Business & finance · also called ex-TAC, revenue excluding traffic acquisition costs, TAC
Revenue ex-TAC
Revenue ex-TAC is revenue minus traffic acquisition costs (TAC), the amounts paid to publishers and partners for the ad space or traffic, showing what an ad company keeps.
TAC stands for traffic acquisition costs: payments a company makes to acquire the traffic or inventory on which it shows ads. Google, for example, reports TAC paid to network partners (publishers in AdSense and AdMob) and to distribution partners (such as browser and device makers who make Google Search the default).
Revenue ex-TAC subtracts those costs from gross revenue to show the money the company actually earns for its own services. It is especially useful for companies that report revenue on a gross basis, making them easier to compare with companies reporting net. Criteo historically headlined "Revenue ex-TAC"; recommendation businesses such as Taboola report "ex-TAC gross profit".
Because ex-TAC is usually a non-GAAP measure, definitions vary by company, and some firms have switched to related metrics such as Contribution ex-TAC. Read the reconciliation in the earnings release to see exactly what is subtracted. A falling TAC rate can mean better economics or a company squeezing its publishers.
Think of it like this
Revenue ex-TAC is like a market stall working out its takings after paying the farmers for the produce: the part left is what the stall really earned.
An example
An ad platform reports US$1,000M revenue and US$550M TAC. Revenue ex-TAC = US$450M, and its TAC rate is 55% of revenue.
Related terms
Contribution ex-TAC
Contribution ex-TAC is a non-GAAP metric, headlined notably by Criteo, that measures revenue after subtracting traffic acquisition costs and other direct costs of delivering the service.
Gross vs net revenue
Gross vs net revenue is the accounting choice between reporting everything customers pay (gross) or only what a company keeps after paying partners (net), which complicates comparisons.
Revenue share
A revenue share is an agreement in which partners split the money earned by an agreed percentage, such as an ad network paying a publisher 70% of ad revenue.
Adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxes, depreciation and amortisation, further adjusted by the company to exclude items such as stock-based compensation and one-time costs; it is a non-GAAP measure.
Earnings report
An earnings report is the periodic announcement, usually quarterly, in which a public company discloses its revenue, profit and other key results, often with an investor call and updated guidance.