comScore, Inc. (SCOR) Q4 2014 Earnings Report, Transcript and Summary

Good day ladies and gentlemen, and welcome to the comScore Fourth Quarter and Full-Year 2014 Financial Results Conference Call. My name is Adrian and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Mel Wesley, Chief Financial Officer. Please proceed.

Thank you. Good morning and welcome to comScore's earnings call for the fourth 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 the potential benefits of particular products; expectations regarding the strategic and economic benefits of certain strategic relationships such as those with Google, Yahoo and WPP/Kantar 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 first quarter and full year 2015, 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 report 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 website, 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 website 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 corresponds to our comments today, and will be helpful as you follow along. With that, I will turn the call over to Serge.

Thank you, Mel. Welcome to today’s call everyone. We have lot to cover, so I will begin with a brief overview of the quarter and then provide details regarding the strategic alliance we announced this morning with WPP’s Kantar Group. Then I’ll report on some key operational highlights from what has been a very quick start to the year. I’ll then turn it over to Mel, to provide a detailed review of our financial performance before we take your questions. Similar to previous quarters, we have a slide deck to review. 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. On a pro forma basis, four quarter 2014 revenues were $89.1 million, up 19% over last year. Adjusted EBITDA was $21.1 million, a 16% year-over-year increase and a 24% EBITDA margin, reflecting the significant operating leverage we have in the business and our focus on managing expenses. During the fourth quarter, we added 46 net new customers for our overall business for total of 2,545 customers at the close of 2014. We added 58 new customers to our Media Metrix Multi-Platform service for a total 506 MMXMP customers at the year end. Two-thirds of these Multi-Platform 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 entire suite of service offerings and continue to embrace our market leading products, that's measured the multi-platform world. Our contract rate with existing customers again remained above 90% on a constant dollar basis. Moving to slide 5; for the past year, we’ve been opening these calls with this Venn diagram, which express our ceases about three megatrends driving the digital media and advertising ecosystem. First, the rapid emergence of the multi-platform consumer who connects with media across multiple devices and platform. Second, the vacuity of video and television that’s reaching consumers through increasing digital channels. And lastly, the rise of advertising automation which is changing our advertising is bought and sold. As we pursue our mission of making audience and advertising more valuable, our strategy has been focused on leveraging the data assets, partnership and clients’ relationship which give us a strong competitive position at the intersection of these trends. Throughout 2014, we delivered on the key priories that supported this strategy. In 2015, our focus continues sharpen as we concentrate on. First, expanding our cross-media offerings globally. Second, extending vCE market leadership. Third, integrating comScore into the places clients use them with a focus on integrating our data into programmatic platforms and client workflows. And fourth, focusing on execution and continue to return capital to our investor base. As we refined our strategy and build momentum over the past year, we’ve look for ways to amplify the impact of our unique capabilities and dramatically expand our addressable market and growth opportunities. That’s the rationale behind the strategic, long term global alliance, we had announced earlier this morning with WPP’s Kantar Group. Turning to Slide 6; in 1999, the founding thesis of comScore was the digital media we transform the interactions between people, media and brands. In 2015, this is obvious and the digital media revolution has profoundly changed the way that advertising works and audiences are valued. Our the past 12 months, we’ve seen an acceleration in the transformation of the video and television audience as consumers access TV and video across multiply devices, shit their viewing patterns to fit their own schedule and increasing do so in way the challenge the traditional broadcast and cable television model. Enormous opportunities are emerging for media company and marketers who can crack across media code. This global opportunity will be undermined by inadequate measurement that sales to account for all video viewing with sufficient accuracy, a concerned and has been frequently voiced by industry players around the world. The solution to this complex problem requires technological innovation, deep measurement expertise and individual country knowledge. We believe that the alliance between comScore and Kantar delivers all of this and more. By combining Kantar’s global experience in TV and media measurement with comScore’s existing new measurement technologies, we will deliver a truly global solution that addresses the requirements of the entire media industry. Their multiple aspects to our long-term global strategic alliance that are important to explain. Moving on to Slide 7; let me first talk a bit about Kantar and explain why we are so excited to force this alliance. As the data investment management arm of WPP, Kantar is one of the world’s largest insight information and consultancy groups. With annual revenues around $4 billion, the Kantar group of companies employs 30,000 people in 100 countries across the whole spectrum of research and consultancy disciplines. Kantar has built a tremendous set of assets that are complementary to those that we build at comScore and offers its clients insight at every point of the consumer cycle. Kantar’s services are employed by over a half of the Fortune 500. As we’ve been meeting with Kantar CEO, Eric Salama and the Kantar team over the past several months become clear to us that their combination of deep media and TV measurement expertise and global footprint is unmatched. We both quickly realized that the opportunity for our partnership is massive as we provide new capabilities to all of our existing and new clients. Moving to Slide 8; our immediate focus in on combining our assets and expertise to jointly deliver cross-media audience and campaign measurement in markets outside the United States leveraging a consistent methodology around the world. Kantar is the leader in TV measurement outside the United States and today delivers its television audience measurement services also known as TAM in 41 countries. Today comScore delivers digital audience measurement services in 44 countries. Working together, we will be able to combine digital media and video with television data to deliver new cross-media capabilities and product across the globe. This alliance will help the media industry in a variety of ways, helping increase accuracy and more comprehensive measurement including bringing services to markets where they are unavailable today and in many cased would be unattainable without our partnership. Together, we can provide the global media marketplace with accurate, reliable and innovative measurement solutions that the industry is calling for. Our focus here is not just on audience measurement, but also on advertising campaign measurement. At comScore, we’ve been developing cross-media vCE to provide campaign level insights across TV and digital media. The ability to measure individual campaign performance across TVs, smartphones, tablets and desktops provides new and powerful insights to marketers. Our alliance with Kantar would canalize [ph] and accelerate the pace of our global rollout. Together, we’re embarking on a multiyear journey to deliver transformational services to our dynamic global marketplace. Turning to Slide 9; to reinforce their commitment to the success of this partnership, WPP is taking an equity stake in comScore. I know you are eager to understand this investment part, so let me explain the financial transaction. Our agreement runs for a minimum of 10 years and is expected to be accretive on a non-GAAP basis in 2015 to comScore. As the foundation to our strategic cross-media partnership, WPP expects to acquire an equity stake just shy of 20% in comScore through a combination of direct issuances and third party transactions. There are four parts to this transaction. First, we will issuing new shares equivalent to 4.45% of basic shares outstanding an exchange for entering into our global strategic alliance and acquiring certain European Internet audience measurement assets. Second, WPP will commence a tender offer for comScore shares in the next few days for approximately 15% of shares from existing shareholders. The tender offer represents a 10% premium on the volume weighted average price of comScore stock for the 20 trading days ending February 9th, 2015 at a price of $46.13. Third, in the event, the tender offer doesn’t reach at least 10.55% of shares outstanding, a total of 15%. ComScore will directly sell addition shares at the previously mentioned tender price to help WPP reach 15% ownership. Lastly, WPP may purchase an addition 5% of comScore shares outstanding to attain a total ownership stake in comScore between 15% to 20%. The entire transaction is subject to customer regulatory approvals including HSR and expected to be completed later in the year. So what is this all mean for comScore. This strategic alliance will be transformative to comScore’s business and to the entire industry. Together with WPP and Kantar, we’ve worked for over a year to make sure our company’s goal are aligned and to ensure that this partnership succeeds and that we’re able to fulfill on its promise which is to bring cross-platform solutions to markets where these types of solutions have not been available or even attainable. That success depends on comScore maintaining its stature as a trusted source of independent third party metrics. The value we bring to our clients and the broader market requires trust in our position as a neutral objective and independent third party. While WPP will be taking a substantial equity stake in our company, they fully understand the importance of comScore’s neutrality and independence. Accordingly, WPP will not have a board seat either as a member or observer. We recognize that it is strongly in all of our interest to ensure that comScore continues to deliver trusted and independent data and services to all our media agency, advertise the clients and the industry at large. Finally, as we met with Kantar over the past to become clear to both of us that there are also powerful opportunities that extend beyond our immediate focus on cross-media audience and advertising measurement outside the U.S. But we’ve covered enough and we’ll leave that discussion for another day. We’re obviously excited to announce our alliance with Kantar this morning and I am sure you all have question, but there are several other items that I want to report on. Turning to Slide 12; 2014 saw a strong emphasis on partnerships with comScore as we work to bring our data to the places clients use them and expand and enrich our datasets which help make our products so valuable to clients. A year ago, we announced partnerships with both Google and Yahoo to integrate vCE into the app server workflows. A data with Google went live in Q4 of last year and we’re on schedule to exit the data period within DoubleClick by the end of Q1 of this year. I am pleased to announce this morning; we are extending vCE in DoubleClick along two addition key dimensions. First, in the U.S. vCE and DoubleClick will be available for mobile advertising. This is an extremely important step as we all know how critical it has become to measure mobile campaign in a scalable platform. Second, vCE and DoubleClick for desktop advertising will become available globally and we plan to jointly rollout several countries in 2015. These additional serviced will begin rolling by the end of Q2. We’ve been working with Google for the past few months to make this happen and we are both excited that this addition layers strengthens our partnership even further. On our Q3 earnings call, I announced the partnership we signed with Pandora to bring their demographic data into vCE mobile. As a reminder Pandora - as a reminder, excuse me Pandora has over 200 million registered users in the U.S. with 81.5 million of them active in a given month. I am pleased to announce that as of January, we are not receiving this data stream and we will be soon activating it within vCE mobile. Rich and granule demographic data is a key building block for vCE but we want to go beyond agent gender which today are the predominant demographic variables used in digital advertising. We indent to ultimately incorporate behavioral, lifestyle and offline segment data into our measurement. Outlining Q4, we signed an agreement with Acxiom Corporation deepening our existing partnership. Our agreement will bring Acxiom’s Infobase consumer segmentation into the comScore vCE product suite. This data allows us for example to extend the audience validation we offer in vCE to advertises this targeting likely purchases of luxury sedan [ph] our consumers shopped with the particular credit card in the past 12 months. Acxiom’s Infobase provides data on 42 major life segments, 252 sub-segments and 1000s of brand and product propensity ratings. It’s inclusion in our vCE product suite will be a significant enhancement to our capabilities. Moving on to Slide 13; we open 2015 with two major product announcements that directly advance our corporate strategy. The release of Media Metrix Multi-Platform and the launch of comScore industry trust. In 2014, we announced total video, our approach to providing cross-media measurement that includes digital video and linear TV. We’ve been working hard on building and assembling the many complex pieces require to deliver syndicated cross-media services and have been delivering private data to clients such ESPN, NBC, ABC among others. Now a pre-retrofit for our total video solution is Video Metrix Multi-Platform which provides unduplicated audience measurement for digital video consumption across desktop, smartphone, tablets and over the top video. We announced the beta availability of Video Metrix Multi-Platform also known as VMXMP in mid-January. The industry has quickly rally behind on based on this announcement and we are in the process of tagging with 79 video publishers in the U.S. including more than 90% of major broadcast and cable networks. Client subscriptions to Video Metrix continue to grow and VMXMP is obviously important in its own right, but it should also be seen as a key building block for our work in delivering total video measurement and the global work will be doing jointly with WPP and Kantar. Video Matrix MP launched in beta in the U.S. and will come out of beta mid-year. We will deliver Video Matrix Multi-Platform in addition market later this year. Moving to Slide 14; in late January, we launched comScore industry trust an important multipart initiative that will be fully rolled out over the course of 2015. As the name implies, industry trust tackles ahead on a fundamental problem in today’s advertising ecosystem, which is the increasing lack of trust between ad buyers and sellers resulting from fraud a non-human that has become a fixture of programmatic advertising. With industry trust, we’re enabling trusted transactions by activating key comScore Metrix non-human traffic data, Media Metrix rankings, vCE viewability Metrix and demographics directly in programmatic trading platforms. The first integrations from Media Map, Turn, The Trade Desk, Rubicon Project and Eyereturn will be completed soon and we expect many more to follow. The technology and data behind industry’s trust is based impart on the work of MdotLabs which we acquired six months ago. Our team completed the Mdot integration with comScore date and system in just 90 days and it’s now a core component of our industry trust initiative. Through industry trust, we’re giving media buyer the ability for the first time to conduct traditional and programmatic-wise based on the same set of trusted Metrix. Industry trust also supports the needs of ad sellers, providing a mechanism for premium publishers to distinguish themselves on programmatic platforms through the quality of their inventory certified by neutral third party comScore. We’re putting our data in places clients need to use. We’ll be taking a greater length about this important initiative as the year goes on but I’d encourage you find our more details now by going to www.industrytrust.com. With Media Metrix MP, Video Metrix MP, vCE and comScore industry are bringing solutions to market that audiences and advertising more valuable. A new strategic alliance with Kantar and our growing relationships with Google and other partners are bringing our solutions to market in new ways globally and at massive scale. We are embarking on this next phasing technology and measurement innovation at exactly the right time and I look forward to updating you over the next several quarters on our progress. Now, I’ll turn in over to Mel for review of our financial results.

Thank you, Serge. I’ll now provide more detail regarding our fourth quarter results. Revenue in the quarter was $89.1 million on a pro forma basis, up 19% versus the same quarter last year. We are pleased with our revenue growth despite foreign currency exchange headwinds. As exchange rates against the U.S. dollar remain constant from the same quarter last year, our Q4 pro forma revenue would have been $1.5 million or 2% higher. Subscription revenue in the quarter was $81 million on the pro forma basis, up 21% versus the same quarter last year. Subscription and project revenue represented 91% and 9% of total revenue respectively. The ongoing success and customer adaption at vCE continues to drive our subscription revenue mix higher. Revenue from existing customers was $82.4 million on a pro forma basis, up 22% year-over-year and representing 92% of total revenue. During the quarter, we also added 46 net new customers bringing our total customer count to 2,545 on a pro forma basis. Our international revenue on a pro forma basis also continued to grow up 16% year-over-year and representing 28% of total revenue. As Serge mentioned, in December we signed an arrangement with an existing customer to acquire key data assets for future use in our products. In return, we provided him with historical behavioral data for use and predictive advertising analytics. The transaction resulted in $4.5 million of Q4 revenue and $6.3 million of Q4 R&D expense. We believe this investment will significantly enhance future products in 2015 and beyond. Turning to margin and expenses on a GAAP basis, our gross margin was 71% increasing 3% over the same quarter last year. Higher gross margin trends this year are primarily attributable, so operating model leverage from increased scale and tight expense controls. Selling and marketing expense decreased to $24.7 million down 1 million from the same quarter last year. The decrease was largely the result of lower travel and advertising costs. R&D expense increased to $21.2 million for the fourth quarter, up from 10.6 million from the same quarter last year. The increase is primarily the result of data acquisition costs including the arrangement previously discussed that added $6.2 million of R&D expense this quarter. G&A expenses increased to $20 million for the fourth quarter, up from 13.7 million from the same quarter last year. The increase is primarily due to stock base compensation expense driven by the market based grant issued in November. I will provide additional grant details during my discussion of stock compensation expense. GAAP per-tax loss for the quarter was $6 million compared to GAAP pre-tax income of 312,000 in the same quarter last year. The decrease was primarily the result of a $2.8 million impairment charge during the quarter related to our mobile operator decision and higher stock compensation expense. The impairment charge was necessary given a classification of that division has held for sale at December 31. In addition, we were unable to complete the sale of the division under the terms of the LOI that was signed in October 2014. Our intent to diverse the division has not changed. The higher stock compensation expense resulted from market based grant issued in November that contributed $7.9 million of incremental stock based compensation expense during Q4. During the quarter, stock compensation expense was $15.5 million compared to $7.7 million for the same quarter last year. The increase relates to the market based grant that was approved by our compensation committee and issued in November besting of which is conditional on significant appreciation in comScore’s share price. This grant outlined in an 8-K filed in November, it designed to align management and shareholder interests during its three year terms by motivating existing and newly appointed executives to drive shareholder value significantly higher. In accordance with applicable accounting guidance, we’ve reported the grant expense regardless wither share price conditions are achieve and the shares vest. Given the structure of the grant, 80% of the grant expense or $21 million will be recorded by the end of Q1 of ’15 and 100% of the grant expense or $26.1 million will be recorded by the end of 2015. This is only the second market base grant approved during the company’s history and is intended to drive tangible returns to our shareholders. The expense associated with this grant is included in our guidance. We generated a tax benefit during the quarter of $3.4 million compared to a tax expense of 142,000 for the same quarter last year. The tax benefit this quarter was primarily the results of a change in the status of our mobile operator division and the related impairment together with the associated tax treatment. We expect our cash taxes to remain low in the near term as we hold net operating loss carry forwards in the U.S. and certain foreign jurisdictions. During the quarter, GAAP net loss was $2.7 million or $0.08 for basic and diluted share based on a basic and diluted share count of 33.6 million shares. Non-GAAP net income for the quarter was $15.7 million or $0.45 per diluted share excluding stock based compensation, the impairment charge related to our mobile operating decision, amortization of intangibles, acquisition related expenses and other non-recurring items. Our non-GAAP EPS calculation is based on a fully diluted share count of 34.6 million shares. Four quarter adjusted EBITDA was $21.1 million or 16% increase over the prior year, representing an adjusted EBITDA margin of 24%. We are pleased by the continued margin expansion we have generated in our core business and we expect these gains to provide us with incremental invest dollar to accelerate key projects we believe will contribute significant ROI. Looking at our balance sheet, we ended the quarter with cash and cash equivalents of $43 million, an increase 3 million sequentially and a decrease of 25 million from the same quarter last year. The decrease from last year primarily reflects $27 million of share repurchases in connection with our stock repurchase program, partially offset by cash flow from operations. Cash flow from operations for the fourth quarter of 2014 was $7.5 million and capital expenditures for the quarter were 1.1 million, resulting in free cash flow of 6.4 million. Free cash flow for the same quarter last year 4.7 million. The increase in free cash flow was primarily the result of strong accounts receivable collections activity. Slide 15 details our guidance. It is important to note that the following guidance ranges exclude the financial impact of the mobile operation decision as the decision is currently classified is held for sale. For the first quarter of 2015, we anticipate revenue on a pro forma basis in the range 84 million to 88 million. We anticipate GAAP loss before income taxes on a pro forma basis in the range 15.3 million to 10 million. The guidance range is driven by $13.1 million of expense associated with the previously discussed market based stock grant. We anticipated adjusted EBITDA to be in the range of 17.5 million to 20.3 million which represents an adjusted EBITDA margins range of approximately 21% to 23% or 22% of the midpoint of our revenue and adjusted EBITDA guidance ranges. For the full quarter - sorry, for the full year of 2015, we anticipate revenue on a pro forma basis in the range 356 million to 379 million. We anticipate GAAP income before income taxes on a pro forma basis in the range of $10.9 million loss to income of 4.5 million. The guidance range is driven by $18.2 million of expense associated with the previously discussed market based stock grant. We anticipate adjusted EBITDA to be in the range of 82.5 million to 93.5 million, which represents an adjusted EBITDA margin range of approximately 23% to 25% or 24% at the midpoint of our revenue and adjusted EBITDA guidance ranges. We will now open the line for questions.

[Operator Instructions] Please stand-by for your first question, which comes from the line of Youssef Squali of Cantor Fitzgerald. Please go ahead.

Thank you very much. Looks like you guys have been pretty busy this quarter, so congrats. Couple of question, first, maybe you can just dig a little deeper into the areas of strength in the quarter by business products of vCE, DAx, MMPX et cetera? And vCE in particular maybe you can comment on the contribution of Yahoo and Google in the quarter? And then I have a follow-up. Thanks.

I’ll take the second part of your question first and I’ll turn it over to Serge. So for the revenue generated by the Google, Yahoo partnerships during the quarter, it was in the lower seven figure range.

And Youssef, as far as the other business units, everyone has been doing well, vCE specifically has beaten all of our internal expectation, obviously the partnership that we announced all last year have helped to do that, but they are - we are on track for vCE, we are actually beating all of our - and like I said beating all of our estimates on vCE. And we are extremely bullish on that product line. In terms of the others, MMXMP is the one that I really want to highlight. That product I remember just to tell everybody, remind everybody what that is, it’s a reduplicated audience measurement service for mobile and desktop. And that product we’ve mostly rolled it out in the U.S. and a few other countries. That product is you know there is not a way to say other than in some fire, everybody is buying it. We have already 506 Media Metrix MP customers at year end. Most of those are in the U.S. we started launching, rolling those out in additional countries, but and we’ll do a phase rollout in several new countries this year Brazil, Spain and others. The key gating factor for that product is mobile and we need mobile measurement panels in each of those counties, so before we can do that. And that’s always been the gating factor that we’ve had, but we’re fortunate enough to be doing extremely well in the U.S. and rolling it out in addition countries.

Okay, thanks. And then on the partnerships that - the partnership you announced this morning, just a quick clarification on Kantar, maybe you can comment on not being in the U.S. it’s only outside the U.S. so just a function of the data that Kantar has and maybe been able to supply with U.S. data or is there anything else? And then on the WPP ownership, I not sure how WPP owning almost 20% of the company, will now hamper your ability to deal with other agencies, have you had any conversations with other agencies and feel confident that, that will not be the case considering you are no longer Switzerland?

You know there is an easy way to differentiate between Kantar and Kantar by the way it’s not that hard. But realistically Youssef, outside of the U.S. is they don’t - Kantar does not have TV, audience measurement services in the U.S. they did have some and they sold it off in a transaction they did with a company called Renntrack last year. So this agreement focuses on 100% on non-U.S. markets and again it’s non-U.S. markets for not only just the cross-media audience measurement piece but it also focuses on cross-media campaign measure piece. So it’s - they have, Kantar as I mentioned earlier, Kantar has over 42 countries where they have the television audience measurement service. We measure 44 countries digitally. So I a lot of countries what happens is there is something call the JIC, which is Joint Industry Committee and what the JIC is does is at a point a research provider to measure TV and research provider to measure the Internet. For example in the UK, an organization is called BARB which is and they have anointed Kantar as its provider. UCOM is the Internet Audience Measurement Association and they have anointed comScore to measure. So there is a lot of new opportunities where we can do just not just in the UK but obviously in a lot more countries where we have the overlap between the two companies. As far as your second question and the objectivity, obviously our biggest concern here, right, so when we’ve been working with WPP and Kantar and WPP has recognized this from day one that they want to make sure that even with an investment in comScore that we remain completely independent and actually agree, we are still a Switzerland here. This is and that’s why we insisted that WPP does not take a board seat or a board observer in comScore. That’s extremely important. Now as far as the agencies and the objectivity and all of that stuff, the end of the day, all of our agency clients have been asking for cross-media measurement across globally, this is an industry initiative that there have been asking for and we came together with Kantar Media and - the Kantar Group and asked to bring this to our agency clients and all of our other clients, not just the agency. So it’s an industry initiative that they have been asking for and this is one way to solve.

Okay, thanks Serge, thanks Mel.

Your next question comes from the line of Robert Peck of SunTrust. Please go ahead.

Congratulations on the WPP deal. I want to stand there if we could. First of all, how should we think about list for comScore, not only in ’15 this is ideal but ’16 in going forward. And then as part of the guidance for ’16, can you tell us what you are backing in and so a quick follow-up on it.

Hey Bob, it’s Mel. So we definitely have revenues baked in ’15, we’re not disclosing what that is, we feel that we’ve been conservative obviously the strategic alliance portion will take something to ramp, but that is definitely contemplated in our 2015 guidance.

And then please walk us through, how are the economics, any new product or capabilities that you form together, how is economic of those product putout between the two?

So we’re going to be working with them to work through a revenue sharing type arrangement, those have not been completely hammered out yet but that is in process.

And Bob, hey this is Serge. These things with the cross-media measurement service, these things take time. This is a - now this capability not exist before, was not attainable in a lot of different areas. Now we have that capability jointly with Kantar, we’re going to go and put the two products together and then we’re going to go jointly bid to the individual - in each of the individual countries. It’s a process, it takes time, but prior to this announcement, comScore did not have a true robust cross-media measurement service in countries outside of the United States and we feel now with this combination, we are very well positioned.

Switching gears really quickly here, Mel, could you tell us what you have baked in for ’15 on vCe with DoubleClick and then also along with the total video for 2015?

Well, so we definitely have obviously revenues baked in through our plan for that, it’s included in the guidance. We’re not breaking out those at a product level, but those are definitely baked into the plant.

Now to be fair, we have baked in these numbers, what we have baked them very conservatively and mostly because Google in still in beta and we expect to get on out of beta at the end of Q1. So we still - it’s way too early to fully bake everything into the numbers just because we need more time. It’s still in beta, there is also seasonality issues that we have to consider. So but again like Mel said, we have baked in some revenue and we will be updating it as we know more and as we launch out of beta.

Well congratulations again.

Sure, thanks, Bob.

Your next question comes from the line Jason Helfstein of Oppenheimer. Please go ahead.

Thanks. Two questions. So given, how should we think about I guess the guide, so there is some Kantar on the guidance, your guide are saying its accretive but you are not actually telling us kind of what you are getting in return for the exactly for the shares. I mean is there a way to think about to think about the value trade and then maybe how we get there. What you guys assuming for, what was year-end share account, what you are assuming for first quarter share account, what you are assuming for fourth quarter share account, assuming this transaction is consummated. And then I have got two more.

So on share account, we did not guide on share account, there are lots of variables obviously with respect to this arrangement, so we did not guide on share account for that reason. In terms of the different revenue stream, so there is basically two bucked to think about, the first relates to the IAM business that we’re purchasing that we referenced in the script, there are revenues associated with that, that will be recording during 2015, they are in the guidance together with the revenues we discussed regarding the strategic alliance which will take more time to ramp. But based on those two categories and our assumed cost associated with the acquisition obviously that’s how we arrive at determination that from a non-GAAP perspective, we’re expecting that to be accretive in 2015. Now that assumes that the tender is successful. If the tender is not successful then obviously that would impact that accretion analysis and we will obviously update that during the next call ones we get visibility and to whether or not the tender is successful.

I mean I guess just you could have EBITDA but if you don’t know how much share are associated with it, it’s hard to people to buy the stock I think you know outside just fully loading everything for the full option. And any comment on what you are guiding assuming for the currency impact for the full year, so how much headwind you are assuming your guidance?

Yeah, sorry, could you repeat that Jason?

Yeah, so any - can you comment on what type of currency headwinds you are assuming in the guidance for the full year, so the impact..?

Yeah, so we did look very carefully at the trends regarding the major currencies where we operated and we basically made the assumption that the U.S. dollar is going to continue to appreciate against our major currencies, so we feel like we have baked in a sufficient amount there. I think we would only get in trouble if we saw a significant appreciating that was far and about what we saw last year. So we feel like we’re relatively well positioned from a currency headwind standpoint. And just to get back to your share question, I can appreciate that at a high level what you can think about is if the tender offer is successful, we should the current share numbers increase by somewhere around 1.6 million. If we end up having a backstop, the tender, if it’s not - if the tender is not fully successful that obviously changes and we just can’t predict that at this time.

Hi guys, that’s helpful. And a super question, can you talk to us what drove the spike in R&D sequentially? And then with respect to the share is being issued with the new auction grant plan, can you guys commit to buying back the equivalent amount of those shares out of free cash? Thanks.

Sure, on the R&D expense as I mentioned 6.3 million of that was related to that, that the transaction that, Serge spoke about the customer where we reached an agreement to buy data assets. So that obviously was a big driver for the year-over-year and then other data acquisition costs, we obviously expect that to come down sequentially and obviously that’s included in our guidance. And then in term of your second question, can you please repeat that.

Yeah, so obviously you know it’s a significant share grant, option grant, can you commit to effectively buying back to offset the dilution as those option of that?

Well in the past, we have used our stock buyback program to offset dilution among other objective and we intend to continue to that. Obviously at this point, I don’t necessarily know what the share price would be if impact in vest, with the triggers are, but if we operate the plan consistent with how we have in the past, we would offset dilution, but I simply can’t commit to that at this point without knowledge of what this prices ultimately will be.

Okay, thank you.

Sure, thanks, Jason.

Your next question comes from the line of Andre Benjamin of Goldman Sachs. Please go ahead.

Thank you, good morning. My first question was also about the Kantar partnership, I was wondering if you have any thoughts around when their commercial product would actually hit the market when you have - and will you have the ability of leverage information from Rentrak give WPP stake in that company?

Hey Andre. As far timing is concerned, we’ve been working with Kantar now for a few months. I don’t have the specific timing, surprise to say we have a bunch of different work streams already going on with Kantar on a bunch of different initiative. But as far as the cross-media audience measurement and campaign measurement work stream, we will - our goal is to have something in 2015, but we’ll obviously be updating you and the street accordingly over the next few quarters. As far as Rentrak is concerned, this deal does - like I mentioned is non-U.S. and does not include any U.S. data assets. We are good friends with Rentrak and we know obviously that WPP have also a 20% ownership stake in Rentrak but this deal does not include them at this stage, so it’s just - because it’s 100% focused on non-U.S. markets.

Got it. And in the past you’ve provided some color on how you are progressing with respect to penetration of the Media Metrix suite, I was wondering if you can give some more color on that both U.S. and internationally and how you think about the runway there?

You know Media Metrix suite obviously in the U.S. we are very well positioned. In the U.S. we have a lot of clients that are buying that product. We feel like we’re probably 85%-90% of more clients buy Media Metrix, I always joke that you kind of have to be in a cave, living in a cave if you are in the digital space and not buying Media Metrix. Now MP is a subset of Media Metrix, some of that platforms are subset of the entire Media Metrix product line. We’ve done very, very well there, it’s probably less than but it’s still less than 50% penetrated in the United States and then overseas it’s probably a lot less penetrated because we only have it one or two countries right now and we’ll be rolling it out in several other countries. So the opportunity to rollout MP - Media Metrix MP and Video Metrix MP, the product that we announced today as well, is substantial not only in the U.S. but also overseas.

My last question would be on the guidance, what would we need to assume happens in order if you hit the high end of the range?

Go ahead.

Are you refereeing to Q1?

No, we can go for full year.

I’ll pick the Q1. Fist, I’ll address Q1. So we did have some deals that we had some accelerated deals like it was on Q4 just due to customer needs that we pulled in. So if we - and that’s obviously contemplated in our guidance in our midpoint. Obviously that’s something that can recur, if that does recur, we would obviously expect to be at the high end. For the full year, obviously from a pipeline perspective as you get out, you have to extrapolate a bit more, so that’s a little bit tougher. But obviously the big you know the big kind of areas that can push us to the top are obviously areas where we’ve been conservative those areas coming in higher. We’ve been conservative in quite a few areas. We talked about the Google and Yahoo partnerships. We talked about obviously the revenue that we expect to generate from the Kantar partnership. So we do feel good about our ability to come in to the high end, just given the fact that we feel we’ve been conservative across the board and some key areas.

Thank you.

Your next question comes from the line Todd Mitchell of Brean Capital. Please go ahead.

Yeah, thank you. First two questions, I want to ask about vCE. So looking at vCE Reston or non-Yahoo, Google alignment, what is the key sell metrics when you go to market that you communicate two potential customers vis-à-vis competition? And the second question which is also related to vCE is if Yahoo or whether Google is in this beta test, what just very high level conceptually, what are they looking for that’s going to give them the ability to determine what they are alive or what’s going to make the value add for this in this partnership, what are they looking, what is the metrics there?

Sure. Hey Todd. In terms of the sell metrics on vCE Reston versus Google, Yahoo, let me the differences. So in vCE Reston if you want to call it that is …

I mean vCE just in Reston not as opposed to align with Google or Yahoo but as opposed to another competing solution.

Yes, now we got it. The vCE is the core vCE product includes the ability in includes verification, that includes non-human traffic that we enhance significantly through our Mdot acquisition and obviously it includes all the data partners that we have that we announced last year, Pandora, Yahoo, Google and other. So it includes all of that and it measure all campaigns across all add servers. That’s the vCE core service. The vCE service for example in Google, up until this today’s announcement covered the U.S. only and covered display and video, did not cover mobile, so that was a differentiator and it was not global. Now today’s announcement obviously expand that and includes and we will be launching with Google mobile vCE and DoubleClick, we will be launching with Google global desktop vCE. And so that’s some of the differences. Another big difference is also is viewability is not yet include in the vCE service in DoubleClick, it does not include viewability, it includes making sure that they are reaching the target audience in terms of demographics. Now as far as what Google will see at the end of Q1 and to determine, you know honestly I am not going to talk on behalf of Google, clearly I think high level metrics I would think are based on adoption in terms of brands, advertisers, number of agencies using the service, those are high level metric that they would look at. But more specifically to that I’ll leave to Google to answer.

Is there a differentiator in linkage between vCE and Media Metrix in that, publishers are often delivering inventory to the exchanges or to even primary customers using Media Metrix for a guarantee and kind of having your dataset aligns increases the efficaciousness of your measurement mechanisms?

Yeah, you know it’s a great question, great point and that’s exactly what the industry trust is all about bringing all of these metrics of Media Metrix, viewability, brand safety, fraud, the demographics all in one platform and then integrating them into these programmatic platforms where it hasn’t been made available in the past, so now they can do it pre-bid and then obviously the media planning tools of media - they would leverage the Media Metrix product suite. So it all comes together with industry trust and it also allows premium publishers to look at the data in advance for their own data to make sure how they measure themselves in terms of fraud, viewability, all certified by an independent third party. So it’s all coming together, we felt that it was extremely important to make sure that, that data is available in the programmatic platform such as Stern, Rubicon project and others and will obviously be expanding that list of platforms in the next few quarter.

Okay, one other question, market positioning for total video and VMMP, how should we think about that as differentiated obviously they are differentiated but you just really quickly sort of address you know in markets ASPs kind of how should we think about the difference in the business models and positioning there?

So we’ve always thought that total video incumbencies the way we measure it is incumbencies both a combination of set-top box data plus panel data from the assets in Nielsen Audio. We then combine it with set-top box data that we have from different providers including AT&T and then combine that data in all of the digital data that we have the panel and the sense of data, that’s what total video is. Now a pre-requisite of total video is what we launched earlier this year which is Video Metrix Multi-Platform. Now what that is, is the ability to tag all of our video content across all digital platform, digital platforms being PC, smartphones, tablets, OTT all of that is what Video Matrix MP does. So we wanted to make sure that we do it. We wanted to make sure that we do it in a scalable and senses based versus a panel based approach. So we need the pre-requisite of Video MP - Video Metrix MP, we have amazing adoption, we announced this product at the beginning of January or in the second or third week of January and already we have 79 plus companies tagging with us, video companies tagging with us, over 90% of cable and broadcast networks tagging with us. And they tag, they don’t just tag one site, they tag all of their sites across all of their digital platforms. Ones we have all of that and we will get out of data of that product in Q2 of this year then it becomes a solid platform and foundation for total video.

Thank you, that’s helpful.

Sure.

Your next question comes from the line of Shyam Patel of Wedbush Securities. Please go ahead.

Hi thank you. On Google, I just wanted to confirm, are you guys still expecting Google out of data at the end of the quarter and lies in 2Q. And so it seems like Google apply things to its customers you know couldn’t have a meaningful impact on adoption, what’s your sense on whether you know it make sense offered and opt out basis versus opt in, given that direct response at the time make up it’s a large portion of the mix, what’s your opinion on that?

Sure. Hey Shyam and welcome to your first earnings call. We - you know with Google, in terms of opt out, opt in all of that stuff, honestly we are not going to get into that, we are still in beta, they have a decision to make at the end of Q1. We are absolutely on schedule with Google to get it out of beta by Q1 on the desktop and then we will be rolling out mobile vCE and Google International on the desktop later this year and mostly starting in Q2. But as far as opt in, opt out, things for now just - let’s - we are 100% focused on getting it out of beta and then jointly with us and Google, we will determine what’s right for the industry. I am not going to predict what they are going to do, it’s still a bit early and we’ll obviously ones we know, we’ll update everybody.

Great, but in terms of the accretion with WPP, you know how much accretion are you guys assuming at the midpoint of the guidance, is this - do you expect to be accretive right away or is that backend loaded, can you guys talk about that?

In the quarter that is closes, it would depend on the timing. If it closes towards the middle to the end of a quarter, it would not be accretive and had initial quarter but we would expect it to be accretive the following first full quarter and certainly for the year.

Now again that’s all assuming that the tender is successful, we are not going to know that until 30 days or so after the tender is launched and we expect the tender to launch in the next couple of days. WPP will launch the tender in the next couple of days.

Great, thanks guys.

So, we have no more questions at this time, so I would now like to turn the call over to Serge for closing remarks.

Thank you for your participation today. Our fourth quarter 2014 results reflect the momentum we’ve been building across our business. We continue to enhance the value proposition of our offerings and enter into strategic partnerships with leaders in digital media. We’re extremely excited for our WPP Kantar relationship and we will update you in the coming quarters on our progress. We’ve remained focused on our key priorities on the sharp execution of our strategy and on delivering value to our shareholders. There’s never been more exciting time at comScore. We look forward to speaking with you again on the next conference call. Thank you and have a good day.