Neustar Announces Results for Fourth Quarter and Full-Year 2009
Fourth Quarter Revenue $134.2 million, up $6.8 million or 5% Year-over-Year
2010 Revenue Growth Expected to Range between 8% and 11%
STERLING, Va., Feb. 10 /PRNewswire-FirstCall/ -- Neustar, Inc. (NYSE: NSR), a provider of essential clearinghouse services to the communications and Internet industries, today announced consolidated results for the quarter and year ended December 31, 2009, and provided full-year guidance for 2010.
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Fourth-Quarter Results
- Revenue of $134.2 million, up from $127.4 million for the 2008 quarter
- Net income of $27.8 million, up from a net loss of $42.5 million for the 2008 quarter
- EBITDA of $58.2 million, up from an EBITDA loss of $17.5 million for the 2008 quarter
- EPS of $0.37 per diluted share, up from a loss per diluted share of $0.57 for the 2008 quarter
"Our solid performance for the quarter and the year, reflected by our profitability and cash generation, demonstrates the strength of our management team, the resilience of our business model and our ability to meet customer needs with our innovative services," said Jeff Ganek, Neustar's chairman and chief executive officer. "Neustar begins 2010 on a positive trajectory, and we expect that momentum to continue. Looking ahead, we will continue to invest in innovative services that fuel our growth."
Full-Year 2009 Results
- Revenue of $480.4 million, compared to $488.8 million for 2008
- Net income of $101.1 million, up from net income of $4.3 million for 2008
- EBITDA of $205.6 million, compared to EBITDA of $109.7 million for 2008
- EPS of $1.34 per diluted share, compared to $0.06 per diluted share for 2008
- Cash, cash equivalents and short-term investments of $342.2 million, compared to $161.7 million at year-end 2008
Paul Lalljie, Neustar's chief financial officer, added, "In 2009, as demonstrated by our results, we successfully managed the business in challenging economic conditions and established a stable base to build upon for the future. Our financial strength, expertise in the growing IP markets that we serve and our experienced management team provide us with the confidence to meet our 2010 guidance."
Business Outlook for 2010
- Revenue expected to range from $520 to $535 million, an increase of 8% to 11% over 2009
- EBITDA margin expected to exceed 42%
Discussion of Fourth Quarter and Full-Year Results
Revenue for the quarter and for the year reflect year-over-year increases from our non-NPAC services, primarily our Ultra Services. In each of the periods, these increases were offset by the anticipated decreases in revenue from our NPAC services in the United States, resulting from the amended pricing terms.
Revenue for the quarter totaled $134.2 million, a 5% increase from $127.4 million in the fourth quarter of 2008, while revenue for the full year totaled $480.4 million, a 2% decrease from $488.8 million in the full year of 2008. Revenue for the quarter and full year from our NPAC services in the United States totaled $78.8 million and $292.5 million, respectively, both of which included additional revenue of $7.5 million related to an unearned customer credit. Also included in the revenue for the quarter and for the year were $4.4 million and $5.4 million, respectively, from one-time functionality improvements, with an additional $5.3 million of revenue to be recognized during 2010.
- Addressing revenue increased 6% to $38.1 million in the fourth quarter and increased 3% to $134.3 million in the full year. Both increases were primarily due to an increase in revenue from our Ultra Services, offset by lower revenues from our NPAC services.
- Interoperability revenue increased 10% to $16.6 million in the fourth quarter and decreased 9% to $58.7 million in the full year. The fourth quarter increase was primarily due to higher revenue from our order management services, offset by lower revenue from our NGM services. The full-year decrease was primarily due to lower revenue from our NPAC services and from our telephone number portability services in Canada.
- Infrastructure and other revenue increased 4% to $79.5 million in the fourth quarter and decreased 2% to $287.4 million in the full year. The fourth quarter increase was primarily due to greater revenue from ongoing support services for telephone number portability solutions outside the United States and one-time functionality improvements requested by our customers, offset by the lower revenue from our NPAC services. The full-year decrease was primarily a result of the lower revenue from our NPAC services, offset by higher revenue from ongoing support services for telephone number portability solutions outside the United States and one-time functionality improvements requested by our customers.
The table below displays fourth quarter and full-year 2009 operating expense, net (loss) income and per share data, and EBITDA and EBITDA per share data compared to the corresponding periods in 2008. With respect to the corresponding periods in 2008, the table below includes separate columns for data that includes and excludes the impairment charges incurred in 2008 related to our NGM business segment.
Three Months Ended
December 31,
------------
2008 2008(1)
Including Absent
impairment impairment
charges charges 2009
------- ------- ----
(in thousands, except per share data)
(unaudited)
Operating Expense $154,487 $73,594 $85,929
Net (Loss) Income $(42,476) $32,229 $27,803
EPS /diluted share $(0.57) $0.43 $0.37
EBITDA(3) $(17,450) $65,290 $58,226
EBITDA /diluted
share(3) $(0.24) $0.87 $0.77
Year Ended
December 31,
------------
2008 2008(2)
Including Absent
impairment impairment
charges charges 2009
------- ------- ----
(in thousands, except per share data)
(unaudited)
Operating Expense $419,739 $309,825 $312,827
Net (Loss) Income $4,294 $107,903 $101,141
EPS /diluted share $0.06 $1.42 $1.34
EBITDA(3) $109,688 $221,449 $205,598
EBITDA /diluted
share(3) $1.44 $2.91 $2.72
(1) Absent the $64.6 million goodwill impairment charge, the $18.2 million
charge for impairment of long-lived assets, and the associated
adjustments to depreciation and amortization and provision for income
taxes, where applicable. All charges are related to our NGM business
segment and were recorded in the fourth quarter of 2008. Further
details are included in the reconciliation table below.
(2) Absent the $29.0 million goodwill impairment charge recorded in the
first quarter of 2008, the $64.6 million goodwill impairment charge
recorded in the fourth quarter of 2008, the $18.2 million charge for
impairment of long-lived assets recorded in the fourth quarter of
2008, and the associated adjustments to depreciation and amortization
and provision for income taxes, where applicable. All charges are
related to our NGM business segment. Further details are included in
the reconciliation table below.
(3) Non-GAAP financial measures reconciled below.
Absent the 2008 fourth quarter non-cash impairment charges related to our NGM business segment, total operating expense for the fourth quarter increased 17% to $85.9 million and increased 1% to $312.8 million for the full year. Included in operating expense for the fourth quarter and for full-year 2009 are restructuring charges of $3.3 million and $6.0 million, respectively, which are related to both our Clearinghouse and our NGM business segments. In the fourth quarter of 2008 and full-year 2008, there was a restructuring charge of $1.7 million related to our NGM business segment.
Cash, cash equivalents and short-term investments totaled $342.2 million as of December 31, 2009, compared to $303.2 million as of September 30, 2009 and $161.7 million as of December 31, 2008.
Reconciliation of Non-GAAP Financial Measures
In this press release, Neustar presents certain non-GAAP financial data. The following is a reconciliation of EBITDA to net (loss) income for the quarter and year ended December 31, 2008 and 2009. Also provided is a reconciliation of projected EBITDA to estimated Net Income for the year ending December 31, 2010:
Reconciliation of EBITDA to Net (Loss) Income
Three Months Ended Year Ended Year Ending
December 31, December 31, December 31,
------------ ------------ ------------
2008 2009 2008 2009 2010(1)
---- ---- ---- ---- -------
(in thousands, except per share data)
(unaudited) (unaudited) (unaudited)
Total revenue $127,413 $134,230 $488,845 $480,385 $527,500
======== ======== ======== ======== ========
Net (loss) income $(42,476) $27,803 $4,294 $101,141 $106,000
Add: Depreciation
and amortization 9,624 9,925 40,582 38,040 44,000
Less: Other expense
(income) 1,891 235 3,125 (1,448) (500)
Add: Provision for
income taxes 13,511 20,263 61,687 67,865 72,000
------ ------ ------ ------ ------
EBITDA $(17,450) $58,226 $109,688 $205,598 $221,500
======== ======= ======== ======== ========
EBITDA per diluted
share $(0.24) $0.77 $1.44 $2.72 $2.88
====== ===== ===== ===== =====
EBITDA margin(2) (14%) 43% 22% 43% 42%
==== === === === ===
Weighted average
diluted common
shares outstanding 73,951 75,685 76,107 75,465 77,000
====== ====== ====== ====== ======
(1) The amounts expressed in this column are based on current estimates as
of the date of this press release. This reconciliation is based on
the midpoint of the revenue guidance.
(2) EBITDA margin is a measure of EBITDA as a percentage of total revenue.
EBITDA, EBITDA per diluted share and EBITDA margin are not measures of financial performance under GAAP and have no standardized measurement prescribed by GAAP. Management believes that these measures enhance our investors' understanding of our financial performance and the comparability of the company's operating results to prior periods, as well as against the performance of other companies. However, these non-GAAP financial measures may not be comparable with similar non-GAAP financial measures used by other companies and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The company provides the following reconciliations to the most directly comparable GAAP financial measures to allow investors to appropriately consider each non-GAAP financial measure.
Reconciliation of EBITDA to Net (Loss) Income and EBITDA
to Net Income in the absence of the impairment charges
for the quarter and the year ended December 31, 2008
Three Months Ended Year Ended
December 31, 2008 December 31, 2008
----------------- -----------------
(in thousands, except per share data)
(unaudited)
Net (loss) income $(42,476) $4,294
Add: Impairment
of goodwill (1) 64,581 93,602
Add: Impairment
of long-lived
assets (1) 18,159 18,159
Less: Adjustment
for depreciation
and amortization
(1) (2) (1,847) (1,847)
Less: Adjustment
for provision for
income taxes (2) (6,188) (6,305)
------ ------
Net income excluding
impairments $32,229 $107,903
======= ========
Net income excluding
impairments per
diluted share $0.43 (3) $1.42
===== =====
Add: Depreciation
and amortization 11,471 42,429
Add: Other expense
(income) 1,891 3,125
Add: Provision for
income taxes 19,699 67,992
------ ------
EBITDA excluding
impairments $65,290 $221,449
======= ========
EBITDA excluding
impairments per
diluted share $0.87 $2.91
===== =====
Weighted average
diluted common
shares outstanding 75,253 (3) 76,107
====== ======
(1) Excluding the impairments of goodwill and long-lived assets for the
period presented, taking into account the adjustment to depreciation
and amortization for such period, total operating expenses would have
been $73.6 million for the fourth quarter of 2008 and $309.8 million
for the full-year 2008, as opposed to the GAAP measurement of total
operating expense of $154.5 million and $419.7 million, respectively.
(2) Adjustment reflects difference to recorded amount in the absence of
the impairment of goodwill and impairment of long-lived assets during
the period presented, assuming the effective tax rate for each such
period.
(3) To understand the comparison of the net loss of $0.57 per diluted
share for the fourth quarter of 2008 against the net income of $0.43
per diluted share that the company would have recorded in the absence
of the goodwill impairment charge and the long-lived asset impairment
charge, it is important to note that the weighted average diluted
common shares outstanding used to calculate the net loss per diluted
share for the fourth quarter was 74.0 million, as compared to the
weighted average diluted common shares outstanding used to calculate
the net income excluding impairments per diluted share, which is 75.3
million. This difference in weighted average diluted common shares
outstanding results from the exclusion of the dilutive impact of such
equity awards in the diluted share calculation when a company records
a net loss for the applicable period as opposed to inclusion of equity
awards in this calculation when a company records net income.
Conference Call
As announced on February 5, 2010, Neustar will conduct an investor conference call to discuss the company's results today at 4:30 p.m. (Eastern Time). Prior to the call, investors may access the conference call over the Internet via the Investor Relations tab of the company's website (www.neustar.biz). Those listening via the Internet should go to the site 15 minutes early to register, download and install any necessary audio software.
The conference call is also accessible via telephone by dialing (888) 437-9274 (international callers dial (719) 457-2694). For those who cannot listen to the live broadcast, a replay will be available through Midnight (Eastern Time) Wednesday, February 17, 2010 by dialing (888) 203-1112 (international callers dial (719) 457-0820) and entering replay PIN 4017541, or by going to the Investor Relations tab of the company's website (www.neustar.biz).
Neustar will take live questions from securities analysts and institutional portfolio managers; the complete call is open to all other interested parties on a listen-only basis.
This press release and the financial tables, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures that may be used periodically by management when discussing the company's financial results with investors and analysts, are available on the company's website under the Investor Relations tab.
About Neustar, Inc.
Neustar, Inc. (NYSE: NSR) solves complex communications challenges and provides market-leading, innovative solutions and directory services to enable trusted communication across networks, applications, and enterprises around the world. Visit Neustar online at www.neustar.biz.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements about our expectations, beliefs and business results in the future, such as guidance regarding our 2010 results. We have attempted, whenever possible, to identify these forward-looking statements using words such as "may," "will," "should," "projects," "estimates," "expects," "plans," "intends," "anticipates," "believes" and variations of these words and similar expressions. Similarly, statements herein that describe our business strategy, prospects, opportunities, outlooks, objectives, plans, intentions or goals are also forward-looking statements. We cannot assure you that our expectations will be achieved or that any deviations will not be material. Forward-looking statements are subject to many assumptions, risks and uncertainties that may cause future results to differ materially from those anticipated. These potential risks and uncertainties include, among others, the uncertainty of future revenue and profitability and potential fluctuations in quarterly and yearly operating results due to such factors as disruptions to our clearinghouse operations, modifications to our material contracts, our ability to successfully identify and complete acquisitions, integrate and support the operations of businesses we acquire, our ability to redeem auction rate securities, increasing competition, market acceptance of our existing services, our ability to successfully develop and market new services, the uncertainty of whether new services will achieve market acceptance or result in any revenue, and business, regulatory and statutory changes in the communications industry. More information about potential factors that could affect our business and financial results is included in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2008 and subsequent periodic and current reports. All forward-looking statements are based on information available to us on the date of this press release, and we undertake no obligation to update any of the forward-looking statements after the date of this press release.
NEUSTAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2008 2009 2008 2009
---- ---- ---- ----
(unaudited) (audited) (unaudited)
Revenue:
Addressing $35,837 $38,096 $130,736 $134,253
Interoperability 15,077 16,601 64,305 58,723
Infrastructure and other 76,499 79,533 293,804 287,409
------ ------ ------- -------
Total revenue 127,413 134,230 488,845 480,385
Operating expense:
Cost of revenue (excluding
depreciation and amortization
shown separately below) 26,606 30,452 105,589 113,260
Sales and marketing 17,374 24,178 74,182 83,371
Research and development 5,085 3,385 27,527 16,160
General and administrative 11,367 14,700 58,407 55,974
Depreciation and amortization 9,624 9,925 40,582 38,040
Restructuring charges 1,691 3,289 1,691 6,022
Impairment of goodwill 64,581 - 93,602 -
Impairment of long-lived
assets 18,159 - 18,159 -
------ ------ ------ -------
154,487 85,929 419,739 312,827
------- ------ ------- -------
(Loss) income from operations (27,074) 48,301 69,106 167,558
Other (expense) income:
Interest and other expense (11,803) (1,402) (16,237) (6,071)
Interest and other income 9,912 1,167 13,112 7,519
----- ----- ------ -----
(Loss) income before
income taxes (28,965) 48,066 65,981 169,006
Provision for income taxes 13,511 20,263 61,687 67,865
------ ------ ------ ------
Net (loss) income $(42,476) $27,803 $4,294 $101,141
======== ======= ====== ========
Net (loss) income per
common share:
Basic $(0.57) $0.37 $0.06 $1.36
====== ===== ===== =====
Diluted $(0.57) $0.37 $0.06 $1.34
====== ===== ===== =====
Weighted average common
shares outstanding:
Basic 73,951 74,394 74,350 74,301
====== ====== ====== ======
Diluted 73,951 75,685 76,107 75,465
====== ====== ====== ======
NEUSTAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2008 2009
---- ----
ASSETS (audited) (unaudited)
Current assets:
Cash, cash equivalents and short-term
investments $161,653 $342,191
Restricted cash 496 512
Accounts and unbilled receivables, net 72,635 67,005
Prepaid expenses and other current assets 18,205 18,087
Income taxes receivable 4,621 -
Deferred tax assets 11,079 6,973
------ -----
Total current assets 268,689 434,768
Property and equipment, net 64,160 73,881
Goodwill and intangible assets, net 134,661 127,206
Other non-current assets 47,412 6,825
Deferred tax assets, long-term 4,244 5,124
----- -----
Total assets $519,166 $647,804
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $59,103 $72,052
Income taxes payable - 2,764
Deferred revenue 32,530 26,117
Notes payable and capital lease obligations 10,123 11,222
Accrued restructuring reserve 1,867 2,459
Other liabilities 430 3,891
--- -----
Total current liabilities 104,053 118,505
Deferred revenue, long-term 11,657 8,923
Notes payable and capital lease
obligations, long-term 11,933 10,766
Accrued restructuring reserve, long-term 1,589 1,111
Other liabilities, long-term 3,281 4,062
----- -----
Total liabilities 132,513 143,367
Total stockholders' equity 386,653 504,437
------- -------
Total liabilities and stockholders'
equity $519,166 $647,804
======== ========
SOURCE Neustar, Inc.
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