ValueClick's EPS Beats, Rev Misses - Analyst Blog
May 03 2012 - 5:45AM
Zacks
ValueClick Inc. (VCLK) reported first quarter
2012 earnings of 33 cents per share that moved past the Zacks
Consensus Estimate of 24 cents per share. The reported earnings
also increased 37.5 % from 24 cents in the prior-year quarter.
Earnings include stock based compensation ($6.1 million) and
related tax effect ($2.1 million) but excludes amortization of
acquired intangible assets ($8.8 million) and related tax effect of
($3.1 million).
Quarter Details
Revenues increased 31.2% year over year to $152.9 million in the
quarter. Despite the year-over-year increase, the reported revenues
fell shy of the Zacks Consensus Estimate of $158.0 million and
failed to beat management’s guided range of $155.0 million–$160.0
million. The year-over-year growth was primarily driven by strong
sales in the Media segment and other business segments, which fully
offset the decline in the Owned and Operated websites segment.
Coming to the segments, the Media (47.2% of the total revenue)
was up by a staggering 99.2% year over year to $72.1 million. The
Affiliated Marketing segment (24.3% of the total revenue) was up
7.5% year over year to $37.1 million, while revenue from Technology
(5.7% of the total revenue) increased 7.4% year over year to $8.7
million in the quarter. However, Owned and operated websites
revenue (22.8% of the total revenue) was down 7.4% year over year
to $37.1 million in the quarter.
Gross profit increased 45.6% year over year to $93.9 million in
the first quarter. Gross margin increased from 55.4% in the
previous-year quarter to 61.4% in the first quarter, primarily
boosted by higher revenues.
Operating expenses were $63.5 million, up 67.1% year over year,
primarily attributable to higher sales and marketing expenses,
which increased 68.3% from the comparable previous year. Moreover,
expenses related to general & administration and technology
increased 59.2% and 57.8%, respectively, on a year-over-year
basis.
Operating income increased 14.7% year over year to $30.4
million, while Operating margin for the quarter was 19.9% compared
with 22.7% in the comparable previous year. Adjusted EBITDA surged
25.9% year over year to $41.8 million.
ValueClick had no long-term debt on its balance sheet at the end
of the reported quarter. Cash and cash equivalents were $107.7
million compared with $116.7 million in the previous quarter.
Guidance
For fiscal second quarter 2012, management expects revenues in
the range of $155.0 million–$160.0 million. Management expects
earnings on a non-GAAP basis to be in the range of 33 cents - 34
cents per share. Adjusted EBITDA is expected in the range of $46.0
million – $48.0 million.
The company expects revenue from Affiliate Marketing to grow in
higher-mid single digit range. Revenue from Owned & Operated
websites are expected to decrease in the high-single digit range.
Technology revenue is expected to remain flat for the second
quarter. Media revenue is anticipated to grow over 85.0% on
reported basis.
Recommendation
ValueClick posted an impressive first quarter. This was
primarily driven by the robust growth recorded in the business
segments along with strength in the internet advertising industry,
increasing e-commerce spending, and improving display ad growth
trends. The company’s concentration in the high-margin businesses
is expected to drive future growth prospects. We also remain upbeat
on ValuClick’s growing Media and Affiliate Marketing segment and
expect a turnaround in its Owned and Operated business.
However, a sluggish macro-economic environment and intense
competition from Google Inc. (GOOG) and
Yahoo! Inc. (YHOO) remain near-term headwinds.
We maintain our Neutral rating on the stock over the long term
(6-12 months). Currently, we have Zacks #3 Rank for ValueClick,
which translates to a short-term ‘Hold’ rating.
GOOGLE INC-CL A (GOOG): Free Stock Analysis Report
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VALUECLICK INC (VCLK): Free Stock Analysis Report
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