NEW YORK – interCLICK, Inc. (the “Company”) (OTCBB: ICLK), a leading behavioral targeting company, announced today record first quarter results for the period ended March 31, 2009. First quarter 2009 revenues of $8.4 million rose 136% from pro forma 2008 first quarter revenues of $3.6 million. Revenues exceeded the Company’s previously announced guidance of at least $7.0 million. Net income of $0.03 million in the 2009 first quarter marks the first profitable quarter for the Company. This compares to a pro forma loss from continuing operations of ($3.0) million in the 2008 first quarter
interCLICK’s record revenues were a function of advertisers shifting a larger share of their budgets to value driven solutions and away from “premium” inventory. This flight to value among advertisers is shared across the range of vertical markets. Against this backdrop, the Company now has 10 verticals each representing a minimum of 5% of total revenues. The 2009 first quarter is seasonally the slowest period for advertisers.
Gross profit of $4.0 million grew 366% from pro forma 2008 first quarter gross profit of $0.9 million while expanding 24% from 2008 fourth quarter gross profit of $3.2 million. Gross margin of 47.3% was the highest in the Company’s history. This compared with pro forma gross margin of 24% in the year-earlier period and 37.8% in the prior quarter, a sequential increase of 950 basis points. Gross margin gains were attributable to supply chain management improvements and efficiencies generated through the Company’s advanced proprietary technology platform.
The Company reported its second consecutive quarter of positive EBITDA and free cash flow due to operating leverage as revenue gains surpassed expense growth. EBITDA for the 2009 first quarter was $0.9 million, or 10.9% of revenues, versus 2008 fourth quarter EBITDA of $0.2 million, or 1.9% of revenues, and pro forma 2008 first quarter EBITDA loss of ($1.7) million, or -47.4% of revenues. Free cash flow for the 2009 first quarter was $0.9 million, or 10.7% of revenues, versus 2008 fourth quarter free cash flow of $0.1 million, or 1.5% of revenues, and pro forma 2008 first quarter free cash outflow of ($1.8) million, or -51.0% of revenues.
The Company’s 2009 first quarter operating income was $0.2 million, or 2.6% of revenues, including $0.7 million, or 8.3% of revenues, in non-cash items such as stock-based compensation, intangible amortization and depreciation. This compares with a 2008 fourth quarter operating loss of ($0.5) million, or -6.4% of revenues, including $0.7 million, or 8.3% of revenues in non-cash items. In the 2008 first quarter, the pro forma operating loss was ($2.3) million, or -65.2% of revenues, including $0.6 million, or 17.9% of revenues in non-cash items.
Subsequent to the end of the 2009 first quarter, the Company increased its revolving credit facility from $4.5 million to $5.5 million, an important development supporting future growth.
“We are pleased that in a seasonally slower period for the advertising industry and a challenging economic environment, interCLICK was able to continue to deliver strong financial results to our shareholders,” said Michael Mathews, interCLICK’s Chief Executive Officer. “Our dedication to continued technology and process innovation has enabled us to deliver meaningful ROI for our advertisers translating into increased revenues and margin.”
Business Outlook:
interCLICK expects 2009 second quarter revenues to exceed $9.5 million and gross margin to be at least 47%. For 2009, the Company is affirming its expectation of 60% year-over-year revenue growth, resulting in full-year revenues forecast to exceed $36 million. interCLICK is currently growing at a rate that would exceed that level. Gross margin is expected to be comparable to or exceed the level of the second quarter.
Conference Call:
The Company will hold a conference call at 4:30 p.m. eastern time today to discuss the results. Interested parties should dial (877) 795-3647 (domestically) or (719) 325-4761 (internationally) and use conference ID 3432330. There will be a replay of the call available for 30 days. To access the replay, interested parties should dial (888) 203-1112 (domestically) or (719) 457-0820 (internationally) and use conference ID 3432330.
NON-GAAP Financial Measures
The Company uses non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to period comparison. Company management believes that the non-GAAP financial measures provide 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. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. The Company believes these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key metrics used by management.
EBITDA. As is common in the industry, the Company uses EBITDA as a measure of performance to demonstrate earnings exclusive of interest and non-cash items. (e.g. depreciation, amortization & stock-based compensation expense). The Company, in its daily management of its business affairs and analysis of its monthly, quarterly and annual performance, makes its decisions based on cash flows. In managing its current and future affairs, the Company cannot affect the amortization of the intangible assets to any material degree, and therefore uses EBITDA as its primary management guide. Since an outside investor may base its evaluation of the Company’s performance on the Company’s net loss not its cash flows, there is a limitation to the EBITDA measurement. EBITDA is not, and should not be considered, an alternative to net loss, loss from operations or any other measure for determining operating performance of liquidity, as determined under GAAP. The most directly comparable GAAP reference in the Company’s case is the removal of interest, depreciation, amortization, taxes and other non-cash expenses.
Pro Forma Information. Pro forma information is used for the first quarter of 2008 revenues in order to back out the revenues of a subsidiary the Company sold in June 2008 so that investors can evaluate and compare interCLICK’s continuing operations.
Free Cash Flow. Free cash flow information is used for the first quarter of 2009. Free cash flow measures the cash flow provided by operating activities less capital expenditures. Management believes that free cash flow provides meaningful information about the Company’s liquidity and future cash availability to fund its operations. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities is that the free cash flow does not represent the total increase or decreases in the cash balance from operations for the period because it excludes cash used for capital expenditures for the period.
To comply with Regulation G of the Securities and Exchange Commission, interCLICK, Inc. attaches to this press release and will post to the Company’s investor relations website (www.interclick.com) any reconciliations of certain non-GAAP measures to the nearest comparable GAAP measures that are presented in this press release.
About interCLICK
interCLICK, Inc. operates the interCLICK Network, an online advertising platform that combines advanced behavioral targeting with complete data and inventory transparency, allowing advertisers to identify and track their desired audience on an unprecedented level. interCLICK offers advanced proprietary demographic, behavioral, contextual, geographic and retargeting technologies across a network of name brand publishers to ensure the right message is delivered to a precise audience in a brand friendly environment. For more information about the interCLICK Network, visit http://www.interclick.com.
