Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Gary Fuges - Manager of IR

Tom Vadnais – Chief Executive Officer

John Pitstick – Chief Financial Officer

David Yovanno – Chief Operating Officer, U.S. Media

Analysts

Mark Mahaney - Citigroup

Kyle Evans - Stephens

Brian Pitts – Bank of America Securities

Ross Sandler – RBC Capital Markets

Eric Martinuzzi - Craig-Hallum Capital

Dan [Sen] – BMO Capital Markets

[Townsend Buckle] – JP Morgan

ValueClick, Inc. (VCLK) Q2 2008 Earnings Call July 31, 2008 4:30 PM ET

Operator

A replay of this call will be available by telephone beginning at 4:30 p.m. PT today and may be accessed through 10 p.m. PT on August 7, 2008. Thereafter it can be accessed on ValueClick’s web site at www.ValueClick.com or www.StreetEvents.com.

Previously filed SEC filings can also be found on ValueClick’s site. (Operator Instructions)At this time I would like to turn the call over to Gary Fuges, Vice President of Investor Relations and Corporate Development for ValueClick, Inc.

Gary Fuges

Welcome to ValueClick’s second quarter 2008 financial results conference call. The presenters on the call with me today are Tom Vadnais, Chief Executive Officer; John Pitstick, Chief Financial Officer and David Yovanno, our Chief Operating Officer of US Media.

Today's call contains forward-looking statements that involve risks and uncertainties including, but not limited to, trends in online advertising spending, and estimates of future online performance based advertising. Actual results may differ materially from the results predicted and reported results should not be considered an indication of future performance.

Important factors which could cause actual results to differ materially from those expressed or implied in the forward-looking statements are detailed under the Risk Factors section and elsewhere in filings with the Securities and Exchange Commission made from time to time by ValueClick including its Annual Report on Form 10-K filed on February 29, 2008, recent quarterly reports on Form 10-Q and current reports on Form 8-K.

Other factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include but are not limited to the risk that market demand for online advertising in general and performance based online advertising in particular will not grow as rapidly as predicted, and legislation and governmental regulations that could negatively impact the company's performance. ValueClick 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.

With that, I'd like to turn the call over to Mr. Tom Vadnais, CEO of ValueClick.

Tom Vadnais

Thanks to all of you for joining us for our second quarter conference call. I am going to go through a brief review of our performance followed by John giving you some of the financial detail and then we’ll open it to questions.

Our second quarter results exceeded our original May 6th guidance for adjusted EBITDA and EPS but revenue was 1% below the low end of our original guidance. Future revenue trends in virtually all of our segments softened over the second half of the quarter. We believe this softness will continue through the second half of the year which is why we adjusted in our July 17th announcement our 2008 guidance.

The breadth of the revenue softness suggests to us that the economy is a key driver in revenue underperformance as opposed to landscape shifts. The good news is that we acted quickly to preserve margins in the face of a softer revenue outlook. Specifically we maintained discipline in managing our gross margin, discretionary spending and headcount plans. Later in the call I’ll spend a few minutes outlining some of the initiatives we have in place today to address revenue growth.

First I’ll give you some color on how Q2 progressed in each business segment. In media worldwide display advertising increased 10% year-over-year which is in line with growth rates posted by a number of our industry peers. During the second half of the quarter we began to see budgets soften. Feedback from advertisers leads us to believe that this will continue through the second half of the year. We are working with more advertisers but spending per advertiser is down.

While there are a number of new players that have entered the ad network space few players have the combined reach, page views, and proprietary technology in addition to the publisher and advertiser relationships that we do. This combination of assets is what drives performance and is a competitive differentiator.

In Lead Generation we are encouraged that the revenue was flat sequentially in Q2. It appears that most of the regulatory reviews by the FCC and various State Attorney General Offices that have negatively impacted revenue for the entire industry have been completed. There is no question that the economy is also impacting the Lead Gen channel which is why our revised outlook anticipates flat sequential revenue for the rest of the year.

Despite the revenue softness, disciplined gross margin and operating expense management resulted in 300 basis point sequential increase in media segment operating margin despite the flat sequential revenue we experienced.

Affiliate marketing revenue grew 10% in the quarter which was in line with our expectations as Commission Junction continues to take market share. In June CJ demonstrated that it continues to be the affiliate marketing solution of choice for the largest online U.S. retailers. 53% of the 2008 internet retailer top 500 using affiliate marketing providers work with CJ which is more than all other competing vendors combined. CJ has seven of the top ten including Newegg, Staples, Apple, Dell, HP, QVC and Best Buy.

In Europe the competitive landscape has stabilized and our CJ business in Europe grew sequentially and year-over-year in the second quarter. In media affiliate marketing experienced a softening top line as the quarter progressed. More than 70% of CJ’s business is in the retail vertical which is driven by consumer spending. A recent industry report shows that e-commerce year-over-year growth rates have decelerated from 18% in December 2007 to 11% in June 2008.

The technology segment again had another record quarter for revenue, profit and deals signed. Revenues grew 30% and segment operating income has grown 53% year-over-year. The trends we saw in Q1 continued in Q2 and we believe we are taking market share in this segment.

Comparison shopping’s quarter started on plan but also declined in the second half of the quarter. As with media and affiliate marketing, comparison shopping is being impacted by slowing consumer spending. Consumers are still visiting our sites but are researching more before taking advertiser action. The large drivers of the recent volatility in our comparison shopping segment had to do with acquiring and managing quality traffic through our operated sites with the expectations of our advertisers.

In mid Q2 we partnered with our advertisers to manage to a higher level on overall traffic quality which impacted volume and it is expected to continue for the rest of the year. Our current outlook however still reflects a 19% pro forma growth rate for this segment.

We maintain high quality sites that provide high value to both consumers and advertisers and we are very much engaged with our advertisers to demonstrate the value of our sites while enhancing traffic quality.

To recap we saw a theme of revenue softness in virtually all of our segments in the second half of the quarter. We were active in the quarter to manage the bottom line which with consolidated financial performance above the high end of our profitability guideline metrics.

With that I’m now going to turn the call over to John Pitstick, our CFO, to give you more detail on the financials and an update on our stock buyback program.

John Pitstick

Before I discuss our financial results I want to mention that second quarter 2008 results include three months of activity from MeziMedia which was acquired in July 2007. In the second quarter of 2008 ValueClick generated revenue of $163.8 million, a 10% increase over Q2 2007 revenue of $148.7 and below our previously issued guidance range of $166-170 million.

Gross profit was $112.1 million for the second quarter of 2008 compared to $99.6 million for Q2 of 2007. Gross margin increased to 68.4% in the second quarter of 2008 compared to 67% in Q2 2007 due to the gross margin management and the increased mix of higher margin affiliate marketing and technology segment revenue.

Our cash operating expenses which exclude stock based compensation and amortization expenses totaled $71.2 million in the second quarter of 2008 compared to $63.2 million in Q2 2007. As a percentage of revenue cash opEx was relatively flat at approximately 43%. Adjusted EBITDA was $43.5 million for the second quarter of 2008 above the high end of previously issued guidance and an increase of 12% over the prior year amount of $38.8 million. Second quarter 2008 adjusted EBITDA margins expanded 50 basis points year-over-year to 26.6%.

Stock based compensation was $5.3 million in the second quarter 2008 compared to $4.9 million in 2007 and represented approximately 3% of revenue in both periods. Amortization of intangible assets was $7.8 million in the second quarter 2008 compared to $5.5 million in Q2 2007. This increase is due to the acquisition of MeziMedia in July 2007.

The company generated operating income of $27.9 million in Q2 2008 compared to $26 million in 2007. Operating margin was 17% compared to 17.5% in the year ago period. This decrease in operating margin is due to the higher intangible asset amortization expense compared to the prior year.

Net interest and other income was $1.4 million for the second quarter of 2008. We expect this to be lower per quarter for the remainder of the year due to the stock repurchase in the second and third quarters.

Income tax expense for Q2 2008 was $12.8 million and the company’s net effective income tax rate was 43.7% in the quarter. This was above the previously issued guidance of 42% primarily due to the lower benefit from interest income earned on our tax free securities.

These figures result in second quarter 2008 net income of $16.5 million or $0.17 per share based on a weighted average number of 96.1 million shares outstanding. This performance is above the high end of our guidance of $0.15 to $0.16 per share and flat compared to the prior year.

We have generated over $66 million cash from operations in the first half of 2008 and we expect the second half of the year to also be in this range. Consolidated balance sheet as of June 30 remains strong with $191 million in cash, cash equivalents and market securities, $706 million in total stockholder’s equity and no debt.

As stated in this afternoon’s press release year-to-date through July 30th the company has repurchased approximately 10.6 million shares for $134.2 million including 7.4 million shares repurchased for $79.5 million since the company’s July 17th earnings pre-announcement. As of July 30th up to $21.8 million of ValueClick’s capital may be used to repurchase shares of the company’s common stock under this stock repurchase program.

Capital expenditures were approximately $3.1 million in Q2 2008 and we continue to expect capEx to be in the range of $10 million for the full year.

Today we are providing third quarter 2008 guidance and reiterating fiscal year 2008 guidance we provided in our July 17 pre-announcement press release. For the third quarter we expect revenue of approximately $150-156 million which is below Q2 revenue due to our view of continued macroeconomic weakness as Tom discussed earlier. We expect adjusted EBITDA in the range of $37-40 million and we expect diluted net income per common share of $0.14 to $0.15 which includes stock based compensation expense of approximately $0.04 per common share based on the expected weighted average share count of approximately 90 million diluted shares outstanding.

For the full year 2008 we expect revenue of approximately $655-675 million. We expect adjusted EBITDA in the range of $172-176 million. We anticipated diluted net income per common share of $0.69 to $0.71 which includes stock based compensation expense of approximately $0.15 per common share and an expected share count of approximately 93 million diluted shares outstanding.

Our full year guidance assumes approximately $29 million in amortization of intangibles, $10 million of depreciation, $23-24 million in stock based compensation, $5-6 million in interest income and a net effective income tax rate of 42.5%.

Before I turn the call back over to Tom I’d like to remind you we realigned our reporting structure to provide segment level results that most accurately reflect business drivers per segment and our internal management structure. As we advised you on the last call we reclassified our Search 123 Distribution business out of the affiliate marketing segment and into the existing comparison shopping segment and we renamed the segment Comparison Shopping and Search.

The press release provides historical correlating information for the past two years. With that I will now turn the call back over to Tom.

Tom Vadnais

Before we open the call up for questions I want to discuss some of the initiatives we are working on that I believe will help drive top and bottom lines over the long-term and realize better synergies among our businesses.

In media last week we announced the launch of our next generation Behavioral Targeting platform. This platform leverages values to combine critical mass of non-personally identifiable and non-client identifiable consumer behavior with proprietary predictive algorithms to build dynamic consumer segments and to drive enhanced performance for advertisers.

Along with being a step forward for media it is also a synergy play as we are positioned to leverage data from our non-media businesses which further enhances behavioral targeting performance and significantly differentiates our offerings from other companies in the market.

In Q2 media also launched the beta of its first vertical display network called AdRX Media to address the specific needs of pharma and other healthcare related advertisers. Unlike other vertical networks and beyond our premium conceptual publish partners our health network leverages the data and technology platform of our broader network which gives advertisers greater consumer engagement, targeting and optimization capabilities. AdRX Media has the largest potential reach of any health property on the web.

Media is also working with Commission Junction to build offer lead fees for large publisher that combine our media and CJ advertiser offers. They have a relationship in place currently with a tier one online publisher and we are working to extend this initiative to other large publishers looking to monetize inventory not sold for their direct sales force.

In media Lead Gen products we are both expanding and focusing the Lead Gen direct sales team so that it can better educate the advertiser on the value of Lead Gen in the post FTC world. It is early but we are encouraged by what we have seen so far including the return of some large advertisers to the Lead Gen channel.

In comparison shopping and search we are focused on actively managing the traffic quality and building Lead Generation technology to better filter traffic. We are also enhancing the technology platform to manage more keywords for traffic acquisition.

In terms of synergies Mezi is working with Media Team to leverage the Mezi SEM technology platforms to drive qualified search traffic to Lead Gen offers. Search is not a channel we have utilized in the Lead Gen segment to date but we believe there is an opportunity to do so with Mezi’s in-house platform and search expertise.

For CJ we are continuing to invest on a worldwide basis. We recently announced our launch in Spain in Q2 as we continue to expand in Europe. In the U.S. we are continuing to grow new service initiatives that were launched in the past two years to help us attract new customers and provide faster program growth. While these initiatives are in the investment stage and have a slight negative impact on margin in the near term we believe that these are the right moves to extend our global leadership position.

In technology our Mediaplex and Mediaplex systems divisions performed very well in the first half. Mediaplex systems which provides agency management software was on plan in the first half and continues to enhance their AdVault technology platform.

Mediaplex which provides third-party ad serving and tracking technology achieved record revenue and profit for both Q1 and Q2. We are continuing to invest in the Mediaplex platform to enhance our position as the largest independent, third-party provider. We expanded Mediaplex capabilities to track cross channel activities which allows customers to track and monetize display search, affiliate and other online channels.

There is a great opportunity in leveraging the scale in each of our core online marketing service businesses which also realized synergies among these offerings. I’ve given you a few examples of business specific and synergy initiatives we are working on and I believe our execution on these will enhance each individual offering and demonstrate the strategic value of having these multiple offerings in one company.

We have the right assets, people and strategies to drive long-term shareholder value while managing through the short-term economic challenges.

With that I’d like to now open up the call. Dave, John and I will be happy to take your questions.

Question-And-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Mark Mahaney – Citigroup.

Mark Mahaney - Citigroup

Any thoughts on the timing for when Lead Generation revenue will stabilize from your comments when it will actually start growing again? Secondly is there the ability to materially increase the authorization level for the buyback?

Tom Vadnais

Let me answer the buyback portion of that. Actually I’ll have John take that one and I’ll ask Dave to comment on the Lead Gen growth opportunities. John do you want to talk about the stock buyback first?

John Pitstick

As I mentioned on the comments we did generate a healthy amount of cash in the first half of the year and expect to continue to do that in the second half of the year so we have got capacity there just by the cash that we are generating each and every quarter. In addition to that as you know we currently don’t have any debt on the balance sheet. Given the strong cash flows we do have it would be well within our capacity to go out and obtain some debt for that purpose if the Board decided to do that.

David Yovanno

On the Lead Gen concern I think we have weathered the storm as we now are starting to see the weather clear up here a little bit. We have stabilized as Tom commented during the script. We have done some reorganization with our sales team. We actually took one of our top performing leaders in our New York office and essentially relocated that person to our Harrisburg headquarters at Lead Gen and have just had a restructured, very focused and are now starting to expand the sales team and get out there and really focus on bringing a lot of those advertisers back into the channel.

We think that any obstacle in growth right now would have to be more macroeconomic than execution but we are going to remain conservatively optimistic about getting that channel back on track.

Tom Vadnais

The channel has also continued to be a very profitable channel for us and a good business overall in the ValueClick family. So as we now hopefully start leading into some growth it will continue to be a very major player for us.

Operator

The next question comes from the line of Kyle Evans – Stephens.

Kyle Evans - Stephens

Tom I think you probably tried to head off in your prepared remarks but maybe a little bit more context around the display ad growth you are anticipating for the year. You talked about the scale you have and the technology you have but there are a lot of concerns out there in the investor base about competition there and so maybe a little bit more specific on what you are seeing in terms of supply and inventory, competition, what you are having to pay out on the traffic acquisition side and how you don’t necessarily have a tax…it is more of a revenue share but are you getting any pressure there? Then also as an extension of that do you think that the pressure that you are seeing might help to clean out some of the smaller, venture capital funded hangliders that are out there maybe hurting the space?

Tom Vadnais

That is a good question and you are right there are a lot of small undercapitalized, minimal value add players jumping into this space. We think we are dealing with them very well. I’ll ask Dave to comment on that. You also may not all be aware that Dave has spent his entire career at ValueClick in the ValueClick media business so he knows that business and industry very well.

David Yovanno

The main driver that we see on the display side of the business for the second half of this year is more in line with budget pull backs from advertisers more so than the competitive pressure. Not to say competitive pressure doesn’t exist. It does but to a much lesser extent. We actually have seen more advertisers in our display channel. They are just spending less. A lot of our larger advertisers have pulled back and it is not a ValueClick specific observation. This is across the board.

Our channel checks with more of our direct competitors on display on the network side more in line with the top at 615 comp score or some of the undercapitalized [VC] guys that you are talking about have actually fared far worse in feedback we have received in just our network of colleagues, etc. We remain pretty optimistic about the position we hold in the market. A lot of the enhancements we’ve made in the technology platforms and the new products released in the second quarter and we will continue to make throughout this year.

On the gross margin side it is actually really good timing with the number of releases that we made in the first half of this year with regards to optimization and some other things that have actually allowed us to get more yield from our overall market place. We’ve been pretty consistent in what we are paying publishers while at the same time growing gross margin and with every client here to pay out more to publishers to continue to expand our supply as demand comes back in a stronger way.

Kyle Evans - Stephens

What is your sense when you look at display ad network Dave in terms of the mix shift in CPC or really ROI oriented ad spending versus more fluffy kind of eyeball reach type buying? I know your network was born kind of CPC out of a CC model but it seemed like for several quarters there awhile ago there was more CPM buying taking place.

David Yovanno

I’d say roughly right now is 90% of our display business is managed through a sort of CPA or other actionable goal but specific pricing we manage is pretty equal actually. It is almost 1/3, 1/3, 1/3 CPM, CPC and CPA. We have seen some growth in CPA recently so that actually may be a little bit larger of a share compared to CPM and CPC but what we have seen along the awareness side and more brand buy those are the more inconsistent spends and I would say in the environment we are in we are definitely seeing less of that. Our main objective is really more can I run my business off the advertising I’m spending with you. It is more the bottom of the funnel performance objective as opposed to the top of the funnel.

Kyle Evans – Stephens

Tom, what kind of activity are you seeing in the affiliate network as the result of the New York nexus tax laws?

Tom Vadnais

Kyle there has been some uneasiness in that regard on the advertiser’s side who are looking at that proposed legislation in charging sales tax in New York. As a result there has been some advertisers have taken action to discontinue or suspend their relationship with publishers who are located in New York until the air clears on this. But it is a relatively small number. It is a few hundred publishers that have been suspended by a handful of advertisers and we estimate it is perhaps about a $15,000 a month hit on CJ revenue at the current time.

The bigger issue there is this going to expand? Are other states going to get in on New York’s coattails on charging tax and we just don’t know. So far it is a minimal impact.

Operator

The next question comes from the line of Brian Pitts – Bank of America Securities.

Brian Pitts – Bank of America Securities

Would you confirm whether your guidance for comparison shopping implies a decline in the fourth quarter? Any additional color you can provide on this. Also in terms of the traffic quality was this an issue for Mezi, Price Run or both? Would you give some perspective on how much performance guidance for the second half is due to the economy versus advertiser requirements for the higher quality traffic?

Tom Vadnais

Let’s try those in reverse order and talk about the quality one first. Then Dave will touch on that. Then John if you can take the one on that would be good.

David Yovanno

The traffic quality a lot of what you are asking there is interrelated in terms of the cause of it but the main driver and the challenge to the comparison shopping financial performance for the remaining part of this year is simply that our traffic has remained consistent. However we have seen fewer clicks. We have a couple of theories on why that is. We do believe some of it has to do with macroeconomic factors.

We received similar feedback. Part of how we came to that conclusion is the analysis we have done on our traffic. We have done some channel check on our own with our editors and partners in the segment. I think as a result advertisers are, because consumers are taking less action on the ads essentially, this is more in the retail segment, that advertisers are quite simply holding to a stricter performance objective. We have had strong partnerships here with our advertisers starting the full press in the second quarter to a lot more transparent on what our performance is on a more real time basis and a lot more detail. We have developed filters. We would optimize display media and we are starting to bring some of those techniques into the comparison now and develop some predictive capabilities in terms of traffic sources, etc.

We are seeing requirements like we have never seen before from advertisers in this segment on the actions of the visitors to our sites and a big driver of that is the macroeconomic factor that consumers are just doing less action on the site.

Tom Vadnais

Just to confirm it is a Mezi related issue since of our two comparison shopping businesses Mezi is the one that [audio break] in driving traffic. That is where it is.

John on the numbers side of that?

John Pitstick

I think you asked the second half outlook how does that compare to the first half of the year and then second half outlook for comparison shopping in total is down from the first half of the year given some of the items that Dave talked about. When you look at the second half of the year you expect Q4 to be stronger than Q3 given the overriding seasonal trends there in the fourth quarter but the second half of the year is down from the first half of the year.

Operator

The next question comes from the line of Ross Sandler – RBC Capital Markets.

Ross Sandler – RBC Capital Markets

I just wanted to follow-up a little more on comparison shopping. It has been pretty well documented out there and Google has spoken at length about its efforts to address gaul on the planning pages, on ad creatives and a bunch of other areas. What is Mezi’s dependency on Google? How much traffic do they get from Google? Is the down tick you are seeing at all related to some of these changes that Google has been implementing and if so is this a structural problem that will take many quarters to fix or do you view this as kind of more of a macro issue that when the economy comes back a bit and the consumer comes back you can get back to a previous run rate?

Tom Vadnais

Dave will take that one. We don’t really disclose the financial details amongst our partners and those types of things but I think we can answer on the rest of the questions.

Dave?

David Yovanno

I might be overstepping here but in terms of traffic from Google it is a minority share especially with the mix of our traffic a larger share of our traffic is [audio breaks] so we have a pretty good distribution on our traffic source but it is [audio break]. As Tom mentioned I would really point to this as being more of an industry wide issue and through our channel checks and through the number of sites that we own and operate looking at traffic analysis. We do feel that in partnership with our advertisers and as the general economy and as consumer responsiveness to advertiser offers on the site improves [audio break].

It is getting more sophisticated than it has been in the past and it is a relatively recent trend that started to kick in at the tail end of Q1 and the early part of [audio break].

Operator

The next question comes from the line of Eric Martinuzzi - Craig-Hallum Capital.

Eric Martinuzzi - Craig-Hallum Capital

I have a question about the display side as far as the display network partners and the gross margins with them. I’m curious to know what kind of leverage you have in driving display margins higher. Is that something you are getting a lot of push back from? Is it a win-win potential for the publisher if you are able to drive up more click, more ad traffic to them? What is the direction of display margins?

David Yovanno

With display margins we actually have quite a bit of leverage. It is a very competitive market on the supply side. It is whoever could pay the highest effective CBM generally speaking for inventory is going to get more share. How you do that is really through your expertise in managing your marketplace. You have got to have a strong marketplace with advertiser offers. You have got to have some great earning capability and optimization to manage it all to warrant a high enough set of CPMs and still meeting the advertiser performance objectives, everything at scale.

So as we made enhancements to our platform with regards to optimization specifically and as we are able to support more and more CPA [crudding] on the display channel it puts us in a greater position to manage margins because what we say is everything is on an effective CPM basis. So we are pricing something on a CPA and we are using our expertise and our technology to add more yields on that. We have a lot more control over that [audio break] with publishers but at the same time the competition holds us to certain percentage points.

Eric Martinuzzi - Craig-Hallum Capital

So directionally do you think that can improve or is it just to maintain the margins you have?

David Yovanno

It can improve. Just to kind of give you an idea on levers we can pull if we chose to a strategy we decided to not do that in the financial performance we are currently obtaining here. We could pay out more publishers to get more top line but it would come at the cost of gross margin. We decided to not pursue that strategy but we are losing market share.

Operator

The next question comes from the line of Dan [Sen] – BMO Capital Markets.

Dan [Sen] – BMO Capital Markets

You mentioned that you are taking just a little bit of share in the technology segment. Previously that was a double click were bought by larger parents. You mentioned that you are starting to get inquiries in terms of new clients but not exactly a pick up. Is that what we are starting to see here is a pick up and actually closing some of those deals?

Tom Vadnais

It is Dan. We’ve had, as I mentioned, the first quarter was the biggest quarter in the history of Mediaplex in both revenue and profit and the second quarter exceeded that. It is a combination of things. I wouldn’t attribute it all to those acquisitions but certainly that has contributed some of the growth with some clients that we’d just as soon have their data be in an independent parties hands as opposed to being Microsoft or Google’s hands but it also is a reflection on the maturation of a number of programs put in place inside Mediaplex in providing a stronger sales effort, better marketing support and so on. I think it is a combination of things that has turned into a strong first half and a share gain for us. Our goal is to continue that.

Dan [Sen] – BMO Capital Markets

Have the dynamics there notwithstanding sort of the diversified drivers there, have the dynamics changed at all with Ad Sense opening up to third-party ad serving?

Tom Vadnais

We haven’t seen anything yet. That is fairly new. We are keeping an eye on it but no indication yet of any impact.

Operator

The next question comes from the line of [Townsend Buckle] – JP Morgan.

[Townsend Buckle] – JP Morgan

On the display side I think you got some good growth from Europe in Q1. Are you still seeing good performance there or has that slipped as well?

Tom Vadnais

No we are seeing good performance there. The first quarter was great in display revenues. Second quarter was also.

[Townsend Buckle] – JP Morgan

Can you give an update on Ebay’s business at Commission Junction? Is that fully out or is it still winding down?

Tom Vadnais

I don’t know if it is 100% out but if it is not 100% it is probably in the high 90’s. They started that initiative last year as I think I mentioned in our last call they started building their own internal systems and staffs and so on and then started migrating to their own platform at the beginning of the second quarter. That is I think pretty much out right now both in the U.S. and in Europe.

Operator

We actually have no more questions in the queue. I’d like to turn the call back over to management for any additional or closing remarks.

Tom Vadnais

Thank you. We appreciate all of you joining us on the call. I hope we have answered your questions. We look forward to meeting with you as we are on the road and we are anxious to talk about anything that is on your mind. So let us know if you have any other questions and we look forward to seeing you when we are out on the road with you. Thanks a lot.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: ValueClick, Inc. Q2 2008 Earnings Call Transcript
This Transcript
All Transcripts