Good day, and thank you for standing by. Welcome to the Taboola Q2 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jennifer Horsley. Please go ahead. Thank you, and good morning, everyone, and welcome to Taboola's Q2 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 Q2 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. Thanks, Jen. Good morning, everyone, and thank you all for joining us for our Q2 call. Q2 was another good quarter. We delivered $143 million of ex-TAC, a growth of 22.5% and Adjusted EBITDA of $34 million. Both beat the high end of our guidance, which gives us confidence to hold our 2022 full-year guidance. While we have seen softness in advertising in the U.S. since the last quarter, over the last few weeks, the effects of the war in Europe as well as the softness in the U.S. have been stabilizing. We're also seeing the benefit from diversity in our business. For instance, we're seeing strength in our e-commerce business a bit better than we expected, as well as we continue to see exponential growth in Taboola News, which for the first time we're showing, the run rates to generate north of $50 million in revenue this year. At the same time, given the challenging macro environment, we're taking measures to control our operating expenses, prioritizing things that are key and spending less on others. On the business front, we're seeing good momentum. We've spoken this year about the strength of our publisher pipeline and that is translating into many new publisher partnerships. In fact, we forecast that in 2022 we will sign almost as much new business as we did in our record-setting year in 2019. For context, that equates to nearly double the monthly new business we signed in 2021. This is a big year for us. The summer has been busy and we recently won incredible partnerships such as PMC, Gray, Fox Sports, TIME.com, and many others. Gray, the largest owner of top-rated local television stations and digital assets in the U.S., was a competitive win. A new five-year partnership that includes Taboola Feed across all of its digital properties, as well as homepage integrations on more than 100 websites. They also will test additional Taboola offerings, including Taboola Newsroom, our technology offerings that provide important readership insights to publishers by using advanced AI and signals for more than 500 million daily active users on the Taboola network. Fox Sports is another new win. It's a three-year partnership that includes Taboola Feed as well as our high-impact mid-article recommendation reel. We're very excited about this partnership and it's a proof of our strength in the sports vertical. We work with many of the major sports networks in the U.S., including ESPN, NBC Sports, CBS Sports, USA Today Sports, and now Fox Sports and many, many others, which give our advertisers great verticalized reach and value when choosing to work with Taboola. We've also seen many of our existing incredible partners re-choosing Taboola and renewing with us. For example, Cox Media Group, Insider Inc., Ströer Content Group, and many, many others. When taking a data-driven view of our publisher momentum, not only are we adding a near record amount of publishers every single month, our churn is also trending under expectation, meaning we're keeping more partners than what is in our plan. Another highlight that we've spoken all of the year is Taboola News, our Apple News product, but for Android devices, which I'm so excited about. I always say that Taboola is a startup of startups, and Taboola News is turning into a blueprint for how we can scale a new business under the Taboola infrastructure. We continue to expand the work we're doing with mobile devices and OEMs, adding new partners, growing in new geographies, expanding how we can recommend personalized news on many screens we're on. Sync device homepage, wake screen, and so forth. Taboola News is growing triple digits, as I indicated on our last call, and we expect that it will cross the $50 million annual run rate by the end of the year. Becoming a meaningful contributor to our financials. What makes this so exciting is how synergetic it is to the rest of our business by bringing more viewers to our publisher sites. This is huge for them in time where capturing audience attention can be challenging with TikTok and other social networks. It is huge for us as well because it results in a publisher deepening their relationship with us. Over time, you'll see the publishers choose Taboola not only for generating the highest revenue they can generate, not only for utilizing our editorial technology, but also to drive new audience growth to their site. In some countries, publishers have started proactively reaching out to us to seek for partnerships, mainly because of traffic they see going to other publishers in their market. That's a good sign. Another new offering area where we're making progress is with our bidder, which we first launched last quarter on Microsoft. We have numerous strategies to increase our share of the $64 billion open web market. While most of those involve converting banners to more native advertising formats, our new bidder will allow us to bid into display inventory and win a portion of that inventory. We think our bidding advantage is threefold. First, we have unique CPC advertiser demand. 90% of our revenue is from our own advertisers. Second, we have unique first-party data. We might see a user interact with us in the bottom of the article unit, see what they read and click on, and then bid on them on a banner placement on the homepage and such. Third, we have unique AI technology. We have years of deep learning investment, and now we have a team focused exclusively on bidding in the open web, perfecting our performance, which is what our Microsoft contract is allowing us to do. We're early days. However, we have begun piloting the bidder technology outside of Microsoft in the Q2, and we're seeing encouraging results. On a handful of publishers, we're trending to generate $a few million this year. The longer-term opportunity is significant when you consider Taboola is working with about 9,000 publishers and how this can increase our share of wallet within our publisher partnerships. Lastly, I'm also happy to report that we're seeing good results in our e-commerce business despite the macro pressure. Because our solutions in e-commerce are 100% performance-based, we're either paid a commission on sale or able to virtually guarantee that the advertiser CPC ad spend will back out to their ROI goals, effectively the same as commission. We've seen little to no pullback in this type of ad spend. Historically, these types of budgets continue to exist even in a recession. In fact, in some cases, we're seeing clients ask us if we can find more opportunities to help them spend as organic traffic has slowed down. I believe consumers are becoming better online shoppers through the pandemic, and those new behaviors are not gonna go back. Coming off of a good Q2 and looking at the back half of the year, while there's a lot going on with the recession and advertising softness, we have the right priorities as a company, the right team that has been executing together for the past decade. The market is big, and we feel optimistic about the tailwinds in business that I mentioned earlier. This is also an election year in the U.S. and a World Cup year, which have historically driven good advertising budgets as well as traffic surges, all of which are giving us confidence to reiterate our full-year guidance. As I finish, I wanna tell you I strongly believe this is a good time for a company to focus on its fundamentals, its competitive advantage, to do the work, and care even more now than ever about Adjusted EBITDA and free cash flow. We always cared about profitable growth, but now more than ever, it is important, so we come out even stronger on the other side of this, whenever this ends. I'm proud of Taboola's north of $150 million in Adjusted EBITDA this year, along with our strong cash flow profile. At the leadership and board level, we're already thinking about 2023 and beyond. I'm energized, as well as my team, and now I pass it over to Steve to talk more about our financials. Thanks, Adam, and good morning, everyone. As Adam shared, we had a solid Q2. We met or exceeded our Q2 guidance on all measures despite some macro headwinds. Revenue in Q2 was $342.7 million. Ex-TAC gross profit was $143.2 million, and adjusted EBITDA was $34.2 million. This represented ex-TAC growth of 22.5% year-over-year or 4.7% on a pro forma basis with Connexity. On a constant currency basis, the pro forma growth would have been 7.1%. Our adjusted EBITDA margin or the ratio of adjusted EBITDA to ex-TAC gross profit was 23.9%. Of the Q2 gross revenue growth of $14 million, $22 million came from new digital properties while existing digital property partners decreased $8 million. This is obviously a very unusual event to see our existing partners shrink year-over-year. This was driven by the weak macroeconomic situation that started in Europe in Q1 and spread to the U.S. and much of the rest of the world around the middle of June. In our business, this translated to a pullback by advertisers, which resulted in weaker yields and a decline in revenue on those existing property partners. Our Q2 ex-TAC gross profit was $143.2 million and was up $26.3 million or 22.5% year-over-year. Adding Connexity to our business obviously had a positive impact, but we are also seeing the benefits from our diverse revenue base as our growth came from three sources, the addition of new digital property partners to our network, growth from new offerings such as Taboola News, and the growth from Connexity. This growth more than offset the impact of the lower yield as well as the anticipated declines in our Microsoft contract as we transition to the new bidder. Our ex-TAC net dollar retention for our publishers was 99% for Taboola on a standalone basis, just under 100% driven by the weaker yield I highlighted earlier. Looking at operating expenses, they were down $28 million year-over-year. The decline was driven by $58 million of lower share-based compensation expenses as the prior year was unusually high as a result of going public. Excluding stock-based comp, operating expenses were higher by $30 million, with slightly less than half of that coming from higher depreciation and amortization from intangibles driven by the Connexity acquisition. The remaining increase came mainly from investments we made in the business, including higher labor expenses reflecting the inflationary environment and tight job market, as well as from the inclusion of Connexity, which we did not close on until September first, 2021. As Adam mentioned, given the macro pressures, we are taking actions to reduce operating expenses going forward, including reducing discretionary spend and decreasing our rate of hiring. We generated Adjusted EBITDA of $34.2 million, which was above our guidance of $23 million-$28 million, a decrease year-over-year driven by our investments in the business. Adjusted EBITDA margin of 23.9% was lower year-over-year, but in line with our expectations. GAAP net loss of $5 million included warrant liability revaluation benefit of $12 million, share-based compensation expenses of $20 million, and intangibles amortization of $16 million, all of which were excluded from non-GAAP net income of $15.8 million, which was above our guidance of $6 million-$11 million. In terms of cash generation, in Q2, we had $2 million in operating cash flow while free cash flow was -$7 million. Cash flow in the quarter was negatively impacted by approximately $22 million from a combination of one-time tax payments and publisher prepayments. We ended Q2 with a strong balance sheet and positive net cash. Our cash and short-term investments balance of $308.5 million remains above our debt balance of $288 million. We also recently entered into a $90 million five-year senior secured revolving credit facility, which further improves our liquidity position. Shifting now to our expectations for Q3 and the rest of 2022, I won't go through all the numbers as they are outlined in detail in our press release. Overall, our overachievement in Q2 provides us confidence to reiterate our 2022 guidance on ex-TAC and Adjusted EBITDA, which are the main metrics we focus on. We are lowering expectations for revenue, mostly due to our mix of business. More revenue is coming from areas with higher ex-TAC margins, such as Connexity, Taboola News, and certain high-margin core regions, and less is coming from areas with lower ex-TAC margins. We also anticipate some tailwinds in Q4 from the US elections, the World Cup, and strong performance from Connexity, which is a Q4-driven business. I should note that our guidance assumes continued weakness in the macroeconomic environment at current levels. This weakness has translated into the lower advertising demand we experienced throughout the Q2. Our guidance does not assume a further weakening of demand or a departure from our normal Q4 seasonality. Overall, the fundamentals of our business are strong. We expect over $150 million of Adjusted EBITDA for the year and healthy free cash flow. We are seeing near record new publisher partnership growth, exponential growth in Taboola News, and strength in e-commerce. We are being judicious in our investments and managing costs closely while still investing in areas that are important to our strategy and growth. We believe all of this will position us for accelerated growth as we come out of this period of economic weakness. With that, let's open it up to questions. Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. Once again, that's star one one. Please stand by. We compile the Q&A roster. One moment for questions. Our first question comes from the line of James Kopelman from Cowen. Your line is open. Good morning, and thanks for taking the question. First one for Adam. On Taboola News, congrats on hitting the $50 million run rate. Given the rapid growth, if we look out maybe 1-2 years, how should we frame the size of the opportunity there versus the overall Taboola business? In terms of growth drivers at Taboola News, is it largely adding more device manufacturers in more regions, or are you focused on scaling user penetration and engagement in your existing footprint? Then I have a follow-up for Steve. Sure. Hi, good morning. Thanks for the question, everyone for joining. Taboola News, just before I get into the details, I think it's exciting because it shows that, you know, we can organically build significant businesses that have financial contribution to our existing base and future base at Taboola. I'm excited about that. You know, that's an organic effort. It's not an M&A. That to me, that shows we have the culture and infrastructure to build successful, diverse business under the Taboola infrastructure. I like it. It's right now, just to give you some, you know, further color on the business. It's trending to be over $50 million this year. For the first time, we're sharing that number. It's live on about 200 million active users a month. Actually it's now about 30% of our entire Taboola clicks a year. If you remember, I spoke previously about annual clicks of about 30 billion clicks a year. Taboola News is about 30% of our overall clicks now, just to show the level of engagement. That's where we're getting. Also, if you remember at our investors day, we spoke about, and Tom, our VP of Strategy, spoke about how do we get more time with consumers? How do we get more engagement with consumers? This is definitely one of our biggest vehicles to be more valuable to people in the open web beyond just websites. All of those trends are very good trends. In terms of how we intend to make that a bigger business financially, you know, all of the above in terms of your question. One, more touch points. Right now we have our OEMs use us either in the wake screen between Which means they're swiping right. The average consumer looks at their screen about 80-100 times a day. They have their picture of their family on the lock screen, but they can swipe right, and then they're getting high quality personalized feed of, you know, recipes and news and things they may like based on our data, and AI. That's one touch point. Xiaomi is an example using that quite broadly. You have minus one, which is a different touch point that's currently being used and adopted mainly by Samsung and others. This is more like the Apple News traditional one when you're unlocking your phone and you swipe right and Taboola is the feed in more and more countries. That's the second touch point. Actually some of our OEMs are speaking with us about other touch points like notifications and bringing news to some widgets that they have on the device. All of those things essentially increase the ARPU, if you will, so revenue per user. One thing we're doing is upselling and upgrading OEMs to use more touch points. That helps us. The second thing is to get more devices. I would say thirdly, it is also a matter of geographies. Obviously, some geographies have higher financial implication versus others. The more we're penetrating the U.S., the U.K., you know, Japan and other countries where in general the advertising strength is more noticeable. You should expect Taboola News to have a bigger impact. Longer term, mid to long term, I expect this to be hundreds of millions of dollars in revenue, and a significant portion of our business. a quick follow-up for Steve. Just in terms of ad verticals, we've heard from other companies reporting that the U.S. consumer remains relatively strong while there's been more of an ad spend pullback or perhaps just caution on the enterprise side. Does that align with what you're seeing among your advertiser clients? Any color there would be helpful. Thanks, Steve. Yeah. That's roughly consistent with what we're seeing. Generally speaking, what you're seeing is that, from an advertiser perspective, the pullback has been more on branding, advertising, and things that they can't measure the ROI on as easily. The further up the funnel you go, the more we're seeing kind of conservatism from our advertisers. Lower funnel performance has been more robust, that's one reason that Connexity has been an area of strength for us because they're at the very bottom of the funnel. They're our Google equivalent at the bottom of the funnel. We're seeing kind of more from an advertiser perspective. You're seeing more conservatism the further up you go from the funnel. As you pointed out, I think also the consumer has been fairly strong. Our advertisers that are more directed towards consumer tend to hold up a bit better. Anything that's more directed, you know, towards enterprises is a little bit softer. For us, though, our enterprise business is fairly small, so you know, most of what we do is kinda targeted to consumers. You know, that's another reason we've probably held up a little bit better in some ways. Great. Thanks a lot, guys. Appreciate all the color. Sure. Thanks, James, for the questions. Operator, next question. One moment for our next question. Our next question comes from the line of Andrew Boone from JMP Securities. Your line is open. Good morning. Matt on for Andrew. Thanks for taking my questions. My first one is just you mentioned publisher or performance advertisers success is a key priority in the letter. Can you just help me understand the key drivers of improving ROI there and anything that you're excited about on the roadmap? And then two, just on new publisher share gains, they seem pretty significant. How should we think about this impacting 2022? And is there potential tailwinds in 2023 as these publishers mature? Thanks. Yeah. Hi. Good morning, Andrew, and thanks for the question. On the performance advertising, I will say that's by far our biggest investment. You know, that's the North Star, that's, you know, the liberation into Taboola becoming even more successful over time. We have about 15,000 direct advertisers who work with us. By the way, what's interesting is that even in a recession time or like, you know, macroeconomics dynamics, you don't really see performance advertisers churn. They may lower budgets, but they don't churn so much, which is again another source of strength for companies who have direct relationship with performance advertisers. We're spending a lot of time on a variety of things when it relates to SmartBid and performance advertising. One of them, which is worth mentioning is sort of a multi-touch point optimization. For a long time, SmartBid was optimizing for a single conversion. Whether that was a click or a subscription or time on site or something like that. Now SmartBid, a lot of our effort is to be able to capture multiple touch points and optimize for all of them. Advertisers get an, again, an easier job getting to that quick conversion, getting many conversions and make it easy for them to work with us. That's been a lot of our recent work, trying to go beyond a single kind of conversion optimization point. The second thing that has been taking our time over the last quarter has been header bidding. Header bidding is used in SmartBid tech stack. We're seeing really encouraging signs. I mean, you all know that Microsoft was a successful launch. We talked about that a quarter ago, and that was basically one publisher using a bidder technology. That technology went from zero to nine digits overnight. Over the last 90 days, we've been implementing the same technology, called header bidding across a handful of publishers, and that's already generating millions of dollars in revenue. And that's very, you know, that's incremental, and we have 9,000 publishers. That's been used in SmartBid tech stack, which again helps advertisers get the right users at a lower CPA. Just to give you a bit of color on that, if we're seeing you on CNBC, you know, reading about furniture, but then we might see you later on our homepage, and there's a display inventory there, or header bidding might bid on you, even though we don't have a JavaScript on page, we might bid on that display trying to show you a furniture ad. That helps us to see you multiple times, not only at the bottom of the article, and effectively get advertisers more opportunities to get conversion and pay less to Taboola from the CPA perspective. That's those things have been keeping us busy over the last quarter, and that's our biggest effort, performance advertising. To your second question about new publisher gains and their impact on 2022 and 2023 even. First of all, you know, I wanna say we're extremely excited. Adam mentioned that in his prepared remarks. It's our second best year on record in terms of new publisher business, which is amazing. It's double the monthly rate of last year. That's, you know, it's a very impressive gain and we're very excited about that. In terms of its impact going forward, you have to kind of understand how publishers usually ramp with us. Usually initially, we start off smaller with them, and we grow over the first couple to few quarters as we launch more properties, more of the positions that we had agreed on doing, and they also get more profitable over that time period. You know, usually we start off a little bit lower on our margins, and it grows over time as we bring on the right demand to put on those publishers. That's kind of the typical ramping period. A lot of those launched in the last quarter or two. Some of them are launching, you know, have even launched in Q3. What I would expect is, and this is factored into our forecast, we'll expect improved performance in Q4, improved revenue gains from those publishers in Q4, and then it'll really impact 2023 because that's where you'll start to see them at their fully ramped level as well as margins probably at what will be the sustainable margin level. We expect kinda growth of those in Q4 and then even more growth from them in 2023. You know, I'll just note that, it's a good question about how that impacts us because if you look at our overall business, we're actually in, you know, in a very strong position. That new publisher business is one aspect of that, but Adam also talked about Taboola News. It growing and ramping is really gonna have a positive impact on our business. I think Adam mentioned this in his either prepared remarks or letter, but we have in some markets now, publishers calling us saying, "We wanna do a partnership with you 'cause we see the traffic from Taboola News going to other sites, and we wanna be part of that." It's really gonna impact our business in multiple ways. We think we're between that, Connexity being an area of strength, and the new publisher business we bring on. We think we're gonna be very, very well positioned now, once ad rates recover and we get out of this period of kind of macro weakness. Great. Thanks, guys. Thanks, Matt. Operator, next question. Thank you. One moment for our next question. Our next question is from Laura Martin from Needham. Your line is open. Good morning. Good numbers, you guys. Let's step up a couple levels, and at the 30,000-foot level, I have two questions, but let's do one at a time. Microsoft first. Microsoft now has Xandr. It's won the Netflix business. I'm interested in your point of view about whether you think that after they get Netflix sorted out on the CTV market, they become a new competitor in the open internet, thereby disadvantaging incumbents over the next three years. Do you have a point of view on that, Adam? Hey, good morning, Laura. I'm happy for them. I think that's an exciting deal with Netflix, and obviously, that's. There's a lot going on. I think what will they do in the future? It's hard for me to say. I mean, when it comes to using that demand they might develop on Netflix and utilizing that on other channels, that sounds like a good opportunity. Again, I don't know what they'll do. Maybe that more is relevant for DSPs and companies that funnel demand into other channels like The Trade Desk and others. Maybe they'll get into that business more. I think when it comes to open web and open internet, if you're thinking about building a network of publishers and a network of advertisers and doing all the things we do, that takes a lot of effort that goes even beyond revenue, right? Publishers now, when they sign with you for three, four, five years, they expect you to do so much more than just CPM. They want you to help them engage consumers, you know, drive new audiences to their site, help them with subscription, give them analytics. It takes a decade to build all those things and a lot of R&D efforts so that you're differentiated in the marketplace, in which those good publisher relationships for a long time. It's hard for me to say what they'll do over a long time, but I do think whoever and whichever direction they take, you know, if to build an open web kind of publisher-oriented company, that takes, I think, a decade. They might wanna use that demand in other channels, and that sounds like a good idea, if that's where you're going. Okay. My second macro question, staying up at that level, is, we had, you guys reported like a, the number's 5% pro forma growth versus Innovid just reported right on top of you 17%, and that's 'cause CTV is growing so fast. That is my question. Do you feel that the mobile universe, Meta, as you know, had revenue down year-over-year for the first time in its history. Do you feel that the mobile open internet is losing share to connected television and the next big growth driver over the next three years is gonna be the connected television, and it's gonna be taking share from the mobile digital ad market? Could you give us your opinion on that, please? I think those are different buckets, right? I think CTV is mainly competing with linear TV, and that is, you know, the question is, you know, where is TV, which is $100 billion, you know, budgets, I think in the US, you know, where are they going? That's a lot of, if you think about traditional linear video ads that are before the show, during the show, after the show, how are they transitioning into a digital measurable world? I think that's CTV, right? I think that's where that's going. Then there's a whole streamers versus not, and how is that gonna pan out. The open web and in general, if you look at Google, Facebook, Taboola, right, that's hundreds of billions of dollars market that are mainly performance advertising. Like most of Google's revenue is performance. Most of Facebook's revenue is performance. Most of Amazon's digital advertising revenue is performance. Most of Taboola's revenue is performance. Those performance budgets, which basically fuel the advertising space, like that's the vast majority of the advertising market, I don't think those translate easily into a TV environment. If you think about converting to buying products and subscriptions and affiliate marketing and e-commerce, I think that's way more down funnel and more lean in, lean forward type environment, which is like a computer or mobile web, maybe an app. I think that these are two big, by the way, two big markets. Right now I think, you know, we're seeing some headwinds from with the recession, everything in the U.S. and we've seen the effect in the war in Europe. Over time, you know, performance advertising is a very strong market and I'm encouraged by where it can be in the future. We just have to, you know, weather the storm as it is now. I do think these are good different markets and the future is bright. Thank you very much. Super helpful, Adam. Thank you. Thank you, Laura. Operator, next question. Thank you. One moment for our next question. Our next question comes from the line of Jason Helfstein from Oppenheimer. Your line is open. Hi, it's Redwan on for Jason. Thanks for taking the questions. Just two quick questions. Building off of the bidder questions from earlier, when do you fully expect the bidder product to be incremental to revenue? What are your, like, long-term expectations for, let's say, 2023 and 2024? And the second question is, how are you planning to, like, restrain operating expenses in the back half of this year? And can we get some additional color on each segment? Thanks. Sure. With regards to header bidding, you know, we haven't given guidance. I can tell you one is a proxy. We did share publicly in my letter that a handful of publishers generate millions of dollars, and we have 9,000 publishers. Again, I'm not suggesting you should multiply the number I just gave you by a thousand. I will tell you for Taboola's top three priorities, I mentioned that last quarter and I mention it again. The number one is performance advertising. The second thing is header bidding, which is taking advantage of our CPC budgets, first-party data across the inventory of display and the open web. The third one is e-commerce. Those are the three things that are a must win, biggest investment sources for Taboola, and I think they will drive the most amount of competitive advantage. One, we mean it, you know, and we're staffing to be very successful in that world. I think we have a differentiated offering in the header bidding space because no one has so much first party data like we do because of our recommendation widgets that are hard coded on the page, and no one has so many direct CPC advertisers like we do. As we gonna enter the display inventory, by the way, which I expect it will happen, we're able to win enough inventory that it's not branded advertising and it's not search advertising. There's an area there that is just, you know, for us to grab. I do think this will become hundreds of millions of dollars for the company. You know, I'm not giving you a timeline because we're not ready to do that. I'm very encouraged by 90 days into Microsoft launching, us generating hundreds of millions of dollars for the company. You know, I'm not giving you a timeline because we're not ready to do that. I'm very encouraged by 90 days into Microsoft launching, us generating millions of dollars from just a test on a bunch of small publishers. That to me is a good sign. I intend to continue to invest in that. The second thing I'll tell you is that every publisher that's launching header bidding by Taboola means that our share of wallet goes up. If you're a publisher working with us and you're generating $20 million a year, and with header bidding you're generating 20-something million dollars a year, it's just a little bit harder to replace Taboola now because we're just a bigger portion of your overall revenue, which is another level of moat as we're thinking about protecting, you know, our open web and publisher relationships. Again, it's very synergetic and I think it's very incremental to our finance. It will be hundreds of millions of dollars, I believe, over the midterm, long term, but, you know, we're not ready to give a specific timeline. In terms of the operating expense question, I think that's a very good question, and we are definitely taking actions right now to bring our operating expenses more in line with where revenues are right now, given the macroeconomic weakness. We've already taken some actions. We've already reduced dramatically our hiring plans. We've looked at all of our discretionary expense spending, and we've already cut budgets on that. We're taking a, you know, ongoing look at that, and we'll probably take additional actions. I will say most of those will probably impact Q4 more than they'll impact Q3. Things like hiring plans, obviously that impacts outer quarters more than they impact the near quarters. Generally speaking, we've already taken actions. We're bringing our operating expenses down, and we expect to see that impact in Q4. We'll also see bottom line margin improvements in Q4 as we ramp up those new publishers that I talked about and their margins improve, and we expect to see that in Q4. We also think that Q4 revenue will be a bit stronger than Q3 with some of the tailwinds there in terms of U.S. elections and World Cup. We think that'll help improve bottom line margins as well. We're very conscious of our operating expenses, and we are bringing those more in line. As Adam mentioned at the beginning, we in times like this Cash flow matters more than, more than anything else. We are working to make sure that we maximize that for this year. Thank you. Thanks, Redwan. Operator, next question. Thank you. One moment for our next question. Our next question comes from the line of Stephen Ju from Credit Suisse. Your line is open. Hey, Adam. As you talk to more of the Connexity advertisers, have you been able to get any feedback or sense in terms of how much better or worse the ROI may be relative to some of the other channels they may be buying traffic from? It seems like just by its very, you know, I guess, principle, it should be delivering what should be more highly qualified, higher intent traffic. The ROI should be superior versus most other channels out there. Yeah. Yeah. Oh, go ahead. Yeah. No, no, go ahead. What's the second question? Oh, second question. I mean, you talked about, you know, dropping revenue yield for all the obvious reasons, macro, et cetera. What are you hearing from your publisher partners as their revenue generation drops? I suppose they probably will not be doing any better with somebody else. It seems like Taboola continues to win, you know, new partners regardless. You know, theoretically, as your revenue yields hold up better versus the next guy, are you receiving any new inquiries from folks who are currently not partners? Thanks. Yeah, sure. Good morning, Steven. So one about Connexity. So a few interesting things that have happened over the last quarter. As you saw in my letter, it was a source of strength in times where macroeconomic sort of softened a bit in the U.S. By the way, they stabilized over the last few weeks as Q3 started. Nevertheless, it was impacting our thinking about the rest of the year, even though we're holding the year. Connexity was a source of strength. What was interesting is that retailers came to us and said that organic traffic to their sites was lower, and they were looking for Connexity to sort of bridge the gap because they knew it essentially meant guaranteed ROI for them. They know that Connexity is a performance advertising channel. They know what the type of ROI they can get, and they increased the budget with Connexity when they saw a decrease in organic traffic. That was interesting to see. By the way, they buy either a CPC or sort of a commission-based, but essentially it's a guaranteed ROI to them. Again, especially in times of weakness, a channel like Connexity becomes even more important because it's a bottom of the funnel and it's sort of a guaranteed you know value of a consumer and the price they pay. That's one thing that we saw. They don't tell us. By the way, no one ever tells us really the how better we are than others. We do know that if they increase the budgets or they stay with us, it means that we meet their, you know, margin threshold. It's you know, if you talk to Google and Facebook, and I can tell you talking to our sales team, we always wanna know how we're doing, you know, versus other companies. The best we know is a proxy of just them keep spending with us and growing with us because to them, it's a very sensitive piece of information. I think Connexity is probably an amazing channel for them because they've seen an increase over the last 90 days versus what they expected. What they told us, by the way, is that the main reason was the decrease in their organic traffic, which makes sense, you know. That's about that. One more thing that is exciting with regards to Connexity is that we've seen some encouraging signs of positive ROI and scale of Connexity advertisers on the Taboola network. If you remember, that was one of the synergies I was most excited about last quarter, because that can be big, right? They have a lot of direct advertisers. Taboola has 500 million people a day. Scaling e-commerce advertisers on Taboola's existing publisher base can be meaningful, and we've started seeing some encouraging signs. By that, I mean positive ROI and some scale, but more to come. All of that is about e-commerce. What publishers tell us, and I was just texting one of our publishers this morning, as you saw our, you know, fairly positive results, is that, you know, we're holding our performance fairly strong. I think in part it's because we're very diverse. You know, we have commerce, we have performance, we have video. We have now header bidding that some of them are testing. We have Taboola News that's sending more traffic. We have these diverse ways of making our publishers strong. Also, if you go back to the pandemic, 2020 was a very strong year for Taboola because especially in times of uncertainty, I think that's where partners come closer to each other. We're seeing good engagements with our publishers. The one we call the recession package. I'm not sure we have a recession package out there for publishers that essentially means how can we do more now, in times when we all wanna stay closer to each other, and bet on each other and you know, upgrade our experiences. That might mean more placements, different UX, A/B test a variety of things, integrate things we might not have done before. Bill, the CEO of Connexity, spoke about more publishers talking about creating high-intent content to get e-commerce. We are seeing more engagement. Our pipeline is the strongest we've ever seen, you know, outside of 2019. Double the growth a month versus last year. By the way, last year was a good year. You know, I'm encouraged by our publisher relationships and partnerships. I think especially right now, this is a good time to bet on people and partnerships and do more with each other. Thank you. Your question. Stephen, did you have another question? Thanks, operator. Do we have any other questions in the queue? No, you can now wrap up the call. Thanks everyone for joining us. I'm happy that, you know, like I wrote on my letter and you can hear Steve and I here, you know, we're happy about the fundamentals being strong despite some challenging macroeconomic factors. You know, we beat the Q2. We're holding 2022. We're generating north of $150 million just at EBITDA with a strong cash flow for the year. Most importantly, you know, the business has a special momentum, you know, to it. The pipeline of our publishers is the strongest we've seen in a very long time. We have good wins with Fox Sports and Gray and PMC and other good friends and partners that have joined Taboola for the next thre, four, five years and hopefully forever. You know, the amount we're growing our supply is you know, 2x, which is significant. E-commerce, you know, I'm so happy with Connexity being part of our family, especially right now. We're seeing the effect of having a diverse business and especially having different buckets of advertising budgets that come into play. That was a source of strength in 2022. Taboola News, which to me is, you know, as the founder, to see us being able to start and co-found another company within Taboola that is getting to over $50 million of business, organically is awesome. It means we have the right culture to invest in ourselves and build organically things that can mean a lot to us. Most importantly, our people are energized. We're working hard. This is a good time to do the work, and we're well positioned for the rest of 2022, and the future. Thanks, everyone, and we're looking forward to engage with you, later today and this week. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.