Call starts abruptly. Earnings Conference Call. Today's conference is being recorded. The press release detailing the financial results is available on the company's website at www.perion.com. Before we begin, I'd like to read the following Safe Harbor statement. Today's discussion includes forward-looking statements. These statements reflect the Company's current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties, and other factors including those discussed under the heading Risk Factors and elsewhere in the Company's annual report on Form 20-F. That may cause actual results, performance, or achievements to be materially differ and any future results, performance, or achievements anticipated or implied by these forward-looking statements. The Company does not undertake to update any forward-looking statements to reflect future events or circumstances. As in prior quarters, the results reported today will be analyzed both on a GAAP and non-GAAP basis. While mentioning EBITDA, we will be referring to adjusted EBITDA. We have provided a detailed reconciliation of non-GAAP measures to their comparable GAAP measures in our earnings release, which is available on our website and has also been filed on Form 6-K. Hosting the call today are Tal Jacobson, Perion’s Chief Executive Officer, and Maoz Sigron, Perion's Chief Financial Officer. I would now like to turn the call over to Tal Jacobson. Please go ahead.

Hello, everyone and welcome to Perion’s third quarter of 2023 earnings. Joining me today is Maoz Sigron, our CFO. I would like to begin by extending our most profound sympathy and support to all our employees and their families and our friends and colleagues in Israel who are facing challenging times. As I recently said in an interview on CNBC, Israel is the most resilient people on earth. Under extreme situation of uncertainty Israelis thrive, come together and overcome any difficulties. Hence Perion's operations and business activities remain strong. Perion is a global company predominantly serving the U.S. market where the vast majority of our revenue is generated. The huge support we are receiving including from many of you on this call, is so appreciated. Perion is built on the hard work and execution abilities of our amazing teams and on the long lasting support and belief of our investors. I want to thank you all for being part of our integral part of our journey. We will continue to serve our country while delivering value to our clients, partners and stakeholders. The headline news of the third quarter of 2023 is similar to every quarter over the last three years. Our financial results reflect Perion's ability to deliver continuous profitable growth even under macroeconomic headwinds. Our profitability remains among the highest in the industry. The three main factors that enabled another quarter of growth and strong profitability are Perion diversified business model, focus on technology and innovation and disciplined execution. We achieved growth in key financial parameters including year-over-year growth in revenue contribution ex-TAC and adjusted EBITDA. This impressive double digit growth represents continuous trend that has been ongoing for the past three years, our ability to execute and deliver constant profitable growth proves once again that our business…

Thank you, Tal. Good afternoon and good morning to those of you joining us from the U.S. It is no secret that Israel is experiencing challenging times. Despite the war situation, it is very important for me to share with you that almost 100% of Perion revenue is generated outside of Israel and only 40% of our cash and cash equivalents is held in Israel. At the same time, we are monitoring the situation closely and are diversifying our cash allocation to mitigate any risk. To be clear, the conflict is not and is not expected to significantly impact our business or financial strength. Turning to the business. In the face of the continuous macroeconomic state of affairs in the third quarter, we delivered strong financial results with continued profitable growth. Once again, we demonstrated the power and the resilience of our agile and diversified business model. Let's review the financial highlights for the third quarter. Revenue increased by 17% year-over-year to $185.3 million. Contribution excluding TAC increased by 90% year-over-year to $77.3 million, delivering a 42% margin. Adjusted EBITDA increased by 29% year-over-year to $42.7 million. GAAP net income increased by 28% year-over-year to $32.8 million and non-GAAP diluted earnings per share increased by 38% year-over-year to $0.84 per diluted share. Let's review the financial results in more detail. The revenue for the third quarter was $185.3 million, an increase of 17% year-over-year. Our strong and consistent growth resulted in a two-year CAGR of 24%. These results demonstrate that our ability to execute in our diversification strategy combined with innovation and business agility provide strong results despite the volatility in the ad industry and the macroeconomic headwind. Display advertising revenue for the third quarter increased by 14% year-over-year to $99.2 million accounting for 54% of total revenue. Over the…

Thank you. [Operator Instructions] Our first question is coming from Laura Martin from Needham and Company. Your line is now live.

Great. Just a couple of things. This retail media network is really fantastic. Could you -- is that driven be it by new customers, higher spending levels? What's going on with pricing? Could you start with retail media strength please?

Yes absolutely. Thanks for joining. So retail is, it's also new customers, but it's deepening the relationship with the retail customers that we already have with more and more technologies such as WAVE, you know the new product we just released, so both new customers and existing customers deep in the relationship.

Okay, great. And then I'm curious as to the juxtaposition here, Tal, we had CTV revenues up 39%, but video advertising down 16%. I would have guessed that CTV was inside videos. So what's falling off a Cliff in video if CTV is doing so well?

CTV and video separated also in our historical number. The reason why video as we said decreasing is related to different priority internally we did. We shifted part of the inventory to the display just in terms of what is the potential of each one of them and in term of the bottom lines what we can get, we can get more dollars from display versus video.

Okay, thanks guys.

Thank you.

Thank you. Our next question today is coming from Andrew Morocco. Your line is now live.

Hey thanks for taking my questions. I kind of wanted to dig in on the metrics that you gave around the search business. With the really, really strong growth in queries on top of 16% growth in publishers, that seems to imply a really, really strong growth in queries per publisher. Can you give any color as to what's behind that?

What's behind, the more searches per publisher?

Correct. Is there anything specific that's driving a big uptick in searches for publisher?

No, I think first of all, a lot of the searches are generated from the existing publishers and also from new publishers. Since we don't really control the searches, we can only add more customers. It's really up to them and for the market trends. If people are searching more or not, it's up to them. Our business is to add more and more publishers, qualified publishers that can attract new customers of their own.

Okay. And then on the WAVE product, I know you have a lot of emerging and earlier stage efforts in front of you. Can you just give us a little bit of background as to what advertiser feedback or anything specific that you heard that really led you to develop this product and get it out into the market? Thank you.

Yes, absolutely. So first of all we're doubling down on generative AI. We think we believe this is the future of advertising. Everything generative AI is definitely the future and we have a lab here just for that. One of the things we've heard from our advertisers is they're looking for more creative and immersive format to be generated on a huge scale and a personalized manner. So this is why we've used generative AI to first of all create all those trillions of scripts. So it would take the data of the product, the promotion, the location, and then through that it actually writes its own script for different variations. And then we're using a very smart algorithm that can actually read that and it actually sounds like a real person and we spread that around through different channels, right, you know, podcasts, radios and then we get the attribution to actually see, you know, what gains, how do people interact with that? Do people actually skip it or not? So it's the whole thing. We just released that. We have a few customers with that. We're getting a very positive feedback and they actually want to add more and more campaigns using that technology. And we're feeling very, very optimistic and positive about the whole trend of generative AI within Perion.

Thank you. Next question is coming from Mark Kelly from Stifel. Your line is now live.

Great. Thanks very much. I had two quick ones. Just first on CTV, we've been hearing about CPMs continue when they come down across the industry. I know you guys have different types of creative units that garner a higher CPM. I'm just curious if you're seeing any pressure on CPMs there? That's the first question. And then just on the WAVE product, can you expand just a little bit on that? I guess are all the intense signals coming from the retail media network? And then I guess will you book that revenue as part of retail media? I guess a little more color there would be great. Thanks, guys.

So let me start with the WAVE of things because we already started that and then Maoz can talk a bit about more KPIs about CTV. So yes, first of all WAVE is basically data-driven advertising on its scale. That's why we need machine learning and generative AI. And the easiest and more natural place for that is going to be in retail. Now we're starting with retail, which is obviously part of the retail media effort we have. But if we're going to add it to more and more vectors and verticals such as travel, automotive and others, but retail, since we get through our relationship with the retail, we get so much data. It just, it makes so much sense to start with that.

Now with the CTV, so CTV, as you know our CTV is not the standard CTV. We're talking about the high impact CTV with different formats we are using. We are charging the same CPM. We are not seeing any drop or any change in the trends. We're able to keep this torque on live CPM and this is what we are also expecting for this quarter. We don't see any weakness on our CPM around CTV.

Okay, great. Thank you both.

Thank you.

Thank you. Next question today is coming from Jason Helfstein from Oppenheimer. Your line is now live.

Everybody. So first I want to offer my sympathies and support for all the Israeli Perion employees. A few questions, so on the mix away from video, how much of this is media quality reasons or is this just solely kind of profitability and efficiency on your side? That's question one. Then question two, Maoz can you elaborate on the third quarter macro headwinds you cited? Were there any specific verticals that you want to call out as we can kind of would maybe like areas you saw were thought were strong, was that just like a broad comment? And then just on the weaker, I mean I think we all know CTV CPMs have been coming down, given the explosion of inventory, isn't that a positive for you because it drives higher ROI, and then if you could show higher ROI, you can get advertisers to put more budget there? Thanks.

Thank you, first thank you, Jason. So about the video, this is pure economic at the unit of economics consideration. Once we see that you can get more profit from display, we will shift the inventory to display. It's just pure economic consideration. Historically it was better with the video, but in the last, let's say quarter it was more, but it's something the trend started a few quarters ago, that is starting that we can get more profit with the display. So we did this shift. This is for the first. About the macro, again we ended the quarter more or less aligned with the original plan. The diversification is part of the reason why we're able to end the quarter. But definitely there is a change between what we planned originally to what how we end the quarter. There was some area that I'll, let's say less and show lower numbers versus our plan, but some others that offset the weaker area. But generally speaking if I'm talking about searches results and the display advertising, because they all as you can see the number this is very much aligned with the plan. The drivers for the quality of that offset more than everything. The negative trend is retail and CTV. This is the main two areas that helped us to offset the negative trend. And the last is about the CTV. You're right that we believe that part of the reason we're able to show better results with the CTV is related to the weakness that we have on the standard CTV. The ROI, the OS [ph] that we are showing is better than the standard and we believe that this is part of the reason we are able to be very attractive and to be able to keep the CPM which are relatively high as you know and this is part of the reason why the growth, the year-over-year trend is very much positive.

Thank you. Next question today is coming from Jeff Martin from Roth. Your line is now live.

Great. Thank you. Good evening and also expressing my support and sympathies. I wanted to get a sense Maoz and Tal, next year how should we start thinking about growth in search and display? Do you believe that retail media can continue to support growth in the double digits on revenue overall? And any insight into whether you think there'll be some M&A activity next year? Thanks.

Yes, so let's start by saying our organic business is growing right and we expect it to continue to grow next year, both in search, on retail, on CTV, on all on all five [ph] currently we have great signals from all parts of the business. Having said that, we are also evaluating a few candidates for M&A. We feel strongly that we need to have another arm, more technology, maybe a new vertical, so we are working on that very actively.

Great. And then just to follow up. There wasn't much discussion about SORT and SORT related metrics and growth, maybe give an update there.

Absolutely, absolutely. So I'm actually glad that you added that. So few things about SORT. First of all SORT is doing great. It stays very strong and it keeps driving more and more campaigns to us. As we said in the past SORT is not a standalone product. SORT drives, it's AI driven targeting capabilities that do not require any cookies or any privacy formats of any sort. We're extremely happy about SORT. Even now, especially when Google just announced that they're going to restrict the ability of advertisers to look at IPs through Chrome and SORT doesn't use that. So it's a home run for us. If cookies are going to go away, if IPs are going to shrink, SORT doesn't use both of them, so we're extremely happy about that. We feel very strongly about us having SORT as a secret sauce to continue our growth. And yes, we don't feel that adding KPI to SORT every single time actually helps or predicts anything about our growth. But it is our secret sauce and we keep investing in that when we're adding more and more features to it and it's very much alive.

Thank you. Next question today is coming from Max Michaelis from Lake Street Capital. Your line is now live.

Hey, guys, just one from me. Looking at the quarter, it seems like advertising came in a little bit softer than expected, still 14% growth which is solid, but surge helped perform. Is that the way we should be thinking about Q4 in terms of modeling? Thank you.

Thank you. So yes, more or less the event of the third quarter reflects very much also in our eye level I was just thinking about Q4. So very much what you'd see here is what we're expecting to see in Q4 with this is an idea of Q4, which is of course, the most important quarter we have for the year.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Thank you everyone for joining. We had a great quarter. We're looking forward to seeing you again at the next quarter. Thank you.

Bye, bye.

Thank you that does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.