Perion Network CEO Discusses Q2 Results - Earnings Transcript

Perion Network Ltd. (PERI)

Q2 2012 Earnings Call

August 08, 2012 10:00 PM ET


Josef Mandelbaum – CEO

Yacov Kaufman – CFO

Brett Maas – IR, Hayden IR


Jared Schramm – Roth Capital

Aram Fuchs – Fertilemind Capital



Ladies and gentlemen, thank you for standing by. Welcome to the Perion second quarter 2012 Results Conference Call. All participants are in listen-only mode. Following management’s formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press * 0. As a reminder this conference is being recorded. With us today from Perion, we have Josef Mandelbaum, CEO and Yacov Kaufman, CFO. I would now like to hand the call over to Brett Maas of Hayden IR.

Brett please begin...

Brett Maas

Thank you, and we appreciate the attention of everyone who is joining us today. On today’s call, management will be reviewing the financial results and business highlights of the second quarter and first half of 2012. The press release detailing the results is available on the company’s website at

Before we begin, I’d like to read the following Safe Harbor Statement: Today’s discussion will include forward-looking statements. These statements reflect the Company’s current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including those discussed under the heading “Risk Factors” and elsewhere in the Company’s annual report on form 20-F that may cause actual results, performance or achievements to be materially different from any future results, performances or achievements anticipated or implied by these forward-looking statements. The Company does not undertake to revise any forward-looking statements to reflect future events or circumstances.

With that, I’ll turn the call over to Josef Mandelbaum, Chief Executive Officer. Josef, the call is yours…

Josef Mandelbaum

Thank you Brett and good morning everyone. Welcome to our second quarter earnings call. This morning, I’d like to focus my comments on a review of our record second quarter and first-half results, and to highlight some of our exciting initiatives for the remainder of the year. I will then turn the call over to Yacov, for more details regarding the financial results before opening up the call for questions.

The second quarter was another great quarter for the company and the 26th consecutive quarter of growth on a year over year basis. After a lot of hard work and investment in our backend systems, as well as refining and optimizing our media buying capabilities, we seem to have hit an inflection point with our search business in the middle of the second quarter. We are very optimistic that this trend will continue in the second half of 2012 and beyond. Therefore, we are increasing our non-GAAP guidance for 2012 to the range of $50 - $52 million in revenue, and to $10.5 - $11.5 million in EBITDA.

Non-GAAP Revenues in the second quarter increased by 53% year over year to $12.3 million dollars, primarily as a result of an increase in product and advertising revenues. Our product focused strategy enables us to continue to communicate with our users while increasing their life time value to Perion.

Search revenue was up 15% compared to the previous quarter, as a result of steps taken to recapture the monetization of our existing users and better protect the monetization of our new users.

In addition, we have significantly enhanced our ability to track our marketing efforts and rapidly adjust our programs to maximize their effectiveness. This in turn has dramatically improved the return on our investment.

We are pleased to report that, as a result of these efforts, June was a record revenue month for us and we see that trend continuing into the third and fourth quarters. As I have mentioned all along, building the proper fundamentals take time and discipline, but we have made significant progress over the last year, enabling us to scale the business and accelerate growth.

More exciting news for us this quarter continues to come from Smilebox as it grew revenues by 30% in the quarter and continues to be cash flow positive and profitable, with an 18% EBITDA margin this quarter. Smilebox has been exactly the acquisition we thought it would be. It has significantly enhanced our premium revenue, providing a stable, recurring, revenue stream and has helped us diversify our revenue base providing a larger profitable platform for growth.

We have also strategically positioned ourselves to address new mobile and tablet platforms. We have begun, and intend to further develop and offer, a range of iPhone, iPad, Android and Windows Mobile / Surface products over time, to answer the increasing penetration and demands of our primary target audience. We believe this is of critical importance for Perion, and one that will serve as the basis for our growth in the future, as mobile devices, and especially tablets, are an ideal platform for our products and consumers.

While we already have a few mobile products, including Smilebox mobile, we need to do more now to establish a leadership position with our audience. I am excited to announce that we expect to launch a revolutionary new email app, that for the first time will make your email enjoyable. We expect to launch for the iPad later this year. We will also be releasing major upgrades to our photo offering on mobile platforms and we look to add additional products over the coming quarters.

Read the rest of this transcript for free on

More from Stocks

How to Survive Intense Stock Market Volatility This Summer

How to Survive Intense Stock Market Volatility This Summer

Jim Cramer on Micron: There's Tightness in DRAMs

Jim Cramer on Micron: There's Tightness in DRAMs

Jim Cramer on U.S.-China Trade: The Media Has it Wrong

Jim Cramer on U.S.-China Trade: The Media Has it Wrong

To Win at Trade the U.S. Must Act and Behave Like China

To Win at Trade the U.S. Must Act and Behave Like China

Dow Rises Sharply as U.S.-China Trade Tensions Thaw

Dow Rises Sharply as U.S.-China Trade Tensions Thaw