Taboola.com Ltd.

Good day, and thank you for standing by. Welcome to the Taboola Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone, and you will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jessica Caracos, Head of Investor Relations.

Thank you and good morning, everyone, and welcome to Taboola's third quarter 2024 earnings conference call. I'm here with Adam Singolda, Taboola's founder and CEO, and Steve Walker, Taboola's CFO. The company issued earnings materials today before the market, and they are available in the investor section of Taboola'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 statements, limitations, and 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 press release posted on our website. With that, I'll turn the call over to Adam.

Good morning, everyone, and thank you all for joining us. Q3 was another strong quarter, bidding on guidance meets point for revenues, exact gross profit, and adjusted EBITDA. With this strong quarter and the momentum we've seen for our run rate heading into Q4, we are reiterating our 2024 guidance for all metrics and raising our free cash flow target to more than $105 million, which represents more than 2x level what we generated in 2023. 2024 continues to be a big year for us, as you can see in our financial performance and our return to positive yield growth in Q3. As we look towards the future, our aim is to continue executing and building out our offering to delight both our advertiser and publisher partners. Given the strength of our supply, much of our focus will continue to be on growing the number of advertisers and their spend with us. This includes making sure our technology is meeting advertisers' needs throughout the entire journey with Taboola. As a reminder, Taboola's core business is helping advertisers reach consumers on publisher sites and driving performance while also helping publishers grow their audience, engagement, and revenue. As I look into the growth potential of our core business, there are three exciting opportunities that are worth noting. First, the growth in publisher adoption of AI. Most publishers have yet to fully adopt AI in a meaningful way. Today, the average user reads about one to two pages per visit, which is way too little. With AI personalizing home pages and article pages, that number should grow and help drive engagement. This is a great opportunity and a differentiation for us as more and more publishers use our publisher platform to go beyond just generating revenue and drive personalization and engagement. Second, We see growth in users visiting our publisher sites through the adoption of new distribution channels. Today, most traffic to publishers come from search and social. We're seeing OEMs and utility apps integrating news feeds to increase the engagement they have with their user base, and that leads to a rise in traffic to publishers driven from those new sources of traffic, like Taboola News and others. And third, we see growth in our ability to drive more revenue per user. Publishers are looking to diversify the revenue stream and take advantage of the editorial clout and trust they have with social networks don't. This includes things like e-commerce, subscription, and more. Our long-term exclusive agreements are a significant competitive advantage for Taboola and provide a predictable base of high-quality inventory for our advertisers. As our publisher network increasingly adopts AI like Homepage4U, Newsroom, and Commerce Widgets, our supply base becomes bigger and stronger. This is great for advertisers and great for Taboola. As you know, we're laser focused on making advertisers successful and growing our yield as a result. We believe Taboola's greatest opportunity for growth is by growing our advertiser base and getting more budget from advertisers, giving our huge access to users. It is very encouraging to see yields returning to growth this quarter. A lot of it is driven by investment in AI and advertisers spend growing globally. We are continuing to make strides, growing ad spend in important international markets like China, where we saw advertisers grow their global spend with us by 2x versus last year. This is the second quarter in a row where we're seeing this trend. You can see a great example in our shareholder letter of how spending is ramping with a major Chinese e-commerce company as we prove how we can deliver strong performance for them at scale. One thing that is unique this year is the learnings we've had about the opportunity to attract Tier 1 advertisers to drive performance. It started with Microsoft years ago, and it ramped meaningfully this year as we rolled out Yahoo and Apple. One of our initiatives to attract these Tier 1 advertisers is called Taboola Select. It is where T1 advertisers can work with us to not only be on premium publishers like CNBC, ESPN, USA Today, and others, but also buy an experience that is even more premium, where they have 100% share of voice. And as an example of that is on Yao homepage, where you can see us rendering beautiful ads that are on their own, surrounded by tutorial recommendations. T1 advertisers love that. It is premium, and it performs. We're seeing good traction with major car manufacturers, health insurance carriers, and food chains. We also partnered with Joust Media to certify that Taboola Select is free of made-for-advertising, also known as MFA, sites, reinforcing our commitment to creating brand-safe environments for advertisers. I mentioned Microsoft, Yahoo, and Apple being big contributors to our learning to attract Tier 1 advertisers. Now let me share a bit more about how we're doing with those. We've been working with Microsoft for nearly a decade now, and we feel good about how our expanded partnership is progressing this year. Our technical integration with Zender is underway, and we expect to onboard additional premium inventory by the end of Q4, growing Microsoft even further from where it is now. We are particularly excited about onboarding Outlook Mail Inventory as we'll now provide our advertisers with access to two of the largest email providers in the world, Yahoo Mail and Outlook Mail. This has the potential to drive more adoption with performance advertisers specifically focused on email marketing. Now, speaking about Yahoo, our sales focus to expand ad budget on Yahoo with Tier 1 advertisers is progressing well. The test of new format is progressing as expected and showing good results for both Yahoo and Taboola. We continue to expect the test to be concluded in Q1 and are currently working with Yahoo on growing Omni advertiser spend on the rest of the Taboola network. This is very small now, as we were very focused on Yahoo first, but it does represent an area of opportunity longer term for Taboola. Finally, for Apple, our focus on sales enablement is seeing significant traction with over 2x growth in the numbers of advertisers spending on Apple inventory in Q3 when comparing July to September. These are all some reasons why we're excited about our core business and the growth potential. Next, I want to move to growth drivers beyond our core, focusing on Taboola News and e-commerce. For Taboola News in Q3, we announced the expansion of our partnership with Xiaomi, one of the world's leading smartphone brands for an additional four years. This renewed agreement goes beyond our original collaboration, allowing us to enhance our presence in new markets and with more touch points on each device. In addition, last quarter, we mentioned that we signed a new partnership with a top 10 global OEM, and while we have not shared yet their name, I'm happy to say we started rolling out in October. I really like Tableau News, and it's a special access to users for our advertisers, but also creates a meaningful driver of traffic to our publishers. It is still small now where we send about more than a million people a day to our publishers, but Taboola News as a new distribution channel to publishers can grow a lot. Turning to e-commerce. E-commerce is a great place to be. We continue to witness impressive growth in new channels, especially in social commerce accessed through our Shop Your Likes creator offerings. This is where people with social influence can come to us, pick up a product they like and are passionate about, and create content. This content is authentic. Retailers love it, and they get paid when they drive conversion. In addition, a good amount of the strong growth we are seeing in China ad spend this quarter is coming from big e-commerce companies, seeing a lot of value in working with Taboola, to drive higher customer acquisition and purchasing activity side-by-side to their spend in search and social today. To wrap things up, I'm happy with our Q3 performance, bidding our revenue, ag tech, and adjusted EBITDA guidance, reiterating our guide for the year, and raising our 2024 free cash flow target. We remain laser-focused on driving demand and improving advertiser success. Our investment in AI with technologies like Abbey, Maximus, Conversion, and AdMaker are central to our efforts. And we're excited to announce even more innovations in the near future. We're going to have an investor day early next year, which is where we intend to share many, many new developments alongside our partners. So stay tuned for more. Now, before I turn the call over to Steve, I do want to take a moment to express my pride in our global team. With everything that is going on in the world, it is inspirational for me to witness Taboola employees' resilience, hard work, and spirit. All of these efforts are showing up in our numbers and in industry recognition, including a win at the Digital Technology Award for Best Native Advertising Platform, highlighting a maximized conversion case study with Yanday and InOcean. We were also named a finalist for the AdExchanger Awards in the category of best use of technology by a publisher for our collaboration with the independent. 2024 is a big year for us, and I'm so proud of our execution leading into a strong Q4. We are looking forward to delivering on our guidance and having a very strong close to the year. With that, let me pass the call to Steve to review our financials and outlook in more detail.