PRESSROOM

ValueClick announces third quarter 2012 results

November 1, 2012


Revenue Increases 26 Percent; Adjusted-EBITDA Increases 35 Percent


Year-over-Year


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


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


third quarter ended September 30, 2012. Revenue, Adjusted-EBITDA1


and net income per diluted share figures exclude the contribution of


Search123, which was sold by the Company effective September 30, 2012.


The results of Search123 are reported as discontinued operations in the


Company's consolidated statements of operations.


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


integrating our core businesses to enhance the long-term growth profile


of the Company," said
James R. Zarley, chief executive officer of


ValueClick. "Our integration initiatives -- including the launch of new


products that leverage expertise and technology across the organization


-- are rapidly transforming ValueClick into the 'go-to' provider of


digital marketing services for large advertisers."


Financial highlights from the quarter include:



  • Revenue of $160.9 million, up 26 percent from the third quarter of


    2011 (Q3 2011);




  • Adjusted-EBITDA of $51.2 million, up 35 percent from Q3 2011;




  • Adjusted-EBITDA margin of 31.8 percent versus 29.6 percent in Q3 2011;




  • Non-GAAP diluted net income2 of $0.39 per common share


    versus $0.52 in Q3 2011 (Q3 2011 included a $0.24 positive impact from


    favorable tax adjustments);




  • GAAP diluted net income from continuing operations of $0.27 per common


    share versus $0.44 in Q3 2011 (Q3 2011 included a $0.24 positive


    impact from favorable tax adjustments); and




  • Free cash flow (defined as cash from operations less capital


    expenditures) for the nine-month period ended September 30, 2012 of


    $91.8 million versus $55.9 million for the nine-month period ended


    September 30, 2011.



_____________________________


1 Adjusted-EBITDA is defined as GAAP (Generally Accepted


Accounting Principles) income from continuing operations before


interest, income taxes, depreciation, amortization, stock-based


compensation, 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.


2 Non-GAAP net income is defined as GAAP income from


continuing operations before the impact of stock-based compensation and


amortization of intangible assets. Please see the attached schedule for


a reconciliation of GAAP income from continuing operations to non-GAAP


diluted net income per common share.


The following table compares the Company's previously-issued third


quarter guidance for revenue, Adjusted-EBITDA and non-GAAP diluted net


income per common share to the pro forma results if Search123 was not


treated as a discontinued operation for the quarter.
















































Q3 2012 (in millions, except per share data):

 

Reported/



Continuing Operations

 

Search123/



Discontinued Operations

 

Pro Forma Combined

 

Previously-Issued Guidance

Revenue

 

$160.9

 

$7.1

 

$168.1

 

$164-$169

Adjusted-EBITDA

 

$51.2

 

$1.9

 

$53.1

 

$49-$51

Non-GAAP diluted net income per common share

 

$0.39

 

$0.01

 

$0.40

 

$0.36-$0.37


 

 

 

 

Share Repurchase Update


During the third quarter, ValueClick repurchased approximately 590,000


shares of the Company's outstanding common stock for approximately $9.2


million. In the nine-month period ended September 30, ValueClick


repurchased approximately 6.5 million shares of the Company's


outstanding common stock for approximately $108.7 million. As of today,


ValueClick's share repurchase program authorization is $91.3 million.


The Company anticipates funding the program through free cash flow


generation and its credit facility.


Search123 Divestiture


On September 20, ValueClick announced the pending divestiture of


Search123, a self-service paid search business operating in Europe. The


business was previously included in the Company's Owned & Operated


Websites segment. The transaction closed on September 30. The terms of


the transaction, which are not material to the Company's financial


position, consist of future contingent payments based upon the


performance of the business over the next four years.


In accordance with applicable accounting standards, ValueClick is


presenting the Search123 business as a discontinued operation for all


periods, including the third quarter of 2012, and is recasting the


Company's historical consolidated financial statements and segment


operating results to reflect this change. Updated trended schedules are


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 fourth quarter of 2012:



























 

 

Q4 Guidance

Revenue

 


$196-$200 million

Adjusted-EBITDA

 


$68-$70 million

Mid-Point Adjusted-EBITDA Margin

 


34.8%

Non-GAAP diluted net income per common share

 

$0.51-0.52

Impact of stock-based compensation and amortization of intangibles,


net of tax

 

$(0.10)

GAAP diluted net income per common share

 

$0.41-$0.42


 

The consolidated revenue guidance ranges are based on the following


segment-level assumptions for revenue growth rates expressed as a


percentage change from fourth quarter 2011 reported revenue levels:



























 

■

 

Affiliate Marketing:

 

Up high single-digits


■

Media:

Up low twenties


■

Owned & Operated:

Down mid single-digits






 

Fourth quarter 2012 guidance assumes: stock-based compensation of $5.0


million; amortization of intangible assets of $6.5 million ($2.5 million


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


income of zero; a 40 percent effective tax rate; and 77 million diluted


shares outstanding.


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


Company management 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 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 8 at


(888) 203-1112 and (719) 457-0820 (pass code: 9435993). An archive of


the webcast will also be available through November 8.


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)



 


September 30,

December 31,


2012

2011


(Unaudited)

ASSETS



Current Assets:



Cash and cash equivalents

$

120,236


$

116,676

Accounts receivable, net

124,387


129,076

Other current assets

36,670

 

25,181

Total current assets

281,293


270,933




 

Note receivable, less current portion

28,188


29,700

Property and equipment, net

28,482


19,952

Goodwill

434,204


437,033

Intangible assets, net

88,227


114,007

Other assets

13,888

 

9,086

TOTAL ASSETS

$

874,282

 

$

880,711




 

LIABILITIES AND STOCKHOLDERS' EQUITY



Borrowings under credit facility, current

$

10,000


$

10,000

Other current liabilities

120,947


125,616

Borrowings under credit facility, less current portion

165,000


157,500

Other non-current liabilities

30,100

 

24,202

Total liabilities

326,047


317,318

Total stockholders' equity

548,235

 

563,393

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

874,282

 

$

880,711







 




































































































































































































































































































































































































































VALUECLICK, INC.



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



(In thousands, except per share data)



 


Three-month Period

Nine-month Period


Ended September 30,

Ended September 30,


2012

 

2011

2012

 

2011


(Unaudited)

(Unaudited)

Revenue

$

160,884


$

127,916


$

461,301


$

353,316

Cost of revenue

63,143

 

54,399

 

178,205

 

152,046

Gross profit

97,741


73,517


283,096


201,270

Operating expenses:







Sales and marketing (Note 1)

21,088


16,534


62,664


42,974

General and administrative (Note 1)

20,177


14,834


59,268


40,346

Technology (Note 1)

16,457


12,592


49,424


33,509

Amortization of intangible assets acquired in



business combinations

5,782

 

4,222

 

18,427

 

10,319

Total operating expenses

63,504

 

48,182

 

189,783

 

127,148

Income from operations

34,237


25,335


93,313


74,122

Interest and other income, net

193

 

2,167

 

1,919

 

3,232

Income before income taxes

34,430


27,502


95,232


77,354

Income tax expense (benefit)

13,526

 

(8,546

)

35,429

 

11,186

Income from continuing operations

20,904

 

36,048

 

59,803

 

66,168

Income from discontinued operations, net of tax

1,646


1,862


4,654


5,585

Gain on sale, net of tax

980

 

—

 

980

 

—

Net income

$

23,530

 

$

37,910

 

$

65,437

 

$

71,753








 

Basic income from continuing operations



per common share

$

0.28

 

$

0.45

 

$

0.77

 

$

0.83

Diluted income from continuing operations



per common share

$

0.27

 

$

0.44

 

$

0.75

 

$

0.82

Basic net income per common share

$

0.31

 

$

0.47

 

$

0.84

 

$

0.90

Diluted net income per common share

$

0.31

 

$

0.47

 

$

0.82

 

$

0.89

Weighted-average shares used to compute basic



net income per common share

75,130

 

80,112

 

78,052

 

79,924

Weighted-average shares used to compute diluted



net income per common share

76,513

 

81,277

 

79,640

 

80,992








 








 

Note 1 - Includes stock-based compensation as follows:








Three-month Period

Nine-month Period


Ended September 30,

Ended September 30,


2012

2011

2012

2011


(Unaudited)

(Unaudited)

Sales and marketing

$

1,283


$

826


$

3,879


$

1,645

General and administrative

2,904


2,077


9,150


5,166

Technology

1,369

 

812

 

4,361

 

1,435

Total stock-based compensation

$

5,556

 

$

3,715

 

$

17,390

 

$

8,246















 































































































































































VALUECLICK, INC.



RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS
TO


ADJUSTED-EBITDA (Note 1)



(In thousands)



 


Three-month Period

Nine-month Period


Ended September 30,

Ended September 30,


2012

 

2011

2012

 

2011


(Unaudited)

(Unaudited)

Income from continuing operations

$

20,904


$

36,048


$

59,803


$

66,168

Interest and other income, net

(193

)

(2,167

)

(1,919

)

(3,232

)

Income tax expense (benefit)

13,526


(8,546

)

35,429


11,186

Amortization of acquired intangible assets included in



cost of revenue

2,519


2,197


7,504


7,135

Amortization of acquired intangible assets included in



operating expenses

5,782


4,222


18,427


10,319

Depreciation and leasehold amortization

3,090


2,015


8,491


5,459

Stock-based compensation

5,556


3,715


17,390


8,246

Acquisition-related costs

—

 

412

 

—

 

412

 

Adjusted-EBITDA

$

51,184

 

$

37,896

 

$

145,125

 

$

105,693

 
















 

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


operations before interest, income taxes, depreciation, amortization,


stock-based compensation, 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 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 INCOME FROM CONTINUING OPERATIONS TO



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



(In thousands)



 


Three-month Period

Nine-month Period


Ended September 30,

Ended September 30,


2012

 

2011

2012

 

2011


(Unaudited)

(Unaudited)

Income from continuing operations

$

20,904


$

36,048


$

59,803


$

66,168

Stock-based compensation

5,556


3,715


17,390


8,246

Amortization of acquired intangible assets included in



cost of revenue

2,519


2,197


7,504


7,135

Amortization of acquired intangible assets included in



operating expenses

5,782


4,222


18,427


10,319

Tax impact of above items

(5,196

)

(3,609

)

(15,461

)

(9,684

)

Non-GAAP net income

$

29,565

 

$

42,573

 

$

87,663

 

$

82,184

 

Non-GAAP diluted net income per common share

$

0.39

 

$

0.52

 

$

1.10

 

$

1.01

 

Weighted-average shares used to compute non-GAAP



diluted net income per common share

76,513

 

81,277

 

79,640

 

80,992

 












 

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,


2012

 

2011

2012

 

2011


(Unaudited)

(Unaudited)

Affiliate Marketing:







Revenue

$

34,871


$

32,525


$

105,583


$

99,615

Cost of revenue

4,514

 

4,260

 

12,890

 

12,898

 

Gross profit

30,357


28,265


92,693


86,717

Operating expenses

10,014

 

9,457

 

29,718

 

28,304

 

Segment income from operations

$

20,343

 

$

18,808

 

$

62,975

 

$

58,413

 








 

Media:







Revenue

$

96,104


$

63,062


$

267,941


$

159,295

Cost of revenue

38,735

 

27,052

 

106,226

 

71,534

 

Gross profit

57,369


36,010


161,715


87,761

Operating expenses

29,722

 

19,109

 

86,543

 

45,145

 

Segment income from operations

$

27,647

 

$

16,901

 

$

75,172

 

$

42,616

 








 

Owned & Operated Websites:







Revenue

$

29,973


$

32,388


$

88,049


$

94,716

Cost of revenue

17,408

 

20,917

 

51,711

 

60,680

 

Gross profit

12,565


11,471


36,338


34,036

Operating expenses

5,451

 

5,420

 

17,072

 

16,298

 

Segment income from operations

$

7,114

 

$

6,051

 

$

19,266

 

$

17,738

 








 

Reconciliation of segment income from operations to



consolidated income from operations:






Total segment income from operations

$

55,104


$

41,760


$

157,413


$

118,767

Corporate expenses

(7,010

)

(6,291

)

(20,779

)

(18,945

)

Stock-based compensation

(5,556

)

(3,715

)

(17,390

)

(8,246

)

Amortization of acquired intangible assets included in



cost of revenue

(2,519

)

(2,197

)

(7,504

)

(7,135

)

Amortization of acquired intangible assets included in



operating expenses

(5,782

)

(4,222

)

(18,427

)

(10,319

)

Consolidated income from operations

$

34,237

 

$

25,335

 

$

93,313

 

$

74,122

 








 

Reconciliation of segment revenue to consolidated revenue:







Affiliate Marketing

$

34,871


$

32,525


$

105,583


$

99,615

Media

96,104


63,062


267,941


159,295

Owned & Operated Websites

29,973


32,388


88,049


94,716

Inter-segment eliminations

(64

)

(59

)

(272

)

(310

)

Consolidated revenue

$

160,884

 

$

127,916

 

$

461,301

 

$

353,316

 


ValueClick, Inc.
Gary J. Fuges, CFA
1.818.575.4677


Source: ValueClick, Inc.



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