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  company logo