Q1 profits double for ValueClick

Despite concerns about privacy and lead generation issues, profits for online lead generation site ValueClick doubled in the first quarter of 2007. Q1 revenue came in at nearly $157 million; EBITDA was $41 million, up 50% from 2006.

by Kristina Knight

James Zarley, chairman and chief executive officer of ValueClick said all segments of the company were performing above average, helping to push ValueClick profits up even more. "We continue to differentiate ourselves through a unique combination of technology, process, relationships, and our constant focus on industry best practices. The fundamentals of our businesses are strong, and I am confident in our ability to deliver strong growth and profitability in 2007."

Others aren't so sure that kind of growth can continue. According to Jordan Rohan, an analyst for RBC Capital Markets, the Q1 growth cannot be continued. Rohan said in his report that the company engages in questionable lead generation tactics, and with an investigation underway by the FTC changes could already be in the wind. Rohan noted in his report that ValueClick uses offers that mention or imply "free" products to gain sales leads. This is one of the questionable practices being investigated

"In our view, the writing is on the wall for reform of the highly-incentivized lead generation companies like ValueClick's WebClients. The timing of that reform is hard to predict with accuracy, but the ultimate magnitude could be significant," Rohan wrote (via MediaPost).

Zarley said the company is tracking developments in the investigation, saying, "We will monitor it and to some degree it may not all be bad, because it could call out some of the bad actors in the space ... We have not been involved in that, and we're not involved."