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Why Perion Stock Exploded Today

By Jeremy Bowman – Oct 26, 2021 at 2:39PM

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The adtech company delivered another blowout earnings report.

What happened

Shares of Perion Network (PERI -8.44%) were soaring today after the adtech company posted better-than-expected results in its third-quarter earnings report and raised its outlook for both 2021 and 2022.

As of 1:42 p.m EDT, the stock was up 28.1%.

A person looking at a transparent screen with different digital images.

Image source: Getty Images.

So what

Perion, which connects digital ad sellers and buyers and helps each maximize their returns, posted strong growth on both its top and bottom lines in the third quarter. Revenue jumped 45% to $121 million, easily beating estimates at $108.9 million as the company once again saw strong growth in its display advertising segment with revenue up 82% to $69 million in display advertising. That includes the fast-growing video and CTV solutions business, where revenue jumped 245% to reach $14 million. Growth in search advertising was more modest, up just 14% to $52 million, but display advertising is now the larger of the two divisions. 

Bottom-line performance was strong as well as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin excluding traffic acquisition costs improved from 26% in the quarter a year ago to 37%, and adjusted EBITDA doubled to $17.6 million. According to generally accepted accounting principles (GAAP), net income quintupled to $10.6 million, and with adjustments, Perion reported earnings per share of $0.40, up from $0.21 in the quarter a year ago, much better than the consensus at $0.17.

CEO Doron Gerstel said: "Perion is firing on all cylinders. Our diversified revenue streams coming from both sides of the open web and the synergies derived from our ability to connect all of our operating assets to a central iHub increases our confidence in over-delivering on our commitment to become an ad tech unique market leader. As a result, we have increased our 2021 and 2022 guidance."

Now what

Looking ahead, management now expects revenue of $455 million to $465 million for 2021, implying 40% growth at the midpoint, and $580 million to $600 million in revenue next year, or 28% growth at the midpoint of that range. Both numbers are well ahead of the analyst consensus.

Perion shares have boomed throughout the pandemic as the business has shown strong growth, but the stock still looks cheap, trading at a price-to-earnings ratio of just 21. That looks like a steal for a company growing this fast.

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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