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ValueClick announces third quarter 2007 results

ValueClick Announces Third Quarter 2007 Results

ValueClick Announces Third Quarter 2007 Results


WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Nov. 1,

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

for the third quarter ended September 30, 2007.


  • Revenue of $156.9 million was at the high end of the $156 to

    $157 million preliminary revenue range the Company provided in

    its October 16 press release;

  • Adjusted-EBITDA(1) of $40.1 million was above the

    previously-issued guidance range of $38 to $40 million; and

  • Diluted net income per common share of $0.17 was at the high

    end of the previously-issued guidance range of $0.16 to $0.17.

Third quarter 2007 revenue was negatively impacted primarily by

continued weakness in the lead generation portion of the Company's

Media business segment, partially offset by better than expected

results in the Comparison Shopping segment.


"While we continue to face challenges in lead generation, I'm

encouraged by the growth in our other core businesses, including

display advertising, affiliate marketing, technology, and comparison

shopping," said Tom Vadnais, chief executive officer of ValueClick.

"Our unique combination of diverse online marketing services,

technologies and expertise in driving publisher and advertiser

monetization places us in a strong position to benefit from the

continued fragmentation of online consumers."


Third Quarter 2007 Results


Revenue for the third quarter of 2007 was $156.9 million, an

increase of $19.0 million, or 14 percent, from $137.9 million for the

third quarter of 2006. Third quarter 2007 results include three months

of operations from Shopping.net, acquired in December 2006, and two

months of operations from MeziMedia, acquired in July 2007.


Income before income taxes for the third quarter of 2007 was $29.3

million compared to $26.4 million for the third quarter of 2006.

Adjusted-EBITDA for the third quarter of 2007 was $40.1 million

compared to $35.6 million for the third quarter of 2006. Net income

for the third quarter of 2007 was $16.8 million, or $0.17 per diluted

common share, compared to $16.8 million, or $0.17 per diluted common

share, for the third quarter of 2006.


The consolidated balance sheet as of September 30, 2007 includes

$251 million in cash, cash equivalents and marketable securities, $687

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

the third quarter, ValueClick paid $96.8 million in net cash related

to the acquisition of MeziMedia, and $44 million to repurchase 2.3

million shares of the Company's outstanding common stock as part of

its stock repurchase program. ValueClick currently has $56 million of

authorization remaining in its stock repurchase program.


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.


(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.


Based on its third quarter results and revised outlook for 2007,

ValueClick is updating its fiscal year 2007 guidance as follows:


Fiscal Year 2007                                    Updated Guidance
----------------------------------------------------------------------
Revenue $635-$640 million
----------------------------------------------------------------------
Adjusted-EBITDA $162-$165 million
----------------------------------------------------------------------
Diluted net income per common share $0.70-$0.71
----------------------------------------------------------------------

Fiscal year 2007 guidance for diluted net income per common share

includes a reduction of $0.11 per diluted common share for stock-based

compensation expense, and assumes a 42 percent net effective income

tax rate.


Additionally, ValueClick is announcing guidance for the fourth

quarter of 2007:


Fourth Quarter 2007                                 Guidance
----------------------------------------------------------------------
Revenue $172-$177 million
----------------------------------------------------------------------
Adjusted-EBITDA $42-$45 million
----------------------------------------------------------------------
Diluted net income per common share $0.17-$0.18
----------------------------------------------------------------------

Fourth 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 42.5 percent net

effective income tax rate.


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


Tom Vadnais, chief executive officer, James Zarley, executive

chairman, and Sam Paisley, chief administrative officer, will present

an overview of the results and other factors affecting ValueClick's

financial performance for the third quarter during a conference call

and webcast on November 1, 2007 at 4:30 p.m. ET.


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 8245264.


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.


                           VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three-month
Period
Ended September
30,
-----------------
2007 2006
-------- --------
(Unaudited)
(Note 1)
Revenue $156,892 $137,865
Cost of revenue 50,450 38,709
-------- --------
Gross profit 106,442 99,156
Operating expenses:
Sales and marketing (Note 2) 46,390 46,270
General and administrative (Note 2) 18,275 14,326
Technology (Note 2) 8,724 8,301
Amortization of intangible assets 6,726 5,462
-------- --------
Total operating expenses 80,115 74,359
-------- --------
Income from operations 26,327 24,797
Interest income, net 2,943 1,642
-------- --------
Income before income taxes 29,270 26,439
Income tax expense 12,439 9,648
-------- --------
Net income $ 16,831 $ 16,791
======== ========
Basic net income per common share $ 0.17 $ 0.17
======== ========
Weighted-average shares used to compute basic net
income per common share 99,138 96,612
======== ========
Diluted net income per common share $ 0.17 $ 0.17
======== ========
Weighted-average shares used to compute diluted net
income per common share 100,174 98,546
======== ========
Note 1 - The condensed consolidated statements of operations include
the results of Shopping.net and MeziMedia from the acquisition
consummation dates (December 1, 2006 and July 30, 2007,
respectively). Had these transactions been completed as of January 1,
2006, on an unaudited pro forma basis, revenue would have been $165.1
million and $149.3 million, and net income would have been $17.7
million, or $0.18 per diluted common share, and $16.0 million, or
$0.16 per diluted common share, for the three-month periods ended
September 30, 2007 and 2006, respectively. These unaudited pro forma
results are for information purposes only, are not necessarily
indicative of what the actual results would have been had these
transactions occurred on January 1, 2006, and are not necessarily
indicative of future results.
Note 2 - Includes stock-based compensation as      Three-month Period
follows: Ended September 30,
-------------------
2007 2006
--------- ---------
(Unaudited)
Sales and marketing $ 1,200 $1,145
General and administrative 2,791 1,264
Technology 603 583
--------- ---------
Total stock-based compensation $ 4,594 $2,992
========= =========
                           VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Nine-month Period
Ended September
30,
-----------------
2007 2006
-------- --------
(Unaudited)
(Note 1)
Revenue $462,492 $385,180
Cost of revenue 146,554 120,072
-------- --------
Gross profit 315,938 265,108
Operating expenses:
Sales and marketing (Note 2) 137,036 115,285
General and administrative (Note 2) 53,016 42,534
Technology (Note 2) 26,386 24,614
Amortization of intangible assets 17,967 16,567
-------- --------
Total operating expenses 234,405 199,000
-------- --------
Income from operations 81,533 66,108
Interest income, net 9,257 5,565
-------- --------
Income before income taxes 90,790 71,673
Income tax expense 37,697 30,649
-------- --------
Net income $ 53,093 $ 41,024
======== ========
Basic net income per common share $ 0.53 $ 0.41
======== ========
Weighted-average shares used to compute basic net
income per
common share 99,577 99,948
======== ========
Diluted net income per common share $ 0.53 $ 0.40
======== ========
Weighted-average shares used to compute diluted net
income per common share 100,941 102,242
======== ========
Note 1 - The condensed consolidated statements of operations include
the results of Shopping.net and MeziMedia from the acquisition
consummation dates (December 1, 2006 and July 30, 2007,
respectively). Had these transactions been completed as of January 1,
2006, on an unaudited pro forma basis, revenue would have been $507.3
million and $411.2 million, and net income would have been $56.5
million, or $0.56 per diluted common share, and $37.0 million, or
$0.36 per diluted common share, for the nine-month periods ended
September 30, 2007 and 2006, respectively. These unaudited pro forma
results are for information purposes only, are not necessarily
indicative of what the actual results would have been had these
transactions occurred on January 1, 2006, and are not necessarily
indicative of future results.
Note 2 - Includes stock-based compensation as       Nine-month Period
follows: Ended September 30,
-------------------
2007 2006
--------- ---------
(Unaudited)
Sales and marketing $ 3,524 $ 3,594
General and administrative 7,856 4,027
Technology 1,772 1,887
--------- ---------
Total stock-based compensation $13,152 $ 9,508
========= =========
                           VALUECLICK, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)
(In thousands)

Three-month
Period
Ended September
30,
----------------
2007 2006
------- -------
(Unaudited)
Net income $16,831 $16,791
Less interest income, net (2,943) (1,642)
Plus provision for income taxes 12,439 9,648
Plus amortization of intangible assets 6,726 5,462
Plus depreciation and leasehold amortization 2,425 2,382
Plus stock-based compensation 4,594 2,992
------- -------
Adjusted-EBITDA $40,072 $35,633
======= =======
                                                    Nine-month Period
Ended September
30,
-----------------
2007 2006
-------- -------
(Unaudited)
Net income $ 53,093 $41,024
Less interest income, net (9,257) (5,565)
Plus provision for income taxes 37,697 30,649
Plus amortization of intangible assets 17,967 16,567
Plus depreciation and leasehold amortization 7,202 6,851
Plus stock-based compensation 13,152 9,508
-------- -------
Adjusted-EBITDA $119,854 $99,034
======== =======

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 as 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 Nine-month
Period Ended Period Ended
September 30, September 30,
---------------- ----------------
2007 2006 2007 2006
------- ------- ------- -------
(Unaudited) (Unaudited)
Media:
Revenue 85,602 98,399 294,961 271,326
Cost of revenue 35,130 31,718 113,547 101,694
------- ------- ------- -------
Gross profit 50,472 66,681 181,414 169,632
Operating expenses 33,269 42,296 114,437 103,766
------- ------- ------- -------
Segment income from operations 17,203 24,385 66,977 65,866
======= ======= ======= =======
Comparison Shopping:
Revenue 29,421 5,874 46,212 17,368
Cost of revenue 7,289 509 10,453 1,262
------- ------- ------- -------
Gross profit 22,132 5,365 35,759 16,106
Operating expenses 15,570 4,727 28,075 15,072
------- ------- ------- -------
Segment income from operations 6,562 638 7,684 1,034
======= ======= ======= =======
Affiliate Marketing:
Revenue 34,138 27,400 99,188 79,422
Cost of revenue 7,209 5,284 19,872 13,723
------- ------- ------- -------
Gross profit 26,929 22,116 79,316 65,699
Operating expenses 10,767 9,051 30,839 26,132
------- ------- ------- -------
Segment income from operations 16,162 13,065 48,477 39,567
======= ======= ======= =======
Technology:
Revenue 8,215 6,525 23,453 18,028
Cost of revenue 1,393 1,374 4,279 4,024
------- ------- ------- -------
Gross profit 6,822 5,151 19,174 14,004
Operating expenses 3,388 3,245 10,237 9,457
------- ------- ------- -------
Segment income from operations 3,434 1,906 8,937 4,547
======= ======= ======= =======
Total segment income from
operations 43,361 39,994 132,075 111,014
Corporate expenses (5,714) (6,743) (19,423) (18,831)
Stock-based compensation (4,594) (2,992) (13,152) (9,508)
Amortization of intangible assets (6,726) (5,462) (17,967) (16,567)
------- ------- ------- -------
Consolidated income from
operations 26,327 24,797 81,533 66,108
======= ======= ======= =======
Reconciliation of segment revenue
to consolidated revenue:
Media 85,602 98,399 294,961 271,326
Comparison Shopping 29,421 5,874 46,212 17,368
Affiliate Marketing 34,138 27,400 99,188 79,422
Technology 8,215 6,525 23,453 18,028
Inter-segment eliminations (484) (333) (1,322) (964)
------- ------- ------- -------
Consolidated revenue 156,892 137,865 462,492 385,180
======= ======= ======= =======
                           VALUECLICK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

September December
30, 31,
2007 2006
--------- --------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 63,483 $ 76,769
Marketable securities, at fair value 187,483 204,825
Accounts receivable, net 111,824 107,785
Other current assets 13,375 13,611
------- -------
Total current assets 376,165 402,990
Property and equipment, net 17,437 18,995
Goodwill 337,090 278,070
Intangible assets, net 121,087 91,383
Other assets 3,406 1,828
-------- --------
TOTAL ASSETS $855,185 $793,266
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 92,186 $ 87,414
Non-current liabilities 76,430 62,143
------- -------
Total liabilities 168,616 149,557
Total stockholders' equity 686,569 643,709
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $855,185 $793,266
======== ========

CONTACT: ValueClick, Inc.


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



SOURCE: ValueClick, Inc.