Press Releases Perion’s Momentum Continues, Delivering 16% Revenue Growth and 54% Increase in Net Income

Perion’s Momentum Continues, Delivering 16% Revenue Growth and 54% Increase in Net Income

Published on

03rd May 2023

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TEL AVIV, Israel & NEW YORK–(BUSINESS WIRE)–May 3, 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 its financial results for the first quarter ended March 31, 2023.

 

Doron Gerstel, Perion’s CEO, stated, “We continue to outperform the adtech industry despite the challenging macro environment, as reflected in our ongoing market share gains and increased efficiencies, which are made possible by our innovative technology. All of these collectively, are driving top-line growth and margin expansion”.

 

“We are growing in the areas where technology matters most,” added Mr. Gerstel. “These include video – which continues to represent an increasing portion of our display revenue; our fast-growing retail media channel; our privacy-first targeting solution SORT®, and our search advertising solution. The rapid emergence of ChatGPT in the market and Microsoft’s mission to further expand the role of AI within search, has elevated user interest in Bing. As a result, we experienced a 49% year-over-year growth in average daily searches, as well as a lift in new publishers”.

 

“Our ongoing margin and top-line growth are the result of our ability to consolidate cross channel data signals in a central place – Perion’s iHUB. Advanced proprietary AI technology powers a centralized bidding system that maximizes unit revenue (CPM), while reducing media cost and simultaneously meeting our customer ROAS (Return on Ad Spend) expectations,” added Mr. Gerstel.

 

First Quarter 2023 Business Highlights

  • Media margin increased to 45%, compared with 43% in the first quarter of 2022
  • Video revenue increased by 26% year-over-year, representing 44% of Display Advertising Revenue compared with 41% last year
    • The number of video platform publishers increased by 63% year-over-year to 75 publishers
    • Revenue from retained video platform publishers increased by 71% year-over-year
    • Average revenue per video platform publisher increased by 22% year-over-year
  • CTV revenue increased by 12% year-over-year, representing 8% of Display Advertising Revenue – similar to last year, with the number of CTV customers nearly doubling
  • Retail Media revenue increased by 60% year-over-year, representing 8% of Display Advertising Revenue compared with 6% last year, with the number of retail media customers up 32% over the same period
  • SORT® spending increased by 93% year-over-year, representing 17% of Display Advertising Revenue, driven by a 142% increase in the number of customers
  • The number of search advertising publishers increased by 29% year-over-year, while the number of average daily searches increased by 49% to 26.3 million over the same period

 

First Quarter 2023 Financial Highlights(1)

In millions,

except per share data

Three months ended

March 31,

2023

2022

%

Display Advertising Revenue

$

79.9

$

68.6

+16%

Search Advertising Revenue

$

65.3

$

56.7

+15%

Total Revenue

$

145.2

$

125.3

+16%

Gross Profit (Revenue ex-TAC)

$

65.3

$

54.3

+20%

GAAP Net Income

$

23.8

$

15.5

+54%

Non-GAAP Net Income

$

29.9

$

20.7

+44%

Adjusted EBITDA

$

31.3

$

22.7

+38%

Adjusted EBITDA to Revenue ex-TAC

48%

42%

Net Cash from Operations

$

17.8

$

23.6

-25%

GAAP Diluted EPS

$

0.48

$

0.33

+45%

Non-GAAP Diluted EPS

$

0.60

$

0.44

+36%

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

 

Outlook for 2023

“Given our current visibility, and the sustainability and predictability of our business model, we feel confident in raising annual guidance for the full year 2023. The management transition announced in February is on track and I am confident that Perion will continue to thrive under Tal Jacobson’s leadership,” concluded Mr. Gerstel.

 

In millions

2022

Prior 2023 Guidance

Current 2023 Guidance

YoY Growth %1

Revenue

$640.3

$720-$740

$725-$745

15%1

Adjusted EBITDA

$132.4

$149-153

$155+

17%

Adjusted EBITDA to Revenue

21%

21%1

21%1

Adjusted EBITDA to Revenue ex-TAC

49%

50%1

50%1

(1) Calculated at revenue guidance midpoint

 

Financial Comparison for the First Quarter of 2023

Revenue: Revenue increased by 16% to $145.2 million in the first quarter of 2023 from $125.3 million in the first quarter of 2022. Display Advertising Revenue increased by 16% year-over-year, accounting for 55% of total revenue. Growth was primarily due to a 26% increase in video revenue, 12% increase in CTV revenue, 93% increase in SORT® customer spending and a 60% year-over-year increase in Retail media revenue. Search Advertising Revenue increased by 15% year-over-year, accounting for 45% of revenue, primarily due to a 29% increase in the number of publishers and a 49% increase in average daily searches, offsetting a 22% decrease in RPM.

 

Traffic Acquisition Costs (“TAC”): TAC amounted to $79.9 million, or 55% of revenue, in the first quarter of 2023, compared with $71.0 million, or 57% of revenue, in the first quarter of 2022. The improvement in media margin was primarily due to our proprietary iHUB technology which optimizes media buying and reduces our media cost, as well as Search and Display advertising product mix.

 

Net Income: On a GAAP basis, net income increased by 54% to $23.8 million in the first quarter of 2023 from $15.5 million in the first quarter of 2022. Non-GAAP net income was $29.9 million, or 21% of revenue, in the first quarter of 2023, compared with $20.7 million, or 17% of revenue, in the first quarter of 2022. A reconciliation of GAAP to non-GAAP net income is included in this press release.

 

Adjusted EBITDA: Adjusted EBITDA was $31.3 million, or 22% of revenue and 48% of revenue ex-TAC, in the first quarter of 2023, compared with $22.7 million, or 18% of revenue and 42% of revenue ex-TAC, in the first quarter of 2022. 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 the first quarter of 2023 was $17.8 million, compared with $23.6 million in the first quarter of 2022. Operating cash flow was affected by the shift of approximately $8 million in customer collection from March 2023 to April 2023 and a one-time change in working capital needs.

 

Cash, cash equivalents, short-term bank deposits and marketable securities: As of March 31, 2023, cash and cash equivalents, short-term bank deposits and marketable securities amounted to $436.3 million, compared with $429.6 million as of December 31, 2022. The $6.7 million increase is primarily a result of $17.8 million in cash from operations, partially offset by $13.3 million cash paid in connection with acquisitions.

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