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Earnings: ValueClick Net Income Plummets 88 Percent

Online ad firm ValueClick (NSDQ: VCLK) had previously warned investors that Q3 would be rough and its earnings report on Wednesday clearly bore that out: the company’s GAAP net income was $2 million ($0.02 per diluted common share), down 88.1 from $16.8 million ($0.17 per diluted common share) in Q307. Net income was affected by the completion of an offer to purchase up to 4.9 million stock options with exercise prices ranging from $25.66 to $29.73 per share. It was also impacted by tax adjustments. Excluding those two items, Q3 net income per diluted common share would have been $0.15, ValueClick said.

— Revenue was down 2.5 percent to $152.9 million compared to $156.9 million for the third quarter of 2007.

More after the jump

A rough year so far: The Westlake Village, Calif-based company has clearly been having a rough time this year. It began with a $2.9 million settlement with the FTC over deceptive online ad charges, and then was hit by the decline in display advertising. Last week, ValueClick COO David Yovanno departed to head widget distributor Gigya.

More weakness sooner, opportunity later: In a research note, UBS analyst Ben Schachter identified some of ValueClick’s weakness ahead. The wider economic meltdown will continue to put pressure on ValueClick’s display business, Schachter wrote. The display market may recover somewhat by the end next year, but a number of ad networks will likely fold amid the continued downturn, allowing ValueClick the chance to consolidate some of that market share. Longer-term, Schachter says that expansion of larger internet players and their goals of building display platforms may pose a new threats to ValueClick.

What a difference a year makes: Additionally, Motley Fool points out that ValueClick is expecting revenue to slide sequentially from Q3 to Q4, with revenues ranging between $140 million and $145 million — far less than the $167.7 million that industry analysts had been expecting and the $183.1 million generated just last year.

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2 Responses to “Earnings: ValueClick Net Income Plummets 88 Percent”

  1. Hi,

    I wanted to touch base to intro myself & update you on happenings at AdBrite and online advertising. I have taken over Marketing from Paul Levine at AdBrite and I wanted to set up some time for you to speak with our CEO (Iggy Fanlo) regarding trends we are seeing in online advertising and how that is affecting ad networks in today’s economy do you have time to connect this afternoon or tomorrow?

    We are seeing a supply / demand imbalance (7:1 ratio of pubs: advertisers) and a changing dynamic between publishers and advertisers as a result, we have a lot of insight to share on ad networks and shift to performance pricing and the shift of all units incl branded Rich Media to performance metrics. We also have interesting data on content of sites and conversion metrics.

    This week AdBrite launched cost-per-click (CPC) auction for graphical banner ads reacting to the shift in the market to paying for performance. AdBrite advertisers can now pay for graphical banner advertising in the same way they pay for search placements and text ads – paying only when their ad is clicked. AdBrite represents more than 85,000 websites, making it second in size only to Google. AdBrite is the fifth-largest ad network by page views (ComScore, October 2008). AdBrite was recently named the #34 fastest-growing private companies in the United States, and the third-fasted growing advertising company, by Inc Magazine’s annual Inc 5,000 survey.

    Please let me know if you have 15 minutes to speak with our CEO Iggy Fanlo and myself this week.



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