Conversant (FRA:VCK) Operating Income : €104.9 Mil (TTM As of Sep. 2014)

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What is Conversant Operating Income?

Conversant's Operating Income for the three months ended in Sep. 2014 was €16.0 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Sep. 2014 was €104.9 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Conversant's Operating Income for the three months ended in Sep. 2014 was €16.0 Mil. Conversant's Revenue for the three months ended in Sep. 2014 was €107.3 Mil. Therefore, Conversant's Operating Margin % for the quarter that ended in Sep. 2014 was 14.92%.

Conversant's 5-Year average Growth Rate for Operating Margin % was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Conversant's annualized ROC % for the quarter that ended in Sep. 2014 was 7.18%. Conversant's annualized ROC (Joel Greenblatt) % for the quarter that ended in Sep. 2014 was 149.62%.

Conversant Operating Income Historical Data

The historical data trend for Conversant's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Conversant Operating Income Chart

Conversant Annual Data

Trend

Dec04

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Operating Income

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56.62

66.97

89.80

102.06

122.48

Conversant Quarterly Data
	Dec09	Mar10	Jun10	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14
Operating Income	Get a 7-Day Free Trial															27.45	44.04	24.44	20.40	16.01

Conversant Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Sep. 2014 adds up the quarterly data reported by the company within the most recent 12 months, which was €104.9 Mil.

Conversant (FRA:VCK) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Conversant's annualized ROC % for the quarter that ended in Sep. 2014 is calculated as:

	ROC % (Q: Sep. 2014 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2014 )	+	Invested Capital (Q: Sep. 2014 ))	/ count )
=	64.04 * ( 1 - 54.61% )	/	( (392.679	+	417.292)	/ 2 )
=	29.067756	/	404.9855
=	7.18 %

where

	Invested Capital		(Q: Jun. 2014 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	541.836	-	87.647	-	( 61.51	-	max(0, 89.545	-	188.661	+	61.51	))
=	392.679

	Invested Capital		(Q: Sep. 2014 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	552.368	-	83.82	-	( 51.256	-	max(0, 89.012	-	186.392	+	51.256	))
=	417.292

Note: The Operating Income data used here is four times the quarterly (Sep. 2014) data.

2. Joel Greenblatt's definition of Return on Capital:

Conversant's annualized ROC (Joel Greenblatt) % for the quarter that ended in Sep. 2014 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Sep. 2014 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Jun. 2014		Q: Sep. 2014
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	64.04	/	( ( (21.306 + max(17.25, 0))	+	(21.279 + max(25.771, 0)) )	/	2 )
=	64.04	/	( ( 38.556	+	47.05 )	/	2 )
=	64.04	/	42.803
=	149.62 %

where Working Capital is:

	Working Capital		(Q: Jun. 2014 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(93.036	+	0	+	13.759)	-	(87.647	+	0	+	1.898)
=	17.25

	Working Capital		(Q: Sep. 2014 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(103.082	+	0	+	11.701)	-	(83.82	+	0	+	5.192)
=	25.771

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Sep. 2014) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Conversant's Operating Margin % for the quarter that ended in Sep. 2014 is calculated as:

Operating Margin %	=	Operating Income (Q: Sep. 2014 )	/	Revenue (Q: Sep. 2014 )
	=	16.01	/	107.331
	=	14.92 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Conversant Operating Income Related Terms

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Conversant (FRA:VCK) Business Description

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Address

Website

http://www.conversantmedia.com

Conversant Inc, formerly known as Valueclick Inc. The Company and its subsidiaries offers digital marketing services across its Affiliate Marketing and Media segments. In affiliate marketing, a website or mobile publisher joins an advertiser's affiliate marketing program and agrees to distribute the advertiser's offers in exchange for commissions on sales or leads generated. The publisher places the advertiser's display advertisements or text links on their website or mobile website, in email campaigns, or in search listings, and receives a commission from the advertiser only when a visitor takes an agreed-upon action, such as making a purchase on the advertiser's website. Advertisers upload their offers onto its system, making them available for placement by affiliates. The Companys affiliate marketing services are structured to deliver an exceptional level of experience, expertise and strategic support to advertisers. Dedicated teams are focused on technical support, network quality and account services to work with advertisers as strategic partners in managing their affiliate programs. The Company offers its clients the option to choose the level of service that fits their needs, ranging from full program management to network access. The Companys media solutions enable marketers to deliver personalized communications and are designed for flexibility based on each brands specific needs. Its media solutions also include a suite of ad serving and analytics tools designed to improve marketing effectiveness through precise ad execution and data collection: the Conversant Tag Manager, which streamlines the collection of website data; Conversant Data Collection & Management, which unites marketing data from across digital channels; and the ConversantTM Ad Server, which executes, reports and optimizes ad campaigns across digital channels. The Company markets its products and services primarily through direct marketing, print advertising and online advertising throughout the year.

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