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DATE

Monday, Aug. 10, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer - Tal Jacobson
  • Chief Financial Officer - Elad Tzubery

TAKEAWAYS

  • Perion One Spend -- $156.7 million, representing a 15% year-over-year increase and accounting for 80% of total company spend.
  • Total Revenue -- $98.2 million, a 5% decrease compared to $103.0 million in the prior year, reflecting softness in open web advertising.
  • Contribution ex-TAC -- $42.3 million, down 11% year over year from $47.6 million.
  • Perion One Contribution ex-TAC -- $34.9 million, down 4% due to the use of promotional terms to acquire new accounts and drive spend.
  • GAAP Net Loss -- $6.8 million, or $0.18 per diluted share, driven by foreign exchange headwinds and restructuring costs.
  • Non-GAAP Net Income -- $3.9 million, or $0.09 per diluted share, compared to $12.0 million in the second quarter of 2025.
  • Adjusted EBITDA -- $2.8 million, including a $1.6 million foreign exchange headwind, representing a 7% margin of contribution ex-TAC.
  • CTV Spend -- $17.7 million, increasing 56% year over year as advertisers shifted budgets toward precise performance and cross-channel execution.
  • Digital Out of Home Spend -- $87.7 million, growing 45% following the extension of infrastructure into Google DV360.
  • Retail Media Vertical Spend -- $59.4 million, a 60% increase supported by new partnerships including Best Buy Canada.
  • Outmax Spend -- 136% growth on a pro forma basis, reflecting rapid adoption of the proprietary AI agent across walled garden platforms.
  • Cash and Liquidity -- $268 million in cash, short-term deposits, and marketable securities with zero debt as of June 30, 2026.
  • Share Repurchases -- 2.7 million shares repurchased for $24.5 million in the second quarter at an average price of $9.12 per share.
  • Full-Year Contribution ex-TAC Guidance -- $215 million to $225 million, narrowed from the previous range of $215 million to $235 million.
  • Full-Year Adjusted EBITDA Guidance -- $51 million to $53 million, representing a 24% margin at the midpoint.
  • Search Advertising Revenue -- $22.1 million, down 2% as the company prioritized cash flow generation for reinvestment into Perion One.
  • Search Contribution ex-TAC -- Declined 30% year over year to support capital allocation strategies.
  • Adjusted Free Cash Flow -- $4.8 million for the quarter, supporting the company's shareholder return commitments.
  • Cost Base Reduction -- 10% following targeted efficiency initiatives and restructuring completed at the end of the second quarter.
  • Geographic Expansion -- Partnered with Acrossmedia241 to bring Outmax to Greece and the Central and Eastern European region.
  • Data Partnership -- Collaborated with Fetch and LiveRamp to access SKU-level purchase data from over 13 million monthly active users.

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RISKS

  • Tzubery stated, "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," noting a negative impact on contribution ex-TAC.
  • Jacobson noted that total revenue was impacted by "continued softness in the open web advertising across the industry," which offset gains in core growth engines.
  • CFO Tzubery identified a "$1.6 million of foreign exchange headwind" that directly reduced adjusted EBITDA during the quarter.

SUMMARY

Management reported that the second quarter was defined by the accelerating adoption of Perion One, which now accounts for the vast majority of total company spend. The company is actively transitioning away from open web advertising by scaling high-growth channels including Connected TV, Digital Out of Home, and Retail Media. Executives noted that while GAAP results were impacted by nonoperating financial headwinds and restructuring costs, the company remains focused on second-half acceleration supported by recently signed strategic agreements. Management completed a 10% reduction in the cost base to improve operational leverage and continued to execute an aggressive share repurchase program to capitalize on current valuations.

  • CEO Jacobson highlighted that the new agentic solution "Ask Perion puts the power of Perion One directly into the hands of advertisers and agencies through a simple conversational interface."
  • The partnership with Best Buy Canada involves a shift from "fixed loop-based signage to a programmatic retail media model that selects ads dynamically" to provide measurable in-store campaign capabilities.
  • Jacobson noted that "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."
  • CFO Tzubery clarified that by "aggressively executing our buybacks now at depressed valuations, we are permanently reducing our share count" to serve as a multiplier for future earnings growth.
  • Management confirmed that material financial contributions from two large strategic agreements are expected "towards the end of the third quarter and accelerate moving forward."
  • The company expanded its global reach to more than 1.6 million screens in over 40 countries by integrating programmatic guaranteed deal execution into Google's DV360 platform.

INDUSTRY GLOSSARY

  • Perion One: A unified AI-native execution infrastructure for planning and optimizing advertising campaigns across multiple digital channels.
  • Outmax: A proprietary AI agent that optimizes outcomes by managing spend allocation and pacing across advertising platforms.
  • Contribution ex-TAC: A non-GAAP metric representing revenue minus traffic acquisition costs and media buy.
  • CTV (Connected TV): Advertising delivered through streaming services and internet-connected television devices.
  • DOOH (Digital Out of Home): Digitally delivered advertising found in public spaces, such as billboards and in-store signage.
  • SORT (Strategic Optimization of Relevant Traits): A cookieless targeting technology used for audience segmentation.
  • Programmatic Guaranteed: An automated media buying process with fixed pricing and committed inventory volumes.
  • Walled Garden: A closed ecosystem where the platform provider controls all access to data and advertising (e.g., Meta or YouTube).
  • DSP/SSP: Demand-side platforms and supply-side platforms used to automate the buying and selling of digital advertising inventory.
  • Agentic Media Buying: An AI-driven approach where autonomous agents handle complex planning and execution tasks on behalf of advertisers.

Full Conference Call Transcript

Operator: 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.

Tal Jacobson: Good morning, and thank you for joining us on Perion's Earnings Call for the second quarter of 2026. Nearly 2 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 a 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 a 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 the 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 partnership 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, platform, 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 algorithm 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.

Elad Tzubery: 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 of 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, 9 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.

Operator: [Operator Instructions] Our first question comes from Andrew Marok at Raymond James.

Andrew Marok: 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 with tools like this are helping to make complex workflows more accessible?

Tal Jacobson: Thank you, Andrew. You were breaking up, so I'll see if I got all of it. So 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. And Outmax is becoming an integrated part of Perion One. It actually drives lot of the AI technologies within the platform. Again, you were breaking up a bit, so I'm not sure I answered the entire question. So if you want to -- if I didn't, if you want to repeat the parts that were not answered, that would be great.

Andrew Marok: I think you got most of it. It was really just kind of the synergies between Ask Perion and Outmax, both kind of 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?

Tal Jacobson: Yes. So absolutely. The agentic solution that we have, including Ask Perion, is fully integrated with Outmax. So Outmax actually provides a lot of the answers within Ask Perion, including the suggestion of how do you reallocate budgets in between platforms. If you just completed a campaign on different social platforms, it will suggest what's next, right? So it would say, I would put more money towards open web, CTV or Meta or YouTube or whatever it is, but Outmax is becoming an even more integrated solution within our entire agentic platform and Ask Perion, obviously.

Andrew Marok: 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?

Tal Jacobson: Sorry, it's very hard to hear you, if you can repeat it for a second.

Andrew Marok: Just talking about your medium-term goals and the 2026 performance so far, if you are still on track for the medium-term goals at the beginning of the year and the track on how to get there?

Elad Tzubery: All right. So I think towards looking at H2 of 2026. First of all, we are starting right now to onboard some strategic agreements we have discussed about in Q1. They're recently signed, we are seeing right now onboarding into our pipeline. And we see all of our growth engines continue to generate healthy pipeline as we are looking at Q3 and Q4. And looking at last year as well, when we see the ex-TAC and EBITDA headwind on second half of the year, we feel that right now, we have the right visibility to narrowing down a bit the guidance for the continuance of the year.

And of course, taking into account everything that we already did in -- with respect to efficiency measures that we took in Q1, we have the right visibility right now towards the second half of the year.

Operator: Our next question comes from Jason Helfstein at Oppenheimer.

Jason Helfstein: Can you hear me okay?

Tal Jacobson: Yes.

Jason Helfstein: Great. Okay. So can you give us a little bit of help? Obviously, you're giving us kind of the spend for Perion One, but we don't know the revenue. So I mean, 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 like a mid-teen-ish type of growth in the back half of the year. So just maybe help us understand how much was either Perion One revenue in the quarter or the non-Perion One revenue year-over-year decline?

So that's question #1. #2, would you think about perhaps changing like the segment disclosure to revenue ex-TAC since you're now guiding to revenue ex-TAC and not revenue? And so maybe giving us that like level of detail? Next question, you highlighted the RIF, headcount reduction. I'm just curious if we can get some more details like what percent of people -- how many people or what percent did that impact? And then just 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?

Elad Tzubery: Okay. Thank you, Jason. The revenue for Q2 for Perion One was $74.2 million. You have it obviously in the presentation that we will upload again to the website. It did show a slight decline year-over-year when you're looking at the revenue, but it's something that we will expect as we onboard more customers into the Perion One. From a revenue recognition method, most of it will come on a net perspective, not necessarily as gross. So we expect to see it as well.

From -- we are looking at the segment and how we are breaking that down, it is important for us to really speak about the spend and how we are contributing to spend towards different channel because we believe that the real adoption of our solution towards our customers is really coming into place when you're looking at the spend level. It's more giving an indication of our -- of the adoption of the customers. And at the end, Perion One is a channel agnostic.

So when we are contributing to different channels, it makes more sense to give it -- breaking down through the spend and Perion One is a total number, which obviously is supposed to produce a better ROI for the advertisers. From the reduction standpoint, so as we discussed, I believe even starting last year, we are constantly doing improvements on how we are operating our business and improving our cost base to be more efficient. We'll be able to, first of all, of course, support all of the scale with the current cost base and improve wherever we can. We -- in H1, we're very focused about also creating this operational leverage going into the second half of the year.

We just announced right now the restructuring that we did. Roughly, I can tell you that we reduced roughly 10% of the cost base. It was intentionally made also to support the different fluctuation in the FX, but also to give us some room to invest more when we are going into 2027. We want to hit the top line expansion that we are aiming to get and the growth rates to Perion One. So not everything will be baked in 2027 without even getting into the guidance right now. For your question to the -- with respect to the cash, we currently have almost $270 million in cash in our balance sheet.

We are continuously trying to do -- also looking at the buybacks. So we expect to end the buyback by the end of -- the current plan by the end of the year. But we are constantly also looking on M&A activities to see if there are any interesting opportunities out there that can generate more value to the Perion customers and to really increase our synergy dollars. Something very important to highlight on that.

We are doing -- we are taking a very disciplined approach when we are looking at our cash, and we're always trying to see what will get the best value to our shareholders, whether this can be a buyback or an M&A or investing in our own business for the growth, but we are always trying to balance between those 3.

Tal Jacobson: Yes. I'll just echo what Elad said and say, with our current cash, obviously, buyback, we still have a healthy chunk to complete this year. We're investing in our technology. So all the growth engines, we're putting some investment there to make sure that they continue to grow and continue to outpace the market. And we're constantly looking at M&A. But as you can see in the past 2 or 3 years, we've always been disciplined in buying the right things with HiveStack, which is showing almost 3 years after, it's still showing amazing growth with Digital Out of Home. Greenbids with Outmax showing amazing growth. So we're not running to just spend the money.

We are looking for good opportunities. And when we find something that makes sense and is extremely synergetic and profitable, then we can explore that.

Operator: [Operator Instructions] Our next question today comes from Matthew Weber at Canaccord.

Matthew Weber: Can you hear me okay?

Tal Jacobson: Yes.

Matthew Weber: Just one for me. You talked about execution of recently signed agreements actively on the onboarding phase and starting to kick in towards the end of Q3. Can you just talk about some of the factors that go into sort of the pacing of those contributions and what could cause them to either exceed or drive some variance relative to your expectations and sort of those customers coming online?

Elad Tzubery: Yes. Thank you, Matt, for the question. So we gave a bit of color of those agreements, but it's basically a volume play to very large agencies that it operates. I can tell you that it took us a lot of time to do the onboarding and all of the testing phases. In the entire H1, we're focusing about showcasing the Perion One capabilities and why it can drive better results for them and for their customers. Right now, we just recently signed them. I think it will take a bit more time to do the onboarding phase.

And then I believe that those contracts will be more materialized towards the end of Q3 and obviously, towards Q4 and mostly kick in, obviously in 2027 as well. It can be faster, and I want to be a bit careful about what -- when you look at a few months of testing, even though onboarding can take more time and it's there -- it's something that they are controlling. We are very capable to take any volume that they will decide to give us. So there can be an upside on that, but it's not under our control.

And that's why currently, we still see a range in the ex-TAC level from those specific reasons and the fact that, obviously, the entire industry is very heavy on the second half of the year, specifically towards Q4.

Tal Jacobson: Yes. I'll just say, again, to echo what Elad said, we spent H1 mainly showcasing how our technology can provide better outcomes than anything else to those 2 strategic clients that we have now. And we're actually happy to know -- it was a frustrating process to take so long to close those agreements. But the fact that the barrier for entry was so high gives us the confidence that our technology can provide great value and that others are going to have a very high barrier to entry, which we're considering as a very good thing. So we're feeling very optimistic about those 2 agreements, and we're now looking at how do we duplicate that with other clients.

Operator: Our next question today comes from Jason Kreyer at Craig-Hallum Capital Group.

Jason Kreyer: Can you guys unpack the commentary about the promotional activity on Perion One? It seems like there's maybe some take rate concessions upfront that will moderate over time. I'm just trying to understand how you migrate take rates to normalized levels and why there's more of an outsized impact in the near term?

Tal Jacobson: Yes, absolutely. Thanks for the question. So as we said, during H1, we ran a lot of test campaigns. Test campaigns come with very low margins. As their name suggests, it's tests. But now, again, as we close those 2 strategic agreements, obviously, they're not going to stay at testing rates. So that should be normalized. But going forward, even though this -- we do think this is going to be normalized, we think testing budget is a great tool for us to use to showcase our technology and gain market share. So our goal is to gain as much market share as possible.

But obviously, once we close those agreements and future agreements, we believe take rates will go back to normal.

Elad Tzubery: And just to add on what Tal said, only starting from the second half of the year, I believe that we're going to see the take rate to be a bit slightly increasing towards the second half of the year.

Jason Kreyer: And then as a follow-up, you guys had impressive growth across CTV and Out of Home and Retail Media. Can you just reconcile that to the CXT growth that was -- that declined in the quarter? When do you think the consolidated growth rates more closely align with these segments as opposed to kind of the legacy segments, which are in decline?

Elad Tzubery: So I think it's not a secret that the web is driving it down. The entire industry is -- we see budget shifting away from the open web and moving towards Digital Out of Home and CTV. Our solutions of Digital Out of Home and CTV are very much focusing most of them around self-serve which increasing the take rate from what we used to see in the past. But having said that, I think that our take rates are still very healthy when you are looking at total Perion One. And we even -- they were even relatively high when we're looking at, so it gives us some room for all of those promotional years that we have discussed.

When we are looking about the different channels, again, in our opinion, the best structured way to give it is on the spend because this is what really -- the discussion with the customers showcase really the adoption of how much we are using the platform. And the Perion One, usually, it's a channel agnostic and it's not something that's under our control in terms of the take rate. We are, of course, controlling the overall take rate that we are expecting to get out of certain campaign, but not necessarily about where the money will be deployed in which channel.

So I'm assuming also next, we'll start to see more -- it leans towards CTV and Digital Out of Home as well. And obviously, we will influence that. But I would not expect it to grow relatively lower than the 20% rate that we see right now. As said, in H2, even we're going to see a moderate increase.

Operator: Our final question today comes from Eric Martinuzzi at Lake Street.

Eric Martinuzzi: Curious to know the repeat customers that are using Outmax. Are you seeing larger spend on subsequent campaigns?

Tal Jacobson: Yes. Thank you. I think the interesting thing about Outmax, specifically, it's a great product for the land and expand model. The majority of our clients that are using it started from small budgets and now they're growing quarter-over-quarter within the same account. So since Outmax is outcome driven, it can show actual business results for our clients. It's a very natural land-and-expand type of model with the majority of our clients of Outmax.

Eric Martinuzzi: And I noticed in your guidance, you lowered the midpoint for the contribution ex-TAC for 2026. Was this a result of a slower-than-expected ramping of these 2 large strategic accounts?

Elad Tzubery: Yes, Eric, I think that -- first of all, it's we -- our initial expectation was that this onboarding and those agreements will be signed earlier in the year, and we will be able to see more growth out there. But also factoring all of the macro headwinds that we saw in H1, we had better visibility to see where we are. But the reduce of the ex-TAC was -- narrowing down to the lower end was actually because of those 2 main factors.

Eric Martinuzzi: Yes. And I did note that you reiterated the midpoint on the adjusted EBITDA. So that was good to see.

Tal Jacobson: Yes.

Elad Tzubery: Yes.

Operator: This concludes today's Q&A. I'll now hand back to management for any closing remarks. Thank you.

Tal Jacobson: 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.

Operator: This concludes today's call. Thank you, everyone, for joining. You may now disconnect.