ValueClick announces third quarter 2012 results

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 income²of $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.

News Provided by Acquire Media

Press Releases

ValueClick announces third quarter 2012 results

Let's Connect!