EX-99.1 2 exhibit991pressreleaseq420.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1

image0a03.jpg

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 -- Comscore, Inc. (NASDAQ: 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.


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 (Nasdaq: 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.

Hattie Young, Comscore, 212-277-6577, press@comscore.com

Steve Calk or Jackie Marcus, Alpha IR Group, 312-445-2870, SCOR@alpha-ir.com




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.