Third Quarter 2019
Highlights:
- Total Revenues of $65.8 million, increased 15%
year-over-year;
- GAAP Net Income of $2.9 million, increased 31%
year-over-year;
- GAAP Earnings Per Share of $0.11, increased 38%
year-over-year;
- Net cash from operations were $11.1 million, increased 1%
year-over-year;
- Management is reaffirming its full-year guidance for Adjusted
EBITDA of $25-27 million and now expects to reach or exceed the top
end of the range.
Perion Network Ltd. (NASDAQ: PERI), a global technology company
that delivers Synchronized Digital Branding solutions across the
three main pillars of digital advertising - Ad Search, Social media
and Display / Video, announced today its financial results for the
third quarter and nine months ended September 30, 2019.
Financial Highlights*
(In millions, except per share data)
Three months ended
Nine months ended
September 30,
September 30,
2019
2018
2019
2018
Advertising revenues
$
21.6
$
26.2
$
61.4
$
88.7
Search and other revenues
$
44.2
$
31.0
$
121.8
$
92.2
Total Revenues
$
65.8
$
57.2
$
183.2
$
180.9
GAAP Net Income
$
2.9
$
2.2
$
7.0
$
3.2
Non-GAAP Net Income
$
5.0
$
4.3
$
12.8
$
12.0
Adjusted EBITDA
$
7.6
$
6.7
$
20.2
$
18.1
Net cash provided by operating
activities
$
11.1
$
11.0
$
33.5
$
28.5
GAAP Diluted Earnings Per Share
$
0.11
$
0.08
$
0.27
$
0.13
Non-GAAP Diluted Earnings Per Share
$
0.18
$
0.16
$
0.49
$
0.44
* Reconciliation of GAAP to Non-GAAP measures follows.
Doron Gerstel, Perion’s CEO commented, “The financial results of
the third quarter are a direct result of the strategic investments
in technology we have made to enhance and align our offering with
the needs of our customers. By providing a diverse suite of
solutions that span display, search and social, Perion is uniquely
positioned to capitalize on opportunities as brands and agencies
shift their ad budgets holistically across different platforms and
channels to maximize their digital strategy objectives. In doing
so, we have achieved our second consecutive quarter of
year-over-year revenue growth while leveraging our strong earnings
power and robust to generate cash. Our cash position improved
significantly during the third quarter amounting to $52 million a
Net cash balance of $33 million providing the company with the
flexibility for future growth opportunities.”
Gerstel continued, “Leveraging new capabilities and offerings in
Search, we are attracting new publishers, driving an increasing
number of unique searchers to Bing through our partnership with
Microsoft and better optimizing the monetization of this traffic,
which is driving higher earnings and cash flow to Perion.”
“In parallel, we are advancing ongoing efforts at Undertone to
expand and enhance the technological capabilities of our
Synchronized Digital Branding solution,” Gerstel added. “Our
Synchronized Digital Branding solution is resonating with our
customers because they recognize the need to deliver strategically
targeted ads, across the entire consumer journey across multiple
channels and platforms. We are offering AI-optimized tools and
workflow management to make this possible. Our development efforts
to scale this offering are progressing as planned, and we remain on
track to formally launch a full, new product suite in the first
half of next year.”
Financial Comparison for the Third Quarter of 2019:
Revenues: Revenues increased by 15%, from $57.2 million
in the third quarter of 2018 to $65.8 million in the third quarter
of 2019. This increase was primarily a result of a 43% increase in
Search and other revenues as a result of additional new publishers,
higher RPMs and an increased number of unique searches. Advertising
revenues decreased by 18% as a result of the continuing transition
from selling formats to an integrated solution, Perion’s gross
margin in the Advertising business continues to grow year over year
as the Company continued to prioritize margins over short-term
sales.
Customer Acquisition Costs and Media Buy (“CAC”): CAC in
the third quarter of 2019 were $34.2 million, or 52% of revenues,
as compared to $28.8 million, or 50% of revenues in the third
quarter of 2018.
Net Income: On a GAAP basis, net income in the third
quarter of 2019 was $2.9 million, as compared to a net income of
$2.2 million in the third quarter of 2018.
Non-GAAP Net Income: In the third quarter of 2019,
non-GAAP net income was $5.0 million, or 8% of revenues, compared
to the $4.3 million, or 8% of revenues, in the third quarter of
2018. A reconciliation of GAAP to non-GAAP net income is included
in this press release.
Adjusted EBITDA: In the third quarter of 2019, Adjusted
EBITDA was $7.6 million, or 12% of revenues, compared to $6.7
million, or 12% of revenues, in the third quarter of 2018. A
reconciliation of GAAP to Adjusted EBITDA is included in this press
release.
Cash and Cash Flow from Operations: As of September 30,
2019, cash and cash equivalents and Short-term bank deposit were
$52.0 million. Cash provided by operations in the third quarter of
2019 was $11.1 million, compared to $11.0 million in the third
quarter of 2018.
Short-term Debt, Long-term Debt and Convertible Debt: As
of September 30, 2019, total debt was $18.8 million, compared to
$40.5 million at December 31, 2018.
2019 Guidance
Management is reaffirming its full-year guidance for Adjusted
EBITDA of $25-27 million and now expects to reach or exceed the top
end of the range.
Conference Call:
Perion will host a conference call to discuss the results today,
November 6, 2019, at 8:30 a.m. ET. Details are as follows:
- Conference ID: 6975750
- Dial-in number from within the United States:
1-800-239-9838
- Dial-in number from Israel: 1-809-212-883
- Dial-in number (other international): 1-323-794-2551
- Playback available until November 13, 2019 by calling
1-844-512-2921 (United States) or 1-412-317-6671 (international).
Please use PIN code 6975750 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 provides agencies,
brands and publishers with innovative solutions that cover the
three pillars of digital advertising. From its data-driven
Synchronized Digital Branding platform and high-impact ad formats
in the display domain; to its powerful social media platform; to
its branded search network, Perion is well-positioned to capitalize
on any changes in marketers’ allocation of digital advertising
spend. More information about Perion can be found at
www.perion.com.
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 expenses, foreign exchange gains (losses) associated
with ASC-842, 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, 2018 filed with the SEC on March 19, 2019. 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
OPERATIONS
In thousands (except share and per share data)
Three months ended
Nine months ended
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Revenues:
Advertising
$
21,552
$
26,224
$
61,436
$
88,725
Search and other
44,225
30,957
121,757
92,158
Total Revenues
65,777
57,181
183,193
180,883
Costs and Expenses:
Cost of revenues
6,819
5,474
18,653
17,341
Customer acquisition costs and media
buy
34,170
28,808
94,778
91,798
Research and development
5,976
4,341
16,448
14,563
Selling and marketing
8,649
8,635
25,641
28,417
General and administrative
3,562
3,883
10,039
13,050
Depreciation and amortization
2,628
2,528
7,304
7,090
Restructuring costs
-
-
-
2,075
Total Costs and Expenses
61,804
53,669
172,863
174,334
Income from Operations
3,973
3,512
10,330
6,549
Financial expense, net
419
1,236
2,733
3,042
Income before Taxes on income
3,554
2,276
7,597
3,507
Taxes on income
680
84
591
272
Net Income
$
2,874
$
2,192
$
7,006
$
3,235
Net Earnings per Share
Basic
$
0.11
$
0.08
$
0.27
$
0.13
Diluted
$
0.11
$
0.08
$
0.27
$
0.13
Weighted average number of
shares
Basic
25,966,097
25,850,188
25,915,134
25,850,188
Diluted
26,895,407
26,420,782
26,054,203
26,516,145
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
In thousands
September 30,
December 31,
2019
2018
Unaudited
Audited
ASSETS
Current Assets:
Cash and cash equivalents
$
35,484
$
39,109
Restricted cash
1,211
1,694
Short-term bank deposit
16,550
4,000
Accounts receivable, net
39,502
55,557
Prepaid expenses and other current
assets
3,181
3,533
Total Current Assets
95,928
103,893
Property and equipment, net
12,155
15,649
Operating lease right-of-use assets
23,406
-
Goodwill and intangible assets, net
129,482
131,547
Deferred taxes
5,622
4,414
Other assets
736
943
Total Assets
$
267,329
$
256,446
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$
40,466
$
38,208
Accrued expenses and other liabilities
15,849
17,240
Short-term operating lease liability
3,090
-
Short-term loans and current maturities of
long-term and Convertible debt
8,333
16,059
Deferred revenues
3,183
3,794
Short-term payment obligation related to
acquisitions
686
1,813
Total Current Liabilities
71,607
77,114
Long-Term Liabilities:
Long-term debt, net of current
maturities
10,417
16,667
Convertible debt, net of current
maturities
-
7,726
Long-term operating lease liability
21,547
-
Other long-term liabilities
5,773
6,158
Total Liabilities
109,344
107,665
Shareholders' equity:
Ordinary shares
212
211
Additional paid-in capital
241,996
239,693
Treasury shares at cost
(1,002)
(1,002)
Accumulated other comprehensive gain
36
142
Accumulated deficit
(83,257)
(90,263)
Total Shareholders' Equity
157,985
148,781
Total Liabilities and Shareholders'
Equity
$
267,329
$
256,446
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
In thousands
Three months ended September
30,
Nine months ended September
30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Operating
activities:
Net Income
$
2,874
$
2,192
$
7,006
$
3,235
Adjustments required to reconcile net
income to net cash provided by operating activities:
Depreciation and amortization
2,628
2,528
7,304
7,090
Stock based compensation expense
678
638
1,601
2,121
Foreign currency translation
(103)
-
(109)
12
Accrued interest, net
-
134
(203)
357
Deferred taxes, net
(363)
100
(1,223)
91
Accrued severance pay, net
179
(4)
(39)
(749)
Fair value revaluation - convertible
debt
-
251
600
(741)
Restructuring costs related to impairment
of property and equipment
-
-
-
462
Net changes in operating assets and
liabilities
5,254
5,165
18,600
16,580
Net cash provided by operating
activities
$
11,147
$
11,004
$
33,537
$
28,458
Investing
activities:
Purchases of property and equipment
$
(248)
$
(1,302)
$
(589)
$
(1,350)
Capitalization of development costs
-
(330)
-
(1,449)
Short-term deposits, net
(10,550)
-
(12,550)
5,913
Cash paid in connection with acquisitions,
net of cash acquired
-
(1,667)
(1,200)
(1,667)
Net cash provided (used) by investing
activities
$
(10,798)
$
(3,299)
$
(14,339)
$
1,447
Financing
activities:
Exercise of stock options and restricted share units
574
-
703
-
Payment made in connection with
acquisition
-
-
(1,813)
-
Repayment of convertible debt
-
-
(15,850)
(8,167)
Repayment of long-term loans
(2,083)
(1,491)
(6,249)
(12,473)
Net cash used in financing
activities
$
(1,509)
$
(1,491)
$
(23,209)
$
(20,640)
Effect of exchange rate changes on cash
and cash equivalents and restricted cash
5
-
(97)
44
Net increase (decrease) in cash and
cash equivalents and restricted cash
(1,155)
6,214
(4,108)
9,309
Cash and cash equivalents and restricted
cash at beginning of period
37,850
35,850
40,803
32,755
Cash and cash equivalents and
restricted cash at end of period
$
36,695
$
42,064
$
36,695
$
42,064
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
RESULTS
In thousands (except share and per
share data)
Three months ended
Nine months ended
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
GAAP Net Income
$
2,874
$
2,192
$
7,006
$
3,235
Share based compensation
678
638
1,601
2,121
Amortization of acquired intangible
assets
1,139
1,190
3,233
3,591
Non-recurring fees (Expenses related to
M&A activity)
339
-
943
226
Restructuring costs
-
-
-
2,075
Fair value revaluation of convertible debt
and related derivative
-
269
89
1,063
Foreign exchange losses associated with
ASC-842
205
-
653
-
Taxes on the above items
(219)
25
(748)
(313)
Non-GAAP Net Income
$
5,016
$
4,314
$
12,777
$
11,998
Non-GAAP Net Income
$
5,016
$
4,314
$
12,777
$
11,998
Taxes on income
899
59
1,339
585
Financial expense, net
214
967
1,991
1,979
Depreciation
1,489
1,338
4,071
3,499
Adjusted EBITDA
$
7,618
$
6,678
$
20,178
$
18,061
Non-GAAP diluted earnings per
share
$
0.18
$
0.16
$
0.49
$
0.44
Shares used in computing non-GAAP
diluted earnings per share
27,148,738
26,420,621
26,225,689
26,213,492
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191106005439/en/
Perion Network Ltd. Rami Rozen, VP of Investor Relations
+972 (52) 5694441 ramir@perion.com
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