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): November 4, 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 November 5, 2019, comScore, Inc. (the "Company") issued a press release announcing its financial results for the period ended September 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 (the "Securities Act") or the Exchange Act, regardless of any general incorporation language in such filing.
Item 7.01 Regulation FD Disclosure.
On November 4, 2019, Bill Livek was appointed as Chief Executive Officer and Executive Vice Chairman of the Company and Dale Fuller resigned as Interim Chief Executive Officer of the Company, effective immediately.
Also on November 4, 2019, the Company and its Chief Information and Technology Officer, Joseph Rostock, mutually agreed that Mr. Rostock would leave the Company by the end of 2019.
The information in this Item 7.01 is being furnished and shall not be deemed "filed" for purposes of Section 18 of 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 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: November 5, 2019
4
Exhibit 99.1
FOR IMMEDIATE RELEASE
Comscore Reports Third Quarter 2019 Results and Announces Leadership Transition
Bill Livek Appointed Chief Executive Officer & Executive Vice Chairman
RESTON, Va., November 5, 2019 - Comscore, Inc. (Nasdaq: SCOR), a trusted partner for planning, transacting and evaluating media across platforms, today reported financial results for the quarter ended Sept. 30, 2019. The company also announced today that Bill Livek has been appointed by Comscore's board of directors as chief executive officer and executive vice chairman, effective immediately, bringing his 40 years of experience in the world of media and consumer measurement to the CEO role.
Third Quarter 2019 Financial Results
• | Revenue for the third quarter was $94.3 million compared to $102.9 million in the prior-year quarter |
• | Net loss of $10.6 million, or $(0.16) per share, compared to a net loss of $24.6 million, or $(0.42) per share in the year-ago quarter |
• | Adjusted EBITDA for the third quarter increased 23.2% year-over-year to $6.4 million |
• | Cash, cash equivalents and restricted cash of $58.5 million increased 16.5% since Dec. 31, 2018 |
• | Cost actions taken beginning to flow through; on track to be fully realized in 2020 |
"This was a transformative quarter for Comscore, as we made substantial progress in refocusing our product portfolio to provide our customers and partners with innovative solutions. During my tenure as interim chief executive officer, we significantly reduced our core operating costs, right-sized our organizational structure, and executed on a strategy that we believe will allow us to achieve breakeven operating cashflow by the end of the year," said Dale Fuller, director and former interim chief executive officer of Comscore. "I am incredibly grateful for the opportunity to have served as Comscore's interim CEO and believe we are a stronger organization to continue our transformation and bring innovative products and services to our customers. After much consideration, I believe I am best able to serve Comscore and its mission as a member of the board of directors."
"I would like to thank Dale for his guidance and leadership throughout this transition," said Bill Livek, Comscore's chief executive officer and executive vice chairman. "I am excited about the prospects that lie ahead for Comscore and the opportunities we continue to believe are ripe for disruption. I look forward to capitalizing on these opportunities and creating meaningful value for our stakeholders."
Third Quarter Summary Results
Total revenue in the third quarter of 2019 was $94.3 million, down from $102.9 million in the year-ago quarter.
Ratings and Planning revenue decreased to $65.3 million in the third 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. TV and cross-platform products were flat compared to the same period last year as a result of higher local TV revenue and increased delivery of cross-platform products, offset by lower national TV revenue.
Analytics and Optimization revenue declined to $18.3 million in the third quarter of 2019, compared to $22.2 million in the year-ago quarter. The decrease was related to lower digital custom marketing solution sales and deliveries in the third 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 third quarter of 2019, compared to $10.2 million in the year-ago quarter.
During the third quarter of 2019, the company announced a settlement with the SEC, resolving a previously disclosed investigation into financial accounting and disclosure practices between February 2014 and February 2016. In agreeing to the settlement, which includes a civil monetary penalty of $5.0 million, the company neither admitted nor denied the SEC's allegations. Following a separate proceeding by the SEC, the company received a clawback of $2.1 million from its former chief executive officer.
Net loss for the third quarter of 2019 was $10.6 million, or $(0.16) per share, compared to a net loss of $24.6 million, or $(0.42) per share reported in the year-ago quarter.
For the third quarter of 2019, non-GAAP adjusted EBITDA was $6.4 million, compared to adjusted EBITDA of $5.2 million in the year-ago quarter. Non-GAAP adjusted EBITDA excludes stock-based compensation expense; settlement of certain litigation (including the clawback referenced above); investigation, litigation and audit-related expense; restructuring expense; change in fair value of financing derivatives and warrants liability; and other items as presented in the accompanying tables.
Balance Sheet and Liquidity
As of September 30, 2019, cash, cash equivalents and restricted cash totaled $58.5 million, including $4.7 million in restricted cash and $2.1 million from the clawback related to the SEC proceeding. Total debt principal as of September 30, 2019, including $204.0 million of senior secured convertible notes, was $213.2 million.
Conference Call Information for Today, Tuesday, Nov. 5 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 # 2225657. 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 # 2225657. 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 product development and innovation, organizational restructuring, the company's ability to achieve breakeven operating cash flow in 2019, strategic plans, future prospects and market opportunities, and value creation for the company's stakeholders. 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 | ||||||
September 30, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 53,839 | $ | 44,096 | |||
Restricted cash | 4,651 | 6,102 | |||||
Accounts receivable, net of allowances of $2,182 and $1,597, respectively | 59,417 | 75,609 | |||||
Prepaid expenses and other current assets | 16,217 | 19,972 | |||||
Total current assets | 134,124 | 145,779 | |||||
Property and equipment, net | 32,609 | 27,339 | |||||
Operating right-of-use assets | 37,923 | — | |||||
Other non-current assets | 2,363 | 8,898 | |||||
Deferred tax assets | 2,521 | 3,991 | |||||
Intangible assets, net | 86,483 | 126,945 | |||||
Goodwill | 415,806 | 641,191 | |||||
Total assets | $ | 711,829 | $ | 954,143 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 44,921 | $ | 29,836 | |||
Accrued expenses | 48,108 | 58,140 | |||||
Accrued litigation settlements | 6,750 | 3,500 | |||||
Contract liability | 51,852 | 64,189 | |||||
Customer advances | 7,706 | 6,688 | |||||
Warrants liability | 5,905 | — | |||||
Current operating lease liabilities | 6,784 | — | |||||
Other current liabilities | 3,788 | 6,583 | |||||
Total current liabilities | 175,814 | 168,936 | |||||
Financing derivatives | 23,200 | 26,100 | |||||
Senior secured convertible notes | 182,744 | 177,342 | |||||
Non-current operating lease liabilities | 44,171 | — | |||||
Deferred rent | — | 10,304 | |||||
Deferred tax liabilities | 325 | 5,527 | |||||
Other non-current liabilities | 20,355 | 14,367 | |||||
Total liabilities | 446,609 | 402,576 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at September 30, 2019 and December 31, 2018; no shares issued or outstanding as of September 30, 2019 and December 31, 2018 | — | — | |||||
Common stock, $0.001 par value per share; 150,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 70,955,367 shares issued and 64,190,571 shares outstanding as of September 30, 2019, and 66,154,626 shares issued and 59,389,830 shares outstanding as of December 31, 2018 | 64 | 59 | |||||
Additional paid-in capital | 1,595,402 | 1,561,208 | |||||
Accumulated other comprehensive loss | (13,515 | ) | (10,621 | ) | |||
Accumulated deficit | (1,086,747 | ) | (769,095 | ) | |||
Treasury stock, at cost, 6,764,796 shares as of September 30, 2019 and December 31, 2018 | (229,984 | ) | (229,984 | ) | |||
Total stockholders' equity | 265,220 | 551,567 | |||||
Total liabilities and stockholders’ equity | $ | 711,829 | $ | 954,143 | |||
COMSCORE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues | $ | 94,300 | $ | 102,864 | $ | 293,482 | $ | 310,172 | ||||||||
Cost of revenues (1) (2) | 47,390 | 49,446 | 152,791 | 148,226 | ||||||||||||
Selling and marketing (1) (2) | 20,421 | 24,866 | 68,590 | 80,418 | ||||||||||||
Research and development (1) (2) | 14,064 | 18,742 | 49,163 | 58,347 | ||||||||||||
General and administrative (1) (2) | 14,064 | 18,707 | 50,541 | 66,067 | ||||||||||||
Investigation and audit related | 980 | 696 | 4,176 | 37,446 | ||||||||||||
Amortization of intangible assets | 6,970 | 7,896 | 23,151 | 24,706 | ||||||||||||
Impairment of goodwill | — | — | 224,272 | — | ||||||||||||
Impairment of intangible asset | — | — | 17,308 | — | ||||||||||||
Settlement of litigation, net | (2,100 | ) | — | 2,900 | 5,250 | |||||||||||
Restructuring (1) | 2,270 | 51 | 5,149 | 5,141 | ||||||||||||
Total expenses from operations | 104,059 | 120,404 | 598,041 | 425,601 | ||||||||||||
Loss from operations | (9,759 | ) | (17,540 | ) | (304,559 | ) | (115,429 | ) | ||||||||
Interest expense, net | (8,175 | ) | (4,682 | ) | (23,176 | ) | (11,711 | ) | ||||||||
Other income (expense), net | 6,733 | (1,711 | ) | 6,621 | (827 | ) | ||||||||||
Gain (loss) from foreign currency transactions | 1,194 | (304 | ) | 768 | (181 | ) | ||||||||||
Loss before income taxes | (10,007 | ) | (24,237 | ) | (320,346 | ) | (128,148 | ) | ||||||||
Income tax (provision) benefit | (552 | ) | (400 | ) | 2,740 | (3,916 | ) | |||||||||
Net loss | $ | (10,559 | ) | $ | (24,637 | ) | $ | (317,606 | ) | $ | (132,064 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic and diluted | $ | (0.16 | ) | $ | (0.42 | ) | $ | (5.16 | ) | $ | (2.32 | ) | ||||
Weighted-average number of shares used in per share calculation - Common Stock: | ||||||||||||||||
Basic and diluted | 64,157,167 | 58,212,306 | 61,603,357 | 56,877,186 | ||||||||||||
Comprehensive loss: | ||||||||||||||||
Net loss | $ | (10,559 | ) | $ | (24,637 | ) | $ | (317,606 | ) | $ | (132,064 | ) | ||||
Other comprehensive loss: | ||||||||||||||||
Foreign currency cumulative translation adjustment | (2,950 | ) | (429 | ) | (2,894 | ) | (2,789 | ) | ||||||||
Total comprehensive loss | $ | (13,509 | ) | $ | (25,066 | ) | $ | (320,500 | ) | $ | (134,853 | ) | ||||
(1) Stock-based compensation expense is included in the line items above as follows: | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Cost of revenues | $ | 396 | $ | 1,248 | $ | 1,880 | $ | 5,235 | ||||||||
Selling and marketing | 756 | 1,860 | 3,159 | 8,227 | ||||||||||||
Research and development | 469 | 1,137 | 1,863 | 5,453 | ||||||||||||
General and administrative | 1,392 | 2,066 | 7,368 | 12,276 | ||||||||||||
Restructuring | 129 | — | (137 | ) | — | |||||||||||
Total stock-based compensation expense | $ | 3,142 | $ | 6,311 | $ | 14,133 | $ | 31,191 | ||||||||
(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)
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
Operating activities: | |||||||
Net loss | $ | (317,606 | ) | $ | (132,064 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation | 9,447 | 12,974 | |||||
Non-cash operating lease expense | 3,987 | — | |||||
Amortization expense of finance leases | 1,974 | — | |||||
Amortization of intangible assets | 23,151 | 24,706 | |||||
Impairment of goodwill | 224,272 | — | |||||
Impairment of intangible asset | 17,308 | — | |||||
Stock-based compensation | 14,133 | 31,191 | |||||
Deferred tax (benefit) provision | (3,951 | ) | 2,828 | ||||
Change in fair value of financing derivatives | (2,900 | ) | 10,141 | ||||
Change in fair value of warrant liability | (4,893 | ) | — | ||||
Change in fair value of investment in equity securities | 2,324 | (307 | ) | ||||
Non-cash interest expense on senior secured convertible notes | 17,374 | — | |||||
Accretion of debt discount | 4,607 | 3,327 | |||||
Amortization of deferred financing costs | 795 | 703 | |||||
Other | 657 | 560 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 14,951 | 19,480 | |||||
Prepaid expenses and other assets | 2,115 | 3,502 | |||||
Accounts payable, accrued expenses, accrued litigation settlements and other liabilities | 6,913 | (22,449 | ) | ||||
Contract liability and customer advances | (11,748 | ) | (28,531 | ) | |||
Operating lease liabilities | (6,034 | ) | — | ||||
Net cash used in operating activities | (3,124 | ) | (73,939 | ) | |||
Investing activities: | |||||||
Proceeds from sale of investment in equity securities | 3,776 | — | |||||
Purchases of property and equipment | (2,810 | ) | (2,183 | ) | |||
Capitalized internal-use software costs | (8,800 | ) | (7,447 | ) | |||
Net cash used in investing activities | (7,834 | ) | (9,630 | ) | |||
Financing activities: | |||||||
Proceeds from borrowings on senior secured convertible notes | — | 100,000 | |||||
Debt issuance costs | — | (5,132 | ) | ||||
Proceeds from private placement, net of issuance costs paid | 19,769 | — | |||||
Financing proceeds received on subscription receivable | — | 7,998 | |||||
Proceeds from sale-leaseback financing transaction | 4,252 | — | |||||
Proceeds from the exercise of stock options | 1,191 | 2,855 | |||||
Payments for taxes related to net share settlement of equity awards | (1,227 | ) | (4,663 | ) | |||
Principal payments on finance leases | (2,080 | ) | — | ||||
Principal payments on capital lease and software license arrangements | (1,997 | ) | (7,260 | ) | |||
Net cash provided by financing activities | 19,908 | 93,798 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (658 | ) | (1,140 | ) | |||
Net increase in cash, cash equivalents and restricted cash | 8,292 | 9,089 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 50,198 | 45,125 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 58,490 | $ | 54,214 | |||
As of September 30, | |||||||
2019 | 2018 | ||||||
Cash and cash equivalents | $ | 53,839 | $ | 47,876 | |||
Restricted cash | 4,651 | 6,338 | |||||
Total cash, cash equivalents and restricted cash | $ | 58,490 | $ | 54,214 | |||
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 September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 (Unaudited) | 2018 (Unaudited) | 2019 (Unaudited) | 2018 (Unaudited) | |||||||||||
Net loss (GAAP) | $ | (10,559 | ) | $ | (24,637 | ) | $ | (317,606 | ) | $ | (132,064 | ) | |||
Income tax provision (benefit) | 552 | 400 | (2,740 | ) | 3,916 | ||||||||||
Interest expense, net | 8,175 | 4,682 | 23,176 | 11,711 | |||||||||||
Depreciation | 3,336 | 4,135 | 9,447 | 12,974 | |||||||||||
Amortization expense of finance leases | 613 | — | 1,974 | — | |||||||||||
Amortization of intangible assets | 6,970 | 7,896 | 23,151 | 24,706 | |||||||||||
EBITDA | 9,087 | (7,524 | ) | (262,598 | ) | (78,757 | ) | ||||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 3,013 | 6,311 | 14,270 | 31,191 | |||||||||||
Investigation and audit related | 980 | 696 | 4,176 | 37,446 | |||||||||||
Settlement of litigation, net | (2,100 | ) | — | 2,900 | 5,250 | ||||||||||
Restructuring | 2,270 | 51 | 5,149 | 5,141 | |||||||||||
Impairment of goodwill | — | — | 224,272 | — | |||||||||||
Impairment of intangible asset | — | — | 17,308 | — | |||||||||||
Private placement issuance cost (1) | (416 | ) | — | 738 | — | ||||||||||
Other (income) expense, net (2) | (6,385 | ) | 5,699 | (5,469 | ) | 9,834 | |||||||||
Adjusted EBITDA | $ | 6,449 | $ | 5,233 | $ | 746 | $ | 10,105 | |||||||
(1) In the second quarter of 2019, we recorded $2.8 million in accrued transaction costs, of which $1.2 million was allocated to the warrants liability and recorded in general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The remaining transaction costs of $1.6 million were recorded in additional paid-in capital in the Condensed Consolidated Balance Sheet. In the third quarter of 2019, we recorded a $1.0 million adjustment due to a change in our estimate of transaction costs by decreasing general and administrative expenses by $0.4 million and additional paid-in capital by $0.6 million.
(2) 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 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 September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 (Unaudited) | 2018 (Unaudited) | 2019 (Unaudited) | 2018 (Unaudited) | |||||||||||
Net loss (GAAP) | $ | (10,559 | ) | $ | (24,637 | ) | $ | (317,606 | ) | $ | (132,064 | ) | |||
Adjustments: | |||||||||||||||
Stock-based compensation | 3,013 | 6,311 | 14,270 | 31,191 | |||||||||||
Investigation and audit related | 980 | 696 | 4,176 | 37,446 | |||||||||||
Amortization of intangible assets (1) | 6,970 | 7,896 | 23,151 | 24,706 | |||||||||||
Settlement of litigation, net | (2,100 | ) | — | 2,900 | 5,250 | ||||||||||
Restructuring | 2,270 | 51 | 5,149 | 5,141 | |||||||||||
Impairment of goodwill | — | — | 224,272 | — | |||||||||||
Impairment of intangible asset | — | — | 17,308 | — | |||||||||||
Private placement issuance cost (2) | (416 | ) | — | 738 | — | ||||||||||
Other (income) expense, net (3) | (6,385 | ) | 5,699 | (5,469 | ) | 9,834 | |||||||||
Non-GAAP net loss | $ | (6,227 | ) | $ | (3,984 | ) | $ | (31,111 | ) | $ | (18,496 | ) | |||
(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) In the second quarter of 2019, we recorded $2.8 million in accrued transaction costs, of which $1.2 million was allocated to the warrants liability and recorded in general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The remaining transaction costs of $1.6 million were recorded in additional paid-in capital in the Condensed Consolidated Balance Sheet. In the third quarter of 2019, we recorded a $1.0 million adjustment due to a change in our estimate of transaction costs by decreasing general and administrative expenses by $0.4 million and additional paid-in capital by $0.6 million.
(3) 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 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 September 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 | $ | 94,300 | 100.0 | % | $ | 102,864 | 100.0 | % | |||||||||||||||||||||
Cost of revenues | 47,390 | $ | 396 | $ | 46,994 | 49.8 | % | 49,446 | $ | 1,248 | $ | 48,198 | 46.9 | % | |||||||||||||||
Gross profit | 46,910 | (396 | ) | 47,306 | 50.2 | % | 53,418 | (1,248 | ) | 54,666 | 53.1 | % | |||||||||||||||||
Selling and marketing | 20,421 | 756 | 19,665 | 20.9 | % | 24,866 | 1,860 | 23,006 | 22.4 | % | |||||||||||||||||||
Research and development | 14,064 | 469 | 13,595 | 14.4 | % | 18,742 | 1,137 | 17,605 | 17.1 | % | |||||||||||||||||||
General and administrative | 14,064 | 1,392 | 12,672 | 13.4 | % | 18,707 | 2,066 | 16,641 | 16.2 | % | |||||||||||||||||||
Restructuring | 2,270 | 129 | 2,141 | 2.3 | % | 51 | — | 51 | — | % | |||||||||||||||||||
Nine Months Ended September 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 | $ | 293,482 | 100.0 | % | $ | 310,172 | 100.0 | % | |||||||||||||||||||||
Cost of revenues | 152,791 | $ | 1,880 | $ | 150,911 | 51.4 | % | 148,226 | $ | 5,235 | $ | 142,991 | 46.1 | % | |||||||||||||||
Gross profit | 140,691 | (1,880 | ) | 142,571 | 48.6 | % | 161,946 | (5,235 | ) | 167,181 | 53.9 | % | |||||||||||||||||
Selling and marketing | 68,590 | 3,159 | 65,431 | 22.3 | % | 80,418 | 8,227 | 72,191 | 23.3 | % | |||||||||||||||||||
Research and development | 49,163 | 1,863 | 47,300 | 16.1 | % | 58,347 | 5,453 | 52,894 | 17.1 | % | |||||||||||||||||||
General and administrative | 50,541 | 7,368 | 43,173 | 14.7 | % | 66,067 | 12,276 | 53,791 | 17.3 | % | |||||||||||||||||||
Restructuring | 5,149 | (137 | ) | 5,286 | 1.8 | % | 5,141 | — | 5,141 | 1.7 | % | ||||||||||||||||||
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 September 30, | ||||||||||||||||||||
(In thousands) | 2019 (Unaudited) | % of Revenue | 2018 (Unaudited) | % of Revenue | $ Variance | % Variance | ||||||||||||||
Ratings and Planning | $ | 65,334 | 69.3 | % | $ | 70,499 | 68.4 | % | $ | (5,165 | ) | (7.3 | )% | |||||||
Analytics and Optimization | 18,252 | 19.3 | % | 22,215 | 21.6 | % | (3,963 | ) | (17.8 | )% | ||||||||||
Movies Reporting and Analytics | 10,714 | 11.4 | % | 10,150 | 10.0 | % | 564 | 5.6 | % | |||||||||||
Total revenues | $ | 94,300 | 100 | % | $ | 102,864 | 100 | % | $ | (8,564 | ) | (8.3 | )% | |||||||
Nine Months Ended September 30, | ||||||||||||||||||||
(In thousands) | 2019 (Unaudited) | % of Revenue | 2018 (Unaudited) | % of Revenue | $ Variance | % Variance | ||||||||||||||
Ratings and Planning | $ | 204,833 | 69.8 | % | $ | 210,569 | 67.9 | % | $ | (5,736 | ) | (2.7 | )% | |||||||
Analytics and Optimization | 57,003 | 19.4 | % | 68,479 | 22.1 | % | (11,476 | ) | (16.8 | )% | ||||||||||
Movies Reporting and Analytics | 31,646 | 10.8 | % | 31,124 | 10.0 | % | 522 | 1.7 | % | |||||||||||
Total revenues | $ | 293,482 | 100 | % | $ | 310,172 | 100 | % | $ | (16,690 | ) | (5.4 | )% | |||||||