Perion Network Ltd

Hello everybody and welcome to the Parion Network third quarter 2023 earnings conference call. Today's conference is being recorded. The press release detailing the financial results is available on the company's website at www.parion.com. Before we begin, I'd like to read the following Safe Harbor statement. Today's discussion includes forward-looking statements. These statements reflect the company's current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including those discussed under the heading Risk Factors and elsewhere in the company's annual report on Form 20F that may cause actual results, performance, or achievements to materially differ, and any future results, performance, or achievements anticipated or implied by these forward-looking statements. The company does not undertake to update any forward-looking statements to reflect future events or circumstances. As in prior quarters, the results reported today will be analyzed both on a GAAP and non-GAAP basis. While mentioning EBITDA, we'll be referring to adjusted EBITDA. We have provided a detailed reconciliation of non-GAAP measures to their comparable GAAP measures in our earnings release, which is available on our website and has also been filed on Form 6-K. Hosting the call today are Tal Jacobson, Perrion's Chief Executive Officer, and Mayo Sigourn, Perrion's Chief Financial Officer. I would now like to turn the call over to Tal Jacobson. Please go ahead.

Hello, everyone, and welcome to Perion's third quarter of 2023 earnings. Joining me today is Maoz Sigron, our CFO. I would like to begin by extending our most profound sympathy and support to all our employees and their families and our friends and colleagues in Israel. who are facing challenging times. As I recently said in an interview on CNBC, Israelis are the most resilient people on earth. Under extreme situations of uncertainty, Israelis thrive, come together, and overcome any difficulties. Hence, Periel's operations and business activities remain strong. Perion is a global company, predominantly serving the US market, where the vast majority of our revenue is generated. The huge support we're receiving, including from many of you on this call, is so appreciated. Perion is built on the hard work and execution abilities of our amazing teams, and on the long-lasting support and belief of our investors. I want to thank you all for being part of our integral part of our journey. We will continue to serve our country while delivering value to our clients, partners and stakeholders. The headline news of the third quarter of 2023 is similar to every quarter over the last three years. Our financial results reflect Payone's ability to deliver continuous profitable growth even under macroeconomic headwinds. Our profitability remains among the highest in the industry. The three main factors that enabled another quarter of growth and strong profitability are Perion diversified business model, focus on technology and innovation, and disciplined execution. We achieved growth in key financial parameters, including year-over-year growth in revenue, contribution act stack, and adjusted EBITDA. This impressive double-digit growth represents a continuous trend that has been ongoing for the past three years. Our ability to execute and deliver constant profitable growth proves once again that our business model is effective and strong. Perion is a technology company. Two of our strongest growth drivers are retail media and CTV. and they are expected to drive significant growth going forward. Our year-to-date CTV revenue has grown an impressive 48% over the same period last year, well ahead of the market. Our diversified portfolio allows us to be agile and shift our solutions to align with our advertisers' budget allocation trends. During the writer's strike, CTV budget shifted to live events versus on-demand content. We at Perion were able to capitalize on this and move our CTV solutions to meet this demand. Our retail media solutions are also showing tremendous growth with a year-to-year revenue of 81% over the same period last year. and dramatically ahead of the expected US retail media growth of less than 20% in 2023. At the beginning of 2023, we expected our retail media revenue to reach an aggressive goal of $30 million by the end of the year. I'm happy to share that we've already achieved our initial annual goal These strong results across both CTV and retail are due to our ability to decipher trends ahead of time and move fast to capture those opportunities. As a technology forward company, we harness technology to effectively penetrate new markets and create high margin growth engines. Our growth is driven by our deep commitment to technological innovation. We offer many unique solutions, both on the supply and the demand sides of the market. We at Perion offer our advertisers a suite of technological multi-channel solutions. Our solutions are optimized to achieve highest business results for advertisers. all under one roof. Firstly, we generate for advertisers high impact creative formats for all media channels. Our goal is to connect advertisers with their consumers at every touch point in an easy and efficient manner. Our creatives are based on advanced data in AI capabilities. To personalize the right message to the right audience, using our SORT technology, we target audience segmentation across channels. Our ads and campaigns are distributed across premium publishers and channels, such as CTV, display, video, social, digital out of home, and audio. The final and very important piece of this puzzle is our ability to measure the impact of each campaign at each channel and optimize based on the results. Live CTV is one of the fastest growing high impact advertising solutions. Here you can see our immersive ad unit integrated into live CTV sports programming at the peak of the excitement at the highest attention level. Here we created an ad for AT&T that ran during FIFA soccer game. The algorithm identify a lull in the action and the exact moment it places the ad alongside the live event. This powerful placement solves commercial avoidance and also known as bathroom breaks. Another great example of the high impact live CTV is our sponsorship with Home Runs, the most exciting moment in baseball. Here you can see the stay live experience we created for the New York Yankees for both CTV and OTT. As FanDuel delivers its message at the right moment during the broadcast, viewers' attention to the thrill of the home run extends to the commercial message itself. by turning an unmissable moment into an unmissable advertising opportunity where we help our advertisers break through the clutter. This ability to command attention has helped Perrion to attract world-class advertisers from a large range of categories, from AT&T to Mazda, Mercedes, Kroger, and many others. I'm happy to announce WAVE, our new advertising solution for dynamic audio ads driven by generative AI. WAVE stands for Waveform Audio Voice Engine. WAVE generates hundreds of thousands of audio ads based on retail data of products and promotions. This groundbreaking solution delivers tailored audio messages to listeners, adapting in real time the various factors, including context, behavioral, geographics, demographics, and others. Utilizing sophisticated algorithms of artificial intelligence, WAVE generates audio ads that create a personal immersive audio experience, enhancing engagement and impact. We at Perion are now present with sight, sound, and motion We combine technology and creativity to allow retailers to deliver deep, meaningful, and full sensory consumer experience. The US digital audio ad market is rapidly expanding. Advertising budgets are projected to reach an impressive figure of nearly $6.8 billion in 2023. In this growing market, WAVE, our new solution, is designed to help advertisers offer enhanced personalization and engagement at each touchpoint on the consumer journey. One of the first WAVE adapters is Albertsons, the second largest supermarket chain in the US. Albertson has seamlessly integrated Wave into several successful campaigns and is now scaling the Wave solution. Here's an example of our Wave technology in action.

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