Conversant, Inc.
VALUECLICK INC/CA (Form: 8-K, Received: 05/02/2012 16:21:23)




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):
 
May 2, 2012

ValueClick, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

 
 
 
Delaware
000-30135
77-0495335
_____________________
(State or other jurisdiction
_____________
(Commission
______________
(I.R.S. Employer
of incorporation)
File Number)
Identification No.)
  
 
 
30699 Russell Ranch Road, Suite 250, Westlake Village, California
 
91362
________________________________
(Address of principal executive offices)
 
___________
(Zip Code)
 
 
 
Registrant's telephone number, including area code:
 
818-575-4500
Not Applicable
______________________________________________
Former name or former address, if changed since last report
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.02 Results of Operations and Financial Condition.

On May 2, 2012, ValueClick, Inc. (the "Company" or "ValueClick") announced its financial results for the fiscal quarter ended March 31, 2012 and provided initial guidance for the fiscal quarter ending June 30, 2012. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Non-GAAP Financial Measures:
Net income before interest, income taxes, depreciation, amortization, and stock-based compensation expenses("Adjusted-EBITDA"), a non-GAAP financial measure, is included in the attached press release at Exhibit 99.1. Adjusted-EBITDA, as defined above, may not be similar to Adjusted-EBITDA measures used by other companies and is not a measurement under generally accepted accounting principles ("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, note receivable and borrowings, and the costs associated with income tax expense, capital investments, and stock-based compensation expense which are not directly attributable to the underlying performance of the Company's business operations.
Non-GAAP diluted net income per common share, a non-GAAP financial measure defined as GAAP diluted net income per common share before the impact of stock-based compensation and amortization of intangibles is also included in the attached press release at Exhibit 99.1. 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 Adjusted-EBITDA and Non-GAAP diluted net income per common share in evaluating the overall performance of the Company's business operations.
Though management finds Adjusted-EBITDA and Non-GAAP diluted net income per common share useful for evaluating aspects of the Company's business, its reliance on these measures are 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 and Non-GAAP diluted net income per common share in conjunction with GAAP earnings and earnings per common share measures. The Company believes that Adjusted-EBITDA and Non-GAAP diluted net income per common share provide investors with additional tools for evaluating the Company's core performance, which management uses in its evaluation of the Company's 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 these supplemental metrics since, with a reconciliation to GAAP, it may provide greater insight into the Company's financial results.
The non-GAAP measures included in the press release at Exhibit 99.1 should be considered in addition to, not as a substitute for, or superior to, other measures of the Company's results of operations or financial position prepared in accordance with GAAP.


Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.

99.1     Q1 2012 Earnings Release dated May 2, 2012.







SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
ValueClick, Inc.
  
 
 
 
 
May 2, 2012
 
By:
 
/s/ John Pitstick
 
 
 
 
 
 
 
 
 
Name: John Pitstick
 
 
 
 
Title: Chief Financial Officer








Exhibit Index

 
 
 
Exhibit No.
 
Description
 
 
 
99.1
 
Q1 2012 Earnings Release dated May 2, 2012.




Exhibit 99.1
For Immediate Release

Contact:
Gary J. Fuges, CFA
ValueClick, Inc.
1.818.575.4677
 
 
 
VALUECLICK ANNOUNCES FIRST QUARTER 2012 RESULTS

Westlake Village, CA - May 2, 2012 - ValueClick, Inc. (Nasdaq: VCLK) today reported financial results for the first quarter ended March 31, 2012. Highlights from the quarter include:
 
Revenue of $152.9 million, up 31 percent from the first quarter of 2011 (Q1 2011);
Adjusted-EBITDA 1 of $47.9 million, up 37 percent from Q1 2011;
Adjusted-EBITDA margin of 31.4 percent versus 30.1 percent in Q1 2011;
Non-GAAP net income 2 of $0.38 per diluted share versus $0.26 in Q1 2011;
GAAP net income of $0.26 per diluted share versus $0.21 in Q1 2011; and
The appointment of John Giuliani, president of ValueClick's Dotomi division, to the role of chief operating officer.
 
"This was an important quarter for ValueClick, as we executed on many of our strategic initiatives, including expanding the Greystripe mobile business into Europe, accelerating the integrated-sales approach among our divisions, and continuing to evolve our Owned & Operated Websites segment," said James R. Zarley, chief executive officer of ValueClick. "We are just scratching the surface of providing a broader range of services to our clients as we execute on our vision of becoming the leading digital marketing services partner for major advertisers."

During the quarter, the Company paid down $62.5 million in debt and did not repurchase any shares. The share repurchase program's current total authorization is $100 million. The consolidated balance sheet as of March 31, 2012 includes approximately $107.7 million in cash and cash equivalents, and $105.0 million in total debt.

The Company's effective tax rate of 29.6 percent in the first quarter of 2012 was positively impacted by discrete state tax adjustments. Assuming the normalized 38 percent effective tax rate included in the Company's previously-issued guidance, non-GAAP net income would have been $28.7 million, or $0.35 per diluted common share.


___________________________
1 Adjusted-EBITDA is defined as GAAP (Generally Accepted Accounting Principles) net income before interest, income taxes, depreciation, amortization, and stock-based compensation expenses. 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 excludes stock-based compensation and amortization of intangible assets. Please see the attached schedule for a reconciliation of GAAP net income to non-GAAP diluted net income per common share.





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Business Outlook
Today, ValueClick is providing guidance for the second quarter of 2012:

 
Guidance
Revenue
$155-$160 million
Adjusted-EBITDA
$46-$48 million
     Mid-Point Adjusted-EBITDA Margin
29.8%
Non-GAAP diluted net income per common share
$0.33-$0.34
Impact of stock-based compensation and amortization of intangibles, net of tax
$(0.12)
GAAP diluted net income per common share
$0.21-$0.22

The consolidated revenue guidance range is based on the following segment-level assumptions for revenue growth rates expressed as a percentage increase from second quarter 2011 reported revenue levels:
 
l
Affiliate Marketing:
up mid single-digits
 
l
Media:
up over 85 percent on a reported basis, up approximately 30 percent on a pro forma basis *
 
l
Owned & Operated:
down high teens
 
l
Technology:
flat

* The financial results of Dotomi, acquired on August 31, 2011, were not included in ValueClick's reported financial results for Q2 2011. Dotomi's revenue in Q2 2011 was approximately $19 million. The financial results of Greystripe, acquired on April 21, 2011, were included in ValueClick's reported financial results for the majority of Q2 2011.

"Given the success of our efforts to reduce the paid traffic component of our Owned & Operated segment in the past two quarters while improving this segment's margin profile, we will accelerate this process in the second quarter," said John Pitstick, chief financial officer of ValueClick. "We expect this will result in a sequential revenue decrease in the O&O segment in the second quarter of approximately 5% compared to Q1, but with continued gross margin improvement."

Second quarter 2012 guidance assumes stock-based compensation of $6.5 million, amortization of intangible assets of $8.8 million ($2.5 million of which will be classified in Cost of revenue), net interest and other income of zero, a 39 percent effective tax rate, and 82.5 million diluted shares outstanding.
 
Conference Call Today at 4:30 p.m. ET
Jim Zarley, chief executive officer, John Giuliani, chief operating 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 2 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 9 at (888) 203-1112 and (719) 457-0820 (pass code: 6218014). An archive of the webcast will also be available through May 9.






Page 2 of 8


About ValueClick
ValueClick, Inc. (Nasdaq: 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. ValueClick's brands include Commission Junction, ValueClick Media, Dotomi, Greystripe, Mediaplex, Smarter.com, CouponMountain.com, Investopedia.com, and PriceRunner. 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, the risk that legislation and governmental regulation could negatively impact the Company's performance, the effects of recent acquisitions on ValueClick's financial results, the potential inability to successfully operate or integrate Dotomi's business, including the potential 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 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.

###



Page 3 of 8



VALUECLICK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)


 
March 31,
 
December 31,
 
2012
 
2011
 
(Unaudited)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
107,696

 
$
116,676

Accounts receivable, net
106,466

 
129,076

Other current assets
26,038

 
25,181

Total current assets
240,200

 
270,933

 
 
 
 
Note receivable, less current portion
29,185

 
29,700

Property and equipment, net
21,296

 
19,952

Goodwill
435,206

 
437,033

Intangible assets, net
105,383

 
114,007

Other assets
9,940

 
9,086

TOTAL ASSETS
$
841,210

 
$
880,711

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Borrowings under credit facility, current
$
10,000

 
$
10,000

Other current liabilities
114,043

 
125,616

Borrowings under credit facility, less current portion
95,000

 
157,500

Other non-current liabilities
23,548

 
24,202

Total liabilities
242,591

 
317,318

Total stockholders' equity
598,619

 
563,393

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
841,210

 
$
880,711





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VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)


 
Three-month Period
 
Ended March 31,
 
2012
 
2011
 
(Unaudited)
Revenue
$
152,852

 
$
116,511

Cost of revenue
58,961

 
51,974

Gross profit
93,891

 
64,537

Operating expenses:
 
 
 
Sales and marketing (Note 1)
21,180

 
12,632

General and administrative (Note 1)
19,883

 
12,523

Technology (Note 1)
16,091

 
10,166

Amortization of intangible assets acquired in business combinations
6,324

 
2,708

Total operating expenses
63,478

 
38,029

Income from operations
30,413

 
26,508

Interest and other income, net
229

 
408

Income before income taxes
30,642

 
26,916

Income tax expense
9,071

 
10,054

Net income
$
21,571

 
$
16,862

 
 
 
 
Basic net income per common share
$
0.27

 
$
0.21

Diluted net income per common share
$
0.26

 
$
0.21

Weighted-average shares used to compute basic net income
   per common share
80,339

 
80,687

Weighted-average shares used to compute diluted net income
   per common share
82,106

 
81,644

 
 
 
 
 
 
 
 
Note 1 - Includes stock-based compensation as follows:
 
 
 
 
Three-month Period
 
Ended March 31,
 
2012
 
2011
 
(Unaudited)
Sales and marketing
$
1,654

 
$
286

General and administrative
3,026

 
1,413

Technology
1,406

 
218

Total stock-based compensation
$
6,086

 
$
1,917





Page 5 of 8



VALUECLICK, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)
(In thousands)


 
Three-month Period
 
Ended March 31,
 
2012
 
2011
 
(Unaudited)
Net income
$
21,571

 
$
16,862

     Interest and other income, net
(229
)
 
(408
)
     Provision for income tax
9,071

 
10,054

     Amortization of acquired intangible assets included in
        cost of revenue
2,493

 
2,180

     Amortization of acquired intangible assets included in
        operating expenses
6,324

 
2,708

     Depreciation and leasehold amortization
2,630

 
1,754

     Stock-based compensation
6,086

 
1,917

Adjusted-EBITDA
$
47,946

 
$
35,067



Note 1 - “Adjusted-EBITDA” (GAAP net income 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 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.




Page 6 of 8


VALUECLICK, INC.
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP DILUTED NET INCOME PER COMMON SHARE (Note 1)
(In thousands)


 
Three-month Period
 
Ended March 31,
 
2012
 
2011
 
(Unaudited)
Net income
$
21,571

 
$
16,862

Stock-based compensation
6,086

 
1,917

     Amortization of acquired intangible assets included in
        cost of revenue
2,493

 
2,180

     Amortization of acquired intangible assets included in
        operating expenses
6,324

 
2,708

Tax impact of above items
(5,250
)
 
(2,726
)
Non-GAAP net income
$
31,224

 
$
20,941

Non-GAAP diluted net income per common share
$
0.38

 
$
0.26

Weighted-average shares used to compute non-GAAP
   diluted net income per common share
82,106

 
81,644



Note 1 - “Non-GAAP diluted net income per common share” (GAAP diluted net income 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.




Page 7 of 8


VALUECLICK, INC.
SEGMENT OPERATING RESULTS
(In thousands)

 
Three-month Period
 
Ended March 31,
 
2012
 
2011
 
(Unaudited)
Affiliate Marketing:
 
 
 
Revenue
$
37,107

 
$
34,474

Cost of revenue
4,176

 
4,324

Gross profit
32,931

 
30,150

Operating expenses
9,993

 
9,661

Segment income from operations
$
22,938

 
$
20,489

Media:
 
 
 
Revenue
$
72,129

 
$
36,202

Cost of revenue
29,482

 
19,713

Gross profit
42,647

 
16,489

Operating expenses
23,631

 
8,641

Segment income from operations
$
19,016

 
$
7,848

Owned & Operated Websites:
 
 
 
Revenue
$
35,095

 
$
37,947

Cost of revenue
21,733

 
24,992

Gross profit
13,362

 
12,955

Operating expenses
6,460

 
5,908

Segment income from operations
$
6,902

 
$
7,047

Technology:
 
 
 
Revenue
$
8,687

 
$
8,081

Cost of revenue
1,188

 
918

Gross profit
7,499

 
7,163

Operating expenses
4,111

 
3,034

Segment income from operations
$
3,388

 
$
4,129

Reconciliation of segment income from operations to
consolidated income from operations:
 
 
 
Total segment income from operations
$
52,244

 
$
39,513

Corporate expenses
(6,928
)
 
(6,200
)
Stock-based compensation
(6,086
)
 
(1,917
)
Amortization of acquired intangible assets included in
        cost of revenue
(2,493
)
 
(2,180
)
Amortization of acquired intangible assets included in
        operating expenses
(6,324
)
 
(2,708
)
Consolidated income from operations
$
30,413

 
$
26,508

Reconciliation of segment revenue to consolidated revenue:
 
 
 
Affiliate Marketing
$
37,107

 
$
34,474

Media
72,129

 
36,202

Owned & Operated Websites
35,095

 
37,947

Technology
8,687

 
8,081

Inter-segment eliminations
(166
)
 
(193
)
Consolidated revenue
$
152,852

 
$
116,511




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