Harris Interactive Inc. (
Q3 2011 Earnings Call
April 28, 2011, 5:00 PM ET
Michael Burns – Vice President, Investor Relations and External Reporting
Kimberly Till – President and CEO
Pavan Bhalla – Executive Vice President, Chief Financial Officer and Treasurer
Eric Narowski – Principal Accounting Officer and SVP, Global Controller
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Good day, ladies and gentlemen and thank you for standing by. Welcome to the Third Quarter 2011 Harris Interactive Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions)
I would now like to introduce you to our host for today, Mr. Michael Burns, Vice President of Investor Relations and External Reporting. Sir, please go ahead.
Good afternoon and thank you for joining us to discuss Harris Interactive’s third quarter fiscal 2011 financial results. With me today are Kimberly Till, our President and Chief Executive Officer; Pavan Bhalla, our Executive Vice President, Chief Financial Officer and Treasurer and Eric Narowski, our Principal Accounting Officer and Senior Vice President, Global Controller.
The format for today’s call will include formal remarks by both Kimberly and Pavan on the state of the business and our performance for the third quarter. After the formal remarks, Kimberly, Pavan and Eric will be available for questions. A webcast replay of this entire call will be accessible via the Investor Relations section of our corporate website later this evening and will be archived there for at least 30 days. However, no telephone replay of this call will be provided. We will post a transcript of this call as soon as practical after the call.
We would like to take this opportunity to remind you that certain statements made during this conference call are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements include beliefs, predictions and expectations related to the company’s future financial performance other business and operating metrics as well as statements regarding the company’s future plans and operations. They involve a number of risks known and unknown that could cause actual results, performance and or achievements of the company to be materially different from the beliefs, predictions and expectations discussed on this call.
Factors that could cause the company’s results to materially differ from the forward-looking statements made today and which are incorporated by reference herein are more fully described in today’s press release, as well as the company’s SEC filings, particularly under the risk factors section of the company’s most recent annual report on Form 10-K, as updated quarterly in our quarterly reports on Form 10-Q to reflect additional material risks.
You are urged to consider these factors carefully in evaluating such forward-looking statements and are cautioned not to place undue reliance on them. The forward-looking statements are only made as of the date of this presentation and the company undertakes no obligation to publicly update them to reflect subsequent events or circumstances.
We’ll also be discussing non-GAAP financial measures including adjusted EBITDA with the add-back of restructuring and other charges. These items are reconciled to GAAP financial measures in today’s press release and the reconciliation is posted on the investor relations section of our website.
I’d now like to turn today’s call over to Harris Interactive’s President and Chief Executive Officer, Kimberly Till. Kimberly?
Thank you, Mike. Good afternoon everyone and thank you for joining us. As many of you will recall, we said in our last earnings call that Q3 has historically been one of our weakest quarters from a seasonality standpoint. However, even considering the seasonality impact, our performance for the quarter was very disappointing.
Pavan will cover our Q3 results in more detail later, but let me briefly provide an overview of our financial performance for the quarter. Our consolidated revenue for Q3 was down $3.8 million or 9% in the quarter compared with last year’s Q3 excluding foreign currency exchange rate differences due mainly to declines in the U.K. of $2.9 million or 42% and the U.S. of $1 million or 4% in constant currency.
The large U.K. decline was due in large part to the revenue impact at the loss of a multimillion dollar tracking study due to a client’s consolidation of seven trackers into one as discussed on the last earnings call.
This loss will have an annual revenue impact of $7.7 million which is difficult to immediately replace. However, we do believe that we can replace this loss revenue overtime. The U.S. revenue decrease was due primarily to a $1.3 million revenue decline in our healthcare sector.
Our consolidated bookings for Q3 were down 13% compared with Q3 of last year excluding foreign currency exchange rate differences, driven primarily by declines in the U.K., U.S. and Canada. The decline in Canada was predominantly due to the early bookings in Q2 of two large tracking studies.
Our operating loss for Q3 was $1.9 million compared with a $943,000 operating loss for last year’s Q3. This operating loss included $448,000 in restructuring and other charges compared with 92,000 in last year’s Q3. So on a normalized basis Q3 fiscal 2011 operating income was $587,000 less than the same period last year. Our increased operating loss is largely explained by the decline in U.K. revenue.