News and Events

Neustar Reports Results for Third Quarter 2013

Oct 30, 2013

STERLING, VA, October 30, 2013 — Neustar, Inc. (NYSE: NSR), a trusted, neutral provider of real-time information services and analysis, today announced results for the quarter ended September 30, 2013, and in a separate release stated that it has acquired Aggregate Knowledge, Inc., a leading campaign and predictive analytics platform, for approximately $119 million in cash consideration.

Results for Third Quarter 2013 Compared to Third Quarter 2012

  • Revenue increased 8% to $227.6 million
  • Non-NPAC revenue increased 9% to $118.3 million
  • Net income increased 4% to $47.5 million.  Net income for the third quarter of 2012 included $5.2 million of discrete income tax benefits
  • Net income per share increased 7% to $0.73

Non-GAAP Results for Third Quarter 2013 Compared to Third Quarter 2012

  • Adjusted net income increased 3% to $62.3 million, representing a 27% margin.  Adjusted net income for the third quarter of 2012 included $5.2 million of discrete income tax benefits
  • Adjusted net income per share increased 6% to $0.95

“We continue to execute on our strategic plan and deliver on our 2013 priorities,” said Lisa Hook, Neustar's President and Chief Executive Officer.  “We have continued to position ourselves for a successful NPAC renewal while broadening our information and analytics capabilities with the addition of the Aggregate Knowledge platform.”

Paul Lalljie, Neustar’s Chief Financial Officer, added, “During the third quarter, we continued to drive shareholder value through our disciplined expense management and commitment to return cash to shareholders.  We continued to experience increased demand for our services but sales cycles have been longer than anticipated, mainly for certain of our information services.” 

Discussion of Third Quarter Results

Consolidated revenue totaled $227.6 million, an 8% increase from $211.2 million in the third quarter of 2012.  In particular:

  • Carrier Services revenue totaled $139.5 million, an 11% increase from $125.2 million in 2012.  This increase was primarily due to a $6.7 million increase in NPAC Services revenue and a $6.2 million increase in Order Management Services revenue;
  • Enterprise Services revenue totaled $44.9 million, a 3% increase from $43.6 million in 2012.  This increase was due to a 9% increase in Internet Infrastructure Services revenue, partially offset by a decrease in Registry Services revenue driven by one-time project-related revenue in 2012; and
  • Information Services revenue totaled $43.3 million, a 2% increase from $42.3 million in 2012. 

Operating expense totaled $147.2 million, an 8% increase from $136.5 million in the third quarter of 2012.  This increase was driven by investments to support business growth, in particular, professional fees increased to pursue new business opportunities and to support the company’s long-term sales strategy.  In addition, advertising and marketing costs increased to promote awareness of the company’s services and solutions.  Cash, cash equivalents and investments totaled $352.7 million as of September 30, 2013, compared to $381.6 million as of June 30, 2013 and to $343.9 million as of December 31, 2012.  During the third quarter, the company purchased approximately 1.8 million shares at an average price of $52.06 per share, for approximately $96.1 million.

Business Outlook for 2013

The company updated its revenue guidance, which was provided on February 5, 2013 and affirmed in the previous two earnings releases.  In addition, the company updated its profitability guidance previously provided on July 30, 2013.

  • Revenue to range from $895 million to $905 million, representing growth of 8% to 9%
  • Adjusted net income to range from $225 million to $231 million, representing growth of 9% to 12%
  • Adjusted earnings per share to range from $3.39 to $3.48, representing growth of 12% to 14% 

Conference Call

As announced on October 17, 2013, Neustar will conduct an investor conference call to discuss the company's results and acquisition 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 888-811-5445 (international callers dial 913-312-0687) and entering PIN 9591303.  For those who cannot listen to the live broadcast, a replay will be available through 11:59 p.m. (Eastern Time) Wednesday, November 6, 2013 by dialing 877-870-5176 (international callers dial 858-384-5517) and entering replay PIN 9591303, or by going to the Investor Relations tab of the company's website (www.neustar.biz).

Neustar will take 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 are available on the company's website under the Investor Relations tab. This includes reconciliations of certain non-GAAP measures to their most directly comparable GAAP measures that may be used periodically by management when discussing the company's financial results with investors and analysts.

About Neustar, Inc.

Neustar, Inc. (NYSE: NSR) is a trusted, neutral provider of real-time information and analysis to the communications services, financial services, retail, and media and advertising sectors.  Neustar applies its advanced, secure technologies to help its clients promote and protect their businesses.  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 its guidance regarding future results of operations .  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, general economic conditions in the regions and industries in which the company operates; the uncertainty of future revenue, expenses 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, the financial covenants in the company's secured credit facility and their impact on the company's financial and business operations; the company's indebtedness and the impact that it may have on the company's financial and operating activities and the company's ability to incur additional debt; the variable interest rates borne by the company's indebtedness and the effects of changes in those rates; the realization of the benefits of the acquisition of Aggregate Knowledge; the reaction of the users of the acquired business; the company's ability to successfully identify and complete acquisitions and integrate and support the operations of businesses the company acquires; increasing competition; market acceptance of its existing services; the company's ability to successfully develop and market new services and 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 risk factors, uncertainties and other 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 
 September 30,

 

Nine Months Ended 
 September 30,

 

2012

 

2013

 

2012

 

2013

 

(unaudited)

Revenue:

 

 

 

 

 

 

 

Carrier Services

$

125,202

 

 

$

139,477

 

 

$

375,922

 

 

$

406,381

 

Enterprise Services

43,630

 

 

44,896

 

 

125,204

 

 

133,466

 

Information Services

42,340

 

 

43,260

 

 

116,090

 

 

124,552

 

Total revenue

211,172

 

 

227,633

 

 

617,216

 

 

664,399

 

Operating expense:

 

 

 

 

 

 

 

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

46,339

 

 

51,434

 

 

137,364

 

 

150,950

 

Sales and marketing

38,040

 

 

40,253

 

 

117,466

 

 

124,468

 

Research and development

7,663

 

 

7,196

 

 

23,483

 

 

22,296

 

General and administrative

20,915

 

 

23,751

 

 

61,999

 

 

66,757

 

Depreciation and amortization

23,622

 

 

24,586

 

 

69,041

 

 

73,941

 

Restructuring (recoveries) charges

(32

)

 

 

 

492

 

 

2

 

 

136,547

 

 

147,220

 

 

409,845

 

 

438,414

 

Income from operations

74,625

 

 

80,413

 

 

207,371

 

 

225,985

 

Other (expense) income:

 

 

 

 

 

 

 

Interest and other expense

(8,517

)

 

(5,496

)

 

(25,114

)

 

(28,851

)

Interest and other income

140

 

 

64

 

 

479

 

 

292

 

Income before income taxes

66,248

 

 

74,981

 

 

182,736

 

 

197,426

 

Provision for income taxes

20,495

 

 

27,442

 

 

64,429

 

 

72,725

 

Net income

$

45,753

 

 

$

47,539

 

 

$

118,307

 

 

$

124,701

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.69

 

 

$

0.74

 

 

$

1.77

 

 

$

1.91

 

Diluted

$

0.68

 

 

$

0.73

 

 

$

1.74

 

 

$

1.87

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

66,523

 

 

63,978

 

 

66,880

 

 

65,223

 

Diluted

67,623

 

 

65,510

 

 

67,961

 

 

66,713

 

 

 

 

NEUSTAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

December 31,
2012

 

September 30,
2013

 

(audited)

 

(unaudited)

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

340,255

 

 

$

352,714

 

Restricted cash

2,543

 

 

1,858

 

Short-term investments

3,666

 

 

 

Accounts receivable, net

131,805

 

 

142,130

 

Unbilled receivables

6,372

 

 

12,927

 

Notes receivable

2,740

 

 

1,601

 

Prepaid expenses and other current assets

17,707

 

 

20,335

 

Deferred costs

7,379

 

 

6,873

 

Income taxes receivable

6,596

 

 

4,324

 

Deferred tax assets

6,693

 

 

5,285

 

Total current assets

525,756

 

 

548,047

 

Property and equipment, net

118,513

 

 

111,541

 

Goodwill

572,178

 

 

576,038

 

Intangible assets, net

288,487

 

 

257,492

 

Notes receivable, long-term

1,008

 

 

 

Other assets, long-term

20,782

 

 

25,585

 

Total assets

$

1,526,724

 

 

$

1,518,703

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,269

 

 

$

5,730

 

Accrued expenses

85,424

 

 

79,187

 

Deferred revenue

49,070

 

 

49,343

 

Notes payable

8,125

 

 

7,972

 

Capital lease obligations

1,686

 

 

572

 

Other liabilities

3,856

 

 

2,826

 

Total current liabilities

157,430

 

 

145,630

 

Deferred revenue, long-term

9,922

 

 

10,020

 

Notes payable, long-term

576,688

 

 

610,285

 

Capital lease obligations, long-term

817

 

 

245

 

Deferred tax liabilities, long-term

114,130

 

 

103,545

 

Other liabilities, long-term

21,129

 

 

22,264

 

Total liabilities

880,116

 

 

891,989

 

Stockholders’ equity:

 

 

 

Common stock

86

 

 

87

 

Additional paid-in capital

532,743

 

 

585,282

 

Treasury stock

(604,042

)

 

(800,737

)

Accumulated other comprehensive loss

(767

)

 

(1,207

)

Retained earnings

718,588

 

 

843,289

 

Total stockholders’ equity

646,608

 

 

626,714

 

Total liabilities and stockholders’ equity

$

1,526,724

 

 

$

1,518,703

 

 

 

Reconciliation of Non-GAAP Financial Measures

In this press release and in other public statements, Neustar presents certain non-GAAP financial measures.  These non-GAAP financial measures have limitations and 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.  Set forth below is the reconciliation of the non-GAAP financial measure to its most directly comparable GAAP financial measure.  This reconciliation should be carefully evaluated.  Prior disclosures of non-GAAP figures may not exclude the same items and as such should not be used for comparison purposes.

 

Reconciliation of Net Income to Adjusted Net Income

The following is a reconciliation of net income to adjusted net income for the three and nine months ended September 30, 2012 and 2013 and the year ending December 31, 2013.  Management believes that this measure enhances 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.

 

 

 

Three Months Ended 
 September 30,

 

Nine Months Ended 
 September 30,

 

Year Ending
 December 31,

 

2012

 

2013

 

2012

 

2013

 

2013 (1)

 

(in thousands, except per share data)
(unaudited)

Revenue

$

211,172

 

 

$

227,633

 

 

$

617,216

 

 

$

664,399

 

 

$

900,000

 

 

 

 

 

 

 

 

 

 

 

Net income

$

45,753

 

 

$

47,539

 

 

$

118,307

 

 

$

124,701

 

 

$

159,000

 

Add: Stock-based compensation

9,037

 

 

9,663

 

 

19,987

 

 

27,675

 

 

43,000

 

Add: Amortization of acquired intangible assets

12,569

 

 

12,385

 

 

37,712

 

 

37,134

 

 

51,000

 

Add: Loss on debt modification and extinguishment (2)

 

 

 

 

 

 

10,886

 

 

10,886

 

Add: Aggregate Knowledge acquisition-related costs (3)

 

 

924

 

 

 

 

924

 

 

1,700

 

Less: Adjustment for provision for income taxes (4)

(6,684

)

 

(8,168

)

 

(20,344

)

 

(27,983

)

 

(37,586

)

Adjusted net income

$

60,675

 

 

$

62,343

 

 

$

155,662

 

 

$

173,337

 

 

$

228,000

 

Adjusted net income margin (5)

29

%

 

27

%

 

25

%

 

26

%

 

25

%

Adjusted net income per diluted share

$

0.90

 

 

$

0.95

 

 

$

2.29

 

 

$

2.60

 

 

$

3.44

 

Weighted average shares outstanding - diluted

67,623

 

 

65,510

 

 

67,961

 

 

66,713

 

 

66,300

 

 

 

 

(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)   Amount represents loss on debt modification and extinguishment related to the refinancing of the company’s 2011 credit facility in the first quarter of 2013.

(3)   Amounts represent costs incurred by the company in connection with its acquisition of Aggregate Knowledge.

(4)   Adjustment reflects the estimated tax effect of tax-deductible adjustments for stock-based compensation expense, amortization of acquired intangible assets, loss on debt modification and extinguishment and Aggregate Knowledge acquisition-related costs of $0.3 million, based on the effective tax rate for the applicable period.  For the year ending December 31, 2013, the company estimates that $39.0 million of stock-based compensation expense will be deductible for income tax purposes.

(5)   Adjusted net income margin is a measure of adjusted net income as a percentage of revenue.

 

 

 

 

 

 

 

Contact Info:

 

 

Investor Relations Contact

Dave Angelicchio

(571) 434-3443

InvestorRelations@neustar.biz

 

Media Contact

Kim Hart

(202) 533-2934

Kim.Hart@neustar.biz