Perion(PERI) - 2022 Q3 - Quarterly Report

Perion Q3 2022 Earnings Release Perion's Q3 2022 earnings release details robust financial and business growth, driven by strategic advertising solutions Financial & Business Highlights Perion achieved its eighth consecutive quarter of double-digit growth in Q3 2022, with significant revenue and net income increases Business Highlights Perion's diversification strategy successfully captured advertising budgets, driving strong growth in video, CTV, and search advertising - The company's diversification strategy is successfully capturing advertising budgets shifting from social media to search advertising[4] - Video and CTV advertising revenues showed strong momentum, growing 209% and 134% year-over-year, respectively. Video now constitutes 44% of Display Advertising revenue[4] - The privacy-focused solution, SORT™, saw a 25% increase in spending over the previous quarter, with the number of customers growing by 11% to 140[4] - The number of search advertising publishers increased by 60% year-over-year, complemented by a 42% rise in Revenue Per Mille (RPM) over the same period[4] Financial Highlights Perion's Q3 2022 financial performance showed significant year-over-year growth in revenue, net income, and adjusted EBITDA Q3 2022 Key Financial Metrics (YoY Growth) | Metric | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $158.6 million | $121.0 million | +31% | | GAAP Net Income | $25.6 million | $10.6 million | +141% | | Adjusted EBITDA | $33.0 million | $17.6 million | +87% | | Net Cash from Operations | $34.7 million | $14.2 million | +145% | | GAAP Diluted EPS | $0.53 | $0.28 | +89% | | Non-GAAP Diluted EPS | $0.61 | $0.40 | +53% | Financial Performance Analysis Perion's Q3 2022 revenue grew 31% to $158.6 million, with improved profitability and a robust cash position Revenue Analysis Total revenue increased by 31% year-over-year, driven by strong growth in Display and Search Advertising segments - Total revenue increased by 31% year-over-year to $158.6 million[7] - Display Advertising revenue grew 26% YoY, accounting for 55% of total revenue, primarily driven by 209% growth in video and 134% growth in CTV revenue[7] - Search Advertising revenue increased by 38% YoY, making up 45% of total revenue, fueled by a 42% increase in RPM and a 60% increase in publishers[7] Profitability Analysis Q3 2022 profitability significantly improved, with media margin expansion and substantial increases in GAAP Net Income and Adjusted EBITDA - Media margin (Revenue ex-TAC) improved to 41% from 39% in Q3 2021, attributed to a favorable product mix and the contribution of the iHUB[4][8] - GAAP Net Income increased by 141% to $25.6 million from $10.6 million in Q3 2021[8] - Adjusted EBITDA grew 87% to $33.0 million, representing 21% of revenue and 51% of revenue ex-TAC[10] Cash Flow and Financial Position Perion demonstrated strong cash generation in Q3 2022, with increased operating cash flow and a robust cash and equivalents balance - Net cash provided by operating activities increased by 145% year-over-year to $34.7 million in Q3 2022[2][11] - As of September 30, 2022, the company held $390.4 million in cash, cash equivalents, and short-term bank deposits[2][11] Full Year 2022 Outlook Perion significantly raised its full-year 2022 guidance, projecting revenue between $630 million and $635 million and Adjusted EBITDA of at least $120 million Updated Full-Year 2022 Guidance | Metric | 2021 Actual | Prior 2022 Guidance | Current 2022 Guidance | YoY Growth % (Current) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $478.5 million | $620 million - $640 million | $630 million - $635 million | 32% | | Adjusted EBITDA | $69.6 million | $102 million+ | $120 million+ | 72% | Consolidated Financial Statements This section presents Perion's unaudited consolidated financial statements for Q3 2022, detailing operations, balance sheet, and cash flows Consolidated Statements of Operations This statement details Perion's revenues, costs, and net income for the three and nine months ended September 30, 2022 Q3 2022 Statement of Operations Highlights (in thousands) | Line Item | Q3 2022 (Unaudited) | Q3 2021 (Unaudited) | | :--- | :--- | :--- | | Total Revenue | $158,615 | $121,029 | | Total Costs and Expenses | $129,019 | $108,647 | | Income from Operations | $29,596 | $12,382 | | Net Income | $25,582 | $10,622 | | Diluted EPS | $0.53 | $0.28 | Condensed Consolidated Balance Sheets This statement presents Perion's financial position, including assets, liabilities, and equity, as of September 30, 2022 Balance Sheet Highlights (in thousands) | Line Item | Sep 30, 2022 (Unaudited) | Dec 31, 2021 (Audited) | | :--- | :--- | :--- | | Total Current Assets | $501,846 | $446,171 | | Total Assets | $767,989 | $713,232 | | Total Current Liabilities | $179,917 | $193,707 | | Total Liabilities | $228,953 | $246,272 | | Total Shareholders' Equity | $539,036 | $466,960 | Condensed Consolidated Statements of Cash Flows This statement summarizes Perion's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2022 Cash Flow Highlights - Nine Months Ended Sep 30 (in thousands) | Line Item | 2022 (Unaudited) | 2021 (Unaudited) | | :--- | :--- | :--- | | Net cash provided by operating activities | $83,949 | $42,270 | | Net cash used in investing activities | $(12,149) | $(51,233) | | Net cash (used in) provided by financing activities | $(4,650) | $57,567 | | Net increase in cash | $66,862 | $48,555 | Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP to non-GAAP financial measures, providing a clearer view of Perion's core operating performance for Q3 2022 Q3 2022 GAAP Net Income to Non-GAAP Net Income Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | GAAP Net Income | $25,582 | | Stock-based compensation | $3,236 | | Amortization of acquired intangible assets | $3,295 | | Retention and other related to M&A | $288 | | Changes in FV of Earnout contingent consideration | $(3,816) | | Other adjustments | $597 | | Non-GAAP Net Income | $29,914 | Q3 2022 Adjusted EBITDA Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | Non-GAAP Net Income | $29,914 | | Taxes on income | $3,966 | | Financial income, net | $(1,281) | | Depreciation | $409 | | Adjusted EBITDA | $33,008 | Company Information and Disclosures Perion is a global advertising technology company leveraging its iHUB for integrated advertising solutions, with disclosures on forward-looking statements and associated risks - Perion is a global advertising technology company with solutions across the three primary channels of digital advertising, brought together by its intelligent Hub (iHUB)[13] - The report includes forward-looking statements that are subject to risks and uncertainties. Perion does not assume any obligation to update these statements[18]