Perion (PERI) Q4 2025: CTV Revenue Surges 59% as AI-Driven Execution Model Accelerates Growth

2026-02-18 | By EarningsIQ Research

Perion’s transformation into an AI-native advertising execution platform delivered notable margin expansion and double-digit growth in its core segments, led by a 59% surge in Connected TV (CTV) revenue. The company’s Outmax AI agent is driving measurable performance gains and attracting blue-chip customers and strategic partners, positioning Perion for a shift to a high-growth, platform-centric model. Management’s multi-year targets underscore confidence in sustained operating leverage and market share gains, but legacy web and search activities remain a drag on the overall mix.

Summary

  • AI Execution Drives Performance: Outmax agent adoption is fueling organic growth and compressing sales cycles.
  • Core Engines Outpace Market: CTV, retail media, and digital out-of-home posted double-digit gains, eclipsing industry averages.
  • Margin Expansion in Focus: Operating leverage and disciplined cost structure underpin ambitious profitability targets to 2028.

Performance Analysis

Perion’s Q4 results mark a decisive inflection, with core growth engines—CTV, digital out-of-home (DOOH), and retail media—delivering double or triple the industry’s pace. CTV revenue climbed 59% year-over-year, digital out-of-home rose 28%, and retail media advanced 42%, together comprising 44% of Q4 revenue versus 34% last year. These segments are increasingly central as legacy web and search shrink in relevance, with web revenue down 17% in the quarter, partly due to a proactive exit from low-margin activities.

Profitability leapt on the back of operational discipline and AI-driven automation. Adjusted EBITDA surged 53% year-over-year, and contribution ex-TAC (traffic acquisition cost, a key measure of net revenue after media costs) rose 19% to $65.2 million, with margins expanding to 48%. Cash flow conversion was a standout, with operating cash flow up 400% year-over-year and free cash flow conversion at 89% for the year. The company ended the year with $313 million in net cash, even after executing $24 million in Q4 share repurchases.

  • Growth Engines Eclipse Legacy: CTV, DOOH, and retail media now drive nearly half of revenue, with continued outperformance expected.
  • Margin Structure Strengthens: EBITDA to contribution ex-TAC margin reached 37%, reflecting improved leverage and cost discipline.
  • Legacy Drag Remains: Web and search activities continue to contract, but are now a minority of the revenue and profit mix.

Perion’s pivot to platform-centric, AI-powered execution is translating into both top-line acceleration and robust bottom-line gains, but the transition away from legacy segments is ongoing and will shape the pace of future growth.

Executive Commentary

"2025 was a defining year for Perion. For a company that has been around since 1999, we consider 2025 as year one for the new Perion, a year in which we change everything except our name. We redefine our mission, our strategy, our technology, our organizational structure, and even our executive team, all in one year."

Tal Jacobson, Chief Executive Officer

"Today, as a result, Perion's consolidated profitability margins are expected to expand into 2028. We have always prided ourselves on being a highly profitable and cash-generative business, and our 2028 target plan is designed to amplify that. Even as we continue to invest in our AI infrastructure, we expect to maintain a high adjusted free cash flow conversion ratio."

Elad Zuberi, Chief Financial Officer

Strategic Positioning

1. Platform Unification and AI-Native Execution

Perion One, the company’s integrated platform, unifies disparate advertising channels and leverages Outmax, its proprietary AI agent, to optimize outcomes in real time. This “AI-native execution infrastructure” is designed to allocate spend, manage pacing, and deliver measurable results across CTV, social, retail media, and DOOH. The Outmax agent’s ability to drive 40% to 80% performance uplift for clients is compressing sales cycles and deepening customer relationships.

2. Strategic Partnerships and Ecosystem Expansion

New alliances with Amazon, Walmart, and MasterCard are accelerating Perion’s access to premium data, inventory, and measurement capabilities. The Amazon DSP integration enables dynamic content optimization for commerce brands, while Walmart Connect and MasterCard bring first-party audience and purchase insights into the Perion platform. These partnerships extend the company’s reach and enhance the value proposition for advertisers seeking performance and accountability.

3. Operating Leverage and Cost Discipline

Margin expansion is a central pillar of Perion’s long-term plan, with automation and AI tools driving efficiency across G&A and cost of revenue. The company has decoupled expense growth from revenue, allowing a greater share of incremental revenue to flow to the bottom line. The 2028 plan targets a 28% adjusted EBITDA to contribution ex-TAC margin, up from 22% for 2025, underpinned by continued investment in innovation and go-to-market capacity.

4. Transition Away from Legacy Segments

Web and search activities are being intentionally deprioritized, with management forecasting only stable or slightly declining contributions from these areas. The focus is firmly on accelerating the Perion One platform, which is expected to comprise 85% to 90% of contribution ex-TAC by 2026, completing the transition to a platform-centric, high-growth business model.

Key Considerations

Perion’s quarter demonstrates the strategic payoff from its multi-year transformation, but investors should weigh the durability of growth engines and the risks inherent in platform transitions.

Key Considerations:

  • AI Execution Layer as Differentiator: Outmax’s cross-channel optimization, not tied to any one DSP, positions Perion as a performance layer above traditional ad tech platforms.
  • Customer Mix and Sales Cycle Compression: The shift from feature selling to outcome-based selling is shortening sales cycles and increasing wallet share with both agencies and direct brands.
  • Platform Flywheel and Organic Growth: Management expects the Perion One “flywheel” to drive organic growth, with no incremental product launches needed to achieve its 2028 targets.
  • Capital Allocation Discipline: Expanded $200 million share buyback program and a robust cash position provide flexibility for both shareholder returns and selective M&A.

Risks

Execution risk remains as Perion transitions away from legacy web and search, which could underperform if digital ad budgets shift unexpectedly or if AI-driven performance gains plateau. Macro visibility remains limited, with advertiser planning cycles staying short and subject to volatility, especially in a crowded and rapidly evolving ad tech landscape. Strategic partnerships must deliver measurable incremental revenue to justify ongoing investment.

Forward Outlook

For Q1 2026, Perion guided to:

  • Contribution ex-TAC of $215 to $235 million for the full year
  • Adjusted EBITDA of $50 to $54 million for the full year

For full-year 2026, management maintained a disciplined outlook, citing:

  • Continued growth in CTV, DOOH, and retail media as primary expansion drivers
  • Legacy web and search expected to decline or remain flat, further shifting mix to high-growth engines

Management’s 2028 plan targets 25%+ CAGR in Perion One spend, 20%+ CAGR in contribution ex-TAC, and a 28% EBITDA margin, all driven by organic platform growth and operating leverage.

Takeaways

  • AI Platform Drives Outperformance: Outmax and Perion One’s execution layer are delivering measurable ROI improvements and compressing customer adoption cycles.
  • Growth Engines Now Core: CTV, DOOH, and retail media are now the majority of the business, with legacy segments intentionally deprioritized and shrinking in relevance.
  • Margin and Cash Flow Story: Operating leverage and disciplined capital allocation underpin ambitious multi-year profitability and cash generation targets, but execution risk remains as the business pivots fully to platform-centric growth.

Conclusion

Perion’s Q4 capped a transformational year, with AI-driven execution and platform unification driving double-digit growth in its core engines and significant margin expansion. The company’s disciplined strategy, robust cash position, and deepening partner ecosystem provide a strong foundation for continued outperformance, though the ongoing legacy transition and macro uncertainty warrant close attention.

Industry Read-Through

Perion’s results reinforce the accelerating shift in digital advertising toward outcome-based, cross-channel optimization driven by AI-native execution layers. The company’s success in compressing sales cycles and driving measurable performance gains highlights the growing demand for unified, data-driven platforms that can operate above legacy DSPs. For the broader ad tech sector, the pivot away from channel silos and toward integrated, AI-optimized execution is becoming table stakes, with legacy web and search models facing secular decline. Strategic partnerships and the ability to demonstrate real ROI will be key differentiators as advertisers and agencies consolidate spend onto platforms that deliver both efficiency and accountability.

PERI Technology Advertising AI CTV Retail media Platform Execution