Vocus Inc.’s (VOCS) second quarter 2011 adjusted earnings per share (EPS) of 2 cents outpaced the Zacks Consensus Estimate of break-even.
Organizations’ eagerness to woo customers through online social networking sites boosted the demand for Vocus’ products and services, which backed the quarter’s outperformance.
The adjusted earnings figure excludes amortization of intangible assets, fair value adjustments to deferred revenue and acquisition-related expenses, but includes stock-based compensation expense.
Revenue
Revenue of $28.5 million in the second quarter increased 19.7% from $23.8 million generated a year ago. The quarter’s result was also above the company’s guided range of $27.6 million to $27.8 million. The favorable outcome was due to customer additions, an extended geographical reach, deal wins and strong product traction.
Customers
Vocus added 601 new subscribers during the second quarter, compared with 435 in the year-earlier quarter. The quarter’s net addition to the total active subscribers to 9,857. A healthy mix of customers across organization size, geographic area and industry was also noticed.
The company signed a host of subscription agreements with new and existing customers. Notable among these are BBC World News, Darden Restaurants, Euro RSCG 360, Massachusetts Institute of Technology, Miss Universe Organization, Qualcomm, Time Warner Cable and Trip Advisor.
Operating Results
Gross margin on a GAAP basis was 81.4%, up from 80.3% in the year-ago quarter. Operating loss on a GAAP basis was $1.2 million versus $1.1 million in the year-ago quarter. Excluding one-time items, but including stock-based compensation expense, operating income on a non-GAAP basis was $0.9 million versus $0.5 million in the year-ago quarter.
Net loss on a GAAP basis was $0.8 million or 4 cents per share, compared with $2.0 million or 11 cents per share in the second quarter of 2010. Excluding one-time items, but including stock-based compensation expense, net income was $0.5 million or 2 cents per share, compared with a net loss of $0.02 million or 1 cent in the year-earlier period.
Balance Sheet & Cash Flow
Vocus exited the quarter with $116.8 million in cash and short-term investments versus $99.0 million in the previous quarter. Accounts receivables were $16.6 million. The company generated $6.2 million in cash from operations versus $13.8 million in the previous quarter. Capital expenditure was $4.3 million. Apart from these, the company repurchased shares for an aggregate cost of $50,000.
Guidance
For the third quarter of 2011, revenue is expected in the range of $28.6 million to $28.8 million. Non-GAAP EPS is expected in the range of 19 cents to 20 cents assuming an estimated non-GAAP weighted average diluted share count of 21.6 million. The non-GAAP tax benefit is expected around 2%.
Stock-based compensation, amortization of intangible assets, acquisition-related expenses, the effect of adjustments to deferred revenue related to purchase accounting and adjustments to the fair value of contingent consideration for earn-outs are expected to total 23 cents per share in the third quarter of 2011.
The GAAP loss per share is expected in the range of 4 cents to 3 cents, assuming an estimated weighted average 19.4 million basic and diluted shares outstanding.
For full-year 2011, revenue is forecast between $114.0 million and $114.7 million on a GAAP basis (previously $112.8 million and $113.8 million), and $114.2 million to $114.9 million on a non-GAAP basis (previously $113.0 million to $114.0 million).
Non-GAAP EPS is expected in the range of 77 cents to 79 cents (previously 75 cents to 77 cents) assuming an estimated non-GAAP weighted average diluted share count of 21.2 million shares. The non-GAAP tax benefit is expected around 10%.
The expected GAAP loss per share is 19 cents to 17 cents (previously 21 cents to 19 cents), assuming an estimated weighted average 19.1 million basic and diluted shares outstanding. The GAAP figure includes stock-based compensation, amortization of intangible assets, acquisition-related expenses, the effect of adjustments to deferred revenue related to purchase accounting and adjustments to the fair value of contingent consideration for earn-outs, which taken together is expected to result in a loss of 96 cents per share.
Vocus continues to expect free cash flow in the range of $17.0 million to $18.0 million.
In Conclusion
Vocus reported impressive second quarter results, beating the Zacks Consensus Estimates on the bottom line. Vocus vies in a nascent market and anticipates good growth prospects. In the absence of any real competition, the company has been able to steadily expand its customer base.
The company has also successfully capitalized on strategic acquisitions. Notable among these is the takeover of North Social, a provider of Facebook applications. We believe that this acquisition will further strengthen Vocus’ position in the social media space.
Currently, Vocus has a Zacks #3 Rank, translating to a short-term Hold recommendation.
VOCUS INC (VOCS): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment