Photo: Ajay Suresh / Wikimedia Commons
Taboola shares fell about 19% in Nasdaq premarket trading Wednesday after the Israeli advertising-technology company lowered its full-year revenue and adjusted-profit forecasts, even as third-quarter net income rose.
The stock traded at $2.74 at 7:16 a.m. Eastern, down 66 cents, or 19.41%, from Tuesday’s $3.40 close, according to Nasdaq’s quote. The move followed the company’s third-quarter earnings release.
For publishers and advertisers, the report shows a business still growing the money it retains after traffic-related costs, but at a lower annual pace than it had planned. For investors, the key change is the reduced outlook, rather than the increase in quarterly net income alone.
Revenue falls while profit rises
Taboola reported revenue of $462.3 million for the quarter ended September 30, down 6.9% from a year earlier, in its November 4 company release. GAAP gross profit rose 9.6% to $152.3 million.
Ex-TAC gross profit, the company’s measure that removes traffic-acquisition costs and makes other specified adjustments, increased 6.8% to $188.8 million. It is different from both total revenue and GAAP gross profit.
Net income reached $18.4 million, compared with $5.2 million a year earlier. Adjusted net income was about $39.9 million, while adjusted EBITDA, a profit measure before interest, taxes, depreciation, amortization and other adjustments, increased 16.1% to $56 million.
Operating cash flow fell to $35.6 million from $53.2 million. Free cash flow declined to $20.4 million from $46.3 million.
The annual targets move lower
Taboola now expects full-year revenue of $1.8825 billion to $1.8985 billion, down from the $1.930 billion to $1.956 billion range in its August company outlook.
Its annual Ex-TAC gross-profit range is now $754 million to $763 million, versus $772 million to $783 million previously. Separately, GAAP gross-profit guidance is $595 million to $604 million, down from $605 million to $615 million. The two measures should not be confused.
Adjusted EBITDA guidance fell to $212 million to $221 million from $228 million to $240 million. Adjusted net-income guidance declined to $151 million to $160 million from $168 million to $176 million.
For the fourth quarter, the company expects revenue of $477 million to $493 million, Ex-TAC gross profit of $204.5 million to $213.5 million and adjusted EBITDA of $73.5 million to $82.5 million.
Management focuses on publisher growth
Founder and CEO Adam Singolda said the company is focusing on adding premium publishers, increasing the revenue generated with existing publisher partners and investing in Taboola News and social commerce. Taboola’s software helps advertisers reach audiences through publisher websites and other digital placements.
The company’s annual guidance now sets a lower financial target for that strategy. Its adjusted measures offer another view of operating performance, but do not replace the GAAP revenue, gross-profit and net-income figures.
JBizNews Desk | New York
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