Israeli digital ad company Perion Network (Nasdaq: PERI; TASE: PERI) has published a profit warning for the first quarter of 2024 and cut its annual guidance due to a drop in income from search advertising because of changes in pricing and other mechanisms made by Microsoft's Bing search engine. The company's share price is down 37.39% on Nasdaq today at $13.21, giving a market cap of $636 million.
There is an element of déjà vu about the current situation. Ten years ago Perion's share price fell sharply after Google changed its policy making it difficult for the company to generate income from search based advertising. Perion has since expanded its activities into other areas but it seems still remains vulnerable to the policies of the tech giants.
Perion CEO Tal Jacobson said, "Our relationship with Microsoft remains strong and both organizations continue to explore more opportunities to collaborate on a variety of digital advertising solutions. Our strategy was, and continues to be, grounded in a fundamental principle of making sure our solutions are diversified in terms of technologies, channels and partners, while focusing on the needs of our customers, brands and retailers across the digital advertising domain. We continue to expand and strengthen our solutions and technologies by leveraging our cash flow generation and strong cash balance of almost half a billion US dollars to acquire companies that are complementary and additive to our growth."
Even before the latest announcement, Perion's share price was on a downward trajectory, falling over 30% since the start of 2024 and 50% over the past 12 months.
Beyond the changes at Microsoft, another factor impacting Perion negatively is its video activities on websites, although according to Perion all other business indices remain positive.
As a result of the changes at Microsoft, Perion expects first quarter revenue of $157 million and adjusted EBITDA of $20 million in the first quarter - growth of 8% in revenue but a fall of 36% in EBITDA from the corresponding quarter of 2023.
Perion expects 2024 revenue of $590-610 million, down 30% from its previous forecast and down 19% from 2023 revenue. The EBITDA 2024 forecast has been cut by 56% to $78-82 million, down 53% from $169 million in 2023.
Published by Globes, Israel business news - en.globes.co.il - on April 8, 2024.
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