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01/11 03:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $497 million, up 15% year-over-year. Growth reflects traction in the market and success with the Realize platform.
Ex-TAC Gross Profit $177 million, up 6% year-over-year. Growth driven by strong advertising spend and performance of Realize, Taboola News, and Bided Supply.
Adjusted EBITDA $48 million, representing a 27% margin. Includes a $2 million headwind from foreign exchange rates and higher operating expenses.
Free Cash Flow $46 million in Q3 and $117 million year-to-date, representing a 96% conversion of adjusted EBITDA in Q3. Strong cash generation attributed to high adjusted EBITDA margins and effective working capital management.
Scaled Advertisers Number grew by 4% to 2,064, and average revenue per scaled advertiser grew 11%. Growth driven by Realize's capabilities and improved advertiser retention and spending.
Net Income $5.2 million, with non-GAAP net income at $34.3 million. Growth supported by strong ex-TAC gross profit and cost management.
Share Repurchases Approximately 10 million shares repurchased in Q3 for $34.4 million. Year-to-date repurchases total $184 million, reducing outstanding shares by 14%.
Realize platform: The new performance platform Realize is gaining traction among advertisers and publishers, helping businesses generate leads and grow sales. It operates similarly to Google Ads or Meta ads but focuses on the open web, engaging 60 million people daily. Realize leverages AI and first-party data to provide authentic insights and high-performing outcomes.
Market opportunity: Taboola estimates a $55 billion market opportunity as advertisers seek alternatives to search and social platforms. Realize is positioned to capture a share of this market.
Financial performance: Q3 revenue was $497 million, with ex-TAC gross profit of $177 million and adjusted EBITDA of $48 million. Free cash flow for the quarter was $46 million, with $117 million year-to-date. The company repurchased $184 million worth of shares year-to-date, representing 14% of the company.
Scaled advertisers: The number of scaled advertisers grew by 4% to 2,064, and average revenue per scaled advertiser increased by 11%. This growth reflects the success of the Realize platform.
Traffic growth: Total company traffic grew year-over-year, driven by double-digit increases in app traffic, which now accounts for one-third of global supply, and new publisher onboarding.
Share repurchases: The company repurchased approximately 10 million shares in Q3 for $34.4 million and nearly 14% of outstanding shares year-to-date. This reflects a strategic focus on capital allocation.
Guidance update: The company raised its full-year 2025 guidance, expecting revenues between $1.91 billion and $1.93 billion, ex-TAC gross profit of $700 million to $710 million, and adjusted EBITDA of $209 million to $214 million.
Competitive Landscape: The company operates in a highly competitive environment dominated by major players like Google, Meta, and Amazon. This presents significant challenges in gaining market share and achieving its ambition to become a leading performance advertising platform outside of these giants.
Foreign Exchange Rates: The company faced a $2 million headwind in Q3 2025 due to foreign exchange rate fluctuations, particularly impacting operating expenses in regions like Israel where it has a large employee base.
Traffic Dependency: Although the company has low exposure to search traffic, any decline in search traffic globally could still indirectly affect its overall traffic patterns and revenue generation.
Hosting Costs: Higher-than-planned hosting costs related to growth initiatives were noted, which could impact profitability if not managed effectively.
Economic Uncertainty: The company operates in a $55 billion market, but economic uncertainties could affect advertiser budgets and spending levels, impacting revenue growth.
Regulatory Conditions: The company met certain Israeli regulatory conditions, which impacted its share repurchase obligations with Yahoo. However, regulatory changes in the future could pose challenges.
Revenue Expectations: For Q4 2025, revenues are expected to be between $532 million and $542 million. For the full year 2025, revenues are projected to be between $1.91 billion and $1.93 billion.
Gross Profit: For Q4 2025, gross profit is expected to be between $166 million and $171 million. For the full year 2025, gross profit is projected to be between $550 million and $564 million.
Ex-TAC Gross Profit: For Q4 2025, ex-TAC gross profit is expected to be between $204 million and $210 million. For the full year 2025, ex-TAC gross profit is projected to be between $700 million and $710 million.
Adjusted EBITDA: For Q4 2025, adjusted EBITDA is expected to range from $83 million to $85 million. For the full year 2025, adjusted EBITDA is projected to be between $209 million and $214 million.
Non-GAAP Net Income: For Q4 2025, non-GAAP net income is expected to be between $52 million and $56 million. For the full year 2025, non-GAAP net income is projected to be between $139 million and $144 million.
Market Opportunity: Taboola estimates a $55 billion market opportunity as advertisers seek scalable performance-driven alternatives to search and social platforms.
Growth Expectations: The company expects to achieve double-digit growth over time, driven by the success of its Realize platform and increasing advertiser budgets.
Free Cash Flow Conversion: For the full year 2025, free cash flow conversion from adjusted EBITDA is expected to exceed the high end of the 60%-70% range.
Share Buyback Program: Taboola has been actively repurchasing shares. Year-to-date, the company has bought back approximately $184 million worth of shares, representing 14% of the company. In Q3 alone, they repurchased approximately 10 million shares for a total consideration of $34.4 million. The average price per share was $3.43. The company views share repurchases as one of the most compelling uses of capital. Additionally, they are no longer required to purchase shares from Yahoo for the remainder of 2025, which allows them to buy more shares in the open market.
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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