PERI Q2 2025: Expects 20%+ CTV Growth After 5% Q2 Dip
- Enhanced Growth in Advertising Solutions: PERI returned to year‐over‐year growth in its advertising solutions business for the first time since Q3 2023, driven by strong performance in digital out-of-home, retail media, and web channels.
- Strong CTV Recovery and Upside: Although CTV revenue declined 5% in Q2 due to budget shifts, management expects the channel to achieve over 20% annual growth—well above the market’s 13%—thanks to their newly launched performance CTV solution that delivers outcome-focused advertising.
- Operational Efficiency and Robust Cash Flow: The company is leveraging its unified Perion One platform and automation initiatives (including GenAI deployment) to boost efficiency without proportional headcount increases. This strategy, coupled with a robust operating cash flow of $21.3M in Q2, supports capital allocation through share buybacks and potential strategic acquisitions.
- CTV softening: A 5% decline in CTV was noted this quarter, with management attributing it to budget shifts to the second half and to alternative channels, which may indicate near-term pressure if the anticipated rebound does not occur.
- Rising cost pressures: The call highlighted that cost of revenue increased by 15% while net revenue fell by 4%, suggesting margin pressure and a potential risk if cost management and automation efforts do not deliver timely improvements.
- Sales and execution uncertainty: There are concerns about the appropriate sizing of the sales organization for the Perion One strategy, with management emphasizing efficiency rather than headcount growth. This reliance on automation and future scaling might pose execution risks if the strategy fails to convert into increased sales momentum in the near term.
Metric | Period | Previous Guidance | Current Guidance | Change |
---|---|---|---|---|
Revenue | FY 2025 | $430 million to $450 million | $430 million to $450 million | no change |
Adjusted EBITDA | FY 2025 | $44 million to $46 million | $44 million to $46 million | no change |
Topic | Previous Mentions | Current Period | Trend |
---|---|---|---|
Advertising Solutions Growth & Channel Expansion | In Q1 2025 and prior (Q3 and Q4 2024), advertising solutions were discussed with strong performance in digital out‑of‑home, CTV, and retail media—with acquisitions like Hivestack helping boost channel initiatives. | Q2 2025 marked the first positive YoY growth after several quarters of decline, with emphasis on expanding channel footprint (e.g., in APAC and EMEA) and a channel‑neutral, performance‐driven approach. | Continued momentum with strategic expansion and a noticeable recovery in revenue growth, reinforcing their channel‑neutral strategy. |
CTV Performance: Recovery vs. Softening Trends | Q1 2025 showed strong CTV growth (31% YoY), while Q3 2024 experienced a seasonal slowdown followed by recovery signs, and Q4 2024 noted a slowdown (10% YoY) yet maintained optimism for outperforming market growth. | Q2 2025 reported a 5% YoY decline in CTV revenue, attributed to advertisers shifting budgets to the second half, while the launch of the Performance CTV solution underpins expectations for robust recovery in H2 2025. | A shift from short‑term softness toward a recovery outlook, with current challenges expected to be transient as performance improvements are anticipated later in the year. |
Operational Efficiency and Automation Initiatives | Q1 2025 and Q4 2024 emphasized cost reductions, headcount optimization, and automation measures, while Q3 2024 mentioned efficiency improvements to boost EBITDA margins. | Q2 2025 highlighted the deployment of GenAI across operations (e.g., HR and campaign deployment) and using the Perion One platform for sales efficiency, all intended to streamline processes and support margin expansion. | A sustained focus on improving operational efficiency, now further enhanced by GenAI integration, indicating a deeper commitment to transforming internal processes. |
Unified Platform Transformation (Perion One) | In Q1 2025 and Q4 2024, the strategic vision and rollout of Perion One were clearly outlined as a means to unify technologies and brands, though Q3 2024 did not mention it. | Q2 2025 reinforced the transformation with updates such as the launch of the Performance CTV solution and expansion through new global partnerships, further embedding the platform strategy into operations. | Continued evolution of the unified platform strategy with added features and broader global deployment, deepening the transformation initiative. |
Advanced AI Integration and Innovation (GenAI, UID 2.0) | Q1 2025 focused on innovations like UID 2.0 integration, AI-powered chatbots, and the incorporation of Greenbids’ custom algorithms, while Q3 and Q4 2024 also noted experiments with generative AI models for creative solutions. | Q2 2025 concentrated on deploying GenAI for operational streamlining (e.g., for HR and campaign automation) and leveraging Greenbids’ AI capabilities, with no mention of UID 2.0. | The AI focus remains strong, but there is a notable shift toward operational applications of GenAI with less emphasis on UID 2.0, underscoring a tactical realignment within their innovation strategies. |
Acquisition Integration and Synergy Realization | Q1 2025 provided detailed accounts of immediate Greenbids integration and Hivestack’s role in expanding digital out‑of‑home capabilities, while Q3 2024 emphasized Hivestack’s DCO technology and cross‑channel synergies. | Q2 2025 confirmed that Greenbids’ integration is fully on track with early wins (e.g., over $1 million in Perion Algo deals) and highlighted continued contributions from Hivestack in strengthening channel expansion. | Continued effective integration with tangible early benefits, demonstrating that acquisition synergies remain central to the company’s growth strategy. |
Legacy Revenue Decline and Transition from Open Web | Q1 2025, as well as Q3 and Q4 2024, revisited the decline in web revenue (e.g., a 28% drop) and diminishing relevance of legacy technologies like Search and Open Web, prompting a strategic shift toward higher‑margin segments. | Not mentioned in Q2 2025. | The topic appears to have receded from current discussions, suggesting it is no longer a primary focus as the company shifts emphasis to newer, higher‑growth channels. |
Cost Pressures and Margin Management | Q1 2025 reported improved contribution margins and headcount reductions; Q3 and Q4 2024 detailed cost reductions, efficiency measures, and stabilized or improved EBITDA margins. | Q2 2025 maintained focus on stable contribution ex‑TAC margins while addressing cost pressures through automation and expecting further margin expansion in the latter half of the year. | Consistent focus on managing cost pressures and improving margins, with ongoing operational efficiency initiatives supporting stable financial performance. |
Sales and Execution Uncertainties | In Q3 2024 and Q4 2024, challenges such as declining Search revenue, seasonal CTV deceleration, and shifts in advertiser spending were noted, indirectly highlighting execution uncertainties. | Q2 2025 addressed uncertainties by emphasizing budget shifts (e.g., in CTV), reinforcing a channel‑neutral strategy and leveraging automation and geographic expansion to mitigate execution risks. | Persistent uncertainties are acknowledged; however, strategic operational adjustments and a diversified channel approach help to mitigate execution risks. |
Financial Guidance and Revenue Outlook Adjustments | Q1 2025 featured raised guidance with increased revenue and EBITDA forecasts, while Q4 2024 provided detailed revenue breakdowns and outlook adjustments, and Q3 2024 maintained previously set guidance. | Q2 2025 reaffirmed the raised full‑year guidance with robust revenue forecasts ($430M‑$450M) and adjusted EBITDA estimates ($44M‑$46M), supported by strong momentum across key channels. | A sustained upward trajectory in guidance and outlook, with confidence in strategic execution and growth drivers being consistently reinforced across periods. |
External Contract Risks (e.g., Microsoft Tail Revenue) | Q3 2024 and Q4 2024 discussed the non‑renewal of the Microsoft Bing contract, the resulting tail revenue (expected to be minimal), and working capital impacts related to this external risk. | Not mentioned in Q2 2025. | The focus on external contract risks, notably Microsoft tail revenue, has diminished in the current period, suggesting it is no longer a priority topic in the discussions. |
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CTV, Sales, Capital
Q: CTV growth, sales headcount, cash use plans?
A: Management is confident in delivering 20%+ annual CTV growth by leveraging performance CTV, enhancing sales efficiency through automation/white-label initiatives, and deploying cash via a $38M buyback and selective M&A to drive growth. -
Cost Increase
Q: Why did cost revenue rise 15% despite lower net revenue?
A: They explained that increased costs stem from expanding the retailer vertical and enhanced reporting and hosting services, with planned automation expected to boost efficiency soon. -
Out-of-home Expansion
Q: How will DOOH partnerships drive geographic expansion?
A: New digital out‑of‑home partnerships are being used as entry points into key markets, enabling cross‑selling of Perion Algo and expanding reach in high‑growth regions. -
CTV Decline
Q: Was the 5% CTV decline industry-wide or a budget shift?
A: Management clarified that the decline reflects a temporary budget shift to H2 rather than any underlying industry weakness, with the launch of performance CTV expected to reverse the trend. -
GenAI Automation
Q: How is GenAI integrated into operations?
A: They are deploying GenAI across the business—from HR to campaign execution—under the leadership of the new COO, enhancing operational efficiency without increasing headcount. -
Web Impact
Q: How will AI search affect web revenue?
A: While acknowledging potential declines in web traffic due to AI search, management remains focused on channel flexibility so that shifting budgets are redirected toward effective outcomes. -
CTV Segmentation
Q: Will mid-market self‑serve features be offered for performance TV?
A: For now, there is no plan to offer a self‑serve option for SMBs; the emphasis remains on larger accounts with comprehensive, outcome‑driven solutions for at least the next 18 months. -
Campaign Length
Q: Have campaign lengths changed amid tariff uncertainties?
A: Management observed no significant changes in campaign durations, noting that marketers continue business as usual despite earlier tariff concerns.
Research analysts covering Perion Network.