Press Releases Perion’s Momentum Continues, Delivering 119% Year-Over-Year Net Income Growth in the Fourth Quarter 2022; Diluted EPS of $0.79

Perion’s Momentum Continues, Delivering 119% Year-Over-Year Net Income Growth in the Fourth Quarter 2022; Diluted EPS of $0.79

Published on

08th Feb 2023

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TEL AVIV & NEW YORK–(BUSINESS WIRE)–Feb. 8, 2023– 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 fourth quarter and full year period ending December 31, 2022.

 

“Perion operates in a dynamic digital advertising market, and our strong financial performance is a clear indication of our unique capability to identify shifts in ad spending, delivering the right solutions at the right time,” said Doron Gerstel, Perion’s CEO. “A three-year EBITDA CAGR of 101% and revenue CAGR of 40% demonstrates the high level of predictability and sustainability of our business model, underpinned by our diversification and profitability-biased strategy. By connecting all our data assets across all media channels on both sides of the open web into an intelligent central hub (iHUB), we’re able to rapidly analyze changes in consumer behavior and shift our business to where media budgets are trending, while consistently delivering superior return on advertising spend to our clients and increasing our profit margins.”

 

“I’d like to stress that the consistency of our performance over the past three years is even more impressive when you consider the unprecedented volatility presented by the global pandemic, supply chain distortions, interest rate increases, and the resultant emotional swings among advertisers and brands,” added Mr. Gerstel.

 

Full-Year 2022 Business Highlights

  • Video revenue increased by 129%, representing 43% of Display Advertising revenue
  • CTV revenue increased by 108% year-over-year
  • 59% of our agencies and brand customers adopted our SORT™ solution, and generated $59.4 million
  • Customer retention rate of 115%
  • Media margin increased to 42% compared with 40% in 2021
  • The number of publishers increased by 27% year-over-year to 265
  • Average daily searches increased by 11% and average RPM increased by 21% year-over-year

 

Fourth Quarter 2022 Business Highlights

  • Video revenue increased by 33% year-over-year, representing 42% of Display Advertising revenue
  • CTV revenue increased by 42% year-over-year
  • Increased adoption of our holistic Video Platform solution continues to deliver strong results:
    • 72% year-over-year increase in the number of Video Platform publishers
    • 78% year-over-year increase in revenue from existing Video Platform publishers
  • Media margin increased to 42% compared with 41% in the fourth quarter of 2021
  • Average daily searches increased by 26% and average RPM increased by 13% year-over-year

 

Fourth Quarter 2022 Financial Highlights(1)

In millions,
except per share data

Three months ended

Year ended

December 31,

December 31,

2022

2021

%

2022

2021

%

Display Advertising Revenue

$

123.8

$

100.2

+24%

$

360.7

$

265.3

+36%

Search Advertising Revenue

$

85.9

$

57.8

+49%

$

279.6

$

213.2

+31%

Total Revenue

$

209.7

$

158.0

+33%

$

640.3

$

478.5

+34%

GAAP Net Income

$

38.7

$

17.7

+119%

$

99.2

$

38.7

+156%

Non-GAAP Net Income

$

44.7

$

25.3

+77%

$

119.8

$

60.0

+100%

Adjusted EBITDA

$

48.2

$

28.9

+67%

$

132.4

$

69.6

+90%

Adjusted EBITDA to Revenue ex-TAC

55%

45%

49%

37%

Net Cash from Operations

$

38.2

$

28.8

+32%

$

122.1

$

71.1

+72%

GAAP Diluted EPS

$

0.79

$

0.44

+80%

$

2.06

$

1.02

+102%

Non-GAAP Diluted EPS

$

0.90

$

0.62

+45%

$

2.47

$

1.57

+57%

(1) See below reconciliation of GAAP to Non-GAAP measures

 

 

Outlook for 2023

Mr. Gerstel concluded, “We expect the strong business momentum to carry on in 2023. We will continue to execute our strategy, harnessing our innovative capabilities and our efficiency measures to further drive growth and high profitability.”

 

In millions

2022

2023 Guidance

YoY Growth %1

Revenue

$640.3

$720-$740

14%1

Adjusted EBITDA

$132.4

$149-$153

14%1

Adjusted EBITDA to Revenue

21%

21%1

Adjusted EBITDA to Revenue ex-TAC

49%

50%1

(1) Calculated at guidance midpoint

 

Financial Comparison for the Full Year of 2022

Revenue: Revenue increased by 34% to $640.3 million in 2022 from $478.5 million in 2021. Display Advertising revenue increased by 36%, accounting for 56% of revenue, mainly driven by 129% growth in video revenue, 108% growth in CTV revenue and 4% increase in the number of agencies and brand customers. Search Advertising revenue increased by 31%, accounting for 44% of revenue, primarily due to a 21% increase in RPM and 11% increase in average daily searches.

 

Traffic Acquisition Costs (“TAC”): TAC amounted to $372.6 million, or 58% of revenue, compared with $288.0 million, or 60% of revenue, in 2021. The improvement in media margin was primarily due to a favorable product mix and our ability to connect the supply and demand sides of the marketplace, bringing Perion and its client’s significant efficiencies.

 

Net Income: On a GAAP basis, net income increased by 156% to $99.2 million in 2022 from $38.7 million in 2021. Non-GAAP net income was $119.8 million, or 19% of revenue, compared with $60.0 million, or 13% of revenue in 2021. A reconciliation of GAAP to non-GAAP net income is included in this press release.

 

Adjusted EBITDA: Adjusted EBITDA was $132.4 million, or 21% of revenue (and 49% of revenue ex-TAC), compared with $69.6 million, or 15% of revenue (and 37% of revenue ex-TAC) in 2021. 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, 2022, cash and cash equivalents and short-term bank deposits amounted to $429.6 million. Net cash provided by operating activities in 2022 was $122.1 million, a 72% increase compared with $71.7 million in 2021.

 

Financial Comparison for the Fourth Quarter of 2022

Revenue: Revenue increased by 33% to $209.7 million in the fourth quarter of 2022 from $158.0 million in the fourth quarter of 2021. Display Advertising revenue increased by 24%, accounting for 59% of total revenue, mainly driven by 33% growth in video revenue, 42% growth in CTV revenue and 11% increase in the number of agencies and brand customers. Search Advertising revenue increased by 49% year-over-year, accounting for 41% of revenue, primarily due to a 13% increase in RPM and a 26% increase in average daily searches.

 

Traffic Acquisition Costs (“TAC”): TAC amounted to $122 million, or 58% of revenue in the fourth quarter of 2022, compared with $93.3 million, or 59% of revenue, in the fourth quarter of 2021. The improvement in media margin was primarily due to a favorable product mix and our ability to connect the supply and demand sides of the marketplace, bringing Perion and its client’s significant efficiencies.

 

Net Income: On a GAAP basis, net income increased by 119% to $38.7 million in the fourth quarter of 2022 from $17.7 million in the fourth quarter of 2021. Non-GAAP net income was $44.7 million, or 21% of revenue, compared with $25.3 million, or 16% of revenue, in the fourth quarter of 2021. A reconciliation of GAAP to non-GAAP net income is included in this press release.

 

Adjusted EBITDA: Adjusted EBITDA was $48.2 million, or 23% of revenue (and 55% of revenue ex-TAC), compared with $28.9 million, or 18% of revenue (and 45% of revenue ex-TAC) in the fourth quarter of 2021. A reconciliation of GAAP Net Income to Adjusted EBITDA is included in this press release.

 

Cash and Cash Flow from Operations: Net cash provided by operating activities in the fourth quarter of 2022 was $38.2 million, a 32% increase compared with $28.8 million in the fourth quarter of 2021.

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