• Revenue: $102.2 million, a 45% year-over-year decrease.
• Adjusted EBITDA: $7.4 million, an 83% year-over-year decrease, with a 7% adjusted EBITDA margin.
• GAAP Net Income: $2.1 million.
• Non-GAAP Net Income: $11.9 million.
• Net Cash: $383.9 million, including cash equivalents, short-term deposits, and marketable securities.
• Advertising Solutions Revenue: $81.3 million, down 18% year-over-year, representing 80% of total revenue.
• Digital Out of Home Growth: 63% year-over-year, $19.1 million.
• CTV Growth: 90% year-over-year, $9.5 million.
• Retail Media Growth: 62% year-over-year, $21 million.
• Search Advertising Revenue: $20.9 million, down 76% year-over-year.
• Cash Flow from Operating Activities: $16.2 million.
• Share Buyback: 1.6 million shares repurchased for $13.5 million.

• Warning! GuruFocus has detected 6 Warning Signs with PERI.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Perion Network Ltd (NASDAQ:PERI) reported strong growth in its digital out of home, retail media, and CTV segments, with year-over-year increases of 63%, 62%, and 19% respectively.
• The company has successfully integrated advanced AI technologies into its offerings, such as generative AI solutions for audio ads and dynamic content optimization, enhancing its competitive edge.
• Perion Network Ltd (NASDAQ:PERI) maintains a strong net cash position of $383.9 million, allowing for continued investment in technology and potential M&A activities.
• The company has a decade-long track record of generating positive adjusted EBITDA and operating cash flow, demonstrating financial stability.
• Perion Network Ltd (NASDAQ:PERI) continues to expand its partnerships with premium inventory providers, ensuring high-quality advertising placements for its clients.

Negative Points

• Perion Network Ltd (NASDAQ:PERI) experienced a significant 45% year-over-year decrease in revenue, primarily due to a 76% decline in search revenue.
• The company's adjusted EBITDA decreased by 83% year-over-year, resulting in a lower adjusted EBITDA margin of 7%.
• The non-renewal of the Microsoft Bing contract will impact future revenue, with the contract currently representing less than 5% of overall revenue.
• There is ongoing weakness in the open web video and standard display performance, contributing to the decline in advertising solutions revenue.
• The company faces challenges in its traditional display and video advertising segments, which are becoming less attractive compared to other channels.

Q & A Highlights

Q: Could you discuss the progress in making digital out of home more programmatic industry-wide? A: Maoz Sigron, Chief Operating Officer, explained that digital out of home is growing rapidly, especially programmatically. By integrating Hivestack with their retail solution, Perion is enabling retailers to drive more foot traffic into physical stores, enhancing growth beyond just digital out of home.

Q: Can you elaborate on the dynamics affecting CTV growth, given the deceleration from previous quarters? A: Maoz Sigron noted that while CPMs are slightly down, they are buying more inventory. The slower growth is attributed to fewer live sports events during the summer, which are major drivers for CTV. Growth is expected to pick up as live events resume.

Q: When do you anticipate advertising revenue returning to positive growth, and what are your long-term EBITDA margin goals? A: Elad Tzubery, Chief Financial Officer, expects advertising solutions to show year-over-year growth starting in Q1 2025, with significant growth by Q3. They aim to improve EBITDA margins through organizational efficiency without changing pricing models.

Q: Can you clarify the status of the Microsoft contract and its impact on future revenue? A: Maoz Sigron confirmed that the Microsoft contract will not be renewed, but there will be some revenue in 2025 due to a tail clause allowing continued use of their product. However, the impact is expected to be minimal, contributing less than 2% of revenue.

Q: How is the integration of Hivestack progressing, and is it meeting the expected synergies? A: Maoz Sigron stated that the integration is progressing well, with Hivestack's dynamic content optimization technology increasing inventory access by 40%. This synergy is driving growth in retail advertising and proving beneficial for Perion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.