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2www.perion.com
Forward-Looking Information
All forward-looking information is solely intended for the date that it relates to. Other than the
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,
whether as a result of new information, a future event or other reasons. Similarly, it is clarified that
the plans and strategy of the Company included in this presentation are correct as of the publication
date and may be changed in accordance with the decision of the Company’s board, as it may be
from time to time.
Other than trademarks owned by the Company, the trademarks contained in this presentation are
the property of their owners and have been used in this presentation for the sake of clarifying the
context alone. Use of the trademarks as stated shall not be interpreted as consent or verification
regarding the Company’s plans, services or securities.
This presentation does not purport to contain or exhaust all of the information which may be
relevant for any decision regarding an investment in the Company’s securities.
For the avoidance of doubt, it is clarified that the Company does not undertake to update the
information included in this presentation. This presentation does not constitute or play a part in any
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
prospectus published by the Company, after the receipt of the permits required from the Securities
Exchange and the Tel Aviv Stock Exchange. In any event of conflict or inconsistency between this
presentation and the prospectus, the provisions of the prospectus shall govern. The presentation
also does not constitute any recommendation and/or consultation regarding the Company’s
securities.
This presentation was prepared by Perion Network Ltd. (“the Company”) as a general presentation
about the Company.
This presentation is not intended to replace the need to review the Prospectus dated May 18, 2014,
and the documents incorporated by reference therein, before making a decision regarding an
investment in the Company’s securities. In the event of any conflict between the contents of this
presentation and the reports of the Company required by law, the contents of the said reports shall
govern.
The information included in this presentation shall not constitute any advice, recommendation,
opinion or offering regarding the profitability of an investment and shall not replace an independent
examination and personal consultation in accordance with the particular circumstances of each
investor.
This presentation may include forward-looking information as defined in the Securities Law, 5728-
1968, including forecasts, estimations, assumptions and other information regarding future matters
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”,
“projects”, and other similar terms and phrases.
The forward-looking information in this presentation is based on the updated estimations and
assumptions of the Company’s management as of the presentation date, which although the
Company believes to be reasonable, are uncertain by nature. The forward-looking information
involves risks and uncertainty, including factors which are not under the control of the Company, each
of which, or a combination thereof, may materially harm the results of the Company’s operations and
cause the actual results to be materially different from the forward-looking information.
3www.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
4www.perion.com
Leading financial data
Strong financial outlook for 2014
• Revenue of $460-470M
• EBITDA of $125-130M
• Net Income of $103-108M
Financial results for 2013 (Pro forma*)
• Revenue of $433M
• EBITDA of $90M
Market cap of ~ NIS 2.4 billion (15.05.2014)
• Listed on NASDAQ
• Listed on TASE
*Inc. ClientConnect, GAAP reconciliations are included in Appendix **Inc. Deferred revenue
Q1 2014 Results: Growth
• Revenue of $117.1M
• EBITDA of $33.6M
• Net Income of $27.6M
March 31 2014 Balance sheet: Strong & without leverage
• Cash flow from operations: $13.9M
• Working Capital**: $16.8M
• Bank debt: $6.1M
• Total equity: $198.9M
5www.perion.com
Strong financial performance
2013 EBITDA of about $90.2M (about 21% of revenues) without significant debt
2012 EBITDA margin of more than 20%
*Perion & Client Connect. The data does not include in 2012 substantial bonus from Bing to ClientConnect. GAAP reconciliations are included in Appendix
2012 2013 2014F
276
433460 - 470
Revenue growth(USD millions pro forma* non GAAP)
~ 7%57%
39%
6www.perion.com
Business development timeline
Successful operations in dynamic and changing market, while performing mergers and acquisitions that complement
strategic gaps
2000 2006 2007 2010 20122011 2014
Client Connect M&A Sweetpacks acquisition
Smilebox acquisition
Company name change to Perion
Josef Mandelbaum joins as CEO TASE Listing Nasdaq IPO
Company’s foundation under
the name of IncrediMail
7www.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
8www.perion.com
Value chain of the Internet industry
Mature and proven business model that Internet industry in general and search engines in particular are based on
Search engine(payable click)
Advertiser(advertising
revenue)Perion
App developerAdvertiser
App’s final user
App’ distributionRevenue from Advertising $$$
Quality App
Quality AppReceives ads and search services $$$
Revenue from Advertising $$$
Users
9www.perion.com
Internet and mobile advertising continue to grow sharply
Internet Ad Mobile Ad
Paid search represents about 48% of all internet advertising revenuesMobile ad spending from total global display advertising: ~16% in 2013.
~27% in 2015
2012 2013 2014 20150
10
20
30
40
50
60
70
33.7 40.2
48.2
57.6
11.0 11.5 12.0 12.6
40.7 46.9
53.6 61.4
Global Display Advertising Spend (USD B)
Total Display Classified Paid search
2011 2012 2013 2014 2015 2016 20170
10
20
30
40
50
60
70
4.0 8.815.8
24.9
35.5
47.2
59.7
Mobile Ad Spending (USD B)
Mobile Ad spending
Source: eMarketer 2013 Source ZenithOptimedia
10www.perion.com
App developers are coping with significant business challenges
There are relatively little profitable applications. Of those, few manage to earn more from $ 5,000
Distribution
• Buying traffic is extremely
complicated, due to multiple
technologies and platforms
• 1 out of 4 apps never get
installed, mostly for technical
reasons
Monetization
• The business model is based on
free software
• Search engines do not adjust their
business proposal for software
developers
• It is difficult to navigate through
advertising networks
• 80% of the developers fail to
establish a profitable business
Optimization
• Most app developers are small
businesses without analytical
capabilities required to:
• Improve funnel conversion
• Revenue per user (LTV)
tracking
• Maximizing distribution
channels acquiring with a
positive ROI
11www.perion.com
Perion’s value proposition: Profit generating business model for application developers
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
Distribution
• Marketing and media channels
driven by Business Intelligence
• Dominant player that purchases
media at significant scale media
• Fast Download Manager that
recommends additional
applications to the end user
Monetization
Revenue share on revenue from
sponsored links with search
engines - Google, Yahoo, Bing and
Ask
Segmented and customer
orientated advertising
Optimization
Real-time BI platform based on
huge amount of data
Extremely accurate ROI models
User friendly analytical and
reporting tools for developers
12www.perion.com
Perion increases it’s presence in the U.S. market Vs. competitors (Ask, AOL)
Source: Perion’s data & comScore Explicit Core Search Query Report
Google Microsoft Yahoo Ask Perion AOL0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
67.5%
18.6%
10.1%
2.5% 2.1% 1.3%
US Search Market Share(March 2014)
Jan-13 Feb-13Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 -
100
200
300
400
500
600
Miilion US Queries
Ask Perion US searches
13www.perion.com
Agreements with search engines
Positive reputation among search engines
Search engineU.S market share
(January 2014)Cooperation starting
yearContract period
Google 68% 2007 August 2015
Bing 18% 2010 December 2014
Yahoo 10% 2013 July 2017
Ask 3% 2013 March 2016
*Agreements with search engines renewed every 1 to 4 years
14www.perion.com
Business strategy
Strengthening of competitive position and leveraging of scale in the Internet search segment
Strengthening and expanding activities with app and content developers
Ensuring value proposition for app developers and end-user with full transparency
Expanding mobile activities and user centered advertising
Maintaining technological leadership through organic investments and mergers and acquisitions
Extension and expansion activities towards attractive and growing segments that improve Perion’s business and
financial positioning
15www.perion.com
From S&P Maalot credit rating repot: ilA-/Stable (06/03/2014)*
“The rating of Perion Network Ltd (hereafter: "Perion") is mainly supported by a low-risk financial risk profile as reflected by
strong debt coverage ratios”
“We estimate that the company's adjusted debt to EBITDA ratio will be lower than 1.5x over the intermediate term,
including M&A activities”
“Our financial risk profile assessment is also supported by the operations of the company, which generally generate positive
free cash flows supporting its debt service capabilities”
“We believe that Perion’s merger with "ClientConnect" strengthened the company’s competitive position as well as its debt
servicing capabilities”
“In our view, over the intermediate term, the company will direct its internal resources to growth initiatives and will not execute
material dividend distribution/buybacks. In addition, we estimate that acquisitions over the near term (up to 1 year), if any, will be
funded through debt, and possibly also with an equity component. As previously indicated, we do not expect such acquisition
activity to lead to a breach of the coverage ratios which we view as commensurate with the current rating”
*Partial quotes. For more information on Perion Network’s credit rating, see S&P Maalot rating report published March 6, 2014.
16www.perion.com
Summary
Perion is among the worldwide leading companies in the search industry and digital distribution
Perion is the second biggest worldwide search services distributor
Business partnerships with leading search engines
Financial strength reflected in high growing profits over the years
Expansion of operations towards attractive segments
Maintaining technological leadership through mergers and acquisitions
Professional management and quality human capital with years of experience and a proven track record in dynamic
markets
Standards of a company listed on NASDAQ
Perion has grown from a small scale company that focused on developing end user’s products to a global leader with a
platform of services and a wide range of revenue streams, along with valuable experience which will enable the Company
to take advantage of future business opportunities
18www.perion.com
GAAP Reconciliation
Perion GAAP reconciliation (in USD 000')Quarter ended March 31 2014
GAAP revenues 114,823
Revenues from discontinued operations -
Valuation adjustment on acquired deferred product revenues 2,292
Non-GAAP revenues 117,115
GAAP net income 13,816
Valuation adjustment on acquired deferred product revenues 2,292
Acquisition related expenses 2,948
Share based compensation 4,436
Amortization of acquired intangible assets 4,500
Accretion of payment obligation related to acquisitions 268
Taxes related to amortization of acquired intangible assets (662)
Non-GAAP net income 27,598
Non-GAAP net income 27,598
Income tax expense 4,622
Interest expense (income), net 393
Accretion of payment obligation related to acquisitions (268)
Taxes related to amortization of acquired intangible assets 662
Depreciation 555
Discontinued financial income, net -
Discontinued tax benefit -
Non-GAAP EBITDA 33,562
Perion GAAP reconciliation (in USD 000') 2013
GAAP revenues 412,657
Revenues from discontinued operations 3,016
Sales from commercial agreement deducted as intercompany transaction 17,480
Non-GAAP revenues 433,153
GAAP net income 28,926
Sales from commercial agreement deducted as intercompany transaction 17,480
Customer acquisition costs associated with unrecognized sales (14,334)
Acquisition related expenses 8,278
Share based compensation 13,163
Amortization of acquired intangible assets 9,269
Finance expense deferred 751
Non recurring tax benefits 8,876
Non-GAAP net income 72,409
Non-GAAP net income 72,409
Income tax expense (benefit) 25,067
Finance expense related to discontinued operations (40)
Tax credit on loss from discontinued operations 454
Non recurring tax expense (8,876)
Interest expense (income), net (1,617)
Finance expense deferred (751)
Depreciation and amortization 3,556
Non-GAAP EBITDA 90,202
19www.perion.com
GAAP Reconciliation (cont’d)
Perion GAAP reconciliation (in USD 000') 2012
GAAP CC revenue 537,008
GAAP Perion revenue 60,223
Combined GAAP revenue 597,231
ClientConnect Search revenue adjustment (322,308)
Perion deferred revenue adjustment 983
Combined non GAAP revenue 275,906
non GAAP CC revenue 214,700
non GAAP Perion revenue 61,206
20www.perion.com
Balance sheetPerion GAAP BALANCE SHEET (in USD 000')
March 31 2014 Unaudited
AssetsCurrent assets:Cash and cash equivalents 51,174Restricted cash 1,541Trade receivables 48,871Other current assets 6,127Total current assets 107,713Property and equipment, net 3,723Goodwill and other intangible assets, net 191,829Other assets 3,064Total assets 306,329Liabilities and Stockholders' EquityCurrent liabilities:Current maturities of long term debt 17,133Trade payables 45,283Deferred revenues 7,923Payment obligation related to acquisition 8,996Accrued expenses and other liabilities 19,455Total current liabilities 98,790Long-term debt 3,675Other long term liabilities 4,927Total liabilities 107,392Stockholders' equity:Ordinary shares 183Additional paid-in capital 184,938Retained earnings 13,816Total stockholders' equity: 198,937Total liabilities and stockholders' equity 306,329
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