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Perion Network: Balancing Offense And Defense

Jun. 02, 2020 3:23 AM ETPerion Network Ltd. (PERI)8 Comments


  • Perion’s diversified ad-tech business model protects it from the volatility and uncertainty in digital advertising.
  • Management has been decisive in cutting costs to cope with COVID-19.
  • Despite the company’s rather impressive profile, industry-wide spending cuts will likely persist in Q2 and Q3, putting pressure on the top line, and hence, I prefer to be neutral for now.
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Doing business without advertising is like winking at a girl in the dark. You know what you are doing, but nobody else does.

- Stewart Henderson Britt

Perion Network Ltd. (NASDAQ:PERI) is a global technology company that is in the business of providing data-driven ad-tech solutions for brands and publishers. I like the company's diversified business model - a go-to-market model which includes products and services that are used across the three main pillars of digital advertising, which are: 1) Search, 2) Social Display, and 3) Video. This helps it cope with the inherent uncertainty and volatility in the digital media spend which was prevalent even before COVID-19 reached our shores. The other important thing to remember is that Google (GOOG, GOOGL), Facebook (FB), and Amazon (AMZN) tend to through their weight around, as they control c.85% of ad spend. This means brands, advertisers, and publishers tend to look for friendlier and flexible alternatives that respect their brands and need for monetization. This is where PERI comes in.

Source: Perion

COVID-19 Impact on Digital Advertising Industry and beyond

As mentioned in the Lead-Lag report, last month, we saw the lowest services sector activity reading - as per ISM - since April 2009. Confidence has been shot, budgets have been trimmed drastically, and advertising, being a discretionary activity, has really had to take it on the chin. Digital and local media companies are more vulnerable to such conditions, with digital ad spending expected to decline by 25-45% in Q2 and 10-20% in Q3. This is so because national television ads are often purchased many months in advance and are harder to cancel, but most digital ad buys can be canceled within days. In fact, PERI management flagged that decline in ad spend from clients was down 25% in March, and a significant number of campaigns that were planned for Q2 were put on hold or canceled. Potential wins too have been delayed or

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This article was written by

Michael A. Gayed, CFA profile picture
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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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