08th May 2024
108% YoY growth in CTV Advertising; 134% YoY growth in Retail Media; 25% YoY growth in Digital Out of Home (DOOH) Advertising on a proforma basis
New York & Tel Aviv– May 8, 2024 – Perion Network Ltd. (NASDAQ and TASE: PERI), a technology leader in connecting advertisers to consumers across all major digital channels, today reported its financial results for the first quarter ended March 31, 2024.
“Perion is a resilient and agile company and we are confident in our strategic positioning to overcome challenges, including recent changes in advertising pricing and mechanisms introduced by Microsoft Bing,” stated Tal Jacobson, CEO of Perion.
“Perion continues to expand its universe of technological advertising solutions, capitalizing on strong organic growth engines that include our Retail Media solutions and CTV advertising, as well as our strategic acquisition of cutting-edge programmatic DOOH technology. Each of these growth engines demonstrated strong year-over-year growth in the first quarter and are expected to contribute meaningfully to our results going forward. In parallel, our AI Lab continues to deliver new technologies, including the introduction of SORT® 2.0, an AI-based audience segmentation technology which is now also available for CTV, and our WAVE technology for dynamic audio ads, which now supports Spanish as well.”
“As we enter the next phase of Perion’s evolution, we are focused on building an advertiser-centric universe that powers brand presence across the consumer journey. This approach is wrapped in a new brand identity and positioning. This embodies our commitment to our clients to stay ahead of the curve, ensuring that wherever their audiences are in their journey Perion is there to elevate their brand and outcomes.”
“Leveraging our strong balance sheet, we will continue to pursue opportunities to develop additional solutions and expand our product offering for our customers, while enhancing long-term value for shareholders,” Jacobson concluded.
1 Retail Media revenue include all media channels, such as, CTV, DOOH, video, and others
2 Formerly referred to as Display Advertising, includes all Perion’s digital advertising activities except Search Advertising
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.
Q2 2024 Guidance
FY 2024 Guidance
As announced on April 8, 2024, Perion’s Board of Directors has approved the expansion of its previously authorized share repurchase program from $50 million to up to $75 million.
1 Contribution ex-TAC and Adjusted EBITDA are 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.
Revenue: Revenue increased by 9% to $157.8 million in the first quarter of 2024 from $145.2 million in the first quarter of 2023. Advertising Solutions revenue decreased 5%, accounting for 48% of total revenue, primarily due to a 52% decrease in video revenue, partially offset by increase in Digital Out of Home of $9.7 million and 108% increase in CTV revenue to $8.2 million. Search Advertising revenue increased by 26%, accounting for 52% of revenue, primarily due to 20% increase in Average Daily Searches and 8% increase in the number of publishers. Changes in advertising pricing and mechanisms implemented by Microsoft Bing in its Search Distribution marketplace led to a decline in our Search Advertising activity. During the quarter, RPM, Average Daily Searches and the number of Search Advertising publishers started to decline, a trend that is expected to be fully reflected in the second quarter results and throughout 2024.
Traffic Acquisition Costs and Media Buy (“TAC”): TAC amounted to $97.6 million, or 62% of revenue, in the first quarter of 2024, compared with $79.9 million, or 55% of revenue, in the first quarter of 2023. The increase in TAC was primarily due to shifts in product mix and higher revenue share for some of our Search Advertising publishers in the first quarter of 2024.
GAAP Net Income: GAAP net income decreased by 51% to $11.8 million in the first quarter of 2024, compared with $23.8 million, in the first quarter of 2023.
Non-GAAP Net Income: Non-GAAP net income decreased by 25% to $22.6 million, or 14% of revenue, in the first quarter of 2024, compared with $29.9 million, or 21% of revenue, in the first quarter of 2023. A reconciliation of GAAP to non-GAAP net income is included in this press release.
Adjusted EBITDA: Adjusted EBITDA was $20.3 million, or 13% of revenue (and 34% of Contribution ex-TAC) in the first quarter of 2024, compared with $31.3 million, or 22% of revenue (and 48% of Contribution ex-TAC) in the first quarter of 2023. 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 first quarter of 2024 was $6.9 million, compared with $17.8 million in the first quarter of 2023. The decrease in operating cash flow was mainly attributed to the reduction in Search Advertising activity and one-time working capital needs for the Hivestack operations.
Net cash: As of March 31, 2024, cash and cash equivalents, short-term bank deposits and marketable securities were $479.7 million, compared with $472.7 million as of December 31, 2023.
Conference Call
Perion’s management will host a conference call to discuss the results at 8:30 a.m. ET today:
https://incommconferencing.zoom.us/webinar/register/WN_EqMzgjKySiuCBeC1sYyw_Q
A recording of the webcast and the transcript are available here.
Perion connects advertisers with consumers through technology across all major digital channels. These channels converge at Perion’s intelligent HUB (iHUB), which connects the company’s demand and supply assets, providing significant benefits to brands and publishers.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude certain items. This press release includes certain non-GAAP measures, including Contribution ex-TAC, Adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share.
Contribution ex-TAC presents revenue reduced by traffic acquisition costs and media buy, reflecting a portion of our revenue that must be directly passed to publishers or advertisers and presents our revenue excluding such items. We believe Contribution ex-TAC is a useful measure in assessing the performance of the Company because it facilitates a consistent comparison against our core business without considering the impact of traffic acquisition costs and media buy related to revenue reported on a gross basis.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) is defined as income from operations excluding stock-based compensation expenses, depreciation, amortization of acquired intangible assets, retention and other acquisition-related expenses and gains and losses recognized with respect to changes in the fair value of contingent consideration.
Non-GAAP net income and non-GAAP diluted earnings per share are defined as net income and net earnings per share excluding stock-based compensation expenses, retention and other 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 and losses associated with ASC-842, as well as gains and losses recognized with respect to changes in fair value of contingent consideration.
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 in this press release. 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, but not limited to, 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, data breaches, cyber-attacks and other similar incidents, unpredictable sales cycles, competitive pressures, market acceptance of new products, changes in applicable laws and regulations as well as industry self-regulation, 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, 2023 filed with the SEC on April 8, 2024. 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)
Three months ended
March 31,
2024
2023
(Unaudited)
Revenue
$
75,786
79,878
82,034
65,272
Total Revenue
157,820
145,150
Costs and Expenses
11,485
7,559
97,619
79,875
9,811
8,353
16,090
14,955
9,752
6,543
4,558
3,361
Total Costs and Expenses
149,315
120,646
Income from Operations
8,505
24,504
5,486
3,428
Income before Taxes on income
13,991
27,932
2,223
4,147
Net Income
11,768
23,785
Net Earnings per Share
0.24
0.51
0.48
Weighted average number of shares
48,256,697
46,382,655
49,541,695
49,467,671
In thousands
December 31,
(Audited)
ASSETS
Current Assets
174,858
187,609
Restricted cash
1,104
1,339
Short-term bank deposits
225,139
207,450
Marketable securities
79,707
77,616
Accounts receivable, net
156,293
231,539
Prepaid expenses and other current assets
23,286
21,033
660,387
726,586
Long-Term Assets
Property and equipment, net
3,171
3,179
Operating lease right-of-use assets
5,666
6,609
Goodwill and intangible assets, net
332,539
336,627
Deferred taxes
4,591
4,180
Other assets
97
85
Total Long-Term Assets
346,064
350,680
Total Assets
1,006,451
1,077,266
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
146,080
217,181
Accrued expenses and other liabilities
25,455
42,636
Short-term operating lease liability
3,977
4,198
Deferred revenue
2,135
2,297
Short-term payment obligation related to acquisitions
73,716
251,363
340,028
Long-Term Liabilities
Payment obligation related to acquisition
1,716
–
Long-term operating lease liability
2,665
3,448
Other long-term liabilities
16,013
15,643
20,394
19,091
Total Liabilities
271,757
359,119
Shareholders’ equity
Ordinary shares
416
413
Additional paid-in capital
535,767
530,620
Treasury shares at cost
(1,002)
Accumulated other comprehensive loss
(454)
(83)
Retained earnings
199,967
188,199
Total Shareholders’ Equity
734,694
718,147
Total Liabilities and Shareholders’ Equity
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Adjustments required to reconcile net income to net cash provided by operating activities:
5,419
3,402
22
(2)
1,738
(4,181)
(432)
78
(158)
1,598
(8)
(12)
(16,010)
(10,250)
Net cash provided by operating activities
6,897
17,779
Cash flows from investing activities
(439)
(134)
(1,935)
(51,406)
(17,689)
2,100
Net cash used in investing activities
(20,063)
(49,440)
Cash flows from financing activities
259
2,063
(13,256)
Net cash provided by (used in) financing activities
(11,193)
Effect of exchange rate changes on cash and cash equivalents and restricted cash
(79)
77
Net decrease in cash and cash equivalents and restricted cash
(12,986)
(42,777)
Cash and cash equivalents and restricted cash at beginning of period
188,948
177,521
Cash and cash equivalents and restricted cash at end of period
175,962
134,744
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
Contribution ex-TAC
60,201
65,275
GAAP Income from Operations
1,796
7
4,086
2,963
472
398
Adjusted EBITDA
20,278
31,274
GAAP Net Income
(11)
(116)
144
(498)
(285)
Non-GAAP Net Income
22,560
29,900
Non-GAAP diluted earnings per share
0.44
0.60
Shares used in computing non-GAAP diluted earnings per share
50,981,658
49,738,514
Perion Network Ltd. Dudi Musler, VP of Investor Relations +972 (54) 7876785 dudim@perion.com
