Perion Network Ltd. (PERI) Q1 2026 Earnings Call Transcript

Hello everybody and welcome to the Perrion Network First Quarter 2026 Earnings Conference Call. Today's conference call is being recorded and an archive of the webcast will be posted on the company's website. The press release detailing the financial results is available on the company's website at www.perrion.com. Before we begin, I'd like to read the following safe arbor 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 20F that may cause actual results, performances or achievements to be materially different and any future results, performances or achievements anticipated or implied by these forward-looking statements. The company does not undertake to update any forward-looking statements to reflect future events or circumstances. As in prior quarters, the results reported today will be analysed both on a gap and on a non-gap measure. Whilst mentioning EBITDA, we will be referring to adjusted EBITDA. We have provided a detailed reconciliation of non-GAAP measures to their comparable GAAP measures in our earnings release, which will be available on our website and has also been filed on Form 6K. Hosting the call today is Tal Jacobson, Perrion's Chief Financial Officer, Chief Executive Officer and Elad Zuberi, Perrion'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 Peleon's earning call for the first quarter of 2026. 2025 was year one for the new Peleon. 2026 focuses on advancing our new technologies and accelerating their adoption among our clients. In the first quarter of 2026, we saw an increase across all our growth engines. Our fastest growing channels, CTV, and digital out-of-home outgrew the market. In retail media adoption, we experienced significant growth that Elad will present. And I'm also happy to share that Outmax, our AI agent technology that was part of the GreenBid's acquisition, is growing rapidly and is becoming a meaningful part of PerianOne. A few important data points from our quarterly numbers. The Perian One product line is seeing an increase of 6% in marketing budgets, which we refer to as spend. This is an encouraging number as we see a faster adoption of our platform and the Outmax AI agent usage among our clients. You can also recognize that both acquisition HiveStack and GreenBids were extremely successful, as both out-of-home and out-max numbers are continuing to grow quarter after quarter. This represents our ability to acquire high-quality companies and integrate them efficiently. Perion One is designed to solve the complexity of the global advertising ecosystem that is both massive and fragmented. Marketers navigate in a universe of screens, platforms, formats, data sets, and buying environments while trying to achieve higher standards of performance. Budgets, signals, and optimizations are siloed by channels, creating a challenging fragmentation that leads to efficiency and performance breakdown. This is the core challenge we've been focused on solving. We are building Perian 1 as an AI-native execution infrastructure to unify the fragmented ecosystem for both advertisers and publishers. Perian 1 enables advertisers to perform highly complex marketing activities. It allows them to make confident decisions faster while continuously optimizing every campaign in real time. With Variant 1, publishers are able to maximize inventory value through smarter demand allocation and yield optimization. By aligning execution across both sides of the ecosystem, demand and supply, Variant 1 improves efficiency, performance, and outcomes end-to-end. Variant 1 is an infrastructure, not a toolset. The most advanced part of Valion One is the Outmax technology, our AI agent which is showing tremendous growth. Outmax's goal is to be the one AI agent for every channel. Whether it's YouTube, Facebook, Instagram, NBC, or Disney+, Outmax is designed to act as an intelligent execution agent that ensures every dollar spent is working at its maximum potential. Outmax removes the guesswork and replaces it with algorithm certainty. It is designed to allocate spent, manage pacing, and optimize outcomes in real time, both inside Perion 1 and on external platforms. We're continuously expanding the channels and platforms that Outmax connects to. This quarter, we announced Outmax for TikTok, which is already showing great results. TikTok is one of the fastest-growing advertising platforms in the world, with 1.6 billion users and ad revenue projected to exceed $50 billion by next year. Outmax for TikTok early results are strong, with Outmax already delivering up to 25% lift in performance on TikTok. This is exactly the lend and expend pattern that we are focusing on, adding new high-growth channels, clear performance advantages, and a global path to allow us to scale across more customers and more platforms. This quarter, we entered into an exclusive partnership with Maxurly Media and MediaMark, deploying Outmax AI agent across Africa. This new partnership unlocks a programmatic market forecasted to reach $6.5 billion by 2029, growing at a 15.3% CAGR. The value this partnership brings is clear. Outmax's AI agent and Perion's programmatic digital out-of-home capabilities, paired with our partner's agency footprint across Africa, create an accelerated distribution for our technologies across the region. This expands Perignon's commercial footprint and creates new revenue channels without adding further expenses to our P&L. The following case studies show how the same execution model delivers for different brands. Bouique Telecom, one of the leading French telcos, deployed Outmax across always-on campaigns. They embedded Outmax into their enterprise marketing operations to continuously control and optimize media execution. The results show 34% lower customer acquisition costs and a 51% reduction in carbon intensity. Buig is already extending Outmax to additional channels, another example of the land and expand model in action. C4 Energy is one of the fastest-growing energy drinks brands in the U.S., with a younger, performance-oriented audience. This makes YouTube a crucial channel for reaching their consumers. C4 Energy turned to Pelion to achieve a greater control across their audience targeting and contextual placement on YouTube, and the results speak for themselves. A skippable view rate of 80% above the benchmark, a 20.7% lift in brand awareness, and a 4.1 lift in brand at recall. Wepner, a clothing brand known for its youthful style and bold statement pieces, ran a multi-channel campaign across Meta and YouTube without Max AI agent, continuously optimizing delivery in real time. Results show how Outmax delivers performance across multiple platforms with multiple KPIs. And finally, Vaseline, a campaign that demonstrates how our advanced real-time data capabilities and our programmatic digital out-of-home can be leveraged to benefit our brands. Vaseline integrated live UV index data directly into its digital out-of-home creative. dynamically presenting exposure risks through a clear visual color-coded system updated in real time. The campaign delivered over 1.65 million impressions, turning everyday commutes into moments of relevant contextual skincare education. This is an example of how Digital Out of Home can offer dynamic, data-driven storytelling that performs. Many of the challenges marketers face are consistent. Earlier this quarter, we partnered with eMarketer on a research study of senior marketers and agencies. The findings reinforce exactly what we have been building towards. 89% of marketers say that creative is crucial for their performance. Nearly half believes that if creative could be optimized in real time, they would unlock 11 to 30% of performance lift. And more than half say creative insights arrive too slowly to act upon. The conclusion is structural. The industry does not have a creative problem or a media problem. It has an execution problem. Insights exist. Signals exist. what is missing is a unified layer that turns those signals into action in real time across channels. This is exactly the gap Perrion 1 was built to close. We at Perrion are committed to continue to evolve. We adjust our processes and our structure whenever we believe they are beneficial for our company's future. With that, I would like to share that our Chief Revenue Officer, Steven Yap, will be transitioning out of his role. We thank him for his partnership during his tenure. As we enter the next phase of our 2026 roadmap, we are pivoting our sales leadership team to ensure we are better positioned to convert our growing pipeline into realized revenue.

With that, I will hand it over to Elad to walk through with the financials thank you Tal and thank you all for joining us on the call today our first quarter results reflect a period of disciplined execution as we are continuing our structural evolution the results for the first quarter came in largely as we expected reflecting the seasonally low quarter in our industry importantly we are seeing a significant increase in spend across our core growth engines, and the adoption of Perrion One continues to build momentum. This demonstrates that the infrastructure we are building is driving measurable value for our customers. This quarter, we continued the strategic building process of Perrion One as an AI-native multi-channel execution infrastructure. Driven by the continued momentum in our growth engines, total Perrion One spend increased 6% year-over-year. Outmax, our proprietary AI agent, is rapidly expanding across customers, regions, and platforms. We recently launched Outmax for TikTok, extending our AI-driven optimization capabilities to one of the fastest growing digital platforms. This has already generated over $1 million in spend during the first quarter. To accelerate our global footprint, we continue to add more collaborations and partnerships. In the first quarter, we launched a strategic reseller initiative in Africa by partnering with MediaMark and McSorley Media to resell Outmax and programmatic digital out-of-home. As part of Perion One's continuous transformation, we will no longer provide a channel revenue breakdown as a primary KPI. This shift reflects our evolution into a truly channel-agnostic platform centered around Outmax, our proprietary advanced AI agent designed to plan, execute, optimize, and measure campaigns across diverse media environments. By moving away from siloed reporting, we are aligning our financial disclosures with our operational strategy, focusing on how our technology delivers integrated value for the advertiser rather than focusing on the performance of individual channels. Instead, it makes much more sense to report our growth engines in terms of spend, and not as revenue or contribution XTAC. Spend represents the total media budget running through our platform. It is the truest leading indicator of our platform's adoption, customer's trust, and long-term scale. And now, to our quarterly results. Revenue for the first quarter was $90.4 million, a 1% increase year-over-year. Total contribution next stock was $39.7 million flat year-over-year with a 44% margin consistent with the same period last year. Adjusted EBITDA for the quarter was $0.5 million compared to $1.8 million in the first quarter of 2025. The decrease was mainly the result of higher go-to-market investments aiming to support our three-year growth plan. We generated cash flow from operations of $6.7 million and adjusted free cash flow of $7 million. During the quarter, we repurchased 2.5 million shares for over $24 million, bringing our net cash position to $293 million as of the end of the quarter. Let's take a look at the momentum of our growth engines through the lens of spend. As advertisers increasingly trust our AI infrastructure to execute their campaigns, we expect more dollars to flow through the Perion One platform. CTV spend grew 68% year-over-year to $18 million, underscoring the strong demand for our performance-driven CTV capabilities. Digital out-of-home spend grew 29% year-over-year to $60.6 million, dollars reflecting our expanding global footprint and our advanced digital out-of-home technology retail media spend increased by 27 percent year-over-year to 36.5 million dollars we continue to unlock commerce related outcomes for top-tier brands despite some market softness especially in the cpg sector it is also important to note that ctv digital out-of-home and retail media have been and consistently outpacing the broader market. These impressive growth rates drove a 6% year-over-year increase in total Perion 1 spend, compensating for the decrease in web. The aggregate impact of the customer's spend shows a growing momentum through this important KPI. In the first quarter of 2026, we achieved a solid 6% increase in Perion 1 spend, while navigating the near-term macro headwinds and cautious advertisers planning cycles. This is a testament of the increasing demand for our solutions and our expected scale as we look towards the second half of the year. Revenue for the first quarter came in at $90.4 million, with advertising solutions revenue at $66.7 million and search at $23.7 million. Contribution X-TAC remained flat year-over-year at $39.7 million. The 44% margin was stable and consistent with last year. While advertising solutions revenue decreased in the first quarter due to the anticipated decline in the web activity, it is important to emphasize that Perion 1 Contribution X-TAC increased by 7% year-over-year, aligned with the spent trajectory. This demonstrates that as we are gradually shifting our business to the Perion One platform, Contribution X stack and spend are becoming the true indicators of our underlining growth. Perion One Contribution X stack continues to be the main profit driver, representing 81% of the total Contribution X stack, up from 75% in the first quarter of 2025. We expect the structural shift to continue, with Perion 1 growing to 85% to 90% of the full year 2026. With respect to our search revenue, as we transition away from the Microsoft Agreement, the margin profile of our search activity is naturally shrinking. As a result, even though search revenue increased year over year by 21%, the related contribution XTAC decreased by 70% as expected. Adjusted EBITDA for the first quarter was half a million dollars compared to $1.8 million in the first quarter of 2025. While we are laser-focused on operational efficiency and disciplined execution, the year-over-year delta was expected. This reflects the incremental expense base from the Greenbit's acquisition in the second quarter of 2025 and additional go-to-market investments to support our three-year growth plan. In addition, during the first quarter of 2026, The headwinds of the U.S. dollar weakness represented $1.4 million impact related to foreign exchange. Excluding this foreign exchange impact, adjusted EBITDA would have been $1.9 million, largely flat year-over-year, despite the additional costs planned for. As we onboard several large strategic agreements, currently in advanced stages, we expect adjusted EBITDA to inflect meaningfully in the second half of the year. This is consistent with a second half-weighted profile of our business similar to last year. On a gap basis, net loss was $10 million or $0.26 per diluted share. This compares with a net loss of $8.3 million or $0.19 per diluted share in the first quarter last year. On a non-gap basis, net income was $4.8 million or $0.11 per diluted share. This compares with $5.4 million or 11 cents per diluted share in the first quarter last year. Net cash provided by operating activities was $6.7 million and adjusted free cash flow was $7 million. The cash generative quality of our business model and our disciplined CapEx investments practices ensure that our internal operations are streamlined to support our growth. We ended the first quarter with $293 million in cash, cash equivalents, short-term bank deposits, and marketable securities on our balance sheet. While we continue to generate positive cash flow from operations, the $20 million reduction from year-end is driven by $24.1 million returning cash to our investors in a form of share repurchases. This strong liquidity profile gives us the financial flexibility to pursue organic investments, M&A opportunities, and continued shareholders' return. Our capital allocation priorities remain highly disciplined, focused on creating long-term value. During the first quarter, we repurchased 2.5 million shares for a total of $24.1 million. Under our current authorized program, we have now repurchased a cumulative total of 15.3 million shares for $142.2 million. Since the program's initiation, we have acquired these shares at an average price of $9.27 per share. This is notably lower than our average stock price at the last 30 days. By doing so, we have already generated immediate, tangible value for our shareholders. Buying back our own stock at current valuation levels, alongside disciplined organic and inorganic investments, is the most effective use of our excess cash. It reflects our confidence in Perion's long-term intrinsic value. Despite the expected macro headwinds for the second quarter, given the momentum we see building in our pipeline for the back half of the year, particularly the several large strategic agreements that are in advanced stages, we are reiterating our full year 2026 guidance. To conclude, Perion entered 2026 with a strong financial foundation, a proven platform strategy, highly disciplined operations, and a set of growth engines that are constantly outpacing their markets. The infrastructure is in place, the pipeline is building continuously, and we are prioritizing sustainable, profitable growth and long-term value creation for our shareholders. With that, I will turn the call back to the operator to open the line for questions. Thank you.

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

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

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

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

Thanks, Andrew. So in terms of the headings that we are seeing, we see that the inflation in the oil prices and all of the tension in the Middle East caused some uncertainty in terms of the budget spends especially I would say around the CPG we see and slightly around O2. In addition to that, we are continuing to see the slow or say short planning cycles of the advertisers in terms of their batch spend. So this is what we see currently in towards Q2. but it is important to say that we always start to see some more momentum growing in our pipeline towards the second half of the year now of course we do not know yet the timing of when all of those headwinds will really be over we do not know to anticipate but we do see more and more strength into our pipeline moving forward, especially around Outmax, the adoption of more and more customers to this solution. And of course we're taking all of those consideration when we are building the guidance towards the rest of the year.

Thank you, appreciate the detail.

Thank you. Our next question comes from Jason Healthsteam at Offenheimer.

Jason, please unmute your line by pressing star six and ask your question um hey then can you hear me yes thank you yeah um good morning so first your comment just about um you know tracking total spend which we agree with are you planning to break down total spend by between um advertising and search or that was just a comment of like you know just one number for that and then i've got some follow-ups okay so in terms of the spend And our main focus, and today's focus, as you know, is around parent one.

So definitely for parent one, we'll continue to give the spend levels for parent one and to give the trajectory of how much we are growing year over year, of course. And also, as you saw, we started to provide a spend also for our growth engines. How does CTV, initial out-of-home, contribute in terms of spend? how exactly Outnext is performing in terms of spend. And this is how we are managing our day-to-day operation in the business as well. So we have tied this one together. In search, as much as it's not right now our main strategic focus of the business, it's still stabilized and we are providing, obviously, most of the trajectory moving forward in terms of contribution next tax, of course, to give it the full profitability of the business.

And I think search was better than expected in the quarter. Any thoughts why that happened?

Yes. So we saw a minor increase in search spend, say, year over year. This is contributing to 21% in revenue, the search, year over year. But if you're looking at it from a contribution next step, which is more importantly, is we are shifting out from Microsoft and focusing on other search providers. As expected, the margins are lower. The contribution next step from search activity was actually reduced year over year. And I have to say it was exactly as we built into our guidance this year. So despite seeing the contribution next step flat year over year, actually what you are seeing is Ethereum one is going to be increased of 7% year over year in the contribution next one, next act. And search is actually declining, but ended up exactly as we expected at the beginning of the year.

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

Okay. So I will touch this in three different points. I would say the first, we do see tangible pipeline increasing already towards the second half of the year, coming from adoption of Almex. As we saw, by the way, in the previous quarter, if you remember the land and expand model, it takes time to ramp, but we see in the direction right now, and we see the adoption towards the second half. In addition to that, and I discussed it a bit in my script, we have a few strategic agreements that are expected to be closed very soon and to onboard already in the next few weeks in Q2. And we will start to see the RAM already in the second half of the year. So those, I would say, two initiatives are tangible things that we see and we are building into the pipeline. I would add also that in terms of the EBITDA, that will have a growth, but also from expense perspective, we are investing right now at the right place that will give us this growth to H2 savings we did last year, both from growth perspective and also from EBITDA perspective on the efficiency level. As we saw last year, the second half of the year is much more, we are much more heavy weighted towards the second half and it's very much important right now to continue our investment in terms of the growth but also in terms of the efficiency that we'll be able to see the benefit going into the second half of the year.

Okay, thank you.

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

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

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

Got it. Thank you. And then just on the launch of Outmax to African Markets, I believe it's currently available in South Africa. What is the timing for a broader continental rollout look like? And are there any major investments you still need to make to support these efforts? Or is it just a matter of execution?

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

Thank you. Very helpful.

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

So the advertising growth was negative four. Total growth for net tech was zero. And most of the industry is reported now. I think you're last. And then really the benchmark was 10 to 12. So could you talk about how you're planning to close the gap to the rest of the ad tech industry growth rates? And then secondly, AI. Could you talk about what you're doing with generative AI internally to cut costs and then externally to increase sales velocity? Not sales velocity, but like new product velocity and how you think it helps you reattain growth in the advertising part of your business.

Thank you, Laura. So I will take the first question and then I'll hand over to Charles. So in terms of the advertising solution revenue, the reason for the decrease that we see right now in the advertising solution revenue line is mainly related to product mix. From an accounting perspective, there are certain products that are recognized on a net basis, and some of them are recognized on a gross basis. That's why we, and by the way, as we are leaning more and moving more towards parent one solution, we'll see more and more revenue recognized on a net basis. That's why we started to focus more and more on the contribution XTAC and the spend, because as you see in this quarter, those are really reflecting the real trajectory of the business as the leading indicator for how we are growing. So the spend of fair one increased 7%, the 6%, I'm sorry, the contribution XTAC increased by 7%. and so i would say the the the gap um that you're referring to from from the peers uh is not that different we do uh we are i would say investing more as i said towards the go-to-market and we change some of our sales strategies as discussed and we're building the pipeline um and in our models we are seeing much more increased growth, more aligned by the way with the plan that we provided also towards the 2028 three-year plans that we provided.

To stick to the AI As for AI we have two layers of AI. Obviously Perian 1 and Outmax is fully AI driven and the new products that we're about to launch are fully agentic, but on the internal parts, you know, everything is becoming AI-driven from our R&D. It's fully deployed with code cloud, and we do see accelerated development and accelerated launches of features. And internally, like I said before, one other example is we now have an AI agent for an SDR, it's all part of the 2028 plan that we announced three months ago. We believe we're going to start seeing even more meaningful efficiency in H2 because we do deploy pretty fast our AI solution mainly for the efficiency part.

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

Yeah, absolutely. I think it's a great question. And I actually thought it was, you know, kind of brilliant on their behalf. Now, as you probably remember, we said that two years ago, that LLMs are going to take web is not going to be the future. Open web is not going to be the future. This is why two years ago, we started moving from open web in towards out of home, which is a channel that is not going to get affected by LLMs and closed gardens. So Outmax works on YouTube, Meta, TikTok, things that are not getting affected by those LLMs. But in parallel, our Outmax AI team, the development team are already researching how do we employ deploy Outmax on platforms such as ChGPT and Google Shopping ads. So that's already in the works. It requires a bit more development, but we're focusing on the marketing budgets, not on the channels themselves. And as I said in the past, we want to be channel agnostic. Wherever advertisers would want to advertise, we're going to be there. Now, if you look at the new product of Google, the major parts are basically Google shopping ads. So it's not fully organic. Advertisers would still need to go through that. And that's why our Outmax team are investigating how do we get Outmax to deploy also on Google shopping ads. That's going to take a bit of time, but we're totally focusing on it.

Super helpful. Thank you. Thank you. Our next question today comes from Jason Cryer at Craig Hallam Capital. Jason, you may now unmute your line and ask your question. Thank you.

Thank you. Just one question for me. I wanted to talk about the customer pipeline. You've talked a few times just about your confidence in the second half of the year. Can you give color on how the RFP processes has evolved over the last couple of quarters, maybe how the different conversations have changed as Perrion won and as Outmax have evolved. Thanks.

Thank you for the question. So I think two moving parts. The RFPs, we see that, and we saw that last year as well, that advertisers do not plan a year ahead. It's three months to six months top ahead. And that didn't change. It's still the same pacing. The thing that we have a bit different this year is the reseller agreements. So we launched two resellers in Africa. We have a few more agreements, which we consider strategic. We do believe that they're going to start ramping up in H2, which give us a bit more confidence about our pacing and we do work on other things that you know we're going to announce once once they're ready but on an rfp to rfp it's the same kind of pacing that we saw last year that didn't change it's mainly the more strategic parts like like the things we we just announced thank you our next question comes from eric martinuzzi at lake street

Eric, you may now unmute your line and ask your question.

Yeah, can you hear me?

We can hear you, thank you.

Okay, thanks. So the three-year plan anticipates this. You talk about the Platform 1 contribution, XTAC, at about a 20% CAGR. And just based on kind of the early days, typically CAGRs in the early years are greater, and then they slow down in the later years. And yet we're in what I think I heard you was 6% or I guess 7% contribution ex-tech. Was that where we were for Q1?

Yes, 7%. And remember that our business, like most ethnic businesses, is extremely seasonal. So Q1 is the weakest out of the quarters, typically.

And we do see a 7% increase. as you go through as you go oh i'm just wondering you know at a certain point we've actually got to get better than 20 i'm just trying to size up this three-year progression right if we're starting out in kind of a mid to high single digits here at what point should we anticipate you know is are you guys already seeing hey this is a slam dunk we're already based on the pipeline we're going to see 20% plus in the back half of 2026.

So to answer your question, I will divide my answer for a second for two. First of all, when you're looking at 2028, we discussed right out of the game that we'll have to bring some investment in the early stages to ramp it up. And the reason why we showed the lending expense, because it takes time to get to the customers we started if you remember the previous customer with that we saw the first year was only 50k in terms of spend second year it was ramped up to 4.5 million and the third year was more than 20 million uh dollars in spend in different channels etc and so this is very much also how what you are thinking about the 2028 model with the terms of the of the nano extent so it takes time to ramp up now when i'm talking specifically about 2026 we do expect to see the second half of the year to be um i would say in uh in uh in uh double digit growth and aiming towards the 20 already towards the uh the fourth board of the year so we will start seeing this right Sorry, could you repeat that, Les? I said it for 2026. We'll start, of course, to see the revenue along the year. And I believe that already in Q4, we'll start to see the double-digit growth aiming towards 20% already in Q4 in this year.

Okay. And then the contribution XTAC margin, was that totally at the hand? It was below what I was anticipating. Another way to put it is, hey, it was an increased tax. Is that pretty much all search-related in your mind?

It's very much search-related. It starts becoming, I would say, a smaller part of our business. And Perion 1 will increase its part of the overall contribution. We'll see the margin goes up, as I discussed earlier, about the net recognition and etc and so definitely is something that we see we need to remember the search has lower seasonality than all of the rest of our business so in uh in q1 you'll see that the search contribution exact was roughly 19 90 of the business or 18 of the overall contribution next time um so and if if you remember last quarter we said we said that the overall parent one will be 85 to 90 so along the year we'll see the um the seasonality much more rapid in uh with respect to parent one and the margin will increase as well

okay got it thanks for taking my questions thank you our final question today comes from Jeff Martin at Roth Capital Partners. Jeff, you may now unmute your line and ask your question.

I appreciate it. You may have mentioned in your prepared remarks about onboarding agreements will drive a meaningful EBITDA inflection.

Just curious if you could elaborate on what those agreements are and the timing in terms of the EBITDA inflection. so in terms of this agreement there are a few strategic agreements that we start working with them over the last year of course they are taking time but we are really right now at the final stages and we start to see more of this of their contribution is to start on board to our platform it does take time, we believe that we're going to see some ramp up but relatively to Perion in terms of the spend and then of course I cannot really speak about what those names in terms of confidentiality but they are very heavy on the spend of how much they are running in different markets and from the test that we did with them and we saw the network and what is the potential and how much we are believing that the ramp up of their customers will be etc we see very good traction towards second half of the year and it should start of course building even higher going forward to next year this is obviously some of the

high volume agreements that we have discussed that we expect to sign during this year great and then my second question is and I know this is not the core growth focus of the business, it's not a growth focus at all, but the web advertising, you go back, you know, six to nine months, commentary was that this business was flattening out for you. And it sounds like in Q1, it was more pressure on growth, perhaps and relative to your initial guidance for 2026 how much of a headwind is any you know negative shift in web uh create a hurdle for hitting your your full year guidance thanks so we don't we do not see the web uh shift is actually if you look at the at the revenue you see the the minus four percent obviously it's come mostly from from where but we need to remember that web is uh was relatively low margin and we at the beginning of 2025 we we

took proactive action to close even some of the the web solution that we are providing if you look at the at the contribution next stack level you will see that the ctv and out-of-home and out-of-home, of course, are actually compensated on the web shrinking. So it grew year over year. I believe that this is coming from the overall market and budget that are shifting away from open web, as we have discussed, moving into more closed gardens and digital out-of-home and CTV, and also, of course, I believe to the LLMs in the next future. So overall, as we are seeing more revenue flowing for the parent one, we are becoming more channel agnostic, and we are not really prioritizing or doing the performance based on certain channels and more focusing on the ROI for the advertising. So overall, we are not expecting this to change where we are at the guidance right now.

Thank you.

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

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

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