INVESTOR RELATIONS
PRESENTATION
January 2015
1
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, 2013 and the report on
Form 6-K filed with the SEC on September 23, 2014. Perion does not assume any obligation to update these forward-looking
statements.
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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.
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Perion’s Mission and Strategy
Perion is a leading performance based cross device technology marketing company
A leading search and display advertising monetization platform providing
cash flow to fuel future growth
Aggregated mobile media buying and retargeting platform, providing
software developers the best ROI
Continued innovation and a strong acquisition pipeline that will
accelerate execution of our vision, driving future growth
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Perion’s Management Team
Josef Mandelbaum
CEO
20+ years experience, former
CEO of American Greetings
Interactive
Dana Maor
SVP Human Resources
15+ years experience
Frutarom, Radvision
Strong M&A background
Yacov Kaufman
CFO
20+ years experience
Acorn Energy, Tower
Semiconductor
Miki Kolko
CTO
20 years experience in
Internet and Big Data tech
Former founder and CTO of 3
startups
Shai Gottesdiener
General Manager, Mobile
15+ years management
experience in Internet
companies
Amir Nahmias
General Manager Codefuel
15+ years experience in the
software and content
industry
Limor Gershony
General Counsel
15+ years experience
Veraz Networks, Medigate
Yuval Hamudot
General Manager Consumer
Apps
15+ years experience in R&D
product development
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Perion’s Monetization Platform
•
We offer our partners a range of innovative and reliable monetization solutions including:
•
Search based monetization tool, offering higher LTV and conversion rates than traditional monetization tools
•
Customizable installer offering targeted secondary offers and advanced installer technology.
•
Targeted display ads
•
•
Robust analytics system enabling real time, easy access to campaign data and immediate optimization.
One of the industry leaders with over 300M monthly queries in the US – representing approximately 2%
share of the US market
• Long term relationship with Bing since 2010
• New 3+1 year contract from Jan 2015
• Perion represents approximately 10% of Bing searches
• Perion has long-term partnerships with all the main search engines
(Google, Yahoo, Bing, Ask)
250M
50M+
20%
100+
End-users
worldwide
Top performing
ads served daily
Avg rise in rev
per install
Countries in our
ad network
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Pushing through the Headwinds
• Industry wide policy changes by search and browser providers and anti-virus companies are
adversely impacting our monetization business and ability to forecast the future
• Causing decreasing revenues through 2014 and expected to continue into 2015
Executing in a Challenging Environment:
• Implemented a cost savings program to maintain margins
• Controlling customer acquisition spend, maximizing RoI and
growing cash position for future investment
• Developing new monetization products to return to growth
• Focus on increasing market share in a smaller market
• Accelerate development and marketing of mobile offering
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Transitioning into Mobile
Performance Advertising
GrowMobile by Perion, an
aggregated mobile media buying
and retargeting platform
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A Booming but Still Nascent Market
•
•
•
Mobile is the fastest-growing digital ad medium
 US mobile ad revenue will top nearly $42B in 2018 - 5-year CAR of 43% from 2013
 The games vertical reached revenue of $25 billion in 2014
Material upside: ad spending still has to catch up with consumer time spent on mobile media
Market still immature, leading to inefficiencies and room for improvement and automation
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A Very Fragmented Environment
•
•
•
•
•
•
Vast amounts of ad space across millions of mobile apps,
websites and games.
Many ways to buy media (RTB ad exchanges, ad networks
Google, Facebook etc.)
Numerous types of ads (display, video, etc.)
Countless traffic sources
Various campaign and user-acquisition strategies
Technical integration required with each traffic source
Your Ad
>> Unorganized, time and resource consuming
>> Ongoing administrative and manual hassles
X100
X20
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Making Measurement and Optimization Challenging
Inefficient campaign measurement
•
•
No equivalent of cookies on mobile
Data about cost, campaign performance, usage, and
revenue are in different systems:
• Revenue from attribution tracking partner
• Cost from ad network
• Install numbers from internal systems
• No real time data
Cost
Installs Data
Device
Lack of retargeting tools
• Huge amount of time on manual reconciliation of
reports.
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Introducing
A mobile advertising platform that provides aggregated, programmatic mobile media
buying, measurement and performance analytics.
•
Simplifying mobile media buying: Aggregates hundreds of networks and
exchanges in real time, through one Insertion Order
•
Tracking and attribution: Single lightweight, open sourced SDK integration to
instantly plug into 100+ ad networks, exchanges and direct publishers.
•
Robust Analytics: Cost, campaign performance, usage, and revenue data for
all traffic sources and all your campaigns in one easy-to-read dashboard.
•
Intelligence Benchmark: Leverage algorithmic learning to optimize predictive
analysis
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Recent Launch of GrowMobile Self-Serve
•
•
•
First cross-network, self-serve mobile advertising platform, offering aggregated access and
programmatic mobile media buying measurement, analysis and optimization from a single dashboard
Beta version launched at the Appworld conference in November 2014
Full launch expected by end of Q1 2015
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Client Segmentation
Small Players
(with some exceptions)
Mobile Marketing
Agencies
Medium to Big
Players
How is User Acquisition
managed?
Ex: Pixelberry
Ex: Fetch
Ex: Glu
Through an internal User
Acquisition team
~10%
90%
80%
Externally managed
90%
10%
20%
Most of the competition targets this (small) part of the market
OUR SWEETSPOT
(and an underserved market)
Source: internal analysis
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Competitive Landscape
Self service
• Facebook automated
PMDs
• RTB platforms (ex:
LiquidM, Strikead
Solo)
Growmobile
Self Serve
All range of
Traffic Sources
Only one sort of
Traffic Source
(social, RTB etc)
• Facebook fully
managed PMDs
(ex: SocialClicks,
Bidalgo)
• Strikead Engage
Source: internal analysis
• Growmobile
• Agencies
• Fiksu
Fully managed
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Customer Testimonials
First-rate Feedback from GrowMobile’s Clients
“With Grow Mobile we've
been able to scale our ad
spends and provide a very
strong ROI month over
month.”
Tim Hsu
User Acquisition
“Grow Mobile provides
cutting edge solutions for
mobile… their technology
and dedication has made
them an essential partner
to grow our business.”
Sho Masuda
VP of Marketing
“Grow Mobile provides an all-inone solution from user acquisition
to downstream analysis. In this
ever-changing landscape of
mobile advertising, Grow Mobile
has been a stable and valuable
partner for Kabam.”
Ko Chiu
VP Business Development
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Client Case Study
The Objective:
Pixelberry is a leading game developer based in Mountain View, California. As part of
their global launch for High School Story on iOS, they partnered with GrowMobile to
develop a UA strategy and to help promote and monetize their app.
The Results of GrowMobile Campaign Management:
• The game hit #5 top free on iTunes in the US and reached #12 top grossing.
• They were able to sustain in the top 100 free and grossing charts for several weeks
through efficient ad spend across high quality traffic and exceptional campaign
management.
• Pixelberry has spent millions of dollars with Grow Mobile to-date, delivering longterm value and ROI.
#12
Top Grossing
$1.25
Paid eCPI
5K – 15K
Sustained
Daily Installs
“Their knowledge, their
belief in our product, and
their willingness to look out
for Pixelberry’s best
interests won me over.”
“We were moving up in the
Top Grossing charts and
earning our marketing money
back.”
“UA is not just about a launch
budget, but about long term
sustained strategy.”
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Next Steps for Perion
• Strategic M&A to enhance our mobile offerings and further
increase market reach
• Enriching our mobile demand platform
• Launch of our mobile engagement platform in late 2015
• Continue to invest in R&D to develop new products – more to
come in 2015
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FINANCIAL OVERVIEW
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Quarterly Revenue
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Strong Cash Flow Generation
and Margins
•
Cash flow from operations in the
first 9 months of 2014: $47M
•
Cash position of $96M as of end
of Q3.14
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Key Takeaways:
•
Seasoned and Adaptive Management with proven ability to execute
•
Executing in a challenging desktop search market to maintain margins
and develop new products to drive growth
•
Strong cash flow generation and flexible cost structure together with
high profitability
•
Successful mobile expansion provides significant growth opportunity
and leverages core competencies
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QUESTIONS?
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APPENDIX – GAAP
RECONCILIATION
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Quarterly Revenue Reconciliation
ClientConnect GAAP Revenue
Revenue from discountinued operations
ClientConnect non-GAAP Revenue
Perion GAAP Revenue
Deferred Revenue
Perion non-GAAP Revenue
Q1.13
79,303
376
79,679
Q2.13
81,147
533
81,680
Q3.13
80,929
639
81,568
Q1.14
114,823
2,292
117,115
Q2.14
109,534
1,521
111,055
Q3.14
86,285
1,092
87,377
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Three months ended
September 30,
2013
Year to Date
Reconciliation
GAAP revenues
$
Revenues from discontinued operations
Valuation adjustment on acquired deferred product
revenues
Nine months ended
September 30,
2014
80,929
$
2013
86,285
$
2014
241,379
$
310,643
639
-
1,548
-
-
1,092
-
4,905
Non-GAAP revenues
$
81,568
$
87,377
$
242,927
$
315,548
GAAP costs and expenses
$
64,015
$
64,260
$
170,188
$
247,188
Acquisition related expenses
-
Discontinued operations operating expenses
11,492
Share based compensation
(4,088)
Amortization of acquired intangible assets
(1,010)
-
(4,370)
-
(4,429)
28,736
-
(9,210)
(4,769)
(12,679)
-
(13,770)
Non-GAAP costs and expenses
$
71,419
$
54,111
$
189,714
$
216,310
GAAP net income (loss)
Valuation adjustment on acquired deferred product
revenues
$
(9,815)
$
16,996
$
22,222
$
48,499
Acquisition related expenses
Share based compensation
-
1,092
-
4,905
-
1,010
-
4,429
4,088
4,370
9,210
12,679
Amortization of acquired intangible assets
-
4,769
-
13,770
Fair value revaluation - convertible note
-
(584)
-
(584)
Non-recurring tax expense
Accretion of payment obligation related to acquisitions
Taxes related to amortization of acquired intangible
assets and share based compensation
11,838
-
11,838
-
-
-
-
452
-
(2,511)
-
(1,006)
Non-GAAP net income
$
6,111
$
26,647
$
43,270
$
81,639
Non-GAAP net income
$
6,111
$
26,647
$
43,270
$
81,639
Income tax expense
Financial (income) expense, net
Depreciation
Discontinued financial income, net
Discontinued tax expense
2,082
4,996
10,833
(602)
1,623
(2,014)
2,038
2,504
679
4,014
1,871
(24)
-
(107)
-
2,581
-
1,230
-
Adjusted EBITDA
$
12,652
$
33,945
$
57,226
Non-GAAP diluted earnings per share
$
0.11
$
0.38
$
0.79
Shares used in computing non-GAAP diluted earnings
15,561
$
101,109
$
1.18
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