What happened

Shares of Perion Network (PERI 1.56%) jumped today after the ad tech company issued strong preliminary results for its third quarter.

The stock finished the day up 13%. 

So what

Perion, which operates an "intelligent hub" that connects ad buyers and sellers, said that revenue in the quarter rose 31% to $158 million, ahead of the analyst consensus at $155.4 million.

Bottom-line growth was even stronger as adjusted EBITDA jumped 76% to $31 million, and its EBITDA margin excluding traffic acquisition costs expanded from 37% to 46%. 

CEO Doron Gerstel said: "The real test of a strategy is what happens when the going gets tough. Perion's diversification strategy has demonstrated the level of predictability and ongoing sustainability of our business, driving strong revenue and EBITDA growth."

The diversification strategy Gerstel's referring to is the company's focus on multiple advertising channels, including search, social, display, and video.

He also added: "Our innovative technology allows us to gain market share, as advertisers and publishers are looking for higher ROI at these trying times. Our SORT technology -- which is built on multi-award-winning AI that leverages the powerful consumer privacy trend, is gaining huge momentum and attracting world-class advertisers like Mercedes."

Perion gives away SORT, its cookieless targeting technology, for free in order to build customer loyalty. With Alphabet's Google still expected to ban third-party cookies by 2024, SORT could prove to be a competitive advantage for Perion.

Now what

Perion stock surged at the end of 2020 during a boom in ad tech stocks as investors took notice of the company's strong growth and profitability. However, as a small-cap stock, it's gotten relatively little attention since then, even though it just reported its seventh consecutive quarter of greater-than-30% revenue growth.

With a number of innovative products to help brands deliver a premium ad experience, Perion looks well-positioned to outperform even in a recession. The ad tech stock is also cheap, trading at a price-to-earnings ratio of 15.8. If it can keep up its recent growth, the stock is sure to reward long-term investors.