comScore Revenue Grows by 41%

ComScore, Inc. (NASDAQ:SCOR) on Friday reported financial results for the first quarter ended March 31, 2008.comScore reported revenue of $26.4 million for the quarter ended March 31, 2008, an increase of 41 percent compared to the first quarter of 2007 and an increase of four percent over the fourth quarter of 2007. This revenue performance exceeded the range of the company’s guidance of approximately $25.9 million to $26.2 million for first quarter 2008.

“In the first quarter, comScore achieved the highest revenue level in the company’s history,” said Magid Abraham, comScore’s chief executive officer and president. “As we continued to pursue our strategic priorities of increasing value for our customers and shareholders, we generated 41 percent revenue growth over the first quarter of 2007, while our deferred revenue balance increased 46 percent over the balance at the end of the first quarter of 2007. These excellent revenue results were achieved while we simultaneously increased our pre-tax net income by 165 percent, our net income by 64 percent and our Adjusted EBITDA by 104 percent.”

First quarter 2008 GAAP income before income taxes was $4.2 million, up 165 percent compared to the first quarter of 2007. Net income was $2.5 million, up 64 percent compared to the same period in 2007. The tax rate included in net income is a normalized effective tax rate of 39.9 percent, inclusive of an effective cash tax rate of 1.5 percent as the company continues to utilize net operating loss carryforwards to reduce cash taxes. By comparison, the first quarter 2007 net income includes an effective tax rate of 2.9 percent.

“We continued to make gains in penetrating our existing customer base both in the U.S. and internationally, while adding a net 53 new customers in the first quarter. Despite recent indications of a slowing U.S. economy, our confidence in the strength of our business and client demand for our products and services remains unchanged. The quality of our client relationships is reflected in our revenue growth amongst existing customers of 38 percent and a sub scri ption renewal rate that was 93 percent this quarter,” continued Abraham. “At the same time, we have been taking steps to further develop our new product pipeline and lay the foundation for future growth. During the first quarter, we launched Ad Metrix-Advertiser View, a powerful tool for agencies and publishers designed to support their media buying and selling activities and supply their competitive intelligence needs. In April, we launched the second generation of our media planning product, Plan Metrix, and increased the frequency of reporting from a semi-annual to a monthly cycle.”

comScore is forecasting full-year 2008 revenue of approximately $113.0 million to $113.6 million; up 30 percent over actual full-year 2007 revenue results. This represents an increase over the company’s previous full-year 2008 revenue guidance of $112.2 million to $113.2 million.

For the full-year 2008, comScore is projecting GAAP net income of $10.3 million to $11.5 million. A normalized estimated effective tax rate of approximately 41 percent, inclusive of an estimated cash tax rate of approximately 4.9 percent, is assumed to be applied against full-year earnings before taxes. Our projection also assumes that recent general declines in interest rates will result in interest income for 2008 that is approximately $900,000 lower than initially anticipated. Given these assumptions, the company is projecting GAAP EPS for the full-year 2008 of $0.34 to $0.38 per share.

The company is projecting Adjusted EBITDA for the full-year 2008 in the range of $26.0 million to $26.5 million, an increase of 45 percent to 48 percent as compared to full-year 2007. This compares to the company’s previous full-year adjusted EBITDA guidance of $25.4 million to $26.4 million. The adjusted EBITDA margin for the full-year 2008 is projected to be between 23 percent and 24 percent, an increase of two to three percentage points compared to full-year 2007 despite a reduction of approximately one percentage point attributable to incremental costs incurred in the first half of 2008 due to comScore’s public reporting and compliance obligations, which costs were not applicable to the company in the first half of 2007.

comScore is also forecasting non-GAAP adjusted net income of approximately $22.8 million to $23.7 million and non-GAAP EPS of $0.75 to $0.80 per share for full-year 2008.

comScore is forecasting second quarter 2008 revenue of approximately $27.1 million to $27.4 million, an increase of 30 percent to 32 percent compared to the second quarter of 2007. For the second quarter of 2008, comScore is projecting GAAP net income of $2.0 million to $2.3 million. The company is forecasting GAAP EPS for the second quarter 2008 of $0.07 to $0.08 per share.

Adjusted EBITDA for the second quarter 2008 is forecast to be $5.8 million to $6.1 million, an increase of 40 percent to 48 percent compared to the second quarter of 2007 and includes approximately $600,000 of incremental public company costs that were not applicable in the second quarter of 2007. The adjusted EBITDA forecast for the second quarter of 2008 results in an adjusted EBITDA margin of 21 percent to 23 percent, up one to two percentage points compared to the second quarter of 2007, despite the effects of approximately two percentage points of reduced margin due to incremental public company expense. Furthermore, comScore has historically had seasonally high costs as a percentage of revenue in the first half of its fiscal year based on such items as higher payroll taxes, vacation accruals and a ramp up of hiring primarily in the sales force and technology groups to support anticipated revenue growth. The company expects a similar pattern for 2008.

comScore is also forecasting non-GAAP adjusted net income for the second quarter 2008 of $4.7 million to $5.0 million. The company is forecasting non- GAAP EPS for the second quarter 2008 of $0.16 to $0.17 per share. A reconciliation of the guidance for second quarter and full-year 2008 GAAP net income and EPS to the adjusted EBITDA, non-GAAP adjusted net income and non- GAAP EPS is set forth in the table accompanying this release.

comScore reports all financial information required in accordance with generally accepted accounting principles (GAAP). comScore believes, however, that evaluating its ongoing operating results will be enhanced if it also discloses certain non-GAAP information because it is useful to understand comScore’s performance, as it excludes non-cash and other special charges that many investors believe may obscure comScore’s on-going operating results.

In addition, comScore uses non-GAAP adjusted net income, which excludes the impact of the revaluation of preferred stock warrant liabilities, stock- based compensation, the amortization of intangible assets resulting from acquisitions, withdrawn follow-on public offering costs and the additional income tax provision booked or projected for 2008 resulting from the valuation allowance reversal in 2007, to evaluate profit performance while including the impact of interest income/expense and cash taxes. comScore also reports non- GAAP EPS (diluted), which uses non-GAAP adjusted net income in lieu of GAAP net income in calculating earnings per share.

comScore’s management also uses free cash flow as a non-GAAP measure of the company’s operating cash flow less cash expenditures for capital spending as a key indicator of the company’s operating cash flow performance net of capital outlays.

Whenever comScore uses such non-GAAP financial measures, it provides a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. The mid-points of the ranges for projected GAAP net income and non-GAAP adjusted net income are used in the reconciliation, where applicable. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure.

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