Revenue Grows 69%, Fueled By Industry-Leading Technology Platform
Operating Efficiencies Drive Strong EBITDA Outperformance
Q2 Revenue Outlook Increased to $20 Million on Accelerated Growth Rate
NEW YORK, May 11, 2010 (GLOBE NEWSWIRE) -- interCLICK, Inc. (Nasdaq:ICLK), an enterprise software company focused on digital advertising technology and services, announced today its results for the first quarter ended March 31, 2010.
Revenue was $14.2 million in Q1 2010, a 69% year-over-year increase, a growth rate that continues to dramatically outpace the growth of the overall online display advertising sector. Growth was driven by strong secular momentum in the back half of the quarter, aggressive incremental spending activity from existing clients, and higher demand for interCLICK's innovative audience targeting solution.
Gross profit was $6.4 million in Q1 2010, up 62% year-over-year. Gross profit margin was 44.9%, 260 basis points higher sequentially as media costs returned to normalized levels following seasonally strong demand in the fourth quarter. Year-over-year gross margins declined modestly, as expected, due to increased competition for third-party data, further validating interCLICK's long-time strategy of leveraging targeting data to deliver audience-centric solutions.
EBITDA, a non-GAAP measure, was $0.7 million in Q1 2010, more than double interCLICK's previous guidance, due to incremental operating efficiencies achieved as a result of interCLICK's platform capabilities. The prior year comparable period benefited from decreased expense resulting from changed estimates in determining certain accruals.
Operating loss was $(0.3 million) in Q1 2010, net income was $0.2 million, and earnings per share was $0.01. Operating expenses increased 80% year-over-year to support the growth of interCLICK's business and in developing and delivering innovative software into the digital advertising market, including the recent launch of Open Segment Manager 2.0 (OSM). The Q1 2010 results also included a $0.5 million impairment charge relating to available-for-sale securities, which was more than offset by an income tax benefit of $1.1 million.
"OSM 2.0 is our third major platform release in the past year, augmenting an already robust technology stack. We plan to continue to innovate at a strong pace and look forward to the efficiencies that interCLICK will gain as we continue to scale our operations," said Michael Mathews, interCLICK's CEO.
interCLICK ended the quarter with cash and cash equivalents of $9.3 million. In addition, the Company had $1.3 million of restricted cash. As of March 31, 2010, interCLICK had 23.7 million shares outstanding and 30.1 million fully-diluted shares outstanding.
Business Outlook
interCLICK expects Q2 revenue to exceed $20 million, which would represent an accelerated year-over-year growth rate of at least 88%, and an increase from previous guidance of $17 million. interCLICK expects Q2 EBITDA to be approximately $750,000.
Conference Call
interCLICK will host a conference call to discuss its first quarter financial results and business outlook on Tuesday, May 11, 2010, at 4:30 p.m. (EST). The conference call can be accessed by dialing toll-free (877) 312-8818 (U.S.) or (253) 237-1185 (international). A live audiocast of the conference call can be accessed from interCLICK's website at http://ir.interclick.com/events.cfm. A replay of the audiocast will be available through May 11, 2011.
Reclassifications
Certain amounts in the accompanying financial tables relating to prior periods have been reclassified to conform to the first quarter 2010 presentation.
Non-GAAP Financial Measure
interCLICK uses a non-GAAP financial measure in evaluating its financial and operational decision making and as a means to evaluate period-to period comparison. Management believes that the non-GAAP financial measure provides meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of the performance of our core cash operations. interCLICK believes that both management and investors benefit from referring to this non-GAAP financial measure in assessing our performance and when planning, forecasting and analyzing future periods. interCLICK believes this non-GAAP financial measure is useful to investors because it allows for greater transparency with respect to key metrics used by management.
EBITDA. As is common in the industry, interCLICK uses EBITDA as a measure of performance to demonstrate operating income exclusive of interest, taxes, depreciation, and amortization (including stock-based compensation). interCLICK, in its daily management of its business affairs and analysis of its monthly, quarterly and annual performance, makes certain of its decisions based on EBITDA. Since an outside investor may base its evaluation of interCLICK's performance on interCLICK's net income or loss, there is a limitation to the EBITDA measurement. EBITDA is not, and should not be considered, an alternative to net income or loss, income or loss from operations or any other measure for determining operating performance or liquidity, as determined under GAAP.
To comply with Regulation G of the Securities and Exchange Commission, interCLICK attached to this press release, and will post to its website at http://ir.interclick.com/index.cfm, a reconciliation of the non-GAAP measure to the nearest comparable GAAP measure that is presented in this release.
About interCLICK
interCLICK is an enterprise software company focused on digital advertising technology and services. Powered by Open Segment Manager (OSM), digital advertising's most effective targeting engine, interCLICK develops coherent and transparent audience targeting strategies with major digital agencies and advertisers, empowering them to reach their desired audiences efficiently, in brand-safe environments, at unprecedented scale. interCLICK is headquartered in New York City and has offices in Chicago, Los Angeles, San Francisco, Dallas and Miami. For more information about the interCLICK Network, visit http://www.interclick.com.
Cautionary Note Regarding Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including second quarter revenue outlook and growth, our plans regarding delivering software innovations to the market and continued scaling of our operations, and expected second quarter EBITDA. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the impact of intense competition, the continuation or worsening of current economic conditions, a potential decrease in corporate advertising spending, a potential decrease in consumer spending and the condition of the domestic and global credit and capital markets.
Further information on our risk factors is contained in our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2009. Any forward-looking statement speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
(Financial Tables Attached)
| interCLICK, Inc. and Subsidiary | ||
| Condensed Consolidated Statements of Operations | ||
| Unaudited |
For the Three Months Ended March 31, 2010 |
For the Three Months Ended March 31, 2009 |
| Revenues | $ 14,201,857 | $ 8,423,291 |
| Cost of revenues | 7,819,181 | 4,474,279 |
| Gross profit | 6,382,676 | 3,949,012 |
| Operating expenses: | ||
| Sales and marketing | 2,116,714 | 1,416,522 |
| General and administrative | 3,230,528 | 1,677,665 |
| Technology support | 1,339,578 | 584,331 |
| Amortization of intangible assets | 39,500 | 49,760 |
| Total operating expenses | 6,726,320 | 3,728,278 |
| Operating income (loss) from continuing operations | (343,644) | 220,734 |
| Other income (expense): | ||
| Interest income | 8,868 | 12 |
| Other than temporary impairment of available-for-sale securities | (458,538) | -- |
| Warrant derivative liability income (expense) | 21,685 | (72,767) |
| Interest expense | (102,409) | (113,592) |
| Total other expense | (530,394) | (186,347) |
| Income (loss) from continuing operations before income taxes | (874,038) | 34,387 |
| Income tax benefit | 1,079,108 | -- |
| Income from continuing operations | 205,070 | 34,387 |
| Discontinued operations: | ||
| Loss on sale of discontinued operations, net of tax | -- | (1,220) |
| Loss from discontinued operations | -- | (1,220) |
| Net income | $ 205,070 | $ 33,167 |
| Basic earnings per share: | ||
| Continuing operations | $ 0.01 | $ -- |
| Discontinued operations | $ -- | $ -- |
| Net income | $ 0.01 | $ -- |
| Diluted earnings per share: | ||
| Continuing operations | $ 0.01 | $ -- |
| Discontinued operations | $ -- | $ -- |
| Net income | $ 0.01 | $ -- |
| Weighted average shares: | ||
| Basic | 23,608,691 | 18,922,596 |
| Diluted | 25,877,963 | 18,933,647 |
| interCLICK, Inc. and Subsidiary | ||
| Reconciliation of GAAP to Non-GAAP Measure | ||
| Unaudited |
For the Three Months Ended March 31, 2010 |
For the Three Months Ended March 31, 2009 |
| GAAP net income | $ 205,070 | $ 33,167 |
| Loss from sale of discontinued operations, net of tax | -- | 1,220 |
| Income tax benefit | (1,079,108) | -- |
| Income (loss) from continuting operations before income taxes | (874,038) | 34,387 |
| Interest expense | 102,409 | 113,592 |
| Interest income | (8,868) | (12) |
| Warrant derivative liability (income) expense | (21,685) | 72,767 |
| Other than temporary impairment of available-for sale securities | 458,538 | -- |
| Operating income (loss) from continuing operations | (343,644) | 220,734 |
| Stock-based compensation | 849,582 | 576,570 |
| Amortization of intangible assets | 39,500 | 49,760 |
| Depreciation | 142,962 | 72,386 |
| EBITDA | $ 688,400 | $ 919,450 |
| interCLICK, Inc. and Subsidiary | ||
| Condensed Consolidated Balance Sheets | ||
| Unaudited | March 31, 2010 | December 31, 2009 |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 9,325,188 | $ 12,653,958 |
| Restricted cash | 500,649 | -- |
| Accounts receivable, net of allowance | 15,272,827 | 21,631,305 |
| Credit facility reserve | 240,018 | 1,052,167 |
| Deferred taxes, current portion | 1,647,894 | 955,471 |
| Income tax receivable | 3,010,010 | -- |
| Prepaid expenses and other current assets | 261,509 | 367,183 |
| Total current assets | 30,258,095 | 36,660,084 |
| Restricted cash | 791,097 | -- |
| Property and equipment, net | 1,863,826 | 988,899 |
| Intangible assets, net | 381,833 | 421,333 |
| Goodwill | 7,909,571 | 7,909,571 |
| Investment in available-for-sale securities | 245,821 | 715,608 |
| Deferred debt issue costs, net | 1,584 | 4,972 |
| Deferred taxes, net of current portion | 46,786 | 2,579,568 |
| Other assets | 207,573 | 192,179 |
| Total assets | $ 41,706,186 | $ 49,472,214 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Accounts payable | $ 7,259,396 | $ 10,934,236 |
| Accrued expenses | 1,945,871 | 3,164,044 |
| Credit facility payable | 1,200,091 | 5,260,834 |
| Obligations under capital leases, current portion | 312,058 | 161,940 |
| Income taxes payable | -- | 515,306 |
| Warrant derivative liability | 47,573 | 69,258 |
| Deferred rent, current portion | 10,094 | 3,508 |
| Total current liabilities | 10,775,083 | 20,109,126 |
| Obligations under capital leases, net of current portion | 676,483 | 338,562 |
| Deferred rent | 179,265 | 83,823 |
| Total liabilities | 11,630,831 | 20,531,511 |
| Stockholders' equity: | ||
| Common stock, $0.001 par value | 23,694 | 23,633 |
| Additional paid-in capital | 43,158,814 | 42,229,293 |
| Accumulated deficit | (13,107,153) | (13,312,223) |
| Total stockholders' equity | 30,075,355 | 28,940,703 |
| Total liabilities and stockholders' equity | $ 41,706,186 | $ 49,472,214 |
| interCLICK, Inc. and Subsidiary | ||
| Condensed Consolidated Statements of Cash Flows | ||
| Unaudited |
For the Three Months Ended March 31, 2010 |
For the Three Months Ended March 31, 2009 |
| Cash flows from operating activities: | ||
| Net income | $ 205,070 | $ 33,167 |
| Add back loss from discontinued operations | -- | 1,220 |
| Income from continuing operations | 205,070 | 34,387 |
|
Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities: |
||
| Changes in deferred tax assets | 1,840,359 | -- |
| Stock-based compensation | 849,582 | 576,570 |
| Other than temporary impairment of available-for-sale securities | 458,538 | -- |
| Depreciation of property and equipment | 142,962 | 72,386 |
| Amortization of intangible assets | 39,500 | 49,760 |
| Amortization of debt issue costs | 3,388 | 14,444 |
| Provision for bad debts | (93,142) | (207,767) |
| Change in warrant derivative liability | (21,685) | 72,767 |
| Changes in operating assets and liabilities: | ||
| Decrease (increase) in accounts receivable | 6,451,620 | (1,106,823) |
| Increase in income taxes receivable | (3,525,316) | -- |
| Decrease (increase) in prepaid expenses and other current assets | 105,674 | (92,687) |
| Increase in other assets | (15,394) | -- |
| Decrease in accounts payable | (3,674,840) | (165,636) |
| (Decrease) increase in accrued expenses | (1,218,173) | 374,356 |
| Increase in deferred rent | 18,958 | 8,942 |
| Increase in accrued interest | -- | 5,918 |
| Net cash provided by (used in) operating activities | 1,567,101 | (363,383) |
| Cash flows from investing activities: | ||
| Proceeds from sale of available-for-sale securities | 11,249 | -- |
| Increase in restricted cash | (1,291,746) | |
| Purchases of property and equipment | (439,219) | (19,263) |
| Net cash used in investing activities | (1,719,716) | (19,263) |
| Cash flows from financing activities: | ||
| Proceeds from stock options and warrants exercised | 80,000 | -- |
| (Repayments to) proceeds from credit facility, net | (3,248,594) | 642,975 |
| Principal payments on capital leases | (7,561) | (3,198) |
| Net cash (used in) provided by financing activities | (3,176,155) | 639,777 |
| Cash flows from discontinued operations: | ||
| Cash flows from investing activities-divestiture | -- | (250,000) |
| Net cash used in discontinued operations | -- | (250,000) |
| Net (decrease) increase in cash and cash equivalents | (3,328,770) | 7,131 |
| Cash and cash equivalents at beginning of period | 12,653,958 | 183,871 |
| Cash and cash equivalents at end of period | $ 9,325,188 | $ 191,002 |
| Supplemental disclosure of cash flow information: | ||
| Interest paid | $ 131,470 | $ 76,412 |
| Income taxes paid | $ 576,583 | -- |
| Non-cash investing and financing activities: | ||
| Property and equipment acquired through capital leases | $ 465,600 | -- |
| Leasehold improvements increased for deferred rent | $ 83,070 | -- |