PRESSROOM

ValueClick announces fourth quarter 2008 results

ValueClick Announces Fourth Quarter 2008 Results

ValueClick Announces Fourth Quarter 2008 Results


WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Feb. 12, 2009--

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

fourth quarter and fiscal year ended December 31, 2008. Revenue and

adjusted-EBITDA1 were above their respective

previously-issued guidance ranges.



“While macroeconomic headwinds clearly impacted the quarter,

ValueClick’s focus on execution allowed us to exceed our revenue and

adjusted-EBITDA guidance for the quarter, and expand adjusted-EBITDA

margin year-over-year,” said Tom Vadnais, chief executive officer of

ValueClick. “In the fourth quarter, we generated $30 million in free

cash flow, bringing the full year total free cash flow generation to

over $120 million. Our performance-based offerings, strong balance sheet

and relentless focus on driving margins make us a formidable competitor

in this challenged environment.”



Fourth Quarter 2008 Financial Results



Revenue for the fourth quarter of 2008 was $150.1 million, higher than

the previously-issued guidance range of $140 to $145 million due

primarily to the performance of the Company’s comparison shopping,

affiliate marketing and display advertising businesses. Fourth quarter

2007 revenue was $175.7 million.



Adjusted-EBITDA for the fourth quarter of 2008 was $38.2 million, higher

than the guidance range of $33 to $36 million, compared to $44.3 million

for the fourth quarter of 2007. Fourth quarter 2008 adjusted-EBITDA

margin was 25.4 percent, compared to 25.2 percent in the prior year

period.



GAAP net loss from continuing operations for the fourth quarter of 2008,

which includes a preliminary, pre-tax $327 million non-cash goodwill

impairment charge, was $261.2 million, or $3.01 per diluted common

share, compared to income from continuing operations of $17.6 million,

or $0.18 per diluted common share, for the fourth quarter of 2007.

Excluding the impact of this charge, net income from continuing

operations would have been $14.1 million, or $0.16 per diluted common

share, at the high end of the guidance range of $0.15 to $0.16.



Non-GAAP net income, which excludes discontinued operations, stock-based

compensation, amortization of intangible assets, and goodwill impairment

charges was $19.9 million, or $0.23 per diluted common share, compared

to $25.8 million, or $0.26 per diluted common share, for the fourth

quarter of 2007. A table reconciling GAAP net income (loss) from

continuing operations to non-GAAP diluted net income per common share is

included in this press release. The Company plans to provide non-GAAP

diluted net income per common share metrics in future quarterly

financial results press releases.



In the quarter, the Company generated approximately $30 million in free

cash flow, defined as net cash from operations less capital

expenditures. In fiscal year 2008, the Company generated approximately

$120 million in free cash flow.



The consolidated balance sheet as of December 31, 2008 includes $150.4

million in cash, cash equivalents and marketable securities and no

long-term debt.



Divestiture of Non-Core Businesses,

Discontinued Operations



On October 20, 2008, the Company announced the divestiture of two

businesses: the AdVault advertising agency management software suite;

and the inkjet 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.



In accordance with GAAP, the Company has presented these divested

businesses as discontinued operations and restated its historical

statements of operations and segment operating results to reflect this

change. A PDF file containing restated historical consolidated

statements of operations and segment operating results information

reflecting this change is available for download on the Investor

Relations page of www.valueclick.com.

The Company’s previously-issued revenue and adjusted-EBITDA guidance for

fiscal year 2008 did not reflect this change in presentation.



Impairment of Goodwill



Fourth quarter 2008 financial statements include the impact of an

estimated $327 million pre-tax, non-cash goodwill impairment charge,

based on the preliminary results of the Company’s annual goodwill

impairment test.



The Company is in the process of completing its goodwill impairment test

and this preliminary impairment charge estimate, and the related tax

impact, may change. Accordingly, fourth quarter 2008 and full year 2008

GAAP operating results included in this press release are preliminary

and subject to change. Final GAAP operating results will be included in

the Company’s annual report on Form 10-K, which will be filed with the
Securities and Exchange Commission no later than Monday, March 2.



Stock Repurchase Program Update



During the quarter, the Company invested $1.1 million to repurchase

approximately 190,000 shares of its common stock through its Stock

Repurchase Program. As of February 12, the Company has approximately

$105 million remaining on its repurchase authorization.



Line of Credit Agreement



On November 14, 2008, ValueClick entered into a three year credit

agreement that provides the Company with a senior secured revolving

credit facility of up to $100 million. For more information on the

Company’s credit agreement, please see the Form 8-K the Company filed

with the Securities and Exchange Commission on November 18, 2008. As of
February 12, no amounts are outstanding and the entire credit facility

is available for drawdown.



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.



Today, ValueClick is announcing guidance for the first quarter of 2009:


















 

 


Guidance



Revenue


$126-$132 million

Adjusted-EBITDA


$29-$31 million

GAAP diluted net income per common share


$0.11-$0.12

Non-GAAP diluted net income per common share


$0.17-$0.18


Starting with first quarter 2009, ValueClick is providing a non-GAAP

diluted net income per common share metric as part of its guidance.

First quarter 2009 non-GAAP and GAAP diluted net income per common share

guidance assume a 42 percent effective tax rate.



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 fourth quarter

during a conference call and webcast on February 12 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 February 19 at

(888) 203-1112 and (719) 457-0820 (pass code: 5647052). An archive of

the Webcast will also be available through February 19.



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 from continuing operations before

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

compensation, and goodwill impairment charges. 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.



PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



(In thousands, except per share data)




 





Three-month Period
Ended December 31,




2008


 

2007



(Unaudited)








 

Revenue


$

150,091



$

175,721


Cost of revenue


 

52,377



 

53,759


Gross profit



97,714




121,962


Operating expenses:







Sales and marketing (Note 1)



37,051




51,805


General and administrative (Note 1)



19,057




24,402


Technology (Note 1)



8,421




9,142


Amortization of intangible assets acquired in business combinations



6,498




7,879


Impairment of goodwill


 

327,000



 

-


Total operating expenses


 

398,027



 

93,228


Income (loss) from operations



(300,313

)



28,734


Interest income and other, net


 

(1,913

)


 

2,789


Income (loss) before income taxes



(302,226

)



31,523


Income tax expense (benefit)


 

(41,033

)


 

13,964


Net income (loss) from continuing operations



(261,193

)



17,559


Loss from discontinued operations, net of tax impact



(82

)



(40

)

Gain on disposal, net of tax impact


 

4,984



 

-


Net income (loss)


$

(256,291

)


$

17,519








 

Basic net income (loss) from continuing operations per common share


$

(3.01

)


$

0.18


Diluted net income (loss) from continuing operations per common share


$

(3.01

)


$

0.18


Basic net income (loss) per common share


$

(2.95

)


$

0.18


Diluted net income (loss) per common share


$

(2.95

)


$

0.18



Weighted-average shares used to compute basic net income (loss)

per common share




 

86,736



 

98,177



Weighted-average shares used to compute diluted net income (loss)

per common share




 

86,736



 

99,245










 















































Note 1 – Includes stock-based compensation as follows:

 

Three-month Period
Ended December 31,



2008

 

2007



(Unaudited)

Sales and marketing


$

612


$

1,516

General and administrative



1,561



3,080

Technology


 

424


 

663

Total stock-based compensation


$

2,597


$

5,259







 




































































































































































































































VALUECLICK, INC.



PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



(In thousands, except per share data)




 




Year Ended


December 31,





2008


 

2007



(Unaudited)






(Note 1)

Revenue


$

625,806



$

616,508

Cost of revenue


 

204,052



 

188,686

Gross profit



421,754




427,822

Operating expenses:






Sales and marketing (Note 2)



181,128




183,313

General and administrative (Note 2)



98,098




75,555

Technology (Note 2)



39,278




34,439

Amortization of intangible assets acquired in business combinations



28,882




24,745

Impairment of goodwill


 

327,000



 

-

Total operating expenses


 

674,386



 

318,052

Income (loss) from operations



(252,632

)



109,770

Interest income and other, net


 

2,173



 

12,026

Income (loss) before income taxes



(250,459

)



121,796

Income tax expense (benefit)


 

(27,447

)


 

51,448

Net income (loss) from continuing operations



(223,012

)



70,348

Income (loss) from discontinued operations, net of tax impact



(608

)



264

Gain on disposal, net of tax impact


 

4,984



 

-

Net income (loss)


 

(218,636

)


$

70,612






 

Basic net income (loss) from continuing operations per common share


$

(2.42

)


$

0.71

Diluted net income (loss) from continuing operations per common share


$

(2.42

)


$

0.70

Basic net income (loss) per common share


$

(2.37

)


$

0.71

Diluted net income (loss) per common share


$

(2.37

)


$

0.70


Weighted-average shares used to compute basic net income (loss)

per common share




 

92,325



 

99,224


Weighted-average shares used to compute diluted net income (loss)

per common share




 

92,325



 

100,518








 


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 $661.3 million, and

net income would have been $73.8 million, or $0.73 per diluted common

share, for the year ended December 31, 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:

 

Year Ended


December 31,





2008

 

2007





 



(Unaudited)

Sales and marketing


$

16,196


$

4,964

General and administrative



31,154



10,930

Technology


 

5,133


 

2,397

Total stock-based compensation


$

52,483


$

18,291







 





































































































































































































VALUECLICK, INC.
RECONCILIATION OF NET INCOME (LOSS)

FROM CONTINUING



OPERATIONS TO ADJUSTED-EBITDA (Note 1)
(In thousands)




 





Three-month Period


Ended December 31,






2008


 

2007



(Unaudited)


Net income (loss) from continuing operations


$

(261,193

)


$

17,559


Interest income and other, net



1,913




(2,789

)

Provision (benefit) for income taxes



(41,033

)



13,964


Amortization of intangible assets acquired in business combinations



6,498




7,879


Depreciation and leasehold amortization



2,371




2,424


Stock-based compensation



2,597




5,259


Impairment of goodwill


 

327,000



 

-


Adjusted-EBITDA


$

38,153



$

44,296










 



Year Ended


December 31,






2008



2007



(Unaudited)


Net income (loss) from continuing operations


$

(223,012

)


$

70,348


Interest income and other, net



(2,173

)



(12,026

)

Provision (benefit) for income taxes



(27,447

)



51,448


Amortization of intangible assets acquired in business combinations



28,882




24,745


Depreciation and leasehold amortization



9,629




9,369


Stock-based compensation



52,483




18,291


Impairment of goodwill


 

327,000



 

-


Adjusted-EBITDA


$

165,362



$

162,175










 


Note 1 “Adjusted-EBITDA” (GAAP net income (loss) from

continuing operations before interest, income taxes, depreciation,

amortization, stock-based compensation, and goodwill impairment charges)

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 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

(LOSS) FROM CONTINUING OPERATIONS TO

NON-GAAP DILUTED

NET INCOME PER COMMON SHARE (Note 1)



(In thousands)




 




Three-month Period


Ended December 31,





2008


 

2007







 

GAAP Net income (loss) from continuing operations


$

(261,193

)


$

17,559


Stock-based compensation



2,597




5,259


Impairment of goodwill



327,000




-


Amortization of intangible assets acquired in business combinations



6,498




7,879


Tax impact of above items


 

(55,051

)


 

(4,901

)

Non-GAAP net income


$

19,851



$

25,796


Non-GAAP diluted net income per common share


$

0.23



$

0.26



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

income per common share




 

86,923



 

99,245










 



Year Ended


December 31,





2008



2007







 

GAAP Net income (loss) from continuing operations


$

(223,012

)


$

70,348


Stock-based compensation



52,483




18,291


Impairment of goodwill



327,000




-


Amortization of intangible assets acquired in business combinations



28,882




24,745


Tax impact of above items


 

(82,998

)


 

(16,646

)

Non-GAAP net income


$

102,355



$

96,738


Non-GAAP diluted net income per common share


$

1.10



$

0.96



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

income per common share




 

92,868



 

100,518










 


Note 1 – “Non-GAAP diluted net income per common share” (GAAP diluted

net income from continuing operations per common share before the impact

of stock-based compensation, goodwill impairment charges, amortization

of intangibles, and other non-recurring events) 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

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)



(Note 1)




 



 





Three-month Period


Ended December 31,





Year Ended


December 31,






2008


 

2007



2008


 

2007




(Unaudited)



(Unaudited)


Media:













Revenue


$

73,943



$

86,808



$

301,256



$

366,312


Cost of revenue


 

35,477



 

37,411



 

136,220



 

140,625


Gross profit



38,466




49,397




165,036




225,687


Operating expenses


 

19,719



 

29,224



 

91,854



 

138,838


Segment income from operations


$

18,747



$

20,173



$

73,182



$

86,849














 

Comparison Shopping and Search:













Revenue


$

38,054



$

50,401



$

177,145



$

112,706


Cost of revenue


 

10,879



 

12,702



 

46,950



 

33,695


Gross profit



27,175




37,699




130,195




79,011


Operating expenses


 

19,274



 

26,741



 

89,263



 

56,504


Segment income from operations


$

7,901



$

10,958



$

40,932



$

22,507














 

Affiliate Marketing:













Revenue


$

31,630



$

32,913



$

121,972



$

115,977


Cost of revenue


 

5,567



 

3,677



 

19,374



 

12,978


Gross profit



26,063




29,236




102,598




102,999


Operating expenses


 

9,992



 

10,647



 

43,143



 

39,798


Segment income from operations


$

16,071



$

18,589



$

59,455



$

63,201














 

Technology:













Revenue


$

7,341



$

6,619



$

28,670



$

23,741


Cost of revenue


 

1,130



 

978



 

4,147



 

3,880


Gross profit



6,211




5,641




24,523




19,861


Operating expenses


 

2,702



 

2,624



 

10,923



 

9,324


Segment income from operations


$

3,509



$

3,017



$

13,600



$

10,537














 

Total segment income from operations


$

46,228



$

52,737



$

187,169



$

183,094


Corporate expenses



(10,446

)



(10,865

)



(31,436

)



(30,288

)

Stock-based compensation



(2,597

)



(5,259

)



(52,483

)



(18,291

)

Amortization of intangible assets



(6,498

)



(7,879

)



(28,882

)



(24,745

)

Impairment of goodwill


 

(327,000

)


 

-



 

(327,000

)


 

-


Consolidated income (loss) from continuing operations



$




(300,313




)





$




28,734






$




(252,632




)





$




109,770
















 













 

Reconciliation of segment revenue to consolidated revenue:













Media


$

73,943



$

86,808



$

301,256



$

366,312


Comparison Shopping and Search



38,054




50,401




177,145




112,706


Affiliate Marketing



31,630




32,913




121,972




115,977


Technology



7,341




6,619




28,670




23,741


Inter-segment eliminations


 

(877

)


 

(1,020

)


 

(3,237

)


 

(2,228

)

Consolidated revenue


$

150,091



$

175,721



$

625,806



$

616,508


















 


Note 1 – On October 20, 2008, the Company announced the divestiture of

two non-core businesses. The Company has presented these divested

businesses as discontinued operations and restated its historical

statements of operations and segment operating results to reflect this

change. The information in this table excludes the divested businesses

for all periods presented. A PDF file containing historical consolidated

statements of operations and segment operating results information is

available for download on the Investor Relations page of www.valueclick.com.



Source: ValueClick, Inc.



ValueClick, Inc.
Gary J. Fuges, CFA
818-575-4677