管理層發言
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 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 headings Risk Factors and elsewhere in the company's annual report on Form 20-F that may cause actual results, performances or achievements to be materially different 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 a non-GAAP basis. While mentioning EBITDA, we will be referring to adjusted EBITDA. We have provided a detailed reconciliation of non-GAAP measures and 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, Perion's Chief Executive Officer; and Elad Tzubery, Perion's Chief Financial Officer. I would now like to turn the call over to Tal Jacobson. Please go ahead.
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. We quickly adapted to the demands of the marketplace ahead of the budget shift the industry is experiencing today. This diversification was driven by both our organic investment in CTV and Retail Media and our M&A strategy from Hivestack in Digital Out of Home to Greenbids and the Outmax AI agent. Ever since, we've been doubling down on that strategy. And this quarter's results reflect that conviction with strong traction across all our key growth engines. In the second quarter of 2026, we saw a massive adoption of the Perion One platform and its product lines. This reflects growing advertising trust and accelerating adoption of our solution across our client base. CTV, Retail Media and Digital Out of Home all outpaced the market, and our advanced AI technology, Outmax, continued to scale rapidly with triple-digit year-over-year spend growth.
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 selected Perion as its end-to-end in-store Retail Media Technology partner, which is now available to our Retail and Digital Out of Home advertisers. As part of our strategy to double down on Retail Media and Digital Out of Home, especially with in-store inventory, we expect those new partnerships to unlock new budget from high-growth verticals, the same verticals that are targeting consumers at the moment of purchase decisions. This quarter, we also added a new distribution partner to bring Outmax to Greece and to Central and Eastern Europe. This partnership extended our reach into new regions through the partner-led model. On the technology side, we extended our full stack Digital Out of Home infrastructure into Google DV360, giving buyers the ability to activate our programmatic guaranteed inventory through Google's media platform.
We also launched an agentic self-serve mobile application within Perion One, which we call Ask Perion. This upgrade transforms our execution capability to be more accessible to advertisers and agencies. New distribution channels, new Retail Media and Digital Out of Home partnerships and advancing our technologies are exactly what's driving the sustainable momentum we're seeing across our growth engines. Marketers navigate a universe of channels, screens, platforms, formats, data sets and buying environments, all while consistently chasing higher performance. Budget, signals and optimization remain siloed by channels. This fragmentation is exactly what breaks efficiency and performance. Perion One is designed to close that gap with advanced technology-driven solutions. Perion One is our unified AI-native execution infrastructure for advertisers. It is built to plan, activate and optimize advertising campaigns across CTV, social, Digital Out of Home, Retail Media and open web.
At the center of Perion One is Outmax, our proprietary AI agent, continuously optimizing outcomes across channels and platforms. Perion One is an infrastructure, not a tool set. Here's what it looks like in practice. The advertiser's entry point is Perion One, our platform and AI execution layer. Under the hood, whenever we need outcome-driven activations, Outmax operates as an agent that plans and executes on our advertisers' behalf. Perion One leverages multiple connections to audiences, data and measurement technologies, including our own SORT audience segmentation technology. From there, Perion One reaches into the channels themselves, every major open and walled garden DSP and SSP from YouTube, Meta, TikTok and the broader open web, plus our own Perion-owned Digital Out of Home DSP and SSP. It's an open ecosystem with effectively unlimited connections we keep adding, giving advertisers the reach to the entire global market.
Outmax, our AI agent, works across all major channels, which allows us to optimize complex campaigns and drive better business outcomes to advertisers. Outmax removes the guesswork and replaces it with algorithmic certainty, allocating spend, managing pacing and optimizing outcomes inside Perion One and beyond. This quarter, we introduced Ask Perion, sparking deeper conversation with CMOs and agencies eager to get ahead of the agentic 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 execution more accessible to more customers. This expansion gives our customers easier access to our technology while embedding Perion One more deeply within the infrastructure they use. This quarter, Best Buy Canada selected Perion as its end-to-end in-store Retail Media Technology partner for its digital signage network.
Using Perion's ad server, SSP and header bidding technologies, 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 measurable in-store Retail Media campaign capabilities. For Perion, this partnership expands our 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 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 with fixed pricing, committed inventory and predictable delivery. This capability is available across our full global Digital Out of Home supply reach, covering more than 1.6 million screens in over 40 countries.
By bringing guaranteed Digital Out of Home buying 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 also extending our reach geographically through our capital-efficient partner-led model. Most recently, we partnered with Acrossmedia241 to bring Outmax to agencies and brands across Greece and the broader Central and Eastern European region. Acrossmedia241 brings established relationships across agencies, national tourism boards and international buying desks as well as existing experience with Perion's Digital Out of Home technology. Through this partnership, Outmax can be applied across major digital channels and optimized toward advertiser-defined business outcomes. This builds on a distribution model we have already applied in other markets. The partnership is expected to accelerate Outmax's path to revenue growth and extend our reach with low incremental cost and margin-accretive growth potential.
This quarter, we also added a new data partnership with Fetch, the leading consumer reward and purchase intelligence platform, accessed through LiveRamp. This gives our advertisers access to verified SKU-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 accessing it at a scale outside the closed platform has been a persistent industry challenge. Fetch data spans more than 1,300 retail agnostic segments from category-level shopper profiles to SKU-specific competitor targeting. Taken together, those initiatives show how Perion One 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 walk through 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 One. In the second quarter, Perion One spend increased 15% year-over-year to $156.7 million. This was driven by the strong momentum in CTV and Digital Out of Home channels, growing 56% and 45% year-over-year, respectively. In addition, our Retail Media vertical spend grew by 60%, partially offset by continued softness in the open web advertising across the industry. Perion One contribution ex-TAC came in at $34.9 million, 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, which temporarily impacted our take rates. As we scale the platform, take rates naturally normalize over time, though we expect them to modestly improve in the second half of the year.
Outmax, our AI agent, continued to scale rapidly with spend growing 136% year-over-year on a pro forma basis, reflecting strong adoption across walled gardens. Our focus on delivering advanced technological solutions is translating into tangible enterprise wins. During the quarter, Best Buy Canada selected Perion as its end-to-end retail Digital Out of Home technology partner, deploying our complete ad server, SSP and header bidding technologies to power one of the largest SSP-enabled 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 to other retailers, growing our Retail Media business 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 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 contribution ex-TAC outlook to reflect the softer first half while maintaining the midpoint 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 Perion solutions. Total spend for the quarter increased 9% year-over-year, reaching $194.7 million. More importantly, spend on the Perion One platform grew 15% year-over-year to $156.7 million, accounting for 80% of our total spend. This compares to 76% in the same period last year, proving that our unified platform strategy is successfully attracting enterprise media budgets.
This was driven by the continuous acceleration of our core growth engines. CTV spend grew 56% year-over-year to $17.7 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 as advertisers are actively shifting budgets towards Perion One to gain precise performance and cross-channel execution. In addition, our Retail Media vertical spend significantly accelerated, growing 60% year-over-year to $59.4 million. Retail Media represents a strategic focus for Perion, bringing together our CTV, Digital Out of Home and display capabilities. Enterprise mandates like Best Buy Canada demonstrate our ability to modernize in-store media networks. This uniquely positions us to bridge the physical and digital worlds. The combination of physical and digital unlocks powerful synergies between 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.
Revenue for the second quarter was $98.2 million, down 5% year-over-year. Contribution ex-TAC for the second quarter was $42.3 million, down 11% year-over-year. Perion One contribution ex-TAC was $34.9 million, representing 83% of total contribution ex-TAC in the quarter, up from 76% last year. Perion One contribution ex-TAC declined 4% year-over-year, mainly due to our use of promotional terms to acquire new accounts and drive incremental spend from existing customers through 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 ex-TAC declined 30% year-over-year. We continue to manage the search business to maximize cash flow to reinvest into Perion One and return capital to shareholders through share repurchase program.
Adjusted EBITDA for the second quarter was $2.8 million, representing a 7% margin of contribution ex-TAC. This includes a $1.6 million foreign exchange headwind. 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 adjusted EBITDA margin to meaningfully inflect upward in the second half of the year to reach our full year targets. On a GAAP basis, second quarter net loss was $6.8 million or $0.18 per diluted share. On a non-GAAP basis, net income was $3.9 million or $0.09 per diluted share. It is important to emphasize that the year-over-year increase in our GAAP net loss was almost entirely driven by negative foreign exchange impact to our nonoperating finance income and lower interest income from our cash balance.
While our underlying operations remain profitable on a non-GAAP basis, the combination of these nonoperating financial headwinds and the lower outstanding share count mathematically amplifies our GAAP loss per share this quarter. However, we are making a highly strategic trade-off. By aggressively executing our buybacks now at depressed valuations, we are permanently reducing our share count. As our profitability scales in the second half of the year and into 2027, this concentrated equity base is expected to serve as a powerful multiplier for future EPS growth. In the second quarter, we generated $2.5 million in net cash from operating activities, while adjusted free cash flow reached $4.8 million. On a yearly basis, we expect to maintain a strong conversion rate relative to adjusted EBITDA as we did in previous years. This reliable cash generation provides us with the financial flexibility to fund our organic growth initiatives, invest in platform innovation and support our shareholders' return commitments, all without stretching our balance sheet.
As of June 30, 2026, we held $268 million in cash, cash equivalents, short-term bank deposits and marketable securities with $0 debt. During the second quarter, we continued strong execution of our shareholder return program. We repurchased 2.7 million shares for $24.5 million at an average price of $9.12 per share. Since the initiation of this buyback program, nine quarters ago, we have repurchased a cumulative total of 18.0 million shares for $166.8 million. 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. Turning to our updated 2026 outlook. Based on our increased visibility for the second half of the year and the momentum we see building in our pipeline, we are narrowing our full year 2026 outlook ranges. We now expect contribution ex-TAC of $215 million to $225 million and adjusted EBITDA of $51 million to $53 million, implying an adjusted EBITDA margin of 24% at the midpoint.
Our confidence in meeting this guidance 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 of Perion One growth engines, combined with a streamlined sales organization, is rapidly converting a robust pipeline into realized spend. In parallel to our top line expansion, operational efficiency remains a core priority. In the first half of the year, we took decisive steps to optimize our cost structure and streamline operations. These deliberate actions are yielding productivity gains and cost savings designed to positively impact our profitability starting in the second half of the year and beyond.
With an optimized expense base and growing momentum across Perion One, we are scaling our business on a strong agile foundation, and we remain completely on track to achieve our 2028 growth and efficiency targets. With that, I will now turn the call back to the operator for the Q&A session. Thank you.
分析師問答
The operator provided instructions for the Q&A. Our first question comes from Andrew Marok at Raymond James.
Maybe first on the Outmax and Ask Perion trends that you're seeing so far. Obviously, the double-digit growth in Outmax is great to see. But can you also talk about the synergy possibilities you see between Ask Perion and Outmax? And maybe more generally, what you're seeing with clients — whether tools like this are helping to make complex workflows more accessible?
Thank you, Andrew. You were breaking up, so I'll see if I got all of it. Outmax grew and continues to grow very fast. We do see synergies between our products as Outmax is now pushing a lot of CTV, Retail and social. Outmax is becoming an integrated part of Perion One and it actually drives many of the AI technologies within the platform. If I missed any part of your question because of the connection, please repeat and I'll address it.
I think you got most of it. It was really just the synergies between Ask Perion and Outmax — both these agentic tools — and how generally the agentic workflows that you're bringing to market are helping make some of these complex workflows for advertisers more accessible?
Yes. Absolutely. The agentic solution that we have, including Ask Perion, is fully integrated with Outmax. Outmax provides many of the answers within Ask Perion, including suggestions on how to reallocate budgets between platforms. For example, if you just completed a campaign on various social platforms, Ask Perion will suggest what's next; it might recommend allocating more toward open web, CTV, Meta, YouTube or another channel. Outmax is becoming an even more integrated solution within our entire agentic platform and Ask Perion.
Maybe one more if my audio will allow me. Can you talk a little bit about the trajectory toward your medium-term goals given the 2026 performance you're seeing so far? Are those still accessible for you and the path to get there?
Sorry, it's very hard to hear you. Can you repeat that for a second?
Just talking about your medium-term goals and the 2026 performance so far — whether you are still on track for the medium-term goals set at the beginning of the year and the path to get there?
All right. Looking toward H2 of 2026, first, we are starting right now to onboard some strategic agreements we discussed in Q1. They were recently signed and are now being onboarded into our pipeline. We see all of our growth engines continuing to generate a healthy pipeline as we look at Q3 and Q4. Looking at last year when we saw ex-TAC and EBITDA headwinds in the second half, we feel we now have the right visibility to narrow the guidance for the remainder of the year. Also, considering the efficiency measures we took in Q1, we have the right visibility toward the second half of the year.
The operator provided instructions for the Q&A. Our next question comes from Jason Helfstein at Oppenheimer.
Can you hear me okay?
Yes.
Great. Okay. So can you give us a little help? You're giving us spend for Perion One, but we don't know the revenue. Obviously, the other parts of the business are still having a negative mix shift because overall revenue is still down, albeit you are guiding for mid-teens-ish growth in the back half of the year. So just help us understand how much was Perion One revenue in the quarter or the non-Perion One revenue year-over-year decline? That's question one. Number two, would you consider changing the segment disclosure to revenue ex-TAC since you're now guiding to contribution ex-TAC and not revenue? Maybe give us that level of detail. Next, you highlighted the RIF and headcount reduction. I'm curious if we can get more details — how many people or what percent did that impact? And then lastly, with the $268 million of cash, should investors assume it entirely goes to buybacks? Or are there other M&A opportunities you're looking at?
Thank you, Jason. The revenue for Q2 for Perion One was $74.2 million. That is included in the presentation we will upload to the website. It showed a slight year-over-year decline in revenue, which we expect as we onboard more customers into Perion One. From a revenue recognition perspective, much of it will come on a net basis, not necessarily gross. We expect to see that reflected as we scale. Regarding segment disclosure, we focus on spend to indicate adoption of our solution across channels. Spend gives a clearer indication of customer adoption because Perion One is channel agnostic and contributes to different channels. On the reduction of costs, as we discussed, we've continually improved operations and cost efficiency. In H1, we focused on creating operational leverage for the second half of the year. We announced restructuring and reduced roughly 10% of the cost base. This was intentional to support FX fluctuations and to give room to invest in 2027.
Not everything will be baked into 2027 without considering guidance. Regarding cash, we currently have almost $270 million. We expect to complete the current buyback plan by the end of the year, but we are also continually evaluating M&A opportunities that can generate value for Perion customers and increase synergies. We take a disciplined approach when evaluating whether cash should be used for buybacks, M&A or reinvestment in the business to maximize shareholder value.
I'll echo what Elad said. With our current cash, we still have a healthy chunk to complete this year's buyback. We're investing in our technology and growth engines to ensure continued outperformance. We're also constantly looking at M&A, but we remain disciplined. In the past few years, we've been selective — Hivestack is showing strong growth in Digital Out of Home, and Greenbids with Outmax is showing strong growth. We're not rushing to spend; we look for highly synergistic, profitable opportunities.
The operator provided instructions for the Q&A. Our next question comes from Matthew Weber at Canaccord.
Can you hear me okay?
Yes.
Just one for me. You talked about execution of recently signed agreements actively in the onboarding phase and starting to kick in towards the end of Q3. Can you talk about some of the factors that go into the pacing of those contributions and what could cause them to either exceed or fall short of your expectations as those customers come online?
Thank you, Matt. These agreements are essentially a volume play with very large agencies. It took significant time to do onboarding and testing. In H1, we focused on showcasing Perion One capabilities and why it can drive better results. They were recently signed, and the onboarding phase will take a bit more time. We expect those contracts to materialize toward the end of Q3 and into Q4, with further acceleration in 2027. It could be faster, but onboarding timing is controlled by the customers. We are capable of handling any volume they decide to give us, so there is upside, but it's not fully under our control. Also, the industry typically sees heavy activity in the second half of the year, especially Q4.
I'll just echo Elad. We spent H1 demonstrating how our technology can provide better outcomes for the strategic clients we signed. The lengthy process to close those agreements was frustrating, but the high barrier to entry gives us confidence that our technology provides significant value and that competitors will face similar barriers. We feel optimistic about those two agreements and will focus on duplicating them with other clients.
The operator provided instructions for the Q&A. Our next question comes from Jason Kreyer at Craig-Hallum Capital Group.
Can you unpack the commentary about the promotional activity on Perion One? It seems like there were some take rate concessions upfront that will moderate over time. I'm trying to understand how you migrate take rates to normalized levels and why there's more of an outsized impact in the near term?
Yes, absolutely. During H1, we ran many test campaigns. Test campaigns come with very low margins — as their name suggests, they're tests. Now that we closed those two strategic agreements, they won't remain at testing rates, so we expect normalization. Going forward, testing budget is a valuable tool to demonstrate our technology and gain market share. Our goal is to gain as much market share as possible, and once we close those and future agreements, take rates should return to normal levels.
To add to what Tal said, starting in the second half of the year we expect to see a modest increase in take rates.
As a follow-up, you had strong growth across CTV, Out of Home and Retail Media. Can you reconcile that with the overall decline in consolidated growth for the quarter? When do you think consolidated growth rates will align more with these growing segments versus legacy segments that are declining?
It's not a secret that the open web is driving the decline. We see budgets shifting away from the open web and toward Digital Out of Home and CTV. Our Digital Out of Home and CTV solutions are largely self-serve, which increases take rates compared to the past. That said, our overall take rates remain healthy for Perion One, and we believe there is room to absorb promotional activity. We prefer to present adoption on a spend basis because that shows how customers are using the platform across channels. Perion One is channel agnostic and we don't directly control where customers deploy budget, although we influence it. Over time, we expect allocations to continue leaning toward CTV and Digital Out of Home, and we expect a moderate increase in take rates in H2.
The operator provided instructions for the Q&A. Our final question comes from Eric Martinuzzi at Lake Street.
Curious to know about repeat customers using Outmax. Are you seeing larger spend on subsequent campaigns?
Yes. Outmax is well-suited for our land-and-expand model. The majority of clients using Outmax start with small budgets and grow quarter-over-quarter within the same account. Because Outmax is outcome driven and demonstrates actual business results, it naturally supports land-and-expand growth for our clients.
I noticed in your guidance you lowered the midpoint for contribution ex-TAC for 2026. Was that a result of a slower-than-expected ramp of these two large strategic accounts?
Yes, Eric. Our initial expectation was that onboarding for those agreements would occur earlier in the year and drive more growth. Factoring macro headwinds in H1 and the timing of those onboarding activities, we had better visibility and narrowed the contribution ex-TAC range toward the lower end for those reasons.
Yes.
This concludes today's Q&A. I'll now hand back to management for any closing remarks. Thank you.
Thank you. Thank you all for joining. Perion One adoption is accelerating across every growth engine, and we're entering the second half with clear momentum. We look forward to updating you in the next quarter. Thank you for your time.
This concludes today's call. Thank you, everyone, for joining. You may now disconnect.