Slide 1: Investor Presentation
Investor Presentation 1 January 2021
Slide 2: Disclaimer: Forward-Looking Statements
Forward-Looking Statements Disclaimer Certain statements in this Presentation may be considered forward-looking statements. Forward-looking statements generally relate to future events or ION Acquisition Corp 1 LTD. (“ION”) and Taboola.com Ltd.’s (the “Company”) future financial or operating perform
Slide 3: Disclaimer: Use of Projections (cont'd)
Disclaimer Use of Projections This Presentation contains financial forecasts with respect to the Company’s projected financial results, including Revenue and Adjusted EBITDA, for the Company's fiscal years 2020 through 2025. The Company's independent (cont’d) auditors have not audited, reviewed, com
Slide 4: Presenters and Senior Leadership
PRESENTERS AND SENIOR LEADERSHIP Adam Singolda Stephen Walker Gilad Shany Avrom Gilbert Founder & CEO CFO CEO COO ▪ Founded Taboola over 13 ▪ 6+ years at Taboola ▪ CEO of ION Acquisition ▪ President and COO of ION years ago, and has led the Corp. 1 and Managing Acquisition Corp. 1 ▪ Previously held
Slide 5: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 5
Slide 6: ION - Built in Israel with Global Scale
ION - BUILT IN ISRAEL WITH GLOBAL SCALE Crossover, IPO and public markets ION Israel ION Crossover Partners ION Acquisition Fund Corp (SPAC) Q4 20 Q3 18 2006 Total AUM: >$2bn Q4 18 2015 Sovereign Wealth ION Tech Fund Fund 6
Slide 7: ION Investment Thesis – AI-Driven Disruptor in a Massive Market
ION INVESTMENT THESIS – AI-DRIVEN DISRUPTOR IN A MASSIVE MARKET Partnering with management to build Open-Web challenger to Walled Gardens New category: recommendation feeds for Open Web ($64B market) 1 Unique partnership with publishers: exclusive, long term & integrated into code (no 3rd party cook
Slide 8: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 8
Slide 9: We Power Recommendations for The Open Web
We Power Recommendations for The Open Web Helping people discover things they may like 9
Slide 10: Taboola = Search "in Reverse"
TABOOLA = SEARCH “IN REVERSE” From people looking for information to information looking for people 10
Slide 11: You Have Seen Taboola Before
YOU HAVE SEEN TABOOLA BEFORE 11
Slide 12: Solving Tremendously Difficult Technological Challenges
SOLVING TREMENDOUSLY DIFFICULT TECHNOLOGICAL CHALLENGES Predicting what people might be interested in without the intent data that Google has or the personal data that Facebook has and doing it at massive scale. DAILY 516M ACTIVE USERS1 More than Twitter and Snap combined2 1 Petabyte 400K+ 1 Trillio
Slide 13: Enabling Publishers to Compete with Walled Garden Behemoths
ENABLING PUBLISHERS TO COMPETE WITH WALLED GARDEN BEHEMOTHS Bringing the user data, AI technology and scale of demand to open Web players 75% 25%3 News sites eCommerce sites Apps / Games SEARCH SOCIAL ECOMMERCE OPEN WEB2 CTV WALLED GARDENS1 (1) Walled Gardens includes other closed platforms includin
Slide 14: Taboola Can Capture Share of the Highly Fragmented $64B Open Web Market
TABOOLA CAN CAPTURE SHARE OF THE HIGHLY FRAGMENTED $64B OPEN WEB MARKET1 SEARCH SOCIAL ECOMMERCE Open Web App Install Affiliates RECOMMENDATIONS ENGINE Video Banners (1) Jounce Media, 2020 Market Outlook Report 14
Slide 15: Taboola Is for Advertising What Shopify Is for E-Commerce
TABOOLA IS FOR ADVERTISING WHAT SHOPIFY IS FOR E-COMMERCE E-COMMERCE ADVERTISING 15
Slide 16: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 16
Slide 17: Full Tech Stack for Publishers: Mission Critical for the Open Web
FULL TECH STACK FOR PUBLISHERS: MISSION CRITICAL FOR THE OPEN WEB $2B+ Paid To Publishers Over 3 Years1 Monetization Monetizing with non-interruptive, native ads Engagement Engaging users by recommending organic content Audience Driving quality audiences from across the network Empowering editorial
Slide 18: Long-Term, Exclusive Partnerships with Publishers
THAT’S WHY TABOOLA GETS LONG-TERM, EXCLUSIVE PARTNERSHIPS WITH PUBLISHERS “NBC News Group is excited to continue working with Taboola to expand the reach of our content and continue driving our already impressive growth. We recognize the • 120% NDR in 20201 value of Taboola’s technology and their ab
Slide 19: Advertisers Choose Taboola for the Open Web
ADVERTISERS CHOOSE TABOOLA FOR THE OPEN WEB • Massive reach – 516M Daily Active Users • Performance focus with measurable ROI • Brand safe ad placements Time • Target ads based on what people truly care about Largest advertiser is 3% of total ad spend 10th largest advertiser is 1% of total ad spend1
Slide 20: Discovering Direct-To-Consumer Brands on Taboola
“Mack Weldon is a digitally native—growth focused—menswear startup brand that designs and delivers premium basics for men. As a performance marketer I’m constantly Discovering looking for new ways to create awareness for our products while growing our customer base cost efficiently. With Taboola, we
Slide 21: Generating Quality Leads for Samsung Life Insurance with Taboola
“We built a website to sell our insurance product online. To drive more sign ups, we started running digital campaigns. To encourage sign-ups, the completion of our quote calculator Generating Quality was the most important behavior. Taboola hugely contributed in expanding our strategy to new digita
Slide 22: Marketplace Business Model
MARKETPLACE BUSINESS MODEL $ $ $ $ $ $ $ AI-Powered Biddable $ Marketplace Advertisers place bids to appear Taboola shares ad revenue on Taboola and pay per click/view with Publishers 22
Slide 23: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 23
Slide 24: Investment Highlights
INVESTMENT HIGHLIGHTS ● The Open Web is a massive category ● Taboola’s technology is resilient to the future disappearance of third-party cookies ● Product-led growth fueled by a network effect ● Platform advantage driven by Taboola’s technology ● Numerous paths to accelerate growth ● Proven, founde
Slide 25: Taboola Is Poised to Capture Share of the $64B Open Web Market
TABOOLA IS POISED TO CAPTURE SHARE OF THE $64B OPEN WEB MARKET • Exclusive relationships with publishers: predictable supply • Product-led growth: powering recommendations (vs. optimizing impressions) Audience • Direct relationships with Network 10K+ advertisers The Open Web Amazon DSP Source: Origi
Slide 26: Taboola Tech Is Built for a Cookie-Less World
TABOOLA TECH IS BUILT FOR A COOKIE-LESS WORLD Taboola’s strong yield performance despite 3rd party cookies being blocked in the industry for years: - Apple started blocking 3rd party cookies in 2017 - Firefox, Edge, etc are also blocking 3rd party cookies - GDPR launched in 2018 - CCPA launched in 2
Slide 27: Product-Led Growth with a Built-In Network Effect
PRODUCT-LED GROWTH WITH A BUILT-IN NETWORK EFFECT More Publisher More Users Reached, Partners More Often Higher Yield More User Data (Better Results for Advertisers Gathered and Publishers) 27
Slide 28: Platform Advantage Driven by Investment in Tech
PLATFORM ADVANTAGE DRIVEN BY INVESTMENT IN TECH 500 R&D staff 100 in Algo & Data $100M Annual R&D Investment Source: Company data, 2021 estimates 28 28
Slide 29: Recommending Anything, Anywhere: A Multi Billion Dollar Growth Engine
RECOMMENDING ANYTHING, ANYWHERE A MULTI BILLION DOLLAR GROWTH ENGINE Core Business $10M’s in 20201 $10M’s in 20203 ANYWHERE $1B+ in 2020 & ANYTHING Taboola News Growing Rapidly2 New products and segments (mobile carriers, device (TV ads, eCommerce, app manufacturers, CTV...) downloads, gaming...) Th
Slide 30: Growth Case Study: ConvertMedia Acquisition
GROWTH CASE STUDY: CONVERTMEDIA ACQUISITION $90M+ 2020 Technology Integration & Go-To-Market Acquired ConvertMedia $20M 2016 Annual Run Rate1 (1) Annual run-rates are expressed in Gross Revenue 30 30
Slide 31: Proven, Founder-Led Management Team
PROVEN, FOUNDER-LED MANAGEMENT TEAM Adam Singolda Stephen Walker Eldad Maniv Lior Golan 13 years at Taboola 6 years at Taboola 8 years at Taboola 11 years at Taboola Founder & CEO CFO President & COO CTO Kristy Sundjaja Aviv Sinai Ran Buck 1 year at Taboola 13 years at Taboola 7 years at Taboola SVP
Slide 32: Financial Highlights
FINANCIAL HIGHLIGHTS Gross $1.2B Revenue 2 0 2 0 EST. $379M ex-TAC 1 Adj. $106M EBITDA2 WE POWER $160M Raised date to RECOMMENDATIONS $240M+ onsheetthe balance 3 FOR THE OPEN WEB (1),(2) Non-GAAP measure, see appendix for reconciliation to GAAP (3) Cash & cash equivalents, balance as of 12/31/2020 3
Slide 33: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 33
Slide 34: Taboola Focuses on Profitable Growth
TABOOLA FOCUSES ON PROFITABLE GROWTH 1 2 PROFITABLE GROWTH Rule of 40 Business UPSIDE IN OUR MODEL • Growth from Core Open Web business only • Conservative growth assumed for existing base • Additional upside from existing growth initiatives and inorganic LONG-TERM MODEL • 20%+ ex-TAC Revenue Growth
Slide 35: 2019 Metrics Were Influenced by Our Investment Strategy
2019 METRICS WERE INFLUENCED BY OUR INVESTMENT STRATEGY In 2019, Taboola made the decision to invest $60 million in long-term partnerships with a number of very large, brand name publishing networks1 Given that investment, Adj. EBITDA Margin2 …Without that investment, Adj. EBITDA Margin (% of ex-TAC
Slide 36: COVID-19 in 2020 Proved the Resiliency of Our Model
COVID-19 IN 2020 PROVED THE Leaving 2020 stronger than we entered with sustainably higher profitability RESILIENCY OF OUR MODEL Yield1 1. Strong Recovery 1. Sustainable yield increase, driving higher margins Relentless • Worked with publisher partners to Focus on optimize for yield Yields… • • Signe
Slide 37: Growth Driven by Core Open Web Installed Base
GROWTH DRIVEN BY CORE OPEN WEB INSTALLED BASE 1. 1. New Publisher ex-TAC Revenue1 • Historically 15% new supply growth • Projecting 8-11% going forward Continued growth from new supply... Outlier 2. 2. Net Dollar Retention2 Growth Has Two Elements • Improvements in yield … helps provide fuel for gro
Slide 38: Selected GAAP and Non-GAAP Forecasted Metrics
SELECTED GAAP AND NON-GAAP FORECASTED METRICS 16% ex-TAC Revenue Growth1 $516M 27%+ $445M Adj EBITDA Margin2 $379M $143M $127M 2020E $106M 2021E 2022E 17%+ Adj EBITDA Growth3 ADJ. EBITDA ($ in millions) ex-TAC ($ in millions) 80%+ Adj. Gross Profit Margin4 (1),(3) Growth rates reflect 2020-2023 CAGR
Slide 39: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 39
Slide 40: Transaction Summary
TRANSACTION SUMMARY Pro forma enterprise value (Sin milions except per share values) ION illustrative share price $10.00 Pro forma shares outstanding (M) 261.2 (1) Total equity value $2,612 Cash on balance sheet $582 (2) Total enterprise value $2,030 Total enterprise value / 2021E 2022E Ex-TAC reven
Slide 41: Valuation Framework
VALUATION FRAMEWORK Primary Secondary Mid-Cap Advertising Technology Advertising Technology Majors Marketing Technology • Funded by digital marketers / • Funded by digital marketers / • Recurring revenues advertisers looking for new advertisers looking for new • B2B-oriented solutions that are custo
Slide 42: Valuation Benchmarking
VALUATION BENCHMARKING Source: Wall Street research, filings and FactSet as of 1/7/2021. Note: Taboola figures calculated using ex-TAC revenue. Figures for Alphabet, MediaAlpha, Magnite, PubMatic and Trade Desk calculated on an ex-TAC equivalent revenue basis. CY21: CY22 : Data for Advertising Techn
Slide 43: Operational Benchmarking
OPERATIONAL BENCHMARKING Source: Wall Street research, filings and FactSet as of 1/7/2021. Note: Taboola figures calculated using ex-TAC revenue. Figures for Alphabet, MediaAlpha, Magnite, PubMatic and Trade Desk calculated on an ex-TAC equivalent revenue basis. CY21: CY22 : Data for Advertising Tec
Slide 44: Thank you.
Thank you. 44
Slide 45: Appendix
APPENDIX
Slide 46: Our Model in a Nutshell
OUR MODEL IN A NUTSHELL Model components: Sample inputs / financials: Page views 799bn x RPM $1.14 Illustrative Taboola economics: = Gross revenue(1) $909 $1.00 (100%) – Traffic Acq Cost (Value to publishers) ($627) ($0.69) = ex-TAC Revenue(2) $282 $0.31 – 46 Cost of Revenues ($48) ($0.05) = Gross p
Slide 47: Key Model Assumptions
KEY MODEL ASSUMPTIONS Operating costs: REVENUE (ex-TAC)1 ($ in millions) ▪ Historically, Taboola grew 20%+ (CAGR ’17A-’20E) ($19) $34 ($45) $34 $62 ▪ In 2020, Taboola will generate ~$379 million ex-TAC (6.4%) 8.9% (10.1%) 6.6% 10.4% ▪ Conservatively modeled ~16% growth, doubling ex-TAC in 5 years AD
Slide 48: Historical & Projected Revenue & ex-TAC Revenue
HISTORICAL & PROJECTED REVENUE & EX-TAC REVENUE1 YoY growth ex-TAC revenue margin2 (1) Non-GAAP measure, see appendix for reconciliation to GAAP (2) ex-TAC Revenue Margin reflects ex-TAC Revenue / Gross Revenue, Non-GAAP measure, see appendix for reconciliation to GAAP 48
Slide 49: Selected GAAP and Non-GAAP Metrics
SELECTED GAAP AND NON-GAAP METRICS 1 2 3 ADJ. EBITDA MARGIN LONG-TERM EX-TAC REVENUE GROWTH ▪ Return to “normal” operations and cost basis in H1 2021 ▪ Current Model only forecasts growth from Core Business ▪ Investing in serving infrastructure and Algo beginning 2021 ▪ Long-Term Growth of 20%+ incl
Slide 50: 2020/2021 Quarterly Financials
2020/2021 QUARTERLY FINANCIALS 1 2 Note: dollar values in this table reflect rounded values; growth and margin calculations are based on exact values calculated to nine decimal places. (1),(2): Non-GAAP measure, see appendix for reconciliation to GAAP 50
Slide 51: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION 51
Slide 52: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION 52
Slide 53: Projected Adjusted EBITDA Reconciliation
PROJECTED ADJUSTED EBITDA RECONCILIATION 53
Slide 54: ex-TAC Revenue Reconciliation
EX-TAC REVENUE RECONCILIATION 54
Slide 55: ex-TAC Revenue Reconciliation
EX-TAC REVENUE RECONCILIATION 55
Slide 56: Projected ex-TAC Revenue Reconciliation
PROJECTED EX-TAC REVENUE RECONCILIATION 56
Slide 57: Adjusted EBITDA Margin Reconciliation
ADJUSTED EBITDA MARGIN RECONCILIATION 57
Slide 58: Projected Adjusted EBITDA Margin Reconciliation
PROJECTED ADJUSTED EBITDA MARGIN RECONCILIATION 58
Slide 59: ex-TAC Revenues Margin Reconciliation
EX-TAC REVENUES MARGIN RECONCILIATION 59
Slide 60: Projected ex-TAC Revenues Margin Reconciliation
PROJECTED EX-TAC REVENUES MARGIN RECONCILIATION 60
Slide 61: Projected Adj. Gross Profit Margin Reconciliation
PROJECTED ADJ. GROSS PROFIT MARGIN RECONCILIATION
Slide 62: Free Cash Flow
FREE CASH FLOW (1) 2021 Free Cash Flow Reduced by Plan To Invest in Two Areas: 1) Purchase of $30M of servers beyond “normal” levels as part of investment in algorithmic yield improvements 2) Plan to remodel offices globally for post-COVID work environment (1) Adj. EBITDA Plus the change in working
Slide 63: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET As of Dec 31, As of Sept 30, ($ in millions) 2019 2020 Cash $ 122 $ 189 Total Assets $ 412 $ 414 Total Liabilities & Convertible Shares $ 402 $ 386 Accumulated Deficit $ (37) $ (31) Additional Paid-in-capital $ 47 $ 59 Total Stockholders' Equity $ 10 $ 28 63
Slide 64: Taboola Protect
TABOOLA PROTECT CONTENT / ADS Ongoing monitoring of the network and removal of undesirable content and actors. CONTENT REVIEW TEAM Manual Automated + Review Review 30+ Reviewers 24/5 manual review + 14h per day on weekends Labeling 24/7 automated review - Taboola automations including AI tools 13 La