comScore Reports Record Revenue in Fourth Quarter and Full Year 2008
(Nasdaq: SCOR), a leader in measuring the digital world, today announced
financial results for its fourth quarter and fiscal year ended
2008
(Logo: http://www.newscom.com/cgi-bin/prnh/20080115/COMSCORELOGO)
are very pleased to report record revenue for the fourth quarter of 2008 that
is 25 percent higher than fourth quarter 2007, despite a challenging economic
environment. Our subscription revenue for the fourth quarter was strong and
increased 32 percent from the same quarter last year, while existing customer
revenue increased 25 percent over fourth quarter 2007. Overall revenue in the
fourth quarter was slightly below the low end of our guidance range, impacted
by somewhat lighter project revenue in the fourth quarter, the negative impact
of the stronger U.S. dollar on our international revenue, and a slower rate of
international growth. We believe the lighter than expected project revenue
can be attributed primarily to clients tightening their year-end spending in
reaction to the economic slowdown.” Dr. Abraham continued, “Our results in
the fourth quarter for net income (excluding certain non-recurring benefits
for tax and charges for impairments), non-GAAP adjusted net income, and GAAP
and non GAAP EPS were on the high end of our guidance range while adjusted
EBITDA was consistent with our expectations. These financial results reflect
continuation of our revenue growth, the fundamental strength of our business
model, and the benefits of cost containment efforts that we implemented late
last year.”
Dr. Abraham added, “Despite the economic conditions, we added 112 gross
new customers, or 30 new customers on a net basis, in the fourth quarter,
which increases our total customer base to 1,166 clients. We are delighted to
report that we recently signed Viacom as the one-hundredth client for Video
Metrix, our industry-leading video tracking service. We also maintained our
historical subscription renewal rate in excess of 90 percent on a subscription
revenue basis, with renewals among our medium- and large-sized customers at
even higher rates. In 2008, we continued to broaden our customer base, and we
made particularly significant strides in penetrating the telecom sector. With
industry leaders such as Verizon and AT&T now among our top 10 customers, we
believe comScore is well positioned as mobile Internet usage continues its
rapid growth.”
“In addition, Brand Metrix, Ad Metrix, and Campaign Metrix, our ad
effectiveness measurement products, all gained important traction in 2008.
These services allow publishers and advertisers to quantitatively evaluate the
effectiveness of advertising campaigns and help maximize the return on
advertising expenditures. Looking ahead to 2009, we believe that this line of
products will gain further momentum as advertisers seek to maximize the return
on their advertising expenditures in these challenging times.”
Dr. Abraham concluded, “Our focus remains on the long term as we continue
to build the leading global digital marketing intelligence platform. We
believe that our strong market position, financial health and business model
have positioned us well for continued long-term success.”
Fourth Quarter and Full-year 2008 Financial Highlights and Operating
Metrics:
$'s and total shares in millions, except per share data (unaudited)
Q4 Q4 % FY FY %
2008 2007 Change 2008 2007 Change
Revenue $31.6 $25.3 25% $117.4 $87.2 35%
GAAP Income before
Income Taxes $1.1 $5.0 -78% $10.3 $11.8 -13%
GAAP Net Income $20.4 $12.7 60% $25.2 $19.3 30%
GAAP EPS
(Diluted) $0.67 $0.42 60% $0.83 $0.88 -6%
Fully Diluted
Shares (M) 30.3 29.9 1% 30.2 18.4 64%
Adjusted EBITDA* $6.5 $6.6 -1% $25.7 $18.0 43%
Adjusted EBITDA
Margin 21% 26% -5% pts. 22% 21% 1% pts.
Non-GAAP Adjusted
Net Income * $5.5 $6.4 -15% $22.1 $16.3 36%
Non-GAAP EPS
(Diluted)* $0.18 $0.21 -14% $0.73 $0.71 3%
Cash, Cash
Equivalents and
Short-term
Investments $71.5 $96.8 -26%
Long-term
Investments $3.5 $7.9 -54%
Total Deferred
Revenue $42.8 $33.0 30%
Cash Flow from
Operations $4.0 $6.6 -39% $32.3 $21.2 52%
Free Cash Flow* $3.4 $5.6 -39% $18.0 $17.6 2%
Revenue Metrics:
Subscription
Revenue $26.6 $20.2 32% $97.4 $68.8 42%
Project Revenue $5.0 $5.1 -2% $20.0 $18.4 9%
Existing Customers $27.3 $21.8 25% $99.4 $74.5 33%
New Customers $4.3 $3.5 23% $18.0 $12.7 42%
International $4.5 $3.5 29% $16.5 $10.0 65%
Customer Count 1,166 895 1,166 895
* A complete reconciliation of GAAP to non-GAAP results is set forth in
the attachment to this press release.
Fourth Quarter and Full-Year Financial Summary:
-- Included in GAAP net income for the fourth quarter is an income tax
benefit of $20.4 million resulting from the reversal of the company's
valuation allowance previously recorded against certain U.S. deferred
tax assets, which consisted principally of net operating loss
carryforwards. Also included in GAAP net income for the fourth quarter
is a $1.4 million charge ($2.2 million for full year 2008) for
impairment of the value of all auction rate securities held by the
company bringing the year-end carrying value of the auction rate
securities to approximately $2.9 million. Excluding the impact of the
tax benefit and impairment charge, net income would have been $1.4
million, or $0.05 per share, at the high end of our previously-
announced fourth quarter 2008 guidance.
-- Excluding the impact of the M: Metrics acquisition and transition-
related costs, free cash flow was approximately $5.6 million in the
fourth quarter of 2008 and approximately $24.0 million for the full
year 2008.
Financial Outlook
In 2009, comScore anticipates maintaining a high overall renewal rate,
increased penetration of existing customers, further international expansion
and expects to benefit from increased focus and interest in its strong
portfolio of Ad Effectiveness products. At the same time, the company expects
to continue to emphasize effective cost management in order to increase
operating leverage in 2009. For the full year of 2009, in a challenging and
highly uncertain economic environment, comScore expects revenue to grow
approximately 15 percent over full year 2008. comScore’s expectations for the
first quarter 2009 are outlined in the table below:
1Q09
Revenue $30.3 - $30.8 million
GAAP Net Income $0.2 - $0.5 million
GAAP EPS* $0.01 - $0.02
Adjusted EBITDA $3.8 - $4.3 million
Non-GAAP Adjusted Net Income $2.6 - $3.1 million
Non-GAAP EPS* $0.09 - $0.10
* Assumes 30.6 million fully diluted shares
A reconciliation of the guidance for first quarter 2009 GAAP net income
and EPS to the adjusted EBITDA, non-GAAP adjusted net income and non-GAAP EPS
is set forth in the table accompanying this release.
Conference Call Information:
Chief Financial Officer, will provide commentary on the company’s results in a
conference call on
The conference call and replay can be accessed by telephone and webcast as
follows:
Call-in Number: 888-713-4209, Passcode 74553746
(International) +1-617-213-4863, Passcode 74553746
Replay Number: 888-286-8010, Passcode 23975880
(International) +1-617-801-6888, Passcode 23975880
Webcast (live and replay): http://ir.comscore.com/events.cfm
About comScore
comScore, Inc. (NASDAQ: SCOR) is a global leader in measuring the digital
world and preferred source of digital marketing intelligence. In an
independent survey of 800 of the most influential publishers, advertising
agencies and advertisers conducted by
comScore was rated the ‘most preferred online audience measurement service’
by 50% of respondents, a full 25 points ahead of its nearest competitor.
comScore’s capabilities are based on a massive, global cross-section of
approximately 2 million Internet users who have given comScore permission to
confidentially capture their browsing and transaction behavior, including
online and offline purchasing. comScore panelists also participate in survey
research that gathers and integrates their attitudes and intentions. Using its
proprietary technology, comScore measures what matters across a broad spectrum
of digital behavior and attitudes, helping clients design more powerful
marketing strategies that deliver superior ROI. With its recent acquisition of
M:Metrics, comScore is also a leading source of data on mobile usage. comScore
services are used by more than 1,100 clients, including global leaders such as
AOL, Microsoft, Yahoo!, BBC, Carat, Cyworld, Deutsche Bank, France Telecom,
Best Buy, The Newspaper Association of America, Financial Times, ESPN, Fox
Sports, Nestle, Starcom, Universal McCann, the United States Postal Service,
the
information, please visit http://www.comscore.com.
Non-GAAP Financial Measures
comScore reports all financial information required in accordance with
generally accepted accounting principles (GAAP). comScore believes, however,
that evaluating its ongoing operating results will be enhanced if it also
discloses certain non-GAAP information because it is useful to understand
comScore’s performance, as it excludes non-cash and other special charges that
many investors believe may obscure comScore’s on-going operating results.
comScore also reports non-GAAP EPS (diluted), which uses non-GAAP adjusted
net income in lieu of GAAP net income in calculating earnings per share.
In addition, comScore believes that Adjusted EBITDA is a useful measure
for investors to use to evaluate its operating performance. Adjusted EBITDA
comprises non-GAAP net income further adjusted to exclude the cash tax
provision, depreciation and interest income (expenses), net. A reconciliation
of comScore’s GAAP results to these non-GAAP measures is included in the
financial tables accompanying this release.
The company believes that Adjusted EBITDA is an important indicator of the
company’s operational strength and the performance of its business because it
provides a link between profitability and operating cash flow. Adjusted
EBITDA is also widely used by investors and analysts as a supplemental measure
to evaluate the overall operating performance of companies in comScore’s
industry. comScore’s management also uses Adjusted EBITDA extensively as a
measure of operating performance because it does not include the impact of
items not directly resulting from our core operations. Moreover, the
company’s management uses the measure for planning purposes, to allocate
resources and to evaluate the effectiveness of the company’s business
strategies and management’s performance.
The company believes that excluding non-recurring costs from non-GAAP net
income and EPS and from Adjusted EBITDA provides a meaningful indication to
investors of the expected on-going operating performance of the company.
Specifically as it relates to M:Metrics, the exclusion of the non-recurring
costs reflect the expected benefits realized upon the integration of M:Metrics
into comScore.
comScore’s management also uses free cash flow as a non-GAAP measure of
the company’s operating cash flow less cash expenditures for capital spending
as a key indicator of the company’s operating cash flow performance net of
capital outlays.
Whenever comScore uses such non-GAAP financial measures, it provides a
reconciliation of non-GAAP financial measures to the most closely applicable
GAAP financial measure. The mid-points of the ranges for projected GAAP net
income and non-GAAP adjusted net income are used in the reconciliation, where
applicable. Investors are encouraged to review the related GAAP financial
measures and the reconciliation of these non-GAAP financial measures to their
most directly comparable GAAP financial measure included in the financial
tables accompanying this release.
Cautionary Statement
This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including, without limitation, comScore’s expectations
regarding the continued growth and breadth of its customer base; the expected
strength of comScore’s business and client demand for comScore’s products,
including VideoMetrix and comScore’s ad effectiveness products portfolio; the
future quality of client relationships and resulting renewal rates; comScore’s
expectations regarding expected customer adoption and acceptance of new
products and capabilities; comScore’s expectations regarding continued
strengthening of its balance sheet and its position for continued success in
various market segments, including the telecommunications industry;
assumptions regarding effective tax rates; forecasts of future financial
performance, including related growth rates and components thereof;
assumptions related to costs and revenue growth for the first quarter and the
full year 2009; and assumptions related to the state of the economy and the
global market environment. These statements involve risks and uncertainties
that could cause our actual results to differ materially, including, but not
limited to: the early stage of the market for digital marketing intelligence
and the rate of development of such market; comScore’s ability to manage its
growth; the rate of development of the Internet advertising and eCommerce
markets; comScore’s ability to effectively expand sales and marketing;
comScore’s reliance on subscription-based revenues; comScore’s ability to
retain existing large customers and obtain new large customers; continued
growth of the Internet as a medium for commerce, content, advertising and
communications; inability to sell additional products and attract new
customers; risks related to the domestic and global economies and the effects
they may have on comScore, its industry or its customers; volatility of
quarterly results and analyst expectations; and the ability of comScore to
utilize net operating losses.
For a detailed discussion of these and other risk factors, please refer to
comScore’s Quarterly Report on Form 10-Q for the period ended
2008
2007
Commission (the “SEC”), which are available on the SEC’s Web site
(http://www.sec.gov).
Stockholders of comScore 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 undertake any 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.
comScore, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
(unaudited) (unaudited) (unaudited)
Revenues $31,590 $25,274 $117,371 $87,153
Cost of revenues
(excludes
amortization of
intangible assets
resulting from
acquisitions shown
below) (1) 10,276 6,528 34,562 23,858
Selling and marketing (1) 10,281 8,135 39,400 28,659
Research and
development (1) 3,994 3,026 14,832 11,413
General and
administrative (1) 4,189 3,605 16,785 11,599
Amortization of
intangible assets
resulting from
acquisitions 329 169 804 966
Total expenses from
operations 29,069 21,463 106,383 76,495
Income from operations 2,521 3,811 10,988 10,658
Interest income, net 322 1,206 1,900 2,627
(Loss) gain from
foreign currency (302) 25 (321) (296)
Impairment of
marketable securities (1,398) - (2,239) -
Other (37) - (37) -
Revaluation of
preferred stock
warrant liabilities - - - (1,195)
Income before income
taxes 1,106 5,042 10,291 11,794
Provision for income taxes 19,263 7,703 14,895 7,522
Net income 20,369 12,745 25,186 19,316
Accretion of redeemable
preferred stock - - - (1,829)
Net income available
to common stockholders $20,369 $12,745 $25,186 $17,487
Net income available to
common stockholders per
common share:
Basic $0.70 $0.45 $0.88 $0.99
Diluted $0.67 $0.42 $0.83 $0.88
Weighted-average number of
shares used in per share
calculation - common
stock
Basic 29,032,423 27,795,936 28,691,216 16,139,365
Diluted 30,271,520 29,859,926 30,232,714 18,377,563
(1) Amortization of
stock-based
compensation is
included in the line
items above as
follows
Cost of revenues 251 134 861 279
Selling and marketing 788 500 2,611 1,009
Research and development 199 117 706 245
General and administrative 599 440 2,296 941
comScore, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2008 2007
(unaudited)
Assets
Current assets:
Cash and cash equivalents $34,297 $68,368
Short-term investments 37,164 28,449
Accounts receivable, net of allowances of
$479 and $234, respectively 29,947 23,446
Prepaid expenses and other current assets 1,871 1,620
Restricted cash - 1,385
Deferred tax asset 13,304 176
Total current assets 116,583 123,444
Long-term investments 3,497 7,924
Property and equipment, net 17,697 6,867
Other non-current assets 131 168
Long-term deferred tax asset 13,736 7,888
Intangible assets, net 8,805 17
Goodwill 39,114 1,364
Total assets $199,563 $147,672
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,755 $1,140
Accrued expenses 9,432 6,838
Deferred revenues 42,779 33,045
Deferred rent 1,049 154
Capital lease obligations 977 900
Total current liabilities 55,992 42,077
Capital lease obligations, long-term - 977
Long-term deferred rent 8,691 181
Total liabilities 64,683 43,235
Commitments and contingencies
Common stock subject to put - 1,815
Stockholders' equity:
Common stock 29 28
Treasury stock (1,265) -
Additional paid-in capital 192,612 183,433
Accumulated other comprehensive (loss)
income (842) 1
Accumulated deficit (55,654) (80,840)
Total stockholders' equity 134,880 102,622
Total liabilities and stockholders' equity $199,563 $147,672
comScore, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
2008 2007
(unaudited)
Operating activities:
Net Income $25,186 $19,316
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 4,977 3,764
Amortization of intangible assets resulting
from acquisition 798 966
Provision for bad debts and sales allowances 594 142
Stock based compensation 6,482 2,474
Deferred rent (126) -
Loss on asset disposal 50 -
Revaluation of preferred stock warrant liability - 1,195
Amortization of deferred finance costs - 7
Deferred tax benefit (15,386) (8,142)
Impairment of marketable securities 2,239 -
Changes in operating assets and liabilities,
net of effect of acquisitions:
Accounts receivable (6,581) (9,186)
Prepaid expenses and other current assets 229 (486)
Other non-current assets 114 255
Accounts Payable, accrued expenses and other
liabilities (1,838) 1,065
Deferred revenues 6,124 9,841
Deferred rent 9,397 -
Net cash provided by operating
activities 32,259 21,211
Investing activities:
Acquisition, net of cash acquired (44,638) -
Recovery (payment) of restricted cash 1,385 (1,115)
Purchase of investments (92,288) (56,475)
Sale and maturity of investments 86,118 30,920
Purchases of property and equipment (14,252) (3,635)
Net cash used in investing activities (63,675) (30,305)
Financing activities:
Proceeds from exercise of common stock options 1,027 972
Repurchase of common stock (1,265) -
Proceeds from issuance of common stock - 73,116
Principal payments on capital lease obligations (900) (2,109)
Net cash (used in) provided by financing
activities (1,138) 71,979
Effect of the exchange rate changes on cash (1,517) 451
Net (decrease) increase in cash and cash
equivalents $(34,071) $63,336
Cash and cash equivalents at beginning of
year $68,368 $5,032
Cash and cash equivalents at end of year $34,297 $68,368
Reconciliation from Income before income taxes to Non-GAAP Adjusted Net
Income and Adjusted EBITDA
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
(Dollars in thousands, except per share data)
(unaudited)
Income before income
taxes $1,106 $5,042 $10,291 $11,794
Valuation Allowance
Release 20,353 8,065 20,254 8,065
Deferred tax provision (1,126) - (4,873) -
Current cash tax
provision 36 (362) (486) (543)
Net income $20,369 $12,745 $25,186 $19,316
Valuation Allowance
Release (20,353) (8,065) (20,254) (8,065)
Impairment of
marketable securities 1,398 - 2,239 -
Net income excluding
impairment of
marketable securities
and benefit from
valuation allowance
release $1,414 $4,680 $7,171 $11,251
Amortization of acquired
intangibles 329 169 804 966
Stock-based compensation 1,837 1,191 6,474 2,474
Non-recurring costs from
acquisition 752 - 2,788 -
Follow-on public offering
costs - 392 - 392
Revaluation of preferred
stock warrant liabilities - - - 1,195
Deferred tax provision 1,126 - 4,873 -
Non-GAAP adjusted net
income $5,458 $6,432 $22,110 $16,278
Current cash tax
provision (36) 362 486 543
Depreciation 1,382 992 4,978 3,762
Interest (income) expense,
net (322) (1,206) (1,900) (2,627)
Adjusted EBITDA $6,482 $6,580 $25,674 $17,956
Adjusted EBITDA
margin (%) 21% 26% 22% 21%
EPS (diluted) $0.67 $0.42 $0.83 $0.88
Non-GAAP EPS (diluted) $0.18 $0.21 $0.73 $0.71
Reconciliation from GAAP Operating Cash Flow to Free Cash Flow
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
(Dollars in thousands) (Dollars in thousands)
(unaudited) (unaudited) (unaudited) (unaudited)
Net cash provided by
operating activities $4,020 $6,563 $32,259* $21,211
Purchase of property
and equipment (665) (933) (14,252)* (3,635)
Free cash flow $3,355 $5,630 $18,007 $17,576
* Includes approximately $9.3 million in leasehold improvements due to
tenant allowances
Reconciliation from Income before income taxes to Non-GAAP Adjusted Net
Income and Adjusted EBITDA (Guidance)
Forecasted amounts for the three months ending
mid-points of the range of the guidance provided herein.
Three Months Ending
March 31,
2009 2008
(Dollars in thousands,
except per share data)
(unaudited) (unaudited)
Income before income taxes $623 $4,209
Deferred tax provision (224) (1,613)
Current cash tax provision (37) (65)
Net income $362 $2,531
Amortization of acquired intangibles 324 7
Stock-based compensation 1,950 1,143
Deferred tax provision 224 1,613
Non-GAAP adjusted net income $2,860 $5,294
Current cash tax provision 37 65
Depreciation 1,479 1,035
Interest (income) expense, net (326) (819)
Adjusted EBITDA $4,050 $5,575
Adjusted EBITDA margin (%) 13% 21%
EPS (diluted) $0.01 $0.08
Non-GAAP EPS (diluted) $0.09 $0.18
Diluted Shares 30,600 29,998
SOURCE comScore, Inc.