comScore Reports Record First Quarter 2010 Results

RESTON, Va., April 28 /PRNewswire-FirstCall/ -- comScore, Inc. (Nasdaq: SCOR), a leader in measuring the digital world, today announced record financial results for the first quarter of fiscal 2010.  

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Revenue in the first quarter of 2010 was a quarterly record $36.1 million, an increase of 18% over the first quarter of 2009.  GAAP income before income taxes was $1.3 million in the first quarter of 2010, compared to $1.5 million in the first quarter of 2009.  GAAP net income was $0.2 million, or $0.01 per diluted share, in the first quarter of 2010, compared to GAAP net income of $0.3 million, or $0.01 per diluted share, in the first quarter of 2009.  Non-GAAP net income in the first quarter of 2010 was $5.0 million, or $0.16 per diluted share, compared to non-GAAP net income of $4.2 million, or $0.14 per diluted share, in the first quarter of 2009.  Adjusted EBITDA was $6.8 million in the first quarter of 2010, compared to adjusted EBITDA of $5.4 million in the first quarter of 2009, an increase of 26%.

Dr. Magid Abraham, comScore's president and chief executive officer said, "We had a strong start to 2010 with revenue, GAAP income before income taxes and adjusted EBITDA exceeding our prior guidance.  The momentum we saw late in 2009 continued in the first quarter of 2010 in all our major product and vertical industry sectors. In particular, customer interest and sales activity in our Media Metrix 360 audience measurement product was high.  We saw particularly strong results in the consumer packaged goods, pharmaceuticals, financial services and telecom industry verticals.  Similarly, our comScore Ad Effx™ suite of advertising measurement products saw healthy revenue growth, with on-line advertising trends continuing to show signs of improvement.  On the international front, we saw very strong revenue growth, with an increase of 35% versus a year ago, reflecting the growing demand for our products outside the U.S.  Also during the first quarter, we completed our acquisition of ARSgroup, which will provide us with technology-driven market research capabilities for measuring the effectiveness of advertising creative content. These additional resources will allow us to create new products and tools for designing and measuring more effective advertising in TV, online, and cross media campaigns."  

"Strong customer and market activity levels in the first quarter of 2010 are also reflected by the growth in our customer count.  We added a total of 76 net new customers in the quarter, 13 of which were net new additions for comScore through our acquisition of ARSgroup.  The remaining 63 net customer additions for comScore represents an almost 400% increase from the same quarter last year.  These new customer gains, coupled with increased sales penetration among existing customers, contributed to our strong revenue growth of 18% year over year and 7% over the fourth quarter of 2009.  Deferred revenues grew by 17% year over year and by 7% over the fourth quarter of 2009, to $51.5 million.  Our subscription renewal rates again improved sequentially and exceeded our historical average annual rate of 90%, as measured by revenue dollars.  While our subscription revenues grew by 17% compared to the first quarter of 2009, our project revenues have recovered to $5.2 million, representing a 27% annual growth.   Finally, we achieved record free cash flow of $13.1 million, which represents a 161% sequential growth over the fourth quarter of 2009."  

"In summary, we are delighted by an all around strong quarter, which we attribute to an improved industry environment, as well as a continued strengthening in our market position. We anticipate this to continue in the second quarter and the full year."

Financial Outlook

Dr. Magid Abraham, comScore's president and chief executive officer, said, "Given the positive results of this most recent quarter, we are now more optimistic about our prospects for full-year 2010.  As such, we are raising our expectations for annual revenue growth from our previously announced range of 21% to 25% to a higher range of 24% to 28%, while continuing to expect adjusted EBITDA margins at the same levels we experienced during 2009."

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 income 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, April 28, 2010 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 marketing intelligence. 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 net income, which excludes stock-based compensation, amortization of acquired intangible assets, impairment of marketable securities, costs from acquisitions and restructurings, and the non-cash, deferred tax provision.  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 and interest income (expenses), net.  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 our 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 as a key indicator of the company's operating cash flow performance net of capital outlays.

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 income before income taxes is set forth in the attachment to this press release.

Cautionary Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, comScore's expectations regarding the continued growth of its customer base; expectations regarding customer advertising and marketing activity and its expected effect on comScore's sales; expectations regarding the impact and financial benefits of certain products, including Media Metrix 360 and the comScore AdEffx™ suite of advertising measurement products; expectations regarding the acquisition of ARSgroup and the resulting impact, opportunities and benefits to comScore; expectations regarding sales penetration of  existing customers; expectations and forecasts of future financial performance, including related growth rates and components thereof; assumptions related to the market and economic environment and assumptions related to growth for the second quarter and the full year 2010. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: comScore's ability to retain existing large customers and obtain new large customers; risks related to the domestic and global economies and the effects they may have on comScore, its industry or its customers; comScore's ability to manage its growth, including through acquisitions; 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 effectively expand sales and marketing; 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.