What happened
Shares of Perion Network (PERI -0.25%) surged last month after the adtech company posted better-than-expected results in its third-quarter earnings report, and raised its guidance at a time when much of the digital advertising industry is struggling.
According to data from S&P Global Market Intelligence, Perion finished the month up 20%. As you can see from the chart below, its earnings report on Nov. 9 sparked a rally that gave the stock most of its gains for the month.
So what
Perion shares rose 3.3% on Nov. 9 after its earnings report came out. The company had reported preliminary earnings earlier so the news wasn't a total surprise, but the market still applauded the results, which also included an increase in guidance.
Revenue in the quarter jumped 31% to $158.6 million, which edged out estimates at $158 million. Growth was strong across the board in both search and display advertising with Connected TV revenue up 134% to $8 million.
On the bottom line, growth was impressive as well, with adjusted before interest, taxes, depreciation, and amortization (EBITDA) nearly doubling to $33 million, and its adjusted EBITDA margin after traffic acquisition costs coming in at 51%. Adjusted earnings per share jumped from $0.40 to $0.61, beating estimates at $0.43.
Perion also raised its guidance, calling for adjusted EBITDA of at least $120 million, up from previous guidance of at least $102 million, representing 72% growth from 2021.
Perion stock followed up those gains with another surge on Nov. 10, jumping 7.2% after the October inflation report came in lower than expected. That sparked a rally across the market with growth stocks surging in particular as the report lifted hopes that the Federal Reserve would curtail its interest rate hikes.
A slowdown in rate hikes would be good news for growth stocks, as lower interest rates make future earnings more valuable.
The stock climbed again to close out the month as Federal Reserve Chair Jerome Powell gave an indication that the central bank could slow rate hikes at its meeting in December.
Now what
As an adtech stock, Perion is being treated as a growth stock by the market, but it actually offers seriously good value for investors right now at a price-to-earnings ratio of just 15 based on earnings under generally accepted accounting principles (GAAP). For a stock growing revenue by 31% and adjusted EBITDA even faster, that looks like a great price.
