EX-99.1 2 exhibit1.htm EX-99.1 EX-99.1

Vocus Announces Results for First Quarter 2013
Company Reports 33% Revenue Growth and Strong Free Cash Flow with Continued Demand for the Vocus
Marketing Suite

Beltsville, MD: April 23, 2013 – Vocus, Inc. (NASDAQ: VOCS), a leading marketing cloud provider, announced today financial results for the first quarter ended March 31, 2013.

“We have one of the fastest growing marketing clouds today, as bookings in the first quarter for the Vocus Marketing Suite grew 200% over the prior year,” said Rick Rudman, President and CEO of Vocus, Inc. “We remain focused on continuing our expansion beyond PR software into the much larger cloud marketing space which we believe will deliver the next phase of growth and success for Vocus.”  

Financial Highlights

Income Statement

    GAAP revenue for the first quarter of 2013 was $46.2 million, a 33% increase over the comparable period in 2012.

    Non-GAAP revenue for the first quarter of 2013 was $46.3 million, a 30% increase over the comparable period in 2012. Non-GAAP revenue includes the revenue excluded from the GAAP results due to purchase accounting adjustments, which reduced deferred revenue to its fair value as of the date of acquisition.

    GAAP loss from operations for the first quarter of 2013 was $(7.7) million, compared to $(10.4) million for the comparable period in 2012.

    Non-GAAP income from operations for the first quarter of 2013 was $2.5 million, compared to $854,000 for the comparable period in 2012.

    GAAP net loss for the first quarter of 2013 was $(8.1) million or $(0.41) per diluted share, compared to $(10.8) million or $(0.57) per diluted share for the comparable period in 2012.

    Non-GAAP net income for the first quarter of 2013 was $2.1 million or $0.09 per diluted share, compared to $452,000 or $0.02 per diluted share for the comparable period in 2012.

Balance Sheet and Other Financial Information

    Total deferred revenue as of March 31, 2013 was $78.1 million compared to $66.4 million at March 31, 2012.

    Cash flow from operations for the first quarter of 2013 was $10.8 million, and free cash flow for the first quarter of 2013 was $8.5 million.

Business Highlights

    Added 828 net new annual subscription customers during the first quarter of 2013 compared to 1,196 net new annual subscription customers added during the comparable period in 2012 and ended the quarter with 17,322 total active annual subscription customers.

    Signed subscription agreements with new and existing customers including Bankers Toolbox, Convergent Wealth Advisors, Creative Outlook on Life, Diamond Nexus, Euronews, Karl Strauss Brewing, Network Automation, Standard Aero, The Children’s Hospital of Philadelphia, The United Way Worldwide, Universities Space Research Association, Vinci, Vitesse Consulting and Washington Nationals.

    Launched new mobile versions of the Vocus Marketing Suite which includes updated mobile capabilities for all smartphone and tablet users on both Apple® and Android® platforms.

Guidance

Vocus is providing, for the first time, guidance for the second quarter and adjusting guidance for the full year 2013 based on information as of April 23, 2013:

    For the second 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 $(0.02) assuming an estimated tax provision of $450,000. Non-GAAP adjustments are expected to be $0.32 per share. GAAP EPS is expected to be in the range of $(0.35) to $(0.34) 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 $188.0 million to $189.0 million. Non-GAAP diluted EPS is expected to be in the range of $0.15 to $0.18 assuming an estimated non-GAAP weighted average 24.4 million diluted shares outstanding and an estimated tax provision of $1.7 million. Non-GAAP adjustments are expected to be $1.38 per share. GAAP EPS is expected to be in the range of $(1.23) to $(1.20) assuming an estimated weighted average 20.1 million basic and diluted shares outstanding. Free cash flow is expected to range from $12.0 million to $13.0 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 first 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 April 30, 2013 at 11:59 p.m. ET and can be accessed by dialing (404) 537-3406 or (855) 859-2056 and entering conference number 73927292.

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,   March 31,
    2012   2013
            (unaudited)
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 32,107     $ 40,332  
Short-term investments
    662       643  
Accounts receivable, net
    29,841       21,573  
Deferred income taxes
    1,478       1,273  
Prepaid expenses and other current assets
    2,933       2,939  
 
               
Total current assets
    67,021       66,760  
Long-term investments
    1,322        
Property, equipment and software, net
    20,068       21,152  
Intangible assets, net
    26,751       23,607  
Goodwill
    177,011       176,835  
Other assets
    641       759  
 
               
Total assets
  $ 292,814     $ 289,113  
 
               
Liabilities, Series A redeemable convertible preferred stock and stockholders’ equity
               
Current liabilities:
               
Accounts payable and accrued expenses (including contingent consideration of $1,107 and $4,560 at
  $ 21,701     $ 25,221  
December 31, 2012 and March 31, 2013, respectively)
               
Notes payable and capital lease obligations
    854       160  
Deferred revenue
    77,098       76,299  
 
               
Total current liabilities
    99,653       101,680  
Notes payable and capital lease obligations, net of current portion
    751       712  
Other liabilities
    6,786       6,636  
Deferred income taxes, net of current portion
    5,120       5,080  
Deferred revenue, net of current portion
    2,235       1,814  
 
               
Total liabilities
    114,545       115,922  
Series A redeemable convertible preferred stock
    77,490       77,490  
Stockholders’ equity:
               
Common stock
    219       219  
Additional paid-in capital
    215,226       218,935  
Treasury stock
    (41,909 )     (42,322 )
Accumulated other comprehensive loss
    (426 )     (675 )
Accumulated deficit
    (72,331 )     (80,456 )
 
               
Total stockholders’ equity
    100,779       95,701  
 
               
Total liabilities, Series A redeemable convertible preferred stock and stockholders’ equity
  $ 292,814     $ 289,113  
 
               

Vocus, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(dollars in thousands, except per share data)

                 
    Three Months Ended
    March 31,
    2012   2013
    (unaudited)   (unaudited)
Revenues
  $ 34,853     $ 46,247  
Cost of revenues
    7,314       9,752  
 
               
Gross profit
    27,539       36,495  
Operating expenses:
               
Sales and marketing
    20,831       26,835  
Research and development
    3,656       2,998  
General and administrative
    12,393       12,333  
Amortization of intangible assets
    1,100       2,020  
 
               
Total operating expenses
    37,980       44,186  
Loss from operations
    (10,441 )     (7,691 )
Other income (expense)
    (58 )     5  
 
               
Loss before provision for income taxes
    (10,499 )     (7,686 )
Provision for income taxes
    326       439  
 
               
Net loss
  $ (10,825 )   $ (8,125 )
 
               
Net loss per share:
               
Basic and diluted
  $ (0.57 )   $ (0.41 )
Weighted average shares outstanding used in computing per share amounts:
               
Basic and diluted
    19,042,761       19,790,692  

Vocus, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

                 
    Three Months Ended
    March 31,
    2012   2013
    (unaudited)   (unaudited)
Cash flows from operating activities:
               
Net loss
  $ (10,825 )   $ (8,125 )
Adjustments to reconcile net loss to net cash provided by operating activities:
               
Depreciation and amortization
    2,592       4,297  
Other non-cash charges, net
    4,522       7,524  
Payments of contingent consideration for business acquisition in excess of
    (494 )      
fair value on acquisition date
               
Changes in operating assets and liabilities
    7,724       7,127  
 
               
Net cash provided by operating activities
    3,519       10,823  
Cash flows from investing activities:
               
Business acquisition, net of cash acquired
    (79,649 )      
Net change in available-for-sale securities
    6,775       1,328  
Purchases of property, equipment and software, net
    (227 )     (2,211 )
Software development costs
    (198 )     (129 )
 
               
Net cash used in investing activities
    (73,299 )     (1,012 )
Cash flows from financing activities:
               
Purchases of common stock
    (2,971 )     (413 )
Proceeds from exercises of stock options
    14        
Payments of contingent consideration for business acquisitions
    (3,112 )      
Net payments on notes payable and capital lease obligations
    (49 )     (729 )
 
               
Net cash used in financing activities
    (6,118 )     (1,142 )
Effect of exchange rate changes on cash and cash equivalents
    227       (444 )
 
               
Net increase (decrease) in cash and cash equivalents
    (75,671 )     8,225  
Cash and cash equivalents, beginning of period
    98,284       32,107  
 
               
Cash and cash equivalents, end of period
  $ 22,613     $ 40,332  
 
               

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 39% and non-GAAP diluted net income per share of $0.02 and $0.06 for the three months ended March 31, 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
    March 31,
    2012   2013
    (unaudited)   (unaudited)
Reconciliation of GAAP revenue to non-GAAP revenue:
               
GAAP revenue
  $ 34,853     $ 46,247  
Fair value adjustment to deferred revenue
    671       44  
 
               
Non-GAAP revenue
  $ 35,524     $ 46,291  
 
               
Reconciliation of GAAP loss from operations to non-GAAP income from operations:
               
Loss from operations
  $ (10,441 )   $ (7,691 )
Stock-based compensation
    3,984       3,663  
Amortization of intangible assets
    1,608       3,070  
Fair value adjustment to deferred revenue
    671       44  
Fair value adjustments to contingent consideration
    232       3,453  
Acquisition-related expenses
    4,800        
 
               
Non-GAAP income from operations
  $ 854     $ 2,539  
 
               
Reconciliation of GAAP net loss to non-GAAP net income:
               
Net loss
  $ (10,825 )   $ (8,125 )
Stock-based compensation
    3,984       3,663  
Amortization of intangible assets
    1,608       3,070  
Fair value adjustment to deferred revenue
    671       44  
Fair value adjustments to contingent consideration including effects of foreign currency
    214       3,453  
Acquisition-related expenses
    4,800        
 
               
Non-GAAP net income
  $ 452     $ 2,105  
 
               
Non-GAAP diluted net income per share
  $ 0.02     $ 0.09  
Non-GAAP diluted weighted average shares used in computing per share amounts
    21,659,426       24,202,458  
Reconciliation of GAAP diluted weighted average shares outstanding to non-GAAP diluted weighted average shares outstanding:
               
GAAP diluted weighted average shares outstanding
    19,042,761       19,790,692  
Dilutive effect of outstanding equity securities
    2,616,665       4,411,766  
 
               
Non-GAAP diluted weighted average shares outstanding
    21,659,426       24,202,458  
 
               
Supplemental information of acquisition-related expenses included in:
               
Cost of revenues
  $ 52     $  
Sales and marketing
    691        
Research and development
    637        
General and administrative
    3,420        
 
               
Total acquisition-related expenses
  $ 4,800     $  
 
               
Supplemental information of stock-based compensation included in:
               
Cost of revenues
  $ 499     $ 468  
Sales and marketing
    1,172       934  
Research and development
    504       623  
General and administrative
    1,809       1,638  
 
               
Total stock-based compensation
  $ 3,984     $ 3,663  
 
               
Reconciliation of cash flow from operations to free cash flow:
               
Net cash provided by operating activities
  $ 3,519     $ 10,823  
Purchases of property, equipment and software, net
    (227 )     (2,211 )
Software development costs
    (198 )     (129 )
Payments of contingent consideration for business acquisition in excess of fair value
    494        
on acquisition date
               
 
               
Free cash flow
  $ 3,588     $ 8,483  
 
               

Vocus, Inc. and Subsidiaries

Reconciliation of 2013 Guidance

GAAP EPS to Non-GAAP Diluted EPS

                 
    Q2 2013   Full Year 2013
    (unaudited)   (unaudited)
GAAP EPS
  $(0.35) to (0.34)   $(1.23) to (1.20)
Effect of non-GAAP adjustments
    0.32       1.59  
Dilutive effect of outstanding equity securities
          (0.21 )
 
               
Non-GAAP diluted EPS
  $(0.03) to (0.02)   $ 0.15 to 0.18