8-K
COMSCORE, INC. (SCOR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 27, 2020
comScore, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-33520 | 54-1955550 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
11950 Democracy Drive
Suite 600
Reston, Virginia 20190
(Address of Principal Executive Offices)
(Zip Code)
(703) 438–2000
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
1
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
|---|---|---|
| Common Stock, par value $0.001 per share | SCOR | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
2
Item 2.02 Results of Operations and Financial Condition.
On February 27, 2020, comScore, Inc. (the "Company") issued a press release announcing its financial results for the period ended December 31, 2019. A copy of the press release announcing the foregoing is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 (the "Securities Act") or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated February 27, 2020 |
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| comScore, Inc. | |
|---|---|
| By: | /s/ Carol DiBattiste |
| Carol DiBattiste | |
| Chief Legal and Compliance Officer |
Date: February 27, 2020
4
Exhibit
Exhibit 99.1
FOR IMMEDIATE RELEASE
Comscore Reports Fourth Quarter and Full Year 2019 Results
Q4 Syndicated digital revenue stabilized on a sequential basis
Q4 Local TV revenue up 35% year-over-year
Comscore announces measurement agreement with Comcast
RESTON, Va., February 27, 2020 - Comscore, Inc. (Nasdaq: SCOR), a trusted partner for planning, transacting, and evaluating media across platforms, today reported financial results for the quarter and full year ended December 31, 2019.
Fourth Quarter 2019 Financial Highlights
| • | Revenue for the fourth quarter was $95.2 million compared to $109.3 million in the prior-year quarter |
|---|---|
| • | GAAP net loss of $21.4 million, or $(0.31) per share, compared to a net loss of $27.2 million, or $(0.46) per share in the year-ago quarter |
| --- | --- |
| • | Adjusted EBITDA for the fourth quarter was $5.5 million compared to $6.3 million in the prior-year quarter |
| --- | --- |
Full-Year 2019 Financial Highlights
| • | Revenue for 2019 was $388.6 million compared to $419.5 million in 2018 |
|---|---|
| • | GAAP net loss of $339.0 million, or $(5.33) per share, which includes impairment charges of $241.6 million, compared to $159.3 million, or $(2.76) per share in 2018 |
| --- | --- |
| • | Adjusted EBITDA of $6.2 million compared to $16.4 million in 2018 |
| --- | --- |
| • | Cash, cash equivalents and restricted cash of $66.8 million compared to $50.2 million as of December 31, 2018 |
| --- | --- |
Recent Key Renewals, Partnerships and New Business Developments
| • | Syndicated digital - Buzzfeed, iHeartMedia, Publishers Clearing House, Revolt Media and ViacomCBS |
|---|---|
| • | National TV - The Cowboy Channel and TargetSmart |
| --- | --- |
| • | Local TV - CBS Television, KRGV, Gray Television and Quincy Media |
| --- | --- |
| • | Movies - Paramount Pictures and Cinemex |
| --- | --- |
"Our fourth-quarter results demonstrate that our turnaround plan is working. We are encouraged by our operating performance, particularly in syndicated digital which showed improvement in the quarter, and local TV," said Bill Livek, CEO and Executive Vice Chairman of Comscore. "We will continue our focus on managing expenses while we shift our efforts towards revenue growth. Energy and enthusiasm from our customers accelerated in the last three months, and we are executing on our plan to deliver products that help our customers achieve better business outcomes."
"Today, we also are announcing a measurement agreement with Comcast that will greatly improve our direct measurement of television households across the U.S. It is a major step in our ongoing journey toward more precise measurement, helping us develop better products to serve our customers and drive revenue growth in the coming years," Livek concluded.
Fourth Quarter Summary Results
Total revenue in the fourth quarter of 2019 was $95.2 million, down from $109.3 million in the year-ago quarter.
Ratings and Planning revenue was $66.8 million in the fourth quarter of 2019, compared to $74.8 million in the year-ago quarter. The decrease compared to the same period in the prior year was the result of a decline in revenue from syndicated digital products and national TV. This was partially offset by local TV revenue, which increased 35% from the year-ago quarter.
Analytics and Optimization revenue was $17.7 million in the fourth quarter of 2019, compared to $23.9 million in the year-ago quarter. The decrease was related to lower digital custom marketing solution sales and Lift revenue compared to the prior-year period. This decrease was offset, in part, by higher revenue from Activation products.
Movies Reporting and Analytics revenue was $10.7 million in the fourth quarter of 2019, compared to $10.6 million in the year-ago quarter.
Net loss for the fourth quarter of 2019 was $21.4 million, or $(0.31) per share, compared to a net loss of $27.2 million, or $(0.46) per share reported in the year-ago quarter.
For the fourth quarter of 2019, non-GAAP adjusted EBITDA was $5.5 million, compared to $6.3 million in the year-ago quarter. Adjusted EBITDA excludes stock-based compensation expense; impairment charges; settlement of certain litigation; investigation, litigation and audit-related expense; restructuring expense; change in fair value of financing derivatives, warrants liability and equity securities investment; and other items as presented in the accompanying tables.
Full-Year Summary Results
Total revenue for the full year of 2019 was $388.6 million compared to $419.5 million in 2018.
Ratings and Planning revenue was $271.6 million compared to $285.4 million in the prior year, primarily driven by a decrease in revenue from syndicated digital products and national TV products, partially offset by higher local TV and cross-platform revenue.
Analytics and Optimization revenue was $74.7 million compared to $92.4 million in the prior year, primarily driven by lower sales and deliveries of digital custom solutions, survey and Lift products in 2019. The decrease was offset by increased revenue from Activation products, which continued to experience year-over-year growth.
Movies Reporting and Analytics revenue was $42.3 million compared to $41.7 million in the prior year due to growth in new product revenue.
GAAP net loss for the full year 2019 was $339.0 million, or $(5.33) per share, compared to a net loss of $159.3 million or $(2.76) per share in 2018. In 2019, the company took non-cash impairment charges totaling $241.6 million relating to an intangible asset and goodwill.
For the full year 2019, the company generated $6.2 million of non-GAAP adjusted EBITDA compared to $16.4 million in 2018.
Balance Sheet and Liquidity
As of December 31, 2019, cash, cash equivalents and restricted cash totaled $66.8 million, including $20.2 million in restricted cash. Total cash increased from $58.5 million as of September 30, 2019 due to $12.7 million in net proceeds from the issuance of a collateralized term note during the fourth quarter. Total debt principal as of December 31, 2019, including $204.0 million of senior secured convertible notes, was $225.6 million.
2020 Outlook
Based on current trends and expectations, the company believes full-year 2020 revenue will be in the range of $390 million to $410 million, driven by growth in TV and addressable advertising, and a slower decline to stabilization in syndicated digital revenue. The company expects an adjusted EBITDA margin of 7% to 10% of revenue for the full year 2020, based on the impact of 2019 cost reductions and a continued focus on expenses.
The company does not provide GAAP net income (loss) on a forward-looking basis because it is unable to predict with reasonable certainty its future stock-based compensation expense, litigation and restructuring expense, fair value adjustments for financing derivatives and warrants, variable interest 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, the company is unable without unreasonable effort to provide a reconciliation of adjusted EBITDA or adjusted EBITDA margin to the most directly comparable GAAP measure, GAAP net income (loss), on a forward-looking basis.
Conference Call Information for Today, Thursday, February 27 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 # 3437876. 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 # 3437876. 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 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 management's turnaround plan, improvement in the company's syndicated digital business, expense management, revenue growth, product development and delivery, the impact of the company's measurement agreement with Comcast, and 2020 revenue and adjusted EBITDA margin. 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, adjusted EBITDA margin and non-GAAP expense, 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.
Media
Neil Ripley
Comscore, Inc.
646-746-0579
press@comscore.com
Investors
Christopher Ferris
Comscore, Inc.
212-277-6547
cferris@comscore.com
COMSCORE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
| As of | As of | |||||
|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 46,590 | $ | 44,096 | ||
| Restricted cash | 20,183 | 6,102 | ||||
| Accounts receivable, net of allowances of $1,919 and $1,597, respectively | 71,853 | 75,609 | ||||
| Prepaid expenses and other current assets | 15,357 | 19,972 | ||||
| Total current assets | 153,983 | 145,779 | ||||
| Property and equipment, net | 31,693 | 27,339 | ||||
| Operating right-of-use assets | 36,689 | — | ||||
| Other non-current assets | 2,979 | 8,898 | ||||
| Deferred tax assets | 2,374 | 3,991 | ||||
| Intangible assets, net | 79,559 | 126,945 | ||||
| Goodwill | 416,418 | 641,191 | ||||
| Total assets | $ | 723,695 | $ | 954,143 | ||
| Liabilities and Stockholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 44,804 | $ | 29,836 | ||
| Accrued expenses | 55,507 | 58,140 | ||||
| Accrued litigation settlements | 3,575 | 3,500 | ||||
| Contract liability | 58,158 | 64,189 | ||||
| Customer advances | 9,886 | 6,688 | ||||
| Warrant liability | 7,725 | — | ||||
| Current operating lease liabilities | 6,764 | — | ||||
| Deferred rent | — | 1,884 | ||||
| Other current liabilities | 3,818 | 4,699 | ||||
| Total current liabilities | 190,237 | 168,936 | ||||
| Secured term note | 12,463 | — | ||||
| Financing derivatives | 21,587 | 26,100 | ||||
| Senior secured convertible notes | 184,075 | 177,342 | ||||
| Non-current operating lease liabilities | 42,497 | — | ||||
| Deferred rent | — | 10,304 | ||||
| Deferred tax liabilities | 287 | 5,527 | ||||
| Other non-current liabilities | 13,575 | 14,367 | ||||
| Total liabilities | 464,721 | 402,576 | ||||
| Commitments and contingencies | ||||||
| Stockholders’ equity: | ||||||
| Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at December 31, 2019 and 2018; no shares issued or outstanding as of December 31, 2019 or 2018 | — | — | ||||
| Common stock, $0.001 par value per share; 150,000,000 shares authorized as of December 31, 2019 and 2018; 76,829,926 shares issued and 70,065,130 shares outstanding as of December 31, 2019, and 66,154,626 shares issued and 59,389,830 shares outstanding as of December 31, 2018 | 70 | 59 | ||||
| Additional paid-in capital | 1,609,358 | 1,561,208 | ||||
| Accumulated other comprehensive loss | (12,333 | ) | (10,621 | ) | ||
| Accumulated deficit | (1,108,137 | ) | (769,095 | ) | ||
| Treasury stock, at cost, and 6,764,796 shares as of December 31, 2019 and 2018 | (229,984 | ) | (229,984 | ) | ||
| Total stockholders’ equity | 258,974 | 551,567 | ||||
| Total liabilities and stockholders’ equity | $ | 723,695 | $ | 954,143 |
COMSCORE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
| 2018 | 2017 | |||||||
| Revenues (1) | 388,645 | $ | 419,482 | $ | 403,549 | |||
| Cost of revenues (1) (2) (3) | 200,220 | 193,605 | ||||||
| Selling and marketing (1) (2) (3) | 108,395 | 130,509 | ||||||
| Research and development (1) (2) (3) | 76,979 | 89,023 | ||||||
| General and administrative (1) (2) (3) | 84,535 | 74,651 | ||||||
| Investigation and audit related (1) | 38,338 | 83,398 | ||||||
| Amortization of intangible assets | 32,864 | 34,823 | ||||||
| Impairment of goodwill | — | — | ||||||
| Impairment of intangible asset (1) | — | — | ||||||
| Settlement of litigation, net | 5,250 | 82,533 | ||||||
| Restructuring (3) | 11,837 | 10,510 | ||||||
| Total expenses from operations | 558,418 | 699,052 | ||||||
| Loss from operations | ) | (138,936 | ) | (295,503 | ) | |||
| Interest expense, net (1) | ) | (16,465 | ) | (661 | ) | |||
| Other income (expense), net | (1,464 | ) | 15,205 | |||||
| Gain (loss) from foreign currency transactions | 1,303 | (3,151 | ) | |||||
| Loss before income taxes | ) | (155,562 | ) | (284,110 | ) | |||
| Income tax benefit (provision) | (3,706 | ) | 2,717 | |||||
| Net loss | (338,996 | ) | $ | (159,268 | ) | $ | (281,393 | ) |
| Net loss per common share: | ||||||||
| Basic and diluted | (5.33 | ) | $ | (2.76 | ) | $ | (4.90 | ) |
| Weighted-average number of shares used in per share calculation - Common Stock: | ||||||||
| Basic and diluted | 57,700,603 | 57,485,755 | ||||||
| Comprehensive loss: | ||||||||
| Net loss | (338,996 | ) | $ | (159,268 | ) | $ | (281,393 | ) |
| Other comprehensive (loss) income: | ||||||||
| Foreign currency cumulative translation adjustment | ) | (4,397 | ) | 6,168 | ||||
| Other | — | 28 | ||||||
| Total comprehensive loss | (340,708 | ) | $ | (163,665 | ) | $ | (275,197 | ) |
| (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: | ||||||||
| 2018 ^(1)^ | 2017 | |||||||
| Cost of revenues | 1,852 | $ | 6,349 | $ | 1,766 | |||
| Selling and marketing | 9,452 | 5,247 | ||||||
| Research and development | 6,580 | 2,270 | ||||||
| General and administrative | 14,770 | 8,031 | ||||||
| Restructuring | ) | 468 | — | |||||
| Total stock-based compensation expense | 16,558 | $ | 37,619 | $ | 17,314 | |||
| (1) 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. |
All values are in US Dollars.
COMSCORE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| (In thousands) | Years Ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2017 | ||||||||
| Operating activities: | ||||||||||
| Net loss | $ | (338,996 | ) | $ | (159,268 | ) | $ | (281,393 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||
| Depreciation | 12,778 | 17,259 | 23,339 | |||||||
| Non-cash operating lease expense | 5,369 | — | — | |||||||
| Amortization expense of finance leases | 2,413 | — | — | |||||||
| Amortization of intangible assets | 30,076 | 32,864 | 34,823 | |||||||
| Impairment of goodwill | 224,272 | — | — | |||||||
| Impairment of intangible asset | 17,308 | — | — | |||||||
| Provision for bad debts | 727 | 966 | 983 | |||||||
| Stock-based compensation | 16,558 | 37,619 | 17,314 | |||||||
| Deferred tax (benefit) provision | (3,727 | ) | 2,019 | (3,203 | ) | |||||
| Change in fair value of financing derivatives | (5,100 | ) | 14,226 | — | ||||||
| Change in fair value of warrant liability | 2,411 | — | — | |||||||
| Change in fair value of investment in equity securities | 2,324 | (1,443 | ) | — | ||||||
| Non-cash interest expense on senior secured convertible notes (related party) | 17,374 | — | — | |||||||
| Accretion of debt discount | 6,242 | 4,812 | — | |||||||
| Amortization of deferred financing costs | 1,078 | 955 | — | |||||||
| Gain on forgiveness of obligation | — | — | (4,000 | ) | ||||||
| Accrued litigation settlements to be settled in Common Stock | — | — | 90,800 | |||||||
| Other | (2 | ) | 568 | 192 | ||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 2,738 | 4,707 | 14,529 | |||||||
| Prepaid expenses and other assets | 2,198 | (4,456 | ) | 4,067 | ||||||
| Insurance recoverable on litigation settlements | — | 10,000 | (37,232 | ) | ||||||
| Accounts payable, accrued expenses, and other liabilities | 10,438 | (4,955 | ) | 85,001 | ||||||
| Contract liability and customer advances | (3,477 | ) | (30,013 | ) | (2,638 | ) | ||||
| Deferred rent | — | 1,565 | 1,013 | |||||||
| Current operating lease liability | (7,638 | ) | — | — | ||||||
| Net cash used in operating activities | (4,636 | ) | (72,575 | ) | (56,405 | ) | ||||
| Investing activities: | ||||||||||
| Sales of marketable securities | 3,776 | — | 28,436 | |||||||
| Purchases of property and equipment | (2,736 | ) | (4,206 | ) | (10,182 | ) | ||||
| Capitalized internal-use software costs | (11,500 | ) | (9,608 | ) | — | |||||
| Net cash (used in) provided by investing activities | (10,460 | ) | (13,814 | ) | 18,254 | |||||
| Financing activities: | ||||||||||
| Proceeds from borrowings on senior secured convertible notes (related party) | — | 100,000 | — | |||||||
| Debt issuance costs | — | (5,146 | ) | — | ||||||
| Proceeds from secured term note | 13,000 | — | — | |||||||
| Secured term note issuance costs | (350 | ) | — | — | ||||||
| Proceeds from private placement, net of issuance costs paid | 19,752 | — | — | |||||||
| Financing proceeds received on subscription receivable (related party) | — | 9,679 | 11,012 | |||||||
| 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 | (1,267 | ) | (5,263 | ) | (1,514 | ) | ||||
| Principal payments on finance leases | (2,535 | ) | — | — | ||||||
| Principal payments on capital lease and software license arrangements | (2,070 | ) | (9,006 | ) | (17,016 | ) | ||||
| Net cash provided by (used in) financing activities | 31,973 | 93,119 | (7,518 | ) | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (302 | ) | (1,657 | ) | 2,453 | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 16,575 | 5,073 | (43,216 | ) |
| Cash, cash equivalents and restricted cash at beginning of period | 50,198 | 45,125 | 88,341 | |||
|---|---|---|---|---|---|---|
| Cash, cash equivalents and restricted cash at end of period | $ | 66,773 | $ | 50,198 | $ | 45,125 |
| As of December 31, | ||||||
| 2019 | 2018 | 2017 | ||||
| Cash and cash equivalents | $ | 46,590 | $ | 44,096 | $ | 37,859 |
| Restricted cash | 20,183 | 6,102 | 7,266 | |||
| Total cash, cash equivalents and restricted cash | $ | 66,773 | $ | 50,198 | $ | 45,125 |
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, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2017 | |||||||
| (In thousands) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
| Net loss (GAAP) | $ | (338,996 | ) | $ | (159,268 | ) | $ | (281,393 | ) |
| Income tax (benefit) provision | (1,007 | ) | 3,706 | (2,717 | ) | ||||
| Interest expense, net | 31,526 | 16,465 | 661 | ||||||
| Depreciation | 12,778 | 17,259 | 23,339 | ||||||
| Amortization expense of finance leases | 2,413 | — | — | ||||||
| Amortization of intangible assets^(3)^ | 30,076 | 32,864 | 34,823 | ||||||
| EBITDA | (263,210 | ) | (88,974 | ) | (225,287 | ) | |||
| Adjustments: | |||||||||
| Stock-based and expected awards compensation expense^(3)^ | 16,695 | 37,151 | 34,261 | ||||||
| Investigation and audit related | 4,305 | 38,338 | 83,398 | ||||||
| Settlement of certain litigation, net^(2)^ | 2,900 | 5,250 | 82,533 | ||||||
| Restructuring | 3,263 | 11,837 | 10,510 | ||||||
| Impairment of goodwill | 224,272 | — | — | ||||||
| Impairment of intangible asset | 17,308 | — | — | ||||||
| Other expense (income), net ^(1)^ | 682 | 12,783 | (4,125 | ) | |||||
| Adjusted EBITDA | $ | 6,215 | $ | 16,385 | $ | (18,710 | ) |
^(1)^ In 2019 and 2018, 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 and certain legal expenses defined by our senior secured convertible notes (the "Notes") and classified as general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss. Additionally, we recorded transaction costs related to the issuance of warrants, which costs were allocated to the warrants liability and recorded in general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss. The remaining transaction costs were recorded in additional paid-in capital in the Consolidated Balance Sheets.
^(2)^Settlement of certain litigation, net includes settlement amounts incurred for certain legal proceedings defined by the Notes, which amounts are classified as general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.
^(3)^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.
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, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2017 | |||||||
| (In thousands) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
| Net loss (GAAP) | $ | (338,996 | ) | $ | (159,268 | ) | $ | (281,393 | ) |
| Adjustments: | |||||||||
| Stock-based and expected awards compensation expense^(4)^ | 16,695 | 37,151 | 34,261 | ||||||
| Investigation and audit related | 4,305 | 38,338 | 83,398 | ||||||
| Amortization of intangible assets^(3)^ | 30,076 | 32,864 | 34,823 | ||||||
| Settlement of certain litigation, net^(2)^ | 2,900 | 5,250 | 82,533 | ||||||
| Restructuring | 3,263 | 11,837 | 10,510 | ||||||
| Impairment of goodwill | 224,272 | — | — | ||||||
| Impairment of intangible asset | 17,308 | — | — | ||||||
| Other expense (income), net ^(1)^ | 682 | 12,783 | (4,125 | ) | |||||
| Non-GAAP net loss | $ | (39,495 | ) | $ | (21,045 | ) | $ | (39,993 | ) |
^(1)^ In 2019 and 2018, 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 and certain legal expenses defined by the Notes and classified as general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss. Additionally, we recorded transaction costs related to the issuance of warrants, which costs were allocated to the warrants liability and recorded in general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss. The remaining transaction costs were recorded in additional paid-in capital in the Consolidated Balance Sheets.
^(2)^Settlement of certain litigation, net includes settlement amounts incurred for certain legal proceedings defined by the Notes, which amounts are classified as general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.
^(3)^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.
^(4)^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.
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, litigation and restructuring 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, adjusted EBITDA margin 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.
| Years Ended December 31, | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2019<br><br>(Unaudited) | 2018<br><br>(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 | $ | 388,645 | 100.0 | % | $ | 419,482 | 100.0 | % | ||||||||||
| Cost of revenues | 199,622 | $ | 1,852 | $ | 197,770 | 50.9 | % | 200,220 | $ | 6,349 | $ | 193,871 | 46.2 | % | ||||
| Gross profit | 189,023 | (1,852 | ) | 190,875 | 49.1 | % | 219,262 | (6,349 | ) | 225,611 | 53.8 | % | ||||||
| Selling and marketing | 89,145 | 3,615 | 85,530 | 22.0 | % | 108,395 | 9,452 | 98,943 | 23.6 | % | ||||||||
| Research and development | 61,802 | 1,981 | 59,821 | 15.4 | % | 76,979 | 6,580 | 70,399 | 16.8 | % | ||||||||
| General and administrative | 66,419 | 9,247 | 57,172 | 14.7 | % | 84,535 | 14,770 | 69,765 | 16.6 | % | ||||||||
| Restructuring | 3,263 | (137 | ) | 3,400 | 0.9 | % | 11,837 | 468 | 11,369 | 2.7 | % |
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.
COMSCORE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2019 | 2018 | |||||
| Revenues ^(1)^ | $ | 95,163 | $ | 109,310 | ||
| Cost of revenues ^(1) (2) (3)^ | 46,831 | 51,994 | ||||
| Selling and marketing ^(1) (2) (3)^ | 20,555 | 27,977 | ||||
| Research and development ^(1) (2) (3)^ | 12,639 | 18,632 | ||||
| General and administrative ^(1) (2) (3)^ | 15,878 | 18,468 | ||||
| Investigation and audit related ^(1)^ | 129 | 892 | ||||
| Amortization of intangible assets | 6,925 | 8,158 | ||||
| Restructuring^(3)^ | (1,886 | ) | 6,696 | |||
| Total expenses from operations | 101,071 | 132,817 | ||||
| Loss from operations | (5,908 | ) | (23,507 | ) | ||
| Interest expense, net ^(1)^ | (8,350 | ) | (4,754 | ) | ||
| Other expense, net | (4,967 | ) | (637 | ) | ||
| Gain (loss) from foreign currency transactions | (432 | ) | 1,484 | |||
| Loss before income taxes | (19,657 | ) | (27,414 | ) | ||
| Income tax (provision) benefit | (1,733 | ) | 210 | |||
| Net loss | $ | (21,390 | ) | $ | (27,204 | ) |
| Net loss per common share: | ||||||
| Basic and diluted | $ | (0.31 | ) | $ | (0.46 | ) |
| Weighted-average number of shares used in per share calculation - Common Stock: | ||||||
| Basic and diluted | 69,644,437 | 59,116,831 | ||||
| Comprehensive loss: | ||||||
| Net loss | $ | (21,390 | ) | $ | (27,204 | ) |
| Other comprehensive income (loss): | ||||||
| Foreign currency cumulative translation adjustment | 1,182 | (1,608 | ) | |||
| Total comprehensive loss | $ | (20,208 | ) | $ | (28,812 | ) |
| ^(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, | ||||||
| 2019 | 2018 | |||||
| Cost of revenues | $ | (28 | ) | $ | 1,114 | |
| Selling and marketing | 456 | 1,225 | ||||
| Research and development | 118 | 1,127 | ||||
| General and administrative | 1,879 | 2,494 | ||||
| Restructuring | — | 468 | ||||
| Total stock-based compensation expense | $ | 2,425 | $ | 6,428 |
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, | ||||||
|---|---|---|---|---|---|---|
| 2019 | 2018 | |||||
| (In thousands) | (Unaudited) | (Unaudited) | ||||
| Net loss (GAAP) | $ | (21,390 | ) | $ | (27,204 | ) |
| Income tax expense (benefit) | 1,733 | (210 | ) | |||
| Interest expense, net | 8,350 | 4,754 | ||||
| Depreciation | 3,331 | 4,285 | ||||
| Finance lease amortization expense | 439 | — | ||||
| Amortization of intangible assets | 6,925 | 8,158 | ||||
| EBITDA | (612 | ) | (10,217 | ) | ||
| Adjustments: | ||||||
| Stock-based and expected awards compensation expense | 2,425 | 5,960 | ||||
| Investigation and audit related | 129 | 892 | ||||
| Restructuring | (1,886 | ) | 6,696 | |||
| Other expense, net ^(1)^ | 5,413 | 2,949 | ||||
| Adjusted EBITDA | $ | 5,469 | $ | 6,280 |
^(1)^ In 2019, 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 Consolidated Statements of Operations and Comprehensive Loss.
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, | ||||||
|---|---|---|---|---|---|---|
| 2019 | 2018 | |||||
| (In thousands) | (Unaudited) | (Unaudited) | ||||
| Net loss (GAAP) | $ | (21,390 | ) | $ | (27,204 | ) |
| Adjustments: | ||||||
| Stock-based and expected awards compensation expense | 2,425 | 5,960 | ||||
| Investigation and audit related | 129 | 892 | ||||
| Amortization of intangible assets | 6,925 | 8,158 | ||||
| Restructuring | (1,886 | ) | 6,696 | |||
| Other expense, net ^(1)^ | 5,413 | 2,949 | ||||
| Non-GAAP net loss | $ | (8,384 | ) | $ | (2,549 | ) |
^(1)^ In 2019, 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 Consolidated Statements of Operations and Comprehensive Loss.
| Three Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | March 31, 2019 (Unaudited) | June 30, 2019 (Unaudited) | September 30, 2019 (Unaudited) | December 31, 2019 (Unaudited) | ||||||||
| Net loss (GAAP) | $ | (27,514 | ) | $ | (279,533 | ) | $ | (10,559 | ) | $ | (21,390 | ) |
| Adjustments: | ||||||||||||
| Stock-based and expected awards compensation expense | 6,953 | 4,304 | 3,013 | 2,425 | ||||||||
| Investigation and audit related | 842 | 2,354 | 980 | 129 | ||||||||
| Amortization of intangible assets | 8,105 | 8,076 | 6,970 | 6,925 | ||||||||
| Settlement of certain litigation, net^(1)^ | — | 5,000 | (2,100 | ) | — | |||||||
| Restructuring | (70 | ) | 2,949 | 2,270 | (1,886 | ) | ||||||
| Impairment of goodwill | — | 224,272 | — | — | ||||||||
| Impairment of intangible assets | — | 17,308 | — | — | ||||||||
| Private placement issuance cost | — | 1,154 | (416 | ) | — | |||||||
| Other (income) expense, net ^(2)^ | (2,388 | ) | 3,304 | (6,385 | ) | 5,413 | ||||||
| Non-GAAP net loss | $ | (14,072 | ) | $ | (10,812 | ) | $ | (6,227 | ) | $ | (8,384 | ) |
^(1)^Settlement of certain litigation, net includes settlement amounts incurred for certain legal proceedings defined by the Notes, which amounts are classified as general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.
^(2)^ In 2019, 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 Consolidated Statements of Operations and Comprehensive Loss.
| 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 | 8,544 | 8,266 | 7,896 | 8,158 | ||||||||
| Settlement of certain litigation, net^(1)^ | — | 5,250 | — | — | ||||||||
| Restructuring | 1,257 | 3,833 | 51 | 6,696 | ||||||||
| Other expense, net ^(2)^ | 2,629 | 1,506 | 5,699 | 2,949 | ||||||||
| Non-GAAP net loss | $ | (5,272 | ) | $ | (9,240 | ) | $ | (3,984 | ) | $ | (2,549 | ) |
^(1)^Settlement of certain litigation, net includes settlement amounts incurred for certain legal proceedings defined by the Notes, which amounts are classified as general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.
^(2)^ In 2019, 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 Consolidated Statements of Operations and Comprehensive Loss.
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) | 2019<br><br>(Unaudited) | 2018<br><br>(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 | $ | 95,163 | 100.0 | % | $ | 109,310 | 100.0 | % | ||||||||||||
| Cost of revenues | 46,831 | $ | (28 | ) | $ | 46,859 | 49.2 | % | 51,994 | $ | 1,114 | $ | 50,880 | 46.5 | % | |||||
| Gross profit | 48,332 | 28 | 48,304 | 50.8 | % | 57,316 | (1,114 | ) | 58,430 | 53.5 | % | |||||||||
| Selling and marketing | 20,555 | 456 | 20,099 | 21.1 | % | 27,977 | 1,225 | 26,752 | 24.5 | % | ||||||||||
| Research and development | 12,639 | 118 | 12,521 | 13.2 | % | 18,632 | 1,127 | 17,505 | 16.0 | % | ||||||||||
| General and administrative | 15,878 | 1,879 | 13,999 | 14.7 | % | 18,468 | 2,494 | 15,974 | 14.6 | % | ||||||||||
| Restructuring | (1,886 | ) | — | (1,886 | ) | (2.0 | )% | 6,696 | 468 | 6,228 | 5.7 | % |
Revenues
Revenues from our three offerings of products and services are as follows:
| Three Months Ended December 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2019<br><br>(Unaudited) | % of Revenue | 2018<br><br>(Unaudited) | % of Revenue | Variance | % Variance | ||||||
| Ratings and Planning | $ | 66,790 | 70.2 | % | $ | 74,786 | 68.4 | % | ) | (10.7 | )% | |
| Analytics and Optimization | 17,722 | 18.6 | % | 23,901 | 21.9 | % | (6,179 | ) | (25.9 | )% | ||
| Movies Reporting and Analytics | 10,651 | 11.2 | % | 10,623 | 9.7 | % | 28 | 0.3 | % | |||
| Total revenues | $ | 95,163 | 100.0 | % | $ | 109,310 | 100.0 | % | ) | (12.9 | )% |
All values are in US Dollars.
| Year Ended December 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2019 | % of Revenue | 2018 | % of Revenue | Variance | % Variance | ||||||
| Ratings and Planning | $ | 271,623 | 69.9 | % | $ | 285,355 | 68.0 | % | ) | (4.8 | )% | |
| Analytics and Optimization | 74,725 | 19.2 | % | 92,380 | 22.0 | % | (17,655 | ) | (19.1 | )% | ||
| Movies Reporting and Analytics | 42,297 | 10.9 | % | 41,747 | 10.0 | % | 550 | 1.3 | % | |||
| Total revenues | $ | 388,645 | 100.0 | % | $ | 419,482 | 100.0 | % | ) | (7.4 | )% |
All values are in US Dollars.