Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Comscore's Fourth Quarter 2018 Financial Results Conference. At this time, all participants are in a listen-only mode. [Operator Instructions] Later, we will have a question-and-answer session. And as a reminder, this conference is being recorded for replay purposes. Now it's my pleasure to turn the call to your host for today Mr. Steve Calk.

Good afternoon. Thank you, operator. Before we begin our prepared remarks, I would like to remind all of you that the following discussion contains forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of '95. These forward-looking statements include comments about our plans, expectations and prospects and are based on our view as of today, February 28, 2019. We disclaim any duty or obligation to update our forward-looking statements to reflect new information after today's call. We'll be discussing non-GAAP measures during this call, for which we've provided reconciliations in the appendices of today's press release and on our website. Our actual results in future periods may differ materially from those currently expected, because of a number of risks and uncertainties. These risks and uncertainties include those outlined in our 10-K, 10-Q and other filings with the SEC which you can find on our website or at sec.gov. I will now turn the call over to Comscore's CEO, Bryan Wiener. Bryan?

Hello, everyone. Thank you for joining our fourth quarter and full year 2018 financial results call. I'm joined by Sarah Hofstetter, our President and Greg Fink, our CFO. Together we will take you through our Q4 results and outline our vision for 2019, which is both ambitious and optimistic, as we look to build on our momentum from the second half of this year. The headline today is our strategy of becoming a trusted currency for planning, transacting and evaluating media across platforms is working. Comscore is uniquely positioned to help content providers and advertisers grow in a dynamic environment that has becoming less influenced by historical inertia that has characterized the measurement marketplace. Within this new world our position is that of an enabler, working with our partners to unlock new ways of doing business and driving growth. With that I am excited to report that Q4 was a marquee quarter for Comscore and a strong finish to a pivotal year in our path forward. While we are not declaring victory, we do believe today's report is yet another proof point that we're on the right track toward building a business that can deliver improved revenue growth with expanding margins over time. Revenue in Q4 exceeded our expectations due to a strong selling quarter as well as the excellent delivery on our solutions. Here are some highlights from Q4. TV and cross-platform revenue increased more than 30% year-over-year. We believe our position as a modern and viable currency alternative will only improve as traditional TV and premium digital video converge. We also signed landmark deals with major local TV station groups that we believe will greatly accelerate our adoption as a buying currency in 2019. Within Ratings and Planning revenue for our syndicated digital products was down only 1%…

Thanks, Bryan. As Bryan mentioned I am currently on site at the ANA Brand Masters Conference, which is an annual gathering of Fortune 500 marketing executives and their senior agency partners. I believe that the future growth and success of this business will be driven by adopting a more customer centric mindset and prioritizing solutions that solve the emerging needs of the market. As a trusted third-party measurement provider with a wealth of cross-platform data assets, we're in a unique position to solve the biggest challenges in media today. I want to take some time to paint a picture of the media ecosystem as our customers see it and explain why Comscore continues to be such an important growth ally for our partners on both sides of the market, buyers and sellers. There are three major trends shaping our customers' business and therefore our own. First, the shift toward Advanced TV. Advanced TV essentially means bringing digital like precision the television ad buying format. Whether someone is watching, This Is Us on a set-top box and Hulu on their mobile phone during the morning commute or streaming via YouTube TV on their living room TV at night, it's all the same to the consumer. But to buyers and sellers this level of fragmentation presents friction, friction that is generating a need for modern currency to provide trusted cross-platform measurement. Fragmentation is something our customers in the local TV market have been grappling with for years. In fact, fragmented viewership in local markets is why station groups continue to rely upon and expand their usage of Comscore as currency. In Q4, we signed expanded groupwide currency deals with Nexstar, the second largest station group in the US, Gray Television, NBCUniversal Owned Television Stations, which includes Telemundo owned stations and The E.W.…

Thanks, Sarah. Today we reported Q4 revenue of $109.3 million, which compares to revenue of $102.9 million reported in the fourth quarter last year, as well as the $102.9 million in the third quarter of 2018. As a quick reminder, in the third quarter of 2018, we began to analyze our customers and revenue by three solution groups, ratings and planning, analytics and optimization and movies reporting and analytics. As we mentioned last quarter, we believe these new categories better reflect our customer needs and where we are focused. For additional details about the products within each category, please refer to our 10-K. Revenue from ratings and planning in the fourth quarter was $74.8 million, up 4% from the same period last year and up 6% compared to the third quarter of 2018. In the quarter, we experienced continued growth in our TV products, offset by a 1% sequential quarter decline in our syndicated digital products. Increases in TV and cross-platform products were driven by improving existing customer contract values in the period, as well as the delivery of cross platform products in two European countries that contributed $2.8 million in the quarter. Of this approximately $2 million was a one-time benefit for completion of product development. Our syndicated digital revenue represented 50% of ratings and planning for the fourth quarter, as compared to 60% in the same period a year ago and 53% in the third quarter of 2018. As we have previously shared, we continue to focus on stabilizing our syndicated digital revenue through product enhancements, additional mobile data and a revised pricing strategy. In the fourth quarter, we began to see some early signs of stabilization. However, it will take a few quarters to validate these initial indication. Revenue from analytics and optimization in the fourth quarter…

Thank you. [Operator Instructions] Our first question is from Tim McHugh at William Blair. Your line is open.

Thank you. Just I guess maybe broadly, you talked about strength in both kind of the activation and the TV side. Which one I guess was really the surprising piece to you relative to the plans going into the quarter maybe?

Hey, Tim. It's Bryan. I wouldn't say any of our growth was surprising, it's just, as you're operating a business you have probabilities of certain things happen, and just about everything good that could have happened in the quarter. When we had upside-downside, the upside came in. And as Greg mentioned, we also do quite a bit of work in what we call our custom solutions group, where we do custom analytics solutions and that requires selling as well as delivering by the end of the quarter and we really executed not only ahead of the strong selling quarter but executed near flawlessly. So I think activation is -- it was very strong. We expected it to be strong. It's still a very small business relative to what it should be given our data assets, and I think that's a big part of what we've talked about previously is revamping our go-to-market on the buy side because activation is bought on the programmatic trading desks at agencies, as well as brands at an in-house programmatic. The general awareness that we even offer this solution is extremely low in the marketplace and we see that as a huge opportunity and it's a big part of Sarah's focus and revamping and rebuilding the team in the first half of 2019. And that's why we actually see activation of big growth opportunities we're looking for the second half of '19 heading into 2020.

Okay, thanks. And I apologize if I missed it in the broader discussion, but what's the latest thing on the programmatic side of digital? Where you at with your approach to kind of rebuild the market presence in that piece.

You're referring the syndicate digital business?

The old VCE type of product.

VCE, so VCE, I wouldn't consider to be a programmatic solution. VCE is a campaign measurement solution and is principally focused on display. What we've talked about is CCR is really video VCE and we are launching that to focus and our focus is really on the premium video end of the market. What we've said is, over time we expect to merge VCE into CCR because they both are the same thing in that they are measuring delivery against of audiences for advertisers of different media properties and it's a currency product. VC has been principally focused on display where CCR is now focused on premium video.

Thanks. I appreciate it.

You got it.

Thank you. Our next question comes from Laura Martin with Needham. Your line is now open.

Hi, there. Maybe a couple of things. Congratulations on getting the CNN on the sell side. Could you -- you were talking about in the second quarter how you are going to announce the buy side. I'm wondering if you have other metrics about making inroads into the buy side because that has been Comscore's historical weakness versus the sell side. And then Sarah I'm interested from you and I know you spent a lot of time on the road when you first got their calling on all of these clients on both sides. I'm sort of interested in from an insider's point of view, what surprised you as you went around, like what you didn't anticipate from the outside that after you were talking to clients because I sort of think we've been hearing the same things on Wall Street for the last three years about what SCOR has to do. So I'm interested in what you learned that you weren't expecting as you went and called on clients? Thanks, guys.

Thanks, Laura. So, I'll start first and then Sarah can jump in on the second part of that question. So you have -- you mixed -- there was a couple of things there. One was, in general specific to CCR and the other was a general thing on the buy side. I'm going to talk about CCR specifically. I just want to make sure everybody kind of understands. With that product it is a ton of excitement and our customers tell us that the only solution in the market that can measure unduplicated reach across linear television, OTT, desktop and mobile and provide co-viewing projections on OTT viewing. Our plan from the start has been to launch with content providers, TV networks, principally one network at a time in order to build coverage and then launch the buy side product that's going to allow advertisers to not only compare performance across screens but allow them to compare across media properties, which is what they really want. So while we will generate revenue from media owners on a sell side product, the real revenue potential is coming from advertisers. But in order for that product to be viable, you need to have enough networks launched in order for them to compare. So we're taking a very methodical approach to getting each network first launched in beta and then commercially. So just to explain while we have lots of network signed up which we've announced, but after that happens, we need to then tag their entire digital video infrastructure, which often includes third party integrations of ad servers and other ecosystem players. So the way we're looking at it is each one of our networks is somewhere in the pipeline that we're pushing through on that infrastructure in launch phase and then once they are launched in beta they then have a three-month trial where they're running campaigns and that they're comparing their numbers versus our numbers. And this is logical because CCR is a currency product. They want to be able to see how these compare before they adopt it. So when we announced the CNN that is the first partner that's moved from beta to commercial launch. So you can consider CCR as a product, it is now at a beta even though most of our launch partners are still in beta testing. So we're going to launch our buy side beta, Laura, later in the second quarter. We can do that even if we have five or six partners launch. We don't need everybody. For buy side to be commercially viable product we need a lot more coverage than that.

Okay.

I hope that answers that part of that question. But buy side demand for this product has really been extremely, extremely high. It's a precursor. We need to get the networks up and running. Sarah, you want to take questions -- the second part of question?

Happily. Hi, Laura.

Hi.

So I think what's surprised me the most was the delta between awareness and knowledge of the breadth of what Comscore has to offer. I think the industry has long known Comscore. But the knowledge of the breadth of capability and mindset of partnership was certainly lacking. And so at whichever level I was going in either on the direct brand side or on the agency brand side, that's probably where the biggest gap was. But I think that represents fantastic opportunity because often we have a foot in the door or we have a relationship but it's highly transactional. And so we can be a better consultative partner to them. We believe we have a wealth of data and analytics to be able to help them with their business and as their business needs shift, we can align with that.

Thanks very much. Appreciate it.

Thank you. Our next question is from Matthew Thornton with SunTrust. Please go ahead.

Hey. Good afternoon, guys. Congrats on the results. Maybe one question and then just two housekeeping ones. I guess first on some of those, the recent local wins you guys have announced around (inaudible) I'm just curious if there was any impact from that in the fourth quarter or that's all still kind of forward-looking as those kind of clients ramp further? And just on the housekeeping side, maybe for Greg. Greg, you talked a little bit about the $2 million non-recurring revenue in the quarter. Any flow-through to EBITDA on that? And then similarly, you also talked about a little bit of a shift from revenue. I think it was in the A&O segment. But I think you talked about some shift -- push up in revenue from 4Q to 1Q. Just wondering if you could maybe quantify that a little bit as well. Thanks guys.

You got it. Matt, I'll take the first one first. And like Greg take the other ones, the short answer is, no. The local deals that we announced are all 2019 impact deals. Greg?

Yeah. So on your couple of questions. As I talked about some of the impact of revenue shifting, it wasn't a material amount that we recorded in Q1 2018, so we didn't really discuss it at that point in time. As Bryan talked about we executed extremely well this year where we sold and delivered. The only reason we even are raising it is as we think about the first quarter it will have some small impact in the comparability between Q1 2018 and the Q1 of 2019. So we just wanted to highlight that for transparency purposes. On the international front, what we talked about was we did deliver quite a few products in Europe and so the number I provided was $2.8 million. But then there was this one-time $2 million piece of it. And as I explained, there was a $2 million expense side of that equation as well. So as we build products, capitalized the costs as fulfillment costs, and as those products are delivered and we recorded revenue, the expense side of that capitalization comes off the books. So when you look at in totality, in sum all of those pieces together, yes, there was positive adjusted EBITDA. The $2.8 million, but the $2.2 million, the $2 million on both sides of the equation had no real impact to the Company.

That makes sense, Matt?

Yeah that does. So just to clarify, it looks like $2.8 million on the revenue, but $2 million cost against that. So that's very de minimis kind of dropped down to EBITDA and then again the shift from 4Q to 1Q in the A&O segment, sounds like it's pretty small. Is that fair?

Yeah, we just thought that as we start thinking about Q1, right, and in my remarks, when I talked about the fact that Q1 might be, our expectation is slightly lower than last year, we felt that it was something we should at least share even though it's not significant.

All right. Great. [indiscernible] Great, thanks guys. Appreciate it.

Thank you. Our next question is from Victor Anthony with Aegis Capital. Your line is open.

Hey, guys. Can you hear me?

We can.

Okay, great. Two general questions. One, [indiscernible] your comment of a significant revenue contribution from CCR in 2020, I was hoping you could just frame that a little bit better for us as we take a look at our models for next year. That's one. And you guys have had several wins against your primary competitor in the space, including one that was announced today on a conference call. What are the clients telling you when they decide to chop your competitor and go with you and just help us understand that better? Thanks.

Sure. I think you're referring to the CNN announcement in the latter part of your question?

Yes, if you could start there. Yes.

So I wouldn't -- I won't -- I wouldn't characterize that as them dropping a competitor. I'd say the CCR, the beauty of it is a new solution solving a major problem in the marketplace that's currently unsolved. So I wouldn't characterize that as a taking market share from somebody else, it's more about how we're providing a solution that's going to allow advertisers to understand how many different people are consuming their ads across all these different devices. This is a huge problem in advertising. So just to kind of clarify that and that leads to kind of the first part of your question which is can we help you define significant. Victor, it's just too early in the product line. I mean, literally CNN is our first paying customer on this. I think it would be premature for us to start providing revenue projections for 2020. I think that's the main message. I think it's important for investors to understand is that we are gaining traction in the market. It's not instantaneous. There's a methodical approach and the main focus, while there will be revenue this year, the main focus for 2019 is getting breath of network coverage and getting advertisers starting to use the products so that we're building market share. And that will set us up very nicely for not only 2020 but 2021 and so on. I think everybody would agree there's really no scenario where consumers are going to start consuming content -- fewer amounts of content on fewer screens. It's only going in one direction. The marketplace is getting more complex. So the trend is our friend here. We just need to be able to execute.

Okay thanks. That's it for me and congrats on the [indiscernible] execution.

Okay. Well thank you everybody for joining and we look forward to updating you next quarter. Thank you. Operator Ladies and gentlemen, thank you for participating in today's conference. This concludes the program and you may all disconnect. Have a wonderful day.+