comScore Inc. (SCOR)
Q4 2008 Earnings Call
February 11, 2009 5:00 pm ET
Magid Abraham - President, CEO and Co-Founder
John Green - CFO
Youssef Squali - Jefferies & Company
Jason Helfstein - Oppenheimer
William Morrison - ThinkEquity
Karl Kirwan - Needham & Company
Meggan Friedman - William Blair & Company
John Blackledge - Credit Suisse
Jeetil Patel - Deutsche Bank
Sandeep Aggarwal - Collins Stewart
Heath Terry - FBR
James Cakmak - Sidoti & Company
Previous Statements by SCOR
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I would now like to turn the call over to, Mr. John Green, Chief Financial Officer. Please proceed.
Thank you. Good afternoon and welcome to comScore’s earnings call for the fourth quarter and full year 2008.
This is John Green, Chief Financial Officer of comScore. On the call with me today is Magid Abraham, comScore’s President, CEO and co-founder. Before we begin, please allow me to read the following statement to inform you of certain Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.
During the course of today's presentation, as well as any discussions, question-and-answer periods to follow, representatives of the company may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 regarding future events or financial performance of the company that involves risks and uncertainties, including without limitation, the expected strength of comScore's business, customer growth and client's demands for comScore's products, the future quality of client relationships and resulting renewal rates, expectations regarding new products and markets, including Extended Web Measurement, ad effectiveness and mobile media markets and forecasts of future financial performance including related growth rates and assumptions for the first quarter and the full year of 2009.
Such statements are only predictions based on management's current expectations. Actual events or results could differ materially from those predictions due to a number of risks and uncertainties including those enumerated in the documents comScore files from time to time with the SEC. Those documents specifically include but are not limited to comScore's Form 8-K filed earlier today relating to the subject matter of this earnings call, comScore's Form 10-K for the year ended December 31st, 2007 and comScore's Form 10-Q for the quarter ended September 30th, 2008.
These filings may contain and identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. We caution you not to place undue reliance on any forward-looking statements included in these presentations. We speak only as of today. We do not undertake any obligation to publically update any forward-looking statements to reflect new information after today's call or to reflect the occurrence of unanticipated events.
I will now turn the call over to Magid. Magid?
Thank you, John. And thank you for joining us on our fourth quarter call today. We are pleased to have met our profitability objectives for Q4 and for the year, as well as posting a record revenue performance, particularly in light of the challenging economic environment we all face.
Revenue growth in the fourth quarter and for the full year benefited from deeper relationships with existing customers, a broadening of our customer base, from geographical expansion and the value-added provided to our customers from our growing product line.
Fourth quarter 2008 revenue of $31.6 million was up 25% year-over-year and 3% sequentially. While a solid performance, it was slightly below our guidance due to a number of reasons: number one, lighter project business as discretionary budgets tightened even more than we typically see in Q4; number two, the impact of the stronger US dollars reduced our reported international revenue; number three, the budget cutbacks on the buy side of the Wall Street have dampened our ability to replace revenues from the renewal of the Citadel contract on a non-exclusive basis, which was worth $850,000 for the quarter or over 3% points in growth; number four, slower international growth particularly in the UK; and number five, small customer churn that has a 2% to 3% point impact in growth. Importantly, however, subscription revenue, which is the key to the strong visibility of our business model grew 32% in the fourth quarter, to $26.6 million, and represented 84% of total revenue. We also maintained our historical renewal rate at over 90%.
It's important to note that renewals among our medium and large-sized customers were at even higher rates. If we exclude the $850,000 net impact of our formerly exclusive deal with Citadel, revenue growth would have been 29% in the fourth quarter and subscription revenue would have grown by 37.5%. We provide this comparison because it represents an indication of how our ongoing business is going. This is clearly strong performance by any measure.
On the profitability side, strong execution and strict cost controls in the fourth quarter helped non-GAAP earnings and adjusted EBITDA to be inline with our expectation. Specifically, GAAP EPS was $0.67, well above our guidance range, due to one-time tax benefit, primarily resulting from the reversal of the company's deferred tax asset valuation allowance as John will describe later.
Also non-GAAP EPS was $0.18 per share, at the upper end of our guidance range, and adjusted EBITDA was in the middle of our guidance range at $6.5 million. For the full year 2008, revenue was $117.4 million, up 35% from 2007. We earned $0.83 per share on a GAAP basis and $0.73 per share on a non-GAAP basis.
Adjusted EBITDA was $25.7 million, up 43% year-over-year. There were many significant accomplishments in 2008, all of which bolstered comScore's leadership position in the provision of digital marketing intelligence. For example, we introduced a number of new products including Extended Web Reporting, which allows publishers and advertisers to track distributed web content across third-party sites, such as video, music, gaming, widgets, social media. We also grew Video Metrix, our industry leading video tracking service and we acquired the leading provider of mobile measurement and metrix.