UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 10-Q




QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2024


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-40566


TABOOLA.COM LTD.
(Exact name of registrant as specified in its charter)



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)



Securities registered pursuant to Section 12(b) of the Act:
 
 
 
 
 
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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company

 
  
 
Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
  Yes No

As of April 30, 2024 the Registrant had outstanding 290,733,986 Ordinary shares and 45,198,702 Non-voting Ordinary shares.



Taboola.com Ltd.
Quarterly Report on Form 10-Q
Table of Contents

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

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless otherwise stated or unless the context otherwise requires, the terms “Company,” “the registrant,” “our company,” “the company,” “we,” “us,” “our,” “ours,” and “Taboola” refer to Taboola.com Ltd., a company organized under the laws of the State of Israel, and its consolidated subsidiaries.

PART I – FINANCIAL INFORMATION

Item 1.
Financial Statements

TABOOLA.COM LTD.

CONSOLIDATED INTERIM BALANCE SHEETS

U.S. dollars in thousands, except share and per share data

   
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
 

 
(1) Includes related party trade receivables of $41,992 and of $12,297, as of March 31, 2024 and December 31, 2023, respectively.
(2) Includes related party trade payables of $61,137 and $38,657, as of March 31, 2024 and December 31, 2023, respectively.

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.

TABOOLA.COM LTD.

CONSOLIDATED INTERIM STATEMENTS OF LOSS

U.S. dollars in thousands, except share and per share data

   
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
 

 
(1) Includes revenues from related party of $52,124 and $7,114, for the three months ended March 31, 2024 and 2023, respectively.
(2) Includes traffic acquisition cost to related party of $73,611 and $0, for the three months ended March 31, 2024 and 2023, respectively.

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.

TABOOLA.COM LTD.

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

U.S. dollars in thousands

   
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
)

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.

TABOOLA.COM LTD.

CONSOLIDATED INTERIM STATEMENTS OF SHAREHOLDERS’ EQUITY

U.S. dollars in thousands, except share and per share data

   
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
 

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.

TABOOLA.COM LTD.

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

   
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
 

 
(1) Includes an increase in related party trade receivables of $29,694 and $617, for the three months ended March 31, 2024 and 2023, respectively.
(2) Includes an increase (decrease) in related party trade payables of $(22,480) and $4,628, for the three months ended March 31, 2024 and 2023, respectively.

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.

TABOOLA.COM LTD.

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

   
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
 

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data

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.
Taboola is a technology company that powers recommendations across the Open Web with an artificial intelligence-based, algorithmic engine developed since the Company began operations in 2007. Taboola partners with websites, devices, and mobile apps (collectively referred to as “digital properties”), to recommend editorial content and advertisements on the Open Web. Digital properties use Taboola’s technology platforms to achieve their business goals, such as driving new audiences to their sites and apps or increasing engagement with existing audiences. Taboola also provides monetization opportunities to digital properties by surfacing paid recommendations by advertisers. Taboola is a business-to-business company with no competing consumer interests. Taboola empowers advertisers to leverage its proprietary AI-powered recommendation platform to reach targeted audiences utilizing effective, native ad-formats across digital properties. As part of the Company e-Commerce offerings, it also syndicates its retailer advertisers’ monetized product listings and links (clickable advertisements) into commerce content-oriented consumer experiences on both the Open Web and within the dominant traditional ad platforms. Taboola generates revenues when people (consumers) click on, purchase from or, in some cases, view the ads that appear within its recommendation platform. The Company’s customers are the advertisers, merchants and affiliate networks that advertise on the Company’s platform (“Advertisers”). Advertisers pay Taboola for those clicks, purchases or impressions, and Taboola shares a portion of the resulting revenue with the digital properties who display those ads.

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.
The Non-voting Ordinary shares are not entitled to vote on or receive notices with respect to any matter pursuant to our Articles and are not entitled to vote or to be counted for purposes of determining whether any vote required under the Articles has been approved by the requisite percentage of voting securities or to be counted towards any quorum required pursuant to the Articles. Except with respect to the voting rights and to the rights to receive notice of meetings of the shareholders, the Non-voting Ordinary shares have rights identical to the rights of Ordinary shares. In connection with the transaction, the Company and Yahoo entered into an Investor Rights Agreement, under which, inter alia, Yahoo is entitled, in certain circumstances, to cause the Company to register the Ordinary shares issued to Yahoo for resale under the Securities Act of 1933, as amended.

The Company accounts for the consideration paid to Yahoo (the “Commercial agreement asset”) as an up-front payment for traffic acquisition costs paid to the digital property partner, which is amortized over the shorter of respective contractual terms and the economic benefit period of the digital property arrangement.

10

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 1:-
GENRAL (Cont.)

The Company and Yahoo are still in the Commercial agreement transition period (as defined in the Commercial agreement), consequently, the exclusivity period has not begun. For the three months ended March 31, 2024 and 2023, the Company did not record amortization expenses of the Commercial agreement asset.

NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”), and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting and include the accounts of Taboola.com Ltd. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The consolidated balance sheet as of December 31, 2023, included herein, was derived from the audited consolidated financial statements as of that date, but does not include all of the disclosures, including certain notes required by GAAP on an annual reporting basis. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

Therefore, these unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2023, filed with the SEC on February 28, 2024.

In the opinion of the Company’s management, the unaudited consolidated interim financial statements have been prepared on a basis consistent with the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s unaudited interim consolidated financial statements. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024, or any other future interim or annual period.

Use of Estimates

The preparation of the interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the interim consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period and accompanying notes. Actual results could differ from those estimates.

The Company’s management regularly evaluates its estimates, primarily those related to: (1) revenue recognition criteria, including the determination of revenue reporting as gross versus net in the Company’s revenue arrangements, (2) allowances for credit losses, (3) operating lease assets and liabilities, including the incremental borrowing rate and terms and provisions of each lease (4) the useful lives of its Commercial agreement asset, property and equipment and capitalized software development costs, (5) income taxes, (6) assumptions used in the option pricing models to determine the fair value of share-based compensation (7) the fair value of financial assets and liabilities, including the fair value of marketable securities, Private Warrants and derivative instruments (8) the fair value of acquired intangible assets and goodwill annual impairment test, and (9) the recognition and disclosure of contingent liabilities.

11

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)

These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances; the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

As of March 31, 2024, the impacts to the Company’s business due to geopolitical developments, such as the wars in Israel and Ukraine and other active or possible hostilities, and macroeconomic factors, such as rising interest rates, inflation and changes in foreign currency exchange rates, continue to evolve. As events continue to evolve and additional information becomes available, the Company’s estimates may change materially in future periods.

Concentrations of Credit Risk
 
The Company’s trade receivables are geographically diversified and derived mainly from sales in the United States, Israel, Germany and United Kingdom. Concentration of credit risk with respect to trade receivables is limited by credit limits, ongoing credit evaluation and account monitoring procedures. The Company performs ongoing credit evaluations of its accounts receivables and establishes an allowance for expected losses as necessary.
 
As of March 31, 2024, the Company had a single customer representing 14.8% of the trade receivables balance. For the three months ended March 31, 2024, the same customer accounted for 12.6% of total revenues (see Note 12).
 
As of December 31, 2023, no single customer represented 10% or more of trade receivables. No single customer accounted for more than 10% of total revenue for the three months ended March 31, 2023.

Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2023, as filed with the SEC on February 28,2024. There have been no significant changes to these policies during the three months ended March 31, 2024, except as noted below.

Reclassification

Certain amounts in the corresponding prior periods have been reclassified to conform with the current period presentation. Such reclassifications did not affect net loss, changes in the shareholders’ equity or cash flows.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topics 740): Improvements to Income Tax Disclosures, which expands the disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid. This ASU is effective for the fiscal years beginning after December 15, 2024. Early adoption permitted. The Company does not expect the adoption of this guidance will have a significant impact on its consolidated financial statement and related disclosures and will adopt the guidance effective January 1, 2025.


12

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands the annual and interim disclosure requirements for public company reportable segments, primarily through enhanced information about the significant expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

NOTE 3:-
CASH AND CASH EQUIVALENTS
The following table presents for each reported period, the breakdown of 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

The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. The Company did not have any transfers between fair value measurements levels during the three months ended March 31, 2024.

The following table sets forth the Company’s assets and liabilities that were measured at fair value as of March 31, 2024 and December 31, 2023, by level within the fair value hierarchy:

         
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
)

13

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 4:- FAIR VALUE MEASUREMENTS (Cont.)

The Company classifies its money market funds as Level 1 based on quoted market prices in active markets.

The Company classifies its short-term investments and derivative instruments within Level 2 as they are valued using inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded.

The Company measures the fair value for Warrants by using a quoted price for the Public Warrants, which are classified as Level 1, and a Black-Scholes simulation model for the Private Warrants, which are classified as Level 3, due to the use of unobservable inputs.


The key inputs into the Black-Scholes model for the Private Warrants were as follows:

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 Company’s use of a Black-Scholes model required the use of subjective assumptions:

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.

The following table presents the changes in the fair value of Warrants liability:

   
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
 

14

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 5:-
SHORT-TERM INVESTMENTS

The following is a summary of available-for-sale marketable securities:

   
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  

As of March 31, 2024, the Company had no significant unrealized losses related to marketable securities (which were accumulated in a period of less than 12 months) and determined the unrealized losses are not due to credit related losses, therefore, the Company did not record an allowance for credit losses for its available-for-sale marketable securities.
As of March 31, 2024, all of the Company’s available-for-sale marketable securities were due within one year.

NOTE 6:-
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company enters into foreign currency forward contracts and put and call options with financial institutions to protect itself against the foreign exchange risks, mainly exposure to changes in the exchange rate of the New Israeli Shekel (“NIS”) against the U.S dollar that are associated with forecasted future cash flows for up to twelve months. The Company’s risk management strategy includes the use of derivative financial instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates; these derivative instruments are designated as cash flow hedges. The Company does not enter into derivative transactions for trading or speculative purposes.

As of March 31, 2024 and December 31, 2023, the notional amounts of the Company’s derivative instruments designated as cash flow hedging instruments outstanding in U.S. dollars amounted to $0 and $39,347, respectively.

Gross notional amounts do not quantify risk or represent assets or liabilities of the Company but are used in the calculation of settlements under the contracts.

The Company records all cash flow hedging instruments on the consolidated balance sheets at fair value. The fair value of cash flow hedging instruments recorded as assets were $172 and $948, as of March 31, 2024 and December 31, 2023, respectively, which were recorded in prepaid expenses and other current assets in the consolidated interim balance sheet.

15

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 6:-
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Cont.)

The gains (losses) related to cash flow hedging instruments, recorded in the consolidated interim statements of loss, for the three months ended March 31, 2024 and 2023, were as follows:

   
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
)

Effect of Foreign Currency Contracts on Accumulated Other Comprehensive Income (Loss)

Net unrealized gains (losses) of foreign currency contracts designated as cash flow hedging instruments are recorded in accumulated other comprehensive income (loss).

The changes in unrealized gains (losses) on the Company’s derivative instruments recorded in accumulated other comprehensive income (loss) were as follows:

   
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 )
All net deferred gains (losses) in accumulated other comprehensive income (loss) as of March 31, 2024, are expected to be recognized over the next twelve months as operating expenses in the same financial statement line item in the consolidated interim statements of loss to which the derivative relates.

NOTE 7:-
GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

There was no impairment or additions to goodwill during the three months ended March 31, 2024.

16

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 7:-
GOODWILL AND INTANGIBLE ASSETS, NET (Cont.)

Intangible Assets, Net

Definite-lived intangible assets, net consist of the following:
 
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
 

Amortization expenses for intangible assets were $15,935 and $15,969, for the three months ended March 31, 2024 and 2023, respectively.
The estimated future amortization expense of definite-lived intangible assets as of March 31, 2024, is as follows (unaudited):
Year Ending December 31,
     
2024 (Remainder)
 
$
44,583
 
2025
   
51,407
 
2026
   
13,244
 
2027
   
89
 
Total
 
$
109,323
 

NOTE 8:-
FINANCING ARRANGEMENTS
Long-term loan
Concurrently with the closing of the Connexity Acquisition, on September 1, 2021, the Company entered into a $300,000 senior secured term loan credit agreement (the “Credit Agreement”), among the Company, Taboola Inc., a wholly-owned Company’s subsidiary (the “Borrower”), the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement provides for borrowings in an aggregate principal amount of up to $300,000 (the “Facility”).
The Facility was fully drawn at closing, net of issuance expenses of $11,250, and the proceeds were used by the Company to finance a portion of the Connexity Acquisition.

17

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 8:-
FINANCING ARRANGEMENTS (Cont.)

The Facility is subject to customary borrowing conditions. In accordance with the terms of the Credit Agreement, the Credit Agreement was amended on June 12, 2023, to replace LIBOR with SOFR and accordingly the Facility bears interest at a variable annual rate based on Term SOFR or Base Rate plus a fixed margin. The Facility will mature on the seventh anniversary of the closing date with the remaining principal amount due at maturity. Due to the Company’s voluntary prepayments, the Company has satisfied in full and has no remaining obligations to make quarterly amortization payments under the Facility at a rate of 1.00% per annum. The Facility is mandatorily prepayable with a portion of the net cash proceeds of certain dispositions of assets, a portion of Taboola’s excess cash flow and the proceeds of incurrences of indebtedness not permitted under the Credit Agreement.
The Credit Agreement also contains customary representations, covenants and events of default. Failure to meet the covenants beyond applicable grace periods could result in acceleration of outstanding borrowings and/or termination of the Facility. As of March 31, 2024, the Company was in compliance with the Facility covenants.

As of March 31, 2024, the Company’s outstanding principal amount of debt under the Credit Agreement was $152,735.
The Facility is guaranteed by the Company and all of its wholly-owned material subsidiaries, subject to certain exceptions set forth in the Credit Agreement (collectively, the “Guarantors”). The obligations of the Borrower and the Guarantors are secured by substantially all the assets of the Borrower and the Guarantors including shares of subsidiaries, subject to certain exceptions set forth in the Credit Agreement.
The total interest expenses, including issuance costs amortization, recognized in connection with the long-term loan were $3,941 and $5,473, for the three months ended March 31, 2024 and 2023, respectively. The long-term loan interest and issuance costs amortization, included as interest expenses, are recognized through the remaining term of the Credit agreement using the effective interest rate.

Revolving Credit Agreement

On August 9, 2022, the Company amended its Credit Agreement to provide for a five-year senior secured revolving credit facility (the “Revolving Credit Agreement”), among the Company, Taboola Inc., a wholly-owned Company’s subsidiary (the “Borrower”), and the lenders party thereto, with Citibank N.A., as lead arranger and JPMorgan Chase Bank, N.A., as administrative agent. The Revolving Credit Agreement provides for revolving loans in an aggregate committed principal amount of up to $90,000 (the “Revolving Loans”).
Certain representations, events of default and covenants of the Revolving Credit Agreement are substantially the same as those in the Credit Agreement. However, the Revolving Credit Agreement contains a financial covenant requiring the Company to maintain a Total Net Leverage Ratio (as defined in the Revolving Credit Agreement) as at the last day of each fiscal quarter. Borrowings under the Revolving Credit Agreement are subject to customary conditions and will bear interest at a variable annual rate based on Term SOFR or Base Rate plus a fixed margin. The lenders under the Credit Agreement and the lenders under the Revolving Credit Agreement are secured by the same collateral, including substantially all the assets of the Borrower and the Guarantors (as defined in the Credit Agreement) including shares of subsidiaries, subject to certain exceptions in the governing documents.

18

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 8:-
FINANCING ARRANGEMENTS (Cont.)

The proceeds of any Revolving Loans may be used for the working capital, capital expenditures and other general corporate purposes of Taboola and its subsidiaries and may also be used for Restricted Payments, Investments (including permitted acquisitions) and Restricted Debt Payments (each, as defined in the Credit Agreement) to the extent permitted under the Credit Agreement.
As of March 31, 2024, the Company was in compliance with the financial covenants and had no outstanding borrowings under the Revolving Credit Agreement.
As of March 31, 2024 and December 31, 2023, deferred financing costs associated with entering into the Revolving Credit Agreement in the total amount of $830 and $893, respectively, were included in short-term and long-term prepaid expenses in the Company’s consolidated balance sheets.
The deferred financing costs are amortized on a straight-line basis over the term of the Revolving Credit Agreement. Deferred financing costs amortization amounted to $63 and $62, for the three months ended March 31, 2024 and 2023, respectively.

NOTE 9:-
SHAREHOLDERS’ EQUITY AND SHARE INCENTIVE PLANS
Share Capital
Holders of Ordinary shares have the right to receive notice of, and to participate in, all general meetings of the Company, where each Ordinary share shall have one vote. Each holder has the right to receive dividends, if any, in proportion to their respective Ordinary share holdings. In the event of Taboola’s liquidation, after satisfaction of liabilities to creditors, Company assets will be distributed to the holders of its Ordinary shares in proportion to their shareholdings.
On December 30, 2022, in connection with the Yahoo transaction, the Company’s shareholders approved an amendment and restatement to the Articles to include a Non-voting Ordinary share class with an authorized share capital of 46,000,000. In January 2023 the Company issued 45,198,702 Non-voting Ordinary shares to Yahoo. The Non-voting Ordinary shares are not entitled to vote, except in limited circumstances as provided in the Articles. Other than the voting rights, the rights to receive notice of meetings of shareholders and limited circumstances as described in the Company’s Articles, the Non-voting Ordinary shares will have rights identical to the rights of Ordinary shares as described above (see Note 1b).

Share Buyback Program

The Company’s board of directors authorized a share buyback program of the Company’s outstanding Ordinary shares, which commenced in June 2023 and does not have an expiration date (the “Buyback Program”). In 2023, the Company’s board of directors authorized up to $80,000 of buybacks under the Buyback Program. In February 2024, the Company’s board of directors authorized up to $100,000 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. As permitted by the Buyback Program, share repurchases may be made from time to time, in privately negotiated transactions or in the open market, including through trading plans, at the discretion of the Company’s management and as permitted by securities laws and other legal requirements. The Buyback Program does not obligate the Company to repurchase any specific number of shares and the number of shares repurchased may depend upon market and economic conditions and other factors. The Buyback Program may be discontinued, modified or suspended at any time.

19

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 9:-
SHAREHOLDERS’ EQUITY AND SHARE INCENTIVE PLANS (Cont.)

During the three months ended March 31, 2024, the Company repurchased 6,223,171 Ordinary shares at an average price of $4.44 per share (excluding broker and transaction fees of $156). As of March 31, 2024, the Company had remaining authorization under the Buyback Program to repurchase Ordinary shares up to an aggregate amount of $92,131, subject to satisfying required conditions under the Companies Law and Companies Regulations.

As of March 31, 2024, the Company repurchased an additional 181,585 Ordinary shares, not yet settled, in the amount of $800.

Share Incentive Plans


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.

For the three months ended March 31, 2024 and 2023, the Company utilized the net issuance mechanism in connection with equity-based compensation for certain Office Holders, which resulted in a tax withholding payment by the Company of $709 and $791, respectively, which were recorded as a reduction of additional paid-in capital.


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
 

During the three months ended March 31, 2024, the Company did not grant options.

The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the option holders had all option holders exercised their options on the last date of the period.

As of March 31, 2024, unrecognized share-based compensation cost related to unvested share options was $11,227, which is expected to be recognized over a weighted-average period of 1.3 years.

20

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
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
 

(*) A portion of the shares that vested were netted out to satisfy the tax obligations of the recipients. During the three months ended March 31, 2024, a total of 152,349 RSUs were canceled to satisfy tax obligations, resulting in net issuance of 152,347 shares.
The total release date fair value of RSUs was $9,722, during the three months ended March 31, 2024.
As of March 31, 2024, unrecognized share-based compensation cost related to unvested RSUs was $146,030, which is expected to be recognized over a weighted-average period of 2.9 years.


The total share-based compensation expense related to all of the Companys share-based awards recognized for the three months ended March 31, 2024 and 2023, was comprised as follows:


 
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

The Company’s effective tax rate is highly dependent upon the geographic distribution of its worldwide earnings or losses and tax regulations. The Company’s effective tax rates were (19.0%) and 2.0% for the three months ended March 31, 2024 and 2023, respectively. The negative effective tax rate for the three months ended March 31, 2024, results primarily from valuation allowance as well as, tax expenses in foreign jurisdictions, partially offset by tax benefits associated with acquired intangible assets mainly in the US.

21

TABOOLA.COM LTD.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 11:-
COMMITMENTS AND CONTINGENCIES

Commercial Commitments

In the ordinary course of the business, the Company enters into agreements with certain digital properties, under which, in some cases it agrees to pay them a guaranteed amount, generally per thousand page views on a monthly basis. These agreements could cause a gross loss on digital property accounts in which the guarantee is higher than the actual revenue generated. These contracts generally range in duration from 2 to 5 years, though some can be shorter or longer.

Non-cancelable Purchase Obligations

In the normal course of business, the Company enters into non-cancelable purchase commitments with various parties to purchase primarily software and IT related-based services. As of March 31, 2024, the Company had outstanding non-cancelable purchase obligations in the amount of $30,590.

Legal Proceedings

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 positio