Perion boosts profit, cuts debt, despite revenue decline

Internet company Perion Network (Nasdaq: PERI, TASE: PERI) continues to reduce its debt and improve its net profit, despite a decline in revenue. The company today published its third quarter results, reporting a $2.2 million GAAP net profit and a $4.3 million non-GAAP net profit on $57.2 million in revenue.

Perion develops software and provides services aimed at assisting software and app developers in distribution and monetization. The company formerly focused on Internet searches, a sector that has declined in recent years. In order to compensate for this downtrend, its has entered digital advertising through the acquisition of Undertone. At the same time, Perion's third quarter report shows problems in the newer market, together with a continued decline in its regular market. The company's revenue from advertising totaled $26.2 million in the third quarter, 21% less than in the preceding quarter and 17% less than in the corresponding quarter last year. Revenue from searches amounted to $31 million, 54% of its total revenue in the quarter, 4.6% less than in the second quarter and 7% less than in the corresponding quarter last year.

Perion CEO Doron Gerstel attributed the fall in advertising revenue to insufficient programmatic inventory to meet the demand for the company's programmatic high-impact ad units, while noting that progress had been made in the programmatic advertising environment (automated systems for purchasing ads, based on advertising targets and surfers' behavior). "We are actively working with our programmatic partners to address this issue and I am confident that we will close the current gap to better serve ‘programmatic ready’ Undertone high-impact ad units in 2019. This will enable us to have access to the quality supply we need to drive revenues." he said.

Perion's $57.2 million third quarter revenue was 9% less than in the preceding quarter and 12.1% less in the third quarter of 2017. The company's revenue totaled $181 million in the first three quarters of 2018, down 8%, compared with the corresponding period last year. GAAP net profit in January-September was $3.2 million, compared with a $35.5 million net loss in the first three quarters of 2017, a loss partly attributable to a decline in the value of Undertone's business. Non-GAAP net profit amounted to $12 million, up 8.4% compared with the corresponding period last year, while Perion's $4.3 million third quarter non-GAAP net profit was 4.3% more than in third quarter of 2017.

Cash flow from current activity totaled $11 million in the third quarter and $28.5 million in January-September 2018. Period had $40.9 million in cash as of the end of the third quarter, and its balance sheet debt was $39.7 million. Commenting on this, Gerstel said, "In the third quarter, our ongoing efforts to strengthen Perion’s financial position resulted in a major financial milestone as long-term debt fell below our net cash levels the first time in four years… I am encouraged by the progress we have made to strengthen our financial position, steadily growing Adjusted EBITDA and generating consistent cash from our operations. I am confident, based on this progress, that we have the necessary runway to carry out our strategy to revitalize growth."

Perion's management reiterated its expectation of adjusted EBITDA of $29 million to $32 million for the full year of 2018.

Published by Globes, Israel business news - en.globes.co.il - on November 1, 2018

Perion boosts profit, cuts debt, despite revenue decline

The company's third quarter revenue was 9% less than in the preceding quarter and 12.1% less than in the third quarter of 2017.