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Tremor International (TRMR)

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Tuesday 25 May, 2021

Tremor International

Q1 2021 Trading Update

RNS Number : 7044Z
Tremor International Ltd
25 May 2021
 

25 May 2021

Tremor International Ltd

 

("Tremor" or the "Company")

 

Q1 2021 Trading Update

 

Organic sales traction underpins record Q1 results and strong momentum across 2021

 

Tremor International Ltd (AIM: TRMR), a global company offering an end to end software advertising platform , announces its results for the three months ended 31 March 2021.

 

Financial summary  

 

· A record performance in Q1 2021, which is historically a quieter period for the Company

o Net revenue increased 96% to $63.0 million (Q1 2020: $32.1 million)

o Programatic net revenue increased 105% to $55.7 million (Q1 2020: $27.2 million), underpinned by revenue growth in Connected TV ("CTV"), the self-serve platform and private marketplaces

o Adjusted EBITDA increased 4,935% to $27.5 million (Q1 2020: $0.5 million)

o Total cash and cash equivalents as at 30 April 2021 of $130 million with no debt, after conducting a buy back of $6.6 million during Q1 2021

· All acquisitions are now fully integrated with Tremor delivering record levels of organic revenue growth

 

Non-GAAP highlights

 

USD thousands

 

 

Q1 2021

Q1 2020

% change

Net Revenue1

$62,988

$32,112

96%

Adjusted EBITDA2

$27,519

$547

4935%

Programmatic net revenue

$55,689

$27,204

105%

 

Financial highlights

 

USD thousands

 

 

Q1 2021

Q1 2020

% change

Revenues

$71,009

$38,611

84%

Cost of sales

$17,692

$13,258

33%

Research and development expenses

$3,403

$3,521

-3%

Selling and marketing expenses

$18,050

$18,169

-1%

General and administrative expenses

$6,806

$9,933

-31%

Depreciation & Amortisation

$9,883

$11,460

-14%

Operating Profit

$15,175

-$17,730

 

 

Adjusted EBITDA reconciliation

 

USD thousands

 

 

Q1 2021

Q1 2020

% change

Operating profit

$15,175

-$17,730

 

Depreciation

$1,954

$3,577

-45%

Amortization

$7,929

$7,883

1%

Share-based payments

$2,341

$5,228

-55%

Restructuring & Acquisition-related cost

$120

$1,589

-92%

Adjusted EBITDA

$27,519

$547

4935%

 

1 Net revenue is included in this announcement consistent with the Company's prior disclosures.  The Company expects that, following its proposed initial public offering of American Depositary Shares representing its ordinary shares in the United States, the metric "net revenue" will be replaced with a metric currently referred to as "Contribution ex-TAC" in the Company's Registration Statement on Form F-1 ("the F-1"), which has been filed with the United States Securities and Exchange Commission ("SEC").  The F-1 remains subject to SEC review and comment and therefore the F-1 disclosure, including with respect to "Contribution ex-TAC", is subject to further review and amendment.

 

2 Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortisation, non-recurring income/expenses and share-based payment expenses

 

Operational summary

 

· Strong growth in Programmatic activity reinforces the Company's strategy to create an end-to-end platform, leveraging technology, data and business intelligence and targeting Video and CTV

· The Company continues to invest in both R&D and product development, to further exploit additional growth opportunities. During Q1 2021, Tremor launched multiple product initiatives to better cater for demand and supply partners as well as enhancing its go-to-market capabilities

 

Revenue KPIs:

 

USD thousands

 

 

Q1 2021

Q1 2020

% growth

Connected TV

$17,606

$5,512

219%

PMPs

$7, 095

$2,606

172%

Self-serve Platform

$ 4 ,266

$396

977%

 

· CTV continues to grow, and has become a key growth driver for the Company, accounting for 28% of net revenue and 32% of programmatic net revenue in Q1 2021

· The Company's self-serve segment highlights the continued strength of its  technology platform with clients now licensing Tremor's software to run campaigns

· PMPs achieved strong traction with first tier global advertisers, creating further opportunity for long term growth

 

Outlook

 

Management remain confident in the medium to long-term prospects of the Company with Tremor well-placed to further benefit from the ongoing resurgence in the global digital advertising industry.

 

1 As described in note 1 to the table above, the metric "net revenue" will be replaced following the Company's proposed initial public offering in the United States with a metric (currently expected to be "Contribution ex-TAC") that is subject to further review and amendment.

 

For further information please contact:

 

Tremor International Ltd

Ofer Druker, Chief Executive Officer

Sagi Niri, Chief Financial Officer

 

via Vigo Consulting

finnCap Ltd

Jonny Franklin-Adams / James Thompson (Corporate Finance)

Tim Redfern / Dicky Chambers (ECM)

 

Tel: +44 20 7220 0500

Stifel Nicolaus Europe Limited

Fred Walsh

Alain Dobkin

Nick Adams

Richard Short

 

Tel: +44 20 7710 7600

 

Vigo Consulting

Jeremy Garcia

Antonia Pollock

 

Tel: +44 20 7390 0230

 

About Tremor International

Tremor is a global company offering an end to end software advertising platform, operating across three core capabilities - Video, Data and CTV.  Tremor's unique approach is centred on offering a full stack of end-to-end software solutions which provides it with a major competitive advantage within the video advertising ecosystem.

 

Tremor Video helps advertisers deliver impactful brand stories across all screens through the power of innovative video technology combined with advanced audience data and captivating creative content. Tremor Video's  innovative video advertising technology has offerings in CTV, in-stream, out-stream and in-app.

 

The media side of Tremor, Unruly, drives real business outcomes in multiscreen advertising. Its programmatic platform efficiently and effectively delivers performance, quality, and actionable data to demand and supply-focused clients and partners. Tremor has a meaningful number of direct integrations with publishers, unique demand relationships with a variety of advertisers and privileged access to News Corp inventory. Unruly connects to the world's largest DSPs and is compatible with most AdAge top 100 brands.

 

Tremor is headquartered in Israel and maintains offices throughout the United States, Canada, Europe, Asia-Pacific and Australia and is traded on the London Stock Exchange (AIM: TRMR).

 

 

Forward-Looking Statements

 

This trading update contains forward-looking statements (as defined in Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements include comments regarding completion of the proposed offering. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by the Company at the time these statements were made. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable at the time made, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

 

 

TREMOR INTERNATIONAL LTD.

 

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

 

 

 

 

 

March 31

 

December 31

 

 

 

 

2021

 

2020

 

 

 

 

Unaudited

 

Audited

 

 

 

 

USD thousands

Assets

 

 

 

 

 

 

ASSETS :

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

103,48 6

 

97,463

Trade receivables, net

 

 

 

142,2 55

 

153,544

Other receivables

 

 

 

16,336

 

17,615

Current tax assets

 

 

 

1,374

 

2,029

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

 

 

 

263,451

 

270,651

 

 

 

 

 

 

 

Fixed assets, net

 

 

 

3,110

 

3,292

Right-of-use assets

 

 

 

16,639

 

18,657

Intangible assets, net

 

 

 

217,411

 

224,500

Deferred tax assets

 

 

 

31,939

 

31,717

Other long term assets

 

 

 

1,993

 

1,834

 

 

 

 

 

 

 

TOTAL NON-CURRENT ASSETS

 

 

 

271,092

 

280,000

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

 

534,543

 

550,651

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

Current maturities of lease liabilities

 

 

 

7,764

 

9,047

Trade payables

 

 

 

109, 933

 

125,863

Other payables

 

 

 

41,1 29

 

47,122

Current tax liabilities

 

 

 

3,647

 

3,162

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

 

 

162,473

 

185,194

 

 

 

 

 

 

 

Employee benefits

 

 

 

504

 

495

Long-term lease liabilities

 

 

 

10,647

 

12,162

Deferred tax liabilities

 

 

 

14,408

 

15,963

Other long term liabilities

 

 

 

6,447

 

7,824

 

 

 

 

 

 

 

TOTAL NON-CURRENT LIABILITIES

 

 

 

32,006

 

36,444

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

 
194,479
 
221,638

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

Share capital

 

 

 

385

 

380

Share premium

 

 

 

263,775

 

264,831

Other comprehensive income

 

 

 

2,494

 

3,330

Retained earnings

 

 

 

73,410

 

60,472

 

 

 

 

 

 

 

TOTAL SHAREHOLDERS' EQUITY

 

 

 

340,064

 

329,013

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

534,543

 

550,651

 

 

Date of approval of the financial statements: May 24 , 20 2 1

 

The accompanying notes are an integral part of these Condensed consolidated interim financial statements.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF OPERATION AND OTHER COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

Three months ended

March 31

 

 

 

2021

 

2020

 

 

 

USD thousands

 

 

 

 

 

 

Revenues

 

 

71, 009

 

38,611

Expenses:

 

 

 

 

 

Cost of Revenues (Exclusive of depreciation and amortization shown separately below)

 

 

17, 692

 

13,258

Research and development expenses

 

 

3,403

 

3,521

Selling and marketing expenses

 

 

18,050

 

18,169

General and administrative expenses

 

 

6,806

 

9,933

Depreciation and amortization

 

 

9,883

 

11,460

Total Expenses

 

 

55,834

 

56,341

 

 

 

 

 

 

Operating Profit (Loss)

 

 

15, 175

 

( 17 , 730 )

 

 

 

 

 

 

Financing income

 

 

(86)

 

(1, 104 )

Financing expenses

 

 

798

 

216

 

 

 

 

 

 

Financing expenses (income), net

 

 

712

 

( 888 )

 

 

 

 

 

 

 

 

 

 

 

 

Profit (Loss) before taxes on income

 

 

14, 463

 

( 16 , 842 )

 

 

 

 

 

 

Tax benefit (expenses)

 

 

( 1,589 )

 

2,583

 

 

 

 

 

 

Profit (loss) for the period

 

 

12,874

 

(14,259)

 

 

 

 

 

 

Other comprehensive income items:

 

 

 

 

 

Foreign currency translation differences for foreign operation

 

 

(836)

 

(2,633)

 

 

 

 

 

 

Total other comprehensive income (loss)

 

 

(836)

 

(2,633)

 

 

 

 

 

 

Total comprehensive income (loss)

 

 

12,038

 

(16,892)

 

 

 

 

 

 

Earnings (loss) per share

 

 

 

 

 

Basic earnings (loss) per share (in USD)

 

 

0.096

 

(0.107)

Diluted earnings (loss) per share (in USD)

 

 

0.091

 

(0.107)

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

 

 

Share capital

 

Share premium

 

Other comprehensive income

 

Retained Earnings

 

Total

 

USD thousands

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2021

380

 

264,831

 

3,330

 

60,472

 

329,013

Total Comprehensive income (loss) for the quarter

 

 

 

 

 

 

 

 

 

Profit for the period

-

 

-

 

-

 

12,874

 

12,874

Other comprehensive Income:

 

 

 

 

 

 

 

 

 

Foreign Currency Translation

-

 

-

 

(836)

 

-

 

(836)

 

 

 

 

 

 

 

 

 

 

Total comprehensive Income (loss) for the period

-

 

-

 

(836)

 

12,874

 

12,038

 

 

 

 

 

 

 

 

 

 

Transactions with owners, recognized directly in equity

 

 

 

 

 

 

 

 

 

Revaluation of liability for put option on non- controlling interests

-

 

-

 

-

 

64

 

64

Own shares acquired

(3)

 

(6,640)

 

-

 

-

 

(6,643)

Share based payments

-

 

5,394

 

-

 

-

 

5,394

Exercise of share options

8

 

190

 

  -

 

-

 

198

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2021

385

 

263,775

 

2,494

 

73,410

 

340,064

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2020

351

 

240,989

 

494

 

58,778

 

300,612

Total Comprehensive loss for the quarter

 

 

 

 

 

 

 

 

 

Loss for the period

-

 

-

 

-

 

(14,259)

 

(14,259)

Other comprehensive Income:

 

 

 

 

 

 

 

 

 

Foreign currency translation

-

 

-

 

(2,633)

 

-

 

(2,633)

 

 

 

 

 

 

 

 

 

 

Total comprehensive loss for the period

-

 

-

 

(2,633)

 

(14,259)

 

(16,892)

 

 

 

 

 

 

 

 

 

 

Transactions with owners, recognized directly in equity

 

 

 

 

 

 

 

 

 

Revaluation of liability for put option on non- controlling interests

-

 

-

 

-

 

(98)

 

(98)

Issuance of shares in Business Combination

25

 

14,092

 

-

 

-

 

14,117

Share based payments

-

 

5,013

 

-

 

-

 

5,013

Exercise of share options

4

 

521

 

-

 

-

 

525

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2020

380

 

260,615

 

( 2,139 )

 

44,421

 

303,277

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three months ended

 March 31

 

 

2021

 

2020

 

 

USD thousands

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES :

 

 

 

 

Profit (loss) for the period

 

12,874

 

(14,259)

Adjustments for:

 

 

 

 

Depreciation and amortization

 

9,883

 

11,460

Net financing expense (income)

 

733

 

(908)

Loss on sale of fixed assets

 

14

 

-

Gain on leases change contracts

 

(307)

 

(2,825)

Share-based payment

 

2,341

 

5,228

Tax expenses (benefit)

 

1,589

 

(2,583)

 

 

 

 

 

Change in trade and other receivables

 

11,096

 

3 6 ,7 31

Change in trade and other payables

 

(19,7 37 )

 

( 33 , 216 )

Change in employee benefits

 

3

 

(21)

Income taxes received

 

1,699

 

984

Income taxes paid

 

(816)

 

(529)

Interest received

 

79

 

199

Interest paid

 

(152)

 

(251)

 

 

 

 

 

Net cash provided by operating activities

 

19, 299

 

10

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Change in pledged deposits

 

(267)

 

149

Leases Receipt

 

830

 

624

Repayment of long-term loans

 

-

 

817

Acquisition of fixed assets

 

(1,545)

 

(307)

Acquisition and capitalization of intangible assets

 

(1,253)

 

(1,189)

Proceeds from sale of business unit

 

59

 

-

Acquisition of subsidiaries, net of cash acquired

 

-

 

6,208

 

 

 

 

 

Net cash provided by (used in) investing activities

 

( 2,176 )

 

6,302

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Acquisition of own shares

 

(6,643)

 

-

Payment of call option liability

 

(1,294)

 

 

Proceeds from exercise of share options

 

198

 

525

Leases repayment

 

(2,809)

 

(4,329)

 

Net cash used in financing activities

 

(10,548)

 

(3,804)

 

 

 

 

 

Net increase in cash and cash equivalents

 

6,57 5

 

2,508

 

 

 

 

 

CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF PERIOD

 

97,463

 

79,047

EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH AND CASH EQUIVALENTS

 

( 552 )

 

(173)

 

 

 

 

 

CASH AND CASH EQUIVALENTS AS OF THE END OF PERIOD

 

103,486

 

81,382

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

NOTE 1:   GENERAL

 

a.  Reporting entity:

 

Tremor International Ltd. (the "Company" or "Tremor International"), formerly known as Taptica International Ltd., was incorporated in Israel under the laws of the State of Israel on March 20, 2007. The ordinary shares of the C ompany are listed on the AIM Market of the London Stock Exchange. The address of the registered office is 82 Yigal Alon Street Tel-Aviv, 6789124, Israel.

 

Tremor International is a global  C ompany offering an end-to-end software platform that supports a wide range of media types (e.g., video, display, etc.) and devices (e.g., mobile, Connected TVs, streaming devices, desktop, etc.), creating an efficient marketplace where advertisers (buyers) are able to purchase high quality advertising inventory from publishers (sellers) at scale. Tremor Video Inc. ("Tremor Video''), a wholly owned subsidiary, is the Company's Demand Side Platform ("DSP") providing full-service and self-managed marketplace access to advertisers and agencies in order to execute their digital marketing campaigns in real time across various ad formats. RhythmOne PLC ("RhythmOne'') and Unruly Holding Ltd ("Unruly"), both wholly owned subsidiaries, provide access to the Sell Side Platform ("SSP") which is designed to monetize digital inventory for publishers and app developers by enabling their content to have the necessary code and requirements for programmatic advertising integration. The SSP provides access to significant amounts of data, unique demand, and a comprehensive product suite to drive more effective inventory management and revenue optimization. The Company also provides a Data Management Platform ("DMP") solution which integrates both DSP and SSP solutions enabling advertisers and publishers to use data from various sources in order to optimize results of their advertising campaigns.

 

Tremor International Ltd. is headquartered in Israel and maintains offices throughout the US, Canada, EMEA and Asia-Pacific.

 

On April 1, 2019, the Company completed an acquisition transaction with RhythmOne and on January 4, 2020 the Company completed an acquisition transaction with Unruly. Following the acquisition of RhythmOne and Unruly, the Company invested and developed capabilities both in the DSP and SSP solutions which launched in 2020 to offer an end-to-end platform that provides customers access to an advertising marketplace in an efficient and scalable manner utilizing machine learning, artificial intelligence and advanced algorithms .

 

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and work force participation and created volatility and disruption of financial markets, the impact of which was most acute during the second quarter of fiscal year 2020. As of March 31, 2021, due to the ongoing impact of the COVID-19 pandemic on the Company's business, many of the estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change in future periods. Actual results could differ from the estimates.

 

b.  Material events in the reporting period :

 

  On March 25, 2021, the Company paid USD 1,294 thousand to ADI founders for it's exercised part of the call option (as explained in note 17 to the financial statements for the year ended December 31, 2020), a lower amount than was originally scheduled, as part transformed to a conditional bonus. D.A. Consortium, Inc., a minority shareholder of ADI, exercised, effective March 5, 2021, its put option pursuant to the Shareholders Agreement dated July 17, 2016, as amended November 20, 2020, to sell to Taptica Japan GK, a wholly owned subsidiary, its entire shareholding in ADI, reflecting 2,120 Shares of ADI, for a purchase price equal to seven times the actual net profit of ADI for the last fiscal year, reflecting USD 1,120 thousand which was paid on April 2021. Following the closing of the put option exercise, the Company will own through its subsidiary 100% of the share capital of ADI.  

 

  On March 25, 2021, the Company's Board of Director approved, subject to the approval  of the Company's Extraordinary General Meeting ("EGM") dated April 30, 2021, to grant to the Company's three Executive Directors, subject to the completion of the Company's initial public offering in the United States, an aggregate of 4,725,000 restricted share units (RSUs) and 2,025,000 performance share units (PSUs) pursuant to the Company's 2017 Equity Incentive Plan and the Company's Global Share Incentive Plan (2011).  The RSUs and the PSUs are issuable, subject to compliance with the applicable vesting terms, into the same amount of Ordinary Shares of the Company.  Pursuant the terms of the awards, the RSUs will vest gradually over a period of three years, with 8.33% of each such grant vesting each quarter, subject to the executive continuing to be employed by the Company on the applicable vesting date, and the PSUs will vest gradually over a period of three years, with 33.33% of each grant vesting each year, subject to (i) the executive continuing to be employed by the Company on the applicable vesting date, and (ii) compliance with performance-based metrics as will be determined by the Remuneration Committee of the Board of Directors. The fair value of the RSUs and PSUs granted to the executives directors as of April 30, 2021 is 720 pence (approximately 10 . 02 USD) per ordinary share based on the market value of the Company's quoted share price.

  The estimated cost of these RSUs and PSUs on a 100% vesting completion will aggregate to approx. USD 67 million over the 36 months period commencing the day of the grant.

 

  In addition, on April 30, 2021, the Company's shareholders approved at the EGM a special US dual listing bonus in the event the Company's initial public offering in the United States is successfully completed, of USD 500,000 to each of the Company's three Executive Directors, subject to the discretion of the Remuneration Committee of the Board of Directors, which are part of an aggregate US dual listing bonus pool of up to USD 5,000,000 approved by the Board of Directors.

 

  The Company's shareholders also approved at the EGM, on April 30, 2021, to increase the aggregate available pool of the Company's 2017 Equity Incentive Plan and the Company's Global Share Incentive Plan (2011) by an additional 6,500,000 Ordinary Shares of the Company (with 80% of the increase allocated to the 2017 Plan and 20% of the increase allocated to the 2011 Plan).

 

c.  Definitions:

 

In these financial statements -

 

The Company

-

Tremor International Ltd.

 

 

 

The Group

-

Tremor International Ltd. and its subsidiaries.

 

 

 

Subsidiaries

-

Companies, the financial statements of which are fully consolidated, directly or indirectly, with the financial statements of the Company such as RhythmOne PLC, Unruly Holding Ltd, Tremor Video Inc.

 

 

 

Related party

-

As defined by IAS 24, "Related Party Disclosures".

 

NOTE 2:   BASIS OF PREPARATION

 

a.  Statement of compliance:

 

The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all the information required for full annual financial statements. They should be read in conjunction with the financial statements for the year ended December 31, 2020 (hereinafter - "the annual financial statements").

 

The condensed consolidated interim financial statements were authorized for issue by the Company's Board of Directors on May 24 , 2021.

 

b.  Use of estimates and judgments:

 

The preparation of financial statements in conformity with IFRS requires management of the Group to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

 

The preparation of accounting estimates used in the preparation of the Group's financial statements requires management of the Group to make assumptions regarding circumstances and events that involve considerable uncertainty. Management of the Group prepares estimates on the basis of past experience, various facts, external circumstances, and reasonable assumptions according to the pertinent circumstances of each estimate.

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

 

NOTE 3:   SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies applied by the Company in these condensed consolidated interim financial statements are the same as those applied by the Company in its annual financial statements, there was no change in accounting policies or any new relevant standards during the quarter.

 

NOTE 4:   SHAREHOLDERS' EQUITY

 

Issued and paid-in share capital:

 

 

 

Or dinary Shares

 

 

2021

 

2020

 

 

Number of shares

 

 

 

 

 

Balance as of January 1

 

133,916,229

 

124,223,182

Own shares held by the Group

 

( 917,998 )

 

-

Share based compensation

 

2,676,968

 

1,277,533

Shares issued in business combination

 

-

 

8,525,323

 

 

 

 

 

Issued and paid-in share capital as of March 31

 

135,675,199

 

134,026,038

 

 

 

 

 

Authorized share capital

 

300,000,000

 

300,000,000

 

1)  Rights attached to share:

 

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All shares rank equally with regard to the Company's residual assets.

 

2)  Issuing new public shares:

 

Following the acquisition of Unruly, the Company issued 8,525,323 shares at a quoted price of GBP 1 .51 (USD 1.98) per share to former Unruly shareholders which became admitted to trading on AIM on January 10, 2020 and are subject to a 18-months lock-up.

 

3)  Own shares acquisition: 

 

As part of the Company's approvals in December 2020 for a share buyback program for a total consideration of USD 10 million, the Company purchased during the three months ended March 31, 2021, 917,998 shares for a total consideration of USD 6,643 thousand.

 

The Ordinary Shares acquired pursuant to the Buyback Program are classified as dormant shares under the Israeli Companies Law (without any rights attached thereon) and held in treasury.

On March 26, 2021 was decided that the Company's current USD 10 million buyback program, originally announced on December 20, 2020, will be paused while the Company pursues the Proposed Offering, which is expected to take place in the second quarter of 2021 after the SEC completes its review process, subject to market and other conditions.

NOTE 5 :   EARNINGS (LOSS) PER SHARE

 

Basic earnings (loss) per share:

 

The calculation of basic earnings (loss) per share as of March 31, 2021 and 2020 was based on the profit for the period divided by a weighted average number of ordinary shares outstanding, calculated as follows:

 

Profit for the period:

 

 

 

Three months ended

March 31

 

 

2021

 

2020

 

 

USD thousands

 

 

 

 

 

Profit (loss) for the period

 

12,874

 

(14,259)

 

Weighted average number of ordinary shares:

 

 

 

Three months ended

March 31

 

 

2021

 

2020

 

 

Shares of NIS

 

 

0.01 par value

 

 

 

 

 

Weighted average number of ordinary shares used to calculate basic earnings per share as of March 31

 

1 34 , 406 , 286

 

133,122,300

 

 

 

 

 

Basic earnings (loss) per share (in USD)

 

0.096

 

(0.107)

 

Diluted earnings (loss) per share:

 

The calculation of diluted earnings (loss) per share as of March 31, 2021 and 2020 was based on profit or for the period divided by a weighted average number of shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:

 

Weighted average number of ordinary shares (diluted):

 

 

 

Three months ended

March 31

 

 

2021

 

2020

 

 

Shares of NIS

 

 

0.01 par value

 

 

 

 

 

Weighted average number of ordinary shares used to calculate basic earnings per share

 

1 34 , 406 , 286

 

133,122,300

Effect of share options issued

 

6,759,645

 

 

 

 

 

 

 

Weighted average number of ordinary shares used to calculate diluted earnings per share

 

141,165,931

 

133,122,300

 

 

 

 

 

Diluted earnings (loss) per share (in USD)

 

0.091

 

(0.107)

 

NOTE 6:   SHARE-BASED PAYMENT ARRANGEMENTS

 

a.  Share-based compensation plan:

 

The terms and conditions related to the grants of the share options programs are as follows:

 

· All the share options that were granted are non-marketable.

· All options are to be settled by physical delivery of shares.

· Vesting conditions are based on a service period of between 0.5- 4 years.

 

b.  Stock Options:

 

The number of share options is as follows :

 

 

 

Number of options

 

Weighted average

exercise price

 

 

2021

 

2020

 

2021

 

2020

 

 

(Thousands)

 

(GBP)

 

 

 

 

 

 

 

 

 

Outstanding at 1 January

 

3,781

 

4,828

 

 

 

 

Forfeited

 

(36)

 

(879)

 

1.60

 

3.26

Exercised

 

(105)

 

(605)

 

1.37

 

0.51

Granted

 

-

 

1,405

 

-

 

1.60

 

 

 

 

 

 

 

 

 

Outstanding at March 31

 

3,640

 

4,749

 

 

 

 

Exercisable at March 31

 

240

 

679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In January 2020, the Company's Board of Directors approved a change in the exercise price and vesting terms relating to 2,204,174 options for ordinary shares held by certain employees (the "Amended Options"), as follows:

 

 

 

 

 

Originally granted

 

Amended Granted

Grated

 date

 

Number of options

 

Exercise price

(GBP)

 

Exercisable date from

 

Exercise price

(GBP)

 

Exercisable date from

 

 

 

 

 

 

 

 

 

 

 

March 20, 2017

 

217,000

 

2.44

 

March 20, 2019

 

1.60

 

July 28, 2021

June 18, 2017

 

116,000

 

2.99

 

June 18, 2019

 

1.60

 

July 28, 2021

November 5, 2017

 

391,000

 

4.31

 

November 5, 2019

 

1.60

 

July 28, 2021

January 23, 2018

 

1,163,000

 

4.37

 

January 23, 2020

 

1.60

 

July 31, 2021

June 20, 2018

 

52,000

 

4.37

 

June 20, 2020

 

1.60

 

July 31, 2021

April 2, 2019

 

265,174

 

2.06-18.27

 

April 2, 2019

 

1.60

 

July 28, 2021

 

The options that had a vesting date up to July 2021 will now vest and become exercisable on July 2021, while the vesting and exercise periods of the rest of the options remain unchanged. The incremental fair value (amounting to USD 1,282 thousand) is recognized over the remaining vesting period. The new expiration date is one year after the last exercise date. 

 

c.  Information on measurement of fair value of share-based payment plans:

 

The total expense recognized in the period ended March 31 , 2021 and 2020 with respect to the options granted to employees, amounted to approximately USD 424 thousand and USD 665, respectively.

 

d.  Restricted Share Units (RSU):

 

The number of restricted share units is as follows :

 

 

 

Number of RSU's

 

Weighted-Average Grant Date Fair Value

 

 

2021

 

2020

 

2021

 

2020

 

 

(Thousands)

 

 

 

 

 

 

 

 

 

 

 

Outstanding at 1 January

 

3,777

 

3,969

 

2.364

 

2.372

Forfeited

 

-

 

-

 

 

 

 

Exercised

 

(747)

 

(673)

 

2.223

 

2.272

Granted

 

40

 

1,880

 

9.349

 

2. 426

Restricted stock units assumed in acquisition during the quarter

 

-

 

415

 

-

 

2. 592

 

 

 

 

 

 

 

 

 

Outstanding at March 31

 

3,070

 

5,591

 

2.752

 

2.418

 

The total expense recognized in the period ended March 31 , 2021 and 2020 with respect to the RSU granted to employees, amounted to approximately USD 1,091 and USD 2,711 thousand, respectively.

 

e.  Performance Stock Units (PSU):

 

The number of performance stock units is as follows :

 

 

 

Number of PSU's

 

Weighted-Average Grant Date Fair Value

 

 

2021

 

2020

 

2021

 

2020

 

 

(Thousands)

 

 

 

 

 

 

 

 

 

 

 

Outstanding at January 1

 

3,852

 

5,071

 

2.155

 

2.105

Forfeited

 

(76)

 

(145)

 

2.179

 

1.973

Exercised

 

( 1 ,824)

 

(1,305)

 

2.179

 

1.973

Granted

 

40

 

725

 

9.349

 

2.592

 

 

 

 

 

 

 

 

 

Outstanding at March 31

 

1,992

 

4,346

 

2.277

 

2.166

 

The vesting of the PSU's is subject to continues employment and compliance with the performance criteria determined by the Company's Remuneration Committee and the Company's Board of Directors.

 

The total expense recognized in three months ended March 31, 2021 and 2020 with respect to the PSU granted to employees, amounted to approximately USD 826 thousand and USD 1,852 thousand, respectively.

 

f.  Expense recognized in the statement of operation and other comprehensive income is as follows:

 

 

 

Three months ended

March 31

 

 

2021

 

2020

 

 

USD thousands

 

 

 

 

 

Selling and marketing

 

687

 

1,923

Research and development

 

143

 

22

General and administrative

 

1,511

 

3,283

 

 

 

 

 

 

 

2,341

 

5,228

 

NOTE 7:   OPERATING SEGMENTS

 

The Group has a single reportable segment as a provider of marketing services.

 

Geographical information:

 

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of consumers.

 

 

 

Three months ended

March 31

 

 

2021

 

2020

 

 

USD thousands

 

 

 

 

 

America

 

63,260

 

33,619

APAC

 

4,550

 

4,084

EMEA

 

3,199

 

908

 

 

 

 

 

Total

 

71,009

 

38,611

 

NOTE 8:  SUBSEQUENT EVENTS

 

On May 18, 2021, Tremor Video, Inc. ("Tremor") filed a complaint against Alphonso, Inc. ("Alphonso") in the Supreme Court of the State of New York, County of New York.  The claim is for breach of contract, tortious interference with business relations, intentional interference with contractual relations, unjust enrichment, and conversion.  The lawsuit arises out of Alphonso's breach of a Strategic Partnership Agreement and an Advance Payment Obligation and Security Agreement ("Security Agreement") with Tremor, along with related misconduct.  Tremor complaint is for damages and other relief, including an order foreclosing on Alphonso's collateral under the Security Agreement, from the Court.

 

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