ValueClick Announces Second Quarter 2007 Results

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--ValueClick, Inc. (Nasdaq:VCLK) today reported financial results for the second quarter ended June 30, 2007. Diluted net income per common share of $0.17 met the low end of the Company’s previously-issued guidance. However, revenue and adjusted-EBITDA¹ were below the Company’s previously-issued guidance. The quarter’s results were negatively impacted by the Company’s promotion-based business.

The Company also announced that today it will close its acquisition of MeziMedia, Inc., a leading operator of U.S. comparison shopping websites, and that its board of directors has increased the authorization of the Company’s stock repurchase program to $100 million.

“The promotion-based sector suffered a downturn that began in late May and became more pronounced in June, which negatively impacted our quarter,” said Tom Vadnais, chief executive officer of ValueClick. “We have reassessed our outlook on the promotion-based business and have taken aggressive steps to bring its costs in line with the changes occurring in this part of the industry. We expect to see the full impact of this cost-cutting initiative in the fourth quarter.”

Mr. Vadnais continued, “While promotion-based lead generation results were disappointing, I am pleased by the strong performance in our non-promotional Media, Affiliate Marketing and Technology businesses. Additionally, MeziMedia gives our Comparison Shopping segment scale in the U.S. that complements PriceRunner’s scale in Europe. ValueClick’s scale and breadth in online performance marketing services and technologies differentiate us from our peers, and we remain optimistic about the Company’s prospects for growth and profitability.”

Second Quarter 2007 Results

Revenue for the second quarter of 2007 was $148.7 million, an increase of $18.6 million, or 14 percent, from $130.0 million for the second quarter of 2006. Second quarter 2007 results include three months of operations from Shopping.net, acquired in December 2006.

Income before income taxes for the second quarter of 2007 was $29.4 million compared to $27.2 million for the second quarter of 2006. Adjusted-EBITDA for the second quarter of 2007 was $38.8 million compared to $36.0 million for the second quarter of 2006. Second quarter 2006 income before income taxes and adjusted-EBITDA include net proceeds of $1.9 million related to a favorable legal settlement.

Net income for the second quarter of 2007 was $17.6 million, or $0.17 per diluted common share, compared to $14.4 million, or $0.14 per diluted common share, for the second quarter of 2006.

The consolidated balance sheet as of June 30, 2007 includes $373 million in cash, cash equivalents and marketable securities, $703 million in total stockholders’ equity and no long-term debt.

MeziMedia Acquisition Closed

ValueClick also announced that today it will close its acquisition of MeziMedia, Inc. for approximately $95.5 million in cash, net of cash acquired, at the time of closing and additional cash consideration based on revenue and adjusted-EBITDA performance from the closing date through December 31, 2009.

Total cash consideration, which includes the $95.5 million net cash payment at time of closing, will range between $95.5 million and $347.4 million, depending on whether performance thresholds are met.

Stock Repurchase Program Authorization Increased to $100 Million

ValueClick also announced that its board of directors has increased the authorization of its stock repurchase program.

In September 2001, the Company’s board of directors authorized a stock repurchase program (“the program”) to allow for the repurchase of shares of the Company’s common stock at prevailing market prices in the open market or through unsolicited negotiated transactions. Since the inception of the program and through June 30, 2007, the Company’s board of directors had authorized a total of $245 million for repurchases under the Program and the Company had repurchased a total of 32.6 million shares of its common stock for $179 million, leaving approximately $66 million available under the program. That amount has been increased to $100 million as a result of the board’s new authorization.

Repurchases have been funded from available working capital and all shares have been retired subsequent to their repurchase. There is no guarantee as to the exact number of shares that will be repurchased by the Company and the Company may discontinue repurchases at any time that management or the Company’s board of directors determines additional repurchases are not warranted.

Business Outlook

The following statements are 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 expense may differ from these estimates based on the timing and amount of options granted, the assumptions used in option valuation and other factors. Actual net income tax expense and the net effective income tax rate may differ from these estimates based on tax planning, changes in tax accounting rules and laws, and other factors.

Based on its second quarter results, the close of the MeziMedia acquisition and revised outlook for 2007, ValueClick is updating its fiscal year 2007 guidance ranges, issued previously on May 2, 2007:

Fiscal Year 2007		Previous Guidance		Updated Guidance
Revenue		$655-$665 million		$645-$660 million
Adjusted-EBITDA		$177-$182 million		$168-$172 million
Diluted net income per common share		$0.79-$0.81		$0.74-$0.76

Fiscal year 2007 guidance for diluted net income per common share includes a reduction of $0.11 per diluted common share for stock-based compensation expense, and assumes a 41 percent net effective income tax rate.

Additionally, ValueClick is announcing guidance for the third quarter of 2007:

Third Quarter 2007		Guidance
Revenue		$155-$165 million
Adjusted-EBITDA		$38-$40 million
Diluted net income per common share		$0.16-$0.17

Third quarter 2007 guidance for diluted net income per common share includes a reduction of $0.03 per diluted common share for stock-based compensation expense and assumes a 42 percent net effective income tax rate.

Conference Call Today at 8:30 a.m. ET

James Zarley, executive chairman, Tom Vadnais, chief executive officer, and Sam Paisley, chief administrative officer, will present an overview of the results and other factors affecting ValueClick’s financial performance for the second quarter during a conference call and webcast on July 30, 2007 at 8:30 a.m. ET. Investors can access the call by dialing (877) 704-5385 or (913) 312-1303. The passcode is 8823884.

The live webcast and other information of potential interest to investors will be available to the public in the Investor Relations section of the Company’s website (www.valueclick.com). Replay information will be available for seven days after the call and may be accessed at (888) 203-1112 for domestic callers and (719) 457-0820 for international callers. The passcode is 8823884.

About ValueClick

ValueClick, Inc. (Nasdaq:VCLK) is one of the world’s largest integrated online marketing services companies, offering comprehensive and scalable solutions to deliver cost-effective customer acquisition for advertisers and transparent revenue streams for publishers. ValueClick’s performance-based solutions allow its customers to reach their potential through multiple online marketing channels, including affiliate and search marketing, display advertising, lead generation, ad serving and related technologies, and comparison shopping. ValueClick brands include Commission Junction, ValueClick Media, Mediaplex, and PriceRunner. For more information, please visit www.valueclick.com.

This release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, trends in online advertising spending and estimates of future online performance-based advertising. 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 March 1, 2007; recent quarterly reports on Form 10-Q; and other current reports on Form 8-K. 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.

¹ Adjusted-EBITDA is defined as GAAP (Generally Accepted Accounting Principles) net income before interest, income taxes, depreciation, amortization, and stock-based compensation. 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.

VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
		Three-month Period Ended June 30,
		2007			2006
		(Unaudited)
		(Note 1)
Revenue		$	148,676		$	130,028
Cost of revenue			49,057			42,126
Gross profit			99,619			87,902
Operating expenses:
Sales and marketing (Note 2)			42,194			37,641
General and administrative (Note 2)			17,200			11,377
Technology (Note 2)			8,735			8,267
Amortization of intangible assets			5,470			5,450
Total operating expenses			73,599			62,735
Income from operations			26,020			25,167
Interest income, net			3,375			2,005
Income before income taxes			29,395			27,172
Income tax expense			11,767			12,728
Net income		$	17,628		$	14,444
Basic net income per common share		$	0.18		$	0.14
Weighted-average shares used to compute basic net income per common share			100,038			101,265
Diluted net income per common share		$	0.17		$	0.14
Weighted-average shares used to compute diluted net income per common share			101,623			103,459
Note 1 – The condensed consolidated statements of operations include the results of Shopping.net from the acquisition consummation date (December 1, 2006). Had this transaction been completed as of January 1, 2006, on an unaudited pro-forma basis, revenue would have been $131.2 million, and net income would have been $14.4 million, or $0.14 per diluted common share, for the three-month period ended June 30, 2006. These unaudited pro-forma results are for information purposes only, are not necessarily indicative of what the actual results would have been had this transaction occurred on January 1, 2006, and are not necessarily indicative of future results.
Note 2 – Includes stock-based compensation expense as follows:
		Three-month Period Ended June 30,
		2007			2006
		(Unaudited)
Sales and marketing		$	1,296		$	1,173
General and administrative			2,981			1,397
Technology			643			626
Total stock-based compensation expense		$	4,920		$	3,196

VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
		Six-month Period Ended June 30,
		2007			2006
		(Unaudited)
		(Note 1)
Revenue		$	305,600		$	247,315
Cost of revenue			96,104			81,363
Gross profit			209,496			165,952
Operating expenses:
Sales and marketing (Note 2)			90,646			69,015
General and administrative (Note 2)			34,741			28,208
Technology (Note 2)			17,662			16,313
Amortization of intangible assets			11,241			11,105
Total operating expenses			154,290			124,641
Income from operations			55,206			41,311
Interest income, net			6,314			3,923
Income before income taxes			61,520			45,234
Income tax expense			25,258			21,001
Net income		$	36,262		$	24,233
Basic net income per common share		$	0.36		$	0.24
Weighted-average shares used to compute basic net income per common share			99,801			101,643
Diluted net income per common share		$	0.36		$	0.23
Weighted-average shares used to compute diluted net income per common share			101,331			104,120
Note 1 – The condensed consolidated statements of operations include the results of Shopping.net from the acquisition consummation date (December 1, 2006). Had this transaction been completed as of January 1, 2006, on an unaudited pro-forma basis, revenue would have been $249.2 million, and net income would have been $24.0 million, or $0.23 per diluted common share, for the six-month period ended June 30, 2006. These unaudited pro-forma results are for information purposes only, are not necessarily indicative of what the actual results would have been had this transaction occurred on January 1, 2006, and are not necessarily indicative of future results.
Note 2 – Includes stock-based compensation expense as follows:
		Six-month Period Ended June 30,
		2007			2006
		(Unaudited)
Sales and marketing		$	2,324		$	2,449
General and administrative			5,065			2,763
Technology			1,169			1,304
Total stock-based compensation expense		$	8,558		$	6,516

VALUECLICK, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED-EBITDA (Note 1)
(In thousands)
		Three-month Period Ended June 30,
		2007				2006
		(Unaudited)
Net income		$	17,628			$	14,444
Less interest income, net			(3,375	)			(2,005	)
Plus provision for income taxes			11,767				12,728
Plus amortization of intangible assets			5,470				5,450
Plus depreciation and leasehold amortization			2,343				2,220
Plus stock-based compensation			4,920				3,196
Adjusted-EBITDA		$	38,753			$	36,033
		Six-month Period Ended June 30,
		2007				2006
		(Unaudited)
Net income		$	36,262			$	24,233
Less interest income, net			(6,314	)			(3,923	)
Plus provision for income taxes			25,258				21,001
Plus amortization of intangible assets			11,241				11,105
Plus depreciation and leasehold amortization			4,777				4,469
Plus stock-based compensation			8,558				6,516
Adjusted-EBITDA		$	79,782			$	63,401
Note 1 - "Adjusted-EBITDA" (earnings 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 marketable securities 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. 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 always 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 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 this supplemental metric since, with a reconciliation to GAAP, it may provide greater insight into the Company's financial results.

VALUECLICK, INC.
SEGMENT OPERATING RESULTS
(In thousands)
		Three-month Period Ended June 30,								Six-month Period Ended June 30,
		2007				2006				2007				2006
		(Unaudited)								(Unaudited)
Media:
Revenue		$	100,937			$	93,542			$	209,359			$	172,927
Cost of revenue			39,885				36,240				78,417				69,976
Gross profit			61,052				57,302				130,942				102,951
Operating expenses			37,072				34,416				81,168				61,470
Segment income from operations		$	23,980			$	22,886			$	49,774			$	41,481
Comparison Shopping:
Revenue		$	8,174			$	5,948			$	16,791			$	11,494
Cost of revenue			1,815				460				3,164				753
Gross profit			6,359				5,488				13,627				10,741
Operating expenses			5,780				4,972				12,505				10,345
Segment income from operations		$	579			$	516			$	1,122			$	396
Affiliate Marketing:
Revenue		$	32,252			$	25,160			$	65,050			$	52,022
Cost of revenue			6,705				4,328				12,663				8,439
Gross profit			25,547				20,832				52,387				43,583
Operating expenses			10,183				8,218				20,072				17,081
Segment income from operations		$	15,364			$	12,614			$	32,315			$	26,502
Technology:
Revenue		$	7,768			$	5,728			$	15,238			$	11,503
Cost of revenue			1,434				1,325				2,886				2,650
Gross profit			6,334				4,403				12,352				8,853
Operating expenses			3,410				3,130				6,849				6,212
Segment income from operations		$	2,924			$	1,273			$	5,503			$	2,641
Total segment income from operations		$	42,847			$	37,289			$	88,714			$	71,020
Corporate expenses			(6,437	)			(3,476	)			(13,709	)			(12,088	)
Stock-based compensation			(4,920	)			(3,196	)			(8,558	)			(6,516	)
Amortization of intangible assets			(5,470	)			(5,450	)			(11,241	)			(11,105	)
Consolidated income from operations		$	26,020			$	25,167			$	55,206			$	41,311
Reconciliation of segment revenue to consolidated revenue:
Media		$	100,937			$	93,542			$	209,359			$	172,927
Comparison Shopping			8,174				5,948				16,791				11,494
Affiliate Marketing			32,252				25,160				65,050				52,022
Technology			7,768				5,728				15,238				11,503
Inter-segment eliminations			(455	)	)		(350	)			(838	)			(631	)
Consolidated revenue		$	148,676			$	130,028			$	305,600			$	247,315