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ValueClick Beats 1Q Earnings

Zacks Equity Research

ValueClick Inc. (VCLK) reported first quarter 2013 non-GAAP earnings of 42 cents per share, up 16.7% from the year-ago quarter. Reported earnings also surpassed management’s guided range of 39 cents-41 cents per share.

Including stock-based compensation, earnings came in at 39 cents a share, ahead of the Zacks Consensus Estimate of 35 cents per share.

Quarter Details

Revenues increased 13.0% year over year to $165.4 million but lagged the Zacks Consensus Estimate of $166 million. Reported revenues were at the lower end of management’s guided range of $165 million-$168 million. The year-over-year growth in revenue was primarily driven by strong performance from the Media, Affiliate Marketing segment and Owned & Operated segment.

Revenues from the Media segment increased 19.2% from the year-ago quarter to $96.3 million while a modest increase of 1.6% was reported in the Affiliate Marketing segment ($38.3 million). Revenues from Owned and Operated websites increased 8.0% year over year to $30.9 million.

Operating expenses were down 2.5% year over year to $61.3 million. General & administration expenses were down 6.9% year over year while technology expenses were up 3.9% year over year. Expenses related to sales and marketing increased 7.3% year over year.

ValueClick’s income from operations spiked 18.1% from the year-ago quarter to $59.9 million. Operating margin increased from 34.6% in the year-ago quarter to 36.2%, primarily due to higher revenue base. Including stock-based compensation, operating income came in at $55.1 million.

Net income on a non-GAAP basis was $32.7 million compared with $29.9 million in the year-ago quarter. However, including stock-based compensation, net income came in at $29.9 million in the quarter.

Cash and cash equivalents were $129.1 million compared with $136.6 million in the previous quarter. The company reported free cash flow of $48.1 million at the end of the reported quarter.


For the second quarter of 2013, ValueClick expects revenue in the range of $164 million-$168 million and non-GAAP earnings in the range of 38 cents-40 cents per share.

ValueClick forecasts revenues from Affiliate Marketing to grow in the high-single digit range in the second quarter. Revenues from Owned & Operated websites are expected to increase by mid-single digits. For the second quarter, Media revenue is expected to grow in the high-single digits.


We believe that ValueClick’s strong product portfolio, aided by accretive acquisitions, will continue to drive market share going forward. The company is realigning its operations toward high-margin business, which is expected to drive profitability going forward. Moreover, ValueClick is expected to benefit from Google’s (GOOG) exit from the Affiliate marketing business.

However, unfavorable foreign exchange and a sluggish European market remain headwind in the near term. ValueClick continues to face competition from Yahoo (YHOO) and Digital River (DRIV), which is expected to affect its profitability going forward.

Currently, ValueClick has a Zacks Rank #2 (Buy).

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