Perion Reports First Quarter 2018 Results
Strong Start of 2018 Drives
and a 23% Increase in Adjusted EBIDTA
Company Reaffirms Full Year Adjusted EBITDA Guidance of
Financial Highlights*
(In millions, except per share data)
Three months ended | |||||||||||||
March 31, | |||||||||||||
2017 | 2018 | % | |||||||||||
Search and other revenues | $ | 37.6 | $ | 31.6 | (16)% | ||||||||
Advertising revenues | $ | 24.4 | $ | 29.3 | 20% | ||||||||
Total Revenues | $ | 62.0 | $ | 60.9 | (2)% | ||||||||
GAAP Net Income (Loss) | $ | (2.1) | $ | 0.1 | |||||||||
Non-GAAP Net Income | $ | 2.8 | $ | 3.0 | 7% | ||||||||
Adjusted EBITDA | $ | 3.5 | $ | 4.3 | 23% | ||||||||
GAAP Diluted Income (Loss) Per Share | $ | (0.03) | $ | 0.00 | |||||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.04 | $ | 0.04 |
*Reconciliation of GAAP to Non-GAAP measures follows.
“Moreover, our efforts to strengthen Undertone’s solution offering and value proposition to the market by combining our insight-driven creative studio with a platform that delivers the right message at the right time over a vetted network of premium publisher sites, has led to a 20% year-over-year increase in our Advertising revenues,” Mr. Gerstel added “We’re encouraged by customer response to Undertone’s newly Synchronized Digital Branding holistic platform, that creates a unified experience across a variety of display and social touchpoints to quality-conscious brands.”
“Simultaneously, the Search business continues to provide steady free
cash flow to support our investments in Undertone, strengthens our
balance sheet and reduces our debt by
Mr. Gerstel concluded, “We executed according to plan during the first quarter and I am increasingly confident, based on the results we achieved, that Perion is on the right track. As a result, we are reaffirming our outlook for full year 2018.”
Financial Comparison for the First Quarter of 2018:
Revenues: Revenues decreased by 2%, from
Customer Acquisition Costs and Media Buy ("CAC"): CAC in
the first quarter of 2018 was
Net Income: On a GAAP basis, net Income in the first quarter of
2018 was $0.1 million as compared to net loss of
Non-GAAP Net Income: In the first quarter of 2018, non-GAAP net
income was
Adjusted EBITDA: In the first quarter of 2018, Adjusted EBITDA
was
Cash and Cash Flow from Operations: As of March 31, 2018, cash,
cash equivalents and short-term deposits were
Short-term Debt, Long-term Debtand Convertible Debt: As
of
Perion satisfies all the financial covenants associated with its public debt.
2018 Guidance
Management reiterated its expectations of Adjusted EBITDA of
Conference Call
Perion will host a conference call to discuss the results today,
- Conference ID: 5635725
-
Dial-in number from within
the United States : 1-800-289-0438 -
Dial-in number from
Israel : 1-809-212-883 - Dial-in number (other international): 1-323-794-2423
-
Playback available until
May 17, 2018 by calling 1-844-512-2921 (United States ) or 1-412-317-6671 (international). Please use PIN code 5635725 for the replay. - Link to the live webcast accessible at https://www.perion.com/ir-info/
About
Perion is a global technology company that delivers advertising solutions to brands and publishers. Perion is committed to providing data-driven execution, from high-impact ad formats to branded search and a unified social and mobile programmatic platform. More information about Perion may be found at www.perion.com, and follow Perion on Twitter @perionnetwork.
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 tax expenses, 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 the Company with the
CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands (except share and per share data)
Three months ended | |||||||
March 31, | |||||||
2017 | 2018 | ||||||
Unaudited |
Unaudited |
||||||
Revenues: | |||||||
Search and other | $ | 37,588 | $ | 31,610 | |||
Advertising | 24,388 | 29,295 | |||||
Total Revenues | 61,976 | 60,905 | |||||
Costs and Expenses: | |||||||
Cost of revenues | 5,893 | 6,056 | |||||
Customer acquisition costs and media buy | 30,052 | 31,885 | |||||
Research and development | 5,020 | 5,544 | |||||
Selling and marketing | 12,905 | 9,701 | |||||
General and administrative | 5,175 | 4,286 | |||||
Depreciation and amortization | 4,901 | 2,071 | |||||
Restructuring costs | - | 1,138 | |||||
Total Costs and Expenses | 63,946 | 60,681 | |||||
Income (Loss) from Operations | (1,970) | 224 | |||||
Financial expense, net | 2,184 | 607 | |||||
Loss before Taxes on income | 4,154 | 383 | |||||
Taxes on income | (2,080) | (440) | |||||
Net Income (Loss) | $ | (2,074) | $ | 57 | |||
Net Earnings (Loss) per Share - Basic and Diluted: | $ | (0.03) | $ | 0.00 | |||
Weighted average number of shares continuing and discontinued | |||||||
Basic | 77,486,996 | 77,550,069 | |||||
Diluted | 77,486,996 | 77,550,069 | |||||
*) less than $0.01 | |||||||
CONDENSED CONSOLIDATED BALANCE SHEET
In thousands
December 31, | March 31, | ||||||
2017 | 2018 | ||||||
Audited | Unaudited | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 31,567 | $ | 41,737 | |||
Short-term bank deposit | 5,913 | 4 | |||||
Accounts receivable, net | 62,830 | 46,339 | |||||
Prepaid expenses and other current assets | 13,955 | 7,847 | |||||
Total Current Assets | 114,265 | 95,927 | |||||
Property and equipment, net | 17,476 | 17,285 | |||||
Goodwill and intangible assets, net | 136,360 | 135,210 | |||||
Deferred taxes | 4,798 | 5,129 | |||||
Other assets | 1,128 | 808 | |||||
Total Assets | $ | 274,027 | $ | 254,359 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 39,180 | $ | 32,352 | |||
Accrued expenses and other liabilities | 17,784 | 16,426 | |||||
Short-term loans and current maturities of long-term and | |||||||
convertible debt | 13,989 | 21,415 | |||||
Deferred revenues | 5,271 | 4,482 | |||||
Payment obligation related to acquisitions | 5,146 | 5,146 | |||||
Total Current Liabilities | 81,370 | 79,821 | |||||
Long-Term Liabilities: | |||||||
Long-term debt, net of current maturities | 30,026 | 20,785 | |||||
Convertible debt, net of current maturities | 16,693 | 8,020 | |||||
Other long-term liabilities | 7,606 | 6,596 | |||||
Total Liabilities | 135,695 | 115,222 | |||||
Shareholders' equity: | |||||||
Ordinary shares | 211 | 211 | |||||
Additional paid-in capital | 236,975 | 237,593 | |||||
Treasury shares at cost | (1,002) | (1,002) | |||||
Accumulated other comprehensive gain (loss) | 532 | 662 | |||||
Accumulated deficit | (98,384) | (98,327) | |||||
Total Shareholders' Equity | 138,332 | 139,137 | |||||
Total Liabilities and Shareholders' Equity | $ | 274,027 | $ | 254,359 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
Three months ended March 31, | |||||||
2017 | 2018 | ||||||
Unaudited | Unaudited | ||||||
Operating activities: |
|||||||
Net Income (loss) | $ | (2,074) | $ | 57 | |||
Adjustments required to reconcile net income to net cash provided | |||||||
by operating activities: | |||||||
Depreciation and amortization | 4,901 | 2,071 | |||||
Stock based compensation expense | 558 | 618 | |||||
Accretion of payment obligation related to acquisition | 30 | - | |||||
Foreign currency translation | (11) | 67 | |||||
Accrued interest, net | 100 | 128 | |||||
Deferred taxes, net | (2,643) | (354) | |||||
Fair value revaluation - convertible debt | 2,833 | (986) | |||||
Net changes in operating assets and liabilities | 4,532 | 12,995 | |||||
Net cash provided by operating activities | $ | 8,226 | $ | 14,596 | |||
Investing activities: |
|||||||
Purchases of property and equipment | $ | (831) | $ | (90) | |||
Capitalization of development costs | (970) | (688) | |||||
Short-term deposits, net | 8,414 | 5,909 | |||||
Net cash provided by investing activities | $ | 6,613 | $ | 5,131 | |||
Financing activities: |
|||||||
Exercise of stock options and restricted share units | 1 | - | |||||
Repayment of convertible debt | (7,901) | - | |||||
Repayment of short-term loans | (8,137) | - | |||||
Repayment of long-term loans | - | (9,630) | |||||
Net cash used in financing activities | $ | (16,037) | $ | (9,630) | |||
Effect of exchange rate changes on cash and cash equivalents | 45 | 73 | |||||
Net increase (decrease) in cash and cash equivalents | (1,153) | 10,170 | |||||
Cash and cash equivalents at beginning of period | 23,962 | 31,567 | |||||
Cash and cash equivalents at end of period | $ | 22,809 | $ | 41,737 | |||
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
In thousands (except share and per share data)
Three months ended | ||||||||
March 31, | ||||||||
2017 | 2018 | |||||||
Unaudited | Unaudited | |||||||
GAAP Net Income (loss) from continuing operations | $ | (2,074) | $ | 57 | ||||
Share based compensation | 558 | 618 | ||||||
Amortization of acquired intangible assets | 4,052 | 1,204 | ||||||
Restructuring costs | - | 1,138 | ||||||
Expenses related to M&A activities | - | 235 | ||||||
Fair value revaluation of convertible debt and related derivative | 1,431 | 127 | ||||||
Accretion of payment obligation related to acquisition | 30 | - | ||||||
Taxes on the above items | (1,243) | (361) | ||||||
Non-GAAP Net Income from continuing operations | $ | 2,754 | $ | 3,018 | ||||
Non-GAAP Net Income from continuing operations | $ | 2,754 | $ | 3,018 | ||||
Taxes on income | (837) | (79) | ||||||
Financial expense, net | 723 | 480 | ||||||
Depreciation | 849 | 867 | ||||||
Adjusted EBITDA | $ | 3,489 | $ | 4,286 | ||||
Non-GAAP diluted earnings per share | $ | 0.04 | $ | 0.04 | ||||
Shares used in computing non-GAAP diluted earnings per share |
77,931,738 |
77,558,726 | ||||||
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Source:
Perion Network Ltd.
Investor relations
Hila Valdman
+972
(73) 398-1000
Investors@perion.com