Q1 2025 Perion Network Ltd Earnings Call
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Today's conference is being recorded and an archive of the webcast will be posted on the company's website.
The press release detailing the financial results is available on the company's website at Www Dot Perry on dotcom before.
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 actual results performance or achievements to be materially different and any future results performance.
Or achievements anticipated or implied by these forward looking statements.
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 GAAP and non-GAAP basis.
Whilst mentioning EBIT door, we will be referring to adjusted EBITDA.
We have provided a detailed reconciliation of non-GAAP measures to that comparable GAAP measures in our earnings release, which is available on our website and has also been filed on form 6K.
Tal Jacobson: Hosting todays call is Tal Jacobson parents, Chief Executive Officer, and Ilan debris <unk> Chief Financial Officer.
I would now like to turn the call over to Tal Jacobson. Please go ahead.
Tal Jacobson: Good morning, and thank you for joining us on the earnings call for the first quarter of 2025.
Speaker Change: Every C suite executive music platform that powers, the right business outcomes.
Speaker Change: Jos have Salesforce C O o's have Monday dot com Cto's have zero and now Cmo's have period as their go to plot 4 billion. One gives marketing leaders a platform that delivers what truly matters better business outcomes at scale.
Speaker Change: Ethic is often misunderstood and sometimes it is viewed by investors as complex crowded and fragmented.
Speaker Change: You had the past few decades tell us that at the companies that are growing through technology can change the world.
Speaker Change: And more importantly that the companies have been using advanced technology to boost value for investors.
Speaker Change: From Doubleclick and Google to meta Amazon up loving and the trade desk companies that are viewed by many investors as tech companies are truly ethic companies their core oldest businesses mastered how to connect brands with consumers more effectively at scale.
Speaker Change: Rebuild their foundation in at technology generating tremendous value for investors.
Speaker Change: We believe varian is on the same trajectory.
Speaker Change: Building billion, one is an outcome driven platform allows us to create a long term value for Cmos.
Speaker Change: And for our shareholders.
Barry on one platform is an outcome driven infrastructure for modern digital advertising.
Speaker Change: Aim to provide measurable outcomes with channel agnostic supply neutral and fully flexible to work with any agency Tech stack.
Speaker Change: By integrating creative insights in AI powered optimization under one roof billion, one delivers a unified and intelligent brand experience from planning to result.
Speaker Change: The first quarter of 2025 was a strong start to the year on all four essential pillars.
Speaker Change: Our business performance exceeded the resort that we initially expected.
Speaker Change: And we enjoyed an increase in all of our growth engines that continued to outperform the market. This.
Speaker Change: This quarter, we advanced our product by creating a new integration partnership with the trade desk.
Speaker Change: Adding <unk> 2.02 billion one capabilities.
Speaker Change: <unk> Foster inter operability across the industry, enabling more seamless and effective solutions for our clients.
Speaker Change: Recently, we were happy to announce a double digit audience engagement with our first to market AI powered chatbot offering brands, a new way to create interactive high impact experience that drives real outcomes.
Speaker Change: As we announced this morning, we advance our AI capabilities by acquiring green bids.
Speaker Change: Cutting edge AI company that significantly enhance our technology there.
Speaker Change: This new advanced custom algorithm for leading Dsp's and closed gardens allows us to dramatically increase our total addressable market.
Speaker Change: And finally industry recognition.
Speaker Change: Our innovation and culture continue to be recognized from campaign. Finally said the drum to winning AD age best places to work.
Speaker Change: All of our growth engines continue to show positive momentum digital out of home CTV and retail media all outpacing the market growth.
Speaker Change: We are encouraged by the increase in all of our growth engines, especially the digital out of home, which grew by 80% the consistent growth in our digital out of home activity proves that our methodology of buying and integrating companies in this case high stack is working well.
Speaker Change: With that I'm happy to announce the acquisition of Grim bids.
Speaker Change: This is one of the most exciting moments in this quarter, a bold step that advances our platform in a meaningful way.
Speaker Change: Grin bids allows us to embed accustom AI based algorithm in the Permian, one extending our optimization capabilities across walled gardens.
Speaker Change: This includes Youtube Facebook and Instagram alongside leading DSP platforms, such as the trade desk and Google D V $3 60.
Speaker Change: <unk> custom algorithm is focused on reducing waste in advertising budgets and increasing business outcomes. The green bids algorithm targets and bypasses inefficiencies in the advertising ecosystem.
Speaker Change: This is how we win and grow profitability for advertisers.
Speaker Change: For us Green beans is more than the strategic fit is a significantly forward.
Speaker Change: We're thrilled to welcome the World class team of Green bids to join us at opinion.
Speaker Change: They share our vision and bring elite AI and ethic talent to our company.
Speaker Change: <unk> is a trusted platform used by over 80 top global brands and by applying our scale, we can accelerate its reach even further.
Speaker Change: We didn't just acquire tech, we gained talent and a momentum from day one to.
Speaker Change: Together, we are poised to unlock the next phase of intelligent advertising.
Speaker Change: Historically, our strength has been in top and mid funnel environments on the open web helping brands reach broader audience and drive consideration with green bids, we're expanding into the lower funnel where purchase decisions are made and we are gaining deeper access to performance budgets.
Speaker Change: Across social and video walled garden platforms.
Speaker Change: This significantly increase our addressable market and creates more ways to deliver value to advertisers.
Speaker Change: It's always rewarding when strong execution translate into strong numbers.
Speaker Change: And that's exactly why we're raising our guidance today it.
Speaker Change: It is essential to state that even without the green bids acquisition. It would have raised our guidance is our Q1 results were very encouraging with.
Speaker Change: With Green bids, we expect this growth to be even stronger.
Speaker Change: Based on our Q1 performance the financial contribution we expect from the Green based acquisition and our continued confidence in execution, we are raising our full year 2025 guidance.
Speaker Change: This reflects our strengthened position and the growing market opportunities ahead as.
Speaker Change: As we grow we remain committed to what drives long term value continued.
Speaker Change: Investment in our customers our people and our technology.
Speaker Change: Before I hand, it over to our CFO elect to Barry I'd like to personally invite you to meet us at one of those upcoming events.
Speaker Change: Today, we'll be at the Luma and Needham events next week at the Oppenheimer event and of course at the Cannes Lions next month.
Speaker Change: To connect share more and show you how purion is shaping the future of outcomes driven intelligent advertising.
Speaker Change: <unk> over to you.
Speaker Change: Thank you Doug and thank you all for joining us on the call today.
Speaker Change: Four main factors allowed us to exceed our expectations for the first quarter of 2025 outperformance was hallmark by solid execution. The markets positive response to our new Purion, one platform and strategy. Our continued operational discipline and our continued focus on growth on both top and bottom.
Speaker Change: Lines all.
Speaker Change: All these factors give us the conviction to increase our 2025 full year financial guidance.
Speaker Change: In the first quarter, our core growth channels digital out of home in CTV continued to outperform the market growing 80% and 31% year over year, respectively. These channels now represent 31% of our total revenue.
Speaker Change: In addition, our retail media vertical grew by 33% year over year also outperforming the broader market.
Speaker Change: This reflects the growing alignment between our strategy and the evolving advertisers demand.
Speaker Change: Moving to our financial results for the quarter total revenue for the first quarter was $89 $3 million. This is higher than our initial expectations. As a result of outperforming in CTV and digital out of home channels and continued growth of our retail media business.
Speaker Change: <unk> EBITDA was $1 $8 million also higher than our expectations, reflecting a continuous operational control and margin discipline.
Speaker Change: Our cash position remains strong with nearly $360 million in net cash we remain focused on profitable growth operational leverage and strategic reinvestment, where we see long term return.
Speaker Change: <unk> revenue mix reflects where the market is headed.
Speaker Change: We remain focused on our core growth channels, including digital out of home and CTV, which outperformed the first quarter.
Digital out of home increased by 80% year over year, reaching 19% of the total revenue up from 6% last year.
Speaker Change: CTV inquiries by 31% year over year, representing 12% of revenue compared to 5% last year.
Web revenue declined by 28% year over year, representing 46% of the total revenue compared to 37% in the same quarter of last year, we expect web revenue to stabilize on a year over year comparison, starting next quarter.
Speaker Change: In the past three quarters, we have been seeing the search revenue stabilizing at approximately $20 million per quarter.
Speaker Change: For the first quarter of 2025 search revenue represented 22% of the total revenue compared to 52% in the same quarter of last year.
Speaker Change: In the first quarter the contribution excluding traffic acquisition costs margin was 44% compared with 38% in the first quarter of 'twenty 'twenty four.
Speaker Change: This is primarily due to the changes in our product mix that is now centered around more profitable solutions.
Speaker Change: Adjusted EBITDA for the first quarter was $1 $8 million, representing 5% of contribution ex tuck <unk>.
Speaker Change: During the first quarter of 2025, and as part of the ongoing implementation of our parent one strategy. We continue to take structural steps to optimize our cost base that align with our unified operations. These actions include a reduction in head count tighter expense control and improvements in sales and marketing.
Speaker Change: CNC.
Speaker Change: These efforts are directly tied to our broader transformation, creating a more age highly scalable organization designed to drive long term growth and profitability.
Speaker Change: On a GAAP basis, our first quarter net loss was $8 3 million or 19 cents per diluted share versus net income of $11 8 million in the first quarter of 'twenty 'twenty, four or 24 cents per diluted share on a non-GAAP basis net income was $5 4 million.
Speaker Change: Or 11 cents per diluted share versus $22 6 million in the first quarter of 2024 or 44 cents per diluted share.
Speaker Change: Our ability to remain profitable on a non-GAAP basis. Despite the loss of search revenue is a testament to the operational efficiency of our business.
Speaker Change: In the first quarter of 2025 cash used in operating activities was $7 $1 million adjusted free cash flow was a negative $7 $4 million.
Speaker Change: The first quarter cash from operation was temporarily impacted by $8 million of collections that shifted from March to April we remain confident in our ability to return to a high cash flow conversion rate, we expect full year adjusted free cash flow to be closely in line with our adjusted EBITDA guidance.
Speaker Change: As of March 31, we had on our balance sheet $358 5 million in cash cash equivalents short term bank deposits and marketable securities we continue.
Speaker Change: To maintain a very strong financial position.
Speaker Change: Our cash balance provides us the flexibility to execute our inorganic growth strategy invest in innovation and return capital to our shareholders.
Speaker Change: We continued to execute on our capital allocation plan with discipline on March 10th our board approved an expansion of the share repurchase program to $125 million reinforcing our long term confidence in fragrance value.
Speaker Change: Since the beginning of the buyback program until the end of the first quarter of 2025, we've repurchased almost 6 million shares at a total amount of $53 $3 million in March this year parent adopted an accelerated share repurchase plan.
Speaker Change: And to date in the second quarter, we already repurchased additional 3 million shares at a total amount of over $26 million.
Speaker Change: Earlier today, we announced the acquisition of Green beans.
Speaker Change: Cutting edge AI platform focused on custom bidding algorithms across walled garden platforms, including Youtube Facebook and Instagram.
Speaker Change: This strategic acquisition allows period to expand our total addressable market into new lower funnel performance opportunities.
Speaker Change: It introduce us to brand specific kpis, driven optimization capabilities that enhance client retention.
Speaker Change: It also enriches our purion, one platform with incremental data and intelligence, improving our automation and measurement capabilities over time.
Speaker Change: The transaction terms include $27 $5 million in cash paid at closing at $22 5 million cash earn out over two years tied to performance milestones.
Speaker Change: And a $15 million retention package in cash and equity structured over three years.
Speaker Change: The transaction is expected to be accretive to adjusted EBITDA already starting this year with early synergies contributing to profitability.
Speaker Change: Looking ahead the contribution to both adjusted EBITDA and revenue is expected to significantly accelerate from 'twenty to 'twenty six onwards, driven by incremental synergies across technology integration go to market expansion and platform scalability.
Speaker Change: This is fully aligned with our M&A strategy minimizing upfront risk, while maximizing strategic value.
Speaker Change: And synergetic with our core business, ensuring seamless integration.
Speaker Change: Turning to our 2025 guidance.
Speaker Change: Based on our strong performance in the first quarter, our organic growth expectation along with the Onboarding of Green beans, we are revising our full year 2025 guidance upwards to reflect our improved outlook and stronger market position.
Speaker Change: We are increasing our revenue guidance for the year from a range of $400 million to $420 million to a new range of $430 million to $450 million, reflecting an increase of 7% at the midpoint.
Speaker Change: In addition, we are increasing our adjusted EBITDA guidance from a range of $40 million to $42 million to a new range of $44 million to $46 million, reflecting an increase of 10% at the midpoint.
Speaker Change: This updated guidance demonstrate our ability to grow efficiently unlock synergies and continue to deliver meaningful value to our shareholders to summarize we started the year strong and we positioned ourselves to maintain this momentum going forward, we remain discipline and execution prioritizing value for our.
Speaker Change: <unk> employees and shareholders.
Speaker Change: With that I will now turn it back to the operator for the Q&A session. Thank you.
Speaker Change: If he would like to ask a question we ask the ease the rain pattern function at the bottom of the Athene screen or if you have dialed in please press star nine.
Speaker Change: Our first question comes from Jason <unk>.
Speaker Change: Manhattan that leaves a niche align and ask your question. Thank you.
Speaker Change: Thanks, everybody.
Yi: I'll answer your question Yi.
Yi: Obviously the guidance that you know.
Yi: A significant kind of pick up in the business.
Yi: Over the next few quarters.
Yi: I guess.
Yi: You alluded part of it you're going to address the decline in open web.
Yi: Or I guess, maybe it's flattish maybe just talk a little bit about why you feel comfortable that this play has stabilized.
Yi: And then just kind of maybe some of the other factors.
Yi: Thinking about to drive the acceleration in advertising for the rest of the year and then just can you review the impact of the acquisition on on revenue on a full year guide. Thanks.
Yi: Yes.
Jason: Yes, hi, Jason good morning.
Yi: So regarding the guidance.
Yi: M a C.
Yi: Whereas there's others.
Yi: Our strong Q4 Q1 performance first of all.
Yi: Our organic growth together with the Griffith acquisition.
Yi: Allowed us to increase does not as we see a healthy pipeline going into the rest of 2025 also contributed from the wealth business as you indicated and this is why we believe that the work.
Yi: When we stabilize already from the next corner on a year over year basis.
Yi: Hum.
Yi: The entire guidance is taking into consideration.
Yi: Both the Greek numbers, but also the synergy that we already see is taking place.
As far as the acquisition, we shift some of the synergies as possible and we saw good traction on that.
Yi: So we felt very comfortable to increase already in the guidance.
Yi: Regardless of 10% and on the revenue side is the additional 7% at the midpoint.
Yi: Everything is combined first of all from our organic growth.
Yi: In addition to that in for 2025.
Yi: We have.
Yi:
Yi: The green myths and to get in line with the synergies we see.
Yi: Fingers and what does it say anything in 2026, we will actually see.
Yi: Even more are contributing to our topline and bottom line, we are investing more in Greenwich.
Yi: They too see even.
Yi: I will say, we will be able to see scale and to gain even more market share.
Yi: Quite fast.
Yi: So the real empathy, most even in the guidance, even more will be implant basics.
Yi: Let me just.
Yi: Echo a few of them.
Yi: Things that.
Yi: That said.
Yi: One, even though you're saying Q1 numbers better than we expected.
Yi: We are really encouraged.
Yi: Is by the fact that our pipeline is better than we expected. So we're actually seeing a healthy pipeline as I touched on that.
Yi: But we also wanted to note that with great beds, we started from a partnership where again on a few things together and now we're saying those customers the greenfields and us working together on coming back and asking for more so.
Yi: Synergies from day one.
Yi: And by our pipeline <unk> pipeline and the immediate synergies that's what makes us feel so comfortable about raising our guidance.
Yi: Yeah.
Yi: Thank you.
Yi: Issues.
Our next question concerns not at Raymond James Please mute your line.
Speaker Change: I don't ask your question. Thank you.
Yi: Yeah.
Yi: Yeah.
Yi: Yeah.
Yi: And he went out on your line and ask your question banking.
Yi: Yeah.
Yi: Uh huh.
Yi: Yeah.
And then I'll come back.
Yi: Understood.
Yi: Ooh.
Yi: Uh huh.
Yi: Uh huh.
Yi: Sure.
Yi: Yes.
Yi: Okay.
Yi: Okay.
Yi: Sure.
Yi: Yeah.
Yi: Hmm.
Yi: Salaries.
Yi: And disconnect them back to you shortly we seem to have some powder media audio that and so our next question comes on.
Yi: Neely.
Yi: You may now in the yellow line and ask your question protein.
Speaker Change: Yes, I wanted to follow up on the most.
Speaker Change: Comment about the contribution for the year I just want to make sure I've got the impact of Green business as well as the performance of the legacy business understood. The midpoint of your revenue increased $30 million and the midpoint of your adjusted EBITDA increase.
Speaker Change: 4 million how much of that increase is due to green bin.
So Randy this is Cindy.
Speaker Change: Despite being a young company, they're already profitable.
Speaker Change: Also on a single digit.
Speaker Change:
Speaker Change: As I previously said in.
Speaker Change: We see many synergies from day one in this acquisition.
Speaker Change: And we are looking at everything combined together.
Speaker Change: And having said that we are planning to invest even more ingredients enjoys 95 in order to be even scan to be able to scale to get more market share.
Speaker Change: <unk> from they want with it.
Speaker Change: And that's why we believe it to be fully developed this acquisition will see in 2026.
Speaker Change: They are on Standalone are.
Speaker Change: Profitable, but together we can be.
Speaker Change: We can definitely be run.
Speaker Change: Onto the market much more faster and.
Speaker Change: <unk> to be their distribution.
Speaker Change: With all of our global presence.
Speaker Change: Okay.
Speaker Change: Is there a sense you won't answer my question what about this maybe if I ask it this way what was in 'twenty 'twenty four what was green bids revenue and adjusted EBITDA.
Speaker Change: Yeah. So.
Speaker Change: Rabbits is is a very new company eighth accelerated very fast there are profitable as a standalone company and the growth there.
Speaker Change: The reason why we're not breaking out breaking it down into what they're doing and what we're doing is we we started to see synergies from day, one and it's going to be complete and very hard to.
Speaker Change: Bring them down into separate businesses from day one.
Speaker Change: He is going to sell them, our technology and their technology as well as the integrated Thats why we do not think.
Speaker Change: We need to look at them as separate entities.
Speaker Change: I can say delta is even as a stand alone they are growing very fast and they're very profitable and then to your question on 2024.
Speaker Change: On a standalone basis, they were the revenue contribution was.
Speaker Change: I would say in the low double digits and the EBIT contribution of low single digits.
Speaker Change: But they are as Doug mentioned is growing fast and together with US we believe that they will even grow faster.
Speaker Change: Okay. Let me shift gears then the is there going to be a timeline required to embed green business technology into Barry on one is that why were saying that 'twenty 'twenty six better contribution.
Speaker Change: No that was it the integration of integration that happens immediately.
Speaker Change: So the integration part does not is not going to take.
Speaker Change: Got it.
Speaker Change: I think what we're trying to do here is while there is extremely strong in Europe, we're now taking the tool.
Two more American companies American grants.
Speaker Change: And we're going to see the full impact.
Speaker Change: Within a few quarters, but even given this year they have a very healthy pipeline of new customers and our goods.
Speaker Change: <unk> of existing customers, we just think that the acceleration I think.
Speaker Change: A bit more time too.
Speaker Change: Get a bigger base of customers in the U S.
Speaker Change: Yeah, well the technology definitely sounds interesting and kind of leading edge so well.
Speaker Change: We will be looking to see what you can do with the acquisition here, but congratulations.
Speaker Change: Landing it thank.
Speaker Change: Thank you.
Speaker Change: Thank you Eric.
Speaker Change: Our next question I'm going to hand back to Andy and Matt can see Oh tier line of Angela. Please mute your line and ask a question thinking.
Speaker Change: Hi, apologies Brad earlier is now better.
Speaker Change: Yeah, Yeah loud and clear thank you Sam.
Speaker Change: Great. Thank you I am just one for me please.
Speaker Change: So as the Purion one concept is kind of rolled out here and you've added capabilities like do I need to point out and now Greenberg how is that message to CMO coming across in terms of familiarity excitement with the kind of unified operating and cause the opportunities and you can see coming out of that thank you.
Speaker Change: Thank you and thank you for your question.
Speaker Change: So the way, we've actually thought of US Green belts is as you know Stephen App, which was leading all cells of the Google deal with 364 17 years.
Speaker Change: Well go to come with the to go.
Speaker Change: Two for very young to push this.
Speaker Change: Uh huh.
Speaker Change: Towards more cmo's.
Speaker Change: And the process with Green pits actually stifle partnership, but then we were Senate Steven speak with Cmos.
Speaker Change: And.
Speaker Change: The response was so positive about this is what the market needs. This is what an Italian one and with the custom algorithms to AI to reduce waste. So I think so.
Speaker Change: <unk> are excited about both stay in one and the custom algorithms through AI and the actual results of green base with customers.
Speaker Change: And they're actually Tony.
Speaker Change: Telling us there's a unified solution under one platform makes a lot of sense as they do not want to continue to handle so many platforms.
So all in all it's been a very positive responses, both antennae on one and the green beds custom algorithms solutions.
Speaker Change: And we're thinking that now combining both of them is going to is going to drive it even faster.
Jeff Martin: I hope that answered with excellent great to hear thank you for the it does thank you very much I appreciate the color. Thank you. Our next question comes from Jeff Martin at Robert Jaffe, You May know Amit Your line and ask your question. Thanks, Good afternoon and good morning.
Jeff Martin: Wanted to dive into the expanded Tam opportunity.
Jeff Martin: Is that.
Jeff Martin: Fairly easy to achieve.
Speaker Change: Our capitalization on that expanded Tam and if you could elaborate on the details of the strategy to go after that expanded.
Jeff Martin: Yes so.
Jeff Martin: Greenville is actually working today on a on the walled garden.
Jeff Martin: It brings us.
Jeff Martin: A much more a new capabilities.
Jeff Martin: Including in our Youtube Facebook and Instagram.
Jeff Martin: We are extending even with our.
Jeff Martin: What part of our roadmap is going to extend it.
Jeff Martin: Very much quickly into even new.
Jeff Martin: New platforms.
Jeff Martin: So overall it allows and it gives us more lower funnel and performance capabilities into those platforms.
Jeff Martin: Weeks.
Jeff Martin: No certainties in the market that would say, we see multiple shifts towards performance. So it actually gives us the right time to do this acquisition it open ups willing as long as as effective they are.
Jeff Martin: Really able to bring the brands there.
Jeff Martin: Rois show them harder they are reducing the waste.
Jeff Martin: On a non monetized.
Jeff Martin: Stan.
Jeff Martin: Combining everything together.
Jeff Martin: It's definitely gives us more and more possibilities and.
Jeff Martin: Offering more in these markets.
Don: And as Don mentioned and I think that.
Don: Combining everything together going with the brand because we are working to date showing them those capabilities.
Don: We already started to see and we believe it will actually be able to see more and more opportunities.
Don: Going diving into those to those Oh.
Don: Our platform the walled gardens.
Don: We were in the next few quarters, we will see more traction there.
Don: Yeah, absolutely I think it's important to note that.
Don: All the agencies and brands are looking to shift more dollars towards performance based campaigns.
Don: So while failure historically was was amazing the upper funnel, so glad awareness with Greenpeace, we're actually getting into an even more interesting segment, which is performance based so reducing risks, especially now with all the uncertainty in the markets the more.
Don: You can show actual performance the more traction you can get with customers and the second thing is.
Don: At the end of the day.
Don: The majority of money goes into the walled gardens that the open web right, So Google Youtube Facebook.
Don: And others are holding the bigger parts. So we're actually entering those two parts of <unk>.
Don: Pharma space and the walled gardens, so it's significant for us it is a significant move.
Don: Thank you.
Don: Thank you.
Speaker Change: There are no further questions on the line, which concludes today's Q&A session. So I'll now hand, the call back over to Tal Jacobson and in antibody for closing remarks. Thank you.
Thank you very much for joining us today, we're excited about the future.
Speaker Change: And advancing our technology and raising our guidance, we think that day on one platform and strategy is the right way.
Speaker Change: To continue our path.
Speaker Change: Thank you for being part of our journey and supporting US and we hope to see you in next quarter. Thank you. Thank you.