WEB NEWS Comments & Business Outlook
Fourth Quarter 2013 Results
Revenues increased 47% year-over-year reaching $31.3 million vs $21.4 million in the prior year.
Diluted earnings per share increased 53% year-over-year, reaching $0.49 vs $0.32 in the prior year.
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.”
Business Outlook
Based on currently available information, Perion’s outlook for the full year of 2014 is as follows:
Revenue is expected to be in the range of $460 million to $470 million.
EBITDA is expected to be in the range of $125 million to $130 million.
Net Income is expected to be in the range of $103 million to $108 million.
“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.”
Acquisition Activity
TEL AVIV, Israel & SAN FRANCISCO--(BUSINESS WIRE announced the completion of the acquisition of Conduit’s ClientConnect business (“ClientConnect”) in an all-stock transaction, creating a leading data-driven technology company with a proven lifecycle management platform that provides distribution, monetization and analytics solutions to publishers.
Josef Mandelbaum, Perion’s CEO, commented, “This transaction uniquely positions Perion as a leader in the software distribution ecosystem. Combined, we are focused on providing a variety of intelligent data-driven solutions to help publishers increase distribution and monetize their apps. Our vast network of developer partners, our many end users and our shareholders will benefit from our increased scale, driving exceptional reach and strong market recognition as we emerge today as one of the largest global digital distribution and product companies in the world.”
“Our combined financial strength also enables us to significantly expand our investment in the mobile space and data analytics, two areas we believe will serve as the foundation for our top and bottom-line growth in the years to come. This is the start of an exciting new day for Perion. We have evolved from a small, product-focused company to a platform-based industry leader with a range of revenue streams and valuable expertise which will lead to incremental opportunities in the future. We welcome the employees, shareholders and customers of ClientConnect to Perion.”
Conduit spun off its ClientConnect business, which includes its monetization and distribution platform for publishers and developers. The spun-off company has become a wholly owned subsidiary of Perion, which issued approximately 54.8 million shares to ClientConnect’s selling shareholders, and approximately 2.8 million options to ClientConnect’s option holders, based on Perion’s fully diluted share count at closing. Perion is now owned approximately 81% by the existing Conduit shareholders and option holders and 19% by existing Perion shareholders and option holders, on a fully diluted basis.
Perion’s shareholders overwhelmingly voted in favor of the acquisition of ClientConnect in November 2013. Various standstill provisions were put in place for major shareholders and no single shareholder owns more than 15% of the shares outstanding post-closing. Key shareholders include Benchmark Capital and JPMorgan Chase & Co. All former ClientConnect shareholders will be subject to contractual lock-up provisions prohibiting any public resale of their Perion shares for a period of six months and imposing conditional resale restrictions in the subsequent 18-month period.
Comments & Business Outlook
TEL AVIV & SEATTLE--(BUSINESS WIRE announced its inclusion in NASDAQ's highest-tiered trading platform, the NASDAQ Global Select Market, starting January 2, 2014.
As indicated by NASDAQ, the NASDAQ Global Select Market has the highest financial listing standards of any exchange in the world, based on stringent financial and liquidity requirements. NASDAQ Global Select Market companies are selected based on financial, qualitative, and liquidity requirements, as well as adherence to NASDAQ corporate governance requirements.
"We are very proud to have qualified for the NASDAQ Global Select Market," said Josef Mandelbaum, Perion’s CEO. "This achievement follows Perion’s acquisition of ClientConnect, planned to close in early January, and is indicative of our commitment to generating value for our shareholders. We believe inclusion in this top tier of companies, reflects the Company's continuous dedication to the highest financial standards and corporate governance practices."
Comments & Business Outlook
Third Quarter 2013 Results
In the third quarter of 2013, revenues reached $21.3 million, reflecting a 31% increase compared to the $16.3 million of revenues in the third quarter of 2012.
In the third quarter of 2013, net income increased 68%, reaching $4.5 million or $0.34 per share, compared to $2.6 million, or $0.26 per share in the third quarter of 2012
Josef Mandelbaum, Perion’s CEO, commented: “This was a momentous quarter for Perion, highlighted by the agreement to combine with Conduit’s ClientConnect business to create an industry powerhouse. On a stand-alone basis, we hit the upper range of our revenue guidance and surpassed our EBITDA and net profit expectations. With our search diversification strategy now fully implemented, we are already seeing great progress, and can say with confidence that Q4 will show significant growth over Q3. From a product standpoint, we launched our new iPhone and Android app, Molto, and are excited by the great reviews and ratings Molto has been receiving.”
“The transaction with ClientConnect has not yet closed, however, our optimism surrounding the combination continues to grow,” continued Mr. Mandelbaum. “As the new, larger and more profitable Perion, we will be uniquely positioned to execute our business strategy and become a preferred partner of app developers, by offering them the best solution to monetize and distribute their apps across all devices. Furthermore, this combination will enable us to increase organic investment in our technology and data platforms, expand faster into mobile and invest in growth through acquisitions. I fully expect 2014 to be another milestone year in Perion’s history, and one that will positively shape our future in the coming years.”
Financial Outlook
Based on currently available information, Perion is updating its outlook for fiscal 2013 as follows:
Revenue is expected to be in the range of $102 million to $104 million.
EBITDA is expected to be in the range of $24 million to $25 million.
Non-GAAP Net Income is expected to be in the range of $18 million to $19 million; and
Non-GAAP diluted EPS between $1.38 and $1.45.
“The fourth quarter is shaping up to be a very strong growth quarter for us, both in terms of revenue and profitability,” concluded Mr. Mandelbaum. “However, in line with our commitment to the highest industry standards, we have decided to be even more selective regarding new business partners. Therefore we are slightly adjusting our full year guidance. While there are certainly headwinds in the market right now, we have always been proactive in our support of better policies and in the long term continue to believe this presents an opportunity for us to capture market share.”
Perion’s expectation of non-GAAP adjusted net income for the fiscal year 2013 excludes share-based compensation expense, acquisition amortization and certain other adjustments, and assumes an effective tax rate of 25 percent. For the purpose of calculating diluted EPS and non-GAAP diluted EPS, the Company assumes approximately 13.1 million weighted-average diluted ordinary shares outstanding for the fourth quarter and for the full year.
Comments & Business Outlook
TEL AVIV, Israel & SEATTLE--(BUSINESS WIRE Molto – a new mobile application specifically tailored for the iPhone.
Consumers want to communicate in a format similar to the social-sphere: automatically updated newsfeeds, videos and visuals and playful communication with friends. The email experience, however, has barely evolved over the decades. Molto now introduces the next era of email apps, erasing the boundaries between digital social interacting, reading emails, and consuming content.
Molto aims to redefine how consumers relate to their email. With a beautiful “social feel” designed interface, Molto creates a hugely enjoyable email experience with innovative and efficient features – consumers no longer need to struggle through their inbox, but can enjoy the experience of browsing through their emails. Leveraging the power of touch devices, email content comes to life with instantly available views of attachments and links.
Designed for iOS7, the Molto interface has been tailored for a more enjoyable experience, while incorporating the functionality of email and extra productivity-oriented features: smart content filters, smart All Stars contacts, and quick reply, which is a chat-like experience on Molto.
Ron Harari, General Manager of Perion’s Communication Division, said, “Email has been around a long time and remains central to modern communication. Despite that, most people consider it a chore. We designed Molto’s email app by joining beauty and productivity with a rich, intuitive feature set developed especially for mobile. With Molto, you can enjoy the process and consume content the same way you would in a social feed.”
Molto has an array of exciting new features:
Smart “All Stars” List – See your important contacts, access them quickly, view threads of conversation history with their social profile images, and more. Over time, Molto learns who your All Stars are, updates the info and makes it easier for you to communicate simply with the important people in your life.
Quick Reply – Enables a chat-like experience when you want to answer on the go.
Email Feed – Emails are displayed in an automatically-updated feed - similar to the look and feel of a social feed, harmonious with the experience you know and love.
Smart Filters – Sort your emails quickly with filters like: Personal, Social, and Services.
Simple Interface – Reply, Delete, Star, and Mark Read/Unread options with one tap on our intuitive menu roll.
Unified Inbox – A unique master inbox for all your email messaging. Don’t leap between accounts - let Molto bring them all to you. Molto supports Gmail, Yahoo!, AOL, Outlook.com/Hotmail*, POP3 and IMAP (*Microsoft provides limited POP3 support for Hotmail/Outlook accounts).
Molto is now available for iPhone, iPad and Android tablet. The Android smartphone is also coming soon.
Acquisition Activity
TEL AVIV & FOSTER CITY, Calif.--(BUSINESS WIRE announced an agreement to combine Conduit’s Client Connect business (“Client Connect”) with Perion in an all-stock transaction, establishing Perion as a significant force in the search distribution industry.
The immediately accretive combination will create a fast-growing, “top tier” search distribution company, generating $367 million in pro forma non-GAAP revenue and $109 million in pro forma EBITDA for the 12 months ended June 30, 2013. The newly combined Perion operation will represent more than 260,000 publisher and content partners.
Josef Mandelbaum, Perion’s CEO, commented, “This is a transformational event for our company, and a powerful combination for our employees and shareholders. This is truly a case where one plus one equals three. Our businesses complement each other and will enable us to increase investment in our monetization and distribution platform, mobile efforts, display advertising and product innovation. I am very happy to welcome all the talented Client Connect employees to Perion and look forward to continuing to build on the great success they have achieved to date.”
Ronen Shilo, CEO and co-founder of Conduit, added, “We couldn’t be happier with this combination. Perion is a thriving, public company that shares our values of entrepreneurship and integrity. I have known Josef for a long time, and I can think of no one better equipped to take Client Connect forward.”
Conduit will spin off its Client Connect business, which includes its monetization and distribution platform for publishers and developers. Under the agreement, the spin-off company will be combined with Perion, which upon closing will issue to Conduit shareholders between 57-60 million shares, based on Perion’s fully diluted share count at closing. Following the closing, Perion will be owned 81% by the existing Conduit shareholders and option holders and 19% by existing Perion shareholders and option holders, on a fully diluted basis.
The combined organization will be led by Josef Mandelbaum, Perion’s current Chief Executive Officer, and Yacov Kaufman, Perion’s current Chief Financial Officer, who will continue to serve in those capacities. Josh Wine will join Perion as President and continue to lead the Client Connect business. Dror Erez, co-founder of Conduit, and Roy Gen, Conduit’s CFO, will join Perion’s Board of Directors at closing.
This combination is the product of Conduit’s decision to spin off Client Connect, its monetization business, and Perion’s growth strategy through acquisitions. Conduit will continue to operate and invest in its high growth emerging businesses which are not part of the transaction; they include its U browser ecosystem and Conduit Mobile, a fast-growing DIY app-creation platform.
Highlights of the combination include:
Substantially increased scale : The combined business will represent a top-three search distribution company responsible for over 2% of searches in the U.S.
Strong Financials : As of June 30, 2013, non-GAAP pro forma trailing 12-month revenue of $367 million, EBITDA of $109 million and non-GAAP net income of $93 million.
Significant synergies : Shared cultures, revenue optimization opportunities, cost efficiencies and complementary assets, including an extensive partner network and strong media buying capabilities.
Accelerated Growth : With the addition of the Client Connect business, Perion will now have the platform and resources to further accelerate its product development as well as its distribution network.
Michael Eisenberg, General Partner at Benchmark Capital and an early investor in Conduit, commented, “This is an exceptional opportunity for shareholders of both companies. Perion’s leadership has proven its ability to create significant value. They are now poised to become the partner of choice for developers large and small to distribute and monetize their innovations. I am very excited for the future.”
The transaction is scheduled to close in early January 2014, subject to a vote of Perion’s shareholders scheduled for November 2013, as well as customary closing conditions, tax rulings and approvals of governmental authorities. Various lock-up provisions are in place for major shareholders, and no single shareholder will own more than 14% of the shares outstanding post-closing.
UBS Investment Bank acted as exclusive financial advisor and Goldfarb Seligman and Kramer Levin Naftalis and Frankel LLP acted as legal advisors to Perion. RBC Capital Markets provided a fairness opinion to the Board of Directors of Perion.
Comments & Business Outlook
SEATTLE--(BUSINESS WIRE announced a new online RSVP option included with all invitations in its social expressions service. With the new feature, hosts and hostesses can create a free Smilebox Event Central page where they can view guests’ replies, edit event information, and more. Guests can also check event details and receive updated event information on any device they use to visit the page – desktop, tablet or smartphone.
“We’ve listened to our customers’ requests for an alternative to Evite that features their own photos and clever animation. With our new RSVP option, we’ve delivered an easy and compelling way for people to express their personality while managing the details of their event”
Smilebox is the only social expression service that offers invitations that combine personal photos with animation and a choice of multiple sharing options: online with RSVP, print at home, professional printing with home delivery, and print at store. With Smilebox, customers can also share photos after their event with easy-to-create slideshows and photo collages.
"We’ve listened to our customers’ requests for an alternative to Evite that features their own photos and clever animation. With our new RSVP option, we’ve delivered an easy and compelling way for people to express their personality while managing the details of their event,” said Yuval Hamudot, president of the Smilebox business unit for Perion.
“Customers send thousands of invitations every day through Smilebox. We’re confident the new RSVP feature will be an exciting benefit to our existing customers and at the same time extend our reach into a previously untapped market for us,” added Hamudot.
Comments & Business Outlook
Second Quarter 2013 Results
Quarterly revenues increased 99% year-over-year reaching $24.4 million;
EBITDA increased 61% year-over-year to $4.3 million;
Net income increased 85% year-over-year, reaching $3.4 million, or 14% of revenues;
Earnings Per Share was $0.26 vs $0.18 in prior year
Josef Mandelbaum, Perion’s CEO, commented: “We had strong results in the second quarter and a record first half of 2013. We nearly doubled revenues and profits in the second quarter compared to last year and generated $6.8 million in cash flow from operations. In the first half of the year we also signed a renewal with Google and two new search agreements with Bing and Ask.com. In addition, earlier today we announced a partnership with Yahoo!, and I am also pleased to announce today that we have signed and launched a search distribution partnership with Conduit, expanding our search partners to five.”
“In the past seven months we have significantly diversified and strengthened our search business,” concluded Mr. Mandelbaum. “However, the implementation of these partnerships has taken longer than we expected, dampening our second quarter results and pushing revenue expected in the third quarter into the fourth quarter of the year. With implementation of these partnerships now well underway and the new product launch of Guardius, in addition to our other products, we are well positioned for future growth in the fourth quarter and leading into 2014.”
Financial Outlook
Given current industry trends, management has decided to provide an outlook for the third quarter of 2013. The Company expects third quarter revenues to be between $20 million and $22 million, reflecting 30% year over year growth and EBITDA to be between $4.5 million and $5.5 million, reflecting a 32% increase year over year. At this time, management remains optimistic that it can achieve its full year guidance.
TEL AVIV, Israel & SEATTLE--(BUSINESS WIRE
Perion's easy-to-use, search services are now also powered by Yahoo!, enabling the Company to further diversify and optimize its search business. Through this agreement, Yahoo!’s search marketplace and search experience is available to Perion's loyal customer base.
Commenting on the agreement, Josef Mandelbaum, Perion's CEO, said, "Yahoo! is one of the most recognized names in search, and a company with a long history of innovation. Perion is pleased to add Yahoo! as a search provider and hopes that this agreement is the beginning of a long and fruitful relationship. Perion has now partnered with four leading search providers, creating a balanced and diversified strategic base for the Company’s search advertising revenue stream."
Comments & Business Outlook
TEL AVIV, Israel & SEATTLE--(BUSINESS WIRE announces today the beta launch of Guardius by Perion, a powerful app enabling a better and faster browsing experience, and increased browsing privacy and protection, powered by the wisdom of the crowd.
Guardius by Perion accomplishes this by enabling users to manage and control the numerous add-ons and toolbars that have been installed on their web browser. This app has been running in a closed beta, and is today being offered to the public by invitation only. During the limited beta phase, the app will be completely free for beta testers.
Many free software services today come bundled with browser add-ons and toolbars that, while providing a variety of services, can create performance issues. Over time, it can become difficult for users to manage all the apps that have been added to their browser, resulting in slower performance.
Based on the wisdom of the crowd, a concept that takes into account the collective opinion of a group of individuals, Guardius by Perion enables users to reclaim their browser speed with an incredibly easy-to-use utility that helps them understand which add-ons and extensions are slowing down their browser and are most often disabled by others, providing additional input regarding possibly unwanted add-ons.
Users are presented with a graphic display showing how much faster their browser will become once they disable specific apps. This provides users with protection from downloading unwanted files, enabling users to make informed decisions regarding sites they visit and apps they download.
“When we set out to build Guardius by Perion, we envisioned a product that would significantly improve the browsing experience for our users,” said Tomer Pascal, Perion’s General Manager of the Utilities Business Unit. “We looked first to our own families and personal experience, seeing how surfing the web was slowed down because of too many toolbars and add-ons installed. We wanted to help users understand what is installed, the 'cost' accompanied with the benefit offered by these toolbars and create a user friendly way to uninstall unwanted toolbars and add-ons, thereby providing users a more protected and more private experience while surfing the web.”
Comments & Business Outlook
First Quarter 2013 Results
Q1’13 revenues were a record $27.6 million, increasing 145%, compared to the first quarter of 2012.
In the first quarter of 2013, net income was $5.8 million, increasing 166%, from $2.2 million in the first quarter of 2012. The growth in net income caused earnings per share to more than double from $0.22 per share in the first quarter of 2012, to $0.45 per share in the first quarter of 2013.
Josef Mandelbaum, Perion’s CEO commented: “The first quarter of 2013 was an extraordinary start for Perion. We had record organic and total revenue growth, increased profitability, strong cash generation, enthusiastic acceptance of our new Incredimail for iPad product and the successful integration of SweetPacks. Perion is hitting on all cylinders, and delivering impressive results against each of its operational and financial metrics. We have good visibility for the rest of the year and are well on our way to achieving, and likely exceeding, our guidance of 80% - plus growth."
“We also saw great progress in further solidifying the foundation of our business to position ourselves for long term sustainable growth," Mr. Mandelbaum added. "Our search diversification strategy yielded excellent results as we signed two new non-exclusive search partnership agreements with Bing and Ask.com, as well as signing an additional two-year non-exclusive agreement with Google. In addition, our increased investment in mobile platforms and our strong pipeline of future accretive acquisitions, form the nucleus of our growth strategy for the future.”
2013 Financial Outlook:
Management today reaffirmed that it will achieve, and likely exceed, its 2013 Financial Outlook announced on January 8th :
Revenue of $110 million, representing overall growth of 80% year-over-year;
EBITDA of $26 million, representing an overall growth of 86% year-over-year;
Non-GAAP Net Income of $20 million, representing overall growth of 94% year-over-year ; and
Non-GAAP EPS of $1.61, representing overall growth of 63% year-over-year.
Comments & Business Outlook
TEL AVIV, Israel & SEATTLE--(BUSINESS WIRE entered into a three year non- exclusive search and distribution relationship with Ask.com, a long-time recognized Q&A brand and leader in the search industry and an operating business of IAC (NASDAQ: IACI).
By partnering with Ask.com, Perion will be able to offer its users Ask’s unique, customized search experience and applications. Ask provides general search services as well as direct answers to natural language questions to more than 100 million global users. It’s also a demonstrated leader in delivering customized search solutions to leading software companies worldwide.
Commenting on the agreement, Josef Mandelbaum, Perion's CEO, said, "We are very excited to add Ask.com as a search partner. We believe Ask.com’s unique approach to helping consumers find what they are looking for is a great match for our audience. While we can’t disclose the terms of the agreement due to confidentiality, I can say that the agreement should be very beneficial economically to Perion. It is non-exclusive, and is for three years, providing long term stability for our business. With three different search providers, Perion is now in the best position in its history for optimizing its search offerings, benefitting both the Company and our growing base of users."
"We are very happy to begin this new strategic relationship with Perion," said Andrew Moers, President of the Ask Partner Network. “This new alliance is a great opportunity for us to broaden Ask’s reach and provide our customized solutions to Perion’s millions of users. We look forward to working with Perion to deliver great products to their customers."
Comments & Business Outlook
TEL AVIV, Israel & SEATTLE--(BUSINESS WIRE )--Perion Network Ltd. (NASDAQ: PERI), today announced it has signed a two-year, non-exclusive, renewal with Google, extending the Company's relationship with the search provider, effective May 1, 2013.
Mr. Josef Mandelbaum, Perion’s CEO, said, "This is an important milestone for our long term growth strategy and we are very pleased to extend our strategic relationship with Google, now entering its eighth year. While the terms of the new contract are confidential, we can say that the business terms are slightly better than those achieved under the previous contract. In addition, I am happy to report that this renewal signifies our full support of, and commitment to comply with, Google's updated downloadable software policies."
Acquisition Activity
TEL AVIV, Israel--(BUSINESS WIRE closed its previously announced acquisition of SweetIM (a.k.a. “SweetPacks”), a consumer internet company that produces a variety of free, fun and safe apps for everyday use.
“After three weeks of working closely with the SweetPacks management team, we are even more convinced that this acquisition will help take Perion to the next level and we are now focused on executing the integration plan,” commented Josef Mandelbaum, Perion’s Chief Executive Officer.
Mr. Mandelbaum continued, “Based on the continued strength of our organic business, and the incremental contribution of one month of SweetPacks, we will exceed our full-year guidance, and are well positioned for significant growth in both revenue and profitability in 2013. This acquisition will provide us with meaningful scale and increased profitability and will strengthen our competitive advantage.”
Perion made an initial payment of $10 million in cash and 1.99 million Perion shares to the shareholders of SweetPacks on November 30, 2012. A second payment of $7.5 million in cash is due 12 months after closing. A third, conditional payment of $7.5 million in cash is due 18 months after closing, subject to certain milestones and achievements.
Previous guidance on a non-GAAP basis for 2012 was: revenues of $55 million, EBITDA of $12 million and Net Income of $9 million.
