Good day, and thank you for standing by. Welcome to the Comscore First Quarter 2023 Financial Results Conference Call [Operator Instructions]. Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker today, Mr. John Tinker, Vice President of Investor Relations. Sir, please go ahead.

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 9, 2023. Our actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties. These risks and uncertainties include those outlined in our 10-K, 10-Q and other filings with the SEC, which you can found on our website or at www.sec.gov. 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, which we have provided reconciliations in today's press release and on our website. Please note that we will be referring to the slides on this call, which are also available on our Web site, www.comscore.com, under Investor Relations, Events and Presentations. I'll now turn the call over to Comscore's Chief Executive Officer, Jon Carpenter. Jon?

Thanks, John, and good evening, everyone. Thanks for joining us to talk about our first quarter tonight. Before we get into the businesses, I wanted to touch on our first quarter results. It's clear that the end markets we're serving remains soft, particularly as it relates to custom deliverables, coupled with a more cautionary ad spend environment. As a result, the financial print for the quarter came in below our expectations. That said, the operational progress we're making is significant. And despite the challenging environment, the strategic wins we've announced and will announce in the future give me great confidence that our strategy is on point and positions us well for the balance of the year and going forward. As it relates to our full year guide, we're maintaining our revenue range. However, we do note pressure on achieving the top end of that range. And from an adjusted EBITDA standpoint, we remain confident in the guidance we previously provided. With that, we've had an action-packed first quarter with meaningful progress in areas critical to transforming our business. For starters, YouTube selected Comscore Campaign Ratings, our cross-platform ad measurement product, as their solution for NFL Sunday Ticket. Measuring campaign performance for the multibillion-dollar investment they've made in Sunday Ticket says a lot to me about the progress we've made with CCR. Building on our success here, Tubi also announced Comscore Campaign Ratings is now available to their advertisers for the measurement of campaigns on their streaming service. And we've recently reached an agreement with Roku that is tied to both CCR and our Brand Survey Lift products, which we're now just getting off the ground. YouTube, Tubi and Roku joined a number of other major media clients signing up for CCR so far in 2023. We've also had no shortage…

Thank you, Jon. Total revenue for the first quarter was $91.6 million, down $2.4 million from the same quarter a year ago. Cross Platform Solutions revenue of $41.1 million was slightly up from $40.8 million in the first quarter of 2022, primarily driven by double-digit growth in local TV and the continued strength of our movies business. National TV revenue declined in the first quarter due to a onetime custom deliverable in the prior year. Revenue from the movies business grew 7.3% to $8.8 million from $8.2 million a year ago. Revenue from Digital Ad Solutions of $50.4 million was down 5.1% compared to $53.1 million a year ago. Similar to what we've seen in the last couple of quarters, this decline was primarily driven by a soft advertising market, which resulted in lower custom deliverables for our digital products. This trend, while down, is an improvement over the last 2 quarters. We expect the current macroeconomic conditions to continue to challenge our digital business as we move through the first half of the year. Adjusted EBITDA was $5.2 million, down $1.6 million from the prior year quarter, resulting in an adjusted EBITDA margin of 5.7%. I want to take a minute to unpack adjusted EBITDA and touch on a few contributing factors that are important to call out. When I look at the results year-over-year, there was an almost $2 million swing in the impact of foreign currency transactions. If you exclude that impact from adjusted EBITDA, this year's first quarter is actually up 4.7% over the prior year. This result is also a testament to our focus on cost execution. Our core operating expenses were down 6% year-over-year with a large part of that due to lower employee compensation. We're continuing to execute on the restructuring plan we put in place last year, which is and will continue to contribute to lower compensation cost as we move through the year. We've also identified and are accelerating other initiatives to transform our business operations and drive additional efficiencies in the latter part of 2023 and into 2024. Regarding our full year guidance, I'll reiterate what Jon mentioned at the top of the call. We're maintaining our guidance for revenue growth of low to mid-single digits over 2022. However, we do note pressure on achieving the high end of that range. Even with the top line pressure, we remain confident in the guidance that we previously provided for adjusted EBITDA. With that, I'll turn it back over to Jon for closing remarks.

Thanks, Mary Margaret, and thanks, everyone, for joining this evening. We continue to have a tremendous opportunity in front of us, and I couldn't be more excited about our growth prospects and the value we will create for shareholders. I also want to take a moment to thank our employees who work tirelessly every day to deliver for our clients. Without them, none of what we spoke about today is possible. With that, operator, we can open it up for questions.

[Operator Instructions] Our first question will come from Jason Kreyer of Craig-Hallum Capital Group.

This is Cal on here for Jason. So just a couple from me. First question, can you just kind of talk through maybe the cadence of the quarter and maybe go a little deeper on where you kind of saw business soften a little more than you expected?

Yes, I can take that. Thanks for the question. And then Mary Margaret can add in. I think it's a continuation of what we were seeing in the second half, where generally discretionary custom deliverables have continued to be put on hold coupled with, quite frankly, a softer than I think anyone expected ad market. I mean the reality is we're selling into a pretty difficult end market. And we're seeing pressure on things that end up being discretionary, particularly around bespoke custom deliverables specifically.

And then second one, Jon, you talked a lot about the wealth of consumer data that Comscore has. And it sounds like you're starting to tap into that with Proximic and some industry partnerships. So can you just talk a little bit about where you see that progressing from here?

As I mentioned in my comments, those partnerships are critically important as we think about not just measuring audiences for our clients, but enabling our publisher ecosystem to transact programmatically with ease. And the partnerships that we've struck in the quarter and will continue to announce here going forward are critical for our digital ad business and that publisher network. I think from an economic standpoint, the more of those partnerships that we stand up, the more sticky we are. The more always-on inside those big platforms means we continue to participate in the ad economics that flow through those platforms on a regular basis. So critically important to our success here in digital.

Our next question will come from Surinder Thind of Jefferies.

So Jon, the first question I'd like to ask about is just you were talking about having measurement at the household level. And then it sounded like you're beginning to add measurement at the individual level. Can you maybe provide a bit more color, if I heard you correctly, on that in terms of the test market, the time lines, scheduled rollouts, anything like that?

One moment please [Technical Difficulty]

Later this year and in the September timeframe.

I apologize, Jon. I don't know if something happened on the phone, but I literally heard the last word that you just said. So we can take that offline, I guess. I'm not sure if there's a technical difficulty, but...

Can you hear us okay, Surinder?

I can hear you now, but it literally went…

Yes, not sure what happened. The way I would think about our personification is you've got a set of clients that obviously like to transact on an Advanced Audience basis at a household level. You've got still a large portion of the marketplace that likes to transact on traditional demos. And that's what we mean by personifying our data set. And so by enabling personification in our offering opens up the optionality for our clients to really choose how they want to transact with us. And as I mentioned, our data -- that data will be available largely for test purposes and for planning purposes later this month and then fully available in Comscore TV in the kind of early fall time frame.

And then you also talked about kind of the headwinds from kind of -- I guess it was characterized as signal loss, right, as we move towards more privacy-centric walled gardens or just in a broader environment more broadly speaking. Can you talk about, is there a secular headwind here that you can actually fully counter, or is there going to be some level of signal loss that you can't recover, and therefore, the amount that advertisers are willing to pay for is going to be lower than it has been historically?

No, I think from our perspective, our offering is pretty unique in terms of our ability to help our publisher network counter the impact of signal loss and the degradation in value that they're seeing from an eCPM standpoint due to that signal loss. We feel like those integrations by nesting in the UID framework gives them the ability to participate in economics inside those platforms that don't exist for them today because they've got no first-party data. We can -- and so our products are kind of the vehicle that allow them to unlock that opportunity, if you will. [Steve], would you add anything to that?

No, I think that's exactly right. Being able to identify and measure, I expect, we can provide additional enrichment, but oftentimes transacting with us basis ultimately, there's some obligation as well to help validate measurable audiences to also being able to participate along for ease of transaction, especially around these new IT frameworks that are starting to emerge and continue to proliferate the market.

And then just one other quick one for Mary. There was talk of driving additional efficiencies beyond what you already had. Any color where you can quantify or what is actually being pursued to generate those efficiencies?

Yes, I mean I think we're still in the planning and then early implementation phase of these additional initiatives. So I think it's still a bit too early to really put a number around it. A lot of what was built into the restructuring plan that we implemented last year were related to very specific initiatives and actions that we wanted to take. And those were based on some of the analysis that we had done at that time. As we've moved into looking at some of the additional details and really understanding and taking a step back and looking at how our business operates, we have identified additional ways to become more efficient as it relates to cleaning up our tech debt as it relates to how we're ingesting data, the cost of the data that we're getting, the cost of some of our other vendors and whether or not there are opportunities to find just similar services for lower costs. We're scrubbing really hard. I think we've got a healthy list of additional initiatives that we've started working through, and we're hoping to really start implementing in the back half of the year.

And then just a point of clarification here. Versus the original plan, how much is in the run rate and how much is left that you can still take out?

For the -- you're talking for restructuring, Surinder?

That is correct, yes.

So I think we've -- through the first quarter, what would you say were -- we kind of identified everything…

$7 million as far as what we've actually taken from a cost perspective. I think we -- I think our updated range of where we think we're going to land is somewhere between $10 million and $15 million. So we've still got between $3 million and $8 million left.

[Operator Instructions] Our next question will come from Laura Martin of Needham.

So one of the things you've always had an advantage of, you have a big cost structure in the set-top boxes. And my question is, as linear becomes less important, can you give up some of the 75 million of one in three U.S. set-top boxes or get a lower price because their value is becoming less important over time as audiences move to CTV?

I think in some cases, our contracts contemplate minimum requirements on household deliverables. So some of what your question is yes, but it depends on the contracts. In many of our contracts, we also have access to additional rights beyond just what's coming in through the set-top box feed.

So you're paying for other things. Okay, that makes sense. And then I thought the slide that you have that breaks out like the growth in local versus digital, I thought was really helpful. And I guess my question is, is the downdraft in digital still that -- is the downdraft in Digital Ad Solutions, is that still the old media -- Comscore Media Metrix project -- product, or is there something -- because it looks like local is still growing and movies are still growing or is there something -- I sort of digress that we would have been really low now in that old Media Metrix product suite? So I'm surprised it's still shrinking 5% year-over-year. Is it still that product or other -- is that weakness leading into other products from the digital side?

So you're talking about the Media Metrix business, obviously, high nine figure business. I think there is churn in some of the smaller clients for sure, no doubt about it. The clients that are more enterprise in nature are very sticky -- continue to be very sticky and rely on us heavily for digital measurement. I think where we've historically augmented our digital offering is with some of the more kind of bespoke one-off custom deliverables in digital that complement the syndicated offering. And I think really since the second half of the last year, that's really where we've seen downward pressure and softness. And that's definitely continued here in the first quarter. So anyway, so obviously, cookie deprecation in the mix there, too, complicates this further, which we try to address in the comments I made during the call.

I am seeing no further questions in the queue. I would now like to turn the conference back to Jon Carpenter for closing remarks.

Thanks, everybody, for joining, and we look forward to talking to everyone soon. Thank you.

This concludes today's conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.