Today is a big day. A big win for the Open Web and a big win for the “good guys.” I can’t even begin to tell you how excited I am. We just announced that we signed a long-term, strategic partnership with Yahoo. This is by far our most strategic partnership agreement ever, and in my mind one of the most exciting partnerships in the history of the Internet.
Yahoo is an internet hero. We’ve all been fans of them for many years. They’re one of the most trusted, innovative tech and media companies of our era. That’s why nearly 900M people visit Yahoo’s websites and apps every single month, again and again.
We are honored that Yahoo chose Taboola because of our superior technology, greater monetization and cultural fit. Taboola is going to power recommendations and native advertising across iconic brands such as Yahoo News, Yahoo Finance, Yahoo Mail, Yahoo Sports, and all of Yahoo’s digital properties.
The agreement is for 30 years of strategic partnership and friendship. We’re going to join hands and innovate together, bringing more power to Open Web users, leveling up the fight against the walled gardens.
The Open Web Platform of Choice for Advertisers – Scale, Contextual Powerhouse and Performance
The Open Web is huge but fragmented, so advertisers are forced to use multiple channels to reach scale, which is difficult.
We’re changing that. Thanks to this partnership, advertisers will get access to 3 things – massive scale, contextual powerhouse in times of privacy, and return on ad spend. We intend to invest heavily in advertising stack, bidding strategies/SmartBid, creative formats, and more.
Let’s break it down. Yahoo reaches nearly 900M people a month, this is an unbelievable scale with unbelievable performance for advertisers. Taboola, across our 9,000+ publisher partners, reaches about 500M active users a day. For advertisers and merchants this means unprecedented reach on the Open Web.
But we’re not stopping there. The collaboration will also help the industry address the key challenges of effective targeting on the backdrop of iOS14 and the demise of 3rd party cookies. Our collaboration with Yahoo will give advertisers access to what I believe is the most sophisticated contextual dataset online. Together, we’re going to build a “Contextual Powerhouse”, enabling advertisers to target relevant audiences without relying on third-party cookies and while maintaining complete user privacy.
Great For Our Publishers – Getting Yahoo Demand on Our Network, Driving Audience, Engagement and Revenue
The partnership means a lot to our publishers. To start, Yahoo native advertisers will now buy Taboola exclusively, meaning that our publishers will get even more quality demand.
Additionally, we’ll be able to invest even more in driving revenue, engagement and audience growth for Open Web publishers. Everywhere I look, I see a rocketship opportunity for growth – eCommerce, Native Advertising innovation, Video and High Impact placements, personalization, audience growth, and more. It’s just unbelievable, and I can’t wait to share our plans with all of our publisher partners for the next many years to come.
Financially Stronger
It’s a meaningful milestone for Taboola. The new partnership with Yahoo is expected to add around $1 billion in annual revenue to Taboola once we’re fully ramped up. For illustration purposes, if Yahoo inventory was part of Taboola in 2022 we would have generated ~$2.5 billion in revenue, assuming it was fully ramped up and expected operating improvements were realized from day 1. That’s before additional revenue opportunities from growth engines we have identified to work on over time – things like eCommerce, Video, Header Bidding (Display) and more. We expect to start rolling out in the second half of 2023 and continue into 2024 – so that’s when you should expect this to start materializing.
This partnership is highly accretive to the important metrics we focus on, and is expected to improve our Revenue per share by ~32%, Adjusted EBITDA per share by ~43%, and while we don’t guide for Free Cash Flow per share, our Free Cash Flow would grow nearly ~5x.
Earlier in the year, at our investor day, we shared our goal of generating $1 billion in annual ex-TAC by 2025, which given our financial profile implies about $300M of Adjusted EBITDA and about $150M of Free Cash Flow. This partnership is a big step towards achieving that goal. It is transformative not only for Taboola and Yahoo, but also for every publisher and advertiser on the planet. Together, we’re going to offer an even bigger and better alternative to the walled gardens.
For our investor community, we will conduct a deal information session after the deal closes, which we expect will be in Q1 2023.
A Big Day for Taboola, our partners and the Open Web
Partnering with Yahoo means we’re doubling down on our commitment to powering recommendations across the Open Web, giving advertisers more choice against being trapped in walled gardens, while at the same time, driving growth to publishers. It’s a vote of confidence in our vision and team, given to us by one of the largest tech and media companies in the world and we’re thankful for that.
As a founder, Apollo standing behind this partnership is amazing. I look forward to learning from Yahoo, and Apollo as we’re working together on realizing and redefining our dreams in the next few decades.
We’re committed to each other, the Open Web, the advertising community and journalism. Today is just the beginning.
–adam
Disclaimer – Forward-Looking Statements
Certain statements in this communication are forward-looking statements. Forward-looking statements generally relate to future events, including Taboola.com Ltd.’s (the “Company’s”) expectations for the proposed transactions described in this communication and future financial or operating performance of the Company.
In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements. Examples of such forward-looking statements include, but are not limited to, projections or estimates regarding the Company’s future financial or operating performance and potential contributions and impacts the proposed transactions may have on the Company’s future financial or operating performance, including the potential revenue generation of $1 billion per year.
These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, are inherently uncertain. Uncertainties and risk factors that could affect the Company’s future performance and cause results to differ from the forward-looking statements in this communication, but are not limited to: the ability to obtain the required approvals to consummate the transaction, including shareholder, regulatory or other approvals and the timing, costs or other actions that may be required to obtain such approvals; the Company’s ability to transition to and fully launch the native advertising service for College Top Holdings, Inc., a Delaware corporation, and Yahoo AdTech JV, LLC, a Delaware limited liability company (the “Yahoo Parties”) on the currently anticipated schedule or at all; market acceptance of the new service and the Company’s ability to attract new or existing Yahoo advertisers to the new service; risks that existing Yahoo advertisers may terminate their contracts as a result of the proposed transactions and not migrate to the Company’s service; the ability to generate $1 billion in annual revenue from the transaction, which depends on, among other things, full ramp up of the partnership, improved yields for Yahoo due to the application of Taboola technology and data, improved yields for Taboola due to increased advertiser demand from Yahoo and additional data, and normal economic conditions; costs related to the introduction and operation of the new service; the timing and amount of any margin, profitability, cash flow or other financial contributions of the new service; the risk that the new service results in a decline in the Company’s financial performance during the preparation and roll out of the new service and beyond; the 30-year term as an exclusive native publisher partner with the Yahoo Parties, which can be subject to early termination in accordance with the governing agreements and/or applicable law; ability to achieve the increase in revenue, Adjusted EBITDA, ex-TAC and Free Cash Flow to the levels assumed in this communication or at all; ability to transform the Company into an alternative to the walled gardens in the Open Web; ability to expand beyond traditional advertising to include additional value-added services to create future growth; expectations regarding the impact of the proposed transaction materializing in H2 2023 and continuing into 2024, which materially depends on the time of the transaction closing, which may be out of our control, and the degree to which our onboarding and ramp up are successful; the intense competition in the digital advertising space, including with competitors who have significantly more resources; ability to grow and scale the Company’s ad and content platform through new relationships with advertisers; ability to maintain relationships with current advertiser partners; ability to make continued investments in the Company’s AI-powered technology platform; the need to attract, train and retain highly-skilled technical workforce to support the proposed transactions; changes in the regulation of, or market practice with respect to, “third party cookies” and its impact on digital advertising; continued engagement by users who interact with the Company’s platform on various digital properties; the impact of the COVID-19 or other possible future pandemics; changes in laws and regulations related to privacy, data protection, advertising regulation, competition and other areas related to digital advertising; ability to enforce, protect and maintain intellectual property rights; and risks related to the fact that the Company is incorporated in Israel and governed by Israeli law; and other risks and uncertainties set forth in the Company’s Annual Report on Form 20-F for the year ended December 31, 2021 under Item 3.D. “Information About the Company – Risk Factors” and in the Company’s subsequent filings with the Securities and Exchange Commission.
Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no duty to update these forward-looking statements except as may be required by law.