Good day, and welcome to the Perion 4th Quarter 2015 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Stephanie Mazer, Perion Investor Relations.
Thank you, operator, and good morning, everyone. Thank you for joining us on our Q4 and full year results earnings call. The press release detailing the results is available on the company's website at terreon.com. Before we begin, I'd like to read the following Safe Harbor statement. Today's discussion will include forward looking statements.
These statements reflect the company's current views with respect to future events. These forward looking statements involve known and unknown risks, uncertainties and other factors, including those discussed under the heading Risk Factors and elsewhere in the company's annual report on Form 20 F that may cause actual results, performance or achievements to be materially different from any future results, performances or achievements anticipated or implied by these forward looking statements. The company does not undertake to update any forward looking statements to reflect future events or circumstances. In addition, and as in prior quarters, the results reported today will be analyzed for the most part on a non GAAP basis, which management believes better conveys the operational performance of the business. We will be referring to adjusted EBITDA and mentioning EBITDA in our comments.
We have provided a detailed reconciliation of non GAAP measures to their comparable GAAP measures in our earnings release, which is available on our website and has also been filed on Form 6 ks. I would now like to turn the call over to Joseph Mandelbaum, Chief Executive Officer of AAON. Joseph?
Thank you, Stephanie, and good morning, everyone. Welcome to our Q4 and full year 2015 earnings call. This morning, I will briefly discuss our financial results, update you on the state of the business and the company's evolution, in particular, the progress we have made post our acquisition of Undertone and conclude with my remarks on Karyon's forward looking strategy. Yafo will review our financial results in more detail, and we'll then open the call to your questions. To start, I'm proud to say that our year end financial results kept a very strong year for the company.
We surpassed our financial goals and made significant progress in further evolving our strategy. We are at the high end of our revenue and EBITDA guidance and exceeded non GAAP net income guidance all both for the quarter year. We have significantly strengthened the company by diversifying our revenue with the acquisitions of Undertone and Make New Leach, which will represent close to 50% of total revenue in 2016, solidly positioning us in growth categories like mobile, social and video. The company is in good health financially with a total cash amount of $60,000,000 and a net financial debt position of roughly $39,000,000 Non GAAP revenues for the year were $218,700,000 EBITDA was $53,100,000 non GAAP net income was $38,000,000 and diluted earnings per share was $0.50 all stronger than anticipated both in terms of budget and guidance. For the quarter, we had $65,300,000 in non GAAP revenue, dollars 10,400,000 in EBITDA and $7,400,000 in non GAAP net income, all at the high end or above our guidance.
This is the 2nd quarter in a row whereby our revenues increased, attributed to the Undertone acquisition and the stable innovation of search revenue. We are confident these trends will continue and that we will experience year over year growth throughout 2016. EBITDA increased as well on a sequential basis for the first time in 6 quarters due to the addition of Undertone. We were highly profitable in 2015 and we will continue to be sold in 2016. We expect our Q1 EBITDA to be lower, primarily due to the seasonality of the ad industry, which has started its weakest quarter.
We will return to EBITDA growth on a sequential basis in the 2nd quarter and on a year over year basis in the 3rd 4th quarters. It's worth taking a step back to review the company's evolution in 2014. 3 years ago, we identified the search advertising in new trends and decided to get out in front of them. With the market dynamic shifting in search, we decided to proactively lower our search media spend, focusing on premium publishers, restructure our business and change the search revenue model, reducing risk, albeit at lower margins. We then identified the shift in consumer attention and the growing importance of mobile and social.
And as a result, the shift of addend to those platforms. Therefore, our reaction was to invest in creating our mobile and social business and supplemented these internal initiatives with the acquisition of Grow Mobile and Make the Reach. From these efforts, we concluded that we should increase our focus on the demand side, specifically on advertisers and agencies as they are the source of revenue. As a result of that decision, we began looking for a profitable growth engine that could establish us as a differentiated player on the demand side and that led us to the Undertone acquisition. I'm proud of our success in restructuring the search business and also establishing the position in social level.
That gave us the ability to make the move with Undertone and successfully transition from a search dominated revenue model to a more diverse and stable model that includes advertising revenue. We have not spent the past 3 months of the M*Kone acquisition in careful analysis and are continuing the revolution. We see a big opportunity for us to focus on making digital advertising more engaging. As brand advertisers move to digital, forecasted to double by 2018, it has been a big opportunity for us. The challenge for brands in the era of more devices and marketing messages than ever before is capturing consumer attention.
Something that standard digital advertising solutions such as banner ads found in an unlimited supply across most of the major ad exchanges simply don't deliver on. We believe that digital advertising can be better, more engaging and drive real results for brand advertisers. This is why we've chosen to focus on a differentiated offering of high impact advertising solutions, both formats and platforms, for brands, which according to the marketer, is a category that will nearly double and reach $11,000,000,000 by 2018. Undertone, combined with the assets we have in Korea, provide us with a unique value proposition. Together, we have a world class proprietary high impact ad formats and platforms, award winning creative and service teams, outstanding social and mobile capabilities, sophisticated analytics, 1st party data and proprietary technology.
On top of that, we are proud of our excellent relationships with key industry players such as Facebook, Twitter, Google and Bing. All these things together enable us to serve the needs of our clients and build on the strong agency and brand relationships we have. Our solution helps brands stand out from the crowd and provide better targeting, engagement and results for advertisers and publishers. While there are some big players out there in the advertising technology industry that will continue to own a strong position, There will also be several category winners. 1 of those categories is high impact, which revolves around making digital advertising more engaging for consumers, brands and publishers, primarily through high impact ad formats and platforms.
We plan to be synonymous with that definition and intend to be the winner in this category, thus creating a strong catalyst for accelerated growth. We intend to accomplish this with both organic and inorganic investments. Organically, we intend to focus all of our business efforts towards this goal. With Undertone, we have identified real revenue synergies with parts of the Global Business and cost synergies opportunities with other parts. We intend to sharpen our focus on these opportunities over the next two quarters.
Inorganically, we believe there will be significant consolidation in the ad tech space, which will present attractive opportunities for us to add scale. We intend to assess these opportunities and if we found the right one that will extend our market position at higher debt, we will ask. Now, let me turn the call over to Jaco, who will walk you through our financials. Jaco? Thank you, Joe.
Non GAAP revenue for Payone this quarter was $65,300,000 compared to $78,700,000 in the Q4 last year. For the entire year, revenues were $218,700,000 as compared to $294,200,000 in 2014. Revenues for the year were made up of $172,200,000 of search generated revenues, $29,800,000 of other advertising revenues and $16,600,000 revenues from consumer products. The comparative reduction on a year over year basis was predominantly in SysGen rate revenues as a result of our decision later to exit certain parts of the download industry and focus on premium publishers and thus significantly reduce our customer acquisition costs or CAC to drive these sales. In 2015, CAC medium buy costs were $88,900,000 as compared to $174,600,000 in 2014.
Besides the reduction in CAC and despite the acquisition of Undertone, COGS, R and D and G and A decreased in 2015 as compared to 2014. This is as a result of our restructuring the business, adapting it to the new market conditions. Sales and marketing expenses increased in 2015 as we repositioned our business to increase revenues as well as consolidate the overturned activity driven by sales and marketing efforts. Adjusted EBITDA in the Q4 of 2015 was $10,400,000 or 60% of revenues as compared to $25,200,000 or 32 percent of revenues in the Q4 of 2014. For the entire year, adjusted EBITDA was $63,100,000 or 24 percent of revenues compared to $126,300,000 or 32% of revenues in 2014.
This year over year decrease in adjusted EBITDA was primarily a result of the aforementioned $175,500,000 decrease in revenues, partially offset by the $85,600,000 decrease in CAC and a $16,300,000 decrease in other costs. Perion's non GAAP net income in the Q4 of 2015 was $7,400,000 representing an 11% net profit margin compared to $20,000,000 or 26% net profit margin in the Q4 of 2014. In the entire year of 2015, non GAAP net income was $38,000,000 or 17% of revenues compared to $101,600,000 or 26% of revenues in 2014. As a result, non GAAP diluted EPS for the past quarter was $0.10 per share as compared to $0.27 per share in the Q4 of last year. As of the entire year, non GAAP diluted EPS was $0.50 per share in 2015 as compared to $1.44 in 2014.
On a GAAP basis, we had in the Q4 the year of 2015 a net loss of $16,800,000 $68,700,000 respectively, with diluted loss per share coming in at $0.23 and $0.97 respectively. The reason for this GAAP net loss is due to a $20,600,000 $98,900,000 impairment of acquired goodwill of intangible asset capitalized software in the Q4 year of 2015. The impairment this quarter is related to the decision we made post the Underdoor acquisition to focus our efforts on becoming the market share leader in the high impact category. Consequently, we have adjusted our Go Mobile business forecast to reflect the evolution in our company's strategy. GAAP cash flow from operations in 2015 was $17,600,000 As of December 31, 2015, net cash, cash equivalents and short term deposits of $60,000,000 and working capital was $87,400,000 We have net financial debt of roughly $39,000,000 and are in compliance with all of our debt covenants.
As of this month, we will start paying down our debt at a rate of approximately $11,300,000 a year. This concludes my financial overview for the Q4 year of 2015. Let me now share with you our financial outlook for the Q1 of 2016. In the Q1 of 2016, we expect non GAAP revenues to be in the range of $69,000,000 to $71,000,000 and adjusted EBITDA to be in the range of $2,000,000 to $3,000,000 For those of you not familiar with the advertising industry, this industry is extremely seasonal with the strongest quarter being the Q4 of every year as advertisers complete their budgets and leverage the holiday season, while the Q1 is the weakest with budgets slow to start. Our Undertone business, as different from our legacy business, reflects these general advertising industry characteristics as the Q1 is historically its weakest, both in terms of revenue and particularly EBITDA.
We expect the EBITDA to increase in the second quarter. As we look out towards the entire year, we expect in excess of 50% year over year revenue growth with EBITDA margins coming in, in the range of 10% to 12%. With that, we will now open the call to questions. Operator? Thank
We'll take our first question from Kerry Rice with Needham.
Thanks a lot. A few questions here. Maybe first on search, I think that for Q4, search was a little bit weaker than we expected. We're looking for some sequential increase. Can you talk
a little bit about that? It also seems you
pulled back on customer acquisition costs. Have you kind of with undertone decided to maybe pull back on future customer acquisition costs on search, and so that's going to run at a lower level. And then around the goodwill impairment related to Grow Mobile, do we think of that of Grow Mobile just kind of wrapped being wrapped into Undertone at this point, given that big write off and so there will be less focus on that? And then just one housekeeping question. I know, Jacopf, you I think broke out other and consumer products for the year.
I didn't hear what it was for Q4. And maybe could you give us what undertone contributed in Q4? Thank you.
Okay. So we'll try to go over and answer all your questions. And if you missed one, just feel free to remind us. First of all, with regard to the last one with regard to the breakdown of revenues, so in the 4th quarter, it was $18,000,000 from advertising and about $4,200,000 from our consumer products and others. All of 'eighteen was from Undertone.
No, right, obviously. So we already had advertising revenues before the Undertone acquisition and that remained pretty much at the similar pace of the prior quarters with the big jump coming from the Undertone acquisition. Answering your first question with regards to search, as we opened up in our remarks, search volumes are relatively stable. And if we look at the beginning of the year, Q1 about 42%, Q2 of 41%, Q3 of 45%, and then back to 43%. So plus minus 5% to all the quarters.
So being relatively stable does not make it immune to different kinds of things that happen in the marketplace. For instance, one of our partners in the 4th quarter suffered from some technical problems with the introduction of Windows 10 and Edge. So, we had some if you assume, we have problems there. So there are some still ups and small ups and downs in that part of the business. But as we said, we're confident Kerry, on the impairment of the Ozemium going forward, Kay, on the current horizon going forward, when you first echo that percent and search, we're committed to it.
We think it's again, it's not a stable good business. It's not a big growth business. We said that. We think there is a lot to come from focusing on our impact. But we still believe it's a good business.
It produces a lot of good cash flow for us, and we think it's stable. Hopefully, we can grow it over time. It's a function of RPMs, which as you know, we don't control and obviously some other noise in the market, which is certainly quietly down for the past year. But that does bring us to the impairment and the assumption of your question, tying the 2 things together. We have decided to really focus the company and its efforts in really 2 areas, search on one end and the others in high impact advertising solutions, which is both formats and platforms.
And when we look at Grow Mobile and we're looking at what we're doing in Undertone, we believe that there is some good synergies, for example, on social, one of these we identified really early on. Undertone has no social presence whatsoever. And we believe we can really enhance that overall pitch to the brands and its agencies, including SearchMail with our platform. And we have to work with Facebook and Twitter and other social networks to have high impact to Facebook and to other places, grow mobile make the lease. But when we look at where we're focusing our efforts going forward, one of the things we decided is just that we think there's a really big opportunity to focus on high impact as a category and it kind of makes us differentiated.
If you look at and therefore some of the focus and shifting levels and our resources in terms of focus will be on supporting that goal. And as such, it's just technical. We took down first of all, because of our stock base, we actually every year we record now, we have to exit that book value versus equity value. For we decided that from a Grand Mobile standpoint, the revenues directly related to a standard mobile DFE. That is not going to be an area where we can grow significantly.
I mean, we're still going to have it. It's so important to actually the Under Chem business as well that it won't be as independent going forward. Revenue streams we know working with the Undertone business and seeing how we side of it. And we think as the evolution of our strategy, as I mentioned earlier, it's the right decision to do now. After we undertook acquisition, it's a really good opportunity.
We're excited about it. And we want to take all the resources we have and prove the idea of becoming number 1 in the higher type category.
That's helpful. Thank you for answering all the questions.
Appreciate it. Thanks for coming, Terry.
And next, we'll hear from Dan Cronos with The Benchmark Company.
Great. Thanks. Good afternoon, guys. Hey, Doug, a few things here. Let's just start with some high level stuff, Joseph.
Can you just tell us kind of where we stand now on all of the lockup issues? I know it expired early this year. Obviously, we can kind of see what happened to the stock price, but just from holders what you're hearing on that end and how what else is what's left and how you plan to address the remaining shares that are out?
Sure. The good news is, I mean, from a lack of standpoint of over, and we think most of our trade is beyond us. We had roughly as we knew, we would happened, we tried to sell you, but in the 1st 2 weeks of January, we have roughly 4000000 to 5000000 shares at the market. It's the best of our ability as we can tell. Out of it, we felt would be a total of 6.
So pretty much almost all of it has hit the market. And I'm not too sure the stock price is pretty much down from 4 to 2 something again after we had a nice increase after the Undertone acquisition. The remaining shares are really in 6 shareholders' hands. And those 6 shareholders we're in constant contact with. None of them are going to dump the stock on the open market.
They will. Some of them will look for liquidity sooner than others. Most of them who are reiterating will either look for off market transactions. Or at some point in time, there could be some other activity. If the stock price is up enough, we could do some type of secondary on behalf of those shareholders.
We don't plan on raising money at this point in time through any offering, obviously. But for these shareholders, if the market and the Southwest rises to a certain amount where they're going to sell, And therefore, I think the Connect seven, the worst is beyond us. We have 6 shareholders on about 40 something, 40,000,000, 40,000,000 shares. And May 6, they're working with us to be as responsible as we can so that we actually hopefully increase the value of the company and not decrease it.
Great color on that, Joseph. Thank you. And then just quickly on search, obviously, we've seen a lot of changes. I'm not going to go into too much because you've given a decent background, but we've seen a lot of changes from Google just in the way that they're revamps the rankings and scores and some other things and Bing is starting to follow suit a little bit and also push their programmatic. So maybe if you can just talk some of the puts and takes that you're seeing on the Bing side as they're continuing to play catch up and how that's impacting sort of your forecast for Surgeon General?
Yes. So I mean clearly, first of all, if you just look at the market share, I think Bing has gained nicely over the past few years and I think they've closed the gap, seemingly better than in the past and the RPM gap between Google and Ring. I think that gap is probably the rate of closing the gap is probably slowing down. Mostly, what was I think just in terms of economics, obviously, if the gap closes more and more, the truth is other than Windows 10, we've had relative stability to have the regulation changes from the Google, Chrome, specifically, or even antivirus companies out there and Microsoft Windows, I think they have succeeded to a large degree of getting rid of a lot of the bad practices and players out there. And we haven't seen significant volatility there.
There's still some noise here and there. There's no question about it. As Jacque mentioned earlier, one of our partners did have a technical issue, something that had been built in that hurt them and unexpectedly obviously in protest as well in Q4. But other than that, Dan, I think what you're seeing most of the internal would be competitors out there, especially the public companies. The decreases you're seeing there is just the fact that we did the poll early on a year and half ago.
And we think we got out in front of it, but we took the hard medicine and the stock price for Winnipeg. And the other companies, I think, had it longer. You can decide which was a better strategy, but you can't fight gravity. At the end of the day, everybody is coming down to the same area where it's a good industry but a much smaller industry than it has. We're pretty much only going to be 2 or 3 pillars left.
As you know, Bluecore is put up for sale in 1 plus space, so we'll see what happens there. ISE is pretty mostly focused on the B2C part. On the B2B part, we're kind of toning that down as well. And maybe the other one major another private company up there is decent size. So I think we're in a position to hopefully pick up some market share, but not keeping the ads and volume further diversify in the search business outside of the download space to the syndication and the web and mobile side, which we are gaining traction.
And we believe over time that will help us continue to evolve the search business, albeit we may be replacing down the revenue network, but we're unable to be growth there for us, but it's still the popular business and the growth will come in shifting of those revenue
streams. That's really helpful color. Just one not
to belabor the point
on this, I was also curious if you had any thoughts on the new announcements since you have focused on higher quality content publishers with the new support embedded in the Bing Ads editor for native content. Does that changes or helps your partners at all?
We believe HubSpot, that's really one of their strategic partners without going into much detail, but we are certainly, we'll be one of the first companies that will be working with them to roll that out on a distribution angle. We're excited about some of their initiatives, which I think is really interesting. And I think they're actually getting it right in a lot of ways. It's still in the early phases. I'm sure, as Perry Mark said, Kevin will tell you, perhaps there are more.
But from our standpoint, we're excited about what that gives us this opportunity to bring to publishers, especially premium publishers with the vast abilities that obviously Bing brings to the table. Great.
And then shifting over to the ad tech side, obviously, there's been a lot of negative press over the last probably 6 months in the ad tech space. I know that you did a good job in your prepared remarks differentiating sort of your products versus the other guys out there. There was a big piece in the journal about declining headcount ramp across the entire industry. So maybe if you could just address specifically how you guys are seeing sales ramp to support your growth initiatives and just any additional color on the differentiation that is helping you through I think what's perceived as tough times?
Sure. I mean, Lee, I think your question hit the nail on the head. This is why we've had undertone and this is why we're actually choosing to focus our energies across the company in the advertising space, including more mobile, a differentiated position with high impact from us and platforms. What we're seeing in the industry is laying at, and this has not been news for anybody, but essentially there's 2 retailers in the IP space, which is polarized to Preston and the stock market. How should I differentiate between all of them?
Think Jacob told me he was at an investor conference recently and he started listening to a few other presenting companies and he said, Oh my God, they all sound alike. I wonder if we sound alike. We hope the XTR and I are differentiated, but that's part of the problem. There's just too many little differentiation programmatic. While it's certainly a big part of the business, we actually believe in our world, we believe in more private marketplaces and product direct.
Open ITD programmatic, first of all, as you're seeing from a lot of the players out there, a lot of garbage inventory, which is problematic and the brands out and agencies are not getting the money's worth. Number 2 is the margins will continue to decrease because technology there is not a differentiator. It will eventually be standard for everybody. So you really need real scale. There are some companies who have low scale.
And I'm not sure that Facebook can do it, obviously. But other independent companies, we don't think we'd be one of them. So we focused on really leveraging our history of what we've done frankly on the search side and Aeryon and found a company that is profitable that has scale already. And we believe together we can scale it further with combining some of our own efforts with their efforts and continue to really expand by the category. So from our perspective, what you see is a massive issue, there are a lot of changes, companies are struggling.
I think that will continue. That presents, we believe, an opportunity for us to maybe pick up some good assets along the way. But on our side, on the iTech, we're growing. We're adding headcounts on the iTech side of the business and we're focusing the resources to try to drive sales. And we expect 2016, as Alcus and Urea, to be a very good growth year for the company, not only overall because of the acquisition, but also organically as we focus on the high impact formats at Undertone, they are growing at 30 plus percent.
So we're excited about that opportunity and hopefully we can really see the moment and become the leader in that category.
I think one of the other issues in the space, Joseph, is that people complain or ad agencies or even end customers, end users complain that a lot of the products are overly complicated and that the choices are widespread. So could you just address that thought process and how if you have at all simplified the process for people through
produces great results by engaging the consumer with their brand and engaging consumers with their brand gets them what they want from their results and stand out amongst the noise in the industry as opposed to banner inventory or different formats out there, pre LTV and other things like that. So we try to make it as simple as possible. Frankly, most of the work probably in the integration on the publisher side, On the advertiser side, it is the creative production side of it. But we do a lot of that work for them. We opt them out on that.
I don't think they find it difficult. So I don't know on that particular piece, which you tell me that from our standpoint, we sell the package and we sell what we're delivering to the advertiser, which is brand awareness and engagement with their brand and sharing on social networks. And if they love the ad, they're going to share it to other people. And that's what the brands really want to drive their business.
Okay. And then just one housekeeping question for Yaacov, just quickly. I know we talked about this last time on the guidance and as we look to think about Undertone revenues in 2016, have you guys made a decision as to whether or not you're going to record net or gross revenues for this?
So I think as you were able to see in our presentation also when we acquired the company going forward. From a GAAP standpoint, we will be on a GAAP standpoint, we will be reporting them on a gross revenue basis. However, management does view some of their revenues, the standard display revenues, which where our content or what we're contributing to the product is relatively lower, management is going to be those starting to display or add unit revenues on a net basis. So, going forward, you're going to see us presenting GAAP and non GAAP revenues in close of that.
And so, the way that you've done it now, there's not going to be any future changes as you assess the business on a go forward basis?
No, not at all. Okay,
perfect. All right. Thanks guys. Appreciate it. Thanks, Doug.
Our next question comes from Robert Sussman at Bentley.
Thank you. On the first quarter guide, you talk about the seasonality, but the revenues in the Q1 are estimated to be higher than the 4th. What accounts for the large margin drop?
Well, so, first of all, there's a technical difference. In the 4th quarter, we're only consolidating 1 month of other tons activity. So that's an anomaly going from the Q4 to the Q1 in the first part, so we took being into the full quarter. That's number 1. And as we mentioned, the strongest quarter in the Undertow business is the 4th quarter and particularly the strongest month is December and we were fortunate to acquire the company for the entire month of December.
As we go into the Q1, that is in the advertising industry in general and Undertone being a player in that industry in particular, that is the weakest quarter. And in this industry, when you have high margins, when you have weaker revenues, it goes down to the bottom line. So that's why even a small drop in revenues has actually a more significant effect on EBITDA and affecting the margin for the entire company.
Okay. That's helpful. And the second question I have is that much of what you're saying about the recent acquisitions, we said about prior acquisitions that have now been written down substantially. What gives you confidence the new business will be so much more successful than the prior acquisitions were?
So, first of all, thank you for the question. I still understand, Robert. I think in any business and I think if you look at our track record, first of all, the MakeReach acquisition has actually done very well. We look at obviously several other acquisitions, Wildbox has done well. The conduit side of the business as you can imagine.
The biggest change there has been the search industry itself. I know, I think we with the acquisition, the answer is, and I've been asked this question before, it was a great acquisition. We got great cash flow out of the business, which sure every time we get close to probably $150,000,000 over the past 2 years, which enabled us better rate to diversify Enviro and which we also pleased with the EBIT acquisition because we've got a mature company that is already on the growth path with strong profitability. I think if you look in the past and therefore, technically, what did happen in the search business is that we did the acquisition because the search industry changed, it was not because that position did not work, and that's very important. We had to ultimately write down because the forecast of the industry changed and our forecast of revenue has changed.
Not to mention, the decrease in our stock price caused us to write things down on we have to look at it on a quarterly basis as opposed to just annually and you might have that going. So if you look at all the acquisitions we've done, the royalties, I think we've done 6, 5 or 6. Yes, I think, too, we did write down and there's no question, I think, probably disappointing. And we're actually very happy with it and we've done well. And I think that's a pretty good batting average.
That was perfect. And we expect you continue, whether it's organic investments or inorganic, even organic investments rather, you do something, they don't work out, and we do work out. Thank you. That's like anything in life and we believe we're going to continue that pace. In this case, we decided to, and I think, which is a difference to a leader question, we decided to go after bigger acquisitions with an existing business that is profitable that really weighs the risk of something not working out.
And I think that's a better way of doing. And we can only get to this acquisition because of the one we did earlier with content. So actually looking at it and I think here is what I'm going to be 100% betting average, 1,000 percent I'm sorry, but it just never is. So we're I think your question is a legitimate question and there's no am I understanding. I don't look at it the same way.
I'm not shying away from the fact that something to work out, and therefore, we do take breakdowns. But the last 2, we're talking about when on concrete with the industry was not the acquisition itself. And Granville, the right time, actually wasn't even Granville as much as it was We're going to focus our efforts on making sure we can be delivering high impact. Therefore, we're shifting some of the focus on that and we're reshipping the focus. Again, because the stop loss is low as well, that does change the forecast.
And the forecast, therefore, is it technically up to that to move down and you change the forecast.
Okay. Thank you very much.
And next we have Mark Estigaria with Chardan Capital Markets.
Thanks for the call I mean for the questions. Just and sorry if you answered this already, Yaacob and Joseph. But in terms of going forward, the forecast,
I think we're looking at 50% growth expectations for
this year. Can you just break down the expectations between search and advertising? I know before it was I think there was a 60% plus guidance fifty-fifty breakdown. If you can just give us a breakdown going forward, what to expect? Because what I'm doing, when I
look at the search going forward,
I'm trying to put in
some growth in search and
I'm putting more in advertising and just trying to
get some color. Sure. First of all, let me just give you the breakdown. We think in general, the revenues from search and consumer apps, so the download and search side of the business, will be roughly half of the business in the advertising business, which is growing over 100 and 12,000,000. So next year, it's roughly a fifty-fifty split.
That's number 1. If you change out the guidance in the 60% to 50%, We said approximately 60, and we said in excess of 50. So we're trying to be conservative. To be candid, given the start price, I give no credit for being negatively aggressive. They're not going to be overly aggressive.
We think that there is growth and there will be growth in the advertising side. On the search and the consumer app side, I think it's an entry point. We expect that to be stable, plus or minus 5% in terms of both 5%, maybe a little bit less, but in that range. And then the rest, we believe there will be growth in the Grow Mobile and Undertone side of the business.
Thank you. Can you provide us with the net revenue number for full year 'fifteen Undertone?
It was approximately 120 dollars for the entire year for Undertone. But again, Undertone has a private company, which reports gross revenues and that's therefore, they didn't really have that growth or gross and net revenue difference. And it's mostly under, if you wish, under the Perion regime But we're just from a management standpoint, we're looking at it from a non GAAP to the net revenue. But for a moment, Mark, it's around 120 in change, whereas what the Undertone net revenue number would have been in 2015. That's helpful.
With regards to ad blocking,
I know it's been a huge theme. There is a big conversation between Google, Yahoo! And one of the app blockers in the Mobile World Congress in Barcelona. And also Opera just came out with their big browser and the built in ad blocking. What is your what are your concerns or what's your comments going forward this year in terms of combating that issue for the industry and for the company?
So for the company, to be specific, we don't expect it to have a meaningful impact on our business, if at all. Only our advertisers and brands agencies only pay for impressions they review. So and the percentage are up, we never charge we never get charged, we never charge the advertiser. We have plenty of inventory that we're not concerned with that. On the industry standpoint, as you may have seen, you may have read recently in Sweden, 90% of all the publishers of Swedish websites actually band together and started saying to all consumers in Sweden, if you want to look at my content, disable the ad mark.
And if you don't, you can't look at the content. I expect there to be a nice barbell on between the ad authors, doctors, who many of them I think have a lot of good intentions, many of them I think are what you call the nice mafia country store and say you need protection payment. And I think the customer consumers, which is the main thing here, want to better ad experience, and we think we're positioned nicely. And I think the industry overall will go to better formats and better quality advertising. And I think we are running leaders in that regard.
And therefore, as we go forward, our proprietary investment formats integrate to the publisher side. There are frequency caps around them. We don't come by anybody. We do it very tastefully. Actually, they're the only ones that people share on social media because they're cool ads.
I think that's one way of doing it, just raising the bar on advertising. There's no question that has to happen. I think number 2 is publishers will start branding together, and that's the answer. It's my guidance. You can't look to look at my site.
I think streaming is a good example of what's happening. On the browser side, it will be interesting to see what happens. Opto is one example, but they have got on a 0.2% market share. So the real one is what happens with Edge and Chrome and Firefox And what they do and again, a lot of their revenue is also generated because publishers actually see their values and a lot of advertising revenue because I do not necessarily see that's going to be as a default implemented. But I think you might for us, specifically, the industry will work itself out.
Marty, you may remember, I know you said it was probably 15 years ago, pop up ads were everywhere. The industry, consumers hated, they complained. It took 2 or 3 years, but eventually it stopped itself. The IAB got involved as we're doing today with Lean. I believe Google and Mobile is getting involved with AMPs.
So I think there's a lot of things that are happening that will eventually create liquidity in the marketplace. And we get better quality ads, we make the consumer get a better experience. But I don't think ad blocking will be z way going. I just don't see most consumers paying for content today and I think that there are a lot of better quality ads and hopefully we do that to them and others will Great. Thank you.
Just one last question. With regards to the revenues attributed from Bing on the consolidated growth going forward, I think what we have is around 40%. Is that sort of still
the concentration from Bing for total revenue? Total revenue including about the total business? Yes. That would be a fair assessment, yes.
Okay. Thank you.
And as there are no further questions, I'll turn the call back over to Mr. Joseph Fademarko.
Thank you, and thank you, everybody, for joining and asking questions today. In conclusion, 2015 was an important year for us. We acquired 2 strong companies, strengthened the foundation of the overall business and laid the task for the next phase of our evolving strategy. It is incredibly gratifying to see our productive strategy gaining traction. We have come a long way and now have a very clear vision for the future in making digital advertising more engaging.
As always, I am thankful for the professional support and hard work of our dedicated employees. Thank you to everyone at Perion and thank you all for joining us today.