Taboola Misses Expectations and Lowers Guidance — Shares Drop on NASDAQ

Taboola published its second-quarter 2026 results, which showed a gap between the improvement in profitability metrics and the weakness in revenue. The company, which operates a platform for content recommendations and digital advertising, moved to a net profit and raised its annual EBITDA forecast, but missed the revenue forecast and lowered its annual outlook — and the stock is responding with a 26% drop on the NASDAQ exchange.

Behind the revenue miss and the forecast reduction are two factors that Taboola itself pointed to. The company's founder and CEO, the Israeli Adam Singolda, said that Taboola faced "two headwinds" during the quarter: a change in Google's policy that led to the discontinuation of the Explore More product, and the company's decision to cut ties with content sites that did not provide sufficient value to advertisers.

The Explore More product presented users with additional sponsored content from the content site after they clicked the back button in the browser. Taboola's CFO, Steve Walker, explained that "Google's policy no longer allows such products." According to him, the policy change and the reduction of the content site network were the main reasons why the quarter's revenue was lower than the forecast provided by the company. The impact is expected to continue in the second half of the year. The updated revenue forecast for 2026 includes the impact from the discontinuation of Explore More and the effect of cutting ties with content sites. Taboola estimated that the product was expected to contribute more than $20 million to gross profit excluding traffic acquisition costs in the second half of the year.

Taboola presented the reduction of the site network as a move intended to improve the quality of advertising space and results for advertisers, even at the cost of a decline in revenue in the short term. At the same time, the company stated that the expansion of Realize and Taboola News activities supported an 11.8% increase in gross profit excluding traffic acquisition costs to $192.4 million.

The company's revenue in the second quarter of 2026 totaled $476.8 million — an increase of 2.4% compared to the same quarter, but below the analysts' forecast of $499.4 million. Accounting profit stood at one cent per share, compared to an expectation of 4 cents, while adjusted EBITDA totaled $55.5 million and beat forecasts.

The company provided a revenue forecast of $460-473 million for the third quarter. The midpoint, $466.5 million, is 10% lower than the analysts' forecast, which stood at $518.1 million. The forecast reflects a 6.1% decrease compared to the same quarter. Taboola also lowered its revenue forecast for 2026 to a range of $1.93-1.96 billion. The midpoint is $1.94 billion, compared to $2.03 billion in the previous forecast and an analysts' expectation of $2.04 billion.

Adjusted EBITDA rose by 22.8% to $55.5 million, above the analysts' forecast of $52 million. The adjusted EBITDA margin rose to 28.8%, compared to 26.2% in the same quarter. The company moved to a net profit of $4.3 million, compared to a loss of $4.3 million in the same period. The operating profit margin reached 1.5%, compared to break-even a year earlier. On the other hand, the free cash flow margin fell to 3.6%, compared to 7.3% in the same quarter.

For the third quarter, Taboola expects an adjusted EBITDA of $51.5-56.5 million. The company raised its adjusted EBITDA forecast for the full year to a range of $228-240 million. Singolda said that Taboola beat its forecasts for gross profit excluding traffic acquisition costs and for adjusted EBITDA, and raised the annual forecast for both metrics. According to him, "The momentum we are seeing in Realize, the addition of Fox News, and other strategic achievements further strengthen our position as leaders in performance-based advertising."