Company raises annual guidance – focusing on
profitability
Perion Network Ltd. (NASDAQ and TASE: PERI), a global
multi-channel advertising technology company that delivers
synergistic solutions across all major channels of digital
advertising – including search advertising, social media, display,
video and CTV advertising – today reported its financial results
for the second quarter ended June 30, 2023.
“Our business results demonstrate, once again, our consistent
ability to outperform the industry. We accomplish that through
focusing on profitability and margin expansion, driven by
efficiency and innovation”, stated Tal Jacobson, Perion’s CEO. “Our
growth in second-quarter revenue and adjusted EBITDA - up 22% and
45% respectively - highlights our ability to identify and seize
lucrative market segments with agility. Our diversification
strategy, powered by exceptional execution and investment in
technology, has formed the foundation of a business model built for
growth.”
Second Quarter 2023 Business Highlights
- CTV revenue1 increased by 104% year-over-year to $7.2 million,
representing 7% of Display Advertising revenue compared to 4% last
year
- Retail Media2 revenue increased by 63% year-over-year to $10.1
million, representing 10% of Display Advertising revenue compared
to 8% last year
- Video revenue increased by 14% year-over-year, representing 41%
of Display Advertising revenue compared to 44% last year
- The number of Average Daily Searches increased by 68%
year-over-year to 28.6 million
- The number of Search Advertising publishers increased by 28%
year-over-year to 159
- Revenue from Perion’s AI-based cookieless targeting solution,
SORT®2, grew by 84% year-over-year, representing 21% of Display
Advertising revenue compared to 14% last year.
1 Starting this quarter, we changed our methodology for
measuring our CTV activity. We moved from measuring CTV campaigns
to measuring CTV channels. The CTV growth trend under both
methodologies remains in the same trajectory. Under our updated
methodology, revenue generated from CTV in the second quarter of
2022 was $3.5 million vs. $5.1 million under the previous
methodology; and in the first quarter of 2023 $3.9 million vs. $6.2
million. 2 Retail Media and SORT® revenue include all media
channels, such as, CTV, video and others
Second Quarter 2023 Financial Highlights1
In millions, except per share
data
Three months ended
Six months ended
June 30,
June 30,
2023
2022
%
2023
2022
%
Display Advertising Revenue
$
99.4
$
81.6
+22%
$
179.3
$
150.2
+19%
Search Advertising Revenue
$
79.1
$
65.1
+21%
$
144.4
$
121.8
+19%
Total Revenue
$
178.5
$
146.7
+22%
$
323.6
$
272.0
+19%
Contribution Ex-TAC (Revenue
Ex-TAC)
$
77.0
$
60.7
+27%
$
142.3
$
115.0
+24%
GAAP Net Income
$
21.4
$
19.5
+10%
$
45.2
$
35.0
+29%
Non-GAAP Net Income
$
42.1
$
24.5
+72%
$
72.0
$
45.2
+59%
Adjusted EBITDA
$
41.2
$
28.5
+45%
$
72.5
$
51.1
+42%
Adjusted EBITDA to Contribution
Ex-TAC
54%
47%
51%
44%
Net Cash Provided by Operating
Activities
$
47.4
$
25.7
+84%
$
65.2
$
49.3
+32%
GAAP Diluted EPS
$
0.43
$
0.41
+5%
$
0.91
$
0.74
+23%
Non-GAAP Diluted EPS
$
0.84
$
0.51
+65%
$
1.45
$
0.95
+53%
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.
Outlook for 20232
“We are encouraged by the strong results we achieved in the
first half of 2023”, commented Tal Jacobson, Perion’s CEO.
“Consequently, we are raising our annual revenue and adjusted
EBITDA guidance to reflect increased profitability and margin
expansion”.
In millions
2022
Prior 2023 Guidance
Current 2023 Guidance
YoY
Growth %1
Revenue
$640.3
$725-$745
$730-$750
16%
Adjusted EBITDA
$132.4
$155+
$167+
26%
Adjusted EBITDA to Revenue
21%
21%1
23%1
Adjusted EBITDA to Contribution
Ex-TAC
49%
50%1
54%1
1 Calculated at revenue guidance midpoint. Adjusted EBITDA
year-over-year growth calculated based on $167 million. 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.
Financial Comparison for the Second Quarter of 2023
Revenue: Revenue increased by 22% to $178.5 million in
the second quarter of 2023 from $146.7 million in the second
quarter of 2022. Display Advertising revenue increased 22%
year-over-year, accounting for 56% of total revenue, primarily due
to a 14% year-over-year increase in video revenue to $40.9 million
and 104% year-over-year increase in CTV revenue to $7.2 million.
Search Advertising revenue increased by 21% year-over-year,
accounting for 44% of revenue, primarily due to a 68% increase in
Average Daily Searches and a 28% increase in the number of
publishers. RPM gradually increased in the second quarter compared
to the first quarter of 2023.
Traffic Acquisition Costs and Media Buy (“TAC”): TAC
amounted to $101.5 million, or 57% of revenue, in the second
quarter of 2023, compared with $86.0 million, or 59% of revenue, in
the second quarter of 2022. The margin expansion was primarily due
to improved product mix in addition to media buying optimization,
enabled by leveraging data and buying power.
GAAP Net Income: GAAP net income increased by 10% to
$21.4 million in the second quarter of 2023 from $19.5 million in
the second quarter of 2022. GAAP net income in the second quarter
of 2023 includes a $14.6 million fair-value adjustment of the
contingent consideration payable in respect to the Vidazoo
acquisition due to overachievement and an amendment to the share
purchase agreement entered into effect this quarter as a result of
their outstanding performance.
Non-GAAP Net Income: Non-GAAP net income was $42.1
million, or 24% of revenue, in the second quarter of 2023, compared
with $24.5 million, or 17% of revenue, in the second quarter of
2022. A reconciliation of GAAP to non-GAAP net income is included
in this press release.
Adjusted EBITDA: Adjusted EBITDA was $41.2 million, or
23% of revenue (and 54% of Contribution Ex-TAC) in the second
quarter of 2023, compared with $28.5 million, or 19% of revenue
(and 47% of Contribution Ex-TAC) in the second quarter of 2022. 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 second quarter of 2023 was $47.4 million,
compared with $25.7 million in the second quarter of 2022.
Net cash: As of June 30, 2023, cash and cash equivalents,
short-term bank deposits and marketable securities amounted to
$483.3 million, compared with $429.6 million as of December 31,
2022.
Conference Call
Perion’s management will host a conference call to discuss the
results at 8:30 a.m. ET today:
- Registration link:
https://incommconferencing.zoom.us/webinar/register/WN_xMvsgXNoSAyrwYE3yNKUcA#/registration
- Toll Free: 1-877-407-0779
- Toll/International: 1-201-389-0914
A replay of the call and a transcript will be available within
approximately 24 hours of the live event on Perion’s website.
About Perion Network Ltd. Perion is a global
multi-channel advertising technology company that delivers
synergistic solutions across all major channels of digital
advertising – including search advertising, social media, display,
video and CTV advertising. 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.
For more information, visit Perion's website at
www.perion.com.
Non-GAAP Measures 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 earning 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 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.
Forward Looking Statements 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, 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, 2022
filed with the SEC on March 15, 2023. 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
Six months ended
June 30,
June 30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenue
Display Advertising
$ 99,379
$ 81,551
$ 179,257
$ 150,154
Search Advertising
79,091
65,105
144,363
121,817
Total Revenue
178,470
146,656
323,620
271,971
Costs and Expenses
Cost of revenue
9,589
6,861
17,148
13,474
Traffic acquisition costs and
media buy
101,482
85,956
181,357
156,930
Research and development
8,236
8,336
16,589
17,369
Selling and marketing
13,857
13,955
28,812
27,293
General and administrative
7,413
6,468
13,956
12,134
Changes in fair value of
contingent consideration
14,602
-
14,602
-
Depreciation and
amortization
3,405
3,208
6,766
6,393
Total Costs and Expenses
158,584
124,784
279,230
233,593
Income from Operations
19,886
21,872
44,390
38,378
Financial income, net
5,158
903
8,586
1,507
Income before Taxes on income
25,044
22,775
52,976
39,885
Taxes on income
3,638
3,275
7,785
4,919
Net Income
$ 21,406
$ 19,500
$ 45,191
$ 34,966
Net Earnings per Share
Basic
$ 0.46
$ 0.44
$ 0.97
$ 0.79
Diluted
$ 0.43
$ 0.41
$ 0.91
$ 0.74
Weighted average number of
shares
Basic
46,961,028
44,439,023
46,673,439
44,238,414
Diluted
49,637,258
47,292,249
49,551,061
47,210,769
PERION NETWORK LTD. AND ITS
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS In
thousands
June 30,
December 31,
2023
2022
(Unaudited)
(Audited)
ASSETS
Current Assets
Cash and cash equivalents
$ 185,928
$ 176,226
Restricted cash
1,315
1,295
Short-term bank deposits
225,300
253,400
Accounts receivable, net
140,734
160,488
Prepaid expenses and other
current assets
18,947
12,049
Marketable Securities
72,090
-
Total Current Assets
644,314
603,458
Long-Term Assets
Property and equipment, net
3,181
3,611
Operating lease right-of-use
assets
8,318
10,130
Goodwill and intangible assets,
net
241,235
247,191
Deferred taxes
6,414
5,779
Other assets
52
49
Total Long-Term Assets
259,200
266,760
Total Assets
$ 903,514
$ 870,218
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$ 145,639
$ 155,854
Accrued expenses and other
liabilities
29,861
37,869
Short-term operating lease
liability
3,920
3,900
Deferred revenue
1,978
2,377
Short-term payment obligation
related to acquisitions
69,333
34,608
Total Current
Liabilities
250,731
234,608
Long-Term Liabilities
Payment obligation related to
acquisition
-
33,113
Long-term operating lease
liability
5,480
7,580
Other long-term liabilities
10,811
11,783
Total Long-Term
Liabilities
16,291
52,476
Total Liabilities
267,022
287,084
Shareholders' equity
Ordinary shares
405
398
Additional paid-in capital
522,217
513,534
Treasury shares at cost
(1,002)
(1,002)
Accumulated other comprehensive
loss
(1,105)
(582)
Retained earnings
115,977
70,786
Total Shareholders'
Equity
636,492
583,134
Total Liabilities and
Shareholders' Equity
$ 903,514
$ 870,218
PERION NETWORK LTD. AND ITS
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS In thousands
Three months ended
Six months ended
June 30,
June 30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Cash
flows from operating activities
Net Income
$ 21,406
$ 19,500
$ 45,191
$ 34,966
Adjustments required to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization
3,405
3,208
6,766
6,393
Stock-based compensation
expenses
3,100
2,701
6,502
5,129
Foreign currency translation
(11)
(128)
(13)
(174)
Accrued interest, net
2,150
(639)
(2,031)
(1,181)
Deferred taxes, net
(554)
(44)
(476)
(248)
Accrued severance pay, net
(1,873)
409
(275)
503
Gain from sale of property and
equipment
(5)
(6)
(17)
(6)
Net change in operating assets
and liabilities
19,754
720
9,504
3,893
Net cash provided by operating
activities
$ 47,372
$ 25,721
$ 65,151
$ 49,275
Cash
flows from investing activities
Purchases of property and
equipment, net of sales
(217)
(177)
(351)
(429)
Marketable securities, net
(20,789)
-
(72,195)
-
Short-term deposits, net
26,000
(1,000)
28,100
(33,400)
Cash paid in connection with
acquisitions, net of cash acquired
-
(6,170)
-
(9,570)
Net cash provided by (used in)
investing activities
$ 4,994
$ (7,347)
$ (44,446)
$ (43,399)
Cash
flows from financing activities
Proceeds from exercise of
stock-based compensation
125
346
2,188
1,294
Payments of contingent
consideration
-
(9,091)
(13,256)
(9,091)
Net cash provided by (used in)
financing activities
$ 125
$ (8,745)
$ (11,068)
$ (7,797)
Effect of exchange rate changes
on cash and cash equivalents and restricted cash
8
(147)
85
(177)
Net increase (decrease) in
cash and cash equivalents and restricted cash
52,499
9,482
9,722
(2,098)
Cash and cash equivalents and
restricted cash at beginning of period
134,744
93,955
177,521
105,535
Cash and cash equivalents and
restricted cash at end of period
$ 187,243
$ 103,437
$ 187,243
$ 103,437
PERION NETWORK LTD. AND ITS
SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP RESULTS In
thousands
Three months ended
Six months ended
June 30,
June 30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
Total Revenue
$ 178,470
$ 146,656
$ 323,620
$ 271,971
Traffic acquisition costs and
media buy
101,482
85,956
181,357
156,930
Contribution Ex-TAC
$ 76,988
$ 60,700
$ 142,263
$ 115,041
Three months ended
Six months ended
June 30,
June 30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
GAAP Income from
Operations
$ 19,886
$ 21,872
$ 44,390
$ 38,378
Stock-based compensation
expenses
3,100
2,701
6,502
5,129
Retention and other
acquisition-related expenses
250
679
257
1,230
Changes in fair value of
contingent consideration
14,602
-
14,602
-
Amortization of acquired
intangible assets
2,992
2,812
5,955
5,601
Depreciation
413
396
811
792
Adjusted EBITDA
$ 41,243
$ 28,460
$ 72,517
$ 51,130
PERION NETWORK LTD. AND ITS
SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP RESULTS
In thousands (except share and per share data)
Three months ended
Six months ended
June 30,
June 30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
GAAP Net Income
$ 21,406
$ 19,500
$ 45,191
$ 34,966
Stock-based compensation
expenses
3,100
2,701
6,502
5,129
Amortization of acquired
intangible assets
2,992
2,812
5,955
5,601
Retention and other
acquisition-related expenses
250
679
257
1,230
Changes in fair value of
contingent consideration
14,602
-
14,602
-
Foreign exchange losses (gains)
associated with ASC-842
(81)
(548)
(198)
(745)
Revaluation of
acquisition-related contingent consideration
147
129
292
261
Taxes on the above items
(289)
(771)
(574)
(1,212)
Non-GAAP Net Income
$ 42,127
$ 24,502
$ 72,027
$ 45,230
Non-GAAP diluted earnings per
share
$ 0.84
$ 0.51
$ 1.45
$ 0.95
Shares used in computing
non-GAAP diluted earnings per share
49,922,156
47,906,671
49,832,074
47,744,781
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802202555/en/
Perion Network Ltd. Dudi Musler, VP of Investor Relations +972
(54) 7876785 dudim@perion.com
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