Global media and tech company Yahoo has taken a 24.99% stake in Israeli content recommendation company Taboola (Nasdaq: TBLA) as part of a 30-year strategic commercial agreement, which will generate an estimated $1 billion in annual revenue for the partnership. The deal makes Yahoo the biggest shareholder in Taboola. In the wake of the announcement, Taboola's share price is up 64% in premarket trading on Wall Street at $3.02.
In its announcement, Taboola said that the agreement will contribute to revenue and profitability. If the agreement had been in effect since the start of 2022, Taboola said that annual revenue would have been $2.5 billion with adjusted EBITDA of $297 million and free cash flow of $105 million, compared with annual revenue of $1.4 billion, adjusted EBITDA of $156 million, and free cash flow of $21 million.
The deal is scheduled to be completed in the first quarter of 2023 following a Taboola shareholders meeting on December 30. At this stage Taboola has no forecast for 2023 but the announcement said that the partnership should generate $1 billion in annual revenue.
Taboola founder and CEO Adam Singolda said, "Yahoo is an internet pioneer, representing one of the largest, most trusted and most sophisticated publishers in the world. Everywhere I look, I see a rocket ship growth opportunity for both of us - native, eCommerce, Video, header bidding (display) and more. This win-win partnership will meaningfully accelerate our growth flywheel, expanding our reach to more users on the open web with high-intent traffic to provide world-class solutions for advertisers, publishers, merchants and users in a cookie-less world. For publishers in the open web, we’ll be able to invest even more in driving revenue, engagement and audience growth moving forward, empowering performance, brand advertisers, merchants as well as agencies with an immense reach to users in a premium, trusted environment. This partnership is a big step toward achieving our goal of generating $1 billion in ex-TAC by 2025."
Taboola said that it would benefit from the size of Yahoo, which reaches 900 million active users every month through email, news, finance and sport.
Taboola's shares began trading on Nasdaq in mid-2021 following the completion of a SPAC merger, at a valuation of $2.6 billion. In line with the fall of tech company share prices on Wall Street this year, Taboola has lost most of its market cap and closed last night with a market cap of just $455 million.
Published by Globes, Israel business news - en.globes.co.il - on November 28, 2022.
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