In 2011, Onvia delivered record profitability despite declining revenue growth. For the full year, Onvia delivered record Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization, including non-cash stock-based compensation) of $3.8 million up 105% over 2010 and exceeded our target of $3.6 million set at the beginning of 2011.
Annual net income was $1.6 million or $0.18 per diluted share for the year ended December 31, 2011 compared to net loss of $806,000, or $0.10 cents per diluted share in 2010. Due to our improving profitability we released $616,000 of the valuation allowance against our deferred tax assets which resulted in the same amount being recognized as a tax benefit in our fourth quarter net income. We will continue to evaluate the appropriateness of the valuation allowance annually at a minimum, but more frequently based on consideration of our operating results. Excluding the effects of the valuation allowance, we had $25 million of deferred tax assets related to $73 million in net operating loss carryforwards available to offset future taxable net income at December 31, 2011.
Consistent with our expectations, annual revenue declined by 14% to $23.2 million from $27.0 million in 2010. In sequential quarters, our declining revenue growth slowed to 2% in the fourth quarter of 2011 compared to a 4% decline in the third quarter. We expect sequential quarterly revenues to stabilize in the first quarter of 2012, but we expect year over year growth rates will remain negative through the first half of 2012 compared to 2011.
Annual Contract Value, or ACV, represents the aggregate annual value of our subscription contracts. ACV declined by 16% to $18.5 million from $22.0 million a year ago, but the rate of decline slowed compared to sequential quarters. In the fourth quarter, ACV declined by 3% compared to a sequential quarter decline of 5% in the third quarter of 2011. Stabilization of ACV indicates that client retention rates are improving and new client acquisitions are beginning to scale. ACV is expected to stabilize in early 2012.
In 2011 Onvia’s total client base decreased 27% to 4,500 clients at December 31, 2011compared to 6,200 clients at December 31, 2010. In the fourth quarter, however, we lost clients at a much slower rate than in previous quarters, losing 4% of our base, compared to 9% and 8% of the base in the second and third quarters of 2011, respectively.
Annual Contract Value per Client, however, increased 16% from Q4 2010 to an average of nearly $4,114 per client. ACVC improved, in part by targeting more strategic clients and because renewals were weighted toward strategic clients with higher contract values.
Our Small and Medium Business or ‘SMB’ sales organization was transformed from a telemarketing transactional model to a professional consultative selling organization. While this team is still a work in process, average contract value for new clients was approximately $6,800 in 2011, compared to approximately $3,900 in 2010, an increase of 73%. On the account management side, client retention rates increased over 12 percentage points since the first quarter of 2011. We expect to begin to realize the full impact of these changes in 2012 and beyond as our clients progress through the term of their annual subscription.
About Oniva: For more than 12 years Onvia (NASDAQ: ONVI) has been delivering the data, business intelligence, analytics and tools that help our clients succeed in the government market.
Thousands of companies across the United States rely on Onvia as a comprehensive resource for timely and actionable sales opportunities and the industry-specific information needed to make intelligent sales decisions. Onvia offers unparalleled coverage of government purchasing activity for industries such as architecture and engineering, construction, IT/telecom, business consulting services, operations and maintenance, and transportation.
Onvia tracks, analyzes and reports the spending of tens of thousands of federal, state and local government agencies, giving companies a single source for conducting open, intelligent and efficient business with government. Along with providing an exclusive suite of integrated business tools for a wide variety of industries, Onvia offers DemandStar, the automated system that streamlines agency procurement processes.