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Comscore Reports Fourth Quarter and Full-Year 2018 Results

TV and Cross-Platform Momentum Continues Alongside Reduction in Net Loss and Fourth Straight Quarter of Positive Adjusted EBITDA

RESTON, Va., Feb. 28, 2019 /PRNewswire/ -- Comscore, Inc. (SCOR), a trusted partner for planning, transacting, and evaluating media across platforms, today reported financial results for the fourth quarter and full-year ended December 31, 2018.

New comScore logo (PRNewsFoto/comScore, Inc.)

Fourth Quarter 2018 Financial Highlights

  • Total year-over-year revenue growth for the fourth quarter of 6.2% to $109.3 million.
  • GAAP net loss of $27.2 million, or $(0.46) per share, compared to $71.9 million, or $(1.25) per share in the year-ago quarter.
  • Adjusted EBITDA of $6.3 million, compared to an adjusted EBITDA loss of $8.1 million in the year-ago quarter.

Full-Year 2018 Financial Highlights

  • Total year-over-year revenue growth of 3.9% to $419.5 million.
  • GAAP net loss of $159.3 million, or $(2.76) per share, compared to $281.4 million, or $(4.90) per share for the prior year.
  • Adjusted EBITDA of $16.4 million, compared to an adjusted EBITDA loss of $18.7 million for the prior year.
  • Cash, cash equivalents and restricted cash of $50.2 million, compared to $45.1 million as of December 31, 2017.

"In the fourth quarter, we continued to expand our customer relationships, drive revenue growth, and improve our cost structure while investing in product development, resulting in our fourth straight quarter of positive adjusted EBITDA," said Bryan Wiener, chief executive officer of Comscore. "We continue to benefit from shifts in the media landscape that demand a better solution and currency for measuring media across platforms. 2018 was a meaningful step forward in the transformation of Comscore, and we are now leveraging a stronger foundation to execute into 2019 and beyond."

Fourth Quarter Summary Results
Total revenue in the fourth quarter of 2018 was $109.3 million, up from $102.9 million in the year-ago quarter.

Ratings and Planning revenue increased to $74.8 million in the fourth quarter, compared to $71.6 million in the year-ago quarter. The increase was primarily from TV products due to increases in existing customer contract values as well as approximately $2.8 million related to the delivery of cross-platform products in Europe. The increase was offset by lower revenue in syndicated digital products; however, the rate of decline slowed to 1% on a sequential quarter basis.

Analytics and Optimization revenue increased to $23.9 million in the fourth quarter, compared to $20.8 million in the year-ago quarter. The increase was largely due to Activation products, which experienced significant growth, and delivery of digital customer marketing solutions.

Movies Reporting and Analytics revenue was $10.6 million in the fourth quarter of 2018 and $10.5 million in the year-ago quarter.

GAAP net loss for the fourth quarter of 2018 was $27.2 million, or $(0.46) per share, compared to $71.9 million, or $(1.25) per share reported in the year-ago quarter. The improvement was driven primarily by a reduction of investigation and audit related costs of $26.0 million; continued cost discipline in selling and marketing, research and development, and G&A; and the increase in revenue described above.

For the fourth quarter of 2018, Comscore generated non-GAAP adjusted EBITDA of $6.3 million, compared to a loss of $8.1 million in the year-ago quarter. Adjusted EBITDA excludes stock-based compensation expense; investigation, litigation and audit-related expense; restructuring expense; change in fair value of financing derivatives; and other items as presented in the accompanying tables.

Full-Year Summary Results
Total revenue for the full year 2018 was $419.5 million, up from $403.5 million for the prior year. The full year 2018 results include an additional $1.0 million in revenue as a result of the adoption of the new revenue standard ASC 606.

Ratings and Planning revenue increased to $285.4 million for the full year, compared to $278.1 million in the prior year. The increase was primarily from TV products due to increases in existing customer contract values as well as the establishment of stand-alone selling price over certain distinct performance obligations and the sale of cross platform products in Europe. The increase was offset by lower revenue in our syndicated digital products.

Analytics and Optimization revenue increased to $92.4 million for the full year, compared to $86.8 million in the prior year. Revenue increased due to emerging products, including Activation, which experienced significant growth in the latter part of 2018, but was partially offset by lower revenue from digital custom marketing solutions products.

Movies Reporting and Analytics revenue increased to $41.7 million for the full year, compared to $38.7 million in the prior year. The company's global footprint remained strong throughout the year.

GAAP net loss for the full year 2018 was $159.3 million, or $(2.76) per share, compared to $281.4 million, or $(4.90) per share reported in prior year. The decrease primarily related to lower litigation settlement costs, lower investigation and audit costs, and lower operating expenses, offset by higher interest expense on the company's senior secured convertible notes. The net loss for the full year 2018 included a $1.9 million positive impact as a result of the adoption of ASC 606.

For the full year 2018, Comscore generated non-GAAP adjusted EBITDA of $16.4 million, compared to an adjusted EBITDA loss of $18.7 million in the prior year.

Balance Sheet and Liquidity
As of December 31, 2018, total debt principal, composed of senior secured convertible notes, was $204.0 million. Cash, cash equivalents and restricted cash as of December 31, 2018 were $50.2 million, including $6.1 million in restricted cash.

Conference Call Information for Today, Thursday, February 28 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 # 9879519.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 #9879519. The replay will also be available via webcast at ir.comscore.com/events-presentations.

About Comscore
Comscore (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.

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, forecasts, plans and opinions regarding shifts in the media landscape, business transformation, and our foundation for executing on business plans in 2019 and beyond. 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, and expressly disclaims, any duty or 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), adjusted EBITDA and non-GAAP expense, 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.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)



As of


As of


December 31,
2018


December 31,
2017





Assets




Current assets:




Cash and cash equivalents

$

44,096



$

37,859


Restricted cash

6,102



7,266


Accounts receivable, net of allowances of $1,597 and $1,991, respectively ($4,024 and $2,899 of accounts receivable attributable to related parties, respectively)

75,609



82,029


Prepaid expenses and other current assets ($484 and $- attributable to related parties)

19,972



15,168


Insurance recoverable on litigation settlements



37,232


Total current assets

145,779



179,554


Property and equipment, net

27,339



28,893


Other non-current assets ($65 and $- attributable to related parties)

8,898



7,259


Deferred tax assets

3,991



4,532


Intangible assets, net

126,945



159,777


Goodwill

641,191



642,424


Total assets

$

954,143



$

1,022,439


Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable ($1,878 and $2,715 attributable to related parties, respectively)

$

29,836



$

27,889


Accrued expenses ($4,478 and $5,857 attributable to related parties, respectively)

58,140



86,031


Accrued litigation settlements

3,500



27,718


Other current liabilities

2,278



2,998


Customer advances

6,688




Contract liability ($2,521 and $2,755 attributable to related parties, respectively)

64,189



98,367


Deferred rent

1,884



1,239


Capital lease obligations

2,421



6,248


Total current liabilities

168,936



250,490


Financing derivatives (related parties)

26,100




Senior secured convertible notes (related parties)

177,342




Deferred rent

10,304



9,394


Deferred tax liabilities

5,527



3,641


Capital lease obligations

1,182



2,103


Accrued litigation settlements



90,800


Other non-current liabilities ($251 and $- attributable to related parties)

13,185



9,519


Total liabilities

402,576



365,947


Commitments and contingencies




Stockholders' equity:




Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at December 31, 2018 and 2017; no shares issued or outstanding as of December 31, 2018 or 2017




Common stock, $0.001 par value per share; 150,000,000 shares authorized as of December 31, 2018 and 100,000,000 shares authorized as of December 31, 2017; 66,154,626 shares issued and 59,389,830 shares outstanding as of December 31, 2018, and 60,053,843 shares issued and 57,289,047 shares outstanding as of December 31, 2017

59



60


Additional paid-in capital

1,561,208



1,407,717


Accumulated other comprehensive loss

(10,621)



(6,224)


Accumulated deficit

(769,095)



(609,091)


Treasury stock, at cost, 6,764,796 and 2,764,796 shares as of December 31, 2018 and 2017, respectively

(229,984)



(135,970)


Total stockholders' equity

551,567



656,492


Total liabilities and stockholders' equity

$

954,143



$

1,022,439


 

COMSCORE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)




Years Ended December 31,



2018


2017


2016

Revenues (1)


$

419,482



$

403,549



$

399,460









Cost of revenues (1) (2) (3)


200,220



193,605



173,080


Selling and marketing (1) (2) (3)


108,395



130,509



126,311


Research and development (1) (2) (3)


76,979



89,023



86,975


General and administrative (1) (2) (3)


84,535



74,651



97,517


Investigation and audit related (1)


38,338



83,398



46,617


Amortization of intangible assets


32,864



34,823



31,896


Gain on asset dispositions






(33,457)


Settlement of litigation, net


5,250



82,533



2,363


Restructuring (3)


11,837



10,510




Total expenses from operations


558,418



699,052



531,302


Loss from operations


(138,936)



(295,503)



(131,842)


Interest expense, net (1)


(16,465)



(661)



(478)


Other (expense) income, net


(1,464)



15,205



12,371


Gain (loss) from foreign currency transactions


1,303



(3,151)



(1,231)


Loss before income taxes


(155,562)



(284,110)



(121,180)


Income tax (provision) benefit


(3,706)



2,717



4,007


Net loss


$

(159,268)



$

(281,393)



$

(117,173)


Net loss per common share:







Basic and diluted


$

(2.76)



$

(4.90)



$

(2.10)


Weighted-average number of shares used in per share calculation - Common Stock:







Basic and diluted


57,700,603



57,485,755



55,728,090


Comprehensive loss:







Net loss


$

(159,268)



$

(281,393)



$

(117,173)


Other comprehensive loss:







Foreign currency cumulative translation adjustment


(4,397)



6,168



(1,170)


Other




28



188


Total comprehensive loss


$

(163,665)



$

(275,197)



$

(118,155)









(1) Transactions with related parties are included in the line items above.

(2) Excludes amortization of intangible assets, which is presented separately in the Consolidated Statements of Operations and Comprehensive Loss.

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




Years Ended December 31,



2018 (4)


2017


2016

Cost of revenues


$

6,349



$

1,766



$

4,841


Selling and marketing


9,452



5,247



10,967


Research and development


6,580



2,270



5,902


General and administrative


14,770



8,031



24,785


Restructuring


468






Total stock-based compensation expense


$

37,619



$

17,314



$

46,495









(4) Stock-based compensation expense in 2018 includes $28.5 million for awards granted under our 2018 Equity and Incentive Compensation Plan, which was approved by our stockholders in May 2018. We did not grant any stock-based awards in 2017, as we were not current in our SEC reporting obligations.

 

COMSCORE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



Years Ended December 31,


2018


2017


2016

Operating activities:






Net loss

$

(159,268)



$

(281,393)



$

(117,173)


Adjustments to reconcile net loss to net cash used in operating activities:






Depreciation

17,259



23,339



25,439


Amortization of intangible assets

32,864



34,823



31,896


Provision for bad debts

966



983



1,507


Stock-based compensation

37,619



17,314



46,495


Deferred tax provision (benefit)

2,019



(3,203)



(3,997)


Gain on asset dispositions





(33,457)


Change in fair value of financing derivatives

14,226






Change in fair value of investment in equity securities

(1,443)






Accretion of debt discount

4,812






Amortization of deferred financing costs

955






Gain on forgiveness of obligation



(4,000)




Accrued litigation settlements to be settled in Common Stock



90,800




Other

568



192



700


Changes in operating assets and liabilities, net of effect of acquisitions:






Accounts receivable

4,707



14,529



4,009


Prepaid expenses and other assets

(4,456)



4,067



(3,928)


Insurance recoverable on litigation settlements

10,000



(37,232)




Accounts payable, accrued expenses, and other liabilities

(4,955)



85,001



(12,972)


Contract liability and customer advances

(30,013)



(2,638)



5,962


Deferred rent

1,565



1,013



(393)


Net cash used in operating activities

(72,575)



(56,405)



(55,912)








Investing activities:






Net cash received from disposition of assets





42,980


Acquisitions, net of cash acquired





37,086


Acquisitions, net of cash acquired (related party)





(27,328)


Sales of marketable securities



28,436



2,188


Purchases of property and equipment

(4,206)



(10,182)



(7,106)


Capitalized internal-use software costs

(9,608)






Net cash (used in) provided by investing activities

(13,814)



18,254



47,820








Financing activities:






Proceeds from borrowings on senior secured convertible notes (related party)

100,000






Debt issuance costs

(5,146)






Financing proceeds received on subscription receivable (related party)

9,679



11,012



8,954


Proceeds from the exercise of stock options

2,855





4,139


Payments for taxes related to net share settlement of equity awards

(5,263)



(1,514)



(18,292)


Repurchase of common stock (treasury shares)





(27,292)


Principal payments on capital lease and software license arrangements

(9,006)



(17,016)



(18,838)


Net cash provided by (used in) financing activities

93,119



(7,518)



(51,329)


Effect of exchange rate changes on cash, cash equivalents and restricted cash

(1,657)



2,453



776


Net increase (decrease) in cash, cash equivalents and restricted cash

5,073



(43,216)



(58,645)


Cash, cash equivalents and restricted cash at beginning of period

45,125



88,341



146,986


Cash, cash equivalents and restricted cash at end of period

$

50,198



$

45,125



$

88,341









As of December 31,


2018


2017


2016

Cash and cash equivalents

$

44,096



$

37,859



$

84,111


Restricted cash

6,102



7,266



4,230


Total cash, cash equivalents and restricted cash

$

50,198



$

45,125



$

88,341


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:


Years Ended December 31,


2018


2017


2016

(In thousands)

(Unaudited)


(Unaudited)


(Unaudited)

Net loss (GAAP)

$

(159,268)



$

(281,393)



$

(117,173)








Income tax provision (benefit)

3,706



(2,717)



(4,007)


Interest expense, net

16,465



661



478


Depreciation

17,259



23,339



25,439


Amortization of intangible assets

32,864



34,823



31,896


EBITDA

(88,974)



(225,287)



(63,367)








Adjustments:






Stock-based and expected awards compensation expense(1)

37,151



34,261



46,495


Investigation and audit related

38,338



83,398



46,617


Settlement of litigation, net

5,250



82,533



2,363


Gain on asset disposition





(33,457)


Restructuring costs

11,837



10,510




Post-merger integration costs (2)





15,772


Acquisition costs (3)





10,351


Adjustments related to dispositions (4)





(293)


Other expense (income), net (5)

12,783



(4,125)



24


Adjusted EBITDA

$

16,385



$

(18,710)



$

24,505



(1) 2017 includes $16.9 million related to a stock-based retention program that was settled in cash for employees who departed prior to issuance of equity.

(2) Post-merger integration costs consist of third-party costs incurred following our merger with Rentrak and acquisition of Compete in 2016.

(3) Acquisition costs are comprised of third-party costs incurred related to our merger with Rentrak and acquisition of Compete in 2016.

(4) Dispositions consist of costs attributable to Digital Analytix ("DAx"), which was disposed in 2016.

(5) In 2018, adjustments to other expense (income), net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustments to other expense (income), net reflect items classified as other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for the DAx disposition. Our change to the calculation of Adjusted EBITDA for 2018 is intended to conform Adjusted EBITDA to the Consolidated EBITDA definition under the company's senior secured convertible notes.

The following tables present a reconciliation of net loss (GAAP) to non-GAAP net loss for each of the periods identified:


Years Ended December 31,


2018


2017


2016

(In thousands)

(Unaudited)


(Unaudited)


(Unaudited)

Net loss (GAAP)

$

(159,268)



$

(281,393)



$

(117,173)








Adjustments:






Stock-based and expected awards compensation expense(1)

37,151



34,261



46,495


Investigation and audit related

38,338



83,398



46,617


Amortization of intangible assets(2)

32,864



34,823



31,896


Settlement of litigation, net

5,250



82,533



2,363


Gain on asset disposition





(33,457)


Restructuring costs

11,837



10,510




Post-merger integration costs (3)





15,772


Acquisition costs (4)





10,351


Adjustments related to dispositions (5)





(293)


Other expense (income), net (6)

12,783



(4,125)



24


Non-GAAP net (loss) income

$

(21,045)



$

(39,993)



$

2,595



(1) 2017 includes $16.9 million related to a stock-based retention program that was settled in cash for employees who departed prior to issuance of equity.

(2) In 2018, amortization of intangible assets was added as an adjustment in our calculation of non-GAAP net loss. Prior year non-GAAP net loss has been recast to include this adjustment, which is intended to better reflect our core operating performance.

(3) Post-merger integration costs consist of third-party costs incurred following our merger with Rentrak and acquisition of Compete in 2016.

(4) Acquisition costs are comprised of third-party costs following our merger with Rentrak and acquisition of Compete in 2016.

(5) Dispositions consist of costs attributable to DAx, which was disposed in 2016.

(6) In 2018, adjustments to other expense (income), net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustments to other expense (income), net reflect items classified as other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for the DAx disposition.

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. GAAP expense line items have been adjusted to exclude the effects of stock-based compensation.


Years Ended December 31,

(In thousands)

2018
(Unaudited)


2017
(Unaudited)


As
reported
(GAAP)


Less: stock-
based
compensation


As
adjusted
(non-
GAAP)


% of
GAAP
Revenue


As
reported
(GAAP)


Less: stock-
based
compensation


As
adjusted
(non-
GAAP)


% of
GAAP
Revenue

Revenues (1)

$

419,482







100.0

%


$

403,549







100.0

%

Cost of revenues

200,220



$

6,349



$

193,871



46.2

%


193,605



$

1,766



$

191,839



47.5

%

Gross profit

219,262



(6,349)



225,611



53.8

%


209,944



(1,766)



211,710



52.5

%

Selling and marketing

108,395



9,452



98,943



23.6

%


130,509



5,247



125,262



31.0

%

Research and development

76,979



6,580



70,399



16.8

%


89,023



2,270



86,753



21.5

%

General and administrative

84,535



14,770



69,765



16.6

%


74,651



8,031



66,620



16.5

%

Restructuring

11,837



468



11,369



2.7

%


10,510





10,510



2.6

%


(1) Revenue in 2017 is not comparable to revenue in 2018 due to our adoption of ASC 606.

 

COMSCORE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share data)




Three Months Ended December 31,



2018


2017

Revenues (1)


$

109,310



$

102,926







Cost of revenues (1) (2) (3)


51,994



50,188


Selling and marketing (1) (2) (3)


27,977



39,713


Research and development (1) (2) (3)


18,632



24,921


General and administrative (1) (2) (3)


18,468



21,225


Investigation and audit related (1)


892



26,929


Amortization of intangible assets


8,158



9,154


Settlement of litigation, net




116


Restructuring (3)


6,696



10,510


Total expenses from operations


132,817



182,756


Loss from operations


(23,507)



(79,830)


Interest expense, net (1)


(4,754)



(107)


Other (expense) income, net


(637)



2,719


Gain (loss) from foreign currency transactions


1,484



(1,628)


Loss before income taxes


(27,414)



(78,846)


Income tax benefit


210



6,940


Net loss


$

(27,204)



$

(71,906)


Net loss per common share:





Basic and diluted


$

(0.46)



$

(1.25)


Weighted-average number of shares used in per share calculation - Common Stock:





Basic and diluted


59,116,831



57,616,774


Comprehensive loss:





Net loss


$

(27,204)



$

(71,906)


Other comprehensive (loss) income:





Foreign currency cumulative translation adjustment


(1,608)



1,864


Other




(29)


Total comprehensive loss


$

(28,812)



$

(70,071)







(1) Transactions with related parties are included in the line items above.

(2) Excludes amortization of intangible assets, which is presented separately in the Consolidated Statements of Operations and Comprehensive Loss.

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




Three Months Ended December 31,



2018 (4)


2017

Cost of revenues


$

1,114



$

320


Selling and marketing


1,225



808


Research and development


1,127



462


General and administrative


2,494



358


Restructuring


468




Total stock-based compensation expense


$

6,428



$

1,948







(4) Stock-based compensation expense in the fourth quarter of 2018 includes $4.1 million for awards granted under our 2018 Equity and Incentive Compensation Plan, which was approved by our stockholders in May 2018. We did not grant any stock-based awards in 2017, as we were not current in our SEC reporting obligations.

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 December 31,


2018


2017

(In thousands)

(Unaudited)


(Unaudited)

Net loss (GAAP)

$

(27,204)



$

(71,906)






Income tax benefit

(210)



(6,940)


Interest expense, net

4,754



107


Depreciation

4,285



5,110


Amortization of intangible assets

8,158



9,154


EBITDA

(10,217)



(64,475)






Adjustments:




Stock-based and expected awards compensation expense(1)

5,960



18,895


Investigation and audit related

892



26,929


Settlement of litigation, net



116


Restructuring costs

6,696



10,510


Other expense (income), net (2)

2,949



(122)


Adjusted EBITDA

$

6,280



$

(8,147)



(1) 2017 includes $16.9 million related to a stock-based retention program that was settled in cash for employees who departed prior to issuance of equity.

(2) In 2018, adjustments to other expense (income), net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustments to other expense (income), net reflect items classified as other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for the DAx disposition. Our change to the calculation of Adjusted EBITDA for 2018 is intended to conform Adjusted EBITDA to the Consolidated EBITDA definition under the company's senior secured convertible notes.

The following tables present a reconciliation of net loss (GAAP) to non-GAAP net loss for each of the periods identified:


Three Months Ended December 31,


2018


2017

(In thousands)

(Unaudited)


(Unaudited)

Net loss (GAAP)

$

(27,204)



$

(71,906)






Adjustments:




Stock-based and expected awards compensation expense(1)

5,960



18,895


Investigation and audit related

892



26,929


Amortization of intangible assets(2)

8,158



9,154


Settlement of litigation, net



116


Restructuring costs

6,696



10,510


Other expense (income), net (3)

2,949



(122)


Non-GAAP net loss

$

(2,549)



$

(6,424)



(1) 2017 includes $16.9 million related to a stock-based retention program that was settled in cash for employees who departed prior to issuance of equity.

(2) In 2018, amortization of intangible assets was added to our calculation of non-GAAP net loss. Prior year non-GAAP net loss has been recast to include this adjustment. The change has been made to better reflect our core operating performance.

(3) In 2018, adjustments to other expense (income), net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustments to other expense (income), net reflect items classified as other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for the DAx disposition.

 


Three Months Ended

(In thousands)

March 31,
2018
(Unaudited)


June 30, 2018
(Unaudited)


September 30,
2018
(Unaudited)


December 31,
2018
(Unaudited)

Net loss (GAAP)

$

(51,450)



$

(55,977)



$

(24,637)



$

(27,204)










Adjustments:








Stock-based and expected awards compensation expense

1,881



22,999



6,311



5,960


Investigation and audit related

31,867



4,883



696



892


Amortization of intangible assets(2)

8,544



8,266



7,896



8,158


Settlement of litigation, net



5,250






Restructuring costs

1,257



3,833



51



6,696


Other expense, net (1)

2,629



1,506



5,699



2,949


Non-GAAP net loss

$

(5,272)



$

(9,240)



$

(3,984)



$

(2,549)



(1) In 2018, adjustments to other expense, net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustment to other expense, net reflects items classified as other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for the DAx disposition.

(2) In 2018, amortization of intangible assets was added to our calculation of non-GAAP net loss. Prior year non-GAAP net loss has been recast to include this adjustment. The change has been made to better reflect our core operating performance.

 


Three Months Ended

(In thousands)

March 31,
2017
(Unaudited)


June 30, 2017
(Unaudited)


September 30,
2017
(Unaudited)


December 31,
2017
(Unaudited)

Net loss (GAAP)

$

(40,792)



$

(38,626)



$

(130,069)



$

(71,906)










Adjustments:








Stock-based and expected awards compensation expense(1)

3,820



2,824



8,722



18,895


Investigation and audit related

17,678



17,399



21,392



26,929


Amortization of intangible assets(2)

8,735



8,443



8,491



9,154


Settlement of litigation, net

1,533



(915)



81,799



116


Restructuring costs







10,510


Other expense (income), net (3)

13



(53)



(3,963)



(122)


Non-GAAP net loss

$

(9,013)



$

(10,928)



$

(13,628)



$

(6,424)



(1) 2017 includes $16.9 million related to a stock-based retention program that was settled in cash for employees who departed prior to issuance of equity.

(2) In 2018, amortization of intangible assets was added to our calculation of non-GAAP net loss. Prior year non-GAAP net loss has been recast to include this adjustment. The change has been made to better reflect our core operating performance.

(3) In 2018, adjustments to other expense (income), net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustment to other expense (income), net reflects items classified as other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for the DAx disposition.

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. GAAP expense line items have been adjusted to exclude the effects of stock-based compensation.


Three Months Ended December 31,

(In thousands)

2018
(Unaudited)


2017
(Unaudited)


As
reported
(GAAP)


Less: stock-
based
compensation


As
adjusted
(non-
GAAP)


% of
GAAP
Revenue


As
reported
(GAAP)


Less: stock-
based
compensation


As
adjusted
(non-
GAAP)


% of
GAAP
Revenue

Revenues (1)

$

109,310







100.0

%


$

102,926







100.0

%

Cost of revenues

51,994



$

1,114



$

50,880



46.5

%


50,188



$

320



$

49,868



48.5

%

Gross profit

57,316



(1,114)



58,430



53.5

%


52,738



(320)



53,058



51.5

%

Selling and marketing

27,977



1,225



26,752



24.5

%


39,713



808



38,905



37.8

%

Research and development

18,632



1,127



17,505



16.0

%


24,921



462



24,459



23.8

%

General and administrative

18,468



2,494



15,974



14.6

%


21,225



358



20,867



20.3

%

Restructuring

6,696



468



6,228



5.7

%


10,510





10,510



10.2

%


(1) Revenue in 2017 is not comparable to revenue in 2018 due to our adoption of ASC 606.

Revenues

Revenues from our three offerings of products and services are as follows:


Three Months Ended December 31,





(In thousands)

2018
(Unaudited)


% of
Revenue


2017 (1)
(Unaudited)


% of
Revenue


$ Variance


% Variance

Ratings and Planning

$

74,786



68.4

%


$

71,617



69.6

%


$

3,169



4.4

%

Analytics and Optimization

23,901



21.9

%


20,843



20.2

%


3,058



14.7

%

Movies Reporting and Analytics

10,623



9.7

%


10,466



10.2

%


157



1.5

%

Total revenues

$

109,310



100.0

%


$

102,926



100.0

%


$

6,384



6.2

%


(1) The revenue for the year ended December 31, 2017 is not comparable to the year ended December 31, 2018 due to our adoption of ASC 606.

 


Year Ended December 31,





(In thousands)

2018


% of
Revenue


2017 (1)


% of
Revenue


$ Variance


% Variance

Ratings and Planning

$

285,355



68.0

%


$

278,081



68.9

%


$

7,274



2.6

%

Analytics and Optimization

92,380



22.0

%


86,765



21.5

%


5,615



6.5

%

Movies Reporting and Analytics

41,747



10.0

%


38,703



9.6

%


3,044



7.9

%

Total revenues

$

419,482



100.0

%


$

403,549



100.0

%


$

15,933



3.9

%


(1) The revenue for the year ended December 31, 2017 is not comparable to the year ended December 31, 2018 due to our adoption of ASC 606.

Revenues from our three offerings of products and services for each quarter in 2018 and 2017 are as follows:


Three Months Ended


Year Ended

(In thousands)

March 31,
2018
(Unaudited)


June 30, 2018
(Unaudited)


September 30,
2018
(Unaudited)


December 31,
2018
(Unaudited)


December 31,
2018

Ratings and Planning

$

69,569



$

70,501



$

70,499



$

74,786



$

285,355


Analytics and Optimization

25,731



20,533



22,215



23,901



92,380


Movies Reporting and Analytics

10,619



10,355



10,150



10,623



41,747


Total revenues

$

105,919



$

101,389



$

102,864



$

109,310



$

419,482


 


Three Months Ended


Year Ended

(In thousands)

March 31,
2017 (1)
(Unaudited)


June 30,
2017(1)
(Unaudited)


September 30,
2017(1)
(Unaudited)


December 31,
2017(1)
(Unaudited)


December 31,
2017(1)

Ratings and Planning

$

67,765



$

69,216



$

69,483



$

71,617



$

278,081


Analytics and Optimization

23,726



21,021



21,175



20,843



86,765


Movies Reporting and Analytics

9,370



9,202



9,665



10,466



38,703


Total revenues

$

100,861



$

99,439



$

100,323



$

102,926



$

403,549



(1) The revenue for the year ended December 31, 2017 is not comparable to the year ended December 31, 2018 due to our adoption of ASC 606.

 

Cision

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