News and Events

Neustar Reports Results for First Quarter 2012

Apr 26, 2012

 

STERLING, Va., April 26, 2012 — Neustar, Inc. (NYSE: NSR), a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, entertainment and marketing industries, today announced results for the quarter ended March 31, 2012. 

GAAP Results for First Quarter 2012 Compared to First Quarter 2011

  • Revenue increased 37% to $199.6 million
  • Income from continuing operations increased 1% to $34.0 million
  • Income from continuing operations per diluted share increased 11% to $0.50
  • Cash, cash equivalents and investments totaled $188.7 million
  • Share repurchases totaled $23.8 million or 655,000 shares

Non-GAAP Results for First Quarter 2012 Compared to First Quarter 2011

  • Adjusted net income from continuing operations increased 16% to $43.9 million
  • Adjusted earnings per share increased 28% to $0.64 per diluted share

“I am pleased with our first quarter results, which demonstrate that we are executing on our strategy,” said Lisa Hook, Neustar’s president and chief executive officer.  “In 2012, we are focused on delivering the highest quality services to our NPAC customers, successfully integrating Information Services and growing its revenue, and achieving our consolidated financial targets.  We remain focused on implementing our growth strategy and driving value for our customers and shareholders over the long term.”

Paul Lalljie, Neustar’s chief financial officer added, “Driven by a substantial contribution from our Information Services operating segment, our revenue grew 37% and we delivered strong earnings.  These solid results produced strong cash flows that enabled us to return significant capital to our stockholders.”

Discussion of First Quarter Results

Consolidated revenue totaled $199.6 million, a 37% increase from $146.1 million in the first quarter of 2011.  This increase included revenue of $35.7 million from our Information Services operating segment and growth in our Carrier Services and Enterprise Services operating segments.  In particular:

  • Carrier Services revenue totaled $124.4 million, a 13% increase from $109.6 million in 2011.  This increase was primarily due to a $10.4 million increase in NPAC Services revenue and a $3.8 million increase in Order Management Services revenue.
  • Enterprise Services revenue totaled $39.5 million, an 8% increase from $36.5 million in 2011.  This increase was primarily due to increased revenue in Registry Services; and
  • Information Services revenue totaled $35.7 million. 

Operating expense totaled $135.2 million, a 51% increase from $89.8 million in the first quarter of 2011.  This increase was primarily driven by the addition of $35.7 million in operating expense from the Company’s recent acquisitions as it continues to diversify its portfolio of services.  The remainder of the increase was primarily to support the expansion of the Company’s operations.  In particular, personnel and personnel-related expense increased $5.7 million due to increased headcount in the areas of sales and marketing, technology and operations and additions to the senior management team.  The remainder of the increase was related to contractor costs incurred to promote brand awareness and improve operational efficiencies.

Cash, cash equivalents and investments totaled $188.7 million as of March 31, 2012, compared to $135.3 million as of December 31, 2011.  Total debt obligations were $593.5 million as of March 31, 2012, compared to $594.6 million as of December 31, 2011.  During the first quarter, the Company purchased 655,000 shares of common stock at an average price of $36.39 per share, for a total purchase price of $23.8 million.

Business Outlook for 2012

The Company affirmed its guidance for revenue and adjusted net income from continuing operations previously provided on February 2, 2012:

  • Revenue to range from $810 million to $830 million
  • Adjusted net income to range from $178 million to $190 million
  • Adjusted net income per diluted share to range from $2.66 to $2.84 

 

Conference Call

As announced on April 17, 2012, Neustar will conduct an investor conference call to discuss the Company’s results today at 4:30 p.m. (Eastern Time).  Prior to the call, investors may access the conference call over the Internet via the Investor Relations tab of the Company’s website (www.neustar.biz).  Those listening via the Internet should go to the website 15 minutes early to register, download and install any necessary audio software.

The conference call is also accessible via telephone by dialing (866) 382-9489 (international callers dial (706) 679-4287) and entering PIN 71908752.  For those who cannot listen to the live broadcast, a replay will be available through 11:59 p.m. (Eastern Time) Wednesday, May 2, 2012 by dialing (855) 859-2056 (international callers dial (404) 537-3406) and entering replay PIN 71908752, or by going to the Investor Relations tab of the Company’s website (www.neustar.biz).

Neustar will take live questions from securities analysts and institutional portfolio managers; the complete call is open to all other interested parties on a listen-only basis.

This press release, the financial tables and other supplemental information, including a reconciliation of segment contribution to the nearest comparable GAAP measure and reconciliations of certain other non-GAAP measures to their nearest comparable GAAP measures that may be used periodically by management when discussing the Company’s financial results with investors and analysts, are available on the Company’s website under the Investor Relations tab.

About Neustar, Inc.

Neustar, Inc. (NYSE: NSR) is a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, entertainment and marketing industries throughout the world.  Neustar applies its advanced, secure technologies in routing, addressing and authentication to its customers’ data to help them identify new revenue opportunities and network efficiencies, and institute cybersecurity and fraud protection measures.  More information is available at www.neustar.biz.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements about the Company’s expectations, beliefs and business results in the future, such as guidance regarding its 2012 results.  The Company has attempted, whenever possible, to identify these forward-looking statements using words such as “may,” “will,” “should,” “projects,” “estimates,” “expects,” “plans,” “intends,” “anticipates,” “believes” and variations of these words and similar expressions.  Similarly, statements herein that describe the Company’s business strategy, prospects, opportunities, outlooks, objectives, plans, intentions or goals are also forward-looking statements.  The Company cannot assure you that its expectations will be achieved or that any deviations will not be material.  Forward-looking statements are subject to many assumptions, risks and uncertainties that may cause future results to differ materially from those anticipated.  These potential risks and uncertainties include, among others, the risks and uncertainties arising from the difficulties with the integration process or the realization of the benefits of the TARGUSinfo acquisition; general economic conditions in the regions and industries in which the Company operates; the uncertainty of future revenue and profitability and potential fluctuations in quarterly operating results due to such factors as disruptions to the Company’s operations, modifications to or terminations of its material contracts, its ability to successfully identify and complete acquisitions, integrate and support the operations of businesses the Company acquires, increasing competition, market acceptance of its existing services, its ability to successfully develop and market new services, the uncertainty of whether new services will achieve market acceptance or result in any revenue, and business, regulatory and statutory changes in the communications industry.  More information about potential factors that could affect the Company’s business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, the Company’s most recent Annual Report on Form 10-K and subsequent periodic and current reports.  All forward-looking statements are based on information available to the Company on the date of this press release, and the Company undertakes no obligation to update any of the forward-looking statements after the date of this press release.

forward-looking statements after the date of this press release.

   

NEUSTAR, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(in thousands, except per share data)

 
   

Three Months Ended

 
   

March 31,

 
   

2011

 

 

2012

 
   

(unaudited)

 

Revenue:

         

Carrier Services

$

109,615

 

$

124,373

Enterprise Services

 

36,480

   

39,485

Information Services

 

   

35,724

Total revenue

 

146,095

   

199,582

Operating expense:

         

Cost of revenue (excluding depreciation and amortization shown separately below)

 

31,052

   

44,898

Sales and marketing

 

24,939

   

38,353

Research and development

 

3,996

   

7,724

General and administrative

 

20,215

   

20,993

Depreciation and amortization

 

9,146

   

22,706

Restructuring charges

 

432

   

522

   

89,780

   

135,196

Income from operations

 

56,315

   

64,386

Other (expense) income:

         

Interest and other expense

 

(347)

   

(8,193)

Interest and other income

 

203

   

229

Income from continuing operations before income taxes

 

56,171

   

56,422

Provision for income taxes, continuing operations

 

22,706

   

22,460

Income from continuing operations

 

33,465

   

33,962

Income from discontinued operations, net of tax

 

38,510

   

Net income

$

71,975

 

$

33,962

           

Basic net income per common share:

         

Continuing operations

$

0.45

 

$

0.51

Discontinued operations

 

0.52

   

Basic net income per common share

$

0.97

 

$

0.51

           

Diluted net income per common share:

         

Continuing operations

$

0.45

 

$

0.50

Discontinued operations

 

0.51

   

Diluted net income per common share

$

0.96

 

$

0.50

           

Weighted average common shares outstanding:

         

Basic

 

73,938

   

67,205

Diluted

 

75,285

   

68,478

           
               

NEUSTAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

                 
         

December 31,

 

 

March 31,

       

2011 

 

 

2012 

         

(audited)

   

(unaudited)

ASSETS

Current assets:

         

Cash and cash equivalents

$

 122,237 

 

$

177,168 

Restricted cash

 

 10,251 

   

10,258 

Short-term investments

 

 10,545 

   

11,388 

Accounts receivable, net

 

 106,274 

   

124,535 

Unbilled receivables

 

 5,551 

   

2,977 

Notes receivable

 

 2,786 

   

2,828 

Prepaid expenses and other current assets

 

 29,714 

   

19,555 

Deferred costs

 

 8,174 

   

8,287 

Income taxes receivable

 

 37,599 

   

9,528 

Deferred tax assets

 

 6,264 

   

7,345 

Total current assets

 

 339,395 

   

373,869 

                 

Long-term investments

 

 2,506 

   

108 

Property and equipment, net

 

 100,102 

   

102,211 

Goodwill

 

 574,651 

   

574,651 

Intangible assets, net

 

 338,768 

   

326,196 

Notes receivable, long-term

 

 3,748 

   

3,025 

Deferred costs, long-term

 

 701 

   

823 

Other assets, long-term

 

 22,767 

   

21,837 

Total assets

$

 1,382,638 

 

$

1,402,720 

                 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current liabilities:

         

Accounts payable

$

7,385 

 

$

4,815 

Accrued expenses

 

 79,334 

   

52,339 

Deferred revenue

 

 41,080 

   

48,781 

Note payable

 

 4,856 

   

59,348 

Capital lease obligations

 

 3,065 

   

3,314 

Accrued restructuring reserve

 

 4,361 

   

1,747 

Other liabilities

 

 5,317 

   

1,576 

Total current liabilities

 

 145,398 

   

171,920 

                 

Deferred revenue, long-term

 

 10,363 

   

11,088 

Note payable, long-term

 

 584,809 

   

529,098 

Capital lease obligations, long-term

 

 1,918 

   

1,782 

Deferred tax liability, long-term

 

121,237 

   

124,927 

Other liabilities, long-term

 

 16,279 

   

17,767 

Total liabilities

 

 880,004 

   

856,582 

           

Stockholders' equity:

         

Common stock

 

 83 

   

85 

Additional paid-in capital

 

 436,598 

   

479,107 

Treasury stock

 

 (495,790)

   

(528,540)

Accumulated other comprehensive loss

 

 (758)

   

(977)

Retained earnings

 

 562,501 

   

596,463 

Total stockholders' equity

 

 502,634 

   

546,138 

Total liabilities and stockholders' equity

$

1,382,638 

 

$

1,402,720 

                 
           

NEUSTAR, INC.

SEGMENT REVENUE AND CONTRIBUTION

(in thousands)

           
   

Three Months Ended

 
   

March 31,

 
   

2011

 

2012

 
   

(unaudited)

 

Revenue: (1) (2)

         

Carrier Services

$

109,615

$

124,373

 

Enterprise Services

 

36,480

 

39,485

 

Information Services

 

 

35,724

 

Total revenue

$

146,095

$

199,582

 
           

Segment contribution:(2) (3)

         

Carrier Services

$

96,579

$

108,446

 

Enterprise Services

 

15,651

 

16,731

 

Information Services

 

 

18,014

 

Total segment contribution

$

112,230

$

143,191

 
           

(1)  Carrier Services:

  • Numbering Services
  • Order Management Services
  • IP Services

 

Enterprise Services:

  • Internet Infrastructure Services
  • Registry Services

 

Information Services:

  • Identification Services
  • Verification & Analytics Services
  • Local Search & Licensed Data Services

(2)  The financial information above reflects the reclassification of the Company’s Converged Messaging Services business to discontinued operations for all periods presented.

(3)  Segment contribution excludes certain unallocated costs within the following expense classifications:  cost of revenue, sales and marketing, research and development, and general and administrative.  In addition, depreciation and amortization and restructuring charges are excluded from segment contribution.  Such unallocated costs totaled $55.9 million and $78.8 million for the three months ended March 31, 2011 and 2012, respectively.

Reconciliation of Non-GAAP Financial Measures

In this press release and in other public statements, Neustar presents certain non-GAAP financial data.  To place these data in an appropriate context, the following is a reconciliation of income from continuing operations to adjusted net income from continuing operations for the three months ended March 31, 2011 and 2012 and the year ending December 31, 2012. 

This reconciliation allows investors to appropriately consider each non-GAAP financial measure.  These non-GAAP financial measures, however, should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.  Management believes that these measures enhance investors’ understanding of the Company’s financial performance and the comparability of the Company’s operating results to prior periods, as well as against the performance of other companies.  However, these non-GAAP financial measures may not be comparable with similar non-GAAP financial measures used by other companies and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.  Prior disclosures of non-GAAP figures do not exclude the same items and as such should not be used for comparison purposes.

Reconciliation of Income from Continuing Operations to Adjusted Net Income from Continuing Operations

 

 

 

Three Months Ended

 

 

Year Ending

 

 

March 31,

 

 

December 31,

 

 

2011 (1)

 

2012

 

 

2012 (2)

   

(in thousands, except per share data)

(unaudited)

Revenue

$

146,095 

$

199,582

 

$

820,000 

               

Income from continuing operations

$

33,465 

$

33,962 

 

$

137,200 

Add: Stock-based compensation

 

6,016 

 

3,901 

   

28,000 

Add: Amortization of acquired intangible assets

 

1,129 

 

12,572

   

50,000 

Add: Adjustment for provision for income taxes(3)

 

(2,888)

 

(6,557)

   

(31,200)

Adjusted net income from continuing operations

$

37,722 

$

43,878 

 

$

184,000 

Adjusted net income margin from continuing operations (4)

 

26%

 

22%

   

22%

Adjusted net income from continuing operations per diluted share

$

0.50 

$

0.64 

 

$

2.75 

Weighted average diluted common shares outstanding

 

75,285 

 

68,478 

 

67,000 

                     

(1)  The results related to the Company’s Converged Messaging Services business for this period have been reclassified to discontinued operations.

(2)  The amounts expressed in this column are current estimates of the results for the full year as of the date of this press release.  This reconciliation is based on the midpoint of the revenue guidance.

(3)  Adjustment reflects the estimated tax effect of adjustments for stock-based compensation expense and amortization of acquired intangible assets based on the effective tax rate for income from continuing operations for the applicable period.

(4)  Adjusted net income margin is a measure of adjusted net income from continuing operations as a percentage of revenue.

Contact Info:

Investor Relations Contact

Dave Angelicchio

(571) 434-3443

InvestorRelations@neustar.biz

 

Media Contact

Susan Wade

(202) 368-5307

SusanWade@neustar.biz