09th Nov 2022
TEL AVIV, Israel & NEW YORK–(BUSINESS WIRE)–Nov. 9, 2022– 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:
“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.”
In millions, except per share data
Three months ended
Nine months ended
September 30,
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
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.
Mr. Gerstel concluded, “Given our strong performance and our sustainable and predictable business model, we are increasing our guidance for 2022 substantially.”
In millions
Prior 2022 Guidance
Current 2022 Guidance
YoY Growth %1
Revenue
$478.5
$620-$640
$630-$635
32%1
$69.6
$102+
$120+
72%1
41%
46%1
(1) Calculated at revenue guidance midpoint and Adjusted EBITDA of $120 million
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.
Perion management will host a conference call to discuss the results at 8:30 a.m. ET today. Call details:
A replay of the call and a transcript will be available within approximately 24 hours of the live event here.
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.
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.
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)
(Unaudited)
Revenue:
Display Advertising
$ 86,779
$ 68,980
$ 236,933
$ 165,146
Search Advertising
71,836
52,049
193,653
155,377
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 & 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
Weighted average number of shares
45,146,639
34,567,551
44,544,483
33,605,215
47,997,745
37,865,732
47,560,112
36,866,637
CONDENSED CONSOLIDATED BALANCE SHEETS In thousands
December 31,
(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)
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
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
3,236
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 & equipment
(5)
–
(10)
(11)
Net changes in operating assets & 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)
(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
68,960
38,057
66,862
48,555
and restricted cash at beginning of period
103,437
59,376
105,535
48,878
and restricted cash at end of period
$ 172,397
$ 97,433
RECONCILIATION OF GAAP TO NON-GAAP RESULTS In thousands (except share and per share data)
Stock-based compensation
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)
Foreign exchange losses (gains)
associated with ASC-842
(80)
6
(824)
(207)
Revaluation of acquisition related
342
136
602
476
Taxes on the above items
1,067
(54)
(145)
92
$ 29,914
$ 15,385
$ 75,144
$ 34,700
3,966
1,803
3,882
Financial income, net
(1,281)
(131)
(2,304)
(153)
Depreciation
409
552
1,201
2,231
$ 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
Perion Network Ltd. Dudi Musler, VP of Investor Relations +972 (54) 7876785 dudim@perion.com
Source: Perion Network Ltd.
