Company Reiterates Annual Guidance, Reflecting
Ongoing Confidence in Sustainable Growth Despite Challenging Macro
Environment
Perion Network Ltd. (NASDAQ & TASE: PERI), a global
advertising technology company whose synergistic solutions are
delivered across the three primary channels of digital advertising
– ad search, social media and display / video / CTV advertising –
today reported record financial results for the second quarter
ended June 30, 2022.
“Second quarter 2022 results mark Perion’s eighth consecutive
quarter of year-over-year revenue and Adjusted EBITDA growth,
demonstrating the predictability and sustainability of our business
model, underpinned by our diversification strategy,” said Doron
Gerstel, Perion’s CEO. “Our structural diversification by channel
provides us with a unique level of agility to shift our business to
where media budgets are trending. In response to the current
macro-economic pressure, advertisers are demanding greater
performance, and shifting media budgets to direct response. This
has driven the RPM (Revenue Per Thousand searches) of our search
advertising to an all-time record high.”
“Perion’s continued margin expansion demonstrates the
effectiveness of our Intelligent HUB (iHUB). By connecting all our
data assets and analyzing signals from all channels on both sides
of the open web, iHUB optimizes campaign yields, increases
operational efficiencies and powers new, innovative products like
SORTTM. These capabilities leverage our data advantage and deep
understanding of market trends to support the growing number of
advertisers who struggle to tackle the cookieless future ahead, and
even more importantly, reflect that consumers increasingly favor
brands that protect their privacy,” added Mr. Gerstel.
“Our growing marketplace traction is measurable by a significant
increase in SORT™ campaigns, which, when combined with ongoing
positive trends, have increased customer spend on video and CTV,
giving us confidence that our momentum is sustainable even in the
face of global economic concerns,” concluded Mr. Gerstel.
Second Quarter 2022 Highlights
- Video revenue grew by 273% year-over-year, representing 44% of
Display Advertising revenue
- CTV revenue grew by 90% year-over-year, representing 6% of
Display Advertising revenue
- SORTTM customers nearly doubled quarter-over-quarter from 65
to 126, and SORTTM customers' spend increased by 62%, accounting
for 14% of Display Advertising revenue
- Increase in the adoption of our Video Platform holistic
solution:
- 145% year-over-year increase in Video Platform to 54
publishers
- 52% year-over-year increase in revenue from retained Video
Platform publishers
- The number of search advertising publishers increased by 33%
year-over-year, RPM increased by 42% over the same period
Second Quarter 2022 Financial Highlights(1)
In millions,
except per share data
Three months ended
Six months ended
June 30,
June 30,
2022
2021
%
2022
2021
%
Display Advertising Revenue
$
81.6
$
58.0
+41%
$
150.2
$
96.2
+56%
Search Advertising Revenue
$
65.1
$
51.6
+26%
$
121.8
$
103.3
+18%
Total Revenue
$
146.7
$
109.7
+34%
$
272.0
$
199.5
+36%
GAAP Net Income
$
19.5
$
7.1
+175%
$
35.0
$
10.4
+237%
Non-GAAP Net Income
$
24.5
$
12.3
+99%
$
45.2
$
19.3
+134%
Adjusted EBITDA
$
28.5
$
14.3
+99%
$
51.1
$
23.1
+122%
Adjusted EBITDA to Revenue
Ex-TAC
47%
33%
+43%
44%
29%
+51%
Net Cash from Operations
$
25.7
$
14.6
+76%
$
49.3
$
28.1
+75%
GAAP Diluted EPS
$
0.41
$
0.19
+116%
$
0.74
$
0.29
+155%
Non-GAAP Diluted EPS
$
0.51
$
0.33
+55%
$
0.95
$
0.53
+79%
(1)See below reconciliation of GAAP to Non-GAAP
measures
Outlook
“Our strong performance, our team's excellent execution,
continuing market share gains and improving efficiencies give us
confidence that we will, at least, achieve the high-end of our
full-year Adjusted EBITDA guidance, even when taking further global
recessionary conditions into account,” Mr. Gerstel concluded.
($M)
2021
Prior 2022 Guidance
Current 2022 Guidance
YoY Growth %
Revenue
$478.5
$620-$640
$620-$640
32%(1)
Adjusted EBITDA
$69.6
$98-$102
$102 +
47%
Adjusted EBITDA to Revenue
Ex-TAC
37%
40%(1)
41%(1)+
(1)At guidance midpoint
Financial Comparison for the Second Quarter of 2022
Revenue: Revenue increased by 34% to $146.7 million in
the second quarter of 2022 from $109.7 million in the second
quarter of 2021. Display Advertising revenue increased by 41%
year-over-year, primarily due to a 273% growth in video, now
representing 44% of Display Advertising revenue (17% in 2021) and
90% increase in CTV revenue, which represents 6% of Display
Advertising revenue. Number of SORTTM customers nearly doubled
quarter-over-quarter, from 65 to 126, SORTTM customers spending
increased by 62%, representing 14% of Display Advertising revenue.
Search revenue increased by 26%, accounting for 44% of revenue,
primarily due to a 42% increase in average RPM and a 33% increase
in number of publishers.
Traffic Acquisition Costs (“TAC”): TAC amounted to $86.0
million, or 58.6% of revenue, in the second quarter of 2022,
compared to $66.2 million, or 60.4% of revenue, in the second
quarter of 2021. The media margin improvement was primarily due to
improved commercial terms, a favorable product mix of ad formats,
and the iHUB Control Systems.
Net Income: On a GAAP basis, net income increased by 175%
to $19.5 million in the second quarter of 2022 from $7.1 million in
the second quarter of 2021.
Non-GAAP Net Income: Non-GAAP net income was $24.5
million, or 16.7% of revenue, in the second quarter of 2022,
compared to $12.3 million, or 11.2% of revenue, in the second
quarter of 2021. A reconciliation of GAAP to non-GAAP net income is
included in this press release.
Adjusted EBITDA: Adjusted EBITDA was $28.5 million, or
19.4% of revenue (and 47% of revenue Ex TAC), in the second quarter
of 2022, compared to $14.3 million, or 13.0% of revenue (and 33% of
revenue Ex TAC), in the second 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 June 30, 2022,
cash and cash equivalents and short-term bank deposits were $353.0
million. Net cash provided by operating activities in the second
quarter of 2022 was $25.7 million, compared to $14.6 million in the
second quarter of 2021.
Conference Call
Perion management will host a conference call to discuss the
results at 8:30 a.m. ET today. Call details:
● Registration link:
https://incommconferencing.zoom.us/webinar/register/WN_oEkHYSvyQ--7h7MrEhjNkg
● Toll Free: 1-877-407-0779
● Toll/International: 1-201-389-0914
A replay of the call and a transcript will be available within
approximately 24 hours of the live event on Perion’s Website.
About Perion Network Ltd.
Perion is a global advertising technology company whose
synergistic solutions are delivered across the three primary
channels of digital advertising – ad search, social media and
display / video / CTV advertising. These channels are brought
together by Perion’s intelligent HUB, which integrates the
company’s business assets from both sides of the open Web,
providing significant benefit to its brands and publisher
customers.
For more information, visit Perion's website at
www.perion.com.
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.
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.
Source: Perion Network Ltd.
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,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenue:
Display Advertising
$ 81,551
$ 58,029
$ 150,154
$ 96,166
Search Advertising
65,105
51,648
121,817
103,328
Total Revenue
146,656
109,677
271,971
199,494
Costs and Expenses:
Cost of revenue
6,861
6,159
13,474
11,595
Traffic acquisition costs and
media buy
85,956
66,226
156,930
121,086
Research and development
8,336
8,928
17,369
17,473
Selling and marketing
13,955
12,879
27,293
23,484
General and administrative
6,468
4,629
12,134
8,760
Depreciation and amortization
3,208
2,000
6,393
4,377
Total Costs and
Expenses
124,784
100,821
233,593
186,775
Income from Operations
21,872
8,856
38,378
12,719
Financial expense (income),
net
(903)
298
(1,507)
105
Income before Taxes on
income
22,775
8,558
39,885
12,614
Taxes on income
3,275
1,475
4,919
2,225
Net Income
$ 19,500
$ 7,083
$ 34,966
$ 10,389
Net Earnings per Share
Basic
$ 0.44
$ 0.21
$ 0.79
$ 0.31
Diluted
$ 0.41
$ 0.19
$ 0.74
$ 0.29
Weighted average number of
shares
Basic
44,439,023
34,074,321
44,238,414
33,116,072
Diluted
47,292,249
37,085,265
47,210,769
36,289,802
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
June 30,
December 31,
2022
2021
(Unaudited)
(Audited)
ASSETS
Current Assets:
Cash and cash equivalents
$ 102,398
$ 104,446
Restricted cash
1,039
1,089
Short-term bank deposits
250,600
217,200
Accounts receivable, net
86,251
115,361
Prepaid expenses and other
current assets
11,809
8,075
Total Current Assets
452,097
446,171
Long-Term Assets:
Property and equipment, net
3,935
4,211
Operating lease right-of-use
assets
9,961
11,578
Goodwill and intangible assets,
net
240,364
245,965
Deferred taxes
5,398
5,228
Other assets
70
79
Total Long-Term Assets
259,728
267,061
Total Assets
$ 711,825
$ 713,232
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$ 96,687
$ 107,730
Accrued expenses and other
liabilities
25,314
40,331
Short-term operating lease
liability
3,251
3,615
Deferred revenue
2,560
3,852
Short-term payment obligation
related to acquisitions
37,724
38,179
Total Current
Liabilities
165,536
193,707
Long-Term Liabilities:
Payment obligation related to
acquisition
21,491
33,250
Long-term operating lease
liability
7,663
9,774
Other long-term liabilities
9,935
9,541
Total Long-Term
Liabilities
39,089
52,565
Total Liabilities
204,625
246,272
Shareholders' equity:
Ordinary shares
379
375
Additional paid-in capital
502,573
496,154
Treasury shares at cost
(1,002)
(1,002)
Accumulated other comprehensive
loss
(1,277)
(128)
Retained earnings (accumulated
deficit)
6,527
(28,439)
Total Shareholders'
Equity
507,200
466,960
Total Liabilities and
Shareholders' Equity
$ 711,825
$ 713,232
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
In thousands
Three months ended
Six months ended
June 30,
June 30,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Cash
flows from operating activities:
Net Income
$ 19,500
$ 7,083
$ 34,966
$ 10,389
Adjustments required to reconcile
net income to net cash provided by operating activities
Depreciation and amortization
3,208
2,000
6,393
4,377
Stock-based compensation
expense
2,701
1,234
5,129
1,989
Foreign currency translation
(128)
31
(174)
(89)
Accrued interest, net
(639)
(92)
(1,181)
(167)
Deferred taxes, net
(44)
59
(248)
295
Accrued severance pay, net
409
89
503
198
Gain from sale of property and
equipment
(6)
(10)
(6)
(11)
Net changes in operating assets
and liabilities
720
4,231
3,893
11,115
Net cash provided by operating
activities
$ 25,721
$ 14,625
$ 49,275
$ 28,096
Cash
flows from investing activities:
Purchases of property and
equipment, net of sales
(177)
(211)
(429)
(355)
Short-term deposits, net
(1,000)
(27,000)
(33,400)
(70,300)
Cash paid in connection with
acquisitions, net of cash acquired
(6,170)
(3,438)
(9,570)
(3,438)
Net cash used in investing
activities
$ (7,347)
$ (30,649)
$ (43,399)
$ (74,093)
Cash
flows from financing activities:
Issuance of shares in private
placement, net
-
-
-
60,960
Proceeds from exercise of
stock-based compensation
346
2,170
1,294
3,871
Payment made in connection with
acquisition
(9,091)
-
(9,091)
-
Repayment of long-term loans
-
-
-
(8,333)
Net cash provided by (used in)
financing activities
$ (8,745)
$ 2,170
$ (7,797)
$ 56,498
Effect of exchange rate changes
on cash and cash equivalents and restricted cash
(147)
9
(177)
(3)
Net increase (decrease) in
cash and cash equivalents and restricted cash
9,482
(13,845)
(2,098)
10,498
Cash and cash equivalents and
restricted cash at beginning of period
93,955
73,221
105,535
48,878
Cash and cash equivalents and
restricted cash at end of period
$ 103,437
$ 59,376
$ 103,437
$ 59,376
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,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
GAAP Net Income
$ 19,500
$ 7,083
$ 34,966
$ 10,389
Stock-based compensation
2,701
1,234
5,129
1,989
Amortization of acquired
intangible assets
2,812
1,356
5,601
2,698
Retention and other related to
M&A related expenses
679
2,178
1,230
3,966
Foreign exchange losses (gains)
associated with ASC-842
(548)
105
(745)
(213)
Revaluation of acquisition
related contingent consideration
129
170
261
339
Taxes on the above items
(771)
197
(1,212)
146
Non-GAAP Net Income
$ 24,502
$ 12,323
$ 45,230
$ 19,314
Non-GAAP Net Income
$ 24,502
$ 12,323
$ 45,230
$ 19,314
Taxes on income
4,046
1,278
6,131
2,079
Financial expense (income),
net
(484)
23
(1,023)
(21)
Depreciation
396
644
792
1,679
Adjusted EBITDA
$ 28,460
$ 14,268
$ 51,130
$ 23,051
Non-GAAP diluted earnings per
share
$ 0.51
$ 0.33
$ 0.95
$ 0.53
Shares used in computing
non-GAAP diluted earnings per share
47,906,671
37,429,049
47,744,781
36,576,534
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220803005459/en/
Perion Network Ltd. Dudi Musler, VP of Investor Relations +972
(54) 7876785 dudim@perion.com
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