What happened
Shares of Perion Network (PERI 0.76%) were pulling back in the first half of the year, trading down with the broad market. According to data from S&P Global Market Intelligence, Perion lost 24%, compared with a 21% decline in the S&P 500.
The slide in the ad tech stock was as notable as its ability to outperform its peers in a difficult market environment as investors moved away from digital advertising stocks, including giants like Alphabet and Meta Platforms, as concerns about a recession mounted and tailwinds from the pandemic faded.
In spite of that, Perion has still delivered strong results this year and even raised guidance, which helps explain why the stock has outperformed peers like The Trade Desk and Magnite. The chart below tells the tale.
So what
As you can see from the chart, Perion has tracked with the S&P 500 for most of the year so far, though the stock dipped early in 2022 and jumped in early April when it raised its guidance. The Israel-based company is still a relatively unknown small-cap stock, so it's not surprising that it's had trouble breaking away from the broad-market trend.
Still, Perion's performance thus far in 2022 deserves credit. The company beat estimates in both its earnings reports this year, showing off strong growth and profitability. In its fourth quarter, overall revenue jumped 34% to $158 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 89% to $28.9 million, equal to an 18% margin.
Meanwhile, first-quarter revenue improved 40% to $125.3 million and adjusted EBITDA soared 158% to $22.7 million. It also raised its guidance in both reports and now expects revenue of $620 million to $640 million for the year, or 32% growth at the midpoint. On the bottom line, it sees adjusted EBITDA increased 44% to $98 million to $102 million in 2022.
The stock pulled back 6% in mid-June on a short-seller attack from Edwin Dorsey of The Bear Cave in mid-June, but it soon recovered those losses.
Now what
Perion reaffirmed its guidance at the end of June, which should offer some reassurance to investors that the company doesn't see a sudden decline in demand for its services, which focus around its intelligent hub that connects ad buyers and sellers.
Though the stock could fall further if the market continues to weaken, it now trades at a price-to-earnings ratio of just 13, making it look like a good bet over the long term.
