1. Presentation for the Capital Market
May 2014

2. Forward-Looking Information
This presentation was prepared by Perion Network Ltd. (“the Company”) as a general presentation about the Company. This presentation is not intended to replace the need to review the Prospectus dated May 18, 2014, and the documents incorporated by reference therein, before making a decision regarding an investment in the Company’s securities. In the event of any conflict between the contents of this presentation and the reports of the Company required by law, the contents of the said reports shall govern. The information included in this presentation shall not constitute any advice, recommendation, opinion or offering regarding the profitability of an investment and shall not replace an independent examination and personal consultation in accordance with the particular circumstances of each investor. This presentation may include forward-looking information as defined in the Securities Law, , including forecasts, estimations, assumptions and other information regarding future matters and events. In certain cases, forward-looking information may be identified through use of terms such as: “expected”, “believes”, “may”, “estimates”, “anticipates”, “intends”, “continues”, “might”, “plans”, “projects”, and other similar terms and phrases. The forward-looking information in this presentation is based on the updated estimations and assumptions of the Company’s management as of the presentation date, which although the Company believes to be reasonable, are uncertain by nature. The forward-looking information involves risks and uncertainty, including factors which are not under the control of the Company, each of which, or a combination thereof, may materially harm the results of the Company’s operations and cause the actual results to be materially different from the forward-looking information.
All forward-looking information is solely intended for the date that it relates to. Other than the obligation to disclose information as required under the securities laws applicable to the Company, the Company is not required to update or change any information included in this presentation, whether as a result of new information, a future event or other reasons. Similarly, it is clarified that the plans and strategy of the Company included in this presentation are correct as of the publication date and may be changed in accordance with the decision of the Company’s board, as it may be from time to time. Other than trademarks owned by the Company, the trademarks contained in this presentation are the property of their owners and have been used in this presentation for the sake of clarifying the context alone. Use of the trademarks as stated shall not be interpreted as consent or verification regarding the Company’s plans, services or securities. This presentation does not purport to contain or exhaust all of the information which may be relevant for any decision regarding an investment in the Company’s securities. For the avoidance of doubt, it is clarified that the Company does not undertake to update the information included in this presentation. This presentation does not constitute or play a part in any offer or solicitation to purchase the Company’s securities and does not constitute or play a part in a solicitation to receive offers as stated. Such an offering will only take place by means of the prospectus published by the Company, after the receipt of the permits required from the Securities Exchange and the Tel Aviv Stock Exchange. In any event of conflict or inconsistency between this presentation and the prospectus, the provisions of the prospectus shall govern. The presentation also does not constitute any recommendation and/or consultation regarding the Company’s securities.

3. Business Card About Perion
Global and leading media & Internet company that operates in search and digital distribution industries
Provides advanced distribution and monetization solutions to applications and software developers
International management team with a proven track record in dynamic and changing markets
Josef Mandelbaum, CEO - more than 20 years of experience in the Internet & Mobile industries
Yacov Kaufman, CFO - more than 25 years of experience in international corporations
Consistent rational growth in revenues and profits without substantial debt
Commitment to high quality standards
*inc. Client Connect

4. Leading financial data
Strong financial outlook for 2014
Revenue of $ M
EBITDA of $ M
Net Income of $ M
Financial results for 2013 (Pro forma*)
Revenue of $433M
EBITDA of $90M
Market cap of ~ NIS 2.4 billion ( )
Listed on NASDAQ
Listed on TASE
Q Results: Growth
Revenue of $117.1M
EBITDA of $33.6M
Net Income of $27.6M
March Balance sheet: Strong & without leverage
Cash flow from operations: $13.9M
Working Capital**: $16.8M
Bank debt: $6.1M
Total equity: $198.9M
*Inc. ClientConnect, GAAP reconciliations are included in Appendix **Inc. Deferred revenue

5. Strong financial performance
~ 7%
57%
39%
*Perion & Client Connect. The data does not include in 2012 substantial bonus from Bing to ClientConnect. GAAP reconciliations are included in Appendix
2013 EBITDA of about $90.2M (about 21% of revenues) without significant debt
2012 EBITDA margin of more than 20%

6. Business development timeline
2000
2006
2007
2010
2012
2011
2014
Client Connect M&A
Sweetpacks acquisition
Smilebox acquisition
Company name change to Perion
Josef Mandelbaum joins as CEO
TASE Listing
Nasdaq IPO
Company’s foundation under the name of IncrediMail
Successful operations in dynamic and changing market, while performing mergers and acquisitions that complement strategic gaps

7. The value proposition
Perion provides app developers with a portfolio of solutions which enable them to efficiently distribute, generate revenue and optimize their software/app while focusing only on what they do best: making a great product

8. Value chain of the Internet industry
Search engine
(payable click)
Perion
App developer
Advertiser
App’s final user
App’ distribution
Revenue from Advertising $$$
Quality App
Receives ads and search services $$$
Users
Advertiser
(advertising revenue)
Mature and proven business model that Internet industry in general and search engines in particular are based on

9. Internet and mobile advertising continue to grow sharply
Internet Ad
Mobile Ad
Mobile ad spending from total global display advertising: ~16% in ~27% in 2015
Paid search represents about 48% of all internet advertising revenues
Source: eMarketer 2013
Source ZenithOptimedia

10. App developers are coping with significant business challenges
Distribution
Buying traffic is extremely complicated, due to multiple technologies and platforms
1 out of 4 apps never get installed, mostly for technical reasons
Monetization
The business model is based on free software
Search engines do not adjust their business proposal for software developers
It is difficult to navigate through advertising networks
80% of the developers fail to establish a profitable business
Optimization
Most app developers are small businesses without analytical capabilities required to:
Improve funnel conversion
Revenue per user (LTV) tracking
Maximizing distribution channels acquiring with a positive ROI
There are relatively little profitable applications. Of those, few manage to earn more from $ 5,000

11. Perion’s value proposition: Profit generating business model for application developers
Distribution
Marketing and media channels driven by Business Intelligence
Dominant player that purchases media at significant scale media
Fast Download Manager that recommends additional applications to the end user
Monetization
Revenue share on revenue from sponsored links with search engines - Google, Yahoo, Bing and Ask
Segmented and customer orientated advertising
Optimization
Real-time BI platform based on huge amount of data
Extremely accurate ROI models
User friendly analytical and reporting tools for developers
Perion provides a wide range of digital media and web applications solutions that assist applications developers to increase their content’s distribution and monetization capabilities

12. Perion increases it’s presence in the U. S. market Vs
Perion increases it’s presence in the U.S. market Vs. competitors (Ask, AOL)
Source: Perion’s data & comScore Explicit Core Search Query Report

13. Agreements with search engines
U.S market share
(January 2014)
Cooperation starting year
Contract period
Google
68%
2007
August 2015
Bing
18%
2010
December 2014
Yahoo
10%
2013
July 2017
Ask 3%
March 2016
*Agreements with search engines renewed every 1 to 4 years
Positive reputation among search engines

14. Business strategy
Strengthening of competitive position and leveraging of scale in the Internet search segment
Strengthening and expanding activities with app and content developers
Ensuring value proposition for app developers and end-user with full transparency
Expanding mobile activities and user centered advertising
Maintaining technological leadership through organic investments and mergers and acquisitions
Extension and expansion activities towards attractive and growing segments that improve Perion’s business and financial positioning

15. From S&P Maalot credit rating repot: ilA-/Stable (06/03/2014)*
“The rating of Perion Network Ltd (hereafter: "Perion") is mainly supported by a low-risk financial risk profile as reflected by strong debt coverage ratios”
“We estimate that the company's adjusted debt to EBITDA ratio will be lower than 1.5x over the intermediate term, including M&A activities”
“Our financial risk profile assessment is also supported by the operations of the company, which generally generate positive free cash flows supporting its debt service capabilities”
“We believe that Perion’s merger with "ClientConnect" strengthened the company’s competitive position as well as its debt servicing capabilities”
“In our view, over the intermediate term, the company will direct its internal resources to growth initiatives and will not execute material dividend distribution/buybacks. In addition, we estimate that acquisitions over the near term (up to 1 year), if any, will be funded through debt, and possibly also with an equity component. As previously indicated, we do not expect such acquisition activity to lead to a breach of the coverage ratios which we view as commensurate with the current rating”
*Partial quotes. For more information on Perion Network’s credit rating, see S&P Maalot rating report published March 6, 2014.

16. Summary
Perion is among the worldwide leading companies in the search industry and digital distribution
Perion is the second biggest worldwide search services distributor
Business partnerships with leading search engines
Financial strength reflected in high growing profits over the years
Expansion of operations towards attractive segments
Maintaining technological leadership through mergers and acquisitions
Professional management and quality human capital with years of experience and a proven track record in dynamic markets
Standards of a company listed on NASDAQ
Perion has grown from a small scale company that focused on developing end user’s products to a global leader with a platform of services and a wide range of revenue streams, along with valuable experience which will enable the Company to take advantage of future business opportunities

17. Appendix

18. GAAP Reconciliation Perion GAAP reconciliation (in USD 000')
Quarter ended March
GAAP revenues
114,823
Revenues from discontinued operations -
Valuation adjustment on acquired deferred product revenues
2,292
Non-GAAP revenues
117,115
GAAP net income
13,816
Acquisition related expenses
2,948
Share based compensation
4,436
Amortization of acquired intangible assets
4,500
Accretion of payment obligation related to acquisitions
268
Taxes related to amortization of acquired intangible assets
(662)
Non-GAAP net income
27,598
Income tax expense
4,622
Interest expense (income), net
393
(268)
662
Depreciation
555
Discontinued financial income, net
Discontinued tax benefit
Non-GAAP EBITDA
33,562
Perion GAAP reconciliation (in USD 000')
2013
GAAP revenues
412,657
Revenues from discontinued operations
3,016
Sales from commercial agreement deducted as intercompany transaction
17,480
Non-GAAP revenues
433,153
GAAP net income
28,926
Customer acquisition costs associated with unrecognized sales
(14,334)
Acquisition related expenses
8,278
Share based compensation
13,163
Amortization of acquired intangible assets
9,269
Finance expense deferred
751
Non recurring tax benefits
8,876
Non-GAAP net income
72,409
Income tax expense (benefit)
25,067
Finance expense related to discontinued operations
(40)
Tax credit on loss from discontinued operations
454
Non recurring tax expense
(8,876)
Interest expense (income), net
(1,617)
(751)
Depreciation and amortization
3,556
Non-GAAP EBITDA
90,202

19. GAAP Reconciliation (cont’d)
Perion GAAP reconciliation (in USD 000')
2012
GAAP CC revenue
537,008
GAAP Perion revenue
60,223
Combined GAAP revenue
597,231
ClientConnect Search revenue adjustment
(322,308)
Perion deferred revenue adjustment
983
Combined non GAAP revenue
275,906
non GAAP CC revenue
214,700
non GAAP Perion revenue
61,206

20. Balance sheet Perion GAAP BALANCE SHEET (in USD 000')
March Unaudited
Assets
Current assets:
Cash and cash equivalents
51,174
Restricted cash
1,541
Trade receivables
48,871
Other current assets
6,127
Total current assets
107,713
Property and equipment, net
3,723
Goodwill and other intangible assets, net
191,829
Other assets
3,064
Total assets
306,329
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long term debt
17,133
Trade payables
45,283
Deferred revenues
7,923
Payment obligation related to acquisition
8,996
Accrued expenses and other liabilities
19,455
Total current liabilities
98,790
Long-term debt
3,675
Other long term liabilities
4,927
Total liabilities
107,392
Stockholders' equity:
Ordinary shares
183
Additional paid-in capital
184,938
Retained earnings
13,816
Total stockholders' equity:
198,937
Total liabilities and stockholders' equity