Perion’s Momentum Continues, Delivering 16% Revenue Growth and 54% Increase in Net Income
Company raises Annual Guidance, Reflecting Continued Media Margin Expansion and Strong Growth Drivers
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
“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 with43% in the first quarter of 2022 -
Video revenue increased by
26% year-over-year, representing44% of Display Advertising Revenue compared with41% 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
-
The number of video platform publishers increased by
-
CTV revenue increased by
12% year-over-year, representing8% 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, representing8% of Display Advertising Revenue compared with6% last year, with the number of retail media customers up32% over the same period -
SORT® spending increased by
93% year-over-year, representing17% of Display Advertising Revenue, driven by a142% 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 by49% to 26.3 million over the same period
First Quarter 2023 Financial Highlights(1)
In millions,
|
Three months ended |
|
||||||
|
March 31, |
|
||||||
|
2023 |
|
2022 |
|
% |
|
||
Display Advertising Revenue |
$ |
79.9 |
|
$ |
68.6 |
|
+ |
|
Search Advertising Revenue |
$ |
65.3 |
|
$ |
56.7 |
|
+ |
|
Total Revenue |
$ |
145.2 |
|
$ |
125.3 |
|
+ |
|
Gross Profit (Revenue ex-TAC) |
$ |
65.3 |
|
$ |
54.3 |
|
+ |
|
GAAP Net Income |
$ |
23.8 |
|
$ |
15.5 |
|
+ |
|
Non-GAAP Net Income |
$ |
29.9 |
|
$ |
20.7 |
|
+ |
|
Adjusted EBITDA |
$ |
31.3 |
|
$ |
22.7 |
|
+ |
|
Adjusted EBITDA to Revenue ex-TAC |
|
|
|
|
|
|
|
|
Net Cash from Operations |
$ |
17.8 |
|
$ |
23.6 |
|
- |
|
GAAP Diluted EPS |
$ |
0.48 |
|
$ |
0.33 |
|
+ |
|
Non-GAAP Diluted EPS |
$ |
0.60 |
|
$ |
0.44 |
|
+ |
|
(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 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA to Revenue |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA to Revenue ex-TAC |
|
|
|
|
|
|
|
|
(1) Calculated at revenue guidance midpoint
Financial Comparison for the First Quarter of 2023
Revenue: Revenue increased by
Traffic Acquisition Costs (“TAC”): TAC amounted to
Net Income: On a GAAP basis, net income increased by
Adjusted EBITDA: Adjusted EBITDA was
Cash Flow from Operations: Net cash provided by operating activities in the first quarter of 2023 was
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
Conference Call
Perion management will host a conference call to discuss the results at 8:30 a.m. ET today. Call details:
- 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 advertising technology company whose synergistic solutions are delivered across the three primary channels of digital advertising – ad search, social media and display, including video and CTV (connected TV) advertising. These channels are brought together by Perion’s intelligent HUB (iHUB), which integrates Perion’s business assets from both sides of the open Web, 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 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.
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, 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, 2022 filed with the SEC on March 15, 2023. Perion does not assume any obligation to update these forward-looking statements.
Three months ended |
||||
March 31, |
||||
2023 |
|
2022 |
||
(Unaudited) |
|
(Unaudited) |
||
Revenue: |
||||
Display Advertising |
|
|
||
Search Advertising |
65,272 |
56,712 |
||
Total Revenue |
145,150 |
125,315 |
||
Costs and Expenses: |
||||
Cost of revenue |
7,559 |
6,613 |
||
Traffic acquisition costs and media buy |
79,875 |
70,974 |
||
Research and development |
8,353 |
9,033 |
||
Selling and marketing |
14,955 |
13,338 |
||
General and administrative |
6,543 |
5,666 |
||
Depreciation and amortization |
3,361 |
3,185 |
||
Total Costs and Expenses |
120,646 |
108,809 |
||
Income from Operations |
24,504 |
16,506 |
||
Financial income, net |
3,428 |
604 |
||
Income before Taxes on income |
27,932 |
17,110 |
||
Taxes on income |
4,147 |
1,644 |
||
Net Income |
|
|
||
Net Earnings per Share |
||||
Basic |
|
|
||
Diluted |
|
|
||
Weighted average number of shares |
||||
Basic |
46,382,655 |
44,035,576 |
||
Diluted |
49,467,671 |
47,030,727 |
||
|
||||
|
March 31, |
December 31, |
||
|
2023 |
2022 |
||
|
(Unaudited) |
(Audited) |
||
ASSETS |
|
|
||
Current Assets: |
|
|
||
Cash and cash equivalents |
|
|
||
Restricted cash |
1,304 |
1,295 |
||
Short-term bank deposits |
251,300 |
253,400 |
||
Accounts receivable, net |
133,482 |
160,488 |
||
Prepaid expenses and other current assets |
13,065 |
12,049 |
||
Marketable Securities |
51,583 |
- |
||
Total Current Assets |
584,174 |
603,458 |
||
|
|
|
||
Long-Term Assets: |
|
|
||
Property and equipment, net |
3,435 |
3,611 |
||
Operating lease right-of-use assets |
9,228 |
10,130 |
||
Goodwill and intangible assets, net |
244,226 |
247,191 |
||
Deferred taxes |
5,719 |
5,779 |
||
Other assets |
44 |
49 |
||
Total Long-Term Assets |
262,652 |
266,760 |
||
Total Assets |
|
|
||
|
|
|
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
||
Current Liabilities: |
|
|
||
Accounts payable |
|
|
||
Accrued expenses and other liabilities |
22,752 |
37,869 |
||
Short-term operating lease liability |
3,894 |
3,900 |
||
Deferred revenue |
1,914 |
2,377 |
||
Short-term payment obligation related to acquisitions |
54,585 |
34,608 |
||
Total Current Liabilities |
214,299 |
234,608 |
||
|
|
|
||
Long-Term Liabilities: |
|
|
||
Payment obligation related to acquisition |
- |
33,113 |
||
Long-term operating lease liability |
6,534 |
7,580 |
||
Other long-term liabilities |
13,668 |
11,783 |
||
Total Long-Term Liabilities |
20,202 |
52,476 |
||
Total Liabilities |
234,501 |
287,084 |
||
|
|
|
||
Shareholders' equity: |
|
|
||
Ordinary shares |
403 |
398 |
||
Additional paid-in capital |
518,994 |
513,534 |
||
Treasury shares at cost |
(1,002) |
(1,002) |
||
Accumulated other comprehensive loss |
(641) |
(582) |
||
Retained earnings |
94,571 |
70,786 |
||
Total Shareholders' Equity |
612,325 |
583,134 |
||
Total Liabilities and Shareholders' Equity |
|
|
||
|
Three months ended |
|||
|
March 31, |
|||
|
2023 |
|
2022 |
|
|
(Unaudited) |
(Unaudited) |
||
|
||||
Cash flows from operating activities: |
||||
Net Income |
|
|
||
Adjustments required to reconcile net income to net cash provided by operating activities: |
||||
Depreciation and amortization |
3,361 |
3,185 |
||
Stock-based compensation expense |
3,402 |
2,428 |
||
Foreign currency translation |
(2) |
(46) |
||
Accrued interest, net |
(4,181) |
(542) |
||
Deferred taxes, net |
78 |
(204) |
||
Accrued severance pay, net |
1,598 |
94 |
||
Gain from sale of property and equipment |
(12) |
- |
||
Net changes in operating assets and liabilities |
(10,250) |
3,173 |
||
Net cash provided by operating activities |
|
|
||
|
||||
Cash flows from investing activities: |
||||
Purchases of property and equipment, net of sales |
(134) |
(252) |
||
Purchase of marketable securities, net of sales |
(51,406) |
- |
||
Short-term deposits, net |
2,100 |
(32,400) |
||
Cash paid in connection with acquisitions, net of cash acquired |
- |
(3,400) |
||
Net cash used in investing activities |
|
|
||
|
||||
Cash flows from financing activities: |
||||
Proceeds from exercise of stock-based compensation |
2,063 |
948 |
||
Payments of contingent consideration |
(13,256) |
- |
||
Net cash provided by (used in) financing activities |
|
|
||
|
||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
77 |
(30) |
||
Net decrease in cash and cash equivalents and restricted cash |
(42,777) |
(11,580) |
||
Cash and cash equivalents and restricted cash at beginning of period |
177,521 |
105,535 |
||
Cash and cash equivalents and restricted cash at end of period |
|
|
||
Three months ended |
||||
March 31, |
||||
2023 |
|
2022 |
||
(Unaudited) |
||||
GAAP Net Income |
|
|
||
Stock-based compensation |
3,402 |
2,428 |
||
Amortization of acquired intangible assets |
2,963 |
2,789 |
||
Retention and other related to M&A related expenses |
7 |
551 |
||
Foreign exchange gains associated with ASC-842 |
(116) |
(197) |
||
Revaluation of acquisition related contingent consideration |
144 |
132 |
||
Taxes on the above items |
(285) |
(441) |
||
Non-GAAP Net Income |
|
|
||
Non-GAAP Net Income |
|
|
||
Taxes on income |
4,432 |
2,085 |
||
Financial income, net |
(3,456) |
(539) |
||
Depreciation |
398 |
396 |
||
Adjusted EBITDA |
|
|
||
Non-GAAP diluted earnings per share |
|
|
||
Shares used in computing non-GAAP diluted earnings per share |
49,738,514 |
47,620,874 |
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230503005499/en/
Perion Network Ltd.
Dudi Musler, VP of Investor Relations
+972 (54) 7876785
dudim@perion.com
Source: Perion Network Ltd
