Taboola.com Ltd. Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. 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
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $466.4 million | $427.5 million |
| Gross Profit | $129.6 million | $119.3 million |
| Net Income | $59.1 million | $(8.8) million |
| Diluted EPS | $0.20 | $(0.03) |
| Operating Cash Flow | $108.7 million | $48.1 million |
| Free Cash Flow | $90.3 million | $36.1 million |
| Cash & Equivalents | $150.3 million | $216.2 million |
| Revolving Credit Facility (Outstanding) | $66.4 million | $102.3 million |
Non-GAAP Highlights: Adjusted EBITDA was $26.7 million (down from $35.9 million in Q1 2025), primarily due to a one-time legal settlement income in the current period. ex-TAC Gross Profit was $168.1 million.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 9.1% year-over-year, driven by an increase in the number of "Scaled Advertisers" (those spending >$100k annually) and higher revenue per advertiser.
- Profitability Turnaround: The company reported a net income of $59.1 million compared to a net loss of $8.8 million in the prior year. This was significantly influenced by a $77.0 million pre-tax legal settlement income recognized in "Other income, net."
- Cost Structure: Traffic Acquisition Costs (TAC) rose 8.1% to $302.4 million. Other cost of revenues increased 21.3% due to higher digital service taxes and content costs.
- Debt Reduction: The company reduced its outstanding revolving credit facility balance by approximately $35.9 million during the quarter.
- Share Repurchases: The company repurchased 6.9 million ordinary shares at an average price of $3.41 per share, totaling approximately $23.6 million.
Outlook, Risks, and Unusual Items
- Unusual Items: The Q1 2026 results include a one-time legal settlement gain of $77.0 million. Excluding this, the company's core operating performance showed growth but lower Adjusted EBITDA compared to the prior year.
- Workforce Reduction: In April 2026 (subsequent to the period end), the company undertook a workforce reduction of approximately 6% (approx. 100 employees).
- Macro Risks: Management cites volatility in global economic conditions, including inflation, interest rates, and geopolitical conflicts (Middle East, Ukraine). U.S. tariffs and retaliatory measures are being monitored for potential material impact.
- Related Party Transactions: Yahoo remains a significant related party, accounting for 14.9% of revenue ($69.7 million) and a substantial portion of traffic acquisition costs ($96.8 million) in Q1 2026.
- Seasonality: The company notes that Q1 is historically the seasonally weakest quarter for revenue and margins.
Investor Verification Checklist
- Settlement Sustainability: Verify the nature of the $77 million legal settlement to understand its impact on future earnings expectations, as it is a non-recurring item.
- Yahoo Dependency: Assess the concentration risk associated with Yahoo, which represents nearly 15% of revenue and a significant portion of costs under the 30-year commercial agreement.
- Cost Inflation: Monitor the 21.3% increase in "Other cost of revenues" to determine if digital service taxes and content costs are becoming a structural burden.
- Workforce Impact: Evaluate the financial impact of the 6% workforce reduction announced in April 2026 on future operating expenses and R&D capabilities.
- Debt Covenants: Confirm continued compliance with the net leverage ratio covenant under the $270 million 2025 Revolving Credit Agreement.