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Vocus Inc. reported second-quarter 2013 adjusted loss per share of 12 cents, narrower than the Zacks Consensus Estimate of 19 cents loss per share.

Revenues

Revenues of $46.6 million in the second quarter increased 6.9% from $43.6 million generated in the year-ago quarter. The quarter’s revenues were above the Zacks Consensus Estimate of $45.0 million.

The favorable outcome was backed by customer additions, strong demand growth from existing customers and improved adoption of its marketing suite. The top line surpassed the company guided range of $45.1 million to $45.5 million.

Vocus added 479 new subscribers during the second quarter compared with 1,013 in the year-earlier quarter. Total active subscribers were 17,801 at quarter end.

The company signed a host of subscription agreements with new and existing customers. Notable among these are the agreements with Ann Inc., Avaya, Centegra Health Systems, comScore Inc., Datex, Cosmopolit Home, J. Renee, Hyatt Regency Paris Etoile, Lehigh University, Nexcom, Organic Valley, Resource One Credit Union, Thompson Creek Windows and Troon Golf.

Vocus initiated a pricing strategy targeting the medium-sized businesses with higher subscriptions. The strategy resulted in higher selling prices but lesser number of net new subscriptions. The strategy has been adopted mainly to move away from the small business market. Management believes that this will benefit its revenue growth, going forward.

Operating Results

Gross margin was 79.0%, down from 80.1% in the year-ago quarter. Operating loss was $5.4 million compared with operating loss of $4.8 million in the year-ago quarter. Total operating expenses increased 6.4% year over year. Operating expenses increased due to growth in direct sales capacity, higher commission and investments.

Net loss on a GAAP basis was $5.9 million or 29 cents per share compared with a net loss of $5.2 million or 27 cents in the second quarter of 2012. Excluding one-time items, but including stock-based compensation expense, net loss was 12 cents per share compared with a net loss of 4 cents a share in the year-earlier period.

Balance Sheet & Cash Flow

Vocus exited the quarter with $36.3 million in cash and short-term investments versus $40.9 million in the previous quarter. Accounts receivables were $22.0 million compared with $21.6 million in the previous quarter. The company used $3.0 million in cash from operations compared with $10.8 million generated in the previous quarter.

Guidance

For the third quarter of 2013, the company expects revenues in the range of approximately $46.5 million to $46.8 million. Non-GAAP earnings per share are expected in the range of 3 to 4 cents. GAAP loss per share is expected in the range of 26 to 25 cents assuming an estimated weighted average 20.1 million shares outstanding.

For full year 2013, the company expects revenues in the range of $188.0 million to $189.0 million. Vocus expects non-GAAP earnings per share in the range of 18 to 21 cents. GAAP loss per share is expected to be in the range of $1.17 to $1.14. Capital expenditure is expected to be around $6.5 million.

Our Take

Vocus’ second-quarter adjusted loss per share was narrower than the Zacks Consensus Estimate. However, the company generated decent revenue growth on a year-over-year basis. Vocus benefited from the high revenue generation ability of its new marketing suite.

Vocus has successfully capitalized on strategic acquisitions. The company continued to acquire more customers for its marketing suite, which reflects growing demand. The company is targeting more customers and cloud opportunities in the SMB space. However, tough competition remains a concern for the company.

Currently, Vocus has a Zacks Rank #2 (Buy). Investors can also consider other technology stocks such as ACI Worldwide (ACIW - Snapshot Report), Aspen Tech (AZPN - Snapshot Report) and CA Inc. (CA - Analyst Report), all of which carry a Zacks Rank #1 (Strong Buy).

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