Company increases 2022 adjusted EBITDA guidance
from $102M to at least $120M as a result of a sustainable
improvement in profitability
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 third quarter ended
September 30, 2022.
Doron Gerstel, Perion’s CEO, stated, “Once again, Perion
outperformed the adtech industry – and we believe will continue to
do so for the following reasons:
- We are leveraging our diversification strategy as advertisers
are shifting their direct response budgets from social advertising
(mainly Facebook) to search advertising
- We are continuously expanding our profit margins, which
demonstrates the strategic and economic value of our Intelligent
HUB (iHUB)
- We are bringing innovation – through SORT™ – in response to
advertiser recognition that privacy matters more than ever
- We are meeting our clients’ objective to enhance their brand
equity by increasing user engagement through Perion’s High-Impact
ad suite.”
“This was the eighth consecutive quarter we delivered top and
bottom-line double-digit growth on a year-over-year basis,” Mr.
Gerstel continued. “The 145% year-over-year increase in operating
cash flow to nearly $35 million, reflects the significant earnings
power of our business model. With a cash position of $390 million
at quarter end, we have significant dry powder to execute on our
growth strategy, delivering value to shareholders for years to
come.”
Third Quarter 2022 Business Highlights
- Media margin increased to 41%, compared with 39% in Q3
2021
- Adjusted EBITDA to revenue ex-TAC of 51% vs. 37% last year.
This is among the highest in the industry
- Video revenue increased by 209% year-over-year, representing
44% of Display Advertising revenue
- CTV revenue increased by 134% year-over-year, representing 9%
of Display Advertising revenue compared with 5% last year
- SORTTM spending increased by 25% over the previous quarter,
driven by an 11% increase in the number of customers from 126 to
140
- The increase in market adoption of our holistic Video Platform
solution continues to deliver strong results:
- 88% year-over-year increase in the number of Video Platform
publishers
- 67% year-over-year increase in revenue from existing Video
Platform publishers
- The number of search advertising publishers increased by 60%
year-over-year, RPM increased by 42% over the same period
Third Quarter 2022 Financial Highlights(1)
In millions, except per share
data
Three months ended
Nine months ended
September 30,
September 30,
2022
2021
%
2022
2021
%
Display Advertising Revenue
$
86.8
$
69.0
+26%
$
236.9
$
165.1
+43%
Search Advertising Revenue
$
71.8
$
52.0
+38%
$
193.7
$
155.4
+25%
Total Revenue
$
158.6
$
121.0
+31%
$
430.6
$
320.5
+34%
GAAP Net Income
$
25.6
$
10.6
+141%
$
60.5
$
21.0
+188%
Non-GAAP Net Income
$
29.9
$
15.4
+94%
$
75.1
$
34.7
+117%
Adjusted EBITDA
$
33.0
$
17.6
+87%
$
84.1
$
40.7
+107%
Adjusted EBITDA to Revenue
ex-TAC
51%
37%
47%
32%
Net Cash from Operations
$
34.7
$
14.2
+145%
$
83.9
$
42.3
+99%
GAAP Diluted EPS
$
0.53
$
0.28
+89%
$
1.27
$
0.57
+123%
Non-GAAP Diluted EPS
$
0.61
$
0.40
+53%
$
1.56
$
0.93
+68%
(1) See below reconciliation of GAAP to Non-GAAP
measures.
Outlook for 2022
Mr. Gerstel concluded, “Given our strong performance and our
sustainable and predictable business model, we are increasing our
guidance for 2022 substantially.”
In millions
2021
Prior 2022 Guidance
Current 2022 Guidance
YoY
Growth %1
Revenue
$478.5
$620-$640
$630-$635
32%1
Adjusted EBITDA
$69.6
$102+
$120+
72%1
Adjusted EBITDA to Revenue
ex-TAC
37%
41%
46%1
(1) Calculated at revenue guidance midpoint and Adjusted
EBITDA of $120 million
Financial Comparison for the Third Quarter of 2022
Revenue: Revenue increased by 31% to $158.6 million in
the third quarter of 2022 from $121.0 million in the third quarter
of 2021. Display Advertising revenue increased by 26%
year-over-year, accounting for 55% of total revenue. This is
primarily due to 209% growth in video, now representing 44% of
Display Advertising revenue compared with 18% in the third quarter
of 2021, 134% growth in CTV revenue, which represents 9% of Display
Advertising revenue, as well as a 10% increase in average deal size
and a 9% increase in the number of clients for high impact
solutions. The number of SORTTM customers increased by 11%
quarter-over-quarter to 140, and SORTTM customers’ spending during
the period increased by 25%, representing 17% of Display
Advertising revenue compared with 14% in the previous quarter.
Search Advertising revenue increased by 38% year-over-year,
accounting for 45% of revenue, primarily due to a 42% increase in
RPM and a 60% increase in the number of publishers.
Traffic Acquisition Costs (“TAC”): TAC amounted to $93.6
million, or 59% of revenue, in the third quarter of 2022, compared
with $73.6 million, or 61% of revenue, in the third quarter of
2021. The improvement in media margin was primarily due to a
favorable product mix of ad formats and the iHUB contribution.
Net Income: On a GAAP basis, net income increased by 141%
to $25.6 million in the third quarter of 2022 from $10.6 million in
the third quarter of 2021.
Non-GAAP Net Income: Non-GAAP net income was $29.9
million, or 19% of revenue, in the third quarter of 2022, compared
with $15.4 million, or 13% of revenue, in the third quarter of
2021. A reconciliation of GAAP to non-GAAP net income is included
in this press release.
Adjusted EBITDA: Adjusted EBITDA was $33.0 million, or
21% of revenue (and 51% of revenue ex-TAC), in the third quarter of
2022, compared with $17.6 million, or 15% of revenue (and 37% of
revenue ex-TAC), in the third 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 September 30,
2022, cash and cash equivalents and short-term bank deposits
amounted to $390.4 million. Net cash provided by operating
activities in the third quarter of 2022 was $34.7 million, compared
with $14.2 million in the third 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__Xf964JLR62r9JhUOeJvHg
- 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 changes in fair value of earnout contingent
consideration. 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. Revenue excluding 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”,
“estimate” 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, changes in applicable laws and
regulations as well as industry self-regulation, data breaches,
cyber-attacks and other similar incidents, 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.
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,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenue:
Display Advertising
$ 86,779
$ 68,980
$ 236,933
$ 165,146
Search Advertising
71,836
52,049
193,653
155,377
Total Revenue
158,615
121,029
430,586
320,523
Costs and Expenses:
Cost of revenue
7,540
6,284
21,014
17,879
Traffic acquisition costs and
media buy
93,625
73,590
250,555
194,676
Research and development
7,766
8,630
25,135
26,103
Selling and marketing
12,591
12,926
39,884
36,410
General and administrative
3,793
5,295
15,927
14,055
Depreciation and amortization
3,704
1,922
10,097
6,299
Total Costs and
Expenses
129,019
108,647
362,612
295,422
Income from Operations
29,596
12,382
67,974
25,101
Financial expense (income),
net
(1,019)
11
(2,526)
116
Income before Taxes on
income
30,615
12,371
70,500
24,985
Taxes on income
5,033
1,749
9,952
3,974
Net Income
$ 25,582
$ 10,622
$ 60,548
$ 21,011
Net Earnings per Share
Basic
$ 0.57
$ 0.31
$ 1.36
$ 0.63
Diluted
$ 0.53
$ 0.28
$ 1.27
$ 0.57
Weighted average number of
shares
Basic
45,146,639
34,567,551
44,544,483
33,605,215
Diluted
47,997,745
37,865,732
47,560,112
36,866,637
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS In
thousands
September 30,
December 31,
2022
2021
(Unaudited)
(Audited)
ASSETS
Current Assets:
Cash and cash equivalents
$ 171,355
$ 104,446
Restricted cash
1,042
1,089
Short-term bank deposits
219,000
217,200
Accounts receivable, net
99,862
115,361
Prepaid expenses and other
current assets
10,587
8,075
Total Current Assets
501,846
446,171
Long-Term Assets:
Property and equipment, net
3,766
4,211
Operating lease right-of-use
assets
9,175
11,578
Goodwill and intangible assets,
net
250,179
245,965
Deferred taxes
2,955
5,228
Other assets
68
79
Total Long-Term Assets
266,143
267,061
Total Assets
$ 767,989
$ 713,232
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$ 110,672
$ 107,730
Accrued expenses and other
liabilities
29,376
40,331
Short-term operating lease
liability
3,200
3,615
Deferred revenue
2,098
3,852
Short-term payment obligation
related to acquisitions
34,571
38,179
Total Current
Liabilities
179,917
193,707
Long-Term Liabilities:
Payment obligation related to
acquisition
32,966
33,250
Long-term operating lease
liability
6,805
9,774
Other long-term liabilities
9,265
9,541
Total Long-Term
Liabilities
49,036
52,565
Total Liabilities
228,953
246,272
Shareholders' equity:
Ordinary shares
389
375
Additional paid-in capital
508,946
496,154
Treasury shares at cost
(1,002)
(1,002)
Accumulated other comprehensive
loss
(1,406)
(128)
Retained earnings (accumulated
deficit)
32,109
(28,439)
Total Shareholders'
Equity
539,036
466,960
Total Liabilities and
Shareholders' Equity
$ 767,989
$ 713,232
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS In
thousands
Three months ended
Nine months ended
September 30,
September 30,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Cash
flows from operating activities:
Net Income
$ 25,582
$ 10,622
$ 60,548
$ 21,011
Adjustments required to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization
3,704
1,922
10,097
6,299
Stock-based compensation
expense
3,236
1,744
8,365
3,733
Foreign currency translation
(64)
(18)
(238)
(107)
Accrued interest, net
(825)
(53)
(2,006)
(220)
Deferred taxes, net
1,575
(478)
1,327
(183)
Accrued severance pay, net
(831)
135
(328)
333
Gain from sale of property and
equipment
(5)
-
(10)
(11)
Net changes in operating assets
and liabilities
2,300
301
6,194
11,415
Net cash provided by operating
activities
$ 34,672
$ 14,175
$ 83,949
$ 42,270
Cash
flows from investing activities:
Purchases of property and
equipment, net of sales
(349)
(141)
(779)
(495)
Short-term deposits, net
31,600
23,000
(1,800)
(47,300)
Cash paid in connection with
acquisitions, net of cash acquired
-
-
(9,570)
(3,438)
Net cash provided by (used in)
investing activities
$ 31,251
$ 22,859
$ (12,149)
$ (51,233)
Cash
flows from financing activities:
Issuance of shares in private
placement, net
-
-
-
60,960
Proceeds from exercise of
stock-based compensation
3,147
1,069
4,441
4,940
Payments of contingent
consideration
-
-
(9,091)
-
Repayment of long-term loans
-
-
-
(8,333)
Net cash provided by (used in)
financing activities
$ 3,147
$ 1,069
$ (4,650)
$ 57,567
Effect of exchange rate changes
on cash and cash equivalents and restricted cash
(110)
(46)
(288)
(49)
Net increase in cash and cash
equivalents and restricted cash
68,960
38,057
66,862
48,555
Cash and cash equivalents and
restricted cash at beginning of period
103,437
59,376
105,535
48,878
Cash and cash equivalents and
restricted cash at end of period
$ 172,397
$ 97,433
$ 172,397
$ 97,433
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,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
GAAP Net Income
$ 25,582
$ 10,622
$ 60,548
$ 21,011
Stock-based compensation
3,236
1,744
8,365
3,733
Amortization of acquired
intangible assets
3,295
1,370
8,896
4,068
Retention and other related to
M&A related expenses
288
1,561
1,518
5,527
Changes in FV of Earnout
contingent consideration
(3,816)
-
(3,816)
-
Foreign exchange losses (gains)
associated with ASC-842
(80)
6
(824)
(207)
Revaluation of acquisition
related contingent consideration
342
136
602
476
Taxes on the above items
1,067
(54)
(145)
92
Non-GAAP Net Income
$ 29,914
$ 15,385
$ 75,144
$ 34,700
Non-GAAP Net Income
$ 29,914
$ 15,385
$ 75,144
$ 34,700
Taxes on income
3,966
1,803
10,097
3,882
Financial income, net
(1,281)
(131)
(2,304)
(153)
Depreciation
409
552
1,201
2,231
Adjusted EBITDA
$ 33,008
$ 17,609
$ 84,138
$ 40,660
Non-GAAP diluted earnings per
share
$ 0.61
$ 0.40
$ 1.56
$ 0.93
Shares used in computing
non-GAAP diluted earnings per share
48,873,796
38,428,524
48,112,823
37,206,600
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109005493/en/
Perion Network Ltd. Dudi Musler, VP of Investor Relations +972
(54) 7876785 dudim@perion.com
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