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Perion (PERI) Q4 Earnings Top Estimates, Revenues Up Y/Y

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Zacks Equity Research
·4 min read
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Perion Network PERI reported fourth-quarter 2020 adjusted earnings of 45 cents per share, up 40.6% year over year. The Zacks Consensus Estimate was pegged at 18 cents per share.

Revenues of $118.3 million beat the consensus mark by 5.8%. Moreover, the figure jumped 51.1% year over year.

This upswing was primarily driven by the solid uptick in Display and Social Advertising revenues on strong momentum in new interactive Connected Television (iCTV) and content monetization offerings, despite lower digital ad spending from travel and hospitality industries.

In addition, growing publisher engagement in search technology division, aided by its partnership with Microsoft MSFT was a major positive. Further, better-than-anticipated synergies from the acquisitions of ContentIQ and Pub Ocean, which were concluded in 2020, continued fueling revenue growth in the fourth quarter.

Perion Network Ltd Price, Consensus and EPS Surprise

Perion Network Ltd Price, Consensus and EPS Surprise
Perion Network Ltd Price, Consensus and EPS Surprise

Perion Network Ltd price-consensus-eps-surprise-chart | Perion Network Ltd Quote

Segment Details

Display and Social Advertising revenues (57.8% of total revenues) soared 158.8% year over year to $68.4 million.

However, Search Advertising and other revenues (42.2% of total revenues) declined 3.8% year over year to $49.9 million, on reduced RPMs, which was partially offset by higher number of daily searches.

During the fourth quarter, Average Daily Traffic Search reached 15.7 million, jumping 32% year over year.

Connected Television (CTV) revenues surged 132% sequentially to $6.5 million.

Operating Details

Non-GAAP gross profit came in at $36.9 million, up 21.8% year over year from the year-ago quarter’s $30.3 million. However, the gross margin contracted 752 basis points (bps) year over year to 31.2%.

Customer acquisition costs and media buy (CAC) surged 82% year over year to $74.8 million. Further, CAC, as a percentage of revenues, increased from 53% in the year-ago quarter to 63% in the fourth quarter, supported by the Content IQ and Pub Ocean acquisitions, change in overall product mix and lower RPMs in search advertising.

On a non-GAAP basis, selling and marketing expenses flared up 12.2% year on year to $10.1 million. Research and development expenses rose 26.3% year over year to $7.2 million. General and administrative expenses shot up 26.5% year on year to $4.3 million.

Total operating expenses on a non-GAAP basis were $22.6 million, up 15.9% year over year.

Perion reported an operating profit of $14.3 million compared with the operating profit of $10.8 million seen in the year-ago quarter.

Adjusted EBITDA came in at $15.3 million, up 25.5% on year-over-year basis.

Balance Sheet and Cash Flows

As of Dec 31, 2020, the company has cash & cash equivalents and short-term bank deposits worth $60.4 million compared with $60 million, of Sep 30, 2020.

Perion’s total debt was $8.3 million as of Dec 31, 2020 compared with $22.9 million as of Sep 30, 2020.

Cash flow from operations was $12.8 million, up from the year-ago quarter’s reported figure of $11.2 million.

Guidance

For 2021, revenues are projected between $350 million and $370 million. Adjusted EBITDA is expected in the range of $35-$37 million, suggesting growth of 10% at the mid-point.

Management believes potential synergies from the acquisitions of ContentIQ and Pub Ocean will further stoke top-line growth. Additionally, the firm’s partnership with Microsoft is likely to attract new publishers and drive publisher traction, thereby propelling growth in the search advertising business.

Zacks Rank & Stocks to Consider

Perion Network currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Cohu COHU and Ultra Clean Holdings UCTT. Both stocks carry a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Cohu is scheduled to release quarterly numbers on Feb 10, while Ultra Clean will report on Feb 17.

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