6-K
Perion Network Ltd. (PERI)
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 August 2022 (Report No. 3)
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
This Report of Foreign Private Issuer on Form 6-K (this “Form 6-K”) is being furnished by Perion Network Ltd. (“Perion”) to the Securities and Exchange Commission (the “SEC”) for the sole purposes of: (i) furnishing, as Exhibit 99.1 to this Form 6-K, unaudited condensed consolidated financial statements of Perion as of and for the six-month period ended June 30, 2022; and (ii) furnishing, as Exhibit 99.2 to this Form 6-K, Management’s Discussion and Analysis of Financial Condition and Results of Operations, which discusses and analyzes Perion’s financial condition and results of operations as of and for the six-month period ended June 30, 2022.
The following exhibits are furnished as part of this Form 6-K:
| Exhibit No. | Description |
|---|---|
| 99.1 | Unaudited Condensed Consolidated Financial Statements for the Six Months Ended June 30, 2022 |
| 99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Interim Consolidated Statements of Income (Loss), (iii) Interim Consolidated Statements of Comprehensive Income (Loss); (iv) Interim Consolidated Statements of Changes in Shareholders' Equity, (v) Interim Consolidated Statements of Cash Flows, and (vi) the Notes to Interim Consolidated Financial Statements |
Exhibit 99.1 and 99.2 to this Report on Form 6-K shall be deemed to be incorporated by reference into Perion’s registration statements on Form F-3 (Files No. 333-254706 and 333-261541) and Form S-8 (File Nos. 333-133968, 333-152010, 333-171781, 333-188714, 333-192376, 333-193145, 333-203641, 333-208278, 333-216494, 333-237196, 333-249846 and 333-262260).
- 2 -
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: August 17, 2022
- 3 -
Perion Network Ltd - 1338940 - 2022
Exhibit 99.1
PERION NETWORK LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
IN U.S. DOLLARS
(UNAUDITED)
INDEX
| Page | |
|---|---|
| Interim Consolidated Balance Sheets as of December 31, 2021 (audited) and June 30, 2022 (unaudited) | F-1 |
| Interim Consolidated Statements of Income<br><br>for the Six Months Ended June 30, 2021 (unaudited) and 2022 (unaudited) | F-2 |
| Interim Consolidated Statements of Comprehensive Income<br><br>for the Six Months Ended June 30, 2021 (unaudited) and 2022 (unaudited) | F-3 |
| Statements of Changes in Shareholders' Equity for the Year Ended December 31, 2021 (audited) and<br><br>Interim Statements of Changes in Shareholders' Equity for the Six Months Ended June 30, 2021 and<br><br>2022 (unaudited) | F-4 |
| Interim Consolidated Statements of Cash Flows<br><br>for the Six Months Ended June 30, 2021 (unaudited) and 2022 (unaudited) | F-5 |
| Notes to the Interim Consolidated Financial Statements | F-7 |
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
| December 31, | |||||
|---|---|---|---|---|---|
| 2021 | |||||
| (Audited) | |||||
| ASSETS | |||||
| Current Assets: | |||||
| Cash and cash equivalents | 102,398 | $ | 104,446 | ||
| Restricted cash | 1,039 | 1,089 | |||
| Short-term bank deposits | 250,600 | 217,200 | |||
| Accounts receivable (net of allowance of 737 and 891 at June 30, 2022 and December 31, 2021, respectively) | 86,251 | 115,361 | |||
| Prepaid expenses and other current assets | 11,809 | 8,075 | |||
| Total Current Assets | 452,097 | 446,171 | |||
| Long-Term Assets: | |||||
| Property and equipment, net | 3,935 | 4,211 | |||
| Operating lease right-of-use assets | 9,961 | 11,578 | |||
| Intangible assets, net | 51,099 | 56,700 | |||
| Goodwill | 189,265 | 189,265 | |||
| Deferred taxes | 5,398 | 5,228 | |||
| Other assets | 70 | 79 | |||
| Total Long-Term Assets | 259,728 | 267,061 | |||
| Total Assets | 711,825 | $ | 713,232 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current Liabilities: | |||||
| Accounts payable | 96,687 | $ | 107,730 | ||
| Accrued expenses and other liabilities | 25,314 | 40,331 | |||
| Short-term operating lease liability | 3,251 | 3,615 | |||
| Deferred revenues | 2,560 | 3,852 | |||
| Short-term payment obligation related to acquisitions | 37,724 | 38,179 | |||
| Total Current Liabilities | 165,536 | 193,707 | |||
| Long-Term Liabilities: | |||||
| Payment obligation related to acquisition | 21,491 | 33,250 | |||
| Long-term operating lease liability | 7,663 | 9,774 | |||
| Other long-term liabilities | 9,935 | 9,541 | |||
| Total Long-Term Liabilities | 39,089 | 52,565 | |||
| Total Liabilities | 204,625 | 246,272 | |||
| Commitments and Contingencies | |||||
| Shareholders' equity: | |||||
| Ordinary shares of ILS 0.03 par value - Authorized: 60,000,000 shares; Issued: 44,778,307 and 43,812,062 as of June 30, 2022 and,<br> December 31, 2021 respectively; Outstanding: 44,662,968 and 43,696,723 shares as of June 30, 2022 and, December 31, 2021, respectively | 379 | 375 | |||
| Additional paid-in capital | 502,573 | 496,154 | |||
| Treasury shares at cost (115,339 shares as of June 30, 2022 and December 31, 2021) | (1,002 | ) | (1,002 | ) | |
| Accumulated other comprehensive loss | (1,277 | ) | (128 | ) | |
| Retained earnings (accumulated deficit) | 6,527 | (28,439 | ) | ||
| Total Shareholders' Equity | 507,200 | 466,960 | |||
| Total Liabilities and Shareholders' Equity | 711,825 | $ | 713,232 |
All values are in US Dollars.
The accompanying notes are an integral part of the interim consolidated financial statements.
F - 1
PERION NETWORK LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
U.S. dollars in thousands (except share and per share data)
| Six months ended | |||||
|---|---|---|---|---|---|
| June 30, | |||||
| 2022 | 2021 | ||||
| (Unaudited) | (Unaudited) | ||||
| Revenues: | |||||
| Display Advertising | $ | 150,154 | $ | 96,166 | |
| Search Advertising | 121,817 | 103,328 | |||
| Total Revenues | 271,971 | 199,494 | |||
| Costs and Expenses: | |||||
| Cost of revenues | 13,474 | 11,595 | |||
| Traffic acquisition costs and media buy | 156,930 | 121,086 | |||
| Research and development | 17,369 | 17,473 | |||
| Selling and marketing | 27,293 | 23,484 | |||
| General and administrative | 12,134 | 8,760 | |||
| Depreciation and amortization | 6,393 | 4,377 | |||
| Total Costs and Expenses | 233,593 | 186,775 | |||
| Income from Operations | 38,378 | 12,719 | |||
| Financial expense (income), net | (1,507 | ) | 105 | ||
| Income before Taxes on income | 39,885 | 12,614 | |||
| Taxes on income | 4,919 | 2,225 | |||
| Net Income | $ | 34,966 | $ | 10,389 | |
| Net Earnings per Share | |||||
| Basic | $ | 0.79 | $ | 0.31 | |
| Diluted | $ | 0.74 | $ | 0.29 | |
| Weighted average number of shares | |||||
| Basic | 44,238,414 | 33,116,072 | |||
| Diluted | 47,210,769 | 36,289,802 |
The accompanying notes are an integral part of the interim consolidated financial statements.
F - 2
PERION NETWORK LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
U.S. dollars in thousands
| Six months ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| (Unaudited) | (Unaudited) | |||||
| Net Income | $ | 34,966 | $ | 10,389 | ||
| Other comprehensive loss: | ||||||
| Change in foreign currency translation | (435 | ) | (104 | ) | ||
| Cash Flow Hedge: | ||||||
| Unrealized gain (loss) from cash-flow hedges, net of taxes | (1,109 | ) | 3 | |||
| Less: reclassification adjustment for net losses included in net income | 395 | 11 | ||||
| Net change | (714 | ) | 14 | |||
| Other comprehensive loss: | (1,149 | ) | (90 | ) | ||
| Comprehensive Income | $ | 33,817 | $ | 10,299 |
The accompanying notes are an integral part of the interim consolidated financial statements.
F - 3
PERION NETWORK LTD. AND ITS SUBSIDIARIES
INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands (except share data)
| Common shares | Additional <br> paid-in<br> capital | Accumulated <br> other <br> comprehensive <br> income (loss) | Retained <br> earnings <br> (accumulated <br> deficit) | Treasury <br> shares | Total <br> shareholders’ <br> equity | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of<br><br> <br>Shares | ||||||||||||
| Balance as of December 31, 2020 (audited) | 27,351,974 | ) | ) | |||||||||
| Issuance of shares - Offering (*) | 5,738,500 | |||||||||||
| Stock-based compensation | - | |||||||||||
| Proceeds from exercise of stock-based compensation | 1,335,337 | |||||||||||
| Other comprehensive loss | - | ) | ) | |||||||||
| Net Income | - | |||||||||||
| Balance as of June 30, 2021 (unaudited) | 34,425,811 | ) | ) | |||||||||
| Issuance of shares - Offering (*) | 8,372,092 | |||||||||||
| Stock-based compensation | - | |||||||||||
| Proceeds from exercise of stock-based compensation | 898,820 | |||||||||||
| Other comprehensive loss | - | ) | ) | |||||||||
| Net Income | - | |||||||||||
| Balance as of December 31, 2021 (audited) | 43,696,723 | ) | ) | ) | ||||||||
| Stock-based compensation | - | |||||||||||
| Proceeds from exercise of stock-based compensation | 966,245 | |||||||||||
| Other comprehensive loss | - | ) | ) | |||||||||
| Net Income | - | |||||||||||
| Balance as of June 30, 2022 (unaudited) | 44,662,968 | ) | ) |
All values are in US Dollars.
(*) Net of issuance expenses
The accompanying notes are an integral part of the interim consolidated financial statements.
F - 4
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
U.S. dollars in thousands
| Six months ended | ||||||
|---|---|---|---|---|---|---|
| June 30, | ||||||
| 2022 | 2021 | |||||
| (Unaudited) | (Unaudited) | |||||
| Cash flows from operating activities: | ||||||
| Net Income | $ | 34,966 | $ | 10,389 | ||
| Adjustments required to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 6,393 | 4,377 | ||||
| Stock-based compensation expense | 5,129 | 1,989 | ||||
| Foreign currency translation | (174 | ) | (89 | ) | ||
| Accrued interest, net | (1,181 | ) | (167 | ) | ||
| Deferred taxes, net | (248 | ) | 295 | |||
| Accrued severance pay, net | 503 | 198 | ||||
| Gain from sale of property and equipment | (6 | ) | (11 | ) | ||
| Net changes in operating assets and liabilities | ||||||
| Accounts receivable, net | 29,012 | 13,547 | ||||
| Prepaid expenses and other current assets | (2,686 | ) | (1,689 | ) | ||
| Other assets | 8 | 101 | ||||
| Operating Lease right-of-use assets | 1,617 | 6,234 | ||||
| Operating Lease liabilities | (2,475 | ) | (6,448 | ) | ||
| Accounts payable | (11,102 | ) | 2,647 | |||
| Accrued expenses and other liabilities | (6,069 | ) | (2,672 | ) | ||
| Deferred revenues | (1,289 | ) | (1,390 | ) | ||
| Payment obligation related to acquisition | (3,123 | ) | 785 | |||
| Net cash provided by operating activities | $ | 49,275 | $ | 28,096 | ||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (435 | ) | (357 | ) | ||
| Proceeds from sale of property and equipment | 6 | 2 | ||||
| Short-term deposits, net | (33,400 | ) | (70,300 | ) | ||
| Cash paid in connection with acquisitions, net of cash acquired | (9,570 | ) | (3,438 | ) | ||
| Net cash used in investing activities | $ | (43,399 | ) | $ | (74,093 | ) |
| Cash flows from financing activities: | ||||||
| Proceeds from follow-on offering, net | - | 60,960 | ||||
| Proceeds from exercise of stock-based compensation | 1,294 | 3,871 | ||||
| Payments of contingent consideration | (9,091 | ) | - | |||
| Repayment of long-term loans | - | (8,333 | ) | |||
| Net cash provided by (used in) financing activities | $ | (7,797 | ) | $ | 56,498 | |
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (177 | ) | (3 | ) | ||
| Net increase (decrease) in cash and cash equivalents and restricted cash | (2,098 | ) | 10,498 | |||
| Cash and cash equivalents and restricted cash at beginning of period | 105,535 | 48,878 | ||||
| Cash and cash equivalents and restricted cash at end of period | $ | 103,437 | $ | 59,376 |
The accompanying notes are an integral part of the interim consolidated financial statements.
F - 5
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
U.S. dollars in thousands
| Six months ended | ||||
|---|---|---|---|---|
| June 30, | ||||
| 2022 | 2021 | |||
| (Unaudited) | (Unaudited) | |||
| Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheet | ||||
| Cash and cash equivalents | $ | 102,398 | $ | 58,154 |
| Restricted cash | 1,039 | 1,222 | ||
| Total cash, cash equivalents, and restricted cash | $ | 103,437 | $ | 59,376 |
| Supplemental Disclosure of Cash Flow Activities: | ||||
| Cash paid during the period for: | ||||
| Income taxes | $ | 4,159 | $ | 1,088 |
| Interest | $ | 3 | $ | 195 |
| Non-cash investing and financing activities: | ||||
| Purchase of property and equipment on credit | $ | 83 | $ | 20 |
The accompanying notes are an integral part of the consolidated financial statements.
F - 6
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 1: | GENERAL |
|---|
Perion Network Ltd. ("Perion") and its wholly-owned subsidiaries (collectively referred to as the "Company"), is a global technology innovator in the digital advertising ecosystem, providing brands, agencies and publishers with holistic solutions to identify and reach their most valuable customers – across all channels – with high-impact creative units. These are orchestrated by Perion’s proprietary intelligent Hub (iHUB), which connects the supply and demand sides of the marketplace, and as a result is capable of bringing Perion and its client’s significant efficiencies.
On October 4, 2021, the Company completed the acquisition of Vidazoo Ltd. (see Note 3).
| NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES |
|---|---|
| a. | Basis of presentation of the Financial Statements |
| --- | --- |
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on 20-F for the fiscal year ended December 31, 2021, filed with the SEC on March 16, 2022 (the "Annual Report"). The interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year.
| b. | There have been no changes to the significant accounting policies described in the Annual Report that have had a material impact on the unaudited interim consolidated financial statements and related notes. |
|---|---|
| c. | Use of estimates |
| --- | --- |
The preparation of the consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, the Company's management evaluates its estimates, including those related to sales allowances and allowance for credit losses, fair value of intangible assets and goodwill, useful lives of intangible assets, fair value of share-based awards, realizability of deferred tax assets, tax uncertainties, and contingent liabilities, among others. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable which are the basis for making judgments about the carrying values of the Company’s assets and liabilities.
F - 7
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|---|---|
| d. | Revenue recognition |
| --- | --- |
The Company evaluates whether Search Advertising and Display Advertising Revenues should be presented on a gross basis, which is the amount that a customer pays for the service, or on a net basis, which is the amount of the customer payment less amounts the Company pays to publishers. In making that evaluation, the Company considers whether it controls the promised good or service before transferring that good or service to the customer. The Company considers indicators such as whether the Company is the primary obligor in the arrangement and assumes risks and rewards as a principal or an agent, including the credit risk, whether the Company has latitude in establishing prices and selecting its suppliers and whether it changes the products or performs part of the service. The evaluation of these factors is subject to significant judgment and subjectivity. Generally, in cases in which the Company is primarily obligated in a transaction, is subject to risk, involved in the determination of the product (or the service) specifications separately negotiates each revenue service agreement or publisher agreement and can have several additional indicators, revenue is recorded on a gross basis.
Contract balances are presented separately on the consolidated balance sheets as either Accounts receivable or Deferred revenues. The Company does not have contract assets.
Accounts receivable includes amounts billed and currently due from customers.
Deferred revenues are recorded when payments are received from customers in advance of the Company's rendering of services.
| e. | Recent Accounting Pronouncements not yet adopted |
|---|
In October 2021 the FASB ASU 2021-08, Topic 805 “Business Combinations” – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently assessing the impact of the new guidance on its consolidated financial statements.
F - 8
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 3: ACQUISITIONS
On October 4, 2021, the Company consummated the acquisition of Vidazoo Ltd., also known as “Vidazoo” (the “Vidazoo Acquisition”), a leading video technology company that enables both advertisers and publishers to deliver high impact content and advertising to consumers.
The total consideration for the acquisition was $77,748, comprised of $35,000 paid in cash at closing, contingent consideration (with a maximum amount of up to $58,545), tied to financial targets over a period of 2.25 years, estimated at fair value of $36,613 on the acquisition date, and a net working capital in the amount of $6,135 which will be set-off against collection. As of June 30, 2022, the contingent consideration is estimated at fair value of $33,059.
NOTE 4: FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments carried at cost, including cash and cash equivalents, short-term deposits, restricted cash, accounts receivable, prepaid expenses and other assets, accounts payable, accrued expenses and other liabilities approximate their fair value due to the short-term maturities of such instruments.
The following table present liabilities measured at fair value on a recurring basis as of June 30, 2022:
| June 30, 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Fair value measurements using input type | ||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||
| Liabilities: | ||||||||
| Derivative liability | - | 639 | - | 639 | ||||
| Contingent consideration in connection to the acquisitions | - | - | 54,720 | 54,720 | ||||
| Total financial liabilities | $ | - | $ | 639 | $ | 54,720 | $ | 55,359 |
F - 9
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 4: FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont.)
The following table present liabilities measured at fair value on a recurring basis as of December 31, 2021:
| December 31, 2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Fair value measurements using input type | ||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||
| Assets: | ||||||||
| Derivative assets | $ | - | $ | 75 | $ | - | $ | 75 |
| Total financial assets | $ | - | $ | 75 | $ | - | $ | 75 |
| Liabilities: | ||||||||
| Contingent consideration in connection to the acquisitions | - | - | 63,550 | 63,550 | ||||
| Total financial liabilities | $ | - | $ | - | $ | 63,550 | $ | 63,550 |
The following table sets forth a summary of the changes in the fair value of the contingent consideration:
| Fair value as of December 31, 2021 | $ | 63,550 | |
|---|---|---|---|
| Payments of contingent consideration | (9,091 | ) | |
| Revaluation of acquisition related contingent consideration | 261 | ||
| Fair value as of June 30, 2022 | $ | 54,720 |
F - 10
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 5:
GOODWILL AND INTANGIBLE ASSETS, NET
a.Goodwill
The changes in the net carrying amount of goodwill in 2021 and six months ended June 30, 2022 were as follows:
| Balance as of January 1, 2021 | $ | 152,303 |
|---|---|---|
| Acquisition of Vidazoo | $ | 36,962 |
| Balance as of December 31, 2021 | $ | 189,265 |
| Balance as of June 30, 2022 | $ | 189,265 |
Goodwill has been recorded as a result of prior acquisitions and represents excess of the consideration over the net fair value of the assets of the businesses acquired. As of June 30, 2022, the Company had two reporting units – Display Advertising and Search Advertising. The Company performs tests for impairment of goodwill at the reporting unit level at least annually, or more frequently if events or changes in circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. As of June 30, 2022, the Company determined that there were no indicators of potential impairment with regards to its reporting units which required interim goodwill impairment analysis.
F - 11
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 5: GOODWILL AND INTANGIBLE ASSETS, NET (Cont.)
b. Intangible assets, net
The following is a summary of intangible assets as of June 30, 2022:
| December 31,<br><br> <br>2021 | Amortization | June 30,<br><br> <br>2022 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Acquired technology | $ | 84,417 | $ | - | $ | 84,417 | |||
| Accumulated amortization | (31,137 | ) | (4,431 | ) | (35,568 | ) | |||
| Impairment | (8,749 | ) | - | (8,749 | ) | ||||
| Acquired technology, net | 44,531 | (4,431 | ) | 40,100 | |||||
| Customer relationships | 45,054 | - | 45,054 | ||||||
| Accumulated amortization | (23,218 | ) | (1,050 | ) | (24,268 | ) | |||
| Impairment | (10,426 | ) | - | (10,426 | ) | ||||
| Customer relationships, net | 11,410 | (1,050 | ) | 10,360 | |||||
| Tradename and other | 18,503 | - | 18,503 | ||||||
| Accumulated amortization | (12,634 | ) | (120 | ) | (12,754 | ) | |||
| Impairment | (5,110 | ) | - | (5,110 | ) | ||||
| Tradename and other, net | 759 | (120 | ) | 639 | |||||
| Intangible assets, net | $ | 56,700 | $ | (5,601 | ) | $ | 51,099 |
F - 12
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 5:
GOODWILL AND INTANGIBLE ASSETS, NET (Cont.)
The following is a summary of intangible assets as of December 31, 2021:
| December 31,<br><br> <br>2020 | Additions | Amortization | December 31,<br><br> <br>2021 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Acquired technology | $ | 53,412 | $ | 31,005 | $ | - | $ | 84,417 | |||
| Accumulated amortization | (25,548 | ) | - | (5,589 | ) | (31,137 | ) | ||||
| Impairment | (8,749 | ) | - | - | (8,749 | ) | |||||
| Acquired technology, net | 19,115 | 31,005 | (5,589 | ) | 44,531 | ||||||
| Customer relationships | 36,860 | 8,194 | - | 45,054 | |||||||
| Accumulated amortization | (22,161 | ) | - | (1,057 | ) | (23,218 | ) | ||||
| Impairment | (10,426 | ) | - | - | (10,426 | ) | |||||
| Customer relationships, net | 4,273 | 8,194 | (1,057 | ) | 11,410 | ||||||
| Tradename and other | 18,503 | - | - | 18,503 | |||||||
| Accumulated amortization | (12,405 | ) | - | (229 | ) | (12,634 | ) | ||||
| Impairment | (5,110 | ) | - | - | (5,110 | ) | |||||
| Tradename and other, net | 988 | - | (229 | ) | 759 | ||||||
| Intangible assets, net | $ | 24,376 | $ | 39,199 | $ | (6,875 | ) | $ | 56,700 |
F - 13
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 6:
SHORT-TERM AND LONG-TERM DEBT
On December 17, 2018, ClientConnect Ltd., a former Israeli subsidiary of Perion, which merged into Perion on June 30, 2020, executed a new loan facility, in the amount of $25,000. Proceeds of the loan facility were applied to refinancing of the existing debt as well as the debt of Undertone, a US subsidiary of Perion. ClientConnect's obligations under the facility were assumed by Perion in the context of the merger. Principal on the loan is payable in twelve equal quarterly instalments beginning March 2019 and maturing on December 31, 2021. The interest on the loan is at the rate of three-month LIBOR plus 5.7% per annum, payable quarterly. The credit facility is secured by liens on the assets of Perion and Undertone and is guaranteed by Undertone. The guarantee by Undertone is limited to $33,000. Financial covenants for the loan facility are tested at the level of Perion on a consolidated basis.
On March 8, 2021, the Company early repaid the full amount of its loan facility with bank Mizrachi of a principal amount of $8,333 together with the accumulated interest up to this date as per the agreement.
NOTE 7: COMMITMENTS AND CONTINGENT LIABILITIES
Legal Matters
On December 22, 2015, Adtile Technologies Inc. filed a lawsuit against the Company and Intercept Interactive Inc. (“Intercept”), a subsidiary of Interactive Holding Corp., in the United States District Court for the District of Delaware. The lawsuit alleges various causes of action against Perion and Undertone related to Undertone’s alleged unauthorized use and misappropriation of Adtile’s proprietary information and trade secrets. Adtile is seeking injunctive relief and, unspecified monetary damages. On June 23, 2016, the court denied Adtile’s motion for a preliminary injunction. On June 24, 2016, the court (i) granted the Company’s motion to dismiss, and (ii) granted Intercept’s motion to stay the action and compel arbitration. In November 2017, the court dismissed the case for administrative reasons, since Adtile had not commenced arbitration proceedings. The Company is still unable to predict the outcome or range of possible loss as of the date of these financial statements, since to date Adtile had not commenced arbitration procedures. Regardless, the Company believes it has strong defenses against this lawsuit and intends to defend against it vigorously.
In addition, from time to time, the Company is party to other various legal proceedings, claims and litigation that arise in the ordinary course of business. It is the opinion of management that the ultimate outcome of these matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows.
F - 14
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 8: SHAREHOLDERS' EQUITY
a.Ordinary shares
The ordinary shares of the Company entitle their holders to voting rights, the right to receive cash dividend and the right to a share in excess assets upon liquidation of the Company.
b.Stock Options, Restricted Share Units and Warrants
In 2003, the Company's Board of Directors approved the 2003 Equity Incentive Plan (the "Plan") for an initial term of ten years from adoption and on December 9, 2012, extended the term of the Plan for an additional ten years. On August 7, 2013, the Company’s Board of Directors approved amendments to the Plan which include the ability to grant RSUs and restricted shares.
The contractual term of the stock options is generally no more than seven years and the vesting period of the options and RSUs granted under the Plan is between one and three years from the date of grant. The rights of the ordinary shares issued upon the exercise of stock options or RSUs are identical to those of the other ordinary shares of the Company.
As of June 30, 2022, there were 235,394 ordinary shares reserved for future stock-based awards under the Plan.
The following table summarizes the activities for the Company’s service-based stock options for the six months ended June 30, 2022:
| Weighted average | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Number of<br><br> <br>options | Exercise<br><br> <br>price | Remaining<br><br> <br>contractual<br><br> <br>term (in<br><br> <br>years) | Aggregate<br><br> <br>intrinsic<br><br> <br>value | |||||||
| Outstanding at January 1, 2022 | 3,574,401 | $ | 2.46 | 45.90 | $ | 77,173 | ||||
| Granted | 302,514 | (* | ) | - | - | |||||
| Exercised | (739,748 | ) | 1.76 | - | 14,560 | |||||
| Cancelled | (81,087 | ) | 4.34 | - | - | |||||
| Outstanding at June 30, 2022 | 3,056,080 | $ | 2.34 | 47.78 | $ | 48,471 | ||||
| Exercisable at June 30, 2022 | 935,057 | $ | 5.16 | 3.50 | $ | 12,198 | ||||
| Vested and expected to vest at June 30, 2022 | 3,175,094 | $ | 2.36 | 1.57 | $ | 50,363 |
(*) Represents an amount less than $1
F - 15
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 8:SHAREHOLDERS' EQUITY (Cont.)
The following table summarizes the activities for the Company’s performance-based stock options for the six months ended June 30, 2022:
| Weighted average | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Number of<br><br> <br>options | Exercise<br><br> <br>price | Remaining<br><br> <br>contractual<br><br> <br>term (in<br><br> <br>years) | Aggregate<br><br> <br>intrinsic<br><br> <br>value | |||||||
| Outstanding at January 1, 2022 | 903,900 | $ | 2.37 | 46.16 | $ | 19,599 | ||||
| Granted | 177,344 | (* | ) | - | - | |||||
| Exercised | (226,497 | ) | (* | ) | - | 4,929 | ||||
| Cancelled | (8,688 | ) | (* | ) | - | - | ||||
| Outstanding at June 30, 2022 | 846,059 | $ | 2.53 | 43.53 | $ | 13,241 | ||||
| Exercisable at June 30, 2022 | 300,000 | $ | 5.35 | 5.08 | $ | 3,849 | ||||
| Vested and expected to vest at June 30, 2022 | 830,218 | $ | 2.58 | 2.45 | $ | 12,953 |
(*) Represents an amount less than $1
The performance-based stock options’ vesting is contingent upon achieving specific financial targets of the Company, set at the grant date.
NOTE 9: INCOME TAXES
The Company had a tax expense of $4,919 and $2,225 for the six months ended June 30, 2022 and 2021, respectively. The variations in the tax expenses between the periods are significantly impacted by increases in tax deductible intangible assets and the impact of foreign exchange fluctuations on non-USD tax assets and liabilities.
F - 16
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 10:EARNINGS PER SHARE
The table below presents the computation of basic and diluted net earnings per common share:
| Six months ended June 30, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Numerator: | ||||
| Net income attributable to ordinary shares – basic and diluted | $ | 34,966 | $ | 10,389 |
| Denominator: | ||||
| Number of ordinary shares outstanding during the year | 44,238,414 | 33,116,072 | ||
| Weighted average effect of dilutive securities: | ||||
| Employee options and restricted share units | 2,972,355 | 3,173,730 | ||
| Diluted number of ordinary shares outstanding | 47,210,769 | 36,289,802 | ||
| Basic net earnings per ordinary share | $ | 0.79 | $ | 0.31 |
| Diluted net earnings per ordinary share | $ | 0.74 | $ | 0.29 |
| Potential ordinary shares equivalents excluded because their effect would have been anti-dilutive | 929,784 | 996,486 |
F - 17
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 11:MAJOR CUSTOMER
A substantial portion of the Company's revenue is derived from search fees and online advertising, the market for which is highly competitive and rapidly changing. Significant changes in this industry or in customer buying behavior would adversely affect the Company’s operating results.
The following table sets forth the customers that represent 10% or more of the Company’s total revenues in each of the periods presented below:
| Six months ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Customer A | 35 | % | 45 | % |
NOTE 12:GEOGRAPHIC INFORMATION
The following table presents the total revenues for six months ended June 30, 2022 and 2021, allocated to the geographic areas in which they were generated:
| Six months ended June 30, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| North America (mainly U.S.) | $ | 234,918 | $ | 167,552 |
| Europe | 30,767 | 28,525 | ||
| Other | 6,286 | 3,417 | ||
| $ | 271,971 | $ | 199,494 |
The following table presents the locations of the Company’s long-lived assets as of June 30, 2022 and December 31, 2021:
| June 30, | December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Israel | $ | 7,231 | $ | 8,049 |
| U.S. | 6,489 | 7,524 | ||
| Europe | 176 | 216 | ||
| $ | 13,896 | $ | 15,789 |
F - 18
Exhibit 99.2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations provides information that we believe to be relevant to an assessment and understanding of our results of operations and financial condition for the periods described. This discussion should be read in conjunction with our condensed consolidated interim financial statements and the notes to the financial statements, which are included in this Report of Foreign Private Issuer on Form 6-K. In addition, this information should also be read in conjunction with the information contained in our Annual Report on Form 20-F for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 16, 2022, or the Annual Report, including the consolidated annual financial statements as of December 31, 2021 and their accompanying notes included therein.
Forward-Looking Statements
This Report of Foreign Private Issuer on Form 6-K 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 Report of Foreign Private Issuer on Form 6-K. 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. Perion does not assume any obligation to update these forward-looking statements.
The terms “Perion,” “Company,” “we,” “us” or “ours” in this Report of Foreign Private Issuer on Form 6-K refer to Perion Network Ltd. and its subsidiaries, unless the context otherwise requires.
General
Perion is a global technology innovator in the digital advertising ecosystem, providing brands, agencies and publishers with holistic solutions to identify and reach their most valuable customers – across all channels – with high-impact creative units. These are orchestrated by Perion’s proprietary intelligent Hub (iHUB), which connects the supply and demand sides of the marketplace, and as a result is capable of bringing Perion and its client’s significant efficiencies.
Perion’s technology leadership leverages the Company’s scale, operating across the three main pillars of digital advertising: ad search, social media, and display/video/CTV, in an addressable global market of more than $602 billion in 2022, which is expected to grow to $876 billion in 2026, according to eMarketer. The presence across the three pillars also provides diversification of our revenue, and market agility, that allows the Company to capitalize on shifts in spending and budget allocation in a timely and efficient manner. The three pillars are represented by our search ad monetization, which is a direct-response platform; cross-channel high impact advertising through the open web, including through video and CTV; social advertising through our actionable performance monitoring platform; and our content monetization system.
Thus, while Perion is positioned to benefit from the overall growth of the digital marketplace, our diversified business solutions also enable us to succeed during volatile periods when growth opportunities are concentrated in specific sectors.
The advanced technological solutions offered by Perion, which apply to the entire consumer journey and marketing funnel, including these capabilities.
| 1. | The ability to monetize search traffic through our partnership with Microsoft Advertising (Bing), as reflected in the growth of our publisher network. This is particularly important given the growing shift to Direct Response units; |
|---|---|
| 2. | The ability to continuously expand our margin, demonstrating the effectiveness of our iHUB, which is further detailed below; |
| --- | --- |
| 3. | The ability to meet advertiser demand for higher user engagement with our high-impact Ad suite; |
| --- | --- |
| 4. | The ability to innovate in sectors that matter most to brands; this is manifest in SORT™ which is an effective and successful response to advertiser recognition that privacy matters; and |
| --- | --- |
| 5. | The ability to acquire and execute with strategic and operational discipline. |
| --- | --- |
SORT™, Perion’s alternative to third party cookies, which is first and foremost the result of our ability to analyze the complex data signals that are derived from our assets that flow through our iHUB.
SORT™ - which stands for “Strategic Optimization of Relevant Traits” – and which is covered by a provisional patent, not only eliminates the need for cookies, but is being demonstrated by actual, real-time comparison tests made by Neutronian, a respected third-party research firm, to outperform first-party cookies.
Further, SORT™ does not collect or store any user data, the way other cookie-less solutions do. This gives SORT™ a unique position as a cookie-free solution which maintain user anonymity. Thus, the technology serves as the superior, competitively advantaged replacement for third-party cookies. These are currently an essential part of the targeting infrastructure of the digital advertising market but are under increasing pressure for the manner in which they violate user privacy. SORT™ is a competitive advantage that should enable Perion to capture revenue as brands and advertisers move away from cookies and other platforms such as Google – who just delayed their elimination of cookies until the end of 2024 because they were unable to develop a satisfactory replacement solution. In addition, consumers are made aware that a brand campaign is running through SORT™, and hence the ads are safe to click, as indicated by a proprietary “Private Shield” graphic logo that is part of every ad unit running through SORT™. SORT™ is a solution that provides consumers with visible confidence they won’t be followed around the web as their behavior is being tracked.
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SORT™ was built as a flywheel that gains insights and effectiveness as more campaigns are run through it, as the below infographic demonstrates:
To provide further details on our iHUB, this centralized and intelligent hub connects Perion’s supply side and demand side assets and processes billions of signals. This provides five levels of value: operational savings – shared resources; Traffic Acquisition Costs and media buying optimization; increased customer value; market agility and creative firepower, as further described below:
| 1. | Operational Savings – Shared Resources |
|---|
Perion’s iHUB serves as a central function to all of Company’s activities, acting as a shared infrastructure resource consisting of an ad-server, as well as a central real-time bidding engine, a smart data layer, and sophisticated reporting. This efficiency eliminates excessive expenses incurred by business units when developing separate infrastructures.
| 2. | Traffic Acquisition Costs (TAC) Optimization |
|---|
The iHUB allows our business units to quickly balance and harmonize demand and supply, providing optimum utilization of our owned & operated supply as well as the open web. This enables us to serve direct demand in a closed loop, generating superior efficiency and hence performance.
Further, we offer publishers and advertisers multiple ad products within our offering model. This enables us to capture more market share, optimizing the return on our go-to-market efforts.
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| 3. | Increased Customer Value |
|---|
Our advertisers benefit from both high scale and reach, as well as better matching on a segment basis. This is made possible by our cross-company data layer. This same technology offers customer value to our publishers, delivering more opportunities to monetize their inventory and generate incremental revenue - as we make multiple ad products from different business units available through our unified platform.
| 4. | Market Agility and Creative Firepower |
|---|
The COVID-19 pandemic, and the volatility of the post-pandemic marketplace have highlighted the importance of being able to respond to strategic shifts in advertising dollars allocated between video/CTV, display and search media.
Perion is positioned to benefit from the overall growth of the digital marketplace, through our diversified business solutions that cover the three main pillars of digital advertising—our search ad monetization; cross-channel high impact advertising, including through video and connected television, or CTV; social advertising through our actionable performance monitoring platform; and our content monetization system.
Recent Developments
COVID-19
The COVID-19 pandemic has impacted worldwide economic activity, financial markets, and business practices since it emerged in 2020. Since the first quarter of 2022, as a result of the increased vaccination rate and less virulent strains, many government-imposed restrictions have been lightened or removed. We fully reopened all of our offices and are conducting business as usual under hybrid working schedules. However, the end of the COVID-19 pandemic is still uncertain. We will continuously monitor and evaluate the situation and respond appropriately to support our employees, customers, partners and communities.
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Results of Operations
Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021
Revenue. Revenue increased by 36%, from $199.5 million in the six-month period ended June 30, 2021 to $272.0 million in the six-month period ended June 30, 2022.
Search Advertising revenue. Search Advertising revenue increased by 18%, from $103.3 million in the six-month period ended June 30, 2021 to $121.8 million in the six-month period ended June 30, 2022. This increase is primarily as a result of increased average daily commercial searches, increase in average RPM and increased number of publishers.
Display Advertising revenue. Display Advertising revenue increased by 56%, from $96.2 million in the six-month period ended June 30, 2021 to $150.2 million in the six-month period ended June 30, 2022. This increase was a result of the acceleration of our Video and CTV advertising offering and an increased number of clients.
Cost of revenue. Cost of revenue increased by 16%, from $11.6 million or 6% of revenue in the six-month period ended June 30, 2021 to $13.5 million or 5% of revenue in the six-month period ended June 30, 2022. The decrease as a percentage of revenue is primarily due to our ability to generate higher level of revenue with a moderate increase in expenses related to hosting, data and headcount.
Traffic acquisition costs (“TAC”) and media buy. TAC and media buy increased by 30%, from $121.1 million or 61% of revenue in the six-month period ended June 30, 2021 to $156.9 million or 58% of revenue in the six-month period ended June 30, 2022. The decrease as a percentage of revenue is primarily due to improved commercial terms, a favorable product mix of ad formats, and the iHUB control system.
Research and development expenses (“R&D”). R&D expense remained stable in the amount of $17.5 million in the six-month period ended June 30, 2021 and $17.4 million in the six-month period ended June 30, 2022.
Selling and marketing expenses (“S&M”). S&M expenses increased by 16%, from $23.5 million in the six-month period ended June 30, 2021 to $27.3 million in the six-month period ended June 30, 2022. The increase was primarily due to marketing expenses and additional headcount as a result of Vidazoo acquisition.
General and administrative expenses (“G&A”). G&A increased by 39%, from $8.8 million in the six-month period ended June 30, 2021 to $12.1 million in the six-month period ended June 30, 2022. The increase was primarily due to increased stock-based compensation expenses, consulting expenses related to M&A transactions and employee-related costs resulting from exchange rate fluctuations.
Depreciation and amortization. Depreciation and amortization expenses in the amount of $4.4 million in the six-month period ended June 30, 2021 and $6.4 million in the six-month period ended June 30, 2022. Depreciation and amortization consist primarily of depreciation of our property and equipment and the amortization of our intangible assets as a result of our acquisitions. The increase is primarily attributable to the additional amortization of the acquired intangible assets derived from Vidazoo acquisition.
Taxes on Income (benefit). Taxes on income increased by $2.7 million from a tax expense of $2.2 million in the six-month period ended June 30, 2021 to tax expenses of $4.9 million in the six-month period ended June 30, 2022. The variations in the tax expenses between the periods are impacted by increases in tax deductible intangible assets and the impact of foreign exchange fluctuations on non-USD tax assets and liabilities.
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Liquidity and Capital Resources
As of June 30, 2022, we had $353.0 million in cash, cash equivalents and short-term bank deposits compared to $321.6 million as of December 31, 2021. The $31.4 million increase is primarily the result of $49.3 million net cash provided by operating activities, deducted by $18.6 million cash paid in connection with acquisitions.
Net cash provided by operating activities
For the six months ended June 30, 2022, our operating activities provided cash in the amount of $49.3 million, primarily as result of a net income in the amount of $35.0 million, increased by non-cash expenses, depreciation and amortization of $6.4 million, stock-based compensation expenses of $5.1 million and a net change of $3.9 million in operating assets and liabilities.
For the six months ended June 30, 2021, our operating activities provided cash in the amount of $28.1 million, primarily as result of a net income in the amount of $10.4 million, increased by non-cash expenses, depreciation and amortization of $4.4 million, stock-based compensation expenses of $2.0 million and a net change of $11.1 million in operating assets and liabilities
Net cash used in investing activities
In the six months ended June 30, 2022, we used in our investing activities $43.4 million cash, primarily due to $33.4 million investment in short-term deposits and $9.6 million paid in connection with acquisitions.
In the six months ended June 30, 2021, we used in our investing activities $74.1 million cash, primarily due to $70.3 million investment in short-term deposits and $3.4 million paid in connection with acquisitions.
Net cash provided by (used in) financing activities
In the six months ended June 30, 2022, we used in our financing activities $7.8 million cash, primarily due to $9.1 million related to contingent consideration payments in respect to previous acquisitions offset by $1.3 million due to stock-options exercises.
In the six months ended June 30, 2021, our financing activities provided cash in the amount of $56.5 million, primarily due to $61 million from the issuance of shares in a follow-on offering and $3.8 million from stock-options exercises, offset by a $8.3 million repayment of our remaining loan.
Research, Development, Patents and Licenses, Etc.
There have been no material changes to our research and development activities from those reported under “Item 5.C.—Research, Development, Patents and Licenses, Etc.” in the Annual Report.
Contractual Obligations and Commitments
As of the date of this discussion and analysis, there are no material changes to our contractual obligations from those reported under “Item 5.F.—Tabular Disclosure of Contractual Obligations” in the Annual Report.
Off-Balance Sheet Arrangements
As of the date of this discussion and analysis, we do not have any, and during the periods presented we did not have any, off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial conditions, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies and Estimates
There have been no material changes to the significant accounting policies and estimates described in “Item 5.A. —Operating Results” in the Annual Report.
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