Perion(US:PERI)2024-07-31 14:46Financial Data and Key Metrics Changes - Revenue for Q2 2024 was $108.7 million, a decrease of 39% year-over-year [47] - Adjusted EBITDA amounted to $7.7 million, a decrease of 81% year-over-year, resulting in a 7% adjusted EBITDA margin [47] - GAAP net loss was $6.2 million, compared to a net income of $21.4 million in Q2 2023 [49] - Non-GAAP net income was $13.4 million, a year-over-year decrease of 68% [49] - Operating cash flow for Q2 was negative $20.5 million, compared to $47.4 million in the same period last year [90] Business Line Data and Key Metrics Changes - CTV business grew by 42% year-over-year to $10.2 million, representing 14% of advertising solutions revenue [6] - Digital out-of-home revenue grew by 41% year-over-year to $13 million, representing 18% of advertising solutions revenue [6][48] - Retail media vertical increased 75% year-over-year to $17.6 million, significantly outpacing the expected market growth of 26% [48] - Search advertising revenue was $34.3 million, a decrease of 57% year-over-year due to changes in Microsoft's advertising pricing mechanisms [89] Market Data and Key Metrics Changes - The global digital advertising market is expected to reach $700 billion in 2024 and grow to over $900 billion within three years [40] - The expected market growth for digital out-of-home is 11% in 2024, while the company achieved 41% growth [6] Company Strategy and Development Direction - The company aims to leverage its strong cash position to capture market share in the digital advertising market [5] - The focus is on integrating various advertising solutions to provide a holistic experience for brands [42] - The company is transitioning from being viewed as an advertising company to a technology company, emphasizing technological solutions [67] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges due to changes in Microsoft's search distribution marketplace, which significantly impacted the search business [46] - The company expects to stabilize around current revenue levels and aims for sustainable profitable growth in the coming years [34][91] - Management expressed confidence in the company's ability to navigate challenges and leverage technological advantages [58] Other Important Information - The company made significant changes in its executive team, with Maoz Sigron promoted to Chief Operating Officer and Elad Tzubery promoted to Chief Financial Officer [45][62] - The company executed a $20 million share buyback program during the quarter [61] Q&A Session Summary Question: Is the take rate the right pricing model or should the company pivot to an agency-type model? - Management clarified that the company does not view itself as an agency but as a technological layer that connects advertisers and agencies [67] Question: What are the M&A goals given the current stock performance and cash flow situation? - Management stated that they are focused on acquiring profitable companies that align with their technology strategy [71] Question: Can you provide more detail on the retail media business and its components? - Management confirmed that their retail media solutions are omni-channel, integrating various advertising platforms [75] Question: What factors contributed to the decline in open web video revenue? - Management indicated that the decline was primarily due to market dynamics and internal adjustments, including the impact of ContentIQ [34][66] Question: What are the expectations for cash generation in the second half of 2024? - Management expects to generate positive cash flow and is focused on cash generation strategies [31][71]