Good day, and thank you for standing by. Welcome to the Taboola Q1 2023 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rick Hoss, Head of Investor Relations of Taboola. Please go ahead. Thank you, good morning, everyone, and welcome to Taboola's 1st quarter 2023 earnings conference call. I'm here with Adam Singolda, our founder and CEO, and Steve Walker, our CFO. We issued our earnings materials today before the market, and they're available in the investors 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 will 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, Rick. Good morning, everyone, and thank you all for joining us for our first quarter call. We had a strong performance in Q1, beating the high end of our guidance across all metrics. We achieved $116 million in ex-TAC gross profit, $10 million in adjusted EBITDA, and $11 million in free cash flow. We're also excited to raise the midpoint of our full year 2023 guidance. While we're not fully guiding for 2024, we do expect a step change in our financial performance with over $200 million in adjusted EBITDA and over $100 million in free cash flow. I've said it in the past that it's so rare for a company to have this level of clarity and confidence a full year in advance. We have such confidence in those numbers that today we announced a share buyback program of up to $40 million in 2023, also our intention to continue paying down debt up to $50 million this year. Our strong performance in Q1 was driven by a few things. In our core business, we keep seeing meaningful publisher wins such as Condé Nast, Univision, The Blaze, and kicker in Germany. I'm spending a lot of time with publishers, existing and those who are yet to be working with us, and it's incredible for me to see the quality of the conversation around how Taboola can empower the editorial teams and how we can help publishers diversify their revenue and how we can help publishers drive new audiences through Taboola News. Additional drivers for our Q1 strong performance was E-commerce, business, and Taboola News, both of which performed better than expected in the first quarter. While we don't plan on reporting this quarterly, when looking at 2022, you can see our revenue is diverse. About 15% of our ex-TAC is E-commerce, about 10% is video, and roughly 5% is Taboola News. The rest, call it 70% of our business, is core native advertising. Taboola's vision is to be the recommendation engine for the open web. Think Amazon, Instagram, TikTok. They're all AI-driven, huge recommendation engines making money from native advertising. These are ads that look and feel native to their platform. Taboola's mission is to bring the best of the walled garden, things such as user experience, data, AI, and advertisers to a brand safe environment of the open web. Our business is predictable because 90% of our revenue is coming from advertisers working with us directly, rather than through ad exchanges. Our partnerships with publishers are exclusive and long-term, most publishers sign a 3 years-10 years partnerships with Taboola. Yahoo recently signed a 30-years partnership. We have significant scale, reaching now about 600 million active users a day. As a reminder, we measure our business on ex-TAC gross profit, adjusted EBITDA, and free cash flow. Over the last three years, our business has grown more than 20% YoY on an ex-TAC basis, has generated about 30% adjusted EBITDA margin, and has converted about 50% of adjusted EBITDA to free cash flow after adjusting for interest payment and prepayments to publishers, which we consider to be an investment. Over time, we expect these two payments to go to zero. Our core business is strong. We're a partner of choice for over 8,000 publishers. We developed a unique technology optimizing for lifetime value, empowering publishers to diversify their revenue streams such as E-commerce, subscription, native, header bidding, and video. Publishers deploy our AI on their homepage. They use our editorial tools to make decisions. They build E-commerce sections, dynamically match content and ads that are relevant, and often Taboola is a top three revenue source to our publishers. Back in the day, people used to say, "Nobody gets fired for buying IBM," and the same can be said about Taboola these days. It's a safe bet to choose Taboola. More than 8,000 publishers grow revenue, engagement, and audience, and around 18,000 advertisers use Taboola to grow their business. Before updating you about our core business and our four priorities, I wanted to share a recent experience. I'm a strong believer in making things personal. We encourage everyone at Taboola to get closer to our clients and to each other. Zero distance is our theme this year. In that spirit, once a year, I fly to Israel and spend an entire month with our engineering team and product management teams. I get direct access to our teams, I join tech working sessions every day, and they get my global view of the business. Let me tell you, it was incredible. The culture, the energy, the hard work, and the focus on our top four priorities was never so high. We're in a rare position as a company where the future is in our hands. We do not need to enter new markets. We don't need to make any big move. We mainly need to execute. We have the best talented people in the world to do that. One of the things that came up again and again in that visit is how engineering teams and product managers are no longer thinking about development just in terms of how good the code is, but mainly in terms of client adoption and impact. We have 600 people in Israel. There's a growing obsession to know how things we build and deliver are affecting our clients. Switching gears, let's talk about our core business, which we've been operating for more than a decade. We have publishers working with us globally, exclusively, for 3years-10 years as their native advertising partner, using our lifetime value platform to help them reach their broad objectives. We generate revenues from advertisers working with us to drive sales by appearing on our publisher sites. You've all seen us before. If you visited sites you love like CNBC, time.com, the BBC, you've all discovered news, product, and paid offerings by advertisers from the open web. This market is estimated to be about $70 billion, and we think we have a meaningful competitive advantage in it. I started Taboola 15 years ago, and though we were not first to this market, we became the partner of choice across the board. Our growth has been driven by our client obsession, execution, and technological advantage. In our core, we monitor our momentum based on new and renewed publisher partnerships and usage of our technology optimizing for lifetime value. This includes offerings such as Newsroom, which is now used by 3,500 editors and writers, homepage personalization, which we call Homepage For You, and more. We look at ex-TAC margin as a proxy for advantage over other advertising companies in the open web. Our publisher momentum remains uniquely strong. In the past quarter, we won publisher partnerships all around the world. Some key new wins include some of the world's largest names like Univision, Condé Nast, L'Express, kicker, Funke, and DuMont. We renewed relationships with well-known publishers including Sinclair, Advance Local, Seven West Media, and more. Now let's move into our key priorities as a company. We're laser-focused on our four growth engines and key priorities, each representing a billion-dollar opportunity for Taboola. I'm now gonna spend some time discussing each one of them. Starting with performance advertising, as a reminder, the vast majority of Taboola's revenue is coming from advertisers who buy from Taboola directly using our own AI. About 10% of our revenue comes from programmatic partners such as Google, The Trade Desk, Amazon, and others. Our two objectives are to get new advertisers to be successful when they try Taboola, and to get existing advertisers to stay with us and spend more, measured by net dollar retention or NDR. The market is massive. Millions of advertisers are buying Google and Meta. Hundreds of thousands of them are buying companies like Snap. Taboola has around 18,000 advertisers. We have a lot of room to grow. Our main focus is on improving AI and workflows to make it easier for advertisers to work and be successful with Taboola. Earlier this year, we launched Target CPA for advertisers, and I'm excited about rolling out Maximized Conversions later this year. These are all part of our Smart Bid technology, giving our advertisers a variety of bidding strategies they can use to be successful with Taboola. It should be as easy to work with us and to find success as it is with Meta or Google. When advertisers succeed with us, our yield on publishers gets higher, which is not only improving our financial metrics, it also bolsters our most as we become even more competitive as a company. About two quarters ago, we grew our engineering resources working on performance advertising from 50 to 200 engineers, given the upside we think there is here for Taboola. Part of our investment here is also on the creative front. We're investing in generative AI, focusing on helping advertisers to easily get titles, thumbnails, and landing pages that can work for them. Being bigger gives us an advantage because we can use our historic data to produce exceptional results. Hundreds of advertisers are adopting our generative AI beta offering, which lives in Taboola Ads. We just completed a hackathon focused on generative AI and are working on more things we can offer advertisers. Stay tuned for more to come. Moving on to our second growth engine, bidding. We estimate that about 8,000 publishers we work with in our core business generate display revenue of roughly $20 billion a year. We think that we can access our publishers' display inventory with our header bidding solution and win about 5%-10% of the auction, given our advantage in AI, first-party data, and direct advertisers relationship. This will make us even more valuable partners for our publishers, increasing our payments to them as well as our share of wallet while providing our advertisers with even more scale. We have three areas where we're already bidding. The first is Microsoft. This launched in April of last year. The second one are publisher partners, where we have first-party advantage, and the third one is publishers not yet using our solution. We believe that as Yahoo launches, we'll be able to also partner with Yahoo on bidding on their display inventory as well. Today, we generate hundreds of millions of dollars from bidding, but it's still very much a startup within Taboola, and we think we can grow that meaningfully. The reason to get excited here is mainly because as the world moves to a much more privacy-driven environment with no cookies and IDFA, we have a meaningful advantage being hard-coded on the page. As we know, people when they come back to our publisher sites, while SSPs and DSPs don't. We're laser-focused on about 50+ publishers we're testing with before rolling that out to the rest of our network. I'm optimistic about what we're seeing here. E-commerce is our third growth engine. I'm happy to share that E-commerce is beating our expectations this quarter, and it's impressive to see the strengths of it. As a reminder, E-commerce is where we offer retailers the opportunity to find clients on the open web on publisher sites. This represents a big upside to both retailers and publishers as users trust their local and national sites a lot. If those review a product or offer financial services, travel, education, people trust those. There's an opportunity to make a positive impact for people as they make decisions they truly care about. There are three pillars to E-commerce we focus on: content creation, driving traffic, and monetization. Over the last six months, we've launched E-commerce in a box with the launch of Taboola Turnkey Commerce. Every publisher that wants to get into E-commerce but has little to no content that's attractive to retailers cannot do that with Taboola. We do all of the work for publishers from using our data to know which content makes sense for us to write on behalf of the publisher, to driving traffic to it, and of course, monetizing it with relationship with merchants and service providers. Last quarter, we announced our first two publisher partners for this initiative, TIME and Advance Local. While early, both launches are off to a good start. Traffic to Taboola Turnkey Commerce sections of both sites is already growing fast and monetization has begun. Finally, to our fourth growth engine, Yahoo. At our information session we held in March this year, we explained the process of integrating Yahoo into Taboola network in four specific phases. Since the event, we've transitioned into phase one from phase zero, which means we're developing the technical infrastructure to allow Gemini ad spend through Taboola's platform and test on a single-digit% of demand. We expect to go into phase two, which is gradually transition ad spend and supply from Gemini to Taboola in the second half of this year. The Taboola team is interacting daily with Yahoo to migrate advertisers into Taboola platform, focusing on advertisers' performance and spend. I can share that Yahoo and Taboola teams are working on accelerating our rollout we can capture revenue faster. In closing, I'm energized about our position in the market. I think we have a unique opportunity to build the very first large-scale must-buy open web company publishers and advertisers can rely on. Google for search, Meta for social, Taboola for the open web. We are focused. We have our four key company priorities. We are lean and executing on our plans. While Taboola is among the largest in our space, we're still small as it relates to the $70 billion open web market, there's a lot of growth for us to capture. What I tell myself and Taboola employees is that we have all we need to execute on our strategy and dreams. These are times to lay low and execute, and that's all we care about. Thanks for joining us, and I'll now pass it over to Steve, our CFO, to talk more about our financials. Thanks, Adam, good morning, everyone. As Adam noted, our Q1 results beat the high end of our guidance on all metrics. We are also raising the midpoint of our full year 2023 guidance and reiterating our 2024 expectations of over $200 million in adjusted EBITDA and over $100 million in free cash flow. As Adam explained, we are very confident in those forecasts and therefore announced today both a share buyback program of up to $40 million in 2023, and also our intention to continue to pay down our long-term debt. We repaid $30 million of our long-term debt in April, which means that we have repaid a total of $91 million since Q4 2022, and we intend to repay up to another $50 million this year, likely in the third quarter after certain cash balances become available. Let me talk now about our Q1 results, which exceeded the high end of our guidance on all metrics. For Q1, revenues were $327.7 million versus the midpoint of our guidance of $312 million. Gross profit of $89.6 million versus the midpoint of $82 million. ex-TAC gross profit of $115.7 million versus the midpoint of $109 million. adjusted EBITDA of $10.1 million versus the midpoint of 0 or break even. Non-GAAP net income of -$4.1 million versus the midpoint of -$17 million. We generated positive free cash flow of $11.2 million. I will note that Q1 and Q2 growth rates suffer from difficult comparables in 2022 before the digital advertising market weakness. We expect to return to positive growth in the second half of 2023. Relative to our guidance, we saw overperformance, particularly in the U.S. and LatAm. E-commerce continues to impress, taking the momentum of the last several quarters of 2022 into this year. We're seeing strong spend from some of our key partners, such as Walmart, Wayfair, and Macy's, as advertisers increase the focus on immediate returns on their advertising spend. This benefits bottom-of-funnel channels, which for Taboola means E-commerce offerings. Our teams have achieved this revenue performance while improving cost efficiency indicated by adjusted EBITDA and non-GAAP net income per overperformance outpacing revenues and ex-TAC gross profit. Operating expenses were $118.4 million in the quarter, down $1.3 million YoY. This decrease was primarily the result of our focus on cost reductions that we announced in Q3 of last year. We expect to show lower expenses as a percentage of revenue on a full YoY basis for 2023. Our head count is down approximately 8% from its peak in July of 2022, and currently stands at approximately 1,730 full-time employees. GAAP net loss for the quarter of $31.3 million included amortization of intangibles of $16 million, share-based compensation expenses of $13.5 million, and holdback compensation expenses related to the Connexity acquisition of $2.6 billion, which were excluded from non-GAAP net income. Our non-GAAP net loss of approximately $4.1 million was above the high end of our guidance range. In terms of cash generation, we had approximately $17.5 million in operating cash flow in Q1, with free cash flow of around $11.2 million. If you remove the impact of net publisher prepayments, which were a source of cash this quarter of $3.9 million, and interest payments on our long-term debt, which were a use of cash of $5.1 million, our cash flow would have been $12.3 million. It is interesting to note that net publisher prepayments were a source of cash this quarter. This was due to the fact that new prepayments were lower than the quarterly amortization of historical prepayments. While we expect net publisher prepayments to be a use of cash in 2023, it does show how they can become neutral to a source of cash in the future. Let's turn to the balance sheet. Cash and cash equivalents + our short-term investments increased from $262.8 million at the end of 2022 to $274.4 million at the end of Q1 2023. Historically, Q1 tends to be a positive cash flow quarter for us as we collect on the higher revenues from Q4. I would also like to note that with the current instability in the banking industry, we continue to evaluate our banking relationships and have minimized our exposure to regional banks in the U.S. and less stable banks internationally. This is obviously a developing situation that we will continue to monitor and adjust as necessary. Now let me shift to our forward-looking guidance. For the full year 2023, we are raising the midpoint of our guidance by increasing the lower bound but keeping the upper bound steady. We expect revenues of $1.427 billion-$1.469 billion. Gross profit of $418 million-$436 million. Ex-TAC gross profit of $529 million-$546 million. Adjusted EBITDA of $65 million-$80 million. Non-GAAP net income of -$5 million to $10 million. For the full year, we assume that we will invest in our Yahoo partnership, but to be conservative, we are still not factoring in the associated revenues that could be generated in 2023. We will update this in future quarters. This guidance also assumes continued investment in our other key company priorities of performance advertising, bidding, and E-commerce. Despite being a year of strategic investment, we expect to generate positive free cash flow in 2023 for the full year. We anticipate free cash flow to turn negative in Q2 and Q3, with significantly positive cash generation in Q4, all due to normal seasonality. We are issuing Q2 guidance. For Q2, 2023, we expect revenues to be between $296 million and $322 million. Gross profit between $78 million and $88 million. ex-TAC gross profit of $105 million and $115 million. adjusted EBITDA between -$4 million and +$6 million. non-GAAP net income of -$26 million and -$16 million. Let me finish by saying that we're happy with our first quarter performance and to be able to raise the midpoint of our guidance for the full year. We are also excited about our adjusted EBITDA and free cash flow targets for 2024. The future looks bright from our vantage point, which is why we're confident in announcing our intention to both buy back shares and continue to pay down our debt. If you wanna hear more about our story, we will be attending the Oppenheimer, Needham, and TD Cowen investor events this quarter, so we hope to see many of you at those events. With that, let's open it up to questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Jason Helfstein of Oppenheimer. Your line is now open. Hey, thanks to everybody. two questions. Has the pace of the Yahoo integration changed since the analyst day? Any color there? Number 2, on the buyback, you know, just wanna know kind of why now, and is there a formula investors should think about in terms of repurchasing a certain amount of free cash flow or EBITDA on a go-forward basis, or is this more just being opportunistic? Thanks. Hey, Justin. Good morning. On the Yahoo front, since the event, we have transitioned into phase one. Back then it was phase zero, which means that we're building the functionality to start moving revenue into our systems. We still expect phase two, you know, to end back half of this year and gradually start growing revenue. What I will share that's another piece of information that's new is that our team, one, they're having great momentum and spending a lot of time together, but we're also looking to have an accelerated plan of capturing revenue even faster. On that one, we'll keep updating. Overall, good momentum, and we're trying to see if we can get this even faster. Hey, Jason. To your second question about the share buyback. I think, first of all, in terms of why now, we feel very good about our Q1 numbers and especially about our 2024 projections of +$200 million of EBITDA and + $100 million of free cash flow. That gives us, you know, good confidence to do a share buyback at this time. You know, I'll note that our core is strong. We've got good publisher wins. Our investment in performance advertising is looking promising, and our growth engines are strong. E-commerce, we mentioned, is particularly strong right now. Taboola News is beating our projections. As Adam just mentioned, we feel good about Yahoo and where we're at with that. That's the why now. In terms of kinda how to think about what we're doing and how investors should think about it, we want shareholders to be focused on free cash flow per share, and in particular, free cash flow per share in 2024 because that's what we're focused on. The goal of buying back shares is to offset dilution from employee shares so that investors can, hold the expectation of kind of maintaining current, shares outstanding, levels. I think that's the expectation that should be set, is that we'll maintain our current share levels. I will say, obviously, you know, things happen, and you aren't always able to achieve that, but that's the goal, stable share count. I'll also note that, you know, the other reason for why now is kinda given our share price right now and frankly the cost of debt, we just think it's a good ROI for shareholders to both be buying back shares and paying back debt at this point. I think we're ready for the next question. Thank you. One moment, please. Our next question comes from the line of James Kopelman of TD Cowen. Your line is now open. Good morning, and thanks for taking the question. First for Adam, what do you view as the differentiating factors that are continuing to attract all these 8,000 publishers? Can you remind us roughly what the prepayment trend is for the remainder of the year relative to last year, I think, after having one of your best years for publisher wins? I have a quick follow-up for Steve. Sure. I can start. One, I think, you know, we're, you know, our core is very strong, and you can see that both in terms of publisher wins and as well as advertisers working with us directly, you know, 18,000 advertisers and 8,000 publishers. On the publisher front, and I mentioned that on the letter, I'm personally having really, you know, incredible conversations with existing publishers and publishers who are yet to be working with us. The quality of the conversation is so much about our full platform offering as it relates to homepage personalization. You know, we call that Homepage For You, Newsroom for editors. We have now 3,500 writers and editors using our Newsroom product, which is, you know, it's a company on its own, that's so valuable because it means when the publishers work with Taboola, think of the workflows and how many people on the organization is using Taboola to make decision as to which content they should write, what helps them drive subscription, how do they move traffic around from a journey perspective. We have the E-commerce and turnkey. You know, time.com launched recently. nj.com of Advance Local launched earlier this year. There's Taboola News, which we help them drive traffic to their site. When you think of a publisher point of view, especially in today's world, they wanna have less vendors and more partners. They want partners who can do a lot of different things with them and for them. As part of that, I think, you know, over time, we'll see more and more of kind of, you know, this trend of publishers making decisions to work with less companies but do a deeper integration, longer term partnerships, and honestly, more quality conversations. When it comes to that, I think it's, you know, I made a joke that when I was younger, you know, people used to say, "Nobody gets fired for not buying IBM." I feel more and more publishers, it's a safe bet for publishers at all levels to choose Taboola. To your second part of that question about prepayment expectations, so I mentioned in my prepared remarks that it was, you know, first quarter publisher prepayments were actually a source of cash because the prepayment that we did in this quarter were lower than the amortization of previous prepayments. We do expect them to be a use of cash for the full year, though, probably on the order of sub $10 million. You know, that we think that it'll be going down from last year and, you know, towards zero. As Adam has said, he thinks these go to zero over time. This will be a lower year for that, we think. I will only caveat that with if the right publisher deal came along, obviously, we would use that as a tool to win the right publishers. Our expectation right now is that they'll be sub $10 million in terms of the use of cash for the year. Great. A quick follow-up for Steve. How should we think about ex-TAC seasonality for the 2023 quarters? I know we sometimes think of 2Q and 3Q as being similar in terms of percentage of the full year's ex-TAC, then 4Q is higher. Is that how we should think about 2023? Are there any additional seasonality factors that you'd like to call out to help us with the modeling this year? Thank you. Sure. We expect, right now, Q2 is actually going to be similar on an ex-TAC basis to Q1. It's the seasonality over the last several years has kinda shifted a bit, and you kinda see an upward trend as you go through the year. We actually expect Q2 to be similar to Q1, and then we expect the second half to improve, especially if you're looking on a YoY basis. By the way, I mentioned this in my prepared remarks, Q1 and Q2 are particularly tough comps. Q3 and Q4 become easier comps. We also, you know, our expectation is at some point we'll start seeing Yahoo revenue, which will help us in the back half as well. I think, that's our expectation, is Q2 will be similar to Q1, and then we'll see an upward trend from there. Great. Thank you very much. Thank you. One moment, please. Our next question comes from the line of Andrew Boone with JMP Securities. The line is now open. Good morning. Thanks for taking my questions. I wanted to go to two more product-oriented questions. Adam, can you talk a little bit about performance advertising and your learnings as you spent more time in Israel with engineers? Talk about the product roadmap there. What are the key drivers for yield today and the rest of 2023? On header bidding, your publisher display integrations, can you talk about what needs to happen for that to become the next million-dollar business? Where are you guys in testing, and what are publishers telling you? Thanks so much. Sure. Hey, thanks for joining. I was in Israel. I spent a month there. I joined, you know, it was so fun for me to, you know, join every day to different tracks, being with engineers and product managers, you know, see what they see and share my point of view. You know, we met clients. We had all hands. It was really energizing. I came back even more energized. You know, for me, that's not always, you know, that easy, but I was, and I am. We're laser focused on kind of two buckets to simplify our thinking on the engineering side. One is new advertisers who are coming to Taboola. What is their experience, and how do we make them successful? We're focusing on the time for first conversions, you know, how many conversions can they see so they get good momentum, a variety of different metrics that we believe are leading indicators to get new advertisers to want to stay and then grow. That's one bucket, and I'll speak to that in a second. The second bucket is existing advertisers. We have now 18,000, which I'm proud of. That's a growing number, which is great. Then here the question is predictability, how they can rely on us and how they can increase their spend while at least sustaining good performance or even improving performance. Think of those are like as two buckets, right? New clients and existing clients. We have multiple tracks that are focused on helping those two buckets be successful. The things I'm mostly excited about are probably threefold. The first one is measurement and how we continue to improve the way we measure our business on the advertiser journey. The second is on the matching front, so this is more of an AI on how do we help match the right advertiser with the right content and the right consumer. The third one is more on the bidding strategies, which is this is fairly big. You know, we launched Target CPA in beta about a quarter ago. It's used by, you know, at the time, I shared it was used by a few hundreds of advertisers. We're gonna move that to general availability, so that's gonna be great. Right after that, we're launching, and I mentioned that in my letter, Maximize Conversions. For those who just not fully grasp those two bidding strategies and what they mean, if today 18 successful advertisers who work with Taboola find success, they work with us, they give us the CPC, and budget and things of that nature, what they really care about is what is the acquisition cost they're trying to get to and how many conversions can they get. If you're a flower shop and you're trying to get someone to become your client, and you know that a client is worth $50, really what all you wanna do with Taboola is tell Taboola, "Here is $10,000. I'm willing to pay $50. Get me as many as you can and see if we can do it." That's about to happen in the second half of the year. I've seen early, you know, kind of like test of these things with some of our early advertisers. It's, it's like back to the future. It's, it's really great. It's how advertisers are used to work with Google and Facebook, and soon it's how they're gonna work with us. All of those things are happening, full force. We're shipping about 5-6 times more features to the field than we did a year ago, and that's mainly because we now have 200 engineers working on performance advertisers versus 50. That's my number one. You know, I dream about performance advertisers when I go to sleep. It has the biggest upside for our business. Like I told the board yesterday, we had a board meeting, I said, "If we do nothing but performance advertising and we do this well, Taboola can be a $10 billion revenue company just by doing that so much better, and we're pretty good at it already." This is top of mind for us. About the header bidding, let me just say a lot of good momentum on that one as well. Microsoft is doing well. I think Stephen mentioned that. Yahoo, when that launches, I think there's a opportunity for another MSN just on the bidding front, to build on the display front on the Yahoo. That can be a big bucket. We have our current 50, 60 publishers that are in progress phase of us, kind of like moving to the next level of rolling it to more publishers. I don't wanna, you know, I don't wanna share too much at this point, but I'll just say that I feel good about this becoming incremental, you know, hundreds of millions of dollars for Taboola in line of sight between Yahoo and more publishers, and just Microsoft that's continuing to perform well. For us, you know, Andrew, what we need to do to get there is mainly, keep executing, testing the publishers that are currently working with us, and then moving that to, you know, general availability so that 8,000 publishers can use it. Thank you. One moment, please. Our next call comes from the line of Laura Martin from Needham. Your line is now open. Hey there. Let's just follow up on that answer right there. Adam, how do you allocate engineering resources between like this help with improving the performance advertising compared to onboarding Yahoo? How do you figure out how to allocate resources to those two enormous tasks? First of all, you know, we allocate resources mainly to the top four priorities, right? There are many things Taboola is doing, but we spend, you know, management energy and resources, you know, just as a high level on our top four priorities, performance advertising, Yahoo, E-commerce and bidding. Within those, we do prioritize Yahoo and performance advertising at a higher level because we think there's a short-term, mid-term and long-term big upside for us, both in terms of making our, you know, business stronger, improving our moat, and like I said, increasing the yield, which as you know, increasing yield for Taboola improves not only revenue but also ex-TAC margin and EBITDA margin and things of that nature. Those two get more resources. You know, we believe that we've modeled that correctly in terms of ROI, so you know how much we've we put together for this year, and we can speak about that again for Yahoo. Yahoo, you know, we believe it's gonna start ramping the second half of the year and hopefully even faster as it relates to next year. We're working on that. I think it's the right thing to do to invest in that. Obviously some of those resources will go to other things once Yahoo is live. Yeah. The only thing I would add in terms of how we allocate R&D resources is, and we talked about this a little bit when we did our cost-cutting back in Q3 of last year, we're very focused on things with sub 2-year payback periods right now. Whereas, you know, previously we had some initiatives which, you know, Adam had previously called them his speedboat initiatives, they were further out in the future. We've cut back on most of that and focused our resources on things that we believe have sub 2-year paybacks. You know, that's why we have the list of the four priorities, 'cause we think those are all very short-term payback and frankly can have the biggest leverage on our business. Super helpful. Adam, my other question for you is you touched on generative AI, and I'm interested in what the use cases you're seeing over the next three years for generative AI. I know you've talked about content creation and specialization in the past, but could you talk about how you think generative AI will get built into your models over the next three years, the use cases for it? Yeah. Yeah, absolutely. I'm not gonna talk about productivity and other things because everyone is talking about that. That's a bit boring I think at this point to talk about that context. In the case of the business, what I think is interesting is right now we're testing. It's already part of our Taboola Ads console and if you I think you've seen it, Laura, but for those who listen, if you haven't seen it, you should check it out. It's fairly cool. Advertisers can now, on Taboola, they can get suggested title and suggested thumbnails, not only by Taboola prompting generative AI with what we think would be good for insurance advertisers, but rather using our historic data to prompt into generative AI titles and thumbnails we already know from past experience have worked for advertisers in that vertical or in that type of segment. That gives us an edge because the suggested creatives we give back to advertisers are based on previous success. In general, my belief is that when it comes to generative AI, anyone can use it, consumers can use it and business can use it, but the differentiation, the big differentiation will be the data. You know, it's a garbage in, garbage out, as they say in computer science. I think companies who will have unique data they can prompt into those engines will have an edge and an advantage. We're, you know, we're fairly big. We reach 600 million people every day. We're probably among the biggest in our space. We have a lot of performance advertisers that are working with us and we are using that data as an edge and an advantage. That's happening now and it will be happening more and more. I think the second thing that might be interesting is on the more, you know, landing page creation opportunity. We had a hackathon. I've saw a glimpse of that. Obviously, that's not ready yet. You can imagine that one of the challenges advertisers have now is that they're not sure how to build the landing page and integrate pixels and how to create the workflows so that they can be successful. They might have really, really good products, they're just not building the landing pages in a way that could be successful for different channels. If you work with Google or Facebook or Taboola, you, it could be that you need different landing pages. I think that's gonna be fascinating to see a whole universe where landing pages are being automatically generated and optimized by generative AI. That, that can be very creative in my opinion. That will take some time, but I think that can be the next step after creative optimization. Super helpful. Thank you very much. Sure. Thanks. Thank you. One moment, please. Our next question comes from the line of Stephen Ju from Credit Suisse. Your line is now open. All right. Thank you. Adam, I think, you cited E-commerce strength in the first quarter results. Is this primarily a function of a ramp in Connexity or on the quote, "product?" You know, the advertisers you cited here and previously are generally larger and are pretty well-resourced. You know, what can we do to broaden the client base here? Also, you know, stepping back a little bit, I'm just wondering if you can more broadly talk about what you are hearing from advertisers. It does seem like the budget cuts have stopped for the time being and overall seem stable, but are there any rising sources of worry or concern you're hearing about or, you know, conversely any sort of optimism? Thanks. Yeah. First of all, you know, overall what you're seeing, and I think it's part of why E-commerce is doing so well, is that advertisers are looking to work with channels and partners that are very good at attribution for performance and to showcase that it's working. The more you're able to show advertisers in it, and that's why we're focusing on that so much, that you're a good place for them to spend their money and CROI. You're gonna get the budget, you're gonna get retention, you're gonna get happy clients. We have 18,000 of those, as I mentioned. On the E-commerce front, which is, you know, it started with Connexity and Skimlinks, and now it's just more Taboola Commerce holistically, or as I mentioned, you know, E-commerce in a box. We're seeing even greater advertiser success over there. I'll say that, you know, we're seeing advertisers just coming in even stronger to work with us on the E-commerce front. I think especially now they're looking for great, you know. I don't know if we're as good as Google Search, but it feels to me based on the momentum that advertisers really like working with our E-commerce initiatives. Again, I don't know if that's because of the overall macro or just because we're great or both, but we're doing a good job on E-commerce and I'm happy to see that momentum. Two, I think, you know, since the acquisition, we're working more holistically as one company. There's a lot of synergies between, you know, data integrations, different initiatives like DCOs, advertisers, you know, Taboola core advertisers buying Connexity core advertisers buying Taboola. We have more salespeople selling and cross-selling. Those things are contributing to E-commerce. I'll tell you, my goal is to double that business. I mean, it's a great business. It should be, you know, it's about 15% of ex-TAC last year. I want this to be 30%. It's such a great business. It's quality advertising for consumers. I think, you know, it's a combination of we're doing really good for advertisers, and since the acquisition, we're working better together as one, and we're enjoying the benefits of that. That was one part of the question. Feedback from advertisers is basically performance. I can tell you, by the way, and I wrote this in my letter, Steve, I don't focus anymore on recession and market softness and things of that nature. I focus on execution and product and does it work or does it not work. I don't wanna hear about anything else personally. I come to work, I think I know what we need to do. We know what we need to do. We need to do the work and I think we have a huge upside doing that. We have everything we need at our disposal to execute on our plans and dreams. Mainly as it relates to advertisers, I think they want the same. They wanna work with companies that can showcase fast. They're putting money into their channels. They can see conversions, many of them fast, so they can stick around and increase spend. These are the two things advertisers want now more than ever. Thank you. Thanks, Stephen. Thank you. One moment, please. Our next question comes from the line of Justin Patterson from KeyBanc Capital Markets. Your line is now open. Thank you. This is Sergio Segura on for Justin. We had two questions. Just how should we think about the pipeline of publisher additions for the rest of the year? Then a follow-up on generative AI. Just how should we think about the cost implications from these investments? Thank you. Sorry. Can you repeat the question real quick? I had a audio breakup here. Sure. Yeah. We had two just on the publisher additions, how that pipeline is looking for the rest of the year, and any way we should think about the cost implications from the investments in generative AI? Yeah. On the pub additions and new publisher revenue, so we're ahead of our plan so far this year. We continue to see good momentum on signing up new publishers. Adam mentioned some of the names earlier, but generally speaking, we're seeing good progress. Pipeline still looks very strong, so we expect that this year will be another very good year in terms of adding new publishers. I think, you know, we tend to always talk about the fact that when we add new publishers, they tend to be lower margin initially, and then we're able to grow the margin over time. I think it's also very promising for the future because I think it'll help us as we look forward, it'll help us to grow ex-TAC over time as we improve the margin on those publishers. In terms of generative AI and cost implications and things, you know, again, I think Adam said, you know, we do expect it to be a productivity boost, so we do expect it to help our AMs, for instance, be more account managers on the advertising side, be more productive because they don't, you know, they don't have to sit there and work to generate new headlines and things for the advertisers. Generative AI can help them with that. Even more important than that, our expectation is that it'll help us with our advertiser success and performance advertising initiatives. It'll help advertisers become more successful on our platform, because one of the things that's important when you're advertising on a platform like ours is to test things, test new headlines, test new images, test different ways of getting your message out there. Test new landing pages, even with different messaging and different ways of converting people to what the advertiser wants them to do, whether it's sign up for a newsletter, sign up for an email list, buy a product, buy a service, that landing page is key, and generative AI can help all of those things. As Adam mentioned, we're already using it to generate headlines for our advertisers. We're already using it to generate images for advertisers. Landing pages probably coming soon. I think it's even more important than the productivity boost. We think it'll have a positive impact on the success of advertisers on our platform. I'll also mention that one of the things that gives us a particular advantage in that area is that generative AI, the most important thing about generative AI and using it effectively is having the data to train it on what works and what doesn't. If you want to generate new headlines for your advertisers, what you need to do is you need to train the generative AI tools on what has worked historically so that the tools can basically make good recommendations to your advertisers. The advantage that Taboola has on that front is that we're much larger than most people in our space, most people who do what we do, one of the largest companies on the open web, and therefore, we have a lot more data to train these tools about what works and what doesn't. We think we have a real advantage there, and we think, like I said, that will translate into advertiser success over time and help us expand our advertiser base and just make them more successful. Thank you, Steve. Thank you. At this time, that concludes our Q&A session for today. I will now turn it back to management for closing remarks. Thank you everyone for joining us today. I think as you can tell from our remarks and the questions and the recent communication, we're excited to be where we are. I'm personally very energized about our position in the market. I think we have an opportunity to build the very first large-scale must-buy open web company that both publishers and advertisers can rely on, you know, side by side to Google for search or side by side to Meta and other social companies. Taboola can be the gateway to the open web, you know, two sides of the marketplace that can optimize user experience, AI and data and all those things that advertisers and publishers need and want. We're fully focused on our four key priorities: performance advertising, bidding, E-commerce, and Yahoo. We're lean, we execute on our plans, and once Yahoo is launched, you know, we expect to be, you know, at a $2.5 billion run rate, and this is out of a +$70 billion open web market. We're bigger, but still a small portion of this, big market. There's a lot of growth for us, and we're excited to go there. What I tell, and like I said earlier, what I tell myself and Taboola, is that at our size, we have everything we need to execute and reach our financial objectives and dreams. These are times to lay low, do the work, execute, and that's all we care about. We look forward to, interacting with many of you. Thanks for joining today. May you all discover things you love and never knew existed. Thanks. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.