Perion Reports $1.3 Million in GAAP Net Income and $6.2 Million in Adjusted EBITDA for the First Quarter 2020
Company continues its 2019 momentum, driving 23% year over year topline growth;
seasoned management team taking range of strategic steps to preserve cash and leverage financial strength amidst COVID-19 uncertainty
Q1 2020 Highlights:
-
Total Revenues of
$66.1 million , increased 23% year-over-year; -
GAAP Net Income of
$1.3 million , increased 8% year-over-year; -
Non-GAAP Net Income of
$5.0 million , increased 53% year-over-year; -
GAAP Earnings Per Share of
$0.05 , no change year-over-year; -
Adjusted EBITDA of
$6.2 million , increased 22% year-over-year; -
Net Cash provided from operations was$2.5 million ; decreased 82% year-over-year; -
Net Cash decreased from$45.0 million to$39.5 , inclusive of the$15.1 million paid at closing to acquire ContentIQ.
Financial Highlights*
(In millions, except per share data)
|
Three months ended |
|
||||||
|
|
|
||||||
|
2020 |
|
2019 |
|
% |
|
||
Advertising revenues |
$ |
23.7 |
|
$ |
18.6 |
|
+28% |
|
Search and other revenues |
$ |
42.3 |
|
$ |
35.3 |
|
+20% |
|
Total Revenues |
$ |
66.1 |
|
$ |
53.8 |
|
+23% |
|
GAAP Net Income |
$ |
1.3 |
|
$ |
1.2 |
|
+8% |
|
Non-GAAP Net Income |
$ |
5.0 |
|
$ |
3.3 |
|
+53% |
|
Adjusted EBITDA |
$ |
6.2 |
|
$ |
5.1 |
|
+22% |
|
Net cash provided by operating activities |
$ |
2.5 |
|
$ |
14.0 |
|
-82% |
|
GAAP Diluted Earnings Per Share |
$ |
0.05 |
|
$ |
0.05 |
|
0% |
|
Non-GAAP Diluted Earnings Per Share |
$ |
0.17 |
|
$ |
0.13 |
|
+31% |
|
|
|
|
|
|
|
|
|
|
* Reconciliation of GAAP to Non-GAAP measures follows.
“As the first quarter progressed and the impact of the COVID-19 pandemic became more pronounced, we swiftly began rolling out strategic initiatives to better prepare Perion for an uncertain market environment with reduced levels of advertising spending,” Gerstel added. “As part of this effort, we implemented cost-saving measures that are expected to yield more than
“The revenue flexibility provided by our product diversity and business mix across the three pillars of digital advertising, contributed to our Q1 success and is critical to our long-term prospects,” Gerstel continued. “CIQ performed well throughout the quarter and in line with expectations, demonstrating the strength and resiliency that our diversification provides. We are fortunate to have a highly focused and differentiated advertising offering which conceptually brings brands, agencies and publishers together – benefiting from a common digital advertising offering.”
Gerstel added, “With regard to the remainder of the year, the disruption in the advertising market and lack of visibility have caused us to join many other public companies who have made the prudent decision to temporarily withdraw full-year guidance. As the horizon becomes clearer and our visibility improves, we hope to return to providing estimates about expected results. We remain confident, that we have the diversification, product offerings and management discipline needed to generate significant cash from operations and remain profitable, for the full year, as we weather the uncertainty of the current environment.”
“We are navigating the current environment from a stable financial position that is superior to many companies in our industry,” concluded Gerstel. “Our organic and inorganic efforts to boost topline revenue remain our top priority. We’ve realized that more and more companies in our industry with excellent, complementary products, services and technologies lack the financial strength to weather a period of disruption. As a result, we have made the strategic decision to file a shelf registration statement, to assess M&A opportunities as they become available.”
Financial Comparison for the first quarter of 2020:
Revenues: Revenues increased by 23%, from
Customer Acquisition Costs and Media Buy (“CAC”): CAC in the first quarter of 2020 were
Net Income: On a GAAP basis, net income in the first quarter of 2020 was
Non-GAAP Net Income: In the first quarter of 2020, non-GAAP net income was
Adjusted EBITDA: In the first quarter of 2020, Adjusted EBITDA was
Cash and Cash Flow from Operations: As of
Short-term Debt, Long-term Debt and Convertible Debt: As of
Conference Call:
Perion will host a conference call to discuss the results today,
- Conference ID: 6762387
-
Dial-in number from within
the United States : 1-866-548-4713 -
Dial-in number from
Israel : 1809 212 883 - Dial-in number (other international): 1-323-794-2093
-
Playback available until
May 13, 2020 by calling 1-844-512-2921 (United States ) or 1-412-317-6671 (international). Please use PIN code 6762387 for the replay. - Link to the live webcast accessible at https://www.perion.com/ir-info/
About
Perion is a global technology company that provides agencies, brands and publishers with innovative solutions that cover the three pillars of digital advertising. From its data-driven Synchronized Digital Branding platform and high-impact ad formats in the display domain; to its powerful social media platform; to its branded search network, Perion is well-positioned to capitalize on any changes in marketers’ allocation of digital advertising spend. More information about Perion can be found at www.perion.com.
Non-GAAP measures
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude acquisition related expenses, share-based compensation expenses, restructuring costs, loss from discontinued operations, accretion of acquisition related contingent consideration, impairment of goodwill, amortization and impairment of acquired intangible assets and the related taxes thereon, non-recurring expenses, foreign exchange gains (losses) associated with ASC-842, as well as certain accounting entries under the business combination accounting rules that require us to recognize a legal performance obligation related to revenue arrangements of an acquired entity based on its fair value at the date of acquisition. Additionally, in
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. 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” 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, 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
CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands (except share and per share data)
Three months ended |
||||
|
||||
2020 |
|
2019 |
||
(Unaudited) |
(Unaudited) |
|||
Revenues: |
||||
Advertising |
|
|
||
Search and other |
42,320 |
35,265 |
||
Total Revenues |
66,053 |
53,849 |
||
Costs and Expenses: |
||||
Cost of revenues |
5,766 |
5,766 |
||
Customer acquisition costs and media buy |
36,138 |
27,433 |
||
Research and development |
7,207 |
4,862 |
||
Selling and marketing |
9,701 |
8,325 |
||
General and administrative |
3,939 |
3,058 |
||
Depreciation and amortization |
2,302 |
2,390 |
||
Total Costs and Expenses |
65,053 |
51,834 |
||
Income from Operations |
1,000 |
2,015 |
||
Financial expense (income), net |
(8) |
1,325 |
||
Income before Taxes on income |
1,008 |
690 |
||
Tax benefit |
326 |
542 |
||
Net Income |
|
|
||
Net Earnings per Share |
||||
Basic |
|
|
||
Diluted |
|
|
||
Weighted average number of shares |
||||
Basic |
26,287,515 |
25,883,768 |
||
Diluted |
28,212,685 |
25,885,029 |
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
|
|
|
|
|
|
2020 |
|
2019 |
|
|
(Unaudited) |
|
(Audited) |
|
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
Restricted cash |
1,220 |
|
1,216 |
|
Short-term bank deposits |
7,748 |
|
23,234 |
|
Accounts receivable, net |
40,778 |
|
49,098 |
|
Prepaid expenses and other current assets |
3,363 |
|
3,170 |
Total Current Assets |
99,483 |
|
115,107 |
|
|
|
|
|
|
Long-Term Assets: |
|
|
|
|
|
Property and equipment, net |
9,801 |
|
10,918 |
|
Operating lease right-of-use assets |
21,465 |
|
22,429 |
|
|
167,463 |
|
128,444 |
|
Deferred taxes |
4,216 |
|
6,171 |
|
Other assets |
673 |
|
708 |
|
Total Long-Term Assets |
203,618 |
|
168,670 |
Total Assets |
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
Current Liabilities: |
|
|
|
|
Accounts payable |
|
|
|
|
|
Accrued expenses and other liabilities |
20,797 |
|
18,414 |
|
Short-term operating lease liability |
3,680 |
|
3,667 |
|
Short-term loans and current maturities of long-term and Convertible debt |
8,333 |
|
8,333 |
|
Deferred revenues |
3,393 |
|
4,188 |
|
Short-term payment obligation related to acquisitions |
13,699 |
|
1,025 |
Total Current Liabilities |
91,035 |
|
83,308 |
|
|
|
|
|
|
Long-Term Liabilities: |
|
|
|
|
|
Long-term debt, net of current maturities |
6,250 |
|
8,333 |
|
Payment obligation related to acquisition |
11,537 |
|
- |
|
Long-term operating lease liability |
19,085 |
|
20,363 |
|
Other long-term liabilities |
6,014 |
|
6,591 |
Total Long-Term Liabilities |
42,886 |
|
35,287 |
|
Total Liabilities |
133,921 |
|
118,595 |
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Ordinary shares |
217 |
|
213 |
|
Additional paid-in capital |
245,864 |
|
243,211 |
|
|
(1,002) |
|
(1,002) |
|
Accumulated other comprehensive gain |
137 |
|
130 |
|
Accumulated deficit |
(76,036) |
|
(77,370) |
Total Shareholders' Equity |
169,180 |
|
165,182 |
|
Total Liabilities and Shareholders' Equity |
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
|
Three months ended |
|||
|
|
|||
|
2020 |
|
2019 |
|
|
(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 |
2,302 |
2,390 |
||
Stock based compensation expense |
1,100 |
463 |
||
Foreign currency translation |
(29) |
19 |
||
Accrued interest, net |
- |
(199) |
||
Deferred taxes, net |
(315) |
(546) |
||
Accrued severance pay, net |
25 |
(316) |
||
Fair value revaluation - convertible debt |
- |
699 |
||
Net changes in operating assets and liabilities |
(1,921) |
10,246 |
||
Net cash provided by operating activities |
|
|
||
|
||||
Cash flows from investing activities: |
||||
Purchases of property and equipment |
(71) |
(227) |
||
Short-term deposits, net |
15,486 |
(2,700) |
||
Cash paid in connection with acquisitions, net of cash acquired |
(15,100) |
- |
||
Obligation in connection with acquisitions |
5,777 |
- |
||
Net cash provided by (used in) investing activities |
|
|
||
|
||||
Cash flows from financing activities: |
||||
Exercise of stock options and restricted share units |
1,557 |
129 |
||
Payment made in connection with acquisition |
- |
(1,813) |
||
Repayment of convertible debt |
- |
(7,901) |
||
Repayment of long-term loans |
(2,083) |
(2,083) |
||
Net cash used in financing activities |
|
|
||
|
||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
(73) |
(110) |
||
Net increase (decrease) in cash and cash equivalents and restricted cash |
7,989 |
(717) |
||
Cash and cash equivalents and restricted cash at beginning of period |
39,605 |
40,803 |
||
Cash and cash equivalents and restricted cash at end of period |
|
|
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
In thousands (except share and per share data)
Three months ended |
||||
|
||||
2020 |
|
2019 |
||
(Unaudited) |
||||
GAAP Net Income |
|
|
||
Share based compensation |
1,100 |
463 |
||
Amortization of acquired intangible assets |
1,065 |
1,046 |
||
Non-recurring fees (Expenses related to M&A activity) |
1,836 |
257 |
||
Fair value revaluation of convertible debt and related derivative |
- |
267 |
||
Foreign exchange loss (gain) associated with ASC-842 |
(280) |
292 |
||
Taxes on the above items |
(90) |
(303) |
||
Non-GAAP Net Income |
|
|
||
Non-GAAP Net Income |
|
|
||
Tax benefit |
(236) |
(239) |
||
Financial expense, net |
272 |
766 |
||
Depreciation |
1,237 |
1,344 |
||
Adjusted EBITDA |
|
|
||
Non-GAAP diluted earnings per share |
|
|
||
Shares used in computing non-GAAP diluted earnings per share |
28,749,160 |
25,908,734 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200506005442/en/
+972 (52) 5694441
ramir@perion.com
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