TBLA

Taboola.com Ltd. 10-Q Summary: Period Ended June 30, 2026

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2026, and the six months ended on that date. Taboola.com Ltd. is a technology company operating an AI-powered recommendation platform that connects advertisers with digital properties (publishers, apps, devices) on the Open Web. The company operates as a single reportable segment and is incorporated in Israel with principal executive offices in New York.

Key Financial Metrics

Non-GAAP Highlights (6 Months): Adjusted EBITDA was $82.18 million, and ex-TAC Gross Profit was $360.43 million.

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased 2.4% quarter-over-quarter (QoQ) and 5.6% year-over-year (YoY) for the six-month period, driven by an increase in the number of "Scaled Advertisers" and higher revenue per advertiser.
• Profitability Turnaround: The company reported Net Income of $4.3 million for the quarter and $63.4 million for the six months, a significant improvement from a Net Loss of $4.3 million and $13.1 million, respectively, in the prior year periods.
• One-Time Legal Settlement: A binding settlement agreement regarding a legal matter where Taboola was the plaintiff resulted in a pre-tax income of approximately $77.0 million, recognized in the six months ended June 30, 2026. This significantly boosted operating income for the half-year.
• Workforce Reduction: In April 2026, the company reduced its workforce by approximately 6%, incurring one-time termination benefits of $5.97 million.
• Asset Impairment: The company recognized a write-off of approximately $12.2 million related to publisher prepayment assets due to a decline in expected future economic benefits.

Guidance, Outlook, and Risks

Management Commentary: Management attributes improved results to margin increases on certain digital property partners and growth in advertising spend. The company continues to invest in AI and Deep Learning capabilities. Seasonality is expected to persist, with the fourth quarter typically being the strongest.

Capital Allocation: The company remains active in its share buyback program. During the six months ended June 30, 2026, it repurchased 16.2 million shares at an average price of $3.99. Approximately $126.6 million of authorization remains available.

Risks and Contingencies:

• Macroeconomic Conditions: Volatility in global trade, tariffs, and geopolitical conflicts (Middle East, Ukraine) could impact operations.
• Related Party Concentration: Yahoo Inc. remains a significant related party, accounting for 15.8% of total revenue and a substantial portion of traffic acquisition costs for the six months ended June 30, 2026.
• Regulatory Environment: Ongoing changes in privacy laws and data protection regulations (e.g., Apple/Google privacy changes) pose risks to the digital advertising ecosystem.

Investor Verification Checklist

• Legal Settlement Impact: Verify the sustainability of the $77 million one-time legal settlement income and its effect on the reported Net Income and Operating Income for the six-month period.
• Yahoo Dependency: Assess the concentration risk associated with Yahoo, which represents a significant portion of both revenue and traffic acquisition costs.
• Asset Write-offs: Review the details of the $12.2 million publisher prepayment write-off to understand the extent of underperforming publisher relationships.
• Debt Covenants: Confirm continued compliance with the financial covenants of the $270 million 2025 Revolving Credit Facility, specifically the net leverage ratio.
• Non-GAAP Reconciliations: Scrutinize the reconciliation of GAAP Net Income to Non-GAAP measures (Adjusted EBITDA, ex-TAC Gross Profit) to ensure the exclusion of significant one-time items is appropriate for trend analysis.