Perion Network's (PERI) Q4 Earnings & Revenues Increase Y/Y

Perion Network Ltd. (NASDAQ:PERI) reported fourth-quarter 2019 non-GAAP earnings of 32 cents per share, which increased 52.4% year over year.

The Zacks Consensus Estimate for fourth-quarter earnings was pegged at 16 cents per share.

Net revenues of $78.3 million beat the consensus mark by 4% and increased 8.6% from the year-ago quarter, driven by growth in Search and other revenues.

Top-line Details

Search and other (66.2% of net revenues) revenues increased 49.3% from the year-ago quarter to $51.8 million. The growth was driven by increased activity from its existing publishers, addition of new publishers, higher RPMs and an increased number of unique searches.

Perion benefited from Codefuel, the company’s search business, whose revenue trajectory has improved through product innovation and an effective sales effort.

The company also stated that the rise in direct-to-consumer brands increased the demand for quality searches on Microsoft’s (NASDAQ:MSFT) Bing, which, in turn drove growth for the company.

Advertising (33.8% of net revenues) revenues decreased 29.2% year over year to $26.4 million. This decline was attributed to the company’s plan to transform its digital branding division Undertone from a single ad unit provider to an integrated provider of synchronized digital branding solutions.

Notably, Perion acquired Content IQ (CIQ), a digital publishing optimization company, to personalize the Undertone business. CIQ technology will allow Undertone to offer more personalized content, as the platform optimizes content to provide a one-to-one user experience and page level engagement.

Operating Details

On a GAAP basis, total operating expenses were $70.6 million in the reported quarter. As a percentage of revenues, operating expenses increased 160 basis points (bps) on a year-over-year basis to 90.3%.

Customer acquisition costs and media buy increased 12.5% year over year to $41.1 million.

Research & development (R&D) expenses increased 42% on a year-over-year basis to $6.1 million. Selling and marketing expenses declined 9.5% from the year-ago quarter to $9.1 million. General and administrative expenses increased 46% on a year-over-year basis to $5 million.

Adjusted EBITDA came in at $12.2 million, up 6.1% from the year-ago quarter.

Balance Sheet

As of Dec 31, 2019, the company’s cash and cash equivalents were $38.4 million compared with $35.5 million as of Sep 30, 2019.

As of Dec 31, 2019, total debt was $16.7 million, compared with $18.8 million as of Sep 30, 2019.

Operating cash flow was $11.2 million in the reported quarter compared with $11.1 million in the previous quarter.

Guidance

For 2020, Perion expects adjusted EBITDA between $38 million and 40 million, including CIQ.

Notably, the company expects to integrate the CIQ acquisition and drive organic growth efforts.

Zacks Rank & Other Stocks to Consider

Currently, Perion Network sports a Zacks Rank #1 (Strong Buy).

CEVA, Inc. (NASDAQ:CEVA) and Alteryx, Inc. (NYSE:AYX) are some other top-ranked stocks in the same industry. Both stocks carry a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for CEVA and Alteryx is currently pegged at 20% and 39.9%, respectively.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>