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Taboola.com Ltd (TBLA) Q1 2024 Earnings Call Transcript Highlights: A Strong Start with Robust ...

GuruFocus Research
·4 min read

  • Revenue: Q1 2024 revenue was approximately $414 million, a 26% increase year-over-year.

  • Net Loss: Reported a net loss of $26.2 million in Q1 2024.

  • Non-GAAP Net Income: Achieved a non-GAAP net income of $3.8 million.

  • Adjusted EBITDA: Reached $23.5 million, with a 17% margin year-over-year.

  • Free Cash Flow: Generated $26.8 million in Q1 2024.

  • X-Tack Revenue: Grew by 20% to $139 million.

  • Share Buybacks: $28 million worth of shares repurchased in Q1 2024.

  • 2024 Revenue Guidance: Expected to be between $1.89 billion to $1.94 billion.

  • 2024 Adjusted EBITDA Guidance: Projected to exceed $200 million.

  • 2024 Free Cash Flow Guidance: Anticipated to be over $100 million.

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Taboola.com Ltd reported Q1 results above the high end of guidance across all metrics, indicating a strong start to 2024.

  • Revenue growth is accelerating, with a 33% increase projected for 2024, reaching nearly $2 billion.

  • Adjusted EBITDA and free cash flow have more than doubled compared to the previous year, with EBITDA expected to exceed $200 million.

  • Significant investments in AI and technology have improved advertiser success, with MAX conversion adoption nearly 60% of revenue.

  • Expansion of partnerships, including with Apple and Yahoo, is enhancing Taboola.com Ltd's market position and offering new growth avenues.

Negative Points

  • Despite strong Q1 performance, full-year guidance remains unchanged, suggesting potential caution about future market conditions or challenges.

  • Net loss reported for Q1 was $26.2 million, indicating ongoing financial pressures despite revenue growth.

  • The onboarding of Yahoo and integration processes are complex and still ongoing, posing risks to smooth operations and expected outcomes.

  • Operating expenses have increased due to the costs associated with onboarding significant inventory and partnerships like Yahoo.

  • While e-commerce is growing, specific financial details and the exact contribution to revenue are not fully disclosed, making it difficult to assess the precise impact on the financial health of Taboola.com Ltd.

Q & A Highlights

Q: Can you discuss the prioritization of onboarding omnichannel advertisers at Yahoo over other strategies? A: Adam Singolda, CEO of Taboola, explained that focusing on premium performance advertisers is crucial because of their potential to significantly increase spending when they observe good performance. This focus is part of why Taboola launched 'Taboola Select', which targets top-tier performance advertisers, aiming to increase the company's share of wallet among brands and agencies.

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Q: What are your goals for user engagement, and how do you plan to achieve them? A: Adam Singolda mentioned that the goal is to increase user engagement to 30 minutes per day, primarily through 'Taboola News'. This involves integrating more vertical videos and utilities like weather or games, which are personalized using AI to enhance user interaction and engagement.

Q: After a strong Q1 performance, why was the full-year guidance not raised? A: Stephen Walker, CFO, noted that despite the strong start, it's early in the year, and they prefer to maintain the current guidance. He emphasized the need to complete the Yahoo advertiser migration and achieve yield gains as critical assumptions for the year.

Q: How will the expanded partnership with Apple influence Taboola's financials in 2024? A: Adam Singolda expressed excitement about expanding into the US and UK markets with Apple, anticipating it will enhance Taboola's offerings to premium advertisers and potentially make Apple one of Taboola's largest partners.

Q: What drives the success with top brands and agencies, reaching over 20% of revenue? A: Stephen Walker attributed this success to effective technology like MAX conversions, targeted sales efforts, and high-quality supply from partnerships with major platforms like Apple and Yahoo. The launch of 'Taboola Select' aims to consolidate these advantages into a compelling package for large brands and agencies.

Q: Can you quantify the e-commerce revenue and its impact on X-Tack margins? A: Stephen Walker explained that while specific figures weren't disclosed, e-commerce is growing faster than other segments and positively impacts X-Tack margins due to its net reporting basis and high-quality demand from major merchants and brands.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.