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TheStreet Open House

Neustar Reports Results For Third Quarter 2012

Business Outlook for 2012

The company updated its full-year 2012 guidance, previously provided on July 26, 2012:

  • Revenue range remains unchanged at $825 to $835 million;
  • Adjusted net income to range from $200 to $206 million. Prior adjusted net income guidance was $189 to $197 million; and
  • Adjusted net income per diluted share to range from $2.94 to $3.03. Prior adjusted net income per diluted share range was $2.78 to $2.90

Conference Call

As announced on October 29, 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 43902736. For those who cannot listen to the live broadcast, a replay will be available through 11:59 p.m. (Eastern Time) on Tuesday, November 13, 2012 by dialing 855-859-2056 (international callers dial 404-537-3406) and entering replay PIN 43902736, 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, information services, financial services, retail, media and advertising sectors. Neustar applies its advanced, secure technologies in location, identification, and evaluation to help its customers 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 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, 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

 

 

Nine Months Ended

 

September 30,

 

September 30,

 

2011

 

 

2012

 

2011

 

 

2012

 

(unaudited)

Revenue:
Carrier Services $ 114,155 $ 125,202 $ 334,604 $ 375,922
Enterprise Services 38,342 43,630 111,671 125,204
Information Services   42,340     116,090  
Total revenue 152,497 211,172 446,275 617,216
Operating expense:
Cost of revenue (excluding depreciation and
amortization shown separately below) 34,194 46,339 96,663 137,364
Sales and marketing 25,069 38,040 76,275 117,466
Research and development 3,746 7,663 11,183 23,483
General and administrative 20,960 20,915 63,124 61,999
Depreciation and amortization 10,486 23,622 29,018 69,041
Restructuring (recoveries) charges (33 ) (32 ) 387   492  
94,422   136,547   276,650   409,845  
Income from operations 58,075 74,625 169,625 207,371
Other (expense) income:
Interest and other expense (675 ) (8,517 ) (1,148 ) (25,114 )
Interest and other income 304   140   1,437   479  
Income from continuing operations before income taxes 57,704 66,248 169,914 182,736
Provision for income taxes, continuing operations 19,931   20,495   65,060   64,429  
Income from continuing operations 37,773 45,753 104,854 118,307
Income from discontinued operations, net of tax     37,249    
Net income $ 37,773   $ 45,753   $ 142,103   $ 118,307  
 
Basic net income per common share:
Continuing operations $ 0.52 $ 0.69 $ 1.42 $ 1.77
Discontinued operations     0.51    
Basic net income per common share $ 0.52   $ 0.69   $ 1.93   $ 1.77  
 
Diluted net income per common share:
Continuing operations $ 0.51 $ 0.68 $ 1.40 $ 1.74
Discontinued operations     0.49    
Diluted net income per common share $ 0.51   $ 0.68   $ 1.89   $ 1.74  
 
Weighted average common shares outstanding:
Basic 73,237   66,523   73,658   66,880  
Diluted 74,632   67,623   75,079   67,961  
 
 
NEUSTAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 

December 31,

 

September 30,

2011

2012

(audited)

(unaudited)

ASSETS
Current assets:
Cash and cash equivalents $ 122,237 $ 261,049
Restricted cash 10,251 10,248
Short-term investments 10,545 8,147
Accounts receivable, net 106,274 147,564
Unbilled receivables 5,551 7,213
Notes receivable 2,786 2,860
Prepaid expenses and other current assets 30,166 18,450
Deferred costs 8,174 7,929
Income taxes receivable 38,687 4,093
Deferred tax assets 6,264   5,850  
Total current assets 340,935 473,403
 
Long-term investments 2,506
Property and equipment, net 100,102 107,825
Goodwill 573,307 573,307
Intangible assets, net 338,768 301,056
Notes receivable, long-term 3,748 1,601
Deferred costs, long-term 701 651
Other assets, long-term 22,767   19,891  
Total assets $ 1,382,834   $ 1,477,734  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,385 $ 2,906
Accrued expenses 79,334 69,200
Deferred revenue 41,080 47,595
Note payable 4,856 59,324
Capital lease obligations 3,065 2,294
Accrued restructuring reserve 4,361 741
Other liabilities 5,317   3,241  
Total current liabilities 145,398 185,301
 
Deferred revenue, long-term 10,363 10,115
Note payable, long-term 584,809 526,690
Capital lease obligations, long-term 1,918 817
Deferred tax liability, long-term 121,237 116,526
Other liabilities, long-term 16,475   20,875  
Total liabilities 880,200 860,324
 
Stockholders' equity:
Common stock 83 86
Additional paid-in capital 436,598 516,349
Treasury stock (495,790 ) (579,224 )
Accumulated other comprehensive loss (758 ) (609 )
Retained earnings 562,501   680,808  
Total stockholders' equity 502,634   617,410  
Total liabilities and stockholders' equity $ 1,382,834   $ 1,477,734  
 
 

NEUSTAR, INC.

SEGMENT REVENUE AND CONTRIBUTION
(in thousands)
 

 

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

 

2012

2011

2012

(unaudited)

Revenue: (1)

Carrier Services $ 114,155 $ 125,202 $ 334,604 $ 375,922
Enterprise Services 38,342 43,630 111,671 125,204
Information Services 42,340   116,090  
Total revenue $ 152,497 $ 211,172 $ 446,275   $ 617,216  
 
Segment contribution: (2)
Carrier Services $ 99,302 $ 109,359 $ 293,451 $ 328,243
Enterprise Services 16,551 20,314 47,620 55,911
Information Services 24,064   59,069  
Total segment contribution $ 115,853 $ 153,737 $ 341,071   $ 443,223  
 

(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 $79.1 million for the three months ended September 30, 2011 and 2012, respectively, and totaled $171.4 million and $235.9 million for the nine months ended September 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 nine months ended September 30, 2011 and 2012 and the year ending December 31, 2012.

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