PRESSROOM

ValueClick announces record revenue and operating profitability, raises 2006 guidance; company will restate previously reported results for 2004 income tax adjustment

ValueClick Announces Record Revenue and Operating Profitability, Raises 2006 Guidance; Company Will Restate Previously Reported Results for 2004 Income Tax Adjustment

ValueClick Announces Record Revenue and Operating Profitability, Raises 2006 Guidance; Company Will Restate Previously Reported Results for 2004 Income Tax Adjustment


WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Feb. 27, 2006--

No Impact on Previously Reported Revenue, Income from Operations,

EBITDA or Adjusted-EBITDA


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

for the fourth quarter and fiscal year ended December 31, 2005, which

included Adjusted-EBITDA(1) and diluted net income per common share

performance that exceeded the Company's previously issued guidance.

Fourth quarter of 2005 results included:


  • $116.6 million in reported revenue, at the high-end of the

    Company's previously issued guidance range of $112-$117

    million and an increase of 114 percent year-over-year;

  • Adjusted-EBITDA of $33.7 million, above the previously issued

    guidance range of $28-$30 million and an increase of 90

    percent year-over-year, with an Adjusted-EBITDA margin of 29

    percent; and

  • Diluted net income per common share of $0.13, above the

    previously issued guidance of $0.12.

Due to the strength of its fourth quarter operating performance

and outlook for 2006, ValueClick is increasing its fiscal year 2006

guidance ranges as follows:


  • Revenue range increases from $480-$500 million to $490-$500

    million; and

  • Adjusted-EBITDA range increases from $123-$128 million to

    $125-$130 million.

ValueClick also announced today it has identified an error

relating to its 2004 income tax benefit and its deferred income tax

assets. To correct this error, ValueClick will restate its previously

filed financial statements as of and for the year ended December 31,

2004 and its previously filed quarterly financial statements for the

first three quarters of 2004. The Company will also restate its

previously filed quarterly financial statements for the first three

quarters of 2005. These restatements will have no impact on the

Company's previously reported operating results for revenue, income

from operations, income before taxes and minority interest, net cash

flows, EBITDA or Adjusted-EBITDA for any period. For more information

on this matter, please refer to Exhibit 1 at the end of this press

release and to ValueClick's current report on Form 8-K, filed with the

Securities and Exchange Commission on February 27, 2006.


"Our strong fourth quarter capped another successful year for

ValueClick," said James Zarley, chairman and chief executive officer

of ValueClick. "We generated growth and realized synergies within our

Media segment, which includes our recently-acquired Fastclick and

Webclients businesses. Additionally, our Affiliate Marketing segment

continued to benefit from its market-leading position and strength in

online commerce. While we are disappointed that it is necessary to

restate previously reported results due to the 2004 income tax

adjustment, the fundamentals of our businesses are not impacted and

remain strong."


Fourth Quarter and Fiscal Year 2005 Results


The following results for 2005 are preliminary and are subject to

change based upon the Company's further analysis and the results of

its independent registered public accounting firm's audit procedures.


For the quarter ended December 31, 2005, ValueClick reported

revenue of $116.6 million, an increase of $62.2 million, or 114

percent, from revenue of $54.4 million for the fourth quarter of 2004.

Fourth quarter 2005 results include a full quarter of operations from:

E-Babylon and Webclients, both acquired in June 2005; and Fastclick,

acquired in September 2005.


Fourth quarter 2005 income before taxes was $24.7 million compared

to $15.9 million for the fourth quarter of 2004. Fourth quarter 2005

Adjusted-EBITDA was $33.7 million compared to $17.7 million for the

fourth quarter of 2004. Net income for the fourth quarter of 2005 was

$13.6 million, or $0.13 per diluted common share.


For the fiscal year ended December 31, 2005, ValueClick reported

revenue of $304.0 million, an increase of $134.8 million, or 80

percent, from revenue of $169.2 million for fiscal year 2004. Fiscal

year 2005 results include seven months of operations from E-Babylon,

acquired in June 2005, six months of operations from Webclients,

acquired in late June 2005, and three months of operations from

Fastclick, acquired in late September 2005. Fiscal year 2004 results

include five months of operations from PriceRunner.com, acquired in

August 2004, and three months of operations from ValueClick Japan,

which was sold in late March 2004.


Fiscal year 2005 income before taxes and minority interest was

$69.5 million compared to $47.2 million for fiscal year 2004. Fiscal

year 2005 Adjusted-EBITDA was $85.6 million compared to $54.7 million

for fiscal year 2004. Excluding the one-time gain on the sale in March

2004 of the Company's ownership interest in ValueClick Japan, fiscal

year 2004 Adjusted-EBITDA would have been $46.7 million. Net income

for fiscal year 2005 was $39.7 million, or $0.44 per diluted common

share.


The Company's consolidated balance sheet remains strong with

approximately $241 million in cash, cash equivalents and marketable

securities and no long-term debt, as of December 31, 2005.


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. Additionally, the Company is

not providing guidance on diluted net income per common share (EPS),

pending its determination of the impact of expensing stock options

under Statement of Financial Accounting Standards 123®. ValueClick

anticipates providing EPS guidance on or before announcing its

financial results for the first quarter of 2006.


Based on its fourth quarter results and outlook for 2006,

ValueClick is raising its fiscal year 2006 guidance ranges, issued

previously on November 1, 2005:


Fiscal Year 2006                               Previous      Updated
Guidance Guidance
-------------------------------------------- ------------ ------------
Revenue $480-$500 $490-$500
million million
-------------------------------------------- ------------ ------------
Adjusted-EBITDA (EBITDA before stock-based $123-$128 $125-$130
compensation) million million
-------------------------------------------- ------------ ------------

Additionally, ValueClick is announcing guidance for the first

quarter of 2006:


First Quarter 2006                                        Guidance
------------------------------------------------------ ---------------
Revenue $110-$112
million
------------------------------------------------------ ---------------
Adjusted-EBITDA $27-$28 million
------------------------------------------------------ ---------------

Conference Call Today


James Zarley, chairman and chief executive officer, and Sam

Paisley, chief administrative officer, will present an overview of the

results and other factors affecting financial performance for the

fourth quarter during a webcast on Monday, February 27, 2006 at 1:30PM

PT. Investors and analysts may obtain dial-in information through

StreetEvents (www.streetevents.com).


The live webcast and other information of potential interest to

investors will be available to the public in the Investor Relations

section of the Company's website (www.valueclick.com). Please allow 15

minutes prior to the call to download and install any necessary audio

software. 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 5945481.


Webcast participants may submit questions on financial results and

business operations to management prior to the call through the

ValueClick Investor Relations voice message system at (818) 575-4677.

Questions should be received no later than 1:30PM PT on Monday,

February 27, 2006.


About ValueClick


ValueClick, Inc. (Nasdaq:VCLK) is one of the world's largest

integrated online marketing companies. Through its individual brands,

ValueClick offers comprehensive and scalable solutions that deliver

cost-effective customer acquisition for advertisers and revenue for

publishers. ValueClick provides advertisers and publishers with

performance-based solutions through all online marketing channels.

Brand offerings include:



-- ValueClick Media and Fastclick -- Brand and Direct Online

Advertising Networks



-- Commission Junction -- Affiliate and Search Marketing



-- HiSpeed Media -- Online Direct Response Lead Generation



-- Webclients.net -- Innovative Technology and Offers for Lead

Generation



-- PriceRunner -- Comprehensive Comparison Shopping Site




-- Mediaplex -- Intelligent Technology for Digital Marketing




For more information, please visit www.valueclick.com.


This release contains forward-looking statements that involve

risks and uncertainties, including, but not limited to, ValueClick's

ability to successfully integrate its recently completed Fastclick and

Webclients mergers, trends in online advertising spending and

estimates of future online performance-based advertising. Actual

results may differ materially from the results predicted, and reported

results should not be considered an indication of future performance.

Important factors that could cause actual results to differ materially

from those expressed or implied in the forward-looking statements are

detailed under "Risk Factors" and elsewhere in filings with the

Securities and Exchange Commission made from time to time by

ValueClick, including its Annual Report on Form 10-K filed on March

31, 2005, its current report on Form 8-K filed on February 27, 2006,

recent quarterly reports on Form 10-Q, other current reports on Form

8-K, its amended registration statement on Form S-4, filed on

September 27, 2005, and its final prospectus on Form 424B3 filed on

September 28, 2005. Other factors that could cause actual results to

differ materially from those expressed or implied in the

forward-looking statements include, but are not limited to, the risk

that market demand for online advertising, and performance-based

online advertising in particular, will not grow as rapidly as

predicted. ValueClick undertakes no obligation to release publicly any

revisions to any forward-looking statements to reflect events or

circumstances after the date hereof or to reflect the occurrence of

unanticipated events.


(1) EBITDA is defined as GAAP (Generally Accepted Accounting

Principles) net income before interest, taxes, depreciation, and

amortization. Adjusted-EBITDA is defined as GAAP net income before

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

compensation. Please see the attached schedule for a reconciliation of

Adjusted-EBITDA to GAAP net income, 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.
SELECTED CONSOLIDATED OPERATIONS DATA
(In thousands, except per share data)

Three-month Period
Ended December 31,
------------------
2005 2004
--------- --------
(Note 1)
(Unaudited)
Revenue $116,607 $54,371
Cost of revenue 39,270 15,011
--------- --------
Gross profit 77,337 39,360
Operating expenses:
Sales and marketing 26,463 11,597
General and administrative 13,022 7,624
Technology 6,568 3,984
Stock-based compensation 1,853 203
Amortization of intangible assets 6,387 1,276
Restructuring benefit, net (77) --
--------- --------
Total operating expenses 54,216 24,684
--------- --------
Income from operations 23,121 14,676
Interest and other income, net 1,610 1,188
--------- --------
Income before taxes 24,731 $15,864
========
Income tax expense 11,174
---------
Net income $13,557
=========
Basic net income per common share $0.13
=========
Weighted-average shares used in computing basic net
income per common share 101,177
=========
Diluted net income per common share $0.13
=========
Weighted-average shares used in computing diluted
net income per common share 105,390
=========
Note 1 - ValueClick announced today it has identified an error
relating to its 2004 income tax benefit and its deferred income tax
assets. To correct this error, ValueClick will restate its previously
filed financial statements as of and for the year ended December 31,
2004 and its previously filed quarterly financial statements for the
first three quarters of 2004. The Company will also restate its
previously filed quarterly financial statements for the first three
quarters of 2005. Due to this pending restatement, the Company is
providing selected consolidated operations data in lieu of a
consolidated statement of operations for the three-month period ended
December 31, 2004.
Please refer to Exhibit 1 at the end of this press release for a
description of these restatements and the estimated adjustments the
Company anticipates will be reflected in the Company's restated
consolidated statement of operations for the year ended December 31,
2004, and its restated consolidated balance sheet as of December 31,
2004. The Company expects to accomplish its restatements on or about
the time of filing the Company's 2005 Annual Report on Form 10-K.

VALUECLICK, INC.
SELECTED CONSOLIDATED OPERATIONS DATA
(In thousands, except per share data)
Year Ended
December 31,
-------------------
2005 2004
--------- ---------
(Note 1)
(Unaudited)
Revenue $304,007 $169,178
Cost of revenue 88,839 50,762
--------- ---------
Gross profit 215,168 118,416
Operating expenses:
Sales and marketing 74,823 36,000
General and administrative 40,528 27,168
Technology 21,314 15,891
Stock-based compensation 2,022 739
Amortization of intangible assets 12,179 4,111
Restructuring benefit, net (73) (1,003)
--------- ---------
Total operating expenses 150,793 82,906
--------- ---------
Income from operations 64,375 35,510
Interest and other income, net 5,077 3,728
Gain on sale of equity interest in Japan
subsidiary -- 8,007
--------- ---------
Income before taxes and minority interest 69,452 $47,245
=========
Income tax expense 29,727
---------
Net income $39,725
=========
Basic net income per common share $0.45
=========
Weighted-average shares used in computing basic
net income per common share 87,722
=========
Diluted net income per common share $0.44
=========
Weighted-average shares used in computing diluted
net income per common share 90,857
=========
Note 1 - ValueClick announced today it has identified an error
relating to its 2004 income tax benefit and its deferred income tax
assets. To correct this error, ValueClick will restate its previously
filed financial statements as of and for the year ended December 31,
2004 and its previously filed quarterly financial statements for the
first three quarters of 2004. The Company will also restate its
previously filed quarterly financial statements for the first three
quarters of 2005. Due to this pending restatement, the Company is
providing selected consolidated operations data in lieu of a
consolidated statement of operations for the year ended December 31,
2004.
Please refer to Exhibit 1 at the end of this press release for a
description of these restatements and the estimated adjustments the
Company anticipates will be reflected in the Company's restated
consolidated statement of operations for the year ended December 31,
2004, and its restated consolidated balance sheet as of December 31,
2004. The Company expects to accomplish its restatements on or about
the time of filing the Company's 2005 Annual Report on Form 10-K.

VALUECLICK, INC.
RECONCILIATION OF INCOME BEFORE TAXES AND MINORITY INTEREST TO
ADJUSTED-EBITDA (Note 1)
(In thousands)

Three-month Period
Ended December 31,
-------------------
2005 2004
---------- --------
(Unaudited)
Income before taxes $24,731 $15,864
Less interest income, net (1,610) (1,125)
Plus amortization of intangible assets 6,387 1,276
Plus depreciation and other amortization 2,325 1,514
Plus stock-based compensation 1,853 203
---------- --------
Adjusted-EBITDA $33,686 $17,732
========== ========

Year Ended
December 31,
-----------------
2005 2004
-------- --------
(Note 2)
(Unaudited)
Income before taxes and minority interest $69,452 $47,245
Less interest income, net (5,077) (3,665)
Plus minority share of loss in consolidated
subsidiary -- 130
Plus amortization of intangible assets 12,179 4,111
Plus depreciation and other amortization 7,067 6,188
Plus stock-based compensation 2,022 739
-------- --------
Adjusted-EBITDA $85,643 $54,748
======== ========
Note 1 - "EBITDA" (earnings before interest, taxes, depreciation,
and amortization) and "Adjusted-EBITDA" (earnings before interest,
taxes, depreciation, amortization, and stock-based compensation)
included in this press release are non-GAAP (Generally Accepted
Accounting Principles) financial measures.
EBITDA and Adjusted-EBITDA, as defined above, may not be similar
to EBITDA and Adjusted-EBITDA measures used by other companies and are
not measurements under GAAP. Management believes that Adjusted-EBITDA
provides useful information to investors about the Company's
performance because it eliminates the effects of period-to-period
changes in costs associated with capital investments, income from
interest on the Company's cash and marketable securities, and
stock-based compensation that are not directly attributable to the
underlying performance of the Company's business operations.
Management uses EBITDA and Adjusted-EBITDA in evaluating the overall
performance of the Company's business operations.
Though management finds EBITDA and Adjusted-EBITDA useful for
evaluating aspects of the Company's business, its reliance on these
measures 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
EBITDA and Adjusted-EBITDA in conjunction with GAAP earnings and
earnings per common share measures. The Company believes that EBITDA
and Adjusted-EBITDA provide investors with additional tools for
evaluating the Company's core performance, which management uses in
its own evaluation of 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 these
supplemental metrics since, with a reconciliation to GAAP, they may
provide greater insight into the Company's financial results.
Note 2 - Adjusted-EBITDA for the year ended December 31, 2004
would have been $46.7 million after excluding the $8.0 million
non-recurring gain on the sale of the Company's equity interest in
ValueClick Japan.
VALUECLICK, INC.
EXHIBIT 1: DESCRIPTION OF RESTATEMENT
ValueClick announced today that it will restate its previously
filed financial statements as of and for the year ended December 31,
2004 and for the first three quarters of 2004. The Company will also
restate its previously filed quarterly financial statements for the
first three quarters of 2005. These restatements result from the
identification of an error relating to the Company's 2004 provision
for income taxes, discovered through additional accounting and
disclosure control procedures implemented by the Company throughout
2005. The Company expects to accomplish these restatements on or about
the time of filing the Company's 2005 Annual Report on Form 10-K.
The correction of this error reduces a deferred tax benefit (and
therefore net income and earnings per common share) previously
reported by the Company in the fourth quarter of 2004 and also
increases the Company's previously reported effective income tax rate
(and therefore reduces net income and earnings per common share) for
the first three quarters of 2004. A resulting impact of the correction
of this error is the elimination of a deferred income tax benefit (and
therefore a reduction in net income and earning per common share)
recognized by the Company in the second quarter of 2005 for a change
in tax rates applied to deferred tax assets.
The correction of this error also affects the balance sheet
amounts of deferred income taxes, goodwill, income taxes payable,
retained earnings, and additional paid-in capital previously reported
at December 31, 2004 and for the first three quarters of 2004 and
2005. The correction of this error, however, has no impact on
previously reported revenue, income from operations, income before
income taxes and minority interest, or net cash flows. Further, this
restatement has no impact on EBITDA or Adjusted-EBITDA as previously
reported by the Company.
The Company's deferred income tax assets, including those arising
from carryover benefits of net operating losses of acquired
subsidiaries ("acquired NOLs"), were fully reserved by a valuation
allowance through the third quarter of 2004. The valuation allowance
was initially established because of uncertainties that such deferred
tax assets would be realized. In the fourth quarter of 2004, based on
factors including, but not limited to: the Company's history of
achieving operating objectives; the achievement of pre-tax income
beginning in the first quarter of 2003 and each subsequent quarter;
established customer relationships; and projections of future pre-tax
income, the Company determined that it was more likely than not that
the Company would be able to realize a substantial portion of its
deferred tax assets, and the valuation allowance related to the
majority of the Company's deferred tax assets, including those arising
from acquired NOLs, was reversed.
The ability to utilize acquired NOLs is subject to complex
calculations involving interpretations of the Internal Revenue Code
("tax code"), some of which could result in limitations on the
Company's ability to use the acquired NOLs before their expiration,
irrespective of the Company's future profitability. As a result of
detailed tax studies, the Company determined there is uncertainty as
to whether its treatment of certain acquired NOLs would be upheld
under examination by the relevant tax authorities and that it is
necessary, under accounting principles generally accepted in the
United States ("GAAP"), to reduce the deferred tax assets related to
these acquired NOLs and restate the Company's previously filed
financial statements accordingly. The Company believes that it may be
able to establish that it is entitled, under the tax code and
interpretations thereof, to the benefit of the acquired NOLs for
amounts in excess of the amounts recognized in the Company's financial
statements. However, there can be no assurance that any such benefit
will actually materialize.
The above-described requirements of the tax code and GAAP and the
facts relevant to the Company existed at the time of the preparation
of the 2004 financial statements, and should have been fully addressed
by the Company at that time. Accordingly, this matter is considered by
the Company to be the correction of an error that requires restatement
of the impacted financial statements as described above.
The Company is completing its analysis of the impact that the
correction of this error will have on the previously reported
financial statements for the year ended December 31, 2004 and the
first three quarters of 2004 and 2005. The Company has determined,
however, that the correction of this error will have no impact on
previously reported revenue, income from operations, income before
income taxes and minority interest, or net cash flows.
The accompanying tables reconcile (i) the Company's results of
operations for the year ended December 31, 2004 and (ii) the Company's
financial position as of December 31, 2004, both previously reported
in the Company's 2004 Annual Report on Form 10-K, to the estimated
amounts the Company anticipates will be reflected in the restated
financial statements. The amounts are preliminary and are subject to
change based upon the Company's further analysis and the results of
its independent registered public accounting firm's audit procedures.

Anticipated
Estimated
As Anticipated Restated
Reported Estimated Amounts
in 2004 10-K Adjustments for 2004
--------- ----------- -----------
(unaudited)
(in thousands, except per share
data)
For the Year Ended December 31,
2004:
-------------------------------
Revenue $169,178 $-- $169,178
Income before income taxes and
minority interest 47,245 -- 47,245
Income tax expense (benefit) (40,512) 55,000 14,488
Minority share of loss in
consolidated subsidiary 130 -- 130
--------- ----------- -----------
Net income $87,887 $(55,000) $32,887
========= =========== ===========
Basic net income per common share $1.10 $(0.69) $0.41
========= =========== ===========
Diluted net income per common share $1.05 $(0.66) $0.39
========= =========== ===========

Anticipated
Estimated
As Anticipated Restated
Reported Estimated Amounts
in 2004 10-K Adjustments for 2004
--------- ----------- -----------
(unaudited)
(in thousands)
As of December 31, 2004:
------------------------
Assets:
Total current assets $282,628 $-- $282,628
Property and equipment, net 8,571 -- 8,571
Goodwill and intangible assets 76,532 1,000 77,532
Deferred tax assets 61,630 (45,000) 16,630
Other assets 1,065 -- 1,065
--------- ----------- -----------
Total assets $430,426 $(44,000) $386,426
========= =========== ===========
Liabilities and Stockholders'
Equity:
Income taxes payable $964 $11,000 $11,964
Other current liabilities 40,025 -- 40,025
--------- ----------- -----------
Total current liabilities 40,989 11,000 51,989
Non-current liabilities 4,532 -- 4,532
--------- ----------- -----------
Total liabilities 45,521 11,000 56,521
Total stockholders' equity 384,905 (55,000) 329,905
--------- ----------- -----------
Total liabilities and
stockholders' equity $430,426 $(44,000) $386,426
========= =========== ===========

For more information on this matter, please refer to ValueClick's

current report on Form 8-K, filed with the Securities and Exchange

Commission on February 27, 2006.



CONTACT: ValueClick, Inc.


Gary J. Fuges, 818-575-4677



SOURCE: ValueClick, Inc.