Company generated $39 million in GAAP Net
Income for full year 2021 with $1.02 in EPS and $70 million in
Adjusted EBITDA; Management increases guidance for 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
record financial results for the fourth quarter and full-year
period ended December 31, 2021.
Doron Gerstel, Perion’s CEO, commented, “Record fourth quarter
and full year outstanding financial performance are a direct result
of Perion’s diversification strategy and our ability to connect all
our assets into a single intelligent hub, demonstrating Perion’s
sustainable and predictable business model.”
“Financial results for 2021, included stellar growth of 300% in
total video and CTV revenue (or 123% on a proforma basis), with the
fast-growing subset of CTV up 205%.” Gerstel added “Simultaneously,
our expanded relationship with Microsoft Bing drove a 19% increase
in search advertising revenue and significant incremental
EBITDA.”
Gerstel concluded “Our unique acquisition strategy behaved
exactly as we intended - creating synergistic growth and widening
our competitive moat. With $322 million net cash in our balance
sheet we intend to continue that model, adding to our
already-strong position in a fast-growing environment.”
Fourth Quarter 2021
Highlights
- Display Advertising revenue growth of 46% (or
23% on a proforma basis), driven by accelerated adoption of
Perion’s video and CTV solutions, leading to an increase in average
revenue per client of 29%;
- Video and CTV grew by 311% year-over-year, or
87% on a proforma basis, representing 46% of Display Advertising
revenue;
- Search Advertising revenue growth of 16%,
primarily driven by an increased number of commercial searches, as
well as a higher percentage of transactional searches;
- EBITDA margin from revenue excluding TAC grew
to 45% compared to 35% during the fourth quarter of 2020, as a
result of our investment in automation and offshoring our
operations;
- Net cash provided by operating activities of
$28.8 million;
- Net cash of $321.6 million.
Fourth Quarter 2021 Financial Highlights*
(In millions, except per share data)
Three months ended
Year ended
December 31,
December 31,
2021
2020
%
2021
2020
%
Display Advertising revenue
$
100.2
$
68.4
+46%
$
265.3
$
148.7
+78%
Search Advertising revenue
$
57.8
$
49.9
+16%
$
213.2
$
179.4
+19%
Total Revenue
$
158.0
$
118.3
+34%
$
478.5
$
328.1
+46%
GAAP Net Income
$
17.7
$
9.0
+97%
$
38.7
$
10.2
+279%
Non-GAAP Net Income
$
25.3
$
13.8
+83%
$
60.0
$
26.6
+125%
Adjusted EBITDA
$
28.9
$
15.3
+89%
$
69.6
$
32.8
+112%
Adjusted EBITDA/Revenue Ex
TAC
45%
35%
+27%
37%
25%
+45%
Net cash provided by operating
activities
$
28.8
$
12.9
+123%
$
71.1
$
22.2
+221%
GAAP Diluted Earnings Per
Share
$
0.44
$
0.30
+47%
$
1.02
$
0.36
+183%
Non-GAAP Diluted Earnings Per
Share
$
0.62
$
0.45
+38%
$
1.57
$
0.91
+73%
* Reconciliation of GAAP to Non-GAAP measures follows.
Financial Comparison for the Fourth Quarter of 2021
Revenue: Revenue increased by 34% to $158.0 million in
the fourth quarter of 2021 from $118.3 million in the fourth
quarter of 2020. This growth was led by a 46% (or 23% on a proforma
basis) increase in Display Advertising revenue, primarily from
growth of 87% in video and CTV, on a proforma basis, representing
63% of total revenue compared to 58% in 2020. Search Advertising
revenue increased by 16% and represented 37% of total revenue
compared to 42% in 2020. The increase was achieved primarily due to
17.5 million average daily commercial search queries compared to
15.7 million in the fourth quarter of 2020 and 43% year-over-year
increase in the number of publishers in our network.
Traffic Acquisition Costs (“TAC”): In the fourth quarter
of 2021, TAC was $93.3 million, or 59.1% of revenue, compared to
$74.8 million, or 63.3% of revenue, in the fourth quarter of 2020.
The decrease of 4.2% was primarily due to product mix and our
continuous iHub efforts to serve direct demand and supply in a
closed loop, generating superior efficiency and performance.
GAAP Net Income: In the fourth quarter of 2021, GAAP net
income was $17.7 million compared to $9.0 million in the fourth
quarter of 2020.
Non-GAAP Net Income: In the fourth quarter of 2021,
non-GAAP net income was $25.3 million, or 16.0% of revenue,
compared to the $13.8 million, or 11.7% of revenue, in the fourth
quarter of 2020. A reconciliation of GAAP to non-GAAP net income is
included in this press release.
Adjusted EBITDA: In the fourth quarter of 2021, Adjusted
EBITDA was $28.9 million, or 18.3% of revenue, compared to $15.3
million, or 13.0% of revenue, in the fourth 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 December 31,
2021, cash and cash equivalents and short-term bank deposits were
$321.6 million. Net cash provided by operating activities in the
fourth quarter of 2021 was $28.8 million, compared to $12.9 million
in the fourth quarter of 2020.
Financial Comparison for the full year of 2021
Revenue: Revenue increased by 46% to $478.5 million in
2021, from $328.1 million in 2020. This increase was driven by 78%
growth in Display Advertising revenue primarily resulting from 300%
growth in video and CTV, representing 55% of total revenue compared
to 45% in 2020. Search Advertising increased by 19% and represented
45% of total revenue compared to 55% in 2020. The increase was
achieved primarily due to 16.7 million of average daily commercial
search queries compared to 13.4 million in 2020 and a 37%
year-over-year increase in the number of publishers in our
network.
Traffic Acquisition Costs (“TAC”): TAC in 2021 was $288.0
million, or 60.2% of revenue, as compared to $197.6 million, or
60.2% of revenue, in 2020. The stabilization of TAC level resulted
from the product mix and continuous iHub efforts to serve direct
demand and supply in a closed loop, generating significantly
improved efficiency and performance.
GAAP Net Income: During 2021, GAAP net income was $38.7
million, or 8.1% of revenue, compared to $10.2 million, or 3.1% of
revenue in 2020.
Non-GAAP Net Income: During 2021, Non-GAAP net income was
$60.0 million, or 12.5% of revenue, compared to $26.6 million, or
8.1% of revenue in 2020. A reconciliation of GAAP to non-GAAP net
income is included in this press release.
Adjusted EBITDA: In 2021, Adjusted EBITDA was $69.6
million, or 14.5% of revenue, compared to $32.8 million, or 10.0%
of revenue in 2020. A reconciliation of GAAP Net Income to Adjusted
EBITDA is included in this press release.
Cash Flow from Operations: Net cash provided by operating
activities in 2021 was $71.1 million, compared to $22.2 million in
2020, an increase of 221%.
Outlook
Perion has raised its financial guidance for 2022, based on the
Company’s strong business momentum and improved visibility.
($M)
2021
Previous 2022 Guidance
Guidance 2022 *
YoY Growth % *
Revenue
$478.5
$590-$610
$610-$630
30%
Adjusted EBITDA
$69.6
$80-$84
$88-$92
29%
EBITDA to REV Ex-TAC
37%
35%
36%
* At guidance midpoint
Conference Call
Perion management will host a Zoom conference call to discuss
the results at 8:30 a.m. ET today.
Registration Link:
https://incommconferencing.zoom.us/webinar/register/WN_I2SURvXmQIaBRsgd8S0bSg
If not on Zoom, Participant Dial-In: 877-407-0779 /
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,
acquisition related items consisting of amortization of intangible
assets, 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
Year ended
December 31,
December 31,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Revenues:
Display Advertising
$ 100,177
$ 68,400
$ 265,323
$ 148,698
Search Advertising
57,798
49,856
213,175
179,365
Total Revenues
157,975
118,256
478,498
328,063
Costs and Expenses:
Cost of revenues
7,318
6,539
25,197
22,477
Traffic acquisition costs and
media buy
93,342
74,809
288,018
197,626
Research and development
9,245
8,480
35,348
30,880
Selling and marketing
16,799
11,717
53,209
39,085
General and administrative
6,878
4,060
20,933
15,819
Depreciation and amortization
3,598
2,675
9,897
9,923
Total Costs and
Expenses
137,180
108,280
432,602
315,810
Income from Operations
20,795
9,976
45,896
12,253
Financial expense, net
465
1,446
581
2,638
Income before Taxes on
income
20,330
8,530
45,315
9,615
Taxes on income (benefit)
2,635
(472)
6,609
(610)
Net Income
$ 17,695
$ 9,002
$ 38,706
$ 10,225
Net Earnings per Share
Basic
$ 0.48
$ 0.33
$ 1.13
$ 0.38
Diluted
$ 0.44
$ 0.30
$ 1.02
$ 0.36
Weighted average number of
shares
Basic
36,768,367
26,946,060
34,397,134
26,687,145
Diluted
40,349,416
29,961,648
37,829,725
28,797,747
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS In
thousands
December 31,
December 31,
2021
2020
(Unaudited)
(Audited)
ASSETS
Current Assets:
Cash and cash equivalents
$ 104,446
$ 47,656
Restricted cash
1,089
1,222
Short-term bank deposits
217,200
12,700
Accounts receivable, net
115,361
81,221
Prepaid expenses and other
current assets
8,075
4,560
Total Current Assets
446,171
147,359
Long-Term Assets:
Property and equipment, net
4,211
6,770
Operating lease right-of-use
assets
11,578
20,266
Goodwill and intangible assets,
net
245,965
176,679
Deferred taxes
5,228
7,111
Other assets
79
496
Total Long-Term Assets
267,061
211,322
Total Assets
$ 713,232
$ 358,681
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$ 107,730
$ 72,498
Accrued expenses and other
liabilities
40,331
21,188
Short-term operating lease
liability
3,615
4,514
Short-term loans and current
maturities of long-term loans
-
8,333
Deferred revenues
3,852
5,711
Short-term payment obligation
related to acquisitions
38,179
7,869
Total Current
Liabilities
193,707
120,113
Long-Term Liabilities:
Payment obligation related to
acquisition
33,250
30,035
Long-term operating lease
liability
9,774
17,698
Other long-term liabilities
9,541
6,713
Total Long-Term
Liabilities
52,565
54,446
Total Liabilities
246,272
174,559
Shareholders' equity:
Ordinary shares
375
224
Additional paid-in capital
496,154
251,933
Treasury shares at cost
(1,002)
(1,002)
Accumulated other comprehensive
gain
(128)
112
Accumulated deficit
(28,439)
(67,145)
Total Shareholders'
Equity
466,960
184,122
Total Liabilities and
Shareholders' Equity
$ 713,232
$ 358,681
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS In thousands
Three months ended
Year ended
December 31,
December 31,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Cash
flows from operating activities:
Net Income
$ 17,695
$ 9,002
$ 38,706
$ 10,225
Adjustments required to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization
3,598
2,675
9,897
9,923
Stock-based compensation
expense
3,252
1,534
6,985
4,447
Foreign currency translation
(116)
108
(223)
19
Accrued interest, net
(80)
(138)
(300)
(125)
Deferred taxes, net
(2,572)
(754)
(2,755)
(3,093)
Accrued severance pay, net
330
(228)
663
(23)
Loss (gain) from sale of property
and equipment
132
(78)
121
10
Net changes in operating assets
and liabilities
6,597
799
18,012
776
Net cash provided by operating
activities
$ 28,836
$ 12,920
$ 71,106
$ 22,159
Cash
flows from investing activities:
Purchases of property and
equipment, net of sales
(37)
(67)
(532)
(454)
Short-term deposits, net
(157,200)
(4,400)
(204,500)
10,534
Cash paid in connection with
acquisitions, net of cash acquired
(35,000)
1,186
(38,438)
(19,000)
Obligation in connection with
acquisitions
-
(1,347)
-
-
Net cash used in investing
activities
$ (192,237)
$ (4,628)
$ (243,470)
$ (8,920)
Cash
flows from financing activities:
Issuance of shares in private
placement, net
169,529
-
230,489
-
Proceeds from exercise of
stock-based compensation
1,958
2,200
6,898
4,286
Proceeds from short-term
loans
-
(12,500)
-
-
Repayment of long-term loans
-
(2,084)
(8,333)
(8,333)
Net cash provided by (used in)
financing activities
$ 171,487
$ (12,384)
$ 229,054
$ (4,047)
Effect of exchange rate changes
on cash and cash equivalents and restricted cash
16
89
(33)
81
Net increase (decrease) in
cash and cash equivalents and restricted cash
8,102
(4,003)
56,657
9,273
Cash and cash equivalents and
restricted cash at beginning of period
97,433
52,881
48,878
39,605
Cash and cash equivalents and
restricted cash at end of period
$ 105,535
$ 48,878
$ 105,535
$ 48,878
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,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
GAAP Net Income
$ 17,695
$ 9,002
$ 38,706
$ 10,225
Stock-based compensation
3,252
1,534
6,985
4,447
Amortization of acquired
intangible assets
2,807
1,611
6,875
5,261
Retention and other related to
M&A related expenses
3,547
2,147
9,074
7,159
Changes in FV of Earnout
contingent consideration
(2,246)
(998)
(2,246)
(998)
Foreign exchange losses (gains)
associated with ASC-842
169
475
(38)
422
Revaluation of acquisition
related contingent consideration
286
175
761
620
Taxes on the above items
(222)
(159)
(130)
(503)
Non-GAAP Net Income
$ 25,288
$ 13,787
$ 59,987
$ 26,633
Non-GAAP Net Income
$ 25,288
$ 13,787
$ 59,987
$ 26,633
Taxes on income
2,857
(313)
6,739
(107)
Financial expense (income),
net
10
796
(142)
1,596
Depreciation
791
1,064
3,022
4,662
Adjusted EBITDA
$ 28,946
$ 15,334
$ 69,606
$ 32,784
Non-GAAP diluted earnings per
share
$ 0.62
$ 0.45
$ 1.57
$ 0.91
Shares used in computing
non-GAAP diluted earnings per share
40,613,055
30,395,478
38,176,470
29,268,098
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220209005499/en/
Perion Network Ltd. Rami Rozen, VP of Investor Relations +972
(52) 5694441 ramir@perion.com
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