NeuStar, Inc. (NSR)
Q2 2009 Earnings Call
July 30, 2009 4:30 pm ET
Brandon Pugh – Director of Finance & Investor Relations
Jeffrey E. Ganek – Chairman & Chief Executive Officer
Paul S. Lalljie – Senior Vice President & Chief Financial Officer
Stephen Baker – Robert W. Baird
Nandan Amladi – Deutsche Bank
Saket Kalia – JPMorgan
Shaul Eyal – Oppenheimer & Company
Daniel Meron – RBC Capital Markets
John Bright – Avondale Partners
Previous Statements by NSR
» NeuStar, Inc. Q3 2009 Earnings Call Transcript
» NeuStar Q1 2009 Earnings Call Transcript
» NeuStar, Inc. Q4 2008 Earnings Call Transcript
As a reminder this call is being recorded Thursday, July 30, 2009. A replay of the call will be accessible until midnight August 6 by dialing 888-203-1112 and entering conference ID 9119340. International callers should dial 719-457-0820. An archive of this call will also be available on the NeuStar website at www.neustar.biz. I would now like to turn the call over to Brandon Pugh, Senior Director of Finance, and Investor Relations of NeuStar. Please go ahead, sir.
Thank you and good afternoon everyone. Welcome to our second quarter 2009 earnings call. Joining us today from NeuStar are Jeff Ganek, Chairman and Chief Executive Officer and Paul Lalljie, our Chief Financial Officer. Our call today will begin with comments from Jeff Ganek. Then Paul Lalljie will follow with a discussion of our financial performance, after which we will open the line to questions from qualified investors and research analysts.
Before we begin, I'd like to remind everyone that some of the information discussed on this call including our projections regarding revenue and EBITDA for the coming year contain forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ material from those set forth in the statements and we cannot assure you that our expectations will be achieved or that any deviations will not be material. Additional information concerning these risks and uncertainties can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2008 and its other subsequent and current periodic reports filed with the U.S. Securities and Exchange Commission. NeuStar assumes no obligation to update any forward-looking statements.
As you listen to today's call, we will discuss certain non-GAAP financial measures. We encourage you to have our press release in front of you, which can be found on our Investor Relations website and includes our financial results, metrics, commentary for the quarter and the reconciliation of certain non-GAAP measures with the most directly comparable GAAP measures. You'll find additional disclosures regarding non-GAAP measures under the Investor Relations tab on our website www.neustar.biz including reconciliation of these measures with the most directly comparable GAAP measures.
With that I am pleased to introduce NeuStar's Chairman and Chief Executive Officer, Jeff Ganek. Jeff?
Jeffrey E. Ganek
Thanks Brandon. Welcome everyone to today's conference call. Through the first half of 2009 we performed well against out objectives. In the face of tough economic conditions, our priority has been profitability and cash flow. Specific to the second quarter our consolidated revenue totaled a $116 million and we produced an EBITDA margin of 43%. These results demonstrate NeuStar's ability to reliably produce profits in cash, while laying a solid foundation for growth in the future. Let me comment on our profit performance. The results derived from the falling factors. First, we have strong reliable and visible revenue streams.
Our LNP services, which produced more than 60% of our revenues provide the base of certainty for revenues. Additionally, revenues from outside of the LNP services for markets that are stable with some growth. So, their growth in 2009 has been slower than in the past. With high confidence in our revenue performance, profit performance is manageable. Second our business model and cost structure enable us to manage spending and direct response to revenue trends. As we demonstrated over the past years we can spend prudently to reliably produced profitability even as revenues vary. We are able to meet profitability target even while delivering high quality that earns high customer satisfaction has volumes continue to grow.
Our second quarter performance demonstrates our ability and commitment to produce profits and cash. We believe the second quarter performance reflects the strengths of the business and the sustainability of our profitability. Now, let me comment on customer demand in the market and our revenues. Customer demand for LNP services continue to grow as reflected by increased volumes of transactions in the first half of this year. Revenues from LNP services decreased 4% as anticipated and that's driven by the contract changes affected in January of this year. Our existing contracts provide for compounded annual growth in LNP revenues up 10% from 2009 through 2015. Specific to the second quarter customer demand was also strong for our ultra services.
Ultra Services provide our customers with advanced proprietary algorithms for global traffic management, enhance security features and performance monitoring. All of which improved our customers' Internet management systems for efficiency, scalability, and reliability. After weaker market conditions during the first quarter, customer demand in the second quarter stabilized that is our enterprise customer showed increased interest in the ROI benefits offered by Ultra's Outsourced in the Cloud solutions. Increased demand for Ultra Services paralleled growth in overall Internet traffic as measured by total Internet query counts, which were high on both sequential and year-over-year basis.