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Earnings: ValueClick Q1 Profits Gain 3.2 Percent, Revs Up 12 Percent

Online ad firm ValueClick (NSDQ: VCLK) posted modestly higher Q1 net income of $19.2 million, or $0.19 per diluted common share, a 3.2 percent gain over last year’s $18.6 million, or $0.18 per diluted common share. The company said that its net income came in ahead of previously issued guidance. Q1 revenue was $176 million, an increase of $19.1 million, or 12 percent, from Q107’s $156.9 million . The company’s positive numbers were boosted by activity associated with comparison shopping engine MeziMedia, which it acquired in July 2007. The Q1 numbers could represent something of a comeback for ValueClick, which settled a suit brought by the Federal Trade Commission over deceptive marketing tied to lead generation practices. The company ended up paying $2.9 million to the FTC in February in hopes of putting the issue behind it.

Earnings release | Webcast (4:30 PM EDT)

Update: ValueClick CEO Tom Vadnais said that although pleased with Q1 results, the company will not increase its guidance for Q2, due mostly economic uncertainty. He also sought to convey a broader profile of the Westlake Village, CA. company as more than an “ad network” or “lead gen operator,” citing its display ad, affiliate marketing, comparison shopping and search offerings. More details from the investors conference call after the jump.

Repurchase program: CFO John Pitstick provided an update on ValueClick’s stock repurchase program. In the first quarter of 2008, the Company repurchased 2.3 million shares of its outstanding common stock for $39.3 million. Year-to-date, ValueClick has repurchased approximately 3.2 million shares for $54.7 million. Later during the call, Vadnais added: “We bought those shares for around $17, we felt it was so low, we had to jump in and by it. We also want to pursue our acquisition strategy this year, so we want to balance out the repurchasing program with our goals to do more acquiring.”

Forecast: Pitstick: Revenues for Q2 are expected to range from $166- to 170 million. For the full year, the company forecast $730- to $740 million in revenues.

Lead Gen prospects: During the Q&A Vadnais was asked about the company’s lead gen business. He said he saw a decline in lead gen business starting in Q2, starting with the FTC investigation. “We took an approach of it being flat and it has been down from Q4, though we may be seeing signs it may be picking up again. But we do not expect to see it return to its heights any time soon.” Later during the call, Vadnais spoke to the factors behind the continuing lag for the lead gen industry as whole: “The reason it has touched so many conpanies, is that, despite getting the regulatory greenlight, advertisers still remain cautious. As a result, advertisers, and publishers to some extent, don’t want to spend as much money in that area.”

Ad nets: COO Dave Yovanno said that ValueClick is developing a vertical ad network strategy for later this year, which the company views as a complement its remnant ad net business. “It’s a natural growth strategy over the next few years, though it doesn’t have the volume and scalability of the horizontal ad network business.”

Affiliate marketing performance: After being asked about how ValueClick’s affiliate marketing system stacks up competitively against Google’s (NSDQ: GOOG) Performix, Vadnais said: “If Performix was on the market, we would be interested in buying it, but Google appears to be intent on keeping that property. They have focused on search as part of their affiliate marketing system, whereas we have conduct those activities through numerous other ways. We’re also considerably larger than them.” On affiliate marketing weakness in Europe, “Our European business is challenged and we are running it all their through a new management team. They have their hands full and they had a blow out in display ad revenue and they might have gotten distracted. Comparison engine shopping was also strong, so those activities probably took away from the affiliate business.”

Google/DoubleClick: Asked whether customers were voicing concerns about ValueClick’s competition position versus the recently combined Google/DoubleClick, Vadnais said he’s been hearing very different things from advertisers and publishers. “Our customers are concerned about Google having all their information and control, at least that’s what we’re hearing. We have long-term contracts for our display ad customers, so the competition is not as big an issue.” As for the ad net business, Yovanno noted that Google has been a strong competitor there for some time. “It’s not an all or nothing game in terms of publishers partnering with us.”

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