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DATA-DRIVEN AD TECH SOLUTIONS FOR BRANDS & PUBLISHERS COMPANY DECK
August 2020
1
$333B 2019
Global Digital Ad Spend
BIG ADDRESSABLE MARKET
2
Source: eMarketer.com 6/2020
ADDRESSABLE MARKET
HUGE $526B 2024 FC,
Global Digital Ad SpendTOMORROW
3
Source: eMarketer.com 6/2020
THE GIANTS ARE CONSOLIDATING THE WORLD 65%
4
Source: eMarketer.com 6/2020
ON AD SPENDING THE COVID19 IMPACT
According to eMarketer, short- term change in average digital Ad spending due to the Pandemic decreased 25%-35%
Source: eMarketer.com 4/2020
5
6
Perion is well- positioned to capitalize on any shifting budget between 3 main pillars of digital advertising
265,470 299,537
333,993 365,554
391,781 411,810
426,124
2017 2018 2019 2020 2021 2022 2023
PERION’S DIVERSIFICATION STRATEGY
Ad Spend ($M)
Source: Statista 10/2019
Search Advertising 45%
Social Advertising 35%
Display Advertising 20%
PERION’S DIVERSIFICATION STRATEGY SEARCH ADVERTISING
VIDEO & DISPLAY
20%
SEARCH 42%
SOCIAL MEDIA
38%
7
Online retailers are leading to greater competition in the auction
Improved algorithms accuracy
Direct correlation between search and online purchases.
MARKET TRENDS
8
Source: eMarketer.com 6/2020
Search Ad Spending $M Worldwide, 2019-2024
FOR 10 YEARS A STRATEGIC PARTNER
9
* Microsoft 10K 7/2020 ** Statcounter.com, 7/2020
963M UNIQUE
GLOBAL VISITORS
144B YEARLY
SEARCHES
18.5% SEARCH SHARE
IN U.S. (PC)**
IN NUMBERS
+1% GROWTH IN REVENUES*
$7.7B IN REVENUES FY2020 YTD*
10
CODEFUEL MARKET RECOVERY
11
BEND THE CURVE OUTPERFORM THE BENCHMARK
-2% YoY
12
37.6
34.4 33.3 34.3 31.6
29.6 31.0
34.7 35.3
42.3 44.2
51.8
42.3 41.6
Q1 -1
7
Q2 -1
7
Q3 -1
7
Q4 -1
7
Q1 -1
8
Q2 -1
8
Q3 -1
8
Q4 -1
8
Q1 -1
9
Q2 -1
9
Q3 -1
9
Q4 -1
9
Q1 -2
0
Q2 -2
0
Based on benchmark -25%
YoY
+10
COLLABORATION WITH CHECK POINT
66
Keywords Data
Traffic Validation
CodeFuel Hosted Search
Data Analysis
Device GEO ad Unit Channel A/B testing
Search Query
Revenues Optimization (CPC / RPM)
13
COLLABORATION WITH
14
You Have the Right to Remain Private
73% Of consumers surveyed are more aware of data breaches compared to five years ago
78% said they are taking action to limit the amount of personal information they share online
PRIVADO CO-DEVELOPED BY CODEFUEL AND MICROSOFT
15
Advertising
16
PERION’S DIVERSIFICATION STRATEGY DISPLAY & SOCIAL ADVERTISING
Brands in housing media buying capabilities
Performance marketing growing
Death of the cookie imminent
Continued growth of walled gardens
Creative matters
KEY GUIDING TRENDS
17
FULL FUNNEL– CUSTOMER JOURNEY
18
(RPM) (CPM)
O&O Sites
Personalized Content and
Layout
5-7 minutes
per session
Audience targeting Buying System
Landing Page
Display Ad Units
Display To Search
Cost Per Click
Maximize PPS – Profit Per Session
ADVERTISING STRATEGY Full Funnel Attribution Modeling
Ad Intelligence Graph (AIG)
(CPA)
19
Action
Predictive Analytics
O&O BUSINESS MODEL EVOLUTION
Yield optimization
Platform
Display 2 Search Format
CIQ As a Service
CIQ As a Platform
Enhance Synchronized
digital branding
Q2/2020 2021Q3/2020 Q3/2020Q1-Q3 /2020
Establish O&O Network
Externalized ContentIQ services To other publishers (Mini-Site)
CIQ Synergy with CodeFuel and Undertone
20
21
18.6 21.3 21.6
26.4 23.7
18.7
39.9 42.4
Q1 -1
9
Q2 -1
9
Q3 -1
9
Q4 -1
9
Q1 -2
0
Q2 -2
0
H1 -1
9
H1 -2
0
ADVERTISING – KEEPING THE MOMENTUM DESPITE COVID
CONNECTING THE WORLD’S BEST BRANDS & PUBLISHERS WITH AWARD-WINNING CREATIVES
AWARDSPUBLISHERSBRANDS
22
PERION’S TURNAROUND – A THREE PHASES’ APPROACH
Cost optimization Building Tech-Moat Ignite Growth Phase 1 Phase 2 Phase 3
23
Key Turnaround Financial Optimization Milestone ($M)
24
92.5 86.2 86.9
77.7
64.6 64.4 62.3 60.7
50.2
40.8 39.7 40.5
31.0
20.8 18.8 16.7 14.6 12.5
-43.7
35.4
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20
Debt Net Cash
Phase 1
In H1 2020 we paid $15M for CIQ acquisition. Total Cash $47.9M Total Debt $12.5M
Cost optimization
25
33%
28% 26% 26%
6% 7% 8%
10%
2017 2018 2019 2020
Revenue OPEX R&D
* 2020 revenues and expenses are based on management mid point guidance and analysts’ estimates
Building Tech-Moat
Ignite Growth
274
253 261
2017 2018 2019 2020
GR OW
TH D
RI VE
RS
ContentIQ / PubOcean Accretive acquisition
Microsoft partnership, Launch of Privado
Synergistic AD solution
Revenues ($M)
26
276-286
27
1. CIQ costs synergy 2. Vendors and consultants'
terms renegotiation 3. Reduced travel and
marketing expenses 4. Reduced rent expenses 5. Automation processes to
reduce costs
All the measures we’ve taken resulted in more than $10 million of proforma* cost savings annualized
Proforma Cost-Savings of more than $10M YoY
0.7
1.8
2.6
5.6
R&D
G&A
S&M
COGS
WHAT WE’VE DONE SO FAR:
* - combined financial results of CIQ as if it was acquired at the beginning of 2019.
ADJUSTED EBITDA ($M) 2019 - 2020
27
29.6
32.5
7.4
2.5
8.7
11-13
2018 2019 Q2-19 Q2-20 H1-20 H2-20
H2 2020 Guidance
2020 GUIDANCE Based on our current
visibility we expect the following results:
28
($M) H1 2020 H2 2020 2020
Revenue $126.4 $150-$160 $276-$286
Adj EBITDA $8.7 $11-$13 $20-$22
www.perion.com 29
Appendix
Balance Sheet Overview ($M)
Current Assets 31/12/2019 30/06/2020 Current Liabilities 31/12/2019 30/06/2020
Cash and cash equivalents 38.4 31.0 Current maturities of long-term loans and Convertible debt 8.3 8.3
Restricted cash 1.2 1.2 Accounts payable 47.7 36.6
Short-term bank deposit 23.2 16.9 Accrued expenses and other liabilities 18.4 15.0
Accounts receivable, net 49.1 35.9 Short-term operating lease liability 3.7 3.8
Prepaid expenses and other current assets 3.2 3.3 Deferred revenues 4.2 3.9
115.1 88.3 Payment obligation related to acquisitions 1.0 13.9
83.3 81.5
Non-Current Assets 31/12/2019 30/06/2020 Long-Term Liabilities 31/12/2019 30/06/2020
Property and equipment, net 10.9 8.6 Long-term Debt 8.3 4.2
Operating lease right-of-use assets 22.4 20.7 Long-term operating lease liability 20.4 18.4
Intangible assets, net 2.7 17.2 Payment obligation related to acquisitions - 12.1
Goodwill 125.8 149.2 Other long-term liabilities 6.6 6.0
Deferred taxes & Other assets 6.9 6.5 35.3 40.7
168.7 202.2
Shareholders' Equity 31/12/2019 30/06/2020
165.2 168.3
Total Assets 283.8 290.5 Total Liabilities and Shareholders' Equity 283.8 290.5
30
Income Statement GAAP Basis ($M)
31
Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 2017 2018 2019 2019 2020
Advertising 29.3 33.2 26.2 37.3 18.6 21.3 21.6 26.4 23.8 18.7 134.5 126.0 87.9 39.9 42.4
Search and other 31.6 29.6 31.0 34.7 35.2 42.3 44.2 51.8 42.3 41.6 139.5 126.8 173.6 77.5 84.0
Total Revenues 60.9 62.8 57.2 72.0 53.8 63.6 65.8 78.2 66.1 60.3 274.0 252.8 261.5 117.4 126.4
Customer acquisition costs 31.9 31.1 28.8 36.6 27.4 33.2 34.2 41.1 36.1 36.8 130.9 128.4 135.9 60.6 72.9
Media Margin 29.0 31.7 28.4 35.4 26.4 30.4 31.6 37.1 30.0 23.5 143.1 124.4 125.6 56.8 53.5
% of Revenues 47.6% 50.5% 49.7% 49.2% 49.1% 47.8% 48.0% 47.4% 45.4% 39.0% 52.2% 49.2