Taboola.com Ltd.

Good day and thank you for standing by. Welcome to Tabula's Q4 2024 earnings call. At this time, all participants are in listen-only mode. After the presentation, there will be a Q&A session. To ask a question during the session, you will need to press star 1 1 on your telephone. 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 session is being recorded. I would now like to turn it over to Jessica Karakis, head of investor relations.

Thank you and good morning, everyone, and welcome to Taboola's fourth quarter and full year 2024 earnings conference call. I'm here with Adam Singolda, Tabula's founder and CEO, and Steve Walker, Tabula's CFO. The company issued earnings materials today before the market, and they are available in the Investors section of Tabula'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. Before I turn the call over to Adam, in an effort to avoid duplicative material and cut down time for those reviewing our quarterly results, we are no longer issuing a shareholder letter and are providing all relevant quarterly updates in our SEC filings, earnings press releases, prepared remarks, and investor presentations. This step was taken in response to feedback we received and we hope is helpful as we continue to make improvements to our materials and disclosures. With that, I'll turn the call over to Adam.

Thanks, Jessica. Good morning, everyone, and thank you all for joining us today. Before we dive into the details, here's what I'm going to cover on today's call. 2024 was a record year. We exceeded expectations, generating nearly 50% more free cash flow than planned, and we're launching a $200 million expansion to our buyback as a result. Our 2025 guidance reflects a single-digit growth, which is below both our historical rates and long-term ambitions. We've always spoken about owning the entire performance advertising market beyond search and social, and we're making a major announcement today, one that is great for our business and what we believe will bring us back to double-digit growth. Most importantly, as you know, Taboola is an execution machine, and as usual, we plan to deliver. A quick refresher on us. Taboola helps businesses grow by placing ads across the open web on publisher sites, mobile apps, and device makers, also known as OEMs, delivering exceptional returns. This is referred to as performance advertising. Advertisers like Babbel, eToro, Trust Us, to drive sales, while nearly 11,000 publishers, including NBC News, Disney, Yahoo, and Apple, rely on us for monetization and audience growth. Our scale is significant. We reach 600 million people every single day, gaining real-time insight into what people read and buy. This gives us unique pulse of the internet data, which alongside our AI is our competitive advantage and helped our advertiser clients achieve exceptional returns on their advertising spend. With 650 engineers refining our AI and 700 global salespeople connecting with advertisers and publishers, our scale and impact are unmatched. Turning now to our results. 2024 was a record year for Taboola. For the full year, we achieved exact gross profit of $667 million, representing 25% growth versus the prior year, and adjusted EBITDA of $201 million, which has more than doubled our results from last year. In addition, we delivered $149 million in free cash flow, which significantly exceeded our original free cash flow minimum target of $100 million by 49% and represented growth of nearly three times our free cash flow as compared to the prior year. These accomplishments are driven by our highly differentiated performance technology and first-party data that allows us to drive value for both advertisers and publishers. 2024 was a busy, busy year. We integrated partners such as Yahoo and Apple and onboarded enterprise advertisers such as Samsung, Citi, Verizon, and others. To reflect our confidence in our future, we're adding $200 million to our buyback authorization on top of the approximately $40 million remaining from prior authorization. This reinforces our commitment to balancing growth and cash generation, ensuring long-term shareholder value while continuing to invest in our product expansion. For 2025, we're guiding for 2% access gross profit and 2% adjusted EBITDA growth, maintaining a 30% EBITDA margin. While I'm incredibly proud of our team and our 2024 performance, I recognize that our projected single-digit growth is below both our historical rates and long-term ambition. This year is about laying the groundwork for accelerated growth ahead. we will be laser-focused on scaling our demand, further investing in our AI efforts, and strengthening our partnerships. Now, the reason we're growing XX slower than usual is unrelated to us attracting supply partners such as publishers, mobile apps, or OEMs. Nobody does that better than us. The main gating factor to our near-term growth is scaling native advertising demand quickly enough to best utilize the supply we have. While we always spoke about our vision to be the leader in performance advertising for the open web and not just bottom-of-article native advertising, it became clear to us towards the end of 2024 that the native market alone just isn't big enough for us to fuel our ambitious growth plan. This realization was reinforced by the behavior of advertisers we absorbed from our Yahoo partnership. While advertisers such as Verizon, Samsung, Citi, and many others use our technology to spend hundreds of millions of dollars on homepage and mail on Yahoo and get exceptional returns, they spent less than $15 million on bottom-of-article native ads across the rest of our network. This is not what we expected. While most advertisers indeed want to get outcomes through performance advertising, and this is where the market is going, most prefer using standard display ads and display placements and not something they refer to as niche like native advertising. You see, I once believed native would overtake display. Given banners often provide a poor experience. But as we scaled revenue nine times from 200 million in 2014 to 1.8 billion in 2024, I realized now that I was wrong. The issue isn't the banner format. In fact, with the right data and technology, display ads can perform just as well as native or meta. I can also tell you after interviewing nearly 100 advertisers in Q4, it is clear to me now that most advertisers see native as too niche. They're not looking to learn a different format. They want to use their existing social creative and their existing display creative to drive results at scale. As I look at our journey, not only did we build the largest business in native advertising market, With these insights, we're able to shape our next phase of our growth, which involves meeting advertisers where they are and expanding beyond native to capture the full performance market opportunity. And it's a big one. Let's expand about our evolution from native to being the leader in everything performance beyond search and social. Taking a step back, advertisers want and need a dedicated solution for performance advertising. Very much separate from the solution they need to drive top of the funnel branding objective. The idea of a full funnel solution that is really great at everything, both top of the funnel branding as well as performance advertising is just a myth. No one can be the best at all parts of the funnel. Even excelling in one part is not that easy. This is our opportunity. In 2025, we're making a deliberate investment to leverage our existing first-party data, AI, and publisher relationships to expand our market opportunity and establish ourselves as the leading performance ad specialist. We see a $55 billion opportunity for us to go after, improving the value advertisers currently get from performance advertising on DSPs and some social campaigns. This is our 10. The opportunity for us exists for three main reasons. First, many DSPs have pivoted to connected TV, also known as CTV, prioritizing branding over performance. Advertisers do not use DSPs the same way they use performance advertising channels like Meta because they serve different goals. Now, let's be real. No one is scanning a QR code from a TV ad to open a bank account. Advertisers need performance advertising partners to accomplish this goal, not DSPs, which are great for top of the funnel. Second, the ethics landscape is crowded and complex. Advertisers want scale and results without the headache of navigating a fragmented ecosystem. And third, social platforms have limitations. While social companies deliver strong early performance, as advertisers spend more, audience fatigue sets in, costs go up, and effectiveness declines. While social channels are good for performance advertising for the most part, there's a big opportunity here to help advertisers shift budget from social and get better return on investment. These challenges, DSP becoming CTV, which is less relevant for performance advertising, ethic being fragmented, and social having diminishing returns, create a massive opportunity, one that we're uniquely positioned to solve. Looking at the supply side, publishers are feeling the pressure too. Native advertising is strong, but it's just not strong enough to drive the revenue growth publishers deserve. At the same time, programmatic revenue is in fast decline as DSPs have shifted to become CTV companies, which is just less relevant for most publishers. And walled gardens platforms have shifted budgets to their own owned and operated properties. As a result, there is less performance advertising spend flowing to publishers as there used to be, and we think we can fix this. Now, this is where it gets exciting. Taking advantage of our unique assets as a company, our first-party data, our AI, such as Max Conversion or Abby, and unmatched supply partnerships, We can go beyond bottom of article, beyond native, and win a much, much larger share of wallet from new and existing customers. Starting today, we're focused on one thing, delivering performance outcomes regardless of format, regardless of placement, or supply type. We call our new advertising platform Realize. our new performance advertising platform built to drive results beyond search and social, beyond native, no limitations. Realize is a major step forward for Taboola and a key pillar of our growth strategy. It expands our market opportunity, unlocks new revenue stream, bring a lot more advertisers into our ecosystem and drives long-term growth. Today's announcement reminds me in many ways of Amazon's transition in 2000 when they expanded beyond books into the broader e-commerce ecosystem. Selling books was a great business, but Amazon saw a bigger opportunity. Their users and retailers wanted more. For us, native advertising is our books, a strong market. We've proven we can lead, but just like Amazon, we can do more. By expanding beyond native, we're unlocking new opportunities for our advertisers, for our publishers, harnessing the full power of our data, supply, and technology. In summary, there are three reasons why we can win this market that you should take from this call. First, this is an adjacent expansion for us. We're expanding beyond native into the entire performance advertising space which is a natural step for us. Thousands of advertisers already buy from Taboola with the goal of getting performance outcomes. We have 700 salespeople all over the world trained on selling performance to advertisers, and our publishers are used to relying on us to bring performance budgets. We realize we'll provide a similar value, but a lot more of it. The second reason why we can win this market is our unique assets and scale. At Taboola, data is everything. Our president and COO has a sign on his wall, in God we trust all others must bring data. Now with the richest first party data in the market and with our global distribution, we are uniquely positioned to build the first ever performance focused advertising company outside of search and social. I strongly believe that with the AI revolution already happening, those who own data and distribution will prevail, and we have both. Third, and perhaps the most important, is our culture. I just returned from APAC and EMEA, and now I'm with our sales team here in the US. And the energy is unstoppable. It is incredible for me to be part of this team where our people are eager to get out there, call advertisers, call publishers and grow. You see, you can copy anything, but you can never copy the way a group of passionate people work together and execute towards a vision. We were not first in nearly anything we did, but we became the biggest and now we're ready to win again. We're not just making news with this announcement today. We're making history in our industry. In closing, I'm so proud of our team and our Q4 and full year 2024 results. Two years ago, we set ambitious targets and we delivered. Now we have everything we need to take on an even bigger step forward. Unique first-party data, unmatched distribution, and cutting-edge AI. Looking ahead, we've set our guidance in a conservative way, ensuring the flexibility to invest, grow, and outperform. We look forward to sharing more at our Investor Day on March 26 in New York City. This is our moment. Thank you for the trust and support. With that, I'll pass it to Steve to walk you through our results and outlook.