TBLA

You should read the following discussion and analysis of our financial condition and results of operations together with Taboola’s accompanying unaudited consolidated interim financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q for the three months ended June 30, 2026 (the “Quarterly Report”) and audited consolidated financial statements and the related notes appearing in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 25, 2026. Some of the information contained in this discussion and analysis is set forth in our 2025 Form 10-K, including information with respect to Taboola’s plans and strategy for Taboola’s business, and includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in Part I, Item 1A “Risk Factors” in our 2025 Form 10-K and “Note Regarding Forward-Looking Statements” in our 2025 Form 10-K and elsewhere herein, Taboola’s actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Throughout this section, unless otherwise noted or the context requires otherwise, “we,” “us,” “our” and the “Company” refer to Taboola and its consolidated subsidiaries, and in references to monetary amounts, “dollars” and “$” refer to U.S. Dollars, and “NIS” refers to New Israeli Shekels Overview Taboola is a technology company that helps businesses grow by placing ads on publisher sites, mobile apps, and devices, which we collectively refer to as digital properties. We operate outside of the major search and social media walled gardens such as Meta, Google, and Amazon. Thousands of Advertisers trust us to drive growth, while approximately 12,000 digital property partners, including NBC News, Disney, Yahoo, and Apple, rely on us for monetization and audience growth. Our scale is meaningful - we reach over 600 million people a day, gaining real-time insight into what people read and buy. This gives us unique “pulse of the internet” data - which alongside our artificial intelligence (AI) - is our competitive advantage and helps our advertiser clients achieve exceptional returns on their advertising spend. Taboola began operations in 2007 and our technology provides significant value to both digital property partners and Advertisers. Digital properties use our technology platforms to achieve their business goals, such as driving new audiences to their sites and apps, or increasing engagement on site. We also provide a meaningful monetization opportunity to digital properties by matching relevant advertising to their audience in real time. Unlike walled gardens, we are a business-to-business, or B2B, company with no competing consumer interests. We only interact with consumers through our partners’ digital properties, hence we do not compete with our partners for user attention. Our motivations are aligned. When our partners win, we win, and we grow together. We empower Advertisers to leverage our proprietary AI-powered performance advertising platform to reach targeted audiences utilizing effective ad formats across digital properties. We generate revenues primarily when people (consumers) click on, purchase from or, in some cases, view the ads that appear within our partners’ digital experiences via our performance AI engine. Advertisers pay us for those clicks, purchases or impressions, and we share the resulting revenue with the digital properties who display those ads and generate those clicks and downstream consumer actions. Our powerful performance AI engine was built to address a technology challenge of significant complexity: predicting which content, both advertisements and editorial, users would be interested in, without explicit intent data or social media profiles. Search advertising platforms have access, at a minimum, to users’ search queries which indicate intent, while social media advertising platforms have access to rich personal profiles created by users. We are the only independent performance platform that goes beyond search and social, and delivers outcomes at scale for advertisers, leveraging our unique supply, 1st-party data and AI technology. Key Factors and Trends Affecting our Performance We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and those referred to in Part II, Item 1A,“Risk Factors.” Business and Macroeconomic Conditions Global economic and geopolitical conditions remain volatile, driven by persistent inflation, fluctuating interest rates, and ongoing conflicts in the Middle East and Ukraine. Throughout 2025 and into the second quarter of 2026, the global trade landscape has shifted significantly due to the implementation of U.S. tariffs and subsequent retaliatory measures from foreign trade partners. These evolving trade policies are difficult to predict, and their ultimate impact will depend on the final scope, timing, and potential exclusions of specific duties. While we are closely monitoring these macroeconomic headwinds, we cannot yet determine if these factors will have a material impact on our business operations or financial results during the remainder of 2026. Maintaining and Growing Our Digital Property Partners We engage with a diverse network of digital property partners, substantially all of which have contracts with us containing either an evergreen term or an exclusive partnership with us for multi-year terms at inception for their native advertising supply. These agreements typically require that our code be integrated on the digital property web page because of the nature of providing both editorial and paid recommendations. In the portion of our business that is tied to these native advertising supply partnerships. which currently accounts for the vast majority of our business, we do not bid for ad placements, as traditionally happens in the advertising technology space, but rather see all users that visit the pages on which we appear. Due to our multi-year exclusive contracts and high retention rates, our supply is relatively consistent and predictable. We had approximately 12,000, 12,000 and 11,000 digital property partners in the second quarters of 2026, 2025 and 2024, respectively. As a result of the launch of our Realize performance platform in February 2025, we expect a growing portion of our business to be tied to inventory where we bid for ad placements, primarily on sites where we have a first party data advantage. Historically, we have had a strong record of growing the revenue generated from our digital property partners. We grow our digital property partner relationships in four ways. First, we grow the revenue from these partnerships by increasing our yield over time. We do this by improving our algorithms, expanding our Advertiser base and increasing the amount of data that helps target our ads. Second, we continuously innovate with new product offerings and features that increase revenue. Third, we innovate by launching new advertising formats. Fourth, we work closely with our digital property partners to find new placements and page types where we can help them drive more revenue. For the majority of our digital properties partners, we have two primary models for sharing revenue with digital property partners. The most common model is a straight revenue share model. In this model, we agree to pay our partner a percentage of the revenue that we generate from advertisements placed on their digital properties. The second model includes guarantees. Under this model, we pay our partners the greater of a fixed percentage of the revenue we generate and a guaranteed amount based on specified performance metric, such as per thousand page views or fixed amount. In the past, we have and may continue to be required to make significant payments under these guarantees. Growing Our Advertiser Client Base We have a large network of Advertisers that wish to achieve specific performance goals, such as obtaining subscribers for email newsletters or acquiring leads for product offerings, across multiple verticals. As we look at growing our advertiser client base, we want to grow the number of advertisers that spend with us at scale. We define a Scaled Advertiser as an Advertiser that has more than $100,000 of cumulative gross spend on the network on a trailing four quarter basis. We had approximately 2,100, 2,000 and 1,900 of Scaled Advertiser clients working with us directly, or through advertising agencies, worldwide during the second quarters of 2026, 2025 and 2024, respectively. In an effort to also measure how we are growing our advertising spend with each Scaled Advertiser, we have introduced an Average Revenue per Scaled Advertiser performance measure. Average Revenue per Scaled Advertiser is calculated as the aggregate cumulative gross spend of all Scaled Advertisers for a given period divided by the number of Scaled Advertisers for that period. The Average Revenue per Scaled Advertiser was approximately $197,000, $196,000 and $194,000 during the second quarters of 2026, 2025 and 2024, respectively. A large portion of our revenue comes from Scaled Advertisers. The Revenue contribution from Scaled Advertisers represented 86%, 86% and 85% of our Revenues for the second quarters of 2026, 2025 and 2024, respectively. These performance Advertisers use our service when they obtain a sufficient return on ad spend to justify their ad spend. We grow the revenue from performance Advertisers in three ways. First, we improve the performance of our network by developing new product features, improving our algorithms and optimizing our supply. Second, we secure increased budgets from existing Advertisers by offering new ad formats and helping them achieve additional goals. Third, we grow our overall Advertiser base by bringing on new Advertisers that we have not worked with previously. Product and Research & Development We view research and development expenditures as investments that help grow our business over time. These investments, which are primarily in the form of employee salaries and related expenditures and hardware infrastructure, can be broken into two categories. This first category includes product innovations that extend the capabilities of our current product offerings and help us expand into completely new markets. This includes heavy investment in AI (specifically Deep Learning) in the form of server purchases and expenses for data scientists. This category of investment is important to maintain the growth of the business but can also generally be adjusted up or down based on management’s perception of the potential value of different investment options. The second category of investments are those that are necessary to maintain our core business. These investments include items such as purchasing servers and other infrastructure necessary to handle increasing loads of recommendations that need to be served, as well as the people necessary to maintain the value delivered to our customers and digital property partners, such as investments in code maintenance for our existing products. This type of investment scales at a slower rate than the growth of our core business. Managing Seasonality The global advertising industry has historically been characterized by seasonal trends that also apply to the digital advertising ecosystem in which we operate. In particular, Advertisers have historically spent relatively more in the fourth quarter of the calendar year to coincide with the year-end holiday shopping season, and relatively less in the first quarter. We expect these seasonality trends to continue, and our operating results will be affected by those trends with revenue and margins being seasonally strongest in the fourth quarter and seasonally weakest in the first quarter. Privacy Trends and Government Regulation We are subject to U.S. and international laws and regulations regarding privacy, data protection, digital advertising and the collection of user data. In addition, large Internet and technology companies such as Google and Apple are making their own decisions as to how to protect consumer privacy, which impacts the entire digital ecosystem. Because we power editorial recommendations, digital properties typically embed our code directly on their web pages. This makes us less susceptible to impact by many of these regulations and industry trends because we are able to drop first party cookies. In addition, because of this integration on our partners’ pages, we have rich contextual information to use to further refine the targeting of our recommendations. Key Financial and Operating Metrics We regularly monitor a number of metrics in order to measure our current performance and project our future performance. These metrics aid us in developing and refining our growth strategies and making strategic decisions. Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (dollars in thousands) Revenues $ 476,826 $ 465,474 $ 943,221 $ 892,967 Gross profit $ 139,479 $ 135,611 $ 269,056 $ 254,918 Net income (loss) $ 4,317 $ (4,345) $ 63,383 $ (13,095) EPS diluted (1) $ 0.01 $ (0.01) $ 0.22 $ (0.04) Ratio of net income (loss) to gross profit 3.1 % (3.2) % 23.6 % (5.1) % Cash flow provided by operating activities $ 31,253 $ 47,397 $ 139,908 $ 95,508 Cash and cash equivalents $ 133,052 $ 115,241 $ 133,052 $ 115,241 Non-GAAP Financial Data (2) ex-TAC Gross Profit $ 192,372 $ 172,133 $ 360,425 $ 323,866 Adjusted EBITDA $ 55,491 $ 45,178 $ 82,179 $ 81,113 Non-GAAP Net Income $ 41,280 $ 30,209 $ 58,475 $ 55,208 Ratio of Adjusted EBITDA to ex-TAC Gross Profit 28.8 % 26.2 % 22.8 % 25.0 % Free Cash Flow $ 17,316 $ 34,161 $ 107,597 $ 70,231 (1)The weighted-average shares used in the computation of the diluted EPS for the three months ended June 30, 2026 and 2025, are 291,392,907 and 313,572,282, respectively, and for the six months ended June 30, 2026 and 2025, are 290,505,359 and 327,578,134, respectively. The weighted-average shares for the three months ended June 30, 2026 and 2025, included 273,353,263 and 277,929,745 Ordinary shares, and 18,039,644 and 35,642,537 Non-voting Ordinary shares, respectively, and for the six months ended June 30, 2026 and 2025, included 272,465,715 and 287,985,819 ,Ordinary shares, and 18,039,644 and 39,592,315, Non-voting Ordinary shares, respectively. (2) Refer to “Non-GAAP Financial Measures” below for an explanation and reconciliation to GAAP metrics. Non-GAAP Financial Measures We are presenting the following non-GAAP financial measures because we use them, among other things, as key measures for our management and board of directors in managing our business and evaluating our performance. We believe they also provide supplemental information that may be useful to investors. The use of these measures may improve comparability of our results over time by adjusting for items that may vary from period to period or not be representative of our ongoing operations. These non-GAAP measures are subject to significant limitations, including those identified below. In addition, other companies may use similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures. Non-GAAP measures should not be considered in isolation or as a substitute for GAAP measures. They should be considered as supplementary information in addition to GAAP operating, liquidity and financial performance measures. ex-TAC Gross Profit We calculate ex-TAC Gross Profit as gross profit adjusted to add back other cost of revenues and non-cash amortization of the Commercial agreement asset. We add back (i) the non-cash amortization of the Commercial agreement asset because it is unique primarily due to the issuance of equity rather than cash and (ii) Publisher’s prepayments write-off that are one time non cash, such that ex-TAC Gross Profit includes solely direct cash contribution components. We believe that ex-TAC Gross Profit is useful because traffic acquisition cost, or TAC, is what we must pay digital properties to obtain the right to place advertising on their websites, and we believe focusing on ex-TAC Gross Profit better reflects the profitability of our business. We use ex-TAC Gross Profit as part of our business planning, for example in decisions regarding the timing and amount of investments in areas such as infrastructure. Limitations on the use of ex-TAC Gross Profit include the following: • Traffic acquisition cost is a significant component of our cost of revenues but is not the only component; and •ex-TAC Gross Profit is not comparable to our gross profit and by definition ex-TAC Gross Profit presented for any period will be higher than our gross profit for that period. The following table provides a reconciliation of revenues and gross profit to ex-TAC Gross Profit: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (dollars in thousands) Revenues $ 476,826 $ 465,474 $ 943,221 $ 892,967 Traffic acquisition cost (1) 300,705 297,423 603,084 577,220 Other cost of revenues 36,642 32,440 71,081 60,829 Gross profit $ 139,479 $ 135,611 $ 269,056 $ 254,918 Add back: Other cost of revenues (1) 52,893 36,522 91,369 68,948 ex-TAC Gross Profit $ 192,372 $ 172,133 $ 360,425 $ 323,866 (1)The three and six months ended June 30, 2026, included $4,082 and $8,119 amortization expense of the non-cash based Commercial agreement asset respectively, and $12,169 write-off of Publisher’s prepayments. See Note 1(b) and 2 respectively of Notes to the Unaudited Interim Consolidated Financial Statements. Adjusted EBITDA and Ratio of Adjusted EBITDA to ex-TAC Gross Profit We calculate Adjusted EBITDA as net income (loss) before finance income (expenses), net, income tax expenses, depreciation and amortization and non-cash amortization of the Commercial agreement asset, further adjusted to exclude share-based compensation including Connexity holdback compensation expenses and other noteworthy income and expense items such as M&A costs and restructuring costs which may vary from period-to-period. We believe that Adjusted EBITDA is useful because it allows us and others to measure our performance without regard to items such as share-based compensation expense, depreciation and amortization, non-cash amortization of the Commercial agreement asset, and interest expense and other items that can vary substantially depending on our financing and capital structure, and the method by which assets are acquired. We use Adjusted EBITDA and GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of performance and the effectiveness of our business strategies, and in communications with our board of directors. We may also use Adjusted EBITDA as a metric for determining payment of cash or other incentive compensation. Limitations on the use of Adjusted EBITDA include the following: •Although depreciation expense is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; •Adjusted EBITDA excludes share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy; •Adjusted EBITDA does not reflect, to the extent applicable for a period presented: (1) changes in, or cash requirements for, our working capital needs; (2) interest expense, or the cash requirements necessary to service interest or if applicable principal payments on debt, which reduces cash available to us; or (3) tax payments that may represent a reduction in cash available to us; and •The expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results. The following table provides a reconciliation of net income (loss) to Adjusted EBITDA: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (dollars in thousands) Net income (loss) $ 4,317 $ (4,345) $ 63,383 $ (13,095) Adjusted to exclude the following: Finance expenses (income), net (33) 2,491 212 6,991 Income tax expenses (benefit) 2,975 1,898 13,048 (114) Depreciation and amortization (1) 27,019 27,659 47,128 52,366 Share-based compensation expenses 14,127 16,571 28,322 32,089 Reduction in workforce expenses (2) 5,970 — 5,970 — Other costs (3) 1,116 904 (75,884) 2,876 Adjusted EBITDA $ 55,491 $ 45,178 $ 82,179 $ 81,113 (1)The three and six months ended June 30, 2026, included $4,082 and $8,119 amortization expense of the non-cash based Commercial agreement asset respectively, and $12,169 write-off of Publisher’s prepayments. See Note 1(b) and 2 respectively of Notes to the Unaudited Interim Consolidated Financial Statements. (2)Costs associated with the Company’s reduction of its workforce implemented in April 2026. (3)The three and six months ended June 30, 2026, includes expenses related to a litigation matter in which the Company is the plaintiff and is not related to our ongoing business operations in the amount of $1,116 and the six months ended June 30, 2026 included a pre-tax income of approximately $77,000, net of legal fees and other related expenses related to a binding settlement agreement regarding a legal matter in which the Company acted as the plaintiff. The three and six months ended June 30, 2025, includes professional and legal expenses related to a litigation matter in which the Company is the plaintiff and is not related to our ongoing business operations in the amount of $904 and $2,876, respectively. We calculate Ratio of Adjusted EBITDA to ex-TAC Gross Profit as Adjusted EBITDA divided by ex-TAC Gross Profit. We believe that the Ratio of Adjusted EBITDA to ex-TAC Gross Profit is useful because TAC is what we must pay digital properties to obtain the right to place advertising on their websites, and we believe focusing on ex-TAC Gross Profit better reflects the profitability of our business. The following table provides a reconciliation of ratio of net income (loss) to gross profit and Ratio of Adjusted EBITDA to ex-TAC Gross Profit: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (dollars in thousands) Gross profit $ 139,479 $ 135,611 $ 269,056 $ 254,918 Net income (loss) $ 4,317 $ (4,345) $ 63,383 $ (13,095) Ratio of net loss to gross profit 3.1 % (3.2) % 23.6 % (5.1) % ex-TAC Gross Profit $ 192,372 $ 172,133 $ 360,425 $ 323,866 Adjusted EBITDA $ 55,491 $ 45,178 $ 82,179 $ 81,113 Ratio of Adjusted EBITDA margin to ex-TAC Gross Profit 28.8 % 26.2 % 22.8 % 25.0 % Non-GAAP Net Income (Loss) We calculate Non-GAAP Net Income (Loss) as net income (loss) adjusted to exclude revaluation of our Warrants liability, share-based compensation expense, including Connexity holdback compensation expenses, M&A costs, amortization of acquired intangible assets and the non-cash based Commercial agreement asset, foreign currency exchange rate gains (losses), net, and other noteworthy items that change from period to period and related tax effects. We believe that Non-GAAP Net Income (Loss) is useful because it allows us and others to measure our operating performance and trends without regard to items such as the revaluation of our Warrants liability, share-based compensation expense, cash and non-cash M&A costs, amortization of acquired intangible assets and the non-cash based Commercial agreement asset, foreign currency exchange rate (gains) losses, net and other noteworthy items that change from period to period and related tax effects. These items can vary substantially depending on our share price, acquisition activity, the method by which assets are acquired and other factors. Limitations on the use of Non-GAAP Net Income (Loss) include the following: •Non-GAAP Net Income (Loss) excludes share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy; •Non-GAAP Net Income (Loss) will generally be more favorable than our net income (loss) for the same period due to the nature of the items being excluded from its calculation; and •Non-GAAP Net Income (Loss) is a performance measure and should not be used as a measure of liquidity. The following table provides a reconciliation of net income (loss) to Non-GAAP Net Income (Loss) for the periods shown: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (dollars in thousands) Net income (loss) $ 4,317 $ (4,345) $ 63,383 $ (13,095) Amortization of intangible assets (1) 19,210 17,828 31,635 35,611 Share-based compensation expenses 14,127 16,572 28,322 32,089 Other costs (2) 1,116 904 (75,884) 2,876 Reduction in workforce expenses (3) 5,970 — 5,970 — Revaluation of Warrants (105) 903 (501) (823) Foreign currency exchange rate gains (losses) (4) (546) 265 (1,227) (1,259) Income tax effects (2,809) (1,918) 6,777 (6,788) Loss on extinguishment of debt (5) — — — 6,597 Non-GAAP Net Income $ 41,280 $ 30,209 $ 58,475 $ 55,208 (1) The three and six months ended June 30, 2026, included $4,082 and $8,119 amortization expense of the non-cash based Commercial agreement asset respectively, and $12,169 write-off of Publisher’s prepayments. See Note 1(b) and 2 respectively of Notes to the Unaudited Interim Consolidated Financial Statements. (2) The three and six months ended June 30, 2026, include expenses related to a litigation matter in which the Company is the plaintiff and is not related to our ongoing business operations in the amount of $1,116 and the six months ended June 30, 2026 included a pre-tax income of approximately $77,000, net of legal fees and other related expenses related to a binding settlement agreement regarding a legal matter in which the Company acted as the plaintiff. The three and six months ended June 30, 2025, include professional and legal expenses related to a litigation matter in which the Company is the plaintiff and is not related to our ongoing business operations it the amount of $904 and $2,876, respectively. (3) Costs associated with the Company’s reduction of its workforce implemented in April 2026. (4) Represents foreign currency exchange rate gains or losses related to the remeasurement of monetary assets and liabilities to the Company’s functional currency using exchange rates in effect at the end of the reporting period. (5)See Note 7 of Notes to the Unaudited Consolidated Interim Financial Statements. Free Cash Flow We calculate Free Cash Flow as Net cash flow provided by operating activities minus purchases of property, plant and equipment, including capitalized internal-use software. We believe that Free Cash Flow is useful to provide management and others with information about the amount of cash generated from our operations that can be used for strategic initiatives, including investing in our business, making strategic acquisitions, and strengthening our balance sheet. We expect our Free Cash Flow to fluctuate in future periods as we invest in our business to support our plans for growth. Limitations on the use of Free Cash Flow include the following: •It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. For example, cash is still required to satisfy other working capital needs, including short-term investment policy, restricted cash, repayment of loan and intangible assets; • Free Cash Flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities; and •This metric does not reflect our future contractual commitments. The following table provides a reconciliation of net cash provided by operating activities to Free Cash Flow: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (dollars in thousands) Net cash provided by operating activities $ 31,253 $ 47,397 $ 139,908 $ 95,508 Purchases of property and equipment, including capitalized internal-use software (13,937) (13,236) (32,311) (25,277) Free Cash Flow $ 17,316 $ 34,161 $ 107,597 $ 70,231 Components of Our Results of Operations Revenues All of our Revenues are generated from Advertisers with whom we enter into commercial arrangements, defining the terms of our service and the basis for our charges. Generally, our charges are based on a CPC, CPM or CPA basis. For campaigns priced on a CPC basis, we recognize these Revenues when a user clicks on an advertisement we deliver. For campaigns priced on a CPM basis, we recognize these Revenues when an advertisement is displayed. For campaigns priced on a performance-based CPA basis, the Company generates revenue when a user makes an acquisition. Cost of revenues Our cost of revenue primarily includes traffic acquisition cost and also includes other cost of revenue. Traffic acquisition cost Traffic acquisition cost, or TAC, consists primarily of cost related to digital property compensation for placing our platform on their digital property and cost for advertising impressions purchased from real-time advertising exchanges and other third parties. Traffic acquisition cost also includes up-front payments, incentive payments, or bonuses paid to the digital property partners and the amortization of the non-cash based Commercial agreement asset (see Note 1(b) of Notes to the Unaudited Interim Consolidated Financial Statements) which are amortized over the shorter of respective contractual terms and the economic benefit period of the digital property arrangement. For the majority of our digital properties partners, we have two primary compensation models for digital properties. The most common model is a revenue share model. In this model, we agree to pay a percentage of our revenue generated from advertisements placed on the digital properties. The second model includes guarantees. Under this model, we pay the greater of a percentage of the revenue generated or a committed guaranteed amount per thousand page views (“Minimum guarantee model”). Actual compensation is settled on a monthly basis. Expenses under both the revenue share model as well as the Minimum guarantee model are recorded as incurred, based on actual revenues generated by us at the respective month. Other cost of revenues Other cost of revenues includes data center and related costs, depreciation expense related to hardware supporting our platform, amortization expense related to capitalized internal-use software and acquired technology, digital and services taxes, personnel costs, and allocated facilities costs. Personnel costs include salaries, bonuses, share-based compensation, and employee benefit costs, and are primarily attributable to our operations group, which supports our platform and our Advertisers. Gross profit Gross profit, calculated as revenues less cost of revenues, has been, and will continue to be, affected by various factors, including fluctuations in the amount and mix of revenue and the amount and timing of investments to expand our digital properties partners and Advertisers base. We hope to increase both our Gross profit in absolute dollars and as a percentage of revenue through enhanced operational efficiency and economies of scale. Research and development Research and development expenses consist primarily of personnel costs, including salaries, bonuses, share-based compensation and employee benefits costs, allocated facilities costs, professional services and depreciation. We expect research and development expenses to increase in future periods to support our growth, including continuing to invest in optimization, accuracy and reliability of our platform and other technology improvements to support and drive efficiency in our operations. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments. Sales and marketing Sales and marketing expenses consist of payroll and other personnel related costs, including salaries, share-based compensation, employee benefits, and travel for our sales and marketing departments, advertising and promotion, rent and depreciation and amortization expenses, particularly related to the acquired intangibles. We expect to increase selling and marketing expenses to support the overall growth in our business. General and administrative General and administrative expenses consist of payroll and other personnel related costs, including salaries, share-based compensation, employee benefits and expenses for executive management, legal, finance and others. In addition, general and administrative expenses include fees for professional services and occupancy costs. We expect our general and administrative expenses to remain relatively flat in 2026. Finance income (expenses), net Finance income (expenses), net, primarily consists of interest income (expense) including amortization of loan and credit facility issuance costs, Warrants liability fair value adjustments, gains (losses) from foreign exchange fluctuations and bank fees. Income tax benefit (expenses) The statutory corporate tax rate in Israel was 23% for the six months ended June 30, 2026 and 2025, although we are entitled to certain tax benefits under Israeli law. Pursuant to the Israeli Law for Encouragement of Capital Investments-1959 (the “Investments Law”) and its various amendments, under which we have been granted “Privileged Enterprise” status, we were granted a tax exemption status for the years 2018 and 2019. For 2021 and subsequent tax years, we adopted the “Preferred Technology Enterprises” (“PTE”) Incentives Regime (Amendment 73 to the Investment Law) granting a 12% tax rate in central Israel on income deriving from benefited intangible assets, subject to a number of conditions being fulfilled, including a minimal amount or ratio of annual research and development expenditure and research and development employees, as well as having at least 25% of annual income derived from exports to large markets. PTE is defined as an enterprise which meets the aforementioned conditions and for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. As of June 30, 2026, we have an accumulated tax loss carry-forward of approximately $1.2 million in US. Those tax loss can be offset indefinitely. Non-Israeli subsidiaries are taxed according to the tax laws in their respective jurisdictions. The following table provides consolidated statements of income (loss) data for the periods indicated: (dollars in thousands) Three months ended June 30, 2026 2025 Unaudited Revenues $ 476,826 $ 465,474 Cost of revenues: Traffic acquisition cost 300,705 297,423 Other cost of revenues 36,642 32,440 Total cost of revenues 337,347 329,863 Gross profit 139,479 135,611 Operating expenses: Research and development, net 38,435 37,482 Sales and marketing 67,156 71,248 General and administrative 26,629 26,837 Total operating expenses 132,220 135,567 Operating profit 7,259 44 Finance income (expenses), net 33 (2,491) Income (loss) before income taxes 7,292 (2,447) Income tax expenses (2,975) (1,898) Net income (loss) $ 4,317 $ (4,345) Comparison of the Three months ended June 30, 2026 and 2025 Revenues increased by $11.4 million, or 2.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, mainly as the result of an increase in the number of Scaled Advertisers which grew 1.9% versus the prior year. From a publisher perspective, new digital property partners contributed approximately $43.7 million of new Revenues on a 12-month run rate basis calculated based on their first full month on the network. Existing digital property partners, including the growth of new digital property partners (beyond the revenue contribution determined based on the run-rate revenue generated by the partners when they are first on-boarded) decreased by approximately $32.4 million. Gross profit increased by $3.9 million, or 2.9%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. Ex-TAC Gross Profit, a non-GAAP measure, increased by $20.2 million, or 11.8%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily benefiting from a margin increase on certain digital property partners as well as growth in advertising spend. Total cost of revenues increased by $7.5 million, or 2.3%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. Traffic acquisition cost increased by $3.3 million, or 1.1%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The cost of guarantees (total payments due under guarantee arrangements in excess of amounts the Company would otherwise be required to pay under revenue sharing arrangements) as a percentage of traffic acquisition costs were approximately 13% and 16% for the three months ended June 30, 2026 and June 30, 2025, respectively. Other cost of revenues increased by $4.2 million, or 13.0%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, mainly as a result of a $1.3 million increase in content cost expenses, a $1.9 million increase in hosting and depreciation expenses and a $0.9 million increase in salaries and related expenses. Research and development expenses increased by $1.0 million, or 2.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, mainly as a result of $1.0 million increase in salaries and related expenses, mainly due to the reduction in workforce. Sales and marketing expenses decreased by $4.1 million, or 5.7%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, mainly as a result of a $10.8 million decrease in amortization expenses related to acquired intangible assets which were offset by a $5.6 million increase in salaries and related expenses mainly due to the reduction in workforce and a $0.7 million increase in advertising and promotion expenses. General and administrative expenses decreased by $0.2 million, or 0.8%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, mainly as a result of a decrease in litigation matter expenses in which the Company acted as the plaintiff. Finance expenses, net decreased by $2.5 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, mainly attributable due to a decrease of $1.0 million due to revaluation of Warrants liability, and a $0.8 million decrease in foreign currency exchange rate gains. Tax expenses increased by $1.1 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase is primarily driven by higher profitability. The following table provides consolidated statements of income (loss) data for the periods indicated: (dollars in thousands) Six months ended June 30, 2026 2025 Unaudited Revenues $ 943,221 $ 892,967 Cost of revenues: Traffic acquisition cost 603,084 577,220 Other cost of revenues 71,081 60,829 Total cost of revenues 674,165 638,049 Gross profit 269,056 254,918 Operating expenses: Research and development, net 78,015 73,438 Sales and marketing 139,721 137,138 General and administrative 51,677 50,560 Other income, net (77,000) — Total operating expenses 192,413 261,136 Operating profit (loss) 76,643 (6,218) Finance expenses, net (212) (6,991) Income (loss) before income taxes 76,431 (13,209) Income tax benefit (expenses) (13,048) 114 Net income (loss) $ 63,383 $ (13,095) Comparison of the Six months ended June 30, 2026 and 2025 Revenues increased by $50.3 million, or 5.6%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, as the result of an increase in the number of Scaled Advertisers as well as an increase in the Revenue per Scaled Advertiser. From a publisher perspective, new digital property partners contributed approximately $91.2 million of new Revenues on a 12-month run rate basis calculated based on their first full month on the network. Existing digital property partners, including the growth of new digital property partners (beyond the revenue contribution determined based on the run-rate revenue generated by the partners when they are first on-boarded) decreased by approximately $40.9 million. Gross profit increased by $14.1 million, or 5.5%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Ex-TAC Gross Profit, a non-GAAP measure, increased by $36.6 million, or 11.3%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, benefiting from growth in advertising spend and a margin increase on certain digital property partners. Total cost of revenues increased by $36.1 million, or 5.7%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Traffic acquisition cost increased by $25.9 million, or 4.5%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The cost of guarantees (total payments due under guarantee arrangements in excess of amounts the Company would otherwise be required to pay under revenue sharing arrangements) as a percentage of traffic acquisition costs were approximately 15% and 17% for the six months ended June 30, 2026 and June 30, 2025, respectively. Other cost of revenues increased by $10.3 million, or 16.9%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily as a result of a $3.4 million increase in content cost expenses, a $3.2 million increase in depreciation expenses and hosting, a $2.2 million increase in digital service tax expenses and a $1.5 million increase in salaries and related expenses. Research and development expenses increased by $4.6 million, or 6.2%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, mainly as a result of a $3.5 million increase in salaries and related expenses, and a $1.1 million increase in IT services. Sales and marketing expenses increased by $2.6 million, or 1.9%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, mainly as a result of a $11.8 million increase in salaries and related expenses, a $5.4 million increase in advertising and promotion expenses, and a $1.5 million increase in sales kick off event expenses, which were partially offset by a decrease of $16.1 million in amortization expenses related to acquired intangible assets. General and administrative expenses increased by $1.1 million, or 2.2%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, mainly as a result of a $3.0 million increase in salaries and related expenses which were primarily offset by a decrease of $2.0 million in professional fees. Finance expenses, net decreased by $6.8 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, mainly attributable to a $6.8 million increase due to the establishment of the Revolving Credit Facility. Tax expenses increased by $13.2 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. This increase is primarily attributable to income from a one time legal settlement and higher profitability. Liquidity and Capital Resources Our primary cash needs are for working capital, personnel costs, contractual obligations, including payments to digital property partners, office leases and software and information technology costs, capital expenditures for servers and capitalized software development, funding our share buyback program, payment of interest on our revolving loan and other commitments. We fund these cash needs primarily from cash generated from operations, as well as from cash and cash equivalents on our balance sheet when required. For the six months ended June 30, 2026 and 2025, we generated cash from operations of $139.9 million and $95.5 million, respectively. As part of our growth strategy, we have made and expect to continue to make significant investments in research and development and in our technology platform. We also plan to selectively consider possible future acquisitions that are attractive opportunities we deem strategic and value-enhancing. To fund our growth, depending on the magnitude and timing of our growth investments and the size and structure of any possible future acquisition, we may supplement our available cash from operations with issuances of equity or debt securities and/or make other borrowings, which could be material. As of June 30, 2026 and December 31, 2025, we had $133.1 million and $120.9 million of cash and cash equivalents, respectively, and $1.5 million and $1.5 million in long-term restricted deposits, respectively, used, mainly, as security for our lease commitments. As of June 30, 2026 we did not hold short-term investments. Cash and cash equivalents consist of cash in banks and time deposits. We believe that this, together with net proceeds from our engagements with Advertisers and digital property partners, will provide us with sufficient liquidity to meet our working capital and capital expenditure needs for at least the next 12 months. In the future, we may be required to obtain additional equity or debt financing in order to support our continued capital expenditures and operations. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies, this could reduce our ability to compete successfully and harm our business, growth, and results of operation. On March 18, 2025 we entered into a revolving credit facility (the “2025 Revolving Credit Agreement”), which provides for borrowings in an aggregate principal amount of up to $270.0 million (the “Revolving Facility”). The proceeds of the Revolving Facility can be used to finance working capital needs and general corporate purposes. Borrowings under the Revolving Facility are subject to customary borrowing conditions and will bear interest at a variable annual rate based on Term SOFR or Base Rate plus a fixed margin. The 2025 Revolving Credit Agreement also contains customary representations, covenants and events of default as well as a financial covenant, which places a limit on our allowable net leverage ratio. As of June 30, 2026, the Company was in compliance with the Revolving Facility covenants. As of June 30, 2026, we had $72.0 million of outstanding principal amount under the Revolving Facility. Borrowings under the 2025 Revolving Credit Facility are voluntarily prepayable from time to time without premium or penalty except in certain cases. Borrowings prepaid may be re-borrowed prior to maturity of the 2025 Revolving Credit Agreement pursuant to customary conditions and restrictions. All borrowings under the 2025 Revolving Credit Agreement are due at maturity on March 18, 2030. Share Buyback Program Our board of directors authorized a share buyback program for the repurchase of our outstanding Ordinary shares, which commenced in June 2023 and does not have an expiration date (the “Buyback Program”). In 2023, our board of directors authorized up to $80.0 million of buybacks under the Buyback Program. In February 2024, our board of directors authorized up to $100.0 million for use under the Buyback Program, including any remaining authority from the 2023 board of directors authorization and in February 2025, our board of directors authorized up to an additional $200.0 million for use under the Buyback Program. In July 2025, our board of directors authorized up to an additional $200.0 million for use under the Buyback Program. As permitted by the Buyback Program, share repurchases may be made from time to time, in privately negotiated transactions or in the open market, including through trading plans intended to comply with Rule 10b5-1, at the discretion of our management and as permitted by securities laws and other legal requirements, including Rule 10b-18 of the Exchange Act. The Buyback Program does not obligate the Company to repurchase any specific number of shares and the number of shares repurchased may depend upon market and economic conditions and other factors. The Buyback Program may be discontinued, modified or suspended at any time. During the six months ended June 30, 2026, we repurchased 16.2 million of our Ordinary shares at an average price of $3.99 per share (excluding broker and transaction fees of $0.4 million). As of June 30, 2026, the Company had remaining authorization from our board of directors to repurchase Ordinary shares up to an aggregate amount of $126.6 million, not including net issuances costs of $15.3 million as of June 30, 2026. See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, Note 8 and Note 11 of Notes to the Unaudited Interim Consolidated Financial Statements. Our future capital requirements and the adequacy of available funds will depend on many factors, including the risks and uncertainties set forth in our 2025 Form 10-K under Item 1A. “Risk Factors,” and in our subsequent filings with the SEC. The following table summarizes our cash flows for the periods indicated: Six months ended June 30, 2026 2025 Unaudited Cash Flow Data: Net cash provided by operating activities $ 139,908 $ 95,508 Net cash used in investing activities (32,311) (21,497) Net cash used in financing activities (95,849) (190,028) Exchange rate differences on balances of cash and cash equivalents 439 4,675 Increase (decrease) in cash and cash equivalents $ 12,187 $ (111,342) Operating Activities During the six months ended June 30, 2026, net cash provided by operating activities was $139.9 million, an increase of $44.4 million, compared to $95.5 million for the same period in 2025. The $139.9 million was related to our net gain of $63.4 million adjusted by non-cash charges of $62.9 million and positive changes in working capital of $13.7 million. The $62.9 million of non-cash charges primarily consisted of share-based compensation expense related to vesting of equity awards of $28.3 million, depreciation and amortization of $26.8 million and non-cash based Commercial agreement asset amortization expenses of $8.1 million. The $13.6 million increase in cash resulting from changes in working capital primarily consisted of a $43.4 million decrease in trade receivables, net and a $16.0 million decrease in prepaid expenses partially offset by a $46.5 million decrease in trade payables, net. Net cash provided by operating activities of $95.5 million for the six months ended June 30, 2025, was related to our net loss of $13.1 million adjusted by non-cash charges of $86.3 million and changes in working capital of $22.3 million. The $86.3 million of non-cash charges primarily consisted of depreciation and amortization of $44.4 million, share-based compensation expense related to vested equity awards of $32.1 million, non-cash based Commercial agreement asset amortization expenses of $8.1 million and loss on extinguishment of debt of $6.6 million, partially offset by a $4.7 million of net gains from financing expenses and a decrease of $0.8 million due to revaluation of Warrants liability. The $22.3 million increase in cash resulting from changes in working capital primarily consisted of a $74.3 million decrease in trade receivables, net and a $2.7 million decrease in prepaid expenses partially offset by $33.8 million decrease in accrued expenses and other current liabilities, a $19.7 million decrease in trade payables, net and a $4.8 million decrease in deferred taxes, net. Investing Activities During the six months ended June 30, 2026, net cash used in investing activities was $32.3 million, an increase of $10.8 million, compared to $21.5 million in net cash used in the same period in 2025. Net cash used in investing activities for the six months ended June 30, 2026, consisted of $32.3 million purchase of property and equipment, including capitalized internal-use software. Net cash used in investing activities was $21.5 million for the six months ended June 30, 2025, primarily consisted of $25.3 million purchase of property and equipment, including capitalized internal-use software partially, offset by $3.8 million proceeds from maturities of short-term investments. Financing Activities During the six months ended June 30, 2026, net cash used in financing activities was $95.8 million, a decrease of $94.2 million, compared to $190.0 million net cash used in the same period in 2025. Net cash used in financing activities for the six months ended June 30, 2026 primarily consisted of $30.3 million repayment to revolving credit line, net, $64.2 million repurchase of ordinary shares and non-voting ordinary shares, $6.9 million payments of tax withholding for share-based compensation, $3.6 million payments on account of repurchase of Ordinary shares partially offset by a $9.1 million exercise of options. Net cash used in financing activities was $190.0 million for the six months ended June 30, 2025, primarily consisted of $150.0 million repurchase of ordinary shares and non-voting ordinary shares $122.7 million repayment in full of the long-term loan, $114.5 million repayment to revolving credit lines, $3.1 million payments on account of repurchase of Ordinary shares, $2.0 million payments of tax withholding for share-based compensation and $0.9 million issuance costs for the revolving credit facility, partially offset by $124.0 million proceeds from revolving credit line, net of issuance costs, $76.0 million borrowing from revolving credit line and $3.2 million exercise of options. Contractual Obligations The following table discloses aggregate information about material contractual obligations and the periods in which they are due as of June 30, 2026. Future events could cause actual payments to differ from these estimates. Contractual Obligations by Period 2026 2027 2028 2029 2030 Thereafter (dollars in thousands) Debt Obligations (1) $ — $ — $ — $ — $ 72,000 $ — Operating Leases (2) 18,279 32,740 16,616 9,576 5,913 10,224 Non-cancellable purchase obligations (3) 26,512 8,622 1,198 414 538 — Total Contractual Obligations $ 44,791 $ 41,362 $ 17,814 $ 9,990 $ 78,451 $ 10,224 (1)Borrowings under the 2025 Revolving Credit Facility are voluntarily prepayable from time to time without premium or penalty except in certain cases. All borrowings under the 2025 Revolving Credit Agreement are due at maturity on March 18, 2030. See Note 7 of Notes to the Unaudited Interim Consolidated Financial Statements. (2)Represents future minimum lease commitments under non-cancellable operating lease agreements. (3)Primarily represents non-cancelable amounts for contractual commitments in respect of software and information technology. The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. The table does not include obligations under agreements that we can cancel without a significant penalty. The table above does not reflect any reduction for prepaid obligations as of June 30, 2026. Other Commercial Commitments In the ordinary course of our business, we enter into agreements with certain digital properties, under which, in some cases we agree to pay them a guaranteed amount, generally per thousand page views on a monthly basis. These agreements could cause a gross loss on digital property accounts in which the guarantee is higher than the actual revenue generated. These contracts generally range in duration from 2 to 5 years, though some can be shorter or longer. These contracts are not included in the table above. Recent Accounting Pronouncements During the period covered by this report, there were no material recent accounting pronouncements impacting our accounting policies that are not already discussed in our 2025 Form 10-K. Critical Accounting Estimates Our discussion and analysis of financial condition results of operations are based upon our consolidated interim financial statements included elsewhere in this report. The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances and we evaluate these estimates on an ongoing basis. Actual results may differ from those estimates. Our critical accounting policies are those that materially affect our consolidated financial statements and involve difficult, subjective or complex judgments by management. There have been no material changes to our critical accounting policies and estimates of and for the year ended December 31, 2025, included in our 2025 Form 10-K. During the three months ended June 30, 2026, we identified impairment indicators related to certain publisher prepayment assets and determined that their carrying value was not recoverable due to a decline in the expected future economic benefits of the underlying arrangements. As a result, we recognized an impairment charge of approximately $12.2 million, recorded within traffic acquisition cost in the consolidated interim statements of income (loss).