Perion Reports First Quarter 2019 Results
Search Business Positive Trajectory Continues: Third Consecutive Quarter of Sequential Growth; Year-over-Year Growth for the First Time in Five Years;
Strong Cash Flow Continues: Company Raises Full Year Adjusted EBITDA
Guidance to
Financial Highlights*
(In millions, except per share data)
Three months ended | ||||||||||||||
March 31, | ||||||||||||||
2018 | 2019 | |||||||||||||
Advertising revenues | $ | 29.3 | $ | 18.6 | ||||||||||
Search and other revenues | $ | 31.6 | $ | 35.2 | ||||||||||
Total Revenues | $ | 60.9 | $ | 53.8 | ||||||||||
GAAP Net Income | $ | 0.1 | $ | 1.2 | ||||||||||
Non-GAAP Net Income | $ | 3.0 | $ | 3.3 | ||||||||||
Adjusted EBITDA | $ | 4.3 | $ | 5.1 | ||||||||||
Net cash provided by operating activities | $ | 14.6 | $ | 14.0 | ||||||||||
GAAP Diluted Earnings Per Share | $ | 0.00 | $ | 0.05 | ||||||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.12 | $ | 0.13 | ||||||||||
* Reconciliation of GAAP to Non-GAAP measures follows.
“This significant progress has meaningfully expanded the immediate and longer-term importance of our Search business,” added Mr. Gerstel. “Our increased Search revenues and strong cash flow enable us to continue our planned investments in our advertising offering, to further differentiate Undertone in a growing but evolving market.”
“Undertones’ Synchronized Digital Branding solution was enhanced by the acquisition of Captain Growth, which will provide the AI optimization engine required to offer brands the critical ability to put their best-performing units in front of the right users at the right time - for unprecedented cross-channel engagement,” Mr. Gerstel continued. “We are excited by the acceptance of our customers and believe in a unique opportunity to differentiate Undertone in this space.”
Mr. Gerstel concluded, “As a result of the strong start of 2019, where
we achieved higher than planned first quarter Adjusted EBITDA combined
with our current visibility, we feel confident to increase our annual
guidance of Adjusted EBITDA from
Financial Comparison for the First Quarter of 2019:
Revenues: Revenues declined by 12%, from
Customer Acquisition Costs and Media Buy (“CAC”): CACin
the first quarter of 2019 were
Net Income: On a GAAP basis, net income in the first quarter of
2019 was
Non-GAAP Net Income: In the first quarter of 2019, non-GAAP net
income was
Adjusted EBITDA: In the first quarter of 2019, Adjusted EBITDA
was
Cash and Cash Flow from Operations: As of
Short-term Debt, Long-term Debt and Convertible Debt: As of
Perion satisfies all the financial covenants associated with its public debt.
2019 Guidance:
Management has increased its previously issued Adjusted EBITDA guidance
of
Conference Call:
Perion management will host a conference call to discuss the results
today at
- Conference ID: 5831485
-
Dial-in number from within
the United States : 1-888-394-8218 -
Dial-in number from
Israel : 1-809-212-883 - Dial-in number (other international): 1-323-701-0225
-
Playback available until
May 22, 2019 by calling 1-844-512-2921 (United States ) or 1-412-317-6671 (international). Please use PIN code 5831485 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 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
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PERION NETWORK LTD. AND ITS SUBSIDIARIES |
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
In thousands (except share and per share data) |
||||||||
Three months ended | ||||||||
March 31, | ||||||||
2018 | 2019 | |||||||
Unaudited | Unaudited | |||||||
Revenues: | ||||||||
Advertising | $ | 29,295 | $ | 18,584 | ||||
Search and other | 31,610 | 35,265 | ||||||
Total Revenues | 60,905 | 53,849 | ||||||
Costs and Expenses: | ||||||||
Cost of revenues | 6,056 | 5,766 | ||||||
Customer acquisition costs and media buy | 31,885 | 27,433 | ||||||
Research and development | 5,544 | 4,862 | ||||||
Selling and marketing | 9,701 | 8,325 | ||||||
General and administrative | 4,286 | 3,058 | ||||||
Depreciation and amortization | 2,071 | 2,390 | ||||||
Restructuring costs | 1,138 | - | ||||||
Total Costs and Expenses | 60,681 | 51,834 | ||||||
Income from Operations | 224 | 2,015 | ||||||
Financial expense, net | 607 | 1,325 | ||||||
Income (Loss) before Taxes on income | (383) | 690 | ||||||
Tax benefit | 440 | 542 | ||||||
Net Income | $ | 57 | $ | 1,232 | ||||
Net Earnings per Share | ||||||||
Basic |
$ | 0.00 | $ | 0.05 | ||||
Diluted | $ | 0.00 | $ | 0.05 | ||||
Weighted average number of shares | ||||||||
Basic | 25,850,023 | 25,883,768 | ||||||
Diluted | 25,850,023 | 25,885,029 | ||||||
PERION NETWORK LTD. AND ITS SUBSIDIARIES |
|||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||||
In thousands |
|||||||||
December 31, | March 31, | ||||||||
2018 | 2019 | ||||||||
Audited | Unaudited | ||||||||
ASSETS | |||||||||
Current Assets: | |||||||||
Cash and cash equivalents | $ | 39,109 | $ | 38,386 | |||||
Short-term bank deposit | 4,000 | 6,700 | |||||||
Accounts receivable, net | 55,557 | 40,159 | |||||||
Prepaid expenses and other current assets | 5,227 | 5,420 | |||||||
Total Current Assets | 103,893 | 90,665 | |||||||
Property and equipment, net | 15,649 | 14,537 | |||||||
Operating lease right-of-use assets | - | 24,889 | |||||||
Goodwill and intangible assets, net | 131,547 | 131,661 | |||||||
Deferred taxes | 4,414 | 4,960 | |||||||
Other assets | 943 | 723 | |||||||
Total Assets | $ | 256,446 | $ | 267,435 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current Liabilities: | |||||||||
Accounts payable | $ | 38,208 | $ | 35,297 | |||||
Accrued expenses and other liabilities | 17,240 | 14,514 | |||||||
Short-term operating lease liability | - | 4,226 | |||||||
Short-term loans and current maturities of long-term and Convertible debt | 16,059 | 16,385 | |||||||
Deferred revenues | 3,794 | 3,417 | |||||||
Payment obligation related to acquisitions | 1,813 | 1,200 | |||||||
Total Current Liabilities | 77,114 | 75,039 | |||||||
Long-Term Liabilities: | |||||||||
Long-term debt, net of current maturities | 16,667 | 14,583 | |||||||
Convertible debt, net of current maturities | 7,726 | - | |||||||
Long-term operating lease liability | - | 21,367 | |||||||
Other long-term liabilities | 6,158 | 5,762 | |||||||
Total Liabilities | 107,665 | 116,751 | |||||||
Shareholders' equity: | |||||||||
Ordinary shares | 211 | 211 | |||||||
Additional paid-in capital | 239,693 | 240,285 | |||||||
Treasury shares at cost | (1,002) | (1,002) | |||||||
Accumulated other comprehensive gain | 142 | 221 | |||||||
Accumulated deficit | (90,263) | (89,031) | |||||||
Total Shareholders' Equity | 148,781 | 150,684 | |||||||
Total Liabilities and Shareholders' Equity | $ | 256,446 | $ | 267,435 | |||||
PERION NETWORK LTD. AND ITS SUBSIDIARIES |
|||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||
In thousands |
|||||||||
Three months ended |
|||||||||
2018 | 2019 | ||||||||
Unaudited | Unaudited | ||||||||
Operating activities: |
|||||||||
Net Income | $ | 57 | $ | 1,232 | |||||
Adjustments required to reconcile net income to net cash |
|||||||||
Depreciation and amortization | 2,071 | 2,390 | |||||||
Share-based compensation expense | 618 | 463 | |||||||
Foreign currency translation | 67 | 19 | |||||||
Accrued interest, net | 128 | (199) | |||||||
Deferred taxes, net | (354) | (546) | |||||||
Accrued severance pay, net | (626) | (316) | |||||||
Fair value revaluation - convertible debt | (986) | 699 | |||||||
Net changes in operating assets and liabilities | 13,621 | 10,246 | |||||||
Net cash provided by operating activities | $ | 14,596 | $ | 13,988 | |||||
Investing activities: |
|||||||||
Purchases of property and equipment, net | $ | (90) | $ | (227) | |||||
Capitalization of development costs | (688) | - | |||||||
Short-term deposits, net | 5,909 | (2,700) | |||||||
Net cash provided by (used in) investing activities | $ | 5,131 | $ | (2,927) | |||||
Financing activities: |
|||||||||
Exercise of stock options and restricted share units | - | 129 | |||||||
Payment made in connection with acquisition | - | (1,813) | |||||||
Repayment of convertible debt | - | (7,901) | |||||||
Repayment of long-term loans | (9,630) | (2,083) | |||||||
Net cash used in financing activities | $ | (9,630) | $ | (11,668) | |||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 74 | (110) | |||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 10,171 | (717) | |||||||
Cash and cash equivalents and restricted cash at beginning of year | 32,755 | 40,803 | |||||||
Cash and cash equivalents and restricted cash at end of year | $ | 42,926 | $ | 40,086 | |||||
PERION NETWORK LTD. AND ITS SUBSIDIARIES |
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RECONCILIATION OF GAAP TO NON-GAAP RESULTS: UNAUDITED |
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In thousands (except share and per share data) |
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|
Three months ended | |||||||||
March 31, | ||||||||||
2018 | 2019 | |||||||||
Unaudited | Unaudited | |||||||||
GAAP Net Income | $ | 57 | $ | 1,232 | ||||||
Share based compensation | 618 | 463 | ||||||||
Amortization of acquired intangible assets | 1,204 | 1,046 | ||||||||
Restructuring costs | 1,138 | - | ||||||||
Non-recurring Legal fees | 235 | 257 | ||||||||
Fair value revaluation of convertible debt and related derivative | 127 | 267 | ||||||||
Foreign exchange losses associated with ASC-842 | - | 292 | ||||||||
Taxes on the above items | (361) | (303) | ||||||||
Non-GAAP Net Income | $ | 3,018 | $ | 3,254 | ||||||
Non-GAAP Net Income | $ | 3,018 | $ | 3,254 | ||||||
Taxes on income | (79) | (239) | ||||||||
Financial expense, net | 480 | 766 | ||||||||
Depreciation | 867 | 1,344 | ||||||||
Adjusted EBITDA | $ | 4,286 | $ | 5,125 | ||||||
Non-GAAP diluted earnings per share | $ | 0.12 | $ | 0.13 | ||||||
Shares used in computing non-GAAP diluted earnings per share | 25,852,909 | 25,908,734 | ||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190514006147/en/
Source:
Perion Network Ltd.
Investor relations
Hila Barenboim
+972
(73) 398-1000
investors@perion.com