PERI.TAPERI.TATLV
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Operator: Hello, everybody, and welcome to the Perion Network Q4 and Full Year 2025 Earnings Call. Today's conference is being recorded, and an archive of the webcast will be posted on the company's website. 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 headings 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 different 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 a 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 Elad Tzubery, Perion's Chief Financial Officer. I would now like to turn the call over to Tal Jacobson. Please go ahead.
Tal Jacobson: Good morning, and thank you for joining us on the Perion's earnings call for the fourth quarter and full year of 2025. 2025 was a defining year for Perion. For a company that has been around since 1999, we consider 2025 as year 1 for the new Perion, a year in which we changed everything except our name. We redefined our mission, our strategy, our technology, our organizational structure and even our executive team, all in 1 year. Today, we will summarize the results of the pivotal path we took 12 months ago. We will present the Q4 results that gives us the confidence in our Perion One strategy. We will also cover our 2026 guidance and our 3-year organic plan based on the momentum we're seeing. In 2025, we started building Perion One as a centralized platform for marketers. We integrated our technologies, expanded strategic partnerships and introduced new innovations to drive growth. We are now introducing the next phase of Perion One, deepening our technology and becoming an AI-native execution infrastructure that delivers measurable results across channels, platforms and verticals. Outmax, our AI execution agent, is already getting into more and more channels, delivering meaningful results for our customers. Perion One is becoming the infrastructure that allows our clients to harness the power of AI agents to execute all their media activities. Let's start with the fourth quarter performance. I'm happy to share that we delivered strong results in Q4. Our main growth engines, CTV, Digital Out-of-Home and Retail Media, all delivered double-digit year-over-year growth, significantly outpacing the market. We accelerated our contribution ex-TAC faster than the revenue growth. We delivered strong adjusted EBITDA growth and generated meaningful operating cash flow, demonstrating that we continue to operate with discipline. This combination of growth and profitability reflects the strength of the infrastructure we are building and our ability to execute in a highly dynamic market. The global advertising ecosystem is both massive and complex. Marketers navigate in a fragmented universe of screens, platforms, formats and buying environments while being held to higher standards of performance and accountability. Budgets, signals and optimization are often siloed by channels. That fragmentation is where efficiency and performance break down. This is the core challenge we've been focused on solving. We've built Perion One to unify the fragmented ecosystem. Its AI-powered execution infrastructures enable marketers to harness AI agents to perform highly complex marketing activities. Perion One helps advertisers make confident decisions faster and continuously optimize every campaign in real time. It also helps publishers to maximize inventory value through smarter demand allocation and yield optimization. By aligning execution across both sides of the ecosystem, demand and supply, Perion One improves efficiency, performance and outcomes end-to-end. At the center of Perion One is Outmax, our AI native execution agent that drives results for our customers. Outmax' goal is to be the one AI agent for every channel, whether it's YouTube, Facebook, Instagram, NBC, Disney+ or digital out-of-home. Outmax acts as the intelligent execution agent that ensures every dollar spent is working at its maximum potential. It removes the guesswork and replaces it with algorithm certainty, allocating spend, managing pacing and optimizing outcomes in real time. Outmax is already showing great results for our customers. Let's take a look. [Presentation]
Tal Jacobson: Here is a strong example of how Outmax agents performance drives trust and scale. The Outmax AI algorithmic model started with this specific advertiser on a $50,000 YouTube budget test in 2023. The performance justified the budget expansion as we grew the spend to $4.5 million in 2024 and to $20 million in 2025. When technology drives performance, scale comes organically. Another example comes from our digital out-of-home technology, where we're seeing the same pattern. In late 2025, we announced the launch of digital out-of-home player that became the marketing operating system for digital out-of-home publishers. As you can see in this graph, an out-of-home publisher that integrated this solution in September '25 scaled with us from a spend of EUR 200 a month to over EUR 0.5 million a month in just 90 days. This is not an isolated win. It demonstrates the repeatability of our execution model across environments and formats. It's the Perion One infrastructure that scales performance and creates stickiness among our customers. This next example shows how execution and optimization come together in our Outmax for CTV. With Webroot, we applied Outmax CTV, AI-driven optimization, to continuously improve performance. Outmax drove a significant reduction in cost per action and an uplift in site visitation that led to week-over-week efficiency improvements. It is also important to note that Webroot had a full transparency into performance, allowing them to see what was working and scale with confidence. All these examples prove that the outcome is consistent across different brands, channels and formats. This Outmax outcome delta graph represents how we think about our AI agent models, models that have only one purpose, to create consistent incremental uplift for our customers. It is a difference between having an army of media traders executing with hands-on keyboards versus our Outmax AI agent optimizing in real time. Following a short learning period, Outmax agent continuously applies dynamic bid and execution adjustments across dimensions, reallocating spend based on live performance signals. This execution capability directly translates into how customers consistently increase ROI at scale with us and why this execution model is trusted by some of the world's largest brands. Perion's technology serves 52 of the Fortune 100 companies in the U.S. across industries, including retail, pharmaceuticals, airlines, technology, media, financial services and insurance. This wide variety reflects trust in our execution model regardless of the vertical. One of the most exciting things about the new Perion is the level of strategic partnerships we are attracting. We are partnering with the most advanced companies in our industry to accelerate our growth. This quarter, we launched 3 new partnerships with Amazon, Walmart and Mastercard. Through our new Amazon partnership, we are combining Amazon's unique audience data and measurement capabilities with our AI-driven creative technology and premium inventory. This partnership strengthened Perion's long-term programmatic revenue potential with commerce brands. I'm also happy to share that Perion's AI-powered dynamic creative optimization is now integrated with Walmart Connect's first-party audience and sales insights. This help advertisers better personalize campaigns, explore opportunities for incremental sales lift and improve ROI. And with Mastercard, we're integrating aggregated purchase insight across the U.S. and Europe, particularly strengthening our digital out-of-home and CTV execution. Together, this partnership extends the power of our infrastructure. Collectively, those achievements reflect a structural shift in our business. 2025 marked Perion's transition from reset to execution and scale. We established Perion One as our AI native execution infrastructure. We unified our brands, our technology and our data into a single operating system, powering the execution of planning, activation, optimization and measurement. Our growth engines reaccelerated. CTV, Digital Out-of-Home and Retail Media showed clear momentum and drove advertising solutions back to growth. We strengthened execution across the organization, simplifying the operating model, refreshing leadership and increasing focus and speed. At the same time, we deepened our AI capabilities, introducing advanced execution algorithm agents and expanding performance solution across channels. Importantly, we returned to year-over-year growth in the second half of the year, demonstrating operating leverage and improved cash flow strength. Taken together, 2025 repositioned Perion for a scalable, durable growth. This foundation is what supports our forward targets. By 2028, we expect Perion One to represent the vast majority of our business with legacy activities remaining stable and no longer defining growth. Today, we present how we think about the future of Perion with our 2028 targets that include 3 main KPIs: Two for accelerated organic growth and the third for EBITDA margin expansion. Specifically, we are targeting Perion One pro forma spend CAGR of at least 25%, contribution ex-TAC CAGR of at least 20% and adjusted EBITDA margins reaching 28% of contribution ex-TAC. These targets are supported by clear structural growth drivers that include continued expansion in our performance-driven AI agents across CTV, Digital Out-of-Home, YouTube, Meta, web and Retail Media. This resonates with a market-wide shift towards performance advertising that is directly aligned with the Perion One offering. Internal AI-driven automation improves operating leverage, while disciplined cost management and targeted investment in go-to-market and innovation ensure we scale efficiently. This is scalable growth built on execution. With that, I'll now turn it over to Elad Tzubery, our CFO, who will walk you through the financial results of the fourth quarter, full year 2025, 2026 guidance and our targets for 2028.
Elad Tzubery: Thank you, Tal, and thank you all for joining us on the call today. Our fourth quarter results mark a definitive turning point for Perion. Over the last 18 months, we focused on unifying our advertising solutions under the Perion One strategy. We are now seeing substantial financial impact. This quarter demonstrates the power of our execution. It reflects on our top 3 financial metrics. We delivered 19% year-over-year growth in contribution ex-TAC resulting from our go-to-market strategy. We achieved a 53% surge in adjusted EBITDA resulting from the efficiency measures we built earlier this year, and we generated over 400% year-over-year increase in operating cash flow, which enabled us to end the year at almost 90% adjusted free cash flow to adjusted EBITDA ratio. The Perion One platform continues to fuel our 3 growth engines: CTV, Retail Media and Digital Out-of-Home. Even more importantly than the outstanding performance of these engines, they are also consistently outgrowing the market. We expect this momentum to continue serving as the primary catalyst for our future expansion. We are entering 2026 with a highly efficient operating model, strong cash-generating abilities and a clear long-term financial road map to continue our top line growth. Our strong financial results, the successful implementation of the Perion One strategy and our AI-based execution infrastructure are the foundation on which our 2028 target plan is built on. We are backing this confidence in Perion's organic growth trajectory with action. We recently expanded our share repurchase program to a total of $200 million, of which we already executed $118 million. Moving on to our key financial metrics for the fourth quarter. Revenue for the quarter grew 6% year-over-year to $137.1 million. More importantly, our contribution ex-TAC grew 19% year-over-year to $65.2 million, significantly outpacing our growth in revenue. Adjusted EBITDA reached $24.3 million, an increase of 53% compared to last year. This implies an adjusted EBITDA to contribution ex-TAC margin of 37%, showcasing the operating leverage we have unlocked. The strength of our underlying business model and our consistent ability to generate cash proved itself effective once again. During this quarter, we generated $21.8 million in operating cash flow. We ended the year with $313 million in net cash even after repurchasing shares at almost $24 million in the fourth quarter alone. Looking at the full year of 2025, revenue was $439.9 million and contribution ex-TAC for the year was $203.4 million. Adjusted EBITDA reached $45.2 million, reflecting a 22% ex-TAC margin. On an annual basis, we generated $41.9 million cash from operations, representing a 504% year-over-year increase. Furthermore, our conversion rate of adjusted free cash flow to adjusted EBITDA was an exceptional 89%. This proves that even during a transition year, Perion's business model is resilient, profitable and highly cash generative. While our AI execution infrastructure is channel-agnostic, our strategic focus on the fastest-growing channels in digital advertising is bearing fruit. Our growth engines are both growing and outpacing the market. CTV revenue grew 59% in the fourth quarter and 42% for the full year, reaching $62.1 million. As the shift from traditional linear TV to connected TV advertising is accelerating, advertisers are increasing their CTV spend, looking for performance and measurement. This is exactly what Perion is offering. Digital Out-of-Home revenue grew 28% in the quarter and 36% for the full year to $94.9 million. This was driven by our expanded global footprint and our complete end-to-end digital out-of-home full stack solution. Retail Media also continues to be a star performer. Revenue increased 42% in Q4 and 36% for the full year and more than doubled the market growth. As we integrate more deeply with industry-leading retail partners like Walmart and Albertsons, we are seeing higher stickiness and recurring spend from top-tier brands. We expect to continue to capture market share in this rapidly expanding vertical. Looking at our revenue mix for Q4 and the full year, we see the continued shift towards advertising solutions that stands at the core of Perion One. Advertising solutions revenue increased by 7% year-over-year in Q4. This demonstrates the growing portion of CTV and Digital Out-of-Home, which accounting collectively for 44% of revenue in the fourth quarter and 36% in the full year 2025, accelerating from 34% and 23%, respectively, last year. Web declined 17% year-over-year in the fourth quarter and 13% for the full year. It is important to note that on a pro forma basis, when utilizing the lower-margin activities that were discontinued in late 2024, web revenue declined 12% in the quarter and only 1% for the full year. Search revenue increased 3% year-over-year in Q4, and we expect it to remain stable going forward. Contribution ex-TAC in the fourth quarter grew by 19% year-over-year to $65.2 million, representing a margin of 48% compared to 42% last year. For the full year 2025, contribution ex-TAC margin was 46% compared to 43% last year. As we move forward with our strategic plan and add more customers to the Perion One platform, we expect a shift in product mix that will grow our contribution ex-TAC at a faster pace compared to the total revenue. This measure better represents our top line performance than revenue alone. Adjusted EBITDA for the fourth quarter surged 53% year-over-year to $24.3 million, representing 37% of contribution ex-TAC and 18% of total revenue. This compares with 29% and 12%, respectively, last year. The fourth quarter is the second consecutive quarter that delivered year-over-year margin expansion. This reflects our improved operational leverage and is a result of the disciplined cost management structure we implemented earlier this year. We have successfully decoupled our expense base from our revenue growth, allowing a higher share of each incremental dollar to flow to the bottom line. As we increase our investment in innovation and go-to-market initiatives, we will also continue to optimize our cost structure. Those efforts, along with scaling our Perion One platform, will allow us to further expand our margin gradually over the next years. GAAP net income in the fourth quarter was $8 million or $0.19 per diluted share, a 61% increase compared to the fourth quarter last year. On a non-GAAP basis, net income for the fourth quarter was $21.4 million or $0.49 per diluted share. This reflects a 30% increase compared to the fourth quarter last year. For the full year, GAAP net loss amounted to $7.9 million or a loss of $0.19 per diluted share. On a non-GAAP basis, net income for the year was $51.3 million, delivering a non-GAAP diluted earnings per share of $1.13. In the fourth quarter of 2025, cash generated from operating activities significantly increased to $21.8 million, and our adjusted free cash flow grew to $20.7 million. On an annual basis, cash generated from operating activities significantly increased to $41.9 million and adjusted free cash flow grew 142% to $40.2 million. This reflects an 89% free cash flow conversion ratio, among the highest in our industry. Turning to our balance sheet. As of December 31, 2025, our balance sheet remains very strong and includes $313 million in cash, cash equivalents, short-term bank deposits and marketable securities. Our strong cash position gives us the financial flexibility to support our balanced capital allocation framework. First, it supports organic investments in our AI infrastructure and an aggressive go-to-market strategy. Next, it allows us to fund our share repurchase program. And lastly, it provides us the flexibility to pursue M&A opportunities that align with our Perion One strategy. Looking ahead, we expect to continue to generate positive free cash flow and maintain a strong conversion ratio. We remain committed to returning value to our shareholders. In the fourth quarter alone, we repurchased 2.5 million shares for a total amount of $23.9 million. Since the initiation of the program, we have returned over $118 million by repurchasing 12.9 million shares. Reflecting our confidence in our 2028 target plan, our long-term value proposition and our cash generation ability, the Board has recently authorized an expansion of our share repurchase program from $125 million to a total of $200 million. At our current valuation, this program represents in full a 56% return on our market cap. 2025 served as a year in which we focused on consolidating our Perion One platform. We introduced new advanced solutions, implemented Outmax, our Agentic AI execution agent and build the foundations for growth with efficient scale. We expect 2026 to be the year we begin to scale. For the full year 2026, we expect contribution ex-TAC of $215 million to $235 million and adjusted EBITDA of $50 million to $54 million. Looking ahead for the next 3 years, our strong results, the successful enrollment of the Perion One strategy and the AI-based execution infrastructure we have been building provide us with the substantial foundations for the 2028 target plan we present to you today. As we become the AI execution infrastructure of digital advertising, spend becomes a leading indicator of our platform's adoption and scale. It represents the total media spend running through our platform. On a pro forma basis, Perion One spend grew at a CAGR of 34% in the 2022 to 2025 time frame. Due to our investments in go-to-market, our innovative solutions that allow us to attract new customers and Outmax's ability to improve ROI and retain customers, we remain confident that the growth trajectory will continue moving forward. we project that Perion One spend will continue to grow at a pace of at least 25% CAGR through 2028. The other legacy parts of Perion, primarily our search activities, are expected to slightly decrease going forward and remain relatively stable. Diving deeper into Perion One, on a pro forma basis, Perion One contribution ex-TAC grew at a CAGR of 19% across the 2022 to 2025 time frame. Moving forward, the surge in spend is expected to translate into growing contribution ex-TAC. This provides us with confidence to target a contribution ex-TAC CAGR for Perion One of over 20% through 2028. Our confidence in this target is supported by 3 key catalysts. First, the ongoing strength of our growth engines; CTV, Digital Out-of-Home and Retail Media continue to provide significant organic tailwinds. Second, the broader market shift to performance advertising aligns perfectly with Perion One's offering. Outmax, our AI agent, demonstrates higher ROI for advertisers, establishing our solutions as value-driven products. Third, our value proposition attracts new customers and drives expansion within existing ones, reflected in our land and expand business model. It is important to emphasize that this growth will be purely organic, driven by the Perion One flywheel. Starting 2026, we expect Perion One to comprise 85% to 90% of the consolidated contribution ex-TAC. Moving forward, search is becoming a smaller portion of the contribution ex-TAC mix, completing our transition to a Perion One pure-play growth story. The rapid growth of Perion One spend and contribution ex-TAC will be accompanied by a balanced approach in profitability. We are targeting an adjusted EBITDA to contribution ex-TAC margin of 28% by 2028. Achieving this margin expansion relies on 2 complementary levers. First, efficiency. We will continue to drive internal efficiency and utilize AI-based automation to optimize our cost structure. Second, we will invest to scale. We plan to strategically deploy capital into go-to-market and innovation. While this requires upfront investments, it is essential to expedite growth and ensure we capture the full potential of our platform in the long term. 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. To summarize, the Perion One model is a combination of top line growth, increased efficiency and strong and sustainable cash flow generation. Perion enters 2026 stronger and more focused than ever. We have the technology, the balance sheet and the strategy to deliver significant value to our shareholders. With that, I will turn the call back to the operator for questions.
Operator: [Operator Instructions] our first question comes from Andrew Marok at Raymond James.
Andrew Marok: Two, if I could. Can we please start on the 2026 guide? A little bit of a wide range there, about 10 percentage points worth of growth. So I guess, can you walk us through what the low end versus the high end assumptions are there? And what you're maybe thinking for political impact in the second half of the year?
Elad Tzubery: Yes. The guidance for 2026 represents the current view of the business. We expect to see a gradual decline in search and our other legacy activities, in parallel, a sharper increase in the Perion contribution ex-TAC. Given the market dynamics that we see -- I'm sorry, given the market dynamics we see today, we see shift towards performance. And within that, we actually believe that Outmax would be able to deliver -- would be able to capture more scale into our [indiscernible]. And right now with how we're seeing 2026 in terms of the budget spend, we see that advertisers are planning for shorter cycles and the visibility remain 6 months. And since right now at the beginning of the year, we start to stay disciplined in how we're seeing it and taking into account that second half of the year will -- the seasonality of AdTech is thinking much more...
Andrew Marok: Got it. And then maybe a follow-up on that. I haven't run through all of the numbers, but it seems that there's like an acceleration implied going from '26 in the context of your 2028 guide, accelerating off of '26 into '27 and '28. Is that just an impact of like the mix shift away from search and toward the Perion One platform? Or are there things like incremental product launches and things like that, that are contemplated over the course of your medium-term guide?
Elad Tzubery: We are not actually taking into account the new proposition, but we will add to the market. You take on the point, the growth of the Perion One platform together with the search declining will actually bring -- and expedite the growth towards [indiscernible].
Operator: Our next question comes from Eric Martinuzzi at Lake Street.
Eric Martinuzzi: Yes. I saw that one of your announcements in the past quarter was the integration with the Amazon DSP. Just wondering if you did see wallet share gains with your advertising, both brand and agency advertisers? And then what does that mean for kind of the ramp in 2026? And I have a follow-up.
Tal Jacobson: Yes, absolutely. So the Amazon DSP, that request actually came from our customers for a long time to use our DCO, our dynamic content optimization, with our inventory through the Amazon DSP. So we've been working with Amazon for quite a while on that integration, and we're extremely happy about it. We think that's going to open up a huge opportunity for us. As we just launched this. Obviously, there are things that are going through this, but it's just getting started.
Eric Martinuzzi: Okay. And then as far as each of the DSPs also has AI tools to optimize spend across -- through their relationships with advertisers. What are you hearing from advertisers as far as the prioritization of using Perion One to manage campaigns as opposed to leaving in place spend at traditional legacy DSP.
Tal Jacobson: That's a great question. I think that's really where we're focusing on. We're not trying to replace other DSPs. I think -- I would carefully predict that all DSPs are going to have their own AI tools if some of them don't already have them. But that's not the case for us. So what we're trying to do is to be a layer above all of those DSPs and optimize cross channel and understand where things operate the best. And that's based in the goal. So if the goal is to drive more people to websites, the goal is to drive more people to physical stores, the goal is to install an app, that is the goal. And then our AI agent can actually run across all DSPs and figure out, on that specific goal, where would that make the most sense and get the best outcome. So even though currently, most of AI tools that we're seeing out there are mostly UI-based and not the execution layer, I'm sure people are going to add more execution parts, but our execution infrastructure is built in a way where other AI agent can interact with our AI agent. And based on that, get the best yield for the advertiser. So it's kind of a different play. We're not optimizing for inventory, which every DSP optimized for its own inventory. We're optimizing for the outcome of the advertiser across all inventories, which is really the big thing we're trying to solve for that industry.
Operator: Our next question comes from Jason Kreyer at Craig-Hallum Capital Group.
Jason Kreyer: So I just want to start out talking about Outmax. If you can talk about maybe what the adoption has been over the last couple of quarters? And then are there any barriers to marketers adopting Outmax?
Tal Jacobson: Yes, absolutely. Thanks for the question. We're seeing strong adoption, and we've shown only one example where we have many examples how the land and expand actually works with Outmax. Outmax is really all about performance. So even though we're extremely excited about the level of technology we have here, our advertisers are actually excited about the level of performance it drives. And we're seeing anything between 40% to almost 80% uplift with some of our advertisers. And it usually starts from budgets for tests and then pretty quickly, it goes into getting more and more budgets, but it's all performance driven. So we're seeing great success with that.
Jason Kreyer: And broader question just on Perion One. Over the course of the last year, as you've rolled this out and you've worked with new customers to onboard, are you seeing anything unique in terms of selling cycles? Or are you seeing selling cycles compress at all over time now that that's been in the market longer?
Tal Jacobson: Yes. So we are seeing people talking less about specific features and more about the outcome of the feature. So people -- in the past, they were tending to look at specific features or specific channels. Now they mainly care about the performance and the outcome. So that's why it kind of makes sense that we combine everything into one AI agent where just tell us what you're trying to achieve and let the agent figure it out. So that made our sales cycle shorter. It's easier to get testing budgets and then through showing actual results, increasing that -- the amount we're getting from the clients.
Operator: Our next question comes from Steve Hromin at Oppenheimer.
Steven Hromin: This is Steve Hromin on for Jason. So just one question from us. So with the very strong 28% guide for '28 EBITDA margin versus, I guess, this year is around 23%. So just if you could double-click on sort of what underpins your confidence in achieving that between cost of revenue efficiencies or OpEx or anything of that nature, AI initiatives?
Elad Tzubery: Sure. Thank you. So I would start by saying that we're already seeing the progress that we did this year with our efficiency. Q4 results proving we jumped from 29% last year in Q4 to 37% this quarter. We took a lot of efficiency measures already this year, and we will continue to invest in them, specifically around the G&A and the cost of revenues using automation and AI tools that we implemented and build on our day-to-day operation. Together with that, we are seeing an increase for next year to 23% since we are about to invest as well in go-to-market and R&D. So as we progress along the year, we'll see more of our ex-TAC growth as a result of our performance, then we're definitely going to see the impact of what's coming as well to the EBITDA contribution ex-TAC ratio. So it's a combination of those 2.
Operator: [Operator Instructions] our next question comes from Laura Martin at Needham.
Laura Martin: Sure. So my first question is on the web. I think you said it was down 17%. So I'm really -- can you hear me okay? There you go.
Tal Jacobson: We just lost you for a minute. Repeat that, please?
Laura Martin: Sure. So the question is on web. I think you said the web piece of the business is down 17%. And so I'm interested in -- is that because -- I'm interested in the fundamentals behind that. Is that CPMs are under pressure or traffic is down because we have AI answers not sending visitors to websites? Or is that -- like tell me what's going on in the fundamentals of web? That's my first question.
Elad Tzubery: Laura, with respect to web, the decline is driven from 2 different reasons. First of all, it's proactively. If you remember, we shut down low tech and low-margin legacy activities at the beginning of '25. So that's part of the decline. On a pro forma basis, if we are neutralizing that, Q4 decline was 12%. And on an overall -- on a yearly basis, it was quite flat. I think that the second reason is that actually human behavior is shifting towards otherworld gardens. What's important to remember that Perion One is channel agnostic. Outmax is optimizing for the ROI of the advertisers without necessarily specification of a certain channel. It's programmatic to hit certain KPIs defined by the customer. And whatever channel presents the best ROI, this is where we're going to see the spend. So it's really a channel agnostic play.
Laura Martin: Okay. And then my other question was customers. So to your point about the fact you're not really a DSP, you're sitting on the layer above that because you want to optimize for brand advertising for the advertiser. It feels like there's going to be a big shift in your customer -- like what kind of customer you're calling on. So can you talk about that, please?
Tal Jacobson: Sure. I'm not sure we're going to have a shift in the type of customers. We're still dealing with the majority of our clients come through agencies, but some of them are brand direct. But I think the way we interact with customers is definitely going to change. Up until a year ago, we interacted with them based on specific products or channels. We are now looking at a more holistic approach that let's look at the entire budget, let's figure out what are we trying to achieve, let's see if we can get you guys on better performance. Not necessarily switching between DSPs, but necessarily optimizing algorithmic approach into driving more performance. So the algorithm might choose different creative, it might choose different audiences, might choose different devices, but that's the focus. So we're actually the same type of customers, different level of conversation, which is more holistic and a broader approach.
Operator: Our next question comes from Jeff Martin at ROTH.
Jeff Martin: I was just curious if you could touch on, at least in your core growth areas, the market share gains that you've achieved over 2025. What has been the biggest contributors to the outpaced growth relative to the industry? And could you touch on the sustainability of that outpaced growth?
Elad Tzubery: Sure. I think we see it in the -- our growth in Q4 definitely came from the growth engines that we see. CTV led with almost 60% year-over-year growth. Digital Out-of-Home with 28%. The Retail Media vertical once again increased 42% in Q4. So overall, all of our growth engines were really outpaced the market by double or triple than the industry. And I think this is part of the power of the value proposition that we are providing to customers around -- specifically around those channels. As we said, this is the foot in the door, always to gain more spend and budgets, and we see this in Q4 results.
Operator: This now concludes the question-and-answer session. I will hand the call back to Tal Jacobson for closing remarks. Thank you.
Tal Jacobson: Thank you for joining us at our Q4 and full year 2025 earnings call, and thank you for being part of our journey. We'll see you next time.
Elad Tzubery: Thank you.