comScore Reports Fourth Quarter and Full Year 2011 Results

RESTON, Va., Feb. 14, 2012 /PRNewswire/ -- comScore, Inc. (NASDAQ: SCOR), a leader in measuring the digital world, today announced financial results for the fourth quarter and full year of 2011.

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In the fourth quarter of 2011, comScore achieved record quarterly revenue of $62.6 million, which was an increase of 22% over the fourth quarter of 2010.  Fourth quarter revenue was negatively impacted by approximately $600,000 due to the effects of foreign exchange fluctuations. GAAP loss before income taxes was ($4.4) million and GAAP net loss was ($3.3) million, or ($0.10) per basic and diluted share, in the fourth quarter of 2011.  The GAAP losses for the quarter include $7.8 million in costs related to litigation with Nielsen Holdings NV and the related settlement in the fourth quarter of 2011. Non-GAAP net income in the fourth quarter of 2011 was a record $11.8 million, or $0.35 per diluted share.  Adjusted EBITDA was also a record at $15.4 million or 25% of revenue in the fourth quarter of 2011, an increase of 34% from adjusted EBITDA of $11.5 million in the fourth quarter of 2010.

For the full year 2011, comScore reported revenue of $232.4 million, an increase of 33% from 2010. GAAP loss before income taxes was ($18.8) million and GAAP net loss was ($15.8) million, or ($0.49) per basic and diluted share. The GAAP losses for the full year include costs of $16.5 million related to comScore's litigation and settlement with Nielsen. Non-GAAP net income in 2011 was $31.8 million, or $0.97 per diluted share. Adjusted EBITDA in 2011 was $47.1 million, a 23% increase from 2010.

Dr. Magid Abraham, comScore's president and chief executive officer said, "We are pleased to report good execution in the fourth quarter. We continue to see progress in expanding the adoption of both core products in audience analytics, as well as new products in advertising analytics, such as vCE or validated Campaign Essentials, website analytics, and mobile and network analytics. We added 54 net new customers during the fourth quarter, which is in-line with our recent organic performance, and continue to see very healthy renewals rates of 90% or higher on a constant dollar basis, as customers derive increasing value from our products and technologies. We are also pleased with the settlement of the litigation with Nielsen during the fourth quarter, which resulted in an expanded portfolio of intellectual property.

"In 2011, comScore invested in integrating acquisitions and developing innovative new products. We are entering 2012 with a broad and deep portfolio of products that we believe can significantly enhance our competitive advantages and help drive increased client adoption of those products.  We now look forward to achieving the benefits of our recent investments in the coming periods and expect that our efforts will progressively prompt increased sales and margin growth."

Financial Outlook

Dr. Abraham concluded, "Looking to 2012, we expect to continue to drive revenue growth by expanding our footprint with existing customers with products from our broader product portfolio while attracting new customers in emerging geographies. We anticipate revenue growth in the range of 19% to 21% for the full year 2012, as compared to 2011. This expectation assumes the projected effect of currency exchange rates which we estimate will negatively affect our revenue growth by 100 to 200 basis points.  At the same time we will focus on execution to drive leverage in our model and expand adjusted EBITDA margins, which we anticipate will increase by 100 to 200 basis points on a full year basis over 2011. On a quarterly basis, we anticipate that growing adoption of newer products such as Digital Analytix, and validated Campaign Essentials will drive accelerating year-over-year growth as we progress through the year."    

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

Conference Call Information:

Management will provide commentary on the company's results in a conference call on Tuesday, February 14 at 8:30 am ET.

About comScore 

comScore, Inc. (NASDAQ: SCOR) is a global leader in measuring the digital world and preferred source of digital business analytics. For more information, please visit http://www.comscore.com/companyinfo.

Non-GAAP Financial Measures

comScore reports all financial information required in accordance with generally accepted accounting principles (GAAP).  comScore believes, however, that evaluating its ongoing operating results will be enhanced if it also discloses certain non-GAAP information because it is useful to understand comScore's performance, as it excludes non-cash and other charges that many investors believe may obscure comScore's on-going operating results.  

For example, comScore uses non-GAAP revenue and non-GAAP net income, which excludes stock-based compensation, amortization of acquired intangible assets, impairment of marketable securities, costs from acquisitions, restructurings and other non-recurring items, the non-cash deferred tax provision, litigation and related settlement costs, and the purchase accounting impact on acquired deferred revenue.  Nexius and Nedstat recorded deferred revenue related to past transactions for which revenue would have been recognized in future periods as revenue recognition criteria were satisfied. Purchase accounting for the acquisition requires comScore to record acquired deferred revenue to its current fair value. As a result, in post-acquisition reporting periods, the Company does not recognize the full amount of this revenue that otherwise would have been recognized by Nexius and Nedstat as independent companies. comScore has adjusted for the effect of the deferred revenue adjustment in non-GAAP revenue and non-GAAP net income to reflect the full amount of this impact and help investors evaluate the intrinsic profitability of the business. comScore also reports non-GAAP EPS (diluted), which uses non-GAAP net income in lieu of GAAP net income in calculating earnings per share.

In addition, comScore believes that adjusted EBITDA is a useful measure for investors to use to evaluate its operating performance.  Adjusted EBITDA comprises non-GAAP net income further adjusted to exclude the cash tax provision, depreciation, interest income (expense) net, and costs not associated with ongoing operations, such as acquisition related, litigation and related settlement costs.  A reconciliation of comScore's GAAP results to these non-GAAP measures is included in the financial tables accompanying this release.

The company believes that adjusted EBITDA is an important indicator of the company's operational strength and the performance of its business because it provides a link between profitability and operating cash flow.  Adjusted EBITDA is also widely used by investors and analysts as a supplemental measure to evaluate the overall operating performance of companies in comScore's industry.  comScore's management also uses adjusted EBITDA extensively as a measure of operating performance because it does not include the impact of items not directly resulting from its core operations.  Moreover, the company's management uses the measure for planning purposes, to allocate resources and to evaluate the effectiveness of the company's business strategies and management's performance.

The company believes that excluding certain costs from non-GAAP net income and EPS and from adjusted EBITDA provides a meaningful indication to investors of the expected on-going operating performance of the company.  Specifically as it relates to acquisitions and restructurings, the exclusion of these costs reflects the expected benefits realized or to be realized upon the integration of acquired entities into comScore, and the realized benefits of the restructurings.  

comScore's management also uses free cash flow as a non-GAAP measure of the company's operating cash flow less cash expenditures for capital spending and acquisition-related costs as a key indicator of the company's operating cash flow performance.

Whenever comScore uses such historical non-GAAP financial measures, it provides a reconciliation of historical non-GAAP financial measures to the most closely applicable GAAP financial measure.  Investors are encouraged to review the related GAAP financial measures and the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measure included in the financial tables accompanying this release.  Although the company provides a reconciliation of historical non-GAAP financial measures, due to the high variability and difficulty in predicting certain items that affect net income, such as tax rates and stock price, comScore is unable to provide a complete reconciliation of adjusted EBITDA to net income on a forward-looking basis without unreasonable efforts.  However, a reconciliation of forward-looking adjusted EBITDA to GAAP income (loss) before income taxes is set forth in the attachment to this press release.

These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies.  The use of certain non-GAAP financial measures requires management to make estimates and assumptions regarding amounts of assets and liabilities and the amounts of revenue and expense during the reporting periods. Significant estimates and assumptions are inherent in the analysis and the measurement of certain elements of non-GAAP financial measures such as the impact of purchase accounting on acquired deferred revenue and the amortization of deferred contract costs associated with acquired deferred revenue.  comScore bases its estimates on historical experience and assumptions that it believes are reasonable. Actual results could differ from those estimates.

Cautionary Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, comScore's expectations regarding the continued growth of its customer base; expectations as to adoption of new products and services by existing customers; expectations regarding continued financial growth and business execution strategies; expectations as to customer renewal rates; expectations regarding the customer reception, impact and financial benefits of certain products, including Digital Analytix and validated Campaign Essentials products; the effects of the integration of certain entities and products recently acquired by comScore; expectations and forecasts of future financial performance, including related growth rates and components thereof, as well as a foreign currency exchange rates; and assumptions related to growth for the first quarter and full year of 2012. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: comScore's ability to generate strong revenue and margin growth in future periods; comScore's ability to retain existing large customers and obtain new large customers; risks related to the domestic and global economies and the effects they may have on comScore, its industry or its customers; comScore's ability to manage its growth, including through acquisitions; comScore's ability to sell new or additional products and attract new customers; comScore's ability to sell additional subscription-based products to customers; comScore's ability to sell additional products and services to existing customers; limitations over comScore's control of certain variables in financial forecasts such as its stock price and the resulting effect on its tax rates; and the volatility of quarterly results and expectations.

For a detailed discussion of these and other risk factors, please refer to comScore's Annual Report on Form 10-K for the period ended December 31, 2010 and Quarterly Report on Form 10-Q for the period ended September 30, 2011 and from time to time other filings with the Securities and Exchange Commission (the "SEC"), which are available on the SEC's Web site (http://www.sec.gov).

Stockholders of comScore are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made.  comScore does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after the date of this press release, or to reflect the occurrence of unanticipated events.

SOURCE comScore, Inc.