Vocus Announces Results for Second Quarter 2010

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A leading provider of on-demand software for public relations management. Follow us on Twitter: @Vocus

Lanham, MD (PRWEB) July 27, 2010

Vocus, Inc. (NASDAQ: VOCS), a leading provider of on-demand software for public relations management, announced today financial results for the second quarter ended June 30, 2010.

“I’m very pleased to report solid results for the quarter which includes double-digit revenue growth and strong operating income and net new customer additions,” said Rick Rudman, President and CEO of Vocus, Inc. “Vocus is continuing to drive growth and innovation in the PR software market despite challenged PR budgets and our accomplishments this quarter certainly underscore that success. The launch of our new social media software and our expansion into the Chinese and French marketplaces through our recently completed acquisitions will contribute to future growth for Vocus.”

Financial Highlights

Income Statement

•     Non-GAAP revenues for the second quarter of 2010 were $24.2 million, a 15% increase over the same period last year. Non-GAAP revenue includes the revenue excluded from the GAAP results due to purchase accounting adjustments, which reduced deferred revenue to its fair value as of the date of acquisition. See Other Supplemental Information for further discussion of non-GAAP measures;
•     GAAP revenues for the second quarter of 2010 were $23.8 million, a 13% increase over the same period last year;
•     Non-GAAP income from operations for the second quarter of 2010 was $3.9 million compared to $4.0 million for the same period last year. Non-GAAP net income for the second quarter of 2010 was $3.1 million, or $0.16 per diluted share, compared to $3.5 million, or $0.18 per diluted share, for the same period last year;
•     GAAP loss from operations for the second quarter of 2010 was $(1.2) million, compared to GAAP income from operations of $228,000 for the same period last year. GAAP net loss for the second quarter of 2010 was $(2.0) million, or $(0.11) per diluted share, compared to $(343,000), or $(0.02) per diluted share, for the same period last year.

Balance Sheet and Other Financial Information

•     Total deferred revenue recorded in connection with the acquisitions was $1.8 million. Total deferred revenue of the acquired companies at the date of acquisition was $3.1 million. This difference in deferred revenue consists of a $1.3 million adjustment to reflect the reduction to the fair value of the acquired deferred revenue due to purchase accounting;
•     Total deferred revenue as of June 30, 2010 was $47.3 million which does not include $792,000 of the unamortized non-GAAP adjustment to deferred revenue;
•     Cash flow from operations for the six months ended June 30, 2010 was $9.5 million;
•     Free cash flow for the six months ended June 30, 2010 was $8.6 million. See Other Supplemental Information for further discussion of non-GAAP measures;
•     Cash paid for acquisitions in the quarter, net of cash acquired, was $8.9 million.

Recent Business Highlights

•     Added 435 net new subscription customers during the quarter compared to 203 net new subscription customers added during the same period last year and ended the quarter with 7,173 total active subscription customers;
•     Reached a milestone by ending the quarter with over 1,000 subscription customers who use the Vocus Small Business Edition to help raise the image and profile of their businesses;
•     Signed subscription agreements with new and existing customers including A Couple of Chicks eMarketing, Automobile Citroën, British Liver Trust, Chase Card Services, Duke University, Global Industry Analysts, Lawinfo.com, Dr. Marc Moramarco, McGraw Hill, NYSE Group, Office Européen des Brevets, PGA Tour, Tequila.net and Universal Studios Home Entertainment;
•     Launched a new social media module which monitors major social media sites including public comments and group discussions on Facebook, LinkedIn, Twitter, YouTube and social bookmarking sites such as Digg and Delicious;
•     Entered the Chinese and French PR software markets and expanded the Vocus media database through the acquisitions of BDL Media Ltd and Data Presse SAS;
•     Acquired Help A Reporter Out (HARO), an online community that brings over 30,000 reporters and bloggers together with over 100,000 credible story sources, including entrepreneurs, business owners and PR professionals;
•     Launched a new version of the PRWeb website making it easier for visitors to navigate and purchase PRWeb services;
•     Held our 9th Annual Users Conference in Washington D.C., which was attended by industry experts and a record number of PR professionals.

Guidance

Vocus is providing, for the first time, guidance for the third quarter and revising guidance for the full year 2010 based on information as of July 27, 2010:

•     For the third quarter of 2010, non-GAAP revenue is expected to be in the range of approximately $24.4 million to $24.6 million. For the third quarter of 2010, GAAP revenue is expected to be in the range of approximately $24.0 million to $24.2 million. Non-GAAP EPS is expected to be in the range of $0.15 to $0.16 assuming an estimated non-GAAP weighted average 19.9 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 11%. Stock-based compensation, amortization of intangible assets, acquisition related expenses and the effect of adjustments to deferred revenue and contingent consideration related to purchase accounting are expected to be $0.22 per share. GAAP EPS is expected to be in the range of $(0.07) to $(0.06) assuming an estimated weighted average 18.0 million basic and diluted shares outstanding;
•     For the full year of 2010, non-GAAP revenue is expected to be in the range of $96.4 million to $97.1 million. For the full year of 2010, GAAP revenue is expected to be in the range of approximately $95.3 million to $96.0 million. Non-GAAP EPS is expected to be in the range of $0.62 to $0.64 assuming an estimated non-GAAP weighted average 20.0 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 10%. Stock-based compensation, amortization of intangible assets, acquisition related expenses and the effect of adjustments to deferred revenue and contingent consideration related to purchase accounting are expected to be $0.88 per share. GAAP EPS is expected to be in the range of $(0.26) to $(0.24) assuming an estimated weighted average 18.1 million basic and diluted shares outstanding. Free cash flow is expected to range from $12.3 million to $13.3 million.

Conference Call Information
Vocus will discuss the financial results and business highlights of the second quarter 2010 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 web cast of the conference call on the Investor Relations section of the Company’s website at http://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 August 3, 2010 at 11:59 p.m. ET and can be accessed by dialing (888) 203-1112 or (719) 457-0820 and entering conference number 2637146.

About Vocus, Inc.

Vocus, Inc. (NASDAQ: VOCS) is a leading provider of on-demand software for public relations management. Our web-based software suite helps organizations of all sizes to fundamentally change the way they communicate with both the media and the public, optimizing their public relations and increasing their ability to measure its impact. Our on-demand software addresses the critical functions of public relations including media relations, news distribution and news monitoring. We deliver our solutions over the Internet using a secure, scalable application and system architecture, which allows our customers to eliminate expensive up-front hardware and software costs and to quickly deploy and adopt our on-demand software. Vocus is used by more than 7,100 organizations worldwide and is available in seven languages. Vocus is based in Lanham, MD with offices in North America, Europe and Asia. For more information, please visit http://www.vocus.com or call (800) 345-5572.

This release contains "forward-looking" statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These are statements that 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, 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, our ability to integrate acquisitions, foreign currency exchange rates and interest rates.

Other Supplemental Information

We define non-GAAP income from operations as income from operations excluding stock-based compensation, amortization of acquired intangible assets, acquisition related expenses and the effect of adjustments to acquired deferred revenue and contingent consideration for earn-outs related to purchase accounting. We define non-GAAP net income as net income excluding stock-based compensation, amortization of acquired intangible assets, acquisition related expenses and the effect of adjustments to deferred revenue related to purchase accounting. Amortization of intangible assets recorded in connection with our acquisitions consist primarily 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. Companies record stock-based compensation by applying varying valuation methodologies and subjective assumptions to different types of equity awards. Acquisition related expenses consist of costs incurred during the reporting period in connection with our acquired businesses. Adjustments to deferred revenue reflect the reductions in the fair value of the acquired company’s deferred revenue due to purchase accounting. Adjustments to contingent consideration reflect the changes in fair value of the estimated contingent consideration as of the acquisition date to the estimated contingent consideration recorded at each reporting date. Management uses non-GAAP income from operations and non-GAAP net income to evaluate operating performance, to determine incentive compensation and to prepare operating budgets and determine the appropriate levels of capital investments. Management believes the exclusion of stock-based compensation, amortization of acquired intangible assets, acquisition related expenses and the effects of adjustments to deferred revenue and contingent consideration related to purchase accounting allows management and investors to make meaningful comparisons between our operating results and those of other companies, as well as providing a consistent comparison of our relative historical financial performance. However, management believes that non-GAAP income from operations and non-GAAP net income are subject to material limitations since they may not be indicative of ongoing operating results.

We define free cash flow as cash flow from operations less net capital expenditures and capitalized software development costs plus the excess tax benefits from equity awards. 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. Management also uses free cash flow as a measure to evaluate performance and determine incentive compensation. Our definition of free cash flow may be different from definitions used by other companies.

Management compensates for the limitations in the use of non-GAAP financial 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.

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