Taboola (TBLA) Earnings Preview: Can Q1 2025 Deliver a Turning Point?

Investors are poised for Taboola’s (NASDAQ:TBLA) Q1 2025 earnings report, due before markets open on May 7. With the company recently indicating results are tracking toward the high end of its guidance, the release could mark a critical inflection point for the digital advertising platform. Let’s dissect the expectations, risks, and what this means for shareholders.

Q1 2025: A Modest Growth Milestone?

Analysts project $144.3 million in revenue, representing a 3.9% year-on-year increase. While this growth pales compared to the 20% YoY surge in Q1 2024, it would still be a positive sign for a company that has missed revenue estimates four times over the past two years. The optimism stems from Taboola’s Realize platform, which now reaches ~600 million daily active users via partnerships with publishers like NBC News and OEMs such as Samsung.

The platform’s focus on performance-driven ads—targeting measurable outcomes beyond social and search—has positioned it as a niche player in a crowded space. However, the slowdown in growth underscores the broader challenge of sustaining momentum in an ad market still navigating macroeconomic headwinds.

Profitability and Non-GAAP Metrics: Proceed with Caution

While revenue is the headline, investors should scrutinize Taboola’s ex-TAC Gross Profit and Adjusted EBITDA, which are central to its guidance. These non-GAAP metrics exclude transaction costs (TAC) and one-time expenses, offering a clearer view of operational health. However, reliance on such measures is a red flag, as GAAP net income is volatile due to variables like share-based compensation and warrant valuations.

Despite these complexities, the stock has surged 18% over the past month, buoyed by optimism around its Q1 guidance and the media sector’s 11.2% average gain among peers. Analysts now average a $3.96 price target, up from $3.08 in February, suggesting confidence in a sustained recovery.

Competitor Landscape: A Mixed Bag for Peers

Taboola’s positive guidance contrasts with lackluster results from traditional media giants. For instance, Interpublic Group (IPG) reported -8.5% YoY revenue growth in Q1 2025, while Omnicom (OMC) missed estimates by 1.6%. This divergence highlights Taboola’s potential to outperform in a sector struggling with declining ad budgets and shifting consumer habits.

Yet, the company isn’t immune to macro risks. Advertisers’ spending sensitivity to economic cycles remains a key uncertainty, particularly as global inflation and interest rates linger above historical averages.

Risks and Roadblocks

1. Execution Risks: The Realize platform’s scalability hinges on retaining partnerships with publishers and OEMs. A misstep here could erode user growth.
2. Metric Transparency: Investors must parse GAAP vs. non-GAAP results carefully. For example, Q3 2024’s EPS miss (-$0.02 vs. $0.02 estimates) was masked by strong revenue.
3. Sector Headwinds: While peers falter, Taboola’s performance ad niche is no guarantee of immunity from broader ad market softness.

Conclusion: A Fragile Optimism

Taboola’s Q1 2025 results could be a pivotal moment. Hitting the high end of its guidance would validate its strategy of leveraging Realize’s global reach, potentially lifting its valuation closer to the $3.96 analyst target. However, investors must remain wary of non-GAAP dependencies and macroeconomic risks.

The May 7 earnings call will be critical. Management’s commentary on ex-TAC margin expansion, publisher partnerships, and pipeline momentum will provide clues about long-term resilience. With the stock up 18% on hopes of a rebound, the bar is set high—but if Taboola can demonstrate consistent execution, it may finally turn the corner after years of inconsistent results.

Final Take: Hold for now, but watch for post-earnings momentum. A beat on Adjusted EBITDA or ex-TAC Gross Profit could shift sentiment decisively.

Data as of April 2025. Past performance is not indicative of future results.