Vocus Announces Results for Fourth Quarter 2012

Vocus Announces Results for Fourth Quarter 2012

Company Reports 54% Revenue Growth and Strong Earnings With a Record Number of
New Customers and Accelerating Growth for the Vocus Marketing Suite

BELTSVILLE, Md., Feb. 5, 2013 (GLOBE NEWSWIRE) -- Vocus, Inc. (Nasdaq:VOCS), a
leading provider of cloud marketing software, announced today financial
results for the fourth quarter and full year ended December 31, 2012.

"We are very pleased to report another strong quarter with record revenue and
strong earnings and cash flow," said Rick Rudman, President and CEO of Vocus,
Inc. "While we are pleased with our financial performance for the quarter, we
are also excited to report a record number of new customers, driven by robust
demand for the Vocus Marketing Suite. With the recent launch of our new
marketing suite, Vocus is the only solution today that integrates email,
social, search and publicity into one intelligent platform, which we believe
positions us well for over 20% billings growth in 2013." 

Financial Highlights

Income Statement – Fourth Quarter

  *GAAP revenue for the fourth quarter of 2012 was $47.1 million, a 54%
    increase over the comparable period in 2011.
  *Non-GAAP revenue for the fourth quarter of 2012 was $47.4 million, a 55%
    increase over the comparable period in 2011.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.
  *GAAP loss from operations for the fourth quarter of 2012 was $(3.2)
    million, compared to GAAP income from operations of $393,000 for the
    comparable period in 2011.
  *Non-GAAP income from operations for the fourth quarter of 2012 was $4.4
    million, compared to $5.1 million for the comparable period in 2011.
  *GAAP net loss for the fourth quarter of 2012 was $(3.7) million or $(0.19)
    per diluted share, compared to $(11.8) million or $(0.63) per diluted
    share for the comparable period in 2011.
  *Non-GAAP net income for the fourth quarter of 2012 was $3.9 million or
    $0.16 per diluted share, compared to $4.8 million or $0.24 per diluted
    share for the comparable period in 2011.

Income Statement – Full Year

  *GAAP revenue for the full year 2012 was $170.8 million, a 49% increase
    over the comparable period in 2011.
  *Non-GAAP revenue for the full year 2012 was $173.0 million, a 50% increase
    over the comparable period in 2011.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.
  *GAAP loss from operations for the full year 2012 was $(21.9) million,
    compared to $(4.2) million for the comparable period in 2011.
  *Non-GAAP income from operations for the full year 2012 was $12.1 million,
    compared to $15.3 million for the comparable period in 2011.
  *GAAP net loss for the full year 2012 was $(23.6) million or $(1.21) per
    diluted share, compared to $(14.6) million or $(0.78) per diluted share
    for the comparable period in 2011.
  *Non-GAAP net income for the full year 2012 was $10.4 million or $0.44 per
    diluted share, compared to $16.7 million or $0.81 per diluted share for
    the comparable period in 2011.

Balance Sheet and Other Financial Information

  *Total deferred revenue as of December 31, 2012 was $79.3 million compared
    to $63.0 million at December 31, 2011.Total deferred revenue as of
    December 31, 2012 does not include $44,000 of the unamortized non-GAAP
    adjustment to deferred revenue.
  *Total deferred revenue recorded in connection with the acquisition of
    iContact was $1.6 million, net of an adjustment of $2.3 million reflecting
    the reduction to the fair value of the acquired deferred revenue due to
    purchase accounting.
  *Cash flow from operations for the full year 2012 was $18.8 million, and
    free cash flow for the full year 2012 was $16.2 million.
  *Total cash, cash equivalents and investments as of December 31, 2012 was
    $34.1 million.

Business Highlights

  *Added 1,363 net new annual subscription customers during the fourth
    quarter of 2012 compared to 1,052 net new annual subscription customers
    added during the comparable period in 2011 and ended the quarter with
    16,494 total active annual subscription customers.
  *Signed subscription agreements with new and existing customers including
    British Airways, Center Stage Productions, Colchester Zoo, Farmers
    Insurance, Gentle Giant Moving, Harlem Globetrotters, Lasio, Make-A-Wish
    Foundation of America, McGladrey, My Stuff Lost and Found, PEZ Candy, The
    Pasadena Playhouse, Trinity Broadcast Network and Wyndham Worldwide.
  *Launched a new version of the Vocus Marketing Suite which includes new and
    enhanced features such as the iContact® email marketing and Buying
    Signals™, which monitors social media to notify marketers when customers
    are ready to buy their product or service.
  *Received numerous corporate awards and distinctions including finalist for
    the 2013 Content CODiE Awards.

Guidance

Vocus is providing, for the first time, guidance for the first quarter and
full year of 2013 based on information as of February 5, 2013:

  *For the first quarter of 2013, revenue is expected to be in the range of
    approximately $46.3 million to $46.7 million. Non-GAAP diluted EPS is
    expected to be in the range of $0.09 to $0.10 assuming an estimated
    non-GAAP weighted average 24.9 million diluted shares outstanding and an
    estimated tax provision of $550,000. Non-GAAP adjustments are expected to
    be $0.35 per share. GAAP EPS is expected to be in the range of $(0.26) to
    $(0.25) assuming an estimated weighted average 20.0 million basic and
    diluted shares outstanding.
  *For the full year of 2013, revenue is expected to be in the range of
    $200.3 million to $201.8 million.Non-GAAP diluted EPS is expected to be
    in the range of $0.50 to $0.53 assuming an estimated non-GAAP weighted
    average 25.4 million diluted shares outstanding and an estimated tax
    provision of $1.8 million.Non-GAAP adjustments are expected to be $1.24
    per share.GAAP EPS is expected to be in the range of $(0.74) to $(0.71)
    assuming an estimated weighted average 20.2 million basic and diluted
    shares outstanding.Free cash flow is expected to range from $24.5 million
    to $25.5 million.Capital expenditures are expected to be $6.5 million.

This release includes non-GAAP financial measures and adjustments.For a
description of these non-GAAP financial measures and adjustments, please refer
to section "Use of Non-GAAP Financial Measures" and the accompanying tables
entitled "Reconciliation of Non-GAAP Measures" and "Reconciliation of 2013
Guidance."

Conference Call Information

Vocus will discuss its financial results and business highlights of the fourth
quarter and full year 2012 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
February 12, 2013 at 11:59 p.m. ET and can be accessed by dialing (404)
537-3406 or (855) 859-2056 and entering conference number 73924282.

About Vocus, Inc.

Vocus, Inc. is a leading provider of cloud marketing software that helps
businesses reach and influence buyers across social networks, online and
through media.Vocus provides an integrated suite that combines social
marketing, search marketing, email marketing and publicity into a
comprehensive solution to help businesses attract, engage and retain
customers.Vocus software is used by more than 120,000 organizations worldwide
and is available in seven languages.Vocus is based in Beltsville, MD with
offices in North America, Europe and Asia.For further information, please
visit www.vocus.com or call (800) 345-5572.

The Vocus, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=12668

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, December 31,
                                                     2011         2012
                                                                (unaudited)
Assets                                                           
Current assets:                                                  
Cash and cash equivalents                            $98,284    $32,107
Short-term investments                               9,895        662
Accounts receivable, net                             23,504       29,841
Deferred income taxes                                82           1,478
Prepaid expenses and other current assets            1,966        2,933
Total current assets                                 133,731      67,021
Long-term investments                                −            1,322
Property, equipment and software, net                17,843       20,068
Intangible assets, net                               5,094        26,751
Goodwill                                             38,029       177,011
Other assets                                         1,046        641
Total assets                                         $195,743   $292,814
Liabilities and stockholders' equity                             
Current liabilities:                                             
Accounts payable and accrued expenses (including
contingent consideration of $6,795 and $1,106 at     $17,883    $21,701
December 31, 2011 and 2012, respectively)
Notes payable and capital lease obligations          176          854
Deferred revenue                                     62,010       77,098
Total current liabilities                            80,069      99,653
Notes payable and capital lease obligations, net of  854         751
current portion
Other liabilities                                    8,331       6,786
Deferred income taxes, net of current portion        2,781       5,120
Deferred revenue, net of current portion             987         2,235
Total liabilities                                    93,022      114,545
Series A redeemable convertible preferred stock      −          77,490
Stockholders' equity:                                            
Common stock                                         218         219
Additional paid-in capital                           200,273     215,226
Treasury stock                                       (48,423)    (41,909)
Accumulated other comprehensive loss                 (607)       (426)
Accumulated deficit                                  (48,740)    (72,331)
Total stockholders' equity                           102,721      100,779
Total liabilities, Series A redeemable convertible   $195,743   $292,814
preferred stock and stockholders' equity



Vocus, Inc. and Subsidiaries
Consolidated Statements of Operations
(dollars in thousands, except per share data)
                                                               
                              Three Months Ended      Year Ended
                               December 31,            December 31,
                              2011        2012        2011        2012
                              (unaudited) (unaudited)            (unaudited)
Revenues                       $30,519   $47,114   $114,874  $170,804
Cost of revenues, including
amortization of intangible
assets of $118 and $1,108 for
the three months ended
December 31, 2011 and 2012,    5,737      8,803      21,857     33,749
respectively and $480 and
$3,842 for the years ended
December 31, 2011 and 2012,
respectively
Gross profit                   24,782     38,311     93,017     137,055
Operating expenses:                                             
Sales and marketing            15,121     27,405     57,543     97,873
Research and development       1,973      3,033      7,561      13,272
General and administrative     6,967      9,089      30,129     40,651
Amortization of intangible     328        2,021      2,021      7,157
assets
Total operating expenses       24,389     41,548     97,254     158,953
Income (loss) from operations  393        (3,237)    (4,237)    (21,898)
Other income (expense)         50         (38)       279        (266)
Income (loss) before provision 443        (3,275)    (3,958)    (22,164)
for income taxes
Provision for income taxes     12,195     457        10,619     1,427
Net loss                       $(11,752) $(3,732)  $(14,577) $(23,591)
Net loss per share:                                             
Basic and diluted              $(0.63)   $(0.19)   $(0.78)   $(1.21)
Weighted average shares
outstanding used in computing                                   
per share amounts:
Basic and diluted              18,736,771  19,600,644  18,743,305  19,437,076



Vocus, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
                                                               
                              Three Months Ended      Year Ended
                               December 31,            December 31,
                              2011        2012        2011        2012
                              (unaudited) (unaudited)            (unaudited)
Cash flows from operating                                       
activities:
Net loss                       $(11,752) $(3,732)  $(14,577) $(23,591)
Adjustments to reconcile net
loss to net cash provided by                                    
operating activities:
Depreciation and amortization  1,322      4,209      5,156      15,843
Other non-cash charges, net    16,274     4,711      27,221     18,541
Excess tax benefits from       (34)       --        (34)       --
equity awards
Payments of contingent
consideration for business     --        (1,941)    (147)      (2,435)
acquisitions in excess of fair
value on acquisition date
Changes in operating assets    504        4,348      13,525     10,467
and liabilities
Net cash provided by operating 6,314      7,595      31,144     18,825
activities
Cash flows from investing                                       
activities:
Business acquisitions, net of  --        --        (6,947)    (79,801)
cash acquired
Net change in                  (4,807)    628        (4,517)    7,936
available-for-sale securities
Purchases of property,         (458)      (1,963)    (13,744)   (4,690)
equipment and software, net
Software development costs     (75)       (162)      (305)      (360)
Net cash used in investing     (5,340)    (1,497)    (25,513)   (76,915)
activities
Cash flows from financing                                       
activities:
Purchases of common stock      (3,898)    (28)       (20,006)   (3,086)
Proceeds from exercises of     16         14         18,952     73
stock options
Payments of contingent
consideration for business     --        (2,059)    (1,289)    (5,171)
acquisitions
Excess tax benefits from       34         --        34         --
equity awards
Net proceeds from (payments
on) notes payable and capital  (38)       (36)       263        (204)
lease obligations
Net cash used in financing     (3,886)    (2,109)    (2,046)    (8,388)
activities
Effect of exchange rate
changes on cash and cash       (232)      148        (219)      301
equivalents
Net increase (decrease) in     (3,144)    4,137      3,366      (66,177)
cash and cash equivalents
Cash and cash equivalents,     101,428    27,970     94,918     98,284
beginning of period
Cash and cash equivalents, end $98,284   $32,107   $98,284   $32,107
of period

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, acquisition-related expenses and
income tax expense related to the valuation allowance established against a
portion of deferred tax assets.

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.
Adjustments to deferred revenue reflect the reductions in the fair value of
the acquired company's deferred revenue due to purchase accounting.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 operating expenses consist of professional fees for
legal, accounting and other advisory services, integration related
professional services, severance costs and retention payments incurred during
the reporting period in connection with our acquired businesses. The income
tax expense related to the establishment of a valuation allowance against a
portion of our deferred tax assets is a non-cash expense that is not
considered part of ongoing operations.It is the opinion of management that it
is more likely than not that some or all of the deferred tax assets will not
be realized, therefore the valuation allowance is recorded against the
deferred tax assets. Management believes these non-GAAP measures allow
management and investors to make meaningful comparisons between our operating
results and those of other companies, as well as provide a consistent
comparison of our relative historical financial performance.

We have not presented the tax impact of non-GAAP adjustments in the
calculation of non-GAAP net income as a result of the valuation allowance in
nearly all of our taxing jurisdictions. The tax impact of the non-GAAP
adjustments would have resulted in an annual effective tax rate of 31% for the
three months and year ended December 31, 2011 and 43% for the three months and
year ended December 31, 2012, and non-GAAP diluted net income per share of
$0.18 and $0.10 for the three months ended December 31, 2011 and 2012,
respectively, and $0.52 and $0.29 for the year ended December 31, 2011 and
2012, respectively.

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 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 revenue, 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
the use of non-GAAP measures is 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      Year Ended
                               December 31,            December 31,
                              2011        2012        2011        2012
                              (unaudited) (unaudited) (unaudited) (unaudited)
Reconciliation of GAAP revenue                                  
to non-GAAP revenue:
GAAP revenue                   $30,519   $47,114   $114,874  $170,804
Fair value adjustment to       --          272         181         2,185
deferred revenue
Non-GAAP revenue               $30,519   $47,386   $115,055  $172,989
                                                               
Reconciliation of GAAP income (loss) from
operations to non-GAAP income from                               
operations:
Income (loss) from operations  $393      $(3,237)  $(4,237)  $(21,898)
Stock-based compensation       3,462       3,726       14,740      14,665
Amortization of intangible     446         3,129       2,501       10,999
assets
Fair value adjustment to       --          272         181         2,185
deferred revenue
Fair value adjustments to      819         480         1,941       1,176
contingent consideration
Acquisition-related expenses   --          --          187         4,957
Non-GAAP income from           $5,120    $4,370    $15,313   $12,084
operations
                                                               
Reconciliation of GAAP net                                      
loss to non-GAAP net income:
Net loss                       $(11,752) $(3,732)  $(14,577) $(23,591)
Stock-based compensation       3,462      3,726      14,740     14,665
Amortization of intangible     446        3,129      2,501      10,999
assets
Fair value adjustment to       --        272        181        2,185
deferred revenue
Fair value adjustments to
contingent consideration       845        480        1,890      1,158
including effects of foreign
currency
Acquisition-related expenses   --        --        187        4,957
Valuation allowance on         11,821     --        11,821     --
deferred tax assets
Non-GAAP net income            $4,822    $3,875    $16,743   $10,373
                                                               
Non-GAAP diluted net income    $0.24     $0.16     $0.81     $0.44
per share
                                                               
Non-GAAP diluted weighted
average shares used in         20,422,288  24,173,459  20,735,931  23,547,885
computing per share amounts
                                                               
Reconciliation of GAAP diluted
weighted average shares
outstanding to non-GAAP
diluted weighted average
shares outstanding:
GAAP diluted weighted average  18,736,771  19,600,644  18,743,305  19,437,076
shares outstanding
Dilutive effect of outstanding 1,685,517   4,572,815   1,992,626   4,110,809
equity securities
Non-GAAP diluted weighted                                       
average shares outstanding
                              20,422,288  24,173,459  20,735,931  23,547,885
Supplemental information of
stock-based compensation                                        
included in:
Cost of revenues               $358      $346      $1,575    $1,514
Sales and marketing            922         1,160       4,126       4,299
Research and development       511         787         2,079       2,646
General and administrative     1,671       1,433       6,960       6,206
Total stock-based compensation $3,462    $3,726    $14,740   $14,665
                                                               
Reconciliation of cash flow
from operations to free cash                                    
flow:
Net cash provided by operating $6,314    $7,595    $31,144   $18,825
activities
Purchases of property,         (458)      (1,963)    (13,744)   (4,690)
equipment and software, net
Software development costs     (75)       (162)      (305)      (360)
Excess tax benefits from       34         --        34         --
equity awards
Payments of contingent
consideration for business     --        1,941      147        2,435
acquisitions in excess of fair
value on acquisition date
Free cash flow                 $5,815    $7,411    $17,276   $16,210



Vocus, Inc. and Subsidiaries
Reconciliation of 2013 Guidance
GAAP EPS to Non-GAAP Diluted EPS
                                                          
                                        Q1 2013            Full Year 2013
                                        (unaudited)        (unaudited)
GAAP EPS                                 $ (0.26) to (0.25) $ (0.74) to (0.71)
Effect of non-GAAP adjustments           0.30              1.09
Dilutive effect of outstanding equity    0.05              0.15
securities
Non-GAAP diluted EPS                     $ 0.09 to 0.10     $ 0.50 to 0.53

CONTACT: Investor Relations
         investorrelations@vocus.com
         301-459-2590

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