NASDAQ:PERI Perion Network Q4 2023 Earnings Report $10.57 -0.25 (-2.31%) Closing price 08/1/2025 04:00 PM EasternExtended Trading$10.81 +0.24 (+2.27%) As of 08/1/2025 07:38 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Perion Network EPS ResultsActual EPS$1.04Consensus EPS $0.93Beat/MissBeat by +$0.11One Year Ago EPS$0.84Perion Network Revenue ResultsActual Revenue$234.23 millionExpected Revenue$233.09 millionBeat/MissBeat by +$1.14 millionYoY Revenue Growth+11.70%Perion Network Announcement DetailsQuarterQ4 2023Date2/7/2024TimeBefore Market OpensConference Call DateWednesday, February 7, 2024Conference Call Time8:30AM ETUpcoming EarningsPerion Network's Q2 2025 earnings is scheduled for Monday, August 11, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q2 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (20-F)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Perion Network Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 7, 2024 ShareLink copied to clipboard.Key Takeaways Perion reported Q4 revenue up 12% to €234.2 million and full-year revenue up 16% to €743.2 million, with adjusted EBITDA rising 28% to €169 million and operating cash flow of €155.5 million in 2023. Key growth channels outperformed benchmarks, with retail media up 114%, CTV ad revenue up 56%, and search revenue up 23%, reflecting strong demand for direct-response and high-impact formats. The strategic acquisition of HiveStack in December expanded Perion’s programmatic digital-out-of-home (DOOH) capabilities and unlocked a major Brazil partnership adding over 46,000 digital screens. Innovation remains a focus, with the launch of Wave generative AI audio ads, new CTV pause ads via DIRECTV, integration of Amazon Publisher Services, and plans for Sort 2.0 to address the cookieless era. For 2024 Perion plans increased R&D investment to enhance its cross-channel AI-driven ecosystem, targets double-digit revenue and EBITDA growth with a ~41% media margin, and continues to pursue M&A over share buybacks. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallPerion Network Q4 202300:00 / 00:00Speed:1x1.25x1.5x2xThere are 10 speakers on the call. Operator00:00:00Hello, everybody, and welcome to the Perion Network 4th Quarter and Full Year 2023 Earnings Conference Call. Today's conference is being recorded. A 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. Operator00:00:21Today'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, performance or achievements to be materially different than 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 a non GAAP basis. Operator00:01:02While mentioning EBITDA, we'll be referring to adjusted EBITDA. We have provided a detailed reconciliation of non GAAP measures to their comparable GAAP measures in our earnings release, which is available on our website and has also been filed on Form 6 ks. Hosting the call today are Tal Jacobson, Perion's Chief Executive Officer and May Ios Negron, Perion's Chief Financial Officer. I will now turn the call over to Tal Jacobson. Please go ahead. Speaker 100:01:34Welcome to Perion's Q4 and full year 2023 earnings. I'm excited to unveil our performance for the quarter, reflect on a year of substantial achievements and provide a glimpse into the future. Before we look at the numbers, let's take a minute to align on our mission. Perion unlocks advertising possibilities across all screens, platforms and locations. We are powering our magic by advanced technology. Speaker 100:02:09Perion is an ever growing ecosystem, Cross channel, AI driven, locally optimized, and most importantly, we exist naturally along the consumer's journey. Today's consumers lead a dynamic and diverse lifestyle, having multiple interactions With the technologies around them, each journey is different, constructed by a multiverse of multiple touch points. We make sure our clients have the solutions For each of those touch points, we enable advertisers to interact with their consumers naturally, Regardless of the platform they use, to achieve maximum impact, Pellion's technologies and solutions Live naturally across the consumer's journey. Picture this, a typical day in Danielle's life. The day begins when she sips her coffee while scrolling through her favorite social app. Speaker 100:03:16Our dynamic video ad appears fitting naturally into our experience, a subtle yet effective touch point. As she commutes to work, our AI driven digital audio ads, WAVE, Taylor's messages to her preferences. This makes her interaction unique and personal. As she looks at the road, she sees our extra large video ad on the side of the road. Those moments are not coincidences. Speaker 100:03:52They are carefully crafted touch points in our journey with the consumer. As the day goes by, Danielle remembers the messaging we've presented to her across the channels. She decides to look for that product on her search engine. This is where our search technology and the partnership with Microsoft comes into play. When Danielle decides to take a coffee break and read some news online, she sees our well optimized dynamic Video display and high impact ads on our favorite websites. Speaker 100:04:32Of course, we will meet Danielle again On her way to her favorite store through our digital out of home ads and continued to interact with her even within the store. As the day winds down, our technology doesn't. Our CTV dynamic ad solutions Continue to present personalized content. Our technology is an immersive cross channel ecosystem that the company's consumers throughout their daily journey. I'm pleased to report Continued profitability for Q4. Speaker 100:05:13Once again, diversification proved to be the right strategy. In the Q4, we see a notable growth in search, CTV and Retail Media. Additionally, our strategic acquisition of HiveStack in December expanded our geographical and channel reach. Looking ahead at 2024, a key aspect of our strategy is to enhance our touch points Across the consumer journey, using cutting edge technology. Hence, we are increasing our investment in technology through our in house R and D teams, including the newly joined HiveStack team. Speaker 100:06:04We're also actively seeking inorganic opportunities that align with our vision. With a strong cash flow from operation of over $150,000,000 a year and a total cash Of over $470,000,000 Perion is well positioned to execute additional acquisitions. In Q4 2023, we achieved a robust top and bottom line growth. Our revenue and adjusted EBITDA reflect on our financial strength and our operational efficiency and market competitiveness. Turning to our full year performance, the same key indicators underpin our excellence. Speaker 100:06:53We've maintained constant focus on revenue growth, profitability and operational optimization, yielding outstanding results throughout 2023. Central to our success is our cutting edge technology that enables agility throughout the consumer's journey. Now let's see where some of our technologies met consumers in Q4. The Perion CTV solution are gaining momentum with advertisers. According to eMarketer, CTV ad spending is on the rise. Speaker 100:07:30Impressively, Perion's results stand way above their growth projections, demonstrating our ability to execute and conquer any channel and vertical we aim for. One of our innovations in the CTV space is pause ads. In partnership with DIRECTV, We've created yet another opportunity for our branded moment on TV. It is also One of the few ways to guarantee that commercial message is noticed in both linear and CTV. When viewers pause content, the CTV ads come into play, offering segmented audience targeting And increasing consumer engagement. Speaker 100:08:21Those ads are both noticeable and actionable. This ad by Shipt is the great example. We build those ads in short repeating loops, so that viewers are virtually guaranteed to see them. Our pause ads run across nearly every TV network on DIRECTV inventory, both linear and streaming. This includes TV networks without any ads in linear, such as HBO and sports networks like ESPN, Brands that already use our PAWS TV ads include Paco Rabanne, Con Edison, Shipt, Twilio, Eversource, AAA and more. Speaker 100:09:15The Perion retail media solution continues to grow and outpaced both our internal expectation and industry benchmark. This is a testament to our effective strategy and execution. In this rapidly growing space, as part of our retail media solutions, Last quarter, we launched our generative AI audio advertising technology, Wave, And the campaign with Albertsons was the first one we revealed. Now, I'm happy to share that Wave is adopted by additional leading brands, running on leading platforms such as Spotify, Iheartmedia, Audio boom and many more. This time, we're sharing the Pep Boys campaign. Speaker 100:10:08To our non U. S. Audience, Pep Boys is a leading U. S. Automotive service provider, operating in more than 900 locations across the U. Speaker 100:10:20S. Let's listen to this generative AI Speaker 200:10:29Select tires and get the 4th one free instantly. We offer expert auto service that makes car care simple and convenient with smart services like online booking, Text alerts to track your service and mobile payments to pay on the go. Make an appointment at pepboys.com and don't miss out on these incredible Speaker 100:10:55This generative AI audio ad creates communication between brands and potential consumers, offering relevant solutions In a tone that sounds natural and appealing, this approach is a prime example of how we leverage AI To revolutionize consumers' interactions, making every message both heard and acted upon. We are very proud of the partnership with Amazon that we've announced this quarter, in which we integrated Amazon Publisher Services into our VideoZoo platform. With this integration, publishers now have access to a wider range of ad demand for more precise targeting and enhanced campaign performance. Some of the notable publishers that are already working with us using the Amazon Publisher Services include IMDB, VonNet, BoardPanda and Publishers Collective, following our strategic acquisition of HiveStack, We shared our plans to expand into new markets. I'm proud to announce we're delivering on that commitment With a major partnership in Brazil, we've joined forces with Eletromedia, One of the largest media owners in Brazil's vibrant media landscape. Speaker 100:12:29While this partnership is not just about the numbers, The addition of over 46,000 digital screens is certainly impressive. It also presents exciting opportunities for our high impact display and creative solutions. The Brazilian market offers a dynamic and rapidly growing advertising landscape. With Electromedia, we are positioned to make a significant impact. 1 of our recent successes In our digital out of home technology for retailers and CPG companies is this campaign for Helena Rubinstein in Hong Kong, Promoting their new PowerCell product, the campaign's core strategy involved advanced proximity, gel fencing to plan and activate campaigns, targeting specific physical locations in the proximity of Elena Womensand's store in Hong Kong. Speaker 100:13:35Let's take a look. Speaker 300:13:38In Hong Kong, marketers face challenges when planning, executing and evaluating online to offline campaigns that are consistent and measurable. Feeling the need to bridge this gap, Helena Rubinstein strategically leveraged programmatic digital out of home Seamlessly integrated with Helena Rubinstein's omnichannel campaign, created a cohesive and impactful brand narrative that achieved client objectives In driving online product searches and offline in store footfall. Developed by Omnicom Media Group And leveraging the HIVEstack demand side platform, the programmatic digital out of home campaign used proximity geofencing to activate the Campaign at the right time at specific digital out of home screens close to the Helena Rubinstein stores in Hong Kong and Custom audience targeting to deliver contextually relevant ads specifically to skin care shoppers. A footfall lift study was conducted to measure Speaker 100:15:25Our digital out of home platforms, advanced jail fencing feature, along with audience targeting, Increased product awareness and store visits significantly. The success of this campaign is another example of how immersive the consumer journey becomes with the use of advanced technologies. To conclude, our focus on diversified technologies that powers the consumer's journey and strategic acquisitions Continues to drive Payone's impressive growth and success. And now, Maoz, our CFO, will provide a more detailed financial analysis. Speaker 400:16:11Thank you, Tal. Good afternoon and good morning to those of you joining us from the U. S. 2023 proved to be a meaningful year, demonstrating the agility and resilience of our business model at Purion. Strict execution of our diversification strategy and cost control measures were key to our success in delivering healthy profitable revenue growth And margin expansion. Speaker 400:16:37Tyrian is among the most diverse companies in the ethics space. Therefore, We were able to quickly respond and capitalize on our customer spending allocations by delivering The right product mix. We successfully harnessed efficiency and innovation to exceed internal expectations for both Profitability and margin goals. Perion achieved year over year revenue growth of 16% to 743,000,000 And 28% growth in adjusted EBITDA, reaching €169,000,000 with a 23% margin and an impressive 55 percent ex TAC margin. Perion's strong and consistent cash flow from operations And our significant net cash position generated over €20,000,000 in financial income in 2023. Speaker 400:17:33That along with our cost efficiency and tax optimization resulted in a year over year growth in GAAP net income of 18% To over 170,000,000 and 40% year over year increase in a non GAAP net income to over 167,000,000. For the year, cash flow from operations increased by 27% year over year to 155,500,000. Our diversified business model and product mix allowed us to quickly respond to shifts in the market, in essence, Following the money with the right solutions, among the top growth drivers in 2023, retail media stood out, Far exceeding our internal expectations with a year over year revenue increase of 114% to nearly 50,000,000. CTV revenue also experienced strong growth of 56% year over year as more and more customers adapted Our high impact CTV solutions. Search grew by 23% year over year, boosted by Advertise the budget shift to our intent advertising. Speaker 400:18:53Key to our success is our ability to develop New innovations that address the needs of our customers. In parallel, we consistently find new ways to improve The efficiency of our operations. In the Q4, we completed acquisition of FireStack, A global innovative programmatic digital out of home solution, also known as DOOH. This transaction is In the fast growing digital out of form channel, according to PQ Media, it is expected to show a 3 year CAGR of 15% for 2024 To 2026, our plan is to leverage the synergies between our retail media Solutions and Ivestech's digital out of home capabilities and offer complete compelling solutions to our customer base. While Perion is strong in the U. Speaker 400:19:57S, IHVESTEC is strong internationally. Together, we can open new markets. We expect this transaction to result in significant core sales opportunities and geographic expansion to fast growing markets. I would like to stress that the ongoing conflict in Israel has not materially impacted our operations and business results. Nearly 100 percent of Perion's revenue is generated outside of Israel and only 45% of our cash and cash equivalents Our Eldin Israel, our employees who are drafted to military service are mostly back to work and business continues uninterrupted. Speaker 400:20:39Now let's review the financial highlights for the 4th quarter. Revenue increased by 12% year over year To €234,200,000 contribution ex TAC was €19,600,000 increased by 3% year over year, delivering a 39% margin. Adjusted EBITDA was $53,900,000 increased by 12% year over year, Delivering 23% margin and 59% extract margin. Non GAAP net income increased by 19% year over year to 52,900,000. Non GAAP diluted earnings per share increased by 16% year over year to $1.04 Our diversification strategy created opportunities that resulted And continued impressive growth. Speaker 400:21:32On a yearly basis, the revenue was 743,200,000, an increase of 16% year over year. Our 2 year CAGR was 25%, demonstrating the strength of our product mix. On a quarterly basis, the revenue for the 4th quarter was €234,200,000 an increase of 12% year over year And our 2 year revenue CAGR was 22%. Turning now to the display advertising. For the 4th quarter, Display advertising revenue decreased by 3% year over year to $119,800,000 accounting for 51% of total revenue. Speaker 400:22:14The quarterly decrease in display advertising revenue was primarily due to a 33% year over year decline in video revenue. This is due to shifting of inventory from video to display to gain higher profit. Our retail media results continued To exceed our internal expectations with quarterly revenue of 20,200,000, an increase of 196% year over year. This accounts for 17% of display advertising revenue compared with 6% in the Q4 of 2022. Our quarterly CTV business continued to expand, growing by 69% year over year, representing 12% of display advertising revenue compared with 7% last year. Speaker 400:23:03Turning now to our search business. The quarterly search revenue significantly increased by 33% year over year to $114,400,000 representing An impressive 41% 2 year CAGR. During the quarter, average daily searches Increased by 37% over the same period last year and the number of publishers grew by 4% year over year. During the last 2 years, we have seen budget shifts to direct response. This is a result of Perion's unique position in Search And we have been able to capitalize on that. Speaker 400:23:41For 2023, our media margin was 42%, Which was on par with 2022 and consistent with our expectations. We were able to maintain this strong margin due to our product mix and the media buying optimization of our supply and demand asset. For the Q4 of 2023, The media margin was 39%, down from 42% in the same period last year due to products mix change And our efforts to gain market share in a competitive environment. We are very proud of Puren's ability Adjusted EBITDA for the year was $169,100,000 increased by 28% year over year with 23% margin Compared with 21% in 2022 and 50% in 2021. Adjusted EBITDA to contribution ex TAC margin was 55%, up from 49% in 2022 and 37% in 2021. Speaker 400:25:01Adjusted EBITDA for the quarter increased by 12% year over year To €53,900,000 reflecting a 23% margin. Adjusted EBITDA to contribution ex TAC margin was 59%, Up from 55% in the Q4 of 2022 and 45% in 2021. This is among the highest in the EdTech industry. On a GAAP basis, 4th quarter net income increased by 2% to 39,400,000 Or $0.78 per diluted share. This is in comparison with $38,700,000 or $0.79 per diluted share In the Q4 of 2022, the increase in net income is mainly due to acquisition expenses, Retention and change in fair value of contingent consideration. Speaker 400:25:54On a non GAAP basis, 4th quarter net income increased by 19 percent to $52,900,000 or $0.0104 per diluted share. This is compared with $44,700,000 or $0.19 per diluted share during the Q4 of 2022. On a GAAP basis, full year 2023 net income increased by 18% to 117,400,000 or $0.234 per diluted share. This is compared with $99,200,000 or $0.0206 per diluted share in 2020 On a non GAAP basis, net income increased by 40 percent to $167,400,000 or $0.0333 per diluted share For 2023, this is in compared with $119,800,000 or $0.246 per diluted share in 2022. Over the past years, Vireon has consistently improved its profitability. Speaker 400:26:58This is mainly thanks to our adoption of operational excellence and strict cost control measures throughout the organization that increased efficiency and productivity. For the Q4, non GAAP operating expenses and cost of revenue were 16% of revenue Compared with 19% in the Q4 of 2022 and 23% in the Q4 of 2021. On an annual basis, we can see the same downward trends as non GAAP operating expenses and cost of revenue were 19% of revenue compared with 21% in 2022 25% in 2021. This continuous improvement Was mainly driven by cross company implementation of process automation, the depreciation of the Israeli shekel versus the U. S. Speaker 400:27:50Dollar and the offshoring of some of our operations. Moving to the balance sheet and cash flow highlights. For the year, operating cash flow $155,500,000 compared with $122,100,000 in 2022, increased by 27% year over year. Operating cash flow for the Q4 was $50,200,000 compared to $38,200,000 in the same period last year, An increase of 32%. As of December 31, 2023, our net cash was 473,000,000 inclusive of the cash paid in the recent iStec acquisition. Speaker 400:28:30Finally, moving to our 2024 outlook. The guidance reflects our plans to significantly invest in technology to enhance our multi channel solutions And to capitalize on IonStack's ability to expand our reach into additional geographics. Strong execution of this initiative is expected to result in strong double digit revenue and adjusted EBITDA growth in the coming years. This concludes my financial overview. And now, we can open the line for questions. Operator00:29:07Thank you. Over the webcast, please use your raise your hand function. Our first question is coming from Jason Helfstein from Oppenheimer. Your line is now live. Thank you. Operator00:29:25Good morning, everybody. Two questions. First, talk about how you think about Purion benefiting from Chrome cookie deprecation. In the past, you've talked about how you're not reliant on cookies, but how you actually think you could benefit when that happens in the industry. And then my second question, I think guidance is slightly weaker than we expected on an organic basis by 200 basis points or so. Operator00:29:51Not huge, but maybe talk about what headwinds you're seeing right now for 2024 that would keep you from growing Stronger than 10% on an organic basis. Thank you. Speaker 100:30:02Okay. Thank you, Jason. So on first of all, let's talk about cookies. So as you know, we have sort and we are now working on sort 2.0, which we're going to launch During the year and we are prepared to all those cook less Implementations. But we I think we're going to gain from that the fact that a lot of other companies are not going to be prepared for that. Speaker 100:30:35And hopefully, we're going to get more budgets just by the fact that we are ready for that. So that's on the cookie part. What Speaker 400:30:43was the other one? The guidance. So thank you, Jason. So as you noticed, the guidance 10% growth on the EBITDA and revenue on a pro form a basis. This is why that there is a bit Change in the product mix mainly due to video that take the numbers to a new level. Speaker 400:31:10As we said in the last quarter and also during the last during this quarter, The priority gross margin is the most important element in our business, and we are actually doing this move from video To display when we can get higher margin. And this is the main reason for the revenue decrease in video during the Q4. This is also implemented in our model for next year, offset by the growth drivers, as we also mentioned, then the retail business, The CTV and also now that we have the digital out of form, this is another growth driver for 2024. But all in all, the 10% I think reflects The model that we are now using and very much reflect all the changes Operator00:32:16Thank you. Our next question is coming from Laura Martin from Needham. Your line is now live. Speaker 500:32:21Good morning, guys. Let's talk about GenAI first. So in your guidance, you said that you're going to have an investment year And it feels like with just listening to like big tech, it's going to be a lot of investment in like infrastructure for Gen AI. So this results in 2 questions. One is, is a lot of your investment coming because of the Gen AI upgrade? Speaker 500:32:45And second, What are your Gen AI? When you think about the product road map, how are you thinking about incorporating Gen AI into product? Speaker 100:32:55That's a great question. Thank you, Lova. So our investment comes from a few points. One, absolutely, GenAI. We've presented the Gen AI Wave product that we launched last quarter and the progress we've made with it. Speaker 100:33:11So we're generating creative 100 percent JAI. We are implementing JAI across all our infrastructure and we're also We bought HiveStack, which is a pure technology play, and we're integrating that into everything Perion. So we're investing in a unified infrastructure. And obviously, Gen AI is a very big part of that. We're seeing that in all the technology companies, big investment in AI, we want to be want to continue To be very advanced, so we're going to continue to invest in GenAI Technologies. Speaker 100:33:53That's a very big part of 2024. Speaker 500:34:02And then I guess my other one, just building on the guidance issue, is are you guys So it sounds like you're saying there's going to be a revenue mix shift in 2020, 24 that's going to have lower margin. That's sort of how I heard you answer Jason's Question, is that permanent or is it, I would have guessed your growth in CTV, which is really robust, would have really helped your margin. But can you talk sort of about the margins and why we're getting a margin downdraft from the mix shift, please? Speaker 400:34:37Thank you, Laura. So there is no dramatic change with the media margin. We're talking about, again, if I need to, let's say, now Talking about 2024 margin, we're talking about 41% margin more or less. This is our estimation, Which is not far from the 42% we have for 2024 sorry, for 2023. And again, in order to And in order to be able to compare to have effective competition, This is the number that we believe can help us to keep and take period to 25 and 26, and this is aligned with our model. Speaker 400:35:18Yes, there is a shift of the product mix that's changed a bit the margin. IStack is new. The fact that we have now less video is another piece. So the mix is different, but the total picture is not different. We are above the 40%. Speaker 400:35:35This is our main goal. And the 41% now at the beginning of the year reflect very much my thinking about 2024 margin. Speaker 500:35:45Thank you very much. Thanks guys. Speaker 600:35:47Thank you. Operator00:35:49Thank you. Our next question today is coming from Mark Kelley from Stifel. Your line is now live. Speaker 700:35:57Great. Thank you very much. Appreciate taking the questions. Two quick ones and apologies if you some of this in the prepared remarks and kind of bouncing between calls. But this next version of Sort, I know it's not out yet. Speaker 700:36:10I know it's early. But any data points you can provide in terms of effectiveness versus The original version of sort that's in the market today. And I guess what's informing your changes that you're Making on the back end for sort, that's the first one. And then the second one, the shift between display and video, I guess, how do those conversations work with your clients when you're changing Where their budgets are allocated? Is it something that your clients are just comfortable with you shipping budgets wherever they're going to get The better ROAS or I guess what goes into that whole process in terms of where you're steering and allocating budgets? Speaker 800:36:57Okay. Absolutely. Speaker 100:36:59So on Sword 2.0, as you know, with technology, we constantly need To make advanced improvements, right? So what was okay for Sort 2 years ago when we built it, now needs to get a robust uplift, including AI, including Gen AI, A lot of infrastructure through the data and a lot of updates. As you probably know, Google released their Sandbox for the cookieless era, which again, everything is getting implemented. So we're constantly adding more and more feature into Sort, But this specific one is going to be a huge leap into something even bigger. So We're constantly adding more features. Speaker 100:37:49Sort 2.0 is going to be a lot more advanced. Video versus display. So the way it works is We sit with our code on websites. And every time you go on a website, it sends request To all admin partners and then based on what we got, we know if we want to show a video ad or display ad, right? And now since Q3 that actually happened last quarter, we saw that video ads got lower rates than display ads. Speaker 100:38:22So we could have made a bigger margin on display and actually our algorithm chose that because on the publishing side, Publisher just want a higher yield, which the algorithm generates a higher yield. So this is why Our algorithm Q3, Q4 decided that this day will generate higher profit and that's how it's being chosen. Operator00:38:55Thanks. Our next question today is coming from Jeff Martin from ROTH. Your line is now live. Speaker 600:39:02Thank you. Good afternoon and good morning to everybody. I wanted to see if you could elaborate on the geographic I know you mentioned the new relationship in Brazil. Looks like that could be very meaningful over time. But just curious if you could elaborate on Any other details on your geographic expansion strategy? Speaker 100:39:22Absolutely. So the reason why we bought HighStack because We think that we see that it's super synergetic with everything that we do. So Undertone and HighStack actually sell the same type of client, Right, the agencies. Now, Allotone has amazing relationship within the U. S, while HighStack has an amazing relationship Everywhere else. Speaker 100:39:48So we're going to push the existing product that we have through the Hive Stack relationships worldwide And we're also going to push the HiveStack technology through the Undertone relationship in the U. S. Sorry, just said that, Everywhere else, right? Hivestack going to push Undertone everywhere else. Undertone is going to push Hivestack US. Speaker 100:40:13Now having said that, when you have a DSP and an SSP, which is basically what HIFESTAC does, When you get an agreement with a company like Electromedia, which is a huge media company in Brazil, You can now have the ability to sell Brazilian traffic, Brazilian screens for everywhere else. So if there's an American company that wants to promote to the Brazilian market or a Chinese or Japanese advertiser, they now can do that through our exclusive inventory there. Now Bear in mind, because we have the DSP SSP, our goal is to constantly increase more inventory worldwide And more advertisers worldwide because what happened is a lot of advertisers in different countries are advertising budgets on other countries, right? This is what we call inside out. So we're actually getting Advertising from Hong Kong and Korea actually advertise on our Japanese screens. Speaker 100:41:20So that constantly happening. So we want to add more agreements like that. And this is the first stage. And through those agreements, we want to push more Impact created that Undertone are so good at. So I hope that answers the question. Speaker 600:41:35Very helpful. Thank you. One more, if I could. Just curious how you're thinking about capital allocation strategy going forward. You look at the free cash flow generation this year more than paid for the HybStack acquisition. Speaker 600:41:47Should we be looking for additional M and A in 2024? And might you consider a share repurchase program or a dividend program? Thanks. Speaker 100:41:57So that's a great question. So absolutely M and A, absolutely. We want to continue to grow even faster. We want to add more technologies for the retail space, CTV, Measurements, we want to grow faster and grow faster even with profitability. So that's one thing. Speaker 100:42:21Buybacks, It's always part of our discussions. We actually done a very thorough analysis. And What we've been told by our research is creating long term value, Continue to grow as fast as possible is going to create more value for shareholders than buybacks. Having said that, this It's always something that we're thinking on. But frankly, we think pushing the company forward and having Our leadership position in the market will gain more market value for investors more value for investors than buybacks. Speaker 100:43:06Thank you. Operator00:43:12Thank you. Next question today is coming from Eric Martinuzzi from Lake Street. Your line is now live. Speaker 800:43:17Yes, I wanted to go a layer deeper on the shift in the mix, the video versus display. What do you think is behind the video getting lower rates than perhaps historically video achieved? Speaker 400:43:33So always there are dynamic in the market. We're working with multiple solutions and formats. You can take the CTV from now that we are charging sometimes more than $30 to the standard As they are with few dollars and this is always based on demand and supply and what is available and what is now more I think the beautiful thing with our system and with our technology is our ability to identify the opportunities And based on that, to improve our position and to improve margin and do what is good for our Results, and this is what happened in the last two quarters. This is something that started at the beginning of the 3rd quarter. So this is H2 And this is the trends. Speaker 400:44:30And 2024, of course, will look different. We need to keep our eyes open To track and to see where are the opportunities, and this is, I think, part of our advantage with the diversification that we have and the different products That we are offering and again, nothing more than that. Of course, there are a lot of Reason behind any preference, but it depends on geographics, depends on the customer type, depends on What's happening in the market? But again, for us, this is just we're looking at that as opportunity. Aizawa, that's Speaker 100:45:11let me just add one more thing. Sorry, just add one more thing to that. I think It goes back to the strategy that we have, right. We know it's very dynamic. Advertisers are keep shifting budgets Based on the goals they have currently, right? Speaker 100:45:27So currently, more advertisers than we saw that in the past 2 quarters, more advertisers are pushing towards Direct response, direct ROI. This is why search is going up. This is why display is going up, This day versus video, great. And other times, video is going up instead of that. So this goes back to the strength Of our model of diversification, we're not putting all our eggs in 1 basket. Speaker 100:45:57We're diversifying. They want to make sure that the technology meets the consumer where the advertiser needs them. We're not doubling down on a specific format. That's not what we do. We want to make sure advertisers have different strategies through different periods. Speaker 100:46:14We're going to meet them and that's our goal. Speaker 800:46:18And has that been driven by, if I were to ask the question regarding vertical strength or vertical weakness Over the past 6 months, could you address financial services, travel and entertainment, maybe auto, what trends are you seeing over the past 6 Speaker 100:46:38So we do see auto in a pretty good shape. Insurance loans Q4 was still low. Travel was still up. We don't have the numbers for Q1 still, But we're hoping that insurance and loans is going to start to pick up, but those were the trends in Q4. Operator00:47:12Our next question is coming from Mauricio Munoz from Raymond James. Your line is now live. Speaker 900:47:20Yeah. Thank you for taking my question. Could you please expand on the opportunity in surge? What's driving the above trend strong results this quarter and how sustainable is the opportunity? Thank you. Operator00:47:35Right. Speaker 100:47:38Listen, we're as always, we're adding more publishers, Which are adding more searches. But at the end of the day, it's really a market trend, right? Where Advertising budgets are going to shift are now shifting into direct response in Q4. Again, it goes back to a lot of markets movements And our ability to gain more searches. Speaker 900:48:09Thank you. Speaker 600:48:10Thank you. Operator00:48:12Thank you. We've reached the end of our question and answer session. I'd like to turn Speaker 100:48:19Thank you. So we're very happy about The Q4 and the full year of 2023 results, we think we saw a tremendous growth. We're going to continue to grow. We're going to continue to invest in technology and we're going to continue to push this company forward Years to come, again, pushing on growth, pushing on profitability, Operator00:48:56Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Annual report(20-F) Perion Network Earnings HeadlinesPerion Network Ltd (NASDAQ:PERI) Receives $12.38 Average Price Target from AnalystsJuly 31 at 2:27 AM | americanbankingnews.comPerion to Announce Second Quarter 2025 Financial Results and Progress on the Perion One StrategyJuly 10, 2025 | finance.yahoo.comI warned you about Nvidia… now look what’s happeningNvidia just got Trump’s greenlight to sell high-powered AI chips to China — and their stock surged 5% before the open. That’s the kind of move Tim Sykes built his XGPT system to trade. It scans AI news in real time, filters the noise, and pinpoints when to strike. He’s now showing exactly how it works — before the next headline hits.August 2 at 2:00 AM | Timothy Sykes (Ad)Perion Network Ltd. Annual Income Statement - MarketWatchJuly 9, 2025 | marketwatch.comPerion Network: 2025 Is A Transformative Year, But Stock Is Not That CheapJune 28, 2025 | seekingalpha.comPERI - Perion Network Ltd Financials - MorningstarJune 27, 2025 | morningstar.comMSee More Perion Network Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Perion Network? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Perion Network and other key companies, straight to your email. Email Address About Perion NetworkPerion Network (NASDAQ:PERI). provides digital advertising solutions to brands, agencies, and publishers in North America, Europe, and internationally. It offers Wildfire, a content monetization platform; search monetization solutions, including website monetization, search mediation, and app monetization; and cross-channel digital advertising software as a service platform. The company also provides supply management platform; demand management platform for campaign planning and design; analytics platform, which provides information and performance insights; creative platform, a robust media platform; and an AI platform that uses machine learning to bring intelligence to the various phases of campaigns. In addition, it offers an actionable performance monitoring platform to support the various phases of campaign management; an online video player and integrated ad server to upload, manage, and stream video content; content monetization system, which integrates ads within the content layouts at the page level. Further, the company provides a publisher management system that provides analytics and performance optimization tools, as well as reports; search-demand management systems; monetization products that integrate and onboards demand vendors; and AI Systems. Additionally, it offers Intelligent HUB (iHUB), which connects the supply and demand sides of the marketplace; and strategic optimization of relevant traits (SORT), a provisional patent technology that eliminates the need for cookies. The company was formerly known as IncrediMail Ltd. and changed its name to Perion Network Ltd. in November 2011. Perion Network Ltd. was incorporated in 1999 and is headquartered in Holon, Israel.View Perion Network ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon's Earnings: What Comes Next and How to Play ItApple Stock: Big Earnings, Small Move—Time to Buy?Microsoft Blasts Past Earnings—What’s Next for MSFT?Visa Beats Q3 Earnings Expectations, So Why Did the Market Panic?Spotify's Q2 Earnings Plunge: An Opportunity or Ominous Signal?RCL Stock Sinks After Earnings—Is a Buying Opportunity Ahead?Amazon's Pre-Earnings Setup Is Almost Too Clean—Red Flag? 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There are 10 speakers on the call. Operator00:00:00Hello, everybody, and welcome to the Perion Network 4th Quarter and Full Year 2023 Earnings Conference Call. Today's conference is being recorded. A 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. Operator00:00:21Today'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, performance or achievements to be materially different than 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 a non GAAP basis. Operator00:01:02While mentioning EBITDA, we'll be referring to adjusted EBITDA. We have provided a detailed reconciliation of non GAAP measures to their comparable GAAP measures in our earnings release, which is available on our website and has also been filed on Form 6 ks. Hosting the call today are Tal Jacobson, Perion's Chief Executive Officer and May Ios Negron, Perion's Chief Financial Officer. I will now turn the call over to Tal Jacobson. Please go ahead. Speaker 100:01:34Welcome to Perion's Q4 and full year 2023 earnings. I'm excited to unveil our performance for the quarter, reflect on a year of substantial achievements and provide a glimpse into the future. Before we look at the numbers, let's take a minute to align on our mission. Perion unlocks advertising possibilities across all screens, platforms and locations. We are powering our magic by advanced technology. Speaker 100:02:09Perion is an ever growing ecosystem, Cross channel, AI driven, locally optimized, and most importantly, we exist naturally along the consumer's journey. Today's consumers lead a dynamic and diverse lifestyle, having multiple interactions With the technologies around them, each journey is different, constructed by a multiverse of multiple touch points. We make sure our clients have the solutions For each of those touch points, we enable advertisers to interact with their consumers naturally, Regardless of the platform they use, to achieve maximum impact, Pellion's technologies and solutions Live naturally across the consumer's journey. Picture this, a typical day in Danielle's life. The day begins when she sips her coffee while scrolling through her favorite social app. Speaker 100:03:16Our dynamic video ad appears fitting naturally into our experience, a subtle yet effective touch point. As she commutes to work, our AI driven digital audio ads, WAVE, Taylor's messages to her preferences. This makes her interaction unique and personal. As she looks at the road, she sees our extra large video ad on the side of the road. Those moments are not coincidences. Speaker 100:03:52They are carefully crafted touch points in our journey with the consumer. As the day goes by, Danielle remembers the messaging we've presented to her across the channels. She decides to look for that product on her search engine. This is where our search technology and the partnership with Microsoft comes into play. When Danielle decides to take a coffee break and read some news online, she sees our well optimized dynamic Video display and high impact ads on our favorite websites. Speaker 100:04:32Of course, we will meet Danielle again On her way to her favorite store through our digital out of home ads and continued to interact with her even within the store. As the day winds down, our technology doesn't. Our CTV dynamic ad solutions Continue to present personalized content. Our technology is an immersive cross channel ecosystem that the company's consumers throughout their daily journey. I'm pleased to report Continued profitability for Q4. Speaker 100:05:13Once again, diversification proved to be the right strategy. In the Q4, we see a notable growth in search, CTV and Retail Media. Additionally, our strategic acquisition of HiveStack in December expanded our geographical and channel reach. Looking ahead at 2024, a key aspect of our strategy is to enhance our touch points Across the consumer journey, using cutting edge technology. Hence, we are increasing our investment in technology through our in house R and D teams, including the newly joined HiveStack team. Speaker 100:06:04We're also actively seeking inorganic opportunities that align with our vision. With a strong cash flow from operation of over $150,000,000 a year and a total cash Of over $470,000,000 Perion is well positioned to execute additional acquisitions. In Q4 2023, we achieved a robust top and bottom line growth. Our revenue and adjusted EBITDA reflect on our financial strength and our operational efficiency and market competitiveness. Turning to our full year performance, the same key indicators underpin our excellence. Speaker 100:06:53We've maintained constant focus on revenue growth, profitability and operational optimization, yielding outstanding results throughout 2023. Central to our success is our cutting edge technology that enables agility throughout the consumer's journey. Now let's see where some of our technologies met consumers in Q4. The Perion CTV solution are gaining momentum with advertisers. According to eMarketer, CTV ad spending is on the rise. Speaker 100:07:30Impressively, Perion's results stand way above their growth projections, demonstrating our ability to execute and conquer any channel and vertical we aim for. One of our innovations in the CTV space is pause ads. In partnership with DIRECTV, We've created yet another opportunity for our branded moment on TV. It is also One of the few ways to guarantee that commercial message is noticed in both linear and CTV. When viewers pause content, the CTV ads come into play, offering segmented audience targeting And increasing consumer engagement. Speaker 100:08:21Those ads are both noticeable and actionable. This ad by Shipt is the great example. We build those ads in short repeating loops, so that viewers are virtually guaranteed to see them. Our pause ads run across nearly every TV network on DIRECTV inventory, both linear and streaming. This includes TV networks without any ads in linear, such as HBO and sports networks like ESPN, Brands that already use our PAWS TV ads include Paco Rabanne, Con Edison, Shipt, Twilio, Eversource, AAA and more. Speaker 100:09:15The Perion retail media solution continues to grow and outpaced both our internal expectation and industry benchmark. This is a testament to our effective strategy and execution. In this rapidly growing space, as part of our retail media solutions, Last quarter, we launched our generative AI audio advertising technology, Wave, And the campaign with Albertsons was the first one we revealed. Now, I'm happy to share that Wave is adopted by additional leading brands, running on leading platforms such as Spotify, Iheartmedia, Audio boom and many more. This time, we're sharing the Pep Boys campaign. Speaker 100:10:08To our non U. S. Audience, Pep Boys is a leading U. S. Automotive service provider, operating in more than 900 locations across the U. Speaker 100:10:20S. Let's listen to this generative AI Speaker 200:10:29Select tires and get the 4th one free instantly. We offer expert auto service that makes car care simple and convenient with smart services like online booking, Text alerts to track your service and mobile payments to pay on the go. Make an appointment at pepboys.com and don't miss out on these incredible Speaker 100:10:55This generative AI audio ad creates communication between brands and potential consumers, offering relevant solutions In a tone that sounds natural and appealing, this approach is a prime example of how we leverage AI To revolutionize consumers' interactions, making every message both heard and acted upon. We are very proud of the partnership with Amazon that we've announced this quarter, in which we integrated Amazon Publisher Services into our VideoZoo platform. With this integration, publishers now have access to a wider range of ad demand for more precise targeting and enhanced campaign performance. Some of the notable publishers that are already working with us using the Amazon Publisher Services include IMDB, VonNet, BoardPanda and Publishers Collective, following our strategic acquisition of HiveStack, We shared our plans to expand into new markets. I'm proud to announce we're delivering on that commitment With a major partnership in Brazil, we've joined forces with Eletromedia, One of the largest media owners in Brazil's vibrant media landscape. Speaker 100:12:29While this partnership is not just about the numbers, The addition of over 46,000 digital screens is certainly impressive. It also presents exciting opportunities for our high impact display and creative solutions. The Brazilian market offers a dynamic and rapidly growing advertising landscape. With Electromedia, we are positioned to make a significant impact. 1 of our recent successes In our digital out of home technology for retailers and CPG companies is this campaign for Helena Rubinstein in Hong Kong, Promoting their new PowerCell product, the campaign's core strategy involved advanced proximity, gel fencing to plan and activate campaigns, targeting specific physical locations in the proximity of Elena Womensand's store in Hong Kong. Speaker 100:13:35Let's take a look. Speaker 300:13:38In Hong Kong, marketers face challenges when planning, executing and evaluating online to offline campaigns that are consistent and measurable. Feeling the need to bridge this gap, Helena Rubinstein strategically leveraged programmatic digital out of home Seamlessly integrated with Helena Rubinstein's omnichannel campaign, created a cohesive and impactful brand narrative that achieved client objectives In driving online product searches and offline in store footfall. Developed by Omnicom Media Group And leveraging the HIVEstack demand side platform, the programmatic digital out of home campaign used proximity geofencing to activate the Campaign at the right time at specific digital out of home screens close to the Helena Rubinstein stores in Hong Kong and Custom audience targeting to deliver contextually relevant ads specifically to skin care shoppers. A footfall lift study was conducted to measure Speaker 100:15:25Our digital out of home platforms, advanced jail fencing feature, along with audience targeting, Increased product awareness and store visits significantly. The success of this campaign is another example of how immersive the consumer journey becomes with the use of advanced technologies. To conclude, our focus on diversified technologies that powers the consumer's journey and strategic acquisitions Continues to drive Payone's impressive growth and success. And now, Maoz, our CFO, will provide a more detailed financial analysis. Speaker 400:16:11Thank you, Tal. Good afternoon and good morning to those of you joining us from the U. S. 2023 proved to be a meaningful year, demonstrating the agility and resilience of our business model at Purion. Strict execution of our diversification strategy and cost control measures were key to our success in delivering healthy profitable revenue growth And margin expansion. Speaker 400:16:37Tyrian is among the most diverse companies in the ethics space. Therefore, We were able to quickly respond and capitalize on our customer spending allocations by delivering The right product mix. We successfully harnessed efficiency and innovation to exceed internal expectations for both Profitability and margin goals. Perion achieved year over year revenue growth of 16% to 743,000,000 And 28% growth in adjusted EBITDA, reaching €169,000,000 with a 23% margin and an impressive 55 percent ex TAC margin. Perion's strong and consistent cash flow from operations And our significant net cash position generated over €20,000,000 in financial income in 2023. Speaker 400:17:33That along with our cost efficiency and tax optimization resulted in a year over year growth in GAAP net income of 18% To over 170,000,000 and 40% year over year increase in a non GAAP net income to over 167,000,000. For the year, cash flow from operations increased by 27% year over year to 155,500,000. Our diversified business model and product mix allowed us to quickly respond to shifts in the market, in essence, Following the money with the right solutions, among the top growth drivers in 2023, retail media stood out, Far exceeding our internal expectations with a year over year revenue increase of 114% to nearly 50,000,000. CTV revenue also experienced strong growth of 56% year over year as more and more customers adapted Our high impact CTV solutions. Search grew by 23% year over year, boosted by Advertise the budget shift to our intent advertising. Speaker 400:18:53Key to our success is our ability to develop New innovations that address the needs of our customers. In parallel, we consistently find new ways to improve The efficiency of our operations. In the Q4, we completed acquisition of FireStack, A global innovative programmatic digital out of home solution, also known as DOOH. This transaction is In the fast growing digital out of form channel, according to PQ Media, it is expected to show a 3 year CAGR of 15% for 2024 To 2026, our plan is to leverage the synergies between our retail media Solutions and Ivestech's digital out of home capabilities and offer complete compelling solutions to our customer base. While Perion is strong in the U. Speaker 400:19:57S, IHVESTEC is strong internationally. Together, we can open new markets. We expect this transaction to result in significant core sales opportunities and geographic expansion to fast growing markets. I would like to stress that the ongoing conflict in Israel has not materially impacted our operations and business results. Nearly 100 percent of Perion's revenue is generated outside of Israel and only 45% of our cash and cash equivalents Our Eldin Israel, our employees who are drafted to military service are mostly back to work and business continues uninterrupted. Speaker 400:20:39Now let's review the financial highlights for the 4th quarter. Revenue increased by 12% year over year To €234,200,000 contribution ex TAC was €19,600,000 increased by 3% year over year, delivering a 39% margin. Adjusted EBITDA was $53,900,000 increased by 12% year over year, Delivering 23% margin and 59% extract margin. Non GAAP net income increased by 19% year over year to 52,900,000. Non GAAP diluted earnings per share increased by 16% year over year to $1.04 Our diversification strategy created opportunities that resulted And continued impressive growth. Speaker 400:21:32On a yearly basis, the revenue was 743,200,000, an increase of 16% year over year. Our 2 year CAGR was 25%, demonstrating the strength of our product mix. On a quarterly basis, the revenue for the 4th quarter was €234,200,000 an increase of 12% year over year And our 2 year revenue CAGR was 22%. Turning now to the display advertising. For the 4th quarter, Display advertising revenue decreased by 3% year over year to $119,800,000 accounting for 51% of total revenue. Speaker 400:22:14The quarterly decrease in display advertising revenue was primarily due to a 33% year over year decline in video revenue. This is due to shifting of inventory from video to display to gain higher profit. Our retail media results continued To exceed our internal expectations with quarterly revenue of 20,200,000, an increase of 196% year over year. This accounts for 17% of display advertising revenue compared with 6% in the Q4 of 2022. Our quarterly CTV business continued to expand, growing by 69% year over year, representing 12% of display advertising revenue compared with 7% last year. Speaker 400:23:03Turning now to our search business. The quarterly search revenue significantly increased by 33% year over year to $114,400,000 representing An impressive 41% 2 year CAGR. During the quarter, average daily searches Increased by 37% over the same period last year and the number of publishers grew by 4% year over year. During the last 2 years, we have seen budget shifts to direct response. This is a result of Perion's unique position in Search And we have been able to capitalize on that. Speaker 400:23:41For 2023, our media margin was 42%, Which was on par with 2022 and consistent with our expectations. We were able to maintain this strong margin due to our product mix and the media buying optimization of our supply and demand asset. For the Q4 of 2023, The media margin was 39%, down from 42% in the same period last year due to products mix change And our efforts to gain market share in a competitive environment. We are very proud of Puren's ability Adjusted EBITDA for the year was $169,100,000 increased by 28% year over year with 23% margin Compared with 21% in 2022 and 50% in 2021. Adjusted EBITDA to contribution ex TAC margin was 55%, up from 49% in 2022 and 37% in 2021. Speaker 400:25:01Adjusted EBITDA for the quarter increased by 12% year over year To €53,900,000 reflecting a 23% margin. Adjusted EBITDA to contribution ex TAC margin was 59%, Up from 55% in the Q4 of 2022 and 45% in 2021. This is among the highest in the EdTech industry. On a GAAP basis, 4th quarter net income increased by 2% to 39,400,000 Or $0.78 per diluted share. This is in comparison with $38,700,000 or $0.79 per diluted share In the Q4 of 2022, the increase in net income is mainly due to acquisition expenses, Retention and change in fair value of contingent consideration. Speaker 400:25:54On a non GAAP basis, 4th quarter net income increased by 19 percent to $52,900,000 or $0.0104 per diluted share. This is compared with $44,700,000 or $0.19 per diluted share during the Q4 of 2022. On a GAAP basis, full year 2023 net income increased by 18% to 117,400,000 or $0.234 per diluted share. This is compared with $99,200,000 or $0.0206 per diluted share in 2020 On a non GAAP basis, net income increased by 40 percent to $167,400,000 or $0.0333 per diluted share For 2023, this is in compared with $119,800,000 or $0.246 per diluted share in 2022. Over the past years, Vireon has consistently improved its profitability. Speaker 400:26:58This is mainly thanks to our adoption of operational excellence and strict cost control measures throughout the organization that increased efficiency and productivity. For the Q4, non GAAP operating expenses and cost of revenue were 16% of revenue Compared with 19% in the Q4 of 2022 and 23% in the Q4 of 2021. On an annual basis, we can see the same downward trends as non GAAP operating expenses and cost of revenue were 19% of revenue compared with 21% in 2022 25% in 2021. This continuous improvement Was mainly driven by cross company implementation of process automation, the depreciation of the Israeli shekel versus the U. S. Speaker 400:27:50Dollar and the offshoring of some of our operations. Moving to the balance sheet and cash flow highlights. For the year, operating cash flow $155,500,000 compared with $122,100,000 in 2022, increased by 27% year over year. Operating cash flow for the Q4 was $50,200,000 compared to $38,200,000 in the same period last year, An increase of 32%. As of December 31, 2023, our net cash was 473,000,000 inclusive of the cash paid in the recent iStec acquisition. Speaker 400:28:30Finally, moving to our 2024 outlook. The guidance reflects our plans to significantly invest in technology to enhance our multi channel solutions And to capitalize on IonStack's ability to expand our reach into additional geographics. Strong execution of this initiative is expected to result in strong double digit revenue and adjusted EBITDA growth in the coming years. This concludes my financial overview. And now, we can open the line for questions. Operator00:29:07Thank you. Over the webcast, please use your raise your hand function. Our first question is coming from Jason Helfstein from Oppenheimer. Your line is now live. Thank you. Operator00:29:25Good morning, everybody. Two questions. First, talk about how you think about Purion benefiting from Chrome cookie deprecation. In the past, you've talked about how you're not reliant on cookies, but how you actually think you could benefit when that happens in the industry. And then my second question, I think guidance is slightly weaker than we expected on an organic basis by 200 basis points or so. Operator00:29:51Not huge, but maybe talk about what headwinds you're seeing right now for 2024 that would keep you from growing Stronger than 10% on an organic basis. Thank you. Speaker 100:30:02Okay. Thank you, Jason. So on first of all, let's talk about cookies. So as you know, we have sort and we are now working on sort 2.0, which we're going to launch During the year and we are prepared to all those cook less Implementations. But we I think we're going to gain from that the fact that a lot of other companies are not going to be prepared for that. Speaker 100:30:35And hopefully, we're going to get more budgets just by the fact that we are ready for that. So that's on the cookie part. What Speaker 400:30:43was the other one? The guidance. So thank you, Jason. So as you noticed, the guidance 10% growth on the EBITDA and revenue on a pro form a basis. This is why that there is a bit Change in the product mix mainly due to video that take the numbers to a new level. Speaker 400:31:10As we said in the last quarter and also during the last during this quarter, The priority gross margin is the most important element in our business, and we are actually doing this move from video To display when we can get higher margin. And this is the main reason for the revenue decrease in video during the Q4. This is also implemented in our model for next year, offset by the growth drivers, as we also mentioned, then the retail business, The CTV and also now that we have the digital out of form, this is another growth driver for 2024. But all in all, the 10% I think reflects The model that we are now using and very much reflect all the changes Operator00:32:16Thank you. Our next question is coming from Laura Martin from Needham. Your line is now live. Speaker 500:32:21Good morning, guys. Let's talk about GenAI first. So in your guidance, you said that you're going to have an investment year And it feels like with just listening to like big tech, it's going to be a lot of investment in like infrastructure for Gen AI. So this results in 2 questions. One is, is a lot of your investment coming because of the Gen AI upgrade? Speaker 500:32:45And second, What are your Gen AI? When you think about the product road map, how are you thinking about incorporating Gen AI into product? Speaker 100:32:55That's a great question. Thank you, Lova. So our investment comes from a few points. One, absolutely, GenAI. We've presented the Gen AI Wave product that we launched last quarter and the progress we've made with it. Speaker 100:33:11So we're generating creative 100 percent JAI. We are implementing JAI across all our infrastructure and we're also We bought HiveStack, which is a pure technology play, and we're integrating that into everything Perion. So we're investing in a unified infrastructure. And obviously, Gen AI is a very big part of that. We're seeing that in all the technology companies, big investment in AI, we want to be want to continue To be very advanced, so we're going to continue to invest in GenAI Technologies. Speaker 100:33:53That's a very big part of 2024. Speaker 500:34:02And then I guess my other one, just building on the guidance issue, is are you guys So it sounds like you're saying there's going to be a revenue mix shift in 2020, 24 that's going to have lower margin. That's sort of how I heard you answer Jason's Question, is that permanent or is it, I would have guessed your growth in CTV, which is really robust, would have really helped your margin. But can you talk sort of about the margins and why we're getting a margin downdraft from the mix shift, please? Speaker 400:34:37Thank you, Laura. So there is no dramatic change with the media margin. We're talking about, again, if I need to, let's say, now Talking about 2024 margin, we're talking about 41% margin more or less. This is our estimation, Which is not far from the 42% we have for 2024 sorry, for 2023. And again, in order to And in order to be able to compare to have effective competition, This is the number that we believe can help us to keep and take period to 25 and 26, and this is aligned with our model. Speaker 400:35:18Yes, there is a shift of the product mix that's changed a bit the margin. IStack is new. The fact that we have now less video is another piece. So the mix is different, but the total picture is not different. We are above the 40%. Speaker 400:35:35This is our main goal. And the 41% now at the beginning of the year reflect very much my thinking about 2024 margin. Speaker 500:35:45Thank you very much. Thanks guys. Speaker 600:35:47Thank you. Operator00:35:49Thank you. Our next question today is coming from Mark Kelley from Stifel. Your line is now live. Speaker 700:35:57Great. Thank you very much. Appreciate taking the questions. Two quick ones and apologies if you some of this in the prepared remarks and kind of bouncing between calls. But this next version of Sort, I know it's not out yet. Speaker 700:36:10I know it's early. But any data points you can provide in terms of effectiveness versus The original version of sort that's in the market today. And I guess what's informing your changes that you're Making on the back end for sort, that's the first one. And then the second one, the shift between display and video, I guess, how do those conversations work with your clients when you're changing Where their budgets are allocated? Is it something that your clients are just comfortable with you shipping budgets wherever they're going to get The better ROAS or I guess what goes into that whole process in terms of where you're steering and allocating budgets? Speaker 800:36:57Okay. Absolutely. Speaker 100:36:59So on Sword 2.0, as you know, with technology, we constantly need To make advanced improvements, right? So what was okay for Sort 2 years ago when we built it, now needs to get a robust uplift, including AI, including Gen AI, A lot of infrastructure through the data and a lot of updates. As you probably know, Google released their Sandbox for the cookieless era, which again, everything is getting implemented. So we're constantly adding more and more feature into Sort, But this specific one is going to be a huge leap into something even bigger. So We're constantly adding more features. Speaker 100:37:49Sort 2.0 is going to be a lot more advanced. Video versus display. So the way it works is We sit with our code on websites. And every time you go on a website, it sends request To all admin partners and then based on what we got, we know if we want to show a video ad or display ad, right? And now since Q3 that actually happened last quarter, we saw that video ads got lower rates than display ads. Speaker 100:38:22So we could have made a bigger margin on display and actually our algorithm chose that because on the publishing side, Publisher just want a higher yield, which the algorithm generates a higher yield. So this is why Our algorithm Q3, Q4 decided that this day will generate higher profit and that's how it's being chosen. Operator00:38:55Thanks. Our next question today is coming from Jeff Martin from ROTH. Your line is now live. Speaker 600:39:02Thank you. Good afternoon and good morning to everybody. I wanted to see if you could elaborate on the geographic I know you mentioned the new relationship in Brazil. Looks like that could be very meaningful over time. But just curious if you could elaborate on Any other details on your geographic expansion strategy? Speaker 100:39:22Absolutely. So the reason why we bought HighStack because We think that we see that it's super synergetic with everything that we do. So Undertone and HighStack actually sell the same type of client, Right, the agencies. Now, Allotone has amazing relationship within the U. S, while HighStack has an amazing relationship Everywhere else. Speaker 100:39:48So we're going to push the existing product that we have through the Hive Stack relationships worldwide And we're also going to push the HiveStack technology through the Undertone relationship in the U. S. Sorry, just said that, Everywhere else, right? Hivestack going to push Undertone everywhere else. Undertone is going to push Hivestack US. Speaker 100:40:13Now having said that, when you have a DSP and an SSP, which is basically what HIFESTAC does, When you get an agreement with a company like Electromedia, which is a huge media company in Brazil, You can now have the ability to sell Brazilian traffic, Brazilian screens for everywhere else. So if there's an American company that wants to promote to the Brazilian market or a Chinese or Japanese advertiser, they now can do that through our exclusive inventory there. Now Bear in mind, because we have the DSP SSP, our goal is to constantly increase more inventory worldwide And more advertisers worldwide because what happened is a lot of advertisers in different countries are advertising budgets on other countries, right? This is what we call inside out. So we're actually getting Advertising from Hong Kong and Korea actually advertise on our Japanese screens. Speaker 100:41:20So that constantly happening. So we want to add more agreements like that. And this is the first stage. And through those agreements, we want to push more Impact created that Undertone are so good at. So I hope that answers the question. Speaker 600:41:35Very helpful. Thank you. One more, if I could. Just curious how you're thinking about capital allocation strategy going forward. You look at the free cash flow generation this year more than paid for the HybStack acquisition. Speaker 600:41:47Should we be looking for additional M and A in 2024? And might you consider a share repurchase program or a dividend program? Thanks. Speaker 100:41:57So that's a great question. So absolutely M and A, absolutely. We want to continue to grow even faster. We want to add more technologies for the retail space, CTV, Measurements, we want to grow faster and grow faster even with profitability. So that's one thing. Speaker 100:42:21Buybacks, It's always part of our discussions. We actually done a very thorough analysis. And What we've been told by our research is creating long term value, Continue to grow as fast as possible is going to create more value for shareholders than buybacks. Having said that, this It's always something that we're thinking on. But frankly, we think pushing the company forward and having Our leadership position in the market will gain more market value for investors more value for investors than buybacks. Speaker 100:43:06Thank you. Operator00:43:12Thank you. Next question today is coming from Eric Martinuzzi from Lake Street. Your line is now live. Speaker 800:43:17Yes, I wanted to go a layer deeper on the shift in the mix, the video versus display. What do you think is behind the video getting lower rates than perhaps historically video achieved? Speaker 400:43:33So always there are dynamic in the market. We're working with multiple solutions and formats. You can take the CTV from now that we are charging sometimes more than $30 to the standard As they are with few dollars and this is always based on demand and supply and what is available and what is now more I think the beautiful thing with our system and with our technology is our ability to identify the opportunities And based on that, to improve our position and to improve margin and do what is good for our Results, and this is what happened in the last two quarters. This is something that started at the beginning of the 3rd quarter. So this is H2 And this is the trends. Speaker 400:44:30And 2024, of course, will look different. We need to keep our eyes open To track and to see where are the opportunities, and this is, I think, part of our advantage with the diversification that we have and the different products That we are offering and again, nothing more than that. Of course, there are a lot of Reason behind any preference, but it depends on geographics, depends on the customer type, depends on What's happening in the market? But again, for us, this is just we're looking at that as opportunity. Aizawa, that's Speaker 100:45:11let me just add one more thing. Sorry, just add one more thing to that. I think It goes back to the strategy that we have, right. We know it's very dynamic. Advertisers are keep shifting budgets Based on the goals they have currently, right? Speaker 100:45:27So currently, more advertisers than we saw that in the past 2 quarters, more advertisers are pushing towards Direct response, direct ROI. This is why search is going up. This is why display is going up, This day versus video, great. And other times, video is going up instead of that. So this goes back to the strength Of our model of diversification, we're not putting all our eggs in 1 basket. Speaker 100:45:57We're diversifying. They want to make sure that the technology meets the consumer where the advertiser needs them. We're not doubling down on a specific format. That's not what we do. We want to make sure advertisers have different strategies through different periods. Speaker 100:46:14We're going to meet them and that's our goal. Speaker 800:46:18And has that been driven by, if I were to ask the question regarding vertical strength or vertical weakness Over the past 6 months, could you address financial services, travel and entertainment, maybe auto, what trends are you seeing over the past 6 Speaker 100:46:38So we do see auto in a pretty good shape. Insurance loans Q4 was still low. Travel was still up. We don't have the numbers for Q1 still, But we're hoping that insurance and loans is going to start to pick up, but those were the trends in Q4. Operator00:47:12Our next question is coming from Mauricio Munoz from Raymond James. Your line is now live. Speaker 900:47:20Yeah. Thank you for taking my question. Could you please expand on the opportunity in surge? What's driving the above trend strong results this quarter and how sustainable is the opportunity? Thank you. Operator00:47:35Right. Speaker 100:47:38Listen, we're as always, we're adding more publishers, Which are adding more searches. But at the end of the day, it's really a market trend, right? Where Advertising budgets are going to shift are now shifting into direct response in Q4. Again, it goes back to a lot of markets movements And our ability to gain more searches. Speaker 900:48:09Thank you. Speaker 600:48:10Thank you. Operator00:48:12Thank you. We've reached the end of our question and answer session. I'd like to turn Speaker 100:48:19Thank you. So we're very happy about The Q4 and the full year of 2023 results, we think we saw a tremendous growth. We're going to continue to grow. We're going to continue to invest in technology and we're going to continue to push this company forward Years to come, again, pushing on growth, pushing on profitability, Operator00:48:56Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.Read morePowered by