Babylon Ltd. advanced the most in more than a year after Yahoo! Inc. decided to retain a advertising revenue-sharing agreement with the Israeli translation software provider.
Shares surged as much as 34 percent today on the Yahoo decision and closed 13 percent higher, the most since August 2012, at 10.45 shekels in Tel Aviv. The stock pared gains after the company announced a drop in third-quarter sales and profit, and said merger talks with ironSource Ltd. were called off.
Shares of Babylon, which is based in Or Yehuda, Israel, slumped 74 percent last month after Google Inc. ended a revenue-sharing agreement with the software maker and Yahoo indicated that Babylon may be in breach of a four-year contract due to deficiencies in its user policy. Talks with ironSource, an Israeli online software distributor, were halted but that there still is “dialogue” between the two companies, Babylon said in a statement.
“Yahoo’s decision is very good news for the company because it shows a source of revenue after it lost Google,” Beni Dekel, an analyst at Tel Aviv-based Union Bank of Israel Ltd. said today by phone. “The announcement on ironSource was expected and the results are in line with expectations.”
Babylon said today third-quarter profit dropped 29 percent to 22 million shekels as revenue declined 23 percent to 152 million shekels. The Yahoo pact generated 38 percent of Babylon’s revenue in the period, compared with 37 percent from Google, the company said in a statement today.
The company, whose controlling shareholders include online gaming entrepreneur Noam Lanir, put on hold in April plans for a $115 million U.S. public offering of shares as it entered acquisition talks with an Israeli Internet search company it didn’t name.
Babylon also said today Chief Financial Officer Shanit Peer Tsfoni was appointed as its new chief executive, according to a company statement. Alon Carmeli, who led the company for five years, announced in April he would step down.