Good day, and thank you for standing by. Welcome to Taboola’s first quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there’ll be a question and answer session. To ask a question during this session, you’ll need to press star one on your telephone. Please be advised that today’s conference may be recorded. I would now like to hand the conference over to your speaker today, Jennifer Horsley, Head of Investor Relations. Please go ahead. Thank you. Good morning, everyone, and welcome to Taboola's first quarter 2022 earnings conference call. I'm here with Adam Singolda, our Founder and CEO, and Stephen Walker, our CFO. We issued our earnings press release yesterday after market, and it is available along with our Q1 shareholder letter in the investor section of our website. Now, I'll quickly cover the safe harbor. Certain statements today, including our expectations for future periods, are forward-looking statements. They are not facts and are subject to material risks and uncertainties described in our SEC filings. These statements are based on currently available information, and we undertake no duty to update them except as required by law. Today's discussion is also subject to the forward-looking statement limitations in the earnings press release. Future events could differ materially and adversely from those anticipated. During this call, we'll use terms defined in the earnings release and refer to non-GAAP financial measures. For definitions and reconciliations to GAAP, please refer to the non-GAAP tables in the earnings release posted on our website. With that, I'll turn the call over to Adam. Thank you, Jen. Good morning, everyone, and thank you all for joining us for our first quarter call. Q1 was a strong quarter. We beat our targets, delivering 31% ex-TAC gross profit growth over Q1 of last year, or 8.4% on a pro forma basis. We also generated $35 million of Adjusted EBITDA despite the very challenging macro environment. Before I walk through the highlights from the quarter, though, I wanna address the revised guidance we issued today in conjunction with our results. The revision was driven by basically two factors. The main factor is the economic uncertainty caused by the war in Ukraine, which increased in the second quarter in a bigger way, affecting our advertising business in Europe. More than 30% of our revenue and global yields as many of our advertisers in Europe buy all around the world. In many ways, it felt similar to what we saw in the pandemic, but obviously on a smaller scale, where businesses slowed down their spending, but in this case, mainly in Europe. The second factor is the launch of our bidder, which is now live and off to a good start, but still behind plan. Now that we're live and we're seeing real data, I'm even more bullish on how much growth opportunity there is here, not only on Microsoft itself, but also on other platforms, which we do plan on integrating via header bidding in the short term. Due to these two factors, we're lowering our full year 2022 guidance ranges on ex-TAC gross profit to $595 million-$616 million and Adjusted EBITDA to $152 million-$162 million. Steve will speak more about our guidance in a few minutes as well. I'm obviously not happy about having to adjust guidance, especially after having a strong first quarter. I can tell you our new guidance factors in both of these two one-time events. We do not wanna do this again. The fundamentals of our business are strong. We're profitable, generating cash. We have technological advantages. Our team is passionate and energized, and our intention is to keep meeting and beating our clients, partners, and investors' expectation. As I look beyond those two events, we're profitable, growing, expect to generate significant cash flow in 2022 with this new guidance. Overall, the business is gaining a lot of momentum in all the things we love. We won new deals, expanded relationships with important partners, launched new products, and made progress in capturing more of the $64 billion open web advertising market. There are a few things that I do want to highlight that I'm very excited about. First, I'm taking a much bigger focus on growing our performance advertisers, achieving even greater scale and relevance, aiming to achieve something that I believe only four companies have ever done, Amazon, Google, Snap, and Facebook, making many, many advertisers, big and small, successful with them, rely on them, grow with them. We're going big here, and you should imagine SmartBid to get even more attention and innovation. As an example, our new guidance assumes that we will double our engineers in that area over the next one year and 4x over the next two years. That includes, of course, our AI engineers as well. On the other side of it, and over time, we see Taboola as a place any performance advertiser can find positive ROI and succeed, especially as social networks will not be able to track consumers as they used to. I believe in the open web, in contextual advertising being a big part of the future and advertisers. The second thing I wanna highlight is at our Investor Day, I spoke a lot about our endless growth opportunity and momentum we're getting in replacing traditional banners with personalized, relevant recommendations. You see, most of the $64 billion of the open web advertising market is made out of banners, the same advertising format invented 30 years ago when Tamagotchi and DVDs were invented. Tamagotchi and DVDs obviously are gone now, but banners are still here and remain. As you think about our TAM and our growth, we are liberating the open web from banners into relevant, personalized experiences, bringing that power of the walled gardens into the open web. At this stage, there's endless room for growth on this journey of replacing banners with Taboola. Amazon moved away from banners to paid recommendations. On Twitter, there are no banners, but paid posts. On Instagram, you don't see banners, but you see paid posts. On search pages, obviously, there are no banners, but paid search results. The open web is the only place where banners remain, and it was invented 30 years ago. This is our market, and we have advantages in capturing it. In the first quarter, we continued to replace banners in the middle of the page, on the homepage, and other placements. Some examples include E! Online, Globes in Israel, Seven West Media in Australia, and others. Thirdly, I'm incredibly excited about our OEM partners scaling really fast with Taboola News. This is becoming an increasingly meaningful part of our business. It's growing fast, and it's scaling. It also relates to our vision to capture more time with consumers, as we talked about on our Investor Day. There is some exciting momentum here, which I hope to be able to update you very soon. More on first quarter. We have very strong publisher pipeline and saw progress with new deals as well as renewals. A lot of time with significant expansion and the size and length of the agreement. To give you some examples, Penske Media Corporation, PMC, a leading independent global media publisher that reaches monthly audiences of more than 310 million people with sites like Variety, Rolling Stone and others, just moved to Taboola. Publishers move to Taboola all over the world, not just in the U.S. To our people in Italy, France, Ibérica, El Nacional, Forbes in Spain, Coral in Australia, and Metrópoles in Brazil, just to name a few. I had a chance to personally talk to the CEOs of some of these, and in many cases, the reason they choose Taboola is because they'll generate more revenue, and they get technologies that help them run their business. I told my board this week, as I look into the market, spending 14 years with publishers, we provide them technology that they want beyond just the revenue. We empower the editorial team, we help them drive growth, and I believe in most markets, 70% of Taboola is worth 100% of our competitors, which explains not only our high win rates, but also our higher gross margin as a proxy for competitive advantage. It is very expensive to take a publisher from Taboola. In another example, Ströer, one of our top five revenue publishers globally, just extended with us for five years. Associated Press, AP, Insider, Altice are also great names that have recently chosen Taboola. As I mentioned earlier, you can see I'm very excited about the advertiser side of our business. We recently updated that our advertiser base just crossed the 15,000 mark. In Q1, we expanded our work with well-known brands such as Heinz, Canada Goose, Volvo, Michelin, Hyundai, Chipotle, Emirates, Progressive Insurance, and Honda, among many, many others. In Q1, we also signed and renewed trade agreements with a number of agencies, including Dentsu in the UK, Omnicom in Germany, TMS, AC Digital, Publicis, and Goldschmidt Partnership in Israel. In Q1, 15% of our revenue were from brands and agencies, and we expect this percentage to grow. As you think about the future beyond the core business, we want to keep diversifying what we recommend. We call that strategy Recommend Anything, video, commerce, gaming, audio. Additionally, we want to grow the time we have with consumers by being wherever they may be. Tom Inbal, our VP of Strategy, talked about that as well on our Investor Day. We call that Recommend Anywhere on mobile devices, CTV, automobile, and more. You may have read the article on Digiday recently speaking about the importance of personalized home pages. They referenced Washington Post, New York Times, and Taboola Homepage For You product, which we've been speaking with you a lot recently. We launched it in early January as part of Newsroom, our editorial suite for writers and editors. The idea, as you can imagine, is to make every homepage on the internet personalized, driven by editorial team plus AI. It is a winning offering. It's more than just money, and publishers are choosing us, thanks to it. Some examples are Miami Herald, McClatchy. I just spoke this morning with the team. It's beautiful. Other examples include NDTV, The Independent, SINA.com, de Rosas Asociados, and others. On the privacy front, which is one of our advantages, we just announced an expansion of Taboola's trust portfolio, where we work with brand safety leaders, including IAS, DoubleVerify, NewsGuard, TAG, and IAB UK. We believe we are a leader in content review and safety, and these partnerships are critical to demonstrating our commitment to a safe, privacy, and protected web. This also supports our expanding of work with brands and agencies. We're also seeing good headway in e-commerce, which comprise 15% of ex-TAC gross profit in Q1. It's been a little over six months since we closed the Connexity acquisition, and we're making steady progress, cross-signing advertisers, including e-commerce and new publishers deal, and merging offices, and importantly, coming together as one team, one strong family. Progress on synergies in Q1 includes a bunch of things. Expansion of Connexity publisher solution in APAC and EMEA, where we expanded Connexity's commerce monetization solution to 14 new countries. Teams are trained up and actively pitching several new partnerships on a weekly basis per country. Success is also building with Taboola ad sales, selling Connexity's advertising solution. We've spoken previously of the success we're seeing out of China with multiple new advertisers signed on. Within the US, a new retail vertical sales team is in place, trained and has begun pitching Connexity e-commerce all the time. Lastly, leveraging Taboola's supply network for Connexity advertisers is taking off. Within the U.S., 54 merchants have already given consent to move forward with Taboola Pixel. Within Europe, a robust pipeline of over 200 clients has been built consisting of both new prospects and existing merchants. Before I hand it off to Steve, 2022 started strong. We had two one-time events that we think are now in our past. We've included those things in our new guidance, and we're executing strong on all the things that matter to our business, with our core business growth with publishers and advertisers and growing to Recommend Anything and Recommend Anywhere in the open web. Now over to Steve, who will dive in deeper to our financial performance and guidance. Thanks, Adam, and good morning, everyone. Let me address right up front our revised guidance. As Adam discussed earlier, there were two factors that caused us to reduce our guidance. The first and main one was caused by the war in Ukraine and subsequent macro weakness. The effect of that on our business has been a negative impact on our European advertising business, which is more than 30% of our overall revenue. The economic and political uncertainty caused by the war caused advertisers to cut back on their spend in Europe. This reduced global yields since many of our European advertisers target users in the U.S. and other countries. We saw an initial dip when the war started, but yields seemed to recover in March before declining again towards the end of the month and in early April. We have also seen a related effect impact our growth, which is a weakening of the euro against the US dollar. This translates into lower U.S.-denominated revenue when we convert our euro revenues into dollars. We estimate the foreign exchange rate impact on our growth in Q1 was 1.5% and will have a similar impact for the full year of 2022. We felt it was judicious to be cautious and therefore factored both a conservative outlook on yield for the balance of the year and the weaker euro into our forward-looking guidance. The second factor was the Bidded Supply that launched 100% on Microsoft on April first. While it's off to a good start, it is behind our plan. We have factored current performance levels of the Bidded Supply into our forward-looking guidance. We believe there's potential upside to this as we have identified opportunities to improve the bidder, and we also will start using the bidder to compete for display inventory via header bidding on publisher sites other than Microsoft. However, we chose not to factor either of these potential upsides into our guidance since we prefer to be conservative. I'm obviously not happy to have to adjust our guidance, and I can assure you that I don't want to be in this position again later this year. We believe our updated guidance fully bakes in the impact of these two factors, both of which we believe are one-time events. Now more specifically on our results. As Adam shared, we had a solid first quarter. We met or exceeded our Q1 guidance on all measures despite some macro headwinds, as I just discussed. Revenue in Q1 was $335 million. Ex-TAC gross profit was $135 million, and adjusted EBITDA was $35 million. This represented ex-TAC growth of 31% year-over-year, or 8.4% on a pro forma basis with Connexity, which is approximately 10% on a constant currency basis, and a 25.2% ratio of adjusted EBITDA to ex-TAC gross profit, which is what we often refer to as adjusted EBITDA margin. Q1 2022 is a challenging comparable because organic ex-TAC gross profit grew 54% year-over-year in Q1 2021, which was an exceptionally strong performance. Of the Q1 gross revenue growth of $52 million, $21 million came from new digital properties, and $31 million came from growth of existing digital property partners. Our growth in existing revenue came from a combination of yield improvements and upsells of additional platform capabilities to existing publishers, such as our high impact placements offering. Our Q1 ex-TAC gross profit was $138 million and was up $32 million or 31% year-over-year. This growth came from three sources: the addition of new digital property partners to our network, growth of existing digital property partners, and the addition of Connexity to our business. Our ex-TAC net dollar retention for our publishers continues to be positive at 106% for Taboola on a standalone basis. Looking at operating expenses, they were up $52 million year-over-year, which is consistent with expectations driven by multiple factors. First, growth and investment in our business. Second, the inclusion of Connexity, as well as higher depreciation and amortization from intangibles coming from the Connexity acquisition. Third, costs related to being a public company. Fourth, some additional costs due to the resumption of travel and opening of offices as the pandemic receded. Fifth, higher labor expenses reflecting the inflationary environment and a tight job market. We generated Adjusted EBITDA of $35 million, which was above our guidance of $32 million-$34 million, an increase of $1.4 million year-over-year. Adjusted EBITDA margin of 25.2% was lower year-over-year. However, it was in line with expectations given the planned higher operating costs I just described. GAAP net income of $3.9 million included warrant liability revaluation benefit of $14 million, share-based compensation expense of $17 million, and the intangibles amortization of $15 million, all of which were excluded from non-GAAP net income of $21.9 million, which was above our guidance of $12 million-$14 million. In terms of cash generation, Q1 is seasonally the lowest cash generation quarter, and we were pleased to have $8 million in operating cash flow and $1.2 million in free cash flow, which was an improvement of $16 million year-over-year. We ended Q1 with a strong balance sheet position and positive net cash. Our cash and short-term deposits balance of $318 million is above our debt balance of $285 million. A good result in terms of cash generation, and we continue to have ample financial flexibility. Shifting now to our expectations for the rest of 2022, we are updating our 2022 guidance, as I mentioned, and now expect revenues between $1.5 billion and $1.54 billion. Gross profit between $485 million and $505 million. Ex-TAC gross profit between $595 million and $615 million. Adjusted EBITDA between $152 million and $160 million, and non-GAAP net income between $83 million and $91 million. I'd like to say the fundamentals of our business are strong. Looking beyond those two one-time events that we've now adjusted for with our new guidance, we continue to be a company that is growing at a good rate, that is profitable, and that generates strong EBITDA and significant positive cash flow. Our five-year compound average growth rate for ex-TAC based on this new guidance is 23%, and we will generate over $150 million of adjusted EBITDA in 2022. We continue to demonstrate competitive advantage based on our strong ex-TAC margin, which is almost 40%. We are bullish about our business and believe that over time, Taboola is a 20% per year grower and 30% plus adjusted EBITDA margin business. Because we believe the fundamentals are strong, we do not plan on reducing the investment in our business at this time. We believe that strong businesses benefit from continuing to invest through downturns, and that these investments will position us strongly going into 2023 for growth acceleration. With that, let's open it up to questions. Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Stephen Ju with Credit Suisse. Your line is open. Okay, thank you. Adam, can you give us a little more color on the Bidded Supply that you called out as being behind plan? What is it designed to do, and what do you think is the reason for what sounds like a slower pace of customer activity? Do you think it's a product or an ROI problem, or do you think this is an awareness problem? And I guess, in regards to the weakness you cite in Europe, did the overall activity just step down on the heels of the war and not really recover thereafter? You know, does the guidance basically assume at this point that Europe, you know, back of the envelope math, it seems like is down about 25% versus where you guys had planned before, and that persists for the balance of the year? Thanks. Sure. Hi, good morning, Stephen, and good morning, everyone. About the Bidded Supply and Steve can take the financial part in Europe. As an update, I'm happy to say it's fully live now. You know, we've developed over the last you know year or so the Bidded Supply. The team has done a really good job integrating that with Microsoft, supporting us in designing that. I would say we're seeing a few things that are doing even better than expected and others that are behind. Overall, it's beyond our expectation, but off to a good start. From here, we believe that as we look forward on Microsoft specifically and even outside of Microsoft, there's a lot of growth opportunity for us. 'Cause if you recall, you know, we mentioned on the Investor Day that Microsoft was kind of a drag on our growth in past years. That will not be the case as we look into the future. I'm really happy that the team was able to build a technology that in such a quick time, you know, is doing what some other companies have done in 10 years, building a bidder. From now, you know, I think we have a lot of opportunity with them. The second thing is the bidder over the next short term really will start integrating into other inventories beyond just Microsoft, you know, header bidding and things of that nature. Overall, the bidder will become a nice growth opportunity for Taboola. Stephen, regarding Europe, I think what the way to think about what happened in Europe is that you can think of it almost as a small pandemic, except in Europe, not in the world as a whole. What happens is, advertisers, when they see that economic uncertainty, we see two things from them. One is we see less spend. In some cases, they cut down on budgets, they reduce what their activity. Also, we end up earning less per click because the way to think about that is we've always talked about the fact that our yields are driven by three factors. Click-through rates, cost per click, and conversions. Basically, they become worried that their, you know, consumers are not gonna buy as much from them, so they reduce how much they're willing to pay per click to adjust for the fact that they're not gonna make as much on it. We see all those effects. What happened with us is because our European advertising business got softer, it actually impacted our global yields, not just Europe, because basically the European advertisers, in many cases, are trying to reach U.S. consumers and Asia Pacific consumers and others. It actually impacted our global yields. You know, when you mentioned that Europe was down 25%, it's really our global business gets impacted, not just the European business, and it affects our yields, which is where it affects our full business. That's the way to think about kind of what happened there. Even from a moving forward perspective, you know, we think both the Bidded and the case in Europe were a single one-time event. The guidance we've revised, you know, includes everything that, you know, we think has happened. From now, you know, it's only on the way up. I also just wanna mention that, you know, the fundamentals of our business are still strong, so we still expect to generate $150 million+ of Adjusted EBITDA, and we expect to generate significant positive cash flow to the tune of high tens of millions of dollars this year as well. Right. Thank you. Thanks. Operator, we'll take the next question. Our next question comes from Laura Martin with Needham. Your line is open. Good morning. I'll ask two. Let's do one at a time. I want to ask about The Trade Desk's OpenPath. I understand that you guys are supply path optimized because you have direct relationships with buyers and sellers. My question is, isn't The Trade Desk's OpenPath essentially doing your job in a way, but in the open internet? Meaning if these journalistic companies like Washington Post adopt OpenPath, and he's really not gonna charge for it, he's just gonna do it at cost. Really, they don't really need. Doesn't that take business away from you? Or isn't that harder than for you to take a customer away from OpenPath because they basically have optimized the supply chain, which is one of your big brand promises when you sign up a new customer. Could you sort of speak to that? First of all, good morning, Laura. Hi. First of all, it's important to remember that Taboola's supply and Taboola's demand are both unique to us. If you think about going to ESPN or CNBC or BBC or any one of our publisher partners, what we actually create, the real estate we create on those publishers does not look like anything that The Trade Desk is looking to achieve with OpenPath, right? We serve two things, both editorial recommendations as well as paid recommendations. You cannot replace that with any form of banner or single ad. From a supply perspective, it's very unique, it's very native. That's from that perspective. The demand is also unique because most of it is performance advertising, supplemented by, you know, about 15% of brands and agencies. Both of those dynamics make it quite unique and not something that we believe is in the same addressable market as what The Trade Desk is looking to replace. The second point I'll make is that over time, you know, as I look into the next ten years, in 2022, in any case, I suspect banners are at risk of being dissolved because if you can imagine, I mentioned that in my letter, we're seeing really good momentum replacing banners with these sort of carousel experiences that are half editorial and half paid, and the paid portion is either e-commerce, video or native advertising. If you think of from a publisher perspective, any banner I have, homepage, middle of the page, section front that anyone can potentially buy, would I prefer to serve a banner or would I prefer to make the same amount of money or more and then have half of it actually engage my users with editorial content? That's a very hard competition. We're seeing good momentum there. I mentioned, you know, E! Online, you know, NBC Sports, ET and others. I think over time, that is where Taboola will grow the most, which is tens of billions of dollars of banners that will be replaced by basically these paid recommendations and editorial recommendations. Let me just add one other thing. In addition to the unique supply and the unique demand that Adam mentioned, we also have unique data. If you remember, we've talked about it in the past, but what we have that The Trade Desk doesn't have is we know what people are reading about. We know what they're interested in. It's a different form of data. I think that also gives advertisers something different with us than they get from The Trade Desk, because it's a different way of targeting consumers with that highly contextually oriented data. Yeah, that's why 9% of the revenue is SmartBid. Right. That's super helpful. Thank you for that. Okay, the other thing you said is, Steve, you said you're gonna keep costs in line even though revenue is gonna be a little softer. Adam, you said in one area you're gonna double your engineering resources over the next year. My question is around hiring. Have you had issues hiring, and have you been able to hire and ramp up your spending as quickly as you wanted, given the tight labor markets? Yeah. It is tight for sure. I think especially when it comes to tech resources, it's a very challenging environment. So far this year we're a bit behind on our hiring plan. But you know, April, for instance, was our best hiring month basically in the last 18 months. It could be that things are opening up a bit, and we do expect to kinda hire at something close to what we initially targeted by the end of the year. I'd say bit behind, but we think we can close that gap. Definitely it's competitive still, but it could be that things are loosening up based on our recent experience. We're also taking an international strategy to expand our tech, sort of hubs, right? We have Israel, initially. We have an office now in L.A. as part of the Connexity that's growing fast. Then also in Taiwan, we're seeing a lot of good momentum. In general, we're also looking to expand our international sort of tech hubs to be able to attract great talent. We've been hearing that back to office, if you let people geodistance, it's easier to recruit. What's your in-office policy, Adam? Well, you know, first of all, I'll say that we don't force anyone to come back. We give the local leaders sort of, you know, the opportunity to decide. We have, you know, we work in 22 countries, and it's very different. I was just in Israel, and in Israel, people are half in the offices in Israel every day. So that's hundreds of people coming to the office. In other regions, much less. You know, in China, people are at home. So I mean, it's very, you know, regional. We wanna empower our leaders to decide. Personally, I can tell you my opinion is that being in the office, seeing the people, we hired north of 400 people last year. You can imagine seeing them, interacting with them, showing empathy to each other is such a boost in culture and eventually execution. I think it's important to see each other. I think over time, companies that will be too aggressive on being remotely will suffer from execution gaps. I choose culture and in person, but that will take time. I come to the office. Thanks, Laura. Thank you. Operator, next question. Thank you. Our next question comes from James Kopelman with Cowen. Your line is open. Good morning. As you look across industry verticals, can you talk about where you saw advertiser strength during the quarter, and which verticals have held up the best into April and May, versus which verticals saw the most impact by the macro and other factors that you cited? Any color around the conversations you're having with advertisers would be helpful. Secondly, in terms of your forward guidance, you mentioned taking a conservative approach. What do you view as the two or three biggest factors that could drive upside over the quarter and through the remainder of the year? How much of potential upside could come from macro or broader digital market improvement versus execution on your growth initiatives, including Connexity or new features like SmartBid? Thanks. Thanks, James. I'll address the verticals first of all. I think first of all, we've seen the most impact geographically rather than on certain verticals. As we talked about, Europe has been weak. There's been much less of an impact in the U.S., although there's been some flow through, but less of an impact on advertisers in the U.S. and Asia-Pacific and LatAm. Generally speaking, it's been much more of a regional impact. In Europe, for instance, it's pretty, you know, it's been impacted pretty evenly across the board. The one thing I would say is that it definitely has impacted brands and agencies more than performance advertisers. For instance, in Europe, you know, I was talking to our VP of EMEA yesterday, and he was telling me that they've had almost every single brand in Europe said, "Please don't show me on any pages about the war." They've cut back significantly on what they wanna be shown on. They've cut spend, they've reduced targets, whereas he said, you know, not a single performance advertiser has had that same conversation with him about not being on war pages. Just to give you a sense, it's definitely more brands than agencies. We are also seeing a bit of softness in e-commerce, mostly due to supply chain issues. That has been a little bit softer than again, our core performance advertising, but not by a lot. Generally speaking, it's relatively across the board, but with a little bit more impact on brands and agents branding dollars than performance, and a little bit more on e-commerce than our core performance. Yeah, I can take the second one. You know, not assuming, you know, like we said, the guidance assumes that those two one-time events are in the past, and from here, with execution, we believe we can meet and beat people's expectations. Just to, you know, share a few execution opportunities for us that are within our control. One, we have a very strong publisher pipeline. You've seen the recent success, you know, with PMC and others. People choose Taboola thanks to our technology and revenue advantages that we have in the market. Also, our wins are becoming greater impact to our business because we're not just winning bottom of article where we traditionally operated. We're also winning banner real estate, so we have a bigger vertical growth with those publishers that we win. You know, I spoke about banners moving to Taboola. I also mentioned that performance advertisers were taking. I have a huge ambition and a dream here to really become what I believe is the fifth company in the history that was very unique in performance advertising success outside of Amazon, Google, you know, Snap, so I think and Facebook. I think we have a huge opportunity in performance advertising, and I mentioned the investments we're making on AI and engineering. That's just on the publisher and advertising front, the core. Taboola News is basically experiencing explosive growth. It's a three-digit growth for us. We're seeing great momentum. You've seen on Investor Day, Samsung on stage speaking about it. Hopefully, you know, we'll be able to share more soon publicly, but I'm very excited about the financial impact it's making and this is, it's our fastest growing, basically, part of our business. The bidder is live. There's no more, you know, uncertainty about what's gonna happen when it's launched. It's live. It's off to a good start. From here, the tech team is very optimistic about all the things we can do to grow, one, on the Microsoft partnership, you know, together with them. The second thing is, outside of Microsoft, we see a lot of header bidding opportunity where we have advantage because like Steve said, we have a lot of advertisers, we have a unique data, and now with the bidder technology, we believe we can become a significant, you know, bidder. So that's the third one. Last one is e-commerce. Personally, I just bought two strollers and a trampoline, and a mattress to my daughter. I did all of that on Reviewed.com, New York Times, Wirecutter, and others because I have no idea what's a good trampoline. I believe, you know, this experience that everyone on this call knows exactly what I mean, will be a big part of the future. We all need trusted sources, to be able to make decisions, about what to buy, and I think that will be, you know, a huge driver for us starting now but also into the future. I would say four things, strong publisher advertiser pipeline, Taboola News explosive growth, bidder going up and up, and e-commerce to add synergies. Yeah. Let me just add two things from a numbers perspective on those four upsides that Adam talked about. First of all, on the bidder, he mentioned that there's an opportunity to improve the bidder and also to take it to header bidding on other publisher sites. Just to be clear, in our current guidance, we factored in current bidder performance, which we already are seeing improvements on. We think that is definitely upside as we improve the bidder over time. I think that's. We've tried to be very conservative in terms of what we factored in there, and we did not bake header bidding into our guidance at all. That's pure upside if we're successful with that. The other thing I would say on the new publisher supply that Adam talked about and winning new publishers. We're currently forecasting that this year will be our second-best year for new publisher revenue in our history other than 2019, which was exceptional, and most of you know the story there. It is shaping up to be a very good year from a new publisher supply perspective. Thanks, James. Operator, next question. Our next question comes from Andrew Boone with JMP Securities. Your line is open. Good morning, and thanks for taking my questions. I've got guidance questions and then just an operational question. I think Microsoft historically was around 20% of gross profit TAC. You guys have highlighted that Europe is 30% of revenue. Can you just help us size the two impacts as we think about guidance? How do we think about the difference between the two? Secondly, given softer demand, can you remind us the amount of contracts that are fixed CPM versus percentage of revenue? In other words, how should we think about softer demand rolling through to take rates? Lastly, and more operationally, hopefully a little bit more fun. Adam, you highlighted the investment in performance advertising. What's missing right now from your advertiser suite? What are you gonna focus these new engineering resources on? Thanks so much. All right. Let me start with the split between, like, the impacts of the different components here. First of all, I kind of said in my prepared remarks that foreign currency exchange rates is about 1.5% drag on our growth. That is, you know, directly comes off of our forward-looking guidance. A majority of the rest of it was the European demand softness due to the war. The launch of the Bidded Supply was a factor, but a smaller part of the overall reduction. Without getting into specific numbers, that's how you can think about the three different components. To your second question about guarantees. We, in our Q1 filings, I believe we said that the Q1 percentage of TAC that was paid out under guarantees was 9%. We expect that to be consistent with Q2. Just to give you a sense, in April, we paid out TAC at 9% of our base. 9% of our TAC was paid out under guarantees again. We expect that to be relatively consistent. Maybe it trends up very slightly, but we don't expect it to go up a lot. That's, you know, we don't see risk to our business from that perspective. Yeah. Hey, Andrew. I knew you were gonna ask me an advertising question, so I'm happy you did. So let me just say, you know, as I think about the opportunity we have on the advertising side, you know, Google and Facebook were able to get to millions of advertisers. Amazon as well. We just saw, you know, they just crushed $30 billion in advertising, which is mostly performance as well, you know, a big amount of advertisers. Snap, I believe it's 250,000 advertisers. We have 15, and I believe the rest of the companies in advertising space have less than us. I'm talking about direct contracts, not programmatic, people, clients you work directly with that rely on your technology and your data. That is the main thing I'm talking about. To me, to be the fifth company, you know, as far as I understand it, that is able to make a huge amount of advertisers successful, and by successful, I mean, they come to us, they tell us what is their goal, whether that's an acquisition cost or whatever goal they're trying to reach. They give us some creatives. We may create the creatives for them. They may have them, and we do the rest, and we're able to drive the most amount of sales for them, much like they can rely on search and social, you know, with Google and Facebook. That is what I want Taboola to be. As part of that, we're doing a lot of interesting things in terms of the product roadmap, but also, like I said, investing in engineering and AI so that we are very well positioned to be the fifth company that has ever done it. Now, that will be a multi-year journey, right? But upside here is unlimited. I mean, because I think the yield effect, as we continue to be successful on that one, will be very impactful. Thanks, Andrew. Thank you. Operator, next question. Our next question comes from Jason Helfstein with Oppenheimer. Your line is open. Hey, it's Jason. Hey, guys. I guess two questions, and they're kind of related. I guess you know, help us understand. Look, the theme right now, obviously, is everyone thinks we're going to a recession, and more and more, we're seeing companies, you know, cut back on spending. You're choosing not to cut back. Help us understand what you will gain by not cutting back. Then the second is, the market seems to kind of question your business model, even prior to this current concern about macro that we're in now. Some of it relates to what Laura talked about. Some of it is still just people are focused on some of the early days of the business where there was, you know, more clickbait as opposed to content recommendation, which is the business today. I guess, like, help us understand, you know, you're a meaningfully cash flow generating business. You know, just talk to us how you plan to narrow the intrinsic value of what the stock is worth versus, you know, how the market is valuing you within the tools of your control. Again, a two-part question. What do you think you're getting out of making investments while others are cutting back? Then two, how do you ultimately get the market to reward you for the value you're creating? Thank you. Great. Thanks. I'll start with the first question, which is, spending, what are we getting for, by not cutting back. As we talked about at our Investor Day, and as many of you probably know, Disproportionate amount of the investment that we're doing in our business, the growth of our operating expenses is going towards R&D. What we're gaining from that is obviously new products, new services, things that we can bring in terms of value to our advertiser and publisher partners. Frankly, expansion into the growth areas outside of our core business. Where that translates for us in terms of our business is in terms of growing our core business, it's growing yield by bringing on more advertisers, making them more successful, driving up our overall revenue to our individual publishers by growing that yield. It's new publisher tools for our publishers. For instance, we'll continue to invest in Homepage For You, which has been very well-received by publishers, and is something that we wanna double down on and really add value to our publisher partners with that. In the growth areas, Adam mentioned a few minutes ago that Taboola News is the single fastest-growing part of our business. It's triple-digit percentage growth rates this year. That's something that, you know, two years ago, if we had not been investing like we have in R&D, that wouldn't be a significant portion of our business. That's the type of thing that we get by continuing to invest in our business, is growth in new areas that frankly we wouldn't get without that investment. As we said, we think that great companies invest through downturns, and that's what makes them unique and special. We're fortunate enough in our case that the fundamentals of our business are strong. I mentioned we plan, you know, we still expect to generate over $150 million of Adjusted EBITDA and high tens of millions of dollars of free cash flow this year. We're in a strong financial position. We think it would be a big mistake for us at this point in time in our kind of advantaged position with generating positive cash flow to cut back now. Now's the time to invest. Yeah. About the second question, I think, you know, that it goes back to, where you think the industry is going, and what you think is the addressable market that we have, and also the fact that we're a large-scale company already and we have, you know, advantages as we continue. If you, if you unbundle that, over time, you know, I do think there's gonna be a company that's over $10 billion in revenue in the open web, you know, side by side to the walled gardens, but just which doesn't exist today, right. The open web does not have a big scale, you know, over $10 billion revenue company so that advertisers can really rely on that channel, you know, side by side to search and social. That's something that I think is gonna happen. The way it's gonna happen, in my belief, is that it's gonna be replacing traditional advertising formats that were invented when you and I watched DVDs with a feed of personalized recommendations like we see on the homepage of Amazon. That is what our children will experience. I do not think they'll see more, you know, cubes that 0.1% of people click on. That is, you know, I'm very bullish on that future. Secondly, I think as you look into the people that we partner with, publishers need a very, very good friend, and we are the best friend you can get. We empower the entire organization. It's more than just money. You know, the editorial team gets Newsroom and Homepage For You. They get commerce strategy, subscription opportunities, and that's why you're seeing 5-10-year partnerships, which I believe no other company on the internet has ever had. I also think that we're well-positioned to become the open web's best friend because we invest so much, like Steve said, in technology. Thirdly, as you look into your mobile phones, TV, automobile, I don't think you'll see banners in your car, but I do think you'll see a feed of recommendations in your car. I don't think you'll see a banner on your Samsung, but I do think you'll see personalized recommendations on your Samsung. I don't think you'll see banners on your TV, but I do think your TV will say, "You may like." As you look at other future time spent with people, we are well-positioned to be that engine that says, you know, other people also liked. About the stock, you know, I really care little about short-term stock dynamics, but we could wonder 'cause, you know, I can't control it, and we're part of a world, you know, dynamics that I can't control either. I can control the long-term execution of this company, and I still think that by 2025, we'll post $1 billion of ex-TAC, which is a very significant scale company in the open web. As part of that, like Steve said, we're growing, we're profitably growing, and we're producing high tens of millions of free cash flow even in 2022, which is again a tricky at least beginning. To me, when you add all those things up, it's a good place to be. Just let me quick follow-up. To your point on, like, not being focused on the stock price short term, understand you're taking a long-term view and clearly with the answer. I mean, is it a concern at all from employee retention? You know, do you have employees who are now looking at their compensation and saying, "I'm making a lot less money because, you know, whatever. I'm, you know, massively out of the money on my stock options or RSUs? I can tell you, first of all, I know when we became a public company, the first thing that happened is you have almost 2,000 people that become traders, and that's a new thing. It's also a new thing for me, 'cause we only are used to, you know, build and ship and dream, and now we also have this reflection from the public market. It's definitely a new thing, and we're adjusting to it. We don't speak about the stock in all hands. We have an all hands every two weeks. I don't speak about it. I answer questions if someone asks, but it's not the things that I focus on because again, short term, you know, we can't control it. People care. Of course, it sucks, but at the very least, you know, we're not alone. You know, there are many great companies like Taboola that are also going through these dynamics. I can tell you what people and I've been doing this for a long time, what people care about the most when they think about where they wanna be from a career perspective, they care so much more than money and, you know, things of that nature. They care about who is their manager, how is their career gonna be developed, how will they be able to reinvent themselves over the next three to five years as an employee. Taboola is an amazing place for people to be a part of. It's a great culture. We're very diversified, we're global, and people care about that more than, I think, the stock price. Thank you. Thanks, Jason. Operator, I think we have one last question. Yes. Our last question comes from Shyam Patil with Susquehanna. Your line is open. Hey, guys. This is Jared on for Shyam. Thanks for taking the question. Digging in on Connexity a little bit, we saw that this represented about 15% of ex-TAC gross profit in the quarter, roughly in line with 4Q. How did this perform versus your own expectations? Are you pretty comfortable with that range of ex-TAC gross profit in the near term? Looking ahead a little bit, do you think that Connexity sensitivity to macro factors is pretty similar to that of the core business, or is there anything to call out there? Thanks for the question, Jared. Connexity has performed basically in line with our expectations. We're happy with where we're at. I think Adam talked a little bit in his prepared remarks about some of the positive things that we're seeing and some of the positive trends that we are seeing. He also talked a bit about the fact that we still believe strongly that this is gonna be core to the publisher revenue in the future. We still think it's gonna be a third of publisher revenues in the future. We're still very bullish on it. You know, in the short term, it's performing up to expectations. That, by the way, is despite the fact that there are some headwinds around e-commerce in terms of supply chain challenges. You saw Amazon had a down year-over-year quarter for the first time in forever for them. There's some headwinds, but we're happy with the performance. It's roughly in line with our expectations, and we feel good about where we're at, and we're very bullish about the future. Thanks, Jared. Great. Thank you. Now I'll hand it back to Adam to wrap up. All right. Thanks, everyone, for joining us today. We look forward to spending time with all of you and our investor base over the next few weeks. Let me just start by saying that I'm very bullish about Taboola growth. The fundamentals of the business are very strong like they were before, you know, this revision. We've had two one-time events that are now in the past, and they're fully factored in our guidance. Trust me, we do not wanna do this again. As I look into the rest of 2022 and the future of the Internet, I'll say three things. One, we've replaced banners, and we are replacing banners with native, personalized experiences like all of us see on Amazon homepage, Twitter, Instagram. Go and check out NBC Sports, E! Online, LT, and others, and you'll see exactly what I mean. Two, e-commerce will be a huge part of the internet and our business. People need trusted publishers to make decisions about what to buy, and they wanna connect with direct-to-consumer brands as they do it. Three, recommendation engines will be everywhere. We see explosive growth here, and we have amazing partners like Samsung and Xiaomi, where over time we'll be in every TV you buy and every car you drive. I don't think traditional ads will make it like we will. Our high gross margin, I think, is a proxy that we're not only just winning because we have something that, you know, everybody needs, it also shows our competitive advantage. We're generating over $150 million of Adjusted EBITDA, high tens of millions dollars of free cash flow in 2022, and my team is energized like never before. Now, as the American rapper Fat Joe says, and I will quote him, "From here, it's all the way up. This concludes today's conference call. Thank you for participating. You may now disconnect.