ValueClick, Inc. (VCLK)

Q4 2012 Earnings Call

February 13, 2013 4:30 PM ET

Executives

Gary Fuges – VP, IR and Corporate Development

John Giuliani – President and CEO

John Pitstick – CFO

Analysts

Youssef Squali – Cantor Fitzgerald

Brian Fitzgerald – Jefferies

Kerry Rice – Needham

Lauren Slabaugh – Stephens

Tom White – Macquarie

Shyam Patil – Raymond James

Richard Fetyko – Janney Capital

Scott Kessler – S&P Capital

Dan Salmon – BMO Capital Markets

Eric Martinuzzi – Lake Street Capital Markets

Ignatius Njoku – Wells Fargo Securities

Presentation

Operator

Good day. My name is Erin 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 4:30 p.m. Pacific Time on February 20, 2013. Thereafter, it can be accessed on ValueClick’s website at www.valueclick.com or www.streetevents.com. Previously filed SEC filings can also be found on ValueClick’s site. (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, Erin. Good afternoon and welcome to ValueClick’s Fourth Quarter and Fiscal Year 2012 Financial Results Conference Call. Joining me on the call today are John Giuliani, Chief Executive Officer, and John Pitstick, Chief Financial Officer.

This call will contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from the results predicted and reported results should not be considered an indication of future performance. Important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements are detailed under the Risk Factors and elsewhere in filings with the Securities and Exchange Commission made from time-to-time by ValueClick. These include, but are not limited to, its annual report on Form 10-K filed on February 29, 2012, recent quarterly reports on Form 10-Q and other current reports on Form 8-K. 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.

I’d like to now turn the call over to Mr. John A. Giuliani, Chief Executive Officer of ValueClick. John?

John Giuliani

Thank you, Gary. And happy to be here for my first earning’s call as ValueClick CEO. It’s been an exciting 18 months since I joined the company. We’ve experienced consistent growth, despite headwinds from ONO in Europe, solid earnings and cash flows. I think we’ve had thoughtful capital allocation through our stock buyback program. And I personally believe we’ve made good capital decisions on behalf of our shareholders. But we’ve also embarked on a strategic initiative to integrate our businesses that will help us accelerate our organic growth rate. And so we’ve laid a great foundation to build the (inaudible).

At our core is our customer. And to be clear, our goal is to be our advertiser’s best marketing relationship. We can achieve that goal by leveraging our unit combination of the breadth and depth our offerings; our unique data and profile; and utilizing these profiles to personalize messaging across all of our offerings and across all devices.

And so headlines from Q4. We had – overall, we had a solid fourth quarter, 14% organic top line growth, strong margins across the board. But clearly, there’s more work to be done and we’re working hard to align our organization and offering to accelerate the growth – the organic growth profile and to us, this means integration.

A quick review of the integration. During Q4, we’ve made good progress in key areas of integration. Last quarter – or last quarter at the conference, we talked about integrating the sales and business development functions. We’ve hired a leader to this initiative in November, all lines of business are reporting to him now. They’ve had an initial sales meeting and even established a company-wide opportunity matrix with the expressed goal of increasing client penetration, as well as our service offering. As we mentioned last time, we expect this initiative to have some effect in 2013, probably more in the back half, but we expect this to really impact our 2014 and beyond growth plan.

Examples of early traction of our sales groups coming together. In January, we launched the top 10 Internet retailer into the affiliate marketing space, whose relationship that came out of our Dotomi’s group CRM relationship. Additionally, we have a large client that’s been historically just Affiliate and Media. We’ve leveraged the relationship to bring in CRM. All three lines of businesses are growing. The CRM is new, but the others are growing over their past performance. But more importantly, the customer’s now are dealing with one ValueClick sales representative and that person is answering all their calls and handling all their needs. And frankly, at a time – at a very important time when some of their agency relations have been not able to step up, we have been able to do that because we’ve been able to mobilize across our different business offerings. So as we go on, we’ll give you more examples of that. The most prominent examples will be in our increased growth rates.

During Q1, we completed the integration of our media operations teams under common leadership. We mentioned we would do that last time. We’ve selected that leader. We’ve now placed those – the people under that person and we’ve been working the groups together. We think there’s increased opportunity for increased efficiency in our media buy-in. We’re also consolidating publisher relationships.

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