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Why Perion Network Stock Jumped Today

By Jeremy Bowman - Jun 28, 2021 at 10:51AM

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Shares of the ad tech were gaining after a strong preliminary earnings report.

What happened

Shares of Perion Network (PERI 1.60%) were soaring today after the Israeli ad tech company posted strong preliminary second-quarter results and raised its guidance for the year.

As a result, the stock was up 13.8% as of 9:47 a.m. EDT.

A person looking at a glass screen with TV images

Image source: Getty Images.

So what

With the second quarter just completed, Perion said it expected $105 million in revenue, up 74% from the pandemic-impacted quarter a year ago, and a 17% increase from the first quarter. 

It also saw strong margin expansion, reporting preliminary adjusted EBITDA of $13.5 million, up from $2.5 million a year ago, and above $8.8 million in the first quarter. 

The company said its "spoke-and-hub" model connecting demand and supply is driving efficiencies and expanding EBITDA margins, and it's seeing strong growth in video, connected TV, and search.

"Perion's accelerating growth further validates our diversification strategy and the success of our holistic solutions approach," CEO Doron Gerstel said. "The key driver of our growth is the strong performance of our advertising business, which outpaced the industry's organic growth rates, as brands and agencies expand the adoption of our solutions."

Now what

Management was also optimistic enough about the rest of the year to raise its guidance. It now sees full-year revenue of $410 million to $430 million, up 28% from 2020, and ahead of its prior forecast of $390 million to $410 million. On the bottom line, it expects adjusted EBITDA margins to improve from 10% to 12%, and for adjusted EBITDA to increase from $32.8 million to between $49 million and $51 million. 

Based on that guidance, Perion is trading for less than 15 times EBITDA. That looks like a great price for fast-growing stock in a disruptive industry.

Jeremy Bowman owns shares of Perion Network. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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