2014 Non-GAAP Revenue $394 Million, Adjusted
EBITDA $126 Million
Perion Network Ltd. (NASDAQ: PERI) announced today its financial
results for the fourth quarter and year ended December 31,
2014.
Financial Highlights *
(U.S. dollars in thousands, except for
per share data)
Three months ended Year ended
December 31, December 31, 2013
2014 2013 2014 Non-GAAP
Revenues $ 85,597 $ 78,683 $ 328,524 $ 394,231 Adjusted
EBITDA $ 11,726 $ 25,184 $ 68,953 $ 126,293 Non-GAAP Net
Income $ 12,478 $ 19,950 $ 57,925 $ 101,589 Non-GAAP Diluted
Earnings Per Share $
0.23
$ 0.27 $ 1.05 $ 1.44 GAAP Net Income (Loss) $ 6,391 $ (7,885
) $ 28,613 $ 42,826 GAAP Diluted Earnings (Loss) Per Share $
0.22 $ (0.13 ) $ 1.14 $ 0.58 GAAP Cash Flow provided by
Operations $ 61,352 $ 72,042
* Reconciliation of GAAP to Non-GAAP
measures can be found in the last table.
Josef Mandelbaum, Perion’s CEO, commented: “We are very pleased
with our fourth quarter and full year results especially given the
challenges facing the industry. We delivered financial results that
came in at the high end of our revenue guidance and exceeded both
our EBITDA and Net Income guidance. More importantly, we took
significant steps in the development of our mobile marketing
platform, a key driver to Perion’s future growth. We successfully
launched the beta version of GrowMobile’s cross-network, self-serve
platform, and are very happy with the initial customer feedback.
Additionally, we further strengthened our platform by adding social
advertising capabilities, as well as a premium European marketing
presence, with the recent acquisition of Paris-based MakeMeReach, a
Facebook preferred marketing developer (PMD) and Twitter marketing
platform partner (MPP). With access to all the main mobile traffic
sources from one single platform, and over $80 million in managed
revenues, GrowMobile is now positioned as one of the industry
leaders in the mobile advertising market.”
“While the search monetization market still faces headwinds, we
see positive signs emerging as much of the industry finally seems
determined to improve overall practices. In the meantime, we
continue to manage our business to ensure robust profitability and
cash flow, albeit at a lower revenue level. In parallel, we are
dedicating resources to organically enhance our monetization
portfolio to include other forms of advertising and to expand into
mobile. We are building a stronger and more stable foundation for
our monetization business, and are confident that it will best
position us for future growth,” concluded Mr. Mandelbaum.
Non-GAAP Financial Comparison for the Fourth Quarter of
2014:
In accordance with generally accepted accounting principles, or
GAAP, the acquisition of ClientConnect by Perion, which closed on
January 2, 2014, is accounted for as a reverse acquisition.
Therefore, Perion is comparing its results this year to the results
of ClientConnect in 2013. As a result, a significant portion of the
year over year changes described below were attributable to the
fact that the comparative results of 2013 include only
ClientConnect’s results and do not include Perion's results for
that year.
Revenues: In the fourth quarter of 2014, revenues were
$78.7 million, decreasing 8% compared to ClientConnect's revenues
of $85.6 million in the fourth quarter of 2013. Non-GAAP revenues
in the fourth quarter of 2014 included $0.6 million of deferred
product revenues, which in accordance with GAAP were recorded at
fair value on the acquisition date. In the fourth quarter of 2013,
non-GAAP revenues included $1.5 million revenues, which in the GAAP
report were associated with discontinued operations.
Customer Acquisition Costs (“CAC”): In the fourth quarter
of 2014, Perion decreased its investment in CAC to $29.0 million,
representing 37% of revenues, compared to $53.6 million, or 63% of
revenues at ClientConnect in the fourth quarter of 2013.
Costs and Expenses: Excluding CAC, costs and expenses in
the fourth quarter of 2014 were $25.3 million, or 32% of revenues,
compared to $21.0 million, or 25% of revenues, at ClientConnect in
the fourth quarter of 2013. Non-GAAP costs and expenses in the
fourth quarter of 2014 excluded $19.9 million impairment charges,
$5.0 million amortization of acquired intangible assets, $4.0
million restructuring costs, $2.2 million of share based
compensation expenses and $0.8 million of acquisition related
expenses, all of which were included in the GAAP numbers. In the
fourth quarter of 2013, non-GAAP costs and expenses excluded $4.0
million of share based compensation expenses and $2.1 million of
acquisition related expenses, and included activities of $7.6
million which were excluded from the GAAP costs and expenses as
they were associated with discontinued operations.
Adjusted EBITDA: In the fourth quarter of 2014, adjusted
EBITDA increased by 115%, to $25.2 million, or 32% of revenues,
compared to $11.7 million, or 14% of revenues, at ClientConnect in
the same quarter last year.
Net Income: In the fourth quarter of 2014, net income was
$20.0 million, or 25% of revenues, increasing 60% from $12.5
million at ClientConnect in the fourth quarter of 2013.
Non-GAAP Financial Comparison for the Year ended December 31,
2014:
Revenues: In 2014, revenues were $394.2 million,
increasing 20% compared to ClientConnect's revenues of $328.5
million in 2013. Non-GAAP revenues in 2014 include $5.5 million of
deferred product revenues, which in accordance with GAAP were
recorded at fair value on the acquisition date. In 2013, non-GAAP
revenues included $3.0 million of revenues which in the GAAP report
were associated with discontinued operations.
Customer Acquisition Costs (“CAC”): In 2014, Perion
decreased its investment in CAC to $174.6 million, representing 44%
of revenues, compared to ClientConnect's $185.4 million in
2013.
Costs and Expenses: Excluding CAC, costs and expenses in
2014 were $96.0 million, or 24% of revenues, compared to $76.8
million, or 23% of revenues, at ClientConnect in 2013. Non-GAAP
costs and expenses in 2014 excluded $19.9 million impairment
charges, $18.7 million amortization of acquired intangible assets,
$14.9 million of share based compensation expenses, $5.2 million of
acquisition related expenses and $4.0 million restructuring costs,
all of which were included in the GAAP numbers. In 2013, non-GAAP
costs and expenses excluded $13.2 million of share based
compensation expenses, $2.2 million impairment charges and $2.1
million of acquisition related expenses, and included activities of
$36.3 million which were excluded from the GAAP costs and expenses
as they were associated with discontinued operations.
Adjusted EBITDA: In 2014, adjusted EBITDA increased by
83%, to $126.3 million, or 32% of revenues, compared to $69.0
million, or 21% of revenues, at ClientConnect in 2013.
Net Income: In 2014, net income was $101.6 million, or
26% of revenues, increasing 75% from $57.9 million at ClientConnect
in 2013.
Cash and Cash Flow from Operations:
As of December 31, 2014, cash, cash equivalents and short-term
deposits, were $116.2 million, including $37.3 million of net
proceeds from the issuance of long-term convertible debt. Perion
currently satisfies all of the financial covenants associated with
the bonds. Cash Flow from operations in 2014 was $72.0 million.
Financial Outlook for First Quarter of 2015:
As required by US GAAP, Perion will be reporting more of its
revenue on a net revenue basis to reflect a shift in its business
model both in search and mobile. This reporting requirement will
lower expected revenues in the first quarter by approximately $7 -
$10 million. It is also worth noting that adjusted EBITDA and Net
Income will not be affected.
With that in mind, management today announced its financial
outlook for the first quarter of 2015 as follows:
- Revenue is expected to be in the range
of $50 - $53 million.
- Adjusted EBITDA is expected to be in
the range of $13 - $15 million.
- Non-GAAP Net Income is expected to be
in the range of $9 - $11 million.
Conference Call
Perion will host a conference call to discuss the results today,
February 25, 2015, at 10 a.m. ET. Details are as follows:
- Conference ID: 7132630
- Dial-in number from within the United
States: 1-888-359-3627
- Dial-in number from Israel:
1-809-245-906
- Dial-in number (other international):
1-719-457-2664
- Playback available until March 4, 2015
by calling 1-877-870-5176 (United States) or 1-858-384-5517
(international). Please use pin number 7132630 for the replay.
- Live webcast accessible at
http://www.perion.com/events/
About Perion Network Ltd.
Perion powers innovation. Perion is a global performance-based
media and Internet company, providing online publishers and app
developers advanced technology and a variety of intelligent,
data-driven solutions to monetize their application or content and
expand their reach to larger audiences, based on its own experience
as an app developer. Our leading software monetization platform,
Perion Codefuel, empowers digital businesses to optimize installs,
analyze data and maximize revenue. Our app promotion platform,
GrowMobile, enables developers to make wise decisions on where to
spend advertising budgets to produce the highest yield and the most
visibility. The Perion team brings decades of experience, operating
and investing in digitally-enabled businesses, and we continue to
innovate and create value for the app ecosystem. More information
about Perion may be found at www.perion.com. Follow Perion on
Twitter @perionnetwork.
Non-GAAP measures
Non-GAAP financial measures, as well as adjusted EBITDA, consist
of GAAP financial measures adjusted to include the results of
discontinued operations, and to exclude restructuring costs,
acquisition related expenses, share-based compensation expenses,
accretion of payment obligation related to acquisitions,
amortization of acquired intangible assets and related taxes,
impairment charges and related taxes, 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. 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.
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.
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 the
Company with the Securities and Exchange Commission from time to
time, including its annual report on Form 20-F for the year ended
December 31, 2013 and the report on Form 6-K filed with the SEC on
September 23, 2014. Perion does not assume any obligation to update
these forward-looking statements.
Source: Perion Network Ltd.
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
U.S. dollars in thousands (except per
share data)
Three months ended
Year ended December 31, December 31,
2013
2014
2013 2014 Unaudited Audited
Unaudited Revenues: Search $ 71,113 $ 68,101 $
277,275 $ 330,757 Advertising and other 13,016
9,987 48,233 57,974
Total
Revenues
84,129
78,088 325,508
388,731 Costs and Expenses: Cost
of revenues 1,686 7,327 6,104 27,817 Customer acquisition costs
53,628 29,027 185,355 174,575 Research and development 6,621 9,297
22,394 44,129 Selling and marketing 3,001 7,262 10,298 25,388
General and administrative 8,142 9,413 19,115 37,605 Impairment and
restructuring charges - 23,922 -
23,922
Total Costs and Expenses
73,078 86,248
243,266 333,436 Income
(loss) from Operations 11,051 (8,160 )
82,242 55,295 Financial income (expense), net
768 (982 ) 2,782 (2,888 )
Income (loss) before Taxes on Income 11,819
(9,142 ) 85,024 52,407 Taxes on income
55 1,257 (22,616 ) (9,581
)
Net Income (loss) from Continuing Operations
11,874 (7,885 ) 62,408 42,826
Net loss from discontinued operations (5,483 ) -
(33,795 ) -
Net Income
(Loss) $ 6,391 $ (7,885
) $ 28,613 $ 42,826
Net Earnings (Loss) per Share - Basic:
Continuing operations $ 0.22 $ (0.11 ) $ 1.16 $ 0.63
Discontinued operations $ (0.10 ) - $ (0.63 )
-
Net Earnings (Loss) per Share –
Diluted: Continuing operations $ 0.22 $ (0.13 ) $ 1.14
$ 0.58 Discontinued operations $ (0.10 ) -
$ (0.63 ) -
Number of shares –
Basic: Continuing and discontinued operations 53,917
69,160 53,911 68,213
Number of shares – Diluted: Continuing
operations 54,843 73,430 54,955
70,327 Discontinued operations 53,917
- 53,911 -
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
U.S. dollars in thousands
December 31, December 31,
2013 2014 Audited Unaudited
ASSETS Current Assets: Cash and cash equivalents $
949 $ 101,183 Restricted cash - 696 Short term bank deposit -
15,000 Accounts receivable, net - 30,808 Other current assets
400 11,468 Total Current Assets 1,349 159,155
Non-current Assets: Property and equipment, net 2,189 12,180
Intangible assets, net - 16,890 Goodwill 27,520 164,092 Other
assets - 3,822
Total Assets $
31,058 $
356,139 LIABILITIES AND
SHAREHOLDERS' EQUITY Current Liabilities: Accounts
payable (includes $12,823 payable to Perion Network Ltd. at
December 31, 2013) $ 13,358 $ 21,173 Accrued expenses and other
liabilities 1,423 26,241 Current maturities of long-term debt -
2,300 Deferred revenues 6,250 7,323 Payment obligation related to
acquisitions - 8,587 Total Current Liabilities 21,031
65,624 Non-current Liabilities: Long-term debt, net of current
maturities - 1,950 Long-term convertible debt - 35,752 Long-term
payment obligation related to acquisitions - 5,058 Other long-term
liabilities - 1,758 Total Liabilities 21,031
110,142 Shareholders' equity: Ordinary shares 147 189
Additional paid-in capital 9,880 202,982 Retained earnings -
42,826 Total Shareholders' Equity 10,027
245,997
Total Liabilities and Shareholders' Equity $
31,058 $
356,139
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
U.S. dollars in thousands
Year ended December 31, 2013
2014 Audited Unaudited
Operating
activities:
Net income $ 28,613 $ 42,826 Loss from discontinued operations, net
(33,795 ) - Income from continuing operations
62,408 42,826 Adjustments required to reconcile net
income to net cash provided by operating activities: Depreciation
and amortization 2,110 21,413 Impairment of intangible assets -
19,941 Restructuring costs related to impairment of property and
equipment - 632 Stock based compensation expense 10,405 15,145
Acquisition related expenses paid by shareholders - 3,060 Accrued
interest, net 1,170 655 Deferred taxes, net - (13,851 ) Accrued
severance pay, net 24 392 Change in payment obligation related to
acquisition - 1,780 Fair value revaluation - convertible debt -
(2,566 ) Capital loss from sale of property and equipment - 121 Net
changes in operating assets and liabilities 9,174
(17,506 ) Net cash provided by continuing operating
activities 85,291 72,042 Net cash used in discontinued operating
activities (23,939 ) -
Net cash provided by
operating activities $ 61,352 $
72,042
Investing
activities:
Purchases of property and equipment $ (1,916 ) $ (10,882 ) Proceeds
from sale of property and equipment - 58 Restricted cash, net -
(202 ) Investments in short-term deposits, net (75,957 ) (15,000 )
Cash used for acquisition - (4,322 ) Cash acquired through
acquisition - 23,364 Net cash used in
continuing investing activities (77,873 ) (6,984 ) Net cash
provided by discontinued investing activities 898
-
Net cash used in investing activities
$ (76,975 ) $ (6,984 )
Financing
activities:
Dividend upon consummation of spin-off $ (65,009 ) - Exercise of
stock options 850 1,584 Contribution by shareholders - 585 Deferred
payment made in connection with acquisition - (2,545 ) Proceeds
from the issuance of convertible debt - 37,852 Repayment of
long-term debt - (2,300 )
Net cash provided
by (used in) continuing financing activities $
(64,159 ) $ 35,176 Net
increase (decrease) in cash and cash equivalents (79,782
) 100,234 Decrease in cash and cash equivalents -
discontinued operations 2,336 - Cash and cash equivalents at
beginning of year 78,395 949
Cash
and cash equivalents at end of year $ 949
$ 101,183
PERION NETWORK LTD.
RECONCILIATION OF GAAP TO NON-GAAP
RESULTS (UNAUDITED)
U.S. dollars and number of shares in
thousands (except per share data)
Three months ended Year ended
December 31, December 31, 2013
2014 2013 2014
GAAP revenues $ 84,129 $
78,088 $ 325,508 $ 388,731
Revenues from discontinued operations 1,468 - 3,016 -
Valuation adjustment on acquired deferred
product revenues
- 595 - 5,500
Non-GAAP revenues $ 85,597
$ 78,683 $ 328,524
$ 394,231 GAAP costs and
expenses $ 73,078 $ 86,248 $
243,266 $ 333,436 Acquisition related expenses
(2,077 ) (809 ) (2,077 ) (5,238 ) Discontinued operations operating
expenses 7,613 - 36,349 - Share based compensation (4,010 ) (2,246
) (13,220 ) (14,925 ) Amortization of acquired intangible assets -
(4,969 ) - (18,739 ) Impairment charges - (19,941 ) (2,177 )
(19,941 ) Restructuring costs - (3,981 )
- (3,981 )
Non-GAAP costs and expenses
$ 74,604 $ 54,302
$ 262,141 $ 270,612
GAAP net income (loss) $ 6,391 $
(7,885 ) $ 28,613 $
42,826 Valuation adjustment on acquired deferred product
revenues - 595 - 5,500 Acquisition related expenses 2,077 809 2,077
5,238 Share based compensation 4,010 2,246 13,220 14,925
Amortization of acquired intangible assets - 4,969 - 18,739
Impairment charges - 19,941 2,177 19,941 Restructuring costs -
3,981 - 3,981 Fair value revaluation of convertible debt and
related derivative - (2,200 ) - (2,784 ) Non-recurring tax expense
(benefit) - - 11,838 (2,320 ) Accretion of payment obligation
related to acquisitions - 615 - 1,067 Taxes related to amortization
of acquired intangible assets and impairment charges -
(3,121 ) - (5,524 )
Non-GAAP
net income $ 12,478 $ 19,950
$ 57,925 $ 101,589
Non-GAAP net income $ 12,478 $
19,950 $ 57,925 $ 101,589 Income
tax (benefit) expense (55 ) 1,864 10,778 17,425 Financial (income)
expense, net (768 ) 2,567 (2,782 ) 4,605 Depreciation 733 803 2,570
2,674 Discontinued financial income, net - - (106 ) - Discontinued
tax (benefit) expense (662 ) - 568
-
Adjusted EBITDA $
11,726 $ 25,184 $
68,953 $ 126,293
Non-GAAP diluted earnings per share $
0.23
$ 0.27 $ 1.05 $ 1.44
Shares used in computing non-GAAP diluted earnings per share
54,843 73,741 54,955 70,327
Perion Network Ltd.Deborah Margalit,
+972-73-398-1600investors@perion.comorSolebury Communications
GroupJamie Lillis, +1-203-428-3223jlillis@soleburyir.com
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