Ladies and gentlemen, thank you for standing by, and welcome to the Comscore First Quarter 2020 Financial Results Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Chris Ferris, Director of Investor Relations. 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, May 7th, 2020. 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. Our actual results in future periods may differ materially from those currently expected because of the 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 Livek. Bill?

Thank you, Chris, and thank you, everyone, for joining us today. I'd like to start by addressing the extraordinary environment. We are now facing a global pandemic. When we last spoke at the end of February, we could not have imagined how rapidly and life-altering the environment would become. As circumstances evolve, we took early action, initiating contingency plans in early March and continuing to monitor the situation on a daily basis. Our employees are safe, secure and continuing to provide our customers with the products and insights they need to navigate what has become a rapidly involving media and consumer landscape. Because we are a nimble technology company with a mobile workforce, we transitioned very well to working from home. I'd like to thank all of our employees for their hard work, their dedication, and their flexibility during this extraordinary time. We have risen to the challenge and the entire team and our customers are grateful. I thank you very much. As a result of our team effort, our data capture, our analytics and our product delivery have been largely unaffected. In fact, the situation has created new opportunities for Comscore, as we deliver new insights on a shifting media consumption and the consumer buying habits that are evolving very quickly as most America [Technical Difficulty]. We have published many [Technical difficulty] over the past few weeks, which have led to robust conversations with our partners about ways to help them understanding this changing landscape. We believe the demand for [Technical difficulty] third-party measurement without customer and consumer contact will only increase in this environment. Our results in the quarter reflect the continued product and sales momentum our management team has been building over the past six months. While revenue was lower than anticipated, due to the unforeseen impact…

Great. Thank you, Bill. Today, we reported first quarter revenue of $89.5 million compared to $102.3 million reported in the first quarter of last year. While we expected revenue to be lower in the first quarter, revenue was below our expectations, due in part to the current environment, which impacted the timing of closing contracts in March as well as delayed political revenue in custom projects we expected to recognize. Revenue from ratings and planning in the first quarter was $63.5 million compared to $70.6 million reported in the first quarter of last year. The decrease was largely driven by lower revenue from our syndicated digital and national TV products. While enterprise renewals were strong, syndicated digital revenue declined year-over-year, representing 50% of our ratings and planning revenue in the quarter compared to 51% in the first quarter of 2019. As I discussed in February, we expected syndicated digital to decline early in the year, but remain optimistic that it will stabilize and begin to flatten on a sequential basis later in the year, due in part to our expectation that we will benefit from new business from the exit of some competitors. Our opportunity to acquire those customers in the first quarter was limited, and there was uncertainty regarding when we might expect those contracts to materialize. National TV was lower as a result of consolidation of certain customers last year as well as the delay in political from campaigns that moved out of the quarter as I mentioned earlier. We expect political revenue to begin in the coming quarter. Local TV revenue continues to grow from new customers and expansion with existing customers. Revenue from analytics and optimization in the first quarter was $15.5 million, compared to $21.5 million in the first quarter of last year. The decrease…

[Operator Instructions] Your first question comes from the line of Benjy Scurlock with Arete Research.

Hi, thanks for taking the questions. I have two, if I may. First, I was wondering if you could provide a bit more color on the partnership with LiveRamp and the impact it could have on the effectiveness of your addressable measurement and whether this is kind of short-term -- we could have a short-term impact or it's a longer-term initiative? And then secondly, I was wondering if you could talk a little bit about the conversations you're having with the client -- with your clients, given the current environment and how you think you could impact from wholesome [ph] and potential new leads for the rest of the year? Any kind of color on that would be helpful. Thanks.

Thank you. LiveRamp, I can't tell you how excited I am. I'm excited that we're working with them, they're a great company and they're integral in this new world, basically measurement around did it actually work, they have schedule, and every customer has their own definition of who their consumer is and the emerging data sets through rely brand. This deal with them, this partnership is going to have an immediate impact, positive impact on our revenue and a long-term impact that's positive for us. So, I can't tell you how super excited I am. In terms of our clients, we've been working closely with all of our clients in all of our verticals, helping them understand how the environment is changing. We're actually in a fortunate place to have been able to secure long-term contracts on so many of our customers, as we're helping them navigate through this and their viewer, their consumer, their digital user has changed quite a bit and they're using us to navigate through that. And it's also interesting to point out on the movie side of the business, even though most movie theaters have been closed around the globe, our customers are using us a great deal as they're building their plans to reopen their releases, so Comscore is not just a tool they use for real-time measurement, they also use it for planning purposes. So, we're in a good place.

Okay, thank you.

Your next question comes from the line of Ryan Vaughan with Needham & Company.

Hi, Bill. Hi, Greg. Thanks for taking my call. A couple of questions for you. One, just I guess to follow-up on the movies. Just in the text there, you did say that you expect to see some impact through the rest of the year. Could you shed a little bit more light on the contractual nature of that business? If there are no theatres open, is there some sort of clause in that contract that there is no payment, anything you could share on that. That's question Number 1, please.

On question Number 1, most of our movie contracts are long-term in nature. And as we reported in the quarter, before COVID ended, we have signed up a new and a very large digital studio as a brand new client. Also since COVID happened, we continue to renew customers and one of the large studios just renewed with us. So, we're an important strategic tool for them. Clearly, it's been rough. We announced over the past year a number of additional products that we're selling into the movie ecosystem. I think it's fair to say that it is not business as usual when the whole infrastructure of the globe opens up. So, selling new products in, I think, is going to be difficult for a while, but our base measurement service is critical, it's durable, and most of our contracts are long-term in nature.

That's helpful. And then, Greg, nice job on the operating margin improvement, quite a nice step-up there. You identified the $2 million to $4 million of additional cost cuts just to adjust to the new environment. Are there other variable costs in there that we could be thinking about? And then, just along the same lines, just we think about 2Q, will that the working capital anything we should be thinking about as far as, does that switch back to more of a source of capital?

Yes, so on the first point, there are things that we decided that we were going to take some action immediately in the short-term and that will add some incremental savings over the next few months, as I highlighted in my remarks. That said, we've been clear that we continue to be vigilant around expenses. We continue to look at everything we do and how we do it and we've been doing that for quite some time in the facilities area and other places and that is ongoing to continue to drive those costs down. I think we talked about that at year-end and we saw another improvement on a sequential basis even from the fourth quarter. So, we are continuing to become more efficient and effective and continuing to look everywhere where we have cost, as to how we can do that better. So, that won't change, but in the short term, we will have some incremental benefit as I outlined. On working capital, when you look at the quarter, the first quarter tends to be a little bit unusual in that you have some year-end compensation in the light and you could see in our cash flow statements a big step down in our equities and our AP in the quarter. Some of that annual incentive compensation and the like that gets paid early in the year. As we continue to ramp down these expenses, we should see positive impact from running a company with a lot lower cost base as we move forward.

Great, thanks so much.

[Operator Instructions] And you do have a question from the line of Jim Roumell with Roumell Asset Management.

Quick question on addressable, can you just comment on two points, where you're at with that in terms of engagements with any potential clients and what if any competitors do you feel are as well positioned as you are to rollout a addressable products?

Thanks for asking that. Addressable, as we talked about in the past, is super important strategically. In the COVID environment, addressable, I don't believe is as important because of how the world has shifted and the advertising pie has buckled under a bit. So when I look at that on a go-forward basis, we are uniquely positioned for a couple of reasons. First off, by having the operator information that we have with all of the operators, the addressable commercials have to be measured by someone who has access to that information in the way that Comscore has it. So, we're in a great environment. The addition of Comcast we think puts us in a great place. Now, I think there is another mega trend that is happening right in front of us. And I can't predict how it's going to play out, but I'm hearing from a number of advertisers that national spot that goes into local markets certainly has changed quite a bit under COVID, but national spot is a small piece of a television stations business and that dollars may go into what they call national addressability, that the television networks may be addressing their commercials out to individual households through the cable spine. If they do in fact accelerate national addressability, we're going to be in the perfect place to capitalize on it. In terms of the competitive landscape, this is a category that we invented and addressable has to also feed into linear. Because of the census measurement nature of both, we believe that advertisers will need those capabilities of measuring all 210 local markets with ratings impressions that feed up to a national total with the network measurement, and then the addressability feeds into that. So, we're in a good place and no one has those capabilities quite like Comscore has, Jim.

Thank you, Bill.

You're welcome.

[Operator Instructions] And there are no further questions at this time.

Thank you, operator. Just in closing, we remain excited about the future as we manage through this difficult present. I'm very pleased with the progress that we made as a company in the roughly two quarters that I've been honored to serve as your CEO. The important, yet the difficult cost decisions that Comscore took last year put Comscore in a position, so we can weather this environment, we think, very well and capitalize in tremendous opportunity that we have as a company. Lastly, before we end, on behalf of myself and the entire Comscore team, I would like to send our heartfelt best wishes and a big thank you to the front line workers in this pandemic, whether they'd be first responders, healthcare workers or central employees. In our little corner of the world of Comscore, we're going to continue to do our part that help our customers and communities recover from this crisis. Thank you all, and we look forward to sharing the progress in the near term or on the next quarterly call. Thank you very much.

This concludes today's conference call. You may now disconnect.