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Perion Network: Perion Reports Third Quarter 2015 Results REVENUE $52.6 MILLION, ADJUSTED EBITDA $9.9 MILLION

The following excerpt is from the company's SEC filing.

Tel Aviv & San Francisco – November 3, 2015 – Perion Network Ltd. (NASDAQ: PERI), announced today its financial results for the third quarter and nine months of 2015.

Third Quarter 2015 Highlights

Revenues for the third quarter and the first nine months of 2015 were $52.6 million and $153.3 million, respectively

Adjusted EBITDA for the third quarter and the first nine months of 2015 was $9.9 million and $42.7 million, respectively

Non-GAAP Net Income for the third quarter and the first nine months of 2015 was $6.7 million and $30.6 million, respectively

Non-GAAP diluted Earnings Per Share for the third quarter and the first nine months of 2015 was $0.09 and $0.43, respectively

Recorded a one-time, non-cash, $74.1 million impairment of goodwill and intangible assets

As of September 30, 2015, cash and deposits totaled $129.4 million

Supply side software monetization business returned to revenue growth for the first time in six quarters

Opened the Barcelona office for Growmobile to serve the fast growing Spanish and Portuguese mobile markets

Josef Mandelbaum, Perion’s CEO commented, “I am very pleased with our third quarter financial results, as we exceeded our guidance on Revenues, Adjusted EBITDA, and non-GAAP Net Income. More importantly, the third quarter marks a significant milestone in our company’s turnaround as our supply side software monetization business returned to revenue growth for the first time in six quarters, one quarter ahead of schedule. Our strategy has delivered the results that we expected, adding validity to our long held view that the software monetization business would remain a good business for Perion with healthy margins and cash flow. Looking forward, we expect to continue to deliver sequential revenue growth in the fourth quarter.”

“On the demand side, as the integration of our social advertising solution into the GrowMobile platform is nearly complete, our focus has turned to aggressively ramping up our investment in sales and marketing to drive revenue growth,” continued Mr. Mandelbaum. “We ended the quarter with 168 active advertisers and over $33 million of managed ad spend, in the seasonally slow part of the year. The fourth quarter is off to a good start, and we fully expect it to be our best quarter ever.”

Financial Comparison for the Third Quarter of 2015:

Revenues:

In the third quarter of

2015, revenues were $52.6 million, reflecting gross revenues of $54.4 million reduced by $1.8 million of customer acquisition costs netted from top-line revenues. The decrease from revenues of $86.3 million in

2014 is primarily a result of our decision to significantly reduce Customer Acquisition Costs (“CAC”) since the third quarter of 2014.

Non-GAAP Costs and Expenses:

Excluding CAC, Non-GAAP costs and expenses in the third quarter of

$18.1

million, or

of revenues, compared to $

of revenues, in the third quarter of

. Non-GAAP costs and expenses in the third quarter of

excluded $74.1 million that resulted from the impairment of goodwill and intangible assets,

$2.1

share based

compensation expenses,

million amortization of acquired intangible assets and

million of acquisition related expenses

all of which were included in the GAAP numbers. In the third quarter of

, non-GAAP costs and expenses excluded

$4.4 million of share based compensation expenses and

$1.0 million of acquisition related expenses.

Adjusted EBITDA:

2015, adjusted EBITDA was $9.9 million, or 19% of revenues, compared to $33.9 million, or 39% of revenues, in

Non-GAAP Net Income:

2015, Non-GAAP net income was $6.7 million, or 13% of revenues, compared to $26.6 million, or 31% of revenues, in

GAAP Net Loss:

On a GAAP basis in the

2015, we had a net loss of $70.8 million. This loss is due to a one-time, non-cash $74.1 million impairment of goodwill and intangible assets. Perion’s share price and market value have declined, triggering a reexamination of the book value of intangible assets on an ongoing basis. Most of the intangible assets reflected the value of the monetization business according to market values in the beginning of 2014. We have reduced the value of goodwill and intangible assets by $74.1 million, so that the current carrying value is $109.3 million. This impairment does not affect Perion’s ongoing operations or tangible equity, which has increased to $96.0 million, as compared to $65.0 million as of year-end and more than double the $43.2 million a year ago, as of September 30, 2014.

Financial Comparison for the Nine months ended September 30, 2015:

the first nine months of 2015, revenues were $153.3 million, reflecting gross revenues of $167.8 million reduced by $14.5 million of customer acquisition costs netted from top-line revenues. The decrease from revenues of $310.6 million in

2014 is primarily a result of our decision to significantly reduce CAC since the third quarter of 2014.

Excluding CAC, Non-GAAP costs and expenses in the first

$52.4

of revenues, in the parallel period in

excluded $78.3 million that resulted from the impairment of goodwill and intangible assets,

million amortization of acquired intangible assets, and

, as well as

a gain from the reversal of acquisition related contingent consideration of $6.6 million, all of which were included in the GAAP numbers. In the

$13.8

$12.7 million of share based compensation expenses and

$4.4 million of acquisition related expenses.

2015, adjusted EBITDA was $42.7 million, or 28% of revenues, compared to $101.1 million, or 33% of revenues...


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