TBLAW — Taboola.com, Ltd.

Summary of TBLAW Q3 2025 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: $497 million, up 15% year-over-year.
• Ex-TAC Gross Profit: $177 million, a 6% increase year-over-year.
• Adjusted EBITDA: $48 million, with a margin of over 27%.
• Free Cash Flow: $46 million in Q3, totaling $117 million year-to-date, reflecting a 96% conversion from adjusted EBITDA.
• Share Repurchases: Approximately 10 million shares repurchased for $34.4 million in Q3, totaling $184 million year-to-date (14% of outstanding shares).

2. Strategic Updates and Business Highlights:

• The launch of the new performance platform, Realize, is gaining traction, contributing to a 4% increase in the number of scaled advertisers (totaling 2,064) and an 11% increase in average revenue per scaled advertiser.
• Taboola News is performing well, contributing positively to overall traffic and providing unique supply unaffected by search traffic declines.
• The company is focusing on enhancing its AI capabilities to improve advertiser success and yield, with ongoing investments in marketing to support Realize's growth.
• A new partnership with Paramount aims to integrate performance advertising into CTV, expanding Taboola's reach.

3. Forward Guidance and Outlook:

• Q4 2025 Guidance: Expected revenue between $532 million and $542 million; ex-TAC gross profit between $204 million and $210 million; adjusted EBITDA between $83 million and $85 million.
• Full Year 2025 Guidance: Revenue projected between $1.91 billion and $1.93 billion; ex-TAC gross profit between $700 million and $710 million; adjusted EBITDA between $209 million and $214 million.
• The company anticipates continued momentum and aims for double-digit growth over time.

4. Bad News, Challenges, or Points of Concern:

• Margin Pressure: Ex-TAC gross profit margins were down year-over-year, primarily due to the impact of prior testing with Yahoo, which distorted comparisons.
• Q4 Revenue Deceleration: A projected decline in revenue ex-TAC for Q4 is expected, influenced by strong prior-year performance from Chinese advertisers and the impact of the Yahoo onboarding.
• Operating Expenses: Increased operating expenses due to higher hosting costs and foreign exchange headwinds, which could affect profitability.

5. Notable Q&A Insights:

• Traffic Quality: Despite overall traffic growth, concerns were raised about the quality of human traffic amidst the rise of LLMs. Management reassured that they monitor traffic quality closely and have not seen significant degradation.
• Sales Strategy: The company is focusing on improving brand perception and sales effectiveness by targeting ideal customer profiles and enhancing advertiser success through Realize.
• AI Utilization: AI is being leveraged to improve advertiser outcomes and internal productivity, with ongoing investments in tools to enhance campaign optimization.
• Taboola News Growth: The segment is expected to continue growing and is seen as a unique supply source, immune to disruptions from LLMs.

Overall, TBLAW reported strong Q3 results, driven by the success of its Realize platform and strategic initiatives, while also navigating challenges related to margins and revenue projections. The company remains optimistic about future growth and market positioning.