ValueClick Inc. (VCLK) reported fourth quarter 2009 pro forma earnings per share of 25 cents, beating the Zacks Consensus Estimate of 16 cents by 9 cents. Profit rose 66.7% from the year-ago level of 15 cents a share demonstrating the company’s focus on driving bottom-line growth.
Better-than-expected earnings in the quarter were due to margin expansion and reduction in operating expenses. Operating expenses in the quarter fell 8.7% to $47.8 million (43.3% of total revenue) from $52.4 million (47.6% of total revenue) in the year-ago period.
On February 1, 2010, ValueClick announced the divestiture of the Web Clients promotional lead generation business (previously included in the Media segment). The company has presented this divested business as a discontinued operation for 2009. Thus the discontinued segment has been excluded from the company’s results for the fourth quarter of 2009.
Earlier this month, ValueClick had forecast $130.2 million in revenue (both continued and discontinued operations) for the quarter.
Total revenue from continuing operations for the fourth quarter was $110.4 million, a decrease of 0.3% from the year-ago quarter. This was in line with the preliminary fourth quarter 2009 revenue from continuing operations given out on Feb 1.
Revenue was down year over year across all but two segments. The Media, Affiliate Marketing and Technology segments performed above the company’s expectations, while the company’s new segment – Owned and operated websites (previously known as the comparison Shopping and Search) did not perform well in the quarter. However, all of the four business segments exceeded the company’s expectations for operating income.
In February, ValueClick’s MeziMedia division changed its name to ValueClick Brands, Inc. to reflect its new focus in the core business. The company also launched its new corporate website.
The display, affiliate marketing and technology businesses performed very well, with sequential revenue growth of 30%, 20% and 13%, respectively. Media segment revenue was up 18.4% from the year-ago period. Year-over-year, Owned and operated websites revenue was down 16.5%, Affiliate Marketing was marginally down 0.3% but Technology was up 2.3%.
Adjusted EBITDA expanded to $35.1 million or 31.8% in the quarter compared to $26.5 million or 24.1% in the year-ago quarter. This was slightly below the company’s preliminary announcement of an adjusted EBITDA of $37.7 million or 29.0%.
Balance Sheet
With no long-term debt, ValueClick exited the quarter with $180 million in cash and marketable securities (including the current portion of marketable securities) versus $182.5 million in the previous quarter. In the quarter, ValueClick generated approximately $33.0 million in free cash flow versus $22.6 million in the previous quarter. ValueClick also repurchased 3.6 million shares for $35.1 million in the quarter. ValueClick also announced an additional share repurchase authorization of $69.9 million.
First Quarter Guidance In-Line
For the first quarter of 2010, ValueClick expects revenue in the $93 – $97 million range. Year over year, the company expects revenue from media and affiliate marketing to be up in the low-single digit percentage range. Technology is expected to be up in the high-single digit range.
However, the Owned & Operated Websites (Comparison shopping and search) is expected to decline in the mid twenties percentage range. ValueClick’s forecast reflects the discontinuation of its Web Clients business.
Adjusted EBITDA is expected to be in the range of $24.0 – $26.0 million, which represents an adjusted EBITDA margin of 26% at the midpoint. Earnings on a GAAP basis are expected to be in the range of 10 cents to 11 cents per share, while earnings on a non-GAAP are expected to be in the range of 15 cents to 16 cents per share, in line with the Zacks Consensus Estimate.
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