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scor-20220930

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

FORM 10-Q

_____________________________________________

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33520

_____________________________________________

COMSCORE, INC.

(Exact name of registrant as specified in its charter)

_____________________________________________


Delaware						54-1955550
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

11950 Democracy Drive, Suite 600

Reston, Virginia 20190

(Address of Principal Executive Offices)

(703) 438-2000

(Registrant's Telephone Number, Including Area Code)

_____________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share

SCOR

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of November 4, 2022, there were 92,009,609 shares of the registrant's Common Stock outstanding.

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COMSCORE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2022

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Cautionary Note Regarding Forward Looking Statements			i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures about Market Risk			29
Item 4. Controls and Procedures			30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			31
Item 1A. Risk Factors			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 3. Defaults Upon Senior Securities			32
Item 4. Mine Safety Disclosures			32
Item 5. Other Information			32
Item 6. Exhibits			33
SIGNATURE			35

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We may make certain statements, including in this Quarterly Report on Form 10-Q, or 10-Q, including the information contained in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations", and the information incorporated by reference in this 10-Q, that constitute forward-looking statements within the meaning of federal and state securities laws. Forward-looking statements are all statements other than statements of historical fact. We attempt to identify these forward-looking statements by words such as "may," "will," "should," "could," "might," "expect," "plan," "anticipate," "believe," "estimate," "target," "goal," "predict," "intend," "potential," "continue," "seek" and other comparable words. Similarly, statements that describe our business strategy, goals, prospects, opportunities, outlook, objectives, plans or intentions are also forward-looking statements. These statements may relate to, but are not limited to, expectations of future operating results or financial performance; expectations regarding the impact on our business of the coronavirus ("COVID-19") pandemic and global measures to mitigate the spread of the virus; expectations regarding our restructuring activities and cost-reduction initiatives; macroeconomic trends that we expect may influence our business, including any recession or changes in consumer behavior resulting from the COVID-19 pandemic; plans for financing and capital expenditures; expectations regarding liquidity, customer payments and compliance with debt and financing covenants and other payment obligations; expectations regarding enhanced commercial relationships and the development and introduction of new products; potential limitations on our net operating loss carryforwards and other tax assets; regulatory compliance and expected changes in the regulatory or privacy landscape affecting our business; expected impact of litigation and regulatory proceedings; and plans for growth and future operations, as well as assumptions relating to the foregoing.

Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These statements are based on expectations and assumptions as of the date of this 10-Q regarding future events and business performance and involve known and unknown risks, uncertainties and other factors that may cause actual events or results to be materially different from any future events or results expressed or implied by these statements. These factors include those set forth in the following discussion and within Item 1A, "Risk Factors" of this 10-Q and elsewhere within this report; those identified within Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2021; and those identified in other documents that we file from time to time with the U.S. Securities and Exchange Commission, or SEC.

We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should not place undue reliance on forward-looking statements, which apply only as of the date of this 10-Q. You should carefully review the risk factors described in this 10-Q and in other documents that we file from time to time with the SEC. Except as required by applicable law, including the rules and regulations of the SEC, we undertake no obligation, and expressly disclaim any duty, to publicly update or revise forward-looking statements, whether as a result of any new information, future events or otherwise. Although we believe the expectations reflected in the forward-looking statements are reasonable as of the date of this 10-Q, our statements are not guarantees of future results, levels of activity, performance, or achievements, and actual outcomes and results may differ materially from those expressed in, or implied by, any of our statements.

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PART I. FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

COMSCORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	As of		As of
	September 30, 2022		December 31, 2021
(In thousands, except share and par value data)	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	25,086	$	21,854
Restricted cash	425		425
Accounts receivable, net of allowances of $677 and $1,173, respectively ($1,335 and $3,606 of accounts receivable attributable to related parties, respectively)	48,223		72,059
Prepaid expenses and other current assets	15,207		14,769
Total current assets	88,941		109,107
Property and equipment, net	36,661		36,451
Operating right-of-use assets	25,422		29,186
Deferred tax assets	2,636		2,811
Intangible assets, net	19,622		39,945
Goodwill	386,245		435,711
Other non-current assets	11,546		10,263
Total assets	$	571,073	$	663,474
Liabilities, Convertible Redeemable Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable ($12,809 and $6,575 attributable to related parties, respectively)	$	28,763	$	23,575
Accrued expenses ($4,420 and $4,122 attributable to related parties, respectively)	41,642		45,264
Contract liabilities ($1,729 and $3,553 attributable to related parties, respectively)	52,564		54,011
Customer advances	10,633		11,613
Current operating lease liabilities	7,667		7,538
Warrants liability	2,049		10,520
Other current liabilities ($3,953 and $7,863 attributable to related parties, respectively)	12,321		12,850
Total current liabilities	155,639		165,371
Non-current operating lease liabilities	31,184		36,055
Non-current portion of accrued data costs ($14,066 and $7,843 attributable to related parties, respectively)	23,230		16,005
Revolving line of credit	16,000		16,000
Deferred tax liabilities	2,145		2,103
Other non-current liabilities ($384 and $1,582 attributable to related parties, respectively)	13,035		16,879
Total liabilities	241,233		252,413
Commitments and contingencies
Convertible redeemable preferred stock, $0.001 par value; 82,527,609 shares authorized, issued and outstanding as of September 30, 2022 and December 31, 2021; aggregate liquidation preference of $207,953 as of September 30, 2022, and $211,863 as of December 31, 2021 (related parties)	187,885		187,885
Stockholders' equity:
Preferred stock, $0.001 par value; 7,472,391 shares authorized as of September 30, 2022 and December 31, 2021; no shares issued or outstanding as of September 30, 2022 or December 31, 2021	—		—
Common stock, $0.001 par value; 275,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 98,774,405 shares issued and 92,009,609 shares outstanding as of September 30, 2022, and 97,172,086 shares issued and 90,407,290 shares outstanding as of December 31, 2021	92		90
Additional paid-in capital	1,690,609		1,683,883
Accumulated other comprehensive loss	(21,736)		(12,098)
Accumulated deficit	(1,297,026)		(1,218,715)
Treasury stock, at cost, 6,764,796 shares as of September 30, 2022 and December 31, 2021	(229,984)		(229,984)
Total stockholders' equity	141,955		223,176
Total liabilities, convertible redeemable preferred stock and stockholders' equity	$	571,073	$	663,474

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except share and per share data)	2022		2021		2022		2021
Revenues (2)	$	92,783	$	92,487	$	278,183	$	270,476

Cost of revenues (1) (2) (3)	51,530		49,179		155,915		153,267
Selling and marketing (1) (3)	17,199		15,212		51,850		49,569
Research and development (1) (3)	8,741		9,051		28,190		29,536
General and administrative (1) (3)	12,899		16,895		48,119		45,609
Amortization of intangible assets	6,772		6,172		20,323		18,866
Restructuring	5,784		—		5,784		—

Impairment of goodwill	46,300		—		46,300		—

Total expenses from operations	149,225		96,509		356,481		296,847
Loss from operations	(56,442)		(4,022)		(78,298)		(26,371)
Other income (expense), net	1,477		5,713		8,467		(9,069)
Gain from foreign currency transactions	2,781		1,180		5,728		1,884
Interest expense, net (2)	(284)		(169)		(660)		(7,569)
Loss on extinguishment of debt (2)	—		—		—		(9,629)
(Loss) income before income taxes	(52,468)		2,702		(64,763)		(50,754)
Income tax benefit (provision)	86		(722)		(1,945)		(2,166)
Net (loss) income	$	(52,382)	$	1,980	$	(66,708)	$	(52,920)
Net loss available to common stockholders:
Net (loss) income	$	(52,382)	$	1,980	$	(66,708)	$	(52,920)
Convertible redeemable preferred stock dividends (2)	(3,910)		(3,910)		(11,603)		(8,713)
Total net loss available to common stockholders:	$	(56,292)	$	(1,930)	$	(78,311)	$	(61,633)
Net loss per common share:
Basic and diluted	$	(0.60)	$	(0.02)	$	(0.85)	$	(0.77)

Weighted-average number of shares used in per share calculation - Common Stock:
Basic and diluted	93,347,017		82,185,009		92,380,984		79,951,857

Comprehensive (loss) income:
Net (loss) income	$	(52,382)	$	1,980	$	(66,708)	$	(52,920)
Other comprehensive loss:
Foreign currency cumulative translation adjustment	(4,553)		(1,917)		(9,638)		(3,337)
Total comprehensive (loss) income	$	(56,935)	$	63	$	(76,346)	$	(56,257)

(1) Excludes amortization of intangible assets, which is presented as a separate line item.
(2) Transactions with related parties are included in the line items above as follows (refer to Footnote 9, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021			2022		2021
Revenues	$	3,527	$	4,170		$	12,125	$	12,045
Cost of revenues	7,938		8,109			23,379		26,143
Interest expense, net	—		—			—		4,692
Loss on extinguishment of debt	—		—			—		(9,608)
Convertible redeemable preferred stock dividends	(3,910)		(3,910)			(11,603)		(8,713)

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of revenues	$	155	$	231	$	877	$	1,554
Selling and marketing	132		208		804		1,679
Research and development	116		170		627		1,162
General and administrative	1,013		2,425		4,906		6,761
Total stock-based compensation expense	$	1,416	$	3,034	$	7,214	$	11,156

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

(Unaudited)


(In thousands, except share data)	Convertible Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Treasury stock, at cost		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2021	82,527,609	$	187,885	90,407,290	$	90	$	1,683,883	$	(12,098)	$	(1,218,715)	$	(229,984)	$	223,176
Net loss	—	—		—	—		—		—		(9,276)		—		(9,276)
Convertible redeemable preferred stock dividends (1)	—	—		—	—		—		—		(3,825)		—		(3,825)
Restricted stock units distributed	—	—		212,246	—		—		—		—		—		—
Exercise of Common Stock options	—	—		86,941	1		102		—		—		—		103
Payments for taxes related to net share settlement of equity awards	—	—		(474)	—		(1)		—		—		—		(1)
Amortization of stock-based compensation	—	—		—	—		1,908		—		—		—		1,908
Settlement of restricted stock unit liability	—	—		—	—		1,719		—		—		—		1,719
Foreign currency translation adjustment	—	—		—	—		—		(541)		—		—		(541)
Other	—	—		(661)	—		(3)		—		—		—		(3)
Balance as of March 31, 2022	82,527,609	$	187,885	90,705,342	$	91	$	1,687,608	$	(12,639)	$	(1,231,816)	$	(229,984)	$	213,260
Net loss	—	—		—	—		—		—		(5,050)		—		(5,050)
Convertible redeemable preferred stock dividends (1)	—	—		—	—		—		—		(3,868)		—		(3,868)
Restricted stock units distributed	—	—		958,594	1		—		—		—		—		1
Exercise of Common Stock options	—	—		745	—		—		—		—		—		—
Payments for taxes related to net share settlement of equity awards	—	—		(12,646)	—		(23)		—		—		—		(23)
Amortization of stock-based compensation	—	—		—	—		2,011		—		—		—		2,011

Foreign currency translation adjustment	—	—		—	—		—		(4,544)		—		—		(4,544)
Other	—	—		121,357	—		—		—		—		—		—
Balance as of June 30, 2022	82,527,609	$	187,885	91,773,392	$	92	$	1,689,596	$	(17,183)	$	(1,240,734)	$	(229,984)	$	201,787
Net loss	—	—		—	—		—		—		(52,382)		—		(52,382)
Convertible redeemable preferred stock dividends (1)	—	—		—	—		—		—		(3,910)		—		(3,910)



Restricted stock units distributed	—	—		226,948	—		—		—		—		—		—

Amortization of stock-based compensation	—	—		—	—		1,013		—		—		—		1,013
Foreign currency translation adjustment	—	—		—	—		—		(4,553)		—		—		(4,553)
Exercise of Common Stock options	—	—		9,269	—		—		—		—		—		—






Balance as of September 30, 2022	82,527,609	$	187,885	92,009,609	$	92	$	1,690,609	$	(21,736)	$	(1,297,026)	$	(229,984)	$	141,955

(1) Transactions for these line items were exclusively with related parties (refer to Footnote 5, Convertible Redeemable Preferred Stock and Stockholders' Equity, and Footnote 9, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information).

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(In thousands, except share data)	Convertible Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit			Treasury stock, at cost		Total Stockholders' Equity
	Shares	Amount		Shares	Amount


































Balance as of December 31, 2020	—	$	—	72,938,546	$	73	$	1,621,986	$	(7,030)	$	(1,156,055)		$	(229,984)	$	228,990

Net loss	—	—		—	—		—		—		(36,355)			—		(36,355)
Convertible redeemable preferred stock, net of issuance costs (1)	82,527,609	188,183		—	—		—		—		—			—		—
Convertible redeemable preferred stock dividends (1)	—	—		—	—		—		—		(935)			—		(935)
Interest paid in Common Stock (1)	—	—		4,165,781	4		10,808		—		—			—		10,812
Conversion shares issued as extinguishment cost on senior secured convertible notes (1)	—	—		3,150,000	3		9,605		—		—			—		9,608
Restricted stock units distributed	—	—		442,051	1		—		—		—			—		1
Payments for taxes related to net share settlement of equity awards	—	—		(10,231)	—		(37)		—		—			—		(37)
Settlement of restricted stock unit liability	—	—		—	—		7,117		—		—			—		7,117
Amortization of stock-based compensation	—	—		—	—		1,358		—		—			—		1,358
Foreign currency translation adjustment	—	—		—	—		—		(2,151)		—			—		(2,151)





Balance as of March 31, 2021	82,527,609	$	188,183	80,686,147	$	81	$	1,650,837	$	(9,181)	$	(1,193,345)		$	(229,984)	$	218,408
Net loss	—	—		—	—		—		—		(18,545)			—		(18,545)
Adjustment to issuance costs on convertible redeemable preferred stock	—	(298)		—	—		—		—		—			—		—
Convertible redeemable preferred stock dividends (1)	—	—		—	—		—		—		(3,868)			—		(3,868)


Restricted stock units distributed	—	—		1,486,344	1		—		—		—			—		1
Payments for taxes related to net share settlement of equity awards	—	—		(414)	—		(1)		—		—			—		(1)

Amortization of stock-based compensation	—	—		—	—		1,895		—		—			—		1,895
Foreign currency translation adjustment	—	—		—	—		—		731		—			—		731
Balance as of June 30, 2021	82,527,609	$	187,885	82,172,077	$	82	$	1,652,731	$	(8,450)	$	(1,215,758)		$	(229,984)	$	198,621
Net income	—	—		—	—		—		—		1,980		0	$	—	1,980
Convertible redeemable preferred stock dividends (1)	—	—		—	—		—		—		(3,910)			—		(3,910)
Restricted stock units distributed	—	—		28,989	—		—		—		—			—		—
Amortization of stock-based compensation	—	—		—	—		2,563		—		—			—		2,563
Foreign currency translation adjustment	—