Perion Network expects a 30% surge in topline for Q4 2022

• Global advertising technology company, Perion Network (NASDAQ:PERI) announced preliminary results for Q4 2022 with revenue expected to be $205M (vs. $201.6M), compares to last year's $158M.
• Adjusted EBITDA expected at $47M vs. $28.9M last year.
• Adjusted EBITDA to Revenue expected 23% vs. 18% prior.
• “Our extraordinary fourth-quarter results demonstrate that our business model is a powerful growth engine, driven by our proprietary iHub (“Intelligent hub”), which connects Perion’s supply and the demand assets. By that, we benefit from maximum operational efficiency, and simultaneously maximize economic value for our customers. We are encouraged by our ability to gain market share by significantly increasing the number of publishers adopting our monetization platform to 260, a 25% increase year-over-year.” commented Doron Gerstel, CEO.

Comments

[Cassidy Run]

Trimmed 10% of my position today at $32.56. Yes, we may head to the $40 range but I want dry powder on hand at all times. LTCG, at a $21 cb, lowering the cb on my remaining shares.

[kevn1111]

@Cassidy Run nice. It is a volatile one, so dont blame you especially since market overall was near the top of it range. If market does not break out and goes back below 3800 towards the Oct low, that dry powder will be very beneficial.

Still think FV is $40+, but when has this one ever traded at FV. I was looking at some covered calls. Apr 21 $35 for $1.60 for a few contracts. You have way more shares than I even after selling as I sit at 3,200 shares. So may just do 2 or 3 contracts, if I do. If it fell to $25 I would sell some puts or buy outright more shares and try to move to 4,000+ shares. Should have done that when at $20 or lower, but I was just nibbling.

But it like the trade and the flexibility it provides.

[Cassidy Run]

@kevn1111 Thanks. Yes, PERI remains a large position for me and I did add in '22 at $17 and $18. My CB now averages $14.19.

I don't entirely trust the market right now and am happy with having dry powder for opportunities later in the year. Perion has weathered the storm remarkably well. It's a core holding and I expect the SP to continue to rise over the next 12-24 months.

[trusthouse]

@Cassidy Run I've been holding PERI for one year, and like you trimming here adding there. My long position has become huge. It has also been a tremendous hedge for my short positions on dubious growth stocks like FCEL : they usually move together, but when PERI retreats a bit, FCEL sinks wildly. Margin requirements are hence respected all the time and improve going forward.

[Solid Capital]

My theory is that PERI will hit All-time high this quarter, if not higher.

[Cassidy Run]

@Solid Capital Why? What is the basis of your theory?

[Solid Capital]

@Cassidy Run This is from a technical perspective. Trend structure is really healthy after Tuesday's gap up in terms of it not being exhausted. The runway after pulling back last month has left it room to reach a higher price and the ATH is not that far away in terms of historical performance and volatility.

[Dividend Latitude]

@Solid Capital I see a massive, approx. 2-year, inverse H&S bottom that projects to a target of ~$42/share.

[Henrik Alex]

Company continues to outperform even in the current advertising environment. Buy.

[Amstragram]

@Henrik Alex indeed, this company is getting cheaper every quarter. Bing my also gets a boost from their investment in OpenAI.

[ValueInvestor_82]

It seems to be a pattern with Israeli companies listed in the US that the US market just undervalues them consistently. Do US investors think that Israel will cease to exist, or what's going on? If you like PERI, check out INMD. Very similar outrageous undervaluation, also an Israeli company.

[b1a2c3j4]

@ValueInvestor_82 I own both and exactly my thoughts. Both are quite cheap and have nice growth. I don't want to go more overweight such small names but definitely holding

[jdberwanger]

@b1a2c3j4 I own both two. Check out another Israeli company Silc. I’ve owned it for 15 years or so. Its about to have its day in the sun.

[kevn1111]

@b1a2c3j4 @ValueInvestor_82

I looked at INMD. PE is 17 per TDA. What I saw on brief look is that bottom line future cagr is around 13%. Does not seem compelling.

Whereas PERI, if you take out the $7-$8 cash is actually at $20 making $2.40ish or PE below 10 growing near 30%.

At first glance (ie no deep dive on INMD) it is not apparently close to the upside PERI has.

[kevn1111]

Sold 3 $25 Feb puts for $1.10. I don’t expect to be put these shares but if I am my net buy will be at $23.90.

[SkiManJamie]

Yup, clearly PERI results are still not as impressive as they seem (sarcasm). They keep smashing it out of the park and they continue to be valued at a significant discount to peers delivering less impressive or even disappointing results.

This implies 4Q adj EPS around 0.85 and FY2022 EPS around 2.40, probably cash/sh 7.43, at $25.10, that's a TTM EV/E of of 7X. When 4Q Revs grew 30%.

[Cassidy Run]

@SkiManJamie I have conviction, that, with patience, Perion could easily be this year‘s Maxar. Happily holding 12,000 shares at a low cost basis.

[SkiManJamie]

@Cassidy Run Agreed! All the best for the new year, my friend!

[Shamanski]

@SkiManJamie
Only question right now is which will be better PERI or ON ?!?!
I don't want too excited too early though, the FED could still f everything up.

[kevn1111]

Just continues to crush yet can’t come close to all time highs. Valuation, especially with so much cash, is getting silly low

[Heikkigold]

$100+ stock in 3 years, maybe more if market gives it a decent multiple. If PERI manages well it’s acquisitions as in the past, it will run way beyond that.

[kevn1111]

@Heikkigold I don’t know about $100, but sb a 20 multiple min + cash/share. So say near $50 now.

It is not truly 100% independent and needs contracts with MSFT. I am surprised they are not being bought out as valuation is silly low. Someone could offer $45 and is below FV imo.

I do expect an acquisition. But have expected for over a year since they did secondary at $21.50 but did nothing with the cash but dilute shareholder. Their only mistake, and it was a doozy as I have repeatedly said.

Other than that PERI fires on all cylinders and if can grow 25% for next 3 years it could get close to your mark if it ever received a fair valuation.

[lbeachmike]

Thanks to all on SA who drew my attention to this company.

[ValueInvestor_82]

I just bought my starting position yesterday. Had discovered this gem about a year ago but was put off by price action in the ad tech sector so was procrastinating with making a move. Yesterday had an intuition that they would probably beat with Q4 results and so didn't want to miss the boat. Talking about timing the market!

[schweis35]

How long will the market ignore this stock?? They keep raising guidance almost every quarter and growing their publisher base during a time where analysts are predicting a recession. I proudly hold my largest single position in this stock and will keep holding before they’re no longer ignored.

[Jeremy Blum]

I wonder if this helps PERI

"Microsoft is reportedly building a version of Bing that uses the tech behind ChatGPT" seekingalpha.com/...

[Kamaal]

@Jeremy Blum I was hoping Microsoft was going to do that when they essentially bought the rights to commercialize ChatGPT. Savy investment by them. I hope it benefits PERI. Looks like it will.

[schweis35]

@Kamaal I’m surprised MSFT hasn’t bought Peri for a couple to a few billion by now. They are undervalued and have positive cash flows and earnings. Already one of their leading industry partners for adtech. Seems like a no brainer acquisition for them.

[ynwa90]

@schweis35 I think foreign companies can’t acquire Israeli companies. Government of Israel holds veto power and prevents it

[Jeremy Blum]

They always beat estimates. I get about $0.70 EPS for the quarter when doing the math. Big beat over the $0.52 estimate.

[ValueInvestor_82]

@Jeremy Blum $0.7 EPS per quarter = $2.8 for the full year = P/E of less than 10, even assuming zero growth from now on. Plus $300m or so in cash sitting on the balance sheet. P/E of 10 is what tobacco businesses are trading for. Market needs to do some math to get to grips with the extent of the undervaluation.

[Heikkigold]

@ValueInvestor_82 well, Q4 is always the strongest quarter but I agree that they will make about $3 per share in 2023. $4 in 2024 and $5+ in 2025. Conservatively.

[RestaurantGuy2]

Adding here. 6-7x EBITDA. 60% ebitda growth. Incredible

[shovel-stocks]

Excellent company. I am glad I discovered this stock in 2022.

[Indy72]

I'm very glad I discovered it in 2019 :)

[shovel-stocks]

@Indy72 Even better :)

[Cryptoanalytic]

@shovel-stocks welcome to the Peridome!

[Amstragram]

Another mispriced stock. Markets have been highly inefficient those last years.