Vocus Announces Results for Fourth Quarter and Full Year 2009
Strong Quarterly Results Highlighted by Record Net New Customer Additions and Record Revenue

 

LANHAM, MD: February 2, 2010

— Vocus, Inc. (NASDAQ: VOCS), a leading provider of on-demand software for public relations management, announced today financial results for the fourth quarter and full year ended December 31, 2009.

“I’m extremely pleased with the results for the fourth quarter, especially given the continued challenges in the current economy,” said Rick Rudman, President and CEO of Vocus, Inc.  “Of particular note is the record number of new customers that we added in the quarter which we believe best underscores the large and untapped market opportunity we are pursuing.” 

Financial Highlights

Fourth Quarter

    Revenues were $22.0 million for the fourth quarter of 2009, a 7% increase over the same period last year;

    GAAP loss from operations was $(308,000) for the fourth quarter of 2009 compared to income from operations of $663,000 for the same period last year. GAAP net loss was $(821,000), or $(0.05) per diluted share, for the fourth quarter of 2009 compared to net income of $1.4 million, or $0.08 per diluted share, for the same period last year;

    Non-GAAP income from operations was $3.4 million for the fourth quarter of 2009 compared to $4.0 million for the same period last year. Non-GAAP net income was $2.9 million, or $0.15 per diluted share, for the fourth quarter of 2009 compared to $4.5 million, or $0.23 per diluted share, for the same period last year. See Other Supplemental Information for further discussion of non-GAAP measures.

Full Year 2009

    Revenues were $84.6 million for the full year 2009, a 9% increase over the same period last year;

    GAAP income from operations was $376,000 for the full year 2009 compared to a loss from operations of $(300,000) for the same period last year. GAAP net loss was $(2.0) million, or $(0.11) per diluted share, for the full year 2009 compared to net income of $6.9 million, or $0.37 per diluted share, for the same period last year. The results for the full year 2008 include the reversal of a portion of the valuation allowance against deferred tax assets totaling $5.2 million, or $0.27 per diluted share;

    Non-GAAP income from operations was $15.1 million for the full year 2009 compared to $13.5 million for the same period last year. Non-GAAP net income was $12.7 million, or $0.65 per diluted share, for the full year 2009 compared to $15.6 million, or $0.78 per diluted share, for the same period last year. See Other Supplemental Information for further discussion of non-GAAP measures.

Balance Sheet and Other Financial Information

    Total cash, cash equivalents and investments as of December 31, 2009 were $104.7 million, compared to $87.2 million as of December 31, 2008;

    Total deferred revenue as of December 31, 2009 was $47.8 million, compared to $42.9 million as of December 31, 2008;

    Cash flow from operations for the full year 2009 was $16.1 million;

    Free cash flow for the full year 2009 was $19.5 million. See Other Supplemental Information for further discussion of non-GAAP measures;

    224,192 shares of common stock were repurchased in the first quarter of 2009 under the stock repurchase program at an aggregate cost of $3.5 million.

Business Highlights  

    Added a record 437 net new subscription customers during the fourth quarter of 2009 compared to 235 net new subscription customers added during the same period last year (net adds);

    Ended the fourth quarter of 2009 with 4,438 total active subscription customers compared to 3,379 subscription customers at the end of the same period last year;

    Signed subscription agreements with new and existing customers including British Midland Airways, Country Music Television, Coleman Company, Duesseldorf Marketing & Tourism, Firehouse Subs, Florida Fruit & Vegetable Association, Harlem Globetrotters International, Honest Abe Log Homes, Loving Arms Childcare, My Wedding Workbook, New York Institute of Technology, Providence College, Royal Caribbean Cruises, The Smallest Ad Agency In Town and Volvo Group North America;

    Added four new partners to the PRWeb online distribution network to extend its reach to over 80 million readers;

    Launched a next generation news release creation tool which allows users to easily create and distribute multimedia news releases;

    Earned several corporate awards and distinctions including recognition by Deloitte as one of North America’s 500 fastest growing technology companies and inclusion in the Software 500, a ranking of the world’s largest software companies.

Guidance

Vocus is providing, for the first time, guidance for the first quarter and full year 2010 based on information as of February 2, 2010:

    For the first quarter of 2010, revenue is expected to be in the range of approximately $21.8 million to $22.0 million. Non-GAAP EPS is expected to be in the range of $0.14 to $0.15 assuming an estimated non-GAAP weighted average 20.7 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 8%. Amortization of intangible assets and stock-based compensation is expected to be $0.19 per share. GAAP EPS is expected to be in the range of $(0.05) to $(0.04) assuming an estimated weighted average 18.4 million basic and diluted shares outstanding;

    For the full year of 2010, revenue is expected to be in the range of $90.0 million to $92.0 million. Non-GAAP EPS is expected to be in the range of $0.56 to $0.58 assuming an estimated non-GAAP weighted average 21.3 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 8%. Amortization of intangible assets and stock-based compensation is expected to be $0.77 per share. GAAP EPS is expected to be in the range of $(0.21) to $(0.19) assuming an estimated weighted average 18.6 million basic and diluted shares outstanding. Free cash flow is expected to range from $12.0 million to $13.0 million. Our non-GAAP cash tax rate for 2010 is expected to be 20%.

Conference Call Information

Vocus will discuss the financial results and business highlights of the fourth quarter and full year 2009 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 web cast of the conference call on the Investor Relations section of the Company’s website at http://onlinepressroom.net/vocus/ir/webcast/. 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 February 9, 2010 at 11:59 p.m. ET and can be accessed by dialing (888) 203-1112 or (719) 457-0820 and entering conference number 2445490.

About Vocus, Inc.

Vocus, Inc. (NASDAQ: VOCS) is a leading provider of on-demand software for public relations management. Our web-based software suite helps organizations of all sizes to fundamentally change the way they communicate with both the media and the public, optimizing their public relations and increasing their ability to measure its impact. Our on-demand software addresses the critical functions of public relations including media relations, news distribution and news monitoring. We deliver our solutions over the Internet using a secure, scalable application and system architecture, which allows our customers to eliminate expensive up-front hardware and software costs and to quickly deploy and adopt our on-demand software.  Vocus is used by over 4,400 organizations worldwide and is available in seven languages.  Vocus is based in Lanham, MD with offices in North America, Europe and Asia.  For more information, please visit www.vocus.com or call (800) 345-5572.

This release contains “forward-looking” statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These are statements that 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, 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,   December 31,
    2008   2009
            (unaudited)
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 65,429     $ 85,817  
Short-term investments
    21,758       17,851  
Accounts receivable, net
    14,739       18,245  
Current portion of deferred income taxes
    394       685  
Other current assets
    3,340       1,753  
 
               
Total current assets
    105,660       124,351  
Long-term investments
    ––       1,001  
Property, equipment and software, net
    4,615       4,666  
Intangible assets, net
    5,906       3,980  
Goodwill
    17,090       17,090  
Deferred income taxes, net of current portion
    6,097       7,459  
Other assets
    611       693  
 
               
Total assets
  $ 139,979     $ 159,240  
 
               
Liabilities and stockholders’ equity
               
Current liabilities:
               
Accounts payable and accrued expenses
  $ 5,273     $ 6,771  
Current portion of notes payable and capital lease obligations
    185       197  
Current portion of deferred revenue
    41,775       46,789  
 
               
Total current liabilities
    47,233       53,757  
Notes payable and capital lease obligations, net of current portion
    188       48  
Other liabilities
    71       93  
Deferred revenue, net of current portion
    1,079       961  
 
               
Total liabilities
    48,571       54,859  
Commitments and contingencies
               
Stockholders’ equity:
               
Common stock
    194       199  
Additional paid-in capital
    129,897       149,279  
Treasury stock
    (10,783 )     (14,914 )
Accumulated other comprehensive income
    564       305  
Accumulated deficit
    (28,464 )     (30,488 )
 
               
Total stockholders’ equity
    91,408       104,381  
 
               
Total liabilities and stockholders’ equity
  $ 139,979     $ 159,240  
 
               

Vocus, Inc. and Subsidiaries
Consolidated Statements of Operations
(dollars in thousands, except per share data)

                                 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2008   2009   2008   2009
    (unaudited)   (unaudited)           (unaudited)
Revenues
  $ 20,615     $ 22,047     $ 77,520     $ 84,579  
Cost of revenues, including amortization of intangible assets of $71 for the year ended December 31, 2008
    3,915       3,846       14,675       15,461  
 
                               
Gross profit
    16,700       18,201       62,845       69,118  
Operating expenses:
                               
Sales and marketing
    9,644       11,228       35,140       41,123  
Research and development
    1,119       1,230       4,998       4,675  
General and administrative
    4,721       5,581       20,356       21,018  
Amortization of intangible assets
    553       470       2,651       1,926  
 
                               
Total operating expenses
    16,037       18,509       63,145       68,742  
Income (loss) from operations
    663       (308 )     (300 )     376  
Other income (expense):
                               
Interest and other income
    524       103       2,136       485  
Interest expense
    (6 )     (8 )     (27 )     (31 )
 
                               
Income (loss) before provision (benefit) for income taxes
    1,181       (213 )     1,809       830  
Provision (benefit) for income taxes
    (268 )     608       (5,119 )     2,854  
 
                               
Net income (loss)
  $ 1,449     $ (821 )   $ 6,928     $ (2,024 )
 
                               
Net income (loss) per share:
                               
Basic
  $ 0.08     $ (0.05 )   $ 0.38     $ (0.11 )
Diluted
  $ 0.08     $ (0.05 )   $ 0.37     $ (0.11 )
Weighted average shares outstanding used in computing per share amounts:
                               
Basic
    18,239,463       18,138,830       17,997,123       18,077,616  
Diluted
    18,523,210       18,138,830       18,958,500       18,077,616  

Vocus, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)

                                 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2008   2009   2008   2009
    (unaudited)   (unaudited)           (unaudited)
Cash flows from operating activities:
                               
Net income (loss)
  $ 1,449     $ (821 )   $ 6,928     $ (2,024 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                               
Depreciation and amortization
    1,017       887       4,543       3,584  
Tax benefit from stock awards
    (1,951 )     (599 )     (1,951 )     (5,048 )
Other non-cash charges, net
    2,779       3,305       4,333       11,529  
Changes in operating assets and liabilities
    (306 )     420       6,371       8,038  
 
                               
Net cash provided by operating activities
    2,988       3,192       20,224       16,079  
Cash flows from investing activities:
                               
Net change in investments
    1,391       (293 )     (10,771 )     2,851  
Purchases of property, equipment and software, net
    (64 )     (302 )     (1,742 )     (1,445 )
Software development costs
    (51 )     (14 )     (74 )     (156 )
 
                               
Net cash provided by (used in) investing activities
    1,276       (609 )     (12,587 )     1,250  
Cash flows from financing activities:
                               
Purchases of common stock
    (7,500 )     ––       (7,500 )     (4,131 )
Proceeds from the exercise of stock options
    180       554       7,226       2,403  
Tax benefit from stock awards
    1,951       599       1,951       5,048  
Payments on notes payable and capital lease obligations
    (42 )     (16 )     (360 )     (218 )
 
                               
Net cash provided by (used in) financing activities
    (5,411 )     1,137       1,317       3,102  
Effect of exchange rate changes on cash and cash equivalents
    (45 )     13       (66 )     (43 )
 
                               
Net increase (decrease) in cash and cash equivalents
    (1,192 )     3,733       8,888       20,388  
Cash and cash equivalents, beginning of period
    66,621       82,084       56,541       65,429  
 
                               
Cash and cash equivalents, end of period
  $ 65,429     $ 85,817     $ 65,429     $ 85,817  
 
                               

Other Supplemental Information

We define non-GAAP income from operations as income from operations excluding amortization of acquired intangible assets and stock-based compensation. We define non-GAAP net income as net income excluding amortization of acquired intangible assets, stock-based compensation and the income tax benefit related to the reversal of a portion of the valuation allowance against deferred tax assets in 2008. Amortization of intangible assets recorded in connection with our acquisitions consist 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.  Companies record stock-based compensation by applying varying valuation methodologies and subjective assumptions to different types of equity awards. The income tax benefit related to the reversal of a portion of the valuation allowance in 2008 is a non-cash benefit that we do not consider part of ongoing operations. Management uses non-GAAP income from operations and non-GAAP net income to evaluate operating performance, to determine incentive compensation and to prepare operating budgets and determine the appropriate levels of capital investments. Management believes the exclusion of amortization of acquired intangible assets, stock-based compensation and the income tax benefit related to the reversal of the valuation allowance in 2008 allows management and investors to make meaningful comparisons between our operating results and those of other companies, as well as providing a consistent comparison of our relative historical financial performance. However, management believes that non-GAAP income from operations and non-GAAP net income are subject to material limitations since they may not be indicative of ongoing operating results.

We define free cash flow as cash flow from operations less net capital expenditures and capitalized software development costs plus tax benefits from stock awards. 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. Management also uses free cash flow as a measure to evaluate performance and determine incentive compensation. Our definition of free cash flow may be different from definitions used by other companies.

Management compensates for the limitations in the use of non-GAAP financial 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   Year Ended
    December 31,   December 31,
    2008   2009   2008   2009
    (unaudited)   (unaudited)   (unaudited)   (unaudited)
Reconciliation of GAAP income (loss) from operations to non-GAAP income from operations:
                               
Income (loss) from operations
  $ 663     $ (308 )   $ (300 )   $ 376  
Amortization of intangible assets (including $71 in cost of revenues for the year ended December 31, 2008)
    553       470       2,722       1,926  
Stock-based compensation
    2,759       3,254       11,088       12,800  
 
                               
Non-GAAP income from operations
  $ 3,975     $ 3,416     $ 13,510     $ 15,102  
 
                               
Reconciliation of GAAP net income (loss) to non-GAAP net income:
                               
Net income (loss)
  $ 1,449     $ (821 )   $ 6,928     $ (2,024 )
Amortization of intangible assets (including $71 in cost of revenues for the year ended December 31, 2008)
    553       470       2,722       1,926  
Stock-based compensation
    2,759       3,254       11,088       12,800  
Effect of reversal of valuation allowance
    (247 )     ––       (5,171 )     ––  
 
                               
Non-GAAP net income
  $ 4,514     $ 2,903     $ 15,567     $ 12,702  
 
                               
Non-GAAP net income per share:
                               
Non-GAAP diluted
  $ 0.23     $ 0.15     $ 0.78     $ 0.65  
Weighted average shares outstanding used in computing per share amounts:
                               
Non-GAAP diluted
    19,652,427       19,833,526       19,935,666       19,668,533  
Reconciliation of GAAP diluted weighted average shares outstanding to non-GAAP diluted weighted average shares outstanding:
                               
Diluted weighted average shares outstanding
    18,523,210       18,138,830       18,958,500       18,077,616  
Treasury stock effect of outstanding equity securities
    ––       553,276       ––       452,435  
Treasury stock effect of unrecognized stock-based compensation on outstanding equity securities
    1,129,217       1,141,420       977,166       1,138,482  
 
                               
Non-GAAP diluted weighted average shares outstanding
    19,652,427       19,833,526       19,935,666       19,668,533  
 
                               
Supplemental information of stock-based compensation included in:
                               
Cost of revenues
  $ 376     $ 312     $ 1,262     $ 1,453  
Sales and marketing
    1,018       879       3,212       3,753  
Research and development
    230       262       769       989  
General and administrative
    1,135       1,801       5,845       6,605  
 
                               
Total stock-based compensation
  $ 2,759     $ 3,254     $ 11,088     $ 12,800  
 
                               
Reconciliation of cash flow from operations to free cash flow:
                               
Net cash provided by operating activities
  $ 2,988     $ 3,192     $ 20,224     $ 16,079  
Purchases of property, equipment and software, net
    (64 )     (302 )     (1,742 )     (1,445 )
Software development costs
    (51 )     (14 )     (74 )     (156 )
Tax benefit from stock awards
    1,951       599       1,951       5,048  
 
                               
Free cash flow
  $ 4,824     $ 3,475     $ 20,359     $ 19,526  
 
                               


The following information was filed by Vocus, Inc. (VOCS) on Tuesday, February 2, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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