ValueClick Announces Fourth Quarter 2012 Results

ValueClick Announces Fourth Quarter 2012 Results

Revenue Meets, Profitability Exceeds High-End of Guidance Ranges

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)-- ValueClick, Inc. (NAS: VCLK) today reported financial results for the fourth quarter ended December 31, 2012. Revenue met the high-end of its guidance range, while Adjusted-EBITDA1 and non-GAAP diluted net income2 per common share exceeded the high-end of their respective guidance ranges.


"We are seeing the early results of our initiatives to elevate our conversations with advertisers to become a more strategic and persistent marketing partner, while also executing on our goals of strong organic growth and profitability," said John Giuliani, chief executive officer of ValueClick. "We expect 2013 to be a watershed year for ValueClick, and we look forward to articulating our vision and strategic initiatives in greater detail at our March 14th analyst and investor day."

Highlights from the fourth quarter of 2012 include:

  • Revenue of $199.6 million, up 14 percent from the fourth quarter of 2011 (Q4 2011);

  • Adjusted-EBITDA of $77.1 million, up 26 percent from Q4 2011;

  • Adjusted-EBITDA margin of 38.6 percent versus 34.8 percent in Q4 2011;

  • Income from operations of $63.0 million, up 43 percent from Q4 2011;

  • Non-GAAP diluted net income of $0.56 per common share versus $0.46 in Q4 2011;

  • GAAP net income from continuing operations of $0.47 per diluted share versus $0.34 in Q4 2011; and

  • Free cash flow (defined as cash from operations less capital expenditures) for the twelve-month period ended December 31, 2012 of $139 million, up 34 percent from the prior year.

The consolidated balance sheet as of December 31, 2012 included approximately $136.6 million in cash and cash equivalents, and $142.5 million in total debt.

_____________________________

1 Adjusted-EBITDA is defined as GAAP (Generally Accepted Accounting Principles) net 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 from continuing operations 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 net 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 net income from continuing operations to non-GAAP diluted net income per common share.

Share Repurchase Program Update

During the quarter, the Company repurchased approximately 113,000 shares of its common stock for a total cost of $2.0 million. For the twelve-month period ended December 31, 2012, ValueClick repurchased 6.6 million shares of its common stock for a total cost of $110.8 million. As of today, ValueClick's share repurchase program authorization is $89.3 million.

Business Outlook

Today, ValueClick is announcing guidance for the first quarter of 2013:

Revenue

$165-$168 million

Adjusted-EBITDA

$53-$55 million

Non-GAAP diluted net income per common share

$0.39-$0.41

Impact of stock-based compensation and amortization of intangibles, net of tax

$(0.09)-$(0.10)

GAAP diluted net income per common share

$0.30-$0.31

The consolidated revenue guidance range is based on the following segment-level assumptions for revenue growth rates, expressed as a percentage increase from first quarter 2012 reported revenue levels:

Affiliate Marketing:

up mid to high single-digits

Media:

up high teens

Owned & Operated:

up high single-digits

First quarter 2013 guidance assumes stock-based compensation of $5.0 million, amortization of intangible assets of $6.5 million (including $2.5 million recorded 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

John Giuliani, 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 fourth quarter during a conference call and Webcast at 4:30 p.m. ET today. The live conference call can be accessed by dialing (888) 219-1420 or (913) 312-0420. Please dial in approximately ten minutes prior to the start time and provide the operator with pass code 9841608. A replay of the conference call will be available from Wednesday, February 13 at 7:30 p.m. ET through Wednesday, February 20 at 7:30 p.m. ET at (888) 203-1112 and (719) 457-0820 (pass code: 9841608). The live and archived Webcast of the conference call will be available at http://ir.valueclick.com.

Analyst and Investor Day: March 14

The Company recently announced that senior management will host an analyst and investor day on Thursday, March 14, at the Four Seasons Hotel in Westlake Village, California. The event is expected to begin at 7:30 a.m. PT and conclude at approximately 2:00 p.m. PT. Financial analysts and investors can register for this event by email at analystday@valueclick.com or by phone at (818) 575-4952. Registration is required for admittance.

About ValueClick

ValueClick, Inc. (NAS: 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. 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, 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 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)

December 31,

December 31,

2012

2011

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

136,638

$

116,676

Accounts receivable, net

147,487

129,076

Other current assets

27,136

25,181

Total current assets

311,261

270,933

Note receivable, less current portion

27,615

29,700

Property and equipment, net

29,014

19,952

Goodwill

434,507

437,033

Intangible assets, net

81,822

114,007

Other assets

15,477

9,086

TOTAL ASSETS

$

899,696

$

880,711

LIABILITIES AND STOCKHOLDERS' EQUITY

Borrowings under credit facility, current

$

10,000

$

10,000

Other current liabilities

132,401

124,046

Borrowings under credit facility, less current portion

132,500

157,500

Other non-current liabilities

34,090

25,772

Total liabilities

308,991

317,318

Total stockholders' equity

590,705

563,393

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

899,696

$

880,711

VALUECLICK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three-month Period

Ended December 31,

2012

2011

(Unaudited)

Revenue

$

199,577

$

175,437

Cost of revenue (Note 1)

71,054

69,357

Gross profit

128,523

106,080

Operating expenses:

Sales and marketing (Note 2)

22,806

22,002

General and administrative (Note 2)

21,782

18,171

Technology (Note 2)

16,900

15,551

Amortization of intangible assets acquired in business combinations

3,993

6,327

Total operating expenses

65,481

62,051

Income from operations

63,042

44,029

Interest and other (expense) income, net

(768

)

1,434

Income before income taxes

62,274

45,463

Income tax expense

26,146

17,441

Net income from continuing operations

36,128

28,022

Income from discontinued operations, net of tax

151

1,355

Net income

$

36,279

$

29,377

Basic net income from continuing operations per common share

$

0.48

$

0.34

Diluted net income from continuing operations per common share

$

0.47

$

0.34

Basic net income per common share

$

0.48

$

0.36

Diluted net income per common share

$

0.47

$

0.35

Weighted-average shares used to compute basic net income per common share

75,225

81,505

Weighted-average shares used to compute diluted net income per common share

76,687

82,963

Note 1 - Includes amortization of intangible assets acquired
in business combinations of $2.5 million for the three-month
periods ended December 31, 2012 and 2011.

Note 2 - Includes stock-based compensation as follows:

Three-month Period

Ended December 31,

2012

2011

(Unaudited)

Sales and marketing

$

1,039

$

1,675

General and administrative

2,342

2,663

Technology

996

1,438

Total stock-based compensation

$

4,377

$

5,776

VALUECLICK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Year Ended December 31,

2012

2011

(Unaudited)

Revenue

$

660,878

$

528,753

Cost of revenue (1)

249,259

221,403

Gross profit

411,619

307,350

Operating expenses:

Sales and marketing (Note 2)

85,470

64,976

General and administrative (Note 2)

81,050

58,517

Technology (Note 2)

66,324

49,060

Amortization of intangible assets acquired in business combinations

22,420

16,646

Total operating expenses

255,264

189,199

Income from operations

156,355

118,151

Interest and other income, net

1,151

4,666

Income before income taxes

157,506

122,817

Income tax expense

61,575

28,627

Net income from continuing operations

95,931

94,190

Income from discontinued operations, net of tax

4,805

6,940

Gain on sale, net of tax

980

Net income

$

101,716

$

101,130

Basic net income from continuing operations per common share

$

1.24

$

1.17

Diluted net income from continuing operations per common share

$

1.22

$

1.16

Basic net income per common share

$

1.32

$

1.26

Diluted net income per common share

$

1.29

$

1.24

Weighted-average shares used to compute basic net income per common share

77,342

80,323

Weighted-average shares used to compute diluted net income per common share

78,898

81,489

Note 1 - Includes amortization of intangible assets acquired
in business combinations of $10.0 million and $9.6 million
for the years ended December 31, 2012 and 2011, respectively.

Note 2 - Includes stock-based compensation as follows:

Year Ended December 31,

2012

2011

(Unaudited)

Sales and marketing

$

4,918

$

3,320

General and administrative

11,492

7,829

Technology

5,357

2,873

Total stock-based compensation

$

21,767

$

14,022

VALUECLICK, INC.

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

TO ADJUSTED-EBITDA (Note 1)


(In thousands)

Three-month Period

Ended December 31,

2012

2011

(Unaudited)

Net income from continuing operations

$

36,128

$

28,022

Interest and other expense (income), net

768

(1,434

)

Provision for income tax

26,146

17,441

Amortization of acquired intangible assets included in cost of revenue

2,491

2,498

Amortization of acquired intangible assets included in operating expenses

3,993

6,327

Depreciation and leasehold amortization

3,232

2,455

Stock-based compensation

4,377

5,776

Adjusted-EBITDA

$

77,135

$

61,085

Year Ended December 31,

2012

2011

(Unaudited)

Net income from continuing operations

$

95,931

$

94,190

Interest and other income, net

(1,151

)

(4,666

)

Provision for income tax

61,575

28,627

Amortization of acquired intangible assets included in cost of revenue

9,995

9,633

Amortization of acquired intangible assets included in operating expenses

22,420

16,646

Depreciation and leasehold amortization

11,723

7,914

Stock-based compensation

21,767

14,022

Acquisition-related costs

412

Adjusted-EBITDA

$

222,260

$