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Perion Announces Another Record Quarter And Year: Fourth Quarter Revenues Up 90%; Adjusted EBITDA Triples To $4.9 Million

Stocks in this article: PERI

Conference Call

Perion will host a conference call to discuss the results today, March 13 th at 10 a.m. EDT (4 p.m. Israel Time). To listen to the call please visit the Investor Relations section of Perion’s website at www.perion.com/events-presentations. Click on the link provided for the webcast, or dial 1-866-744-5399. Callers from Israel may access the call by dialing (03) 918-0685. The webcast will be archived on the company’s website for seven days.

About Perion Network Ltd.

Perion Network Ltd. (NASDAQ: PERI) is a global consumer internet company that develops applications to make the online experience of its users simple, safe and enjoyable. Perion’s three main consumer brands are: Incredimail, Smilebox and SweetIM. Incredimail is a unified messaging application enabling consumers to manage multiple email accounts and Facebook messages in one place with an easy-to-use interface and extensive personalization features, and is available in over 100 countries in 8 languages; Smilebox is a leading photo sharing and social expression product and service that quickly turns life's moments into digital keepsakes for sharing and connecting with friends and family, in a fun and personal way. SweetIM is an instant messaging application that enables consumers to personalize their everyday communications with free, fun and easy to use content. Perion products have had over 300 million downloads to date with more than 50 million monthly unique visitors across all of its brands. Most of Perion’s applications are monetized through a freemium model. Free versions of our applications are monetized primarily through our toolbar which generates search revenue and display advertising revenue, generated through impressions. A more advanced feature rich version of many of our products is available with a premium upgrade. Perion also offers and develops a range of products for mobile phones and tablets to answer its users' increasing mobile demands. For more information on Perion please visit www.perion.com.

Non-GAAP measures

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: Valuation adjustment on acquired deferred product revenues, amortization of acquired intangible assets, share-based compensation expenses, acquisition related expenses, deferred finance expenses and non-recurring tax benefits. 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. 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. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Business combination accounting rules requires us to recognize a legal performance obligation related to a revenue arrangement of an acquired entity. The amount assigned to that liability should be based on its fair value at the date of acquisition. The non-GAAP adjustment is intended to reflect the full amount of such revenue. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statements of Income.

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 the Company. 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 the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company 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, potential litigation associated with the transaction, risks that the Company's acquisition activities may disrupt current plans and operations and pose difficulties in employee retention, risks entailed in integrating acquired businesses, changes in the markets in which the Company operates and in general economic and business conditions, loss of key customers and 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 the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time, including its annual report on Form 20-F for the year ended December 31, 2011. The Company does not assume any obligation to update these forward-looking statements.

Source: Perion Network Ltd.

PERION NETWORK LTD.
NON-GAAP SUMMARY FINANCIAL METRICS
U.S. dollars in thousands (except per share data), unaudited
       

 

Quarter ended December 31, Year ended December 31,
2012     2011 2012     2011
Revenues:
Search $ 15,250 $ 6,458 $ 38,061 $ 25,466
Product 4,382 4,209 18,557 8,724
Other   1,739   609   4,588   2,816
Total revenues $ 21,371 $ 11,276 $ 61,206 $ 37,006
Gross Profit $ 20,262 $ 10,215 $ 57,481 $ 34,499
EBITDA $ 4,926 $ 1,361 $ 13,994 $ 9,670
Net Income $ 3,634 $ 1,598 $ 10,301 $ 8,269
Diluted EPS $ 0.32 $ 0.16 $ 0.99 $ 0.83
 
 

PERION NETWORK LTD.

GAAP FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME

U.S. dollars and number of shares in thousands (except per share data)

       

Quarter ended December 31,

Year ended December 31,

2012     2011 2012     2011
(unaudited) (unaudited) (unaudited)
Revenues:
Search $ 15,250 $ 6,458 $ 38,061 $ 25,466
Product 4,377 3,236 17,574 7,191
Other   1,739   609     4,588     2,816
Total revenues 21,366 10,303 60,223 35,473
Cost of revenues   1,850   1,311     5,230     2,840
Gross profit   19,516   8,992     54,993     32,633
Operating expenses:
Research and development, net 2,877 2,386 10,735 7,453
Selling and marketing 2,196 2,494 7,456 4,971
Customer acquisition costs 9,698 3,071 22,061 8,013
General and administrative   3,307   1,665     8,560     7,649
Total operating expenses   18,078   9,616     48,812     28,086
Operating income (loss) 1,438 (624 ) 6,181 4,547
Financial income (expense), net   80   1,059     (174 )     1,293
Income before taxes on income 1,518 435 6,007 5,840
Taxes on income   925   243     2,473     172
Net income $ 593 $ 192   $ 3,534   $ 5,668
 
Basic earnings per share $ 0.06 $ 0.02   $ 0.35   $ 0.58
Diluted earnings per share $ 0.05 $ 0.02   $ 0.34   $ 0.57
 
Basic weighted number of shares   10,727   9,914     10,159     9,796
Diluted weighted number of shares   11,275   9,958     10,367     10,002
 
 
PERION NETWORK LTD.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
U.S. dollars and number of shares in thousands (except per share data), unaudited
       

Quarter ended December 31,

Year ended December 31,

2012     2011 2012     2011
GAAP revenues $ 21,366   $ 10,303 $ 60,223 $ 35,473
Valuation adjustment on acquired deferred product revenues   5     973     983     1,533  
Non-GAAP revenues $ 21,371   $ 11,276   $ 61,206   $ 37,006  
 
GAAP gross profit $ 19,516 $ 8,992 $ 54,993 $ 32,633
Valuation adjustment on acquired deferred product revenues 5 973 983 1,533
Share based compensation 2 - 16 -
Amortization of acquired intangible assets   739     250     1,489     333  
Non-GAAP gross profit $ 20,262   $ 10,215   $ 57,481   $ 34,499  
 
GAAP operating expenses $ 18,078 $ 9,616 $ 48,812 $ 28,086
Acquisition related expenses 1,703 39 2,204 1,069
Share based compensation 265 268 1,040 1,183
Amortization of acquired intangible assets 314 255 946 323
Other   -     -     -     (50 )
Non-GAAP operating expenses $ 15,796   $ 9,054   $ 44,622   $ 25,561  
 
GAAP operating income (loss) $ 1,438   $ (624 ) $ 6,181   $ 4,547  
Valuation adjustment on acquired deferred product revenues 5 973 983 1,533
Acquisition related expenses 1,703 39 2,204 1,069
Share based compensation 267 268 1,056 1,183
Amortization of acquired intangible assets 1,053 505 2,435 656
Other   -     -     -     (50 )
Operating income adjustments   3,028     1,785     6,678     4,391  
Non-GAAP operating income $ 4,466   $ 1,161   $ 12,859   $ 8,938  
 
GAAP Net income $ 593 $ 192 $ 3,534 $ 5,668
Operating income adjustments 3,028 1,785 6,678 4,391
Deferred finance expenses 101 - 177 -
Non-recurring tax benefit - (379 ) - (1,790 )
Taxes related to amortization of acquired intangible assets   (88 )   -     (88 )   -  
Non-GAAP net income $ 3,634   $ 1,598   $ 10,301   $ 8,269  
 
GAAP diluted earnings per share $ 0.05   $ 0.02   $ 0.34   $ 0.57  
 
Non-GAAP diluted earnings per share $ 0.32   $ 0.16   $ 0.99   $ 0.83  
 
Shares used in computing US GAAP and Non-GAAP diluted earnings per share   11,275     9,958     10,367     10,002  
 
Non-GAAP net income $ 3,634 $ 1,598 $ 10,301 $ 8,269
Income tax expense 925 243 2,473 172
Non-recurring tax benefit 88 379 88 1,790
Interest expense (income), net (80 ) (1,059 ) 174 (1,293 )
Deferred finance expenses (101 ) - (177 ) -
Depreciation and amortization   460     200     1,135     732  
Non-GAAP EBITDA $ 4,926   $ 1,361   $ 13,994   $ 9,670  
 
 
PERION NETWORK LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
       
December 31,
2012         2011
Unaudited Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 21,762 $ 11,260
Trade receivables 10,246 3,265
Restricted cash 10,260 -
Other receivables and prepaid expenses   5,424   6,459
Total current assets   47,692   20,984
 
LONG-TERM ASSETS:
Property and equipment, net 1,522 1,300
Goodwill and other intangible assets, net 72,250 31,359
Other assets   1,216   1,261
Total long-term assets   74,988   33,920
Total assets $ 122,680 $ 54,904
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,300 $ -
Trade payables 9,560 3,207
Deferred revenues 5,132 4,280
Payment obligation related to acquisition 20,317 6,574
Accrued expenses and other liabilities   14,676   11,230
Total current liabilities   51,985   21,011
 
LONG-TERM LIABILITIES:
Long-term debt 6,550 -
Contingent purchase consideration 6,078 -
Other long-term liabilities   3,357   2,078
Total long-term liabilities 15,985 2,078
 
SHAREHOLDERS' EQUITY   54,710   31,815
Total liabilities and shareholders' equity $ 122,680 $ 54,904
 
 
PERION NETWORK LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands, (unaudited)
 
        Year ended December 31,
2012         2011

Cash flows from operating activities:

Net income $ 3,534 $ 5,668
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,572 1,388
Stock based compensation expense 1,056 1,183
Accretion of payment obligation related to acquisition 490 100
Finance expense related to marketable securities - 84
Deferred taxes, net (172 ) (1,140 )
Net changes in operating assets and liabilities:
Trade receivables 492 (383 )
Other receivables and prepaid expenses 1,658 (1,100 )
Other long-term assets 82 60
Trade payables 4,035 108
Deferred revenues (268 ) 998
Accrued expenses and other liabilities 1,788 112
Accrued severance pay, net   (3 )   (40 )
Net cash provided by operating activities   16,264     7,038  
 

Cash flows from investing activities:

Purchase of property and equipment (662 ) (316 )
Restricted cash (343 ) 90
Capitalization of software development and content costs (821 ) (829 )
Cash paid in connection with acquisitions, net of cash acquired (13,590 ) (21,712 )
Cash paid by employees on previously exercised options of acquired company 727 -
Proceeds from sales of marketable securities - 26,704
Investment in marketable securities   -     (11,915 )
Net cash used in investing activities (14,689 ) (7,978 )
 

Cash flows from financing activities:

Exercise of share options 77 30
Proceeds from long-term loans 10,000 -
Repayment of long-term loans (1,150 ) -
Dividend paid   -     (3,885 )
Net cash provided by (used in) financing activities   8,927     (3,855 )
Increase (Decrease) in cash and cash equivalents 10,502 (4,795 )
Cash and cash equivalents at beginning of year   11,260     16,055  
Cash and cash equivalents at end of period $ 21,762   $ 11,260  
 

Supplemental disclosure of non-cash investing activities:

Issuance of shares in connection with acquisitions   18,200     750  
Stock-based compensation that was capitalized as part of capitalization of software development costs   27     -  




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