Press Releases

November 2, 2011 |  Westlake Village, CA

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

third quarter ended September 30, 2011. Highlights from the third

quarter of 2011 results include:


  • Revenue of $136.0 million, up 27 percent from the third quarter of

    2010 (Q3 2010);


  • Adjusted-EBITDA1 of $40.0 million, up 29 percent from Q3

    2010;


  • Adjusted-EBITDA margin of 29.4 percent versus 29.1 percent in Q3 2010;

    and


  • GAAP net income of $0.47 per diluted share versus $0.44 in Q3 2010.

"We delivered strong organic growth and profitability in the quarter,

while strengthening our display capabilities and direct advertiser

relationships with the Dotomi acquisition," said
Jim Zarley, chief

executive officer of ValueClick. "The organic initiatives and

acquisitions we completed over the last twelve months provide us with a

unique set of capabilities at scale, and I am optimistic that we can

leverage these competitive strengths to drive strong, sustainable growth

and meaningful profitability going forward."

Non-GAAP net income, which excludes stock-based compensation and

amortization of intangible assets was $44.4 million, or $0.55 per

diluted common share for the third quarter of 2011. A table reconciling

GAAP net income to non-GAAP diluted net income per common share is

included in this press release.

The Company recorded favorable tax adjustments of approximately $19

million in the third quarter of 2011. Assuming the normalized 38 percent

effective tax rate included in the Company's previously-issued guidance,

net income would have been $18.4 million, or $0.23 per diluted common

share.

The consolidated balance sheet as of September 30, 2011 included

approximately $98.7 million in cash and cash equivalents, and $145.0

million in total debt associated with the August 31 acquisition of

Dotomi.

Dotomi Acquisition Closed

On August 31, ValueClick acquired all of the outstanding equity interest

in Dotomi for upfront consideration consisting of: (a) 7.1 million

shares of ValueClick common stock; (b) the assumption of 0.5 million

fully vested stock options; and (c) $148 million in cash (net of cash

acquired). In addition, ValueClick assumed 0.4 million shares of

unvested restricted stock which will vest over a one-year period and 0.5

million unvested stock options which will vest over a period ranging

from one to three years.

A portion of the acquisition was funded by the Company's Amended and

Restated Credit Agreement, as described in the Company's Form 8-K filed

with the Securities and Exchange Commission on August 24. This credit

agreement provides the Company with $200 million of total available

credit with a five-year term, including a senior secured revolving

credit facility of $150 million and a $50 million term loan.

Dotomi's results of operations were included in ValueClick's

consolidated and Media segment results beginning on August 31, 2011.

Share Repurchase Program Update

During the quarter, the Company repurchased 4.3 million shares of its

common stock for a total cost of $63.1 million. Year to date, ValueClick

has repurchased 7.0 million shares of its common stock for a total cost

of $102.2 million. As of today, ValueClick's share repurchase program

authorization is $83.4 million.

Business Outlook

Today, ValueClick is announcing guidance for the fourth quarter of 2011:


Guidance

Revenue

$173-$179 million

Adjusted-EBITDA

$55-$59 million

Mid-Point Adjusted-EBITDA Margin

32.4


%

Non-GAAP diluted net income per common share

$0.39-$0.41

The consolidated revenue guidance range is based on the following

segment-level assumptions for revenue growth rates expressed as a

percentage increase from fourth quarter 2010 reported revenue levels:


Affiliate Marketing:

up high single-digits


Media:

up over 100 percent on a reported basis, up high teens to low

twenties excluding the impact of acquisitions


Owned & Operated:

down low double-digits


Technology:

up mid teens

"Given the tremendous growth opportunities and higher margin profiles of

our other three segments, we believe the time is right to proactively

scale down some of the lower-margin businesses within the Owned &

Operated segment that rely on paid traffic and search monetization, and

this is reflected in our fourth quarter expectations," said
John

Pitstick, chief financial officer of ValueClick. "We will continue to

focus on our higher-margin, organic traffic-based owned and operated

properties, which complement our core marketing services offerings."

Fourth quarter 2011 guidance assumes stock-based compensation of $6.0

million, amortization of intangible assets of $9.0 million, net interest

and other income of $0.0 million, a 38 percent effective tax rate, and

84 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 third quarter,

during a conference call and webcast on November 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 November 9 at

(888) 203-1112 and (719) 457-0820 (pass code: 6490250). An archive of

the webcast will also be available through November 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 28,

2011; 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 expenses, and acquisition-related costs. 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)

September 30,

December 31,

2011

2010

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

98,687

$

194,317

Marketable securities

3,000

Accounts receivable, net

106,154

86,738

Other current assets

24,044

18,470

Total current assets

228,885

302,525

Note receivable, less current portion

30,112

31,267

Property and equipment, net

19,896

12,414

Goodwill

438,661

183,218

Intangible assets, net

123,008

33,525

Other assets

14,069

50,618

TOTAL ASSETS

$

854,631

$

613,567

LIABILITIES AND STOCKHOLDERS' EQUITY

Borrowings under credit facility, current

$

10,000

$

Other current liabilities

110,148

103,258

Borrowings under credit facility, less current

135,000

Other non-current liabilities

23,220

37,668

Total liabilities

278,368

140,926

Total stockholders' equity

576,263

472,641

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

854,631

$

613,567


VALUECLICK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)

Three-month Period

Ended September 30,

2011

2010

(Unaudited)

Revenue

$

135,988

$

106,768

Cost of revenue

45,736

28,502

Gross profit

90,252

78,266

Operating expenses:

Sales and marketing (Note 1)

28,578

29,351

General and administrative (Note 1)

15,144

12,331

Technology (Note 1)

12,649

8,897

Amortization of intangible assets acquired in business combinations

6,419

5,376

Total operating expenses

62,790

55,955

Income from operations

27,462

22,311

Interest and other income (expense), net

2,167

(2,683

)

Income before income taxes

29,629

19,628

Income tax benefit

(8,281

)

(16,549

)

Net income

$

37,910

$

36,177

Basic net income per common share

$

0.47

$

0.45

Diluted net income per common share

$

0.47

$

0.44

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

share

80,112

81,228

Weighted-average shares used to compute diluted net income per

common share

81,277

81,814

Note 1 - Includes stock-based compensation as follows:

Three-month Period

Ended September 30,

2011

2010

(Unaudited)

Sales and marketing

$

826

$

257

General and administrative

2,077

1,261

Technology

812

163


Total stock-based compensation

$

3,715

$

1,681


VALUECLICK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)

Nine-month Period

Ended September 30,

2011

2010

(Unaudited)

Revenue

$

377,561

$

302,051

Cost of revenue

118,711

81,347

Gross profit

258,850

220,704

Operating expenses:

Sales and marketing (Note 1)

85,995

80,963

General and administrative (Note 1)

41,229

39,517

Technology (Note 1)

33,668

25,123

Amortization of intangible assets acquired in business combinations

17,454

15,278

Total operating expenses

178,346

160,881

Income from operations

80,504

59,823

Interest and other income, net

3,232

313

Income before income taxes

83,736

60,136

Income tax expense

11,983

594

Income from continuing operations

71,753

59,542

Loss from discontinued operations, net of tax

(134

)

Gain on sale, net of tax

10,040

Net income

$

71,753

$

69,448

Basic income from continuing operations per common share

$

0.90

$

0.73

Diluted income from continuing operations per common share

$

0.89

$

0.72

Basic net income per common share

$

0.90

$

0.85

Diluted net income per common share

$

0.89

$

0.84

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

share

79,924

81,884

Weighted-average shares used to compute diluted net income per

common share

80,992

82,501

Note 1 - Includes stock-based compensation as follows:

Nine-month Period

Ended September 30,

2011

2010

(Unaudited)

Sales and marketing

$

1,645

$

917

General and administrative

5,166

4,358

Technology

1,435

563


Total stock-based compensation

$

8,246

$

5,838


VALUECLICK, INC.


RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS


TO ADJUSTED-EBITDA (Note 1)


(In thousands)

Three-month Period

Ended September 30,

2011

2010

(Unaudited)

Net income

$

37,910

$

36,177

Interest and other (income) expense, net

(2,167

)

2,683

Provision for income tax

(8,281

)

(16,549

)

Amortization of intangible assets acquired in business combinations

6,419

5,376

Depreciation and leasehold amortization

2,036

1,664

Stock-based compensation

3,715

1,681

Acquisition-related costs

412

Adjusted-EBITDA

$

40,044

$

31,032

Nine-month Period

Ended September 30,

2011

2010

(Unaudited)

Income from continuing operations

$

71,753

$

59,542

Interest and other income, net

(3,232

)

(313

)

Provision for income tax

11,983

594

Amortization of intangible assets acquired in business combinations

17,454

15,278

Depreciation and leasehold amortization

5,552

4,878

Stock-based compensation

8,246

5,838

Acquisition-related costs

412

Adjusted-EBITDA

$

112,168

$

85,817

Note 1 - "Adjusted-EBITDA" (GAAP income from continuing

operations before interest, income taxes, depreciation, amortization,

stock-based compensation expenses, and acquisition-related costs)

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, 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 INCOME FROM CONTINUING OPERATIONS TO


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


(In thousands)

Three-month Period


Ended September 30,

2011

2010

(Unaudited)

Net income

$

37,910

$

36,177

Stock-based compensation

3,715

1,681

Amortization of intangible assets acquired in business combinations

6,419

5,376

Tax impact of above items

(3,609

)

(2,818

)

Non-GAAP net income

$

44,435

$

40,416

Non-GAAP diluted net income per common share

$

0.55

$

0.49

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

per common share

81,277

81,814

Nine-month Period

Ended September 30,

2011

2010

(Unaudited)

GAAP income from continuing operations

$

71,753

$

59,542

Stock-based compensation

8,246

5,838

Amortization of intangible assets acquired in business combinations

17,454

15,278

Tax impact of above items

(9,684

)

(8,264

)

Non-GAAP net income

$

87,769

$

72,394

Non-GAAP diluted net income per common share

$

1.08

$

0.88

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

per common share

80,992

82,501

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

income from continuing operations 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

Nine-month Period

Ended September 30,

Ended September 30,

2011

2010

2011

2010

(Unaudited)

(Unaudited)

Affiliate Marketing:

Revenue

$

32,525

$

29,841

$

99,615

$

87,938

Cost of revenue

4,260

4,111

12,898

12,548

Gross profit

28,265

25,730

86,717

75,390

Operating expenses

9,457

9,190

28,304

27,527

Segment income from operations

$

18,808

$

16,540

$

58,413

$

47,863

Media:

Revenue

$

52,714

$

33,321

$

131,902

$

95,761

Cost of revenue

26,104

18,239

68,899

51,000

Gross profit

26,610

15,082

63,003

44,761

Operating expenses

15,752

7,257

35,289

21,704

Segment income from operations

$

10,858

$

7,825

$

27,714

$

23,057

Owned & Operated Websites:

Revenue

$

40,460

$

35,913

$

118,961

$

95,796

Cost of revenue

14,452

5,473

34,482

15,990

Gross profit

26,008

30,440

84,479

79,806

Operating expenses

17,830

23,307

60,359

62,279

Segment income from operations

$

8,178

$

7,133

$

24,120

$

17,527

Technology:

Revenue

$

10,399

$

7,901

$

27,572

$

23,405

Cost of revenue

999

826

2,805

2,451

Gross profit

9,400

7,075

24,767

20,954

Operating expenses

3,357

2,887

9,865

8,903

Segment income from operations

$

6,043

$

4,188

$

14,902

$

12,051

Reconciliation of segment income from operations to consolidated

income from operations:

Total segment income from operations

$

43,887

$

35,686

$

125,149

$

100,498

Corporate expenses

(6,291

)

(6,318

)

(18,945

)

(19,559

)

Stock-based compensation

(3,715

)

(1,681

)

(8,246

)

(5,838

)

Amortization of intangible assets

(6,419

)

(5,376

)

(17,454

)

(15,278

)

Consolidated income from operations

$

27,462

$

22,311

$

80,504

$

59,823

Reconciliation of segment revenue to consolidated revenue:

Affiliate Marketing

$

32,525

$

29,841

$

99,615

$

87,938

Media

52,714

33,321

131,902

95,761

Owned & Operated Websites

40,460

35,913

118,961

95,796

Technology

10,399

7,901

27,572

23,405

Inter-segment eliminations

(110

)

(208

)

(489

)

(849

)

Consolidated revenue

$

135,988

$

106,768

$

377,561

$

302,051

ValueClick, Inc.
Gary J. Fuges, CFA
1.818.575.4677

Source: ValueClick, Inc.

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