Good day, and welcome to the Perion First Quarter 2018 Earnings Conference Call. Today's conference is being recorded. The press release detailing the financial results is available on the company's website at purion.com. Before we begin, I'd like to read the following Safe Harbor statement. Today's discussion will include 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, performances or achievements to be materially different from any future results, performances 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. When mentioning EBITDA, we will be referring to adjusted EBITDA.
We have provided 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 ks. Hosting the call today are Doron Gristel, Kurion's Chief Executive Officer Mahaz Zekran, Perion's Chief Financial Officer Mike Pallett, President of Undertone and Mike Glover, GM of Search Division. I would now like to turn the call over to Doron Gerstel. Please go ahead, sir.
Thank you and good morning. Today, our CFO, Mao Zedron, will discuss the Q1 results. Then we will open the call up for your questions. Mike Pellet, President of our Undertone Business and Mike Glover, GM of our Search division, will join us for the Q and A session. We are here to share our Q1 performance results, but before we get into the details, which are very positive, I'd like to start off by providing an update on our turnaround process.
Our turnaround consisted of 3 initiatives. The first initiative was the imperative to significantly reduce costs. On this matter, we are ahead of schedule and I would like to congratulate the team for working on the implementation of those measures. It's been a year since we have started this initiative and the expected cost cutting amount in sales and marketing and G and A for 2018 compared to 2017 is more than $14,000,000 Let me note that we achieved this cost reduction without hindering our investment into technology. Technology is essential for our competitive advantage and the moat we are building.
This brings me to the 2nd and third initiatives, which are connected, achieving organic growth and leveraging our technology assets. These efforts will further help to differentiate and enhance our offering. This quarter results demonstrate the strength of both sides of our business. Our search business is healthy and profitable and our agreement with Brink guarantees revenue for years to come. We are currently evolving our search business from its dependency on a small number of large publishers and extending it to a network of greater number of publishers.
Our efforts on our technology in 2017 to rewrite our platform, clean up technical debt will allow us to efficiently onboard more publishers in 2018 and beyond. This is the move to diversify the monetization, the user acquisition and to provide user with a product that provides utility. Consequently, we are focusing our efforts and attention on our advertisement business. Undertone and Make Me Reach our social media arm, the most significant driver of Perion's growth in both its market potential and distinctive competitive advantages. I would now like to share my perspective on Undertone before getting into the details for the quarter.
It's no secret that Perion's stock is depressed and I recognize that we have done a less than stellar job explaining why strongly believe in Perion's ability to create value for our shareholders. To share with you why we are so excited about Undertone's prospects, I'll now discuss the fundamentals of the Undertone business and where it fits into the digital ecosystem. As many of you know, Undertone is a 16 years old business. It has gone through many transitions over this decade and a half, but its prospect has never been greater. I said it because its fundamental capability, which is a unique fusion of creative data and technology that helps solve a marketing problem for the world's most sophisticated brands, which has never been more relevant than at this moment.
At its core, Undertone is an EdTech company, a sector I fully understand is not exactly lighting up the world these days, but its position and value proposition with EdTech is so unique and valuable, serving as a partner to brand conscious brands extremely aware and protective of their image, their perception and the customer experience they create. That's where Undertone's proprietary ad tech and our creative capabilities fit in. We combine the technology that brands need and the relationship they cover. More and more premium brands are hyper focused on forming meaningful relationship with consumer and telling consistent story and quality safe environment. They are seeking ways to take their investment in advertisement and extend them into a digital life of their consumer in a unique and authentic way.
There is no longer a place for generic commoditized ad units. Today, the biggest challenge the ad tech industry faces is the silo platforms are getting good targeting results with their own universe. But consumer don't live exclusively in 1 universe. Consumer or multiverse, They bounce from Facebook to Google to news apps and are wise enough to know a misleading brand when they see 1. They are looking for brands that connect with them through consistent, relevant and personal messaging across any channel.
Brands today are extremely focused on creating seamless and continuous relationship with their customer where one message builds on another and the next builds on the preceding one. This synergistic messaging cannot occur within Silo platform that only target with a degree of coordination. Once the consumer leaves the silo platform, brand messaging becomes fragmented, unable to weave together a coherent story. Undertone is a unique EdTech solution that combines insight driven creative with synchronized holistic platform driven by proprietary technology that connects display and social media. Undertone keeps its highest standard of rent safe environment and handpicked publisher sites.
Each element is essential and will drive our market penetration and growth. Delivering on that experience isn't trivial, yet is the heart of Undertone Advantage. We describe it as synchronized digital branding and it's the key to staying relevant and continue winning in the SAC world. Undertone's synchronized digital branding solves this huge problem. With the work done by our in house creative team, Pixel Studios, a brand's advertising assets are transformed into beautiful digital units, optimized for performance over our network of premium vetted publishers.
These units are delivered in a cross screen harmony, perfectly synchronized so that the right message reaches the right person at the right time. Since launching our Synchronized Digital platform in Q4 of 2017, we have seen an increased appetite in the market for exactly what Undertone is now providing. As a direct result, our average campaign investment has increased while our client attrition has decreased. 2 important factors led to our 20% year over year growth in Q1 of 2018. I will now turn it over to our CFO, Maoz, who will break down this quarter financial overview.
Thank you, Doron. In the Q1 of 2018, revenue for Perion totaled $60,900,000 comprised of $29,300,000 of advertising revenues and $31,600,000 of search and other revenue. Revenue was down 2% from $62,000,000 in the Q1 last year. This decrease was due to search and other revenues declining 16% offset by 20% increase in advertising revenue. The decline in search and other revenues is mainly due to proactive network cleanup that took place in 2017 and the expected natural churn of search legacy products.
The 20% increase in advertising revenue is mainly due to the higher brand spend by existing customer during the Q1 of 2018. Search and other revenue represent 52% of revenues for the Q1 of 2018 with advertising contributing 48%. This is compared to the Q1 of 2017 in which search contributed 60.6% and advertising contributed 39%. Customer acquisition costs and media buy in the Q1 of 2018 accounted for $31,900,000 or 52 percent of revenue compared to $30,100,000 or 48 percent of revenue in the Q1 of 2017. In search, the increase as a percentage of revenue is primarily due to churn of our legacy products, while in advertising the increase is mainly attributed to product mix and due to the effect of the adher bidding and home ad blocker.
We reported a net income of $100,000 or 0 point 0 $0 per diluted share for the Q1 of 2018 compared to a net loss of $2,100,000 or $0.03 per diluted share in the Q1 of 2018. Perion non GAAP net income in the Q1 of 2018 was $3,000,000 or $0.04 per share compared to $2,800,000 or $0.04 per share in the Q1 of 2017. Adjusted EBITDA in the Q1 of 2018 was $4,300,000 compared to $3,500,000 in the Q1 of 2017. Cash flow from operating activities for the Q1 of 2018 was $14,600,000 compared to $8,200,000 for the Q1 last year. The increase in cash generated was primarily the result of better collection during the quarter as well as improved profitability due to the cost reduction effort.
As of March 31, 2018, we had cash, cash equivalents and short term deposits of $41,700,000 compared to $37,500,000 as of December 31, 2017. This concludes my financial overview for the Q1 of 2018. I will now turn the call back to Doron.
Thank you, Maoz. In our press release today, we reiterated our full year guidance of adjusted EBITDA of $28,000,000 to $32,000,000 for 2018. Before I open the call for questions, I want to say that while we are pleased by our results and our team performance, we are keeping our foot on the gas pedal. We work in a competitive, fast changing industry. We stay alert to these changes and are constantly adapting to meet them.
We believe that Undertone offers brand the optimal fusion of creativity and technology. Our creative drives engagement and our technology enables synchronized digital branding, the holy grail for brands that want to connect with their consumer and create meaningful experiences for them. We believe more and more brands will be seeking our consumer based solution. In a world of commodified ad tech, we are a welcome alternative. The trends are in our favor and putting us on the path to long term growth.
That's what we are here for. Thank you. Operator?
And at this time, we do not have any questions in the queue for today. With that, that does conclude today's conference. We do thank you for your participation and you may now disconnect.