Perion Network Ltd

Hello everybody and welcome to the Perion Network second quarter 2026 earnings conference call. Hello everybody and welcome to the Perion Network second quarter 2026 earnings conference call. Today's conference call is being recorded. An archive of the webcast will be posted on the company's website. The press release detailing the financial results is available on the company's website at www.perion.com. Before we begin, I'd like to read the following safe harbour statements. Today's discussion includes forward-looking statements. These statements reflect the company's current views with respect to future events. The company does not undertake to update any forward-looking statements to reflect future statements or circumstances. As in prior quarters, the results reported today will be analysed both on a gap and a non-gap basis. As in prior quarters, the results reported today will be analysed both on a gap and a non-gap basis. By mentioning EBITDA, we will be referring to adjusted EBITDA. We have provided a detailed reconciliation of non-gap measures and their comparable gap measures in our earnings release, which is available on our website and has also been filed on Form 6K. Hosting the call today are Tal Jacobson, Perrion's Chief Executive Officer, and Elad Tzubery, Perrion's Chief Financial Officer. Good morning, and thank you for joining us on Perrion's earnings call for the second quarter of 2026.

Good morning and thank you for joining us on Perion's Earnings Call for the second quarter of 2026. Nearly two years ago, we made a deliberate decision to diversify Perion away from the open web. This diversification was driven by both our organic investments in CTV and Retail Media. This diversification was driven by both our organic investment in CTV and retail media and our M&A strategy. Ever since, we've been doubling down on that strategy. And this quarter results reflect that conviction. Ever since, we've been doubling down on that strategy. And this quarter results reflect that conviction. With strong traction across all our key growth engines.

In the second quarter of 2026, we saw a massive adoption and accelerating adoption of our solution across our client base. This reflects a growing advertising trust and accelerating adoption of our solution across our client base. And our advanced AI technology outmatches continue to scale rapidly with a triple-digit and our advanced AI technology OutMatch. We also continue to expand our reach this quarter, both geographically and in the depth of our platform capabilities. We also continue to expand our reach this quarter, both geographically and in the depth of our platform capabilities. In retail media, Best Buy Canada has selected Perion as its end-to-end in-store retail media technology partner, as part of our strategy to double down on retail media and digital phone advertising. As part of our strategy, we expect those new partnerships to unlock new budgets from high-growth verticals. We expect those new partnerships to unlock new budgets from high-growth verticals. This quarter, we also added a new distribution partner to bring outmatch to Greece and to the Central and Eastern Europe.

This partnership extended outmatch to Greece and to the Central and Eastern Europe.

On the technology side, we extended our reach into new regions through the partner-led model. On the technology side, we extended our full-stack digital home infrastructure into Google's DV360.

We also launched an agentic software mobile application through Google's Media Platform. which we call AskPerry. This upgrade transforms our execution capability to be more accessible to advertisers and agencies.

This upgrade transforms our execution capability to be more accessible to advertisers and agencies. New distribution channels, new retail momentum we're seeing across our growth engines. Marketers navigate a universe of channels, screens, platforms, formats, datasets, and buying environments.

All while consistently chasing higher performance. Budgets, datasets, and buying environments remain siloed by channels. Parian 1 is designed to close that gap with advanced technology-driven solutions.

It is built to plan, activate, and optimize advertising campaigns across CTV, social, digital art, home, retail media, and open web. At the center of Pellion One is Outlooks, a proprietary AI agent continuously optimizing outcomes across channels and platforms. Pellion One is an infrastructure, not a toolset. Here's what it looks like in practice. Perian One is an entry point, not a toolset. Here's what it looks like in practice. Under the hood, whenever we need outcome-driven activations, Outmax operates as an agent that plans and executes on our advertisers' behalf. Perian One leverages multiple connections to audiences, data, and measurement technologies. including our own sortable audience segmentation technology. From there, Perion One reaches into the channels themselves, every major open and world garden DSP and SSP. From there, Perion One reaches into the channels themselves, every major open and world garden DSP and SSP. From there, Perion One reaches into the channels themselves, every major open and world garden DSP and SSP. It's an open ecosystem with effectively unlimited connections we keep adding, giving advertisers the reach to the entire global market. Outmix, our AI agent, works across all major channels, which allows us to optimize complex campaigns and drive better business outcomes to advertising. which allows us to optimize complex campaigns and drive better business outcomes to advertisers.

Outmax removes the guesswork and replaces it with algorithm certainty. This quarter, we introduce Ask Perion, sparking deeper conversation with CMOs and agencies, eager to get ahead of their genetic media buying curve. Sparking deeper conversation with CMOs and agencies, eager to get ahead of their genetic media buying curve.

Ask Perion puts the power of Perion One directly into the hands of advertisers and agencies through a simple conversational interface. Ask Perion is about making sophisticated access to our technology while embedding Perion One more deeply within the infrastructure to use.

This quarter, Best Buy Canada selected Perion as its end-to-end in-store retail media technology part. This quarter, Best Buy Canada selected Perion as its and two end in-store retail media technology partners.

Best Buy Canada is moving from a fixed loop-based signage to a programmatic retail media model that selects ads dynamically. This technological adoption is designed to give advertisers more This technological adoption is designed to give advertisers more measurable in-store retail media reach, deepens our role as a full-stack infrastructure partner, and supports a repeatable model for building more predictable infrastructure level revenue streams over time. This full-stack infrastructure is also becoming easier for buyers to access.

We added Programmatic Guaranteed Deal Execution for our digital out-of-home directly within Google's DV360 Media Platform.

This gives buyers access to premium digital out-of-home inventory through their primary DSP. This gives buyers access to premium digital out-of-home inventory through their primary DSP. This capability is available across our full global digital out-of-home supply reach. This capability is available across our screens in over 40 countries. By bringing more than 1.6 million screens into the same workflow, advertisers already use for display, video, and CTV, we are making our supply more accessible and expanding its monetization potential.

We are making our supply more accessible and expanding its monetization potential.

Most recently, we partnered with Across Media 2 for 1 to bring Outmax to agencies and brands across Greece and the broader Central and Eastern European region. Across Media 2 for 1 brings established relationships across agencies, national tourism boards and international buying desks as well as existing experience with tourism boards and international buying desks.

Outmax can be applied across major digital channels and optimized toward advertisers' defined business outcomes.

This builds on a distribution model we've already applied in other markets. The partnership is expected to accelerate Outmax's path to revenue growth and extend our reach with low incremental costs and margin accretive growth potential. This quarter, we also added a new data partnership with Fetch, deleting consumer reward and purchase intelligence access through LiveRamp. This gives our advertisers access to verified SQ-level purchase data from over 13 million monthly active users and 26,000-plus merchants. Purchase behavior is the most direct signal of consumer intent and access to it. Purchase behavior is the most direct signal of consumer intent.

And accessing it at the scale outside the closed platform has been a persistent industry challenge.

Fetch data spends more than 1300 retail agnostic segments. Taking together those initial Those initiatives show how Payone 1 scales. First, by embedding more deeply with enterprise customers. Secondly, by expanding access to our infrastructure. And finally, by extending Outmax into new markets through our partners.

This reach and trust are the foundation of our land and expand model, giving us a strong base to deepen customer relationships and drive sustainable growth over time. With that, I will hand it over to Elad to work toward the financials.

Thank you Tal, and good morning everyone.

Our second quarter performance reflects our continued operational focus on driving scale and adoption across Perion 1. In the second quarter, Perion 1's spend increased 15% year over year to $156.7 million. This was increased 15% year-over-year to 156.7 million dollars. This was increased 15% year-over-year to 156.7 million dollars. This was increased 15% year-over-year to 156.7 million dollars. This was increased 15% year-over-year to 156.7 million dollars.

Partially offset by continued softness in the open web advertising across the industry, down 4% year-over-year. This was driven by the use of promotional terms to acquire new accounts and drive incremental spend from existing customers, though we expect them to modestly improve in the second half of the year. Take rates naturally normalized over time, though we expect them to scale rapidly, with spend growing 136% year-over-year.

Our focus on delivering advanced technological solutions is translating into tangible enterprise wins.

Our focus on delivering advanced technological solutions as its end-to-end retail digital out-of-home technology partner. Deploying our complete digital out-of-home technology partner. Deploying our complete digital out-of-home media networks in Canada.

This relationship validates our digital out-of-home business strategy and it allows us to replicate this offering

This relationship validates our digital out-of-home business strategy globally. We also remain focused on creating immediate value through our shareholders' return program. Our highly disciplined approach to capital allocation allowed us to repurchase 2.7 million shares

Our highly disciplined approach to capital allocation allowed us to repurchase 2.7 billion shares for $24.5 million during the quarter.

Finally, based on our growing visibility going into the second half of the year, the strong momentum we are seeing in our pipeline, new strategic agreements, and the structural efficiencies we have secured, we are narrowing our full year guidance ranges.

We are adjusting the high end of our EBITDA guidance. I will discuss this in more detail shortly.

Let's take a look at spend. The top line metric which reflects customers' adoption of Payone solutions. Let's take a look at spend. The top line metric which reflects customers' adoption of Payone solutions. More importantly, spend of the Payone platform grew 15% year-over-year to More importantly, spend of the period on one platform grew 15% year-over-year to 176.7 million dollars, proving that our unified platform strategy is successfully attracting enterprise media budgets. This was driven by the continuous acceleration of our core growth engines. Digital out-of-home spend grew 46% year-over-year to $87.7 million. Digital out-of-home spend grew 45% year-over-year to $87.7 million. Both continue to vastly outpace the broader market growth expectations and as advertisers are actively shifting budgets in addition to gain precise performance and cross-channel execution.

Growing 60% year-over-year to 59.4 million dollars. Retail media represents a strategic focus for per year bringing together our CTV digital out-of-home and display capabilities. Enterprise Mondays like Best by Canada demonstrate our ability to modernize in-store media networks.

Enterprise Mondays, like Best Buy Canada, demonstrate our ability to modernize in-store media networks.

This uniquely positions us to bridge the physical and in-store digital screens and external digital out-of-home screens, delivering a truly unified end-to-end customer journey that few in the industry can match.

Delivering a truly unified end-to-end customer journey that few in the industry can match. Contribution X-Stack for the second quarter was $42.3 million, down 11% year-over-year. Parent 1 Contribution X-Stack was $42.3 million, down 11% year-over-year.

Parent 1 Contribution X-Stack was up from $76 million last year. Representing 83% of total contribution stock in the quarter, up from 76% last year.

Parallel contribution stock declined 4% year over year, mainly due to our use of promotional terms to acquire new accounts and drive incremental spend from existing customers to our platform. As we continue to scale the platform, we expect take rates to naturally normalize over time, though modestly improved in the second half of the year. As expected, search revenue declined 2% year-over-year, while search contribution x-stack declined 30% year-over-year. As expected, search revenue declined 2% year-over-year, while search contribution x-stack declined 30% year-over-year.

And we continue to manage the search business to maximize cash flow to reinvest into period 1.

and Return Capital to Shareholders through Share Repurchase Pro. Adjusted EBITDA for the second quarter was $2.8 million, representing a 7% margin of contribution extract. Excluding this foreign exchange impact, adjusted EBITDA would have been $4.4 million.

As we are scaling our top line and capturing more market share, we remain focused and disciplined on improving our operational efficiency.

At the end of the second quarter, we executed targeted efficiency initiatives to optimize our cost base as part of this year's efficiency plan.

While the second quarter did not benefit from these actions, we expect as part of this year's efficiency plan.

While the second quarter did not benefit from these actions, we expect the adjusted EBITDA margin to meaningfully inflect upwards in the second half of the year to reach our full-year targets.

On a gap basis, second quarter net loss was $6.8 million or $0.09 per diluted share.

On a non-GAAP basis, net income was 3.9 million dollars or 9 cents per division. It is important to emphasize that the year-over-year increase in our GAAP net loss was almost entirely driven by negative foreign exchange Thank you for watching! and the lower outstanding share count, we are making a highly strategic trade-off. By aggressively executing our buybacks now, as our profitability scales in the second half of the year, we are permanently reducing our share count, as our profitability scales in the second half of the year. Thank you for watching! This reliable cash generation provides us with the financial flexibility to fund our organic growth initiatives all without stretching our budget.

As of June 30, 2026, we held 268 million dollars in cash, cash equivalents, short-term bank deposits, and marketable securities with zero debt. In cash, cash equivalents, short-term bank deposits, and marketable securities with zero debt. We repurchased 2.7 million shares for 24.5 million dollars at an average price of 9.12 million shares.

Since the initiation of this private program 9 quarters ago, we have repurchased a cumulative total of Since the initiation of this buyback program nine quarters ago, we have repurchased a community of 18 million shares for the remaining $33.8 million under the current plan.

By the end of this year, we plan to fully execute the remaining $33.2 million under the current plan.

Repurchasing our stock at current valuation levels reflects our confidence in Perion's long-term value and future prospects. Thanks for watching! We are narrowing our full year $225 million and adjusted EBITDA of 51 to 53 million dollars implying an adjusted EBITDA margin of 24% at the midpoint. Our confidence in meeting this EBITDA margin is driven by tangible second half catalysts. Leading these catalysts is the execution of large-scale strategic agreements. These recently signed agreements are actively in the onboarding phase. Their material financial contribution is expected to kick in towards the end of the third quarter and accelerate moving forward. In addition, the continued scaling towards the end of the third quarter and accelerate moving forward. In addition, is rapidly converting a robust pipeline growth into realized spend. In parallel to our top line expansion, we took decisive steps to optimize our cost structure and streamline operations.

In the first half of the year, we took decisive steps to optimize our cost savings and streamline operations. These deliberate actions started in the second half of the year and beyond.

With an optimized expense base and growing momentum across Perion 1, we are scaling our business on a strong Agile foundation and we remain completely on track to achieve our 2028 growth and efficiency targets.

If you wish to ask a question, we ask that you please use the raised hand function at the bottom of your Zoom screen.

If you wish to ask a question, we ask that you please use the raised hand function at the bottom of your Zoom screen. Or if you have dialed in today, please press star 9. Our first question comes from Andrew Marrock at Raymond James.

Andrew, you may now unmute your line and ask your question. Thank you. You were breaking off, so I'll see if I got all of it.

So you were breaking off, so I'll see if I continue to grow very fast.

We do see synergies between our products.

We do see synergies between our products. Retail and Social is now pushing out of CPV. Retail and Social actually drives a lot of the AI technologies within the platform. Again, you were breaking a lot of the AI technologies within the platform.

If you want to repeat the parts that were not answered, that would be great.

Generally, the agency workflows that you're bringing to market are helping

The GenFix solutions that we have, including Askperion, is fully integrated with Outrex. The GenFix solutions that we have, including Askperion, is fully integrated with Outrex. If you just completed a campaign on different social platforms, it will suggest V or Meta or YouTube or whatever it is, Almex is becoming an even more integrated solution within our entire agendic platform.

Andrew, I'm sorry, it's very hard to hear you. If you can repeat this for us again. Just talking about your medium term goals and the 2026 performance so far.

We are starting right now to onboard the sub-certificate agreement we have discussed about in Q1. We are starting right now to onboard the sub-certificate agreement we have discussed about in Q1. We are starting right now to onboard the sub-certificate agreement we have discussed about in Q1. We are looking at Q3 and Q4 when we see the XDAQ and EBITDA at last year as well. When we see second half of the year, the XDAQ and EBITDA had weighted on second half of the year. Hey everybody, can you hear me okay?

Yes, thank you. Hey everybody, can you hear me okay? Can you give us a little bit of help? Obviously, you're giving us kind of the spend for period one, but we don't know the revenue. So, can you give us a little bit of help?

Obviously, you're giving us kind of the spend for period one, but we don't know the revenue.

So, I mean, obviously, you know, the other parts of the business are still having a negative makeshift back at the year.

So, just maybe help us understand how we're driving for, you know, either period one revenue in the quarter or back at the year. So,

Just maybe help us understand how much fines, that's question number one. Number two, would you think about perhaps changing like the segment disclosure to revenue tax? Number two, would you think about perhaps changing like the segment disclosure to revenue tax since you're now guiding to revenue tax tax and to maybe giving us that level of detail? I'm just curious if we can get some more details like what percent of people, how many people or what percent that is that reduction?

And then just lastly, with the 268 million of cash, should investors assume it entirely goes to buybacks or other M&A opportunities?

Thank you.

The reading for Q2 was 74 dollars to the website. It did show a slightly inclined year-over-year with the revenue, but it's something we were expecting this week. It did show a slightly inclined year-over-year with the revenue, but it's something we were expecting this week.

From a revenue recognition method, most people come on a net perspective in the period of growth. So from a revenue recognition method, most people come on a net perspective in the period of growth. We're looking at this segment and how we're breaking down this point.

It is important for us to really speak about how we are contributing to expand towards a different channel. It is important for us to really speak about how our solution is really coming into play, giving indications of our level of adoption of the customers. And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom.

And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom. And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom.

And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom. And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom. And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom. And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom. And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom. And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom. And at the end, Parent 1 is the channel of Gnostic, so the adoption of the custom. And at the end So as we discuss, I believe in studying last year, we are constantly doing improvements on how we're operating on fish, of course, and improving our cost-based scale, be more fish cost-based, and improve wherever we can. support all of this scale with the course in H1 we're very improved wherever we can creating this operational leverage going into the second half of the year we just announced right now the restructuring of the cost base it was roughly intentionally made to reduce

to support the different situation in the FX.

But also to give us some room to support the different situation in the FX. But also to give us some room to invest more in where we are going to get the growth rate. We want to hit the top line, especially in the FX. We are hitting growth rate, growth rate still fair in one. For a question with respect to the cash, record you have almost 170 million dollars in cash in our plan sheet. We are continuously trying to do a plan sheet. We are also looking at the buybacks, so we expect to end the current plan by the end of the year. But we are constantly looking at M&A activities to see if there are any more interesting opportunities to go out there and to really increase We are doing something very important when we are looking to hire cash.

We are taking very disciplined approach when we are looking at our cash. We are always trying to see what we are investing in our own. We are always trying to balance between Vyvec, or an M&A, or investing in our own business or growth.

We are always trying to balance between those.

With our current cash, obviously Vyvec, we still have a happy chunk to complete. Obviously Vyvec, we still have a happy chunk to complete this year.

We're investing there to make sure that they continue to grow and continue to outpace the market. We're investing there to make sure that they continue to grow and continue to outpace the market.

and we're constantly looking at M&A but as you can see in the past two or three years, we've always been here at the center and still showing amazing growth for this startup.

We've always been here at the center and still showing amazing growth for this startup. So we're not home running to just spend the money, we are looking for amazing opportunities.

And when we find something that makes sense, we are looking for good opportunities. And when we find something that makes sense and is extremely synergetic and profitable,

Thank you. As a reminder, if you would like to ask a question and you are in the Zoom webinar, we ask that you please use the raised hand function at the bottom of your Zoom screen. Or if you have dialed in, please press star nine. Our next question today comes from Matthew Webber at Canaccord. Matthew, you may now unmute your line and ask your question. Thank you. Our next question today comes from Matthew Webber at Canaccord. Matthew, you may now unmute your line and ask your question. Thank you.

Yeah. Okay, great. Thanks, guys. Just one for me. You talked about execution recently. Okay, great. Thanks, guys. Just one for me. Can you just talk about some of the factors that go into some of those contributions? Can you just talk about some of the factors that... Thank you, Matt. We...

We gave a lot of those agreements. It's basically a volume of those agreements. It's basically a volume of agencies. I can tell you it took us a lot of time. I can tell you that it took us a lot of time to do the onboarding and all of the test capabilities. It took us a lot of time to do the onboarding and all of the test capabilities. and many more. and I mostly can't be careful about it. You can be a professor in a few months of testing and you don't know what you can take. I want to be more careful about it. When you look at something that they are controlling, you don't know what you can take. Very capable to take any volume that they decide to give. So they are very capable to take any volume that they will decide to give. So they can be an upside in the XDAF level.

And that's why, from those specific reasons, in fact, in the XDAF level, the entire industry are very heavy from those specific reasons.

And the fact that...

I'll just say, again, to echo what Elad said, I'll just say, again, to echo what Elad said, we spent H2 main showcasing how our technology can provide better outcomes than anything else, how our technology can provide better outcomes than anything else, We're actually happy to know the strategic clients that we have now and we're actually happy to know that the value for entry was so high that it gives us the confidence that our technology can provide great value and that others are going to have a great high and provide great value. and others are going to have a very high value to entry which we're considering very optimistic about those two agreements and we're now looking how do we duplicate that with other times. Thank you.

Our next question today comes from Jason Cryer at Craig Hallam Capital Group. Jason, you may now unmute your line and ask your question. Thank you. Thank you.

Can you guys unpack the commentary about the promotional activity on Perion One? It seems like there's maybe some take rate concessions up front that'll moderate over time. I'm just trying to understand how you might take rate concessions up front that'll moderate over time. I was just trying to understand how you migrate take rates to normalized levels and why there's more impact in the near term.

So as we said, during H1, we ran a lot of test campaigns. So as we said, during H1, we ran a lot of test campaigns. But now, again, as we close those two strategic agreements, obviously, they're not going to stay at testing rates. We do think this is going to be normalized, but going forward, testing budgets is a great tool. We do think this is going to be normalized. We think testing budgets is a great tool to showcase our technology. So our goal is to gain as much market share as possible, and obviously once we close those agreements and future agreements, we believe tick rates will go back to normal.

And just to add to what Stan said, already starting from the second half of the year, I believe that we're going to see slightly increasing towards the second half of the year. Thank you.

And then as a follow-up, you guys had impressive growth across CTV and out-of-home. Thank you. And then as a follow-up, you guys had impressive growth across CTV and out-of-home. When do you think the consolidated growth rates more closely align with the segments as opposed to the legacy segments which are in decline? As opposed to kind of the legacy segments which are in decline.

I think it's not a secret that WED is driving the entire industry.

We see buyers shifting away from the open world and moving towards digital art performance. We see buyers shifting away from the open world and moving towards digital art performance. We see our solutions for digital art performance increasing. Very much focusing what we used to sell in the self-serve. So having said that, I think that our indicators feel very healthy from what we used to sell in the self-serve. So having said that, I think that our indicators feel very healthy from what we used to sell in the self-serve.

So having said that, I think that our indicators feel very healthy from what we used to sell in the In our opinion, when we are looking about the different structural way you give it is on the standard. Because this is what really the adoption of how much the discussion with the customers

and the third one, usually it's the channel platform and the third one, usually it's the take rate channel. We are of course controlling the overall take rate that we are expecting to get.

where the money will be deploding out of certain companies.

So I'm assuming also next act, we'll start seeing more money.

So I'm assuming also next act, we'll start seeing more money. I would not expect it to go relatively lower than the 20% rate that we see right now. As said, in HQ even we're going to see a moderate increase. Thank you.

Our final question today comes from Eric Martinuzzi at Lake Streak. Eric, you may now unmute and ask your question. Our final question today comes from Eric Martinuzzi at Lake Streak.

I'm curious to know the repeat customers that are using Outmax. Are you seeing larger spend? Yes, thank you.

I think the interesting thing about Outmax specifically, it's a great product for the level of spend model. Specifically, it's a great product for the level of spend model. The majority of our clients that are using it started from within the same account. And now they're growing order over order within the same account. So since Altmex is outcome driven, it can show actual business results for our clients with the majority of our clients.

And I noticed you, in your guidance, you lowered the midpoint for Contribution X tax for 2026. Was this a result of a slower-than-expected ramping of these two large strategic accounts? Yes, first of all, our initial expectation was that this onboarding would really be...

We signed earlier in the year and we will be able to see more product. Also, earlier in the year, one of the multiple headwinds that we saw in H1,

I did note that you reiterated the midpoint on the adjusted EBITDA, so that was good to see.

This concludes today's Q&A. I'll now hand back to management for any closing remarks.

Thank you. Thank you all for joining. A billion and one adoption is accelerating across every growth engine. Thank you all for joining. A billion and one adoption is accelerating across every growth engine. And we're entering the second half of the design momentum. We look forward to updating you for the next quarter. Thank you for your time.

This concludes today's call. Thank you everyone for joining. You may now disconnect.