DATA-DRIVEN AD TECH SOLUTIONS FOR BRANDS & PUBLISHERSCOMPANY DECK

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$333B2019

Global DigitalAd Spend

BIGADDRESSABLEMARKETTODAY

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Source: eMarketer.com

ADDRESSABLEMARKET

HUGE $518B2023 FC,

Global DigitalAd SpendTOMORROW

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Source: eMarketer.com

The Giants Are Consolidating the WorldFacebook, Google and Amazon represent 85% of digital ad dollars 85%

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Source: eMarketer.com

THE GIANTS DON’T LIMIT OPPORTUNITIES THEY CREATE THEM…

Keeping users in their Walled Garden Ecosystems

Capturing as much revenue from publishers as possible

Advertising commoditization - platforms become the differentiator

Perion is Re-Engineering Ad-Tech to Capitalize on Each of These Opportunities

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DISPLAY / VIDEOAD SEARCHSOCIAL MEDIA

PERION’S DIVERSIFICATION STRATEGY

Perion is well-positioned to capitalize on any shifting budget between 3 main pillars of digital advertising

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FULL FUNNELCOVERAGE

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PERION’S DIVERSIFICATION STRATEGY

VIDEO & DISPLAY

20%

SEARCH42%

SOCIAL MEDIA

38%

8

PPC growthOnline retailers are leading to greater competition in the auction

Improved algorithms accuracy

Growing number of searches Direct correlation between search and online purchases.

MARKETTRENDS

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FOR 10 YEARSA STRATEGIC PARTNER

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Statista.com, October 19

963MUNIQUE

GLOBAL VISITORS

144BYEARLY

SEARCHES

35%SEARCH SHARE

IN U.S. (PC)

IN NUMBERS

+10%GROWTH IN REVENUES

$4.2BIN REVENUES

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PROUD TO BE A PART OF THE BING ECOSYSTEMCodeFuel

SERVES+13M DAILY SEARCHES

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COLLABORATION WITH CHECK POINT

66

Keywords Data

TrafficValidation

CodeFuel Hosted Search

DataAnalysis

Device GEO ad Unit Channel A/B testing

Search Query

RevenuesOptimization(CPC / RPM)

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+13MSERVES

DAILY SEARCHES

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BEND THE CURVE

37.634.4 33.3 34.3

31.629.6 31.0

34.7 35.3

42.344.2

51.8

Q1-1

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Q2-1

7

Q3-1

7

Q4-1

7

Q1-1

8

Q2-1

8

Q3-1

8

Q4-1

8

Q1-1

9

Q2-1

9

Q3-1

9

Q4-1

9

• RPM increase• Revenues per

searcher optimization• Launch of new

products (O&O)

+17% QoQ

+49%YoY

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You Have the Right to Remain Private

73%Of consumers surveyed are more aware of data breaches compared to five years ago

78%said they are taking action to limit the amount of personal information they share online

PRIVADOCO-DEVELOPED BY CODEFUEL AND MICROSOFT

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PERION’S DIVERSIFICATION STRATEGY Advertising

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ADVERTISING

BRANDPUBLISHER

AGENCY

Synchronized Digital Branding

STRATEGY

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CONNECTING THE WORLD’S BEST BRANDS & PUBLISHERS WITH AWARD-WINNING CREATIVES

AWARDSPUBLISHERSBRANDS

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THE CUSTOMER’S JOURNEYHAS TURNED INTO A 3D JOURNEY

PERION’S UNIQUE SOLUTION:SYNCHRONIZED DIGITAL BRANDING

We’ve created an AI-based Ad journey that aligns with the consumers’ journey in multiple touchpoints across funnel/platform/channel

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Planning● Create the Ads journey● Recommendation engine

AI-based Optimization● Rules-based optimization● AI recommendation engine● Budget optimization

Activation● “Flow”● Campaign execution Reporting

CREATIVESCENTER

AUDIENCESCENTER FEEDBACK LOOP WITH DATA-DRIVEN INSIGHTS

WORKFLOW MANAGEMENT

Advertising Cloud PlatformProductization of Undertone solution – Synchronized Digital Branding

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Acquires

Increasingly challenging for brands to tell their story to distracted and distrustful consumers

A NEW PARADIGM SHIFT IS REQUIRED

Personalized environments

Disciplined Layout

Scaling Engine

High Impact Content

Trusted brand experiences

Noisy, questionable environments dilute advertising messages

Publishers struggle to generate quality traffic

Must engage traffic with advertising using love and respect.

Publishers are forced to accept lack of transparency, massive waste and outright fraud - compounding issues of brand safety

FIXEDLAYOUT / CONTENT

AD PLACEMENT

GIVEN AUDIENCE

PUBLISHER ENVIRONMENT TRANSFORMATION SYNCHRONIZE THEIR DESTINATION

STATIC

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DYNAMICPUBLISHER ENVIRONMENT TRANSFORMATION SYNCHRONIZE THEIR DESTINATION

PAGE LAYOUTSCALED AUDIENCE

ELASTIC CONTENT

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PERION’S TURNAROUNDCost optimization Building Tech-Moat Ignite Growth

2017/8 2018/9 2019/20…

Net cash $45.0M –Net cash flow continues to grow for the fifth consecutive quarter

Total Cash $61.6MTotal Debt $16.7M

92.586.2 86.9

77.7

64.6 64.4 62.3 60.7

50.240.8 39.7 40.5

31.0

20.8 18.8 16.7

-43.7

45.0

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19

Debt Net Cash

Key Turnaround Financial Optimization Milestone ($M)

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OPEX NON-GAAP ($M)2017 - 2019

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PERION’S TURNAROUNDCost optimization Building Tech-Moat Ignite Growth

2017/8 2018/9 2019/20…

17.2

18.9

22.6

2017 2018 2019 2020

26-28

Adjusting ad products portfolio to match new standards, streamlining channel to channel creatives

Building a device graph with billions of IDs to support SDB targeting and sequencing, building contextual solutions to mitigate the cookie apocalypse

Digital spend optimization and automation in channels and across channels (Social, Display) - Captain Growth’s acquisition

Supporting effective scale cost by cloud infrastructure investing

Creative

Data

AI

Scale

R&D Expenses ($M)

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R&D

GROW

TH D

RIVE

RS

PERION’S TURNAROUNDCost optimization Building Tech-Moat Ignite Growth

2017/8 2018/9 2019/20…

274

253261

2017 2018 2019 2020

GROW

TH D

RIVE

RS

ContentIQ: organic synergy content optimization for publishers

Microsoft partnership,Launch of Privado

Synchronized digital branding

Revenues ($M)

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ADJUSTED EBITDA ($M)2017 - 2019

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CASH FROM OPERATIONS ($M)2017 - 2019

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2020ADJUSTEDEBITDA GUIDANCE

Expecting 2020 Adjusted EBITDA to reach

38-40 ($M)

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Appendix

www.perion.com34

Balance Sheet Overview ($M)

Current Assets 31/12/2018 31/12/2019 Current Liabilities 31/12/2018 31/12/2019

Cash and cash equivalents 39.1 38.4 Current maturities of long-term loans and Convertible debt 16.1 8.3

Restricted cash 1.7 1.2 Accounts payable 38.2 47.7

Short-term bank deposit 4.0 23.2 Accrued expenses and other liabilities 17.2 18.4

Accounts receivable, net 55.6 49.1 Short-term operating lease liability - 3.7

Prepaid expenses and other current assets 3.5 3.2 Deferred revenues 3.8 4.2

103.9 115.1 Payment obligation related to acquisitions 1.8 1

77.1 83.3

Non-Current Assets 31/12/2018 31/12/2019 Long-Term Liabilities 31/12/2018 31/12/2019

Property and equipment, net 15.6 10.9 Long-term Debt 16.7 8.3

Operating lease right-of-use assets - 22.4 Convertible debt, net of current maturities 7.7 -

Intangible assets, net 6.5 2.7 Long-term operating lease liability - 20.4

Goodwill 125.1 125.8 Other long-term liabilities 6.1 6.6

Deferred taxes & Other assets 5.3 6.9 30.5 35.3

152.5 168.7

Shareholders' Equity 31/12/2018 31/12/2019

148.8 165.2

Total Assets 256.4 283.8 Total Liabilities and Shareholders' Equity 256.4 283.8

Net Income Statement ($M)

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P&L Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 2017 2018 2019

Advertising 29.3 33.2 26.2 37.3 18.6 21.3 21.6 26.4 134.5 126.0 87.9

Search and other 31.6 29.6 31.0 34.7 35.2 42.3 44.2 51.8 139.5 126.8 173.6

Total Revenues 60.9 62.8 57.2 72.0 53.8 63.6 65.8 78.2 274.0 252.8 261.5

Customer acquisition costs 31.9 31.1 28.8 36.6 27.4 33.2 34.2 41.1 130.9 128.4 135.9

Media Margin 29.0 31.7 28.4 35.4 26.4 30.4 31.6 37.1 143.1 124.4 125.6

% of Revenues 47.6% 50.5% 49.7% 49.2% 49.1% 47.8% 48.0% 47.4% 52.2% 49.2% 48.0%

Cost of revenues 6.1 5.8 5.5 6.4 5.8 6.1 6.8 6.9 24.7 23.8 25.6

Gross Margin 22.9 25.9 22.9 29.0 20.6 24.3 24.8 30.2 118.4 100.6 100.0

% Gross Margin 37.6% 41.2% 40.0% 40.3% 38.3% 38.2% 37.7% 38.6% 43.2% 39.8% 38.2%

Research and development 5.5 4.7 4.4 4.3 4.9 5.6 6.0 6.1 17.2 18.9 22.6

Selling and marketing 9.7 10.1 8.6 10.5 8.3 8.7 8.6 9.0 52.7 38.9 34.7

General and administrative 4.3 4.9 3.9 3.4 3.0 3.4 3.6 5.0 21.9 16.4 15.0

Depreciation and amortization 2.1 2.5 2.5 2.6 2.4 2.3 2.6 2.4 16.6 9.7 9.7

Impairment, loss of goodwill and intangibles - - - - - - - - 85.7 - -

Restructuring charges 1.1 0.9 - - - - - - - 2.0 -

Total OPEX 22.7 23.1 19.4 20.8 18.6 20.0 20.8 22.5 194.1 85.9 82.0

% of Revenues 37.3% 36.8% 33.9% 28.9% 34.6% 31.4% 31.6% 28.8% 70.8% 34.0% 31.4%

EBIT 0.2 2.8 3.5 8.2 2.0 4.3 4.0 7.7 (75.7) 14.7 18.0

% of Revenues 0.3% 4.5% 6.1% 11.4% 3.7% 6.8% 6.1% 9.8% -27.6% 5.8% 6.9%

Financial expense, net 0.6 1.2 1.2 0.8 1.3 1.0 0.4 0.7 5.9 3.8 3.5

Tax expenses (benefit) (0.5) 0.6 0.1 2.5 (0.5) 0.4 0.7 1.1 (8.8) 2.8 1.6

Net Income (Loss) 0.1 1.0 2.2 4.9 1.2 2.9 2.9 5.9 (72.8) 8.1 12.9

% of Revenues 0.2% 1.6% 3.8% 6.8% 2.2% 4.6% 4.4% 7.5% -26.6% 3.2% 4.9%

Net Earnings per Share - Basic 0.00 0.04 0.08 0.19 0.05 0.11 0.11 0.23 (2.81) 0.31 0.50

Net Earnings per Share - Diluted 0.00 0.03 0.08 0.19 0.05 0.11 0.11 0.22 (2.81) 0.31 0.49

Non-GAAP Adjustments ($M)

Reconciliation of GAAP to NON-GAAP Results Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 2017 2018 2019

GAAP Net Income (Loss) from continuing operations 0.1 1.0 2.2 4.9 1.2 2.9 2.9 5.9 (72.8) 8.1 12.9

Share based compensation 0.6 0.9 0.6 0.6 0.5 0.5 0.7 0.7 2.1 2.7 2.3

Amortization of acquired intangible assets 1.2 1.2 1.2 1.2 1.0 1.0 1.1 1.0 13.0 4.8 4.3

Restructuring costs 1.1 0.9 - - - - - - - 2.0 -

Expenses related to M&A activity 0.2 - - 0.1 0.3 0.3 0.3 1.4 0.2 0.4 2.4

Impairment of goodwill and intangible assets - - - - - - - - 85.7 - -

Fair value revaluation of convertible debt and related derivative 0.1 0.7 0.3 (0.3) 0.3 (0.2) - - 1.2 0.8 0.1

Foreign exchange losses associated with ASC-842 - - - - 0.3 0.2 0.2 - - - 0.7

Taxes on the above items (0.3) 0.0 0.0 (0.7) (0.3) (0.2) (0.2) (0.2) (12.0) (1.0) (1.0)

Non-GAAP Net Income from continuing operations 3.0 4.7 4.3 5.8 3.3 4.5 5.0 8.8 17.4 17.8 21.7

Taxes on income (0.1) 0.6 0.1 3.2 (0.2) 0.7 0.9 1.2 3.2 3.8 2.6

Financial expense, net 0.5 0.5 1.0 1.1 0.7 1.0 0.2 0.7 4.7 3.1 2.7

Depreciation 0.9 1.3 1.3 1.4 1.3 1.2 1.5 1.4 3.6 4.9 5.5

Adjusted EBITDA 4.3 7.1 6.7 11.5 5.1 7.4 7.6 12.1 28.9 29.6 32.5

Non-GAAP diluted earnings per share 0.12 0.17 0.16 0.21 0.12 0.17 0.18 0.32 0.72 0.65 0.83

Cash Flow Overview ($M)

Cash Flow Results Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 2017 2018 2019

Operating activities

Net Income 0.1 1.0 2.2 4.9 1.2 2.9 2.9 5.9 (72.8) 8.1 12.9

Adjustments required to reconcile net income to net cash 14.5 1.9 8.8 (0.6) 12.8 5.5 8.2 5.3 108.8 24.7 31.8

Net cash provided by continuing operating activities 14.6 2.9 11.0 4.3 14.0 8.4 11.1 11.2 36.0 32.8 44.7

Investing activities

Net cash provided by (used in) investing activities 5.1 (0.4) (1.6) (4.9) (2.9) (0.6) (10.8) (6.8) (4.8) (1.8) (21.1)

Financing activities

Net cash used in financing activities (9.6) (9.5) (3.2) (0.7) (11.7) (10.0) (1.5) (1.5) (23.9) (23.0) (24.8)

Effect of exchange rate changes on cash and cash equivalents 0.1 (0.1) 0.1 - (0.1) - - - 0.3 0.1 -

Net increase (decrease) in cash and cash equivalents and restricted cash 10.2 (7.1) 6.3 (1.3) (0.7) (2.2) (1.2) 2.9 7.6 8.1 (1.2)

Cash and cash equivalents and restricted cash at beginning of period 32.7 42.9 35.8 42.1 40.8 40.1 37.9 36.7 25.1 32.7 40.8

Cash and cash equivalents and restricted cash at end of period 42.9 35.8 42.1 40.8 40.1 37.9 36.7 39.6 32.7 40.8 39.6

Non-GAAP P&L($M)P&L Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 2017 2018 2019

Advertising 29.3 33.2 26.2 37.3 18.6 21.3 21.6 26.4 134.5 126.0 87.9

Search and other 31.6 29.6 31.0 34.7 35.2 42.3 44.2 51.8 139.5 126.9 173.6

Total Revenues 60.9 62.8 57.2 72.0 53.8 63.6 65.8 78.2 274.0 252.9 261.5

Customer acquisition costs 31.9 31.1 28.8 36.6 27.4 33.2 34.2 41.2 130.9 128.4 135.9

Media Margin 29.0 31.7 28.4 35.4 26.4 30.4 31.6 37.0 143.1 124.5 125.6

% of Revenues 47.6% 50.5% 49.7% 49.2% 49.1% 47.8% 48.0% 47.3% 52.2% 49.2% 48.0%

Cost of revenues 6.0 5.8 5.5 6.4 5.7 6.0 6.8 6.8 24.6 23.6 25.3

Gross Margin 23.0 25.9 22.9 29.0 20.7 24.4 24.8 30.2 118.5 100.9 100.3

% Gross Margin 37.8% 41.2% 40.0% 40.3% 38.5% 38.4% 37.7% 38.6% 43.2% 39.9% 38.4%

Research and development 5.4 4.6 4.2 4.2 4.8 5.5 5.1 5.7 17.0 18.4 21.1

Selling and marketing 9.5 9.9 8.4 10.3 8.1 8.6 8.5 9.1 52.0 38.1 34.2

General and administrative 3.8 4.3 3.6 3.0 2.7 2.9 3.6 3.3 20.6 14.8 12.5

Total OPEX 18.7 18.8 16.2 17.5 15.6 17.0 17.2 18.1 89.6 71.3 67.8

% of Revenues 30.7% 29.9% 28.3% 24.3% 29.0% 26.7% 26.1% 23.1% 32.7% 28.2% 25.9%

EBITDA 4.3 7.1 6.7 11.5 5.1 7.4 7.6 12.1 28.9 29.6 32.5

% of Revenues 7.1% 11.3% 11.7% 16.0% 9.5% 11.6% 11.6% 15.5% 10.5% 11.7% 12.4%

Non-GAAP diluted earnings per share 0.12 0.17 0.16 0.21 0.12 0.17 0.18 0.32 0.72 0.65 0.83