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Today, we highlight Perion Networks, a global technology innovator in the digital advertising ecosystem. This Israeli firm, founded in 1999, provide companies with an opportunity to unlock online growth opportunities. The organization operates across three main segments of digital advertising space – social media, ad search, and Connected TV/display/video. The Total Addressable Market (TAM) is believed to be worth $300 Billion (and over $500 Billion by 2024).

Total Addressable Market for advertising

A New Standard Delivered Using AI

Perion Network delivers Artificial Intelligence (AI)-driven advertising solutions to advertisers and publishers. It further develops digital advertising solutions to capture consumer attention and increase engagement. In addition, Perion also provides online advertising and mobile applications.

The steady growth of social advertising was accelerated by COVID-19 and the boom in e-commerce. Perion’s social marketing platform offers a dashboard for marketers that makes it easy to manage and optimize advertising campaigns in real-time. Designed with social media in mind such as, Twitter, Instagram, Facebook, Snap, TikTok, Google, Linkedin and Pinterest on a cross-network basis. This leads to happy advertising clients with improved ROI. Their high-profile clientele includes Pepsi, RedBull, Louis Vuitton, Mercedes-Benz, Delta, Samsung, BMW, Toyota and Dell. They also provide advertising solutions for big media companies like Disney, ABC, CBS, A&E, BBC, NBC, and Fox News.

Perion further strengthens its technology position by evolving an integrated offering, branded as “Capture and Convince.” The new technology represents a significant industry advance in the user funnel. With its new user loop, it employs AI and machine- learning techniques. The result is optimized advertising and content for brand-safe sites which has been shown to engage new users for up to six minutes. Engaging users online this long generates significant revenue-per-session for the advertiser while uniquely satisfying the needs of the user.

Perion also provides publishers with increased web traffic, higher engagement, and increase in revenue-per-session. Their digital advertising search monetization solution captures consumers at the moment of highest intent to purchase. The firm has a longstanding relationship with Microsoft Bing and other leading search and content partners across 34 countries. That is how it implements its monetization solution more effectively than conventional search solutions.

Ad spend on digital media

Perion Sees Surprising Growth During COVID-19

With COVID-19 shutting down economies around the globe, Perion (and other companies in the sector) emerged as benefactors of the changed business environment. Even as the pandemic sent shockwaves through the market, the company has managed to deliver robust growth, with overall annual revenue Year-over-Year growing by 20%. Display and social advertising revenues are growing 159% Year-over-Year despite COVID-19.

Growth of Perion Revenue

The strength of the balance sheet is manifested in declining debt levels. In 2017, the company's debt stood at $60.7M. Last year, that amount plunged to only $10.4M. Over the same period, cash position improved from -$47M to +$37M, a difference of $84M in just 4 years.

This dramatic shift enabled Perion to make strategic acquisitions and enabled significant new investments in Research & Development.

Perion debt-to-cash ratio

Benefit From Wise Money Israel's Research Team

Wise Money Israel has held this Israeli technology stock as part of our client managed portfolios, and in the past year, the share price rose 173%. Also, our firm purchased and strategically took profits during the past 12 months, increasing even further our client’s gains on this stock.

This example demonstrates the Wise Money Israel process: investing in Israeli companies low in debt and high in revenue that demonstrate growth in its top line, as well as earning growth on the bottom line.

If you would like to see this kind of growth for your portfolio, please contact us about investing in Israel.

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Israel's High-Tech Prowess

Israel is known as the Start-Up nation, notorious for its hi-tech expertise. At a time when the world is changing to a service economy, Israel was ready to answer the call. While a strong currency generally makes it harder to sell your products and services abroad, the continued high demand for Israeli technology has clearly overcome this barrier.

Global Currency Hedging

As the pandemic raged on around the globe, the world experienced a stock market crash in March, 2020. When this happened, smart investors knew that this was a good time to buy in, and in the subsequent months money flooded into stock markets all around the world. Essentially, the Shekel’s value increased as globally-minded investors looked to diversify into foreign currency to lower their dependence on the U.S. Dollar. Since the initial panic in March, 2020 the Shekel strengthened 12% against the U.S. Dollar.

Growing Energy Market

Israel also continues to pump product from its vast offshore gas fields and sell it to neighboring countries in U.S. Dollars. The influx of Dollars into the Israeli economy helped the Shekel to strengthen.

COVID Staycation

Normally, Israelis go on vacation every year, spending as much as $3B U.S. Dollars abroad. Additionally, due to Corona-related unemployment, imports of foreign goods into Israel was lower. The inability to travel and the lower demand for imports meant that fewer Shekels were exchanged for foreign currency, keeping Dollars in the country and strengthening the Shekel as a result.

Keeping The Balance Sheet In The Black

One of Israel's greatest accomplishments has been its positive balance of payments. Israel has been able to exceed its exports over its imports for many years. This keeps Israel as a lender nation and not a borrower nation, probably the most significant factor making Israel’s economy such an attractive investment destination.

Track Record of Strength

Looking at the last 18 years since the Shekel was at its weakest against the U.S. Dollar, the Shekel has gained 53%. This means that if you converted $100,000 to Shekels in 2002, it would be worth $153,000 today, before even investing any of it in securities. Since the U.S. elections of 2020, the Shekel has risen over 4% alone. Whether this is simply uncertainty in the market, or an expectation that America will continue to print money and lower the value of the U.S. Dollar, remains to be seen.

At Wise Money Israel, we continue to recommend investment in the Shekel as a hedge against other world currencies. Combining the Shekel strength with the great Israeli companies that provide some of the best investment opportunities in the world, we see tremendous growth potential in the future.

If you would like to start investing in the Shekel today, please contact us for assistance.

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Trump Administration Attitude Toward Middle East Paves The Way

Ever since the Trump Administration announced that there will be no daylight with Israel, the Middle East has been evolving. I noticed the shift dramatically earlier this year when a video surfaced of Iranian students from Tehran’s Beheshti University. They live in a country whose leadership vows to wipe Israel off the map. However, they still intentionally decided not to step on Israeli and American flags on the ground in the path of their protest. The Jerusalem Post reported that even when the flags were stepped on, the students booed and shouted, “Shame on you.”

Within weeks of this event, the world would enter a lockdown to fight a global pandemic. I did not expect to hear much again about the changing attitudes of Arabs toward Israel. But suddenly, a courageous voice emerges out of the silence. The United Arab Emirates decided it wants to work with Israel economically. The next thing you know, many nations jump on the bandwagon in some fashion. Whether it is peace, a new embassy, talks, normalization of relations, or trade deals, so many nations want in. While the UAE started it off, Israel has made deals or expects to make deals with many more. They include Bahrain, Morocco, Serbia, Kosovo, Oman, Saudi Arabia, Sudan, Uganda, Qatar and Lebanon.

A New Day Comes

Some may look at these deals cynically. After all, how does one reconcile decades of fighting with a sudden willingness to work together? A recent event may shed some light on this. As I wrote earlier, attitudes in the Arab world are shifting. Israel is no longer the sole enemy. Earlier this month, the foreign minister of the United Arab Emirates, Sheikh Abdullah bin Zayed bin Sultan Al Nahyan, planned a meeting with the foreign minister of Israel, Gabi Ashkenazi. They would tour a Holocaust Memorial in Berlin with the German foreign minister, Heiko Maas. The memorial is called, “The Memorial of the Murdered Jews of Europe.” It is hard to believe that in my lifetime I am witnessing the Arab nation's call for another Holocaust being replaced by an Arab minister leading a tour to honor the victims of the Holocaust.

Jewish News Syndicate reported that Bin Zayed said in the wake of the Abraham Accords, “the Middle East is witnessing a new chapter on its path towards freedom and peace. I would like to assure you that the opportunities in our region for more cooperation in different sectors exist, in terms of security and also in terms of technology. On an international level, the Emirates is committed, together with its Israeli partners and its German partners, to fulfill this role.”

There is more evidence emerging this week from a Zogby poll on the attitudes of Israelis and Arabs from five different countries: Egypt, Saudi Arabia, UAE, Palestine and Jordan. The poll stated that 79% of Saudis are in favor of normalizing ties with Israel over the next five years. The most shocking part of this poll is that Zogby conducted it from late June to early July. The new peace and economic deals were still over a month away.

The Future Of The Middle East

So, where does this leave us? This week the US, Israel and UAE announced a $3 billion regional investment fund. The Times of Israel reported that the creation of the new trilateral fund would funnel investment to projects that “promote regional economic cooperation and prosperity in the Middle East and beyond.” The joint statement released on the project stated, “The Abraham Fund will bolster regional trade, enable strategic infrastructure projects, and increase energy security through the provision of reliable access to electricity. The fund also aims to improve agricultural productivity and facilitate reliable and efficient access to clean water in the region...The partners welcome participation from other countries to advance these objectives.”

This sounds great on paper, but what does it mean to the average investor? It shows that this changing attitude is may be manifesting itself in true regional partnership that will benefit all economies in the region with trade partners, innovation and investment. Israel is already a strong economy with a stable currency; this development merely adds to the sentiment that Israel is one of the best places to invest in the world. Now the rest of the world is catching on.

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“The U.S. economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit,” related the former Morgan Stanley Asia chairman. “The dollar is going to fall very, very sharply.” He believes the drop could be as much as 35% against other major currencies. That will take quite a chunk out of your U.S. investments. 

Foreign investment does have its advantages. In Israel it is the overwhelming research & development and innovation that leads the world. Israel is one of the only countries in the world with a rising birth rate,  rising GDP, current account surplus and shrinking debt. 

One of the hidden, but attainable factors that should be leveraged by every global investor is the strength of the Israeli Shekel. Over the past 18 years the Shekel has gained 45% against the dollar.

Shekel against the Dollar 2002-2018

This means that if you had invested $100,000 in 2002 and saw a reasonable 8% average annual return combined with the multiplier effect of the Shekel strength, your investment would be worth about $581,000 today (before any fees).

We may not see this exact amount of Shekel growth over the next 18 years, but where else can you turn for a strong alternative to hedge against a weak U.S. Dollar?

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The offering has attracted over 400 different investors from 40 different countries, with strong demand from Asian institutional investors. The Ministry of Finance says Bank of America, Barclay’s Bank, Goldman Sachs and Citibank are underwriting the initiative. With $25 billion in demand, Israel decided to raise $5B at favorable rates. This isn’t surprising given that Israel has an AA- Stable credit rating from S&P, A1 Stable rating from Moody’s, an A+ rating from Fitch.

Israel’s Accountant General Roni Hezekiah said the oversubscription “indicates the confidence of the world’s largest investors in the Israeli economy, especially in view of the way the State is coping with the corona crisis. The 100-year IPO is a testament to the country’s financial strength and its establishment in international markets.”

Senior Deputy Accountant General Gil Cohen said: "The ability of the State of Israel to make the successful IPO at record speed and with the high volatility in financial markets is a direct result of [Israel’s] economic strength and the ongoing relationship with investors around the world in recent years.

In other COVID-19 Israel news, Israel was ranked the safest country during the coronavirus outbreak according to the Deep Knowledge Group website as highlighted by the Prime Minister’s Office. The country is currently coming out of a lockdown for all citizens, as already on April 2, 2020 new cases peaked and we’re seeing much fewer new cases in the past four weeks. Among the essential sectors that continued to function during the crisis is the capital market. We are already seeing a significant market recovery and have made appropriate moves to protect and grow our client’s investments.

If you'd like to learn more about investing in Israeli bonds, please go to our contact page and write us.

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Sources: Israel Ministry of Finance, Calcalist, News1

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