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TheStreet Open House

Perion Revenues Nearly Double And Non GAAP Net Income Up 85% In Second Quarter Of 2013

Conference Call

Perion will host a conference call to discuss the results today, August 12 th at 10 a.m. EDT (5 p.m. Israel Time). Details are as follows:

  • Dial-in number from within the United States: 1-888-427-9376
  • Dial-in number from Israel: 180-924-5906
  • Dial-in number (other international): 1-719-785-1753
  • Playback, available until August 19, 2013 by calling 1-877-870-5176 (United States) or 1-858-384-5517 (international). Please use pin number 2633918 for the replay.
  • A live webcast is accessible at http://www.perion.com/events-presentations.

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 turn 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. 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 http://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/A for the year ended December 31, 2012. 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 June 30,     Six months ended June 30,
2013     2012 2013     2012
Revenues:
Search $ 18,137 $ 6,398 $ 38,446 $ 11,950
Product and Other   6,290   5,907   13,559   11,611
Total revenues $ 24,427 $ 12,305 $ 52,005 $ 23,561
Gross Profit $ 23,304 $ 11,494 $ 49,656 $ 21,986
EBITDA $ 4,255 $ 2,650 $ 12,157 $ 5,267
Net Income $ 3,402 $ 1,840 $ 9,186 $ 4,016
Diluted EPS $ 0.26 $ 0.18 $ 0.71 $ 0.40
 
 
PERION NETWORK LTD.
GAAP FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME

U.S. dollars and number of shares in thousands (except per share data), (unaudited)
       
Quarter ended June 30, Six months ended June 30,
2013     2012 2013     2012
 
Revenues:
Search $ 18,137 $ 6,398 $ 38,446 $ 11,950
Product and Other   6,290   5,585   13,559   10,692
Total revenues 24,427 11,983 52,005 22,642
Cost of revenues   2,981   1,064   6,069   2,087
Gross profit   21,446   10,919   45,936   20,555
Operating expenses:
Research and development, net 2,922 2,464 6,293 5,147
Selling and marketing 2,558 1,543 5,342 3,224
Customer acquisition costs 12,516 3,925 23,881 6,538
General and administrative   2,066   1,524   4,284   3,515
Total operating expenses   20,062   9,456   39,800   18,424
Operating income 1,384 1,463 6,136 2,131
Financial expense, net   347   248   801     196
Income before taxes on income 1,037 1,215 5,335 1,935
Taxes on income   195   337   1,604   687
Net income $ 842 $ 878 $ 3,731 $ 1,248
 
Basic earnings per share $ 0.07 $ 0.09 $ 0.31 $ 0.13
Diluted earnings per share $ 0.06 $ 0.09 $ 0.29 $ 0.12
 
Basic weighted number of shares   12,274   9,984   12,181   9,950
Diluted weighted number of shares   13,030   10,022   12,935   10,015
 
 

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 June 30,

   

Six months ended June 30,

2013       2012 2013       2012
GAAP revenues $ 24,427   $ 11,983 $ 52,005 $ 22,642
Valuation adjustment on acquired deferred product revenues   -     322   -     919
Non-GAAP revenues $ 24,427   $ 12,305 $ 52,005   $ 23,561
 
GAAP gross profit $ 21,446 $ 10,919 $ 45,936 $ 20,555
Valuation adjustment on acquired deferred product revenues - 322 - 919
Share based compensation 1 3 5 12
Amortization of acquired intangible assets   1,857     250   3,715     500
Non-GAAP gross profit $ 23,304   $ 11,494 $ 49,656   $ 21,986
 
GAAP operating expenses $ 20,062 $ 9,456 $ 39,800 $ 18,424
Acquisition related expenses - - - 313
Share based compensation 178 178 724 529
Amortization of acquired intangible assets   486     209   949     419
Non-GAAP operating expenses $ 19,398   $ 9,069 $ 38,127   $ 17,163
 
GAAP operating income $ 1,384   $ 1,463 $ 6,136   $ 2,131
Valuation adjustment on acquired deferred product revenues - 322 - 919
Acquisition related expenses - - - 313
Share based compensation 179 181 729 541
Amortization of acquired intangible assets   2,343     459   4,664     919
Operating income adjustments   2,522     962   5,393     2,692
Non-GAAP operating income $ 3,906   $ 2,425 $ 11,529   $ 4,823
 
GAAP net income $ 842 $ 878 $ 3,731 $ 1,248
Operating income adjustments 2,522 962 5,393 2,692
Accretion of payment obligation related to acquisitions 283 - 550 76
Taxes on amortization of acquired intangible assets   (245 )   -   (488 ) -
Non-GAAP net income $ 3,402   $ 1,840 $ 9,186   $ 4,016
 
GAAP diluted earnings per share $ 0.06   $ 0.09 $ 0.29   $ 0.12
 

Non-GAAP diluted earnings per share

$ 0.26   $ 0.18 $ 0.71   $ 0.40
 
Shares used in computing US GAAP and Non-GAAP diluted earnings per share   13,030     10,022   12,935     10,015
 
Non-GAAP net income $ 3,402 $ 1,840 $ 9,186 $ 4,016
Income tax expense 195 337 1,604 687
Taxes on amortization of acquired intangible assets 245 - 488 -
Interest expense, net 64 248 251 120
Depreciation and amortization   349     225   628     444
Non-GAAP EBITDA $ 4,255   $ 2,650 $ 12,157   $ 5,267
 
 

PERION NETWORK LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
        June 30,         December 31,
2013 2012
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 30,385 $ 21,762
Trade receivables 8,893 10,246
Restricted cash 10,260 10,260
Other receivables and prepaid expenses   4,334   5,424
Total current assets   53,872   47,692
LONG-TERM ASSETS:

Property and equipment, net

1,492 1,522
Goodwill and other intangible assets, net 69,166 72,730
Other assets   1,424   1,215
Total long-term assets   72,082   75,467
Total assets $ 125,954 $ 123,159
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,300 $ 2,300
Trade payables 8,224 9,560
Deferred revenues 5,360 5,132
Payment obligation related to acquisitions 17,694 20,317
Accrued expenses and other liabilities   17,771   14,679
Total current liabilities   51,349   51,988
LONG-TERM LIABILITIES:
Long-term debt 5,400 6,550
Contingent purchase consideration 6,541 6,078
Other long-term liabilities   3,472   3,833
Total long-term liabilities   15,413   16,461
 
SHAREHOLDERS' EQUITY   59,192   54,710
Total liabilities and shareholders' equity $ 125,954 $ 123,159
 
 

PERION NETWORK LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands, (unaudited)
       
Six months ended June 30,
2013         2012

Operating activities:

Net income $ 3,731 $ 1,248
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,292 1,363
Stock based compensation expense 729 541
Accretion of payment obligation related to acquisition 550 389
Net change in operating assets and liabilities   4,030     (1,038 )
Net cash provided by operating activities   14,332     2,503  
 

Investing activities:

Purchase of property and equipment (364 ) (361 )
Restricted cash (167 ) -
Payment in connection with acquisition (2,710 ) -
Capitalization of software development and content costs (1,319 ) (447 )
Acquisition of subsidiary   -     (6,626 )
Net cash used in investing activities   (4,560 )   (7,434 )
 

Financing activities:

Exercise of share options 1 1
Proceeds from (payment of) long-term loans   (1,150 )   10,000  
Net cash provided by (used in) financing activities   (1,149 )   10,001  
Net increase in cash and cash equivalents 8,623 5,070
Cash and cash equivalents at beginning of period   21,762     11,260  
Cash and cash equivalents at end of period $ 30,385   $ 16,330  
 
Supplemental disclosure of non-cash investing activities:
Stock-based compensation that was capitalized as part of capitalization of software development costs $ 19   $ 23  




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