Hello, everybody, and welcome to the Perion Network third quarter of 2022 earnings conference call. Today's conference is being recorded. 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 and uncertainties and other factors, including those discussed under the heading Risk Factors and elsewhere in the company's annual report on Form 20-F, and may cause actual results, performance or achievements to be materially different in 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 in our earnings release, which is available on our website and has been filed on Form 6-K. Hosting the call today are Doron Gerstel, Perion's Chief Executive Officer, and Maoz Sigron, Perion's Chief Financial Officer. I would now like to turn the call over to Doron Gerstel. Please go ahead.
Thank you very much. Good morning, good afternoon, everyone. Thanks for joining our third quarter earnings call. Together with me on the call, Maoz Sigron, our CFO. Before I dive into the quarter results, let's start by looking back to the last eight quarters, taking the Rule of 40 model and applying it to our business. The Rule of 40 is used by investors to see the long-term health and sustainability of a business. It can also be used by management to make long-term prediction and decisions. In my opinion, it's the best way to assess performance through the convergent lens of revenue growth and EBITDA margin. The fact that Perion passes the hurdle of the Rule of 40 is remarkable for an AdTech company, and has done so in the last eight quarters, as you can see from the slide.
Perion needs to be viewed through this valuation lens, even though it's applied to a high-growth, scalable software company, and not, in my knowledge, to our industry. Now, I want to deal with the elephant in the room. A big elephant which can be summarized in one question, given our quarterly results. How can we keep outperforming our peers? I keep asking this question, and I think it's more relevant today than ever before. Therefore, Perion is uniquely able to react and seize opportunities based on current trends that might change. But what will not change is our DNA to continue identifying trends and turning them into business opportunities. Looking at the last eight quarters, our ability to exceed the Rule of 40 is not a series of anomalies or a one-off success. Quite the opposite.
We are outperforming the industry because we are built on the fundamental recognition that AdTech must be able to respond, underline respond, to the trend with ability and agility. Let's look at the current core trends that we see, and more importantly, how we're able to react to those trends. Advertisers are looking for ways to increase customer engagement, to enhance their brand equity, especially these days, moving away from standard ad units. Those that are not investing in brand equity in this difficult economic time, it's proven that they will pay the price. What we will show later on with few use cases is to what extent our high impact suite for display and CTV, not just keep the customer engagements really high, but allows us to keep our margin really high.
The next one, advertisers shifting direct response budget from social channels to search and advertising. Our Intent to Action solution known for search advertising is doing exceptionally well, and we'll bring some figures how this is changing, in terms of advertising allocation budget. Third, advertisers recognize that consumers are voting for brands that protect their privacy. Our SORT is gaining huge momentum, and we will talk about SORT and the huge momentum that we experienced in the third quarter. Last but not least, advertisers are undergoing margin pressure due to rapid rises in cost of goods. Our iHub enable us to absorb pressure and maintain our high margins. The fact of the matter, we increased our margin this quarter. Diving into our revenue. Our revenue growth demonstrates our ability to continue shifting our business where media budgets are trending.
For example, the growth of privacy trends, the growing demand for high impact CTV, the need for retailers to transform their media business. The fact that advertisers targeting Gen Z generation in console games, solution that I demonstrated in our last earnings call. These are all reflected in this performance. These shifts are likely to increase, not decrease in velocity. Therefore, ability to react becomes mandatory to continue outperforming the industry. From an EBITDA standpoint, our iHub, intelligent hub, is a great example of technology innovation that serve our clients and our own financial results. Balancing supply and demand yields better efficiency both for our clients and for Perion. We also benefit from operational efficiency utilizing shared resources for all advertising solutions. We believe that the pressure on advertising inventory due to macroeconomic environment will reinforce our central control system, iHub optimizing demand and supply.
Media margin increased to 41% compared to 39% in the third quarter last year. From an advertising revenue standpoint, as I pointed out, the trend shows the multiple ways in which advertisers are seeking to build brand recognition, make an impact while respecting privacy. The growth of video driven by our Vidazoo acquisition that happened last year demonstrate our ability to identify the right acquisition target and empower entrepreneurs to continue to grow their business. There are moments when consumer wants to lean in to a small screen, and others when they want to lean back and take it in the immersive experience of a large screen. Therefore, our ability to provide cross synchronization is a key factor to capture attention and provide higher return on ad spend to our clients. I showed you this slide when we made the Vidazoo acquisition.
The model has served us well by attracting publishers who have an end-to-end video platform that eliminates the friction of multiple vendors. As you can see, we have nearly doubled the number of new publishers using Vidazoo platform and achieve robust growth in a new spend at the same time. We believe Vidazoo will continue to grow. I want to take a moment and to dig into example, which I think you will find very compelling. It demonstrate the power of two of our core competencies working together. On one hand, the high impact ad unit, and on the other hand, targeted CTV. We ran a test, and this test we measure effectiveness of conventional standard CTV ad unit versus our high impact CTV suite, as you can see it on the screen. We did it by tracking the user that landed on client's website in both cases.
As you can see, the high impact unit achieved a 400% increase in site visits and 400% higher conversion rate. Results like this are why advertisers will pay a premium for our high impact units. Premium means $32 CPM compared to higher lower teens when it comes to standard ads. That by itself drive another very important KPI for us, which is average deal size, which increased by 10% to $117,000. High price CPM help us maintain and grow our margin. The need for high impact will grow since advertisers are constantly looking to increase consumer attention. We are continually innovating new ways to measure the effectiveness of our high impact units. Today I'm pleased to unveil our new attention trade measurement.
It's a revolutionary way to measure consumer engagement, as you can see it on the slide, with our high impact units in real time. Let me put this technology innovation in perspective. You may know that for decades, the traditional way to measure consumer engagement with an ad unit has been eye tracking. This works by following consumer eyes as they interact with an ad unit to measure effectiveness. Our researchers and data scientists were not satisfied with the one-dimensional model of measuring attention. Working with our partner, System1, we developed a model that includes sound along with sight. We measure that through real-time analysis that literally traces attention and displays as consumer react. This will provide our advertisers with the future validation of the efficacy of our high impact units, and will keep justifying our pricing model, enhance our margin.
We have a number of initiatives inside Perion which provide us with a pipeline of scalable revenue opportunities. One of them is our retail media solution. You probably know that many retailers are building their own media platform as the way to generate value from their first-party data, build and activate loyalty, and compete against the giant like Amazon and Walmart. The breakthrough for us is that this solution enable us to shift our transactional business to an always on spend, which provide the predictability and sustainability we're always looking for. The excitement of this business is that we're not waiting for the IO, we're not waiting for the campaign. This is a constant month by month spend over a course of a year.
As you can see by the prestigious logos on the slide, this is being rapidly adopted by some of America's most successful retailers. While the revenue contribution are still modest, the growth potential given the TAM is huge. SORT is the powerful technology for protecting privacy without storing any personal data. Our SORT business has been rapidly growing as a result of privacy trends I mentioned before. In fact, as you may know, the FTC recently requested commentary on their proposed privacy regulation, and Perion submitted a detailed perspective. I'll be happy to share with you what's with our submission. A side of our vision that the future of digital advertising must acknowledge consumer privacy, SORT functions as effective flywheel that gets even more valuable and more effective as more data flows into it.
No matter which metrics you looked at, versus cookies, versus Google benchmark, versus raw, SORT comes out on top. Lastly, take a look at the quote from Mercedes. They believe privacy is so important that they want to be associated with it, and guess what? Without compromising on the results. You're able to see the Mercedes campaign here with 58% CTR lift in SORT versus contextual, and 53% CTR lift SORT versus third party. Going back to the trends I've mentioned earlier today and our ability to react to them, having a central hub is pivotal to increase our profitability and future growth. We cannot predict what will happen on either side of the open web, demand or supply. Those are market forces.
We can be confident that by being in the center and having a two-way visibility, we can optimize the benefits for us and for our clients. In its first year, iHub contributes 40% of our year-over-year EBITDA growth. More importantly, our ability to capture signals from all channels to a central hub, as you can see it on your screen, and analyze them, is the main factor behind SORT's superior performance over other conventional targeting methods. The trends where advertisers shift budgets towards direct response continue. Pay attention to what Philipp Schindler, Chief Business Officer at Google, said recently. I will read it for all of us. "In challenging times like this, advertisers are carefully evaluating the effectiveness of their budget. Search advertising tends to do relatively well in such environments, giving it strong measurability and focus on delivering ROI.
It's also well-suited to quickly adjust to changes in consumer behavior." Us, being a strategic partner of Microsoft Bing, definitely enjoy this trend. On top of this, the latest change of Apple's privacy and Facebook's reduced attribution window are causing advertisers to shift budgets to search advertising. We are evaluating this shift on both ends. Advertisers looking to pay more on their ads, reflecting n 42% increase in RPM. Higher intent of searchers increased their CTR ratio by 27%. With that, I will turn the call to Maoz. Maoz?
Thank you, Doron. Doron, please let me share my screen. Thank you.
One second. Go ahead, please.
Thank you, Doron. Good afternoon, and good morning to those of you joining us from the U.S. I am happy to be here today to present Perion's strong results for the third quarter of 2022. As you can see, Perion is performing extremely well. We are over-performing our industry in each of the financial metrics, consistently improving our results during the last two years, despite the global macroeconomic challenges and market volatility. The tech industry is not immune to the challenges. We are navigating our way between the market shift, thanks to our diversification strategy, our ability to execute, our agile business model, and our innovative solutions. Given the sense of our sustainable and predictable business model, which give us good visibility and the action we have taken to reduce costs and penetrate new fast-growing market segments, we are updating our guidance and are positive about next year.
Let's look at the key financial achievements this quarter, reflecting the strength of our business model and our ability to execute our strategy. Revenue of $158.6 million, reflecting 31% year-over-year growth, the highest quarterly revenue since 2014. Adjusted EBITDA of $33 million, 21% of revenue compared with 15% last year, reflecting 87% year-over-year growth. Net GAAP net income of $25.6 million, 141% year-over-year growth, the highest quarterly net income since 2014. Non-GAAP diluted earnings per share of $0.61, reflecting 53% year-over-year growth. Turning now to the quarterly results in more detail. The third quarter revenue was $158.6 million, an increase of 31% year-over-year. The strong continuous revenue growth reflects a carry of 38%.
Display advertising revenue increased by 26% year-over-year to $86.8 million, 55% of total revenue. Market adoption of our holistic video platform solution continued to rise. Video revenue more than tripled year-over-year, representing 44% of display advertising revenue. The number of video platform publishers increased by 88% year-over-year from 34 to 64, and the revenue from retained video platform publishers increased by 67% year-over-year. Our CTV is also gaining traction, growing by 134% year-over-year, representing 9% of total display advertising revenue. Our unique privacy-first SORT solution is seeing more interest from advertisers and agencies who are becoming more aware of the importance of consumer privacy. The number of active customers rose to 140 this quarter, 11% increase quarter-over-quarter.
Sold customer spending increased by 25% during that period, now representing 17% of display advertising revenue. The third quarter search advertising revenue increased by 38% year-over-year to $71.8 million, in line with the recent trend of advertisers favoring our intent direct response advertising. The year-over-year increase in revenue was driven by a 42% increase in RPM and a 60% increase in publishers. The 60.9 million daily searches on average reflect an increase of 15% year-over-year. Let's look at the revenue mix, which reflects our strategic business diversification. Third quarter display advertising revenue accounted for 55% of the total revenue, compared with 57% in 2021, with search advertising representing 45% of revenue compared with 43% in 2021.
We continue to expand into fast-growing video, CTV and retail business, which now accounted for 57% of display advertising, compared with 28% in Q3 2021. We are benefiting from the current shift to high intent search advertising. Our media margin continued to improve year-over-year. Revenue excluding tax was $65 million or 41% of revenue, compared with $47.4 million in the third quarter of 2021, or 39% of revenue. Over the last year, we have created the intelligence app with several ad processes and automation by leveraging data and buying power in order to control and improve current media buying system. This has resulted in better financial terms that translate into better selling power, which is reflected in our financial results and more specifically in the media margin.
Third quarter OpEx and CapEx amounted to $31.7 million or 20% of revenue, compared with $33.1 million or 27% of revenue last year. This impressive achievement reflects the execution of our business strategy. Herein lies our DNA and state of mind: growing the business while keeping and improving efficiency. Over the last few years, we invested millions in technology, automation and offshoring part of our business. We have improved budget control and are consistently looking for new initiatives for further efficiency. On a GAAP basis, net income was $25.6 million or $0.53 per diluted share, an increase of 141% compared with $10.6 million or $0.28 per diluted share in the third quarter of 2021.
On a non-GAAP basis, net income was $29.9 million or $0.61 per diluted share, an increase of 94% compared with $15.4 million or $0.40 per diluted share in the third quarter of 2021. Adjusted EBITDA of $33 million, reflecting 94% year-over-year growth. Adjusted EBITDA margin of 21% compared with 15% last year. Adjusted EBITDA to revenue excluding stock increased from 37% in the third quarter of 2021 to 51% during the third quarter of 2022. Our excellent financial performance is not limited to P&L only. Operating cash flow was $34.7 million compared with $14.2 million in the third quarter of 2021, reflecting 145% year-over-year growth.
As of September 30, 2022, we had cash equivalents, and short-term bank deposits of $390 million, compared with $322 million as of December 31, 2021. We are continuously generating positive cash flow. The $390 million in cash will serve as a valuable resource to execute both organic and inorganic growth opportunities. This concludes my financial overview. Doron, please go ahead.
Thank you. Given our strong performance and our sustainable and predictable business model and the good visibility into the fourth quarter, we're increasing our guidance for 2022 substantially. More specific, we are calling for $630 million-$640 million in revenue by the end of the year, and at least $120 million of EBITDA. This represents 72% year-over-year on the EBITDA growth or 33% year-over-year growth from the on the revenue side. Another note here is that our CAGR on the revenue between 2020 to 2022 is 39%, and the CAGR on the EBITDA on these three years is 91%. Ending note. Let me go back to why how I started this presentation.
Since I became a CEO in April of 2017, my mission has been to build the company of the future for the future. That means the company that will be strategically diverse and also lightweight and fluid. I saw a future of volatility where new trends would emerge, others would become less relevant, and where a successful company needed to shorten the reaction cycle, or it would be outrun by circumstances beyond its control. We built a company that makes the trends its friends, and that's why we are outperforming the market and can continue to do so. In a year, those four trends may change, but it doesn't matter to Perion because we will be able to react immediately to the new trends, gain market share in a high profitability while driving client satisfaction.
I'd like to close this call by thanking my team because without their ability and agility, we would not be where we are today, and together, we will continue achieving what we do next. Thanks so much. With that, let's open the line for Q&A.
Thank you. We will now be conducting a question-and-answer session. If you would like to ask us a question and have joined us by phone, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. If you have joined us via Zoom, please click on the Raise Hand icon on the bottom of your screen to be placed in the queue. Alternatively, if you have joined us by Zoom, you can also submit written questions by using the Q&A pod. One moment, please, while we poll for your questions. Our first questions come from the line of Eric Martinuzzi with Lake Street Capital Markets. Please proceed with your questions.
Yeah, congratulations on the strong quarter and the good outlook. Just curious to know, I know you released your prelim Q3 results on October fifth. What did you learn during the month of Octoberv as far as the trends in the industry different maybe than what you saw in Q3?
We didn't. I don't think that there are changes in October, but what we're able to see these days is that this is going to be definitely a strong holiday season and definitely when it comes to demand for our advertiser on all channels.
As far as your competitors go and just other players in digital marketing, there's definitely been a dramatic deceleration. You went through some of the reasons why Perion has not experienced those same decelerations. I know you're not giving guidance on 2023, but the organic growth that you've guided to for Q4, I believe we're in the neighborhood of high 20%. What's the sustainability of that beyond Q4?
I must say that was the heart of, you know, our presentation and our ability, you know, to keep growing the way we did in the last eight quarters. I think the diversification is definitely something which is important, but our ability to identify, you know, those trends and react quickly is giving us a lot of confidence on our ability to maintain, grow our business. The foundation is definitely there. The foundation from the hub perspective is giving us a huge cost leverage. The foundation of our ability to go after new markets, I think that what we are able to achieve with those with resellers is definitely evident. Retail marketing is one of this.
We are investing a lot on developing new, high impact format, mainly for the CTV. We have advanced conversation with Microsoft Advertising, as far as our ability to leverage our great reputation from the search part of the business into Xandr and PromoteIQ, the two acquisitions that Microsoft Advertising did, this is all part of 2023. We are quite optimistic. We are aware of what is going around. It make us that we need to really work harder than, well, how we performed in the past.
Okay. Lastly, you talked about taking a share in social. Is that anecdotal color that you're getting? I mean, or do you have a view into, you know, your customers are telling you, "Hey, we're pulling this much out of social, and we're shifting it over to search," specifically on that direct response to budget shift?
There are, I think, two major events that happened on social. One has to do with iOS 14, that was kind of a year ago. Second, the fact that the attribution window in Facebook is being reduced from 28 days to seven days. Those are mega events when it comes to advertisers that definitely view the effectiveness of social advertising, and from a targeting standpoint. That's. We definitely see shift from social into search because there is nothing compared to the intent of the consumer that you're able to target in search advertising. We see a rise there. As evidence of it, we share the RPM increase and the CTR.
This all reflected that advertisers are willing to pay more to have their ad associated with the keywords this year or this time compared to last year. As the CTR shows that there are more qualified with respect to high intent consumer that will be exposed to, you know, those ads and being reflected in the CTR. All in all, definitely a shift. I think it was part of what we keep saying for a long time, that Perion is in a very interesting position that we are able to capitalize on those shifts that is happening. This is the nature of this industry because from the eyes of the chief digital officer who needs to allocate their budget wisely among those three main dealers, they shift budget because of what's happened.
The question is how we will be victim of being a point solution that's not able to do anything when, you know, there is different trends, or you're able to diversify your offering and capitalize on those trends. I'm glad that we are rather than the former.
I am glad of that as well. Thanks for taking my question.
Thank you. Thanks so much.
Thank you. Our next question has come from the line of Laura Martin with Needham & Company. Please proceed with your questions.
Hey, can you hear me okay?
Yeah, we can hear you. Hi, Laura.
Hi. Great numbers. Wow, what a performance. Congratulations. I guess my first question is, as you think about costs next year, one of the things I'm curious about is we have Twitter laying off half of their workforce and Meta today laying off 13% of their workforce. Does that give you opportunities to pick up some excellent engineers and maybe build your costs, but really upgrade and add to your talent base because of some of these talented people getting laid off in the sort of digital ad industry?
Right on. Our HR is already all over. You know, they are using LinkedIn, and they're using any other resources because there are some great engineers there. We have great Israel is a small community, and I'm glad that Facebook has a huge lab here. Some of them are unfortunately looking for a new home. I think that we have a huge data scientist team that is working on our iHub. You know, if they're hearing me now, that's definitely a good place for them. We see it as a great opportunity. When it comes to Twitter, I must say that there is a very interesting thing that we noticed that has to do with privacy, nothing from the employment. There are some hesitation from advertisers.
It's kind of they're on the fence. They're not sure yet what is going on. We see it immediately when they are shifting budget to other channels. That's I don't know how long this trend will continue, but I can tell you that advertiser acting quite quickly when they are shifting from channel or within channels. That's something that we noticed immediately after the announcement of the Twitter and Musk acquisition.
On interactive ad units, I'm wondering how important you feel that is as a driver to your 2023 revenue?
You're talking about the interactive ad unit?
Yeah.
Again, Laura, you could do it. Laura?
Can you hear me or no?
Now we can hear you, but I didn't hear the question well. Can you repeat?
Oh, yeah. I was asking about how important are interactive ad units to drive revenue in 2023.
Very good. Interactive ad units, especially on the CTV side, is part of what we call high impact suite. It is not the pivot of it's a feature. There are some that like it, some not. I can tell you that I talked a bit about the laid-back type of experience. It is really interesting to know to what extent when you are laid back. The whole performance CTV is very much under kind of a question mark that the interactive falls very well as a way to interact with your TV, make an action. I must say that at this point, the majority of our advertiser is looking at it that the viewer is more passive than we were kind of hoping.
It is there, but it's not more than, let's say, 10%-15% of the overall CTV spend.
Very helpful. Thank you very much. Congratulations on great numbers.
Thank you.
Thank you. Our next question has come from the line of Andrew Marok with Raymond James. Please proceed with your questions.
Thanks for taking my questions. So the trends on SORT look really encouraging. I guess what does it take to get SORT more involved in more advertisers' campaigns? Is it really just an awareness issue right now? Secondly, kind of separately on the search market, I guess, could we drill down a little bit there because your search business is growing well in excess of the total search market. Just to get a little sense of some of the drivers there. We understand the shift towards search in a pressured macro environment, but what particularly are you guys doing well? Thank you.
Right. Thank you. First on SORT. There are two drivers, you know, behind SORT, which makes it quite important. I use the word flywheel, but we truly believe that that's a flywheel. First and foremost, from a technology and data standpoint, more SORT campaign we're doing, the better we are. That's very important figure, and I'm happy that we are able to perform well. Now, keep in mind that there are two forces here that's pushing SORT. One is coming from advertisers, that they realize that consumer prefers brand that protect their privacy. It's part of a bigger movement, which is ESG movement. When we're dealing with the premium advertisers, that's a very important argument.
However, at this point, with all due respect to privacy, they said, "Well, we love what you're doing, but we don't want to compromise on performance." All of them, with no exception, and Mercedes-Benz was one of them, they're expecting us to do an A, B, C benchmark. A, SORT, B, third parties, and C, contextual targeting in order to benchmark the performance report. The other thing which is very interesting is what's happening from a legislation standpoint. That's a very, very interesting movement, even though it will take time. We have a feeling that this train definitely left the station. That's what really makes SORT moving. Now, to your question, we are working as we speak right now on SORT as a service. In other words, currently, SORT is being used as bare metal with no exception.
Our intention is to go beyond bare metal and have it as a service, a service that we were able to work with publisher, other DSPs, and make it a company. So far we are in, we've just completed a very crucial step. Keep in mind that we need to meet a very rigid response time, which is less than 2 milliseconds on this service. It's quite a technology challenge. So far, definitely so good. There is a great market reaction to it. For product market fit, definitely we check this box. All in all, we are very confident on our ability to provide the service even on the first half of next year.
Now, when it comes to the second question that has to do with what we are doing better when it comes to search advertising. What we are doing better very much has to do with our partner, Microsoft Advertising. Microsoft identified that there is a time, and they are putting a lot of effort behind it, which has to do with new products that we launch in this quarter. It's called Microsoft Trends. All in all, there is a huge effort from their side in what they realize is what's happening, you know, with Google or with other search, so they're expanding to new countries, they're putting more resources on products, and that's reflected on our numbers.
Great. Thank you.
You're welcome.
Thank you. Our next question comes from the line of Jeff Martin with ROTH. Please proceed with your questions.
Great. Can you hear me?
Yeah. Hi, Jeff.
Great. Hi. Hi. Congrats on a wonderful quarter. Wanted to drill down a little bit more on the publisher growth within search, you know, up 60% year-over-year, you're obviously expanding it into new countries. Was curious if there's things beyond that, if the, you know, the high impact capabilities within search are attracting publishers. Is there anything in particular that is driving that publisher growth and what your outlook for additional increase in publisher additions over the next 12-18 months looks like?
Just a small correction. The high impact has to do with the display, and search is nothing to do with the high impact, high impact suite that we're doing. To your question, when it comes to publisher, definitely with the new product that we're launching, we're looking about two parameters. The increase in spend that existing publisher is doing, and the other one, our ability to attract net new publisher. That's going very well in both ends. The fact that we are becoming bigger and bigger gives us also a better revenue share rate, which we are able to share with our publisher and makes us even more competitive compared to other partner. That gives us an advantage to attract even more publishers.
Great. Just was curious if you could give some insight into the potential to continue to grow, you know, the average, campaign size or average client spend. You know, the, I think $117,000 in the quarter, and that's up nicely year- over year. You know, what are some of the factors as we head into 2023 that will enable that to continue to grow?
Absolutely. The main factor, of course, it has to do with the unit. The whole notion of going into a high impact opposed to standard is you spend more, yet, you know, it all needs to be translated to a higher return on ad spend. Quite an effort to educate our customers. You know, don't measure us based on what you spend. Measure us based on what you gain out of this campaign, even though you're paying premium, and I mentioned the $32 CPM, which is a very, very high number. It has to do with continue with the high impact. That's one. Second, it's very important for us to come with this campaign with multiple screens.
I mentioned how important is to have in one campaign the ability to run it to multiple screen and ability to synchronize between your, those screens because it's quite different on price, and it's very effective because the consumer is changing screen in his way to work, at work, at home, and you name it. That's another factor. While we're able to have more screens in a single campaign, that increase dramatically the spend. Now, it fits very well the agency and the brand that are looking more than ever to minimize the number of vendors. When you're coming with holistic solution that cover all their needs on multiple screen, they are willing to give you more and more business.
It's no secret to say that getting a $117,000 average deal IO, it's the same effort in getting a nine. From a sales standpoint, it's the same effort. For everything, it's the same effort because creative is being done and activation is being done, and you need to set the plumbing, and you need to do reporting, and you need to do everything. That's a net margin that we're able to get. This is one of the, I think, the most important parameter that we should look at. We're doing tremendous efforts to increase the spend, but at the same time, it needs to be translated to increase value from the perception of the customer. Otherwise, it cannot be done.
Great. Last question for me, if I could. You know, you've got a pretty sizable, you know, cash hoard at this point. Could you give us a look under the hood at what M&A might look like in 2023? Are you planning on continuing down that strategic path?
Yes. First of all, I must say that I answered this question beginning of 2022, and honestly, I was, you know, I was kind of thinking that we're able to do. If I remember, I said one and maybe two even. The situation is a bit different. I think that, we all understand that, you know, we worked really hard to be in this position where we have now close to $400 million of net cash and no debt. It gives us a wonderful position. We are looking for a pretty specific target that we identify. I can tell you that, we are definitely focusing on it. The intention, I now need to be more careful than last year. The intention is definitely doing it in 2023. That's the intention.
There are some great opportunities there for us and I'm very optimistic.
Great. Thank you.
Thanks.
Thank you. Our next question has come from the line of Mark Kelley with Stifel. Please proceed with your questions.
Great. Thank you very much. I wanted to ask you about the, you know, you called a strong holiday season as your expectation for this year. You know, Criteo is just one company in particular that called out a lack of an early holiday ramp in ad spend. It sounds like maybe you're not seeing that. I guess, is the shape of the fourth quarter playing out as you would typically expect so far? That's my first question. The second one is, and if you answered this, I apologize, but, can you please give us the pro forma growth rate, for Q3, with video? Thank you.
Very good. As far as the Q4 so far, November ninth, we're definitely almost in the middle of the quarter, and we are definitely not seeing any slowdown claims that there were before. It may be changing mix between the different channels, yes. That's definitely something which we couldn't, you know, project. As I mentioned before, the fact that we are diverse gives us a way to capitalize on these changes, and the overall looks as we planned.
Perfect. Thank you. On the pro forma, growth for Q3, if you could give us that'd be great.
Yes. I must thank you for the question. We are pro forma above 15% for Q3. Again, this is as mentioned during the last call. It's difficult for us to measure the exact number due to the synergy that we have between Vidazoo and the rest of the business unit, which is good. Yes, this is more or less the number. Again, as mentioned during the last call, part of the iHub benefit is definitely from Vidazoo joining and contribute a lot to the bottom line too, even.
All right. Thank you. 15 1 5, right?
1415.
Just to make sure. Okay. Thanks very much.
Thank you. Our next question has come from the line of Jason Helfstein with Oppenheimer. Please proceed with your questions.
Yeah, I'll ask one. So it's very clear as earnings are playing out, obviously a lot this morning, last night, that you know right now like being a demand-side platform is definitely a more attractive place to be because you control effectively like the buying decision as opposed to accepting bids. In addition, you know, being multi-platform is increasingly important. You're also seeing significant benefit by having supply-side capabilities on the margin and controlling inventory. So far, as we've seen companies scale two-sided marketplaces, it's been incredibly difficult. I mean, talk about you know kind of where you see the kind of plan from here, kind of both organically and through M&A continuing to be a two-sided marketplace, which is clearly working in your favor. Thank you.
Yeah. First of all, Jason, right on. I mean, that's a good description, I think of why we're able to perform quarter after quarter. I can tell you that from organic standpoint, there is a lot that we can grow. I mentioned few areas. You know, on the display side, we're definitely putting a lot of efforts on retail media. I think that definitely the customers that we're talking with are very much behind on their media business, and they all want to be, you know, where Amazon and Walmart and others are today. They have the data. They have the data. That's the point. The challenge for us is to take them and from where they are today to where they need to be.
I'm very happy that we're able to do it in even an ongoing fashion. It's only the start, but that's definitely an area that we are planning to invest more. That's from a vertical perspective. When it comes to, you know, the video, there is quite a very interesting thing that's happening also that those publishers that are joining are very much putting all their video business on our platform, which give us another very interesting, what we call stickiness kind of business. The cost of transitioning or the cost of switching is so high, and we're always looking for those kind of things that gives us more stability and more predictability on our business. I think that there is a great way organically, you know, to grow the business, as I mentioned in the call.
In terms of the acquisition, yes. We identify, you know, two areas where we want CTV definitely remain high. We truly believe that there are some very interesting companies in this domain. We're going after, you know, those companies. We are where we are today and what we want to accomplish. This needs to be a company that definitely represents, you know, a leadership position in the domain. Not less than that. It's not going to be a technology acquisition. It's definitely a business acquisition, which have, you know, prominent Tier 1 agencies and customers. This is what we look for, and this is the screening that we're doing at this time, and there are some interesting opportunities there.
Other area, which is something that we start working and evaluating has to do with Digital Out-of-Home. We think that this is really interesting, especially when we are looking about convergence of Digital Out-of-Home and retail. Having screens in the retail is very interesting. At least this is something that we are hearing from our retail business. Those are the two areas that at this point we're looking at. Hello? Hello?
I'm all set. You can go to the next question.
Oh, thank you. My pleasure. Operator?
Thank you. There are no further questions at this time, so I'll hand the call back over to you for any closing comments.
Very good. All right. Guys, thank you very much for joining, and see you next time. Thanks again. Bye-bye. Bye-bye. Bye-bye.
Thank you. This does end today's teleconference. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your day.