Slide 1: Investor Presentation
INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements - Disclaimer
Forward-Looking Statements - Disclaimer Certain statements in this presentation are forward-looking statements, including our Q1 and full-year 2023 guidance. Forward-looking statements generally relate to future events including future financial or operating performance of Taboola.com Ltd. (the “Com
Slide 3: Today's Presenters
TODAY’S PRESENTERS ADAM SINGOLDA STEPHEN WALKER FOUNDER & CEO CFO ➔ Founded Taboola over 15 years ago ➔ 8+ years at Taboola ➔ Has led the company as its CEO ➔ Led several of Idealab's portfolio ever since companies, including Perfect Market ➔ Prior experience at Disney & General Electric
Slide 4: Agenda
AGENDA 1 Capturing Share of $70B Open Web Ad Market & Taboola Overview Taboola’s 2 Differentiation and Why We Win 3 Q4 Updates & Momentum 4 Financial Update
Slide 5: Powering Recommendations for the Open Web
POWERING RECOMMENDATIONS FOR THE OPEN WEB HELPING PEOPLE DISCOVER THINGS THEY MAY LIKE
Slide 6: Taboola = Search "In Reverse"
TABOOLA = SEARCH “IN REVERSE” FROM PEOPLE LOOKING FOR INFORMATION TO INFORMATION LOOKING FOR PEOPLE
Slide 7: The Open Web
THE OPEN WEB where we spend 25% of our time RECOMMENDATION WHERE AI, personalized, relevant, based on the user and the context $70B* article page, homepage, app, ctv,... WHAT video, product, tv show, app,... * Company estimate
Slide 8: Done Wrong...
p TE There’s Still Time to send the perfect prese’ SHOP GIFTS UNDER ‘50 Donate At: rdy.AdCouncil.org owed avrestaurants in your city at restaurants in your city i Get Your FREE Credit Score ij NOV 22-DED31 E-exede ‘efernet
Slide 9: ...Done Right
...DONE RIGHT Walled garden integrated ad experience Paid Paid Paid Paid Organic Organic Organic Paid
Slide 10: Taboola Revolution
Paid TABOOLA REVOLUTION Bring power of walled gardens to open web with Tens of billions clicks a year Editorial
Slide 11: (But) Open Web Today Is Not Personalized
(BUT) OPEN WEB TODAY IS NOT PERSONALIZED
Slide 12: Rocket Engine (AI)
ROCKET ENGINE (AI) • Deep Learning since 2017 • $100M Annual R&D Spend1 • Editorial recommendations • Paid recommendations • SmartBid (1) Source: Company data, see slide titled “Key 2023 Model Assumptions”
Slide 13: Rocket Fuel
ROCKET FUEL • 500M+ DAU • Context • Tens of billions clicks a year • Curiosity graph (“people who read this also do this”) • 90% of revenue direct (pixel on page) Source: Company data NASA/MAF/Steven Seipel
Slide 14: Slide 14
Slide 15: Tech Differentiation
TECH DIFFERENTIATION 10 years partnerships, trust
Slide 16: An Open Web Powered by Taboola Recommendations
AN OPEN WEB POWERED BY 4,909 The Number of interactions/Capita/Day TABOOLA RECOMMENDATIONS 1,426 584 298 2010 2015 2020 2025 Source: Data Age 2025, sponsored by Seagate with data from IDC Global DataSphere Nov 2018
Slide 17: We Expect to Cross $1B ex-TAC While Maintaining Our Margins
Over the next 3 years WE EXPECT TO CROSS $1B EX-TAC WHILE MAINTAINING OUR MARGINS
Slide 18: Anything. Anywhere.
ANYTHING. ANYWHERE.
Slide 19: Taboola
Tab@la © AEC GC)
Slide 20: Anything. Anywhere.
))) What are Blue Zones and why they are the secret to seman lif tf tates ANYTHING. ——~ _ ANYWHERE.
Slide 21: Agenda
AGENDA Capturing Share of $70B Open 1 Web Ad Market & Taboola Overview Taboola’s Differentiation 2 and Why We Win 3 Q4 Updates & Momentum 4 Financial Update
Slide 22: Taboola's Differentiation
TABOOLA’S DIFFERENTIATION 1 ● Growth fueled by a network effect HOW IT DRIVES SUPERIOR FINANCIAL PERFORMANCE & EXPANDING MARGINS 2 Long-term yield increases 3 ● Taboola’s technology is resilient to the future disappearance of third-party cookies 4 ● Platform advantage driven by Taboola’s technology
Slide 23: Expanding ex-TAC Margins Point to Competitive Advantage
EXPANDING EX-TAC MARGINS POINT TO COMPETITIVE ADVANTAGE 1 1 1 ➔ ex-TAC Margin has increased significantly since 2015 ➔ Competitive landscape has not changed significantly in that time period ➔ Margins increase as competitive advantages increase (1) Non-GAAP measure, see appendix for reconciliation t
Slide 24: Scale Matters in Our Industry
1 SCALE MATTERS IN OUR INDUSTRY More Publisher More Users Reached More Partners Frequently GROWTH WITH A BUILT-IN NETWORK EFFECT Higher Yield More Data Better Targeting Generated Drives Better Results for Advertisers
Slide 25: What Makes Up Yield
2 WHAT MAKES Click Through Rate (CTR): UP YIELD ➔ The number of clicks that an ad receives divided by the number of times the ad is shown (impressions) ➔ A high CTR is a good indication that CTR users find your ads relevant Click Through Rate Cost Per Click (CPC): The amount advertisers pay for each
Slide 26: How We Increase Yield
2 HOW WE INCREASE YIELD CTR and Conversions Click Through Rate, Conversion Rates ➔ Algorithmic improvements drive better prediction of what users will engage with ➔ More advertisers on the platform and higher diversity of campaigns CPC ➔ More data that provides Cost Per Click more contextual signals
Slide 27: Taboola Tech Is Built for a Cookie-less, IDFA / ATT World
3 TABOOLA TECH IS BUILT FOR A COOKIE-LESS, IDFA / ATT WORLD Taboola’s strong yield performance despite 3rd party Taboola has its own Unique readership People click on cookies being blocked in the industry for years: 1st party cookie – context – Taboola ➔ Apple started blocking 3rd party cookies in 2
Slide 28: Comprehensive Platform Advantage
4 PUBLISHER PLATFORM PLATFORM ADVANTAGE DRIVEN COMPREHENSIVE BY INVESTMENT IN TECHNOLOGY CAPABILITIES NOT AVAILABLE FROM OUR COMPETITORS ADVERTISER PLATFORM COMPREHENSIVE
Slide 29: Taboola for Brands & Agencies
4 TABOOLA FOR BRANDS & AGENCIES High Impact Placements: a premium solution for achieving brand awareness Premium Ad Placements & Experiences Brand Safety & Adjacency Control Unique Readership Data & Insights
Slide 30: Taboola News
4 TABOOLA NEWS Bringing Premium Content To People Everywhere & Driving Audience For Our Publisher Partners Taboola News delivers relevant content from our premium publisher partners, integrated into mobile phones and other user touchpoints. It creates new opportunities for engagement and revenue for
Slide 31: Newsroom
4 NEWSROOM ACTIONABLE INSIGHTS TO GROW READERSHIP & ENGAGEMENT Easily ANALYZE: • Real-Time Audience Data • Article Engagement Metrics • Trending Topic Insights • Subscription Analytics Instantly ACT: • Identify high-performing content • A/B test Headlines & Images • Boost subscriptions
Slide 32: For All / For You
4 FOR ALL Must-know information, hand-curated by editors FOR YOU Personalized recommendations, powered by editor- enhanced algo
Slide 33: 1/3 of Open Web Publisher Revenue Will Be E-commerce
5 1/3 OF OPEN WEB PUBLISHER REVENUE WILL BE E-COMMERCE 1/3 OPEN WEB PUBLISHER REVENUE Source: Company Estimates.
Slide 34: Connexity Furthers Our Competitive Advantage
5 CONNEXITY FURTHERS OUR COMPETITIVE ADVANTAGE INTRINSIC VALUE OF BUSINESS Significant expansion of our addressable TAM with long runway of growth SYNERGIES Tremendous opportunity to leverage our scale, combined relationships and Connexity’s e-commerce market maker capabilities STRATEGIC VALUE ⅓ of
Slide 35: Connexity Synergies
5 CONNEXITY SYNERGIES SHORT-TERM 1. Connexity on Taboola Publishers, growing publishers % of traffic with intent 2. Take Connexity Global 3. Expanding Connexity’s Client base by Leveraging Taboola Ad Sales MEDIUM-TERM 1. Connexity merchant demand on Taboola publisher supply 2. Better personalization
Slide 36: Agenda
AGENDA Capturing Share of $70B Open 1 Web Ad Market & Taboola Overview Taboola’s 2 Differentiation and Why We Win 3 Q4 Updates & Momentum 4 Financial Update
Slide 37: Q4 2022 in Review
Q4 2022 IN REVIEW - capturing more of the $70 billion Open Web ad market Renewing and building new long term relationships ➔ Signed new digital property partner agreements, including competitive wins with Prisa, Grupo Godó, Network18, Kodansha, Buzzfeed Japan. ➔ Signed key renewals and new deals wit
Slide 38: Delivered on FY 2022 Financial Expectations
DELIVERED ON FY 2022 FINANCIAL EXPECTATIONS 2022 Actuals GROWTH RATE Guidance Revenues $1,401M -2% $1,388 to $1,404M Gross Profit $464M 5% $458 to $470M ex-TAC Gross Profit1 $570M 10% $564 to $576M Adj. EBITDA1 $157M 16% $152 to $160M (1) Non-GAAP measures, see appendix for reconciliation to GAAP
Slide 39: Guidance in 2023
GUIDANCE IN 2023: Investing for Yahoo temporarily impacts expected performance 1Q 2023 GUIDANCE FY 2023 GUIDANCE Revenues $299 to $325M $1,419 to $1,469M Gross Profit $76 to $88M $416 to $436M ex-TAC Gross Profit1 $103 to $115M $526 to $546M Adj. EBITDA2 -$6 to $6M $60 to $80M GUIDANCE IN 2024: At l
Slide 40: Agenda
AGENDA Capturing Share of $70B Open 1 Web Ad Market & Taboola Overview Taboola’s 2 Differentiation and Why We Win 3 Q4 Updates & Momentum 4 Financial Update
Slide 41: Taboola Focuses on Profitable Growth
TABOOLA FOCUSES ON PROFITABLE GROWTH PROFITABLE GROWTH Rule of 40 Business Upside in our model ➔ Conservative growth assumed for core base ➔ Additional upside from existing growth initiatives Long-term model ➔ 20%+ ex-TAC Gross Profit Growth ➔ 30%+ Ratio of Adjusted EBITDA to ex-TAC Gross Profit (1)
Slide 42: Growth Driven by Core
GROWTH DRIVEN BY CORE OPEN WEB INSTALLED BASE 1 New Publisher1 ex-TAC Gross Profit ➔ Approximately 40% of total growth CONTINUED ➔ Historically 10%+ new supply growth 1 GROWTH FROM NEW ➔ Projecting similar range going forward Outliers SUPPLY... 2 Net Dollar Retention2 Growth Has Two Elements ➔ Appro
Slide 43: Exceptional New Publisher Momentum in 2022
EXCEPTIONAL NEW PUBLISHER MOMENTUM IN 2022 2022 Was A Banner Year For New Publisher Partnerships ➔ Measured by average gross Revenues added per month from new publishers ➔ Over 90% higher than 2020 and Outliers 2021 average ➔ Second best year on record Sample of New Publisher Partnerships in 2022 ➔
Slide 44: Strong Financial Profile
STRONG FINANCIAL PROFILE FAST GROWING HIGH PROFITABILITY STRONG BALANCE SHEET GENERATING CASH FLOW $570M $157M $27.8M Strong Positive 2022A 2022A Q4 2022 Free Cash Flow ex-TAC1 Adj. EBITDA2 Net Cash3 Generation 21.6% 27.5% $262.8M $165M Five Year 2022 Adjusted Free Cash Flow Compounded Q4 2022 Cash
Slide 45: Thank you.
Thank you. 45
Slide 46: Appendix
APPENDIX
Slide 47: Our Model in a Nutshell
OUR MODEL IN A NUTSHELL Model components: Sample inputs / financials: Illustrative Taboola economics: Revenues(1) $909 $1.00 (100%) – Traffic Acq Cost (Value to publishers) ($627) ($0.69) = ex-TAC Gross Profit(2) $282 $0.31 – Cost of Revenues ($48) ($0.05) = Gross profit $234 $0.26 – 47 R&D ($73) ($
Slide 48: Historical Revenues & ex-TAC Gross Profit (Reported Basis)
HISTORICAL REVENUES & EX-TAC GROSS PROFIT1 (REPORTED BASIS) 1 (1) 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) 1 1 1 (1) 22 2 1 (1)Non-GAAP measures, see appendix for reconciliation to GAAP Note: 2023 projections reflect the midpoint of current company guidance. 49
Slide 50: FY 2023 Guidance
FY 2023 GUIDANCE 1 1 (1) 11 22 2 1 1 1 1 1 (1) Non-GAAP measure, see appendix for reconciliation to GAAP 50
Slide 51: Additional Modeling Assumptions
ADDITIONAL MODELING ASSUMPTIONS ● Interest payment of approximately $5M per quarter associated with $235M term loan related to the Connexity acquisition. ● Share based compensation of $128M in 2021 unusually high as a result of going public triggering event, 2022 at $75M and 2023 estimated at $74M.
Slide 52: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION 1 2 1A substantial majority is share-based compensation expenses related to going public. 2 Relates to the acquisition of ION Acquisition Corp. 1 Ltd. and going public. 52
Slide 53: 2022 Quarterly Results: Adjusted EBITDA Reconciliation
2022 QUARTERLY RESULTS: ADJUSTED EBITDA RECONCILIATION 1 2 1A substantial majority is share-based compensation expenses related to going public. 2 Relates to the acquisition of ION Acquisition Corp. 1 Ltd. and going public. 53
Slide 54: ex-TAC Gross Profit Reconciliation
EX-TAC GROSS PROFIT RECONCILIATION 54
Slide 55: Ratio of Adjusted EBITDA to ex-TAC Gross Profit Reconciliation
RATIO OF ADJUSTED EBITDA TO EX-TAC GROSS PROFIT RECONCILIATION 55
Slide 56: ex-TAC Gross Profit Margin Reconciliation
EX-TAC GROSS PROFIT MARGIN RECONCILIATION 56
Slide 57: Historical Adj. Gross Profit Margin Reconciliation
HISTORICAL ADJ. GROSS PROFIT MARGIN RECONCILIATION Note: Adj. Gross Profit Margin is calculated by dividing Gross profit by ex-TAC Gross Profit. 57
Slide 58: Historical Free Cash Flow Reconciliation
HISTORICAL FREE CASH FLOW RECONCILIATION 1 1 (1) Adj. EBITDA plus the change in working capital reflects the Net cash provided by operating activities. 58
Slide 59: Supplemental Cash Flow Information
SUPPLEMENTAL CASH FLOW INFORMATION 1 (1) We calculate cash investment in publisher prepayments (net) for a specific measurement period as the gross amount of cash publisher prepayments we made in that measurement period minus the amortization of publisher prepayments that were included in traffic ac
Slide 60: Example of Publisher Prepayments
EXAMPLE OF PUBLISHER PREPAYMENTS 1 60
Slide 61: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET As of Dec As of Dec As of Dec As of Dec ($ in millions) 31, 2019 31, 2020 31, 2021 31, 2022 Cash, cash equivalents and short-term $ 116 $ 243 $ 319 $263 deposits Total Assets $ 482 $ 580 $ 1,598 $1,530 Total Liabilities & Convertible Shares $ 475 $ 534 $ 830 $695 Accumulat
Slide 62: 2023 Full Year Guidance: ex-TAC Gross Profit Reconciliation
2023 FULL YEAR GUIDANCE: EX-TAC GROSS PROFIT RECONCILIATION 62
Slide 63: Note Regarding Adjusted EBITDA Guidance
Note Regarding Adjusted EBITDA Guidance Although we provide guidance for Adjusted EBITDA, we are not able to provide guidance for projected Net income (loss), the most directly comparable GAAP measure. Certain elements of Net income (loss), including share-based compensation expenses, are not predic
Slide 64: Thank You!
THANK YOU!