ValueClick Announces Third Quarter 2008 Results
Repurchase Program
Board of Directors Authorizes $100 Million Increase to Stock
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Oct. 29,2008--ValueClick, Inc. (Nasdaq: VCLK) today reported financial results
for the third quarter ended September 30, 2008. Revenue and
adjusted-EBITDA(1) were within their respective previously-issued
guidance ranges.
"We stated in mid-July that increasing economic uncertainty would
impact the second half of the year, and our third quarter results were
in-line with this revised outlook," said Tom Vadnais, chief executive
officer of ValueClick. "While the industry's growth outlook for the
rest of the year is more cautious, we have the experience and
management team depth to continue to drive strong margins and free
cash flow in this challenging market."
Third Quarter 2008 Financial Results
Revenue for the third quarter of 2008 was $152.9 million compared
to $156.9 million for the third quarter of 2007. Weakness in the
Comparison Shopping and Search segment was offset by better than
expected performance by the display advertising business within the
Media segment. The Company's Affiliate Marketing and Technology
segments performed in-line with expectations for the third quarter of
2008.
Adjusted-EBITDA for the third quarter of 2008 was $38.4 million
compared to $40.1 million for the third quarter of 2007. Third quarter
2008 adjusted-EBITDA margin was 25.1 percent, compared to 25.5 percent
in the prior year period.
GAAP net income for the third quarter of 2008 was $2.0 million, or
$0.02 per diluted common share, compared to $16.8 million, or $0.17
per diluted common share, for the third quarter of 2007. Third quarter
2008 net income per diluted common share was impacted by two items not
included in the Company's previously-issued guidance: a stock option
tender offer; and certain discrete tax adjustments. Excluding these
two items, which are described in detail below, third quarter 2008 net
income per diluted common share would have been $0.15.
The consolidated balance sheet as of September 30, 2008 includes
$119 million in cash, cash equivalents and marketable securities, $622
million in total stockholders' equity and no long-term debt. In the
quarter, the Company generated $32.0 million in cash from operations
and invested $2.0 million in capital expenditures. Year to date
through September 30, 2008, the Company generated $98.3 million in
cash from operations and invested $6.6 million in capital
expenditures.
Stock Option Tender Offer Completed in Third Quarter
On September 24, 2008, the Company completed a tender offer to
purchase up to 4.9 million stock options with exercise prices ranging
from $25.66 to $29.73 per share issued by the Company in 2007 to
certain employees, officers and directors. The Company repurchased 4.8
million of these stock options for an aggregate cash payment $4.8
million in the third quarter of 2008. The completed option tender
offer triggered the acceleration of stock-based compensation resulting
in an additional charge of $33.8 million in the third quarter of 2008.
Income Tax Adjustments
The Company recorded an income tax benefit in the third quarter of
2008 of $9.1 million related to discrete income tax adjustments,
primarily as a result of the expiration of certain statutes of
limitations during the third quarter of 2008.
Stock Repurchase Program Update
Today, ValueClick announced that its board of directors has
authorized a $100 million increase in the Company's Stock Repurchase
Program. As of today, up to $106.1 million of ValueClick's capital may
be used to repurchase shares of the Company's common stock under the
Stock Repurchase Program. Year-to-date through October 29, the Company
has repurchased approximately 12.0 million shares for $150.2 million,
including 8.8 million shares repurchased for $95.4 million during the
third quarter of 2008.
Divestiture of Two Non-Core Assets
On October 20, 2008, the Company announced that it had sold two
non-core assets in order to focus on its core competency of providing
online marketing products and services. The divestitures included the
AdVault advertising agency management software suite, and the ink-jet
e-commerce business. AdVault was included in the Company's Technology
business segment, while the e-commerce business was included in the
Media business segment. ValueClick retains the separate Mediaplex
online advertising technology solutions marketed under the MOJO brand,
which is unrelated to the AdVault suite and is a key part of the
Company's core online marketing services portfolio.
These divested businesses in aggregate represented less than four
percent of ValueClick's consolidated revenue and an immaterial portion
of the Company's total operating income for the first nine months of
2008. The aggregate gross proceeds from these divestitures of
approximately $18 million and the related net gain will be recorded in
the Company's fourth quarter 2008 results.
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 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.
Based on its third quarter results and outlook for the remainder
of the year, ValueClick is updating its fiscal year 2008 guidance
ranges, issued previously on July 31, 2008. The Company is also
issuing guidance for the fourth quarter of 2008.
The updated guidance also reflects the Company's divestiture of
two non-core assets, which previously were expected to contribute $5
million in aggregate revenue in the fourth quarter of 2008. Fourth
quarter 2008 revenue expectations have also been negatively impacted
by approximately $6 million relative to previous guidance due to
foreign currency exchange movements. Guidance is as follows:
Fiscal Year 2008 Fourth Qtr. 2008
----------------------------------------------------------------------
Revenue $633-$638 $140-$145
million million
----------------------------------------------------------------------
Adjusted-EBITDA $161-$164 $33-$36 million
million
----------------------------------------------------------------------
Adjusted-EBITDA Margin at Mid-
Point of Guidance Ranges 25.6% 24.2%
----------------------------------------------------------------------
GAAP diluted net income per common
share $0.55-$0.56 $0.15-$0.16
----------------------------------------------------------------------
Fiscal year 2008 GAAP diluted net income per common share guidance
includes the impact of approximately $0.36 per diluted common share
for stock-based compensation. Fourth quarter 2008 guidance for GAAP
diluted net income per common share includes a reduction of $0.02 per
diluted common share for stock-based compensation and assumes a 43
percent net effective income tax rate.
Fiscal year and fourth quarter 2008 guidance for GAAP diluted net
income per common share does not include the net gain on sale from the
divested businesses, which the Company expects to record as
discontinued operations in its fourth quarter 2008 financial
statements.
Conference Call Today at 4:30 p.m. ET
Tom Vadnais, 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 second
quarter during a conference call and webcast on October 29, 2008 at
4:30PM 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 November 5 at (888) 203-1112 and (719) 457-0820 (pass code:
7487512). An archive of the Webcast will also be available through
November 5.
About ValueClick
ValueClick, Inc. (Nasdaq: VCLK) is one of the world's largest
integrated online marketing services 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, Smarter.com, CouponMountain.com, 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, 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, and the risk that legislation and governmental regulation
could negatively impact the Company's performance. 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, 2008; recent quarterly reports on Form
10-Q; and other current reports on Form 8-K. 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 BALANCE SHEETS
(In thousands)
September 30, December 31,
2008 2007
------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 86,718 $ 82,767
Marketable securities 2,151 170,691
Accounts receivable, net 102,927 126,605
Other current assets 26,990 18,785
------------- ------------
Total current assets 218,786 398,848
Marketable securities, less current
portion 30,350 34,059
Property and equipment, net 18,123 19,357
Goodwill 438,057 439,532
Intangible assets, net 89,387 112,979
Other assets 5,711 6,247
------------- ------------
TOTAL ASSETS $800,414 $1,011,022
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $105,085 $ 219,199
Non-current liabilities 73,070 81,890
------------- ------------
Total liabilities 178,155 301,089
Total stockholders' equity 622,259 709,933
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $800,414 $1,011,022
============= ============
VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three-month Period
Ended September 30,
--------------------
2008 2007
--------------------
(Unaudited)
(Note 1)
Revenue $152,900 $ 156,892
Cost of revenue 53,718 50,450
--------- ----------
Gross profit 99,182 106,442
Operating expenses:
Sales and marketing (Note 2) 51,160 46,390
General and administrative (Note 2) 39,435 18,275
Technology (Note 2) 12,375 8,724
Amortization of intangible assets acquired in
business combinations 7,139 6,726
--------- ----------
Total operating expenses 110,109 80,115
--------- ----------
Income (loss) from operations (10,927) 26,327
Interest income and other, net (366) 2,943
--------- ----------
Income (loss) before income taxes (11,293) 29,270
Income tax expense (benefit) (13,292) 12,439
--------- ----------
Net income $ 1,999 $ 16,831
========= ==========
Basic net income per common share $ 0.02 $ 0.17
========= ==========
Weighted-average shares used to compute basic net
income per common share 89,571 99,138
========= ==========
Diluted net income per common share $ 0.02 $ 0.17
========= ==========
Weighted-average shares used to compute diluted
net income per common share 89,957 100,174
========= ==========
Note 1 - The condensed consolidated statements of operations include
the results of MeziMedia from the acquisition consummation date (July
30, 2007). Had this transaction been completed as of January 1, 2007,
on an unaudited pro forma basis, revenue would have been $165.1
million, and net income would have been $17.7 million, or $0.18 per
diluted common share, for the three-month period ended September 30,
2007. These unaudited pro forma results are for information purposes
only, are not necessarily indicative of what the actual results would
have been had this transaction occurred on January 1, 2007, and are
not necessarily indicative of future results.
Note 2 - Includes stock-based compensation as
follows:
Three-month Period
Ended September 30,
--------------------
2008 2007
--------- ----------
(Unaudited)
Sales and marketing $ 12,957 $ 1,200
General and administrative 23,192 2,791
Technology 3,497 603
--------- ----------
Total stock-based compensation $ 39,646 $ 4,594
========= ==========
VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Nine-month Period
Ended September 30,
-------------------
2008 2007
-------------------
(Unaudited)
(Note 1)
Revenue $ 492,765 $ 462,492
Cost of revenue 160,533 146,554
--------- ---------
Gross profit 332,232 315,938
Operating expenses:
Sales and marketing (Note 2) 148,958 137,036
General and administrative (Note 2) 81,311 53,016
Technology (Note 2) 32,502 26,386
Amortization of intangible assets acquired in
business combinations 22,678 17,967
--------- ---------
Total operating expenses 285,449 234,405
--------- ---------
Income from operations 46,783 81,533
Interest income and other, net 4,098 9,257
--------- ---------
Income before income taxes 50,881 90,790
Income tax expense 13,226 37,697
--------- ---------
Net income $ 37,655 $ 53,093
========= =========
Basic net income per common share $ 0.40 $ 0.53
========= =========
Weighted-average shares used to compute basic net
income per common share 94,202 99,577
========= =========
Diluted net income per common share $ 0.40 $ 0.53
========= =========
Weighted-average shares used to compute diluted
net income per common share 94,864 100,941
========= =========
Note 1 - The condensed consolidated statements of operations include
the results of MeziMedia from the acquisition consummation date (July
30, 2007). Had this transaction been completed as of January 1, 2007,
on an unaudited pro forma basis, revenue would have been $507.3
million, and net income would have been $56.5 million, or $0.56 per
diluted common share, for the nine-month period ended September 30,
2007. These unaudited pro forma results are for information purposes
only, are not necessarily indicative of what the actual results would
have been had this transaction occurred on January 1, 2007, and are
not necessarily indicative of future results.
Note 2 - Includes stock-based compensation as
follows:
Nine-month Period
Ended September 30,
-------------------
2008 2007
--------- ---------
(Unaudited)
Sales and marketing $ 16,355 $ 3,524
General and administrative 29,595 7,856
Technology 4,813 1,772
--------- ---------
Total stock-based compensation $ 50,763 $ 13,152
========= =========
VALUECLICK, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)
(In thousands)
Three-month Period
Ended September 30,
--------------------
2008 2007
---------- ---------
(Unaudited)
Net income $ 1,999 $ 16,831
Interest income and other, net 366 (2,943)
Provision (benefit) for income taxes (13,292) 12,439
Amortization of intangible assets acquired
in business combinations 7,139 6,726
Depreciation and leasehold amortization 2,559 2,425
Stock-based compensation 39,646 4,594
---------- --------
Adjusted-EBITDA $ 38,417 $ 40,072
========== ========
Nine-month Period
Ended September 30,
--------------------
2008 2007
---------- ---------
(Unaudited)
Net income $ 37,655 $ 53,093
Interest income and other, net (4,098) (9,257)
Provision for income taxes 13,226 37,697
Amortization of intangible assets acquired
in business combinations 22,678 17,967
Depreciation and leasehold amortization 7,685 7,202
Stock-based compensation 50,763 13,152
---------- --------
Adjusted-EBITDA $127,909 $119,854
========== ========
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 income from interest on the Company's cash and marketable
securities 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 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.
VALUECLICK, INC.
RECONCILIATION OF GAAP NET INCOME PER DILUTED COMMON SHARE TO PRO
FORMA NET INCOME PER DILUTED COMMON SHARE (Note 1)
(In thousands)
Three-month Period
Ended September 30,
2008
-------------------
GAAP net income $ 1,999
Stock-based compensation related to tender
offer:
Gross impact 33,796
Tax impact (13,518)
Tax benefit from discrete tax adjustments (9,118)
-----------------
Pro forma net income 13,159
=================
Pro forma diluted net income per common share $ 0.15
=================
Weighted-average shares used to compute diluted net
income per common share 89,957
=================
Note 1 - "Pro forma net income per diluted common share" (GAAP net
income per diluted common share before the impact of accelerated
stock-based compensation associated with the Company's
recently-completed stock option tender offer and before the impact of
significant discrete tax adjustments) included in this press release
is a non-GAAP financial measure.
Pro forma net income per diluted common share, as defined above,
may not be similar to pro forma net income per diluted common share
measures used by other companies and is not a measurement under GAAP.
Management believes that pro forma net income per diluted common share
provides useful information to investors about the Company's
performance because it eliminates the effects of non-recurring items
which are not directly attributable to the underlying performance of
the Company's business operations. Management uses pro forma net
income per diluted common share in evaluating the overall performance
of the Company's business operations.
Though management finds pro forma net income per diluted 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 always
uses pro forma net income per diluted common share in conjunction with
GAAP earnings and earnings per common share measures. The Company
believes that pro forma net income per diluted 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 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.
VALUECLICK, INC.
SEGMENT OPERATING RESULTS
(In thousands)
Three-month Period Nine-month Period
Ended September Ended
30, September 30,
------------------ -------------------
2008 2007 2008 2007
-------- -------- -------- ---------
(Unaudited) (Unaudited)
Media:
Revenue $ 78,735 $ 85,602 $237,407 $294,961
Cost of revenue 37,065 35,130 108,075 113,547
-------- -------- -------- --------
Gross profit 41,670 50,472 129,332 181,414
Operating expenses 22,785 33,269 76,081 114,437
-------- -------- -------- --------
Segment income from operations $ 18,885 $ 17,203 $ 53,251 $ 66,977
======== ======== ======== ========
Comparison Shopping and
Search:
Revenue $ 36,580 $ 35,703 $139,091 $ 62,305
Cost of revenue 10,484 11,363 36,071 20,993
-------- -------- -------- --------
Gross profit 26,096 24,340 103,020 41,312
Operating expenses 18,760 16,129 69,989 29,763
-------- -------- -------- --------
Segment income from operations $ 7,336 $ 8,211 $ 33,031 $ 11,549
======== ======== ======== ========
Affiliate Marketing:
Revenue $ 29,315 $ 27,836 $ 90,342 $ 83,064
Cost of revenue 5,081 3,115 13,807 9,301
-------- -------- -------- --------
Gross profit 24,234 24,721 76,535 73,763
Operating expenses 11,031 10,208 33,151 29,151
-------- -------- -------- --------
Segment income from operations $ 13,203 $ 14,513 $ 43,384 $ 44,612
======== ======== ======== ========
Technology:
Revenue $ 8,998 $ 8,215 $ 28,346 $ 23,453
Cost of revenue 1,682 1,393 4,604 4,279
-------- -------- -------- --------
Gross profit 7,316 6,822 23,742 19,174
Operating expenses 4,032 3,388 12,194 10,237
-------- -------- -------- --------
Segment income from operations $ 3,284 $ 3,434 $ 11,548 $ 8,937
======== ======== ======== ========
Total segment income from
operations $ 42,708 $ 43,361 $141,214 $132,075
Corporate expenses (6,850) (5,714) (20,990) (19,423)
Stock-based compensation (39,646) (4,594) (50,763) (13,152)
Amortization of intangible
assets (7,139) (6,726) (22,678) (17,967)
-------- -------- -------- --------
Consolidated income (loss)
from operations $(10,927) $ 26,327 $ 46,783 $ 81,533
======== ======== ======== ========
Reconciliation of segment
revenue to consolidated
revenue:
Media $ 78,735 $ 85,602 $237,407 $294,961
Comparison Shopping and Search 36,580 35,703 139,091 62,305
Affiliate Marketing 29,315 27,836 90,342 83,064
Technology 8,998 8,215 28,346 23,453
Inter-segment eliminations (728) (464) (2,421) (1,291)
-------- -------- -------- --------
Consolidated revenue $152,900 $156,892 $492,765 $462,492
======== ======== ======== ========
CONTACT: ValueClick, Inc.
Gary J. Fuges, CFA, 1-818-575-4677
SOURCE: ValueClick, Inc.