Perion Network Ltd.

 

Perion Network is an Israeli company (listed on the NASDAQ) that has a few business units involved in digital advertising and they have been transforming their businesses over the past few years.  The company languished and carried excessive debt and was focused on short-term revenue at the expense of margins; but the company has improved its business and balance sheet, which is now net cash, and they have improved margins to deliver solid profitability. Importantly, they have a partnership with Bing (Microsoft) for search-based advertising although Search is becoming a smaller part of their business as the rest of the business grows faster.

Undertone helps advertising agency clients manage and evaluate their digital branding and advertising campaigns across multiple types of screens and platforms.  Employing AI, the company seeks to deliver advertising at the right time and place.

MakeMeReach helps advertisers and agencies create, manage, and optimize their campaigns on all major platforms such as Facebook, Google, Twitter, Instagram, and Snapchat.  In September 2019, the company announced a partnership with Pinterest.

CodeFuel offers Publishers (sellers of advertising space) solutions to optimize search traffic, engage users, improve user experience, and boost revenues across desktop and mobile platforms.  Solutions include monetizing website advertisements, search engines, browser extensions/Add-ons, and apps.  

Smilebox enables users to create invitations, slideshows, greeting cards, and incorporate their photos to customize and personalize these moments.

 

Advertising – integrating Undertone’s high-impact display and video offerings with their social media platform to create a meaningful and trackable cross-channel advertising journey.

Transitioning business from short-term race for low-margin sales to developing longer-term relationships to drive better margins. Replacing current alliance with Alphonso (CTV provider) with a better and higher-margin alternative.

Ests:                 4Q23   1Q24   FY23    FY24

Revs                233m   175      742      887

EPS                  .93       .59       3.18     3.19     use Koyfin for EPS estimates

                                                             

P=29.47, Net cash/sh $7.83, TTM EPS=3.33, P/E=8.8X, EV/E=6.6X, FY24 P/E=9X, FY24 EPS est of 3.19 would be down y/y but guidance would be growth from 3.33

 

Feb 7- 2024 Exited PERI after the conference call at average price $24.84

  • It seems drastic to fully exit from such a large position but I shouldn’t have let the position get so large and I had to cleanse that slip from discipline. Although their results were fine and their FY24 guidance was for modest growth despite being modestly below estimates on Revenue and EBITDA but implied better than expected EPS as estimates were for a decline. The problems for me were that the company is not fighting for investors by attempting to close information gaps to improve confidence on the resiliency of the Microsoft Business. Back in September, Raymond James downgraded the name, citing pushback from investors because of that lack of understanding. Furthermore the KPIs are getting less clear (Video, as a subcomponent of Display, was down because of shifting inventory to Display and the provided KPIs of Display do  not sum up to the total) and investors who are concerned about risk to the Search business would not find comfort in declining Display and growing concentration in Search when previously concentration in Search was shrinking as the non-Search business delivered stronger growth as well as q/q declines in average daily searches and publishers.  As for the complete exit, that’s 2 parts, I’ve lost confidence in management fighting for investors. And had I perfectly trimmed the name back last year and ended up with an 8% position, I still wouldn’t have felt confident in buying so I had to enforce discipline on myself and fully exit. I will continue to watch the name especially to if the Microsoft business renews or not but management clearly isn’t taking steps to improve investor confidence and the list of shit-posters is growing in number, volume, and boldness and the growing red flags give them more ammunition.

4Q23 1.04 vs .90, est.93, FY23 EPS 3.33 vs 2.47

  • Feb 7, 2024, P=29.47, TTM EPS=3.33, P/E=8.8X, EV/E=6.6X, FY24 P/E=9X

  • Revs +11.7% to 234.2m, EBITDA +11.7% to 53.9m, est 53.6m, OCF 50.2m vs 49.5m

  • Display -3% to 119.8m, Search +33.2% to 114.4m, Net Revs +3.4% to 90.6m,

  • Retail +196% to 20.2%, 17% of Display, CTV +69% to 14.4m, 12% of Display, Video -33% to 29% of Display vs 42% last year, why don’t those add to 100% of Display, where’s the rest?

  • Average Daily Searches +37% to 30.2m, Search Advertising Partners +4% to 162m, both down q/q, no explanation why Search is +40% q/q with those metrics down

  • MSFT Search and news advertising exTAC +8% (+7% ex fx), MSFt had previously projected +MSD, higher volumes offset by negative impact from 3rd party partnership, expect next quarter M-HSD

  • FY24 Outlook: Revs +15-18% to 860-880m, +10% pro-forma, est 887m, EBITDA +5-7% to 178-182, est 187.1 (51% of net Revs vs 55% in FY23), implies EPS >3.43, est 3.19

3Q23   .84 vs .61, est .74 up from .68

  • Nov 1, 2023, P=25.40, TTM EPS=3.15, P/E=8X

  • Revs +17% 185.3m, adj EBITDA +29% to 42.7m, OCF 40.1m vs 34.7m

  • Display +14% to 99.2m, Search +20% to 86.1m, Net Revs +19% to 77.3m

  • Retail Media +112% to 13m to 13% of Display, CTV +39% to 7.9m or 8% of Display, Video -16% to 32% of Display, Average Daily Searches +86% to 31.3m, Search Advertising Partners +16% to 164, no mention of SORT which in 2Q was 21% of Display

  • Reiterate FY23 Outlook, Implies 4Q Revs +5-15%, 220-240m, EBITDA +7% to 51.8m

  • Retail Media already achieved their FY goal, Outlook is even more perplexing.

  • Introduced WAVE (where’s SORT?), doubling down on generative AI.

  • Question on SORT, “doing great”, “not a stand-alone product”

  • Not seeing weakness in CTV CPM

  • Outlook seems very conservative although 4Q22 was very strong.

  • No attempt to improve understanding of how the business operates or to clear up predatory allegations from Spruce Point and the “market” is punishing me for my oversize position which I have intended to reduce and previously stated I was too slow to do so, management’s tone-deafness to improving communication about their business (not just me, RJ says this is their biggest pushback) is frustrating and disappointing. On an EV/E basis, PERI is down to 5X and buyers are not motivated.

2Q23 .84 vs .52 +65%, est .66 up from .59

  • Aug 2, 2023, P=35.48, TTM EPS=2.93, P/E=12X (EV/E=9X), FY24 P/E=12X

  • Revs +22% to 178.5m, Display +22.3% to 99.9m, Search +21.5% to 79.1m, Net Revs +27.4% to 77.3m, adj EBITDA +45% to 41.2m, OM 22.8% vs 19.1%

  • CTV +104% to 7.2m, 7% of Display, Retail Media +63% to 10.1m, 10% of Display, Video +14% to 41% of Display, SORT +84% to 21% of Display

  • Avg Daily Searches +68% to 28.6m, Search Advertising Publishers +28% to 159, RPM modest up q/q

  • Modestly raised FY23 Outlook Revs +16% to 740-750m, adj EBITDA 167m+ implies 2H Revs +10-15.7% and 2H adj EBITDA +16% or more, implies FY23 adj EPS ~3.40 (est 2.93 up from 2.59 3 months ago).

  • Fantastic results as usual although guidance bump is less than the 2Q beat, management seems tone deaf to 2H implications but they’ve done this before and ultimately results decelerate as implied by that guidance. But I am displeased that management hasn’t taken the opportunity to dispel constant rumours of spam advertising and other accusations from Spruce Point (despite many of his numeric claims don’t stand up to scrutiny, it’s difficult to dig deeper into the qualitative). Management should be discussing how their Microsoft business works in terms of referrals and payment for profitable referrals or how they feel their business will not be impaired by AI as claimed, instead new CEO talked about his days at ICQ.

Mid-Quarter Update May 23, 2023– subject of short attack by Spruce Point (SP),

  • In typical fashion, packaging sensationalist speculation with some facts in a void by the company’s unclear communication style. Various claims about mgmt. and the Auditor.

  • SP claims 1Q23 shows cash flow is weak on 1Q call in May, mgmt. said OCF was down due to 8m receivable pushed from March to April so should have been collected at that statement in May. Ex changes in NWC, cash flow looked solid.

  • SP also claims MSFT revs falling short at $401m which for FY22 + FY21 is accurate but FY21 was +5.8% to 177m, FY22 +26.6% to 224.1m, FY23 looks off to a solid start with search +15%.

  • says revs/employee is off the charts, using like/like gross and net, TTD is much higher on gross and still higher on net.

  • SP tries to drive fear over proposal to increase share authorization by 20m shares from 60m but reality is current diluted is ~ 51m so they’ll be getting close to increasing it for normal course and likely increasing it in advance of potential acquisition for flexibility, previous secondaries while not necessary they haven’t burned the cash and now can earn modest interest (which he criticizes).

  • Ultimately unless there are real issues to revs and cash flow and cash balance, I see no justification for such a low multiple which would just negate all their progress.

1Q23   .60 vs .44 +36%, est .50 up from .39

  • May 3, 2023, P=34.86, TTM EPS=2.60, P/E=13X, FY23 P/E=13X

  • Revs +16% to 145.2m, CAC 55% vs 56.6%, Net Revs +20% to 65.3m, adj EBITDA +38% to 31.3m, OM 21.3% vs 17.8%

  • Display +16% to 79.9m, Search +15% to 65.3m

  • OCF 17.8m vs 23.6m by 8m shift in customer collection and WC, before NWC OCF 28m vs 20.4m

  • Avg daily searches +49%, publishers +29%, RPM -22%

  • Video Revs +26% to 44% of Display, publishers +63% to 75, CTV +12% to 8% of Display, CTV customers almost doubled

  • SORT spend +93% to 17% of Display on +142% customer count

  • Retail Media +60% to 8% of Display, customers +32%, customers include Rite Aid, Albertsons, Dick’s Sporting Goods, ABInBev, P&G, Unilever, Pepsico, GSK, and others.

  • Modest raise in guidance, Revs +15% to 725-745m, adj EBITDA 155m+ (21% of Revs, 50% of Net Revs), implies remainder of year Revs +12-16%, EBITDA +12-14%, implies FY23 EPS >2.93 (est 2.59)

  • Very solid results, conservative outlook looks solid considering economic uncertainty, initially reacted positively and ended -3% possibly by traders thinking the best days are behind them. CRTO reported ugly results, stock was +5%

4Q22   .90 vs .55 +64%, est .73 up from .52

  • Feb 8, 2023, P=33.54, TTM EPS=2.42, P/E=15X, EV/E=11X

  • CEO retiring August 1st, GM of CodeFuel to be CEO, was integral in all aspects of the business, dealing with MSFT, acquisitions, iHUB, etc.

  • Revs +32.7% to 209.7m, CAC 58.2% vs 59.1%, Net Revs +35.6% to 87.6m, adj EBITDA +66.6% to 48.2m, adj OM 22.6% vs 17.8%

  • Display +23.5% to 123.8m, Search +48.6% to 85.9m, Video +33% to 42% of Display, CTV +42%

  • Video Publishers +72%, Revs from Video Publishers +78%, Agency and brand customers +11%

  • Average Daily Searches +26%, RPM +13%

  • FY22 59% of agencies and brand customers adopted SORT generated 59.4m revs, 191 customers, 76 new, avg deal size +33% to 137k

  • FY23 Outlook: Revs +14%, 720-740m (est 730m), adj EBITDA +14% to 149-153m (est 139m), expect advertising to grow faster than search.

  • Not seeing a slowdown into 1Q, QTD looks very favourable. Commented on avoiding commoditization of CTV so focus on margin rather than growth.

  • CEO does not see a risk that MSFT doesn’t renew the agreement in 2 years, they deliver quality searches with high intent to MSFT

  • Very solid results, negative reaction >10%

3Q22   .61 vs .40 +53%, est .55 up from .40

  • Nov 9, 2022, P=22.23, TTM EPS=2.06, P/E=10.8X,

    Revs +31% to 158.6m (pro-forma +15%), CAC 59% vs 60.8%, Net Revs +37% to 65m, adj EBITDA +87% to 33m, margin on Net Revs 51% vs 37%, adj OM 20.6% vs 14.1%, OCF/adj NI=1.16X

    Display +25.8% to 86.8m, Search +38% to 71.8m, Video +209% to 44% of Display, CTV +134% to % of Display vs 5%

    SORT +25% q/q to 17% of Display vs 14% in 2Q, customers +11% q/q to 140, spend +25%, Search Publishers +60% y/y with RPM +42%, avg deal size +10% to 117k, Premium CPM $32

    Advertisers shifting budget from social to search and advertising is benefitting Perion.

    HR teams already looking for software engineers being laid off by the likes of Twitter, Meta, etc.

    Intention to launch SORT as a service to publishers, other DSPs in 1H next year.

     Acquisition focus a business acquisition (not technology) with prominent first tier agencies and customers,

    Raised FY22 Guidance: Revs 630-635m, adj EBITDA >120m, Implies 4Q: Revs +26-29% to 199-204m (est 202), EBITDA >35.9m +24%, est 30.6, with 59% CAC implies EBITDA margin 43%, implies 4QEPS +20% to .66, est .52

Mid-Quarter Update – Oct 6, 2022

  • Preliminary Results Revs +31% to 158m (est 155.4), EBITDA +76% to 31m (30% above est of 23.7 which was 19.8m 1 year ago), EBITDA % of net Revs 46% vs 37%, Net Revs as % of Gross 43% vs 39%, Gross Revs +42%, likely puts adj EPS +38% to .55 vs est flat at .40

2Q22   .51 vs .33, est .40 up from .34

  • Aug 3, 2022, P=19.47, TTM EPS=1.79, P/E=11X, EV/E=7X, FY22 P/E=10X, ests low

  • Revs +33.7% to 146.7m (~+20% pro forma), adj EBITDA 28.5m vs 14.3m (47% margin vs 33%)

  • Display +41% to 81.6m, Search +26% to 65.1m

  • Video +273% to 44% of Display, CTV +90% to 6% of Display

  • SORT customers 126 vs 65 last quarter, customer spend +62% (existing customers spent 50% more q/q)

  • Video Platform +145% to 54 publishers, Search publishers +33% y/y, RPM +42%

  • OCF 25.7m vs 14.6

  • Outlook mostly unchanged but confident they will hit top end “at least”, EBITDA margin outlook 41% vs 40% previously, implies 2H Revs +25-32%, 2H EBITDA +9%, looks very conservative considering last 2 quarters EBITDA margin >41%

1Q22   .44 vs .18 +144%, est .33 up from .19 then .27

  • Apr 28, 2022, P=22.63, TTM EPS 1.57, P/E=14X, EV/E=10.8X, FY22 P/E=14X, ests low

  • Revs +39.5% to 125.3m (est 122m up from 113), CAC 56.6% vs 61%, Net Revs +55.5%, EBITDA 22.7m vs 8.8m, 41.7% of Net Revs vs 25.1%, OM 17.8% vs 8.6%

  • OCF 23.6m vs 13.5m, FCF 23.3m vs 13.3m, FCF/adj NI 1.1X

  • Search +10% to 56.7m, 45% of total vs 58%

  • Display +80% (+52% pro-forma) to 68.6m, +3% number of clients, +42% average spend per client, Video/CTV +341% (+123% pro-forma) to 46% of Display vs 19%

  • CTR 2.5X higher than Google Benchmark highlights value proposition to customers and it’s translating to higher client spend.

  • Re Search, # of Publishers 120 vs 95, avg daily searches +2%

  • Management highlights adoption of SORT (~30% of Display Revs in 1Q), Intelligent HUB contributing to better expense leverage, lowering CAC as % of revs, suggesting guidance is still very conservative.

  • Raised FY Guidance: Revs 620-640m (+30-34%), EBITDA 98-102m, 40% margin.  Still conservative, implies FY22 EPS 2.08-2.17 and growth for the remainder of the year compared to estimates which are down for the rest of the year.  Stock initially reacted positively then selling off, possibly recession fears or searching out forced/desperate sellers.  

Mid Quarter Update – Apr 4, 2022

  • Solid Preliminary 1Q Update

  • Revs +39% to 125m (est 119m), adj EBITDA +150% to 22m (est 15.8m), 42% margin, implies EPS >.40, est .27

4Q21   .55 vs vs .38, (reported .62 w/avg shares) est .50 up from .27, FY21 EPS +72% to 1.29

  • Feb 9, 2022, P=21.93, TTM fully diluted EPS=1.29, P/E=17X, EV/E=13X, FY22 P/E=15X

  • Revs +33.6% to 158m (est 145m, +20% pro forma), CAC 59% vs 63% so Net Revs +48.8%, adj EBITDA 28.9m vs 15.3m (45% of Net Revs vs 35%), adj OM 19.2% vs 12.9%, OpInc +99%, OCF 28.8m vs 12.9

  • Display +46% to 100.2m (+23% pf), Video and CTV +311% (+87% pf), 46% of Display, Display was 63% of TOTAL in 4Q vs 58% and 55% in FY21 vs 45%, 92/412 customers using CTV (20% vs 11% last year)

  • Search +16% to 57.8m, 114 publishers bs 79

  • Avg deal size 4Q +29% to 139k, Customer retention 91% vs 86%

  • FY22 Outlook: Revs +30% to 610-630m (previously 590-610), EBITDA +29% to 88-92m (previously 80-84m), 36% % of Net Revs vs 35% in FY21, implies EPS 1.66-1.73, est 1.44,

  • didn’t offer 1Q guidance, Mgmt expects 20% of FY revs in 1Q (normal seasonality) so ~126m would be +40% vs est 113m, EPS est is flattish reflecting dilution, I’ve already diluted the earnings stream, some might focus on slightly lower EBITDA margin but ignores improved Net Revs % of Gross Revs, estimates still too low.

  • Vs Initial Guidance, FY21 Revs were 478.5m (vs 460m), adj EBITDA 69.6m (vs 36m), 1 year ago the stock was 28X EPS of 0.75, today it’s modestly higher and at 17X EPS of 1.29 with EPS growth likely >30%

  • Discussed their cookie-less solution, SORT, already >40 customers, 2X click-through-rate of cookies, looking at providing SORT as a service to publishers. 

  • Demonstrated iCTV ad for Advil (Pfizer), “not in inventory game”, good results for advertiser drives growth from higher budget allocation.

  • Fantastic results, frustratingly cheap stock and predatory trading patterns.

Mid Quarter Update – Dec 8, 2021

  • Announced $100m equity offering (12% dilutive) to fund growth, upsided to 156.5m, issuing 7.28m shares at $21.50, underwriters30-day option to buy 1.09m shares 

  • Concurrently raised guidance

  • FY21 Revs 460-470m, EBITDA 64-65m, implies 4Q Revs 139-149m (+18-26%), EBITDA +52-59%

  • FY22 Revs 590-610m (+29%), EBITDA 80-84m, EBITDA margin ex TAC 35%, flat from FY21, implies EPS 1.63-1.71 (est 1.52)

3Q21   .40 vs .21 +90%, est .28

  • Oct 26, 2021, P=22.14, TTM EPS 1.21, P/E=18X

  • Revs +45% to 121m, CAC 60.8% vs 59.8%, adj EBITDA 17.6m vs 8.7m, adj OM 14% vs 9%, CFO 14.2m vs 6.6m

  • Display +82% to 69m (+73% pro forma), Search +14% to 52m

  • In Display, average deal size +30%, client baes +12%

  • Video and CTV +245%, 20% of Display revs

  • Raised Guidance: FY21 Revs 455-465m, adj EBITDA 59-61m, 33% margin (vs 32% YTD), FY22 Revs +28%, EBITDA margin 34%

  • Implies 4Q Revs 134-144m (est 129.8), EBITDA 18.3-20.3m, EPS could be ~.47

  • Demonstrated CTV ad with Draftkings

  • Very solid results, continues to be a cheap stock.

 

Mid Quarter Update – Oct 4, 2021

  • Acquiring Vidazoo for up to 93.5m, 35m cash on closing w up to 58.5m in 2023 earn-out if Vidazoo generates 32.4m cumulatively in EBIDTA 

  • Vidazoo is a “highly-differentiated video monetization platform” enables advertisers and publishers to deliver high-impact content and advertising, gives Perion an end-to-end video solution, eliminating all intermediaries, reducing media costs which could enhance Perion margins.

  • Vidazoo’s 3 differentiated characteristics: proprietary online video player and integrated ad server (compatible with all devices and video formats), a sophisticated yield management platform, a rich video content and ad marketplace 

  • Vidazoo 2020 Revs 31.9m, adj EBITDA 4.3m, expect 2021 +41% to 45m and +86% to 8m.

  • Raised guidance only to reflect Vidazoo: FY21 Revs 430-445m, EBITDA 52-53m, FY22 Revs 545-575m, EBITDA 68-72m

2Q21   .33 vs .03, est .27 up from .15

  • Aug 3, 2021, P=18.59, TTM EPS=.99, P/E=19X, FY22 P/E=16X

  • Revs +81% to 109.7m, +72% vs 2y, CAC 60% vs 61%, adj EBITDA 14.3m vs 2.5m vs 7.4m, adj OM 12.4% vs 2% vs 9.7%, CFO=1.2X Net Income

  • Display and Social Ad Revs +211% to 58m (+72% vs 2yr), Search +24% to 51.6m (+22% vs 2yr)

  • Seeing significant more dollars spent per campaign and new customers +67%

  • Searches up >30% y/y to 16.9m average daily monetizable search queries, Bing deviates from Google mainly in mobile presence

  • Added 28 new publishers to network in 2Q

  • FY21 Outlook: 415-430m, EBITDA 50-51m, implies 2H Revs +7-14%, EBITDA +12-17%

  • FY22 Preliminary Outlook: 490-520m (+20%, est 486m), EBITDA 59-62m (+20%) 

  • Very solid results, as usual guidance probably conservative.

 Mid Quarter Update – June 28, 2021, Preliminary 2Q results, Raised FY21 Guidance:

  • 2Q21 Revs 105m, EBITDA 13.5m, EPS could be 0.28 vs .03 vs .17 (est .15), would put TTM EPS at 0.95,

  • FY21 Outlook: Revs 410-430m, EBITDA 49-51m, EPS could be 1.02-1.07 (est .78)

  • Hub and Spoke model driving efficiencies driving operating leverage

  • Video advertising and CTV are key drivers

  • Solid guidance boost, now implies 2H Revs +12% and EBITDA +33.6%, 12.3% margin vs 10.3%, could still be conservative, stock not expensive at about 21X earnings. 

 

Now estimating Bing deal to drive 900m in revs over 4 years, previously estimated 800m, likely driven by geographical expansion

 

Mid Quarter Update – May 19, 2021 Needham Conference

  • Some other players talk about cannibalization of mobile and social into CTV.. PERI’s 3 pillars (search, social, and display) is like a natural hedge while they benefit overall. 

  • Transactional searches (high intent) are growing in composition of overall search.  Exploratory searches can get presented ads to increase intent.  

  • With iCTV, CPM goes from ~30 to 100 or higher, 

  • Conversion ratio is “not that high” (around 2%), next step is more personalization which they’re seeing ~10% conversion.  Mgmt thinks advertisers will press video services to adopt iCTV from Perion (currently vizio TV).

3 Objectives this year

1) “need to beat guidance”

2) Want to increase average deal size with their brands, “have more to offer”

3) hub and spoke model hope to reduce their total media cost

1Q21   .18 vs .14, est .14

  • May 4th, 2021, P=17.62, TTM EPS=0.70 due to dilution, P/E=25, FY21 P/E=23X

  • Revs +36% (+26% organic) to 89.8m, CAC 61% vs 55%, adj EBITDA 8.8m vs 6.2, adj OM 8.6% vs 7.6%, OpInc +55%

  • Display and Social Advertising +61% (+32% pro forma), Search +22% 

  • CTV key factor for new customer acquisition, average deal +11%

  • Average daily searches +45% to 17.7m, record level

  • Actionable Performance Monitoring SaaS added 7 customers since Jan launch

  • Gross cash 128m, net 91m, CFO 13.5m vs 2.5m

  • FY Guidance: Raised to 390-410m (+22% at midpoint), adj EBITDA 37-38m, still looks conservative (TTM 35.3m) and does not factor in improvement in travel-related business, expect to hit their FY23 targets SOONER than expected. 

 

Mar 8, 2021 Analyst Day

  • Concurrently announced re-branding of MakeMeReach as Paragone, SaaS platform to monitor social advertising spend across all networks, agencies, platforms, can predict effectiveness and recommend actions to drive performance, adopted by Havas Media and Disney 

  • <3% of Total revenue may be affected by 3rd party cookies, again not a surprise.

  • Discussed iCTV (interactive) enhancing consumer engagement, turning a 30s spot into a 90s engagement with creative design and automation. CPM for iCTV>CTV due to proprietary input/engagement (CPM paid on display plus any engagement)

  • Non-commoditized activities are a growing part of the business, won’t yet discuss metrics,

  • Presentation from Newsweek’s CEO 

  • CodeFuel helps customers identify what type of ad to show, value to the advertiser.

  • “Intelligent Hub” in situated in between sellers of ads and publishers, capabilities to intelligently place ads in owned/operated sites, publisher network, strategic accounts like Newsweek. 

  • Did highlight goal to get EBITDA margin from 10% to 12% in 2023

Mid Quarter Update Mar 2, 2021

  • Raised guidance ahead of Analyst Day on March 8th “Based on strong business momentum”

  • 1Q21 Revs 87-87m (+31%) adj EBITDA at least 7.2m (vs 6.2m last year, +16% y/y)

  • FY21 Revs 370-380m (previously 350-370, midpoint boosted 4%), adj EBITDA 37-38 (previously 35-37, +13-16%)

  • FY Guidance is now Revs +13-16%, adj EBITDA +13-16%, implies EPS .87-.90 w 15% tax rate

4Q20   .38 vs .31 w 15% TR +23%, est .35 up from .16 after guidance raise, FY20 EPS .75 vs .75

  • Feb 9, 2021, P=21.35, TTM EPS=.75, P/E=28X

  • Reported adj EPS .45 incl tax refund vs 15% tax rate 

  • Revs +51% to 118.3m, CAC 43.3%, adj OM 12.9% vs 13.8%, OpInc +41%, CFO +14% to 12.8m,

  • Display and Social Advertising +159% to 68.4m (pro forma organic >+20%), CTV +132% q/q to 6.5m, Search and other -4% y/y to 49.9m, +10% q/q (lower RPM, avg daily searches +32% y/y to 15.7m)

  • Gross cash 61.6m, Net Cash 15.3m or 96m net of Def Revs 

  • 2021 Outlook: Revs 350-370m (+7-13%, est 351m), adj EBITDA margin 10%, 35-37m, (+7-13%) 

  • Outlook sounds very conservative as I think the 2023 targets are as well. 

  • Solid results despite significant decline in travel and hospitality which was 15% of FY19 revs

 

Preliminary 4Q Results ahead of Guidance, and $50m stock offering - Jan 19, 2021

  • Revs 4Q 110-115m, FY20 320-325m, 

  • adj EBITDA 4Q 14.5-15m, FY20 23-32.5m

  • adj EPS 4Q .35-.36 vs .31 est .23 up from .16, FY20 .80-.82 vs .77

  • Stock offering for 57.4m upsized from 50m, 4.99m shares @11.50, ~18% dilution for WC and growth

 

Needham Conference Jan 11, 2021

  • Disclosed 4Q20 CTV 6.5m vs 2.8m in 3Q and 0.6m in 2Q20, differentiating interactive CTV (highlighted Mercedes ad)

  • 2023 targets $500m revs, $60m EBITDA (12% margin)

 

LD Micro Conference Dec 14, 2020

  • Expanded on “double digit growth” by calling out target of $500m revenue by 2023.

 

Mid Quarter Update Dec 7, 2020

  • Raised Guidance Revs and adj EBITDA Revs 100-105m +28-34%, (previously 81-91m), adj EBITDA 13-14 +6-15%, (previously 8-10m)

  • Higher than expected revenue “synergies” from recent acquisitions as well as higher demand across their CTV offerings

  • Also seeing increased number of publishers wanting to engage Search business unit following MSFT renewal

  • MGNI 4Q Guidance: Revs 72-75m, adj EBITDA 21.6-22.5m

 

Mid-Quarter update Nov 2, 2020

  • Renewed MSFT deal for 4 years

  • Later disclosed expanded from 6 to 34 countries, 170-190m annual revenues

3Q20   .21 vs .18 +17%, est .07 up from (.01)

  • Oct 28, 2020, P=7.65, TTM EPS .70, P/E=11X

  • Revs +26.7% to 83.4m, adj OpEx 26m vs 25.5m, adj OM 9% vs 9.3%, OpInc +23% to 7.5m

  • Adj EBITDA +15% to 8.7m, CFO 6.6m vs 11.1m due to ~4m CIQ and Pub Ocean working cap

  • Advertising +76% to 37.9m (CTV +200%, contribution from CIQ and Pub Ocean)

  • Search +3% to 45.5m due to greater number of monetized search queries

  • Total Debt 22.9m , Cash 60m, net cash 1.6m, Non-cash Working Cap (11m)

  • Mgmt called out a “clear path to sustainable and consistent double-digit growth”

  • Mgmt confident renewing Bing agreement before end of year on better than current terms, in “very advanced stage”

  • They are showing they can keep new user attention for more than 6 minutes, page layout, content type and delivery, tailored 

  • Agencies and brands looking to reduce number of vendors, mgmt. sees PERI as a beneficiary helping them “increasing revenue but doing it way smarter”

  • Modest beat in revenues, crushed EPS estimates, estimates are too low

Mid Quarter Update – October 7, 2020

  • Raised Guidance to 2H Revs $164-174m, adj EBITDA $16-18bn

  • Mgmt stated outlook driven by a faster recovery in advertising business

  • In a separate release, “Undertone has seen triple digit growth for video campaigns” due to investment, features for ex measuring how long video ads are viewed. no time frame specified

2Q20   .03 vs .17, ex .04 tax benefit, est (.09) down from .09

  • Aug 5, 2020, P=6.23, TTM EPS 0.70, P/E=9X, FY21 P/E=14X, estimates look low

  • Reported adj .07 incl tax refund

  • Revs -5% to 60.3m (est 53.6m), adj OpInc 1.3m vs 6.2m, OM 2.2% vs 9.3%

  • Adj EBITDA 2.5m vs 7.4m, CFO .2m vs 8.4m incl -2m due to CIQ

  • Advertising -12% to 18.7m (CIQ contribution?), Search and other -1% to 41.7m (higher search queries, lower rates)

  • Completed cost reduction actions, seeing early indications of recovery, trajectory to be gradual and uneven

  • Expect MSFT renewal in October, over past 3 months enhanced partnership with MSFT to cover more products, business models, and geographies, distribute MSN News in 140 countries to their publishers, Privado being tested with a mobile operator in France, 

  • Leveraging technology platform to identify new publishers (signed up Newsweek) 

  • Re Pub Ocean, mgmt. impressed by their recommendation engine and real-time revenue analytics, will be integrated with CIQ programmatic bidding algorithm. CIQ drives traffic from Facebook through ad buying platform, Pub Ocean totally different channel, combined will reduce the cost of driving audience.  

  • Gross cash -14m YTD, 16m paid in acquisitions

  • Outlook: 2H20 Revs 150-160m (126.4m in 1H, 142m est), adj EBITDA 11-13m (8.7m in 1H20, 19.8m in 2H19), implies 2H EPS .26-.32 while down from 2H19, solid improvement from 1H20, stock still looks attractively valued on 2H earnings power

  • Results not as bad as feared (boosted by CIQ acquisition), guidance looks solid and better than estimates, solid improvement over 1H, FY21 estimates look low, EPS power still look above $0.60

  • Impressive that Search business was only -1% while industry down much more.  Advertisers shifted to lower CPM (cost per thousand impressions) units which hurt PERI in 2Q and explains the significant decline in profitability, mgmt. seeing improving trends in 3Q to higher CPM units. 

  • Mgmt describes their capabilities as giving advertisers control of their content, layout, audience, improving their 1st party data from CodeFuel and being less-reliant on 3rd party data, should improve their return on ad spend. 

Mid-quarter update – July 22, 2020

  • Acquiring Pub Ocean, an Innovative Publisher Technology Platform for up to $22m, $4m upfront, $17m 2-year earn-out, $1m for 2 years of retention

  • Immediately accretive, expecting >$25m in revenues and $5m in adj EBITDA in 1st 12 months.

  • To be integrated into CIQ to build a “new media supply chain” 

1Q20   .14 vs .10 est .03down from .09

  • May 6, 2020, P=4.69, TTM EPS .78, P/E=6X

  • Reported adj .17 vs .13 but include tax benefits rather than expense.

  • Revs +22.7% to 66.1m, +8% organic, est 7.9m from CIQ, adj OM 7.6% vs 7%, adj OpInc +32% to 5m, EBT +57% to 4.7m

  • Advertising +27.4% to 23.7m (est -15% ex CIQ), Search +19.8% to 42.3m

  • 55m in gross cash, 12.1m net of debt, earnouts, and def revs.  

  • CFO 2.5m vs 14m due to 1-time working capital adjustments on purchase of CIQ and differences in collection cycle, might raise questions re quality of CIQ receivables

  • Implementing cost savings initiatives to reduce annualized cost $10m

  • Results were trending at record levels, March saw advertising spending decline 15-25% (not sure if that is PERI specific or market), expect search -10-15% in 3Q?. For what it’s worth, Pinterest said their April Revs were -8% and they saw a shift from awareness spending to performance spending.  

4Q19   .31 vs .29 +7% w 15% TR, est .17 up from .11, FY19 EPS +12% to .77 w 15% TR

  • Feb 12, 2020, P=8.34, TTM EPS=.77, P/E=11X, FY20 P/E=13X

  • Reported adj EPS +52% to .32 but mostly due to tax rate swings

  • Revs +9% to 78.3m, OM 13.9% vs 13.5%, OpInc +11.6%

  • Advertising Revs -29% to 26.4m, Search and other +49% to 51.8m

  • CFO 11.2m vs 4.3m, FY CFO 44.7m vs 32.8m

  • Acquired ContentIQ, brings capabilities to Undertone to optimize publisher content and audience interest. 

  • Search revs driven by new publishers, higher RPMs, and more searches, Advertising revs impacted by “transition from selling formats to an integrated solution”

  • Stock initially popped 8% but quickly turned down 4%

  • “Strengthened partnership with Microsoft Advertising” and launched Privado Private Search Engine powered by Bing, developed by Codefuel and Microsoft.

  • FY20 Outlook: adj EBITDA 38-40m (vs 32.4m in FY19), FY20 estimates look too low

  • Decent absolute results, estimates are just horrible so much better than estimates, comps skewed by low tax rate vs high tax rate. 

3Q19 .18 vs .16, TTM EPS .71 vs .67

Advertising Revs -18% but margins improved due to transition taking place

5th consecutive q/q growth and 4th consecutive quarter of y/y growth for Search.

Offering has changed dramatically over past 2 years focused on delivering better margins

Mgmt says MSFT is pleased with the partnership and PERI is “working on innovating the partnership in bold new ways”.  Expect to launch their first co-developed application with Bing in 4Q, and looking at extending their current agreement.

Mgmt feels advertising business is nearing a major inflection point 

Announced partnership with Pinterest in 3Q