Display Advertising revenues growth of 82%
driven by high-impact video and CTV performance; Management
increases guidance for 2021 and 2022
Perion Network Ltd. (NASDAQ: PERI), a global advertising
technology company that delivers a holistic solution across the
three main pillars of digital advertising – ad search, social
media, and display / video / CTV advertising – today announced
financial results for the third quarter ended September 30,
2021.
Doron Gerstel, Perion’s CEO, commented, “During the first nine
months of the year our display advertising generated more than $165
million of revenues, exceeding the $149 million generated for all
of 2020. Driven by the capabilities of our iHub to create
unprecedented advertising efficiencies, our average deal size
expanded by 30%, as budgets moved to our breakthrough high-impact,
creatively led formats especially for Video and CTV. In recognition
of the growing demand for video advertising, we made the accretive
acquisition of Vidazoo, a leading video tech platform. By combining
Perion’s proven, high-impact video suite and Vidazoo’s unique
online video player, we can offer a proprietary, end-to-end video
solution that extends the efficiency of our iHub, and that meets
the needs of publishers for simple, highly scalable, plug-and-play
video solutions.”
Third Quarter 2021
Highlights
- Display advertising revenues growth of 82% (or 73% on pro forma
basis), driven by accelerating adoption of Perion’s video and CTV
solutions, leading to an increase of average client spend by 30%
and a 12% increase in number of clients;
- Search advertising revenues growth of 14%, primarily driven by
an increased number of monetized searches;
- EBITDA margin of 37% excluding traffic acquisitions costs
compared to 26% during the third quarter of 2020, partially
resulted from the implementation of Perion’s iHub that provides
higher costs efficiencies;
- Net cash provided by operating activities of $14.2 million;
Perion had $156.2 million in cash and zero debt as of September 30,
2021;
- Video and CTV grew by 245% year-over-year, representing 20% of
the Display advertising revenues.
Third Quarter 2021 Financial Highlights*
(In millions, except per share data)
Three months ended
Nine months ended
September 30,
September 30,
2021
2020
%
2021
2020
%
Display Advertising revenues
$
69.0
$
37.9
+82%
$
165.1
$
80.3
+106%
Search Advertising revenues
$
52.0
$
45.5
+14%
$
155.4
$
129.5
+20%
Total Revenues
$
121.0
$
83.4
+45%
$
320.5
$
209.8
+53%
GAAP Net Income
$
10.6
$
2.1
+399%
$
21.0
$
1.2
+1,618%
Non-GAAP Net Income
$
15.4
$
5.9
+159%
$
34.7
$
12.8
+170%
Adjusted EBITDA
$
17.6
$
8.7
+101%
$
40.7
$
17.4
+133%
Adjusted EBITDA/Revenue Ex
TAC
37%
26%
42%
32%
20%
60%
Net cash provided by operating
activities
$
14.2
$
6.6
+115%
$
42.3
$
9.2
+358%
GAAP Diluted Earnings Per
Share
$
0.28
$
0.08
+250%
$
0.57
$
0.04
+1,325%
Non-GAAP Diluted Earnings Per
Share
$
0.40
$
0.21
+90%
$
0.93
$
0.45
+107%
* Reconciliation of GAAP to Non-GAAP measures follows.
Mr. Gerstel continued, “Perion is firing on all cylinders. Our
diversified revenue streams coming from both sides of the open web
and the synergies derived from our ability to connect all of our
operating assets to a central iHub increases our confidence in
over-delivering on our commitment to become an Ad Tech unique
market leader. As a result, we have increased our 2021 and 2022
guidance.”
Financial Comparison for the Third Quarter of 2021
Revenues: Revenues increased by 45% from $83.4 million in
the third quarter of 2020 to $121 million in the third quarter of
2021. This growth was led by an 82% (or 73% on a pro forma basis)
increase in Display Advertising revenues, primarily from growth of
245% in video and CTV, a 30% increase in average revenues per
client, and a 12% increase in the number of clients. Search
revenues increased by 14%, primarily due to 14.7 million of average
daily monetizable search queries compared to 12.8 million in the
third quarter of 2020, as well as the addition of 17 publishers to
our network.
Traffic Acquisition Costs (“TAC”): During the third
quarter of 2021 TAC were $73.6 million, or 60.8% of revenues,
compared to $49.9 million, or 59.8% of revenues, in the third
quarter of 2020.
Net Income: On a GAAP basis, net income increased by 399%
from net income of $2.1 million in the third quarter of 2020 to net
income of $10.6 million in the third quarter of 2021.
Non-GAAP Net Income: In the third quarter of 2021,
non-GAAP net income was $15.4 million, or 12.7% of revenues,
compared to the $5.9 million, or 7.1% of revenues, in the third
quarter of 2020. A reconciliation of GAAP to non-GAAP net income is
included in this press release.
Adjusted EBITDA: In the third quarter of 2021, Adjusted
EBITDA was $17.6 million, or 14.5% of revenues, compared to $8.7
million, or 10.5% of revenues, in the third 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 September 30,
2021, cash and cash equivalents and short-term bank deposits were
$156.2 million. Net cash provided by operating activities in the
third quarter of 2021 was $14.2 million, compared to $6.6 million
in the third quarter of 2020.
Outlook
Perion has raised its financial guidance for 2021 and 2022,
based on the Company’s strong business momentum and improved
visibility.
($M)
Guidance 2021
YoY
Growth % *
Guidance 2022 *
YoY
Growth % *
Revenue
$455-$465
40%
$580-$600
28%
Adjusted EBITDA
$59-$61
83%
$75-$78
28%
EBITDA to REV Ex-TAC
33%
34%
* At guidance midpoint
Conference Call
Perion management will host a Zoom conference call on October
26, 2021 at 8:30 a.m. ET to discuss the third quarter’s results.
Please join the call using the following Zoom link:
https://incommconferencing.zoom.us/webinar/register/WN_Pv_H9FZRSxO3ockGT2o4ZA
Participant Dial-in number:
877-407-4779
201-389-0914
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,
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. Due to the high variability and difficulty in making
accurate forecasts and projections of some of the information
excluded from these projected measures, together with some of the
excluded information not being ascertainable or accessible, we are
unable to quantify certain amounts that would be required for such
presentation without unreasonable effort. Consequently, no
reconciliation of the forward-looking non-GAAP financial measures
is included. 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
Nine months ended
September 30,
September 30,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenues:
Display Advertising
$
68,980
$
37,891
$
165,146
$
80,298
Search Advertising
52,049
45,522
155,377
129,509
Total Revenues
121,029
83,413
320,523
209,807
Costs and Expenses:
Cost of revenues
6,284
5,292
17,879
15,938
Traffic acquisition costs and media buy
73,590
49,878
194,676
122,817
Research and development
8,630
8,071
26,103
22,400
Selling and marketing
12,926
9,448
36,410
27,368
General and administrative
5,295
4,239
14,055
11,759
Depreciation and amortization
1,922
2,695
6,299
7,248
Total Costs and
Expenses
108,647
79,623
295,422
207,530
Income from Operations
12,382
3,790
25,101
2,277
Financial expense, net
11
459
116
1,192
Income before Taxes on
income
12,371
3,331
24,985
1,085
Taxes on income (benefit)
1,749
1,203
3,974
(138)
Net Income
$
10,622
$
2,128
$
21,011
$
1,223
Net Earnings per Share
Basic
$
0.31
$
0.08
$
0.63
$
0.05
Diluted
$
0.28
$
0.08
$
0.57
$
0.04
Weighted average number of
shares
Basic
34,567,551
26,707,649
33,605,215
26,600,837
Diluted
37,865,732
28,336,902
36,866,637
28,318,091
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
In thousands
September 30,
December 31,
2021
2020
(Unaudited)
(Audited)
ASSETS
Current Assets:
Cash and cash equivalents
$
96,210
$
47,656
Restricted cash
1,223
1,222
Short-term bank deposits
60,000
12,700
Accounts receivable, net
74,439
81,221
Prepaid expenses and other
current assets
6,948
4,560
Total Current Assets
238,820
147,359
Long-Term Assets:
Property and equipment, net
5,065
6,770
Operating lease right-of-use
assets
12,808
20,266
Goodwill and intangible assets,
net
172,610
176,679
Deferred taxes
7,245
7,111
Other assets
322
496
Total Long-Term Assets
198,050
211,322
Total Assets
$
436,870
$
358,681
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$
78,365
$
72,498
Accrued expenses and other
liabilities
23,576
21,188
Short-term operating lease
liability
4,070
4,514
Short-term loans and current
maturities of long-term loans
-
8,333
Deferred revenues
3,187
5,711
Short-term payment obligation
related to acquisitions
29,924
7,869
Total Current Liabilities
139,122
120,113
Long-Term Liabilities:
Payment obligation related to
acquisition
5,086
30,035
Long-term operating lease
liability
10,429
17,698
Other long-term liabilities
7,681
6,713
Total Long-Term Liabilities
23,196
54,446
Total Liabilities
162,318
174,559
Shareholders' equity:
Ordinary shares
290
224
Additional paid-in capital
321,500
251,933
Treasury shares at cost
(1,002)
(1,002)
Accumulated other comprehensive
gain
(102)
112
Accumulated deficit
(46,134)
(67,145)
Total Shareholders'
Equity
274,552
184,122
Total Liabilities and
Shareholders' Equity
$
436,870
$
358,681
PERION NETWORK LTD. AND ITS
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
In thousands
Three months ended
Nine months ended
September 30,
September 30,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Cash
flows from operating activities:
Net Income
$
10,622
$
2,128
$
21,011
$
1,223
Adjustments required to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization
1,922
2,695
6,299
7,248
Stock-based compensation expense
1,744
972
3,733
2,913
Foreign currency translation
(18)
(42)
(107)
(89)
Accrued interest, net
(53)
13
(220)
13
Deferred taxes, net
(478)
(387)
(183)
(2,339)
Accrued severance pay, net
135
172
333
205
Loss (gain) from sale of property and equipment
-
4
(11)
88
Net changes in operating assets and liabilities
301
1,037
11,415
(23)
Net cash provided by operating
activities
$
14,175
$
6,592
$
42,270
$
9,239
Cash
flows from investing activities:
Purchases of property and equipment, net of sales
(141)
(274)
(495)
(386)
Short-term deposits, net
23,000
8,572
(47,300)
14,934
Cash paid in connection with acquisitions, net of cash acquired
-
(4,041)
(3,438)
(20,186)
Obligation in connection with acquisitions
-
(1,002)
-
1,347
Net cash provided by (used in)
investing activities
$
22,859
$
3,255
$
(51,233)
$
(4,291)
Cash
flows from financing activities:
Issuance of shares in private placement, net
-
-
60,960
-
Proceeds from exercise of stock-based compensation
1,069
345
4,940
2,086
Proceeds from short-term loans
-
12,500
-
12,500
Repayment of long-term loans
-
(2,083)
(8,333)
(6,249)
Net cash provided by financing
activities
$
1,069
$
10,762
$
57,567
$
8,337
Effect of exchange rate changes
on cash and cash equivalents and restricted cash
(46)
65
(49)
(9)
Net increase in cash and cash
equivalents and restricted cash
38,057
20,674
48,555
13,276
Cash and cash equivalents and
restricted cash at beginning of period
59,376
32,207
48,878
39,605
Cash and cash equivalents and
restricted cash at end of period
$
97,433
$
52,881
$
97,433
$
52,881
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,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
GAAP Net Income
$
10,622
$
2,128
$
21,011
$
1,223
Stock-based compensation
1,744
972
3,733
2,913
Amortization of acquired intangible assets
1,370
1,491
4,068
3,650
Retention and other related to M&A related expenses
1,561
1,292
5,527
5,011
Foreign exchange losses (gains) associated with ASC-842
6
27
(207)
(52)
Revaluation of acquisition related contingent consideration
136
162
476
445
Taxes on the above items
(54)
(127)
92
(344)
Non-GAAP Net Income
$
15,385
$
5,945
$
34,700
$
12,846
Non-GAAP Net Income
$
15,385
$
5,945
$
34,700
$
12,846
Taxes on income
1,803
1,330
3,882
206
Financial expense (income), net
(131)
270
(153)
799
Depreciation
552
1,204
2,231
3,598
Adjusted EBITDA
$
17,609
$
8,749
$
40,660
$
17,449
Non-GAAP diluted earnings per
share
$
0.40
$
0.21
$
0.93
$
0.45
Shares used in computing
non-GAAP diluted earnings per share
38,428,524
28,977,861
37,206,600
28,864,722
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211026005637/en/
Perion Network Ltd. Rami Rozen, VP of Investor Relations +972
(52) 5694441 ramir@perion.com
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