Perion Network Ltd

Hello, everybody, and welcome to the Carry On Network first quarter 2024 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.carryon.com. Before we begin, I would 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 be materially different than any future results, performance, or achievements anticipated or implied by these four 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 a non-GAAP basis. While mentioning EBITDA, we will 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 6K. Hosting the call today are Kyle Jacobson, Parian's Chief Executive Officer, and Miles Siglo, Parian's Chief Financial Officer. I would now like to turn the call over to Kyle Jacobson. Please go ahead.

Good morning and good afternoon, everyone. Thank you for joining us today. With me today at our New York office, our HiveStack General Manager, Andreas Supliotis, who leads our out-of-home advertising technologies, and our Chief Product Officer, Kenny Lau, who leads our advertising solutions. Our CFO, Meroz Sigron, is joining us from our Israeli office. Today, we face our challenges heads-on, with a determined spirit to navigate forward. As we previously announced, the first quarter of 2024 presented specific challenges. Notably, a decline in our search advertising activity that began during the first quarter and will be mostly reflected from our second quarter. This is largely due to recent changes in advertising pricing and mechanisms by Microsoft Bing. These changes led to reduction in revenue per thousand searches for both Perion and other Microsoft Bing distribution partners. Let's take a deeper look into what this means for us. Perion has been working with Microsoft on a revenue sharing model. This model did not change. Yet both Microsoft and Perion earned their revenue based on how much Microsoft charges their advertisers. This is where the changes were made. It is common for major tech companies such as Microsoft to periodically adjust their pricing strategies. Microsoft's advertising pricing and mechanism changes do not affect our contract. You'll notice that despite our announcement about the changes that Microsoft made, our search activity actually grew 26% year over year in Q1. Again, we expect the changes to mostly affect us from Q2 forward and our new guidance reflects that. We believe that our relationship with Microsoft remains strong with ongoing collaboration between our teams. This event didn't change Perion's execution abilities and future possibilities. Now let's move to talk about the future. I'm excited to present the next phase of Perion's evolution. an advertiser-centric universe with technologies that power brand presence across the entire consumer journey. The Perion universe is built to connect advertisers with their target audience throughout the entire day, online and in the physical world, such as in-store advertising. We harness the power of dynamic creative optimization to generate demand, We use our technologies in web and search supply, in digital out of home, in social, connected TV, and in audio ads. All our technologies are leveraged to create an harmonious blend of consumer engagement. This new chapter of Perion is wrapped in a fresh brand identity. Our new brand reflects our evolution as a company. At Perion, we architect AI-powered technology solutions to anticipate consumer behavior and adjust to it. Our AI solutions are designed to help brands and advertisers elevate their strategies and seize every advertising moment. Our new slogan, Elevate with Perrion, embodies our commitment to advertisers to stay ahead of the curve. Our objective is to ensure that wherever their audiences are in their journey, Perrion is there to elevate their brand and outcome. As Perrion keeps evolving, we add more technologies and solutions to our universe, either by acquisitions or through our in-house talented R&D teams. Later, you will hear from our Chief Product Officer for Advertising Solutions about the new innovations we have lined up. While we at Perion have many growth engines, we are highlighting for you the fastest growing drivers in each quarter. We've seen significant growth across the key areas. Retail media solution grew by 134%. Our CTV advertising surged 108%, and our programmatic digital out of home advertising increased by 25% on a pro forma basis. These engines are pivotal in our growth path. Within retail, we replicated the success that we had with large retailers and grocers. in the food and beverage industry. In the first quarter, for example, our technology significantly enhanced the top US beer brand with a cross-channel campaign. We used advanced AI-driven dynamic mapping in high-impact advertising units to achieve a 14% sales lift. And we generated nearly half a million dollars in incremental in-store sales. This approach leveraged real-time data, such as sporting events, to optimize ad delivery that creates more foot traffic to multiple retail locations. It's important to highlight the strength that HiveStack brought to our retail media solutions. As you can see, the impressive 134% year-over-year growth of our retail media solutions was fueled by both our organic and our new digital out of home advertising solutions. We believe that digital out of home will increasingly support the growth of our retail media solutions going forward. Within CTV advertising that enjoyed a remarkable 108% growth, this quarter the most popular features among our customers were live and dynamic CTV, branded CTV, and pause ads. Here's an example of a live CTV ad that we ran for Estee Lauder that was part of an international cross-screen campaign.

I grew up on game day.