Perion Network Ltd · NASDAQ:PERI
Perion Network — Q3 2021 Earnings Presentation
48 slides from Perion Network's earnings presentation, Oct 26, 2021
Slide 1: Third Quarter 2021 Earnings Conference Call
Third Quarter 2021 Earnings Conference Call October 26th , 2021 1
Slide 2: Forward Looking Statements
F O R W A R D L OOKI NG STATEMENTS This presentation a n d our r e m a r k s c o n t a in forward -looking s t a t e m e n t s (within t h e m e a n i n g of T h e Private Securities Litigation R e f o r m A c t of 1995) t h a t involve subst antial risks a n d uncertainties, i n c l u di n g s t a
Slide 3: Introduction
introduction Doron Gerstel Maoz Sigron CEO CFO 3
Slide 4: The momentum continues
the momentum continues 2020-2022: past, present and future 4
Slide 5: Macro perspective: digital ad spend
macro perspective digital ad spend worldwide in Billions $645.8B "...if you want to sell, you have to spend. It's as simple as that.” Tom Bueller $585.96B • A unique cocktail of a well-funded consumer, inflation, and the power of digital advertising leads $524.3B to unprecedented growth outlook $455
Slide 6: All time record revenues
all time record revenues $590M* • Video and CTV revenue grew by 245% YoY 40% 45% YoY • Higher average deal size YoY GROWTH (32% growth YoY) GROWTH $460M* $121M • Growth in customer retention 109% $328M $83.4M 2020 - 2022 CAGR 34% Q3 -2020 Q3 2021 2020 2021 2022 6 * at guidance’ midpoint
Slide 7: Adj. EBITDA doubled YoY
Adj. EBITDA doubled YoY $76.5M* • Successful implementation of hub and spoke 83% • Scale and costs leverage YoY GROWTH $60M* • Improved budget control • Enhanced process automation 101% YoY GROWTH $17.6M $32.8M $8.75M 2020-2022 CAGR 53% Q3 -2020 Q3 2021 2020 2021 2022 7 * at guidance’ midpoint
Slide 8: SG&A % to Revenue continues to decrease
SG&A % to Revenue continues to decrease 26% • Improve Budget control $460M* • Enhance Process automation 21% • Renegotiate commercial terms 18% $328M $274M $253M $261M 15% Revenue SG&A $73M $53M $47M $49M % to revenue 2017 2018 2019 2020 2021 * Reflects midpoint of guidance Non GAAP figures 8
Slide 9: Non-GAAP R&D – Investing in Growth
Non-Gaap R&D – Investing in Growth R&D % to Revenue increased to 8%, reflecting Perion Growth strategy, we believe $460M* that this is what 8% 8% differentiates our offering from competition. 6% $328M $261M $252M Revenue $26M R&D $18M $21M % to revenue * Reflects midpoint of guidance 9
Slide 10: Improved & Strong Balance Sheet
Improved & Strong BALANCE SHEET $156M Total Net Cash $92M $0 Debt Q1-21 Q2-21 Q3-21 Q1-16 Operating Cash Flow of $14.2M in Q3-21 -$43M Net cash is calculated as cash + cash equivalents + short term bank deposit – short- and long-term loans 10
Slide 11: Video and CTV revenue grew by 241% YoY
growth drivers: Video and CTV revenue grew by 241% YoY 286% YoY GROWTH $32.8M 245% YoY GROWTH $14M $8.3M $4.1M Q1-Q3/20 Q1-Q3/21 Q3 20 Q3 21 8
Slide 12: High impact CTV suite
growth drivers: high impact ctv suite from your Smart TV to shopping cart in one click Take your brands’ shopping experience to the big screen with QR Codes and Direct-to-Cart Technology 1.14% CTR
Slide 13: Introducing Live CTV
growth drivers: high impact ctv suite Introducing Live CTV “…we were looking for something new and exciting. With Perion Live CTV, our ads are integrated into the game broadcast, making them nearly unmissable!” OLIVIA SUTHERLAND Senior TV Growth Marketing DraftKings 19:1 LIVE CTV ROAS 8
Slide 14: Average deal size grew by 40%
growth drivers: Average deal size grew by 40% from 79K to 103K YoY Making impact on EVERY screen 7.9% Interaction rate 8
Slide 15: Enhance publisher offering
growth drivers: Enhance publisher offering Enhances Perion’s high impact and video offering An END to END offering for advertisers and publishers eliminating all existing H/I intermediaries video Accretive from day 1 suite Prudent M&A model – 1/3 cash, 2/3 earnout 15
Slide 16: Growth drivers: contextual signals
growth drivers: 2 contextual always responds to car ads information always responds to travel ads external user signals signals always responds to insurance ads unlikely to watch video UP TO unlikely to interact 30% TRAVEL OFFER OFF likely to click to site 16 12
Slide 17: Privacy-first cookieless targeting
growth drivers: privacy – first Cookieless targeting +77% +21.5% CTR IR “ a scalable, cookieless targeting solution, on par with or better than third-party cookie-based targeting options.” Timur Yarnall CEO and Co-Founder of Neutronian 17 12
Slide 18: New monetization opportunities within apps
new monetization Growth opportunities Drivers within apps Cross-screen High impact creative Content monetization system Search Adv. monetization 18
Slide 19: Search mediation for publishers
Search mediation Growth for publishers Drivers Cross-screen High impact creative Content monetization system Search Adv. monetization 19
Slide 20: Search advertising revenues
Search Advertising Revenues* Growth Drivers We saw years' worth As a result, online advertisers' use of measurable performance- Cross-screen of commerce growth based, cost-per-action buying models made it easier to justify in just a few months High impact creative increased investment. Video / CTV C
Slide 21: Search advertising growth drivers
growth drivers : 150% Search Advertising Transactional 140% Search Intent 130% 120% $574K $541K $542K 110% $540K $494K $547K $542K $542K $518K $469K 100% $457K $438K $441K $432K 17.7 16.9 $363K 90% $347K 15.7 Transactional search $314K 14.7 $307K 12.2 13 12.8 $291K 11.9 10.4 9.5 80% 7.8 70% Avg. Dai
Slide 22: Intelligent HUB
DEMAND S U P P LY growth drivers: Intelligent HUB High Own & brand Impact Operated social Sites intelligent Product DSPs agency ads HUB Operated pub's D2S Sites END TO END 22
Slide 23: iHUB values
iHUB Values reduced reduced increased operational TAC customer cost closing the loop value 23
Slide 24: Financial results Q3 2021
financial results Q3 2021 24
Slide 25: Strong momentum continues over the last 12 months
Strong momentum continues over the last 12 months Revenue EBITDA EBITDA to EBITDA to Revenue Revenue ex TAC $439M $56M+ 13% 33% 25
Slide 26: Immediately accretive acquisition of Vidazoo
Immediately accretive acquisition of Vidazoo 2021 2022 2023 2024 $35M $4.7M $12.9M $40.9M 37% 5% 14% 44% Accumulative EBITDA of $32.4M
Slide 27: Revenue growth accelerates
Revenue growth accelerates Q3 21 $120.8M Q3 20 $83.4M 45% growth Q3 20 PROFORMA $85.4M 42% growth 27
Slide 28: Display advertising revenue grew by 82%
Display advertising revenue grew by 82% year over year Q1-Q3/21 $165.1M Q1-Q3/20 $80.3M 106% growth Q3 21 $69M Q3 20 $37.9M 82% growth 28
Slide 29: Video and CTV are key growth drivers
Video and CTV are key growth drivers average deal size video & CTV New Publishers 32% $14M 245% growth YoY +3 20% from Display advertising 29
Slide 30: Search advertising revenue grew by 14%
Search advertising revenue grew by 14% year over year Q1-Q3/21 $155.4M Q1-Q3/20 $129.4M 20% growth Q3 21 $52M Q3 20 $45.5M 14% growth 30 30
Slide 31: 14.7M daily average monetizable searches
14.7M daily average monetizable searches search advertising daily number & other of searches 14% 14.7M Year-Over-Year 12.8M last year 31
Slide 32: Display advertising reached 57% of revenue
Display Advertising revenue reached 57% of revenue 57% 43% $69M $52M Display Advertising Search Advertising revenue and Other revenue 32
Slide 33: Stable TAC level over the last year
Stable TAC level over the last year 59.8% 60.8% $49.9M $73.6M Q3 2020 Q3 2021 33
Slide 34: Net income growth of 404%
Net income growth of 404% Q3 21 $10.6M Q3 20 $2.1M Q3 21 GAAP Net income growth Q3 21 GAAP EPS Q3 21 $0.31M 404% Q3 20 $0.08M 34
Slide 35: Non-GAAP Net income growth of 161%
Non-GAAP Net income growth of 161% Q3 21 $15.4M Q3 20 $5.9M Q3 21 non GAAP Net income growth Q3 21 non GAAP EPS Q3 21 $0.40M 161% Q3 20 $0.21M
Slide 36: Adjusted EBITDA growth of 101%
Adjusted EBITDA growth of 101% Q3 21 $17.6M Q3 20 $8.7M 101% growth Q3 Cash flow Q3 21 $14.2M Q3 20 $6.6M 115% growth 36
Slide 37: $60M unrestricted cash and short-term bank deposits
unrestricted cash, c a s h equivalent $60M a n d short-term b a n k deposits 2020 2021 37
Slide 38: Guidance
Guidance 38
Slide 39: Revised Guidance 2021-2022
Revised Guidance 2021-2022 YoY YoY “Perion is firing on all cylinders. ($M) 2021 2022 G u i dance Growt h%* G u i d anc e Growt h%* Our diversified revenue streams coming from both sides of the open web and the Revenue $455-$465 4 0 % $ 5 8 0 - $ 6 0 0 28% synergies derived from our ability to conne
Slide 40: Peer Group Comparison
Peer Group Comparison Average CAGR (2020-2022) 34% 24% 29% 29% 24% 22% 19% 20% 16% 32% EBITDA to Rev Ex TAC 34% 31% 37% 32% 31% 18% 35% 35% 37% 33% Multiples EV/Rev Ex TAC 3.8 8.9 23.5 7.6 5.1 2.9 2.7 3.3 3.5 16.8 EV/EBITDA 14.1 26.5 63.0 23.5 16.4 15.6 7.6 9.7 9.4 50.2 data updated to November 1 20
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Slide 42: Thank you
thank you 42
Slide 43: Appendix
appendix 43
Slide 44: Balance Sheet GAAP Basis Overview ($M)
Balance Sheet GAAP Basis Overview ($M) Current Assets 31/12/2020 30/09/2021 Current Liabilities 31/12/2020 30/09/2021 Cash and cash equivalents 47.7 96.2 Current maturities of long-term loans and Convertible debt 8.3 - Restricted cash 1.2 1.2 Accounts payable 72.5 78.4 Short-term bank deposit 12.7 6
Slide 45: Income Statement GAAP Basis ($M)
Income Statement GAAP Basis ($M) Full year ended, P&L - GAAP Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 2018 2019 2020 Display Advertising revenues 29.3 33.2 26.2 37.3 18.6 21.3 21.6 26.4 23.8 18.7 37.9 68.4 38.1 58.0 69.0 126.0 87.9 148.7 Search Advert
Slide 46: Cash Flow GAAP Basis Overview ($M)
Cash Flow GAAP Basis Overview ($M) Full year ended, Cash Flow Results Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 2018 2019 2020 Operating activities Net Income 0.1 1.0 2.2 4.9 1.2 2.9 2.9 5.9 1.3 (2.2) 2.1 9.0 3.3 7.1 10.6 8.1 12.9 10.2 Adjustments requ
Slide 47: Non-GAAP Adjustments ($M)
Non-GAAP Adjustments ($M) Full year ended, Reconciliation of GAAP to NON-GAAP Results Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 2018 2019 2020 GAAP Net Income (Loss) from continuing operations 0.1 1.0 2.2 4.9 1.2 2.9 2.9 5.9 1.3 (2.2) 2.1 9.0 3.3 7.1 1
Slide 48: P&L Non-GAAP ($M)
P&L Non-GAAP ($M) Full year ended, P&L - Non-GAAP Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 2018 2019 2020 Display Advertising revenues 29.3 33.2 26.2 37.3 18.6 21.3 21.6 26.4 23.7 18.7 37.9 68.4 38.1 58.0 69.0 126.0 87.9 148.7 Search Advertising reven