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Revenue was $130.2 million. Adjusted-EBITDA(1) was $33.4 million and adjusted-EBITDA margin was 25.7 percent. The Company generated approximately $22.6 million in free cash flow in the third quarter, defined as net cash from operations less capital expenditures. The consolidated balance sheet as of September 30, 2009 includes $182.5 million in cash, cash equivalents and marketable securities and no debt.
"Our continued focus on delivering performance-based solutions for our advertisers helped ValueClick generate another quarter of strong financial results," said Tom Vadnais, chief executive officer of ValueClick. "In the fourth quarter, we anticipate sequential revenue growth in most of our businesses and continued adjusted-EBITDA margin strength. I remain confident in ValueClick's competitive position due to our commitment to performance-based online marketing services, our proprietary technology platforms, and our operating expertise."
GAAP net income was $25.0 million, or $0.29 per diluted common share. The Company recorded an income tax benefit in the third quarter of 2009 of $2.7 million due to favorable income tax adjustments recorded in the quarter. Excluding these adjustments and assuming the normalized 42 percent effective tax rate included in the Company's previously-issued third quarter guidance, net income would have been $13.0 million, or $0.15 per diluted common share.
Non-GAAP net income, which excludes discontinued operations, stock-based compensation and amortization of intangible assets was $30.3 million, or $0.34 per diluted common share. A table reconciling GAAP net income from continuing operations to non-GAAP diluted net income per common share is included in this press release.
The comparison shopping & search segment and lead generation business within the media segment performed above the Company's expectations for the quarter, while the Company's other businesses performed in-line with expectations.
(1) Adjusted-EBITDA is defined as GAAP (Generally Accepted Accounting Principles) net income from continuing operations before interest, income taxes, depreciation, amortization, and stock-based compensation. 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.
Business Outlook
Today, ValueClick is announcing guidance for the fourth quarter of 2009:
Guidance Revenue $128-$138 million Adjusted-EBITDA $32-$35 million Mid-Point Adjusted-EBITDA Margin ~25% GAAP diluted net income per common share $0.15-$0.16 Non-GAAP diluted net income per common share $0.21-$0.22
In the fourth quarter, the Company expects revenue in its media, affiliate marketing and technology segments to increase from their respective third quarter of 2009 levels. Specifically, the mid-point of guidance includes the following segment-level assumptions for revenue growth rates from third quarter 2009 revenue levels:
-- Media: up high single digits -- Affiliate Marketing: up low to mid teens -- Technology: up mid single digits -- Comparison Shopping & Search: down mid to high teens
Within the media segment, the Company anticipates display revenue growth in the mid teens and flat growth in lead generation revenue relative to third quarter 2009 revenue.
Fourth quarter 2009 non-GAAP and GAAP diluted net income per common share guidance assume a 40 percent effective tax rate.
Conference Call Today at 4:30 p.m. ET
Tom Vadnais, 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 October 27 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 3 at (888) 203-1112 and (719) 457-0820 (pass code: 3787414). An archive of the Webcast will also be available through November 3.
About ValueClick
ValueClick, Inc. (Nasdaq:VCLK) is one of the world's largest integrated online marketing services companies, offering comprehensive and scalable solutions to deliver cost-effective customer acquisition for advertisers and transparent revenue streams for publishers. ValueClick's performance-based solutions allow its customers to reach their potential through multiple online marketing channels, including affiliate and search marketing, display advertising, lead generation, ad serving and related technologies, and comparison shopping. ValueClick brands include Commission Junction, ValueClick Media, Mediaplex, Smarter.com, CouponMountain.com, and PriceRunner. 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, and the risk that legislation and governmental regulation could negatively impact the Company's performance. 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 March 2, 2009; 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,
2009 2008
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 159,041 $ 122,487
Marketable securities - 2,175
Accounts receivable, net 78,382 108,611
Other current assets 18,043 20,515
Total current assets 255,466 253,788
Marketable securities, less current portion 23,498 25,750
Property and equipment, net 12,933 15,514
Goodwill 174,099 172,583
Intangible assets, net 61,974 80,042
Other assets 55,557 55,602
TOTAL ASSETS $ 583,527 $ 603,279
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 96,480 $ 176,605
Non-current liabilities 61,943 73,195
Total liabilities 158,423 249,800
Total stockholders' equity 425,104 353,479
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 583,527 $ 603,279
VALUECLICK,INC.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three-month Period
Ended September 30,
2009 2008
(Unaudited)
Revenue $ 130,161 $ 148,065
Cost of revenue 39,042 51,381
Gross profit 91,119 96,684
Operating expenses:
Sales and marketing (Note 1) 36,495 49,434
General and administrative (Note 1) 18,401 38,637
Technology (Note 1) 7,027 11,777
Amortization of intangible assets acquired in business combinations 6,354 7,047
Total operating expenses 68,277 106,895
Income (loss) from operations 22,842 (10,211 )
Interest income and other, net (513 ) (371 )
Income (loss) before income taxes 22,329 (10,582 )
Income tax benefit (2,701 ) (13,002 )
Net income from continuing operations 25,030 2,420
Loss from discontinued operations, net of tax impact - (421 )
Net income $ 25,030 $ 1,999
Basic net income from continuing operations per common share $ 0.29 $ 0.03
Diluted net income from continuing operations per common share $ 0.29 $ 0.03
Basic net income per common share $ 0.29 $ 0.02
Diluted net income per common share $ 0.29 $ 0.02
Weighted-average shares used to compute basic net income per common 87,194 89,571
share
Weighted-average shares used to compute diluted net income per 87,790 89,957
common share
Note 1 - Includes stock-based compensation as follows: Three-month Period
Ended September 30,
2009 2008
(Unaudited)
Sales and marketing $ 406 $ 12,322
General and administrative 1,565 23,191
Technology 191 3,421
Total stock-based compensation $ 2,162 $ 38,934
VALUECLICK,INC.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Nine-month Period
Ended September 30,
2009 2008
(Unaudited)
Revenue $ 395,566 $ 475,715
Cost of revenue 122,838 151,675
Gross profit 272,728 324,040
Operating expenses:
Sales and marketing (Note 1) 110,249 144,077
General and administrative (Note 1) 51,630 79,041
Technology (Note 1) 22,011 30,857
Amortization of intangible assets acquired in business combinations 18,893 22,384
Total operating expenses 202,783 276,359
Income from operations 69,945 47,681
Interest income and other, net 516 4,086
Income before income taxes 70,461 51,767
Income tax expense 17,342 13,586
Net income from continuing operations 53,119 38,181
Loss from discontinued operations, net of tax impact - (526 )
Net income $ 53,119 $ 37,655
Basic net income from continuing operations per common share $ 0.61 $ 0.41
Diluted net income from continuing operations per common share $ 0.61 $ 0.40
Basic net income per common share $ 0.61 $ 0.40
Diluted net income per common share $ 0.61 $ 0.40
Weighted-average shares used to compute basic net income per common 87,032 94,202
share
Weighted-average shares used to compute diluted net income per 87,489 94,864
common share
Note 1 - Includes stock-based compensation as follows: Nine-month Period
Ended September 30,
2009 2008
(Unaudited)
Sales and marketing $ 1,617 $ 15,584
General and administrative 4,720 29,593
Technology 945 4,709
Total stock-based compensation $ 7,282 $ 49,886
VALUECLICK,INC.
RECONCILIATION OF NET INCOME FROM CONTINUING
OPERATIONS TO ADJUSTED-EBITDA (Note 1)
(In thousands)
Three-month Period
Ended September 30,
2009 2008
(Unaudited)
Net income from continuing operations $ 25,030 $ 2,420
Interest income and other, net 513 371
Provision for income taxes (2,701 ) (13,002 )
Amortization of intangible assets acquired in business combinations 6,354 7,047
Depreciation and leasehold amortization 2,041 2,413
Stock-based compensation 2,162 38,934
Adjusted-EBITDA $ 33,399 $ 38,183
Nine-month Period
Ended September 30,
2009 2008
(Unaudited)
Net income from continuing operations $ 53,119 $ 38,181
Interest income and other, net (516 ) (4,086 )
Provision for income taxes 17,342 13,586
Amortization of intangible assets acquired in business combinations 18,893 22,384
Depreciation and leasehold amortization 6,363 7,258
Stock-based compensation 7,282 49,886
Adjusted-EBITDA $ 102,483 $ 127,209
Note 1 -- "Adjusted-EBITDA" (GAAP net income from continuing operations before interest, income taxes, depreciation, amortization, and stock-based compensation) 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 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 base-line 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 NET INCOME FROM CONTINUING OPERATIONS TO
NON-
GAAP DILUTED NET INCOME PER COMMON SHARE (Note 1)
(In thousands)
Three-month Period
Ended September 30,
2009 2008
GAAP net income from continuing operations $ 25,030 $ 2,420
Stock-based compensation 2,162 38,934
Amortization of intangible assets acquired in business combinations 6,354 7,047
Tax impact of above items (3,282 ) (17,987 )
Non-GAAP net income $ 30,264 $ 30,414
Non-GAAP diluted net income per common share $ 0.34 $ 0.34
Weighted-average shares used to compute non-GAAP diluted net 87,790 89,957
income per common share
Nine-month Period
Ended September 30,
2009 2008
GAAP net income from continuing operations $ 53,119 $ 38,181
Stock-based compensation 7,282 49,886
Amortization of intangible assets acquired in business combinations 18,893 22,384
Tax impact of above items (9,894 ) (27,947 )
Non-GAAP net income $ 69,400 $ 82,504
Non-GAAP diluted net income per common share $ 0.79 $ 0.87
Weighted-average shares used to compute non-GAAP diluted net 87,489 94,864
income per common share
Note 1 -- "Non-GAAP diluted net income per common share" (GAAP diluted net income from continuing operations per common share before the impact of stock-based compensation, amortization of intangibles, and other non-recurring events) 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 base-line 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 DILUTED NET INCOME PER COMMON SHARE TO
PRO
FORMA DILUTED NET INCOME PER COMMON SHARE (Note 1)
(In thousands)
Three-month Period
Ended September 30,
2009 2008
GAAP net income from continuing operations $ 25,030 $ 2,420
Stock based compensation related to tender offer
Gross impact - 33,084
Tax impact - (13,234 )
Impact of tax adjustments (12,079 ) (9,118 )
Pro forma net income from continuing operations $ 12,951 $ 13,152
Pro forma diluted net income per common share $ 0.15 $ 0.15
Weighted-average shares used to compute pro forma diluted net 87,790 89,957
income per common share
Note 1 -- "Pro forma net income per diluted common share" (GAAP net income per diluted common share before the impact of accelerated stock-based compensation associated with the Company's stock option tender offer in the third quarter of 2008 and before the impact of significant tax adjustments) included in this press release is a non-GAAP financial measure.
Pro forma net income per diluted common share, as defined above, may not be similar to pro forma net income per diluted common share measures used by other companies and is not a measurement under GAAP. Management believes that pro forma net income per diluted common share provides useful information to investors about the Company's performance because it eliminates the effects of non-recurring items which are not directly attributable to the underlying performance of the Company's business operations. Management uses pro forma net income per diluted common share in evaluating the overall performance of the Company's business operations.
Though management finds pro forma net income per diluted 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 always uses pro forma net income per diluted common share in conjunction with GAAP earnings and earnings per common share measures. The Company believes that pro forma net income per diluted 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 base-line 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 Ended Nine-month Period Ended
September 30, September 30,
2009 2008 2009 2008
(Unaudited) (Unaudited)
Media:
Revenue $ 55,941 $ 76,190 $ 178,174 $ 227,313
Cost of revenue 29,289 35,231 87,808 100,743
Gross profit 26,652 40,959 90,366 126,570
Operating expenses 15,240 21,691 50,736 72,135
Segment income from operations $ 11,412 $ 19,268 $ 39,630 $ 54,435
Comparison Shopping and Search:
Revenue $ 41,536 $ 36,580 $ 117,828 $ 139,091
Cost of revenue 5,366 10,484 21,287 36,071
Gross profit 36,170 26,096 96,541 103,020
Operating expenses 25,002 18,760 68,646 69,989
Segment income from operations $ 11,168 $ 7,336 $ 27,895 $ 33,031
Affiliate Marketing:
Revenue $ 26,342 $ 29,315 $ 80,359 $ 90,342
Cost of revenue 3,692 5,081 11,612 13,807
Gross profit 22,650 24,234 68,747 76,535
Operating expenses 9,505 11,031 28,921 33,151
Segment income from operations $ 13,145 $ 13,203 $ 39,826 $ 43,384
Technology:
Revenue $ 6,638 $ 6,690 $ 20,179 $ 21,329
Cost of revenue 933 1,161 2,815 3,017
Gross profit 5,705 5,529 17,364 18,312
Operating expenses 2,882 2,716 8,279 8,221
Segment income from operations $ 2,823 $ 2,813 $ 9,085 $ 10,091
Total segment income from operations $ 38,548 $ 42,620 $ 116,436 $ 140,941
Corporate expenses (7,190 ) (6,850 ) (20,316 ) (20,990 )
Stock-based compensation (2,162 ) (38,934 ) (7,282 ) (49,886 )
Amortization of intangible assets (6,354 ) (7,047 ) (18,893 ) (22,384 )
Consolidated income (loss) from operations $ 22,842 $ (10,211 ) $ 69,945 $ 47,681
Reconciliation of segment revenue to consolidated revenue:
Media $ 55,941 $ 76,190 $ 178,174 $ 227,313
Comparison Shopping and Search 41,536 36,580 117,828 139,091
Affiliate Marketing 26,342 29,315 80,359 90,342
Technology 6,638 6,690 20,179 21,329
Inter-segment eliminations (296 ) (710 ) (974 ) (2,360 )
Consolidated revenue $ 130,161 $ 148,065 $ 395,566 $ 475,715
SOURCE: ValueClick, Inc.
ValueClick, Inc. Gary J. Fuges, CFA 1-818-575-4677
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