NeuStar Reports Record Revenue

Neustar, Inc. a members of our Domain Name Stock Index announced results for the quarter ended March 31, 2011 today.

Neustar runs the back end for many domain extensions including .biz and .co.

Revenue increased 14% to $146.5 million

Net income totaled $72.0 million.  Excluding a $41.9 million discrete income tax benefit, adjusted net income increased 19% to $30.0 million

Earnings per diluted share of $0.96.  Excluding a $41.9 million discrete income tax benefit, adjusted earnings per diluted share increased 21% to $0.40

EBITDA increased 19% to $61.9 million, representing a 42% margin

Discussion of First Quarter Results

Consolidated revenue totaled $146.5 million, a 14% increase from $129.0 million in the first quarter of 2010.  This increase was driven by growth in both the Carrier Services and Enterprise Services business segments. In particular:

• Carrier Services revenue totaled $110.0 million, a 10% increase from $99.8 million in the first quarter of 2010.  This increase is primarily due to a $10.9 million increase in the established fixed fee under the Company’s contracts to provide NPAC Services, included in our Numbering Services revenue.  Additionally, Order Management Services revenue increased by $2.6 million, primarily due to greater demand and usage from existing customers and the addition of new customers.  Partially offsetting these revenue increases was a $1.1 million decrease in revenue from IP Services, resulting from the sale of certain assets associated with the continued wind down of our Converged Messaging Services business; and
• Enterprise Services revenue totaled $36.5 million, a 25% increase from $29.2 million in the first quarter of 2010.  This increase is primarily due to a $5.0 million increase in Internet Infrastructure Services revenue due to greater demand and usage from existing customers and the addition of new customers utilizing the Company’s expansive DNS solutions, including IP geolocation services.  Additionally, Registry Services revenue increased by $2.3 million due to a greater number of common short codes and domain names under management.

 

Total operating expense increased 8% to $94.1 million from $87.0 million in the first quarter of 2010.  The $7.2 million increase was primarily due to additional personnel and personnel-related expense to support expansion of the Company’s operations and new services, including increased stock-based compensation expense of $1.2 million attributable to the change in employment status of certain former executives.

Cash, cash equivalents and investments totaled $392.2 million as of March 31, 2011, compared to $382.4 million as of December 31, 2010.  During the first quarter, the Company purchased approximately 712,000 shares of its Class A common stock at an average price of $25.95 per share, for a total purchase price of $18.5 million.

Business Outlook for 2011

The Company affirmed revenue and EBITDA guidance previously provided on February 2, 2011:

• Revenue to range from $585 million to $600 million
• EBITDA to range from $244 million to $254 million

 

Net income to range from $165 million to $171 million, or between $2.19 and $2.26 per diluted share.  Excluding the impact of the $41.9 million discrete income tax benefit, adjusted net income to range from $123 million to $129 million, or between $1.63 and $1.71 per diluted share. Per share calculations are based on an estimated 75.5 million diluted weighted average shares outstanding