ValueClick, Inc. (Nasdaq: VCLK) today reported financial results
for the second quarter ended June 30, 2006. Revenue,
adjusted-EBITDA(1), and diluted net income per common share for the
quarter exceeded previously issued guidance and included record levels
of revenue and adjusted-EBITDA. Based on its second quarter
performance and outlook, ValueClick also raised its guidance for
fiscal year 2006.
"ValueClick's scale and leadership in key performance-based online
marketing services generated another successful quarter of growth and
profitability, including 35 percent year-over-year organic revenue
growth," said James Zarley, chairman and chief executive officer of
ValueClick. "Our increased 2006 guidance and the year-to-date
repurchase of close to seven percent of the Company's total shares
outstanding illustrate our confidence in ValueClick's competitive
position and growth opportunity."
Revenue for the second quarter of 2006 was a record $130.0
million, $10 million above the Company's previously issued guidance
range of $118-$120 million and an increase of $75.4 million, or 138
percent, from $54.6 million for the second quarter of 2005. Second
quarter 2006 results include a full quarter of operations from:
E-Babylon and Webclients, both acquired in June 2005; and Fastclick,
acquired in September 2005. Second quarter 2005 results include one
month of operations from E-Babylon.
Income before income taxes for the second quarter of 2006 was a
record $27.2 million, compared to $12.1 million for the second quarter
of 2005. Second quarter 2006 income before income taxes includes $3.2
million of stock-based compensation expense, due primarily to the
Company's adoption of Statement of Financial Accounting Standards
(SFAS) 123R on January 1, 2006, compared to $45,000 for the second
quarter of 2005. Second quarter 2006 income before income taxes also
includes net proceeds of $1.9 million related to a favorable legal
settlement.
Adjusted-EBITDA for the second quarter of 2006 was a record $36.0
million, above the Company's previously issued guidance range of
$29-$31 million and an increase of $22.3 million, or 163 percent, from
$13.7 million for the second quarter of 2005.
Net income for the second quarter of 2006 was $14.4 million, or
$0.14 per diluted common share, compared to $6.8 million, or $0.08 per
diluted common share, for the second quarter of 2005. Second quarter
2006 net income includes $2.3 million of stock-based compensation
expense, net of tax, largely due to the Company's adoption of SFAS
123R. This stock-based compensation expense reduced second quarter
2006 diluted net income per common share by $0.02.
The consolidated balance sheet as of June 30, 2006 includes $188
million in cash, cash equivalents and marketable securities, $568
million in total stockholders' equity and no long-term debt. During
the second quarter, ValueClick repurchased 5.9 million shares of the
Company's outstanding common stock for $88.4 million. Year-to-date
through July 31, 2006, the Company has repurchased 6.9 million shares
of its outstanding common stock for $103.4 million.
Business Outlook
The following statements are 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 expense may differ from these estimates based on the
timing and amount of options granted, the assumptions used in option
valuation and other factors.
Based on its second quarter results and outlook for 2006,
ValueClick is raising its fiscal year 2006 guidance ranges, issued
previously on May 8, 2006:
Fiscal Year 2006 Previous Guidance Updated Guidance
------------------------- -------------------- ----------------------
Revenue $495-$505 million $519-$529 million
------------------------- -------------------- ----------------------
Adjusted-EBITDA $128-$131 million $133-$137 million
------------------------- -------------------- ----------------------
Diluted net income per
common share $0.46-$0.48 $0.48-$0.54
------------------------- -------------------- ----------------------
ValueClick's full year 2006 guidance for diluted net income per
common share includes a deduction in the range of $0.09 to $0.10 per
share for stock-based compensation expense.
Additionally, ValueClick is announcing guidance for the third
quarter of 2006:
Third Quarter 2006 Guidance
---------------------------------------- ------------------------
Revenue $133-$135 million
---------------------------------------- ------------------------
Adjusted-EBITDA $33-$35 million
---------------------------------------- ------------------------
Diluted net income per common share $0.14
---------------------------------------- ------------------------
Third quarter 2006 diluted net income per common share has been
reduced by $0.02 per share for stock-based compensation expense, and
third quarter and full year 2006 diluted net income per common share
guidance assumes an effective tax rate of 46.4 percent.
Conference Call Today
James Zarley, chairman and chief executive officer, and Sam
Paisley, chief administrative officer, will present an overview of the
results and other factors affecting financial performance for the
second quarter during a webcast on August 1, 2006 at 1:30PM PT.
Investors and analysts may obtain dial-in information through
StreetEvents (www.streetevents.com).
The live webcast and other information of potential interest to
investors will be available to the public in the Investor Relations
section of the Company's website (www.valueclick.com). Replay
information will be available for seven days after the call and may be
accessed at 888-203-1112 for domestic callers and 719-457-0820 for
international callers. The passcode is 6522400.
About ValueClick
ValueClick, Inc. (Nasdaq: VCLK) is one of the world's largest
integrated online marketing companies, offering comprehensive and
scalable solutions to deliver cost-effective customer acquisition for
advertisers and transparent revenue streams for publishers.
ValueClick's performance-based solutions allow its customers to reach
their potential through multiple online marketing channels, including
affiliate and search marketing, display advertising, lead generation,
ad serving and related technologies, and comparison shopping.
ValueClick brands include Commission Junction, ValueClick Media,
Mediaplex, and PriceRunner. For more information, please visit
www.valueclick.com.
This release contains forward-looking statements that involve
risks and uncertainties, including, but not limited to, ValueClick's
ability to successfully integrate its recently completed Fastclick and
Webclients acquisitions, trends in online advertising spending and
estimates of future online performance-based advertising. 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: its Annual Report on Form 10-K filed on March
31, 2006 and an amendment to its Annual Report on Form 10-K/A filed on
April 21, 2006; its current report on Form 8-K filed on February 27,
2006; recent quarterly reports on Form 10-Q and Form 10-Q/A; other
current reports on Form 8-K; its amended registration statement on
Form S-4 filed on September 27, 2005; and its final prospectus on Form
424B3 filed on September 28, 2005. Other factors that could cause
actual results to differ materially from those expressed or implied in
the forward-looking statements include, but are not limited to, the
risk that market demand for online advertising, and performance-based
online advertising in particular, will not grow as rapidly as
predicted. 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 before interest, income taxes,
depreciation, amortization, and stock-based compensation. 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.
VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three-month Period
Ended June 30,
------------------
2006 2005
--------- --------
(Unaudited)
(Note 1)
Revenue $130,028 $54,572
Cost of revenue 42,126 13,768
--------- --------
Gross profit 87,902 40,804
Operating expenses:
Sales and marketing (Note 2) 37,641 15,064
General and administrative (Note 2) 11,377 8,700
Technology (Note 2) 8,267 4,686
Amortization of intangible assets 5,450 1,448
Restructuring expense, net -- 206
--------- --------
Total operating expenses 62,735 30,104
--------- --------
Income from operations 25,167 10,700
Interest income, net 2,005 1,420
--------- --------
Income before income taxes 27,172 12,120
Income tax expense 12,728 5,353
--------- --------
Net income $14,444 $6,767
========= ========
Basic net income per common share $0.14 $0.08
========= ========
Weighted-average shares used to compute basic net
income per common share 101,265 82,641
========= ========
Diluted net income per common share $0.14 $0.08
========= ========
Weighted-average shares used to compute diluted
net income per common share 103,459 84,930
========= ========
Note 1 - The condensed consolidated statements of operations
include the results of E-Babylon, Webclients and Fastclick from the
beginning of the accounting period nearest to their acquisition
consummation dates (June 13, 2005, June 24, 2005 and September 29,
2005, respectively). Had these transactions been completed as of
January 1, 2005, on an unaudited pro-forma basis, revenue would have
been $96.1 million and net income would have been $8.0 million, or
$0.08 per diluted common share, for the three-month period ended June
30, 2005. These unaudited pro-forma results are for information
purposes only, are not necessarily indicative of what the actual
results would have been had the transactions occurred on January 1,
2005, and are not necessarily indicative of future results.
Note 2 - Includes stock-based compensation expense as
follows (the increase in 2006 compared to 2005 is
primarily due to the adoption of SFAS 123R): Three-month Period
Ended June 30,
--------------
2006 2005
--------------
(Unaudited)
Sales and marketing $1,173 $20
General and administrative 1,397 17
Technology 626 8
------- -----
Total stock-based compensation expense $3,196 $45
======== =====
VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Six-month Period
Ended June 30,
-------------------
2006 2005
--------- ---------
(Unaudited)
(Note 1)
Revenue $247,315 $105,986
Cost of revenue 81,363 27,073
--------- ---------
Gross profit 165,952 78,913
Operating expenses:
Sales and marketing (Note 2) 69,015 26,412
General and administrative (Note 2) 28,208 17,253
Technology (Note 2) 16,313 9,101
Amortization of intangible assets 11,105 2,685
Restructuring expense, net -- 4
--------- ---------
Total operating expenses 124,641 55,455
--------- ---------
Income from operations 41,311 23,458
Interest income, net 3,923 2,780
--------- ---------
Income before income taxes 45,234 26,238
Income tax expense 21,001 10,788
--------- ---------
Net income $24,233 $15,450
========= =========
Basic net income per common share $0.24 $0.19
========= =========
Weighted-average shares used to compute basic net
income per common share 101,643 82,471
========= =========
Diluted net income per common share $0.23 $0.18
========= =========
Weighted-average shares used to compute diluted
net income per common share 104,120 85,091
========= =========
Note 1 - The condensed consolidated statements of operations
include the results of E-Babylon, Webclients and Fastclick from the
beginning of the accounting period nearest to their acquisition
consummation dates (June 13, 2005, June 24, 2005 and September 29,
2005, respectively). Had these transactions been completed as of
January 1, 2005, on an unaudited pro-forma basis, revenue would have
been $190.0 million and net income would have been $16.3 million, or
$0.16 per diluted common share, for the six-month period ended June
30, 2005. These unaudited pro-forma results are for information
purposes only, are not necessarily indicative of what the actual
results would have been had the transactions occurred on January 1,
2005, and are not necessarily indicative of future results.
Note 2 - Includes stock-based compensation expense as
follows (the increase in 2006 compared to 2005 is
primarily due to the adoption of SFAS 123R): Six-month Period
Ended June 30,
---------------
2006 2005
---------------
(Unaudited)
Sales and marketing $2,449 $45
General and administrative 2,763 34
Technology 1,304 20
--------- -----
Total stock-based compensation expense $6,516 $99
========= =====
VALUECLICK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2006 2005
----------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $48,398 $46,875
Marketable securities, at fair value 139,169 193,908
Accounts receivable, net 93,552 74,636
Other current assets 14,555 11,324
----------- -----------
Total current assets 295,674 326,743
Property and equipment, net 17,579 17,509
Goodwill 273,195 273,215
Intangible assets, net 91,360 102,245
Other assets 1,480 1,149
----------- -----------
TOTAL ASSETS $679,288 $720,861
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 65,367 66,946
Non-current liabilities 45,802 35,372
----------- -----------
Total liabilities 111,169 102,318
Total stockholders' equity 568,119 618,543
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $679,288 $720,861
=========== ===========
VALUECLICK, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)
(In thousands)
Three-month Period
Ended June 30,
-----------------
2006 2005
-----------------
(Unaudited)
Net Income $14,444 $6,767
Less interest income, net (2,005) (1,420)
Plus provision for income taxes 12,728 5,353
Plus amortization of intangible assets 5,450 1,448
Plus depreciation and leasehold amortization 2,220 1,528
Plus stock-based compensation 3,196 45
-------- --------
Adjusted-EBITDA $36,033 $13,721
======== ========
Six-month Period
Ended June 30,
-----------------
2006 2005
-----------------
(Unaudited)
Net Income $24,233 $15,450
Less interest income, net (3,923) (2,780)
Plus provision for income taxes 21,001 10,788
Plus amortization of intangible assets 11,105 2,685
Plus depreciation and leasehold amortization 4,469 3,063
Plus stock-based compensation 6,516 99
-------- --------
Adjusted-EBITDA $63,401 $29,305
======== ========
Note 1 - "Adjusted-EBITDA" (earnings 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 costs associated with capital investments, income from
interest on the Company's cash and marketable securities, and
stock-based compensation expense 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 always 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 base-line 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.
CONTACT: ValueClick, Inc.
Gary J. Fuges, CFA, 818-575-4677
SOURCE: ValueClick, Inc.