Taboola enters its third-quarter report asking investors to accept an unusual trade: a shrinking top line in exchange for better economics. Last quarter management cut its full-year revenue outlook while raising its forecasts for ex-TAC gross profit and adjusted EBITDA. It argued that losing low-quality supply and an abruptly deprecated Google product would hurt near-term revenue but leave a healthier, higher-margin business. The September quarter is the first full period to absorb both hits, which makes it the cleanest test yet of whether that story holds.
Wall Street is braced for contraction. Consensus calls for revenue of $467.8 million, down about 5.8% from $496.8 million a year ago and below the $476.8 million reported last quarter. That estimate sits just above the midpoint of management's $460 million to $473 million guidance range, so the Street has fully reset after the cut rather than holding out for something better. Earnings are expected at $0.10 per share, up from $0.09 last quarter and $0.07 a year earlier. That gain would come from mix, cost discipline and an aggressive buyback that has retired roughly a fifth of the share count since 2025.
The revenue line matters, but mostly as a credibility check. Taboola missed its own second-quarter revenue guidance by a wide margin, and a second miss would suggest management still cannot see the edges of its problems. The more important number is ex-TAC gross profit. Management lifted its full-year range to $772 million to $783 million and its ex-tech growth target to 9%, even after absorbing a drag of more than $20 million from Explore More in the second half. Ex-TAC grew 12% last quarter to $192.4 million as reduced supply pushed ad rates higher. If that growth rate holds near double digits with the Google headwind now fully in the numbers, the pruning thesis gains real weight. A sharp slowdown would suggest that higher pricing cannot offset lost volume.
The advertiser metrics deserve close attention. Scaled advertiser growth slowed to 2% last quarter, and average revenue per scaled advertiser was flat after rising 5% in the first quarter. Stabilization, or any improvement, would show demand holding as the inventory mix shifts. Further deterioration would raise the question of whether the slump reflects broader pressure on the open web. Management itself flagged that AI-driven declines in search referrals are reducing display impressions. Investors should also look for early signs that NextEngage is recovering Explore More revenue within Google's rules. They will want updates on the Fox News ramp and timing for the full-page monetization deal with a large existing publisher, which management expects to begin contributing in the fourth quarter. Progress on Realize Plus, which had more than 300 advertisers in beta, and on Deeper Dive's CPM uplift would help show that the 2027 recovery case rests on more than promises.
The market has not been patient. Shares are down 9.4% since the last report, trailing the S&P 500 by about 8 percentage points. At $3.38 the stock trades well below its 200-day moving average of $4.02 and sits near the bottom of its post-earnings range of $3.18 to $4.20. That range lies entirely below the prior quarter's $4.06 to $5.71 band. Sentiment has become less bearish, improving from roughly 42.6% bearish to 23.9% bearish, which suggests some investors think the worst is priced in. Even so, the readings remain negative.
In the end, this report comes down to whether Taboola can keep its profit guidance intact while revenue falls. Holding or raising the ex-TAC and EBITDA targets, with no new one-time charges like last quarter's $12 million publisher prepayment write-down, would support management's short-term-pain argument. Another reduction in those preferred metrics would undercut the story Taboola has asked investors to believe.