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Perion Announces Record Financial Results: Full Year Non-GAAP Revenues of $104.6 Million, Up 71%, EBITDA of $25.5 Million, Up 82%TEL AVIV, Israel & SEATTLE --(Business Wire)-- Perion Network Ltd. (NASDAQ: PERI) today announced record financial results for the fourth quarter and full year ended December 31, 2013. Full Year 2013 Perion non-GAAP Financial Highlights Include:
Q4 2013 Perion non-GAAP Financial Highlights Include:
On January 2, 2014, Perion completed the acquisition of Conduit's ClientConnect in an all-stock transaction. Select highlights of the pro-forma performance of ClientConnect as provided by Conduit are as follows: Full Year 2013 ClientConnect non-GAAP Financial Highlights Include:
Q4 2013 ClientConnect non-GAAP Pro Forma Financial Highlights Include:
Josef Mandelbaum, Perion's CEO, commented: "This was a strong end to a record and transformational year for our company. We exceeded our guidance and delivered year over year non-GAAP revenue growth of 71% and non-GAAP net income doubled. More importantly, we completed a milestone acquisition uniquely positioning us as one of the clear industry leaders, enabling us to evolve as an even stronger company in the future. This future is focused on developers who are challenged to reach more customers, increase engagement and monetize their innovations on both the desktop and mobile platforms. Our Lifecycle Management Platform will address all these needs, and become the industry gold standard." "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. Cash Flow from Operations: Based on U.S. GAAP, in the full year of 2013, cash flow from operations was $15.9 million, compared to $16.3 million in the full year of 2012. Cash flow from operations in 2013 was due GAAP net income of $0.3 million increased by non-cash expenses depreciation and amortization expenses of $10.7 million, $2.7 million in other expenses, as well as $2.2 million from change in operating assets and liabilities. Financial Outlook Based on currently available information, Perion's outlook for the full year of 2014 is as follows:
"Our strong cash flow, resources, and proven expertise enables us to overcome industry changes, increase our investment in customer acquisition to gain market share, as well as invest in our platform and revenue diversification strategy," concluded Mr. Mandelbaum. "The key components of this strategy, involve building a proprietary mobile distribution network, expanding our data-driven display advertising business, and enhancing our analytics solutions for developers. These investments, along with expenses related to the consolidation of our headquarters and the new profit baseline of the industry, will temper EBITDA growth in 2014. Looking ahead we are excited about our future and believe the dynamics of the industry and the introduction of our new platform, position us well for profitable long-term growth." Conference Call Perion will host a conference call to discuss the results today, March 3, 2014 at 10 a.m. ET (5 p.m. Israel Time). Details are as follows:
About Perion Network Ltd. Perion powers innovation. Perion is a global performance-based media and Internet Company, providing online publishers and app developers advanced technology and a variety of intelligent, data-driven solutions to monetize their application or content and expand their reach to larger audiences. Our leading self-service platform with simple integration and robust, built-in analytics, empowers digital businesses to optimize distribution and maximize revenue. Our distribution solutions, which are based on our own experience as an app developer, position us to best understand the needs of developers, and enable developers to focus exclusively on creating high-quality digital product and content. The Perion team brings decades of experience, operating and investing in digitally-enabled businesses, and we continue to innovate and create value for the app ecosystem. More information about Perion may be found at www.perion.com. Non-GAAP measures Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: Certain search revenues related to agreement with Conduit; valuation adjustment on acquired deferred product revenues; customer acquisition costs related to the revenues from the Conduit agreement; amortization of acquired intangible assets, share-based compensation expenses, acquisition related expenses, taxes on amortization of acquired intangible assets; non-recurring tax benefit; non-recurring financial income; and deferred financial expenses. 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 Operations. 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 Perion. 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 Perion with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of Perion 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, the failure to realize the anticipated benefits of the ClientConnect transaction; risks entailed in integrating the ClientConnect business with Perion's other businesses, including employee retention and customer acceptance; the risk that the transaction will divert management and other resources from the ongoing operations of the two businesses or otherwise disrupt the conduct of those businesses, potential litigation associated with the transaction, and general risks associated with the business of Perion and with the ClientConnect business, including changes in the markets in which the businesses operate and in general economic and business conditions, loss of key customers, 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 Perion 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. Perion does not assume any obligation to update these forward-looking statements. Source: Perion Network Ltd.
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