Taboola.Com Ltd. Signals Upbeat Earnings and Outlook

Taboola.Com Ltd. ((TBLA)) has held its Q1 earnings call. Read on for the main highlights of the call.

Taboola.Com Ltd.’s latest earnings call struck an upbeat tone, as management highlighted a clean beat on first‑quarter guidance, robust product traction and stronger cash generation. Executives acknowledged some blemishes, including foreign‑exchange headwinds, higher operating costs and a one‑time legal settlement, yet they reiterated confidence in a medium‑term path to double‑digit growth and structurally higher margins.

Revenue Growth

Taboola reported first‑quarter revenue of $466.4 million, up 9% year over year and above the high end of its guidance range. The solid top‑line performance, driven by stronger advertiser demand and platform engagement, gave management enough conviction to raise full‑year revenue guidance to a new range of $2.00 billion to $2.06 billion.

Ex‑TAC and Gross Profit Expansion

Ex‑TAC gross profit rose 11% year over year to $168.1 million, while gross profit climbed 9% to $129.6 million, reflecting improving economics on the company’s network. Management pointed to higher advertiser spend, continued strength in Taboola News and growing bidded supply as key contributors to the margin‑accretive mix shift.

Realize Momentum and Product Innovation

The company’s Realize platform remains a core growth engine, helping scaled advertisers increase performance and spend on the network. Scaled advertisers grew 3.5%, and average revenue per scaled advertiser advanced 5%, aided by new tools like Realize+, expanded DeeperDive capabilities and a fresh Claude integration supporting advanced agent‑to‑agent workflows.

Profitability and Margin Outlook

Adjusted EBITDA for the quarter came in at $26.7 million, representing a 16% margin on reported revenue, and management underscored its focus on maintaining strong profitability. For the full year, Taboola is guiding adjusted EBITDA of $222 million to $240 million, implying roughly 30% margins, and noted that, absent FX headwinds, margins would be closer to 34%.

Strong Cash Generation and Liquidity

First‑quarter operating cash flow reached $108.7 million, with free cash flow of $90.3 million, highlighting the business’s cash‑generative profile even amid FX volatility. The company ended the quarter with $150.3 million in cash and equivalents, net cash of $83.9 million and about $203.6 million of available liquidity on its $270 million revolving credit facility.

Disciplined Capital Allocation — Share Repurchases

Taboola continued to lean on buybacks as its primary capital‑return lever, repurchasing roughly 7 million shares in the quarter for $23.5 million. Management noted that between 2025 and year‑to‑date 2026 it has retired about 19% of the company’s shares and plans to direct the majority of future free cash flow toward repurchases, with approximately $160 million still authorized.

Foreign Exchange Headwinds

Currency movements, particularly the stronger Israeli shekel, weighed on profitability, creating roughly a $4.7 million drag on first‑quarter adjusted EBITDA. Executives warned that FX is likely to remain a meaningful burden, guiding to an approximately $13 million operating expense headwind in 2026, which will dampen flow‑through and reported margin expansion.

One‑Time Legal Settlement Inflated Net Income and FCF

Headline net income of $59.1 million was boosted by proceeds from a one‑time legal settlement, which also temporarily lifted free cash flow. On an adjusted basis, excluding this benefit, non‑GAAP net income was $17.2 million, and management emphasized that investors should not annualize the settlement‑driven uplift when assessing recurring earnings power.

Rising Infrastructure and Operating Costs

Gross profit gains were partly offset by higher infrastructure and operating expenses as Taboola invests to scale its network and accelerate research and development. Management framed these costs as strategic, supporting product innovation and long‑term growth, but acknowledged they are limiting near‑term margin expansion even as top‑line and ex‑TAC performance improve.

Not Yet at Consistent Double‑Digit Growth

While the company sees signs of an inflection and raised its full‑year outlook, it conceded that consistent double‑digit revenue growth remains a medium‑term objective rather than a current reality. The updated guidance implies roughly 8% growth in ex‑TAC gross profit for the year, suggesting progress but not yet the sustained acceleration many investors are looking for.

Limited Flow‑Through to Bottom Line

Despite beating revenue and ex‑TAC guidance, the upside did not fully translate into adjusted EBITDA or non‑GAAP net income, largely because of FX impacts and limited hedging. As a result, management is taking a more conservative stance on bottom‑line expectations, even as it continues to push for stronger operating leverage over time.

Guidance and Outlook

Looking ahead to the second quarter, Taboola expects revenue between $492 million and $505 million, ex‑TAC gross profit of $189 million to $194 million and adjusted EBITDA of $49 million to $55 million. For the full year, the company now projects revenue of $2.00 billion to $2.06 billion, ex‑TAC gross profit of $760 million to $781 million and non‑GAAP net income of $167 million to $191 million, all built around an adjusted EBITDA margin near 30% despite anticipated FX pressure.

Taboola’s earnings call painted the picture of a platform gaining commercial and product momentum, yet still navigating currency volatility and investment‑driven cost growth. Investors heard a story of rising revenues, expanding ex‑TAC profits and disciplined capital returns, balanced by a reminder that the journey to steady double‑digit growth and structurally higher margins is underway but not yet complete.