Hello, everybody, and welcome to the Perion Network Q2 2025 Earnings Conference Call. Today's conference is being recorded, and an archive of the webcast will be posted on the company website. The press release detailing the financial results is available on the company's website at www.perion.com. Before we begin, I'd like to read the following safe harbor statement. Today's discussion includes forward-looking statements. These statements reflect the company's current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including those discussed under the heading Risk Factors and elsewhere in the company's annual report on Form 20-F that may cause actual results, performance or achievements to be materially different from 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. 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 also been filed on Form 6-K. Hosting the call today are Tal Jacobson, Perion's Chief Executive Officer; and Elad Tzubery, Perion's Chief Financial Officer. I would now like to turn the call over to Tal Jacobson. Please go ahead.

Good morning, and thank you for joining us on Perion's earnings call for the second quarter of 2025. We continue to focus on our vision, a future where CMOs and their teams are powered by a centralized platform built for their needs, contrary to CROs who rely on Salesforce, COOs on monday.com and CTOs on Jira. CMOs, who drive nearly $1 trillion annually through the pipes of digital advertising, lack a centralized platform that supports their needs. As of now, a comprehensive centralized platform tailored for marketer needs has not emerged. This creates a clear gap in the market. Perion One is a platform that connects media with measurable business outcomes, a channel-neutral platform that brings together creative, data, and AI. That's the role we want Perion One to play in the direction we're steadily moving towards. With every feature we develop, every channel we expand into, and every new advertiser we onboard, we're taking a clear step towards becoming the CMO platform of choice. The strategic shift into Perion One strategy did not happen overnight. We've been planning it since late 2023. We believe this shift towards becoming the CMO centralized platform requires more than one product or one quarter. It requires long-term deliberate transformation, and that's exactly what we have been building at Perion. Over the past 18 months, we've been laying the foundation, reorganizing our structure, unifying our technologies, and aligning our go-to-market strategy with our long-term platform vision. This is both a product evolution and a company-wide transformation. In December 2023, we acquired Hivestack, an advanced multifunctional digital advertising platform that we knew would evolve into the Perion One platform. This also allowed us to enter the exciting world of the global digital out-of-home space that shows great growth. In addition, we appointed key global executives to lead our new platform strategy. At the beginning of 2025, we announced Perion One strategy and focus on execution. Our strategy is about bringing together all of our technologies and brands under one unified platform that serves the new needs of the digital advertising world in the AI era. We acquired Greenbids, an AI-first company to optimize and improve walled garden performance. By that, we extended our TAM and offering to our customers and initiated a go-to-market transformation focused on vertical solutions and enterprise clients. Looking ahead to 2026 and beyond, we plan to scale this platform so that Perion One will orchestrate planning, activation, and measurement across all major digital channels. We aim to transition towards a platform-led company, expanding recurring high-margin revenue streams powered by AI-driven insights, self-service capabilities, and creative automation. We aim to improve speed and efficiency while deepening global adoption across brands, agencies, and retailers, unlocking long-term growth and margin leverage. Each step we take now brings us closer to our vision, a single intelligent platform that delivers better performance, faster decisions, and long-term value for marketers and shareholders. While this is our long-term journey, we're already seeing the impact of this transformation in our execution, innovation, and progress we saw this quarter. Let's highlight a few of our most meaningful achievements this quarter. Our non-search revenue, or as we call it, advertising solutions is up year-over-year for the first time since Q3 2023. Our retail media, digital out-of-home, and web are up year-over-year as well. And as for our CTV, which is slightly down, we remain optimistic about our annual growth in this channel, which brings us to the launch of our new performance CTV solution, a new native feature within Perion One. While Perion was always focused on high-impact CTV ads, now with our performance CTV feature, we are integrating our high-impact technology with a new performance algorithm and measurement capabilities. With this new feature, we focus our activation not only on viewability, but also on actual outcomes. It's been three months since we acquired Greenbids, and our business and tech integrations are fully on track. It is proving to be a strategic fit, and it's already generating new synergies. We are excited by the capabilities that Greenbids added to our AI technology under the Perion One suite of solutions. We expanded our programmatic digital out-of-home footprint in APAC with new partnerships in Korea, expanding our reach in a $21 billion market. We are also expanding our reach in EMEA with two new digital out-of-home partnerships in Germany and Italy. All our achievements are not isolated wins. They are milestones coming to life in our journey towards our goal to become a platform of choice for marketers. One of the most exciting milestones this quarter is the launch of our new performance CTV solution. It brings the precision of performance marketing to connected TV, one of the fastest-growing, most premium video channels. Our performance CTV transforms CTV ads into full funnel ROI-focused channel activation. By focusing campaigns on real KPIs and return on ad spend, we're turning what was traditionally an awareness medium into a measurable performance engine. It gives us access to new outcome-driven budgets from advertisers who were previously underserved, especially mid-market brands and retailers looking for high-intent accountable inventory. It strengthened the Perion One value proposition and it seamlessly integrates with our web, digital out-of-home algo, and social offerings. This enables unified activation, cross-channel attribution, and platform-wide insights. We believe this new solution positions Perion to capture a greater share in a market projected to exceed $36 billion of ad spend in the U.S. by 2026 as advertisers demand greater accountability from their video investments. I'm proud to share our new performance CTV clip to showcase this new feature within the Perion One platform. None of this progress from launching our new CTV to scaling the Perion One platform would be possible without the world-class leadership team behind it. What you see here is a group of highly experienced executives with deep roots in advertising, technology, and operations. Each one of them brings expertise from some of the most respected companies in the world. This team has been instrumental in aligning our strategy, accelerating innovation, and driving disciplined execution across every part of our business. I'm pleased to welcome Anat Paran, who recently joined us as Chief Operating Officer to streamline our operations and accelerate our efficiencies as we plan for growth. I'd like to take a moment to thank Maoz Sigron for his incredible contribution to Perion during his nearly eight years as our COO and CFO. Maoz has decided to move on, and we're grateful for the impact he's had. He played a key role in transforming Perion into a platform company, and he was truly a positive force throughout our journey. Thank you, Maoz. You will be greatly missed at Perion. Anat Paran brings a wealth of operational and organizational leadership, and she is already helping us strengthen the infrastructure needed to scale Perion One globally. The strength of this team and the culture we're building together is one of our greatest long-term advantages. With the right strategy in place, strong technology, and an experienced team driving it forward, what does it all mean from an investor's perspective? What makes Perion such a compelling investment opportunity? We operate in a high-growth industry with high-growth verticals and channels, CTV, digital out-of-home, and retail media. At our core, we're a tech company with a proven innovation culture. And for the past ten years, we have delivered positive annual adjusted EBITDA and operating cash flow. We have an experienced global management team, and we're building a platform designed for an AI-first world. We feel confident in our ability to execute and drive long-term shareholder value as Perion is uniquely positioned to lead the next chapter of digital advertising, a chapter in which performance is the product and Perion One is the platform. With that, I'll turn it over to our CFO, Elad Tzubery, to walk you through our financial results for this quarter.

Thank you, Tal, and hello, everyone. Our second quarter results mark another important step forward in Perion's strategic transformation. It reflects strong operational execution, a disciplined cost structure, and increasing momentum across our core businesses. Our Advertising Solutions business returned to year-over-year growth for the first time since the third quarter of 2023 earlier than we anticipated. This was driven by healthy performance across digital out-of-home, retail media, and web. This quarter, we also delivered a robust free cash flow, reinforcing the cash-generative nature of our business model. Perion's main growth engines continue to demonstrate strength, supported by our strategic partnership and access to high-quality supply. Digital out-of-home has continued its strong growth trajectory, recording a 35% year-over-year growth, and we continue to expand our global programmatic digital out-of-home presence through strategic partnerships. Despite a 5% year-over-year decline in CTV, going forward, we still see CTV as one of our growth engines. This decline is mostly attributed to CTV budget shifting to the second half of the year. We continue to see a healthy demand for our CTV solutions that now also include performance CTV as presented by Tal. Our Retail Media vertical continues to gain traction, generating $22.3 million in the second quarter that represents a 27% year-over-year increase. For the full year, we continue to expect above-market growth across our growth engines, including CTV, digital out-of-home, and retail media. Three months ago, we announced the acquisition of Greenbids, a cutting-edge AI platform that delivers custom algorithms across walled gardens and major DSP platforms. Since then, we have been focusing on integrating Greenbids into Perion, aiming to maximize and accelerate the potential synergies we identified pre-acquisition. So far, I can share that we are very pleased with the progress we've made. We are already benefiting from both tangible synergies and a positive market reaction that are reflected in early wins for the Perion Algo solution from both existing and new customers. As of today, we already booked more than $1 million of Perion Algo deals from existing Perion customers, and our healthy new business pipeline is growing faster than we initially expected. Our quarterly and year-to-date performance gives us the confidence to reiterate our full year outlook that was raised last quarter in May. With that, let's dive into the numbers. Revenue for the second quarter was $103 million, marked by an 8% year-over-year increase in advertising solutions revenue. Contribution ex-TAC margin was 46%, remaining stable year-over-year. Adjusted EBITDA was $7.1 million, resulting in a 7% adjusted EBITDA margin and a 15% ex-TAC margin. Non-GAAP net income was $12 million, resulting in non-GAAP diluted earnings per share of $0.26. Importantly, we generated $21.3 million in operating cash flow this quarter. This reflects the strength of our business model and our ability to convert earnings into cash. Looking at our revenue mix, Digital out-of-home increased by 35% year-over-year, reaching 17% of total revenue, up from 12% last year. CTV declined by 5% year-over-year, representing 9% of revenue, the same as last year. The decline was primarily due to shifts in advertisers' budget to the second half of the year. This is another example of us being channel neutral and focusing on advertisers' budgets rather than specific channels such as CTV. Having said that, we remain confident that our CTV channel will deliver strong results on an annual basis as we are expecting to outpace the CTV market growth. Web revenue increased by 5% year-over-year, representing 52% of total revenue compared to 47% in the same quarter of last year. Search revenue for the quarter was $22.4 million, representing 22% of total revenue compared to 32% in the same quarter of last year. Revenue from advertising solutions grew by 8.3% year-over-year, accounting for 78% of total revenue. This marks the first positive year-over-year growth since the third quarter of 2023, ending a streak of six consecutive quarters of decline. Search revenue in the second quarter was $22.4 million, accounting for 22% of total revenue. This shows a trend of stability over the past four quarters. Looking ahead, we expect this trend to continue, generating roughly similar revenue levels per quarter. In the second quarter of 2025, the contribution, excluding traffic acquisition cost margin was 46%. This is similar to the second quarter margin of last year. Year-to-date, we have benefited from the product mix that is centered around more profitable solutions. Moving forward this year, we expect to see similar levels of contribution ex-TAC margins. Adjusted EBITDA for the second quarter was $7.1 million, representing 15% of contribution ex-TAC. As we noted last quarter, we are actively taking steps to optimize our cost structure to better align with our unified operational structure. As we continue to execute on our cost efficiency initiatives, we expect the second half of 2025 to show continued margin expansion. On a GAAP basis, our second quarter net loss was $3.5 million or $0.08 per diluted share. This compares with a net loss of $6.2 million or $0.13 per diluted share in the same quarter last year. On a non-GAAP basis, net income was $12 million compared to $13.4 million in the second quarter of 2024. Despite this income decrease, the earnings per share remained stable at $0.26 per diluted share. This is a direct result of our share buyback plan reflected in a reduced number of outstanding shares. In the second quarter of 2025, cash generated from operating activities was $21.3 million, and our adjusted free cash flow was $20.7 million. As we mentioned last quarter, our cash performance in the second quarter benefited from the $8 million of collections that shifted from March to April. Yet this highlights our strategic focus on profitability and our ability to generate positive cash flow. We continue to expect a strong cash flow conversion rate on an annual basis. As of June 30, our balance sheet includes $318.5 million in cash, cash equivalents, short-term bank deposits, and marketable securities. During the quarter, we used $26.6 million for the Greenbids acquisition and $33.4 million for share repurchase under our buyback plan. These were offset by $21.3 million in cash provided by operating activities. During the quarter, we continued to execute our share buyback program, repurchasing a total of 3.6 million shares for a total amount of $33.4 million. This brings our year-to-date accumulated share repurchase spend to $86.7 million. These actions further reinforce our confidence in Perion's long-term value proposition. Our strong cash balance provides the financial flexibility to execute on both organic and inorganic growth opportunities while also supporting capital returns to shareholders. We remain disciplined in our approach and focused on maximizing shareholder value. Turning to our full year 2025 outlook. Our performance in the first half of 2025, combined with the momentum heading into the second half of the year, gives us the confidence to reaffirm our guidance. For the full year, we still expect revenue in the range of $430 million to $450 million and adjusted EBITDA in the range of $44 million to $46 million. To conclude, we are pleased with our second quarter results and the positive business momentum that we have built. We believe we have considerable opportunities to expand both our top and bottom lines in the second half of 2025 and beyond. We are confident that this marks the beginning of our return to a year-over-year growth trajectory. With that, I will now turn it back to the operator to open the line for questions. Thank you.

Our first question comes from Eric Martinuzzi with Lake Street.

Yes. Congratulations on the good results for the second quarter. I wanted to ask a question regarding kind of the CTV. I was a little bit surprised by the 5% decline in CTV. You attributed that to kind of a budget shift to the second half of the year. Do you feel like this was a macro industry-wide phenomenon or that it was just particular to the advertisers and agencies with which Perion works?

Thank you, Eric. We don't think it's an actual issue of the industry or within Perion. As you know, we've announced the Perion One strategy, which is focused on CMOs and on outcomes of marketing budgets. And within that, we did see in Q2, people are shifting towards other formats, which tend to perform better than CTV. But we also saw that the CTV budgets are getting shifted towards H2. Now again, as we focus on CMOs, we're channel agnostic, right? We're not pushing customers towards specific channels. We're pushing customers towards what works best for them because at the end of the day, we're after the budgets, not after the channels. And we want to make sure that our customers are getting the best results. So we can expect fluctuations between channels, but our eyes are always on customers and how much more budgets are we getting, and that's the major focus for us.

Okay. My second question is yes, go ahead.

Sorry, I just want to say that within that, we obviously launched the performance CTV solution now because we know that everybody is focusing on performance and CTV has to also come with performance metrics. So that should also help the CTV numbers in H2 and onwards.

Okay. You mentioned earlier in the year that marketers were running shorter campaigns due to uncertainty in the economy related to tariff issues. Have you noticed any change in the length of campaigns among marketers?

No, we haven't seen any major changes. I think we're not seeing any concerns with regards to tariffs or any of those things. People are still continuing business as usual. So we haven't seen anything unusual.

Our next question comes from Jason Helfstein with Oppenheimer.

A few questions. So continuing with the CTV question, why are you confident CTV growth will accelerate in the back half? Question number one. Number two, just broadly, like is the sales organization rightsized for Perion One? And should we expect sales headcount growth in the back half? And then just broadly, how are you thinking about the use of cash over the next 6 months? Should we expect any meaningful M&A, some kind of buyback or just be conservative with the cash?

Thank you, Jason. I'll begin by addressing CTV. We are not worried about the decrease we experienced in CTV during the second quarter as we anticipate budgets shifting towards the second half of the year. There is robust demand, and we already see a pipeline increase for Q3 and Q4. Importantly, on an annual basis, we expect to exceed the market growth in 2025, with eMarketer projecting about 13% CTV growth for this year. We believe our growth will be over 20%, which gives us confidence in our CTV trajectory for this year. Additionally, as Tal mentioned, we view ourselves as channel neutral. In Q2, we did notice some budget reallocations from CTV to other channels due to the varying needs of CMOs. Regarding sales headcount, looking ahead to the second half and into 2026, part of the strategy for Perion One was to equip agencies with a white-label version of the platform. This enables us to expand sales capacity without constantly increasing the number of salespeople and allows for greater efficiency in our sales processes. We anticipate improvements in our EBITDA margin and overall operational efficiency, including in sales operations. As Tal noted, we expect to gain market share at a faster pace moving into 2026 and 2027. While we do plan to enhance our sales team, we are also focused on maintaining efficiency, which means the scale of headcount growth will not directly correlate with revenue increases. As for capital use in the second half, we will continue our buyback program while also engaging in M&A activities. Tal will elaborate on the M&A aspect shortly. We are continuously reassessing our capital allocation to balance investments in organic growth with our strategies for increasing market share. We are looking at M&A opportunities to boost growth rates as well. Additionally, returning capital to shareholders is a priority that we consistently evaluate for the right balance. We currently have $38 million left in our buyback program, which we expect to fully utilize by year-end. We aim to wrap this up as soon as possible and will evaluate further allocations afterward. As I mentioned, we are actively seeking to balance these three considerations. Tal, would you like to share your thoughts on M&A?

Yes. I completely agree with what Elad mentioned. Regarding our headcount, as we advance with Perion One, we are automating many processes and transitioning many of our features to a self-service model. We believe that as we move forward, our efficiency will improve. We are positioning the company to increase sales and revenue without necessarily increasing headcount. Concerning capital allocation, we still have a significant amount of funds available for the buyback, and we aim to complete that as soon as we can. We are also looking at other M&A opportunities and are actively considering how to deploy the remaining capital, which is currently in progress. Jason, do you have anything to add?

No, thank you.

Next question comes from Andrew Marok with Raymond James.

I have two on two different topics, so maybe it makes sense to take them one at a time. First, with the web revenue increasing 5% year-over-year, a pretty good result given that we've heard concerns around AI search impacts on publisher traffic. I guess how do you see the impact of that AI search playing out for your web business, given it's still the biggest part of your advertising segment?

So you're asking how do we see web and search revenue going forward?

No. So given AI search's impacts on publisher traffic, so on the web formats, how do you see that web business playing out and the potential risks from AI search?

Yes, that's an important question. I believe that web search and websites may not continue to grow. However, as we focus on marketers and their budgets, I anticipate that human behavior could shift. People might rely less on web search and fewer websites, yet marketers will remain keen on finding audiences and allocating their budgets. We're adaptable, so if there's a movement towards TikTok, we'll embrace that. If attention shifts to Meta or YouTube, we'll be present there as well. Our primary focus is on customers rather than specific channels. We aim to increase customer spending with us by delivering the outcomes they need. In the future, we may observe a decline in search and web usage over the next few years, but we can also expect growth in other channels. As long as we collaborate closely with advertisers and direct their media investments towards achieving results, I believe we are heading in the right direction.

Great. I appreciate that. Regarding the performance TV business, I believe you mentioned in your remarks and slide deck that you're targeting mid-market customers. How does this relate to the firms already in the market focusing on the SMB segment? Is this something you plan to pursue directly, or is there a customer segmentation issue that allows both of you to coexist and target different potential marketers?

Absolutely. So that's a great question. As of now, we do not plan to do a self-serve feature for this for the middle market or local markets. We're continuing to attract holding companies, independent agencies, and CMOs on a bigger scale, but also the middle market, wherever we can actually deploy their creative through our systems. As I said a few months ago, I think as we progress with Perion One, we're going to have more and more self-serve features, and that's where we're going to start looking at local markets and small businesses, but not for the next at least 1.5 years. For now, we're just focusing on providing more outcome-driven results or campaigns versus brand awareness. That's the major thing.

Our next question comes from Laura Martin with Needham.

I'll ask two questions. First, can you explain why the cost of revenue is increasing so quickly? Secondly, could you provide an update on how you are integrating Gen AI tools to automate your Perion One products?

We didn't hear the first question. So if you can repeat the first one.

Sure. Just the cost of revenue, I think it rose 15%, while your net revenue itself fell 4%. So I'm just wondering why the increase in cost of revenue.

In terms of the cost of revenue, our retail segment is on the rise. As we engage more with retailers, we are also providing them with additional analyses and reports. It's important to highlight that our hosting services play a role here as well. This year, we are focusing on improving business efficiency, particularly in automation, which we plan to enhance moving forward. I believe that by the second half of the year, particularly in the third and fourth quarters, we'll start to see an increase in the cost of revenue as a percentage of total revenue. What we are witnessing now is a shift in the business, leaning more towards retailers and advertising solutions.

Yes. So Gen AI, we're deploying, as you saw, we have Anat Paran, which is our new Chief Operating Officer, and her first job is to see how can we streamline our entire operation with Gen AI. This goes through our entire company from HR to use more Gen AI to answer employees' questions to actually deploying the campaigns themselves through Gen AI. We are focusing on streamlining our entire company with Gen AI for the operations part. So we can streamline our growth without increasing our headcount as we grow. Does that answer your question?

Yes, it definitely does.

Our next question comes from Jeff Martin with ROTH.

I wondered if you could comment on any noticeable shifts in trends on digital out-of-home that's obviously your biggest strength at this point from a growth perspective. You mentioned some geographic expansion. Is that mainly focused on digital out-of-home? And how significant do you see that geographic expansion contributing over the next 6 to 18 months? Thanks.

Yes. Thank you. So yes, the new partnerships that we've announced are all through digital out-of-home. We're seeing digital out-of-home as our foot in the door in specific markets. But once we're there, we're already training our sales team on the ground to start selling our Perion Algo, which is the Greenbids that we bought to start pushing to Perion Algo in those countries. So we're seeing a combination. And we're starting to see a lot of cross-pollination of our products. We're starting to see digital out-of-home together with CTV campaigns, digital out-of-home together with Perion Algo. So when we have a feature that is unique for us, which is the out-of-home part, it gives us the ability to get into an agency in a smoother way because we don't have a lot of competition. And once we're there, we're actually presenting our entire suite of solutions, and then we're starting to create those cross-selling opportunities. So our out-of-home is mainly a strategy of expansion and then we do the cross-selling and the synergies. Does that answer your question? Anything else?

As there are no further questions, I shall now pass to Tal Jacobson for closing remarks.

Thank you, everyone, for joining us on our earnings of Q2. We hope to see you together in our next earnings when we report our progress on our strategy and business. Thank you.