Neustar, Inc. (NSR)

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NeuStar, Inc. (NSR)

Q4 2012 Earnings Call

February 5, 2013 4:30 pm ET


Dave Angelicchio – Head of Investor Relations

Lisa A. Hook – President and Chief Executive Officer

Paul S. Lalljie – Senior Vice President and Chief Financial Officer


John Bright – Avondale Partners

William Power – Robert W. Baird & Co.

Sterling Auty – JPMorgan

Daniel Meron – RBC Capital Markets

Julio Quinteros – Goldman Sachs

John Weidemoyer – William Blair & Co. LLC

Greg Mesniaeff – Maxim Group



Please stand by. Good afternoon, everyone. Thank you for standing by. Welcome to the Neustar Fourth Quarter 2012 Earnings Conference. At this time all participants are in a listen-only mode. After the prepared remarks, we’ll conduct a question-and-answer session.

As a reminder, this conference is being recorded. For opening remarks, I’d like to turn the conference over to Mr. Dave Angelicchio, Head of Investor Relations. Please go ahead, sir.

Dave Angelicchio

Thank you, and good afternoon, everyone. Welcome to today’s conference call. Joining us today from Neustar are Lisa Hook, President and Chief Executive Officer; and Paul Lalljie, our Chief Financial Officer. Our call today will begin with comments from Lisa Hook and Paul Lalljie followed by Q&A.

Before we begin, I’d like to remind everyone that today’s discussion contains forward-looking statements based on information as of today, February 5, 2013, and as such is subject to many risks and uncertainties that may cause actual results to differ materially from those anticipated.

Additional information concerning these risks and uncertainties can be found in our earnings release and our filings with the U.S. Securities and Exchange Commission, including our last annual report on Form 10-K and subsequent periodic and current reports. We assume no obligation to update any forward-looking statements.

As you listen to today’s call, we will discuss certain non-GAAP financial measures and supplemental key performance metrics by revenue categories, head count and additional expense details. This information including reconciliations to the most comparable GAAP measures can be found in today’s earnings release and under our investor relations tab on our website

With that, I’m pleased to introduce Neustar’s President and Chief Executive Officer, Lisa Hook. Lisa?

Lisa A. Hook

Thank you very much, David, and thank you all for joining us this afternoon as we report our results for the fourth quarter and fiscal year. I’ll begin by closing out on our 2012 performance and then turn to our top priorities for 2013, after which our Chief Financial Officer, Paul Lalljie will walk you through our results in more detail.

You’ll recall that in the beginning of 2012, I articulated four priorities for the year; to achieve our financial performance target; to position ourselves for a successful NPAC contract renewal; to integrate TARGUSinfo and to transform our culture into one team with one mission.

We achieved our financial target for the year, once again the growth in revenue, growth in earnings, and growth in cash flow. Year-over-year, fourth quarter revenue was up 23% to $214.2 million and adjusted EPS increased 47% to $0.75 per share.

For the full year, revenue increased 34% to $831.4 million. This increase was driven by the full year impact of Information Services and double-digit increases in Carrier and Enterprise Services. Our strong revenue growth combined with previous spending drove a 43% increase in adjusted EPS to $3.04.

Our next priority was to position the company to compete successfully for renewal of NPAC contract. We do have an installment to report there, a few hours ago, the SEC issued a public notice announcing the release of the RFP. The RFP documents are now available to parties who are interested in submitting proposal. We’re reviewing the RFP and so we are not in a position to comment on it at that time.

We can say, however, that we are thrilled that the next phase in the process is underway. As we’ve always said, the best way to compete for the NPAC contract is to provide outstanding service to the industry, and we’ve done just that. I’m pleased that we earned a near perfect score in the industry’s annual independent customer survey.

That report measured all aspects of our service including customer satisfaction, operational excellence, and neutrality. In this, we continue to provide this exceptional service, but we will take nothing for granted and we will vigorously compete to renew our contract.

Let me remind you that the NPAC is the world’s largest and most complex number portability system and it’s a critical component of America’s telecommunications network infrastructure. Our NPAC system connects continuously with over 4,800 industry customers, at least 15 times more customers than any other number portability system in the world.

This system securely and reliably distributes essential routing and rating information every few seconds, making it one of the most personal and reliable information exchange in the world. The NPAC updates the entire U.S. communications network every eight second, enabling carriers to switch your phone number in the time it takes you to tie your shoe. This is only possible in North America. Everywhere else, it takes at least hours to put a telephone number and in some places it can take more than a month.

Our exceptional performance makes it easier for providers to acquire new subscribers. It’s the foundation of our robustly competitive telecommunications market. We also support the industry’s needs to a real-time network and resource optimization, emergency preparedness in the tax recovery and efficient telephone number utilization.

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