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Original Source: FD (FAIR DISCLOSURE) WIRE
. Gary Fuges, ValueClick, VP of IR & Corp. Dev. . Tom Vadnais, ValueClick, CEO . John Pitstick, ValueClick, CFO . Dave Yovanno, ValueClick, COO, U.S. Media . Mark Mahaney, Citigroup, Analyst . Kyle Evans, Stephens, Analyst . Brian Pitz, Banc of America Securities, Analyst
. Ross Sandler, RBC Capital Markets, Analyst . Eric Martinuzzi, Craig-Hallum, Analyst . Dan Salmon, BMO Capital Markets, Analyst
. Townsend Buckle, JPMorgan, Analyst
VCLK reported 2Q08 revenue of $163.8m and gross profit of $112.1m. Co. expects FY08 revenue to be approx. $655-675m, 3Q08 revenue to be approx. $150-156m, FY08 diluted net income per common share to be $0.69-0.71, and 3Q08 diluted net income per common share to be $0.14-0.15.
A. Key Data From Call 1. 2Q08 revenue = $163.8m. 2. 2Q08 gross profit = $112.1m. 3. 2Q08 GM = 68.4%. 4. 2Q08 cash OpEx, excluding stock-based compensation and amortization expense = $71.2m. 5. 2Q08 CapEx = approx. $3.1m. 6. Cash, cash equivalents and marketable securities (As of 06/30/08) = $191m. 7. FY08 revenue guidance = approx. $655-675m. 8. 3Q08 revenue guidance = approx. $150-156m.
9. FY08 diluted net income per common share guidance = $0.69-0.71.
10. 3Q08 diluted net income per common share guidance = $0.14-0.15.
S1. 2Q08 Business Review (T.V.) 1. 2Q08 Results: 1. Exceeded original May 6 guidance for adjusted EBITDA and EPS, but revenue was 1% below the low-end of original guidance. 2. Revenue trends in all of the segments softened over 2H08. 1. Believes this softness will continue throughout the rest of the year. 2. Media: 1. Worldwide display advertising increased 10% YoverY, which is in line with growth rates posted by a number of industry peers.
2. During 2H08 began to see budgets softened. 3. Working with more advertisers, but spending per advertiser is down. 4. While there are a number of new players that have entered the
ad network space, few players have the combined reach, page
views, proprietary technology in addition to the publisher and
advertiser relationships that Co. does. 1. This combination of assets is what drives performance and is a competitive differentiator.
5. In lead generation, Co. is encouraged that the revenue was
flat sequentially in 2Q08. 6. It appears that most of the regulatory reviews by the FTC and various state attorney general offices that have negatively impacted revenue for the entire industry have been completed. 1. The economy has impacted the lead gen channel. 7. Despite the revenue softness disciplined GM and OpEx management resulted in 300 BP sequential increase in media's segment operating margin despite of the flat sequential
revenue that Co. experienced. 3. Affiliated Marketing: 1. Revenue grew 10% in 2Q08, in line with expectations as Commission Junction (CJ) continues to take market share. 2. In June CJ demonstrated that it continues to be the affiliate marketing solution of choice for the largest online US retailers. 1. 53% of 2008 Internet retailer Top 500 using affiliate marketing providers work with CJ, which is more than all other competing vendors combined.
2. CJ has seven of the Top 10 including Newegg, Staples, Apple,
Dell, HP, QVC, and Best Buy. 3. In Europe, the competitive landscape has stabilized and CJ business in Europe grew sequentially and YoverY in 2Q08. 4. Media, affiliate marketing experienced the softening topline as the qtr. progressed. 1. More than 70% of CJ's business is in the retail vertical, driven by consumer spending.
2. Recent industry report shows that e-Commerce YoverY growth
rates have decelerated from 18% in Dec. 2007 to 11% in June 2008.
4. Technology Segment: 1. Had another record qtr. for revenue, profit, and deal signed. 2. Revenue has grown 30% and segment operating income has grown 53% YoverY. 3. Trends seen in 1Q08 continued in 2Q08 and Co. believes it is taking market share in this segment.
5. Comparison Shopping: 1. Started on plan, but declined in 2H08 as with media and affiliate marketing, comparison shopping has been impacted by slowing consumer spending. 2. Consumers are still visiting its size, but are researching before taking advertiser action. 1. The largest drivers of the recent volatility in Co.'s comparison shopping segment had to do with acquired and
managing quality traffic to its owned and operated sites to the expectations of its advertisers. 3. In mid-2Q08, Co. partnered with advertisers to manage to a higher level on overall traffic quality, which impacted volume is expected to continue for the rest of the year. 1. Current outlook still reflects 19% pro forma growth rate for this segment. 2. Maintains high quality sites that provide high value to consumers and advertisers and are engaged with advertisers that demonstrate the value of sites will enhance in traffic quality. 6. Recap: 1. Co. saw a theme of revenue softness in virtually all of the …