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Internet Capital Group, Inc. (ICGE)

Q2 2013 Earnings Call

August 08, 2013 10:00 AM ET

Executives

Karen Greene - IR

Walter Buckley - Chairman and CEO

Kirk Morgan - CFO

Analysts

Jeff Van Rhee - Craig-Hallum

Scott Berg - Northland Securities

David Cohen - Midwood Capital

Ben Atkinson - Gagnon Securities

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2013 ICG Earnings Conference Call. My name is Derek and I’ll be your operator for today. At this time, all participants are in a listen-only mode. (Operator Instructions)

I would now like to turn the conference over to Ms. Karen Greene, Managing Director of Investor Relations. Please proceed.

Karen Greene

Good morning. This is Karen Greene with Investor Relations, and want to welcome you to ICG’s Second Quarter Conference Call. I'd like to remind everyone that we are going to use presentation slides to accompany our prepared remarks today. These slides can be found on our website at icg.com. Go to the investor information tab and you will see an icon for our fourth quarter conference call. The slides can be accessed through that icon. For those of you without immediate access to our website, the conference call and slides will remain on our website and be available for future reference.

On the call this morning, we will be discussing certain non-GAAP financial measures. For additional information on these non-GAAP financial measures, including a reconciliation of these measures to the most comparable GAAP measures, please refer to the press release we put out this morning, including the attachment to this press release. The press release is also available on our website which again is icg.com. To access the press release on our site, go to our home page and select the August 8, 2013 press release. The attachments to the release can be accessed by clicking on the PDF file contained within the release itself.

Before we begin, I would like to briefly review our Safe Harbor language. The statements contained in this press release that are not historical facts are forward-looking statements that involve certain risks and uncertainties, including but not limited to risks associated with the effect of economic conditions generally, capital spending by our company’s customers, our company's ability to compete successfully against their respective competitors, our company's ability to timely and effectively respond to technological developments, our ability to have continued access to capital and to deploy capital effectively and on acceptable terms, our ability to maximize value in connection with divestures, our and our company's collective ability to retain key personnel, and other risks and uncertainties detailed in ICG’s filings with the Securities and Exchange Commission. These and other factors may cause actual results to differ materially from those projected.

With that, I'd like to turn the call over to Walter Buckley, ICG’s Chairman and CEO.

Walter Buckley

Thanks Karen, and welcome and thank you for joining us this morning. Today I will provide an overview of ICG’s performance for Q2 2013, and Kirk Morgan, our Chief Financial Officer, will follow up with ICG’s financial results for the second quarter.

Overall the quarter was right in line with our expectations. I'm turning to slide 5 to review the highlights for the quarter. We signed a number of large contracts and had strong pipeline activity during the quarter. All of which sets us up well for a strong second half of the year. We expect to meet our previously announced annual revenue and adjusted net income guidance and we continue to aggressively repurchase our stock during the quarter buying back 480,000 shares for $5.3 million.

From an operational perspective, we continue to aggressively pursue our key growth initiatives. Fueled by the positive results we are seeing our customer and a growth in our sales pipelines, we continue to aggressively invest in sales and marketing. Spending 9.1 million on sales and marketing across the businesses and bringing year-to-date spend to 17.1 million as compared to 9.4 million for first six months of 2012.

To elaborate on this further, turning to slide 6. Procurian signed a comprehensive procurement outsourcing contract with a global manufacturing company based on South America during the quarter. The company also continues to make good progress with respect to direct selling single category solutions, signing three new energy contracts and significantly spending relationships with two existing Fortune 100 customers.

Since quarter end, company has signed another comprehensive procurement outsourcing contract with a major global brand and has received four verbal commitments, all of which are in contracting phase.

Procuring aggressive sales efforts in Europe are also beginning to reflect pipeline activity as well. Additionally the company is building out sales teams in two new verticals, financial services and pharmaceuticals, to sport the level of interest and opportunity it is seeing on these sectors.

In terms of industry recognition Procurian's naming as one of international association of outsourcing professionals, global 100 providers was recently featured in the special edition of fortune 500 magazine.

The IAOP is a global association that annually ranks the top 100 outsourcing service providers and Procurian was the only procurement focused organization acknowledged on this list.

Now turning to slide 7, GovDelivery signed 34 new clients in Q2, up from 18 in Q1. And grew annual recurring revenue by more than it ever has in its history in the quarter. The company secured its largest contract to date, which is associated with changes in the Federal healthcare policy. Additionally, aggressive lead-gen efforts we saw in a range of small and midsized deals across the Federal state and local markets.

Read the rest of this transcript for free on seekingalpha.com