CEO, Perion Network
Perion Networks (PERI): Algo Trading for Ads — Perion's AI Layer for a Trillion-Dollar Market
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In this episode of the WTR Small-Cap Spotlight podcast, Tal Jacobson, CEO of Perion Network (NASDAQ: PERI), joins host Tim Gerdeman and WTR's James Kisner to discuss how the repositioned, AI-native Perion is tackling fragmentation in the trillion-dollar digital ad market. Jacobson walks through Perion One — a platform that sits above ad-buying platforms like Google, YouTube, Meta, and TikTok rather than replacing them — and Outmax, the company's AI agent that applies algorithmic-trading methodology to media buying for 52 Fortune 10...
About Tal Jacobson
Tal Jacobson, CEO of Perion Network, has described 2026 as "year one" for the company following a strategic pivot in which it reset its management, product line, and focus. In podcast appearances, Jacobson stated that Perion now positions itself as an "AI native" advertising technology company that does not own inventory, allowing it to recommend ad placements across platforms such as Google, YouTube, Meta, and TikTok without being tied to any single one. He introduced Perion One, a platform that sits above existing ad-buying systems, and Outmax, an AI agent that applies algorithmic-trading methodology to media buying. Jacobson said Outmax serves 52 Fortune 100 companies and claimed it provides "up to 80 or 90% better results" than manual work. Jacobson also discussed partnerships with Amazon, Walmart Connect, and Mastercard, and noted that the company's historical product growth has been around 19-20% year-over-year. He projected that Perion's EBITDA margin could reach 28% by 2028, attributing potential efficiency gains to AI-driven automation, stating that as revenue scales, the company does not expect to proportionally increase headcount.
Transcript (21 segments)
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Tim Gerdtman0:01
Welcome to the WTR Small Cap Spotlight podcast. I'm your host Tim Gerdtman, vice chair and co-founder and chief marketing officer of Water Tower Research. Today we're joined by Tal Jacobson, chief executive officer of Perion Network, NASDAQ ticker symbol PERI. Perion is an AI native advertising technology company that helps brands, agencies, retailers optimize their ad spend across channels like connected TV, digital out-of-home, retail media, social, and the open web. The company's Perion One platform and its Outbrain AI agent serve 52 of the Fortune 100 companies. Also joining us is by WTR equity research colleague James Kistler. Good morning, gentlemen, and thank you for joining me.
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Tal Jacobson0:47
Hey, good morning. Thanks for having me.
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Tim Gerdtman0:50
Tal, you've called 2026 year one for the new Perion. For listeners who may not be familiar with the company's evolution, can you please give them a quick overview of what Perion does and where the company is strategically headed?
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Tal Jacobson1:03
Absolutely. So Perion has been around for years, especially as a public company, but last year we totally pivoted the company and reset our strategy, our management team, and our product line. And we're now focusing on the biggest problem of digital advertising. Now, digital advertising is a huge market with over a trillion dollars a year in marketing spend. And we figured out that the biggest issue is it's too fragmented, too many platforms, too many solutions, and extremely hard for CFOs and CMOs to understand how the money's being spent and what is the ROI. So Perion One does not replace other platforms, but it actually sits above all other platforms and tries to make sense out of the noise to help CMOs and CFOs to understand their yield on their media investment.
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Tim Gerdtman2:03
Great, thank you. I think I may have misspoke. I believe it was 2025 that you called year one, correct? Yes, 2025. Yes, okay, very good. James?
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James Kistler2:11
Yeah, thanks Tim again and welcome to all. So, you had a really strong fourth quarter. Contribution ex-TAC was up 19%. EBITDA was up over 50%. So, what's driving that momentum and how much of it is the Perion One platform starting to click?
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Tal Jacobson2:27
Yeah. The majority of our new products is focused on outcome. So, really about ROI on media spend. And we're seeing great success on that, especially with uncertainty in the economy, we're seeing more and more advertisers shifting dollars into outcome-driven products. And that's what we saw in Q4, which was as you said a pretty strong quarter.
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James Kistler2:58
All right, let's turn to your growth engines. CTV, digital out of home, and retail media. They're all growing well ahead of the broader market. Can you talk about what's fueling that and where you see the most runway?
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Tal Jacobson3:12
Sure. You're absolutely right. Our CTV is showing very nice growth. Our retail media also a good adoption and our digital out of home, which I think the market is now realizing is a great channel for performance. I don't think that was the case a few years back. It all comes now under one roof on the Perion One platform. So, it's easier for our customers to now upsell across budgets in between those channels and that really drives that growth.
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James Kistler3:52
Okay, thank you. So, let's turn to Outmax, which is really central to the Perion One story. So, for investors who aren't deep in ad tech, can you explain in plain terms what Outmax does and why an advertiser would use it instead of just going directly through Google or Meta?
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Tal Jacobson4:10
Yeah, absolutely. So, a lot of investors are asking us this. I think it's going to be easier for investors to understand this better than marketers. Custom algo or custom algo trading has been around for like 20 years in the stock market. And we know algo trading can do things that no human can do, right? It's impossible to compete with that. We took that exact methodology and created an algo trading for media. So, when you think about it, there's a trillion dollars going through the pipes. And now we have an AI agent that sits above those buying platforms and buys through an algorithm on behalf of our brands. As you said, we serve the majority of the top 1,000 brands in the US. And a lot of them are now using Outmax, which provides up to 80 or 90% better results than manual work.
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James Kistler5:16
Yeah, algorithmic trading is certainly taking over the world. I know that you did back I can see how that would help in your world as well. And so, you've announced some notable partnerships recently. Amazon, Walmart Connect, Mastercard, and you acquired Media Bits last year, which became Outmax of course. And that now works with big platforms like Google, YouTube, Meta, and TikTok. So, how do these pieces fit together and what do they unlock for Perion One going forward?
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Tal Jacobson5:45
Yep. So, I think in this entire evolution of AI, data is really the key. Right? So, it's like fuel for cars. AI without a lot of data is not going to be able to do anything. So, those partnerships, especially with big retailers on consumer behavior data, no personal data of course, but consumer behavior data really helps our AI algorithm to provide better results. And our job is not to replace any other platform. Our job is to sit above those platforms with the right data and the right algorithm to provide those results. And we think partnership is the way to go and the way to scale as fast as possible.
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James Kistler6:34
That makes total sense. So, the market is fragmenting across walled gardens, may I call them CTV, social media, the open web. Instead of relying on a single channel, Perion One is pitched as this kind of channel agnostic platform. So, how does your AI ensure advertisers get the best outcomes across such a divided landscape?
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Tal Jacobson6:59
Yeah. I think that's really the strongest part of Perion. You know, companies like Meta or TikTok or Google are great. They really are amazing in what they do. They can only offer you their own inventory. So, you would never hear Meta say, you know what, for this specific campaign, you should actually go to Google. With us, we're not connected to any inventory. So, our goal is to make you the best yield on your media investment and we can actually recommend for a specific campaign and say, you know what, for this specific campaign, we think you should do less of that and more of this, which is very unique. There are no other companies in the world that can actually do that, especially with an algorithm that can actually shift that.
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James Kistler7:52
Sounds very value-added. So, I'd like you to step back and take a higher-level view. You've laid out a 3-year plan. And you're targeting 20-plus percent organic contribution ex-TAC CAGR. And expanding EBITDA margins to 28% by 2028. And sitting on over 300 million in cash. How does your focus on the AI execution layer distinguish Perion in the market? And how does it inherently drive the operating leverage needed to hit those long-term profitability targets?
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Tal Jacobson8:28
Yep. So, when we look at the products that we have under the hood, that's Perion One now on our platform. And we look back on the historical growth for those specific products, we were always around 19-20% year-over-year. So, we feel that should still be the case around that. As for efficiency, the EBITDA margin we think by 2028 should go to 28%. And obviously AI is a major driver in efficiency. A lot of automation. We do not as we scale our revenue, we do not think we need to scale our headcount. So, that should really drive the efficiency going forward.
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James Kistler9:22
Yeah, it sounds like it's not just a revenue driver, it's also an efficiency driver for you guys. And that's great to see you guys benefiting from the AI from all sides there. So, well, thank you, Tal. I'm going to pass it back to Tim to wrap things up for us.
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Tim Gerdtman9:35
Oh, well, thanks, gentlemen, for joining us today. Very interesting story at Perion and I look forward to following it as 2026 unfolds. So thanks again for joining me today.
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Tal Jacobson9:43
Thank you.
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Tim Gerdtman9:46
Thank you for listening and don't forget to subscribe as well as visiting www.watertowerresearch.com to stay up to speed on the company's small cap written research reports, podcasts, fireside chats, industry specific symposiums, and conference schedules. We will see you next time for another edition of the WTR Small Cap Spotlight podcast. Finally, a special thanks to the producer and editor of the podcast, Krista Fitzpatrick.