Going to get started. I'm Laura Martin. I'm the Senior Media and Internet Analyst here at Needham & Company, and I'd like to welcome to my stage Adam Singolda, the founder and CEO of Taboola.
He is one of my favorite people to have on my stage. I'm going to start with the hardest question first, Adam, which has nothing to do with your company, which is, as a CEO, what is the most important professional conversation you've ever had, and how did it impact your path?
I mean, in my journey, I think the most special kind of sequence of conversations, but really environment, is probably my Army service. I mean, I've met many great people along the journey and interesting people, but the most unique that kind of really shaped me was I spent almost seven years as an engineer in the Israeli version of NSA here, but in Israel. And when you join the unit in that way, it's uniquely flat. No one gets promotion. There's no VPs. Nobody gets a bonus. You're there, and you have to make it work. And it matters when you do well because you're saving people's lives and all those things.
What's amazing is that you're able to build amazing products and do really innovative things without all the things that we in the industry are used to, like experience and LinkedIn profiles and equity and all those things. When I left the Army, it really shaped how I think about culture and running a company in the way that I look at Taboola. We're uniquely flat. We're aggressively transparent in how we talk to each other and what we share. I think eventually it allowed Taboola to execute better than many, many companies in our space because of the way we work together.
Not only are we many years together, if you look at Taboola, Steve and I are CFO 10 years and many of us around 10 years, but the way we deal with problems and the way we execute on things we want to do in a complicated space, I think a lot of it was shaped with what I've seen in my first 7 years, because Taboola is my first job. So before that, I think that shaped me probably the most, just seeing the.
Not a single conversation anywhere along your professional path that sort of somebody said something, you said, OK, I'm going to do it that way from now on. Was it learning that sort of pivoted your professional?
I mean, I feel like I have many mentors. I mean, I feel like almost everyone is my mentor in many ways. And I actually subscribe to overshare and risk you.
I love that about you.
I risk you taking advantage of me because I told you more about me and what I think. However, I'm going to learn from you and many people that I speak with and hopefully make better decisions. So I'm biased towards more transparency, share more, but learn faster and execute better versus I think a lot of people tend to believe that their ideas are unique. And hence, that is their superpower. And I think that actually most of us are way more average than we like to think. And most ideas are way more commodity than we like to admit. And the true innovation of this century is execution. It's not the presentation. It's not the funding. It's not even my resume.
And a lot of times, unless you're building SpaceX and you're flying rockets to space that will come back to Earth, and that is quite a unique experience, most of us in the room, so long that we're fairly intelligent people, can probably learn what other people already do know and then beat them if we're willing to take risks and work better together. So if you subscribe to that, then experience means less. And passion and energy and a group of people working together means more. So I think I prefer to invest in companies that look like that. And I prefer to hire people that are head of revenue, which we're getting for almost $2 billion in revenue this year, $200 million of EBITDA. I mean, real numbers, before Taboola, it was a chef that used to cook for a living.
But in fairness, you did the Yahoo deal, which gave him all that revenue. He did nothing to do that.
Yahoo is by far not all the revenue. It's a big publisher of ours. But before Yahoo, we got it for $1.5 billion. That wasn't me.
But nothing to do with the chef. The chef is showing up, and the revenue is already there because you're handing him revenue.
He showed up 11 years ago when we were pre-revenue. Someone had to do it. And by the way, no one person does everything in any case. But I'm just saying it's his job to run a big sales organization in 20 countries. But my point is, and I can go again and again, my point is that I think he's one of the better revenue people I know now. He knew nothing beforehand. And that's my point about what's the most important piece in a company, which I think eventually is execution, which is driven by culture and a group of people that can do better than others.
Well, you've always had a really big focus on culture. And I had a panel of Amazon people on board. And they said Amazon only hires athletes, and then it moves them every two years. It doesn't want experts in its business because they're slow, and they have ways of doing it. That's basically what you're saying you do in your company, too. You hire chefs, or you hire Steve, who didn't have accounting background before he came. And then they're great athletes, and then they turn into great team leaders.
And by the way, I think clients love that, too. I mean, in Steve's world, which is clients or investors, they love it. They get to speak to someone who understands the business really, really well. I mean, not to say that people that come from accounting are bad people. I'm just saying that you get to speak to someone who runs sales organizations and sales ops and knows the business to the T as an investor. I think you'll like that type of a CFO because it's interesting. You understand the business more. So I think same for publishers and advertisers. So I think that you benefit from that as well. And a lot of times, I think experienced people, again, nothing is wrong if someone worked for Google, God forbid. But I mean, there's nothing wrong with that.
But I think a lot of times when experienced people come into a situation, the risk profile they carry is lower. They have something to lose. And when you have something to lose.
And they're doing it that they don't want to look at a new way of doing it, the clean piece of paper.
And again, it's not necessarily bad, but it's just harder for them to fit and make mistakes and kind of become a blended part of the organization. So that's something that we care about. And it affects the way we interview people and the fact we interact with each other and how we go into conflicts and get out of those, but eventually killing it in the marketplace.
Let's go to Taboola. So your vision for Taboola is that it can become a one-stop shop for advertisers in the open internet. It's going to be like the necessary ad buy on the internet. So can you share that vision with the audience and how you are executing that vision today?
Yeah. I think that, first of all, taking a step back, I'm very excited about advertising in general. I think that we're seeing now companies like Amazon reporting advertising being more profitable than cloud. Uber is going to make more than $1 billion in revenue this year from ads. Walmart is into ads. Apple is into ads. Everyone is into advertising. And the reason is it allows great companies to offer a more affordable tier of their service or reach more consumers or making things even free. Netflix now has advertising. Disney, everyone is into advertising. So overall, I like it. I think it shows that we're in the right, there's a right good trend here. And we're going to see many Fortune 1000 companies wanting, I think, all board meetings and CEOs and C-level employees now saying, what's our advertising strategy?
When is Laura going to have us on stage? Because what do we do in advertising? That's a good trend. Google and Facebook are big. But the future growth, I don't think, comes from Google and Facebook. I think it comes from everyone else that want to get into advertising because it allows all the things we just said. And when that happens, there's an opportunity to build kind of like a Google for the Open Web for the rest, for the non-Google Facebook market, which is referred to as the Open Web. And the Open Web today, while it's about $80 billion-$100 billion, depends on which report you're reading, what sucks about that space is that it has dozens of small companies, each with their own technology, their own account management, their own interface, their own shtick. But if you're an advertiser, it's easy to buy Google Search.
It's easy to buy Facebook. It's really complicated to buy the open web. And the opportunity that exists here is to build the very first bridge that advertisers can secondarily rely on you. Your technology works. And by the way, it's premium. It's safe. You're giving me stuff that I want, and it's going to be good for me to buy. That doesn't exist today yet. I'm convinced it will exist. And I think Taboola has a chance of being that company. We're almost $2 billion, which I think makes us the biggest to date. I think we have an amazing AI technology.
What are you doing with Trade Desk? Trade Desk is $2 billion in revenue and $10 billion in gross revenue.
The Trade Desk is one of our advertisers. They're buying on Taboola. But we're different than the Trade Desk in the sense that I think, to me, the Trade Desk has done a great job building a must-buy for agencies.
I see. They're a must-buy for agencies.
I see the Trade Desk as they're like Taboola. It's like five years ago. It's like if the Trade Desk was five years ago being interviewed, they would say, we want to build the first agency must-buy because agencies deserve a non-Google platform.
Right. Non-Google choice.
They did it. Taboola wants to do the same for the Open Web such that we have publishers and advertisers meeting each other in a.
In a marketplace.
In a marketplace. That doesn't exist today. I think it will be. I think the Yahoo and the Apple and all those things just make us closer.
OK. OK, great. That makes sense. So let's talk about those two things. Let's talk about what you're doing with Yahoo and how it changes the transitions of business, and then what you're doing with Apple because both of those are really interesting sort of recent developments, really.
Love those two. It's great. Because when I started Taboola, when I raised money from investors, I had this TAM open web. I said, well, Yahoo is outside of our TAM, and Microsoft I thought Microsoft and Apple and Yahoo and all these big companies are not relevant to Taboola. Look at us now. They all love Taboola so much, which is great. What we do with Yahoo is we signed a 30-year partnership that includes kind of three things. It includes the supply, so the Yahoo.com, which we all use for Yahoo Finance every day, maybe sports too and news. It includes migrating advertisers from Yahoo into Taboola. It includes data integration to help us create more contextual segments to make advertisers successful.
The first stages, which we're on time to migrate by the middle of this year, basically, is the Yahoo.com piece, the site, the publisher. And then once we do that, to do that, we have to finalize migrating advertisers. That's what's ahead of us. So there's more work to be done. And then we're going to start cross-selling advertisers between Yahoo and Taboola Network. And we hope to see yield growth basically on both sides, which is what we believe is a sizable synergy between us. So that's the Yahoo thing. And Apple, I can show you how it looks like. Should I show you?
OK. Sure.
You see? Steve Jobs presented iPhones. I want to do the same. So if you open your iPhone and you swipe right and you click on Apple News, so you should see ads on your Apple.
News feed.
News feed. And that will be Taboola. So if I see one, you'll see us. Yeah. So Taboola. So if you have an iPhone in the U.K., so 90 days ago, it was Australia and Canada. And then I'm happy to report that we expanded out to the U.S. and the U.K. These are the four markets Apple operates. Apple News is.
Apple News, yeah.
Yeah. So that's great because the whole thing between Yahoo and Apple News and in general, what we've announced recently is it's the whole premiumness of Taboola to allow brand advertisers to buy performance from Taboola in a scaled way. We took the Yahoo Network, which is very premium. We took Apple News, which is nobody got fired for advertising on iPhone. And then we took the 15% of our network, which is Disney and NBC and CBS and BBC and all of those. And we created a standalone ad unit. And we said, if you're a brand advertiser and you're willing to pay a premium, now you can. And you'll get all of this. And I think this will be a big step for Taboola.
You're segmenting your inventory into a premium unit where people can pay more but know it's context-safe. It's brand-safe.
It was always safe because it was always like ESPN and NBC. But now you're on your own. It's one of the things.
It's on your own. What's that mean, you're on your own?
There's no other advertiser next to you. It's just like the ad sits outside of our feed.
I see.
Also at Yahoo.com, you'll see ads are independent. There's just like standalone ads. On Apple News, it's standalone ads. What we've seen, which is one of the learning curves I've had from working with Yahoo, is that if you can create an experience for an advertiser that is completely standalone on a good publisher and it works, you're willing to spend real money for that.
How do you define it works? What's that step? What does it mean to work?
Yeah. The good question. The works piece is mainly, do you hit their acquisition cost targets?
I see.
Is it when they compare it to Google and Facebook, how does that compare? So these are not brand budgets. This is not top of the funnel, Olympics type of thing. It's not one and dime type of dollars. These are big brands: Hulu, Samsung, Verizon, Citi, great brands. But they have an acquisition cost target in mind. And if it works, they're able to spend a significant amount.
OK. And you're putting these in your Apple News and your Yahoo Premium content by themselves. So they get protected ad space that they're not.
Yeah. It's just them.
It's just them. It's almost like a sponsorship. Isn't that what sponsorships do? It's just them.
Ish. But in this case, it's highly performance-driven. And Taboola, in general, I just don't, I think that the only way to build a company that can be $2-$5 billion more in revenue. You have to really be the best in performance advertising.
Again, Trade Desk would be the example that doesn't support your statement.
Because they went in a market that's agency-driven.
But you just said a business can't build a business unless they're performance. And they're about to do that.
Well, I want to build a Google Facebook business, which I think so I think and also, the revenue, they have a great multiple. But I mean, the revenue that I think Taboola aspires to get to is I want to be a big chunk of the $80 billion of Open Web. But those are mostly performance advertisers. So outside of market cap and multiples and all those things, as I think about the next I just came back from an offsite. And we're talking about growing from $2 billion-$5 billion in revenue. I don't think those budgets come from brands branding advertising.
Where do they come from?
They come from brands who look for performance. I think that's the next big step for Taboola will be to the horizons of the world and bigger brands that are looking for a premium, safe environment, but that work, that they can rely on the performance as compared to Google and Facebook.
OK. So one of the conclusions of the prior panel, which was called "The Future of Advertising," is that with the signal decay in the open internet and the loss of an ID spine, that a lot of money that used to be in the open web moves back towards CTV because it's a registered environment. Could you comment on that?
I don't think so. So the way I think about dollars and the way they're being spent, the Open Web dollars now are there because they work for people who spend them. And I don't know if they go away to necessarily like walled gardens of other kinds because I think if they could, they would. I don't think advertisers now don't spend on Google or Facebook or CTV because they spend on the Open Web. They spend wherever it works. So the question, what happened to those budgets in the Open Web if third-party cookies go away, which can they go away already?
Yeah, please.
We can be talking about it for a long time. Enough is enough. I mean.
That's so great.
But assuming they go away soon, I do think we'll see winners and losers in the Open Web. So I don't think. I think the Open Web has a chance to even go bigger because we'll see bigger companies that can actually become more must-buy to advertisers. So personally, I think that companies who have first-party cookies, companies who are good at contextual advertising, advertisers want to reach ESPN and NBC and CBS. They're not going to give it up because they can't. They'll find other ways to get there. And I think it's going to be potentially good for some companies and bad for others.
OK. So you don't see a shift. That was another thing they said. They said that in the last two months, this notion of media mix modeling, is that it? Which is how much of your budget you allocate top of funnel, mid funnel, down funnel, is coming back after five years of sort of disappearing because their thesis was the reason that concept is coming back is because people have done overperformance, that they've been driving to performance, driving to performance. And companies are running up against their TAM. And they weren't replenishing the pipeline. So now we're going back to media mix modeling because they have to now start doing awareness mid funnel, bottom of funnel. Do you have a point of view on that?
1. Maybe. I heard that too from some smart people. I think.
The panelists were smart.
No, no. I'm not saying they're not. I think that on the back of the pandemic, recessions, inflations, what I'm seeing is actually people want to prove their ROI even more than they used to. So I don't know that we're going back to because the challenge with top funnel is that it's a bit hard to prove that it works.
That's true.
So, I think the challenge is, are you ready? Do you feel like the economy is so good that you're willing to potentially waste money? I don't know. I don't know if the word by the way, I hope they're right. How about that? I hope they're right. And the economy is so strong that marketers get free money to just spend and hope it's going to be OK, which in many ways, brand advertising is because you don't really know. You can't prove it did anything. So I don't know if we're there yet. I hope they're right because why not? We'll take the budgets if we can. I personally think that if I had a $1 to invest, I would invest in making sure that I'm the best choice for performance advertisers first because I know that's the last thing that goes away.
That's true.
We live in a world of flux. We could use a boring month. Give us a quarter of just nothing happened. Give us humanity.
It's not the world you live in.
Humanity deserves a quarter of just like, how was your day? Boring. Give me one boring day.
You're inspired of one boring.
We all deserve like 8:00 to 5:00, 1:00, 1:00 to 8:00 to 5:00. Give us 9:00 to 5:00, 1:00, one day. So when we go back to that, when I just watch a movie with a glass of wine and today was just a boring day, then I think brand advertisers go back. Oh, it comes back strong. But until then, God willing, we should probably prove whatever we do works for someone. So that's my personal opinion.
OK. That's very funny, right? It's very well reasoned. Let's talk about e-commerce. So tell me about when you bought e-commerce, what was your vision? How has that changed? And how are we doing on the execution side of the e-commerce part of the equation?
It's one of our fastest-growing parts of the business. Just to level set what e-commerce means to us is if you go to Time.com and you read an article that says five coffee machines to buy for the holiday because you're thinking about buying a coffee machine and you're debating which one to buy, they usually tell you the most affordable one, the best one, whatever. You click one, you buy it. We help write that content. And we help bring the merchants into that content. And we make money when someone bought something. That's growing really fast for us. In fact, it keeps beating our expectation. So we keep having an internal expectation for what's going to happen. And it does better. So that's good. We see a lot of demand from publishers and retailers to do that.
I think retail media is a good source of strength because you're looking to spend more dollars outside of the actual retailer. We're a good home to capture those budgets. If you're Best Buy or we mentioned in my letter, I mentioned Amazon DSP. If you want to spend more dollars outside of your own site to get consumers back to your store or back to buy products, Taboola it's a great place to put your ads on or products on publishers' content because there's so much trust with publishers. Consumers, if you think about every time you go and buy something from Amazon, as an example, a lot of times you'll read about it before. You'll do some research. It's not that you don't trust Amazon, but you want to see what people say about those products. You may not even know.
I bought a trampoline for the kids. What the hell do I know about trampolines? So I had to read about it on websites. And I bought one. So we're trying to own that market. I think it's going to be a big pillar of the Open Web over time. And we can be big in that. And it's very synergetic to our business because we bring more retailers. The auction gets better. Yield gets better. So overall, we're very happy with e-commerce. We announced that Associated Press just launched an e-commerce website with us. So we're seeing more of this dynamics of publishers launching mini Amazon on their site to review products and sell products direct to consumers.
OK. It's growing faster. It used to be like 20% of revenue. Is the issue the reason it's not as meaningful for revenue is because Yahoo came in and it just sort of took our revenue number through the roof? E-commerce just doesn't look as big as it used to?
I don't know. Do you want to share specifically? I don't know if we shared exactly how much e-commerce was. Steve is nodding no. But what are you doing, Steve? But it's growing fast. Is it growing as fast as Yahoo this year? Yahoo is a rocket ship. But it's growing fast, faster than our core business outside of Yahoo.
All right. You had done something called e-commerce in a box. Is that the most typical execution or implementation of e-commerce?
As of recent, I mean, we either help write it altogether or we work with the editorial team to write it. But in general, I can tell you publishers really, really, really want to diversify the revenue stream. And they want to be directly interacting with consumers around personal finance, commerce, travel, health care. We see the New York Times. They're doing it. I think we're going to see this trend more and more. Gen AI is a risk to publishers because audiences may go down. Advertising cookies go away. Publishers are saying, how do we own our destiny? And we have this amazing brand. Should we be offering products and services to consumers direct? And I think it's going to be a bigger trend over the next decade because we're seeing what happens around us.
OK. Well, I do like e-commerce. One of the things you've said about e-commerce is you often win business on the core business, on the supply side, because you have this e-commerce, let me call it, promise as well as Taboola News. So let's talk about that in terms of new business. So one of yours, I know, Yahoo's sort of eclipsed everything. But after Yahoo gets integrated, one of the things you go back to is finding the next supply side piece of inventory and talk about how what you're doing in news is helpful to getting that winning that next supply side at a better bid level and also the e-commerce business.
I think publishers we're talking this $80 billion market. It's basically publishers on the one side and advertisers monetizing those. When they choose who to work with these days, they kind of want three things. They want to make money. So they want someone who's good at monetizing their traffic. They want to empower the entire organization so that they can grow audience and grow engagement. So we offer them home page personalization. If you go to USA TODAY, most of the home page, each one of us will see a completely different home page. So that's because we're trying to personalize it to you, much like TikTok and Instagram do the same.
This is on news? Is this for news?
Yeah, USA Today.com. If you go to the home page, we personalize the entire home page. We help them drive subscription for those who have it. So we offer them different technologies that make the pie bigger. And so they want that. They want someone that's more than just money, more than just ethics to them. And we do that by providing their editorial tools, analytics, home page personalization, all those things. And we're very unique in that. And the third one is Taboola News is in that thing. We help them get traffic. So again, number one is money. Number two is we want more audience and engagement, which we help them by dropping traffic to their site from Taboola News or personalizing their home page. And the third one is they want direct-to-consumer revenue, which is where e-commerce fits in. They want something that can help them diversify.
They call it diversification strategy. So we check the box. I think publishers just want to have less partners and deeper partnerships.
OK. Because it's too complicated to have more than one?
Well, there's also synergy between the things. If someone is powering your home page personalization, then they can know that this person is into e-commerce. So they'll send them to an e-commerce page. Or if that person doesn't like commerce but they like video, they'll send them to a video page. If the same company is on the other side, they talk to each other. In this case, Taboola, it's all one platform. And it allows publishers to really think about lifetime value of consumers versus slicing the business to different parts. And to me, it's so much fun because when we work with publishers, I just had a great meeting a few days ago with a publisher that's not Taboola's publisher.
Oh, OK.
It's great. The FOMO. But the reason I love my job is because I get to walk into that room and everyone is in the room. Everyone that matters, the editorial team is in the room. The product team is in the room. The guy who heads the company is in the room. The subscription person is in the room. Everyone wants to see what can Taboola do for them. And I don't know how that looks like in a parallel universe when other companies walk in. But my guess is that they see more of the business person, the revenue person. And I get to meet everyone. And I think it just makes us more strategic, which is why Yahoo is a 30-year partnership. And NBC just renewed for 5. And AP just renewed for 5. And we're like 5s and 10s and great numbers.
And so it's more fun for us but also makes us more intimate and strategic with those publisher partners.
OK. Questions from the audience? Questions? Yes, sir.
We're talking about Microsoft and what's going on there, and headwind is the big hand in the guidance for it.
Well, we reported Q4. Microsoft shut down one canvas across the board. They shut down one kind of like page. No ads were on that page, not because of anything we did, but we were on that page too. And so they shut it down. They haven't brought that back. But the guidance includes whatever the situation now is, then guidance includes that. And it's fairly flat up until now. I did send a letter that we believe the second half of the year, there are some good things that we're talking to Microsoft about doing. So I do expect more growth on the second half of the year for Microsoft. Up until now, it's been just stable.
At that lower level, that's general.
Yeah, at that lower level. It's been stable since. I don't expect any material change beyond the good things that I do expect to come later in the year.
It sounds like they've gone to a different bidding platform.
Xandr.
Yeah, exactly. Are you guys fully bidding into that now? Or are you planning to migrate over time?
We're playing with it. That's part of why the growth is coming. That's the second half of the year. We do expect good things to come from Microsoft. That's one thing that happened in Q4 that has not come back yet.
OK. Other questions for Adam? Other questions? OK. I will ask one last question because we have three minutes left. What is the market missing about Taboola? What would you like everyone in this room to take away from why they should be buying Taboola shares today?
What I think people are missing is well, if they're missing, actually, I want to be humble and saying I don't know that they're missing. I think they're looking at us and saying, well, let's see how you continue to execute and see what happens. And over time, they may get more comfortable to join the journey. We're having great meetings here as well. Thank you. But I think people just want to get to know us. We're still new. The ad tech market is a complicated market. And I feel like to investors, before you become big enough, safe enough, easy enough, it's hard to really go all in. So some investors we have amazing investors who are with us for a bunch of time and others that spend time with us but yet to get in, buy. And that's fine.
I think it's on us as management team to just do the work, show that all those big dreams we're talking about, building that first trade desk for the open web that I believe will happen, can happen. Nobody made money following the market. It's about risk profiles. Different people have different risk profiles. I'm a believer. I buy when I can. I use my own money to exercise options and things like that. I think there's a chance to build the first Google version for the open web, just not evil, really just truly like good values and type of company. I'm excited to be here.
OK. Great. Thank you very much. Thank you, Adam. Thank you, everybody, for listening.