Taboola today reported first-quarter 2026 financial results that beat the high end of its own guidance across every metric, including revenues of $466.4 million, a net income of $59.1 million, and free cash flow of $90.3 million. The announcement, made on May 6, 2026, comes alongside a raised full-year outlook and a notable disclosure: a one-time $77 million legal settlement boosted headline net income by an amount that management has explicitly stripped out of its non-GAAP figures.

Revenue and gross profit

Revenue for the three months ended March 31, 2026 reached $466.4 million, up 9.1% from $427.5 million in Q1 2025. That result cleared the top end of the company's prior guidance range of $444 million to $462 million by $4.4 million. Gross profit rose 8.6% year-over-year to $129.6 million, also above guidance of $119 million to $125 million.

The metric Taboola treats as most representative of its underlying economics, ex-TAC Gross Profit - which strips out traffic acquisition costs paid to publishers and adds back other non-cash items - came in at $168.1 million, up 10.8% from $151.7 million a year earlier. That figure exceeded the $158 million to $164 million guidance range. Ex-TAC Gross Profit is defined by the company as gross profit adjusted to add back other cost of revenues and non-cash amortization of the commercial agreement asset, a structure that isolates direct cash contribution from publisher payments.

Traffic acquisition cost, the largest single line item on Taboola's income statement, rose 8.1% to $302.4 million, slightly slower than revenue growth. Other cost of revenues climbed 21.3% to $34.4 million, driven by higher digital service tax expenses, content costs, and depreciation.

The settlement and what it means for the numbers

The most important number to isolate is the $77 million. On February 5, 2026, Taboola entered into a binding settlement agreement in a legal matter where the company was the plaintiff. The resulting pre-tax income of approximately $77 million, net of legal fees, was recognized as other income in the first quarter's income statement. Without that item, reported operating expenses would have totaled $137.2 million rather than $60.2 million, and operating income would have been far lower.

Taboola's Adjusted EBITDA of $26.7 million explicitly excludes this settlement. That figure fell 25.7% from $35.9 million in Q1 2025 - a decline that reflects genuine increases in operating costs, including a $3.6 million rise in research and development spending and a $6.7 million increase in sales and marketing. The Adjusted EBITDA margin for the quarter stood at 15.9% of ex-TAC Gross Profit. On a constant currency basis, foreign exchange headwinds from a stronger Israeli shekel - where Taboola carries a significant employee cost base - reduced Adjusted EBITDA by approximately $4.7 million. Excluding that FX impact, Adjusted EBITDA would have been $31.4 million, representing a margin of 19.1%.

Non-GAAP Net Income came in at $17.2 million, down from $25 million a year earlier. The GAAP net income of $59.1 million - a swing from a net loss of $8.8 million in Q1 2025 - is therefore not a clean operating comparison. Marketing professionals evaluating this report should treat the settlement as a non-recurring item and look to the non-GAAP figures for underlying trajectory.

Cash generation and the balance sheet

Cash flow generated by operating activities reached $108.7 million in the quarter, more than doubling the $48.1 million generated in Q1 2025. Free cash flow was $90.3 million compared to $36.1 million a year ago. Both figures benefited from the legal settlement, which contributed actual cash proceeds. The company targets a free cash flow conversion rate of 60% to 70% of Adjusted EBITDA over a typical four-quarter period.

Cash and cash equivalents ended March 31 at $150.3 million, up from $120.9 million at year-end 2025. The company reduced its revolving credit facility balance from $102.3 million to $66.4 million during the quarter. Net cash balance - cash minus long-term debt - stood at $83.9 million. Available liquidity under the $270 million revolving credit facility reached approximately $203.6 million as of quarter-end. The facility matures March 18, 2030.

Capital expenditures were $18.4 million for the quarter, up from $12 million in Q1 2025 as the company scaled infrastructure. Full-year capital expenditure guidance stands at $47 million.

Share repurchases

Taboola repurchased approximately 6.9 million shares during the quarter at an average price of $3.41 per share, for total consideration of $23.5 million. Shares outstanding declined to approximately 273 million at quarter end, down from 276 million at the end of 2025. Cumulative buybacks between 2025 and year-to-date 2026 account for 19% of the company's float, according to CEO Adam Singolda's prepared remarks. The remaining buyback authorization stood at approximately $168 million as of March 31. Separately, in April 2026, Taboola disclosed a reduction in its workforce by approximately 6%, representing around 100 employees, according to the 10-Q filed today.

Scaled advertisers and the Realize platform

The operational story beneath the financial results centers on Taboola's Realize performance advertising platform, which launched in February 2025. According to the prepared remarks from CFO Steve Walker, revenue from scaled advertisers - defined as those spending more than $100,000 per year - represented approximately 85% of total revenue in Q1 2026. The number of scaled advertisers grew 3.5% year-over-year to 2,061, while average revenue per scaled advertiser rose 5% to approximately $193,000. Both metrics came in above the prior year's figures of approximately 1,995 scaled advertisers and $184,000 average revenue.

Walker attributed ex-TAC Gross Profit growth primarily to higher advertising spend supported by Realize, alongside strong performance from Taboola News and what the company calls Bidded Supply - inventory acquired through real-time advertising exchanges rather than direct publisher relationships.

The go-to-market strategy has shifted toward what the company describes as verticalization, organizing sales teams around Ideal Customer Profiles in categories including travel, healthcare, auto, and personal finance. Krishan Bhatia joined as Chief Business Officer to lead this effort. According to Singolda, these industry-aligned teams are producing stronger advertiser retention and spend growth.

Realize+ and the agentic advertising layer

Two weeks before the earnings announcement, Taboola launched Realize+, an agentic advertising system that automates campaign decisions in real time, including audience targeting, creative generation, placements, and continuous optimization. Advertisers who prefer full automation can provide only a budget and objective; the system handles the rest. Those who prefer manual control can continue using the underlying Realize platform.

The architecture places Realize+ alongside Meta's Advantage+ and Google's Performance Max as a class of fully automated campaign systems. Taboola also opened Realize to Claude Skills from Anthropic, allowing advertisers and agencies to manage campaigns from within the Claude environment - a development PPC Land covered on April 23, 2026. That integration places Taboola alongside other ad tech vendors moving toward AI-native workflows as an entry point for performance marketing teams.

This product development is directly relevant to how Singolda frames the company's competitive position. According to his prepared remarks, the winners in an AI-driven advertising environment will be those with unique data that large language models cannot access, or unique supply and distribution. Taboola's argument is that code-on-page integrations with publishers, combined with data from Taboola News and intent signals derived from billions of ad clicks, represent exactly that kind of proprietary data set.

Yahoo partnership and geographic detail

The 30-year commercial agreement with Yahoo, signed in November 2022, remains a structurally significant part of Taboola's revenue base. Revenues from Yahoo - where Taboola powers native advertising across Yahoo's digital properties - reached $69.7 million in Q1 2026, representing 14.9% of total company revenue, up from $48.3 million and 11% in Q1 2025. Traffic acquisition costs paid to Yahoo were $96.8 million for the quarter, up from $82.2 million a year earlier. Trade receivables from Yahoo stood at $51.3 million as of March 31.

The commercial agreement asset, carried on Taboola's balance sheet at $266.2 million as of March 31, reflects the shares Taboola issued to Yahoo at the time of the deal - valued at $288 million - amortized over an 18-year economic benefit period. Quarterly amortization of $4.037 million runs through both the traffic acquisition cost line and the ex-TAC Gross Profit reconciliation.

Geographically, the United States generated $224.5 million in Q1 2026 revenue, up from $201.5 million a year earlier. Germany contributed $37.3 million, Israel $28.5 million, and the United Kingdom $16.1 million. The rest of world category delivered $160.1 million. The Israeli shekel's strength against the dollar was the primary driver of the FX headwind, given that Israel represents the largest single concentration of Taboola's employee cost base.

Full-year guidance raised

Taboola raised its 2026 full-year guidance across all metrics following the Q1 beat. The company now targets full-year revenues of $2.006 billion to $2.062 billion, compared to $1.912 billion in 2025 - a roughly 6% increase at the midpoint. Full-year gross profit guidance is $610 million to $630 million; ex-TAC Gross Profit guidance is $760 million to $781 million, implying 8% year-over-year growth. Adjusted EBITDA guidance stands at $222 million to $240 million, up 7% at the midpoint. Non-GAAP Net Income guidance is $167 million to $191 million.

For Q2 2026 specifically, the company expects revenues of $492 million to $505 million, gross profit of $147 million to $152 million, ex-TAC Gross Profit of $189 million to $194 million, Adjusted EBITDA of $49 million to $55 million, and Non-GAAP Net Income of $36 million to $43 million. Revenue is weighted roughly 47% to the first half and 53% to the second half, while Adjusted EBITDA is weighted approximately 34% to the first half and 66% to the second half - a pattern typical of digital advertising seasonality, where Q4 carries disproportionate spend.

Full-year guidance includes a forecasted foreign exchange headwind of approximately $13 million in operating expenses, primarily from the shekel. Excluding that effect, Adjusted EBITDA margins would be approximately 34% rather than the guided 30%.

Why this matters for the marketing community

For performance marketers and agencies on PPC Land, this earnings report carries several relevant signals. First, the growth in scaled advertisers and average revenue per scaled advertiser points to advertisers successfully shifting budgets to the open web beyond search and social - a trend the platform has actively cultivated through Realize. Second, the launch of Realize+ and Claude Skills integration represents a meaningful shift in how performance campaigns may be managed: through conversational AI interfaces rather than traditional campaign management platforms.

Third, the FX headwind and Israeli operations cost concentration are factors that constrain margin improvement regardless of revenue performance - a structural dynamic that will persist. Fourth, the legal settlement inflates Q1 free cash flow in a way that will not repeat in subsequent quarters, which matters for interpreting capital return capacity under the buyback program.

The broader competitive context is also shifting. Taboola has expanded its publisher network through Realize platform partnerships with TIME, Weather Channel Digital, Gannett, Nexstar, and Slate, and has moved into CTV performance measurement through its partnership with LG Ad Solutions. Those moves extend Taboola's total addressable market and give performance advertisers more inventory options outside the traditional walled gardens. Whether that translates into sustained double-digit growth - the target Singolda has articulated for the long term - remains to be seen in subsequent quarters.

Timeline

  • November 2022 - Taboola signs 30-year commercial agreement with Yahoo, issuing $288 million in shares as an upfront traffic acquisition payment; the commercial agreement asset is amortized over 18 years beginning January 2024.
  • June 2023 - Taboola board authorizes share buyback program with no expiration date; initial authorization of $80 million.
  • February 2024 - Board authorizes additional $100 million under the buyback program.
  • February 2025 - Taboola launches Realize performance advertising platform; board authorizes additional $200 million buyback.
  • March 18, 2025 - Taboola enters into a $270 million revolving credit facility with Bank of America, replacing a prior term loan and revolving facility; the 2021 Credit Agreement is extinguished, generating a $6.6 million loss on debt extinguishment.
  • June 4, 2025 - Taboola launches Predictive Audiences, an AI-powered targeting capability reporting up to 270% conversion improvements for early adopters.
  • July 2025 - Board authorizes additional $200 million buyback.
  • October 15, 2025 - Taboola expands Realize platform partnerships with TIME, Weather Channel Digital, Gannett, Nexstar, and Slate to include display inventory.
  • October 22, 2025 - Taboola and Paramount launch Performance Multiplier for small business CTV measurement - the first major streaming provider to adopt Realize AI technology.
  • December 3, 2025 - LG Ad Solutions and Taboola announce Performance Enhancer connecting CTV exposure to digital conversions via Realize.
  • February 5, 2026 - Taboola enters a binding legal settlement as plaintiff, generating approximately $77 million pre-tax income net of legal fees.
  • February 25, 2026 - Taboola reports Q4 and full-year 2025 results: full-year revenue $1.912 billion, up 8.3%; free cash flow $163.4 million.
  • April 8, 2026 - Taboola announces DeeperDive has reached 7 million monthly active users and expands to six new languages.
  • April 23, 2026 - Taboola launches Realize+, an agentic AI system automating open web performance campaigns, alongside Claude Skills integration.
  • April 2026 - Taboola undertakes a workforce reduction of approximately 6%, representing around 100 employees.
  • May 6, 2026 - Taboola reports Q1 2026 results: revenue $466.4 million (+9.1%), net income $59.1 million (versus net loss $8.8 million in Q1 2025), Adjusted EBITDA $26.7 million (-25.7%), free cash flow $90.3 million; raises full-year 2026 guidance across all metrics; files 10-Q with the SEC.

Summary

Who: Taboola (Nasdaq: TBLA), a New York-based performance advertising technology company incorporated in Israel, with CEO Adam Singolda and CFO Steve Walker.

What: Q1 2026 financial results showing $466.4 million in revenue (+9.1%), $59.1 million GAAP net income (improved from a $8.8 million net loss), $26.7 million Adjusted EBITDA (-25.7%), and $90.3 million free cash flow - alongside a raised full-year 2026 guidance. A one-time legal settlement of approximately $77 million materially inflated GAAP net income and free cash flow but was excluded from non-GAAP measures. The company also disclosed a roughly 100-person workforce reduction and the April 23 launch of Realize+, an agentic advertising product.

When: Results are for the fiscal quarter ended March 31, 2026, announced on May 6, 2026.

Where: Taboola operates globally, with its principal executive offices at 16 Madison Square West, New York, NY 10010. The company's largest cost concentration is in Israel. Revenue is generated across the United States, Germany, the United Kingdom, Israel, and rest of world markets, reaching over 600 million daily active users through its publisher network.

Why: The report matters because it confirms that Taboola's Realize platform is generating measurable advertiser growth - 3.5% more scaled advertisers and 5% higher average revenue per scaled advertiser year-over-year - while the company simultaneously executes capital returns through aggressive share repurchases. The divergence between GAAP net income (boosted by a non-recurring settlement) and non-GAAP Adjusted EBITDA (down 25.7%) illustrates the importance of looking past headline figures for performance marketers and investors evaluating the underlying business trajectory. The Realize+ launch and Claude Skills integration add a structural dimension: Taboola is repositioning itself as an AI-native platform competing for advertiser budgets alongside Meta's Advantage+ and Google's Performance Max.

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