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ValueClick announces first quarter 2007 results

ValueClick Announces First Quarter 2007 Results<br />

ValueClick Announces First Quarter 2007 Results

Results Exceed Previously Issued Guidance; Company Raises 2007 Outlook


WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--May 2,

2007--ValueClick, Inc. (Nasdaq: VCLK) today reported financial results

for the first quarter ended March 31, 2007. Revenue,

adjusted-EBITDA(1) and diluted net income per common share for the

quarter exceeded previously issued guidance.


"The first quarter was a great start to 2007 for ValueClick, with

34 percent revenue growth and all segments performing above plan,"

said James Zarley, chairman and chief executive officer of ValueClick.

"We continue to differentiate ourselves through a unique combination

of technology, process, relationships, and our constant focus on

industry best practices. The fundamentals of our businesses are

strong, and I am confident in our ability to deliver strong growth and

profitability in 2007."


Revenue for the first quarter of 2007 was $156.9 million, above

the high end of the Company's previously issued guidance and an

increase of $39.6 million, or 34 percent, from $117.3 million for the

first quarter of 2006. First quarter 2007 results include three months

of operations from Shopping.net, acquired in December 2006.

Year-over-year pro-forma organic revenue growth was 33 percent in the

first quarter of 2007.


Income before income taxes for the first quarter of 2007 was $32.1

million compared to $18.1 million for the first quarter of 2006.

Adjusted-EBITDA for the first quarter of 2007 was $41.0 million, above

the high end of the Company's previously issued guidance and an

increase of $13.7 million, or 50 percent, from $27.4 million for the

first quarter of 2006.


Net income for the first quarter of 2007 was $18.6 million, or

$0.18 per diluted common share, compared to $9.8 million, or $0.09 per

diluted common share, for the first quarter of 2006. First quarter

2007 diluted net income per common share exceeded the Company's

previously issued guidance by $0.01.


The consolidated balance sheet as of March 31, 2007 includes $334

million in cash, cash equivalents and marketable securities,

approximately $671 million in total stockholders' equity and no

long-term debt.


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. 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 first quarter results and outlook for 2007,

ValueClick is raising its fiscal year 2007 guidance ranges, issued

previously on February 21, 2007:


Fiscal Year 2007               Previous Guidance    Updated Guidance
----------------------------- -------------------- -------------------
Revenue $645-$665 million $655-$665 million
----------------------------- -------------------- -------------------
Adjusted-EBITDA $175-$180 million $177-$182 million
----------------------------- -------------------- -------------------
Diluted net income per common
share $0.78-$0.80 $0.79-$0.81
----------------------------- -------------------- -------------------

Fiscal year 2007 guidance for diluted net income per common share

includes a reduction of $0.12 per diluted common share for stock-based

compensation expense, and assumes a 42.5 percent effective tax rate.


Additionally, ValueClick is announcing guidance for the second

quarter of 2007:


Second Quarter 2007                                 Guidance
------------------------------------------ ---------------------------
Revenue $157-$159 million
------------------------------------------ ---------------------------
Adjusted-EBITDA $40-$42 million
------------------------------------------ ---------------------------
Diluted net income per common share $0.17-$0.18
------------------------------------------ ---------------------------

Second quarter 2007 diluted net income per common share guidance

includes a reduction of $0.03 per diluted common share for stock-based

compensation expense and assumes a 42.5 percent effective tax rate.


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 ValueClick's financial performance

for the first quarter during a conference call and webcast on May 2,

2007 at 1:30PM PT. Investors and analysts may obtain the 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 5077746.


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, 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, but not

limited to: its annual report on Form 10-K filed on March 1, 2007;

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 STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three-month Period
Ended March 31,
-------------------
2007 2006
--------- ---------
(Unaudited)
(Note 1)
Revenue $156,924 $117,287
Cost of revenue 47,047 39,237
--------- ---------
Gross profit 109,877 78,050
Operating expenses:
Sales and marketing (Note 2) 48,452 31,374
General and administrative (Note 2) 17,541 16,831
Technology (Note 2) 8,927 8,046
Amortization of intangible assets 5,771 5,655
--------- ---------
Total operating expenses 80,691 61,906
--------- ---------
Income from operations 29,186 16,144
Interest income, net 2,939 1,918
--------- ---------
Income before income taxes 32,125 18,062
Income tax expense 13,491 8,273
--------- ---------
Net income $18,634 $9,789
========= =========
Basic net income per common share $0.19 $0.10
========= =========
Weighted-average shares used to compute basic net
income per common share 99,562 102,026
========= =========
Diluted net income per common share $0.18 $0.09
========= =========
Weighted-average shares used to compute diluted
net income per common share 101,036 104,788
Note 1 - The condensed consolidated statements of operations include
the results of Shopping.net from acquisition consummation date
(December 1, 2006). Had this transaction been completed as of January
1, 2006, on an unaudited pro-forma basis, revenue would have been
$118.0 million, and net income would have been $9.5 million, or $0.09
per diluted common share, for the three-month period ended March 31,
2006. 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, 2006, and are
not necessarily indicative of future results.
Note 2 - Includes stock-based compensation expense as follows:
Three-month Period
Ended March 31,
-------------------
2007 2006
--------- ---------
(Unaudited)
Sales and marketing $1,028 $1,276
General and administrative 2,084 1,366
Technology 526 678
--------- ---------
Total stock-based compensation expense $3,638 $3,320
========= =========

VALUECLICK, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)
(In thousands)
Three-month Period
Ended March 31,
------------------
2007 2006
--------- --------
(Unaudited)
Net Income $18,634 $9,789
Less interest income, net (2,939) (1,918)
Plus income tax expense 13,491 8,273
Plus amortization of intangible assets 5,771 5,655
Plus depreciation and leasehold amortization 2,434 2,249
Plus stock-based compensation 3,638 3,320
--------- --------
Adjusted-EBITDA $41,029 $27,368
========= ========
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 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.
                           VALUECLICK, INC.
SEGMENT OPERATING RESULTS
(Amounts in thousands)
Three-month Period
Ended March 31,
-------------------
2007 2006
--------- ---------
(Unaudited)
Media:
Revenue $108,422 $79,385
Cost of revenue 38,532 33,736
--------- ---------
Gross profit 69,890 45,649
Operating expenses 44,096 27,054
--------- ---------
Segment income from operations $25,794 $18,595
========= =========
Comparison Shopping:
Revenue $8,617 $5,546
Cost of revenue 1,349 293
--------- ---------
Gross profit 7,268 5,253
Operating expenses 6,725 5,373
--------- ---------
Segment income from operations $543 $(120)
========= =========
Affiliate Marketing:
Revenue $32,798 $26,862
Cost of revenue 5,958 4,111
--------- ---------
Gross profit 26,840 22,751
Operating expenses 9,889 8,863
--------- ---------
Segment income from operations $16,951 $13,888
========= =========
Technology:
Revenue $7,470 $5,775
Cost of revenue 1,452 1,325
--------- ---------
Gross profit 6,018 4,450
Operating expenses 3,439 3,082
--------- ---------
Segment income from operations $2,579 $1,368
========= =========
Total segment income from operations $45,867 $33,731
Corporate expenses (7,272) (8,612)
Stock-based compensation (3,638) (3,320)
Amortization of intangible assets (5,771) (5,655)
--------- ---------
Consolidated income from operations $29,186 $16,144
========= =========
Reconciliation of segment revenue to consolidated
revenue:
Media $108,422 $79,385
Comparison Shopping 8,617 5,546
Affiliate Marketing 32,798 26,862
Technology 7,470 5,775
Inter-segment eliminations (383) (281)
--------- ---------
Consolidated revenue $156,924 $117,287
========= =========
                           VALUECLICK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2007 2006
---------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 78,040 $ 76,769
Marketable securities, at fair value 256,304 204,825
Accounts receivable, net 100,593 107,785
Other current assets 16,750 13,611
-------- --------
Total current assets 451,687 402,990
Property and equipment, net 18,309 18,995
Goodwill 277,674 278,070
Intangible assets, net 85,384 91,383
Other assets 2,236 1,828
--------- ------------
TOTAL ASSETS $835,290 $793,266
========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 94,743 $ 87,414
Non-current liabilities 69,419 62,143
-------- --------
Total liabilities 164,162 149,557
Total stockholders' equity 671,128 643,709
--------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $835,290 $793,266
========= ============
                           VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three-month Period
Ended March 31,
(Unaudited)
------------------
2007 2006
--------- --------
Cash flows from operating activities:
Net income $18,634 $ 9,789
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,205 7,904
Non-cash, stock-based compensation expense 3,486 2,595
Benefit from deferred income taxes (3,330) (1,512)
Other non-cash adjustments 416 748
Changes in operating assets and liabilities 21,225 (2,058)
--------- --------
Net cash provided by operating activities 48,636 17,466
--------- --------
Cash flows from investing activities:
Net purchases of marketable securities (51,326) (5,431)
Purchases of property and equipment (1,771) (2,201)
Acquisition of businesses, net of cash acquired -- (1,000)
--------- --------
Net cash used in investing activities (53,097) (8,632)
--------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options 3,914 1,651
Excess tax benefits from stock option exercises 1,728 2,937
Repayment of capital lease obligations -- (62)
--------- --------
Net cash provided by financing activities 5,642 4,526
--------- --------
Effect of foreign currency translations 90 318
--------- --------
Net increase in cash and cash equivalents 1,271 13,678
Cash and cash equivalents, beginning of period 76,769 46,875
--------- --------
Cash and cash equivalents, end of period $78,040 $60,553
========= ========

CONTACT: ValueClick, Inc.


Gary J. Fuges, CFA


818-575-4677



SOURCE: ValueClick, Inc.