Perion Network’s Earnings Call: Growth Amid Challenges

Perion Network Ltd ((PERI)) has held its Q1 earnings call. Read on for the main highlights of the call.

Perion Network’s recent earnings call painted a picture of both promising growth and notable financial challenges. The company reported strong performance in key segments such as Digital Out-of-Home and Connected TV (CTV), alongside a strategic acquisition of Greenbids. However, these positive developments were tempered by a decline in web revenue and a GAAP net loss, resulting in a balanced sentiment overall.

Strong Growth in Digital Out-of-Home and CTV

Perion Network showcased impressive growth in its Digital Out-of-Home and CTV segments, with year-over-year increases of 80% and 31%, respectively. These channels now account for 31% of the company’s total revenue, significantly outperforming market growth and underscoring their importance in Perion’s revenue mix.

Acquisition of Greenbids

The acquisition of Greenbids, a cutting-edge AI company, marks a strategic move for Perion Network. This acquisition is expected to enhance Perion’s technology capabilities, expand its total addressable market, and improve profitability, positioning the company for future growth.

Increased Full-Year Guidance

Reflecting its strong performance and strategic initiatives, Perion Network raised its full-year 2025 guidance. The company now projects revenue between $430 million and $450 million, up from the previous range of $400 million to $420 million. Adjusted EBITDA guidance was also increased, indicating confidence in its financial outlook.

Strong Cash Position and Share Repurchase

Perion Network’s robust cash position of $358.5 million and an expanded share repurchase program of $125 million demonstrate the company’s confidence in its long-term value. These financial strategies are aimed at enhancing shareholder value and supporting future growth initiatives.

Decline in Web Revenue

Despite the positive developments, Perion Network experienced a 28% year-over-year decline in web revenue, which now represents 46% of total revenue compared to 37% last year. The company expects this decline to stabilize starting next quarter, indicating potential challenges in this segment.

GAAP Net Loss

Perion reported a GAAP net loss of $8.3 million, or $0.19 per diluted share, a significant drop from the net income of $11.8 million reported in the first quarter of 2024. This loss highlights the financial hurdles the company faces despite its growth in other areas.

Negative Adjusted Free Cash Flow

The company’s adjusted free cash flow was negative $7.4 million, impacted by $8 million of collections shifting from March to April. This cash flow challenge is a critical area for the company to address moving forward.

Forward-Looking Guidance

Perion Network’s forward-looking guidance reflects a positive outlook, supported by strategic moves and strong performance. The company exceeded initial expectations with first-quarter revenue of $89.3 million and adjusted EBITDA of $1.8 million. With the acquisition of Greenbids and organic growth, Perion revised its full-year 2025 guidance upwards, anticipating revenue between $430 million and $450 million and adjusted EBITDA between $44 million and $46 million.

In summary, Perion Network’s earnings call highlighted a balanced sentiment, with strong growth in key segments and strategic acquisitions driving an optimistic outlook. However, financial challenges such as a decline in web revenue and a GAAP net loss pose hurdles that the company must navigate. Overall, the call underscored Perion’s strategic focus on growth and long-term value creation.