Perion Expects 2013 Revenues to Exceed $110 Million

  Perion Expects 2013 Revenues to Exceed $110 Million

              2012 Non-GAAP Revenues expected to be $61 million

Business Wire

TEL AVIV, Israel & SEATTLE -- January 8, 2013

Perion Network Ltd. (NASDAQ: PERI) announced today revenue estimates for 2012
and its guidance for 2013.

Revenues in the fourth quarter of 2012 are expected to reach a record $21
million, more than double the fourth quarter of 2011. This will bring total
non-GAAP revenues for 2012 to $61 million, increasing 64%, from $37 million in
2011. The $61 million exceeded the updated guidance of $55 million and
includes one month of results from the acquisition of SweetPacks. Perion
intends to report final 2012 financial results at the beginning of March.

2013 Financial Outlook:

  *Revenue is expected to exceed $110 million, representing overall growth of
    80%+ year over year, and at least 25% organic growth year over year
  *EBITDA is expected to be at least $26 million, representing an EBITDA
    margin of 24%
  *Non-GAAP Net Income is expected to be at least $20 million, representing
    an 18% net profit margin
  *Non-GAAP EPS is expected to be at least $1.61, based on an average of 12.4
    million shares outstanding

Commenting on the guidance, Mr. Josef Mandelbaum, Perion’s CEO said, “We are
very excited about 2013 and expect it to be a breakout year in terms of growth
both in top and bottom line results. Our improving financial results are a
result of our strong organic growth coupled with our acquisition strategy and
a diversified product portfolio with multiple revenue streams.

“Since 2010, Perion will have more than tripled its revenues, enriched its
product portfolio, developed strong back-end systems and moved onto mobile
platforms, while maintaining robust EBITDA margins,” continued Mr. Mandelbaum.
“This year, as in previous years we also expect strong cash flow from
operations, closely tracking our non-GAAP net income.”

Customer acquisition costs, with a positive return on investment, are expected
to exceed $50 million, driving revenue growth in 2013 and beyond.

Revenue and other financial estimates contained in this press release have not
been audited or reviewed by Perion’s independent auditors, and accordingly
they express no opinion or other form of assurance as to this information. The
Company provides no assurance that these preliminary results will not change
following the Company’s completion of its financial audit of results of
operations for the fiscal fourth quarter 2012, which are expected to be
completed by March 2013.

About Perion Network Ltd.

Perion Network, Ltd. (NASDAQ: PERI) is a global consumer internet company that
develops applications to make the online experience of its users simple, safe
and enjoyable. Perion’s three main consumer brands are: IncrediMail, Smilebox
and SweetIM. IncrediMail is a unified messaging application enabling consumers
to manage multiple email accounts and Facebook messages in one place with an
easy-to-use interface and extensive personalization features, and is available
in over 100 countries in 8 languages; Smilebox is a leading photo sharing and
social expression product and service that quickly turn life's moments into
digital keepsakes for sharing and connecting with friends and family, in a fun
and personal way. SweetIM  is an instant messaging and Facebook application
that enables consumers to personalize their everyday communications with free,
fun and easy to use content. Perion products have had over 300 million
downloads to date with more than 50 million monthly visitors across all of its
brands. Most of Perion’s applications are monetized through a freemium model.
Free versions of our applications are monetized primarily through our toolbar
which generates search revenue and display advertising revenue, generated
through impressions. A more advanced feature-rich version of many of our
products is available with a premium upgrade. Perion also offers and develops
a range of products for mobile phones and tablets to answer its users
increasing mobile demands. For more information on Perion please visit
www.perion.com.

Non-GAAP measures

Non-GAAP financial measures consist of GAAP financial measures adjusted to
exclude: Valuation adjustment on acquired deferred product revenues,
amortization of acquired intangible assets, share-based compensation expenses,
acquisition related expenses, deferred finance expenses and non-recurring tax
benefits. GAAP Revenues in 2011 were $35.5 million and expected to be in 2012
approximately $60 million. Non-GAAP revenues exclude the valuation adjustment
on acquired deferred product revenues of $1.0 in 2012 and $1.5 million in
2011. No such revenues are projected for 2013. Perion uses EBITDA as a
non-GAAP financial performance measurement. EBITDA is calculated by adding
back to net income; Valuation adjustment on acquired deferred product
revenues, acquisition related expenses, interest, taxes, stock-based
compensation, depreciation and amortization and one-time expenses (credits).
Reconciliation of EBITDA and Non-GAAP Net income to GAAP Net Income expected
for 2013 has not been provided as Perion has not yet quantified the
amortization expenses associated with assets recently acquired or shared based
to be expected in 2013. The purpose of such adjustments is to give an
indication of performance exclusive of non-cash charges and other items that
are considered by management to be outside of core operating results. Our
non-GAAP financial measures are not meant to be considered in isolation or as
a substitute for comparable GAAP measures, and should be read only in
conjunction with our consolidated financial statements prepared in accordance
with GAAP. Our management regularly uses our supplemental non-GAAP financial
measures internally to understand, manage and evaluate our business and make
operating decisions. These non-GAAP measures are among the primary factors
management uses in planning for and forecasting future periods. Business
combination accounting rules requires us to recognize a legal performance
obligation related to a revenue arrangement of an acquired entity. The amount
assigned to that liability should be based on its fair value at the date of
acquisition. The non-GAAP adjustment is intended to reflect the full amount of
such revenue. We believe this adjustment is useful to investors as a measure
of the ongoing performance of our business. We believe these non-GAAP
financial measures provide consistent and comparable measures to help
investors understand our current and future operating cash flow performance.
These non-GAAP financial measures may differ materially from the non-GAAP
financial measures used by other companies.

Forward Looking Statements

This press release contains historical information and forward-looking
statements within the meaning of The Private Securities Litigation Reform Act
of 1995 with respect to the business, financial condition and results of
operations of the Company. The words “believe,” “expect,” “intend,” “plan,”
“should” and similar expressions are intended to identify forward-looking
statements. Such statements reflect the current views, assumptions and
expectations of the Company with respect to future events and are subject to
risks and uncertainties. In addition, the financial information set forth in
this press release is not an indication of the future financial results of the
Company following the consummation of the acquisition. Many factors could
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements that
may be expressed or implied by such forward-looking statements, or financial
information, including, among others, risk associated with uncertainty as to
whether the transaction will be consummated, the occurrence of any event,
change or other circumstances that could give rise to the termination of the
acquisition agreement, potential litigation associated with the transaction,
risks that the proposed transaction disrupts current plans and operations and
the potential difficulties in employee retention as a result of the proposed
transaction and in integrating the acquired business, the distraction of
management and the Company resulting from the proposed transaction, changes in
the markets in which the Company operates and in general economic and business
conditions, loss of key customers and unpredictable sales cycles, competitive
pressures, market acceptance of new products, inability to meet efficiency and
cost reduction objectives, changes in business strategy and various other
factors, whether referenced or not referenced in this press release. Various
other risks and uncertainties may affect the Company and its results of
operations, as described in reports filed by the Company with the Securities
and Exchange Commission from time to time, including its annual report on Form
20-F for the year ended December 31, 2011. The Company does not assume any
obligation to update these forward-looking statements.

Source: Perion Network Ltd.

Contact:

Perion Investor Relations
Deborah Margalit
+972-3-7696100
investors@perion.com
or
Hayden/MS-IR LLC
Brett Maas / Miri Segal-Scharia
646-536-7331 / 917-607-8654
Brett@haydenir.com / msegal@ms-ir.com
 
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