Perion Network Ltd (PERI) Q4 2024 Earnings Call Highlights: Navigating Challenges with ...
Adjusted EBITDA: $50.9 million, with a 10% adjusted EBITDA margin and a 24% ex-TAC margin.
GAAP Net Income: $12.6 million for the full year.
Non-GAAP Net Income: $64 million for the full year.
Operating Cash Flow: $6.9 million generated during 2024.
Adjusted Free Cash Flow: $16.6 million for the full year.
Net Cash: $373.3 million as of December 31, 2024.
Q4 Revenue: $129.6 million, compared to $234.2 million in the same period last year.
Q4 Adjusted EBITDA: $15.5 million, with a 12% adjusted EBITDA margin and a 28% ex-TAC margin.
Q4 GAAP Net Income: $4.9 million.
Q4 Non-GAAP Net Income: $16.1 million, with a non-GAAP diluted EPS of $0.33.
Advertising Solutions Revenue: $104.1 million in Q4, down 13% year over year.
Digital Out-of-Home Growth: 50% year over year for the full year, 57% in Q4.
CTV Growth: 30% year over year for the full year, 10% in Q4.
Retail Media Growth: 62% year over year for the full year, 34% in Q4.
Search Advertising Revenue: $25.5 million in Q4, representing 20% of total revenue.
Share Repurchase: 5.2 million shares repurchased for $46.9 million as of December 31, 2024.
Warning! GuruFocus has detected 5 Warning Signs with PERI.
Release Date: February 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Perion Network Ltd (NASDAQ:PERI) introduced the Perion One strategy, unifying all technologies and business units under one platform to enhance efficiency and customer attraction.
The company reported strong growth in its core growth engines: digital out-of-home grew by 50% year over year, CTV solutions grew by 30%, and retail media grew by 62%, all outpacing market growth.
Perion Network Ltd (NASDAQ:PERI) strengthened its leadership team with experienced executives from Google, Criteo, and Samsung Ads, expected to expand reach and unlock new growth opportunities.
Despite a challenging year, the company ended 2024 with positive operating cash flow and met its revised guidance for revenue, adjusted EBITDA, and adjusted EBITDA to contribution ex-TAC margin.
The company has a strong balance sheet with $373.3 million in cash, cash equivalents, short-term bank deposits, and marketable securities, supporting its capital allocation priorities and growth plans.
Perion Network Ltd (NASDAQ:PERI) experienced a 33% decrease in full-year revenue, primarily due to a decline in search revenue and weakness in Open Web video and standard ad formats.
The company did not renew its contract with Microsoft Bing, which ended on December 31, 2024, impacting search advertising revenue.
Adjusted EBITDA for the full year was significantly lower at $50.9 million compared to $169.1 million in 2023, reflecting a decrease in profitability.
The company is undergoing headcount reductions as part of its operational streamlining efforts, which may impact employee morale and productivity.
Perion Network Ltd (NASDAQ:PERI) provided a lower revenue guidance for 2025, expecting $400 million to $420 million, reflecting a cautious outlook amid ongoing market challenges.
Q: How does the Perion One reorganization address the challenges in the Open Web business, and what impact will it have on the 2025 outlook? A: Tal Jacobson, General Manager - CodeFuel, explained that while the Open Web industry is not growing, the Perion One platform aims to strengthen this area by onboarding new advertisers. Elad Tzubery, CFO, added that the reorganization will lead to more efficient operations and is expected to positively impact margins in 2025, with full benefits realized in 2026.
Q: How will automation and the Perion One platform improve gross margins and sales efficiency? A: Tal Jacobson highlighted that automation will reduce manual work, enhancing efficiency. The consolidation of brands under Perion One will also improve marketing efficiency. The focus is on high-margin products, and some legacy technologies with lower margins are being phased out.
Q: What growth rate is expected for CTV in 2025, given the slowdown in Q4 2024? A: Elad Tzubery noted that while CTV growth slowed to 10% in Q4 due to value shifts to out-of-home, the annual performance outpaced the market. Perion expects to continue beating market growth for CTV in 2025.
Q: What is the expected free cash flow for 2025, given the adjusted EBITDA guidance? A: Elad Tzubery stated that despite lower EBITDA in 2025 compared to 2024, cash flow is expected to improve. The cash flow conversion from EBITDA will return to normal rates, with adjusted free cash flow closely aligning with EBITDA.
Q: How is Perion leveraging generative AI and large language models in the Perion One platform? A: Tal Jacobson mentioned that while Perion continues to use OpenAI, they are also experimenting with Google's capabilities and DeepSeek algorithms for cost efficiency. The company ensures flexibility by not building dependencies that would incur high switching costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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