Vocus Announces Results for Second Quarter 2011

Company Reports 20% Revenue Growth, Better Than Expected Earnings and Cash Flow, and Increasing Demand for Social Media Software

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With our foundation in PR and online content distribution and our recent expansion into social marketing, Vocus is uniquely positioned to help organizations reach and influence buyers across social networks, online and through the media

Lanham, MD. (PRWEB) July 26, 2011

Vocus, Inc. (NASDAQ: VOCS), a leading provider of cloud-based marketing and PR software, announced today financial results for the second quarter ended June 30, 2011.

“I am very pleased to report another strong quarter for 2011 highlighted by better than expected revenue, earnings and cash flow,” said Rick Rudman, President and CEO of Vocus, Inc.  “Overall, we saw very healthy demand across all geographies and areas of our business with particularly strong demand for our social media products.  With our foundation in PR and online content distribution and our recent expansion into social marketing, Vocus is uniquely positioned to help organizations reach and influence buyers across social networks, online and through the media.” 

Financial Highlights

  • GAAP revenue for the second quarter of 2011 was $28.5 million, a 20% increase over the comparable period in 2010.
  • GAAP loss from operations for each of the second quarters of 2011 and 2010 was $(1.2) million.
  • Non-GAAP income from operations for the second quarter of 2011 was $3.7 million, compared to $3.9 million for the comparable period in 2010.
  • GAAP net loss for the second quarter of 2011 was $(755,000) or $(0.04) per diluted share, compared to $(2.0) million or $(0.11) per diluted share for the comparable period in 2010.
  • Non-GAAP net income for the second quarter of 2011 was $4.1 million or $0.20 per diluted share, compared to $3.1 million or $0.16 per diluted share for the comparable period in 2010.
  • Total deferred revenue as of June 30, 2011 was $55.9 million compared to $47.3 million at June 30, 2010.
  • Cash flow from operations for the second quarter of 2011 was $6.2 million, and free cash flow for the second quarter of 2011 was $1.8 million.
  • Total cash, cash equivalents and short-term investments as of June 30, 2011 was $116.8 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 601 net new annual subscription customers during the second quarter of 2011 compared to 435 net new annual subscription customers added during the comparable period in 2010 and ended the quarter with 9,857 total active annual subscription customers.
  • Signed subscription agreements with new and existing customers including BBC World News, Darden Restaurants, Euro RSCG 360, Five Guys Enterprises, Happy Grasshopper, KORT Physical Therapy, Massachusetts Institute of Technology, Miss Universe Organization, Monkey Bars Garage Storage Systems, Poems To Go, Qualcomm, Save and Make Moola, Time Warner Cable and Trip Advisor.
  • Held our 10thAnnual Users Conference in which PR and marketing professionals from companies such as Gerber Childrenswear and Warner Bros. networked, listened to industry speakers and attended workshops on issues including online reputation management, Facebook fan engagement, content marketing and outreach measurement.  Nearly all (98%) attendees surveyed would recommend the conference to their peers.
  • Launched Vocus Small Business Edition in the UK, a product suite designed specifically to meet the PR and marketing needs of organizations in the small business market.

Guidance

Vocus is providing, for the first time, guidance for the third quarter and revising guidance for the full year 2011 based on information as of July 26, 2011:

  • For the third quarter of 2011, revenue is expected to be in the range of approximately $28.6 million to $28.8 million. Non-GAAP EPS is expected to be in the range of $0.19 to $0.20 assuming an estimated non-GAAP weighted average 21.6 million diluted shares outstanding and an estimated non-GAAP effective tax benefit of 2%. 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 $0.23 per share. GAAP EPS is expected to be in the range of $(0.04) to $(0.03) assuming an estimated weighted average 19.4 million basic and diluted shares outstanding.
  • For the full year of 2011, non-GAAP revenue is expected to be in the range of $114.2 million to $114.9 million. For the full year of 2011, GAAP revenue is expected to be in the range of approximately $114.0 million to $114.7 million. Non-GAAP EPS is expected to be in the range of $0.77 to $0.79 assuming an estimated non-GAAP weighted average 21.2 million diluted shares outstanding and an estimated non-GAAP effective tax benefit of 10%. 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 $(0.19) to $(0.17) assuming an estimated weighted average 19.1 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 second 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 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 10, 2011 at 11:59 p.m. ET and can be accessed by dialing (706) 645-9291 or (800) 642-1687 and entering conference number 31798648.

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 30,000 organizations worldwide and is available in seven languages. For more information, please visit http://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, 2010*

   

June 30, 2011

   
   
Assets
         
(unaudited)
Current assets:
           

Cash and cash equivalents

  $ 94,918   $ 106,777

Short-term investments

    5,496     10,036

Accounts receivable, net

    20,846     16,562

Deferred income taxes

    365     365

Prepaid expenses and other current assets

    3,790     2,859
     
   
Total current assets
    125,415     136,599
Property, equipment and software, net
    6,183     15,500
Intangible assets, net
    7,534     6,479
Goodwill     26,278     38,649
Deferred income taxes, net of current portion     8,314     10,104
Other assets     156     840
     
   
Total assets
  $ 173,880   $ 208,171
   
   
Liabilities and stockholders' equity
           
Current liabilities:
           

Accounts payable and accrued expenses (including contingent consideration of $1,287 and $3,115 at December 31, 2010 and June 30, 2011, respectively)

  $ 9,456   $ 15,080

Notes payable and capital lease obligations

    152     154

Deferred revenue

    55,722     55,207
     
   
Total current liabilities
    65,330     70,441
Notes payable and capital lease obligations, net of current portion
    192     222
Other liabilities
    2,005     11,371

Deferred income taxes, net of current portion

    1,065     1,035

Deferred revenue, net of current portion

    854     710
     
   
Total liabilities
    69,446     83,779
Stockholders' equity:
           

Common stock

    204     216
Additional paid-in capital
    166,985     192,040

Treasury stock

    (28,417)     (31,555)
Accumulated other comprehensive income (loss)
    (175)     467

Accumulated deficit

    (34,163)     (36,776)
     
   
Total stockholders' equity
    104,434     124,392
     
   
Total liabilities and stockholders' equity
  $ 173,880   $ 208,171
   
   
           
* 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 June 30,
Six Months Ended June 30,
         
 
2010
2011
 
2010
2011
   
 
 
 
   
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
                 
Revenues
$ 23,781

$

28,482

$

46,052

$

55,469
Cost of revenues   4,723   5,301   9,158   10,753
   
 
 
 
Gross profit   19,058   23,181   36,894   44,716
Operating expenses:                
Sales and marketing   12,492   14,460   23,895   28,241
Research and development   1,341   1,800   2,655   3,815
General and administrative   5,828   7,497   11,027   15,725
Amortization of intangible assets   593   635   1,062   1,251
   
 
 
 
Total operating expenses   20,254   24,392   38,639   49,032
Loss from operations   (1,196)   (1,211)   (1,745)   (4,316)
Other income (expense)   (3)   58   58   224
   
 
 
 
Loss before provision (benefit) for income taxes   (1,199)   (1,153)   (1,687)   (4,092)
Provision (benefit) for income taxes   758   (398)   849   (1,479)
   
 
 
 
Net loss $ (1,957) $ (755) $ (2,536) $ (2,613)
   
 
 
 
Net loss per share:                
Basic and diluted $ (0.11) $ (0.04) $ (0.14) $ (0.14)
                 
                 
Weighted average shares outstanding used in computing per share amounts:                
Basic and diluted   17,955,925   18,788,747   18,008,822   18,917,775
                 

 

Vocus, Inc. and Subsidiaries
   
Condensed Consolidated Statements of Cash Flows
   
(dollars in thousands)
   
 
Three Months Ended June 30,
 
Six Months Ended June 30,
   
2010
2011
2010
2011
   
 
 
 
 

 

(unaudited)
 
(unaudited)

 

(unaudited)
 
(unaudited)
Cash flows from operating activities:                
Net loss

$

(1,957)

$

(755)

$

(2,536)

$

(2,613)
Adjustments to reconcile net loss to net cash provided by operating activities:                
Depreciation and amortization   1,101   1,322   1,924   2,608
Other non-cash charges, net   2,865   3,544   5,833   6,827
Excess tax benefits from equity awards   (636)   -   (727)   -

Changes in operating assets and liabilities

  (64)   2,060   4,977   13,236
   
 
 
 
Net cash provided by operating activities   1,309   6,171   9,471   20,058
Cash flows from investing activities:                
Business acquisitions, net of cash acquired   (8,921)   -   (8,921)   (6,947)

Net change in available-for-sale securities

  3,799   (2,495)   10,197   (4,536)
Purchases of property, equipment and software, net   (386)   (4,322)   (1,156)   (10,330)

Software development costs

  (259)   (26)   (414)   (66)
   
 
 
 
Net cash used in investing activities   (5,767)   (6,843)   (294)   (21,879)
Cash flows from financing activities:                
Purchases of common stock   (3)   (50)   (8,312)   (3,138)

Proceeds from exercises of stock options

  87   16,583   106   17,138

Payments of contingent consideration for business acquisitions

  -   (699)   -   (699)
Excess tax benefits from equity awards   636   -   727   -

Net payments on notes payable and capital lease obligations

  (88)   (48)   (226)   (45)
   
 
 
 
Net cash provided by (used in) financing activities   632   15,786   (7,705)   13,256
Effect of exchange rate changes on cash and cash equivalents   (267)   120   (309)   424
   
 
 
 
Net increase (decrease) in cash and cash equivalents   (4,093)   15,234   1,163   11,859
Cash and cash equivalents, beginning of period   91,073   91,543   85,817   94,918
   
 
 
 
Cash and cash equivalents, end of period $ 86,980 $ 106,777 $ 86,980 $ 106,777
   
 
 
 

 

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 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.  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 June 30,
Six Months ended June 30,
 
2010
2011
2010
2011
   
 
 
 
 

 

(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Reconciliation of GAAP revenue to non-GAAP revenue:                
GAAP revenue $ 23,781 $ 28,482 $ 46,052 $ 55,469
Fair value adjustment to deferred revenue   400   -   400   181
   
 
 
 
Non-GAAP revenue $ 24,181 $ 28,482 $ 46,452 $ 55,650
   
 
 
 
                 
Reconciliation of GAAP loss from operations to non-GAAP income from operations:                

Loss from operations

$

(1,196)

$

(1,211)

$

(1,745)

$

(4,316)
Stock-based compensation   3,333   3,608   6,182   7,836
Amortization of intangible assets  

630

 

757

  1,099   1,493
Fair value adjustment to deferred revenue   400   -   400   181
Fair value adjustments to contingent consideration   -   527   -   589
Acquisition related expenses   687   20   988   187
   
 
 
 
Non-GAAP income from operations $ 3,854 $ 3,701 $ 6,924 $ 5,970
   
 
 
 
                 
Reconciliation of GAAP net loss to non-GAAP net income:                
Net loss $ (1,957) $ (755) $ (2,536) $ (2,613)
Stock-based compensation   3,333   3,608   6,182   7,836
Amortization of intangible assets  

630

 

757

  1,099   1,493
Fair value adjustment to deferred revenue   400   -   400   181
Fair value adjustments to contingent consideration including effects of foreign currency   -   504   -   483
Acquisition related expenses   687   20   988   187
   
 
 
 
Non-GAAP net income $ 3,093 $ 4,134 $ 6,133 $ 7,567
   
 
 
 
                 
Non-GAAP diluted net income per share $ 0.16 $ 0.20 $ 0.31 $ 0.36
                 
Non-GAAP diluted weighted average shares used in computing per share amounts   19,893,201   21,078,028   19,848,932   21,206,255
                 
Reconciliation of GAAP diluted weighted average shares outstanding to non-GAAP diluted weighted average shares outstanding:                
GAAP diluted weighted average shares outstanding   17,955,925   18,788,747   18,008,822   18,917,775
Treasury stock effect of outstanding equity securities and effect of stock-based compensation   1,937,276   2,289,281   1,840,110   2,288,480
   
 
 
 
Non-GAAP diluted weighted average shares outstanding   19,893,201   21,078,028   19,848,932   21,206,255
   
 
 
 
Supplemental information of stock-based compensation included in:                
Cost of revenues $ 351 $ 374 $ 930 $ 858
Sales and marketing   977   1,113   1,414   2,296
Research and development   418   428   791   1,073
General and administrative   1,587   1,693   3,047   3,609
   
 
 
 
Total stock-based compensation $ 3,333 $ 3,608 $ 6,182 $ 7,836
   
 
 
 
Reconciliation of cash flow from operations to free cash flow:                
Net cash provided by operating activities $ 1,309 $ 6,171 $ 9,471 $ 20,058
Purchases of property, equipment and software, net   (386)   (4,322)   (1,156)   (10,330)
Software development costs   (259)   (26)   (414)   (66)
Excess tax benefits from equity awards   636   -   727   -
   
 
 
 
Free cash flow $ 1,300 $ 1,823 $ 8,628 $ 9,662
   
 
 
 

 

###

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