Conversant, Inc. CNVR, the leader in personalized digital marketing, today reported financial results for its fourth quarter and full year ended December 31, 2013.
“We delivered solid execution in the fourth quarter, driven by Media segment revenues that outperformed across all product lines,” said John Giuliani, president and CEO of Conversant. “Last week we unveiled our company rebrand and launched our largest-ever marketing campaign, highlighting our leading capabilities in personalized digital marketing and sharing our vision for the future. This marks an exciting step forward for Conversant and the early response from customers and prospects has been very positive. We expect that our investments in this initiative during the first quarter will pay dividends in the balance of 2014 and beyond.”
| Q4 and Full Year Results Summary | ||||||||||||||||||||||
| In millions, except percentages and per share amounts | Q4 2013 | Q4 2012 | % Change | FY 2013 | FY 2012 | % Change | ||||||||||||||||
| Revenue | $ | 176.4 | $ | 166.6 | 6% | $ | 573.1 | $ | 539.8 | 6% | ||||||||||||
| Adjusted EBITDA(1) | 74.8 | 68.1 | 10% | 222.2 | 192.9 | 15% | ||||||||||||||||
|
GAAP Net Income from Continuing |
38.9 | 29.9 | 30% | 90.4 | 78.6 | 15% | ||||||||||||||||
| Non-GAAP Net Income(1) | $ |
46.0 |
$ | 35.9 |
28% |
$ |
115.6 |
$ | 109.7 |
5% |
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|
GAAP Net Income from Continuing |
$ | 0.57 | $ | 0.39 | 46% | $ | 1.22 | $ | 1.00 | 22% | ||||||||||||
| Non-GAAP Net Income Per Diluted Common Share(1) | $ |
0.67 |
$ | 0.47 |
43% |
$ | 1.56 | $ | 1.39 | 12% | ||||||||||||
| (1) Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Net Income Per Diluted Share are Non-GAAP measures that are described below and reconciled to their most comparable GAAP measures. | ||||||||||||||||||||||
Q4 2013 Financial Summary
- Revenue was $176.4 million, an increase of 6% year-over-year.
- Adjusted EBITDA was $74.8 million, an increase of 10% year-over-year.
- Adjusted EBITDA margin increased to 42.4% from 40.9% in the fourth quarter of 2012.
- Non-GAAP net income per diluted share was $0.67, an increase of 43% year-over-year.
- GAAP net income from continuing operations per diluted share was $0.57, an increase of 46% year-over-year.
- The effective tax rate for Q4 2013 of 34.2% benefited from certain discrete tax adjustments and is preliminary pending the Company's final income tax procedures. Any changes to this preliminary tax rate will be reflected in the Company's Form 10-K required to be filed by March 3, 2014.
Recent Business Highlights
- On February 6, 2014, Conversant acquired SET Media, a digital video technology company that connects brands with consumers through high quality, targeted, and brand safe video advertising campaigns. The acquisition increases Conversant's scale and capabilities within video advertising, one of the fastest-growing segments of digital advertising.
- On February 3, 2014, the Company changed its name to Conversant and initiated a comprehensive marketing campaign to highlight Conversant's leading capabilities in personalized digital marketing. The Company's common stock began trading under the new NASDAQ ticker symbol, CNVR, on February 5, 2014.
- On January 10, 2014, the Company completed the sale of its former Owned & Operated Websites (“O&O”) Segment. The divestiture demonstrates key progress on efforts to align the business with the Company's strategic vision, which will better serve Conversant clients, employees and shareholders.
- On December 6, 2013, the Company announced a partnership with Twitter to help advertisers tailor audiences on the social network and reach them through personalized communication from Promoted Tweets and Promoted Accounts. Conversant was the only initial launch partner capable of personalizing messaging beyond segments to the individual level and connecting with Twitter users across their devices, in real-time.
Cash Flows and Stock Repurchases
- Free cash flow for the year ended December 31, 2013 was $164.9 million, an increase of 19% year-over-year. (The Company defines free cash flow as net cash provided by operating activities less capital expenditures.)
- The Company expects free cash flow in 2014 will benefit from the utilization of cash tax benefits generated in connection with the O&O segment divestiture. The Company currently estimates these cash tax benefits will reduce its normalized cash tax payment obligations by approximately $40 million in 2014.
- Conversant continues to use its cash flows and strong balance sheet to return capital to shareholders. During 2013, the Company repurchased 10 million common shares for $223.8 million.
- Currently, $100 million is available under the Company's stock repurchase program.
Balance Sheet
- As of December 31, 2013, cash and cash equivalents were $81.3 million and total debt was $140 million.
- The Company grew its cash and cash equivalents by $26.8 million and reduced its outstanding debt balance by $55 million during the fourth quarter of 2013.
- The December 31, 2013 balance sheet does not include $80 million of gross proceeds from the divestiture of the O&O segment received by the Company in January 2014.
| Conversant Segment Financial Summary | |||||||||||||||||||||||||||
| In millions, except percentages | Q4 2013 | Q4 2012 |
% Change |
FY 2013 | FY 2012 | % Change | |||||||||||||||||||||
| Affiliate Marketing Revenue | $ | 49.1 | $ | 43.9 | 12% | $ | 162.9 | $ | 149.5 | 9% | |||||||||||||||||
| Media Revenue | 127.4 | 122.7 | 4% | 410.4 | 390.6 | 5% | |||||||||||||||||||||
| Intersegment Eliminations | — | (0.1 | ) | NM | (0.1 | ) | (0.3 | ) | NM | ||||||||||||||||||
| Consolidated Revenue | $ | 176.4 | $ | 166.6 | 6% | $ | 573.1 | $ | 539.8 | 6% | |||||||||||||||||
| Affiliate Marketing Income from Operations | $ | 33.2 | $ | 28.4 | 17% | $ | 102.3 | $ | 91.4 | 12% | |||||||||||||||||
| Media Income from Operations | 47.1 | 45.0 | 5% | 136.6 | 120.2 | 14% | |||||||||||||||||||||
| Total Segment Income from Operations | $ | 80.2 | $ | 73.4 | 9% | $ | 238.9 | $ | 211.6 | 13% | |||||||||||||||||
Q4 2013 Segment Results Summary
- Affiliate marketing segment revenue was $49.1 million, an increase of 12% year-over-year. The increase in Affiliate Marketing segment revenue and operating profitability was driven primarily by net new client wins during 2013.
- Media segment revenue was $127.4 million, an increase of 4% year-over-year. Continued solid growth in CRM, mobile, video and cross-device solutions was partially offset by a decline in the Company's traditional insertion-order display business.
Q1 2014 Business Outlook
- Conversant's financial guidance for the first quarter of 2014 is presented in the following tables.
- The guidance includes approximately $3 million in incremental and one-time operating expenses related to the corporate name change to Conversant and related marketing campaign to highlight the Company's leading capabilities in personalized digital marketing. The guidance also assumes the recent SET Media acquisition will contribute an operating loss of approximately $1 million and nominal revenue.
- Results for the first quarter of 2013 are provided as a basis for comparison and have been recast to reflect the reclassification of the O&O segment to discontinued operations.
| Consolidated Financial Outlook |
Q1 2014 |
Q1 2013 |
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| Revenue | $138 - $144 million | $134.5 million | ||||||
| Adjusted EBITDA | $47 - $49 million | $50.4 million | ||||||
| Mid-Point Adjusted EBITDA Margin | 34.0% | 37.5% | ||||||
| Non-GAAP net income per diluted common share | $0.38 - $0.39 | $0.38 | ||||||
| Impact of stock-based compensation and amortization of intangibles, net of tax | $(0.10) | $(0.08) | ||||||
| GAAP net income from continuing operations per diluted common share | $0.28 - $0.29 | $0.30 | ||||||
| Segment Revenue Assumptions |
Q1 2014 |
Q1 2013 |
||||||
| Affiliate Marketing Segment Revenue | $39 - $41 million | $38.3 million | ||||||
| Media Segment Revenue | $99 - $103 million | $96.3 million | ||||||
Additional Guidance Assumptions
Conversant's first quarter 2014 guidance assumes: stock-based compensation of $5.0 million; amortization of intangible assets of $7.0 million ($2.5 million of which will be included in cost of revenue); net interest and other expense of $0.5 million; a 40% effective tax rate; and 68.5 million diluted shares outstanding.
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding Conversant's financial results, Conversant has disclosed in the tables below and elsewhere in this press release Adjusted EBITDA and Non-GAAP Net Income Per Diluted Common Share. Each of these Non-GAAP measures is defined within the following section of this press release and reconciled to their most comparable GAAP financial measure. Investors should not consider these Non-GAAP measures in isolation or as a substitute for GAAP financial measures. Conversant's definition of Adjusted EBITDA and Non-GAAP Net Income Per Diluted Common Share may not necessarily be directly comparable to similarly titled Non-GAAP measures employed by other companies.
Q4 2013 Conference Call and Webcast Today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
Conversant management will host a conference call at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) today to discuss its financial and operating results for the fourth quarter of 2013. A live webcast of the conference call, along with a financial highlights presentation containing supplemental information, will be available on Conversant's investor relations website at http://ir.conversantmedia.com. A replay of the webcast will be available through the same link beginning approximately two hours after the completion of the live call.
To access the live conference call by telephone, interested parties should dial 888-221-3894 (for domestic participants) or 913-312-1500 (for international participants) at least 10 minutes prior to the start time and use conference ID 5106571. A telephonic replay of the conference call will be available from 7:30 p.m. Eastern Time on February 11, 2014 until 7:30 p.m. Eastern Time on February 18, 2014. To access the replay, interested parties should dial 888-203-1112 (for domestic participants) and 719-457-0820 (for international participants) and the conference ID 5106571.
About Conversant
Conversant, Inc. CNVR is the leader in personalized digital marketing. Combining the strengths of ValueClick Media, Commission Junction, Mediaplex, Greystripe and Dotomi, Conversant helps the world's biggest companies grow by creating personalized experiences that deliver higher returns for brands and greater satisfaction for people. We offer a fully integrated personalization platform, personalized media programs and the world's largest affiliate marketing network - all fueled by a deep understanding of what motivates people to engage, connect and buy. For more information, please visit www.conversantmedia.com.
Cautionary Information Regarding Forward-Looking Statements
This release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, the risk that market demand for on-line advertising in general, and performance based on-line advertising in particular, will not grow as rapidly as predicted, and the risk that legislation and governmental regulation could negatively impact the Company's performance. 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 "Risk Factors" and elsewhere in filings with the Securities and Exchange Commission made from time to time by Conversant, including, but not limited to: its annual report on Form 10-K filed on February 27, 2013; recent quarterly reports on Form 10-Q; and other current reports on Form 8-K.
The Business Outlook contained in this release is based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any mergers, acquisitions or other business combinations that may be completed after the date of this release. Actual stock-based compensation may differ from these estimates based on the timing and amount of stock awards granted, the assumptions used in stock award valuation and other factors. Actual income tax expense may differ from these estimates based on tax planning, changes in tax accounting rules and laws, and other factors.
Conversant 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.
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CONVERSANT, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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|
(In thousands, except per share data) |
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| Three-month Period | ||||||||||
| Ended December 31, | ||||||||||
| 2013 | 2012 | |||||||||
| (Unaudited) | ||||||||||
| Revenue | $ | 176,443 | $ | 166,568 | ||||||
| Cost of revenue (Note 1) | 56,141 | 52,582 | ||||||||
| Gross profit | 120,302 | 113,986 | ||||||||
| Operating expenses: | ||||||||||
| Sales and marketing (Note 2) | 23,961 | 21,190 | ||||||||
| General and administrative (Note 2) | 17,558 | 19,900 | ||||||||
| Technology (Note 2) | 13,896 | 13,901 | ||||||||
| Amortization of intangible assets acquired in business combinations | 4,558 | 3,625 | ||||||||
| Total operating expenses | 59,973 | 58,616 | ||||||||
| Income from operations | 60,329 | 55,370 | ||||||||
| Interest and other expense, net | (1,158 | ) | (760 | ) | ||||||
| Income before income taxes | 59,171 | 54,610 | ||||||||
| Income tax expense | 20,239 | 24,728 | ||||||||
| Net income from continuing operations | 38,932 | 29,882 | ||||||||
| Income from discontinued operations, net of tax | 6,078 | 6,397 | ||||||||
| Net income | $ | 45,010 | $ | 36,279 | ||||||
|
Net income from continuing operations
|
$ | 0.58 | $ | 0.40 | ||||||
|
Net income from continuing operations
|
$ | 0.57 | $ | 0.39 | ||||||
| Net income per common share - basic | $ | 0.67 | $ | 0.48 | ||||||
| Net income per common share - diluted | $ | 0.66 | $ | 0.47 | ||||||
|
Weighted-average shares used to compute net
|
66,781 | 75,225 | ||||||||
|
Weighted-average shares used to compute net
|
68,295 | 76,687 | ||||||||
|
Note 1 - Includes amortization of intangible assets acquired in
business combinations of $2.0 million |
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| Note 2 - Includes stock-based compensation as follows: | ||||||||||
| Three-month Period | ||||||||||
| Ended December 31, | ||||||||||
| 2013 | 2012 | |||||||||
| (Unaudited) | ||||||||||
| Sales and marketing | $ | 1,292 | $ | 1,031 | ||||||
| General and administrative | 2,406 | 2,188 | ||||||||
| Technology | 1,207 | 926 | ||||||||
| Total stock-based compensation | $ | 4,905 | $ | 4,145 | ||||||
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CONVERSANT, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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|
(In thousands, except per share data) |
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| Year Ended December 31, | |||||||||
| 2013 | 2012 | ||||||||
| (Unaudited) | |||||||||
| Revenue | $ | 573,121 | $ | 539,820 | |||||
| Cost of revenue (1) | 183,282 | 177,562 | |||||||
| Gross profit | 389,839 | 362,258 | |||||||
| Operating expenses: | |||||||||
| Sales and marketing (Note 2) | 88,104 | 79,944 | |||||||
| General and administrative (Note 2) | 63,143 | 73,791 | |||||||
| Technology (Note 2) | 55,602 | 54,838 | |||||||
| Amortization of intangible assets acquired in business combinations | 15,208 | 19,755 | |||||||
| Total operating expenses | 222,057 | 228,328 | |||||||
| Income from operations | 167,782 | 133,930 | |||||||
| Interest and other (expense) income, net | (25,180 | ) | 747 | ||||||
| Income before income taxes | 142,602 | 134,677 | |||||||
| Income tax expense | 52,160 | 56,073 | |||||||
| Net income from continuing operations | 90,442 | 78,604 | |||||||
| Income from discontinued operations, net of tax | 8,431 | 22,132 | |||||||
| Gain on sale, net of tax | 2,286 | 980 | |||||||
| Net income | $ | 101,159 | $ | 101,716 | |||||
|
Net income from continuing operations per common share - basic |
$ | 1.25 | $ | 1.02 | |||||
|
Net income from continuing operations per common share - diluted |
$ | 1.22 | $ | 1.00 | |||||
| Net income per common share - basic | $ | 1.40 | $ | 1.32 | |||||
| Net income per common share - diluted | $ | 1.36 | $ | 1.29 | |||||
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Weighted-average shares used to compute net income per common share - basic |
72,376 | 77,342 | |||||||
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Weighted-average shares used to compute net income per common share - diluted |
74,122 | 78,898 | |||||||
|
Note 1 - Includes amortization of intangible assets acquired in
business combinations of $7.9 million and |
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| Note 2 - Includes stock-based compensation as follows: | |||||||||
| Year Ended December 31, | |||||||||
| 2013 | 2012 | ||||||||
| (Unaudited) | |||||||||
| Sales and marketing | $ | 5,093 | $ | 4,885 | |||||
| General and administrative | 9,299 | 10,840 | |||||||
| Technology | 4,578 | 5,108 | |||||||
| Total stock-based compensation | $ | 18,970 | $ | 20,833 | |||||
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CONVERSANT, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands) |
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| December 31, | December 31, | ||||||||
| 2013 | 2012 | ||||||||
| (Unaudited) | |||||||||
| ASSETS | |||||||||
| Current Assets: | |||||||||
| Cash and cash equivalents | $ | 81,319 | $ | 136,638 | |||||
| Accounts receivable, net | 148,738 | 147,487 | |||||||
| Other current assets | 17,744 | 27,136 | |||||||
| Assets held for sale | 32,802 | — | |||||||
| Total current assets | 280,603 | 311,261 | |||||||
| Assets held for sale, less current portion | 55,642 | — | |||||||
| Note receivable, less current portion | — | 27,615 | |||||||
| Property and equipment, net | 28,006 | 29,014 | |||||||
| Goodwill | 388,922 | 434,507 | |||||||
| Intangible assets, net | 48,501 | 81,822 | |||||||
| Other assets | 15,381 | 15,477 | |||||||
| TOTAL ASSETS | $ | 817,055 | $ | 899,696 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Borrowings under credit facility, current | $ | — | $ | 10,000 | |||||
| Other current liabilities | 130,529 | 132,401 | |||||||
| Borrowings under credit facility, less current portion | 140,000 | 132,500 | |||||||
| Other non-current liabilities | 33,645 | 34,090 | |||||||
| Liabilities related to assets held for sale | 8,704 | — | |||||||
| Total liabilities | 312,878 | 308,991 | |||||||
| Total stockholders' equity | 504,177 | 590,705 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 817,055 | $ | 899,696 | |||||
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CONVERSANT, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(In thousands) |
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| For the Year Ended December 31, | ||||||||||
| 2013 | 2012 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net income | $ | 101,159 | $ | 101,716 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Loss on note receivable | 22,556 | — | ||||||||
| Depreciation and amortization | 39,398 | 44,189 | ||||||||
| Non-cash, stock-based compensation | 20,167 | 21,767 | ||||||||
| Provision for doubtful accounts and sales credits | 3,674 | 4,382 | ||||||||
| Gain on sale of business | (2,286 | ) | (980 | ) | ||||||
| Amortization of discount on note receivable | (570 | ) | (2,370 | ) | ||||||
| Deferred income taxes | 9,364 | (3,397 | ) | |||||||
| Tax benefit from stock-based awards | 4,131 | 2,956 | ||||||||
| Excess tax benefit from stock-based awards | (4,319 | ) | (3,251 | ) | ||||||
| Changes in operating assets and liabilities, excluding business acquisitions | (14,722 | ) | (8,958 | ) | ||||||
| Net cash provided by operating activities | 178,552 | 156,054 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Purchases of property and equipment | (13,694 | ) | (17,472 | ) | ||||||
| Principal payments received on note receivable | 7,460 | 4,191 | ||||||||
| Payments for acquisitions, net of cash acquired | — | (241 | ) | |||||||
| Net cash used in investing activities | (6,234 | ) | (13,522 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from borrowings under credit agreement | 225,799 | 82,000 | ||||||||
| Repayments under credit agreement | (230,000 | ) | (107,000 | ) | ||||||
| Repurchases and retirement of common stock | (223,824 | ) | (110,795 | ) | ||||||
| Proceeds from shares issued under employee stock programs | 8,855 | 7,236 | ||||||||
| Excess tax benefit from stock-based awards | 4,319 | 3,251 | ||||||||
| Net cash used in financing activities | (214,851 | ) | (125,308 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 2,147 | 2,738 | ||||||||
| Net increase in cash and cash equivalents of discontinued operations | (14,933 | ) | — | |||||||
| Net (decrease) increase in cash and cash equivalents | (55,319 | ) | 19,962 | |||||||
| Cash and cash equivalents, beginning of period | 136,638 | 116,676 | ||||||||
| Cash and cash equivalents, end of period | 81,319 | 136,638 | ||||||||
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CONVERSANT, INC. |
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RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS |
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TO ADJUSTED EBITDA (Note 1) |
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(In thousands) |
||||||||||
| Three-month Period | ||||||||||
| Ended December 31, | ||||||||||
| 2013 | 2012 | |||||||||
| (Unaudited) | ||||||||||
| Net income from continuing operations | $ | 38,932 | $ | 29,882 | ||||||
| Interest and other expense, net | 1,158 | 760 | ||||||||
| Provision for income tax | 20,239 | 24,728 | ||||||||
| Amortization of acquired intangible assets included in cost of revenue | 1,986 | 1,986 | ||||||||
| Amortization of acquired intangible assets included in operating expenses | 4,558 | 3,625 | ||||||||
| Depreciation and leasehold amortization | 3,023 | 2,948 | ||||||||
| Stock-based compensation | 4,905 | 4,145 | ||||||||
| Adjusted EBITDA | $ | 74,801 | $ | 68,074 | ||||||
| Year Ended December 31, | ||||||||||
| 2013 | 2012 | |||||||||
| (Unaudited) | ||||||||||
| Net income from continuing operations | $ | 90,442 | $ | 78,604 | ||||||
| Interest and other expense (income), net | 25,180 | (747 | ) | |||||||
| Provision for income tax | 52,160 | 56,073 | ||||||||
| Amortization of acquired intangible assets included in cost of revenue | 7,943 | 7,976 | ||||||||
| Amortization of acquired intangible assets included in operating expenses | 15,208 | 19,755 | ||||||||
| Depreciation and leasehold amortization | 12,263 | 10,399 | ||||||||
| Stock-based compensation | 18,970 | 20,833 | ||||||||
| Adjusted EBITDA | $ | 222,166 | $ | 192,893 | ||||||
Note 1 - “Adjusted EBITDA” (GAAP net income from continuing operations before interest, income taxes, depreciation, amortization, and stock-based compensation) included in this press release is a non-GAAP financial measure.
Adjusted EBITDA, as defined above, may not be similar to Adjusted EBITDA measures used by other companies and is not a measurement under GAAP. Management believes that Adjusted EBITDA provides useful information to investors about the Company's performance because it eliminates the effects of period-to-period changes in income from interest on the Company's cash and cash equivalents, note receivable and borrowings, and the costs associated with income tax expense, capital investments, and stock-based compensation which are not directly attributable to the underlying performance of the Company's business operations. Management uses Adjusted EBITDA in evaluating the overall performance of the Company's business operations.
Though management finds Adjusted EBITDA useful for evaluating aspects of the Company's business, its reliance on this measure is limited because excluded items often have a material effect on the Company's earnings and earnings per common share calculated in accordance with GAAP. Therefore, management uses Adjusted EBITDA in conjunction with GAAP earnings and earnings per common share measures. The Company believes that Adjusted EBITDA provides investors with an additional tool for evaluating the Company's core performance, which management uses in its own evaluation of overall performance, and a baseline for assessing the future earnings potential of the Company. While the GAAP results are more complete, the Company prefers to allow investors to have this supplemental metric since, with a reconciliation to GAAP, it may provide greater insight into the Company's financial results.
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CONVERSANT, INC. |
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RECONCILIATION OF GAAP NET INCOME FROM CONTINUING OPERATIONS TO |
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NON-GAAP NET INCOME PER DILUTED COMMON SHARE (Note 1) |
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(In thousands) |
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| Three-month Period | ||||||||||
| Ended December 31, | ||||||||||
| 2013 | 2012 | |||||||||
| (Unaudited) | ||||||||||
| Net income from continuing operations | $ | 38,932 | $ | 29,882 | ||||||
| Stock-based compensation | 4,905 | 4,145 | ||||||||
| Amortization of acquired intangible assets included in cost of revenue | 1,986 | 1,986 | ||||||||
| Amortization of acquired intangible assets included in operating expenses | 4,558 | 3,625 | ||||||||
| Tax impact of above items |
(4,421 |
) | (3,741 | ) | ||||||
| Non-GAAP net income | $ |
45,960 |
$ | 35,897 | ||||||
| Non-GAAP diluted net income per common share | $ |
0.67 |
$ | 0.47 | ||||||
| Weighted-average shares used to compute non-GAAP net income per diluted common share | 68,295 | 76,687 | ||||||||
| Year Ended December 31, | ||||||||||
| 2013 | 2012 | |||||||||
| (Unaudited) | ||||||||||
| Net income from continuing operations | $ | 90,442 | $ | 78,604 | ||||||
| Stock-based compensation | 18,970 | 20,833 | ||||||||
| Amortization of acquired intangible assets included in cost of revenue | 7,943 | 7,976 | ||||||||
| Amortization of acquired intangible assets included in operating expenses | 15,208 | 19,755 | ||||||||
| Tax impact of above items |
(17,012 |
) | (17,473 | ) | ||||||
| Non-GAAP net income | $ |
115,551 |
$ | 109,695 | ||||||
| Non-GAAP diluted net income per common share | $ | 1.56 | $ | 1.39 | ||||||
| Weighted-average shares used to compute non-GAAP net income per diluted common share | 74,122 | 78,898 | ||||||||
Note 1 - “Non-GAAP net income per diluted common share” (GAAP net income from continuing operations per diluted common share before the impact of stock-based compensation and amortization of intangibles) included in this press release is a non-GAAP financial measure.
Non-GAAP net income per diluted common share, as defined above, may not be similar to non-GAAP net income per diluted common share measures used by other companies and is not a measurement under GAAP. Management believes that non-GAAP net income per diluted common share provides useful information to investors about the Company's performance because it eliminates the effects of items which are not directly attributable to the underlying performance of the Company's business operations. Management uses non-GAAP net income per diluted common share in evaluating the overall performance of the Company's business operations.
Though management finds non-GAAP net income per diluted common share useful for evaluating aspects of the Company's business, its reliance on this measure is limited because excluded items often have a material effect on the Company's earnings and earnings per common share calculated in accordance with GAAP. Therefore, management uses non-GAAP net income per diluted common share in conjunction with GAAP earnings and earnings per common share measures. The Company believes that non-GAAP net income per diluted common share provides investors with an additional tool for evaluating the Company's core performance, which management uses in its own evaluation of overall performance, and a baseline for assessing the future earnings potential of the Company. While the GAAP results are more complete, the Company prefers to allow investors to have this supplemental metric since, with a reconciliation to GAAP, it may provide greater insight into the Company's financial results.
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CONVERSANT, INC. |
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SEGMENT OPERATING RESULTS |
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(In thousands) |
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| Three-month Period | Year Ended | ||||||||||||||||||
| Ended December 31, | December 31, | ||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||
| Affiliate Marketing: | |||||||||||||||||||
| Revenue | $ | 49,071 | $ | 43,944 | $ | 162,876 | $ | 149,527 | |||||||||||
| Cost of revenue | 4,277 | 4,656 | 17,856 | 17,546 | |||||||||||||||
| Gross profit | 44,794 | 39,288 | 145,020 | 131,981 | |||||||||||||||
| Operating expenses | 11,639 | 10,913 | 42,750 | 40,631 | |||||||||||||||
| Segment income from operations | $ | 33,155 | $ | 28,375 | $ | 102,270 | $ | 91,350 | |||||||||||
| Media: | |||||||||||||||||||
| Revenue | $ | 127,377 | $ | 122,694 | $ | 410,377 | $ | 390,635 | |||||||||||
| Cost of revenue | 49,879 | 45,971 | 157,553 | 152,197 | |||||||||||||||
| Gross profit | 77,498 | 76,723 | 252,824 | 238,438 | |||||||||||||||
| Operating expenses | 30,428 | 31,690 | 116,217 | 118,233 | |||||||||||||||
| Segment income from operations | $ | 47,070 | $ | 45,033 | $ | 136,607 | $ | 120,205 | |||||||||||
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Reconciliation of segment income from operations |
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| Total segment income from operations | $ | 80,225 | $ | 73,408 | $ | 238,877 | $ | 211,555 | |||||||||||
| Corporate expenses | (8,447 | ) | (8,282 | ) | (28,974 | ) | (29,061 | ) | |||||||||||
| Stock-based compensation | (4,905 | ) | (4,145 | ) | (18,970 | ) | (20,833 | ) | |||||||||||
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Amortization of acquired intangible assets included
in consolidated cost of revenue |
(1,986 | ) | (1,986 | ) | (7,943 | ) | (7,976 | ) | |||||||||||
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Amortization of acquired intangible assets included
in consolidated operating expense |
(4,558 | ) | (3,625 | ) | (15,208 | ) | (19,755 | ) | |||||||||||
| Consolidated income from operations | $ | 60,329 | $ | 55,370 | $ | 167,782 | $ | 133,930 | |||||||||||
| Reconciliation of segment revenue to consolidated revenue: | |||||||||||||||||||
| Affiliate Marketing | $ | 49,071 | $ | 43,944 | $ | 162,876 | $ | 149,527 | |||||||||||
| Media | 127,377 | 122,694 | 410,377 | 390,635 | |||||||||||||||
| Inter-segment eliminations | (5 | ) | (70 | ) | (132 | ) | (342 | ) | |||||||||||
| Consolidated revenue | $ | 176,443 | $ | 166,568 | $ | 573,121 | $ | 539,820 | |||||||||||
Conversant, Inc.
Erik Randerson, CFA
818-575-4540
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