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Aug 10, 2020

Comscore Reports Second Quarter 2020 Results

Local TV and OpenAP Expansion Highlight Long-Term Growth Opportunity
 
Lower Net Loss and Record Adjusted EBITDA

RESTON, Va., Aug. 10, 2020 /PRNewswire/ -- Comscore, Inc. (Nasdaq: SCOR), a trusted partner for planning, transacting, and evaluating media across platforms, today reported financial results for the quarter ended June 30, 2020.

Second Quarter 2020 Financial Highlights

  • Revenue of $88.6 million compared to $96.9 million in the prior-year quarter, with growth in TV and Addressable year-over-year
  • Movies revenue of $7.9 million compared to $10.7 million in the prior year, primarily due to pandemic-related closure of movie theaters
  • Net loss of $10.4 million, or $(0.15) per share compared to a net loss of $279.5 million, or $(4.61) per share, which included a non-cash impairment charge of $241.6 million, in the prior-year quarter
  • Adjusted EBITDA of $9.2 million compared to a loss of $3.2 million in the prior-year quarter

Recent Key Renewals, Partnerships and New Business Developments

  • Addressable and Cross-Platform – Renewed and expanded partnership with OpenAP, the advanced advertising marketplace
  • Movies – Eight large customer renewals, including three major studios
  • Validated Campaign Essentials – Integration of Google Ads Data Hub
  • Local TV – Rockfleet Broadcasting and Cox Media Group
  • Syndicated Digital – Bassmaster, Minute Media
  • National Agency – Omnicom Group (digital expansion)
  • OnDemand – Shout! Studios and Cinedigm
  • OTT – Sinclair Compulse360, the leading Local OTT content advertising platform
  • Comscore Consumer Intelligence for local markets – A new Local product merging in-market consumer behavior with Digital and TV usage
  • International – Auditel (Italy), MMS (Sweden)
  • Awarded U.S. patent for protecting consumer privacy during demographics data collection

"During the second quarter, we made strides in many areas of our business, positioning Comscore for success in the second half of 2020 and beyond. While the pandemic impacted our revenue for the quarter, particularly in our Movies and Digital businesses, our TV and Analytics businesses performed well. We effectively managed expenses, which drove adjusted EBITDA to its highest level since 2016," said Bill Livek, CEO and Executive Vice Chairman of Comscore. "This quarter, we also celebrated a milestone 1,000th TV station client, a testament to how our television measurement and advanced demographic solutions add media planning value for our customers."

"Our strategic review progressed during the second quarter," Livek continued. "Despite some delay from the pandemic and related closures, we have conducted a fulsome process and are in active discussions regarding strategic alternatives to maximize long-term shareholder value. We look forward to updating our stakeholders when appropriate."

Second Quarter Summary Results

Total revenue in the second quarter of 2020 was $88.6 million, compared to $96.9 million in the year-ago quarter. Ratings and Planning revenue was $63.8 million in the second quarter of 2020, compared to $68.9 million in the year-ago quarter. The decrease was largely driven by lower revenue from syndicated digital, partially offset by higher Local TV and Addressable TV. Syndicated Digital revenue from small customers has been impacted in part by the Covid-19 pandemic. However, the Company has been successful in renewing its large enterprise clients and added new customers in the quarter.

National TV revenue was consistent with the second quarter of last year, but higher than the first quarter of 2020, due in part to the Company's new partnership with LiveRamp. Local TV revenue continued its growth with higher revenue year-over-year, reflecting the impact of new customers gained last year. In Local TV, the Company added and renewed a number of clients, including several large affiliate groups. Addressable TV revenue also increased compared to the prior-year quarter.

Analytics and Optimization revenue was $16.9 million in the second quarter of 2020 compared to $17.3 million in the year-ago quarter. The decrease was due primarily to lower Activation revenue from reduced ad spend in the quarter, due in part to the impact of the pandemic, offset by approximately $1.0 million in revenue from a one-time recovery of revenue-sharing fees. 

Movies Reporting and Analytics revenue was $7.9 million in the second quarter of 2020 compared to $10.7 million in the year-ago quarter. Revenue was impacted by some smaller, non-long-term contract customers pausing service in connection with theater closures. We expect theater closures to continue affecting Movies revenue until theaters reopen. During the quarter, the Company signed or renewed contracts with eight significant Movies customers, including three major U.S. studios and one international studio. However, the uncertainty around theater re-openings delayed some customer contracts in the quarter.

Total expenses from cost of revenues, sales and marketing, research and development and general and administrative were $84.5 million, compared to $109.1 million in the year-ago quarter. The decrease relates to a significant reduction in compensation expense due to lower headcount, as well as lower facility costs, professional fees and other general operating expenses. A portion of this reduction relates to temporary actions the Company implemented to reduce costs given the current economic uncertainty.

Net loss for the second quarter of 2020 was $10.4 million, or $(0.15) per share, compared to a net loss of $279.5 million, or $(4.61) per share reported in the year-ago quarter. The second quarter of 2019 included non-cash impairment charges totaling $241.6 million.

For the second quarter of 2020, non-GAAP adjusted EBITDA was $9.2 million, compared to an adjusted EBITDA loss of $3.2 million in the year-ago quarter. Adjusted EBITDA excludes stock-based compensation expense; impairment charges; investigation, litigation and legacy audit-related expense; restructuring expense; change in fair value of financing derivatives, warrants liability and equity securities investment; and other items as presented in the accompanying tables.

Balance Sheet and Liquidity

As of June 30, 2020, cash, cash equivalents and restricted cash totaled $55.5 million, including $19.6 million in restricted cash. Total debt principal as of June 30, 2020, including $204.0 million of senior secured convertible notes, was $223.6 million.

Conference Call Information for today, Monday, August 10th 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 # 6443146. 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 # 6443146. 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 TV 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 the impact of the Covid-19 pandemic on the Company's business, customers and the broader media industry; the impact of movie theater closures; the temporary nature of movie contract pauses; the Company's strategic review; creation of long-term shareholder value; cost reductions; and growth opportunities, market positioning and strategy. These statements involve risks and uncertainties that could cause actual events to differ materially from expectations, including, but not limited to, the scope and duration of the Covid-19 pandemic and related government mandates, changes in consumer behavior, customer payment collections, delays in contract execution and renewals, delays in completing the strategic review, external market conditions, and 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


June 30, 2020


December 31, 2019


(Unaudited)



Assets




Current assets:




Cash and cash equivalents

$

35,899



$

46,590


Restricted cash

19,611



20,183


Accounts receivable, net of allowances of $2,772 and $1,919, respectively

64,026



71,853


Prepaid expenses and other current assets

14,755



15,357


Total current assets

134,291



153,983


Property and equipment, net

30,362



31,693


Operating right-of-use assets

31,484



36,689


Other non-current assets

3,652



2,979


Deferred tax assets

1,868



2,374


Intangible assets, net

65,790



79,559


Goodwill 

416,172



416,418


Total assets

$

683,619



$

723,695


Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$

36,178



$

44,804


Accrued expenses

51,071



55,507


Contract liability

55,422



58,158


Customer advances

8,432



9,886


Warrants liability

3,832



7,725


Current operating lease liabilities

6,994



6,764


Other current liabilities

6,723



7,393


Total current liabilities

168,652



190,237


Secured term note

12,488



12,463


Financing derivatives

16,900



21,587


Senior secured convertible notes

188,275



184,075


Non-current operating lease liabilities

39,480



42,497


Non-current contract liability

6,165



291


Deferred tax liabilities

407



287


Other non-current liabilities

11,245



13,284


Total liabilities

443,612



464,721


Commitments and contingencies




Stockholders' equity:




Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at June 30, 2020 and December 31, 2019; no shares issued or outstanding as of June 30, 2020 and December 31, 2019




Common stock, $0.001 par value per share; 150,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 77,629,871 shares issued and 70,865,075 shares outstanding as of June 30, 2020, and 76,829,926 shares issued and 70,065,130 shares outstanding as of December 31, 2019

71



70


Additional paid-in capital

1,615,284



1,609,358


Accumulated other comprehensive loss

(13,642)



(12,333)


Accumulated deficit

(1,131,722)



(1,108,137)


Treasury stock, at cost, 6,764,796 shares as of June 30, 2020 and December 31, 2019

(229,984)



(229,984)


Total stockholders' equity

240,007



258,974


Total liabilities and stockholders' equity

$

683,619



$

723,695


 

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,



2020


2019


2020


2019

Revenues


$

88,566



$

96,888



$

178,094



$

199,182











Cost of revenues (1) (2)


44,949



51,994



90,747



105,401


Selling and marketing (1) (2)


16,007



23,329



35,220



48,169


Research and development (1) (2)


9,765



16,883



19,901



35,099


General and administrative (1) (2)


13,741



16,932



29,284



36,477


Investigation and audit related




2,354





3,196


Amortization of intangible assets


6,846



8,076



13,764



16,181


Impairment of goodwill




224,272





224,272


Impairment of intangible asset




17,308





17,308


Settlement of litigation, net




5,000





5,000


Impairment of right-of-use and long-lived assets






4,671




Restructuring (1)




2,949





2,879


Total expenses from operations


91,308



369,097



193,587



493,982


Loss from operations


(2,742)



(272,209)



(15,493)



(294,800)


Interest expense, net


(8,856)



(8,242)



(17,702)



(15,001)


Other income (expense), net


1,477



(3,081)



8,671



(112)


Loss from foreign currency transactions


(944)



(464)



(140)



(426)


Loss before income taxes


(11,065)



(283,996)



(24,664)



(310,339)


Income tax benefit


664



4,463



1,079



3,292


Net loss


$

(10,401)



$

(279,533)



$

(23,585)



$

(307,047)


Net loss per common share:









Basic and diluted


$

(0.15)



$

(4.61)



$

(0.34)



$

(5.09)


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









Basic and diluted


70,554,326



60,697,608



70,340,658



60,315,528


Comprehensive loss:









Net loss


$

(10,401)



$

(279,533)



$

(23,585)



$

(307,047)


Other comprehensive loss:









Foreign currency cumulative translation adjustment


1,564



677



(1,309)



56


Total comprehensive loss


$

(8,837)



$

(278,856)



$

(24,894)



$

(306,991)











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




Three Months Ended June 30,


Six Months Ended June 30,



2020


2019


2020


2019

Cost of revenues


$

487



$

636



$

696



$

1,484


Selling and marketing


720



1,087



1,329



2,403


Research and development


375



668



431



1,394


General and administrative


764



1,913



2,548



5,976


Restructuring




(266)





(266)


Total stock-based compensation expense


$

2,346



$

4,038



$

5,004



$

10,991











(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)



Six Months Ended June 30,


2020


2019

Operating activities:




Net loss

$

(23,585)



$

(307,047)


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




Depreciation

6,788



6,111


Non-cash operating lease expense

2,978



2,747


Amortization expense of finance leases

784



1,361


Amortization of intangible assets

13,764



16,181


Bad debt expense

1,590




Impairment of goodwill



224,272


Impairment of intangible asset



17,308


Stock-based compensation

5,004



10,991


Deferred tax provision (benefit)

324



(3,983)


Change in fair value of financing derivatives

(4,687)



(1,100)


Change in fair value of warrants liability

(3,893)




Change in fair value of investment in equity securities



2,016


Impairment of right-of-use and long-lived assets

4,671




Accretion of debt discount

3,617



3,042


Amortization of deferred financing costs

739



525


Other

(6)



(20)


Changes in operating assets and liabilities:




Accounts receivable

5,836



4,442


Prepaid expenses and other assets

(779)



3,190


Accounts payable, accrued expenses and other liabilities

(13,948)



20,176


Contract liability and customer advances

2,330



(6,552)


Operating lease liabilities

(3,319)



(4,364)


Net cash used in operating activities

(1,792)



(10,704)






Investing activities:




Proceeds from sale of investment in equity securities 



705


Purchases of property and equipment

(45)



(1,893)


Capitalized internal-use software costs

(7,836)



(5,619)


Net cash used in investing activities

(7,881)



(6,807)






Financing activities:




Proceeds from private placement, net of issuance costs paid



19,894


Proceeds from sale-leaseback financing transaction



4,252


Proceeds from the exercise of stock options



1,191


Payments for taxes related to net share settlement of equity awards

(68)



(1,210)


Principal payments on finance leases

(823)



(1,417)


Principal payments on software license arrangements

(155)



(1,662)


Net cash (used in) provided by financing activities

(1,046)



21,048


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

(544)



91


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

(11,263)



3,628


Cash, cash equivalents and restricted cash at beginning of period

66,773



50,198


Cash, cash equivalents and restricted cash at end of period

$

55,510



$

53,826







As of June 30,


2020


2019

Cash and cash equivalents

$

35,899



$

48,963


Restricted cash

19,611



4,863


Total cash, cash equivalents and restricted cash

$

55,510



$

53,826


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)

2020 (Unaudited)


2019 (Unaudited)


2020 (Unaudited)


2019 (Unaudited)

Net loss (GAAP)

$

(10,401)



$

(279,533)



$

(23,585)



$

(307,047)










Interest expense, net

8,856



8,242



17,702



15,001


Amortization of intangible assets

6,846



8,076



13,764



16,181


Depreciation

3,404



3,005



6,788



6,111


Amortization expense of finance leases

394



787



784



1,361


Income tax benefit

(664)



(4,463)



(1,079)



(3,292)


EBITDA

8,435



(263,886)



14,374



(271,685)










Adjustments:








Stock-based compensation expense

2,346



4,304



5,004



11,257


Investigation and audit related



2,354





3,196


Settlement of litigation, net



5,000





5,000


Restructuring



2,949





2,879


Impairment of goodwill



224,272





224,272


Impairment of intangible asset



17,308





17,308


Private placement issuance cost



1,154





1,154


Impairment of right-of-use and long-lived assets





4,671




Other (income) expense, net (1)

(1,542)



3,304



(8,434)



916


Adjusted EBITDA

$

9,239



$

(3,241)



$

15,615



$

(5,703)



(1) Adjustments to other (income) expense, net, reflect non-cash changes in the fair value of financing derivatives, warrants liability and equity securities investment included in other income (expense), net and certain legal expenses defined by the senior secured convertible notes and classified as general and administrative expenses on our Condensed Consolidated Statements of Operations and Comprehensive Loss. We sold our investment in equity securities in 2019.

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


Three Months Ended June 30,


Six Months Ended June 30,

(In thousands)

2020 (Unaudited)


2019 (Unaudited)


2020 (Unaudited)


2019 (Unaudited)

Net loss (GAAP)

$

(10,401)



$

(279,533)



$

(23,585)



$

(307,047)










Adjustments:








Amortization of intangible assets

6,846



8,076



13,764



16,181


Stock-based compensation expense

2,346



4,304



5,004



11,257


Investigation and audit related



2,354





3,196


Impairment of right-of-use and long-lived assets





4,671




Settlement of certain litigation, net



5,000





5,000


Restructuring



2,949





2,879


Impairment of goodwill



224,272





224,272


Impairment of intangible asset



17,308





17,308


Private placement issuance cost



1,154





1,154


Other (income) expense, net (1)

(1,542)



3,304



(8,434)



916


Non-GAAP net loss

$

(2,751)



$

(10,812)



$

(8,580)



$

(24,884)



(1) Adjustments to other (income) expense, net, reflect non-cash changes in the fair value of financing derivatives, warrants liability and equity securities investment included in other income (expense), net and certain legal expenses defined by the senior secured convertible notes and classified as general and administrative expenses on our Condensed Consolidated Statements of Operations and Comprehensive Loss. We sold our investment in equity securities in 2019.

We do not provide GAAP net income (loss) on a forward-looking basis because we are unable to predict with reasonable certainty our future stock-based compensation expense, litigation and restructuring expense, fair value adjustments for financing derivatives and warrants, variable interest expense for outstanding senior secured convertible notes, and any unusual gains or losses without unreasonable effort. These items are uncertain, depend on various factors, and could be material to results computed in accordance with GAAP. For this reason, we are unable without unreasonable effort to provide a reconciliation of adjusted EBITDA or non-GAAP net loss to the most directly comparable GAAP measure, GAAP net income (loss), on a forward-looking basis.

Revenues

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


Three Months Ended June 30,





(In thousands)

2020
(Unaudited)


% of Revenue


2019
(Unaudited)


% of Revenue


$ Variance


% Variance

Ratings and Planning

$

63,779



72.0

%


$

68,922



71.1

%


$

(5,143)



(7.5)

%

Analytics and Optimization

16,894



19.1

%


17,293



17.9

%


(399)



(2.3)

%

Movies Reporting and Analytics

7,893



8.9

%


10,673



11.0

%


(2,780)



(26.0)

%

Total revenues

$

88,566



100.0

%


$

96,888



100.0

%


$

(8,322)



(8.6)

%




Six Months Ended June 30,





(In thousands)

2020
(Unaudited)


% of Revenue


2019
(Unaudited)


% of Revenue


$ Variance


% Variance

Ratings and Planning

$

127,300



71.5

%


$

139,499



70.0

%


$

(12,199)



(8.7)

%

Analytics and Optimization

32,395



18.2

%


38,751



19.5

%


(6,356)



(16.4)

%

Movies Reporting and Analytics

18,399



10.3

%


20,932



10.5

%


(2,533)



(12.1)

%

Total revenues

$

178,094



100.0

%


$

199,182



100.0

%


$

(21,088)



(10.6)

%

 

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SOURCE Comscore

Press, Neil Ripley, Comscore, Inc., 646-746-0579, press@comscore.com; Investors, Christopher Ferris, Comscore, Inc., 212-277-6547, cferris@comscore.com