Results include 211% advertising growth and
strong margin Management expects to achieve over $500 million in
revenue in 2022, a year earlier than expected, representing a CAGR
of 25% between 2020-2022
Perion Network Ltd. (NASDAQ: PERI), a global advertising
technology company that delivers holistic 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 second quarter ended June 30, 2021.
Doron Gerstel, Perion’s CEO, commented, “This quarter’s
performance is another indicator that we are executing on our
disciplined strategic plan and positioned to achieve our three-year
targets a year earlier than expected. Based on the strength
behind our growth – significantly more dollars spent per campaign
and a healthy increase in new clients – we are narrowing the ranges
of our 2021 guidance to revenues of $415-$430 million and EBITDA of
$50-$51 million as well as introducing guidance for 2022. We expect
revenue of $490-$520 million and Adjusted EBITDA of $59-$62 million
in 2022.”
Second Quarter 2021
Highlights
- Advertising revenue growth of 211% (or 134% on pro forma basis)
fueled by broad-based adoption of our video and CTV offerings,
leading to an increase of average campaign spend by 58% and a 67%
increase in number of clients;
- Search advertising revenue growth of 24%, primarily driven by
increased performance advertising spend by brands;
- The inherent and strategically constructed operating leverage
in our business model increased adjusted EBITDA margin to 33% of
revenue excluding traffic acquisitions costs compared to 10% in the
second quarter of 2020; and
- Net cash provided by operating activities was $14.6 million;
Perion has $141 million in cash and zero debt as of June 30,
2021.
Second Quarter 2021 Financial Highlights*
(In millions, except per share data)
Three months ended
Six months ended
June 30,
June 30,
2021
2020
%
2021
2020
%
Display and Social Advertising
revenues
$
58.0
$
18.7
+211%
$
96.2
$
42.4
+127%
Search Advertising and other
revenues
$
51.6
$
41.7
+24%
$
103.3
$
84.0
+23%
Total Revenues
$
109.7
$
60.3
+82%
$
199.5
$
126.4
+58%
GAAP Net Income (loss)
$
7.1
$
(2.2)
+416%
$
10.4
$
(0.9)
+1,248%
Non-GAAP Net Income
$
12.3
$
1.9
+536%
$
19.3
$
6.9
+180%
Adjusted EBITDA
$
14.3
$
2.5
+479%
$
23.1
$
8.7
+165%
Adjusted EBITDA/Revenue Ex
TAC
33%
10%
29%
16%
Net cash provided by operating
activities
$
14.6
$
0.2
+9,585%
$
28.1
$
2.6
+961%
GAAP Diluted Earnings (loss) Per
Share
$
0.19
$
(0.08)
+338%
$
0.29
$
(0.03)
+1,067%
Non-GAAP Diluted Earnings Per
Share
$
0.33
$
0.07
+371%
$
0.53
$
0.24
+121%
* Reconciliation of GAAP to Non-GAAP measures follows.
Mr. Gerstel continued, “Three years ago, we initiated a
disciplined process of reducing costs and paying down debt. We then
focused on leveraging technology and AI to create competitively
differentiated advertising capabilities, which triggered us to
introduce an aggressive three-year growth plan. We are on pace to
achieve these aggressive revenue and EBITDA targets a year earlier
than expected. Perion now has a sustained track record of growth,
profitability, and delivering on its promises.”
Financial Comparison for the Second Quarter of 2021
Revenues: Revenues increased by 82% (or 65% on a pro
forma basis), from $60.3 million in the second quarter of 2020 to
$109.7 million in the second quarter of 2021. This increase was led
by a 211% (or 134% on a pro forma basis) increase in Display and
Social Advertising revenues, primarily from the growth in video and
CTV, which led to a 58% increase in average revenue per client, and
a 67% growth in the number of new clients. Search and other
revenues increased by 24%, primarily due to 16.9 million of average
daily monetizable search queries compared to 13.0 million in the
second quarter of 2020, as well as the addition of 28 publishers to
our network.
Traffic Acquisition Costs (“TAC”): During the second
quarter of 2021 TAC were $66.2 million, or 60.4% of revenues,
compared to $36.8 million, or 61.0% of revenues, in the second
quarter of 2020.
Net Income: On a GAAP basis, net income increased by 416%
from a net loss of $2.2 million in the second quarter of 2020 to
net income of $7.1 million in the second quarter of 2021.
Non-GAAP Net Income: In the second quarter of 2021,
non-GAAP net income was $12.3 million, or 11.2% of revenues,
compared to the $1.9 million, or 3.2% of revenues, in the second
quarter of 2020. A reconciliation of GAAP to non-GAAP net income is
included in this press release.
Adjusted EBITDA: In the second quarter of 2021, Adjusted
EBITDA was $14.3 million, or 13.0% of revenues, compared to $2.5
million, or 4.1% of revenues, in the second quarter of 2020. A
reconciliation of GAAP Net Income to Adjusted EBITDA is included in
this press release.
Cash and Cash Flow from Operations: As of June 30, 2021,
cash and cash equivalents and short-term bank deposits were $141.2
million. Cash provided by operating activities in the second
quarter of 2021 was $14.6 million, compared to $0.2 million in the
second quarter of 2020.
Outlook
Perion is narrowing it’s 2021 guidance and expects revenues to
be between $415-$430 million (previously $410-$430 million) and
EBITDA of $50-$51 million (previously $49-$51 million). Based on
the strong business momentum and improved visibility, Perion is
introducing guidance for 2022.
($M)
2021 Guidance
YoY
Growth %
2022 Guidance
YoY
Growth %
Revenue
$415-$430
28%*
$490-$520
20%*
Adjusted EBITDA
$50-$51
54%*
$59-$62
20%*
EBITDA to REV Ex TAC
30%*
30%*
* At guidance midpoint
Conference Call
Perion will host a conference call to discuss the results today,
Tuesday, August 3, 2021 at 8:30 a.m. ET. Details are as
follows:
- Conference ID: 9985661
- Dial-in number from within the United States:
1-866-548-4713
- Dial-in number from Israel: 1809 212 883
- Dial-in number (other international): 1-323-794-2093
- Playback available until Tuesday, August 10, 2021 by calling
1-844-512-2921 (United States) or 1-412-317-6671 (international).
Please use PIN code 9985661 for the replay.
- Link to the live and archived webcast accessible at
https://www.perion.com/ir-info/
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 stock-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 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. 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 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, 2020 filed with the SEC on March 25, 2021. 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,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenues:
Display and Social
Advertising
$ 58,029
$ 18,674
$ 96,166
$ 42,407
Search Advertising and other
51,648
41,667
103,328
83,987
Total Revenues
109,677
60,341
199,494
126,394
Costs and Expenses:
Cost of revenues
6,159
4,880
11,595
10,646
Traffic acquisition costs and
media buy
66,226
36,801
121,086
72,939
Research and development
8,928
7,122
17,473
14,329
Selling and marketing
12,879
8,219
23,484
17,920
General and administrative
4,629
3,581
8,760
7,520
Depreciation and amortization
2,000
2,251
4,377
4,553
Total Costs and
Expenses
100,821
62,854
186,775
127,907
Income (loss) from
Operations
8,856
(2,513)
12,719
(1,513)
Financial expense, net
298
741
105
733
Income (loss) before Taxes on
income
8,558
(3,254)
12,614
(2,246)
Taxes on income (benefit)
1,475
(1,015)
2,225
(1,341)
Net Income (loss)
$ 7,083
$ (2,239)
$ 10,389
$ (905)
Net Earnings (loss) per
Share
Basic
$ 0.21
$ (0.08)
$ 0.31
$ (0.03)
Diluted
$ 0.19
$ (0.08)
$ 0.29
$ (0.03)
Weighted average number of
shares
Basic
34,074,321
26,629,654
33,116,072
26,546,844
Diluted
37,085,265
26,629,654
36,289,802
26,546,844
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
June 30,
December 31,
2021
2020
(Unaudited)
(Audited)
ASSETS
Current Assets:
Cash and cash equivalents
$ 58,154
$ 47,656
Restricted cash
1,222
1,222
Short-term bank deposits
83,000
12,700
Accounts receivable, net
67,641
81,221
Prepaid expenses and other
current assets
6,432
4,560
Total Current Assets
216,449
147,359
Long-Term Assets:
Property and equipment, net
5,463
6,770
Operating lease right-of-use
assets
13,936
20,266
Goodwill and intangible assets,
net
173,981
176,679
Deferred taxes
6,788
7,111
Other assets
346
496
Total Long-Term Assets
200,514
211,322
Total Assets
$ 416,963
$ 358,681
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$ 75,141
$ 72,498
Accrued expenses and other
liabilities
17,902
21,188
Short-term operating lease
liability
4,395
4,514
Short-term loans and current
maturities of long-term loans
-
8,333
Deferred revenues
4,317
5,711
Short-term payment obligation
related to acquisitions
30,192
7,869
Total Current
Liabilities
131,947
120,113
Long-Term Liabilities:
Payment obligation related to
acquisition
5,059
30,035
Long-term operating lease
liability
11,271
17,698
Other long-term liabilities
7,445
6,713
Total Long-Term
Liabilities
23,775
54,446
Total Liabilities
155,722
174,559
Shareholders' equity:
Ordinary shares
287
224
Additional paid-in capital
318,690
251,933
Treasury shares at cost
(1,002)
(1,002)
Accumulated other comprehensive
gain
22
112
Accumulated deficit
(56,756)
(67,145)
Total Shareholders'
Equity
261,241
184,122
Total Liabilities and
Shareholders' Equity
$ 416,963
$ 358,681
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
Three months ended
Six months ended
June 30,
June 30,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Cash
flows from operating activities:
Net Income (loss)
$ 7,083
$ (2,239)
$ 10,389
$ (905)
Adjustments required to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization
2,000
2,251
4,377
4,553
Stock-based compensation
expense
1,234
841
1,989
1,941
Foreign currency translation
31
(18)
(89)
(47)
Accrued interest, net
(92)
-
(167)
-
Deferred taxes, net
59
(1,637)
295
(1,952)
Accrued severance pay, net
89
8
198
33
Loss (gain) from sale of property
and equipment
(10)
84
(11)
84
Net changes in operating assets
and liabilities
4,231
861
11,115
(1,060)
Net cash provided by operating
activities
$ 14,625
$ 151
$ 28,096
$ 2,647
Cash
flows from investing activities:
Purchases of property and
equipment, net of sales
(211)
(41)
(355)
(113)
Short-term deposits, net
(27,000)
(9,124)
(70,300)
6,362
Cash paid in connection with
acquisitions, net of cash acquired
(3,438)
(1,045)
(3,438)
(16,145)
Obligation in connection with
acquisitions
-
(3,428)
-
2,349
Net cash used in investing
activities
$ (30,649)
$ (13,638)
$ (74,093)
$ (7,547)
Cash
flows from financing activities:
Issuance of shares in private
placement, net
-
-
60,960
-
Proceeds from exercise of
stock-based compensation
2,170
184
3,871
1,741
Repayment of long-term loans
-
(2,083)
(8,333)
(4,166)
Net cash provided by (used in)
financing activities
$ 2,170
$ (1,899)
$ 56,498
$ (2,425)
Effect of exchange rate changes
on cash and cash equivalents and restricted cash
9
(1)
(3)
(73)
Net increase (decrease) in
cash and cash equivalents and restricted cash
(13,845)
(15,387)
10,498
(7,398)
Cash and cash equivalents and
restricted cash at beginning of period
73,221
47,594
48,878
39,605
Cash and cash equivalents and
restricted cash at end of period
$ 59,376
$ 32,207
$ 59,376
$ 32,207
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
In thousands (except share and per share data)
Three months ended
Six months ended
June 30,
June 30,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
GAAP Net Income (loss)
$ 7,083
$ (2,239)
$ 10,389
$ (905)
Stock-based compensation
1,234
841
1,989
1,941
Amortization of acquired
intangible assets
1,356
1,094
2,698
2,159
Retention and other related to
M&A related expenses
2,178
1,885
3,966
3,721
Foreign exchange losses (gains)
associated with ASC-842
105
201
(213)
(79)
Revaluation of acquisition
related contingent consideration
170
282
339
282
Taxes on the above items
197
(127)
146
(217)
Non-GAAP Net Income
$ 12,323
$ 1,937
$ 19,314
$ 6,902
Non-GAAP Net Income
$ 12,323
$ 1,937
$ 19,314
$ 6,902
Taxes on income
1,278
(888)
2,079
(1,124)
Financial expense (income),
net
23
258
(21)
530
Depreciation
644
1,157
1,679
2,394
Adjusted EBITDA
$ 14,268
$ 2,464
$ 23,051
$ 8,702
Non-GAAP diluted earnings per
share
$ 0.33
$ 0.07
$ 0.53
$ 0.24
Shares used in computing
non-GAAP diluted earnings per share
37,429,049
28,545,484
36,576,534
28,796,194
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210803005532/en/
Perion Network Ltd. Rami Rozen, VP of Investor Relations +972
(52) 5694441 ramir@perion.com Source: Perion Network Ltd.
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