Taboola (Nasdaq: TBLA) released its fourth‑quarter and full‑year 2025 financial results, highlighting modest revenue growth, a shift in profitability metrics and an aggressive investment in its Realize platform. The data points to a company that is consolidating its position in the performance‑advertising space while navigating a competitive landscape dominated by AI‑enabled buying.
“2025 was not just about beating guidance — it was a turning point for Taboola and validation that Realize is working,” said Adam Singolda, CEO of Taboola. “We accelerated growth throughout the year, improved advertiser outcomes, generated strong free cash flow, and reduced our share count by 18%, all while continuing to invest heavily in AI‑driven innovation. As Realize gains traction, our proprietary intent data and deep distribution across the open web increasingly differentiate us in an AI‑driven world. We believe these structural advantages in data and distribution position Taboola to build the leading performance advertising company beyond Search and Social and drive long‑term expansion.”
Q4‑2025 performance in numbers
Taboola’s revenue for the quarter ended Dec 31 2025 reached $522.3 million, a 6.4 % increase versus Q4 2024’s $491.0 million. Annual revenue climbed to $1.9 billion, up 8.3 % from $1.77 billion the prior year. The growth, while positive, came amid a broader slowdown in digital ad spend and heightened competition from major platforms that have doubled down on AI‑based targeting.
Gross profit, however, showed a mixed picture. The company reported $175.6 million in Q4 gross profit—a 1.1 % dip from $177.6 million a year earlier—while full‑year gross profit rose to $569.5 million, an improvement of 6.6 % over 2024. When adjusted for “other cost of revenues” and the non‑cash amortization of the commercial‑agreement asset (the ex‑TAC Gross Profit metric), Q4’s figure was $212.8 million and the annual total $713.5 million, reflecting modest gains of 0.1 % and 6.9 % respectively.
Net income turned positive in both periods. The quarter generated $50.1 million in net income, while the full year posted $42.3 million—a swing from a $33.1 million profit and a $(3.8) million loss in the comparable 2024 periods. Adjusted EBITDA, a non‑GAAP profitability indicator that strips out financing, tax, depreciation, amortization and certain non‑recurring items, fell 6.6 % to $86.1 million in Q4 but rose 7.2 % to $215.5 million for the year. The resulting Adjusted EBITDA margin settled at 30.2 %, marginally above the 30.1 % recorded in 2024.
Operating cash flow remained healthy, with $59.7 million generated in the quarter and $208.4 million over the twelve months—slightly below the $61.9 million and $184.3 million reported a year earlier. Free cash flow, the cash left after capital expenditures, was $46.9 million for Q4 and $163.4 million for the year, compared with $51.9 million and $149.2 million respectively in 2024.
Why the numbers matter
Taboola’s modest top‑line growth suggests that its Realize platform—an AI‑powered, intent‑driven ad solution—has begun to resonate with advertisers seeking alternatives to search‑ and social‑centric buying. The company’s ability to turn that demand into free cash flow, despite an 18 % share‑count reduction, signals disciplined capital allocation. The decline in raw gross profit is offset by the ex‑TAC Gross Profit metric, which removes the amortization of a commercial‑agreement asset that, according to the firm, reflects equity‑based compensation rather than cash outlay.
Adjusted EBITDA’s slight dip in Q4 may be a short‑term artifact of higher investment in AI talent and infrastructure, a hypothesis supported by the CEO’s emphasis on “investing heavily in AI‑driven innovation.” The margin’s stability indicates that those investments have not yet eroded operating efficiency.
2026 guidance: a cautious yet optimistic outlook
Taboola projected Q1 2026 revenue in the $444 million–$462 million range, with full‑year revenue expected between $1.99 billion and $2.05 billion. The company anticipates ex‑TAC Gross Profit of $158 million–$164 million for the quarter and $753 million–$774 million for the year. Adjusted EBITDA guidance is set at $20 million–$26 million for Q1 and $222 million–$236 million for FY 2026. Non‑GAAP Net Income (Loss) is forecasted at a modest $(1) million–$7 million for the quarter and $165 million–$191 million for the full year.
Notably, Taboola refrains from offering GAAP net‑income guidance, citing the volatility of share‑based compensation, warrant valuations and other items that are difficult to predict. The company instead focuses on Adjusted EBITDA and Non‑GAAP Net Income as more reliable performance proxies.
Decoding the non‑GAAP metrics
- Ex‑TAC Gross Profit removes “other cost of revenues” and the non‑cash amortization tied to the commercial‑agreement asset. The company argues this yields a clearer view of cash‑based contribution margins, especially given the equity‑centric nature of the commercial agreement.
- Adjusted EBITDA strips out financing, taxes, depreciation, amortization, share‑based compensation, holdback compensation, M&A costs, revaluation of warrants, foreign‑exchange gains/losses, and debt extinguishment losses. The metric is intended to surface the underlying operating profitability that is not distorted by capital structure or one‑off accounting items.
- Adjusted EBITDA margin is simply Adjusted EBITDA divided by ex‑TAC Gross Profit, offering a profitability ratio that excludes the same adjustments applied to the top line.
These definitions, included in the release, are intended to help investors compare Taboola’s performance with peers that also report non‑GAAP figures.
Industry context: AI, intent data, and the battle for ad spend
Taboola’s emphasis on “Realize” and its proprietary intent data aligns with a broader industry shift toward AI‑enhanced targeting. Competitors such as Google, Meta and Amazon have been integrating large‑language‑model insights into their ad platforms, while emerging players like Tradedoubler and Revcontent are also courting advertisers with intent‑based solutions.
The company’s claim that its distribution spans “over 600 million daily active users across some of the best publishers in the world” underscores a strategic focus on inventory quality. Partnerships with high‑traffic publishers (e.g., NBC Universal, Yahoo) and OEMs (Samsung, Xiaomi) give Taboola a diversified supply chain that may mitigate the risk of over‑reliance on any single ecosystem—a concern that has haunted other ad tech firms when platform policy changes occur.
From an advertiser perspective, the promise of performance‑driven outcomes beyond search and social is compelling, especially as brands look to diversify spend away from the “big three” platforms that dominate market share. Taboola’s reported free cash flow generation suggests it can sustain its AI investments without compromising liquidity, a crucial factor as the sector faces heightened scrutiny over data privacy and measurement standards.
Risks and forward‑looking statements
The release contains a standard forward‑looking statement disclaimer, noting that actual results could diverge due to factors such as the ability to grow profitably, retain talent, regulatory changes, competitive pressure, third‑party cookie deprecation, geopolitical instability, and the company’s Israeli incorporation. The disclaimer also highlights the difficulty of forecasting GAAP net income because of unpredictable share‑based compensation and warrant valuations.
Investors are reminded that the guidance figures are based on management’s best estimates and are subject to change, especially given the rapid evolution of AI capabilities and the macroeconomic environment affecting ad budgets.
Bottom line
Taboola’s Q4‑2025 earnings paint a picture of a company transitioning from a growth‑centric phase to a more balanced model where cash generation and AI‑driven product differentiation take center stage. Revenue growth remains modest but steady, while profitability metrics show a nuanced shift—raw gross profit slipped, yet the ex‑TAC Gross Profit and Adjusted EBITDA margins held firm.
The 2026 outlook, anchored by a revenue target just shy of $2.1 billion and a focus on Adjusted EBITDA, suggests confidence in Realize’s market traction. Whether the platform can capture enough advertiser spend to offset the competitive pressure from larger, AI‑rich ecosystems will be a key narrative to watch in the coming quarters.
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