TEL AVIV, Israel & NEW YORK--(BUSINESS WIRE)--Perion Network Ltd. (NASDAQ: PERI), a global innovator in delivering digital marketing solutions for brands that are relentlessly focused on their consumer relationships, announced today its financial results for the third quarter and nine months ended September 30, 2018.
Financial Highlights*
(In millions, except per share data)
| Three months ended | Nine months ended | ||||||||
| September 30, | September 30, | ||||||||
| 2017 | 2018 | 2017 | 2018 | ||||||
| Advertising revenues | $ | 31.7 | $ | 26.2 | $ | 91.4 | $ | 88.7 | |
| Search and other revenues | $ | 33.3 | $ | 31.0 | $ | 105.3 | $ | 92.2 | |
| Total Revenues | $ | 65.0 | $ | 57.2 | $ | 196.7 | $ | 180.9 | |
| GAAP Net Income (Loss) | $ | 2.6 | $ | 2.2 | $ | (35.5) | $ | 3.2 | |
| Non-GAAP Net Income | $ | 4.1 | $ | 4.3 | $ | 11.1 | $ | 12.0 | |
| Adjusted EBITDA | $ | 6.5 | $ | 6.7 | $ | 17.0 | $ | 18.1 | |
| Net cash provided by operating activity | $ | 17.1 | $ | 11.0 | $ | 28.9 | $ | 28.5 | |
| GAAP Diluted Earnings (Loss) Per Share | $ | 0.10 | $ | 0.08 | $ | (1.37) | $ | 0.13 | |
| Non-GAAP Diluted Earnings Per Share | $ | 0.16 | $ | 0.16 | $ | 0.42 | $ | 0.44 | |
* Reconciliation of GAAP to Non-GAAP measures follows.
Doron Gerstel, Perion’s CEO commented, “In the third quarter, our ongoing efforts to strengthen Perion’s financial position resulted in a major financial milestone as long-term debt fell below our net cash levels the first time in four years. With our expense restructuring effort largely completed, we are pivoting to the next phase of our three-phase turnaround strategy. As part of this, we are reallocating additional technology resources to further enhance Undertone’s Synchronized Digital Branding platform by integrating advanced AI-based sequential messaging capabilities to retarget users according to their level of engagement. This will derive significantly higher campaign ROIs for our blue-chip customers and further differentiate Undertone within a competitive marketplace. I am encouraged by the progress we have made to strengthen our financial position, steadily growing Adjusted EBITDA and generating consistent cash from our operations. I am confident, based on this progress, that we have the necessary runway to carry out our strategy to revitalize growth.”
Gerstel went on to comment about the Company’s quarterly decline in advertising revenue: “We are making progress in adopting our high-quality, high-impact ad units within the current programmatic environment and maintaining premium campaign results for our clients. However, the current capacity of publishers that can place our unique units is less than the demand we have, so we have campaigns that are not being fully delivered. We are actively working with our programmatic partners to address this issue and I am confident that we will close the current gap to better serve ‘programmatic ready’ Undertone high-impact ad units in 2019. This will enable us to have access to the quality supply we need to drive revenues.”
“In parallel, we continue to leverage our relationship with Bing to drive innovation and revenue as part of our ongoing effort to provide a comprehensive and compelling search solutions to quality publishers around the globe,” Gerstel concluded. “To drive this, we have appointed Tal Jacobson to lead our CodeFuel business unit within Search and others. Tal has a long track record of innovation and monetization, most recently as the Chief Revenue Officer & Chief Business Development Officer at SimilarWeb. I am confident that he will add immense value to our team. I also want to take this opportunity to thank Mike Glover who managed the Search business unit and will transition into an advisory role at the end of this year.”
Financial Comparison for the Third Quarter of 2018:
Revenues: Revenues decreased by 12%, from $65.0 million in the third quarter of 2017 to $57.2 million in the third quarter of 2018. This decrease was primarily a result of a 17% decrease in Advertising revenue due to insufficient programmatic inventory to meet our demand for our programmatic high-impact ad units, along with 7% decrease attributable to continuing decline of the “long tail” of our legacy search products.
Customer Acquisition Costs and Media Buy (“CAC”): CACin the third quarter of 2018 were $28.8 million, or 50% of revenues, as compared to $32.0 million, or 49% of revenues in the third quarter of 2017. This increase was primarily a result of the effect of header bidding and Chrome ad blocker on Advertising.
Net Income (Loss): On a GAAP basis, net income in the third quarter of 2018 was $2.2 million, as compared to a net income of $2.6 million in the third quarter of 2017.
Non-GAAP Net Income: In the third quarter of 2018, non-GAAP net income was $4.3 million, or 7.5% of revenues, compared to the $4.1 million, or 6.4% of revenues, in the third quarter of 2017.
Adjusted EBITDA: In the third quarter of 2018, Adjusted EBITDA was $6.7 million, or 12% of revenues, compared to $6.5 million, or 10% of revenues, in the third quarter of 2017.
Cash and Cash Flow from Operations: As of September 30, 2018, cash and cash equivalents were $40.9 million. Cash provided by operations in the third quarter of 2018 was $11.0 million, compared to $17.1 million in the third quarter of 2017.
Short-term Debt, Long-term Debt and Convertible Debt: As of September 30, 2018, total debt was $39.7 million, compared to $60.7 million at December 31, 2017.
Perion satisfies all the financial covenants associated with its public debt.
2018 Guidance
Management reiterated its expectation of Adjusted EBITDA of $29 million to $32 million for the full year of 2018.
About Perion Network Ltd.
Perion is a global technology company that delivers advertising solutions to brands and publishers. Perion is committed to providing data-driven execution, from high-impact ad formats to branded search and a unified social and mobile programmatic platform. More information about Perion may be found at www.perion.com, and follow Perion on Twitter@perionnetwork.
