Q1 2026 Perion Network Ltd Earnings Call

May 20, 2026

Speaker #1: 2026 earnings conference call. Today's conference call 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.perion.com.

Operator: 2026 earnings conference call. Today's conference call 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.perion.com. 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 company's annual report on Form 20-F that may cause actual results, performances, or achievements to be materially different and any future results, performances, 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.

Speaker #1: 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.

Speaker #1: 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 company's annual report on Form 20F.

Speaker #1: That may cause actual results performances or achievements to be materially different. And any future results performances or achievements anticipated or implied by these forward-looking statements.

Speaker #1: The company does not undertake to update any forward-looking statements to reflect future events or circumstances. As in prior quarters, the results reported are on a non-GAAP measure.

Operator: As in prior quarters, the results reported today will be analyzed both on a GAAP and on a non-GAAP measure. While mentioning EBITDA, we 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 will be available on our website and has also been filed on Form 6-K. Hosting the call today is Tal Jacobson, Perion's Chief Executive Officer, and Elad Tzubery, Perion's Chief Financial Officer. I would now like to turn the call over to Tal Jacobson. Please go ahead.

Speaker #1: Whilst mentioning EBITDA, we will be referring to adjusted EBITDA. We have provided a detailed reconciliation of non-gap measures to their comparable gap measures in our earnings release, which will be available on our website and has also been filed on Form 6K.

Speaker #1: Posting the call today is Tal Jacobson, Perion's Chief Financial Officer, Chief Executive Officer, and Elad Tzubery, Perion's Chief Financial Officer. I would now like to turn the call over to Tal Jacobson.

Speaker #1: Please go ahead.

Speaker #2: Good morning. And thank you for joining us on Perion's earning call for the first quarter of 2026. 2025 was year one for the new Perion.

Tal Jacobson: Good morning, thank you for joining us on Perion's earnings call for Q1 2026. 2025 was year one for the new Perion. 2026 focuses on advancing our new technologies and accelerating their adoption among our clients. In Q1 2026, we saw an increase across all our growth engines. Our fastest-growing channels, CTV and digital out-of-home, outgrew the market. In retail media adoption, we experienced significant growth that Elad will present. I'm also happy to share that Outmax, our AI agent technology that was part of the Greenbids acquisition, is growing rapidly and is becoming a meaningful part of Perion One. A few important data points from our quarterly numbers. The Perion One product line is seeing an increase of 6% in marketing budgets, which we refer to as spend.

Speaker #2: 2026 focuses on advancing our new technologies and accelerating their adoption among our clients. In the first quarter of 2026, we saw an increase across all our growth engines.

Speaker #2: Our fastest growing channels, CTV and digital out-of-home, outgrew the market. In retail, media adoption, we experienced significant growth that Elad will present. And I'm also happy to share that Outmax, our AI agent technology, that was part of the Greenbits acquisition, is growing rapidly and is becoming a meaningful part of Perion One.

Speaker #2: A few important data points from our quarterly numbers. The Perion One product line is seeing an increase of 6% in marketing budgets, which will refer to as spend.

Speaker #2: This is an encouraging number as we see a faster adoption of our platform. And the Outmax AI agent usage among our clients. You can also recognize that both acquisition HiveStack and Greenbits were extremely successful, as both out-of-home and Outmax numbers are continuing to grow quarter after quarter.

Tal Jacobson: This is an encouraging number as we see a faster adoption of our platform and the Outmax AI agent usage among our clients. You can also recognize that both acquisitions, Hivestack and Greenbids, were extremely successful as both out-of-home and Outmax numbers are continuing to grow quarter after quarter. This represents our ability to acquire high-quality companies and integrate them efficiently. Perion One is designed to solve the complexity of the global advertising ecosystem that is both massive and fragmented. Marketers navigate in a universe of screens, platforms, formats, data sets, and buying environments while trying to achieve higher standards of performance. Budgets, signals, and optimizations are siloed by channels, creating a challenging fragmentation that leads to efficiency and performance breakdown. This is the core challenge we've been focused on solving.

Speaker #2: This represents our ability to acquire high-quality companies and integrate them efficiently. Perion One is designed to solve the complexity of the global advertising ecosystem.

Speaker #2: That is both massive and fragmented. Marketers navigate in a universe of screens, platforms, formats, data sets, and buying environments while trying to achieve higher standards of performance.

Speaker #2: Budgets, signals, and optimizations are siloed by channels, creating a challenging fragmentation that leads to efficiency and performance breakdown. This is the core challenge we've been focused on solving.

Speaker #2: We're building Perion One as an AI-native execution infrastructure to unify the fragmented ecosystem for both advertisers and publishers. Perion One enables advertisers to perform highly complex marketing activities.

Tal Jacobson: We are building Perion One as an AI-native execution infrastructure to unify the fragmented ecosystem for both advertisers and publishers. Perion One enables advertisers to perform highly complex marketing activities. It allows them to make confident decisions faster while continuously optimizing every campaign in real time. With Perion One, publishers are able to maximize inventory value through smarter demand allocation and yield optimization. By aligning execution across both sides of the ecosystem, demand and supply, Perion One improves efficiency, performance, and outcomes end to end. Perion One is an infrastructure, not a tool set. The most advanced part of Perion One is the Outmax technology, our AI agent, which is showing tremendous growth. Outmax's goal is to be the one AI agent for every channel, whether it's YouTube, Facebook, Instagram, NBC, or Disney+.

Speaker #2: It allows them to make confident decisions faster, while continuously optimizing every campaign in real time. With Perion One, publishers are able to maximize inventory value through smarter demand allocation and yield optimization.

Speaker #2: By aligning execution across both sides of the ecosystem—demand and supply—Perion One improves efficiency, performance, and outcomes end-to-end. Perion One is an infrastructure, not a toolset.

Speaker #2: The most advanced part of Perion One is the Outmax technology, our AI agent, which is showing tremendous growth. Outmax's goal is to be the one AI agent for every channel.

Speaker #2: Whether it's YouTube, Facebook, Instagram, NBC, or Disney+, Outmax is designed to act as an intelligent execution agent that ensures every dollar spent is working at its maximum potential.

Tal Jacobson: Outmax is designed to act as an intelligent execution agent that ensures every dollar spent is working at its maximum potential. Outmax removes the guesswork and replaces it with algorithm certainty. It is designed to allocate spend, manage pacing, and optimize outcomes in real time, both inside Perion One and on external platforms. We are continuously expanding the channels and platforms that Outmax connects to. This quarter, we announced Outmax for TikTok, which is already showing great results. TikTok is one of the fastest-growing advertising platforms in the world, with 1.6 billion users and ad revenue projected to exceed $50 billion by next year. Outmax for TikTok early results are strong, with Outmax already delivering up to 25% lift in performance on TikTok.

Speaker #2: Outmax removes the guesswork and replaces it with algorithm certainty. It is designed to allocate spent managed pacing and optimize outcomes in real-time, both inside Perion One and on external platforms.

Speaker #2: We're continuously expanding the channels and platforms that Outmax connects to. This quarter, we announced Outmax for TikTok, which was already showing great results. TikTok is one of the fastest growing advertising platforms in the world.

Speaker #2: With 1.6 billion users, and ad revenue projected to exceed $50 billion by next year. Outmax for TikTok early results are strong, with Outmax already delivering up to a 25% lift in performance on TikTok.

Speaker #2: This is exactly the land and expand pattern that we're focusing on. Adding new high-growth channels, clear performance advantages, and a global path to allow us to scale across more customers and more platforms.

Tal Jacobson: This is exactly the land and expand pattern that we are focusing on, adding new high-growth channels, clear performance advantages, and a global path to allow us to scale across more customers and more platforms. This quarter, we entered into an exclusive partnership with McSorely Media and Mediamark, deploying Outmax AI agent across Africa. This new partnership unlocks a programmatic market forecasted to reach $6.5 billion by 2029, growing at a 15.3% CAGR. The value this partnership brings is clear. Outmax AI agent and Perion's programmatic digital out-of-home capabilities, paired with our partner's agency footprint across Africa, create an accelerated distribution for our technologies across the region. This expands Perion's commercial footprint and creates new revenue channels without adding further expenses to our P&L. The following case studies show how the same execution model delivers for different brands. Bouygues Telecom, one of the leading French telcos, deployed Outmax across always-on campaigns.

Speaker #2: This quarter, we entered into an exclusive partnership with McSurly Media and MediaMark, deploying the Outmax AI agent across Africa. This new partnership unlocks a programmatic market forecasted to reach $6.5 billion by 2029, growing at a 15.3% CAGR.

Speaker #2: The value this partnership brings is clear. Outmax AI agent and Perion's programmatic digital out-of-home capabilities, paired with our partner's agency footprint across Africa, create an accelerated distribution for our technologies across the region.

Tal Jacobson: Outmax AI agent and Perion's programmatic digital out-of-home capabilities, paired with our partner's agency footprint across Africa, create an accelerated distribution for our technologies across the region. This expands Perion's commercial footprint and creates new revenue channels without adding further expenses to our P&L. The following case studies show how the same execution model delivers for different brands. Bouygues Telecom, one of the leading French telcos, deployed Outmax across always-on campaigns.

Speaker #2: This expands Perion's commercial footprint and creates new revenue channels without adding further expenses to our P&L. The following case studies show how the same execution model delivers for different brands.

Speaker #2: Bouique Telecom, one of the leading French telcos, deployed Outmax across always-on campaigns. They embedded Outmax into their enterprise marketing operations to continuously control and optimize media execution.

Tal Jacobson: They embedded Outmax into their enterprise marketing operations to continuously control and optimize media execution. The results show 34% lower customer acquisition costs and a 51% reduction in carbon intensity. Bouygues is already extending Outmax to additional channels. Another example of the land and expand model in action. C4 Energy is one of the fastest-growing energy drinks brands in the US, with a younger, performance-oriented audience. This makes YouTube a crucial channel for reaching their consumers. C4 Energy turned to Perion to achieve greater control across their audience targeting and contextual placement on YouTube. The results speak for themselves. A skippable view rate of 80% above the benchmark, a 20.7% lift in brand awareness, and a 4.1 lift in brand ad recall.

Speaker #2: The results show 34% lower customer acquisition costs and a 51% reduction in carbon intensity. Bouique is already extending Outmax to additional channels, another example of the land and expand model in action.

Speaker #2: C4 Energy is one of the fastest-growing energy drink brands in the US. With a younger, performance-oriented audience, this makes YouTube a crucial channel for reaching their consumers.

Speaker #2: C4 Energy turned to Perion to achieve a greater control across their audience targeting and contextual placement on YouTube. And the results speak for themselves.

Speaker #2: A skippable view rate of 80% above the benchmark, a 20.7% lift in brand awareness, and a 4.1% lift in brand ad recall. Wepner, a closing brand known for its youthful style and bold statement pieces, ran a multi-channel campaign across Meta and YouTube with Outmax AI agent, continuously optimizing delivery in real-time.

Tal Jacobson: Wepner, a clothing brand known for its youthful style and bold statement pieces, ran a multi-channel campaign across Meta and YouTube with Outmax AI agent, continuously optimizing delivery in real time. Results show how Outmax delivers performance across multiple platforms with multiple KPIs. Finally, Vaseline, a campaign that demonstrates how our advanced real-time data capabilities and our programmatic digital out-of-home can be leveraged to benefit our brands. Vaseline integrated live UV index data directly into its digital out-of-home creative, dynamically presenting exposure risks through a clear visual color-coded system updated in real time. The campaign delivered over 1.65 million impressions, turning everyday commutes into moments of relevant contextual skincare education. This is an example of how digital out-of-home can offer dynamic, data-driven storytelling that performs. Many of the challenges marketers face are consistent. Earlier this quarter, we partnered with eMarketer on a research study of senior marketers and agencies.

Speaker #2: Results show how Outmax delivers performance across multiple platforms, with multiple KPIs. And finally, Vaseline—a campaign that demonstrates how our advanced real-time data capabilities and our programmatic digital out-of-home can be leveraged to benefit our brands.

Speaker #2: Vaseline integrated live UV index data directly into its digital out-of-home creative, dynamically presenting exposure risks through a clear visual color-coded system updated in real-time.

Speaker #2: The campaign delivered over 1.65 million impressions, turning everyday commutes into moments of relevant, contextual skincare education. This is an example of how digital out-of-home can offer dynamic, data-driven storytelling that performs.

Speaker #2: Many of the challenges marketers face are consistent. Earlier this quarter, we partnered with eMarketer on a research study of senior marketers and agencies. The findings reinforce exactly what we have been building towards.

Tal Jacobson: The findings reinforce exactly what we have been building towards. 89% of marketers say that creative is crucial for their performance. Nearly half believe that if creative could be optimized in real time, they would unlock 11% to 30% of performance lift, and more than half say creative insights arrive too slowly to act upon. The conclusion is structural. The industry does not have a creative problem or a media problem. It has an execution problem. Insights exist, signals exist. What is missing is a unified layer that turns those signals into action in real time across channels. This is exactly the gap Perion One was built to close. We at Perion are committed to continue to evolve. We adjust our processes and our structure whenever we believe they are beneficial for our company's future.

Speaker #2: Eighty-nine percent of marketers say that creative is crucial for performance. Nearly half believe that if creative could be optimized in real time, they would unlock an 11% to 30% lift in performance.

Speaker #2: And more than half say creative insights arrive too slowly to act upon. The conclusion is structural. The industry does not have a creative problem, or a media problem.

Speaker #2: It has an execution problem. Insights exist, signals exist, what is missing is a unified layer that turns those signals into action in real-time across channels.

Speaker #2: This is exactly the gap Perion One was built to close. We at Perion are committed to continue to evolve. We adjust our processes and our structure whenever we believe they are beneficial for our company's future.

Speaker #2: With that, I would like to share that our Chief Revenue Officer, Stephen Yap, will be transitioning out of his role. We thank him for his partnership during his tenure.

Tal Jacobson: With that, I would like to share that our Chief Revenue Officer, Stephen Yap, will be transitioning out of his role. We thank him for his partnership during his tenure. As we enter the next phase of our 2026 roadmap, we are pivoting our sales leadership team to ensure we are better positioned to convert our growing pipeline into realized revenue. With that, I will hand it over to Elad to walk through the financials.

Speaker #2: As we entered the next phase of our 2026 roadmap, we're pivoting our sales leadership team to ensure we are better positioned to convert our growing pipeline into realized revenue.

Speaker #2: With that, I will hand it over to Elad to walk through the financials.

Speaker #3: Thank you, Tal. And thank you all for joining us on the call today. Our first quarter results reflect a period of disciplined execution as we are continuing our structural evolution.

Elad Tzubery: Thank you, Tal, thank you all for joining us on the call today. Our Q1 results reflect a period of disciplined execution as we are continuing our structural evolution. The results for Q1 came in largely as we expected, reflecting the seasonally low quarter in our industry. Importantly, we are seeing a significant increase in spend across our core growth engines, and the adoption of Perion One continues to build momentum. This demonstrates that the infrastructure we are building is driving measurable value for our customers. This quarter, we continue the strategic building process of Perion One as an AI-native, multi-channel execution infrastructure. Driven by the continued momentum in our growth engines, total Perion One spend increased 6% year-over-year. Outmax, our proprietary AI agent, is rapidly expanding across customers, regions, and platforms.

Speaker #3: The results for the first quarter came in largely as we expected, reflecting the seasonally low quarter in our industry. Importantly, we are seeing a significant increase in spend across our core growth engines, and the adoption of Perion One continues to build momentum.

Speaker #3: This demonstrates that the infrastructure we are building is driving measurable value for our customers. This quarter, we continue the strategic building process of Perion One as an AI-native multi-channel execution infrastructure.

Speaker #3: Driven by the continued momentum in our growth engines, total Perion One spend increased 6% year-over-year. Outmax, our proprietary AI agent, is rapidly expanding across customers, regions, and platforms.

Speaker #3: We recently launched Outmax for TikTok, extending our AI-driven optimization capabilities to one of the fastest growing digital platforms. This has already generated over $1 million in spend during the first quarter.

Elad Tzubery: We recently launched Outmax for TikTok, extending our AI-driven optimization capabilities to one of the fastest-growing digital platforms. This has already generated over $1 million in spend during the Q1. To accelerate our global footprint, we continue to add more collaborations and partnerships. In the Q1, we launched strategic reseller initiatives in Africa by partnering with Mediamark and McSorely Media to resell Outmax and programmatic digital out-of-home. As part of Perion One's continuous transformation, we will no longer provide a channel revenue breakdown as a primary KPI. This shift reflects our evolution into a truly channel-agnostic platform centered around Outmax, our proprietary advanced AI agent designed to plan, execute, optimize, and measure campaigns across diverse media environments.

Speaker #3: To accelerate our global footprint, we continue to add more collaborations and partnerships. In the first quarter, we launched a strategic reseller initiative in Africa, by partnering with MediaMark and McSorley Media to resell Outmax and Programmatic Digital Out-of-Home.

Speaker #3: As part of Perion One's continued transformation, we will no longer provide a channel revenue breakdown as a primary KPI. This shift reflects our evolution into a truly channel-agnostic platform centered around Outmax, our proprietary advanced AI agent designed to plan, execute, optimize, and measure campaigns across diverse media environments.

Speaker #3: By moving away from siloed reporting, we are aligning our financial disclosures with our operational strategy. Focusing on how our technology delivers integrated value for the advertiser, rather than focusing on the performance of individual channels.

Elad Tzubery: By moving away from siloed reporting, we are aligning our financial disclosures with our operational strategy, focusing on how our technology delivers integrated value for the advertiser rather than focusing on the performance of individual channels. Instead, it makes much more sense to report our growth engines in terms of spend and not as revenue or contribution ex-TAC. Spend represents the total media budget running through our platform. It is the truest leading indicator of our platform's adoption, customers' trust, and long-term scale. Now to our quarterly results. Revenue for the Q1 was $90.4 million, a 1% increase year over year. Total contribution ex-TAC was $39.7 million, flat year over year with a 44% margin consistent with the same period last year. Adjusted EBITDA for the quarter was half a million dollars compared to $1.8 million in the Q1 of 2025.

Speaker #3: Instead, it makes much more sense to report our growth engines in terms of spend, and not as revenue or contribution stack. Spend represents the total media budget running through our platform—an indicator of our platform's adoption, customers' trust, and long-term scale.

Speaker #3: And now, to our quarterly results. Revenue for the first quarter was $90.4 million, a 1% increase year over year. Total contribution stack was $39.7 million, flat year over year with a 44% margin, consistent with the same period last year.

Speaker #3: Adjusted EBITDA for the quarter was half a million dollars, compared to 1.8 million dollars in the first quarter of 2025. The decrease was mainly the result of higher go-to-market investments aiming to support our three-year growth plan.

Elad Tzubery: The decrease was mainly the result of higher go-to-market investment aiming to support our 3-year growth plan. We generated cash flow from operations of $6.7 million and adjusted free cash flow of $7 million. During the quarter, we repurchased 2.5 million shares for over $24 million, bringing our net cash position to $293 million as of the end of the quarter. Let's take a look at the momentum of our growth engines through the lens of spend. As advertisers increasingly trust our AI infrastructure to execute their campaigns, we expect more dollars to flow through the Perion One platform. CTV spend grew 68% year over year to $18 million, underscoring the strong demand for our performance-driven CTV capabilities. Digital out-of-home spend grew 29% year over year to $60.6 million, reflecting our expanding global footprint and our advanced digital out-of-home technology.

Speaker #3: We generated cash from operations of $6.7 million and adjusted free cash flow of $7 million. During the quarter, we repurchased 2.5 million shares for over $24 million, bringing our net cash position to $293 million as of the end of the quarter.

Speaker #3: Let's take a look at the momentum of our growth engines through the lens of spend. As advertisers increasingly trust our AI infrastructure, to execute their campaigns, we expect more dollars to flow through the Perion One platform.

Speaker #3: CTV spend grew 68% year over year, to $18 million, underscoring the strong demand for our performance-driven CTV capabilities. Digital Out-of-Home spend grew 29% year over year, to $60.6 million.

Speaker #3: Reflecting our expanding global footprint and our advanced digital out-of-home technology. Retail media spend increased by 27% year over year, to $36.5 million. We continue to unlock commerce-related outcomes for top-tier brands despite some market softness, especially in the CPG sector.

Elad Tzubery: Retail media spend increased by 27% year over year to $36.5 million. We continue to unlock commerce-related outcomes for top-tier brands despite some market softness, especially in the CPG sector. It is also important to note that CTV, digital out-of-home, and retail media have been consistently outpacing the broader market. These impressive growth rates drove a 6% year over year increase in total Perion One spend, compensating for the decrease in web. The aggregate impact of the customer spend shows a growing momentum through this important KPI. In Q1 2026, we achieved a solid 6% increase in Perion One spend while navigating the near-term macro headwinds and cautious advertisers' planning cycles. This is a testament of the increasing demand for our solutions and our expected scale as we look towards the H2 of the year.

Speaker #3: It is also important to note that CTV, digital out-of-home, and retail media have been consistently outpacing the broader market. These impressive growth rates drove a 6% year-over-year increase in total Perion One spend, compensating for the decreasing web.

Speaker #3: The aggregate impact of the customer spend shows a growing momentum through this important KPI. In the first quarter of 2026, we achieved a solid 6% increase in Perion One spend, while navigating the near-term macro headwinds and cautious advertisers' planning cycles.

Speaker #3: This is a testament to the increasing demand for our solutions and our expected scale as we look toward the second half of the year.

Speaker #3: Revenue for the first quarter came in at $90.4 million, with advertising solutions revenue at $66.7 million and search at $23.7 million. Contribution stack remained flat year over year, at 39.7 million.

Elad Tzubery: Revenue for Q1 came in at $90.4 million, with advertising solutions revenue at $66.7 million and search at $23.7 million. Contribution ex-TAC remained flat year-over-year at $39.7 million. The 44% margin was stable and consistent with last year. While advertising solutions revenue decreased in Q1 due to the anticipated decline in the web activity, it is important to emphasize that Perion One contribution ex-TAC increased by 7% year-over-year, aligned with the spend trajectory. This demonstrates that as we are gradually shifting our business to the Perion One platform, contribution ex-TAC and spend are becoming the true indicators of our underlying growth. Perion One contribution ex-TAC continued to be the main profit driver, representing 81% of the total contribution ex-TAC, up from 75% in Q1 of 2025.

Speaker #3: The 44% margin was stable and consistent with last year. While advertising solutions revenue decreased in the first quarter due to the anticipated decline in web activity, it is important to emphasize that Perion One Contribution Stack increased by 7% year over year, aligned with the spend trajectory.

Speaker #3: This demonstrates that as we are gradually shifting our business to the Perion One platform, contribution stack and spend are becoming the true indicators of our underlying growth.

Speaker #3: Perion One contribution stack continued to be the main profit driver, representing 81% of the total contribution stack, up from 75% in the first quarter of 2025.

Speaker #3: We expect this structural shift to continue, with Perion One growing to 85% to 90% of the full year 2026. With respect to our search revenue, as we transition away from the Microsoft agreement, the margin profile of our search activity is naturally shrinking.

Elad Tzubery: We expect the structural shift to continue, with Perion One growing to 85% to 90% of the full year 2026. With respect to our search revenue, as we transition away from the Microsoft agreement, the margin profile of our search activity is naturally shrinking. As a result, even though search revenue increased year over year by 21%, the related contribution ex-TAC decreased by 70% as expected. Adjusted EBITDA for Q1 was half a million dollars compared to $1.8 million in Q1 of 2025. While we are laser-focused on operational efficiency and disciplined execution, the year over year delta was expected. This reflects the incremental expense base from the Greenbids acquisition in Q2 of 2025 and additional go-to-market investments to support our 3-year growth plan.

Speaker #3: As a result, even though search revenue increased year over year by 21%, the related contribution stack decreased by 70%, as expected. Adjusted EBITDA for the first quarter was $0.5 million, compared to $1.8 million in the first quarter of 2025.

Speaker #3: While we are laser-focused on operational efficiency and disciplined execution, the year-over-year delta was expected. This reflects the incremental expense base from the Greenbits acquisition in the second quarter of 2025, and additional go-to-market investments to support our three-year growth plan.

Speaker #3: In addition, during the first quarter of 2026, the headwinds of US dollar weakness represented a $1.4 million impact related to foreign exchange. Excluding this foreign exchange impact, adjusted EBITDA would have been $1.9 million, largely flat year over year, despite the additional costs planned for.

Elad Tzubery: In addition, during Q1 2026, the headwinds of the US dollar weakness represented $1.4 million impact related to foreign exchange. Excluding this foreign exchange impact, adjusted EBITDA would have been $1.9 million, largely flat year over year, despite the additional costs planned for. As we onboard several large strategic agreements currently in advanced stages, we expect adjusted EBITDA to inflect meaningfully in H2 of the year. This is consistent with the H2-weighted profile of our business, similar to last year. On a GAAP basis, net loss was $10 million, or $0.26 per diluted share. This compares with a net loss of $8.3 million, or $0.19 per diluted share in Q1 last year. On a non-GAAP basis, net income was $4.8 million, or $0.11 per diluted share.

Speaker #3: As we onboard several large strategic agreements, currently in advanced stages, we expect adjusted EBITDA to inflect meaningfully in the second half of the year.

Speaker #3: This is consistent with the second half-weighted profile of our business, similar to last year. On a GAAP basis, net loss was $10 million, or $0.26 per diluted share.

Speaker #3: This compares with a net loss of $8.3 million, or $0.19 per diluted share, in the first quarter last year. On a non-GAAP basis, net income was $4.8 million, or $0.11 per diluted share.

Elad Tzubery: This compares with $5.4 million, or $0.11 per diluted share in Q1 last year. Net cash provided by operating activities was $6.7 million, and adjusted free cash flow was $7 million. The cash generative quality of our business model and our disciplined CapEx investments practices ensure that our internal operations are streamlined to support our growth. We ended Q1 with $293 million in cash equivalents, short-term bank deposits, and marketable securities on our balance sheet. While we continue to generate positive cash flow from operations, the $20 million reduction from year-end is driven by $24.1 million returning cash to our investors in a form of share repurchases. This strong liquidity profile gives us the financial flexibility to pursue organic investments, M&A opportunities, and continued shareholders return. Our capital allocation priorities remain highly disciplined, focused on creating long-term value.

Speaker #3: This compares with 5.4 million dollars or 11 cents per diluted share in the first quarter last year. Net cash provided by operating activities was 6.7 million dollars, and adjusted free cash flow was $7 million.

Speaker #3: The cash generative quality of our business model and our disciplined CapEx investments practices ensure that our internal operations are streamlined to support our growth.

Speaker #3: We ended the first quarter with $293 million in cash, equivalent short-term bank deposits, and marketable securities on our balance sheet. While we continue to generate positive cash flow from operations, the $20 million reduction from year-end is driven by $24.1 million returning cash to our investors in the form of share repurchases.

Speaker #3: This strong liquidity profile gives us the financial flexibility to pursue organic investments M&A opportunities and continued shareholders' return. Our capital allocation priorities remain highly disciplined, focused on creating long-term value.

Elad Tzubery: During Q1, we repurchased 2.5 million shares for a total of $24.1 million. Under our current authorized program, we have now repurchased a cumulative total of 15.3 million shares for $142.2 million. Since the program's initiation, we have acquired these shares at an average price of $9.27 per share. This is notably lower than our average stock price at the last 30 days. By doing so, we have already generated immediate tangible value for our shareholders. Buying back our own stock at current valuation levels alongside disciplined organic and inorganic investments is the most effective use of our excess cash. It reflects our confidence in Perion's long-term intrinsic value.

Speaker #3: During the first quarter, we repurchased 2.5 million shares for a total of $24.1 million. Under our current authorized program, we have now repurchased a cumulative total of 15.3 million shares for $142.2 million.

Speaker #3: Since the program's initiation, we have acquired these shares at an average price of $9.27 per share. This is notably lower than our average stock price at the last 30 days.

Speaker #3: By doing so, we have already generated immediate, tangible value for our shareholders. Buying back our own stock at current valuation levels, alongside disciplined organic and inorganic investments, is the most effective use of our excess cash.

Speaker #3: It reflects our confidence in Perion's long-term intrinsic value. Despite the expected macro headwinds for the second quarter, given the momentum we see building in our pipeline for the back half of the year, particularly the several large strategic agreements that are in advanced stages, we are reiterating our full year 2026 guidance.

Elad Tzubery: Despite the expected macro headwinds for Q2, given the momentum we see building in our pipeline for H2, particularly the several large strategic agreements that are in advanced stages, we are reiterating our full year 2026 guidance. To conclude, Perion entered 2026 with a strong financial foundation, a proven platform strategy, highly disciplined operations, and a set of growth engines that are constantly outpacing their markets. The infrastructure is in place, the pipeline is building continuously, and we are prioritizing sustainable, profitable growth and long-term value creation for our shareholders. With that, I will turn the call back to the operator to open the line for questions. Thank you.

Speaker #3: To conclude, Perion entered 2026 with a strong financial foundation, a proven platform strategy, highly disciplined operations, and a set of growth engines that are constantly outpacing their markets.

Speaker #3: The infrastructure is in place, the pipeline is building continuously, and we are prioritizing sustainable, profitable growth and long-term value creation for our shareholders. With that, I will turn the call back to the operator to open the line for questions.

Speaker #3: Thank you. We will now begin the Q&A. If you would like to ask a question, we ask that you please use the raised hand function at the bottom of your Zoom screen.

Operator: We will now begin the Q&A. If you would like to ask a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Or if you have dialed in, please press star nine. Our first question today comes from Andrew Marok at Raymond James. Andrew, you may now unmute your line and ask your question. Thank you.

Speaker #3: Or if you have dialed in, please press star nine. Our first question today comes from Andrew Marek at Raymond James. Andrew, you may now unmute your line and ask your question.

Speaker #3: Thank you.

Andrew Marok: Hi. Thanks for taking my questions. Wanted to start off with one on Outmax, some really good numbers there. We're seeing the agentic space getting increasingly crowded. I guess, how are you differentiating Outmax in the marketplace in your go-to-market process that is allowing it to more than triple spend year-over-year? I have a follow-up.

Speaker #4: Hi. Thanks for taking my questions. I wanted to start off with one on Outmax. Some really good numbers there. And we're seeing the agentic space getting increasingly crowded.

Speaker #4: I guess, how are you differentiating Outmax in the marketplace, and your go-to-market process that is allowing it to more than triple spend year over year? Then I have a—

Elad Tzubery: Yeah. Thank you, Andrew. Yes. You saw Outmax, the AI agent technology that we have grew by over 300%. The main thing and our main advantage is we are the only technology out there that can perform this across both CTV, web, and social, with the closed gardens, which is a major advantage. To have only one AI agent technology and infrastructure that can run across all those channels, all those platforms, is a major advantage.

Tal Jacobson: Yeah. Thank you, Andrew. Yes. You saw Outmax, the AI agent technology that we have grew by over 300%. The main thing and our main advantage is we are the only technology out there that can perform this across both CTV, web, and social, with the closed gardens, which is a major advantage. To have only one AI agent technology and infrastructure that can run across all those channels, all those platforms, is a major advantage.

Speaker #5: Yeah, thank you, Andrew. Yes, so you saw Outmax, the AI agent technology that we have, grew by over 300%. The main thing and our main advantage is we're the only technology out there that can perform this across both CTV, web, and social within closed gardens.

Speaker #5: A major advantage is having only one AI agent technology and infrastructure that can run across all those channels, all those platforms. It's a major advantage.

Andrew Marok: Great. Thank you. Maybe one for Elad. Can you expand a little bit on the commentary that you gave in your prepared remarks on the uneven macro conditions and some of the caution you're seeing from advertisers? From your peer set, we're kind of hearing feedback that's quite variable. I'd just like to get a little bit more granularity of what you're seeing from your position. Thank you.

Speaker #4: Great, thank you. And then maybe one for Elad. Can you expand a little bit on the commentary that you gave in your prepared remarks on the uneven macro conditions and some of the caution you're seeing from advertisers?

Speaker #4: From your peer set, we're kind of hearing feedback that's quite variable. So I'd just like to get a little bit more granularity of what you're seeing from your position.

Speaker #4: Thank you.

Elad Tzubery: Thanks, Andrew. In terms of the headwinds that we are seeing, we see that the inflation in the oil prices and all of the tension in the Middle East caused some uncertainty in terms of the budget spend, especially I would say around the CPG we see, and slightly around auto. In addition to that, we are continuing to see the slow, or say short planning cycles of the advertisers in terms of their budget spend. This is what we see currently towards Q2. It is important to say that we already started to see some more momentum growing in our pipeline towards H2. Of course, we do not know yet the timing of when all of those headwinds will really be over.

Speaker #6: Sure. Thanks, Andrew. So in terms of the headwinds that we are seeing, we see that inflation in the oil prices and all of the tension in the Middle East caused some uncertainty in terms of the budget spend.

Speaker #6: Especially, I would say, around CPG we see—and slightly around auto. In addition to that, we are continuing to see the slow or, say, short planning cycles of the advertisers in terms of their budget spend.

Speaker #6: So this is what we see currently towards Q2. But it is important to say that we already started to see some more momentum growing in our pipeline towards the second half of the year.

Speaker #6: Now, of course, we do not know yet the timing of when all of those headwinds will really be over. We do not know what to anticipate, but we do see more and more strength in our pipeline moving forward, especially around Outmax, with the adoption of more and more customers to this solution.

Elad Tzubery: We do not know to anticipate, because we do see more and more strength into our pipeline moving forward, especially around Outmax, the adoption of more and more customers to this solution. Of course, we're taking all of those considerations when we are building the guidance towards the rest of the year.

Speaker #6: And of course, we're taking all of those considerations into account when we are building the guidance toward the rest of the year.

Andrew Marok: Thank you. Appreciate the detail.

Speaker #4: Thank you. Appreciate the detail.

Elad Tzubery: Sure.

Operator: Thank you. Our next question comes from Jason Helfstein at Oppenheimer. Jason, please unmute your line by pressing star six and ask your question.

Speaker #6: Sure.

Speaker #3: Our next question comes from Jason, Health Team at Offenheimer. Jason, please unmute your line by pressing star six and ask your question.

Jason Helfstein: Hey, thanks. Can you hear me?

Speaker #7: Hey, there. Can you hear me?

Operator: Yes. Thank you.

Elad Tzubery: Yes.

Speaker #3: Yes. Thank you.

Speaker #7: Yeah. Good morning. So first, your comment just about tracking total spend, which we agree with. Are you planning to break down total spend by between advertising and search?

Jason Helfstein: Good morning. First, your comment just about tracking total spend, which we agree with. Are you planning to break down total spend by between advertising and search, or that was just a comment of just one number for that? Then I've got some follow-ups.

Speaker #7: Or that was just a comment of just one number for that, and then I've got some follow-ups?

Elad Tzubery: Okay. In terms of the spend, our main focus and strategic focus is with around Perion One. Definitely for Perion One, we'll continue to give the spend level for Perion One and to give the trajectory of how much we are growing year-over-year, of course. Also, as you saw, we started to provide a spend also for our growth engines. How does CTV and digital out-of-home contribute in terms of spend? How exactly Outmax is performing in terms of spend? This is how we are managing our day-to-day operation in the business as well. We are tied this one together.

Speaker #6: Okay. So, in terms of the spend, our main growth—our main focus—into this focus is always around Perion One. So, definitely for Perion One, we'll continue to give the spend level for Perion One.

Speaker #6: And to give the trajectory of how much we are growing year over year, of course. And also, as you saw, we started to provide the spend also for our growth engines.

Speaker #6: How does CTV and digital out-of-home contribute in terms of spend? How exactly Outmax is performing in terms of spend? And this is how we are managing our day-to-day operation in the business as well.

Speaker #6: So we are tied this one together. In search, as much as it's not right now our main strategic focus of the business, we are still stabilized and we are providing obviously most of the trajectory moving forward in terms of contribution and stats of, of course, to give the full possibility of the business.

Elad Tzubery: In search, as much as it's not right now our main strategic focus of the business, we are still stabilizing, and we are providing obviously most of the trajectory moving forward in terms of contribution ex-TAC, of course, to give it the full profitability of the business.

Jason Helfstein: I think search was better than expected in the quarter. Just any thoughts why that happened?

Speaker #7: And I think search was better than expected in the quarter. I just—any thoughts why that happened?

Elad Tzubery: Yes. We saw a minor increase in search spend, say, year-over-year. This is contributing to 21% in revenue to search year-over-year. If you are looking it from a contribution ex-TAC, which is more importantly, is we are shifting out from Microsoft and focusing on other search providers. As expected, the margins are lower. The contribution ex-TAC from search activity was actually reduced year-over-year. I have to say it was exactly as we built into our guidance this year. Despite seeing the contribution ex-TAC, last year over year, actually what you are seeing is Perion One is contribute increase of 7% year-over-year in the contribution ex-TAC. Search is actually declining, but ended up exactly as we expected at the beginning of the year.

Speaker #6: Yes. So we saw a minor increase in search spend, say, year over year. This is contributing to 21% in revenue to search year over year.

Speaker #6: But if you're looking at it from a contribution next step, which is more importantly, is we are shifting out from Microsoft and focusing on other search providers.

Speaker #6: As expected, the margins are lower. The contribution X stack from search activity was actually reduced year over year. And I have to say it was exactly as we built into our guidance this year.

Speaker #6: So despite seeing the contribution X stack flat year over year, actually what you are seeing is Perion One is increased of 7% year over year in the contribution X stack.

Speaker #6: And search is actually declining, but ended up exactly as we expected at the beginning of the year.

Jason Helfstein: Okay. I guess with the weaker advertising in the quarter, I think relative to what folks were expecting, yet you're still keeping your full-year guidance. How much is this, kind of known versus unknown? Obviously the macro is unknown, right? I think you said that this macro was maybe a little worse than you thought in the quarter, but yet you're again, still keeping your full-year guide the same, and you're assuming new clients start spending. I guess, why is that the most prudent way to look at this right now? Why not lower the full-year outlook for the maybe weaker Q1? I don't know. Why is this the right way to look at the business right now?

Speaker #4: Okay. And then I guess with the weaker advertising in the quarter, I think relative to what folks were expecting, yet you're still keeping your full year guidance.

Speaker #4: I mean, how much is this kind of known versus unknown? I mean, obviously, the macro is unknown, right? I think you said that this macro was maybe a little worse than you thought in the quarter.

Speaker #4: But yet you're, again, still keeping your full year guide the same, and you're assuming new clients start spending. So I guess why is that the most prudent way to look at this right now?

Speaker #4: Why not kind of lower the full-year outlook for the maybe weaker first quarter? I don't know. Why is this the right way to look at the business right now?

Elad Tzubery: Okay. I will touch this in three different points. I would say the first, we do see tangible pipeline that's increasing already towards H2 of the year, coming from adoption of Outmax. As we saw, by the way, in Q3, if you remember the landed expand model, it takes time to ramp, we see in the direction right now, and we see the adoption towards H2. In addition to that, I discussed in the beginning in my script, we have few strategic agreements that are expect to be closed very soon to onboard already in the next few weeks in Q2, and we will start to see the ramp already in H2 of the year. Those, I would say two initiatives are tangible things that we see, and we are building into the pipeline.

Speaker #6: Okay. So I will touch this in three different points. I would say the first, we do see tangible pipeline that's increasing already towards the second half of the year.

Speaker #6: Coming from adoption of Outmax. As we saw, by the way, in the previous quarter, if you remember, the lending expense model, it takes time to ramp, but we see in the traction right now.

Speaker #6: And we see the adoption towards the second half. In addition to that—and I discussed this a bit in my script—we have a few strategic agreements that are expected to be closed very soon and to onboard already in the next few weeks in Q2.

Speaker #6: And we will start to see the ramp already in the second half of the year. So those, I would say, two initiatives are tangible things that we see, and we are building into the pipeline.

Elad Tzubery: I would add also that in terms of the EBITDA, that will help our growth, but also from expense perspective, we are investing right now in the right places that will give us this growth to H2, same as we did last year, both from growth perspective and also from EBITDA perspective on the efficiency level. As we saw last year, H2, we are much more heavy-weighted towards H2. It is very much important right now to continue our investment in terms of the growth, but also in terms of the efficiency that we will be able to see the benefit going into H2.

Speaker #6: I would add also that in terms of the EBIT, that will have a growth, but also from expense perspective, we are investing right now at the right places that will give us this growth to H2O savings we did last year, both from growth perspective and also from EBITDA perspective on the efficiency level.

Speaker #6: As we saw last year, the second half of the year is much more—we are much more heavyweighted towards the second half. And it's very much important right now to continue our investment in terms of the growth, but also in terms of the efficiency, that we will be able to see the benefit going into the second half of the year.

Jason Helfstein: Okay. Thank you.

Speaker #7: Okay. Thank you.

Operator: Thank you. Our next question today comes from Matthew Weber at Canaccord. Matthew, you may now unmute your line and ask your question. Thank you.

Speaker #3: Thank you. Our next question today comes from Matthew Webber at Canaccord. Matthew, you may now unmute your line and ask your question. Thank you.

Matthew Weber: Hey, thanks so much for taking the question. Just wanted to ask about your comments on pivoting the sales leadership team to better convert pipeline into realized revenue. Can you just provide some additional color on what this entails? Are you looking to make new hires, altering the compensation structure of employees, or reorganizing the team? I have a quick follow-up.

Speaker #8: Hey, thanks so much for taking the question. Just wanted to ask about your comments on pivoting the sales leadership team to better convert pipeline into realized revenue.

Speaker #8: Can you just provide some additional color on what this entails? Are you looking to make new hires? Altering the compensation structure of employees, or reorganizing the team?

Speaker #8: And then I have a quick follow-up.

Tal Jacobson: Yeah, absolutely. Thank you for your question. The main idea is how do we streamline growing pipeline towards conversion. We're flattening the organization. As I said, part of the call that Stephen Yap is transitioning out of his role, and we're flattening the organization to make it more streamlined and more efficient. We're also introducing a lot of new AI capabilities to the sales team, especially a new capability of AI, SDR, which is a lead qualification with faster turnarounds from leads to sales. We are now mainly focusing, as we advance our technology, focusing a lot on accelerating our sales. That's part of it.

Speaker #6: Yeah. Absolutely. Thank you for your question. So the main idea is how do we streamline growing pipeline towards conversion? So we're flattening our organizations.

Speaker #6: As I said, part of the call that Stephen Yap is transitioning out of his role and we're flattening the organization to make it more streamlined and more efficient.

Speaker #6: We're also introducing a lot of new AI capabilities to the sales team especially a new capability of AI SDR, which is lead qualification with faster turnarounds from leads to sales.

Speaker #6: And we are now mainly focusing as we advance our technology, focusing a lot on accelerating ourselves. So that's part of it.

Matthew Weber: Got it. Thank you. Just on the launch of Outmax to African markets, I believe it's currently available in South Africa. What does the timing for a broader continental rollout look like? Are there any major investments you still need to make to support these efforts, or is it just a matter of execution?

Speaker #8: Got it. Thank you. And then just on the launch of Outmax to African markets, I believe it's currently available in South Africa. What is the timing for broader continental rollout look like?

Speaker #8: And are there any major investments you still need to make to support these efforts, or is it just a matter of execution?

Tal Jacobson: Right. We've just launched this new partnership with those two new partners to see how do we work on a reseller agreement and have mainly Outmax with resellers across now Africa, but we're going to put a lot of efforts to launch more and more resellers going forward. We believe Outmax is the perfect product for resellers. It's an easy pitch, easy setup. There are worldwide, the majority of budgets in marketing sits within Meta, YouTube, and TikTok. It's pretty perfect anywhere on the planet. At the same time, we can grow without adding extra cost to our P&L. We believe it's only the beginning of something that can become much bigger worldwide, the reseller program that we launched.

Speaker #6: Right. So we've just launched this new partnership with those two new partners, to see how do we work on a reseller agreement and have mainly Outmax with resellers across now Africa, but we're going to put a lot of efforts to launch new, more and more resellers going forward.

Speaker #6: We believe it's Outmax is the perfect product for resellers. It's an easy pitch, easy setup. There are worldwide the majority of budgets in marketing sits within Meta, YouTube, and TikTok.

Speaker #6: So it's pretty perfect. Anywhere on the planet. At the same time, we can grow without adding extra cost to our P&L. So it's we believe it's only the beginning of something that can become much bigger worldwide.

Speaker #6: The reseller program that we launched.

Matthew Weber: Thank you. Very helpful.

Speaker #8: Thank you. Very helpful.

Operator: Thank you. Our next question today comes from Laura Martin at Needham. Laura, you may now unmute your line and ask your question. Thank you.

Speaker #3: Thank you. Our next question today comes from Laura Martin at Needham. Laura, you may now unmute your line and ask your question. Thank you.

Laura Martin: Hi, two. The advertising growth was -4%. Total growth for net TAC was 0%, and most of the industry is reported now, I think you're last. The benchmark was 10% to 12%. Could you talk about how you're planning to close the gap to the rest of the ad tech industry growth rates? Secondly, AI, could you talk about what you're doing with generative AI internally to cut costs and then externally to increase new product velocity, and how you think it helps you reattain growth in the advertising part of your business? Thank you.

Speaker #9: Hi. Too. So the advertising growth was negative four. Total growth was for Netac was zero. And most of the industry is reported now. I think your last.

Speaker #9: So and really the benchmark was 10 to 12. So could you talk about how you're planning to close the gap to the rest of the ad tech industry growth rates?

Speaker #9: And then secondly, AI. Could you talk about what you're doing with generative AI internally to cut costs? And then externally to increase sales velocity?

Speaker #9: Not sales velocity, but new product velocity and how you think it helps you re-attain growth in the advertising part of your business? Thank you.

Elad Tzubery: Hey, Laura. I will take the first question, and then I'll hand over to Tal. In terms of the advertising solution revenue, the reasons for the decrease that we see right now in the advertising solution revenue line is mainly related to product mix. From an accounting perspective, there are certain products that are recognized on a net basis, and some of them are recognized on a gross basis. By the way, as we are leaning more and moving more towards Perion One solution, we'll see more and more revenue recognized on a net basis. That's why we started to focus more and more on the contribution ex-TAC in the spend, because as we see in this quarter, those are really reflecting the real trajectory of the business as the leading indicator for how we are growing. The spend of Perion One increased 7%.

Speaker #6: Hey, Laura. So I would say I will take the first question and then I'll hand over to Charles. So in terms of the advertising solution revenue, the reason for the decrease that we see right now in the advertising solution revenue line is mainly related to product mix.

Speaker #6: From an accounting perspective, there are certain products that are recognized on a net basis, and some of them are recognized on a gross basis.

Speaker #6: That's why we and by the way, as we are leaning more and moving more towards spare and one solution, we'll see more and more revenue recognized on a net basis.

Speaker #6: That's why we started to focus more and more on the contribution XTAC and the spend because as we see in this quarter, those are really reflecting the real trajectory of the business as the leading indicator for how we are growing.

Speaker #6: So the spend of Spare and One increased 7%. The 6%—I'm sorry, the contribution XTAC increased by 7%. So I would say the gap that you're referring to from the peers is not that different.

Elad Tzubery: The 6%, I'm sorry, the contribution ex-TAC increased by 7%. I would say the gap that you're referring to from the peers is not that different. We are, I would say, investing more, as I said, towards the go-to market, and we changed some of our sales strategies, as Tal discussed, and we're building the pipeline. In our models, we are seeing much more increased, I'll say, growth, more aligned, by the way, with the plan that we provided also towards the 2028 three-year plans that we provided.

Speaker #6: We do—we are, I would say, investing more, as I said, towards the go-to-market, and we changed some of our sales strategy as discussed.

Speaker #6: And we're building the pipeline. And in our models, we are seeing much more increased, I would say, growth, more in line, by the way, with the plan that we provided also towards the 2028 three-year plans that we provided.

Elad Tzubery: Yeah.

Tal Jacobson: Yeah.

Elad Tzubery: Just to go to the AI-

Speaker #6: Yeah, just to the AI. And as for AI, we have two layers of AI. Obviously, Perion One and Outmax are fully AI-driven. And the new products that we're about to launch are fully agentic.

Tal Jacobson: As for AI, we have 2 layers of AI. Obviously, Perion One and Outmax is fully AI-driven. The new products that we're about to launch are fully agentic. On the internal parts, everything is becoming AI-driven. From our R&D, it's fully deployed with code cloud, and we do see accelerated development and accelerated launches of features. Internally, like I said before, one of the examples is we now have an AI agent for an SDR. It's all part of the 2028 plan that we announced 3 months ago. We believe we're going to start seeing even more meaningful efficiency in H2, because we do deploy pretty fast our AI solutions mainly for the efficiency part.

Speaker #6: But on the internal parts, everything is becoming AI-driven. From our R&D, it's fully deployed with code cloud. And we do see accelerated development and accelerated launches of features.

Speaker #6: And internally, like I said before, one of the examples is we now have an AI agent for an SDR. It's all part of the 2028 plan that we announced three months ago.

Speaker #6: We believe we're going to start seeing even more meaningful efficiency in H2, because we do deploy pretty fast our AI solution, mainly for the efficiency part.

Laura Martin: Okay, maybe I'll just follow up. Google did its I/O developers conference sort of keynote yesterday, and their vision, Tal, is to get consumers in via search and then keep them in the Google perimeter and become essentially a gatekeeper and not really let them get to the open internet. Is there anything really you or any open internet company can do if Google's vision is to keep consumers within their perimeter for all discovery, purchase, consideration, essentially displacing the purchase funnel that we know today? Do you have any points of view about that?

Speaker #9: Okay. Maybe I'll just follow up. So Google did its I/O developer's conference sort of keynote yesterday. And their vision now is to get consumers in via search and then keep them.

Speaker #9: In the Google perimeter, and become essentially a gatekeeper and not really let them get to the open internet. Is there anything really you or any open internet company can do if Google's vision is to keep consumers within their perimeter for all discovery, purchase, consideration—essentially displacing the purchase funnel—about that?

Tal Jacobson: Yeah, absolutely. I think it's a great question, and I actually thought it was brilliant on their behalf. As you probably remember, we said that 2 years ago, that LLMs are going to take over. Web is not going to be the future, open web is not going to be the future. This is why 2 years ago, we started moving from open web in towards out of home, which is a channel that is not going to get affected by LLMs, and closed gardens. Outmax works on YouTube, Meta, TikTok, things that are not getting affected by those LLMs. In parallel, our Outmax AI team, the development team, are already researching, how do we deploy Outmax on platforms such as ChatGPT and Google Shopping ads? That's already in the works.

Speaker #6: Yeah, absolutely. I think it's a great question. And I actually thought it was kind of brilliant on their behalf. Now, as you probably remember, we said two years ago that LLMs are going to take over.

Speaker #6: Web is not going to be the future. Open web is not going to be the future. This is why two years ago, we started moving from open web and towards out-of-home, which is a channel that is not going to get affected by LLMs.

Speaker #6: And closed gardens. So Outmax works on YouTube, Meta, TikTok—things that are not getting affected by those LLMs. But in parallel, our Outmax AI team, the development team, are already researching.

Speaker #6: How do we employ and deploy Outmax on platforms such as ChatGPT and Google Shopping ads? So, that's already in the works. It requires a bit more development.

Tal Jacobson: It requires a bit more development, but we're focusing on the marketing budgets, not on the channels themselves. As I said in the past, we want to be channel agnostic. Wherever advertisers would want to advertise, we're going to be there. Now, if you look at the new products of Google, the major parts are basically Google Shopping ads. It's not fully organic. Advertisers would still need to go through that, and that's why our Outmax team are investigating, how do we get Outmax to deploy also on Google Shopping ads? That's going to take a bit of time, but we're totally focusing on it.

Speaker #6: But we're focusing on the marketing budgets, not on the channels themselves. And as I said in the past, we want to be channel agnostic.

Speaker #6: Wherever advertisers would want to advertise, we're going to be there. Now, if you look at the new product of Google, the major parts are basically Google Shopping ads.

Speaker #6: So it's not fully organic. Advertisers would still need to go through that. And that's why our Outmax team are investigating how do we get Outmax to deploy also on Google Shopping ads.

Speaker #6: That's going to take a bit of time, but we're totally focusing on it.

Laura Martin: Super helpful. Thank you.

Speaker #9: Super helpful. Thank you.

Tal Jacobson: Thank you.

Speaker #10: Thank you. Our next question today comes from Jason Cryer at Craig-Hallum Capital. Jason, you may now unmute your line and ask your question.

Operator: Thank you. Our next question today comes from Jason Kreyer at Craig-Hallum Capital. Jason, you may now unmute your line and ask your question. Thank you.

Speaker #10: Thank you.

Jason Kreyer: Thank you. Just one question from me. Wanted to talk about the customer pipeline. You've talked a few times just about your confidence in the H2 of the year. Can you give color on how the RFP processes has evolved over the last 2 quarters? Maybe how the different conversations have changed as Perion One and as Outmax have evolved. Thanks.

Speaker #11: Thank you. Just one question for me. I wanted to talk about the customer pipeline. You’ve talked a few times just about your confidence in the second half of the year.

Speaker #11: Can you give color on how the RFP processes have evolved over the last couple of quarters? Maybe how the different conversations have changed as Perion One and as Outmax have evolved.

Speaker #11: Thanks.

Tal Jacobson: Sure. Thank you for the question. I think two moving parts. The RFPs, we see that, and what we saw that last year as well, that advertisers do not plan a year ahead. It's 3 months to 6 months top ahead. That didn't change. It's still the same pacing. The thing that we have a bit different this year is the reseller agreements. We launched two resellers in Africa. We have a few more agreements which we consider strategic. We do believe that they're going to start ramping up in H2, which give us a bit more confidence about our pacing. We do work on other things that we're going to announce once they're ready. On an RFP to RFP, it's the same kind of pacing that we saw last year. That didn't change.

Speaker #6: Sure. Thank you for the question. So I think two moving parts. The RFPs we see that what we saw that last year as well, that advertisers do not plan a year ahead.

Speaker #6: It's three months to six months, top ahead. And that didn't change; it's still the same pacing. The thing that we have a bit different this year is the reseller agreements.

Speaker #6: So we launched two resellers in Africa. We have a few more agreements which we consider strategic. We do believe that they're going to start ramping up in H2, which gives us a bit more confidence about our pacing.

Speaker #6: And we do work on other things that we're going to announce once they're ready. But on an RFP to RFP, it's the same kind of pacing that we saw last year.

Speaker #6: That didn't change. It's mainly the more strategic parts, like the things we just announced.

Tal Jacobson: It is mainly the more strategic parts, like the things we just announced.

Operator: Thank you. Our next question comes from Eric Martinuzzi at Lake Street. Eric, you may now unmute your line and ask your question.

Speaker #10: Thank you. Our next question comes from Eric Martinuzzi at Lake Street. Eric, you may now unmute your line and ask your question.

Eric Martinuzzi: Yeah. Can you hear me?

Speaker #12: Yeah. Can you hear me?

Operator: We can hear you. Thank you.

Tal Jacobson: Yeah.

Eric Martinuzzi: Okay, thanks. The 3-year plan anticipates this, you talk about the Perion One contribution ex-TAC at about a 20% CAGR, just based on kind of the early days, typically CAGRs in the early years are greater, then they slow down in the later years. Yet we're in what I think I heard you was 6%, or I guess 7% contribution ex-TAC. Was that where we were for Q1?

Speaker #10: We can hear you. Thank you.

Speaker #12: Yeah. Okay. Thanks. So the three-year plan anticipates this you talk about the platform one contribution XTAC at about a 20% CAGR. And just based on kind of the early days, typically CAGR is in the early years are greater and then they slow down in the later years.

Speaker #12: And yet we're in what I think I heard you was 6% or I guess 7% contribution XTAC. Was that where we were for Q1?

Elad Tzubery: Yes, 7%. Remember that our business, like most other businesses, is extremely seasonal. Q1 is the weakest out of the quarters, typically, and we do see a 7% increase.

Elad Tzubery: Yes, 7%. Remember that our business, like most other businesses, is extremely seasonal. Q1 is the weakest out of the quarters, typically, and we do see a 7% increase. As you go, I'm just wondering, at a certain point, we've actually got to get better than 20%. I'm just trying to size up this 3-year progression, right? If we're starting out in a mid to high single digits here, at what point should we anticipate Are you guys already seeing, Hey, this is a slam dunk. Based on the pipeline, we're going to see 20% plus in the H2 of 2026?

Speaker #6: Yes. 7%. And remember that our business, like most ethics business, is extremely seasonal. So Q1 is the weakest out of the quarters. Typically, and we do see a 7% increase.

Eric Martinuzzi: As you go, I'm just wondering, at a certain point, we've actually got to get better than 20%. I'm just trying to size up this 3-year progression, right? If we're starting out in a mid to high single digits here, at what point should we anticipate Are you guys already seeing, Hey, this is a slam dunk. Based on the pipeline, we're going to see 20% plus in the H2 of 2026?

Speaker #6: As you go through as you go I'm just wondering, at a certain point, we've actually got to get better than 20%. I'm just trying to size up this three-year progression, right, if we're starting out and kind of a mid to high single digits here.

Speaker #6: At what point should we anticipate are you guys already seeing, "Hey, this is a slam dunk. We're already based on the pipeline. We're going to see 20% plus in the back half of 2026"?

Elad Tzubery: To answer your question, I will divide my answer for a second for this. First of all, when you're looking at 2028, we discussed right at the beginning that we'll have to bring some investment in the early stages to ramp it up. The reason why we showed the landed spend, because it takes time to get to the customers. We started, if you remember the previous customers with us, we saw the first year was only $50,000 in terms of spend. Second year, it was ramped up to $4.5 million, and the third year was more than $20 million in spend in different channels, et cetera. This is very much also how, what we are thinking about the 2028 model with the terms of the landed spend. It takes time to ramp up.

Speaker #12: So to answer your question, I will divide my answer for a second for this. First of all, when you're looking at 2028, we discussed, right out of the get-go, that we'll have to bring some investment in the early stages—early stages to ramp it up.

Speaker #12: And the reason why we showed the lend and expand is because it takes time to get to the customers. We started if you remember the previous customers that we saw in the first year, it was only 50K in terms of spend.

Speaker #12: Second year, it was ramped up to $4.5 million. And the third year was more than $20 million in spend in different channels, etc.

Speaker #12: And so this is very much also how what we are thinking about the 2028 model with the terms of the lend and expand. So it takes time to ramp up.

Elad Tzubery: Now, when I'm talking specifically about 2026, we do expect to see the H2 of the year to be, I would say, in double-digit growth, and aiming towards the 20% already towards the Q4 of the year. We'll start seeing these ramps go.

Speaker #12: Now, when I'm talking specifically about 2026, we do expect to see the second half of the year to be I would say in double digit growth.

Speaker #12: And aiming towards the 20% already towards the fourth quarter of the year. So we will start seeing this ramp go. Sorry. Could you repeat that last?

Eric Martinuzzi: Sorry, could you repeat that last?

Elad Tzubery: I said that for 2026, we'll start, of course, to see the ramp along the year, and I believe that already in Q4, we'll start to see the double digits growth aiming towards 20% already in Q4 in this year.

Speaker #6: I said it for 2026, we will start, of course, to see the ramp along the year. And I believe that already in Q4, we'll start to see the double-digit growth aiming towards 20% already in Q4 in this year.

Eric Martinuzzi: Okay. The contribution ex-TAC margin. It was below what I was anticipating. Another way to put it is, say, there was an increased TAC. Is that pretty much all search related in your mind?

Speaker #12: Okay. And then the contribution XTAC margin, was that totally at the it was below what I was anticipating. Another way to put it is, say, it was an increased tax.

Speaker #12: Is that pretty much all search-related, in your mind?

Elad Tzubery: It's very much search related, and search becoming, I would say, smaller part of our business, and Perion One will increase its part of the overall contribution. We'll see the margin goes up. They discussed earlier about the net recognition and et cetera. Definitely something that we see. We need to remember that search has lower seasonality than all of the rest of our business. In Q1, you'll see that the search contribution ex-TAC was roughly 90% of the business or 18% of the overall contribution ex-TAC. If you remember last quarter, we said that the overall Perion One will be 85% to 90%. Along the year, we'll see the seasonality much more rapid in with respect to Perion One, and the margin will increase as well.

Speaker #6: It's very much search-related. And search is becoming I would say a smaller part of our business. And Perion One is will increase its part of the overall contribution.

Speaker #6: We'll see the margin goes up. They discussed earlier about the net recognition, etc. So definitely, it's something that we see. We need to remember that the search has lower seasonality than all of the rest of our business.

Speaker #6: So in Q1, you'll see that the search contribution XTAC was roughly 90% of the business or 18% of the overall contribution XTAC. So if you remember last quarter, we said that the overall Perion One will be 85 to 90 percent.

Speaker #6: So along the year, we'll see the seasonality much more rapid in with respect to Perion One. And the margin will increase as well.

Eric Martinuzzi: Okay, got it. Thanks for taking my questions.

Speaker #12: Okay, got it. Thanks for taking my questions. Thank you.

Operator: Thank you.

Elad Tzubery: Thank you.

Operator: Our final question today comes from Jeff Martin at ROTH Capital Partners. Jeff, you may now unmute your line and ask your question. Thank you.

Speaker #10: Our final question today comes from Jeff Martin at Roth Capital Partners. Jeff, you may now unmute your line and ask your question. Thank you.

Jeff Martin: Thank you. I appreciate it. You made mention in your prepared remarks about onboarding agreements will drive a meaningful EBITDA inflection. Just curious if you could elaborate on what those agreements are and the timing in terms of the EBITDA inflection.

Speaker #12: Thank you, I appreciate it. You made mention in your prepared remarks about onboarding agreements. We'll drive a meaningful EBITDA inflection. Just curious if you could elaborate on what those agreements are and the timing in terms of the EBITDA inflection.

Elad Tzubery: In terms of this agreement, there are a few strategic agreements that we start working with them over the last year. Of course, they are taking time. We are really right now at the final stages, and we start to see more of their contribution start to onboard to our platform. It does take time. We believe that we're going to see some ramp up, but relatively to Perion in terms of the spend. Of course, I cannot really speak about who are those names in terms of confidentiality, but they are very heavy on the spend of how much they are running in different markets.

Speaker #6: So in terms of this agreement, there are a few strategic agreements that we start working on them already last year. Of course, they are taking time.

Speaker #6: But we are really right now with the final stages, and we start to see more of this—of their contribution is to start to onboard to our platform.

Speaker #6: It does take time. We will leave it. We're going to see some ramp-up, but relative to Perion in terms of the spend. And then, of course, I cannot really speak about where those names are, in terms of confidentiality.

Speaker #6: But they are very heavy on the spend of how much they are running in different markets. And from the tests that we did with them, and we saw the network and what is the potential and how much we are believing that their ramp up of the of their customers will be, etc.

Elad Tzubery: From the tests that we did with them, and we saw the network and what is the potential and how much we are believing that the ramp up of their customers will be, et cetera, we see very good traction towards the H2, and it should start, of course, building even higher going forward to next year. This is obviously some of the high volume agreements that we have discussed that we expect to sign during this year.

Speaker #6: We see very good traction towards the second half of the year. And it should start, of course, building even higher going forward to next year's.

Speaker #6: This is obviously some of the high-volume agreements that we have discussed, that we expect to sign during this year.

Jeff Martin: Great. My second question is, and I know this is not the core growth focus of the business, it's not a growth focus at all, but the web advertising. You go back 6 to 9 months, commentary was that this business was flattening out for you, and it sounds like in Q1 it was more pressure on growth, perhaps. Relative to your initial guidance for 2026, how much of a headwind is any negative shift in web create a hurdle for hitting your full-year guidance? Thanks.

Speaker #12: Great. And then my second question is, and I know this is not the core growth focus of the business. It's not a growth focus at all.

Speaker #12: But the web advertising you go back six to nine months, commentary was that this business was flattening out for you. And it sounds like in Q1, it was a more pressure on growth, perhaps.

Speaker #12: And relative to your initial guidance for 2026, how much of a headwind is any negative shift in web create a hurdle for hitting your full-year guidance?

Speaker #12: Thanks.

Elad Tzubery: We don't see the web shift is actually that bad. If you look at the revenue, you see the -4%. Obviously, it's come mostly from web, but we need to remember that web was relatively low margin. At the beginning of 2025, we took proactive action to close even some of the web solutions that we are providing. If you look at the contribution at stack level, you will see that the CTV and out of home and out-of-home, of course, actually compensated on the web shrinking. We grew year over year. I believe that this is coming from the overall markets and budget that are shifting away from open web, as we have discussed, moving into more closed gardens and digital out-of-home and CTV. Of course, I believe to the LLMs in the next future.

Speaker #6: So we do not see the web shift as actually technical, guys. If you look at the revenue, you see the minus 4%. Obviously, it's come mostly from web.

Speaker #6: But we need to remember that web is relatively low margin. And we at the beginning of 2025, we took proactive action to close even some of the web solution that we are providing.

Speaker #6: If you look at the contribution XTAC level, you will see that the CTV and out-of-home and outlets, of course, are actually compensated on the web shrinking.

Speaker #6: So we grew year over year. I believe that this is it's coming from the overall market and budget that are shifting away from open web as we have discussed moving into more closed gardens and digital out-of-home and CTV.

Speaker #6: And also, of course, I believe to the LLMs in the next future. So overall, as we are seeing more revenue flowing for the Perion One, we are becoming more channel agnostic.

Elad Tzubery: Overall, as we are seeing more revenue flowing for the Perion One, we are becoming more channel agnostic, and we are not really prioritizing or doing the performance based on certain channels, and more focusing on the ROI for the advertisers. Overall, we are not expecting this to change where we are at the guidance right now.

Speaker #6: And we are not really prioritizing our own performance or doing the performance based on certain channels, and more focusing on the ROI for the advertiser.

Speaker #6: So overall, we are not expecting this to change where we are at the guidance right now.

Jeff Martin: Thank you.

Speaker #12: Thank you.

Elad Tzubery: Sure.

Operator: Thank you. This concludes today's Q&A. I will now pass back to Tal Jacobson for closing remarks.

Speaker #10: Thank you. This concludes today's Q&A. I will now pass back to Tal Jacobson for closing remarks.

Tal Jacobson: Thank you. Thank you everyone for joining us at the Q1 earning call. We will continue to invest and advance our technologies and continue to invest in our clients, and the adoption rate should be increasing. We'll see you next time. Thank you.

Speaker #6: Thank you. Thank you, everyone, for joining us for our Q1 earnings call. We will continue to invest and advance our technologies, and continue to invest in our clients. The adoption rate should be increasing, and we'll see you next time.

Speaker #6: Thank you.

Operator: This concludes today's call. Thank you everyone for joining. You may now disconnect.