Revenue Increases 26 Percent; Adjusted-EBITDA Increases 35 Percent
Year-over-Year
third quarter ended
and net income per diluted share figures exclude the contribution of
Search123, which was sold by the Company effective
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
products that leverage expertise and technology across the organization
-- are rapidly transforming
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 |
|
|
|
|
|
|
|
|
Adjusted-EBITDA |
|
|
|
|
|
|
|
|
Non-GAAP diluted net income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
Share Repurchase Update
During the third quarter,
shares of the Company's outstanding common stock for approximately
million. In the nine-month period ended
repurchased approximately 6.5 million shares of the Company's
outstanding common stock for approximately
The Company anticipates funding the program through free cash flow
generation and its credit facility.
Search123 Divestiture
On
Search123, a self-service paid search business operating in
business was previously included in the Company's Owned & Operated
Websites segment. The transaction closed on
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,
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
investor relations page at http://ir.conversantmedia.com.
Business Outlook
Today,
|
|
Q4 Guidance |
Revenue |
|
|
Adjusted-EBITDA |
|
|
Mid-Point Adjusted-EBITDA Margin |
|
34.8% |
Non-GAAP diluted net income per common share |
|
|
Impact of stock-based compensation and amortization of intangibles, net of tax |
|
|
GAAP diluted net income per common share |
|
|
|
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
million; amortization of intangible assets of
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
Company management will present an overview of the results and other
factors affecting
quarter during a conference call and webcast on
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
(888) 203-1112 and (719) 457-0820 (pass code: 9435993). An archive of
the webcast will also be available through
About
marketing companies. Through a unique combination of data, technology
and services,
acquisition at scale for the world's largest advertisers, and maximizes
advertising revenue for tens of thousands of online and mobile
publishers.
Media,
Investopedia.com, and PriceRunner. The Company is based in
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
operate or integrate
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
Exchange Commission made from time to time by
not limited to: its annual report on Form 10-K filed on
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.
to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) |
||||||
|
||||||
|
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 |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data) |
||||||||||||||
|
||||||||||||||
Three-month Period |
Nine-month Period |
|||||||||||||
Ended |
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 |
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 |
|||
|
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS ADJUSTED-EBITDA (Note 1)
(In thousands) |
|||||||||||||||
|
|||||||||||||||
Three-month Period |
Nine-month Period |
||||||||||||||
Ended |
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.
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 |
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.
SEGMENT OPERATING RESULTS
(In thousands) |
|||||||||||||||
|
|||||||||||||||
Three-month Period |
Nine-month Period |
||||||||||||||
Ended |
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 |
|
1.818.575.4677
Source:
News Provided by Acquire Media