Taboola.com Ltd. · NASDAQ:TBLA
Taboola.com — SPAC Merger (January 2021)
58 slides from Taboola.com's SPAC merger presentation, Jan 25, 2021
Slide 1: PIPE Investor Meeting Management Presentation
PIPE Investor Meeting Management Presentation January, 2021 Confidential 1
Slide 2: Important Information and Disclaimer
This investor presentation (this “ Presentation ” ) is for informational purposes only to assist interested parties in making their own evaluation with respect to the proposed business combination (the “ Business Combination ” ) between ION Acquisition Corp 1 LTD . ( “ ION ” ) and Taboola . com Ltd
Slide 3: Non-GAAP Financial Measures
Non - GAAP Financial Measures This Presentation includes certain financial measures not presented in accordance with GAAP including, but not limited to, Adjusted EBITDA and certain ratios and other metrics derived therefrom, including free cash flow and ex - TAC Revenue, and related margin measures
Slide 4: Presenters and Senior Leadership
PRESENTERS AND SENIOR LEADERSHIP Adam Singolda Founder & CEO Stephen Walker CFO ▪ 6+ years at Taboola ▪ Previously held positions in Idealab’s New Ventures Group and also led several of Idealab's portfolio companies, including Perfect Market ▪ Prior experience at Disney & General Electric ▪ CEO of I
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 Q 3 18 ION Crossover Partners 2015 Sovereign Wealth Fund Q 4 18 ION Tech Fund 2006 ION Israel Fund Total AUM: >$ 2 bn Q 4 20 ION Acquisition Corp (SPAC) Crossover, IPO and public markets 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 1 New category: recommendation feeds for Open Web ($64B market) Unique partnership with publishers: exclusive, long term & integrated into code (no 3rd party
Slide 8: Transaction Summary
TRANSACTION SUMMARY ▪ Pro forma enterprise value of $ 2.0 billion ▪ $ 509 million total proceeds consisting of: − $ 259 million from ION Acquisition Corp. 1 Ltd. − $ 200 million in target PIPE proceeds raised at $ 10.00 / share − $ 50 million forward purchase agreement (FPA) at $ 10.00 / share ▪ Exi
Slide 9: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 9
Slide 10: We Power Recommendations for the Open Web
We Power Recommendations for The Open Web Helping people discover things they may like 10
Slide 11: Taboola = Search In Reverse
TABOOLA = SEARCH “ IN REVERSE ” From people looking for information to information looking for people 11
Slide 12: You Have Seen Taboola Before
YOU HAVE SEEN TABOOLA BEFORE 12
Slide 13: 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. Data Processed by Taboola AI Daily 3 1 Petabyte CPU Cores 4 400 K+ 1 Trillion 516 M DAIL
Slide 14: Enabling Publishers to Compete with Walled Garden Behemoths
ENABLING PUBLISHERS TO COMPETE WITH WALLED GARDEN BEHEMOTHS WALLED GARDENS 1 Bringing the user data, AI technology and scale of demand to open Web players SOCIAL SEARCH ECOMMERCE OPEN WEB 2 25 % 3 (1) Walled Gardens includes other closed platforms including Snap, Twitter, and Netflix (2) Open Web: D
Slide 15: Taboola Can Capture the Highly Fragmented Open Web Market
TABOOLA CAN CAPTURE THE HIGHLY FRAGMENTED $ 64 B OPEN WEB MARKET 1 SOCIAL SEARCH ECOMMERCE RECOMMENDATIONS ENGINE Open Web App Install Video Banners Affiliates ( 1 ) Jounce Media, 2020 Market Outlook Report 15
Slide 16: Taboola Is for Advertising What Shopify Is for E-Commerce
E - COMMERCE TABOOLA IS FOR ADVERTISING WHAT SHOPIFY IS FOR E - COMMERCE ADVERTISING 16
Slide 17: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 17
Slide 18: Full Tech Stack for Publishers
FULL TECH STACK FOR PUBLISHERS: MISSION CRITICAL FOR THE OPEN WEB Engagement Engaging users by recommending organic content Monetization Monetizing with non - interruptive, native ads Audience Driving quality audiences from across the network $ 2 B+ Paid To Publishers Over 3 Years 1 ( 1 ) See Append
Slide 19: Long-Term, Exclusive Partnerships with Publishers
THAT ’ S WHY TABOOLA GETS LONG - TERM, EXCLUSIVE PARTNERSHIPS WITH PUBLISHERS • 120 % NDR in 2020 1 • 9,000 publishers • Global Publishers on a 5 + Year Contract with Taboola ( 1 ) Source: Company Data. Reported dollar - based net retention rate ( “ NDR ” ) is the simple arithmetic average of our mo
Slide 20: Advertisers Choose Taboola for the Open Web
ADVERTISERS CHOOSE TABOOLA FOR THE OPEN WEB • Massive reach – 516 M Daily Active Users • Performance focus with measurable ROI • Brand safe ad placements • Target ads based on what people truly care about Largest advertiser is 3 % of total ad spend 10 th largest advertiser is 1 % of total ad spend 1
Slide 21: Discovering Direct-To-Consumer Brands on Taboola
- Zach Jacobs, Director of Marketing at Mack Weldon “ 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 looking for new ways to create awareness for our products while growing our c
Slide 22: Generating Quality Leads for Samsung Life Insurance
- Gahee Lee, Digital Sales Section Manager, Samsung Life Insurance “ 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 was the most important behavior. Taboola hugely
Slide 23: Marketplace Business Model
MARKETPLACE BUSINESS MODEL AI - Powered Biddable Marketplace Advertisers place bids to appear on Taboola and pay per click/view Taboola shares ad revenue with Publishers $ $ $ $ $ $ $ $ 23
Slide 24: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 24
Slide 25: 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
Slide 26: Taboola Is Poised to Capture the $64B Open Web Market
• Exclusive relationships with publishers: predictable supply • Product - led growth: powering recommendations (vs. optimizing impressions) • Direct relationships with 10 K+ advertisers TABOOLA IS POISED TO CAPTURE THE $ 64 B OPEN WEB MARKET The Open Web Audience Network Amazon DSP Source: Original
Slide 27: Taboola Tech Is Built for a Cookie-Less World
• Taboola has its own 1 st party cookie - recommending personalized editorial content enables serving our own 1 st party identifier • Unique readership context - deep access to the context of the page, allowing advertisers to target context (vs. “ 3 rd party cookie behavior ” ) • People click on Tab
Slide 28: Product-Led Growth with a Built-In Network Effect
PRODUCT - LED GROWTH WITH A BUILT - IN NETWORK EFFECT 3 More Publisher Partners More Users Reached , More Often More User Data Gathered Higher Yield (Better Results for Advertisers and Publishers) 28
Slide 29: Platform Advantage Driven by Investment in Tech
PLATFORM ADVANTAGE DRIVEN BY INVESTMENT IN TECH 500 R&D staff 100 in Algo & Data $ 100 M Annual R&D Investment 4 Source: Company data, 2021 estimates 29
Slide 30: Recommending Anything, Anywhere: A Multi Billion Dollar Growth Engine
RECOMMENDING ANYTHING, ANYWHERE A MULTI BILLION DOLLAR GROWTH ENGINE Core Business $ 1 B+ in 2020 & Growing Rapidly 2 A N Y T H I N G $ 10 M ’ s in 2020 3 $ 10 M ’ s in 2020 1 A N Y W H E R E New products and segments (TV ads, eCommerce, app downloads, gaming...) Taboola News (mobile carriers, devic
Slide 31: Growth Case Study: ConvertMedia Acquisition
GROWTH CASE STUDY: CONVERTMEDIA ACQUISITION 5 2016 $ 20 M Annual Run Rate 1 Acquired ConvertMedia 2020 +$ 90 M Technology Integration & Go - To - Market 31 ( 1 ) Annual run - rates are expressed in Gross Revenue 31
Slide 32: Proven, Founder-Led Management Team
PROVEN, FOUNDER - LED MANAGEMENT TEAM 6 Kristy Sundjaja 1 year at Taboola SVP, People Operations Ran Buck 7 years at Taboola SVP, Global Revenue Aviv Sinai 13 years at Taboola SVP, R&D Adam Singolda 13 years at Taboola Founder & CEO Eldad Maniv 8 years at Taboola President & COO Stephen Walker 6 yea
Slide 33: Financial Highlights
FINANCIAL HIGHLIGHTS 7 WE POWER RECOMMENDATIONS FOR THE OPEN WEB $ 1.2 B Gross Revenue $ 379 M ex - TAC $ 106 M Adj. EBITDA $ 160 M Raised to date $ 200 M+ on the balance sheet 1 2 0 2 0 EST. 33 ( 1 ) Cash Balance as of 11 / 30 / 2020 33
Slide 34: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 34
Slide 35: Taboola Focuses on Profitable Growth
TABOOLA FOCUSES ON PROFITABLE GROWTH 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 PROFITABLE GROWTH Rule of 40 Business ( 1 ) Adj. EBITDA Margin = Adj. EBITDA / ex - TA
Slide 36: 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 networks 1 Given that investment, Adj. EBITDA margin (% of ex - TAC) was 11.5 %... 2018 A 2019 A 2020 E 27
Slide 37: COVID-19 in 2020 Proved the Resiliency of Our Model
COVID - 19 IN 2020 PROVED THE RESILIENCY OF OUR MODEL • COVID - 19 / Recession Dip Strong Recovery Real RPM 1 Leaving 2020 stronger than we entered with sustainably higher profitability Sustainable yield increase, driving higher margins • Worked with publisher partners to optimize for yield • Signed
Slide 38: Growth Driven by Core Open Web Installed Base
GROWTH DRIVEN BY CORE OPEN WEB INSTALLED BASE New Publisher Supply in Open Web • Historically 15 % new supply growth • Projecting 8 - 11 % going forward Net Dollar Retention Growth Has Two Elements • Improvements in yield (RPM) • More supply from existing publishers • Projecting 101 - 103 % net doll
Slide 39: P&L Summary: Forecasts Show Our Profitable Growth Plans
P&L SUMMARY: FORECASTS SHOW OUR PROFITABLE GROWTH PLANS $ 106 M $ 379 M $ 127 M $ 445 M $ 143 M $ 516 M 16 % ex - TAC Revenue Growth 1 27 %+ Adj EBITDA Margin 17 %+ Adj EBITDA Growth 2 80 %+ Adj. Gross Profit Margin 3 ( 1 ),( 2 ) Growth rates reflect 2020 - 2023 CAGR ( 3 ) Adj. Gross Profit Margin i
Slide 40: Agenda
AGENDA • Introduction • Overview • About Taboola • Investment Highlights • Financial Information • Valuation & Comparables 40
Slide 41: Transaction Summary and Pro Forma Ownership
TRANSACTION SUMMARY Notes ( 1 ) Total shares includes 201.1 million rollover equity shares, 25.9 million ION public shares, 20.0 million shares from PIPE, 6.5 million ION founder shares and 5.0 million FPA shares. Excludes dilution from 12.4 million public and private placement warrants struck at $
Slide 42: Valuation Framework
VALUATION FRAMEWORK Mid - Cap Advertising Technology • Funded by digital marketers / advertisers looking for new customers • Similar scale • Funded by digital marketers / advertisers looking for new customers • Recurring revenues • B 2 B - oriented solutions that are consumer focused • Support marke
Slide 43: Valuation Metrics
VALUATION METRICS CY 21 : CY 22 : 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 a ex - TAC equivalent revenue basi s. Data for Advertisin
Slide 44: Operational Metrics
OPERATIONAL METRICS CY 21 : CY 22 : 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 a ex - TAC equivalent revenue basi s. Data for Advertis
Slide 45: Thank you.
Thank you. 45 45
Slide 46: Appendix
APPENDIX 46
Slide 47: Our Model in a Nutshell
OUR MODEL IN A NUTSHELL 47 Page views RPM Gross revenue ( 1 ) Traffic Acq Cost (Value to publishers) ex - TAC Revenue ( 2 ) Cost of Revenues Gross profit R&D S&M G&A Operating Income 799 bn $ 1.14 $ 909 ($ 627 ) $ 282 ($ 48 ) $ 234 ($ 73 ) ($ 110 ) ($ 34 ) $ 17 $ 1.00 ( 100 %) ($ 0.69 ) $ 0.31 ($ 0.
Slide 48: Key Model Assumptions
KEY MODEL ASSUMPTIONS Operating costs: ($ in millions) Operating margin (% of ex - TAC revenue) Operating income ($ in millions) REVENUE (ex - TAC) ▪ Historically, Taboola grew 20 %+ (CAGR ’ 17 A - ’ 20 E) ▪ In 2020 , Taboola will generate ~$ 379 million ex - TAC ▪ Conservatively modeled ~ 16 % grow
Slide 49: Historical & Projected Revenue
HISTORICAL & PROJECTED REVENUE Gross revenue margin YoY growth 49
Slide 50: P&L Summary
P&L SUMMARY ADJ. EBITDA MARGIN ▪ Return to “ normal ” operations and cost basis in H 1 2021 ▪ Investing in serving infrastructure and Algo beginning 2021 ▪ IPO readiness costs added starting 2021 LONG - TERM EX - TAC REVENUE GROWTH ▪ Current Model only forecasts growth from Core Business ▪ Long - Te
Slide 51: 2020 / 2021 Quarterly Financials
2020 / 2021 QUARTERLY FINANCIALS Note: dollar values in this table reflect rounded values; growth and margin calculations are based on exact values calculated to nine decimal places 51
Slide 52: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION 52
Slide 53: Adjusted EBITDA Reconciliation
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: Free Cash Flow
FREE CASH FLOW (1) Adj. EBITDA Plus the change in working capital reflects the net cash provided by operating activities. ( 1 ) 2021 Free Cash Flow Reduced by Plan To Invest in Two Areas: 1) Purchase of $ 30 M of servers beyond “ normal ” levels as part of investment in algorithmic yield improvement
Slide 57: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET ($ in millions) As of Dec 31, 2019 As of Sept 30, 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 57
Slide 58: Taboola Protect
TABOOLA PROTECT Ongoing monitoring of the network and removal of undesirable content and actors. 30 + Reviewers 24 / 5 manual review + 14 h per day on weekends 24 / 7 automated review - Taboola automations including AI tools 13 Languages English, Danish, Swedish, Norwegian, Spanish, Portuguese, Germ