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Taboola.com Ltd. (TBLA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 beat across key KPIs: revenues $427.5M (+3% YoY), ex‑TAC gross profit $151.7M (+9% YoY), Adjusted EBITDA $35.9M (+53% YoY), and free cash flow $36.1M; ratio of net loss to gross profit improved to (7.3%) from (24%) .
  • Street comparison: Revenue beat S&P Global consensus ($427.5M vs $418.3M*) and normalized EPS beat ($0.073* vs $0.013*); guidance for Q2 revenue ($438–$458M) brackets Street ($448.6M*), while FY25 revenue guidance ($1.84–$1.89B) sits below current Street ($1.93B*)—implying potential estimate recalibration if management remains conservative . Values retrieved from S&P Global.
  • Management reiterated full‑year 2025 guidance and highlighted early traction from Realize (new performance ad platform), 9% growth in scaled advertisers to 1,996, and a deliberate focus on cost discipline; share buybacks remain aggressive under a $200M authorization and a new $270M revolver reduces interest expense by $3–$5M annually .
  • Watch catalysts: evidence of Realize unlocking net‑new budgets (CPC for display, predictive audiences), sustained ex‑TAC margin gains, and continued buyback pace; modest macro/tariff headwind (~1% of spend) is embedded in the outlook .

What Went Well and What Went Wrong

  • What Went Well

    • “Above the high end” execution: Q1 delivered beats vs internal guidance on revenues, ex‑TAC GP, and Adjusted EBITDA; Adjusted EBITDA margin on ex‑TAC expanded from 16.9% to 23.7% YoY .
    • Realize launched with encouraging early signals (CPC for display, predictive audiences, social/display creative import, refreshed UI with AI assistant “Abby”) and new supply placements (display across publisher sites) to access net‑new budgets .
    • Capital and cost levers: free cash flow $36.1M (+35% YoY), $270M revolver (debt to 2030, $3–$5M annual interest savings), and continued buybacks ($49M in Q1; additional $43M post‑quarter) .

  • What Went Wrong

    • GAAP profitability remains negative: net loss $(8.8)M; GAAP diluted EPS $(0.03) despite strong non‑GAAP performance .
    • Advertiser mix headwinds: average revenue per scaled advertiser declined 3% YoY as onboarding more scaled advertisers (now 1,996, +9%) diluted ARPU in the near‑term; ARPU ~ $184k remains historically high .
    • Macro/tariffs and cadence: management cited ~1% ad spend impact (China‑related) and kept FY guidance unchanged despite Q1 beat; H2 revenue growth expected stronger YoY as Yahoo test impacts roll off, but FY stance remains prudent .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$433.0 $491.0 $427.5
Gross Profit ($M)$132.9 $177.6 $119.3
ex‑TAC Gross Profit ($M)$166.4 $212.7 $151.7
Adjusted EBITDA ($M)$47.9 $92.3 $35.9
Net Income (Loss) ($M)$(6.5) $33.1 $(8.8)
Diluted EPS (GAAP)$(0.02) $0.10 $(0.03)
Adj. EBITDA / ex‑TAC (%)28.8% 43.4% 23.7%
Free Cash Flow ($M)$42.9 $51.9 $36.1

Street vs actual — Q1 2025

  • Revenue: Actual $427.5M vs S&P Global consensus $418.3M* (beat). Values retrieved from S&P Global.
  • EPS (Normalized/Primary): Actual $0.0731* vs S&P Global consensus $0.0133* (beat). Values retrieved from S&P Global.

KPI snapshot (Q1 2025)

  • Scaled Advertisers: 1,996 (+9% YoY)
  • Avg. Revenue per Scaled Advertiser: ~$184k; down 3% YoY
  • Ratio of Net Loss to Gross Profit: (7.3%) vs (24%) YoY improvement
  • Cash from Operations: $48.1M vs $32.4M YoY

Guidance Changes

MetricPeriodPrevious Guidance (2/26/25)Current Guidance (5/7/25)Change
Revenue ($M)Q2 2025—$438–$458 New
Gross Profit ($M)Q2 2025—$124–$134 New
ex‑TAC Gross Profit ($M)Q2 2025—$156–$166 New
Adjusted EBITDA ($M)Q2 2025—$38–$44 New
Non‑GAAP Net Income ($M)Q2 2025—$26–$32 New
Revenue ($B)FY 2025$1.838–$1.888 $1.838–$1.888 Maintained
Gross Profit ($M)FY 2025$536–$552 $536–$552 Maintained
ex‑TAC Gross Profit ($M)FY 2025$674–$690 $674–$690 Maintained
Adjusted EBITDA ($M)FY 2025$201–$209 $201–$209 Maintained
Non‑GAAP Net Income ($M)FY 2025$122–$128 $122–$128 Maintained

Note: Company provides non‑GAAP guidance but does not reconcile to GAAP due to variability in items such as SBC and warrant valuations .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
AI/product innovationLaunched Abby; yield turned positive; strong Tier‑1 spend Announced Realize to expand beyond native into performance ads Realize launched: CPC for display, predictive audiences, new UI with Abby; early positive feedback Building momentum
Macro/tariffs/ChinaChina ad spend up 2x YoY (Q3 highlight) —~1% ad spend impact from tariffs (mostly China); China ~5% of Q2 revenue run‑rate; baked into guide Slight headwind, contained
Supply/partnersNew publisher wins; renewals (Xiaomi, El Universal, Network18) Yahoo integration, Apple/OEM momentum Added display inventory (Microsoft, Gannett); exclusive global deal with LINE (utility app) Expanding differentiated supply
Go‑to‑market—Set stage for verticalized sales, focus on ICPs Sales verticalization done; “2nd inning” of execution Early in adoption
Profitability/FCFFCF $43M; strong conversion FY24 FCF $149M; EBITDA margin >30% FCF $36.1M; server useful life to 6 years improved gross profit; reiterated FY guide Structural improvements
Regulatory/industry—Strategy shift beyond native given TAM, market limits Cookies/DOJ: potential opportunity as advertisers seek alternatives; focus on first‑party data Watchful, cautiously optimistic

Management Commentary

  • “We’re happy to start the year off strong with our first quarter revenue, ex‑TAC gross profit and adjusted EBITDA all coming in above the high end of our guidance range.” — CEO Adam Singolda .
  • “We officially launched Realize in Q1… new ad formats (vertical video, social creatives, display), CPC pricing for display, Predictive Audiences, and a refreshed UI with Abby.” — CEO .
  • “Our net loss was $8.75 million, with non‑GAAP net income… $25 million… Adjusted EBITDA… $35.9 million… margin 24% vs 17% last year.” — CFO Stephen Walker .
  • “Increase[d] the estimated useful lives of our server and networking equipment from three years to six years… benefiting GAAP gross profit.” — CFO .
  • “We proactively entered into a new $270 million revolving credit facility… expected to reduce annual interest expense by $3 to $5 million… and improve working capital flexibility.” — CFO .
  • “About a 1% impact, mostly related to China… baked into our guidance.” — CFO on tariffs .

Q&A Highlights

  • Sales verticalization: completed; in “second inning”; early positive indicators but too early for metrics .
  • Yield: No one‑offs; sustainable trajectory; 2024 yield +105% with dilution from added supply (Apple, Yahoo) .
  • Realize timing: Not in 2025 guidance; expected to become meaningful late 2025 into 2026 as forecastability improves .
  • H2 cadence: Year‑over‑year revenue growth stronger in H2 as Yahoo test effects roll off; normalized from Q1 2026 .
  • Buybacks: ~$49M in Q1 at $3.03 avg; additional $43M post‑quarter; ~$$140M authorization remaining; plan to remain aggressive given FCF and net cash .
  • FY stance: Core native market growing low‑ to mid‑single digits; Realize intended to re‑accelerate growth back to double digits over time .

Estimates Context

  • Q1 2025 vs S&P Global: Revenue $427.5M actual vs $418.3M estimate (beat); EPS (normalized/Primary) $0.0731 actual vs $0.0133 estimate (beat). Values retrieved from S&P Global.
  • Q2 2025: Company revenue guidance $438–$458M vs Street $448.6M* (roughly in‑line at midpoint). Values retrieved from S&P Global.
  • FY 2025: Company revenue guidance $1.838–$1.888B vs Street $1.9277B* (Street above company stance). Values retrieved from S&P Global.

Asterisk denotes values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution beat: Broad‑based Q1 beat vs guidance and Street on revenue/normalized EPS supports operating momentum and cost discipline .
  • Realize is the swing factor: Product unlocks CPC display and predictive audiences to tap budgets beyond native; tangible proof points (scaled advertisers +9%, early client traction) would be the key multiple driver .
  • Guidance conservatism: FY25 maintained despite Q1 beat and new product ramp; if macro remains stable and Realize ramps, upward revisions are possible, but Street revenue sits above guide—monitor estimate drift .
  • Cash returns + lower interest: Aggressive buybacks and $270M revolver (lower interest expense) support per‑share value compounding even amid modest topline growth .
  • Watch H2 trajectory: Management expects stronger H2 YoY revenue growth as Yahoo testing effects roll off; look for continuity in ex‑TAC margin and FCF conversion .
  • Macro risk contained: Tariff‑related impact ~1% of spend (mostly China) incorporated in outlook; diversified advertiser base mitigates demand shocks .
  • Near‑term trading: Stock likely to react to signs of Realize adoption (advertiser adds, CPC display budget capture), continued buyback cadence, and whether Q2 lands at or above guidance midpoint .

Additional references and context:

  • Q1 press release with full financials and reconciliations .
  • Q4 2024 baseline, FY25 initial guide, and multi‑quarter trends .
  • Q3 2024 reference points on KPIs and product rollout .
  • Debt refinancing details (3/19/25) .
  • Q1 tracking pre‑announcement (3/26/25) .