Key Highlights

  • On the 273.1m ordinary and non-voting shares outstanding, that values the Nasdaq-listed, Israeli-incorporated advertising group at roughly US$1.4bn, about half again above the US$3.41 average price at which it repurchased its own shares during the March quarter.
  • In the three months, revenue rose 9.1% to US$466.4m and ex-TAC gross profit rose 10.8% to US$168.1m.
  • The simplest argument is cash: US$163.4m of free cash flow in 2025 and US$90.3m in the March quarter, against a market capitalisation near US$1.4bn, with more cash than debt.
  • Yahoo and Microsoft are named as the largest partners, but their individual shares are not disclosed, leaving investors unable to size the exposure.

Why a US$5 share price is interesting again

Taboola.com (NASDAQ:TBLA). On the 273.1m ordinary and non-voting shares outstanding, that values the Nasdaq-listed, Israeli-incorporated advertising group at roughly US$1.4bn, about half again above the US$3.41 average price at which it repurchased its own shares during the March quarter.

The re-rating follows a change of direction in the number management steers by. Ex-TAC gross profit grew just 0.1% year on year in the December 2025 quarter; three months later, in results published, it grew 10.8% and guidance was raised. The counterweight: adjusted EBITDA fell 25.7% in that quarter, and a US$77.0m legal settlement produced most of the reported profit.

What the company does

Taboola sells advertising on the open web, the news sites, publisher apps and device homescreens outside Google search, Meta's feeds and Amazon. Advertisers pay when people click, buy or view, and Taboola shares that money with the publishers who supplied the audience. Those payments are traffic acquisition costs, or TAC.

TAC is why the revenue line flatters the business. Of the US$466.4m of revenue booked in the March quarter, US$302.4m went straight back out as TAC. Taboola therefore reports ex-TAC gross profit, gross profit plus other cost of revenues and the non-cash amortisation of the asset created by its Yahoo deal, of US$168.1m. Only about a third of gross revenue is money the company keeps.

The 2025 annual report describes roughly 14,000 digital property partners, more than 600 million daily users and about 2,200 "Scaled Advertisers" (those spending above US$100,000 over four trailing quarters). Yahoo and Microsoft are the largest partners; the Yahoo tie is a 30-year exclusive native advertising partnership closed in January 2023, for which Yahoo received 45,198,702 non-voting shares. The United States supplied 48% of 2025 revenue. Realize, launched in February 2025, is the group's performance advertising platform.

Latest financial and operating performance

In the three months, revenue rose 9.1% to US$466.4m and ex-TAC gross profit rose 10.8% to US$168.1m. Below that line the picture reverses: operating costs grew about 10%, other cost of revenues rose 21.3%, adjusted EBITDA fell 25.7% to US$26.7m (15.9% of ex-TAC gross profit) and non-GAAP net income fell to US$17.2m from US$25.0m.

Reported net income of US$59.1m, or US$0.20 a diluted share, needs care: it includes US$77.0m of other operating income from a settlement of a case in which Taboola was the plaintiff. Strip it out and the quarter produced an operating loss of about US$7.6m, against US$6.3m a year earlier.

Cash generation was strong. Operating cash flow was US$108.7m against US$48.1m, and after US$18.4m of capital expenditure free cash flow was US$90.3m. Cash rose to US$150.3m while drawings on the US$270m revolving facility fell to US$66.4m, leaving net cash of roughly US$84m. Buybacks took US$22.7m, with US$168.0m of authorisation left.

For 2025 as a whole, revenue was US$1,912.0m (up 8.3%), ex-TAC gross profit US$713.5m (up 6.9%), adjusted EBITDA US$215.5m and free cash flow US$163.4m. On 6 May full-year ex-TAC guidance was lifted to US$760m-US$781m from US$753m-US$774m. June-quarter guidance is ex-TAC gross profit of US$189m-US$194m and adjusted EBITDA of US$49m-US$55m.

The catalyst: growth in the metric that pays the bills

Attention is on the shape of the ex-TAC line, not revenue. Ex-TAC gross profit has been far more volatile: up 15.1% in the June 2025 quarter, flat in December, then up 10.8% in March. It matters because it is what remains after paying publishers, and it is the base for Taboola's adjusted EBITDA margin. When it stalls while publisher commitments stay fixed, operating leverage works in reverse.

June-quarter guidance implies ex-TAC growth of roughly 10% to 13% on the US$172.1m of a year earlier, so management is signalling March was not a one-off. The unresolved question is conversion: ex-TAC gross profit rose US$16.3m year on year in March, yet adjusted EBITDA fell US$9.2m.

The bull case

The simplest argument is cash: US$163.4m of free cash flow in 2025 and US$90.3m in the March quarter, against a market capitalisation near US$1.4bn, with more cash than debt.

The second is the share count, cut about 17% year on year on a weighted average basis after US$255.4m of buybacks in 2025. If ex-TAC gross profit grows in line with guidance, per-share economics improve mechanically.

The third is positioning. Advertisers seeking reach outside the walled gardens have few routes to 14,000 publisher properties, and the Yahoo agreement locks in a large slice of that supply.

The bear case and the risks

Partner concentration. Yahoo and Microsoft are named as the largest partners, but their individual shares are not disclosed, leaving investors unable to size the exposure. Disruption to either would hit supply, ex-TAC gross profit and cash flow at once.

Guaranteed payments to publishers. To win exclusive placements Taboola commits minimum guarantees; guarantee costs were approximately 19% or less of total TAC in 2024 and 2025. Those commitments are fixed while the revenue supporting them is not, so a slowdown compresses ex-TAC gross profit faster than revenue.

Profitability is moving the wrong way. Adjusted EBITDA fell 6.6% in December 2025 and 25.7% in March 2026, while other cost of revenues rose 21.3%. Excluding the settlement, March was operationally loss-making; US$59.1m of net income is not a run-rate.

Structural and geopolitical exposure. Taboola competes with Google, Meta and Amazon for budgets, and with The Trade Desk, Magnite, PubMatic and Teads for open-web inventory. Its supply depends on publisher web traffic, itself under pressure from AI-generated answers in search. The company is incorporated in Israel, and its filings name conditions there as a risk.

What investors should watch next

June-quarter results. Taboola reported its June 2025 quarter, so 2026's is due shortly. The tests are ex-TAC gross profit of US$189m-US$194m and adjusted EBITDA of US$49m-US$55m against US$45.2m a year earlier.

The full-year guide. A second increase on the US$760m-US$781m ex-TAC range would corroborate the re-acceleration; a trim would suggest March flattered the trend.

Costs and the buyback. Watch cost growth against ex-TAC growth, and whether the remaining buyback authorisation is funded from free cash flow rather than by drawing the revolver.

Investor takeaway

Taboola enters the second half of 2026 with its key growth metric moving again, guidance raised, a net cash balance sheet and a share count shrinking at double-digit rates. Those are verifiable improvements, and they explain why the shares trade well above the average price the company itself paid in the March quarter.

The caveats are equally concrete. Adjusted EBITDA has fallen year on year in two consecutive quarters, costs are growing faster than the ex-TAC line they support, and March's profit rests on a one-off settlement. The June-quarter report is the cleanest test of whether growth and profit can move together. This article is information, not advice.

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any security. Share prices can rise or fall, and past performance does not guarantee future results. Investors should conduct independent research and consult a licensed financial adviser before making investment decisions.