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NeuStar, Inc. (NSR)

Q4 2009 Earnings Call

February 10, 2010 04:30 am ET


Brandon Pugh - Senior Director of Finance & IR

Jeff Ganek - Chairman & CEO

Paul Lalljie - CFO


Daniel Meron - RBC Capital Markets

Scott Sutherland - Wedbush Securities

Sterling Auty - JPMorgan

Jonathan Ho - William Blair

Will Power - Robert Baird

John Bright - Avondale



Ladies and gentlemen thank you for standing by and welcome to the NeuStar fourth quarter investor conference call. The company's release made earlier today is available from its website at During the presentation all participants will be in a listen-only mode. Afterwards, securities, analysts and institutional portfolio managers will be invited to participate in the Question-and-Answer Session. (Operator Instructions).

As a reminder this call is being recorded Wednesday, February 10, 2010 and a replay of the call will be accessible until midnight February 17 by dialing 888-203-1112 and entering conference ID 4017541. International callers should dial 719-457-0820. Also an archive of this call will also be available on the NeuStar website at I would now like to turn the conference over to Brandon Pugh, Senior Director of Finance, and Investor Relations of NeuStar. Please go ahead, sir.

Brandon Pugh

Thank you and good afternoon everyone. Welcome to our fourth 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, EBITDA and EBITDA margin for the coming year contain forward-looking statements. These statements involve risks and uncertainties, and may cause actual results to differ material from those said forth in the statements. And we cannot assure you that our expectations will be achieved whether any of these deviations will not be material. Additional information concerning these risks and uncertainties can be found at 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 in our Investor Relations website and includes their financial results, metrics commentary for the quarter and the reconciliation of certain non-GAAP measures with the most directly comparable GAAP measures.

You will find additional disclosures regarding non-GAAP measures under the Investors Relations tab on our website including reconciliation of these measures with the most directly comparable GAAP measures. In addition, we're providing supplemental information to this filings report on our website at included in the supplemental information our key performance metrics by revenue categories, head count and other details and our expenses.

With I'm pleased to introduce to NeuStar's Chairman and Chief Executive Officer Jeff Ganek. Jeff?

Jeff Ganek

Thanks Brandon. Welcome to today's conference call. I'm pleased to discuss our results for the fourth quarter and full-year 2009 along with our 2010 outlook. As you know last year overall spending in the market attracted consumers and enterprises alike, making 2009 a challenging year. We took the opportunity to focus on strong reliable profits in cash flow in the near term while strengthening NeuStar's position in anticipation of the economy's rebound in the future.

Despite 2009s economic difficulties we met our 2009 goals. As a result we produced strong financial results. We have high visibility into continued revenue growth, strong profitability and cash flow. Let me highlight some of our 2009 results for you. Paul Lalljie our CFO will then provide additional specifics. First I will discuss our overall financial results for 2009. Consolidated revenue for the full year totaled just over $480 million yielding an EBITDA margin of 43%, a net income margin of 21% and over a $175 million in cash generation.

While producing results that exceeded our goals, we drove cost efficiencies making the store more effective and dynamic. For example we located, we relocated certain operations to more cost effective geographies and in our NGM segment we realigned our resources to match the slow uptake in the market to mobile instant messaging. As a result we came out of the fourth quarter with NGM operating on an EBITDA neutral basis. Let me turn now to a discussion of some important developments in the market and the business. They are all linked by growing customer requirements to seamlessly interconnect voice and IP networks.

The change made last year to the contracts under which we provide telephone number portability in the United States is a development that has had material impact. The change delivered improved predictability for NeuStar revenue growth as important they provide significant value to our customers. These amendments allow the industry to establish and use three new internet protocol or IP fields in NeuStar's NPAC directory related to three fast growing next gen applications which are voice over IP, SMS text messaging and MMS which you may know as transferring the photos between mobile handsets.

We initiated this bold move to keep NeuStar and the number of portability administration center or NPAC, essential in the world of IP as it is today in the voice world as a result NeuStar will benefit in the future from new incremental revenue growth opportunities in IP early results are encouraging.

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