Conference Transcript - PERI 2025-08-12

Maria Rief, Analyst — Canaccord Genuity

Good morning, everyone, and welcome to the first session of the day. I'm Maria Rief, Internet Analyst here at Canaccord Genuity, and I'm joined today by my colleague, Matt Weber, and it's our pleasure to introduce Tal Jacobson, our parents' CEO. Tal, thank you so much for joining us today.

Tal Jacobson, CEO

Thank you for having me.

Maria Rief, Analyst — Canaccord Genuity

Maybe just to start, your company went through quite a transformation over the past several quarters. maybe talk to us about your platform sort of high-level how it has evolved and how are you positioned today in the broader digital advertising ecosystem yeah

Tal Jacobson, CEO

absolutely so as you said our company went through a big transformation up until now I've been with the company for seven years now until now we were focusing in advertising on technology for managing inventory for the supply side and now we're shifting strongly into the demand side. So this happened for one major reason. We see that you know even though digital marketing is there's a trillion dollar going through the pipes of digital marketing it became impossible for people that are running that CMOs to actually run and manage those budgets because it's too fragmented so our company basically creates a unified centralized platform for CMOs to manage all their funds all the media investment it's kind of a sales force for CMOs we're the platform for CMOs right and we're agnostic they can buy whatever channel they want. They can buy Meta, they can buy YouTube, they can buy OpenWeb.

Matt Weber, Analyst — Canaccord Genuity

It's all good. Everything's there. Perfect. And then Tal, you just, Parian just reported Q2 results on Monday. What areas of the business are you seeing the most momentum and what are you

Tal Jacobson, CEO

most excited about? So as I said, we're now focusing on CMO, right? So our eyes is really about how much budget we're seeing going through our system. What's our actual X-tax? What's our profit that is actually growing? But within that, we see shifts between channels, right? So we're the biggest platform for digital out-of-home worldwide. We're working in 40 countries. It's a very exciting channel. It grows very, very fast, especially the programmatic part. It grows very, very fast worldwide. that's actually the only channel on the planet that is growing faster worldwide versus the US. US everything grows very fast out of home APAC and NAF grows way way faster so we have that part that digital out of home programmatic we have CTV we just launched our performance CTV and we obviously we have social we have

Maria Rief, Analyst — Canaccord Genuity

web and we have search and those parts are good. So that leads into our next question and I feel like you sort of touched on that a little bit in your opening question which is period one. Can you maybe talk about that offering, talk about key sort of capabilities and functionality and what inefficiencies are you trying to solve sort of in the market? Maybe expand on that a little bit more.

Tal Jacobson, CEO

So the major inefficiency we see in the market, I don't know if you guys saw the statistic that CMOs in the U.S. are now getting replaced every year. Now, those are the people who are in charge of a trillion dollars every year that will go through the fight. So you give a trillion dollars to a C-level of CMOs, but they're getting replaced every year. right now in the past few years CMOs are transitioning their state of mind into becoming investment managers right they're getting their money from a CFO and they need to invest that money and to show you like thank you guys right a CFO has a very hard time understanding what the CMO actually did with the money and it's not because of the CMO it's because one though too many platforms So any platform by itself is great, but there are just too many to translate what actually happened. So you have Meta, and you have Google, and you have Trade Desk, and you have Magnite, and you have Pubmatic, and you have Out of Home, and you have a lot, right? And then on top of that, you have a lot of agencies. And every agency would send their presentation saying, we've done an amazing job, which probably they did. But then when you need to translate that into a CFO language, you do not have the right metrics because our industry does not provide the metrics that a CFO can understand. Like how many people saw the ad or how many people clicked on the ad? A CFO doesn't care about how many people saw the ad, right? He wants to know if I'm Nike, how many shoes I actually sold through that investment. So, while the market is expanding, ad tech is expanding, there's still a fundamental issue within that market. There is no centralized platform and with AI coming and you know we're putting everything we have on AI, the major thing a company needs is data. Now when your data sits within so many agencies and so many platforms it's almost impossible to optimize across the ecosystem so when you have everything in a centralized place AI can actually start working for you because it can optimize it can say you know what maybe for that specific campaign less tick-tock more Instagram or snapchat or whatever it is but for you to be able to shift in between the channels you have to put everything in one place. So there's a gap in the market. We're aiming to become part of this huge solution and provide that to the market. So what are some functionalities that sort of

Maria Rief, Analyst — Canaccord Genuity

Perion One is offering to address that gap, to close that gap? So as you know, we're a company

Tal Jacobson, CEO

that is in transition, right? So we have all the moving pieces. We have probably the best solution out there for digital out-of-home. We're planning, location-based planning, data. We're connected to all the data layers, so Experian, MasterCore, you name it, right? We have CTV performance solutions. We have high impact for web. We have video. We have social. We have everything. Now we're in a phase, and we just launched this new strategy, and the new executives on that team six months ago. And now we're in a phase where we're considing everything into one data lake and a layer of AI that can actually speak to each other, right? Now, we've announced this transformation, this new platform six months ago. We're seeing an amazing traction. It got us very optimistic to the point that last quarter we actually raised our guidance because we saw better traction. And we believe that's going to get accelerated, the traction.

Maria Rief, Analyst — Canaccord Genuity

And do you feel like there is a specific type of advertiser that this solution will be particularly appealing to?

Tal Jacobson, CEO

So at first stage, we're targeting the bigger brands, brands that have multiple agencies, multiple platforms, right? Next phase, we'll go to the SMBs, and the last phase would be to actually self-serve small businesses. So that's how we're thinking about that business.

Maria Rief, Analyst — Canaccord Genuity

Got it. That makes sense.

Matt Weber, Analyst — Canaccord Genuity

And then one of the most exciting new product additions was the acquisition of GreenBids, which brought custom-based AI bidding capabilities. capabilities. Could you talk about how that enhances your optimization capabilities and

Tal Jacobson, CEO

broadens your TAM as well? Yeah, absolutely. So what happens is when you buy media through any platform of media, right? If you buy it through Google, if you're buying YouTube, or you're buying through Meta, or you're buying through TikTok, or you're buying through the Tradesk, they're all great by themselves. But you need to remember, they have one algorithm that optimizes for the DSP. This is not because they're doing something bad. This is just because it's a vanilla type of algorithm, so it would fit to everybody. But in reality, every campaign and every brand has to be customized to the performance you want to get out of this specific campaign. So if I'm Nike, what am I trying to get out of this specific campaign? Is that brand awareness? Is that actual leads? Is that actual people to come to my store? What am I trying to get? And every campaign has different goals, right? So this AI algorithm sits in between the client and the platform and in real time constantly optimizes the results, right? So we are now connected into platforms like the Trade Desk, but we're also connected to World Gardens like Meta and Google, and we're working with others to continue to deploy on other platforms. And that helped us to increase our TAM. So now we're pretty much connected to 70% to 80% of the market.

Matt Weber, Analyst — Canaccord Genuity

And yesterday on your earnings call, you highlighted $1 million in book business from existing Perion clients through GreenBids. Is that a function of the, you know, those TAM expansion capabilities or just kind of what's driving that?

Tal Jacobson, CEO

So, you know, we're trying, we're now, we just bought them three months ago. We're now integrating them into the company. But we saw a lot of excitement through our existing customers, our existing Perion customers, not the GridMe customers, about what is that algorithm, how does that work. And we started to get, you know, a lot of orders to start deploying that. And that's what got us excited. I mean, we haven't completed our integration. We're already starting to see synergies in between that. So in the synergies, actually, we reported the synergies of very young customers wanting to use the algo. But we haven't reported, well, I don't have that number out of my head, but we actually see the other way around We see Greenbit's customers asking to start using our CTV, are out of home so the coordination in between the solution in between the companies is was an immediate synergy that we saw and you know we're excited about it we feel that this is another confirmation that the acquisition was the right acquisition and it had a very strategic fit to our company yeah it

Maria Rief, Analyst — Canaccord Genuity

seems like there is a lot of cross all opportunity them so switching gears here a little bit sort of focusing on channels for a minute. I think yesterday you announced a new CTV performance solution. Maybe talk about some of the key capabilities of this solution and how is it different from what's available in the market?

Tal Jacobson, CEO

Yeah, absolutely. So up until now, our CTV solution was mainly focused on high impact. And within that, we have something called DCO. So it's the dynamic optimization, creative optimization. So it means that every person, even the imagine we are all neighbors, but every person, even though we live near each other, would see something else because we have different layers of data. So that's our high impact solution. We would know to say, well, maybe you should try eating your lunch at this restaurant. It's only five minutes a walk away from your home. It's not because we know who you are. It's because a TV is now basically a computer, right? And we have the IP, and we know it's Google Maps, basically, right? We would know this location from this location takes five minutes, right? And it's not violating privacy. It just looks personal, but it's not. So that was the original solution we had. Now, we took all our AI algorithm of performance. We've matched that with our CTV solution. And we added attribution ability. So we would now know, let's say, you're seeing an amazing campaign for Golden Coral, and you're getting a QR code to say, Maybe you should just order in or reserve a table. So from that, the attribution would know which channel was that initiated from, right? Was that Disney? Was that Hulu? Was that Discovery? And then we can start the algorithm would start to know which channel, at which time, at which location, out of which TV type, you would get the most performance. And then the algorithm would shift budgets so you would optimize your investment to get a better yield. That's pretty much it.

Matt Weber, Analyst — Canaccord Genuity

And then, focusing a little bit more on near-term trends, CTV came under a bit of pressure, I think, in Q2, but I believe you reiterated your expectation to outpace the market in terms of growth, which I think eMarketer's estimating about 13% for the year. Could you just talk about what's underpinning that expectation? How much of it is this new solution versus other dynamics?

Tal Jacobson, CEO

So, yeah. So in Q2, we did see a very minor decline of 5%. But as an overhaul, we believe that, as you said, 13% of the market, we believe we're going to be above 20%, right? And we're already seeing, and I think we said that in the earnings, we're already seeing good traction, right? So in Q3 is undergoing, from everything we saw in Q3 up until now, we see good results. We see a very healthy pipeline. So it is bouncing back. So that's not a concern that we have, and it's not because we believe the new solution would bounce it back. We're already seeing the bounce. But now we actually have more fuel. So we have the existing solution we had. We have the performance solution, which is another fuel into that engine. And then we have the Perion Argo, which is Greenbeats, that also need to fuel YouTube campaign, which is basically CTV, right? Most of, a lot of the YouTube views are happening on a TV. So if you take all three and you take the pipeline and you take whatever we just saw through Q3 up until now, we feel very comfortable with that.

Matt Weber, Analyst — Canaccord Genuity

That makes a lot of sense. And then maybe switching to Digital Out of Home, another fast-growing channel for you. You touched on this earlier, but I believe you acquired a company called HiveStack a couple years ago. You've seen strong organic growth of late. Yesterday, you announced expansion into EMEA and, I believe, Korean markets. So just talk to us about how you're thinking about that segment. You know, what does the growth profile look like? And, yeah, maybe just comment on that.

Tal Jacobson, CEO

So in the U.S., digital out-of-home grows roughly 8%. Programmatic grows 15%. We're in the programmatic part. We're in the digital, but we especially specialize in programmatic, right? So programmatic means out-of-home ads with the layers of data, right? So the layers of data would affect what the ad would show, right? So straining, the ad might show something like a person with an umbrella, right? So that's the programmatic part. So I can bid and have layers of data, which out-of-home never had. And you can see better performance just because of that. But if you're going to look at APAC, which is the fastest growing in digital out of home, especially programmatic, they are growing very, very fast. So the whole APAC market is, I think, next year, $21 billion just in digital out of home. It's a huge market. Now, you need to understand Americans spend less time out of the house. So Americans would consume more TV and more web, while people in Asia, in APAC, are spending a lot more time out of the house, right?

Maria Rief, Analyst — Canaccord Genuity

That's a sad statistic.

Tal Jacobson, CEO

They're spending more time out of the house. So with that, digital out-of-home actually has a huge potential. And that's why we're putting so much emphasis on digital out-of-home. We have an amazing partnership with Densu Japan. where actually our technology operates, I think, roughly 80% of the screens in Japan. We have amazing partnerships in China. So we're seeing some money getting out of China, out of Chinese companies, towards other markets, right? So Chinese companies would buy screens in Times Square. They would buy screens in Japan or in Korea to promote their products, right? So within that, because we're getting to become so big and digital out of home, we're seeing money getting from different countries to other countries, right? Because we're basically, when you think about it, it's like Google, right? Even companies in Italy would spend money on TVs in the US, right? So you would get that movement of money. So yeah, AIPAC is very important to us. We also announced two partnerships in EMEA, one in Italy, one in Germany. I think we actually have another one. I'm not even sure that we announced it, but we have another one that we just signed. But even though Digital Have Home is growing very, very fast and we're the biggest company in that sector, it actually helps us in another strategic layer where we would meet agencies. And because we're the biggest at this part, because we're getting into the agency, now we can sell them our CTV solutions, our web solutions, our algo solutions. So the cross-selling opportunity is very, very big.

Matt Weber, Analyst — Canaccord Genuity

Got it. And then just maybe before we ask a question on financials and wrap up, I just want to touch briefly on the search business. You outlined earlier how that came a little bit under pressure. How should we think about the trajectory for that going forward?

Tal Jacobson, CEO

Yeah. So as we said, you know, we were one of the biggest partners of Microsoft in the past 10 years, right? Unfortunately for us and for Microsoft, web search is not a thing. It's not a popular thing anymore, right? I don't know how many times you guys actually use web search in the past three months. I'm using it less and less. So human behavior is changing. This has nothing to do with Microsoft or Google. It's about humans. so we do think this specific sector would continue to decline for this year we're estimating roughly 20 million dollars every quarter from our search business having said that we're not putting any R&D efforts into that we're not doing any innovation our focus as long as search exists that's great we're gonna make money out of that but we're actually our eyes are in pillion one on on that CMO centralized solution. We really want to be that sales force worldwide for CMOs.

Maria Rief, Analyst — Canaccord Genuity

So let's talk about your financials before we wrap up. I think yesterday you reiterated your full year revenue and profitability outlook. Maybe just talk about what's underneath that guidance, and how should we think about revenue progression as we head into next year?

Tal Jacobson, CEO

So for this year, we're roughly talking about $440 million in revenue, I think $44 million to $46 million in EBITDA. That's our guidance for this year. We look at next year, and we're not going to give guidance now, and we're not going to go into actual numbers. You're going to continue to see growth, not on the search part, but on everything else. You'll see healthy growth. We believe double digits. So on that part, I think we're going to have good trajectory.

Maria Rief, Analyst — Canaccord Genuity

Got it. I think we have just about 30 seconds left here. Tal, is there anything that we didn't talk about that you'd like to highlight for our audience today?

Tal Jacobson, CEO

I think Peron is an amazing opportunity. So I've been with the company for six years. We've done one turnaround. I think the market changed. We're going to do another turnaround. I believe, I personally believe that's what's going to happen. But you need to understand this is, what we're doing is bigger than paying. It's a huge shift in the market. A trillion dollar is not being managed by any company. Everybody's focusing on channels. We're focusing on the client. We're all AI based and AI is going to take over by storm and we're going to be in the front of it. So it is a huge opportunity for investors and for us.

Maria Rief, Analyst — Canaccord Genuity

Well, with that, we're out of time. Tal, thank you so much for joining us.

Tal Jacobson, CEO

Thank you, Tal. Thank you.