Q2 2023 comScore Inc Earnings Call

Thank you for standing by it.

Comscore second.

Often twenty-three financial results.

All participants are.

<unk>.

After the speaker's presentation there'll be a question and answer session to ask a question. During the session you won't need to press star one one on your telephone.

Haven't hear an automated message advising your hand is waste.

Question piece breasts.

Again.

And please be advised that today's conference is being recorded.

Conference Speaker today.

Head of Investor Relations. Please go ahead.

Thank you up right before we begin our prepared remarks.

The phone discussion contains forward looking statements.

Looking statements comments about our plans expectations.

Based on that.

Today.

2023.

Actual results in future periods.

Material.

We expect it because of a number of risks and uncertainties.

Risks and uncertainties.

10-K.

And other filings with the S. P C.

On a website.

Www Dot S C C dot Gov.

Display.

Data.

To reflect new information after today's call will.

We'll be discussing non-GAAP measures during this cough, which we provide reconciliations in today's press release and on our website. Please note that we will be referring to slice on this call which are also available on our website www Comscore dot com.

Relations events and presentations.

Commscope Chief Executive Officer, John Carpenter.

Good evening everyone.

Joining us to talk about our second quarter. This evening.

Ah results in the corner or solid.

Markets.

Continue to experience softness, particularly in the AD market.

Ah results across a number of areas in our business are encouraging.

Delivered revenue growth of 2.5% over the second quarter of last year.

Growth over the first quarter of this year.

T V continues to show strength and our digital business was up for the first time in five quarters.

And or activation product, which is up by over 30 per cent.

As we've discussed previously this team is focused on delivering scalable profitable growth and in the second quarter, we printed adjusted EBITDA growth of 125% after adjusting for foreign exchange.

Science that we're moving in the right direction.

I continue to believe that our opportunity to drive meaningful growth to deliver value for our stakeholders.

Significant.

That our clients are faced with.

The continued fragmentation of media from traditional channels.

Digital programmatic channels.

With the proliferation of Sigoloff throughout the digital ecosystem that is created an audience Addressability gap.

Nearly 70 per cent.

And finally, a lack of accountability across advertising, that's fueling billions of dollars in waste.

Or all problems Comscore is uniquely positioned to help solve.

Are you in our audience intelligence footprint across digital video and connect the T V as well as web Mobil and linear.

Matched.

10000 publisher integrations and the trillions of signals recollect, we have massive scale and a trusted methodology. That's both solving the audience signal loss problem and helping close to your address ability.

Until now are massive scale task or stable reliable audience measurement partner with more granular inaccurate then the competition.

The industry needs more than that.

And that's why we're invested in making your data actionable.

Alrighty, I driven predictive audience segment empower advertisers to maximize reached regardless of whether I d's are pregnant or not.

In fact, a recent case study that showed our AI enabled predictive audience. This product reached nearly double the incremental users versus E Bay segments.

Take the losses and a Sunday problem. It's one that every advertisers dealing with now and Comscore is unique and our ability to help them solve for it.

We also have the linear footprint that can provide of transparent and accurate reach and frequency to our clients providing data that is 93% accurate to final posting data within 48 hours across all 41704, Zip codes and 210 local markets.

Depth and understanding audiences with precision in every market and ZIP code is valuable for advertisers want to maximize reach and eliminate waste.

While you've heard me speak about our digital data assets. Many times, we're finding new ways to use them to create value and solve problems for our clients.

Things that I'm. Most excited about is the innovation of transformation I'm seeing when we bring our digital linear and cross screen capabilities together.

Almost while we're still in the early innings here results are encouraging.

Best of breed measurement approaches in both digital and linear comscore his position to make advertisers more efficient.

Bring a new level of insight to the delivery of cross screen Incrementality.

With our assets clients can guarantee T duplicated reach across digital or traditional video channels optimizing in-flight campaigns in ways that help them eliminate wasted at spend an inventory.

I want to be clear, we're committed to delivering products and solutions that help our clients solve the big problems and challenges facing their businesses.

The product capabilities that we've talked about coupled.

Coupled with the continued execution like we had in the second quarter gives me confidence that we're focused on the things that matter most to our clients and our stakeholders.

With that let me turn it over to Mary Margaret to discuss our second quarter results in more detail.

Thank you John .

Total revenue for the second quarter was 93.7 million.

5% from $91.4 million, the same quarter a year ago.

Cross platform solutions revenue of 41 million, what's up 3% from $39.8 million in the second quarter of 2022.

Primarily driven by double digit growth in local television.

Continued strength.

Which is 5% to $8.8 million from $8.4 million a year ago.

Revenue from digital Absolution, a 52.6 million was up 2% compared to 51.6 million a year ago.

Nearly driven by an increase in usage of our activation products.

We also saw an increase in revenues for certain cut some digital project products as a result of higher deliverable.

<unk> customers.

As John mentioned earlier the markets that were serving are challenged evidence. My recent earnings reports from some of our biggest client and softer than expected upfront this year.

Certainly not immune to these macro factors and these may have an impact on our business as we move into the third quarter.

Adjusted EBITDA was 8.8 million at 35% from the prior year quarter, resulting in an adjusted EBIT margin at 9.4%.

Exclude the foreign exchange impact from adjusted EBITDA. This year second quarter results at 9 million is 125 per cent over the prior year.

This result is a testament to continue to focus on cost execution.

Core operating expenses were down 4% year every year with a large part of that due to lower employee compensation.

We are continuing to execute on the restructuring plan me put in place last year.

And in spite of restructuring charge that $4.1 million, we took in the second quarter, which is and will continue to contribute to lower operating costs as we move through the year.

Not done yet.

Diligently working to transform our business operations and to simplify our tech stack to drive additional efficiencies in the latter part of 2023 and.

2024.

Regarding our full year guidance, we noted last order that there was pressure on the high end of our revenue growth range.

Just on our current expectations or tightening our revenue guidance to the low end of the range with growth another single digits.

For adjusted EBITDA, we remain confident in and are reaffirming the guidance. We previously provided.

With that I'll turn it back over to John for closing remarks.

Before we wrap up I want to take a moment to think our employees, who work tirelessly everyday to deliver for our clients.

None of <unk>, we've we've executed on or spoke about today would be possible.

Thanks to everyone on the call for joining us. This evening, we've got a tremendous opportunity in front of us and I couldn't be more excited about our growth prospects in the value we can create for our shareholders.

With that operator, let's open it up for questions.

Thank you so much for centers and as a reminder to ask a question. Please press star one one.

And wait for your name to be an ounce and do with your question. Please press started one one again the standby while to compile the CUNY roster.

Your first question comes from the line of cheese in clear Creek Helen.

Go ahead.

And then the quarter to delay the dividend payment looks like probably until the end of the year. Just curious if you could unpack that decision you know why you're delayed that they all the benefits that and maybe any near term use of those funds.

Hey, Jason Yeah. Thanks for the question, Yeah, we as part of our ongoing conversations with our preferred shareholders around flexibility.

And freeing up capital to reinvest back into business they agreed to.

<unk> pushed the dividend pushed the dividend out. They also agreed to give us some optionality in terms of how that was paid for in one of our earlier releases, we made that announcement as well all that just points to to give me the company greater flexibility to execute the.

The restructuring of transformation plan that is well underway.

That's where the bulk of that investment is going toward things like improving.

Our tech infrastructure, making the investment in and resources in engineering and analytics insuring up our product capabilities. So that we can continue to deliver on some of the things that I spoke about at the top of the call.

Okay, perfect and then you've talked about proxemics over the last couple of calls it seems like you're you're seeing good results. There can you taught me more about what the vision is there I would imagine it's not a meaningful contributor to results today, but is there a point in time, where you expect that.

B a more meaningful contributor.

Yes, it's certainly not an insignificant part of the of.

The revenue profile and it's growing rapidly I think we're just on the on the cost of what that capability is when paired with our broader measurements solutions across both both digital and linear. Thank the pairing of you know the.

Fly wheel of.

Insights and planning to activation to measurement it just fit so nicely into.

Solutions set that we're delivering for our clients and I think we're at the tip of the spear in terms of the integration of what proximate can do in terms of advanced audience segment, coupled with advanced audience segments that we deliver in in in our linear linear cough Court T V product.

And then broadly speaking what it can do to.

Better position Comscore digital more broadly in the wake of broader signal loss of me in the marketplace. So I liked the progress that we're making their on on the product front and you know our integrations that we announced in the second quarter are starting to excuse me earlier in the first quarter have really kind of positioned us well here.

<unk>, which has contributed to some of the growth that we were able to unlock in in the second quarter resolved.

John one more just in terms of clarification last month, we saw a deal struck between Comcast and Nielsen I think they expanded their relation relationship at that includes the bulk of markets.

He was under the impression that you were doing a lot of the local market suffer for Comcast friendly early for N. D. C. U curious if there's any change with your relationship with Comcast or N. B C. U after that that deal was struck.

No not at all I I think in fact N. B C has leaned in quite a bit in terms of them leveraging comscore in market for currency across their their their their local sweet you know, let's let's remember Nielsen has had that Comcast date.

For the better part of five years, and so you know for us.

This wasn't.

I was surprised that stated that they've had access to <unk>.

<unk> for you know gotcha last handful of years he's easily so our relationship with M. B CS is very very strong and we're pleased with the progress that we continue to make across not just local but other areas of their business in terms of helping them more broadly as it relates to cross platform measurement capabilities.

Perfect. Thank you.

Thank you so much.

Next question comes from the line of <unk>. Please go ahead.

You guys have done a great job of shortening the window between two weeks to pronounce 48 hours and your accuracy at 93%, it's really impressive however.

Out of your competitors in the marketplace are now doing real time in campaign measurement is that your next step you have to get to that point in order to complete.

I think that the the the big difference is certainly in some of our digital products <unk>, we've got the ability to deliver a lot closer to real time, but as it relates to in flight linear optimization within 48 hours across all 210 markets, there's really nobody that stands up to that capability.

And if you think about the the the.

The ability within 48 hours to to effectively be able to.

To deliver.

As close to 100 per cent accuracy to final posting when you think about guaranteeing a buy or guaranteeing audience is against that it allows our clients a tremendous amount of flexibility to optimize the real time and then you start taking you start adding on.

The the the capability to driving for mental reach leveraging that 48 hour optimization too you know extensions to digital including connected television.

You want to add anything to your eyes.

Tied to local and national it's really important.

That's an excellent point Carol Carol's point is that are we we've got a singular methodology, which is you know a big differentiator. When you start talking about every single one of our our markets rolling up to a national number. So it's not just the ability in all markets, but it's the ability to optimize within 48 hours on the national campaigns as well.

Okay and then my second one is on the strikes that you have this wonderful.

My work in the movie business and it went through Covid and I felt like it was coming back on now or in strikes.

Depending on who you ask anywhere from another four to six months. So the question is does this actually structurally hurt your movie income stream Sorta forever, What's your point of view on that.

Yeah. So I mean, it's unfortunate that were you know.

The industry is kind of going through what it's going through as it relates to our business. You know we don't we don't see an immediate impact to the the financial profile of what our guide implies or even you know in.

In the next year I think should the strike start to carry out for long periods of time that.

Ultimately impacts production Ah some point in the future you know that that may bleed into renewals that are out in those years, but it's it's it's not a it's not a remainder twenty-three or even a 24 kind of issue for us.

Business at least for now.

Certainly something worth watching closely.

Thank you.

Thank you so much.

And your next question comes from the line of <unk> of Chafee's LLC. Please go ahead.

With a question around the the use of AI for payment filling in the signal loss and enhancing the measurement techniques here.

When you take a step back how much of an advancement is this over previous statement analytics techniques like.

How should we think about the point of competitive differentiation here.

Well I think.

Thanks for the question surrender, I think you've got kind of two parts to that you've got kind of AI as it relates to our predictive audience capability and then you know.

That product internet in and of itself.

What is the differentiator in market I would say the simple explanation in terms of how we are differentiated for other kind of what I would consider more run of the mill basic.

Contextual audience activation places that we've got a significant digital panel that gives us a tremendous amount of insight that allows us to get at you know the the 70% Addressability gap that exists in the ditch.

It'll ecosystem that is you know audiences without Ids, we've leveraged our panel to to play a big role in our in our predictive audience capability, which is which is a big difference no. One else has got the the size of the panel that that we have norwood that ignore.

The economics of investing in something like that and make a ton of sense for for other so that that business benefits from the fact that you know were crowded in our in our system.

And the panel and the measurement standard that Comscore has always bad and we bring that benefit to the to the activation business as it relates to AI.

You know I think the anytime you think about a I think you have to start with the scale of the data that you have to train against and I think that's where we've got a massive differentiator as it relates to at least other players in the in the in the measurement space is that the scope of data that are AI capabilities have the ability.

I need a trained from is a massive differentiator in that that extends to noxious or predictive audiences, but if you think about planning and leveraging AI and planning to better inform outcomes when it gets to to measurement.

Leveraging AI algorithms is it is it is a massive play that that John Lieberman and his team are building out as it relates to our measurement capabilities.

Leveraging AI so for me the AIP starts with the first question is.

What's your what's your dataset, what kind of scale do have because that's what you've got the ability to kind of trained from and then given our size and scale. That's a man that that that's massive back data that is massive kind of ongoing data from digital from linear and so I think that's our biggest differentiator when it comes to.

Overall AI capability.

Got it.

And then when I think about the cross plan for measurement more broadly and I kind of look over.

The revenue trajectory over about the last six quarters or so.

Relatively stable can you kind of unpack the different moving pieces underneath obviously, you're seeing strong double digit growth in some areas but.

Uhm any additional color on what the puts and takes sir.

Yeah, I think really encouraged by the momentum that we continue to build across our local capabilities in those local capabilities are from my perspective of real differentiator as <unk> as it relates to how we deliver cross platform and overall <unk>.

Incrementality to our clients so thick about an advertiser. That's you know running a campaign nationally across a suite of of of markets are local foundation allows us to take that campaign, that's being run by an hour.

Ties are and and highlight over or under performance down to the ZIP code level, we can take that that that many your audience suppress it use it to inform better connected T V purchase behavior through programmatic channels that.

At that cross screen Incrementality capability as a big differentiator and it starts from countless local foundation that Comscore has always been.

Been rooted in and so I think we're just at the tip of the tip of the spear in terms of water opportunities.

On that front, but it it's showing up in our local performance, it's showing up in our our performance in in aspects of our digital business, which grew for the first time in the last five quarters really on the backs of of activation and some of the early wins that we're starting to get again again to what I just spoke about.

Got it and then a question on you called out syndicated digital is a bit of a headwind any additional color there how we should be thinking about a quarter over quarter.

Yeah, It's it's still it's still a significant business and an important part of <unk>.

I I would think I I.

Say this to the to to the team all the time that are syndicated digital business.

Is probably more important now than it ever has been in the history, maybe maybe going all the way back to the beginning in terms of Sigoloff, that's happening across this ecosystem and our client penetration and our ability to work with them to surface their audiences.

In a world where signal losses, proliferating cpm's are getting completely depressed.

Our digital business is really well positioned for future growth and you know we're just.

We're we're just in in a very very very early innings of of what that what that looks like and I expect you'll hear from us over the course of the next quarter on some of the things that we're doing with that asset as it relates to the industry more broadly.

Excellent. Thank you.

Thank you so much and presenters there are no further questions. At this time. This concludes today's conference call. Thank you for participating and you may now disconnect have a good day.

Thanks, everybody here.

Mmm.

[music] [music].