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Vocus Announces Results for Third Quarter 2013



Vocus Announces Results for Third Quarter 2013

Better Than Expected EPS and Strong Growth of the Marketing Suite Highlight
Quarterly Results

BELTSVILLE, Md., Oct. 22, 2013 (GLOBE NEWSWIRE) -- Via PRWEB -- Vocus, Inc.
(Nasdaq:VOCS), a leading marketing cloud provider, announced today financial
results for the third quarter ended September 30, 2013.

"The third quarter marked an important step forward in our move up-market and
transition from providing stand-alone point products to selling a
comprehensive, digital marketing suite for mid-sized organizations," said Rick
Rudman, President and CEO of Vocus, Inc. "While our guidance today reflects a
more tempered outlook due to the discontinuance of our Small Business Edition
and recent pricing and packaging changes, we are very pleased to see strong
growth in Q3 of our digital marketing suite on higher average selling prices
as well as another quarter of consistent performance for our PR products."

Financial Highlights

  * GAAP revenue for the third quarter of 2013 was $46.6 million, a 3%
    increase over the comparable period in 2012.
  * GAAP loss from operations for the third quarter of 2013 was $(3.3)
    million, compared to $(3.4) million for the comparable period in 2012.
  * Non-GAAP income from operations for the third quarter of 2013 was $2.5
    million, compared to $3.9 million for the comparable period in 2012.
  * GAAP net loss for the third quarter of 2013 was $(3.9) million or $(0.19)
    per diluted share, compared to $(3.8) million or $(0.20) per diluted share
    for the comparable period in 2012.
  * Non-GAAP net income for the third quarter of 2013 was $1.9 million or
    $0.08 per diluted share, compared to $3.5 million or $0.14 per diluted
    share for the comparable period in 2012.
  * Total deferred revenue as of September 30, 2013 was $76.1 million compared
    to $68.1 million at September 30, 2012.

Business Highlights

  * Ended the quarter with 17,484 total active annual subscription customers
    compared to 15,131 active annual subscriptions customers as of September
    30, 2012.
  * Signed subscription agreements with new and existing customers including
    Adeptia, Dish Network, Dole Packaged Foods, Eurotalk, GoDaddy, Investor's
    Business Daily, Kunzler, Lululemon Athletica, Mila Publishing, National
    Cancer Institute, SimplifyMD, US Environmental Protection Agency,
    University of Maryland and Valeo.
  * Released major updates to PRWeb which integrate new social tags for
    Twitter and Google+, making PRWeb content more accessible and robust in
    the ever changing world of social media.
  * Announced that Mark Gambill, who previously held executive roles at CDW,
    Dell and Home Depot, joined the company as Chief Marketing Officer.

Guidance

Vocus is providing, for the first time, guidance for the fourth quarter and
revising guidance for the full year 2013 based on information as of October
22, 2013:

  * For the fourth quarter of 2013, revenue is expected to be in the range of
    approximately $45.1 million to $45.5 million. Non-GAAP EPS is expected to
    be in the range of $0.03 to $0.04 assuming an estimated non-GAAP weighted
    average 24.2 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 $0.28 per share. GAAP EPS is expected to be in the
    range of $(0.25) to $(0.24) 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
    $184.6 million to $185.0 million. Non-GAAP diluted EPS is expected to be
    in the range of $0.20 to $0.21 assuming an estimated non-GAAP weighted
    average 24.2 million diluted shares outstanding and an estimated tax
    provision of $1.5 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 $1.34 per share. GAAP EPS is expected to be
    in the range of $(1.14) to $(1.13) assuming an estimated weighted average
    20.1 million basic and diluted shares outstanding. Free cash flow is
    expected to range from $3.0 million to $4.0 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."

Conference Call Information

Vocus will discuss the financial results and business highlights of the third
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
October 29, 2013 at 11:59 p.m. ET and can be accessed by dialing (404)
537-3406 or (855) 859-2056 and entering conference number 73933164.

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, September 30,
                                                    2012         2013
                                                                 (unaudited)
Assets                                                            
Current assets:                                                   
Cash and cash equivalents                            $ 32,107     $ 35,932
Short-term investments                              662          --
Accounts receivable, net                            29,841       20,495
Deferred income taxes                               1,478        799
Prepaid expenses and other current assets           2,933        2,484
Total current assets                                67,021       59,710
Long-term investments                               1,322        --
Property, equipment and software, net               20,068       21,164
Intangible assets, net                              26,751       17,687
Goodwill                                            177,011      177,135
Other assets                                        641          508
Total assets                                         $ 292,814    $ 276,204
Liabilities, Series A redeemable convertible                      
preferred stock and stockholders' equity
Current liabilities:                                              
Accounts payable and accrued expenses                $ 21,701     $ 17,316
Notes payable and capital lease obligations         854          151
Deferred revenue                                    77,098       73,687
Total current liabilities                           99,653       91,154
Notes payable and capital lease obligations, net of 751          1,240
current portion
Other liabilities                                   6,786        6,486
Deferred income taxes, net of current portion       5,120        5,068
Deferred revenue, net of current portion            2,235        2,416
Total liabilities                                   114,545      106,364
Series A redeemable convertible preferred stock     77,490       77,490
Stockholders' equity:                                             
Common stock                                        219          219
Additional paid-in capital                          215,226      224,951
Treasury stock                                      (41,909)     (42,301)
Accumulated other comprehensive loss                (426)        (320)
Accumulated deficit                                 (72,331)     (90,199)
Total stockholders' equity                          100,779      92,350
Total liabilities, Series A redeemable convertible   $ 292,814    $ 276,204
preferred stock and stockholders' equity

 
Vocus, Inc. and Subsidiaries
Consolidated Statements of Operations
(dollars in thousands, except per share data)
                                                                    
                               Three Months Ended      Nine Months Ended
                               September 30,           September 30,
                               2012        2013        2012        2013
                               (unaudited) (unaudited) (unaudited) (unaudited)
Revenues                        $ 45,217    $ 46,615    $ 123,690   $ 139,479
Cost of revenues               8,932       9,301       24,946      28,857
Gross profit                   36,285      37,314      98,744      110,622
Operating expenses:                                                 
Sales and marketing            25,623      27,126      70,468      81,581
Research and development       3,280       2,426       10,239      8,149
General and administrative     8,805       9,168       31,562      31,392
Amortization of intangible     2,016       1,928       5,136       5,962
assets
Total operating expenses       39,724      40,648      117,405     127,084
Loss from operations           (3,439)     (3,334)     (18,661)    (16,462)
Other income (expense)         (105)       (136)       (228)       (272)
Loss before provision for      (3,544)     (3,470)     (18,889)    (16,734)
income taxes
Provision for income taxes     301         381         970         1,134
Net loss                        $ (3,845)   $ (3,851)   $ (19,859)  $ (17,868)
Net loss per share:                                                 
Basic and diluted              $ (0. 20)    $ (0.19)    $ (1.02)    $ (0.89)
Weighted average shares
outstanding used in computing                                       
per share amounts:
Basic and diluted              19,570,459  20,151,494  19,385,318  20,015,284

 
Vocus, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
                                                                    
                               Three Months Ended      Nine Months Ended
                               September 30,           September 30,
                               2012        2013        2012        2013
                               (unaudited) (unaudited) (unaudited) (unaudited)
Cash flows from operating                                           
activities:
Net loss                        $ (3,845)   $ (3,851)   $ (19,859)  $ (17,868)
Adjustments to reconcile net
loss to net cash provided by                                        
(used in) operating
activities:
Depreciation and amortization  4,733       4,420       11,634      13,161
Other non-cash charges, net    4,016       3,215       13,828      14,116
Payments of contingent
consideration for business     --          --          (494)       (4,560)
acquisition in excess of fair
value on acquisition date
                                                                    
Changes in operating assets    (668)       (4,147)     6,114       2,621
and liabilities
Net cash provided by (used in) 4,236       (363)       11,223      7,470
operating activities
Cash flows from investing                                           
activities:
Business acquisition, net of   (152)       --          (79,801)    --
cash acquired
Net change in                  1,029       --          7,308       1,979
available-for-sale securities
Purchases of property,         (1,294)     (760)       (2,727)     (4,751)
equipment and software, net
Software development costs     --          (262)       (198)       (478)
Net cash used in investing     (417)       (1,022)     (75,418)    (3,250)
activities
Cash flows from financing                                           
activities:
Purchases of common stock      (56)        (1)         (3,058)     (458)
Proceeds from exercises of     44          84          59          84
stock options
Payments of contingent
consideration for business     --          --          (3,112)     --
acquisitions
Net proceeds from (payments
on) notes payable and capital  (36)        465         (168)       (214)
lease obligations
Net cash provided by (used in) (48)        548         (6,279)     (588)
financing activities
Effect of exchange rate
changes on cash and cash       171         486         160         193
equivalents
Net increase (decrease) in     3,942       (351)       (70,314)    3,825
cash and cash equivalents
Cash and cash equivalents,     24,028      36,283      98,284      32,107
beginning of period
Cash and cash equivalents, end  $ 27,970    $ 35,932    $ 27,970    $ 35,932
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 43%
for the three and nine months ended September 30, 2012 and 2013, respectively,
and non-GAAP diluted net income per share of $0.09 and $0.06 for the three
months ended September 30, 2012 and 2013, respectively, and $0.18 and $0.13
for the nine months ended September 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      Nine Months Ended
                               September 30,           September 30,
                               2012        2013        2012        2013
                               (unaudited) (unaudited) (unaudited) (unaudited)
Reconciliation of GAAP revenue                                      
to non-GAAP revenue:
GAAP revenue                    $ 45,217    $ 46,615    $ 123,690   $ 139,479
Fair value adjustment to       513         --          1,913       44
deferred revenue
Non-GAAP revenue                $ 45,730    $ 46,615    $ 125,603   $ 139,523
                                                                    
Reconciliation of GAAP loss
from operations to non-GAAP                                         
income from operations:
Loss from operations            $ (3,439)   $ (3,334)   $ (18,661)  $ (16,462)
Stock-based compensation       3,481       2,816       10,939      9,449
Amortization of intangible     3,129       2,976       7,870       9,107
assets
Fair value adjustment to       513         --          1,913       44
deferred revenue
Fair value adjustments to      232         --          696         3,453
contingent consideration
Acquisition-related expenses   --          --          4,957       --
Non-GAAP income from            $ 3,916     $ 2,458     $ 7,714     $ 5,591
operations
                                                                    
Reconciliation of GAAP net                                          
loss to non-GAAP net income:
Net loss                        $ (3,845)   $ (3,851)   $ (19,859)  $ (17,868)
Stock-based compensation       3,481       2,816       10,939      9,449
Amortization of intangible     3,129       2,976       7,870       9,107
assets
Fair value adjustment to       513         --          1,913       44
deferred revenue
Fair value adjustments to
contingent consideration       232         --          678         3,453
including effects of foreign
currency
Acquisition-related expenses   --          --          4,957       --
Non-GAAP net income             $ 3,510     $ 1,941     $ 6,498     $ 4,185
                                                                    
Non-GAAP diluted net income     $ 0.14      $ 0.08      $ 0.28      $ 0.17
per share
                                                                    
Non-GAAP diluted weighted
average shares used in         24,317,807  24,204,219  23,340,209  24,161,969
computing per share amounts
                                                                    
Reconciliation of GAAP diluted
weighted average shares
outstanding to non-GAAP                                             
diluted weighted average
shares outstanding:
GAAP diluted weighted average  19,570,459  20,151,494  19,385,318  20,015,284
shares outstanding
Dilutive effect of outstanding 4,747,348   4,052,725   3,954,891   4,146,685
equity securities
Non-GAAP diluted weighted      24,317,807  24,204,219  23,340,209  24,161,969
average shares outstanding
                                                                    
Supplemental information of
stock-based compensation                                            
included in:
Cost of revenues                $ 343       $ 296       $ 1,168     $ 1,086
Sales and marketing            994         738         3,139       2,473
Research and development       712         409         1,859       1,490
General and administrative     1,432       1,373       4,773       4,400
Total stock-based compensation  $ 3,481     $ 2,816     $ 10,939    $ 9,449
                                                                    
Reconciliation of cash flow
from operations to free cash                                        
flow:
Net cash provided by (used in)  $ 4,236     $ (363)     $ 11,223    $ 7,470
operating activities
Purchases of property,         (1,294)     (760)       (2,727)     (4,751)
equipment and software, net
Software development costs     --          (262)       (198)       (478)
Payments of contingent
consideration for business     --          --          494         4,560
acquisition in excess of fair
value on acquisition date
Free cash flow                  $ 2,942     $ (1,385)   $ 8,792     $ 6,801

 
Vocus, Inc. and Subsidiaries
Reconciliation of 2013 Guidance 
GAAP EPS to Non-GAAP Diluted EPS
                                                             
                                                             
                                         Q4 2013            Full Year 2013
                                         (unaudited)        (unaudited)
                                                             
GAAP EPS                                 $ (0.25) to (0.24) $ (1.14) to (1.13)
Effect of non-GAAP adjustments           0.32               1.53
Dilutive effect of outstanding equity    (0.04)             (0.19)
securities
Non-GAAP diluted EPS                     $ 0.03 to 0.04     $ 0.20 to 0.21

CONTACT: Investor Relations
         301-459-2590

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