Israel’s Perion Network said it was targeting annual revenue of $1 billion in the next five years following the acquisition of Conduit’s ClientConnect business.
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The Tel Aviv-based Perion completed the purchase on Thursday in an all-stock deal worth $660 million, giving the company a platform designed to provide give mobile application publishers and developers a way of improving their distribution and money-making capabilities.
“My plan three years ago was to build a billion dollar company in Israel,” Perion CEO Joseph Mandelbaum said in an interview with Reuters. “My internal goal is it will take three to five years to get there.”
Mandelbaum said about a quarter of mobile apps never get downloaded, except perhaps by the developer’s friends and family, while 98% of apps earn less than $5,000 a year. Citing studies, Perion also said 76% of consumers find free versions of apps sufficient.
“The toughest thing is getting traffic and making money,” Mandelbaum said. Perion shares, which rose 35% in 2013 on top of a 126% advance in 2012, closed up 2.45% on Nasdaq Friday.
Mandelbaum said the acquisition of the much larger ClientConnect would allow Perion to help more mobile apps find paying customers. Perion, he noted, was able to make money from its main products, IncrediMail and Smilebox, through search partnerships with Yahoo!, Google and Microsoft’s Bing.
On its own, Perion, founded in 2000 and whose key shareholders include Benchmark Capital and JP Morgan Chase, is expected to post 2013 revenue of between $102 and $104 million, up from $61 million in 2012. Including ClientConnect, 2013 revenue would be about $400 million.
Mandelbaum declined to give an outlook for 2014 but said the company expects to grow sales and profit, especially as the ClientConnect deal is immediately positive for earnings.
“This deal is a great stepping stone,” Mandelbaum said. “We are not where we want to be yet. We have to do more investments and acquisitions to fill in the gaps.”
He said Perion aims to improve its presence in the mobile sector, a tougher area for advertising than on desktop computers, and in analytics.
“We haven’t even scratched the surface,” he added. “We have terabytes of data to help ourselves and publishers make more money.”