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Perion Network's CEO Discusses Q3 2011 Results - Q&A Session Transcript

Stocks in this article: PERI

Perion Network Ltd. ( PERI)

Q3 2011 Earnings Call

November 14, 2011 10:00 am ET

Executives

Josef Mandelbaum – Chief Executive Officer

Yacov Kaufman – Chief Financial Officer

Analysts

Nick Halen – Sidoti & Company

Christopher L. Ferris – Noble Financial Group, Inc.

Aram Fuchs – Fertilemind Capital

Presentation

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) The first question is from Nick Halen of Sidoti & Company. Please go ahead.

Nick Halen – Sidoti & Company

Hi, guys thanks for taking my questions.

Josef Mandelbaum

Hey, Nick. How are you doing?

Nick Halen – Sidoti & Company

Good, good. So, the first question I had is, I know it’s only been about a month or so, did you mentioned I apologize if I missed it, how much revenue you guys did from Smilebox in the quarter?

Josef Mandelbaum

Yacov did mention it; in the month it’s about $900,000.

Nick Halen – Sidoti & Company

$900,000 okay. Okay. Just in terms of the media buying it seems like you guys are pretty happy with the ROI that you’re seeing on that. But do you guys kind of have somewhat of a timeline as so when you expect to may be scale back a little bit of that spending or is it as long as its ROI positive we can expect to continue seeing higher expenses on that end?

Josef Mandelbaum

I think from our standpoint, as long as the ROI meet certain thresholds obviously have to exceed our weighted average cost of capital as to bigger return. We expect to continue however these things have a natural ceiling and they usually, at some point in time you get to a place were your return isn’t worth it and you level it out and then you start optimizing. And you will not see increases so significantly. I don’t think we’re there yet, but as we even see from the chart that I think, Yacov showed during his presentation, part of the testing process we did had ups and downs, as we mentioned in our previous phone calls. And is really finding, where to get the best return, trying to frankly put the pedal to the metal and see how far we can push that and ultimately, what happens when you do that is, you reach the ceiling and you got to keep on looking in expanding it horizontally. I think there’s still a lot of opportunity there and the ROI is positive. So we’re excited about that, and we think it can continue to fuel growth hopefully for many, many more quarters to come.

Nick Halen – Sidoti & Company

Okay. And just lastly, I know there was a pretty significant jump in accrued expenses on the balance sheet this quarter, did that have anything to do with the acquisition, and I guess, in working we could expect that to be by the end of the year?

Yacov Kaufman

Yes. You hit on the note, that expense is accrual of the coming payment that we’re expecting to pay for the most part in March of 2012 for the acquisition of Smilebox, and we’re expecting that number to be in the neighborhood of $6 million to $7 million.

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