Atperion.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 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 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 on Form 6 ks, which has been filed and is available on our website as well. Hosting the call are Doron Gerstel, Perion's Chief Executive Officer Mayola Sidron, Perion's Chief Financial Officer and Daniel Slifkin, vidazoo's Chief Executive Officer.
I will now turn the call over to Doron Gerstel. Please go ahead.
Hi, everyone. Good morning. Thanks for joining this special conference where we're announcing the acquisition of VideoZoo, Video Monetization System. Let's get started. Okay.
So my presentation today is divided into 3 parts. At the beginning, I want to take you a little bit back and talk about why video. Probably, you have an idea where we are going. 2nd It's why vidazoo and the 3rd part will be we'll talk a lot about the synergy for Perion. So with the why video?
So all in all, it always starts with the consumer trend and those are facts that we are taking from Social Media Week from beginning of 2021 where they did quite a survey as far as comparing The consumer engagement to video versus text, and you see the numbers, and I will read it for you, but 88 And more time spent on website with video and no doubt that we are in this age that video is very much way more preferred by consumer when they are reading content which is based on video or exposed to any kind of advertising. And talking about advertising, I think the reaction from advertising is definitely there. And as you can see from the number, This is the digital video advertising spend in the U. S. Between 2019 and prediction to 20 2023, we talk about the CAGR of almost 20% year over year and we definitely see the number.
This is the fast growing format when it comes to digital advertising. So clearly, advertising are reacting on consumer preference. The next trend, which I very much would like to see, is from the publisher standpoint. And what we found out that this is very interesting where publishers are struggling and not all of the publishers because those publishers and this is at this point, there is a massive video advertising market concentration, which is very much among the largest, most prominent publisher and broadcaster, where more than 60% of the pie is of edge spend is going in them. And what is the need from the others, which is Tier 2 and Tier 3, large but not as large, that they're all looking for a simple, highly scalable plug and play video solution.
So from there is a need and from a product market fit standpoint, this is what publisher is looking which leads me very much into why vidazoo. And from why vidazoo, 1st and foremost, To give you the big picture and looking about the Perion high impact video suite Spend or business week advertising dollars between 2020 2021. So when you basically see that We did a $20,000,000 The number is growing, and this is expected to be $47,000,000 in 2021, which is reflecting The growing direct demand that we're getting from a large advertiser for our solution, which is high impact video suite. At the right side is the VIDAZO, and this is the VIDAZO number from 2020 to 2021, which is reflecting the publisher side of the equation, and they are selling more and increasing it to more publishers that looking for this plug and play video monetization platform. So the 2 so what Perion is looking for, Perm is looking for access to direct video ad supply and VIDAZU is looking to access to direct video ad budget, which is can be a very happy marriage because this is quite a complementary acquisition Because if we are looking about growing our business, as we can see in the 2020 to 2021 and beyond, And we have here high aspiration to grow our business.
We definitely need this direct video ad supply. At the same time for VIDAZ, that when they are looking about growing their business, the fact that we're able to expose their publisher to a direct Quality demand and I will talk about it in large in a second, that's complementing and that's create a huge growth for both sides of the equation. So Peran and Vrindus, first of all, the positioning statement of how the 2 is going positioning to the market the day after. So for the first time, we can say on one side to our advertiser, which are brand and agency, on the other side to publisher that we are offering an end to end solution and end solution for advertiser and publisher, but the most important part is the other part of my sentence that we are eliminating all existing intermediators. And the fact that we're eliminating them gives us A huge benefit, but aside of our own way that we are basically cutting the middlemen and able to improve Our operational cost and reduce our media cost, put this a bit aside for a second, most and foremost is for our customer.
So breadth and agency are able to get via this end to end platform way better control on their ad spend, both from quality, scalability and transparency because it all comes from one platform that is coming from 1 vendor. 2nd, scale. So one of the things that has really helped Perion scale its video business has to do with high impact video suites, as I mentioned before. And we reached the point that in order to increase and create more engagement between user and our ad units require an intimate relationship with the for instance, with the video player or other or video monetization platform. And in this way, using Vida's existing fab network will really help us to achieve greater scale for high impact video to their publisher network Enable, as I mentioned before, to have better control on the quality of those videos.
The quality, unique on page integration tech allows control and transparency, both advertising and publisher. We touched this one and I will Definitely demonstrated on the technology that VIDAZUL is bringing into the table. So if the technology is right, definitely the team is right. And as I mentioned, Daniel is with us. They are 3 co founders, Daniel and Daniel, Gal and Roman, which established VIDAZU 7 years ago.
I will Daniel is on the call with us. Daniel, would you like to say a few words?
Yes. Hi to everyone. My name is Daniel Slifkin. I'm One of the original cofounders and this is definitely a ride of 7.5 years that as a bootstrap company, we're always seeking for the right Partner for us among the years and the opportunity is definitely huge for us with Perion As Vidyoza wants to become the largest global video monetization platform, in order to do that, we needed a partner can actually help us to drive the vision forward at large scale. So with the Perion available business Units and the resources and business connections, we will definitely be able to deliver our products at a grand scale, as we could only dream before as a private
Thank you, Daniel. Let's move on. And we are still with the The headquarters in Tel Aviv, and this is the team. Most of it are the technology people, as you can see here. From a tax standpoint, Daniel, you definitely can talk about those three factors that we mentioned In our press release, please go ahead.
Yes, sure. So maybe just to explain more about what Our technology is doing so basically our technology is very unique because it allows every publisher without video knowledge and or resources or tech to quickly create and syndicate relevant video content through our online video player that later obviously can be monetized with video ads and add new incremental revenue from TV Budgets. So our technology basically divided to several products. I would say like each one of them has their own entity and life. So the first and the most crucial one is the online video player that publishers don't have this technology.
They need to license this technology and pay a lot of money for it. We do provide a service where you can just implement the code and then we will create in real time any placement, any video unit that publisher desires that will immediately can be monetized with our ad marketplace, which is the 2nd product and the yield management that is basically a very sophisticated ad server that behind the scenes can control and automatically optimize all of the programmatic demand, direct demand to eventually optimize and deliver the highest Payouts to the publisher from the TV budgets. Doron, can you please yes. So As I mentioned, the robust marketplace is what the publisher sees in the platform, how much money he made. Also, we have a content marketplace that If a publisher doesn't have a production resources or their own video content, they can easily Choose any category of videos through our marketplace of content creators and easily create a playlist, implement it on their site and then just monetize it with pre rollouts that coming from our marketplace and then they just go to the platform and see how much money they made every day from the video views and the video ads.
So this technology is basically just to sum everything up is the wire plug that connects TV budgets that are being shifted very quickly in the last 8 years or so from Lineal TV to digital publishers, and we allow this at a very quick and plug and play solution, as Doron mentioned, at high scale to every publisher worldwide.
Great. Thanks so much. The numbers are right. So from a numbers standpoint, those are the numbers of VIDAZUL 2020 to 2021, you're able to look at it from a revenue perspective as well as from adjusted EBITDA. From an revenue it comes to EBITDA, dollars 4,300,000 in 20.20 $8,000,000 in 2021, which reflect 86% growth year over year.
Numbers are not just revenue and EBITDA. I think that we are impressed with the fact that their We will share with you the data as it comes in the next calls that we have as far as how their Growing their spend on video with the Videozu platform and the main so we are working on 2 efforts. 1, increase the base of the pyramids, which is the number of publisher and second, looking about this publisher as a revenue unit that is Going to consume more and more and more video from the VIDAZU monetization platform. They were working with 20 plus Advertising aggregated companies, 80% of the revenue are from U. S.
Advertisers and user. And for We were looking for a company which have developed what we like to call it as the S wide technology The deal is right. And I mentioned to you and it was our investor calls, analyst investor calls at the beginning of the year when we did our follow on And we put here a few criteria when it comes to this acquisition. First, we said it needs to be a product market fit. And I think we Cover it in-depth here because it's from the advertiser that moving spend so much into video from a Publisher's standpoint is looking for a plug and play from the fact that it provides a technology that creates a differentiation in the marketplace.
But that was only the 1 the first and the second criteria of what we're looking The other one was we basically stated that it need to be immediately accretive deal for Perion. And yes, it's immediately Acquitted deal from the Perion. The second the criteria that we basically said has to do very much with the structure. And we are we believe on this We're a third of the overall deal. The transaction is providing in cash and the other 2 And we are measuring this success by the fact that the acquired team is highly motivated and engage for us, in this case, till the end of 2023.
All in all, because we have So we believe that this is the right form or right framework of transaction That has to do with the acquisition that we're doing. Why Perion and VIDAZU? So if we cover the Y video and then we talked a lot about the VIDASU side, let's now look at it together into to one point of view. So this is our hub and model, which I shared with you in the past. The new edition and hope you're able to see my cursor.
The new edition is this the VIDAZU The logo here, but let's take it here. The left side of the hub and spoke has to do with the demand side of The right side has to do with the supply as you basically see it. And here within the circle Our assets, they're divided into 2, asset that has to do with demand asset and asset that has to do with suppliers. Yes. This is very much the framework.
I mean, within this framework, we are able to add more and This has to do with the Intelligent Hub. Internally, we looked at it as a smart routing. I will talk about its value in a second, but it's basically able to give you kind When we talked about eliminating all intermediators between The demand side between our customer brand and agencies and And Bing as well to the right side, the publisher. And here, we're able to develop that's the end to end. We're able to connect The left side, the demand, the brand and agency with their advertising campaign all the way to either on publisher content publisher asset in this regards our own O and O and the mini site, the Newsweek of the world that we're working with as well as the network of publisher.
This network of publisher that we are working with, 100 Publisher and additional publisher that VIDAZU is working with. So altogether, we are We are expanding our reach and make this circle bigger and bigger, which gives us more and more opportunities to do to increase the revenue. When it comes to the value of it, I want to talk about 3 levels of values that we see by enhancing our hub and spoke. Not in any specific order, but those are our main interests. Those are our KPI.
1 has to do very much of increase operational efficiency because when you're looking about the Intelligent Hub, there are a lot of shared That we are operating here, shared services from the demand side as well as shared services for the supply side, which allows In a way, to be way, way more efficient operationally, which has to do of reducing Our OpEx on OpEx to revenue, something that I'm sharing all the time when we're doing our IR presentation. The next value item is reduced media costs. Reduced media costs is definitely one of the most important thing in for Perion as Advertising as an ad tech company, we are reducing this media cost by having this smart route, by having it closing the loop. And We closed the loop. And in this way, we closed the loop because we are serving more and more demand that we're getting here from our from our customer with our internal asset.
And now with VIDAZU, we don't need to use others in order to serve those video The format as we did before and Daniel mentioned it, if it has to do with the player, it has to do with video monetization platform, it's all Being done in house and closing this loop provide us way, way better opportunity to reduce the media costs. Last but not least, which think it's the most important, Sam, is that we increase the customer value. That's actually creating this flywheel that we all talked Why it's creating this flywheel? Because at the end of the day, the customer here understand that the fact that we are providing it an End to end type of solution, they spend more. If they spend more, our publisher is getting more.
And this is We serve the purpose in creating a great flyweight that allows us to get, as I said, more campaign and more budget Because we definitely see the value. Other dimension is to this value is a huge investment that we're doing because other The smart routing, we're able to see and capture data that is coming from all our assets, if it's the left side or the right side. But in a way, this data is serving to better target audience in any given campaign. So no doubt that Customers start and realize the value of our hub and spoke mode. Last but not least, this all Together has to do with us providing a revised guidance, and this revised guidance is 1st and foremost for The remaining of 2021 that has to do with the acquisition, what you're able to see here that was the previous guidance.
So we increased the guidance from a midpoint of $422,500,000 to $437,500,000 that's on the revenue side, that's reflecting 33% Year over year growth, that's 2021. And from an EBITDA standpoint, it's a 60% growth year over year at the guidance midpoint between 2020 2021, and that's the year growth. When it comes to 2022, I want to mention one thing before I'm going into the numbers. And this is a very important That has to do with our visibility. And as I mentioned, the fact that we We are adding vis a vis here give us way better way to forecast and Way better way to predict our numbers and give us a confidence, greater confidence when we're coming up when we are putting guidance for 2022.
And in this way, we increased our guidance, which reflect 29% year over year growth between 2021 2021 from the revenue side and 33% growth on adjusted EBITDA between 2021 2022. All in all, another thing that we're looking at is EBITDA to revenue ex TAC, and we And with that, I very much finish our presentation. We're very exciting To have the VIDAZU team as part of the Perion team, there is a tremendous opportunity for us
Thank you, Doron. And it's also important to We are very thrilled and excited to join the family and looking forward for very great synergy and growth ahead. So thank you very much for the opportunity and
That's great. Yes, we will open the guidance. We will open the call for any questions, right? Can we?
Yes. Thank you. At this I will be conducting a question and answer session. You may submit a question by using the Q and A icon at the bottom of your screen. You may need to hover your mouse in the Zoom program for the icon to appear.
To verbally ask a question, please click the raise your and Our first question today is coming from Eric Martinuzzi. Your line is now live.
Gentlemen, congratulations on the transaction. Daniel, you've created quite a company. I'm a big fan of growth companies and I like that 41% number for 2021. That's a terrific accomplishment. My question has to do with the competitive landscape.
When I and I'm still trying to get my arms around the technology that you've acquired here. But to me, it looks like a supply side platform SSPs will be your competitors here. Do I have that right with a Bookmatic, with a Magnite, either Doron or Daniel, is that who your competitors are?
Daniel, you want to take it?
Yes, I would love some. So in that sense, the SSPs, the supply side Forms are basically have only they're only a pipe of budgets, right? So they have budgets that they're driving from the DSPs, which is the demand side platforms, to the publishers. And it works that way in display. I mean, SSPs work directly with the publishers when it comes to display, but when it comes to video, they need to buy pre roll and Stream formats, which they don't have the technology to do.
So in that sense, today, Virtusa works with all of the SSPs. And those SSPs, as you mentioned, such as PubMatic and AppNexus and the rest of them are all acquiring the media and ad Placements from VIDAZU, if they want VIDAZU and some other several companies, if they want to access pre roll supply or out stream video supply.
Go ahead, I'll let you finish.
No, and I just wanted to mention that Doron mentioned that VideoZoo, in order to grow, we need a more direct budgets to allow our publishers a higher payout and at the same time also the brands and agencies want more control and transparency because When you transform the same meds from so many intermediaries in between, you don't always have this confidence in what I'm getting eventually in terms of viewability and other metrics. So in that sense, we are integrated directly on the page with our video player and Outstream video player, and we allow the agencies and brands to have a more transparent path of optimization.
Okay. So that you actually anticipated my next question, which was who are the middlemen who are getting eliminated here? And I'm assuming that You're saying that friction cost of the SSPs gets eliminated here because now people can use Varyon, the hub and
So if Perion has their own DSP and they have their own brands and agencies that are already spending on their platform for specific formats, Now they can actually extend and expand their offering to their agencies that can now also suggest them pre roll ads, standard video ads and also high impact video ads, as Doron mentioned.
Our next question today is coming from Jeff Martin. Your line is now live.
Thanks. Good evening, guys. Congratulations on a nice transaction here. I wanted to get a And I joined a little bit late, so I apologize if this is redundant. But I want to get a sense of the competitive moat.
How is The platform differentiated and if you could speak to who you most directly compete with, that That'd be very helpful.
We just answered this question a minute ago.
Right. But I was wondering if you could name direct Competitors. Daniel?
Yes, sure. So we mainly compete with other similar technologies such as Kinetics, for example, and Avantis and AW Player and Brightcove, Some of them direct, some of them indirect, but basically every company that develops their own video player or can provide some video content library And our culture and the way to focus our business is always a performance driven attitude, meaning that we provide to publishers the technology that Creates and drives the highest payout in terms of the dollar that they're getting for every ad, and it's all being done through the sophisticated and demand and the direct demand together that publisher can get the highest dollar for the least ads that they can show to the users. Great.
And I did catch you had about 200 publishers on the platform. Could you speak to some of the largest customers? How long they've been with How much they're adding, at what rate they're adding, it looks like a very nice growth profile of the business. So Obviously, you must be adding publishers and growing the existing publisher base. So if you could comment around that, that would be helpful.
Yes, sure. Thanks. So You are right. In the publishing side of things, we're growing very rapidly because it's a word-of-mouth out there. So once you provide a very good performance, I must mention that most of our publishers are tier to Tier 3 publishers, not the giants that has their own content internal content creation teams and resources.
So we mainly work with publishers that either has only content writers and don't have a lot of resources to manage and power ads. So we have when it comes to the big names, so we are working with investing.com, which is one of the largest financial portals. We are working with Stoehr Media Brands in Germany, which is one of the largest media publications in Europe in general. We work with also some local news sites and we also work with a huge entertainment section that doing a lot of social activity, part of which also Doron mentioned, for example, that they're all in all websites, and those are growing very rapidly, and we're expecting a growth with the synergy of with the synergy with Perion, we expect to have a lot of Also more premium publishers to come into our platform to help us drive all of this publisher network that obviously Perion has as well.
Wonderful. Thanks for taking my questions and congratulations to all of you.
Thank you. Thank you so much.
Kevin, we will take the question one question from the chat just to answer about the guidance. The guidance for 2020, 2021 updated by $12,000,000 as with the acquisition of VidaZoo and $3,000,000 just aligning to the midpoint that we have currently. So the main change is from VIDAZU. For 2020 So the additional $55,000,000 revenue is directly related to VidaZou, and now we are Expecting $560,000,000 revenue midpoint for 2022.
Any further or closing comments?
Yes. So guys, thank you very much for joining this call. We're so we're excited About this acquisition, just to remind you, our 3rd quarter earning call is to be on October 26, where we're going to, of course, cover the 3 quarters and will elaborate more on the VidaZu acquisition and about our hub and spoke strategy as well. So thanks again for
Thank you. That does conclude today's webinar. You may disconnect your line at this time and have a wonderful day. We thank you feel your participation today.
Thank