Okay.

Thank you everyone for joining us today. I'm Matt Weber. I cover Perrion here at Canaccord Genuity and it's my pleasure to introduce Tal Jacobson, CEO of Perrion. Tal and his team traveled a long way to be here, which we very much appreciate. So thanks for joining us.

Yeah, thank you for having me.

So just to start off, you described previously 2025 as a year in which Perrion changed everything but its name. The business is now unified under the Perrion One platform. For those in the audience less familiar with the story, can you walk us through how your company has been repositioned and where does Perrion sit within the digital ad ecosystem today?

Yeah, absolutely. So as you said, beginning of 2025, we unified the company. We totally pivoted the company. we realize digital advertising is a huge industry running a trillion dollar. Two of the biggest companies in that name, I think all of the investors are actually investing in, which is Google and Meta, so everybody's investing in our industry. But what most people don't realize is it's extremely complex advertisers, which are the people that are driving that trillion dollar, are extremely frustrated with their ability to understand what's going on in between all the platforms. So we're actually building a layer above those platforms with AI that can help you run across everything smoothly and then get the insights and then basically maximizing your media investment.

Yeah, that sounds like a compelling value proposition given how fragmented the industry is. So, you know, you just reported Q2 results yesterday. Could you maybe give us the highlights, what areas of the business are seeing the most momentum and what are you most excited about?

Yeah, absolutely. So, as I said, we totally completely pivoted the company into the new platform, Perion One. Within that, we have all the new technologies, our digital out-of-home, our CTV, our retail media, our AI agent, which we call Outmax, And all of those new things showed amazing growth. Perian 1, and when I say growth, I mean by spent, so that's how we measure adoption. Perian 1 as a whole showed 15% growth year-over-year. And then we saw retail media 60% year-over-year, CTV 56 out of home 45, Outmix 130-something percent. So, all in all, we're extremely happy about the adoption rates, and we do think, you know, that's going to continue to accelerate. Got it, got it, yeah.

So, maybe let's dive a little deeper on Perrion 1. Could you spend a minute just, you know, unpacking a little bit more some of the inefficiencies the offering is addressing and how you go about, you know, filling those gaps? Yeah.

So again, you know, at the end of the day, digital media is all about data, right? When you spend so much money, big brands are spending so much money over so many platforms. It's extremely important to understand the data, understand all the bits and pieces within the data, and then optimize across everything. So only now with AI, we have the ability to go through that enormous amount of data, understand what's going on and optimize in between platforms in between creatives in between audiences in between all the KPIs and then produce you know a suggestion or say you've completed that campaign here's what you should do next so you up until now you ran on you know out of home CTV YouTube we think you should add tik-tok or we think you should add that creative or remove that creative to get a better result. So that's how we're using AI to remove inefficiencies in our industry. Got it.

And at the center of that story is Outmax, which you just mentioned more than doubled spend in Q2 on a pro forma basis. So where does adoption stand across your advertiser base today? And where does the product go from here? Yeah.

So again, Outmax over 130% growth. So we're adding more and more channels into it. We're seeing good adoption. We're seeing that a lot of our customers are, once they start, it's easier to, you know, basically we call it a land and expand model where they start small and then they grow year over year over year. We think Outmix is extremely sticky. It's all about performance, all about outcomes. So the moment we get into that business, the moment we understand what drives their business, our customer's business, it's easier than any other product that we saw out there to continue to increase the budgets within that product.

Got it. Makes a lot of sense. So on Monday, you shared that two strategic agreements tied to a very large agency are now signed in onboarding and material contribution to the financials is expected in late Q3. Can you talk about what these partnerships involve and what the path looks like to replicating them with additional clients?

So both agreements took many months of testing. they wanted to test our technologies with different KPIs, different campaigns, different creative and it showed it actually proved that our technology works very well on different platforms, on different channels and that's how we were able to complete those agreements now signed and we're ramping up through that we do think that this model, even though not as easy to close, we do think we can continue to replicate that. We're actually feeling very positive about the fact that it's hard to close because we think the fact that the barrier for entry is so high, it's going to be hard for others to duplicate. So once we're in, we feel comfortable about this continues to grow. Yeah, that's a good point. Right.

And then this quarter you also launched Ask Perrion, which is sort of a chat bot within your platform that streamlines some functions for your advertiser base. And then your team is also working to deploy Outmax on platforms like ChatGPT and Google Shopping while building towards agent-to-agent buying. So how do you see agentic advertising developing and what role does a cross-channel optimization layer play in that world? Right.

So, yeah, we launched S-Pen, which is basically an agentic interface for clients, for our clients. It's a better way to describe it than how I did. For our clients to interact with us, get their campaigns in, optimize, keep asking our agent, you know, what can I do better? How did that campaign go? And they don't need us 24-7. They can ask our system on their way to the work, what else can I do? How else can I prove my numbers? Within that, as we continue to add more and more channels, now, while AskPaylon is the interface, Outmax is basically the engine. So as we continue to add more and more channels into that, obviously, in our future, we're going to add things like Chachi PT, Gemini, Snapchat, and others, but Outmix would be able to actually look at all of those and say, you know, for your specific product and your specific audience, we do think that's a niche or that's a channel that will work better for you.

Again, our platform is very flexible, and we're building it in a way that is extremely flexible, so it will adjust to any brand in any specific action you want to get out of it yeah that's important in an AI world yeah let's shift gears and talk about channels so digital out-of-home is your largest channel today with spend up over 45% in q2 beyond programmatic the you have a digital out-of-home player that is positions you as an operating system for the screen what does adoption looks like since launch and how should we think about the sustainable growth rate for this channel?

Yeah. You know, it's an interesting thing. One, we are, there are not a lot of companies out there that can do the full stack out of home, like us and maybe another company and a half. But we work worldwide. We just completed the integration with Best Buy Canada. So we're actually operating the entire technology for their in-store inventory, which is great and that's something that we're looking to even expand more, the in-store inventory. We think retailers, especially with commerce and other big verticals want to advertise at the moment where the client makes a decision to buy. You can't get any closer than that. You can't get any more intent than that. A person looks at you're at the shelves of your vertical you want to make sure that you're there um that's i think that that can contribute a lot to our growth going forward but we're just we have over 1.6 million screens in over 40 countries it's not our screen but we're connected to those screens and we're going to continue to add more and more screens so our appetizer can just you know through us get to any screen worldwide.

Yep, it makes a lot of sense. And then turning to CTV, you saw a nice momentum in Q2, I think 56% year-over-year spend growth. Your approach leans on performance and dynamic creative. How is that resonating with enterprise clients, and how large do you think CTV can become in the mix over time?

So again, CTV is one of our fastest growing products. This is a product that we built organically, we didn't buy anything, so organically we've developed this, we grew this over the years and it continues to grow very nicely, again 56% in a quarter. We do think the market is going to continue to grow. We do think we're going to continue to grow with it. We obviously grew way faster than the market. Well, we see a lot of other opportunities within CTV, right? So YouTube is one of the biggest CTV platforms out there and Outmax can do CTV for YouTube, but can also do CTV for Disney, Hulu, HBO, so everything. So the fact that we have one agent that can reallocate between all those channels, that will help us grow even faster, I believe. Yeah, yeah, definitely.

And then closing the loop here on the high growth channels, you've got the retail media vertical spend across that vertical growing 60% year over year in Q2. And Best Buy Canada just selected Perrion as its end-to-end in-store retail media technology partner. So you've now got partnerships with Amazon, Walmart, MasterCard, and now Best Buy. So what are the top strategic priorities for that vertical? And how does your retail media strategy tie together with digital out-of-home?

So we always thought that retail media has two different positions, right? You have the online part, which we obviously, we started from online. where anything we do is digital. But in the past few years, we realized that 87% of Americans still buy physical stores, right? For a convenience store like CVS, it's over 90%. So how do we get more people towards those stores and help our brands win more customers towards their store and other competitors, right? And that's where we made the move to buy out of home. Out-of-home, we think, is the best channel for retail media, physical retail media. But that's where we're now doubling down, not only on out-of-home, but also on in-store inventory. I think that will complete the entire journey. So we have everything, you know, mobile, desktop, CTV, out-of-home, and now within retail, within the physical stores. so you get the complete experience end-to-end.

Yeah, it's a great offering tying the two ends together. And then I just want to ask about, you've begun expanding through exclusive reseller agreements, I think as a way to enter new geographies without limiting the upfront investment. So how do these arrangements work in practice and should we expect similar deals in other regions?

Yes, so while we're working now in 40 countries, we're trying to see if we can expand into more countries and more verticals but without the financial burden of just continuing to hire more and more people and get having those bets right right so we do think reseller a reseller model the same model that you know Microsoft or Google has for years or Amazon would work great for us. And now we've added four or five resellers in the past year. We're going to continue to add more. But again, the majority of time goes into vetting those resellers. How do we make sure that they have the ability to push us forward, even though it does not come with any financial burden but it does come you know focus so that's what we're focusing on how do we add more to expand faster it's basically a distribution channel what do you what like qualities or characteristics do you look for in a partner so you know where we do evaluate their relationship with agencies with brands the ability to sell technology the ability to provide good customer service to their clients those are the kind of things that we're looking at. Yeah, that makes sense.

Before we move on to financials, I just want to touch briefly on search. So, that business remains under pressure as you continue to transition away from Microsoft. What are your expectations for when it stabilizes and how are you thinking about the role of that segment going forward?

So, our search business is basically stable at this point. the longer we can continue to keep it sustained and get the profits out of it so we can continue to invest in our growth engine or even in our buyback program. We'll continue to add that, but that's a very profitable and stable part of the business. Got it. Makes a lot of sense.

So let's touch on the outlook. Yesterday, you narrowed the full year Contribution-X TAC guidance at the upper end and maintained your adjusted EBITDA outlook at the midpoint. Profitability is expected to influx nicely in the second half. What are the key assumptions behind these ramps? And what are the swing factors between the low and the high end?

Yeah, so as you said, we just signed those two strategic agreements. I think that should have an impact on our annual guidance. Within our specific company, seasonality is a big thing. So even if you look on last year, the majority of revenue in EBITDA came on the second half of the year. That's not going to be different this year. That's basically the natural seasonality of a company. So we do expect H2 to be way stronger than H1. Again, this is an extremely natural thing for our company. Got it.

And then you have 2028 targets that call for Parion 1 spend CAGR of at least 25%, Contribution X TAC growth of at least 20%, and Adjusted EBITDA reaching 28%, and you reaffirmed those on Monday. So can you walk us through the bridge? And to reach that 28% margin, how much of that depends on operating leverage from growth versus AI-driven efficiencies across the business?

So, you know, it depends on all of those, right? So we're seeing the growth, you know, with our spend, which we just saw now, which is growing nicely. With EBITDA, we're also seeing an improvement on our EBITDA margins. even within the adjustment that we just made. But going forward, we do believe AI would provide more efficiency. So as we continue to grow our revenue in XDAQ, we do not believe that we will need to continue to grow our headcount because AI is going to start getting more and more of those pieces. And we're now implementing different pieces. Even Ask Perion, while it has an interface with clients, it also has an interface with their own operation. So they're asking Aspareon to do a lot of the internal tasks to run some of the internal things that the parent does. So within all of that, we believe we'll get to the 28.

Okay. And then maybe just touch on sort of what underpins the 25%, the spend growth.

Yeah, so again, you can see now that all our growth engines are growing fast, right? I mean, from retail media with 60%, with CTV 56%. So we do feel comfortable about this.

Okay, and then I want to ask about capital allocation. So you've been buying back a good amount of stock. I think you've repurchased roughly $167 million against a $200 million authorization. You expect to complete the remaining by year-end. You still have a substantial cash position. How are you thinking about what comes next, a renewed buyback program versus M&A, versus investing in the core business further than you already are?

So we've been doing this under that new pivot. We've been doing this for a few years now, and you can see by the pattern of our behavior that we're extremely disciplined in the way we're looking at M&A. And we bought, again, we bought two companies, HiveStack, which is out of home, and you can see the results that are continuing to grow quarter after quarter after quarter for the past three years. Last year, we bought Greenbit, which is Outmax, again, grew 136%. So we're extremely disciplined. We don't want to buy companies just to buy companies. We want to make sure that we're buying things that are extremely synergetic, growing fast, the technology has to be the engine behind it. So we do continue to look at companies to buy them, but we're not going to buy anything if it's not super accurate for us. And obviously, as you said, we're aiming to complete the buyback, the current program that we have to complete that by the end of the year, and next year we'll see how we can continue this.

That makes sense. Are there, if you can talk about this, are there any areas of the business where you think if a good asset came to market, that there's a natural fit right now in terms of your business bolstering it via M&A?

Yeah, so the things we're constantly looking at are, everything that will grow, our CTV, our retail media, our digital out of home, and obviously our cross-channel activation, which is Outmax. So we're not looking to get into more areas or to diversify the things we're doing. We're trying to see how do we get the things that we have now that are going really well for us. How do we accelerate that? How do we double down on what it works well to make it work faster. Got it, got it, that makes sense.

So is it fair to say that your channel mixed with CTV, digital out of home, retail media, that's probably like the core for the foreseeable future? Are there any channels that you would want to go into?

No, I mean, currently we are at any channel. Without Max, we have social, we have everything. We have audio on Spotify, iHeart, so we're not missing channels. We're just trying to figure out how do we accelerate our growth faster.

Makes sense. We have just a couple of minutes left here. I just wanted to see if there's any questions in the audience. Nope, okay, all right, maybe just one on advertiser spend by vertical. Just it feels like there's a lot of sort of like the overall market is healthy, but there's volatility underneath between the different verticals. What are you seeing, and what are your expectations as we get into the Q4 political season? And yeah, maybe just talk about that.

So political was never as a factor for us. We're seeing good growth across commerce, healthcare, travel. Those are the kind of things that we're seeing very healthy growth within. Got it, got it. Maybe in the last minute or two here, is there anything that we didn't talk about that you'd like to highlight for folks? Listen, we're extremely excited about how AI is going to transform the entire thing, right? So again, people tend to think, you know what, we don't invest in ad tech, which is every time somebody says that to me, it's kind of funny, because everybody invests in ad tech. I mean, Google and Meta are basically ad tech, So you can't not invest in EdTech. EdTech is the fastest growing thing that moves the economy. I do think that AI will reshuffle the winners and losers within that. We're the infrastructure that is going to try to make sense out of the mess. It's a complete mess. The customers that are driving this trillion down are very frustrated. they are in need for this product. And I think the growth that we're showing just says everything, right? I mean, the reason why people are trying it out and using it is because they need it. So we're feeling really good about our strategy and the way our products are evolving. All right.

I think we'll end it there. Tal, thanks so much. It was a great discussion. Thank you.