|
PERION NETWORK LTD.
|
|
|
|
|
|
|
|
By:
|
/s/ Maoz Sigron
|
|
|
|
Name: Maoz Sigron
|
|
|
|
Title: Chief Financial Officer
|
|
|
|
|
|
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
Advertising revenues
|
$
|
35.3
|
$
|
33.2
|
$
|
59.7
|
$
|
62.5
|
||||||||
Search and other revenues
|
$
|
34.4
|
$
|
29.6
|
$
|
72.0
|
$
|
61.2
|
||||||||
Total Revenues
|
$
|
69.7
|
$
|
62.8
|
$
|
131.7
|
$
|
123.7
|
||||||||
GAAP Net Income (Loss)
|
$
|
(36.0
|
)
|
$
|
1.0
|
$
|
(38.1
|
)
|
$
|
1.0
|
||||||
Non-GAAP Net Income
|
$
|
4.2
|
$
|
4.7
|
$
|
6.9
|
$
|
7.7
|
||||||||
Adjusted EBITDA
|
$
|
7.0
|
$
|
7.1
|
$
|
10.5
|
$
|
11.4
|
||||||||
GAAP Diluted Earnings (Loss) Per Share
|
$
|
(0.46
|
)
|
$
|
0.01
|
$
|
(0.49
|
)
|
$
|
0.01
|
||||||
Non-GAAP Diluted Earnings Per Share
|
$
|
0.05
|
$
|
0.06
|
$
|
0.09
|
$
|
0.09
|
· |
Conference ID: 8850618
|
· |
Dial-in number from within the United States: 1-866-548-4713
|
· |
Dial-in number from Israel: 1-809-212-883
|
· |
Dial-in number (other international): 1-323-794-2093
|
· |
Playback available until August 16, 2018 by calling 1-844-512-2921 (United States) or
|
· |
Link to the live webcast accessible at https://www.perion.com/ir-info/
|
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||
Revenues:
|
||||||||||||||||
Advertising
|
$
|
35,309
|
$
|
33,206
|
$
|
59,697
|
$
|
62,501
|
||||||||
Search and other
|
34,379
|
29,591
|
71,967
|
61,201
|
||||||||||||
Total Revenues
|
69,688
|
62,797
|
131,664
|
123,702
|
||||||||||||
Costs and Expenses:
|
||||||||||||||||
Cost of revenues
|
5,914
|
5,811
|
11,807
|
11,867
|
||||||||||||
Customer acquisition costs and media buy
|
33,786
|
31,105
|
63,838
|
62,990
|
||||||||||||
Research and development
|
3,947
|
4,678
|
8,967
|
10,222
|
||||||||||||
Selling and marketing
|
13,560
|
10,081
|
26,465
|
19,782
|
||||||||||||
General and administrative
|
6,013
|
4,881
|
11,188
|
9,167
|
||||||||||||
Depreciation and amortization
|
5,008
|
2,491
|
9,909
|
4,562
|
||||||||||||
Impairment charges
|
43,847
|
-
|
43,847
|
-
|
||||||||||||
Restructuring costs
|
-
|
937
|
-
|
2,075
|
||||||||||||
Total Costs and Expenses
|
112,075
|
59,984
|
176,021
|
120,665
|
||||||||||||
Income (Loss) from Operations
|
(42,387
|
)
|
2,813
|
(44,357
|
)
|
3,037
|
||||||||||
Financial expense, net
|
1,338
|
1,199
|
3,522
|
1,806
|
||||||||||||
Income (Loss) before Taxes on income
|
(43,725
|
)
|
1,614
|
(47,879
|
)
|
1,231
|
||||||||||
Taxes on income
|
7,709
|
(628
|
)
|
9,789
|
(188
|
)
|
||||||||||
Net Income (Loss)
|
$
|
(36,016
|
)
|
$
|
986
|
$
|
(38,090
|
)
|
$
|
1,043
|
||||||
Net Earnings (Loss) per Share - Basic and Diluted
|
$
|
(0.46
|
)
|
$
|
0.01
|
$
|
(0.49
|
)
|
$
|
0.01
|
||||||
Weighted average number of shares
|
||||||||||||||||
Basic
|
77,550,069
|
77,550,069
|
77,548,252
|
77,550,069
|
||||||||||||
Diluted
|
77,550,069
|
79,261,852
|
77,548,252
|
77,556,333
|
December 31,
|
June 30,
|
|||||||
2017
|
2018
|
|||||||
Audited
|
Unaudited
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
31,567
|
$
|
34,662
|
||||
Short-term bank deposit
|
5,913
|
-
|
||||||
Accounts receivable, net
|
62,830
|
50,240
|
||||||
Prepaid expenses and other current assets
|
13,955
|
7,936
|
||||||
Total Current Assets
|
114,265
|
92,838
|
||||||
Property and equipment, net
|
17,476
|
15,938
|
||||||
Goodwill and intangible assets, net
|
136,360
|
134,026
|
||||||
Deferred taxes
|
4,798
|
4,752
|
||||||
Other assets
|
1,128
|
699
|
||||||
Total Assets
|
$
|
274,027
|
$
|
248,253
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$
|
39,180
|
$
|
35,150
|
||||
Accrued expenses and other liabilities
|
17,784
|
16,172
|
||||||
Short-term loans and current maturities of long-term and convertible debt
|
13,989
|
13,472
|
||||||
Deferred revenues
|
5,271
|
4,432
|
||||||
Payment obligation related to acquisitions
|
5,146
|
5,146
|
||||||
Total Current Liabilities
|
81,370
|
74,372
|
||||||
Long-Term Liabilities:
|
||||||||
Long-term debt, net of current maturities
|
30,026
|
19,382
|
||||||
Convertible debt, net of current maturities
|
16,693
|
7,937
|
||||||
Other long-term liabilities
|
7,606
|
5,992
|
||||||
Total Liabilities
|
135,695
|
107,683
|
||||||
Shareholders' equity:
|
||||||||
Ordinary shares
|
211
|
211
|
||||||
Additional paid-in capital
|
236,976
|
238,459
|
||||||
Treasury shares at cost
|
(1,002
|
)
|
(1,002
|
)
|
||||
Accumulated other comprehensive gain (loss)
|
532
|
243
|
||||||
Accumulated deficit
|
(98,384
|
)
|
(97,341
|
)
|
||||
Total Shareholders' Equity
|
138,332
|
140,570
|
||||||
Total Liabilities and Shareholders' Equity
|
$
|
274,027
|
$
|
248,253
|
Three months ended June 30,
|
Six months ended June 30,
|
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||
Operating activities:
|
||||||||||||||||
Net Income (Loss)
|
$
|
(36,016
|
)
|
$
|
986
|
$
|
(38,090
|
)
|
$
|
1,043
|
||||||
Adjustments required to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
Depreciation and amortization
|
5,008
|
2,491
|
9,909
|
4,562
|
||||||||||||
Impairment of goodwill and intangible assets
|
43,847
|
-
|
43,847
|
-
|
||||||||||||
Stock based compensation expense
|
561
|
865
|
1,119
|
1,483
|
||||||||||||
Foreign currency translation
|
21
|
(55
|
)
|
10
|
12
|
|||||||||||
Accrued interest, net
|
117
|
95
|
217
|
223
|
||||||||||||
Deferred taxes, net
|
(8,109
|
)
|
345
|
(10,752
|
)
|
(9
|
)
|
|||||||||
Change in payment obligation related to acquisition
|
(2
|
)
|
-
|
28
|
-
|
|||||||||||
Fair value revaluation - convertible debt
|
934
|
(6
|
)
|
3,767
|
(992
|
)
|
||||||||||
Restructuring costs related to impairment of property and equipment
|
-
|
462
|
-
|
462
|
||||||||||||
Net changes in operating assets and liabilities
|
(2,816
|
)
|
(2,325
|
)
|
1,716
|
10,670
|
||||||||||
Net cash provided by operating activities
|
$
|
3,545
|
$
|
2,858
|
$
|
11,771
|
$
|
17,454
|
||||||||
Investing activities:
|
||||||||||||||||
Purchases of property and equipment
|
$
|
(434
|
)
|
$
|
42
|
$
|
(1,265
|
)
|
$
|
(48
|
)
|
|||||
Capitalization of development costs
|
(1,811
|
)
|
(431
|
)
|
(2,781
|
)
|
(1,119
|
)
|
||||||||
Short-term deposits, net
|
(1,503
|
)
|
4
|
6,911
|
5,913
|
|||||||||||
Net cash provided (used) by investing activities
|
$
|
(3,748
|
)
|
$
|
(385
|
)
|
$
|
2,865
|
$
|
4,746
|
||||||
Financing activities:
|
||||||||||||||||
Exercise of stock options and restricted share units
|
-
|
-
|
1
|
-
|
||||||||||||
Payment made in connection with acquisition
|
(551
|
)
|
-
|
(551
|
)
|
-
|
||||||||||
Proceeds from long-term loans
|
5,000
|
-
|
5,000
|
-
|
||||||||||||
Repayment of convertible debt
|
-
|
(8,167
|
)
|
(7,901
|
)
|
(8,167
|
)
|
|||||||||
Repayment of short-term loans
|
1,137
|
-
|
(7,000
|
)
|
-
|
|||||||||||
Repayment of long-term loans
|
(7,414
|
)
|
(1,352
|
)
|
(7,414
|
)
|
(10,982
|
)
|
||||||||
Net cash used in financing activities
|
$
|
(1,828
|
)
|
$
|
(9,519
|
)
|
$
|
(17,865
|
)
|
$
|
(19,149
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
147
|
(29
|
)
|
192
|
44
|
|||||||||||
Net increase (decrease) in cash and cash equivalents
|
(1,884
|
)
|
(7,075
|
)
|
(3,037
|
)
|
3,095
|
|||||||||
Cash and cash equivalents at beginning of period
|
22,809
|
41,737
|
23,962
|
31,567
|
||||||||||||
Cash and cash equivalents at end of period
|
$
|
20,925
|
$
|
34,662
|
$
|
20,925
|
$
|
34,662
|
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||
GAAP Net Income (Loss)
|
$
|
(36,016
|
)
|
$
|
986
|
$
|
(38,090
|
)
|
$
|
1,043
|
||||||
Share based compensation
|
561
|
865
|
1,119
|
1,483
|
||||||||||||
Amortization of acquired intangible assets
|
4,059
|
1,197
|
8,111
|
2,401
|
||||||||||||
Non-recurring Legal fees
|
-
|
(9
|
)
|
226
|
||||||||||||
Restructuring costs
|
-
|
937
|
-
|
2,075
|
||||||||||||
Impairment of goodwill and intangible assets
|
43,847
|
-
|
43,847
|
-
|
||||||||||||
Fair value revaluation of convertible debt and related derivative
|
(18
|
)
|
667
|
1,413
|
794
|
|||||||||||
Accretion of payment obligation related to acquisition
|
(3
|
)
|
-
|
27
|
-
|
|||||||||||
Taxes on the above items
|
(8,251
|
)
|
23
|
(9,494
|
)
|
(338
|
)
|
|||||||||
Non-GAAP Net Income
|
$
|
4,179
|
$
|
4,666
|
$
|
6,933
|
$
|
7,684
|
||||||||
Non-GAAP Net Income
|
$
|
4,179
|
$
|
4,666
|
$
|
6,933
|
$
|
7,684
|
||||||||
Taxes on income (expenses)
|
542
|
605
|
(295
|
)
|
526
|
|||||||||||
Financial expense, net
|
1,359
|
532
|
2,082
|
1,012
|
||||||||||||
Depreciation
|
949
|
1,294
|
1,798
|
2,161
|
||||||||||||
Adjusted EBITDA
|
$
|
7,029
|
$
|
7,097
|
$
|
10,518
|
$
|
11,383
|
||||||||
Non-GAAP diluted earnings per share
|
$
|
0.05
|
$
|
0.06
|
$
|
0.09
|
$
|
0.09
|
||||||||
Shares used in computing non-GAAP diluted earnings per share
|
77,989,840
|
79,261,852
|
77,990,009
|
77,980,917
|