Press Releases Perion Continues to Deliver Strong Results with 17% Year-Over-Year Increase in Revenue and 29% Growth in Adjusted EBITDA

Perion Continues to Deliver Strong Results with 17% Year-Over-Year Increase in Revenue and 29% Growth in Adjusted EBITDA

Published on

01st Nov 2023

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NEW YORK & TEL AVIV–(BUSINESS WIRE)–Nov. 1, 2023– Perion Network Ltd. (NASDAQ and TASE: PERI), a global technology company whose synergistic solutions serve all major digital advertising channels – including search, social, display, and video/CTV, today reported its financial results for the third quarter ended September 30, 2023.

 

“Once again, our business results proved that our strategically diversified model gives us the agility to deliver continued growth,” stated Tal Jacobson, Perion’s CEO. “Despite macroeconomic headwinds, our third-quarter year-over-year revenue and adjusted EBITDA increased 17% and 29%, respectively. These results were made possible by the ability to leverage our technological capabilities and focus resources on the strongest industry verticals to achieve top-line profitability and margin expansion. Specifically, our Retail Media solutions are tracking to significantly exceed our annual revenue goal for 2023.”

 

“Our diversification remains a key differentiator for Perion, powered by exceptional execution and ongoing investment in technology,” added Mr. Jacobson.

 

Introducing WAVE

Reaffirming its commitment to technological innovation, Perion expands its advertiser suite of solutions with the introduction of WAVE (Waveform Audio Voice Engine), a generative AI-powered dynamic audio solution that enables advertisers to generate personalized audio advertising messages at scale. The power of the solution is based on advanced algorithmic AI processing which combines first-party data with voice, reaching consumer audiences with tailored audio messages that adapt in real time to parameters such as weather, location, daypart, and many others.

 

“We are focused on developing technology that creates deeper and more meaningful consumer experiences,” explained Mr. Jacobson. “WAVE represents our commitment to changing the game for advertisers, enabling us to tap into lucrative channels and create entirely new categories. We envision a future where every consumer interaction is customized, localized and commerce-enabled.”

 

Albertsons is an early adopter that has seamlessly integrated WAVE into several successful campaigns and is now looking to scale the solution more broadly.

 

“When Perion introduced us to the AI script and voice, we were blown away. It was very hard to detect that it was an actual AI voice – right down to the nuances of how certain products are pronounced, and the annunciation. To see the machine actually learning those dialogue differences was super important to us,” said Tony Colvin, Director – Paid Media, Albertsons Companies.

 

WAVE is launching into the Retail vertical, adding a richer, multi-dimensional capability to each consumer touchpoint. Perion plans to quickly roll out WAVE to additional verticals, including QSR – Quick-Service Restaurants, automotive, and travel.

 

Third Quarter 2023 Business Highlights

  • Retail Media1 revenue increased 112% year-over-year to $13.0 million, representing 13% of Display Advertising revenue compared to 7% last year
  • CTV revenue2 increased 39% year-over-year to $7.9 million, representing 8% of Display Advertising revenue compared to 7% last year
  • Video revenue decreased 16% year-over-year, driven by shifting inventory from video to display to gain higher profit, representing 32% of Display Advertising revenue, compared to 44% last year
  • The number of Average Daily Searches increased by 86% year-over-year to 31.3 million. The number of Search Advertising publishers increased by 16% year-over-year to 164
1 Retail Media revenue includes all media channels, such as CTV, video, and others.

 

2 Starting in the previous quarter, we changed our methodology for measuring our CTV activity. We moved from measuring CTV campaigns to measuring CTV channels. The CTV growth trend under both methodologies remains in the same trajectory. Under our updated methodology, revenue generated from CTV in the third quarter of 2022 was $5.7 million vs. $7.4 million under the previous methodology.

 

Third Quarter 2023 Financial Highlights1

In millions,

Three months ended

Nine months ended

except per share data

September 30,

September 30,

2023

2022

%

2023

2022

%

Display Advertising Revenue $

99.2

$

86.8

14%

$

278.5

$

236.9

18%

Search Advertising Revenue $

86.1

$

71.8

20%

$

230.5

$

193.7

19%

Total Revenue $

185.3

$

158.6

17%

$

509

$

430.6

18%

Contribution ex-TAC (Revenue ex-TAC)1 $

77.3

$

65

19%

$

219.6

$

180

22%

GAAP Net Income $

32.8

$

25.6

28%

$

78

$

60.5

29%

Non-GAAP Net Income1 $

42.4

$

29.9

42%

$

114.4

$

75.1

52%

Adjusted EBITDA1 $

42.7

$

33

29%

$

115.2

$

84.1

37%

Adjusted EBITDA to Revenue ex-TAC

55%

51%

52%

47%

Net Cash from Operations $

40.1

$

34.7

16%

$

105.2

$

83.9

25%

GAAP Diluted EPS $

0.65

$

0.53

23%

$

1.57

$

1.27

24%

Non-GAAP Diluted EPS1 $

0.84

$

0.61

38%

$

2.28

$

1.56

46%

 

Outlook for 2023 2

With the first three quarters of 2023 behind us, Perion reiterates its annual revenue and adjusted EBITDA guidance.

In millions

2022

2023 Guidance

YoY Growth %3

Revenue

$640.3

$730-$750

16%

Adjusted EBITDA

$132.4

$167+

26%

Adjusted EBITDA to Revenue

21%

23%3

Adjusted EBITDA to Contribution ex-TAC

49%

54%3

1 Contribution ex-TAC, non-GAAP Net Income, Adjusted EBITDA and non-GAAP Diluted EPS are non-GAAP measures. See below reconciliation of GAAP to non-GAAP measures.

 

2 We have not provided an outlook for GAAP Income from operations or reconciliation of Adjusted EBITDA guidance to GAAP Income from operations, the closest corresponding GAAP measure, because we do not provide guidance for certain of the reconciling items on a consistent basis due to the variability and complexity of these items, including but not limited to the measures and effects of our stock-based compensation expenses directly impacted by unpredictable fluctuation in our share price and amortization in connection with future acquisitions. Hence, we are unable to quantify these amounts without unreasonable efforts.

 

3 Calculated at revenue guidance midpoint. Adjusted EBITDA year-over-year growth calculated based on $167 million.

 

Financial Comparison for the Third Quarter of 2023

Revenue: Revenue increased 17% to $185.3 million in the third quarter of 2023 from $158.6 million in the third quarter of 2022. Display Advertising revenue increased 14% year-over-year, accounting for 54% of total revenue, primarily due to a 112% year-over-year increase in Retail revenue to $13.0 million and a 39% year-over-year increase in CTV revenue to $7.9 million. Search Advertising revenue increased 20% year-over-year, accounting for 46% of revenue, with 86% increase in Average Daily Searches and 16% increase in the number of publishers.

 

Traffic Acquisition Costs and Media Buy (“TAC”): TAC amounted to $108.0 million, or 58% of revenue, in the third quarter of 2023, compared with $93.6 million, or 59% of revenue, in the third quarter of 2022. The margin expansion was primarily attributed to favorable product mix and media buying optimization through our platform.

 

GAAP Net Income: GAAP net income increased by 28% to $32.8 million in the third quarter of 2023 compared with $25.6 million in the third quarter of 2022.

 

Non-GAAP Net Income: Non-GAAP net income was $42.4 million, or 23% of revenue, in the third quarter of 2023, compared with $29.9 million, or 19% of revenue, in the third quarter of 2022. A reconciliation of GAAP to non-GAAP net income is included in this press release.

 

Adjusted EBITDA: Adjusted EBITDA was $42.7 million, or 23% of revenue (and 55% of Contribution ex-TAC) in the third quarter of 2023, compared with $33.0 million, or 21% of revenue (and 51% of Contribution ex-TAC) in the third quarter of 2022. A reconciliation of GAAP income from operations to Adjusted EBITDA is included in this press release.

 

Cash Flow from Operations: Net cash provided by operating activities in the third quarter of 2023 was $40.1 million, compared with $34.7 million in the third quarter of 2022.

 

Net cash: As of September 30, 2023, cash and cash equivalents, short-term bank deposits and marketable securities amounted to $523.6 million, compared with $429.6 million as of December 31, 2022.

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,

2023

2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue

Display Advertising

$

99,193

$

86,779

$

278,450

$

236,933

Search Advertising

86,112

71,836

230,475

193,653

Total Revenue

185,305

158,615

508,925

430,586

Costs and Expenses

Cost of revenue

9,805

7,540

26,953

21,014

Traffic acquisition costs and media buy

107,981

93,625

289,338

250,555

Research and development

7,763

7,766

24,352

25,135

Selling and marketing

14,171

12,591

42,983

39,884

General and administrative

7,712

1 7,609

21,668

1 19,743

Change in fair value of contingent consideration

1,982

1 (3,816)

16,584

1 (3,816)

Depreciation and amortization

3,425

3,704

10,191

10,097

Total Costs and Expenses

152,839

129,019

432,069

362,612

Income from Operations

32,466

29,596

76,856

67,974

Financial income, net

6,103

1,019

14,689

2,526

Income before Taxes on income

38,569

30,615

91,545

70,500

Taxes on income

5,748

5,033

13,533

9,952

Net Income

$

32,821

$

25,582

$

78,012

$

60,548

Net Earnings per Share

Basic

$

0.69

$

0.57

$

1.66

$

1.36

Diluted

$

0.65

$

0.53

$

1.57

$

1.27

Weighted average number of shares

Basic

47,392,072

45,146,639

46,915,616

44,544,483

Diluted

50,270,296

47,997,745

49,831,190

47,560,112

 

1 Reflects reclassification of $3.8 million of earnout liability in 2022 that was incurred in connection with a transaction from general and administrative to change in fair value of contingent consideration.

 

 

PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands

September 30, December 31,

2023

2022

(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents

$

197,853

$

176,226

Restricted cash

1,327

1,295

Short-term bank deposits

253,950

253,400

Marketable securities

71,817

Accounts receivable, net

142,106

160,488

Prepaid expenses and other current assets

16,641

12,049

Total Current Assets

683,694

603,458

Long-Term Assets
Property and equipment, net

3,012

3,611

Operating lease right-of-use assets

7,400

10,130

Goodwill and intangible assets, net

238,218

247,191

Deferred taxes

7,651

5,779

Other assets

75

49

Total Long-Term Assets

256,356

266,760

Total Assets

$

940,050

$

870,218

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable

$

139,476

$

155,854

Accrued expenses and other liabilities

33,759

37,869

Short-term operating lease liability

3,940

3,900

Deferred revenue

1,530

2,377

Short-term payment obligation related to acquisitions

71,464

34,608

Total Current Liabilities

250,169

234,608

Long-Term Liabilities
Payment obligation related to acquisition

33,113

Long-term operating lease liability

4,415

7,580

Other long-term liabilities

12,023

11,783

Total Long-Term Liabilities

16,438

52,476

Total Liabilities

266,607

287,084

Shareholders’ equity
Ordinary shares

409

398

Additional paid-in capital

526,399

513,534

Treasury shares at cost

-1,002

-1,002

Accumulated other comprehensive loss

-1,161

-582

Retained earnings

148,798

70,786

Total Shareholders’ Equity

673,443

583,134

Total Liabilities and Shareholders’ Equity

$

940,050

$

870,218

 

 

PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

In thousands

Three months ended Nine months ended

September 30,

September 30,

2023

2022

2023

2022

(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities
Net Income

$

32,821

$

25,582

$

78,012

$

60,548

Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

3,425

3,704

10,191

10,097

Stock-based compensation expense

4,425

3,236

10,927

8,365

Foreign currency translation

22

-64

9

-238

Accrued interest, net

-2,208

-825

-4,239

-2,006

Deferred taxes, net

-1,257

1,575

-1,733

1,327

Accrued severance pay, net

-187

-831

-462

-328

Gain from sale of property and equipment

-5

-5

-22

-10

Net changes in operating assets and liabilities

3,059

2,300

12,563

6,194

Net cash provided by operating activities

$

40,095

$

34,672

$

105,246

$

83,949

Cash flows from investing activities
Purchases of property and equipment, net of sales

-152

-349

-503

-779

Investment in marketable securities, net of sales

597

-71,598

Short-term deposits, net

-28,650

31,600

-550

-1,800

Cash paid in connection with acquisitions, net of cash acquired

-9,570

Net cash provided by (used in) investing activities

$

(28,205)

$

31,251

$

(72,651)

$

(12,149)

Cash flows from financing activities
Proceeds from exercise of stock-based compensation

150

3,147

2,338

4,441

Payments of contingent consideration

-13,256

-9,091

Net cash provided by (used in) financing activities

$

150

$

3,147

$

(10,918)

$

(4,650)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

-103

-110

-18

-288

Net increase in cash and cash equivalents and restricted cash

11,937

68,960

21,659

66,862

Cash and cash equivalents and restricted cash at beginning of period

187,243

103,437

177,521

105,535

Cash and cash equivalents and restricted cash at end of period

$

199,180

$

172,397

$

199,180

$

172,397

 

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,

2023

2022

2023

2022

(Unaudited) (Unaudited)
Revenue

$

185,305

$

158,615

$

508,925

$

430,586

Traffic acquisition costs and media buy

107,981

93,625

289,338

250,555

Contribution ex-TAC

$

77,324

$

64,990

$

219,587

$

180,031

 

 

Three months ended Nine months ended
September 30, September 30,

2023

2022

2023

2022

(Unaudited) (Unaudited)
GAAP Income from Operations

$

32,466

$

29,596

$

76,856

$

67,974

Stock-based compensation expenses

4,425

3,236

10,927

8,365

Retention and other acquisition related expenses

401

288

658

1,518

Change in fair value of contingent consideration

1,982

-3,816

16,584

-3,816

Amortization of acquired intangible assets

3,017

3,295

8,972

8,896

Depreciation

408

409

1,219

1,201

Adjusted EBITDA

$

42,699

$

33,008

$

115,216

$

84,138

 

 

Three months ended Nine months ended

September 30,

September 30,

2023

2022

2023

2022

(Unaudited) (Unaudited)
GAAP Net Income

$

32,821

$

25,582

$

78,012

$

60,548

Stock-based compensation expenses

4,425

3,236

10,927

8,365

Amortization of acquired intangible assets

3,017

3,295

8,972

8,896

Retention and other acquisition related expenses

401

288

658

1,518

Change in fair value of contingent consideration

1,982

-3,816

16,584

-3,816

Foreign exchange gains associated with ASC-842

-83

-80

-280

-824

Revaluation of acquisition related contingent consideration

149

342

441

602

Taxes on the above items

-291

1,067

-865

-145

Non-GAAP Net Income

$

42,421

$

29,914

$

114,449

$

75,144

Non-GAAP diluted earnings per share

$

0.84

$

0.61

$

2.28

$

1.56

Shares used in computing non-GAAP diluted earnings per share

50,543,534

48,873,796

50,106,425

48,112,823

 

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