Perion (PERI) Q3 2025: CTV Revenue Jumps 75% as Platform Unification Drives Margin Expansion
Perion’s Q3 marked a pivotal return to year-over-year growth, propelled by 75% CTV revenue gains and a strategic shift toward unified, AI-powered advertising solutions. Margin expansion, product innovation, and a $75 million share buyback boost reinforce management’s confidence in sustainable, high-margin growth. With CTV, digital out-of-home, and retail media now comprising over a third of revenue, Perion’s transformation into a channel-agnostic marketing platform is accelerating into 2026.
Summary
- CTV and Out-of-Home Engines Accelerate: High-growth channels now comprise 37% of total revenue, reflecting rapid adoption.
- Unified Platform and AI Leverage: Perion One and Outmax are driving operational synergies and recurring, high-margin revenue streams.
- Capital Allocation Signals Confidence: Expanded $200 million buyback and continued investment in R&D and sales underpin aggressive scaling plans for 2026.
Performance Analysis
Perion delivered its first year-over-year revenue and contribution ex-TAC growth since early 2024, signaling a successful inflection in its transformation. Total revenue reached $110.5 million, up 8% YoY, with contribution ex-TAC (Traffic Acquisition Costs, a key digital ad cost) rising 7% to $51 million and maintaining a robust 46% margin. Adjusted EBITDA surged 63% YoY, reflecting the operational leverage unlocked by efficiency initiatives and the unified Perion One platform.
Growth was most pronounced in Connected TV (CTV), up 75% YoY and now 15% of revenue, and digital out-of-home, up 26% and now 22% of revenue. Retail media revenue also grew 40%, reinforcing Perion’s exposure to high-velocity digital ad segments. The web channel, by contrast, declined 11% YoY, but management clarified that most of this was due to the intentional exit of low-margin business lines, with underlying web revenue actually up 2% after adjusting for these actions. Search revenue stabilized, rising 9% and contributing 21% of revenue.
- Channel Mix Shift Accelerates: CTV and digital out-of-home now represent 37% of total revenue, up from 28% last year, highlighting a decisive pivot away from legacy web formats.
- Margin Expansion Materializes: XTAC margin held at 46%, while adjusted EBITDA margin rose to 24% of contribution ex-TAC, underscoring improved cost discipline and platform leverage.
- Cash Generation Remains Solid: Operating cash flow reached $5.9 million for the quarter, with year-to-date cash flow at $20.1 million and a strong $315 million cash position supporting flexibility.
Perion’s transformation is now visible in both financial results and segment composition, with high-growth, high-margin channels outpacing legacy declines and the unified platform enabling improved efficiency and scalability.
Executive Commentary
"Our key growth engines, CTV, digital out of home, and retail media, continue to expand and present healthy growth. We are also expanding our share repurchase program to $200 million, adding $75 million to the current program. This decision was made after a deep analysis of our future capital needs that will support our growth and it reflects our confidence in Perion's long-term value for investors and our ability to continue to generate cash."
Tal Jacobson, Chief Executive Officer
"During this quarter, we achieved our first year-over-year revenue and contribution xDAG growth since the first quarter of 2024. This is a milestone that reflects our disciplined execution, and it's a direct result of our enhanced organizational structure, our continued adoption of unified Perion 1 platform, and a strong go-to-market strategy."
Elad Soubry, Chief Financial Officer
Strategic Positioning
1. Platform Unification and AI-Driven Innovation
Perion One, the company’s unified, multi-channel marketing platform, is now the backbone of its go-to-market and operational strategy. Outmax, the new AI-powered optimization engine, unifies performance algorithms across CTV, social, and web, enabling real-time budget reallocation and measurable ROI improvements for advertisers. SOTA, an AI supply path optimizer for publishers, and the new digital out-of-home player, further embed Perion’s technology into both demand and supply-side stacks, creating sticky, recurring revenue streams and expanding addressable market.
2. High-Growth Channel Focus
CTV, digital out-of-home, and retail media are now Perion’s primary growth engines, with each segment outpacing industry averages. The Albertsons Media Collective partnership and Outmax’s impact on major campaigns (e.g., Ford, Primo Water) exemplify Perion’s ability to deliver measurable business outcomes and win market share in these fast-growing verticals.
3. Channel-Agnostic Model and Risk Mitigation
By deliberately exiting low-margin web businesses and investing in channel-agnostic technology, Perion is positioned to capture shifting advertiser budgets as consumer behavior evolves. The platform’s flexibility allows for rapid adaptation to demand shifts between open web, walled gardens, CTV, and out-of-home, reducing reliance on any single channel and enhancing retention.
4. Capital Allocation and Shareholder Returns
The expansion of the share repurchase program to $200 million (pending regulatory approval) signals strong confidence in Perion’s intrinsic value and cash generation. Management sees buybacks, disciplined organic investment, and targeted M&A as the optimal use of its $315 million cash balance in the current environment.
5. Scaling for 2026 and Beyond
Management is investing in sales, marketing, and R&D headcount to accelerate Perion One adoption globally, with a stated goal to scale the platform aggressively in 2026 and 2027. Efficiency gains from automation and AI are expected to offset personnel growth outside of core innovation and go-to-market functions.
Key Considerations
Perion’s Q3 results demonstrate a business in strategic transition, moving decisively from legacy web advertising toward a unified, AI-first platform anchored in high-growth channels. Investors should weigh the following:
Key Considerations:
- Growth Engine Momentum: CTV and digital out-of-home are driving both revenue mix shift and margin expansion, validating management’s focus and recent acquisitions.
- Web Channel Decline Managed: Underlying web revenue would have grown 2% YoY absent the deliberate exit of low-margin activities, suggesting the decline is more strategic than structural.
- Recurring Revenue Visibility: SOTA and the digital out-of-home player are embedding Perion within partner tech stacks, increasing revenue predictability and customer stickiness.
- Capital Deployment Discipline: The enlarged buyback program and ongoing R&D investment reflect a balanced approach to shareholder returns and future growth.
Risks
Perion faces ongoing risks from rapid shifts in digital ad spend, particularly as AI agents and zero-click search erode traditional web traffic. Execution risk remains as the company scales new platforms and integrates recent acquisitions. Channel mix volatility and macroeconomic headwinds could impact advertiser budgets, while competitive pressures from larger walled gardens persist. Management’s channel-agnostic model and recurring revenue focus help mitigate these, but success depends on continued innovation and platform adoption.
Forward Outlook
For Q4 2025, Perion guided to:
- Revenue in line with the $430 to $450 million full-year range
- Adjusted EBITDA of $44 to $46 million for the year
For full-year 2025, management reiterated guidance:
- Revenue: $430 to $450 million
- Adjusted EBITDA: $44 to $46 million
Management emphasized:
- Confidence in delivering within the guidance range, citing strong holiday season pipeline and no signs of advertiser budget slowdown.
- Continued scaling of Perion One, with incremental investment in sales, marketing, and R&D to drive global adoption and product roadmap acceleration into 2026.
Takeaways
Perion’s Q3 marks a clear inflection in its transformation, with high-growth channels and unified platform strategy now reflected in both results and forward guidance. The business model is evolving toward recurring, high-margin revenue streams, supported by disciplined capital allocation and product innovation.
- Mix Shift Drives Margin: CTV and digital out-of-home are now the core of Perion’s revenue and profit growth, offsetting web declines and lifting overall margins.
- Platform Leverage and AI Innovation: The Perion One strategy is yielding operational synergies, improved retention, and expanded addressable market, setting the stage for scalable growth in 2026 and beyond.
- Execution and Scaling in Focus: Investors should monitor adoption of new products, the pace of recurring revenue growth, and management’s ability to balance investment with profitability as Perion seeks global scale.
Conclusion
Perion’s Q3 2025 results confirm the company’s strategic pivot from legacy web advertising to a unified, AI-powered platform anchored in the fastest-growing digital ad channels. With margin expansion, robust capital returns, and a clear scaling roadmap, Perion is positioned to outpace industry growth into 2026—provided execution on platform adoption and innovation continues to deliver.
Industry Read-Through
Perion’s performance underscores the accelerating shift of digital ad budgets toward CTV, retail media, and digital out-of-home, at the expense of legacy web formats. The success of unified, AI-driven platforms that span both demand and supply sides is becoming a competitive necessity as advertisers seek measurable outcomes and cross-channel optimization. Other ad tech players and digital media companies must adapt to this channel mix volatility and invest in automation and platform unification, or risk margin compression and market share loss. The capital return discipline and recurring revenue focus seen at Perion will likely set the standard for sector leaders as macro and technological disruptions continue to reshape the digital advertising landscape.