Executive Summary

Strong execution: Q2 revenue $465.5M, ex-TAC gross profit $172.1M, and Adjusted EBITDA $45.2M all exceeded the high end of guidance; FY25 guidance raised across all key metrics .
Quality of growth improved: ex-TAC GP grew 15.1% YoY (FX tailwind ~45 bps) driven by higher ad spend, mix shift to higher-margin publishers, Taboola News and Bidded Supply; Adjusted EBITDA margin expanded to 26.2% (+130 bps YoY) on cost discipline and infrastructure savings .
Capital returns accelerated: ~12% of shares repurchased in 1H25; board authorized an incremental $200M, bringing total authorization to ~ $285M as of Aug 1; net cash ~$27M, revolver provides flexibility .
Key stock catalysts: raised FY25 guide, improving profitability/FCF conversion, early traction from Realize (performance ads beyond native), and continued buybacks; watch ARPSA growth pace and China/tariff sensitivity .

What Went Well and What Went Wrong

What Went Well
- Beat-and-raise quarter: Revenue, ex-TAC GP, and Adjusted EBITDA all topped high end of guide; FY25 guidance lifted across revenue, gross profit, ex-TAC GP, Adjusted EBITDA, and Non-GAAP NI .
- Profitability mix improving: 15.1% ex-TAC GP growth on higher-margin publisher mix and contributions from Taboola News and Bidded Supply; margin expansion aided by lower server/network depreciation .
- Strategic momentum: Early traction from Realize with ~650 advertisers testing display/social since February; CEO: “We’re raising full-year guidance across the board…exciting early traction with Realize” .
What Went Wrong
- ARPSA growth modest: Average revenue per scaled advertiser rose ~2% YoY; analysts flagged the low growth vs the strategic goal of expanding budgets from existing clients .
- China/tariff headwind: China-related spend had been a modest drag (~1% impact previously); management assumes no recovery in 2H25 despite slight recent improvement .
- GAAP EPS still negative: Diluted GAAP EPS remained ($0.01); non-GAAP profits positive, but GAAP net loss persisted at ($4.3M) .

Financial Results

Overall performance vs prior two quarters (oldest → newest):

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$491.0	$427.5	$465.5
Gross Profit ($M)	$177.6	$119.3	$135.6
ex-TAC Gross Profit ($M)	$212.7	$151.7	$172.1
Adjusted EBITDA ($M)	$92.3	$35.9	$45.2
Non-GAAP Net Income ($M)	$73.3	$25.0	$30.2
GAAP Diluted EPS ($)	$0.10	($0.03)	($0.01)
Cash from Operations ($M)	$61.9	$48.1	$47.4
Free Cash Flow ($M)	$51.9	$36.1	$34.2
Cash & Equivalents ($M)	$230.4	$216.2	$115.2

Q2 2025 YoY growth vs Q2 2024:

Metric	Q2 2025 YoY
Revenue	+8.7%
Gross Profit	+18.2%
ex-TAC Gross Profit	+15.1% (FX +0.5%)
Adjusted EBITDA	+21.3% (margin 26.2% vs 24.9%)

Consensus vs actual (Q2 2025):

Metric	Consensus*	Actual	Result
Revenue ($M)	$448.6*	$465.5	Beat
Primary EPS (Non-GAAP) ($)	$0.083*	$0.096*	Beat

Values retrieved from S&P Global.

KPIs and metrics:

KPI	Q2 2025	Prior Year / Comment
Scaled Advertisers YoY growth	+8.5%	Healthy new-customer adds
Avg Rev per Scaled Advertiser YoY	+1.8%	Modest; mix reflects newer advertisers start smaller
Adjusted EBITDA margin	26.2%	24.9% in Q2’24
Taboola News	Double-digit growth	Key unique supply driver

Drivers and mix commentary:

ex-TAC GP growth driven by higher ad spend, shift to higher-margin digital property partners, Taboola News and Bidded Supply; partial favorable compare from Yahoo onboarding in the year-ago period .
Gross profit benefited from cost actions, including reduced server/network depreciation following useful life reassessment .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	FY 2025	$1,838–$1,888	$1,858–$1,888	Raised (low end)
Gross Profit ($M)	FY 2025	$536–$552	$541–$555	Raised
ex-TAC Gross Profit ($M)	FY 2025	$674–$690	$689–$703	Raised
Adjusted EBITDA ($M)	FY 2025	$201–$209	$208–$214	Raised
Non-GAAP Net Income ($M)	FY 2025	$122–$128	$138–$144	Raised materially
Revenue ($M)	Q3 2025	—	$461–$469	New
Gross Profit ($M)	Q3 2025	—	$127–$133	New
ex-TAC Gross Profit ($M)	Q3 2025	—	$166–$172	New
Adjusted EBITDA ($M)	Q3 2025	—	$43–$48	New
Non-GAAP Net Income ($M)	Q3 2025	—	$29–$34	New
Share repurchase authorization	n/a	—	+$200M incremental; total auth. ~ $285M as of Aug 1	Expanded

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
AI/Technology initiatives	Launch of Realize performance platform; focus on 2025 investments	Building momentum; above guidance; Realize traction noted	Early traction: ~650 advertisers tested display/social; expanding beyond native	Positive adoption, still early
Macro/tariffs	Not highlighted in PR	Stable ad market backdrop	Stability; tariffs watched; assuming no China recovery in 2H	Neutral to slight headwind from China
Product performance	2024 transformative; strong results	Broad-based growth in native	Taboola News double-digit growth; Bidded Supply strong	Improving mix/unique supply
Regional trends	Global footprint noted	—	China modest drag (~1% previously), ~5% of revenue; slight recovery, not in guide	Cautious on China
Regulatory/legal	—	—	Buyback process subject to Israeli approvals; no update on 25% exemption	Ongoing
R&D/Infrastructure	—	—	Lower server/network depreciation benefited gross profit	Cost discipline continues
Capital allocation	Authorization +$200M announced	Returning capital via buybacks	~12% shares repurchased 1H25; +$200M incremental authorization	Aggressive buybacks sustained

Management Commentary

CEO: “We delivered a strong second quarter, beating the high end of our guidance…raising full-year guidance across the board…seeing exciting early traction with Realize…We truly believe we're just getting started.”
CEO on Realize: “Realize expands our reach beyond native…display and social…650 advertisers have already tested our new display and social capabilities since the February launch.”
CEO on open web/LLMs: Minimal impact to date; only ~5% of company traffic from Google search; sees opportunity for LLM experiences on publisher sites creating new high-intent touchpoints .
CFO: “Adjusted EBITDA margin was 26.2%, improved by 130 bps YoY…benefited from healthy ex-TAC growth and strong cost discipline…We ended Q2 with net cash ~$27.2M; $270M revolver provides significant liquidity.”

Q&A Highlights

Path back to double-digit growth: Management pegs Realize as the primary lever to re-accelerate beyond the 3–5% FY growth embedded in FY25 guide; not yet in FY25 outlook .
ARPSA debate: Analysts questioned modest +2% ARPSA; CFO notes mix effect from onboarding new scaled advertisers; considering “same-store” disclosure in the future .
Open web durability vs AI search: CEO argues limited current impact and long-term opportunity from publisher-embedded LLMs elevating intent moments .
China/tariffs: Slight recovery observed but not embedded in guidance; China ~5% of revenue, prior drag ~1% .
Capital allocation: Company using revolver to run cash-neutral on average and prioritize buybacks; incremental $200M authorization secured .

Estimates Context

Q2 2025: Revenue and Primary (non-GAAP) EPS both beat S&P Global consensus; revenue $465.5M vs $448.6M*; Primary EPS $0.096* vs $0.083* . Values retrieved from S&P Global.
Implication: Estimate revisions likely skew positive on revenue and non-GAAP EPS; Adjusted EBITDA performance and raised FY guide should also support upward tweaks to FY25 profitability frameworks .

Values retrieved from S&P Global.

Key Takeaways for Investors

Beat-and-raise quarter with expanding profitability and strong FCF conversion; execution credibility improving .
Mix shift and infrastructure optimization underpin margin expansion; these drivers appear durable into 2H25 .
Realize is the medium-term growth call option; early traction across display/social broadens TAM beyond native; tangible KPI to track is growth in scaled advertisers and ARPSA acceleration .
Unique supply (Taboola News, OEM lock screens) offers differentiated performance inventory as alternatives to search/social saturate .
China remains a watch item; guidance prudently assumes no rebound despite slight recent improvement .
Aggressive buybacks (12% in 1H25) and additional $200M authorization provide support; revolver gives flexibility with net cash position maintained .
Near-term setup: Q3 guide implies continued stability; track estimate revisions post-raise and any disclosures on Realize monetization milestones .

Appendix: Current Guidance Detail

Q3 2025 and FY 2025 (as of Aug 6, 2025):

Metric	Q3 2025 Guidance	FY 2025 Guidance
Revenue ($M)	$461–$469	$1,858–$1,888
Gross Profit ($M)	$127–$133	$541–$555
ex-TAC Gross Profit ($M)	$166–$172	$689–$703
Adjusted EBITDA ($M)	$43–$48	$208–$214
Non-GAAP Net Income ($M)	$29–$34	$138–$144

Management notes they cannot reconcile non-GAAP guidance to GAAP without unreasonable effort due to variability in items like share-based compensation and warrant valuations .

Taboola.com Ltd. (TBLA)·Q2 2025 Earnings Summary