ValueClick Earnings: Margins Shrink Again, but This Climbs

ValueClick Inc. (NASDAQ:VCLK) reported net income above Wall Street’s expectations for the second quarter. ValueClick offers a suite of products and services that enable marketers to advertise and sell their products through online marketing channels such as display advertising, lead generation marketing, email marketing, and search marketing.

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ValueClick Inc. Earnings Cheat Sheet

Results: Net income for ValueClick Inc. rose to $20.3 million (25 cents per share) vs. $17 million (21 cents per share) in the same quarter a year earlier. This marks a rise of 19.8% from the year-earlier quarter.

Revenue: Rose 28.7% to $161 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: ValueClick Inc. beat the mean analyst estimate of 22 cents per share. Analysts were expecting revenue of $157.8 million.

Quoting Management: “We delivered another quarter of strong financial results, while further leveraging our unique data, traffic and services capabilities to become a more strategic partner for our clients,” said James R. Zarley, chief executive officer of ValueClick. “As illustrated in our share repurchase activity, we remain confident in our ability to become the partner of choice for the largest, most sophisticated digital advertisers and capitalize on the growth opportunities in our industry.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 30.9%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 41.8% from the year earlier quarter.

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 8.2 percentage points from the year-earlier quarter to 59.7%. Over that time, margins have contracted on average 14.1 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 27.9% and in the fourth quarter of the last fiscal year, the figure rose 39.5%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 2 cents in the first quarter, by 6 cents in the fourth quarter of the last fiscal year, and by 31 cents in the third quarter of the last fiscal year.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the third quarter has moved down from 28 cents a share to 27 cents over the last ninety days. For the fiscal year, the average estimate has moved down from $1.19 a share to $1.14 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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