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Aug 9, 2018

comScore Reports Second Quarter 2018 Results

RESTON, Va., Aug. 9, 2018 /PRNewswire/ -- comScore, Inc. (Nasdaq: SCOR), a trusted partner for planning, transacting, and evaluating media across platforms, today reported financial results for the second quarter of 2018, ended June 30, 2018.

New comScore logo (PRNewsFoto/comScore, Inc.)

Revenue in the second quarter of 2018 was $101.4 million, up from $99.4 million reported in the same period of 2017. GAAP net loss for the second quarter of 2018 was $56.0 million, or $(1.02) per share as compared to $38.6 million, or $(0.67) per share reported in the same period for 2017.

Revenue from the digital audience product offering in the second quarter of 2018 was $49.9 million, down 8% from the same period of 2017. TV and cross-platform revenue increased 16% year-over-year to $29.5 million. In the second quarter of 2018, the company recorded $1.9 million in revenue related to a change in accounting estimate for certain contracts in its TV and cross-platform offering and increased its cost of sales by the same amount. Excluding this impact, revenue growth from TV and cross-platform would have been 9% compared to the same period of 2017. Advertising product revenue increased 12% year-over-year to $11.7 million as a result of emerging products, and movies revenue increased 13% year-over-year to $10.4 million.

On a non-GAAP basis, net loss for the second quarter of 2018 was $17.5 million, excluding $23.0 million in stock-based compensation expense related to the issuance of equity awards to employees, directors and consultants; a charge of $5.3 million for a legal settlement associated with the conclusion of certain litigation; a restructuring charge of $3.8 million; and other items as presented in the accompanying tables. Non-GAAP net loss in the second quarter of 2018 compares to a non-GAAP net loss of $19.4 million reported in the same period for 2017.

For the second quarter of 2018, comScore generated adjusted EBITDA of $1.3 million, excluding the above-mentioned items as presented in the accompanying tables. This compares to an adjusted EBITDA loss of $3.7 million reported in the same period one year ago.

"In the second quarter, we continued to push forward on our mission to build momentum in the market through a focused vision, accelerated product development, and a demonstrably streamlined and simplified operating model, which was reflected in our ability to post positive adjusted EBITDA for the second straight quarter," said Bryan Wiener, CEO of comScore. "Our turnaround is moving with velocity, and we are rallying around a renewed strategic plan that continues to establish comScore as currency and the new standard for cross-platform measurement."

Conference Call information for today, Thursday, August 9 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 #2839798. 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 #2839798. 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 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 and opinions regarding business and market opportunities, product development and innovation, financial growth, operational improvements and strategic plans. 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 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.

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)



June 30, 2018


December 31,
2017


(Unaudited)



Assets




Current assets:




Cash and cash equivalents

$

46,589



$

37,859


Restricted cash

6,599



7,266


Accounts receivable, net of allowances of $1,510 and $1,991, respectively ($1,409 and $2,899 of accounts receivable attributable to related parties, respectively)

70,182



82,029


Prepaid expenses and other current assets

19,523



15,168


Insurance recoverable on litigation settlements

10,000



37,232


Total current assets

152,893



179,554


Property and equipment, net

27,669



28,893


Other non-current assets

9,143



7,259


Deferred tax assets

3,619



4,532


Intangible assets, net

143,004



159,777


Goodwill

641,702



642,424


Total assets

$

978,030



$

1,022,439


Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable ($977 and $2,715 attributable to related parties, respectively)

$

18,352



$

27,889


Accrued expenses ($5,745 and $5,857 attributable to related parties, respectively)

52,485



86,031


Accrued litigation settlements

3,800



27,718


Other current liabilities

10,335



10,485


Customer advances ($988 and $2,755 attributable to related parties, respectively)

86,310



98,367


Total current liabilities

171,282



250,490


Financing derivatives (related party)

15,900




Senior secured convertible notes (related party)

174,404




Deferred tax liabilities

5,590



3,641


Accrued litigation settlements

1,750



90,800


Other non-current liabilities

36,149



21,016


Total liabilities

405,075



365,947


Commitments and contingencies




Stockholders' equity:




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




Common stock, $0.001 par value per share; 150,000,000 shares authorized as of June 30, 2018 and 100,000,000 shares authorized as of December 31, 2017; 64,651,714 shares issued and 57,886,918 shares outstanding as of June 30, 2018, and 60,053,843 shares issued and 57,289,047 shares outstanding as of December 31, 2017

58



60


Additional paid-in capital

1,528,719



1,407,717


Accumulated other comprehensive loss

(8,584)



(6,224)


Accumulated deficit

(717,254)



(609,091)


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

(229,984)



(135,970)


Total stockholders' equity

572,955



656,492


Total liabilities and stockholders' equity

$

978,030



$

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 June 30,


Six Months Ended June 30,



2018


2017


2018


2017

Revenues (1)


$

101,389



$

99,439



$

207,308



$

200,300











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


51,526



47,301



98,780



94,614


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


29,647



31,190



55,552



60,923


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


20,889



21,502



39,605



42,522


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


28,699



13,310



47,360



31,095


Investigation and audit related (1)


4,883



17,399



36,750



35,077


Amortization of intangible assets


8,266



8,443



16,810



17,178


Settlement of litigation, net


5,250



(915)



5,250



618


Restructuring


3,833





5,090




Total expenses from operations


152,993



138,230



305,197



282,027


Loss from operations


(51,604)



(38,791)



(97,889)



(81,727)


Interest expense, net(1)


(4,124)



(252)



(7,029)



(406)


Other income, net


807



2,683



884



5,867


Gain (loss) from foreign currency transactions


1,045



(1,205)



123



(1,225)


Loss before income taxes


(53,876)



(37,565)



(103,911)



(77,491)


Income tax provision


(2,101)



(1,061)



(3,516)



(1,927)


Net loss


$

(55,977)



$

(38,626)



$

(107,427)



$

(79,418)


Net loss per common share:









Basic


$

(1.02)



$

(0.67)



$

(1.90)



$

(1.38)


Diluted


$

(1.02)



$

(0.67)



$

(1.90)



$

(1.38)


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









Basic


55,192,741



57,498,228



56,703,795



57,386,516


Diluted


55,192,741



57,498,228



56,703,795



57,386,516


Comprehensive loss:









Net loss


$

(55,977)



$

(38,626)



$

(107,427)



$

(79,418)


Other comprehensive income:









Foreign currency cumulative translation adjustment


(3,975)



2,352



(2,360)



2,955


Unrealized gain on marketable securities, net




34





34


Total comprehensive loss


$

(59,952)



$

(36,240)



$

(109,787)



$

(76,429)











(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 June 30,


Six Months Ended June 30,



2018


2017


2018


2017

Cost of revenues


$

3,774



$

433



$

3,987



$

1,062


Selling and marketing


5,792



1,532



6,367



2,978


Research and development


3,972



450



4,316



1,271


General and administrative


9,461



409



10,210



1,333




$

22,999



$

2,824



$

24,880



$

6,644



(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)



Six Months Ended June 30,


2018


2017

Operating activities:




Net loss

$

(107,427)



$

(79,418)


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




Depreciation

8,839



11,996


Amortization of intangible assets

16,810



17,178


Stock-based compensation

24,880



6,644


Deferred tax provision

2,477



1,808


Change in fair value of financing derivatives

4,460




Change in fair value of investment in equity securities

(265)




Accretion of debt discount

1,978




Amortization of deferred financing costs

445




Other

510



189


Changes in operating assets and liabilities:




Accounts receivable

10,638



11,724


Prepaid expenses and other assets

(5,255)



(15,693)


Accounts payable, accrued expenses, and other liabilities

(18,138)



20,402


Customer advances

(14,321)



2,912


Net cash used in operating activities

(74,369)



(22,258)






Investing activities:




Purchases of property and equipment

(1,287)



(4,021)


Capitalized internal-use software costs

(5,228)




Net cash used in investing activities

(6,515)



(4,021)






Financing activities:




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

100,000




Debt issuance costs

(5,123)




Financing proceeds received on subscription receivable (related party)

4,676



5,822


Proceeds from the exercise of stock options

164




Repurchase of Common Stock (withholding taxes)

(4,275)



(1,262)


Principal payments on capital lease and software license arrangements

(5,359)



(8,608)


Net cash provided by (used in) financing activities

90,083



(4,048)


Effect of exchange rate changes on cash and cash equivalents

(1,136)



21


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

8,063



(30,306)


Cash, cash equivalents and restricted cash at beginning of period

45,125



88,341


Cash, cash equivalents and restricted cash at end of period

$

53,188



$

58,035







As of June 30,


2018


2017

Cash and cash equivalents

$

46,589



$

47,638


Restricted cash

6,599



10,397


Total cash, cash equivalents and restricted cash

$

53,188



$

58,035


 

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 June 30,


Six Months Ended June 30,

(In thousands)

2018


2017


2018


2017

Net loss (GAAP)

$

(55,977)



$

(38,626)



$

(107,427)



$

(79,418)










Income tax provision

2,101



1,061



3,516



1,927


Interest expense, net

4,124



252



7,029



406


Depreciation

4,276



5,867



8,839



11,996


Amortization of intangible assets

8,266



8,443



16,810



17,178


EBITDA

(37,210)



(23,003)



(71,233)



(47,911)










Adjustments:








Stock-based compensation

22,999



2,824



24,880



6,644


Investigation and audit related

4,883



17,399



36,750



35,077


Settlement of litigation, net

5,250



(915)



5,250



618


Restructuring costs

3,833





5,090




Other loss (income), net (1)

1,506



(53)



4,135



(40)


Adjusted EBITDA

$

1,261



$

(3,748)



$

4,872



$

(5,612)



(1) In 2018, adjustments to other income, 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. These financial instruments were not held in the prior period. The prior period adjustment to other income, net reflects items classified as non-operating other 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 exclude non-operating other income, net from our 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 and non-GAAP net loss per share for each of the periods identified:



Three Months Ended June 30,


Six Months Ended June 30,

(In thousands)

2018


2017


2018


2017

Net loss (GAAP)

$

(55,977)



$

(38,626)



$

(107,427)



$

(79,418)










Adjustments:








Stock-based compensation

22,999



2,824



24,880



6,644


Investigation and audit related

4,883



17,399



36,750



35,077


Settlement of litigation, net

5,250



(915)



5,250



618


Restructuring costs

3,833





5,090




Other loss (income), net (1)

1,506



(53)



4,135



(40)


Non-GAAP net loss

$

(17,506)



$

(19,371)



$

(31,322)



$

(37,119)




(1) In 2018, adjustments to other income, 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. These financial instruments were not held in the prior period. The prior period adjustment to other income, net reflects items classified as non-operating other 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. We have excluded non-operating other income, net from our calculation of non-GAAP net loss for 2018.

 

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 June 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

$

101,389







100.0

%


$

99,439







100.0

%

Cost of revenues

51,526



(3,774)



47,752



47.1

%


47,301



(433)



46,868



47.1

%

Selling and marketing

29,647



(5,792)



23,855



23.5

%


31,190



(1,532)



29,658



29.8

%

Research and development

20,889



(3,972)



16,917



16.7

%


21,502



(450)



21,052



21.2

%

General and administrative

28,699



(9,461)



19,238



19.0

%


13,310



(409)



12,901



13.0

%



Six Months Ended June 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

$

207,308







100.0

%


$

200,300







100.0

%

Cost of revenues

98,780



(3,987)



94,793



45.7

%


94,614



(1,062)



93,552



46.7

%

Selling and marketing

55,552



(6,367)



49,185



23.7

%


60,923



(2,978)



57,945



28.9

%

Research and development

39,605



(4,316)



35,289



17.0

%


42,522



(1,271)



41,251



20.6

%

General and administrative

47,360



(10,210)



37,150



17.9

%


31,095



(1,333)



29,762



14.9

%


 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/comscore-reports-second-quarter-2018-results-300695099.html

SOURCE comScore

Investor Contact: Hattie Young, press@comscore.com

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