Presentation for the Capital Market May 2014 1 www.perion.com
Forward-Looking Information This presentation was prepared by Perion Network Ltd. ( “ the Company ” ) as a general presentation All forward-looking information is solely intended for the date that it relates to. Other than the about the Company. obligation to disclose information as required under the securities laws applicable to the Company, the Company is not required to update or change any information included in this presentation, This presentation is not intended to replace the need to review the Prospectus dated May 18, 2014, whether as a result of new information, a future event or other reasons. Similarly, it is clarified that and the documents incorporated by reference therein, before making a decision regarding an the plans and strategy of the Company included in this presentation are correct as of the publication investment in the Company ’ s securities. In the event of any conflict between the contents of this date and may be changed in accordance with the decision of the Company ’ s board, as it may be presentation and the reports of the Company required by law, the contents of the said reports shall from time to time. govern. Other than trademarks owned by the Company, the trademarks contained in this presentation are The information included in this presentation shall not constitute any advice, recommendation, the property of their owners and have been used in this presentation for the sake of clarifying the opinion or offering regarding the profitability of an investment and shall not replace an independent context alone. Use of the trademarks as stated shall not be interpreted as consent or verification examination and personal consultation in accordance with the particular circumstances of each regarding the Company ’ s plans, services or securities. investor. This presentation does not purport to contain or exhaust all of the information which may be relevant This presentation may include forward-looking information as defined in the Securities Law, 5728- for any decision regarding an investment in the Company ’ s securities. 1968, including forecasts, estimations, assumptions and other information regarding future matters For the avoidance of doubt, it is clarified that the Company does not undertake to update the and events. In certain cases, forward-looking information may be identified through use of terms such as: “ expected ” , “ believes ” , “ may ” , “ estimates ” , “ anticipates ” , “ intends ” , “ continues ” , “ might ” , “ plans ” , information included in this presentation. This presentation does not constitute or play a part in any “ projects ” , and other similar terms and phrases. offer or solicitation to purchase the Company ’ s securities and does not constitute or play a part in a solicitation to receive offers as stated. Such an offering will only take place by means of the The forward-looking information in this presentation is based on the updated estimations and prospectus published by the Company, after the receipt of the permits required from the Securities assumptions of the Company ’ s management as of the presentation date, which although the Exchange and the Tel Aviv Stock Exchange. In any event of conflict or inconsistency between this Company believes to be reasonable, are uncertain by nature. The forward-looking information presentation and the prospectus, the provisions of the prospectus shall govern. The presentation involves risks and uncertainty, including factors which are not under the control of the Company, also does not constitute any recommendation and/or consultation regarding the Company ’ s each of which, or a combination thereof, may materially harm the results of the Company ’ s securities. operations and cause the actual results to be materially different from the forward-looking information. 2 www.perion.com
Business Card About Perion ▪ Global and leading media & Internet company that operates in search and digital distribution industries ▪ Provides advanced distribution and monetization solutions to applications and software developers ▪ International management team with a proven track record in dynamic and changing markets • Josef Mandelbaum, CEO - more than 20 years of experience in the Internet & Mobile industries • Yacov Kaufman, CFO - more than 25 years of experience in international corporations ▪ Consistent rational growth in revenues and profits without substantial debt ▪ Commitment to high quality standards *inc. Client Connect 3 www.perion.com
Leading financial data Strong financial outlook for 2014 Q1 2014 Results: Growth • Revenue of $460-470M • Revenue of $117.1M • EBITDA of $125-130M • EBITDA of $33.6M • Net Income of $103-108M • Net Income of $27.6M Financial results for 2013 (Pro forma*) March 31 2014 Balance sheet: Strong & without leverage • Revenue of $433M • Cash flow from operations: $13.9M • EBITDA of $90M • Working Capital**: $16.8M • Bank debt: $6.1M Market cap of ~ NIS 2.4 billion (15.05.2014) • Total equity: $19 8 .9M • Listed on NASDAQ • Listed on TASE *Inc. ClientConnect, GAAP reconciliations are included in Appendix **Inc. Deferred revenue 4 www.perion.com
Strong financial performance Revenue growth (USD millions pro forma* non GAAP) ~ 7% 57% 460 - 470 433 39% 276 2012 2013 2014F *Perion & Client Connect. The data does not include in 2012 substantial bonus from Bing to ClientConnect. GAAP reconciliations are included in Appendix ▪ 2013 EBITDA of about $90.2M (about 21% of revenues) without significant debt ▪ 2012 EBITDA margin of more than 20% 5 www.perion.com
Business development timeline 2000 2006 2007 2010 2011 2012 2014 Smilebox Company ’ s acquisition foundation under Josef Mandelbaum Sweetpacks Nasdaq IPO TASE Listing Client Connect M&A the name of joins as CEO acquisition Company name IncrediMail change to Perion Successful operations in dynamic and changing market, while performing mergers and acquisitions that complement strategic gaps 6 www.perion.com
The value proposition Perion provides app developers with a portfolio of solutions which enable them to efficiently distribute, generate revenue and optimize their software/app while focusing only on what they do best: making a great product 7 www.perion.com
Value chain of the Internet industry Search engine (payable click) Advertiser App developer Quality App Users Advertiser App ’ distribution (advertising Revenue from Advertising Perion Revenue from Advertising $$$ $$$ revenue) Receives ads and search services $$$ Quality App App ’ s final user Mature and proven business model that Internet industry in general and search engines in particular are based on 8 www.perion.com
Internet and mobile advertising continue to grow sharply Mobile Ad Internet Ad Mobile ad spending from total global display advertising: ~16% in 2013. Paid search represents about 48% of all internet advertising revenues ~27% in 2015 Mobile Ad Spending (USD B) Global Display Advertising Spend (USD B) 70 70 60 60 61.4 59.7 57.6 50 50 53.6 48.2 46.9 47.2 40 40 40.7 40.2 30 30 35.5 33.7 20 20 24.9 10 15.8 10 4.0 12.6 12.0 11.5 11.0 8.8 0 0 2011 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 Mobile Ad spending Total Display Classified Paid search Source: eMarketer 2013 Source ZenithOptimedia 9 www.perion.com
App developers are coping with significant business challenges Distribution Monetization Optimization • Buying traffic is extremely • The business model is based on • Most app developers are small complicated , due to multiple free software businesses without analytical technologies and platforms capabilities required to: • Search engines do not adjust their • 1 out of 4 apps never get • Improve funnel conversion business proposal for software installed , mostly for technical developers • Revenue per user (LTV) reasons • It is difficult to navigate through tracking advertising networks • Maximizing distribution • 80% of the developers fail to channels acquiring with a establish a profitable business positive ROI There are relatively little profitable applications. Of those, few manage to earn more from $ 5 , 000 10 www.perion.com
Perion ’ s value proposition: Profit generating business model for application developers Distribution Monetization Optimization • Marketing and media channels ▪ Revenue share on revenue from ▪ Real-time BI platform based on driven by Business Intelligence sponsored links with search huge amount of data engines - Google, Yahoo, Bing and • Dominant player that purchases ▪ Extremely accurate ROI models Ask media at significant scale media ▪ User friendly analytical and ▪ Segmented and customer • Fast Download Manager that reporting tools for developers orientated advertising recommends additional applications to the end user Perion provides a wide range of digital media and web applications solutions that assist applications developers to increase their content ’ s distribution and monetization capabilities 11 www.perion.com
Perion increases it ’ s presence in the U.S. market Vs. competitors (Ask, AOL) US Search Market Share Miilion US Queries (March 2014) 600 80.0% 67.5% 500 70.0% 60.0% 400 50.0% 300 40.0% 200 30.0% 18.6% 20.0% 100 10.1% 10.0% 2.5% 2.1% 1.3% - 0.0% Google Microsoft Yahoo Ask Perion AOL Ask Perion US searches Source: Perion ’ s data & comScore Explicit Core Search Query Report 12 www.perion.com
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