ValueClick Inc. Q4 2008 Earnings Call Transcript

ValueClick Inc. (VCLK)

Q4 2008 Earnings Call

February 12, 2009 4:30 pm ET

Executives

Gary Fuges - VP, Investor Relations and Corporate Development

Tom Vadnais - CEO

John Pitstick - CFO

Analysts

Youssef Squali - Jefferies & Company

Robert Coolbrith - ThinkEquity

Ben Schachter - UBS

Mark Mahaney - Citigroup

Christa Quarles - Thomas Weisel Partners

Carter Malloy - Stephens Incorporated

Eric Martinuzzi - Craig-Hallum

Townsend Buckles - JPMorgan

Sameet Sinha - JMP Securities

Ross Sandler - RBC Capital Markets

Mark May - Needham

Dan Salmon - BMO Capital Markets

Presentation

Operator

Good day and my name is Elizabeth and I will be your conference facilitator today. A replay of this call will be available by telephone beginning at 4:30 p.m. Pacific Time today, and may be accessed through 10 O'clock p.m. Pacific Time on February 19, 2009. Thereafter, it can be accessed on ValueClick's web site at www.valueclick.com or www.streetevents.com.

Previously filed SEC filings can also be found on ValueClick's site. All lines have been placed in a listen-only mode to prevent any background noise. After the speakers' remarks there will be a question-and-answer period. (Operator Instructions).

At this time, I would like to turn the call over to Mr. Gary Fuges, Vice President of Investor Relations and Corporate Development for ValueClick, Incorporated. Please go ahead, sir.

Gary Fuges

Thank you, Elizabeth. Good afternoon and welcome to ValueClick's Fourth Quarter and Fiscal Year 2008 Financial Results Conference Call. On the call with me today are Tom Vadnais, Chief Executive Officer and John Pitstick, Chief Financial Officer.

Today's call contains forward-looking statements that involve risks and uncertainties including, but not limited to, trends in online advertising spending, and estimates of future online performance based advertising. Actual results may differ materially from the results predicted and reported results should not be considered an indication of future performance.

Important factors which could cause actual results to differ materially from those expressed or implied in the forward-looking statements are detailed under the Risk Factors section and elsewhere in filings with the Securities and Exchange Commission made from time to time by ValueClick including its Annual Report on Form 10-K filed on February 29, 2008, recent quarterly reports on Form 10-Q and current reports on Form 8-K.

Other factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include but are not limited to the risks that market demand for online advertising in general and performance based online advertising in particular will not grow as rapidly as predicted, and legislation and governmental regulation that could negatively impact the company's performance. ValueClick undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

With that, I'd like to turn the call over to Mr. Tom Vadnais, CEO of ValueClick. Tom?

Tom Vadnais

Thank you, Gary. Good afternoon, everyone and thanks for joining us for ValueClick’s fourth quarter 2008 conference call. Despite of the macro issues faced by virtually every company today, ValueClick executed well in the fourth quarter of ’08.

Revenue increased sequentially and was $5 million above the high-end of our guidance range. The company was successful in converting a high percentage of the revenue growth into adjusted-EBITDA, which resulted in adjusted-EBITDA above the high-end of our guidance range and an adjusted-EBITDA margin of 25.4%.

There were housekeeping items in the quarter that John will discuss later in the call, including the presentation of two divested businesses as discontinued operations. He will also review something you’ve seen from a lot of companies this quarter, a goodwill impairment charge.

Before I turn the call over to John, I’d like to comment on our four business segments. In media, worldwide display advertising increased about 3% sequentially, which was better than the flat sequential growth, which we guided in our last call.

ValueClick Media's scale, performance-based offerings and reputation are definitely a competitive advantage in this market. We also feel that our proprietary behavioral targeting capabilities are improving giving us say, competitive advantage in the sector.

The software and telco verticals were healthy in the quarter and our AdRX vertical network help deliver strong results in the pharma vertical.

Shifting to lead generation, our lead generation sector was down about 7% sequentially in the quarter, which was in-line with the guidance provided on our last call.

Broad-based lead gen players across the industry remain challenged in this macro environment, as some demand has shifted to alternate online channels.