08th Feb 2023
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.
In millions, except per share data
Three months ended
Year ended
December 31,
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
+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
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
2023 Guidance
YoY Growth %1
Revenue
$640.3
$720-$740
14%1
$132.4
$149-$153
Adjusted EBITDA to Revenue
21%
21%1
50%1
(1) Calculated at guidance midpoint
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.
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.
Perion will host a conference call to discuss the results at 8:30 a.m. ET today. A replay and a transcript will be available here.
Call details:
As disclosed earlier today, Perion has announced that Tal Jacobson will succeed Doron Gerstel as CEO on August 1, 2023. Additional information can be found in a press release at https://www.perion.com/investors/press-releases/
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)
(Audited)
Revenue:
Display Advertising
$ 123,757
$ 100,177
$ 360,690
$ 265,323
Search Advertising
85,913
57,798
279,566
213,175
209,670
157,975
640,256
478,498
Costs and Expenses:
Cost of revenue
9,390
7,318
30,404
25,197
Traffic acquisition costs and media buy
122,046
93,342
372,601
288,018
Research and development
9,289
9,245
34,424
35,348
Selling and marketing
16,130
16,799
56,014
53,209
General and administrative
7,886
6,878
23,813
20,933
Depreciation and amortization
3,741
3,598
13,838
9,897
Total Costs and Expenses
168,482
137,180
531,094
432,602
Income from Operations
41,188
20,795
109,162
45,896
Financial expense (income), net
(1,976)
465
(4,502)
581
Income before Taxes on income
43,164
20,330
113,664
45,315
Taxes on income
4,487
2,635
14,439
6,609
Net Income
$ 38,677
$ 17,695
$ 99,225
$ 38,706
Net Earnings per Share
Basic
$ 0.84
$ 0.48
$ 2.21
$ 1.13
Diluted
$ 0.79
$ 0.44
$ 2.06
$ 1.02
Weighted average number of shares
45,842,833
36,768,367
44,871,149
34,397,134
48,872,169
40,349,416
48,071,638
37,829,725
CONDENSED CONSOLIDATED BALANCE SHEETS In thousands
ASSETS
Current Assets:
Cash and cash equivalents
$ 176,226
$ 104,446
Restricted cash
1,295
1,089
Short-term bank deposits
253,400
217,200
Accounts receivable, net
160,488
115,361
Prepaid expenses
& other current assets
12,049
8,075
Total Current Assets
603,458
446,171
Long-Term Assets:
Property and equipment, net
3,611
4,211
Operating lease right-of-use assets
10,130
11,578
Goodwill and intangible assets, net
247,191
245,965
Deferred taxes
5,779
5,228
Other assets
49
79
Total Long-Term Assets
266,760
267,061
Total Assets
$ 870,218
$ 713,232
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
$ 155,854
$ 107,730
Accrued expenses and other liabilities
37,869
40,331
Short-term operating lease liability
3,900
3,615
Deferred revenue
2,377
3,852
Short-term payment obligation
related to acquisitions
34,608
38,179
Total Current Liabilities
234,608
193,707
Long-Term Liabilities:
Payment obligation
related to acquisition
33,113
33,250
Long-term operating lease liability
7,580
9,774
Other long-term liabilities
11,783
9,541
Total Long-Term Liabilities
52,476
52,565
Total Liabilities
287,084
246,272
Shareholders’ equity:
Ordinary shares
398
375
Additional paid-in capital
513,534
496,154
Treasury shares at cost
(1,002)
Accumulated other comprehensive loss
(582)
(128)
Retained earnings (accumulated deficit)
70,786
(28,439)
Total Shareholders’ Equity
583,134
466,960
Total Liabilities & 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
3,205
3,252
11,570
6,985
Foreign currency translation
258
(116)
20
(223)
Accrued interest, net
(1,639)
(80)
(3,646)
(300)
Deferred taxes, net
(2,755)
(2,572)
(1,428)
Accrued severance pay, net
222
330
(106)
663
Gain from sale of property
and equipment
(2)
132
(12)
121
Net changes in operating assets
and liabilities
(3,536)
6,597
2,658
18,012
Net cash provided
by operating activities
$ 38,171
$ 28,836
$ 122,119
$ 71,106
Cash flows from investing activities:
Purchases of property and equipment,
net of sales
(267)
(37)
(1,046)
(532)
Short-term deposits, net
(34,400)
(157,200)
(36,200)
(204,500)
Cash paid in connection with acquisitions,
net of cash acquired
–
(35,000)
(9,570)
(38,438)
Net cash used
in investing activities
$ (34,667)
$ (192,237)
$ (46,816)
$ (243,470)
Cash flows from financing activities:
Issuance of shares in private placement, net
169,529
230,489
Proceeds from exercise
of stock-based compensation
1,392
1,958
5,833
6,898
Payments of contingent consideration
(9,091)
Repayment of long-term loans
(8,333)
Net cash provided by
(used in) financing activities
$ 1,392
$ 171,487
$ (3,258)
$ 229,054
Effect of exchange rate changes on cash
and cash equivalents and restricted cash
228
16
(59)
(33)
Net increase in cash and
cash equivalents and restricted cash
5,124
8,102
71,986
56,657
Cash and cash equivalents and
restricted cash at beginning of period
172,397
97,433
105,535
48,878
restricted cash at end of period
$ 177,521
$ 105,535
RECONCILIATION OF GAAP TO NON-GAAP RESULTS In thousands (except share and per share data)
Stock-based compensation
Amortization of acquired intangible assets
2,988
2,807
11,884
6,875
Retention and other related to M&A related expenses
100
3,547
1,618
9,074
Changes in FV of Earnout contingent consideration
(2,246)
(3,816)
Foreign exchange losses (gains) associated with ASC-842
3
169
(821)
(38)
Revaluation of acquisition related contingent consideration
184
286
786
761
Taxes on the above items
(506)
(222)
(651)
(130)
$ 44,651
$ 25,288
$ 119,795
$ 59,987
4,993
2,857
15,090
6,739
Financial income, net
(2,163)
10
(4,467)
(142)
Depreciation
753
791
1,954
3,022
$ 48,234
$ 28,946
$ 132,372
$ 69,606
Non-GAAP diluted earnings
per share
$ 0.90
$ 0.62
$ 2.47
$ 1.57
Shares used in computing non-GAAP
diluted earnings per share
49,511,914
40,613,055
48,496,154
38,176,470
Perion Network Ltd. Dudi Musler, VP of Investor Relations +972 (54) 7876785 dudim@perion.com Source: Perion Network Ltd.
