Earnings call transcript: Taboola beats Q1 2025 forecasts, stock rises

Taboola reported better-than-expected earnings for the first quarter of 2025, with revenue surpassing forecasts and a smaller-than-anticipated loss per share. The company’s stock responded positively, climbing 2.59% in pre-market trading. With a market capitalization of $1.08 billion and a strong financial health score of GOOD according to InvestingPro, Taboola’s strategic innovations and operational improvements have bolstered its performance, setting a promising tone for the remainder of the year.

Key Takeaways

• Taboola’s Q1 2025 revenue reached $427 million, exceeding forecasts.
• Earnings per share (EPS) was a loss of $0.03, better than the projected loss of $0.05.
• Stock price increased by 2.59% following the earnings announcement.
• The company launched the Realize platform, introducing new ad formats and AI integration.
• Taboola anticipates stronger revenue growth in the second half of 2025.

Company Performance

Taboola demonstrated robust performance in Q1 2025, with a 3% year-over-year increase in revenue reaching $427 million, building on its impressive 22.68% revenue growth over the last twelve months. The company’s focus on performance-driven advertising and strategic partnerships has positioned it as a leader in the open web advertising space. InvestingPro analysis reveals the company maintains more cash than debt on its balance sheet, with a healthy current ratio of 1.35. The launch of innovative products, such as the Realize platform, underscores Taboola’s commitment to enhancing advertiser engagement and expanding its market presence.

Financial Highlights

• Revenue: $427 million (3% YoY growth)
• Ex-TAC Gross Profit: $152 million (9% YoY growth)
• Adjusted EBITDA: $36 million (53% YoY growth)
• Free Cash Flow: $36 million (35% YoY growth)
• Scaled Advertisers: 1,996 (9% growth YoY)

Earnings vs. Forecast

Taboola reported an EPS loss of $0.03, surpassing the forecasted loss of $0.05. This marks a positive surprise for investors, as the company managed to narrow its losses more than expected. Revenue also beat projections, coming in at $427.5 million compared to the anticipated $417.35 million, reflecting effective cost management and strategic growth initiatives.

Market Reaction

Following the earnings release, Taboola’s stock rose by 2.59%, reflecting investor optimism. The stock’s recent performance aligns with broader market trends, as investors favor companies demonstrating resilience and growth potential. According to InvestingPro analysis, Taboola appears undervalued based on its Fair Value calculation, with 12 additional ProTips available to subscribers. The stock is trading closer to its 52-week high of $4.6, indicating strong market confidence, while maintaining an attractive free cash flow yield.

Outlook & Guidance

Taboola provided a revenue guidance range for the full year 2025 between $1.84 billion and $1.89 billion, with adjusted EBITDA expected to be between $201 million and $209 million. The company anticipates that the Realize platform will drive growth and help achieve double-digit revenue increases in the latter half of the year. Notably, InvestingPro data indicates analysts expect the company to turn profitable this year, with comprehensive analysis available in the Pro Research Report, part of the extensive coverage of over 1,400 US stocks.

Executive Commentary

CEO Adam Singolda remarked, "We’re seeing good early signs. And I think it’s a combination of we’re focusing on clients, advertisers where we know they have a market fit with us." CFO Steve Walker added, "We expect Realize will help us get back to more double-digit growth." These statements highlight the company’s strategic focus on aligning with ideal customer profiles and leveraging new platforms for growth.

Risks and Challenges

• Potential impacts from tariffs could reduce spending by approximately 1%.
• The native advertising market is growing at low single digits, which may limit expansion opportunities.
• Macro uncertainties, including economic fluctuations, could affect advertiser budgets.
• Competition in the performance advertising sector remains intense.
• Dependence on partnerships with large tech companies could pose risks if relationships change.

Q&A

During the earnings call, analysts inquired about potential impacts from Google’s search changes on publisher traffic and Taboola’s strategies for scaling advertisers. The company addressed these concerns by emphasizing its strong data capabilities and the benefits of its diversified advertiser base. Additionally, Taboola detailed its share buyback strategy, reflecting confidence in its long-term growth prospects.

Full transcript - Taboola (TBLA) Q1 2025:

Conference Operator: Good day and thank you for standing by. Welcome to the Dabula’s First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer Please be advised today’s conference is being recorded. I would now like to turn the conference over to your speaker today, Jessica Kurokas, Head of Investor Relations.

Please go ahead.

Jessica Kurokas, Head of Investor Relations, Taboola: Thank you, and good morning, everyone, and welcome to Tabula’s first quarter twenty twenty five earnings conference call. I’m here with Adam Singolda, Tabula’s Founder and CEO and Steve Walker, Tubula’s CFO. The company issued earnings materials today before the market, and they are available in the Investors section of Tubula’s website. Now I’ll quickly cover the Safe Harbor. Certain statements today, including our expectations for future periods, are forward looking statements.

They are not facts and are subject to material risks and uncertainties described in our SEC filings. These statements are based on currently available information, and we undertake no duty to update them except as required by law. Today’s discussion is also subject to the forward looking statement limitations in the earnings press release. Future events could differ materially and adversely from those anticipated. During this call, we will use terms defined in the earnings release and refer to non GAAP financial measures.

For definitions and reconciliations to GAAP, please refer to the non GAAP tables in the earnings release posted on our website. With that, I’ll turn the call over to Adam.

Adam Singolda, Founder and CEO, Taboola: Thanks, Jessica. Good morning, everyone, and thank you all for joining us today. Before we dive into the results, I want to quickly remind everyone how we see our market opportunity, who we are, and why we believe we can win. There’s a major shift in advertising towards performance to drive growth to your business. It’s a result driven approach focused on measurable outcomes versus brand advertising, which is mostly for awareness.

While most advertisers buy ads on search and social for that need, many advertisers feel that they’ve maxed out on those channels. We estimate that there’s about $55,000,000,000 opportunity to serve advertisers’ performance needs outside of search and social in the open web, and that is our focus. Tabula is a global leader in performance advertising, helping businesses grow across the open web. Our platform, Realize, connects thousands of advertisers to approximately 600,000,000 daily users through premium publishers like Yahoo, Apple, and ESPN, top device manufacturers like Samsung and Xiaomi, and leading utility apps like LINE. Our extensive first party data and AI investments enable us to uniquely identify user intent by analyzing their reading habits and genuine interests.

This is information we uniquely know and can package in a way that advertisers can act upon. This makes us a key growth engine for advertisers side by side with search and social, and a trusted partner for publishers all over the world. Taboola today has a bit over 2,000 employees globally with 700 salespeople and six fifty engineers. Last year, we generated about $1,800,000,000 in revenue, over $200,000,000 in adjusted EBITDA, and about $150,000,000 in free cash flow. Now turning to our first quarter results.

We’re happy to start the year off strong with our first quarter revenue, ex TAC gross profit and adjusted EBITDA all coming in above the high end of our guidance range. It is a clear reflection of solid execution, strong team focus and the resilience of our model. For the first quarter, we reported revenues of $427,000,000 representing growth of 3% year over year, ex tax gross profit of $152,000,000 9 percent higher than last year, adjusted EBITDA of $36,000,000 50 3 percent higher than last year, with margins expanding significantly. And free cash flow of $36,000,000 growing 35% year over year. While the macro environment is something that we’re tracking closely, we haven’t seen material impact to our business.

We’ve seen about 1% decrease in advertising spend related to the tariffs so far, which is mainly China to us. This brings our China business to around 5% of total Q2 revenue as of now. At the same time, we’re currently seeing positive trends in Tebula News, billet supply, and other parts of the business. These recent tailwinds, together with our strong performance in Q1, support our decision to reiterate our full year 2025 guidance and continue aggressively buying back shares as part of our 200,000,000 share buyback program. Now let’s turn to some highlights from the quarter.

In March, we hosted our Investor Day, where our management team alongside several of our key advertiser and publisher partners took a deep dive into the $55,000,000,000 market opportunity ahead of us, and how we’re positioned in Tabula to capture share in the performance advertising space, particularly through our Realize platform. Roughly a third of the event was dedicated to partner panels offering direct validation of our technology, data, and strategic direction. Our partners essentially echoed a clear message: There is a real gap in the market that Tabula is uniquely positioned to fill as advertisers are maxed out on search and social channels. The market appreciates having a company of our scale that is laser focused on performance, measurement and outcomes, not trying to be everything to everyone, but offering a real alternative when it matters most. Our management team is focused on tracking net new impacts from Realize, which is incremental to us.

We define it as a combination of new demand formats and budgets we previously could not access, alongside new supply placements that open new opportunities for advertisers. While it’s still early, initial results are promising, and we’re excited to share continued progress as adoption increases and our capabilities expand. At our Investor Day, we laid out three focused areas to accelerate growth in our business. First, driving incremental ad spend through Realize’s new capabilities. Second, focusing our go to market strategy on things such as verticalizing our sales organization, as well as going after ideal customer profiles, ICP, where we see better retention rates and lower churn rates.

As part of our focus on growth, last quarter, we introduced a new metric, scaled advertisers, defined as those spending over $100,000 annually. In Q1, the number of scaled advertisers has grown by 9%, reaching nineteen ninety six, which is great to see. Third, going after new supply partners that have unique data our advertisers are looking for, which would help us drive incremental growth in advertising budgets. Let me take this opportunity to highlight some of the progress we’ve made this past quarter. Starting with the launch of Realize.

We officially launched Realize in Q1, marking a major step forward for Tabula. Realize leverages our core strengths, proprietary technology, unique data we have that others don’t, and massive reach across the internet. Some of the new things Realize offers to our advertisers include new ad formats like vertical videos, social creatives, and display. You can easily import your social and display creatives to realize which advertisers really like. We have a new pricing model, so advertisers can now pay on a CPC even when buying display from us.

Imagine an industry that for 30 years charged advertisers on impressions for display, and would realize for the first time, you can get the value of people seeing your ad, but you only pass if a user actually clicked on it. This is big. We also launched a new predictive audiences solution that helps advertisers target users based on historical conversion data. Similar to Lookalike modeling, this capability allows advertisers like an insurance company that acquired 100 customers through Taboola to efficiently find the next 100 by leveraging patterns from past conversions. Next, we’re adding new display supply, which means that advertisers will be able to access all ad inventory on our publisher sites, not just bottom of article.

And last but not least, we launched a whole new refresh to our user interface, so it feels like what advertisers are used to on the big platforms. And with ABBYY, our intelligent AI assistant embedded into the Realize dashboard, advertisers have dedicated support with their campaigns every step of the way. While Realize is only out for two months, all of these new capabilities enable us to unlock performance advertising budgets that historically were out of reach. I’m encouraged by the energy this new product has injected into our sales teams, the early reception we’re seeing, and the results from our initial advertisers like Babbel, Motley Fool, and others. I’m confident Realize will play an increasingly meaningful role in driving our growth in the years to come.

Moving to onboarding unique supply and data. We’ve also seen good momentum with top publisher partners adding realized display inventory, which is net new supply for advertisers. Our focus is adding inventory that is differentiated and is highly valued by advertisers because we have unique data, enabling us to drive better ROI. As an example, we only bid on our own publishers where we have first party data, and massive amount of historic conversions, which is an advantage. Or another example is Taboola News and utility apps, where we have deep data integrations.

In the first quarter, we announced exciting expansions of our partnerships with Microsoft and Gannett, adding display inventory for realized advertisers. We also signed an exclusive global partnership with LINE, which is one of the largest messaging app in Asia, allowing us to bring personalized content and ads to LINE users globally in new engaging ways. This is the first utility app that is signed with Tabula News, which is very exciting, and I believe utility apps will become a whole new wave of publishers for Tabula as everyone wants a piece of the advertising market. In summary, we’ve kicked off the year with real momentum. The early signals from Realize to capture net new advertising budgets are exciting and reinforce the opportunity we see ahead.

We’re heads down doing the work on what matters most as we move through 2025, and that is execution. We’re confident in the strength of our business and continue to take a prudent approach to the guidance we’ve provided. While we have not seen a material impact to the business from the macro environment, we’re tracking it while making sure we prioritize cost discipline and investment in our key growth initiatives. Our balance sheet is strong. We have access to revolving credit facility while generating healthy free cash flow.

We continue to believe that the highest return capital is through investing in our own growth, and we intend to continue being aggressive with share repurchases. With that, I’ll turn it over to Steve to walk you through our first quarter results and outlook in more detail.

Steve Walker, CFO, Taboola: Thanks, Adam, and good morning, everyone. As Adam mentioned, we had a strong start to the year and we are well positioned to build on this momentum throughout the year. So let’s dive into the details of our financial performance. In the first quarter, we reported results above the high end of our guidance range across all metrics. Revenues reached 4 and $27,500,000 representing 3% growth year over year, while ex TAC gross profit reached $151,700,000 representing 9% growth year over year, which included a 70 basis point headwind from foreign exchange.

Our revenue growth was primarily driven by 9% growth in the number of scaled advertisers, which was partially offset by a 3% decline in the average revenue per scaled advertiser, both measured on a year over year basis. As we said last quarter, we expect these two metrics to sometimes have an inverse correlation. As we successfully onboard new advertisers and grow them into scaled advertisers, it can sometimes pull down the average as happened this quarter. However, the strong growth in the number of scaled advertisers is a good leading indicator for our business as it shows good traction bringing on new advertisers and scaling them over the last year. Having more advertisers fuels future growth as we can work with these advertisers to increase budgets over time.

First quarter revenue growth was broad based and included positive growth in our existing core native business. As we indicated last quarter, the format testing that we were doing with Yahoo! On Select Supply wound down this quarter and is now fully completed. As in the past, there was marginal reduction of first quarter revenue due to the way we were accounting for this test. Without this impact, first quarter revenue growth would have been approximately 5% year over year.

X X TAC also benefited from margin expansion in our core native business as well as growth in Tbula News and our Bidded Supply, which includes Microsoft. Gross profit of $119,300,000 primarily benefited from our X TAC gross profit growth. In addition, gross profit increased due to reductions in our other cost of revenues, driven by increased efficiencies in how we operate our servers and networking equipment. These were the result of investments that we made in our software platform, as well as advances in hardware technology.

The end result was an increase in the estimated useful lives of our servers and networking equipment from three years to six years, which allowed us to increase the amortization period commensurately. This change took effect on 01/01/2025 and applies to all servers with a carrying value on our books as of that date, as well as to any other servers purchased after 01/01/2025. This will primarily benefit our GAAP gross profit since most of our servers depreciation are classified within other costs of revenues. But the change will also have a smaller benefit on operating profit and net income since some equipment amortization expense hits operating expenses. In terms of our profitability, our net loss was $8,750,000 with non GAAP net income coming in positive at $25,000,000 Adjusted EBITDA for the quarter was $35,900,000 reflecting 53% year over year growth.

Our adjusted EBITDA margin was 24%, which is a significant improvement over 17% adjusted EBITDA margin in Q1 twenty twenty four. This improvement reflects the benefit of our 9% year over year growth in ex TAC gross profit, along with strong cost discipline that we maintained in 2024 and into the first quarter of this year. In terms of cash generation, we had $48,100,000 in operating cash flow in the first quarter and free cash flow of $36,100,000 Our free cash flow benefited significantly from a couple of factors. First, free cash flow benefited from our improved profitability. Our net losses decreased from $26,200,000 in Q1 twenty twenty four to $8,750,000 in Q1 twenty twenty five.

Second, free cash flow benefited from strong management of our working capital. Q1 free cash flow also included a onetime benefit of approximately $11,000,000 related to the timing of payments from the testing we did on certain Yahoo! Supply. Our free cash flow conversion from adjusted EBITDA has been over 70% over the last four and the last eight quarters, which we are very happy about. Looking forward, while we continue to expect convert free cash flow from adjusted EBITDA at a 50% to 60% rate over any typical trailing eight quarter period, I would hope to remain at the higher end of that range.

Turning to the balance sheet, we remain in the strong financial position, ending the first quarter with a robust net cash balance of $89,700,000 Cash and cash equivalents totaled $216,200,000 which more than offset our long term debt of $126,500,000 As announced in March, we proactively entered into a new $270,000,000 revolving credit facility, which was good timing given everything that has happened since. We used the proceeds to fully repay our prior long term loan and still have over 140,000,000 of excess capacity on the revolver. This refinancing provides multiple benefits. First, the revolver has a lower interest rate, which will reduce our interest expenses. Second, the revolver will allow us to more proactively manage our working capital.

Rather than have a fixed amount of debt outstanding each quarter, we will be able to draw upon and repay the revolver multiple times each quarter, which will reduce our average debt balance and further reduce our interest expenses. Together, these benefits are expected to reduce annual interest expense by $3,000,000 to $5,000,000 In addition, the revolver gives us the ability to operate in a more capital efficient way over time, as we will be able to operate with a lower cash balance while preserving access to significant liquidity. This puts us in a stronger position to navigate macro uncertainty and continue executing on our long term strategy. Regarding share repurchases, as we announced in our fourth quarter twenty twenty four earnings call, our Board approved an incremental $200,000,000 to our share repurchase program. Given our current share price, we believe share repurchases are the best use of capital to drive shareholder value.

During the course of the first quarter, we repurchased approximately 16,200,000.0 shares at an average share price of $3.3 for a total consideration of $49,000,000 Since the end of the first quarter, we have repurchased an additional 15,100,000.0 shares at an average share price of $2.83 for a total consideration of $43,000,000 At this point, we anticipate remaining aggressive in our share buyback program. Over the past year, our shares outstanding have declined from 338,600,000.0 at the end of Q1 twenty twenty four to $324,500,000 at the end of Q1 twenty twenty five. This represents a decline of 4% of total shares outstanding. Moving to guidance, for the second quarter of twenty twenty five, we expect revenues to be between $438,000,000 and $458,000,000 gross profit from $124,000,000 to $134,000,000 ex TAC gross profit from $156,000,000 to $166,000,000 adjusted EBITDA from $38,000,000 to $44,000,000 and non GAAP net income from $26,000,000 to $32,000,000 We are reiterating our guidance for the full year. We continue to expect revenues to be between 1,840,000,000 to $1,890,000,000 gross profit from $536,000,000 to $552,000,000 ex TAC gross profit from $674,000,000 to $690,000,000 adjusted EBITDA from $2.00 1,000,000 to $2.00 $9,000,000 and non GAAP net income from $122,000,000 to 128,000,000.

While we had a strong Q1 and we are pleased with the momentum of our business, we do not think it would be prudent to raise guidance at this point in time given the level of macro uncertainty. It is also important to note that due to the test we did with Yahoo! And the implications that had on our revenue and ex TAC, we expect second half year over year revenue growth to be stronger than in the first half. This is already factored into our guidance and will normalize beginning in Q1 twenty twenty six. In summary, we’re pleased to report a strong first quarter with results exceeding the high end of our guidance and that we are reaffirming our full year outlook.

With clear momentum behind the growth initiatives we shared at Investor Day and a large runway of opportunity ahead, we believe we are well positioned to drive meaningful value for our shareholders over the long term. And with that, let’s move to Q and A. Operator, can you please open the line for questions?

Conference Operator: Thank you. Our first question comes from Mark Kotowicz with The Benchmark Company. Your line is open.

Mark Kotowicz, Analyst, The Benchmark Company: Thank you. Good morning, guys. Just curious, first question just on progress that you’re seeing in fully verticalizing your sales force, and maybe you could just quantify it in terms of what inning you’re in and whether you have the right amount of capacity to get to scale there. And then also curious, Steve, you talked about the 9% scaled advertiser growth offset by a 3% decline in average rev. I’m just curious if you could maybe talk around the puts and takes there in terms of whether you always expect there to be an offset or whether you can sort of remove that offset at some point in time, sort of what the put and takes are there?

And then I had just one follow-up. Thanks.

Steve Walker, CFO, Taboola: Sure. Hi, Mark. Thanks for the questions. So first on the verticalizing of the optimized go to market strategy with our sales teams. So the actual restructuring of the sales teams is done.

So that was actually done tail end of last year, early this year to move the teams into verticals to have focusing on ideal customer profile verticals. So that’s done. They’re starting to sell that way now. I think the early returns are good, but we’re pretty early in that process. I think Adam talked a little bit in his remarks about how we’re seeing nice traction with some of the early conversations we’re having about Realize, and that’s obviously centered on some of those verticals.

So, I think we’re seeing some nice early signs. But to your question about what inning are we in there and kind of where are we really, I’d say we’re in kind of the second inning, like where we’ve gotten out of the start of the game, we’re starting to see some traction, but too early to really talk about metrics and kind of what’s happening there. So that’s kind of where we are on the optimized go to market. In terms of your question about our scaled revenue, our scaled advertisers and the average revenue for those. So first of all, do we always expect to see them to move in an inverse way?

No. Like sometimes you can both grow the number of scaled advertisers and the average revenue per scaled advertiser. It can happen that way. But I think what I would say is, if you look at our numbers this past quarter, we’re very happy with where the number of scaled advertisers went. So going up 9% is a very positive sign for our business because as I said in my prepared remarks, that’s basically the fuel for future growth, right?

If you’re growing the number of advertisers you have, now you’ve got clients that you can talk to and work with and grow budgets over time. So we’re very happy with that. It was offset by the 3% decline in the average revenue per scaled advertiser. But if you look at that more on a historical basis, so if you look back over the last few years, that number, the average revenue per scaled advertiser, which was around $184,000 this quarter is still at a historical high point. Like if you look back to Q1 of twenty twenty three, that’s actually up 17% from the 157,000 per scaled revenue or scaled advertiser that we had then.

So it’s still at a historically very strong point for us. So we’re actually very pleased with the trend on both of those metrics. So I think we’re doing a good job. Again, we’re early on realizing and we’re early on the ideal customer profile and optimized go to market, but the early signs are positive.

Mark Kotowicz, Analyst, The Benchmark Company: That’s helpful, Steve. Appreciate it. Just one quick follow-up just around this yield improvements that you saw that drove better 1Q native margin. I’m just curious if there was any one time benefits in 1Q or if that’s a sustainable sort of trajectory for yield improvement and whether MAX conversions played into that.

Steve Walker, CFO, Taboola: So first of all, we do it’s hard to separate the impact of something specific like max conversions from our overall business. But I think what I would say is in 2024, our overall yield improvement was around 105% for the full year, which was good. It’s not our historical average of 110% or so that we’re already striving for, but it was very good. The only reason that it wasn’t stronger is because frankly, we added a lot of supply last year, which diluted some of the impact of increasing advertiser budgets. So like Apple coming on, still growing the Yahoo!

Supply early last year was part of it. So generally, we’re pretty pleased with where it was. There wasn’t any onetime effects. I think we feel good about our ability to kind of continue to grow yield going forward from here.

Mark Kotowicz, Analyst, The Benchmark Company: Great. Thanks, Steve. Appreciate it.

Steve Walker, CFO, Taboola: Thanks, Mark.

Conference Operator: One moment for our next question. Our next question comes from Laura Martin with Needham and Company. Your line is open.

Laura Martin, Analyst, Needham and Company: Hi there. So, can we first talk about Google? So I’ve gotten some important, I think, Google news and its impact on the ad tech industry. Could you talk about what you think the assuming they actually get to go forward with these remedies, the DOJ’s remedies, how does it affect you guys?

Adam Singolda, Founder and CEO, Taboola: Hey, good morning, Laura. So there’s a lot going on the industry. I think there’s a bunch of things. There’s about the cookies. And I think you and I actually talked about that last we saw each other possible.

I think as it relates to that, personally, I think that companies in advertising should assume that cookies go away one way or another over time. And there’s going be much more privacy focus in the industry. So the way we think about it is companies that have first party cookies that have access to a large stream of consumer behavior and can create value for advertisers with that in mind. That’s going to be a big benefit. And now scale matters more than ever because of that.

So I think about the cookie news, for me, it’s no news news as of now. As it relates to breaking and unbreaking, it’s unclear what’s going to happen there. Overall, I think it could be an opportunity for companies like us because advertisers may look for alternatives to still find growth. So cautiously optimistic, but we’ll see what happens.

Laura Martin, Analyst, Needham and Company: Okay. And then my second thing I did want to follow-up. When we were at Possible, you guys were spending a lot of time and had a lot of meetings in your activation around REALiZE. So I was just wondering if you could update us on what you heard two weeks ago about Realize in this launch of Realize to try to jumpstart your display advertising product. Could you talk about what you learned from all those meetings about what people are saying about Realize and are you getting better adoption?

Adam Singolda, Founder and CEO, Taboola: Yes. So financially, it’s still early stages, like Stephen mentioned. But what’s really exciting for me, because I focus a lot about net new, so I’m looking to see what types of budgets we could have not gotten before that we can get now and why. And I think we’ve realized a lot of it is about, if you think about display advertising as an example, and especially with these macroeconomics where advertisers are looking for performance and outcomes, the fact you can buy display and pair on a CPC basis is quite new. So we’re hearing good feedback from advertisers about how that’s encouraging to them.

In general, we’re thinking about how agencies are spending more time about outcomes. So the whole idea that we can have predictive audiences, we can upload creators from social and display fairly quickly. You can pay on a CPC, which is very much performance driven. All those things come in a good place and specifically at a good time. So to me, the feedback is mainly positive.

We have high dozens of clients that we think we could have not gotten before, and that’s great. And it injected a whole new energy for the sales team globally. You probably have seen a lot of activity there, which is all about this net new concept, what types of advertisers and budget could we get now that we just could not have gotten before.

Laura Martin, Analyst, Needham and Company: Okay. And then my last one is since April 2, when we started this tariff quarter to date, I noticed that you did not raise the year, but you over delivered the first quarter. So have you are there any verticals where you have seen started to see weakness since April 2 in the current quarter?

Steve Walker, CFO, Taboola: I’ll take that one, Laura. So in general, advertising, I think is not going to be impacted as much as certain types of advertising by what’s going on with tariffs. But what we’ve seen in our business is about a one percent impact, mostly related to China. So it’s not material, but we’re seeing something. Just to give you a sense, it’s basically Chinese advertisers that are trying to reach US consumers have definitely cut back their spend because they’re being directly impacted by the tariffs.

Other companies such as car companies or companies that rely on Chinese manufacturing heavily, they’ve also cut back somewhat because they’re worried about their supply chains and their ability to deliver product to consumers. So we’ve seen some impact, again, mostly Chinese advertisers, what we call our China export business has been impacted, but it’s not material. It’s around 1% and that’s kind of what we’ve seen. By the way, that’s baked into our guidance. And that’s our assumption on guidance is that that’s what remains for the rest of the year.

Laura Martin, Analyst, Needham and Company: Okay. That’s helpful. Thank you very much.

Steve Roman, Analyst, Oppenheimer: Thank you. Thanks, Laura.

Conference Operator: One moment for our next question. Our next question comes from Jason Helfstein with Oppenheimer. Your line is open.

Steve Walker, CFO, Taboola: Hi. This is Steve Roman on for Jason. Just one question from us. Do you, despite for Steve, when do you believe Realize will start becoming a meaningful revenue driver? Thanks.

So I think what we’ve said at this point is that we’re, and Adam talked about it a little bit a moment ago, so we’re in the early stages. We’re seeing some really positive signs in terms of meetings that we’re getting. As Laura mentioned, we were at a conference recently where our sales team spent a lot of time with advertisers and got a lot of interest, probably more meetings than we would expect at a conference like that because of the interest. But that’s all very early indicators, like it’s not something that we can forecast yet. So as of now in the 2025 guidance, we don’t have realized factoring into the guidance for this year.

If that changes as we go forward through the rest of the year, we will definitely update on that obviously. But we expect realized to have an impact. We think it’ll have an impact starting sometime late this year and then as we move into 2026. But again, we’ll update on that as we kind of see as there’s something that’s more forecastable.

Adam Singolda, Founder and CEO, Taboola: I’ll just mention that, especially given what’s going on in the world, we feel good about how there’s no better time to try to go after the performance advertising market with Realize because that’s if you’re a business, there’s no better time, we’ve seen it, especially in the recent event, to look for partners that can prove measurement outcome. And we’re thinking of there’s a lot of saturation and diminishing return with search and social. So not only do we believe in this strategy, but this comes at a very good time in the industry as advertisers are looking for someone they can rely on.

Steve Walker, CFO, Taboola: Great. Thank you.

Conference Operator: One moment for our next question. Our next question comes from Zach Cummins with B. Riley Securities. Your line is open.

Zach Cummins, Analyst, B. Riley Securities: Hi, good morning. Thanks for taking my questions and congrats on the strong Q1 results. I just wanted to dig a little bit more into the different components of your business. It sounded like in Q1, both native and Tabula News and even your bidding stream with Microsoft did pretty well. I’m just curious, as we go into a more uncertain macro environment, which portions of your business are you anticipating will be more resilient versus maybe others that could face some headwinds in a more challenging environment?

Adam Singolda, Founder and CEO, Taboola: So to me, this is more of a demand question because if the macroeconomics change, what it should change is the strength of advertisers’ ability to spend dollars. So it’s not so much about publishers or partnerships of different kinds on the supply side. To me, that’s more a question of the strength of the demand front. I think so again, nobody’s I wouldn’t see the future, but if the history is any indication, and we’ve seen this with the in the last iteration, being in the performance advertising space and not trying to be everything for everyone is a very good place to be. So I think that’s one very important.

We’re not trying to go after the entire funnel. We’re not trying to go after top of the funnel branding dollars. Those tend to be historically more exposed. So if your business is TV, top of the funnel, high CPM branding dollars, I believe those are probably more exposed because that if you’re a marketer and you need to make sure that your business survives and thrives, you need to find clients. And then the first thing you may consider stopping is things that you’re not sure drive direct correlation to sales and growth.

So that’s one. So I think we’re in a good place. We don’t have any concentration on demand side. There’s no one client that kind of really owns a big chunk of the business. It’s fairly diversified and it’s all driven by AI and outcomes.

So again, think we’re in a good place from that perspective, especially as advertisers are looking for more of that type of partners they can work with now more than ever. So again, I think that’s more of a demand question, and it’s hard to say, but so far, we haven’t seen any material impact.

Zach Cummins, Analyst, B. Riley Securities: Understood. That’s helpful. And my second question is maybe geared towards Steve. Just in terms of the implied guidance for ex in the second half of the year, I think assuming the midpoint for the full year, it implies a slight decline year over year in ex TAC in second half. Is that partially due to the tougher comp created by kind of the testing that you did with Yahoo!

Second half of last year? Or what are some of the assumptions going into that component there?

Steve Walker, CFO, Taboola: Yes. No, that’s a very good question. So first of all, I think last quarter we talked about the fact that one of our realizations, pun intended, recently was that the native market is growing at low to single mid single digits, so slower than we had anticipated. And I think that’s the right way to think about the growth rate of our business of our core business, the core native business going forward. So like if you were to ask me ’26 and beyond, how is your core going to grow, I’d say that’s the good that’s the right way to think about it.

And as we’ve discussed, what we think is that realized will help us get back to more double digit growth. The negative second half growth is primarily related to two factors. One is we’ve taken, as we’ve talked about, a very prudent approach to 2025 guidance because we wanted to give our teams time to work on realized and kind of get back the growth that we expect. And second, it’s related to the fact that we’re not raising our guidance now just because of the uncertainty of the macro. We don’t think it’s prudent right now to do that.

So that obviously has an effect on the second half as well because we’re trying to be conservative there. So I think the way I think about it is expect us our core business to be kind of low to mid single digits growth rates until we start telling you about the impact that realized has. And at that point, we hope we’ll be able to guide you a bit higher on that. And the second half is really just an anomaly related to where we are right now.

Zach Cummins, Analyst, B. Riley Securities: Makes sense. And maybe just one question for you, Steve, it might be in the 10 Q. But just given all the share repurchase activity that you had in Q1 and to date in Q2, how much do you have left on your current share repurchase authorization?

Steve Walker, CFO, Taboola: Yeah. So we have about, I believe, 190,000,000 left in our current authorization for the buyback. Sorry. I’m getting a gesture from one of my attorneys that it’s lower than that hundred

Adam Singolda, Founder and CEO, Taboola: $1.40, I think. $1.40.

Steve Walker, CFO, Taboola: Oh, we’re down to $1.40 now. Sorry. We’re at actually about a hundred and 40,000,000 left on the existing authorization. From a equally important because we can always get more authorization from our board, but equally important from a cash perspective, right now we have about $80,000,000 of net cash. That’s cash after our long term debt.

We generated obviously good cash free cash flow in the first quarter. We expect to generate good free cash flow for the rest of the year. So my expectation is that we’ll be able to remain very aggressive on the share buyback, probably buying at least at a comparable level to what we’ve been buying lately. Obviously, that can all change if anything changes with our business, but we expect to continue to remain very aggressive there.

Zach Cummins, Analyst, B. Riley Securities: Got it. Appreciate you taking my questions and best of luck with the rest of the quarter.

Steve Roman, Analyst, Oppenheimer: Thank you. Thank you.

Conference Operator: One moment for our next question. Our next question comes from James Kopelman with D. D. Cowen. Your line is open.

Steve Roman, Analyst, Oppenheimer: Good morning and thanks for taking the question. First one is for Adam. You mentioned that you’re looking to track net new impact from realized with new formats, budgets and supply placements. What are you seeing into May more broadly as you track these metrics? I know it’s early, but wondering if you can provide any color on or any specific insights from the advertisers you mentioned such as Motley Fool and Babble?

And also for Adam, any way to help us size up the opportunity with the LINE partnership or potential for additional similar deals with other utility apps? And then I have a follow-up for Steve.

Adam Singolda, Founder and CEO, Taboola: Sure. It’s going be bit hard for me to provide any short term indication of the financial impact at least, but I can give you the flavor of the business. So when I say net new, just to make sure we’re I show this with everyone. What I mean by that is demand that historically we could not have gotten. So think about display budgets and social budgets, which historically we didn’t go after, and that’s a much, much bigger market.

And the second thing is also supply within show ads on. So instead of bottom of article, think of every possible display as well as Tubular News and other areas where we can show vertical videos, social ads and display ads. So to me, obviously, both of those things are very incremental because none of them existed before realized. So that’s and I’m laser focused on that. I have a daily e mail that I get from the team that’s sent to me, and I’m tracking that like a hawk because I’m really excited about seeing that turning a corner and giving us seeing that we have competitive advantage, taking advantage of our first party data and AI and seeing that go in the right direction.

So overall, that’s what I’m tracking. That’s what I mean by that. We’re seeing good early signs. And I think it’s a combination of we’re focusing on clients, advertisers where we know they have a market fit with us. So those ICPs, financial services, pharma, direct to consumer and others.

So we’re seeing good performance, primarily lower churn rates and higher ability to spend dollars with us. Again, dollars we don’t think we could have had before. And I don’t want to give Q2 specific short term indication, but I do believe it’s going in the right direction. So that’s about that. Line.

Yes. And Line is, again, it’s financially, I don’t think we’ve given an indication on that, but nothing material for the guidance. What I will say is that the reason I really liked it, and I think it matters to investors, is because LINE is really kind of like the first of potentially a whole new universe of publishers we can work with. So if you think about the publisher ecosystem, when I started Taboola, it was mostly websites. Then we expanded that into iconic partnerships like Yahoo!

And Apple. And now you’ve seen that utility apps like Klein that have obviously reached to consumers also want to be part of the advertising ecosystem. I think advertising, which just crossed the $1,000,000,000,000 mark is something that many companies, especially in a Fortune 500 companies want to be part of. And all of them will be a bit concerned to partner with Google because they’re, to some degree, competitor. And Tabula is just a very good friend.

So to me, LINE is just one of what I hope to see a lot more in the future. And you can imagine who we want to work with, music companies, messaging companies and many other apps we all have on our phones every day that we use. So it’s one of what I hope to be a whole new types of publishers we work with. And again, financially, nothing material this year.

Steve Roman, Analyst, Oppenheimer: Great. And then for Steve, you disclosed employee headcount, including 700 salespeople, six hundred engineers. Not sure if you do that every quarter. My question is, what can you tell us about potential headcount trends in areas of hiring as you ramp the realized platform over, say, twelve to eighteen months? And how are you balancing that priority against maybe a focus on remaining prudent with regards to cost given the ongoing macro uncertainty?

Steve Walker, CFO, Taboola: Yeah, no, good question. So I think you can see from our guidance that we don’t expect cost to ramp a lot the rest of the year. We do see some ramp in the back half of the year on costs And where that is mostly, so we talked about previously that most of our hiring for the sales teams with the restructuring of the sales team, ramping of realized, most of that was done last year, Q4 and into Q1 this year. So I think we expect to be limited additional investment in sales and marketing. There’ll probably be some, but it’ll be smaller.

We are ramping the R and D team some as we continue to build out features and functionality for the realized platform. We see a lot of opportunity there. So we’re ramping costs there a bit. G and A, obviously, we expect to continue to get cost improvements. I will also just note that we’re heavily focused right now on where we can utilize AI to improve productivity within the organization.

Our President and COO, Eldad Meniv, who you all have heard from, First question he asked everybody when they want to hire is, but where are you using AI and how can we improve productivity? So we’re pretty much, we’re very focused on that. So I expect us to remain relatively prudent on kind of increasing costs and try and remain relatively frugal for now, we see a lot of opportunities to improve productivity as we go.

Steve Roman, Analyst, Oppenheimer: Great. Thanks, guys. Appreciate all the color.

Adam Singolda, Founder and CEO, Taboola: Of course.

Conference Operator: One moment for our next question. Our next question comes from Matt Condon with Citizens. Your line is open.

Matt Condon, Analyst, Citizens: Thank you so much for taking my questions. My first one is just on with Google rolling out, AI overviews to more users and also leaning in with an AI mode and just AI search more generally rolling out to more and more consumers. Has this impacted publisher traffic that you’ve seen so far? And then how should we think about that going forward just as AI search becomes more widely adopted? And then my second question is just, Adam, can you just talk about what you’re doing to increase the breadth and depth of your auction?

I know you’ve implemented a lot of efficiencies just within the interface, the UX of the actual platform with ABBYY and other things. Can you just talk about the progress of that and what you’re hearing from advertisers? Thank you so much. Yes,

Adam Singolda, Founder and CEO, Taboola: of course. Thanks for the question. So as it relates to the first one, and if you recall, we kind of touched on that on Investor Day, which I thought was great. So one, we’ve seen throughout last year some effect. Obviously, now we are where we are now.

But we’ve seen some effect from search traffic going down to some publishers. Nothing too material. And we’ve said that before. Now as it relates to the future, one, I think that we might see more effect. So as I think about it, let’s say publishers have about 30% of traffic ish coming from search.

Could it go 5%, ten %, twenty % more down? Maybe we don’t know. But even if it did, I don’t think that’s a material change at least to our overall base. That’s one. Two, in general, as I think about Tabula’s point of view, supply is not our concern these days.

We have a lot of supply. And I think that’s a growing part of our business. We’re doing such a good job attracting publishers, growing engagement, growing audience for publishers. So I think for us, the biggest upside, regardless to what’s going to happen with search traffic, is going to be on the demand side and how we can grow more budgets. And then on the publisher side, and I’m spending a lot of time with publishers on that, I think still that when I look at what publishers do today as relates to adopting AI, we’re still in very, very early stages.

We are still all of us, when you go to a homepage, it looks the same. Most article pages looks the same. Compare that to TikTok, compare that to Instagram, compare that to Snap. There’s so much more opportunity to drive personalization, increase pages per session on publisher site. So I think while traffic may go down 5%, ten %, and I don’t know, I think that the pie could grow at least at the same rate if we adopt AI in a much bigger way.

And I’m excited about our investment in that space in AI because I think our publishers look to us and say, what can we do to adopt AI in a much bigger way? So net net, I feel good about where things are because we can do so much more with AI. And I think we’ve seen a lot of the effect already from GenAI in 2024.

Steve Walker, CFO, Taboola: The second question was about what we’re using

Adam Singolda, Founder and CEO, Taboola: Does So auction, mean, the biggest thing that will continue to increase auction in our marketplace, one is continuously looking for great data that whether it’s contextual data, first party data, data through our OEM partners, data through our utility apps, all of those integrations make Taboola as a whole a better partner for advertisers. Advertisers want to work with companies that have intent, that can get closer to the moment when consumers make decisions. So I think one, the more we continue to diversify and improve the quality of the data we capture, that improves the auction and our ability to attract advertisers and match between consumers and ads. So that’s one.

Two, obviously, Realize is the biggest thing, right? The more we get more types of budgets, more types of formats, that will increase the auction on our marketplace. And ABBYY now being part of Realize, which is great. I mean, it’s just not part of the UX. It’s just there.

We have big ambition to make ABBYY just something that everyone gets to use at the very beginning or over time as kind of this super accounts manager. So with all of those investments and our laser focus on Realize, that is the thing. As I think about what doubles this company, I believe Realize and this going after owning the performance advertising space, all of those things will improve the auction rates for the company, will make us more competitive as we fight for more supply partners. And in general, especially now more than ever, given our focus on performance advertising, I think this industry will experience losers and winners based on the strategy companies have chosen. And I think being on the performance advertising side now more than ever is the right thing to do.

Steve Walker, CFO, Taboola: Great. Very helpful. Thank you so much.

Conference Operator: And I’m not showing any further questions I’d like to turn the call back over to Adam for any closing remarks.

Adam Singolda, Founder and CEO, Taboola: All right. Thank you, everyone. So to close, one, let me just start by saying I’m very, very proud of the Tabula team all around the world, working hard, executing. I had a board meeting yesterday and I said how much fun it is to see a company of our size, over 2,000 employees, almost $2,000,000,000 in revenue executing like a startup, but a scaled one. We started 2025 with real momentum, beating our high end of the guidance across all metrics.

We have a very clear strategy, which we communicated to the market and a growing validation from both advertisers and publishers in the industry. Realize, which is now used by the entire advertiser base of the company overnight, is off to a strong start. Our focus on performance and measurable outcomes at the right time as the market is looking for partners they can rely on for growth, especially during these times, feels really good. We’re confident in our ability to capture a share from this $55,000,000,000 market we see ahead of us, deliver value to shareholders and continue leading the open web in performance advertising. I do want to take a moment to thank everyone for joining this morning, being part of our journey, and we’re looking forward to spending more time with you in days and weeks to come.

Conference Operator: Thank you, ladies and gentlemen. That concludes today’s presentation. You may now disconnect, and have a wonderful day.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.