Again Profitable Before Charges, ValueClick Warns About Future
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Ad network ValueClick Thursday posted better-than-expected results for its fourth quarter and full-year 2000, continuing its before-charges profitability and beating its last quarter's performance, although it echoed industry-wide pessimism for the coming quarter.
The Westlake Village, Calif.-based company -- which, unlike competitors DoubleClick, 24/7 Media and Engage, operates on a performance-based model -- said revenues for 2000 increased 129 percent, to $56.7 million. For the quarter, revenues increased 24 percent to $15.3 million.
Those revenues propelled the firm to post a continued operating profit, excluding one-time non-cash charges. Pro forma operating income for the fourth quarter was $1.3 million, or $0.04 per share -- well above the Street's consensus of $0.01 per share, according to Thompson Financial/First Call.
Last quarter, the firm posted earnings of $0.02 per share, or $565,000.
Before-charges earnings for 2000 totaled $6.8 million, or $0.23 per share, up from $4.5 million, or $0.30 for 1999. Those results, too, are well in excess of the Street's $0.09 per-share profit expectations.
indeed, the company has posted an operating profit every quarter. However, after accounting and other non-cash charges are factored in, ValueClick saw a loss of $57 million or $1.71 per share, versus a loss of $436,000, or $0.01, for third quarter.
The company attributed its success to its performance-based ad model -- all of the firm's products are cost-per-acquisition, cost-per-lead, or cost-per-click -- and pointed to its recent acquisition activity that boosted its product line.
During the year, the firm bought companies including CPC ad network (and onetime competitor) ClickAgents, cost-per-acquisition firm onResponse.com, online marketing ROI measurement firm eTrax, and the intention to acquire cost-per-lead service Z Media, Inc. It also opened up ValueClick Japan and launched an IPO there as well.
"The year 2000 was a period of significant achievement for ValueClick," said ValueClick chairman and chief executive Jim Zarley. "It saw us complete two IPOs -- one in the United States and the other in Japan -- add two domestic sales offices and five international offices, and significantly expand our product offerings through the acquisition of three companies."
"We're very proud that we were able to accomplish these objectives, more than double our business, and achieve pro forma operating profitability in what by all accounts were very difficult market conditions," Zarley added.
That feat is especially significant considering that larger competitors Engage and 24/7 Media have launched sizable restructuring efforts recently, and are facing cash crises. DoubleClick, which owns a minority stake in ValueClick and is the most powerful player in the space, failed to repeat its third-quarter before-charges profit and posted a $0.11 loss for the year.
For first quarter 2001, ValueClick executives said they expect the firm to generate between $13.5 and $14 million in revenue, enough to break even on a pro forma basis. Analysts had been expecting a $0.01 per-share prifit.
For all of 2001, ValueClick projected revenue to be between $63 million and $65 million, and pro forma cash earnings per share between $.09 and $0.11. The Street had been predicting earnings of $0.10 per share.
ValueClick's lackluster first-quarter and full-year 2001 predictions come as no surprise -- DoubleClick and other competitors, as well as industry watchers like Merrill Lynch's Henry Blodget, continue to predict the worst quarter yet still ahead for online ad firms, and say the industry won't rally until mid- to late- 2001.
In the meantime, ValueClick said it ended the year with $126.1 million in cash and marketable securities -- enough to get it out of the online advertising market's lean quarters.
At press time, shares of VCLK were trading up 2.7 percent to $4