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.

 

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SOURCE Comscore, Inc.