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PERION NETWORK LTD.
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By:
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/s/ Maoz Sigron
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Name: Maoz Sigron
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Title: Chief Financial Officer
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Three months ended
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Year ended
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|||||||||||||||
December 31,
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December 31,
|
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
Advertising revenues
|
$
|
43.0
|
$
|
37.3
|
$
|
134.5
|
$
|
126.0
|
||||||||
Search and other revenues
|
$
|
34.3
|
$
|
34.7
|
$
|
139.5
|
$
|
126.8
|
||||||||
Total Revenues
|
$
|
77.3
|
$
|
72.0
|
$
|
274.0
|
$
|
252.8
|
||||||||
GAAP Net Income (Loss)
|
$
|
(37.3
|
)
|
$
|
4.9
|
$
|
(72.8
|
)
|
$
|
8.1
|
||||||
Non-GAAP Net Income
|
$
|
6.4
|
$
|
5.8
|
$
|
17.4
|
$
|
17.8
|
||||||||
Adjusted EBITDA
|
$
|
11.9
|
$
|
11.5
|
$
|
28.9
|
$
|
29.6
|
||||||||
Net cash provided by operating activities
|
$
|
7.2
|
$
|
4.3
|
$
|
36.0
|
$
|
32.8
|
||||||||
GAAP Diluted Earnings (Loss) Per Share
|
$
|
(1.44
|
)
|
$
|
0.19
|
$
|
(2.81
|
)
|
$
|
0.31
|
||||||
Non-GAAP Diluted Earnings Per Share
|
$
|
0.24
|
$
|
0.21
|
$
|
0.72
|
$
|
0.65
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· |
Conference ID: 5632003
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· |
Dial-in number from within the United States: 1-800-263-0877
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· |
Dial-in number from Israel: 1-809-212-883
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· |
Dial-in number (other international): 1-646-828-8143
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· |
Playback available until February 20, 2019 by calling 1-844-512-2921 (United States) or 1-412-317-6671 (international). Please use PIN code 5632003 for the
replay.
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· |
Link to the live webcast accessible at https://www.perion.com/ir-info/
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Three months ended
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Year ended
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|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
Unaudited
|
Unaudited
|
Audited
|
Unaudited
|
|||||||||||||
Revenues:
|
||||||||||||||||
Advertising
|
$
|
43,029
|
$
|
37,251
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$
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134,481
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$
|
125,977
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||||||||
Search and other
|
34,251
|
34,711
|
139,505
|
126,868
|
||||||||||||
Total Revenues
|
77,280
|
71,962
|
273,986
|
252,845
|
||||||||||||
Costs and Expenses:
|
||||||||||||||||
Cost of revenues
|
6,838
|
6,416
|
24,659
|
23,757
|
||||||||||||
Customer acquisition costs and media buy
|
35,092
|
36,553
|
130,885
|
128,351
|
||||||||||||
Research and development
|
4,406
|
4,321
|
17,189
|
18,884
|
||||||||||||
Selling and marketing
|
14,309
|
10,501
|
52,742
|
38,918
|
||||||||||||
General and administrative
|
5,369
|
3,398
|
21,911
|
16,450
|
||||||||||||
Depreciation and amortization
|
3,294
|
2,629
|
16,591
|
9,719
|
||||||||||||
Impairment charges
|
41,820
|
-
|
85,667
|
-
|
||||||||||||
Restructuring costs
|
-
|
-
|
-
|
2,075
|
||||||||||||
Total Costs and Expenses
|
111,128
|
63,818
|
349,644
|
238,154
|
||||||||||||
Income (Loss) from Operations
|
(33,848
|
)
|
8,144
|
(75,658
|
)
|
14,691
|
||||||||||
Financial expense, net
|
1,756
|
753
|
5,922
|
3,794
|
||||||||||||
Income (Loss) before Taxes on income
|
(35,604
|
)
|
7,391
|
(81,580
|
)
|
10,897
|
||||||||||
Taxes on income (Tax benefit)
|
1,673
|
2,504
|
(8,826
|
)
|
2,776
|
|||||||||||
Net Income (Loss)
|
$
|
(37,277
|
)
|
$
|
4,887
|
$
|
(72,754
|
)
|
$
|
8,121
|
||||||
Net Earnings (Loss) per Share
|
||||||||||||||||
Basic
|
$
|
(1.44
|
)
|
$
|
0.19
|
$
|
(2.81
|
)
|
$
|
0.31
|
||||||
Diluted
|
$
|
(1.44
|
)
|
$
|
0.19
|
$
|
(2.81
|
)
|
$
|
0.31
|
||||||
Weighted average number of shares
|
||||||||||||||||
Basic
|
25,850,023
|
25,850,187
|
25,849,724
|
25,850,067
|
||||||||||||
Diluted
|
25,850,023
|
26,850,977
|
25,849,724
|
26,855,225
|
December 31,
|
December 31,
|
|||||||
2017
|
2018
|
|||||||
Audited
|
Unaudited
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
31,567
|
$
|
39,109
|
||||
Short-term bank deposit
|
5,913
|
4,000
|
||||||
Accounts receivable, net
|
62,830
|
55,557
|
||||||
Prepaid expenses and other current assets
|
13,955
|
5,227
|
||||||
Total Current Assets
|
114,265
|
103,893
|
||||||
Property and equipment, net
|
17,476
|
15,649
|
||||||
Goodwill and intangible assets, net
|
136,360
|
131,547
|
||||||
Deferred taxes
|
4,798
|
4,414
|
||||||
Other assets
|
1,128
|
943
|
||||||
Total Assets
|
$
|
274,027
|
$
|
256,446
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$
|
39,180
|
$
|
38,208
|
||||
Accrued expenses and other liabilities
|
17,784
|
17,240
|
||||||
Short-term loans and current maturities of long-term and convertible debt
|
13,989
|
16,059
|
||||||
Deferred revenues
|
5,271
|
3,794
|
||||||
Payment obligation related to acquisitions
|
5,146
|
1,813
|
||||||
Total Current Liabilities
|
81,370
|
77,114
|
||||||
Long-Term Liabilities:
|
||||||||
Long-term debt, net of current maturities
|
30,026
|
16,667
|
||||||
Convertible debt, net of current maturities
|
16,693
|
7,726
|
||||||
Other long-term liabilities
|
7,606
|
6,158
|
||||||
Total Liabilities
|
135,695
|
107,665
|
||||||
Shareholders' equity:
|
||||||||
Ordinary shares
|
211
|
211
|
||||||
Additional paid-in capital
|
236,975
|
239,693
|
||||||
Treasury shares at cost
|
(1,002
|
)
|
(1,002
|
)
|
||||
Accumulated other comprehensive gain
|
532
|
142
|
||||||
Accumulated deficit
|
(98,384
|
)
|
(90,263
|
)
|
||||
Total Shareholders' Equity
|
138,332
|
148,781
|
||||||
Total Liabilities and Shareholders' Equity
|
$
|
274,027
|
$
|
256,446
|
Three months ended
December 31,
|
Year ended
December 31,
|
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
Unaudited
|
Unaudited
|
Audited
|
Unaudited
|
|||||||||||||
Operating
activities:
|
||||||||||||||||
Net Income (Loss)
|
$
|
(37,277
|
)
|
$
|
4,887
|
$
|
(72,754
|
)
|
$
|
8,121
|
||||||
Adjustments required to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
Depreciation and amortization
|
3,294
|
2,629
|
16,591
|
9,719
|
||||||||||||
Impairment of goodwill and intangible assets
|
41,820
|
-
|
85,667
|
-
|
||||||||||||
Stock based compensation expense
|
445
|
596
|
2,112
|
2,718
|
||||||||||||
Accretion of payment obligation related to acquisition
|
(18
|
)
|
-
|
43
|
-
|
|||||||||||
Foreign currency translation
|
6
|
(9
|
)
|
83
|
3
|
|||||||||||
Accrued interest, net
|
136
|
648
|
475
|
1,005
|
||||||||||||
Deferred taxes, net
|
3,038
|
244
|
(8,877
|
)
|
335
|
|||||||||||
Accrued severance pay, net
|
960
|
(34
|
)
|
801
|
(783
|
)
|
||||||||||
Fair value revaluation - convertible debt
|
1,017
|
(844
|
)
|
3,785
|
(1,585
|
)
|
||||||||||
Restructuring costs related to impairment of property and equipment
|
-
|
-
|
-
|
462
|
||||||||||||
Net changes in operating assets and liabilities
|
(6,260
|
)
|
(3,775
|
)
|
8,087
|
12,806
|
||||||||||
Net cash provided by operating activities
|
$
|
7,161
|
$
|
4,342
|
$
|
36,013
|
$
|
32,801
|
||||||||
Investing
activities:
|
||||||||||||||||
Purchases of property and equipment
|
$
|
(107
|
)
|
$
|
(629
|
)
|
$
|
(1,596
|
)
|
$
|
(1,979
|
)
|
||||
Capitalization of development costs
|
(1,319
|
)
|
(307
|
)
|
(5,756
|
)
|
(1,756
|
)
|
||||||||
Change in restricted cash, net
|
-
|
(500
|
)
|
-
|
(500
|
)
|
||||||||||
Short-term deposits, net
|
(4,405
|
)
|
(4,000
|
)
|
2,501
|
1,913
|
||||||||||
Cash paid in connection with acquisitions
|
-
|
(1,666
|
)
|
-
|
(3,333
|
)
|
||||||||||
Net cash used in investing activities
|
$
|
(5,831
|
)
|
$
|
(7,102
|
)
|
$
|
(4,851
|
)
|
$
|
(5,655
|
)
|
||||
Financing
activities:
|
||||||||||||||||
Exercise of stock options and restricted share units
|
-
|
-
|
1
|
-
|
||||||||||||
Payment made in connection with acquisition
|
(1,000
|
)
|
-
|
(2,551
|
)
|
-
|
||||||||||
Proceeds from long-term loans
|
-
|
25,000
|
5,000
|
25,000
|
||||||||||||
Repayment of convertible debt
|
-
|
-
|
(7,901
|
)
|
(8,167
|
)
|
||||||||||
Repayment of short-term loans
|
-
|
-
|
(7,000
|
)
|
-
|
|||||||||||
Repayment of long-term loans
|
(2,759
|
)
|
(24,036
|
)
|
(11,389
|
)
|
(36,509
|
)
|
||||||||
Net cash provided by (used in) financing activities
|
$
|
(3,759
|
)
|
$
|
964
|
$
|
(23,840
|
)
|
$
|
(19,676
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
29
|
28
|
283
|
72
|
||||||||||||
Net increase (decrease) in cash and cash equivalents
|
(2,400
|
)
|
(1,768
|
)
|
7,605
|
7,542
|
||||||||||
Cash and cash equivalents at beginning of period
|
33,967
|
40,877
|
23,962
|
31,567
|
||||||||||||
Cash and cash equivalents at end of period
|
$
|
31,567
|
$
|
39,109
|
$
|
31,567
|
$
|
39,109
|
Three months ended
|
Year ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
Unaudited
|
Unaudited
|
Audited
|
Unaudited
|
|||||||||||||
GAAP Net Income (Loss)
|
$
|
(37,277
|
)
|
$
|
4,887
|
$
|
(72,754
|
)
|
$
|
8,121
|
||||||
Share based compensation
|
446
|
596
|
2,112
|
2,718
|
||||||||||||
Amortization of acquired intangible assets
|
2,416
|
1,186
|
13,024
|
4,777
|
||||||||||||
Restructuring costs
|
-
|
-
|
-
|
2,075
|
||||||||||||
Non-recurring Legal fees
|
206
|
125
|
206
|
351
|
||||||||||||
Impairment of goodwill and intangible assets
|
41,820
|
-
|
85,667
|
-
|
||||||||||||
Fair value revaluation of convertible debt and related derivative
|
538
|
(307
|
)
|
1,148
|
756
|
|||||||||||
Accretion of payment obligation related to acquisition
|
(18
|
)
|
-
|
43
|
-
|
|||||||||||
Taxes on the above items
|
(1,763
|
)
|
(684
|
)
|
(12,010
|
)
|
(997
|
)
|
||||||||
Non-GAAP Net Income
|
$
|
6,368
|
$
|
5,803
|
$
|
17,436
|
$
|
17,801
|
||||||||
Non-GAAP Net Income
|
$
|
6,368
|
$
|
5,803
|
$
|
17,436
|
$
|
17,801
|
||||||||
Taxes on income
|
3,436
|
3,188
|
3,184
|
3,773
|
||||||||||||
Financial expense, net
|
1,236
|
1,060
|
4,731
|
3,038
|
||||||||||||
Depreciation
|
878
|
1,443
|
3,567
|
4,942
|
||||||||||||
Adjusted EBITDA
|
$
|
11,918
|
$
|
11,494
|
$
|
28,918
|
$
|
29,554
|
||||||||
Non-GAAP diluted earnings per share
|
$
|
0.24
|
$
|
0.21
|
$
|
0.72
|
$
|
0.65
|
||||||||
Shares used in computing non-GAAP diluted earnings per share
|
25,850,021
|
26,437,584
|
26,374,193
|
25,506,072
|