UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||
OR | ||||||
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||
For the fiscal year ended | ||||||
December 31, 2022 | ||||||
OR | ||||||
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||
OR | ||||||
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 001-40504
TREMOR INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
Not applicable
(Translation of Registrant’s name into English)
Israel
(Jurisdiction of incorporation or organization)
82 Yigal Alon Street
Tel Aviv, 6789124, Israel
+972-3-545-3900
(Address of principal executive offices)
Sagi Niri
Chief Financial Officer
sniri@tremorinternational.com
82 Yigal Alon Street
Tel Aviv, 6789124, Israel
+972-3-545-3900
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
American Depositary Shares | TRMR | The Nasdaq Stock Market LLC (Global Market) |
Ordinary shares, par value NIS 0.01 per share* |
* Not for trading, but only in connection with the listing of the American Depositary Shares, each American Depositary Share representing 2 ordinary shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report: 144,477,962 ordinary shares, par value NIS 0.01 per share (excluding Treasury Shares) and including 29,442,508 ordinary shares in the form of American Depositary Shares) (as of December 31, 2022)
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Emerging growth company ☒ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fi rm that prepared or issued its audit report. ☐
U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other ☐ |
3 | |
3 | |
4 | |
4 | |
4 | |
6 | |
6 | |
6 | |
6 | |
3.A. [RESERVED] | 6 |
3.B. CAPITALIZATION AND INDEBTEDNESS | 6 |
3.C. REASONS FOR THE OFFER AND USE OF PROCEEDS | 6 |
3.D. RISK FACTORS | 6 |
30 | |
4.A. HISTORY AND DEVELOPMENT OF THE COMPANY | 30 |
4.B. BUSINESS OVERVIEW | 31 |
4.C. ORGANIZATIONAL STRUCTURE | 41 |
4.D. PROPERTY, PLANTS AND EQUIPMENT | 42 |
4.E. UNRESOLVED STAFF COMMENTS | 42 |
42 | |
5.A. OPERATING RESULTS | 42 |
5.B LIQUIDITY AND CAPITAL RESOURCES | 52 |
5.C RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES | 54 |
5.D TREND INFORMATION | 55 |
5.E CRITICAL ACCOUNTING ESTIMATES | 55 |
55 | |
6.A. DIRECTORS AND SENIOR MANAGEMENT | 55 |
6.B. COMPENSATION | 57 |
6.C. BOARD PRACTICES | 59 |
6.D. EMPLOYEES | 67 |
6.E. SHARE OWNERSHIP | 67 |
67 | |
7.A. MAJOR SHAREHOLDERS | 67 |
7.B. RELATED PARTY TRANSACTIONS | 69 |
7.C. INTERESTS OF EXPERTS AND COUNSEL | 69 |
70 | |
8.A. COMBINED STATEMENTS AND OTHER FINANCIAL INFORMATION | 70 |
8.B. SIGNIFICANT CHANGES | 70 |
70 | |
9.A. OFFER AND LISTING DETAILS | 70 |
9.B. PLAN OF DISTRIBUTION | 71 |
9.C. MARKETS | 71 |
9.D. SELLING SHAREHOLDERS | 71 |
9.E. DILUTION | 71 |
71 | |
10.A. SHARE CAPITAL | 71 |
10.B. MEMORANDUM AND ARTICLES OF ASSOCIATION | 71 |
10.C. MATERIAL CONTRACTS | 71 |
10.D. EXCHANGE CONTROLS | 71 |
10.E. TAXATION | 72 |
10.F. DIVIDENDS AND PAYING AGENTS | 78 |
10.G. STATEMENT BY EXPERTS | 78 |
10.H. DOCUMENTS ON DISPLAY | 78 |
10.I. SUBSIDIARY INFORMATION | 78 |
78 | |
78 | |
12.A. DEBT SECURITIES | 78 |
12.B. WARRANTS AND RIGHTS | 79 |
12.C. OTHER SECURITIES | 79 |
12.D. AMERICAN DEPOSITARY SHARES | 79 |
81 | |
81 | |
81 | |
81 | |
81 | |
16.A. AUDIT COMMITTEE AND FINANCIAL EXPERT | 81 |
16.B. CODE OF ETHICS | 81 |
16.C. PRINCIPAL ACCOUNTANT FEES AND SERVICES | 82 |
16.D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES. | 82 |
16.E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS. | 82 |
16.F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT | 83 |
16.G. CORPORATE GOVERNANCE | 83 |
16.H. MINE SAFETY DISCLOSURE | 83 |
16.I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 83 |
83 | |
83 | |
83 | |
84 | |
SIGNATURES | 85 |
• | CTV revenue is revenue derived from CTV devices. |
• | Video revenue is revenue derived from video format ads on all devices. |
• | Contribution ex-TAC is defined as our gross profit plus depreciation and amortization attributable to cost of revenues and cost of revenues (exclusive of depreciation and amortization) minus the Performance media cost (“traffic acquisition costs” or “TAC”). |
• | Adjusted EBITDA is defined as total comprehensive income for the period adjusted for foreign currency translation differences for foreign operations, financing expenses, net, tax benefit, depreciation and amortization, stock-based compensation, restructuring, acquisition and IPO-related costs and other income, net. |
• | Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of revenue. |
• | An active customer is defined as an advertiser, buyer, agency, trading desk or third-party demand side platform (“DSP”) that has used our platform within a trailing 365-day period. |
• | An active publisher is defined as a publisher or third-party supply side platform (“SSP”) that has used our platform within a trailing 365-day period. |
• | A unique user is defined as an unduplicated visitor to a publisher’s site connected to our platform from both direct and third-party sites in a one-month period and “unique users” is the total number of unduplicated visitors to a publisher’s site connected to our platform from both direct and third-party sites in a one-month period. When a user visits a publisher’s site that is connected to our platform, we receive the request along with a field that holds a unique ID number that identifies the source from which the request came, and as such “unique users” is a summation of unique ID numbers to produce a total of unduplicated visitors to publishers’ sites connected to our platform. |
• | Contribution ex-TAC retention rate is defined as Contribution ex-TAC generated in a fiscal year from the customers who were existing customers as of the last day of the previous fiscal year as a percentage of the Contribution ex-TAC generated in the previous fiscal year from the same group of customers. We consider all of our revenue to be recurring. |
• | Net cash is defined as cash and cash equivalents minus long term debt and server leases. |
• | our success and revenue growth are dependent on adding new advertisers and publishers, effectively educating and training our existing advertisers and publishers on how to make full use of our platform and increasing usage of our platform by advertisers and publishers; |
• | our business depends on our ability to maintain and expand access to advertising spend, including spend from a limited number of DSPs, agencies and advertisers; |
• | our business depends on our ability to maintain and expand access to valuable inventory from publishers, including our largest publishers; |
• | we may not attract and retain advertisers and publishers if we may fail to make the right investment decisions in our platform, or innovate and develop new solutions that are adopted by advertisers and publishers; |
• | significant parts of our business depend on relationships with data providers for data sets used to deliver targeted campaigns; |
• | our business depends on our ability to collect, use and disclose certain data, including CTV data, to deliver advertisements. Any limitation imposed on our collection, use or disclosure of this data could significantly diminish the value of our platform; |
• | if the use of third-party “cookies,” mobile device IDs, CTV data collection or other tracking technologies is restricted without similar or better alternatives (and adoption of such alternatives), our platform’s effectiveness could be diminished; |
• | our failure to meet content and inventory standards and provide services that our advertisers and publishers trust could harm our brand and reputation; |
• | we must grow rapidly to remain a market leader and to accomplish our strategic objective; |
• | the market for programmatic buying for advertising campaigns is relatively new and evolving; |
• | if we fail to detect or prevent fraud on our platform, or malware intrusion into the systems or devices of our publishers and their consumers, publishers could lose confidence in our platform and we could face legal claims; |
• | the rejection of digital advertising by consumers through opt-in, opt-out or ad-blocking technologies or other means; |
• | our ability to scale our platform infrastructure to support anticipated growth and transaction volume; |
• | disruptions to service from our third-party data center hosting facilities and cloud computing and hosting providers could impair the delivery of our services; |
• | potential liability and harm to our business based on the human factor of inputting information into our platform; |
• | any failure to protect our intellectual property rights; |
• | if non-proprietary technology, software, products and services that we use are unavailable, have future terms we cannot agree to or do not perform as we expect; |
• | the overall demand for advertising; |
• | the macroeconomic headwinds including rising inflation, rising interest rates and global supply chain constraints and the residual impacts of the COVID-19 pandemic; |
• | any decrease in the use of the advertising or publishing channels that we primarily depend on, or failure to expand into emerging channels; |
• | if CTV develops in ways that prevent advertisements from being delivered to consumers; |
• | the competitive nature of the market in which we participate; |
• | seasonal fluctuations in advertising activity; |
• | the effective growth and training of our sales and support teams; |
• | we are a party to a credit agreement which contains a number of covenants that may restrict our current and future operations and could adversely affect our ability to execute business needs; |
• | other risks relating to our employees or our location in Israel; |
• | other risks relating to legal or regulatory issues; and other risks associated with our financial profile and our American Depositary Shares (“ADSs”). |
• | adverse economic conditions, rising inflation and interest rates and general uncertainty about an economic downturn, particularly in North America where we do most of our business including recession and depression concerns; |
• | instability in political or market conditions generally; |
• | changes in the pricing policies of publishers and competitors; |
• | any changes in tax treatment of advertising expenses and the deductibility thereof; |
• | the seasonal nature of advertising spend on digital advertising campaigns; and changes and uncertainty in the regulatory and business environment (for example, when Apple or Google change policies for their browsers and operating systems). |
• | the need to localize our solutions, including product customizations and adaptation for local practices and regulatory requirements; |
• | lack of familiarity and burdens of ongoing compliance with local laws, legal standards, regulatory requirements, tariffs, customs formalities and other barriers, including restrictions on advertising practices, regulations governing online services, restrictions on importation or shipping of specified or proscribed items, importation quotas, shopper protection laws, enforcement of intellectual property rights, laws dealing with shopper and data protection, privacy, encryption, denied parties and sanctions, and restrictions on pricing or discounts; |
• | heightened exposure to fraud; |
• | legal uncertainty in foreign countries with less developed legal systems; |
• | unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or customs formalities, embargoes, exchange controls, government controls or other trade restrictions; |
• | differing technology standards; |
• | difficulties in managing and staffing international operations and differing employer/employee relationships; |
• | fluctuations in exchange rates that may increase our foreign exchange exposure; |
• | potentially adverse tax consequences, including the complexities of foreign tax laws (including with respect to value added taxes) and restrictions on the repatriation of earnings; |
• | increased likelihood of potential or actual violations of domestic and international anti-money laundering laws and anticorruption laws, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) and the U.K. Bribery Act 2010 (the “U.K. Bribery Act”), which correlates with the scope of our sales and operations in foreign jurisdictions and operations in certain industries, such that an increase in such operations would increase risk of non-compliance with the aforementioned laws; |
• | uncertain political and economic climates in foreign markets; |
• | managing and staffing operations over a broader geographic area with varying cultural norms and customs; |
• | varying levels of Internet and mobile technology adoption and infrastructure; |
• | reduced or varied protection for intellectual property rights in some countries; and |
• | new and different sources of competition. |
• | Israeli corporate law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased; |
• | Israeli corporate law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions; |
• | Israeli corporate law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders; |
• | our amended and restated articles of association do not permit a director to be removed except by a vote of the holders of at least 65% of our outstanding shares entitled to vote at a general meeting of shareholders; and |
• | our amended and restated articles of association provide that director vacancies may be filled by our board of directors. |
• | recruiting, integrating and retaining qualified and motivated employees, particularly engineers |
• | developing, maintaining and expanding relationships with publishers, agencies and advertisers; |
• | innovating and developing new solutions that are adopted by and meet the needs of publishers, agencies and advertisers; |
• | competing against companies with a larger customer base or greater financial or technical resources; |
• | global economic disruption and technological changes driven by the COVID-19 pandemic; |
• | further expanding our global footprint; |
• | managing expenses as we invest in our infrastructure and platform technology to scale our business and operate as a U.S. listed public company; and |
• | responding to evolving industry standards and government regulations that impact our business, particularly in the areas of data protection and consumer privacy. |
• | difficulties in integrating the operations, technologies, product or service offerings, administrative systems and personnel of acquired businesses, especially if those businesses operate outside of our core competency or geographies in which we currently operate; |
• | ineffectiveness or incompatibility of acquired technologies or solutions; |
• | potential loss of key employees of the acquired business; |
• | inability to maintain key business relationships and reputation of the acquired business; |
• | diversion of management attention from other business concerns; |
• | litigation arising from the acquisition or the activities of the acquired business, including claims from excluded assets, terminated employees, customers, former shareholders or other third parties; |
• | assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights, or increase our risk of liability; |
• | complications in the integration of acquired businesses or diminished prospects, including as a result of the COVID-19 pandemic and its global economic effects; |
• | failure to generate the expected financial results and synergies related to an acquisition on a timely manner or at all; |
• | failure to accurately forecast the impact of an acquisition transaction; and |
• | implementation or remediation of effective controls, procedures and policies for acquired businesses. |
• | actual or anticipated fluctuations in our results of operations; |
• | variance in our financial performance from the expectations of market analysts; |
• | announcements by us or our direct or indirect competition of significant business developments, changes in service provider relationships, acquisitions or expansion plans; |
• | the impact of the COVID-19 pandemic on our management, employees, partners, merchants and operating results; |
• | changes or proposed changes in laws or regulations or differing interpretations or enforcement of laws or regulations affecting our business; |
• | changes in our pricing model; |
• | our involvement in litigation or regulatory actions; |
• | our sale of ADSs or other securities in the future; |
• | our buyback program for our ordinary shares or the implementation of a buyback program for our ADSs; |
• | market conditions in our industry; |
• | changes in key personnel; |
• | the dual listing and the trading of our ordinary shares on AIM (as defined herein); |
• | the trading volume of our ADSs; |
• | publication of research reports or news stories about us, our competition or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; |
• | changes in the estimation of the future size and growth rate of our markets; and |
• | general economic, geopolitical and market conditions. |
• | the composition of our board of directors which has the authority to direct our business and to appoint and remove our officers; |
• | approving or rejecting a merger, consolidation or other business combination; |
• | raising future capital; and |
• | amending our articles of association which govern the rights attached to our ordinary shares. |
• | Demand Side Platform – We offer self-service DSP solutions for advertisers and their agencies to efficiently and intuitively manage omni-channel campaigns. We also offer full-service options to agencies in addition to our self-service DSP solutions. Our DSP solutions provide access to wide-reaching and high-quality inventory, audience targeting, and advanced reporting to optimize advertising campaigns, improve ROI, and gain deep insights and analytics into brand engagement. |
• | Data Management Platform – We offer a fully integrated DMP solution that sits at the center of our platform that unlocks the power of data flowing through our DSP and SSP solutions. Our DMP enables advertisers and publishers to use data from various sources in order to optimize results of their advertising campaigns. Our DMP provides insights and recommendations pertaining to geographic, behavioral, and demographic data, among others in a unified solution. We believe an integrated DMP is a key component to the marketplace because it enables advertisers and publishers to use and activate data to target audiences with more accuracy across several different channels. |
• | Supply Side Platform – We offer a self-service SSP solution for digital publishers to sell their online ad placements via a real-time bidding auction across all screens including mobile, CTVs, streaming devices and desktops. Our SSP provides access to significant amounts of data, unique demand and a comprehensive product suite to drive more effective inventory management and revenue optimization. |
• | Analytics/Artificial Intelligence – We collect, synthesize and analyze the data sets across our platform through extensive artificial intelligence technologies and advanced machine learning capabilities. These recommendations ultimately provide key insights into valuable ad impressions and forecasts for auction behavior. We believe these technologies drive optimal results for our advertisers and publishers. |
• | Advanced TV (ATV) Platform – We offer broadcasters and demand side partners an advanced planning product for their premium linear TV and digital video investments that allows broadcasters to improve yields on their inventory while helping to maximize return-on-ad-spends for advertisers. We recently launched a cross platform offering which allows broadcasters to package both linear and digital supplies together for their upfront deals. We are also working to expand this offering for demand side agency partners who we believe would benefit from such a solution to reduce waste and offer maximum flexibility to their clients when budgets are shifted across linear and digital premium video during the broadcast year. The integration of ATV into Tremor’s technology stack creates a significant growth opportunity for us in the premium activity of the market where we can create precise cross platform planning and activate the digital portion of the cross-planning via Tremor International’s digital activation ecosystem. |
• | Brand intelligence – An audience insight and activation platform unifying insights from cross channel data sources with the additional ability to leverage first party data. This platform helps our customers gain a comprehensive view of their audiences to better plan, optimize and activate their advertising campaigns. |
• | Comprehensive, insightful and modern self-service interface that intuitively supports the needs of advertisers and enables them to operate and implement strategies effectively and independently. |
• | Superior artificial intelligence-based real-time bidding models, to drive efficient buying and meet our customers’ key performance indicators. |
• | Enables seamless access to and integration of an advertisers’ own first-party data, our proprietary data and a wide list of premium third-party data segments. |
• | Meaningful forecasting and reporting tools, as our DSPs can accurately measure how many households and unique users an advertising campaign is able to reach through any targeting initiatives to ensure campaign strategies are achievable. |
• | Robust omni-channel reporting and insights tools which enables advertisers to analyze across device and channel campaign effectiveness against various key performance indicators with the ability to compare their statistics through various comprehensive benchmarks. |
• | Access to our creative studio (Tr.ly) with deep expertise to support a variety of creative needs and generate ideas to enrich messaging and consumer engagements. |
• | Data and brand surveys that provide meaningful information for advertisers to evaluate brand lift and behavioral and emotional engagement. |
• | Our proprietary brand safety technology uses a combination of machine-learning and propriety algorithms as well as data ingestion from industry-leading verification providers to develop and maintain dynamic block lists and a scoring mechanism to grade our traffic before, during and after ad requests are made. |
• | Comprehensive and highly intuitive self-service platform which enables publishers to easily integrate into our ecosystem, manage their digital inventory, access reporting and insights, and transact with their programmatic buyers through private marketplace deals. Once integrated with our SSP solution, publishers also benefit from our unique and differentiated demand available through our proprietary DSP solution and additionally through demand facilitation initiatives driven by our global salesforce. |
• | Connection to the world’s largest DSPs and compatibility with most AdAge top 100 brands. Our SSP solution delivers over 6 billion advertisements to viewers every month and optimizes content for different formats, builds effective custom audiences and delivers impressive ROI at scale. |
• | Omni-channel marketplace with access to approximately 1,530 active publishers across the globe and exclusive access to VIDAA digital advertising inventory. |
• | Industry-leading forecasting analytics and data-driven yield optimization tools to maximize inventory monetization and delivers impressive ROI at scale. |
• | Enables publishers to customize their experience through the ability to opt out of certain ad verticals or specific advertisers in order to customize demand for their media and manage channel conflicts. |
• | Support for all major integration types, including open real-time bidding, header-bidding solutions, as well as our proprietary client-side solutions, including our video player, giving publishers the flexibility of choosing the methods through which they want to offer their ad inventory to advertisers. |
• | Recent acquisition of SpearAd, a platform purpose-built for broadcasters and TV content companies to deliver seamless TV-like experiences in CTV, linear addressable TV and over the top (OTT) environments. The platform includes a robust user interface with advanced data driven tools for TV ad pod management and monetization on both pre-recorded and live TV content as well as a unified auction tool, enabling broadcasters and publishers to seamlessly mediate their demand partnerships. |
• | Audience segments that are generated directly within our platform, leveraging a collection of first- and third-party data sets, including strategic data partnerships. Our platform also enables advertisers and publishers to connect and leverage their own first party data for activation across our ecosystem. Based on our platform’s statistical models, we are able to uncover deep insights from behavioral data, feeding into a machine learning platform that allows us to achieve our advertisers’ and publishers’ performance metrics. |
• | Ability for advertisers and publishers to layer custom data segments against their campaigns and private marketplace deals. |
• | Includes unique data driven insights available through our self-service user interfaces or custom built and curated by our team, along with the ability for advertisers and publishers to forecast scale, reach and media cost against the audiences they are looking to target. |
• | Provides for audience driven creative optimization, combining the power of the DMP with our proprietary creative platform (Tr.ly). |
• | Specific focus and expertise around the collection and packaging of TV viewership data for activation and insights, providing advertisers strong content retargeting, insight and attribution capabilities on digital formats. |
• | Our EQ product, fully integrated into our DMP, is a proprietary emotional analytics tool that provides advertisers with the data they need to maximize the emotional, social and business impact of their advertising. |
• | Our EQ product compiles surveys along with facial recognition of users to see how those individuals respond to questions or advertising, which further engages targeting for our advertisers’ campaigns. |
• | Linear TV Planning: Data driven linear TV has been growing in significance. Our Linear TV Planning feature allows sellers at national broadcasters to generate linear TV plans during and after upfronts. Budgets ranging from hundreds of thousands to hundreds of millions of dollars can be allocated at the program airing with a high level of granularity around key data points such as schedules, days of weeks and time of the day. While data driven linear TV is expected to grow slowly due to digital content taking precedence, it is expected to remain a significant portion of the ad spend for many years to come. |
• | Cross-Platform Planning: Due to fragmentation in the industry, advertisers often experience significant budget waste when trying to mirror similar audiences across linear and digital video channels. Our Cross-platform planner allows sellers and buyers to use a deduplicated audience universe across linear and digital channels to produce a precise plan for upfront investment and post upfront adjustments. We recently launched this product with our strategic national broadcaster clients. The Cross-Platform Planning platform was built using advanced data science and AI/ML methodologies. We believe cross-platform planning is a highly differentiated and unique offering in the market. |
• | A platform that unifies disparate data across digital, linear and social environments to uncover insights and turn them into robust and seamless targeting capabilities. |
• | Superior artificial intelligence and natural language processing capabilities, to drive accurate and unique insights and changes in behaviors and trends. |
• | Provides clients with a comprehensive set of capabilities to discover, understand, and keep pace with their customers across channels, so they can leverage real time insights to inform and enrich tactical activation based on consumer behaviors, sentiment, trends and interests. |
• | Leveraging a multitude of rich, cross-channel data sources, including linear TV, CTV, digital and social, combined with a proprietary panel, for clients to extend their reach with greater relevance across targeting strategies and tactics. |
• | proven technology, software-as-a-service offering and optimization capabilities; |
• | omni-channel execution; |
• | quality and scale of digital inventory and demand; |
• | depth and breadth of relationships with brand advertisers, premium publishers and agencies; |
• | full suite of viewability, measurement, verification and brand safety offerings; |
• | flexible pricing; and |
• | transparency in the ecosystem. |
Name of company | Country of Incorporation | Ownership Percentage | ||
Taptica Inc. | USA | 100% | ||
Tremor Video Inc. | USA | 100% | ||
Adinnovation Inc. | Japan | 100% | ||
Taptica UK | UK | 100% | ||
Unruly Group US Holding Inc.* | USA | 100% | ||
YuMe Inc.* | USA | 100% | ||
Perk.com Canada Inc | Canada | 100% | ||
R1Demand LLC* | USA | 100% | ||
Unruly Group LLC | USA | 100% | ||
Unruly Holdings Ltd.* | UK | 100% | ||
Unruly Group Ltd. | UK | 100% | ||
Unruly Media GmbH | Germany | 100% | ||
Unruly Media Pte Ltd.* | Singapore | 100% | ||
Unruly Media Pty Ltd. | Australia | 100% | ||
Unruly Media KK | Japan | 100% | ||
Unruly Media Inc | USA | 100% | ||
SpearAd GmbH | Germany | 100% | ||
Unmedia Video Distribution Sdn Bhd | Malaysia | 100% | ||
Amobee Inc* | USA | 100% | ||
Amobee EMEA Limited | UK | 100% | ||
Amobee International Inc | USA | 100% | ||
Amobee Ltd | IL | 100% | ||
Amobee Asia Pte Ltd* | Singapore | 100% | ||
Amobee ANZ Pty Ltd | Australia | 100% |
• | Demand Side Platform – We offer self-service DSP solutions for advertisers and their agencies to efficiently and intuitively manage omni-channel campaigns. We also offer full-service options to agencies in addition to our self-service DSP solutions. Our DSP solutions provide access to wide reaching and high-quality inventory, audience targeting, and advanced reporting to optimize advertising campaigns, improve ROI, and gain deep insights and analytics into brand engagement. |
• | Data Management Platform – We offer a fully integrated DMP solution that sits at the center of our platform that unlocks the power of data flowing through our DSP and SSP solutions and includes Linear TV and Cross-Planning tools. Our DMP enables advertisers and publishers to use data from various sources in order to optimize results of their advertising campaigns. Our DMP provides insights and recommendations pertaining to geographic, behavioral and demographic data, among others in a unified solution. We believe an integrated DMP is a key component to the marketplace because it enables advertisers and publishers to use and activate data to target audiences with more accuracy across a number of different channels. |
• | Supply Side Platform – We offer a self-service SSP solution for digital publishers to sell their online ad placements via a real-time bidding auction across all screens including mobile, CTVs, streaming devices and desktops. Our SSP provides access to significant amounts of data, unique demand and a comprehensive product suite to drive more effective inventory management and revenue optimization. |
• | Brand Intelligence – We collect, synthesize and analyze the data sets across our platform through extensive artificial intelligence technologies and advanced machine learning capabilities. These recommendations ultimately provide key insights into valuable ad impressions and forecasts for auction behavior. We believe these technologies drive optimal results for our advertisers and publishers. |
Year Ended December 31, 2022 | Year Ended December 31, 2021 | |||||||||||||||
(In thousands) | As a % of revenue | (In thousands) | As a % of revenue | |||||||||||||
Revenues | $ | 335,250 | 100.0 | % | $ | 341,945 | 100.0 | % | ||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 60,745 | 18.1 | 71,651 | 21.0 | ||||||||||||
Research and development | 33,659 | 10.0 | 18,422 | 5.4 | ||||||||||||
Selling and marketing | 89,953 | 26.8 | 74,611 | 21.8 | ||||||||||||
General and administrative | 68,005 | 20.3 | 63,499 | 18.6 | ||||||||||||
Depreciation and amortization | 42,700 | 12.7 | 40,259 | 11.7 | ||||||||||||
Other income, net | (4,564 | ) | (1.4 | ) | (959 | ) | (0.3 | ) | ||||||||
Profit (loss) from operations | 44,752 | 13.3 | 74,462 | 21.8 | ||||||||||||
Financing income | (2,284 | ) | (0.7 | ) | (483 | ) | (0.1 | ) | ||||||||
Financing expenses | 4,611 | 1.4 | 2,670 | 0.8 | ||||||||||||
Financing expenses, net | 2,327 | 0.7 | 2,187 | 0.7 | ||||||||||||
Profit before taxes on income | 42,425 | 12.7 | 72,275 | 21.1 | ||||||||||||
Tax benefit (expenses) | (19,688 | ) | (5.9 | ) | 948 | 0.3 | ||||||||||
Profit for the year | 22,737 | 6.8 | 73,223 | 21.4 | ||||||||||||
Foreign currency translation differences for foreign operation | (6,499 | ) | (1.9 | ) | (2,632 | ) | (0.8 | ) | ||||||||
Total comprehensive income for the year | $ | 16,238 | 4.8 | % | $ | 70,591 | 20.6 | % |
Year Ended December 31, | Change | |||||||||||||||
2022 (In thousands) | 2021 (In thousands) | |||||||||||||||
$ | % | |||||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Revenue | $ | 335,250 | $ | 341,945 | $ | (6,695 | ) | (2.0 | )% |
Year ended December 31, | Change | |||||||||||||||
2022 (In thousands) | 2021 (In thousands) | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Cost of revenues (Exclusive of Depreciation and Amortization) | $ | 60,745 | $ | 71,651 | $ | (10,906 | ) | (15.2 | )% |
Year ended December 31, | Change | |||||||||||||||
2022 (In thousands) | 2021 (In thousands) | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Research and development | $ | 33,659 | $ | 18,422 | $ | 15,237 | 82.7 | % |
Year ended December 31, | Change | |||||||||||||||
2022 (In thousands) | 2021 (In thousands) | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Selling and marketing | $ | 89,953 | $ | 74,611 | $ | 15,342 | 20.6 | % |
Year ended December 31, | Change | |||||||||||||||
2022 (In thousands) | 2021 (In thousands) | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
General and administrative | $ | 68,005 | $ | 63,499 | �� | $ | 4,506 | 7.1 | % |
Year ended December 31, | Change | |||||||||||||||
2022 (In thousands) | 2021 (In thousands) | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Depreciation and amortization | $ | 42,700 | $ | 40,259 | $ | 2,441 | 6.1 | % |
Year ended December 31, | Change | |||||||||||||||
2022 (In thousands) | 2021 (In thousands) | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Other income, net | $ | 4,564 | $ | 959 | $ | 3,605 | 375.9 | % |
Year ended December 31, | Change | |||||||||||||||
(in thousands, except for percentages) | 2022 (In thousands) | 2021 (In thousands) | $ | % | ||||||||||||
Financial income | $ | (2,284 | ) | $ | (483 | ) | $ | (1,801 | ) | 372.9 | % | |||||
Financial expenses | $ | 4,611 | $ | 2,670 | $ | 1,941 | 72.7 | % | ||||||||
Financial expenses, net | $ | 2,327 | $ | 2,187 | $ | 140 | 6.4 | % |
Year ended December 31, | Change | |||||||||||||||
(in thousands, except for percentages) | 2022 (In thousands) | 2021 (In thousands) | $ | % | ||||||||||||
Tax benefit (expenses) | $ | (19,688 | ) | $ | 948 | $ | (20,636 | ) | (2176.8 | )% |
Year ended December 31, | Change | |||||||||||||||
(in thousands, except for percentages) | 2022 (In thousands) | 2021 (In thousands) | $ | % | ||||||||||||
Profit for the year | $ | 22,737 | $ | 73,223 | $ | (50,486 | ) | (69.0 | )% |
Year ended December 31, | Change | |||||||||||||||
(in thousands, except for percentages) | 2022 (In thousands) | 2021 (In thousands) | $ | % | ||||||||||||
Total comprehensive income for the year | $ | 16,238 | $ | 70,591 | $ | (54,353 | ) | (77.0 | )% | |||||||
Net profit margin | 4.8 | % | 20.6 | % |
2022 Revenue | 2021 Revenue | |||||||||||||||||||||||
Yearly revenue matrix | Programmatic | Performance | Group | Programmatic | Performance | Group | ||||||||||||||||||
(unaudited, in thousands) | ||||||||||||||||||||||||
Video | $ | 243,306 | — | $ | 243,306 | $ | 242,724 | — | $ | 242,724 | ||||||||||||||
CTV(1) | 40 | % | — | 40 | % | 33 | % | — | 33 | % | ||||||||||||||
Mobile(1) | 47 | % | — | 47 | % | 47 | % | — | 47 | % | ||||||||||||||
Desktop(1) | 12 | % | — | 12 | % | 20 | % | — | 20 | % | ||||||||||||||
Other(1) | 1 | % | — | 1 | % | — | — | — | ||||||||||||||||
Display | $ | 24,810 | $ | 60,895 | $ | 85,705 | $ | 23,891 | $ | 75,330 | $ | 99,221 | ||||||||||||
Other (2) | $ | 6,239 | — | $ | 6,239 | — | — | — | ||||||||||||||||
Total Group | $ | 274,355 | $ | 60,895 | $ | 335,250 | $ | 266,616 | $ | 75,329 | $ | 341,945 |
Selected Device – CTV | ||||||||||||
Year Ended December 31, 2022 | Year Ended December 31, 2021 | % Change | ||||||||||
Revenue (in thousands) | $ | 97,164 | $ | 80,299 | 21 | % | ||||||
% of Programmatic revenue | 35 | % | �� | 30 | % | — |
Selected Media Type – Video | ||||||||||||
Year ended December 31, 2022 | Year Ended December 31, 2021 | % Change | ||||||||||
Revenue (in thousands) | $ | 243,306 | $ | 242,724 | 0.2 | % | ||||||
% of Programmatic revenue | 89 | % | 91 | % | — |
Other Key Financial Metrics | ||||||||||||
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
IFRS measures | ||||||||||||
Revenue (in thousands) | $ | 335,250 | $ | 341,945 | $ | 211,920 | ||||||
Gross profit (in thousands) | $ | 249,138 | $ | 253,689 | $ | 132,517 | ||||||
Total comprehensive income | $ | 16,238 | $ | 70,591 | $ | 4,975 | ||||||
Net profit margin | 5 | % | 21 | % | 2 | % | ||||||
Non-IFRS measures | ||||||||||||
As adjusted (non-IFRS) revenue (in thousands) | — | — | — | |||||||||
Contribution ex-TAC (in thousands) | $ | 309,726 | $ | 301,975 | $ | 184,282 | ||||||
Adjusted EBITDA (in thousands) | $ | 144,889 | $ | 161,238 | $ | 60,513 | ||||||
Adjusted EBITDA margin | 43.2 | % | 47 | % | 29 | % |
Year Ended December 31, | ||||||||||||
(in thousands) | 2022 | 2021 | 2020 | |||||||||
Revenues | $ | 335,250 | $ | 341,945 | $ | 211,920 | ||||||
Cost of revenues (exclusive of depreciation and amortization) | (60,745 | ) | (71,651 | ) | (59,807 | ) | ||||||
Depreciation and amortization attributable to Cost of Revenues | (25,367 | ) | (16,605 | ) | (19,596 | ) | ||||||
Gross profit (IFRS) | 249,138 | 253,689 | 132,517 | |||||||||
Depreciation and amortization attributable to Cost of Revenues | 25,367 | 16,605 | 19,596 | |||||||||
Cost of revenues (exclusive of depreciation and amortization) | 60,745 | 71,651 | 59,807 | |||||||||
Performance media cost(a) | (25,524 | ) | (39,970 | ) | (27,638 | ) | ||||||
Contribution ex-TAC (Non-IFRS) | $ | 309,726 | $ | 301,975 | $ | 184,282 |
Year Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Total comprehensive income (loss) for the year | $ | 16,238 | $ | 70,591 | $ | 4,975 | ||||||
Foreign currency translation differences for foreign operation | 6,499 | 2,632 | (2,836 | ) | ||||||||
Taxes on income | 19,688 | (948 | ) | (9,581 | ) | |||||||
Financial expense (income), net | 2,327 | 2,187 | 1,417 | |||||||||
Depreciation and amortization | 42,700 | 40,259 | 45,187 | |||||||||
Stock-based compensation | 50,505 | 42,818 | 14,490 | |||||||||
Other expenses | 540 | — | 1,700 | |||||||||
Restructuring | 307 | 508 | 4,637 | |||||||||
Acquisition-related cost | 6,085 | 253 | 524 | |||||||||
IPO related one-time cost | — | 2,938 | — | |||||||||
Adjusted EBITDA | $ | 144,889 | $ | 161,238 | $ | 60,513 |
Key Operating Metrics | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Active customers | ||||||||||||
Number of active customers(1) | 1,250 | 764 | 889 | |||||||||
Gross profit per active customer (in thousands) | $ | 199 | $ | 332 | $ | 149 | ||||||
Contribution ex-TAC(2) per active customer (in thousands) - Organic | $ | 308 | $ | 395 | $ | 207 | ||||||
Contribution ex-TAC retention rate(3) | 80 | % | 150 | % | 112 | % | ||||||
Active publishers | ||||||||||||
Number of active publishers(4) | 1,526 | 1,578 | 1,444 | |||||||||
Ad impressions | ||||||||||||
Number of ad impressions(5) (in millions) | 123,936 | 94,363 | 53,839 |
(in thousands) | 2022 (as reported) | 2021 (as reported) | 2020 (as reported) | |||||||||
Net cash provided by operating activities | $ | 83,008 | $ | 170,088 | $ | 35,163 | ||||||
Net cash provided by (used in) investing activities | (232,994 | ) | (16,487 | ) | 4,919 | |||||||
Net cash provided by (used in) financing activities | 3,056 | 116,862 | (22,367 | ) |
Name | Age | Position | ||
Executive Officers | ||||
Ofer Druker | 57 | Chief Executive Officer and Director | ||
Sagi Niri | 51 | Chief Financial Officer and Director | ||
Yaniv Carmi | 41 | Chief Operating Officer and Director | ||
Directors | ||||
Christopher Stibbs | 60 | Non-Executive Chairperson | ||
Rebekah Brooks | 52 | Non-Executive Director | ||
Norm Johnston | 56 | Non-Executive Director | ||
Neil Jones | 56 | Senior Non-Executive Director | ||
Joanna Parnell | 44 | Non-Executive Director | ||
Lisa Klinger | 55 | Non-Executive Director |
Information Regarding Covered Officers (1) | ||||||||||||||||||||
Name and Principal Position (2) | Base Salary | Benefits and Perquisites (3) | Variable Compensation (4) | Equity-Based Compensation (5) | Total | |||||||||||||||
Ofer Druker, Chief Executive Officer | $ | 720,000 | $ | 217,827 | $ | 540,000 | $ | 15,187,086 | $ | 16,664,913 | ||||||||||
Yaniv Carmi, Chief Operating Officer | $ | 600,000 | $ | 130,903 | $ | 360,000 | $ | 6,693,867 | $ | 7,784,770 | ||||||||||
Sagi Niri, Chief Financial Officer | $ | 383,855 | $ | 41,236 | $ | 225,000 | $ | 5,649,299 | $ | 6,299,390 | ||||||||||
Tal Mor, Chief Technology Officer | $ | 303,245 | $ | 36,116 | $ | 262,500 | $ | 1,837,099 | $ | 2,438,961 | ||||||||||
Amy Rothstein, Chief Legal Officer | $ | 400,000 | $ | 61,963 | $ | 150,000 | $ | 1,546,177 | $ | 2,158,140 |
• | retaining and terminating our independent auditors, subject to ratification by the board of directors, and in the case of retention, to ratification by the shareholders; |
• | pre-approving audit and non-audit services to be provided by the independent auditors and related fees and terms; |
• | overseeing the accounting and financial reporting processes of our company and audits of our financial statements, the effectiveness of our internal control over financial reporting and making such reports as may be required of an audit committee under the rules and regulations promulgated under the Exchange Act; |
• | reviewing with management and our independent auditor our annual and quarterly financial statements prior to publication or filing (or submission, as the case may be) to the SEC; |
• | recommending to the board of directors the retention and termination of the internal auditor, and the internal auditor’s engagement fees and terms, in accordance with the Companies Law as well as approving the yearly or periodic work plan proposed by the internal auditor; |
• | reviewing with our general counsel and/or external counsel, as deemed necessary, legal and regulatory matters that could have a material impact on the financial statements; |
• | identifying irregularities in our business administration by among other things, consulting with the internal auditor or with the independent auditor, and suggesting corrective measures to the board of directors; |
• | reviewing policies and procedures with respect to transactions between the Company and officers and directors (other than transactions related to the compensation or terms of service of officers and directors), or affiliates of officers or directors, or transactions that are not in the ordinary course of the Company’s business and deciding whether to approve such acts and transactions if so required under the Companies Law; and |
• | establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided to such employees. |
• | making recommendations to the board of directors with respect to the approval of the compensation policy for office holders; |
• | reviewing the implementation of the compensation policy and periodically making recommendations to the board of directors with respect to any amendments or updates of the compensation policy; |
• | resolving whether or not to approve arrangements with respect to the terms of office and employment of office holders; and |
• | exempting, under certain circumstances, transactions with our Chief Executive Officer from the approval of our shareholders. |
• | recommending to our board of directors for its approval a compensation policy in accordance with the requirements of the Companies Law as well as other compensation policies, incentive-based compensation plans and equity-based compensation plans, and overseeing the development and implementation of such policies and recommending to our board of directors any amendments or modifications the committee deems appropriate, including as required under the Companies Law; |
• | reviewing and approving the granting of options and other incentive awards to our Chief Executive Officer and other executive officers, including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, including evaluating their performance in light of such goals and objectives; |
• | approving and exempting certain transactions regarding office holders’ compensation pursuant to the Companies Law; and |
• | administering our equity-based compensation plans, including without limitation, approving the adoption of such plans, amending and interpreting such plans and the awards and agreements issued pursuant thereto, and making awards to eligible persons under the plans and determining the terms of such awards. |
• | the education, skills, experience, expertise and accomplishments of the relevant office holder; |
• | the office holder’s position and responsibilities; |
• | prior compensation agreements with the office holder; |
• | the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the company, including employees employed through contractors who provide services to the company, in particular the ratio between such cost to the average and median salary of such employees of the company, as well as the impact of disparities between them on the work relationships in the company; |
• | if the terms of employment include variable components — the possibility of reducing variable components at the discretion of the board of directors and the possibility of setting a limit on the value of non-cash variable equity-based components; and |
• | if the terms of employment include severance compensation — the term of employment or office of the office holder, the terms of the office holder’s compensation during such period, the company’s performance during such period, the office holder’s individual contribution to the achievement of the company goals and the maximization of its profits and the circumstances under which he or she is leaving the company. |
• | with regards to variable components: |
• | with the exception of office holders who report to the chief executive officer, a means of determining the variable components on the basis of long-term performance and measurable criteria; provided that the company may determine that an immaterial part of the variable components of the compensation package of an office holder shall be awarded based on non-measurable criteria, if such amount is not higher than three months’ salary per annum, taking into account such office holder’s contribution to the company; |
• | the ratio between variable and fixed components, as well as the limit of the values of variable components at the time of their payment, or in the case of equity-based compensation, at the time of grant; |
• | a condition under which the office holder will return to the company, according to conditions to be set forth in the compensation policy, any amounts paid as part of the office holder’s terms of employment, if such amounts were paid based on information later to be discovered to be wrong, and such information was restated in the company’s financial statements; |
• | the minimum holding or vesting period of variable equity-based components to be set in the terms of office or employment, as applicable, while taking into consideration long-term incentives; and |
• | a limit to retirement grants. |
• | overseeing and assisting our board in reviewing and recommending nominees for election as directors; |
• | assessing the performance of the members of our board; and |
• | establishing and maintaining effective corporate governance policies and practices, including, but not limited to, developing and recommending to our board a set of corporate governance guidelines applicable to our business. |
• | at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, are voted in favor of the compensation package, excluding abstentions; or |
• | the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the compensation package does not exceed two percent (2%) of the aggregate voting rights in the Company. |
• | at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, are voted in favor of the compensation package, excluding abstentions; or |
• | the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the compensation package does not exceed two percent (2%) of the aggregate voting rights in the Company. |
• | information on the business advisability of a given action brought for his, her or its approval or performed by virtue of his, her or its position; and |
• | all other important information pertaining to such action. |
• | refrain from any act involving a conflict of interest between the performance of his, her or its duties in the company and his, her or its other duties or personal affairs; |
• | refrain from any activity that is competitive with the business of the company; |
• | refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for himself, herself or itself or others; and |
• | disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his, her or its position as an office holder. |
• | an amendment to the company’s articles of association; |
• | an increase of the company’s authorized share capital; |
• | a merger; or |
• | interested party transactions that require shareholder approval. |
• | a financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria; |
• | reasonable litigation expenses, including legal fees, incurred by the office holder (1) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial liability, such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and (2) in connection with a monetary sanction; |
• | reasonable litigation expenses, including legal fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf or by a third-party or in connection with criminal proceedings in which the office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent; and |
• | expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law, 1968 (the “Israeli Securities Law”). |
• | a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach of the duty of care to the company or to a third-party, including a breach arising out of the negligent conduct of the office holder; |
• | a financial liability imposed on the office holder in favor of a third-party; |
• | a financial liability imposed on the office holder in favor of a third-party harmed by a breach in an administrative proceeding; and |
• | expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative proceeding instituted against him or her, pursuant to certain provisions of the Israeli Securities Law. |
• | a breach of the duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; |
• | an act or omission committed with intent to derive illegal personal benefit; or |
• | a fine, monetary sanction or forfeit levied against the office holder. |
• | each person or entity known by us to own beneficially more than 5% of our outstanding ordinary shares; |
• | each of our directors and executive officers individually; and |
• | all of our executive officers and directors as a group. |
Beneficial Ownership as of February 28, 2023 | ||||||||
Ordinary Shares | Voting Power | |||||||
Name of Beneficial Owner | Number | % | ||||||
Principal Shareholders | ||||||||
Mithaq Capital SPC(1) | 34,591,438 | 24.1 | ||||||
Toscafund Asset Management LLP(2) | 21,691,454 | 15.1 | ||||||
Schroder Investment Management Limited(3) | 14,328,218 | 10.0 | ||||||
News Corporation(4) | 8,525,323 | 5.9 | ||||||
Directors and Executive Officers | ||||||||
Ofer Druker(5) | 3,981,513 | 2.8 | ||||||
Sagi Niri(6) | 1,063,900 | * | ||||||
Yaniv Carmi(7) | 1,823,917 | 1.3 | ||||||
Christopher Stibbs | — | — | ||||||
Rebekah Brooks | — | — | ||||||
Norm Johnston | 8,000 | * | ||||||
Neil Jones | — | — | ||||||
Joanna Parnell | — | — | ||||||
Lisa Klinger | — | — | ||||||
All executive officers and directors as a group (9 persons) | 6,877,330 | 4.8 | % |
Material Contract | Location in This Annual Report | |
Global Share Incentive Plan (2011) | Item 6.B. Directors, Senior Management and Employees⸺ Compensation⸺Equity Incentive Plans. | |
2017 Equity Incentive Plan | Item 6.B. Directors, Senior Management and Employees⸺ Compensation⸺Equity Incentive Plans. | |
Compensation Policy | Item 6.C. Directors, Senior Management and Employees⸺Board Practices – Compensation Policy under the Companies Law. | |
Form of Indemnification Agreement | Item 6.C. Directors, Senior Management and Employees⸺Board Practices⸺Exculpation, Insurance and Indemnification of Office Holders. | |
Credit Agreement | Item 5.B. Liquidity and Capital Resources | |
Amobee Share and Asset Purchase Agreement | On July 25, 2022, the Company and its subsidiaries entered into a Share and Asset Purchase Agreement with Amobee Group Pte. Ltd to acquire Amobee, Inc., Amobee Group Pte. Ltd. and Amobee ANZ Pty Ltd. The acquisition was completed on September 12, 2022. |
• | the expenditures are approved by the relevant Israeli government ministry, determined by the field of research; |
• | the research and development must be for the promotion of the company; and |
• | the research and development are carried out by or on behalf of the company seeking such tax deduction. |
• | Amortization over an eight-year period of the cost of purchased know-how and patents and rights to use a patent and know-how which are used for the development or advancement of the company; |
• | Under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies; and |
• | Expenses related to a public offering are deductible in equal amounts over a three-year period. |
Service | Fees | |
• Issuance of ADSs (e.g., an issuance of ADS upon a deposit of ordinary shares, upon a change in the ADS(s)-to-ordinary share(s) ratio, or for any other reason), excluding ADS issuances as a result of distributions of ordinary shares) | Up to U.S. 5¢ per ADS issued | |
• Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited property, upon a change in the ADS(s)-to-ordinary share(s) ratio, or for any other reason) | Up to U.S. 5¢ per ADS cancelled | |
• Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements) | Up to U.S. 5¢ per ADS held | |
• Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs | Up to U.S. 5¢ per ADS held | |
• Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., upon a spin-off) | Up to U.S. 5¢ per ADS held | |
• ADS Services | Up to U.S. 5¢ per ADS held on the applicable record date(s) established by the depositary bank | |
• Registration of ADS transfers (e.g., upon a registration of the transfer of registered ownership of ADSs, upon a transfer of ADSs into DTC and vice versa, or for any other reason) | Up to U.S. 5¢ per ADS (or fraction thereof) transferred | |
• Conversion of ADSs of one series for ADSs of another series (e.g., upon conversion of Partial Entitlement ADSs for Full Entitlement ADSs, or upon conversion of Restricted ADSs (each as defined in the Deposit Agreement) into freely transferable ADSs, and vice versa). | Up to U.S. 5¢ per ADS (or fraction thereof) converted |
• | taxes (including applicable interest and penalties) and other governmental charges; |
• | the registration fees as may from time to time be in effect for the registration of ordinary shares on the share register and applicable to transfers of ordinary shares to or from the name of the custodian, the depositary bank or any nominees upon the making of deposits and withdrawals, respectively; |
• | certain cable, telex and facsimile transmission and delivery expenses; |
• | the fees, expenses, spreads, taxes and other charges of the depositary bank and/or service providers (which may be a division, branch or affiliate of the depositary bank) in the conversion of foreign currency; |
• | the reasonable and customary out-of-pocket expenses incurred by the depositary bank in connection with compliance with exchange control regulations and other regulatory requirements applicable to ordinary shares, ADSs and American Depositary Receipts (“ADRs”); and |
• | the fees, charges, costs and expenses incurred by the depositary bank, the custodian, or any nominee in connection with the ADR program. |
Year Ending December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Audit fees | 842 | 551 | ||||||
Audit-related fees | 130 | 125 | ||||||
Tax fees | 288 | 213 | ||||||
Total | 1,260 | 889 |
Period | Total Number of Ordinary Shares Purchased (1) | Average Price Paid per Ordinary Share | Total Number of Ordinary Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number (or Approximate Dollar Value) of Ordinary Shares that May Yet be Purchased under the Plans or Programs (2) | ||||||||||||
January 1 – January 31 | — | — | — | — | ||||||||||||
February 1 – February 28 | — | — | — | — | ||||||||||||
March 1 – March 31 | 1,684,510 | $ | 7.55 | 1,684,510 | $ | 75,000,000 | ||||||||||
April 1 – April 30 | 1,575,151 | $ | 6.87 | 1,575,151 | $ | 62,285,772 | ||||||||||
May 1 – May 31 | 1,835,509 | $ | 5.63 | 1,835,509 | $ | 51,468,912 | ||||||||||
June 1 – June 30 | 2,306,300 | $ | 4.91 | 2,306,300 | $ | 41,136,764 | ||||||||||
July 1 – July 31 | 2,200,981 | $ | 4.75 | 2,200,981 | $ | 29,812,463 | ||||||||||
August 1 – August 31 | 4,061,034 | $ | 4.61 | 4,061,034 | $ | 19,368,757 | ||||||||||
September 1 – September 30 | 129,000 | $ | 3.80 | 129,000 | $ | 666,048 | ||||||||||
October 1 – October 31 | 489,203 | $ | 3.69 | 489,203 | $ | 20,000,000 | ||||||||||
November 1 – November 30 | 1,770,572 | $ | 3.54 | 1,770,572 | $ | 18,192,559 | ||||||||||
December 1 – December 31 | 854,535 | $ | 3.70 | 854,535 | $ | 11,927,953 | ||||||||||
Total | 16,906,795 | $ | 5.09 | * | 16,906,795 |
Exhibit No. | Description |
1.1 |
2.1 |
2.2 |
2.3 |
4.1 |
4.2 |
4.3 |
4.4 |
8.1 |
12.1 |
12.2 |
13.1 |
13.2 |
15.1 |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | XBRL Taxonomy Definition Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
104 | Cover Page Interactive Data File (the cover page iXBRL tags are embedded within the Inline XBRL document). |
TREMOR INTERNATIONAL LTD. By: /s/ Ofer Druker Ofer Druker Chief Executive Officer By: /s/ Sagi Niri Sagi Niri Chief Financial Officer |
Page | |
F - 2 | |
CONSOLIDATED FINANCIAL STATEMENTS: | |
F - 3 | |
F - 4 | |
F - 5 - F - 6 | |
F - 7 | |
F - 8 - F - 59 |
To the Shareholders and Board of Directors
Tremor International Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Tremor International Ltd. and its subsidiaries (the Group) as of December 31, 2022 and 2021, the related consolidated statements of operation and other comprehensive income, change in equity, and cash flows for each of the years in the three‑year period ended December 31, 2022 and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2022, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Somekh Chaikin
Somekh Chaikin
December 31 | |||||||||||
2022 | 2021 | ||||||||||
Note | USD thousands | ||||||||||
Assets | |||||||||||
ASSETS: | |||||||||||
Cash and cash equivalents | 10 | 217,500 | 367,717 | ||||||||
Trade receivables, net | 8 | 219,837 | 165,063 | ||||||||
Other receivables | 8 | 23,415 | 18,236 | ||||||||
Current tax assets | 750 | 981 | |||||||||
TOTAL CURRENT ASSETS | 461,502 | 551,997 | |||||||||
Fixed assets, net | 5 | 29,874 | 3,464 | ||||||||
Right-of-use assets | 6 | 23,122 | 13,955 | ||||||||
Intangible assets, net | 7 | 398,096 | 208,220 | ||||||||
Deferred tax assets | 4 | 18,161 | 24,431 | ||||||||
Investment in shares | 18 | 25,000 | - | ||||||||
Other long-term assets | 406 | 672 | |||||||||
TOTAL NON-CURRENT ASSETS | 494,659 | 250,742 | |||||||||
TOTAL ASSETS | 956,161 | 802,739 | |||||||||
Liabilities and shareholders’ equity | |||||||||||
LIABILITIES: | |||||||||||
Current maturities of lease liabilities | 6 | 14,104 | 7,119 | ||||||||
Trade payables | 9 | 212,690 | 161,812 | ||||||||
Other payables | 9 | 45,705 | 42,900 | ||||||||
Current tax liabilities | 9,417 | 8,836 | |||||||||
TOTAL CURRENT LIABILITIES | 281,916 | 220,667 | |||||||||
Employee benefits | 238 | 426 | |||||||||
Long-term lease liabilities | 6 | 15,234 | 7,876 | ||||||||
Long term debt | 11 | 98,544 | - | ||||||||
Other long-term liabilities | 20 | 7,452 | - | ||||||||
Deferred tax liabilities | 4 | 1,162 | 1,395 | ||||||||
TOTAL NON-CURRENT LIABILITIES | 122,630 | 9,697 | |||||||||
TOTAL LIABILITIES | 404,546 | 230,364 | |||||||||
SHAREHOLDERS’ EQUITY: | 15 | ||||||||||
Share capital | 413 | 442 | |||||||||
Share premium | 400,507 | 437,476 | |||||||||
Other comprehensive income (loss) | (5,801 | ) | 698 | ||||||||
Retained earnings | 156,496 | 133,759 | |||||||||
TOTAL SHAREHOLDERS’ EQUITY | 551,615 | 572,375 | |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 956,161 | 802,739 |
Chairman of the Board of Directors | CEO |
| CFO |
Year ended December 31 | |||||||||||||||
2022 | 2021 | 2020 | |||||||||||||
Note | USD thousands | ||||||||||||||
Revenues | 12 | 335,250 | 341,945 | 211,920 | |||||||||||
Cost of Revenues (Exclusive of depreciation and amortization shown separately below) | 13 | 60,745 | 71,651 | 59,807 | |||||||||||
Research and development expenses | 33,659 | 18,422 | 13,260 | ||||||||||||
Selling and marketing expenses | 89,953 | 74,611 | 68,765 | ||||||||||||
General and administrative expenses | 14 | 68,005 | 63,499 | 29,678 | |||||||||||
Depreciation and amortization | 42,700 | 40,259 | 45,187 | ||||||||||||
Other expenses (income), net | (4,564 | ) | (959 | ) | 1,248 | ||||||||||
Total operating costs | 229,753 | 195,832 | 158,138 | ||||||||||||
Operating Profit (Loss) | 44,752 | 74,462 | (6,025 | ) | |||||||||||
Financing income | (2,284 | ) | (483 | ) | (445 | ) | |||||||||
Financing expenses | 4,611 | 2,670 | 1,862 | ||||||||||||
Financing expenses, net | 2,327 | 2,187 | 1,417 | ||||||||||||
Profit (Loss) before taxes on income | 42,425 | 72,275 | (7,442 | ) | |||||||||||
Tax benefit (expenses) | 4 | (19,688 | ) | 948 | 9,581 | ||||||||||
Profit for the year | 22,737 | 73,223 | 2,139 | ||||||||||||
Other comprehensive income (loss) items: | |||||||||||||||
Foreign currency translation differences for foreign operations | (6,499 | ) | (2,632 | ) | 2,836 | ||||||||||
Total other comprehensive income (loss) for the year | (6,499 | ) | (2,632 | ) | 2,836 | ||||||||||
Total comprehensive income for the year | 16,238 | 70,591 | 4,975 | ||||||||||||
Earnings per share | |||||||||||||||
Basic earnings per share (in USD) | 16 | 0.15 | 0.51 | 0.02 | |||||||||||
Diluted earnings per share (in USD) | 16 | 0.15 | 0.48 | 0.02 |
Share capital | Share premium | Other comprehensive income | Retained Earnings | Total | ||||||||||||||||
USD thousands | ||||||||||||||||||||
Balance as of January 1, 2020 | 351 | 240,989 | 494 | 58,778 | 300,612 | |||||||||||||||
Total Comprehensive income for the year | ||||||||||||||||||||
Profit for the year | - | - | - | 2,139 | 2,139 | |||||||||||||||
Other comprehensive Income: | ||||||||||||||||||||
Foreign currency translation | - | - | 2,836 | - | 2,836 | |||||||||||||||
Total comprehensive income for the year | - | - | 2,836 | 2,139 | 4,975 | |||||||||||||||
Transactions with owners, recognized directly in equity | ||||||||||||||||||||
Issuance of shares in a Business Combination | 25 | 14,092 | - | - | 14,117 | |||||||||||||||
Revaluation of liability for put option on non- controlling interests | - | - | - | (445 | ) | (445 | ) | |||||||||||||
Own shares acquired | (15 | ) | (9,950 | ) | - | - | (9,965 | ) | ||||||||||||
Share based compensation | - | 18,770 | - | - | 18,770 | |||||||||||||||
Exercise of share options | 19 | 930 | - | - | 949 | |||||||||||||||
Balance as of December 31, 2020 | 380 | 264,831 | 3,330 | 60,472 | 329,013 | |||||||||||||||
Total Comprehensive Income (loss) for the year | ||||||||||||||||||||
Profit for the year | - | - | - | 73,223 | 73,223 | |||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||
Foreign Currency Translation | - | - | (2,632 | ) | - | (2,632 | ) | |||||||||||||
Total comprehensive Income (loss) for the year | - | - | (2,632 | ) | 73,223 | 70,591 | ||||||||||||||
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 compensation | - | 41,822 | - | - | 41,822 | |||||||||||||||
Exercise of share options | 17 | 1,353 | - | - | 1,370 | |||||||||||||||
Issuance of shares | 47 | 136,111 | - | - | 136,158 | |||||||||||||||
Issuance of Restricted shares | 1 | (1 | ) | - | - | - | ||||||||||||||
Balance as of December 31, 2021 | 442 | 437,476 | 698 | 133,759 | 572,375 |
| Share capital | Share premium | Other comprehensive income | Retained Earnings | Total | |||||||||||||||
| USD thousands | |||||||||||||||||||
| ||||||||||||||||||||
Total Comprehensive Income (loss) for the year | ||||||||||||||||||||
Profit for the year | - | - | - | 22,737 | 22,737 | |||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||
Foreign Currency Translation | - | - |
| (6,499 | ) | - | (6,499 | ) | ||||||||||||
| ||||||||||||||||||||
Total comprehensive Income (loss) for the year | - | - |
| (6,499 | ) | 22,737 | 16,238 | |||||||||||||
| ||||||||||||||||||||
Transactions with owners, recognized directly in equity | ||||||||||||||||||||
Own shares acquired | (50 | ) | (86,202 | ) | - |
| - |
| (86,252 | ) | ||||||||||
Share based compensation | 47,049 | - | - | 47,049 | ||||||||||||||||
Exercise of share options | 21 | 2,184 | - | - | 2,205 | |||||||||||||||
| ||||||||||||||||||||
Balance as of December 31, 2022 | 413 | 400,507 | (5,801 | ) | 156,496 | 551,615 |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Profit for the year | 22,737 | 73,223 | 2,139 | |||||||||
Adjustments for: | ||||||||||||
Depreciation and amortization | 42,700 | 40,259 | 45,187 | |||||||||
Net financing expense | 2,147 | 2,023 | 1,310 | |||||||||
Disposals of fixed and intangible assets | 542 | - | 3 | |||||||||
Loss (Gain) on leases change contracts | 56 | (377 | ) | (2,103 | ) | |||||||
Gain on sale of business unit | - | (982 | ) | (503 | ) | |||||||
Share-based compensation and restricted shares | 50,505 | 42,818 | 14,490 | |||||||||
Tax (benefit) expense | 19,688 | (948 | ) | (9,581 | ) | |||||||
Change in trade and other receivables | 57,050 | (11,676 | ) | (39,351 | ) | |||||||
Change in trade and other payables | (100,145 | ) | 26,845 | 25,882 | ||||||||
Change in employee benefits | (179 | ) | (69 | ) | (23 | ) | ||||||
Income taxes received | 1,175 | 2,231 | 1,168 | |||||||||
Income taxes paid | (14,784 | ) | (3,185 | ) | (2,855 | ) | ||||||
Interest received | 2,103 | 496 | 517 | |||||||||
Interest paid | (587 | ) | (570 | ) | (1,117 | ) | ||||||
Net cash provided by operating activities | 83,008 | 170,088 | 35,163 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Change in pledged deposits, net | (213 | ) | (11 | ) | 229 | |||||||
Payments on finance lease receivable | 1,306 | 2,454 | 2,885 | |||||||||
Repayment of long-term loans | - | - | 817 | |||||||||
Acquisition of fixed assets | (6,433 | ) | (3,378 | ) | (594 | ) | ||||||
Acquisition and capitalization of intangible assets | (8,750 | ) | (4,966 | ) | (4,858 | ) | ||||||
Proceeds from sale of business unit | 1,180 |
| 415 | 232 | ||||||||
Investment in shares | (25,000 | ) | - | - | ||||||||
Acquisition of subsidiaries, net of cash acquired | (195,084 | ) | (11,001 | ) | 6,208 | |||||||
Net cash provided by (used in) investing activities | (232,994 | ) | (16,487 | ) | 4,919 | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Acquisition of own shares | (86,048 | ) | (6,643 | ) | (9,965 | ) | ||||||
Proceeds from exercise of share options | 2,205 | 1,370 | 949 | |||||||||
Leases repayment | (12,018 | ) | (10,009 | ) | (13,351 | ) | ||||||
Issuance of shares, net of issuance cost | - | 134,558 | - | |||||||||
Receipt of long-term debt, net of transaction cost | 98,917 | - | - | |||||||||
Payment of financial liability | - | (2,414 | ) | - | ||||||||
Net cash provided by (used in) financing activities | 3,056 | 116,862 | (22,367 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | (146,930 | ) | 270,463 | 17,715 | ||||||||
CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF YEAR | 367,717 | 97,463 | 79,047 | |||||||||
EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH AND CASH EQUIVALENTS | (3,287 | ) | (209 | ) | 701 | |||||||
CASH AND CASH EQUIVALENTS AS OF THE END OF YEAR | 217,500 | 367,717 | 97,463 |
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 Company are listed on the AIM Market of the London Stock Exchange and the American Depositary Shares ("ADSs"), each of which represents two ordinary shares of the Company, represented by the American Depositary Receipts ("ADR") are listed on the Nasdaq Capital Market. The address of the registered office is 82 Yigal Alon Street Tel-Aviv, 6789124, Israel. Tremor International is a global Company offering an end-to-end digital advertising technology 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) can purchase high quality advertising inventory from publishers (sellers) at scale. Tremor Video Inc. (“Tremor Video’’) and Amobee, wholly owned subsidiaries of Tremor International, serve as the Company’s Demand Side Platforms (“DSP”) which provide full-service and self-managed marketplace access to advertisers and agencies to execute their digital marketing campaigns in real time across various ad formats. Unruly Group, LLC (formerly RhythmOne, LLC), provides customers with access to a Sell Side Platform (“SSP”) designed to monetize digital inventory for publishers, media companies, 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 to optimize results of their advertising campaigns. Tremor International Ltd. is headquartered in Israel and maintains offices throughout the United States, Canada, Europe, and Asia-Pacific. |
b. | Starting June 18, 2021, the Company's ADSs trade on the Nasdaq Global Market under the ticker symbol “TRMR”. The aggregate proceeds from the IPO and the options to the underwriters provided as part of the IPO were USD 147.9 million before deducting underwriting discounts and commissions. |
c. | During 2022, the Company, its customers, and its partners, continued to face persistent macroeconomic challenges associated with several factors including: the COVID-19 (“COVID-19”) pandemic, and residual impacts of efforts to curtail its spread and reduce further economic damage sustained, rising interest rates, rising inflation, global supply chain constraints, changes in foreign currency exchange rates, recession concerns, and geopolitical uncertainty. The combination of which drove advertisers across several industries to reduce, or delay deployment of budgets and advertising spend. |
NOTE 1: | GENERAL (Cont.) |
d. | Material events in the reporting period: |
1. | On February 23, 2022, the Board of Directors approved a share buyback program of up to USD 75 million of its ordinary shares. The share repurchase program was completed in the third quarter of 2022. On September 20, 2022, the Board of Directors approved a USD 20 million share repurchase program under which the Company is authorized to purchase up to USD 20 million of its Ordinary Shares. During 2022, the Company repurchased 16,906,795 ordinary shares in aggregate amount of USD 86.3 million which was financed by existing cash resources. See Note 15. |
2. | On June 19, 2022, Unruly Media Pte. Ltd., a subsidiary of the Company, entered into a definitive agreement to make a strategic USD 25 million investment in VIDAA (Netherlands) International Holdings B.V. (the "Investment"), a smart TV operating system and streaming platform, and a subsidiary of Hisense Co., Ltd. The Investment reflects 2.439% of VIDAA’s issued and outstanding share capital on a fully diluted basis. The investment was completed on August 18, 2022. See Note 18. |
3. | On July 25, 2022, the Company and its subsidiaries entered into a definitive agreement with Amobee Group Pte. Ltd (the “Seller”) to acquire the voting shares capital of Amobee Inc., Amobee Asia Pte. Ltd. and Amobee ANZ Pty Ltd (“Amobee”), and the DSP operation from Amobee Inc. The acquisition was completed on September 12, 2022, for a total consideration of USD 211.8 million which was funded through a combination of existing cash resources, and a credit facility consists of USD 90 million secured term loan drawn at closing, and USD 90 million revolving credit facility, of which USD 10 million was drawn at closing. see Note 20b. The covenants for the secured term loan are detailed in Note 11. |
e. | 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 Unruly Group LLC, Unruly Holding Ltd, Tremor Video Inc, Amobee Inc, SpearAd. | ||
Related party | - | As defined by IAS 24, “Related Party Disclosures”. |
NOTE 2: | BASIS OF PREPARATION |
a. | Statement of compliance: The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board ("IASB"). The consolidated financial statements were authorized for issue by the Company’s Board of Directors on March 6, 2023. |
b. | Functional and presentation currency: These consolidated financial statements are presented in US Dollars (USD), which is the Company’s functional currency, and have been rounded to the nearest thousand, except when otherwise indicated. The USD is the currency that represents the principal economic environment in which the Company operates. |
c. | Basis of measurement: The consolidated financial statements have been prepared on a historical cost basis except for the following assets and liabilities: |
• | Deferred and current tax assets and liabilities |
• | Put option to non-controlling interests |
• | Provisions |
• | Derivatives | |
• | Investment in shares |
d. | 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 2: | BASIS OF PREPARATION (Cont.) |
e. | Determination of fair value: |
• | Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. |
• | Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. |
• | Level 3: inputs that are not based on observable market data (unobservable inputs). |
• | Note 17, on share-based compensation; |
• | Note 18, on financial instruments; |
• | Note 18, on investments in shares. | |
• | Note 20, on subsidiaries (regarding business combinations). |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES |
a. | Basis of consolidation: |
1) | Business combinations: |
2) | Subsidiaries: |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
3) | Transactions eliminated on consolidation: |
b. | Foreign currency: |
1) | Foreign currency transactions: |
2) | Foreign operations: |
c. | Financial instruments: |
1) | Non-derivative financial assets Initial recognition and measurement of financial assets The Group initially recognizes trade receivables and debt instruments issued on the date that they are created. All other financial assets are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. A financial asset is initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. A trade receivable without a significant financing component is initially measured at the transaction price. Receivables originating from contract assets are initially measured at the carrying amount of the contract assets on the date classification was changed from contract asset to receivables. |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
- The contractual terms of the debt instrument give rise to cash flows representing solely payments of principal and interest on the principal amount outstanding on specified dates.
All financial assets not classified as measured at amortized cost or fair value through other comprehensive income as described above, as well as financial assets designated at fair value through profit or loss, are measured at fair value through profit or loss. On initial recognition, the Group designates financial assets at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
The Group has balances of trade and other receivables and deposits that are held within a business model whose objective is collecting contractual cash flows. The contractual cash flows of these financial assets represent solely payments of principal and interest that reflects consideration for the time value of money and the credit risk. Accordingly, these financial assets are measured at amortized cost.
|
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Subsequent measurement and gains and losses Financial assets at amortized cost These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. Financial assets at fair value through profit or loss These assets are subsequently measured at fair value. Net gains and losses, including any interest income or dividend income, are recognized in profit or loss (other than certain derivatives designated as hedging instruments). |
2) | Non-derivative financial liabilities Non-derivative financial liabilities include trade and other payables, finance lease liability and other long term liabilities. Initial recognition of financial liabilities The Group initially recognizes debt securities issued on the date that they originated. All other financial liabilities are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. Subsequent measurement of financial liabilities Financial liabilities (other than financial liabilities at fair value through profit or loss) are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method. Transaction costs directly attributable to an expected issuance of an instrument that will be classified as a financial liability are recognized as an asset in the framework of deferred expenses in the statement of financial position. These transaction costs are deducted from the financial liability upon its initial recognition or are amortized as financing expenses in the statement of income when the issuance is no longer expected to occur. Derecognition of financial liabilities Financial liabilities are derecognized when the obligation of the Group, as specified in the agreement, expires or when it is discharged or cancelled. Offset of financial instruments Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the Group currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
3) | Derivative financial instruments: Economic hedges Hedge accounting is not applied to derivative instruments that economically hedge financial assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognized in profit or loss under financing income or expenses. |
4) | Share capital: Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects. Incremental costs directly attributable to an expected issuance of an instrument that will be classified as an equity instrument are recognized as an asset in deferred expenses in the statement of financial position. The costs are deducted from equity upon the initial recognition of the equity instruments or are amortized as financing expenses in the statement of income when the issuance is no longer expected to take place. Treasury shares When share capital recognized as equity is repurchased by the Group, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as a deduction in Share Premium. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus on the transaction is carried to share premium, whereas a deficit on the transaction is deducted from retained earnings. |
d. | Fixed Assets: Fixed assets are measured at cost less accumulated depreciation. The cost of fixed assets includes expenditure that is directly attributable to the acquisition of the asset. Depreciation is provided on all property and equipment at rates calculated to write each asset down to its residual value (assumed to be nil), using the straight-line method, over its expected useful life as follows: |
Years | |
Computers and servers | 3-5 |
Office furniture and equipment | 3-17 |
Leasehold improvements | The shorter of the lease term and the useful life |
An asset is depreciated from the date it is ready for use, meaning the date it reaches the location and condition required for it to operate in the manner intended by management. Depreciation methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate. | ||
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
e. | Intangible assets: |
1) | Software development: Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss when incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group has the intention and sufficient resources to complete development and to use or sell the asset. The expenditure capitalized in respect of development activities includes the cost of materials, direct labor and overhead costs that are directly attributable to preparing the asset for its intended use, and capitalized borrowing costs. Other development expenditure is recognized in profit or loss as incurred. In subsequent periods, capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment losses. Where these criteria are not met, development costs are charged to the statement of operation and other comprehensive income as incurred. The estimated useful lives of developed software are three years. Amortization methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate. |
2) | Acquired software: Acquired software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software licenses. These costs are amortized over their estimated useful lives using the straight-line method. Costs associated with maintaining software programs are recognized as an expense as incurred. |
3) | Goodwill: Goodwill that arises upon the acquisition of subsidiaries is presented as part of intangible assets. For information on measurement of goodwill at initial recognition, see Note 3a(1). In subsequent periods goodwill is measured at cost less accumulated impairment losses. The Group has identified its entire operation as a single cash generating unit (CGU). According to management assessment as of December 31, 2022, no impairment in respect to goodwill has been recorded. | |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
4) | Other intangible assets: Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. |
5) | Amortization: Amortization is a systematic allocation of the amortizable amount of an intangible asset over its useful life. The amortizable amount is the cost of the asset less its accumulated residual value. Internally generated intangible assets, such as software development costs, are not systematically amortized as long as they are not available for use, i.e., they are not yet on site or in working condition for their intended use. Goodwill is not systematically amortized as well but is tested for impairment at least once a year. The Group examines the amortization methods, useful life and accumulated residual values of its intangible assets at least once a year (usually at the end of each reporting period) in order to determine whether events and circumstances continue to support the decision that the intangible asset has an indefinite useful life. Amortization is recognized in the statements of operation and other comprehensive income on a straight-line basis over the estimated useful lives of the intangible assets from the date they are available for use, since this method most closely reflects the expected pattern of consumption of the future economic benefits embodied in each asset, such as development costs, are tested for impairment at least once a year until such date as they are available for use. The estimated useful lives for the current and comparative periods are as follows:
|
Trademarks | 1.75-5 years |
Software (developed and acquired) | 3 years |
Customer relationships | 3-5.75 years |
Technology | 3-5.25 years |
Amortization methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate. | ||
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
f. | Impairment: Non-derivative financial assets Financial assets, contract assets and lease receivables The Group recognizes a provision for expected credit losses in respect of: - Financial assets at amortized cost; - Lease receivables.
The Group has elected to measure the provision for expected credit losses in respect of financial assets and lease receivables at an amount equal to the lifetime credit losses of the instrument. When determining whether the credit risk of a financial asset has increased significantly since initial recognition, and when estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available. Such information includes quantitative and qualitative information, and an analysis, based on the Group’s past experience and informed credit assessment, and it includes forward looking information. Measurement of expected credit losses Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive.
With respect to other debt assets, the Group measures the provision for expected credit losses at an amount equal to the full lifetime expected credit losses, other than the provisions hereunder that are measured at an amount equal to the 12-month expected credit losses: |
- | Debt instruments that are determined to have low credit risk at the reporting date; and |
- | Other debt instruments and deposits, for which credit risk has not increased significantly since initial recognition. |
Presentation of provision for expected credit losses in the statement of financial position Provisions for expected credit losses of financial assets measured at amortized cost and are deducted from the gross carrying amount of the financial assets. Write-off The gross carrying amount of a financial asset is written off when the Group does not have reasonable expectations of recovering a financial asset at its entirety or a portion thereof. This is usually the case when the Group determines that the debtor does not have assets or sources of income that may generate sufficient cash flows for paying the amounts being written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due. Write-off constitutes a de-recognition event. | ||
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
g. | Impairment of non-financial assets: Non-financial assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which an asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that were subject to impairment are reviewed for possible reversal of the impairment recognized in respect thereof at each financial reporting date. |
h. | Restricted Cash and Deposit: The Company classifies certain restricted cash and deposit balances within other current assets on the consolidated statement of financial position based upon the term of the remaining restrictions. On December 31, 2022, and 2021 the Company had restricted cash and deposit of USD 1,966 thousand and USD 2,061 thousand, respectively. These restricted cash and deposits are not available for withdraw by the Company. |
i. | Share Based Compensation: Compensation expense related to stock options, restricted stock units and performance stock units. The Company’s employee stock purchase plan is measured and recognized in the consolidated financial statements based on the fair value of the awards granted. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. Stock-based compensation expense related to stock options and restricted stock is recognized over the requisite service periods of the awards. Determining the fair value of stock options awards requires judgment. The Company’s use of the Black-Scholes option pricing model requires the input of subjective assumptions. The assumptions used in the Company’s option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. These assumptions and estimates are as follows: Risk-Free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities approximating the expected term of the awards. Expected Term. The expected term of an award is calculated based on the vesting date and the expiration date of the award. Volatility. The Company determined the price volatility based on daily price observations over a period equivalent to the expected term of the award. Dividend Yield. The dividend yield assumption is based on the Company’s history and current expectations of dividend payouts. Fair Value of Common Stock. The fair value of common stock is based on the closing price of the Company's common stock on the grant date. | |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
j. | Employee benefits: |
1) | Post-employment benefits: The Group’s main post-employment benefit plan is under section 14 to the Severance Pay Law ("Section 14"), which is accounted for as a defined contribution plan. In addition, for certain employees, the Group has an additional immaterial plan that is accounted for as a defined benefit plan. These plans are usually financed by deposits with insurance companies or with funds managed by a trustee. |
a) | Defined contribution plans: |
b) | Defined benefit plans: |
2) | Short-term benefits: |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
k. | Provisions A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability without adjustment for the Company’s credit risk. The carrying amount of the provision is adjusted each period to reflect the time that has passed and the amount of the adjustment is recognized as a financing expense. The Company recognizes a reimbursement asset if, and only if, it is virtually certain that the reimbursement will be received if the Company settles the obligation. The amount recognized in respect of the reimbursement does not exceed the amount of the provision. Restructuring A provision for restructuring is recognized when the Group has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. The provision includes direct expenditures caused by the restructuring and necessary for the restructuring, and which are not associated with the continuing activities of the Group. Onerous contracts
A provision for onerous contracts is recognized when the unavoidable costs of a contract exceed the benefits expected to be received from the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the unavoidable costs (net of the revenues) of continuing with the contract. Unavoidable costs are costs the Group cannot avoid as they are subject to a contract. |
l. | Revenue recognition: |
(1) | Identifying the contract with customer. |
(2) | Identifying distinct performance obligations in the contract. |
(3) | Determining the transaction price. |
(4) | Allocating the transaction price to distinct performance obligations. |
(5) | Recognizing revenue when the performance obligations are satisfied. |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
m. | Classification of expenses |
n. | Financing income and expenses: |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
o. | Income tax expense: |
• | The initial recognition of goodwill; and |
• | Differences relating to investments in subsidiaries to the extent it is probable that they will not reverse in the foreseeable future, either by way of selling the investment or by way of distributing taxable dividends in respect of the investment. |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
p. | Leases: |
(a) | The right to obtain substantially all the economic benefits from use of the identified asset; and |
(b) | The right to direct the identified asset’s use. |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
☐ | Buildings | 1-8 years | |
☐ | Data centers | 1-5.5 years |
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
q. | Earnings per share: |
r. | New standards, amendments to standards and interpretations not yet adopted: |
The Company is examining the effects of the Amendment on the financial statements with no plans to early adopt.
NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
NOTE 4: | INCOME TAX |
a. | Details regarding the tax environment of the Israeli company: |
1) | Corporate tax rate |
2) | Benefits under the Law for the Encouragement of Capital Investments |
NOTE 4: | INCOME TAX (Cont.) |
b. | Details regarding the tax environment of the non-Israeli companies: |
(1) | US |
Provisions enacted in the Tax Cuts and Jobs Act in 2017 related to the capitalization for tax purposes of research and experimental expenditures (“R&E”) became effective on January 1, 2022. These new R&E provisions require us to capitalize certain research and experimental expenditures and amortize them on the U.S. tax return over five or fifteen years, depending on where these costs are conducted. The tax expense in the U.S. would increase as a result, unless these provisions are modified through legislative processes in the future. The Company consider the effect of the new enacted act in the current year tax provision and the deferred tax asset.
NOTE 4: | INCOME TAX (Cont.) |
(2) | International |
NOTE 4: | INCOME TAX (Cont.) |
c. | Composition of income tax benefit: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Current tax expense | ||||||||||||
Current year | 14,378 | 7,220 | 3,022 | |||||||||
Deferred tax expense (income) | ||||||||||||
Creation and reversal of temporary differences | 5,310 |
| (8,168 | ) | (12,603 | ) | ||||||
Tax (benefit) expenses | 19,688 |
| (948 | ) | (9,581 | ) |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Domestic | 5,766 | 4,995 | 1,661 | |||||||||
US | 11,578 |
| (961 | ) | (5,646 | ) | ||||||
International | 2,344 |
| (4,982 | ) | (5,596 | ) | ||||||
Tax (benefit) expenses | 19,688 |
| (948 | ) | (9,581 | ) |
NOTE 4: | INCOME TAX (Cont.) |
d. | Reconciliation between the theoretical tax on the pre-tax profit and the tax expense: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Profit (Loss) before taxes on income | 42,425 | 72,275 | (7,442 | ) | ||||||||
Primary tax rate of the Company | 23 | % | 23 | % | 23 | % | ||||||
Tax calculated according to the Company’s primary tax rate | 9,758 | 16,623 | (1,712 | ) | ||||||||
Additional tax (tax saving) in respect of: | ||||||||||||
Non-deductible expenses net of tax exempt income (*) | 11,642 | (3,364 | ) | (2,509 | ) | |||||||
Difference between measurement basis of income/expenses for tax purposes and measurement basis of income/expenses for financial reporting purposes | (654 | ) | - | - | ||||||||
Effect of reduced tax rate on preferred income and differences in previous tax assessments | (4,625 | ) | (7,226 | ) | 170 | |||||||
Utilization of tax losses from prior years for which deferred taxes were not created | (2,539 | ) | (1,117 | ) | (5,887 | ) | ||||||
Effect on deferred taxes at a rate different from the primary tax rate | 2,697 | (3,329 | ) | (768 | ) | |||||||
Recognition of deferred taxes for tax losses and benefits from previous years for which deferred taxes were not created in the past | (1,104 | ) | (4,586 | ) | - | |||||||
Recognition in temporary differences for which deferred taxes are not recognized | 35 | - | - | |||||||||
Foreign tax rate differential | 4,478 | 2,051 | 1,125 | |||||||||
Tax (benefit) expenses | 19,688 | (948 | ) | (9,581 | ) | |||||||
Effective income tax rate | 46 | % | (1 | )% | 129 | % |
(*) | including non- deductible share-based compensation expenses. |
NOTE 4: | INCOME TAX (Cont.) |
e. | Deferred tax assets and liabilities: |
Intangible Assets and R&D expenses | Employees Compensation | Carryforward Losses | Accrued Expenses | Doubtful Debt | Other | Total | ||||||||||||||||||||||
USD thousands | ||||||||||||||||||||||||||||
Balance of deferred tax asset (liability) as of January 1, 2021 | (17,035 | ) | 9,239 | 14,145 | 4,456 | 3,724 | 1,225 | 15,754 | ||||||||||||||||||||
Business combinations | (1,962 | ) | - | 458 | - | - | - | (1,504 | ) | |||||||||||||||||||
Changes recognized in profit or Loss | 13,310 | 3,861 | (4,714 | ) | (3,117 | ) | (623 | ) | (549 | ) | 8,168 | |||||||||||||||||
Changes recognized in equity | 100 | (1,026 | ) | (54 | ) | 1,600 | (2 | ) | - | 618 | ||||||||||||||||||
Balance of deferred tax asset (liability) as of December 31, 2021 | (5,587 | ) | 12,074 | 9,835 | 2,939 | 3,099 | 676 | 23,036 |
Business combinations | (11,313 | ) | 1,502 | 7,857 | 1,322 | 973 | 2,158 | 2,499 | ||||||||||||||||||||
Changes recognized in profit or Loss | 5,019 | (2,927 | ) | (2,486 | ) | (2,590 | ) | (1,332 | ) | (1,249 | ) | (5,565 | ) | |||||||||||||||
Effect of change in tax rate | - | 14 | 237 | - | - | 4 | 255 | |||||||||||||||||||||
Changes recognized in equity | 187 | (3,417 | ) | (24 | ) | 22 | 11 | (5 | ) | (3,226 | ) | |||||||||||||||||
Balance of deferred tax asset (liability) as of December 31, 2022 | (11,694 | ) | 7,246 | 15,419 | 1,693 | 2,751 | 1,584 | 16,999 |
f. | Tax assessment: |
The Company considers tax year 2017 and the US federal group tax year 2018 as close for tax assessment.
NOTE 5: | FIXED ASSETS, NET |
Computers and Servers | Office furniture and equipment | Leasehold improvements | Total | |||||||||||||
USD thousands | ||||||||||||||||
Cost | ||||||||||||||||
Balance as of January 1, 2021 | 7,683 | 1,132 | 1,870 | 10,685 | ||||||||||||
Exchange rate differences | (2 | ) | 10 | 3 | 11 | |||||||||||
Additions* | 2,010 | 44 | 58 | 2,112 | ||||||||||||
Business combinations | - | 1 | - | 1 | ||||||||||||
Disposals | (852 | ) | (742 | ) | (1,161 | ) | (2,755 | ) | ||||||||
Balance as of December 31, 2021 | 8,839 | 445 | 770 | 10,054 | ||||||||||||
Exchange rate differences | 53 | 41 | 20 | 114 | ||||||||||||
Additions* | 8,375 | 5 | 5 | 8,385 | ||||||||||||
Business combinations (See Note 20) | 22,256 | 351 | 647 | 23,254 | ||||||||||||
Disposals | (892 | ) | (28 | ) | (336 | ) | (1,256 | ) | ||||||||
Balance as of December 31, 2022 | 38,631 | 814 | 1,106 | 40,551 | ||||||||||||
Depreciation | ||||||||||||||||
Balance as of January 1, 2021 | 4,981 | 823 | 1,589 | 7,393 | ||||||||||||
Exchange rate differences | (1 | ) | 24 | (2 | ) | 21 | ||||||||||
Disposals | (852 | ) | (742 | ) | (1,161 | ) | (2,755 | ) | ||||||||
Additions | 1,570 | 164 | 197 | 1,931 | ||||||||||||
Balance as of December 31, 2021 | 5,698 | 269 | 623 | 6,590 | ||||||||||||
Exchange rate differences | 57 | 41 | 18 | 116 | ||||||||||||
Disposals | (890 | ) | (28 | ) | (336 | ) | (1,254 | ) | ||||||||
Additions | 4,957 | 61 | 207 | 5,225 | ||||||||||||
Balance as of December 31, 2022 | 9,822 | 343 | 512 | 10,677 | ||||||||||||
Carrying amounts | ||||||||||||||||
As of December 31, 2021 | 3,141 | 176 | 147 | 3,464 | ||||||||||||
As of December 31, 2022 | 28,809 | 471 | 594 | 29,874 |
* As of December 31, 2022, USD 1,900 additions have not been paid (2021: nil).
NOTE 6: | LEASES |
a. | Leases in which the Group is the lessee: |
- | Offices; |
- | Data center; |
1) | Information regarding material lease agreements: |
a) | The Group leases Offices mainly in the United States of America (US), Israel, Canada and UK with contractual original lease periods ends between the years 2023 and 2027 from several lessors. The Group did not assume renewals in determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. | |
A lease liability in the amount of USD 18,513 thousand and USD 12,023 thousand as of December 31, 2022, and December 31, 2021, respectively, and right-of-use asset in the amount of USD 7,753 thousand and USD 5,424 thousand as of December 31, 2022, and December 31, 2021, respectively have been recognized in the statement of financial position in respect of leases of offices. |
b) | The Group leases data center and related network infrastructure with contractual original lease periods ends between the years 2023 and 2026. The Group did not assume renewals in determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. | |
A lease liability in the amount of USD 10,825 thousand and USD 2,972 thousand as of December 31, 2022, and December 31, 2021, respectively, and right-of-use asset in the amount of USD 10,520 thousand and USD 2,849 thousand as of December 31, 2022, and December 31, 2021, respectively have been recognized in the statement of financial position in respect of data centers. |
2) | Lease liability: |
December 31 | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Less than one year (0-1) | 14,104 | 7,119 | ||||||
One to five years (1-5) | 15,234 | 7,042 | ||||||
More than five years (5+) | - | 834 | ||||||
Total | 29,338 | 14,995 | ||||||
Current maturities of lease liability | 14,104 | 7,119 | ||||||
Long-term lease liability | 15,234 | 7,876 |
NOTE 6: | LEASES (Cont.) |
3) | Right-of-use assets - Composition: |
Offices | Data center | Total | ||||||||||
USD thousands | ||||||||||||
Balance as of January 1, 2021 | 5,925 | 4,897 | 10,822 | |||||||||
Depreciation and amortization on right-of-use assets | (4,022 | ) | (2,312 | ) | (6,334 | ) | ||||||
Additions | 3,571 | 446 | 4,017 | |||||||||
Lease modifications | - | 7 | 7 | |||||||||
Disposals | - | (189 | ) | (189 | ) | |||||||
Exchange rate differences | (50 | ) | - | (50 | ) | |||||||
Balance as of December 31, 2021 | 5,424 | 2,849 | 8,273 | |||||||||
Business Combinations | 6,103 | 10,633 | 16,736 | |||||||||
Depreciation and amortization on right-of-use assets | (4,533 | ) | (4,693 | ) | (9,226 | ) | ||||||
Additions | 1,113 | 1,783 | 2,896 | |||||||||
Lease modifications | (74 | ) | - | (74 | ) | |||||||
Disposals | (205 | ) | (52 | ) | (257 | ) | ||||||
Exchange rate differences | (75 | ) | - | (75 | ) | |||||||
Balance as of December 31, 2022 | 7,753 | 10,520 | 18,273 |
4) | Amounts recognized in statement of operation: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Interest expenses on lease liability | (587 | ) | (570 | ) | (1,117 | ) | ||||||
Depreciation and amortization of right-of-use assets | (9,226 | ) | (6,334 | ) | (8,855 | ) | ||||||
Gain (loss) recognized in profit or loss | (74 | ) | 7 | 1,829 | ||||||||
Total | (9,887 | ) | (6,897 | ) | (8,143 | ) |
NOTE 6: | LEASES (Cont.) |
5) | Amounts recognized in the statement of cash flows: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Cash outflow for leases | (12,605 | ) | (10,579 | ) | (14,468 | ) |
b. | Leases in which the Group is a lessor: |
1) | Information regarding material lease agreements: |
2) | Net investment in the lease: |
Offices | ||||||||
Year ended December 31 | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Balance as of January 1, | 5,682 | 7,835 | ||||||
Sublease receipts | (1,306 | ) | (2,454 | ) | ||||
Additions | 310 |
| 301 | |||||
Business combinations (See Note 20) | 163 | - | ||||||
Balance as of December 31, | 4,849 | 5,682 |
3) | Maturity analysis of net investment in finance leases: |
Year ended December 31 | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Less than one year (0-1) | 1,084 | 1,067 | ||||||
One to five years (1-5) | 3,765 | 3,789 | ||||||
More than five years (5+) | - | 826 | ||||||
Total net investment in the lease as of December 31, | 4,849 | 5,682 |
NOTE 6: | LEASES (Cont.) |
4) | Amounts recognized in statement of operation: |
Offices | ||||||||||||
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Gain from finance subleases | - |
| 301 | 274 | ||||||||
Financing income on the net investment in the lease | 199 | 245 | 361 | |||||||||
Total | 199 | 546 | 635 |
NOTE 7: | INTANGIBLE ASSETS, NET |
Software | Trademarks | Customer relationships | Technology | Others | Goodwill | Total | ||||||||||||||||||||||
USD thousands | ||||||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||||||
Balance as of January 1, 2021 | 24,095 | 36,639 | 48,340 | 46,818 | 2,159 | 152,861 | 310,912 | |||||||||||||||||||||
Exchange rate differences | (25 | ) | (272 | ) | (374 | ) | (166 | ) | (17 | ) | (1,338 | ) | (2,192 | ) | ||||||||||||||
Additions | 4,966 | - | - | - | - | - | 4,966 | |||||||||||||||||||||
Disposals | (5,084 | ) | - | - | - | - | - | (5,084 | ) | |||||||||||||||||||
Business combinations | 735 | - | - | 6,540 | - | 5,189 | 12,464 | |||||||||||||||||||||
Balance as of December 31, 2021 | 24,687 | 36,367 | 47,966 | 53,192 | 2,142 | 156,712 | 321,066 | |||||||||||||||||||||
Exchange rate differences | (50 | ) | (1,262 | ) | (1,341 | ) | (548 | ) | (114 | ) | (3,216 | ) | (6,531 | ) | ||||||||||||||
Additions | 8,750 | - | - | - | - | - | 8,750 | |||||||||||||||||||||
Disposals | (1,199 | ) | (19,570 | ) | (2,393 | ) | (4,851 | ) | - | - | (28,013 | ) | ||||||||||||||||
Business combinations (see Note 20) | - | 7,654 | 29,169 | 85,684 | - | 92,244 | 214,751 | |||||||||||||||||||||
Balance as of December 31, 2022 | 32,188 | 23,189 | 73,401 | 133,477 | 2,028 | 245,740 | 510,023 | |||||||||||||||||||||
Amortization | ||||||||||||||||||||||||||||
Balance as of January 1, 2021 | 14,446 | 20,636 | 17,195 | 32,033 | 2,102 | - | 86,412 | |||||||||||||||||||||
Exchange rate differences | (8 | ) | (170 | ) | (256 | ) | (21 | ) | (21 | ) | - | (476 | ) | |||||||||||||||
Additions | 5,522 | 9,320 | 9,142 | 7,949 | 61 | - | 31,994 | |||||||||||||||||||||
Disposals | (5,084 | ) | - | - | - | - | - | (5,084 | ) | |||||||||||||||||||
Balance as of December 31, 2021 | 14,876 | 29,786 | 26,081 | 39,961 | 2,142 | - | 112,846 | |||||||||||||||||||||
Exchange rate differences | 2 | (585 | ) | (800 | ) | (198 | ) | (114 | ) | - | (1,695 | ) | ||||||||||||||||
Additions | 6,189 | 2,514 | 9,289 | 10,257 | - | - | 28,249 | |||||||||||||||||||||
Disposals | (659 | ) | (19,570 | ) | (2,393 | ) | (4,851 | ) | - | - | (27,473 | ) | ||||||||||||||||
Balance as of December 31, 2022 | 20,408 | 12,145 | 32,177 | 45,169 | 2,028 | - | 111,927 | |||||||||||||||||||||
Carrying amounts | ||||||||||||||||||||||||||||
As of December 31, 2021 | 9,811 | 6,581 | 21,885 | 13,231 | - | 156,712 | 208,220 | |||||||||||||||||||||
As of December 31, 2022 | 11,780 | 11,044 | 41,224 | 88,308 | - | 245,740 | 398,096 |
NOTE 7: | INTANGIBLE ASSETS, NET (Cont.) |
2022 | ||||
% | ||||
Increase Pre-tax discount rate | 224% |
| ||
Decrease Terminal value growth rate | 100% |
|
NOTE 8: | TRADE AND OTHER RECEIVABLES |
December 31 | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Trade receivables: | ||||||||
Trade receivables | 229,975 | 178,933 | ||||||
Allowance for doubtful debts | (10,138 | ) | (13,870 | ) | ||||
Trade receivables, net | 219,837 | 165,063 | ||||||
Other receivables: | ||||||||
Prepaid expenses | 14,425 | 13,110 | ||||||
Loan to third party | - | 480 | ||||||
Institutions | 1,281 | 1,050 | ||||||
Pledged deposits | 3,036 | 2,647 | ||||||
Acquisition consideration adjustment | 4,673 | - | ||||||
Other | - | 949 | ||||||
23,415 | 18,236 |
NOTE 9: | TRADE AND OTHER PAYABLES |
December 31 | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Trade payables | 212,690 | 161,812 | ||||||
Other payables: | ||||||||
Contract liabilities | 6,540 | 11,415 | ||||||
Wages, salaries and related expenses | 24,539 | 16,406 | ||||||
Provision for vacation | 1,869 | 1,003 | ||||||
Institutions | 1,659 | 791 | ||||||
Ad spend liability | - | 7,729 | ||||||
Onerous contract | 1,350 | - | ||||||
Interest to pay | 1,504 | - | ||||||
Pledged deposits | 362 | 592 | ||||||
Others | 7,882 | 4,964 | ||||||
45,705 | 42,900 |
NOTE 10: | CASH AND CASH EQUIVALENTS |
December 31 | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Cash | 173,568 | 77,537 | ||||||
Bank deposits | 43,932 | 290,180 | ||||||
Cash and cash equivalents | 217,500 | 367,717 |
NOTE 11: LONG-TERM DEBT
In September 2022, Unruly Group US Holding Inc. entered into a $90 million senior secured term loan facility (the Term Loan Facility) and a $90 million senior secured revolving credit facility with a $15 million letter of credit sub-facility (the Revolving Credit Facility and, together with the Term Loan Facility, collectively, the Credit Facilities). The Company used the net proceeds of the Term Loan Facility and $10 million of net proceeds of the Revolving Credit Facility to fund a portion of the cash consideration required to close its acquisition of Amobee Inc. The Company may use borrowings made from time to time under the Revolving Credit Facility for general corporate purposes or other purposes not prohibited under the Credit Facilities. Each of the Credit Facilities matures on September 15, 2025 and bears interest, at the Company’s discretion, at a base rate plus a margin of 0.25% to 1.00% per annum or SOFR rate plus a spread of 1.25% to 2.00% per annum plus a credit spread adjustment of 0.10% to 0.25% based on the interest period duration of the applicable borrowing, in each case with such margin being determined by the Company’s consolidated total net leverage ratio. The Revolving Credit Facility may be borrowed, repaid, and re-borrowed until its maturity. The Company may prepay the Credit Facilities at its discretion without premium or penalty. The Credit Facilities are each due and payable in full on the respective maturity date of such Credit Facility.
The Company is also obligated to pay a commitment fee on the undrawn amounts of the Revolving Credit Facility at an annual rate ranging from 0.20% to 0.35%, determined by the Company’s total net leverage ratio. The Credit Facilities require compliance with various financial and non-financial covenants, including affirmative and negative covenants. The financial covenants require that the total net leverage ratio not exceed 3x and the interest coverage ratio not be less than 4x, in each case measured as of the end of each fiscal quarter. As of December 31, 2022, the Company was in compliance with all related covenants. The letter of credit sub-facility includes a fee at a rate per annum equal to the applicable margin for SOFR Loans then in effect on the daily maximum amount then available to be drawn as well as a fronting fee equal to 0.125% per annum along with other standard fees.
Unruly Group US Holding Inc.’s obligations under the Credit Facilities are (i) jointly and severally guaranteed by Tremor International Ltd. and certain of Tremor International Ltd.’s direct and indirect, existing and future wholly owned restricted subsidiaries, subject to certain exceptions and (ii) secured on a first-lien basis by substantially all of the tangible and intangible assets of Unruly Group US Holding Inc. and the guarantors of the Credit Facilities, subject to certain permitted liens and other agreed upon exceptions.
NOTE 12: | REVENUE |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Programmatic | 274,355 | 266,616 | 161,625 | |||||||||
Performance | 60,895 | 75,329 | 50,295 | |||||||||
335,250 | 341,945 | 211,920 |
For the year ended December 31, 2022, one buyer represents 10.7% of the revenue. For the year ended December 31, 2021 one buyer represents 13.6% of revenue. For the year ended December 31, 2020, no individual buyer accounted for more than 10% of revenue.
NOTE 13: | COST OF REVENUE |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Programmatic | 35,110 | 31,572 | 31,918 | |||||||||
Performance | 25,635 | 40,079 | 27,889 | |||||||||
Cost of Revenue | 60,745 | 71,651 | 59,807 |
NOTE 14: | GENERAL AND ADMINISTRATIVE EXPENSES |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Wages, salaries and related expenses | 18,933 | 17,755 | 15,274 | |||||||||
Share base payments | 31,878 | 32,250 | 9,420 | |||||||||
Rent and office maintenance | 319 | 549 | (483 | ) | ||||||||
Professional expenses | 12,233 | 7,136 | 4,766 | |||||||||
Doubtful debts | (3,167 | ) | 4,958 | (1,091 | ) | |||||||
Acquisition costs | 6,012 | 253 | 524 | |||||||||
Other expenses | 1,797 | 598 | 1,268 | |||||||||
68,005 | 63,499 | 29,678 |
NOTE 15: | SHAREHOLDERS’ EQUITY |
Ordinary Shares | ||||||||
2022 | 2021 | |||||||
Number of shares | ||||||||
Balance as of January 1 | 154,501,629 | 133,916,229 | ||||||
Own shares held by the Group | (16,906,795 | ) | (917,998 | ) | ||||
Share based compensation | 6,883,128 | 5,564,808 | ||||||
Issuance of shares in IPO | - | 15,568,590 | ||||||
Issuance of Restricted shares * | - | 370,000 | ||||||
Issued and paid-in share capital as of December 31 | 144,477,962 | 154,501,629 | ||||||
Authorized share capital | 500,000,000 | 500,000,000 |
NOTE 16: | EARNINGS PER SHARE |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Profit for the year | 22,737 | 73,223 | 2,139 |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Shares of NIS | ||||||||||||
0.01 par value | ||||||||||||
Weighted average number of ordinary shares used to calculate basic earnings per share as at December 31 | 149,937,339 | 144,493,989 | 133,991,210 | |||||||||
Basic earnings per share (in USD) | 0.15 | 0.51 | 0.02 |
NOTE 16: | EARNINGS PER SHARE (cont.) |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Shares of NIS | ||||||||||||
0.01 par value | ||||||||||||
Weighted average number of ordinary shares used to calculate basic earnings per share | 149,937,339 | 144,493,989 | 133,991,210 | |||||||||
Effect of share options on issue | 3,120,304 | 8,212,903 | 4,714,985 | |||||||||
Weighted average number of ordinary shares used to calculate diluted earnings per share | 153,057,643 | 152,706,892 | 138,706,195 | |||||||||
Diluted earnings per share (in USD) | 0.15 | 0.48 | 0.02 |
NOTE 17: | SHARE-BASED COMPENSATION ARRANGEMENTS |
a. | Share-based compensation plan: |
• | All the share options that were granted are non-marketable. |
• | All options are to be settled by physical delivery of ordinary shares or ADSs. |
• | Vesting conditions are based on a service period of between 0.5-4 years. |
NOTE 17: | SHARE-BASED COMPENSATION ARRANGEMENTS (Cont.) |
b. | Stock Options: |
Number of options | Weighted average exercise price | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
(Thousands) | (USD) | |||||||||||||||
Outstanding of 1 January | 6,026 | 3,781 | 6.54 | 2.19 | ||||||||||||
Forfeited during the year | (828 | ) | (359 | ) | 7.61 | 6.79 | ||||||||||
Exercised during the year | (1,046 | ) | (652 | ) | 1.96 | 2.08 | ||||||||||
Granted during the year | 620 | 3,256 | 7.22 | 10.76 | ||||||||||||
Outstanding of December 31 | 4,772 | 6,026 | 7.31 | 6.54 | ||||||||||||
Exercisable of December 31 | 1,814 | 1,540 |
2022 | 2021 | ||||||
Grant date fair value in USD | 3.13-3.24 | 4.30 | |||||
Share price (on grant date) (in USD) | 7.10 | 10.09 | |||||
Exercise price (in USD) | 7.22 | 10.76 | |||||
Expected volatility (weighted average) | 60 | % | 60 | % | |||
Expected life (weighted average) | 3.5-3.8 | 3.75 | |||||
Expected dividends | 0.00 | % | 0.00 | % | |||
Risk-free interest rate | 2.15 | % | 0.54 | % |
The total expense recognized in the year ended December 31, 2022, with respect to the options granted to employees, amounted to approximately USD 5,867 thousand (2021: USD 3,412 thousand).
c. | Restricted Share Units: |
NOTE 17: | SHARE-BASED COMPENSATION ARRANGEMENTS (Cont.) |
Number of RSU's | Weighted-Average Grant Date Fair Value | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
(Thousands) | ||||||||||||||||
Outstanding at 1 January | 8,146 | 3,777 | 8.606 | 2.364 | ||||||||||||
Forfeited during the year | (261 | ) | (25 | ) | 9.948 | 7.861 | ||||||||||
Exercised during the year | (3,374 | ) | (2,972 | ) | 8.091 | 4.447 | ||||||||||
Granted during the year | 777 | 7,366 | 4.596 | 10.017 | ||||||||||||
Outstanding at December 31 | 5,288 | 8,146 | 8.277 | 8.606 |
d. | Performance Stock Units: |
Number of PSU's | Weighted-Average Grant Date Fair Value | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
(Thousands) | ||||||||||||||||
Outstanding at January 1 | 4,486 | 3,852 | 6.796 | 2.155 | ||||||||||||
Forfeited during the year | (80 | ) | (93 | ) | 9.952 | 2.253 | ||||||||||
Exercised during the year | (2,582 | ) | (1,941 | ) | 4.891 | 2.204 | ||||||||||
Granted during the year | 168 | 2,668 | 4.453 | 9.999 | ||||||||||||
Outstanding at December 31 | 1,992 | 4,486 | 8.937 | 6.796 |
e. | Expense recognized in the statement of operation and other comprehensive income is as follows: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
Selling and marketing | 10,594 | 7,094 | 4,515 | |||||||||
Research and development | 8,034 | 3,474 | 555 | |||||||||
General and administrative | 31,877 | 32,250 | 9,420 | |||||||||
50,505 | 42,818 | 14,490 |
NOTE 18: | FINANCIAL INSTRUMENTS |
a. | Overview: |
☐ Liquidity risk
December 31 | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Derivatives presented under current assets | ||||||||
Forward exchange contracts used for hedging | - | 947 | ||||||
Derivatives presented under non-current assets | ||||||||
Forward exchange contracts used for hedging | - | 241 | ||||||
Derivatives presented under current liability | ||||||||
Forward exchange contracts used for hedging | (209 | ) | - | |||||
Total | (209 | ) | 1,188 |
b. | Risk management framework: |
NOTE 18: | FINANCIAL INSTRUMENTS (Cont.) |
c. | Credit risk: |
December 31 | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Cash and cash equivalents | 217,500 | 367,717 | ||||||
Trade receivables, net (a) | 219,837 | 165,063 | ||||||
Other receivables | 7,709 | 4,076 | ||||||
Long term deposit | 406 | 431 | ||||||
Long term receivables | - | 241 | ||||||
445,452 | 537,528 |
(a) | At December 31, 2022, the Group included provision for doubtful debts in the amount of USD 10,138 thousand (December 31, 2021: USD 13,870 thousand) in respect of collective impairment provision and specific debtors that their collectability is in doubt. As of December 31, 2022, two buyers accounted for 15.7% and 14.1% of trade receivables. As of December 31, 2021, two buyers accounted for 17.1% and 16.9% of trade receivables. |
Allowance for Doubtful debts | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Balance at January 1 | 13,870 | 9,036 | ||||||
Allowance for doubtful debts expenses (income) | (3,167 | ) | 4,958 | |||||
Write-off | (542) | (93 | ) | |||||
Exchange rate difference | (23 | ) | (31 | ) | ||||
Balance at December 31 | 10,138 | 13,870 |
d. | Liquidity risk: |
NOTE 18: | FINANCIAL INSTRUMENTS (Cont.) |
e. | Market risk: |
f. | Sensitivity analysis: |
2022 | 2021 | |||||||||||||||
GBP/USD | +10% | -10% | +10% | -10% | ||||||||||||
USD thousands | ||||||||||||||||
Profit / (Loss) | (2,893 | ) | 2,893 | (2,587 | ) | 2,587 | ||||||||||
Increase / (Decrease) in Shareholders’ Equity | (94 | ) | 94 | (379 | ) | 379 |
2022 | 2021 | |||||||||||||||
NIS/USD | +10% | -10% | +10% | -10% | ||||||||||||
USD thousands | ||||||||||||||||
Profit / (Loss) | (139 | ) | 139 | (721 | ) | 721 | ||||||||||
Increase / (Decrease) in Shareholders’ Equity | (107 | ) | 107 | (721 | ) | 721 |
2022 | 2021 | |||||||||||||||
SGD/USD | +10% | -10% | +10% | -10% | ||||||||||||
USD thousands | ||||||||||||||||
Profit / (Loss) | (2,615 | ) | 2,615 | (433 | ) | 433 | ||||||||||
Increase / (Decrease) in Shareholders’ Equity | (320 | ) | 320 | (22 | ) | 22 |
NOTE 18: | FINANCIAL INSTRUMENTS (Cont.) |
Interest rate risk
g. | Level 3 financial instruments carried at fair value |
| December 31, 2022 | |||
Level 3 | ||||
USD thousands | ||||
Financial assets measured at fair value through profit or loss: | ||||
Investment in shares | 25,000 |
The fair value of non-marketable shares is determined by external valuer on an annual basis.
• | The estimated royalties from App share and remote-control button which is based on the expected increase in market share. |
• | The average operating profit margin which is based on the stage of research and development. |
• | The discount rate, which is based on the risk-free rate for 10-year debentures issued by the government in the relevant market, adjusted for a risk premium to reflect both the risk of investing in equities, the systematic risk of company and entity specific risk to the extent not already reflected in the cash flows. |
NOTE 19: | RELATED PARTIES |
Year ended December 31 | ||||||||
2022 | 2021 | |||||||
USD thousands | ||||||||
Share-based compensation | 30,914 | 31,283 | ||||||
Other compensation and benefits | 4,433 | 6,752 | ||||||
35,347 | 38,035 |
NOTE 20: | SUBSIDIARIES |
a. | Details in respect of subsidiaries: |
Principal | The Group’s ownership interest | |||||||||
location of | in the subsidiary for the | |||||||||
the | year ended | |||||||||
Company’s | December 31 | |||||||||
Name of company | activity | 2022 | 2021 | |||||||
Taptica Inc | USA | 100 | % | 100 | % | |||||
Tremor Video Inc | USA | 100 | % | 100 | % | |||||
Adinnovation Inc | Japan | 100 | % | 100 | % | |||||
Taptica UK | UK | 100 | % | 100 | % | |||||
YuMe Inc* | USA | 100 | % | 100 | % | |||||
Perk.com Canada Inc | Canada | 100 | % | 100 | % | |||||
R1Demand LLC* | USA | 100 | % | 100 | % | |||||
Unruly Group LLC | USA | 100 | % | 100 | % | |||||
Unruly Group US Holding Inc* | USA | 100 | % | 100 | % | |||||
Unruly Holdings Ltd* | UK | 100 | % | 100 | % | |||||
Unruly Group Ltd* | UK | 100 | % | 100 | % | |||||
Unruly Media GmbH | Germany | 100 | % | 100 | % | |||||
Unruly Media Pte Ltd* | Singapore | 100 | % | 100 | % | |||||
Unruly Media Pty Ltd | Australia | 100 | % | 100 | % | |||||
Unruly Media KK | Japan | 100 | % | 100 | % | |||||
Unmedia Video Distribution Sdn Bhd | Malaysia | 100 | % | 100 | % | |||||
Unruly Media Inc | USA | 100 | % | 100 | % | |||||
SpearAd GmbH | Germany | 100 | % | 100 | % | |||||
Amobee Inc* | USA | 100 | % | 0 | % | |||||
Amobee EMEA Limited | UK | 100 | % | 0 | % | |||||
Amobee International Inc | USA | 100 | % | 0 | % | |||||
Amobee Ltd | IL | 100 | % | 0 | % | |||||
Amobee Asia Pte Ltd* | Singapore | 100 | % | 0 | % | |||||
Amobee ANZ Pty Ltd | Australia | 100 | % | 0 | % |
* | Under these companies, there are twenty-seven (27) wholly owned subsidiaries that are inactive and in liquidation process. | |
NOTE 20: | SUBSIDIARIES (Cont.) |
b. | Acquisition of subsidiaries and business combinations during the current period: |
On July 25, 2022, the Company and its subsidiaries entered into a definitive agreement with Amobee Group Pte. Ltd (the “Seller”) to acquire 100% of the voting share capital of Amobee, Inc., Amobee Asia Pte. Ltd. and Amobee ANZ Pty Ltd (“Amobee”). Amobee is a leading global advertising platform. The acquisition was completed at September 12, 2022 for a total consideration of USD 211.8 million which was funded through a combination of existing cash resources, and USD 100 million from a new USD 180 million secured credit facility, see note 11.
The primary reasons for the business combination are the goals to increase Company’s global market presence, significantly enhance and expand Company’s technology capabilities, add new linear TV capabilities and cross selling opportunities, and enrich Company’s growth and competitive positioning within the industry.
The purchase price of consideration transferred, and the recognized amounts of assets acquired, and liabilities assumed at the acquisition date of USD 211.8 million includes USD 82 million Intellectual Property Assets previously owned by Amobee Inc.
In the consolidated period from the acquisition date to December 31, 2022 the subsidiary contributed USD 12.6 million loss to the Group’s results and USD 36.8 million to the Group’s revenue. If the acquisition had occurred on January 1, 2022, management estimates that consolidated loss would have been USD 55.2 million and consolidated revenue for the year would have been USD 427.6 million. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on January 1, 2022. The pro forma results do not include any anticipated cost synergies or other effects of the combined companies.
Identifiable assets acquired and liabilities assumed:
USD thousands | ||||
Cash and Cash equivalents | 18,919 | |||
Accounts Receivables | 109,362 | |||
Other assets | 14,232 | |||
Fixed Assets | 23,254 | |||
Intangible Assets | 122,507 | |||
Right-of-use assets | 16,900 | |||
Deferred tax Assets | 2,499 | |||
Trade payables | (105,693 | ) | ||
Other Payables | (49,909 | ) | ||
Lease Liabilities | (23,526 | ) | ||
Onerous contract (a) | (9,019 | ) | ||
Net identifiable assets | 119,526 |
NOTE 20: | SUBSIDIARIES (Cont.) |
(a) | In 2019, Amobee Asia Pte Ltd ("Amobee SG") entered into an agreement with MediaCorp Pte Ltd ("MediaCorp") for the design, development, implementation, integration, testing, delivery, and maintenance of a Dynamic Ad Platform based on Amobee technology.
As of the date of acquisition and as part of the PPA, the Group assessed that the obligation for the net discounted future payments exceeding market fair value aggregated to present value of USD 9 million.
As of December 31, 2022, the liability balance aggregated to present value of USD 8.7 million. The amount which is included in the long term is USD 7.3 million. |
Measurement of fair values:
The fair value of the technology is based on the research and development costs, the relief from royalty method was utilized in the determination of the fair value of the existing and developed technologies.
The fair value of the brand is based on the discounted estimated royalty income that could have generate if the trademark was licensed, in an arm’s length transaction, to a third party.
The fair value of customer relationships is determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.
The following table summarizes the components of the acquired intangible assets and estimated useful lives as of the acquisition date:
Amount | Estimated Useful Life | |||||||
USD thousands | Years | |||||||
Technology | 85,684 | 5 | ||||||
Customer relations | 29,169 | 5-6 | ||||||
Brand | 7,654 | 5 | ||||||
122,507 |
USD thousands | ||||
Consideration transferred | 211,770 | |||
Cash and cash equivalents at Amobee | (18,919 | ) | ||
Acquisition of subsidiary – Cash | 192,851 |
NOTE 20: | SUBSIDIARIES (Cont.) |
Goodwill
USD thousands | ||||
Consideration transferred | 211,770 | |||
Less fair value of identifiable net assets | (119,526 | ) | ||
Goodwill | 92,244 |
The following table summarizes the components of the acquired goodwill that is deductible for tax purposes:
| USD thousands | |||
| ||||
Deductible for tax purposes | 7,354 | |||
Not deductible for tax purposes | 84,890 | |||
| ||||
Goodwill | 92,244 |
Acquisition-related costs
The Company incurred acquisition-related costs of USD 5.3 million thousand related to legal fees and due diligence costs. These costs have been included in general and administrative expenses in the statements of operation and other comprehensive income. As of December 31, 2022, USD 2.2 million out of the acquisition-related costs were paid.
Settlement of pre-existing relationship with the acquiree
The Company and the acquiree are parties to a long-term relationship under which the acquiree and the Company supplies each other with services at changing prices. The transactions between the parties were done based on market value. This pre-existing relationship were not terminated as part of the acquisition.
NOTE 21: | OPERATING SEGMENTS |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USD thousands | ||||||||||||
America | 303,106 | 304,686 | 180,515 | |||||||||
APAC | 20,031 | 20,931 | 20,804 | |||||||||
EMEA | 12,113 | 16,328 | 10,601 | |||||||||
Total | 335,250 | 341,945 | 211,920 |
NOTE 22: | CONTINGENT LIABILITY |
1. | In January 2018, AlmondNet, Inc. and its affiliates (Datonics LLC and Intent IQ) contacted RhythmOne asserting that RhythmOne’s online advertising system infringes eleven U.S. Patents owned by the AlmondNet Group. As of the date of this report, a claim was never filed and RhythmOne is currently in a commercial agreement with AlmondNet’s affiliate. The Company believes that the likelihood of a material loss is remote but at this point is unable to reasonably estimate any potential loss and financial impact to the Company resulting from this matter. |
2. | On May 18, 2021, the Company filed a complaint against Alphonso, Inc. (“Alphonso”) in the Supreme Court of the State of New York, County of New York (the “Court”), asserting claims for breach of contract, tortious interference with business relations, intentional interference with contractual relations, unjust enrichment, and conversion. On September 10, 2021, the Company amended its complaint against Alphonso and added LG Electronics, Inc. (“LGE”) as a Defendant. |
3. | On June 21, 2022, Alphonso, Inc. (“Alphonso”) filed a complaint against the Company in the United States District Court for the Northern District of California, asserting claims for misappropriation of trade secrets under federal and state law. On July 19, 2022, Alphonso also filed a motion for a preliminary injunction. On October 31, 2022, the Court denied Alphonso’s motion for a preliminary injunction. Alphonso and the Company are currently engaged in fact discovery. The Company believes that the likelihood of a loss is remote and at this point is unable to reasonably estimate any potential loss and financial impact to the Company resulting from this matter. |