Taboola.com Ltd.

Good day and thank you for standing by. Welcome to the Tabula's first quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 on your telephone. Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker today, Jennifer Hornsley, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to Tabula's first quarter 2022 earnings conference call. I'm here with Adam Singolda, our founder and CEO, and Steve Walker, our CFO. We issued our earnings press release yesterday after market, and it is available along with our Q1 shareholder letter in the investor section of our 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'll 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.

Thank you, Jen. Good morning, everyone, and thank you all for joining us for our first quarter call. Q1 was a strong quarter. We beat our targets, delivering 31% ex-tax gross profit growth over Q1 of last year, or 8.4% on a performer basis. We also generated $35 million of adjusted EBITDA despite the very challenging macro environments. Before I walk through the highlights from the quarter, though, I want to address the revised guidance we issued today in conjunction with our results. The revision was driven by basically two factors. The main factor is the economic uncertainty caused by the war in Ukraine, which increased in the second quarter in a bigger way, affecting our advertising business in Europe, more than 30% of our revenue, and global yields, as many of our advertisers in Europe, by all around the world. In many ways, it felt similar to what we saw in the pandemic, but obviously in a smaller scale, where businesses slowed down their spending, but in this case, mainly in Europe. The second factor is the launch of our bidder, which is now live and off to a good start, but still behind plan. Now that we're live and we're seeing real data, I'm even more bullish on how much growth opportunity there is here, not only on Microsoft itself, but also on other platforms, which we do plan on integrating via header bidding in the short term. Due to these two factors, we're lowering our full year 2022 guidance ranges on AgTech gross profit to 595 million to 616 million and adjusted EBITDA to 152 million to 162 million. Steve will speak more about our guidance in a few minutes as well. I'm obviously not happy about having to adjust guidance, especially after having a strong first quarter. I can tell you our new guidance factors in both of these two one-time events. We do not want to do this again. The fundamentals of our business are strong. We're profitable, generating cash. We have technological advantages. Our team is passionate and energized, and our intention is to keep meeting and beating our clients, partners, and investors' expectations. As I look beyond those two events, we're profitable, growing, expect to generate significant cash flow in 2022 with this new guidance. And overall, the business is getting a lot of momentum in all the things we love. We want new deals, expanding relationships with important partners, launched new products, and made progress in capturing more of the $64 billion open web advertising market. There are a few things that I do want to highlight that I'm very excited about. First, I'm taking a much bigger focus on growing our performance advertisers, achieving even greater scale and relevance, aiming to achieve something that I believe only four companies have ever done, Amazon, Google, Snap, and Facebook, making many, many advertisers, big and small, successful with them, rely on them, grow with them. We're going big here. And you should imagine Smartbit to get even more attention and innovation. As an example, our new guidance assumes that we will double our engineers in that area over the next one year and 4X over the next two years. That includes, of course, our AI engineers as well. On the other side of it, and over time, we see Taboola as a place any performance advertiser can find positive ROI and succeed, especially as social networks will not be able to track consumers as they used to I believe in the open web, in contextual advertising being a big part of the future and advertisers. The second thing I want to highlight is at our investor day, I spoke a lot about our endless growth opportunity and momentum we're getting in replacing traditional banners with personalized relevant recommendations. You see, most of the $64 billion of the open web advertising market is made out of banners, the same advertising format invented 30 years ago. when Tamagotchi and DVDs were invented. Tamagotchi and DVDs obviously are gone now, but banners are still here and remain. As you think about our time and our growth, we are liberating the open web from banners into relevant, personalized experiences, bringing that power of the walled gardens into the open web. At this stage, there's endless room for growth on this journey of replacing banners with taboola. Amazon moved away from banners to paid recommendations. On Twitter, there are no banners but paid posts. On Instagram, you don't see banners, but you see paid posts. And on search pages, obviously, there are no banners, but paid search results. The open web is the only place where banners remain. And it was invented 30 years ago. This is our market, and we have advantages in capturing it. In the first quarter, we continue to replace banners in the middle of the page, on the home page, and other placements. Some examples include E! Online, Globes in Israel, Seven West Media in Australia, and others. Thirdly, I'm incredibly excited about our OEM partners scaling really fast with Taboola News. This is becoming an increasingly meaningful part of our business. It's growing fast, and it's scaling. It also relates to our vision to capture more time with consumers, as we talked about on our investor day. There is some exciting momentum here, which I hope to be able to update you very soon. More on first quarter. We have a very strong publisher pipeline and saw progress with new deals as well as renewals. a lot of time with significant expansion and the size and length of the agreement. To give you some examples, Penske Media Corporation, PMC, a leading independent global media publisher that reaches monthly audiences of more than 310 million people with sites like Variety, Rolling Stones, and other, just moved to Taboola. Publishers moved to Taboola all over the world, not just in the U.S. So people in Italy, France, America, El Nacional, Forbes in Spain, Corning in Australia, and Metropoles in Brazil, just to name a few. I had a chance to personally talk to the CEOs of some of these, and in many cases, the reason they choose Taboola is because they'll generate more revenue and they get technologies that help them run their business. I told my board this week, as I look into the market, spending 14 years with publishers, we provide them technology that they want beyond just the revenue. We empower their editorial team, we help them drive growth, and I believe in most markets, 70% of Taboola is worth 100% of our competitors, which explains not only our high win rates, but also a higher gross margin as a proxy for competitive advantage. It is very expensive to take a publisher from Taboola. In another example, Struer, one of our top five revenue publishers globally, just extended with us for five years. Associated Press, AP, Insider, Altice are also great names that have recently chosen Taboola. As I mentioned earlier, you can see I'm very excited about the advertiser side of our business. We recently updated that our advertiser base just crossed the 15,000 mark. And in Q1, we expanded our work with well-known brands such as Heinz, Canada Goose, Volvo, Michelin, Hyundai, Chipotle, Emirates, Progressive Insurance, and Honda, among many, many others. In Q1, we also signed and renewed trade agreements with a number of agencies, including Dentsu in the UK, Omnicom in Germany, TMF, AC Digital, Publicis, and Goichman Partnership in Israel. In Q1, 15% of our revenue were from brands and agencies, and we expect this percentage to grow. As you think about the future beyond the core business, we want to keep diversifying what we recommend. We call that strategy Recommend Anything, video, commerce, gaming, audio, And additionally, we want to grow the time we have with consumers by being wherever they may be. Tom Inbal, our VP strategy, talked about that as well on our investor day. We call that recommend anywhere on mobile devices, CTV, automobile, and more. You may have read the article on Digiday recently speaking about the importance of personalized homepages. They reference Washington Post, New York Times, and Taboola homepage for your product, which we've been speaking with you a lot recently. We launched it in early January as part of Newsroom, our editorial suite for writers and editors. And the idea, if you can imagine, is to make every homepage on the Internet personalized, driven by editorial team plus AI. It is a winning offering. It's more than just money, and publishers are choosing us thanks to it. Some examples are Miami Herald, McClatchy. I just started this morning with the team. It's beautiful. Other examples include NDTV, The Independence, Cinecor, Deos Associados, and others. On the privacy front, which is one of our advantages, we just announced an expansion of Taboola's Trust Portfolio, where we work with brand safety leaders, including IAS, DoubleVerify, NewsGuard, TAG, and IBUK. We believe we are a leader in content review and safety, and these partnerships are critical to demonstrating our commitment to a safe, privacy, and protected web. This also supports our expanding of work with brands and agencies. We're also seeing good headway in e-commerce, which comprises 15% of XTAC gross profit in Q1. It's been a little over six months since we closed the Connexity acquisition, and we're making steady progress, cross-signing advertisers, including e-commerce and new publishers deal, and merging offices, and importantly, coming together as one team, one strong family. Progress on synergies in Q1 includes a bunch of things. Expansion of Connexity publisher solution in APAC and EMEA, where we expanded Connexity's commerce monetization solution to 14 new countries. Teams are trained up and actively pitching several new partnerships on a weekly basis per country. Success is also building with Taboola ad sales selling Connexity's advertising solution. We've spoken previously of the success we're seeing out of China with multiple new advertisers signed on. Within the US, a new retail vertical sales team is in place, trained, and has begun pitching Connexity e-commerce all the time. Lastly, leveraging Taboola's supply network for connectivity advertisers is taking off. Within the U.S., 54 merchants have already given consent to move forward with Taboola Pixel. Within Europe, a robust pipeline of over 200 clients has been built consistent of both new prospects and existing merchants. Before I hand it off to Steve, 2022 started strong. We had two one-time events that we think are now in our past. We've included those things in our new guidance and we're executing strong on all the things that matter to our business. with our core business growth with publishers and advertisers, and growing to recommend anything and anywhere in the open web. And now, over to Steve, who will dive in deeper to our financial performance and guidance.