Vocus Posts 1Q Loss, Guides Firm - Analyst Blog

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Vocus Inc. 's ( VOCS ) first quarter 2012 adjusted loss per share of 16 cents was better than the Zacks Consensus Estimate of a loss per share of 17 cents. Despite the loss, shares jumped 6.57% in the after-hour trade due to favorable second quarter guidance and raised fiscal 2012 guidance.

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 $34.9 million in the first quarter increased 29.1% from $27.0 million generated a year ago. The top line was almost in line the company's guided range of $34.7 million to $35.0 million as well as Zacks Consensus Estimate of $35.0 million. The favorable outcome was backed by customer additions and improved product adoption.

Management believes that Vocus' continuous investing activity and a new product launch targeting the small and mid-sized organizations have boosted the quarter's results.

Customers

Vocus added 1,196 new subscribers during the first quarter, compared with 682 in the year-earlier quarter. Total active subscribers were 13,103 at quarter end. A healthy mix of customers across organizations, geographic areas and industries was also noticed.

The company signed a host of subscription agreements with new and existing customers. Notable among these are Bose Corporation, British Gymnastics, Browse and Pick Corporation, The Canary Party, Cincinnati Children's Hospital, Clio, Empire Today, LivingWorks Education, Mairie de Marseille, Mary Kay, Sleep Restfully, Smartlogic, Toledo Symphony, Under Armour Inc. ( UA ), Urban Outfitters Inc. ( URBN ) and Whirlpool Corp. ( WHR ).

Operating Results

Gross margin was 79.0%, down from 79.8% in the year-ago quarter. Operating loss was $10.4 million compared to $3.1 million in the year-ago quarter. The operating loss can be attributed to a 54.1% year-over-year rise in operating expenses, which outpaced the 29.1% revenue growth.

Net loss on a GAAP basis was $10.8 million or 57 cent per share, compared with $1.9 million or 10 cents in the first quarter of 2011. Excluding one-time items, but including stock-based compensation expense, net loss was $3.5 million or 16 cents per share, compared with $795,000 or 4 cents in the year-earlier period.

Balance Sheet & Cash Flow

Vocus exited the quarter with $25.8 million in cash and short-term investments versus $108.2 million in the previous quarter. Accounts receivables were $19.8 million. The company generated $3.5 million in cash from operations versus $6.3 million in the previous quarter. Capital expenditure was $0.2 million. Apart from these, the company repurchased its outstanding common shares worth $3.0 million.

Guidance

For the second quarter of 2012, non-GAAP revenue is expected in the range of $43.5 million to $43.80 million, while GAAP revenue is expected in the range of $42.8 million to $43.1 million. Non-GAAP EPS is expected in the range of 8-9 cents assuming an estimated non-GAAP weighted average diluted share count of 24.2 million. GAAP loss per share is expected in the range of 30-29 cents assuming an estimated GAAP weighted average diluted share count of 19.5 million.

Vocus raised its fiscal 2012 guidance. For full-year 2012, non-GAAP revenue is forecast between $171.3 million and $172.5 million (previously $169.9 million and $171.4 million). Non-GAAP EPS is expected in the range of 38 cents to 40 cents (previously 35 cents to 37 cents) assuming an estimated non-GAAP weighted average, diluted share count of 24.5 million shares (previously 24.0 million shares). On a GAAP basis, total revenue will be between $169.1 million and $170.3 million, loss per share will be between $1.25 and $1.23, and the GAAP weighted average diluted share count is projected at 19.5 million.

Vocus expects free cash flow in the range of $15.5 million to $16.5 million (previously $15.0 million to $16.0 million) and capital expenditure to remain $4.0 million.

The above guidance includes expected contribution from the recently acquired iContact.

To Conclude

Vocus posted loss in the first quarter, but the result was better than the Zacks Consensus Estimate. On the other hand, Vocus generated solid revenue growth and was just $100,000 short of our estimate. But the company provided better sequential guidance and raised the fiscal guidance for revenue and earnings on its growth momentum reflected by continuous customer wins and synergies from strategic acquisitions.

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. We believe that the complete integration of iContact (in February 2012) will further boost product adoption.

By leveraging iContact's capabilities and increasing the sales team to target SMBs, Vocus is eyeing the cloud-space opportunities in the SMBs. But there remains a concern related to margin contraction based on higher investments in sales and marketing as well as acquisitions.

Currently, Vocus has a Zacks #3 Rank, which translates into a short-term Hold recommendation.


 
UNDER ARMOUR-A (UA): Free Stock Analysis Report
 
URBAN OUTFITTER (URBN): Free Stock Analysis Report
 
VOCUS INC (VOCS): Free Stock Analysis Report
 
WHIRLPOOL CORP (WHR): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: UA , URBN , VOCS , WHR

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