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ValueClick announces record results for fourth quarter 2006

ValueClick Announces Record Results for Fourth Quarter 2006<br /> <p></p>

ValueClick Announces Record Results for Fourth Quarter 2006

Results Exceed Previously Issued Guidance; Company Provides Initial 2007 Guidance


WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Feb. 21,

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

for the fourth quarter and fiscal year ended December 31, 2006.

Revenue, adjusted-EBITDA(1) and diluted net income per common share

for the quarter exceeded previously issued guidance.


"The successful integration of our 2005 acquisitions helped us

generate another year of strong performance in 2006, including a

fourth quarter with 38 percent year-over-year revenue growth and

record revenue, net income and adjusted-EBITDA," said James Zarley,

chairman and chief executive officer of ValueClick. "The leadership

positions we have built in performance-based marketing solutions and

value-added online networks give us confidence to anticipate continued

strong growth and healthy margins in 2007."


Fourth Quarter and Fiscal Year 2006 Results


The Company's income tax expense and resulting net income and

diluted net income per common share for the fourth quarter and fiscal

year 2006 are preliminary and subject to change based upon the

completion of the Company's final year-end tax-related procedures.


Revenue for the fourth quarter of 2006 was a record $160.4

million, above the high end of the Company's previously issued

guidance and an increase of $43.8 million, or 38 percent, from $116.6

million for the fourth quarter of 2005. Fourth quarter 2006 results

include one month of operations from Shopping.net, acquired in

December 2006, which was immaterial.


Income before income taxes for the fourth quarter of 2006 was a

record $38.5 million compared to $24.7 million for the fourth quarter

of 2005. Adjusted-EBITDA for the fourth quarter of 2006 was a record

$46.1 million, above the high end of the Company's previously issued

guidance and an increase of $12.4 million, or 37 percent, from $33.7

million for the fourth quarter of 2005.


Net income for the fourth quarter of 2006 was $22.1 million, or

$0.22 per diluted common share, compared to $14.2 million, or $0.14

per diluted common share, for the fourth quarter of 2005. Fourth

quarter 2006 diluted net income per common share exceeded the high end

of the Company's previously issued guidance range by $0.04.


For the fiscal year ended December 31, 2006, ValueClick reported

revenue of $545.6 million, an increase of $241.6 million, or 79

percent, from revenue of $304.0 million for fiscal year 2005. Assuming

acquisitions in 2005 and 2006 had been completed on January 1, 2005,

year-over-year organic revenue growth was 34 percent for fiscal year

2006(2).


Fiscal year 2006 income before taxes was $110.1 million compared

to $69.5 million for fiscal year 2005. Fiscal year 2006

adjusted-EBITDA was $145.1 million compared to $85.6 million for

fiscal year 2005. Net income for fiscal year 2006 was $63.1 million,

or $0.62 per diluted common share, compared to $40.6 million, or $0.45

per diluted common share, for fiscal year 2005. Fiscal year 2006 net

income includes $8.0 million of stock-based compensation expense, net

of tax, largely due to the impact of SFAS 123®. Stock-based

compensation expense reduced fiscal year 2006 diluted net income per

common share by $0.08.


The consolidated balance sheet as of December 31, 2006 includes

$282 million in cash, cash equivalents and marketable securities,

approximately $640 million in total stockholders' equity and no

long-term debt. In fiscal year 2006, the Company repurchased 6.9

million shares of its outstanding common stock for $103.4 million.


Starting with its fourth quarter 2006 results, ValueClick is

providing operating results across four worldwide reporting segments:

Media; Comparison Shopping; Affiliate Marketing; and Technology. For

comparative information purposes, the Company has included segment

financial performance for the past eight quarters at the end of this

press release.


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.


Today, ValueClick is providing its initial fiscal year 2007 guidance
ranges:
Fiscal Year 2007 Initial Guidance
----------------------------------------------------------------------
Revenue $645-$665 million
----------------------------------------------------------------------
Adjusted-EBITDA $175-$180 million
----------------------------------------------------------------------
Diluted net income per common share $0.78-$0.80
----------------------------------------------------------------------

Fiscal year 2007 guidance for diluted net income per common share

includes a reduction of $0.11 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 first quarter
of 2007:
First Quarter 2007 Guidance
----------------------------------------------------------------------
Revenue $148-$149 million
----------------------------------------------------------------------
Adjusted-EBITDA $38-$39 million
----------------------------------------------------------------------
Diluted net income per common share $0.17
----------------------------------------------------------------------

First quarter 2007 diluted net income per common share guidance

includes a reduction of $0.02 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 fourth quarter during a conference call and webcast on

February 21, 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 4871755.


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 31, 2006 and

an amendment to its annual report on Form 10-K/A filed on April 21,

2006; recent quarterly reports on Form 10-Q and Form 10-Q/A; 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.


(2) Please see Note 1 of the Condensed Consolidated Statements of

Operations for the Year Ended December 31, 2006 for additional

information.


                           VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three-month Period
Ended December 31,
---------------------
2006 2005
---------- ----------
(Unaudited)
(Note 1)
Revenue $160,436 $116,607
Cost of revenue 47,789 39,270
---------- ----------
Gross profit 112,647 77,337
Operating expenses:
Sales and marketing (Note 2) 47,620 27,207
General and administrative (Note 2) 15,594 13,341
Technology (Note 2) 8,183 7,356
Amortization of intangible assets 5,234 6,387
Restructuring benefit, net -- (77)
---------- ----------
Total operating expenses 76,631 54,214
---------- ----------
Income from operations 36,016 23,123
Interest income, net 2,440 1,610
---------- ----------
Income before income taxes 38,456 24,733
Income tax expense (Note 3) 16,351 10,541
---------- ----------
Net income $22,105 $14,192
========== ==========
Basic net income per common share $0.22 $0.14
========== ==========
Weighted-average shares used to compute basic net
income per common share 98,567 101,177
========== ==========
Diluted net income per common share $0.22 $0.14
========== ==========
Weighted-average shares used to compute diluted
net income per common share 100,175 105,390
========== ==========
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, 2005, on an unaudited pro-forma basis, revenue would have been
$161.2 million and $117.1 million, and net income would have been
$21.9 million, or $0.22 per diluted common share, and $13.8 million,
or $0.13 per diluted common share, for the three-month periods ended
December 31, 2006 and December 31, 2005, respectively. 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, 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 Three-month Period
is primarily due to the adoption of SFAS 123(R)): Ended December 31,
------------------
2006 2005
--------- --------
(Unaudited)
Sales and marketing $835 $744
General and administrative 1,231 321
Technology 366 788
--------- --------
Total stock-based compensation expense $2,432 $1,853
========= ========
Note 3 - The Company's income tax expense for the quarter ended
December 31, 2006 is preliminary and subject to change based upon the
completion of the Company's final year-end tax-related procedures.
                           VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended
December 31,
--------------------
2006 2005
--------- ----------
(Unaudited)
(Note 1)
Revenue $545,616 $304,007
Cost of revenue 167,861 88,839
--------- ----------
Gross profit 377,755 215,168
Operating expenses:
Sales and marketing (Note 2) 162,905 75,640
General and administrative (Note 2) 58,128 40,908
Technology (Note 2) 32,797 22,137
Amortization of intangible assets 21,801 12,179
Restructuring benefit, net -- (73)
--------- ----------
Total operating expenses 275,631 150,791
--------- ----------
Income from operations 102,124 64,377
Interest income, net 8,005 5,077
--------- ----------
Income before income taxes 110,129 69,454
Income tax expense (Note 3) 47,000 28,810
--------- ----------
Net income $63,129 $40,644
========= ==========
Basic net income per common share $0.63 $0.46
========= ==========
Weighted-average shares used to compute basic net
income per
common share 99,600 87,722
========= ==========
Diluted net income per common share $0.62 $0.45
========= ==========
Weighted-average shares used to compute diluted
net income per common share 101,721 90,857
========= ==========
Note 1 - The condensed consolidated statements of operations include
the results of E-Babylon, Webclients, Fastclick, and Shopping.net
from the beginning of the accounting period nearest to their
acquisition consummation dates (June 13, 2005, June 24, 2005,
September 29, 2005, and December 1, 2006, respectively). Had these
transactions been completed as of January 1, 2005, on an unaudited
pro-forma basis, revenue would have been $549.3 million and $409.8
million, and net income would have been $62.6 million, or $0.61 per
diluted common share, and $38.6 million, or $0.37 per diluted common
share, for the years ended December 31, 2006 and December 31, 2005,
respectively. These unaudited pro-forma results are for information
purposes only, are not necessarily indicative of what the actual
results would have been had these 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 Year Ended
primarily due to the adoption of SFAS 123(R)): December 31,
----------------
2006 2005
-------- -------
(Unaudited)
Sales and marketing $4,429 $817
General and administrative 5,258 382
Technology 2,253 823
-------- -------
Total stock-based compensation expense $11,940 $2,022
======== =======

Note 3 - The Company's income tax expense for the year ended December
31, 2006 is preliminary and subject to change based upon the
completion of the Company's final year-end tax-related procedures.
                           VALUECLICK, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)
(In thousands)
Three-month Period
Ended December 31,
------------------
2006 2005
--------- --------
(Unaudited)
Net Income $22,105 $14,192
Less interest income, net (2,440) (1,610)
Plus income tax expense 16,351 10,541
Plus amortization of intangible assets 5,234 6,387
Plus depreciation and leasehold amortization 2,413 2,325
Plus stock-based compensation 2,432 1,853
--------- --------
Adjusted-EBITDA $46,095 $33,688
========= ========
Year Ended
December 31,
------------------
2006 2005
--------- --------
(Unaudited)
Net Income $63,129 $40,644
Less interest income, net (8,005) (5,077)
Plus income tax expense 47,000 28,810
Plus amortization of intangible assets 21,801 12,179
Plus depreciation and leasehold amortization 9,264 7,067
Plus stock-based compensation 11,940 2,022
--------- --------
Adjusted-EBITDA $145,129 $85,645
========= ========
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
(Prior periods have been restated for new reporting segmentation
adopted in the fourth quarter of 2006. Amounts in thousands)
Three-month Period Year Ended
Ended December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Media:
Revenue $111,647 $77,926 $382,973 $164,835
Cost of revenue 39,763 33,973 141,457 66,966
--------- --------- --------- ---------
Gross profit 71,884 43,953 241,516 97,869
Operating expenses 43,557 24,638 147,323 59,559
--------- --------- --------- ---------
Segment income from operations $28,327 $19,315 $94,193 $38,310
========= ========= ========= =========
Comparison Shopping:
Revenue $8,849 $5,938 $26,217 $17,295
Cost of revenue 903 222 2,165 664
--------- --------- --------- ---------
Gross profit 7,946 5,716 24,052 16,631
Operating expenses 5,904 4,421 20,976 14,597
--------- --------- --------- ---------
Segment income from operations $2,042 $1,295 $3,076 $2,034
========= ========= ========= =========
Affiliate Marketing:
Revenue $32,728 $26,694 $112,150 $95,791
Cost of revenue 6,047 4,004 19,770 17,116
--------- --------- --------- ---------
Gross profit 26,681 22,690 92,380 78,675
Operating expenses 8,342 8,346 34,474 33,714
--------- --------- --------- ---------
Segment income from operations $18,339 $14,344 $57,906 $44,961
========= ========= ========= =========
Technology:
Revenue $7,686 $6,405 $25,714 $27,015
Cost of revenue 1,372 1,361 5,396 5,275
--------- --------- --------- ---------
Gross profit 6,314 5,044 20,318 21,740
Operating expenses 3,239 3,096 12,696 12,437
--------- --------- --------- ---------
Segment income from operations $3,075 $1,948 $7,622 $9,303
========= ========= ========= =========
Total segment income from
operations $51,783 $36,902 $162,797 $94,608
Corporate expenses (8,101) (5,616) (26,932) (16,103)
Stock-based compensation (2,432) (1,853) (11,940) (2,022)
Amortization of intangible
assets (5,234) (6,387) (21,801) (12,179)
Restructuring benefit
(expense), net - 77 - 73
--------- --------- --------- ---------
Consolidated income from
operations $36,016 $23,123 $102,124 $64,377
========= ========= ========= =========
Reconciliation of segment
revenue to consolidated
revenue:
Media $111,647 $77,926 382,973 $164,835
Comparison Shopping 8,849 5,938 26,217 17,295
Affiliate Marketing 32,728 26,694 112,150 95,791
Technology 7,686 6,405 25,714 27,015
Inter-segment eliminations (474) (356) (1,438) (929)
--------- --------- --------- ---------
Consolidated revenue $160,436 $116,607 $545,616 $304,007
========= ========= ========= =========
                           VALUECLICK, INC.
SEGMENT OPERATING RESULTS
(Prior periods have been restated for new reporting segmentation
adopted in the fourth quarter of 2006. Amounts in thousands)
Three-month Period Ended
-------------------------------------
March September December
31, June 30, 30, 31,
2005 2005 2005 2005
-------- -------- --------- ---------
(Unaudited)
Media:
Revenue $17,042 $21,810 $48,057 $77,926
Cost of revenue 7,534 8,458 17,001 33,973
-------- -------- --------- ---------
Gross profit 9,508 13,352 31,056 43,953
Operating expenses 6,739 9,302 18,880 24,638
-------- -------- --------- ---------
Segment income from operations $2,769 $4,050 $12,176 $19,315
======== ======== ========= =========
Comparison Shopping:
Revenue $3,640 $3,607 $4,110 $5,938
Cost of revenue 102 155 185 222
-------- -------- --------- ---------
Gross profit 3,538 3,452 3,925 5,716
Operating expenses 2,628 3,862 3,686 4,421
-------- -------- --------- ---------
Segment income from operations $910 $ (410) $239 $1,295
======== ======== ========= =========
Affiliate Marketing:
Revenue $23,508 $22,276 $23,313 $26,694
Cost of revenue 4,344 4,524 4,244 4,004
-------- -------- --------- ---------
Gross profit 19,164 17,752 19,069 22,690
Operating expenses 7,932 8,546 8,890 8,346
-------- -------- --------- ---------
Segment income from operations $11,232 $9,206 $10,179 $14,344
======== ======== ========= =========
Technology:
Revenue $7,290 $7,114 $6,206 $6,405
Cost of revenue 1,391 1,254 1,269 1,361
-------- -------- --------- ---------
Gross profit 5,899 5,860 4,937 5,044
Operating expenses 3,260 3,293 2,788 3,096
-------- -------- --------- ---------
Segment income from operations $2,639 $2,567 $2,149 $1,948
======== ======== ========= =========
Total segment income from
operations $17,550 $15,413 $24,743 $36,902
Corporate expenses (3,703) (3,014) (3,770) (5,616)
Stock-based compensation (54) (45) (70) (1,853)
Amortization of intangible
assets (1,237) (1,448) (3,107) (6,387)
Restructuring benefit (expense),
net 202 (206) - 77
-------- -------- --------- ---------
Consolidated income from
operations $12,758 $10,700 $17,796 $23,123
======== ======== ========= =========
Reconciliation of segment
revenue to consolidated
revenue:
Media $17,042 $21,810 $48,057 $77,926
Comparison Shopping 3,640 3,607 4,110 5,938
Affiliate Marketing 23,508 22,276 23,313 26,694
Technology 7,290 7,114 6,206 6,405
Inter-segment eliminations (66) (235) (272) (356)
-------- -------- --------- ---------
Consolidated revenue $51,414 $54,572 $81,414 $116,607
======== ======== ========= =========

VALUECLICK, INC.
SEGMENT OPERATING RESULTS
(Prior periods have been restated for new reporting segmentation
adopted in the fourth quarter of 2006. Amounts in thousands)
Three-month Period Ended
---------------------------------------
September December
March 31, June 30, 30, 31,
2006 2006 2006 2006
--------- --------- --------- ---------
(Unaudited)
Media:
Revenue $79,385 $93,542 $98,399 $111,647
Cost of revenue 33,736 36,240 31,718 39,763
--------- --------- --------- ---------
Gross profit 45,649 57,302 66,681 71,884
Operating expenses 27,054 34,416 42,296 43,557
--------- --------- --------- ---------
Segment income from operations $18,595 $22,886 $24,385 $28,327
========= ========= ========= =========
Comparison Shopping:
Revenue $5,546 $5,948 $5,874 $8,849
Cost of revenue 293 460 509 903
--------- --------- --------- ---------
Gross profit 5,253 5,488 5,365 7,946
Operating expenses 5,373 4,972 4,727 5,904
--------- --------- --------- ---------
Segment income from operations $ (120) $516 $638 $2,042
========= ========= ========= =========
Affiliate Marketing:
Revenue $26,862 $25,160 $27,400 $32,728
Cost of revenue 4,111 4,328 5,284 6,047
--------- --------- --------- ---------
Gross profit 22,751 20,832 22,116 26,681
Operating expenses 8,863 8,218 9,051 8,342
--------- --------- --------- ---------
Segment income from operations $13,888 $12,614 $13,065 $18,339
========= ========= ========= =========
Technology:
Revenue $5,775 $5,728 $6,525 $7,686
Cost of revenue 1,325 1,325 1,374 1,372
--------- --------- --------- ---------
Gross profit 4,450 4,403 5,151 6,314
Operating expenses 3,082 3,130 3,245 3,239
--------- --------- --------- ---------
Segment income from operations $1,368 $1,273 $1,906 $3,075
========= ========= ========= =========
Total segment income from
operations $33,731 $37,289 $39,994 $51,783
Corporate expenses (8,612) (3,476) (6,743) (8,101)
Stock-based compensation (3,320) (3,196) (2,992) (2,432)
Amortization of intangible
assets (5,655) (5,450 ) (5,462) (5,234)
Restructuring benefit
(expense), net - - - -
--------- --------- --------- ---------
Consolidated income from
operations $16,144 $25,167 $24,797 $36,016
========= ========= ========= =========
Reconciliation of segment
revenue to consolidated
revenue:
Media $79,385 $93,542 $98,399 $111,647
Comparison Shopping 5,546 5,948 5,874 8,849
Affiliate Marketing 26,862 25,160 27,400 32,728
Technology 5,775 5,728 6,525 7,686
Inter-segment eliminations (281) (350) (333) (474)
--------- --------- --------- ---------
Consolidated revenue $117,287 $130,028 $137,865 $160,436
========= ========= ========= =========


CONTACT: ValueClick, Inc.


Gary J. Fuges, CFA, 1-818-575-4677



SOURCE: ValueClick, Inc.