Perion Network Ltd. (NASDAQ & TASE: PERI), a global advertising technology company whose synergistic solutions are delivered across the three primary channels of digital advertising – ad search, social media and display / video / CTV advertising – today reported record financial results for the second quarter ended June 30, 2022.
“Second quarter 2022 results mark Perion’s eighth consecutive quarter of year-over-year revenue and Adjusted EBITDA growth, demonstrating the predictability and sustainability of our business model, underpinned by our diversification strategy,” said Doron Gerstel, Perion’s CEO. “Our structural diversification by channel provides us with a unique level of agility to shift our business to where media budgets are trending. In response to the current macro-economic pressure, advertisers are demanding greater performance, and shifting media budgets to direct response. This has driven the RPM (Revenue Per Thousand searches) of our search advertising to an all-time record high.”
“Perion’s continued margin expansion demonstrates the effectiveness of our Intelligent HUB (iHUB). By connecting all our data assets and analyzing signals from all channels on both sides of the open web, iHUB optimizes campaign yields, increases operational efficiencies and powers new, innovative products like SORTTM. These capabilities leverage our data advantage and deep understanding of market trends to support the growing number of advertisers who struggle to tackle the cookieless future ahead, and even more importantly, reflect that consumers increasingly favor brands that protect their privacy,” added Mr. Gerstel.
“Our growing marketplace traction is measurable by a significant increase in SORT™ campaigns, which, when combined with ongoing positive trends, have increased customer spend on video and CTV, giving us confidence that our momentum is sustainable even in the face of global economic concerns,” concluded Mr. Gerstel.
Second Quarter 2022 Highlights
– Video revenue grew by 273% year-over-year, representing 44% of Display Advertising revenue
– CTV revenue grew by 90% year-over-year, representing 6% of Display Advertising revenue
– SORTTM customers nearly doubled quarter-over-quarter from 65 to 126, and SORTTM customers’ spend increased by 62%, accounting for 14% of Display Advertising revenue
– Increase in the adoption of our Video Platform holistic solution:
- 145% year-over-year increase in Video Platform to 54 publishers
- 52% year-over-year increase in revenue from retained Video Platform publishers
– The number of search advertising publishers increased by 33% year-over-year, RPM increased by 42% over the same period
Second Quarter 2022 Financial Highlights(1)
(1)See below reconciliation of GAAP to Non-GAAP measures
Outlook
“Our strong performance, our team’s excellent execution, continuing market share gains and improving efficiencies give us confidence that we will, at least, achieve the high-end of our full-year Adjusted EBITDA guidance, even when taking further global recessionary conditions into account,” Mr. Gerstel concluded.
|
($M) |
2021 |
Prior 2022 Guidance |
Current 2022 Guidance |
YoY Growth % |
|
Revenue |
$478.5 |
$620-$640 |
$620-$640 |
32%(1) |
|
Adjusted EBITDA |
$69.6 |
$98-$102 |
$102 + |
47% |
|
Adjusted EBITDA to Revenue Ex-TAC |
37% |
40%(1) |
41%(1)+ |
|
(1)At guidance midpoint
Financial Comparison for the Second Quarter of 2022
Revenue: Revenue increased by 34% to $146.7 million in the second quarter of 2022 from $109.7 million in the second quarter of 2021. Display Advertising revenue increased by 41% year-over-year, primarily due to a 273% growth in video, now representing 44% of Display Advertising revenue (17% in 2021) and 90% increase in CTV revenue, which represents 6% of Display Advertising revenue. Number of SORTTM customers nearly doubled quarter-over-quarter, from 65 to 126, SORTTM customers spending increased by 62%, representing 14% of Display Advertising revenue. Search revenue increased by 26%, accounting for 44% of revenue, primarily due to a 42% increase in average RPM and a 33% increase in number of publishers.
Traffic Acquisition Costs (“TAC”): TAC amounted to $86.0 million, or 58.6% of revenue, in the second quarter of 2022, compared to $66.2 million, or 60.4% of revenue, in the second quarter of 2021. The media margin improvement was primarily due to improved commercial terms, a favorable product mix of ad formats, and the iHUB Control Systems.
Net Income: On a GAAP basis, net income increased by 175% to $19.5 million in the second quarter of 2022 from $7.1 million in the second quarter of 2021.
Non-GAAP Net Income: Non-GAAP net income was $24.5 million, or 16.7% of revenue, in the second quarter of 2022, compared to $12.3 million, or 11.2% of revenue, in the second quarter of 2021. A reconciliation of GAAP to non-GAAP net income is included in this press release.
Adjusted EBITDA: Adjusted EBITDA was $28.5 million, or 19.4% of revenue (and 47% of revenue Ex TAC), in the second quarter of 2022, compared to $14.3 million, or 13.0% of revenue (and 33% of revenue Ex TAC), in the second quarter of 2021. 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, 2022, cash and cash equivalents and short-term bank deposits were $353.0 million. Net cash provided by operating activities in the second quarter of 2022 was $25.7 million, compared to $14.6 million in the second quarter of 2021.
Conference Call
Perion management will host a conference call to discuss the results at 8:30 a.m. ET today. Call details:
● Registration link:
https://incommconferencing.zoom.us/webinar/register/WN_oEkHYSvyQ–7h7MrEhjNkg
● 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.
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