Hello, everybody, and welcome to the Perion Network First Quarter 2023 Earnings Conference Call. Today’s conference is being recorded. The press release detailing the financial results is available on the company’s website at 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, performance, or achievements to be materially different, and any future results, performance, or achievements anticipated or implied by these forward-looking statements. The company does not undertake to update any forward-looking statements to reflect future events or circumstances. As in prior quarters, the results reported today will be analyzed both on a GAAP and non-GAAP basis. 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 is available on our website and has been filed on Form 6-K. Hosting the call today are Doron Gerstel, Perion’s Chief Executive Officer; and Maoz Sigron, Perion’s Chief Financial Officer; and Tal Jacobson, General Manager of CodeFuel and Perion’s Chief Executive Officer effective August 1, 2023. I would now like to turn the call over to Doron Gerstel. Please go ahead.

Hello, everyone, and welcome. Thanks for joining Perion’s first quarter of 2023 earnings call. Together with me on the call is Maoz Sigron, our CFO, and Tal Jacobson, my successor as CEO as of August 1. It’s rare to be excited about being repetitive, but this is one of those times. I say that because today is the 12th time in the last three years that I have used the same headline describing our financials: our momentum continues. It’s not the first time you have heard me state that our unique diversification strategy is what’s behind our ability to deliver business results that are sustainable and predictable. Our continuing agility to grow the top line and bottom line, regardless of macroeconomic conditions, has been demonstrated over the last three years, as you can see from the slides. Even most recently, where the industry has been challenged by a reduction in digital advertising spending, our strategy of supporting the three main pillars of digital advertising is especially relevant during this time when advertisers are under pressure and grappling with uncertainty. Just last week, the Federal Reserve described the economy as rocky and bumpy. The unavoidable result of this dynamic environment is that budgets are continually in flux, more dramatically than ever before. Advertisers shift between channels, they shift between awareness campaigns and performance campaigns, and they shift between omni-channel objectives, in other words, between online sales and driving foot traffic. Perion is perfectly poised to capture these sudden moves in advertiser spending preferences proactively, not reactively. We don’t need to scramble as the wind shifts; we are prepared whenever and wherever the market moves because we have the platform and the infrastructure in place to support it. The strategic advantage of being ahead of the market is due to our investment in technology. This allows us to compete, win, and gain market share in the most pioneering sectors where innovation matters. To be more specific when we look at the growth driver, I also want to point out that our pillars provide us with a competitive advantage that makes our predictability and sustainability possible. Supporting those pillars provides us with valuable insights about consumer behavior and advertiser preferences. We are then able to react immediately as our R&D and product teams analyze these insights and bring innovative solutions to the market. This agility is our primary core competence. Now, I will move on to discuss our specific results and revenue performance. We continue to outpace the category with a year-over-year growth rate of 16%, which is higher than the digital advertising market. I want to highlight that we had robust and healthy growth across all our pillars and sub-pillars. Our growth has come from both new clients and extended engagement with current ones. For me, this is an important signal that we are doing the right thing, demonstrating our efficacy with current clients and using it as leverage to win new ones. It’s also crucial to note that we are venturing into areas that are the most sophisticated from a technology point of view. That includes video and CTV, along with our cookie-less innovation, retail media, and search. I say search, yes, which I would not have said a year ago because of the transformation being created by OpenAI and ChatGPT 4, driven by Microsoft, which is our long-term strategic partner. You may remember last quarter when I mentioned how we are using the exploit and explore framework to guide our strategy and execution. Well, that is what has happened with search, specifically with some of the business opportunities we’ve seen emerging within search. Thanks to the disruptive possibilities of integrating AI into search, we now have a whole new initiative firmly in the explorer quadrant. Next, I’ll discuss our EBITDA, which exceeded Q1 of last year by 38%. In other words, almost $0.50 of every dollar of net revenue is profit. We are particularly proud of this accomplishment, given everything I’ve discussed in terms of the macroeconomic rocky and bumpy ride we’re on. I’m often asked by many of you and at conferences how we are able to continually generate results that seem to challenge the laws of gravity and physics. This is especially compelling considering that many companies struggle to drive top-line growth while maintaining high profitability. The answer is that we capture and analyze data signals from all channels and from both sides of the open web into our central hub. We are using advanced AI to develop a bidding system that maximizes our unit revenue while reducing our video costs. By doing this, we uniquely combine efficient bidding with the ability to meet our customer’s ROAS, or Return on Ad Spend, expectations. At the same time, when advertisers are under extreme growth pressure, this is a true competitive advantage for us. I've mentioned this before; it is a paradigm that investors and venture firms have applied to identify the markers of healthy growth for tech-driven software companies, even though it’s not common for evaluating a company. We at Perion see ourselves at the forefront of incorporating AI technology into our solutions and thus need to be benchmarked alongside small, sophisticated tech companies. To reiterate the formula, you should add your trailing 12-month growth rate in percentage terms to your EBITDA margin. If the result is 40 or more, you are doing great. You can see how we measure up right here. This is something we look at all the time in our fiscal discipline, because as I said before, if you focus too heavily on the top line and ignore profitability, you put yourself on a slippery slope that's extremely difficult to correct. I’ll move to search advertising now. It has been a reliable and significant growth driver for Perion and will become an even bigger contributor based on the recent investments Microsoft has made in ChatGPT. With that in mind, I’d like to quote Satya Nadella, CEO of Microsoft, who said on the recent earnings call last week when talking about Bing and ChatGPT 4. He said, 'We are making progress in market share gain. We continue to innovate with the first-of-its-kind AI-powered features. We see that when people use these new AI features, their engagement with Bing goes up. We look forward to a future where chats become a new way for people to seek information.' This is a generational shift in the largest software category: search. This is truly profound and just the beginning. This means that the ad search category, which has been mature and faced slow growth, is now one of the most dynamic categories in our industry. Our first-quarter search numbers were boosted by a significant increase of 29% in the number of publishers who sense the potential and want to be part of it. As a result, average daily traffic increased dramatically by nearly 50% year-over-year and are now close to 30 million monetized searches per day on average. We believe that the massive media attention to ChatGPT 4 has driven a material portion of this and that we will continue to see growth that exceeds our normative projections. Microsoft’s Bing has a real competitive advantage now, and that cascades immediately to our business. Next, I’d like to provide some context and visibility into our retail media commerce business, as I see it as a very important growth driver for the company. I’m sure you know that just about every major retailer, from Albertsons to CVS to Target, has launched their own media network to compete with the pressure from Amazon and Walmart. What we’ve built at Perion is an AI-driven platform that enables these retailers to maximize the value of their inventory with ad units that identify consumer signals and respond with timely and personalized promotions and content. For example, if the weather is unappealing and it’s a good day to cook at home, our intelligent platform delivers ads like that, as you can see on the screen. We can personalize at scale and do it in an omni-channel fashion across all screens. From the moment you wake up until you go to bed, we consolidate multi-data sets, including retailer first-party data, external signals like weather and location, and AI-driven decisioning within our ad platform solution. Coupled with our award-winning creative on an omni-channel basis, in other words, synchronizing our messaging according to the consumer journey across display, video, CTV, and digital out of home using dynamic messaging delivery, we delivered a 14 times return on ad spend to Albertsons and others, driving results digitally while replacing traditional circulars, even allowing retailers to shut off promotions if they reach a negative margin. Our retail platform is changing the business dynamics of our clients by shifting from transactional campaigns to always-on strategies that improve the sustainability and predictability of our business. Our commerce platform has grown by 60% year-over-year in terms of revenue and by 32% in terms of new customers. You can see some of the logos at the bottom of the screen. With a total addressable market of $46 billion in 2023 and virtually little innovation in retail media, you can see why we are so bullish on this innovation. Retail media is one macro trend we are capitalizing on. Privacy is another. A study reveals that consumers will choose brands that protect their privacy over those that do not. In fact, more than 80% of consumers care about their privacy. That’s the power and appeal of SORT. SORT is our cookieless, totally anonymous solution that protects consumer privacy in a unique and honorable way, which is why we are attracting brands that want to be associated with privacy-first principles. Those include brands from Mercedes to the United Nations. In fact, 48 new customers adopted SORT in the first quarter of 2023, and in total, there are 157 customers using our privacy-first technology, but that’s just one reason SORT is expanding. It is also due to the results and the ROI we deliver. SORT has been verified by third-party researchers to deliver superior results compared to cookies themselves. That’s why existing SORT customers are increasing their spend by 93% year-over-year. Another critical point to note is the connection between privacy and ESG, which stands for environmental, social, and governance. To meet ESG standards means that user privacy must be protected. We’re seeing investors, legislators, and regulators paying unprecedented attention to this essential right. This is why we believe SORT will continue to be a major contributor to revenue and EBITDA. Now, looking at our Growth Driver 4, as you can see from the numbers right now, we achieved a 26% year-over-year growth and increased our new publishers added to our video platform by 63%. EBITDA is thriving. Our end-to-end platform is meeting a large and growing need for publishers who are looking for fast results and lack the internal resources to build a complex, time-consuming internal system. The platform advantage is what’s behind our land and expand sales growth engine. Revenue from retained video platform publishers increased by 71%, and average revenue per publisher increased by 22%. To unpack that, our sales team focuses on getting initial traction with a more flexible yet extendable footprint, which enables us to demonstrate our capabilities and build from there. Display – these displays on the slide represent our full suite video platform service. Each and every one of these components, as you can see in the bottom half of the slide, is independently valuable and collectively powerful. We aren’t asking clients to commit everything at once because we are confident in our platform's holistic power as they learn more about it. To conclude, the more they experience us, the more services they consume. Growth number 5, which I think is making the most impact on our business, is our iHUB. As you know, our iHUB is key to our differentiation. We spend tens of millions of dollars building this mode, which connects all the signals across our platform. This provides efficiencies that have led to unique business advantages on many levels. But before describing the benefits of the iHUB, we must reiterate the importance of having all pieces of the business connected; otherwise, we would be managing a very costly, inefficient, and fragmented business. On any given day, we capture billions of data requests from various media channels into the iHUB data lake. One example of effectively leveraging this amount of data is creating an AI-driven bidding strategy that optimizes the match between supply and demand to maximize our profits while assuring the highest performance for our customers. Our iHUB open architecture is the foundation that enables us to make acquisitions that are instantly optimized because they plug into the center of our ecosystem. As the landscape grows more complex and multi-dimensional, the value of our iHUB will only become more meaningful. With that, I will turn the call to Maoz. Maoz?

Yes, thank you, Doron. Good afternoon and good morning to those of you who are joining us from the U.S. I am happy to be here today to present strong results for the first quarter of 2023. The strength of Perion's business has been evident for the last two years, building great momentum on both the top and bottom line. These strong trends have continued in the first quarter of 2023 even as the market has been impacted by a slowdown in advertising activity, driven by macroeconomic challenges. Our diversified business model, technology differentiation, and innovation-focused approach continue to enable us to navigate our way through market changes. Quarter after quarter, we are increasing revenue while media margins and EBITDA margins improve dramatically. Let’s look at the main financial achievements for the first quarter. Revenue grew by 16% to $145.2 million. Gross profit grew by 20% to $65.3 million with a 45% margin compared with 43% last year. Adjusted EBITDA grew by 38% to $31.3 million with a 22% margin compared with 18% last year. Net income of $23.8 million increased by 54% year-over-year. Non-GAAP diluted earnings per share increased by 36% to $0.60 per share. Now let’s move to the quarterly results in more detail. The revenue for the first quarter of 2023 was $145.2 million, an increase of 16% year-over-year, reflecting a strong continued three-year CAGR of 30%. First quarter display advertising revenue increased by 16% year-over-year to $79.9 million, which is 55% of total revenue. This was driven primarily by the continuous market adoption of our holistic video platform and the increase in SORT, retail media, and CTV. Video revenue increased by 26% year-over-year, representing 44% of display advertising revenue compared with 41% in the first quarter of 2022. The number of video platform publishers increased by 63% year-over-year from 46 to 75. Revenue from retained video platform publishers increased by 71% year-over-year, while average revenue per video platform publisher increased by 22%. Our innovative cookieless targeting SORT solution is increasingly adopted by the market in line with consumer growing awareness and increasing regulatory pressure on companies to protect consumer privacy. The number of SORT customers reached 157, representing an increase of 142% year-over-year. SORT customers' spending increased by 93%, representing 17% of display advertising revenue compared with 7% last year. CTV revenue increased by 12% year-over-year, representing 8% of total display advertising revenue. Meanwhile, retail media revenue increased by 60% year-over-year, accounting for 8% of display advertising revenue compared with 6% last year. The number of retail media customers increased by 32% year-over-year. First quarter search advertising revenue increased by 15% year-over-year to $65.3 million, accounting for 45% of total revenue. The strength of our search business was driven by a sharp increase in the consumer interest in ChatGPT, which continued to rise, and our ecosystem is benefiting from that exciting change. The strong increase of 49% in average daily searches and the 29% increase in publishers more than offset the 22% decline in RPM rates for this quarter. The first quarter display advertising revenue accounted for 55% of total revenue, while search advertising accounted for 45%. Revenue excluding tax was $65.3 million or 45% of revenue compared with 43% in the first quarter of 2022. Our media margin continued to show year-over-year improvement quarter after quarter. The intelligent HUB we have developed leverages data bank power to control and improve overall media bank results. This has resulted in better selling and buying power, translating into continuous improvements in media margin. We take great pride in our ability to implement efficiency measures and progress in our day-to-day operations. Each efficiency measure shows continuous improvement over the last three years. OPEX plus COGS accounted for 26% of revenue this quarter compared with 28% in the first quarter of 2022 and 32% in 2021, marking a 6% improvement over the last three years. During the same period, EBITDA per FTE has risen from $18,000 in 2021 to $45,000 in 2022 to over $62,000 in 2023. This impressive achievement demonstrates our ongoing productivity improvements and reflects the discipline with which we execute our business strategy. Over the past few years, we have invested in innovation and automation, creating the infrastructure that allows incremental top and bottom line growth on a lower cost basis. We have improved our budget control and are consistently looking for new efficiency initiatives. These improvements, coupled with focused growth in high-margin businesses, translate into significant bottom line growth. First quarter adjusted EBITDA was $31.3 million, reflecting 38% year-over-year growth. Adjusted EBITDA margin was 22%, compared with 18% last year. Adjusted EBITDA to revenue excluding tax increased from 42% in the first quarter of 2022 to 48% in the first quarter of 2023. On a GAAP basis, first quarter net income was $23.8 million or $0.48 diluted share, an increase of 54% compared to $15.5 million or $0.33 diluted share in the first quarter of 2022. Importantly, our net profit includes two additional profit sources worth highlighting. First is our strong cash position and disciplined cash management, which helped generate $3.4 million in financial income during the first quarter. Second, we also enjoy a low effective tax rate of around 15% due to our disciplined tax planning. This means that more of our pretax income converts to earning. On a non-GAAP basis, first quarter net income was $29.9 million or $0.60 per diluted share, an increase of 44% compared to $20.7 million or $0.44 per diluted share in the first quarter of 2022. First quarter operating cash flow was $17.8 million compared with $23.6 million in the first quarter of 2022. Operating cash flow was affected by about $8 million due to a shift in customer collections from March to April 2023 and a one-time change in working capital needs. As of March 31, 2023, our cash and cash equivalents, short-term deposits, and marketable securities amounted to $436 million, up over $6 million since the previous quarter. The $6.7 million increase was primarily the result of $17.8 million in cash from operations, partially offset by $13.3 million paid in connection with acquisitions. This concludes my financial overview and now I will hand over to Doron. Doron, please go ahead.

Thank you, Maoz. I will wrap up with guidance for the balance of the year. This confidence is based on everything I have shared with you together with Maoz. As I said earlier, the markers of successful companies are both the ability to drive revenue growth and profitability. Therefore, we’re increasing our guidance as we’re expecting another strong performance, increasing our revenue outlook to $735 million, which represents 15% year-over-year growth, and increasing our EBITDA guidance to at least $155 million, representing a 17% year-over-year growth. As you can see in an industry where it’s easy to distort the results by paying too much for traffic and getting squeezed on the margin side, our EBITDA is projected to grow at a greater pace than our revenue. Our model is built and tuned for revenue and profitability. Since this is my last earnings call, allow me to conclude on a personal note. It’s been a privilege to lead this company for six years and to work with the most talented team I have ever worked with before. A special thanks to our customers and partners who believe in us, and last but not least to you, our investor community. It’s been an honor to share our story with you and to answer your questions. I couldn’t be more excited to turn the baton and the podium over to my friend Tal Jacobson. And now for the last time, I will turn it over to the floor.

Thank you. We will now begin the question-and-answer session. Our first question comes from Laura Martin with Needham and Company. Please go ahead with your questions.

Good morning, spectacular numbers you guys. Congratulations. Let’s start with AI. You guys are in one of the best positions to benefit from AI. Generative AI is what I’m focused on both in Bing, but I’m also interested in what kind of client reception you’re getting now, because Bing is really going into ChatGPT more aggressively integrating that. But also, when you think about your business, the rest of your business outside of search, how do you think about the role of generative AI in your display business? That’s my first question.

Yes. Thanks, Laura. So first and foremost, I think that our publishers, and this is something that I mentioned on our call, are really excited about what’s going on. Yes, it’s not being translated too much into action with them, but they want to be part of it. Just to mention, the process of approval between us and Microsoft is a matter of months. It has to do with going through a very rigid quality process, and the moment they heard that Microsoft is going to invest heavily around it and they’re putting their search technology as the first example to utilize their investments—they're coming. At this point, without having any evidence or even more than that, I can say how ChatGPT can help them—that’s one. From a consumer perspective, it’s similar. I think that at this point, everything Bing is doing, and we know very well what’s going on here, is heavily utilizing ChatGPT behind the scenes. It’s not yet something that’s being translated into significant market share gains, as they pointed out: every point of market share in search is worth $2 billion for them. So what consumers are doing is obviously a great PR move for Microsoft Bing. They are adopting the search browser more and more. I think we mentioned it on the last call; at this point, they have a 3% market share, and there’s a huge runway for them to take, especially given the amount of investment they’re making. Having said that, in terms of discussions between us and Bing, I can tell you without disclosing too much, because we are under a strict NDA, there is a huge cooperation between the two companies. One of my calls there was from someone running Microsoft Advertising, and she basically said that Bing is going to be something very attractive for their partners. Now, to the other part of your question: I think that the effects of ChatGPT are beyond what we can imagine. It’s a transformational change. I would say that the search interaction as we’ve experienced over the last 20 years is not going to be the same. We will have a chance to look at it two years from now, and it will look completely different in terms of interaction, user experience, and engagement between consumers and search engines. No doubt about it.

Okay. And then my other question—sorry, my other question was on CTV. I was really interested that the CTV revenue grew 12%, but overall video grew 26%, which is quite a slowdown in CTV. So could you actually speak to in more detail why is video revenue growing so much faster than CTV revenue in the first quarter?

Yes. Hold on for a second. I need to move here due to a technology glitch. So when it comes to CTV, especially with the publisher business, let’s distinguish: there is a low-hanging fruit here that has to do with our video platform. This low-hanging fruit is characterized by the concept of land and expand, where we first land with one component and then add others. We are very much meeting a need in the marketplace for publishers who are looking to substantially increase their ability to monetize their business. That’s our primary focus at this point for every publisher. A very important KPI for us is retention dollars, which are very high. For every publisher that we can work with and use our platform, the lifetime value of this publisher is huge. So from a company standpoint, we make decisions that we’d like to focus on this area and capture as much market share as we can. We are gaining market share and are very content with this segment, as I also mentioned on the call. Now, from a CTV perspective, that’s an interesting question. Perion as a company is focused on maximizing our margin. While it seems that CTV is generating higher revenue, there are significant costs involved that impact margins, and we are reaching a point in CTV where prices have been dropping and margins have been compressed. It has become, for all intents and purposes, commoditized. When it comes to CTV, we’re focusing mainly on live CTV events, where we can grow modestly but are able to maintain higher margins. So it was by design that we’re not aggressively pursuing the broader CTV market.

Thank you very much.

Thank you.

Thank you. Our next question comes from the line of Jason Helfstein with Oppenheimer. Please proceed with your questions.

Hey, thanks. So first, Doron, I want to say it’s been a pleasure working with you, and I look forward to keeping the team aligned. So two questions. First on the search side, I think one of the questions people are going to have is why you didn’t see a tailwind from improved CPCs at Bing. While they are getting meaningfully more usage, it’s just not having an impact on broad CPCs. Given you didn’t really raise, I don’t think we’re taking up search numbers that much for the year. Are you just not assuming that there’s a benefit to CPCs at some point this year? That’s the first question. The second question is, you guys have been very successful integrating SSP capabilities, and how it allowed you to better target ads and save fees. Do you think you could bolt on additional SSP capabilities in the current form, or do you also need to bring additional DSP capabilities as well to kind of match both sides? Thank you.

Thank you very much. Can you hear me?

Yes.

Okay, great. So to your first question, when it comes to ChatGPT as a driver, I must tell you that at this point, it’s very, very difficult for us to simulate, and our numbers for this year are not taking the ChatGPT extra tailwind into account, not according to our model. That’s definitely something that we believe will impact our business substantially. However, as I mentioned before, it’s really difficult for us to translate that into tangible engagement models and how it can be monetized. So we’re being very cautious here and are not factoring it into our model. That would be a nice additional boost. Now, regarding the SSP and DSP connection: you are absolutely right; that is one of the areas where we are investing mostly, especially with more SSPs. We are facing a huge demand on one side that needs to be balanced with the other. We are very much trying to handle it on our own; that’s our preference, because we are saving quite a chunk from intermediaries that can be very costly. But what is more important is, as you can imagine, that if we don’t have the supply, we need to find it at any cost because otherwise, we risk disappointing our customers, and we want to maintain their trust. So this is a very, very important, strategic initiative for the company to increase the number of SSPs we integrate with. At the same time, since we also have a supply side, we are well-connected to various DSPs. That’s the beauty of our model. Yes, the priority is to maintain our demand coming from Undertone, but they are also working with others, including some of the larger players looking for quality first and second-tier publishers that are part of the Vidazoo network. So, it goes both ways on the SSP side and the DSP side.

I meant acquisitions when I brought that up—I didn’t mean acquire traffic. I meant to acquire other companies, given that you guys have a lot of cash and are looking for M&A opportunities in the market. Would you look at buying an SSP, or to make it work, would you also need to acquire DSP capabilities as well?

That’s a very good question. To be honest, the preference is always to get closer to the customer. In this case, being on the demand side is more valuable since I think it's precious to be close to the customer. Hence, the preference is to focus on the demand side of things. We are not looking at the SSP side; it's become quite commodity-like, and I don’t think we will be able to differentiate ourselves through such acquisitions. This is especially true with recent announcements from some larger DSPs stating they can offer SSP capabilities, effectively reducing costs for the customer. So, to your question, our preference lies in the demand side of the house.

Thank you.

Thank you very much.

Thank you. Our next question comes from the line of Andrew Marok with Raymond James. Andrew, you’re free to talk.

Great. Thanks for taking my questions. And Doron, best of luck in your next chapter. Two questions if I could, please: one on search and one on SORT. What can you tell us about the new search publishers that are coming online with the 29% year-over-year growth? Is there any notable concentration in vertical type of publishers, etc.? And then on SORT, any progress on the monetization plans? Thank you.

Yes. So there’s no notable concentration; they are not coming from any specific vertical. The only commonality is that they all have, without exception, a very loyal customer base. Essentially, the only way for these publishers to monetize their efforts is through search, which is why they’re moving. I suspect they are transitioning from competing search companies to Bing. It is not exclusive to the Bing ecosystem. I suspect they’re working with several search providers, but the fact that they're adding Bing to the mix is an important market signal. Every search they provide us is not a search provided to Bing’s competitors, making this a significant win for Microsoft’s ability to gain market share. As for SORT, we are making headway in terms of SORT as a service; it’s not significant in terms of revenue yet. We are defining it as a three-phase approach. The first phase is that we are using SORT internally on our own operated sites. We have completed that phase and verified the technology. The second phase involves working with outside publishers, and third, we are establishing our business model. I must say that during our discussions with external publishers, we anticipate that instead of cash payments for SORT services, they may offer inventory equivalent to the value in terms of dollars they’re paying us. It’s a win-win situation for both parties, as we can provide them direct demand.

Understood. Thank you.

You’re welcome.

Thank you. Our next question comes from the line of Jeff Martin with Roth. Please proceed with your questions.

Thanks. Hello everyone, good to see you. Doron, I wanted to check in with you on what you’re seeing competitively on the SORT front. You’ve been in the market with it for over a year now. I would imagine there are many competitors trying to develop a similar solution. So, I’m curious about what you’re seeing out there competitively regarding SORT?

Yes, absolutely. The market is in a very interesting situation where everyone is speculating about what Google will do. That’s the big news right now. They seem to be working towards their solution; I think it is expected in 2024 or even later. I truly believe this is not a technology challenge but a business challenge. They have reached a point where they must simulate the day after the pull of cookies and assess the impact on their revenue. I believe they are attempting to find an alternative that will allow them to not suffer financially. I am very skeptical, though, that they can find a solution that protects user privacy while avoiding revenue losses. Many companies are gearing up for this day, building homegrown solutions that market them outwards. SORT is something we developed from the initial line of code with the intention of selling or implementing externally. Yes, we had to undergo a very rigorous process to test SORT internally, but the product was designed for third-party usage and is architecturally set up as a service. I don’t see many similar products on the market, so I don’t view this as a competitive threat. The real question will be what happens when publishers are forced to use this type of solution; right now, it’s a luxury. At this moment, they are free to utilize alternatives.

Great. And then my second question relates to your land and expand strategy. It’s impressive customer growth in the quarter. Does that suggest you could see revenue growth acceleration as we progress throughout the year as those customers expand with you?

Definitely. The interesting part here is that we’ve developed a very efficient forecasting system that allows us to track the progress of a publisher's expansion over the course of the first year, second year, and so on. This gives us great visibility into our revenue growth potential and helps us assess the lifetime value of a publisher. Of course, we need to categorize it by publisher tiers; the larger ones will inherently consume more products, aside from the scale led to higher payments. This model is one of the factors behind our ability to improve visibility beyond just the actual insertion orders we are receiving from agencies and brands.

Great. Thank you, and good luck in your next venture, Doron.

Thank you. Thank you.

Thank you. Our next questions come from the line of Eric Martinuzzi with Lake Street. Please proceed with your questions.

Yes, I wanted to dive in on the video growth within the display revenues. You talked about video growing 26%, but the CTV revenue was only up 12%. What’s – I would’ve thought that CTV would’ve been on the higher growth side of that 26% number.

Yes, I think I answered this question. Perion is focused on margin. While it may seem that CTV is generating higher revenue, there are significant costs involved that impact margins. We’ve reached a point in CTV where prices are decreasing, and margins are tightening—it has become commoditized. In terms of CTV, we’re focusing on live events where we can grow modestly but maintain healthy margins. So it was by design that we are not pursuing the broader CTV market aggressively, even though it may appear easier.

Okay. Thanks for taking my question.

Thank you. There are no further questions at this time. I would now like to hand the call back over to Doron Gerstel for any closing comments.

Guys, thank you very much. As I mentioned, I’ll see you in the next venture. Bye-bye.

Bye-bye.

Bye-bye.

Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.