Ladies and gentlemen, thank you for standing by and welcome to the comScore Third Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Also please be advised that today's conference is being recorded. [Operator Instructions] 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 of 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. Our 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 Livek. 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 Jon Carpenter as our new CFO who will be joining us on November 29th. Jon 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 and our Currency TV services, the turnaround of our digital business, continued growth in our activation business and our movie business. 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 help brands and…

Thank you, Bill. Today, we reported third quarter revenue of $92.5 million, up 5% from $88 million in the third quarter of last year. Revenue from Ratings and Planning was $62.1 million, down just 1% from the $62.7 million reported in the same prior year quarter. The year-over-year decrease was the result of lower syndicated digital revenue, offset by continued revenue increases in both national and local TV. As Bill mentioned, TV is experiencing higher growth from new partnerships and increased agency adoption. Syndicated digital revenue has declined at a lower rate throughout the year and while down from the prior year was sequentially flat when compared to the second quarter of this year. For the third quarter, TV revenue comprised 43% of our Ratings and Planning revenue compared to 41% last year, while syndicated digital revenue comprised 46% of our Ratings and Planning revenue compared to 48% in the third quarter of 2020. Analytics and Optimization revenue was $22.5 million in the third quarter, up 29% from $17.4 million in the prior year quarter. The increase was related to higher revenue across all product offerings including activations, custom solutions, lift and survey. Activation revenue experienced 38% year-over-year growth and 7% sequential growth, as we continued to bring new solutions to the market. Movies Reporting and Analytics revenue was $7.9 million in the third quarter, up 1% from $7.8 million in the prior year quarter and up 5% sequentially. Now that theaters have reopened in most major markets worldwide, we expect revenue from the Movie business to continue to experience sequential quarterly increases as consumers return to theaters. Turning to operating costs. Our core expenses, which include the cost of revenues, sales and marketing, research and development and general and administrative expenses increased 6% to $90.3 million compared to $85.2…

[Operator Instructions] Your first question comes from the line of Alan Gould from Loop Capital. Your line is open.

Thanks for taking the question. Bill, can you go into a little bit more detail of how you're able to do measurement on digital when the incumbent or the digital platforms which have all their local data are having problems with IDFA?

Yeah. I mean we've got. Thanks Alan. It's a very good question. I'm also -- David Algranati is online. I may ask him to chime in. But, the most of the publishers are looking at that identifier and how they're selling impressions. Because we have an opt-in platform and we also have data feeds from most of the major publishers, we think that we're in a unique position. And that's what our clients tell us that they're getting very good results by using comScore Digital. Chris, would you like anything to add or David on that?

I'll let David jump in on that and then I can add any color if you'd like. David is on mute. So Alan, I think the short answer is that, so we have a number of assets that we've acquired over the years companies like Proxemic, our panel information. That's allowed us to be able to understand behavior on the web. It allows us to move away from IDFA. We've been working for probably the last 18 months or so in anticipation of these 24 months, in coming up with privacy compliant ways to be able to provide the solutions and services we have both with our syndicated digital services. And as Bill mentioned, the predictive audiences that allow us to do it in a way that clearly protects the privacy and gives our customers the solution the fidelity they're used to, without being reliant on these third-party cookies and information we know isn't going to be available going forward. We actually feel that this type of trend in the marketplace is a competitive advantage for comScore because of the work that we put in to prepare for this.

Okay. Thanks, Chris. And if I can follow-up on one other question. The MRC audit, can you give us some sense of what the time frame it usually takes to get MRC accreditation and what the cost of that typically is?

We're not going to talk about the cost and -- but this is a process that it could take as long as a year. We're working to expedite this with the MRC. We're fully engaged with them. We have a lot of respect for the institution and what they do for the entire ad industry, but we'll be talking about that more in subsequent earnings calls. As you know, I said we just entered it in October, and we'll be giving periodic updates to our investors.

Okay. Thank you, gentlemen.

Your next question comes from the line of Jason Kreyer from Craig-Hallum. Your line is open.

Thank you, gentlemen. Good afternoon. I wanted to start out on some of the spectrum commentary you provided, because it seems to suggest you've moved beyond the Southeast region towards something more resembling nationwide. And I'm just curious what you're hearing on the other end as this takes shape. I mean are you having conversations with broadcasters and agencies about working more closely? Is there more receptivity to engaging there or any specific color you've heard would be great?

Thanks, Jason and thanks for that question. It's a very good one. Those of you who followed us for a while, for adoption for currency to occur, you need critical mass of sellers and buyers. So when we look at our future success, I personally look at our embedded client base of 3,000 customers that are using us for one application and it's very easy to move over for the currency application. So specifically in the Southeast, what we saw develop was the folks had spectrum and they have a very large sales organization. I was going to say, ubiquitous, but typically the cable interconnect sales operations are far larger than a multiple of TV stations. So with that they reach a wide group of advertisers. And they along with TV stations are trusted consultants. So we saw in the Southeast, ad agencies starting to subscribe to us in a more rapid rate as our regional advertisers start to do. Stations saw greater utility. So with that excitement Jason, they decided to roll it out across the country including their two largest markets. So we think as that's fully deployed through the remainder of the year, that will yield us revenue and usage that will empower more stations to subscribe and also give us a better pricing dynamic when we discuss with television stations renewals. So that's how a company really moves to currency. It's a process. It doesn't become a proclamation. So we're well down the road of that process in local.

And obviously, you put up a nice quarter. You reiterated your outlook for the balance of the year and now you're giving a lot of really good context around how at least this spectrum engagement is rolling out. Can you kind of shape the contribution from that for us? Is – what is the time towards those agreements materializing into revenue? And should we just think of more of all of this as a 2022 event?

Yes. I mean the reason we – you heard in my prepared remarks, I'm excited about the quarter that we're in right now because of the things that are happening. I don't think it's coincidental that some of the Univision stations that we signed up exclusively here. A couple of them are in that Southeast region. It's this really healthy dynamic that's happening. So this is happening now and certainly throughout 2022. We have momentum. As I said at the opening, we have returned as a growth business.

Okay. One more for me. Just wanted to get an update on local markets, specifically. I mean it seems like you're winning a lot more business on that front. So can you maybe do two things? Can you size the opportunity in local market? And then again maybe some specific commentary from these wins on why you're landing some of these new contracts.

Well, we're landing the wins because our competitor is showing fewer ad impressions based on what I believe is an antiquated methodology. When you have a method where you're getting return path information, as we talked about during the pandemic that our TV viewing was consistent. We showed periods where it was up versus our competitor. So the pandemic didn't create the problems for the other service. It just highlighted the problems. And with that the risk of not changing has become intolerable. Having inertia works until it doesn't work. And right now it no longer works because of what happened. So the reason I'm excited about local, we think it's directly going to feed into national because ad agencies who are chartered with the brands of executing the buys can only use or we can – they will only use comScore in the future because they can build a national buy where all 210 local markets feed together. So you're sitting up in Minneapolis, but there's a national buy per product. They can see whether Minneapolis-St. Paul, under-delivers and over-delivers and have the confidence that the rating service merges into it. So they can look at that sensitivity. So we're really excited about the movement in local, because it is a cornerstone for moving the entire TV business. And we talked for a long time that we believe there will be a small basket of currencies that everyone will trade on. We've been a currency for a while. We think we'll take on increasing importance, as the year concludes. And we get into 2022.

All right. Thanks for the color Bill. I appreciate it.

Thank you, Jason.

Your next question comes from the line of Laura Martin from Needham. Your line is open.

Hi there. Great results, especially on the margin side, congratulations.

Thank you, Laura.

I have three. Let's start with the industry, one. Roku said that it was seeing supply chain headwinds to ad growth in the fourth quarter. Trade Desk this morning seeing they're seeing no headwinds growth in the fourth quarter and took our customers up. So when you look at comScore, from an industry-wide point of view, do you see -- can you talk about headwinds you're seeing in auto because of chip shortages, or supply chain shortages, or labor shortages? Could you talk about headwinds if you're seeing any in the fourth quarter please?

Yeah. For us it feels like the pandemic is over even though people are still suffering, of course. Our clients -- and I speak with them every day, they're feeling really good about their businesses. And auto clearly there are chip shortages, but they're still advertising. And as they look into 2022 -- I was talking with a station group head just yesterday. And they are incredibly optimistic. So this environment feels really good for our customers from what I see. And it also feels good for our businesses. All of our businesses are firing well. Our TV business, our Digital business, our Activation business and our Movie business is in a good place. So we feel good, Laura.

Okay. Great. Then my second one out of three, as I want to step up to -- I guess step down from the 30,000 and go to the national. So Viacom announced during the quarter that it was going to accept VideoAmp as a second currency if you will. And I'm wondering, if your point of view as a head of comScore that we are going to increasingly see these national advertisers allow or accept other currencies -- like formally except other currencies? And how do you think comScore will get to be named the second currency accepted for some of these national advertisers?

Great question, Laura and as you know a couple of quarters ago Viacom CBS talked about using us as currency. And you've been following us for a long time. And you know we've been talking about this basket of currency that I believe today would come that advertisers would trade looking at multiple currencies. And I think those multiple currencies how this is panning out have different use cases. We believe, our core data inputs gives us currency grade meaning the data trends. It's predictable. You can do a reach and frequency analysis. And some of the other products are tools that help add some context around -- so I do think nationally Laura, there will be a small basket of suppliers that do very well. And I am very optimistic, that we will do very well in this changing environment.

Okay. And then, my third one is Trade Desk which was up 30% today on earnings and you guys are on your way there right now. But anyway they said that they -- or the UID. The CEO talks about Universal ID 2.0 is like, replacing cookies and better than cookies. And maybe on conflating measurement with targeting because he does targeting. Can you talk about when you think about the currency what we've talked about for a long time comScore gain of currency he talks about UID 2.0 being a currency? So are those complementary? Are they interoperable? Do they compete with each other? Can you talk about how those relate to each other? I'd be very interested. Thank you.

Well, if we have David back online, I'll ask him to comment further. When it comes to the Trade Desk, our segments are on the Trade Desk. And how our information is being used there, customers will use a particular target. And then if they have better results on one target versus another, then usage increases. And that's in our activation suite that we've talked about for a few quarters now of how it's growing. So, I think in this cookie-less world, we're going to do very well in it and but it's there will be other suppliers. It's not going to be one company, Laura. I believe that there will be a few. And the ANA is involved with this with -- along with other folks. David, if we still have you is there anything else you'd like to add there?

I can jump in Bill. It sounds like David is having technical issues. So, Laura, so I would see them as complementary as far -- because the UID is more of an identity spine. That is we leverage identity spines as it relates to doing our audience targeting. And we facilitate our customers' ability to be able to understand the audiences and who they're going to reach within a particular media which is -- Trade Desk is a large partner of ours already. We do a lot of business with them. As it relates to that, I think you're right, there is sometimes the Board currency gets used loosely at times. We're referring to currency as it relates to ratings and planning in our television and cross-platform business and our digital business. It relates to more of the traditional reach and frequency measurement and the ability to leverage our census level data to really provide kind of future measurement as it relates to leveraging our scale to understand who's being reached by particular media. It's being able to understand how to post that out and have a service as MRC accredited for that -- for those purposes. But we do play in both worlds, but we see the identity spine as a complementary component to what it is that we do at comScore.

Very helpful. Thank you so much guys for taking the questions.

Sure.

Thank you, Laura.

There are no questions at this time. Presenters, please continue.

Thank you, operator and thank you everyone for joining us today. I want to close by highlighting our return to growth and our unwavering focus on driving change in the industry. The industry is looking for our type of currency that we've been working on for over a decade. The time for change is here and the choice is clear. We think the future is now and the future as comScore. Thank you for joining us today and we look forward to be sitting with you on our next quarter. Have a good evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.