Vocus Announces Results for Second Quarter 2013

Vocus Announces Results for Second Quarter 2013  Strong Demand for the Marketing Suite and Higher Average Selling Prices Result in Better EPS in Q2 and Higher Earnings Outlook for the Full Year  BELTSVILLE, Md., July 23, 2013 (GLOBE NEWSWIRE) -- Via PRWEB -- Vocus, Inc. (Nasdaq:VOCS), a leading marketing cloud provider, announced today financial results for the second quarter ended June 30, 2013.  "Q2 was highlighted by a number of exciting results including continued rapid bookings growth for the marketing suite and better than expected earnings," said Rick Rudman, President and CEO of Vocus, Inc. "We are also excited about our move up-market and the new pricing and packaging introduced in Q2 which resulted in notably higher selling prices on fewer net new subscription customers. This shift to larger subscriptions will provide better unit economics and more profitable growth for Vocus going forward."  Financial Highlights    *GAAP revenue for the second quarter of 2013 was $46.6 million, a 7%     increase over the comparable period in 2012.   *GAAP loss from operations for the second quarter of 2013 was $(5.4)     million, compared to $(4.8) million for the comparable period in 2012.   *Non-GAAP income from operations for the second quarter of 2013 was     $594,000, compared to $2.9 million for the comparable period in 2012.   *GAAP net loss for the second quarter of 2013 was $(5.9) million or $(0.29)     per diluted share, compared to $(5.2) million or $(0.27) per diluted share     for the comparable period in 2012.   *Non-GAAP net income for the second quarter of 2013 was $139,000 or $0.01     per diluted share, compared to $2.5 million or $0.11 per diluted share for     the comparable period in 2012.   *Total deferred revenue as of June 30, 2013 was $78.5 million compared to     $68.1 million at June 30, 2012.  Business Highlights    *Added 479 net new annual subscription customers during the second quarter     of 2013 compared to 1,013 net new annual subscription customers added     during the comparable period in 2012 and ended the quarter with 17,801     total active annual subscription customers.   *Signed subscription agreements with new and existing customers including     Ann Inc., Avaya, Centegra Health Systems, Comscore, Datex, Cosmopolit     Home, J. Reneé, Hyatt Regency Paris Etoile, Lehigh University, Nexcom,     Organic Valley, Resource One Credit Union, Thompson Creek Windows and     Troon Golf.   *Introduced new email features to the Vocus Marketing Suite that enhance     the experience and functionality for our customers who wish to do more     sophisticated marketing.   *Released major updates to PRWeb which focus on streamlining and     modernizing issuer identity and new, innovative independent social     authentication.   *Held our Demand Success 2013 Marketing Conference where over 700 attendees     gathered with thought leaders and industry experts to share digital     marketing best practices and network.  Guidance  Vocus is providing, for the first time, guidance for the third quarter and revising guidance for the full year 2013 based on information as of July 23, 2013:    *For the third quarter of 2013, revenue is expected to be in the range of     approximately $46.5 million to $46.8 million. Non-GAAP EPS is expected to     be in the range of $0.03 to $0.04 assuming an estimated non-GAAP weighted     average 24.4 million diluted shares outstanding and an estimated tax     provision of $400,000. The estimated non-GAAP weighted average diluted     shares outstanding assume 3.0 million common shares from the conversion of     the Series A redeemable convertible preferred stock. Non-GAAP adjustments     are expected to be $0.29 per share. GAAP EPS is expected to be in the     range of $(0.26) to $(0.25) assuming an estimated weighted average 20.1     million basic and diluted shares outstanding.        *For the full year of 2013, revenue is expected to be in the range of     $188.0 million to $189.0 million.Non-GAAP diluted EPS is expected to be     in the range of $0.18 to $0.21 assuming an estimated non-GAAP weighted     average 24.4 million diluted shares outstanding and an estimated tax     provision of $1.7 million.The estimated non-GAAP weighted average diluted     shares outstanding assume 3.0 million common shares from the conversion of     the Series A redeemable convertible preferred stock..The Non-GAAP     adjustments are expected to be $1.35 per share.GAAP EPS is expected to be     in the range of $(1.17) to $(1.14) assuming an estimated weighted average     20.1 million basic and diluted shares outstanding.Free cash flow is     expected to range from $11.0 million to $12.0 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."  Disclosure Using Social Media Channels  Given Vocus' role as a leading marketing cloud provider, Vocus believes that in today's evolving digital environment those interested in our company look to various communication channels for information about the company. Vocus announces material information using its websites, filings with the US Securities and Exchange Commission, press releases, public conference calls and webcasts. Vocus also uses social media and other internet sources to communicate with its customers and the public about the company, its services and other issues. Given the recent SEC guidance regarding the use of social media channels to announce material information, Vocus is notifying investors, the media, its customers and others interested in the company that it may communicate material, non-public information through social media or other internet sources or that information that it posts on social media or other internet sources may be deemed to be material, non-public information. Vocus encourages investors, the media, its customers and others interested in our company to review the information that we post on the social media channels and internet sources listed below. Any changes to the list of social media channels and internet sources that Vocus may use to announce material, non-public information will be posted in the Investor Relations section of its website.  Vocus' Facebook Page (https://www.facebook.com/vocus)  Vocus' Twitter Feed (https://twitter.com/vocus)  Vocus' LinkedIn Page (http://www.linkedin.com/company/vocus)  Vocus' Google+ Page (https://plus.google.com/+vocus)  Vocus' Blog (http://vocus.com/blog)  Our CEO, Rick Rudman's Twitter Feed (https://twitter.com/vocuschairman)  Conference Call Information  Vocus will discuss the financial results and business highlights of the second quarter of 2013 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://investor.shareholder.com/vocs/events.cfm.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 July 30, 2013 at 11:59 p.m. ET and can be accessed by dialing (404) 537-3406 or (855) 859-2056 and entering conference number 73930336.  About Vocus, Inc.  Vocus, Inc. is a leading marketing cloud provider 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.  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, June 30,                                                      2012         2013                                                                  (unaudited) Assets                                                             Current assets:                                                    Cash and cash equivalents                             $32,107      $36,283 Short-term investments                                662          -- Accounts receivable, net                              29,841       21,987 Deferred income taxes                                 1,478        1,098 Prepaid expenses and other current assets             2,933        3,056 Total current assets                                  67,021       62,424 Long-term investments                                 1,322        -- Property, equipment and software, net                 20,068       21,562 Intangible assets, net                                26,751       20,582 Goodwill                                              177,011      176,926 Other assets                                          641          653 Total assets                                          $292,814     $282,147 Liabilities, Series A redeemable convertible                       preferred stock and stockholders' equity Current liabilities:                                               Accounts payable and accrued expenses                 $21,701      $20,540 Notes payable and capital lease obligations           854          163 Deferred revenue                                      77,098       76,333 Total current liabilities                             99,653       97,036 Notes payable and capital lease obligations, net of   751          763 current portion Other liabilities                                     6,786        6,559 Deferred income taxes, net of current portion         5,120        5,134 Deferred revenue, net of current portion              2,235        2,181 Total liabilities                                     114,545      111,673 Series A redeemable convertible preferred stock       77,490       77,490 Stockholders' equity:                                              Common stock                                          219          219 Additional paid-in capital                            215,226      221,968 Treasury stock                                        (41,909)     (42,300) Accumulated other comprehensive loss                  (426)        (555) Accumulated deficit                                   (72,331)     (86,348) Total stockholders' equity                            100,779      92,984 Total liabilities, Series A redeemable convertible    $292,814     $282,147 preferred stock and stockholders' equity                                                                    Vocus, Inc. and Subsidiaries Consolidated Statements of Operations (dollars in thousands, except per share data)                               Three Months Ended      Six Months Ended                               June 30,                June 30,                               2012        2013        2012        2013                               (unaudited) (unaudited) (unaudited) (unaudited) Revenues                       $43,620     $46,617     $78,473     $92,864 Cost of revenues               8,700       9,804       16,014      19,556 Gross profit                   34,920      36,813      62,459      73,308 Operating expenses:                                              Sales and marketing            24,014      27,620      44,845      54,455 Research and development       3,303       2,725       6,959       5,723 General and administrative     10,364      9,891       22,757      22,224 Amortization of intangible     2,020       2,014       3,120       4,034 assets Total operating expenses       39,701      42,250      77,681      86,436 Loss from operations           (4,781)     (5,437)     (15,222)    (13,128) Other income (expense)         (65)        (141)       (123)       (136) Loss before provision for      (4,846)     (5,578)     (15,345)    (13,264) income taxes Provision for income taxes     343         314         669         753 Net loss                       $(5,189)    $(5,892)    $(16,014)   $(14,017) Net loss per share:                                              Basic and diluted              $(0.27)     $(0.29)     $(0.83)     $(0.70) Weighted average shares outstanding used in computing                                    per share amounts: Basic and diluted              19,540,700  20,099,700  19,291,730  19,946,050                                                                  Vocus, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (dollars in thousands)                               Three Months Ended      Six Months Ended                               June 30,                June 30,                               2012        2013        2012        2013                               (unaudited) (unaudited) (unaudited) (unaudited) Cash flows from operating                                        activities: Net loss                       $(5,189)    $(5,892)    $(16,014)   $(14,017) Adjustments to reconcile net loss to net cash provided by                                     (used in) operating activities: Depreciation and amortization  4,309       4,444       6,901       8,741 Other non-cash charges, net    5,290       3,377       9,813       10,901 Payments of contingent consideration for business     --          (4,560)     (494)       (4,560) acquisition in excess of fair value on acquisition date Changes in operating assets    (922)       (364)       6,793       6,760 and liabilities Net cash provided by (used in) 3,488       (2,995)     6,999       7,825 operating activities Cash flows from investing                                        activities: Business acquisition, net of   --          --          (79,649)    -- cash acquired Net change in                  (496)       651         6,279       1,979 available-for-sale securities Purchases of property,         (1,206)     (1,780)     (1,433)     (3,991) equipment and software, net Software development costs     --          (87)        (198)       (216) Net cash used in investing     (1,702)     (1,216)     (75,001)    (2,228) activities Cash flows from financing                                        activities: Purchases of common stock      (31)        (44)        (3,002)     (457) Proceeds from exercises of     1           --          15          -- stock options Payments of contingent consideration for business     --          --          (3,112)     -- acquisitions Net proceeds from (payments on) notes payable and capital  (83)        50          (132)       (679) lease obligations Net cash provided by (used in) (113)       6           (6,231)     (1,136) financing activities Effect of exchange rate changes on cash and cash       (258)       156         (23)        (285) equivalents Net increase (decrease) in     1,415       (4,049)     (74,256)    4,176 cash and cash equivalents Cash and cash equivalents,     22,613      40,332      98,284      32,107 beginning of period Cash and cash equivalents, end $24,028     $36,283     $24,028     $36,283 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 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. 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. 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 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 43% and 42% for the three and six months ended June 30, 2012 and 2013, respectively, and non-GAAP diluted net income per share of $0.07 and $0.01 for the three months ended June 30, 2012 and 2013, respectively, and $0.09 and $0.07 for the six months ended June 30, 2012 and 2013, 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      Six Months Ended                               June 30,                June 30,                               2012        2013        2012        2013                               (unaudited) (unaudited) (unaudited) (unaudited) Reconciliation of GAAP revenue                                   to non-GAAP revenue: GAAP revenue                   $43,620     $46,617     $78,473     $92,864 Fair value adjustment to       729         --          1,400       44 deferred revenue Non-GAAP revenue               $44,349     $46,617     $79,873     $92,908                                                                 Reconciliation of GAAP loss from operations to non-GAAP                                      income from operations: Loss from operations           $(4,781)    $(5,437)    $(15,222)   $(13,128) Stock-based compensation       3,474       2,970       7,458       6,633 Amortization of intangible     3,133       3,061       4,741       6,131 assets Fair value adjustment to       729         --          1,400       44 deferred revenue Fair value adjustments to      232         --          464         3,453 contingent consideration Acquisition-related expenses   157         --          4,957       -- Non-GAAP income from           $2,944      $594        $3,798      $3,133 operations                                                                 Reconciliation of GAAP net                                       loss to non-GAAP net income: Net loss                       $(5,189)    $(5,892)    $(16,014)   $(14,017) Stock-based compensation       3,474       2,970       7,458       6,633 Amortization of intangible     3,133       3,061       4,741       6,131 assets Fair value adjustment to       729         --          1,400       44 deferred revenue Fair value adjustments to contingent consideration       232         --          446         3,453 including effects of foreign currency Acquisition-related expenses   157         --          4,957       -- Non-GAAP net income            $2,536      $139        $2,988      $2,244                                                                 Non-GAAP diluted net income    $0.11       $0.01       $0.13       $0.09 per share                                                                 Non-GAAP diluted weighted average shares used in         23,965,235  24,188,135  22,854,023  24,131,857 computing per share amounts                                                                 Reconciliation of GAAP diluted weighted average shares outstanding to non-GAAP                                          diluted weighted average shares outstanding: GAAP diluted weighted average  19,540,700  20,099,700  19,291,730  19,946,050 shares outstanding Dilutive effect of outstanding 4,424,535   4,088,435   3,562,293   4,185,807 equity securities Non-GAAP diluted weighted      23,965,235  24,188,135  22,854,023  24,131,857 average shares outstanding                                                                 Supplemental information of stock-based compensation                                         included in: Cost of revenues               $326        $322        $825        $790 Sales and marketing            973         801         2,145       1,735 Research and development       643         458         1,147       1,081 General and administrative     1,532       1,389       3,341       3,027 Total stock-based compensation $3,474      $2,970      $7,458      $6,633                                                                 Reconciliation of cash flow from operations to free cash                                     flow: Net cash provided by (used in) $3,488      $(2,995)    $6,999      $7,825 operating activities Purchases of property,         (1,206)     (1,780)     (1,433)     (3,991) equipment and software, net Software development costs     --          (87)        (198)       (216) Payments of contingent consideration for business     --          4,560       494         4,560 acquisition in excess of fair value on acquisition date Free cash flow                 $2,282      $(302)      $5,862      $8,178                                                                  Vocus, Inc. and Subsidiaries Reconciliation of 2013 Guidance GAAP EPS to Non-GAAP Diluted EPS                                           Q3 2013           Full Year 2013                                           (unaudited)       (unaudited)                                                             GAAP EPS                                   $(0.26) to (0.25) $(1.17) to (1.14) Effect of non-GAAP adjustments             0.34              1.56 Dilutive effect of outstanding equity      (0.05)            (0.21) securities Non-GAAP diluted EPS                       $0.03 to 0.04     $0.18 to 0.21  CONTACT: Investor Relations          investorrelations@vocus.com          301-459-2590  company logo  
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