UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K
Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934

For the month of May 2020 (Report No. 1)

Commission File Number: 000-51694

Perion Network Ltd.
(Translation of registrant's name into English)

1 Azrieli Center, Building A, 4th Floor
26 HaRokmim Street, Holon, Israel 5885849
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒   Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): N/A

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): N/A



Explanatory Note

On May 6, 2020, Perion Network Ltd. (the “Registrant” or “Perion”) issued a press release titled “Perion Reports $1.3 Million in GAAP Net Income and $6.2 Million in Adjusted EBITDA for the First Quarter 2020” A copy of this press release is furnished as Exhibit 99.1 herewith.

The GAAP financial statements tables contained in the press release attached to this report on  Form 6-K are incorporated by reference into the Registrant’s registration statements on Form S-8 (File Nos. 333-208278, 333-203641, 333-193145, 333-192376, 333-188714, 333-171781, 333-152010, 333-133968, 333-216494 and 333-237196).



Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
PERION NETWORK LTD.
 
       
 
By:
/s/ Maoz Sigron
 
 
Name:
Maoz Sigron
 
 
Title:
Chief Financial Officer
 

Date: May 6, 2020




Exhibit 99.1


 

Perion Reports $1.3 Million in GAAP Net Income and $6.2 Million in Adjusted
EBITDA for the First Quarter 2020

Company continues its 2019 momentum, driving 23% year over year topline growth;
seasoned management team taking range of strategic steps to preserve cash and leverage financial strength
amidst COVID-19 uncertainty

Q1 2020 Highlights:

Total Revenues of $66.1 million, increased 23% year-over-year;
GAAP Net Income of $1.3 million, increased 8% year-over-year;
Non-GAAP Net Income of $5.0 million, increased 53% year-over-year;
GAAP Earnings Per Share of $0.05, no change year-over-year;
Adjusted EBITDA of $6.2 million, increased 22% year-over-year;
Net Cash provided from operations was $2.5 million; decreased 82% year-over-year;
Net Cash decreased from $45.0 million to $39.5, inclusive of the $15.1 million paid at closing to acquire ContentIQ.

Tel Aviv & New York – May 6, 2020 – Perion Network Ltd. (NASDAQ: PERI), a global technology company that delivers its Synchronized Digital Branding solution across the three main pillars of digital advertising - ad search, social media and display / video advertising – announced today its financial results for the first quarter ended March 31, 2020.
 
Financial Highlights*

(In millions, except per share data)

 
 
Three months ended
 
 
 
March 31,
 
 
 
2020
   
2019
   
%
 
Advertising revenues
 
$
23.7
   
$
18.6
     
+28
%
Search and other revenues
 
$
42.3
   
$
35.3
     
+20
%
Total Revenues
 
$
66.1
   
$
53.8
     
+23
%
GAAP Net Income
 
$
1.3
   
$
1.2
     
+8
%
Non-GAAP Net Income
 
$
5.0
   
$
3.3
     
+53
%
Adjusted EBITDA
 
$
6.2
   
$
5.1
     
+22
%
Net cash provided by operating activities
 
$
2.5
   
$
14.0
     
-82
%
GAAP Diluted Earnings Per Share
 
$
0.05
   
$
0.05
     
0
%
Non-GAAP Diluted Earnings Per Share
 
$
0.17
   
$
0.13
     
+31
%

* Reconciliation of GAAP to Non-GAAP measures follows.
 


Doron Gerstel, Perion’s CEO commented, “The strong momentum that we experienced in the fourth quarter of 2019 continued in the first quarter of 2020. Our results were trending at record levels in January and February, which led to consolidated revenue growth of 23% for the full quarter.  Our results were driven by the robust performance of our Search business and the contribution of ContentIQ (CIQ) which we acquired mid-January. Since the beginning of March, we have been navigating a rapidly changing business environment as the COVID-19 pandemic unfolded, driving a 15%-25% decline in advertising spending.”
 
“As the first quarter progressed and the impact of the COVID-19 pandemic became more pronounced, we swiftly began rolling out strategic initiatives to better prepare Perion for an uncertain market environment with reduced levels of advertising spending,” Gerstel added. “As part of this effort, we implemented cost-saving measures that are expected to yield more than $10 million in annualized savings on a proforma basis. Like others, we are cautiously optimistic that we will begin to see improvements in the overall market later this year. Nonetheless, with $54 million in cash, $40 million in net cash and the ability to generate significant free cash flow from ongoing operations, we have the financial stability to weather an extended period of disruption should it occur. The current management team’s demonstrated track record for managing costs, preserving cash and maximizing profitability, gives me confidence in our financial resilience and ability to withstand uncertainty.”
 
“The revenue flexibility provided by our product diversity and business mix across the three pillars of digital advertising, contributed to our Q1 success and is critical to our long-term prospects,” Gerstel continued. “CIQ performed well throughout the quarter and in line with expectations, demonstrating the strength and resiliency that our diversification provides. We are fortunate to have a highly focused and differentiated advertising offering which conceptually brings brands, agencies and publishers together – benefiting from a common digital advertising offering.”
 
Gerstel added, “With regard to the remainder of the year, the disruption in the advertising market and lack of visibility have caused us to join many other public companies who have made the prudent decision to temporarily withdraw full-year guidance. As the horizon becomes clearer and our visibility improves, we hope to return to providing estimates about expected results. We remain confident, that we have the diversification, product offerings and management discipline needed to generate significant cash from operations and remain profitable, for the full year, as we weather the uncertainty of the current environment.”
 
“We are navigating the current environment from a stable financial position that is superior to many companies in our industry,” concluded Gerstel. “Our organic and inorganic efforts to boost topline revenue remain our top priority. We’ve realized that more and more companies in our industry with excellent, complementary products, services and technologies lack the financial strength to weather a period of disruption. As a result, we have made the strategic decision to file a shelf registration statement, to assess M&A opportunities as they become available.”
 
Financial Comparison for the first quarter of 2020:

Revenues: Revenues increased by 23%, from $53.8 million in the first quarter of 2019 to $66.1 million in the first quarter of 2020. This increase was primarily a result of a 20% increase in Search and other revenues mainly due to an increased number of unique searches and additional new publishers. Advertising revenues increased by 28% as a result of the consolidation of Content IQ which was acquired on January 14, 2020.
 
Customer Acquisition Costs and Media Buy (“CAC”): CAC in the first quarter of 2020 were $36.1 million, or 55% of revenues, as compared to $27.4 million, or 51% of revenues in the first quarter of 2019. The increase as a percentage of revenue is primarily due to the acquisition of CIQ and product mix.
 
Net Income: On a GAAP basis, net income in the first quarter of 2020 was $1.3 million, or 2% of revenues as compared to a net income of $1.2 million, or 2.3% of revenues, in the first quarter of 2019.
 
Non-GAAP Net Income: In the first quarter of 2020, non-GAAP net income was $5.0 million, or 8% of revenues, compared to the $3.3 million, or 6% of revenues, in the first quarter of 2019. A reconciliation of GAAP to non-GAAP net income is included in this press release.

2

Adjusted EBITDA: In the first quarter of 2020, Adjusted EBITDA was $6.2 million, or 9% of revenues, compared to $5.1 million, or 9% of revenues, in the first quarter of 2019. A reconciliation of GAAP to Adjusted EBITDA is included in this press release.

Cash and Cash Flow from Operations: As of March 31, 2020, cash and cash equivalents and short-term bank deposits were $54.1 million. Cash provided by operations in the first quarter of 2020 was $2.5 million, compared to $14.0 million in the first quarter of 2019. The main reasons for the decrease in cash flow from operations is attributed to one-time working capital requirements for the CIQ operations and collection cycle differences between the business units.

Short-term Debt, Long-term Debt and Convertible Debt: As of March 31, 2020, total debt was $14.6 million, compared to $16.7 million at December 31, 2019.

Conference Call:

Perion will host a conference call to discuss the results today, Wednesday, May 6, 2020 at 8:30 a.m. ET. Details are as follows:

Conference ID: 6762387
Dial-in number from within the United States: 1-866-548-4713
Dial-in number from Israel: 1809 212 883
Dial-in number (other international): 1-323-794-2093
Playback available until May 13, 2020by calling 1-844-512-2921 (United States) or 1-412-317-6671 (international). Please use PIN code 6762387 for the replay.
Link to the live webcast accessible at https://www.perion.com/ir-info/

About Perion Network Ltd.
 
Perion is a global technology company that provides agencies, brands and publishers with innovative solutions that cover the three pillars of digital advertising. From its data-driven Synchronized Digital Branding platform and high-impact ad formats in the display domain; to its powerful social media platform; to its branded search network, Perion is well-positioned to capitalize on any changes in marketers’ allocation of digital advertising spend. More information about Perion can be found at www.perion.com.

Non-GAAP measures
 
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude acquisition related expenses, share-based compensation expenses, restructuring costs, loss from discontinued operations, accretion of acquisition related contingent consideration, impairment of goodwill, amortization and impairment of acquired intangible assets and the related taxes thereon, non-recurring expenses, foreign exchange gains (losses) associated with ASC-842, as well as certain accounting entries under the business combination accounting rules that require us to recognize a legal performance obligation related to revenue arrangements of an acquired entity based on its fair value at the date of acquisition. Additionally, in September 2014, the Company issued convertible bonds denominated in New Israeli Shekels and at the same time entered into a derivative arrangement (SWAP) that economically exchanges the convertible bonds as if they were denominated in US dollars when the bonds were issued. The Company excludes from its GAAP financial measures the fair value revaluations of both, the convertible bonds and the related derivative instrument, and by doing so, the non-GAAP measures reflect the Company’s results as if the convertible bonds were originally issued and denominated in US dollars, which is the Company’s functional currency. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") is defined as operating income excluding stock-based compensation expenses, depreciation, restructuring costs, acquisition related items consisting of amortization of intangible assets and goodwill and intangible asset impairments, acquisition related expenses, gains and losses recognized on changes in the fair value of contingent consideration arrangements and certain accounting entries under the business combination accounting rules that require us to recognize a legal performance obligation related to revenue arrangements of an acquired entity based on its fair value at the date of acquisition.
 
3

The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the non-GAAP measures are regularly used internally to understand, manage and evaluate our business and make operating decisions, and we believe that they are useful to investors as a consistent and comparable measure of the ongoing performance of our business. However, 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. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. A reconciliation between results on a GAAP and non-GAAP basis is provided in the last table of this press release.

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 Perion. The words “will”, “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 Perion with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of Perion 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, the failure to realize the anticipated benefits of companies and businesses we acquired and may acquire in the future, risks entailed in integrating the companies and businesses we acquire, including employee retention and customer acceptance; the risk that such transactions will divert management and other resources from the ongoing operations of the business or otherwise disrupt the conduct of those businesses, potential litigation associated with such transactions, and general risks associated with the business of Perion including intense and frequent changes in the markets in which the businesses operate and in general economic and business conditions, loss of key customers, 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 Perion and its results of operations, as described in reports filed by Perion with the Securities and Exchange Commission from time to time, including its annual report on Form 20-F for the year ended December 31, 2019 filed with the SEC on March 16, 2020. Perion does not assume any obligation to update these forward-looking statements.
 
Contact Information:

Perion Network Ltd.
Rami Rozen, VP of Investor Relations
+972 (52) 5694441
ramir@perion.com

Source: Perion Network Ltd.

4

PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands (except share and per share data)

   
Three months ended
 
   
March 31,
 
   
2020
   
2019
 
   
(Unaudited)
   
(Unaudited)
 
             
Revenues:
           
Advertising
 
$
23,733
   
$
18,584
 
Search and other
   
42,320
     
35,265
 
Total Revenues
   
66,053
     
53,849
 
                 
Costs and Expenses:
               
Cost of revenues
   
5,766
     
5,766
 
Customer acquisition costs and media buy
   
36,138
     
27,433
 
Research and development
   
7,207
     
4,862
 
Selling and marketing
   
9,701
     
8,325
 
General and administrative
   
3,939
     
3,058
 
Depreciation and amortization
   
2,302
     
2,390
 
Total Costs and Expenses
   
65,053
     
51,834
 
                 
Income from Operations
   
1,000
     
2,015
 
Financial expense (income), net
   
(8
)
   
1,325
 
                 
Income before Taxes on income
   
1,008
     
690
 
Tax benefit
   
326
     
542
 
                 
Net Income
 
$
1,334
   
$
1,232
 
                 
Net Earnings per Share
               
Basic
 
$
0.05
   
$
0.05
 
Diluted
 
$
0.05
   
$
0.05
 
                 
Weighted average number of shares
               
Basic
   
26,287,515
     
25,883,768
 
Diluted
   
28,212,685
     
25,885,029
 

5

PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
 
 
 
March 31,
   
December 31,
 
 
 
2020
   
2019
 
 
 
(Unaudited)
   
(Audited)
 
ASSETS
           
Current Assets:
           
Cash and cash equivalents
 
$
46,374
   
$
38,389
 
Restricted cash
   
1,220
     
1,216
 
Short-term bank deposits
   
7,748
     
23,234
 
Accounts receivable, net
   
40,778
     
49,098
 
Prepaid expenses and other current assets
   
3,363
     
3,170
 
Total Current Assets
   
99,483
     
115,107
 
 
               
Long-Term Assets:
               
Property and equipment, net
   
9,801
     
10,918
 
Operating lease right-of-use assets
   
21,465
     
22,429
 
Goodwill and intangible assets, net
   
167,463
     
128,444
 
Deferred taxes
   
4,216
     
6,171
 
Other assets
   
673
     
708
 
Total Long-Term Assets
   
203,618
     
168,670
 
Total Assets
 
$
303,101
   
$
283,777
 
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY
               
Current Liabilities:
               
Accounts payable
 
$
41,133
   
$
47,681
 
Accrued expenses and other liabilities
   
20,797
     
18,414
 
Short-term operating lease liability
   
3,680
     
3,667
 
Short-term loans and current maturities of long-term and Convertible debt
   
8,333
     
8,333
 
Deferred revenues
   
3,393
     
4,188
 
Short-term payment obligation related to acquisitions
   
13,699
     
1,025
 
Total Current Liabilities
   
91,035
     
83,308
 
 
               
Long-Term Liabilities:
               
Long-term debt, net of current maturities
   
6,250
     
8,333
 
Payment obligation related to acquisition
   
11,537
     
-
 
Long-term operating lease liability
   
19,085
     
20,363
 
Other long-term liabilities
   
6,014
     
6,591
 
Total Long-Term Liabilities
   
42,886
     
35,287
 
Total Liabilities
   
133,921
     
118,595
 
 
               
Shareholders' equity:
               
Ordinary shares
   
217
     
213
 
Additional paid-in capital
   
245,864
     
243,211
 
Treasury shares at cost
   
(1,002
)
   
(1,002
)
Accumulated other comprehensive gain
   
137
     
130
 
Accumulated deficit
   
(76,036
)
   
(77,370
)
Total Shareholders' Equity
   
169,180
     
165,182
 
Total Liabilities and Shareholders' Equity
 
$
303,101
   
$
283,777
 

6

PERION NETWORK LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands

 
 
Three months ended
 
 
 
March 31,
 
 
 
2020
   
2019
 
 
 
(Unaudited)
   
(Unaudited)
 
 
           
Cash flows from operating activities:
           
Net Income
 
$
1,334
   
$
1,232
 
Adjustments required to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
   
2,302
     
2,390
 
Stock based compensation expense
   
1,100
     
463
 
Foreign currency translation
   
(29
)
   
19
 
Accrued interest, net
   
-
     
(199
)
Deferred taxes, net
   
(315
)
   
(546
)
Accrued severance pay, net
   
25
     
(316
)
Fair value revaluation - convertible debt
   
-
     
699
 
Net changes in operating assets and liabilities
   
(1,921
)
   
10,246
 
Net cash provided by operating activities
 
$
2,496
   
$
13,988
 
 
               
Cash flows from investing activities:
               
Purchases of property and equipment
   
(71
)
   
(227
)
Short-term deposits, net
   
15,486
     
(2,700
)
Cash paid in connection with acquisitions, net of cash acquired
   
(15,100
)
   
-
 
Obligation in connection with acquisitions
   
5,777
     
-
 
Net cash provided by (used in) investing activities
 
$
6,092
   
$
(2,927
)
 
               
Cash flows from financing activities:
               
Exercise of stock options and restricted share units
   
1,557
     
129
 
Payment made in connection with acquisition
   
-
     
(1,813
)
Repayment of convertible debt
   
-
     
(7,901
)
Repayment of long-term loans
   
(2,083
)
   
(2,083
)
Net cash used in financing activities
 
$
(526
)
 
$
(11,668
)
 
               
Effect of exchange rate changes on cash and cash equivalents and restricted cash
   
(73
)
   
(110
)
Net increase (decrease) in cash and cash equivalents and restricted cash
   
7,989
     
(717
)
Cash and cash equivalents and restricted cash at beginning of period
   
39,605
     
40,803
 
Cash and cash equivalents and restricted cash at end of period
 
$
47,594
   
$
40,086
 

7


PERION NETWORK LTD. AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP RESULTS
In thousands (except share and per share data)

   
Three months ended
 
   
March 31,
 
   
2020
   
2019
 
   
(Unaudited)
 
             
GAAP Net Income
 
$
1,334
   
$
1,232
 
Share based compensation
   
1,100
     
463
 
Amortization of acquired intangible assets
   
1,065
     
1,046
 
Non-recurring fees (Expenses related to M&A activity)
   
1,836
     
257
 
Fair value revaluation of convertible debt and related derivative
   
-
     
267
 
Foreign exchange loss (gain) associated with ASC-842
   
(280
)
   
292
 
Taxes on the above items
   
(90
)
   
(303
)
Non-GAAP Net Income
 
$
4,965
   
$
3,254
 
                 
Non-GAAP Net Income
 
$
4,965
   
$
3,254
 
Tax benefit
   
(236
)
   
(239
)
Financial expense, net
   
272
     
766
 
Depreciation
   
1,237
     
1,344
 
Adjusted EBITDA
 
$
6,238
   
$
5,125
 
                 
Non-GAAP diluted earnings per share
 
$
0.17
   
$
0.13
 
                 
Shares used in computing non-GAAP diluted earnings per share
   
28,749,160
     
25,908,734
 

 
8