Taboola entered the second half of 2026 in a position its own filings had never shown before: a company whose revenue has essentially stopped growing, but whose unit economics are improving fast enough to raise guidance twice in one year. The second-quarter print looked unimpressive on the top line, with revenue barely above the prior year, and even slower than the 8.3 percent growth the company delivered in 2025. Yet the same quarter carried an 11.8 percent increase in ex-TAC gross profit. Adjusted EBITDA rose 22.8 percent to $55.5 million, and management raised full-year guidance on both metrics. The investment debate is whether a business that adds almost no revenue can still compound its cash earnings at a rate the stock has not yet priced in.
The mechanism dates to the 30-year exclusive commercial agreement with Yahoo. It keeps replacing lower-yield publisher relationships with higher-yield ones, and that rotation is the whole engine of the margin story. The second quarter delivered new digital property partners contributing $43.7 million of new revenue on a 12-month run-rate basis. Management is also trimming the cost base, having recorded a $5.97 million workforce reduction charge in April. The guarantee overhang that historically ate into traffic costs has fallen to 13 percent of traffic acquisition cost, down from 16 percent a year earlier. The counterargument is direct: existing partners declined by $32.4 million on the same run-rate basis, so the company is churning at the margin, and a single quarter of mix improvement does not prove the churn has ended.
The variables that resolve the thesis over the next two quarters are the ex-TAC gross profit run-rate against the raised full-year guide. The other two are the pace at which new partner revenue offsets the decline among incumbents, and whether the April restructuring produces expense savings that survive into 2027. At $3.62, the stock trades well below its 52-week high. At a market cap near $978 million, the shares price full-year adjusted EBITDA at barely five times, which is the market paying for a stagnant topline rather than for the margin inflection. Whether that gap closes depends on one number: whether ex-TAC gross profit keeps outgrowing revenue.