Taboola secures $270 million credit facility, pays off debt

NEW YORK - Taboola (NASDAQ:TBLA), known for its digital advertising technology and currently identified as undervalued by InvestingPro analysis, has established a new $270 million revolving credit facility, the company disclosed today. The company, with a market capitalization of approximately $986 million and annual revenue of $1.77 billion, maintains a strong balance sheet with more cash than debt. This strategic financial move allowed Taboola to retire its existing term loan, which had an outstanding principal and accrued interest totaling $123.2 million.

The new credit facility is expected to generate annual interest savings for Taboola in the range of $3 to $5 million, based on current interest rates. The company’s Chief Financial Officer, Steve Walker, highlighted the refinancing as a measure that lowers the company’s cost of capital and bolsters its liquidity while extending debt maturities to 2030. This strategic move aligns with the company’s strong financial position, reflected in its healthy current ratio of 1.35 and substantial free cash flow yield of 15%.

The additional financial benefits of the new credit agreement include the potential to maintain a lower average debt balance, which could lead to further interest savings. It also provides about $180 million in extra debt capacity, which Taboola can use to enhance its financial flexibility.

Bank of America, N.A. served as the Administrative Agent for the transaction, with Citibank, N.A., London Branch, and Valley National Bank as Syndication Agents. These institutions, along with Bank of America, N.A., also acted as Joint Bookrunners and Joint Lead Arrangers.

Walker expressed that the refinancing transaction strengthens Taboola’s balance sheet and supports the company’s continued investment in profitable growth. He also mentioned that it aligns with maintaining Taboola’s aggressive share buyback program, which InvestingPro data confirms as one of management’s key strategic initiatives. For deeper insights into Taboola’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, covering over 1,400 US stocks with expert analysis and actionable intelligence.

Taboola’s platform, Realize, is utilized by thousands of advertisers and reaches approximately 600 million daily active users. The company partners with top publishers and original equipment manufacturers (OEMs) to leverage its data and technology for audience and revenue growth.

This financial development is based on a press release statement and involves forward-looking statements that carry inherent risks and uncertainties. Taboola has advised that these statements should not be seen as guarantees of future performance and that actual results could differ materially from their current expectations.

In other recent news, Taboola reported its fourth-quarter earnings for 2024, slightly missing market expectations with earnings per share (EPS) of $0.10 compared to the forecasted $0.11. Revenue also fell short, coming in at $410 million against an anticipated $476.56 million. For the full year, Taboola achieved revenues of $1.77 billion, with a notable 25% increase in Ex-TAC Gross Profit, reaching $667.5 million. Despite the quarterly shortfall, the company saw a 104% growth in adjusted EBITDA, totaling $200.9 million, and free cash flow that surpassed expectations at $149.2 million.

In another development, B.Riley downgraded Taboola’s stock from Buy to Neutral, lowering the price target to $4.00, citing a longer timeline for the new platform and strategy to take effect. Benchmark also revised its price target for Taboola shares, reducing it to $4.50 but maintaining a Buy rating. Citizens JMP downgraded the stock to Market Perform, highlighting a reduced 2025 guidance below Wall Street expectations. The company has launched a new performance advertising platform called "Realize," aiming to tap into a $55 billion market opportunity and expand its performance advertising capabilities.

Taboola’s management remains optimistic about future growth, focusing on leveraging its new product lineup and first-party data. However, analysts have expressed caution, pointing out the company’s need to adjust to revised expectations and the uncertain demand for the new platform. Despite the challenges, Taboola announced a $200 million expansion to its stock repurchase program, reflecting confidence in its long-term strategy.

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