"This is Taboola’s Amazon moment": Singolda bets big, but growth stalls
The company expands into a larger ad market, but forecasts a year of no revenue growth in 2025.
“This is Taboola's Amazon moment. Just as Jeff Bezos decided that the book market wasn't big enough and turned Amazon into a store for everything, so too is Taboola expanding beyond its niche to appeal to all advertisers. We are moving from a niche market to one that caters to all advertisers," says Adam Singolda, Taboola's founder and CEO, in an interview with Calcalist, without undue modesty.
Singolda founded the Israeli company 17 years ago as an online advertising and content recommendation platform, best known to internet users worldwide for the phrase "You might also be interested in." Through this format, Taboola provides users with additional content—essentially advertisements for which customers pay.
On Wednesday, Taboola, which is now publicly traded on Nasdaq, acknowledged that its core market is already saturated and cannot sustain rapid long-term growth. Because of this, the company is making a bold move into a much larger market—though one where it lacks a clear comparative advantage or established reputation. Taboola shares have fallen by over 20% over the past two days.
The new platform, called Realize, enables advertisers to buy performance-based advertising outside of search and social media—the traditional domains of Taboola's content recommendation business. This will allow advertisers to take the campaigns they originally designed for social networks and extend them to news sites, for example.
In the long term, the goal is to double the addressable market from approximately $25 billion today to $55 billion. However, in the short term, as revealed in Taboola's 2025 forecast, this shift will come at a cost: a significant slowdown in growth.
This slowdown is particularly striking given the strong 25% growth rate Taboola reported for 2024. In fact, based on its new forecast, Taboola expects no growth at all in 2025. The company emphasized that this is a conservative projection, allowing time to assess how the new platform is received by existing customers, particularly the larger and more strategic advertisers it is targeting.
"We have been developing the new platform over the past year, primarily at Taboola's Ramat Gan development center, and now it is launching," said Singolda.
"We recognize the appeal of a different market and new customers, which is why we've reorganized our sales organization and are actively recruiting salespeople. The goal is to take market share from Google and Facebook. Based on what we see in the digital advertising landscape, advertisers spend $30 billion a year on ineffective advertising. It often starts off cheap and effective, but over time, costs rise, making it less attractive in terms of return on investment."
Singolda's description of this transition as Taboola's Amazon moment reflects its potential—if his vision materializes. However, another key factor driving this shift is the company's 2022 agreement with Yahoo. Under that deal, Yahoo received a 25% stake in Taboola and a seat on its board, while Taboola gained exclusive access to Yahoo's advertising business.
The plan was for all Yahoo advertising to be managed through Taboola's platform, with the two companies sharing the revenue. However, Taboola admitted on Wednesday that many advertisers coming through Yahoo are looking for a broader, more standardized advertising platform rather than Taboola's niche offering.
Taboola's current model requires advertisers to create new ad creatives specifically tailored to its "You might also be interested in" format, rather than repurposing existing campaigns. This has made the product less attractive to some advertisers. From the company's statements, it is evident that Yahoo has been pushing for a strategic shift to make the partnership more fruitful.
On the positive side, Singolda noted that without Yahoo, Taboola would not have gained access to major strategic advertisers, whose feedback helped drive the company's decision to pivot. When the Yahoo deal was announced, Taboola estimated it would generate an additional $1 billion in revenue and significantly boost cash flow—neither of which materialized.
"The Yahoo partnership may not have delivered the expected revenue growth, and we are clearly not satisfied with our growth rate, but it has significantly improved our profitability," Taboola stated.
However, the Yahoo deal has created an unexpected complication: its impact on Taboola's share buyback program. Since Yahoo holds 25% of Taboola's shares, Israeli corporate law prevents it from increasing its stake without making a public purchase offer. As a result, when Taboola buys back its own shares from the market, it effectively increases Yahoo's relative ownership.
On Wednesday, Taboola announced a new $200 million share buyback program. To maintain Yahoo’s 25% stake, the company stated that for every 100 shares repurchased, 75 will come from the market and 25 from Yahoo. Beyond that, Taboola is working with Israeli regulators to address the issue.
Despite the challenges, the Yahoo deal had a positive impact in 2024. Taboola posted its strongest profitability metrics since 2021. Gross revenue increased 23% to $1.8 billion, while net revenue (after traffic acquisition costs) rose 25% to $668 million. Net income quadrupled to $122.4 million, and operating cash flow more than doubled from $84 million at the end of 2023 to $184 million by the end of 2024.
“2024 proved to be a transformative year for Taboola,” said Singolda. “Our team remained focused and dedicated, delivering the strong results we set out to achieve two years ago.”
However, 2025 is projected to be a different story. The company expects gross revenue of $1.85 billion—a modest 2% increase—while net revenue and net income are expected to remain flat at approximately $680 million and $120 million, respectively.
Taboola attempted to reassure investors that this short-term slowdown is the price of achieving long-term growth, but the market was unimpressed. The stock fell when trading began. On Wall Street, the company is currently valued at about $1 billion—far below the $2.6 billion valuation at which it went public in 2021 at the height of the IPO boom.
Taboola is not alone in facing a saturated content recommendation market. Its longtime rival, Israeli company Outbrain, was originally set to merge with Taboola before both companies went public separately. Outbrain also recognized the limits of the market and pursued a dramatic shift—albeit in a different direction.
Outbrain recently completed a reverse merger with French company Teads, valuing the combined entity at $1 billion. This move brings Outbrain into the video advertising sector, positioning it to compete in a market where Taboola and others are all struggling. The broader digital advertising industry remains highly competitive, with Google, Facebook, and their affiliates dominating the space—leaving companies like Taboola and Outbrain fighting for the scraps.
