TBLA Q3 Deep Dive: Realize Platform Drives Growth, Margin Pressures Surface

Content discovery platform Taboola (NASDAQ:TBLA) announced better-than-expected revenue in Q3 CY2025, with sales up 199% year on year to $496.8 million. On top of that, next quarter’s revenue guidance ($537 million at the midpoint) was surprisingly good and 3.3% above what analysts were expecting. Its non-GAAP profit of $0.11 per share was 24.6% above analysts’ consensus estimates.

Is now the time to buy TBLA? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Taboola’s third quarter results were well received by the market, with shares rallying after the company delivered revenue, net profit, and adjusted EBITDA all above Wall Street’s expectations. Management cited the rollout of its Realize performance platform as a key factor, noting improved traction with larger advertisers and an uptick in average spend per customer. CEO Adam Singolda pointed to momentum from Realize, explaining, “Our new performance platform Realize is beginning to work for both advertisers and publishers.” The company also highlighted strong cash generation, which enabled significant share repurchases during the quarter.

Looking forward, Taboola’s guidance suggests confidence in further revenue acceleration, underpinned by continued adoption of the Realize platform and a broadening base of scaled advertisers. Management outlined plans to increase marketing investment and sustain technology upgrades to maintain momentum. CFO Stephen Walker emphasized, “We are seeing advertisers more likely to be successful coming on to our network now with the launch of Realize,” while also noting a commitment to maintaining disciplined cost structures despite increased growth investments.

Key Insights from Management’s Remarks

Management attributed the quarter’s growth to Realize’s performance, expansion in app-based traffic, and new publisher partnerships, while also discussing evolving investment priorities and product differentiation.

• Realize platform momentum: The Realize platform, Taboola’s AI-driven performance advertising solution, showed strong traction, with a 4% increase in scaled advertisers and an 11% rise in average revenue per scaled advertiser. This was driven by enhanced targeting, improved retention, and larger budget allocations from existing clients.

• App traffic expansion: Management highlighted a notable shift in traffic mix, with app-based traffic now accounting for roughly one-third of total supply. CEO Adam Singolda explained that app users are more engaged and less impacted by search engine changes, supporting more stable growth.

• New publisher and OEM partnerships: The company successfully onboarded new publishers and expanded relationships with device manufacturers (OEMs), such as Apple News and Samsung, fueling unique supply and advertiser demand. Taboola News, in particular, grew faster than the rest of the company and is seen as immune to challenges posed by large language models (LLMs).

• AI and productivity gains: Taboola continues to integrate artificial intelligence across its platform, using deep learning to optimize ad placement and predictive audience tools to improve conversion rates. New features like the Abby LLM-based assistant and productivity tools for internal teams contributed to higher yields and operational efficiency.

• Increased marketing investment: The company intentionally boosted marketing spend for Realize, citing higher advertiser success rates and improved return on investment from targeted campaigns, especially in verticals such as finance, auto, and health.

Drivers of Future Performance

Taboola expects ongoing growth to be driven by Realize platform adoption, expanded app traffic, and disciplined investment, while remaining mindful of margin pressures and competitive dynamics.

• Sustained Realize adoption: Management believes that continued expansion of the Realize platform, including new features and targeted marketing, will attract more scaled advertisers and increase average spend per client. The focus remains on retaining advertisers and driving higher campaign success rates.

• Margin discipline amid investment: While Taboola plans to maintain a 30% adjusted EBITDA margin target, the company expects increased marketing and technology investments to support long-term growth. CFO Stephen Walker indicated that operating expenses will grow in line with revenue, with Realize as the primary area of focus.

• Industry and platform risks: Management acknowledged headwinds from potential declines in certain advertiser segments and continued volatility in traffic sources. The company is also monitoring the evolving impact of AI-driven platforms and large language models on traditional web traffic and advertiser behavior.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team is watching (1) the pace of scaled advertiser growth and average spend on the Realize platform, (2) further expansion of app-based and OEM-driven traffic supply, and (3) signs of operating leverage as marketing and technology investments ramp. Progress on new publisher partnerships, the continued integration of AI, and the resilience of gross profit margins will also be critical indicators of execution and sustainability.

Taboola currently trades at $3.71, up from $3.34 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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