Perion Delivers 82% Year Over Year Growth in the Second Quarter of 2021; Introduces 2022 Guidance Encouraged by Improved Visibility

Results include 211% advertising growth and strong margin
Management expects to achieve over $500 million in revenue in 2022, a year earlier than expected, representing a CAGR of 25% between 2020-2022

Perion Network Ltd., a global advertising technology company that delivers holistic solution across the three main pillars of digital advertising – ad search, social media, and display / video / CTV advertising – announced today its financial results for the second quarter ended June 30, 2021.

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Doron Gerstel, Perion’s CEO, commented, “This quarter’s performance is another indicator that we are executing on our disciplined strategic plan and positioned to achieve our three-year targets a year earlier than expected. Based on the strength behind our growth – significantly more dollars spent per campaign and a healthy increase in new clients – we are narrowing the ranges of our 2021 guidance to revenues of $415-$430 million and EBITDA of $50-$51 million as well as introducing guidance for 2022. We expect revenue of $490-$520 million and Adjusted EBITDA of $59-$62 million in 2022.”

Second Quarter 2021 Highlights

• Advertising revenue growth of 211% (or 134% on pro forma basis) fueled by broad-based adoption of our video and CTV offerings, leading to an increase of average campaign spend by 58% and a 67% increase in number of clients;
• Search advertising revenue growth of 24%, primarily driven by increased performance advertising spend by brands;
• The inherent and strategically constructed operating leverage in our business model increased adjusted EBITDA margin to 33% of revenue excluding traffic acquisitions costs compared to 10% in the second quarter of 2020; and
• Net cash provided by operating activities was $14.6 million; Perion has $141 million in cash and zero debt as of June 30, 2021.

Second Quarter 2021 Financial Highlights*

(In millions, except per share data)

* Reconciliation of GAAP to Non-GAAP measures follows.

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Mr. Gerstel continued, “Three years ago, we initiated a disciplined process of reducing costs and paying down debt. We then focused on leveraging technology and AI to create competitively differentiated advertising capabilities, which triggered us to introduce an aggressive three-year growth plan. We are on pace to achieve these aggressive revenue and EBITDA targets a year earlier than expected. Perion now has a sustained track record of growth, profitability, and delivering on its promises.”

Financial Comparison for the Second Quarter of 2021

Revenues: Revenues increased by 82% (or 65% on a pro forma basis), from $60.3 million in the second quarter of 2020 to $109.7 million in the second quarter of 2021. This increase was led by a 211% (or 134% on a pro forma basis) increase in Display and Social Advertising revenues, primarily from the growth in video and CTV, which led to a 58% increase in average revenue per client, and a 67% growth in the number of new clients. Search and other revenues increased by 24%, primarily due to 16.9 million of average daily monetizable search queries compared to 13.0 million in the second quarter of 2020, as well as the addition of 28 publishers to our network.

Traffic Acquisition Costs (“TAC”): During the second quarter of 2021 TAC were $66.2 million, or 60.4% of revenues, compared to $36.8 million, or 61.0% of revenues, in the second quarter of 2020.

Net Income: On a GAAP basis, net income increased by 416% from a net loss of $2.2 million in the second quarter of 2020 to net income of $7.1 million in the second quarter of 2021.

Non-GAAP Net Income: In the second quarter of 2021, non-GAAP net income was $12.3 million, or 11.2% of revenues, compared to the $1.9 million, or 3.2% of revenues, in the second quarter of 2020. A reconciliation of GAAP to non-GAAP net income is included in this press release.

Adjusted EBITDA: In the second quarter of 2021, Adjusted EBITDA was $14.3 million, or 13.0% of revenues, compared to $2.5 million, or 4.1% of revenues, in the second quarter of 2020. A reconciliation of GAAP Net Income to Adjusted EBITDA is included in this press release.

Cash and Cash Flow from Operations: As of June 30, 2021, cash and cash equivalents and short-term bank deposits were $141.2 million. Cash provided by operating activities in the second quarter of 2021 was $14.6 million, compared to $0.2 million in the second quarter of 2020.

Outlook

Perion is narrowing it’s 2021 guidance and expects revenues to be between $415-$430 million (previously $410-$430 million) and EBITDA of $50-$51 million (previously $49-$51 million). Based on the strong business momentum and improved visibility, Perion is introducing guidance for 2022.