Perion Network (PERI) stock sinks on lower guidance

Shares of Perion Network (NASDAQ: PERI) plunged as much as 40% Monday after the company announced its preliminary results, cutting its revenue forecast.

The revenue forecast was cut due to a drop in search advertising driven by changes at Microsoft's Bing in advertising pricing and mechanisms implemented by Microsoft Bing in its Search Distribution marketplace.

"These adjustments led to a reduction in Revenue Per Thousand Impressions (RPM) for both Perion and other Microsoft Bing distribution partners. These changes contributed to decreased search volume," said the company.

Perion now expects Q1 2024 revenue and adjusted EBITDA of $157 million and $20 million, respectively. For the full year 2024, the company expects revenue of $590 to $610 million, down from $860 million to $880 million. Adjusted EBITDA is now seen between $78 million and $82 million, down from $178 million to $182 million.

The decrease is mainly attributed to search advertising and, to a limited extent, to web video activity. The rest of the business indicators remain positive, said the company.

"Our relationship with Microsoft remains strong, and both organizations continue to explore more opportunities to collaborate on a variety of digital advertising solutions," commented Tal Jacobson, Perion's CEO. "A key driver of our long-term success is our focus on expanding our Display Advertising activity, whose growth drivers include AI-driven CTV, Retail Media, and Digital out-of-home (DOOH). These growth drivers continued to deliver meaningful growth in the first quarter and are expected to increasingly contribute to our results in 2024."

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