News and Events

Neustar Reports Results for Second Quarter 2012

Jul 26, 2012

STERLING, Va., — 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 June 30, 2012 and increased its guidance for full-year 2012. 

GAAP Results for Second Quarter 2012 Compared to Second Quarter 2011

  • Revenue increased 40% to $206.5 million
  • Income from continuing operations increased 15% to $38.6 million
  • Income from continuing operations per diluted share increased 27% to $0.57
  • Cash, cash equivalents and investments totaled $235.0 million
  • Share repurchases totaled $25.0 million or 742,000 shares

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

  • Adjusted net income from continuing operations increased 33% to $51.2 million
  • Adjusted earnings per diluted share increased 47% to $0.75

“Our second quarter results exceeded our expectations, reinforcing our confidence in our ability to execute on our strategy,” said Lisa Hook, Neustar’s president and chief executive officer.  “Neustar has long been a leader in addressing, routing, and policy management.  We are now emerging as a leader in real-time information and analytics, and doing so while meeting our growth targets and other objectives.”

Paul Lalljie, Neustar’s chief financial officer, added, “Our results this quarter demonstrate strength across all of our businesses and our ability to execute on our plan.  In particular, we experienced sequential top-line growth, strong profits, and robust cash generation.  Given our performance to date and the key leading indicators of the business, we are confident in our ability to execute our operational plan and achieve the higher financial projections we are providing today.”

 

Discussion of Second Quarter Results

Consolidated revenue totaled $206.5 million, a 40% increase from $147.7 million in the second quarter of 2011.  This increase included revenue of $38.0 million from our Information Services operating segment.  In particular:

  • Carrier Services revenue totaled $126.3 million, a 14% increase from $110.8 million in 2011.  This increase was primarily due to an $11.0 million increase in NPAC Services revenue and a $2.1 million increase in Order Management Services revenue.
  • Enterprise Services revenue totaled $42.1 million, a 14% increase from $36.8 million in 2011.  This increase was due to higher revenue in Registry Services and Internet Infrastructure Services; and
  • Information Services revenue totaled $38.0 million comprised of $23.0 million in Identification Services, $9.8 million in Verification & Analytics Services, and $5.2 million in Local Search & Licensed Data Services. 

 

Operating expense totaled $138.1 million, a 49% increase from $92.4 million in the second quarter of 2011.  This increase was primarily driven by the addition of $37.1 million in operating expense from the Company’s recent acquisitions as it continues to diversify its portfolio of services.  The remaining $8.6 million of the increase was primarily driven by the growth in the Company’s operations.  In particular, personnel and personnel-related expense increased $3.4 million due to increased headcount in the areas of sales and marketing, technology and operations.  

Cash, cash equivalents and investments totaled $235.0 million as of June 30, 2012, compared to $188.7 million as of March 31, 2012 and compared to $135.3 million as of December 31, 2011.  During the second quarter, the Company repurchased approximately 742,000 shares of common stock at an average price of $33.67 per share, for a total purchase price of approximately $25.0 million.

Business Outlook for 2012

The Company increased the full-year guidance for revenue and adjusted net income from continuing operations that was provided on February 2, 2012 and affirmed on April 26, 2012:

  • Revenue to range from $825 to $835 million.  Prior revenue guidance was between $810 and $830 million
  • Adjusted net income to range from $189 to $197 million.  Prior adjusted net income guidance was $178 to $190 million
  • Adjusted earnings per diluted share to range from $2.78 to $2.90.  Prior adjusted earnings per diluted share was $2.66 to $2.84

Conference Call

As announced on July 12, 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). 

The conference call is also accessible via telephone by dialing 866-382-9489 (international callers dial 706-679-4287) and entering PIN 99777389.  For those who cannot listen to the live broadcast, a replay will be available through 11:59 p.m. (Eastern Time) Thursday, August 2, 2012 by dialing 855-859-2056 (international callers dial 404-537-3406) and entering replay PIN 99777389, or by going to the Investor Relations tab of the Company’s website (www.neustar.biz).

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.

 


 

 

 

 

 

 

 

 

 

NEUSTAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2011

 

2012

 

2011

 

2012

 

 

(unaudited)

Revenue:

 

 

 

 

 

 

 

 

Carrier Services

$

110,834

$

126,347

$

220,449

$

250,720

Enterprise Services

 

36,849

 

42,089

 

73,329

 

81,574

Information Services

 

 

38,026

 

 

73,750

Total revenue

 

147,683

 

206,462

 

293,778

 

406,044

Operating expense:

 

 

 

 

 

 

 

 

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

 

31,417 

 

46,127

 

62,469

 

91,025

Sales and marketing

 

26,267

 

41,073

 

51,206

 

79,426

Research and development

 

3,441

 

8,096

 

7,437

 

15,820

General and administrative

 

21,949

 

20,091

 

42,164

 

41,084

Depreciation and amortization

 

9,386

 

22,713

 

18,532

 

45,419

Restructuring (recoveries) charges

 

(12)

 

2

 

420

 

524

 

 

92,448

 

138,102

 

182,228

 

273,298

Income from operations

 

55,235

 

68,360

 

111,550

 

132,746

Other (expense) income:

 

 

 

 

 

 

 

 

Interest and other expense

 

(126)

 

(8,404)

 

(473)

 

(16,597)

Interest and other income

 

930

 

110

 

1,133

 

339

Income from continuing operations before income taxes

 

56,039

 

60,066

 

112,210

 

116,488

Provision for income taxes, continuing operations

 

22,423

 

21,474

 

45,129

 

43,934

Income from continuing operations

 

33,616

 

38,592

 

67,081

 

72,554

(Loss) income from discontinued operations, net of tax

 

(1,261)

 

 

37,249

 

Net income

$

32,355

$

38,592

$

104,330

$

72,554

 

 

 

 

 

 

 

 

 

Basic net income (loss) per common share:

 

 

 

 

 

 

 

 

Continuing operations

$

0.46

$

0.58

$

0.91

$

1.08

Discontinued operations

 

(0.02)

 

 

0.50

 

Basic net income per common share

$

0.44

$

0.58

$

1.41

$

1.08

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per common share:

 

 

 

 

 

 

 

 

Continuing operations

$

0.45

$

0.57

$

0.89

$

1.06

Discontinued operations

 

(0.02)

 

 

0.50

 

Diluted net income per common share

$

0.43

$

0.57

$

1.39

$

1.06

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

73,807

 

66,917

 

73,872

 

67,060

Diluted

 

75,015

 

67,887

 

75,129

 

68,132

 

 

 

 

 

 

 

 

 


 

NEUSTAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

June 30,

 

 

 

 

2011 

 

 

2012 

 

 

 

 

 

(audited)

 

 

(unaudited)

ASSETS

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

 122,237 

 

$

224,635 

Restricted cash

 

 10,251 

 

 

10,247 

Short-term investments

 

 10,545 

 

 

10,381 

Accounts receivable, net

 

 106,274 

 

 

127,210 

Unbilled receivables

 

 5,551 

 

 

8,439 

Notes receivable

 

 2,786 

 

 

2,870 

Prepaid expenses and other current assets

 

 30,166 

 

 

19,091 

Deferred costs

 

 8,174 

 

 

7,764 

Income taxes receivable

 

 38,687 

 

 

– 

Deferred tax assets

 

 6,264 

 

 

7,738 

Total current assets

 

 340,935 

 

 

418,375 

 

 

 

 

 

 

 

 

 

Long-term investments

 

 2,506 

 

 

– 

Property and equipment, net

 

 100,102 

 

 

108,651 

Goodwill

 

 573,307 

 

 

573,307 

Intangible assets, net

 

 338,768 

 

 

313,625 

Notes receivable, long-term

 

 3,748 

 

 

2,291 

Deferred costs, long-term

 

 701 

 

 

831 

Other assets, long-term

 

 22,767 

 

 

20,942 

Total assets

$

 1,382,834 

 

$

1,438,022 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

7,385 

 

$

3,569 

Accrued expenses

 

 79,334 

 

 

61,156 

Income taxes payable

 

 

 

6,126 

Deferred revenue

 

 41,080 

 

 

47,597 

Note payable

 

 4,856 

 

 

59,336 

Capital lease obligations

 

 3,065 

 

 

3,094 

Accrued restructuring reserve

 

 4,361 

 

 

1,287 

Other liabilities

 

 5,317 

 

 

3,660 

Total current liabilities

 

 145,398 

 

 

185,825 

 

 

 

 

 

 

 

 

 

Deferred revenue, long-term

 

 10,363 

 

 

10,392 

Note payable, long-term

 

 584,809 

 

 

527,892 

Capital lease obligations, long-term

 

 1,918 

 

 

1,011 

Deferred tax liability, long-term

 

121,237 

 

 

120,222 

Other liabilities, long-term

 

 16,475 

 

 

18,375 

Total liabilities

 

 880,200 

 

 

863,717 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

Common stock

 

 83 

 

 

85 

Additional paid-in capital

 

 436,598 

 

 

493,790 

Treasury stock

 

 (495,790)

 

 

(553,909)

Accumulated other comprehensive loss

 

 (758)

 

 

(716)

Retained earnings

 

 562,501 

 

 

635,055 

Total stockholders' equity

 

 502,634 

 

 

574,305 

Total liabilities and stockholders' equity

$

1,382,834 

 

$

1,438,022 

 

 

 

 

 

 

 

 

 

NEUSTAR, INC.

SEGMENT REVENUE AND CONTRIBUTION

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2011

 

2012

 

2011

 

2012

 

 

(unaudited)

Revenue: (1)

 

 

 

 

 

 

 

 

Carrier Services

$

110,834

$

126,347

$

220,449

$

250,720

Enterprise Services

 

36,849

 

42,089

 

73,329

 

81,574

Information Services

 

 

38,026

 

 

73,750

Total revenue

$

147,683

$

206,462

$

293,778

$

406,044

 

 

 

 

 

 

 

 

 

Segment contribution:(2)

 

 

 

 

 

 

 

 

Carrier Services

$

97,570

$

110,438

$

194,149

$

218,884

Enterprise Services

 

15,418

 

18,866

 

31,069

 

35,597

Information Services

 

 

16,991

 

 

35,005

Total segment contribution

$

112,988

$

146,295

$

225,218

$

289,486

 

 

 

 

 

 

 

 

 

 

(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)   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 $57.8 million and $77.9 million for the three months ended June 30, 2011 and 2012, respectively, and totaled $113.7 million and $156.7 million for the six months ended June 30, 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 and six months ended June 30, 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

 

Six Months Ended

 

 

Year Ending

 

 

June 30,

 

June 30,

 

 

December 31

 

 

2011

 

2012

 

2011

 

2012

 

 

2012 (1)

 

 

(in thousands, except per share data)

 

 

(unaudited)

Revenue

$

147,683 

$

206,462 

$

293,778 

$

406,044 

 

$

830,000 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

33,616 

$

38,592 

$

67,081 

$

72,554 

 

$

146,800 

Add: Stock-based compensation

 

6,000 

 

7,049 

 

12,016 

 

10,950 

 

 

27,000 

Add: Amortization of acquired intangible assets

 

1,110 

 

12,571 

 

2,239 

 

25,143 

 

 

50,000 

Add: TARGUSinfo acquisition-related costs (2)

 

680 

 

– 

 

680 

 

– 

 

 

– 

Add: Adjustment for provision for income taxes (3)

 

(2,845)

 

(7,014)

 

(5,733)

 

(13,613) 

 

 

(30,800)

Adjusted net income from continuing operations

$

38,561 

$

51,198 

$

76,283 

$

95,034 

 

$

193,000 

Adjusted net income margin from continuing operations (4)

 

26% 

 

25% 

 

26% 

 

23% 

 

 

23% 

Adjusted net income from continuing operations per diluted share

$

0.51 

$

0.75 

$

1.02 

$

1.39 

 

$

2.84 

Weighted average diluted common shares outstanding

 

75,015 

 

67,887 

 

75,129 

 

68,132 

 

 

68,000

 

 (1)  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.

(2)   Amounts represent costs incurred by the Company in connection with its acquisition of Targus Information Corporation.  These costs are not deductible for income tax purposes.

(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