UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

comScore, Inc.

(Exact name of registrant as specified in its charter)

Delaware		000-1158172		54-1955550
(State or other jurisdiction of		(Commission File Number)		(IRS Employer
incorporation)				Identification No.)

11950 Democracy Drive
Suite 600
Reston, Virginia 20190
(Address of principal executive offices, including zip code)

(703) 438-2000
(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition.

Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for comScore, Inc. (the “Company”) for the three month period and full year ended December 31, 2009 as well as forward-looking statements relating to the first quarter ending March 31, 2010 and full year ending December 31, 2010 as presented in a press release issued on February 10, 2010.

The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

Exhibit No.		Description
99.1		Press Release dated February 10, 2010 announcing fourth quarter and full year 2009 financial results

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 10, 2010

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press Release dated February 10, 2010 announcing fourth quarter and full year 2009 financial results

Exhibit 99.1

comScore Reports Record Fourth Quarter and Full Year 2009 Results

RESTON, VA — February 10, 2010 comScore, Inc. (NASDAQ: SCOR), a leader in measuring the digital world, today announced financial results for the fourth quarter and full year 2009.

Revenue in the fourth quarter of 2009 was $33.8 million, an increase of 7% over the fourth quarter of 2008. GAAP income before taxes was $3.1 million in the fourth quarter of 2009, compared to $1.1 million in the fourth quarter of 2008, an increase of 182%. GAAP net income was $1.6 million, or $0.05 per diluted share, in the fourth quarter of 2009, compared to GAAP net income of $20.4 million, or $0.67 per diluted share, in the fourth quarter of 2008, which included a non-recurring tax benefit of $20.4 million. Non-GAAP net income in the fourth quarter of 2009 was $6.5 million, or $0.21 per diluted share, compared to non-GAAP net income of $5.5 million, or $0.18 per diluted share, in the fourth quarter of 2008. Adjusted EBITDA was $8.6 million in the fourth quarter of 2009, compared to adjusted EBITDA of $6.5 million in the fourth quarter of 2008, an increase of 32%.

Dr. Magid Abraham, comScore’s president and chief executive officer said, “We are pleased with the strong improvement in sales activity in the fourth quarter. Improving customer budgets and the introduction of Media Metrix 360 helped drive a significant pick-up in sales across the board. During the quarter, we added 57 net customers, the highest number of net adds we have seen since the second quarter of 2008, and a significant increase over the average quarterly net adds of 20 customers over the prior 4 quarters. Reflecting our sales momentum in the quarter, we recorded the highest level of deferred revenues in the company’s history.

We believe our Media Metrix 360 service, which is built on a Unified Measurement™ approach combining our proprietary consumer panel and website server data, is performing particularly well in attracting new customers, and we expect it to continue to drive revenue growth. The performance of Media Metrix was further complemented by strong sales in our vertical marketing solutions business and by high levels of activity involving our AdEffx™ suite of advertising measurement product. We are cautiously optimistic that customer spending patterns will continue to show improvements in 2010.

Adding to our growth potential in 2010 and beyond is our pending acquisition of Indiana-based ARSgroup, as separately announced. ARSgroup is a leading technology-driven market research firm with an impressive roster of marquee clients and services that measure the persuasion of advertising on TV and multi-media platforms. In addition, ARSgroup provides clients with actionable information to improve their creative and strategic messaging targeted against specific audiences. We are excited about the opportunities to expand ARSgroup’s global capabilities and to leverage their proprietary IP to build new and innovative solutions in online advertising measurement. We believe that significant opportunities exist to expand

their services within the broader comScore client base. We expect ARS to fuel incremental growth for comScore in 2010. Our acquisition of ARS is subject to customary closing conditions and is expected to close later in the first quarter 2010. The entire consideration for the acquisition will be paid in cash.

With customers’ budgets improving and the strength inherent in our Unified Measurement™ services and vertical marketing solutions, we are quite optimistic about comScore’s longer-term prospects.”

Fourth Quarter and Full Year 2009 Financial and Business Summary
(Dollars in thousands, except per share data)

		4Q09				4Q08				Change				FY 2009				FY 2008				Change
Revenue		$	33.8			$	31.6				7.0	%		$	127.7			$	117.4				8.8	%
GAAP Pre-Tax Income		$	3.1			$	1.1				181.8	%		$	9.9			$	10.3				-3.9	%
GAAP Net Income		$	1.6			$	20.4				-92.2	%		$	4.0			$	25.2				-84.1	%
GAAP EPS		$	0.05			$	0.67				-92.5	%		$	0.13			$	0.83				-84.3	%
Adjusted EBITDA*		$	8.6			$	6.5				32.3	%		$	28.5			$	25.7				10.9	%
Adjusted EBITDA Margin*			25	%			21	%			19.0	%			22	%			22	%			0.0	%
Non-GAAP Net Income*		$	6.5			$	5.5				18.2	%		$	21.6			$	22.1				-2.3	%
Non-GAAP EPS*		$	0.21			$	0.18				16.7	%		$	0.70			$	0.73				-4.1	%
Operating Cash Flow		$	6.6			$	4.2				57.1	%		$	25.0			$	33.0				-24.2	%
Free Cash Flow*		$	5.0			$	3.5				42.9	%		$	18.6			$	18.7				-0.5	%
Deferred Revenue		$	48.1			$	42.8				12.4	%		$	48.1			$	42.8				12.4	%
Subscription Revenue		$	29.2			$	26.6				9.8	%		$	109.8			$	97.4				12.7	%
Project Revenue		$	4.6			$	5.0				-8.0	%		$	17.9			$	20.0				-10.5	%
Existing Customer Revenue		$	30.1			$	27.3				10.3	%		$	113.4			$	99.4				14.1	%
New Customer Revenue		$	3.7			$	4.3				-14.0	%		$	14.3			$	18.0				-20.6	%
International Revenue		$	5.7			$	4.5				26.7	%		$	19.7			$	16.5				19.4	%
Customer Count			1,273				1,166				9.2	%

Financial Outlook

Dr. Magid Abraham, comScore’s president and chief executive officer, said, “We are pleased to see improving order patterns among customers, with Media Metrix 360 an important contributor to this trend. Looking forward to 2010, we expect these improving order patterns to continue.”

Abraham continued, “For the full year 2010, comScore expects revenue to grow approximately 21% to 25% percent over full year 2009, including the impact of the ARSgroup acquisition, which is expected to close toward the end of first quarter 2010. We are optimistic about 2010 and will continue to manage expenses

as tightly as possible. We anticipate adjusted EBITDA margin for the full year 2010 in line with the company’s 2009 EBITDA margin performance.”

comScore’s expectations for the first quarter 2010 are outlined in the table below:

Revenue		$34.2 — $36.0 million
Income before income taxes		$0.3 — $0.9 million
Adjusted EBITDA*		$5.8 — $6.6 million
Estimated diluted shares		31.5 million

Due to the high variability and difficulty in predicting certain items that affect net income, such as tax rates and stock price, comScore is unable to provide a complete reconciliation of Adjusted EBITDA to net income on a forward-looking basis without unreasonable efforts. However, a reconciliation of forward-looking Adjusted EBITDA to income before taxes is set forth in the attachment to this press release.

Conference Call Information:

Management will provide commentary on the company’s results in a conference call on Wednesday, February 10, 2010 at 5:00 pm ET.

The conference call and replay can be accessed by telephone and webcast as follows:

Call-in Number: 888-680-0893, Pass code 52018489
(International) 617-213-4859, Pass code 52018489

Replay Number: 888-286-8010, Pass code 45116481
(International) 617-801-6888, Pass code 45116481

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. For more information, please visit http://www.comscore.com/companyinfo.

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.

For example, comScore uses non-GAAP net income, which excludes stock-based compensation, amortization of acquired intangible assets, impairment of marketable securities, non-recurring costs from acquisitions and restructurings, and the non-cash, deferred tax provision. comScore also reports non-GAAP EPS (diluted), which uses non-GAAP 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 acquisitions and restructurings, the exclusion of the non-recurring costs reflects the expected benefits realized or to be realized upon the integration of acquired entities into comScore, and the realized benefits of the restructurings.

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 historical non-GAAP financial measures, it provides a reconciliation of historical non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measure included in the financial tables accompanying this release. Although the company provides a reconciliation of historical non-GAAP financial measures, due to the high variability and difficulty in predicting certain items that affect net income, such as tax rates and stock price, comScore is unable to provide a complete reconciliation of

Adjusted EBITDA to net income on a forward-looking basis without unreasonable efforts. However, a reconciliation of forward-looking Adjusted EBITDA to income before income taxes is set forth in the attachment to this press 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 of its customer base; expectations regarding customer budgets and their expected effect on comScore’s sales; expectations regarding the impact and financial benefits of certain products, including Media Metrix 360 and the Unified Measurement services; expectations regarding the acquisition of ARSgroup and the resulting impact, opportunities and benefits to comScore; expectations regarding the outcome of cost containment measures and the resulting effect on comScore’s financial performance; expectations and forecasts of future financial performance, including related growth rates and components thereof; assumptions related to the market and economic environment; and assumptions related to revenue growth for the first quarter and the full year 2010. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: comScore’s ability to retain existing large customers and obtain new large customers; risks related to the domestic and global economies and the effects they may have on comScore, its industry or its customers; comScore’s ability to manage its growth, including through acquisitions; the impact of a change in methodology stemming from acquisitions or the development of new products; the impact of increasing international operations; the rate of development of the Internet advertising and eCommerce markets; comScore’s ability to effectively expand sales and marketing; comScore’s ability to sell new or additional products and attract new customers; limitations over comScore’s control of certain variables in financial forecasts such as its stock price and the resulting effect on its tax rates; and the volatility of quarterly results and expectations.

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 September 30, 2009, comScore’s Annual Report on Form 10-K for the period ended December 31, 2008 and from time to time other filings with the Securities and Exchange 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.

Contact:
Kenneth Tarpey
Chief Financial Officer
comScore, Inc.
(703) 438-2305
ktarpey@comscore.com

comScore, Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2009				2008				2009				2008
		(unaudited)								(unaudited)
Revenues		$	33,826			$	31,590			$	127,740			$	117,371
Cost of revenues (excludes amortization of intangible assets resulting from acquisitions shown below) (1)			9,544				10,276				38,730				34,562
Selling and marketing (1)			10,896				10,281				41,954				39,400
Research and development (1)			4,617				3,994				17,827				14,832
General and administrative (1)			5,359				4,189				18,232				16,785
Amortization of intangible assets resulting from acquisitions			425				329				1,457				804
Total expenses from operations			30,841				29,069				118,200				106,383
Income from operations			2,985				2,521				9,540				10,988
Interest and other income, net			62				285				410				1,863
(Loss) gain from foreign currency			(79	)			(302	)			(132	)			(321	)
Gain on sale of marketable securities			89				—				89				—
Impairment of marketable securities			—				(1,398	)			—				(2,239	)
Income before income taxes			3,057				1,106				9,907				10,291
Income tax (provision) benefit			(1,493	)			19,263				(5,938	)			14,895
Net income		$	1,564			$	20,369			$	3,969			$	25,186
Net income available to common stockholders per common share:
Basic		$	0.05			$	0.70			$	0.13			$	0.88
Diluted		$	0.05			$	0.67			$	0.13			$	0.83
Weighted -average number of shares used in per share calculation — common stock
Basic			30,306,344				29,032,423				30,014,085				28,691,216
Diluted			31,238,733				30,271,520				30,970,642				30,232,714
(1) Amortization of stock-based compensation is included in the line items above as follows:
Cost of revenues		$	261			$	251			$	1,186			$	861
Selling and marketing			1,044				788				4,617				2,611
Research and development			282				199				1,111				706
General and administrative			886				599				2,942				2,296

comScore, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)

		December 31,				December 31,
		2009				2008
		(unaudited)				*
Assets
Current assets:
Cash and cash equivalents		$	58,284			$	34,297
Short-term investments			29,833				37,164
Accounts receivable, net of allowances of $510 and $479, respectively			34,922				29,947
Prepaid expenses and other current assets			2,324				1,871
Deferred tax asset			11,044				13,304
Total current assets			136,407				116,583
Long-term investments			2,809				3,497
Property and equipment, net			17,302				17,697
Other non-current assets			193				131
Long-term deferred tax asset			9,938				13,736
Intangible assets, net			8,745				8,805
Goodwill			42,014				39,114
Total assets		$	217,408			$	199,563
Liabilities and stockholders’ equity
Current Liabilities:
Accounts payable		$	2,009			$	1,755
Accrued expenses			8,370				9,432
Deferred revenues			48,140				42,779
Deferred rent			1,231				1,049
Capital lease obligations			360				977
Total current liabilities			60,110				55,992
Deferred rent, long-term			8,210				8,691
Capital lease obligations, long-term			674				—
Other long-term liabilities			475				—
Total liabilities			69,469				64,683
Stockholders’ equity:
Common stock			30				29
Treasury stock			—				(1,265	)
Additional paid-in capital			199,270				192,612
Accumulated other comprehensive loss			323				(842	)
Accumulated deficit			(51,684	)			(55,654	)
Total stockholders’ equity			147,939				134,880
Total liabilities and stockholders’ equity		$	217,408			$	199,563

comScore, Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2009				2008				2009				2008
		(unaudited)								(unaudited)				*
Operating Activities:
Net income		$	1,564			$	20,369			$	3,969			$	25,186
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			1,620				1,381				6,544				4,977
Amortization of intangible assets resulting from acquisitions			425				326				1,457				798
Provisions for bad debts			19				215				290				594
Stock-based compensation			2,472				1,840				9,849				6,482
Amortization of deferred rent			(200	)			(56	)			(632	)			(126	)
Amortization of bond premium			188				162				610				730
Deferred tax provision			908				(19,231	)			5,096				(15,386	)
(Gain on sale) impairment of marketable securities			(89	)			1,398				(89	)			2,239
Loss on asset disposal			31				50				139				50
Changes in operating assets and liabilities:
Accounts receivable			(7,668	)			(6,063	)			(4,491	)			(6,581	)
Prepaid expenses and other current assets			62				527				83				229
Other non-current assets			—				9				(55	)			114
Accounts payable, accrued expenses, and other liabilities			573				(280	)			(2,908	)			(1,838	)
Deferred revenues			6,706				3,506				4,838				6,124
Deferred rent			—				31				331				9,397
Net cash provided by operating activities			6,611				4,184				25,031				32,989
Investing activities:
Acquisition, net of cash acquired			(1,296	)			(95	)			(1,296	)			(44,638	)
Recovery of restricted cash			—				—				—				1,385
Purchase of investments			(8,694	)			(20,444	)			(50,197	)			(92,288	)
Sales and maturities of investments			18,198				12,434				57,973				85,388
Purchase of property and equipment			(1,646	)			(665	)			(6,472	)			(14,252	)
Net cash provided (used) by investing activities			6,562				(8,770	)			8				(64,405	)
Financing activities:
Proceeds from the exercise of common stock options and warrants			510				148				922				1,027
Repurchase of common stock			(103	)			(27	)			(1,573	)			(1,265	)
Principal payments on capital lease obligations			(339	)			(231	)			(1,064	)			(900	)
Net cash provided (used) by financing activities			68				(110	)			(1,715	)			(1,138	)
Effect of exchange rate changes on cash			67				(898	)			663				(1,517	)
Net increase (decrease) in cash and cash equivalents			13,308				(5,594	)			23,987				(34,071	)
Cash and cash equivalents at beginning of period			44,976				39,891				34,297				68,368
Cash and cash equivalents at end of period		$	58,284			$	34,297			$	58,284			$	34,297

Reconciliation from Income before income taxes to Non-GAAP Net Income and Adjusted EBITDA (dollars in thousands, except per share amounts)

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2009				2008				2009				2008
		(unaudited)								(unaudited)
Income before income taxes		$	3,057			$	1,106			$	9,907			$	10,291
Valuation allowance release			—				20,353				—				20,254
Deferred tax provision			(908	)			(1,126	)			(5,096	)			(4,873	)
Current cash tax provision			(585	)			36				(842	)			(486	)
Net income		$	1,564			$	20,369			$	3,969			$	25,186
Valuation allowance release			—				(20,353	)			—				(20,254	)
Amortization of acquired intangibles			425				329				1,457				804
Stock-based compensation			2,473				1,837				9,856				6,474
Gain on sale of marketable securities			(89	)			—				(89	)
Impairment of marketable securities			—				1,398				—				2,239
Non-recurring costs			1,202				752				1,314				2,788
Deferred tax provision			739				1,126				4,927				4,873
Non-GAAP net income		$	6,483			$	5,458			$	21,603			$	22,110
Current cash tax provision			585				(36	)			842				486
Depreciation			1,620				1,381				6,544				4,977
Interest (income) expense, net			(51	)			(322	)			(489	)			(1,900	)
Adjusted EBITDA		$	8,637			$	6,481			$	28,500			$	25,673
Adjusted EBITDA margin (%)			25	%			21	%			22	%			22	%
EPS (diluted)		$	0.05			$	0.67			$	0.13			$	0.83
Non-GAAP EPS (diluted)		$	0.21			$	0.18			$	0.70			$	0.73

Reconciliation from GAAP Operating Cash Flow to Free Cash Flow (dollars in thousands)

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2009				2008				2009				2008
		(unaudited)								(unaudited)
Net cash provided by operating activities		$	6,611			$	4,184			$	25,031	**		$	32,989	**
Purchase of property and equipment			(1,646	)			(665	)			(6,472)	**			(14,252)	**
Free cash flow		$	4,965			$	3,519			$	18,559			$	18,737

Reconciliation from Income before income taxes to Adjusted EBITDA (Guidance) (dollars in thousands)

Forecasted amounts for the three months ended March 31, 2010 are based on the mid-points of the range of guidance provided herein.

The three months ended March 31, 2009 reflect reported results.

		Three Months Ended
		March 31,
		2010				2009
		(unaudited)
Revenues		$	35,100			$	30,624
Income before income taxes		$	600			$	1,457
Amortization of acquired intangibles			350				320
Stock-based compensation			2,750				2,300
Non-recurring costs from acquisitions and restructuring			850				—
Depreciation			1,650				1,511
Interest (income) expense, net			—				(175	)
Adjusted EBITDA		$	6,200			$	5,413
Adjusted EBITDA margin (%)			18	%			18	%