Taboola Q3 Revenue Falls 7% as Adjusted EBITDA Rises 16%

Taboola.com Ltd. (NASDAQ: TBLA) reported lower third-quarter revenue as advertiser volume and impressions declined, while gross profit and adjusted EBITDA increased. Revenue of $462.3 million fell 7% year over year but remained within the company’s guidance range, while adjusted EBITDA rose 16% to $56.0 million, reaching the top end of its forecast.

Gross profit increased 10% to $152.3 million, slightly above the $148 million to $152 million guidance range. Ex-TAC gross profit, a non-GAAP measure representing revenue retained after traffic acquisition costs paid to publishers, rose 7% to $188.8 million, compared with guidance of $184 million to $190 million.

GAAP net income was $18.4 million for the quarter. Non-GAAP net income totaled $39.5 million, and free cash flow was $20.4 million, based on $36 million of net cash generated by operating activities and $16 million used for specified investing activities.

Advertiser count and impressions decline

Scaled advertisers, defined as customers with more than $100,000 of cumulative gross spending over the trailing four quarters, generated about 85% of total revenue. Their number declined approximately 4% from a year earlier to 2,081, while average quarterly revenue per scaled advertiser was about $198,000.

Taboola attributed the decline in those advertiser metrics to lower impression volume and a slower-than-expected rollout of Next Engage. The company’s revenue model depends on user engagement, advertising yield and its ability to match advertisers with audiences across publisher properties.

Fourth-quarter and full-year outlook

For the fourth quarter, Taboola expects revenue of $477 million to $493 million, representing a year-over-year decline of about 7% at the midpoint. Gross profit is projected at $174 million to $183 million, while adjusted EBITDA is expected to range from $73.5 million to $82.5 million, down about 10% at the midpoint.

For full-year 2026, the company forecast revenue of $1.8825 billion to $1.8985 billion, approximately 1% lower year over year at the midpoint. Gross profit is expected to rise about 5% to between $595 million and $604 million, and ex-TAC gross profit is projected to increase about 6% to $754 million to $763 million. Adjusted EBITDA guidance of $212 million to $221 million implies roughly flat year-over-year performance at the midpoint, while non-GAAP net income is expected to decline about 6% to between $151 million and $160 million.

Taboola estimates that the fourth quarter will account for about 26% of annual revenue, 28% of annual ex-TAC gross profit and 37% of annual adjusted EBITDA, based on the midpoint of its full-year assumptions.

The company also expects approximately $60 million of capital expenditures in 2026, up from $45 million in 2025. Share-based compensation is estimated at $56 million, compared with $64 million last year, while depreciation and amortization is projected to decline to $45 million from $81 million. Taboola expects free cash flow conversion from adjusted EBITDA to exceed 70% across the two full fiscal years, compared with its prior expectation of 60% to 70%.

Execution and market risks

The outlook remains subject to the timing and performance of Realize, Taboola’s performance advertising platform, including its ability to attract advertisers and expand advertising spending. Other disclosed risks include competition in digital advertising, dependence on a limited number of major partners including Yahoo, publisher minimum guarantees, changes involving third-party cookies, privacy and advertising regulation, and the company’s ability to retain advertisers, publishers and technical employees.

Taboola also identified potential pressure from tariffs on advertising spending and economic sentiment, continued investment requirements for its AI-powered platform, and risks related to its incorporation and operations in Israel, including the effects of the war in the country.