Q3 2023 Perion Network Ltd Earnings Call

<unk> of the company's website at Www Dot Perry on Dot com.

Unknown Executive: Before we begin, I'd like to read the following State Harbor Statement. Today's discussion includes forward-looking statements. These statements reflect the company's current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including those discussed under the heading risk factors that elsewhere in the company's annual report on Form 20F that may cause actual results performance or achievements to materially different. And any future results performance or achievements anticipated or applied by these forward-looking statements.

Before we begin I'd like to read the following safe Harbor statement.

Today's discussion includes forward looking statements. These statements reflect the company's current views with respect to future events. These forward looking statements involve known and unknown risks uncertainties and other factors, including those discussed under the heading risk factors and elsewhere in the Companys annual report on form 20-F that may cause acts.

The results performance or achievements to materially different.

And any future results performance or achievements anticipated or implied by these forward looking statements.

Unknown Executive: The company does not undertake to update any forward-looking statements to reflect future events or circumstances. As in prior quarters, the results reported today will be analyzed both on a gap and non-gab basis, while mentioning EBITDA will be referring to adjusted EBITDA. We have provided a detailed reconciliation of non-gab measures to their comparable gap measures in our earnings release, which is available on our website, and has also been filed on Form 6K.

<unk> does not undertake to update any forward looking statements to reflect future events or circumstances as in prior quarters. The results reported today will be analyzed both on a GAAP and non-GAAP basis, while mentioned EBITDA will be referring to adjusted EBITDA.

We have provided a detailed reconciliation of non-GAAP measures to their comparable GAAP measures in our earnings release, which is available on our website and has also been filed on form 6K.

Unknown Executive: Hosting of call today, or Todd Jacobson, Perion's Chief Executive Officer, and Mayo Sigrun, Perion's Chief Financial Officer. I would now like to turn the call over to Todd Jacobson. Please go ahead.

Hosting the call today are Paul Jacobson, <unk>, Chief Executive Officer, and Mayo Cig, Ron <unk> Chief Financial Officer.

I'd now like to turn the call over to tell Jacobson. Please go ahead.

Tal Jacobson: Hello, everyone, and welcome to Perion's third quarter of 2023 earnings. Joining me today is Mayo Sigrun, our CFO.

Hello, everyone and welcome to <unk> third quarter.

<unk> 23 earnings.

Joining me today is mostly grown our CFO.

Tal Jacobson: I would like to begin by extending our most profound sympathy and support to all our employees and their families and our friends and colleagues in Israel, or facing challenging times. As I recently said in an interview on CNBC, Israelis are the most resilient people on earth. Another extreme situation of uncertainty, Israelis thrive, come together, and overcome any difficulties. Hence, Perion's operations and business activities remain strong. Perion is the global company, predominantly serving the US market, where the vast majority of our revenue is generated.

I would like to begin by extending our most profound sympathy and support to all our employees and their families.

And our friends and colleagues in Israel.

We're facing challenging times.

They recently said in an interview on CNBC Israelis.

Israelis are the most resilient people on Earth.

Either extreme situations of uncertainty Israelis why I've come together and overcome any difficulties.

Hans.

He owns operation and business activities remain strong.

Barry on the global company predominantly serving the U S market, where the vast majority of our revenue is generated.

Tal Jacobson: The huge support we are receiving, including from many of you on this call, is so appreciated. Perion is built on the hard work and execution abilities of our amazing teams, and on the long lasting support and belief of our investors. I want to thank you all for being part of our integral part of our journey. We will continue to serve our country while delivering value to our clients, partners, and stakeholders.

The huge support we are receiving.

Including for many of you on this call you. So appreciate it.

Varian is built on the hard work and execution abilities of our amazing team.

And on the long lasting support and belief of our investors.

I want to thank you all for being part of an integral part.

Of our journey.

We will continue to serve our country, while delivering value to our clients partners and stakeholders.

Tal Jacobson: The headline news of the third quarter of 2023 is similar to every quarter over the last three years. Our financial results reflect Perion's ability to deliver continuous, profitable growth, even under macroeconomic headwinds. Our profitability remains among the highest in the industry. The three main factors that enabled another quarter of growth and strong profitability are Perion diversified business model focused on technology and innovation and discipline execution. We achieved growth in key financial parameters including year-to-year growth in revenue, contribution extract and adjusted EBITDA. This impressive double digit growth represents continuous trend that has been ongoing for the past three years. Our ability to execute and deliver constant profitable growth proves, once again, that our business model is effective and strong.

The headline news of the third quarter of 2023 is similar to every quarter over the last three years.

Our financial results reflect the ability to deliver continuous.

<unk> growth even under macroeconomic headwinds.

Our profitability remains among the highest in the industry.

The three main factors that enabled another quarter of growth and strong profitability, our patio and diversified business model.

Focus on technology, and innovation and disciplined execution, we achieved growth in key financial parameters, including year over year growth in revenue contribution ex Tac and adjusted EBITA. This impressive double digit growth represents.

Continuous trend that has been ongoing for the past three years, our ability to execute and deliver constant profitable growth.

Proves once again that our business model is effective and strong.

Tal Jacobson: Perion is a technology company. Two of our strongest growth drivers are retail media and CTV, and they are expected to drive significant growth going forward. Our year-to-date CTV revenue has grown an impressive 48% over the same period last year, well ahead of the market. Our diversified portfolio allows us to be agile and shift our solutions to align with our advertisers, budget allocation trends. During the right-of-strike, CTV budgets shifted to live events versus on-demand content.

Marianne is a technology company two of our strongest growth drivers, our retail media and CTV and they are expected to drive significant growth going forward.

Our year to date CTV revenue has grown and impressive.

48% over the same period last year, well ahead of the market.

Our diversified portfolio allows us to be agile and shift our solutions to align with our advertisers' budget allocation trends.

During the Writers' strike CTV budget shifted to live events.

First is on demand content.

Tal Jacobson: We at Perion were able to capitalize on this and move our CTV solutions to meet this demand. Our retail media solutions are also showing tremendous growth with a year-to-year revenue up 81% over the same period last year, and dramatically ahead of the expected US retail media growth of less than 20% in 2023. At the beginning of 2023, we expected our retail media revenue to reach an aggressive goal of $30 million by the end of the year.

We had billion, we're able to capitalize on this and move our CTV solutions to meet this demand.

Our retail media solutions are also showing tremendous growth.

With a year to year revenue up 81% over the same period last year.

And dramatically ahead of the expected U S retail media growth of less than 20% in 2020 three.

At the beginning of 2023 we expected our retail media revenue to reach an aggressive goal of $30 million by the end of the year.

Tal Jacobson: I'm happy to share that we've already achieved our initial annual goal. These strong results across both CTV and retail are due to our ability to decipher trends ahead of time and move fast to capture those opportunities.

I'm happy to share that we've already achieved our initial annual goal.

These strong results across both CTV and retail although due to our ability to decipher trends ahead of time and moved fast to capture those opportunities.

Tal Jacobson: As a technology-forth company, we harness technology to effectively penetrate new markets and create high margin growth engines. Our growth is driven by our deep commitment to technological innovation. We offer many unique solutions both on the supply and the demand side of the market. We at Perion offer our advertisers a suite of technological multi-channel solutions. Our solutions are optimized to achieve highest business results, for advertisers all under one roof. Firstly, we generate for advertisers high-impact creative formats for all media channels.

Is the technology forward company, we harness technology to effectively penetrate new markets and create high margin growth engines.

Our growth is driven by our deep commitment.

Two technological innovation.

We offer many unique solution both on the supply and the demand side of the market.

We experian offer our advertisers a suite of technological multichannel solutions, our solutions are optimized to achieve highest business results.

For our advertisers.

All under one roof.

Firstly, we generate for advertisers high impact creative formats for all media channels.

Tal Jacobson: Our goal is to connect advertisers with their consumers at every touchpoint in an easy and efficient manner. Our creatives are based on advanced data in AI capabilities. To personalize the right message to the right audience using our source technology, we target audience segmentation across channels. Our ads and campaigns are distributed across premium publishers and channels such as CTV, display, video, social, digital out of home, and audio. The final and very important piece of this puzzle is our ability to measure the impact of each campaign at each channel and optimize based on the results.

Our goal is to connect advertisers with their consumers at every touch point in an easy and efficient manner.

Our creative are based on advanced data in AI capabilities.

To personalize.

The right message to the right audience.

Using our source technology, we target audience segmentation across channels.

Our ads.

And campaigns are distributed across premium publishers and channels.

Such as CTV.

Play.

Video.

Oshell digital out of home and audio.

The final and very important piece of this puzzle is our ability to measure the impact of each campaign at each channel and optimize based on the results like CTV is one of the fastest growing high impact advertising solutions.

Tal Jacobson: Like CTV is one of the fastest growing high-impact advertising solutions. Here you can see our immersive ad units integrated into live CTV sports programming at the peak of the excitement at the highest attention level. Here, we created an ad for AT&T that ran during FIFA soccer game. The algorithm identified a low interaction and the exact moment it places the ad alongside the live event. This powerful placement solves commercial avoidance and also known as bathroom breaks.

Here, you can see our immersive AD unit integrated into like CTV sports programming at the Pea.

Peak of the excitement and the highest attention level heal we created an AD for AT&T that ran during FIFA soccer game the algorithm identify a lull in the action and the exact moment. It places the AD alongside the live event this powerful place.

Mint.

So commercial avoidance and also known as bathroom breaks another Great example of the high impact lie CTV is our sponsorship with homeruns. The most exciting moment in baseball here you can see the stay live experience we can.

Tal Jacobson: Another great example of the high-impact live CTV is our sponsorship with home runs, the most exciting moment in baseball. Here you can see the stay live experience we created for the New York Yankees, for both CTV and AT&T, as stand dual, deliver its message at the right moment during the broadcast, viewer attention to the feel of the home run, extend to the commercial message itself. By turning an unmissable moment into an unmissable advertising opportunity, where you help our advertisers break through the clutter. This ability to command attention has helped Perion to attract world-class advertisers, from a large range of categories, from AT&T, to Mazda, Mercedes, Quarger, and many others.

Created for the New York Yankees for both CTV and OTT as band you'll deliver its message at the right moment during the broadcast viewers attention to the wheel of the homerun extend to the commercial message itself.

By turning an unmissable moment into an unmissable advertising opportunity.

We help our advertisers break through the clutter.

The ability to command attention is help variant to attract world class advertisers.

From a large range of categories from AT&T to Mazda precipitous Cougar and many others.

Tal Jacobson: I'm happy to announce WAVE, our new advertising solution for dynamic audio ads driven by Gen. V.I. WAVE stands for waveform audio voice engine. WAVE generates hundreds of thousands of audio ads based on retail data of product and promotion. This groundbreaking solution delivers tailored audio messages to listeners, adopting in real-time the various factors including context, behavioral, geographics, demographics, and others. Utilizing sophisticated algorithms of artificial intelligence. Wave generates audio ads that create a personal immersive audio experience, enhancing engagement and impact.

I'm happy to announce wave, our new advertising solution for dynamic audio ads driven by generative AI.

Wave Stanfill way form audio voice engine waived generates hundreds of thousands of audio ads based on retail data off product and promotions. This groundbreaking solution delivers tailored audio messages to listeners adapting in real time.

I'm, the various factors, including context, behavioral geographics demographics, and others utilizing sophisticated algorithms of artificial intelligence wave generates audio ads that create a personal immersive audio experience.

Yes.

Enhancing engagement and impact.

Tal Jacobson: We at Perion are now present with sight, sound, and motion. We combine technology and creativity to allow retailers to deliver deep, meaningful and full sensory consumer experience. The US Digital Audio Ad Market is rapidly expanding. Advertising budgets are projected to reach an impressive figure of nearly $6.8 billion in 2023. In this growing market, Wave, our new solution, is designed to help advertisers offer enhanced personalization and engagement at each touch point on the consumer journey. One of the first wave adapters is Albozon, the second largest supermarket chain in the US. Albozon has seamlessly integrated wave into several successful campaigns and is now scaling the wave solution.

We had failures are now present with site.

<unk>.

In motion.

We combine technology and.

Creativity to allow retailers to deliver deep.

Meaningful and full sensory consumer experience.

The U S digital audio AD market is rapidly expanding advertising budgets are projected to reach an impressive figure of nearly $6.8 billion in 2020 three.

In this growing market wave our new solution is designed to help advertisers offer enhance personalization.

And engagement at each touch point on the consumer journey.

One of the first wave of Adaptors is albertsons, the second largest supermarket chain in the U S.

Albertson has seamlessly integrated wave into several successful campaigns and he's now scaling the wave solution.

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Here's an example of a wave technology in action get ready to start the new school year strong come on into your local Acme to find all the fresh feel you need for school.

Up tender Purdue boneless chicken breasts for $2 99, a pound limit one in our app or online 10 score tender grass fed beef Thomas Rabe I think for just 999, a pound download the app for your deals today Acme fresh food local flavors.

Tal Jacobson: Our results are strong, our operational discipline and innovative technology allows a business model that is unique, competitive and high performing. We're intensely reviewing MNA opportunities that could further accelerate growth and diversification. Those opportunities may include area of technology that complements our existing portfolio.

Our results are strong our operational discipline and innovative technology allows our business model that is unique.

Competitive and high performing.

We're intensely reviewing M&A opportunities that could further accelerate growth.

And diversification.

Those opportunities may include area of technology that complements our existing portfolio with that I will hand over the stage to moes.

Maoz Sigron: With that, I will hand over the stage to most to discuss the financial results in more detail. Thank you Tal, good afternoon and good morning to those of you joining us on the US. It is no secret that Israel is experiencing challenging time. Despite the whole situation, it is very important for me to share with you that almost 100% of clearance revenue is generated outside the reserve and only 40% of our cash and cash equivalent is held in Israel.

Discuss the financial results in more detail.

Thank you Todd good afternoon, and good morning to those of you joining us from the U S. It is no secret that Israel is experiencing challenging time.

Despite the wall situation. It is very important for me to share with you that almost 100% of DRAM revenue is generated outside of Israel, and only 40% of our cash and cash equivalents is held in Israel.

Maoz Sigron: At the same time, we are monitoring the situation closely and are diversifying our cash allocation to mitigate any risk. To be clear, the conflict is not and is not expected to significantly impact our business or financial strength. Downing with the business. In the face of the continuous macroeconomic state of affairs, in the third quarter, we delivered strong financial results with continued possible growth. Once again, we demonstrated the power and resilience of our agile and diversified business model.

The same time, we are monitoring the situation closely and are diversifying our cash allocation to mitigate any risk.

To be clear the conflict is not and is not expected to significantly impact our business or financial plans the earnings of the business.

In face of the continuous macroeconomic state of affairs in the third quarter, we delivered strong financial results with continued profitable growth.

Once again, we demonstrated the power and the resilience of our agile and diversified business model.

Maoz Sigron: Let's review the financial highlights for the tailed water. Revenue increased by 17% over a year to 185.3 million. Contribution, excluding stock increased by 90% over a year to 77.3 million, delivering a 42% margin. Adjusted EBDA increased by 29% over a year to 42.7 million. Gap net income increased by 28% over a year to 32.8 million. And non-gap diluted earnings per share increased by 38% over a year to 84% per diluted share.

Let's review the financial highlights for the third quarter.

Revenue increased by 17% year over year to $185 3 million.

Contribution excluding <unk> increased by 90% year over year to $77 3 million delivering a 42% margin.

Adjusted EBITDA increased by 29% year over year to $42 7 million GAAP net income increased by 28% year over year to 32.8 million <unk>.

And non-GAAP diluted earnings per share increased by 38% year over year to 84 cents per diluted share.

Maoz Sigron: Let's review the financial results in more detail. The revenue for the third quarter was 185.3 million and increased of 17% over a year. Our strong and consistent growth resulted in a two-year keg year of 24%. These results demonstrate that our ability to execute and our diversification strategy combined with innovation and business agility provides strong results despite the volatility in the attic industry and the macroeconomic advent. Display advertising revenue for the tailed quarter increased by 14% year over a year to 99.2 million, accounting for 54% of total revenue.

Let's review the financial results in more detail.

The revenue for the third quarter was $185 3 million, an increase of 17% year over year.

Our strong and consistent growth resulted in a two year CAGR of 24%.

These results demonstrate that our ability to execute on our diversification strategy combined with innovation and business agility devices strong results. Despite the volatility in the attic industry and the macroeconomic headwinds.

Display advertising revenue for the third quarter increased by 40% year over year to $99 2 million accounting for 54% of total revenue over the last few years, we've diversified our display advertising business, adding new component to our portfolio and our revenue streams such as.

Maoz Sigron: Over the last three years, we have diversified our display advertising business, adding new components to our portfolio and revenue streams, such as CTV and retail media, to become a one-stop shop platform for advertisers. Our retail media revenue more than doubled, increasing by 100% over a year and accounted for 30% of display advertising revenue compared with 7% in the same period last year. These results were driven by new customers and increased the spending of existing customers.

CTV innovative media to become a one stop shop platform for advertising.

Our retail media revenue more than doubled increasing by one either with 12% year over year and accounted for 30% of display advertising revenue compared with 7% in the same period last year.

These results were driven by new customers and increase the spending of existing customers.

Maoz Sigron: We are experiencing strong and rapid growth in retail media and as Dal mentioned, we will exceed our expectation for 20-23. Our CTV business continued to expand growing 39% year over a year, representing 8% of the sales advertising revenue compared with 7% last year. Video revenue decreased by 60% year over a year due to our decision to shift part of our inventory from video to display to gain higher profit. Our search business continued to be a driver of our sustained performance.

We are experiencing strong and rapid growth in our lithium media as Todd mentioned, we would exceed our expectation for 'twenty or 'twenty three.

Our CTV business continued to expand growing 39% year over year, representing 8% of this advertising revenue compared with 7% last year.

Video revenue decreased by 60% year over year due to our decision to shift part of our inventory from video to display to gain <unk>.

Our search business continued to be and driver of our sustained performance.

Maoz Sigron: Search advertising revenue increased by 20% year over a year, while the U.S, search advertising spending is expected to grow by 8.3% in 2023 according to a marketer. During the quarter, average daily searches increased by 86% over the same period last year, and the number of publishes grew by 60% year over a year. Our third quarter of media margin continued to improve, increasing to 42% compared with 41% in the third quarter last year and 39% in 2021.

Search advertising revenue increased by 20% year over year, while the U S search advertising spending is expected to grow by eight 3% in 2023, according to a market deal.

During the quarter average daily searches increased by 86% over the same period last year and the number of published show grew by 6% year over year, our third quarter media margin continued to improve increasing to 42% compared with 41% in the third quarter last year and 39% in 2020 one.

Maoz Sigron: This continuous improvement is attributable to our focus on improved product mix and media buying optimization to our platform. In addition to our top-line growth, especially giving the macroeconomics admins, we are very proud of our ability to successfully direct resources to i-cove areas with IR margins, along with our focus on operational efficiency, translating to a 29% year-over-year growth in adjusted EBDA to 42.7 million. Adjusted EBDA margin in the third quarter increased to 23% up from 21% in the third quarter of 2022 and 15% in the third quarter of 2021.

This continuous improvement is attributable to our focus on improved product mix and media blank optimization to our platform. In addition to our topline growth, especially given the macroeconomic headwinds we are very proud of our ability to successfully direct resources to iron golf areas with.

Iron margins, along with our focus on operational efficiency translating to a 29% year over year growth in adjusted EBITDA to $42 7 million.

And adjusted EBITDA margin in the third quarter increased to 23% up from 21% in the third quarter of 2022 and 15% in the third quarter of 2021.

Maoz Sigron: Finally, adjusted EBDA to contribution excluding stock increased to 55% up from 51% in the third quarter of 2022 and 37% in the third quarter of 2021. On a gap basis, third quarter net income increased by 28% to 32.8 million, 0.65 cent per deluta share compared with 25.6 million of 53 cent per deluta share in the third quarter of 2022. On a non-gap basis, net income increased by 42% to 42.4 million, 0.84 cent per deluta share for the third quarter compared with 29.9 million, 0.61 cent per deluta share last year.

Finally, adjusted EBITDA, two contribution excluding stock increased to 55% at 451% in the third quarter of 2022 and 37% in the third quarter of 2021 on a GAAP basis third quarter net income increased by 28% to 32.8 million.

Oh, 65 center diluted share compared with $25 6 million or 53 center. Those are true in the third quarter of 2022 on a non-GAAP basis net income increased by 42% to 42.4 million or 84 cents per diluted share for the third quarter.

Compared with $29 9 million or 61 cents per diluted share of last year.

Maoz Sigron: We delivered an impressive two-year keger of 76% for gap net income and 66% for non-gap net income despite the global macro instability. This is testimony to the strength of our diversification strategy, our efficient operations and to our strict cost control measure. Over the past three years, we have consistently improved our productivity and successfully executed cost efficiencies. Our two-year quarter, non-gap index and cost, decreased to 19% from revenue, compared with 20% in the third in the same period last year.

We delivered an impressive two year CAGR of 76% for GAAP net income and 66% for non-GAAP net income despite the global macro instability.

This is testimony to the strength of our diversification strategy, our efficient operations and to our strict cost control measures.

Over the past three years, we have consistently improved our productivity and successfully executed cost efficiencies.

Our third quarter, non-GAAP, Opex, and Cogs decreased 19% from revenue compared with 20% in the cells in the same period last year.

Maoz Sigron: Our productivity measured by adjusted EBDA per ST increased to 84.1000 from 66,000 in the third quarter of last year. Operating cash flow for the third quarter was 40.1 million compared with 34.7 million in the same period last year. As of September 30, 2023, our net cash, including cash, cash equivalent, short-term deposits and marketed securities was 500, 23.6 million. This is an increase from 483.3 million at the end of the second quarter, 2023. The increase in cash and cash equivalent was the result of the strong operating cash flow generated in the quarter.

Our productivity measured by adjusted EBITDA up your ft increased to $84 1004, 66000 in the third quarter of last year operating cash flow for the third quarter was $40 1 million compared with $34 7 million in the same period last year as of September.

32023, our net cash, including cash cash equivalents short term deposits and marketable securities was $523 6 million. This is an increase from $483 3 million at the end of the second quarter 2023.

The increase in cash and cash equivalents was the result of the strong operating cash flow generated in the quarter.

Maoz Sigron: We are reiterating our full-year 2023 guidance that confirms parents confidence in achieving strong year-over-year revenue and adjusted EBDA growth.

We are reiterating our full year 2023 guidance, then confirm parents confidence in achieving strong year over year revenue and adjusted EBITDA growth. This concludes my financial overview and now we will open the line for questions.

Maoz Sigron: This concludes my financial overview and now we will open the line for questions.

Unknown Executive: Thank you and now for your question and answer session. If you had to be placing the question Q in your dialed in with the phone, please press star 1 on your telephone keypad and over the zoom you may raise your hand using the raise your hand function on the zoom. One moment please, while we pull for questions.

Thank you, we'll now be conducting a question and answer session.

To be placed in the question queue and you're dialed in to the phone. Please press star one on your telephone keypad. However, the zoom you may raise your hand, using the raise your hand function resume one moment. Please while we poll for questions.

Laura Martin: Our first question is coming from Laura Martin from Needhamon Company. Your line is now live. Great. Just a couple of things. This retail media network is really fantastic. Could you, is that driven by new customers, higher spending levels? What's going on with pricing? Could you start with retail, media's price please? Yeah, absolutely. Thanks for joining. So, retail is, it's also new customers, but it's deepening the relationship with the retail customers that we already have with more and more technology, such as wave, you know, the new product we just released. So, both new customers and existing customers, deep in the relationship.

Our first question is coming from Laura Martin from Needham <unk> Company. Your line is now live.

Great just a couple of things. This retail media network is really fantastic could you is that given the by new customers higher spending level, what's going on with pricing could you start with Macau media strike right.

Yeah absolutely.

For joining so retail is it's also new customers, but it's deepening the relationship with the retail customers that we already have.

With more and more technologies, such as wave the new product. We just released so both new customers and existing customers deepen the relationship.

Yeah.

Laura Martin: Okay, great. And then I'm curious as to the juxtaposition here, Tal, we had CTV revenues up 39%, but video advertising down 16%. I would have guessed that CTV was inside videos. So, what's falling off a cliff in video if CTV's doing so well? CTV and video are separated, also in our historical number. The reason why video, as we said, decreasing is related to different priority internally we did, which is the part of the inventory to the display just in terms of what is the potential of each one of them. And in terms of the bottom lines, what we can get, you can get more dollars from display versus the video. Okay, thanks guys.

Unknown Executive: Thank you.

Andrew Marok: Next question, Tays, can we move from Andrew Marock, your line of that lies? Great. Thanks for taking my questions. I kind of wanted to dig in on the metrics that you gave around the search business with the really, really strong growth in queries on top of 16% growth and publishers. That seems to imply a really, really strong growth in queries per publisher. Can you give any color as to what's behind that?

In queries on top of 16 per cent growth and publishers that seems to imply up really really strong growth inquiries per publisher can you give any color as to what's behind that.

Andrew Marok: What's behind the more searches for the publisher? Correct. Is there anything specific that's driving a big uptick in searches per publisher? No, I think, first of all, a lot of the searches are generated from the existing publishers and also from new publishers. And since we don't really control the searches, we can only add more customers. It's really up to them and for the market, you know, trends. If people are searching more or not, it's up to them. Our business is to add more and more publishers, qualified publishers that can, you know, attract new customers of the own.

What's behind the more searches the puppy's fur.

Correct is there anything specific that's driving a big uptick in searches for publisher no. I think principal allows the searches are generated from the existing publishers and also from new puppy choose.

Since we don't really control the searches we can only add more customers, it's really up to them and for the market.

No trends if people are stretching more than that.

It's it's up to them our business is to add more and more.

Publishers qualify publishers that can you attract new customers of <unk>.

Andrew Marok: Okay. And then on the wave product, I know you have a lot of emerging and earlier stage efforts in front of you. Can you just give us a little bit of background as to what advertiser feedback or anything specific that you heard that really led you to develop this product and get it out into the market. Thank you. Yeah, absolutely. So, first of all, we're doubling down on Generative AI. We think we believe this is the future of advertising.

Okay, and then on the wave product I I know you have a lot of emerging an earlier stage efforts in front of you can you just give us a little bit of background as to what advertiser feedback or anything specific that you heard that really led you to to develop this product and.

And and get it out into the market. Thank you yeah, absolutely. So first of all where we're doubling down on January <unk>. We think we believe this is the future of advertising.

Andrew Marok: Everything Generative AI is definitely the future and we have a lab here just for that. One of the things we've heard from our advertisers is they're looking for more creative and immersive formats, to be generated on a huge scale and a personalized manner. So this is why we've used Generative AI to first of all create all those trillions of scripts. So it would take the data of the product, the promotion, the location, and then through that it actually writes its own scripts for different variations and then we're using a very smart algorithm that can actually read that.

Everything <unk> is definitely the future and we have a lab here suggest for that one of the things we've heard from our advertisers is they're looking for more creative and immersive format.

To be generated on a huge scale in a personalized manner. So this is why we've used Timothy B I two.

First of all create all those trillions of script. So it would take the data the product of promotions. The location and then two that is actually right its own scripts for different abbreviations and then we're using a very smart algorithm that can actually read that.

Andrew Marok: And it actually sounds like a real person and we spread that around through different channels, right? You know, podcasts, radios, and then we get the attribution to actually see, you know, what gains, how do people interact with that to people actually skip it or not. So, you know, it's the whole thing. We just released that. We have a few customers with that. We're getting very positive feedbacks and they actually want to add more and more campaigns using that technology. And we're feeling very, very optimistic and positive about the whole trend of Generative AI within Perion. Thank you.

And it actually sounds like a real person and we spread that around to different channels alright, Yeah hope both cast radios and then we get that <unk> to actually see.

Webb gains how do people.

Interact with that two people actually keep it or not so you know it's the whole thing with just released that we have a few customers with that we're getting very positive feedback and they will actually want to add more and more campaigns using that technology.

And we're feeling very very optimistic and positive about the whole trend of generativity within failure.

Mark Kelley: Next question is coming from Mark Kelly from Steve. Your line is now live. Great. Thanks very much. I had two quick ones. Just first on CTV. You know, we've been hearing about CPMs, you know, continuing to come down across the industry. I know you guys have, you know, different types of creative units that. Gardner, a higher CPM. I'm just curious if you're seeing any pressure on CPMs there.

Thank you next question is coming from <unk> T for your wireless in my life.

Alright. Thank you very much I have two quick ones just uhm first on C. T. V. You know we've been hearing about <unk>, you know continuing to come down across the industry. I know you guys have you know different types of creative <unk>.

Garner a higher C P. A and I'm just curious if you're seeing any pressure on CPM. There. That's the first question and then just another way of product.

Mark Kelley: That's the first question. And then just on a wave product. Can you spend just a little bit on that? I guess are all the intense signals coming from the retail media network? And then I guess will you book that revenue as part of retail media? I guess a little more color there would be great. Thanks. Right. So let me start with with the wave things because we already started that and then most can can talk about the more more KPIs about CTV.

Can you extend it a little bit on that I guess are all the intense signals coming from the retail media <unk>.

Network and then I guess when you book that revenue is part of retail media I get a little more color that would be great. Thanks.

Alright, So let me start with the with the way things because we already started that <unk> can talk available and more kpis with C. T V.

Mark Kelley: So yes, for the wave is basically that a driven advertising on its scale. That's why we need machine learning in the Generative AI. And the easiest and more natural place for that is going to be retail. Now we're starting with retail, which is obviously part of the retail media effort we have. But if we're going to, you know, add it to more and more vectors and verticals such as travel, you know, automotive and others. But retail, since we get to our relationship with the retail, we get so much data. It's just it makes so much sense to start with that.

So yes <unk> is <unk>.

Basically data driven advertising, it's kail, that's why we need machine learning and generally T V I.

And the easiest and more natural place for that is gonna be retail.

Now, we're starting with retail which is obviously part of the retail media effort we have.

But we're gonna.

Added to more and more vectors and vertical such as travel.

You know automotive and others, but retail essence, we get.

To our relationship with the details we get so much data.

Yes.

It makes so much sense to start with that.

Mark Kelley: Now it's for the CTV. So CTV, as you know, our CTV is not a standard TV. We're talking about the impact TV with different so much we are using. We are charging the same CPM. We are not seeing any drop or any change in the trends. We're able to keep this talk on the CPM. And this is what we also expecting for this photo. We don't see any weakness on our CPM around TV. Okay, great. Thank you both.

Now, let's put the C T V.

Unknown Executive: Thank you.

<unk> as you know our city. Please understand that typically we're talking about the I'm pretty busy with different four.

<unk>, we are using <unk> charging the same city and we are not seeing any and doable any change in advance we are able to keep the store gondola C. P. M. And this is what we also expect <unk>, we don't see any weakness on our <unk>.

Okay, great. Thank you both.

Thank you.

Jason Helfstein: Next question, today is coming from Jason Helfstein from Oppenheimer. Your line is now live. Hey everybody, it's a first.

Alright next question today is coming from Jason helps me from Oppenheimer. Your line is our life.

I everybody. So first I want to offer my sympathies and support for all the Israeli carry on them. Please.

Jason Helfstein: I want to offer my sympathies and support for all the Israeli Perion employees. A few questions. So on the mix away from video, how much of this is media quality reasons? Or is this just solely, you know, kind of profitability and efficiency on your side? That's question one.

A few questions. So so on the next away from video how much of this is is media quality reasons or is it just slowly you know kind of profitability inefficiency on your side that that's question one.

Jason Helfstein: Then question two, Maoz, can you elaborate on the third quarter macro headwinds you cited? With any specific verticals that you want to call out as weak and kind of, you know, maybe like areas you saw or thought were strong, but it's just like a broad comment. And then just on the weaker, I mean, I think we all know CTCBMs have been coming down given the explosion inventory. Isn't that a positive for you because it drives higher ROI and then if you could get advertisers to put more budget there. Thanks. Thank you.

Nine question too I was can you elaborate on the the the third quarter macro headwinds decided we are there any specific vertical that you wanted to call out as we can kind of you know.

Maybe like area <unk>.

A strong religious like abroad comment.

And then just on the weaker I mean, I think we all know C. C. T V. C. P M has been coming down.

Given the explosion inventory isn't that a positive for you because he drives higher R. Y and then if you could show higher R. Y you can get advertisers are put more budget there. Thanks.

Maoz Sigron: First, thank you Jason. So about the video, this is pure economic. That's a unit of economic consideration. Once we see that you can get more profit from this play, we will shift the inventory to this play. It's just, you know, pure economic consideration. Historically, it was better with the video, but in the last, let's say, quarter, it was more, but it's something that when started few quarters ago, that we start saying that we can get a more profit with the display. So we did this shift.

Thank you. Thank you Jason so about this visa this is pure economics.

A unit of economic sense. The duration once you receive as you can get more of it from this day, we will ship the inventory to display. It's just you know pure economic consideration.

Historically, it was better with the video but in the last that's a quarter. It was more but it's something that <unk> that <unk> that we can get a more.

Profit and we did the strike. So we did this shift this is for the first <unk> again, we ended the quarter more or less.

Maoz Sigron: This is for the first, about the macro. Again, we ended the quarter more or less around a line with the original plan. That diversification is part of the reason why we're able to end the quarter. But definitely there is a change between, you know, what you plan originally to what are we in the quarter. There was some area that are, let's say, less and show lower numbers versus our plan. But some others that offset the weaker area, but generally speaking, you know, if I'm talking about searches all and this play, as I think it's all, as you can see, the numbers, this is very much aligned with the plan. The drivers for the quarter that offset more than everything the negative trend is retail and CTV. This is the main two area that help us to offset the negative trend.

In line with the original plan. The diversification is part of the reason why we are able to end the call too, but definitely there is a change between you know what you planned originally to US we end the quarter there was some area that the.

Let's say less and and Joe lower numbers versus our plan, but some other that's all set the the the week area, but generally speaking you know what I'm talking about such a zone and the display of <unk> as you can see the numbers is very much a line with a plan the.

The driver for the call Sir that's all set more than they ever think the negative trend is retail and <unk>. This is the main two area that help us to all set the negative the negative <unk>.

Maoz Sigron: And the last is about the CTV. You're right that we believe the start of the reason we're able to show better results with the CTV is related to the weakness that we have on the standout CTV. The ROI, the loss that we are showing is better than the standout. And we believe that this is part of the reason we are able to be very attractive and to be able to keep the CPM, which are relatively high, as you know. And this is part of the reason why the growth, the year-over-year trend is very much better. Thank you.

And the last is about the city V. You're right that we believe that part of the reason, we able to show better results on with a C. T V is related to the weakness that we have on the stand out <unk>. The <unk>. The one that we are showing is better than the stand out.

And we believe that this is part of the reason we are able to be very attractive and do be able to keep the C. P M, which are relatively I as as you know.

And this is part of the reason why the <unk> the year over your rent is very much positive.

Mmm.

Jeff Martin: Next question, say you're coming from Jeff Martin, from Ralthur, line is now live. Great. Thank you.

Check your next question today coming from Jeff Martin from off your line of your life.

Jeff Martin: Good evening and also expressing my support and sympathies. Wanted to get a sense, Maoz and Tal. Next year, you know, how should we start thinking about growth in search and display? Do you believe that retail media can continue to support growth in the double digits on revenue overall and any insight into whether you think there'll be some M&A activity next year. Thanks. Yeah. So let's start by saying, you know, our organic business is growing, right?

Great. Thank you good evening and also expressing my support and sympathy uhm.

Wanted to get a sense mass.

Next year, how should we start thinking about redfin in search and display do you believe that retail media can <unk>.

Continue to support growth in the double digits on revenue overall, and you know any any insight into whether you think there'll be some M&A activity next year. Thanks.

Yeah. So.

Let's start by saying you know organic business.

Jeff Martin: And we expect it to continue to grow next year. Both in search on retail, on CTV on all parts. Currently, we have great signals from all from all parts of the business. Having said that, we're also evaluating a few candidates for M&A. We feel strongly that we need to have another arm more technology, maybe a new vertical. So we are working on that very actively. Great.

Is growing and we we expect it to continue to grow next year.

Both in search on retail C. T V on all <unk>.

Currently we have great signals from all from what part of the business.

Having said that we are also evaluating a few candidates four M&A.

We feel strongly that.

We need to have another another arm more technology.

Maybe a new vertical.

So we are working on that very actively.

Jeff Martin: And then just to follow up, there wasn't, there wasn't much discussion about sort and sort related metrics and growth, maybe giving up right there. Absolutely. So I actually glad that you added that. So few things about sort. First of all, sort of doing great, you know, it stays very strong and it keeps driving more and more campaigns to us. As we said in the past, sort is not a stand-alone product. Sort drives, it's AI driven targeting capabilities that do not require any cookies or any privacy formats of any sort.

Great and then just follow up it wasn't there wasn't much discussion about sore and sort related matrix and grew up maybe given up going out there after.

<unk>, absolutely so I'm actually glad that.

That you that you edit that.

So.

A few things about sort first of all soldiers doing great you know it it it stays very strong and it keeps driving more and more campaigns to us as we said in the past. So it is not a standalone product sort <unk>.

Drives.

AI driven targeting capabilities that do not require any cookies or any privacy formats of any sort.

Jeff Martin: We're extremely happy about sort. Even now, especially when Google just announced that they're going to restrict the ability of advertisers to look at IPs through Chrome. And, you know, source doesn't use that. So, you know, it's a home run for us. If cookies are going to go away, if IPs are going to shrink. Sort doesn't use both of them. So we're extremely happy about that. We feel very strongly about, you know, us having sort as a secret sauce to continue our growth.

We're extremely happy about so it's even now specially when Google <unk>.

We're gonna.

Restrict the ability of advertisers to look at the eyepiece.

Through chrome.

And you know so.

Source doesn't use that so.

It's a home run for us.

Cookies are gonna go away if I P. S are gonna shrink.

So it doesn't use both of them. So we're extremely happy about that we feel very strongly about you know.

Jeff Martin: And yes, we don't, we don't feel that, you know, adding KPI to sort every single time actually helps or predict anything about our growth, but it is our secret sauce. And we keep investing in that when we're adding more and more features with it needs very much of life. Thank you.

US having source is.

Is a secret sauce to continue our growth and yes, we don't we don't feel that you know.

And keep your eyes of sorts every single time actually help so predict <unk>.

Anything about our growth, but it is our secret sauce, and we keep investing in that when we're adding more and more features with <unk>.

And it's very much alive.

Maxwell Michaelis: Next question today is coming from Max McAlist from Make Street Capital. You're one of our lives. Hey guys, just one for me. Looking at the quarter, it seems like advertising came in a little bit optimistic, expected. So, 14% growth, which is all up at the search for form. Is it the way we should be thinking about Q4 in terms of modeling?

Thank you next question today is coming from <unk> from Lake Street Capital Your what is your life.

[noise] Hey, guys just wanted to me you're looking at the quarter. It seems like advertising came in a little bit choppy than expected. So 40 per cent growth with just solid put search all.

The way, we should be taking issue for two terms of marble. Thank you.

Maoz Sigron: Thank you. So, yes, more or less, the event of the third quarter, we thank you very much. Also, you know, I level I was just thinking about Q4. So, very much what you see here is what we're expecting to see. Thank you for this is the night of Q4, which is of course the most important quarter we have for you.

Thank you so yes, <unk> the end of the third quarter and thank you very much I also and Oh I level I was just thinking about it.

Q for so very much you'll see here is is what you're expecting to thank you for with this is an idea of your for which is of course, the most important <unk> we have <unk>.

Unknown Executive: Thank you. We reach in to our question and session. I just turn the floor back over.

Thank you we reset of our question and answer session. If I could turn up for that cover pretty further our closing comments.

Tal Jacobson: Any further closing comments? Thank you everyone for joining. We had a great quarter. We're looking forward to seeing you again at the next quarter.

Unknown Executive: Thank you.

Thank you everyone for joining.

We had a great quarter, we're looking forward to seeing you again at the next floor.

Thank you.

Alright, Thank you that does that.

Unknown Executive: That does conclude today's telecomments of webcast.

So that does conclude today's teleconference webcast me disconnected while at this time and have a wonderful day, we thank you for your participation today.

Unknown Executive: We disconnect your line at this time and have a wonderful day. We thank you for your participation today.