Perion(US:PERI)2020-08-06 03:10Financial Data and Key Metrics Changes - In Q2 2020, revenues decreased by 5% from $63.6 million in Q2 2019 to $60.3 million, with advertising revenue down 12% primarily due to COVID-19 impacts [21][24] - Net loss for Q2 2020 was $2.2 million or $0.08 per diluted share, compared to net income of $2.9 million or $0.11 per diluted share in Q2 2019 [23][24] - Adjusted EBITDA in Q2 2020 was $2.5 million, down from $7.4 million in Q2 2019 [24] Business Line Data and Key Metrics Changes - Advertising revenue was $18.7 million, while search and other revenues were $41.7 million, with advertising contributing 31% to total revenue [21][22] - Customer acquisition costs in media buy were $36.8 million or 61% of revenue, up from $33.2 million or 52% in Q2 2019, primarily due to the acquisition of Content IQ [23] Market Data and Key Metrics Changes - Digital ad spending is expected to decline by approximately $20 billion, representing a 20% drop from 2019, with a potential rebound in the second half of the year [5] - The advertising business was negatively impacted by a 25% to 35% reduction in ad spending across sectors, particularly travel and automobile [9] Company Strategy and Development Direction - The company aims to drive top-line growth and profitability through innovation and accretive M&A without raising additional capital [6][27] - The acquisition of Pub Ocean is part of the company's strategy to enhance its advertising business unit and is expected to generate an incremental $25 million in revenue and $5 million in adjusted EBITDA over the next 12 months [16][20] Management's Comments on Operating Environment and Future Outlook - Management believes the worst of COVID-19's impact is behind them, providing guidance for the second half of 2020 with expected revenues between $150 million to $160 million and adjusted EBITDA of $11 million to $13 million [28] - The company is optimistic about improving business indicators and market trends in early Q3 [9][28] Other Important Information - The integration of Content IQ has been completed smoothly, and the company is working on enhancing the integration of CodeFuel's signals into the Content IQ and Pub Ocean platforms [13][14] - The partnership with Microsoft has expanded, covering more products and geographies, which is expected to drive new revenue streams [11] Q&A Session Summary Question: Comparison of Pub Ocean and CIQ - Management described Pub Ocean and CIQ as complementary, with CIQ lacking content recommendation capabilities that Pub Ocean provides [31] Question: Revenue Monetization from Pub Ocean - The majority of Pub Ocean's revenue is generated from its own sites, approximately 80% [32] Question: Trends in Advertising Business - Management noted that while travel and automobile sectors significantly impacted revenue, other sectors are beginning to increase their ad spend [39] Question: Future of the Search Business - The search business has shown resilience, with growth driven by new products and a strong partnership with Microsoft Bing [34][45] Question: Industry Trends and CPM - Management indicated that CPM trends have been negatively affected, with advertisers shifting from high-impact ad units to lower-cost options during budget cuts [46] Question: Future Outlook Post-Acquisitions - Management expects significant integration benefits from the acquisitions of Content IQ and Pub Ocean, enhancing their capabilities in the advertising space [48]