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United States securities and exchange commission logo
March 11, 2021
Adam Singolda
Chief Executive Officer
Taboola.com Ltd.
16 Madison Square West, 7th Floor
New York, NY 10010
Re: Taboola.com Ltd.
Draft Registration
Statement on Form F-4
Submitted February
11, 2021
CIK No. 0001840502
Dear Mr. Singolda:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-4
Questions and Answers About the Proposals, page x
1. Please revise to add a
question and answer related to the vote required to approve the
business combination
proposal. Please include a discussion of the Sponsor Support
Agreement that makes it
more likely that the business combination proposal will be
approved and discuss
the percentage of shares not subject to this agreement that would be
required to approve the
business combination proposal.
Adam Singolda
FirstName LastNameAdam Singolda
Taboola.com Ltd.
Comapany
March NameTaboola.com Ltd.
11, 2021
March2 11, 2021 Page 2
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FirstName LastName
Risk Factors
If our performance under contracts with digital properties..., page 10
2. Please disclose the percentage of your contracts where you are
obligated to pay a specified
minimum guaranteed amount.
The effects of health epidemics..., page 15
3. Please revise to provide more specific disclosure of the negative
impact of COVID-19 on
your revenues and results of operations. As one example, we note the
Wall Street Journal
article on September 13, 2020 titled How the Tie-Up of Clickbait
Giants Taboola and
Outbrain Unraveled in which you state that on March 15 alone, your
ad-auction rates fell
18% from a day earlier. Similarly, if COVID-19 directly impacted the
ability of Taboola
and Outbrain to consummate its merger just prior to this transaction,
you should discuss
this negative impact.
We have historically relied..., page 15
4. Please disclose the number of premium digital properties that
represent a significant
percentage of your revenue and disclose the percentage of revenue they
represent. Please
also disclose the material terms of your agreement with Microsoft
including the term,
material termination provisions and any guarantee arrangements.
Our amended and restated articles of association..., page 35
5. We note that your forum selection provision identifies federal courts
as the exclusive
forum for claims brought pursuant to the Securities Act. Please revise
your prospectus to
state that there is uncertainty as to whether a court would enforce
such a provision.
Provisions of Israeli law..., page 36
6. Please briefly describe each of the provisions in your amended and
restated articles of
association that require the approval of 65% of the total voting power
to amend.
Directors of ION have potential conflicts of interest..., page 39
7. Please disclose that the 7,150,000 warrants held by the Sponsors and
directors will expire
and be worthless if the transaction is not consummated and an
alternative target is not
identified by October 6, 2022.
If the Business Combination does not qualify as a "reorganization" under
Section 368(a) of Title
26 of the U.S. Internal Revenue Code..., page 45
8. Although we note that you intend the merger to qualify as a tax-free
reorganization under
the tax code, we also note the absence of a tax opinion supporting
such a position due to
the absence of guidance. Revise the risk factor to focus on the
reasons for this uncertainty
and the inability of the company to obtain a tax opinion supporting
its position.
Adam Singolda
FirstName LastNameAdam Singolda
Taboola.com Ltd.
Comapany
March NameTaboola.com Ltd.
11, 2021
March3 11, 2021 Page 3
Page
FirstName LastName
The board has not obtained and will not obtain a third-party valuation or
financial opinion in
determining whether or not..., page 46
9. Discuss how the combined valuation of Taboola and Outbrain for its
planned merger
compared to the valuation of Taboola in this acquisition.
Proposal No. 1 - The Business Combination Proposal
Background of the Business Combination, page 59
10. We note your disclosure that the principal terms of the transaction
were negotiated
between December 3, 2020 and December 9, 2020. Please expand your
disclosure to
include a more detailed discussion of the negotiations regarding the
valuation of Taboola.
Taboola's Business
Industry Trends, page 115
11. Please disclose the basis for your estimate that advertisers spent
approximately $64 billion
advertising on the Open Web in 2020.
Our Market Opportunity, page 116
12. Please define your reference to daily active users.
Taboola's Management's Discussion and Analysis of Financial Condition and
Results of
Operations, page 134
13. Please disclose your retention rates, daily active users, ad
impressions, number of digital
property partners and advertisers for the periods presented and
discuss any trends related
to these measures.
Key Financial and Operating Metrics, page 136
14. With respect to Free Cash Flow, Adjusted EBITDA, and Adjusted EBITDA
Margin,
please present with equal or greater prominence the most directly
comparable financial
measure calculated and presented in accordance with GAAP. Similarly
revise your non-
GAAP disclosures elsewhere in your filing, as applicable. Refer to
Item 10(e)(1)(i)(A) of
Regulation S-K.
Non-GAAP Financial Measures, page 137
15. Your presentation of the non-GAAP performance measure called "ex-TAC
Revenues"
appears to adjust GAAP revenues recognized on a gross basis to exclude
traffic
acquisition costs and thus present revenues as if they were recognized
on a net basis.
Please explain to us why you believe this non-GAAP measure does not
substitute
individually tailored revenue recognition and measurement methods for
those of GAAP.
Refer to Question 100.04 of Compliance and Disclosure Interpretations
on Non-GAAP
Financial Measures and Rule 100(b) of Regulation G.
Adam Singolda
Taboola.com Ltd.
March 11, 2021
Page 4
Revenues, page 141
16. You indicate that the increase in revenues was driven by multiple
factors. To the extent
possible, please revise to provide quantification regarding the impact
of each factor. For
example, please revise to quantify the number of new digital property
partners added
and their impact to the increase in revenues. If possible, please also
revise to quantify the
impact of changes in advertising rates charged to customers. Please
refer to Item
303(a)(3) of Regulation S-K.
17. You disclose on page 134 that you have been and may continue to be
required to make
significant payments related to your guarantees with digital property
partners. We also
note disclosures on page 135 regarding changes to your guarantee
arrangements in
response to COVID-19. Please revise your MD&A and financial statements
to more fully
explain how you account for your guarantee arrangements. Please also
revise your
MD&A to quantify any significant guarantee payments made as well as
any other
significant financial statement impacts attributable to your guarantee
arrangements during
the periods presented.
Liquidity and Capital Resources, page 142
18. Please revise your discussion of changes in operating activities on
page 143 to provide a
more substantive analysis of the primary factors affecting your cash
flows during the
periods presented. Your discussion should address sources and uses of
cash as well as
material trends and uncertainties affecting cash flows. Please refer
to Item 303(a)(1) and
(2) of Regulation S-K.
Contractual Obligations, page 143
19. Please disclose the nature of the non-cancellable purchase obligations
disclosed in the
table.
Unaudited Prospective Financial Information of Taboola, page 150
20. Please revise your filing to disclose the complete projections
provided to the board instead
of a summary of them.
Beneficial Ownership of Securities, page 201
21. Please disclose the portion of each class of securities held in the
United States and the
number
FirstName of record holders
LastNameAdam in the United States. Refer to Item 7.A.2 of
Form 20-F.
Singolda
Comapany
22. NameTaboola.com
Please Ltd.
disclose the natural person or persons who exercise the voting
and/or dispositive
powers with respect
March 11, 2021 Page 4 to the securities owned by Evergreen, Marker and
Pitango.
FirstName LastName
Adam Singolda
FirstName LastNameAdam Singolda
Taboola.com Ltd.
Comapany
March NameTaboola.com Ltd.
11, 2021
March5 11, 2021 Page 5
Page
FirstName LastName
Audited Consolidated Financial Statements of Taboola.com Ltd.
Note 2 - Significant Accounting Policies, page F-8
23. Please revise your discussion of credit risk on page F-10 to
incorporate the information
provided on page 149 regarding the lack of government-sponsored
deposit insurance for
cash balances held in Israel and the amount of cash balances held in
excess of the FDIC
insurance amounts as of the most recent balance sheet date.
24. Please revise your revenue recognition accounting policy on page F-12
to more fully
explain the specific aspects of your business model, including your
platform's algorithms,
that led you to determine you control the specified goods or services
before they are
transferred to customers.
25. We note your digital property partner agreements typically require you
to integrate your
code on the digital property web page. With respect to these costs and
any up-front
payments, including incentive payments or bonuses paid to the digital
property partners,
please explain to us your accounting policies including your
consideration of the guidance
in ASC 340-40-25 and clarify your disclosure.
Exhibits
26. Please reconcile the scope of your exclusive forum provision (Section
72 of Exhibit 3.2)
to your disclosure on page 37. For example, your disclosure indicates
that your exclusive
forum provision does not apply to claims arising under the Securities
Act of 1933 and
Securities Exchange Act of 1934; however, your exclusive forum
provision in your
Articles of Association indicates that it applies to claims under the
Securities Act of 1933
and does not address claims arising under the Securities Exchange Act
of 1934.
General
27. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
Adam Singolda
FirstName LastNameAdam Singolda
Taboola.com Ltd.
Comapany
March NameTaboola.com Ltd.
11, 2021
March6 11, 2021 Page 6
Page
FirstName LastName
You may contact Lisa Etheredge, Staff Accountant, at (202) 551-3424 or
Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact Jeff
Kauten, Staff
Attorney, at (202) 551-3447 or Larry Spirgel, Office Chief, at 202-551-3815
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Technology
cc: Senet S. Bischoff