Perion Reports Third Quarter 2017 Results
Perion Extends and Enhances Agreement with Microsoft Bing Through
2020; Company Achieves Goal to Reduce
Financial Highlights*
(In millions, except per share data)
Three months ended | Nine months ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2017 | 2016 | 2017 | |||||||||
Search and other revenues | $ | 42.1 | $ | 33.3 | $ | 132.2 | $ | 105.3 | ||||
Advertising revenues | $ | 32.4 | $ | 31.7 | $ | 96.1 | $ | 91.4 | ||||
Total Revenues | $ | 74.5 | $ | 65.0 | $ | 228.3 | $ | 196.7 | ||||
GAAP Net Income (Loss) from continuing operation | $ | 2.9 | $ | 2.6 | $ | 2.5 | $ | (35.5) | ||||
Non-GAAP Net Income | $ | 7.7 | $ | 4.1 | $ | 21.2 | $ | 11.1 | ||||
Adjusted EBITDA | $ | 12.4 | $ | 6.5 | $ | 31.9 | $ | 17.0 | ||||
Impairment of Goodwill and Intangible assets | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 43.8 | ||||
GAAP Diluted Earnings (Loss) Per Share from continuing operation |
$ | 0.04 | $ | 0.03 | $ | 0.03 | $ | (0.46) | ||||
Non-GAAP Diluted Earnings Per Share | $ | 0.10 | $ | 0.05 | $ | 0.26 | $ | 0.14 |
* Reconciliation of GAAP to Non-GAAP measures follows.
“We are revitalizing our long-term growth prospects by shifting
significant resources to accelerate the development of innovative
technology to enable advertisers to manage their brand awareness
campaigns,” continued Gerstel. “At the same time, we are implementing
targeted expense reductions and reallocating resources to support the
investment in new technology. I am pleased to report that we have
already achieved the
“Undertone remains well positioned as an industry leading rich media
digital solution provider,” continued Gerstel. “Given the continuous
shift of media budgets towards unreserved programmatic, we have
accelerated our efforts to introduce high impact ads into the unreserved
programmatic world in early 2018. The new formats we are developing will
also address the expected impact of new ad blocking features that will
be included in the newest version of Chrome that
“On the search side of our business, our extension with Microsoft Bing through 2020, will meaningfully extend Perion’s reach within the search ecosystem, in both desktop and mobile,” added Mr. Gerstel. “Today, Bing commands one-third of all desktop searches in the U.S., giving Perion a large and increasingly important partner. The extension of our agreement ensures that Perion will continue to provide its publisher partners, and their consumers, a leading search and monetization solution while at the same time providing the necessary cash flow to drive internal growth initiatives within the organization.”
Financial Comparison for the Third Quarter of 2017:
Revenues: Revenues decreased by 13%, from
Customer Acquisition Costs and Media Buy ("CAC"): CAC
in the third quarter of 2017 were
Net Income: On a GAAP basis, net income from continuing operation
in the third quarter of 2017 was
Non-GAAP Net Income: In the third quarter of 2017, non-GAAP net
income was
Adjusted EBITDA: In the third quarter of 2017, Adjusted EBITDA
was
Cash and Cash Flow from Operations: As of
Perion currently satisfies all the financial covenants associated with its public debt.
Conference Call:
Perion will host a conference call to discuss the results today,
- Conference ID: 8570941
-
Dial-in number from within
the United States : 1-888-430-8709 -
Dial-in number from
Israel : 1-80-925-8243 - Dial-in number (other international): 1-719-325-2456
-
Playback available until
November 16, 2017 by calling 1-844-512-2921 (United States ) or
1-412-317-6671 (international). Please use PIN code 8570941 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
Source:
CONSOLIDATED STATEMENTS OF OPERATIONS: UNAUDITED
In thousands (except share and per share data)
Three months ended | Nine months ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||
Unaudited | Unaudited | Unaudited | Unaudited | ||||||||||
Revenues: | |||||||||||||
Search and other | $ | 42,110 | $ | 33,287 | $ | 132,195 | $ | 105,254 | |||||
Advertising | 32,350 | 31,755 | 96,057 | 91,452 | |||||||||
Total Revenues | 74,460 | 65,042 | 228,252 | 196,706 | |||||||||
Costs and Expenses: | |||||||||||||
Cost of revenues | 3,794 | 3,561 | 12,008 | 10,476 | |||||||||
Customer acquisition costs and media buy | 32,990 | 31,955 | 102,065 | 95,793 | |||||||||
Research and development | 5,829 | 4,096 | 20,361 | 13,625 | |||||||||
Selling and marketing | 14,270 | 14,142 | 45,906 | 44,937 | |||||||||
General and administrative | 6,672 | 5,353 | 21,524 | 16,541 | |||||||||
Depreciation and amortization | 6,156 | 3,388 | 19,803 | 13,297 | |||||||||
Impairment charges | - | - | - | 43,847 | |||||||||
Restructuring costs | - | - | 728 | - | |||||||||
Total Costs and Expenses | 69,711 | 62,495 | 222,395 | 238,516 | |||||||||
Income (Loss) from Operations | 4,749 | 2,547 | 5,857 | (41,810) | |||||||||
Financial expense, net | 950 | 644 | 6,406 | 4,166 | |||||||||
Income (Loss) before Taxes on income | 3,799 | 1,903 | (549) | (45,976) | |||||||||
Taxes on income | 915 | (710) | (3,078) | (10,499) | |||||||||
Net Income (loss) from continuing operations | 2,884 | 2,613 | 2,529 | (35,477) | |||||||||
Net Loss from discontinued operations | 2,021 | - | (2,647) | - | |||||||||
Net Income (Loss) | $ | 4,905 | $ | 2,613 | $ | (118) | $ | (35,477) | |||||
Net Earnings (Loss) per Share - Basic and Diluted: | |||||||||||||
Continuing operations | $ | 0.04 | $ | 0.03 | $ | 0.03 | *) | $ | (0.46) | ||||
Discontinued operations | $ | 0.03 | $ | - | $ | (0.03) | $ | - | |||||
Weighted average number of shares continuing and discontinued | |||||||||||||
Basic | 76,573,397 | 77,550,069 | 76,357,173 | 77,548,867 | |||||||||
Diluted | 77,739,340 | 80,381,420 | 76,381,693 | 77,548,867 | |||||||||
*) less than $0.01 | |||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS: UNAUDITED
In thousands
December 31, | September 30, | ||||||
2016 | 2017 | ||||||
Audited | Unaudited | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 23,962 | $ | 33,967 | |||
Short-term bank deposit | 8,414 | 1,508 | |||||
Accounts receivable, net | 71,346 | 45,626 | |||||
Prepaid expenses and other current assets | 10,036 | 14,597 | |||||
Total Current Assets | 113,758 | 95,698 | |||||
Property and equipment, net | 14,205 | 16,968 | |||||
Goodwill and intangible assets, net | 234,755 | 180,600 | |||||
Deferred taxes | 4,117 | 7,902 | |||||
Other assets | 1,617 | 1,391 | |||||
Total Assets | $ | 368,452 | $ | 302,559 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 38,293 | $ | 32,692 | |||
Accrued expenses and other liabilities | 17,466 | 14,915 | |||||
Short-term loans and current maturities of long-term and convertible debt | 17,944 | 13,879 | |||||
Deferred revenues | 5,354 | 4,845 | |||||
Payment obligation related to acquisitions | 7,653 | 6,163 | |||||
Total Current Liabilities | 86,710 | 72,494 | |||||
Long-Term Liabilities: | |||||||
Long-term debt, net of current maturities | 37,928 | 32,431 | |||||
Convertible debt, net of current maturities | 21,862 | 16,003 | |||||
Deferred taxes | 8,087 | 66 | |||||
Other long-term liabilities | 5,721 | 6,538 | |||||
Total Liabilities | 160,308 | 127,532 | |||||
Shareholders' equity: | |||||||
Ordinary shares | 210 | 211 | |||||
Additional paid-in capital | 234,831 | 236,529 | |||||
Treasury shares at cost | (1,002) | (1,002) | |||||
Accumulated other comprehensive gain (loss) | (265) | 396 | |||||
Accumulated deficit | (25,630) | (61,107) | |||||
Total Shareholders' Equity | 208,144 | 175,027 | |||||
Total Liabilities and Shareholders' Equity | $ | 368,452 | $ | 302,559 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS: UNAUDITED
In thousands
Nine months ended September 30, | |||||||
2016 | 2017 | ||||||
Unaudited | Unaudited | ||||||
Operating activities: | |||||||
Net Loss | $ | (118) | $ | (35,477) | |||
Loss from discontinued operations, net | (2,647) | - | |||||
Net Income (Loss) from continuing operations | 2,529 | (35,477) | |||||
Adjustments required to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 19,803 | 13,297 | |||||
Impairment of goodwill and intangible assets | - | 43,847 | |||||
Stock based compensation expense | 4,985 | 1,667 | |||||
Foreign currency translation | 928 | 77 | |||||
Accrued interest, net | 306 | 339 | |||||
Deferred taxes, net | (5,342) | (11,915) | |||||
Change in payment obligation related to acquisition | 1,271 | 61 | |||||
Fair value revaluation - convertible debt | 1,588 | 2,768 | |||||
Net changes in operating assets and liabilities | (4,398) | 14,188 | |||||
Net cash provided by continuing operating activities | 21,670 | 28,852 | |||||
Net cash used in discontinued activities | (3,303) | - | |||||
Net cash provided by operating activities | $ | 18,367 | $ | 28,852 | |||
Investing activities: | |||||||
Purchases of property and equipment | $ | (1,011) | $ | (1,489) | |||
Capitalization of development costs | (3,724) | (4,437) | |||||
Change in restricted cash, net | (132) | - | |||||
Short-term deposits, net | 34,606 | 6,906 | |||||
Net cash provided by investing activities | $ | 29,739 | $ | 980 | |||
Financing activities: | |||||||
Exercise of stock options and restricted share units | 1 | 1 | |||||
Payment made in connection with acquisition | (28,052) | (1,551) | |||||
Proceeds from long-term loans | - | 5,000 | |||||
Repayment of convertible debt | (7,620) | (7,901) | |||||
Repayment of short-term loans | (26,000) | (7,000) | |||||
Repayment of long-term loans | (6,390) | (8,630) | |||||
Net cash used in financing activities | $ | (42,061) | $ | (20,081) | |||
Effect of exchange rate changes on cash and cash equivalents | 14 | 254 | |||||
Net increase in cash and cash equivalents | 9,362 | 10,005 | |||||
Net cash used in discontinued activities | (3,303) | - | |||||
Cash and cash equivalents at beginning of period | 17,519 | 23,962 | |||||
Cash and cash equivalents at end of period | $ | 23,578 | $ | 33,967 | |||
RECONCILIATION OF GAAP TO NON-GAAP RESULTS: UNAUDITED
In thousands (except share and per share data)
Three months ended | Nine months ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||
Unaudited | Unaudited | Unaudited | Unaudited | ||||||||||
GAAP Net Income from continuing operations | $ | 2,884 | $ | 2,613 | $ | 2,529 | $ | (35,477) | |||||
Acquisition related expenses | - | - | 179 | - | |||||||||
Valuation adjustment on acquired deferred revenues | - | - | 359 | - | |||||||||
Share based compensation | 1,457 | 547 | 4,985 | 1,666 | |||||||||
Amortization of acquired intangible assets | 5,178 | 2,497 | 16,801 | 10,608 | |||||||||
Restructuring costs | - | - | 728 | - | |||||||||
Impairment of goodwill and intangible assets | - | - | - | 43,847 | |||||||||
Fair value revaluation of convertible debt and related derivative | (422) | (803) | 134 | 610 | |||||||||
Accretion of payment obligation related to acquisition | 63 | 34 | 1,270 | 61 | |||||||||
Taxes on the above items | (1,490) | (753) | (5,810) | (10,247) | |||||||||
Non-GAAP Net Income from continuing operations | $ | 7,670 | $ | 4,135 | $ | 21,175 | $ | 11,068 | |||||
Non-GAAP Net Income from continuing operations | $ | 7,670 | $ | 4,135 | $ | 21,175 | $ | 11,068 | |||||
Taxes on income | 2,405 | 43 | 2,732 | (252) | |||||||||
Financial expense, net | 1,309 | 1,413 | 5,002 | 3,495 | |||||||||
Depreciation | 978 | 891 | 3,002 | 2,689 | |||||||||
Adjusted EBITDA | $ | 12,362 | $ | 6,482 | $ | 31,911 | $ | 17,000 | |||||
Non-GAAP diluted earnings per share | $ | 0.10 | $ | 0.05 | $ | 0.26 | $ | 0.14 | |||||
Shares used in computing non-GAAP diluted earnings per share | 78,877,949 | 77,819,551 | 79,798,457 | 78,787,155 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20171109005644/en/
Source:
Perion Network Ltd.
Investor relations
Vicky Batkin
+972
(73) 398-1000
Perion.Investor.Relations@perion.com