comScore, Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. The filing also reports fourth-quarter results. comScore measures advertising, content and audiences across digital, television, streaming and movie platforms.
Financial performance and liquidity
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $356.0 million | $388.6 million |
| Gross profit / margin | $175.3 million / 49.2% | $189.0 million / 48.6% |
| Operating loss | $21.3 million | $310.5 million |
| Net loss | $47.9 million | $339.0 million |
| Adjusted EBITDA (non-GAAP) | $32.3 million | $6.2 million |
| Operating cash flow | $0.7 million | $(4.6) million |
| Cash, cash equivalents and restricted cash | $50.7 million | $66.8 million |
Fourth-quarter 2020 revenue was $90.0 million, gross profit was $46.5 million (51.7% margin), operating loss was $1.8 million and net loss was $13.2 million. The comparable fourth-quarter 2019 figures were revenue of $95.2 million, gross profit of $48.3 million, operating loss of $5.9 million and net loss of $21.4 million.
At year-end, cash and cash equivalents were $31.1 million and restricted cash was $19.6 million. Current assets were $137.0 million versus current liabilities of $184.3 million. Debt included $204.0 million face value of senior secured convertible notes (carrying value $192.9 million) and a $13.0 million secured term note (carrying value $12.6 million). The Notes bore 12% interest and required a minimum cash balance of $40 million; the company reported compliance with debt covenants at year-end. Total liabilities were $449.0 million and stockholders’ equity was $229.0 million.
Changes versus prior period
- Revenue declined 8.4% year over year. Ratings and Planning fell 6.6% to $253.7 million; Analytics and Optimization fell 7.6% to $69.1 million; Movies Reporting and Analytics fell 21.3% to $33.3 million.
- Management attributed lower digital, custom analytics and movie revenue to COVID-19 impacts, including weaker customer activity, theater closures and delayed film releases. TV revenue increased, supported by political customer deliveries, local/addressable TV and a LiveRamp partnership.
- Operating loss narrowed substantially, primarily because 2019 included $224.3 million of goodwill impairment, $17.3 million of intangible-asset impairment, investigation/audit and restructuring costs. In 2020, comScore recorded a $4.7 million non-cash impairment of lease and related long-lived assets.
- Cost reductions lowered selling and marketing, R&D and G&A expenses. Data costs rose 5.7% to $63.6 million as the company expanded TV data licensing; management expected increased data costs to continue in 2021.
- Net loss improved, but included $14.6 million of other income, mainly non-cash fair-value gains on financing derivatives and warrants. Adjusted EBITDA is a non-GAAP measure and should be considered alongside GAAP results and cash flow.
Outlook, transactions and risks
- The filing provides no quantified operating guidance. Management said COVID-19 effects on customer renewals, collections and movie-related business could continue, and that it could not quantify future impacts.
- After year-end, Charter, Qurate and Pine agreed to invest $68 million each, or $204 million total, for Series B convertible preferred stock. Stockholders approved the transactions on March 9, 2021; closing was expected around March 10. Proceeds were intended to repay the $204 million Notes, with the $13 million secured term note and transaction expenses to be repaid using balance-sheet cash. Management expected debt repayment to end related covenants and improve liquidity, and said approved transactions should fund estimated needs for at least one year after the financial statements’ issuance date.
- The preferred stock carries a 7.5% annual cash dividend, rising to 9.5% if a full dividend is missed or certain consent-right breaches occur. The investors’ preferred shares were expected to convert into approximately 82.5 million common shares, about 50.6% of post-closing common shares on an as-converted basis. The investors also receive governance and consent rights. The company estimated a $15 million to $25 million non-cash transaction-related charge at closing; the amount depends on closing-date factors.
- Key risks include ongoing losses and limited unrestricted cash, customer payment delays and concentration, dependence on third-party data, intense competition, privacy and cybersecurity regulation, changes in measurement technology, and the possibility that the preferred-stock transactions’ commercial benefits or liquidity assumptions do not materialize. The company reported a $47.9 million net loss in 2020 and an accumulated deficit of $1.16 billion.
- Approximately $210 million of remaining performance obligations under non-cancelable contracts was expected to be recognized: about 63% in 2021 and 28% in 2022.
- A privacy class-action settlement remained subject to final court approval. A securities class action was dismissed with prejudice in July 2020. The auditor issued unqualified opinions on the financial statements and internal controls; management also concluded disclosure controls and internal control over financial reporting were effective at year-end.
Investor facts to verify
- Confirm completion and final terms of the preferred-stock transactions, repayment of both debt instruments, related fees and the actual post-closing cash balance.
- Review the preferred dividend, investor consent and board rights, conversion terms, warrant anti-dilution adjustment and resulting fully diluted share count.
- Track unrestricted liquidity, customer collections, covenant status before repayment and cash requirements after the new preferred dividends.
- Assess whether revenue stabilizes, particularly syndicated digital, custom analytics and movie services, and whether the forecast data-cost increases affect margins.
- Monitor the non-cash transaction charge, derivative and warrant remeasurement, and any subsequent goodwill or long-lived-asset impairment indicators.
- Check final court approval of the privacy settlement and developments in privacy regulation, data access and cybersecurity.