Perion’s Diversification Strategy Continues to Drive Strong Performance as Company Achieves Quarterly Growth in Search, CTV and Retail Media
Delivers Annual Year-Over-Year Growth of 16% in Revenue, 18% in GAAP Net Income and 28% in Adjusted EBITDA
“Our fourth quarter and annual results showed notable growth in Search, CTV and Retail Media, further demonstrating the positive impact of our business diversification and continued focus on technology and innovation. In 2023, we generated industry-leading adjusted EBITDA to Contribution ex-TAC margins, giving us a solid foundation for 2024,” stated
“As advertising budgets shifted between channels, we capitalized on these trends and delivered profitable growth well ahead of the digital advertising market for 2023. We also advanced our growth strategy with the acquisition of
“Additionally, our strong cash flow from operations of
Fourth Quarter 2023 Business Highlights
-
Retail Media1 revenue increased 196% year-over-year to
$20.2 million , representing 17% ofDisplay Advertising revenue compared to 6% last year -
CTV revenue2 increased 69% year-over-year to
$14.4 million , representing 12% ofDisplay Advertising revenue compared to 7% last year -
Video revenue decreased 33% year-over-year, driven by shifting inventory from video to display to gain higher profit, representing 29% of
Display Advertising revenue, compared to 42% last year -
The number of Average Daily Searches increased by 37% year-over-year to 30.2 million. The number of
Search Advertising publishers increased by 4% year-over-year to 162
Full-Year 2023 Business Highlights
-
Retail Media1 revenue increased 114% year-over-year to
$49.7 million , representing 12% ofDisplay Advertising revenue compared to 6% last year -
CTV revenue2 increased 56% year-over-year to
$33.5 million , representing 8% ofDisplay Advertising revenue compared to 6% last year -
Video revenue decreased 7% year-over-year, driven by shifting inventory from video to display to gain higher profit, representing 36% of
Display Advertising revenue, compared to 43% last year -
The number of Average Daily Searches increased by 57% year-over-year to 29.1 million. The annual average number of
Search Advertising publishers increased by 18% year-over-year to 160
1 |
Retail Media revenue include all media channels, such as, CTV, video and others |
|
|
2 |
Starting in the second quarter of 2023, we changed our methodology for measuring our CTV activity. We moved from measuring CTV campaigns to measuring CTV channels. The CTV growth trend under both methodologies remains in the same trajectory. Under our updated methodology, revenue generated from CTV in the fourth quarter of 2022 was |
Fourth Quarter 2023 Financial Highlight
In millions,
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Three months ended |
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Year ended |
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||||||||||||
|
2023 |
|
2022 |
|
% |
|
2023 |
|
2022 |
|
% |
|
||||
Display Advertising Revenue |
$ |
119.8 |
|
$ |
123.8 |
|
-3% |
|
$ |
398.2 |
|
$ |
360.7 |
|
+10% |
|
Search Advertising Revenue |
$ |
114.4 |
|
$ |
85.9 |
|
+33% |
|
$ |
344.9 |
|
$ |
279.6 |
|
+23% |
|
Total Revenue |
$ |
234.2 |
|
$ |
209.7 |
|
+12% |
|
$ |
743.2 |
|
$ |
640.3 |
|
+16% |
|
Contribution ex-TAC1 |
$ |
90.6 |
|
$ |
87.6 |
|
+3% |
|
$ |
310.2 |
|
$ |
267.7 |
|
+16% |
|
GAAP Net Income |
$ |
39.4 |
|
$ |
38.7 |
|
+2% |
|
$ |
117.4 |
|
$ |
99.2 |
|
+18% |
|
Non-GAAP Net Income1 |
$ |
52.9 |
|
$ |
44.7 |
|
+19% |
|
$ |
167.4 |
|
$ |
119.8 |
|
+40% |
|
Adjusted EBITDA1 |
$ |
53.9 |
|
$ |
48.2 |
|
+12% |
|
$ |
169.1 |
|
$ |
132.4 |
|
+28% |
|
Adjusted EBITDA to Contribution ex-TAC1 |
|
59% |
|
|
55% |
|
|
|
|
55% |
|
|
49% |
|
|
|
|
$ |
50.2 |
|
$ |
38.2 |
|
+32% |
|
$ |
155.5 |
|
$ |
122.1 |
|
+27% |
|
GAAP Diluted EPS |
$ |
0.78 |
|
$ |
0.79 |
|
-1% |
|
$ |
2.34 |
|
$ |
2.06 |
|
+14% |
|
Non-GAAP Diluted EPS1 |
$ |
1.04 |
|
$ |
0.90 |
|
+16% |
|
$ |
3.33 |
|
$ |
2.47 |
|
+35% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outlook for 20242
“Our expectations for 2024 reflect increased investments in technology and innovation to enhance our advanced multi-channel solutions, that combined with the acquisition of
In millions |
2023 |
2024 Guidance |
YoY Growth %3 |
YoY proforma Growth %3 |
Revenue |
|
|
17% |
10% |
Adjusted EBITDA1 |
|
|
6% |
10% |
Adjusted EBITDA to Revenue1 |
23% |
21%3 |
|
|
Adjusted EBITDA to Contribution ex-TAC1 |
55% |
51%3 |
|
|
1 |
Contribution ex-TAC, non-GAAP Net Income, Adjusted EBITDA and non-GAAP Diluted EPS are non-GAAP measures. See below reconciliation of GAAP to non-GAAP measures. |
2 |
We have not provided an outlook for GAAP Income from operations or reconciliation of Adjusted EBITDA guidance to GAAP Income from operations, the closest corresponding GAAP measure, because we do not provide guidance for certain of the reconciling items on a consistent basis due to the variability and complexity of these items, including but not limited to the measures and effects of our stock-based compensation expenses directly impacted by unpredictable fluctuation in our share price and amortization in connection with future acquisitions. Hence, we are unable to quantify these amounts without unreasonable efforts. |
3 |
Calculated at revenue and adjusted EBITDA guidance midpoint. |
Financial Comparison for the Fourth Quarter of 2023
Revenue: Revenue increased by 12% to
Traffic Acquisition Costs and Media Buy (“TAC”): TAC amounted to
GAAP Net Income: GAAP net income increased by 2% to
Non-GAAP
Net Income: Non-GAAP net income increased by 19% to
Adjusted EBITDA: Adjusted EBITDA was
Cash Flow from Operations: Net cash provided by operating activities in the fourth quarter of 2023 was
Net cash: As of
Financial Comparison for the Full-Year of 2023
Revenue: Revenue increased by 16% to
Traffic Acquisition Costs (“TAC”): TAC amounted to
GAAP Net Income: GAAP net income increased by 18% to
Non-GAAP
Net Income: Non-GAAP net income increased by 40% to
Adjusted EBITDA: Adjusted EBITDA was
Cash Flow from Operations: Net cash provided by operating activities in 2023 was
Conference Call
Perion’s management will host a conference call to discuss the results at
-
Registration link:
https://incommconferencing.zoom.us/webinar/register/WN_UWvlk6kISBKD8PSKakaDEA - Toll Free: 1-877-407-0779
- Toll/International: 1-201-389-0914
A replay of the call and a transcript will be available within approximately 24 hours of the live event on Perion’s website.
About
Perion is a global multi-channel advertising technology company that delivers synergistic solutions across all major channels of digital advertising – including search advertising, social media, display, video and CTV advertising. These channels converge at Perion’s intelligent HUB (iHUB), which connects the company’s demand and supply assets, providing significant benefits to brands and publishers.
For more information, visit Perion's website at www.perion.com
Non-GAAP Measures
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude certain items. This press release includes certain non-GAAP measures, including Contribution ex-TAC, Adjusted EBITDA, non-GAAP net income and non-GAAP diluted earning per share.
Contribution ex-TAC presents revenue reduced by traffic acquisition costs and media buy, reflecting a portion of our revenue that must be directly passed to publishers or advertisers and presents our revenue excluding such items. We believe Contribution ex-TAC is a useful measure in assessing the performance of the Company because it facilitates a consistent comparison against our core business without considering the impact of traffic acquisition costs and media buy related to revenue reported on a gross basis.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") is defined as income from operations excluding stock-based compensation expenses, depreciation, amortization of acquired intangible assets, retention and other acquisition-related expenses and gains and losses recognized with respect to changes in the fair value of contingent consideration.
Non-GAAP net income and non-GAAP diluted earnings per share are defined as net income and net earnings per share excluding stock-based compensation expenses, retention and other acquisition-related expenses, revaluation of acquisition-related contingent consideration, amortization of acquired intangible assets and the related taxes thereon, non-recurring expenses, foreign exchange gains and losses associated with ASC-842, as well as gains and losses recognized with respect to changes in fair value of contingent consideration.
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. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the non-GAAP measures are regularly used internally to understand, manage and evaluate our business and make operating decisions, and we believe that they are useful to investors as a consistent and comparable measure of the ongoing performance of our business. However, 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. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Due to the high variability and difficulty in making accurate forecasts and projections of some of the information excluded from these projected measures, together with some of the excluded information not being ascertainable or accessible, we are unable to quantify certain amounts that would be required for such presentation without unreasonable effort. Consequently, no reconciliation of the forward-looking non-GAAP financial measures is included in this press release. A reconciliation between results on a GAAP and non-GAAP basis is provided in the last table of this press release.
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,” “estimate” 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, but not limited to, the failure to realize the anticipated benefits of companies and businesses we acquired and may acquire in the future, risks entailed in integrating the companies and businesses we acquire, including employee retention and customer acceptance; the risk that such transactions will divert management and other resources from the ongoing operations of the business or otherwise disrupt the conduct of those businesses, potential litigation associated with such transactions, and general risks associated with the business of Perion including intense and frequent changes in the markets in which the businesses operate and in general economic and business conditions, loss of key customers, data breaches, cyber-attacks and other similar incidents, unpredictable sales cycles, competitive pressures, market acceptance of new products, changes in applicable laws and regulations as well as industry self-regulation, 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 Perion with the
CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands (except share and per share data)
|
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||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,435 |
|
85,913 |
|
344,911 |
|
279,566 |
Total Revenue |
234,230 |
|
209,670 |
|
743,155 |
|
640,256 |
|
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
Cost of revenue |
10,877 |
|
9,390 |
|
37,830 |
|
30,404 |
|
Traffic acquisition costs and media buy |
143,605 |
|
122,046 |
|
432,943 |
|
372,601 |
|
Research and development |
8,714 |
|
9,289 |
|
33,066 |
|
34,424 |
|
Selling and marketing |
15,008 |
|
16,130 |
|
57,991 |
|
56,014 |
|
General and administrative |
10,131 |
|
7,886 |
|
31,799 |
|
1 27,629 |
|
Change in fair value of contingent consideration |
2,110 |
|
- |
|
18,694 |
|
1 (3,816) |
|
Depreciation and amortization |
3,901 |
|
3,741 |
|
14,092 |
|
13,838 |
Total Costs and Expenses |
194,346 |
|
168,482 |
|
626,415 |
|
531,094 |
|
|
|
|
|
|
|
|
|
|
Income from Operations |
39,884 |
|
41,188 |
|
116,740 |
|
109,162 |
|
|
Financial income, net |
6,262 |
|
1,976 |
|
20,951 |
|
4,502 |
Income before Taxes on income |
46,146 |
|
43,164 |
|
137,691 |
|
113,664 |
|
|
Taxes on income |
6,745 |
|
4,487 |
|
20,278 |
|
14,439 |
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings per Share |
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
|
|
|
|
|
|
|
|
Basic |
47,756,953 |
|
45,842,833 |
|
47,128,232 |
|
44,871,149 |
|
Diluted |
50,600,750 |
|
48,872,169 |
|
50,073,985 |
|
48,071,638 |
1Reflects reclassification of
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
(Unaudited) |
|
(Audited) |
ASSETS |
|
|
|
|
Current Assets |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Restricted cash |
1,339 |
|
1,295 |
|
Short-term bank deposits |
207,450 |
|
253,400 |
|
Marketable securities |
77,616 |
|
- |
|
Accounts receivable, net |
231,539 |
|
160,488 |
|
Prepaid expenses and other current assets |
21,033 |
|
12,049 |
|
Total Current Assets |
726,586 |
|
603,458 |
|
|
|
|
|
Long-Term Assets |
|
|
|
|
|
Property and equipment, net |
3,179 |
|
3,611 |
|
Operating lease right-of-use assets |
6,609 |
|
10,130 |
|
|
337,990 |
|
247,191 |
|
Deferred taxes |
2,817 |
|
5,779 |
|
Other assets |
85 |
|
49 |
|
Total Long-Term Assets |
350,680 |
|
266,760 |
Total Assets |
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
Current Liabilities |
|
|
|
|
|
Accounts payable |
|
|
|
|
Accrued expenses and other liabilities |
42,636 |
|
37,869 |
|
Short-term operating lease liability |
4,198 |
|
3,900 |
|
Deferred revenue |
2,297 |
|
2,377 |
|
Short-term payment obligation related to acquisitions |
73,716 |
|
34,608 |
|
Total Current Liabilities |
340,028 |
|
234,608 |
|
|
|
|
|
Long-Term Liabilities |
|
|
|
|
|
Payment obligation related to acquisition |
- |
|
33,113 |
|
Long-term operating lease liability |
3,448 |
|
7,580 |
|
Other long-term liabilities |
15,643 |
|
11,783 |
|
Total Long-Term Liabilities |
19,091 |
|
52,476 |
Total Liabilities |
359,119 |
|
287,084 |
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
Ordinary shares |
413 |
|
398 |
|
Additional paid-in capital |
530,620 |
|
513,534 |
|
|
(1,002) |
|
(1,002) |
|
Accumulated other comprehensive loss |
(83) |
|
(582) |
|
Retained earnings |
188,199 |
|
70,786 |
Total Shareholders' Equity |
718,147 |
|
583,134 |
|
Total Liabilities and Shareholders' Equity |
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
|
|
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Year ended |
||||
|
|
|
|
|
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
||
Net Income |
|
|
|
|
|
|
|
|
Adjustments required to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
3,901 |
|
3,741 |
|
14,092 |
|
13,838 |
|
Stock-based compensation expense |
4,663 |
|
3,205 |
|
15,590 |
|
11,570 |
|
Foreign currency translation |
(36) |
|
258 |
|
(27) |
|
20 |
|
Accrued interest, net |
(1,308) |
|
(1,639) |
|
(5,547) |
|
(3,646) |
|
Deferred taxes, net |
1,079 |
|
(2,755) |
|
(654) |
|
(1,428) |
|
Accrued severance pay, net |
188 |
|
222 |
|
(274) |
|
(106) |
|
Gain from sale of property and equipment |
(6) |
|
(2) |
|
(27) |
|
(12) |
|
Net changes in operating assets and liabilities |
2,334 |
|
(3,536) |
|
14,897 |
|
2,658 |
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
||
|
Purchases of property and equipment, net of sales |
(280) |
|
(267) |
|
(784) |
|
(1,046) |
|
Investment in marketable securities, net of sales |
(5,001) |
|
- |
|
(76,599) |
|
- |
|
Short-term deposits, net |
46,500 |
|
(34,400) |
|
45,950 |
|
(36,200) |
|
Cash paid in connection with acquisitions, net of cash acquired |
(101,921) |
|
- |
|
(101,921) |
|
(9,570) |
Net cash used in investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
||
|
Proceeds from exercise of stock-based compensation |
95 |
|
1,392 |
|
2,433 |
|
5,833 |
|
Payments of contingent consideration |
- |
|
- |
|
(13,256) |
|
(9,091) |
Net cash provided by (used in) financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
159 |
|
228 |
|
141 |
|
(59) |
|
Net increase (decrease) in cash and cash equivalents and restricted cash |
(10,232) |
|
5,124 |
|
11,427 |
|
71,986 |
|
Cash and cash equivalents and restricted cash at beginning of period |
199,180 |
|
172,397 |
|
177,521 |
|
105,535 |
|
Cash and cash equivalents and restricted cash at end of period |
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
In thousands (except share and per share data)
|
|
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|
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|
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|
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
(Unaudited) |
|
(Unaudited) |
||||
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
Traffic acquisition costs and media buy |
143,605 |
|
122,046 |
|
432,943 |
|
372,601 |
Contribution ex-TAC |
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Year ended |
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|
|
|
|
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||||
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|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
(Unaudited) |
|
(Unaudited) |
||||
|
|
|
|
|
|
|
|
|
GAAP Income from Operations |
|
|
|
|
|
|
|
|
|
Stock-based compensation expenses |
4,663 |
|
3,205 |
|
15,590 |
|
11,570 |
|
Retention and other acquisition related expenses |
3,342 |
|
100 |
|
4,000 |
|
1,618 |
|
Change in fair value of contingent consideration |
2,110 |
|
- |
|
18,694 |
|
(3,816) |
|
Amortization of acquired intangible assets |
3,476 |
|
2,988 |
|
12,448 |
|
11,884 |
|
Depreciation |
425 |
|
753 |
|
1,644 |
|
1,954 |
Adjusted EBITDA |
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
In thousands (except share and per share data)
|
|
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|
|
|
|
|||||
|
|
2023 |
|
2022 |
2023 |
|
2022 |
|
|
|
(Unaudited) |
(Unaudited) |
|||||
|
|
|
|
|
|
|
|
|
GAAP Net Income |
|
|
|
|
|
|
|
|
|
Stock-based compensation expenses |
4,663 |
|
3,205 |
|
15,590 |
|
11,570 |
|
Amortization of acquired intangible assets |
3,476 |
|
2,988 |
|
12,448 |
|
11,884 |
|
Retention and other acquisition related expenses |
3,342 |
|
100 |
|
4,000 |
|
1,618 |
|
Change in fair value of contingent consideration |
2,110 |
|
- |
|
18,694 |
|
(3,816) |
|
Foreign exchange losses (gains) associated with ASC-842 |
114 |
|
3 |
|
(166) |
|
(821) |
|
Revaluation of acquisition related contingent consideration |
142 |
|
184 |
|
583 |
|
786 |
|
Taxes on the above items |
(301) |
|
(506) |
|
(1,166) |
|
(651) |
Non-GAAP Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing non-GAAP diluted earnings per share |
50,862,007 |
|
49,511,914 |
|
50,311,682 |
|
48,496,154 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240207831314/en/
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