Taboola.com Ltd. (TBLA) is a global leader in powering recommendations for the open web. The company’s platform, Taboola, partners with websites, devices, and mobile apps and recommends editorial content and advertisements on the open web to users. The company’s operational efficiency and robust profitability are fueled by its long-term partnerships and collaborations with leading websites, platforms, and companies.

Recently, Taboola signed multiple renewal deals, including the renewal of its long-standing partnership with Future, a global multi-platform media company, and a new three-year agreement with WeatherBug, a leading weather site and mobile app. The renewal deals extended the company’s collaborations, reinstating its industry footing. Also, TBLA’s continuous innovations, like the introduction of Abby, will propel its growth.

IMARC group projects that the global advertising market will reach $995 billion by 2033, exhibiting growth at a CAGR of 4.4%. The market is expected to benefit from the recent shift towards online platforms, rising utilization of AI, and increasing consumer demand for ethical and environmentally responsible brands.

As businesses across the globe realize the potential of digital marketing and advertisement, they are actively investing and engaging top advertising entities to increase traffic and grow brand awareness. Companies and brands are becoming aware of the power of the right advertising and the latest technologies.

Amid such market sentiments, TBLA, with its artificial intelligence-based algorithmic engine platform, stands at the forefront to benefit exponentially in the long run. Also, with continuous innovations and investment in industry-first Generative AI technology, Abby, the company will be able to easily differentiate itself from its peers.

TBLA’s stock performance is also complementing its sound operational performance. Shares of TBLA surged 16.6% over the past three months to close its last trading session at $3.73. The stock has also gained 13% over the past six months.

Let’s look at factors that could influence TBLA’s performance in the upcoming months.

Positive Recent Developments

On October 21, TBLA signed an exclusive multi-year partnership with National World, one of the UK’s largest regional publishers with a reach of more than 15 million monthly visitors. National World has implemented TBLA’s suite of products to grow its audience, optimize user engagement, and drive revenue across its digital properties.

On October 16, TBLA introduced Abby, an industry-first Generative AI technology for advertisers. Advertisers could utilize the technology to start and manage campaigns, even without any expertise in advertising. Abby is an advanced AI assistant offering a conversational approach to building and launching every aspect of campaigns, including budgeting, targeting, creativity, and optimization.

Robust Financials

TBLA’s total revenues increased 20.2% year-over-year to $433.01 million during the third quarter that ended September 30, 2024. Its gross profit grew 32% from the year-ago value to $132.88 million. Also, the company’s operating income for the quarter amounted to $4.56 million.

In addition, the company’s non-GAAP net income came in at $22.21 million, up 231.3% year-over-year. TBLA’s adjusted EBITDA rose 109.9% from the prior-year period to $47.93 million. Its free cash flow increased 88% from the year-ago value to $42.86 million.

Also, the company’s cash and cash equivalents stood at $217.23 million as of September 30, 2024, compared to $176.11 million as of December 31, 2023.

Solid Historical Growth

TBLA’s revenue has grown at a CAGR of 21.8% over the past three years, while its EBITDA increased 111.2% over the same timeframe. The company’s tangible book value has increased 11% over the past three years, and its levered free cash flow has improved at a CAGR of 29.9%.

Favorable Analyst Estimates

Analysts expect TBLA’s revenue for the fourth quarter (ended December 2024) to increase 13.5% year-over-year to $476.56 million. The consensus EPS estimate of $0.15 for the same quarter reflects a 70.5% year-over-year improvement. Furthermore, the company has surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.

Additionally, Street expects the company’s revenue and EPS for the fiscal year 2024 to increase 21.7% and 224.5% year-over-year to $1.75 billion and $0.31, respectively. Also, for the fiscal year 2025, TBLA’s revenue and EPS are expected to grow 15.8% and 50% from the prior year to $2.03 billion and $0.46.

Low Valuation

In terms of forward non-GAAP P/E, TBLA is currently trading at 12.23x, 8.6% lower than the industry average of 13.38x. Also, the stock’s forward EV/Sales and Price/Sales of 0.71x and 0.72x are considerably lower than the industry averages of 1.98x and 1.31x, respectively.

Additionally, the stock’s forward EV/EBITDA of 6.24x is 23% lower than the industry average of 8.10x.

POWR Ratings Reflect Promise

TBLA’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. TBLA has a B grade for Growth, which is in sync with its impressive historical growth and solid financial performance in the last reported quarter.

In addition, the stock also has a B grade for Value and Sentiment, consistent with its low valuation and promising analysts’ estimates.

TBLA is ranked #2 in the 16-stock Advertising industry.

Beyond what is stated above, we have also given TBLA grades for Quality, Momentum, and Stability. Get access to all the TBLA Ratings here.

Bottom Line

TBLA operates an artificial intelligence-based algorithmic engine platform offering editorial content and advertisements. The company offers its services through the Taboola platform, which partners with websites, devices, and mobile apps. TBLA is maintaining its strong market position through strategic collaborations and continued partnerships with leading sites and companies.

Further, as the company continues to tap into the potential of Artificial Intelligence (AI) and its capabilities, its long-term growth prospects and opportunities appear promising.

Considering TBLA’s strong financial standings, optimistic analyst estimates, and strategic market position, now might be the ideal time to consider adding TBLA to one’s investment portfolio.

How Does Taboola.com Ltd. (TBLA) Stack Up Against Its Peers?

While TBLA has an overall POWR Rating of A, investors could also check out these other stocks within the Advertising industry with A (Strong Buy) or B (Buy) ratings: Nexxen International Ltd. ADR (NEXN), Cimpress PLC (CMPR), and Tremor International Ltd. (TRMR).

For exploring more A and B-rated advertising stocks, click here.

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TBLA shares were trading at $3.67 per share on Wednesday morning, down $0.06 (-1.61%). Year-to-date, TBLA has gained 0.55%, versus a 0.43% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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