Net income of $15.5 million in the first
quarter is ahead of the entire first half of last year; 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 – today announced record financial
results for the first quarter ending March 31, 2022.
Doron Gerstel, Perion’s CEO, commented, “Our exceptional
financial performance is a direct result of our diversification
strategy, our continuing investment in high-impact innovation, and
our ability to connect the supply and demand sides of the open-web
to our central iHub - an intelligent control system. The iHub
embodies our diversification strategy, which was built through
significant organic innovation and successful strategic
acquisitions. For instance, a key factor behind Perion’s 80%
year-over-year revenue growth in Display Advertising is the strong
adoption of SORTTM - proprietary cookie-free technology which
delivers greater ROAS for our customers than 3rd party
cookies.”
First Quarter 2022
Highlights
- Display Advertising revenue grew 80% (or 52% on pro forma
basis), driven by accelerating adoption of Perion’s video and CTV
solutions, leading to an increase of average client spend by 42%
and a 3% increase in number of clients;
- Video and CTV revenue grew by 341% year-over-year, (or 123% on
a proforma basis), representing 46% of Display advertising
revenue;
- Search advertising revenue grew 10%, primarily driven by an
increased number of commercial searches, as well as in the
percentage of transactional searches;
- Adjusted EBITDA margin expanded to 42% of revenue excluding
traffic acquisitions costs compared to 25% during the first quarter
of 2021, as a result of continuous improvement of iHub;
- Net cash provided by operating activities of $23.6 million;
Perion had $342.5 million in cash and zero debt as of March 31,
2022.
First Quarter 2022 Financial Highlights*
(In millions, except per share data)
Three months ended
March 31,
2022
2021
%
Display Advertising revenue
$
68.6
$
38.1
+80%
Search Advertising revenue
$
56.7
$
51.7
+10%
Total Revenue
$
125.3
$
89.8
+40%
GAAP Net Income
$
15.5
$
3.3
+368%
Non-GAAP Net Income
$
20.7
$
7.0
+196%
Adjusted EBITDA
$
22.7
$
8.8
+158%
Adjusted EBITDA/Revenue Ex
TAC
42%
25%
+66%
Net cash provided by operating
activities
$
23.6
$
13.5
+75%
GAAP Diluted Earnings Per
Share
$
0.33
$
0.09
+267%
Non-GAAP Diluted Earnings Per
Share
$
0.44
$
0.19
+132%
* Reconciliation of GAAP to Non-GAAP measures follows.
Mr. Gerstel added “Perion’s newly acquired Vidazoo - a video
monetization platform - is also winning market share and supporting
our strategic success in growing our Display Advertising revenue,
which represented 55% of our total revenue, up from 42% one year
ago and 36% two years ago. Our ability to connect all media
transactions to our central intelligent HUB is key factor behind
the growth of media margin; 43% in the first quarter, up from 39%
in the first quarter last year. This resulted in record first
quarterly EBITDA levels, on our highest-ever EBITDA margins, and
$23.6 million in operating cash flow.”
“The strong performance, led by our predictable and sustainable
business model gave us increased confidence to update our full-year
outlook,” Gerstel concluded. “With robust growth, increased
profitability, and $342.5 million in cash and zero debt, Perion is
poised to further accelerate its momentum. This positions us well
for a post-cookie future, one where privacy consciousness will
drive more and more advertising decisions. We have the platform,
track record, proven team, and financial depth to drive enduring
success.
Gerstel concluded ”Separately, we announced that yesterday we
were honored with the Microsoft Advertising's prestigious GLOBAL
Supply Partner of the Year Award”.
Financial Comparison for the First Quarter
of 2022
Revenue: Revenue increased by 40% to
$125.3 million in the first quarter of 2022 from $89.8 million in
the first quarter of 2021. This growth was led by an 80% (or 52% on
a pro forma basis) increase in Display Advertising revenue,
primarily from growth of 341% in video and CTV, (or 123% on a
proforma basis), now representing 46% of display advertising
revenue compared with 19% in the first quarter of 2021 (or 31% on a
pro forma basis), as well as a 42% increase in average revenues per
client and a 3% increase in the number of clients. Search
Advertising revenue increased by 10% and represented 45% of
revenue, growth was achieved primarily due to 18.1 million average
daily commercial searches compared to 17.7 million in the first
quarter of 2021, and the addition of 25 new publishers to our
network.
Traffic Acquisition Costs (“TAC”): In
the first quarter of 2022, TAC were $71.0 million, or 56.6% of
revenue, compared to $54.9 million, or 61.1% of revenue, in the
first quarter of 2021. The decrease of 4.5% was primarily due to a
favorable product mix of ad formats, and the continuous iHub
efforts to serve direct demand and supply in a closed loop that
generates superior efficiency and performance.
Net Income: On a GAAP basis, net income
increased by 367.8% to $15.5 million in the first quarter of 2022
from $3.3 million in the first quarter of 2021.
Non-GAAP Net Income: In the first
quarter of 2022, non-GAAP net income was $20.7 million, or 16.5% of
revenue, compared to the $7.0 million, or 7.8% of revenue, in the
first quarter of 2021. A reconciliation of GAAP to non-GAAP net
income is included in this press release.
Adjusted EBITDA: In the first quarter of
2022, Adjusted EBITDA was $22.7 million, or 18.1% of revenue (and
41.7% of revenue Ex TAC), compared to $8.8 million, or 9.8% of
revenue (and 25.1% of revenue Ex TAC), in the first quarter of
2021. A reconciliation of GAAP Net Income to Adjusted EBITDA is
included in this press release.
Cash and Cash Flow from Operations: As
of March 31, 2022, cash and cash equivalents and short-term bank
deposits were $342.5 million. Net cash provided by operating
activities in the first quarter of 2022 was $23.6 million, compared
to $13.5 million in the first quarter of 2021.
Outlook Perion has raised its financial
guidance for 2022, based on the Company’s strong business momentum
and improved visibility.
($M)
2021
Previous 2022 Guidance
Guidance 2022 *
YoY Growth % *
Revenue
$478.5
$610-$630
$620-$640
32%
Adjusted EBITDA
$69.6
$88-$92
$98-$102
44%
EBITDA to REV Ex-TAC
37%
36%
40%
* 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
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") and Revenue after Traffic
Acquisition Costs (“Revenue ex-TAC”). 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. Revenue after Traffic Acquisition Costs (“Revenue
ex-TAC”) presents revenue reduced by traffic acquisition costs,
reflecting that a portion of our revenue must be directly passed to
publishers or advertisers and presents our revenue excluding such
items.
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, 2021 filed with the SEC on March 16, 2022. Perion does
not assume any obligation to update these forward-looking
statements.
CONSOLIDATED STATEMENTS OF OPERATIONS In thousands
(except share and per share data)
Three months ended
March 31,
2022
2021
(Unaudited)
(Unaudited)
Revenue:
Display Advertising
$ 68,603
$ 38,137
Search Advertising
56,712
51,680
Total Revenue
125,315
89,817
Costs and Expenses:
Cost of revenue
6,613
5,436
Traffic acquisition costs and
media buy
70,974
54,860
Research and development
9,033
8,545
Selling and marketing
13,338
10,605
General and administrative
5,666
4,131
Depreciation and amortization
3,185
2,377
Total Costs and
Expenses
108,809
85,954
Income from Operations
16,506
3,863
Financial income, net
604
193
Income before Taxes on
income
17,110
4,056
Taxes on income
1,644
750
Net Income
$ 15,466
$ 3,306
Net Earnings per Share
Basic
$ 0.35
$ 0.10
Diluted
$ 0.33
$ 0.09
Weighted average number of
shares
Basic
44,035,576
32,147,176
Diluted
47,030,727
35,820,634
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
March 31,
December 31,
2022
2021
(Unaudited)
(Audited)
ASSETS
Current Assets:
Cash and cash equivalents
$ 92,892
$ 104,446
Restricted cash
1,063
1,089
Short-term bank deposits
249,600
217,200
Accounts receivable, net
84,542
115,361
Prepaid expenses and other
current assets
8,553
8,075
Total Current Assets
436,650
446,171
Long-Term Assets:
Property and equipment, net
4,034
4,211
Operating lease right-of-use
assets
10,776
11,578
Goodwill and intangible assets,
net
243,177
245,965
Deferred taxes
5,413
5,228
Other assets
110
79
Total Long-Term Assets
263,510
267,061
Total Assets
$ 700,160
$ 713,232
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$ 94,056
$ 107,730
Accrued expenses and other
liabilities
27,081
40,331
Short-term operating lease
liability
3,504
3,615
Deferred revenue
3,199
3,852
Short-term payment obligation
related to acquisitions
34,651
38,179
Total Current
Liabilities
162,491
193,707
Long-Term Liabilities:
Payment obligation related to
acquisition
33,377
33,250
Long-term operating lease
liability
8,835
9,774
Other long-term liabilities
9,647
9,541
Total Long-Term
Liabilities
51,859
52,565
Total Liabilities
214,350
246,272
Shareholders' equity:
Ordinary shares
378
375
Additional paid-in capital
499,527
496,154
Treasury shares at cost
(1,002)
(1,002)
Accumulated other comprehensive
gain
(120)
(128)
Accumulated deficit
(12,973)
(28,439)
Total Shareholders'
Equity
485,810
466,960
Total Liabilities and
Shareholders' Equity
$ 700,160
$ 713,232
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS In
thousands
Three months ended
March 31,
2022
2021
(Unaudited)
(Unaudited)
Cash
flows from operating activities:
Net Income
$ 15,466
$ 3,306
Adjustments required to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization
3,185
2,377
Stock-based compensation
expense
2,428
755
Foreign currency translation
(46)
(120)
Accrued interest, net
(542)
(75)
Deferred taxes, net
(204)
236
Accrued severance pay, net
94
109
Net changes in operating assets
and liabilities
3,173
6,883
Net cash provided by operating
activities
$ 23,554
$ 13,471
Cash
flows from investing activities:
Purchases of property and
equipment, net of sales
(252)
(144)
Short-term deposits, net
(32,400)
(43,300)
Cash paid in connection with
acquisitions, net of cash acquired
(3,400)
-
Net cash used in investing
activities
$ (36,052)
$ (43,444)
Cash
flows from financing activities:
Issuance of shares in private
placement, net
-
60,960
Proceeds from exercise of
stock-based compensation
948
1,701
Repayment of long-term loans
-
(8,333)
Net cash provided by financing
activities
$ 948
$ 54,328
Effect of exchange rate changes
on cash and cash equivalents and restricted cash
(30)
(12)
Net increase (decrease) in
cash and cash equivalents and restricted cash
(11,580)
24,343
Cash and cash equivalents and
restricted cash at beginning of period
105,535
48,878
Cash and cash equivalents and
restricted cash at end of period
$ 93,955
$ 73,221
RECONCILIATION OF GAAP TO NON-GAAP RESULTS In
thousands (except share and per share data)
Three months ended
March 31,
2022
2021
(Unaudited)
GAAP Net Income
$ 15,466
$ 3,306
Stock-based compensation
2,428
755
Amortization of acquired
intangible assets
2,789
1,342
Retention and other related to
M&A related expenses
551
1,788
Foreign exchange gains associated
with ASC-842
(197)
(318)
Revaluation of acquisition
related contingent consideration
132
169
Taxes on the above items
(441)
(51)
Non-GAAP Net Income
$ 20,728
$ 6,991
Non-GAAP Net Income
$ 20,728
$ 6,991
Taxes on income
2,085
801
Financial income, net
(539)
(44)
Depreciation
396
1,035
Adjusted EBITDA
$ 22,670
$ 8,783
Non-GAAP diluted earnings per
share
$ 0.44
$ 0.19
Shares used in computing
non-GAAP diluted earnings per share
47,620,874
36,122,783
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428005599/en/
Perion Network Ltd. Rami Rozen, VP of Investor Relations +972
(52) 5694441 ramir@perion.com Source: Perion Network Ltd.
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