INVESTOR RELATIONS PRESENTATION May 2015
Forward Looking Statements This presentation contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of Perion. The words “ will ” , “ believe, ” “ expect, ” “ intend, ” “ plan, ” “ should ” and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of Perion with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of Perion to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, or financial information, including, among others, the failure to realize the anticipated benefits of the ClientConnect transaction; risks entailed in integrating the ClientConnect business with Perion ’ s other businesses, including employee retention and customer acceptance; the risk that the transaction will divert management and other resources from the ongoing operations of the two businesses or otherwise disrupt the conduct of those businesses, potential litigation associated with the transaction, and general risks associated with the business of Perion and with the ClientConnect business, including changes in the markets in which the businesses operate and in general economic and business conditions, loss of key customers, unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, whether referenced or not referenced in this presentation. Various other risks and uncertainties may affect Perion and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time, including its annual report on Form 20-F for the year ended December 31, 2014 filed with the SEC on April 16, 2015 and the report on Form 6-K filed with the SEC on May 6, 2015. Perion does not assume any obligation to update these forward-looking statements. Confidential
Use of Non-GAAP Measures Non-GAAP financial measures, as well as adjusted EBITDA, consist of GAAP financial measures adjusted to include the results of discontinued operations, and to exclude acquisition related expenses, share-based compensation expenses, amortization of acquired intangible assets and non-recurring tax expenses, as well as certain accounting entries that are required under the business combination accounting rules. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the non-GAAP measures are regularly used internally to understand, manage and evaluate our business and make operating decisions, and we believe that they are useful to investors as a consistent and comparable measure of the ongoing performance of our business. However, our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. A reconciliation between results on a GAAP and non-GAAP basis is provided in the Appendix of this presentation. Confidential
The Vision Providing publishers a unified platform to drive user acquisition, enhanced monetization and engagement Confidential
Who is Perion Today? • Unified solutions suite for publishers : Company Perion Network Ltd. – Search and display advertising monetization Headquarters Tel Aviv, Israel platform International Offices San Francisco, CA; Paris, France; – Mobile marketing and advertising platform for Redmond, WA user acquisition and engagement Employees 393 • Strong foundation for acquisitions : Exchange / Ticker NASDAQ.GS / PERI – Transformative acquisition of Conduit ’ s Market Cap $254 million ClientConnect in January 2014 Q1 ’ 15 Revenue $52.1 million – GrowMobile in July 2014 Q1 ’ 15 Adjusted EBITDA $19.6 million – MakeMeReach in February 2015 Q1 ’ 15 non-GAAP Net Income $14.4 million • Seasoned management team : – Josef Mandelbaum, CEO, 20+ years of Internet & mobile experience – Yacov Kaufman, CFO, 20+ years of experience 5 Confidential
Perion ’ s Evolving Product Suite: Multi-Format, Cross-Channel Channels Desktop Mobile Social Download Content Format Display Video Revenue: CPA CPM CPM 7 Confidential
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Monetization Platform • We offer web publishers a range of innovative and reliable monetization solutions • Search-based monetization tool, downloadable or in-site • High LTV and conversion rates • Display ad network • Strong LTV Algorithm • Proprietary predictive technology • Expertise in Big Data • Facilitating rate flexibility and highly adaptive business model • Commercial competitive advantage through Bing long-term relationship • New 3+1 year contract from Jan 2015 • Bing has increased its market share in the US from 12% to 20% • Long-term contracts with all the main search engines • Google, Yahoo, Bing, Ask.com Confidential
Executing in a Challenging Environment • Search and platform providers regularly enact new guidelines to regulate the industry Adversely impacts monetization and ability to effectively compete Proactive reduction of CAC as of Q3 2014 Reduced revenue • We expect the decline to bottom out in Q2 2015 and return to growth in Q4 2015. * Net revenue starting Q1.15 Confidential
Reducing Risk and Maintaining Profitability • Transition away from PPI model and Perion OpEx in $M $30 increase rev-share-based model $25 - Rev share model increased from 6% of $20 search revenue in Q1.14 to almost 50% of search revenue in Q1.15 $15 $10 • Improve cost structure to maintain high $5 margins $- Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15F Confidential
Investing in Codefuel ’ s Future • Strong balance sheet and cash flow Cash & Working Capital generation enables us to continue $150 M innovating $125 M • Increasing R&D efforts in new areas $100 M - Data-driven and programmatic video and $75 M display ad network $50 M - Extending to mobile solution: a $25 M publisher-focused SDK and API options $0 M for mobile web and in-app advertising Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 -$25 M Cash Working Capital Confidential
Publisher Problem Mobile: a Big Opportunity in a Fragmented Environment • Google: more searches on mobile than on desktop • Immature and inefficient market • • Q3 ’ 14: Americans spend more time on mobile than Technology different from desktop • Hundreds of traffic sources on TV • No unified solution US mobile advertising market: $42B Your Ad Display, social & video: $24B Potential net revenue: ~$2-3B Source: Business Insider, October 2014 , 2018 Projections Confidential
Complex Multidisciplinary Solution High technological requirements • Fragmented technology and only point solutions • Numerous capabilities needed: attribution, data, analytics … • Complicated technical integrations Inefficient campaign measurement • Multiple technology and manual reconciliations • Data needs to be pulled from different systems - Revenue from attribution-tracking partner - Cost from ad network - Install numbers from internal systems • No real-time data • Lack of effective retargeting tools Confidential
Perion ’ s Comprehensive Solution Complete mobile and social advertising platform providing programmatic media buying, measurement, performance analytics and customer engagement solutions • One-stop media buying: FB, Twitter and hundreds of networks and exchanges in real-time • Tracking and attribution: Single lightweight, open-sourced SDK integration • Robust analytics: Cost, campaign performance, usage, and revenue data for all traffic sources Next step - GrowMobile Engage: • Data-driven actionable insights to optimize conversion, reduce churn and enable customer re-engagement Everything Self-Serve or Fully-Managed Offering Confidential
Recent Acquisition of MakeMeReach Adds Social Media Capabilities • Acquisition completed in February 2015 Number of Active Customers • Paris-based startup, European presence , profitable and rapidly growing • Award-winning technology enabling mobile advertisers to efficiently and effectively scale their campaigns on social media • Offers both fully-managed services and a top-tier SaaS platform • Facebook Preferred Marketing Developer (PMD) and Twitter Marketing Platform Partner (MPP) Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 GrowMobile & MMR together have over 150 active clients and $120M run rate managed ad spend Confidential
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