Perion Network Ltd. Q4 FY2024 earnings call

• 2024 was a pivotal year for Perion Network Ltd., laying the foundation for the PerionOne strategy to unify technologies, business units, and brands under one platform.
• Focus on AI development for customer-facing products and operational efficiency solutions. The PerionOne platform will unite various capabilities under an AI-driven platform, to be rolled out in upcoming months.
• Strengthened leadership team with new hires in key roles like Chief Revenue Officer, Chief Product Officer, and Chief Technology Officer.
• Core growth engines (digital out-of-home, CTV, retail media) outpaced market growth in 2024: digital out-of-home grew 50% y/y, CTV 30% y/y, retail media 62% y/y.
• Implemented cost reductions and efficiency measures in the second half of 2024 to moderate adjusted EBITDA decline.

For the fourth quarter, advertising solutions revenue was $104.1 million, down 13% year over year, representing 80% of total revenue. Digital out-of-home increased by 57% year over year in the fourth quarter on a pro forma basis, representing 27% of advertising solutions revenue. For the full year, digital out-of-home increased by 50% and represented 21% of advertising solutions revenue. CTV business increased by 10% year over year in the fourth quarter, representing 15% of advertising solutions revenue versus 12% last year; for the full year, CTV increased by 30%, representing 13% of advertising solutions versus 8% in 2023. Retail media revenue in the fourth quarter grew by 34% year over year to $27 million, and for the full year 2024, it delivered an impressive 62% growth, reaching $80.6 million. Search advertising revenue for the fourth quarter totaled $25.5 million, accounting for 20% of total revenue.

• For full-year 2025, expect revenue of $400 to $420 million, adjusted EBITDA of $40 to $42 million, and adjusted EBITDA to contribution ex-stock margin of 22%.
• Expect cash flow conversion from EBITDA to resemble past performance patterns in 2025, with positive cash flow from operations and adjusted free cash flow similar to prior years.

Q: How much of the open web business slowdown is addressable via PerionOne reorg vs. overall tough conditions in the space?

A: Tal Jacobson said open web as an industry isn't growing, but PerionOne platform can help strengthen open web over time as new advertisers use the platform for all channels.

Q: How does PerionOne's automation improve gross margins and sales/marketing efficiency?

A: Tal Jacobson stated focus on AI-driven automation to reduce manual work, leading to better efficiency. Sales and marketing are being shifted to automation, with fewer brands now, focusing marketing dollars on one brand for more efficiency.

Q: CTV growth slowed in Q4, what's the growth outlook for 2025?

A: Elad Tzubery said CTV still outperforms market, and Tal Jacobson added they expect to continue beating market growth for CTV in 2025.

Q: Details on generative AI and large language models for PerionOne?

A: Tal Jacobson said they experiment with different large language models, including DeepSeek, and are testing various options to find the right cost-effective infrastructure.

Q: Thoughts on acquisition strategy relative to PerionOne?

A: Tal Jacobson said any acquisitions must fit within the PerionOne platform as additional features, and they're currently focusing on organic growth and unification transition but still consider synergistic acquisitions that fit the platform.