Taboola Raises 2026 Outlook After Strong First Quarter as AI Driven Advertising Platform Realize Accelerates Growth

Taboola reported first quarter revenue of 466.4 million dollars, representing year over year growth of 9 percent. Ex TAC gross profit increased 11 percent to 168.1 million dollars, while gross profit rose 9 percent to 129.6 million dollars. Adjusted EBITDA reached 26.7 million dollars despite foreign exchange pressure tied largely to the Israeli shekel.

The company also generated strong cash flow during the quarter. Operating cash flow totaled 108.7 million dollars and free cash flow reached 90.3 million dollars, supported partly by proceeds from a legal settlement. Taboola ended the quarter with 150.3 million dollars in cash and cash equivalents and maintained more than 200 million dollars in available liquidity under its revolving credit facility.

Management used part of that financial strength to continue aggressive share repurchases. During the quarter, Taboola bought back around 7 million shares for 23.5 million dollars. Executives said the company has repurchased approximately 19 percent of its shares since 2025 and intends to continue allocating most free cash flow toward buybacks.

The company now expects full year 2026 revenue between 2 billion and 2.06 billion dollars, while adjusted EBITDA is projected between 222 million and 240 million dollars. The raised guidance reflects management’s expectation that advertiser demand and platform adoption will continue strengthening throughout the year.

The strongest theme throughout the earnings discussion was the growing importance of Realize, Taboola’s AI driven advertising platform designed to help marketers achieve measurable business outcomes across the open web. The company believes the platform is becoming the primary engine behind both advertiser retention and higher spending.

Taboola said the number of scaled advertisers, defined as advertisers spending more than 100,000 dollars annually on the platform, increased by 3.5 percent during the quarter. Average revenue per scaled advertiser climbed 5 percent. According to management, these larger advertisers tend to deliver more stable and predictable revenue because they have already tested and optimized campaigns successfully on the platform.

Executives argued that advertiser growth is being driven by multiple technology improvements inside Realize. These include predictive audience targeting, automated bidding systems, stronger user identity graphs across devices, and better use of intent signals generated from publisher content and ad engagement.

The company also pointed to increasing advertiser demand for diversified ad formats. Realize now supports display advertising, vertical video campaigns, in app inventory, and full screen placements across original equipment manufacturer ecosystems. Management said these capabilities are helping advertisers expand beyond traditional recommendation widgets into broader performance marketing campaigns.

One of the most important announcements from the quarter was the launch of Realize Plus, an automated advertising framework that management compared with Google Performance Max and Meta Advantage Plus.

Realize Plus is designed for advertisers that want automation instead of manual campaign management. Rather than setting individual campaigns and optimization rules themselves, advertisers can provide a budget and objective while the system automatically manages targeting, bidding, creative generation, placements, and optimization in real time.

Taboola believes this automation could become a major competitive advantage because many advertisers increasingly prefer simplified campaign management tools powered by AI. According to executives, some advertisers currently operate dozens or even hundreds of campaigns manually through Realize, while Realize Plus could eventually automate thousands of campaign variations daily.

Management said the long term goal is not only operational simplicity but also greater advertising performance. The company believes AI driven optimization can help advertisers spend more confidently over time because the system continuously adapts to changing market conditions and audience behavior.

Artificial intelligence was central to nearly every strategic discussion during the call. Executives repeatedly framed Taboola as an AI native advertising business positioned to benefit from the next wave of agent driven internet activity.

Singolda discussed how AI agents and large language models may transform the advertising industry by enabling advertisers to manage campaigns directly through conversational systems instead of traditional dashboards. He specifically referenced integrations with Claude, describing a future where marketers could buy search, social, television, and open web advertising from AI assistants without leaving conversational interfaces.

According to management, the company has already launched a capability allowing users to interact with Realize through agent to agent communication inside Claude. The company sees this as an early step toward a larger industry shift where advertising platforms compete not only on inventory but also on the intelligence and accessibility of their AI systems.

Taboola executives argued that the future winners in AI driven advertising will be companies that possess either unique data or unique distribution. The company believes it has both due to its extensive relationships with publishers, apps, and device manufacturers combined with billions of consumer engagement signals collected across the open web.

Another emerging product discussed during the earnings call was DeeperDive, Taboola’s AI powered search and recommendation experience for publishers. Although still financially small relative to the broader business, management expressed strong optimism about its future potential.

The company said DeeperDive is being adopted by several major publishing partners and is generating encouraging advertising performance metrics. Executives claimed the platform is producing strong effective CPMs and advertiser conversion rates, suggesting that conversational discovery experiences could eventually become an important monetization layer for publishers.

Taboola views DeeperDive as more than a traditional search feature. Management described it as a ChatGPT like experience tailored specifically for publishers and supported by first party data insights that help generate more relevant questions and recommendations for readers.

The company believes AI powered discovery experiences may help publishers strengthen audience engagement while creating additional advertising inventory that performs better than conventional placements.

Despite the strong quarter, management acknowledged that foreign exchange volatility remains a meaningful challenge for profitability in 2026. The Israeli shekel, where the company has significant employee and operational exposure, created a notable headwind during the quarter.

Executives said foreign exchange effects reduced first quarter adjusted EBITDA by approximately 4.7 million dollars. For the full year, Taboola expects foreign exchange related operating expense pressure of roughly 13 million dollars.

Even with those challenges, the company maintained confidence in its profitability outlook and said adjusted EBITDA margins would approach 34 percent without the currency headwind.

Throughout the earnings call, management repeatedly stressed that Taboola’s strategy is focused on sustainable organic growth rather than large acquisitions. Executives said the company’s priority is improving advertiser outcomes, strengthening relationships with publishers, and building technology that increases spending efficiency over time.

Singolda also emphasized growing interest from companies seeking alternatives to dominant digital advertising ecosystems. He suggested that more publishers and platforms are looking for partnerships outside Google and Meta as they attempt to diversify monetization strategies and maintain greater control over their advertising businesses.

At the same time, Taboola is continuing internal restructuring and efficiency improvements supported partly by AI tools. While headcount has declined from previous levels, executives said the broader goal is not necessarily reducing employees but improving productivity through automation and AI assisted development.

Management indicated that engineering teams are already exploring projects designed to multiply development efficiency significantly using AI systems.

The broader digital advertising industry remains highly competitive, with major platforms investing heavily in AI powered campaign automation and predictive targeting systems. Google, Meta, and Amazon continue to dominate global advertising spending, while emerging AI driven search experiences are reshaping how consumers discover content online.

Taboola is attempting to position itself as one of the largest independent performance advertising companies operating outside those major walled gardens. The company believes the open web still represents a significant opportunity if advertisers can achieve measurable performance outcomes comparable to those available on larger platforms.

The latest earnings report suggests investors and advertisers will closely watch whether Realize and Realize Plus can continue delivering higher advertiser spending and retention throughout 2026. If adoption accelerates as management expects, Taboola may strengthen its position as a meaningful AI powered advertising player during a period of rapid transformation across the digital media industry.