Perion(US:PERI)2020-10-29 04:08Financial Data and Key Metrics Changes - Total revenues increased by 27% year-over-year to $83.4 million, with advertising revenue growing by 76% and search revenue increasing by 3% [6][16] - Adjusted EBITDA rose by 15% year-over-year to $8.7 million, representing 10% of revenue, compared to 12% in the previous year [9][18] - Net income for Q3 2020 was $2.1 million or $0.08 per diluted share, down from $2.9 million or $0.11 per diluted share in Q3 2019 [18] Business Line Data and Key Metrics Changes - The advertising division saw a 76% increase in revenue, primarily driven by a 200% growth in Connected TV (CTV) [6][16] - The search business experienced a 3% growth due to an increase in monetized queries delivered to Microsoft Bing [8][16] - Customer acquisition costs increased to $49.9 million, or 60% of revenue, compared to 52% in the previous year, largely due to acquisitions [17] Market Data and Key Metrics Changes - The demand for CTV advertising has surged, attributed to changing consumer behaviors during the pandemic [7][12] - The company is positioned to benefit from the shift towards unified IDs as third-party cookies decline, enhancing its competitive edge [25] Company Strategy and Development Direction - The company is focused on a diversification strategy across three pillars: search, social, and display/video advertising, aiming for sustainable double-digit growth [11][13] - The integration of acquisitions like Content IQ and Pub Ocean is expected to enhance capabilities in content recommendation and audience capture [66] - The strategic roadmap includes developing a full-funnel experience to meet the evolving needs of marketers [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sustainable and profitable double-digit annual revenue growth, supported by a strong operational model and market trends [11][21] - The company raised its revenue guidance for the second half of 2020 to between $164 million and $174 million, with adjusted EBITDA expected to be between $16 million and $18 million [21] Other Important Information - Cash flow from operating activities was $6.6 million, impacted by working capital changes related to acquisitions [19] - The company has a total debt of $22.9 million as of September 30, 2020, down from $16.7 million at the end of 2019 [19] Q&A Session Summary Question: Performance of Content IQ and Pub Ocean - Management indicated that both acquisitions are performing better than expected, contributing positively to overall growth [25] Question: Unified IDs and Opportunities - The company is developing its own unified ID to prepare for a cookie-less future, leveraging its owned and operated sites [25] Question: Microsoft Contract Renewal - Management expressed growing confidence in the ongoing negotiations for the Microsoft contract, indicating they are in an advanced stage [36] Question: Capture and Convince Technology - This strategy is integrated across all business units, focusing on capturing new users and providing full-funnel attribution [32] Question: Advertising Segment Growth - Management expects significant growth in the advertising segment driven by technology development and a comprehensive solution that meets market demands [65] Question: Integration of Pub Ocean and CIQ - The integration is progressing well, enhancing capabilities in audience capture and content recommendation [66] Question: Tax Rate Commentary - The higher tax rate in the quarter is attributed to deferred tax and acquisition-related movements, with expectations to normalize around 20% going forward [68]