Vocus Announces Results for Fourth Quarter and Full Year 2009

Vocus, Inc. (NASDAQ: VOCS | Quote | Chart | News | PowerRating), a leading provider of on-demand software for public relations management, announced today financial results for the fourth quarter and full year ended December 31, 2009.

"I'm extremely pleased with the results for the fourth quarter, especially given the continued challenges in the current economy," said Rick Rudman, President and CEO of Vocus, Inc. "Of particular note is the record number of new customers that we added in the quarter which we believe best underscores the large and untapped market opportunity we are pursuing." Financial Highlights

Fourth Quarter

Revenues were $22.0 million for the fourth quarter of 2009, a 7% increase over the same period last year; GAAP loss from operations was $(308,000) for the fourth quarter of 2009 compared to income from operations of $663,000 for the same period last year. GAAP net loss was $(821,000), or $(0.05) per diluted share, for the fourth quarter of 2009 compared to net income of $1.4 million, or $0.08 per diluted share, for the same period last year; Non-GAAP income from operations was $3.4 million for the fourth quarter of 2009 compared to $4.0 million for the same period last year. Non-GAAP net income was $2.9 million, or $0.15 per diluted share, for the fourth quarter of 2009 compared to $4.5 million, or $0.23 per diluted share, for the same period last year. See Other Supplemental Information for further discussion of non-GAAP measures. Full Year 2009 Revenues were $84.6 million for the full year 2009, a 9% increase over the same period last year; GAAP income from operations was $376,000 for the full year 2009 compared to a loss from operations of $(300,000) for the same period last year. GAAP net loss was $(2.0) million, or $(0.11) per diluted share, for the full year 2009 compared to net income of $6.9 million, or $0.37 per diluted share, for the same period last year. The results for the full year 2008 include the reversal of a portion of the valuation allowance against deferred tax assets totaling $5.2 million, or $0.27 per diluted share; Non-GAAP income from operations was $15.1 million for the full year 2009 compared to $13.5 million for the same period last year. Non-GAAP net income was $12.7 million, or $0.65 per diluted share, for the full year 2009 compared to $15.6 million, or $0.78 per diluted share, for the same period last year. See Other Supplemental Information for further discussion of non-GAAP measures. Balance Sheet and Other Financial Information

Total cash, cash equivalents and investments as of December 31, 2009 were $104.7 million, compared to $87.2 million as of December 31, 2008; Total deferred revenue as of December 31, 2009 was $47.8 million, compared to $42.9 million as of December 31, 2008; Cash flow from operations for the full year 2009 was $16.1 million; Free cash flow for the full year 2009 was $19.5 million. See Other Supplemental Information for further discussion of non-GAAP measures; 224,192 shares of common stock were repurchased in the first quarter of 2009 under the stock repurchase program at an aggregate cost of $3.5 million.

Business Highlights Added a record 437 net new subscription customers during the fourth quarter of 2009 compared to 235 net new subscription customers added during the same period last year (net adds); Ended the fourth quarter of 2009 with 4,438 total active subscription customers compared to 3,379 subscription customers at the end of the same period last year; Signed subscription agreements with new and existing customers including British Midland Airways, Country Music Television, Coleman Company, Duesseldorf Marketing & Tourism, Firehouse Subs, Florida Fruit & Vegetable Association, Harlem Globetrotters International, Honest Abe Log Homes, Loving Arms Childcare, My Wedding Workbook, New York Institute of Technology, Providence College, Royal Caribbean Cruises, The Smallest Ad Agency In Town and Volvo Group North America; Added four new partners to the PRWeb online distribution network to extend its reach to over 80 million readers; Launched a next generation news release creation tool which allows users to easily create and distribute multimedia news releases; Earned several corporate awards and distinctions including recognition by Deloitte as one of North America's 500 fastest growing technology companies and inclusion in the Software 500, a ranking of the world's largest software companies. Guidance

Vocus is providing, for the first time, guidance for the first quarter and full year 2010 based on information as of February 2, 2010:

For the first quarter of 2010, revenue is expected to be in the range of approximately $21.8 million to $22.0 million. Non-GAAP EPS is expected to be in the range of $0.14 to $0.15 assuming an estimated non-GAAP weighted average 20.7 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 8%. Amortization of intangible assets and stock-based compensation is expected to be $0.19 per share. GAAP EPS is expected to be in the range of $(0.05) to $(0.04) assuming an estimated weighted average 18.4 million basic and diluted shares outstanding; For the full year of 2010, revenue is expected to be in the range of $90.0 million to $92.0 million. Non-GAAP EPS is expected to be in the range of $0.56 to $0.58 assuming an estimated non-GAAP weighted average 21.3 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 8%. Amortization of intangible assets and stock-based compensation is expected to be $0.77 per share. GAAP EPS is expected to be in the range of $(0.21) to $(0.19) assuming an estimated weighted average 18.6 million basic and diluted shares outstanding. Free cash flow is expected to range from $12.0 million to $13.0 million. Our non-GAAP cash tax rate for 2010 is expected to be 20%.Conference Call Information Vocus will discuss the financial results and business highlights of the fourth quarter and full year 2009 in a conference call at 4:30 p.m. ET, or 1:30 p.m. PT, today. Investors are invited to listen to a live audio web cast of the conference call on the Investor Relations section of the Company's website at http://onlinepressroom.net/vocus/ir/webcast/. A replay of the webcast will be available approximately one hour after the conclusion of the call and will remain available for 30 calendar days following the conference call. An audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will be available until February 9, 2010 at 11:59 p.m. ET and can be accessed by dialing (888) 203-1112 or (719) 457-0820 and entering conference number 2445490.

About Vocus, Inc.

Vocus, Inc. (NASDAQ: VOCS) is a leading provider of on-demand software for public relations management. Our web-based software suite helps organizations of all sizes to fundamentally change the way they communicate with both the media and the public, optimizing their public relations and increasing their ability to measure its impact. Our on-demand software addresses the critical functions of public relations including media relations, news distribution and news monitoring. We deliver our solutions over the Internet using a secure, scalable application and system architecture, which allows our customers to eliminate expensive up-front hardware and software costs and to quickly deploy and adopt our on-demand software. Vocus is used by over 4,400 organizations worldwide and is available in seven languages. Vocus is based in Lanham, MD with offices in North America, Europe and Asia. For more information, please visit www.vocus.com or call (800) 345-5572.

This release contains "forward-looking" statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These are statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "may," "will," "expects," "projects," "anticipates," "estimates," "believes," "intends," "plans," "should," "seeks," and similar expressions. This press release contains forward-looking statements relating to, among other things, Vocus' expectations and assumptions concerning future financial performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual future results to differ materially from those projected or contemplated in the forward-looking statements. Forward-looking statements may be significantly impacted by certain risks and uncertainties described in Vocus' filings with the Securities and Exchange Commission. The risks and uncertainties referred to above include, but are not limited to, risks associated with possible fluctuations in our operating results and rate of growth, our history of operating losses, interruptions or delays in our service or our Web hosting, our business model, breach of our security measures, the emerging market in which we operate, our relatively limited operating history, our ability to hire, retain and motivate our employees and manage our growth, competition, our ability to continue to release and gain customer acceptance of new and improved versions of our service, successful customer deployment and utilization of our services, fluctuations in the number of shares outstanding, foreign currency exchange rates and interest rates.

Vocus, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (dollars in thousands) December 31, 2008 December 31 , 2009 Assets (unaudited) Current assets: Cash and cash equivalents $ 65,429 $ 85,817 Short-term investments 21,758 17,851 Accounts receivable, net 14,739 18,245 Current portion of deferred income taxes 394 685 Other current assets 3,340 1,753 Total current assets 105,660 124,351 Long-term investments - 1,001 Property, equipment and software, net 4,615 4,666 Intangible assets, net 5,906 3,980 Goodwill 17,090 17,090 Deferred income taxes, net of current portion 6,097 7,459 Other assets 611 693 Total assets $ 139,979 $ 159,240 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses $ 5,273 $ 6,771

Current portion of notes payable and capital lease obligations 185 197

Current portion of deferred revenue 41,775 46,789 Total current liabilities 47,233 53,757 Notes payable and capital lease obligations, net of current portion 188 48 Other liabilities 71 93 Deferred revenue, net of current portion 1,079 961 Total liabilities 48,571 54,859 Commitments and contingencies Stockholders' equity:

Common stock 194 199

Additional paid-in capital 129,897 149,279 Treasury stock (10,783) (14,914)

Accumulated other comprehensive income 564 305

Accumulated deficit (28,464) (30,488) Total stockholders' equity 91,408 104,381 Total liabilities and stockholders' equity $ 139,979 $ 159,240

Vocus, Inc. and Subsidiaries Consolidated Statements of Operations (dollars in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2008 2009 2008 2009 (unaudited) (unaudited) (unaudited) Revenues $ 20,615 $ 22,047 $ 77,520 $ 84,579 Cost of revenues, including amortization of intangible assets of $71 for the year ended December 31, 2008 3,915 3,846 14,675 15,461 Gross profit 16,700 18,201 62,845 69,118 Operating expenses: Sales and marketing 9,644 11,228 35,140 41,123 Research and development 1,119 1,230 4,998 4,675 General and administrative 4,721 5,581 20,356 21,018 Amortization of intangible assets 553 470 2,651 1,926 Total operating expenses 16,037 18,509 63,145 68,742 Income (loss) from operations 663 (308) (300) 376 Other income (expense): Interest and other income 524 103 2,136 485 Interest expense (6) (8) (27) (31) Income (loss) before provision (benefit) for income taxes 1,181 (213) 1,809 830 Provision (benefit) for income taxes (268) 608 (5,119) 2,854 Net income (loss) $ 1,449 $ (821) $ 6,928 $ (2,024) Net income (loss) per share: Basic $ 0.08 $ (0.05) $ 0.38 $ (0.11) Diluted $ 0.08 $ (0.05) $ 0.37 $ (0.11) Weighted average shares outstanding used in computing per share amounts: Basic 18,239,463 18,138,830 17,997,123 18,077,616 Diluted 18,523,210 18,138,830 18,958,500 18,077,616

Vocus, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (dollars in thousands) Three Months Ended December 31, Year Ended December 31, 2008 2009 2008 2009 (unaudited) (unaudited) (unaudited) Cash flows from operating activities: Net income (loss) $ 1,449 $ (821) $ 6,928 $ (2,024) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,017 887 4,543 3,584 Tax benefit from stock awards (1,951) (599) (1,951) (5,048) Other non-cash charges, net 2,779 3,305 4,333 11,529

Changes in operating assets and liabilities (306) 420 6,371 8,038 Net cash provided by operating activities 2,988 3,192 20,224 16,079 Cash flows from investing activities:

Net change in investments 1,391 (293) (10,771) 2,851 Purchases of property, equipment and software, net (64) (302) (1,742) (1,445)

Software development costs (51) (14) (74) (156) Net cash provided by (used in) investing activities 1,276 (609) (12,587) 1,250 Cash flows from financing activities: Purchases of common stock (7,500) - (7,500) (4,131)

Proceeds from the exercise of stock options 180 554 7,226 2,403 Tax benefit from stock awards 1,951 599 1,951 5,048

Payments on notes payable and capital lease obligations (42) (16) (360) (218) Net cash provided by (used in) financing activities (5,411) 1,137 1,317 3,102 Effect of exchange rate changes on cash and cash equivalents (45) 13 (66) (43) Net increase (decrease) in cash and cash equivalents (1,192) 3,733 8,888 20,388 Cash and cash equivalents, beginning of period 66,621 82,084 56,541 65,429 Cash and cash equivalents, end of period $ 65,429 $ 85,817 $ 65,429 $ 85,817

Other Supplemental Information

We define non-GAAP income from operations as income from operations excluding amortization of acquired intangible assets and stock-based compensation. We define non-GAAP net income as net income excluding amortization of acquired intangible assets, stock-based compensation and the income tax benefit related to the reversal of a portion of the valuation allowance against deferred tax assets in 2008. Amortization of intangible assets recorded in connection with our acquisitions consist of non-compete agreements, trade names, purchased technology and customer relationships that are not expected to be replaced when fully amortized, as a depreciable tangible asset might. Companies record stock-based compensation by applying varying valuation methodologies and subjective assumptions to different types of equity awards. The income tax benefit related to the reversal of a portion of the valuation allowance in 2008 is a non-cash benefit that we do not consider part of ongoing operations. Management uses non-GAAP income from operations and non-GAAP net income to evaluate operating performance, to determine incentive compensation and to prepare operating budgets and determine the appropriate levels of capital investments. Management believes the exclusion of amortization of acquired intangible assets, stock-based compensation and the income tax benefit related to the reversal of the valuation allowance in 2008 allows management and investors to make meaningful comparisons between our operating results and those of other companies, as well as providing a consistent comparison of our relative historical financial performance. However, management believes that non-GAAP income from operations and non-GAAP net income are subject to material limitations since they may not be indicative of ongoing operating results.

We define free cash flow as cash flow from operations less net capital expenditures and capitalized software development costs plus tax benefits from stock awards. Management considers free cash flow to be a liquidity measure which provides useful information to management and investors regarding our ability to generate cash from operations that is available for acquisitions and other investments. Management also uses free cash flow as a measure to evaluate performance and determine incentive compensation. Our definition of free cash flow may be different from definitions used by other companies.

Management compensates for the limitations in the use of non-GAAP financial measures by also utilizing GAAP financial measures and by providing investors with a detailed reconciliation between our GAAP and non-GAAP financial results. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in our SEC filings.

Vocus, Inc. and Subsidiaries Reconciliation of Non-GAAP Measures (dollars in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2008 2009 2008 2009 (unaudited) (unaudited) (unaudited) (unaudited) Reconciliation of GAAP income (loss) from operations to non-GAAP income from operations:

Income (loss) from operations $ 663 $ (308) $ (300) $ 376 Amortization of intangible assets (including $71 in cost of revenues for the year ended December 31, 2008)

553

470 2,722 1,926 Stock-based compensation 2,759 3,254 11,088 12,800 Non-GAAP income from operations $ 3,975 $ 3,416 $ 13,510 $ 15,102 Reconciliation of GAAP net income (loss) to non-GAAP net income: Net income (loss) $ 1,449 $ (821) $ 6,928 $ (2,024) Amortization of intangible assets (including $71 in cost of revenues for the year ended December 31, 2008) 553 470 2,722 1,926 Stock-based compensation 2,759 3,254 11,088 12,800 Effect of reversal of valuation allowance (247) - (5,171) - Non-GAAP net income $ 4,514 $ 2,903 $ 15,567 $ 12,702 Non-GAAP net income per share: Non-GAAP diluted $ 0.23 $ 0.15 $ 0.78 $ 0.65 Weighted average shares outstanding used in computing per share amounts: Non-GAAP diluted 19,652,427 19,833,526 19,935,666 19,668,533 Reconciliation of GAAP diluted weighted average shares outstanding to non-GAAP diluted weighted average shares outstanding: Diluted weighted average shares outstanding 18,523,210 18,138,830 18,958,500 18,077,616 Treasury stock effect of outstanding equity securities - 553,276 - 452,435 Treasury stock effect of unrecognized stock-based compensation on outstanding equity securities 1,129,217 1,141,420 977,166 1,138,482 Non-GAAP diluted weighted average shares outstanding 19,652,427 19,833,526 19,935,666 19,668,533 Supplemental information of stock-based compensation included in: Cost of revenues $ 376 $ 312 $ 1,262 $ 1,453 Sales and marketing 1,018 879 3,212 3,753 Research and development 230 262 769 989 General and administrative 1,135 1,801 5,845 6,605 Total stock-based compensation $ 2,759 $ 3,254 $ 11,088 $ 12,800 Reconciliation of cash flow from operations to free cash flow: Net cash provided by operating activities $ 2,988 $ 3,192 $ 20,224 $ 16,079 Purchases of property, equipment and software, net (64) (302) (1,742) (1,445) Software development costs (51) (14) (74) (156) Tax benefit from stock awards 1,951 599 1,951 5,048 Free cash flow $ 4,824 $ 3,475 $ 20,359 $ 19,526

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