COMSCORE, INC. Q2 FY2024 earnings call

• The company is undergoing a turnaround from relying on legacy markets to a transactional model for future media measurement.
• There's progress in cross-platform offerings like Proximic and CCR, though CCR adoption pace is slower than expected. An example of Proximic's Predictive Audiences showing scaling from small revenue bump to over $1 million monthly in one platform.
• Second quarter results: Total revenue $85.8M, down 8.4%; Adjusted EBITDA $6.9M, margin 8.1%; core operating expenses down 6.1% year-over-year.
• Balance sheet progress: Paid down $6M of credit facility balance, evaluating financing options, nearly completed restructuring plan, and reached an agreement with preferred shareholders regarding Series B preferred shares.

Total revenue for the second quarter was $85.8 million, down 8.4% from the same quarter in 2023. Content and ad measurement revenue was $72.2 million, down 6.7% from 2023, primarily due to lower syndicated audience revenue; the movies business had 5% revenue growth year-over-year. Cross-platform revenue declined, with CCR revenue down due to a pause in usage with a large enterprise client, but Proximic revenue grew though slightly lower than expected. Research and Insight Solutions revenue was $13.6 million, down 16.5% from 2023, mainly because of fewer custom digital solutions deliverables. Content and ad measurement contributed around 84.1% to total revenue ($72.2 million / $85.8 million), cross-platform around a smaller portion, and Research and Insight Solutions around 15.9% ($13.6 million / $85.8 million).

• Revised full-year 2024 revenue to be between $350M and $360M, a decline of 3%-6% from 2023.
• Third quarter 2024 revenue expected to be down 4%-6% year-over-year, but decline to moderate in the back half as Proximic and CCR ramp.
• Target minimum adjusted EBITDA margin of 10%.

• Pressure on legacy media clients creating headwinds for syndicated offerings.
• Slower-than-expected ramp of CCR integration.
• Short-term negative impact on Proximic revenue due to Oracle's ad business shutdown.

Q: Given all of the changes and the challenges in the legacy business, what really is the path forward here given that the newer products that you're focused on are much more part of the business at this point?

A: Hi Surrender, thanks. I mean big picture, we're focused on areas of where comScore has got significant opportunity, and that's going to continue to be in our cross-platform capability and building out the solutions that our clients are asking us for, and that includes expanding CCR integrations. It includes our cross-platform, content planning product that I mentioned, and it includes continued investment in sales and product development inside Proximic, and that's where we're going to continue to focus the lion's share of our investment, because that's where we see the most significant growth going forward as we look out over the early the remainder of this year and certainly, they're a part 2025.

Q: But I guess from a headwinds perspective, what's the risk that these headwinds remain material for a significant period of time and just asking the other parts of the business. I guess that's kind of what I was trying to get at. And are there maybe strategic alternatives or options that you can think about, for example, the movies business or anything else where it may be able to separate out some of the parts of the business?

A: Yes. I understand the question. I'm not going to comment on maybe some of the strategic points that you mentioned if we've got an announcement to make. We'll certainly make that available. But I think when we look at the balance of this year, what we put out for our thinking on 2025 as it relates to the traditional businesses, outside of custom, which does get choppy. And in the guide, we've really stripped out any kind of try to account for any unknown in the custom business in the guide. But as it relates to the traditional products, TV, in digital, I think by the time we get to the end of this year, we'll have anniversaried a lot of the, I would say, churn that we've seen in the digital product, we'll have anniversaried some of the big major renewals that we have this year and that we had in parts of last year. So just in terms of the visibility to that side of the business as we exit, certainly the third quarter and the early parts of the fourth quarter, we've got pretty good line of sight into what that -- how that business kind of stabilizes itself.

Q: Just you kind of gave an example of the ramp in Proximic and then you kind of transition that to commentary around CCR. How should we be thinking about that? Is that -- are we measuring that in quarters or how should we talk about where you want to be at a certain point in the target?

A: Yes. I mean I think what we've learned here with CCR is that, we're integrating with some very big platforms. And much of the time line that we're talking about here is not always in our control in terms of the pace with which these things start to become visible inside those platforms. If anything, I think we can look back and learn from Proximic, and that was the example that I used, where it took some time. We're now 15 months into that integration. And as I mentioned on the call, we're doing over $1 million a month in one platform. And looking back on it, it took 3 to 6 months to really start to see meaningful momentum build. If you look at where we are with CCR, for example, the Trade Desk, which is one that we've talked about publicly, it really didn't get into the platform until the early part of July, and that was certainly delayed from when we had initially expected it to be. But that gives you a sense for CCR is still in the very early innings inside that platform specifically. And so, I think we're talking about months and quarters as these things start to get scale, we tried to account for that in terms of resetting our expectation for the growth that we can count on from that specifically in the balance of the second half.