If you have any questions, please reach out to your Morgan Stanley sales representative. Good morning, everyone. My name is Brian Pyle. I lead up our digital advertising practice in the investment bank at Morgan Stanley. I'm joined here today by Stephen Walker, CFO of Taboola, which is a leading independent ad tech platform. Welcome, Stephen.
Thank you. Thanks for having us.
Of course. To kick things off, for anyone who may not be familiar with the Taboola story, how would you describe the company today and how that description has evolved over the last few years?
Sure. We're the leading performance advertising platform for the open web. What that means is we help deliver search and social-like performance outcomes for advertisers, but in the open web. You know, billions of consumers read and watch and interact with content on trusted publisher websites out in the open web every day. Our job is to find what we call moments of intent within that activity, where we can help deliver performance outcomes for advertisers. You know, Google knows intent on their platform, Meta knows intent on their apps and services. We know intent on the open web. The way we know that is we have significant scale, so we reach 600 million consumers every month. We have very unique intent data because we see what people are reading, what they're clicking on. We even, you know, pixel...
have pixels downstream to see what they're buying and converting on. We also have technology, AI-driven technology, that helps match that very unique data with the intent signals to put the right ads in front of the right consumers at the right time. Bottom line, we help advertisers deliver basically reach audiences in the open web with good performance outcomes. In so doing, we also help publishers then monetize their unique audiences on the open web. That's who Taboola is.
Awesome. Before we jump ahead to where Taboola is going, can you just take a step back and recap 2025 for us? What were the most important takeaways investors should understand to frame the conversation today?
Yep. You know, 2025 was a good year for us. Very, it was a transitional year in many ways, but we ended up delivering almost $2 billion of revenue, $714 million of ex-TAC, which is the revenue we keep after we pay our publishers, $214 million of EBITDA, about a 30% EBITDA margin. Overall, very strong year financially. I think the big story for 2025 was the rollout of our new advertising platform called Realize. What Realize did is it took us from being a Native Advertising company, those are, kind of those ads that look like publisher content that you'll see on publisher sites, to being really performance anywhere.
We can do display, we can do vertical video, we can do all formats, all placements, and really help advertisers across a much broader area. We rolled that out early in 2025, and that was really what we focused our attention on, and we saw good progress over the course of the year in rolling out Realize. The other thing I would note is we're generating very strong cash flow right now, we had over $160 million of cash flow last year. We bought back about 18% of our shares last year.
Terrific. Anything about 2025 that surprised you? There was a lot of volatility in markets, broader economic backdrop. It sounds like the business still performed very strongly.
Yes. I wouldn't say there was anything that was particularly surprising. I think, we were pretty happy with the reception we got to Realize. We were making a pretty major transition, right? We're going from being, fairly specialized in the online advertising world in terms of native, you know, we estimated that that was probably a $4 billion-$5 billion market, to really trying to be performance anywhere on the open web. We think that's 10 times that size market. You know, that's a $40 billion-$50 billion market instead. You know, it's a big step for us. We consider it kind of a lateral extension, but we were pretty happy with the reception we got.
I think advertisers, they understood that we have the skill set, the technology, the data, and kind of the mindset to help them do a lot more on the open web. I think that was probably our most pleasant surprise in 2025, was just the reception we got to the rollout.
It's obvious when you put it in those terms how big of an opportunity this is, absolutely makes sense why you're going after it. Realize is now about a year old. What were you ultimately trying to unlock with this platform, particularly around performance marketing? I guess performance is kind of a, an industry term, but in your mind, what does performance mean as it relates to Realize?
Yeah. Yeah, let me start with the second part of your question, what is performance? For us, and I think in general you can identify a performance advertiser versus, say, a branding advertiser or somebody with other goals because they've got a very specific outcome in mind. Whether that's getting somebody to buy a product, sign up for a service, give them your email address that they can then market to you further from there's some outcome that they can measure. That's by far the most important thing. Second, they've got a very specific goal when it comes to that outcome. A particular Return on Ad Spend, a particular Cost Per Acquisition, a particular Cost Per Lead that they're targeting.
They can measure the outcome, they've got a specific goal. Performance advertisers tend to be optimizers. They tend to really focus on testing, trying different things, improving upon whatever that outcome is that they want, and that's kind of how you think of a performance advertiser. In terms of what we were trying to unlock, we're basically trying to help those advertisers reach consumers in the open internet, because at the end of the day, you know, today, those advertisers, they're kind of limited. They're basically competing for space on Google and Meta are the big two, Amazon, if you're an e-commerce or retailer. You're basically competing for space on what are increasingly competitive and crowded spaces.
We think we can help bring them to an audience that's, in a way, underserved out in the open internet and help them grow their business faster by reaching a whole new audience. That's what we're really trying to unlock, is we're trying to help those advertisers to grow faster by reaching an audience that they have a hard time reaching today.
That's terrific. When you talk about the different advertisers, these are performance marketers. Can you give us a little bit more about the complexion of your advertiser base?
Sure. Yeah. In fact, I'll talk about this in the context of one of the big things that we did in 2025 was we basically We looked really closely as we were rolling out Realize, and we said, "Who works well on our platform? What advertisers find success?" We found kind of clusters of advertisers that we saw were being successful. We call them Ideal Customer Profiles. They're performance advertisers, the way we just defined it. On top of that, they're in certain categories where it just happens to perform well on our, on our network. We focused our sales teams on those Ideal Customer Profile verticals.
That was a big kind of focus for what we were doing in 2025, was getting our sales teams out there focused on those verticals. To your question about, you know, defining our base, those verticals tend to be e-commerce. That's our biggest one. Finance and financial services, travel, direct-to-consumer products, like a food service or something that goes direct to consumer, auto, travel. It's health. It's kind of some of the classic performance advertising categories, so not surprising. Those are the verticals that we found a lot of success with and the ones that our sales teams are now focusing on.
Awesome. Realize is off to the races. You had a great 2025. Let's look forward to 2026. As we think about the year ahead, what are you specifically trying to accomplish with the Realize this year, and what should investors be watching to measure that progress?
Yeah, I mean, ultimately, the goal of Realize for us is to re-accelerate our growth rate. You know, last year, we started the year guiding to 2%. We ended up at 7% growth year-over-year. Frankly, that's not where we wanna be long term. We wanna be a double-digit growth company. That's what Realize is about, is getting back to that double-digit growth. The key metric to watch within that, we released a metric beginning of last year that we call scaled advertisers. A scaled advertiser is any advertiser that spends more than $100,000 with us in a 12-month period. That's an important measure for us because that, A, it makes up 85%-86% of our revenue. Obviously, those are our key customers.
On top of that, it's a good metric to track because anybody who spends $100,000 with you in a 12-month period, they're no longer testing. Like, they have found some level of success with your platform or else they wouldn't be spending that much. We measure that, and we watch that internally because every time we get someone to that level, we know, okay, they've found something that's working. We release that. The metric in particular that we re-release 2 metrics. One is the number of Scaled Advertisers, and the second is the average revenue per Scaled Advertiser. I think the first one, the number of Scaled Advertisers, that's the one I would keep my eye on as an investor because that's the one that really says, are they growing their customer base?
It's fuel for future growth because every time you get someone scaled to that level, I think you have a much better chance of growing them going forward. I'd be watching the number of scaled advertisers.
Awesome. Getting back to that sustainable double-digit growth, feels like these scaled advertisers are a key component of that recipe for success. Anything else that you guys are driving to get to a durable level of double-digit growth?
I think there's really three things that we talk about internally and that we're focused on to help us get back to that double-digit growth rate. First, I mentioned this a bit earlier, but we've got our sales teams now focused on Ideal Customer Profile customers. We verticalized our sales team. We have an auto vertical, we've got a finance vertical, we've got a health vertical. I think what that does for us is it lets us have deeper conversations with those customers. If you're always talking to auto advertisers, you can talk the talk. You know who they are. We think ultimately that that's gonna help us grow the revenue faster with those advertisers, frankly, bring in more new ones.
Again, if you know auto, then when you go out to talk to, you know, Ford Motor, if you've been talking to GM and Mazda and others, you understand their business, you understand what they're trying to do. That's one thing. Ideal Customer Profile and focusing on those verticals is one thing we're doing. Second thing is, and this is an important one, we need to shift the brand perception of Taboola. We need advertisers when we walk in the room to think of us as a full you know, a full platform for performance advertising of any type, not just Native Advertising, which is a form of performance advertising.
Mm-hmm
... but it's a small, you know, sub-subsegment of it. We want them to think of us when we walk in the room as everything performance. And we're making progress, you know, as we talk more to customers, they're getting. Like I said, we have great reception to that message. We just need more people to understand it. Third thing, you know, is the technology platform. We've built a great AI-driven platform over time that takes that unique intent data that we have and helps match the ads to the consumers at those moments of intent in the open internet. We have to keep improving that. In particular, we're focused on ways of making it really easy to use and also, you know, perform well for more and more specialized types of advertisers over time.
Those are kind of the three areas of focus for us.
You touched a little bit on the go-to-market motion with these Ideal Customer Profiles. Can you talk a little bit more about how you're empowering your sales team to go out and not just win new customers within each of these verticals, but actually scale existing spends with existing customers?
Yeah. I think that's where the verticalization, I think, comes in. We verticalized our sales team, so like I said, we can have deeper conversations with our customers in their industry specifically. I think the next step of that is you get the case studies, you start to see the success. Like if Mazda is having a great success with us driving test drive, which is the type of thing that auto advertisers like to do with performance advertising. They're seeing a lot of test drives coming out of campaigns with us. Well, you get the case study from them, and you go talk to Ford Motor, and you say, "Look, they're getting a ton of test drives.
You should be working more with us on that." If Ford's not working with us at all, that lets us have a better conversation about why they should work with us. If they are working with us, it gives us a good reason to go kind of work on growing their dollars that they spend with us. There's also a technology component to it, too. I don't remember if we've talked about it specifically, but we've released features on our platform now that also helps the sales teams. For instance, one is called Predictive Audiences.
What it does is it says, "Hey, Ford Motor, if you're spending $100,000 with us today and you're getting 1,000 test drives out of that, if you spent $150,000 with us, you'd get an extra 400 test drives." It predicts that for them. It just makes it a lot easier for our sales teams then to make the pitch as to why they should spend more over time. There's also technology elements like that that we're rolling out over time.
Fascinating. Not just driving clicks or downloads or, you know, other Return on Ad Spend metrics. It seems very customized to the different verticals that you served across the advertising base.
Exactly. Yeah. It's a lot about understanding what they want and then figuring out how we can show them that we can deliver that.
Awesome. Let's zoom out a little bit. We talked a little bit about Realize. What are the other strategic initiatives that you have this year? What would you like investors to understand about how you plan to execute against each of those?
Yeah. You know, to be honest with you, it really is about Realize for us right now. We think that focusing on Realize is the right way to grow our business. You know, I mentioned, there's the go-to-market strategy that I think we've talked about quite a bit. There's the rebranding, we are spending a lot more now on marketing of our brand. Getting out there at different conferences, making sure people are aware that we can do a lot more for them than just native advertising, which is how a lot of people still think of us. We're spending more money there. We're also doubling down on a lot of our investments on the technology side.
Beyond just, you know, the things that we've talked about, for instance, we have AI features and AI tool called Abby, which is a AI. It's a generative AI, LLM-based AI that can help do everything for an advertiser. It'll set up your creatives for you, tell you how you should adjust your campaigns, help you figure out which bidding strategy to use. It's kind of an end-to-end solution. I think, you know, bigger picture is really all about Realize. That's where we're focused, and that's where our attention is.
You brought it up first. You said AI first. I want to skip ahead to some of the questions on AI.
Okay.
Bringing all of this back to Taboola, what does the rise of AI specifically mean for your business? How are you thinking about areas like search and traffic, search traffic and discovery, and the impact that AI will have on those businesses?
I think we, and I'm sure you hear this from everybody, but we view AI as an opportunity more so than a threat. The reason we say that is if you think about AI, I know what a lot of the markets are worried about when it comes to SaaS and other things right now, is that AI is gonna allow companies to kind of rebuild whole SaaS platforms without having to buy it from somebody or, you know, the SaaS can be displaced. I think in our case, the way I think about it is AI is gonna help us build a much more robust platform, do a lot more, and maybe it could help a startup or some other competitor build our platform.
To me, that's like, if AI could help someone build the most amazing sports car in the world, if you don't have fuel to run it just doesn't matter. The fuel that runs our platform is the data, the intent data that we gather by having distribution on thousands of premium publishers around the web. Without that data and knowing what works, what ads work in which context for which consumers, you can build the best-platform in the world, and it just won't perform. I think we have a very unique positioning in that we've got the data, we've got the distribution that's going to allow our tech platform to work, and we're going to use AI to make that tech platform dramatically better.
I mean, I hear from our engineering teams how they think, you know, our 600, 700 engineers can become like 7,000, 10,000 engineers because of AI. That's exciting. Again, we've got the fuel to then make that work. The important within that is that we need the distribution to get that data. I think, we believe that our, you know, total base of publishers is only about 5%-10% search traffic. What that means is that most of the traffic to our publishers comes direct. It doesn't come through search. I think their, our publisher base, because of the premium publishers we work with, are less exposed to the potential threat of, you know, ChatGPT or somebody taking away all of their traffic.
In fact, we've seen our, the traffic to our publishers grow year-over-year, even with LLMs coming in. I think we feel like we're in a very good position where we've got the distribution. That distribution seems fairly secure and safe, and then that drives the data that allows us to really make our platform perform, and then we'll use AI to make our platform that much better. That's why we think of it as more of an opportunity than a threat at this point.
It's hugely self-reinforcing between the data, the distribution, and really the distribution. You're working with premium publishers who represent a destination for so many of their users, which substantially de-risks a lot of that AI threat.
Yeah. I think, you know, one of the signals that we've talked about as to how sticky our publishers are is that, over a third of our traffic is in-app, meaning it's like ESPN's app or the Yahoo Finance app or, you know, CNBC's app. People who come to an app, that just proves that it's a much stickier audience because it's not coming through search or coming through. It's not flyby traffic.
Mm-hmm.
It's somebody who comes there regularly.
Let's talk a little bit about the financials. Can you walk us through the 2026 guidance that you recently published, as well as what you're seeing underneath it in terms of the customer verticals, channel mix, broader ad spend trends?
Sure. Yeah. We're guiding this year. I mentioned that last year we started guiding at 2%. We ended up growing 7%. We did about 30% EBITDA margins. We've been saying for a while, you know, as you think about 2026, start by thinking about our 2025 results as a basis. We are. We're guiding to 7% year-over-year growth on ex-TAC. We're guiding to 30% EBITDA margins. We've said that we think we should convert 60%-70% of our EBITDA into Free Cash Flow. Then over time, what we wanna do is get that 7% growth rate up to double digits. For now, what we've built into our guide is basically what we're seeing on the platform today.
The key things that drive kind of the growth rate of our platform is new customers. How many new customers are we bringing on, and how much revenue do they bring in? Which the key to that is how successful are they? Like, you can go out and get a test budget, but you gotta make them successful to get more budget. It's new customers and their success rate, and then it's what we call NDR, Net Dollar Retention. It's for the customers that we already had, how do they grow over time? Those are the two key metrics. What we built into our guide this year is kinda what we've been seeing. You know, we talked in Q3 2025 about seeing an inflection point.
We built that into our model, but we haven't built kind of upside from some of the key initiatives that I talked about earlier.
Mm-hmm.
The verticalization and the focus on Ideal Customer Profiles. Hopefully, our brand gets stronger over time, and it gets easier to get new customers in, and that technology, as we roll it out, should drive better performance too. We kinda didn't build those things in. That's option value. We built in what we're seeing today.
Right. That makes sense. Appropriately conservative. Then you talked a little bit about where you're investing. Let's talk a little bit about capital allocation more broadly. You've historically focused on being cash neutral, quote-unquote. How should investors think about capital priorities this year, including buybacks?
Yeah. You know, we've been pretty consistent with this over the last 18 months, basically. I think we still think the best use of our capital is for share buybacks. We still expect to be generating a large amount of cash flow. You know, we're guiding to over $230 million of Adjusted EBITDA. If we convert 60% of that into Free Cash Flow, that's a decent amount of Free Cash Flow that we have. We do think that the best use of that is for share buybacks. We have said all along that, you know, we're always looking at the M&A markets, and if we found something that we find interesting, we would look at it.
We expect those to be smaller, more tuck-in types of things, where we're acquiring a capability that we particularly like and feel we need or maybe a small customer base somewhere that we think it's interesting. It's likely to be small and tuck-in, and therefore, we expect most of our capital to continue to go towards buybacks. We still have $180 million left under our current authorization. We've said that we expect the majority of our Free Cash Flow this year to continue to go to those buybacks.
Okay. Awesome. last question from me before we open it up to the floor, and just to wrap things up. If we're sitting here in 3-5 years from now, and Taboola has really succeeded in what you're trying to build with Realize and some of these other strategic initiatives. What will the company look like at that point in time versus where it is today? Where do you think investors will say you got it right?
I think, you know, obviously it comes down to Realize and the success of making this transition to be performance for the open internet. If we're truly successful, what's gonna happen is you'll talk to an advertiser, and you'll say, "Hey, where do you go," you know, performance advertiser in particular. "Where do you go to spend your dollars, and why do you go to those places?" What they'll say is, let's assume they're not a retailer for a moment. They're Ford Motor. I keep coming back to them for some reason today. They're Ford Motor. They'll say, "Oh, well, we go to Google for search. We go to Meta for social. We go to Taboola to reach the open internet." Like, that's what we wanna be.
We wanna be the channel for advertisers to reach consumers in the open internet. We wanna be the third leg of the stool. If you include, if you're a retailer, the fourth leg of the stool, 'cause then Amazon's a key part of their strategy-
Mm-hmm
... as well. We think that's important for advertisers 'cause like I said, today they're kind of trapped into these very expensive, very crowded, walled gardens. If we can become that third leg, it's valuable to them, obviously valuable to us in growing our business, and, frankly, it's valuable to publishers as well as they try and grow their business.
Awesome. Well, Stephen, thank you for your time. I'd like to open the floor to any Q&A that we have in the room. I see a hand over here.
Thanks. I was hoping, like, if you look more broadly at ad tech in general, what is it that you think investors misunderstand about the space, competitive advantage, durability of the business model, terminal value? It's like clearly something's being misunderstood because when you talk through your numbers and you talk through your growth, there's something there that you believe in. In 3-5 years, if you are that third leg of the stool, then it's a wonderful business. Something's clearly not clicking right now. You might not wanna talk about competitors.
Yeah.
Maybe just Taboola specifically.
Yeah, I'll focus on Taboola specifically because, like, I don't wanna talk for the industry as a whole. I think for Taboola, I certainly think that there's probably two things that are being missed. One is what I talked about. I think right now there's a lot of concern out there about LLMs being able to just rebuild tech platforms from scratch. I think that's where I don't think people are fully understanding how important the data is that we have and how important the distribution is that we have to get that data. Being on thousands of premium publisher websites globally is really the only way to get that.
If you think of it, if you're a, let's say, a startup company and you're coming in to try and disrupt what Taboola does, you may be able to build a great tech platform, thanks to AI and everything else. You go to one of our publishers and you say, "Give me your business," and they say, "Well, how much are you gonna pay me?" The answer is, unless you're really, really well funded and wanna lose a lot of money, the answer is, "I can't pay you that much." There's a big chicken and the egg problem here that comes that I think is being misunderstood or at least not fully valued. I think that's one thing. I think the second thing is, I think there is some fear that LLMs disrupt the open internet as a whole, right?
That the open internet, traffic to the open internet goes away. We don't believe that. In fact, we are actually seeing the signs. Like I said, our base is actually growing year-over-year. Why is that? Well, my belief is that it's because the sites that are getting hit are the long tail, the ones who don't have a brand and don't have a regular user base. If you're a, you know, a Boston Celtics blogger who has a little blog which is popular, but frankly, you know, doesn't have a brand per se. You know, people can ask questions of an LLM, maybe they stop coming to your site. At some point, people do wanna go watch the video from the Celtics game last night. They wanna read from commentators they trust.
They go to ESPN. I think brands like ESPN and CBS Sports and CNBC and Yahoo Finance and all the brands we work with, I think they have a long-term place in this. I mean, frankly, without them, what is LLM even gonna get their content? I think there's a long-term place for that, and I think that's being misinterpreted right now too. There's a lot of fear, and I think that people will figure out over time that it's overdone.
Maybe just one follow-up question because I do think that resonates with me on the LLM and AI risk. What about just broader competition throughout the industry? I think you're seeing that kind of trickle down with players like Amazon, for instance, you know, getting more aggressive on the ad tech side. How do you see that playing out longer term?
Well, I think, you know, obviously, Amazon has disrupted the DSP space.
Mm-hmm.
I think that's where you're seeing it big time right now. I think, though, for us, the way we think about it is, if you are not adding a lot of value to whatever your kind of customer base is, both supply and demand, then you're probably exposed. I think we've said for a long time that if you're on only one side or the other, you may have a challenge. Like, if you're an SSP who only works with publishers and you don't have direct demand, that's disruptable.
Mm-hmm.
If you're a DSP who only works with advertisers, you don't have direct access to the supply, that's disruptable. I think especially when the person with the most supply comes in, which is Amazon in this case, right?
Mm-hmm.
I think we believe that first you wanna be end to end, so you wanna have relationships on both sides, which we do. About 90% of our revenue comes from direct advertisers, and almost all of our distribution is direct relationships with publishers. You wanna be two-sided, and then you gotta make sure you add a lot of value in between. I think what's unique about Taboola and the value we add is that we know intent on the open internet. Just like Google knows intent on their platform and Facebook knows intent on their platform, we know intent in the open internet, and that's a non-trivial challenge. Like, to have enough data to predict that this ad in front of this consumer in this particular context on the open internet is going to work is a challenge.
It's a bigger challenge, frankly, than search. It's a bigger challenge probably in many ways than social. That's the value add we bring. I think the ones who are most at risk of being disruptors, people who don't have that value add. They're either one-sided and therefore can't add enough value on both sides, or maybe they're two-sided, but they don't really have real value add in between. I think that's where we think we're in a fairly good position because of that value add. Just wait for the mic.
Thank you for this presentation. May I ask you about how you feel whether your data is protected? How do you develop your AI tools? Do you use Gemini, OpenAI? If you use this frontier model, do you feel that actually what you possess is really secure?
Yeah. No, it's a good question. I mean, wow, things are changing so fast that I have a feeling any answer I gave you today would be different by next week. What I can tell you is we've got 700 engineers globally. Our biggest group is in Israel. By the way, pray for everyone in Israel right now 'cause it's a little bit noisy there. But our biggest group is in Israel. We've got a big group in L.A., Taiwan, we have Eastern Europe. We've got a very large engineering team, they've been cutting edge on AI for a long time. I think what I trust them to do is figure out the best tools at any given time.
you know, when I talk to our senior vice president of engineering, he gets me excited about how we can go from being kind of the small guy in many ways relative to, you know, the big walled gardens, having 600, 700 engineers, leverage them using AI and act like we've got 20,000 engineers. Now we can really develop things that were just pipe dreams, you know, a year ago. The answer is to kind of avoid your question, you know, it changes every day as to which tools we use, but we've got a really strong engineering team who knows how to use the tools and are building ways to leverage the engineering team and make them, you know, way more productive than they've ever been able to be.
Using third-party LLMs, is it dangerous for your business? Or, do you feel the risk of exposing yourself to the fact that if you use the either LLM or even the agent provided by OpenAI, for example.
Mm-hmm.
-whether it exposes you to the risk of, losing some of your data?
Well, yeah. There's two sides to this. When you first asked your question, I thought you were talking about engineering tools like, you know, Claude to help you code or other tools like that. I think most of those services expect themselves to be tools forever, or at least for a long time. I don't think they have to help you avoid that exposure, or else they won't have a business for very long. When it comes to engineering tools and making your teams more productive, I'm not as concerned. I think your question also was related to using LLMs within our products and to do things. You know, I think we watch that. We obviously are very cognizant of what's the licensing on this? What are they allowed to do? What are we allowed to do?
We won't use tools that we're giving away data for. Like, we know that our data is our secret sauce, and it's what makes us valuable. We're very careful to not use tools where we're exposing that data to the world. We only use tools where they, you know, will allow us to run instances on our own servers, our own infrastructure, firewalled from the rest of the world where they can't get that information. We're very careful about that.
Okay. Thank you very much, Stephen.
All right. Thank you. Appreciate it.