EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
Exhibit 99.1


Perion Delivers Record Revenues, Up 45% Year-Over-Year; GAAP Net Income Up 399% for the
Third Quarter of 2021 
 
Display Advertising revenues growth of 82% driven by high-impact video and CTV performance;
Management increases guidance for 2021 and 2022
 
Tel Aviv & New York – October 26, 2021 – Perion Network Ltd. (NASDAQ: PERI), a global advertising technology company that delivers a holistic solution across the three main pillars of digital advertising – ad search, social media, and display / video / CTV advertising – today announced financial results for the third quarter ended September 30, 2021.
 
Doron Gerstel, Perion’s CEO, commented, “During the first nine months of the year our display advertising generated more than $165 million of revenues, exceeding the $149 million generated for all of 2020. Driven by the capabilities of our iHub to create unprecedented advertising efficiencies, our average deal size expanded by 30%, as budgets moved to our breakthrough high-impact, creatively led formats especially for Video and CTV. In recognition of the growing demand for video advertising, we made the accretive acquisition of Vidazoo, a leading video tech platform. By combining Perion’s proven, high-impact video suite and Vidazoo’s unique online video player, we can offer a proprietary, end-to-end video solution that extends the efficiency of our iHub, and that meets the needs of publishers for simple, highly scalable, plug-and-play video solutions.”
 
Third Quarter 2021 Highlights
 

 •
Display advertising revenues growth of 82% (or 73% on pro forma basis), driven by accelerating adoption of Perion’s video and CTV solutions, leading to an increase of average client spend by 30% and a 12% increase in number of clients;
 

 •
Search advertising revenues growth of 14%, primarily driven by an increased number of monetized searches;
 

 •
EBITDA margin of 37% excluding traffic acquisitions costs compared to 26% during the third quarter of 2020, partially resulted from the implementation of Perion’s iHub that provides higher costs efficiencies;


•
Net cash provided by operating activities of $14.2 million; Perion had $156.2 million in cash and zero debt as of September 30, 2021;


•
Video and CTV grew by 245% year-over-year, representing 20% of the Display advertising revenues.
 
Third Quarter 2021 Financial Highlights*
 
(In millions, except per share data)

 
  
Three months ended
    
Nine months ended
  
 
  
September 30,
    
September 30,
  
 
  
2021
    
2020
    
%
    
2021
    
2020
    
%
  
Display Advertising revenues
  
$
69.0
    
$
37.9
      
+82
%
  
$
165.1
    
$
80.3
      
+106
%
Search Advertising revenues
  
$
52.0
    
$
45.5
      
+14
%
  
$
155.4
    
$
129.5
      
+20
%
Total Revenues
  
$
121.0
    
$
83.4
      
+45
%
  
$
320.5
    
$
209.8
      
+53
%
GAAP Net Income
  
$
10.6
    
$
2.1
      
+399
%
  
$
21.0
    
$
1.2
      
+1,618
%
Non-GAAP Net Income
  
$
15.4
    
$
5.9
      
+159
%
  
$
34.7
    
$
12.8
      
+170
%
Adjusted EBITDA
  
$
17.6
    
$
8.7
      
+101
%
  
$
40.7
    
$
17.4
      
+133
%
Adjusted EBITDA/Revenue Ex TAC
    
37
%
    
26
%
    
42
%
    
32
%
    
20
%
    
60
%
Net cash provided by operating activities
  
$
14.2
    
$
6.6
      
+115
%
  
$
42.3
    
$
9.2
      
+358
%
GAAP Diluted Earnings Per Share
  
$
0.28
    
$
0.08
      
+250
%
  
$
0.57
    
$
0.04
      
+1,325
%
Non-GAAP Diluted Earnings Per Share
  
$
0.40
    
$
0.21
      
+90
%
  
$
0.93
    
$
0.45
      
+107
%

* Reconciliation of GAAP to Non-GAAP measures follows.
 
Mr. Gerstel continued, “Perion is firing on all cylinders. Our diversified revenue streams coming from both sides of the open web and the synergies derived from our ability to connect all of our operating assets to a central iHub increases our confidence in over-delivering on our commitment to become an Ad Tech unique market leader. As a result, we have increased our 2021 and 2022 guidance.”
 
Financial Comparison for the Third Quarter of 2021
 
Revenues: Revenues increased by 45% from $83.4 million in the third quarter of 2020 to $121 million in the third quarter of 2021. This growth was led by an 82% (or 73% on a pro forma basis) increase in Display Advertising revenues, primarily from growth of 245% in video and CTV, a 30% increase in average revenues per client, and a 12% increase in the number of clients. Search revenues increased by 14%, primarily due to 14.7 million of average daily monetizable search queries compared to 12.8 million in the third quarter of 2020, as well as the addition of 17 publishers to our network.
 
Traffic Acquisition Costs (“TAC”): During the third quarter of 2021 TAC were $73.6 million, or 60.8% of revenues, compared to $49.9 million, or 59.8% of revenues, in the third quarter of 2020.
 
Net Income: On a GAAP basis, net income increased by 399% from net income of $2.1 million in the third quarter of 2020 to net income of $10.6 million in the third quarter of 2021.
 
Non-GAAP Net Income: In the third quarter of 2021, non-GAAP net income was $15.4 million, or 12.7% of revenues, compared to the $5.9 million, or 7.1% of revenues, in the third quarter of 2020. A reconciliation of GAAP to non-GAAP net income is included in this press release.
 
Adjusted EBITDA: In the third quarter of 2021, Adjusted EBITDA was $17.6 million, or 14.5% of revenues, compared to $8.7 million, or 10.5% of revenues, in the third quarter of 2020. A reconciliation of GAAP Net Income to Adjusted EBITDA is included in this press release.
 
Cash and Cash Flow from Operations: As of September 30, 2021, cash and cash equivalents and short-term bank deposits were $156.2 million. Net cash provided by operating activities in the third quarter of 2021 was $14.2 million, compared to $6.6 million in the third quarter of 2020.
 
2

Outlook
 
Perion has raised its financial guidance for 2021 and 2022, based on the Company’s strong business momentum and improved visibility.

($M)
Guidance 2021
YoY
Growth % *
 
Guidance 2022 *
YoY
Growth % *
Revenue
$455-$465
40%
$580-$600
28%
Adjusted EBITDA
$59-$61
83%
$75-$78
28%
EBITDA to REV Ex-TAC
33%
  
34%
  
 
* At guidance midpoint
 
Conference Call
 
Perion management will host a Zoom conference call on October 26, 2021 at 8:30 a.m. ET to discuss the third quarter’s results. Please join the call using the following Zoom link:
 
https://incommconferencing.zoom.us/webinar/register/WN_Pv_H9FZRSxO3ockGT2o4ZA

Participant Dial-In: 877-407-0779 / 201-389-0914
 
About Perion Network Ltd.
 
Perion is a global technology company that delivers strategic business solutions that enable brands and advertisers to efficiently “Capture and Convince” users across multiple platforms and channels, including interactive connected television – or iCTV. Perion achieves this through its Synchronized Digital Branding capabilities, which are focused on high impact creative; content monetization; its branded search network, in partnership with Microsoft Bing; and social media management that orchestrates and optimizes paid advertising. This diversification positions Perion for growth as budgets shift across categories.

Non-GAAP Measures
 
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude stock-based compensation expenses, retention and acquisition related expenses, revaluation of acquisition related contingent consideration, amortization 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. 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. Due to the high variability and difficulty in making accurate forecasts and projections of some of the information excluded from these projected measures, together with some of the excluded information not being ascertainable or accessible, we are unable to quantify certain amounts that would be required for such presentation without unreasonable effort. Consequently, no reconciliation of the forward-looking non-GAAP financial measures is included. A reconciliation between results on a GAAP and non-GAAP basis is provided in the last table of this press release.

3
 
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, 2020 filed with the SEC on March 25, 2021. Perion does not assume any obligation to update these forward-looking statements.

Contact Information:
Perion Network Ltd.
Rami Rozen, VP of Investor Relations
+972 (52) 5694441
ramir@perion.com
Source: Perion Network Ltd.

4
 
PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands (except share and per share data)

   
Three months ended
    
Nine months ended
  
   
September 30,
    
September 30,
  
   
2021
    
2020
    
2021
    
2020
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
                         
Revenues:
                        
Display Advertising
  
$
68,980
    
$
37,891
    
$
165,146
    
$
80,298
  
Search Advertising
    
52,049
      
45,522
      
155,377
      
129,509
  
Total Revenues
    
121,029
      
83,413
      
320,523
      
209,807
  
                                 
Costs and Expenses:
                                
Cost of revenues
    
6,284
      
5,292
      
17,879
      
15,938
  
Traffic acquisition costs and media buy
    
73,590
      
49,878
      
194,676
      
122,817
  
Research and development
    
8,630
      
8,071
      
26,103
      
22,400
  
Selling and marketing
    
12,926
      
9,448
      
36,410
      
27,368
  
General and administrative
    
5,295
      
4,239
      
14,055
      
11,759
  
Depreciation and amortization
    
1,922
      
2,695
      
6,299
      
7,248
  
Total Costs and Expenses
    
108,647
      
79,623
      
295,422
      
207,530
  
                                 
Income from Operations
    
12,382
      
3,790
      
25,101
      
2,277
  
Financial expense, net
    
11
      
459
      
116
      
1,192
  
Income before Taxes on income
    
12,371
      
3,331
      
24,985
      
1,085
  
Taxes on income (benefit)
    
1,749
      
1,203
      
3,974
      
(138
)
Net Income
  
$
10,622
    
$
2,128
    
$
21,011
    
$
1,223
  
                                 
Net Earnings per Share
                                
Basic
  
$
0.31
    
$
0.08
    
$
0.63
    
$
0.05
  
Diluted
  
$
0.28
    
$
0.08
    
$
0.57
    
$
0.04
  
                                 
Weighted average number of shares
                                
Basic
    
34,567,551
      
26,707,649
      
33,605,215
      
26,600,837
  
Diluted
    
37,865,732
      
28,336,902
      
36,866,637
      
28,318,091
  

5
 
PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands

 
  
September 30,
    
December 31,
  
 
  
2021
    
2020
  
 
  
(Unaudited)
    
(Audited)
  
ASSETS
            
Current Assets:
            
Cash and cash equivalents
  
$
96,210
    
$
47,656
  
Restricted cash
    
1,223
      
1,222
  
Short-term bank deposits
    
60,000
      
12,700
  
Accounts receivable, net
    
74,439
      
81,221
  
Prepaid expenses and other current assets
    
6,948
      
4,560
  
Total Current Assets
    
238,820
      
147,359
  
 
                
Long-Term Assets:
                
Property and equipment, net
    
5,065
      
6,770
  
Operating lease right-of-use assets
    
12,808
      
20,266
  
Goodwill and intangible assets, net
    
172,610
      
176,679
  
Deferred taxes
    
7,245
      
7,111
  
Other assets
    
322
      
496
  
Total Long-Term Assets
    
198,050
      
211,322
  
Total Assets
  
$
436,870
    
$
358,681
  
 
                
LIABILITIES AND SHAREHOLDERS' EQUITY
                
Current Liabilities:
                
Accounts payable
  
$
78,365
    
$
72,498
  
Accrued expenses and other liabilities
    
23,576
      
21,188
  
Short-term operating lease liability
    
4,070
      
4,514
  
Short-term loans and current maturities of long-term loans
    
-
      
8,333
  
Deferred revenues
    
3,187
      
5,711
  
Short-term payment obligation related to acquisitions
    
29,924
      
7,869
  
Total Current Liabilities
    
139,122
      
120,113
  
 
                
Long-Term Liabilities:
                
Payment obligation related to acquisition
    
5,086
      
30,035
  
Long-term operating lease liability
    
10,429
      
17,698
  
Other long-term liabilities
    
7,681
      
6,713
  
Total Long-Term Liabilities
    
23,196
      
54,446
  
Total Liabilities
    
162,318
      
174,559
  
 
                
Shareholders' equity:
                
Ordinary shares
    
290
      
224
  
Additional paid-in capital
    
321,500
      
251,933
  
Treasury shares at cost
    
(1,002
)
    
(1,002
)
Accumulated other comprehensive gain
    
(102
)
    
112
  
Accumulated deficit
    
(46,134
)
    
(67,145
)
Total Shareholders' Equity
    
274,552
      
184,122
  
Total Liabilities and Shareholders' Equity
  
$
436,870
    
$
358,681
  

6

PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands

 
  
Three months ended
    
Nine months ended
  
 
  
September 30,
    
September 30,
  
 
  
2021
    
2020
    
2021
    
2020
  
 
  
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
 
                        
Cash flows from operating activities:
                        
Net Income
  
$
10,622
    
$
2,128
    
$
21,011
    
$
1,223
  
Adjustments required to reconcile net income to net cash provided by operating activities:
                                
Depreciation and amortization
    
1,922
      
2,695
      
6,299
      
7,248
  
Stock-based compensation expense
    
1,744
      
972
      
3,733
      
2,913
  
Foreign currency translation
    
(18
)
    
(42
)
    
(107
)
    
(89
)
Accrued interest, net
    
(53
)
    
13
      
(220
)
    
13
  
Deferred taxes, net
    
(478
)
    
(387
)
    
(183
)
    
(2,339
)
Accrued severance pay, net
    
135
      
172
      
333
      
205
  
Loss (gain) from sale of property and equipment
    
-
      
4
      
(11
)
    
88
  
Net changes in operating assets and liabilities
    
301
      
1,037
      
11,415
      
(23
)
Net cash provided by operating activities
  
$
14,175
    
$
6,592
    
$
42,270
    
$
9,239
  
 
                                
Cash flows from investing activities:
                                
Purchases of property and equipment, net of sales
    
(141
)
    
(274
)
    
(495
)
    
(386
)
Short-term deposits, net
    
23,000
      
8,572
      
(47,300
)
    
14,934
  
Cash paid in connection with acquisitions, net of cash acquired
    
-
      
(4,041
)
    
(3,438
)
    
(20,186
)
Obligation in connection with acquisitions
    
-
      
(1,002
)
    
-
      
1,347
  
Net cash provided by (used in) investing activities
  
$
22,859
    
$
3,255
    
$
(51,233
)
  
$
(4,291
)
 
                                
Cash flows from financing activities:
                                
Issuance of shares in private placement, net
    
-
      
-
      
60,960
      
-
  
Proceeds from exercise of stock-based compensation
    
1,069
      
345
      
4,940
      
2,086
  
Proceeds from short-term loans
    
-
      
12,500
      
-
      
12,500
  
Repayment of long-term loans
    
-
      
(2,083
)
    
(8,333
)
    
(6,249
)
Net cash provided by financing activities
  
$
1,069
    
$
10,762
    
$
57,567
    
$
8,337
  
 
                                
Effect of exchange rate changes on cash and cash equivalents and restricted cash
    
(46
)
    
65
      
(49
)
    
(9
)
Net increase in cash and cash equivalents and restricted cash
    
38,057
      
20,674
      
48,555
      
13,276
  
Cash and cash equivalents and restricted cash at beginning of period
    
59,376
      
32,207
      
48,878
      
39,605
  
Cash and cash equivalents and restricted cash at end of period
  
$
97,433
    
$
52,881
    
$
97,433
    
$
52,881
  

7
 
PERION NETWORK LTD. AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP RESULTS
In thousands (except share and per share data)

   
Three months ended
    
Nine months ended
  
   
September 30,
    
September 30,
  
   
2021
    
2020
    
2021
    
2020
  
   
(Unaudited)
    
(Unaudited)
  
                         
GAAP Net Income
  
$
10,622
    
$
2,128
    
$
21,011
    
$
1,223
  
Stock-based compensation
    
1,744
      
972
      
3,733
      
2,913
  
Amortization of acquired intangible assets
    
1,370
      
1,491
      
4,068
      
3,650
  
Retention and other related to M&A related expenses
    
1,561
      
1,292
      
5,527
      
5,011
  
Foreign exchange losses (gains) associated with ASC-842
    
6
      
27
      
(207
)
    
(52
)
Revaluation of acquisition related contingent consideration
    
136
      
162
      
476
      
445
  
Taxes on the above items
    
(54
)
    
(127
)
    
92
      
(344
)
Non-GAAP Net Income
  
$
15,385
    
$
5,945
    
$
34,700
    
$
12,846
  
                                 
Non-GAAP Net Income
  
$
15,385
    
$
5,945
    
$
34,700
    
$
12,846
  
Taxes on income
    
1,803
      
1,330
      
3,882
      
206
  
Financial expense (income), net
    
(131
)
    
270
      
(153
)
    
799
  
Depreciation
    
552
      
1,204
      
2,231
      
3,598
  
Adjusted EBITDA
  
$
17,609
    
$
8,749
    
$
40,660
    
$
17,449
  
                                 
Non-GAAP diluted earnings per share
  
$
0.40
    
$
0.21
    
$
0.93
    
$
0.45
  
                                 
Shares used in computing non-GAAP diluted earnings per share
    
38,428,524
      
28,977,861
      
37,206,600
      
28,864,722
  

8