comScore Reports Fourth Quarter and Full Year 2010 Results

RESTON, Va., Feb. 16, 2011 /PRNewswire/ -- comScore, Inc. (Nasdaq: SCOR), a leader in measuring the digital world, today announced financial results for the fourth quarter and full year of 2010.

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In the fourth quarter of 2010, comScore achieved record quarterly revenue of $51.2 million, which was an increase of 52% over the fourth quarter of 2009.  GAAP loss before income taxes was ($1.5) million in the fourth quarter of 2010 and GAAP net loss was ($0.5 million), or ($0.02) per basic and diluted share. GAAP operating results were impacted by several recent acquisition-related items, including severance costs, amortization of intangible assets and the purchase accounting impact on acquired deferred revenue.  Non-GAAP net income in the fourth quarter of 2010 was $7.8 million, or $0.24 per diluted share, a 20% increase over the fourth quarter of 2009.  Adjusted EBITDA was $11.5 million in the fourth quarter of 2010, compared to adjusted EBITDA of $8.6 million in the fourth quarter of 2009, an increase of 34%.

Dr. Magid Abraham, comScore's president and chief executive officer said, "We reported our best annual revenues ever in 2010  with a 37% growth over 2009.  Even excluding the contributions from recent acquisitions, revenue growth in our base business was very healthy.  The main drivers of this growth included further up-selling of existing customers with additional products and services, acquisitions of new customers in both existing and new geographies through both our base business as well as through acquisitions, and the introduction of new products that also opened new markets.   We added 70 net new customers in the fourth quarter, bringing our total customer count to 1,752, an increase of almost 500 customers from a year ago. We believe these drivers position us well for continued growth in 2011."

"We believe that 2010 was a transformative year for comScore. We have substantially expanded our addressable market by increasing our global footprint and broadening our offerings to incorporate solutions in site analytics, advertising analytics, advanced mobile solutions and cross media measurement. Our acquisitions of ARS Group, Nexius Xplore, and Nedstat NV are important enablers for these initiatives. We are particularly pleased with the successful integration of these acquisitions thus far and the pace of progress on integrated product offerings. We are also encouraged by the positive client reaction to early demonstrations of our new capabilities, which we believe should progressively materialize and ultimately contribute to strong revenue and margin growth during the second half of 2011 and continuing into 2012."  

Financial Outlook

Dr. Abraham concluded, "We are pleased to see business momentum continue into 2011 as our digital business analytics theme is resonating with a wide array of customers and providing opportunities to grow our relationships with existing customers."

Abraham continued, "For the full year 2011, comScore expects revenue to grow approximately 34% to 36% percent over full year 2010.  We expect that revenues in the second half of 2011 should begin to benefit from incremental sales generated by new product offerings in the site analytics, mobile analytics and cross media measurement areas, while the full incremental revenue benefit of those sales should materialize in 2012.  We expect our investments in acquisition integration and in the development and launch of these new offerings will burden our margins in the first half of the year but should help expand our margins in the second half.  As a result, we expect quarterly margin progression in 2011 to be stronger than our typical progression in past years with full year 2011 adjusted EBITDA margin slightly above 2010 levels.  We also believe these investments will position comScore for future positive results."  

comScore's expectations for the first quarter of 2011 are outlined in the table below:

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 on a forward-looking basis without unreasonable efforts.  However, a reconciliation of forward-looking Adjusted EBITDA to GAAP 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 Wednesday, February 16, 2011 at 5:00 pm ET.

The conference call and replay can be accessed by telephone and webcast as follows:  

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 and restructurings, the non-cash deferred tax provision, 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 and will adjust 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 under steady state revenue accounting. 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 (expenses), net and costs not associated with ongoing operations, such as acquisition 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 net of these expenditures.

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 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, both organically and through acquisitions; expectations regarding the impact and financial benefits of certain products, including the roll-out of new products in new geographic markets; expectations regarding customer up-selling and new market opportunities; projections of comScore's potential addressable market ; expectations regarding the acquisitions of ARS, Nexius and Nedstat and the resulting impacts, opportunities and benefits to comScore; expectations and forecasts of future financial performance, including related growth rates and components thereof; and assumptions related to the market and economic environment and assumptions related to growth for the first quarter and the full year 2011. 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, including those gained through acquisitions, 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; the impact of a change in methodology stemming from acquisitions or the development of new products; the rate of development of the Internet advertising and eCommerce markets; comScore's ability to sell new or additional products and attract new 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, 2009 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.