If youve ever scrolled to the end of an online article and noticed several pieces of recommended content, youve probably seen some of Taboolas handiwork. Taboola is a technology company that reaches 516 million daily active users, aiming for engaging content and advertising experiences. Their mission is to “drive business by reaching people genuinely, effectively, and at the right moment.”
This native discovery platform is number one in the globe. Taboola partners with more than 9,000 publishers and 13,000 advertisers and is looking to further expand market reach in 2021. The Taboola IPO, which is happening through a merger with a special purpose acquisition company (SPAC), will surely help with this.
The terms of the Taboola SPAC merger include a $285 million private investment in public equity (PIPE) from investors like Fidelity and Baron Capital Group. Taboola fundraising for the SPAC is expected to hit $545 million, resulting in a $2.6 billion valuation once the merger is complete.
TL;DR
- Taboola is an Israeli-founded tech company that powers content recommendations to increase user engagement on digital platforms.
- CEO Adam Singolda founded the company in 2007 and began official partnerships with publishers in 2012.
- Taboola partners with well-known publishers such as MSN, NBC News, and Business Insider. They use machine learning to offer recommendations tailored to individual users.
- Taboola has chosen ION Acquisition Corp. to bring them to the public market. The merger will likely close during the second quarter of 2021.
- ION Acquisition formed and went public in 2020 with the intention of merging with an Israeli tech company. Its current ticker symbol is IACA. The newly merged company will trade publicly on the NYSE as ticker symbol TBLA.
- The IPO is expected to raise $545 million, including $285 million in a committed PIPE investment. Post-IPO, Taboola expects a $2.6 billion valuation.
Taboola’s company history: A quick rundown
Taboolas goal is connecting companies to potential customers through content marketing, increasing publishers reach via timely, appealing advertising.
The idea for Taboola came about as founder Adam Singolda was aimlessly flipping through channels, unsure of what to watch next. His boredom flicked a light on. The young engineer began designing software that could analyze a persons interests and behaviors in order to discover the right next content.
Singolda started the company in 2007 and raised $1.5 million in the initial funding round. The companys first partnerships with publishers and advertisers formed in 2012. Taboola operates exclusive partnerships with media companies such as MSN, Bloomberg, The Weather Channel, USA Today, NBC, and CBS Newsall of whom are highly reputable market leaders.
Some of the key segments within Taboolas business include:
- Taboola Newsroom: Helps writers and editors analyze data around pageviews, traffic engagement, and content performance to make informed decisions towards increasing overall readership.
- Taboola Video: Assists advertisers in developing high-quality video. Taboolas research has found its own videos to be 2.4 times more favorable to audiences than disruptive ads.
- Taboola Creative Shop: Works to help improve marketing campaigns and facilitates adjustments to creative content based on the particular platform being targeted (i.e. YouTube or Facebook).
As of December 2020, the company had a total of 500 staff members in research and development. They also boasted 516 million daily active users and 1 petabyte of daily data processed (for reference, there are 1 million gigabytes in a petabyte). They work with more than 9,000 publishing partners and more than 13,000 active advertisers.
Taboola fundraising through the years
Taboola has raised a total of $160 million over seven funding rounds. Here are the basic details of their efforts:
- Series A: In 2007, Evergreen Venture Partners led a $1.5 million Series A round.
- Series B: A year later, in 2008, Evergreen invested in Taboola again. This time, they injected another $4.5 million into the company.
- Series B Part 2: The company conducted a second part to their Series B funding round in 2011. Crescent Point Energy led this round for $9 million in new capital.
- Series C: Marker led this round, bringing in an additional $10 million in 2012 for Taboola.
- Series D: Pitango Venture Capital led a Series D funding round which brought in $15 million.
- Series E: In February 2015, Fidelity Management and Research Company took the lead on a Series E. The total of that funding round, with 13 total investors, brought in another $117 million.
- Venture Round: Later that year, in June, Daily Mail led Taboola’s venture capital funding round, which raised a total of $3 million.
Path to the Taboola IPO
In late 2020, Taboola was in talks with their key competitor Outbrain about a potential merger of the two companies. The $850 million deal to combine with Outbrainwhich would have given the combined company a value of over $2 billionfell through. This was partly due to the pandemics impact on the overall market.
CEO Adam Singolda told TechCrunch, “I always wanted to go public.”
Although Songolda said this desire wasnt the direct reason for calling off the merger, preparing for a Taboola IPO wasnt possible during the merger plans. Once the Outbrain merger fell through, ION CEO Gilad Shany connected with Taboola for a reverse merger with the blank-check company.
Taboola closed out strong at the end of 2020. By January 2021, they projected $1.2 billion in revenueincluding $375M ex-TAC revenue (aka revenue after paying publishers) and more than $100 million adjusted EBITDA.
Related: What is EBITDA?
Taboola is raising a total of $545 million in the deal. Included in the SPAC merger agreement is a $285 million PIPE investment from names like Fidelity Management & Research Company, Baron Capital Group, Hedosophia funds, and Federated Hermes Kaufmann funds.
ION CEO Shany commented on the good fortune of the match between the two companies:
We were looking to merge with a global technology leader with Israeli DNA and we found that in Taboola.
When is the Taboola IPO date?
Taboola has chosen the route of merging with a SPAC, ION Acquisition Corp, which went public in an effort to specifically acquire an Israeli tech company. The official Taboola IPO date (which is when the SPAC merger will officially close) has not yet been set, though the new ticker is expected to debut sometime during Q2 2021. Once the deal closes, Taboola will list on the New York Stock Exchange as “TBLA”.
In 2021, Singolda and the Taboola executive team plan to spend at least $100 million on R&D in artificial intelligence, eCommerce, TV, and device manufacturing initiatives.
The leaders of both Taboola and ION have spoken of so-called “walled gardens,” referring to the major players in the Internetespecially Facebook and Google. They want Taboola to promote the “open web,” or the internet beyond those key controlling tech companies.
Related: What is a SPAC?
Risks and opportunities investors should know about
As with any newly public company, there are risks and potential opportunities to consider.
Taboola’s experienced executive team and growth prospects put them in a potentially solid position in the public market.
They’re the top discovery platform in the world and maintain a massive reach. Taboola says they hold fifty times more data than all of the books in the New York City Public Library. They’re a giant in the digital advertising space, with 1.4 billion unique monthly users. Taboola currently reaches 44.5% of the entire global internet population, but that doesn’t mean they’re a sure thing. They will need to watch out for their rival, Outbrain, as they move forward in the public market.
Singolda has great expectations for his soon-to-be-public company, with a 10-year vision that projects Taboola will power recommendations for all typs of content and entertainment on every device.
“They will live on our connected TVs at home, recommending shows people love, as well as in peoples cars surfacing content they love, podcasts, and text-to-audio from the open web,” Singolda says.
Shany is also optimistic about the merger, saying that being a public company will benefit Taboola as the status may help publishers and advertisers view Taboola positively. He pointed out that long-term partnerships with publishers, huge global reach, and proven AI technology will all help Taboola in their work.
Of course, there is the potential risk of ad blockers infringing on Taboolas business. An estimated 41% of Americans currently use ad blockers on their devices, and that number is expected to grow. However, Taboola diversifies by using code on the client side as well as the server side, and ad blockers tend to work best on ads from client-side code.
Taboola faces another challenge: Many internet users dislike the constant barrage of advertisements based on their likes and interests. Some view Taboolas ads as clickbaitbut Singolda says that half of ad clicks keep users within the same website.
As data privacy continues to develop (with Google Chrome blocking third-party cookies in 2021 and the Apple iOS 14 update paving the way for in-app data use approval), Taboola may see their business shift. Investors should keep this in mind when analyzing the stock’s long-term efficacy.
Bottom line
Digitization is ingrained. As a successful native online advertising company, the Taboola team knows this. The Taboola SPAC has its own risks, like development in data privacy, that investors ought to weigh before plunging in. Regardless, CEO Adam Singolda is determined to make Taboola a champion for the open web, pursuing a portion of that $64 billion market.
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