The company launches WAVE, a generative
AI-powered dynamic audio advertising solution
Perion Network Ltd. (NASDAQ and TASE: PERI), a global technology
company whose synergistic solutions serve all major digital
advertising channels - including search, social, display, and
video/CTV, today reported its financial results for the third
quarter ended September 30, 2023.
“Once again, our business results proved that our strategically
diversified model gives us the agility to deliver continued
growth,” stated Tal Jacobson, Perion’s CEO. “Despite macroeconomic
headwinds, our third-quarter year-over-year revenue and adjusted
EBITDA increased 17% and 29%, respectively. These results were made
possible by the ability to leverage our technological capabilities
and focus resources on the strongest industry verticals to achieve
top-line profitability and margin expansion. Specifically, our
Retail Media solutions are tracking to significantly exceed our
annual revenue goal for 2023.”
“Our diversification remains a key differentiator for Perion,
powered by exceptional execution and ongoing investment in
technology,” added Mr. Jacobson.
Introducing WAVE
Reaffirming its commitment to technological innovation, Perion
expands its advertiser suite of solutions with the introduction of
WAVE (Waveform Audio Voice Engine), a generative AI-powered dynamic
audio solution that enables advertisers to generate personalized
audio advertising messages at scale. The power of the solution is
based on advanced algorithmic AI processing which combines
first-party data with voice, reaching consumer audiences with
tailored audio messages that adapt in real time to parameters such
as weather, location, daypart, and many others.
"We are focused on developing technology that creates deeper and
more meaningful consumer experiences," explained Mr. Jacobson.
"WAVE represents our commitment to changing the game for
advertisers, enabling us to tap into lucrative channels and create
entirely new categories. We envision a future where every consumer
interaction is customized, localized and commerce-enabled."
Albertsons is an early adopter that has seamlessly integrated
WAVE into several successful campaigns and is now looking to scale
the solution more broadly.
"When Perion introduced us to the AI script and voice, we were
blown away. It was very hard to detect that it was an actual AI
voice – right down to the nuances of how certain products are
pronounced, and the annunciation. To see the machine actually
learning those dialogue differences was super important to us,”
said Tony Colvin, Director – Paid Media, Albertsons Companies.
WAVE is launching into the Retail vertical, adding a richer,
multi-dimensional capability to each consumer touchpoint. Perion
plans to quickly roll out WAVE to additional verticals, including
QSR - Quick-Service Restaurants, automotive, and travel.
Third Quarter 2023 Business Highlights
● Retail Media1 revenue increased 112% year-over-year to $13.0
million, representing 13% of Display Advertising revenue compared
to 7% last year
● CTV revenue2 increased 39% year-over-year to $7.9 million,
representing 8% of Display Advertising revenue compared to 7% last
year
● Video revenue decreased 16% year-over-year, driven by shifting
inventory from video to display to gain higher profit, representing
32% of Display Advertising revenue, compared to 44% last year
● The number of Average Daily Searches increased by 86%
year-over-year to 31.3 million. The number of Search Advertising
publishers increased by 16% year-over-year to 164
1 Retail Media revenue includes all media channels, such as CTV,
video and others 2 Starting in the previous quarter, we changed our
methodology for measuring our CTV activity. We moved from measuring
CTV campaigns to measuring CTV channels. The CTV growth trend under
both methodologies remains in the same trajectory. Under our
updated methodology, revenue generated from CTV in the third
quarter of 2022 was $5.7 million vs. $7.4 million under the
previous methodology.
Third Quarter 2023 Financial Highlights1
In millions,
Three months ended
Nine months ended
except per share data
September 30,
September 30,
2023
2022
%
2023
2022
%
Display Advertising Revenue $
99.2
$
86.8
14%
$
278.5
$
236.9
18%
Search Advertising Revenue $
86.1
$
71.8
20%
$
230.5
$
193.7
19%
Total Revenue $
185.3
$
158.6
17%
$
509
$
430.6
18%
Contribution ex-TAC (Revenue ex-TAC)1 $
77.3
$
65
19%
$
219.6
$
180
22%
GAAP Net Income $
32.8
$
25.6
28%
$
78
$
60.5
29%
Non-GAAP Net Income1 $
42.4
$
29.9
42%
$
114.4
$
75.1
52%
Adjusted EBITDA1 $
42.7
$
33
29%
$
115.2
$
84.1
37%
Adjusted EBITDA to Revenue ex-TAC
55%
51%
52%
47%
Net Cash from Operations $
40.1
$
34.7
16%
$
105.2
$
83.9
25%
GAAP Diluted EPS $
0.65
$
0.53
23%
$
1.57
$
1.27
24%
Non-GAAP Diluted EPS1 $
0.84
$
0.61
38%
$
2.28
$
1.56
46%
Outlook for 2023 2
With the first three quarters of 2023 behind us, Perion
reiterates its annual revenue and adjusted EBITDA guidance.
In millions
2022
2023
Guidance
YoY
Growth %3
Revenue
$640.3
$730-$750
16%
Adjusted EBITDA
$132.4
$167+
26%
Adjusted EBITDA to Revenue
21%
23%3
Adjusted EBITDA to Contribution ex-TAC
49%
54%3
1 Contribution ex-TAC, non-GAAP Net
Income, Adjusted EBITDA and non-GAAP Diluted EPS are non-GAAP
measures. See below reconciliation of GAAP to non-GAAP
measures.
2 We have not provided an outlook for GAAP
Income from operations or reconciliation of Adjusted EBITDA
guidance to GAAP Income from operations, the closest corresponding
GAAP measure, because we do not provide guidance for certain of the
reconciling items on a consistent basis due to the variability and
complexity of these items, including but not limited to the
measures and effects of our stock-based compensation expenses
directly impacted by unpredictable fluctuation in our share price
and amortization in connection with future acquisitions. Hence, we
are unable to quantify these amounts without unreasonable
efforts.
3 Calculated at revenue guidance midpoint.
Adjusted EBITDA year-over-year growth calculated based on $167
million.
Financial Comparison for the Third Quarter of 2023
Revenue: Revenue increased 17% to $185.3 million in the
third quarter of 2023 from $158.6 million in the third quarter of
2022. Display Advertising revenue increased 14% year-over-year,
accounting for 54% of total revenue, primarily due to a 112%
year-over-year increase in Retail revenue to $13.0 million and a
39% year-over-year increase in CTV revenue to $7.9 million. Search
Advertising revenue increased 20% year-over-year, accounting for
46% of revenue, with 86% increase in Average Daily Searches and 16%
increase in the number of publishers.
Traffic Acquisition Costs and Media Buy (“TAC”): TAC
amounted to $108.0 million, or 58% of revenue, in the third quarter
of 2023, compared with $93.6 million, or 59% of revenue, in the
third quarter of 2022. The margin expansion was primarily
attributed to favorable product mix and media buying optimization
through our platform.
GAAP Net Income: GAAP net income increased by 28% to
$32.8 million in the third quarter of 2023 compared with $25.6
million in the third quarter of 2022.
Non-GAAP Net Income: Non-GAAP net income was $42.4
million, or 23% of revenue, in the third quarter of 2023, compared
with $29.9 million, or 19% of revenue, in the third quarter of
2022. A reconciliation of GAAP to non-GAAP net income is included
in this press release.
Adjusted EBITDA: Adjusted EBITDA was $42.7 million, or
23% of revenue (and 55% of Contribution ex-TAC) in the third
quarter of 2023, compared with $33.0 million, or 21% of revenue
(and 51% of Contribution ex-TAC) in the third quarter of 2022. A
reconciliation of GAAP income from operations to Adjusted EBITDA is
included in this press release.
Cash Flow from Operations: Net cash provided by operating
activities in the third quarter of 2023 was $40.1 million, compared
with $34.7 million in the third quarter of 2022.
Net cash: As of September 30, 2023, cash and cash
equivalents, short-term bank deposits and marketable securities
amounted to $523.6 million, compared with $429.6 million as of
December 31, 2022.
Conference Call
Perion’s management will host a conference call to discuss the
results at 8:30 a.m. ET today:
● Registration link:
https://incommconferencing.zoom.us/webinar/register/WN_Mwx-qMqNRZKyt3FCZ1XXxQ
● Toll Free: 1-877-407-0779
● Toll/International: 1-201-389-0914
A replay of the call and a transcript will be available within
approximately 24 hours of the live event on Perion’s website.
About Perion Network Ltd.
Perion is a global multi-channel advertising technology company
that delivers synergistic solutions across all major channels of
digital advertising – including search advertising, social media,
display, video and CTV advertising. These channels converge at
Perion’s intelligent HUB (iHUB), which connects the company’s
demand and supply assets, providing significant benefits to brands
and publishers.
For more information, visit Perion's website at
www.perion.com
Non-GAAP Measures
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude certain items. This press release includes
certain non-GAAP measures, including Contribution ex-TAC, Adjusted
EBITDA, non-GAAP net income and non-GAAP diluted earnings per
share.
Contribution ex-TAC presents revenue reduced by traffic
acquisition costs and media buy, reflecting a portion of our
revenue that must be directly passed to publishers or advertisers
and presents our revenue excluding such items. We believe
Contribution ex-TAC is a useful measure in assessing the
performance of the Company because it facilitates a consistent
comparison against our core business without considering the impact
of traffic acquisition costs and media buy related to revenue
reported on a gross basis.
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization ("Adjusted EBITDA") is defined as income from
operations excluding stock-based compensation expenses,
depreciation, amortization of acquired intangible assets, retention
and other acquisition-related expenses and gains and losses
recognized with respect to changes in the fair value of contingent
consideration.
Non-GAAP net income and non-GAAP diluted earnings per share are
defined as net income and net earnings per share excluding
stock-based compensation expenses, retention and other
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 and losses associated with ASC-842, as well
as gains and losses recognized with respect to changes in fair
value of contingent consideration.
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 in this press release. 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,”
“estimate” 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, but not limited to, the current war between Israel and
Hamas and any worsening of the situation in Israel such as further
mobilizations, 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, data
breaches, cyber-attacks and other similar incidents, unpredictable
sales cycles, competitive pressures, market acceptance of new
products, changes in applicable laws and regulations as well as
industry self-regulation, 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, 2022 filed with the SEC on March 15, 2023. Perion does
not assume any obligation to update these forward-looking
statements.
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,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenue
Display Advertising
$
99,193
$
86,779
$
278,450
$
236,933
Search Advertising
86,112
71,836
230,475
193,653
Total Revenue
185,305
158,615
508,925
430,586
Costs and Expenses
Cost of revenue
9,805
7,540
26,953
21,014
Traffic acquisition costs and media buy
107,981
93,625
289,338
250,555
Research and development
7,763
7,766
24,352
25,135
Selling and marketing
14,171
12,591
42,983
39,884
General and administrative
7,712
1 7,609
21,668
1 19,743
Change in fair value of contingent consideration
1,982
1 (3,816)
16,584
1 (3,816)
Depreciation and amortization
3,425
3,704
10,191
10,097
Total Costs and Expenses
152,839
129,019
432,069
362,612
Income from Operations
32,466
29,596
76,856
67,974
Financial income, net
6,103
1,019
14,689
2,526
Income before Taxes on income
38,569
30,615
91,545
70,500
Taxes on income
5,748
5,033
13,533
9,952
Net Income
$
32,821
$
25,582
$
78,012
$
60,548
Net Earnings per Share
Basic
$
0.69
$
0.57
$
1.66
$
1.36
Diluted
$
0.65
$
0.53
$
1.57
$
1.27
Weighted average number of shares
Basic
47,392,072
45,146,639
46,915,616
44,544,483
Diluted
50,270,296
47,997,745
49,831,190
47,560,112
1 Reflects reclassification of $3.8
million of earnout liability in 2022 that was incurred in
connection with a transaction from general and administrative to
change in fair value of contingent consideration.
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
September 30, December 31,
2023
2022
(Unaudited) (Audited) ASSETS Current
Assets Cash and cash equivalents
$
197,853
$
176,226
Restricted cash
1,327
1,295
Short-term bank deposits
253,950
253,400
Marketable securities
71,817
-
Accounts receivable, net
142,106
160,488
Prepaid expenses and other current assets
16,641
12,049
Total Current Assets
683,694
603,458
Long-Term Assets Property and equipment, net
3,012
3,611
Operating lease right-of-use assets
7,400
10,130
Goodwill and intangible assets, net
238,218
247,191
Deferred taxes
7,651
5,779
Other assets
75
49
Total Long-Term Assets
256,356
266,760
Total Assets
$
940,050
$
870,218
LIABILITIES AND SHAREHOLDERS' EQUITY Current
Liabilities Accounts payable
$
139,476
$
155,854
Accrued expenses and other liabilities
33,759
37,869
Short-term operating lease liability
3,940
3,900
Deferred revenue
1,530
2,377
Short-term payment obligation related to acquisitions
71,464
34,608
Total Current Liabilities
250,169
234,608
Long-Term Liabilities Payment obligation related to
acquisition
-
33,113
Long-term operating lease liability
4,415
7,580
Other long-term liabilities
12,023
11,783
Total Long-Term Liabilities
16,438
52,476
Total Liabilities
266,607
287,084
Shareholders' equity Ordinary shares
409
398
Additional paid-in capital
526,399
513,534
Treasury shares at cost
-1,002
-1,002
Accumulated other comprehensive loss
-1,161
-582
Retained earnings
148,798
70,786
Total Shareholders' Equity
673,443
583,134
Total Liabilities and Shareholders' Equity
$
940,050
$
870,218
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
Three months ended Nine months ended
September 30,
September 30,
2023
2022
2023
2022
(Unaudited) (Unaudited) (Unaudited)
(Unaudited) Cash flows from
operating activities Net Income
$
32,821
$
25,582
$
78,012
$
60,548
Adjustments required to reconcile net income to net cash provided
by operating activities: Depreciation and amortization
3,425
3,704
10,191
10,097
Stock-based compensation expense
4,425
3,236
10,927
8,365
Foreign currency translation
22
-64
9
-238
Accrued interest, net
-2,208
-825
-4,239
-2,006
Deferred taxes, net
-1,257
1,575
-1,733
1,327
Accrued severance pay, net
-187
-831
-462
-328
Gain from sale of property and equipment
-5
-5
-22
-10
Net changes in operating assets and liabilities
3,059
2,300
12,563
6,194
Net cash provided by operating activities
$
40,095
$
34,672
$
105,246
$
83,949
Cash flows from investing
activities Purchases of property and equipment, net of
sales
-152
-349
-503
-779
Investment in marketable securities, net of sales
597
-
-71,598
-
Short-term deposits, net
-28,650
31,600
-550
-1,800
Cash paid in connection with acquisitions, net of cash acquired
-
-
-
-9,570
Net cash provided by (used in) investing activities
$
(28,205)
$
31,251
$
(72,651)
$
(12,149)
Cash flows from financing
activities Proceeds from exercise of stock-based
compensation
150
3,147
2,338
4,441
Payments of contingent consideration
-
-
-13,256
-9,091
Net cash provided by (used in) financing activities
$
150
$
3,147
$
(10,918)
$
(4,650)
Effect of exchange rate changes on cash and cash equivalents
and restricted cash
-103
-110
-18
-288
Net increase in cash and cash equivalents and restricted
cash
11,937
68,960
21,659
66,862
Cash and cash equivalents and restricted cash at beginning of
period
187,243
103,437
177,521
105,535
Cash and cash equivalents and restricted cash at end of
period
$
199,180
$
172,397
$
199,180
$
172,397
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,
2023
2022
2023
2022
(Unaudited) (Unaudited) Revenue
$
185,305
$
158,615
$
508,925
$
430,586
Traffic acquisition costs and media buy
107,981
93,625
289,338
250,555
Contribution ex-TAC
$
77,324
$
64,990
$
219,587
$
180,031
Three months ended Nine months ended
September 30, September 30,
2023
2022
2023
2022
(Unaudited) (Unaudited) GAAP Income from
Operations
$
32,466
$
29,596
$
76,856
$
67,974
Stock-based compensation expenses
4,425
3,236
10,927
8,365
Retention and other acquisition related expenses
401
288
658
1,518
Change in fair value of contingent consideration
1,982
-3,816
16,584
-3,816
Amortization of acquired intangible assets
3,017
3,295
8,972
8,896
Depreciation
408
409
1,219
1,201
Adjusted EBITDA
$
42,699
$
33,008
$
115,216
$
84,138
Three months ended Nine months ended
September 30,
September 30,
2023
2022
2023
2022
(Unaudited) (Unaudited) GAAP Net Income
$
32,821
$
25,582
$
78,012
$
60,548
Stock-based compensation expenses
4,425
3,236
10,927
8,365
Amortization of acquired intangible assets
3,017
3,295
8,972
8,896
Retention and other acquisition related expenses
401
288
658
1,518
Change in fair value of contingent consideration
1,982
-3,816
16,584
-3,816
Foreign exchange gains associated with ASC-842
-83
-80
-280
-824
Revaluation of acquisition related contingent consideration
149
342
441
602
Taxes on the above items
-291
1,067
-865
-145
Non-GAAP Net Income
$
42,421
$
29,914
$
114,449
$
75,144
Non-GAAP diluted earnings per share
$
0.84
$
0.61
$
2.28
$
1.56
Shares used in computing non-GAAP diluted earnings per
share
50,543,534
48,873,796
50,106,425
48,112,823
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101750361/en/
Perion Network Ltd. Dudi Musler, VP of Investor Relations +972
(54) 7876785 dudim@perion.com
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