Non-GAAP Financial Comparison for the First Six Months and Second Quarter of 2013:
In the second quarter of 2013, revenues reached $24.4 million, nearly double the $12.3 million of revenues in the second quarter of 2012. This increase was attributable to a 183% year over year increase in search generated revenues, while other revenues increased 6%. The increase in search revenues was achieved while diversifying our search partners, with only 51% of our search generated revenues coming directly from Google in the second quarter. We continue to diversify our search relationships and expect to see this trend progress in the coming quarters.
In the first six months of 2013 revenues were $52.0 million, increasing 121% from the $23.6 million recorded in the same period in 2012. This too was primarily as a result of our more than tripling search generated revenues and increasing other revenues by 17%. The increase in search generated revenues was due to both organic growth and our acquisition of SweetPacks in November 2012. Growth in other revenues was attributable to other advertising revenues, while the growth in product sales was primarily reflected in a 13% increase in Deferred Revenues on our Balance Sheet.
As a result of the increase in revenues, in the second quarter of 2013 gross profit doubled as well, and was $23.3 million, or 95% of sales, compared to $11.5 million, or 93% of sales in the second quarter of 2012. Gross profit in the first half of 2013 was $49.7 million, or 95% of revenues, increasing 126% compared to $22.0 million, or 93% of revenues in the first half of 2012.
Customer Acquisition Costs (“CAC”):
In the second quarter of 2013, CAC was $12.5 million, more than triple the $3.9 million spent in the second quarter of 2012. In the first half of 2013, Perion invested $23.9 million in CAC, more than three-fold the $6.5 million invested in the first half of 2012. The increase in CAC was lower than initially planned for this period, as the company was adapting its acquisition strategy to its new partners. We expect this transition to continue in the third quarter, and then CAC will increase significantly in the fourth quarter, powering our growth in the latter part of this year and into 2014.
In the second quarter of 2013, EBITDA was $4.3 million, increasing 61% compared to $2.7 million in the second quarter of 2012, despite the $8.6 million increase in CAC. In the first half of 2013 EBITDA was $12.2 million, increasing 131%, compared to $5.3 million in the first half of 2012.
In the second quarter of 2013, net income was $3.4 million or $0.26 per share, compared to $1.8 million, or $0.18 per share in the second quarter of 2012. In the first half of 2013 net income was $9.2 million, or $0.71 per share, compared to $4.0 million, or $0.40 per share, in the first half of 2012.
Cash Flow from Operations:
Based on U.S. GAAP, in the first half of 2013, cash flow from operations was $14.3 million, compared to $2.5 million in the first half of 2012. Cash flow from operations in the first half of 2013 was primarily due to our $3.7 million in GAAP net income, in addition to non-cash amortization and accretion expenses of $6.6 million, as well as realizing $4.0 million of other working capital.
Given current industry trends, management has decided to provide an outlook for the third quarter of 2013. The Company expects third quarter revenues to be between $20 million and $22 million, reflecting 30% year over year growth and EBITDA to be between $4.5 million and $5.5 million, reflecting a 32% increase year over year. At this time, management remains optimistic that it can achieve its full year guidance.