1
www.perion.com
Presentation for the Capital Market May 2014 1 www.perion.com - - PowerPoint PPT Presentation
Presentation for the Capital Market May 2014 1 www.perion.com Forward-Looking Information This presentation was prepared by Perion Network Ltd. ( the Company ) as a general presentation All forward-looking information is solely intended
1
www.perion.com
2
www.perion.com
All forward-looking information is solely intended for the date that it relates to. Other than the
the Company is not required to update or change any information included in this presentation, whether as a result of new information, a future event or other reasons. Similarly, it is clarified that the plans and strategy of the Company included in this presentation are correct as of the publication date and may be changed in accordance with the decision of the Company’s board, as it may be from time to time. Other than trademarks owned by the Company, the trademarks contained in this presentation are the property of their owners and have been used in this presentation for the sake of clarifying the context alone. Use of the trademarks as stated shall not be interpreted as consent or verification regarding the Company’s plans, services or securities. This presentation does not purport to contain or exhaust all of the information which may be relevant for any decision regarding an investment in the Company’s securities. For the avoidance of doubt, it is clarified that the Company does not undertake to update the information included in this presentation. This presentation does not constitute or play a part in any
solicitation to receive offers as stated. Such an offering will only take place by means of the prospectus published by the Company, after the receipt of the permits required from the Securities Exchange and the Tel Aviv Stock Exchange. In any event of conflict or inconsistency between this presentation and the prospectus, the provisions of the prospectus shall govern. The presentation also does not constitute any recommendation and/or consultation regarding the Company’s securities. This presentation was prepared by Perion Network Ltd. (“the Company”) as a general presentation about the Company. This presentation is not intended to replace the need to review the Prospectus dated May 18, 2014, and the documents incorporated by reference therein, before making a decision regarding an investment in the Company’s securities. In the event of any conflict between the contents of this presentation and the reports of the Company required by law, the contents of the said reports shall govern. The information included in this presentation shall not constitute any advice, recommendation,
examination and personal consultation in accordance with the particular circumstances of each investor. This presentation may include forward-looking information as defined in the Securities Law, 5728- 1968, including forecasts, estimations, assumptions and other information regarding future matters and events. In certain cases, forward-looking information may be identified through use of terms such as: “expected”, “believes”, “may”, “estimates”, “anticipates”, “intends”, “continues”, “might”, “plans”, “projects”, and other similar terms and phrases. The forward-looking information in this presentation is based on the updated estimations and assumptions of the Company’s management as of the presentation date, which although the Company believes to be reasonable, are uncertain by nature. The forward-looking information involves risks and uncertainty, including factors which are not under the control of the Company, each of which, or a combination thereof, may materially harm the results of the Company’s
information.
3
www.perion.com
About Perion ▪ Global and leading media & Internet company that operates in search and digital distribution industries ▪ Provides advanced distribution and monetization solutions to applications and software developers ▪ International management team with a proven track record in dynamic and changing markets
▪ Consistent rational growth in revenues and profits without substantial debt ▪ Commitment to high quality standards
*inc. Client Connect
4
www.perion.com
Strong financial outlook for 2014
Financial results for 2013 (Pro forma*)
Market cap of ~ NIS 2.4 billion (15.05.2014)
*Inc. ClientConnect, GAAP reconciliations are included in Appendix **Inc. Deferred revenue
Q1 2014 Results: Growth
March 31 2014 Balance sheet: Strong & without leverage
5
www.perion.com
▪
2013 EBITDA of about $90.2M (about 21% of revenues) without significant debt
▪
2012 EBITDA margin of more than 20%
*Perion & Client Connect. The data does not include in 2012 substantial bonus from Bing to ClientConnect. GAAP reconciliations are included in Appendix
276 433 460 - 470 2012 2013 2014F Revenue growth (USD millions pro forma* non GAAP) ~ 7% 57% 39%
6
www.perion.com
Successful operations in dynamic and changing market, while performing mergers and acquisitions that complement strategic gaps
2000 2006 2007 2010 2012 2011 2014
Client Connect M&A Sweetpacks acquisition Smilebox acquisition Company name change to Perion Josef Mandelbaum joins as CEO TASE Listing Nasdaq IPO Company’s foundation under the name of IncrediMail
7
www.perion.com
Perion provides app developers with a portfolio of solutions which enable them to efficiently distribute, generate revenue and optimize their software/app while focusing only on what they do best: making a great product
8
www.perion.com
Mature and proven business model that Internet industry in general and search engines in particular are based on Search engine (payable click) Advertiser (advertising revenue) Perion App developer Advertiser App’s final user
App’ distribution Revenue from Advertising $$$ Quality App Quality App Receives ads and search services $$$ Revenue from Advertising $$$ Users
9
www.perion.com
Internet Ad Mobile Ad Paid search represents about 48% of all internet advertising revenues Mobile ad spending from total global display advertising: ~16% in 2013. ~27% in 2015
33.7 40.2 48.2 57.6 11.0 11.5 12.0 12.6 40.7 46.9 53.6 61.4 10 20 30 40 50 60 70 2012 2013 2014 2015
Global Display Advertising Spend (USD B)
Total Display Classified Paid search 4.0 8.8 15.8 24.9 35.5 47.2 59.7 10 20 30 40 50 60 70 2011 2012 2013 2014 2015 2016 2017
Mobile Ad Spending (USD B)
Mobile Ad spending
Source: eMarketer 2013 Source ZenithOptimedia
10
www.perion.com
There are relatively little profitable applications. Of those, few manage to earn more from $ 5,000
Distribution
complicated, due to multiple technologies and platforms
installed, mostly for technical reasons
Monetization
free software
business proposal for software developers
advertising networks
establish a profitable business
Optimization
businesses without analytical capabilities required to:
tracking
channels acquiring with a positive ROI
11
www.perion.com
Perion provides a wide range of digital media and web applications solutions that assist applications developers to increase their content’s distribution and monetization capabilities
Distribution
driven by Business Intelligence
media at significant scale media
recommends additional applications to the end user
Monetization
▪ Revenue share on revenue from sponsored links with search engines - Google, Yahoo, Bing and Ask ▪ Segmented and customer
Optimization
▪ Real-time BI platform based on huge amount of data ▪ Extremely accurate ROI models ▪ User friendly analytical and reporting tools for developers
12
www.perion.com
Source: Perion’s data & comScore Explicit Core Search Query Report
67.5% 18.6% 10.1% 2.5% 2.1% 1.3%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
Google Microsoft Yahoo Ask Perion AOL
US Search Market Share
(March 2014)
200 300 400 500 600
Miilion US Queries
Ask Perion US searches
13
www.perion.com
Positive reputation among search engines
Search engine U.S market share (January 2014) Cooperation starting year Contract period Google 68% 2007 August 2015 Bing 18% 2010 December 2014 Yahoo 10% 2013 July 2017 Ask 3% 2013 March 2016
*Agreements with search engines renewed every 1 to 4 years
14
www.perion.com
▪ Strengthening of competitive position and leveraging of scale in the Internet search segment ▪ Strengthening and expanding activities with app and content developers ▪ Ensuring value proposition for app developers and end-user with full transparency ▪ Expanding mobile activities and user centered advertising ▪ Maintaining technological leadership through organic investments and mergers and acquisitions
Extension and expansion activities towards attractive and growing segments that improve Perion’s business and financial positioning
15
www.perion.com
( 06/03/2014 ) *
▪ “The rating of Perion Network Ltd (hereafter: "Perion") is mainly supported by a low-risk financial risk profile as reflected by
strong debt coverage ratios”
▪ “We estimate that the company's adjusted debt to EBITDA ratio will be lower than 1.5x over the intermediate term,
including M&A activities”
▪ “Our financial risk profile assessment is also supported by the operations of the company, which generally generate positive
free cash flows supporting its debt service capabilities”
▪ “We believe that Perion’s merger with "ClientConnect" strengthened the company’s competitive position as well as its debt
servicing capabilities”
▪ “In our view, over the intermediate term, the company will direct its internal resources to growth initiatives and will not execute
material dividend distribution/buybacks. In addition, we estimate that acquisitions over the near term (up to 1 year), if any, will be funded through debt, and possibly also with an equity component. As previously indicated, we do not expect such acquisition activity to lead to a breach of the coverage ratios which we view as commensurate with the current rating”
*Partial quotes. For more information on Perion Network’s credit rating, see S&P Maalot rating report published March 6, 2014.
16
www.perion.com
▪ Perion is among the worldwide leading companies in the search industry and digital distribution ▪ Perion is the second biggest worldwide search services distributor ▪ Business partnerships with leading search engines ▪ Financial strength reflected in high growing profits over the years ▪ Expansion of operations towards attractive segments ▪ Maintaining technological leadership through mergers and acquisitions ▪ Professional management and quality human capital with years of experience and a proven track record in dynamic
markets
▪ Standards of a company listed on NASDAQ
Perion has grown from a small scale company that focused on developing end user’s products to a global leader with a platform of services and a wide range of revenue streams, along with valuable experience which will enable the Company to take advantage of future business opportunities
17
www.perion.com
18
www.perion.com
Perion GAAP reconciliation (in USD 000') Quarter ended March 31 2014 GAAP revenues 114,823 Revenues from discontinued operations
2,292 Non-GAAP revenues 117,115 GAAP net income 13,816 Valuation adjustment on acquired deferred product revenues 2,292 Acquisition related expenses 2,948 Share based compensation 4,436 Amortization of acquired intangible assets 4,500 Accretion of payment obligation related to acquisitions 268 Taxes related to amortization of acquired intangible assets (662) Non-GAAP net income 27,598 Non-GAAP net income 27,598 Income tax expense 4,622 Interest expense (income), net 393 Accretion of payment obligation related to acquisitions (268) Taxes related to amortization of acquired intangible assets 662 Depreciation 555 Discontinued financial income, net
33,562 Perion GAAP reconciliation (in USD 000') 2013 GAAP revenues 412,657 Revenues from discontinued operations 3,016 Sales from commercial agreement deducted as intercompany transaction 17,480 Non-GAAP revenues 433,153 GAAP net income 28,926 Sales from commercial agreement deducted as intercompany transaction 17,480 Customer acquisition costs associated with unrecognized sales (14,334) Acquisition related expenses 8,278 Share based compensation 13,163 Amortization of acquired intangible assets 9,269 Finance expense deferred 751 Non recurring tax benefits 8,876 Non-GAAP net income 72,409 Non-GAAP net income 72,409 Income tax expense (benefit) 25,067 Finance expense related to discontinued operations (40) Tax credit on loss from discontinued operations 454 Non recurring tax expense (8,876) Interest expense (income), net (1,617) Finance expense deferred (751) Depreciation and amortization 3,556 Non-GAAP EBITDA 90,202
19
www.perion.com
Perion GAAP reconciliation (in USD 000') 2012 GAAP CC revenue 537,008 GAAP Perion revenue 60,223 Combined GAAP revenue 597,231 ClientConnect Search revenue adjustment (322,308) Perion deferred revenue adjustment 983 Combined non GAAP revenue 275,906 non GAAP CC revenue 214,700 non GAAP Perion revenue 61,206
20
www.perion.com
Perion GAAP BALANCE SHEET (in USD 000') March 31 2014 Unaudited Assets Current assets: Cash and cash equivalents 51,174 Restricted cash 1,541 Trade receivables 48,871 Other current assets 6,127 Total current assets 107,713 Property and equipment, net 3,723 Goodwill and other intangible assets, net 191,829 Other assets 3,064 Total assets 306,329 Liabilities and Stockholders' Equity Current liabilities: Current maturities of long term debt 17,133 Trade payables 45,283 Deferred revenues 7,923 Payment obligation related to acquisition 8,996 Accrued expenses and other liabilities 19,455 Total current liabilities 98,790 Long-term debt 3,675 Other long term liabilities 4,927 Total liabilities 107,392 Stockholders' equity: Ordinary shares 183 Additional paid-in capital 184,938 Retained earnings 13,816 Total stockholders' equity: 198,937 Total liabilities and stockholders' equity 306,329