James Kopelman

James Kopelman asked about the conditions in the overall digital ad market given macro uncertainty and consumer state, and advertisers' budget growth plans. He also inquired about the ARPU opportunity for publishers adopting AI on their sites, the progress seen, and the stage of this process. Additionally, he asked about balancing investment with shareholder returns, particularly regarding share repurchases, and the growth trend of Connexity and e-commerce relative to the overall business.

Answer

Adam Singolda, Founder and CEO, highlighted a significant industry trend towards performance advertising, citing partnerships with Paramount and LG as new demand opportunities. He noted that consumers engaging with AI on publisher sites become 'super engaged,' leading to unprecedented CPMs and conversion opportunities for advertisers, though it's still early stages. Stephen Walker, CFO, stated that the majority of free cash flow (60-70% EBITDA conversion) is expected to be used for share repurchases, with $180 million remaining in authorization, and potential for small, tuck-in M&A. He added that e-commerce, including Connexity, is growing in line with the rest of the business and is their biggest and most successful ICP segment.

James Kopelman from TD Cowen asked about the overall digital ad market conditions given macro uncertainty and U.S. consumer trends, and advertisers' budget growth plans. He also inquired about the ARPU opportunity for publishers adopting AI on their sites, the progress seen, and how Taboola balances investment with shareholder returns, particularly regarding share repurchases. Finally, he asked about Connexity and e-commerce growth relative to the rest of the business.

Answer

Adam Singolda, Founder and CEO, highlighted a significant industry trend towards performance advertising, citing new partnerships with TV companies like Paramount and LG as demand sources for mid-to-low funnel metrics, positioning Taboola as the 'monetization layer for the open web.' He noted that consumers interacting with AI on publisher sites (like DeeperDive) become 'super engaged,' leading to unprecedented CPMs and conversion opportunities for advertisers, though it's still early. Stephen Walker, CFO, stated that Taboola expects to use the majority of its free cash flow (60-70% EBITDA conversion) for share repurchases, with $180 million remaining in authorization, while also considering small tuck-in M&A. He added that Connexity and the e-commerce ICP segment are growing in line with the rest of the business and are strong performers.

James Kopelman of TD Cowen asked for more color on the growth and long-term opportunity for Tabula News, inquired about the current digital ad market conditions, and sought clarification on operating expense trends for the second half of the year.

Answer

CEO Adam Singolda described Tabula News as a key initiative that is growing faster than the company by providing unique, high-intent supply for the Realize platform. CFO Stephen Walker characterized the macro ad environment as stable, which is reflected in the guidance, and noted the company is about 50% US-based. He also clarified that Q2 operating expenses were higher due to timing shifts from Q1, and the average of the two quarters provides a better run-rate for modeling the second half.

James Kopelman from TD Cowen sought details on the 'net new' impact being tracked from the Realize platform, the potential scale of the LINE partnership, and future headcount trends as Realize is scaled over the next 12-18 months.

Answer

CEO Adam Singolda defined 'net new' as display and social budgets Taboola couldn't previously access and is tracking it closely with positive early signs. He positioned the LINE deal as strategically important, opening a new category of utility app publishers, though not financially material for the current year. CFO Stephen Walker indicated that hiring for Realize was mostly completed, with some R&D ramp-up expected, but the company remains focused on cost prudence and leveraging AI for productivity.

James Kopelman asked for insights from early advertiser conversations regarding the new Realize platform and questioned if this launch signifies a shift in the company's AI investment strategy.

Answer

CEO Adam Singolda shared that early advertiser feedback is positive, citing frustration with diminishing returns on social platforms and a lack of control with other ad channels as key drivers of interest. He clarified that Realize is an adjacent expansion, not a pivot, as it still focuses on performance advertising. He stated AI investments will continue, with a focus on leveraging Taboola's unique first-party data and distribution.

James Kopelman of TD Cowen inquired about Taboola's strategy for educating publishers on AI tool adoption and whether publisher comfort has grown. He also asked about the drivers of the recent return to positive yield growth and the outlook for this trend.

Answer

CEO Adam Singolda stated that publisher adoption of AI is driven by the significant upside potential and the changing industry landscape, with Taboola being a trusted partner to facilitate this transition. CFO Stephen Walker attributed the return to positive yield growth to the stabilization of supply after the Yahoo! onboarding, which now allows for a focus on growing advertiser budgets. He expects this positive yield trend to continue, driven by AI-powered advertiser success tools like Max Conversions.