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Comscore Reports Third Quarter 2019 Results and Announces Leadership Transition

Bill Livek Appointed Chief Executive Officer & Executive Vice Chairman

RESTON, Va., Nov. 5, 2019 /PRNewswire/ -- Comscore, Inc. (SCOR), a trusted partner for planning, transacting and evaluating media across platforms, today reported financial results for the quarter ended Sept. 30, 2019. The company also announced today that Bill Livek has been appointed by Comscore's board of directors as chief executive officer and executive vice chairman, effective immediately, bringing his 40 years of experience in the world of media and consumer measurement to the CEO role.

New comScore logo (PRNewsFoto/comScore, Inc.)

Third Quarter 2019 Financial Results

  • Revenue for the third quarter was $94.3 million compared to $102.9 million in the prior-year quarter
  • Net loss of $10.6 million, or $(0.16) per share, compared to a net loss of $24.6 million, or $(0.42) per share in the year-ago quarter
  • Adjusted EBITDA for the third quarter increased 23.2% year-over-year to $6.4 million
  • Cash, cash equivalents and restricted cash of $58.5 million increased 16.5% since Dec. 31, 2018
  • Cost actions taken beginning to flow through; on track to be fully realized in 2020

"This was a transformative quarter for Comscore, as we made substantial progress in refocusing our product portfolio to provide our customers and partners with innovative solutions. During my tenure as interim chief executive officer, we significantly reduced our core operating costs, right-sized our organizational structure, and executed on a strategy that we believe will allow us to achieve breakeven operating cashflow by the end of the year," said Dale Fuller, director and former interim chief executive officer of Comscore. "I am incredibly grateful for the opportunity to have served as Comscore's interim CEO and believe we are a stronger organization to continue our transformation and bring innovative products and services to our customers. After much consideration, I believe I am best able to serve Comscore and its mission as a member of the board of directors."

"I would like to thank Dale for his guidance and leadership throughout this transition," said Bill Livek, Comscore's chief executive officer and executive vice chairman. "I am excited about the prospects that lie ahead for Comscore and the opportunities we continue to believe are ripe for disruption. I look forward to capitalizing on these opportunities and creating meaningful value for our stakeholders."

Third Quarter Summary Results

Total revenue in the third quarter of 2019 was $94.3 million, down from $102.9 million in the year-ago quarter.

Ratings and Planning revenue decreased to $65.3 million in the third quarter of 2019, compared to $70.5 million in the year-ago quarter. The decrease was the result of a decline in syndicated digital products. TV and cross-platform products were flat compared to the same period last year as a result of higher local TV revenue and increased delivery of cross-platform products, offset by lower national TV revenue.

Analytics and Optimization revenue declined to $18.3 million in the third quarter of 2019, compared to $22.2 million in the year-ago quarter. The decrease was related to lower digital custom marketing solution sales and deliveries in the third quarter of 2019 as compared to the prior-year period. This decrease was offset, in part, by increased revenue from Activation products.

Movies Reporting and Analytics revenue was $10.7 million in the third quarter of 2019, compared to $10.2 million in the year-ago quarter.

During the third quarter of 2019, the company announced a settlement with the SEC, resolving a previously disclosed investigation into financial accounting and disclosure practices between February 2014 and February 2016. In agreeing to the settlement, which includes a civil monetary penalty of $5.0 million, the company neither admitted nor denied the SEC's allegations. Following a separate proceeding by the SEC, the company received a clawback of $2.1 million from its former chief executive officer.

Net loss for the third quarter of 2019 was $10.6 million, or $(0.16) per share, compared to a net loss of $24.6 million, or $(0.42) per share reported in the year-ago quarter.

For the third quarter of 2019, non-GAAP adjusted EBITDA was $6.4 million, compared to adjusted EBITDA of $5.2 million in the year-ago quarter. Non-GAAP adjusted EBITDA excludes stock-based compensation expense; settlement of certain litigation (including the clawback referenced above); investigation, litigation and audit-related expense; restructuring expense; change in fair value of financing derivatives and warrants liability; and other items as presented in the accompanying tables.

Balance Sheet and Liquidity

As of September 30, 2019, cash, cash equivalents and restricted cash totaled $58.5 million, including $4.7 million in restricted cash and $2.1 million from the clawback related to the SEC proceeding. Total debt principal as of September 30, 2019, including $204.0 million of senior secured convertible notes, was $213.2 million.  

Conference Call Information for Today, Tuesday, Nov. 5 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 the call, dial +1 844-229-7593 (domestic) or +1 314-888-4258 (international) and reference conference ID # 2225657. 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 # 2225657. 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 TV 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 product development and innovation, organizational restructuring, the company's ability to achieve breakeven operating cash flow in 2019, strategic plans, future prospects and market opportunities, and value creation for the company's stakeholders. 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) and adjusted EBITDA, 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 and per share data)






As of


As of


September 30, 2019


December 31, 2018


(Unaudited)



Assets




Current assets:




Cash and cash equivalents

$

53,839



$

44,096


Restricted cash

4,651



6,102


Accounts receivable, net of allowances of $2,182 and $1,597, respectively

59,417



75,609


Prepaid expenses and other current assets

16,217



19,972


Total current assets

134,124



145,779


Property and equipment, net

32,609



27,339


Operating right-of-use assets

37,923




Other non-current assets

2,363



8,898


Deferred tax assets

2,521



3,991


Intangible assets, net

86,483



126,945


Goodwill

415,806



641,191


Total assets

$

711,829



$

954,143


Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$

44,921



$

29,836


Accrued expenses

48,108



58,140


Accrued litigation settlements

6,750



3,500


Contract liability

51,852



64,189


Customer advances

7,706



6,688


Warrants liability

5,905




Current operating lease liabilities

6,784




Other current liabilities

3,788



6,583


Total current liabilities

175,814



168,936


Financing derivatives

23,200



26,100


Senior secured convertible notes

182,744



177,342


Non-current operating lease liabilities

44,171




Deferred rent



10,304


Deferred tax liabilities

325



5,527


Other non-current liabilities

20,355



14,367


Total liabilities

446,609



402,576


Commitments and contingencies




Stockholders' equity:




Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at September 30, 2019 and December 31, 2018; no shares issued or outstanding as of September 30, 2019 and December 31, 2018




Common stock, $0.001 par value per share; 150,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 70,955,367 shares issued and 64,190,571 shares outstanding as of September 30, 2019, and 66,154,626 shares issued and 59,389,830 shares outstanding as of December 31, 2018

64



59


Additional paid-in capital

1,595,402



1,561,208


Accumulated other comprehensive loss

(13,515)



(10,621)


Accumulated deficit

(1,086,747)



(769,095)


Treasury stock, at cost, 6,764,796 shares as of September 30, 2019 and December 31, 2018

(229,984)



(229,984)


Total stockholders' equity

265,220



551,567


Total liabilities and stockholders' equity

$

711,829



$

954,143


 

COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share data)








Three Months Ended September 30,


Nine Months Ended September 30,



2019


2018


2019


2018

Revenues


$

94,300



$

102,864



$

293,482



$

310,172











Cost of revenues (1) (2)


47,390



49,446



152,791



148,226


Selling and marketing (1) (2)


20,421



24,866



68,590



80,418


Research and development (1) (2)


14,064



18,742



49,163



58,347


General and administrative (1) (2)


14,064



18,707



50,541



66,067


Investigation and audit related


980



696



4,176



37,446


Amortization of intangible assets


6,970



7,896



23,151



24,706


Impairment of goodwill






224,272




Impairment of intangible asset






17,308




Settlement of litigation, net


(2,100)





2,900



5,250


Restructuring (1)


2,270



51



5,149



5,141


Total expenses from operations


104,059



120,404



598,041



425,601


Loss from operations


(9,759)



(17,540)



(304,559)



(115,429)


Interest expense, net


(8,175)



(4,682)



(23,176)



(11,711)


Other income (expense), net


6,733



(1,711)



6,621



(827)


Gain (loss) from foreign currency transactions


1,194



(304)



768



(181)


Loss before income taxes


(10,007)



(24,237)



(320,346)



(128,148)


Income tax (provision) benefit


(552)



(400)



2,740



(3,916)


Net loss


$

(10,559)



$

(24,637)



$

(317,606)



$

(132,064)


Net loss per common share:









Basic and diluted


$

(0.16)



$

(0.42)



$

(5.16)



$

(2.32)


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









Basic and diluted


64,157,167



58,212,306



61,603,357



56,877,186


Comprehensive loss:









Net loss


$

(10,559)



$

(24,637)



$

(317,606)



$

(132,064)


Other comprehensive loss:









Foreign currency cumulative translation adjustment


(2,950)



(429)



(2,894)



(2,789)


Total comprehensive loss


$

(13,509)



$

(25,066)



$

(320,500)



$

(134,853)











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



Three Months Ended September 30,


Nine Months Ended September 30,



2019


2018


2019


2018

Cost of revenues


$

396



$

1,248



$

1,880



$

5,235


Selling and marketing


756



1,860



3,159



8,227


Research and development


469



1,137



1,863



5,453


General and administrative


1,392



2,066



7,368



12,276


Restructuring


129





(137)




Total stock-based compensation expense


$

3,142



$

6,311



$

14,133



$

31,191




(2) 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)




Nine Months Ended September 30,


2019


2018

Operating activities:




Net loss

$

(317,606)



$

(132,064)


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




Depreciation

9,447



12,974


Non-cash operating lease expense

3,987




Amortization expense of finance leases

1,974




Amortization of intangible assets

23,151



24,706


Impairment of goodwill

224,272




Impairment of intangible asset

17,308




Stock-based compensation

14,133



31,191


Deferred tax (benefit) provision

(3,951)



2,828


Change in fair value of financing derivatives

(2,900)



10,141


Change in fair value of warrant liability

(4,893)




Change in fair value of investment in equity securities

2,324



(307)


Non-cash interest expense on senior secured convertible notes

17,374




Accretion of debt discount

4,607



3,327


Amortization of deferred financing costs

795



703


Other

657



560


Changes in operating assets and liabilities:




Accounts receivable

14,951



19,480


Prepaid expenses and other assets

2,115



3,502


Accounts payable, accrued expenses, accrued litigation settlements and other liabilities

6,913



(22,449)


Contract liability and customer advances

(11,748)



(28,531)


Operating lease liabilities

(6,034)




Net cash used in operating activities

(3,124)



(73,939)






Investing activities:




Proceeds from sale of investment in equity securities

3,776




Purchases of property and equipment

(2,810)



(2,183)


Capitalized internal-use software costs

(8,800)



(7,447)


Net cash used in investing activities

(7,834)



(9,630)






Financing activities:




Proceeds from borrowings on senior secured convertible notes



100,000


Debt issuance costs



(5,132)


Proceeds from private placement, net of issuance costs paid

19,769




Financing proceeds received on subscription receivable



7,998


Proceeds from sale-leaseback financing transaction

4,252




Proceeds from the exercise of stock options

1,191



2,855


Payments for taxes related to net share settlement of equity awards

(1,227)



(4,663)


Principal payments on finance leases

(2,080)




Principal payments on capital lease and software license arrangements

(1,997)



(7,260)


Net cash provided by financing activities

19,908



93,798


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

(658)



(1,140)


Net increase in cash, cash equivalents and restricted cash

8,292



9,089


Cash, cash equivalents and restricted cash at beginning of period

50,198



45,125


Cash, cash equivalents and restricted cash at end of period

$

58,490



$

54,214







As of September 30,


2019


2018

Cash and cash equivalents

$

53,839



$

47,876


Restricted cash

4,651



6,338


Total cash, cash equivalents and restricted cash

$

58,490



$

54,214


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 September 30,


Nine Months Ended September 30,

(In thousands)

2019
(Unaudited)


2018
(Unaudited)


2019
(Unaudited)


2018
(Unaudited)

Net loss (GAAP)

$

(10,559)



$

(24,637)



$

(317,606)



$

(132,064)










Income tax provision (benefit)

552



400



(2,740)



3,916


Interest expense, net

8,175



4,682



23,176



11,711


Depreciation

3,336



4,135



9,447



12,974


Amortization expense of finance leases

613





1,974




Amortization of intangible assets

6,970



7,896



23,151



24,706


EBITDA

9,087



(7,524)



(262,598)



(78,757)










Adjustments:








Stock-based compensation

3,013



6,311



14,270



31,191


Investigation and audit related

980



696



4,176



37,446


Settlement of litigation, net

(2,100)





2,900



5,250


Restructuring

2,270



51



5,149



5,141


Impairment of goodwill





224,272




Impairment of intangible asset





17,308




Private placement issuance cost (1)

(416)





738




Other (income) expense, net (2)

(6,385)



5,699



(5,469)



9,834


Adjusted EBITDA

$

6,449



$

5,233



$

746



$

10,105



(1) In the second quarter of 2019, we recorded $2.8 million in accrued transaction costs, of which $1.2 million was allocated to the warrants liability and recorded in general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The remaining transaction costs of $1.6 million were recorded in additional paid-in capital in the Condensed Consolidated Balance Sheet. In the third quarter of 2019, we recorded a $1.0 million adjustment due to a change in our estimate of transaction costs by decreasing general and administrative expenses by $0.4 million and additional paid-in capital by $0.6 million.

(2) Adjustments to other (income) expense, net, reflect non-cash changes in the fair value of financing derivatives, warrants liability and equity securities investment included in other income (expense), net on our Condensed Consolidated Statements of Operations and Comprehensive Loss.

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


Three Months Ended September 30,


Nine Months Ended September 30,

(In thousands)

2019
(Unaudited)


2018
(Unaudited)


2019
(Unaudited)


2018
(Unaudited)

Net loss (GAAP)

$

(10,559)



$

(24,637)



$

(317,606)



$

(132,064)










Adjustments:








Stock-based compensation

3,013



6,311



14,270



31,191


Investigation and audit related

980



696



4,176



37,446


Amortization of intangible assets (1)

6,970



7,896



23,151



24,706


Settlement of litigation, net

(2,100)





2,900



5,250


Restructuring

2,270



51



5,149



5,141


Impairment of goodwill





224,272




Impairment of intangible asset





17,308




Private placement issuance cost (2)

(416)





738




Other (income) expense, net (3)

(6,385)



5,699



(5,469)



9,834


Non-GAAP net loss

$

(6,227)



$

(3,984)



$

(31,111)



$

(18,496)



(1) In the fourth quarter of 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.

(2) In the second quarter of 2019, we recorded $2.8 million in accrued transaction costs, of which $1.2 million was allocated to the warrants liability and recorded in general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The remaining transaction costs of $1.6 million were recorded in additional paid-in capital in the Condensed Consolidated Balance Sheet. In the third quarter of 2019, we recorded a $1.0 million adjustment due to a change in our estimate of transaction costs by decreasing general and administrative expenses by $0.4 million and additional paid-in capital by $0.6 million.

(3) Adjustments to other (income) expense, net, reflect non-cash changes in the fair value of financing derivatives, warrants liability and equity securities investment included in other income (expense), net on our Condensed Consolidated Statements of Operations and Comprehensive Loss.

We do not provide GAAP net income (loss) on a forward-looking basis because we are unable to predict with reasonable certainty our future stock-based compensation expense, investigation, audit-related and litigation expense, fair value adjustments for financing derivatives and warrants, variable interest expense for outstanding senior secured convertible notes, and any unusual gains or losses without unreasonable effort. These items are uncertain, depend on various factors, and could be material to results computed in accordance with GAAP. For this reason, we are unable without unreasonable effort to provide a reconciliation of adjusted EBITDA or non-GAAP net loss to the most directly comparable GAAP measure, GAAP net income (loss), on a forward-looking basis.

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 September 30,


2019

(Unaudited)


2018

(Unaudited)

(In thousands)

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

$

94,300







100.0

%


$

102,864







100.0

%

Cost of revenues

47,390



$

396



$

46,994



49.8

%


49,446



$

1,248



$

48,198



46.9

%

Gross profit

46,910



(396)



47,306



50.2

%


53,418



(1,248)



54,666



53.1

%

Selling and marketing

20,421



756



19,665



20.9

%


24,866



1,860



23,006



22.4

%

Research and development

14,064



469



13,595



14.4

%


18,742



1,137



17,605



17.1

%

General and administrative

14,064



1,392



12,672



13.4

%


18,707



2,066



16,641



16.2

%

Restructuring

2,270



129



2,141



2.3

%


51





51



%




Nine Months Ended September 30,


2019

(Unaudited)


2018

(Unaudited)

(In thousands)

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

$

293,482







100.0

%


$

310,172







100.0

%

Cost of revenues

152,791



$

1,880



$

150,911



51.4

%


148,226



$

5,235



$

142,991



46.1

%

Gross profit

140,691



(1,880)



142,571



48.6

%


161,946



(5,235)



167,181



53.9

%

Selling and marketing

68,590



3,159



65,431



22.3

%


80,418



8,227



72,191



23.3

%

Research and development

49,163



1,863



47,300



16.1

%


58,347



5,453



52,894



17.1

%

General and administrative

50,541



7,368



43,173



14.7

%


66,067



12,276



53,791



17.3

%

Restructuring

5,149



(137)



5,286



1.8

%


5,141





5,141



1.7

%

We do not provide GAAP cost of revenues, selling and marketing, research and development, general and administrative, and restructuring expense on a forward-looking basis because we are unable to predict with reasonable certainty our future stock-based compensation expense without unreasonable effort. Stock-based compensation expense is uncertain, depends on various factors, and could be material to results computed in accordance with GAAP. For this reason, we are unable without unreasonable effort to provide a reconciliation of non-GAAP operating expense to the most directly comparable GAAP measure on a forward-looking basis.

Revenues

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


Three Months Ended September 30,





(In thousands)

2019
(Unaudited)


% of
Revenue


2018
(Unaudited)


% of
Revenue


$ Variance


% Variance

Ratings and Planning

$

65,334



69.3

%


$

70,499



68.4

%


$

(5,165)



(7.3)

%

Analytics and Optimization

18,252



19.3

%


22,215



21.6

%


(3,963)



(17.8)

%

Movies Reporting and Analytics

10,714



11.4

%


10,150



10.0

%


564



5.6

%

Total revenues

$

94,300



100

%


$

102,864



100

%


$

(8,564)



(8.3)

%








Nine Months Ended September 30,





(In thousands)

2019
(Unaudited)


% of
Revenue


2018
(Unaudited)


% of
Revenue


$ Variance


% Variance

Ratings and Planning

$

204,833



69.8

%


$

210,569



67.9

%


$

(5,736)



(2.7)

%

Analytics and Optimization

57,003



19.4

%


68,479



22.1

%


(11,476)



(16.8)

%

Movies Reporting and Analytics

31,646



10.8

%


31,124



10.0

%


522



1.7

%

Total revenues

$

293,482



100

%


$

310,172



100

%


$

(16,690)



(5.4)

%

 

Cision

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