UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K
Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934

For the month of August 2019 (Report No. 1)

Commission File Number: 000-51694

Perion Network Ltd.
(Translation of registrant's name into English)

1 Azrieli Center, Building A, 4th Floor
26 HaRokmim Street, Holon, Israel 5885849
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒   Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): N/A

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): N/A



Explanatory Note

On August 7, 2019, Perion Network Ltd. (the “Registrant”) issued a press release titled “Perion Reports EPS of $0.11 for the Second Quarter of 2019.” A copy of this press release is furnished as Exhibit 99.1 herewith.

The GAAP financial statements tables contained in the press release attached to this report on Form 6-K are incorporated by reference into the Registrant’s registration statements on Form S-8 (File Nos. 333-208278, 333-203641, 333-193145, 333-192376, 333-188714, 333-171781, 333-152010, 333-133968 and 333-216494).



Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
PERION NETWORK LTD.
 
       
 
By:
/s/ Maoz Sigron
 
 
Name:
Maoz Sigron
 
 
Title:
Chief Financial Officer
 

Date: August 7, 2019




Exhibit 99.1


PERION REPORTS EPS OF $0.11 FOR THE SECOND QUARTER OF 2019

Revenues of $63.6 million, increased 1% year-over-year, representing the first quarter of growth in the last three years;
GAAP Net Income of $2.9 million, increased 194% year-over-year;
GAAP Earnings Per Share of $0.11, increased 267% year-over-year;
Net cash provided from operations were $8.4 million, up 194% year-over-year;
Net cash Increased from $2.7 million to $21.3 million in the last 6 months;
Management Increases 2019 Adjusted EBIDTA Guidance to $25-27 million.

Tel Aviv & New York – August 7, 2019 – Perion Network Ltd. (NASDAQ: PERI), a global technology company that delivers Synchronized Digital Branding solutions across the three main pillars of digital advertising - Ad Search, Social media and Display / Video, announced today its financial results for the second quarter and six months ended June 30, 2019.
 
Financial Highlights*

(In millions, except per share data)

   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
   
2019
   
2018
   
2019
   
2018
 
Advertising revenues
 
$
21.3
   
$
33.2
   
$
39.9
   
$
62.5
 
Search and other revenues
 
$
42.3
   
$
29.6
   
$
77.5
   
$
61.2
 
Total Revenues
 
$
63.6
   
$
62.8
   
$
117.4
   
$
123.7
 
GAAP Net Income
 
$
2.9
   
$
1.0
   
$
4.1
   
$
1.0
 
Non-GAAP Net Income
 
$
4.5
   
$
4.7
   
$
7.8
   
$
7.7
 
Adjusted EBITDA
 
$
7.4
   
$
7.1
   
$
12.6
   
$
11.4
 
Net cash provided by operating activities
 
$
8.4
   
$
2.9
   
$
22.4
   
$
17.5
 
GAAP Diluted Earnings Per Share
 
$
0.11
   
$
0.03
   
$
0.16
   
$
0.04
 
Non-GAAP Diluted Earnings Per Share
 
$
0.17
   
$
0.17
   
$
0.30
   
$
0.28
 

* Reconciliation of GAAP to Non-GAAP measures follows.
 
Doron Gerstel, Perion’s CEO commented, “Perion continued to bolster its position as an innovative digital advertising company with an increasingly strong balance sheet. Operationally, Perion’s media-spanning suite enables us to benefit from evolving trends in the digital advertising sector. Brands and agencies are operating in a fluid environment, shifting dollars between search, social and display, based on a combination of their own evolving objectives and strategies as well as external factors, including regulatory pressures and other policies. Perion is well-positioned to capitalize on these changes, which is reflected by our quarterly consolidated revenue growth and our decision to increase our guidance for the second time in 2019.”
 
Mr. Gerstel added, “During the first six months of 2019, we generated $22.4 million in cash from operations, a 28% year-over-year increase from the first half of 2018. As a result, Perion’s net cash was $21.3 million as of June 30, the highest level in three and a half years. This was the fourth consecutive quarter of sequential growth for our Search business, and our third consecutive quarter of year-over-year growth, demonstrating our capability to bend the revenue curve driven by our deep technology investments.”
 
Mr. Gerstel concluded, “Simultaneously, our ongoing investments in Undertone continue to resonate, as agencies and brands are increasingly recognizing the value of our Synchronized Digital Branding solution. We remain focused on expanding margins and delivering predictable revenues in our Advertising business, this initiative has resulted in an 8% increase in the margins of this business. I continue to be encouraged by our ability to flex where advertising dollars go – including CTV. Our recently announced partnership with Alphonso opens synchronization opportunities in the CTV segment. In just a month, we have already generated 28 Requests for Proposals, incorporating digital TV reach into our Synchronized Digital Branding adverting solution, growing our pipeline by $5 million.”


 
Financial Comparison for the Second Quarter of 2019:

Revenues: Revenues increased by 1%, from $62.8 million in the second quarter of 2018 to $63.6 million in the second quarter of 2019. This increase was primarily a result of a 43% increase in Search and other revenues as a result of additional new publishers, higher RPMs and an increased number of searches. Advertising revenues decreased by 36% as a result of the transition from selling formats to an integrated solution. However, despite a decline in revenues, Perion’s gross margin in the Advertising business increased year over year as the Company continued to prioritize margins over short-term sales.
 
Customer Acquisition Costs and Media Buy (“CAC”): CAC in the second quarter of 2019 were $33.2 million, or 52% of revenues, as compared to $31.1 million, or 50% of revenues in the second quarter of 2018.
 
Net Income: On a GAAP basis, net income in the second quarter of 2019 was $2.9 million, as compared to a net income of $1.0 million in the second quarter of 2018.
 
Non-GAAP Net Income: In the second quarter of 2019, non-GAAP net income was $4.5 million, or 7% of revenues, compared to the $4.7 million, or 7% of revenues, in the second quarter of 2018. A reconciliation of GAAP to non-GAAP net income is included in this press release.

Adjusted EBITDA: In the second quarter of 2019, Adjusted EBITDA was $7.4 million, or 12% of revenues, compared to $7.1 million, or 11% of revenues, in the second quarter of 2018. A reconciliation of GAAP to Adjusted EBITDA is included in this press release.

Cash and Cash Flow from Operations: As of June 30, 2019, cash and cash equivalents and Short-term bank deposit were $42.1 million. Cash provided by operations in the second quarter of 2019 was $8.4 million, compared to $2.9 million in the second quarter of 2018.

Short-term Debt, Long-term Debt and Convertible Debt: As of June 30, 2019, total debt was $20.8 million, compared to $40.5 million at December 31, 2018.

2019 Guidance  
 
Management increased its guidance for 2019, and now expects Adjusted EBITDA in the range of $25-27 million, up from prior guidance of $24-26 million.
 
Conference Call:

Perion will host a conference call to discuss the results today, August 7, 2019, at 10 a.m. ET. Details are as follows:

Conference ID: 6714779
Dial-in number from within the United States: 1-800-239-9838
Dial-in number from Israel: 1-809-212-883
Dial-in number (other international): 1-323-794-2551
Playback available until August 14, 2019 by calling 1-844-512-2921 (United States) or 1-412-317-6671 (international). Please use PIN code 6714779 for the replay.
Link to the live webcast accessible at https://www.perion.com/ir-info/

About Perion Network Ltd.
 
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.

2


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 September 2014, the Company issued convertible bonds denominated in New Israeli Shekels and at the same time entered into a derivative arrangement (SWAP) that economically exchanges the convertible bonds as if they were denominated in US dollars when the bonds were issued. The Company excludes from its GAAP financial measures the fair value revaluations of both, the convertible bonds and the related derivative instrument, and by doing so, the non-GAAP measures reflect the Company’s results as if the convertible bonds were originally issued and denominated in US dollars, which is the Company’s functional currency. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") is defined as operating income excluding stock-based compensation expenses, depreciation, restructuring costs, acquisition related items consisting of amortization of intangible assets and goodwill and intangible asset impairments, acquisition related expenses, gains and losses recognized on changes in the fair value of contingent consideration arrangements and 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.
 
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 Securities and Exchange Commission from time to time, including its annual report on Form 20-F for the year ended December 31, 2018 filed with the SEC on March 19, 2019. Perion does not assume any obligation to update these forward-looking statements.
 
Contact Information:

Perion Network Ltd.
Investor relations
Hila Barenboim
+972 (73) 398-1000
investors@perion.com
Source: Perion Network Ltd.

3

PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

In thousands (except share and per share data)

   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
   
2019
   
2018
   
2019
   
2018
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
Revenues:
                       
Advertising
 
$
21,300
   
$
33,206
   
$
39,884
   
$
62,501
 
Search and other
   
42,267
     
29,591
     
77,532
     
61,201
 
Total Revenues
   
63,567
     
62,797
     
117,416
     
123,702
 
                                 
Costs and Expenses:
                               
Cost of revenues
   
6,068
     
5,811
     
11,834
     
11,867
 
Customer acquisition costs and media buy
   
33,175
     
31,105
     
60,608
     
62,990
 
Research and development
   
5,610
     
4,678
     
10,472
     
10,222
 
Selling and marketing
   
8,667
     
10,081
     
16,992
     
19,782
 
General and administrative
   
3,419
     
4,881
     
6,477
     
9,167
 
Depreciation and amortization
   
2,286
     
2,491
     
4,676
     
4,562
 
Restructuring costs
   
-
     
937
     
-
     
2,075
 
Total Costs and Expenses
   
59,225
     
59,984
     
111,059
     
120,665
 
                                 
Income from Operations
   
4,342
     
2,813
     
6,357
     
3,037
 
Financial expense, net
   
989
     
1,199
     
2,314
     
1,806
 
                                 
Income before Taxes on income
   
3,353
     
1,614
     
4,043
     
1,231
 
Taxes on income (benefit)
   
453
     
628
     
(89
)
   
188
 
                                 
Net Income
 
$
2,900
   
$
986
   
$
4,132
   
$
1,043
 
                                 
Net Earnings per Share
                               
Basic
 
$
0.11
   
$
0.04
   
$
0.16
   
$
0.04
 
Diluted
 
$
0.11
   
$
0.03
   
$
0.16
   
$
0.04
 
                                 
Weighted average number of shares
                               
Basic
   
25,894,632
     
25,850,021
     
25,889,230
     
25,850,021
 
Diluted
   
25,896,520
     
26,420,617
     
25,891,306
     
25,852,109
 


4

 
PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands

   
June 30,
   
December 31,
 
   
2019
   
2018
 
   
Unaudited
   
Audited
 
ASSETS
           
             
Current Assets:
           
Cash and cash equivalents
 
$
36,144
   
$
39,109
 
Short-term bank deposit
   
6,000
     
4,000
 
Accounts receivable, net
   
38,957
     
55,557
 
Prepaid expenses and other current assets
   
4,897
     
5,227
 
Total Current Assets
   
85,998
     
103,893
 
                 
Property and equipment, net
   
13,417
     
15,649
 
Operating lease right-of-use assets
   
24,342
     
-
 
Goodwill and intangible assets, net
   
130,620
     
131,547
 
Deferred taxes
   
5,274
     
4,414
 
Other assets
   
771
     
943
 
                 
Total Assets
 
$
260,422
   
$
256,446
 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
Current Liabilities:
               
Accounts payable
 
$
36,748
   
$
38,208
 
Accrued expenses and other liabilities
   
13,693
     
17,240
 
Short-term operating lease liability
   
3,007
     
-
 
Short-term loans and current maturities of long-term and Convertible debt
   
8,333
     
16,059
 
Deferred revenues
   
3,531
     
3,794
 
Short-term payment obligation related to acquisitions
   
347
     
1,813
 
Total Current Liabilities
   
65,659
     
77,114
 
Long-Term Liabilities:
               
Long-term debt, net of current maturities
   
12,500
     
16,667
 
Convertible debt, net of current maturities
   
-
     
7,726
 
Long-term operating lease liability
   
22,387
     
-
 
Other long-term liabilities
   
5,854
     
6,158
 
Total Liabilities
   
106,400
     
107,665
 
                 
Shareholders' equity:
               
Ordinary shares
   
211
     
211
 
Additional paid-in capital
   
240,745
     
239,693
 
Treasury shares at cost
   
(1,002
)
   
(1,002
)
Accumulated other comprehensive gain
   
199
     
142
 
Accumulated deficit
   
(86,131
)
   
(90,263
)
Total Shareholders' Equity
   
154,022
     
148,781
 
                 
Total Liabilities and Shareholders' Equity
 
$
260,422
   
$
256,446
 


5

 
PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

In thousands

   
Three months ended June 30,
   
Six months ended June 30,
 
   
2019
   
2018
   
2019
   
2018
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
Operating activities:
                       
Net Income
 
$
2,900
   
$
986
   
$
4,132
   
$
1,043
 
                                 
Adjustments required to reconcile net income to net cash provided by operating activities:
                               
Depreciation and amortization
   
2,286
     
2,491
     
4,676
     
4,562
 
Stock based compensation expense
   
460
     
865
     
923
     
1,484
 
Foreign currency translation
   
(25
)
   
(55
)
   
(6
)
   
12
 
Accrued interest, net
   
(4
)
   
95
     
(203
)
   
223
 
Deferred taxes, net
   
(314
)
   
345
     
(860
)
   
(9
)
Accrued severance pay, net
   
98
     
(119
)
   
(218
)
   
(745
)
Fair value revaluation - convertible debt
   
(99
)
   
(6
)
   
600
     
(992
)
Restructuring costs related to impairment of property and equipment
   
-
     
462
     
-
     
462
 
Net changes in operating assets and liabilities
   
3,100
     
(2,206
)
   
13,346
     
11,414
 
Net cash provided by operating activities
 
$
8,402
   
$
2,858
   
$
22,390
   
$
17,454
 
                                 
Investing activities:
                               
Purchases of property and equipment
 
$
(114
)
 
$
42
   
$
(341
)
 
$
(48
)
Capitalization of development costs
   
-
     
(431
)
   
-
     
(1,119
)
Short-term deposits, net
   
700
     
4
     
(2,000
)
   
5,913
 
Cash paid in connection with acquisitions, net of cash acquired
   
(1,200
)
   
-
     
(1,200
)
   
-
 
Net cash provided (used) by investing activities
 
$
(614
)
 
$
(385
)
 
$
(3,541
)
 
$
4,746
 
                                 
Financing activities:
                               
Exercise of stock options and restricted share units
   
-
     
-
     
129
     
-
 
Payment made in connection with acquisition
   
-
     
-
     
(1,813
)
   
-
 
Repayment of convertible debt
   
(7,949
)
   
(8,167
)
   
(15,850
)
   
(8,167
)
Repayment of long-term loans
   
(2,083
)
   
(1,352
)
   
(4,166
)
   
(10,982
)
Net cash used in financing activities
 
$
(10,032
)
 
$
(9,519
)
 
$
(21,700
)
 
$
(19,149
)
Effect of exchange rate changes on cash and cash equivalents and restricted cash
   
8
     
(29
)
   
(102
)
   
45
 
Net increase (decrease) in cash and cash equivalents and restricted cash
   
(2,236
)
   
(7,075
)
   
(2,953
)
   
3,096
 
Cash and cash equivalents and restricted cash at beginning of period
   
40,086
     
42,926
     
40,803
     
32,755
 
Cash and cash equivalents and restricted cash at end of period
 
$
37,850
   
$
35,851
   
$
37,850
   
$
35,851
 

6

 
PERION NETWORK LTD. AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

In thousands (except share and per share data)

   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
   
2019
   
2018
   
2019
   
2018
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
GAAP Net Income
 
$
2,900
   
$
986
   
$
4,132
   
$
1,043
 
Share based compensation
   
460
     
865
     
923
     
1,483
 
Amortization of acquired intangible assets
   
1,048
     
1,197
     
2,094
     
2,401
 
Non-recurring fees (Expenses related to M&A activity)
   
347
     
(9
)
   
604
     
226
 
Restructuring costs
   
-
     
937
     
-
     
2,075
 
Fair value revaluation of convertible debt and related derivative
   
(178
)
   
667
     
89
     
794
 
Foreign exchange losses associated with ASC-842
   
157
     
-
     
449
     
-
 
Taxes on the above items
   
(227
)
   
23
     
(530
)
   
(338
)
Non-GAAP Net Income
 
$
4,507
   
$
4,666
   
$
7,761
   
$
7,684
 
                                 
Non-GAAP Net Income
 
$
4,507
   
$
4,666
   
$
7,761
   
$
7,684
 
Taxes on income
   
680
     
605
     
441
     
526
 
Financial expense, net
   
1,010
     
532
     
1,776
     
1,012
 
Depreciation
   
1,238
     
1,294
     
2,582
     
2,161
 
Adjusted EBITDA
 
$
7,435
   
$
7,097
   
$
12,560
   
$
11,383
 
                                 
Non-GAAP diluted earnings per share
 
$
0.17
   
$
0.17
   
$
0.30
   
$
0.28
 
                                 
Shares used in computing non-GAAP diluted earnings per share
   
25,923,018
     
26,420,617
     
25,915,987
     
26,136,761
 

 7