ValueClick, Inc. (Nasdaq: VCLK) today reported financial results for the
first quarter ended March 31, 2012. Highlights from the quarter include:
Revenue of $152.9 million, up 31 percent from the first quarter of
2011 (Q1 2011);
Adjusted-EBITDA1 of $47.9 million, up 37 percent from Q1
2011;
Adjusted-EBITDA margin of 31.4 percent versus 30.1 percent in Q1 2011;
Non-GAAP net income2 of $0.38 per diluted share versus
$0.26 in Q1 2011;
GAAP net income of $0.26 per diluted share versus $0.21 in Q1 2011; and
The appointment of
John Giuliani, president of ValueClick's Dotomi
division, to the role of chief operating officer.
"This was an important quarter for ValueClick, as we executed on many of
our strategic initiatives, including expanding the Greystripe mobile
business into Europe, accelerating the integrated-sales approach among
our divisions, and continuing to evolve our Owned & Operated Websites
segment," said
James R. Zarley, chief executive officer of ValueClick.
"We are just scratching the surface of providing a broader range of
services to our clients as we execute on our vision of becoming the
leading digital marketing services partner for major advertisers."
During the quarter, the Company paid down $62.5 million in debt and did
not repurchase any shares. The share repurchase program's current total
authorization is $100 million. The consolidated balance sheet as of
March 31, 2012 includes approximately $107.7 million in cash and cash
equivalents, and $105.0 million in total debt.
The Company's effective tax rate of 29.6 percent in the first quarter of
2012 was positively impacted by discrete state tax adjustments. Assuming
the normalized 38 percent effective tax rate included in the Company's
previously-issued guidance, non-GAAP net income would have been $28.7
million, or $0.35 per diluted common share.
_______________________________________________
1 Adjusted-EBITDA is defined as GAAP (Generally Accepted
Accounting Principles) net income before interest, income taxes,
depreciation, amortization, stock-based compensation expenses. Please
see the attached schedule for a reconciliation of GAAP net income to
adjusted-EBITDA, and a discussion of why the Company believes
adjusted-EBITDA is a useful financial measure to investors and how
Company management uses this financial measure.
2 Non-GAAP net income excludes stock-based compensation and
amortization of intangible assets. Please see the attached schedule for
a reconciliation of GAAP net income to non-GAAP diluted net income per
common share.
Business Outlook
Today, ValueClick is providing guidance for the second quarter of 2012:
Guidance
Revenue
$155-$160 million
Adjusted-EBITDA
$46-$48 million
Mid-Point Adjusted-EBITDA Margin
29.8%
Non-GAAP diluted net income per common share
$0.33-$0.34
Impact of stock-based compensation and amortization of intangibles,
net of tax
$(0.12)
GAAP diluted net income per common share
$0.21-$0.22
The consolidated revenue guidance range is based on the following
segment-level assumptions for revenue growth rates expressed as a
percentage increase from second quarter 2011 reported revenue levels:
•
Affiliate Marketing:
up mid single-digits
•
Media:
up over 85 percent on a reported basis, up approximately 30 percent
on a pro forma basis*
•
Owned & Operated:
down high teens
•
Technology:
flat
* The financial results of Dotomi, acquired on August 31, 2011, were not
included in ValueClick's reported financial results for Q2 2011.
Dotomi's revenue in Q2 2011 was approximately $19 million. The financial
results of Greystripe, acquired on April 21, 2011, were included in
ValueClick's reported financial results for the majority of Q2 2011.
"Given the success of our efforts to reduce the paid traffic component
of our Owned & Operated segment in the past two quarters while improving
this segment's margin profile, we will accelerate this process in the
second quarter," said
John Pitstick, chief financial officer of
ValueClick. "We expect this will result in a sequential revenue decrease
in the O&O segment in the second quarter of approximately five percent
compared to Q1, but with continued gross margin improvement."
Second quarter 2012 guidance assumes stock-based compensation of $6.5
million, amortization of intangible assets of $8.8 million ($2.5 million
of which will be classified in Cost of revenue), net interest and other
income of zero, a 39 percent effective tax rate, and 82.5 million
diluted shares outstanding.
Conference Call Today at 4:30 p.m. ET
Jim Zarley, chief executive officer;
John Giuliani, chief operating
officer; and
John Pitstick, chief financial officer, will present an
overview of the results and other factors affecting ValueClick's
financial performance for the first quarter, during a conference call
and webcast on May 2 at 4:30 p.m. ET. Investors and analysts may obtain
the dial-in information through StreetEvents (www.streetevents.com).
The live webcast of the conference call will be available on the
Investor Relations section of www.valueclick.com.
A replay of the conference call will be available through May 9 at
888-203-1112 and 719-457-0820 (pass code: 6218014). An archive of the
webcast will also be available through May 9.
About ValueClick
ValueClick, Inc. (Nasdaq: VCLK) is one of the world's largest digital
marketing companies. Through a unique combination of data, technology
and services, ValueClick increases brand awareness and drives customer
acquisition at scale for the world's largest advertisers, and maximizes
advertising revenue for tens of thousands of online and mobile
publishers. ValueClick's brands include Commission
Junction, ValueClick
Media, Dotomi,
and PriceRunner.
The Company is based in Westlake Village, California, and has offices in
major advertising markets worldwide. For more information, please visit www.valueclick.com.
This release contains forward-looking statements that involve risks
and uncertainties, including, but not limited to, the risk that market
demand for on-line advertising in general, and performance based on-line
advertising in particular, will not grow as rapidly as predicted, the
risk that legislation and governmental regulation could negatively
impact the Company's performance, the effects of recent acquisitions on
ValueClick's financial results, the potential inability to successfully
operate or integrate Dotomi's business, including the potential
inability to retain customers, key employees or vendors. Actual results
may differ materially from the results predicted, and reported results
should not be considered an indication of future performance. Important
factors that could cause actual results to differ materially from those
expressed or implied in the forward-looking statements are detailed
under "Risk Factors" and elsewhere in filings with the Securities and
Exchange Commission made from time to time by ValueClick, including, but
not limited to: its annual report on Form 10-K filed on February 29,
2012; recent quarterly reports on Form 10-Q; and other current reports
on Form 8-K.
The Business Outlook contained in this release is based on current
expectations. These statements are forward-looking, and actual results
may differ materially. These statements do not include the potential
impact of any mergers, acquisitions or other business combinations that
may be completed after the date of this release. Actual stock-based
compensation may differ from these estimates based on the timing and
amount of stock awards granted, the assumptions used in stock award
valuation and other factors. Actual income tax expense may differ from
these estimates based on tax planning, changes in tax accounting rules
and laws, and other factors.
ValueClick undertakes no obligation to release publicly any revisions
to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events.
VALUECLICK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31,
December 31,
2012
2011
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
107,696
$
116,676
Accounts receivable, net
106,466
129,076
Other current assets
26,038
25,181
Total current assets
240,200
270,933
Note receivable, less current portion
29,185
29,700
Property and equipment, net
21,296
19,952
Goodwill
435,206
437,033
Intangible assets, net
105,383
114,007
Other assets
9,940
9,086
TOTAL ASSETS
$
841,210
$
880,711
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings under credit facility, current
$
10,000
$
10,000
Other current liabilities
114,043
125,616
Borrowings under credit facility, less current portion
95,000
157,500
Other non-current liabilities
23,548
24,202
Total liabilities
242,591
317,318
Total stockholders' equity
598,619
563,393
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
841,210
$
880,711
VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three-month Period
Ended March 31,
2012
2011
(Unaudited)
Revenue
$
152,852
$
116,511
Cost of revenue
58,961
51,974
Gross profit
93,891
64,537
Operating expenses:
Sales and marketing (Note 1)
21,180
12,632
General and administrative (Note 1)
19,883
12,523
Technology (Note 1)
16,091
10,166
Amortization of intangible assets acquired in business combinations
6,324
2,708
Total operating expenses
63,478
38,029
Income from operations
30,413
26,508
Interest and other income, net
229
408
Income before income taxes
30,642
26,916
Income tax expense
9,071
10,054
Net income
$
21,571
$
16,862
Basic net income per common share
$
0.27
$
0.21
Diluted net income per common share
$
0.26
$
0.21
Weighted-average shares used to compute basic net income per
common share
80,339
80,687
Weighted-average shares used to compute diluted net income per
common share
82,106
81,644
Note 1 - Includes stock-based compensation as follows:
Three-month Period
Ended March 31,
2012
2011
(Unaudited)
Sales and marketing
$
1,654
$
286
General and administrative
3,026
1,413
Technology
1,406
218
Total stock-based compensation
$
6,086
$
1,917
VALUECLICK, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)
(In thousands)
Three-month Period
Ended March 31,
2012
2011
(Unaudited)
Net income
$
21,571
$
16,862
Interest and other income, net
(229
)
(408
)
Provision for income tax
9,071
10,054
Amortization of acquired intangible assets included in cost of
revenue
2,493
2,180
Amortization of acquired intangible assets included in operating
expenses
6,324
2,708
Depreciation and leasehold amortization
2,630
1,754
Stock-based compensation
6,086
1,917
Adjusted-EBITDA
$
47,946
$
35,067
Note 1 - "Adjusted-EBITDA" (GAAP net income before interest,
income taxes, depreciation, amortization, and stock-based compensation)
included in this press release is a non-GAAP financial measure.
Adjusted-EBITDA, as defined above, may not be similar to adjusted-EBITDA
measures used by other companies and is not a measurement under GAAP.
Management believes that adjusted-EBITDA provides useful information to
investors about the Company's performance because it eliminates the
effects of period-to-period changes in income from interest on the
Company's cash and cash equivalents, note receivable and borrowings, and
the costs associated with income tax expense, capital investments, and
stock-based compensation which are not directly attributable to the
underlying performance of the Company's business operations. Management
uses adjusted-EBITDA in evaluating the overall performance of the
Company's business operations.
Though management finds adjusted-EBITDA useful for evaluating aspects of
the Company's business, its reliance on this measure is limited because
excluded items often have a material effect on the Company's earnings
and earnings per common share calculated in accordance with GAAP.
Therefore, management uses adjusted-EBITDA in conjunction with GAAP
earnings and earnings per common share measures. The Company believes
that adjusted-EBITDA provides investors with an additional tool for
evaluating the Company's core performance, which management uses in its
own evaluation of overall performance, and a baseline for assessing the
future earnings potential of the Company. While the GAAP results are
more complete, the Company prefers to allow investors to have this
supplemental metric since, with a reconciliation to GAAP, it may provide
greater insight into the Company's financial results.
VALUECLICK, INC.
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP DILUTED NET INCOME PER COMMON SHARE (Note 1)
(In thousands)
Three-month Period
Ended March 31,
2012
2011
(Unaudited)
Net income
$
21,571
$
16,862
Stock-based compensation
6,086
1,917
Amortization of acquired intangible assets included in cost of
revenue
2,493
2,180
Amortization of acquired intangible assets included in operating
expenses
6,324
2,708
Tax impact of above items
(5,250
)
(2,726
)
Non-GAAP net income
$
31,224
$
20,941
Non-GAAP diluted net income per common share
$
0.38
$
0.26
Weighted-average shares used to compute non-GAAP
diluted net income per common share
82,106
81,644
Note 1 - "Non-GAAP diluted net income per common share" (GAAP diluted
net income per common share before the impact of stock-based
compensation and amortization of intangibles) included in this press
release is a non-GAAP financial measure.
Non-GAAP diluted net income per common share, as defined above, may not
be similar to non-GAAP diluted net income per common share measures used
by other companies and is not a measurement under GAAP. Management
believes that non-GAAP diluted net income per common share provides
useful information to investors about the Company's performance because
it eliminates the effects of items which are not directly attributable
to the underlying performance of the Company's business operations.
Management uses non-GAAP diluted net income per common share in
evaluating the overall performance of the Company's business operations.
Though management finds non-GAAP diluted net income per common share
useful for evaluating aspects of the Company's business, its reliance on
this measure is limited because excluded items often have a material
effect on the Company's earnings and earnings per common share
calculated in accordance with GAAP. Therefore, management uses non-GAAP
diluted net income per common share in conjunction with GAAP earnings
and earnings per common share measures. The Company believes that
non-GAAP diluted net income per common share provides investors with an
additional tool for evaluating the Company's core performance, which
management uses in its own evaluation of overall performance, and a
baseline for assessing the future earnings potential of the Company.
While the GAAP results are more complete, the Company prefers to allow
investors to have this supplemental metric since, with a reconciliation
to GAAP, it may provide greater insight into the Company's financial
results.
VALUECLICK, INC.
SEGMENT OPERATING RESULTS
(In thousands)
Three-month Period
Ended March 31,
2012
2011
(Unaudited)
Affiliate Marketing:
Revenue
$
37,107
$
34,474
Cost of revenue
4,176
4,324
Gross profit
32,931
30,150
Operating expenses
9,993
9,661
Segment income from operations
$
22,938
$
20,489
Media:
Revenue
$
72,129
$
36,202
Cost of revenue
29,482
19,713
Gross profit
42,647
16,489
Operating expenses
23,631
8,641
Segment income from operations
$
19,016
$
7,848
Owned & Operated Websites:
Revenue
$
35,095
$
37,947
Cost of revenue
21,733
24,992
Gross profit
13,362
12,955
Operating expenses
6,460
5,908
Segment income from operations
$
6,902
$
7,047
Technology:
Revenue
$
8,687
$
8,081
Cost of revenue
1,188
918
Gross profit
7,499
7,163
Operating expenses
4,111
3,034
Segment income from operations
$
3,388
$
4,129
Reconciliation of segment income from operations to
consolidated income from operations:
Total segment income from operations
$
52,244
$
39,513
Corporate expenses
(6,928
)
(6,200
)
Stock-based compensation
(6,086
)
(1,917
)
Amortization of acquired intangible assets included in cost of
revenue
(2,493
)
(2,180
)
Amortization of acquired intangible assets included in operating
expenses
(6,324
)
(2,708
)
Consolidated income from operations
$
30,413
$
26,508
Reconciliation of segment revenue to consolidated revenue:
Affiliate Marketing
$
37,107
$
34,474
Media
72,129
36,202
Owned & Operated Websites
35,095
37,947
Technology
8,687
8,081
Inter-segment eliminations
(166
)
(193
)
Consolidated revenue
$
152,852
$
116,511
ValueClick, Inc.
Gary J. Fuges, CFA
1-818-575-4677
Source: ValueClick, Inc.
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