Taboola reports strong Q2 2024 results, reaffirms full-year guidance

Taboola.com this week announced its financial results for the second quarter ended June 30, 2024. The company reported significant year-over-year growth across key metrics and reaffirmed its full-year 2024 guidance, highlighting the success of its strategic initiatives and investments in artificial intelligence technology.

According to the earnings release, Taboola generated revenues of $428.2 million in Q2 2024, representing a 29% increase compared to the same period last year. The company's ex-TAC Gross Profit, a key performance indicator, grew by 21% year-over-year to reach $149.5 million. This growth was primarily driven by increased advertiser spending, particularly from Tier 1 premium advertisers, and the expansion of premium supply availability through Taboola's platform.

Taboola's Founder and CEO, Adam Singolda, attributed the strong performance to the company's investments in AI, access to unique data, and laser-focus on strategy and execution. During the earnings call, Singolda emphasized the transformational nature of 2024 for Taboola, stating that the company is progressing towards becoming one of the most scalable companies in the open web.

The financial results revealed a significant improvement in profitability metrics. Adjusted EBITDA for Q2 2024 stood at $37.2 million, marking a substantial 138% increase from the previous year. This translated to an Adjusted EBITDA margin of 25%, demonstrating the company's ability to scale efficiently. Free Cash Flow also saw impressive growth, reaching $26.2 million, up 237% year-over-year and representing a 70% conversion rate from Adjusted EBITDA.

Taboola's Chief Financial Officer, Steve Walker, highlighted the company's strong focus on cost discipline. Q2 operating expenses of $122.4 million remained essentially flat compared to the same period last year, despite the significant revenue growth. This efficiency was attributed to the scalability of Taboola's business model and strategic investments in technology.

The company made notable progress in its partnerships and product offerings during the quarter. Taboola completed the migration of Yahoo's advertisers to its platform and reported positive performance metrics from these migrated campaigns. For instance, a leading hotel group leveraging Taboola's native ads on Yahoo achieved a 77% lower Cost Per Acquisition (CPA) than their target goal and a 36% lower CPA compared to the next-best-performing channel.

Taboola's AI-powered bidding technology, Maximize Conversions, continued to gain traction among advertisers. The adoption rate of this technology approached 70% of Taboola's revenue in Q2, up approximately 10 percentage points from Q1 2024. The company reported a massive sequential increase of over 100% in the number of advertiser campaigns using this advanced AI-powered bidding technology.

In addition to its core business growth, Taboola made strides in its growth engines. The company signed a significant, exclusive global OEM partnership for Taboola News, which is expected to expand its reach into all global markets. The e-commerce segment delivered another strong quarter, driven by advertiser revenue retention in core markets and expansion into new high-growth advertising channels and international markets.

Looking ahead, Taboola reiterated its full-year 2024 guidance for ex-TAC Gross Profit, Adjusted EBITDA, and Free Cash Flow. The company expects ex-TAC Gross Profit to grow 25% year-over-year to $667 million, Adjusted EBITDA to more than double to over $200 million, and Free Cash Flow to exceed $100 million, also representing a doubling compared to 2023 levels.

For the third quarter of 2024, Taboola provided guidance of $416 million to $446 million in revenues, $159 million to $169 million in ex-TAC Gross Profit, and $42 million to $52 million in Adjusted EBITDA. These projections reflect the company's confidence in its ongoing business momentum and the effectiveness of its strategic initiatives.

Taboola's strong performance comes amid a challenging macroeconomic environment and increased competition in the digital advertising space. The company's focus on premium advertising and performance-driven solutions appears to be resonating with advertisers seeking measurable returns on their marketing investments.

The digital advertising industry has been undergoing significant changes, with the phasing out of third-party cookies and increased privacy regulations. Taboola's investments in AI and first-party data solutions position the company to navigate these challenges and capitalize on the growing demand for targeted, privacy-compliant advertising solutions.

Taboola's success in attracting and retaining premium publishers and advertisers is particularly noteworthy. The company reported that 25% of its revenue in Q2 came from Tier 1 brands and agencies, indicating its growing appeal to high-value advertisers. This shift towards premium advertising is expected to drive higher yields and profitability for Taboola in the coming quarters.

The company's ongoing partnership with Apple for advertising on Apple News and Stocks applications in key markets (U.S., UK, Canada, and Australia) represents another significant opportunity for growth. While specific financial details of this partnership were not disclosed, Taboola executives expressed optimism about its potential to become one of their largest publishing partnerships over time.

Taboola's performance in Q2 2024 and its reaffirmed guidance for the full year demonstrate the company's resilience and ability to execute on its strategic initiatives. As the digital advertising landscape continues to evolve, Taboola's focus on AI-driven solutions, premium partnerships, and performance advertising positions it well for sustained growth in the competitive open web advertising market.

Key facts from the earnings report

Q2 2024 revenues: $428.2 million (29% YoY growth)

Q2 2024 ex-TAC Gross Profit: $149.5 million (21% YoY growth)

Q2 2024 Adjusted EBITDA: $37.2 million (138% YoY growth)

Q2 2024 Free Cash Flow: $26.2 million (237% YoY growth)

Maximize Conversions AI technology adoption: ~70% of revenue

Full-year 2024 ex-TAC Gross Profit guidance: $667 million (25% YoY growth)

Full-year 2024 Adjusted EBITDA guidance: Over $200 million (~2x YoY growth)

Full-year 2024 Free Cash Flow guidance: Over $100 million (~2x YoY growth)

Tier 1 brands and agencies revenue contribution: 25% in Q2 2024