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ValueClick announces second quarter 2007 results

ValueClick Announces Second Quarter 2007 Results<br />

ValueClick Announces Second Quarter 2007 Results

Company Closes the MeziMedia Acquisition and Increases Share Repurchase Authorization to $100 Million


WESTLAKE VILLAGE, Calif., Jul 30, 2007 (BUSINESS WIRE) -- ValueClick, Inc. (Nasdaq:VCLK) today reported financial results

for the second quarter ended June 30, 2007. Diluted net income per

common share of $0.17 met the low end of the Company's

previously-issued guidance. However, revenue and adjusted-EBITDA(1)

were below the Company's previously-issued guidance. The quarter's

results were negatively impacted by the Company's promotion-based

business.


The Company also announced that today it will close its

acquisition of MeziMedia, Inc., a leading operator of U.S. comparison

shopping websites, and that its board of directors has increased the

authorization of the Company's stock repurchase program to $100

million.


"The promotion-based sector suffered a downturn that began in late

May and became more pronounced in June, which negatively impacted our

quarter," said Tom Vadnais, chief executive officer of ValueClick. "We

have reassessed our outlook on the promotion-based business and have

taken aggressive steps to bring its costs in line with the changes

occurring in this part of the industry. We expect to see the full

impact of this cost-cutting initiative in the fourth quarter."


Mr. Vadnais continued, "While promotion-based lead generation

results were disappointing, I am pleased by the strong performance in

our non-promotional Media, Affiliate Marketing and Technology

businesses. Additionally, MeziMedia gives our Comparison Shopping

segment scale in the U.S. that complements PriceRunner's scale in

Europe. ValueClick's scale and breadth in online performance marketing

services and technologies differentiate us from our peers, and we

remain optimistic about the Company's prospects for growth and

profitability."


Second Quarter 2007 Results


Revenue for the second quarter of 2007 was $148.7 million, an

increase of $18.6 million, or 14 percent, from $130.0 million for the

second quarter of 2006. Second quarter 2007 results include three

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


Income before income taxes for the second quarter of 2007 was

$29.4 million compared to $27.2 million for the second quarter of

2006. Adjusted-EBITDA for the second quarter of 2007 was $38.8 million

compared to $36.0 million for the second quarter of 2006. Second

quarter 2006 income before income taxes and adjusted-EBITDA include

net proceeds of $1.9 million related to a favorable legal settlement.


Net income for the second quarter of 2007 was $17.6 million, or

$0.17 per diluted common share, compared to $14.4 million, or $0.14

per diluted common share, for the second quarter of 2006.


The consolidated balance sheet as of June 30, 2007 includes $373

million in cash, cash equivalents and marketable securities, $703

million in total stockholders' equity and no long-term debt.


MeziMedia Acquisition Closed


ValueClick also announced that today it will close its acquisition

of MeziMedia, Inc. for approximately $95.5 million in cash, net of

cash acquired, at the time of closing and additional cash

consideration based on revenue and adjusted-EBITDA performance from

the closing date through December 31, 2009.


Total cash consideration, which includes the $95.5 million net

cash payment at time of closing, will range between $95.5 million and

$347.4 million, depending on whether performance thresholds are met.


Stock Repurchase Program Authorization Increased to $100 Million


ValueClick also announced that its board of directors has

increased the authorization of its stock repurchase program.


In September 2001, the Company's board of directors authorized a

stock repurchase program ("the program") to allow for the repurchase

of shares of the Company's common stock at prevailing market prices in

the open market or through unsolicited negotiated transactions. Since

the inception of the program and through June 30, 2007, the Company's

board of directors had authorized a total of $245 million for

repurchases under the Program and the Company had repurchased a total

of 32.6 million shares of its common stock for $179 million, leaving

approximately $66 million available under the program. That amount has

been increased to $100 million as a result of the board's new

authorization.


Repurchases have been funded from available working capital and

all shares have been retired subsequent to their repurchase. There is

no guarantee as to the exact number of shares that will be repurchased

by the Company and the Company may discontinue repurchases at any time

that management or the Company's board of directors determines

additional repurchases are not warranted.


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 net income tax expense and the net

effective income tax rate may differ from these estimates based on tax

planning, changes in tax accounting rules and laws, and other factors.


Based on its second quarter results, the close of the MeziMedia

acquisition and revised outlook for 2007, ValueClick is updating its

fiscal year 2007 guidance ranges, issued previously on May 2, 2007:


Fiscal Year 2007                Previous Guidance   Updated Guidance
----------------------------------------------------------------------
Revenue $655-$665 million $645-$660 million
----------------------------------------------------------------------
Adjusted-EBITDA $177-$182 million $168-$172 million
----------------------------------------------------------------------
Diluted net income per common
share $0.79-$0.81 $0.74-$0.76
----------------------------------------------------------------------

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 41 percent net effective income

tax rate.


Additionally, ValueClick is announcing guidance for the third

quarter of 2007:


Third Quarter 2007                               Guidance
----------------------------------------------------------------------
Revenue $155-$165 million
----------------------------------------------------------------------
Adjusted-EBITDA $38-$40 million
----------------------------------------------------------------------
Diluted net income per common share $0.16-$0.17
----------------------------------------------------------------------

Third quarter 2007 guidance for diluted net income per common

share includes a reduction of $0.03 per diluted common share for

stock-based compensation expense and assumes a 42 percent net

effective income tax rate.


Conference Call Today at 8:30 a.m. ET


James Zarley, executive chairman, Tom Vadnais, 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 second quarter during a conference call

and webcast on July 30, 2007 at 8:30 a.m. ET. Investors can access the

call by dialing (877) 704-5385 or (913) 312-1303. The passcode is

8823884.


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 8823884.


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, 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 June 30,
----------------------
2007 2006
---------- -----------
(Unaudited)
(Note 1)
Revenue $ 148,676 $ 130,028
Cost of revenue 49,057 42,126
---------- -----------
Gross profit 99,619 87,902
Operating expenses:
Sales and marketing (Note 2) 42,194 37,641
General and administrative (Note 2) 17,200 11,377
Technology (Note 2) 8,735 8,267
Amortization of intangible assets 5,470 5,450
---------- -----------
Total operating expenses 73,599 62,735
---------- -----------
Income from operations 26,020 25,167
Interest income, net 3,375 2,005
---------- -----------
Income before income taxes 29,395 27,172
Income tax expense 11,767 12,728
---------- -----------
Net income $ 17,628 $ 14,444
========== ===========
Basic net income per common share $ 0.18 $ 0.14
========== ===========
Weighted-average shares used to compute basic
net income per common share 100,038 101,265
========== ===========
Diluted net income per common share $ 0.17 $ 0.14
========== ===========
Weighted-average shares used to compute diluted
net income per common share 101,623 103,459
========== ===========
Note 1 - The condensed consolidated statements of operations include
the results of Shopping.net from the 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
$131.2 million, and net income would have been $14.4 million, or
$0.14 per diluted common share, for the three-month period ended June
30, 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 June 30,
----------------------
2007 2006
---------- -----------
(Unaudited)
Sales and marketing $ 1,296 $ 1,173
General and administrative 2,981 1,397
Technology 643 626
---------- -----------
Total stock-based compensation expense $ 4,920 $ 3,196
========== ===========
                           VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Six-month Period
Ended June 30,
-----------------------
2007 2006
----------- -----------
(Unaudited)
(Note 1)
Revenue $ 305,600 $ 247,315
Cost of revenue 96,104 81,363
----------- -----------
Gross profit 209,496 165,952
Operating expenses:
Sales and marketing (Note 2) 90,646 69,015
General and administrative (Note 2) 34,741 28,208
Technology (Note 2) 17,662 16,313
Amortization of intangible assets 11,241 11,105
----------- -----------
Total operating expenses 154,290 124,641
----------- -----------
Income from operations 55,206 41,311
Interest income, net 6,314 3,923
----------- -----------
Income before income taxes 61,520 45,234
Income tax expense 25,258 21,001
----------- -----------
Net income $ 36,262 $ 24,233
=========== ===========
Basic net income per common share $ 0.36 $ 0.24
=========== ===========
Weighted-average shares used to compute basic
net income per common share 99,801 101,643
=========== ===========
Diluted net income per common share $ 0.36 $ 0.23
=========== ===========
Weighted-average shares used to compute
diluted net income per common share 101,331 104,120
=========== ===========
Note 1 - The condensed consolidated statements of operations include
the results of Shopping.net from the 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
$249.2 million, and net income would have been $24.0 million, or
$0.23 per diluted common share, for the six-month period ended June
30, 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:
Six-month Period
Ended June 30,
-----------------------
2007 2006
----------- -----------
(Unaudited)
Sales and marketing $ 2,324 $ 2,449
General and administrative 5,065 2,763
Technology 1,169 1,304
----------- -----------
Total stock-based compensation expense $ 8,558 $ 6,516
=========== ===========
                           VALUECLICK, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)
(In thousands)
Three-month Period
Ended June 30,
-------------------
2007 2006
-------------------
(Unaudited)
Net income $ 17,628 $ 14,444
Less interest income, net (3,375) (2,005)
Plus provision for income taxes 11,767 12,728
Plus amortization of intangible assets 5,470 5,450
Plus depreciation and leasehold amortization 2,343 2,220
Plus stock-based compensation 4,920 3,196
--------- ---------
Adjusted-EBITDA $ 38,753 $ 36,033
========= =========
Six-month Period
Ended June 30,
-------------------
2007 2006
-------------------
(Unaudited)
Net income $ 36,262 $ 24,233
Less interest income, net (6,314) (3,923)
Plus provision for income taxes 25,258 21,001
Plus amortization of intangible assets 11,241 11,105
Plus depreciation and leasehold amortization 4,777 4,469
Plus stock-based compensation 8,558 6,516
--------- ---------
Adjusted-EBITDA $ 79,782 $ 63,401
========= =========
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
(In thousands)
Three-month Period Six-month Period
Ended June 30, Ended June 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Media:
Revenue $100,937 $ 93,542 $209,359 $172,927
Cost of revenue 39,885 36,240 78,417 69,976
--------- --------- --------- ---------
Gross profit 61,052 57,302 130,942 102,951
Operating expenses 37,072 34,416 81,168 61,470
--------- --------- --------- ---------
Segment income from operations $ 23,980 $ 22,886 $ 49,774 $ 41,481
========= ========= ========= =========
Comparison Shopping:
Revenue $ 8,174 $ 5,948 $ 16,791 $ 11,494
Cost of revenue 1,815 460 3,164 753
--------- --------- --------- ---------
Gross profit 6,359 5,488 13,627 10,741
Operating expenses 5,780 4,972 12,505 10,345
--------- --------- --------- ---------
Segment income from operations $ 579 $ 516 $ 1,122 $ 396
========= ========= ========= =========
Affiliate Marketing:
Revenue $ 32,252 $ 25,160 $ 65,050 $ 52,022
Cost of revenue 6,705 4,328 12,663 8,439
--------- --------- --------- ---------
Gross profit 25,547 20,832 52,387 43,583
Operating expenses 10,183 8,218 20,072 17,081
--------- --------- --------- ---------
Segment income from operations $ 15,364 $ 12,614 $ 32,315 $ 26,502
========= ========= ========= =========
Technology:
Revenue $ 7,768 $ 5,728 $ 15,238 $ 11,503
Cost of revenue 1,434 1,325 2,886 2,650
--------- --------- --------- ---------
Gross profit 6,334 4,403 12,352 8,853
Operating expenses 3,410 3,130 6,849 6,212
--------- --------- --------- ---------
Segment income from operations $ 2,924 $ 1,273 $ 5,503 $ 2,641
========= ========= ========= =========
Total segment income from
operations $ 42,847 $ 37,289 $ 88,714 $ 71,020
Corporate expenses (6,437) (3,476) (13,709) (12,088)
Stock-based compensation (4,920) (3,196) (8,558) (6,516)
Amortization of intangible
assets (5,470) (5,450) (11,241) (11,105)
--------- --------- --------- ---------
Consolidated income from
operations $ 26,020 $ 25,167 $ 55,206 $ 41,311
========= ========= ========= =========
Reconciliation of segment
revenue to consolidated
revenue:
Media $100,937 $ 93,542 $209,359 $172,927
Comparison Shopping 8,174 5,948 16,791 11,494
Affiliate Marketing 32,252 25,160 65,050 52,022
Technology 7,768 5,728 15,238 11,503
Inter-segment eliminations (455)) (350) (838) (631)
--------- --------- --------- ---------
Consolidated revenue $148,676 $130,028 $305,600 $247,315
========= ========= ========= =========

SOURCE: ValueClick, Inc.


ValueClick, Inc.


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