UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 6, 2019
(Exact name of registrant as specified in charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
(Address of principal executive offices, including zip code)
(703 ) 438–2000
(Registrant’s telephone number, including area code)
N/A
(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:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 2.02 Results of Operations and Financial Condition.
On August 6, 2019, comScore, Inc. (the "Company") issued a press release announcing its financial results for the period ended June 30, 2019. A copy of the press release announcing the foregoing is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information in this Item 2.02, 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 (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 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 | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document | |
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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.
comScore, Inc. | ||
By: | /s/ Carol A. DiBattiste | |
Carol A. DiBattiste | ||
General Counsel & Chief Compliance, Privacy and People Officer | ||
Date: August 6, 2019
4
Exhibit 99.1
FOR IMMEDIATE RELEASE
Comscore Reports Second Quarter 2019 Results
Continued Alignment of Strategic Priorities and Products to Drive to Future Profitability
RESTON, Va., August 6, 2019 - 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, 2019.
Second Quarter 2019 Financial Results
• | Year-over-year revenue for the second quarter declined 4.4% to $96.9 million |
• | Including 2019 non-cash impairment charges totaling $241.6 million, net loss of $279.5 million, or $(4.61) per share, compared to a net loss of $56.0 million, or $(1.02) per share in the year-ago quarter |
• | Adjusted EBITDA loss of $3.2 million, compared to positive adjusted EBITDA of $1.3 million in the year-ago quarter |
• | Cash, cash equivalents and restricted cash of $53.8 million, compared to $50.2 million as of December 31, 2018 |
"In the second quarter, we took significant steps to better prioritize, refocus and invest in our product portfolio, and provide our customers with innovative technologies and services which we believe will drive us to a position of profitability and growth faster and more efficiently," said Dale Fuller, director and interim chief executive officer of Comscore. "Additionally, we reduced core operating costs in the quarter, which provided greater financial flexibility as we seek to maximize our resources. The management team is exploring all aspects of the business and is conducting a comprehensive strategic review of all our options, making sure that our talent is focused on developing compelling products that our customers want and need. We believe this approach should ultimately allow us to generate break-even to positive operating cash flow later this year."
Second Quarter Summary Results
Total revenue in the second quarter of 2019 was $96.9 million, down from $101.4 million in the year-ago quarter.
Ratings and Planning revenue decreased to $68.9 million in the second quarter of 2019, compared to $70.5 million in the year-ago quarter. The decrease was the result of a decline in syndicated digital products offset by higher revenue in TV and cross-platform products. TV and cross-platform product revenue was higher on a year-over-year basis due to higher local TV revenue and increased deliveries of cross-platform products.
Analytics and Optimization revenue declined to $17.3 million in the second quarter of 2019, compared to $20.5 million in the year-ago quarter. The decrease was related to lower digital custom marketing solution sales and deliveries in the second quarter of 2019 as compared to the prior-year period. This decrease was offset, in part, by increased revenue from Activation products.
Movies Reporting and Analytics revenue was $10.7 million in the second quarter of 2019, compared to $10.4 million in the year-ago quarter. The increase was driven by revenue from new products and new customers.
Due in part to a decline in market capitalization and revenue, the company performed an interim impairment assessment as of the end of the quarter. As a result of the assessment, the company took non-cash impairment charges totaling $241.6 million relating to an intangible asset and goodwill. These non-cash impairment charges do not directly impact the company’s liquidity, cash flows, compliance with debt covenants, or future operations.
During the second quarter of 2019, the company recorded a $5.0 million liability related to the previously disclosed SEC investigation, which management believes is a reasonable estimate of the company’s probable liability for this matter.
Primarily as a result of the non-cash impairment charges and legal accrual, net loss for the second quarter of 2019 was $279.5 million, or $(4.61) per share, compared to a net loss of $56.0 million, or $(1.02) per share reported in the year-ago quarter.
For the second quarter of 2019, non-GAAP adjusted EBITDA loss was $3.2 million, compared to positive adjusted EBITDA of $1.3 million in the year-ago quarter. Non-GAAP adjusted EBITDA excludes stock-based compensation expense; investigation, litigation and audit-related expense; restructuring expense; change in fair value of financing derivatives; impairment charges; and other items as presented in the accompanying tables.
Balance Sheet and Liquidity
As of June 30, 2019, cash, cash equivalents and restricted cash were $53.8 million, including $4.9 million in restricted cash. The cash balance as of June 30, 2019 is inclusive of $20.0 million in initial cash proceeds that the company received from a capital transaction that was completed toward the close of the quarter. The transaction was intended to strengthen the company’s balance sheet and maintain compliance with the minimum cash covenant in the company’s senior secured convertible notes, which increases from $20.0 million to $40.0 million upon filing of the Form 10-Q for the quarter ended June 30, 2019. Total debt principal as of June 30, 2019, including $204.0 million of senior secured convertible notes, was $215.0 million.
Conference Call Information for Today, Tuesday, August 6 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 # 8974238. 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 # 8974238. 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 future growth, profitability and cash flow, product development and innovation, customer agreements, financial flexibility and compliance with financial covenants, management's strategic review, legal proceedings, and the impact of non-cash impairment charges. These statements involve risks and uncertainties that could cause actual events to differ materially from expectations, including, but not limited to, Comscore's ability to achieve its expected strategic, financial and operational plans. For additional discussion of risk factors, please refer to Comscore's respective Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and other filings that Comscore makes from time to time with the U.S. Securities and Exchange Commission (the "SEC"), which are available on the SEC's website (www.sec.gov).
Investors are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Comscore does not intend or undertake, and expressly disclaims, any duty or obligation to publicly update any forward- looking statements to reflect events, circumstances or new information after the date of this press release, or to reflect the occurrence of unanticipated events.
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, we are disclosing herein non-GAAP net income (loss) and adjusted EBITDA, which are non-GAAP financial measures used by our management to understand and evaluate our core operating performance and trends. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, as they permit our investors to view our core business performance using the same metrics that management uses to evaluate our performance. Nevertheless, our use of these non-GAAP financial measures has limitations as an analytical tool, and investors should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Instead, you should consider these measures alongside GAAP-based financial performance measures, net income (loss), various cash flow metrics, and our other GAAP financial results.
Set forth below are reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures. These reconciliations should be carefully evaluated.
Media
Neil Ripley
Comscore, Inc.
646-746-0579
press@comscore.com
Investors
Robert Winters or Jackie Marcus
Alpha IR Group
312-445-2870
SCOR@alpha-ir.com
COMSCORE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
As of | As of | ||||||
June 30, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 48,963 | $ | 44,096 | |||
Restricted cash | 4,863 | 6,102 | |||||
Accounts receivable, net of allowances of $1,598 and $1,597, respectively | 71,231 | 75,609 | |||||
Prepaid expenses and other current assets | 15,579 | 19,972 | |||||
Total current assets | 140,636 | 145,779 | |||||
Property and equipment, net | 32,819 | 27,339 | |||||
Operating right-of-use assets | 39,377 | — | |||||
Other non-current assets | 5,984 | 8,898 | |||||
Deferred tax assets | 2,783 | 3,991 | |||||
Intangible assets, net | 93,458 | 126,945 | |||||
Goodwill | 416,775 | 641,191 | |||||
Total assets | $ | 731,832 | $ | 954,143 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 40,303 | $ | 29,836 | |||
Accrued expenses | 54,803 | 58,140 | |||||
Contract liability | 58,933 | 64,189 | |||||
Customer advances | 5,926 | 6,688 | |||||
Warrants liability | 10,798 | — | |||||
Current operating lease liabilities | 6,548 | — | |||||
Other current liabilities | 10,996 | 10,083 | |||||
Total current liabilities | 188,307 | 168,936 | |||||
Financing derivatives | 25,000 | 26,100 | |||||
Senior secured convertible notes | 180,909 | 177,342 | |||||
Non-current operating lease liabilities | 45,928 | — | |||||
Deferred rent | — | 10,304 | |||||
Deferred tax liabilities | 314 | 5,527 | |||||
Other non-current liabilities | 21,298 | 14,367 | |||||
Total liabilities | 461,756 | 402,576 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at June 30, 2019 and December 31, 2018; no shares issued or outstanding as of June 30, 2019 and December 31, 2018 | — | — | |||||
Common stock, $0.001 par value per share; 150,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 70,056,765 shares issued and 63,291,969 shares outstanding as of June 30, 2019, and 66,154,626 shares issued and 59,389,830 shares outstanding as of December 31, 2018 | 63 | 59 | |||||
Additional paid-in capital | 1,586,750 | 1,561,208 | |||||
Accumulated other comprehensive loss | (10,565 | ) | (10,621 | ) | |||
Accumulated deficit | (1,076,188 | ) | (769,095 | ) | |||
Treasury stock, at cost, 6,764,796 shares as of June 30, 2019 and December 31, 2018 | (229,984 | ) | (229,984 | ) | |||
Total stockholders’ equity | 270,076 | 551,567 | |||||
Total liabilities and stockholders’ equity | $ | 731,832 | $ | 954,143 | |||
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, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues | $ | 96,888 | $ | 101,389 | $ | 199,182 | $ | 207,308 | ||||||||
Cost of revenues (1) (2) | 51,994 | 51,526 | 105,401 | 98,780 | ||||||||||||
Selling and marketing (1) (2) | 23,329 | 29,647 | 48,169 | 55,552 | ||||||||||||
Research and development (1) (2) | 16,883 | 20,889 | 35,099 | 39,605 | ||||||||||||
General and administrative (1) (2) | 16,932 | 28,699 | 36,477 | 47,360 | ||||||||||||
Investigation and audit related | 2,354 | 4,883 | 3,196 | 36,750 | ||||||||||||
Amortization of intangible assets | 8,076 | 8,266 | 16,181 | 16,810 | ||||||||||||
Impairment of goodwill | 224,272 | — | 224,272 | — | ||||||||||||
Impairment of intangible asset | 17,308 | — | 17,308 | — | ||||||||||||
Settlement of litigation, net | 5,000 | 5,250 | 5,000 | 5,250 | ||||||||||||
Restructuring (1) | 2,949 | 3,833 | 2,879 | 5,090 | ||||||||||||
Total expenses from operations | 369,097 | 152,993 | 493,982 | 305,197 | ||||||||||||
Loss from operations | (272,209 | ) | (51,604 | ) | (294,800 | ) | (97,889 | ) | ||||||||
Interest expense, net | (8,242 | ) | (4,124 | ) | (15,001 | ) | (7,029 | ) | ||||||||
Other (expense) income, net | (3,081 | ) | 807 | (112 | ) | 884 | ||||||||||
(Loss) gain from foreign currency transactions | (464 | ) | 1,045 | (426 | ) | 123 | ||||||||||
Loss before income taxes | (283,996 | ) | (53,876 | ) | (310,339 | ) | (103,911 | ) | ||||||||
Income tax benefit (provision) | 4,463 | (2,101 | ) | 3,292 | (3,516 | ) | ||||||||||
Net loss | $ | (279,533 | ) | $ | (55,977 | ) | $ | (307,047 | ) | $ | (107,427 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic and diluted | $ | (4.61 | ) | $ | (1.02 | ) | $ | (5.09 | ) | $ | (1.90 | ) | ||||
Weighted-average number of shares used in per share calculation - Common Stock: | ||||||||||||||||
Basic and diluted | 60,697,608 | 55,192,741 | 60,315,528 | 56,703,795 | ||||||||||||
Comprehensive loss: | ||||||||||||||||
Net loss | $ | (279,533 | ) | $ | (55,977 | ) | $ | (307,047 | ) | $ | (107,427 | ) | ||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency cumulative translation adjustment | 677 | (3,975 | ) | 56 | (2,360 | ) | ||||||||||
Total comprehensive loss | $ | (278,856 | ) | $ | (59,952 | ) | $ | (306,991 | ) | $ | (109,787 | ) | ||||
(1) Stock-based compensation expense is included in the line items above as follows: | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Cost of revenues | $ | 636 | $ | 3,774 | $ | 1,484 | $ | 3,987 | ||||||||
Selling and marketing | 1,087 | 5,792 | 2,403 | 6,367 | ||||||||||||
Research and development | 668 | 3,972 | 1,394 | 4,316 | ||||||||||||
General and administrative | 1,913 | 9,461 | 5,976 | 10,210 | ||||||||||||
Restructuring | (266 | ) | — | (266 | ) | — | ||||||||||
Total stock-based compensation expense | $ | 4,038 | $ | 22,999 | $ | 10,991 | $ | 24,880 | ||||||||
(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, | |||||||
2019 | 2018 | ||||||
Operating activities: | |||||||
Net loss | $ | (307,047 | ) | $ | (107,427 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation | 6,111 | 8,839 | |||||
Non-cash operating lease expense | 2,747 | — | |||||
Amortization expense of finance leases | 1,361 | — | |||||
Amortization of intangible assets | 16,181 | 16,810 | |||||
Impairment of goodwill | 224,272 | — | |||||
Impairment of intangible asset | 17,308 | — | |||||
Stock-based compensation | 10,991 | 24,880 | |||||
Deferred tax (benefit) provision | (3,983 | ) | 2,477 | ||||
Change in fair value of financing derivatives | (1,100 | ) | 4,460 | ||||
Change in fair value of investment in equity securities | 2,016 | (265 | ) | ||||
Accretion of debt discount | 3,042 | 1,978 | |||||
Amortization of deferred financing costs | 525 | 445 | |||||
Other | (20 | ) | 510 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 4,442 | 10,638 | |||||
Prepaid expenses and other assets | 3,190 | (5,255 | ) | ||||
Accounts payable, accrued expenses, and other liabilities | 20,176 | (18,138 | ) | ||||
Contract liability and customer advances | (6,552 | ) | (14,321 | ) | |||
Operating lease liabilities | (4,364 | ) | — | ||||
Net cash used in operating activities | (10,704 | ) | (74,369 | ) | |||
Investing activities: | |||||||
Proceeds from sale of investment in equity securities | 705 | — | |||||
Purchases of property and equipment | (1,893 | ) | (1,287 | ) | |||
Capitalized internal-use software costs | (5,619 | ) | (5,228 | ) | |||
Net cash used in investing activities | (6,807 | ) | (6,515 | ) | |||
Financing activities: | |||||||
Proceeds from borrowings on senior secured convertible notes | — | 100,000 | |||||
Debt issuance costs | — | (5,123 | ) | ||||
Proceeds from private placement, net of issuance costs paid | 19,894 | — | |||||
Financing proceeds received on subscription receivable | — | 4,676 | |||||
Proceeds from sale-leaseback financing transaction | 4,252 | — | |||||
Proceeds from the exercise of stock options | 1,191 | 164 | |||||
Payments for taxes related to net share settlement of equity awards | (1,210 | ) | (4,275 | ) | |||
Principal payments on finance leases | (1,417 | ) | — | ||||
Principal payments on capital lease and software license arrangements | (1,662 | ) | (5,359 | ) | |||
Net cash provided by financing activities | 21,048 | 90,083 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 91 | (1,136 | ) | ||||
Net increase in cash, cash equivalents and restricted cash | 3,628 | 8,063 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 50,198 | 45,125 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 53,826 | $ | 53,188 | |||
As of June 30, | |||||||
2019 | 2018 | ||||||
Cash and cash equivalents | $ | 48,963 | $ | 46,589 | |||
Restricted cash | 4,863 | 6,599 | |||||
Total cash, cash equivalents and restricted cash | $ | 53,826 | $ | 53,188 | |||
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) | 2019 (Unaudited) | 2018 (Unaudited) | 2019 (Unaudited) | 2018 (Unaudited) | |||||||||||
Net loss (GAAP) | $ | (279,533 | ) | $ | (55,977 | ) | $ | (307,047 | ) | $ | (107,427 | ) | |||
Income tax (benefit) provision | (4,463 | ) | 2,101 | (3,292 | ) | 3,516 | |||||||||
Interest expense, net | 8,242 | 4,124 | 15,001 | 7,029 | |||||||||||
Depreciation | 3,005 | 4,276 | 6,111 | 8,839 | |||||||||||
Amortization expense of finance leases | 787 | — | 1,361 | — | |||||||||||
Amortization of intangible assets | 8,076 | 8,266 | 16,181 | 16,810 | |||||||||||
EBITDA | (263,886 | ) | (37,210 | ) | (271,685 | ) | (71,233 | ) | |||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 4,304 | 22,999 | 11,257 | 24,880 | |||||||||||
Investigation and audit related | 2,354 | 4,883 | 3,196 | 36,750 | |||||||||||
Settlement of litigation, net | 5,000 | 5,250 | 5,000 | 5,250 | |||||||||||
Restructuring | 2,949 | 3,833 | 2,879 | 5,090 | |||||||||||
Impairment of goodwill | 224,272 | — | 224,272 | — | |||||||||||
Impairment of intangible asset | 17,308 | — | 17,308 | — | |||||||||||
Private placement issuance cost | 1,154 | — | 1,154 | — | |||||||||||
Other expense, net (1) | 3,304 | 1,506 | 916 | 4,135 | |||||||||||
Adjusted EBITDA | $ | (3,241 | ) | $ | 1,261 | $ | (5,703 | ) | $ | 4,872 | |||||
(1) Adjustments to other expense, net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss.
The following table presents a reconciliation of net loss (GAAP) to non-GAAP net loss for each of the periods identified:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2019 (Unaudited) | 2018 (Unaudited) | 2019 (Unaudited) | 2018 (Unaudited) | |||||||||||
Net loss (GAAP) | $ | (279,533 | ) | $ | (55,977 | ) | $ | (307,047 | ) | $ | (107,427 | ) | |||
Adjustments: | |||||||||||||||
Stock-based compensation | 4,304 | 22,999 | 11,257 | 24,880 | |||||||||||
Investigation and audit related | 2,354 | 4,883 | 3,196 | 36,750 | |||||||||||
Amortization of intangible assets (1) | 8,076 | 8,266 | 16,181 | 16,810 | |||||||||||
Settlement of litigation, net | 5,000 | 5,250 | 5,000 | 5,250 | |||||||||||
Restructuring | 2,949 | 3,833 | 2,879 | 5,090 | |||||||||||
Impairment of goodwill | 224,272 | — | 224,272 | — | |||||||||||
Impairment of intangible asset | 17,308 | — | 17,308 | — | |||||||||||
Private placement issuance cost | 1,154 | — | 1,154 | — | |||||||||||
Other expense, net (2) | 3,304 | 1,506 | 916 | 4,135 | |||||||||||
Non-GAAP net loss | $ | (10,812 | ) | $ | (9,240 | ) | $ | (24,884 | ) | $ | (14,512 | ) | |||
(1) In the fourth quarter of 2018, amortization of intangible assets was added as an adjustment in our calculation of non-GAAP net loss. Prior year non-GAAP net loss has been recast to include this adjustment, which is intended to better reflect our core operating performance.
(2) Adjustments to other expense, net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss.
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, investigation, audit-related and litigation 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.
Supplemental Non-GAAP Disclosure
The following tables present a reconciliation of certain non-GAAP expense line items (to be discussed on today’s conference call) to the most directly comparable GAAP expense line items. GAAP expense line items have been adjusted to exclude the effects of stock-based compensation.
Three Months Ended June 30, | |||||||||||||||||||||||||||||
2019 (Unaudited) | 2018 (Unaudited) | ||||||||||||||||||||||||||||
(In thousands) | As reported (GAAP) | Less: stock-based compensation | As adjusted (non-GAAP) | % of GAAP Revenue | As reported (GAAP) | Less: stock-based compensation | As adjusted (non-GAAP) | % of GAAP Revenue | |||||||||||||||||||||
Revenues | $ | 96,888 | 100.0 | % | $ | 101,389 | 100.0 | % | |||||||||||||||||||||
Cost of revenues | 51,994 | $ | 636 | $ | 51,358 | 53.0 | % | 51,526 | $ | 3,774 | $ | 47,752 | 47.1 | % | |||||||||||||||
Gross profit | 44,894 | (636 | ) | 45,530 | 47.0 | % | 49,863 | (3,774 | ) | 53,637 | 52.9 | % | |||||||||||||||||
Selling and marketing | 23,329 | 1,087 | 22,242 | 23.0 | % | 29,647 | 5,792 | 23,855 | 23.5 | % | |||||||||||||||||||
Research and development | 16,883 | 668 | 16,215 | 16.7 | % | 20,889 | 3,972 | 16,917 | 16.7 | % | |||||||||||||||||||
General and administrative | 16,932 | 1,913 | 15,019 | 15.5 | % | 28,699 | 9,461 | 19,238 | 19.0 | % | |||||||||||||||||||
Restructuring | 2,949 | (266 | ) | 3,215 | 3.3 | % | 3,833 | — | 3,833 | 3.8 | % | ||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||||||
2019 (Unaudited) | 2018 (Unaudited) | ||||||||||||||||||||||||||||
(In thousands) | As reported (GAAP) | Less: stock-based compensation | As adjusted (non-GAAP) | % of GAAP Revenue | As reported (GAAP) | Less: stock-based compensation | As adjusted (non-GAAP) | % of GAAP Revenue | |||||||||||||||||||||
Revenues | $ | 199,182 | 100.0 | % | $ | 207,308 | 100.0 | % | |||||||||||||||||||||
Cost of revenues | 105,401 | $ | 1,484 | $ | 103,917 | 52.2 | % | 98,780 | $ | 3,987 | $ | 94,793 | 45.7 | % | |||||||||||||||
Gross profit | 93,781 | (1,484 | ) | 95,265 | 47.8 | % | 108,528 | (3,987 | ) | 112,515 | 54.3 | % | |||||||||||||||||
Selling and marketing | 48,169 | 2,403 | 45,766 | 23.0 | % | 55,552 | 6,367 | 49,185 | 23.7 | % | |||||||||||||||||||
Research and development | 35,099 | 1,394 | 33,705 | 16.9 | % | 39,605 | 4,316 | 35,289 | 17.0 | % | |||||||||||||||||||
General and administrative | 36,477 | 5,976 | 30,501 | 15.3 | % | 47,360 | 10,210 | 37,150 | 17.9 | % | |||||||||||||||||||
Restructuring | 2,879 | (266 | ) | 3,145 | 1.6 | % | 5,090 | — | 5,090 | 2.5 | % | ||||||||||||||||||
We do not provide GAAP cost of revenues, selling and marketing, research and development, general and administrative, and restructuring expense on a forward-looking basis because we are unable to predict with reasonable certainty our future stock-based compensation expense without unreasonable effort. Stock-based compensation expense is uncertain, depends 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 non-GAAP operating expense to the most directly comparable GAAP measure 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) | 2019 (Unaudited) | % of Revenue | 2018 (Unaudited) | % of Revenue | $ Variance | % Variance | ||||||||||||||
Ratings and Planning | $ | 68,922 | 71.1 | % | $ | 70,501 | 69.5 | % | $ | (1,579 | ) | (2.2 | )% | |||||||
Analytics and Optimization | 17,293 | 17.9 | % | 20,533 | 20.3 | % | (3,240 | ) | (15.8 | )% | ||||||||||
Movies Reporting and Analytics | 10,673 | 11.0 | % | 10,355 | 10.2 | % | 318 | 3.1 | % | |||||||||||
Total revenues | $ | 96,888 | 100 | % | $ | 101,389 | 100 | % | $ | (4,501 | ) | (4.4 | )% | |||||||
Six Months Ended June 30, | ||||||||||||||||||||
(In thousands) | 2019 (Unaudited) | % of Revenue | 2018 (Unaudited) | % of Revenue | $ Variance | % Variance | ||||||||||||||
Ratings and Planning | $ | 139,499 | 70.0 | % | $ | 140,070 | 67.6 | % | $ | (571 | ) | (0.4 | )% | |||||||
Analytics and Optimization | 38,751 | 19.5 | % | 46,264 | 22.3 | % | (7,513 | ) | (16.2 | )% | ||||||||||
Movies Reporting and Analytics | 20,932 | 10.5 | % | 20,974 | 10.1 | % | (42 | ) | (0.2 | )% | ||||||||||
Total revenues | $ | 199,182 | 100 | % | $ | 207,308 | 100 | % | $ | (8,126 | ) | (3.9 | )% | |||||||