“The momentum has continued in the first quarter and we remain very confident and excited about 2013,” continued Mr. Mandelbaum. “In addition to reaffirming our guidance, we fully expect to continue our existing search partnerships well into the future. At the same time, we are exploring additional search partnership opportunities to leverage our new scale. 2013 will also be a year of exciting new product launches, like our recent Incredimail for iPad launch, further diversification of our business model and accelerated and sustained growth."
Non-GAAP Financial Comparison for the Fourth Quarter and the Year of 2012:
Revenue: Q4’12 revenues were a record $21.4 million, increasing 90%, compared to the fourth quarter of 2011. The accelerating growth was a result of positive trends in all Perion’s revenue streams, particularly with search generated revenues increasing 136% year-over-year. The extensive growth in search generated revenues was primarily a result of organic growth, in addition to which we benefited from one month of revenues from SweetPacks.
In 2012, revenues increased 65%, reaching $61.2 million, compared to $37.0 million in 2011. As product and advertising sales more than doubled in 2012, they represented 38% of total revenues, as compared to 31% in 2011.Gross Profits: Gross profit in the fourth quarter of 2012 was $20.3 million, almost double the $10.2 million in the fourth quarter of 2011. The gross profit margin increased to 95% this last quarter, compared to 91% in the fourth quarter of 2011. For the entire year, gross profit in 2012 increased 67%, reaching $57.5 million, compared to $34.5 million, with the gross profit margin increasing to 94%, from 93% in 2011. Customer Acquisition Costs (“CAC”): In the fourth quarter of 2012, Perion increased its investment in CAC to a record $9.7 million, more than triple the $3.1 million invested in the fourth quarter of 2011. For the entire year, CAC totaled $22.1 million in 2012, compared to only $8.0 million in 2011. The increase in CAC was a combination of an organic increase resulting from ability to better track the return on this investment since the second quarter of this year, as well as that incurred by the acquisition of SweetPacks in November of this year. Adjusted EBITDA: In the fourth quarter of 2012, Adjusted EBITDA was $4.9 million, or 23% of sales, a 262% increase compared to the $1.4 million in the same quarter last year, despite the $6.6 million increase in CAC. Adjusted EBITDA in 2012 was $14.0 million, increasing $4.3 million, or 44% from $9.7 million in 2011, even though CAC increased $14.0 million in 2012, compared to 2011. Net Income: In the fourth quarter of 2012, net income was $3.6 million, or $0.32 per share, more than double the $1.6 million or $0.16 per share in the fourth quarter of 2011. Net income in 2012 was $10.3 million, or $0.99 per share, compared to $8.3 million and $0.83 per share in 2011, increasing 20% despite the $14.0 million increase in CAC. Cash Flow from Operations: Based on U.S. GAAP, in 2012 cash flow from operations was $16.3 million. Included in that number is $3.1 million cash, from accounts receivable acquired as part of the SweetPacks acquisition, which will be returned to SweetPacks shareholders in the first half of 2013. In 2011, cash flow from operations was $7.0 million. 2013 Financial Outlook: Management today reaffirmed its 2013 Financial Outlook from the Company’s press release on January 8 th that it expects:
- Revenues to exceed $110 million, representing overall growth of 80%+ year-over-year, representing at least 25% organic growth year-over-year;
- Adjusted EBITDA of at least $26 million, representing an EBITDA margin of 24% and representing approximately 105% growth vs. 2012;
- Non-GAAP Net Income of at least $20 million, an 18% net profit margin and representing approximately 100% growth vs. 2012; with cash flow from operations closely tracking Non-GAAP Net Income; and
- Non-GAAP EPS of $1.61, based on an average of 12.4 million shares outstanding.
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