Good day, and thank you for standing by. Welcome to Taboola's Third Quarter 2025 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jessica Kourakos, Head of Investors.

Thank you, and good morning, everyone, and welcome to Taboola's Third Quarter 2025 Earnings Conference Call. I'm here with Adam Singolda, Taboola's Founder and CEO; and Steve Walker, Taboola's 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 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. With that, I'll turn the call over to Adam.

Thanks, Jessica. Good morning, everyone, and thank you all for joining us today. We're pleased to report another strong quarter, our third consecutive quarter in 2025, exceeding the high end of our guidance. Our new performance platform Realize is beginning to work for both advertisers and publishers. We're seeing an inflection point in our business and have greater confidence than we did even 90 days ago that we will get back to double-digit growth over time. This momentum gives us the confidence to once again raise our full-year outlook. We've bought back 14% of the company year-to-date, and we're continuing to buy back shares aggressively. As a reminder, Taboola is one of the largest performance advertising platforms outside of search and social. Our platform Realize helps businesses get leads and grow sales. It operates similarly to Google Ads or Meta ads, offering a simple-to-use platform powered by AI. The key difference is that while Google reaches users in search and Meta in social, Realize engages 60 million people every day across the open web on partners like Yahoo, NBC, ESPN, USA Today, Apple News, Samsung, and Xiaomi, driving those people to action. Our competitive advantage lies in our AI and first-party data drawn from what people actually read about versus what people idealize themselves on social media, giving advertisers authentic insights into users' intent and high-performing outcomes. In 2025, we expect nearly $2 billion in gross revenue and more than $700 million in ex-TAC gross profit, which is what we keep after we pay our publisher partners who show our ads to their users. We expect to generate over $200 million in adjusted EBITDA at a 30% margin with strong free cash flow. As advertisers see diminishing returns on search and social, they look for scalable performance-driven alternatives like Realize. Taboola is uniquely positioned to take share in what we estimate is a $55 billion opportunity. Now let's turn to our Q3 results, which came in ahead of the high end of our guidance across the board. We delivered revenue of $497 million, ex-TAC gross profit of $177 million and adjusted EBITDA of $48 million, representing a strong EBITDA margin of over 27%. We also generated $46 million in free cash flow this quarter and $117 million year-to-date, which amounts to a 96% conversion of our adjusted EBITDA in Q3. This strong cash generation allowed us to repurchase approximately 10 million shares during the quarter for a total consideration of $34.4 million. Year-to-date, we bought back approximately $184 million worth of shares, representing 14% of the company. Driving ex-TAC gross profit growth is our North Star. It indicates that we're providing increased value to our customers and fuel our profitability and cash generation. In the third quarter, ex-TAC gross profit grew 6% year-over-year. The vast majority of our revenue is driven by scaled advertisers, those who spend $100,000 or more annually. As such, we guide investors to track 2 main metrics that affect our ex-TAC gross profit growth. The first is growing the number of scaled advertisers. The second is increasing average revenue per scaled advertiser. In the third quarter, we grew the number of scaled advertisers by 4% to 2,064. Our average revenue per scaled advertiser grew 11%, reflecting meaningful progress in driving advertiser success with Realize. Realize's expanded capabilities and strong performance technology are driving these improved results. One example can be found with a major online travel company that was interested in growing their cruise business. While using Realize's advanced targeting and bidding technologies, they were able to achieve 67% lower CPCs versus Meta while driving a 48% increase in traffic to their site. This performance was so strong, this travel company increased their initial investment 10x and has now become a scaled advertiser on our platform. Last quarter, we shared more about how our supply is differentiated. Overall, our exposure to search traffic globally remained in the single digits. And even as search traffic across the web declines, our total company traffic in Q3 grew year-over-year. This growth was fueled by strong double-digit increases in app traffic, now accounting for roughly 1/3 of our global supply, along with successful new publisher onboarding. We continue to monitor our traffic patterns, but at this time, it is a relatively small level of exposure. In summary, we're very happy with how the year is progressing. We think Realize can make us the leading performance advertising platform outside of Google, Meta, and Amazon across mobile, desktop, OEMs, messaging apps, and more. It is a big ambition, and the numbers make it clear that we're not there yet. That said, we see an inflection point in the business with Realize. And if you know his team as well as I do, you’d know we're motivated by big challenges. It is probably one of the reasons we were voted one of Fortune's Best Places to Work. We're taking on one of the toughest competitive landscapes in the world in an enormous addressable market. We're hard at work, and we bought approximately $184 million worth of shares as we see the opportunity ahead of us. Before I hand it over to Steve, on a personal note, I want to say that over the past months, our teams and partners in Israel have shown incredible strength, resilience, and unity. Seeing things begin to come and people returning home safely fills me with gratitude and hope. With that, I'll hand it over to Steve.

Thanks, Adam, and good morning, everyone. As Adam mentioned, we've had a strong year so far. In the third quarter, we continued that momentum, delivering results that exceeded the high end of our guidance across all metrics. In the third quarter, revenues reached $496.8 million, up 15% year-over-year. We believe this growth reflects an inflection point and realizes traction in the market. I have spoken about the fact that we have a large amount of very high-quality supply, so what we need to grow our business going forward is primarily to earn new advertiser budgets. We started to see traction in that area during Q3 as our new ad platform is helping advertisers succeed and helping us win additional budgets. This showed up in our scaled advertiser metrics, evidenced by a 4.4% increase in the number of scaled advertisers and a 10.9% increase in average revenue per scaled advertiser. Both of which primarily benefited from Realize improving retention and growing ad spending levels with existing advertisers when compared to the same period last year. As I have said in prior quarters, we are particularly pleased to see the number of scaled advertisers growing as they tend to be the fuel for future growth. I should note that the growth in average revenue per scaled advertiser also benefited from an easier comparison with Q3 2024 because during that period, we were testing ad formats with Yahoo, and revenue from that test was recognized as an offset to traffic acquisition costs rather than as revenue. Normalizing for that one-time test, growth in this metric was more in the mid- to high single digits range, and taken together with our growth in scaled advertisers, positively contributed to our revenue and ex-TAC performance. Ex-TAC gross profit for the third quarter came in at $176.8 million, up 6.3% year-over-year, including a 55-basis point tailwind from foreign exchange rates. Ex-TAC gross profit growth was primarily driven by strong growth in advertising spend, thanks to the success we are seeing with Realize, and includes strong performance from Taboola News and Bided Supply. Ex-TAC gross profit margins were down year-over-year, primarily due to the one-time testing we were doing with Yahoo last year. Notwithstanding, overall Ex-TAC gross profit dollars grew year-over-year. And as I have said previously, I focus more on growth of Ex-TAC gross profit dollars rather than the margin percentage. Gross profit for the quarter was $139 million, primarily benefiting from strong ex-TAC gross profit growth. As mentioned in prior quarters, gross profit also benefited from reductions in our other cost of revenues driven by lower server and network infrastructure costs, some of which came from a reduction in depreciation expenses related to our servers due to a reassessment of their useful lives. Our net income was $5.2 million, with non-GAAP net income coming in at $34.3 million. Adjusted EBITDA for the quarter was $48.2 million, reflecting an adjusted EBITDA margin of 27.3%. We continue to focus on cost discipline across the business while strategically investing in areas that support growth. This quarter, we had a $2 million headwind for foreign exchange rates versus Q3 2024, $3 million higher operating expenses, partially offset by approximately $1 million in Ex-TAC tailwinds. The impact on operating expenses was primarily from the Israeli shekel, where we have a large employee and expense base. Without this headwind, our adjusted EBITDA margin would have been roughly the same as Q3 2024. We also had higher-than-planned hosting costs related to certain growth initiatives, and we decided this quarter to further increase our marketing spend for Realize based on the traction we are seeing. In terms of cash generation, we had $53.2 million in operating cash flow in the third quarter and free cash flow of $46.3 million, representing 96% conversion from adjusted EBITDA in the quarter. Our free cash flow benefited significantly from a couple of factors, primarily high adjusted EBITDA margins and strong management of our working capital. Our free cash flow conversion from adjusted EBITDA continues to be over 70% over the last 4 and the last 8 quarters. Given our experience over the last couple of years, we think it is safe for investors to assume that we will convert free cash flow at a 60% to 70% rate over the longer term, which is above our prior 50% to 60% target conversion of free cash flow from adjusted EBITDA. For the full year 2025, I expect to do even better than the high end of that range. Turning to the balance sheet, we remain in a strong financial position. We ended the third quarter with a net cash balance of $41.5 million. Cash and cash equivalents totaled $115.5 million, which more than offset our long-term debt of $74 million. As a reminder, earlier this year, we secured a new $270 million revolving credit facility, allowing us to fully repay our previous long-term debt loan while maintaining approximately $196 million in available capacity as of September 30. This facility also allowed us to reduce our interest expense by $1.6 million in the third quarter. With this facility, we can operate with a lower cash balance while preserving access to significant liquidity. We continue to believe share repurchases are one of the most compelling uses of capital. In the third quarter, we repurchased approximately 10 million shares at an average price of $3.43 for a total consideration of $34.4 million. Year-to-date, we have bought back nearly 14% of our outstanding shares, reducing our total share count from approximately 337 million at the end of 2024 to about 291 million at the end of Q3 2025. As an update to our share repurchases from Yahoo, we are no longer required to purchase shares from Yahoo for the remainder of 2025 due to meeting certain Israeli regulatory conditions. This means we have the ability to buy more shares in the open market. Moving to guidance, for the fourth quarter 2025, we expect revenues to be between $532 million and $542 million, gross profit to be between $166 million and $171 million, ex-TAC gross profit to be $204 million to $210 million, adjusted EBITDA to range from $83 million to $85 million and non-GAAP net income to be $52 million to $56 million. For the full year, we are raising our guidance across the board. We now expect revenues to be between $1.91 billion and $1.93 billion, gross profit to be between $550 million and $564 million, ex-TAC gross profit to be $700 million to $710 million adjusted EBITDA to be $209 million to $214 million and non-GAAP net income to be $139 million to $144 million. This guidance reflects continued momentum across our business. I would note that in Q4, the adjusted EBITDA guidance reflects a forecasted headwind from foreign exchange rates of over $5 million on operating expenses, partially offset by ex-TAC tailwinds, which reduces our adjusted EBITDA by approximately $1.5 million and reduces the adjusted EBITDA margin by over 140 basis points. Also, as a reminder, when you are comparing each of the quarters this year to the same quarter last year, you must keep in mind the onboarding of Yahoo, which impacts quarterly comparisons this year. As a result, we believe the full year projected growth rate of 6% at the midpoint of our new range normalizes for these dynamics and is the best representation of the true growth of our core business in 2025. In summary, we're very pleased with our Q3 performance and the strong momentum we've built so far this year. We're seeing an inflection point with Realize and remain focused on delivering against the goals we set at the beginning of the year. There's still work ahead, but we believe we're on the right path toward achieving double-digit growth over time. With that, let's move to Q&A. Operator, can you please open the lines for questions?

Yes, thank you. Your first question comes from the line of Zachary Cummins with B. Riley Securities. Your line is now open.

Hi, good morning. Thanks for taking my question and congrats on the strong results here in Q3. So just starting off with Realize platform, nice to see the incremental traction that we're seeing on that front. Just curious, in terms of taking it to the next level of capturing more of these advertiser budgets, is it more just proving it out and testing it in the market? Or what are kind of the next steps in terms of taking this from strong traction to meaningful contribution to the overall P&L?

Yes. So I think overall, we're seeing good momentum, which is encouraging for us to see. If you look at what we said when we launched it, taking a step back, there are really 3 things that move the needle financially. The first one is just going from native advertising to performance, and that takes time in order to shift kind of perception in the market and getting more advertisers to be aware of Taboola as a place they can spend money beyond search and social. So that's one. The second thing is our focus on the sell side on ICPs. And that's important because when we sell to the right clients, we tend to see higher retention and more spend. And the third one is keep iterating on the tech front. So predictive audiences, new formats, new placements. So those 3 things, keep iterating on those, we believe will make a positive impact.

Understood. My follow-up question is about the partnership you announced with Paramount. Can you discuss the performance multiplier product and how Taboola might expand its presence in CTV over time?

Yes. So I mean, let me just say that it's financially small as of now, but very exciting. So what we've announced, which is essentially a demand generation opportunity for Taboola through Realize, we're tracking essentially the industry overall going more and more into outcome and measurement and performance-driven market. And even in television, which is about a $100 billion market in the U.S., we're seeing these dynamics. So what we've announced, which is essentially a demand generation opportunity for Taboola through Realize, we're tracking essentially the industry overall going more and more into outcome and measurement and performance-driven market. And even in television, which is about a $100 billion market in the U.S., we're seeing these dynamics. Advertisers are expecting to not only enjoy the benefit of a large screen when they get consumers exposed to ads, but also track and be able to drive conversions through that campaign. We're seeing this with Amazon, obviously, telling advertisers if you buy Prime, we can show ads also on Amazon.com and show you that someone ended up buying the product. It's a very powerful pitch to advertisers. So what we've announced with Paramount, which is a great partner of ours on the CBSI front for a very long time and now on the CTV front, is to bring the combined power of TV and performance advertising into one home, if you will. So if you're buying an ad and that ad is shown on Yellowstone as an example, and you see that ad in your living room, you, a consumer, and people like you may be through a matching integration with Paramount, may be seeing relevant ads on the open web through Realize. And the point here is that we're able to expand the audience. So even if one person saw an ad on TV, we're able to show maybe 10 other people ads that are relevant to the same advertiser and then report back, and this is the exciting part, reports back to the advertiser, how many clicks have occurred, impressions, conversions, price per acquisition. So, you're buying a TV and you feel like you're buying Meta. I'm excited about it, and I hope we'll continue to see traction, but it's like retail media for TV, if you will, it's still early days.

Your next question comes from the line of Laura Martin with Needham.

Great numbers, guys. I have a couple. Can you talk about what's going on with traffic? And if you're not seeing any degradation in traffic, I'm very interested in the quality because these LLMs are searching sort of anywhere between 8,000 and 8,000 pages per query to give an answer. So my first question is on traffic, both volume and quality of is human traffic declining even if total traffic to your site is not? And then my second question is, you guys were really early adopters of using AI to improve your yields and conversion rates. I'm interested in an update on actual metrics of where you've seen improvements either in costs or in revenue or in yield from your updated AI implementations, please?

Sure. Thanks for the question. So I can start, and we can bounce off of this. So the first thing we're seeing actually surge in traffic overall, which is interesting, obviously, as you say, in times of search traffic declining because of L&M engines. The main 2 reasons we're seeing traffic going up is, I would say, one, we're seeing an increase in direct traffic, actually specifically through apps. So many of our partners have a very strong brand name. So if you think about the ESPNs of the world, the CNBCs, Yahoo!, and OEM partners such as Apple and Samsung, and others, many of them have a very strong brand and are recognizable with consumers. And while search traffic is going down, we're seeing their app direct traffic going up, and that affects our overall traffic mix. So that's something that's really helpful. And the second thing is, we're doing a good job onboarding new partners. So think of new publishers and new devices through Taboola News; we've seen positive trends in adding new partners. So for those 2 reasons, overall company-wise, we are seeing growth in traffic. So that's about that. Human traffic, we're not seeing any material change that I'm aware of. In general, the way we're doing it today, we have this index that actually allows us to constantly make sure that our supply has high quality for advertisers. When we onboard a new partner or as things change, we're able to see if the conversion rate from a certain publisher or the conversion rate from a certain page has changed. And if it's within a certain range of what we expect, we call that human and good. And if it's too far down, we actually part ways with that partner. We're not sustaining partners on our network that do not perform to advertisers. So we've been doing this for a long time. And I think advertisers really appreciate that because they know they can always rely on our traffic being high quality. Steve?

Yes. And then in terms of your question about AI, and where are we seeing impact from that? So just to take a step back real quickly, we use AI across our business. We've been a deep learning-based business for better than a decade now. And that is what the technology basically drives, how we decide which ads or which pieces of content to show to which users in which particular context at any given time. So that is a key part of our business and has been for a decade. LLM-based AIs, where we started using, obviously, more recently, as they become more advanced, we use those primarily in 2 areas of our business. So one is we announced, obviously, Laura, you remember we demoed Abby with you, where we showed an LLM-based assistant for advertisers that helps them to get up and running on our platform. And now, over time, it is even helping them to optimize campaigns and to do more with the platform. So we use it there. And then internally, we're using LLM-based technology a lot more for productivity reasons. So a great demo I saw the other day was showing our sales team where they can say, 'Hey, I'm about to go into a meeting with Nestle with this person,' and an LLM-based tool will actually prep a whole kind of package of information that they should know. What has Nestle been saying about their goals as a business? What does this person do? It’s kind of amazing how much information they get going into the meetings that they come in prepped. So we're using it as a productivity tool in that way. In general, what I would say is that we will always see the biggest impact on our business with AI is anything that drives higher yields and higher success rates for our advertisers. And that's true. So when we talk about seeing an inflection with Realize, frankly, a lot of that is coming on the back of better algo, things like predictive audience is an AI-based prediction tool of where could you get more conversions on our network and what do you have to do to get those. So that's probably impact number one. Abby is definitely having an impact on our advertisers. So we're seeing more success, thanks to that. And then I'd say that we are seeing productivity, but we're probably earliest in that area in terms of where we're seeing impact.

And lastly, Laura, just to add one more note is that we also launched deeper dive a few months back, which is our kind of ChatGPT for the open web driven by advertising as a revenue source. Still early days, but that's another thing that can generate surge in quality traffic, definitely human traffic because people have to type and engage with it. So that's another investment we're making to try to create more quality supply for advertisers in the form of LLM and support publishers in growing and getting into the AI era as we know it.

Your next question comes from the line of Jason Helfstein with Oppenheimer.

I was on a few calls, so I apologize if this was already covered. But I'm struggling to understand kind of, again, why revenue ex-TAC on a year-over-year basis will decelerate, call it, seven points? And then why the other cost of goods, the non-TAC COGS is going to be up $5 million sequentially? So can you unpack that? And then I've just got a question about next year.

Yes. When you talked about the non-TAC COGS, are you talking about the other cost of revenue?

Correct. Yes.

I will begin with a general discussion of ex-TAC and our current position. Firstly, margins decreased year-over-year for ex-TAC, mainly due to last year’s Yahoo testing. We ran a format test with Yahoo that was recognized on a net basis, which distorted our margins. For Q3, margins were affected by this. However, ex-TAC dollars grew by 6% year-over-year in Q3, and we consider these dollar amounts more important. In Q4, we expect a year-over-year decline, primarily due to two factors. First, the Yahoo onboarding last year caused some discrepancies between quarters. Second, we experienced particularly strong demand from Chinese advertisers in Q4 last year that was atypical, and due to tariffs this year, that demand has decreased and has not yet returned to previous levels. Regarding changes in other costs of revenue, we have updated our accounting for servers, which has reduced these costs. Additionally, we revised our approach to accounting for some capitalized projects, which is a significant part of the remaining changes.

Okay. Philosophically, we previously thought next year would see low single-digit growth. Given the revenue guidance of a decline of about 2% for the fourth quarter, is it still reasonable to believe that the company could achieve positive revenue growth next year?

Yes. So yes. And I think that generally, the way I think about it is, first of all, we're seeing good momentum with the business. Like I think we're happy with what we're seeing. I think I wouldn't look at quarters when you're thinking about the growth rate. And while we'll give you guidance, obviously, for 2026 in February, what I would look at now is our full year growth rate for 2025 is a good proxy for, I think, where you can start with thinking about 2026.

Your next question comes from the line of Mark Zgutowicz with The Benchmark Company.

Steve, you talked a little bit about marketing spend. I'm just curious, if you think about Realize marketing spend returns, what adjustments have you made since launching Realize? Maybe you can talk about what's worked, what hasn't and perhaps how your sales capacity is there relative to where you'd like it or if it's where you are comfortable with? And then in terms of margins, if we look at the fourth quarter adjusted EBITDA margin guidance, is that a good proxy for us to think about in terms of 2026, excluding any potential rev ex-tech acceleration? And then maybe a last one for Adam, if I could. If you think about opportunities for investment alongside Realize incrementality, can you maybe prioritize Agentic, MCP, ad CP or any other areas?

Sure. Thanks, Mark. I will address the first two questions. First, regarding our marketing spend, we've intentionally increased it over the last two quarters, Q3 and now into Q4. This decision is driven by the positive impact we're seeing from Realize. Advertisers seem more likely to succeed on our network now with Realize and its new features. For example, if I was previously spending $1,000 to onboard an advertiser in the U.S. and they had a certain likelihood of success, that likelihood has increased with Realize. This improvement translates to a similar or possibly better lifetime value, which allows me to spend more on marketing while still achieving a positive return on investment. Consequently, we've ramped up our marketing spend, which may not yield immediate results but is expected to attract more advertisers and support faster growth in the future. This trend is happening across various regions, but we are noticing particular momentum in the U.S. As for the types of advertisers, we focus on ideal customer profiles, particularly in finance, auto, health, and direct-to-consumer products, where we are seeing the most traction. Regarding your second question about expectations for adjusted EBITDA, Q4 typically shows a strong adjusted EBITDA margin. It's important not to judge future performance solely based on Q4. We've often stated that we aim for around 30% adjusted EBITDA margins as a guideline to balance growth investment and profitability, which should serve as a starting point for thinking about our margins and operating expenses for next year.

I can address the AI question. Juan, regarding the first part of your inquiry, all our efforts are focused on investing in AI to enhance advertiser success. Realize is now a significant source of our revenue, and facilitating advertiser success through Realize will be crucial for us to achieve double-digit growth again. We are monitoring Realize in terms of how many scaled advertisers we have and their average spending. This data is important because effectively supporting advertisers with unique data, extensive distribution, and advanced AI investments should lead to increased scaled advertisers and higher spending, indicating better retention rates. If advertisers try our services and churn less, they will stay longer and increase their spending over time, which is our goal. As mentioned earlier, we are observing a 4% rise in scaled advertisers and an 11% increase in average spending. Our focus is on delivering a quick return on ad spend to minimize churn, along with technologies like predictive audiences and new formats that enable advertisers to spend more over time. These are the two main priorities for us. Regarding Taboola's position in the market and MCP, we believe we are well-positioned since most of our revenue comes from direct purchases by advertisers. This allows us to share more with publishers while maintaining a healthy margin for our business, unlike the traditional ad tech model where money often gets lost. Therefore, tracking MCP in this industry is crucial for companies like Taboola, which operate a two-sided marketplace. Publishers collaborate with us directly, and advertisers purchase from us directly. This resembles a consumer company model, although we don’t have our own Instagram; we connect with consumers through publisher relationships. Overall, I believe we are well-positioned, which is reflected in our performance.

Your next question comes from the line of James Kopelman with TD Cowen.

The first one is for Adam, just following up on Laura's question on traffic. You mentioned that app traffic is now 1/3 of supply. Where do you see that trending over time? Do you think that could hit 50% or higher of supply? And do you expect double-digit app traffic increases in the fourth quarter as well? And then I have a follow-up question for Steve.

It's encouraging to see that app traffic is already at nearly one-third, which provides a stable base that isn't significantly impacted by search. This gives us a positive outlook for the future, and I believe it could increase more rapidly due to the highly engaged nature of app users. Publishers often note that app users are much more involved; they spend more time, read more, and generate more revenue. This motivates publishers to encourage users to shift to apps. Additionally, with the emergence of large language models, I anticipate more publishers will focus on getting consumers to download their apps. There is also significant growth from Taboola News and in-app monetization partnerships, such as with Apple News and Samsung. Earlier this year, we discussed our collaboration with LINE, a messaging app. Our goal as a company is to continue expanding wherever consumers spend their time, aiming to be present on every device, lock screen, and swipe, delivering relevant news as part of users' utility apps. We are investing in this vision, as we see a strong alignment between our offerings of content, data, and revenue and market demands. Therefore, I believe this trend will continue positively.

Yes, that's a good question, James. Generally, we've always approached our business with the mindset of investing in growth where we see a positive return on investment, while also aiming to maintain a 30% plus EBITDA margin. This will continue to guide our planning for 2026. When it comes to our investment areas, realized is going to be our main focus moving forward. We will also have smaller initiatives, like deeper dive projects, where we invest a little to learn and explore. However, our major investment will remain in realized. You can anticipate our operating expenses to grow alongside our growth, allowing us to sustain those 30% plus EBITDA margins.

Your next question comes from the line of Tyler DeMatteo with BTIG.

Adam, I wanted to come back to some of your comments at the beginning of the Q&A on kind of the sales approach. What's the biggest opportunity on the sales side of things to improve the brand perception and ultimately kind of realize adoption there? Like what are some of the learnings that you've seen where you can see an incremental improvement on the sales side and that opportunity? And then my second question is on the comments about the inflection point in realize, what are some of the underlying assumptions baked into that? Is that the number of advertisers? Is that the propensity to spend, the dollar value of spend? I'm just curious like what's the underlying assumptions there?

That's a great question. We're investing in improving our market perception by engaging our team in important events and interactions that showcase Realize, positioning it as a tool for performance advertising beyond just search and social media. We recognize this need and are seizing the opportunity in the market. We're committed to sharing our story and partnering with successful advertisers to enhance our brand narrative. Your brand is defined by what others say about you when you’re not present, so it's encouraging to see advertisers we work with eager to promote our story. Looking at the overall landscape of scaled advertisers and their average spending, we believe we are tracking the right metrics. Our sales team understands where the revenue opportunities lie and targets the most promising market segments, especially in high-consideration areas like travel, healthcare, automotive, and e-commerce. We excel in financial services, and it would be unwise for any financial business not to utilize our services. By concentrating on Ideal Customer Profiles, we're seeing improved outcomes. All these initiatives should positively impact our brand perception over time, though it requires commitment and cannot be rushed. After spending a decade establishing ourselves in native advertising, we aim to build the largest performance advertising company beyond just search and social in the next decade.

In response to your second question regarding the underlying assumptions about the realized inflection point, it's important to note that we are observing a greater success rate among advertisers who work with us. This indicates an increasing capacity for them to scale and achieve their objectives. The key metric I want to highlight is the consistent growth of our number of scaled advertisers year-over-year, as this is the best indicator of our success. While we also aim for an increase in average revenue per scaled advertiser, the growth of scaled advertisers is what primarily drives future growth, making it the metric we concentrate on the most.

Your last question comes from the line of Matthew Condon with Citizens.

My first one, maybe just shifting gears here a little bit. Can you just talk about the Taboola News? It looked like it was another strong quarter. Just what's the sustainability of growth there? And how should we think about that contributing in 2026? And my second one is also just on your partnerships with some of the OEM partners. Just how are these progressing and scaling up here? And should we expect these also to be key contributors in '26?

I can address the first part of that. Firstly, Q3 was indeed positive for Taboola News. It is outpacing the company’s overall growth, which is encouraging for a growth initiative. A key aspect of Taboola News is that it forms part of our distinct supply strategy, offering a type of supply that remains unaffected by LLM disintermediation. This is advantageous. It also engages new users and provides valuable data, especially when accessed on mobile devices where we have better insights into user behavior. This unique supply offers advertisers a prime opportunity, as it reaches users before they engage with their social networks or begin browsing the internet. This timing is beneficial for advertisers as well. With the increasing demand for advertising, including from mobile manufacturers and OEMs, we see significant potential here. While we haven't provided specific guidance or breakout information, we believe there is substantial upside in this area over time. Apologies, operator, are we still connected?

Yes. Yes. I didn't know if there was going to be another question. So at this point, there are no further questions, and I'll turn it back to Adam Singolda for closing remarks.

Thank you. Thanks, everyone, for being with us this morning. If you take 3 things from the quarter that matter, number one, we've hit an inflection point with Realize, which is our biggest investment. Customers are giving us good feedback and our product is driving good results. It shows in our scaled advertiser numbers, a 4% increase in the amount of scaled advertisers. That's obviously a good thing. And we're seeing 11% higher average spend. And we track those 2 numbers as a proxy for realized success and realizes most of our revenue. So that is our main way to grow in the future. Number two, we're feeling better about our financial performance. We like the direction we're heading. And as such, we bought 14% of the company year-to-date and intend to continue to buy aggressively. And number three, I'm proud of the team. We're taking upon ourselves a big challenge, and we're hard at work, and I believe we can do this. So I'm looking forward to interacting with many of you over the next few weeks, and thanks for joining us today.

Yes. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.