Press Releases

August 2, 2012


Revenue & Profitability Exceed High-End of Guidance Ranges


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


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


second quarter ended June 30, 2012. Revenue, adjusted-EBITDA1


and earnings per share metrics all exceeded the high-end of


previously-issued guidance ranges.


Financial highlights from the quarter include:



  • Revenue of $161.0 million, up 29 percent from the second quarter of


    2011 (Q2 2011);




  • Adjusted-EBITDA of $49.5 million, up 33 percent from Q2 2011;




  • Adjusted-EBITDA margin of 30.7 percent versus 29.6 percent in Q2 2011;




  • Non-GAAP net income2 of $0.37 per diluted share versus


    $0.28 in Q2 2011;




  • GAAP net income of $0.25 per diluted share versus $0.21 in Q2 2011; and




  • $88.2 million in cash and $172.5 million in debt as of June 30, 2012.



Additional highlights include:



  • The repurchase of 5.9 million shares of the Company's outstanding


    common stock in Q2 2012 and a $100 million increased authorization of


    the share repurchase program;




  • A $50 million increase in the Company's credit facility; and




  • The consolidation of the Mediaplex technology business into the Media


    segment, resulting in three segments: Media, Affiliate Marketing, and


    Owned & Operated.



"We delivered another quarter of strong financial results, while further


leveraging our unique data, traffic and services capabilities to become


a more strategic partner for our clients," said
James R. Zarley, chief


executive officer of ValueClick. "As illustrated in our share repurchase


activity, we remain confident in our ability to become the partner of


choice for the largest, most sophisticated digital advertisers and


capitalize on the growth opportunities in our industry."


______________________________


1 Adjusted-EBITDA is defined as GAAP (Generally Accepted


Accounting Principles) net income before interest, income taxes,


depreciation, amortization, and stock-based compensation expenses.


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 Non-GAAP net income excludes stock-based compensation and


amortization of intangible assets. Please see the attached schedule for


a reconciliation of GAAP net income to non-GAAP diluted net income per


common share.


Share Repurchase and Credit Facility Update


During the second quarter, ValueClick repurchased approximately 5.9


million shares of the Company's outstanding common stock for


approximately $99.5 million. On June 28, ValueClick's board of directors


authorized a $100 million increase to the program, such that $100.5


million of the Company's capital may be used to repurchase shares of the


Company's common stock going forward. ValueClick anticipates funding the


program through free cash flow generation and its credit facility.


On June 28, ValueClick announced a $50 million increase in the amount


available under its credit facility. The Company's total credit facility


now consists of: 1) a $200 million revolver (previously $150 million)


with an outstanding balance of $130 million as of June 30, 2012; and 2)


a term loan with an outstanding balance as of June 30, 2012 of $42.5


million.


New Segment Reporting Structure


Starting with Q2 2012 results, ValueClick will report three segments:


Media, which now includes the Mediaplex technology businesses; Affiliate


Marketing; and Owned & Operated. The decision to consolidate Mediaplex


into the Media segment is being driven by increased revenue synergies


between Mediaplex's advertiser base and Media's display offerings.


"Given our early success with capturing incremental display budgets from


Mediaplex's great roster of direct advertisers, it makes sense to


fast-track the consolidation of these two segments," said
John Giuliani,


chief operating officer of ValueClick. "It's great to see some early


success from our strategy of providing an integrated offering to our


advertisers."


A trended schedule of ValueClick's new reporting segment results is


available under the "Featured Presentations" section of ValueClick's


investor relations page at http://ir.conversantmedia.com.


Business Outlook


Today, ValueClick is providing guidance for the third and fourth


quarters of 2012:












































 



 



 



 



 



 



Q3 Guidance



 



Q4 Guidance



Revenue



 



$164-$169 million



 



$200-$210 million



Adjusted-EBITDA



 



$49-$51 million



 



$68-$72 million



Mid-Point Adjusted-EBITDA Margin



 



30.0%



 



34.1%



Non-GAAP diluted net income per common share



 



$0.36-$0.37



 



$0.52-0.53



Impact of stock-based compensation and amortization of intangibles,


net of tax



 




$(0.12)



 



$(0.10)



GAAP diluted net income per common share



 



$0.24-$0.25



 



$0.42-$0.43


The consolidated revenue guidance ranges are based on the following


segment-level assumptions for revenue growth rates expressed as a


percentage increase from third and fourth quarter 2011 reported revenue


levels:

















 





● Affiliate Marketing:




Q3 and Q4: up high single-digits




● Media:




Q3: up over 50 percent on a reported basis, up low/mid twenties on a


pro forma basis*; Q4: up mid twenties




● Owned & Operated:




Q3 and Q4: down mid teens




 


* The financial results of Dotomi were included in ValueClick's reported


Q3 2011 financial results as of its August 31, 2011 acquisition date. In


the two months of Q3 2011 prior to its acquisition, Dotomi generated


revenue of $15.6 million.


Third and fourth quarter 2012 guidance assumes: stock-based compensation


of $6.0 million and $5.0 million; amortization of intangible assets of


$8.3 million and $6.5 million ($2.5 million of which in each quarter


will be classified in Cost of revenue); net interest and other income of


zero; a 39 percent effective tax rate; and 78 million diluted shares


outstanding.


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


Jim Zarley, chief executive officer,
John Giuliani, chief operating


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 2 at 4:30 p.m. ET. Investors and analysts may


obtain the dial-in information through StreetEvents (www.streetevents.com).


The live webcast of the conference call will be available on the


Investor Relations section of www.valueclick.com.


A replay of the conference call will be available through May 9 at (888)


203-1112 and (719) 457-0820 (pass code: 3346413). An archive of the


webcast will also be available through August 9.


About ValueClick


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


marketing companies. Through a unique combination of data, technology


and services, ValueClick increases brand awareness and drives customer


acquisition at scale for the world's largest advertisers, and maximizes


advertising revenue for tens of thousands of online and mobile


publishers. ValueClick's brands include Commission Junction, ValueClick


Media, Dotomi, Greystripe, Mediaplex, Smarter.com, CouponMountain.com,


Investopedia.com, and PriceRunner. The Company is based in Westlake


Village, California, and has offices in major advertising markets


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


This release contains forward-looking statements that involve risks


and uncertainties, including, but not limited to, the risk that market


demand for on-line advertising in general, and performance based on-line


advertising in particular, will not grow as rapidly as predicted, the


risk that legislation and governmental regulation could negatively


impact the Company's performance, the effects of recent acquisitions on


ValueClick's financial results, the potential inability to successfully


operate or integrate Dotomi's business, including the potential


inability to retain customers, key employees or vendors. Actual results


may differ materially from the results predicted, and reported results


should not be considered an indication of future performance. Important


factors that could cause actual results to differ materially from those


expressed or implied in the forward-looking statements are detailed


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


Exchange Commission made from time to time by ValueClick, including, but


not limited to: its annual report on Form 10-K filed on February 29,


2012; 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.





































































































































































 



VALUECLICK, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS



(In thousands)



 




 



June 30,



 



December 31,





2012




2011





(Unaudited)



ASSETS







Current Assets:







Cash and cash equivalents




$



88,156




$



116,676



Accounts receivable, net





118,755





129,076



Other current assets




 



31,530




 



25,181



Total current assets





238,441





270,933







 



Note receivable, less current portion





28,650





29,700



Property and equipment, net





26,145





19,952



Goodwill





433,850





437,033



Intangible assets, net





96,258





114,007



Other assets




 



11,649




 



9,086



TOTAL ASSETS




$



834,993




$



880,711







 



LIABILITIES AND STOCKHOLDERS' EQUITY







Borrowings under credit facility, current




$



10,000




$



10,000



Other current liabilities





118,120





125,616



Borrowings under credit facility, less current portion





162,500





157,500



Other non-current liabilities




 



23,772




 



24,202



Total liabilities





314,392





317,318



Total stockholders' equity




 



520,601




 



563,393



TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY




$



834,993




$



880,711






















































































































































































































































































































































































 



VALUECLICK, INC.



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



(In thousands, except per share data)



 




 



Three-month Period



 



Six-month Period





Ended June 30,




Ended June 30,





2012



 



2011




2012



 



2011





(Unaudited)




(Unaudited)



Revenue




$



160,982




$



125,062




$



313,834




$



241,573



Cost of revenue




 



64,880




 



56,450




 



123,841




 



108,424



Gross profit





96,102





68,612





189,993





133,149



Operating expenses:











Sales and marketing (Note 1)





20,879





14,274





42,059





26,906



General and administrative (Note 1)





19,887





13,562





39,770





26,085



Technology (Note 1)





16,914





10,853





33,005





21,019




Amortization of intangible assets acquired in business combinations




 



6,321




 



3,389




 



12,645




 



6,097



Total operating expenses




 



64,001




 



42,078




 



127,479




 



80,107



Income from operations





32,101





26,534





62,514





53,042



Interest and other income, net




 



1,497




 



657




 



1,726




 



1,065



Income before income taxes





33,598





27,191





64,240





54,107



Income tax expense




 



13,262




 



10,210




 



22,333




 



20,264



Net income




$



20,336




$



16,981




$



41,907




$



33,843











 



Basic net income per common share




$



0.26




$



0.22




$



0.53




$



0.42



Diluted net income per common share




$



0.25




$



0.21




$



0.52




$



0.42



Weighted-average shares used to compute basic net income per common


share




 



78,720




 



78,981




 



79,529




 



79,829



Weighted-average shares used to compute diluted net income per


common share




 



80,336




 



80,059




 



81,221




 



80,847











 











 



Note 1 - Includes stock-based compensation as follows:













Three-month Period




Six-month Period





Ended June 30,




Ended June 30,





2012




2011




2012




2011





(Unaudited)




(Unaudited)



Sales and marketing




$



942




$



533




$



2,596




$



819



General and administrative





3,220





1,676





6,246





3,089



Technology




 



1,586




 



405




 



2,992




 



623



Total stock-based compensation




$



5,748




$



2,614




$



11,834




$



4,531






















































































































































































 



VALUECLICK, INC.



RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)



(In thousands)



 




 



Three-month Period



 



Six-month Period





Ended June 30,




Ended June 30,





 



2012



 



 



 



2011



 




 



2012



 



 



 



2011



 





(Unaudited)




(Unaudited)



Net income




$



20,336





$



16,981





$



41,907





$



33,843




Interest and other income, net





(1,497



)





(657



)





(1,726



)





(1,065



)



Provision for income tax





13,262






10,210






22,333






20,264





Amortization of acquired intangible assets included in cost of


revenue





2,492






2,758






4,985






4,938





Amortization of acquired intangible assets included in operating


expenses





6,321






3,389






12,645






6,097




Depreciation and leasehold amortization





2,803






1,762






5,433






3,516




Stock-based compensation




 



5,748



 




 



2,614



 




 



11,834



 




 



4,531



 



Adjusted-EBITDA




$



49,465



 




$



37,057



 




$



97,411



 




$



72,124



 



 




Note 1 - "Adjusted-EBITDA" (GAAP net income 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 cash


equivalents, note receivable and borrowings, 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 baseline 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 TO



NON-GAAP DILUTED NET INCOME PER COMMON SHARE (Note 1)



(In thousands)



 




 



Three-month Period



 



Six-month Period





Ended June 30,




Ended June 30,





 



2012



 



 



 



2011



 




 



2012



 



 



 



2011



 





(Unaudited)




(Unaudited)



Net income




$



20,336





$



16,981





$



41,907





$



33,843




Stock-based compensation





5,748






2,614






11,834






4,531





Amortization of acquired intangible assets included in cost of


revenue





2,492






2,758






4,985






4,938





Amortization of acquired intangible assets included in operating


expenses





6,321






3,389






12,645






6,097




Tax impact of above items




 



(5,015



)




 



(3,349



)




 



(10,265



)




 



(6,075



)



Non-GAAP net income




$



29,882



 




$



22,393



 




$



61,106



 




$



43,334



 



Non-GAAP diluted net income per common share




$



0.37



 




$



0.28



 




$



0.75



 




$



0.54



 




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


income per common share




 



80,336



 




 



80,059



 




 



81,221



 




 



80,847



 



 




Note 1 - "Non-GAAP diluted net income per common share" (GAAP


diluted net income per common share before the impact of


stock-based compensation and amortization of intangibles) 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 baseline 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,





 



2012



 



 



 



2011



 




 



2012



 



 



 



2011



 





(Unaudited)




(Unaudited)



Affiliate Marketing:











Revenue




$



33,605





$



32,616





$



70,712





$



67,090




Cost of revenue




 



4,200



 




 



4,314



 




 



8,376



 




 



8,638



 



Gross profit





29,405






28,302






62,336






58,452




Operating expenses




 



9,711



 




 



9,186



 




 



19,704



 




 



18,847



 



Segment income from operations




$



19,694



 




$



19,116



 




$



42,632



 




$



39,605



 











 



Media:











Revenue




$



91,088





$



52,008





$



171,837





$



96,233




Cost of revenue




 



36,888



 




 



23,907



 




 



67,491



 




 



44,482



 



Gross profit





54,200






28,101






104,346






51,751




Operating expenses




 



29,079



 




 



14,363



 




 



56,821



 




 



26,036



 



Segment income from operations




$



25,121



 




$



13,738



 




$



47,525



 




$



25,715



 











 



Owned & Operated Websites:











Revenue




$



36,398





$



40,554





$



71,493





$



78,501




Cost of revenue




 



21,349



 




 



25,548



 




 



43,082



 




 



50,540



 



Gross profit





15,049






15,006






28,411






27,961




Operating expenses




 



6,361



 




 



6,111



 




 



12,821



 




 



12,019



 



Segment income from operations




$



8,688



 




$



8,895



 




$



15,590



 




$



15,942



 











 




Reconciliation of segment income from operations to


consolidated income from operations:











Total segment income from operations




$



53,503





$



41,749





$



105,747





$



81,262




Corporate expenses





(6,841



)





(6,454



)





(13,769



)





(12,654



)



Stock-based compensation





(5,748



)





(2,614



)





(11,834



)





(4,531



)



Amortization of acquired intangible assets included in



cost of revenue





(2,492



)





(2,758



)





(4,985



)





(4,938



)




Amortization of acquired intangible assets included in operating


expenses




 



(6,321



)




 



(3,389



)




 



(12,645



)




 



(6,097



)



Consolidated income from operations




$



32,101



 




$



26,534



 




$



62,514



 




$



53,042



 











 



Reconciliation of segment revenue to consolidated revenue:











Affiliate Marketing




$



33,605





$



32,616





$



70,712





$



67,090




Media





91,088






52,008






171,837






96,233




Owned & Operated Websites





36,398






40,554






71,493






78,501




Inter-segment eliminations




 



(109



)




 



(116



)




 



(208



)




 



(251



)



Consolidated revenue




$



160,982



 




$



125,062



 




$



313,834



 




$



241,573



 



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


Source: ValueClick, Inc.



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