Investing

Perion Network (PERI): Israeli Advertisement Company On The Verge Of A Big Surge

After the renewed partnership between Perion Network (PERI) and Microsoft (MSFT) and an increased guidance for Q4 revenue, Perion Network (PERI) stock surged. The Golden Investor thinks their is still more room for growth after the revival of this Israeli tech firm that overcame previous corona losses with great magnitude.

Perion Network (PERI) is an Israeli tech company that delivers data-driven online advertising and search solutions to brands and publishers. Recently they extended their collaboration with Microsoft (MSFT) to further drive their search advertising business growth through their division called CodeFuel. The continuing collaboration between the companies will enable Perion Network to further grow its publisher relationships offering, lucrative search technology solutions, and sophisticated expertise for monetizing their digital properties. These include shopping, product comparison and content websites, applications, browser extensions, mobile launchers, and white label search engines. This enables Microsoft to increase their search advertising market share and connect advertisers to millions of potential customers through their own search engine Bing, boosted by Perion Network’s extensive technologies.

In the past two years, CodeFuel has seen significant growth and has created new revenue streams, while focusing on increasingly high quality monetization solutions to track search demand. With the help of recent acquisitions of Pub Ocean and Content IQ, Perion Network has aggressively positioned itself in the growing digital advertisement market, attaining the essential analytic tools to increase their capabilities within the sector. This is represented by their 31% year-over-year expected growth in Q4 2020.

Despite the hit taken by the corona outbreak, the company has proven to have enough resilience to quickly overcome the demand shock. The company has proved to have turned to table, erasing the losses made in Q2 2020 with strong Q3 results and now expect even stronger results in Q4. A signal that their renewed collaboration with Microsoft together with their strategic acquisitions have been proven to be fruitful. Further growth into 2021 seems inevitable, while there is some potential downside risk for stock dilution at these elevated prices, the company is likely to continue to make profits. Perion Network, therefore, can easily recover from the cash outflows related to their acquisitions, without having to issue new common stock.

In recent years Perion Network has spend over 200 million U.S. dollars on acquisitions and as small player could well be a potential take-over target if it continues to grow its business. Even though their Q3 advertisement revenue growth was bigger than expected, also costs went up. This means that despite their revised increased revenue growth, it could well be that the growth of revenue comes along with rising costs. Time will tell if Perion Network can keep growing while keeping costs down. For now, with 11 percent EBITDA growth expected in Q4 it seems that Perion Network has found their way up.

Disclaimer: The writer of this article holds Perion Network (PERI) stock, this article should not be interpreted as investment advice or anything like that.

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