“I am also very pleased to report that the integration of ClientConnect with Perion has gone exceedingly well, even better than our expectations, due in large part to the talent and quality of the combined management team,” added Mr. Mandelbaum. “In the short time since we closed the acquisition, we have deployed several initiatives to accelerate growth and we continue to successfully adjust to industry changes. We are encouraged with the preliminary results of these actions and as a result, our first quarter as a combined company is off to a good start, despite headwinds in the industry.”
Non-GAAP Financial Comparison for the Fourth Quarter and Full Year of 2013:
Revenue: In the fourth quarter of 2013, Perion revenues reached $31.3 million, reflecting a 47% increase compared to $21.4 million in the fourth quarter of 2012. This increase was attributable to a 61% year over year increase in search generated revenues, with products and other revenues increasing 12%.
In the full year of 2013 Perion revenues were $104.6 million, increasing 71% from the $61.2 million recorded in 2012. Search generated revenues increased by 101% and products and other revenues grew by 21%. The increase in search revenues was achieved while continuing to diversify the Company’s search partners, as we partnered with five companies and Google accounting for only 38% of our revenues in 2013.Included in 2013 non GAAP revenues was $18 million in revenues generated through a commercial transaction with Conduit, which was entered into prior to the acquisition of their ClientConnect business. On a GAAP accounting basis these revenues were netted out, with $14.3 million being reduced from customer acquisition cost and $3.1 million recorded as deferred revenues. Customer Acquisition Costs (“CAC”): In the fourth quarter of 2013, CAC was $14.6 million, 50% higher than the $9.7 million spent in the fourth quarter of 2012. In the full year of 2013, Perion invested $46.6 million in CAC, increasing 111%, compared to the $22.1 million invested in the full year of 2012. Non GAAP CAC in 2013 included $14.3 million expensed in generating revenues in connection with Perion’s commercial transaction in place with Conduit, which was entered into prior to the acquisition of their ClientConnect business. This expense was netted against revenues generated from the commercial transaction with Conduit and deferred revenues in the GAAP report. EBITDA: In the fourth quarter of 2013, EBITDA was $7.7 million, increasing $2.8 million, or 56%, compared to $4.9 million in the fourth quarter of 2012. Perion’s EBITDA margin this quarter was 24%, compared to 23% in the same quarter last year. In the full year of 2013, EBITDA increased 82% to $25.5 million, or 24% of revenues, compared to $14.0 million, or 23% or revenues, in 2012. Net Income: In the fourth quarter of 2013, net income increased 77%, reaching $6.4 million or $0.49 per share, compared to $3.6 million, or $0.32 per share, in the fourth quarter of 2012. On a GAAP basis, we recorded a net loss of $1.8 million, or ($0.14) per share, primarily as a result of deferring $3.1 million net revenue on a GAAP basis, $2.8 million expenses related to our ClientConnect acquisition, as well as $2.3 million amortization of acquired intangible assets. In the full year of 2013, non-GAAP net income nearly doubled compared to 2012, reaching $20.1 million, or $1.54 per share, compared to $10.3 million, or $0.99 per share, in 2012. On a GAAP accounting basis we recorded a $0.3 million net profit, or $0.02 per share primarily as a result of deferring $3.1 million net revenue, $6.2 million of expenses related to the acquisition of ClientConnect, as well as $9.3 million amortization of acquired intangible assets and $1.5 million share based compensation.