☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Israel
(State or other jurisdiction of
incorporation or organization)
|
Not Applicable
(I.R.S. Employer
Identification No.)
|
16 Madison Square West
7th Floor
New York, NY
(Address of principal executive offices)
|
10010
(Zip code)
|
212-206-7633
(Registrant’s telephone number, including area code)
|
|
|
|
|
|
Title of each class
|
|
Trading
Symbol(s)
|
|
Name of each exchange on which registered
|
Ordinary shares, no par value
|
|
TBLA
|
|
The Nasdaq Global Market
|
Warrants to purchase Ordinary shares
|
|
TBLAW
|
|
The Nasdaq Global Market
|
Large accelerated filer
|
☐
|
|
Accelerated filer
|
☒
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
Page No.
|
||
PART I.
|
4 |
|
Item 1.
|
4 |
|
4 |
||
5 |
||
6 |
||
7 |
||
8 |
||
10 |
||
Item 2.
|
24 |
|
Item 3.
|
40 |
|
Item 4.
|
42 |
|
PART II.
|
43 |
|
Item 1.
|
43 |
|
Item 1A.
|
43 |
|
Item 2.
|
43 |
|
Item 3.
|
44 |
|
Item 4.
|
44 |
|
Item 5.
|
44 |
|
Item 6.
|
45 | |
45 |
March 31,
|
December 31,
|
|||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
178,534
|
$
|
176,108
|
||||
Short-term investments
|
2,485
|
5,725
|
||||||
Restricted deposits
|
1,270
|
1,407
|
||||||
Trade receivables (net of allowance for credit losses of $9,412
and $10,207 as of March 31, 2024 and December 31, 2023, respectively) (1)
|
284,239
|
306,307
|
||||||
Prepaid expenses and other current assets
|
77,485
|
69,865
|
||||||
Total current assets
|
544,013
|
559,412
|
||||||
NON-CURRENT ASSETS
|
||||||||
Long-term prepaid expenses
|
27,351
|
39,602
|
||||||
Commercial agreement asset
|
289,451
|
289,451
|
||||||
Restricted deposits
|
4,216
|
4,247
|
||||||
Operating lease right of use assets
|
57,305
|
61,746
|
||||||
Property and equipment, net
|
72,587
|
72,155
|
||||||
Intangible assets, net
|
109,323
|
125,258
|
||||||
Goodwill
|
555,931
|
555,931
|
||||||
Total non-current assets
|
1,116,164
|
1,148,390
|
||||||
Total assets
|
$
|
1,660,177
|
$
|
1,707,802
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES
|
||||||||
Trade payables (2)
|
$
|
279,373
|
$
|
282,012
|
||||
Short-term operating lease liabilities
|
19,141
|
20,264
|
||||||
Accrued expenses and other current liabilities
|
118,176
|
118,689
|
||||||
Current maturities of long-term loan
|
—
|
3,000
|
||||||
Total current liabilities
|
416,690
|
423,965
|
||||||
LONG-TERM LIABILITIES
|
||||||||
Long-term loan, net of current maturities
|
145,455
|
142,164
|
||||||
Long-term operating lease liabilities
|
44,992
|
49,450
|
||||||
Warrants liability
|
6,168
|
6,129
|
||||||
Deferred tax liabilities, net
|
11,130
|
14,815
|
||||||
Other long-term liabilities
|
14,751
|
14,217
|
||||||
Total long-term liabilities
|
222,496
|
226,775
|
||||||
COMMITMENTS AND CONTINGENCIES (Note 11)
|
||||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Ordinary shares with no par value-
Authorized: 700,000,000 as of March 31, 2024 and December 31, 2023; 293,413,305
and 295,670,620 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
|
—
|
—
|
||||||
Non-voting Ordinary shares with no par value-
Authorized: 46,000,000 as of March 31, 2024 and December 31, 2023; 45,198,702
shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
|
—
|
—
|
||||||
Treasury Ordinary shares, at cost - 21,463,642 and 15,240,471 shares as of March 31, 2024 and December 31, 2023, respectively
|
(83,271 | ) | (55,513 | ) | ||||
Additional paid-in capital
|
1,280,715
|
1,262,093
|
||||||
Accumulated other comprehensive income
|
165
|
942
|
||||||
Accumulated deficit
|
(176,618
|
)
|
(150,460
|
)
|
||||
Total shareholders’ equity
|
1,020,991
|
1,057,062
|
||||||
Total liabilities and shareholders’ equity
|
$
|
1,660,177
|
$
|
1,707,802
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Revenues (1)
|
$
|
414,008
|
$
|
327,686
|
||||
Cost of revenues:
|
||||||||
Traffic acquisition cost (2)
|
275,120
|
211,946
|
||||||
Other cost of revenues
|
29,935
|
26,148
|
||||||
Total cost of revenues
|
305,055
|
238,094
|
||||||
Gross profit
|
108,953
|
89,592
|
||||||
Operating expenses:
|
||||||||
Research and development
|
36,249
|
31,985
|
||||||
Sales and marketing
|
67,608
|
60,569
|
||||||
General and administrative
|
23,329
|
25,836
|
||||||
Total operating expenses
|
127,186
|
118,390
|
||||||
Operating loss
|
(18,233
|
)
|
(28,798
|
)
|
||||
Finance expenses, net
|
(3,638
|
)
|
(3,154
|
)
|
||||
Loss before income taxes
|
(21,871
|
)
|
(31,952
|
)
|
||||
Income tax benefit (expenses)
|
(4,287
|
)
|
639
|
|||||
Net loss
|
$
|
(26,158
|
)
|
$
|
(31,313
|
)
|
||
Net loss per share attributable to Ordinary and Non-voting Ordinary shareholders, basic and diluted
|
$
|
(0.08
|
)
|
$
|
(0.09
|
)
|
||
Weighted-average shares used in computing net loss per share attributable to Ordinary and Non-voting Ordinary shareholders, basic and diluted
|
345,502,643
|
333,424,276
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Net loss
|
$
|
(26,158
|
)
|
$
|
(31,313
|
)
|
||
Other comprehensive loss:
|
||||||||
Unrealized gains (losses) on available-for-sale marketable securities, net
|
(1
|
)
|
327
|
|||||
Unrealized losses on derivative instruments, net
|
(776
|
)
|
(656
|
)
|
||||
Other comprehensive loss
|
(777
|
)
|
(329
|
)
|
||||
Comprehensive loss
|
$
|
(26,935
|
)
|
$
|
(31,642
|
)
|
Non-voting
Ordinary shares
|
Ordinary shares
|
|||||||||||||||||||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Treasury
Ordinary
shares
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Accumulated
other
comprehensive
income (loss)
|
Total
shareholders’
equity
|
||||||||||||||||||||||||||||
Balance as of January 1, 2024
|
45,198,702
|
$
|
—
|
295,670,620
|
$
|
—
|
$ | (55,513 | ) |
$
|
1,262,093
|
$
|
(150,460
|
)
|
$
|
942
|
$
|
1,057,062
|
||||||||||||||||||
Share-based compensation expenses
|
—
|
—
|
—
|
—
|
— |
17,007
|
—
|
—
|
17,007
|
|||||||||||||||||||||||||||
Repurchase of Ordinary shares
|
— | — | (6,223,171 | ) | — | (27,758 | ) | — | — | — | (27,758 | ) | ||||||||||||||||||||||||
Exercise of options and vested RSUs
|
—
|
—
|
3,384,456
|
—
|
— |
2,324
|
—
|
—
|
2,324
|
|||||||||||||||||||||||||||
Connexity issuance of Holdback |
— | — | 581,400 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Payments of tax withholding for share-based compensation
|
—
|
—
|
—
|
—
|
— |
(709
|
)
|
—
|
—
|
(709
|
)
|
|||||||||||||||||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
— |
—
|
—
|
(777
|
)
|
(777
|
)
|
|||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
— |
—
|
(26,158
|
)
|
—
|
(26,158
|
)
|
|||||||||||||||||||||||||
Balance as of March 31, 2024 (unaudited)
|
45,198,702
|
$
|
—
|
293,413,305
|
$
|
—
|
$ | (83,271 | ) |
$
|
1,280,715
|
$
|
(176,618
|
)
|
$
|
165
|
$
|
1,020,991
|
Non-voting
Ordinary shares
|
Ordinary shares
|
|||||||||||||||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Accumulated
other
comprehensive
loss
|
Total
shareholders’
equity
|
|||||||||||||||||||||||||
Balance as of January 1, 2023
|
—
|
$
|
—
|
254,133,863
|
$
|
—
|
$
|
903,789
|
$
|
(68,420
|
)
|
$
|
(834
|
)
|
$
|
834,535
|
||||||||||||||||
Share-based compensation expenses
|
—
|
—
|
—
|
—
|
16,734
|
—
|
—
|
16,734
|
||||||||||||||||||||||||
Exercise of options and vested RSUs
|
—
|
—
|
3,581,421
|
—
|
1,764
|
—
|
—
|
1,764
|
||||||||||||||||||||||||
Connexity issuance of Holdback |
— | — | 581,400 | — | — | — | — | — | ||||||||||||||||||||||||
Issuance of Ordinary shares and Non-voting Ordinary shares related to Commercial agreement
|
45,198,702 | — | 39,525,691 | — | 288,063 | — | — | 288,063 | ||||||||||||||||||||||||
Payments of tax withholding for share-based compensation
|
—
|
—
|
—
|
—
|
(791
|
)
|
—
|
—
|
(791
|
)
|
||||||||||||||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(329
|
)
|
(329
|
)
|
||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(31,313
|
)
|
—
|
(31,313
|
)
|
||||||||||||||||||||||
Balance as of March 31, 2023 (unaudited)
|
45,198,702
|
$
|
—
|
297,822,375
|
$
|
—
|
$
|
1,209,559
|
$
|
(99,733
|
)
|
$
|
(1,163
|
)
|
$
|
1,108,663
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$
|
(26,158
|
)
|
$
|
(31,313
|
)
|
||
Adjustments to reconcile net loss to net cash flows provided by operating activities:
|
||||||||
Depreciation and amortization
|
25,321
|
22,601
|
||||||
Share-based compensation expenses
|
16,401
|
16,082
|
||||||
Net gain from financing expenses
|
(408
|
)
|
(328
|
)
|
||||
Revaluation of the Warrants liability
|
39
|
(1,676
|
)
|
|||||
Amortization of loan and credit facility issuance costs
|
354
|
500
|
||||||
Amortization of premium and accretion of discount on short-term investments, net
|
142
|
(281
|
)
|
|||||
Change in operating assets and liabilities:
|
||||||||
Decrease in trade receivables, net (1)
|
22,068
|
44,362
|
||||||
Decrease in prepaid expenses and other current assets and long-term prepaid expenses
|
9,199
|
721
|
||||||
Decrease in trade payables (2)
|
(8,262
|
)
|
(22,807
|
)
|
||||
Decrease in accrued expenses and other current liabilities and other long-term liabilities
|
(1,476
|
)
|
(13,439
|
)
|
||||
Increase (decrease) in deferred taxes, net
|
(3,685
|
)
|
2,790
|
|||||
Change in operating lease right of use assets
|
4,453
|
4,151
|
||||||
Change in operating lease liabilities
|
(5,593
|
)
|
(3,839
|
)
|
||||
Net cash provided by operating activities
|
32,395
|
17,524
|
||||||
Cash flows from investing activities
|
||||||||
Purchase of property and equipment, including capitalized internal-use software
|
(5,589
|
)
|
(6,350
|
)
|
||||
Proceeds from business acquisition holdback liability
|
719
|
—
|
||||||
Investments in restricted deposits
|
—
|
(280
|
)
|
|||||
Proceeds from maturities of short-term investments
|
3,265
|
41,940
|
||||||
Net cash provided by (used in) investing activities
|
(1,605
|
)
|
35,310
|
|||||
Cash flows from financing activities
|
||||||||
Issuance costs
|
(456 | ) | — | |||||
Exercise of options and vested RSUs
|
1,809
|
1,335
|
||||||
Payment of tax withholding for share-based compensation expenses
|
(709
|
)
|
(791
|
)
|
||||
Repurchase of Ordinary shares
|
(27,758 | ) | — | |||||
Payments on account of repurchase of Ordinary shares
|
(1,658 | ) | — | |||||
Repayment of long-term loan
|
—
|
(750
|
)
|
|||||
Net cash used in financing activities
|
(28,772
|
)
|
(206
|
)
|
||||
Exchange rate differences on balances of cash and cash equivalents
|
408
|
328
|
||||||
Increase in cash and cash equivalents
|
2,426
|
52,956
|
||||||
Cash and cash equivalents - at the beginning of the period
|
176,108
|
165,893
|
||||||
Cash and cash equivalents - at end of the period
|
$
|
178,534
|
$
|
218,849
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the year for:
|
||||||||
Income taxes
|
$
|
3,243
|
$
|
4,258
|
||||
Interest
|
$
|
3,610
|
$
|
5,067
|
||||
Non-cash investing and financing activities:
|
||||||||
Purchase of property and equipment, including capitalized internal-use software
|
$
|
4,262
|
$
|
36
|
||||
Share-based compensation included in capitalized internal-use software
|
$
|
606
|
$
|
652
|
||||
Creation of operating lease right-of-use assets
|
$
|
12
|
$
|
5,045
|
NOTE 1:- |
GENERAL
|
|
a. |
Taboola.com Ltd. (together with its subsidiaries, the “Company” or “Taboola”) was incorporated under the laws of the state of Israel on September 3, 2006.
|
|
b. |
In November 2022, the Company announced it entered into a 30-year exclusive commercial agreement (the “Commercial
agreement”) with Yahoo Inc. and affiliated entities (“Yahoo”), under which Taboola will power native advertising across all of Yahoo’s digital properties, expanding the Company’s native advertising offering. In connection with this
transaction, and following approval by the Company’s shareholders on December 30, 2022, the articles of association of the Company were amended and restated (the “Articles”) in their entirety to include a Non-voting Ordinary share class
with an authorized share capital of 46,000,000. On January 17, 2023 (the “Transaction closing date”), the Company closed the
transaction related agreements, including the issuance of 39,525,691 Ordinary shares and 45,198,702 Non-voting Ordinary shares to Yahoo. Based on the closing share price, on January 17, 2023, of $3.40 per share, the aggregate fair value of the issued shares amounted to $288,063. As part of the Ordinary shares and Non-voting Ordinary shares issuance, the Company incurred $1,388 of issuance expenses.
|
NOTE 1:- |
GENRAL (Cont.)
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 3:- |
CASH AND CASH EQUIVALENTS
|
March 31,
|
December 31,
|
|||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Cash
|
$
|
97,730
|
$
|
99,811
|
||||
Money market funds
|
75,666
|
72,510
|
||||||
Time deposits
|
5,138
|
3,787
|
||||||
Total Cash and cash equivalents
|
$
|
178,534
|
$
|
176,108
|
NOTE 4:-
|
FAIR VALUE MEASUREMENTS
|
Fair value measurements
as of
|
||||||||||
Description
|
Fair Value
Hierarchy
|
March 31,
2024
|
December 31,
2023
|
|||||||
|
Unaudited
|
|||||||||
Assets:
|
||||||||||
Cash equivalents:
|
||||||||||
Money market funds
|
Level 1
|
$
|
75,666
|
$
|
72,510
|
|||||
Short-term investments:
|
||||||||||
Corporate debt securities
|
Level 2
|
$
|
1,493
|
$
|
3,651
|
|||||
Commercial paper
|
Level 2
|
$
|
992
|
$
|
2,074
|
|||||
Derivative instruments asset: | ||||||||||
Derivative instruments designated as cash flow hedging instruments
|
Level 2 | $ |
172 | $ |
948 | |||||
Liabilities:
|
||||||||||
Warrants liability:
|
||||||||||
Public Warrants
|
Level 1
|
$
|
(4,082
|
)
|
$
|
(4,253
|
)
|
|||
Private Warrants
|
Level 3
|
$
|
(2,086
|
)
|
$
|
(1,876
|
)
|
NOTE 4:- | FAIR VALUE MEASUREMENTS (Cont.) |
Input
|
March 31,
2024
|
December 31,
2023
|
||||||
Risk-free interest rate
|
4.44% - 4.70
|
%
|
4.04% - 4.28
|
%
|
||||
Expected term (years)
|
1.50 - 2.25
|
1.75 - 2.50
|
||||||
Expected volatility
|
69.1
|
%
|
61.1% - 63.9
|
%
|
||||
Exercise price
|
$
|
11.50
|
$
|
11.50
|
||||
Underlying share price
|
$
|
4.44
|
$
|
4.33
|
|
● |
The risk-free interest rate assumption was interpolated based on
constant maturity U.S. Treasury rates over a term commensurate with the expected term of the Private Warrants.
|
|
● |
The expected term was based on the maturity of the Private Warrants of five years following June 29, 2021, the Business Combination date, and for certain Private Warrants the maturity was determined to be five years from the date of the October 1, 2020, ION initial public offering effective date.
|
|
● |
The expected volatility is based on the Company’s share price
volatility. For periods prior January 1, 2024, the expected share volatility assumption was based on the implied volatility from a set of comparable publicly-traded companies as determined based on size and proximity, as the Company did
not have sufficient trading history.
|
Private
|
Public
|
Total
|
||||||||||
Input
|
Warrants
|
Warrants
|
Warrants
|
|||||||||
Fair value as of December 31, 2023
|
$
|
1,876
|
$
|
4,253
|
$
|
6,129
|
||||||
Change from private to public holdings | (21 | ) | 21 | — | ||||||||
Change in fair value
|
231
|
(192
|
)
|
39
|
||||||||
Fair value as of March 31, 2024 (unaudited)
|
$
|
2,086
|
$
|
4,082
|
$
|
6,168
|
NOTE 5:- |
SHORT-TERM INVESTMENTS
|
March 31, 2024
|
||||||||||||||||
Unaudited
|
||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
Corporate debt securities
|
$ |
1,499
|
$ |
—
|
$ |
(6
|
)
|
$ |
1,493
|
|||||||
Commercial paper
|
993
|
—
|
(1
|
)
|
992
|
|||||||||||
Total
|
$
|
2,492
|
$
|
—
|
$
|
(7
|
)
|
$
|
2,485
|
December 31, 2023
|
||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
Corporate debt securities
|
$ |
3,654
|
$ |
—
|
$ |
(3
|
)
|
$ |
3,651 | |||||||
Commercial paper
|
2,077
|
—
|
(3
|
)
|
2,074 | |||||||||||
Total
|
$
|
5,731
|
$
|
—
|
$
|
(6
|
)
|
$
|
5,725 |
NOTE 6:- |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
|
NOTE 6:- |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Cont.)
|
Three months ended
March 31,
|
||||||||
|
2024
|
2023
|
||||||
Unaudited
|
||||||||
Cost of revenues
|
$
|
15
|
$
|
(28
|
)
|
|||
Research and development |
174
|
(315
|
)
|
|||||
Sales and marketing
|
43
|
(56
|
)
|
|||||
General and administrative
|
35
|
(49
|
)
|
|||||
Total gains (losses) recognized in the consolidated statements of loss, net
|
$
|
267
|
$
|
(448
|
)
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Unrealized gains (losses) on derivative instruments at the beginning of the period
|
$ | 948 | $ | (313 | ) | |||
Changes in fair value of derivative instruments
|
(509 | ) | (1,104 | ) | ||||
Reclassification of losses (gains) recognized in the consolidated interim statements of loss from accumulated other comprehensive income (loss)
|
(267 | ) | 448 | |||||
Unrealized gains (losses) on derivative instruments at the end of the period (unaudited)
|
$ | 172 | $ | (969 | ) |
NOTE 7:- |
GOODWILL AND INTANGIBLE ASSETS, NET
|
NOTE 7:- |
GOODWILL AND INTANGIBLE ASSETS, NET (Cont.)
|
March 31, 2024
|
Gross Fair
Value
|
Accumulated
Amortization
|
Net Book
Value
|
|||||||||
Merchant/Network affiliate relationships
|
$ | 146,547 | $ | (84,129 | ) | $ | 62,418 | |||||
Technology
|
74,193 | (46,412 | ) | 27,781 | ||||||||
Publisher relationships
|
42,933 | (27,728 | ) | 15,205 | ||||||||
Tradenames
|
24,097 | (20,752 | ) | 3,345 | ||||||||
Customer relationship
|
13,146 | (12,572 | ) | 574 | ||||||||
Total (unaudited)
|
$ | 300,916 | $ | (191,593 | ) | $ | 109,323 |
December 31, 2023
|
Gross Fair
Value |
Accumulated
Amortization
|
Net Book
Value
|
|||||||||
Merchant/Network affiliate relationships
|
$
|
146,547
|
$
|
(75,987
|
)
|
$
|
70,560
|
|||||
Technology
|
74,193
|
(43,535
|
)
|
30,658
|
||||||||
Publisher relationships
|
42,933
|
(25,044
|
)
|
17,889
|
||||||||
Tradenames
|
24,097
|
(18,739
|
)
|
5,358
|
||||||||
Customer relationships
|
13,146
|
(12,353
|
)
|
793
|
||||||||
Total
|
$
|
300,916
|
$
|
(175,658
|
)
|
$
|
125,258
|
Year Ending December 31,
|
||||
2024 (Remainder)
|
$
|
44,583
|
||
2025
|
51,407
|
|||
2026
|
13,244
|
|||
2027
|
89
|
|||
Total
|
$
|
109,323
|
NOTE 8:- |
FINANCING ARRANGEMENTS
|
NOTE 8:- |
FINANCING ARRANGEMENTS (Cont.)
|
NOTE 8:- |
FINANCING ARRANGEMENTS (Cont.)
|
NOTE 9:- |
SHAREHOLDERS’ EQUITY AND SHARE INCENTIVE PLANS
|
NOTE 9:- |
SHAREHOLDERS’ EQUITY AND SHARE INCENTIVE PLANS (Cont.)
|
|
a. |
In addition to the Buyback Program detailed above, the Company utilizes a net issuance mechanism to satisfy tax withholding
obligations related to equity-based compensation on behalf of its directors, officers and other employees (the “Net Issuances”). In April 2024, subsequent to the balance sheet date, the Company satisfied the required conditions, as
set forth in the Israeli Companies Law and the Companies Regulations, to conduct future repurchases of its Ordinary shares under the Buyback Program and Net Issuances in an aggregate amount up to $100,000, which amount was partly utilized under our previous Israeli court authorization. The Company’s board of directors have the
authority to determine the amount to be utilized for Net Issuances and Ordinary share repurchases.
|
|
b. |
The following is a summary of share option activity and related information for the three months ended March 31, 2024 (including employees, directors, officers and consultants of the Company):
|
Outstanding
Share
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Balance as of January 1, 2024
|
29,291,285
|
$
|
3.35
|
5.27
|
$
|
57,118
|
||||||||||
Exercised
|
(1,312,222
|
)
|
1.81
|
— | |
3,260
|
||||||||||
Forfeited
|
(338,892
|
)
|
2.77
|
— | — | |||||||||||
Balance as of March 31, 2024 (unaudited)
|
27,640,171
|
$
|
3.43
|
5.26
|
$
|
55,360
|
||||||||||
Exercisable as of March 31, 2024 (unaudited)
|
23,742,117
|
$
|
2.93
|
4.96
|
$
|
51,989
|
NOTE 9:- |
SHAREHOLDERS’ EQUITY AND SHARE INCENTIVE PLANS (Cont.)
|
|
c. |
The following is a summary of the RSU activity and related information for the three months ended March 31, 2024:
|
Outstanding
Restricted Shares
Unit
|
Weighted
Average Grant
Date Fair Value
|
|||||||
Balance as of January 1, 2024
|
23,479,308
|
$
|
5.13
|
|||||
Granted
|
12,783,639
|
4.74
|
||||||
Vested (*)
|
(2,072,234
|
)
|
5.48
|
|||||
Forfeited
|
(388,211
|
)
|
4.99
|
|||||
Balance as of March 31, 2024 (unaudited)
|
33,802,502
|
$
|
4.96
|
|
|
Three months ended
March 31,
|
|||||||
2024
|
2023
|
|||||||
|
Unaudited
|
|||||||
Cost of revenues
|
$
|
1,011
|
$
|
1,044
|
||||
Research and development
|
6,378
|
5,844
|
||||||
Sales and marketing
|
4,323
|
4,285
|
||||||
General and administrative
|
4,689
|
4,909
|
||||||
Total share-based compensation expense
|
$
|
16,401
|
$
|
16,082
|
NOTE 10:- |
INCOME TAXES
|
NOTE 11:- |
COMMITMENTS AND CONTINGENCIES
|
NOTE 12:- |
RELATED PARTY TRANSACTIONS
|
NOTE 13:- |
GEOGRAPHIC INFORMATION
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Israel
|
$
|
31,465
|
$
|
45,498
|
||||
United States
|
193,362
|
114,775
|
||||||
Germany
|
35,697
|
31,375
|
||||||
United Kingdom |
20,074 | 17,948 | ||||||
Rest of the world
|
133,410
|
118,090
|
||||||
Total
|
$
|
414,008
|
$
|
327,686
|
NOTE 14:- |
NET LOSS PER SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS
|
|
Three months ended
March 31,
|
|||||||||||||||
|
2024 |
2023 |
||||||||||||||
|
Ordinary
shares
|
Non-voting
Ordinary
shares
|
Ordinary
shares
|
Non-voting
Ordinary
shares
|
||||||||||||
|
Unaudited |
|||||||||||||||
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Net loss attributable to Ordinary shareholders, basic and diluted
|
$
|
(22,736
|
)
|
$ | (3,422 | ) |
$
|
(27,870
|
)
|
$
|
(3,443
|
)
|
||||
Denominator:
|
||||||||||||||||
Weighted-average shares used in computing net loss per share attributable to Ordinary shareholders, basic and diluted
|
300,303,941 |
45,198,702 |
296,763,107 |
36,661,169 |
||||||||||||
Net loss per share attributable to Ordinary and Non-voting Ordinary shareholders, basic and diluted
|
$ | (0.08 | ) | $ | (0.08 | ) | $ | (0.09 | ) | $ | (0.09 | ) |
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Warrants
|
12,349,990
|
12,349,990
|
||||||
RSUs
|
26,734,790
|
28,550,688
|
||||||
Outstanding share options
|
21,839,078
|
28,449,625
|
||||||
Issuable Ordinary shares related to Business Combination under holdback arrangement
|
968,992
|
1,704,406
|
||||||
Total
|
61,892,850
|
71,054,709
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
(dollars in thousands, except per share data)
|
Three months ended
March 31,
|
|||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Revenues
|
$
|
414,008
|
$
|
327,686
|
||||
Gross profit
|
$
|
108,953
|
$
|
89,592
|
||||
Net loss
|
$
|
(26,158
|
)
|
$
|
(31,313
|
)
|
||
EPS diluted (1)
|
$
|
(0.08
|
)
|
$
|
(0.09
|
)
|
||
Ratio of net loss to gross profit
|
(24.0
|
%)
|
(35.0
|
%)
|
||||
Cash flow provided by operating activities
|
$
|
32,395
|
$
|
17,524
|
||||
Cash, cash equivalents, short-term deposits and investments
|
$
|
181,019
|
$
|
274,431
|
||||
Non-GAAP Financial Data (2)
|
||||||||
ex-TAC Gross Profit
|
$
|
138,888
|
$
|
115,740
|
||||
Adjusted EBITDA
|
$
|
23,489
|
$
|
10,122
|
||||
Non-GAAP Net Income (Loss)
|
$
|
3,832
|
$
|
(4,101
|
)
|
|||
Ratio of Adjusted EBITDA to ex-TAC Gross Profit
|
16.9
|
%
|
8.7
|
%
|
||||
Free Cash Flow
|
$
|
26,806
|
$
|
11,174
|
|
(1) |
The weighted-average shares used in the computation of the diluted EPS for the three months ended March 31, 2024 and 2023 are 345,502,643 and 333,424,276, respectively. The weighted-average shares for the three months ended March 31, 2024
and 2023 include 45,198,702 Non-voting Ordinary shares.
|
|
(2) |
Refer to “Non-GAAP Financial Measures” below for an explanation and reconciliation to GAAP metrics.
|
|
● |
Traffic acquisition cost is a significant component of our cost of revenues but is not the only component; and
|
|
● |
ex-TAC Gross Profit is not comparable to our gross profit and by definition ex-TAC Gross Profit presented for any period will be higher than our gross profit for that period.
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(dollars in thousands)
|
||||||||
Revenues
|
$
|
414,008
|
$
|
327,686
|
||||
Traffic acquisition cost
|
275,120
|
211,946
|
||||||
Other cost of revenues
|
29,935
|
26,148
|
||||||
Gross profit
|
$
|
108,953
|
$
|
89,592
|
||||
Add back: Other cost of revenues
|
29,935
|
26,148
|
||||||
ex-TAC Gross Profit
|
$
|
138,888
|
$
|
115,740
|
|
● |
Although depreciation expense is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital
expenditure requirements;
|
|
● |
Adjusted EBITDA excludes share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;
|
|
● |
Adjusted EBITDA does not reflect, to the extent applicable for a period presented: (1) changes in, or cash requirements for, our working capital needs; (2) interest expense, or the cash requirements necessary to service interest or if
applicable principal payments on debt, which reduces cash available to us; or (3) tax payments that may represent a reduction in cash available to us; and
|
|
● |
The expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results.
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(dollars in thousands)
|
||||||||
Net loss
|
$
|
(26,158
|
)
|
$
|
(31,313
|
)
|
||
Adjusted to exclude the following:
|
|
|
||||||
Finance expenses, net
|
3,638
|
3,154
|
||||||
Income tax expenses (benefit)
|
4,287
|
(639
|
)
|
|||||
Depreciation and amortization
|
25,321
|
22,601
|
||||||
Share-based compensation expenses
|
13,756
|
13,527
|
||||||
Holdback compensation expenses (1)
|
2,645
|
2,555
|
||||||
Other costs (2)
|
—
|
237
|
||||||
Adjusted EBITDA
|
$
|
23,489
|
$
|
10,122
|
|
(1) |
Represents share-based compensation due to holdback of Ordinary shares issuable under compensatory arrangements relating to Connexity acquisition.
|
|
(2) |
The three months ended March 31, 2023 includes one-time costs related to the Commercial agreement.
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(dollars in thousands)
|
||||||||
Gross profit
|
$
|
108,953
|
$
|
89,592
|
||||
Net loss
|
$
|
(26,158
|
)
|
$
|
(31,313
|
)
|
||
Ratio of net loss to gross profit
|
(24.0
|
%)
|
(35.0
|
%)
|
||||
ex-TAC Gross Profit
|
$
|
138,888
|
$
|
115,740
|
||||
Adjusted EBITDA
|
$
|
23,489
|
$
|
10,122
|
||||
Ratio of Adjusted EBITDA margin to ex-TAC Gross Profit
|
16.9
|
%
|
8.7
|
%
|
|
● |
Non-GAAP Net Income (Loss) excludes share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;
|
|
● |
Non-GAAP Net Income (Loss) will generally be more favorable than our net income (loss) for the same period due to the nature of the items being excluded from its calculation; and
|
|
● |
Non-GAAP Net Income (Loss) is a performance measure and should not be used as a measure of liquidity.
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(dollars in thousands)
|
||||||||
Net loss
|
$
|
(26,158
|
)
|
$
|
(31,313
|
)
|
||
Amortization of acquired intangibles
|
15,935
|
15,969
|
||||||
Share-based compensation expenses
|
13,756
|
13,527
|
||||||
Holdback compensation expenses (1)
|
2,645
|
2,555
|
||||||
Other costs (2)
|
—
|
237
|
||||||
Revaluation of Warrants
|
39
|
(1,676
|
)
|
|||||
Foreign currency exchange rate losses (3)
|
1,041
|
429
|
||||||
Income tax effects
|
(3,426
|
)
|
(3,829
|
)
|
||||
Non-GAAP Net Income (Loss)
|
$
|
3,832
|
$
|
(4,101
|
)
|
|
(1) |
Represents share-based compensation due to holdback of Ordinary shares issuable under compensatory arrangements relating to Connexity acquisition.
|
|
(2) |
The three months ended March 31, 2023, includes one-time costs related to the Commercial agreement.
|
|
(3) |
Represents foreign currency exchange rate gains or losses related to the remeasurement of monetary assets and liabilities to the Company’s functional currency using exchange rates in effect at the end of the reporting period.
|
|
● |
It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. For example, cash is still required to satisfy other working capital needs, including short-term investment policy, restricted
cash, repayment of loan and intangible assets;
|
|
● |
Free Cash Flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities; and
|
|
● |
This metric does not reflect our future contractual commitments.
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(dollars in thousands)
|
||||||||
Net cash provided by operating activities
|
$
|
32,395
|
$
|
17,524
|
||||
Purchases of property and equipment, including capitalized internal-use software
|
(5,589
|
)
|
(6,350
|
)
|
||||
Free Cash Flow
|
$
|
26,806
|
$
|
11,174
|
(dollars in thousands)
|
Three months ended
March 31,
|
|||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Revenues
|
$
|
414,008
|
$
|
327,686
|
||||
Cost of revenues:
|
||||||||
Traffic acquisition cost
|
275,120
|
211,946
|
||||||
Other cost of revenues
|
29,935
|
26,148
|
||||||
Total cost of revenues
|
305,055
|
238,094
|
||||||
Gross profit
|
108,953
|
89,592
|
||||||
Operating expenses:
|
||||||||
Research and development
|
36,249
|
31,985
|
||||||
Sales and marketing
|
67,608
|
60,569
|
||||||
General and administrative
|
23,329
|
25,836
|
||||||
Total operating expenses
|
127,186
|
118,390
|
||||||
Operating loss
|
(18,233
|
)
|
(28,798
|
)
|
||||
Finance expenses, net
|
(3,638
|
)
|
(3,154
|
)
|
||||
Loss before income taxes
|
(21,871
|
)
|
(31,952
|
)
|
||||
Income tax benefit (expenses)
|
(4,287
|
)
|
639
|
|||||
Net loss
|
$
|
(26,158
|
)
|
$
|
(31,313
|
)
|
Three months ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Cash Flow Data:
|
||||||||
Net cash provided by operating activities
|
$
|
32,395
|
$
|
17,524
|
||||
Net cash provided by (used in) investing activities
|
(1,605
|
)
|
35,310
|
|||||
Net cash used in financing activities
|
(28,772
|
)
|
(206
|
)
|
||||
Exchange rate differences on balances of cash and cash equivalents
|
408
|
328
|
||||||
Increase in cash and cash equivalents
|
$
|
2,426
|
$
|
52,956
|
Contractual Obligations by Period
|
||||||||||||||||||||||||
2024
|
2025
|
2026
|
2027
|
2028
|
Thereafter
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Debt Obligations (1)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
152,735
|
$
|
—
|
||||||||||||
Operating Leases (2)
|
16,770
|
17,672
|
14,320
|
10,087
|
5,607
|
8,264
|
||||||||||||||||||
Non-cancellable purchase obligations (3)
|
24,814
|
3,465
|
2,025
|
286
|
—
|
—
|
||||||||||||||||||
Total Contractual Obligations
|
$
|
41,584
|
$
|
21,137
|
$
|
16,345
|
$
|
10,373
|
$
|
158,342
|
$
|
8,264
|
|
(1) |
Due to our voluntary prepayments, we have no remaining obligations to make quarterly amortization payments under our long-term loan.
|
|
(2) |
Represents future minimum lease commitments under non-cancellable operating lease agreements.
|
|
(3) |
Primarily represents non-cancelable amounts for contractual commitments in respect of software and information technology.
|
|
Operating loss impact
three months ended
March 31,
|
|||||||||||||||
|
2024
|
2023
|
||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||
|
+10%
|
|
-10%
|
|
+10%
|
|
-10%
|
|||||||||
NIS/USD
|
$
|
(458
|
)
|
$
|
458
|
$
|
(841
|
)
|
$
|
841
|
||||||
EUR/USD
|
$
|
757
|
$
|
(757
|
)
|
$
|
204
|
$
|
(204
|
) |
||||||
GBP/USD
|
$
|
(461
|
)
|
$
|
461
|
$
|
(481
|
)
|
$
|
481
|
||||||
JPY/USD
|
$
|
306
|
$
|
(306
|
)
|
$
|
354
|
$
|
(354
|
) |
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Period
|
(a) Total Number of Shares Repurchased
|
(b) Average
Price Paid Per
Share (1)
|
(c) Total Number
of Shares
Purchased as Part
of Publicly
Announced Program
|
(d) Approximate Dollar
Value of Shares that May
Yet Be Purchased Under
the Plan or Program (2)
|
||||||||||||
January 1 - January 31, 2024
|
2,530,691
|
$
|
4.24
|
2,530,691
|
$
|
14,120,274
|
||||||||||
February 1 - February 29, 2024
|
1,888,295
|
$
|
4.77
|
1,888,295
|
$
|
100,000,000
|
||||||||||
March 1 - March 31, 2024
|
1,804,185
|
$
|
4.36
|
1,804,185
|
$
|
92,130,860
|
(1) |
Excludes broker and transaction fees.
|
(2) |
Our board of directors authorized a share buyback program of our outstanding Ordinary shares, which commenced in June 2023 and does not have an expiration date (the “Buyback Program”). In 2023, our board of directors authorized up to $80.0
million of buybacks under the Buyback Program. In February 2024, our board of directors authorized up to $100.0 million for use under the Buyback Program, including any remaining authority from the 2023 board of directors authorization,
subject to satisfying required conditions under the Israeli Companies Law and the Companies Regulations (Reliefs for Corporations, Which Securities Are Listed on Foreign Stock Exchanges) 2000. The Buyback Program permits us to purchase our
Ordinary shares from time to time in the open market, including through trading plans intended to comply with Rule 10b5-1 under the Exchange Act, in privately negotiated transactions or otherwise. The timing and amount of any share buybacks
will be subject to market conditions and other factors determined by the Company. The Company may suspend, modify or discontinue the program at any time in its sole discretion without prior notice.
|
Item 3. |
Defaults upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Item 6. |
Exhibits
|
Exhibit No.
|
Exhibit Description
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
|
Section 1350 Certifications
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
Inline XBRL Taxonomy Extension Labels Linkbase Document.
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
|
By: /s/ Stephen C. Walker
|
|
Name: Stephen C. Walker
|
|
Title: Chief Financial Officer
|
Date: May 8, 2024
|
By:
|
/s/ Adam Singolda
|
Adam Singolda
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
Date: May 8, 2024
|
By:
|
/s/ Stephen C. Walker
|
Stephen C. Walker
|
||
Chief Financial Officer
|
||
(Principal Financial Officer)
|
By:
|
/s/ Adam Singolda
|
|
Adam Singolda
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
||
By:
|
/s/ Stephen C. Walker
|
|
Stephen C. Walker
|
||
Chief Financial Officer
|
||
(Principal Financial Officer)
|