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Vocus Posts Better-than-Expected 3Q - Analyst Blog
10/29/2012 4:05:00 PM
Vocus Inc. ( VOCS ) reported break even earnings in third quarter 2012, better than the Zacks Consensus Estimate of a loss per share of 1 cent.
Better-than-expected revenue generation from iContact benefited the revenues. The quarterly revenues also benefited to a certain extent from the company's SEO new services and Facebook apps. The newly-acquired company iContact is operating at a breakeven level.
Management also opined that Vocus' continuous investments and a product launch targeting the small and mid-sized organizations had a positive impact on the quarter's results.
Gross margin was 80.2%, down from 81.4% in the year-ago quarter. Operating loss was $3.4 million compared with $0.3 million in the year-ago quarter. The operating loss can be traced back to a 66.7% year-over-year rise in operating expenses, which outpaced the 53.1% revenue growth.
Net loss on a GAAP basis was $3.8 million or 20 cents per share, compared with a net loss of $212,000 or 1 cents in the third quarter of 2011. Excluding one-time items, but including stock-based compensation expense, net profit was $29,000 or 0 cent per share, compared with a net income of $913,000 or 4 cents in the year-earlier period.
Balance Sheet & Cash Flow
Vocus exited the quarter with $30.6 million in cash and short-term investments versus $27.6 million in the previous quarter. Accounts receivables were $18.9 million compared with $18.8 million in the previous quarter. The company generated $4.2 million in cash from operations, compared with $3.5 million in the previous quarter.
For full year 2012, non-GAAP revenue is estimated between $172.8 million and $173.2 million. GAAP revenue is expected to be roughly $170.6 million to $171.0 million. Non-GAAP diluted EPS is estimated at 42 cents to 43 cents; whereas GAAP loss per share is expected to be in the range of $1.20 to $1.19. Company expects free cash flow in the range of $15.5 million to $16.5 million. Capital expenditures are projected at $4.0 million.
Though Vocus posted a GAAP loss in the third quarter, the company reported breakeven figures on a non-GAAP basis, which was better than the Zacks Consensus Estimate. Also, Vocus generated solid year-on-year revenue growth and the figure edged past the company's estimate. The company benefited from the high revenue generation ability of iContact and also to a certain extent from the company's SEO new services and Facebook apps.
Vocus exists 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. By leveraging iContact's capabilities and increasing the sales team to target SMBs, Vocus is eyeing the cloud-space opportunities in the SMBs. However, 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 rating.
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