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RESTON, Va., Nov. 6, 2023 /PRNewswire/ -- Comscore, Inc. (Nasdaq: SCOR), a trusted partner for planning, transacting, and evaluating media across platforms, today reported financial results for the quarter ended September 30, 2023.
Q3 2023 Financial Highlights
"Despite challenging end-markets that impacted revenue in the quarter, we delivered double-digit growth in local TV, more than 20% growth in Activation and Comscore Campaign Ratings, and a significant increase in profitability and adjusted EBITDA. As we close out 2023 and look to 2024, we will continue to leverage Comscore's complete view of audiences across platforms to deliver value for our clients and shareholders," said Jon Carpenter, CEO of Comscore.
Third Quarter Summary Results
Revenue in the third quarter was $91.0 million, down 1.9% from $92.8 million in Q3 2022. Digital Ad Solutions revenue declined 3.6% from Q3 2022, primarily due to the timing of deliverables for certain custom digital products and lower revenue from our syndicated digital products, partially offset by increased usage of our Activation product and growth in Comscore Campaign Ratings (CCR). On a combined basis, Activation and CCR delivered growth rates of 23% for the quarter and 26% year to date compared to 2022. Cross Platform Solutions revenue was up 0.2% from Q3 2022, driven by continued double-digit growth in local TV revenue, offset by lower national TV revenue. Movies revenue was flat compared to the prior year quarter.
Our core operating expenses, which include cost of revenues, sales and marketing, research and development and general and administrative expenses, were $86.3 million, a decrease of 4.5% compared to $90.4 million in Q3 2022. The primary driver of the decline was employee compensation, which decreased from ongoing restructuring efforts and a higher amount of capitalization related to internally developed software as we increased our focus on product infrastructure and innovation in 2023. We also abandoned two office spaces during the quarter, which resulted in a non-cash impairment charge of $1.5 million.
Net income was $2.6 million in Q3 2023, compared to net loss of $52.4 million in Q3 2022, resulting in net income (loss) margins of 2.9% and (56.5)% of revenue, respectively. After accounting for dividends on our convertible preferred stock, loss per share attributable to common shares was $(0.02) and $(0.60) for Q3 2023 and Q3 2022, respectively.
Non-GAAP adjusted EBITDA for the quarter was $13.4 million, compared to $11.7 million in Q3 2022, resulting in adjusted EBITDA margins of 14.7% and 12.6%, respectively. Excluding the impact of foreign currency transactions, FX adjusted EBITDA for the quarter was $12.3 million, compared to $8.9 million in Q3 2022. Adjusted EBITDA and adjusted EBITDA margin exclude stock-based compensation, amortization of cloud-computing implementation costs, restructuring costs, change in fair value of contingent consideration and warrants liability, impairment of goodwill, impairment of right-of-use and long-lived assets, transformation costs (added in Q3 2023 and applied to prior periods), and other items as presented in the accompanying tables. FX adjusted EBITDA excludes these items as well as gain/loss from foreign currency transactions.
Balance Sheet and Liquidity
As of September 30, 2023, cash, cash equivalents and restricted cash totaled $30.3 million. Total debt principal, including $16.0 million in outstanding borrowings under our senior secured revolving credit agreement, was $21.0 million.
2023 Outlook
Based on current trends and expectations, we believe full-year 2023 revenue will be flat to down 1% compared to 2022 and are reaffirming our guidance for an adjusted EBITDA margin in the double digits.
We do not provide GAAP net income (loss) or net income (loss) margin on a forward-looking basis because we are unable to predict with reasonable certainty our future stock-based compensation expense, fair value adjustments, variable interest expense, litigation and restructuring expense 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 adjusted EBITDA margin to the most directly comparable GAAP measures, GAAP net income (loss) and net income (loss) margin, on a forward-looking basis.
Conference Call Information for Today, Monday, November 6, 2023 at 5:00 p.m. ET
Management will host a conference call to discuss the results on Monday, November 6, 2023 at 5:00 p.m. ET. The live audio webcast along with supplemental information will be accessible at ir.comscore.com/events-presentations. Participants can obtain dial-in information by registering for the call at the same web address and are advised to register in advance of the call to avoid delays. Following the conference call, a replay will be available via webcast at ir.comscore.com/events-presentations.
About Comscore
Comscore is a global, 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 empowers media buyers and sellers to quantify their multiscreen behavior and make meaningful 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, our expectations, forecasts, plans and opinions regarding expected revenue and adjusted EBITDA margin for 2023, growth areas, strategic and financial focus areas, economic and industry trends, value delivery to clients and shareholders, product infrastructure and innovation, and restructuring plans. These statements involve risks and uncertainties that could cause actual events to differ materially from expectations, including, but not limited to, changes in our business and customer, partner and vendor relationships; external market conditions and competition; changes or declines in ad spending or other macroeconomic factors; evolving privacy and regulatory standards; and our ability to achieve our expected strategic, financial and operational plans, including the restructuring plan we announced in September 2022. For additional discussion of risk factors, please refer to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and other filings that we make 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. We do not intend or undertake, and expressly disclaim, 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 in this press release adjusted EBITDA, adjusted EBITDA margin and FX 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), net income (loss) margin, 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, net income (loss) and net income (loss) margin. These reconciliations should be carefully evaluated.
MediaKai HeslopKCSA Strategic Communicationscomscore@kcsa.com | InvestorsJohn TinkerComscore, Inc.212-203-2129jtinker@comscore.com |
COMSCORE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS | |||
As of | As of | ||
September 30, 2023 | December 31, 2022 | ||
(In thousands, except share and par value data) | (Unaudited) | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 30,067 | $ 20,044 | |
Restricted cash | 186 | 398 | |
Accounts receivable, net of allowances of $496 and $798, respectively | 46,469 | 68,457 | |
Prepaid expenses and other current assets | 13,893 | 15,922 | |
Total current assets | 90,615 | 104,821 | |
Property and equipment, net | 41,401 | 36,367 | |
Operating right-of-use assets | 19,750 | 23,864 | |
Deferred tax assets | 3,075 | 3,351 | |
Intangible assets, net | 8,915 | 13,327 | |
Goodwill | 343,542 | 387,973 | |
Other non-current assets | 11,541 | 10,883 | |
Total assets | $ 518,839 | $ 580,586 | |
Liabilities, Convertible Redeemable Preferred Stock and Stockholders' Equity | |||
Current liabilities: | |||
Accounts payable | $ 32,382 | $ 29,090 | |
Accrued expenses | 35,777 | 43,393 | |
Contract liabilities | 50,901 | 52,944 | |
Revolving line of credit | 16,000 | — | |
Accrued dividends | 19,846 | 7,863 | |
Customer advances | 7,595 | 11,527 | |
Current portion of contingent consideration | 3,676 | 7,134 | |
Current operating lease liabilities | 7,954 | 7,639 | |
Other current liabilities | 4,742 | 5,501 | |
Total current liabilities | 178,873 | 165,091 | |
Non-current operating lease liabilities | 24,903 | 29,588 | |
Non-current portion of accrued data costs | 30,647 | 25,106 | |
Non-current revolving line of credit | — | 16,000 | |
Deferred tax liabilities | 1,832 | 2,127 | |
Other non-current liabilities | 9,133 | 10,627 | |
Total liabilities | 245,388 | 248,539 | |
Commitments and contingencies | |||
Convertible redeemable preferred stock, $0.001 par value; 100,000,000 shares authorized and 82,527,609 shares issued and outstanding as of September 30, 2023 and 82,527,609 shares authorized, issued and outstanding as of December 31, 2022; aggregate liquidation preference of $223,846 as of September 30, 2023, and $211,863 as of December 31, 2022 | 187,885 | 187,885 | |
Stockholders' equity: | |||
Preferred stock, $0.001 par value; 5,000,000 shares authorized as of September 30, 2023 and 7,472,391 shares authorized as of December 31, 2022; no shares issued or outstanding as of September 30, 2023 or December 31, 2022 | — | — | |
Common stock, $0.001 par value; 275,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 101,851,130 shares issued and 95,086,334 shares outstanding as of September 30, 2023, and 98,869,738 shares issued and 92,104,942 shares outstanding as of December 31, 2022 | 95 | 92 | |
Additional paid-in capital | 1,695,998 | 1,690,783 | |
Accumulated other comprehensive loss | (16,809) | (15,940) | |
Accumulated deficit | (1,363,734) | (1,300,789) | |
Treasury stock, at cost, 6,764,796 shares as of September 30, 2023 and December 31, 2022 | (229,984) | (229,984) | |
Total stockholders' equity | 85,566 | 144,162 | |
Total liabilities, convertible redeemable preferred stock and stockholders' equity | $ 518,839 | $ 580,586 | |
COMSCORE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
(In thousands, except share and per share data) | 2023 | 2022 | 2023 | 2022 | |||
Revenues | $ 91,000 | $ 92,783 | $ 276,242 | $ 278,183 | |||
Cost of revenues (1) (2) | 50,473 | 51,530 | 155,360 | 155,915 | |||
Selling and marketing (1) (2) | 14,794 | 17,199 | 48,984 | 51,850 | |||
Research and development (1) (2) | 8,083 | 8,741 | 25,792 | 28,190 | |||
General and administrative (1) (2) | 12,928 | 12,899 | 39,776 | 48,119 | |||
Amortization of intangible assets | 800 | 6,772 | 4,412 | 20,323 | |||
Impairment of right-of-use and long-lived assets | 1,502 | — | 1,502 | — | |||
Restructuring | 353 | 5,784 | 5,455 | 5,784 | |||
Impairment of goodwill | — | 46,300 | 44,100 | 46,300 | |||
Total expenses from operations | 88,933 | 149,225 | 325,381 | 356,481 | |||
Income (loss) from operations | 2,067 | (56,442) | (49,139) | (78,298) | |||
Other income, net | 628 | 1,477 | 425 | 8,467 | |||
Gain (loss) from foreign currency transactions | 1,090 | 2,781 | (544) | 5,728 | |||
Interest expense, net | (426) | (284) | (1,141) | (660) | |||
Income (loss) before income taxes | 3,359 | (52,468) | (50,399) | (64,763) | |||
Income tax (provision) benefit | (741) | 86 | (563) | (1,945) | |||
Net income (loss) | $ 2,618 | $ (52,382) | $ (50,962) | $ (66,708) | |||
Net loss available to common stockholders: | |||||||
Net income (loss) | $ 2,618 | $ (52,382) | $ (50,962) | $ (66,708) | |||
Convertible redeemable preferred stock dividends | (4,286) | (3,910) | (11,983) | (11,603) | |||
Total net loss available to common stockholders | $ (1,668) | $ (56,292) | $ (62,945) | $ (78,311) | |||
Net loss per common share: | |||||||
Basic and diluted | $ (0.02) | $ (0.60) | $ (0.66) | $ (0.85) | |||
Weighted-average number of shares used in per share calculation - Common Stock: | |||||||
Basic and diluted | 97,709,191 | 93,347,017 | 95,704,106 | 92,380,984 | |||
Comprehensive income (loss): | |||||||
Net income (loss) | $ 2,618 | $ (52,382) | $ (50,962) | $ (66,708) | |||
Other comprehensive loss: | |||||||
Foreign currency cumulative translation adjustment | (2,267) | (4,553) | (869) | (9,638) | |||
Total comprehensive income (loss) | $ 351 | $ (56,935) | $ (51,831) | $ (76,346) | |||
(1) Excludes amortization of intangible assets, which is presented as a separate line item. | |||||||
(2) Stock-based compensation expense is included in the line items above as follows: | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2023 | 2022 | 2022 | 2022 | ||||
Cost of revenues | $ 113 | $ 155 | $ 435 | $ 877 | |||
Selling and marketing | 96 | 132 | 411 | 804 | |||
Research and development | 85 | 116 | 333 | 627 | |||
General and administrative | 747 | 1,013 | 2,640 | 4,906 | |||
Total stock-based compensation expense | $ 1,041 | $ 1,416 | $ 3,819 | $ 7,214 | |||
COMSCORE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||
Nine Months Ended September 30, | |||
(In thousands) | 2023 | 2022 | |
Operating activities: | |||
Net loss | $ (50,962) | $ (66,708) | |
Adjustments to reconcile to net cash provided by operating activities: | |||
Impairment of goodwill | 44,100 | 46,300 | |
Depreciation | 14,613 | 12,542 | |
Amortization of intangible assets | 4,412 | 20,323 | |
Non-cash operating lease expense | 4,196 | 4,540 | |
Stock-based compensation expense | 3,819 | 7,214 | |
Impairment of right-of-use and long-lived assets | 1,502 | — | |
Amortization expense of finance leases | 1,268 | 1,875 | |
Change in fair value of contingent consideration liability | 252 | 2,447 | |
Change in fair value of warrants liability | (407) | (8,471) | |
Deferred tax benefit | (61) | (90) | |
Other | 1,295 | 1,456 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | 21,899 | 22,143 | |
Prepaid expenses and other assets | 132 | (1,081) | |
Accounts payable, accrued expenses and other liabilities | (2,779) | 3,159 | |
Contract liabilities and customer advances | (7,013) | (3,448) | |
Operating lease liabilities | (5,981) | (5,665) | |
Net cash provided by operating activities | 30,285 | 36,536 | |
Investing activities: | |||
Capitalized internal-use software costs | (16,609) | (12,402) | |
Purchases of property and equipment | (1,240) | (823) | |
Net cash used in investing activities | (17,849) | (13,225) | |
Financing activities: | |||
Principal payments on finance leases | (1,337) | (2,004) | |
Contingent consideration payment at initial value | (1,037) | — | |
Payments for dividends on convertible redeemable preferred stock | — | (15,512) | |
Other | (276) | (61) | |
Net cash used in financing activities | (2,650) | (17,577) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 25 | (2,502) | |
Net increase in cash, cash equivalents and restricted cash | 9,811 | 3,232 | |
Cash, cash equivalents and restricted cash at beginning of period | 20,442 | 22,279 | |
Cash, cash equivalents and restricted cash at end of period | $ 30,253 | $ 25,511 | |
As of September 30, | |||
2023 | 2022 | ||
Cash and cash equivalents | $ 30,067 | $ 25,086 | |
Restricted cash | 186 | 425 | |
Total cash, cash equivalents and restricted cash | $ 30,253 | $ 25,511 | |
Reconciliation of Non-GAAP Financial Measures The following table presents a reconciliation of GAAP net income (loss) and net income (loss) margin to non-GAAP adjusted EBITDA, adjusted EBITDA margin and non-GAAP FX adjusted EBITDA for each of the periods identified: | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
(In thousands) | 2023 (Unaudited) | 2022 (Unaudited) | 2023 (Unaudited) | 2022 (Unaudited) | |||
GAAP net income (loss) | $ 2,618 | $ (52,382) | $ (50,962) | $ (66,708) | |||
Depreciation | 5,020 | 4,186 | 14,613 | 12,542 | |||
Income tax provision (benefit) | 741 | (86) | 563 | 1,945 | |||
Amortization of intangible assets | 800 | 6,772 | 4,412 | 20,323 | |||
Interest expense, net | 426 | 284 | 1,141 | 660 | |||
Amortization expense of finance leases | 419 | 515 | 1,268 | 1,875 | |||
EBITDA | 10,024 | (40,711) | (28,965) | (29,363) | |||
Adjustments: | |||||||
Impairment of right-of-use and long-lived assets | 1,502 | — | 1,502 | — | |||
Stock-based compensation expense | 1,041 | 1,416 | 3,819 | 7,214 | |||
Transformation costs (1) | 653 | — | 753 | 460 | |||
Amortization of cloud-computing implementation costs | 360 | 358 | 1,078 | 1,076 | |||
Restructuring | 353 | 5,784 | 5,455 | 5,784 | |||
Change in fair value of contingent consideration liability | 97 | 44 | 252 | 2,447 | |||
Other income, net(2) | (634) | (1,476) | (407) | (8,464) | |||
Impairment of goodwill | — | 46,300 | 44,100 | 46,300 | |||
Non-GAAP adjusted EBITDA | $ 13,396 | $ 11,715 | $ 27,587 | $ 25,454 | |||
Net income (loss) margin(3) | 2.9 % | (56.5) % | (18.4) % | (24.0) % | |||
Non-GAAP adjusted EBITDA margin (4) | 14.7 % | 12.6 % | 10.0 % | 9.2 % | |||
Adjustments: | |||||||
(Gain) loss from foreign currency transactions | (1,090) | (2,781) | 544 | (5,728) | |||
Non-GAAP FX adjusted EBITDA | $ 12,306 | $ 8,934 | $ 28,131 | $ 19,726 | |||
(1) Transformation costs represent expenses incurred prior to formal launch of identified strategic projects with anticipated long-term benefits to the company. These costs generally relate to third-party consulting and non-capitalizable technology costs tied directly to the identified projects. We added transformation costs as an adjustment in Q3 2023 for greater transparency around these costs and have applied the adjustment to prior periods for comparison. |
(2) Adjustments to other income, net reflects non-cash changes in the fair value of warrants liability included in other income, net on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). |
(3) Net income (loss) margin is calculated by dividing net income (loss) by revenues reported on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the applicable period. |
(4) Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenues reported on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the applicable period. |
Revenues Revenues from our two offerings of products and services are as follows: | |||||||||||
Three Months Ended September 30, | |||||||||||
(In thousands) | 2023(Unaudited) | % of Revenue | 2022(Unaudited) | % of Revenue | $ Variance | % Variance | |||||
Digital Ad Solutions | $ 50,501 | 55.5 % | $ 52,360 | 56.4 % | $ (1,859) | (3.6) % | |||||
Cross Platform Solutions(1) | 40,499 | 44.5 % | 40,423 | 43.6 % | 76 | 0.2 % | |||||
Total revenues | $ 91,000 | 100.0 % | $ 92,783 | 100.0 % | $ (1,783) | (1.9) % | |||||
(1) Cross Platform Solutions revenue includes revenue from our movies business, which was $8.7 million in the third quarter of 2022 and 2023. | |||||||||||
Nine Months Ended September 30, | |||||||||||
(In thousands) | 2023(Unaudited) | % of Revenue | 2022(Unaudited) | % of Revenue | $ Variance | % Variance | |||||
Digital Ad Solutions | $ 153,597 | 55.6 % | $ 157,127 | 56.5 % | $ (3,530) | (2.2) % | |||||
Cross Platform Solutions(1) | 122,645 | 44.4 % | 121,056 | 43.5 % | 1,589 | 1.3 % | |||||
Total revenues | $ 276,242 | 100.0 % | $ 278,183 | 100.0 % | $ (1,941) | (0.7) % | |||||
(1) Cross Platform Solutions revenue includes revenue from our movies business, which grew from $25.3 million in the nine months ended September 30, 2022 to $26.2 million in the nine months ended September 30, 2023. | |||||||||||
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SOURCE Comscore, Inc.
