Perion Network Ltd. (PERI:US), the Israeli software maker whose partners include Google Inc. (GOOG:US) and Microsoft Corp. (MSFT:US)’s Bing, will announce an agreement with one of the world’s biggest search engines in July as it seeks to diversify its revenue sources, Chief Executive Officer Josef Mandelbaum said.
“We have signed with a fourth search partner, it’s a done deal,” Mandelbaum said in an interview at Bloomberg’s headquarters in New York yesterday, declining to identify the company. “We sign multiple deals because it is healthier for the company, as opposed to growing with only one partner.”
Shares of Perion have surged 50 percent this year, even after slumping 4.5 percent yesterday amid a global decline in stocks spurred by concern that growth is slowing. The Bloomberg Israel-US Equity Index of the most-traded Israeli companies in the U.S. slipped for the second time in three days, led by CaesarStone Sdot Yam Ltd. Drug developer Prolor Biotech Inc. (PBTH:US) dropped 3.8 percent, the biggest among dually listed companies.
Perion is pursuing new partners after Google, which halted automatic software downloads Feb. 1, contributed all of its search revenue last year. The Tel Aviv-based company has since entered accords with Bing and Oakland, California-based Ask.com while announcing a two-year extension of its partnership with Google. Mandelbaum said no single provider will make up more than 50 percent of search revenue by the end of this year.
The Bloomberg Israel-US Index fell 1 percent to 90.84, a one-month low. The shares in Tel Aviv dropped 3.5 percent to 49.75 shekels, or the equivalent of $13.59, at 10:45 a.m. in Israel. The benchmark TA-25 Index of stocks slipped 0.1 percent to 1,225.17.
The maker of products that simplify the use of e-mail and social networking websites is keeping its record $110 million annual revenue forecast announced in January, which would imply an 83 percent increase from 2012, according to Mandelbaum. On average, the four analysts surveyed by Bloomberg estimate revenue of $117 million for the company this year. Perion’s CEO forecasts annual revenue of as much as $300 million in 2016.
“Any time you diversify sources of revenue, it’s a positive for the company,” Jared Schramm, a Newport Beach, California-based analyst at Roth Capital Partners LLC, said by phone yesterday. He has a buy recommendation on the stock. “Their acquisition strategy has been very successful. The company enjoys a strong relationship with Google and is in a pretty unique space based on what they do.”
Perion, which spent about $40 million on the purchase of Israeli consumer Internet company SweetPacks in November, is seeking other acquisitions and has “no immediate” buyback or dividend plans, Mandelbaum said.
“We want to invest in growth,” he said. “The SweetPacks acquisition really helped give us much more scale, which just made us more attractive at the dance. I can’t buy a $100 million company today, but there are things we can do.”
While the Nasdaq accounts for about 90 percent of trading on Perion’s shares, Mandelbaum said the company has no current plans of delisting in Israel. Mellanox Technologies Ltd. (MLNX:US), which makes data transferral and storage software, will be “voluntarily” delisted from the Tel Aviv Stock Exchange, the company said in a May 30 statement.
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