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ValueClick announces second quarter 2010 results

WESTLAKE VILLAGE, Calif., Aug 05, 2010 (BUSINESS WIRE) -- ValueClick, Inc. (Nasdaq: VCLK) today reported financial results for the second quarter ended June 30, 2010. Revenue, adjusted-EBITDA1, and earnings per share metrics all exceeded the high-end of the guidance ranges management provided on April 29.



Yesterday, the Company also announced the acquisition of Investopedia.com, a leading financial and investing information website. Founded in 1999, Investopedia provides ValueClick with valuable organic display and email traffic in the financial services vertical. The site attracts an average monthly audience of 2.2 million unique U.S. visitors (comScore, June 2010) and has a highly-engaged audience that includes 3.1 million newsletter subscribers, 1.7 million email subscribers and 1.3 million stock simulator users.


"I'm pleased with the team's performance in the quarter, as we generated better-than-expected financial results and made solid progress on our major growth initiatives," said Jim Zarley, chief executive officer of ValueClick. "Excluding the $11 million negative impact of one customer change in our O&O segment, our consolidated revenue grew seven percent year-over-year in the second quarter, which is up from four percent in the first quarter. I am confident that we can accelerate this growth in the second half of the year, while continuing to look for high quality acquisitions like Investopedia that provide synergy opportunities with our existing businesses."


For the second quarter of 2010, the Company generated $99.6 million in revenue and $27.3 million in adjusted-EBITDA, resulting in an adjusted-EBITDA margin of 27.4 percent. GAAP net income from continuing operations for the second quarter was $12.0 million, or $0.15 per diluted common share. Non-GAAP net income, which excludes discontinued operations, stock-based compensation and amortization of intangible assets was $16.4 million, or $0.20 per diluted common share for the second quarter. A table reconciling GAAP net income from continuing operations to non-GAAP diluted net income per common share is included in this press release. The Company's second quarter results do not include any contribution from Investopedia, which will be included in the Company's results beginning in August 2010.


The Company generated approximately $41 million in free cash flow in the first half of 2010. The consolidated balance sheet as of June 30, 2010 includes approximately $194 million in cash, cash equivalents and marketable securities and no debt.


Business Outlook


Today, ValueClick is announcing guidance for the third quarter of 2010:




















Guidance
Revenue $100-$104 million
Adjusted-EBITDA $27-$28 million
Mid-Point Adjusted-EBITDA Margin ~27.0%
GAAP diluted net income per common share $0.13-$0.14
Non-GAAP diluted net income per common share $0.18-$0.19

Third quarter guidance provided above assumes that Investopedia will contribute approximately $1.5 million in revenue, $0.75 million in adjusted-EBITDA, and have zero impact on diluted net income per common share.


The consolidated revenue guidance range is based on the following segment-level assumptions for revenue growth rates (excluding the contribution of Investopedia) expressed as a percentage increase or decrease from third quarter 2009 revenue levels:



































â- Affiliate Marketing:


up high single digits to low double digits

â- Media:


up mid single digits to low double digits

â- Owned & Operated:


down low to mid twenties (excluding Investopedia)

â- Technology:


up low double digits to mid teens

Third quarter 2010 non-GAAP and GAAP diluted net income per common share guidance assume stock-based compensation of $2.0 million, amortization of intangible assets of $6 million, interest and other income of $1.0 million, a 42 percent effective tax rate, and 82.5 million diluted shares outstanding.


Conference Call Today at 4:30 p.m. ET


Jim Zarley, 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 second quarter during a conference call and webcast on August 5 at 4:30 p.m. ET. Investors and analysts may obtain the dial-in information through StreetEvents (http://www.streetevents.com). The live Webcast of the conference call will be available on the Investor Relations section of http://www.valueclick.com. A replay of the conference call will be available through August 12 at (888) 203-1112 and (719) 457-0820 (pass code: 7857476). An archive of the Webcast will also be available through August 12.


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 marketing, display advertising, ad serving and related technologies, and comparison shopping. ValueClick's brands include Commission Junction, ValueClick Media, Mediaplex, Smarter.com, CouponMountain.com, Investopedia.com, and PriceRunner. For more information, please visit http://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 26, 2010; recent quarterly reports on Form 10-Q; and other current reports on Form 8-K.


The Business Outlook contained in this release is 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.


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.


CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands)


June 30, December 31,
2010 2009
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 171,747 $ 158,497
Accounts receivable, net 62,220 68,484
Other current assets 27,466 20,856
Assets held for sale - 11,098
Total current assets 261,433 258,935
Assets held for sale, less current portion - 25,777
Note receivable, less current portion 31,975 -
Marketable securities 22,026 22,026
Property and equipment, net 9,301 11,272
Goodwill 155,875 157,123
Intangible assets, net 28,348 38,718
Other assets 58,090 52,711
TOTAL ASSETS $ 567,048 $ 566,562
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 90,896 $ 98,404
Non-current liabilities 63,675 61,669
Total liabilities 154,571 160,073
Total stockholders' equity 412,477 406,489
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 567,048 $ 566,562






























































































































































































































VALUECLICK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)



Three-month Period


Ended June 30,


2010 2009
(Unaudited)
Revenue $ 99,601 $ 104,090
Cost of revenue 27,346 28,232
Gross profit 72,255 75,858
Operating expenses:
Sales and marketing (Note 1) 27,117 30,927
General and administrative (Note 1) 13,363 14,810
Technology (Note 1) 8,302 6,244
Amortization of intangible assets acquired in business combinations 4,936 4,924
Total operating expenses 53,718 56,905
Operating income from continuing operations 18,537 18,953
Interest and other income, net 2,437 1,133
Income before income taxes from continuing operations 20,974 20,086
Income tax expense 8,932 8,129
Net income from continuing operations 12,042 11,957
Income from discontinued operations, net of tax impact - 2,915
Net income $ 12,042 $ 14,872
Basic net income from continuing operations per common share $ 0.15 $ 0.14
Diluted net income from continuing operations per common share $ 0.15 $ 0.14
Basic net income per common share $ 0.15 $ 0.17
Diluted net income per common share $ 0.15 $ 0.17
Weighted-average shares used to compute basic net income per common share 81,551 87,071
Weighted-average shares used to compute diluted net income per common share 82,212 87,645
Note 1 - Includes stock-based compensation as follows:

Three-month Period


Ended June 30,


2010 2009
(Unaudited)
Sales and marketing $ 332 $ 575
General and administrative 1,660 1,542
Technology 208 242
Total stock-based compensation $ 2,200 $ 2,359



































































































































































































































































VALUECLICK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)



Six-month Period


Ended June 30,


2010 2009
(Unaudited)
Revenue $ 195,283 $ 207,163
Cost of revenue 52,845 59,190
Gross profit 142,438 147,973
Operating expenses:
Sales and marketing (Note 1) 51,612 60,136
General and administrative (Note 1) 27,186 29,239
Technology (Note 1) 16,226 12,728
Amortization of intangible assets acquired in business combinations 9,902 9,813
Total operating expenses 104,926 111,916
Operating income from continuing operations 37,512 36,057
Interest and other income, net 2,996 991
Income before income taxes from continuing operations 40,508 37,048
Income tax expense 17,143 16,107
Net income from continuing operations 23,365 20,941
Income (loss) from discontinued operations, net of tax impact (134 ) 7,148
Gain on sale, net of tax 10,040 -
Net income $ 33,271 $ 28,089
Basic net income from continuing operations per common share $ 0.28 $ 0.24
Diluted net income from continuing operations per common share $ 0.28 $ 0.24
Basic net income per common share $ 0.40 $ 0.32
Diluted net income per common share $ 0.40 $ 0.32
Weighted-average shares used to compute basic net income per common share 82,218 86,949
Weighted-average shares used to compute diluted net income per common share 82,850 87,335
Note 1 - Includes stock-based compensation as follows:

Six-month Period


Ended June 30,


2010 2009
(Unaudited)
Sales and marketing $ 660 $ 1,158
General and administrative 3,097 3,118
Technology 400 503
Total stock-based compensation $ 4,157 $ 4,779









































































































































































VALUECLICK, INC.


RECONCILIATION OF NET INCOME FROM CONTINUING


OPERATIONS TO ADJUSTED-EBITDA (Note 1)


(In thousands)



Three-month Period


Ended June 30,


2010 2009
(Unaudited)
Net income from continuing operations $ 12,042 $ 11,957
Interest and other income, net (2,437 ) (1,133 )
Provision for income taxes 8,932 8,129
Amortization of intangible assets acquired in business combinations 4,936 4,924
Depreciation and leasehold amortization 1,608 1,932
Stock-based compensation 2,200 2,359
Adjusted-EBITDA $ 27,281 $ 28,168
Six-month Period

Ended June 30,


2010 2009
(Unaudited)
Net income from continuing operations $ 23,365 $ 20,941
Interest and other income, net (2,996 ) (991 )
Provision for income taxes 17,143 16,107
Amortization of intangible assets acquired in business combinations 9,902 9,813
Depreciation and leasehold amortization 3,214 3,902
Stock-based compensation 4,157 4,779
Adjusted-EBITDA $ 54,785 $ 54,551

Note 1 - "Adjusted-EBITDA" (GAAP net income 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 FROM CONTINUING OPERATIONS TO NON-GAAP DILUTED NET INCOME PER COMMON SHARE (Note 1)


(In thousands)


Three-Month Period

Ended June 30,


2010 2009
GAAP net income from continuing operations $ 12,042 $ 11,957
Stock-based compensation 2,200 2,359
Amortization of intangible assets acquired in business combinations 4,936 4,924
Tax impact of above items (2,746 ) (2,710 )
Non-GAAP net income $ 16,432 $ 16,530
Non-GAAP diluted net income per common share $ 0.20 $ 0.19

Weighted-average shares used to compute non-GAAP diluted net income per common share


82,212 87,645
Six-Month Period

Ended June 30,


2010 2009
GAAP net income from continuing operations $ 23,365 $ 20,941
Stock-based compensation 4,157 4,779
Amortization of intangible assets acquired in business combinations 9,902 9,813
Tax impact of above items (5,446 ) (5,416 )
Non-GAAP net income $ 31,978 $ 30,117
Non-GAAP diluted net income per common share $ 0.39 $ 0.34

Weighted-average shares used to compute non-GAAP diluted net income per common share


82,850 87,335

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, 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


June 30,



Six-month Period Ended


June 30,


2010 2009 2010 2009
(Unaudited) (Unaudited)
Media:
Revenue $ 31,637 $ 32,433 $ 62,440 $ 63,991
Cost of revenue 16,908 17,150 32,761 33,914
Gross profit 14,729 15,283 29,679 30,077
Operating expenses 7,163 7,954 14,447 15,972
Segment income from operations $ 7,566 $ 7,329 $ 15,232 $ 14,105
Owned & Operated Websites:
Revenue $ 31,986 $ 38,775 $ 59,883 $ 76,292
Cost of revenue 5,434 6,330 10,517 15,921
Gross profit 26,552 32,445 49,366 60,371
Operating expenses 21,042 22,496 38,972 43,644
Segment income from operations 5,510 $ 9,949 $ 10,394 $ 16,727
Affiliate Marketing:
Revenue $ 28,738 $ 26,059 $ 58,097 $ 54,017
Cost of revenue 4,418 4,034 8,437 7,920
Gross profit 24,320 22,025 49,660 46,097
Operating expenses 9,046 9,743 18,337 19,416
Segment income from operations $ 15,274 $ 12,282 $ 31,323 $ 26,681
Technology:
Revenue $ 7,610 $ 7,125 $ 15,504 $ 13,541
Cost of revenue 860 933 1,625 1,882
Gross profit 6,750 6,192 13,879 11,659
Operating expenses 2,975 2,714 6,016 5,397
Segment income from operations $ 3,775 $ 3,478 $ 7,863 $ 6,262

Reconciliation of segment income from operations to consolidated income from operations:


Total segment income from operations $ 32,125 $ 33,038 $ 64,812 $ 63,775
Corporate expenses (6,452 ) (6,802 ) (13,241 ) (13,126 )
Stock-based compensation (2,200 ) (2,359 ) (4,157 ) (4,779 )
Amortization of intangible assets (4,936 ) (4,924 ) (9,902 ) (9,813 )
Consolidated income from continuing operations

$



18,537



$



18,953



$



37,512



$



36,057


Reconciliation of segment revenue to consolidated revenue:
Media $ 31,637 $ 32,433 $ 62,440 $ 63,991
Owned & Operated Websites 31,986 38,775 59,883 76,292
Affiliate Marketing 28,738 26,059 58,097 54,017
Technology 7,610 7,125 15,504 13,541
Inter-segment eliminations (370 ) (302 ) (641 ) (678 )
Consolidated revenue $ 99,601 $ 104,090 $ 195,283 $ 207,163

Note 1 - On February 1, 2010, the Company announced the divestiture of the Web Clients business, which had been included in the Media segment. The Company has presented this divested business as discontinued operations and has recast its historical statements of operations and segment operating results to reflect this change. The information in this table excludes the divested business 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 at http://www.valueclick.com.


SOURCE: ValueClick, Inc.


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