Comscore Reports Third Quarter 2018 Results

PRNewswire 8-Nov-2018 4:15 PM

RESTON, Va., Nov. 8, 2018 /PRNewswire/ -- Comscore, Inc. (NASDAQ:SCOR), a trusted partner for planning, transacting, and evaluating media across platforms, today reported financial results for the third quarter of 2018, ended September 30, 2018.

New comScore logo (PRNewsFoto/comScore, Inc.)

Financial and Operational Highlights

  • Total year-over-year revenue growth of 2.5%, driven by TV and cross-platform growth of 25%.
  • Gross profit improvement, reflecting relatively flat costs on increased revenue.
  • SG&A costs of $43.6 million, or 42% of revenue, compared to $52.2 million, or 52% of revenue in the year-ago quarter.
  • GAAP net loss of $24.6 million, or $(0.42) per share, compared to $130.1 million, or $(2.26) per share in the year-ago quarter.
  • Adjusted EBITDA of $5.2 million, compared to an adjusted EBITDA loss of $5.0 million in the year-ago quarter.
  • Cash, cash equivalents and restricted cash of $54.2 million, compared to $45.1 million as of December 31, 2017.
  • Comscore to host Investor Day on November 13 in New York.

"We are pleased with our performance and progress on our strategic initiatives during the third quarter. We drove revenue growth and made significant progress in streamlining our cost structure, as evidenced by our third straight quarter of positive adjusted EBITDA," said Bryan Wiener, CEO of Comscore. "Fundamental changes in the media ecosystem require a modern measurement partner to help businesses transact media with confidence. We believe our strategic plan positions us to be that trusted partner for today and in the future."

Summary Results
Total revenue in the third quarter of 2018 was $102.9 million, up from $100.3 million in the year-ago quarter. The third quarter financials reflect the three new categories in which Comscore will analyze customers and revenue moving forward. These new categories better reflect solution groups that address customer needs.

Ratings and Planning revenue is composed of revenue from digital, TV and cross-platform products. Ratings and Planning revenue increased to $70.5 million in the third quarter, compared to $69.5 million in the year-ago quarter. The increase was primarily from TV products due to increases in existing customer contract values. This was offset by lower revenues in digital products that continued to be negatively impacted by ongoing industry changes in ad buying and consolidation.

Analytics and Optimization revenue increased to $22.2 million in the third quarter, compared to $21.2 million in the year-ago quarter. Revenue increased primarily due to increases in emerging products (including activation), partially offset by lower revenue from digital custom offerings.

Movies Reporting and Analytics revenue increased to $10.2 million in the third quarter, compared to $9.7 million in the year-ago quarter. Revenue increased as the company's global footprint remained strong and products continued to result in higher contract pricing.

GAAP net loss for the third quarter of 2018 was $24.6 million, or $(0.42) per share, compared to $130.1 million, or $(2.26) per share reported in the year-ago quarter. The improvement was driven primarily by an $81.8 million non-recurring legal settlement in the year-ago quarter, as well as continued cost discipline in selling and marketing, research and development, and G&A, and a decrease in investigation and audit-related costs.

For the third quarter of 2018, Comscore generated non-GAAP adjusted EBITDA of $5.2 million, which includes a larger than normal $1.6 million payment received from a prior-year patent settlement and excludes stock-based compensation expense, change in fair value of financing derivatives, and other items as presented in the accompanying tables. This compares to an adjusted EBITDA loss of $5.0 million in the year-ago quarter.

Balance Sheet and Liquidity
As of September 30, 2018, total debt principal, composed of senior secured convertible notes, was $202.0 million. Cash, cash equivalents and restricted cash at the end of the third quarter were $54.2 million, including $6.3 million in restricted cash.

Business Outlook
In the fourth quarter of 2018, Comscore expects revenue to increase modestly and adjusted EBITDA to be positive for the fourth straight quarter and at the lower end of the range of the first three quarters of 2018, excluding the $1.6 million patent payment received in the third quarter. Looking forward, management is focused on streamlining the company's cost structure to fund critical investments in product development and drive revenue growth in 2019 and beyond.

Comscore plans to provide 2019 and multi-year financial guidance at its Investor Day hosted on November 13th in NYC and live streamed on ir.comscore.com/events-presentations. Presentation materials and an archived replay will be available for approximately 90 days following the event at the same link.

Conference Call Information for Today, Thursday, November 8 at 5:00 p.m. ET:
Management will provide commentary on the company's results in a conference call today at 5:00 p.m. ET. To access this call, dial +1 844-229-7593 (domestic) or +1 314-888-4258 (international) and reference conference ID #2195848. Participants are advised to dial in at least 10 minutes prior to the call to register. Additionally, a live webcast of the conference call will be available on the Investor Relations section of the company's website at ir.comscore.com/events-presentations. Following the conference call, a replay will be available by dialing +1 855-859-2056 (domestic) or +1 404-537-3406 (international) with passcode #2195848. The replay will also be available via webcast at ir.comscore.com/events-presentations.

About Comscore
Comscore (NASDAQ:SCOR) is a trusted partner for planning, transacting and evaluating media across platforms. With a data footprint that combines digital, linear TV, over-the-top and theatrical viewership intelligence with advanced audience insights, Comscore allows media buyers and sellers to quantify their multiscreen behavior and make business decisions with confidence. A proven leader in measuring digital and set-top box audiences and advertising at scale, Comscore is the industry's emerging, third-party source for reliable and comprehensive cross-platform measurement. To learn more about Comscore, please visit www.comscore.com.

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal and state securities laws, including, without limitation, Comscore's expectations, forecasts, plans and opinions regarding business and market opportunities, product development and innovation, financial performance, operational improvements and strategic plans, in particular Comscore's plans regarding customer needs, market positioning and revenue presentation and expectations regarding future revenue and adjusted EBITDA performance. These statements involve risks and uncertainties that could cause actual events to differ materially from expectations, including, but not limited to, Comscore's ability to achieve its expected strategic, financial and operational plans. For additional discussion of risk factors, please refer to Comscore's respective Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and other filings that Comscore makes from time to time with the U.S. Securities and Exchange Commission (the "SEC"), which are available on the SEC's website (www.sec.gov).

Investors are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Comscore does not intend or undertake, and expressly disclaims, any duty or obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after the date of this press release, or to reflect the occurrence of unanticipated events, except as required by applicable law.

Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, we are disclosing herein non-GAAP net income (loss) and adjusted EBITDA, each of which are non-GAAP financial measures used by our management to understand and evaluate our core operating performance and trends. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, as they permit our investors to view our core business performance using the same metrics that management uses to evaluate our performance. Nevertheless, our use of these non-GAAP financial measures has limitations as an analytical tool, and investors should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Instead, you should consider these measures alongside GAAP-based financial performance measures, net income (loss), various cash flow metrics, and our other GAAP financial results.

Set forth below are reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures. These reconciliations should be carefully evaluated.

COMSCORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)






As of


As of


September 30, 2018


December 31, 2017


(Unaudited)



Assets




Current assets:




Cash and cash equivalents

$

47,876



$

37,859


Restricted cash

6,338



7,266


Accounts receivable, net of allowances of $1,073 and $1,991, respectively ($2,759 and $2,899 of accounts receivable attributable to related parties, respectively)

61,900



82,029


Prepaid expenses and other current assets

20,254



15,168


Insurance recoverable on litigation settlements



37,232


Total current assets

136,368



179,554


Property and equipment, net

27,315



28,893


Other non-current assets

9,572



7,259


Deferred tax assets

3,591



4,532


Intangible assets, net

135,110



159,777


Goodwill

641,594



642,424


Total assets

$

953,550



$

1,022,439


Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable ($1,467 and $2,715 attributable to related parties, respectively)

$

19,716



$

27,889


Accrued expenses ($5,089 and $5,857 attributable to related parties, respectively)

48,352



86,031


Accrued litigation settlements

4,375



27,718


Other current liabilities

8,029



10,485


Customer advances ($2,188 and $2,755 attributable to related parties, respectively)

72,119



98,367


Total current liabilities

152,591



250,490


Financing derivatives (related party)

21,800




Senior secured convertible notes (related party)

175,850




Deferred tax liabilities

6,033



3,641


Accrued litigation settlements

875



90,800


Other non-current liabilities

27,859



21,016


Total liabilities

385,008



365,947


Commitments and contingencies




Stockholders' equity:




Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at September 30, 2018 and December 31, 2017; no shares issued or outstanding as of September 30, 2018 and December 31, 2017




Common stock, $0.001 par value per share; 150,000,000 shares authorized as of September 30, 2018 and 100,000,000 shares authorized as of December 31, 2017; 65,664,431 shares issued and 58,899,635 shares outstanding as of September 30, 2018, and 60,053,843 shares issued and 57,289,047 shares outstanding as of December 31, 2017

59



60


Additional paid-in capital

1,549,371



1,407,717


Accumulated other comprehensive loss

(9,013)



(6,224)


Accumulated deficit

(741,891)



(609,091)


Treasury stock, at cost, 6,764,796 and 2,764,796 shares as of September 30, 2018 and December 31, 2017, respectively

(229,984)



(135,970)


Total stockholders' equity

568,542



656,492


Total liabilities and stockholders' equity

$

953,550



$

1,022,439


 

COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share data)








Three Months Ended September 30,


Nine Months Ended September 30,



2018


2017


2018


2017

Revenues (1)


$

102,864



$

100,323



$

310,172



$

300,623











Cost of revenues (1) (2) (3)


49,446



48,803



148,226



143,417


Selling and marketing (1) (2) (3)


24,866



29,873



80,418



90,796


Research and development (1) (2) (3)


18,742



21,580



58,347



64,102


General and administrative (1) (2) (3)


18,707



22,331



66,067



53,426


Investigation and audit related (1)


696



21,392



37,446



56,469


Amortization of intangible assets


7,896



8,491



24,706



25,669


Settlement of litigation, net




81,799



5,250



82,417


Restructuring


51





5,141




Total expenses from operations


120,404



234,269



425,601



516,296


Loss from operations


(17,540)



(133,946)



(115,429)



(215,673)


Interest expense, net (1)


(4,682)



(148)



(11,711)



(554)


Other (expense) income, net


(1,711)



6,619



(827)



12,486


Loss from foreign currency transactions


(304)



(298)



(181)



(1,523)


Loss before income taxes


(24,237)



(127,773)



(128,148)



(205,264)


Income tax provision


(400)



(2,296)



(3,916)



(4,223)


Net loss


$

(24,637)



$

(130,069)



$

(132,064)



$

(209,487)


Net loss per common share:









Basic


$

(0.42)



$

(2.26)



$

(2.32)



$

(3.65)


Diluted


$

(0.42)



$

(2.26)



$

(2.32)



$

(3.65)


Weighted-average number of shares used in per share calculation - Common Stock:









Basic


58,212,306



57,547,863



56,877,186



57,442,180


Diluted


58,212,306



57,547,863



56,877,186



57,442,180


Comprehensive loss:









Net loss


$

(24,637)



$

(130,069)



$

(132,064)



$

(209,487)


Other comprehensive (loss) income:









Foreign currency cumulative translation adjustment


(429)



1,349



(2,789)



4,304


Other




23





57


Total comprehensive loss


$

(25,066)



$

(128,697)



$

(134,853)



$

(205,126)











(1) Transactions with related parties are included in the line items above.

(2) Stock-based compensation expense is included in the line items above as follows:



Three Months Ended September 30,


Nine Months Ended September 30,



2018


2017


2018


2017

Cost of revenues


$

1,248



$

384



$

5,235



$

1,446


Selling and marketing


1,860



1,461



8,227



4,439


Research and development


1,137



537



5,453



1,808


General and administrative


2,066



6,340



12,276



7,673




$

6,311



$

8,722



$

31,191



$

15,366











(3) Excludes amortization of intangible assets, which is presented separately in the Condensed Consolidated Statements of Operations and Comprehensive Loss.



 

COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)




Nine Months Ended September 30,


2018


2017

Operating activities:




Net loss

$

(132,064)



$

(209,487)


Adjustments to reconcile net loss to net cash used in operating activities:




Depreciation

12,974



18,229


Amortization of intangible assets

24,706



25,669


Stock-based compensation

31,191



15,366


Deferred tax provision

2,828



3,787


Change in fair value of financing derivatives

10,141




Accretion of debt discount

3,327




Amortization of deferred financing costs

703




Gain on forgiveness of obligation



(4,000)


Accrued litigation settlements to be settled in Common Stock



90,800


Other

253



646


Changes in operating assets and liabilities:




Accounts receivable

19,480



22,731


Prepaid expenses and other assets

3,502



(34,593)


Accounts payable, accrued expenses, and other liabilities

(22,449)



50,214


Customer advances

(28,531)



(7,063)


Net cash used in operating activities

(73,939)



(27,701)






Investing activities:




Sales of marketable securities



15,000


Purchases of property and equipment

(2,183)



(7,596)


Capitalized internal-use software costs

(7,447)




Net cash (used in) provided by investing activities

(9,630)



7,404






Financing activities:




Proceeds from borrowings on senior secured convertible notes (related party)

100,000




Debt issuance costs

(5,132)




Financing proceeds received on subscription receivable (related party)

7,998



9,011


Proceeds from the exercise of stock options

2,855




Payments for taxes related to net share settlement of equity awards

(4,663)



(1,514)


Principal payments on capital lease and software license arrangements

(7,260)



(12,699)


Net cash provided by (used in) financing activities

93,798



(5,202)


Effect of exchange rate changes on cash, cash equivalents and restricted cash

(1,140)



595


Net increase (decrease) in cash, cash equivalents and restricted cash

9,089



(24,904)


Cash, cash equivalents and restricted cash at beginning of period

45,125



88,341


Cash, cash equivalents and restricted cash at end of period

$

54,214



$

63,437







As of September 30,


2018


2017

Cash and cash equivalents

$

47,876



$

54,782


Restricted cash

6,338



8,655


Total cash, cash equivalents and restricted cash

$

54,214



$

63,437




Reconciliation of Non-GAAP Financial Measures

The following table presents a reconciliation of net loss (GAAP) to adjusted EBITDA for each of the periods identified:


Three Months Ended September 30,


Nine Months Ended September 30,

(In thousands)

2018


2017


2018


2017

Net loss (GAAP)

$

(24,637)



$

(130,069)



$

(132,064)



$

(209,487)










Income tax provision

400



2,296



3,916



4,223


Interest expense, net

4,682



148



11,711



554


Depreciation

4,135



6,233



12,974



18,229


Amortization of intangible assets

7,896



8,491



24,706



25,669


EBITDA

(7,524)



(112,901)



(78,757)



(160,812)










Adjustments:








Stock-based compensation

6,311



8,722



31,191



15,366


Investigation and audit related

696



21,392



37,446



56,469


Settlement of litigation, net



81,799



5,250



82,417


Restructuring costs

51





5,141




Other expense (income), net (1)

5,699



(3,963)



9,834



(4,003)


Adjusted EBITDA

$

5,233



$

(4,951)



$

10,105



$

(10,563)



(1) In 2018, adjustments to other expense (income), net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustment to other expense (income), net reflects items classified as other (expense) income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for the Digital Analytix ("DAx") disposition. Our change to the calculation of adjusted EBITDA for 2018 is intended to conform adjusted EBITDA to the Consolidated EBITDA definition under our senior secured convertible notes issued to funds affiliated with or managed by Starboard Value LP.

The following table presents a reconciliation of net loss (GAAP) to non-GAAP net loss for each of the periods identified:


Three Months Ended September 30,


Nine Months Ended September 30,

(In thousands)

2018


2017


2018


2017

Net loss (GAAP)

$

(24,637)



$

(130,069)



$

(132,064)



$

(209,487)










Adjustments:








Stock-based compensation

6,311



8,722



31,191



15,366


Investigation and audit related

696



21,392



37,446



56,469


Settlement of litigation, net



81,799



5,250



82,417


Restructuring costs

51





5,141




Other expense (income), net (1)

5,699



(3,963)



9,834



(4,003)


Non-GAAP net loss

$

(11,880)



$

(22,119)



$

(43,202)



$

(59,238)



(1) In 2018, adjustments to other expense (income), net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustment to other expense (income), net reflects items classified as other (expense) income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for the DAx disposition.

Supplemental Non-GAAP Disclosure

The following tables present a reconciliation of certain non-GAAP expense line items (to be discussed on today's conference call) to the most directly comparable GAAP expense line items:


Three Months Ended September 30,

(In thousands)

2018


2017


As reported (GAAP)


Less: stock-based compensation


As adjusted (non-GAAP)


% of GAAP Revenue


As reported (GAAP)


Less: stock-based compensation


As adjusted (non-GAAP)


% of GAAP Revenue

Revenues (1)

$

102,864







100.0

%


$

100,323







100.0

%

Cost of revenues

49,446



$

1,248



$

48,198



46.9

%


48,803



$

384



$

48,419



48.3

%

Selling and marketing

24,866



1,860



23,006



22.4

%


29,873



1,461



28,412



28.3

%

Research and development

18,742



1,137



17,605



17.1

%


21,580



537



21,043



21.0

%

General and administrative

18,707



2,066



16,641



16.2

%


22,331



6,340



15,991



15.9

%




Nine Months Ended September 30,

(In thousands)

2018


2017


As reported (GAAP)


Less: stock-based compensation


As adjusted (non-GAAP)


% of GAAP Revenue


As reported (GAAP)


Less: stock-based compensation


As adjusted (non-GAAP)


% of GAAP Revenue

Revenues (1)

$

310,172







100.0

%


$

300,623







100.0

%

Cost of revenues

148,226



$

5,235



$

142,991



46.1

%


143,417



$

1,446



$

141,971



47.2

%

Selling and marketing

80,418



8,227



72,191



23.3

%


90,796



4,439



86,357



28.7

%

Research and development

58,347



5,453



52,894



17.1

%


64,102



1,808



62,294



20.7

%

General and administrative

66,067



12,276



53,791



17.3

%


53,426



7,673



45,753



15.2

%


(1) Revenue in 2017 is not comparable to revenue in 2018 due to our adoption of ASC 606.



Revenues

Revenues from our three offerings of products and services are as follows:


Three Months Ended September 30,





(In thousands)

2018


% of Revenue


2017 (1)


% of Revenue


$ Variance


% Variance

Ratings and Planning

$

70,499



68.4

%


$

69,483



69.3

%


$

1,016



1.5

%

Analytics and Optimization

22,215



21.6

%


21,175



21.1

%


1,040



4.9

%

Movies Reporting and Analytics

10,150



10.0

%


9,665



9.6

%


485



5.0

%

Total revenues

$

102,864



100

%


$

100,323



100

%


$

2,541



2.5

%






Nine Months Ended September 30,





(In thousands)

2018


% of Revenue


2017 (1)


% of Revenue


$ Variance


% Variance

Ratings and Planning

$

210,569



67.9

%


$

206,464



68.7

%


$

4,105



2.0

%

Analytics and Optimization

68,479



22.1

%


65,922



21.9

%


2,557



3.9

%

Movies Reporting and Analytics

31,124



10.0

%


28,237



9.4

%


2,887



10.2

%

Total revenues

$

310,172



100

%


$

300,623



100

%


$

9,549



3.2

%

Revenues from our three offerings of products and services for each quarter in 2018 and 2017 are as follows:


Three Months Ended,


Nine Months Ended,

(In thousands)

March 31, 2018


June 30, 2018


September 30, 2018


September 30, 2018

Ratings and Planning

$

69,569



$

70,501



$

70,499



$

210,569


Analytics and Optimization

25,731



20,533



22,215



68,479


Movies Reporting and Analytics

10,619



10,355



10,150



31,124


Total revenues

$

105,919



$

101,389



$

102,864



$

310,172





Three Months Ended,


Fiscal Year Ended,

(In thousands)

March 31, 2017 (1)


June 30, 2017(1)


September 30, 2017(1)


December 31, 2017(1)


December 31, 2017(1)

Ratings and Planning

$

67,765



$

69,216



$

69,483



$

71,617



$

278,081


Analytics and Optimization

23,726



21,021



21,175



20,843



86,765


Movies Reporting and Analytics

9,370



9,202



9,665



10,466



38,703


Total revenues

$

100,861



$

99,439



$

100,323



$

102,926



$

403,549


For the three and nine months ended September 30, 2018, revenues from our previously disclosed four offerings of products and services would have been as follows:


Three Months Ended September 30,





(In thousands)

2018


% of Revenue


2017(1)


% of Revenue


$ Variance


% Variance

Digital Audience

$

49,467



48.1

%


$

55,430



55.3

%


$

(5,963)



(10.8)%


TV and Cross-Platform

29,775



28.9

%


23,754



23.7

%


6,021



25.3

%

Advertising

13,472



13.1

%


11,474



11.4

%


1,998



17.4

%

Movies

10,150



9.9

%


9,665



9.6

%


485



5.0

%

Total revenues

$

102,864



100

%


$

100,323



100

%


$

2,541



2.5

%




Nine Months Ended September 30,





(In thousands)

2018


% of Revenue


2017(1)


% of Revenue


$ Variance


% Variance

Digital Audience

$

157,137



50.7

%


$

167,733



55.8

%


$

(10,596)



(6.3)%


TV and Cross-Platform

84,547



27.3

%


71,138



23.7

%


13,409



18.8

%

Advertising

37,365



12.0

%


33,515



11.1

%


3,850



11.5

%

Movies

31,123



10.0

%


28,237



9.4

%


2,886



10.2

%

Total revenues

$

310,172



100

%


$

300,623



100

%


$

9,549



3.2

%


(1) Revenue in 2017 is not comparable to revenue in 2018 due to our adoption of ASC 606.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/comscore-reports-third-quarter-2018-results-300747087.html

SOURCE Comscore, Inc.

Wait, Before You Leave...