comScore, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Comscore 3rd Quarter 2021 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this time, you will need to press star 1 on your telephone keypad. Also, please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. John Tinker. Thank you. Please go ahead, sir.

Thank you, operator. Before we begin our prepared remarks, I'd like to remind all of you that the following discussion contains forward-looking statements. These forward-looking statements include comments about our plans, expectations, and prospects and are based on our view as of today, November 8, 2021. We disclaim any duty or obligation to update our forward-looking statements to reflect new information after today's call. We will be discussing non-GAAP measures during this call, for which we have provided reconciliations in today's press release and on our website. Actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties, including those related to the COVID-19 pandemic and its economic impact. 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 www.sec.gov. I'll now turn the call over to ComScore's Chief Executive Officer, Bill Livick. Bill.

Thank you, John, and thank you, everyone, for joining us today. With me are Chris Wilson, our Chief Commercial Officer, Mary Margaret Curry, our Senior Vice President and Controller, and other members of management. I would also like to officially welcome John Carpenter as our new CFO, who will be joining us on November 29th. John brings a world-class background and leadership experience with several of the world's leading media and technology companies. I look forward to all of you meeting John soon and hearing from him on our next earnings call. Today, I'm very, very proud to report that we're turning in a solid third quarter, demonstrating that we are a growth business again. We reported our highest revenue number in seven quarters and our highest revenue growth rates in 11 quarters. We grew analytics and optimization business, stabilized syndicated digital, and closed agreements that we believe will have significantly improved our ratings and planning business in future quarters. We also reported adjusted EBITDA at a level we haven't seen in many years. We are excited about our return to growth and the opportunities ahead. We expect to build on this quarter's performance throughout the rest of 2021 and into next year as we move forward with new clients in our currency TV services, the turnaround of our digital business, continued growth in our activation business, and our movie business. You know, we have been in the measurement business for a long time with our DNA and is firmly positioned in the digital and census scale TV measurement business. We're right now at a tipping point where the industry is looking for our type of currency that we've been working on for over a decade. And you can see this from the signals the market is sending and how brands and advertisers decide to spend their money and make decisions for their business. And as I recently said, in an open letter to the industry on the future of measurement. The future is now. The future is Comscore. And make no mistake, the changing of the guard is already happening. Only Comscore produces a measurement solution that uses a single methodology in all 210 local markets that rolls up to our national service. along with customers' digital usage in all 210 markets. This allows customers to understand the products that consumers buy and search for online, creating a unique service that enables brands to buy nationally and local advertising together. Additionally, two significant catalysts are driving the momentum of Comscore's TV currency. The first is the Media Rating Council, also known as the MRC. In September of this year, the MRC suspended accreditation for the legacy TV rating service for both its national and its local TV measurement. This suspension of accreditation followed a finding by the MRC that the legacy service had, quoting now, generally consistent pattern of underreporting viewings. It's also important to note that the TB suspension comes on the heels of their digital ad rating service losing accreditation. With this news, Comscore announced that our MRC audit for local and national TB measurement was moved up from next year, and now it's officially underway as of October 19th. Our MRC audit is important because we are seeking accreditation not for the old small panel approach to measurement, but rather the future approach we built by leveraging census scale information. Our innovative TV approach is consistent with the pioneering approach we took in our digital accreditation of media metrics. We made Comscore the future of media measurements. The second catalyst is that the agencies, TV networks, and local stations are very vocal about actively looking for a new currency to base their advertising inventory transactions on. We are in the middle of discussions with national TV networks to use Comscore's measurement as currency, especially as we move into next year's upfront market. That follows our expanded relationship with Fox Networks and ViacomCBS for traditional linear currency that we announced previously. As local stations fight to address their concerns over diminished ratings and impressions from the legacy currency shortfalls, more and more businesses are turning to Comscore for our stable and our reliable currency. For example, On Friday, we announced our exclusive arrangement with Univision as their local TV currency in several markets. Roberto Ruiz, Executive Vice President of Research and Insight at Univision said, quoting now, with trust in audience measurement at an inflection point across the industry, Univision surveyed the market and quickly identified Comscore as the right partner for us to deliver reliable and advanced measurement beginning in these three markets. We are thrilled to be expanding our relationship with Comscore into linear TV space and are excited to have a seat at the table in helping to drive meaningful, positive change in standards for how the Hispanic audience and audiences in general are measured. As you can see from Roberto's statement, The industry has reached a point where the risk of staying with the status quo is intolerable, in my opinion, and Comscore has become a clear choice for the future. Now, let me discuss the quarter. Ratings and planning revenue was down 1% compared to a year ago. We are pleased that we're seeing growth in both local and national TV. Our local TV growth rate has become stronger over the years. and we anticipate a strong fourth quarter. Additionally, the rollout of Comscore's consumer intelligence in all 210 local markets provides our customers with an added sales tool to compete with the proliferation of digital video inventory in local markets. Our near real-time innovative approach demonstrates our commitment to the future of measurement, and our belief that local TV is a cornerstone for growth in 2022 and beyond. And speaking of cornerstones, we recently signed an exclusive agreement with the agency called Cornerstone Media Group and Imaginuity, both who will exclusively use Comscore's local TV ratings as their currency. I'm also excited to announce that Spectrum Reach, expects to roll out Comscore as their preferred television currency in all of their 89 markets, including New York and Los Angeles by year end. This is following the successful launch in their Southeast markets. With this, we believe that more agencies, brands will be switching to Comscore to buy TV advertising. And it's another reason. for TV stations and other companies to subscribe to Comscore on top of our more than 1,000 client stations. Turning to syndicated digital, we achieved stabilization with revenue being sequentially flat, setting the stage for return to growth. We have consistently seen solid renewals from our large customers. Now we're starting to see the same with our smaller customers too. Former customers are returning because they appreciate Comscore's quality versus that of our competitors. During the quarter, we sign new syndicated digital agreements with Talgru, a job and advertising platform, the Publishers Desk, which provides publishers with custom-tailored strategies for increasing the monetization of their digital platforms. We also saw improved renewal rates with small digital publishers who use our services to help operate their businesses every day. There have been a number of recent events signaling Comscore's role as the video currency. For example, we announced a deal with Jamloop, the connected TV demand-side advertising platform that helps brands reach streaming TV audiences. They meet Comscore's robust audience digital segmentation capabilities, our household-level audience targeting, and our demographic segments. Also, at a recent Variety Entertainment and Technology Summit, it was great to hear during a panel discussion where Disney's Rita Farrell, President of Advertising Sales and Partnerships, and responsible for selling advertising on Hulu State, Comscore is one of our great partners. Furthermore, on that panel, Warren Media's head of advertising sales, J.P. Colato, stated that they were working very closely with Comscore on the first national addressable measurement at scale that had been working with us since 2020. I'm also very excited about our growing partnership with Google. We expect continued growth in 2022. We recently announced expansion of our integration with Google Ad Data Ops, which adds connected TV impressions from YouTube and YouTube TV's inventory in our cross-platform advertising measurement currency. Comscore campaign ratings are what we refer to as CCR. This accomplishment marks two important milestones. First, Comscore is the first measurement provider to measure advertising on YouTube and YouTube TV on connected televisions. This measurement includes co-viewing, which provides advertisers with the most comprehensive view of their audience. Second, the addition of YouTube and YouTube TV expands CCR, enabling comprehensive cross-platform measurement. As previously published by Comscore, more than 80% of CTV reach in the United States falls on only five streaming services. Of those five, only two, Hulu and YouTube, are as supported. I hope you can see by that why we're so excited about the YouTube arrangement. CCR measurement, including YouTube and YouTube TV, is now available to our buy-side clients for their ad campaigns. Turning to analytics and optimization, we reported a revenue increase of 29% compared to the prior year, in part driven by digital activation. The activational transactional business model is very attractive to us. Many major platforms in this space use Comscore to place their buys. Here is why I like to refer to this area as our new digital business. We get paid based on media spend, not research budgets. Activation, our targeting suite for digital with a privacy centric focus is building momentum with Comscore's predictive audiences, which is our cookie-free targeting solution that enables advertisers to reach audiences based on granular consumer behavior and privacy-friendly contextual signals. Apple is giving users the choice to block the IDFA identifier, and as many of you know, Some leading digital advertisers reported lower revenue due to this change. The ad tech world operates on ID-based cookie targeting, which is going to be going away in 2023, suggesting the difficulty of measuring will only increase. However, Comscore's measurement is not reliant on the IDFA. Comscore's AI contextual engine and our global opt-in panelists enables us to create next-generation cookie-free audience segments that perform well as these cookie-based segments. This is an alternative solution, as is identifier substitutes. However, many of the identifier substitutes do not have the full scale, and an advertiser cannot reach the same amount of audience. By contrast, the scale of our predictive audiences replaced the need for identifiers. We see strong interest in our predictive audiences and recently added the L2 political segments here to help audiences reach ahead of the 2022 political season, which I think we all would agree will be very active. Our emphasis on activation reflects our commitment to security and privacy-friendly product development and the responsible use of information for the benefit of both advertisers and consumers. As a reflection of this commitment, we recently received the prestigious ISO certifications for information security and privacy information management systems. ISO 27001 and ISO 27701. I'm so proud of our security and privacy teams for this accomplishment. Another emerging market opportunity is out-of-home measurement. We recently signed agreements with True, a leading U.S. place-based media company, and Vistar Media, a leading global provider of programmatic technology. for digital out of home. This year we've already signed three leading digital out of home advertising companies and expect our new out of home offering to be an incremental revenue generator. Finishing with the movie business, revenue in the third quarter was up 5% sequentially. We expanded our relationship with Sony to include certain international offerings. Our global Movie currency provides a critical view of box office for every major studio, every mini major studio, and prominent independent distributors in the worldwide theatrical industry. During the third quarter, movie theaters reopened in most major markets worldwide for the first time since the pandemic began. Theaters are seen as an essential delivery channel for Hollywood studios. The evidence that we believe the studios saw was with Disney's release of The Legend of the Ten Rings, smashing the record for Labor Day openings, which many in the industry has taken proof of the power of the theatrical-only release. No Time to Die, the James Bond movie, had the highest UK opening weekend for any Bond movie ever. We expect box office revenue to return to pre-pandemic levels in 2022. I hope you can hear the excitement we have about the industry we serve and the opportunity that we and our customers collectively have. Comscore plans to take advantage of this opportunity to capture market share in TV and in video, which will enable us to continue to develop and enhance the next generation of measurement tools our customers need and want. Our focus is on building a unified framework that uses currency-grade data to drive real-time analytics for all media types in a trusted environment. Finally, I'd like to thank all of our Comscore employees for their hard work and dedication throughout the pandemic. and Mary Margaret Curry and the rest of the financial team for so ably managing our financials at this time. Now I'd like to turn over the call to Mary Margaret to provide some specific financial details. Mary Margaret?