ValueClick Announces Fourth Quarter and Full Year 2004 Results; Report

ValueClick Announces Fourth Quarter and Full Year 2004 Results; Reports Record Revenue and Operating Income and Raises Full Year 2005 Guidance

    Business Editors

    WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Feb. 17, 2005--ValueClick, Inc. (Nasdaq:VCLK) today reported financial results for the fourth quarter and fiscal year ended December 31, 2004. Performance in the fourth quarter of 2004 exceeded the Company's previously issued guidance for revenue, fully diluted net income per share, and net income before interest, taxes, depreciation, and amortization (EBITDA)(1).
    For the quarter ended December 31, 2004, ValueClick reported revenue of $54.4 million, an increase of $24.1 million, or 80 percent, from revenue of $30.3 million for the fourth quarter of 2003. Fourth quarter 2004 results include a full quarter of operations from Commission Junction and Hi-Speed Media, both acquired in December 2003, and a full quarter of operations from Pricerunner.com, acquired in August 2004. Fourth quarter 2003 results include a full quarter of operations from ValueClick Japan, which was sold in March 2004.
    Fourth quarter 2004 income before taxes and minority interest was $15.9 million compared to $5.3 million for the fourth quarter of 2003. Net income for the fourth quarter of 2004 was $13.5 million, or $0.16 per diluted common share, compared to $5.3 million, or $0.07 per diluted common share, for the fourth quarter of 2003. Fourth quarter 2004 EBITDA of $17.5 million was an improvement compared to $6.7 million for the fourth quarter of 2003.
    For the fiscal year ended December 31, 2004, ValueClick reported revenue of $169.2 million, an increase of approximately $76.7 million, or 83 percent, from revenue of $92.5 million for fiscal year 2003. Fiscal year 2004 results include a full year of operations from Commission Junction and Hi-Speed Media, both acquired in December 2003, five months of operations from Pricerunner.com, acquired in August 2004, and three months of operations from ValueClick Japan, which was sold in March 2004. Fiscal 2003 results include seven months of operations of Search123, acquired in May 2003, and one month of operations of Commission Junction, acquired in early December 2003.
    Fiscal year 2004 income before taxes and minority interest was $47.2 million compared to $10.6 million for fiscal year 2003. Net income for fiscal year 2004 was $40.1 million, or $0.48 per diluted common share, compared to $9.8 million, or $0.13 per diluted common share, for fiscal year 2003. EBITDA was $54.0 million for fiscal year 2004 compared to $14.8 million for fiscal year 2003.
    The consolidated balance sheet remained strong with $243 million in cash, cash equivalents and marketable securities, $236 million in working capital and $330 million in total stockholders' equity as of December 31, 2004.
    The foregoing results for 2004 are preliminary and unaudited, and are subject to adjustment based on the results of our auditor's year-end procedures.

    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.
    For the first quarter of 2005, ValueClick anticipates revenue in the range of $48.0 million to $49.0 million, a 32 percent increase at the mid-point from first quarter 2004 revenue. The Company expects diluted net income per share of approximately $0.08 in the first quarter of 2005. EBITDA for the first quarter of 2005 is expected to be in the range of $12.0 million to $12.5 million.
    Based on its fourth quarter results and outlook for 2005, ValueClick is raising its fiscal year 2005 guidance as follows:

Previous Guidance New Guidance --------------------- ---------------- Revenue $210 million $215 million to $220 million Diluted net income per share $0.34 to $0.36 $0.37 to $0.39 EBITDA $52.5 million $54.0 million to $56.0 million
    Full year 2005 guidance excludes any effects of the change in accounting for stock-based compensation, which comes into effect later this year.
    "ValueClick concluded a successful 2004 on a high note, with record revenue and profitability, and year-over-year organic revenue growth of 49 percent in the fourth quarter," said James Zarley, chairman and chief executive officer of ValueClick. "Our increased guidance illustrates our optimistic view of 2005, and we remain focused on expanding the product breadth and geographic footprint of our online marketing offerings to drive growth and profitability in 2005 and beyond."

    Conference Call Today

    James Zarley, chairman and chief executive officer, and Sam Paisley, chief financial officer, will present an overview of the results and other factors affecting financial performance for the fourth quarter during a webcast on February 17, 2005 at 1:30PM PT. Investors and analysts may obtain dial-in information through StreetEvents (www.streetevents.com).
    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). Please allow 15 minutes prior to the call to download and install any necessary audio software. Replay information will be available for seven days after the call and may be accessed at (888) 203-1112 for domestic and (719) 457-0820 for international callers. The passcode is 4553602.
    Webcast participants are encouraged to submit questions on financial results and business operations to management prior to the call. Please call (818) 575-4677 to leave your question on our Investor Relations voice message system. Questions will be addressed on the live call and should be received no later than 1:30PM PT on Thursday, February 17, 2005.

    About ValueClick

    ValueClick, Inc. (Nasdaq:VCLK) is the single-source provider of media, technology and related services that enable advertisers, agencies and publishers to reach consumers in all major online marketing channels, through our three business units:

    -- ValueClick Media (http://media.valueclick.com) provides brand
    advertising and direct marketing solutions for advertisers,
    agencies and publishers. Through its ValueClick Brand and
    ValueClick Direct groups, ValueClick Media offers marketers a
    wide range of distribution methods, including web-based
    advertising, co-registration, pay-per-click search and a
    variety of e-mail marketing options.

    ValueClick Media also includes Pricerunner.com
    (www.pricerunner.com), a leading provider of online comparison
    shopping services.

--	Commission Junction (www.cj.com) provides advanced performance marketing solutions that help marketers increase online leads and sales. By facilitating strategic relationships between advertisers and publishers, Commission Junction leverages its proven expertise in affiliate marketing and search marketing to drive measurable results for its clients.
--	Mediaplex (www.mediaplex.com) provides technology and services that help advertisers, agencies and Web site publishers manage their online advertising and permission-based email campaigns. Additionally, Mediaplex provides the AdVault suite of software and services that help advertising agencies and other companies operate their businesses more efficiently, through effective agency management, media management, and content management solutions.

    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 its Annual Report on Form 10-K filed on March 15, 2004, recent quarterly reports on Form 10-Q and current reports on Form 8-K. Other factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include, but are not limited to, the risk that market demand for online advertising, and performance-based online advertising in particular, will not grow as rapidly as predicted. 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) EBITDA is defined as GAAP (Generally Accepted Accounting Principles) net income before interest income, taxes, depreciation, and amortization. Please see the attached schedule for a reconciliation of EBITDA to GAAP net income and a discussion of why the Company believes EBITDA is a useful financial measure to investors and how it is used by management.

VALUECLICK, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)

Three-month Period Ended December 31, ----------------- 2004 2003 -------- -------- (Note 1) (Unaudited)

Revenue $54,371 $30,273 Cost of revenue 15,011 10,044 -------- -------- Gross profit 39,360 20,229 Operating expenses: Sales and marketing 11,597 6,251 General and administrative 7,624 5,841 Product development 3,984 2,925 Stock-based compensation 203 86 Amortization of intangible assets 1,276 515 -------- -------- Total operating expenses 24,684 15,618 -------- -------- Income from operations 14,676 4,611 Interest and other income, net 1,188 675 -------- -------- Income before taxes and minority interest 15,864 5,286 Provision for income taxes 2,346 16 -------- -------- Income before minority interest 13,518 5,270 Minority share of loss of consolidated subsidiary -- 76 -------- -------- Net income $13,518 $5,346 ======== ========

Basic net income per share $0.17 $0.07 ======== ========

Weighted-average shares used in computing basic net income per share 81,578 75,629 ======== ========

Diluted net income per share $0.16 $0.07 ======== ========

Weighted-average shares used in computing diluted net income per share 84,492 80,295 ======== ========

Note 1 - The condensed consolidated statements of operations include the results of Commission Junction, Hi-Speed Media and Pricerunner.com from the beginning of the accounting period nearest to their acquisition dates (December 7, 2003, December 17, 2003 and August 6, 2004, respectively) in accordance with the purchase method of accounting. The three-month period ended December 31, 2003 includes the results of ValueClick Japan, which was sold on March 26, 2004. Had these transactions been completed as of January 1, 2003, on an unaudited pro-forma GAAP basis revenues would have been $36.5 million and net income would have been $5.8 million, or $0.07 per fully diluted share, for the three-month period ended December 31, 2003.

These unaudited pro-forma GAAP results are for information purposes only, are not necessarily indicative of what the actual results would have been had the acquisitions occurred on January 1, 2003, and are not necessarily indicative of future results.

VALUECLICK, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)

Year Ended December 31, -------------------- 2004 (Unaudited) 2003 ----------- -------- (Note 1)

Revenue $169,178 $92,516 Cost of revenue 50,762 32,024 ----------- -------- Gross profit 118,416 60,492 Operating expenses: Sales and marketing 36,000 21,162 General and administrative 27,168 19,699 Product development 15,891 10,504 Stock-based compensation 739 352 Amortization of intangible assets 4,111 1,570 Restructuring reserve reversal (1,003) -- ----------- -------- Total operating expenses 82,906 53,287 ----------- -------- Income from operations 35,509 7,205 Interest and other income, net 3,728 3,364 Gain on sale of equity interest in Japan subsidiary 8,007 -- ----------- -------- Income before taxes and minority interest 47,245 10,569 Provision for income taxes 7,277 830 ----------- -------- Income before minority interest 39,968 9,739 Minority share of loss of consolidated subsidiary 130 84 ----------- -------- Net income $40,098 $9,823 =========== ========

Basic net income per share $0.50 $0.13 =========== ========

Weighted-average shares used in computing basic net income per share 80,063 74,300 =========== ========

Diluted net income per share $0.48 $0.13 =========== ========

Weighted-average shares used in computing diluted net income per share 83,303 78,436 =========== ========

Note 1 - The condensed consolidated statements of operations include the results of Search123, Commission Junction, Hi-Speed Media and Pricerunner.com from the beginning of the accounting period nearest to their acquisition dates (May 30, 2003, December 7, 2003, December 17, 2003 and August 6, 2004, respectively) in accordance with the purchase method of accounting. The condensed consolidated statements of operations also include the results of ValueClick Japan, which was sold on March 26, 2004. Had these transactions been completed as of January 1, 2003, on an unaudited pro-forma GAAP basis revenues would have been $171.9 million and $120.8 million, and net income would have been $32.0 million, or $0.38 per fully diluted share, and $9.1 million, or $0.12 per fully diluted share, for the twelve-month periods ended December 31, 2004 and 2003, respectively.

These unaudited pro-forma GAAP results are for information purposes only, are not necessarily indicative of what the actual results would have been had the acquisitions occurred on January 1, 2003, and are not necessarily indicative of future results.

VALUECLICK, INC. RECONCILIATION OF NET INCOME TO EBITDA (Note 1) (Unaudited, in thousands)

Three-month Period Ended December 31, ------------------ 2004 2003 -------- -------

Net Income $13,518 $5,346 Less interest income, net (1,125) (675) Plus provision for income taxes 2,346 16 Plus amortization of intangible assets 1,276 515 Plus depreciation and leasehold amortization 1,514 1,452 -------- ------- EBITDA $17,529 $6,654 ======== =======

Year Ended December 31, ----------------- 2004 2003 -------- -------- (Note 2)

Net Income $40,098 $9,823 Less interest income, net (3,665) (3,364) Plus provision for income taxes 7,277 830 Plus amortization of intangible assets 4,111 1,570 Plus depreciation and leasehold amortization 6,188 5,961 -------- -------- EBITDA $54,009 $14,820 ======== ========

Note 1- Earnings before interest income, taxes, depreciation, and amortization ("EBITDA") included in this press release is a non-GAAP (Generally Accepted Accounting Principles) financial measure which represents net income excluding the effects of interest, income taxes, depreciation, and amortization. EBITDA, as defined above, may not be similar to EBITDA measures used by other companies and is not a measurement under generally accepted accounting principles.

We believe that EBITDA provides useful information to investors about the Company's performance because it eliminates the effects of period-to-period changes in costs associated with capital investments and income from interest on the Company's cash and marketable securities that are not directly attributable to the underlying performance of the Company's business operations. Management uses EBITDA in evaluating the overall performance of the Company's business operations.

Note 2 - Excluding the non-recurring gain on the sale of the Company's interest in ValueClick Japan in March 2004, EBITDA would have been $46,002 for the year ended December 31, 2004.

--30--SW/la*

CONTACT: ValueClick, Inc. Gary J. Fuges, 818-575-4677

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: ADVERTISING/MARKETING INTERNET E-COMMERCE EARNINGS CONFERENCE CALLS SOURCE: ValueClick, Inc.

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