Daily Research News Online no. 30558 - Cost-Cutting Helping Comscore Weather Storm

Cost-Cutting Helping Comscore Weather Storm

November 9 2020

Comscore has reported lower revenue - down 6.7% to $88.0m - but adjusted EBITDA up around 14% to $7.3m, in the third quarter. The company also announced that as a result of its strategic review it will look to recapitalize with an anchor investor, lowering debt and enhancing liquidity.

Bill Livek For the quarter ended September 30th, the company reported a net loss of $11.1m, slightly worse than the Q3 2019 ($10.6m), but has reduced its costs - including sales and marketing, R&D and general / administrative by more than $10m year-on-year ($85.2m vs $95.9m in 2019) to give the EBITDA improvement. Among the drivers of this reduction are lower headcount, lower facility costs, professional fees and other general operating expenses - some of these reflecting 'temporary actions the Company implemented to reduce costs given the current economic uncertainty'.

Revenue for the largest sub-division, Ratings and Planning, was down from $65.3m to $62.7m, with lower revenue from syndicated digital mitigated by improved National TV revenue via its new partnership with LiveRamp. Analytics and Optimization revenue fell around 5% to $17.4m with lower Custom, Lift and Survey revenue.

Movies Reporting and Analytics - one of the firm's strongest sectors in recent years - has obviously been hit by Covid theatre closures, and frankly did well to record revenue of $7.8m, vs $10.7m a year earlier. The firm said it expects the closures to continue affecting Movies revenue 'until theaters reopen at scale'. However, in the last fortnight, the firm has announced a first major win for its next-generation movie theater management system, with a contract signed by Marcus Theatres, the fourth largest US operator with over 1,100 screens.

CEO Bill Livek (pictured) said of the figures: 'I am pleased with the progress Comscore made during the third quarter, despite market conditions that remained challenging. Our TV product grew revenue high single digit percentage year-over-year in the quarter, Addressable continued to expand, and we continued to generate higher levels of adjusted EBITDA compared to the prior year. Thus far in 2020, we have recognized more than a $22 million positive swing in adjusted EBITDA due to financial discipline, and we remain well-positioned when the impact of the pandemic eases'. Livek describes the company as 'poised to win the future of media measurement with a host of new products centered around a new impressions-based currency with enhanced advertising capabilities'.

Comscore has total debt of $223.2m, and today in a separate announcement said it was ' in advanced discussions with respect to a recapitalization transaction with an anchor investor', having 'conducted a thorough and deliberate review process'. Most speculation when the review was announced had centred around a possible sale. The firm says the planned transaction would mean 'a significant reduction' in its outstanding indebtedness, 'enhancing its balance sheet and liquidity profile', and would 'provide for enhanced commercial relationships to support its growth initiatives'. At this point in time, Comscore gives no guarantees about the process, and says it 'does not intend to provide additional updates unless or until it determines that further disclosure is necessary'.

Markets were relatively unmoved by the two announcements, with shares remaining around the $2 mark where they have been for six weeks.

Web site: www.comscore.com .