Taboola today disclosed that it and Yahoo - the only customer that accounts for more than 10% of its revenue, and one of its principal shareholders - have each submitted a notice of mediation under a services agreement dated November 28, 2022, each asserting material non-compliance with obligations under it. The disclosure takes up one paragraph of the subsequent-events note in the quarterly report Taboola filed this morning, alongside third-quarter results in which revenue fell 6.9% to $462.3 million and the company lowered its full-year outlook for 2026.

The rest of the quarter tells two stories at once. Revenue shrank, the number of large advertisers fell and the outlook for the fourth quarter dropped sharply from what Taboola implied in August. Yet profit rose. Gross profit climbed 9.6% to $152.3 million, ex-TAC gross profit rose 6.8% to $188.8 million, and adjusted EBITDA increased 16.1% to $56.0 million, according to the earnings release. Net income was $18.4 million, against $5.2 million a year earlier.

Management put a cause on the table. "The environment in which we operate is changing," Adam Singolda, Taboola's founder and chief executive, said in prepared remarks published for the morning call. "We're seeing shifts in how consumers discover and engage with content across the open web, including the growing influence of AI-summaries and LLMs. While page views across our publisher base remain relatively steady, we are seeing advertising impressions decline as consumer behavior changes."

In Short

Taboola, which runs the ad and article recommendation boxes on many news sites, took in less money from advertisers this summer than a year ago, and it revealed a formal disagreement with Yahoo, the partner behind nearly 15% of its sales. The company says people still load publisher pages about as often as before, but fewer ads get seen, which it links to the growing use of AI answers. Because roughly the same advertiser demand chased fewer ads, Taboola kept a bigger slice of each dollar, so profit rose while sales fell. It now expects a weaker end to 2026 than it forecast in August, and the Yahoo dispute is heading to mediation with no public detail on what either side claims.

The Yahoo dispute

The relevant passage is short. "Subsequent to September 30, 2026, Yahoo and the Company each submitted a notice of mediation pursuant to the Digital Property Services Agreement ('Services Agreement') dated November 28, 2022, each asserting material non-compliance with certain obligations under the Services Agreement," according to the 10-Q. "The Company intends to pursue its rights and remedies under the Services Agreement."

That is all the filing says. It does not name the obligations in question, give the dates of the notices, describe what either company is seeking, or set out what happens under the agreement if mediation fails. The earnings release does not mention the matter. Neither do the prepared remarks from Singolda and chief financial officer Stephen Walker, nor the investor presentation. And in its risk factors section, the 10-Q states that there are "no additional material changes" to the risks described in the 2025 annual report.

The date of the Services Agreement matters. It falls in November 2022, the month the two companies announced what Taboola's 10-Q describes as a 30-year exclusive commercial agreement, under which Taboola powers native advertising across all of Yahoo's digital properties. The deal closed in January 2023, when Yahoo received 24.99% of Taboola's pro forma equity and became its largest shareholder. Yahoo also holds the right to appoint a director to Taboola's board.

How much of Taboola's business runs through Yahoo? The 10-Q gives a precise answer for the quarter. Revenue recorded from Yahoo reached $68.2 million, or 14.8% of the total, up from $52.1 million and 10.5% a year earlier. Over nine months the figure was $217.2 million, 15.5% of revenue. That revenue, according to the filing, is "derived from Yahoo's advertiser spend on the Company's network, for which Yahoo is the billing entity."

The other side of the ledger is larger. Taboola recorded $94.7 million of traffic acquisition cost to Yahoo in the third quarter, against $93.1 million a year earlier. That is 34.1% of all traffic acquisition cost in the quarter, up from 28.7% (a PPC Land calculation). Put differently, while Taboola's total traffic acquisition cost fell 14.3%, the amount attributed to Yahoo rose. Excluding Yahoo, traffic acquisition cost dropped by roughly 21%, from $231.0 million to $182.9 million, by the same calculation. At the end of September, Yahoo accounted for $46.3 million of Taboola's trade receivables, 15.3% of the total, and $67.7 million of its trade payables.

The 2022 transaction also sits on Taboola's balance sheet. The shares issued to Yahoo, with a fair value of $288.1 million, are accounted for as an upfront payment for traffic acquisition costs, recorded as the Commercial Agreement Asset and amortized over an estimated 18 years from January 2024. Amortization runs at about $4.1 million a quarter, and the asset stood at $258.0 million on September 30. The investor presentation's forward-looking statements list "reliance on a limited number of partners for a significant portion of the Company's revenue and ex-TAC Gross Profit, including but not limited to Yahoo" among the risks to the business.

The relationship has also shaped Taboola's buybacks. Under a share repurchase agreement signed in February 2025, Taboola bought 14,170,762 of Yahoo's non-voting ordinary shares for about $44.3 million through October 14, 2025, a program designed to keep Yahoo's ownership below 25%. The agreement terminated on October 15, 2025, after Israeli counsel advised that approval from the Israeli Competition Authority was not required, according to the 10-Q.

Third-quarter numbers

Walker said the quarter was "in line with our guidance." The figures bear that out. Revenue of $462.3 million sat near the bottom of the $460 million to $473 million range Taboola set in August, while gross profit of $152.3 million edged above the top of its $148 million to $152 million range. Ex-TAC gross profit of $188.8 million fell inside the $184 million to $190 million range, and adjusted EBITDA of $56.0 million landed close to the top of $51.5 million to $56.5 million, according to the investor presentation.

The revenue decline is the first year-over-year quarterly fall since the second quarter of 2023, when revenue dropped 3.1%, according to Taboola's own quarterly financial model (a PPC Land calculation from that model). Traffic acquisition cost fell 14.3% to $277.6 million, the steepest year-over-year decline in the series, which starts in 2018. Ex-TAC gross profit as a share of revenue reached 40.8%, up from 35.6% a year earlier and the highest third-quarter level in the same model, by the same calculation.

Operating expenses fell to $125.4 million from $132.5 million. Research and development cost $36.7 million, down 3.1%. Sales and marketing came to $64.7 million, down 7.8%, although the decline was driven by a $9.8 million fall in amortization of acquired intangible assets and a $2.9 million cut in salaries; spending on advertising and promotion rose by $7.5 million in the same period. General and administrative expenses were $24.1 million, down 1.9%.

Operating income rose to $26.9 million from $6.5 million. Finance expenses of $2.7 million replaced finance income of $0.5 million, mainly because of $2.1 million in higher foreign exchange losses and the absence of a $1.6 million warrant revaluation gain - all outstanding warrants expired in June 2026. Income tax rose to $5.8 million from $1.8 million. Diluted earnings per share were $0.06, against $0.02.

Adjusted EBITDA margin, which Taboola calculates against ex-TAC gross profit, expanded to 29.7% from 27.3%. Walker said currency moves cost about $3.8 million: "Excluding this impact, Adjusted EBITDA would have been approximately $59.8 million, which would have represented an Adjusted EBITDA margin of 31.6%." Non-GAAP net income was $39.9 million, up from $34.3 million.

Over nine months, revenue grew 1.1% to $1.405 billion and net income reached $81.7 million, against a loss of $7.9 million a year earlier. That nine-month profit includes roughly $77 million of pre-tax income from a binding settlement Taboola reached on February 5, 2026, in a legal matter where it was the plaintiff - the item behind the first-quarter jump in reported profit. Taboola excludes it from adjusted EBITDA.

Fewer impressions on the same pages

Walker repeated the central point in his own remarks. "While page views remain relatively steady, what we have seen has been a reduction in the number of impressions available for our advertisers and a headwind on revenue," he said. Neither executive gave a figure for how far impressions fell, which publishers or regions were most affected, or why steady page views would produce fewer ad impressions. The mechanism is left unexplained.

The 10-Q breaks the revenue decline down by publisher. Existing digital property partners, including growth at new partners beyond their onboarding run rate, contributed about $72.7 million less revenue than a year earlier. According to the filing, this "was largely driven by the deprecation of ExploreMore following a Google policy change in the second quarter of 2026, lower impressions on existing digital property partners and network cleanup from prior quarters of digital property partners that did not meet advertiser success standards." New partners added about $38.2 million on a 12-month run-rate basis. Taboola counted approximately 12,000 digital property partners, the same as a year earlier.

Explore More was a session-depth product that let users find more sponsored content after clicking back, as Walker described it in August. Google announced on April 13 that it would treat back button hijacking as spam, with enforcement from June 15, 2026, and began sending Search Console warnings to affected sites in April. In August, Taboola said the loss of Explore More would cost more than $20 million of ex-TAC gross profit in the second half of 2026.

Its replacement has been slow to arrive. "Our revenue was primarily impacted by the impression volume headwinds and by a slower than expected rollout of Next Engage, which is the product we introduced to replace Explore More," Walker said. The remarks do not describe how Next Engage works, how many publishers run it or when the rollout is expected to finish.

Advertiser metrics moved with revenue. Scaled Advertisers - those with more than $100,000 of cumulative gross spend over the trailing four quarters - fell about 4% to 2,081, according to the investor presentation. Average revenue per Scaled Advertiser was about $198,000, down from $208,000. These advertisers generated 85% of revenue, against 86% a year earlier. "Scaled Advertisers represent approximately 85% of Revenues, so when we see declining revenue as we did this quarter, we would expect to see a decline in these metrics," Walker said. The presentation attributes the decline to "lower impression volume and a slower-than-expected rollout of Next Engage."

Growth in the US, contraction elsewhere

Geography sharpens the picture. Revenue from advertisers billed in the United States rose 9.1% to $252.6 million, lifting the US share of revenue to 54.6% from 46.6%. Everything else shrank. Revenue billed outside the US fell 20.9% to $209.7 million (a PPC Land calculation from the 10-Q's geographic table). Germany dropped 25.3% to $32.0 million, Israel 27.6% to $19.0 million, the United Kingdom 14.9% to $15.8 million, and the rest of the world 19.5% to $142.9 million. The table is based on advertisers' billing addresses, so it shows where buyers are invoiced rather than where the ads ran.

Scarcity lifts Taboola's share of each dollar

If revenue fell, why did gross profit rise? Walker gave two reasons. "First, as the volume of our supply declines, we see higher ad rates on our network because a similar amount of demand is spread over less supply. Higher ad rates drive higher ex-TAC margins," he said. "Second, we saw strong growth in Taboola News, which contributed to the growth in ex-TAC." No figure was given for Taboola News.

The 10-Q adds a contractual layer. Traffic acquisition cost fell faster than revenue "primarily due to a margin increase on certain digital property partners and increase in yield per impression on digital property partners with guarantees." Taboola pays most publishers a straight revenue share. Some contracts instead pay the greater of a revenue share or a guaranteed amount, usually per thousand page views, and typically run two to five years. When yield per impression rises on a guaranteed contract, more of the guarantee is covered by actual revenue. The cost of guarantees - payments above what revenue sharing alone would require - nonetheless rose to about 14% of traffic acquisition cost, from about 12% a year earlier, according to the filing.

For publishers in aggregate, the result is a smaller share. Traffic acquisition cost equaled 60.1% of revenue in the third quarter, against 65.2% a year earlier (a PPC Land calculation). For advertisers, Walker's explanation implies higher rates for a smaller pool of placements. The filing also records a separate pressure on publisher economics: in the second quarter, Taboola wrote off about $12.2 million of publisher prepayments after identifying "a decline in the expected future economic benefits of the underlying arrangements," booked within traffic acquisition cost.

A weaker fourth quarter than August implied

For the fourth quarter, Taboola expects revenue of $477 million to $493 million, a 7% fall at the midpoint from $522.3 million a year earlier. Gross profit is guided at $174 million to $183 million, up 2% at the midpoint. Ex-TAC gross profit is expected at $204.5 million to $213.5 million, down 2%, adjusted EBITDA at $73.5 million to $82.5 million, down 10%, and non-GAAP net income at $53 million to $62 million, against $79.1 million in the fourth quarter of 2025.

The full-year ranges now stand at $1.8825 billion to $1.8985 billion for revenue, $595 million to $604 million for gross profit, $754 million to $763 million for ex-TAC gross profit, $212 million to $221 million for adjusted EBITDA and $151 million to $160 million for non-GAAP net income, according to the release. Singolda framed the change as "lowering our full-year ex-TAC guidance to $758 million, representing 6% growth."

The trajectory over the year is clear. In May, Taboola guided full-year revenue to $2.006 billion to $2.062 billion, with ex-TAC gross profit of $760 million to $781 million and adjusted EBITDA of $222 million to $240 million. In August, revenue guidance dropped to $1.930 billion to $1.956 billion, while the ex-TAC range rose to $772 million to $783 million and adjusted EBITDA to $228 million to $240 million. Against the August midpoints, today's guidance is $52.5 million lower on revenue, $19 million lower on ex-TAC gross profit and $17.5 million lower on adjusted EBITDA. Against May, the revenue midpoint has fallen by $143.5 million (all PPC Land calculations).

Nearly all of the reduction lands on the final three months. Because the third quarter came in within its range, subtracting nine-month actuals from the August full-year guidance implied fourth-quarter revenue of about $524.5 million to $550.5 million, ex-TAC gross profit of about $222.8 million to $233.8 million and adjusted EBITDA of about $89.8 million to $101.8 million (a PPC Land calculation). The new fourth-quarter ranges sit well below each. The fourth quarter is, by Taboola's own account in the 10-Q, its seasonally strongest.

If the midpoint holds, 2026 would be the first year of lower revenue in the presentation's annual series, which runs from $552 million in 2016 to $1.912 billion in 2025. The presentation also lists modeling assumptions for 2026: capital expenditure of $60 million, up from $45 million in 2025; share-based compensation of $56 million, down from $64 million; depreciation and amortization of $45 million, down from $81 million; interest payments of about $6 million; and a long-term effective tax rate of 18% to 20%.

Where Taboola is looking for growth

Singolda's statement in the release set out three priorities. "In the third quarter, we delivered $189 million in ex-TAC and $56 million in Adjusted EBITDA," he said. "As the open web continues to evolve, we're focused on three areas, bringing more premium publishers onto our platform, growing the revenue we generate with our existing publisher partners, and investing in complementary growth areas like Taboola News and social commerce."

On new publishers, Singolda pointed to "our recent signing of FOX News, FOX Local, FOX Sports and FOX Weather." Fox News had already been named as a new win in August.

On existing publishers, the main product is Full Page Monetization. "Historically, we've monetized mainly through native placements, however, with products like full page monetization - where we monetize the entire ad inventory of a publisher, including display, vertical formats, native and more. We believe we can increase that monetization 2 to 3 times per publisher so this is something we are leaning into with our teams and our top publishers," Singolda said. The remarks give no publisher-level revenue to support the multiple.

NBCUniversal is the first partner. In August, Taboola's Realize platform took over programmatic display on NBCNews.com and TODAY.com, two properties previously monetized only through recommendation units. "We're now live across 100% of the advertising inventory on NBC News and TODAY.com and the performance we see is on par with what NBC and us expected, which is encouraging," Singolda said. "For publishers, this creates an opportunity to grow revenue while working with fewer partners, reducing operational complexity and improving efficiency."

DeeperDive, the AI answer engine, is "now being used by nearly 14 million people across publishers and OEMs," according to Singolda. In April, Taboola reported nearly 7 million monthly active users. Today's figure is not described as monthly, so the two numbers may not measure the same thing. The product reached Motorola lockscreens through a partnership announced on October 28.

The proposed acquisition of Dianomi, announced on September 18, is meant to extend Taboola's reach in finance. Singolda described Dianomi as "a highly specialized network of hundreds of premium publishers, including Reuters, CNN Business and The Wall Street Journal, alongside blue-chip financial advertisers." He added: "We expect to complete the acquisition before the end of 2026 and we will continue to provide updates." The release and remarks give no price, and the 10-Q records $459,000 of acquisition-related legal fees in the quarter without naming a target.

Beyond publishers, Singolda said Taboola is "investing in diversified areas of our business that are growing and not impacted by AI such as Taboola News, apps and social commerce." None of the three was given a revenue figure. He closed with an ambition: "Much like in social and search, the open web has an opportunity to have one company that can be the monetization infrastructure for everything and I believe it can be Taboola."

What the headline says and what the executives said

The release headline reads: "Full Page Monetization Live Across All NBCUniversal; Fox News Live 100%; Dianomi Acquisition Expected to Close Before End of Year." The body of the release does not discuss any of the three items. In the remarks, full page monetization is live on two named properties, NBC News and TODAY.com, rather than across NBCUniversal; Taboola's 2023 native renewal with the company covered NBC News, CNBC, MSNBC and TODAY. Fox appears in the remarks only as a signing. Nothing in the materials describes a Fox rollout reaching 100% of anything.

Cash, debt and buybacks

Cash generation weakened. Operating cash flow fell to $35.6 million from $53.2 million, partly because trade payables fell by $13.8 million and prepaid expenses and other current assets rose by $12.8 million. Capital expenditure, including capitalized software, more than doubled to $15.2 million from $6.9 million. Free cash flow dropped to $20.4 million from $46.3 million, a conversion of about 36% of adjusted EBITDA in the quarter (a PPC Land calculation). "We expect our free cash flow to convert from Adjusted EBITDA at a 60-70% rate this year," Walker said.

Taboola ended September with $128.7 million in cash and cash equivalents and $78.5 million drawn on its $270 million revolving credit facility, which matures on March 18, 2030, leaving net cash of $50.2 million and about $191 million of available liquidity. The company was in compliance with the facility's net leverage covenant, according to the 10-Q.

Buybacks continued at a falling price. Taboola repurchased about 6.9 million shares in the third quarter at an average of $4.37, for $30.3 million, Walker said. The monthly averages in the 10-Q show the slide: $5.18 a share in July, $4.10 in August and $3.67 in September. Over nine months the company bought back 23.2 million shares at an average of $4.10. Ordinary and non-voting shares outstanding fell to 266.2 million at the end of September from 276.4 million at the end of 2025 (a PPC Land calculation from the balance sheet). On November 3, the board authorized a further $200 million for repurchases, subject to conditions under Israeli company law.

Litigation, layoffs and insider plans

The 10-Q discloses a securities class action. Fortin v. Taboola.Com Ltd., et al, No. 1:26-cv-07170-VM, was filed on August 21, 2026, in the US District Court for the Southern District of New York against the company and certain officers. The complaint alleges that the defendants "made false and misleading statements about the Company's relationships with certain publishers and its anticipated earnings" in violation of Sections 10(b) and 20(a) of the Securities Exchange Act, and seeks unspecified damages. Taboola "believes that it has strong defenses to the claims in this lawsuit and intends to vigorously defend against them," according to the filing, and cannot yet estimate any possible loss.

Other disclosures fill in the year. In April 2026, Taboola cut its workforce by about 6%, at a one-time cost of $5.97 million, of which $3.97 million fell in sales and marketing; it expects no further costs. It also spent $1.1 million in the third quarter on a litigation matter in which it is the plaintiff and which it says is unrelated to its ongoing operations. A trust established by Eldad Maniv, president and chief operating officer, adopted a 10b5-1 trading plan on August 27 for the potential sale of up to 1,751,894 ordinary shares, running until May 26, 2027 at the latest. Kristy Sundjaja, chief people officer, adopted a plan on August 10 covering up to 331,046 shares.

Where the documents disagree

The results materials do not match each other on several points:

  • Full-year gross profit guidance is $595 million to $604 million in the release and the presentation, but $595.5 million to $604.5 million in Walker's remarks. Non-GAAP net income is $151 million to $160 million in the release and $151.5 million to $160.5 million in the remarks.
  • The presentation's guidance summary shows fourth-quarter ex-TAC gross profit of "$204.5 to $223.5M." The release and the reconciliation table give $204.5 million to $213.5 million, the only range consistent with the full-year figure.
  • The presentation's table of quarterly guidance splits lists full-year ranges of $1.882 billion to $1.910 billion for revenue, $756 million to $769 million for ex-TAC gross profit and $217 million to $232 million for adjusted EBITDA. These match neither today's guidance nor August's.
  • Walker expects free cash flow to convert from adjusted EBITDA at 60% to 70% "this year." The presentation says conversion will be "70%+ over the two full fiscal years (vs. expectations of 60-70%)."
  • The presentation gives 2,081 Scaled Advertisers for the third quarter, the same count Taboola reported at the end of June. The 10-Q rounds the third-quarter figure to approximately 2,000, against approximately 2,100 a year earlier, and puts the decline at 3.8%.
  • Walker cited approximately $90 million left under the buyback authorization; the 10-Q puts the remaining amount at $96.3 million as of September 30, before the new $200 million.

Why this matters for marketers and publishers

Taboola's account adds a specific claim to a familiar debate. Much of the discussion around AI and publishers has centered on search referrals: Pew Research Center found in 2025 that Google users who saw an AI summary clicked a traditional result in 8% of visits, against 15% without one, and Google's AI Overviews have become the main focus of concern about zero-click search. Taboola describes something different - page views that hold steady while ad impressions fall. Whether that reflects shorter sessions, less scrolling, fewer recommendation widgets loading or something else, the company has not said. Without the impression data itself, the claim cannot be tested from the outside.

The pressure is not unique to Taboola. Teads, which competes with Taboola in open web advertising, reported in August a 17% fall in second-quarter revenue and a 14% fall in ex-TAC gross profit, and suspended its 2026 adjusted EBITDA guidance, with direct response and SME ex-TAC down 30%. Taboola's numbers are steadier. Its ex-TAC gross profit is still growing, and its full-year guidance still points to 6% growth on that measure.

For advertisers buying native and performance inventory outside the walled gardens, the quarter describes a tighter market: fewer impressions, higher rates, and a supplier that keeps more of each dollar. For publishers, the signals point the same way. Taboola's traffic acquisition cost, mostly payments to digital properties, fell 14.3% while its revenue fell 6.9%, its guarantees grew more expensive, and its pitch to publishers is consolidation - one vendor selling display, vertical video and native across an entire page. Then there is Yahoo. A formal dispute under a 2022 services agreement, with a partner that billed nearly 15% of Taboola's quarterly revenue and accounted for a third of its traffic acquisition cost, now sits alongside a guidance cut and a securities suit. How the mediation unfolds, and whether Taboola says more about it, is likely to matter more to the company's 2027 than any single product launch.

Timeline

Summary

Who: Taboola (Nasdaq: TBLA), its chief executive Adam Singolda and chief financial officer Stephen Walker; Yahoo, its largest customer and a principal shareholder; publishers including NBC News, TODAY.com and the Fox properties; and the plaintiff in a securities class action.

What: Third-quarter revenue fell 6.9% to $462.3 million while gross profit rose 9.6%, ex-TAC gross profit 6.8% and adjusted EBITDA 16.1%. Taboola lowered its 2026 guidance, with fourth-quarter revenue expected to fall 7%, and its 10-Q disclosed that Taboola and Yahoo have each submitted notices of mediation alleging material non-compliance under their 2022 services agreement.

When: The results, 8-K and 10-Q were published today, November 4, 2026. The mediation notices were submitted after September 30, 2026, on dates the filing does not give.

Where: Taboola's investor materials and its filing with the US Securities and Exchange Commission. The class action is in the US District Court for the Southern District of New York; revenue grew in the US and fell in every other region Taboola reports.

Why: Taboola attributes the revenue decline to fewer ad impressions on publisher pages, which it links to AI summaries and LLMs, the end of Explore More after Google's back button policy, a slow rollout of its replacement and network cleanup. Higher ad rates on scarcer supply raised its margins. The Yahoo dispute matters because Yahoo billed 14.8% of quarterly revenue and accounted for 34.1% of its traffic acquisition cost.