09th Feb 2022
TEL AVIV, Israel & NEW YORK–(BUSINESS WIRE)–Feb. 9, 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.”
(In millions, except per share data)
Three months ended
Year ended
December 31,
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
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.
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.
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 $22.2 million in 2020, an increase of 221%.
Perion has raised its financial guidance for 2022, based on the Company’s strong business momentum and improved visibility.
($M)
Previous 2022 Guidance
Guidance 2022 *
YoY Growth % *
Revenue
$478.5
$590-$610
$610-$630
30%
$69.6
$80-$84
$88-$92
29%
EBITDA to REV Ex-TAC
36%
* At guidance midpoint
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
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 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.
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)
(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
36,768,367
26,946,060
34,397,134
26,687,145
40,349,416
29,961,648
37,829,725
28,797,747
CONDENSED CONSOLIDATED BALANCE SHEETS In thousands
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)
Accumulated other comprehensive gain
(128)
112
Accumulated deficit
(28,439)
(67,145)
Total Shareholders’ Equity
466,960
184,122
Total Liabilities and Shareholders’ Equity
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS In thousands
Cash flows from operating activities:
Adjustments required to reconcile net income to net cash
provided by operating activities:
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
$ 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)
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
at end of period
$ 105,535
$ 48,878
RECONCILIATION OF GAAP TO NON-GAAP RESULTS In thousands (except share and per share data)
Stock-based compensation
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)
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)
$ 25,288
$ 13,787
$ 59,987
$ 26,633
Taxes on income
2,857
(313)
6,739
(107)
Financial expense (income), net
796
(142)
1,596
Depreciation
791
1,064
3,022
4,662
$ 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
Perion Network Ltd. Rami Rozen, VP of Investor Relations +972 (52) 5694441 ramir@perion.com
