Taboola.com Q2 Earnings Call Highlights

Key Points

• Taboola exceeded Q2 profitability guidance: Revenue rose 2% year over year to $476.8 million, while ex-TAC gross profit increased 12% to $192.4 million and adjusted EBITDA reached $55.5 million. The company raised its full-year ex-TAC gross-profit and adjusted EBITDA guidance.
• Revenue faced temporary headwinds from Google’s deprecation of the Explore More feature and Taboola’s removal of underperforming publishers, which is expected to reduce second-half 2026 ex-TAC gross profit by more than $20 million. Taboola is developing Next Engage as a replacement.
• Growth opportunities are expanding through broader advertising agreements with major publishers, including Fox News, and AI products such as Realize+ and DeeperDive. DeeperDive is nearing 10 million users and has generated CPMs reportedly five to 10 times higher than traditional traffic.

Taboola.com NASDAQ: TBLA reported second-quarter results that exceeded its guidance for key profitability measures, despite revenue headwinds from a Google policy change and the company’s decision to remove lower-quality publishers from its network.

Revenue rose 2% year over year to $476.8 million, while ex-TAC gross profit increased 12% to $192.4 million. Adjusted EBITDA was $55.5 million, above the high end of the company’s outlook, with a 29% margin. Net income was $4.3 million, and non-GAAP net income was $41.3 million.

Founder and CEO Adam Singolda said the quarter represented “another important step forward” as the company advanced its strategy to build a performance advertising platform for the open web. He said Taboola’s strategic wins and product investments supported its decision to raise full-year ex-TAC gross-profit guidance.

Google change and publisher cleanup weighed on revenue

CFO Steve Walker said revenue came in below the company’s prior guidance primarily because of two factors. First, Taboola more aggressively removed publishers that did not meet its standards for advertiser performance. Second, Google changed its policies in a way that ended Taboola’s Explore More feature during the quarter.

Explore More had enabled users to discover additional sponsored content after clicking a browser back button. Walker said the product’s deprecation was expected to reduce ex-TAC gross profit by more than $20 million in the second half of 2026. The company has introduced a replacement offering called Next Engage, which Singolda said could recover a substantial portion of the lost revenue over time, though he said it may not fully replace Explore More.

Walker said the publisher-network cleanup was concentrated among international publishers, largely in the Greater China region. These publishers had traffic that did not perform well for advertisers, either because of potential illegitimate traffic or low conversion rates, he said.

“If it doesn't work for our advertisers, we really don't want it on our network,” Walker said.

The number of scaled advertisers increased 2% from a year earlier, while average revenue per scaled advertiser was relatively flat. Walker said both metrics were affected by the network cleanup and the Explore More change. He added that Taboola views continued growth in scaled advertisers as an important indicator of future growth.

Strategic publisher wins and expanded monetization

Singolda highlighted an expected expansion with one of Taboola’s largest existing publisher partners, which he described as a premier media and entertainment company. The company did not name the publisher but said it expects to announce the arrangement soon.

Under the planned expansion, Taboola would move beyond monetizing traditional bottom-of-article native placements to handling broader advertising inventory, including display, vertical formats and native ads. Singolda estimated that display advertising at the publisher could represent two to three times the revenue from the native placements Taboola has historically monetized. During the question-and-answer session, he described the broader revenue opportunity as being in the range of two to five times its existing native business.

Taboola expects the new publisher expansion and other strategic wins to begin gradually contributing to ex-TAC in the fourth quarter, with a more substantial ramp anticipated in 2027.

The company also added Fox News to its publisher network, expanding an existing relationship that includes Fox Local, Fox Sports and Fox Weather. Singolda described the Fox News agreement as a competitive win and a meaningful expansion across the Fox ecosystem.

Walker said Taboola’s ex-TAC margins have generally been in a 35% to 40% range and said that remains a reasonable expectation going forward, although quarterly results can vary based on seasonality and business mix. He said new full-page monetization relationships may initially carry lower margins than Taboola’s legacy business, but could still materially increase ex-TAC because of their larger revenue potential.

AI initiatives gain adoption

Taboola continued to emphasize its AI-driven products, including Realize+, an optimization framework intended to automate campaign management and improve advertiser outcomes. Singolda said more than 300 advertisers have adopted the Realize+ beta, although he said it was too early to provide more detailed performance metrics or budget-allocation information.

The company also discussed DeeperDive, its AI-powered conversational product for publisher sites. Singolda said DeeperDive was approaching 10 million users after launching in September 2025, up from roughly 7 million users discussed in a prior update. He said more than 10% of visitors use the feature at certain publisher implementations, including Yahoo.

Singolda said DeeperDive monetization has produced CPM opportunities that are “five to sometimes 10X” compared with traditional Taboola publisher-site traffic, though he cautioned that the initiative remains early. Taboola also launched a DeeperDive advertising network for other large-language-model services and utility applications, he said.

Separately, Taboola said a Claude and Model Context Protocol integration has begun allowing agencies and advertisers to plan, launch and optimize campaigns through natural-language conversations. Singolda said a few million dollars of advertiser spending had flowed through the integration.

Guidance raised for ex-TAC gross profit and adjusted EBITDA

For the third quarter, Taboola forecast revenue of $460 million to $473 million, gross profit of $148 million to $152 million, ex-TAC gross profit of $184 million to $190 million and adjusted EBITDA of $51.5 million to $56.5 million.

For the full year, the company updated its revenue outlook to $1.93 billion to $1.96 billion and its gross-profit outlook to $605 million to $615 million. It raised its ex-TAC gross-profit forecast by $7 million at the midpoint to a range of $772 million to $783 million, and raised adjusted EBITDA guidance by $3 million at the midpoint to $228 million to $240 million. Full-year non-GAAP net income is expected to be $168 million to $176 million.

Foreign exchange remained a headwind. Walker said currency movements reduced second-quarter adjusted EBITDA by roughly $7.5 million; excluding that effect, adjusted EBITDA would have been about $63 million, or a 33% margin.

Taboola generated $31.3 million in operating cash flow and $17.3 million in free cash flow during the quarter. It repurchased about 9.4 million shares for $41.4 million at an average price of $4.42 per share. The company said it has repurchased approximately 20% of its outstanding shares since the start of 2025 and had about $114 million remaining under its repurchase authorization.

About Taboola.com (NASDAQ:TBLA)

Taboola.com NASDAQ: TBLA operates a leading content discovery platform that connects advertisers with premium publishers through native advertising and personalized recommendations. The company’s technology analyzes user behavior and contextual information to deliver promoted content, video, and product recommendations to audiences across a network of thousands of websites and mobile apps. By leveraging machine learning and big data, Taboola helps publishers generate incremental revenue while enabling advertisers to reach engaged users at scale.

Taboola’s suite of products includes feed placements, video recommendations, and sponsored content units designed to blend seamlessly with editorial pages.

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