1www.perion.com

Presentation for the Capital Market

May 2014

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

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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

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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

276

433460 - 470

2012 2013 2014F

Revenue growth(USD millions pro forma* non GAAP)

~ 7%57%

39%

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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&ASweetpacksacquisition

Smileboxacquisition

Company name change to Perion

Josef Mandelbaumjoins as CEO

TASE Listing Nasdaq IPO

Company’s foundation under

the name of IncrediMail

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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

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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’ distribution

Revenue from Advertising $$$

Quality App

Quality AppReceives ads and search services $$$

Revenue from Advertising

$$$

Users

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Internet and mobile advertising continue to grow sharply

Internet AdMobile Ad

Paid search represents about 48% of all internet advertising revenuesMobile ad spending from total global display advertising: ~16% in 2013.

~27% in 2015

33.7

40.2

48.2

57.6

11.0 11.5 12.0 12.6

40.7 46.9

53.6

61.4

0

10

20

30

40

50

60

70

2012 2013 2014 2015

Global Display Advertising Spend (USD B)

Total Display Classified Paid search

4.08.8

15.8

24.9

35.5

47.2

59.7

0

10

20

30

40

50

60

70

2011 2012 2013 2014 2015 2016 2017

Mobile Ad Spending (USD B)

Mobile Ad spending

Source: eMarketer 2013 Source ZenithOptimedia

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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

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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

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Perion increases it’s presence in the U.S. market Vs. competitors (Ask, AOL)

Source: Perion’s data & comScore Explicit Core Search Query Report

67.5%

18.6%

10.1%

2.5% 2.1% 1.3%0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Google Microsoft Yahoo Ask Perion AOL

US Search Market Share(March 2014)

-

100

200

300

400

500

600

Miilion US Queries

Ask Perion US searches

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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

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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

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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

17www.perion.com

Appendix

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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

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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

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Balance sheet

Perion GAAP BALANCE SHEET (in USD 000')March 31 2014

Unaudited

Assets

Current assets:

Cash and cash equivalents 51,174

Restricted cash 1,541

Trade receivables 48,871

Other current assets 6,127

Total current assets 107,713

Property and equipment, net 3,723

Goodwill and other intangible assets, net 191,829

Other assets 3,064

Total assets 306,329

Liabilities and Stockholders' Equity

Current liabilities:

Current maturities of long term debt 17,133

Trade payables 45,283

Deferred revenues 7,923

Payment obligation related to acquisition 8,996

Accrued expenses and other liabilities 19,455

Total current liabilities 98,790

Long-term debt 3,675

Other long term liabilities 4,927

Total liabilities 107,392

Stockholders' equity:

Ordinary shares 183

Additional paid-in capital 184,938

Retained earnings 13,816

Total stockholders' equity: 198,937

Total liabilities and stockholders' equity 306,329