Perion(US:PERI)2023-05-03 16:55Financial Data and Key Metrics Changes - Revenue for Q1 2023 grew by 16% year-over-year to $145.2 million, with gross profit increasing by 20% to $65.3 million, resulting in a gross margin of 45% compared to 43% last year [28][30] - Adjusted EBITDA rose by 38% to $31.3 million, with an adjusted EBITDA margin of 22% compared to 18% last year [28][31] - Net income increased by 54% year-over-year to $23.8 million, with non-GAAP diluted earnings per share rising by 36% to $0.60 [28][54] Business Line Data and Key Metrics Changes - Search advertising revenue increased by 15% year-over-year to $65.3 million, accounting for 45% of total revenue, driven by consumer interest in ChatGPT [28][128] - Retail media revenue surged by 60% year-over-year, representing 8% of display advertising revenue, with the number of retail media customers increasing by 32% [78][80] - Video revenue grew by 26% year-over-year, making up 44% of display advertising revenue, while the number of video platform publishers increased by 63% [51][78] Market Data and Key Metrics Changes - CTV revenue increased by 12% year-over-year, representing 8% of total display advertising revenue, indicating a slower growth compared to overall video revenue [78][60] - The number of SORT customers rose by 142% year-over-year to 157, with customer spending increasing by 93%, now accounting for 17% of display advertising revenue compared to 7% last year [29][30] Company Strategy and Development Direction - The company is focused on integrating AI technology into its solutions, positioning itself as a leader in the tech-driven software sector [18][35] - The strategy emphasizes a "land and expand" approach, where initial traction with clients leads to increased service consumption over time [25][132] - The company aims to maintain high margins in CTV by focusing on unique verticals rather than broad market engagement [87][104] Management's Comments on Operating Environment and Future Outlook - Management described the current economic environment as "rocky and bumpy," affecting advertising budgets and strategies [14][35] - The company is increasing its revenue guidance to $735 million for the year, representing a 15% year-over-year growth, and expects EBITDA to reach at least $155 million, a 17% increase [32][83] - Management expressed confidence in the company's ability to adapt to market changes and capitalize on emerging opportunities, particularly in AI and retail media [35][45] Other Important Information - The company has a strong cash position, with cash and cash equivalents amounting to $436 million as of March 31, 2023 [110] - The company is investing in technology to enhance operational efficiency and improve margins, with OPEX+COGS accounting for 26% of revenue, down from 28% in the previous year [80][81] Q&A Session Summary Question: Why is video revenue growing faster than CTV revenue? - Management indicated that the focus is on maintaining margins in CTV, which has become more commoditized, leading to slower growth compared to overall video revenue [60][123] Question: What is the outlook for search and SORT monetization? - Management noted that new search publishers are coming online, and while monetization plans for SORT are still being defined, there is optimism about its future contributions [69][97] Question: How does the company view competition in the SORT market? - Management expressed skepticism about competitors finding effective alternatives to cookies that protect user privacy without impacting revenue [116][117] Question: What is the strategy regarding SSP and DSP capabilities? - The company prefers to focus on demand-side capabilities and is not currently looking to acquire SSPs, as they are seen as commoditized [93][92]