##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-Q
   (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30,
    2010o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    000-51644
  Vocus, Inc.
 (Exact Name of Registrant as
    Specified in Its Charter)
   Delaware(State or other jurisdiction
    of
    incorporation or organization)

58-1806705(I.R.S. Employer
    Identification No.)   4296
    Forbes Boulevard
    Lanham, Maryland 20706(301) 459-2590 (Address
    including zip code, and telephone number,
    including area code, of principal executive
    offices)
   Not
    applicable (Former
    name, former address and former fiscal year, if changed since
    last report)
   þ o
   Regulation S-T
 o o
   12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o    Rule 12b-2
 o þ




---



##### 





TABLE OF
    CONTENTS
  PagePART I  FINANCIAL
    INFORMATIONItem 1.

Consolidated Financial Statements


3Consolidated Balance Sheets as of December 31,
    2009 and June 30, 2010


3Consolidated Statements of Operations for the
    three and six months ended June 30, 2009 and 2010


4Consolidated Statements of Cash Flows for the six
    months ended June 30, 2009 and 2010


5Notes to Consolidated Financial Statements


6Item 2.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


16Item 3.

Quantitative and Qualitative Disclosures about
    Market Risk


23Item 4.

Controls and Procedures


23PART II  OTHER INFORMATIONItem 1.

Legal Proceedings


24Item 1A.

Risk Factors


24Item 2.

Unregistered Sales of Equity Securities and Use
    of Proceeds


36Item 6.

Exhibits


37SIGNATURES


38Exhibit 31.1Exhibit 31.2Exhibit 32.1   2




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##### Table of Contents



PART I  Item 1.
    Consolidated
    Financial Statements  Vocus,
    Inc. and Subsidiaries
  Consolidated
    Balance Sheets
  December 31,


June 30,2009


2010(Unaudited)(Dollars in thousands, except per share data)Current assets:Cash and cash equivalents

$
85,817


$
86,980Short-term investments


17,851



8,645Accounts receivable, net of allowance for doubtful accounts of
    $212 and $548 at December 31, 2009 and June 30, 2010,
    respectively


18,245



13,479Current portion of deferred income taxes


685



685Prepaid expenses and other current assets


1,753



2,389Total current assets


124,351



112,178Long-term investments


1,001



Property, equipment and software, net


4,666



5,866Intangible assets, net


3,980



8,022Goodwill


17,090



25,855Deferred income taxes, net of current portion


7,459



7,460Other assets


693



591Total assets

$
159,240


$
159,972Current liabilities:Accounts payable

$
1,148


$
2,030Accrued compensation


2,384



2,728Accrued expenses


3,239



5,782Current portion of notes payable and capital lease obligations


197



200Current portion of deferred income taxes






156Current portion of deferred revenue


46,789



46,817Total current liabilities


53,757



57,713Notes payable and capital lease obligations, net of current
    portion


48



225Deferred income taxes, net of current portion






991Other liabilities


93



1,634Deferred revenue, net of current portion


961



496Total liabilities


54,859



61,059Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value, 10,000,000 shares
    authorized; no shares issued and outstanding at
    December 31, 2009 and June 30, 2010






Common stock, $0.01 par value, 90,000,000 shares
    authorized; 19,854,585 and 20,039,061 shares issued at
    December 31, 2009 and June 30, 2010, respectively;
    18,173,444 and 17,972,310 shares outstanding at
    December 31, 2009 and June 30, 2010, respectively


199



200Additional paid-in capital


149,279



155,810Treasury stock, 1,681,141 and 2,066,751 shares at
    December 31, 2009 and June 30, 2010, respectively at
    cost


(14,914
)


(23,226
)Accumulated other comprehensive income (loss)


305



(847
)Accumulated deficit


(30,488
)


(33,024
)Total stockholders equity


104,381



98,913Total liabilities and stockholders equity

$
159,240


$
159,972    3




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Consolidated Statements of
    Operations
  Three Months Ended June 30,


Six Months Ended June 30,2009


2010


2009


2010(Unaudited)(Dollars in thousands, except per share data)Revenues

$
21,079


$
23,781


$
41,490


$
46,052Cost of revenues


3,847



4,723



7,754



9,158Gross profit


17,232



19,058



33,736



36,894Operating expenses:Sales and marketing


10,190



12,492



19,706



23,895Research and development


1,138



1,341



2,295



2,655General and administrative


5,186



5,828



10,231



11,027Amortization of intangible assets


490



593



980



1,062Total operating expenses


17,004



20,254



33,212



38,639Income (loss) from operations


228



(1,196
)


524



(1,745
)Other income (expense):Interest and other income


105



10



330



78Interest expense


(7
)


(13
)


(13
)


(20
)Total other income (expense)


98



(3
)


317



58Income (loss) before provision for income taxes


326



(1,199
)


841



(1,687
)Provision for income taxes


669



758



1,662



849Net loss

$
(343
)

$
(1,957
)

$
(821
)

$
(2,536
)Net loss per share:Basic

$
(0.02
)

$
(0.11
)

$
(0.05
)

$
(0.14
)Diluted

$
(0.02
)

$
(0.11
)

$
(0.05
)

$
(0.14
)Weighted average shares outstanding used in computing per share
    amounts:Basic


18,051,243



17,955,925



18,038,888



18,008,822Diluted


18,051,243



17,925,925



18,038,888



18,008,822    4




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Consolidated Statements of Cash
    Flows
  Six Months Ended June 30,2009


2010(Unaudited)(Dollars in thousands)Cash flows from operating activities:Net loss

$
(821
)

$
(2,536
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization of property, equipment and software


839



820Amortization of intangible assets


980



1,104Loss on disposal of assets


3



1Stock-based compensation


6,237



6,273Provision for doubtful accounts


233



15Deferred income taxes


(300
)


(456
)Excess tax benefits from equity awards


(2,508
)


(727
)Changes in operating assets and liabilities:Accounts receivable


5,125



5,794Prepaid expenses and other current assets


931



(494
)Other assets


(69
)


201Accounts payable


798



618Accrued compensation


(483
)


(35
)Accrued expenses


2,768



1,174Deferred revenue


(3,456
)


(2,095
)Other liabilities


(21
)


(186
)Net cash provided by operating activities


10,256



9,471Cash flows from investing activities:Purchases of
    available-for-sale
    securities


(20,027
)


(4,097
)Maturities of
    available-for-sale
    securities


24,075



14,294Business acquisitions, net of cash acquired






(8,921
)Purchases of property, equipment and software


(726
)


(1,156
)Software development costs


(91
)


(414
)Net cash provided by (used in) investing activities


3,231



(294
)Cash flows from financing activities:Repurchases of common stock


(4,121
)


(8,312
)Proceeds from the exercise of stock options


1,773



106Excess tax benefits from equity awards


2,508



727Payments on notes payable and capital lease obligations


(179
)


(226
)Net cash used in financing activities


(19
)


(7,705
)Effect of exchange rate changes on cash and cash equivalents


(41
)


(309
)Net increase in cash and cash equivalents


13,427



1,163Cash and cash equivalents, beginning of period


65,429



85,817Cash and cash equivalents, end of period

$
78,856


$
86,980Supplemental disclosure of non-cash investing activities:Accrued contingent consideration for business acquisitions

$



$
1,327    5




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes
    to Consolidated Financial Statements
  1.
    Business
    Description  Organization
    and Description of Business
    2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
  Form 10-Q Regulation S-X. Form 10-K
  Principles
    of Consolidation
    Use of
    Estimates
    Investments
  available-for-sale available-for-sale available-for-sale other-than-temporary
 6




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Fair
    Value Measurements
  available-for-sale
  Level 1 
    Inputs are quoted prices in active markets for identical assets
    or liabilities.Level 2 
    Inputs are quoted prices for similar assets or liabilities in
    active markets, quoted prices for identical or similar assets or
    liabilities in markets that are not active, inputs other than
    quoted prices that are observable and market-corroborated inputs
    which are derived principally from or corroborated by observable
    market data.Level 3 
    Inputs are derived from valuation techniques in which one or
    more significant inputs or value drivers are unobservable.  Revenue
    Recognition
        Sales
    Commissions
    Stock-Based
    Compensation
   7




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Income
    Taxes
      Comprehensive
    Income (Loss)
  available-for-sale
  Three Months Ended


Six Months EndedJune 30,


June 30,2009


2010


2009


2010Net loss

$
(343
)

$
(1,957
)

$
(821
)

$
(2,536
)Other comprehensive loss:Change in foreign currency translation adjustment


(288
)


(1,236
)


(282
)


(1,147
)Net change in unrealized net loss on
    available-for-sale
    investments


(4
)


(1
)


(29
)


(5
)Total comprehensive loss

$
(635
)

$
(3,194
)

$
(1,132
)

$
(3,688
)  8




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Segment
    Data
    Earnings
    Per Share
      Recent
    Accounting Pronouncements
    3.
    Business
    Combinations  Business
    Combinations.
    Cash consideration

$
9,723Fair value of contingent consideration


572Total purchase consideration

$
10,295  9




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Estimated


EstimatedUseful Life


Fair ValueCash and cash equivalents





$
2,798Accounts receivable, net






1,055Prepaid and other current assets






210Property, equipment and software, net






426Other assets






68Trade name


5 years



218Customer relationships


7 years



3,617Purchased technology


5 years



842Goodwill






6,018Accounts payable and accrued liabilities






(1,195
)Notes payable and capital lease obligations






(418
)Deferred income taxes






(1,412
)Deferred revenue






(1,793
)Other liabilities






(139
)Total purchase price





$
10,295     Three Months Ended


Six Months EndedJune 30,


June 30,2009


2010


2009


2010Pro forma revenue

$
22,341


$
25,406


$
44,244


$
49,206Pro forma net income (loss)

$
(201
)

$
(1,938
)

$
(1,103
)

$
(2,461
)Pro forma net income per share:Basic and diluted

$
(0.01
)

$
(0.11
)

$
(0.06
)

$
(0.14
)    10




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    4.
    Cash
    Equivalents and Investments    Unrealized


FairCost


Gains


Losses


ValueCash equivalents:Money market funds

$
7,045


$



$



$
7,045Commercial paper


37,144











37,144Certificates of deposit


2,900











2,900Short-term investments:Commercial paper


6,497



2







6,499Government-sponsored agency debt securities


8,746



5







8,751Certificates of deposit


700











700Corporate notes and bonds


1,900



1







1,901Long-term investments:Government-sponsored agency debt securities


1,000



1







1,001Total

$
65,932


$
9


$



$
65,941     Unrealized


FairCost


Gains


Losses


ValueCash equivalents:Money market funds

$
27,262


$



$



$
27,262Commercial paper


25,172











25,172Certificates of deposit and time deposits


916











916U.S. Treasury securities


4,550











4,550Government-sponsored agency debt securities


1,366











1,366Short-term investments:Government-sponsored agency debt securities


7,745











7,745Corporate notes and bonds


900











900Total

$
67,911


$



$



$
67,911  11




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    5.
    Goodwill
    and Intangible Assets    Balance as of January 1, 2010

$
17,090Goodwill acquired


9,371Effects of foreign currency translation


(606
)Balance as of June 30, 2010

$
25,855     Weighted-Average


GrossAmortization


Carrying





Net CarryingPeriod


Amount


Amortization


AmountCustomer relationships


5.0


$
3,041


$
(2,326
)

$
715Trade names


7.0



3,946



(1,920
)


2,026Agreements
    not-to-compete


5.0



3,913



(2,674
)


1,239Total





$
10,900


$
(6,920
)

$
3,980     Weighted-Average


GrossAmortization


Carrying





Net CarryingPeriod


Amount


Amortization


AmountCustomer relationships


6.0


$
6,953


$
(2,704
)

$
4,249Trade names


6.9



4,308



(2,213
)


2,095Purchased technology


4.8



867



(37
)


830Agreements
    not-to-compete


5.0



3,913



(3,065
)


848Total





$
16,041


$
(8,019
)

$
8,022     Remainder of 2010

$
1,3082011


2,1102012


1,3972013


1,1272014


7772015


630Thereafter


673$
8,022  12




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  6.
    Fair
    Value Measurements    Total


Level 1


Level 2


Level 3Assets:Cash equivalents

$
59,266


$
34,094


$
25,172


$
Short-term investments


8,645



8,645







Total assets measured at fair value

$
67,911


$
42,739


$
25,172


$
LiabilitiesAccrued contingent consideration

$
1,327


$



$



$
1,327Total liabilities measured at fair value

$
1,327


$



$



$
1,327       7.
    Stockholders
    Equity  Common
    Stock Repurchases
   13




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  8.
    Stock-Based
    Compensation    Three Months Ended


Six Months EndedJune 30,


June 30,2009


2010


2009


2010Cost of revenues

$
398


$
351


$
743


$
930Sales and marketing


992



977



1,849



1,414Research and development


256



418



471



791General and administration


1,705



1,625



3,174



3,138Total

$
3,351


$
3,371


$
6,237


$
6,273   Stock
    Option Awards
    Three MonthsEnded


Six Months EndedJune 30,


June 30,2009


2010


2009


2010Stock price volatility


62
%


59
%


61
%


60
%Expected term (years)


6.3



6.3



6.1



6.3Risk-free interest rate


2.5
%


2.3
%


2.4
%


2.6
%Dividend yield


0
%


0
%


0
%


0
%     Number of


Weighted-





AggregateShares


Average


Weighted-


IntrinsicUnderlying


Exercise


Average


Value as ofStock


Price per


Contractual


June 30,Options


Share


Term


2010(In thousands)Balance outstanding at December 31, 2009


2,134,979


$
14.35Granted


618,401



14.79Exercised


(15,315
)


6.92Forfeited or cancelled


(8,458
)


18.32Balance outstanding at June 30, 2010


2,729,607


$
14.48



6.9


$
6,745Options vested and expected to vest at June 30, 2010


2,659,097


$
14.44



6.9


$
6,719Exercisable at June 30, 2010


1,715,174


$
13.45



5.9


$
6,178    14




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##### Table of Contents



Vocus,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Restricted
    Stock Awards
    Number of SharesUnderlyingStock AwardsBalance nonvested at December 31, 2009


1,229,358Awarded


577,451Vested


(347,745
)Forfeited


(25,125
)Balance nonvested at June 30, 2010


1,433,939       9.
    Commitments
    and Contingencies   15




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis of our financial
    condition and results of operations should be read in
    conjunction with our consolidated financial statements and
    related notes that appear elsewhere in this report and in our
    annual report on
    Form 10-K
    for the year ended December 31, 2009.
  This report includes forward-looking statements that are made
    pursuant to the safe harbor provisions of the Private Securities
    Litigation Reform Act of 1995. These forward-looking statements
    can be identified by the use of words such as
    anticipate, believe,
    estimate, may, intend,
    expect, will, should,
    seeks or other similar expressions. Forward-looking
    statements reflect our plans, expectations and beliefs, and
    involve inherent risks and uncertainties, many of which are
    beyond our control. You should not place undue reliance on any
    forward-looking statement, which speaks only as of the date
    made. Our actual results could differ materially from those
    discussed in the forward-looking statements. Factors that could
    cause or contribute to these differences include those discussed
    below and elsewhere in this report, particularly in Risk
    Factors in Item 1A of Part II.
  Overview
    not-for-profit
      Business Combinations,
   16




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Sources
    of Revenues
        Cost of
    Revenues and Operating Expenses
  Cost of Revenues.
    Sales and Marketing.
   17




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##### Table of Contents



Research and Development.
  General and Administrative.
  Amortization of Intangible Assets. not-to-complete
  Critical
    Accounting Policies
    10-K
  Revenue Recognition.
    Sales Commissions.
 18




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##### Table of Contents



Stock-Based Compensation.
  Business Combinations. not-to-compete
  Goodwill and Long-Lived Assets.
    Income Taxes.
   19




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##### Table of Contents



Results
    of Operations
    Three MonthsEnded


Six MonthsJune 30,


Ended June 30,2009


2010


2009


2010Revenues


100
%


100
%


100
%


100
%Cost of revenues


19



20



18



20Gross profit


81



80



82



80Operating expenses:Sales and marketing


47



53



48



52Research and development


6



6



6



6General and administrative


25



24



25



24Amortization of intangible assets


2



2



2



2Total operating expenses


80



85



81



84Income (loss) from operations


1



(5
)


1



(4
)Other income, net


1











Income (loss) before provision for income taxes


2



(5
)


1



(4
)Provision for income taxes


4



3



3



2Net loss


(2
)%


(8
)%


(2
)%


(6
)%   Three
    Months Ended June 30, 2010 and 2009
  Revenues.
  Cost of Revenues.
 20




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##### Table of Contents



Sales and Marketing Expenses.
  Research and Development Expenses.
  General and Administrative Expenses.
  Amortization of Intangible
    Assets.
  Other Income (Expense).
  Provision for Income Taxes.
    Six
    Months Ended June 30, 2010 and 2009
  Revenues.
 21




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##### Table of Contents



Cost of Revenues.
  Sales and Marketing Expenses.
  Research and Development Expenses.
  General and Administrative Expenses.
  Amortization of Intangible
    Assets.
  Other Income (Expense).
  Provision for Income Taxes.
    Liquidity
    and Capital Resources
     22




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##### Table of Contents



Contractual
    Obligations, Commercial Commitments and Off-balance Sheet
    Arrangements
      Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk  Form 10-K
  Foreign
    Currency Exchange Risk
    Item 4.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
 23




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##### Table of Contents



Changes
    in Internal Controls
   PART II  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors    Risks
    Related to Our Business and Industry
  Current
    economic and market conditions may adversely affect our
    business, financial condition and results of
    operations.
    
    reductions in the corporate budgets, including technology
    spending of our customers and potential customers;
    declines in demand for our solutions;
    decreases in collections of our customer receivables;
    insolvency of our key vendors and suppliers; and
    volatility in interest rates and decreases in investment income.   24




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##### Table of Contents



Our
    quarterly results of operations may fluctuate in the future. As
    a result, we may fail to meet or exceed the expectations of
    investors or securities analysts, which could cause our stock
    price to decline.
    
    our ability to retain and increase sales to existing customers
    and attract new customers;
    changes in the volume and mix of subscriptions sold and press
    releases distributed in a particular quarter;
    seasonality of our business cycle, given that our subscription
    volumes are normally lowest in the first quarter and highest in
    the fourth quarter;
    our policy of expensing sales commissions at the time our
    customers are invoiced for a subscription agreement, while the
    majority of our revenue is recognized ratably over future
    periods;
    the timing and success of new product introductions or upgrades
    by us or our competitors;
    changes in our pricing policies or those of our competitors;
    the amount and timing of expenditures related to expanding our
    operations;
    changes in accounting policies or the timing of non-recurring
    charges;
    changes in the payment terms for our products and services;
    changes in foreign currency exchange rates;
    unforeseen fluctuations in our effective tax rate including
    changes in the mix of earnings in the various countries in which
    we operate, the valuation of deferred tax assets and liabilities
    and the deductibility of certain expenses; and
    the purchasing and budgeting cycles of our customers.    quarter-to-quarter
  The
    markets for our on-demand software and solutions are emerging,
    which makes it difficult to evaluate our business and future
    prospects and may increase the risk of your
    investment.
    
    generating sufficient revenue to maintain profitability;
    managing growth in our operations;
    managing the risks associated with developing new services and
    modules;
    attracting and retaining customers; and 25




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##### Table of Contents




    attracting and retaining key personnel.    If our
    on-demand solutions are not widely accepted, our business will
    be harmed.
    A
    majority of our on-demand solutions are sold pursuant to
    subscription agreements, and if our existing subscription
    customers elect either not to renew these agreements or renew
    these agreements for fewer modules or users, our business,
    financial condition and results of operations will be adversely
    affected.
    Because
    we recognize subscription revenue over the term of the
    applicable subscription agreement, the lack of subscription
    renewals or new subscription agreements may not be immediately
    reflected in our operating results.
    We
    might not generate increased business from our current
    customers, which could limit our revenue in the
    future.
    Our
    business model continues to evolve, which may cause our results
    of operations to fluctuate or decline.
   26




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We
    depend on search engines to attract new customers, and if those
    search engines change their listings or our relationship with
    them deteriorates or terminates, we may be unable to attract new
    customers and our business may be harmed.
    Failure
    to effectively develop and expand our sales and marketing
    capabilities could harm our ability to increase our customer
    base and achieve broader market acceptance of our
    solutions.
    If we
    fail to develop our brands, our business may
    suffer.
   27




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##### Table of Contents



If our
    information databases do not maintain market acceptance, our
    business, financial condition and results of operations could be
    adversely affected.
    We
    rely on third-parties to provide certain content for our
    solutions, and if those third-parties discontinue providing
    their content, our business, financial condition and results of
    operations could be adversely affected.
    We
    depend on search engines for the placement of our
    customers online news distribution, and if those search
    engines change their listings or our relationship with them
    deteriorates or terminates, our reputation will be harmed and we
    may lose customers or be unable to attract new
    customers.
    We
    have incurred operating losses in the past and may incur
    operating losses in the future.
    We
    face competition, and our failure to compete successfully could
    make it difficult for us to add and retain customers and could
    reduce or impede the growth of our business.
    
    PR solution providers offering products specifically designed
    for PR;
    generic desktop software and other commercially available
    software not specifically designed for PR;
    outsourced PR service providers;
    custom-developed solutions; and
    press release distribution providers. 28




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If we
    fail to respond to evolving industry standards, our on-demand
    solutions may become obsolete or less competitive.
    If
    there are interruptions or delays in providing our on-demand
    solutions due to third-party error, our own error or the
    occurrence of unforeseeable events, delivery of our solutions
    could become impaired, which could harm our relationships with
    customers and subject us to liability.
       29




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The
    market for our solutions among large customers may be limited if
    they require customized features or functions that we do not
    currently intend to provide in our solutions or that would be
    difficult for individual customers to customize within our
    solutions.
    Acquisitions
    could prove difficult to integrate, disrupt our business, dilute
    stockholder value and consume resources that are necessary to
    sustain our business.
    
    issue additional equity securities that would dilute the
    ownership of our stockholders;
    use cash that we may need in the future to operate our business;
    incur or assume debt on terms unfavorable to us or that we are
    unable to repay;
    incur large charges or substantial liabilities;
    encounter difficulties retaining key employees of an acquired
    company or integrating diverse business cultures; and
    become subject to adverse tax consequences.    We may
    be liable to our customers and may lose customers if we provide
    poor service, if our solutions do not comply with our agreements
    or if there is a loss of data.
   30




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##### Table of Contents



If our
    solutions fail to perform properly or if they contain technical
    defects, our reputation will be harmed, our market share would
    decline and we could be subject to product liability
    claims.
        Changes
    in laws and/or regulations related to the Internet or changes in
    the Internet infrastructure itself may cause our business to
    suffer.
       31




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If we
    are unable to protect our proprietary technology and other
    intellectual property rights, it will reduce our ability to
    compete for business.
      If a
    third-party asserts that we are infringing its intellectual
    property, whether successful or not, it could subject us to
    costly and time-consuming litigation or expensive licenses, and
    our business may be harmed.
    
    divert managements attention;
    result in costly and time-consuming litigation;
    require us to enter into royalty or licensing agreements, which
    may not be available on acceptable terms, or at all; or
    require us to redesign our solutions to avoid infringement.    Our
    growth could strain our personnel and infrastructure resources
    and, if we are unable to implement appropriate controls and
    procedures to manage our growth, we may not be able to
    successfully implement our business plan.
     32




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We are
    dependent on our executive officers and other key personnel, and
    the loss of any of them may prevent us from implementing our
    business plan in a timely manner if at all.
    We may
    not be able to attract and retain the highly skilled employees
    we need to support our planned growth.
    Because
    we conduct operations in foreign jurisdictions, which accounted
    for approximately 9% of our 2009 revenues, and because our
    business strategy includes expanding our international
    operations, our business is susceptible to risks associated with
    international operations.
    
    compliance with a wide variety of complex foreign laws and
    regulations, including data privacy requirements, content
    restrictions, labor laws and U.S. laws including the
    Foreign Corrupt Practices Act;
    difficulties caused by distance, language and cultural
    differences in managing and conducting international operations;
    potentially adverse tax consequences; and
    fluctuations in currency exchange rates.   33




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We
    might require additional capital to support business growth, and
    this capital might not be available.
    Our
    reported financial results may be adversely affected by changes
    in accounting principles generally accepted in the United
    States.
    Compliance
    with new regulations governing public company corporate
    governance and reporting is uncertain and
    expensive.
    Risks
    Related to our Common Stock and the Securities Markets
  If
    securities analysts do not publish research or reports about our
    business or if they downgrade our stock, the price of our stock
    could decline.
   34




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##### Table of Contents



Volatility
    of our stock price could adversely affect
    stockholders.
    
    quarterly variations in our operating results;
    seasonality of our business cycle;
    interest rate changes;
    changes in the markets expectations about our operating
    results;
    our operating results failing to meet the expectation of
    securities analysts or investors in a particular period;
    changes in financial estimates and recommendations by securities
    analysts concerning our company or the on-demand software
    industry in general;
    operating and stock price performance of other companies that
    investors deem comparable to us;
    news reports relating to trends in our markets;
    changes in laws and regulations affecting our business;
    material announcements by us or our competitors;
    sales of substantial amounts of common stock by our directors,
    executive officers or significant stockholders or the perception
    that such sales could occur;
    economic conditions including a slowdown in economic growth and
    uncertainty in equity and credit markets; and
    general political conditions such as acts of war or terrorism.  Provisions
    in our amended and restated certificate of incorporation and
    bylaws or Delaware law might discourage, delay or prevent a
    change of control of our company or changes in our management
    and, therefore, depress the trading price of our
    stock.
    
    establish a classified board of directors so that not all
    members of our board of directors are elected at one time;
    provide that directors may only be removed for cause
    and only with the approval of
    662/3 percent
    of our stockholders;
    require super-majority voting to amend our bylaws or specified
    provisions in our amended and restated certificate of
    incorporation;
    authorize the issuance of blank check preferred
    stock that our board of directors could issue to increase the
    number of outstanding shares and to discourage a takeover
    attempt;
    limit the ability of our stockholders to call special meetings
    of stockholders;
    prohibit stockholder action by written consent, which requires
    all stockholder actions to be taken at a meeting of our
    stockholders;
    provide that the board of directors is expressly authorized to
    adopt, amend, or repeal our bylaws; and
    establish advance notice requirements for nominations for
    election to our board of directors or for proposing matters that
    can be acted upon by stockholders at stockholder meetings.   35




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Future
    sales, or the availability for sale, of our common stock may
    cause our stock price to decline.
  Rule 10b5-1
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds  Sale of
    Unregistered Securities
    Use of
    Proceeds
  Form S-1 (No. 333-125834),
       36




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Issuer
    Purchases of Equity Securities
    MaximumTotal Number of

Dollar Value ofShares

SharesTotal Number

Average Price

Purchased as

That May Yet beof Shares

Paid per

Part of Publicly

PurchasedPurchased

Share

Announced Plan

Under the PlanApril 1  April 30Share repurchase program(1)














Employee transactions(2)














N/AMay 1  May 31Share repurchase program(1)














Employee transactions(2)














N/AJune 1  June 30Share repurchase program(1)














Employee transactions(2)


200











N/A     (1)
    
    All shares were purchased though our publicly announced share
    repurchase program. On November 25, 2008, our Board of
    Directors authorized us to purchase up to
    $30,000,000 shares of our common stock. There is no
    expiration date specified for the program.(2)
    
    All shares were delivered to us by employees to satisfy the
    minimum statutory tax withholding obligations with respect to
    the taxable income recognized by these employees upon the
    vesting of their stock awards.  Item 6.
    Exhibits  ExhibitNumber

Exhibit3
.1

Fifth Amended and Restated Certificate of Incorporation.(1)3
.2

Amended and Restated Bylaws.(1)31
.1*

Certification of Chairman and Chief Executive Officer pursuant
    to
    Rule 13a-14(a)
    and
    Rule 15d-14(a),
    promulgated under the Securities Exchange Act of 1934, as
    amended.31
.2*

Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)
    and
    Rule 15d-14(a),
    promulgated under the Securities Act of 1934, as amended.32
.1*

Certification of Chairman and Chief Executive Officer and Chief
    Financial Officer pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.     *
    
    Filed herewith(1)
    
    Incorporated by reference to an exhibit to the Registration
    Statement on
    Form S-8
    of Vocus, Inc. (Registration No.
    333-132206)
    filed with the Securities and Exchange Commission on
    March 3, 2006. 37




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SIGNATURES      By:
    /s/  Richard
    Rudman      By:
    /s/  Stephen
    Vintz       38




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INDEX TO
    EXHIBITS
  ExhibitNumber

Exhibit3
.1

Fifth Amended and Restated Certificate of Incorporation.(1)3
.2

Amended and Restated Bylaws.(1)31
.1*

Certification of Chairman and Chief Executive Officer pursuant
    to
    Rule 13a-14(a)
    and
    Rule 15d-14(a),
    promulgated under the Securities Act of 1934, as amended.31
.2*

Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)
    and
    Rule 15d-14(a),
    promulgated under the Securities Act of 1934, as amended.32
.1*

Certification of Chairman and Chief Executive Officer and Chief
    Financial Officer pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.     *
    
    Filed herewith(1)
    
    Incorporated by reference to an exhibit to the Registration
    Statement on
    Form S-8
    of Vocus, Inc. (Registration No.
    333-132206)
    filed with the Securities and Exchange Commission on
    March 3, 2006.