PRESSROOM

ValueClick announces fourth quarter 2011 results

February 7, 2012


Revenue and Profitability Exceed High-End of Guidance Ranges


WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--


ValueClick, Inc. (Nasdaq:VCLK) today reported financial results for the


fourth quarter ended December 31, 2011. Revenue, adjusted-EBITDA1


and non-GAAP diluted net income per common share were all above the


high-end of their respective guidance ranges.


"We completed a successful 2011 with strong fourth quarter results,


including Media segment results that were driven by 20 percent organic


growth in our display business, double digit growth in the Affiliate


Marketing and Technology segments, and very strong performance by our


recent acquisitions," said
Jim Zarley, chief executive officer of


ValueClick. "We will continue to invest in people and in our data,


optimization and traffic platforms to expand our presence in the digital


marketing industry, and we remain confident in our ability to generate


more than $700 million in revenue in 2012."


Highlights from the fourth quarter of 2011 results include:



  • Revenue of $182.6 million, up 42 percent from the fourth quarter of


    2010 (Q4 2010);




  • Adjusted-EBITDA of $62.7 million, up 50 percent from Q4 2010;




  • Adjusted-EBITDA margin of 34.3 percent versus 32.5 percent in Q4 2010;




  • Income from operations of $45.6 million, up 39% from Q4 2010;




  • Non-GAAP net income2 of $0.47 per diluted share versus


    $0.31 in Q4 2010; and




  • GAAP net income of $0.35 per diluted share versus $0.26 in Q4 2010.



The consolidated balance sheet as of December 31, 2011 included


approximately $117 million in cash and cash equivalents, and $167.5


million in total debt associated with the August 31 acquisition of


Dotomi and subsequent share repurchases.


Share Repurchase Program Update


During the quarter, the Company repurchased 2.8 million shares of its


common stock for a total cost of $44.2 million. During fiscal year 2011,


ValueClick repurchased 9.7 million shares of its common stock for a


total cost of $145.0 million. Since the Dotomi acquisition announcement


on August 1, ValueClick repurchased 7.1 million shares, which largely


offsets the shares issued as part of the acquisition.


Today, ValueClick announced that its board of directors has increased


the share repurchase program authorization by $59 million, bringing the


program's current total authorization to $100 million.


Cost Reclassifications


Beginning with the fourth quarter 2011 results, the Company will make


two accounting reclassifications that have no impact on the Company's


historical consolidated revenue, operating income, cash flows, net


income, net income per diluted common share or adjusted-EBITDA, or on


historical revenue or operating income by segment.


First, ValueClick is electing to reclassify certain costs associated


with payments to search engines for driving consumer traffic to the


Company's owned and operated websites. Historically, these traffic


acquisition costs have been classified in operating expenses in the Sales


and marketing expense line item. The Company is now classifying


these costs in Cost of revenue, which the Company believes will


provide increased transparency into the drivers of the Owned & Operated


Websites segment.


Second, ValueClick is correcting the accounting classification of the


amortization of developed technologies and websites acquired in business


combinations by including it in Cost of revenue. Amortization


related to developed technologies and websites acquired in business


combinations was considered immaterial prior to the Dotomi acquisition


and was previously recorded in operating expenses in the Amortization


of intangible assets acquired in business combinations line item.


All prior periods presented in the Consolidated Statement of Operations


and Segment Operating Results included in this press release are


presented using the new classifications. A table with historical trend


information is available at http://ir.conversantmedia.com.


Business Outlook


Today, ValueClick is announcing guidance for the first quarter of 2012:


















 

Guidance

Revenue

$155-$160 million

Adjusted-EBITDA

$46-$48 million

Non-GAAP diluted net income per common share

$0.34-$0.35

Impact of stock-based compensation and amortization of intangibles,


net of tax

 

$(0.12)

GAAP diluted net income per common share

$0.22-$0.23


 

The consolidated revenue guidance range is based on the following


segment-level assumptions for revenue growth rates, expressed as a


percentage increase from first quarter 2011 reported revenue levels:

































 

■

Affiliate Marketing:

 

 

up low double digits


■

Media:


up over 100 percent on a reported basis, up mid teens excluding the


impact of acquisitions


■

Owned & Operated:


down high single digits to low double digits


■

Technology:


up high single digits






 

First quarter 2012 guidance assumes stock-based compensation of $6.2


million, amortization of intangible assets of $8.8 million (including


$2.5 million recorded in Cost of revenue), net interest and other income


of zero, a 38 percent effective tax rate, and 82 million diluted shares


outstanding.


Conference Call Today at 4:30 p.m. ET


Jim Zarley, chief executive officer, and
John Pitstick, chief financial


officer, will present an overview of the results and other factors


affecting ValueClick's financial performance for the fourth quarter,


during a conference call and webcast on February 7 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 at http://ir.conversantmedia.com.


A replay of the conference call will be available through February 14 at


(888) 203-1112 and (719) 457-0820 (pass code: 4205958). An archive of


the webcast will also be available through February 14.


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, Greystripe, Mediaplex, Smarter.com, CouponMountain.com,


Investopedia.com, 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 28,


2011; 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.


1 Adjusted-EBITDA is defined as GAAP (Generally Accepted


Accounting Principles) net income from continuing operations before


interest, income taxes, depreciation, amortization, stock-based


compensation expenses, and acquisition-related costs. 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.
















































































































































VALUECLICK, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS



(In thousands)



 


December 31,

December 31,


2011

2010


(Unaudited)

ASSETS



Current Assets:



Cash and cash equivalents

$

116,676


$

194,317

Marketable securities

—


3,000

Accounts receivable, net

129,076


86,738

Other current assets

25,181

 

18,470

Total current assets

270,933


302,525




 

Note receivable, less current portion

29,700


31,267

Property and equipment, net

19,952


12,414

Goodwill

437,033


183,218

Intangible assets, net

114,007


33,525

Other assets

9,086

 

50,618

TOTAL ASSETS

$

880,711

 

$

613,567




 

LIABILITIES AND STOCKHOLDERS' EQUITY



Borrowings under credit facility, current

$

10,000


$

—

Other current liabilities

125,616


103,258

Borrowings under credit facility, less current portion

157,500


—

Other non-current liabilities

24,202

 

37,668

Total liabilities

317,318


140,926

Total stockholders' equity

563,393

 

472,641

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

880,711

 

$

613,567







 



















































































































































































































VALUECLICK, INC.



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



(In thousands, except per share data)


 



Three-month Period



Ended December 31,



2011

 

2010



(Unaudited)

Revenue

$

182,594


$

128,747

Cost of revenue (Note 1)

74,128

 

56,907

Gross profit

108,466


71,840

Operating expenses:




Sales and marketing (Note 2)

22,275


12,047

General and administrative (Note 2)

18,678


14,019

Technology (Note 2)

15,608


9,924

Amortization of intangible assets acquired in business combinations

6,327

 

3,153

Total operating expenses

62,888

 

39,143

Income from operations

45,578


32,697

Interest and other income, net

1,434

 

1,891

Income before income taxes

47,012


34,588

Income tax expense

17,635

 

13,526

Net income

$

29,377

 

$

21,062





 

Basic net income per common share

$

0.36

 

$

0.26

Diluted net income per common share

$

0.35

 

$

0.26

Weighted-average shares used to compute basic net income per common


share

81,505

 

80,817

Weighted-average shares used to compute diluted net income per


common share

82,963

 

81,837





 





 

Note 1 - Includes amortization of intangible assets acquired in


business combinations of $2.5 million and $2.2 million for the


three-month periods ended December 31, 2011 and 2010, respectively.





 

Note 2 - Includes stock-based compensation as follows:






Three-month Period



Ended December 31,



2011

2010



(Unaudited)

Sales and marketing

$

1,675


$

363

General and administrative

2,663


1,457

Technology

1,438

 

286

Total stock-based compensation

$

5,776

 

$

2,106








 


































































































































































































































VALUECLICK, INC.



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



(In thousands, except per share data)


 


Year Ended December 31,


2011

 

2010


(Unaudited)

Revenue

$

560,155


$

430,798

Cost of revenue (1)

242,249

 

190,856

 

Gross profit

317,906


239,942

Operating expenses:



Sales and marketing (Note 2)

65,996


45,750

General and administrative (Note 2)

59,906


53,536

Technology (Note 2)

49,276


35,047

Amortization of intangible assets acquired in business combinations

16,646

 

13,089

 

Total operating expenses

191,824

 

147,422

 

Income from operations

126,082


92,520

Interest and other income, net

4,666

 

2,204

 

Income before income taxes

130,748


94,724

Income tax expense

29,618

 

14,120

 

Income from continuing operations

101,130


80,604

Loss from discontinued operations, net of tax

—


(134

)

Gain on sale, net of tax

—

 

10,040

 

Net income

$

101,130

 

$

90,510

 




 

Basic income from continuing operations per common share

$

1.26

 

$

0.99

 

Diluted income from continuing operations per common share

$

1.24

 

$

0.98

 

Basic net income per common share

$

1.26

 

$

1.11

 

Diluted net income per common share

$

1.24

 

$

1.10

 

Weighted-average shares used to compute basic net income per common


share

80,323

 

81,615

 

Weighted-average shares used to compute diluted net income per


common share

81,489

 

82,334

 




 




 

Note 1 - Includes amortization of intangible assets acquired in


business combinations of $9.6 million and $7.5 million for the years


ended December 31, 2011 and 2010, respectively.




 

Note 2 - Includes stock-based compensation as follows:




Year Ended December 31,


2011

2010


(Unaudited)

Sales and marketing

$

3,320


$

1,280

General and administrative

7,829


5,815

Technology

2,873

 

849

 

Total stock-based compensation

$

14,022

 

$

7,944

 








 



























































































































































VALUECLICK, INC.



RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS



TO ADJUSTED-EBITDA (Note 1)



(In thousands)


 


Three-month Period


Ended December 31,


2011

 

2010


(Unaudited)

Net income

$

29,377


$

21,062

Interest and other income, net

(1,434

)

(1,891

)

Provision for income tax

17,635


13,526

Amortization of acquired intangible assets included in cost of


revenue

2,498


2,180

Amortization of acquired intangible assets included in operating


expenses

6,327


3,153

Depreciation and leasehold amortization

2,476


1,742

Stock-based compensation

5,776


2,106

Acquisition-related costs

—

 

—

 

Adjusted-EBITDA

$

62,655

 

$

41,878

 




 




 


Year Ended December 31,


2011

2010


(Unaudited)

Income from continuing operations

$

101,130


$

80,604

Interest and other income, net

(4,666

)

(2,204

)

Provision for income tax

29,618


14,120

Amortization of acquired intangible assets included in cost of


revenue

9,633


7,522

Amortization of acquired intangible assets included in operating


expenses

16,646


13,089

Depreciation and leasehold amortization

8,028


6,620

Stock-based compensation

14,022


7,944

Acquisition-related costs

412

 

—

 

Adjusted-EBITDA

$

174,823

 

$

127,695

 








 

Note 1 - "Adjusted-EBITDA" (GAAP income from continuing


operations before interest, income taxes, depreciation, amortization,


stock-based compensation expenses, and acquisition-related costs)


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 marketable securities, 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 INCOME FROM CONTINUING OPERATIONS TO



NON-GAAP DILUTED NET INCOME PER COMMON SHARE (Note 1)



(In thousands)


 


Three-month Period


Ended December 31,


2011

 

2010


(Unaudited)

Net income

$

29,377


$

21,062

Stock-based compensation

5,776


2,106

Amortization of acquired intangible assets included in cost of


revenue

2,498


2,180

Amortization of acquired intangible assets included in operating


expenses

6,327


3,153

Tax impact of above items

(4,693

)

(2,956

)

Non-GAAP net income

$

39,285

 

$

25,545

 

Non-GAAP diluted net income per common share

$

0.47

 

$

0.31

 

Weighted-average shares used to compute non-GAAP diluted net income


per common share

82,963

 

81,837

 




 


Year Ended December 31,


2011

2010


(Unaudited)

Income from continuing operations

$

101,130


$

80,604

Stock-based compensation

14,022


7,944

Amortization of acquired intangible assets included in cost of


revenue

9,633


7,522

Amortization of acquired intangible assets included in operating


expenses

16,646


13,089

Tax impact of above items

(14,377

)

(11,220

)

Non-GAAP net income

$

127,054

 

$

97,939

 

Non-GAAP diluted net income per common share

$

1.56

 

$

1.19

 

Weighted-average shares used to compute non-GAAP diluted net income


per common share

81,489

 

82,334

 






 

Note 1 - "Non-GAAP diluted net income per common share" (GAAP diluted


income from continuing operations 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

Year Ended


Ended December 31,

December 31,


2011

 

2010

2011

 

2010


(Unaudited)

(Unaudited)

Affiliate Marketing:







Revenue

$

39,794


$

36,188


$

139,409


$

124,126

Cost of revenue

4,227

 

4,667

 

17,125

 

17,215

 

Gross profit

35,567


31,521


122,284


106,911

Operating expenses

9,407

 

9,832

 

37,711

 

37,359

 

Segment income from operations

$

26,160

 

$

21,689

 

$

84,573

 

$

69,552

 

Media:







Revenue

$

92,672


$

41,726


$

224,574


$

137,487

Cost of revenue

41,216

 

23,102

 

110,115

 

74,102

 

Gross profit

51,456


18,624


114,459


63,385

Operating expenses

24,150

 

8,056

 

59,439

 

29,760

 

Segment income from operations

$

27,306

 

$

10,568

 

$

55,020

 

$

33,625

 


Owned & Operated Websites:







Revenue

$

40,860


$

42,749


$

159,821


$

138,545

Cost of revenue

25,209

 

26,389

 

101,964

 

89,639

 

Gross profit

15,651


16,360


57,857


48,906

Operating expenses

6,007

 

5,924

 

24,093

 

20,943

 

Segment income from operations

$

9,644

 

$

10,436

 

$

33,764

 

$

27,963

 

Technology:







Revenue

$

9,459


$

8,484


$

37,031


$

31,889

Cost of revenue

1,112

 

908

 

3,917

 

3,359

 

Gross profit

8,347


7,576


33,114


28,530

Operating expenses

3,692

 

3,029

 

13,557

 

11,932

 

Segment income from operations

$

4,655

 

$

4,547

 

$

19,557

 

$

16,598

 

Reconciliation of segment income from operations to consolidated


income from operations:







Total segment income from operations

$

67,765


$

47,240


$

192,914


$

147,738

Corporate expenses

(7,586

)

(7,104

)

(26,531

)

(26,663

)

Stock-based compensation

(5,776

)

(2,106

)

(14,022

)

(7,944

)

Amortization of acquired intangible assets included



in consolidated cost of revenue

(2,498

)

(2,180

)

(9,633

)

(7,522

)

Amortization of acquired intangible assets included



in consolidated operating expense

(6,327

)

(3,153

)

(16,646

)

(13,089

)

Consolidated income from operations

$

45,578

 

$

32,697

 

$

126,082

 

$

92,520

 

Reconciliation of segment revenue to consolidated revenue:







Affiliate Marketing

$

39,794


$

36,188


$

139,409


$

124,126

Media

92,672


41,726


224,574


137,487

Owned & Operated Websites

40,860


42,749


159,821


138,545

Technology

9,459


8,484


37,031


31,889

Inter-segment eliminations

(191

)

(400

)

(680

)

(1,249

)

Consolidated revenue

$

182,594

 

$

128,747

 

$

560,155

 

$

430,798

 
















 


ValueClick, Inc.
Gary J. Fuges, CFA
1.818.575.4677



Source: ValueClick, Inc.



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