Strong Profitability Momentum of 2018
Continues;
GAAP Net income of $1.0 Million, 12% increase
YoY in Non-GAAP Net Income of $4.7 Million
Advertising Revenues are Up 5% for first 6
months Due to Growing Demand
During First Six Months of 2018, Net Debt
Decreased from $23.2 million to $6.1 million
Perion Network Ltd. (NASDAQ: PERI), a global innovator in
delivering digital marketing solutions for brands that are
relentlessly focused on their consumer relationships, announced
today its financial results for the second quarter and six months
ended June 30, 2018.
Financial Highlights*
(In millions, except per share data)
Three months ended Six months
ended June 30, June 30, 2017
2018 2017 2018 Advertising revenues $
35.3 $ 33.2 $ 59.7 $ 62.5 Search and other revenues $ 34.4 $ 29.6 $
72.0 $ 61.2 Total Revenues $ 69.7 $ 62.8 $ 131.7 $ 123.7 GAAP Net
Income (Loss) $ (36.0) $ 1.0 $ (38.1) $ 1.0 Non-GAAP Net Income $
4.2 $ 4.7 $ 6.9 $ 7.7 Adjusted EBITDA $ 7.0 $ 7.1 $ 10.5 $ 11.4
GAAP Diluted Earnings (Loss) Per Share $ (0.46) $ 0.01 $ (0.49) $
0.01 Non-GAAP Diluted Earnings Per Share $ 0.05 $ 0.06 $ 0.09 $
0.09
* Reconciliation of GAAP to Non-GAAP measures follows.
Doron Gerstel, Perion’s CEO commented, “Perion’s investments in
Undertone’s technology platform, including the seamless integration
of our social platform (MMR) into our full advertising solution,
are driving momentum, and there are positive indicators across the
entire market and sales system. We are encouraged by the market
acceptance of our Synchronized Digital Platform, introduced at the
beginning of 2018, which is enabling us to capture new customers
and generate larger insertion orders from existing ones. The latter
indicator of momentum is that during the first half of 2018, five
brands have increased the critical metric of spend to over $1
million. These results demonstrate that our unique, holistic
offering is resonating, and we are successfully differentiating
Undertone.”
“Our 2018 first half growth, compared to the same period last
year, was such that the supply of available advertising placements
was actually insufficient to meet demand, thus hampering even
greater growth,” Mr. Gerstel continued. “While this is a ’good
problem’ to have, we are addressing that imbalance with an
aggressive pipeline of innovative new products that will appeal to
brand-conscious brands and meet all quality industry
guidelines.”
“Simultaneously, driven by our lower cost structure, Perion
continues to utilize the consistently strong cash generation of our
Search business.” concluded Mr. Gerstel. “Perion is stronger today
than it was when I joined the company, and we are increasing the
bottom-end of our expected full-year Adjusted EBITDA range of $29
million to $32 million for the full year of 2018.”
Financial Comparison for the Second Quarter of 2018:
Revenues: Revenues decreased by 10%, from $69.7 million
in the second quarter of 2017 to $62.8 million in the second
quarter of 2018. This decrease was primarily a result of Search and
other revenues declining 14% due to churn of our legacy products
and the second quarter of 2017 network cleanup, along with a 6%
decrease in our Advertising revenues due to insufficient supply to
meet existing demand.
Customer Acquisition Costs and Media Buy (“CAC”): CAC in
the second quarter of 2018 were $31.1 million, or 50% of revenues,
as compared to $33.8 million, or 48% of revenues in the second
quarter of 2017. In Search and other revenues, the increase as
a percentage of revenues is primarily due to the churn of our
legacy products, while in Advertising, the increase is mainly
attributed to product mix and due to the effect of header bidding
and Chrome ad blocker.
Net Income (Loss): On a GAAP basis, net income in the
second quarter of 2018 was $1.0 million, as compared to a net loss
of $36.0 million in the second quarter of 2017. The loss in the
second quarter of 2017, was mainly due to $43.8 million non-cash
impairment of goodwill and intangible assets related to the
Undertone business.
Non-GAAP Net Income: In the second quarter of 2018,
non-GAAP net income was $4.7 million, or 7% of revenues, compared
to the $4.2 million, or 6% of revenues, in the second quarter of
2017.
Adjusted EBITDA: In the second quarter of 2018, Adjusted
EBITDA was $7.1 million, or 11% of revenues, compared to $7.0
million, or 10% of revenues, in the second quarter of 2017.
Cash and Cash Flow from Operations: As of June 30, 2018,
cash and cash equivalents were $34.7 million. Cash provided by
operations in the second quarter of 2018 was $2.9 million, compared
to $3.5 million in the second quarter of 2017.
Short-term Debt, Long-term Debt and Convertible Debt: As
of June 30, 2018, total debt was $40.8 million, compared to $60.7
million at December 31, 2017.
Perion satisfies all the financial covenants associated with its
public debt.
2018 Guidance
Management increased the bottom-end of its expectations of
Adjusted EBITDA. Management now expects Adjusted EBITDA of $29
million to $32 million for the full year of 2018, up from the prior
range of $28 to $32 million.
Reverse Split:
Following the approval of Perion’s shareholders, Perion will
affect a reverse split of Perion’s ordinary shares at the ratio of
3:1, such that each three ordinary shares, par value NIS 0.01 per
share, shall be consolidated into one ordinary share, par value NIS
0.03 (the “Reverse Split”). The record date for determining
which holders of Perion’s ordinary shares will have their holdings
adjusted as a result of the reverse share split will be the close
of business on Friday, August 24, 2018.
Perion’s ordinary shares will begin trading on the Tel Aviv
Stock Exchange Ltd. after implementation of the Reverse Split on
Sunday, August 26, 2018 and on NASDAQ Global Select Market on
Monday, August 27, 2018.
Conference Call:
Perion will host a conference call to discuss the results today,
August 9, 2018, at 10 am ET, 05 pm Israel time.
Details are as follows:
- Conference ID: 8850618
- Dial-in number from within the United
States: 1-866-548-4713
- Dial-in number from Israel:
1-809-212-883
- Dial-in number (other international):
1-323-794-2093
- Playback available until August 16,
2018 by calling 1-844-512-2921 (United States) or 1-412-317-6671
(international). Please use PIN code 8850618 for the replay.
- Link to the live webcast accessible at
https://www.perion.com/ir-info/
About Perion Network Ltd.
Perion is a global technology company that delivers advertising
solutions to brands and publishers. Perion is committed to
providing data-driven execution, from high-impact ad formats to
branded search and a unified social and mobile programmatic
platform. More information about Perion may be found at
www.perion.com, and follow Perion on Twitter@perionnetwork.
Non-GAAP measures
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude acquisition related expenses, share-based
compensation expenses, restructuring costs, loss from discontinued
operations, accretion of acquisition related contingent
consideration, impairment of goodwill, amortization and impairment
of acquired intangible assets and the related taxes thereon,
non-recurring tax expenses, as well as certain accounting entries
under the business combination accounting rules that require us to
recognize a legal performance obligation related to revenue
arrangements of an acquired entity based on its fair value at the
date of acquisition. Additionally, in September 2014, the Company
issued convertible bonds denominated in New Israeli Shekels and at
the same time entered into a derivative arrangement (SWAP) that
economically exchanges the convertible bonds as if they were
denominated in US dollars when the bonds were issued. The Company
excludes from its GAAP financial measures the fair value
revaluations of both, the convertible bonds and the related
derivative instrument, and by doing so, the non-GAAP measures
reflect the Company’s results as if the convertible bonds were
originally issued and denominated in US dollars, which is the
Company’s functional currency. Adjusted Earnings Before Interest,
Taxes, Depreciation and Amortization ("Adjusted EBITDA") is defined
as operating income excluding stock-based compensation expenses,
depreciation, restructuring costs, acquisition related items
consisting of amortization of intangible assets and goodwill and
intangible asset impairments, acquisition related expenses, gains
and losses recognized on changes in the fair value of contingent
consideration arrangements and certain accounting entries under the
business combination accounting rules that require us to recognize
a legal performance obligation related to revenue arrangements of
an acquired entity based on its fair value at the date of
acquisition.
The purpose of such adjustments is to give an indication of our
performance exclusive of non-cash charges and other items that are
considered by management to be outside of our core operating
results. These non-GAAP measures are among the primary factors
management uses in planning for and forecasting future periods.
Furthermore, the non-GAAP measures are regularly used internally to
understand, manage and evaluate our business and make operating
decisions, and we believe that they are useful to investors as a
consistent and comparable measure of the ongoing performance of our
business. However, our non-GAAP financial measures are not meant to
be considered in isolation or as a substitute for comparable GAAP
measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
Additionally, these non-GAAP financial measures may differ
materially from the non-GAAP financial measures used by other
companies. A reconciliation between results on a GAAP and non-GAAP
basis is provided in the last table of this press release.
Forward Looking Statements
This press release contains historical information and
forward-looking statements within the meaning of The Private
Securities Litigation Reform Act of 1995 with respect to the
business, financial condition and results of operations of Perion.
The words “will”, “believe,” “expect,” “intend,” “plan,” “should”
and similar expressions are intended to identify forward-looking
statements. Such statements reflect the current views, assumptions
and expectations of Perion with respect to future events and are
subject to risks and uncertainties. Many factors could cause the
actual results, performance or achievements of Perion to be
materially different from any future results, performance or
achievements that may be expressed or implied by such
forward-looking statements, or financial information, including,
among others, the failure to realize the anticipated benefits of
companies and businesses we acquired and may acquire in the future,
risks entailed in integrating the companies and businesses we
acquire, including employee retention and customer acceptance; the
risk that such transactions will divert management and other
resources from the ongoing operations of the business or otherwise
disrupt the conduct of those businesses, potential litigation
associated with such transactions, and general risks associated
with the business of Perion including intense and frequent changes
in the markets in which the businesses operate and in general
economic and business conditions, loss of key customers,
unpredictable sales cycles, competitive pressures, market
acceptance of new products, inability to meet efficiency and cost
reduction objectives, changes in business strategy and various
other factors, whether referenced or not referenced in this press
release. Various other risks and uncertainties may affect Perion
and its results of operations, as described in reports filed by
Perion with the Securities and Exchange Commission from time to
time, including its annual report on Form 20-F for the year ended
December 31, 2017 filed with the SEC on March 27, 2018. Perion does
not assume any obligation to update these forward-looking
statements.
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS In thousands
(except share and per share data) Three months
ended Six months ended June 30, June 30,
2017 2018 2017 2018
Unaudited Unaudited Unaudited Unaudited
Revenues: Advertising $ 35,309 $ 33,206 $ 59,697 $
62,501 Search and other 34,379 29,591 71,967
61,201
Total Revenues 69,688
62,797 131,664 123,702
Costs and Expenses: Cost of revenues 5,914 5,811 11,807
11,867 Customer acquisition costs and media buy 33,786 31,105
63,838 62,990 Research and development 3,947 4,678 8,967 10,222
Selling and marketing 13,560 10,081 26,465 19,782 General and
administrative 6,013 4,881 11,188 9,167 Depreciation and
amortization 5,008 2,491 9,909 4,562 Impairment charges 43,847 -
43,847 - Restructuring costs - 937 -
2,075
Total Costs and Expenses 112,075
59,984 176,021 120,665
Income (Loss) from Operations (42,387) 2,813
(44,357) 3,037 Financial expense, net 1,338
1,199 3,522 1,806
Income (Loss)
before Taxes on income (43,725) 1,614
(47,879) 1,231 Taxes on income 7,709
(628) 9,789 (188)
Net Income (Loss)
$ (36,016) $ 986 $
(38,090) $ 1,043 Net Earnings
(Loss) per Share - Basic and Diluted $ (0.46) $ 0.01 $ (0.49) $
0.01
Weighted average number of shares Basic
77,550,069 77,550,069 77,548,252 77,550,069
Diluted 77,550,069 79,261,852 77,548,252
77,556,333
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS In thousands
December 31, June 30,
2017 2018 Audited Unaudited
ASSETS Current Assets: Cash and cash
equivalents $ 31,567 $ 34,662 Short-term bank deposit 5,913 -
Accounts receivable, net 62,830 50,240 Prepaid expenses and other
current assets 13,955 7,936
Total Current
Assets 114,265 92,838 Property and
equipment, net 17,476 15,938 Goodwill and intangible assets, net
136,360 134,026 Deferred taxes 4,798 4,752 Other assets
1,128 699
Total Assets $
274,027 $
248,253 LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities: Accounts payable $ 39,180 $
35,150 Accrued expenses and other liabilities 17,784 16,172
Short-term loans and current maturities of long-term and
convertible debt 13,989 13,472 Deferred revenues 5,271 4,432
Payment obligation related to acquisitions 5,146
5,146
Total Current Liabilities 81,370 74,372
Long-Term Liabilities: Long-term debt, net of current
maturities 30,026 19,382 Convertible debt, net of current
maturities 16,693 7,937 Other long-term liabilities 7,606
5,992
Total Liabilities 135,695
107,683 Shareholders' equity: Ordinary shares
211 211 Additional paid-in capital 236,976 238,459 Treasury shares
at cost (1,002) (1,002) Accumulated other comprehensive gain (loss)
532 243 Accumulated deficit (98,384) (97,341)
Total Shareholders' Equity 138,332
140,570 Total Liabilities and Shareholders'
Equity $
274,027 $
248,253
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS In
thousands Three months ended June 30,
Six months ended June 30, 2017 2018
2017 2018 Unaudited
Unaudited Unaudited Unaudited
Operating
activities:
Net Income (Loss) $ (36,016) $ 986 $ (38,090) $ 1,043
Adjustments required to reconcile net income to net cash provided
by operating activities: Depreciation and amortization 5,008 2,491
9,909 4,562 Impairment of goodwill and intangible assets 43,847 -
43,847 - Stock based compensation expense 561 865 1,119 1,483
Foreign currency translation 21 (55) 10 12 Accrued interest, net
117 95 217 223 Deferred taxes, net (8,109) 345 (10,752) (9) Change
in payment obligation related to acquisition (2) - 28 - Fair value
revaluation - convertible debt 934 (6) 3,767 (992) Restructuring
costs related to impairment of property and equipment - 462 - 462
Net changes in operating assets and liabilities (2,816)
(2,325) 1,716 10,670
Net cash provided by
operating activities $ 3,545 $
2,858 $ 11,771 $ 17,454
Investing
activities:
Purchases of property and equipment $ (434) $ 42 $ (1,265) $ (48)
Capitalization of development costs (1,811) (431) (2,781) (1,119)
Short-term deposits, net (1,503) 4 6,911 5,913
Net cash provided (used) by investing activities $
(3,748) $ (385) $ 2,865 $
4,746
Financing
activities:
Exercise of stock options and restricted share units - - 1 -
Payment made in connection with acquisition (551) - (551) -
Proceeds from long-term loans 5,000 - 5,000 - Repayment of
convertible debt - (8,167) (7,901) (8,167) Repayment of short-term
loans 1,137 - (7,000) - Repayment of long-term loans (7,414)
(1,352) (7,414) (10,982)
Net cash used in
financing activities $ (1,828) $
(9,519) $ (17,865) $
(19,
149) Effect of exchange rate changes on cash and
cash equivalents 147 (29) 192 44
Net
increase (decrease) in cash and cash equivalents (1,884)
(7,075) (3,037) 3,095 Cash and cash
equivalents at beginning of period 22,809 41,737
23,962 31,567
Cash and cash equivalents at end of
period $ 20,925 $ 34,662 $
20,925 $ 34,662
PERION NETWORK LTD. AND ITS SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS: UNAUDITED In
thousands (except share and per share data)
Three months ended Six months ended June
30, June 30, 2017 2018 2017
2018 Unaudited Unaudited
Unaudited Unaudited GAAP Net Income
(Loss) $ (36,016) $ 986 $
(38,090) $ 1,043 Share based compensation 561
865 1,119 1,483 Amortization of acquired intangible assets 4,059
1,197 8,111 2,401 Non-recurring Legal fees - (9) 226 Restructuring
costs - 937 - 2,075 Impairment of goodwill and intangible assets
43,847 - 43,847 - Fair value revaluation of convertible debt and
related derivative (18) 667 1,413 794 Accretion of payment
obligation related to acquisition (3) - 27 - Taxes on the above
items (8,251) 23 (9,494) (338)
Non-GAAP Net Income $ 4,179 $
4,666 $ 6,933 $ 7,684
Non-GAAP Net Income $ 4,179 $
4,666 $ 6,933 $ 7,684 Taxes on
income (expenses) 542 605 (295) 526 Financial expense, net 1,359
532 2,082 1,012 Depreciation 949 1,294 1,798
2,161
Adjusted EBITDA $ 7,029 $
7,097 $ 10,518 $ 11,383
Non-GAAP diluted earnings per share $ 0.05
$ 0.06 $ 0.09 $ 0.09
Shares used in computing non-GAAP diluted earnings per
share 77,989,840 79,261,852 77,990,009
77,980,917
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180809005239/en/
Perion Network Ltd.Investor relationsHila Valdman+972
(73) 398-1000investors@perion.com
Perion Network (NASDAQ:PERI)
Historical Stock Chart
From Aug 2024 to Sep 2024
Perion Network (NASDAQ:PERI)
Historical Stock Chart
From Sep 2023 to Sep 2024