Taboola Q2 2026 Earnings: Ex-TAC Profit Growth Outpaces Revenue

Taboola (NASDAQ: TBLA) reported Q2 2026 revenue of $476.8 million, up 2.4% year over year, while diluted GAAP EPS improved to $0.01 from a loss of $0.01 in Q2 2025. Ex-TAC gross profit and adjusted EBITDA grew considerably faster than revenue, but quarterly operating and free cash flow declined.

Core financial results

For the quarter ended June 30, 2026, GAAP gross profit increased 2.9% and gross margin was broadly stable. Lower total operating expenses helped operating profit rise to $7.3 million from approximately breakeven, while net income turned positive at $4.3 million.

The non-GAAP results showed greater expansion: ex-TAC gross profit rose 11.8%, and adjusted EBITDA increased 22.8% with a 2.6-percentage-point margin improvement. Cash generation moved in the opposite direction, however, as operating cash flow fell 34.1% and free cash flow declined 49.3%.

Adjusted EBITDA margin is calculated against ex-TAC gross profit rather than revenue. Ex-TAC gross profit, adjusted EBITDA, and free cash flow are non-GAAP measures and may not be directly comparable with similarly named metrics reported by other companies.

Adjusted profit accelerated while cash conversion weakened

Part of the difference between GAAP and non-GAAP growth reflects Taboola’s adjustments. The ex-TAC calculation added back $52.9 million of other cost-of-revenue and specified non-cash items, up from $36.5 million a year earlier. Q2 2026 included a $12.2 million publisher prepayment write-off and $4.1 million of commercial agreement asset amortization.

The adjusted EBITDA reconciliation also excluded $27.0 million of depreciation and amortization, $14.1 million of share-based compensation, and $6.0 million of workforce-reduction expenses. Investors therefore should not treat the 11.8% ex-TAC growth or 22.8% adjusted EBITDA growth as equivalent to the movement in GAAP gross profit or net income.

There was nevertheless improvement within the GAAP operating accounts. Gross profit increased by $3.9 million, while operating expenses declined by $3.3 million. Sales and marketing expense fell by $4.1 million, more than offsetting a roughly $1.0 million increase in research and development expense, helping operating profit improve by $7.2 million.

Cash conversion was weaker despite the return to profitability. Lower non-cash add-backs and less favorable movements in receivables and payables outweighed the increase in net income. Capital expenditures also edged up to $13.9 million from $13.2 million, contributing to the sharper decline in free cash flow.

Balance sheet and capital allocation

Taboola ended June with $133.1 million of cash and cash equivalents, compared with $120.9 million at the end of 2025. Revolving credit facility borrowings decreased to $72.0 million from $102.3 million over the same period.

The quarterly movement was less favorable than the six-month comparison: cash fell by $17.2 million during Q2 from $150.3 million at the beginning of the quarter. Taboola used $35.2 million in financing activities and spent $41.5 million repurchasing ordinary and non-voting ordinary shares during Q2. Repurchases totaled $64.2 million for the first six months of 2026.

Management commentary

CEO Adam Singolda pointed to momentum in the Realize advertising platform, the addition of Fox News, and other strategic wins as evidence of progress in Taboola’s Open Web strategy. The release did not quantify how much these developments contributed to Q2 revenue or profit.

Taboola also said it raised its full-year ex-TAC gross profit and adjusted EBITDA outlook. Prior guidance ranges were not included in the supplied release, so the size of the increase cannot be quantified from the available information.

Recent insider transactions

The supplied six-month insider summary reports 5,706,251 shares purchased across five transactions and 101,878 shares sold across two transactions, for net purchases of 5,604,373 shares. Several of the latest reported transactions were stock awards or a derivative-security conversion, so the aggregate should not be interpreted as open-market buying.

Risks investors need to monitor

• Weaker cash conversion: Operating and free cash flow declined even as net income and adjusted EBITDA improved. Continued divergence could limit financial flexibility for repurchases, debt reduction, or investment.
• Dependence on adjusted metrics: Ex-TAC gross profit and adjusted EBITDA exclude significant costs, including the publisher prepayment write-off, amortization, share-based compensation, and workforce-reduction expenses. These exclusions widened the difference from GAAP results this quarter.
• Realize execution: Management emphasized Realize momentum, but did not disclose its standalone revenue, advertiser spending, retention, or profitability. The platform’s ability to attract and expand advertisers remains an execution factor.
• Publisher relationships and concentration: Taboola relies on digital-property partners and may face minimum-guarantee obligations. Losing major partners or securing traffic on less favorable terms could pressure revenue and ex-TAC profitability.
• Digital advertising conditions: Competition, changes involving third-party cookies, privacy and advertising regulation, and tariff-related pressure on advertiser spending could affect demand and platform economics.

Summary

Taboola’s Q2 2026 results showed modest revenue and GAAP gross-profit growth alongside a clearer improvement in operating profit, net income, and adjusted EBITDA. Lower operating expenses supported profitability, while non-GAAP exclusions also contributed to the faster adjusted growth rates. The main counterpoint was weaker quarterly cash generation, making cash conversion, Realize’s measurable contribution, and the durability of margin improvement the most important items to monitor.