|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
(Address of principal executive offices)
|
(Zip code)
|
(Registrant’s telephone number, including area code)
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|
|
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|
Title of each class
|
|
Trading
Symbol(s)
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|
Name of each exchange on which registered
|
|
|
|
|
|
|
|
|
|
|
Large accelerated filer
|
☐
|
|
|
☒
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Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
|
|
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Emerging growth company
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Page No.
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|
PART I.
|
4 | |
Item 1.
|
4 | |
5 | ||
6 | ||
7 | ||
8 | ||
10 |
||
12 | ||
Item 2.
|
28 | |
Item 3.
|
48 | |
Item 4.
|
49 | |
PART II.
|
50 |
|
Item 1.
|
50 |
|
Item 1A.
|
50 |
|
Item 2.
|
50 |
|
Item 3.
|
51 | |
Item 4.
|
51 | |
Item 5.
|
51 | |
Item 6.
|
52 | |
52 |
Page
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5 |
|
6 |
|
7
|
|
8-9 | |
10-11
|
|
12-27
|
June 30,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
Unaudited
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Short-term investments
|
|
|
||||||
Restricted deposits
|
|
|
||||||
Trade receivables (net of allowance for credit losses of $
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
NON-CURRENT ASSETS
|
||||||||
Long-term prepaid expenses
|
|
|
||||||
Commercial agreement asset
|
|
|
||||||
Restricted deposits
|
|
|
||||||
Deferred tax assets, net
|
|
|
||||||
Operating lease right of use assets
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Total non-current assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES
|
||||||||
Trade payables
|
$
|
|
$
|
|
||||
Short-term operating lease liabilities
|
|
|
||||||
Accrued expenses and other current liabilities
|
|
|
||||||
Current maturities of long-term loan
|
|
|
||||||
Total current liabilities
|
|
|
||||||
LONG-TERM LIABILITIES
|
||||||||
Long-term loan, net of current maturities
|
|
|
||||||
Long-term operating lease liabilities
|
|
|
||||||
Warrants liability
|
|
|
||||||
Deferred tax liabilities, net
|
|
|
||||||
Other long-term liabilities
|
|
|
||||||
Total long-term liabilities
|
|
|
||||||
COMMITMENTS AND CONTINGENCIES (Note 11)
|
||||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Ordinary shares with
|
|
|
||||||
Non-voting Ordinary shares with
|
|
|
||||||
Treasury Ordinary shares, at cost -
|
( |
) | ||||||
Additional paid-in capital
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023 |
2022 | 2023 |
2022 | |||||||||||||
Unaudited |
||||||||||||||||
Revenues
|
$
|
|
$
|
|
$ | $ | ||||||||||
Cost of revenues:
|
||||||||||||||||
Traffic acquisition cost
|
|
|
||||||||||||||
Other cost of revenues
|
|
|
||||||||||||||
Total cost of revenues
|
|
|
||||||||||||||
Gross profit
|
|
|
||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
|
|
||||||||||||||
Sales and marketing
|
|
|
||||||||||||||
General and administrative
|
|
|
||||||||||||||
Total operating expenses
|
|
|
||||||||||||||
Operating loss
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Finance income (expenses), net
|
(
|
)
|
|
( |
) | |||||||||||
Loss before income taxes benefit (expenses)
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Income tax benefit (expenses)
|
(
|
)
|
(
|
)
|
( |
) | ||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
Net loss per share attributable to Ordinary and Non-voting Ordinary shareholders, basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) |
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023 |
2022 |
|||||||||||||
Unaudited
|
||||||||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
Other comprehensive income (loss):
|
||||||||||||||||
Unrealized gains (losses) on available-for-sale marketable securities
|
|
(
|
)
|
( |
) | |||||||||||
Unrealized gains (losses) on derivative instruments, net
|
|
(
|
)
|
( |
) | ( |
) | |||||||||
Other comprehensive income (loss)
|
|
(
|
)
|
( |
) | |||||||||||
Comprehensive loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$ |
( |
) | $ |
( |
) |
Non-voting
Ordinary shares
|
Ordinary shares
|
|||||||||||||||||||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Treasury
Ordinary
shares
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Accumulated
other
comprehensive
loss
|
Total
shareholders’
equity
|
||||||||||||||||||||||||||||
Balance as of March 31, 2023 (unaudited)
|
|
$
|
|
|
$
|
|
$ |
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||||
Share-based compensation expenses
|
—
|
—
|
—
|
—
|
— |
|
—
|
—
|
|
|||||||||||||||||||||||||||
Repurchase of Ordinary Shares
|
— | — | ( |
) | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||||
Exercise of options and vested RSUs
|
—
|
—
|
|
—
|
— |
|
—
|
—
|
|
|||||||||||||||||||||||||||
Payments of tax withholding for share-based compensation
|
—
|
—
|
—
|
—
|
— |
(
|
)
|
—
|
—
|
(
|
)
|
|||||||||||||||||||||||||
Other comprehensive income
|
—
|
—
|
—
|
—
|
— |
—
|
—
|
|
|
|||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
— |
—
|
(
|
)
|
—
|
(
|
)
|
|||||||||||||||||||||||||
Balance as of June 30, 2023 (unaudited)
|
|
$
|
|
|
$
|
|
$ | ( |
) |
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Ordinary shares | ||||||||||||||||||||||||
Number
|
Amount
|
Additional paid-in
capital
|
Accumulated
deficit
|
Accumulated
other
comprehensive
loss
|
Total
shareholders’
equity
|
|||||||||||||||||||
|
||||||||||||||||||||||||
Balance as of March 31, 2022 (unaudited)
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||
Share-based compensation expenses
|
—
|
—
|
|
—
|
—
|
|
||||||||||||||||||
Exercise of options and vested RSUs
|
|
—
|
|
—
|
—
|
|
||||||||||||||||||
Payments of tax withholding for share-based compensation
|
—
|
—
|
(
|
)
|
—
|
—
|
(
|
)
|
||||||||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
(
|
)
|
(
|
)
|
||||||||||||||||
Net loss
|
—
|
—
|
—
|
(
|
)
|
—
|
(
|
)
|
||||||||||||||||
Balance as of June 30, 2022 (unaudited)
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Non-voting
Ordinary shares
|
Ordinary shares
|
|||||||||||||||||||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Treasury
Ordinary
shares
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Accumulated
other
comprehensive
loss
|
Total
shareholders’
equity
|
||||||||||||||||||||||||||||
Balance as of January 1, 2023
|
|
$
|
|
|
$
|
|
$ |
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||||
Share-based compensation expenses
|
—
|
—
|
—
|
—
|
— |
|
—
|
—
|
|
|||||||||||||||||||||||||||
Repurchase of Ordinary Shares
|
— | — | ( |
) | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||||
Exercise of options and vested RSUs
|
—
|
—
|
|
—
|
— |
|
—
|
—
|
|
|||||||||||||||||||||||||||
Issuance of Ordinary shares and Non-voting Ordinary shares related to Commercial agreement
|
|
—
|
|
—
|
— |
|
—
|
—
|
|
|||||||||||||||||||||||||||
Payments of tax withholding for share-based compensation
|
—
|
—
|
|
—
|
— |
(
|
)
|
—
|
—
|
(
|
)
|
|||||||||||||||||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
— |
—
|
—
|
|
|
|||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
— |
—
|
(
|
)
|
—
|
(
|
)
|
|||||||||||||||||||||||||
Balance as of June 30, 2023 (unaudited)
|
|
$
|
|
|
$
|
|
$ | ( |
) |
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Ordinary shares | ||||||||||||||||||||||||
Number
|
Amount
|
Additional paid-in
capital
|
Accumulated
deficit
|
Accumulated
other
comprehensive
loss
|
Total
shareholders’
equity
|
|||||||||||||||||||
|
||||||||||||||||||||||||
Balance as of January 1, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||||
Share-based compensation expenses
|
—
|
—
|
|
—
|
—
|
|
||||||||||||||||||
Exercise of options and vested RSUs
|
|
—
|
|
—
|
—
|
|
||||||||||||||||||
Payments of tax withholding for share-based compensation
|
—
|
—
|
(
|
)
|
—
|
—
|
(
|
)
|
||||||||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
(
|
)
|
(
|
)
|
||||||||||||||||
Net loss
|
—
|
—
|
—
|
(
|
)
|
—
|
(
|
)
|
||||||||||||||||
Balance as of June 30, 2022 (unaudited)
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Six months ended
June 30,
|
||||||||
2023
|
2022
|
|||||||
Unaudited
|
||||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash flows provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Share-based compensation expenses
|
|
|
||||||
Net loss from financing expenses
|
|
|
||||||
Revaluation of the Warrants liability
|
(
|
)
|
(
|
)
|
||||
Amortization of loan and credit facility issuance costs
|
|
|
||||||
Amortization of premium and accretion of discount on short-term investments, net
|
(
|
)
|
(
|
)
|
||||
Change in operating assets and liabilities:
|
||||||||
Decrease in trade receivables, net
|
|
|
||||||
Decrease (increase) in prepaid expenses and other current assets and long-term prepaid expenses
|
|
(
|
)
|
|||||
Decrease in trade payables
|
(
|
)
|
(
|
)
|
||||
Decrease in accrued expenses and other current liabilities and other long-term liabilities
|
|
(
|
)
|
|||||
Decrease in deferred taxes, net
|
(
|
)
|
(
|
)
|
||||
Change in operating lease right of use assets
|
|
|
||||||
Change in operating lease liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash provided by operating activities
|
|
|
||||||
Cash flows from investing activities
|
||||||||
Purchase of property and equipment, including capitalized internal-use software
|
(
|
)
|
(
|
)
|
||||
Cash paid in connection with acquisitions, net of cash acquired
|
|
(
|
)
|
|||||
Proceeds from (investments in) restricted deposits
|
(
|
)
|
|
|||||
Proceeds from sales and maturities of short-term investments
|
|
|
||||||
Purchase of short-term investments
|
( |
) | ( |
) | ||||
Payments of cash in escrow for acquisition of a subsidiary
|
|
(
|
)
|
|||||
Net cash provided by (used in) investing activities
|
|
(
|
)
|
|||||
Cash flows from financing activities
|
||||||||
Exercise of options and vested RSUs
|
|
|
||||||
Payment of tax withholding for share-based compensation expenses
|
(
|
)
|
(
|
)
|
||||
Repurchase of Ordinary shares
|
( |
) | ||||||
Repayment of long-term loan
|
(
|
)
|
(
|
)
|
||||
Net cash provided by (used in) financing activities
|
(
|
)
|
|
|||||
Exchange rate differences on balances of cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
Increase (decrease) in cash and cash equivalents
|
|
(
|
)
|
|||||
Cash and cash equivalents - at the beginning of the period
|
|
|
||||||
Cash and cash equivalents - at end of the period
|
$
|
|
$
|
|
Six months ended
June 30,
|
||||||||
2023
|
2022
|
|||||||
Unaudited
|
||||||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the year for:
|
||||||||
Income taxes
|
$
|
|
$
|
|
||||
Interest
|
$
|
|
$
|
|
||||
Non-cash investing and financing activities:
|
||||||||
Purchase of property and equipment, including capitalized internal-use software
|
$
|
|
$
|
|
||||
Share-based compensation included in capitalized internal-use software
|
$
|
|
$
|
|
||||
Creation of operating lease right-of-use assets
|
$
|
|
$
|
|
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
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 3:- |
CASH AND CASH EQUIVALENTS
|
June 30,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
Unaudited
|
||||||||
Cash
|
$
|
|
$
|
|
||||
Money market accounts and funds
|
|
|
||||||
Time deposits
|
|
|
||||||
Total Cash and cash equivalents
|
$
|
|
$
|
|
NOTE 4:-
|
FAIR VALUE MEASUREMENTS
|
Fair value measurements
as of
|
||||||||||
Description
|
Fair Value
Hierarchy
|
June 30,
2023
|
December 31,
2022
|
|||||||
Unaudited
|
||||||||||
Assets:
|
||||||||||
Cash equivalents:
|
||||||||||
Money market accounts and funds
|
Level 1
|
$
|
|
$
|
|
|||||
Short-term investments:
|
||||||||||
Corporate debt securities
|
Level 2
|
$
|
|
$
|
|
|||||
U.S. agency bonds
|
Level 2
|
$
|
|
$
|
|
|||||
Commercial paper
|
Level 2
|
$
|
|
$
|
|
|||||
U.S. government treasuries | Level 2 | $ |
$ |
|||||||
Liabilities:
|
||||||||||
Warrants liability:
|
||||||||||
Public Warrants
|
Level 1
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Private Warrants
|
Level 3
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Derivative instruments liability:
|
||||||||||
Derivative instruments designated as cash flow hedging instruments
|
Level 2
|
$
|
(
|
)
|
$
|
(
|
)
|
NOTE 4:- | FAIR VALUE MEASUREMENTS (Cont.) |
Input
|
June 30,
2023
|
December 31,
2022
|
||||||
Risk-free interest rate
|
|
%
|
|
%
|
||||
Expected term (years)
|
|
|
||||||
Expected volatility
|
|
%
|
|
%
|
||||
Exercise price
|
$
|
|
$
|
|
||||
Underlying share price
|
$
|
|
$
|
|
● |
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
|
● |
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.
|
Private
|
Public
|
Total
|
||||||||||
Input
|
Warrants
|
Warrants
|
Warrants
|
|||||||||
Fair value as of December 31, 2022
|
$
|
|
$
|
|
$
|
|
||||||
Change in fair value
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Fair value as of June 30, 2023 (unaudited)
|
$
|
|
$
|
|
$
|
|
NOTE 5:- |
SHORT-TERM INVESTMENTS
|
June 30, 2023
|
||||||||||||||||
Unaudited
|
||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
|||||||||||||
Corporate debt securities
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
|
|||||||
U.S. agency bonds
|
|
|
(
|
)
|
|
|||||||||||
Commercial paper
|
|
|
(
|
)
|
|
|||||||||||
U.S. government treasuries | ( |
) | ||||||||||||||
Total
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
December 31, 2022
|
||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
|||||||||||||
U.S. government treasuries
|
$
|
|
$
|
|
$
|
(
|
)
|
$ | ||||||||
Corporate debt securities
|
|
|
(
|
)
|
||||||||||||
U.S. agency bonds
|
|
|
(
|
)
|
||||||||||||
Commercial paper
|
|
|
(
|
)
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
NOTE 6:- |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
|
Reclassification of losses into loss from accumulated
other comprehensive loss
|
||||||||||||||||
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022 |
2023 | 2022 | |||||||||||||
Unaudited
|
||||||||||||||||
$
|
|
$
|
|
$ |
$ |
|||||||||||
|
|
|
||||||||||||||
|
|
|
||||||||||||||
|
|
|
||||||||||||||
|
$
|
|
$
|
|
$ |
$ |
NOTE 6:- |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Cont.)
|
Six months ended
June 30,
|
||||||||
2023
|
2022
|
|||||||
Unaudited
|
||||||||
Unrealized losses on derivative instruments at the beginning of the period
|
$ | ( |
) | $ |
||||
Changes in fair value of derivative instruments
|
( |
) | ( |
) | ||||
Reclassification of losses recognized in the consolidated interim statements of loss from accumulated other comprehensive loss
|
||||||||
Unrealized losses on derivative instruments at the end of the period
|
$ | ( |
) | $ |
( |
) |
NOTE 7:- |
GOODWILL AND INTANGIBLE ASSETS, NET
|
Carrying
Amount
|
||||
Balance as of December 31, 2022
|
$
|
|
||
Purchase accounting adjustment
|
|
|||
Balance as of June 30, 2023 (unaudited)
|
$
|
|
NOTE 7:- |
GOODWILL AND INTANGIBLE ASSETS, NET (Cont.)
|
|
Gross Fair
Value
|
Accumulated
Amortization
|
Net Book
Value
|
|||||||||
Merchant / Network affiliate relationships
|
$ | $ | ( |
) | $ | |||||||
Technology
|
( |
) | ||||||||||
Publisher relationships
|
( |
) | ||||||||||
Tradenames
|
( |
) | ||||||||||
Customer relationships
|
( |
) | ||||||||||
Total
|
$ | $ | ( |
) | $ |
|
Gross Fair
Value
|
Accumulated
Amortization
|
Net Book
Value
|
|||||||||
Merchant / Network affiliate relationships
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Technology
|
|
(
|
)
|
|
||||||||
Publisher relationships
|
|
(
|
)
|
|
||||||||
Tradenames
|
|
(
|
)
|
|
||||||||
Customer relationships
|
|
(
|
)
|
|
||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
Year Ending December 31,
|
||||
2023 (Remainder)
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Total
|
$
|
|
NOTE 8:- |
FINANCING ARRANGEMENTS
|
Amount
|
||||
Year Ending December 31,
|
||||
2023 (current maturities)
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028
|
|
|||
Total
|
$
|
|
NOTE 8:- |
FINANCING ARRANGEMENTS (Cont.)
|
NOTE 9:- |
SHAREHOLDERS’ EQUITY AND SHARE INCENTIVE PLANS
|
a. |
On May 28, 2023, the Company received the approval of the Israeli court for its motion to extend, to November 16, 2023, its former motion to allow the
Company to utilize the net issuance mechanism to satisfy tax withholding obligations related to equity-based compensation on behalf of its directors, officers and other employees and possible future share repurchases (the “Program”) of
up to $
|
b. |
The following is a summary of share option activity and related information for the six months ended June 30, 2023 (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, 2023
|
|
$
|
|
|
$
|
|
||||||||||
Granted
|
|
|
— | — | ||||||||||||
Exercised
|
(
|
)
|
|
— | |
|
||||||||||
Forfeited
|
(
|
)
|
|
— | — | |||||||||||
Balance as of June 30, 2023 (unaudited)
|
|
$
|
|
|
$
|
|
||||||||||
Exercisable as of June 30, 2023 (unaudited)
|
|
$
|
|
|
$
|
|
NOTE 9:- |
SHAREHOLDERS’ EQUITY AND SHARE INCENTIVE PLANS (Cont.)
|
c. |
The following is a summary of the RSU activity and related information for the six months ended June 30, 2023:
|
Outstanding
Restricted Shares
Unit
|
Weighted
Average Grant
Date Fair Value
|
|||||||
Balance as of January 1, 2023
|
|
$
|
|
|||||
Granted
|
|
|
||||||
Vested (*)
|
(
|
)
|
|
|||||
Forfeited
|
(
|
)
|
|
|||||
Balance as of June 30, 2023 (unaudited)
|
|
$
|
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023 | 2022 | |||||||||||||
|
Unaudited
|
|||||||||||||||
Cost of revenues
|
$
|
|
$
|
|
$ | $ | ||||||||||
Research and development
|
|
|
||||||||||||||
Sales and marketing
|
|
|
||||||||||||||
General and administrative
|
|
|
||||||||||||||
Total share-based compensation expense
|
$
|
|
$
|
|
$ | $ |
NOTE 9:- |
SHAREHOLDERS’ EQUITY AND SHARE INCENTIVE PLANS (Cont.)
|
NOTE 10:- |
INCOME TAXES
|
NOTE 11:- |
COMMITMENTS AND CONTINGENCIES
|
a. |
In April 2021, the Company became aware that the Antitrust Division of the U.S. Department of Justice is conducting a criminal investigation of hiring
activities in the Company’s industry, including the Company. The Company cooperated with the Antitrust Division.
In July 2023, subsequent to the interim balance sheet date, the Company was notified in writing by the Antitrust Division of the U.S. Department of Justice
that it was no longer a subject or target of the previously disclosed criminal investigation of hiring activities in the Company’s industry, including the Company.
|
NOTE 11:- |
COMMITMENTS AND CONTINGENCIES (Cont.)
|
b. |
In the ordinary course of business, the Company may be subject from time to time to various proceedings, lawsuits, disputes, or claims. The Company
investigates these claims as they arise and records a provision, as necessary. Provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other
information and events pertaining to a particular matter. Although claims are inherently unpredictable, the Company is currently not aware of any matters that, it believes would individually or taken together, have a material adverse
effect on its business, financial position, results of operations, or cash flows.
|
NOTE 12:- |
RELATED PARTY BALANCES AND TRANSACTIONS
|
NOTE 13:- |
GEOGRAPHIC INFORMATION
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023 | 2022 | |||||||||||||
Unaudited
|
||||||||||||||||
Israel
|
$
|
|
$
|
|
$ |
$ |
||||||||||
United States
|
|
|
||||||||||||||
Germany
|
|
|
||||||||||||||
United Kingdom |
||||||||||||||||
Rest of the world
|
|
|
||||||||||||||
Total
|
$
|
|
$
|
|
$ |
$ |
NOTE 14:- |
NET LOSS PER SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||
Ordinary
shares
|
Non-voting
Ordinary
shares
|
Ordinary
shares
|
Non-voting
Ordinary
shares
|
Ordinary
shares
|
Non-voting
Ordinary
shares
|
Ordinary
shares
|
Non-voting
Ordinary
shares
|
|||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||
Numerator:
|
||||||||||||||||||||||||||||||||
Net loss attributable to Ordinary shareholders, basic and diluted
|
$
|
(
|
)
|
$ | ( |
) |
$
|
(
|
)
|
$
|
|
$ | ( |
) | $ | ( |
$ | ( |
) | $ | ||||||||||||
Denominator:
|
||||||||||||||||||||||||||||||||
Weighted-average shares used in computing net loss per share attributable to Ordinary shareholders, basic
|
|
|
|
|||||||||||||||||||||||||||||
Weighted-average shares used in computing net loss per share attributable to Ordinary shareholders, diluted
|
||||||||||||||||||||||||||||||||
Net loss per share attributable to Ordinary and non-voting Ordinary shareholders, basic
|
$
|
(
|
)
|
$ | ( |
) |
$
|
(
|
)
|
$
|
|
$ | ( |
) | $ | ( |
$ | ( |
) | $ | ||||||||||||
Net loss per share attributable to Ordinary and non-voting Ordinary shareholders, diluted
|
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
$ | ( |
) | $ |
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023 | 2022 | |||||||||||||
Unaudited
|
||||||||||||||||
Warrants
|
|
|
||||||||||||||
RSUs
|
|
|
||||||||||||||
Outstanding share options
|
|
|
||||||||||||||
Issuable Ordinary Shares related to Business Combination under holdback arrangement
|
|
|
||||||||||||||
Total
|
|
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
(dollars in thousands, except per share data)
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Unaudited
|
||||||||||||||||
Revenues
|
$
|
332,004
|
$
|
342,695
|
$
|
659,690
|
$
|
697,421
|
||||||||
Gross profit
|
$
|
97,057
|
$
|
116,361
|
$
|
186,649
|
$
|
228,391
|
||||||||
Net loss
|
$
|
(31,314
|
)
|
$
|
(5,021
|
)
|
$
|
(62,627
|
)
|
$
|
(1,133
|
)
|
||||
EPS diluted (1)
|
$
|
(0.09
|
)
|
$
|
(0.02
|
)
|
$
|
(0.18
|
)
|
$
|
(0.00
|
)
|
||||
Ratio of net loss to gross profit
|
(32.3
|
%)
|
(4.3
|
%)
|
(33.6
|
%)
|
(0.5
|
%)
|
||||||||
Cash flow provided by operating activities
|
$
|
11,598
|
$
|
2,084
|
$
|
29,122
|
$
|
10,207
|
||||||||
Cash, cash equivalents, short-term deposits and investments
|
$
|
246,851
|
$
|
308,473
|
$
|
246,851
|
$
|
308,473
|
||||||||
Non-GAAP Financial Data (2)
|
||||||||||||||||
ex-TAC Gross Profit
|
$
|
123,134
|
$
|
143,209
|
$
|
238,874
|
$
|
281,437
|
||||||||
Adjusted EBITDA
|
$
|
15,661
|
$
|
34,168
|
$
|
25,783
|
$
|
69,024
|
||||||||
Non-GAAP Net Income (Loss)
|
$
|
(1,406
|
)
|
$
|
15,794
|
$
|
(5,507
|
)
|
$
|
37,889
|
||||||
Ratio of Adjusted EBITDA to ex-TAC Gross Profit
|
12.7
|
%
|
23.9
|
%
|
10.8
|
%
|
24.5
|
%
|
||||||||
Free Cash Flow
|
$
|
7,770
|
$
|
(7,266
|
)
|
$
|
18,944
|
$
|
(6,045
|
)
|
(1) |
The weighted-average shares used in the computation of the diluted EPS for the three months ended June 30, 2023 and 2022 are 351,585,059 and 250,777,915, respectively, and for the six months ended June 30, 2023 and 2022 are 342,491,457
and 249,095,931, respectively. The weighted-average shares for the three and six months ended June 30, 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. The following table provides a reconciliation of revenues and
gross profit to ex-TAC Gross Profit:
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Revenues
|
$
|
332,004
|
$
|
342,695
|
$
|
659,690
|
$
|
697,421
|
||||||||
Traffic acquisition cost
|
208,870
|
199,486
|
420,816
|
415,984
|
||||||||||||
Other cost of revenues
|
26,077
|
26,848
|
52,225
|
53,046
|
||||||||||||
Gross profit
|
$
|
97,057
|
$
|
116,361
|
$
|
186,649
|
$
|
228,391
|
||||||||
Add back: Other cost of revenues
|
26,077
|
26,848
|
52,225
|
53,046
|
||||||||||||
ex-TAC Gross Profit
|
$
|
123,134
|
$
|
143,209
|
$
|
238,874
|
$
|
281,437
|
● |
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
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Net loss
|
$
|
(31,314
|
)
|
$
|
(5,021
|
)
|
$
|
(62,627
|
)
|
$
|
(1,133
|
)
|
||||
Adjusted to exclude the following:
|
|
|
|
|
||||||||||||
Finance (income) expenses, net
|
3,827
|
(4,764
|
)
|
6,981
|
(15,959
|
)
|
||||||||||
Income tax (benefit) expenses
|
2,487
|
234
|
1,848
|
(158
|
)
|
|||||||||||
Depreciation and amortization
|
22,792
|
22,813
|
45,393
|
45,489
|
||||||||||||
Share-based compensation expenses
|
13,890
|
17,640
|
27,417
|
34,679
|
||||||||||||
Holdback compensation expenses (1)
|
2,645
|
2,792
|
5,200
|
5,582
|
||||||||||||
M&A and other costs (2)
|
1,334
|
474
|
1,571
|
524
|
||||||||||||
Adjusted EBITDA
|
$
|
15,661
|
$
|
34,168
|
$
|
25,783
|
$
|
69,024
|
(1) |
Represents share-based compensation due to holdback of Taboola Ordinary Shares issuable under compensatory arrangements relating to Connexity acquisition.
|
(2) |
Includes one-time costs related to the Commercial agreement.
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Gross profit
|
$
|
97,057
|
$
|
116,361
|
$
|
186,649
|
$
|
228,391
|
||||||||
Net loss
|
$
|
(31,314
|
)
|
$
|
(5,021
|
)
|
$
|
(62,627
|
)
|
$
|
(1,133
|
)
|
||||
Ratio of net loss to gross profit
|
(32.3
|
%)
|
(4.3
|
%)
|
(33.6
|
%)
|
(0.5
|
%)
|
||||||||
ex-TAC Gross Profit
|
$
|
123,134
|
$
|
143,209
|
$
|
238,874
|
$
|
281,437
|
||||||||
Adjusted EBITDA
|
$
|
15,661
|
$
|
34,168
|
$
|
25,783
|
$
|
69,024
|
||||||||
Ratio of Adjusted EBITDA margin to ex-TAC Gross Profit
|
12.7
|
%
|
23.9
|
%
|
10.8
|
%
|
24.5
|
%
|
● |
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
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Net loss
|
$
|
(31,314
|
)
|
$
|
(5,021
|
)
|
$
|
(62,627
|
)
|
$
|
(1,133
|
)
|
||||
Amortization of acquired intangibles
|
15,962
|
15,828
|
31,931
|
31,608
|
||||||||||||
Share-based compensation expenses
|
13,890
|
17,640
|
27,417
|
34,679
|
||||||||||||
Holdback compensation expenses (1)
|
2,645
|
2,792
|
5,200
|
5,582
|
||||||||||||
M&A and other costs (2)
|
1,334
|
474
|
1,571
|
524
|
||||||||||||
Revaluation of Warrants
|
702
|
(11,958
|
)
|
(974
|
)
|
(26,000
|
)
|
|||||||||
Foreign currency exchange rate losses (gains) (3)
|
(663
|
)
|
2,490
|
(234
|
)
|
2,706
|
||||||||||
Income tax effects
|
(3,962
|
)
|
(6,451
|
)
|
(7,791
|
)
|
(10,077
|
)
|
||||||||
Non-GAAP Net Income (Loss)
|
$
|
(1,406
|
)
|
$
|
15,794
|
$
|
(5,507
|
)
|
$
|
37,889
|
(1) |
Represents share-based compensation due to holdback of Taboola Ordinary Shares issuable under compensatory arrangements relating to Connexity acquisition.
|
(2) |
Includes one-time costs related to the Commercial agreement.
|
(3) |
Represents non-operating 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
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Net cash provided by operating activities
|
$
|
11,598
|
$
|
2,084
|
$
|
29,122
|
$
|
10,207
|
||||||||
Purchases of property and equipment, including capitalized internal-use software
|
(3,828
|
)
|
(9,350
|
)
|
(10,178
|
)
|
(16,252
|
)
|
||||||||
Free Cash Flow
|
$
|
7,770
|
$
|
(7,266
|
)
|
$
|
18,944
|
$
|
(6,045
|
)
|
Three months ended
June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
$
|
332,004
|
$
|
342,695
|
||||
Cost of revenues:
|
||||||||
Traffic acquisition cost
|
208,870
|
199,486
|
||||||
Other cost of revenues
|
26,077
|
26,848
|
||||||
Total cost of revenues
|
234,947
|
226,334
|
||||||
Gross profit
|
97,057
|
116,361
|
||||||
Operating expenses:
|
||||||||
Research and development
|
34,001
|
34,079
|
||||||
Sales and marketing
|
61,198
|
66,405
|
||||||
General and administrative
|
26,858
|
25,428
|
||||||
Total operating expenses
|
122,057
|
125,912
|
||||||
Operating loss
|
(25,000
|
)
|
(9,551
|
)
|
||||
Finance income (expenses), net
|
(3,827
|
)
|
4,764
|
|||||
Loss before income taxes
|
(28,827
|
)
|
(4,787
|
)
|
||||
Income tax expenses
|
(2,487
|
)
|
(234
|
)
|
||||
Net loss
|
$
|
(31,314
|
)
|
$
|
(5,021
|
)
|
Six months ended
June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
$
|
659,690
|
$
|
697,421
|
||||
Cost of revenues:
|
||||||||
Traffic acquisition cost
|
420,816
|
415,984
|
||||||
Other cost of revenues
|
52,225
|
53,046
|
||||||
Total cost of revenues
|
473,041
|
469,030
|
||||||
Gross profit
|
186,649
|
228,391
|
||||||
Operating expenses:
|
||||||||
Research and development
|
65,986
|
64,491
|
||||||
Sales and marketing
|
121,767
|
127,773
|
||||||
General and administrative
|
52,694
|
53,377
|
||||||
Total operating expenses
|
240,447
|
245,641
|
||||||
Operating loss
|
(53,798
|
)
|
(17,250
|
)
|
||||
Finance income (expenses), net
|
(6,981
|
)
|
15,959
|
|||||
Loss before income taxes benefit (expenses)
|
(60,779
|
)
|
(1,291
|
)
|
||||
Income tax benefit (expenses)
|
(1,848
|
)
|
158
|
|||||
Net loss
|
$
|
(62,627
|
)
|
$
|
(1,133
|
)
|
Six months ended
June 30,
|
||||||||
2023
|
2022
|
|||||||
Unaudited
|
||||||||
Cash Flow Data:
|
||||||||
Net cash provided by operating activities
|
$ |
29,122
|
$ |
10,207
|
||||
Net cash provided by (used in) investing activities
|
45,126
|
(93,817
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(35,310
|
)
|
2,347
|
|||||
Exchange rate differences on balances of cash and cash equivalents
|
(236
|
)
|
(4,316
|
)
|
||||
Increase (decrease) in cash and cash equivalents
|
$ |
38,702
|
$ |
(85,579
|
)
|
Contractual Obligations by Period
|
||||||||||||||||||||||||
2023
|
2024
|
2025
|
2026
|
2027
|
Thereafter
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Debt Obligations
|
$
|
1,500
|
$
|
3,000
|
$
|
3,000
|
$
|
3,000
|
$
|
3,000
|
$
|
189,985
|
||||||||||||
Operating Leases (1)
|
8,469
|
19,539
|
16,173
|
13,240
|
9,589
|
13,692
|
||||||||||||||||||
Non-cancellable purchase obligations (2)
|
17,217
|
6,818
|
511
|
99
|
—
|
—
|
||||||||||||||||||
Total Contractual Obligations
|
$
|
27,186
|
$
|
29,357
|
$
|
19,684
|
$
|
16,339
|
$
|
12,589
|
$
|
203,677
|
(1) |
Represents future minimum lease commitments under non-cancellable operating lease agreements.
|
(2) |
Primarily represents non-cancelable amounts for contractual commitments in respect of software and information technology.
|
|
Operating loss impact
Six months ended
June 30,
|
|||||||||||||||
|
2023
|
2022
|
||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||
|
+10%
|
|
-10%
|
|
+10%
|
|
-10%
|
|
||||||||
NIS/USD
|
$
|
(126
|
)
|
$
|
126
|
$
|
(2,978
|
)
|
$
|
2,978
|
||||||
EUR/USD
|
$
|
169
|
$
|
(169
|
)
|
$
|
2,226
|
$
|
(2,226
|
)
|
||||||
GBP/USD
|
$
|
(104
|
)
|
$
|
104
|
$
|
(2,135
|
)
|
$
|
2,135
|
||||||
JPY/USD
|
$
|
312
|
$
|
(312
|
)
|
$
|
945
|
$
|
(945
|
)
|
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
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)
|
||||||||||||
April 1 - April 30, 2023
|
—
|
$
|
—
|
—
|
$
|
—
|
||||||||||
May 1 - May 31, 2023
|
—
|
$
|
—
|
—
|
$
|
40,000,000
|
||||||||||
June 1 - June 30, 2023
|
1,442,000
|
$
|
3.02
|
1,442,000
|
$
|
35,641,792
|
(1) |
Excludes broker and transaction fees.
|
(2) |
On May 10, 2023, the Company announced a share buyback program for the repurchase of up to $40.0 million of our Ordinary shares. The program does not have an expiration date and permits us to purchase our Ordinary shares from time to
time in the open market, including through trading plans intended to qualify under 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
|
||
Amendment to Compensation Package, dated as of June 1, 2023, by and between the Registrant and Adam Singolda
|
|||
Amendment No. 2, dated as of June 12, 2023, to the Credit Agreement by and among Taboola.com Ltd., Taboola, Inc., as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
|
|||
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
|