Perion Network, an Israeli ad tech stock, has surpassed expectations with strong growth in the second quarter of this year. The company, known for its intelligent hub that optimizes ad placements and traffic, reported a 22% increase in revenue to $178.5 million, along with a 65% surge in adjusted earnings per share to $0.84, outperforming estimates.
Perion Network also raised its guidance for both revenue and earnings. The company now expects revenue between $730 million and $750 million, representing a 16% year-on-year growth. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast has been raised to at least $167 million, reflecting a 26% increase.
Several channels contributed to Perion’s growth, including a 104% rise in connected TV revenue, reaching $7.2 million. Retail media revenue saw a 63% increase to $10.1 million, while revenue from its cookieless targeting solution, SORT, surged 84% to $21 million.
Although Perion may not be considered a typical AI stock, artificial intelligence and machine learning play a significant role in its intelligent hub and other digital ad technologies. Tal Jacobson, the company’s new CEO, explained that their platform combines three layers of data, including anonymized shopper data, third-party data on demographics and location, and Perion’s proprietary iHUB data. These layers of data are processed by their AI decision engine, which selects from a wide range of dynamic creative ads.
SORT, Perion’s AI-based solution, allows them to target the right product to the right person at the right moment without relying on third-party cookies, which are expected to be phased out on Google Chrome next year. For instance, the company can customize retail ad creatives based on local weather conditions. If it’s raining, viewers in one city will see ads for comforting soup, while those in hot and sunny locations are targeted with ice cream ads.
Perion has been successful in the ad tech sector, even during the pandemic, when digital ad growth slowed down. This success has led to a nearly 500% increase in the company’s stock price over the past three years, and its profitability continues to soar.
Jacobson, who took over as CEO on August 1st, plans to continue Perion’s growth strategy through acquisitions. He envisions becoming one of the biggest companies in the ad tech space, with the goal of purchasing more technologies and companies to achieve this ambition. Perion’s strong financial position, with approximately $500 million in cash and no long-term debt, positions them well to make further acquisitions.
Despite being a relatively small player in ad tech, Perion presents an attractive growth opportunity for investors in a massive industry. The company’s stock is currently trading at a price-to-earnings ratio of 16, based on generally accepted accounting principles (GAAP) earnings. If Perion maintains its strong growth trajectory, its AI technologies could provide even greater leverage to its business model and drive further margin expansion.
In conclusion, Perion Network’s impressive second-quarter performance, coupled with its AI-powered ad tech solutions, have positioned the company for continued success. With its new CEO at the helm and a focus on acquisitions, Perion has ambitious plans to solidify its position in the ad tech industry. As the company grows and capitalizes on the potential of AI, investors could see significant returns in the future.
