Vocus Announces Results for Third Quarter 2010

Lanham, MD (PRWEB) October 26, 2010

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

“I am very pleased with the results for the third quarter and the continued acceleration in our business as evidenced by our strong top-line growth and record net adds,” said Rick Rudman, President and CEO of Vocus, Inc. “Non-GAAP revenue grew 19% for the quarter which represents our fifth consecutive quarter of accelerating growth. While we are very pleased with our financial results, perhaps more exciting is the demand we are seeing for our recently launched social media software which we believe underscores a fundamental shift in PR and marketing towards a more integrated approach focused on earned visibility and social networks. This is positioning us well for continued growth.”

Financial Highlights

Income Statement

•     Non-GAAP revenue for the third quarter of 2010 was $25.1 million, a 19% increase over the same period last year. See Other Supplemental Information for further discussion of non-GAAP measures;
•     GAAP revenue for the third quarter of 2010 was $24.7 million, a 17% increase over the same period last year;
•     Non-GAAP income from operations for the third quarter of 2010 was $3.9 million compared to $4.0 million for the same period last year. Non-GAAP net income for the third quarter of 2010 was $4.1 million, or $0.21 per diluted share, compared to $3.5 million, or $0.17 per diluted share, for the same period last year;
•     GAAP loss from operations for the third quarter of 2010 was $(957,000), compared to GAAP income from operations of $160,000 for the same period last year. GAAP net loss for the third quarter of 2010 was $(742,000), or $(0.04) per diluted share, compared to $(382,000), or $(0.02) per diluted share, for the same period last year.

Balance Sheet and Other Financial Information

•     Total deferred revenue as of September 30, 2010 was $47.6 million which does not include $475,000 of the unamortized non-GAAP acquisition related adjustment to deferred revenue;
•     Cash from operations for the nine months ended September 30, 2010 was $12.0 million;
•     Free cash flow for the nine months ended September 30, 2010 was $11.0 million. See Other Supplemental Information for further discussion of non-GAAP measures;
•     Purchased 354,487 shares of common stock during the third quarter under the stock repurchase program at an aggregate cost of $5.2 million.

Recent Business Highlights

•     Added a record 579 net new subscription customers during the quarter compared to 240 net new subscription customers added during the same period last year and ended the quarter with 7,752 total active subscription customers;
•     Signed subscription agreements with new and existing customers including City of Gatlinburg, Clif Bar & Company, Dow Corning, Envergure, Groupe Volkswagen France, Hormel Foods, Make-A-Wish Foundation of America, MrsPinkelmeyer.com, PowerScout Sports, SunTrust Banks, U-Pack Moving & MoveBuilder, U.S. Department of Energy and World Travel and Tourism Council;
•     Announced a partnership with LegalZoom to provide companies filing for incorporation using LegalZoom.com with a PRWeb news release in order to optimize search results and generate internet visibility;
•     Expanded the distribution and visibility of PRWeb in the financial community through its partnership with FinancialContent by providing PRWeb’s premium news releases to its financial network of publishers and media outlets;
•     Earned several corporate awards and distinctions including recognition by Deloitte as one of North America’s 500 fastest growing technology companies and inclusion in the Software 500, a ranking of the world’s largest software companies.

Guidance

Vocus is providing, for the first time, guidance for the fourth quarter and revising guidance for the full year 2010 based on information as of October 26, 2010:

•     For the fourth quarter of 2010, non-GAAP revenue is expected to be in the range of approximately $25.9 million to $26.1 million. For the fourth quarter of 2010, GAAP revenue is expected to be in the range of approximately $25.6 million to $25.8 million. Non-GAAP EPS is expected to be in the range of $0.17 to $0.18 assuming an estimated non-GAAP weighted average 19.8 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 0%. 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 $0.22 per share. GAAP EPS is expected to be in the range of $(0.05) to $(0.04) assuming an estimated weighted average 17.8 million basic and diluted shares outstanding;
•     For the full year of 2010, non-GAAP revenue is expected to be in the range of $97.5 million to $97.7 million. For the full year of 2010, GAAP revenue is expected to be in the range of approximately $96.4 million to $96.6 million. Non-GAAP EPS is expected to be in the range of $0.69 to $0.70 assuming an estimated non-GAAP weighted average 19.8 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 5%. 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 $0.90 per share. GAAP EPS is expected to be in the range of $(0.21) to $(0.20) assuming an estimated weighted average 17.9 million basic and diluted shares outstanding. Free cash flow is expected to range from $12.5 million to $13.5 million.

Conference Call Information
Vocus will discuss the financial results and business highlights of the third 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 November 2, 2010 at 11:59 p.m. ET and can be accessed by dialing (888) 203-1112 or (719) 457-0820 and entering conference number 4278790.

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 7,700 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.

 

 

Vocus, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)			December 31, 2009			September 30, 2010
Assets						(unaudited)
Current assets:
Cash and cash equivalents		$	85,817		$	87,493
Short-term investments			17,851			5,683
Accounts receivable, net			18,245			13,564
Current portion of deferred income taxes			685			685
Other current assets			1,753			2,831
Total current assets			124,351			110,256
Long-term investments			1,001			-
Property, equipment and software, net			4,666			5,609
Intangible assets, net			3,980			7,811
Goodwill			17,090			26,401
Deferred income taxes, net of current portion			7,459			7,676
Other assets			693			202
Total assets		$	159,240		$	157,955
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses		$	6,771		$	9,584
Current portion of notes payable and capital lease obligations			197			183
Current portion of deferred revenue			46,789			47,076
Total current liabilities			53,757			56,843
Notes payable and capital lease obligations, net of current portion			48			227
Other liabilities			93			2,011
Deferred income taxes, net of current portion			-			946
Deferred revenue, net of current portion			961			517
Total liabilities			54,859			60,544
Commitments and contingencies
Stockholders' equity:
Common stock			199			201
Additional paid-in capital			149,279			159,373
Treasury stock			(14,914)			(28,417)
Accumulated other comprehensive income			305			20
Accumulated deficit			(30,488)			(33,766)
Total stockholders' equity			104,381			97,411
Total liabilities and stockholders' equity		$	159,240		$	157,955

 

Vocus, Inc. and Subsidiaries
Consolidated Statements of Operations
(dollars in thousands, except per share data)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2009		2010		2009		2010
		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues	$	21,042	$	24,701	$	62,532	$	70,753
Cost of revenues		3,861		4,906		11,615		14,064
Gross profit		17,181		19,795		50,917		56,689
Operating expenses:
Sales and marketing		10,189		12,341		29,895		36,236
Research and development		1,150		1,561		3,445		4,216
General and administrative		5,206		6,230		15,437		17,257
Amortization of intangible assets		476		620		1,456		1,682
Total operating expenses		17,021		20,752		50,233		59,391
Income (loss) from operations		160		(957)		684		(2,702)
Other income (expense):
Interest and other income		52		52		382		130
Interest expense		(10)		(10)		(23)		(30)
Income (loss) before provision (benefit) for income taxes		202		(915)		1,043		(2,602)
Provision (benefit) for income taxes		584		(173)		2,246		676
Net loss	$	(382)	$	(742)	$	(1,203)	$	(3,278)
Net loss per share:
Basic	$	(0.02)	$	(0.04)	$	(0.07)	$	(0.18)
Diluted	$	(0.02)	$	(0.04)	$	(0.07)	$	(0.18)
Weighted average shares outstanding used in computing per share amounts:
Basic		18,092,595		17,836,960		18,021,737		17,950,905
Diluted		18,092,595		17,836,960		18,021,737		17,950,905

 

Vocus, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
		Three Months Ended    September 30,				Nine Months Ended September 30,
		2009		2010		2009		2010
		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Cash flows from operating activities:
Net loss	$	(382)	$	(742)	$	(1,203)	$	(3,278)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		878		1,225		2,697		3,150
Excess tax benefits from equity awards		(1,941)		-		(4,449)		(727)
Other non-cash charges, net		2,051		3,417		8,224		9,367
Changes in operating assets and liabilities		2,049		(1,495)		7,600		3,536
Net cash provided by operating activities		2,655		2,405		12,869		12,048
Cash flows from investing activities:
Business acquisitions, net of cash acquired		-		-		-		(8,921)
Net change in investments		(904)		2,961		3,144		13,158
Purchases of property, equipment and software, net		(417)		(236)		(1,143)		(1,393)
Software development costs		(51)		-		(142)		(414)
Net cash provided by (used in) investing activities		(1,372)		2,725		1,859		2,430
Cash flows from financing activities:
Purchases of common stock		(10)		(5,191)		(4,131)		(13,503)
Proceeds from exercise of stock options		76		280		1,849		386
Excess tax benefits from equity awards		1,941		-		4,449		727
Payments on notes payable and capital lease obligations		(23)		(63)		(202)		(260)
Net cash provided by (used in) financing activities		1,984		(4,974)		1,965		(12,650)
Effect of exchange rate changes on cash and cash equivalents		(39)		357		(38)		(152)
Net increase in cash and cash equivalents		3,228		513		16,655		1,676
Cash and cash equivalents, beginning of period		78,856		86,980		65,429		85,817
Cash and cash equivalents, end of period	$	82,084	$	87,493	$	82,084	$	87,493

 

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, the effect of adjustments to deferred revenue related to purchase accounting and adjustments to the fair value of contingent consideration for earn-outs. We define non-GAAP net income as net income excluding stock-based compensation, amortization of acquired 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. 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 as of each reporting date from the fair value of the contingent consideration recorded on the acquisition 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 also believes the exclusion of stock-based compensation, amortization of acquired 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 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.

 

Vocus, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(dollars in thousands, except per share data)
		Three Months Ended    September 30,				Nine Months ended September 30,
		2009		2010		2009		2010
		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Reconciliation of GAAP revenues to non-GAAP revenues:
GAAP revenues	$	21,042	$	24,701	$	62,532	$	70,753
Effect of acquisition related adjustments to deferred revenue		-		400		-		800
Non-GAAP revenues	$	21,042	$	25,101	$	62,532	$	71,553
Reconciliation of GAAP income (loss) from operations to non-GAAP income from operations:
Income (loss) from operations	$	160	$	(957)	$	684	$	(2,702)
Effect of acquisition related adjustments to deferred revenue		-		400		-		800
Stock-based compensation		3,357		3,237		9,546		9,419
Amortization of intangible assets		476		669		1,456		1,768
Fair value adjustments to contingent consideration		-		481		-		481
Acquisition related expenses		-		25		-		1,013
Non-GAAP income from operations	$	3,993	$	3,855	$	11,686	$	10,779
Reconciliation of GAAP net loss to non-GAAP net income:
Net loss	$	(382)	$	(742)	$	(1,203)	$	(3,278)
Effect of acquisition related adjustments to deferred revenue		-		400		-		800
Stock-based compensation		3,357		3,237		9,546		9,419
Amortization of intangible assets		476		669		1,456		1,768
Fair value adjustments to contingent consideration		-		481		-		481
Acquisition related expenses		-		25		-		1,013
Non-GAAP net income	$	3,451	$	4,070	$	9,799	$	10,203
Non-GAAP net income per share:
Non-GAAP diluted	$	0.17	$	0.21	$	0.50	$	0.52
Weighted average shares outstanding used in computing per share amounts:
Non-GAAP diluted		19,771,096		19,716,033		19,567,328		19,805,972
Reconciliation of GAAP diluted weighted average shares outstanding to non-GAAP diluted weighted average shares outstanding:
Diluted weighted average shares outstanding		18,092,595		17,836,960		18,021,737		17,950,905
Treasury stock effect of outstanding equity securities and effect of stock-based compensation		1,678,501		1,879,073		1,545,591		1,855,067
Non-GAAP diluted weighted average shares outstanding		19,771,096		19,716,033		19,567,328		19,805,972
Supplemental information of stock-based compensation included in:
Cost of revenues	$	398	$	318	$	1,141	$	1,248
Sales and marketing		1,025		954		2,874		2,368
Research and development		256		363		727		1,154
General and administrative		1,678		1,602		4,804		4,649
Total stock-based compensation	$	3,357	$	3,237	$	9,546	$	9,419
Reconciliation of cash flow from operations to free cash flow:
Net cash provided by operating activities	$	2,655	$	2,405	$	12,869	$	12,048
Purchases of property, equipment and software, net		(417)		(236)		(1,143)		(1,393)
Software development costs		(51)		-		(142)		(414)
Excess tax benefits from equity awards		1,941		-		4,449		727
Free cash flow	$	4,128	$	2,169	$	16,033	$	10,968

 

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