Press Releases

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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