I'm an analyst on the Internet team here at Cowen. We're excited to have Adam Singolda, founder and CEO of Taboola, and Jessica Kourakos, Head of IR, here today to discuss trends at Taboola, a leader in the open web who's using AI to drive performance advertising, part of a broader effort to expand beyond native to capture a $55 billion+ performance ad market opportunity. For investors who are new, who may be new to Taboola, I want to start with the performance advertising opportunity that you laid out at the recent Investor Day. Obviously, a massive number in terms of how you're framing it at $55 billion relative to Taboola's current run rate of a little under $2 billion gross revenue. Could you walk us through this huge opportunity that you see ahead, a current gap in the digital advertising market, and how you're pursuing this over the next couple of years? Yeah, thanks for having me. In general, there are a few interesting things that are happening at the same time that are relevant for us. One, from a macro perspective, over the last three or four years, with the volatility in the market, we've been through a lot. There's a major shift towards performance advertising. Basically, marketers are looking to spend money in areas where they know that that money is going to yield positive results, sales for their business. It's not that top of the funnel branding dollars don't matter. They still matter, but there's a much leaned-in approach towards kind of like ROAS, outcomes, measurement, and things of that nature. That's been a macro trend, which I think will continue as we move along because what's happening in the world, I'm not sure we're coming back to anything different than what it is now. The second thing is that search and social have been kind of maxed out. Advertisers, many of them buy search and social for different reasons. They feel like there's not much more they can give them. In fact, maybe there's even diminishing returns, which we're hearing constantly from advertisers who buy social. We can get into that as well, which creates an opportunity to go beyond search and social. Taboola is the largest performance advertising company in the open web, which is everything outside of search and social. What's unique about what we do is we work with publishers, utility apps, and OEMs when we have a unique data point, unique signal that gives us sort of an intent of a consumer. If you read about taking a mortgage or buying a pizza oven to your house, you're probably in that market or you're curious about it. That first-party data, which we now have about 600 million people every single day across all of our publisher network around the world, which is very unique to us, what I believe no other company outside of. Something like a trillion recommendations a month. I mean, it's, yeah, even more. And so that is such a unique signal that we get from the open web, which no other ad tech to my knowledge has access to. That makes us so valuable to advertisers because they can come to us when they're capped out on search and social and reach those consumers and find that performance advertising outcome they want. It is a great moment in time for us to be in performance advertising because of the macro challenges and trends. It is a great moment in time because search and social are capped out. I think search goes through their own challenges with OpenAI and all those things. For us, we're well positioned to win that market, a lot of it because of our unique access to consumers across those publishers we have and our investment in AI. Let's just break down a little bit this $55 billion opportunity. You guys basically won native. Now there's this $55 billion that is, I think, roughly $25 billion is from open web performance advertising, performance display and video. The other $30 billion is from the diminishing returns that you mentioned that advertisers are getting on social media spend. Maybe you can talk a little bit about where those two numbers come from and then how much is kind of you see as a near-term opportunity as well. Yeah, so to kind of go from, I don't want to call it easy to hard, but things that are more attainable to us and then over time even more. If you look at the $55 billion, like you mentioned, $30 billion is driven by social media, which I'll get into in a second. The $25 billion is mainly open web display for the most part. Of the $25 billion, about $10 billion a year go to, from advertisers to adtech traditional companies, SSPs, DSPs, affiliate marketing. A lot of great companies, but a lot of those tend to be smaller than Taboola and create less value with less scale, which I think the trend again in the industry is to have less vendors, more partners, deeper relationship. Advertisers today have to operate in a very fragmented market. Those $10 billion of highly fragmented marketplace, I believe, over the next three, four, five years will be much simplified, maybe with more deprecation of companies that turns into something else or merge into other things. In that world, I believe Taboola can capture a lot of those dollars and offer that to any advertiser who would like to reach the open web. The $30 billion, so that's the $10 billion which we're going after. Yep. You want to ask us something? No, go ahead. The $30 billion of the social media is the experience advertisers have with social media today, primarily Meta. I think they've reached a certain ceiling of how many ads they can show consumers. There is this feeling of fatigue and diminishing returns users and advertisers experience. If you talk to advertisers, what they tell you, and we've done this case study, is that the last dollars they give social media companies tend to be at a very expensive price. If you look at the trends of their performance, it starts really well. Let's say they're willing to sell a pizza oven for $50. The early dollars, the acquisition cost they pay is less than $50. It's great. It's doing really well at the beginning. Towards the end, it gets very expensive. They would love to take the end of that budget and move it elsewhere. We want to take that for Taboola and our publishers. Right, OK, so acknowledging that the ROI is phenomenal at the beginning. Here's a stat that you showed at the Investor Day, which is regards to the social media advertising. 75% of advertisers are noticing diminishing return on their social spend, and 80% are noticing diminishing returns before 70% of the social budget is spent. That's where you're getting some of this $10 billion immediate opportunity just in social. Let me ask you also, you mentioned there is an opportunity in certain verticals where Realize excels. Maybe you can also talk about the verticals where Realize does really well. What's interesting about the open web, if you compare search, which is a very low funnel, I'm searching for something, I'm going to buy it, to social, which is much more about things I like, things I say about myself, and things of that nature. The open web is really strong. For us, we're very good at kind of consideration stage. These are when consumers make decisions that require some consideration before they actually do it. We excel in a few verticals, or we call it ICPs, ideal customer profile, such as travel, direct-to-consumer, the pizza oven example, financial services. We're very good at that. If you're a mortgage shop or if you're a bank and you don't work with Taboola, that's a risk you're taking. We're very good in that area. Pharma. These are some big categories that we're very good at. And by that, what I mean is the churn rates are lower and the spend over time is more likely to grow. From a seller perspective, we have about 700 sellers. When they sell into those ICPs, they tend to make more commission, and we tend to be better in those. It's a win-win for everyone. We're doubling down from a sales structure perspective. We kind of verticalize our sales to go after those aggressively. This is versus being good for many, want to be great for a few. That's kind of like what we're seeing. You launched the Realize platform. This underpins these new efforts, launched a few months ago. Can you talk about some of the capabilities of Realize that are new to Taboola, for example, paying on a CPC basis for display? That is new, as well as your predictive audiences solution. Also, as a follow-up to that, how would you characterize the advertiser feedback that you have heard so far? I know it is early. Yeah, I mean, I'm so happy with what we've done over the last year with Realize. First, from a culture perspective, we do what the best companies out there ever do. We see an opportunity, we focus on it, and we win the market, and we're doing a good job taking a lion's share of it. We've done that with native advertising. We were not first, and we became the best at it. For advertisers, publisher partners, OEM, utility apps, we're the partner of choice for so many great, incredible companies. Sometimes you have to pinch yourself to remind yourself this is real. From here, we've expanded with Realize so that anyone can be successful with us, not just native advertising, but any business that is already working with social and search, which most of them do, can easily work with us. The net new kind of capabilities, some of them, there's a long list, but some of the big ones that are worth mentioning, one is just the formats and ease of use. If you buy from Google Display or if you buy from Meta, with a click of a button, all of your Instagram creatives and Meta creatives and Blue App are on Realize. It is very easy to get going. Same for Display. The second thing is you can only pay if someone actually clicked on the ad. If you think about Display advertising as it is today, advertisers buy from various adtech companies. They upload Display, which is most of the business. They have to pay on a CPM, which means every 1,000 impressions. There is so much unknown for advertisers. Was the ad even seen? Where is it on the page? Was it a real person? So many questions. With Taboola and Realize, they can truly attach it to a performance metric, only pass if someone clicked on it. We now have this predictive audiences capability that tells you, look, you have spent $50,000 with Taboola and we have sold you thousands of pizza ovens. And we can predict now that if you give us $40,000 additional and you upload more creatives and things, we can sell more pizza ovens for you. Would you like to do it? If you remember Meta, about 10 years ago, launched their lookalike modeling, which was you upload a seed of users and they expanded that seed. We do a similar thing, but for conversions. We look for a seed of conversions and we expand it. Now for them, all they have to say is, yeah, we would like to spend more and get more. All of these things are net new in Realize. Again, I'm also proud of the team because overnight, we've switched almost $2 billion of spend from one system to a whole new technology. Remember, everyone is buying through Realize native, and some are starting to buy this new supply, new formats, new things. It is, to me, very encouraging to see how much trust we have from advertisers, as well as how well our employees and engineers and sellers and account managers globally did transform this entire book of business overnight to Realize. Let's talk about some of your work with enterprise advertisers in terms of your go-to-market strategy with Realize. I think you called out enterprise clients as the biggest opportunity. Can you talk about how Realize unlocks demand from larger clients who may be interested in social or display, but not necessarily native placements? Or maybe they're interested in native, but not bottom of article? How are these conversations going so far with regards to the larger enterprise clients? That's probably the biggest opportunity we have. If you want to connect to it as an investor, put yourself in the shoes. If you want to be empathetic to advertisers, if you're a CMO of a large bank or you're a CMO of a large enterprise company and you need to decide how you're spending $100 million, search is obvious and you're going to do search, and socially is you're going to do social. When you have to decide what else are you going to do, it's very hard to justify getting to know something that is fairly niche. Native is an amazing business, but it's smaller. If you want to spend millions of dollars, tens of millions of dollars or more, you're looking for big bets. With bottom of article native, it was just not something many marketers or big companies wanted to educate themselves on doing, even if it was good. Also, some of them have concerns around being next to other advertisers. They like the idea of a bigger format, a bigger canvas on the page where it's just them. For those reasons, even though native is an amazing business that drives great performance, Meta-like performance, it was too much of a chasm for them to cross. With Realize, they're now able to just buy the supply they want on the most amazing publishers in the world, Apple News, Yahoo, Disney, NBC, Lionsgate, Asia Pacific, I mean, really amazing stuff, and do it in a way that is known to them. They know how to buy display and social. They know how to use dashboards like Realize. We're not asking them to do too much work to try it out. That is what excites me because now it's on us to execute and show them that it's doing the work for them and then hopefully scale over time. That's the biggest jump and why I'm excited about agencies and bigger clients that up until now, native and bottom of article as good as it is, just not something that was part of their plan. I wanted to give a chance to poll the audience to see if you have any questions in the room. We probably don't, and we usually don't, but I'll ask again one or two more times if you think of any questions. We'll keep going. I want to focus on the first-party data because I think your unique signal on the massive trove of data that you've trained underpins and has underpinned all of the innovation at Taboola over the years. You've talked about 600 million daily active users. We just mentioned over a trillion monthly recommendations. I think you recently stated 1.8 billion conversions trained using AI. The question is, within the context of the next stage of Taboola's growth, can you highlight how your unique data signal positions you to capture more of this really huge performance ad buy? Yeah, I mean, I think we live in very interesting times where AI, anyone can download an open-source AI, whichever one you like, and try it out. What is innovation anymore moving forward? As an investor, who would get my money in a private company? Who's the next founder I'm going to give money to? What public company is worth my money? When I think about competitive advantage, because at the end of the day, that's the only thing that matters, who is winning over time? Because they have something that others don't. I can download AI like anyone that's free to download. That's not innovative anymore. Anyone can buy some NVIDIA chips and see what happens. That's not innovative anymore. What's left? I think what's left to truly create unfair advantage, one is always culture and how companies make decisions. By far, people is the most innovation a company can have. Then it's data and distribution. If you reach a lot of people, that's an advantage. If you have unique data others don't, it's an advantage. When you ask yourself, Gemini of Google versus OpenAI, both good companies. One has $180 billion of conversions a year, and one has none. That's why I'm still fairly optimistic about Google opportunity to come up with very interesting things as relates to their future. Personal opinion, not giving advice to anyone. As when I go back to Taboola and I compare myself to Google, when we go and build AI technologies using our data, we have north of $500,000,000,000 conversions a year. When I bid into DisplaySpot in this tens of billions of dollars market and I compete with other SSPs and DSPs, I have half a trillion conversions of 600 million people every single day that I get to compare myself to and see if it's worth me bidding on it. If I know you bought a pizza oven or you almost got it, and I now see you on the homepage of a publisher, and there's a big display spot there, and I put a pizza oven creative versus others who don't know the same thing about you, I have an advantage. That's how I compare our opportunity capturing that. I think it's the only thing that matters over the next decade, which is distribution and unique data others don't. As we move through 2025, I'm curious, what are the key metrics that you'll be using to track around Realize's client adoption as we go forward? When do you think we might start to see Realize contribute meaningfully to the business? Yeah, so I'll start with the second question. First, as a company and from an IR perspective, we're taking a conservative approach in the sense that we've given guidance that will allow our team to work hard and execute on Realize and capture value that would hopefully come into play in 2026 and years to come as we're looking to be a fast-growing company, profitable company, and you know our desire financials. That's one thing we've done, which I think is good because it gives investors an opportunity to look at the company, join the journey, or consider joining at a place where there's an upside with Realize, which is not in the guidance. We've shared a new metric called scaled advertisers, which is about 75%-80% of the revenue of the company. Those are advertisers who spend more than $100,000 a year. That's a steady boat mix of advertisers. That number has grown 17% over the last two years. We're seeing good growth in that bucket. We believe that's a good proxy for investors to kind of track our demand growth over time with Realize as well. We're also thinking about other metrics to provide more granularity on Realize progress over time because, again, it's still early days. Stay tuned as we're thinking about other metrics. We don't want to come up with numbers and change them all the time. We want to see what might make sense for investors to look into as we continue to progress. It's early days. We're seeing really good encouraging signs from the advertisers we want to tap into with this new strategy. Let me ask a couple of supply questions as well. Taboola, of course, uniquely positioned due to your strong multi-year relationships with thousands of publishers. Looking ahead, one priority you mentioned is going after new supply partners with unique data. Where do you see the biggest opportunity among publishers in terms of adding data to drive incremental ad budgets? I think publishers have a huge data opportunity because the signal they have is it's an authenticity signal. It's a true pulse of the internet. I compare it to why I love Grok, right? Grok has access to X, which I love. It's so unique. I use Grok all the time. It's amazing. It's unbelievable. It's unbelievable because they have access to something very special. OpenAI has access to something very special, which is what am I reading? No one reads an article not wanting to read that article. The Knicks lost yesterday. What a bad day. Obviously, I spent so much time reading about the Knicks. Obviously, I'm in market. I'm in market for the Knicks related to anything. You want to offer me a subscription, streaming? I'm a candidate. I'm watching NBA. Why would I watch and read 30 minutes about the Knicks if I'm not passionately obsessed about how I don't like the Pacers and I love the Knicks? That's an opportunity for advertisers to reach me at that moment. By the way, did I put it on Facebook? No. Did I tweet about it? No. I put it on a story on Instagram, but not across my LinkedIn and all those things. I read about it for 30 minutes. I am in market. That is the Grok of the open web. So unique. To me, as we go through this generation of privacy, cookie deprecation, don't track me, don't be creepy world we're going into, the context of what I'm reading is so valuable, in my opinion, because that is really what I want to do now. I think that's the open web opportunity. It requires a lot of AI, a lot of investment, which we're doing. To me, if we can Grok the open web, that would be amazing. I'm curious what AI tools you find yourself using. For me personally, it's four or five of them, and it depends on what I'm asking. You mentioned Grok. I'm curious what, and if you don't feel comfortable answering that one, another question I have is how your organization internally is utilizing generative AI tools for opportunities to find more efficiencies over time. Yeah, I use a variety of them because I want to be educated about who is, in my opinion, good in what type of questions. For the same reason, I have different social apps on my phone, which I use. Most of them I don't use, but I'm trying to be good from a product perspective, understand as much as I can who is doing what, what features they offer, and things of that nature. There are some I think are really, I don't understand why they exist, and some that I really love, and I think there's a lot to learn from. I use many of them. Internally, I can't even remember what Taboola was before this AI boom. I mean, we use it for everything from FP&A to ask questions about our business to engineering. I mean, if you're an engineer and a significant portion of your code is not automatically generated, you're going to be deprecated yourself, right? It's all about, I mean, engineers are becoming creative people that can take advantage of their ideas and, again, data sources and things versus just writing mundane things. Almost every part of the company is using it. From a product perspective, wow, I'm spending a lot of my time on really cool things as relates to what we can offer our partners and clients. You've seen it with Abby and now with Realize, which Abby is part of that right there, and so much more to come. It's hard for me to even remember what Taboola was before. Yeah, we only have a few minutes, so I have several AI questions. I'm curious on the other side of it. We talked about the benefit. You're using it internally. It's helping your productivity levels at all areas of the company within Taboola. At the same time, you're offering these generative AI products and solutions like Abby, which is phenomenal to get advertisers where they need to be faster with their campaigns. Let me ask you about a different question, which is the generative AI impact to publisher referrals. This is the question about when Google rolls out AI overviews and what that means for publisher referrals, let's say, or through ChatGPT. At the same time, how I think you view it as a Taboola's opportunity to drive more revenue per publisher is I think how you framed it. I think, look, obviously, search traffic went down. People have spoken about a 20%-30% decrease in traffic. And most of our publishers are bigger publishers. So for them, search traffic is about 30%-40%. So first of all, I think this is not a disaster to them. It's a smaller portion of search business referral traffic where they have a lot of homepage, email, and other subscription and other sources of traffic. I think the interesting point in time for this is that most publishers have yet to really adopt AI in a big way. Some of those we talked about in the past, like homepage personalization, which is getting a lot of traction. But there's so much more they can do so the internet would be completely dynamic and relevant for consumers. I actually think that this kind of challenge the industry is facing with search traffic going down is there's going to be a faster adoption and growth of value per person. And we're very leaned in on creating more value to publishers and advertisers from users on our publisher sites. In general, the open web is so big. I mean, there's no supply challenge. This is a demand opportunity. This is about how can you get advertisers to think of the open web like they think of search and social. This is the 10x. How can you create much more value for advertisers and through that to publishers? I think there's a demand opportunity primarily, and less so much of what if supply goes down 5% or 10% across the board. Let's say if we say AI has come a long way in the last two years, maybe it's still early innings, certainly early innings with generative AI. My question to you is, what do you think will be the biggest difference in Gen AI two years from now versus what you're seeing? Another way of asking that question is, what do you think still needs to be improved in these tools or fixed if something's not working? I mean, the biggest thing that I predict will happen over the next, I'm not sure if it's two or three or five years, is that a click of a user is now worth between $0.50-$5. That's how much we're worth. With Gen AI relationship, as you think about the next two, three, four, five years, where you're going to get commerce agent, travel agent, you're going to buy with different agents that give you personalized advice, a click is going to be worth $5,000 because you're going to trust those agents to make important decisions. I think there's actually a huge growth opportunity for publishers, for advertisers, for different companies that reach consumers. The winners and losers will be, I think, divided by those who have distribution and data and those who don't. We're going to see, I think, a lot of big will get bigger. That's because there's going to be much more advantage for those who can offer value to clients in this new world with OpenAI and Llama and other models free to download and open source and play with. I think we're going to the biggest opportunity is the 1,000x value of a human click over the next five years. I want to give you a chance to discuss some of the potential upside factors later this year. What would you say are the main puts and takes that could swing outcomes one way or another second half of 2025? I mean, we want to be conservative. We do not want to give at this point, we want to give investors the comfort that our guidance is conservative to allow us to beat and raise, which is the company we want to be versus beat and hold. That is why Realize is not in our numbers. We intend to share as much as we can to give transparency to investors. As you all know, none of us is here for single-digit growth. When that happens, we will share as we continue. We feel comfortable with where we are and focused on our strategy through Rock and Roll in years to come. One last question because we only have a minute on potential future M&A, if any. You closed Connexity in 2021. That was a great acquisition. Yahoo partnership closed in 2023, ramped in 2024. Looking ahead next few years, how are you thinking about potential M&A opportunities versus continuing to return cash through shareholders as you have been doing with a robust buyback program? Yeah, we've been buying aggressively in Q1. I think it was over $60 million of purchase buyback. As you can see, we believe I believe I'm buying shares. We're all in it too, we're in it. We believe we think from an M&A perspective, it's unlikely we'll do a dilutive event. The shares are not in a place where I would like to give them to anyone at this point but myself. Happy to buy more of those. I think we're always on the out there. If there's something that is small and synergetic and we think good team, good culture type of thing, we're open-minded to those. We believe we have what we need to execute on our strategy with Realize. From that perspective, it will be hard for us to imagine a dilutive event. All right. OK, that's time. So once again, let's thank Adam Singolda, founder and CEO of Taboola. Jessica Kourakos, head of investor relations, for joining us. Thanks for having us. Thank you.