Taboola and Yahoo accuse each other of breaching 30-year deal as shares lose more than half their value
The two companies have each initiated mediation over alleged violations of their long-term advertising agreement, which accounts for approximately 15% of Taboola's revenue. The dispute comes as the Israeli ad-tech company's market capitalization has fallen to around $570 million.
Taboola and Yahoo have accused each other of failing to meet their contractual obligations under a 30-year advertising partnership, opening a potentially consequential dispute between the Israeli ad-tech company and one of its most important commercial partners.
The disagreement, disclosed in Taboola's latest quarterly filing with the U.S. Securities and Exchange Commission, has moved into mediation after both companies submitted notices asserting "material non-compliance" with certain obligations under their Digital Property Services Agreement. The notices were submitted after September 30, according to the filing.
Taboola did not disclose which provisions of the agreement are in dispute, what either side is demanding, or whether the disagreement could ultimately threaten the partnership. The company said it intends to pursue its rights and remedies under the agreement. Yahoo has not publicly detailed its allegations.
The dispute is particularly significant because the agreement is central to Taboola's distribution strategy and has become an increasingly important source of revenue. Under the deal, signed in November 2022, Taboola became the exclusive provider of native advertising across Yahoo's digital properties, including its news, finance, sports, and other online services. The arrangement was presented as a 30-year partnership intended to strengthen Yahoo's advertising business while giving Taboola access to a vast global audience.
The transaction also made Yahoo a principal shareholder in Taboola. In January 2023, Taboola issued Yahoo approximately 39.5 million ordinary shares and 45.2 million non-voting shares, with an aggregate fair value of approximately $288 million. Yahoo also received the right to appoint a representative to Taboola's board.
The financial importance of the relationship has grown. In the third quarter of 2026, Taboola recorded $68.2 million in revenue associated with Yahoo, representing 14.8% of its total revenue, compared with $52.1 million, or 10.5%, a year earlier. For the first nine months of the year, the figure reached $217.2 million, or 15.5% of total revenue, up from $146.9 million, or 10.6%, in the corresponding period of 2025.
The relationship also involves substantial payments to Yahoo. Taboola recorded $94.7 million in traffic acquisition costs related to the company during the third quarter, compared with $93.1 million a year earlier. Those costs totaled $295.8 million in the first nine months of 2026, up from $252.6 million in the same period last year. Taboola cautions that some of these costs are not associated with Yahoo-related revenue recognized during the same reporting period.
The contractual dispute comes as Taboola faces mounting pressure in the public markets. Its shares have lost approximately 53% of their value since the beginning of the year, even after recovering 7.5% on Monday to close at $2.15. The stock had fallen sharply in the three trading sessions following the company's November 4 earnings report, dropping from $3.40 to $2.00 by November 6. Its market capitalization now stands at approximately $570 million, less than half its value at the beginning of the year.
The sell-off followed results that showed declining revenue and a weaker-than-expected outlook. Taboola reported third-quarter revenue of $462.3 million, down 6.9% from $496.8 million a year earlier and slightly below analysts' expectations. Net income rose to $18.4 million from $5.2 million, while adjusted EBITDA increased to $56 million from $48.2 million. Gross profit also improved, reaching $152.3 million compared with $139 million a year earlier.
However, the company's fourth-quarter outlook disappointed investors. Taboola forecast revenue of between $477 million and $493 million, with a midpoint of $485 million, well below the approximately $534 million analysts had expected. Its full-year adjusted EBITDA guidance also came in below market expectations.
Taboola recorded $81.7 million in net income during the first nine months of 2026, compared with a loss of $7.9 million a year earlier. But the 2026 figure included approximately $77 million in pre-tax income from a settlement in a legal matter in which Taboola was the plaintiff. The company recorded the settlement in February.
CEO Adam Singolda has pointed to changes in the broader digital advertising market as a challenge for the business. As audiences increasingly turn to AI-generated summaries and other new ways of discovering information, publishers are under pressure to maintain traffic and advertising revenue. Taboola has said it is seeking to expand its relationships with premium publishers, increase revenue from existing partners, and develop additional businesses such as Taboola News and social commerce.
The Yahoo dispute is not the company's only legal headache. In August, a putative securities class-action lawsuit was filed against Taboola and certain executives in the Southern District of New York. The complaint alleges that the company made false or misleading statements about its relationships with certain publishers and its earnings outlook. Taboola has said it believes it has strong defenses and intends to contest the claims.
