Press Releases Perion Delivers Another Strong Quarter, with 31% Revenue Growth and 141% Growth in Net Income

Perion Delivers Another Strong Quarter, with 31% Revenue Growth and 141% Growth in Net Income

Published on

09th Nov 2023

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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:

  • 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.

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