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01/11 03:19
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Taboola's earnings call reveals strong financial performance with revenue growth, improved EBITDA, and a reduced net loss. The share buyback program and positive reception of the Realize platform add to the positive sentiment. While there are some uncertainties regarding the impact of Google's AI rollout, overall guidance remains optimistic. The market cap of approximately $1.15 billion suggests a moderate reaction, leading to a predicted stock price increase of 2% to 8% over the next two weeks.
Revenue $427 million, representing growth of 3% year-over-year.
Ex-TAC Gross Profit $152 million, 9% higher than last year.
Adjusted EBITDA $36 million, 53% higher than last year with margins expanding significantly.
Free Cash Flow $36 million, growing 35% year-over-year.
Net Loss $8.75 million, improved from a net loss of $26.2 million in Q1 2024.
Scaled Advertisers 1,996, a growth of 9% year-over-year.
Operating Cash Flow $48.1 million.
Cash and Cash Equivalents $216.2 million.
Long-term Debt $126.5 million.
Shares Outstanding Declined from 338.6 million at the end of Q1 2024 to 324.5 million at the end of Q1 2025, a decline of 4%.
Launch of Realize: Taboola officially launched Realize in Q1, marking a major step forward. Realize offers new ad formats like vertical videos, social creatives, and display, allowing advertisers to import their social and display creatives easily.
Predictive Audiences Solution: A new predictive audiences solution was launched, helping advertisers target users based on historical conversion data, similar to lookalike modeling.
User Interface Refresh: A complete refresh of the user interface was introduced, enhancing user experience and integrating an AI assistant named Abby for campaign support.
Expansion of Partnerships: Taboola announced an expansion of partnerships with Microsoft and Gannett, adding display inventory for Realize advertisers, and signed an exclusive global partnership with LINE, a major messaging app in Asia.
Operational Efficiencies: Increased efficiencies in server and networking operations led to an increase in the estimated useful lives of servers from three years to six years, benefiting gross profit.
Free Cash Flow: Free cash flow reached $36 million, growing 35% year-over-year, supported by improved profitability and strong working capital management.
Share Buyback Program: Taboola continues to aggressively buy back shares as part of a $200 million share buyback program, repurchasing approximately 16.2 million shares at an average price of $3.03.
Focus on Performance Advertising: The company is focusing on capturing a $55 billion market opportunity in performance advertising, particularly through the Realize platform.
Advertising Spend Decrease: There has been a 1% decrease in advertising spend related to tariffs, primarily affecting the business with China, which constitutes about 5% of total Q2 revenue.
Macro Environment Uncertainty: The company is closely tracking the microenvironment, indicating potential risks from macroeconomic factors, although no material impact has been observed so far.
Regulatory Issues: The forward-looking statements made during the call are subject to material risks and uncertainties, including regulatory issues that could affect future performance.
Competitive Pressures: The company acknowledges competitive pressures in the advertising market, particularly as advertisers feel maxed out on search and social channels.
Supply Chain Challenges: The company is focused on onboarding unique supply partners, which indicates potential challenges in securing differentiated inventory that advertisers value.
Economic Factors: The company has not seen material impacts from the macroeconomic environment but remains cautious and prioritizes cost discipline amid uncertainty.
Market Opportunity: Taboola estimates a $55 billion opportunity in performance advertising outside of search and social.
Realize Platform Launch: Launched Realize in Q1, offering new ad formats and a CPC pricing model, enabling advertisers to access previously unreachable budgets.
Growth Focus Areas: Three areas to accelerate growth: driving incremental ad spend through Realize, verticalizing sales strategy, and onboarding new supply partners.
Scaled Advertisers Growth: Number of scaled advertisers grew by 9% to 1,996 in Q1.
Partnership Expansion: Expanded partnerships with Microsoft and Gannett, and signed an exclusive global partnership with LINE.
Q2 2025 Revenue Guidance: Expected revenues between $438 million and $458 million.
Full Year 2025 Revenue Guidance: Reiterating revenues between $1.84 billion and $1.89 billion.
Q2 2025 Adjusted EBITDA Guidance: Expected adjusted EBITDA between $38 million and $44 million.
Full Year 2025 Adjusted EBITDA Guidance: Reiterating adjusted EBITDA between $201 million and $209 million.
Macro Environment Impact: No material impact observed, but cautious due to macro uncertainty.
Share Buyback Program: Taboola has a $200 million share buyback program. In Q1 2025, approximately 16.2 million shares were repurchased at an average price of $3.03, totaling $49 million. Since the end of Q1, an additional 15.1 million shares were repurchased at an average price of $2.83, totaling $43 million. The total shares outstanding decreased from 338.6 million at the end of Q1 2024 to 324.5 million at the end of Q1 2025, representing a 4% decline.
The earnings call reveals strong financial performance with increased ex-TAC gross profit and adjusted EBITDA margins. The Realize platform shows promising growth, and strategic partnerships like Paramount enhance future prospects. Share repurchases and raised full-year guidance further boost investor confidence. Although some concerns exist, such as revenue ex-TAC deceleration and non-TAC COGS increase, the overall sentiment remains positive, especially given the company's small-cap nature, which tends to react strongly to favorable news.
The earnings call summary and Q&A indicate a positive outlook. Revenue and profit metrics showed significant growth, with optimistic guidance for the second half of 2025. The Realize platform and strategic partnerships are expected to drive future growth. Despite some concerns about growth rates for existing clients and debt management, the share repurchase program signals confidence in the company's valuation. Considering the company's small market cap, the positive financial performance and strategic initiatives are likely to result in a stock price increase of 2% to 8%.
Taboola's earnings call reveals strong financial performance with revenue growth, improved EBITDA, and a reduced net loss. The share buyback program and positive reception of the Realize platform add to the positive sentiment. While there are some uncertainties regarding the impact of Google's AI rollout, overall guidance remains optimistic. The market cap of approximately $1.15 billion suggests a moderate reaction, leading to a predicted stock price increase of 2% to 8% over the next two weeks.
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