Taboola.com Ltd.

The three pillars to e-commerce we focus on, content creation, driving traffic, and monetization. Over the last six months, we've launched e-commerce in a box with the launch of Taboola Turnkey Commerce. Every publisher that wants to get into e-commerce but has little to no content that's attractive to retailers cannot do that with Taboola. We do all of the work for publishers from using our data to know which content makes sense for us to write on behalf of the publisher to driving traffic to it and, of course, monetizing it with relationship with merchants and service providers. Last quarter, we announced our first two publisher partners for this initiative, Time and Advanced Local. While early, both launches are off to a good start. Traffic to Taboola turnkey commerce sections of both sites is already growing fast and monetization has begun. And finally, to our fourth growth engine, Yahoo. At our information session we held in March this year, we explained the process of integrating Yahoo into Taboola network in four specific phases. Since the event, we've transitioned into phase one from phase zero, which means we're developing the technical infrastructure to allow Gemini ad spend through Taboola's platform and test on a single digit percentage of demand. We expect to go into phase two, which is gradually transition ad spend and supply from Gemini to Taboola in the second half of this year. The Taboola team is interacting daily with Yahoo to migrate advertisers into Taboola platform focusing on advertisers' performance and spend. I can share that Yahoo and Taboola teams are working on accelerating our rollout so we can capture revenue faster. In closing, I'm energized about our position in the market. I think we have a unique opportunity to build the very first large-scale, must-buy, open web company publishers and advertisers can rely on. Google for search, Meno for social, and Taboola for the open web. We are focused We have our four key company priorities. We are lean and executing on our plans. While Taboola is among the largest in our space, we're still small as it relates to the $70 billion open web market, so there's a lot of growth for us to capture. What I tell myself and Taboola employees is that we have all we need to execute on our strategy and dreams. These are times to lay low and execute, and that's all we care about. Thanks for joining us, and I'll now pass it over to Steve our CFO, to talk more about our financials.

Thanks, Adam, and good morning, everyone. As Adam noted, our Q1 results beat the high end of our guidance on all metrics. We are also raising the midpoint of our full year 2023 guidance and reiterating our 2024 expectations of over $200 million in adjusted EBITDA and over $100 million in free cash flow. As Adam explained, we are very confident in those forecasts and therefore announced today both a share buyback program of up to $40 million in 2023, and also our intention to continue to pay down our long-term debt. We repaid $30 million of our long-term debt in April, which means that we have repaid a total of $91 million since Q4 2022, and we intend to repay up to another $50 million this year, likely in the third quarter after certain cash balances become available. Let me talk now about our Q1 results, which exceeded the high end of our guidance on all metrics. For Q1, revenues were $327.7 million versus the midpoint of our guidance of $312 million. Gross profit of $89.6 million versus the midpoint of $82 million. Extact gross profit of $115.7 million versus the midpoint of $109 million. Adjustee Vida of $10.1 million versus the midpoint of zero or break even. And non-GAAP net income of negative $4.1 million versus the midpoint of negative $17 million. We generated positive free cash flow of $11.2 million. I will note that Q1 and Q2 growth rates suffer from difficult comparables in 2022. before the digital advertising market weakness. We expect to return to positive growth in the second half of 2023. Relative to our guidance, we saw overperformance, particularly in the US and LATAM. E-commerce continues to impress, taking the momentum of the last several quarters of 2022 into this year. We're seeing strong spend from some of our key partners, such as Walmart, Wayfair, and Macy's, as advertisers increase the focus on immediate returns on their advertising spend. This benefits bottom-of-funnel channels, which for Tuula means e-commerce offerings. Our teams have achieved this revenue performance while improving cost efficiency, indicated by adjusted EBITDA and non-gap net income per overperformance, outpacing revenues, and XTAC gross profits. Operating expenses were $118.4 million in the quarter, down $1.3 million year over year. This decrease was primarily the result of our focus on cost reductions that we announced in Q3 of last year. We expect to show lower expenses as a percentage of revenue on a full year over year basis for 2023. Our headcount is down approximately 8% from its peak in July of 2022, and currently stands at approximately 1,730 full-time employees. Gap net loss for the quarter of $31.3 million included amortization of intangibles of $16 million, share-based compensation expenses of $13.5 million, and holdback compensation expenses related to the Connexity acquisition of $2.6 million, which were excluded from non-gap net income. Our knot and gap net loss of approximately $4.1 million was above the high end of our guidance range. In terms of cash generation, we had approximately $17.5 million in operating cash flow in Q1, with free cash flow of around $11.2 million. If you remove the impact of net publisher prepayments, which were a source of cash this quarter of $3.9 million, and interest payments on our long-term debt, which were a use of cash of $5.1 million, our cash flow would have been $12.3 million. It is interesting to note that net publisher prepayments were a source of cash this quarter. This was due to the fact that new prepayments were lower than the quarterly amortization of historical prepayments. While we expect net publisher prepayments to be a use of cash in 2023, it does show how they can become neutral to a source of cash in the future. Let's turn to the balance sheet. Cash and cash equivalents plus our short-term investments increased from $262.8 million at the end of 2022 to $274.4 million at the end of Q1 2023. Historically, Q1 tends to be a positive cash flow quarter for us as we collect on the higher revenues from Q4. I would also like to note that with the current instability in the banking industry, we continue to evaluate our banking relationships and have minimized our exposure to regional banks in the U.S. and less stable banks internationally. This is obviously a developing situation that we will continue to monitor and adjust as necessary. Now let me shift to our forward-looking guidance. For the full year 2023, we are raising the midpoint of our guidance by increasing the lower bound but keeping the upper bound steady. We expect revenues of $1.427 billion to $1.469 billion, gross profit of $418 million to $436 million, ex-tax gross profit of $529 million to $546 million, Adjust EBITDA of $65 million to $80 million, and non-GAAP net income of negative $5 million to positive $10 million. For the full year, we assume that we will invest in our Yahoo partnership, but to be conservative, we are still not factoring in the associated revenues that could be generated in 2023. We will update this in future quarters. This guidance also assumes continued investment in our other key company priorities of performance advertising, bidding, and e-commerce. Despite being a year of strategic investment, we expect to generate positive free cash flow in 2023 for the full year. We anticipate free cash flow to turn negative in Q2 and Q3 with significantly positive cash generation in Q4, all due to normal seasonality. Finally, we are issuing Q2 guidance. For Q2 2023, we expect revenues to be between $296 million and $322 million, gross profit between $78 million and $88 million, XTAC gross profit of $105 million and $115 million, and adjusted EBITDA between negative $4 million and positive $6 million, and non-GAAP net income of negative $26 million and negative $16 million. Let me finish by saying that we're happy with our first quarter performance and to be able to raise the midpoint of our guidance for the full year. We are also excited about our adjusted EBITDA and free cash flow targets for 2024. The future looks bright from our vantage point, which is why we're confident in announcing our intention to both buy back shares and continue to pay down our debt. If you want to hear more about our story, we will be attending the Oppenheimer, Needham, and TD Cowan investor events this quarter, so we hope to see many of you at those events.

With that, let's open it up to questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Jason Helfsen of Oppenheimer. Your line is now open.

Hey, thanks, everybody. Two questions. Has the pace of the Yahoo integration changed since the analyst day at any color there? And then number two, on the buyback, you know, just want to know kind of why now, and is there a formula investors should think about in terms of repurchasing a certain amount of free cash over EBITDA on a go-forward basis, or is this more just being opportunistic? Thanks.

Hey Justin, good morning. So on the out front, since the event, we have transitioned into phase one. So back then it was phase zero, which means that we're building the functionality to start moving revenue into our systems. We still expect phase two to end back half of this year and gradually start growing revenue. What I will share, that's another piece of information that's new is that our teams, one, they're having great momentum and spending a lot of time together, but We're also looking to have an accelerated plan of capturing revenue even faster. So on that one, we'll keep updating. But overall, good momentum, and we're trying to see if we can get this even faster.

Hey, Jason. So to your second question about the share buybacks, So I think, first of all, in terms of why now, so we feel very good about our Q1 numbers and especially about our 2024 projections of $200 million plus of EBITDA and $100 million plus of free cash flow. So that gives us good confidence to do a share buyback at this time. I'll note that our core is strong. We've got good publisher wins. Our investment in performance advertising is looking promising. And our growth engines are strong. E-commerce, we mentioned, is particularly strong right now. Taboola News is beating our projections. And as Adam just mentioned, we feel good about Yahoo and where we're at with that. So that's the why now. In terms of kind of how to think about what we're doing and how investors should think about it, so we want shareholders to be focused on free cash flow per share, and in particular, free cash flow per share in 2024, because that's what we're focused on. So the goal of buying back shares is to offset dilution from employee shares so that investors can hold the expectation of kind of maintaining current shares outstanding levels. So I think that's the expectation that should be set is that we'll maintain our current share level. I will say, obviously, things happen and you aren't always able to achieve that, but that's the goal, stable share counts. And I'll also note that the other reason for why now is kind of given our share price right now and, frankly, the cost of debt, we just think it's a good ROI for shareholders to both be buying back shares and paying back debt at this point. Yep.

I think we're ready for the next question.

Thank you. One moment, please.

Our next question comes from the line of James Koppelman of TD Cohen. Your line is now open.

Good morning, and thanks for taking the question. First for Adam, what do you view as the differentiating factors that are continuing to attract all these 8,000 publishers? And then can you remind us roughly what the prepayment trend is for the remainder of the year relative to last year, I think, after having one of your best years for publisher wins? And then I have a quick follow-up for Steve.

Sure. I can start. So one, I think our core is very strong, and you can see that both in terms of publisher wins and as well as advertisers working with us directly you know, 18,000 advertisers and 8,000 publishers. On the publisher front, and I mentioned that on the letter, I'm personally having really, you know, incredible conversations with existing publishers and publishers who are yet to be working with us. And the quality of the conversation is so much about our full platform offering as it relates to homepage personalization, you know, we call that homepage for you, newsroom for editors. We have now 3,500 writers and editors using our newsroom product, which is, you know, it's a company on its own, and that's so valuable because it means when the publishers work with Taboola, think of the workflows and how many people on the organization is using Taboola to make decisions as to which content they should write, what helps them draft subscription, how do they move traffic around from a journey perspective. Then we have the e-commerce and turnkey. You know, Time.com launched recently. NJ.com have advanced, launched earlier this year. Then there's Taboola News, which we help them drive traffic to their site. So when you think of a publisher point of view, especially in today's world, they want to have less vendors and more partners. And they want partners who can do a lot of different things with them and for them. And as part of that, I think, over time, we'll see more and more of this trend of publishers making decisions to work with less companies but do a deeper integration, longer-term partnerships, And honestly, more quality conversations. So when it comes to that, I think it's, you know, I made a joke that when I was younger, you know, people used to say nobody gets fired for not buying IBM. And I feel more and more publishers, it's a safe bet for publishers at all levels to choose Taboola.

To your second part of that question about prepayment expectations. I mentioned in my prepared remarks that the first quarter publisher prepayments were actually a source of cash because the prepayments that we did in this quarter were lower than the amortization of previous prepayments. We do expect them to be a use of cash for the full year, though, probably on the order of sub $10 million. We think that it'll be Going down from last year and you know towards zero as Adam has said he thinks these go to zero over time So this will be a lower year for that. We think I will only caveat that with the right publisher deal came along Obviously, we would use that as a tool to win the right publishers but our expectation right now is that there'll be sub 10 million in terms of the use of cash for the year and

Great. And then a quick follow-up for Steve. How should we think about X-TAC seasonality for the 2023 quarters? I know we sometimes think of 2Q and 3Q as being similar in terms of percentage of the full year's X-TAC and then 4Q is higher. Is that how we should think about 2023? And are there any additional seasonality factors that you'd like to call out to help us with the modeling this year? Thank you.

Sure. So we expect right now Q2 is actually going to be similar on an XTAC basis to Q1. So the seasonality over the last several years has kind of shifted a bit, and you kind of see an upward trend as you go through the year. We actually expect Q2 to be similar to Q1, and then we expect the second half to improve Especially if you're looking on a year-over-year basis, by the way, I mentioned this in my prepared remarks, Q1 and Q2 are particularly tough comps. Q3 and Q4 become easier comps. We also, you know, our expectation is at some point we'll start seeing Yahoo revenue, which will help us in the back gap as well. So I think that's our expectation is Q2 will be similar to Q1, and then we'll see an upward trend from there.

Great. Thank you very much. Thank you. One moment, please.

Our next question comes from the line of Andrew Boone with JMP Securities. The line is now open.

Good morning, and thanks for taking my questions. I wanted to go to two more product origin questions. Adam, can you talk a little bit about performance advertising and your learnings as you spent more time in Israel with engineers? Talk about the product roadmap there. And then what are the key drivers for yield today and the rest of 2023? And then on header bidding, your publisher display integrations, can you talk about what needs to happen for that to become the next billion dollar business? Where are you guys in testing and what are publishers telling you? Thanks so much.

Sure, and hey, thanks for joining. So I was in Israel. I spent a month there, and I joined. It was so fun for me to join every day to different tracks, being with engineers and product managers, see what they see and share my point of view. And we met clients. We had all hands. It was really energizing. I came back even more energized. And for me, that's not always that easy, but I was, and I am. We're laser-focused on kind of two buckets, to simplify our thinking on the engineering side. One is new advertisers who come into Taboola, what is their experience and how do we make them successful? We're focusing on the time for first conversions, how many conversions can they see so they get good momentum and a variety of different metrics that we believe are leading indicators to get new advertisers to wanna stay and then grow. So that's one bucket and I'll speak to that in a second. The second bucket is existing advertisers. We have now 18,000. which I'm proud of. That's a growing number, which is great. And then here, the question is predictability, how they can rely on us and how they can increase their spend while at least sustaining good performance or even improving performance. So think of those as two buckets, new clients and existing clients. And then the biggest track, we have multiple tracks that are focused on helping those two buckets be successful. The things I'm mostly excited about are probably threefold. The first one is measurement and how we continue to improve the way we measure our business on the advertiser journey. The second is on the matching front. So this is more of an AI and how do we help match the right advertiser with the right content and the right consumer. And the third one is more in the bidding strategies, which is, this is fairly big, so You know we launched Target CPA in beta about a quarter ago. It's used by, at the time I shared it, it was used by a few hundreds of advertisers. We're going to move that to general availability. So that's going to be great. And right after that, we're launching, and I mentioned that in my letter, max conversions. And for those who just not fully grasp those two bidding strategies and what they mean, if today 18 successful advertisers who work with Taboola find success, They work with us. They give us the CPC and budget and things of that nature. What they really care about is what acquisition costs you're trying to get to and how many conversions can they get. So if you're a flower shop and you're trying to get someone to become your client and you know that a client is worth $50, really all you want to do with Taboola is tell Taboola, here is $10,000. I'm willing to pay $50. Get me as many as you can and see if we can do it. That's about to happen in the second half of the year. I've seen early kind of like tests of these things with some of our early advertisers. It's like back to the future. It's really great. It's how advertisers are used to work with Google and Facebook, and soon it's how they're going to work with us. So all of those things are happening full force. We're shipping about five, six times more features to the field than we did a year ago, and that's mainly because we now have 200 engineers working on performance advertisers versus 50. And that's my number one. I dream about performance advertisers when I go to sleep. It has the biggest upside for our business. Like I told the board yesterday, we had a board meeting and said, if we do nothing but performance advertising and we do this well, Tabula can be a $10 billion revenue company just by doing that so much better. And we're pretty good at it already. So this is top of mind for us. About the header bidding, so let me just say a lot of good momentum on that one as well. Microsoft is doing well. I think Steven mentioned that. Yahoo, when that launches, I think there's an opportunity for another MSN just on the bidding front to go on the display front on the Yahoo. So that can be a big bucket. And then we have our current 50, 60 publishers that are in progress phase of us kind of moving to the next level of rolling that to more publishers. So I don't want to share too much at this point, but I'll just say that I feel good about this becoming incremental, hundreds of millions of dollars for Taboola in line of sight between now and more publishers, and just Microsoft that's continuing to perform well. So for us, Andrew, what we need to do together is mainly keep executing, testing the publishers that are currently working with us, and then moving that to general availability so that 8,000 publishers can use it.

Thank you. One moment please.

Our next call comes from the line of Laura Martin from Needham. Your line is now open.

Hey there. Let's just follow up on that answer right there. So Adam, how do you allocate engineering resources between improving the performance advertising compared to onboarding Yahoo? How do you figure out how to allocate resources to those two enormous tasks?

So first of all, we allocate resources mainly to the top four priorities, right? So there are many things Tabula is doing, but we spend management energy and just as a high level on our top four priorities, performance advertising, Yahoo, e-commerce, and bidding. And then within those, we do prioritize Yahoo and performance advertising at a higher level because we think there's a short-term, mid-term, and long-term big upside for us, both in terms of making our business stronger, improving our moat, and like I said, increasing the yield, which, as you know, increasing the yield for Taboola improves not only revenue but also exit margin and EBITDA margin and things of that nature. So those two get more resources. And then we believe that we've modeled that correctly in terms of ROI, so you know how much we've put together for this year. We can speak about that again for Yahoo. Yahoo, we believe it's going to start ramping the second half of the year and hopefully even faster as it relates to next year. We're working on that. So I think it's the right thing to do to invest in that, and obviously some of those resources will go to other things once YOW is live.

Yeah, the only thing I would add in terms of how we allocate R&D resources is, and we talked about this a little bit when we did our cost cutting back in Q3 of last year, we're very focused on things with sub-two-year payback periods right now. So whereas previously we had some initiatives, which Adam had previously called them his speedboat initiatives, they were further out in the future. We've cut back on most of that and focused our priorities now on things that we have or our resources on things that we believe have sub-two-year paybacks. So, you know, that's why we have the list of the four priorities because we think those are all very short-term payback and, frankly, can have the biggest leverage on our business.

Super helpful. And then, Adam, my other question for you is you touched on generative AI. And I'm interested in what the use cases you're seeing over the next three years for generative AI. I know you've talked about content creation and specialization in the past, but could you talk about how you think generative AI will get built into your models over the next three years, the use cases for it?

Yeah, absolutely. So I'm not going to talk about productivity and other things because everyone is talking about that. That's a bit boring, I think, at this point to talk about that context. In the case of the business, what I think is interesting is So right now, we're testing. It's already part of our Taboola ads console, and I think you've seen it, Laura, but for those who listen, if you haven't seen it, you should check it out. It's fairly cool. Advertisers can now, on Taboola, they can get suggested titles and suggested thumbnails, not only by Taboola prompting general VI with what you think would be good for insurance advertisers, but rather using our historic data to prompt into general VI ads titles and thumbnails we already know from past experience have worked for advertisers in that vertical or in that type of segment. And that gives us an edge because the suggested creatives we give back to advertisers are based on previous success. And in general, my belief is that when it comes to general AI, anyone can use it. Consumers can use it and business can use it. But the differentiation, the big differentiation will be the data. It's a garbage in, garbage out, as they say in computer science. So I think companies will have unique data. They can prompt into those engines. We'll have an edge and an advantage. We're fairly big. We reach 600 million people every day. We're probably among the biggest in our space. So we have a lot of performance advertisers that are working with us, and we are using that data as an edge and an advantage. So that's happening now, and it will be happening more and more. I think the second thing that might be interesting is on the more landing page creation opportunity. We had a hackathon. I saw a glimpse of that. Obviously, that's not ready yet. But you can imagine that one of the challenges advertisers have now is that they're not sure how to build the landing page and integrate pixels and how to create the workflows so that they can be successful. They might have really, really good products, but they're just not building the landing pages in a way that could be successful for different channels. So if you work with Google or Facebook or Taboola, it could be that you need different landing pages. And I think that's going to be fascinating to see a whole universe where landing pages are being automatically generated and optimized by generative AI. And that can be very creative, in my opinion. That will take some time, but I think that can be the next step after creative optimization.

Super helpful. Thank you very much.

Sure.

Thanks. Thank you. One moment, please. Our next question comes from the line of Steven Zhao from Credit Suisse. Your line is now open. All right. Thank you.

So, Adam, I think you cited e-commerce strength in the first quarter results. Is this primarily a function of a ramp in connectivity or a product? And, you know, the advertisers you cited here and previously are generally larger and are pretty well resourced. So, you know, what can we do to broaden the client base here? And also, you know, stepping back a little bit, I'm just wondering if you can more broadly talk about what you are hearing from advertisers. It does seem like the budget cuts have stopped for the time being and overall seem stable. But are there any rising sources of worry or concern you're hearing about or conversely, any sort of optimism? Thanks.

Yeah. So first of all, overall what you're seeing, and I think it's part of why e-commerce is doing so well, is that advertisers are looking to work with channels and partners that are very good at attribution for performance and to showcase that it's working. So the more you're able to show advertisers in it, and that's why we're focusing on that so much, that you're a good place for them to spend their money and see ROI. You're going to get the budget. You're going to get retention. You're going to get happy clients. So we have 18,000 of those, as I mentioned, on the e-commerce front, which is, you know, it started with Connect City and Skimlinks and now it's just more Taboola Commerce holistically. Or as I mentioned, you know, e-commerce in a box. We're seeing even greater advertiser success over there. So I'll say that, you know, we're seeing advertisers just coming in even stronger to work with us on the e-commerce front. I think especially now they're looking for great, I don't know if we're as good as Google search, but it feels to me based on the momentum that advertisers really like working with our e-commerce initiatives. So again, I don't know if that's because of the overall macro or just because we're great or both, but we're doing a good job on e-commerce and I'm happy to see that momentum. Two, I think since the acquisition, we're working more holistically as one company. So there's a lot of synergies between data integrations, Um, different, um, initiatives like, uh, DCL, uh, advertisers, um, you know, Tabula core advertisers buying Connexity, Tabula, Connexity core advertisers buying Tabula. We have more salespeople selling and cross selling. So those things are, uh, contributing to e-commerce and I'll tell you my, my goal is to double that business. I mean, it's a great business. It should be, you know, it's about 15% of extract last year. I want this to be 30%. It's such a great business. It's quality advertising for consumers. So I think it's a combination of we're doing really good for advertisers and since acquisition we're working better together as one and we're enjoying the benefits of that. So that was one part of the question. Feedback from advertisers is basically performance. And I can tell you, by the way, and I wrote this in my letter, I don't focus anymore on recession and market softness and things of that nature. I focus on execution and product. And does it work or does it not work? I don't want to hear about anything else personally. I come to work. I think I know what we need to do. We know what we need to do. We need to do the work. And I think we have a huge upside during that. So we have everything we need at our disposal to execute on our plans and dreams. And mainly as it relates to advertisers, I think they want the same. They want to work with companies that can showcase fast. They're putting money into their channels. They can see conversions, many of them fast, so they can stick around and increase spend. These are the two things advertisers want now more than ever.

Thank you. Thanks, Stephen.

Thank you.

One moment, please.

Our next question comes from the line of Justin Patterson from KeyBank Capital Markets. Your line is now open.

Thank you. This is Sergio Segura on for Justin. We had two questions. Just how should we think about the pipeline of publisher additions for the rest of the year? And then a follow-up on generative AI. Just how should we think about the cost implications from these investments? Thank you.

Sorry. So can you repeat the question real quick? I had an audio break up here.

Sure. Yeah. We had two just on the publisher additions. how that pipeline is looking for the rest of the year, and any way we should think about the cost implications from the investments in generative AI.

Yeah, so on the pub additions and new publisher revenue, so we're ahead of our plan so far this year, so we continue to see good momentum on signing up new publishers. Adam mentioned some of the names earlier, but generally speaking, we're seeing good progress. Pipeline still looks very strong. So we expect that this year will be another very good year in terms of adding new publishers. And I think we tend to always talk about the fact that when we add new publishers, they tend to be lower margin initially, and then we're able to grow the margin over time. So I think it's also very promising for the future because I think it'll help us as we look forward, it'll help us to grow XTAC over time as we improve the margin on those publishers. In terms of generative AI and cost implications and things, you know, again, I think Adam said, you know, we do expect it to be a productivity boost. So we do expect it to help our AMs, for instance, be more account managers on the advertising side, be more productive because they don't, you know, they can, they don't have to sit there and work to generate new headlines and things for the advertisers. Generative AI can help with that. But even more important than that, our expectation is that it'll help us with our advertiser success and performance advertising initiatives. It'll help advertisers become more successful on our platform because one of the things that's important when you're advertising on a platform like ours is to test things, test new headlines, test new images, test different ways of getting your message out there, test new landing pages even with different messaging and different ways of converting people to what the advertiser wants them to do, whether it's sign up for a newsletter, sign up for an email list, buy a product, buy a service. That landing page is key. And generative AI can help all of those things. As Adam mentioned, we're already using it to generate headlines for our advertisers. We're already using it to generate images for advertisers. Landing page is probably coming soon. So I think it's even more important than the productivity boost. We think it'll have a positive impact on the success of advertisers on our platform. I'll also mention that one of the things that gives us a particular advantage in that area is that generative AI, the most important thing about generative AI and using it effectively is having the data to train it on what works and what doesn't. So if you want to generate new headlines for your advertisers, what you need to do is you need to train the generative AI tools on what has worked historically so that the tools can basically make good recommendations to your advertisers. And the advantage that Taboola has on that front is that we're much larger than most people in our space, most people who do what we do, one of the largest companies on the open web. And therefore, we have a lot more data to train these tools about what works and what doesn't. So we think we have a real advantage there. And we think, like I said, that will translate into advertiser success over time and help us expand our advertiser base and just make them more successful.

Thank you, Steve.

Thank you. At this time, that concludes our Q&A session for today. I will now turn it back to management for closing remarks.

Thank you, everyone, for joining us today. I think as you can tell from our remarks and the questions and the recent communication, we're excited to be where we are. I'm personally very energized about our position in the market. I think we have an opportunity to build the very first large-scale must-buy open web company that both publishers and advertisers can rely on, side-by-side to Google for Search or side-by-side to Meta and other social companies. Taboola can be the gateway to the open web, two-sided marketplace that can optimize user experience, AI and data, and all those things that advertisers and publishers need and want. We're fully focused on our four key priorities, performance advertising, bidding, e-commerce, and Yahoo. We're lean. We execute on our plans. And once YOW is launched, we expect to be at a $2.5 billion run rate. And this is out of a $70-plus billion open web market. So we're bigger, but still a small portion of this big market. So there's a lot of growth for us, and we're excited to go there. And like I said earlier, what I tell myself and Tabula is that at our size, we have everything we need to execute and reach our financial objectives and dreams. These are times to lay low. do the work, execute, and that's all we care about. So we look forward to interacting with many of you. Thanks for joining today. And may you all discover things you love and never knew existed. Thanks.

Thank you. And thank you for your participation in today's conference. This does conclude the program. You may now disconnect.