Vertro, Inc. (VTRO)
Q2 2010 Earnings Call
August, 5, 2010; 04:30 pm ET
Peter Corrao - President & Chief Executive Officer
James Gallagher - Chief Financial Officer
Rob Roe - Senior Vice President, General Manager of MIVA Direct
Alex Vlasto - Vice President of Marketing and Communications
Ryan Bergen - Craig-Hallum
Good day ladies and gentlemen and welcome to the Vertro second quarter 2010 financial results conference call. At this time all participants are in a listen-only mode. Later, we'll have a question-and-answer session and instructions will follow at that time. (Operator Instructions)
I would now like to turn the conference over to your host for today Mr. Alex Vlasto, Vice President of Marketing and Communications. Sir, you may begin.
Thank you Mary and good afternoon everyone. Welcome to Vertro's second quarter 2010 financial results conference call. With me on the call today are President and CEO, Peter Corrao; CFO, Jim Gallagher; and General Manager, Rob Roe.
I’d like to remind everyone that today's comments include forward-looking statements. These statements are subject to risks and uncertainties that may cause actual results and events to differ materially from those expressed in the forward-looking statements. These risks and uncertainties will be outlined at the end of this call, and are also detailed in our filings with the SEC.
Before handing over to Peter, let me take a moment to review how we measure our financial performance. In addition to the standard GAAP measurements, we utilize certain profitability based metrics to evaluate our period-to-period and year-over-year performance. They are EBITDA, Earnings Before Interest, Income Tax, Depreciation and Amortization, adjusted EBITDA, adjusted net income or loss and adjusted net income or loss per share.
We believe that EBITDA, adjusted EBITDA, adjusted net income or loss and adjusted net income or loss per share provide meaningful measures for comparison of the company's currents and projected operating performance, with its historical results, due to the significant changes in non-cash amortization that began in 2004, primarily due to certain intangible assets resulting from mergers and acquisitions that have since been written off.
Vertro defines adjusted EBITDA as EBITDA plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation in the business. Vertro uses EBITDA and adjusted EBITDA as internal measures of its business, and believes that utilizes an important measure of performance by the investment community.
Vertro defines adjusted net incomes straight loss as net incomes straight loss plus amortization and non-cash compensation expenses, plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business.
In each case, including the tax effects if any of the adjustment, Vertro defines adjusted net income straight loss per share as the adjusted net income straight loss as previously described, divided by the average basic or fully diluted number of outstanding shares of Vertro's common stock over the reported period.
For a detailed review of our second quarter 2010 results, including the corresponding GAAP financial measures and a reconciliation of our non-GAAP financial measures to GAAP financial measures, please refer to the press release we issued today, the accompanying key metric slides and our Form 10-Q for Q2 filed with the SEC. You could find these metric slides on our website www.vetro.com.
To comply with the SEC's guidance on fair and open disclosure, we’ve made this conference call publicly available via audio webcast through the Investor Relations section of our website and a replay of this call will be available for 90 days from today.
I'd now like to turn the call over to our President and CEO, Peter Corrao. Peter.
Thanks Alex. Good afternoon everybody and welcome to today's call. We appreciate here having you with us. I want to start this afternoon by introducing our new CFO, Jim Gallagher, to those of you who haven’t already met him or had the opportunity to talk with him.
Jim has a wealth of higher relevant expertise for Vertro. He joined us in June from Gallagher Enterprises, a firm he founded in ‘01, to provide consultancy on financial, operational and funding issues, to start up some high growth companies in the range of $150 millions.
He previously held senior level financial positions in software and media industries and also worked for 10 years as a Senior Auditor at Arthur Andersen here in New York City. Jim’s already made a significant contribution to the business and we are delighted to have him onboard. So with that said, let me move on to our results for the second quarter.
Q2 was a solid quarter for us, in which we achieved both annual and sequential quarterly revenue growth, delivered our third consecutive quarter of profitability, increased sequential quarterly adjusted EBITDA, continued to expand our portfolio of apps we offer our toolbar and home page user and achieve continued growth in our user base and search volumes, both nationally and internationally.
While we are pleased to have continued our recent trend of sequential quarterly revenue growth, we do believe that our growth in the second quarter was tempered by our focus on regaining compliance with NASDAQ shareholder equity requirements. Let me tell you a little about that.
As a remainder, on February 16, 2010, NASDAQ granted our request for a continued listings on the capital market. Subject to the conditions that are on it before June 14 of 2010, we achieved a minimum of $2.5 million in shareholder equity. So we cautiously managed or customer acquisition program during the quarter, to try and ensure that we could regain compliance with NASDAQ’s requirement with only a minimal capital raise. One of the issues that we faced during the quarter related to the considerable fluctuations in exchange rates between the U.S. and European currencies.