Taboola.com Ltd. (NASDAQ:TBLA) Q1 2024 Earnings Call Transcript

Taboola.com Ltd. (NASDAQ:TBLA) Q1 2024 Earnings Call Transcript May 8, 2024

Taboola.com Ltd. beats earnings expectations. Reported EPS is $-0.08, expectations were $-0.09. Taboola.com Ltd. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and thank you for standing by. Welcome to the Taboola First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Jessica Kourakos. Please go ahead.

Jessica Kourakos: Thank you, and good morning, everyone, and welcome to Taboola’s first quarter fiscal 2024 earnings conference call. I’m here with Adam Singolda, Taboola’s Founder and CEO; and Steve Walker, Taboola’s CFO. The company issued earnings materials today before the market and they are available in the Investors section of Taboola’s website. Now, I’ll quickly cover the Safe Harbor, certain statements today, including our expectations for future periods, are forward-looking statements. They are not facts and are subject to material risks and uncertainties described in our SEC filings. These statements are based on currently available information and we undertake no duty to update them except as required by law. Today’s discussion is also subject to the forward-looking statement limitations in the earnings press release.

Future events could differ materially and adversely from those anticipated. During this call, we will use terms defined in the earnings release and refer to non-GAAP financial measures. For definitions and reconciliations to GAAP, please refer to the non-GAAP tables in the earnings release posted on our website. With that, I’ll turn the call over to Adam.

Adam Singolda: Thanks, Jessica. Good morning, everyone, and thank you all for joining us. We had a strong start with Q1 results above the high end of our guidance range across all metrics. ex-TAC of $139 million grew 20% versus last year. Adjusted EBITDA of $23 million grew more than 100%. Free cash flow was nearly $27 million in Q1 and also more than doubled last year. All metrics beat the high end of our guidance range and are on track to meet our full-year 2024 guidance. I’m also encouraged to see that our growth rates are accelerating compared to last year. Looking at our use of cash, over 100% of free cash flow in Q1 was spent on share buybacks, demonstrating our strong commitment to shareholder returns and confidence in our long-term strategy and ability to execute.

With a strong Q1 and Q2 guidance showing double-digit growth versus the same time last year, we are reiterating our 2024 guidance which projects accelerated growth on every metric and making 2024 a record year for us. Revenue growing 33% to nearly $2 billion, ex-TAC growing 25% to almost $670 million, adjusted EBITDA of over $200 million growing approximately 2x 2023, and over $100 million of free cash flow which is also 2x 2023 levels. When looking at our core business, our main focus is first, making our advertisers successful and in return growing our yield year-over-year. And the second and big focus for us this year is ramping Yahoo. Starting with our initiatives driving advertiser success. I can tell you it just came back from an off-site where a lot of what we talked about is our goal to expand our initiatives to make Taboola company recognized for quality across all fronts, delivering premium experiences to users and publishers while attracting tier-one performance advertisers.

As I wrote in my shareholder letter, I’m happy to report that we just crossed the 20% mark of our revenue being driven by top brands and agencies, and it’s growing fast. We think there’s a big upside here in many ways more than I’ve imagined in the past. You will hear me speak a lot about it this year and onwards as I think this can be material to our partners as well as for us driving yields even faster. Let me share a bit more about this. We have recently launched Taboola Select as the way for premium performance advertisers to reach our top 15% of publishers, which includes Yahoo, Apple, NBC, Disney, and more, with a premium standalone ad experience. Big brands are willing to pay a premium for it while focused exclusively on performance.

This is not a branding play. We’re not looking for top-of-the-funnel budgets here, but to enable big performance budgets to go beyond social and search to the open web and Taboola’s new offering. Between Taboola Select, our Yahoo partnership, our Apple partnership, and the success of tier-one advertisers such as Hulu, Citi, Verizon, we hope to differentiate ourselves in the marketplace and help drive yields even faster. Our biggest R&D in product investment is making advertisers successful. I’m happy to share that Maximize Conversions adoption continues to grow and is now almost 60% of our revenue. We’re focused on improving our retention rates and increasing budgets also known as NDR. We’re seeing encouraging results from advertisers migrating to Max Conversions in AI, including double-digit growth in NDR for advertisers who have migrated to Max Conversions versus ones who have not.

On improving retention rates, our main work here is to reduce cold start by training our AI models and taking advantage of the massive amount of first-party data and clickstream to look for similar past advertisers and bring that know-how front and center. Switching gears to our second top priority this year, ramping Yahoo. We’re on track to complete the migration by mid-year as planned, and we continue to make progress migrating Yahoo’s tier-one omnichannel advertisers to Taboola, and we’ve achieved our goal in Q1 to exceed $100 million in revenue on Yahoo supply. While there is still a lot of work to be done, we couldn’t be more pleased with the partnership with Yahoo, the work between our leaderships, and encouraging performance advertisers are seen when using Taboola’s technology.

One recent success story was with one of the world’s largest personal finance software companies, where the ad performance was so strong that they increased their budget more than 2x over the course of the campaign and are now one of the largest advertisers on the Taboola network. If there was ever a proof that AI matters, this is a good example of it. We spoke last quarter about our relationship with Apple, and I’m happy to share that it has now expanded to new markets. Previously, Apple had selected us to monetize Apple News and Apple stocks as an authorized reseller starting in Australia and Canada, and just recently we expanded our role to serve as an authorized reseller for Apple News and Apple stocks in the U.S. and U.K. markets. I could not be more proud of the Taboola team supporting our efforts here and we have a lot to learn as we onboard this amazing new partnership.

And I remain confident that Apple will become one of our most important partners. Turning now to our growth engines. Taboola News, e-commerce, and Bidder. Overall, product innovation and commercial wins continue to drive our momentum here. Our key investment for Taboola News is getting more vertical videos real-time content onto it, similar to what you’ve seen on Instagram or Snap, and we’re seeing great user engagement. In addition, we’re introducing various utilities users may like to engage with, such as weather, gaming, and more. And our ambition here is over the next many, many years, to have people spend over 20 minutes a day with us, or as my product team likes to refer to it, we have a chance to become the main dish. On the e-commerce front, we had a great quarter, growing solid double digit and exceeding our expectations again.

We launched Associated Press’s new e-commerce site powered by Taboola and it’s beautiful. You should check it out. It’s called AP Buyline. It gives people a chance to check product reviews and make decisions that matter to them leveraging the trust of AP and our relationships with retailers. We also recently integrated with Amazon’s DSP to allow Amazon sellers to extend their budgets into Taboola. As an example, let’s say you have a store on Amazon and you want to reach buyers in the open web. You can now extend your reach using Amazon’s DSP on the Taboola open web network of publishers. Our Header Bidder is still small, but the potential here over time is to integrate across our thousands of publishers, including Yahoo, into their display stack, which is an opportunity that can be quite meaningful.

We are extremely excited by the prospect of our Taboola growth engines and their ability to create synergies with our core business over the long term. In summary, we are coming in strong into 2024, extending our high end of guidance across all metrics, expecting double-digit growth in Q2 over last year while reiterating our 2024 guidance, making this year a record year for us. Our revenue growth is accelerating while having a strong EBITDA of over $200 million and over $100 million of free cash flow. We’re continuing our $100 million of buyback authorization and we’re laser-focused this year on advertiser success, which should result in yield growth and ramping up Yahoo. With that, let me pass the call to Steve to review our financials and outlook in more detail.

Stephen Walker: Thanks, Adam, and good morning, everyone. As Adam mentioned, we had a strong start to 2024. Our Q1 revenues were approximately $414 million and grew 26% year-over-year, accelerating from Q4 levels. ex-TAC gross profit was $139 million, which represented growth of 20% year-over-year. ex-TAC’s growth was driven by double-digit growth in advertising spend as we onboarded Yahoo advertisers and saw the benefit of having Yahoo supply available through our platform as well as by accelerating growth in our e-commerce business. In addition, we saw double-digit growth in our premium brand and advertising demand spend, which included strong organic growth as well as the transitioning of advertising spend from Yahoo’s platform to Taboola.

One note on our financials that is new this quarter, on each of our financial statements in our 10-Q, you will note related party callouts. For instance, on our income statement, you will see that we call out related party revenue and traffic acquisition costs. As you might guess, those related party numbers are for Yahoo. The traffic acquisition cost disclosure is relatively simple. This is the revenue share we pay to Yahoo and it flows through to payables on the balance sheet and change of payables in the cash flow statement. The related party revenue is not quite as simple to understand. There are three types of advertisers spending on Yahoo supply. First, there are what we have historically called omnichannel advertisers. These are advertisers that buy multiple advertising formats through the Yahoo DSP, display, video, and native.

They are still billed and collected by Yahoo, but all of the native revenue is spent on the Taboola platform, so they are recognized by Taboola as revenue and appear as related party revenue. The second type of advertiser is an advertiser that historically was only spending on native through Yahoo. No display, video, or other formats, and has now been transitioned to Taboola. These advertisers do not appear in related party revenue because they are now billed and collected directly by Taboola, so they are not the customers of a related party. The last type of advertiser is an advertiser that had not historically spent through the Yahoo platform but is now spending on Yahoo supply through the Taboola platform. These are historical Taboola customers or new customers that we have brought on.

They also do not appear in related party revenue since they are billed and collected by Taboola. I will note that there is a small amount of other revenue in the related party disclosure that is either from other related parties, companies related to Yahoo, or other advertisers that spend through Yahoo on Taboola but not through the DSP. However, these are a very small part of the related party revenue. I will also note that the related party revenue also flows through to the balance sheet in the receivables line and into the cash flow statement in the change of receivables. I hope that helps to explain what is in the related party disclosures. Now let me get back to our regularly scheduled programming. In Q1, our net loss was $26.2 million and our non-GAAP net income was positive $3.8 million.

Adjusted EBITDA was $23.5 million, representing a 17% adjusted EBITDA margin. Year-over-year adjusted EBITDA was down, which was due primarily to higher expenses related to the onboarding of Yahoo supply that were not in the year ago period and which preceded the full benefit of Yahoo advertiser transitions. Free cash flow benefited from the stronger than forecasted adjusted EBITDA, partially offset by the expenses related to the onboarding of Yahoo. We are very happy that our teams drove accelerating revenue and ex-TAC performance in Q1. Through the remainder of the year, we expect improving cost efficiency, especially as the revenue from Yahoo advertiser transitions catch up with the associated costs which will drive margin expansion. Operating expenses were $127 million in Q1, up $9 million year-over-year as a result of the costs incurred to onboard the significant inventory we are gaining with the addition of Yahoo.

We continue to focus on cost discipline. Despite the hiring required to support onboarding Yahoo, our headcount is still roughly flat relative to its peak in July of 2022. With this ongoing expense discipline and our strong growth expectations, we continue to expect that in 2024 we will approach our long-term adjusted EBITDA margin target of 30%. GAAP net loss for Q1 of $26.2 million included amortization of intangibles of $15.9 million, share-based compensation expenses of $13.8 million, and hold-back compensation expenses related to the Connexity acquisition of $2.6 million, all of which were excluded from non-GAAP net income. Our non-GAAP net income of $3.8 million was above the high end of our guidance range. In terms of cash generation, we had approximately $32.4 million in operating cash flow in Q1 and free cash flow of $26.8 million.

This includes net publisher prepayments, which were a source of cash of $7.3 million, and interest payments on our long-term debt, which were a use of cash of $3.6 million. As I have highlighted in previous quarters, I would note that net publisher prepayments were a source of cash this quarter due to the fact that new prepayments were lower than the amortization of historical prepayments. Let’s turn to the balance sheet. You can see that our net cash balance remains healthy. Our net cash position of $35.5 million remained positive at the end of Q1, even after share repurchases. Cash and cash equivalents plus our short-term investments were $181 million at the end of Q1. Cash and cash equivalents and short-term investments remained above our long-term loan balance of $145.5 million.

Speaking of our share repurchases, we repurchased $28 million of shares in Q1. We still have $92 million of authorizations under our previously announced $100 million expansion of our repurchase plan. When we initiated our buyback program, we stated that our intent was to at least offset any dilution and maintain our issued and outstanding shares at the end of Q1 2023 levels. You can see that we have exceeded that goal as our issued and outstanding shares at the end of Q1 2024 were lower than the end of Q1 2023 by almost 5 million shares. In terms of future use of cash, we continue to be able to fund our organic growth investments from our operating cash flow. As we said last quarter, we believe that at current valuations, the best use of our free cash flow is to buy back shares.

To the extent that we have additional cash to deploy, we will consider paying down our long-term debt. As always, both share repurchases and early retirement of debt are contingent upon the availability of sufficient working capital. I’m also happy to report that the process in Israel for share repurchases has been updated for Israeli companies like Taboola with securities listed outside Israel. Under the new process, we must post a notice on our website that we intend to buy back shares and if no creditors object, within 30 days, we can begin the buybacks. The process still requires our Board to conclude that we meet a financial strength test as specified in the rules. So going forward, you may see us post notices of our intention to buy back shares to our investor page.

Now let me shift to our forward-looking guidance. Two important expectations are included in this guidance. First, while there is significant work left to be done, we expect the Yahoo advertiser migration to be complete by the middle of this year and we will continue ramping Yahoo into 2025. Second, we expect yield growth to turn positive in 2024 as the volume of our contextual data increases with the addition of Yahoo and other supply to our network, and our investments in performance advertising bear fruit. As I mentioned, we are very happy with the strong start to 2024 and we are reiterating our guidance for 2024. This guidance implies strong top-line growth and improving profitability. We expect revenue of $1.89 billion to $1.94 billion which represents growth of 33% at the midpoint.

We expect gross profit of $535 million to $555 million, and ex-TAC gross profit of $656 million to $679 million. That ex-TAC is up roughly 25% year-over-year at the midpoint. We are reiterating our 2024 adjusted EBITDA guidance of over $200 million and free cash flow expectation of over $100 million. I will note that the adjusted EBITDA and free cash flow guidance represents roughly a doubling of both metrics versus 2023. Finally, we are expecting non-GAAP net income of $84 million to $104 million in 2024. We are also introducing Q2 2024 guidance. This quarter, we expect revenues of $410 million to $440 million, gross profit of $110 million to $120 million, ex-TAC gross profit of $140 million to $150 million, adjusted EBITDA of $20 million to $30 million, and non-GAAP net income of zero to positive $10 million.

Let me finish by saying that we are very happy with our first quarter performance. Our growth is accelerating in 2024 and I’m looking forward to the step change we are expecting in our financials in 2024. The growth investments we have made in 2023, the additional scale that Yahoo is bringing, and the additional supply we will be onboarding as part of a new partnership with Apple is accelerating our journey towards becoming a must-buy for advertisers looking to reach consumers in the open web. And with that, let me pass it back to Adam for some closing remarks.

Adam Singolda: Thanks, Steve. In summary, it’s great to see our business momentum and growth rates accelerating. It’s an exciting time for us here at Taboola seeing our investments panning out. Starting with our financials. We started 2024 strong with a beat above our high end of guidance across all metrics. Our growth rates are accelerating, which is good to see. In Q2, we’re guiding for double-digit growth versus Q2 of last year, and 2024 is a record year for us overall with nearly $2 billion in revenue, north of $200 million of EBITDA, and over $100 million of free cash flow. We’re executing on our buyback program, which demonstrates our confidence in our ability to execute and create shareholder value. When looking at our business, our top two priorities this year are making advertisers successful and ramping Yahoo.

On advertiser success, Max Conversions is a hit with advertisers. After six months, it’s almost 60% adoption, and advertisers who have adopted it are generating double-digit higher NDR. We’re also focusing on attracting premium advertisers with Taboola Select accessing our top 15% of our network, including Yahoo, Disney, Apple, NBC, and others. On Yahoo, we’re on track to complete the migration by midyear as planned and we crossed the $100 million in Q1 as we thought. Beyond that, we’re seeing great momentum overall. Our relationship with Apple is now expanding to the U.S. and U.K. beyond Canada and Australia. Our growth engines, e-commerce, Taboola News, and Header Bidding are showing strong momentum and becoming more and more synergetic to our core business, making our publisher and advertiser business stronger.

I’m excited to be exactly where we are. We know what we need to do. We have an incredible team all around the world working hard to build the very first must-buy advertising company for the open web. Thank you all for being part of our journey. And with that, let’s open it up for questions. Operator?

Operator: [Operator Instructions] Our first question comes from the line of Laura Martin of Needham. Your line is now open.

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Q&A Session

Laura Martin: Good morning. Boy, there’s a lot going on and great numbers, you guys. Congratulations.

Adam Singolda: Thank you.

Stephen Walker: Thank you, Laura.

Laura Martin: So my first question is on these priorities. So I know that you’re trying to onboard these omnichannel advertisers at Yahoo, but there’s a lot that you’re talking about and in the shareholder letter about performance — high-quality performance advertisers. So is this just an overall part of a strategy to just increase the total number of advertisers? I’m surprised that the Yahoo priority isn’t number one and that you’ve elevated this performance — high-quality performance advertisers to be a higher priority than Yahoo. Can you speak to that, please?

Adam Singolda: Yes, sure. Hi Laura, and looking forward to seeing you very soon at the event. So overall with Yahoo, one thing that we’re seeing, and I mentioned in the letter also an interesting case study of a performance advertiser, one of the largest personal finance advertiser that was able to migrate and double the spend once using that Taboola technology. In general, we’re seeing something that is fairly new to us, which is where premium advertisers that are great names, Hulu and Verizon, and Samsung and names we’ve mentioned before are coming on board. When they’re seeing good performance, their ability to spend a lot more is quite exciting. And two, they’re willing to pay a premium for doing so, which is also why we launched Taboola Select, which is a way to essentially create, like, this index of the top of our company-wide network between Yahoo and Apple and Disney and NBC and BBC and others, to allow advertisers to buy a specific kind of like, segregated ad unit, a standalone ad unit and pay a premium for it.

So what we think is that there’s an opportunity for us to grow our portion of kind of top-tier performance brands advertiser. And again, this is not a top-of-the-funnel kind of attention play. This is by far a performance focus using Max Conversions, Pixel on Page, all the things we like. However, coming from agencies and brands, and a lot of it, we’ve learned from the partnership with Yahoo. So that’s why we’re speaking a lot about it. That’s why we’ve launched Taboola Select. And that’s a lot of what excites me because I think as Taboola grows from $2 billion to $3 billion to $4 billion in revenue, there’s an opportunity to become much more kind of short of wallet for brands and agencies, but performance-focused. I think it also is an opportunity to elevate our company overall quality.

So I like where it’s going and that’s why we’re speaking about it. And to your question about why, I think performance advertiser is actually the number one priority and then by far, actually maybe even number two to three and four is because I see such an opportunity to accelerate yields from where we are over the next many, many years. And if you think about that, if you can double the company’s yields, you double the company’s revenue. And I think we can double and triple Taboola by just growing yield. And that is by far the biggest thing we can do for our company and shareholders. So we have the biggest focus on that from the performance advertising tech team, our sales team, even our work with Yahoo. So I do think that for Taboola, over the next three or five years, yield expansion is by far the biggest thing we can do.

And of course, since 2024, Yahoo is the biggest thing we have going on.

Laura Martin: Okay, very helpful, Adam. And then secondly, I was intrigued in a shareholder letter, you set a goal of 30 minutes of engagement a day. Could you talk about where your engagement is today and what the core drivers of engagement growth are? How do you bridge the gap between what your engagement level is today in terms of minutes and, like, what is it you’re going to do? What are the tools to get to that 30 minutes of engagement a day which is your goal?

Adam Singolda: Yes, the biggest driver for that is Taboola News, as far as we see today. So what happens to Taboola News, more and more OEMs are integrating us to be in what they call lock screen or wake screen, which is even before the consumer kind of is interacting with the device itself. I was joking earlier saying that my team is referring to that as the main dish because Taboola becomes the first thing they see before they even go to Facebook and Google or other apps. We become the first thing consumers do. And the average consumer is looking at their lock screen over 100 times a day. Now, what we see now is that over the last quarter, and I mentioned that in my letter, we’re introducing more and more vertical videos. Think of it like reels or like what Snap is doing, and that is expanding engagement with consumers, and we’re seeing the acceleration in time and engagement.

And because of that, our product roadmap this year is more and more getting oriented around one, video, specifically full-screen vertical videos, and two, utilities. As an example, we’re now introducing consumers to weather. We’re offering them games, we’re offering them to see, if you’re Virgo, what does that mean? And so we’re giving you more things that you might like. We’re using AI to personalize different utilities you might like to engage with. And thanks to that, we’re getting more time with consumers. So we didn’t share Taboola News, current kind of time, but I can tell you it’s in the single digit as of now, but growing. We have some cases when it’s more than ten minutes. And I believe that over the next many, many years, my inspiration is to get this to be kind of consistently double-digit or 20 minutes a day.

And my philosophy is that if you get people’s time over time, you build a great business around it. So if you build something that consumers want and they use it again and again and again, the revenue follows. And that’s why I really like Taboola News, because, one, I think it helps us, Taboola become even more important to consumers. But again, it’s mega synergetic to our core because then you click to go to a publisher site, it’s Taboola’s publishers and it allows us to become a growing source of traffic to publishers. And especially with GenAI and Bard, the Gemini, all those things, I think it matters to publishers a lot.

Laura Martin: Very helpful. Thank you, Adam, very much.

Adam Singolda: Sure.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Matt Condon of Citizens JMP. Your line is now open.

Matt Condon: Thank you for taking my questions. My first one is just after a strong beat in 1Q relative to your guidance, and you left the full-year guidance unchanged. Is there something that’s happening in the macro or otherwise preventing you from raising your guidance? And then my second question is, just as you’re expanding your coverage of Apple News and Apple Stock to the U.S. and U.K., can you just help contextualize the opportunity and how you expect this to impact financials in 2024? Thank you so much.

Stephen Walker: Yes, so good question on the guidance. So in terms of our full-year guidance, we’re obviously happy that Q1 we grew 26% year-over-year on a revenue basis and 20% year-over-year on an ex-TAC basis. So it was a very strong quarter for us. And we expect improved adjusted EBITDA margins as we move to the back half so we’re still expecting our full-year adjusted EBITDA margins to be 30%, or at least to approach 30%. So I think we’re pretty happy with where we are. 2024, in fact, is going to be a record year for us. It will be our highest ex-TAC and highest adjusted EBITDA on record. So overall, we think the guidance is really strong. We feel good about where we’re at, but it’s still very early. So, while we feel very good about where we’re at, there’s a lot of work to do and we don’t want to adjust the rest of the year yet, being as early as it is.

So we’re very happy with where we stand. We’re just not ready to change the full year at this point. In terms of Apple opportunity.

Adam Singolda: Yes, we don’t like to speak about any specific accounts for reasons you can imagine. But what I can tell you is, one, it’s very exciting for us to work with a company like Apple now in four markets. Obviously, U.K. and the U.S. are great markets to expand our relationship with. We do think that this drives two things for us as a company. One, following also Laura’s question, this is a very good anchor kind of a step forward towards Taboola giving premium advertisers yet another way to reach consumers. So there’s no more premium than Apple. And that’s really awesome for us to have that relationship and offer that to brand-quality advertisers that are looking for performance. So that’s one. It sits perfectly well with our kind of elevating and getting even more access to top brands all around the world. And two, we do believe that Apple has a chance of becoming one of our largest partners. So I’m comfortable saying that without getting into specifics.

Matt Condon: Thank you so much. That’s helpful.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Zach Cummins of B. Riley Securities. Your line is now open.

Zach Cummins: Hi. Good morning. Thanks for taking my questions and congrats on the strong Q1 results. I really just had to follow-up question around kind of the assumptions that are baked into your Q2 guidance here and how we should think about the progression going into the second half of the year just based on the unchanged outlook? And then part two is just with the expanded Apple relationship, can you talk about the kind of additional work on the development side that’s going to be required as you continue to onboard and ramp that relationship in second half of this year?

Stephen Walker: Yes. So what’s the question about the Q2 guidance though, specifically?

Zach Cummins: Just key assumptions that are baked into that versus, I mean, the strong performance out the gate here and kind of how we should think about the progression into the second half of the year to hit that full-year guidance range that’s reaffirmed?

Stephen Walker: Got it. So I think in terms of the Q2 guidance and frankly the full year guidance, the most important assumptions that we’re making there are one, that the Yahoo is fully ramped by mid-year so there’s still a lot of work to do there, but we’re making good progress. I think Adam alluded to earlier how we are seeing some really good results from some of the advertisers we brought across, but we got to finish that work and get the rest of the advertisers across. So, that’s assumption one is that that happens. We’re also assuming that in the back half of the year, especially, we start to see some yield gains as we basically from those new advertisers that we’re bringing across and from our own work on performance advertising, that we start to see benefit from that and we start to gain some yield assumptions or some yield gains as a result.

And then I think the other kind of basic assumption that we’ve made, which I think we talked about last quarter, is that operating expenses will kind of be running at roughly Q4 levels for the year. So from an EBITDA basis, that’s the basic assumption. But I think the most important two assumptions were the first two, Yahoo ramping by midyear and we start to see some yield gains as we move into the back half. In terms of dev work required to make Apple successful, I don’t think there’s anything — it’s a publisher partner of ours, so there’s nothing that is dramatically special or unique or different about it. I think all the work that we’re doing on making performance advertisers successful and the performance advertising work that applies to Apple just like it applies to any of our other publishers.

So I don’t think there’s anything particularly unique. Obviously, they’re a big partner. They have their own requirements, but that’s true of any of our publishers. So nothing really unique there.

Zach Cummins: Great. Thanks for taking my questions.

Stephen Walker: Thanks, Zach.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of James Kopelman of TD Cowen. Your line is now open.