Vocus EPS Loss Narrows (revised) - Analyst Blog
) second quarter 2012 adjusted loss per share of 4 cents was better
than the Zacks Consensus Estimate of a loss per share of 7 cents.
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 of $43.6 million in the second quarter increased 53.1% from $28.5 million generated a year ago. The top line was within the company's guided range of $43.5 million to $43.8 million and roughly in line with the Zacks Consensus Estimate of $44.0 million. The favorable outcome was backed by customer additions and improved product adoption.
Management believes that Vocus' continuous investments and a product launch targeting the small and mid-sized organizations have boosted the quarter's results.
Vocus added 1,013 new subscribers during the second quarter, compared with 601 in the year-earlier quarter. Total active subscribers were 14,116 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 Bhumi Makeup Brushes, Bullfrog Spas, Cash For Cars Quick, Dwell Magazine, EyeMaginations, France Publications, Marque Medical, Miracle Botanicals, Sprout Healthy Vending, Tripwire, University of Cambridge, University of Pennsylvania, Wake County Public School System and Westinghouse Electric.
Gross margin was 80.1%, down from 81.4% in the year-ago quarter. Operating loss was $4.8 million compared to $1.2 million in the year-ago quarter. The operating loss can be traced back to a 62.8% year-over-year rise in operating expenses, which outpaced the 53.1% revenue growth.
Net loss on a GAAP basis was $5.2 million or 27 cents per share, compared with $755,000 or 4 cents in the second quarter of 2011. Excluding one-time items, but including stock-based compensation expense, net loss was $0.94 million or 4 cents per share, compared with a net income of $526,000 or 2 cents in the year-earlier period.
Balance Sheet & Cash Flow
Vocus exited the quarter with $27.6 million in cash and short-term investments versus $25.8 million in the previous quarter. Accounts receivables were $18.8 million. The company generated $3.5 million in cash from operations, flat with the previous quarter. Capital expenditure was $1.2 million. Apart from these, the company repurchased its outstanding common shares for $0.031 million.
For the third quarter of 2012, non-GAAP revenue is expected in the range of $44.7 million to $45.0 million, while GAAP revenue is expected in the range of $44.2 million to $44.5 million. Non-GAAP EPS is expected in the range of 10-11 cents assuming an estimated non-GAAP weighted average diluted share count of 24.5 million. GAAP loss per share is expected in the range of 24-23 cents assuming an estimated GAAP weighted average diluted share count of 19.6 million.
Vocus raised its fiscal 2012 guidance. For full-year 2012, non-GAAP revenue is forecast between $172.0 million and $173.0 million (previously $171.3 million and $172.5 million). Non-GAAP EPS is expected in the range of 40 cents to 42 cents (previously 38 cents to 40 cents) assuming an estimated non-GAAP weighted average, diluted share count of 24.0 million shares (previously 24.5 million shares). On a GAAP basis, the expected total revenue is $169.8 million to $170.8 million and loss per share of $1.21 and $1.19. The GAAP weighted average diluted share count is projected at 19.5 million.
Vocus continues to expect free cash flow in the range of $15.5 million to $16.5 million and capital expenditure to remain $4.0 million.
Vocus posted loss in the second quarter, but the result was better than the Zacks Consensus Estimate. On the other hand, Vocus generated solid revenue growth and the figure was roughly in line with 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.
(Note: We are reissuing this article to correct an inaccuracy. The original article, released earlier today, July 25, 2012, should no longer be relied upon.)
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