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Perion eyes $1 billion in revenue, more acquisitions in next five years

By Steven Scheer

JERUSALEM (Reuters) - Perion Network Ltd said it was targeting annual revenue of $1 billion in the next five years following the acquisition of Conduit Ltd's ClientConnect business.

Israel-based Perion on Thursday completed the purchase in an all-stock deal worth $660 million, giving the company a platform designed to give mobile application (app) publishers and developers a way of improving their distribution and money-making capabilities.

Josef Mandelbaum, Perion's chief executive, said about a quarter of mobile apps never get downloaded - except perhaps by the developer's friends and family - while 98 percent of apps earn less than $5,000 a year.

Citing studies, Perion also said 76 percent of consumers find free versions of apps sufficient.

"The toughest thing is getting traffic and making money," Mandelbaum said in an interview with Reuters.

Perion shares, which rose 35 percent in 2013 on top of a 126 percent advance in 2012, were up 3 percent by 1120 ET on Nasdaq.

Mandelbaum said the acquisition of the much larger ClientConnect would allow Perion to help more mobile apps find paying customers. Perion, he noted, was able to make money from its main products - IncrediMail and Smilebox - through search partnerships with Yahoo! Inc, Google Inc and Microsoft Corp's Bing.

"My plan three years ago was to build a billion dollar company in Israel," said Mandelbaum. "My internal goal is it will take three to five years to get there."

On its own, Perion - founded in 2000 and whose key shareholders include Benchmark Capital and JP Morgan Chase - is expected to post 2013 revenue of between $102 and $104 million, up from $61 million in 2012. Including ClientConnect, 2013 revenue would be about $400 million.

Mandelbaum declined to give an outlook for 2014 but said the company expects to grow sales and profit, especially as the ClientConnect deal is immediately positive for earnings.

"This deal is a great stepping stone," Mandelbaum said. "We are not where we want to be yet. We have to do more investments and acquisitions to fill in the gaps."

He said Perion aims to improve its presence in the mobile sector, a tougher area for advertising than on desktop computers, and in analytics.

"We haven't even scratched the surface," he added. "We have terrabytes of data to help ourselves and publishers make more money."

(Editing by David Holmes)

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