Vocus Announces Results for Third Quarter 2011 Company Reports 17% Revenue Growth and Record Number of New Customer Additions on Strong Demand from Small Business Market
Beltsville, MD:October 25, 2011 – Vocus, Inc. (NASDAQ: VOCS), a leading provider of cloud-based marketing and PR software, announced today financial results for the third quarter ended September 30, 2011.
“We are thrilled to have added a record number of new customers across a variety of industries and segments,” said Rick Rudman, President and CEO of Vocus, Inc. “While we saw strong demand from organizations of all sizes we are particularly pleased with the continued momentum in our small business market, which presents a significant growth opportunity for Vocus. With the recent launch of our new cloud-based marketing suite we believe we are uniquely positioned to serve this vast market by helping organizations reach and influence buyers across social networks, online and through the media.”
Financial Highlights
•
GAAP revenue for the third quarter of 2011 was $28.9 million, a 17% increase over the comparable period in 2010.
•
GAAP loss from operations for the third quarter of 2011 was $(314,000), compared to $(957,000) for the comparable period in 2010.
•
Non-GAAP income from operations for the third quarter of 2011 was $4.2 million, compared to $3.9 million for the comparable period in 2010.
•
GAAP net loss for the third quarter of 2011 was $(212,000) or $(0.01) per diluted share, compared to $(742,000) or $(0.04) per diluted share for the comparable period in 2010.
•
Non-GAAP net income for the third quarter of 2011 was $4.4 million or $0.21 per diluted share, compared to $4.1 million or $0.21 per diluted share for the comparable period in 2010.
•
Total deferred revenue as of September 30, 2011 was $55.2 million compared to $47.6 million at September 30, 2010.
•
Cash flow from operations for the third quarter of 2011 was $4.8 million, and free cash flow for the third quarter of 2011 was $1.8 million, which includes a $147,000 payment of contingent consideration for business acquisitions in excess of the fair value recorded on the acquisition date.
•
Total cash, cash equivalents and short-term investments as of September 30, 2011 was $106.6 million.
•
Purchased 643,410 shares of common stock during the third quarter 2011 under its stock repurchase program at an aggregate cost of $13.0 million.
This release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, please refer to section “Use of Non-GAAP Financial Measures” and the accompanying table entitled “Reconciliation of Non-GAAP Measures.”
Business Highlights
•
Added 998 net new annual subscription customers during the third quarter of 2011 compared to 579 net new annual subscription customers added during the comparable period in 2010 and ended the quarter with 10,855 total active annual subscription customers.
•
Signed subscription agreements with new and existing customers including American Beverage Association, Aéroport de Bordeaux, Brad Schmett Realtor, Consumer Electronics Association, Dog Ear Publishing, Life Time Fitness, LogMeIn, Michigan Economic Development Corp, Monsanto, Smiles Change Lives, SunGard Systems International, Toothsoap, Trek Bicycle Corporation and YogaSoul Center.
•
Unveiled Vocus Marketing, a new cloud-based marketing suite that helps businesses attract customers on search engines, get followers on Facebook and Twitter and generate buzz and visibility online and in the media.
•
Launched a subscription version of HARO (Help a Reporter Out) which includes customized publicity alerts, journalist profiles and other premium features making it easier for businesses to generate publicity.
•
Announced a $30 million expansion of the stock repurchase program bringing the total authorized amount of common stock available to be repurchased under the program to $60 million.
•
Earned several awards and distinctions including recognition as one of the Top 50 Social Media Blogs of 2011 for BloggingPRWeb.com and inclusion in the Software 500, a ranking of the world’s largest software and service providers.
•
Completed construction and relocated to its new worldwide headquarters, a 93,000 square foot facility located in Beltsville, MD.
Guidance
Vocus is providing, for the first time, guidance for the fourth quarter and revising guidance for the full year 2011 based on information as of October 25, 2011:
•
For the fourth quarter of 2011, revenue is expected to be in the range of approximately $30.1 million to $30.3 million. Non-GAAP EPS is expected to be in the range of $0.21 to $0.22 assuming an estimated non-GAAP weighted average 20.4 million diluted shares outstanding and an estimated non-GAAP effective tax benefit of 3%. Stock-based compensation, amortization of intangible assets, acquisition related expenses and adjustments to the fair value of contingent consideration for earn-outs are expected to be $0.25 per share. GAAP EPS is expected to be in the range of $(0.04) to $(0.03) assuming an estimated weighted average 18.8 million basic and diluted shares outstanding.
•
For the full year of 2011, non-GAAP revenue is expected to be in the range of $114.6 million to $114.8 million. For the full year of 2011, GAAP revenue is expected to be in the range of approximately $114.4 million to $114.6 million. Non-GAAP EPS is expected to be in the range of $0.78 to $0.79 assuming an estimated non-GAAP weighted average 20.8 million diluted shares outstanding and an estimated non-GAAP effective tax benefit of 12%. Stock-based compensation, amortization of intangible assets, acquisition related expenses, the effect of adjustments to deferred revenue related to purchase accounting and adjustments to the fair value of contingent consideration for earn-outs are expected to be $0.96 per share. GAAP EPS is expected to be in the range of $(0.18) to $(0.17) assuming an estimated weighted average 18.8 million basic and diluted shares outstanding. Free cash flow is expected to range from $17.0 million to $18.0 million.
Conference Call Information
Vocus will discuss the financial results and business highlights of the third quarter of 2011 in a conference call at 4:30 p.m. ET, or 1:30 p.m. PT, today. Investors are invited to listen to a live audio webcast of the conference call on the Investor Relations section of the Company’s website athttp://onlinepressroom.net/vocus/ir/webcast/. A replay of the webcast will be available approximately one hour after the conclusion of the call and will remain available for 30 calendar days following the conference call. An audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will be available until November 8, 2011 at 11:59 p.m. ET and can be accessed by dialing (706) 645-9291 or (800) 642-1687 and entering conference number 31801846.
About Vocus, Inc.
Vocus (Nasdaq: VOCS) is a leading provider of cloud-based marketing and PR software that helps organizations of all sizes reach and influence buyers across social networks, online and through the media. Vocus provides a suite of software for social media, content marketing and media relations, creating a comprehensive solution for our customers looking to generate awareness, build their reputation and increase sales in today’s customer-led buying cycle. Vocus is used by more than 40,000 organizations worldwide and is available in seven languages. For more information, please visit www.vocus.com or call (800) 345-5572.
Forward-Looking Statement
This release contains “forward-looking” statements that are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “may,” “will,” “expects,” “projects,” “anticipates,” “estimates,” “believes,” “intends,” “plans,” “should,” “seeks,” and similar expressions. This press release contains forward-looking statements relating to, among other things, Vocus’ expectations and assumptions concerning future financial performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual future results to differ materially from those projected or contemplated in the forward-looking statements. Forward-looking statements may be significantly impacted by certain risks and uncertainties described in Vocus’ filings with the Securities and Exchange Commission.
The risks and uncertainties referred to above include, but are not limited to, risks associated with possible fluctuations in our operating results and rate of growth, our history of operating losses, risks associated with acquisitions, including our ability to successfully integrate acquired businesses, risks associated with our foreign operations, interruptions or delays in our service or our web hosting, our business model, breach of our security measures, the emerging market in which we operate, our relatively limited operating history, our ability to hire, retain, and motivate our employees and manage our growth, competition, our ability to continue to release and gain customer acceptance of new and improved versions of our service, successful customer deployment and utilization of our services, fluctuations in the number of shares outstanding, foreign currency exchange rates and interest rates.
Vocus, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
December 31,
September 30,
2010 *
2011
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
94,918
$
101,428
Short-term investments
5,496
5,207
Accounts receivable, net
20,846
16,774
Deferred income taxes
365
365
Prepaid expenses and other current assets
3,790
2,044
Total current assets
125,415
125,818
Property, equipment and software, net
6,183
18,209
Intangible assets, net
7,534
5,704
Goodwill
26,278
38,306
Deferred income taxes, net of current portion
8,314
10,328
Other assets
156
1,112
Total assets
$
173,880
$
199,477
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses (including contingent consideration of $1,287 and $2,993 at
$
9,456
$
14,899
December 31, 2010 and September 30, 2011, respectively)
Notes payable and capital lease obligations
152
184
Deferred revenue
55,722
54,460
Total current liabilities
65,330
69,543
Notes payable and capital lease obligations, net of current portion
192
895
Other liabilities
2,005
11,380
Deferred income taxes, net of current portion
1,065
980
Deferred revenue, net of current portion
854
730
Total liabilities
69,446
83,528
Stockholders’ equity:
Common stock
204
217
Additional paid-in capital
166,985
197,338
Treasury stock
(28,417
)
(44,525
)
Accumulated other comprehensive loss
(175
)
(93
)
Accumulated deficit
(34,163
)
(36,988
)
Total stockholders’ equity
104,434
115,949
Total liabilities and stockholders’ equity
$
173,880
$
199,477
*In accordance with ASC 805, balances as of December 31, 2010 reflect adjustments made during the measurement period to the final purchase price allocation resulting in reductions to goodwill of $617 and to accrued expenses and other liabilities of $70 and $547, respectively.
Vocus, Inc. and Subsidiaries
Consolidated Statements of Operations
(dollars in thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2010
2011
2010
2011
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
$
24,701
$
28,886
$
70,753
$
84,355
Cost of revenues
4,906
5,367
14,064
16,120
Gross profit
19,795
23,519
56,689
68,235
Operating expenses:
Sales and marketing
12,341
14,181
36,236
42,422
Research and development
1,561
1,773
4,216
5,588
General and administrative
6,230
7,437
17,257
23,162
Amortization of intangible assets
620
442
1,682
1,693
Total operating expenses
20,752
23,833
59,391
72,865
Loss from operations
(957
)
(314
)
(2,702
)
(4,630
)
Other income (expense)
42
5
100
229
Loss before provision (benefit) for income taxes
(915
)
(309
)
(2,602
)
(4,401
)
Provision (benefit) for income taxes
(173
)
(97
)
676
(1,576
)
Net loss
$
(742
)
$
(212
)
$
(3,278
)
$
(2,825
)
Net loss per share:
Basic and diluted
$
(0.04
)
$
(0.01
)
$
(0.18
)
$
(0.15
)
Weighted average shares outstanding used in computing per share amounts:
Basic and diluted
17,836,960
19,289,740
17,950,905
18,745,508
Vocus, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2010
2011
2010
2011
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Cash flows from operating activities:
Net loss
$
(742
)
$
(212
)
$
(3,278
)
$
(2,825
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
1,225
1,226
3,150
3,834
Other non-cash charges, net
3,417
4,077
9,367
10,900
Excess tax benefits from equity awards
—
—
(727
)
—
Payments of contingent consideration for business
—
(147
)
—
(147
)
acquisitions in excess of fair value on acquisition date
Changes in operating assets and liabilities
(1,495
)
(189
)
3,536
13,054
Net cash provided by operating activities
2,405
4,755
12,048
24,816
Cash flows from investing activities:
Business acquisitions, net of cash acquired
—
—
(8,921
)
(6,947
)
Net change in available-for-sale securities
2,961
4,826
13,158
290
Purchases of property, equipment and software, net
(236
)
(2,956
)
(1,393
)
(13,286
)
Software development costs
—
(164
)
(414
)
(230
)
Net cash provided by (used in) investing activities
2,725
1,706
2,430
(20,173
)
Cash flows from financing activities:
Purchases of common stock
(5,191
)
(12,970
)
(13,503
)
(16,108
)
Proceeds from exercises of stock options
280
1,798
386
18,936
Payments of contingent consideration for business acquisitions
—
(590
)
—
(1,289
)
Excess tax benefits from equity awards
—
—
727
—
Net proceeds from (payments on) notes payable and capital
(63
)
346
(260
)
301
lease obligations
Net cash provided by (used in) financing activities
(4,974
)
(11,416
)
(12,650
)
1,840
Effect of exchange rate changes on cash and cash equivalents
357
(394
)
(152
)
27
Net increase (decrease) in cash and cash equivalents
513
(5,349
)
1,676
6,510
Cash and cash equivalents, beginning of period
86,980
106,777
85,817
94,918
Cash and cash equivalents, end of period
$
87,493
$
101,428
$
87,493
$
101,428
Use of Non-GAAP Financial Measures
Vocus provides non-GAAP measures for revenue, income from operations, net income, diluted net income per share and free cash flow as supplemental information.
We define non-GAAP revenue as GAAP revenue adjusted for the impact of the fair value adjustment to deferred revenue related to purchase accounting. Management believes the adjustment is useful to investors as a more accurate measure of our ongoing performance from the acquisitions.
We define non-GAAP income from operations as GAAP income from operations including the impact of non-GAAP revenue and excluding stock-based compensation, amortization of acquired intangible assets, fair value adjustments to contingent consideration and acquisition related expenses.
We define non-GAAP net income as GAAP net income including the impact of non-GAAP revenue and excluding stock-based compensation, amortization of acquired intangible assets, fair value adjustments to contingent consideration including the effect of foreign currencies and acquisition related expenses.
Stock-based compensation included in our GAAP financial results relates to stock option and restricted stock awards. Companies record stock-based compensation by applying varying valuation methodologies and subjective assumptions to different types of equity awards. Amortization of acquired intangible assets included in our GAAP financial results consists of amortization of non-compete agreements, trade names, purchased technology and customer relationships that are not expected to be replaced when fully amortized, as a depreciable tangible asset might. Amortization expense can vary from period to period due to the timing and size of our acquisitions. Our GAAP financial results include adjustments to the fair value of contingent consideration for acquisition earn-outs as of each reporting date from the fair value recorded on the acquisition date. Acquisition related expenses included in our GAAP general and administrative costs consist of legal, accounting and other professional fees incurred during the reporting period in connection with our acquired businesses. Management believes these non-GAAP measures allow management and investors to make meaningful comparisons between our operating results and those of the other companies, as well as provide a consistent comparison of our relative historical financial performance.
We define free cash flow as cash flow from operations less net capital expenditures, capitalized software development costs plus the excess tax benefits from equity awards and payments of contingent consideration for business acquisitions in excess of fair value on acquisition date. Management considers free cash flow to be a liquidity measure which provides useful information to management and investors regarding our ability to generate cash from operations that is available for acquisitions and other investments. Our definition of free cash flow may be different from definitions used by other companies.
Management uses non-GAAP income from operations, non-GAAP net income and free cash flow to evaluate operating performance, determine incentive compensation and to prepare operating budgets and determine the appropriate levels of capital investments. However, management believes that non-GAAP income from operations, non-GAAP net income and free cash flow are subject to material limitations since they may not be indicative of ongoing operating results. Management compensates for the limitations in the use of non-GAAP measures by also utilizing GAAP financial measures and by providing investors with a detailed reconciliation between our GAAP and non-GAAP financial results. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in our SEC filings.
Vocus, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(dollars in thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2010
2011
2010
2011
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Reconciliation of GAAP revenue to non-GAAP revenue:
GAAP revenue
$
24,701
$
28,886
$
70,753
$
84,355
Fair value adjustment to deferred revenue
400
—
800
181
Non-GAAP revenue
$
25,101
$
28,886
$
71,553
$
84,536
Reconciliation of GAAP loss from operations to non-GAAP income from operations:
Loss from operations
$
(957
)
$
(314
)
$
(2,702
)
$
(4,630
)
Stock-based compensation
3,237
3,442
9,419
11,278
Amortization of intangible assets
669
562
1,768
2,055
Fair value adjustment to deferred revenue
400
—
800
181
Fair value adjustments to contingent consideration
481
533
481
1,122
Acquisition related expenses
25
—
1,013
187
Non-GAAP income from operations
$
3,855
$
4,223
$
10,779
$
10,193
Reconciliation of GAAP net loss to non-GAAP net income:
Net loss
$
(742
)
$
(212
)
$
(3,278
)
$
(2,825
)
Stock-based compensation
3,237
3,442
9,419
11,278
Amortization of intangible assets
669
562
1,768
2,055
Fair value adjustment to deferred revenue
400
—
800
181
Fair value adjustments to contingent consideration
481
563
481
1,046
including effects of foreign currency
Acquisition related expenses
25
—
1,013
187
Non-GAAP net income
$
4,070
$
4,355
$
10,203
$
11,922
Non-GAAP diluted net income per share
$
0.21
$
0.21
$
0.52
$
0.57
Non-GAAP diluted weighted average shares used in computing per share amounts
19,716,033
21,087,482
19,805,972
20,861,082
Reconciliation of GAAP diluted weighted average shares outstanding to non-GAAP diluted weighted average shares outstanding:
GAAP diluted weighted average shares outstanding
17,836,960
19,289,740
17,950,905
18,745,508
Treasury stock effect of outstanding equity securities and effect of stock-based compensation
1,879,073
1,797,742
1,855,067
2,115,574
Non-GAAP diluted weighted average shares outstanding
19,716,033
21,087,482
19,805,972
20,861,082
Supplemental information of stock-based compensation included in:
Cost of revenues
$
318
$
359
$
1,248
$
1,217
Sales and marketing
954
908
2,368
3,204
Research and development
363
495
1,154
1,568
General and administrative
1,602
1,680
4,649
5,289
Total stock-based compensation
$
3,237
$
3,442
$
9,419
$
11,278
Reconciliation of cash flow from operations to free cash flow:
Net cash provided by operating activities
$
2,405
$
4,755
$
12,048
$
24,816
Purchases of property, equipment and software, net
(236
)
(2,956
)
(1,393
)
(13,286
)
Software development costs
—
(164
)
(414
)
(230
)
Excess tax benefits from equity awards
—
—
727
—
Payments of contingent consideration for business
—
147
—
147
acquisitions in excess of fair value on acquisition date
Free cash flow
$
2,169
$
1,782
$
10,968
$
11,447
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