Thank you, and good morning, everyone, and welcome to Taboola's First Quarter 2024 Earnings Conference Call. I'm here with Adam Singolda, Taboola's Founder and CEO; and Steve Walker, Taboola CFO. The company issued earnings materials today before the market and they are available in the Investors section of Taboola's website. Now I'll quickly cover the safe harbour. 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 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. With that, I'll turn the call over to Adam.

Thanks, Jessica. Good morning, everyone, and thank you all for joining us. We had a strong start with Q1 results above the high end of our guidance range across all metrics. Ex TAC of $139 million grew 20% versus last year. Adjusted EBITDA of $23 million grew more than 100%. Free cash flow was nearly $27 million in Q1 and also more than doubled last year. All metrics beat the high end of our guidance range and are on track to meet our full year 2024 guidance. I'm also encouraged to see that our growth rates are accelerating compared to last year. Looking at our use of cash, over 100% of free cash flow in Q1 was spent on share buybacks, demonstrating our strong commitment to shareholder returns and confidence in our long-term strategy and ability to execute. With a strong Q1 and Q2 guidance showing double-digit growth versus the same time last year, we are reiterating our 2024 guidance, which projects accelerated growth on every metric and making 2024 a record year for us. Revenue growing 33% to nearly $2 billion, ex TAC growing 25% to almost $670 million, adjusted EBITDA of over $200 million, growing approximately two times 2023 and over $100 million of free cash flow, which is also two times 2023 levels. Our main focus this year is two-fold: firstly, making our advertisers successful, ultimately growing our yield year-over-year; and secondly, ramping Yahoo! Starting with our initiatives driving advertiser success, I can tell you that I just returned from an event where we discussed our goal to expand our initiatives to make Taboola recognized for quality across all fronts, delivering premium experiences to users and publishers while attracting Tier 1 performance advertisers. As I wrote in my shareholder letter, I'm excited to report that we just crossed the 20% mark of our revenue being driven by top brands and agencies, and it's growing rapidly. We see substantial upside here, more than I previously imagined, and you'll hear me talk about it a lot this year and beyond as it could significantly benefit our partners and drive yields even faster. We recently launched Taboola Select as a way for premium performance advertisers to reach our top 15% of publishers, which includes Yahoo!, Apple, NBC, Disney, and more, with a premium stand-alone ad experience. Big brands are willing to pay a premium for it while focusing exclusively on performance. This is not a branding play. We're not seeking top-of-the-funnel budgets here, but enabling big performance budgets to expand beyond social and search to the Open Web with Taboola's new offering. Between Taboola Select, our Yahoo partnership, our Apple partnership, and the success of Tier 1 advertisers such as Hulu, City, and Verizon, we hope to differentiate ourselves in the marketplace and accelerate deals. Our major R&D and product investment is aimed at making advertisers successful. I'm pleased to share that MAX conversion adoption continues to grow, making up almost 60% of our revenue. We're focused on improving our retention rates and equipment budgets, also known as MDR. We're seeing encouraging results from advertisers migrating to MAX conversion in AI, including double-digit growth in MDR for those who have migrated versus those who have not. In terms of improving retention rates, our main objective is to reduce call starts by training our AI models and utilizing the vast amount of first-party data to identify similar past advertisers, transitioning that knowledge directly into actionable insights. Now switching gears to our second top priority this year, ramping Yahoo!. We're on track to complete the migration by mid-year as planned and are continuing to progress in migrating Yahoo!'s Tier 1 omnichannel advertisers to Taboola. In Q1, we achieved our goal to exceed $100 million in revenue from Yahoo! supply. While there is still much work to be done, we are thrilled with the partnership with Yahoo!, the collaboration between our leadership teams, and the encouraging performance advertisers experience when using Taboola technology. One recent success story involves one of the world's largest personal finance software companies, where the ad performance was so impressive that they increased their budget more than two-fold during the campaign, making them one of the largest advertisers on the Taboola network. If there was ever a testament to the effectiveness of AI, this is a prime example. We previously discussed our relationship with Apple, and I'm excited to say that it has now expanded to new markets. Apple has selected us to monetize Apple News and Apple Stocks as an authorized reseller, starting in Australia and Canada. Recently, we expanded our role to serve as an authorized reseller for Apple News and Apple Stocks in the U.S. and the U.K. markets. I couldn't be prouder of the Taboola team's efforts in supporting this significant partnership, and I remain confident that Apple will become one of our most important partners. Turning to our growth engines Taboola News and our bidder. Overall, product innovation and commercial wins continue to drive our momentum. Our key investment for Taboola News is bringing more vertical video content to the platform, similar to what you're seeing on Instagram or Snap, resulting in great user engagement. Additionally, we're adding various utilities for users, such as weather, gaming, and more. Our ambition over the coming years is to have users spend over 20 minutes a day with us. As my product team likes to phrase it, we have the chance to become the main dish. On the e-commerce front, we had an excellent quarter, growing solid double digits and exceeding our expectations once more. We launched new Associated Press e-commerce sites powered by Taboola, and it's exceptional. You should check it out; it's called AP Byline. It gives users a chance to read product reviews and make informed purchasing decisions, leveraging AP's credibility and our relationships with retailers. We have also recently integrated with Amazon's DSP, allowing Amazon sellers to broaden their budgets into Taboola. For instance, if you have a store on Amazon and wish to reach buyers on the Open Web, you can now extend your reach using Amazon's DSP on the Taboola Open Web network of publishers. Our bidder remains small, but the potential is vast as we aim to integrate across our thousands of publishers, including Yahoo!, creating a significant opportunity. We are extremely excited about the prospects of our Taboola growth engines and their ability to create synergies with our core business in the long term. In summary, we're entering 2024 strong, exceeding our high-end guidance across all metrics while expecting double-digit growth in Q2 compared to last year. We are reiterating our 2024 guidance, anticipating it to be a record year for the company. Our revenue growth is accelerating, with a strong EBITDA of over $200 million and over $100 million of free cash flow. We're continuing our $100 million buyback authorization and are laser-focused this year on advertiser success, which is set to enhance yield growth and ramping up Yahoo!. With that, let me pass the call to Steve to review our financials and outlook in more detail.

Thanks, Adam, and good morning, everyone. As Adam mentioned, we had a strong start to 2024. Our Q1 revenues were approximately $414 million, growing 26% year-over-year, which accelerated from Q4 levels. Ex-TAC gross profit was $139 million, representing a growth of 20% year-over-year. This growth was driven by double-digit increases in advertising spend as we onboarded Yahoo! advertisers, seeing the benefits of having Yahoo! supply available on our platform, along with accelerating growth in our e-commerce business. Additionally, we saw double-digit growth in our premium brand and advertising demand spend, which included strong organic growth as well as transitioning advertising spend from Yahoo!'s platform to Taboola. A note about our financials new to this quarter: in our 10-Q financial statements, you will notice mention of related party revenues and traffic acquisition costs. These related party numbers predominantly pertain to Yahoo!. The traffic acquisition cost disclosure is straightforward; it represents the revenue share payable to Yahoo!, which flows through to payables on the balance sheet and cash flow statement. The related party revenue, however, is more complex to understand. There are three types of advertisers spending on Yahoo! supply. First, we have the omnichannel advertisers, purchasing multiple formats through the Yahoo! DSP. They are billed and collected by Yahoo!, but all native revenue is spent on Taboola's platform and recognized as revenue on our books. The second type includes advertisers that historically only spent on native through Yahoo! and are now transitioned to Taboola. These advertisers do not appear in related party revenue because they are billed and collected directly by Taboola. The last group consists of advertisers who weren't historically utilizing Yahoo!'s platform but are now spending on Yahoo! supply through Taboola. These advertisers also do not feature in related party revenue since they are billed and collected by Taboola. There is a minimal amount of other revenue classified as related party revenue from other companies connected with Yahoo! or other advertisers spending through Yahoo! on Taboola but not the DSP. This represents a very small fraction of the related party revenue. The related party revenue is also reflected in the receivables line on the balance sheet and cash flow statement. I hope this clarifies our related party disclosures. Now let me return to standard reporting. In Q1, our net loss was $26.2 million while our non-GAAP net income stood at positive $3.8 million. Adjusted EBITDA was $23.5 million, equating to a 17% adjusted EBITDA margin. Year-over-year adjusted EBITDA was down, primarily due to higher costs associated with onboarding Yahoo! supply that were absent in the previous year and lacked the full advantage of transitioning Yahoo! advertisers. Our free cash flow benefited from higher than forecasted adjusted EBITDA, slightly offset by costs related to onboarding Yahoo!. We are very pleased to see our teams driving accelerating revenue and positive ex-TAC performance in Q1. For the remainder of the year, we anticipate enhanced cost efficiency, particularly as revenue from transitioning Yahoo! advertisers catches up with related costs, thereby driving margin expansion. Operating expenses amounted to $127 million in Q1, up $9 million year-over-year, due to costs incurred to onboard the considerable inventory acquired from Yahoo!. Though we have made hires to support the transition, our headcount remains roughly flat relative to its peak in July 2022, underscoring our commitment to disciplined cost management. With this ongoing expense control and our robust growth projections, we remain optimistic about approaching our long-term adjusted EBITDA margin target of 30% in 2024. The GAAP net loss for Q1 of $26.2 million included amortization of intangibles amounting to $15.9 million, share-based compensation expenses of $13.8 million, and holdback compensation expenses related to the Connect acquisition totaling $2.6 million, all of which were excluded from the non-GAAP net income. Our non-GAAP net income of $3.8 million exceeded the high end of our guidance range. In brief, we generated approximately $32.4 million in operating cash flow in Q1 and free cash flow of $26.8 million. This figure encompasses net publisher prepayments, which contributed $7.3 million, while interest payments on our long-term debt constituted a cash outflow of $3.6 million. As emphasized in previous quarters, our net publisher prepayments served as a cash influx this quarter due to lower new prepayments compared to the amortization of historical ones. Now turning to our balance sheet, our net cash position remains robust. Our net cash balance of $35.5 million was positive at the conclusion of Q1, even after share repurchases. Cash and cash equivalents plus short-term investments totaled $181 million by the end of Q1, remaining above our long-term loan balance of $145.5 million. Speaking of share repurchases, we repurchased $28 million of shares in Q1. We still have $92 million remaining under our previously announced $100 million share repurchase plan. Upon initiating this buyback program, we stated our aim was to at least offset any dilution and maintain our issued and outstanding shares at January 2023 levels. We have surpassed that goal, as evidenced by our issued and outstanding shares at the end of Q1 2024 being nearly 5 million less than at the end of Q1 2023. Regarding future cash usage, we are capable of financing our organic growth investments through operating cash flow. As mentioned last quarter, we believe that, at current valuations, the best use of our free cash flow is share buybacks. Should any additional cash be available for allocation, we will contemplate applying it to pay down long-term debt. As always, both share repurchases and the early retirement of debt are dependent on sufficient working capital availability. I'm pleased to share that the process for share buybacks in Israel has now been updated for companies like Taboola with securities listed outside of Israel. Under the new regulations, we must post a notice on our website regarding intended buybacks, and if no creditors object within 30 days, we can initiate the purchases. The process still necessitates our Board's affirmation of our financial strength as specified in the rules. You may soon see announcements about our intent to repurchase shares on our investor page. Now, shifting to our forward-looking guidance. This guidance includes two critical expectations. Firstly, we anticipate the Yahoo! advertiser migration to be fully completed by the middle of this year, and we will continue ramping Yahoo! into 2025. Secondly, we expect yield growth to turn positive in 2024 as the volume of our contextual data increases with the integration of Yahoo! and other supply into our network, along with our investments in performance advertising starting to yield results. As I mentioned, we are thrilled with the strong start to 2024, and we are reaffirming our guidance for the year. This guidance indicates robust top-line growth and improved profitability. We project revenue of $1.89 billion to $1.94 billion, which corresponds to a growth rate of 33% at the midpoint. We anticipate gross profit ranging from $535 million to $555 million and ex-TAC gross profit of $656 million to $679 million, which is approximately a 25% year-over-year increase at the midpoint. We are reasserting our 2024 adjusted EBITDA guidance of over $200 million and a free cash flow expectation of over $100 million, both of which represent about double the metrics from 2023. Lastly, we expect non-GAAP net income between $84 million and $104 million in 2024. We are also presenting our guidance for Q2 2024, where we expect revenues ranging from $410 million to $440 million, gross profit from $110 million to $120 million, ex-TAC gross profit from $140 million to $150 million, adjusted EBITDA from $20 million to $30 million, and non-GAAP net income ranging from $0 to positive $10 million. In conclusion, we are very pleased with our first quarter performance. Our growth is accelerating in 2024, and I'm eager to witness the step change we anticipate in our financials this year. The growth investments made in 2023, increased scale brought about by Yahoo!, and the additional supply onboarded through our new partnership with Apple are all propelling us toward becoming a must-buy for advertisers seeking to engage consumers in the Open Web. With that, I'll pass the floor back to Adam for some closing remarks.

Thanks, Steve. In summary, it's great to observe our business momentum and accelerating growth rates. It's an exciting time for us at Taboola as we see our investments paying off. To recap our financials, we commenced 2024 with strong results, above the high end of our guidance across all metrics. Our growth rates are on the rise, which is promising. For Q2, we're guiding for double-digit growth compared to Q2 of last year, and 2024 is set to be a record year for us with anticipated revenue nearing $2 billion, over $200 million in EBITDA, and more than $100 million of free cash flow. We're executing our buyback program, reflecting our confidence in our ability to perform and create shareholder value. In terms of business priorities this year, we're committed to making advertisers successful and ramping up Yahoo!. Regarding advertising success, MAX conversion is becoming widely adopted, with almost 60% utilization after six months, and advertisers utilizing it are witnessing double-digit increases in MDR. Furthermore, we are concentrating on attracting premium advertisers who participate in our top 15% of the network, including Yahoo!, Disney, Apple, NBC, and others. On Yahoo!, we're on track to finalize the migration by mid-year as intended, surpassing the $100 million benchmark in Q1. Beyond that, we're observing exceptional momentum overall. Our partnership with Apple continues to grow, now extending to the U.S. and U.K., in addition to Canada and Australia. Our growth engines—including e-commerce, Taboola News, and header bidding—are showing strong momentum and are increasingly synergistic with our core business, strengthening our publisher and advertiser relationships. I am genuinely excited about where we are and what we need to accomplish. Our dedicated team worldwide is actively working to build the premier must-buy advertising company for the Open Web. Thank you all for being part of our journey. With that, let's open the floor for questions.

There's a lot going on, and great numbers, guys. Congratulations. My first question pertains to your priorities. I understand you're trying to onboard omnichannel advertisers at Yahoo!, but you've mentioned a lot about performance, high-quality performance advertisers in your shareholder letter. Why is the priority of Yahoo! not #1? You've elevated high-quality performance advertisers to a higher priority than Yahoo!. Can you elaborate on that?

Yes, certainly, Laura. I'm looking forward to seeing you very soon at the event. Regarding Yahoo!, we're observing something quite new to us with premium advertisers. I've cited a notable case study of a leading personal finance advertiser that migrated to us and doubled their spend due to exceptional performance with our technology. We're seeing major brands like Hulu, Verizon, and Samsung coming onboard. When they experience good performance, they are inclined to increase their budgets significantly, which is highly encouraging. They are also willing to pay a premium for this performance, driving us to launch Taboola Select as a means to create a distinct offering for our top-tier advertisers. Our aim is to grow our share of top-tier performance brand advertisers. This isn't merely top-of-the-funnel engagement; it's a performance-focused strategy harnessing MAX conversion, Pixel on page, and other technologies. We are learning a lot from our partnership with Yahoo!. The focus on performance advertisers is essential because if we can double our company's yield, we can likewise double our revenue. Thus, this has become our primary focus from both the performance advertising tech team and our sales team. For Taboola, prioritizing yield expansion is fundamentally vital, and of course, Yahoo! remains a significant aspect of our efforts in 2024.

I'm intrigued by the goal you set in the shareholder letter of achieving 30 minutes of daily engagement. Could you elaborate on where your engagement metrics currently stand? What are the primary drivers of engagement growth, and how do you plan to bridge the gap to hit that 30 minutes of engagement goal?

Yes. The primary driver for this initiative right now is Taboola News. We are seeing that more OEMs are integrating us to be present on their lock and home screens, which is often the first thing users see when they engage their devices. This increases the chances that Taboola becomes the first action consumers take before turning to apps like Facebook or Google. Our average user engages with their lock screen over 100 times a day. In the last quarter, we’ve been adding more vertical video content, akin to 'reels,' which is boosting user engagement rates. Our product roadmap this year will focus more on full-screen vertical videos and new utilities. Our aim is to provide engaging content personalized through AI, which will ultimately enhance user interaction. Though we haven’t disclosed Taboola’s current engagement time, it is presently in the single digits but is trending upward. Some users exceed 10 minutes, and I aspire to achieve consistent double-digit engagement or even reach 20 minutes daily. I firmly believe that securing user engagement over time will significantly enhance our business. This is why I strongly support Taboola News as it makes our offering even more essential to consumers and serves as a significant traffic source for publishers.

Following such a strong Q1 relative to your guidance and yet maintaining the full-year guidance unchanged, are there macro factors or other reasons that might be influencing this decision? Secondly, as you expand your coverage of Apple News and Apple Stocks to the U.S. and U.K., could you help us understand the opportunity and how you anticipate this affecting financials in 2024?

Great question regarding the guidance. We're pleased with Q1's growth of 26% year-over-year on revenue and 20% on an ex-TAC basis, making it a robust quarter for us. We anticipate improved adjusted EBITDA margins as we progress into the latter half of the year, and we still expect our full-year adjusted EBITDA margins to approach 30%. Overall, we believe our guidance is solid, representing one of our best years yet in terms of ex-TAC and adjusted EBITDA. However, it's still very early in the year, and we have more work to do, so we prefer to keep the projections unchanged for the time being. Regarding the Apple opportunity...

Yes, we prefer not to disclose specifics about individual accounts, but I can say that collaborating with a company like Apple across four markets is exhilarating for us. The U.K. and the U.S. represent excellent expansion prospects. This partnership can lead to two outcomes: first, it creates a significant anchor for Taboola and enables premium advertisers to reach consumers through Apple’s platform. No partnership boasts a greater premium than that with Apple, making it a fantastic opportunity for us to provide to high-quality advertisers looking for performance. Secondly, we believe Apple could evolve into one of our largest partners, which is an exciting prospect for us.

Congratulations on the solid Q1 results. I have a follow-up regarding the assumptions underpinning your Q2 guidance and how we should view progression into the latter half of the year given your unchanged outlook. Additionally, with the extended Apple relationship, what kind of development efforts will be required for successful implementation and ramping in the second half of the year?

Can you clarify your specific inquiries about the Q2 guidance?

Could you provide clarity on the key assumptions driving your guidance while considering your strong performance date and how we might interpret the trajectory into the second half to meet that full-year guidance?

Understood. For both the Q2 and full-year guidance, key assumptions include that the Yahoo! ramp will be completed by mid-year. While there is still significant work to accomplish, we are making substantial headway. Additionally, we anticipate seeing yield gains in the latter half of the year from the new advertisers we're onboarding and from our performance advertising initiatives, contributing to our expected improvements. We also project that operating expenses will remain close to Q4 levels throughout the year. So these assumptions are pivotal in our outlook. The two primary assumptions are the completion of Yahoo! onboarding and realizing yield gains in the latter half of the year. As for the development required to optimize the Apple relationship, we don't foresee anything particularly unique or distinct. Apple operates as a publisher partner like our other partnerships. All the efforts directed at enhancing performance advertisers apply universally, and while Apple is a substantial partner with specific requirements, none are drastically different from those faced with our other publishers.

To start, Adam, regarding the financial advertiser who doubled their campaign budget, can you elaborate on the impact of AI on their successful experience and how larger benefits might be realized as more advertisers adopt your AI and GenAI tools? Additionally, what percentage of your R&D budget do you allocate toward AI model training over time?

Great questions! MAX conversion and AI hold a critical role in advertiser success. The large brand that adopted our technology experienced substantial results with specific metrics related to lower funnel performance, leading to a notable increase in their budget after a successful campaign. I'm thrilled about the trajectory of our AI-driven performance; the more we can secure those types of results, the more significant the budget is expected to be. Currently, approximately half of our R&D is devoted to various aspects of performance advertising, and this concern is highlighted at our board meetings. Advertiser success is our top priority, and we continually invest in our product and tech teams to ensure we can deliver great results.

You brought up retention rates, which have improved thanks to our AI models. We've highlighted in our letter that NDR for advertisers employing our AI and the newer tools has exhibited double-digit improvements—an indicator of successful performance. We’ve not disclosed new metrics on advertiser retention, but such improvements in NDR usually stem from reduced churn.

To elaborate, while we haven’t publicly detailed the financial allocation towards AI model development, I can emphasize that we’re significantly concentrating our resources on training our AI systems to maximize advertiser success through historical data and enhanced recommendations. The faster we can expedite conversions for advertisers, the less likely they are to churn. That is a primary goal for us going forward, and I mentioned this in our shareholder letter as well.

Lastly, for Steve, regarding the trajectory of sales and marketing expenses through 2024—being the largest OpEx line—what are the major drivers influencing spending this year? Should we expect that expense to rise sequentially throughout the year in light of your various investments? Any additional insights across OpEx as we progress through the year?

Across the board, the bulk of hiring undertaken in sales and marketing is aimed at supporting the transition of Yahoo! advertisers to Taboola. Most recruitment has already been completed, and Q1 was effectively a full quarter for those hires. While there might be a slight uptick in the short term, it won't be substantial. We’re currently about right-sized and will reassess after the midyear ramp-up is complete, determining if additional resources are required. Regarding operating expenses, we expect these to maintain a flat trajectory for the remainder of 2024, aligning with our current operational needs.

Two questions: regarding the progress on Yahoo!, considering you achieved $100 million in revenue for the quarter and have a target of $450 million for the year, do you foresee tracking above that? If so, can you help quantify the new potential revenue target? Additionally, excluding Yahoo! would suggest that the business saw a decline of around 4%. Were there any specific areas—product, geography, or ad category—that you should be mindful of when assessing the quarter?

We exceeded the $100 million threshold for Yahoo! as projected, and it's hopeful that we'll sustain this positive trajectory. We consider Yahoo! as core to our overall strategy, just as we do with Apple and others. Overall, our core business is growing at double-digit rates, which is encouraging. Importantly, we're witnessing both performance advertisers migrating and achieving good results. We're on track to finalize the Yahoo! migration by mid-year and are well aware of the extensive work ahead, so we’re not taking it lightly at all. We're pleased with how everything is proceeding so far.

Thank you.

Thank you. I see no further questions. I would now like to hand the call back over to Adam Singolda.

Thanks for joining us, everyone, on the call today. I hope you can see we're very happy with our strong start to the year. The key things to take away from the call today are: one, Q1 showcased great momentum in our business with results at the high end of guidance, reaffirming 2024 as a record year. Our growth rates are accelerating, which is promising. Our top priorities revolve around advertising success and ramping Yahoo!, and both areas are performing well. Additionally, we have expanded our relationship with Apple News now in the U.S. and U.K. after previous engagements in Australia and Canada. There's a lot underway, and we are excited about the momentum we've seen so far. I hope to see all of you soon, and thank you for your attention.

Thank you for your participation in today's conference. This concludes our program. You may now disconnect.