Incredimail 2014 Annual Report Download - page 40

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ITEM 4.A UNRESOL V ED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations should be read in conjunction with our Financial
Statements. In addition to historical financial information, the following discussion and analysis contains forward looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act, including, without limitation, statements regarding
the Company’
s expectations, beliefs, intentions, or future strategies that are signified by the words "expects," "anticipates," "intends,"
"believes," or similar language. These forward looking statements involve risks, uncertainties and assumptions. Our actual results and timing of
selected events may differ materially from those anticipated in these forward looking statements as a result of many factors, including those
discussed under "Item 3.D Risk Factors" and elsewhere in this annual report.
A. OPERATING RESULTS
Overview
Perion is a global performance-
based media and Internet company, providing online publishers and app developers advanced
technology and a variety of intelligent, data-
driven solutions to monetize their application or content and expand their reach to larger audiences.
Our software monetization platform, Perion Codefuel, empowers digital businesses to optimize installs, analyze data and maximize revenue. Our
advertising mobile marketing business enables developers to make decisions on where to spend advertising budgets to produce the highest yield
and the most visibility.
Our headquarters and primary research and development facilities are located in Israel, and we have other offices located in the United
States and France.
Our products, whether they be the software developed and marketed by ourselves, or the search properties offered together with
products of our software developing partners, have been installed by 246 million consumers in 2014, as compared to 348 and 266 million in
2012 and 2013, respectfully. These installation statistics refer to the number of computers having a unique ID onto which one of our products
has been installed, regardless of whether such product or search property is actively being used. The number of consumers actually using one of
our products, or search properties together with the product of one our partner software developers, as of December 31, 2014 was 8 million, as
compared to 28 and 25 million as of December 31, 2012 and 2013, respectfully. We measure quality of users primarily by user location, with the
highest revenue users being located in North America, defined as "Tier 1," followed by European users as "Tier 2" and users in the rest of the
world to be "Tier 3." The decline in the number of installations and users of our products is primarily the result of our significantly reducing the
investment in aquiring new customers and forming partnerships with software developers in the second half of 2014. This investment is
coningent on our ability to estimate the future revenues and return on this investment over the coming year. As a result of the recurring and
increasingly severe policy changes by our search engine partners, since mid-
2014 we lack visibilty regarding the return and future profitability of
these investments. We subsequently decided to decrease this investment causing signifcant decrease in installations and users of our products.
As we are experiencing difficulties in growing our desktop monetization business, we have been focusing our growth efforts in
developing a mobile advertising platform for app developers. The business acquired from Grow Mobile, coupled with our organic development
efforts, empowers effective advertising campaigns for mobile app developers seeking to achieve distribution through advertising. By aggregating
hundreds of advertising networks and exchanges in real-time through a single insertion order, our self-
serve and fully managed mobile marketing
platforms, enable mobile applications developers to increase their customer acquisition, retention and monetization. Our self-
serve platform,
which has been released in Beta version, offers mobile application developers an efficient interface, containing on a single dashboard, a data
room with all advertising networks
and campaigns together, with easy and understandable graphs and tables, enabling immediate analysis and
effective action. In addition, utilizing its proprietary bidding algorithm, it enables sophisticated retargeting, of high quality users and integrate
top mobile advertising exchanges. Finally, by providing easy access to these tools and simplifying the administration of the advertising process,
mobile application developers are free to focus on improving their mobile media buying strategy.
We are also developing other platforms and software, to enable mobile app developers improved optimization and monetization of their
existing user base.
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