Comscore Reports First Quarter 2019 Results

Comscore Reports First Quarter 2019 Results

Strategic Review Expected to Produce Initial $20 Million in Annualized Cost Savings

PR Newswire

RESTON, Va., May 8, 2019 /PRNewswire/ -- Comscore, Inc. (Nasdaq: SCOR), a trusted partner for planning, transacting, and evaluating media across platforms, today reported financial results for the quarter ended March 31, 2019.

New comScore logo (PRNewsFoto/comScore, Inc.)

First Quarter 2019 Financial Results

  • Total year-over-year revenue for the first quarter declined 3.4% to $102.3 million
  • Net loss of $27.5 million, or $(0.46) per share, compared to a net loss of $51.5 million, or $(0.93) per share in the year-ago quarter
  • Adjusted EBITDA loss of $2.5 million, compared to adjusted EBITDA of $3.6 million in the year-ago quarter
  • Cash, cash equivalents and restricted cash of $42.8 million, compared to $50.2 million as of December 31, 2018

"As we sharpen our focus on the products our customers want, we will further strengthen our position in the marketplace. This will better enable us to expand our customer base, service our existing customers, and drive long-term value for our stockholders," said Dale Fuller, interim chief executive officer of Comscore.

"Over the past five weeks, we began a strategic review of the company, including all aspects of customer relationships, products, and organization structure," Fuller added. "While the strategic review is still in process, we have identified and implemented actions this week that we believe will result in a better customer experience, improved organizational efficiency, and resources that are better aligned with business needs. We expect these actions to decrease our annualized costs and cash outflow by approximately $20 million, or 5% of our core operating costs, a portion of which will be realized beginning in the second quarter of 2019."

First Quarter Summary Results
Total revenue in the first quarter of 2019 was $102.3 million, down from $105.9 million in the year-ago quarter.

Ratings and Planning revenue increased to $70.6 million in the first quarter of 2019, compared to $69.6 million in the year-ago quarter. The increase was primarily driven by TV products due to increases in contract values from existing customers and expanded market reach, offset by lower revenue in syndicated digital products due to ongoing industry changes in ad buying and consolidation.

Analytics and Optimization revenue declined to $21.5 million in the first quarter of 2019, compared to $25.7 million in the year-ago quarter. As previously disclosed, the first quarter of 2018 included certain digital customer solution deliveries from prior-year sales. This, in combination with a decline in current deliveries of digital customer solutions, resulted in lower revenue for the 2019 quarter as compared to the year-ago period. This decrease was offset by increased volume in Activation products.

Movies Reporting and Analytics revenue was $10.3 million in the first quarter of 2019, compared to $10.6 million in the year-ago quarter. The decrease principally related to lower project-based revenue in the quarter.

Net loss for the first quarter of 2019 was $27.5 million, or $(0.46) per share, compared to a net loss of $51.5 million, or $(0.93) per share reported in the year-ago quarter. The improvement was driven primarily by a reduction of investigation and audit related costs, as well as continued cost discipline in selling and marketing and research and development.

For the first quarter of 2019, non-GAAP adjusted EBITDA loss was $2.5 million, compared to positive adjusted EBITDA of $3.6 million in the year-ago quarter. Adjusted EBITDA excludes stock-based compensation expense; investigation, litigation and audit-related expense; restructuring (income) expense; change in fair value of financing derivatives; and other items as presented in the accompanying tables. Adjusted EBITDA for the first quarter of 2019 was impacted by additional non-stock expense of $2.4 million related to the resignation of certain executives.

Balance Sheet and Liquidity
As of March 31, 2019, cash, cash equivalents and restricted cash were $42.8 million, including $6.1 million in restricted cash. Total debt principal, composed of senior secured convertible notes, was $204.0 million.

Conference Call Information for Today, Wednesday, May 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 the call, dial +1 844-229-7593 (domestic) or +1 314-888-4258 (international) and reference conference ID # 2463568. 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 #2463568. 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.

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 product focus, market positioning, customer acquisition, customer service, growth in stockholder value, organizational efficiency and resource alignment, and the timing and amount of cost savings from restructuring actions. 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.

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, 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 and per share data)



As of


As of


March 31, 2019


December 31, 2018


(Unaudited)



Assets




Current assets:




Cash and cash equivalents

$

36,741



$

44,096


Restricted cash

6,102



6,102


Accounts receivable, net of allowances of $1,683 and $1,597, respectively

63,057



75,609


Prepaid expenses and other current assets

18,678



19,972


Total current assets

124,578



145,779


Property and equipment, net

28,406



27,339


Operating right-of-use assets

41,210




Other non-current assets

5,908



8,898


Deferred tax assets

2,842



3,991


Intangible assets, net

118,840



126,945


Goodwill

640,786



641,191


Total assets

$

962,570



$

954,143


Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$

38,225



$

29,836


Accrued expenses

42,126



58,140


Contract liability

62,640



64,189


Current operating lease liabilities

6,629




Customer advances

6,155



6,688


Other current liabilities

5,692



10,083


Total current liabilities

161,467



168,936


Financing derivatives

22,000



26,100


Senior secured convertible notes

178,913



177,342


Non-current operating lease liabilities

47,739




Deferred rent



10,304


Deferred tax liabilities

4,825



5,527


Other non-current liabilities

13,688



14,367


Total liabilities

428,632



402,576


Commitments and contingencies




Stockholders' equity:




Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at March 31, 2019 and December 31, 2018; no shares issued or outstanding as of March 31, 2019 and December 31, 2018




Common stock, $0.001 par value per share; 150,000,000 shares authorized as of March 31, 2019 and December 31, 2018; 66,722,683 shares issued and 59,957,887 shares outstanding as of March 31, 2019, and 66,154,626 shares issued and 59,389,830 shares outstanding as of December 31, 2018

60



59


Additional paid-in capital

1,571,759



1,561,208


Accumulated other comprehensive loss

(11,242)



(10,621)


Accumulated deficit

(796,655)



(769,095)


Treasury stock, at cost, 6,764,796 shares as of March 31, 2019 and December 31, 2018

(229,984)



(229,984)


Total stockholders' equity

533,938



551,567


Total liabilities and stockholders' equity

$

962,570



$

954,143


 

 

COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share data)




Three Months Ended March 31,



2019


2018

Revenues


$

102,294



$

105,919







Cost of revenues (1) (2)


53,407



47,254


Selling and marketing (1) (2)


24,840



25,905


Research and development (1) (2)


18,216



18,716


General and administrative (1) (2)


19,545



18,661


Investigation and audit related


842



31,867


Amortization of intangible assets


8,105



8,544


Restructuring (income) expense


(70)



1,257


Total expenses from operations


124,885



152,204


Loss from operations


(22,591)



(46,285)


Interest expense, net


(6,759)



(2,905)


Other income, net


2,969



77


Gain (loss) from foreign currency transactions


38



(922)


Loss before income taxes


(26,343)



(50,035)


Income tax provision


(1,171)



(1,415)


Net loss


$

(27,514)



$

(51,450)


Net loss per common share:





Basic and diluted


$

(0.46)



$

(0.93)


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





Basic and diluted


59,958,203



55,227,046


Comprehensive loss:





Net loss


$

(27,514)



$

(51,450)


Other comprehensive (loss) income:





Foreign currency cumulative translation adjustment


(621)



1,615


Total comprehensive loss


$

(28,135)



$

(49,835)







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




Three Months Ended March 31,



2019


2018

Cost of revenues


$

848



$

213


Selling and marketing


1,316



575


Research and development


726



344


General and administrative


4,063



749


Total stock-based compensation expense


$

6,953



$

1,881



(2) 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)



Three Months Ended March 31,


2019


2018

Operating activities:




Net loss

$

(27,514)



$

(51,450)


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




Depreciation

3,106



4,563


Non-cash operating lease expense

1,427




Amortization expense of finance leases

574




Amortization of intangible assets

8,105



8,544


Stock-based compensation

6,953



1,881


Deferred tax provision

441



906


Change in fair value of financing derivatives

(4,100)



2,180


Change in fair value of investment in equity securities

1,712



449


Accretion of debt discount

1,319



752


Amortization of deferred financing costs

252



207


Other

(138)



(69)


Changes in operating assets and liabilities:




Accounts receivable

12,506



11,095


Prepaid expenses and other assets

1,818



(597)


Accounts payable, accrued expenses, and other liabilities

(2,544)



(19,761)


Contract liability and customer advances

(2,500)



(3,498)


Operating lease liabilities

(2,993)




Net cash used in operating activities

(1,576)



(44,798)






Investing activities:




Proceeds from sale of investment in equity securities

705




Purchases of property and equipment

(1,836)



(725)


Capitalized internal-use software costs

(3,109)



(1,932)


Net cash used in investing activities

(4,240)



(2,657)






Financing activities:




Proceeds from borrowings on senior secured convertible notes



85,000


Debt issuance costs



(4,315)


Financing proceeds received on subscription receivable



3,065


Proceeds from the exercise of stock options

1,191




Payments for taxes related to net share settlement of equity awards

(1,138)



(4,099)


Principal payments on finance leases

(694)




Principal payments on capital lease and software license arrangements

(823)



(2,859)


Net cash (used in) provided by financing activities

(1,464)



76,792


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

(75)



368


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

(7,355)



29,705


Cash, cash equivalents and restricted cash at beginning of period

50,198



45,125


Cash, cash equivalents and restricted cash at end of period

$

42,843



$

74,830







As of March 31,


2019


2018

Cash and cash equivalents

$

36,741



$

67,266


Restricted cash

6,102



7,564


Total cash, cash equivalents and restricted cash

$

42,843



$

74,830


 

 

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 March 31,

(In thousands)

2019
(Unaudited)


2018
(Unaudited)

Net loss (GAAP)

$

(27,514)



$

(51,450)






Income tax provision

1,171



1,415


Interest expense, net

6,759



2,905


Depreciation

3,106



4,563


Finance lease amortization expense

574




Amortization of intangible assets

8,105



8,544


EBITDA

(7,799)



(34,023)






Adjustments:




Stock-based compensation

6,953



1,881


Investigation and audit related

842



31,867


Restructuring (income) expense

(70)



1,257


Other (income) expense, net (1)

(2,388)



2,629


Adjusted EBITDA

$

(2,462)



$

3,611



(1) Adjustments to other (income) expense, net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss.

 

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


Three Months Ended March 31,

(In thousands)

2019
(Unaudited)


2018
(Unaudited)

Net loss (GAAP)

$

(27,514)



$

(51,450)






Adjustments:




Stock-based compensation

6,953



1,881


Investigation and audit related

842



31,867


Amortization of intangible assets(2)

8,105



8,544


Restructuring (income) expense

(70)



1,257


Other (income) expense, net (1)

(2,388)



2,629


Non-GAAP net loss

$

(14,072)



$

(5,272)



(1) Adjustments to other (income) expense, net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss.

(2) In the fourth quarter of 2018, amortization of intangible assets was added as an adjustment in our calculation of non-GAAP net loss. Prior year non-GAAP net loss has been recast to include this adjustment, which is intended to better reflect our core operating performance.

 

 

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. GAAP expense line items have been adjusted to exclude the effects of stock-based compensation.


Three Months Ended March 31,


2019

(Unaudited)


2018

(Unaudited)

(In thousands)

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

$

102,294







100.0

%


$

105,919







100.0

%

Cost of revenues

53,407



$

848



$

52,559



51.4

%


47,254



$

213



$

47,041



44.4

%

Gross profit

48,887



(848)



49,735



48.6

%


58,665



(213)



$

58,878



55.6

%

Selling and marketing

24,840



1,316



23,524



23.0

%


25,905



575



25,330



23.9

%

Research and development

18,216



726



17,490



17.1

%


18,716



344



18,372



17.3

%

General and administrative

19,545



4,063



15,482



15.1

%


18,661



749



17,912



16.9

%

 

 

Revenues

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


Three Months Ended March 31,





(In thousands)

2019
(Unaudited)


% of
Revenue


2018
(Unaudited)


% of
Revenue


$ Variance


% Variance

Ratings and Planning

$

70,577



69.0

%


$

69,569



65.7

%


$

1,008



1.4

%

Analytics and Optimization

21,458



21.0

%


25,731



24.3

%


(4,273)



(16.6)

%

Movies Reporting and Analytics

10,259



10.0

%


10,619



10.0

%


(360)



(3.4)

%

Total revenues

$

102,294



100

%


$

105,919



100

%


$

(3,625)



(3.4)

%

 

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SOURCE Comscore

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