Display and Social Advertising achieved 69%
annual revenue growth, propelled by new interactive Connected
Television (iCTV) offering and Content Monetization solution
GAAP Net Income increased by 53% YOY during the
fourth quarter to $9M
Perion Network Ltd. (NASDAQ: PERI), a global advertising
technology company that delivers its Synchronized Digital Branding
solution across the three main pillars of digital advertising – ad
search, social media and display / video / CTV advertising –
announced today its financial results for the fourth quarter and
twelve months ended December 31, 2020.
Fourth Quarter 2020
Highlights
- Revenues were $118.3 million, a 51% increase year over
year;
- Display and social advertising revenues were $68.4 million, a
159% increase year over year;
- CTV revenues were $6.5 million, 132% increase from previous
quarter;
- Search advertising and other revenues were $49.9 million, a 4%
decrease year over year;
- Average Daily Traffic Search achieved the highest level of
15.7M, 32% increase year over year;
- In the fourth quarter of 2020, GAAP SG&A was 13% of
revenues, compared to the 18% of revenues in the fourth quarter of
2019;
- Net cash provided by operating activities were $12.8M, a 14%
increase year over year.
Fourth Quarter and Full Year 2020 Results Summary*
(In millions, except per share data)
Three months ended
Year ended
December 31,
December 31,
2020
2019
%
2020
2019
%
Display and Social Advertising
revenues
$
68.4
$
26.4
+159%
$
148.7
$
87.9
+69%
Search Advertising and other
revenues
$
49.9
$
51.8
-4%
$
179.4
$
173.6
+3%
Total Revenues
$
118.3
$
78.3
+51%
$
328.1
$
261.5
+25%
GAAP Net Income
$
9.0
$
5.9
+53%
$
10.2
$
12.9
-21%
Non-GAAP Net Income
$
13.8
$
8.9
+56%
$
26.6
$
21.6
+23%
Adjusted EBITDA
$
15.3
$
12.2
+26%
$
32.8
$
32.4
+1%
Net cash provided by operating
activities
$
12.8
$
11.2
+14%
$
22.0
$
44.7
-51%
GAAP Diluted Earnings Per
Share
$
0.30
$
0.22
+36%
$
0.36
$
0.49
-27%
Non-GAAP Diluted Earnings Per
Share
$
0.45
$
0.32
+41%
$
0.91
$
0.83
+10%
* Reconciliation of GAAP to Non-GAAP measures follows.
Doron Gerstel, Perion’s CEO, commented, “Perion closed 2020
delivering strong revenues and earnings that well exceeded our 2019
results. The effectiveness of our content monetization engine as a
holistic, one-stop solution for brands and agencies, and the
acceleration of our Connected TV advertising offering, were the
main factors behind 25% revenue growth for the full year. Despite
that travel advertisers that traditionally contribute 15% or $10
million in revenues in 2019 dramatically reduced their digital ad
spend, we continued to drive healthy growth thanks to our
diversification strategy, allowing us to capitalize on any shifting
budget between the three main pillars of digital advertising:
display, search and social.”
“During the fourth quarter, we renewed and expanded our
strategic partnership with Microsoft Bing for an additional four
years,” Gerstel added. “The continuing collaboration with Microsoft
is a significant factor in Perion’s multi-year strategic plan to
achieve sustainable and highly profitable double-digit annual
revenue growth, with a desired target of $500 million in annual
revenue by 2023.”
“We enter 2021 in a strong position,” Gerstel concluded. “In
January, we completed a follow-on public offering, which was both
upsized and oversubscribed, generating net proceeds of more than
$61 million. This successful transaction further solidifies our
balance sheet and better positions Perion to capitalize on the
growth opportunities in front of us as we prudently evaluate
accretive and synergistic acquisitions to bolster our content
monetization platform, expand our technology moat, and that are
capable of driving predictable and profitable growth.”
Financial Comparison for the Fourth Quarter of 2020
Revenues: Revenues increased by 51%, from $78.3 million
in the fourth quarter of 2019 to $118.3 million in the fourth
quarter of 2020. This increase was primarily attributable to a 159%
increase in Display and Social Advertising revenues, resulting from
the acceleration of our Connected TV advertising offering and the
contribution of our content monetization offering. Search
Advertising and other revenues decreased by 4% as a result of lower
RPMs, partially offset by growth in number of daily searches.
Customer Acquisition Costs and Media Buy (“CAC”): CAC in
the fourth quarter of 2020 were $74.8 million, or 63% of revenues,
compared to $41.1 million, or 53% of revenues, in the fourth
quarter of 2019. The increase as a percentage of revenues is
primarily due to the acquisitions of Content IQ and Pub Ocean as
well as product mix.
Net Income: In the fourth quarter of 2020, GAAP net
income was $9.0 million, or 8% of revenues, compared to the $5.9
million, or 8% of revenues in the fourth quarter of 2019.
Non-GAAP Net Income: In the fourth quarter of 2020,
non-GAAP net income was $13.8 million, or 12% of revenues, compared
to the $8.9 million, or 11% of revenues in the fourth quarter of
2019. A reconciliation of GAAP to non-GAAP net income is included
in this press release.
Adjusted EBITDA: In the fourth quarter of 2020, Adjusted
EBITDA was $15.3 million, or 13% of revenues, compared to $12.2
million, or 16% of revenues, in the fourth quarter of 2019. A
reconciliation of GAAP Net Income to Adjusted EBITDA is included in
this press release.
Cash and Cash Flow from Operations: As of December 31,
2020, cash and cash equivalents and short-term bank deposits were
$60.4 million. Cash provided from operations in the fourth quarter
of 2020 was $12.8 million, compared to $11.2 million in the fourth
quarter of 2019.
Short-Term Debt, Long-term Debt: As of December 31, 2020,
total debt was $8.3 million, compared to $22.9 million at September
30, 2020 and $16.7 million at December 31, 2019. During the fourth
quarter of 2020, the Company returned $12.5 million drawn during
the third quarter of 2020 out of its secured credit line and made
scheduled paydown of $2.1 million of its credit facility
balance.
Financial Comparison for the full year of 2020
Revenues: Revenues increased by 25%, from $261.5 million
in 2019 to $328.1 million in 2020. This increase was driven by 69%
growth in Display and Social Advertising primarily resulting from
the acceleration of our Connected TV advertising offering and the
contribution of our content monetization offering. Search
Advertising and other revenues increased by 3% due to a higher
number of daily searches partially offset by lower RPMs.
Customer Acquisition Costs and Media Buy
(“CAC”): CAC in 2020 were $197.6
million, or 60% of revenues, as compared to $135.9 million, or 52%
of revenues, in 2019. The increase as a percentage of revenues is
primarily due to the acquisitions of Content IQ and Pub Ocean as
well as product mix.
Net Income: During 2020, GAAP net income was $10.2
million, or 3% of revenues, compared to the $12.9 million, or 5% of
revenues in 2019.
Non-GAAP Net Income: During 2020, Non-GAAP net income was
$26.6 million, or 8% of revenues, compared to the $21.6 million, or
8% of revenues in 2019.
Adjusted EBITDA: In 2020, Adjusted EBITDA was $32.8
million, or 10% of revenues, compared to $32.4 million, or 12% of
revenues in 2019.
Cash Flow from Operations: Cash provided from operations
in 2020 decreased by 51%, from $44.7 million in 2019 to $22.0
million in 2020, the primary reason for the decrease compared to
the prior year is mainly due to working capital needs of
approximately $10 million in connection with the acquisitions of
CIQ and Pub Ocean.
Outlook
In 2021, management expects to generate revenue of $350 to $370
million and Adjusted EBITDA of $35 million to $37 million. The
mid-point of the guidance range reflects 10% growth and 10%
Adjusted EBITDA margin.
Conference Call
Perion will host a conference call to discuss the results today,
Tuesday, February 9, 2021 at 8:30 a.m. ET. Details are as
follows:
- Conference ID: 7553088
- Dial-in number from within the United States: 1-
888-394-8218
- Dial-in number from Israel: 1809 212 883
- Dial-in number (other international): 1- 323-701-0225
- Playback available until Tuesday, February 16, 2021 by calling
1-844-512-2921 (United States) or 1-412-317-6671 (international).
Please use PIN code 7553088 for the replay
- Link to the live webcast accessible at
http://public.viavid.com/index.php?id=142903
About Perion Network Ltd. Perion is a global technology
company that delivers strategic business solutions that enable
brands and advertisers to efficiently “Capture and Convince” users
across multiple platforms and channels, including interactive
connected television – or iCTV. Perion achieves this through its
Synchronized Digital Branding capabilities, which are focused on
high impact creative; content monetization; its branded search
network, in partnership with Microsoft Bing; and social media
management that orchestrates and optimizes paid advertising. This
diversification positions Perion for growth as budgets shift across
categories.
Non-GAAP measures Non-GAAP financial measures consist of
GAAP financial measures adjusted to exclude share-based
compensation expenses, retention and acquisition related expenses,
revaluation of acquisition related contingent consideration,
amortization of acquired intangible assets and the related taxes
thereon, non-recurring expenses, foreign exchange gains (losses)
associated with ASC-842, as well as changes in fair value of
earnout contingent consideration. 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, acquisition
related items consisting of amortization of intangible assets and
goodwill, acquisition related expenses, gains and losses recognized
on changes in the fair value of contingent consideration
arrangements.
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, 2019 filed with the SEC on March 16, 2020. 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
Year ended
December 31,
December 31,
2020
2019
2020
2019
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Revenues:
Display and Social
Advertising
$ 68,400
$ 26,427
$ 148,698
$ 87,863
Search Advertising and other
49,856
51,830
179,365
173,587
Total Revenues
118,256
78,257
328,063
261,450
Costs and Expenses:
Cost of revenues
6,539
6,867
22,477
25,520
Customer acquisition costs and
media buy
74,809
41,113
197,626
135,891
Research and development
8,480
6,137
30,880
22,585
Selling and marketing
11,717
9,095
39,085
34,736
General and administrative
4,060
4,960
15,819
14,999
Depreciation and amortization
2,675
2,407
9,923
9,711
Total Costs and
Expenses
108,280
70,579
315,810
243,442
Income from Operations
9,976
7,678
12,253
18,008
Financial expense, net
1,446
737
2,638
3,470
Income before Taxes on
income
8,530
6,941
9,615
14,538
Taxes on income (benefit)
(472)
1,054
(610)
1,645
Net Income
$ 9,002
$ 5,887
$ 10,225
$ 12,893
Net Earnings per Share
Basic
$ 0.33
$ 0.23
$ 0.38
$ 0.50
Diluted
$ 0.30
$ 0.22
$ 0.36
$ 0.49
Weighted average number of
shares
Basic
26,946,060
26,115,057
26,687,145
25,965,357
Diluted
29,961,648
27,288,364
28,797,747
26,357,585
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
December 31,
December 31,
2020
2019
(Unaudited)
(Audited)
ASSETS
Current Assets:
Cash and cash equivalents
$ 47,656
$ 38,389
Restricted cash
1,222
1,216
Short-term bank deposits
12,700
23,234
Accounts receivable, net
81,221
49,098
Prepaid expenses and other
current assets
4,560
3,170
Total Current Assets
147,359
115,107
Long-Term Assets:
Property and equipment, net
6,770
10,918
Operating lease right-of-use
assets
20,266
22,429
Goodwill and intangible assets,
net
176,679
128,444
Deferred taxes
7,111
6,171
Other assets
496
708
Total Long-Term Assets
211,322
168,670
Total Assets
$ 358,681
$ 283,777
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$ 72,498
$ 47,681
Accrued expenses and other
liabilities
21,188
18,414
Short-term operating lease
liability
4,514
3,667
Short-term loans and current
maturities of long-term loans
8,333
8,333
Deferred revenues
5,711
4,188
Short-term payment obligation
related to acquisitions
7,869
1,025
Total Current
Liabilities
120,113
83,308
Long-Term Liabilities:
Long-term loans, net of current
maturities
-
8,333
Payment obligation related to
acquisition
30,035
-
Long-term operating lease
liability
17,698
20,363
Other long-term liabilities
6,713
6,591
Total Long-Term
Liabilities
54,446
35,287
Total Liabilities
174,559
118,595
Shareholders' equity:
Ordinary shares
224
213
Additional paid-in capital
251,933
243,211
Treasury shares at cost
(1,002)
(1,002)
Accumulated other comprehensive
gain
112
130
Accumulated deficit
(67,145)
(77,370)
Total Shareholders'
Equity
184,122
165,182
Total Liabilities and
Shareholders' Equity
$ 358,681
$ 283,777
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
Three months ended
Year ended
December 31,
December 31,
2020
2019
2020
2019
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Cash
flows from operating activities:
Net Income
$ 9,002
$ 5,887
$ 10,225
$ 12,893
Adjustments required to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization
2,674
2,407
9,923
9,711
Stock based compensation
expense
1,534
692
4,447
2,293
Foreign currency translation
108
23
19
(86)
Accrued interest, net
(138)
(1)
(125)
(204)
Deferred taxes, net
(754)
(533)
(3,093)
(1,756)
Accrued severance pay, net
(228)
135
(23)
96
Fair value revaluation -
convertible debt
-
-
-
600
Loss from sale of property and
equipment
-
-
88
-
Net changes in operating assets
and liabilities
608
2,594
585
21,194
Net cash provided by operating
activities
$ 12,806
$ 11,204
$ 22,046
$ 44,741
Cash
flows from investing activities:
Purchases of property and
equipment
(115)
(128)
(502)
(717)
Short-term deposits, net
(4,400)
(6,684)
10,534
(19,234)
Cash paid in connection with
acquisitions, net of cash acquired
-
-
(20,186)
(1,200)
Obligation in connection with
acquisitions
-
-
1,347
-
Net cash used in investing
activities
$ (4,515)
$ (6,812)
$ (8,807)
$ (21,151)
Cash
flows from financing activities:
Exercise of stock options and
restricted share units
2,200
524
4,286
1,227
Payment made in connection with
acquisition
-
-
-
(1,813)
Repayment of short-term loans
(12,500)
-
-
-
Repayment of convertible debt
-
-
-
(15,850)
Repayment of long-term loans
(2,084)
(2,083)
(8,333)
(8,332)
Net cash used in financing
activities
$ (12,384)
$ (1,559)
$ (4,047)
$ (24,768)
Effect of exchange rate changes
on cash and cash equivalents and restricted cash
90
77
81
(20)
Net increase (decrease) in
cash and cash equivalents and restricted cash
(4,003)
2,910
9,273
(1,198)
Cash and cash equivalents and
restricted cash at beginning of period
52,881
36,695
39,605
40,803
Cash and cash equivalents and
restricted cash at end of period
$ 48,878
$ 39,605
$ 48,878
$ 39,605
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
In thousands (except share and per share data)
Three months ended
Year ended
December 31,
December 31,
2020
2019
2020
2019
(Unaudited)
(Unaudited)
GAAP Net Income
$ 9,002
$ 5,887
$ 10,225
$ 12,893
Share based compensation
1,534
692
4,447
2,293
Amortization of acquired
intangible assets
1,611
1,023
5,261
4,256
Retention and other related to
M&A related expenses
2,147
1,438
7,159
2,381
Changes in FV of Earnout
contingent consideration
(998)
-
(998)
-
Fair value revaluation of
convertible debt and related derivative
-
-
-
89
Foreign exchange losses
associated with ASC-842
475
45
422
699
Revaluation of acquisition
related contingent consideration
175
-
620
-
Taxes on the above items
(159)
(231)
(503)
(979)
Non-GAAP Net Income
$ 13,787
$ 8,854
$ 26,633
$ 21,632
Non-GAAP Net Income
$ 13,787
$ 8,854
$ 26,633
$ 21,632
Taxes on income
(313)
1,285
(107)
2,624
Financial expense, net
796
692
1,596
2,682
Depreciation
1,064
1,384
4,662
5,455
Adjusted EBITDA
$ 15,334
$ 12,215
$ 32,784
$ 32,393
Non-GAAP diluted earnings per
share
$ 0.45
$ 0.32
$ 0.91
$ 0.83
Shares used in computing
non-GAAP diluted earnings per share
30,395,478
27,473,695
29,268,098
26,690,743
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210209005580/en/
Contact Information: Perion Network Ltd. Rami Rozen, VP
of Investor Relations +972 (52) 5694441 ramir@perion.com Source:
Perion Network Ltd.
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