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ValueClick Announces First Quarter 2009 Results

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--May. 5, 2009-- ValueClick, Inc. (Nasdaq:VCLK) today reported financial results for the first quarter ended March 31, 2009.

“Our multiple performance-based online marketing solutions and relentless focus on margins and expense management helped drive strong first quarter results,” said Tom Vadnais, chief executive officer of ValueClick. “While advertising spending and budget visibility remain challenged in this macroeconomic environment, our large scale performance-based offerings differentiate us competitively and allow us to add value for our advertisers and publishers regardless of market conditions.”

First Quarter 2009 Financial Results

Revenue for the first quarter of 2009 was $135.0 million. The Company’s Comparison Shopping and Search segment and its Media segment’s display advertising business performed above expectations. Adjusted-EBITDA1 for the first quarter of 2009 was $34.7 million and adjusted-EBITDA margin was 25.7 percent.

GAAP net income for the first quarter of 2009 was $13.2 million, or $0.15 per diluted common share. Non-GAAP net income for the first quarter of 2009, which excludes discontinued operations, stock-based compensation, and amortization of intangible assets was $18.8 million, or $0.22 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.

In the first quarter of 2009, the Company generated approximately $40 million in free cash flow, defined as net cash from operations less capital expenditures. The consolidated balance sheet as of March 31, 2009 includes $130 million in cash, cash equivalents and marketable securities and no long-term debt.

Business Outlook

Today, ValueClick is announcing guidance for the second quarter of 2009:

  Guidance
Revenue $124-$130 million
Adjusted-EBITDA $31-$33 million
GAAP diluted net income per common share $0.13-$0.14
Non-GAAP diluted net income per common share $0.19-$0.20

Second quarter 2009 non-GAAP and GAAP diluted net income per common share guidance assume a 42 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 first quarter during a conference call and webcast on May 5 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 May 12 at (888) 203-1112 and (719) 457-0820 (pass code: 8914545). An archive of the Webcast will also be available through May 12.

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)

     
March 31, December 31,
2009 2008
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 104,488 $ 122,487
Marketable securities -- 2,175
Accounts receivable, net 86,959 108,611
Other current assets   16,299   20,515
Total current assets 207,746 253,788
 
Marketable securities, less current portion 25,750 25,750
Property and equipment, net 13,999 15,514
Goodwill 171,604 172,583
Intangible assets, net 73,299 80,042
Other assets   55,727   55,602
TOTAL ASSETS $ 548,125 $ 603,279
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities $ 105,966 $ 176,605
Non-current liabilities   74,309   73,195
Total liabilities 180,275 249,800
Total stockholders’ equity   367,850   353,479
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 548,125 $ 603,279
 

VALUECLICK, INC.

PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 
Three-month Period
Ended March 31,
2009   2008
(Unaudited)
 
Revenue $ 135,041 $ 169,126
Cost of revenue   43,947   51,252
Gross profit 91,094 117,874
Operating expenses:
Sales and marketing (Note 1) 36,990 49,970
General and administrative (Note 1) 16,494 20,880
Technology (Note 1) 7,666 9,442
Amortization of intangible assets acquired in business combinations   6,252   7,657
Total operating expenses   67,402   87,949
Income from operations 23,692 29,925
Interest income and other, net   (166 )   3,047
Income before income taxes 23,526 32,972
Income tax expense   10,309   13,759
Net income from continuing operations 13,217 19,213
Loss from discontinued operations, net of tax impact   --   (46 )
Net income $ 13,217 $ 19,167
 
Basic net income from continuing operations per common share $ 0.15 $ 0.20
Diluted net income from continuing operations per common share $ 0.15 $ 0.19
Basic net income per common share $ 0.15 $ 0.20
Diluted net income per common share $ 0.15 $ 0.19
Weighted-average shares used to compute basic net income per common share   86,825   97,722
Weighted-average shares used to compute diluted net income per common share   87,022   98,557
 
Note 1 – Includes stock-based compensation as follows:   Three-month Period
Ended March 31,
  2009     2008
(Unaudited)
Sales and marketing $ 610 $ 1,614
General and administrative 1,598 3,455
Technology   392   637
Total stock-based compensation $ 2,600 $ 5,706
 

VALUECLICK, INC.

RECONCILIATION OF NET INCOME FROM CONTINUING

OPERATIONS TO ADJUSTED-EBITDA (Note 1)

(In thousands)

 
Three-month Period

Ended March 31,

2009   2008
(Unaudited)
 
Net income from continuing operations $ 13,217 $ 19,213
Interest income and other, net 166 (3,047 )
Provision for income taxes 10,309 13,759
Amortization of intangible assets acquired in business combinations 6,252 7,657
Depreciation and leasehold amortization 2,186 2,438
Stock-based compensation   2,600   5,706
Adjusted-EBITDA $ 34,730 $ 45,726
 

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 March 31,

  2009 2008
 
GAAP net income from continuing operations $ 13,217 $ 19,213
Stock-based compensation 2,600 5,706
Amortization of intangible assets acquired in business combinations 6,252 7,657
Tax impact of above items   (3,307 )   (5,037 )
Non-GAAP net income   18,762 $ 27,539
Non-GAAP diluted net income per common share $ 0.22 $ 0.28
 
Weighted-average shares used to compute non-GAAP diluted net income per

common share

  87,022   98,557
 

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.

SEGMENT OPERATING RESULTS

(In thousands)

(Note 1)

 

Three-month Period Ended
March 31,

2009 2008
(Unaudited)
Media:
Revenue $ 63,526 $ 74,694
Cost of revenue   29,752   33,140
Gross profit 33,774 41,554
Operating expenses   18,867   25,269
Segment income from operations $ 14,907 $ 16,285
 
Comparison Shopping:
Revenue $ 37,517 $ 57,072
Cost of revenue   9,591   13,787
Gross profit 27,926 43,285
Operating expenses   21,148   28,084
Segment income from operations $ 6,778 $ 15,201
 
Affiliate Marketing:
Revenue $ 27,958 $ 31,200
Cost of revenue   3,886   4,199
Gross profit 24,072 27,001
Operating expenses   9,673   11,283
Segment income from operations $ 14,399 $ 15,718
 
Technology:
Revenue $ 6,416 $ 7,006
Cost of revenue   949   866
Gross profit 5,467 6,140
Operating expenses   2,683   2,751
Segment income from operations $ 2,784 $ 3,389
 
Total segment income from operations $ 38,868 $ 50,593
Corporate expenses (6,324 ) (7,305 )
Stock-based compensation (2,600 ) (5,706 )
Amortization of intangible assets   (6,252 )   (7,657 )
Consolidated income from operations $ 23,692 $ 29,925
 
Reconciliation of segment revenue to consolidated revenue:
Media $ 63,526 $ 74,694
Comparison Shopping 37,517 57,072
Affiliate Marketing 27,958 31,200
Technology 6,416 7,006
Inter-segment eliminations   (376 )   (846 )
Consolidated revenue $ 135,041 $ 169,126
 

Note 1 – On October 20, 2008, the Company announced the divestiture of two non-core businesses. The Company has presented these divested businesses as discontinued operations and restated its historical statements of operations and segment operating results to reflect this change. The information in this table excludes the divested businesses for all periods presented. A PDF file containing historical consolidated statements of operations and segment operating results information is available for download on the Investor Relations page of www.valueclick.com.

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.

Source: ValueClick, Inc.

Gary J. Fuges, CFA
ValueClick, Inc.
1.818.575.4677

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