Perion Network Ltd. (NASDAQ: PERI) today announced financial
results for the second quarter and six months ended June 30,
2013.
Q2 2013 non-GAAP Financial Highlights Include:
- Quarterly revenues increased 99%
year-over-year reaching $24.4 million;
- EBITDA increased 61% year-over-year to
$4.3 million;
- Net income increased 85%
year-over-year, reaching $3.4 million, or 14% of revenues;
- Earnings Per Share was $0.26; and
- GAAP Cash flow from operations was $6.8
million.
First Six Months 2013 non-GAAP Financial Highlights
Include:
- Year-to-date revenues increased 121%
year-over-year to $52.0 million;
- EBITDA increased 131% year-over-year to
$12.2 million;
- Net income increased 129%, reaching
$9.2 million, or 18% of revenues;
- Earnings Per Share was $0.71; and
- GAAP Cash flow from operations was
$14.3 million.
Josef Mandelbaum, Perion’s CEO, commented: “We had strong
results in the second quarter and a record first half of 2013. We
nearly doubled revenues and profits in the second quarter compared
to last year and generated $6.8 million in cash flow from
operations. In the first half of the year we also signed a renewal
with Google and two new search agreements with Bing and Ask.com. In
addition, earlier today we announced a partnership with Yahoo!, and
I am also pleased to announce today that we have signed and
launched a search distribution partnership with Conduit, expanding
our search partners to five.”
“In the past seven months we have significantly diversified and
strengthened our search business,” concluded Mr. Mandelbaum.
“However, the implementation of these partnerships has taken longer
than we expected, dampening our second quarter results and pushing
revenue expected in the third quarter into the fourth quarter of
the year. With implementation of these partnerships now well
underway and the new product launch of Guardius, in addition to our
other products, we are well positioned for future growth in the
fourth quarter and leading into 2014.”
Non-GAAP Financial Comparison for the First Six Months and
Second Quarter of 2013:
Revenue: In the second quarter of 2013, revenues reached
$24.4 million, nearly double the $12.3 million of revenues in the
second quarter of 2012. This increase was attributable to a 183%
year over year increase in search generated revenues, while other
revenues increased 6%. The increase in search revenues was achieved
while diversifying our search partners, with only 51% of our search
generated revenues coming directly from Google in the second
quarter. We continue to diversify our search relationships and
expect to see this trend progress in the coming quarters.
In the first six months of 2013 revenues were $52.0 million,
increasing 121% from the $23.6 million recorded in the same period
in 2012. This too was primarily as a result of our more than
tripling search generated revenues and increasing other revenues by
17%. The increase in search generated revenues was due to both
organic growth and our acquisition of SweetPacks in November 2012.
Growth in other revenues was attributable to other advertising
revenues, while the growth in product sales was primarily reflected
in a 13% increase in Deferred Revenues on our Balance Sheet.
Gross Profits: As a result of the increase in revenues,
in the second quarter of 2013 gross profit doubled as well, and was
$23.3 million, or 95% of sales, compared to $11.5 million, or 93%
of sales in the second quarter of 2012. Gross profit in the first
half of 2013 was $49.7 million, or 95% of revenues, increasing 126%
compared to $22.0 million, or 93% of revenues in the first half of
2012.
Customer Acquisition Costs (“CAC”): In the second quarter
of 2013, CAC was $12.5 million, more than triple the $3.9 million
spent in the second quarter of 2012. In the first half of 2013,
Perion invested $23.9 million in CAC, more than three-fold the $6.5
million invested in the first half of 2012. The increase in CAC was
lower than initially planned for this period, as the company was
adapting its acquisition strategy to its new partners. We expect
this transition to continue in the third quarter, and then CAC will
increase significantly in the fourth quarter, powering our growth
in the latter part of this year and into 2014.
EBITDA: In the second quarter of 2013, EBITDA was $4.3
million, increasing 61% compared to $2.7 million in the second
quarter of 2012, despite the $8.6 million increase in CAC. In the
first half of 2013 EBITDA was $12.2 million, increasing 131%,
compared to $5.3 million in the first half of 2012.
Net Income: In the second quarter of 2013, net income was
$3.4 million or $0.26 per share, compared to $1.8 million, or $0.18
per share in the second quarter of 2012. In the first half of 2013
net income was $9.2 million, or $0.71 per share, compared to $4.0
million, or $0.40 per share, in the first half of 2012.
Cash Flow from Operations: Based on U.S. GAAP, in the
first half of 2013, cash flow from operations was $14.3 million,
compared to $2.5 million in the first half of 2012. Cash flow from
operations in the first half of 2013 was primarily due to our $3.7
million in GAAP net income, in addition to non-cash amortization
and accretion expenses of $6.6 million, as well as realizing $4.0
million of other working capital.
Financial Outlook
Given current industry trends, management has decided to provide
an outlook for the third quarter of 2013. The Company expects third
quarter revenues to be between $20 million and $22
million, reflecting 30% year over year growth and EBITDA to be
between $4.5 million and $5.5 million,
reflecting a 32% increase year over year. At this time, management
remains optimistic that it can achieve its full year guidance.
Conference Call
Perion will host a conference call to discuss the results today,
August 12th at 10 a.m. EDT (5 p.m. Israel Time). Details are as
follows:
- Dial-in number from within the United
States: 1-888-427-9376
- Dial-in number from Israel:
180-924-5906
- Dial-in number (other international):
1-719-785-1753
- Playback, available until August 19,
2013 by calling 1-877-870-5176 (United States) or 1-858-384-5517
(international). Please use pin number 2633918 for the replay.
- A live webcast is accessible at
http://www.perion.com/events-presentations.
About Perion Network Ltd.
Perion Network, Ltd. (NASDAQ: PERI) is a global consumer
internet company that develops applications to make the online
experience of its users simple, safe and enjoyable. Perion’s three
main consumer brands are: Incredimail, Smilebox and SweetIM.
Incredimail is a unified messaging application enabling
consumers to manage multiple email accounts and Facebook messages
in one place with an easy-to-use interface and extensive
personalization features, and is available in over 100 countries in
8 languages; Smilebox is a leading photo sharing and social
expression product and service that quickly turn life's moments
into digital keepsakes for sharing and connecting with friends and
family, in a fun and personal way. SweetIM is an instant
messaging application that enables consumers to personalize their
everyday communications with free, fun and easy to use content.
Perion products have had over 300 million downloads to date with
more than 50 million monthly unique visitors across all of its
brands. Perion also offers and develops a range of products for
mobile phones and tablets to answer its users' increasing mobile
demands. For more information on Perion please visit
http://www.perion.com.
Non-GAAP measures
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude: Valuation adjustment on acquired deferred
product revenues, amortization of acquired intangible assets,
share-based compensation expenses, acquisition related expenses,
deferred finance expenses and non-recurring tax benefits. 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. 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.
Our management regularly uses our supplemental non-GAAP financial
measures internally to understand, manage and evaluate our business
and make operating decisions. These non-GAAP measures are among the
primary factors management uses in planning for and forecasting
future periods. Business combination accounting rules requires us
to recognize a legal performance obligation related to a revenue
arrangement of an acquired entity. The amount assigned to that
liability should be based on its fair value at the date of
acquisition. The non-GAAP adjustment is intended to reflect the
full amount of such revenue. We believe this adjustment is useful
to investors as a measure of the ongoing performance of our
business. We believe these non-GAAP financial measures provide
consistent and comparable measures to help investors understand our
current and future operating cash flow performance. These non-GAAP
financial measures may differ materially from the non-GAAP
financial measures used by other companies. Reconciliation between
results on a GAAP and non-GAAP basis is provided in a table
immediately following the Consolidated Statements of Income.
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 the
Company. 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 the Company with respect to
future events and are subject to risks and uncertainties. Many
factors could cause the actual results, performance or achievements
of the Company 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, potential litigation associated with the
transaction, risks that the Company's acquisition activities may
disrupt current plans and operations and pose difficulties in
employee retention, risks entailed in integrating acquired
businesses, changes in the markets in which the Company operates
and in general economic and business conditions, loss of key
customers and 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 the
Company and its results of operations, as described in reports
filed by the Company with the Securities and Exchange Commission
from time to time, including its annual report on Form 20-F/A for
the year ended December 31, 2012. The Company does not assume any
obligation to update these forward-looking statements.
Source: Perion Network Ltd.
PERION NETWORK LTD.
NON-GAAP SUMMARY FINANCIAL METRICS
U.S. dollars in thousands (except per share data), unaudited
Quarter ended June 30, Six
months ended June 30, 2013 2012
2013 2012 Revenues: Search $ 18,137 $
6,398 $ 38,446 $ 11,950 Product and Other 6,290 5,907
13,559 11,611 Total revenues $ 24,427 $ 12,305 $
52,005 $ 23,561 Gross Profit $ 23,304 $ 11,494 $ 49,656 $ 21,986
EBITDA $ 4,255 $ 2,650 $ 12,157 $ 5,267 Net Income $ 3,402 $ 1,840
$ 9,186 $ 4,016 Diluted EPS $ 0.26 $ 0.18 $ 0.71 $ 0.40
PERION NETWORK LTD. GAAP FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars and number of shares in thousands (except per share
data), (unaudited)
Quarter ended
June 30, Six months ended June 30, 2013
2012 2013 2012
Revenues: Search $ 18,137 $ 6,398 $ 38,446 $ 11,950 Product and
Other 6,290 5,585 13,559 10,692 Total
revenues 24,427 11,983 52,005 22,642 Cost of revenues 2,981
1,064 6,069 2,087 Gross profit 21,446
10,919 45,936 20,555 Operating expenses:
Research and development, net 2,922 2,464 6,293 5,147 Selling and
marketing 2,558 1,543 5,342 3,224 Customer acquisition costs 12,516
3,925 23,881 6,538 General and administrative 2,066
1,524 4,284 3,515 Total operating expenses
20,062 9,456 39,800 18,424 Operating income
1,384 1,463 6,136 2,131 Financial expense, net 347
248 801 196 Income before taxes on income
1,037 1,215 5,335 1,935 Taxes on income 195 337
1,604 687 Net income $ 842 $ 878 $ 3,731 $ 1,248
Basic earnings per share $ 0.07 $ 0.09 $ 0.31 $ 0.13 Diluted
earnings per share $ 0.06 $ 0.09 $ 0.29 $ 0.12 Basic
weighted number of shares 12,274 9,984 12,181
9,950 Diluted weighted number of shares 13,030
10,022 12,935 10,015
PERION NETWORK LTD.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS U.S. dollars and number
of shares in thousands (except per share data), unaudited
Quarter endedJune 30,
Six months endedJune 30,
2013 2012 2013
2012 GAAP revenues $ 24,427 $ 11,983 $
52,005 $ 22,642 Valuation adjustment on acquired deferred product
revenues - 322 - 919
Non-GAAP revenues $ 24,427 $ 12,305 $ 52,005 $ 23,561
GAAP gross profit $ 21,446 $ 10,919 $ 45,936 $ 20,555
Valuation adjustment on acquired deferred product revenues - 322 -
919 Share based compensation 1 3 5 12 Amortization of acquired
intangible assets 1,857 250 3,715
500 Non-GAAP gross profit $ 23,304 $ 11,494 $
49,656 $ 21,986 GAAP operating expenses $ 20,062 $
9,456 $ 39,800 $ 18,424 Acquisition related expenses - - - 313
Share based compensation 178 178 724 529 Amortization of acquired
intangible assets 486 209 949
419 Non-GAAP operating expenses $ 19,398 $ 9,069 $
38,127 $ 17,163 GAAP operating income $ 1,384
$ 1,463 $ 6,136 $ 2,131 Valuation adjustment on acquired
deferred product revenues - 322 - 919 Acquisition related expenses
- - - 313 Share based compensation 179 181 729 541 Amortization of
acquired intangible assets 2,343 459
4,664 919 Operating income adjustments 2,522
962 5,393 2,692 Non-GAAP
operating income $ 3,906 $ 2,425 $ 11,529 $ 4,823
GAAP net income $ 842 $ 878 $ 3,731 $ 1,248 Operating income
adjustments 2,522 962 5,393 2,692 Accretion of payment obligation
related to acquisitions 283 - 550 76 Taxes on amortization of
acquired intangible assets (245 ) - (488 ) -
Non-GAAP net income $ 3,402 $ 1,840 $ 9,186 $ 4,016
GAAP diluted earnings per share $ 0.06 $ 0.09 $ 0.29
$ 0.12
Non-GAAP diluted earnings per share
$ 0.26 $ 0.18 $ 0.71 $ 0.40 Shares used in
computing US GAAP and Non-GAAP diluted earnings per share
13,030 10,022 12,935 10,015
Non-GAAP net income $ 3,402 $ 1,840 $ 9,186 $ 4,016 Income
tax expense 195 337 1,604 687 Taxes on amortization of acquired
intangible assets 245 - 488 - Interest expense, net 64 248 251 120
Depreciation and amortization 349 225
628 444 Non-GAAP EBITDA $ 4,255 $ 2,650 $
12,157 $ 5,267
PERION NETWORK LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
June 30,
December 31, 2013 2012
Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $
30,385 $ 21,762 Trade receivables 8,893 10,246 Restricted cash
10,260 10,260 Other receivables and prepaid expenses 4,334
5,424 Total current assets 53,872 47,692
LONG-TERM ASSETS:
Property and equipment, net
1,492 1,522 Goodwill and other intangible assets, net 69,166 72,730
Other assets 1,424 1,215 Total long-term assets
72,082 75,467 Total assets $ 125,954 $ 123,159
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current
maturities of long-term debt $ 2,300 $ 2,300 Trade payables 8,224
9,560 Deferred revenues 5,360 5,132 Payment obligation related to
acquisitions 17,694 20,317 Accrued expenses and other liabilities
17,771 14,679 Total current liabilities 51,349
51,988 LONG-TERM LIABILITIES: Long-term debt 5,400 6,550
Contingent purchase consideration 6,541 6,078 Other long-term
liabilities 3,472 3,833 Total long-term liabilities
15,413 16,461 SHAREHOLDERS' EQUITY
59,192 54,710 Total liabilities and shareholders' equity $
125,954 $ 123,159
PERION NETWORK LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
U.S. dollars in thousands, (unaudited)
Six months ended June 30, 2013
2012
Operating
activities:
Net income $ 3,731 $ 1,248 Adjustments required to reconcile net
income to net cash provided by operating activities: Depreciation
and amortization 5,292 1,363 Stock based compensation expense 729
541 Accretion of payment obligation related to acquisition 550 389
Net change in operating assets and liabilities 4,030
(1,038 ) Net cash provided by operating activities
14,332 2,503
Investing
activities:
Purchase of property and equipment (364 ) (361 ) Restricted cash
(167 ) - Payment in connection with acquisition (2,710 ) -
Capitalization of software development and content costs (1,319 )
(447 ) Acquisition of subsidiary - (6,626 )
Net cash used in investing activities (4,560 ) (7,434
)
Financing
activities:
Exercise of share options 1 1 Proceeds from (payment of) long-term
loans (1,150 ) 10,000 Net cash provided by
(used in) financing activities (1,149 ) 10,001
Net increase in cash and cash equivalents 8,623 5,070 Cash and cash
equivalents at beginning of period 21,762
11,260 Cash and cash equivalents at end of period $ 30,385
$ 16,330 Supplemental disclosure of non-cash
investing activities: Stock-based compensation that was capitalized
as part of capitalization of software development costs $ 19
$ 23
Perion Investor RelationsDeborah
Margalit+972-3-7696100investors@perion.comorHayden / MS-IR
LLCBrett Maas / Miri Segal-Scharia646-536-7331 /
917-607-8654Brett@haydenir.com / msegal@ms-ir.com
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