Attached files
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| 8-K - FORM 8-K - NEUSTAR INC | d386035d8k.htm |
| EX-99.2 - SLIDES PRESENTED AT THE JULY 26, 2012 EARNINGS CALL - NEUSTAR INC | d386035dex992.htm |
Exhibit 99.1
Neustar Reports Results for Second Quarter 2012
Company Raises 2012 Guidance
STERLING, Va., July 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 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 June 30, |
Six Months
Ended June 30, |
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| 2011 | 2012 | 2011 | 2012 | |||||||||||||
| (unaudited) | ||||||||||||||||
| Revenue: |
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| 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 | ||||||||||||
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| Total revenue |
147,683 | 206,462 | 293,778 | 406,044 | ||||||||||||
| Operating expense: |
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| 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 | |||||||||||
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| 92,448 | 138,102 | 182,228 | 273,298 | |||||||||||||
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| Income from operations |
55,235 | 68,360 | 111,550 | 132,746 | ||||||||||||
| Other (expense) income: |
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| Interest and other expense |
(126 | ) | (8,404 | ) | (473 | ) | (16,597 | ) | ||||||||
| Interest and other income |
930 | 110 | 1,133 | 339 | ||||||||||||
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| 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 | ||||||||||||
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| Income from continuing operations |
33,616 | 38,592 | 67,081 | 72,554 | ||||||||||||
| (Loss) income from discontinued operations, net of tax |
(1,261 | ) | — | 37,249 | — | |||||||||||
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| Net income |
$ | 32,355 | $ | 38,592 | $ | 104,330 | $ | 72,554 | ||||||||
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| Basic net income (loss) per common share: |
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| Continuing operations |
$ | 0.46 | $ | 0.58 | $ | 0.91 | $ | 1.08 | ||||||||
| Discontinued operations |
(0.02 | ) | — | 0.50 | — | |||||||||||
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| Basic net income per common share |
$ | 0.44 | $ | 0.58 | $ | 1.41 | $ | 1.08 | ||||||||
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| Diluted net income (loss) per common share: |
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| Continuing operations |
$ | 0.45 | $ | 0.57 | $ | 0.89 | $ | 1.06 | ||||||||
| Discontinued operations |
(0.02 | ) | — | 0.50 | — | |||||||||||
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| Diluted net income per common share |
$ | 0.43 | $ | 0.57 | $ | 1.39 | $ | 1.06 | ||||||||
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| Weighted average common shares outstanding: |
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| Basic |
73,807 | 66,917 | 73,872 | 67,060 | ||||||||||||
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| Diluted |
75,015 | 67,887 | 75,129 | 68,132 | ||||||||||||
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NEUSTAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| December
31, 2011 |
June
30, 2012 |
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| (audited) | (unaudited) | |||||||
| ASSETS |
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| Current assets: |
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| 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 | ||||||
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| 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 | ||||||
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| Total assets |
$ | 1,382,834 | $ | 1,438,022 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| 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 | ||||||
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| 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 | ||||||
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| Total liabilities |
880,200 | 863,717 | ||||||
| Stockholders’ equity: |
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| 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 | ||||||
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| Total stockholders’ equity |
502,634 | 574,305 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 1,382,834 | $ | 1,438,022 | ||||
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NEUSTAR, INC.
SEGMENT REVENUE AND CONTRIBUTION
(in thousands)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2011 | 2012 | 2011 | 2012 | |||||||||||||
| (unaudited) | ||||||||||||||||
| Revenue: (1) |
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| 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 | ||||||||||||
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| Total revenue |
$ | 147,683 | $ | 206,462 | $ | 293,778 | $ | 406,044 | ||||||||
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| Segment contribution: (2) |
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| 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 | ||||||||||||
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| Total segment contribution |
$ | 112,988 | $ | 146,295 | $ | 225,218 | $ | 289,486 | ||||||||
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| (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 June 30, |
Six Months Ended June 30, |
Year Ending December 31 2012 (1) |
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| 2011 | 2012 | 2011 | 2012 | |||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Revenue |
$ | 147,683 | $ | 206,462 | $ | 293,778 | $ | 406,044 | $ | 830,000 | ||||||||||
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| 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 | ) | ||||||||||
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| Adjusted net income from continuing operations |
$ | 38,561 | $ | 51,198 | $ | 76,283 | $ | 95,034 | $ | 193,000 | ||||||||||
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| Adjusted net income margin from continuing operations (4) |
26 | % | 25 | % | 26 | % | 23 | % | 23 | % | ||||||||||
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| Adjusted net income from continuing operations per diluted share |
$ | 0.51 | $ | 0.75 | $ | 1.02 | $ | 1.39 | $ | 2.84 | ||||||||||
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| Weighted average diluted common shares outstanding |
75,015 | 67,887 | 75,129 | 68,132 | 68,000 | |||||||||||||||
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| (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 |