Good day ladies and gentlemen, and welcome to the Third Quarter 2014 comScore, Incorporated Earnings Conference Call. My name is Michelle and I will be your operator today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Mr. Mel Wesley, Chief Financial Officer; and Mr. Serge Matta, President and Chief Executive Officer. Please proceed.

Thank you. Good morning and welcome to comScore's earnings call for the third quarter of 2014. I'm Mel Wesley, comScore's new Chief Financial Officer, and with me today is Serge Matta, President and Chief Executive Officer. Before we begin, please allow me to read the following disclaimer regarding our use of forward-looking information and non-GAAP financial measures. During the course of today's call, as well as during any question-and-answer periods that may follow, representatives of the company may make forward-looking statements within the meanings of Securities Act of 1933, and the Securities Exchange Act of 1934 regarding future events or performance of the company that involve risks and uncertainties, including without limitation, expectations as to opportunities for comScore including customers markets and partnerships; expectations as to the strengths of comScore's business, including the growth and composition of comScore's customer base and renewal rates; expectations regarding comScore's products, including regarding new releases and features, their quality relative to competitors and potential benefits of particular products; expectations as to the financial effects of comScore's expected divestiture of certain business lines and related impairment losses; assumptions regarding tax rates and net operating loss carry-forwards, and forecasts of future financial performance for the fourth quarter and full year 2014, including related growth rates, exchange rates and assumptions. Such statements are only predictions based on management's current expectations. Actual events or results could differ materially from those predictions due to a number of risks and uncertainties, including those identified in the documents comScore files from time-to-time with the Securities and Exchange Commission. Those documents specifically include but are not limited to comScore's Form 8-K filed earlier today relating to this call, and comScore's Form 10-K for the period ending December 31, 2013, and comScore's most recent quarterly reports on Form 10-K. We caution you not to place undue reliance on any forward-looking statements included in these presentations, which speak only as of today. We do not undertake any obligation to publicly update any forward-looking statements to reflect new information after today's call or to reflect the occurrence of unanticipated events. In addition, we may also reference certain non-GAAP financial measures in the course of our presentation. You will find in our press release and on our Investor Relations web site, a reconciliation of non-GAAP financial measures discussed during today's call to the most directly comparable GAAP financial measure. The link to our Investor Relations web site is ir.comscore.com, and our results are posted under Press Releases. We have a presentation posted on our IR website under events and presentations that accompanies our comments today, and will help as you follow along. With that, I will now turn the call over to Serge.

Thank you, Mel, and this is Mel's first earnings call with us, and I'd like to just say how excited we are to have him on our team. Thank you all for joining us early today, especially after a thrilling Washington Redskins win last night in Monday night's football game. Now on to a more serious note; let me first provide an overview of the quarter, and then discuss key operational highlights. After that, I will turn over to Mel to review our financial performance before we take your questions. Let's begin with slide 4; comScore delivered another quarter of record revenues and strong profitability. This reflects continued positive momentum across our business and the strength of our partnerships, which continue to grow in number and impact. Third quarter 2014 revenues were $82.1 million, up 15% over last year. Adjusted EBITDA was $19.1 million, a 17% year-over-year increase and a 23% EBITDA margin, reflecting the significant operating leverage we have in the business and our focus on managing expenses. For the quarter, we added 44 net new customers for the overall business, and added 43 new customers to our Media Metrix Multi-Platform service, bringing our total customers using MMXMP to 448. Two-thirds of these customers also bought Mobile Metrix and/or Video Metrix during the same quarter, continuing a trend I have highlighted before. We see this as a validation that customers place significant value on our whole suite of service offerings and continue to embrace our market leading products, that's measured the multi-platform world. Our contract renewal rate with existing customers again remained above 90% on a constant dollar basis, a metric that I am pleased to say, has been consistent, since we have gone public in 2007. Turning to slide 5; let me review the market opportunity, where we…

Thank you, Serge. Now let's take a closer look at our third quarter results. Revenue in the quarter was $82.1 million, up 15% versus the same quarter last year. Subscription revenue in the quarter was $74.1 million, up 19% versus the same quarter last year. Subscription and project revenue represented 90% and 10% of total revenue respectively. The ongoing success and customer adoption of vCE continues to drive our subscription revenue mix higher. Revenue from existing customers was $75.3 million, up 17% year-over-year and representing 92% of total revenue. During the quarter, we also added 44 net new customers, bringing our total customer count to 32,503. Our international revenue also continued to grow, up 18% year-over-year and representing 31% of total revenue. Turning to margin and expenses, our gross margin was 70%, up 0.4% over the same quarter last year. The higher gross margin trends we continue to experience this year, are primarily attributable to operating model leverage from increased scale and tight expense controls. G&A expenses increased to $50 million for the third quarter, up 20% from the same quarter last year. The increase is largely related to increased stock based compensation and severance costs relating to a change in executive officers that occurred during the quarter, partially offset by a decrease in professional fees. GAAP pre-tax loss for the quarter was $5.8 million, compared to GAAP pre-tax income of $707,000 in the same quarter last year. The decrease was primarily the result of a $6.9 million impairment charge during the quarter, related to our mobile operator division. Excluding the impairment charge, we would have achieved pre-tax income for the quarter of $1.1 million. During the quarter, stock compensation expense was $10.2 million compared to $2 million for the same quarter of last year. The increase relates to the…

Thank you. (Operator Instructions). The first question we have comes from the line of Youssef Squali from Cantor Fitzgerald. Please go ahead. Your line is now open.

Thank you very much. Two questions please; any insight from the Yahoo! partnership that you've had going on for almost a quarter now that could help us may be gauge the size of the opportunity, both for Yahoo! and for Google? And on that, is that option an opt-in or an opt-out just to be clear for both Google and Yahoo!? And Leslie [ph] on EBITDA, so EBITDA margins went up nicely in the quarter, I was just wondering how was your target changed for EBITDA longer term now that its not pressured by the mobile operator analytics business? Thanks a lot.

Sure. Good morning Youssef. So on Yahoo! and Google, it’s a bit too early to say how much revenue we are going to be generating. We are both very optimistic about both partnerships. Yahoo! has gone well, they have solidly given us a ton of data to integrate into vCE and mobile. I know your question is related to revenue on both. Honestly at this point, its hard to say because we are still going and signing up the big agencies and the big advertisers to sign up for the service. Both of them, Yahoo! and Google -- so let me give you some insight on Google. Google as I said, just launched on the third of October. They, just in about few days that we literally got the paperwork just last week, and early this week. We have signed paperwork from the three top agency holding companies. So what does that mean? It means they are signing up for the service that's integrated into Google. It is right now an opt-in basis, and I want to just say, right now is being the key word. We are working with Google and the agency holding companies, to see an automated way to make it opt-out if possible. But for now, it is opt-in. Both, just to give you guys some additional insight, both Yahoo! and Google in this beta period are not charging for their service, but we still get paid, no matter what. So both are currently opt-in, we are working to make it opt-out, and that's one of the reasons why we have been -- we haven't given a whole lot of clarity on the revenue is, until we really see and see the revenue -- materially start seeing the revenue flow in, we don't want to provide guidance until we see it. So we are just being a bit conservative on that side, but for now it is opt-in, and both are going well. As far as EBITDA expansion, we are -- based on as you can tell, the drag on the mobile operator business was definitely a drag to the overall business. That being said, we should see some margin expansion to continue to happen next year and the years going forward. I have always said that you should expect at least one margin point increase year-over-year. We will also however reinvest some of that margin back into the business, mostly to focus on mobile and multi-platform solutions. We really want to expand our mobile panels in a lot of different countries, because once you do that, you then have a Mobile Metrix product, and then as a result, you have a Media Metrix multi-platform product. So its not -- we are going to reinvest some of it, but obviously, we also expect to see additional margin expansion.

Okay. Thanks a lot.

Sure.

The next question we have comes from the line of Andre Benjamin from Goldman Sachs. Please go ahead. Your line is now open.

Thank you. Good morning. I guess my question would be the follow-up on the last; now that the deals are live, I know you can't give any explicit revenue guidance, but is there any color you can provide, maybe on the rates that you're charging for the volumes that run through either Yahoo! or Google relative to what you would charge for an average campaign.

Sure. Unfortunately -- good morning, Andre, unfortunately, I can't disclose the CPM rates. I can tell you -- give you some color, just because I am contractually not allowed to do that with -- based on what we have signed with Google. I can tell you that the Google CPM rate is lower than the Yahoo! CPM rate, and that's to be somewhat expected based on the volume that we anticipate coming in from Google versus Yahoo! But that's as far as color that we have right now. That being said, like I said, during the beta period, they are not charging. Google has decided and we have worked with them. Google has decided to give away this product for free. With the hope of getting as much adoption, and then post-beta, the decision will be made, whether or not to charge. The current plans are, that Google will charge post-beta, but we also are kind of in a wait and see mode, depending on adoption. And that's why its making it a bit difficult for us to project truly the 2015 numbers on how what we think its going to be, because obviously if Google decides not to charge in 2015, then you'd obviously anticipate that adoption will be much higher. If they do charge, adoption will still be very strong, but not as strong if it was for free. So those are kind of the things that we are working on with them. We have a very close partnership and it continues to increase on a day-to-day basis.

Excellent. And one quick follow-up, you have announced a number of different, or progress on a number of different initiatives that should allow you to continue to penetrate both vCE and Mobile Metrix, or Multi-Platform Metrix. As we look at the resulting impact, on say customer account or customer ARPU, how should we be thinking about that, relative to recent trends from both the fourth quarter and into 2015?

Yeah, I think the customer count one is something that we just need to continue to watch going forward. I think most of the new customer accounts, as we have indicated in the past, has come from international, that so in the U.S. That being said, I think with vCE ramping up in these partnerships, there is a theory out there that the new customer accounts may start declining, as a result because we are going to be gaining the new customers from Google, and as such we will be -- its not a new client, its just the way it's being reported. Kind of TBD, we will wait and see how it works. We haven't yet seen a decline, as suggested by the numbers at all so far this year. We expect ARPU to continue to increase, especially for MMXMP when we roll out to these additional new countries. The beautiful think about MMXMP is, it’s the only service in town, and we are the only product that deduplicates this audience across mobile, PCs, smartphones, tablets, and as a result, we definitely have a significant product advantage, both in the U.S., and in countries as we roll them up.

Thank you.

Sure.

The next question we have comes from the line of Jason Helfstein from Oppenheimer. Please go ahead. Your line is now open.

Hey Serge. You're talking a lot more about video on this call; and so just talk about -- I think historically, Nielsen has had a stronger [indiscernible] with video, and it sounds like you guys are really gaining momentum. So talk about what's really driving that, and kind of what you're seeing particularly with the video and vCE integration? And then as a follow-up to that, where are you getting your data for OTT, to add that to Video Metrix? I thought that was pretty interesting. And then just lastly, specific on the guidance, the midpoint, organically of the guidance suggests kind of 15% growth, which is about what you did in this quarter, and then the high end, it seems 18% which would be an acceleration. But yet you're basically saying that you're not assuming any revenue from Google vCE. So I just want to make sure that the high end of the revenue guidance, that is still kind of ex-Google vCE? Thanks.

Sure yeah. Good morning Jason. I think you raised a really good point about video. We have been really laser focused on video. It definitely gets -- Nielsen gets a lot of attention on video, understandably so, based on their heritage. That being said, we feel we are in a very strong position in measuring all of digital video. We have been -- clients have been telling us, you don't provide -- you guys don't get a lot of credit in terms of all your video measurement capabilities. We have obviously started out with Video Metrix a long time ago. We are upgrading to Video Metrix 3.0. But with vCE more importantly, we made it a priority at the beginning of this year, to integrate vCE into all of the major video app platforms. That is something that we made it as a number one priority, and we are fulfilling that priority for us, we are doing well on that, especially with -- when you have relationships with BrightRoll, we are now with a company that you cover, TubeMogul, obviously with YouTube. We feel like we have a very significant position, and potentially even an edge. That being said, we are also integrating in others. It's not like we are not just -- we are not integrated in the Videologies, and the [indiscernible] of the world. We have integration with all of them. We just emphasize corporately that this is a very important strategic initiative of ours, and we will continue doing that on a going forward basis. On an OTT standpoint, it’s a couple of ways we are doing it. I am not going to go too much into the specifics, because we haven't yet fully launched it. We said OTT will come out in 2015. Its going to come from two different sources; one is obviously tagging. We have the capability to tag that content; and as such, we will have visibility. We will also be introducing an in-home solution that will provide us additional data regarding OTT and other forms of media content flowing through the home. I will provide a lot more specifics in the next call or two on that, but we feel very optimistic it will have a very unique offering. As far as the guidance is concerned, I will let Mel comment a bit on this, but there is at the high end of the range. There is probably some Google in it and Yahoo! in it. Its just -- at this point, its really hard to measure. But for sure, at the 17%, 18%, with the growth rate, there will be definitely some Yahoo!, Google. I just can't tell you how much exactly right now, but we are not just saying that, if Google and Yahoo! materialize, we are going to come in at over 18%. That's definitely not something we are seeing at this point. If we are, we will be in an even better position.

Okay, thank you.

Sure.

The next question we have comes from the line of Todd Mitchell from Brean Capital (sic). Please go ahead. Your line is now open.

Hi.

I didn't realize you work for us, Todd.

Good morning. Excuse me, I mean a lot of my questions have been asked. I wanted to kind of go to two questions. So one of the things you have been saying about, it seems like there is this quest for data sources between you and your competitor right now to sort of line up the world. And you talk about the data that you're getting from Yahoo! and that you're getting from Google. You have also talked about the desire to invest in mobile panels internationally. Can you kind of flush out something I don't understand, which is -- what is the difference between data you get through panels on mobile and data that's provided you through your partnerships in the form of -- what you guys refer to demographic data?

Okay, sure. So we do have a data quest to get as much data sources out there. Our strategy, I don't know, I am not going to speak on behalf of Nielsen's strategy, our strategy is very clear. We want to bring as many data sources as possible, because at the end of the day, there is no one perfect data source out there. Let's be very clear, there is always noise in every single data source out there. So our feeling is, the more the merrier, so that we can correlate and ensure that the quality at the individual level, obviously everything being anonymized and privacy-friendly, is clean, is better and significantly better when you add multiple data sources. That's our strategy, that's how we are going by it, and as such, you see with vCE at the beginning of the year, we started with Google, then we went with Yahoo!, now with mobile, obviously mobile being key to our success in 2015 and beyond, Yahoo! will be a very important strategic player for us in mobile, as a data player. But then, Pandora now provides us with a significant amount of data to increase our offering and improve the quality of our offering. Again, we are never going to rely on just one data source. We will use as many data sources as possible. Back to your question, what's the difference in panel versus these relationships. So first of all the panel provides us clickstream information, it shows us exactly what everybody is doing. We let them serve in their natural environment. Associated with that, we get also their demographics. But it’s a panel. And as great a panel that is, its still relatively small compared to what we are getting from these partnerships. The partnerships are getting us hundreds of millions of demographic sources that we can then use and leverage, in not just vCE, but across all of our products, especially with the Pandora relationship that we just announced. So its somewhat apples and oranges, but it definitely improves the overall quality of the product.

I guess, I just don't understand that last [indiscernible]. How do they provide you -- if you are not capturing the whole thing like you do in a panel, how do you integrate this demographic data from these partnerships, to give a sort of rating, and how do you avoid duplication?

Yeah, I can go on, and maybe we will definitely take this offline. We can go on, on a big methodology document, we have that. That's publicly available on our web site. But at the end of the day, it is based on our census collection. Our census collection collects it for every single we have, it’s a cookie-based, it’s a tag-based approach, and we are able to match that data with these third party providers, all anonymously without ever knowing the identity of the individual -- down to the individual level. But I hear you, why don't we take it a bit offline and go into a deep dive methodology if you'd like?

I'd appreciate that at some point. Okay. So last question, perhaps this is not an answerable one as well. If you look at sort of the penetration of advertising that's getting tagged or measured by vCE and sources of demographic data what you're capturing, can you just roughly tell me advertising that's getting tagged by vCE is 10%. We are now tagging and measuring 40% of the web. I mean, do you have sort of the numbers which we can kind of get around, so we can see ultimately what's the runway here?

You know, the last time we did that was at the end of last year, before we announced the Google and Yahoo! relationships. And we mentioned on the call that we are probably penetrated in the low to mid teens, as far as the big advertisers tagging with vCE. That being said, we also used to provide a comparison between vCE and our nearest competitor there. That being said, it becomes somewhat of a moot point, once we integrate -- now that we have integrated with both Yahoo! and Google, because their shares are -- between the two of them, are north of 80% in both display and video. So it becomes somewhat of a moot point, because one of the things that we are, and I am sure you guys are struggling, so are we, is the amount of -- how quickly the adoption rate is going to be. But what if -- assuming we can get to a ton of adoption with Google, this will be a non-issue as well; because there -- like I said, their market share is north of 70% on display and with YouTube being a very large player in this ecosystem, we feel very good about both of those partnerships. So not something I can provide right now, because we honestly don't know, but think the last time we did it was in the low to mid-teens, probably increased since then; because one of the things that I mentioned earlier was, we have not seen any cannibalization associated with either one of those integrations with our regular core offering of vCE. What I mean by that is, a client is not coming to us and saying, hey you have vCE, now with Google, I am going to only use the Google service, and I am not going to use the comScore vCE Reston [ph] (47:54) service, if that's how we call it. That's something that we have not yet seen, we hope that it continues. Obviously if we start seeing it, we will let everybody know.

Thank you.

Sure.

Sir, you have no further questions at this time. (Operator Instructions).

Well thank you for your participation today. Our third quarter 2014 results reflect the momentum we have been building across our business. We continue to enhance the value proposition of our offerings, and to enter into strategic partnerships with leaders and digital media. We remain focused on our key priorities, on the sharp execution of our strategy, and on delivering value to our shareholders. We look forward to speaking with you again on the next conference call. Thank you.