Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2022 | |
Document Type | 6-K |
Document Period End Date | Jun. 30, 2022 |
Entity Registrant Name | ironSource Ltd |
Entity Central Index Key | 0001837430 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 235,882 | $ 778,261 |
Short-term deposits | 150,631 | |
Accounts receivable, net of allowances of $828 and $437 as of June 30, 2022 and December 31, 2021, respectively | 286,809 | 232,049 |
Other current assets | 61,814 | 42,382 |
Total current assets | 735,136 | 1,052,692 |
Long-term restricted cash | 3,266 | 3,495 |
Deferred tax assets | 14,561 | 2,012 |
Operating lease right-of-use assets | 37,676 | 34,116 |
Property, equipment and software, net | 30,739 | 25,131 |
Investment in equity securities and other investments | 21,000 | 20,000 |
Goodwill | 456,354 | 240,299 |
Intangible assets, net | 188,619 | 54,221 |
Other non-current assets | 73,273 | 18,857 |
Total assets | 1,560,624 | 1,450,823 |
Current liabilities: | ||
Accounts payable | 265,682 | 247,362 |
Operating lease liabilities | 9,905 | 7,525 |
Other current liabilities | 62,980 | 53,949 |
Total current liabilities | 338,567 | 308,836 |
Deferred tax liabilities | 6,898 | 6,514 |
Long-term operating lease liabilities | 28,541 | 30,076 |
Other non-current liabilities | 1,955 | 2,829 |
Total liabilities | 375,961 | 348,255 |
Commitments and contingencies (Note 8) | ||
Shareholders' equity: | ||
Treasury shares, at cost, 6,745,955 Class A ordinary shares held at June 30, 2022 and December 31, 2021 | (67,460) | (67,460) |
Additional paid-in capital | 1,101,163 | 1,042,589 |
Accumulated other comprehensive income (loss) | (2,482) | 495 |
Retained earnings | 153,442 | 126,944 |
Total shareholders' equity | 1,184,663 | 1,102,568 |
Total liabilities and shareholders' equity | $ 1,560,624 | $ 1,450,823 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Accounts receivable, allowances | $ 828 | $ 437 |
Ordinary shares, shares authorized | 11,500,000,000 | 11,500,000,000 |
Ordinary shares, shares issued | 1,022,958,567 | 1,018,468,804 |
Ordinary shares, shares outstanding | 1,022,958,567 | 1,018,468,804 |
Class A Ordinary Shares | ||
Ordinary shares, shares authorized | 10,000,000,000 | 10,000,000,000 |
Ordinary shares, shares issued | 679,594,924 | 652,938,412 |
Treasury shares | 6,745,955 | 6,745,955 |
Class B Ordinary Shares | ||
Ordinary share, par value | $ 0 | $ 0 |
Ordinary shares, shares authorized | 1,500,000,000 | 1,500,000,000 |
Ordinary shares, shares outstanding | 343,363,643 | 365,530,392 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||
Revenue | $ 372,450 | $ 254,749 |
Cost of revenue | 80,668 | 42,905 |
Gross profit | 291,782 | 211,844 |
Operating expenses: | ||
Research and development | 69,864 | 43,571 |
Sales and marketing | 153,190 | 100,902 |
General and administrative | 44,311 | 36,233 |
Total operating expenses | 267,365 | 180,706 |
Income from operations | 24,417 | 31,138 |
Financial expenses (income), net | (878) | 2,006 |
Income before income taxes | 25,295 | 29,132 |
Provision for (benefit from) income taxes | (1,203) | 8,884 |
Net income | $ 26,498 | $ 20,248 |
Basic net income per ordinary share, attributable to ironSource Ltd. shareholders*: | ||
Basic net income per ordinary share | $ 0.03 | $ 0.02 |
Weighted-average ordinary shares outstanding - basic | 1,018,784,260 | 652,122,890 |
Diluted net income per ordinary share, attributable to ironSource* | ||
Diluted net income per ordinary share | $ 0.02 | $ 0.02 |
Weighted-average ordinary shares outstanding - diluted | 1,073,791,056 | 729,329,729 |
Comprehensive income | ||
Net income | $ 26,498 | $ 20,248 |
Other comprehensive loss, net of tax: | ||
Unrealized losses on derivatives designated as cash flow hedge | (2,977) | |
Other comprehensive loss | (2,977) | |
Comprehensive income | $ 23,521 | $ 20,248 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | 2019 Ordinary Shares Ordinary Shares | Class A and Class B Ordinary Share Ordinary Shares | Additional Paid-In Capital | Retained Earnings | Treasury shares | Accumulated Other Comprehensive Income (loss) | Total |
Balance at the beginning at Dec. 31, 2020 | $ 72,000 | $ 152,251,000 | $ 67,123,000 | $ 219,446,000 | |||
Balance at the beginning (in shares) at Dec. 31, 2020 | 25,006,298 | 640,266,044 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Recapitalization transaction | $ (72,000) | 736,573,000 | $ (67,460,000) | 669,041,000 | |||
Recapitalization transaction (in shares) | (25,006,298) | 352,045,800 | |||||
Share options and restricted share units issued related to business combinations | 57,715,000 | 57,715,000 | |||||
Share options and restricted share units issued related to business combinations (in shares) | 9,503,398 | ||||||
Exercise of options | 342,000 | 342,000 | |||||
Exercise of options (in shares) | 10,106,922 | ||||||
Vested restricted share units (in shares) | 695,078 | ||||||
Share-based compensation expense | 38,225,000 | 38,225,000 | |||||
Net income | 20,248,000 | 20,248,000 | |||||
Balance at the end at Jun. 30, 2021 | 985,106,000 | 87,371,000 | (67,460,000) | 1,005,017,000 | |||
Balance at the end (in shares) at Jun. 30, 2021 | 1,012,617,242 | ||||||
Balance at the beginning at Dec. 31, 2021 | 1,042,589,000 | 126,944,000 | (67,460,000) | $ 495,000 | $ 1,102,568,000 | ||
Balance at the beginning (in shares) at Dec. 31, 2021 | 1,018,468,804 | 1,018,468,804 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share options and restricted share units issued related to business combinations | 1,498,000 | $ 1,498,000 | |||||
Exercise of options | 3,680,000 | $ 3,680,000 | |||||
Exercise of options (in shares) | 4,368,250 | 4,368,250 | |||||
Vested restricted share units (in shares) | 121,513 | ||||||
Share-based compensation expense | 53,396,000 | $ 53,396,000 | |||||
Other comprehensive income | (2,977,000) | (2,977,000) | |||||
Net income | 26,498,000 | 26,498,000 | |||||
Balance at the end at Jun. 30, 2022 | $ 1,101,163,000 | $ 153,442,000 | $ (67,460,000) | $ (2,482,000) | $ 1,184,663,000 | ||
Balance at the end (in shares) at Jun. 30, 2022 | 1,022,958,567 | 1,022,958,567 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities | ||
Net income | $ 26,498 | $ 20,248 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 31,124 | 11,217 |
Share-based compensation expenses | 51,796 | 37,474 |
Non-cash lease expense | (3,132) | 842 |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 3,981 | (139) |
Gain on disposal of property and equipment | (1) | |
Interest accrued and other financial expenses | (631) | 628 |
Deferred income taxes, net | (16,160) | (728) |
Changes in operating assets and liabilities, net of effects of businesses acquired: | ||
Accounts receivable | (2,736) | (38,866) |
Other current assets | (26,888) | (18,644) |
Other non-current assets | (55,241) | (8,037) |
Accounts payable | (21,029) | 20,368 |
Other current liabilities | (11,604) | (1,553) |
Other non-current liabilities | (678) | 637 |
Net cash provided by (used in) continuing operating activities | (24,701) | 23,447 |
Net cash provided by (used in) discontinued operating activities | (5,168) | |
Net cash provided by (used in) operating activities | (24,701) | 18,279 |
Cash flows from investing activities | ||
Purchase of property and equipment | (1,899) | (760) |
Capitalized software development costs | (8,118) | (5,602) |
Purchase of intangible assets | (1,950) | |
Acquisitions, net of cash acquired | (356,589) | (89,340) |
Purchase of equity securities and other investments | (1,000) | (20,000) |
Investments in short-term deposits | (150,000) | |
Maturities of short-term deposits | 17,590 | |
Net cash used in continuing investing activities | (517,606) | (100,062) |
Net cash used in investing activities | (517,606) | (100,062) |
Cash flows from financing activities | ||
Repayment of long-term loan | (85,000) | |
Proceeds from Recapitalization transaction, net | 672,893 | |
Exercise of options | 3,680 | 342 |
Net cash provided by continuing financing activities | 3,680 | 588,235 |
Net cash provided in financing activities | 3,680 | 588,235 |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (3,981) | 139 |
Net change in cash and cash equivalents and restricted cash | (538,627) | 506,452 |
Cash and cash equivalents and restricted cash at beginning of the period | 781,756 | 203,087 |
Cash and cash equivalents and restricted cash at end of the period | 239,148 | 709,678 |
Supplemental disclosure of cash flows information: | ||
Cash paid for taxes, net | 13,397 | 16,725 |
Cash paid for interest | 401 | 1,055 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Fair value of ordinary shares issued as consideration for business combination | 57,197 | |
Fair value of share options and restricted share units assumed in a business combination | 1,498 | 518 |
Fair value of contingent consideration assumed in a business combination | 844 | |
Share-based compensation capitalized to software costs | 1,600 | 751 |
Unpaid offering costs | $ 9,080 | |
Inception of lease transaction | $ 3,793 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets | ||||
Cash and cash equivalents | $ 235,882 | $ 778,261 | $ 706,797 | |
Long-term restricted cash | 3,266 | 3,495 | 2,881 | |
Total cash and cash equivalents and restricted cash | $ 239,148 | $ 781,756 | $ 709,678 | $ 203,087 |
DESCRIPTION OF THE BUSINESS_
DESCRIPTION OF THE BUSINESS: | 6 Months Ended |
Jun. 30, 2022 | |
DESCRIPTION OF THE BUSINESS: | |
DESCRIPTION OF THE BUSINESS: | NOTE 1 — DESCRIPTION OF THE BUSINESS: ironSource Ltd. (collectively referred to with its wholly owned subsidiaries as “ironSource”, “we”, “our”, “us” or the “Company”) is a leading business platform that enables mobile content creators to prosper within the App Economy. Since our founding in 2010, we have focused on empowering our customers to grow, engage, monetize and analyze their users to create scaled and sustainable businesses. Today, we provide core business infrastructure to mobile game and app developers and enhance telecom operators’ relationship with their users. We are headquartered in Tel-Aviv, Israel, and have offices in various cities in North America, Europe and Asia. On June 28, 2021, we consummated a recapitalization transaction (the “Recapitalization”) with Thoma Bravo Advantage (“TBA”), a publicly traded special purpose acquisition company, resulting in TBA becoming a wholly owned subsidiary of the Company. On June 29, 2021, ironSource became a publicly traded corporation at the New York Stock Exchange under the symbol “IS.” Pending Merger On July 13, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to merge with Unity Software Inc. (“Unity”), an industry leading platform for creating and operating interactive, real-time 3D (RT3D) content. The estimated purchase consideration is based on an exchange ratio of 0.1089 shares of Unity in exchange for shares of ironSource. The transaction, which is anticipated to close in the fourth quarter of this year, is subject to approval by ironSource and Unity shareholders, the receipt of required regulatory approvals, and other customary closing conditions. Once consummated, current Unity stockholders will own approximately 73.5% and current ironSource shareholders will own approximately 26.5% of the combined company. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES: | 6 Months Ended |
Jun. 30, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES: | |
SIGNIFICANT ACCOUNTING POLICIES: | NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES: a. Basis of Presentation and Consolidation We prepared the accompanying unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, the information contained herein reflects all adjustments necessary for a fair statement of our results of operations, financial position, cash flows, and shareholders’ equity. All such adjustments are of a normal, recurring nature. The results of operations for the six months ended June 30, 2022 shown in these unaudited condensed consolidated financial statements are not necessarily indicative of the results to be expected for the full year ending December 31, 2022. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 20-F for the year ended December 31, 2021. The condensed consolidated financial statements include the accounts of ironSource Ltd. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. There have been no material changes in our significant accounting policies as described in our consolidated financial statements for the year ended December 31, 2021. b. Short-Term Deposits Short-term deposits are bank deposits with maturities over three months and of up to one year. As of June 30, 2022, short-term deposits were denominated in U.S. dollars, bore interest of 3.2% and are presented at their cost, including accrued interest. The recorded amounts of short-term deposits approximate their respective fair value because of the liquidity and short period of time to maturity of these instruments. NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued): c. New Accounting Pronouncements Recently issued accounting pronouncements, not yet adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (“Topic 326”): Measurement of Credit Losses on Financial Instruments to introduce a new model for recognizing credit losses on financial instruments based on estimated current expected credit losses, or CECL. Under the new standard, an entity is required to estimate CECL on trade receivables at inception, based on historical information, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 is effective for us for the annual period beginning after December 15, 2022, including interim periods within that reporting period. We are evaluating the impact of adoption of the new standard on our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU No. 2019-12 is effective for us for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. We are evaluating the impact of adoption of the new standard on our consolidated financial statements. |
DISAGGREGATION OF REVENUE_
DISAGGREGATION OF REVENUE: | 6 Months Ended |
Jun. 30, 2022 | |
DISAGGREGATION OF REVENUE: | |
DISAGGREGATION OF REVENUE: | NOTE 3 — DISAGGREGATION OF REVENUE: Revenue by Source The following table presents our revenue disaggregated by source (U.S. dollars in thousands): Six Months Ended June 30, 2022 2021 Sonic $ 335,576 $ 222,519 Aura 36,874 32,230 Total revenue $ 372,450 $ 254,749 Revenue by Geographic Area The following table presents our revenue disaggregated by geography, based on the invoice address of the customers (U.S. dollars in thousands): Six Months Ended June 30, 2022 2021 United States $ 129,812 $ 91,778 EMEA 101,952 56,642 APAC 81,732 41,612 Ireland 37,532 49,969 Israel 9,682 8,281 Other 11,740 6,467 Total revenue $ 372,450 $ 254,749 For the six months ended June 30, 2022 and 2021, no individual country, other than those disclosed above, exceeded 10% of our total revenue. For the six months ended June 30, 2022, no individual customer exceeded 10% of our total revenue. For the six months ended June 30, 2021, we had one individual customer representing 12% of our total revenue. |
BUSINESS COMBINATIONS_
BUSINESS COMBINATIONS: | 6 Months Ended |
Jun. 30, 2022 | |
BUSINESS COMBINATIONS: | |
BUSINESS COMBINATIONS: | NOTE 4 – BUSINESS COMBINATIONS: Acquisition of Tapjoy In January 2022, we acquired all outstanding shares of Tapjoy Inc. (“Tapjoy”), which provides mobile marketing and monetization services to game and app developers. We have included the financial results of Tapjoy in the consolidated financial statements from the date of acquisition. The costs associated with the acquisition were approximately $3,300 thousand and are recorded in general and administrative expenses. The acquisition date fair value of the consideration transferred was $391,252 thousand, which consisted of the following (U.S. dollars in thousands): Consideration: Cash $ 389,754 Fair value of share options and restricted share units assumed 1,498 Total consideration transferred $ 391,252 The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition (U.S. dollars in thousands): Cash $ 33,165 Accounts receivable 52,024 Other current assets 1,257 Operating lease right-of-use asset 4,496 Property, equipment and software 465 Goodwill 216,055 Technology 118,900 Customer relationships 33,300 Trade name 5,700 Other assets 359 Accounts payable (39,349) Other current liabilities (19,791) Operating lease liabilities (4,913) Deferred tax liabilities (9,768) Other non-current liabilities (648) Net assets acquired $ 391,252 The above allocation of the purchase price is still provisional and subject to change within the measurement period, including potential adjustments to deferred tax balances as tax returns are finalized and as additional information is received. The final allocation of the purchase price is expected to be completed as soon as practicable, but no later than one year from the date of the acquisition close. The estimated useful life of the acquired technology is six years , the customer relationships is eight years and the trade name is five years . The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities. The goodwill balance is not deductible for tax purposes. We paid cash consideration of $392,034 thousand. Of the total consideration, $389,754 thousand was allocated to the purchase consideration and $2,280 thousand was allocated to future services, recorded under other assets, and will be expensed over the remaining service periods. NOTE 4 – BUSINESS COMBINATIONS: (continued) We assumed share options and restricted share units to Tapjoy’s employees with an estimated fair value of $3,245 thousand. Of the total consideration, $1,498 thousand was allocated to the purchase consideration and $1,747 thousand was allocated to future services and will be expensed over the remaining service periods. The fair value of the share options assumed by the Company was determined using the Black-Scholes option pricing model. The Company’s condensed consolidated statement of operations for the six months ended June 30, 2022, includes revenue of $49.3 million from Tapjoy. However, due to the significant integration of Tapjoy with Sonic, it was impractical to determine the impact of the acquired business on earnings. The following unaudited pro forma financial information presents the consolidated results of Tapjoy for the six months ended June 30, 2022 and 2021, giving effect to the acquisition as if it had occurred on January 1, 2021, and combines the historical financial results of Tapjoy. The unaudited pro forma financial information was as follows (U.S. dollars in thousands): Six Months Ended June 30, 2022 2021 Unaudited pro forma financial information Pro forma revenue $ 372,450 $ 300,100 Pro forma net income $ 29,524 $ 6,213 The unaudited pro forma financial information includes adjustments to give effect to pro forma events that are directly attributable to the acquisition. The pro forma financial information includes adjustments to amortization for intangible assets acquired, share-based compensation expense for unvested share options and restricted share units, acquisition costs and income taxes. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of future periods. The unaudited pro forma financial information does not give effect to the potential impact of current financial conditions, future revenues, regulatory matters, or any anticipated synergies, operating efficiencies, or cost savings that may be associated with the acquisition. |
GOODWILL & INTANGIBLE ASSETS, N
GOODWILL & INTANGIBLE ASSETS, NET: | 6 Months Ended |
Jun. 30, 2022 | |
GOODWILL & INTANGIBLE ASSETS, NET: | |
GOODWILL & INTANGIBLE ASSETS, NET: | NOTE 5 — GOODWILL & INTANGIBLE ASSETS, NET: Goodwill The following table presents the changes in the carrying amount of goodwill for the six months ended June 30, 2022 (U.S. dollars in thousands): Balance as of December 31, 2021 $ 240,299 Goodwill from acquisition of Tapjoy 216,055 Balance as of June 30, 2022 $ 456,354 NOTE 5 — GOODWILL & INTANGIBLE ASSETS, NET: (continued) Intangible Assets The following tables present details of our intangible assets (U.S. dollars in thousands): June 30, 2022 Weighted- Average Carrying Remaining Amount, Useful Lives Net of Accumulated Net Book in Years Impairment Amortization Value Technology 5.17 $ 173,925 $ (27,492) $ 146,433 Customer relationships 7.04 44,382 (8,936) 35,446 Trade Name 4.51 5,700 (570) 5,130 Domain 6.61 1,950 (340) 1,610 Total intangible assets $ 225,957 $ (37,338) $ 188,619 December 31, 2021 Weighted- Average Carrying Remaining Amount, Useful Lives Net of Accumulated Net Book in Years Impairment Amortization Value Technology 4.68 $ 60,400 $ (12,908) $ 47,492 Customer relationships 3.97 11,082 (6,085) 4,997 Domain 7.1 1,950 (218) 1,732 Total intangible assets $ 73,432 $ (19,211) $ 54,221 Amortization expenses of intangible assets were $18,127 thousand and $2,825 thousand for the six months ended June 30, 2022 and 2021, respectively. The following table presents the estimated future amortization of intangible assets as of June 30, 2022 (U.S. dollars in thousands): Year ending December 31 Remainder of 2022 $ 18,210 2023 36,434 2024 34,914 2025 33,041 2026 32,735 Thereafter 33,285 $ 188,619 |
REVOLVING CREDIT FACILITY_
REVOLVING CREDIT FACILITY: | 6 Months Ended |
Jun. 30, 2022 | |
REVOLVING CREDIT FACILITY: | |
REVOLVING CREDIT FACILITY: | NOTE 6 – REVOLVING CREDIT FACILITY: On June 29, 2021, we entered into a credit agreement (the “RCF”) with several lenders (the “Lenders”), Silicon Valley Bank, as L/C issuer and the Agent. Under the RCF, the Lenders would extend to the Company a five-year revolving credit facility in an initial aggregate principal amount of up to $350 million, with the right, subject to certain conditions, to incur additional revolving commitments and/or incremental term loans in an amount not to exceed the sum of (i) $150 million plus (ii) additional amounts so long as the consolidated secured leverage ratio, on a pro forma basis after giving effect to such increase or incurrence, is no greater than or equal to 2.25 : 1.00 . Revolving loans under the RCF bear interest through maturity at a variable rate based upon, at the Company’s option, either the Eurodollar rate (also known as LIBOR rate) or the base rate (which is the highest of (x) the federal funds rate plus 0.50 %, (y) the prime rate published in the Wall Street Journal or any successor publication thereto, and (z) 1.00% in excess of the one-month Eurodollar rate), plus, in each case, an applicable margin. Based on the applicable consolidated net leverage ratio, the applicable margin for Eurodollar rate revolving loans ranges from 1.25 % to 1.75 % per annum and the applicable margin for base rate loans ranges from 0.25 % to 0.75 % per annum. Revolving loans may be prepaid, and revolving loan commitments may be permanently reduced by the Company in whole or in part, without penalty or premium. Our RCF allows for the LIBOR rate to be phased out and replaced with the Secured Overnight Financing Rate and therefore we do not anticipate a material impact by the expected upcoming LIBOR transition. The LIBOR in relation to the RCF, will be in use until the end of June 2023. In addition to paying interest on outstanding principal under the RCF, the Company will be required to pay an unused line fee on a quarterly basis with respect to the unutilized commitments under the RCF from 0.20 % to 0.30 % per annum, depending on consolidated net leverage ratio. The Company will also be required to pay customary letter of credit fees and agent and lender fees customary for credit facilities of this size and type. The Company’s obligations under the RCF will be secured by, substantially all of the assets of the Company and its material subsidiaries, and the equity interests therein. The obligations under the RCF and the guarantees are secured by a lien on substantially all of the Company’s tangible and intangible personal property and the subsidiaries that are guarantors, and by a pledge of substantially all of the equity interests of the Company’s subsidiaries, subject to limited exceptions. The RCF contains a number of covenants and restrictions that, among other things, require the Company to maintain (i) a maximum ratio of consolidated funded indebtedness (net of unrestricted cash and Cash Equivalents, in an amount not to exceed 50 % of consolidated EBITDA) to consolidated EBITDA (both as defined in the RCF) of 4.00 : 1.00 , subject to a step down to 3.75 : 1.00 after four full fiscal quarters, which ratio will, in either case, be increased by 0.50 : 1.00 following a Qualified Acquisition (as defined in the RCF) and (ii) a ratio of consolidated EBITDA to consolidated interest charges (as defined in the RCF) of less than 3.00 : 1.00 . Further, the RCF contains a number of covenants and restrictions including restrictions on the Company and its subsidiaries’ ability to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, repurchase its stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of its business, enter into sale-leaseback transactions, transfer and sell material assets and merge or consolidate. The RCF also includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. The occurrence of an event of default including the change of control upon the consummation of the Merger Agreement with Unity could result in the acceleration of the obligations under the RCF. As of June 30, 2022, we were in compliance with all of the covenants. There were no outstanding borrowings under the RCF as of June 30, 2022. |
DERIVATIVES AND HEDGING_
DERIVATIVES AND HEDGING: | 6 Months Ended |
Jun. 30, 2022 | |
DERIVATIVES AND HEDGING: | |
DERIVATIVES AND HEDGING: | NOTE 7 – DERIVATIVES AND HEDGING: We entered into forward contracts to hedge certain forecasted payroll payments denominated in NIS, against exchange rate fluctuations of the U.S. dollar for a period of up to twelve months . We record the cash flows associated with these derivatives under operating activities. Forward contracts are designated as cash flow hedges, as defined by ASC Topic 815, and are all highly effective. As of June 30, 2022, and December 31, 2021, we had outstanding contracts designated as hedging instruments in the aggregate notional amount of approximately $41 million and $31 million, respectively. As of June 30, 2022, the fair value of our outstanding contracts amounted to a liability of $2,821 thousand, recorded under other current liabilities. As of December 31, 2021, the fair value of our outstanding contracts amounted to an asset of $562 thousand, recorded under other current assets. The foreign exchange forward contracts will expire throughout 2022. For the six months ended June 30, 2022, an amount of $1,004 thousand was reclassified from other comprehensive income into net income. As of June 30, 2022, we expect to reclassify all of our unrealized gains and losses from accumulated other comprehensive income to earnings during the next twelve months . |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES: | 6 Months Ended |
Jun. 30, 2022 | |
COMMITMENTS AND CONTINGENT LIABILITIES: | |
COMMITMENTS AND CONTINGENT LIABILITIES: | NOTE 8 — COMMITMENTS AND CONTINGENT LIABILITIES: Legal Proceedings From time to time, we are subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. We accrue a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, we believe that any of these proceedings or other claims are neither probable to result in a liability nor can result in a material adverse effect on our business, financial condition, results of operations or cash flows. We are not currently a party to any material legal proceedings, including any such proceedings that are pending or threatened, of which we are aware. |
SHARE-BASED COMPENSATION_
SHARE-BASED COMPENSATION: | 6 Months Ended |
Jun. 30, 2022 | |
SHARE-BASED COMPENSATION: | |
SHARE-BASED COMPENSATION: | NOTE 9 — SHARE-BASED COMPENSATION: a. Share-based compensation expense for the six months ended June 30, 2022 and 2021 was as follows (U.S. dollars in thousands): Six Months Ended June 30, 2022 2021 Cost of revenue $ 1,398 $ 593 Research and development 19,023 11,142 Sales and marketing 17,750 8,511 General and administrative 13,625 17,228 Total share-based compensation expenses $ 51,796 $ 37,474 NOTE 9 — SHARE-BASED COMPENSATION: (continued) As of June 30, 2022, there is an unrecognized share-based compensation expense of $136,548 thousand to be recognized over the average remaining vesting period of 3.31 years. b . A summary of our share options for Class A and Class B ordinary shares activity is as follows: Weighted- Weighted- Average Aggregate Average Remaining Intrinsic Exercise Contractual Value (U.S. Number of Price (U.S. Term dollars in Options dollars) In Years thousands) Balance as of December 31, 2021 103,239,069 $ 1.71 5.95 $ 622,635 Granted 1,941,995 5.48 — — Exercised (4,368,250) 0.81 — — Forfeited (1,081,144) 2.51 — — Balance as of June 30, 2022 99,731,670 $ 1.81 5.62 $ 92,154 Exercisable, June 30, 2022 60,464,486 $ 1.33 4.56 $ 74,765 For the six months ended June 30, 2022, the aggregate intrinsic values of share options exercised were $17,038 thousand. The calculated fair value of option grants was estimated using the Black-Scholes option-pricing model with the following assumptions: Six Months Ended June 30, 2022 2021 Risk-free interest rate 1.15% - 1.94% 0.60% - 0.77% Expected option term (in years) 3.06 - 6.10 5.61 - 6.11 Expected price volatility 34.59% - 36.55% 37.79% - 37.89% Fair value of an ordinary share $6.5 - $6.98 $4.44 - $7.41 Dividend yield 0% 0% The risk-free interest rate is based on U.S. Treasury rates in effect at the time of grant with maturities equal to the grant’s expected term. The expected term is calculated using the simplified method, as we conclude that our historical share option exercise experience does not provide a reasonable basis to estimate the expected option term. The expected volatility is based on the historical volatility of the ordinary shares of comparable companies that are publicly traded. The fair value of an ordinary share is estimated based on observable transactions in the secondary market for share options granted prior to the Recapitalization and based on the grant-date closing price of our ordinary share for share options granted after the Recapitalization. Dividend yield is zero since we have a mandatory adjustment to the options exercise price in our option plan following any cash dividends. c. A summary of our RSUs for Class A and Class B ordinary share activity is as follows: Weighted- Average Grant Date Fair Value Number of Price (U.S. Shares dollars) Unvested RSUs outstanding as of December 31, 2021 2,143,186 $ 10.88 Granted 20,773,026 6.00 Vested (121,513) 3.54 Forfeited (884,030) 6.88 Unvested RSUs outstanding as of June 30, 2022 21,910,669 $ 6.45 |
TAXES ON INCOME_
TAXES ON INCOME: | 6 Months Ended |
Jun. 30, 2022 | |
TAXES ON INCOME: | |
TAXES ON INCOME: | NOTE 10 — TAXES ON INCOME: The Company’s quarterly tax provision, and estimates of its annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income, the mix of jurisdictions to which such income relates and tax law developments, as well as non-deductible expenses, such as share-based compensation. For the six months ended June 30, 2022 and 2021, the Company’s effective tax rate differs from the Israeli statutory rate of 23% due to non-deductible expenses mainly related to share-based compensation and tax benefits arising from reduced tax rates under benefit programs, and for the six months ended June 30, 2022, is primarily due to discrete tax adjustments and tax benefits related to share-based compensation. The Company and its Israeli subsidiaries are subject to Preferred Technological Enterprise status and, accordingly, eligible for a reduced tax rate of 12% . |
RELATED PARTIES_
RELATED PARTIES: | 6 Months Ended |
Jun. 30, 2022 | |
RELATED PARTIES: | |
RELATED PARTIES: | NOTE 11 – RELATED PARTIES: Related party balances and transactions The Company’s chairman of the audit committee and member of the board, Mr. David Kostman, is the Co-Chief Executive Officer of Outbrain Inc. (“Outbrain”). Accordingly, Outbrain is considered a related party. During the six months ended June 30, 2022, revenue recorded by the Company from its operational activity with Outbrain amounted to $1,535 thousand. As of June 30, 2022, the Company had trade receivables balances due from Outbrain in amounts of $1,023 thousand. In 2021, there were no material related party balances and transactions with Outbrain. Type A On December 31, 2020, we entered into an agreement with TypeA to provide certain administrative services over a four-month period ended on April 30, 2021. On the same date, we also entered into a sub-lease agreement with TypeA for a term of twelve months ended on December 31, 2021. TypeA extended the sub-lease agreement by an additional one month and a half. For the six months ended June 30, 2022 and 2021, we recorded an amount of $212 thousand and $1,308 thousand, respectively, as a deduction in the general and administrative expense. Options Granted to Executive Officers and Directors On February 16, 2022, we granted 153,846 options and 307,692 RSUs to one executive officer, which will become exercisable over a four-year period. The options have an exercise price of $6.5 . On January 17, 2021, we granted 24,908,370 options and 77,900 RSUs to our executive officers and directors, which will become exercisable over a three-year or a four-year period. The options have an exercise price of $3.14 . On June 28, 2021, we granted 50,000 RSUs to our executive officers and directors, which will become exercisable over a three-year period. |
OTHER CURRENT LIABILITIES_
OTHER CURRENT LIABILITIES: | 6 Months Ended |
Jun. 30, 2022 | |
OTHER CURRENT LIABILITIES: | |
OTHER CURRENT LIABILITIES: | NOTE 12 — OTHER CURRENT LIABILITIES: Other current liabilities consist of the following (U.S. dollars in thousands): June 30, December 31 2022 2021 Accrued compensation $ 36,399 $ 42,971 Other current liabilities 26,581 10,978 Total other current liabilities $ 62,980 $ 53,949 |
NET INCOME PER ORDINARY SHARE_
NET INCOME PER ORDINARY SHARE: | 6 Months Ended |
Jun. 30, 2022 | |
NET INCOME PER ORDINARY SHARE: | |
NET INCOME PER ORDINARY SHARE: | NOTE 13 – NET INCOME PER ORDINARY SHARE: Basic net income per ordinary share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period, including unexercised vested options with a zero exercise price, net of treasury shares. Diluted net income per ordinary share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period, while giving effect to all potentially dilutive ordinary shares to the extent they are dilutive. Basic and diluted net income per ordinary share takes into account deduction of amounts attributable to participating securities, in conformity with the "two-class" method. Moreover, the 2019 ordinary shares’ conversion into ordinary shares was contingent upon certain deemed liquidation events, for which we assessed their occurrence at the end of each reporting period. If the contingency was met, their potential dilution was computed using the “if-converted” method. The 2019 ordinary shares’ contingency was met on June 28, 2021, as part of the Recapitalization, following which the 2019 ordinary shares were converted into the Company's ordinary shares. The 2019 ordinary shares were excluded from the computation of net income per ordinary share, for the six months ended June 30, 2021, due to their anti-dilutive effect. Following the Recapitalization, the Company has two classes of issued and outstanding ordinary shares: Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and holders of Class B ordinary shares have substantially identical rights, except for different voting rights, with holders of Class A ordinary shares entitled to one vote per share while holders of Class B ordinary shares are entitled to five votes per share. As such, basic and diluted income per ordinary share of Class A ordinary shares and Class B ordinary shares are identical. Class B ordinary shares will be automatically converted automatically on a one-for-one basis into a Class A ordinary share upon sale or transfer (other than excluded transfers to certain parties that are related to or affiliated with the shareholder). NOTE 13 – NET INCOME PER ORDINARY SHARE (continued) : The following table sets forth the computation of basic and diluted net income per ordinary share, attributable to our ordinary shares (U.S. dollars in thousands, except share and per share data): Six Months Ended June 30, 2022 2021 Basic net income per ordinary share Numerator: Net income $ 26,498 $ 20,248 Amount allocated to participating 2019 shareholders — (5,562) Amount allocated to contingently returnable shares issued in connection with acquisitions (40) — Net income, attributable to ordinary shares 26,458 14,686 Denominator: Weighted-average number of ordinary shares outstanding 1,018,784,260 652,122,890 Basic net income, attributable to ordinary shares $ 0.03 $ 0.02 Diluted net income per ordinary share Effect of dilutive securities on weighted-average number of ordinary shares: Options 54,830,450 76,218,322 RSUs 176,345 988,517 Weighted-average number of ordinary shares outstanding, after giving effect to dilutive securities 1,073,791,056 729,329,729 Diluted net income, attributable to ordinary shares $ 0.02 $ 0.02 NOTE 13 – NET INCOME PER ORDINARY SHARE (continued): The following weighted-average amounts of securities were excluded from the computation of diluted net income per ordinary share: Six Months Ended June 30, 2022 2021 Options 21,033,355 65,432 RSUs 15,982,328 25,000 Contingently returnable shares 1,540,350 — 2019 ordinary shares (*) — 246,871,957 (*) The weighted-average number of ordinary shares that were excluded from the computation of diluted net income per ordinary share is based on the number of ordinary shares for which the 2019 ordinary shares were converted into following the Recapitalization. The 2019 ordinary shares' contingent conversion was triggered on June 28, 2021, as part of the Recapitalization. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES: | |
Basis of Presentation and Consolidation | a. Basis of Presentation and Consolidation We prepared the accompanying unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, the information contained herein reflects all adjustments necessary for a fair statement of our results of operations, financial position, cash flows, and shareholders’ equity. All such adjustments are of a normal, recurring nature. The results of operations for the six months ended June 30, 2022 shown in these unaudited condensed consolidated financial statements are not necessarily indicative of the results to be expected for the full year ending December 31, 2022. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 20-F for the year ended December 31, 2021. The condensed consolidated financial statements include the accounts of ironSource Ltd. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. There have been no material changes in our significant accounting policies as described in our consolidated financial statements for the year ended December 31, 2021. |
Short-Term Deposits | b. Short-Term Deposits Short-term deposits are bank deposits with maturities over three months and of up to one year. As of June 30, 2022, short-term deposits were denominated in U.S. dollars, bore interest of 3.2% and are presented at their cost, including accrued interest. The recorded amounts of short-term deposits approximate their respective fair value because of the liquidity and short period of time to maturity of these instruments. |
New Accounting Pronouncements | c. New Accounting Pronouncements Recently issued accounting pronouncements, not yet adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (“Topic 326”): Measurement of Credit Losses on Financial Instruments to introduce a new model for recognizing credit losses on financial instruments based on estimated current expected credit losses, or CECL. Under the new standard, an entity is required to estimate CECL on trade receivables at inception, based on historical information, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 is effective for us for the annual period beginning after December 15, 2022, including interim periods within that reporting period. We are evaluating the impact of adoption of the new standard on our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU No. 2019-12 is effective for us for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. We are evaluating the impact of adoption of the new standard on our consolidated financial statements. |
DISAGGREGATION OF REVENUE_ (Tab
DISAGGREGATION OF REVENUE: (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
DISAGGREGATION OF REVENUE: | |
Summary of revenue disaggregated by source and geography | The following table presents our revenue disaggregated by source (U.S. dollars in thousands): Six Months Ended June 30, 2022 2021 Sonic $ 335,576 $ 222,519 Aura 36,874 32,230 Total revenue $ 372,450 $ 254,749 The following table presents our revenue disaggregated by geography, based on the invoice address of the customers (U.S. dollars in thousands): Six Months Ended June 30, 2022 2021 United States $ 129,812 $ 91,778 EMEA 101,952 56,642 APAC 81,732 41,612 Ireland 37,532 49,969 Israel 9,682 8,281 Other 11,740 6,467 Total revenue $ 372,450 $ 254,749 |
BUSINESS COMBINATIONS_ (Tables)
BUSINESS COMBINATIONS: (Tables) - Tapjoy Inc | 6 Months Ended |
Jun. 30, 2022 | |
Business Acquisition [Line Items] | |
Schedule of Acquisition date fair value of consideration transferred | The acquisition date fair value of the consideration transferred was $391,252 thousand, which consisted of the following (U.S. dollars in thousands): Consideration: Cash $ 389,754 Fair value of share options and restricted share units assumed 1,498 Total consideration transferred $ 391,252 |
Summary of fair values of assets acquired and liabilities assumed | The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition (U.S. dollars in thousands): Cash $ 33,165 Accounts receivable 52,024 Other current assets 1,257 Operating lease right-of-use asset 4,496 Property, equipment and software 465 Goodwill 216,055 Technology 118,900 Customer relationships 33,300 Trade name 5,700 Other assets 359 Accounts payable (39,349) Other current liabilities (19,791) Operating lease liabilities (4,913) Deferred tax liabilities (9,768) Other non-current liabilities (648) Net assets acquired $ 391,252 |
Summary of unaudited pro forma financial information | Six Months Ended June 30, 2022 2021 Unaudited pro forma financial information Pro forma revenue $ 372,450 $ 300,100 Pro forma net income $ 29,524 $ 6,213 |
GOODWILL & INTANGIBLE ASSETS,_2
GOODWILL & INTANGIBLE ASSETS, NET: (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
GOODWILL & INTANGIBLE ASSETS, NET: | |
Schedule of changes in carrying amount of goodwill | The following table presents the changes in the carrying amount of goodwill for the six months ended June 30, 2022 (U.S. dollars in thousands): Balance as of December 31, 2021 $ 240,299 Goodwill from acquisition of Tapjoy 216,055 Balance as of June 30, 2022 $ 456,354 |
Summary of intangible assets | The following tables present details of our intangible assets (U.S. dollars in thousands): June 30, 2022 Weighted- Average Carrying Remaining Amount, Useful Lives Net of Accumulated Net Book in Years Impairment Amortization Value Technology 5.17 $ 173,925 $ (27,492) $ 146,433 Customer relationships 7.04 44,382 (8,936) 35,446 Trade Name 4.51 5,700 (570) 5,130 Domain 6.61 1,950 (340) 1,610 Total intangible assets $ 225,957 $ (37,338) $ 188,619 December 31, 2021 Weighted- Average Carrying Remaining Amount, Useful Lives Net of Accumulated Net Book in Years Impairment Amortization Value Technology 4.68 $ 60,400 $ (12,908) $ 47,492 Customer relationships 3.97 11,082 (6,085) 4,997 Domain 7.1 1,950 (218) 1,732 Total intangible assets $ 73,432 $ (19,211) $ 54,221 |
Summary of estimated future amortization of intangible assets | The following table presents the estimated future amortization of intangible assets as of June 30, 2022 (U.S. dollars in thousands): Year ending December 31 Remainder of 2022 $ 18,210 2023 36,434 2024 34,914 2025 33,041 2026 32,735 Thereafter 33,285 $ 188,619 |
SHARE-BASED COMPENSATION_ (Tabl
SHARE-BASED COMPENSATION: (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
SHARE-BASED COMPENSATION: | |
Summary of share-based compensation expense | a. Share-based compensation expense for the six months ended June 30, 2022 and 2021 was as follows (U.S. dollars in thousands): Six Months Ended June 30, 2022 2021 Cost of revenue $ 1,398 $ 593 Research and development 19,023 11,142 Sales and marketing 17,750 8,511 General and administrative 13,625 17,228 Total share-based compensation expenses $ 51,796 $ 37,474 |
Summary of share option activity | Weighted- Weighted- Average Aggregate Average Remaining Intrinsic Exercise Contractual Value (U.S. Number of Price (U.S. Term dollars in Options dollars) In Years thousands) Balance as of December 31, 2021 103,239,069 $ 1.71 5.95 $ 622,635 Granted 1,941,995 5.48 — — Exercised (4,368,250) 0.81 — — Forfeited (1,081,144) 2.51 — — Balance as of June 30, 2022 99,731,670 $ 1.81 5.62 $ 92,154 Exercisable, June 30, 2022 60,464,486 $ 1.33 4.56 $ 74,765 |
Summary of calculated fair value of option grants estimated using the Black-Scholes option-pricing model | Six Months Ended June 30, 2022 2021 Risk-free interest rate 1.15% - 1.94% 0.60% - 0.77% Expected option term (in years) 3.06 - 6.10 5.61 - 6.11 Expected price volatility 34.59% - 36.55% 37.79% - 37.89% Fair value of an ordinary share $6.5 - $6.98 $4.44 - $7.41 Dividend yield 0% 0% |
Summary of our RSUs activity | Weighted- Average Grant Date Fair Value Number of Price (U.S. Shares dollars) Unvested RSUs outstanding as of December 31, 2021 2,143,186 $ 10.88 Granted 20,773,026 6.00 Vested (121,513) 3.54 Forfeited (884,030) 6.88 Unvested RSUs outstanding as of June 30, 2022 21,910,669 $ 6.45 |
OTHER CURRENT LIABILITIES_ (Tab
OTHER CURRENT LIABILITIES: (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
OTHER CURRENT LIABILITIES: | |
Summary of other current liabilities | Other current liabilities consist of the following (U.S. dollars in thousands): June 30, December 31 2022 2021 Accrued compensation $ 36,399 $ 42,971 Other current liabilities 26,581 10,978 Total other current liabilities $ 62,980 $ 53,949 |
NET INCOME PER ORDINARY SHARE_
NET INCOME PER ORDINARY SHARE: (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
NET INCOME PER ORDINARY SHARE: | |
Summary of computation of basic and diluted net income per ordinary share from, attributable to our ordinary shares | The following table sets forth the computation of basic and diluted net income per ordinary share, attributable to our ordinary shares (U.S. dollars in thousands, except share and per share data): Six Months Ended June 30, 2022 2021 Basic net income per ordinary share Numerator: Net income $ 26,498 $ 20,248 Amount allocated to participating 2019 shareholders — (5,562) Amount allocated to contingently returnable shares issued in connection with acquisitions (40) — Net income, attributable to ordinary shares 26,458 14,686 Denominator: Weighted-average number of ordinary shares outstanding 1,018,784,260 652,122,890 Basic net income, attributable to ordinary shares $ 0.03 $ 0.02 Diluted net income per ordinary share Effect of dilutive securities on weighted-average number of ordinary shares: Options 54,830,450 76,218,322 RSUs 176,345 988,517 Weighted-average number of ordinary shares outstanding, after giving effect to dilutive securities 1,073,791,056 729,329,729 Diluted net income, attributable to ordinary shares $ 0.02 $ 0.02 |
Summary of weighted-average amounts of securities were excluded from the computation of diluted net income per ordinary share | Six Months Ended June 30, 2022 2021 Options 21,033,355 65,432 RSUs 15,982,328 25,000 Contingently returnable shares 1,540,350 — 2019 ordinary shares (*) — 246,871,957 (*) The weighted-average number of ordinary shares that were excluded from the computation of diluted net income per ordinary share is based on the number of ordinary shares for which the 2019 ordinary shares were converted into following the Recapitalization. The 2019 ordinary shares' contingent conversion was triggered on June 28, 2021, as part of the Recapitalization. |
DESCRIPTION OF THE BUSINESS_ (D
DESCRIPTION OF THE BUSINESS: (Details) | Jul. 13, 2022 shares |
Unity stockholders | |
Business Acquisition [Line Items] | |
Ownership interest (as a percent) | 73.50% |
ironSource | |
Business Acquisition [Line Items] | |
Ownership interest (as a percent) | 26.50% |
Unity Software Inc. | |
Business Acquisition [Line Items] | |
Number of shares converted for each share upon merger | 0.1089 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES: (Details) | 6 Months Ended |
Jun. 30, 2022 | |
Short-Term Deposits | |
Interest rate on short-term deposits | 3.20% |
DISAGGREGATION OF REVENUE_ - Re
DISAGGREGATION OF REVENUE: - Revenue by Source (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 372,450 | $ 254,749 |
Sonic | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 335,576 | 222,519 |
Aura | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 36,874 | $ 32,230 |
DISAGGREGATION OF REVENUE_ - _2
DISAGGREGATION OF REVENUE: - Revenue by Geographic Area (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) customer | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 372,450 | $ 254,749 |
Total revenue | Customer concentration risk | Customer One | ||
Disaggregation of Revenue [Line Items] | ||
Number of customers | customer | 1 | |
Concentration risk (as a percent) | 12% | |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 129,812 | $ 91,778 |
EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 101,952 | 56,642 |
APAC | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 81,732 | 41,612 |
Ireland | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 37,532 | 49,969 |
Israel | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 9,682 | 8,281 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 11,740 | $ 6,467 |
BUSINESS COMBINATIONS_ - Acquis
BUSINESS COMBINATIONS: - Acquisitions (Details) - Tapjoy Inc $ in Thousands | 1 Months Ended |
Jan. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | |
Fair value of consideration transferred | $ 391,252 |
Payment of cash consideration | 392,034 |
General and administrative expenses | |
Business Acquisition [Line Items] | |
Costs associated with acquisition | 3,300 |
Share options and restricted share units | |
Business Acquisition [Line Items] | |
Estimated fair value | 3,245 |
Purchase consideration | |
Business Acquisition [Line Items] | |
Estimated fair value | 1,498 |
Payment of cash consideration | 389,754 |
Future services and continued employment | |
Business Acquisition [Line Items] | |
Estimated fair value | 1,747 |
Payment of cash consideration | $ 2,280 |
Technology | |
Business Acquisition [Line Items] | |
Estimated useful life | 6 years |
Customer relationships | |
Business Acquisition [Line Items] | |
Estimated useful life | 8 years |
Trade Name | |
Business Acquisition [Line Items] | |
Estimated useful life | 5 years |
BUSINESS COMBINATIONS_ - Acqu_2
BUSINESS COMBINATIONS: - Acquisition date fair value of consideration transferred (Details) - Tapjoy Inc $ in Thousands | 1 Months Ended |
Jan. 31, 2022 USD ($) | |
Consideration: | |
Cash | $ 389,754 |
Fair value of share options and restricted share units assumed | 1,498 |
Total consideration transferred | $ 391,252 |
BUSINESS COMBINATIONS_ - Summar
BUSINESS COMBINATIONS: - Summary of fair values of assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Jan. 31, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 456,354 | $ 240,299 | |
Tapjoy Inc | |||
Business Acquisition [Line Items] | |||
Cash | $ 33,165 | ||
Accounts receivable | 52,024 | ||
Other current assets | 1,257 | ||
Operating lease right-of-use asset | 4,496 | ||
Property, equipment and software | 465 | ||
Goodwill | 216,055 | ||
Technology | 118,900 | ||
Customer relationships | 33,300 | ||
Trade name | 5,700 | ||
Other assets | 359 | ||
Accounts payable | 39,349 | ||
Other current liabilities | 19,791 | ||
Operating lease liabilities | (4,913) | ||
Deferred tax liabilities | 9,768 | ||
Other non-current liabilities | 648 | ||
Net assets acquired | $ 391,252 |
BUSINESS COMBINATIONS_ - Unaudi
BUSINESS COMBINATIONS: - Unaudited pro forma financial information (Details) - Tapjoy Inc - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Business Acquisition [Line Items] | ||
Revenue from acquisition | $ 49,300 | |
Pro forma revenue | 372,450 | $ 300,100 |
Pro forma net income | $ 29,524 | $ 6,213 |
GOODWILL & INTANGIBLE ASSETS,_3
GOODWILL & INTANGIBLE ASSETS, NET - Changes in carrying amount of goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Changes in goodwill | |
Balance of beginning | $ 240,299 |
Goodwill from acquisition of Tapjoy | 216,055 |
Balance of end | $ 456,354 |
GOODWILL & INTANGIBLE ASSETS,_4
GOODWILL & INTANGIBLE ASSETS, NET: - Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Intangible Assets | |||
Carrying Amount, Net of Impairment | $ 225,957 | $ 73,432 | |
Accumulated Amortization | (37,338) | (19,211) | |
Net Book Value | 188,619 | $ 54,221 | |
Amortization expenses of intangible assets | $ 18,127 | $ 2,825 | |
Technology | |||
Intangible Assets | |||
Weighted- Average Remaining Useful Lives | 5 years 2 months 1 day | 4 years 8 months 4 days | |
Carrying Amount, Net of Impairment | $ 173,925 | $ 60,400 | |
Accumulated Amortization | (27,492) | (12,908) | |
Net Book Value | $ 146,433 | $ 47,492 | |
Customer relationships | |||
Intangible Assets | |||
Weighted- Average Remaining Useful Lives | 7 years 14 days | 3 years 11 months 19 days | |
Carrying Amount, Net of Impairment | $ 44,382 | $ 11,082 | |
Accumulated Amortization | (8,936) | (6,085) | |
Net Book Value | $ 35,446 | $ 4,997 | |
Trade Name | |||
Intangible Assets | |||
Weighted- Average Remaining Useful Lives | 4 years 6 months 3 days | ||
Carrying Amount, Net of Impairment | $ 5,700 | ||
Accumulated Amortization | (570) | ||
Net Book Value | $ 5,130 | ||
Domain | |||
Intangible Assets | |||
Weighted- Average Remaining Useful Lives | 6 years 7 months 9 days | 7 years 1 month 6 days | |
Carrying Amount, Net of Impairment | $ 1,950 | $ 1,950 | |
Accumulated Amortization | (340) | (218) | |
Net Book Value | $ 1,610 | $ 1,732 |
GOODWILL & INTANGIBLE ASSETS,_5
GOODWILL & INTANGIBLE ASSETS, NET: - Future amortization of intangible assets (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Estimated future amortization of intangible assets | ||
Remainder of 2022 | $ 18,210 | |
2023 | 36,434 | |
2024 | 34,914 | |
2025 | 33,041 | |
2026 | 32,735 | |
Thereafter | 33,285 | |
Total | $ 188,619 | $ 54,221 |
REVOLVING CREDIT FACILITY_ (Det
REVOLVING CREDIT FACILITY: (Details) - Revolving credit facility $ in Thousands | Jun. 29, 2021 USD ($) | Jun. 30, 2022 USD ($) |
Line of Credit Facility [Line Items] | ||
Debt instrument term | 5 years | |
Aggregate principal amount | $ 350,000 | |
Incremental term loan | $ 150,000 | |
Secured leverage ratio | 4 | |
Net of unrestricted cash and cash equivalents, in amount not to exceed, percentage | 50% | |
Outstanding borrowings | $ 0 | |
Federal funds rate | ||
Line of Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 0.50% | |
Maximum | ||
Line of Credit Facility [Line Items] | ||
Secured leverage ratio | 1 | |
Debt instrument, basis spread on variable rate | 0.30% | |
Increased qualified acquisition ratio | 1 | |
Interest charges, ratio | 1 | |
Maximum | Pro forma basis | ||
Line of Credit Facility [Line Items] | ||
Secured leverage ratio | 1 | |
Maximum | Base rate | ||
Line of Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 0.75% | |
Maximum | Eurodollar rate | ||
Line of Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.75% | |
Minimum | ||
Line of Credit Facility [Line Items] | ||
Secured leverage ratio | 3.75 | |
Debt instrument, basis spread on variable rate | 0.20% | |
Increased qualified acquisition ratio | 0.50 | |
Interest charges, ratio | 3 | |
Minimum | Pro forma basis | ||
Line of Credit Facility [Line Items] | ||
Secured leverage ratio | 2.25 | |
Minimum | Base rate | ||
Line of Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 0.25% | |
Minimum | Eurodollar rate | ||
Line of Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.25% |
DERIVATIVES AND HEDGING_ (Detai
DERIVATIVES AND HEDGING: (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Designated as hedging instruments | ||
DERIVATIVES AND HEDGING: | ||
Aggregate notional amount | $ 41,000 | $ 31,000 |
Forward contract | ||
DERIVATIVES AND HEDGING: | ||
Derivative foreign currency exchange rate fluctuation period | 12 months | |
Fair value of outstanding contracts amount, liability | $ 2,821 | |
Fair value of outstanding contracts amount, assets | $ 562 | |
Derivative gain loss reclassified from AOCI to Net income | $ 1,004 |
SHARE-BASED COMPENSATION_ - Sha
SHARE-BASED COMPENSATION: - Share-based compensation expense (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total share-based compensation expenses | $ 51,796 | $ 37,474 |
Unrecognized share-based compensation expense | $ 136,548 | |
Unrecognized share-based compensation expense to be recognized over the average remaining vesting period | 3 years 3 months 21 days | |
Cost of revenue | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total share-based compensation expenses | $ 1,398 | 593 |
Research and development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total share-based compensation expenses | 19,023 | 11,142 |
Sales and marketing | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total share-based compensation expenses | 17,750 | 8,511 |
General and administrative expenses | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total share-based compensation expenses | $ 13,625 | $ 17,228 |
SHARE-BASED COMPENSATION_ - S_2
SHARE-BASED COMPENSATION: - Share option activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Number of Options | ||
Balance at the beginning | 103,239,069 | |
Granted | 1,941,995 | |
Exercised | (4,368,250) | |
Forfeited | (1,081,144) | |
Balance at the end | 99,731,670 | 103,239,069 |
Exercisable at the end | 60,464,486 | |
Weighted-Average Exercise Price | ||
Balance at the beginning (in dollars per share) | $ 1.71 | |
Granted (in dollars per share) | 5.48 | |
Exercised (in dollars per share) | 0.81 | |
Forfeited (in dollars per share) | 2.51 | |
Balance at the end (in dollars per share) | 1.81 | $ 1.71 |
Exercisable at the end (in dollars per share) | $ 1.33 | |
Weighted- Average Remaining Contractual Term and Aggregate Intrinsic Value | ||
Weighted average remaining contractual term (in years) | 5 years 7 months 13 days | 5 years 11 months 12 days |
Exercisable at the end (in years) | 4 years 6 months 21 days | |
Balance at the beginning (in dollars) | $ 622,635 | |
Balance at the end (in dollars) | 92,154 | $ 622,635 |
Exercisable at the end (in dollars) | 74,765 | |
Aggregate intrinsic values of share options exercised | $ 17,038 |
SHARE-BASED COMPENSATION_ - Fai
SHARE-BASED COMPENSATION: - Fair value of option grants (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Fair value of option grants was estimated using the Black-Scholes option-pricing model | ||
Risk-free interest rate, minimum | 1.15% | 0.60% |
Risk-free interest rate, maximum | 1.94% | 0.77% |
Expected price volatility, minimum | 34.59% | 37.79% |
Expected price volatility, maximum | 36.55% | 37.89% |
Dividend yield | 0% | 0% |
Minimum | ||
Fair value of option grants was estimated using the Black-Scholes option-pricing model | ||
Expected option term (in years) | 3 years 21 days | 5 years 7 months 9 days |
Fair value of an ordinary share | $ 6.5 | $ 4.44 |
Maximum | ||
Fair value of option grants was estimated using the Black-Scholes option-pricing model | ||
Expected option term (in years) | 6 years 1 month 6 days | 6 years 1 month 9 days |
Fair value of an ordinary share | $ 6.98 | $ 7.41 |
SHARE-BASED COMPENSATION_ - Add
SHARE-BASED COMPENSATION: - Additional information (Details) | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Number of Shares | |
Unvested RSUs outstanding at the beginning | shares | 2,143,186 |
Granted | shares | 20,773,026 |
Vested | shares | (121,513) |
Forfeited | shares | (884,030) |
Unvested RSUs outstanding at the end | shares | 21,910,669 |
Weighted- Average Grant Date Fair Value Price | |
Unvested RSUs outstanding at the beginning (in dollars per share) | $ / shares | $ 10.88 |
Granted (in dollars per share) | $ / shares | 6 |
Vested (in dollars per share) | $ / shares | 3.54 |
Forfeited (in dollars per share) | $ / shares | 6.88 |
Unvested RSUs outstanding at the end (in dollars per share) | $ / shares | $ 6.45 |
TAXES ON INCOME_ (Details)
TAXES ON INCOME: (Details) | 6 Months Ended |
Jun. 30, 2022 | |
TAXES ON INCOME: | |
Statutory tax rate | 23% |
Preferred technological enterprise status, reduced tax rate | 12% |
RELATED PARTIES_ - Additional I
RELATED PARTIES: - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||||||
Feb. 16, 2022 | Jun. 28, 2021 | Jan. 17, 2021 | Dec. 31, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||||||
Exercisable over the period | 4 years 6 months 21 days | ||||||
Exercise price | $ 0.81 | ||||||
Executive officers and directors | |||||||
Related Party Transaction [Line Items] | |||||||
Number of shares granted | 153,846 | 24,908,370 | |||||
Exercise price | $ 6.5 | $ 3.14 | |||||
Executive officers and directors | Minimum | |||||||
Related Party Transaction [Line Items] | |||||||
Exercisable over the period | 3 years | ||||||
Executive officers and directors | Maximum | |||||||
Related Party Transaction [Line Items] | |||||||
Exercisable over the period | 4 years | 3 years | 4 years | ||||
RSUs | Executive officers and directors | |||||||
Related Party Transaction [Line Items] | |||||||
Number of shares granted | 307,692 | 50,000 | 77,900 | ||||
Outbrain | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue from operations activities | $ 1,535 | ||||||
Trade receivables | 1,023 | ||||||
Balances from related parties | $ 0 | ||||||
Type A | |||||||
Related Party Transaction [Line Items] | |||||||
Administrative services period | 4 months | ||||||
Sub-lease income | $ 212 | $ 1,308 | |||||
Type A | Sub-lease agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Lease, term of contract | 12 months |
OTHER CURRENT LIABILITIES_ (Det
OTHER CURRENT LIABILITIES: (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
OTHER CURRENT LIABILITIES: | ||
Accrued compensation | $ 36,399 | $ 42,971 |
Other current liabilities | 26,581 | 10,978 |
Total other current liabilities | $ 62,980 | $ 53,949 |
NET INCOME PER ORDINARY SHARE_2
NET INCOME PER ORDINARY SHARE: - Additional Information (Details) | Jun. 30, 2022 Vote |
Class A Ordinary shares | |
Class of Stock [Line Items] | |
Number of vote per share | 1 |
Class B Ordinary shares | |
Class of Stock [Line Items] | |
Number of vote per share | 5 |
NET INCOME PER ORDINARY SHARE_3
NET INCOME PER ORDINARY SHARE: - Computation of basic and diluted net income per ordinary share (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Numerator: | ||
Net income | $ 26,498 | $ 20,248 |
Amount allocated to participating 2019 shareholders | (5,562) | |
Amount allocated to contingently returnable shares issued in connection with acquisitions | (40) | |
Net income, attributable to ordinary shares | $ 26,458 | $ 14,686 |
Denominator: | ||
Weighted-average number of ordinary shares outstanding | 1,018,784,260 | 652,122,890 |
Basic net income, attributable to ordinary shares | $ 0.03 | $ 0.02 |
Effect of dilutive securities on weighted-average number of ordinary shares: | ||
Options | 54,830,450 | 76,218,322 |
RSUs | 176,345 | 988,517 |
Weighted-average number of ordinary shares outstanding, after giving effect to dilutive securities | 1,073,791,056 | 729,329,729 |
Diluted net income, attributable to ordinary shares | $ 0.02 | $ 0.02 |
NET INCOME PER ORDINARY SHARE_4
NET INCOME PER ORDINARY SHARE: - Weighted average amounts of securities were excluded from the computation of diluted net income per ordinary share (Details) - shares | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted-average amounts of securities excluded from the computation of diluted net income per ordinary share | 15,982,328 | 25,000 |
Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted-average amounts of securities excluded from the computation of diluted net income per ordinary share | 21,033,355 | 65,432 |
Contingently returnable shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted-average amounts of securities excluded from the computation of diluted net income per ordinary share | 1,540,350 | |
2019 Ordinary Shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted-average amounts of securities excluded from the computation of diluted net income per ordinary share | 246,871,957 |