Neustar Reports: Revenue Up 38%
Neustar (NSR) announced results for the quarter ended September 30, 2012 and updated its guidance for full-year 2012. after the market closed today.
Neustar provides the back end of many TLD including .biz, .US and .Co and is the back end provider for many of the new gTLD applications.
GAAP Results for Third Quarter 2012 Compared to Third Quarter 2011
- Revenue increased 38% to $211.2 million
- Income from continuing operations increased 21% to $45.8 million. Income from continuing operations for the third quarter of 2012 includes $5.2 million of discrete income tax benefits
- Income from continuing operations per diluted share increased 33% to $0.68
Non-GAAP Results for Third Quarter 2012 Compared to Third Quarter 2011
- Adjusted net income from continuing operations increased 36% to $60.7 million. Adjusted net income from continuing operations for the third quarter of 2012 includes $5.2 million of discrete income tax benefits
- Adjusted earnings per diluted share increased 50% to $0.90
“In the third quarter, we continued to execute well on our priorities – working towards the renewal of the NPAC contract, integrating Information Services and capitalizing on the opportunities it brings us, transforming our culture and achieving our financial performance targets,” said Lisa Hook, Neustar’s president and chief executive officer. “With strong year-to-date results and continued progress in implementing our strategic plan, we are well-positioned to achieve both our short-term objectives and our long-term strategic goals.”
Paul Lalljie, Neustar’s chief financial officer added, “We generated solid profits in the third quarter while continuing to invest in the long-term growth of our business. We continue to produce consistently high margins and strong cash flows through our operational efficiencies, which gives us the flexibility to continue to return capital to our shareholders. We are updating our full-year guidance given our results and visibility into our key performance indicators.”
Discussion of Third Quarter Results
Consolidated revenue totaled $211.2 million, a 38% increase from $152.5 million in the third quarter of 2011. In particular:
- Carrier Services revenue totaled $125.2 million, a 10% increase from $114.2 million in 2011. This increase was due to an $11.1 million increase in NPAC Services revenue;
- Enterprise Services revenue totaled $43.6 million, a 14% increase from $38.3 million in 2011. This increase was due to higher revenue in both Internet Infrastructure and Registry Services; and
- Information Services contributed $42.3 million of revenue in the third quarter of 2012. This business segment was created as a result of the TARGUSinfo acquisition completed in the fourth quarter of 2011. Revenue from Information Services was comprised of $24.2 million in Identification Services, $13.1 million in Verification & Analytics Services, and $5.0 million in Local Search & Licensed Data Services.
Total operating expense increased 45% to $136.5 million from $94.4 million in the third quarter of 2011. This $42.1 million increase was driven by the addition of $31.4 million in operating expense from the acquisition of our Information Services business segment. The remaining $10.7 million increase represents growth of 11% in the company’s operating expense. In particular, personnel and personnel-related expense increased $8.9 million due to increased headcount in technology and operations, research and development, and sales and marketing.
For the third quarter of 2012, adjusted net income totaled $60.7 million, including the impact of discrete tax benefits primarily associated with a domestic production activities deduction. Excluding the impact of these discrete tax benefits, our effective tax rate was approximately 38.8%.
Cash, cash equivalents and investments totaled $269.2 million as of September 30, 2012, compared to $235.0 million as of June 30, 2012 and $135.3 million as of December 31, 2011. In the third quarter of 2012, the company purchased approximately 688,000 shares of common stock at an average price of $36.34 per share, for a total purchase price of $25.0 million.
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