Good day, everyone, and welcome to the Perion First Quarter 2014 Earnings Conference. Just a reminder, today's call is being recorded. And at this time, it is my pleasure to turn the conference over to Deborah Marglett, Perion Investor Relations. Deborah, please go ahead.
Thank you, and we appreciate the attention of everyone who is joining today. On today's call, management will be reviewing the financial results and business highlights of the Q1 ended March 13, 2014. The press release detailing the results is available on the company's website at perion.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 revise any forward looking statements to reflect future events or circumstances. In addition and as in prior quarters, the results reported today will be analyzed on a non GAAP basis, which management believes better conveys the operational state of the business. We have provided a detailed reconciliation of non GAAP measures to the comparable GAAP measures in our earnings release, which is available on our website and has also been filed on Form 6 ks.
With that, I'll turn the call over to Joseph Mandelbaum, Chief Executive Officer. Joseph?
Thank you, Deborah, and good morning, everyone. Welcome to our 2014 Q1 earnings call. This was a great start to 2014 for Perion with record financial results and continued strong growth both in terms of revenue and profitability. I'm very pleased with the progress we have made, especially given the significant task of consolidating and fully integrating Perion with ClientConnect. The theme of the Q1 and into the Q2 has been integration.
The greatest challenge of most acquisitions is not the negotiations we end up to closing, rather it is the post merger integration to ensure future success. I'm happy to report that the integration process has gone faster and smoother than we anticipated, and I'm extremely encouraged with the incredible talent we have assembled. When we embarked on this journey 9 months ago, we started planning ahead with a post merger integration process to be implemented immediately upon closing. It consisted of employees from both sides and proceeded to develop 10 different working teams to tackle everything from financial reporting consolidation to quick business wins and infrastructure cost savings. Many of these items many of these teams, excuse me, have already finished their original objectives and have moved on to other potential synergy projects within the company.
I think it is fair to say that the execution capabilities of the team have been stellar as evidenced by our financial results, With $117,100,000 in revenue, dollars 33,600,000 in EBITDA and over 20 $7,600,000 in net income, this was truly a great quarter. But more importantly, it is a great testament to the talented execution oriented team we have at Perion and budding expertise we have developed with regard to acquisitions. Today, Perion is stronger than ever with the talent, scale, resources, infrastructure and expertise necessary to develop and deploy new solutions that leverage our current business and position Perion as a clear industry leader. We are now the 2nd largest search distribution company in the world and one of the largest software distribution providers through our industry leading technology platform. We are particularly excited as this transformative acquisition provides us the means and resources to implement our 3 year diversification strategy.
This strategy will take Perion from being a company with one main revenue source and obvious industry challenges to a multiproduct and multi revenue based company. Our vision remains the same, however, as we strive to be the platform and partner of choice for developers who want to promote, monetize and optimize their business. Simply put, it has become increasingly challenging to be a software or app developer even as the consumer market has grown with smartphones and tablets. It remains challenging for software and developers to get discovered. While the logistics of distribution on mobile on the mobile side are slightly easier, marketing your offering and creating an awareness to your product is still very difficult.
On top of all this, it has become much more difficult to monetize applications. Half of all apps don't generate enough revenue to cover development costs, let alone marketing costs. In a recent study done by Adkit, an online research company, it found that 49% of all app developers, both on the desktop and mobile platform, said discovery is their biggest problem with monetization a close second. To make things more difficult, most app developers, being small businesses, lack the analytical capabilities to improve funnel conversion, create systems for traffic, revenue per user or implement traffic acquisition campaigns. In the same study by Adkid, it found that 68% of all developers are either individuals or belong to a small business with fewer than 10 employees.
Today at Perion, we are laser focused on addressing all these challenges as we build out our lifecycle management platform. This powerful solution will essentially provide a comprehensive single and cross platform solution for app developers that want to increase their distribution, optimize the engagement of the users and, of course, monetize those users. Today, we largely utilize search agreements to provide monetization solutions to developers. In the coming quarters though, we'll see display advertising play an increasingly prominent role in our monetization efforts. In addition to potential acquisitions to help us round out our life cycle management platform, we have launched a few organic initiatives in the Q1 and are pleased with their progress.
The first is using our data, while maintaining the highest level of privacy policy standards to build a profiling system to help our partners increase their display advertising revenue through targeted advertising, which yields higher CPMs. Our new scale and massive data set give us a powerful advantage in display advertising space. While the test is still in its early stages, we are very encouraged by the increased yield our data is able to provide to advertisers and therefore our partners. The second initiative we launched this quarter is a mobile distribution platform leveraging our business intelligence systems to help developers increase the efficacy and yield of their marketing efforts. We have partnered with a number of market leaders as design partners for this new platform and we'll update you on our progress next quarter.
The 3rd initiative is focused on extending our core search business into the mobile arena. We are working on a few variations of a mobile search product that will leverage our unique search partnerships and tremendous expertise in the search business. These offerings are customized for certain verticals and our partners' needs, while delivering a good consumer experience. Though it is still in its early stages, it is showing some encouraging results. Before I turn the call over to Yaacov for a detailed financial analysis, let me mention that we recently filed a shelf registration statement with the SEC, specifically registering certain shares issued in connection with our reverse acquisition of ClientConnect.
This filing was agreed to at the time of signing, was one of the conditions of the agreement and was disclosed in the proxy statement issued last October and in our annual report. Affiliates of Karyon need a shelf registration because there are resale restrictions under SEC rules. However, this filing was just a technicality as all shareholders are still under the agreed upon lockup provisions. As a reminder, approximately 5,500,000 shares will be eligible to come off lockup by July 3, 2014, when all shareholders can sell up to 10% of their holdings. Approximately 40% of the shares issued to the shareholders remain locked up for at least another year and a half, while the other 50% remain locked up dependent on our stock price increasing to $15 $18.5 $22 We are exploring different options put in place a structure that will facilitate an organized and responsible way for these shares to be sold.
To explain our thoughts in a bit more detail, allow me to elaborate. We believe that increasing the float and expanding liquidity could help facilitate new institutional ownership of Parion stock and reduce potential investor concerns about the relatively small public float and limited liquidity of Perion stock. Increasing our float and attracting new institutional investors will also lower the volatility of our stock. In addition, we are contemplating a debt offering to residents of Israel. We favor a debt offering because of the low prevailing interest rates and our goal of minimizing dilution to our shareholders.
Our strong cash flow supports our ability to service the debt. We have a history of making good strategic acquisitions, and we have shown that we are cautious and methodical in this approach. That will not change. With that, I'll turn the call over to Yaacov, and we'll take your questions. Yaacov?
Thank you, Joseph. As mentioned earlier, the accounting for the acquisition of ClientConnect is viewed under U. S. GAAP as a reverse acquisition. And as such, I'll be discussing the non GAAP results for Perion in the Q1 of 2014 as compared to the non GAAP results for ClientConnect in the Q1 of last year.
In addition, for the sake of transparency, for this quarter alone, I will compare the main components of Perion's results to those of the combined Perion client connect entities in the Q1 of 2013 on a non GAAP basis. Given our past history of acquisitions and our intention to do future acquisitions, we do not intend to compare against combined in future quarters. Revenue for Perion this quarter was 117,100,000 dollars or 47 percent compared to $79,700,000 at client connect in the Q1 last year. On a combined basis, revenues increased $9,900,000 or 9% as compared to $107,300,000 in the Q1 of 2013. In the Q1 of 2014, non GAAP revenues include $2,300,000 of Perion's deferred product revenues, which were deducted in accordance with U.
S. GAAP as a result of the acquisition. In the Q1 of 2014, Perion increased its investment in customer acquisition by 49% to $59,600,000 representing 51 percent of revenues as compared to $40,100,000 or 50% of revenues in the Q1 of 2013 by ClientConnect. On a combined basis, the 2 companies spent $51,500,000 on cost of acquisition in the Q1 last year. R and D expenses this quarter were $12,200,000 or 10 percent of revenues compared to $9,700,000 or 12 percent of revenues in the Q1 of 2013.
Non GAAP R and D expenses in the Q1 of 2014 and 2013 do not include $1,100,000 $600,000 respectively of non cash employee equity compensation included in the GAAP report. Non GAAP R and D expenses in the Q1 of 2013 at ClientConnect included $5,200,000 of expenses classified as discontinued operations in the GAAP report. Looking forward, we intend to further increase our investment in developing new products for new platforms without increasing the expense as a percentage of sales. Sales and marketing expenses for the quarter, excluding customer acquisition costs, were $4,400,000 or 4 percent of revenues, compared to $4,100,000 or 5% of revenues in the same quarter last year. These expenses were reduced in the non GAAP report for the Q1 of 2013 2014 by $300,000 and $1,400,000 respectively for non cash equity compensation and amortization expenses included in the GAAP reports.
In addition, the non GAAP reports for the Q1 of 2013 included $1,900,000 of expenses classified as discontinued operations in the GAAP report. Our G and A expense for the quarter was $5,300,000 or 5 percent of non GAAP revenues compared to $2,400,000 or 3 percent of revenues in the Q1 of last year. The increase in G and A reflects our Building ClientConnect into a sustainable company capable of being active in the public and M and A markets. Building in part on the management platform created in Perion, which had G and A expenses of $1,900,000 in the Q1 of 2013. This quarter, GAAP operating expenses, including cost of goods, included $4,400,000 of non cash share based compensation, dollars 4,500,000 amortization of acquired intangible assets and $2,900,000 in acquisition related expenses, providing for a total of $11,800,000 adjustment of GAAP operating expenses.
In the Q1 of 2013, the GAAP operating and cost of goods sold expenses were increased by a total of $7,700,000 classified as discontinued operations in the GAAP report, partially offset by an increase of expenses by $400,000 of non cash employee equity compensation. During the Q1 of 2014, EBITDA was 33,600,000 dollars or 29 percent of non GAAP revenues, up 49% compared to $22,500,000 or 28 percent of non GAAP revenues in the Q1 of 2013. On a combined pro form a basis, EBITDA increased $3,200,000 or 10%. Perion's net income in the Q1 of 2014 was $27,600,000 increasing 41% from $19,500,000 at ClientConnect in the Q1 of 2013. On a combined basis, the 2 companies generated in the Q1 of 2013 $25,300,000 in net income, in comparison to which net income therefore increased 9% this quarter.
Again, I caution that this figure does not account for any synergies achieved as a result of the split of client connect from conduit and the subsequent combination. As of March 31, 2014, cash and cash equivalents were $51,200,000 or approximately $0.75 per share. This was made up primarily of $13,900,000 cash flow from operations, dollars 23,400,000 cash balance at Perion prior to the acquisition and a $14,800,000 short term loan from Conduit to support working capital post acquisition. In the context of acquiring the ClientConnect business, Perion did not acquire cash or working capital. As such, a significant amount of the quarter's profits were reflected in creating working capital.
Once accomplished, we expect cash flow from operations to be closely correlated to net income in the coming quarters. This concludes my financial overview. Let me now review some key operating metrics for the Q1 and end with our 2014 outlook. Our total queries in the quarter totaled approximately $3,400,000,000 of which $1,500,000,000 were from Tier 1 countries and $1,900,000,000 from the rest of the world. Tier 1 queries increased year over year as we shifted our customer acquisitions to Tier 1 countries away from the rest of the world with the industry changes in February of 2013.
In addition, as we move more toward advertising, we felt it important to start reporting some relevant metrics. Ad impressions total approximately 3,900,000,000 impressions with 1,500,000,000 of them in Tier 1 countries and 2,400,000,000 in the rest of the world. Lastly, we are reiterating our full year 2014 guidance. We continue to expect revenues to be in the range of $60,000,000 to $470,000,000 EBITDA is expected to be between $125,000,000 $130,000,000 and net income is expected to be in the range of $103,000,000 to $108,000,000 We are seeing some seasonality in our business And as Joseph mentioned earlier, there are still some expected headwinds from certain browser changes to be implemented at the end of the second or beginning of Q3, which will impact the quarter to quarter results. We expect the 4th quarter to be our strongest quarter, with the second and third quarters slightly weaker on a relative basis.
Therefore, despite our better than expected Q1 performance, we are leaving our full year guidance as is and remain confident we will achieve it. With that, we will now open the call to questions. Operator?
Thank you.
And we'll go first to Kerry Rice at Needham.
Thanks a lot. Hey, Joseph. Hey, Yaacov. A couple of questions, maybe if you can elaborate a little bit, One on your kind of targeted display advertising that you're going to roll out. Is that both online and offline?
I mean, I'm sorry, offline and mobile and how do you kind of look at that progressing through the year? The second question is, expanding local search into mobile. And can you maybe add some more color around that? Is that in app? Is that mobile web?
And then just a quick housekeeping on the number of queries and ad impressions. I don't know if you could give any year over year growth rates. I know you said that queries grew year over year. But if you can give any more specifics, that would be great. Thank you.
Sure. Thanks for the questions, Kerry. Okay. I'll try to take them 1 at a time and Jacob can chime in. So on the targeted advertising side, we have started this quarter partnering with some few select companies, and we are seeing that our data and the first thing, actually building our own profiling system in house, building the RTB system.
Right now, it's mostly online specifically. And we are seeing some nice early results in terms of the yield or the lift in the yield for our advertisers and our partners in terms of monetization. In the mobile distribution side that I mentioned we're building, part of that also will do some targeting. That's probably going to be towards the latter half of the year, while the target advertising side we're working on now. I hope by the end of the Q2, we'll probably roll out in a more aggressive way in early Q3.
That's the plan as of today. We're excited about what we can do with that and hopefully look to leverage our position in the marketplace to get into, we think, a field which is growing significantly, both online and on mobile, and which we have significant assets that up until today, frankly just have never been utilized for a variety of reasons that today we're unlocking as part of the acquisition. We now have enough scale. And as you know, with the data side, you need enough scale to really be able to leverage your data enough to give an increased yield to advertisers. So we're it's probably focused today primarily on the desktop as a proof of concept first.
But in the mobile distribution initiative, I mentioned second, we are also looking at some of the opportunities we have to do some targeting on the mobile side, and I'll explain probably more of that in the Q2 earnings call as we have more data. On your mobile search side, so on that one, what we're doing is specifically we're targeting some verticals. It's in app. It's not mobile web today. It's in app and we've targeted some verticals that we think are very appropriate, they have good reach.
And through our existing relationships, basically, it's adding on some type of nice consumer looking search box and search products into the app or into the integrated into the app itself. And these are mostly people who either can't get the deals with the directors, the search providers, and some of them are our partners already. So we just started launching that, and we're seeing actually some nice LTV in the initial, it's been I think operational for 6 to 8 weeks and we're seeing some good initial results with some of our partners. So again, it will take a while to roll out, but we think we've identified 2 or 3 or 4 verticals, which we think are really appealing to this type of product offering that will help them add incremental monetization to their apps.
With regard to the queries, if I may, as we mentioned in the prepared comments, we are leveraging the advantages of our Bing contract and therefore shifting our attention to Tier 1 countries.
And just to give a
little bit more color, we said we had about 3.4 1,000,000,000 queries this quarter. That is actually down by about 9% from ClientConnect in the Q1 of 2013, but is reflective of a dramatic increase in the Tier 1 increase Tier 1 queries from about from below 900 $1,000,000 to about $1,500,000,000 as we said, while the risk of the world queries went down from $2,800,000 to 1.9 So what you're seeing is a shift to Tier 1 countries and leveraging the advantages of our Bing contract.
I'd add to that. Even in the rest of the world, you're seeing a shift to higher Tier 2 countries where actually the yield of the RPM is still higher than some of the other countries we were focused on before. So as you look at managing the balance of queries, we're focused on obviously, the different countries that have the highest RPMs as well as where we can get the best distribution. So it's a combination of those things. And I think we'll continue to work on that as we go forward.
But we have multiple search partnerships that allow us to kind of maximize the yield for our partners and help them make more money and in turn, obviously, does the same for us.
Okay. Thank you. Thanks, Carey.
We'll take our next question today from Dan Kurnos with Benchmark Company.
Yes. Great. Good morning. Nice quarter, guys. Just a couple of questions here.
First, we heard that there were some rumors out there that Google was withholding particular query data from certain partners. Were you affected by that at all? And then secondarily, excuse me, Joseph, you did reference some browser changes coming up in either 2Q or 3Q. We know that Google has been pushing new clients towards their custom search ads platform and had heard from industry sources that Bing was likely to follow suit in 6 months. Is this what you're referring to?
And if so, does it require any technology changes, whether it's a shift from XML to Java? And how disruptive might that be?
Sure. Thanks, Dan. Thanks for asking the questions. On the first one, actually, I don't we don't feel anything, any changes on that side. I have not heard what you heard about Google withholding anything.
So I can't really comment on that. We have a good partnership with them, and we haven't been affected of anything. So I don't have anything else to add. With regards to the browser changes, guys, it's public information obviously that Chrome specifically in their blog post is making certain changes for the benefit of consumers to make sure there's more transparency. And as we said before, in the long term, we support all those things and we think that it's a good churn for the industry.
Although it might have a slight negative effect in terms of conversion and therefore queries in the short term, we do think that over time now being one of the bigger players in the industry, the industry is still going through a transition, started last year, still going through this year. We do think that this year will still be a transition year, but we're actually bullish in the long term because of the basic fundamentals of the business, which is most people on this phone call today still don't want to give their credit card to buy software from whether it's on the mobile or on the desktop app. And there's still software developers who still want to make money to put food on the table. So they still need partners, and we're I think a very good partner with a good reputation in terms of servicing the needs of our partners. And therefore, there will always be some type of advertising, be it search or display, monetization opportunities for people like us to play a role.
And I think what we've been focused on in general is assuming everybody is treated equally in the industry, which we like and we hope over time will happen, then we're well positioned to be a long term player in the industry. And I think the industry reputation will get better over time because consumers will understand. And therefore, the Chrome or the IE or other browsers will be more than happy to work with anybody as long as the consumer acceptance is above board and with full transparency. So I think the transition will hurt a little bit. In some cases, you're seeing that already today.
I think we've been certainly aware of that. We're prepared for it. We're still working with on those solutions. And I think from that perspective, long term, we're bullish. So as Jakob said, there may be some weakness in the next two quarters.
It's too early to tell from our standpoint. We obviously hope not, and we'll see how it goes. But we're still very confident about the full year. With regards to the technology side, I mean, Chrome published the way you can work with them. It's pretty clear cut.
It's an API you work with them on, and I think it doesn't require massive changes on a technology side. It's just working with them and incorporating that into your flow. And we intend to do that. And I think as I mentioned before, if everybody else does that, I think it's better for the industry and better for consumers.
Got it. Thanks for all the color. Let me just follow-up quickly on the monetization side of the equation here. And I guess as we look out and understanding that none of us really have a crystal ball to how all these changes are going to play out. Historically, there's been a pretty wide monetization gap.
But as these changes filter through, do you still expect the gap to be in place between Google and Bing? Is it closing? And have you seen any progress over the past 6 months with all these changes being made?
Yes. I mean, I'm probably not going to go into too much detail on that given the sensitivities of all of our search partners that we have confidentiality. I would say on a macro level, I think as if market share for Bing and Yahoo continue to increase, then eventually they'll get more volume. More volume will lead to higher RPMs because more advertisers are interested in advertising, and that's just the way it works. If they don't, then I think the gap will remain relatively the same what it is today.
I think the gap itself is made up of a few different variables though, not just the RPM. As you know, it's based on conversion and a lot of other variables. So I think today in certain countries, you're seeing that it is competitive between the different search partners. And in other countries, clearly, there are still some leaders out there.
We like
to work with all 3, and hopefully, get the best yield we can by working with all 3 and working with all of them to optimize our business with them.
Okay, great. Thanks for all the color on that. I have a few more, but I'll back in the queue and let other people ask. So thanks, Joseph.
Thanks, Dan.
Moving on, we'll go next to Jason Helfstein at Oppenheimer.
Thanks. So one point of clarification and then two questions. The first, just to go back to Carrie's question. So you're saying that by sometime the end of the second quarter, early Q3, you would have some basically test cases from display advertising in mobile that you could effectively talk about it. I just wanted to clarify that, that's how you think about the timing around that?
We certainly hope so, yes.
Okay. And then second, can you talk about how you think about, I guess, return to shareholders? And obviously, that can come in different ways. It can come through growth. It could come through buyback of shares.
It can come through dividends. Ultimately, what you're asking shareholders to bet on here is that you can diversify the business by into display and then into mobile. And to the extent that that will take time, just give us your thoughts about finding other ways to return capital to shareholders kind of while we're waiting for those growth initiatives? And would you consider a dividend or potentially buying back stock once you complete the debt offering and there was more liquidity in the stock through potentially a secondary? And then the final question, can you talk about the timing of when you expect to receive all the full OpEx synergies net of any investments from the Conduit merger?
Sure. Thanks, Jason. Nice to have you on the call. So with regards to your questions about increasing shareholder value and all the different variations, First and foremost, I think our answer is probably going to be a little bit canned, but it's the right answer, which is we always are exploring the ways of optimizing and increasing shareholder value. We look at all options pretty much at any given point in time, and we make decisions that we think over the long term do increase shareholder value.
Specifically with what you said, I'm not taking anything off the table today, but I think what we're asking shareholders to believe is not a big leap. We're growing even on a pro form a basis by 10% in an industry which has had challenges and most other companies have not grown, we're growing. We're using the cash we're generating, which is significant to and still showing significant EBITDA in the process to invest in a few other businesses. And I think we're leveraging our core assets and core strengths. And I think based on that, I think it's personally, it's a pretty compelling value proposition for investors.
And I think we've proven in the past that we do deliver over a period of time, and I'd expect the same thing here. If we augment that with some other financial instrument, whether that be a buyback or dividend over time, again, we're open to anything if it makes sense for shareholders and increasing shareholder value. But we have nothing specific planned at this point in time. With regard to the last question, I have to remind you what it was. Condo synergies.
Condo synergies. Thank you, Jaco. We would the full amount of synergies by the end of this fiscal year. We're ahead of schedule a lot of ways, but there are certain bigger projects that take time. And obviously, as we mentioned earlier, one of those is clearly going to be moving into the new headquarters, which will be the end of August.
And that will be the first time, well, since in 9 months where we're all together. I can tell you just from an overhead perspective, it is expensive. We're traveling back and forth often. But also just from the synergies of different people and 2 different cleaning cruisers or 2 different all the different aspects of running 2 different operations, let alone the rent of 2 different offices and other aspects when you're together, the synergies will prevent will prevail. We think by the end of the fiscal year, we will have pretty much most of the synergies that we've identified finalized.
And just can you follow-up on just a little more on that? I mean, so effectively, what do we think the impact will be in, let's say, 15% of those cost savings?
Yes. The synergies came in regards to 2 things. 1 is cost savings and 1 is revenue opportunities, both. I think for we've said previously, but I think for this year, we believe we're probably in the range of this year, it's in the numbers already as we see it, roughly around $7,000,000 to $10,000,000 of synergies on both the revenue and the operational side. And I think next year, we probably continue to see in that same range on a full run rate, hopefully, by the end of this year, in the probably $5,000,000 to $10,000,000 depending on certain aspects of the business that hopefully will happen.
It could be on the higher end of that. The others don't, it's on the lower end of that. So altogether, probably between $15,000,000 to $20,000,000 of overall synergies.
Thank
you. And moving on, we will go next to Jay Srivastava with Chardan Capital Markets.
Thanks for taking my questions. Congratulations on a good quarter and guidance. On the mobile side, Joseph, could you give us some sense on what the time line is for launching some of the products? And when do you hope to start to realize some material revenues?
So as I mentioned earlier, I think we're we have won some of the products already in the small beta testing. To fully roll them out, I'd expect end of Q3, early Q4. I mean, as you can imagine, it does take some time. And obviously, there is technology, but there's also partnerships and business development work that have to be done. I don't expect to have any material impact on revenues this year.
But we believe in next year, as we grow, mobile will be the fastest growing part of our business, which is probably not a really insightful comment because it's probably anybody's fastest growing part of the business. But we think that's likely to be, and we hope to have 2 or 3 other things we're working on in mobile to share with you over time that will also help accelerate growth towards the end of this year into 2015 where the mobile revenues will be more significant.
Okay. And then in terms of synergies, Yaacov, can you highlight what are some of the cost savings you expect to realize? And when does it start to hit the income statement?
Well, I think the synergies are all coming 2 forms. First of all, we are finding and as you saw through our guidance, we're finding growth through the year. And the larger company and the combination of the companies will enable us to achieve that growth with a smaller investment in expenses, thereby maintaining and even achieving a higher EBITDA ratio. That's the main point. The second one though is, as Joseph mentioned, the mere fact that we'll be in one location, just as a matter of fact, the cost per square meter or square foot that we're renting in the new location is lower than either of the locations we're in right now.
So that we're able to, as I said, scale up the size of our offices without impacting on the bottom line. And there are numerous other examples of what we're able to achieve, whether that be in the rental, whether it be with car leases and other aspects of the company that we should be able to achieve comes towards the end of the year and into 2015.
Thank you.
And it appears we have no further questions at this time. I'd like to turn the program back over to our speakers for any additional or concluding remarks.
Thank you. As always, I'd like to thank the talented team at Blue Perion for all their hard work and dedication helping us achieve these great results. Together, we are poised to achieve great things as we transform Perion into a new company and deliver proven solutions to help application developers grow, monetize and optimize their business, both on the desktop and in mobile environments. Stay tuned for more exciting news from us over the next few quarters. Thank you.
Have a good day.
Ladies and gentlemen, that does conclude our conference for today. Once again, I'd like to thank everyone for joining us.