Taboola Q1 2025 slides: Revenue beats guidance, adjusted EBITDA surges 53%

Digital advertising company Taboola (NASDAQ:TBLA) delivered a strong first quarter for 2025, exceeding guidance across all key metrics and showing significant improvement after a disappointing fourth quarter of 2024. The company’s May 7, 2025 investor presentation revealed robust growth in profitability metrics and provided an optimistic outlook for the remainder of the year.

Introduction & Market Context

Taboola’s stock jumped 9.71% in premarket trading to $3.39 following the release of its Q1 2025 results, signaling investor confidence in the company’s performance. This positive reaction marks a significant turnaround from the previous quarter, when the stock dropped 10.81% after missing earnings expectations.

The digital advertising company, led by founder and CEO Adam Singolda, has been working to expand beyond its core native advertising business with the official launch of its "Realize" performance advertising platform, which aims to tap into a larger market opportunity.

Quarterly Performance Highlights

Taboola significantly exceeded its guidance across all key financial metrics for Q1 2025. Revenue reached $427.5 million, representing a 3% year-over-year increase and surpassing the high end of the company’s guidance range of $407-427 million.

As shown in the following chart of Q1 2025 actual results versus guidance:

Particularly impressive was the company’s profitability improvement, with adjusted EBITDA of $35.9 million representing a 53% year-over-year increase and substantially exceeding the guidance range of $22-26 million. Gross profit grew 10% year-over-year to $119.3 million, while ex-TAC gross profit increased 9% to $151.7 million.

These results demonstrate a significant rebound from Q4 2024, when Taboola missed analyst expectations with revenue of $410 million (below the forecast of $476.56 million) and EPS of $0.10 (versus the expected $0.11).

Strategic Initiatives

A key highlight of Taboola’s Q1 performance was the growth in its advertiser base and the official launch of its "Realize" platform. The company reported that its total number of scaled advertisers grew 9% year-over-year to 1,996, though the average revenue per scaled advertiser decreased slightly by 3% to approximately $184,000.

The following slide details these business highlights and key publisher partnerships:

Taboola’s strategy continues to focus on expanding its publisher network, with notable wins and renewals including Kakao, Oricon News, Bauer Xcel Media, Le Figaro, Prensa Iberica, and Business Insider. The company also announced a new supply partnership with Line, a popular mobile messaging app, further expanding its distribution capabilities.

The growth in scaled advertisers has been a consistent trend for Taboola, as illustrated in this chart showing the increasing number of advertisers contributing significant revenue:

Forward-Looking Statements

Building on its strong Q1 performance, Taboola provided optimistic guidance for both Q2 2025 and the full year. For the second quarter, the company expects:

• Revenues of $438-458 million, representing 5% year-over-year growth
• Gross profit of $124-134 million, up 14% year-over-year
• Ex-TAC gross profit of $156-166 million, an 8% increase
• Adjusted EBITDA of $38-44 million, a 10% improvement

For the full year 2025, Taboola projects:

The full-year guidance suggests continued growth, with revenues expected to reach $1,838-1,888 million (5% year-over-year growth), gross profit of $536-552 million (2% growth), ex-TAC gross profit of $674-690 million (2% growth), and adjusted EBITDA of $201-209 million (2% growth).

This guidance represents a more conservative outlook for the latter half of 2025, with stronger growth projected for the first half of the year.

Financial Model & Long-term Trends

Taboola’s financial model continues to demonstrate the company’s ability to generate high incremental margins. The presentation included a clear breakdown of the company’s economic model, showing how each dollar of revenue flows through to free cash flow:

This model illustrates how Taboola converts approximately 31% of revenue to ex-TAC gross profit, with an adjusted EBITDA margin of around 7.4% of revenue. The company expects free cash flow to represent 50-60% of adjusted EBITDA, according to its modeling assumptions.

Historically, Taboola has shown consistent growth in both revenue and profitability metrics. The following chart illustrates the company’s revenue and ex-TAC gross profit trajectory from 2019 to projected 2025 figures:

One of the most impressive aspects of Taboola’s financial performance has been the improvement in its profitability ratios. The ratio of adjusted EBITDA to ex-TAC gross profit has increased significantly, from 11% in 2019 to 30% in 2024, demonstrating the company’s ability to scale efficiently:

Detailed Financial Analysis

Taboola’s growth strategy is driven by both new publisher acquisition and improved monetization of existing publishers. The company reported that publisher net dollar retention reached 105% in 2024, indicating that existing publishers are increasing their spending with Taboola year-over-year.

The company’s balance sheet remains strong, with more cash than debt according to the earnings article. This financial flexibility positions Taboola well for continued investments in its technology platforms and potential strategic acquisitions.

For investors focused on cash flow, Taboola’s historical free cash flow reconciliation shows a generally positive trend, though with some fluctuations:

The company’s guidance for 2025 suggests continued focus on profitability and cash flow generation, with adjusted EBITDA expected to grow in line with revenue.

Conclusion

Taboola’s Q1 2025 results represent a strong rebound from its disappointing Q4 2024 performance. The company exceeded guidance across all key metrics, with particularly impressive growth in adjusted EBITDA. The launch of the "Realize" platform and continued expansion of the publisher network suggest that Taboola is successfully executing on its growth strategy.

While the company’s guidance for the full year 2025 shows more modest growth than the Q1 results might suggest, Taboola appears well-positioned to continue its trajectory of improving profitability and cash flow generation. Investors will be watching closely to see if the company can maintain this momentum throughout the remainder of 2025.

Full presentation:

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