Shares of Perion Network (NASDAQ: PERI), the adtech company known for its intelligent hub that connects ad buyers and sellers, were falling Wednesday morning after it offered disappointing guidance in its fourth-quarter earnings report.
As of 11 a.m. ET, the stock was down by 16.3%.
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Perion continues to execute
Perion's actual fourth-quarter results were solid, and the company topped analyst expectations.
Overall revenue rose 12% to $234.2 million, which was slightly ahead of the consensus of $233.1 million. Growth was paced by the search advertising category, which rose 33% to $114.4 million, while display ad revenue fell 3% to $119.8 million.
The company's growth priories were also strong, with retail media revenue jumping 196% to $20.2 million in the quarter, and connected TV revenue jumping 69% to $14.4 million.
It also closed on its acquisition of Hivestack, a digital out-of-home (DOOH) company that will help give Perion exposure to a fast-growing channel.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 12% to $53.9 million, and adjusted earnings per share rose 16% to $1.04, which topped expectations for $0.82.
"Our fourth quarter and annual results showed notable growth in Search, CTV, and Retail Media, further demonstrating the positive impact of our business diversification and continued focus on technology and innovation," CEO Tal Jacobson said in the earnings release.
Guidance disappoints
The primary reason for Wednesday morning's sell-off seemed to be Perion's weaker-than-expected guidance for 2024. Management forecast revenue of $860 million to $880 million, up 17% at the midpoint of the range, or up 10% excluding the acquisition of Hivestack. The average analyst had been expecting $887.2 million in revenue for the year.
The company also called for adjusted EBITDA in the $178 million to $182 million range, representing 6% growth, or 10% growth excluding the impact of the acquisition.
Perion stock continues to look cheap. While its growth rate may be decelerating, the company is building out a combination of distinct capabilities in adtech that make it a unique competitor in the industry. Given that, this sell-off looks like a buying opportunity.
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Jeremy Bowman has positions in Perion Network. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
