Vocus, Inc.’s (VOCS) first-quarter earnings per share of 1 cent exceeded the Zacks Consensus Estimate for a loss of 1 cent.
 
Revenue
 
Revenue for the quarter was $22.3 million, representing a 9% increase over the year-ago period. This exceeded the company’s prior view of $21.8 million to $22 million. The first quarter of 2010 revenue was positively impacted by the increase in customer demand, as the company added 396 net new customers during the current quarter.
 
Margin
 
Gross margin on a GAAP basis was 80.1%, down from 80.8% in the year-ago quarter. The company fell slightly short of its long-term targeted gross margin range of 83% to 87%. Gross margin declined as the growth in cost of sales, surpassed the growth in revenue. Operating margin on a GAAP basis for the quarter was negative 2.5% versus positive 1.4% in the year-ago quarter. Operating margin on a non-GAAP basis was 13.8% versus 17.9% in the year-ago quarter.
 
Operating Result
 
Net loss on a GAAP basis was $0.6 million or 3 cents per share in the first quarter of 2010 compared to a net loss of $0.5 million or 3 per share in the first quarter of 2009. Including amortization of intangibles, stock based compensation and acquisition related expenses, non-GAAP net income for the quarter was $3 million or 15 cents per share versus net income of $2.9 million or 15 cents per share in the year-ago quarter. Non-GAAP EPS was within the company’s guidance of 14 cents to 15 cents. Excluding stock-based compensation, the Non-GAAP EPS for the quarter was 1 cent.
 
Customers
 
Vocus added 396 net new subscription customers during the first quarter and ended the quarter with 4834 total active subscription customers, compared to 179 net new subscription customers added during the first quarter of 2009. The company signed subscription agreements with new and existing customers, which include names such as, CapeUK, Fado Irish Pubs, Federal Deposit Insurance Corporation, Graco, Healthsouth, Honda UK, Morton’s of Chicago, Nordstrom, Philadelphia Zoo, The Royal College of Surgeons of England; American Breast Cancer Foundation, and bottlerocketapps.com.
 
Balance Sheet & Cash Flow
 
Vocus exited the quarter with $103.5 million in cash and short-term investments versus $103.7 million in the previous quarter. The company generated $8.2 million in cash from operations versus $3.2 million in the previous quarter. Notes payable and capital lease obligation, including the current portion, were $107,000 in the quarter versus $185,000 in the previous quarter.
 
Guidance
 
For the second quarter of 2010, the company expects revenue in the range of $23.9 million to $24.1 million. The non-GAAP EPS expectation falls within the range of 13 cents to 14 cents assuming an estimated non-GAAP weighted average of 20.1 million outstanding shares. Amortization of intangible assets, stock-based compensation and acquisition related expenses are expected to be 22 cents per share. Earnings per share on a GAAP basis are expected in the range of negative 11 cents to negative 10 cents assuming an estimated weighted average of 18 million outstanding shares.
 
For full year 2010, the company expects revenue in the range of $94.5 million to $96 million. The company’s non-GAAP EPS is expected to remain in the range of 60 cents to 62 cents assuming an estimated non-GAAP weighted average of 20.2 million outstanding shares. Amortization of intangible assets, stock-based compensation and acquisition related expenses are expected at 81 cents per share. On a GAAP basis, EPS is expected to remain in the range of negative 27 cents to negative 25 cents assuming an estimated weighted average of 18.1 million outstanding shares.
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