comScore Reports Second Quarter 2018 Results
RESTON, Va., Aug. 9, 2018 /PRNewswire/ -- comScore, Inc. (Nasdaq: SCOR), a trusted partner for planning, transacting, and evaluating media across platforms, today reported financial results for the second quarter of 2018, ended June 30, 2018.
Revenue in the second quarter of 2018 was $101.4 million, up from $99.4 million reported in the same period of 2017. GAAP net loss for the second quarter of 2018 was $56.0 million, or $(1.02) per share as compared to $38.6 million, or $(0.67) per share reported in the same period for 2017.
Revenue from the digital audience product offering in the second quarter of 2018 was $49.9 million, down 8% from the same period of 2017. TV and cross-platform revenue increased 16% year-over-year to $29.5 million. In the second quarter of 2018, the company recorded $1.9 million in revenue related to a change in accounting estimate for certain contracts in its TV and cross-platform offering and increased its cost of sales by the same amount. Excluding this impact, revenue growth from TV and cross-platform would have been 9% compared to the same period of 2017. Advertising product revenue increased 12% year-over-year to $11.7 million as a result of emerging products, and movies revenue increased 13% year-over-year to $10.4 million.
On a non-GAAP basis, net loss for the second quarter of 2018 was $17.5 million, excluding $23.0 million in stock-based compensation expense related to the issuance of equity awards to employees, directors and consultants; a charge of $5.3 million for a legal settlement associated with the conclusion of certain litigation; a restructuring charge of $3.8 million; and other items as presented in the accompanying tables. Non-GAAP net loss in the second quarter of 2018 compares to a non-GAAP net loss of $19.4 million reported in the same period for 2017.
For the second quarter of 2018, comScore generated adjusted EBITDA of $1.3 million, excluding the above-mentioned items as presented in the accompanying tables. This compares to an adjusted EBITDA loss of $3.7 million reported in the same period one year ago.
"In the second quarter, we continued to push forward on our mission to build momentum in the market through a focused vision, accelerated product development, and a demonstrably streamlined and simplified operating model, which was reflected in our ability to post positive adjusted EBITDA for the second straight quarter," said Bryan Wiener, CEO of comScore. "Our turnaround is moving with velocity, and we are rallying around a renewed strategic plan that continues to establish comScore as currency and the new standard for cross-platform measurement."
Conference Call information for today, Thursday, August 9 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 this call, dial +1 844-229-7593 (domestic) or +1 314-888-4258 (international) and reference conference ID #2839798. 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 #2839798. 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 set-top box audiences and advertising at scale, comScore is the industry's emerging, third-party source for reliable and comprehensive cross-platform measurement. To learn more about comScore, please visit comScore.com.
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 and opinions regarding business and market opportunities, product development and innovation, financial growth, operational improvements and strategic plans. 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 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.
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, each of which are non-GAAP financial measures used by our management to understand and evaluate our core operating performance and trends. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, as they permit our investors to view our core business performance using the same metrics that management uses to evaluate our performance. Nevertheless, our use of these non-GAAP financial measures has limitations as an analytical tool, and investors should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Instead, you should consider these measures alongside GAAP-based financial performance measures, net income (loss), various cash flow metrics, and our other GAAP financial results.
Set forth below are reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures. These reconciliations should be carefully evaluated.
COMSCORE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 30, 2018 December 31,
2017
----
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $46,589 $37,859
Restricted cash 6,599 7,266
Accounts receivable, net of
allowances of $1,510 and
$1,991, respectively ($1,409
and $2,899 of accounts
receivable attributable to
related parties,
respectively) 70,182 82,029
Prepaid expenses and other
current assets 19,523 15,168
Insurance recoverable on
litigation settlements 10,000 37,232
Total current assets 152,893 179,554
Property and equipment, net 27,669 28,893
Other non-current assets 9,143 7,259
Deferred tax assets 3,619 4,532
Intangible assets, net 143,004 159,777
Goodwill 641,702 642,424
------- -------
Total assets $978,030 $1,022,439
======== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ($977 and
$2,715 attributable to
related parties,
respectively) $18,352 $27,889
Accrued expenses ($5,745 and
$5,857 attributable to
related parties,
respectively) 52,485 86,031
Accrued litigation settlements 3,800 27,718
Other current liabilities 10,335 10,485
Customer advances ($988 and
$2,755 attributable to
related parties,
respectively) 86,310 98,367
Total current liabilities 171,282 250,490
Financing derivatives (related
party) 15,900 -
Senior secured convertible
notes (related party) 174,404 -
Deferred tax liabilities 5,590 3,641
Accrued litigation settlements 1,750 90,800
Other non-current liabilities 36,149 21,016
Total liabilities 405,075 365,947
------- -------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par
value per share; 5,000,000
shares authorized at June 30,
2018 and December 31, 2017;
no shares issued or
outstanding as of June 30,
2018 and December 31, 2017 - -
Common stock, $0.001 par value
per share; 150,000,000 shares 31, 2017
authorized as of June 30,
2018 and 100,000,000 shares
authorized as of December 31,
2017; 64,651,714 shares
issued and 57,886,918 shares
outstanding as of June 30,
2018, and 60,053,843 shares
issued and 57,289,047 shares
outstanding as of December 58 60
Additional paid-in capital 1,528,719 1,407,717
Accumulated other
comprehensive loss (8,584) (6,224)
Accumulated deficit (717,254) (609,091)
Treasury stock, at cost,
6,764,796 and 2,764,796
shares as of June 30, 2018
and December 31, 2017,
respectively (229,984) (135,970)
-------- --------
Total stockholders' equity 572,955 656,492
------- -------
Total liabilities and
stockholders' equity $978,030 $1,022,439
======== ==========
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,
2018 2017 2018 2017
---- ---- ---- ----
Revenues (1) $101,389 $99,439 $207,308 $200,300
-------- ------- -------- --------
Cost of revenues (1) (2) (3) 51,526 47,301 98,780 94,614
Selling and marketing (1) (2)
(3) 29,647 31,190 55,552 60,923
Research and development (1) (2)
(3) 20,889 21,502 39,605 42,522
General and administrative (1)
(2) (3) 28,699 13,310 47,360 31,095
Investigation and audit related
(1) 4,883 17,399 36,750 35,077
Amortization of intangible
assets 8,266 8,443 16,810 17,178
Settlement of litigation, net 5,250 (915) 5,250 618
Restructuring 3,833 - 5,090 -
----- --- ----- ---
Total expenses from operations 152,993 138,230 305,197 282,027
------- ------- ------- -------
Loss from operations (51,604) (38,791) (97,889) (81,727)
Interest expense, net (1) (4,124) (252) (7,029) (406)
Other income, net 807 2,683 884 5,867
Gain (loss) from foreign
currency transactions 1,045 (1,205) 123 (1,225)
Loss before income taxes (53,876) (37,565) (103,911) (77,491)
Income tax provision (2,101) (1,061) (3,516) (1,927)
------ ------ ------ ------
Net loss $(55,977) $(38,626) $(107,427) $(79,418)
======== ======== ========= ========
Net loss per common share:
Basic $(1.02) $(0.67) $(1.90) $(1.38)
Diluted $(1.02) $(0.67) $(1.90) $(1.38)
Weighted-average number of
shares used in per share
calculation - Common Stock:
Basic 55,192,741 57,498,228 56,703,795 57,386,516
Diluted 55,192,741 57,498,228 56,703,795 57,386,516
-------
Comprehensive loss:
Net loss $(55,977) $(38,626) $(107,427) $(79,418)
Other comprehensive income:
Foreign currency cumulative
translation adjustment (3,975) 2,352 (2,360) 2,955
Unrealized gain on marketable
securities, net - 34 - 34
Total comprehensive loss $(59,952) $(36,240) $(109,787) $(76,429)
======== ======== ========= ========
(1) Transactions with related parties are included in the line items above.
(2) Stock-based compensation expense is included in the line items above as follows:
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
---- ---- ---- ----
Cost of revenues $3,774 $433 $3,987 $1,062
Selling and marketing 5,792 1,532 6,367 2,978
Research and development 3,972 450 4,316 1,271
General and administrative 9,461 409 10,210 1,333
$22,999 $2,824 $24,880 $6,644
======= ====== ======= ======
(3) 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,
2018 2017
---- ----
Operating activities:
Net loss $(107,427) $(79,418)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 8,839 11,996
Amortization of intangible
assets 16,810 17,178
Stock-based compensation 24,880 6,644
Deferred tax provision 2,477 1,808
Change in fair value of
financing derivatives 4,460 -
Change in fair value of
investment in equity
securities (265) -
Accretion of debt discount 1,978 -
Amortization of deferred
financing costs 445 -
Other 510 189
Changes in operating assets and liabilities:
Accounts receivable 10,638 11,724
Prepaid expenses and other
assets (5,255) (15,693)
Accounts payable, accrued
expenses, and other
liabilities (18,138) 20,402
Customer advances (14,321) 2,912
Net cash used in operating
activities (74,369) (22,258)
Investing activities:
Purchases of property and
equipment (1,287) (4,021)
Capitalized internal-use
software costs (5,228) -
------ ---
Net cash used in investing
activities (6,515) (4,021)
Financing activities:
Proceeds from borrowings on
senior secured convertible
notes (related party) 100,000 -
Debt issuance costs (5,123) -
Financing proceeds received on
subscription receivable
(related party) 4,676 5,822
Proceeds from the exercise of
stock options 164 -
Repurchase of Common Stock
(withholding taxes) (4,275) (1,262)
Principal payments on capital
lease and software license
arrangements (5,359) (8,608)
Net cash provided by (used in)
financing activities 90,083 (4,048)
Effect of exchange rate
changes on cash and cash
equivalents (1,136) 21
------ ---
Net increase (decrease) in
cash, cash equivalents and
restricted cash 8,063 (30,306)
Cash, cash equivalents and
restricted cash at beginning
of period 45,125 88,341
------ ------
Cash, cash equivalents and
restricted cash at end of
period $53,188 $58,035
======= =======
As of June 30,
2018 2017
---- ----
Cash and cash equivalents $46,589 $47,638
Restricted cash 6,599 10,397
----- ------
Total cash, cash equivalents
and restricted cash $53,188 $58,035
======= =======
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) 2018 2017 2018 2017
---- ---- ---- ----
Net loss (GAAP) $(55,977) $(38,626) $(107,427) $(79,418)
-------- -------- --------- --------
Income tax provision 2,101 1,061 3,516 1,927
Interest expense, net 4,124 252 7,029 406
Depreciation 4,276 5,867 8,839 11,996
Amortization of
intangible assets 8,266 8,443 16,810 17,178
----- ----- ------ ------
EBITDA (37,210) (23,003) (71,233) (47,911)
Adjustments:
Stock-based compensation 22,999 2,824 24,880 6,644
Investigation and audit
related 4,883 17,399 36,750 35,077
Settlement of litigation,
net 5,250 (915) 5,250 618
Restructuring costs 3,833 - 5,090 -
Other loss (income), net
(1) 1,506 (53) 4,135 (40)
Adjusted EBITDA $1,261 $(3,748) $4,872 $(5,612)
====== ======= ====== =======
(1) In 2018, adjustments to other
income, net, reflect non-cash changes
in the fair value of financing
derivatives and equity securities
investment included in other income,
net on our Condensed Consolidated
Statements of Operations and
Comprehensive Loss. These financial
instruments were not held in the prior
period. The prior period adjustment to
other income, net reflects items
classified as non-operating other
income, net on our Condensed
Consolidated Statements of Operations
and Comprehensive Loss, excluding the
other income associated with the
transition services agreement for the
Digital Analytix ("DAx") disposition.
Our change to exclude non-operating
other income, net from our calculation
of adjusted EBITDA for 2018 is intended
to conform adjusted EBITDA to the
Consolidated EBITDA definition under
our senior secured convertible notes
issued to funds affiliated with or
managed by Starboard Value LP.
The following table presents a reconciliation of net loss (GAAP) to non-GAAP net loss and non-GAAP net loss per share for each of the periods identified:
Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2018 2017 2018 2017
---- ---- ---- ----
Net loss (GAAP) $(55,977) $(38,626) $(107,427) $(79,418)
-------- -------- --------- --------
Adjustments:
Stock-based compensation 22,999 2,824 24,880 6,644
Investigation and audit
related 4,883 17,399 36,750 35,077
Settlement of litigation,
net 5,250 (915) 5,250 618
Restructuring costs 3,833 - 5,090 -
Other loss (income), net
(1) 1,506 (53) 4,135 (40)
Non-GAAP net loss $(17,506) $(19,371) $(31,322) $(37,119)
======== ======== ======== ========
(1) In 2018, adjustments to other
income, net, reflect non-cash changes
in the fair value of financing
derivatives and equity securities
investment included in other income,
net on our Condensed Consolidated
Statements of Operations and
Comprehensive Loss. These financial
instruments were not held in the prior
period. The prior period adjustment to
other income, net reflects items
classified as non-operating other
income, net on our Condensed
Consolidated Statements of Operations
and Comprehensive Loss, excluding the
other income associated with the
transition services agreement for the
DAx disposition. We have excluded non-
operating other income, net from our
calculation of non-GAAP net loss for
2018.
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:
Three Months Ended June 30,
(In thousands) 2018 2017
As Less: stock- As % of As Less: stock- As % of
reported based adjusted GAAP reported based adjusted GAAP
(GAAP) compensation (non- Revenue (GAAP) compensation (non- Revenue
GAAP) GAAP)
---
Revenues $101,389 100.0% $99,439 100.0%
Cost of revenues 51,526 (3,774) 47,752 47.1% 47,301 (433) 46,868 47.1%
Selling and
marketing 29,647 (5,792) 23,855 23.5% 31,190 (1,532) 29,658 29.8%
Research and
development 20,889 (3,972) 16,917 16.7% 21,502 (450) 21,052 21.2%
General and
administrative 28,699 (9,461) 19,238 19.0% 13,310 (409) 12,901 13.0%
Six Months Ended June 30,
(In thousands) 2018 2017
As Less: stock- As % of As Less: stock- As % of
reported based adjusted GAAP reported based adjusted GAAP
(GAAP) compensation (non- Revenue (GAAP) compensation (non- Revenue
GAAP) GAAP)
---
Revenues $207,308 100.0% $200,300 100.0%
Cost of revenues 98,780 (3,987) 94,793 45.7% 94,614 (1,062) 93,552 46.7%
Selling and
marketing 55,552 (6,367) 49,185 23.7% 60,923 (2,978) 57,945 28.9%
Research and
development 39,605 (4,316) 35,289 17.0% 42,522 (1,271) 41,251 20.6%
General and
administrative 47,360 (10,210) 37,150 17.9% 31,095 (1,333) 29,762 14.9%
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SOURCE comScore
