Strengthens business with the signing of three search partnerships
Perion Network Ltd. (NASDAQ: PERI), today announced record financial
results for the first quarter ended March 31, 2013.
Q1 2013 non-GAAP Year-Over-Year Financial Highlights:
-
Quarterly revenues more than doubled, reaching $27.6 million;
-
Adjusted EBITDA tripled, reaching $7.9 million, or 29% of revenues;
-
Net income increased 166%, reaching $5.8 million, or 21% of revenues;
-
Earnings Per Share doubled, reaching $0.45; and
-
Cash flow from operations tripled, reaching $7.5 million.
Josef Mandelbaum, Perion’s CEO commented: “The first quarter of 2013 was
an extraordinary start for Perion. We had record organic and total
revenue growth, increased profitability, strong cash generation,
enthusiastic acceptance of our new Incredimail for iPad product and the
successful integration of SweetPacks. Perion is hitting on all
cylinders, and delivering impressive results against each of its
operational and financial metrics. We have good visibility for the rest
of the year and are well on our way to achieving, and likely exceeding,
our guidance of 80%-plus growth."
“We also saw great progress in further solidifying the foundation of our
business to position ourselves for long term sustainable growth," Mr.
Mandelbaum added. "Our search diversification strategy yielded excellent
results as we signed two new non-exclusive search partnership agreements
with Bing and Ask.com, as well as signing an additional two-year
non-exclusive agreement with Google. In addition, our increased
investment in mobile platforms and our strong pipeline of future
accretive acquisitions, form the nucleus of our growth strategy for the
future.”
Non-GAAP Financial Comparison for the First Quarter of 2013:
Revenue: Q1’13 revenues were a record $27.6 million, increasing
145%, compared to the first quarter of 2012. The accelerated growth was
a result of positive trends in all of Perion’s revenue streams,
particularly with search generated revenues increasing 266%
year-over-year. The extensive growth in search generated revenues was
primarily a result of the acquisition of SweetPacks in November of 2012,
coupled with robust organic growth.
Gross Profits: Gross profit in the first quarter of 2013 was
$26.4 million, increasing 151%, compared to $10.5 million in the first
quarter of 2012. The gross profit margin increased to 96% this last
quarter, compared to 93% in the first quarter of 2012. This was a result
of the significant growth in search generated revenues, a revenue stream
with virtually no direct costs.
Customer Acquisition Costs (“CAC”): In the first quarter of 2013,
Perion increased its investment in CAC to a record $11.4 million, more
than quadruple the $2.6 million invested in the first quarter of 2012.
The increase in CAC was enabled by the Company's strengthened marketing
team and enhanced back-end systems.
Adjusted EBITDA: In the first quarter of 2013, Adjusted EBITDA
was $7.9 million, or 29% of sales, a 201% increase compared to the $2.6
million in the same quarter last year, despite the $8.8 million increase
in CAC.
Net Income: In the first quarter of 2013, net income was $5.8
million, increasing 166%, from $2.2 million in the first quarter of
2012. The growth in net income caused earnings per share to more than
double from $0.22 per share in the first quarter of 2012, to $0.45 per
share in the first quarter of 2013.
Cash Flow from Operations: Based on U.S. GAAP, in the first
quarter of 2013 cash flow from operations was $7.5 million, tripling the
$2.5 million in the first quarter of 2012.
2013 Financial Outlook:
Management today reaffirmed that it will achieve, and likely exceed, its
2013 Financial Outlook announced
on January 8th:
-
Revenue of $110 million, representing overall growth of 80%
year-over-year;
-
EBITDA of $26 million, representing an overall growth of 86%
year-over-year;
-
Non-GAAP Net Income of $20 million, representing overall growth of 94%
year-over-year; and
-
Non-GAAP EPS of $1.61, representing overall growth of 63%
year-over-year.
Conference Call
Perion will host a conference call to
discuss the results today, May 13th at 10 a.m. EDT (5 p.m.
Israel Time). To listen to the call please visit the Investor Relations
section of Perion’s website at www.perion.com/events-presentations.
Click on the link provided for the webcast, or dial 1-866-744-5399.
Callers from Israel may access the call by dialing (03) 918-0685. The
webcast will be archived on the company’s website for seven days.
About Perion Network Ltd.
Perion Network, Ltd. (NASDAQ: PERI) is a global consumer internet
company that develops applications to make the online experience of its
users simple, safe and enjoyable. Perion’s three main consumer brands
are: Incredimail, Smilebox and SweetIM. Incredimail
is a unified messaging application enabling consumers to manage multiple
email accounts and Facebook messages in one place with an easy-to-use
interface and extensive personalization features, and is available in
over 100 countries in 8 languages; Smilebox
is a leading photo sharing and social expression product and service
that quickly turn life's moments into digital keepsakes for sharing and
connecting with friends and family, in a fun and personal way. SweetIM
is an instant messaging application that enables consumers to
personalize their everyday communications with free, fun and easy to use
content. Perion products have had over 300 million downloads to date
with more than 50 million monthly unique visitors across all of its
brands. Most of Perion’s applications are monetized through a freemium
model. Free versions of our applications are monetized primarily through
our toolbar which generates search revenue and display advertising
revenue, generated through impressions. A more advanced feature rich
version of many of our products is available with a premium upgrade.
Perion also offers and develops a range of products for mobile phones
and tablets to answer its users increasing mobile demands. For more
information on Perion please visit http://www.perion.com.
Non-GAAP measures
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude: Valuation adjustment on acquired deferred product
revenues, amortization of acquired intangible assets, share-based
compensation expenses, acquisition related expenses, accretion of
payment obligation related to acquisitions and taxes on amortization of
acquitted intangible assets. 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. 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. Our management regularly
uses our supplemental non-GAAP financial measures internally to
understand, manage and evaluate our business and make operating
decisions. These non-GAAP measures are among the primary factors
management uses in planning for and forecasting future periods. Business
combination accounting rules requires us to recognize a legal
performance obligation related to a revenue arrangement of an acquired
entity. The amount assigned to that liability should be based on its
fair value at the date of acquisition. The non-GAAP adjustment is
intended to reflect the full amount of such revenue. We believe this
adjustment is useful to investors as a measure of the ongoing
performance of our business. We believe these non-GAAP financial
measures provide consistent and comparable measures to help investors
understand our current and future operating cash flow performance. These
non-GAAP financial measures may differ materially from the non-GAAP
financial measures used by other companies. Reconciliation between
results on a GAAP and non-GAAP basis is provided in a table immediately
following the Consolidated Statements of Income.
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 the Company. The words “will”,
“believe,” “expect,” “intend,” “plan,” “should” and similar expressions
are intended to identify forward-looking statements. Such statements
reflect the current views, assumptions and expectations of the Company
with respect to future events and are subject to risks and
uncertainties. Many factors could cause the actual results, performance
or achievements of the Company 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, potential litigation associated with the
transaction, risks that the Company's acquisition activities may disrupt
current plans and operations and pose difficulties in employee
retention, risks entailed in integrating acquired businesses, changes in
the markets in which the Company operates and in general economic and
business conditions, loss of key customers and unpredictable sales
cycles, competitive pressures, market acceptance of new products,
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 the Company and its results of operations, as described in
reports filed by the Company with the Securities and Exchange Commission
from time to time, including its annual report on Form 20-F for the year
ended December 31, 2012. The Company does not assume any obligation to
update these forward-looking statements.
Source: Perion Network Ltd.
PERION NETWORK LTD.
|
NON-GAAP SUMMARY FINANCIAL METRICS
|
U.S. dollars (except per share data) in thousands, unaudited
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
2013
|
|
2012
|
Revenues:
|
|
|
|
|
Search
|
|
$
|
20,309
|
|
$
|
5,552
|
Product and Other
|
|
|
7,269
|
|
|
5,704
|
Total revenues
|
|
$
|
27,578
|
|
$
|
11,256
|
Gross Profit
|
|
$
|
26,352
|
|
$
|
10,492
|
EBITDA
|
|
$
|
7,901
|
|
$
|
2,621
|
Operating Income
|
|
$
|
7,622
|
|
$
|
2,398
|
Net Income
|
|
$
|
5,783
|
|
$
|
2,176
|
Diluted EPS
|
|
$
|
0.45
|
|
$
|
0.22
|
|
|
|
|
|
PERION NETWORK LTD.
|
GAAP INTERIM FINANCIAL STATEMENTS
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
U.S. dollars and number of shares in thousands (except per share
data), (unaudited)
|
|
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Search
|
|
|
|
|
$
|
20,309
|
|
|
$
|
5,552
|
Product and Other
|
|
|
|
|
|
7,269
|
|
|
|
5,107
|
Total revenues
|
|
|
|
|
|
27,578
|
|
|
|
10,659
|
Cost of revenues
|
|
|
|
|
|
3,088
|
|
|
|
1,023
|
Gross profit
|
|
|
|
|
|
24,490
|
|
|
|
9,636
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and development, net
|
|
|
|
|
|
3,372
|
|
|
|
2,683
|
Selling and marketing
|
|
|
|
|
|
2,784
|
|
|
|
1,681
|
Customer acquisition costs
|
|
|
|
|
|
11,365
|
|
|
|
2,613
|
General and administrative
|
|
|
|
|
|
2,218
|
|
|
|
1,991
|
Total operating expenses
|
|
|
|
|
|
19,739
|
|
|
|
8,968
|
Operating income
|
|
|
|
|
|
4,751
|
|
|
|
668
|
Financial (expense) income, net
|
|
|
|
|
|
(454
|
)
|
|
|
52
|
Income before taxes on income
|
|
|
|
|
|
4,297
|
|
|
|
720
|
Taxes on income
|
|
|
|
|
|
1,409
|
|
|
|
350
|
Net income
|
|
|
|
|
$
|
2,888
|
|
|
$
|
370
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
|
|
$
|
0.24
|
|
|
$
|
0.04
|
Diluted earnings per share
|
|
|
|
|
$
|
0.22
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
Basic weighted number of shares
|
|
|
|
|
|
12,087
|
|
|
|
9,917
|
Diluted weighted number of shares
|
|
|
|
|
|
12,838
|
|
|
|
10,007
|
|
|
|
|
|
|
|
|
PERION NETWORK LTD.
|
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
|
U.S. dollars and number of shares in thousands (except per share
data), unaudited
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
2013
|
|
|
2012
|
GAAP revenues
|
|
$
|
27,578
|
|
|
$
|
10,659
|
|
Valuation adjustment on acquired deferred product revenues
|
|
|
-
|
|
|
|
597
|
|
Non-GAAP revenues
|
|
$
|
27,578
|
|
|
$
|
11,256
|
|
GAAP gross profit
|
|
$
|
24,490
|
|
|
$
|
9,636
|
|
Valuation adjustment on acquired deferred product revenues
|
|
|
-
|
|
|
|
597
|
|
Amortization of acquired intangible assets
|
|
|
1,858
|
|
|
|
250
|
|
Share based compensation
|
|
|
4
|
|
|
|
9
|
|
Non-GAAP gross profit
|
|
$
|
26,352
|
|
|
$
|
10,492
|
|
GAAP operating expenses
|
|
$
|
19,739
|
|
|
$
|
8,968
|
|
Acquisition related expenses
|
|
|
-
|
|
|
|
313
|
|
Share based compensation
|
|
|
546
|
|
|
|
351
|
|
Amortization of acquired intangible assets
|
|
|
463
|
|
|
|
210
|
|
Non-GAAP operating expenses
|
|
$
|
18,730
|
|
|
$
|
8,094
|
|
GAAP operating income
|
|
$
|
4,751
|
|
|
$
|
668
|
|
Valuation adjustment on acquired deferred product revenues
|
|
|
-
|
|
|
|
597
|
|
Acquisition related expenses
|
|
|
-
|
|
|
|
313
|
|
Share based compensation
|
|
|
550
|
|
|
|
360
|
|
Amortization of acquired intangible assets
|
|
|
2,321
|
|
|
|
460
|
|
Operating income adjustments
|
|
|
2,870
|
|
|
|
1,730
|
|
Non-GAAP operating income
|
|
$
|
7,622
|
|
|
$
|
2,398
|
|
GAAP Net income
|
|
$
|
2,888
|
|
|
$
|
370
|
|
Operating income adjustments
|
|
|
2,871
|
|
|
|
1,730
|
|
Accretion of payment obligation related to acquisitions
|
|
|
267
|
|
|
|
76
|
|
Taxes on amortization of acquitted intangible assets
|
|
|
(243
|
)
|
|
|
-
|
|
Non-GAAP net income
|
|
$
|
5,783
|
|
|
$
|
2,176
|
|
|
|
|
|
|
GAAP diluted earnings per share
|
|
$
|
0.22
|
|
|
$
|
0.04
|
|
Non-GAAP diluted earnings per share
|
|
$
|
0.45
|
|
|
$
|
0.22
|
|
Shares used in computing US GAAP and non-GAAP diluted earnings per
share
|
|
|
12,838
|
|
|
|
10,007
|
|
Non-GAAP net income
|
|
$
|
5,783
|
|
|
$
|
2,176
|
|
Income tax expense
|
|
|
1,409
|
|
|
|
350
|
|
Taxes on amortization of acquitted intangible assets
|
|
|
243
|
|
|
|
-
|
|
Interest expense (income), net
|
|
|
187
|
|
|
|
(128
|
)
|
Depreciation and amortization
|
|
|
279
|
|
|
|
223
|
|
Non-GAAP EBITDA
|
|
$
|
7,901
|
|
|
$
|
2,621
|
|
|
|
|
|
|
|
|
|
|
PERION NETWORK LTD.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
U.S. dollars in thousands (except share data)
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
|
Unaudited
|
|
|
ASSETS
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
27,647
|
|
$
|
21,762
|
Trade receivables
|
|
|
7,595
|
|
|
10,246
|
Restricted cash
|
|
|
10,260
|
|
|
10,260
|
Other receivables and prepaid expenses
|
|
|
3,269
|
|
|
5,424
|
Total current assets
|
|
|
48,771
|
|
|
47,692
|
LONG-TERM ASSETS:
|
|
|
|
|
Property and equipment, net
|
|
|
1,529
|
|
|
1,522
|
Goodwill and other intangible assets, net
|
|
|
71,193
|
|
|
72,730
|
Other assets
|
|
|
1,287
|
|
|
1,215
|
Total long-term assets
|
|
|
74,009
|
|
|
75,467
|
Total assets
|
|
$
|
122,780
|
|
$
|
123,159
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
2,300
|
|
$
|
2,300
|
Trade payables
|
|
|
5,756
|
|
|
9,560
|
Deferred revenues
|
|
|
5,462
|
|
|
5,132
|
Payment obligation related to acquisitions
|
|
|
20,361
|
|
|
20,317
|
Accrued expenses and other liabilities
|
|
|
14,935
|
|
|
14,679
|
Total current liabilities
|
|
|
48,814
|
|
|
51,988
|
LONG-TERM LIABILITIES:
|
|
|
|
|
Long-term debt
|
|
|
5,975
|
|
|
6,550
|
Contingent purchase consideration
|
|
|
6,301
|
|
|
6,078
|
Other long-term liabilities
|
|
|
3,528
|
|
|
3,833
|
Total long-term liabilities
|
|
|
15,804
|
|
|
16,461
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
58,162
|
|
|
54,710
|
Total liabilities and shareholders' equity
|
|
$
|
122,780
|
|
$
|
123,159
|
|
|
|
|
|
|
|
PERION NETWORK LTD.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
U.S. dollars in thousands, (unaudited)
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
2013
|
|
2012
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
2,888
|
|
|
$
|
370
|
|
Adjustments required to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
2,600
|
|
|
|
683
|
|
Stock based compensation expense
|
|
|
550
|
|
|
|
360
|
|
Accretion of payment obligation related to acquisitions
|
|
|
267
|
|
|
|
76
|
|
Deferred taxes, net
|
|
|
(270
|
)
|
|
|
(30
|
)
|
Accrued severance pay, net
|
|
|
49
|
|
|
|
36
|
|
Net change in working capital
|
|
|
1,432
|
|
|
|
985
|
|
Net cash provided by operating activities
|
|
|
7,516
|
|
|
|
2,480
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Purchase of property and equipment
|
|
|
(202
|
)
|
|
|
(110
|
)
|
Capitalization of software development and content costs
|
|
|
(854
|
)
|
|
|
(106
|
)
|
Net cash used in investing activities
|
|
|
(1,056
|
)
|
|
|
(216
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Payment of long-term loan
|
|
|
(575
|
)
|
|
|
-
|
|
Net cash used in financing activities
|
|
|
(575
|
)
|
|
|
-
|
|
Increase in cash and cash equivalents
|
|
|
5,885
|
|
|
|
2,264
|
|
Cash and cash equivalents at beginning of year
|
|
|
21,762
|
|
|
|
11,260
|
|
Cash and cash equivalents at end of year
|
|
$
|
27,647
|
|
|
$
|
13,524
|
|
|
|
|
|
|
|
|
|
|
<div class="copyright">
Copyright Business Wire 2013
</div>