管理層發言
Good day, and thank you for standing by. Welcome to Taboola's 2026 Second Quarter Earnings Conference Call. Operator provided instructions. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Aadam Anwar, Head of Investor Relations.
Thank you, and good morning, everyone. Welcome to Taboola's Second Quarter 2026 Earnings Conference Call. I'm here with Adam Singolda, Taboola's Founder and CEO; and Steve Walker, Taboola's CFO. The company issued earnings materials today before market opened, and they are available in the Investors section of Taboola's website. And I'll quickly cover the safe harbor. Certain statements today, including our expectations for future periods, are forward-looking statements. They are not facts and are subject to material risks and uncertainties described in our SEC filings. These statements are based on currently available information, and we undertake no duty to update them, except as required by law. Today's discussion is also subject to forward-looking statement limitations in the earnings press release. Future events could differ materially and adversely from those anticipated. During this call, we will use terms defined in the earnings release and refer to non-GAAP financial measures. For definitions and reconciliations to GAAP, please refer to the non-GAAP tables in the earnings press release posted on our website. With that, I'll turn the call over to Adam.
Thanks, Aadam. Good morning, everyone, and thank you for joining us today. The second quarter was another important step forward for Taboola. We continue to execute and delivered results above our guidance across our key metrics despite dealing with two headwinds during the quarter. The first was a Google policy change that deprecated our Explore More product and the second was our decision to remove low-quality publishers that were not delivering value for advertisers. Despite these two headwinds, I'm happy with our ability to beat our key metrics, accelerate growth and repurchase a lot of shares. More importantly, we had some large strategic wins that demonstrate meaningful progress against our long-term vision. We expect these new wins to gradually begin contributing to our ex-TAC in the fourth quarter and to ramp more considerably in 2027. These tailwinds give us the confidence to raise our full year ex-TAC guidance to 9%. What gives me confidence isn't just the financials. It's the validation we got this quarter that our strategy is working. We're continuing to offer advertisers a viable option beyond search and social while investing in our tech to drive advertiser success and strengthening our relationship with some of the world's leading publishers. Together, these reinforce our confidence in our path forward to sustainable double-digit ex-TAC growth. Before getting into more detail, let me remind everyone who we are and how we compete. Taboola is one of the largest performance advertising companies outside of search and social, referred to as the open web. Similar to how Google and Meta understand intent within their own platforms, Taboola understands intent across the billions of consumers who read, watch and engage within trusted OEMs, apps and publishers across the open web. We then convert these signals into profitable and measurable outcomes for advertisers. That proprietary intent data and the AI-driven conversion machine we've built, that is Taboola. Now in a world where AI is evolving so fast, I believe the winners will be those with either unique data that LLMs cannot get or access to unique supply and distribution. Taboola has both. Turning now into two strategic milestones that further validates our realized strategy. First, we expect to announce a first-of-its-kind expansion with one of our largest existing publisher partners, a premier media and entertainment company. This marks an important evolution for us, expanding our role from monetizing individual bottom-of-article placements to monetizing everything, including display, vertical formats, native and more. To put this opportunity into perspective, we estimate that display advertising alone on this publisher represents two or three times the revenue of the traditional native placements we've historically monetized. This is important for three reasons. First, it's a validation of our Realize products and strategy built with the purpose to expand wallet share within our publishers by moving beyond native ads to handle the full suite of ad placement needs. Second, we believe it will demonstrate how publishers can move away from relying on multiple AdTech providers and now consolidate it all into a single partner. By doing this, publishers can reduce complexity, lower operational burden, improve efficiency and drive stronger revenue outcomes. Lastly, this will create an opportunity for our advertisers to take advantage of even more premium supply, and we expect this to be a model for how things can be done with other publishers going forward. This partnership demonstrates that publishers increasingly value partners that can combine AI, proprietary data and advertiser demand to drive better monetization. At the same time, we continue to see strong validation of our strategy through our ability to win some of the world's leading publishers. A great example is FOX News, one of the top five publishers in the U.S. We've already built a strong relationship with Fox Local, Fox Sports and Fox Weather, and the addition of FOX News represents a substantial growth opportunity and a significant expansion of our partnership across the FOX ecosystem. We believe this win reflects the investments we're making in Realize and our continued focus on helping premium publishers like Fox generate more value through performance advertising and AI. We're encouraged by this highly competitive win and believe it will further validate our ability to continue taking share in the performance advertising market. Moving beyond our business wins, we've continued investing in our technology, particularly Realize, our performance advertising platform driving greater scale, better signals and stronger performance for advertisers. We believe the future of advertising will increasingly be powered by AI, moving from manual campaign management to intelligent systems that understand advertisers' goals, make decisions and continuously optimize performance. That's the vision behind Realize Plus, our AI-powered optimization framework that brings to the open web the kind of automation advertisers have come to expect from solutions like Google Performance Max and Meta's Advantage+. Since launching Realize Plus beta, more than 300 advertisers have already adopted the platform, and we're seeing encouraging early results as advertisers use AI to improve campaign efficiency and performance. We also believe AI will fundamentally change how advertisers interact with advertising platforms, particularly holding companies, agencies and large advertisers. That is why we built our MCP and cloud integration, which enable advertisers and agencies to plan, launch and optimize campaigns through natural language, conversations with AI. While still early, we're encouraged by the momentum with a few millions of dollars of advertiser spend already flowing through the integration. We believe these investments position us well to lead the next generation of performance advertising and create more value for advertisers across the open web. To wrap things up, we continue to execute across the business and raised our guidance for the year for ex-TAC gross profit. Importantly, we also delivered strategic wins that demonstrate progress against our long-term vision. We're also allocating capital with discipline. In the second quarter, we repurchased approximately 9 million shares for $41 million, continuing to return the majority of our free cash flow through buybacks. We've repurchased approximately 20% of our outstanding shares since the beginning of 2025, while maintaining the right balance between investing for growth and returning capital to shareholders. As we look ahead, we're excited about the momentum we're building; the actions we've taken and the initiatives we're putting in place are positioning us well for the back half of the year and into 2027. We're building a stronger, more durable business and are excited about the path ahead as we continue building the leading performance advertising platform for the open web. And with that, I'll hand it over to Steve.
Thanks, Adam, and good morning, everyone. We're pleased with our performance in the second quarter. We continue to execute against our strategy and delivered results above our guidance across our key metrics. In the second quarter, revenues grew 2% year-over-year to $476.8 million. Revenue was below our guidance this quarter, primarily as a result of two factors. The first was our continuing effort to optimize supply quality. As part of our ongoing focus on improving the quality and performance of our publisher network, we took a more aggressive approach in the second quarter by exiting publisher relationships that did not meet our standards for advertiser success. Because this should improve advertiser success across our network, we believe this will improve long-term revenue despite the negative impact on 2026 revenues. The second factor relates to the impact from Google's policy changes that affected our Explore More feature, as Adam described earlier. This feature enabled users to discover additional sponsored content from a publisher site after they clicked on the back button. However, due to Google's policy change, we were no longer able to provide that product starting this quarter. Despite these headwinds, I was happy to see that the number of scaled advertisers on our network grew 2% year-over-year, though we did see an impact from the headwinds on our average revenue per scaled advertiser, which remained relatively flat. Ex-TAC gross profit increased 12% year-over-year to $192.4 million in the second quarter. Growth in ex-TAC gross profit outpaced the growth in revenues due to a combination of factors. First, given the reduction in supply due to our network cleanup and the deprecation of Explore More, we saw an increase in ad rates, which drives higher ex-TAC margins. Second, we had a shift in the mix of our business towards higher-margin areas, partially driven by those same cleanup efforts. Our strong ex-TAC growth also reflects the continued scaling of Realize, along with strong contributions from Taboola News. I would note that if it were not for the Google policy change that affected our Explore More product, we would have exceeded the high end of our ex-TAC gross profit guidance. Gross profit for the quarter was $139.5 million, up 3% year-over-year. Growth in ex-TAC gross profit contributed to this growth. This growth was partially offset by a one-time noncash write-down of approximately $12 million related to certain publisher prepayments that we no longer expect to recoup, which obviously does not impact the long-term economics of our business. Net income for the quarter was $4.3 million, with non-GAAP net income coming in at $41.3 million. Adjusted EBITDA for the quarter was $55.5 million, which was above the high end of our guidance and represented a margin of 29%. This reflects our ongoing discipline in expense management while continuing to invest in strategic priorities to support our long-term growth. Foreign exchange continues to be a headwind in 2026. On a constant currency basis, FX represented roughly a $7.5 million headwind to second quarter adjusted EBITDA. Excluding this impact, adjusted EBITDA would have been approximately $63 million, which would have represented an adjusted EBITDA margin of 33%. We expect FX to remain a headwind for the remainder of 2026. In terms of cash generation, we had $31.3 million in operating cash flow in the second quarter and free cash flow of $17.3 million. We continue to expect to sustainably convert free cash flow from adjusted EBITDA at a 60% to 70% rate over any typical four-quarter period. Turning to the balance sheet. We remain in a strong financial position. We ended the first quarter with a net cash balance of $61.1 million. Cash and cash equivalents totaled $133.1 million, which more than offset our long-term debt of $72 million. As of June 30, we had approximately $198 million of available liquidity under our $270 million revolving credit facility. In the second quarter, we repurchased approximately 9.4 million shares at an average price of $4.42 for a total consideration of $41.4 million. We have approximately $114 million remaining under our authorization and continue to view share repurchases as a compelling use of the majority of our free cash flow. Moving to guidance. For the third quarter, we expect revenues to be between $460 million and $473 million, gross profit to be between $148 million and $152 million, ex-TAC gross profit to be $184 million to $190 million. Adjusted EBITDA to range from $51.5 million to $56.5 million and non-GAAP net income to be $38 million to $42 million. Reflecting continued momentum across the business, we are increasing our full year outlook for ex-TAC gross profit and adjusted EBITDA while also updating our revenue, gross profit and non-GAAP net income guidance. We now expect revenue of $1.93 billion to $1.96 billion and gross profit of $605 million to $615 million. Importantly, we are raising our ex-TAC gross profit guidance by $7 million at the midpoint to $772 million to $783 million and raising adjusted EBITDA guidance by $3 million at the midpoint to $228 million to $240 million. We expect non-GAAP net income to be between $168 million and $176 million. Our updated revenue guidance incorporates forward-looking effects of the revenue impacts from our publisher network cleanup and the deprecation of our Explore More product due to Google's policy changes. I would also note that while there has been significant public discussion about the reduction of display ad impressions at open web publishers, our guidance reflects the impacts of these user behavior changes. Our raised ex-TAC gross profit guidance is notable, given that our outlook now incorporates the impact of the deprecation of Explore More, which was expected to contribute over $20 million of ex-TAC in the second half of 2026. In summary, we continue to make meaningful progress against our strategic priorities. This quarter, I was particularly excited about the strengthening of our publisher network. Adding FOX News demonstrates the continued strength and growth of our network of exclusive supply. Our soon-to-be announced expansion with one of our larger existing publishers to full page monetization is a significant validation of our Realize strategy and our expansion beyond native advertising. While we are in the early stages of many of these initiatives, we are encouraged by the momentum we're seeing and believe our disciplined execution reinforces our confidence in returning to sustainable double-digit growth. With that, let's move to Q&A. Operator, can you please open the line for questions?
分析師問答
Operator provided instructions. Our first call comes from the line of Naved Khan of B. Riley Securities.
Maybe just on the deeper dive. I think last time around, you updated 7 million or so daily active users. Can you maybe just update us on how that user engagement looks like currently versus the last update that you had? And then on Realize Plus, it looks like a good number of advertisers have adopted it. Can you just maybe talk about the advertising budget allocation? And also, I think you mentioned superior ROI and efficiency in that ad spending that goes through Realize, but can you maybe put some numbers around it and give us a sense of how that is?
Thanks for the question. I can start. So with regards to deeper dive, a few things. First of all, we're about to cross 10 million users, which is really astonishing growth. We launched this product in September of last year. So this is really encouraging to see publishers adopting it, but even more so, consumers using it when they come to visit publishers at a growing pace. We're seeing north of 10% of people using deeper dive when they land on publisher sites. So if you go to a publisher site today, one in ten or more will type a question or replace a suggested question and then start engaging with an AI mode on a publisher site, which has trusted content. What's even more interesting to me is that we see the reaction from the industry. When publishers are thinking about the future, publishers know that the future is not going to be driven by traditional page views. It's going to be driven by conversations and LLM monetization and a much deeper relationship with consumers that can grow the ARPU of their business. And in that future, Taboola plays a much more strategic role because it's more than just a widget on a page. It's more than visible CPMs and things; it's more about conversational AI engagement. So we're seeing publishers choosing Taboola. I mentioned FOX News, which is such an exciting competitive win for us. There's so much more to talk about that I'm excited to share later in the year. So deeper dive is a differentiated position for us in the company. And then when you talk to advertisers, LLM monetization is almost like the next CTV for them. CTV is a more mature market. LLM is at the beginning of it, and it's growing really, really fast. So for agencies and big advertisers to be part of the conversation and monetize that is really critical. And with deeper dive, we're getting in the room with agencies and advertisers. And the performance we're seeing for deeper dive is very strong. I always joke that when search ads started, people were probably shocked by the gap between traditional ads and search ads. That's what I'm seeing at Taboola. The gap between traditional Taboola monetization, which is great, and what we're doing on deeper dive is quite significant. About Realize Plus, we shared that we have about 300 advertisers using it, which is good to see that more advertisers are adopting it. We believe that's going to be a big part of our business in the future. If you compare that to Performance Max and Advantage+ for Meta and Google, we think advertisers want that product and the opportunity to improve ROI for them is significant because we have full control over how it's utilized. It's too early to go much deeper than that, but I'm encouraged by the amount of advertisers using it. And I think once the ecosystem evolves further, this will become a bigger portion of our business.
Our next call is from Martin Crockett of Rosenblatt.
I wanted to maybe explore more about Explore More. Could you tell us a little bit — you said $20 million impact. Is that revenues or ex-TAC gross profit or EBITDA? That's just one on the financial. And then second, if you could just give us a sense of the degree to which you have other exposures to things that might be subject to Google kind of quality controls. I was thinking of you guys namely doing ads on publisher websites; are you exposed to traffic flows like this? If you could elaborate on that, that would be helpful.
Yes. So I can start with the product impact and then Steve, feel free to jump in. So we do think this is a one-time event from a Google perspective. They made the decision to do it. They executed it faster than we had anticipated. Usually, Google at times will announce something and take months or years to actually do it. This one was faster. I assume it's impacted everyone, not just Taboola, but as it relates to us, we had a product that on the publisher side when consumers click back button, a certain experience would come up and show mostly content and some ads. Google deprecated that kind of experience, which impacted in our world something we call Explore More. We did come up with a new product, Engage, which is basically aiming to capture a lot of that revenue back in other ways within the policies of Google. So that's been rolled out, and I expect it to create growth in the future. I don't know if it's going to bring back 100% of the Explore More, but I think it has a chance of bringing a lot of it back. But it was a one-time event. It's in the guide, and I don't expect that type of thing to happen again. But of course, it's Google.
And in terms of your question, that $20 million — over $20 million in the second half, that was ex-TAC.
And so we would have that in the second half and then in the first half of next year as well?
Correct. Yes. I mean that is — over $20 million was a second half effect. So it will affect us in the first half from a comparison basis.
Okay. And then you guys are also talking about cleaning up some of the secondary publishers. You didn't really size that. Is there any sense of the size, revenue and/or ex-TAC impact of that? Or is it just much less material and so not really a discrete breakout potential?
Well, I guess what we said is that between that and the Explore More, that was the majority of the shortfall that we had on revenue. So you can kind of get a sense of the impact with what we've given on the Explore More plus that. But I think, generally speaking, the way we think about that is that's a short-term hit, long-term gain because ultimately, if you have supply in your network that's not performing for advertisers, it hurts your overall advertiser performance and you probably lose budget. Some advertisers don't even know that they're losing it because of that, but you're losing budget. So while it reduces the short-term revenue, we think it's a positive thing for our network over time. And therefore, it should lead to better results in the longer term. So it's a kind of short-term pain, long-term gain type of situation.
Okay. And outside of these kind of discrete actions, just to reiterate, what's your sense of the broader macro for ad flow across your network as you look into the fourth quarter, how are you feeling about the environment?
So generally speaking, the environment has remained relatively stable. So similar to what we've been saying in past quarters, it's not the most robust advertising market you're ever going to see, but it's fairly stable. Like investors, advertisers are looking every day to see if there's geopolitical risk or inflation surprises. There's a lot of skittishness out there. But so far, advertisers, especially our performance advertisers, have continued to spend and continue to operate their businesses as usual. So it's been fairly stable. But I think there's a lot of people just watching what's going on to make sure that they're not surprised by something.
Our next call is from Laura Martin of Needham & Company.
Yes. Just following up a little bit on Barton's topic. Why now? Why cut this now? And is there more to go in this low quality? That's my first one.
Yes. Laura, so I think the why now is we really do this on an ongoing basis. We're always looking at our network and trying to find parts of the network that are not working for advertisers and cutting it. Q2 was just a very unusual quarter in that we had a number of publishers grow really large very quickly that we had to cut because they just weren't working for advertisers. So it was an unusual quarter in terms of the volume of this. But the why now is we always try and do this as soon as we find pockets of nonperforming supply because you just don't want to be harming your advertisers that way. So we always do it. This quarter was unusual just in terms of the volume because of how fast some of those publishers grew with us.
Okay. Great. And then shares are weak right now, I think, in part because of the dependence on Google. So can you just walk through when Google makes a policy change like this — you mentioned a really $40 million hit over the next four quarters on Explore More. It sounds, Adam, from your answer earlier that maybe they tell you this is going to happen and then you guys have some time to adjust, but this one moved much faster, so you couldn't adjust fast enough. Did I understand how the Google impact works in terms of timing?
Yes. So you have that correct. So basically, Google announced this in April, just before our previous earnings. And so we had heard about it. But usually, Google takes quarters upon quarters to actually implement these things because usually, they want comments from publishers and they want to make sure that they're not harming somebody or having secondary effects that they hadn't anticipated. So the example I'll give is third-party cookies, which Google announced three or four years ago they were going to eliminate and then they delayed and delayed and delayed and eventually said they weren't going to. So we heard about it in April, didn't expect it to happen that quickly. So we didn't actually adjust our guidance or anything as a result of it, but then we were surprised, as Adam said, by how fast Google moved on this. So yes, you're correct about the timing and how that happened. Having said that, as Adam said earlier, I don't know of any other products we have that has that type of dependence on a Google policy. Obviously, our publishers have search traffic from Google, which is a Google dependency, but it's less than 5% of our U.S. page views. So there's less dependency there for us than most. So I'm not aware of any other kind of big exposures we have in that way.
Our next question comes from James Kopelman of TD Cowen.
The first one is for Adam. I want to ask about deeper dive and the broader opportunity to capitalize on chatbot engagement. When you look at the broader trends with AI chatbots, how quickly are consumers adopting them or willing to adopt them directly on publisher sites? And what sort of timeline are you contemplating in terms of this new type of engagement becoming a significant driver of both time spent and monetization on publisher sites? It certainly seems like a huge opportunity, but I'm curious how quickly large publishers are moving on this? And are there some advertising verticals where you think publishers will move most quickly or most slowly?
Thanks for the question. So let me start from the end. If I could transition half of Taboola to deeper dive traffic now, I would — as much of Taboola's traffic to deeper dive as possible — I would do it, which I suspect is exactly what other large platforms want to do as well. The CPM opportunity and the monetization opportunity today — and we just got started — is already in the realm of about five to sometimes ten times. So every 1,000 impressions that Taboola serves today on publisher sites versus every 1,000 impressions we get on deeper dive, it is incomparable, and it's quite material. For us and for the industry, I hope it moves as fast as possible. Advertisers want to move fast, publishers want to move fast, and we as the bridge want to move fast. In terms of what we're seeing already, like I mentioned, about 10% of traffic is converting into deeper dive once we launch it on a publisher, which creates immediately almost around 10% revenue growth for that property. So it depends on the publisher. It's already accretive to revenue the publisher can make, but it's still small. Our operation now is how fast can we adopt it, how fast can we move it. Because it's new and publishers are exploring editorial concerns and deployment choices, it's still fairly new. Some move faster than others. But I already see the impact of us offering that and seeing publishers choosing Taboola versus competitors, because they know the future is no longer widgets. They want someone that can help them enter the future, monetize the future and grow together. So I think it's already making a positive impact as it relates to competitive wins that we're having. And you'll see more later in the year as we advance. That also relates to advertisers who want to monetize it. We had 70 million users a few months ago on other products, and now we're at 10 million just on deeper dive. We launched kind of an ad network about a month ago for deeper dive because we're getting requests from many utility apps and other companies that offer LLMs to their users to want us to monetize it for them. Consumers are not going to have 50 subscriptions, so these LLM services need ads and nobody wants to put a banner under an LLM. We're unique in our ability to provide advertising that is native, beautiful, relevant and drives high CPMs. So I think this can be big, but we're trying to be conservative with investors and set expectations and see how it goes.
And then I have a follow-up for Steve. I wanted to just go back to the AI topic. How are you thinking about the potential for agentic AI to help drive efficiency gains within Taboola — among Taboola employees? I'm curious if you have any color on any internal beta initiatives and how they may be progressing or what you're learning? And then I have a second question on the Q2 factors. I was curious if you could separate and quantify the impact of what I would see as three factors: the Google policy change, the dropping of underperforming publishers, and search referral declines related to AI. Specifically on search referral declines from AI, did that trend worsen during the quarter versus what you saw when you issued Q2 guidance three months ago?
So starting with the first question, in terms of AI efficiency gains within Taboola, we have a lot of initiatives now that we're working on. A significantly high percentage of our code now is written or affected by AI. So we're getting gains in productivity in our R&D and product management groups from AI. We also have initiatives throughout the organization to automate and streamline processes using AI. We have people centrally who are working on that with our groups, and then individuals within our teams are helping to automate processes. It's exciting. I do see real opportunities here to have significant efficiency gains. But it's a bit too early right now to talk about exactly where it gets to or to give you quantification on that. I'll also say that we're cognizant of the fact that it's one thing to get efficiency gains from AI; it's another if that only means you're then paying a third party the same amount you saved on your own people. So we're trying to be smart there. We're working on hosting our own models in-house and doing some things that will keep that cost mitigated because companies that aren't thinking about that could be in for a shock in the future. In terms of quantifying the different impacts on Q2, what we've said is that the majority of the shortfall in our revenue guidance was from the two factors: the deprecation of Explore More and the network cleanup. We said Explore More was expected to contribute over $20 million of ex-TAC in the second half, so you can do some back-of-the-envelope math to understand the likely gross revenue on it. It's a fairly high-margin product, a bit higher margin than our typical 35% to 40% ex-TAC. The impact from search traffic declines related to agentic AI is smaller for us because less than 5% of our U.S. network, for example, is from search. So it's a smaller impact relative to the other two factors.
Our next question comes from Tyler DiMatteo of BTIG.
I wanted to come back to the publisher point. Can we just talk a little bit about the nature of those publishers that you were talking about in the headwind comments and the type? And then secondarily, how do you think about the mix of publishers here by vertical as you look to shift to more premium publishers? And then my second question is, as I look at the geo breakdown of revenue, it seems like this is entirely an ex-U.S. phenomenon in terms of where the revenue is coming lower. Is that correct? Is there anything else going on there in terms of the geographic breakdown?
Tyler, okay. So starting with the first question, those publishers that we removed from our network that we deemed not to have good advertiser performance were international publishers. Many were in the Greater China region. Generally speaking, what those publishers are is low-performing traffic. That could be because they bought traffic or other types of illegitimate traffic. It could also be that the nature of their traffic is such that users don't convert. Frankly, whether it's fraud or just a type of consumer that doesn't convert, if it doesn't work for our advertisers, we don't want it on our network. So those publishers were largely in the Greater China region and were low-performing for our network, so we removed them. In terms of the mix of publishers we're looking for, we've always biased toward premium publishers. We're always looking for the biggest brand names. That's one of the reasons we're excited about FOX News because it's a major brand in the U.S. It draws in consumers and is a brand you want on your network. We always bias toward that. That doesn't mean we never end up with lesser brand names, and that's why we're always cleaning up our network. In terms of the geo question, the removed publishers were more international. The Explore More impact from Google's policy change was more global, while the network cleanup was more international.
Our next question comes from Briana Diaz of Citizens.
Just going back on the lower quality publishers, how should we think about the impact to revenue per active advertiser and the number of advertisers in regards to Q2 and maybe if that contributed to the slowdown in the growth from Q1 to Q2 and how we should be thinking about those two metrics going forward for the remainder of the year? And then just a second question, can you elaborate on the strategic significance of expanding from individual article placements to monetizing the full suite of inventory? That feels like a big step change. What's the opportunity to expand that to other publishers online?
So first of all, on scaled advertisers. Yes, Q2 the growth of the average revenue per scaled advertiser, and frankly, also the number of scaled advertisers, was impacted by the network cleanup as well as the Google policy change that deprecated Explore More. When you intentionally reduce revenue on your network by cleaning up and removing poor-performing publishers, that is going to impact your metrics. I was happy that our number of scaled advertisers still grew 2% year-over-year because having more scaled advertisers means we've got more relationships with advertisers that we can then continue to grow in the future. That is a leading indicator we'd like to see continue to grow. Average revenue per scaled advertiser, as long as it's stable around its current level and not declining significantly, is acceptable because when you add more scaled advertisers, they tend to start smaller and then hopefully grow over time, which can drag the average down a bit initially. So I'd like to see continued growth in the number of scaled advertisers and relative stability in the average revenue per scaled advertiser.
I can take the second one. The partnership I hope to announce soon is with one of our largest publishers and a name you know. What's interesting is not only the financial growth opportunity, which I mentioned is in the realm of about three times bigger in some placements, it's more about the industry shift. Publishers are dealing with a lot of change and increasingly want fewer partners, deeper relationships, less complexity and more revenue. Because we're already a significant portion of revenue for many publishers and we have strong direct advertiser demand and programmatic connections, we're in a unique position to say, 'Give us everything.' In this case, the publisher actually came to us with the idea. It's a relationship with a senior person there who suggested it, we modeled it and we're implementing it. Simultaneously, we're in conversations with other publishers. I do think this could be an industry change where publishers want to consolidate partners rather than use five to ten different AdTech providers. If we can become the single most important partner for open web monetization — similar to how Google owns search and Facebook owns social — that would be a major position for Taboola. It's financially meaningful and we're starting with a top-tier publisher.
This concludes the question-and-answer session. I'd now like to turn it back to Adam Singolda for closing remarks.
Thanks for joining us, everyone, this morning. This was an important quarter for us. We raised our guidance, continue to validate our strategy through major strategic wins, and we're making meaningful progress against our long-term vision. We bought back approximately 20% of our shares since 2025, and we intend to continue returning the majority of our free cash flow through share repurchases. Thank you for your support, and we look forward to speaking with all of you and many of you in the weeks ahead. Thank you.
Thank you. This does conclude the program. You may now disconnect.