Perion Network Acquires Content IQ For Orchestration Tech


Quick Take

Perion Network Ltd. (PERI) has announced the acquisition of Content IQ for up to a total potential consideration of $73 million.

CIQ has developed a digital publishing management system using proprietary algorithms to optimize operations.

With the deal for CIQ, PERI is acquiring additional machine learning capabilities to assist its clients in a more challenging and ‘cookie-less’ online advertising environment.

Although PERI stock may be currently fully valued based on a conservative DCF basis, management appears to be aggressively moving to acquire the firms and technologies it needs to differentiate its offerings, so I’m cautiously BULLISH.

Target Company

New York, NY-based CIQ was founded to develop a suite of software tools to enable digital publishers to more efficiently distribute and monetize content in a ‘cookie-less’ environment based on new data regulations.

Management is headed by co-founder Asaf Katzir, who was previously co-founder at Wildfire and co-founder Ziv Yirmiyahu, who was previously co-founder at Top Trender.

CIQ’s primary offerings include:

  • Attribution Science

  • The Refiner

  • Central Command

  • Bidding Brain

  • Content Driver

Market & Competition

According to a 2019 market research report by Grand View Research, the market for digital marketing software is expected to reach $105 billion by 2025.

This represents a forecast CAGR (Compound Annual Growth Rate) of 15.2% from 2019 to 2025

The main drivers for this expected growth the continued proliferation of Internet usage by marketers and a growing use of social media in particular encouraging brands to seek more compelling and measurable ROI.

Major vendors that provide competitive services include:

  • Adobe Systems (ADBE)

  • Marketo

  • Salesforce (CRM)

  • Hubspot (HUBS)

Source: Sentieo

Acquisition Terms & Financials

Perion disclosed the acquisition price and terms as a total potential consideration of $73 million comprised of:

  • Cash at closing – $15 million

  • Retention incentives – $11 million

  • Two year revenue & EBITDA earn-outs – $47.05 million

Assuming a total purchase price of $73 million and 2019 Content IQ revenues of $39 million, Perion paid a Price / Sales multiple of 1.87x.

Management didn’t provide a change in financial guidance as a result of the transaction.

A review of the firm’s most recent published financial results indicate that as of September 30, 2019 Perion had $52.0 million in cash and short-term investments and $109.3 million in total liabilities of which $10.4 million was long-term debt.

Free cash flow for the twelve months ended September 30, 2019 was $36.6 million.

In the past 12 months, Perion Network Ltd.’s stock price has grown by 135.8% vs. the U.S. Media industry’s rise of 17.6% and the U.S. S&P 500 Index’ rise of 19.4%, as the PERI chart indicates below:

Source: Simply Wall St.

Earnings surprises versus analyst consensus estimates have been positive in only five of the last twelve quarters, as the chart shows below:

Source: Seeking Alpha

Analyst sentiment in recent earnings calls has dropped from a recent high, as the linguistic analysis shows here:

Source: Sentieo

Valuation Metrics

Below is a table of relevant capitalization and valuation figures for the company:



Market Capitalization


Enterprise Value


Price / Sales


Enterprise Value / Sales


Enterprise Value / EBITDA


Free Cash Flow [TTM]


Revenue Growth Rate


Earnings Per Share


Source: Company Financials

Below is an estimated DCF (Discounted Cash Flow) analysis of the firm’s projected growth and earnings:

Assuming the above conservative DCF parameters, the firm’s shares would be valued at approximately $6.79 versus the current price of $7.74, indicating they are potentially currently overvalued, with the given earnings, growth and discount rate assumptions of the DCF.


PERI acquired CIQ to bolster its ability to provide brands with content control across diverse environments.

As Perion’s CEO Doron Gerstel stated in the deal announcement,

As brands find it increasingly difficult to effectively tell their story to consumers, and branded content becomes a more critical and effective form of engagement, a new paradigm is required. Brands must gain the ability to scale to highly relevant audiences, and through that to assert greater control over the media environment. CIQ’s offering fills this gap and provides Perion with a proprietary solution that gives publishers and brands the tools they need to prosper in a challenging digital world.

Also, CIQ’s technology provides machine learning technologies to help optimize presented content in a ‘cookie-less’ environment such as those brought on by GDPR, CCPA and others.

So, the deal positions Perion to have a compelling offering for clients dealing with a changing online advertising environment.

PERI’s stock has had quite a run in the past twelve months, but has recently come off a high of $9.37.

The firm appears to be generating more predictable earnings and producing earnings beats in the four most recent quarters.

With its improved cash position, management is seeking more acquisition opportunities, so the deal for CIQ is part of an increasing focus on gaining traction ‘to accelerate market adoption of what we’re selling.’

Although the DCF indicates PERI stock may be currently fully valued from a cash flow standpoint (assuming a conservative growth rate), Perion has the potential to grow faster due to its proactive focus on providing clients with solutions in a changing advertising environment.

Management declined to provide forward guidance for cash flow, but I’m cautiously BULLISH on the firm’s growth prospects in the medium term.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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