Form 8-K NEUSTAR INC For: Jul 30

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July 30, 2015 4:08 PM EDT



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
FORM 8-K
 
 

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported) July 30, 2015
 
NeuStar, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
001-32548
 
52-2141938
(State or other jurisdiction
 
(Commission
 
(IRS Employer
Of incorporation)
 
File Number)
 
Identification No.)

21575 Ridgetop Circle
Sterling, Virginia
 
20166
(Address of principal executive offices)
 
(Zip Code)
(571) 434-5400
(Registrant's telephone number, including area code.)
N/A
(Former name and former address, if changed since last report.)
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.02. Results of Operations and Financial Condition.
On July 30, 2015, NeuStar, Inc. (the “Company” or “Neustar”) announced its financial results for the second quarter of 2015. A copy of the press release containing the announcement is included as Exhibit 99.1 to this Current Report and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On July 30, 2015, Neustar issued a press release announcing its financial results for the second quarter of 2015 and a press release announcing the completion of its acquisition of Bombora Technologies Pty Ltd (“Bombora”), based in Australia. Copies of the press releases containing these announcements are included as Exhibits 99.1 and 99.2 to this Current Report and are incorporated herein by reference.
As set forth in these press releases, Neustar will conduct an investor conference call to discuss the Company's results and acquisition today at 4:30 p.m. (Eastern Time). A replay of this call will be available to all those who cannot listen to the live broadcast.
The information in this report on Form 8-K under Items 2.02 and 7.01, including Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number
 
Description
 
 
 
99.1
 
Earnings Release of Neustar, dated July 30, 2015.
99.2
 
Press Release of Neustar, dated July 30, 2015.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
NeuStar, Inc.
 
 
 
 
 
Date:
July 30, 2015
 
By:
 
/s/ Paul S. Lalljie
 
 
 
Name: Paul S. Lalljie
 
 
 
Title: Chief Financial Officer (Principal Financial and Accounting Officer and Duly Authorized Officer)







EXHIBIT INDEX
Exhibit
Number
 
Description
 
 
 
99.1
 
Earnings Release of Neustar, dated July 30, 2015.
99.2
 
Press Release of Neustar, dated July 30, 2015.





Exhibit 99.1
Neustar Reports Results for Second Quarter 2015
Acquires Strategic Domain Name Registry

STERLING, VA, July 30, 2015 — Neustar, Inc. (NYSE: NSR), a trusted, neutral provider of real-time information services, today announced results for the quarter ended June 30, 2015, and increased its guidance for full-year 2015.
In a separate announcement, the company stated that it has acquired Australia-based Bombora Technologies Pty Ltd, the registry services provider of the .au top-level domain and numerous other top-level domains, for approximately AUD $118.5 million, or approximately USD $86.9 million in cash.
Results for Second Quarter 2015 Compared to Second Quarter 2014
•
Revenue increased 8% to $256.8 million
•
Marketing Services revenue increased 17% to $40.9 million
•
Security Services revenue increased 18% to $40.5 million
•
Net income increased 22% to $45.1 million
•
Net income per share increased 31% to $0.80
Non-GAAP Results for Second Quarter 2015 Compared to Second Quarter 2014
•
Adjusted net income increased 7% to $61.7 million
•
Adjusted net income per share increased 16% to $1.10
“Our strong second quarter results reflect increased demand for the differentiated services we provide clients, based on our unique datasets and proprietary algorithms,” said Lisa Hook, Neustar’s President and Chief Executive Officer. “With exceptional accuracy and our core expertise in authentication, we help clients make informed, real-time decisions to promote their services and protect their brands online.”
Paul Lalljie, Neustar’s Chief Financial Officer, added, “Information Services continued to deliver impressive revenue growth, with a 10% year-over-year increase.  In addition, our strong profits and cash flows reflect the strength in our business model and the ability to execute on our strategic initiatives.  With this continued momentum and the registry acquisition announced today, we are increasing our full-year revenue and adjusted net income guidance.”
Discussion of Second Quarter Results
Revenue totaled $256.8 million, an 8% increase from $237.5 million in 2014. Marketing Services revenue grew 17% to $40.9 million driven by increased demand for the company's services that help its clients make informed and high-impact decisions to promote their products and services. Security Services revenue grew 18% to $40.5 million driven by increased demand for the company's DNS Services and additional revenue from domain name registries. Data Services revenue was flat at $49.2 million. NPAC Services revenue grew 6% to $126.2 million driven by an increase in NPAC fixed-fee revenue.




Operating expense totaled $178.7 million, a 3% increase from $172.7 million in the second quarter of 2014. This $6.0 million increase was driven by a $3.3 million increase in personnel and personnel-related expense, and a $4.6 million increase in costs related to information technology and systems. In addition, the company incurred an increase of $1.1 million in professional fees and marketing expense associated with the NPAC.
As of June 30, 2015, the company's cash and cash equivalents totaled $412.0 million, an increase of $85.4 million from $326.6 million as of December 31, 2014. As of June 30, 2015, the company's outstanding debt under its term facilities and senior notes was $779.3 million. During the quarter, the company purchased approximately 1.4 million shares at an average price of $27.72 per share, for approximately $38.0 million.
Business Outlook for 2015
The company increased its full-year 2015 guidance provided on April 29, 2015:
•
Revenue to range from $1.035 billion to $1.045 billion or growth of 7% to 8%
•
Adjusted net income to range from $245 million to $255 million or a decline of 1% to 5%. In 2014, the company recorded $12.2 million of discrete tax items
•
Adjusted net income per share to range $4.34 to $4.51 or flat to 4% growth
The company's business outlook excludes the impact of any future share repurchases.
Conference Call
As announced on July 16, 2015, Neustar will conduct an investor conference call to discuss the company's results today at 4:30 p.m. (Eastern Time). Prior to the call, investors may access the conference call over the Internet via the Investor Relations tab of the company's website (www.neustar.biz). Those listening via the Internet should go to the website 15 minutes early to register, download and install any necessary audio software.
The conference call is also accessible via telephone by dialing 877-704-5378 (international callers dial 913-312-1485) and entering PIN 8258371.  For those who cannot listen to the live broadcast, a replay will be available through 11:59 p.m. (Eastern Time) August 6, 2015 by dialing 877-870-5176 (international callers dial 858-384-5517) and entering PIN 8258371, or by going to the Investor Relations tab of the company's website (www.neustar.biz).
Neustar will take questions from securities analysts and institutional investors; the complete call is open to all other interested parties on a listen-only basis.
This press release, the financial tables and other supplemental information are available on the company's website under the Investor Relations tab. The supplemental information includes reconciliations of certain non-GAAP measures to their most directly comparable GAAP measures. These non-GAAP measures may be used periodically by management when discussing the company's financial results with investors and analysts.
About Neustar, Inc.
Neustar, Inc. (NYSE: NSR) is the first real-time provider of cloud-based information services, enabling marketing and IT security professionals to promote and protect their businesses. With a commitment to privacy and neutrality, Neustar operates complex data registries and uses its expertise to deliver actionable, data-driven insights that help clients make high-value business decisions in real time, one customer interaction at a time. More information is available at www.neustar.biz.




Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements about the company's expectations and beliefs about its future results, such as its guidance regarding future results of operations. The company has attempted, whenever possible, to identify these forward-looking statements by using words such as “may,” “will,” “should,” “projects,” “estimates,” “expects,” “plans,” “intends,” “anticipates,” “believes” and variations of these words and similar expressions. Similarly, statements herein that describe the company's business strategy, prospects, opportunities, outlooks, objectives, plans, intentions or goals are also forward-looking statements. The company cannot assure you that its expectations will be achieved or that any deviations will not be material. Forward-looking statements are subject to many assumptions, risks and uncertainties that may cause future results to differ materially from those anticipated.
These potential risks and uncertainties include, among others, the uncertainty of future revenue, expenses and profitability and potential fluctuations in quarterly results due to such factors as modifications to, terminations of, or failures to renew (or announcements related to any of the foregoing) the company's material contracts, including its contracts to serve as the Local Number Portability Administrator, disruptions to the company's operations resulting from network disruptions, security breaches or other events, or an inability to obtain high quality data on favorable terms or otherwise; general economic conditions in the regions and industries in which the company operates; the financial covenants in the company's secured credit facility and their impact on the company's financial and business operations; the company's indebtedness and the impact that it may have on the company's financial and operating activities; the company's ability to incur additional debt; the variable interest rates applicable under the company's indebtedness and the effects of changes in those rates; the company's ability to acquire Bombora Technologies Pty Ltd and realize the expected benefits in a timely manner or at all; the company's ability to successfully identify and complete other acquisitions and integrate and support the operations of other businesses the company acquires; increasing competition; market acceptance of the company’s existing services; the company's ability to successfully develop and market new services and the uncertainty of whether new services will achieve market acceptance or result in any revenue; the company’s ability to raise additional capital on favorable terms or at all; business, regulatory and statutory changes related to the communications and Internet industries; and the impact on the company of any litigation, arbitration, investigation or other similar proceeding. More information about risk factors, uncertainties and other potential factors that could affect the company's business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, the company's most recent Annual Report on Form 10-K and subsequent periodic and current reports. All forward-looking statements are based on information available to the company on the date of this press release, and the company undertakes no obligation to update any of the forward-looking statements after the date of this press release.





NEUSTAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2014
 
2015
 
2014
 
2015
 
(unaudited)
Revenue
$
237,457

 
$
256,767

 
$
467,354

 
$
508,155

Operating expense:
 
 
 
 
 
 
 
Cost of revenue (excluding depreciation and amortization shown separately below)
60,844

 
67,551

 
119,455

 
131,709

Sales and marketing
48,637

 
50,942

 
98,628

 
97,676

Research and development
6,932

 
5,997

 
13,991

 
12,451

General and administrative
26,008

 
24,729

 
52,299

 
49,386

Depreciation and amortization
30,086

 
29,438

 
57,726

 
59,362

Restructuring charges
200

 
—

 
5,166

 
—

 
172,707

 
178,657

 
347,265

 
350,584

Income from operations
64,750

 
78,110

 
120,089

 
157,571

Other (expense) income:
 
 
 
 
 
 
 
Interest and other expense
(7,270
)
 
(6,481
)
 
(13,267
)
 
(13,203
)
Interest income
163

 
69

 
258

 
295

Income before income taxes
57,643

 
71,698

 
107,080

 
144,663

Provision for income taxes
20,796

 
26,640

 
38,550

 
53,391

Net income
$
36,847

 
$
45,058

 
$
68,530

 
$
91,272

Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.62

 
$
0.81

 
$
1.14

 
$
1.64

Diluted
$
0.61

 
$
0.80

 
$
1.11

 
$
1.61

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
58,973

 
55,377

 
60,100

 
55,676

Diluted
60,388

 
56,238

 
61,539

 
56,563






NEUSTAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
December 31,
2014
 
June 30,
2015
 
(audited)
 
(unaudited)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
326,577

 
$
411,975

Restricted cash
2,191

 
2,531

Accounts receivable, net
155,086

 
162,847

Unbilled receivables
13,084

 
13,498

Prepaid expenses and other current assets
24,392

 
31,187

Deferred costs
6,951

 
7,758

Income taxes receivable
15,956

 
—

Deferred income tax assets
10,380

 
16,513

Total current assets
554,617

 
646,309

Property and equipment, net
161,604

 
147,611

Goodwill
692,269

 
691,033

Intangible assets, net
302,622

 
271,187

Other assets, long-term
30,996

 
32,491

Total assets
$
1,742,108

 
$
1,788,631

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
8,439

 
$
6,455

Accrued expenses
94,771

 
89,073

Income taxes payable
—

 
4,847

Deferred revenue
73,908

 
74,244

Notes payable
7,972

 
7,972

Capital lease obligations
3,702

 
4,175

Other liabilities
23,125

 
24,116

Total current liabilities
211,917

 
210,882

Deferred revenue, long-term
27,017

 
21,872

Notes payable, long-term
775,318

 
771,331

Capital lease obligations, long-term
5,579

 
3,928

Deferred income tax liabilities, long-term
49,111

 
60,372

Other liabilities, long-term
53,683

 
61,200

Total liabilities
1,122,625

 
1,129,585

Total stockholders’ equity
619,483

 
659,046

Total liabilities and stockholders’ equity
$
1,742,108

 
$
1,788,631





Reconciliation of Non-GAAP Financial Measures
In this press release and in other statements, Neustar presents certain non-GAAP financial measures. These non-GAAP financial measures have limitations and may not be comparable with similar non-GAAP financial measures used by other companies and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Set forth below is the reconciliation of the non-GAAP financial measure to its most directly comparable GAAP financial measure. This reconciliation should be carefully evaluated. Prior disclosures of non-GAAP figures may not exclude the same items and as such should not be used for comparison purposes.

Reconciliation of Net Income to Adjusted Net Income
The following is a reconciliation of net income to adjusted net income for the three and six months ended June 30, 2014 and 2015 and the year ending December 31, 2015. Management believes that this measure enhances investors' understanding of the company's financial performance and the comparability of the company's results to prior periods, as well as against the performance of other companies.

 
Three Months Ended
June 30,
 
Six Months Ended 
 June 30,
 
Year Ending
December 31,
 
2014
 
2015
 
2014
 
2015
 
2015 (1)
 
(in thousands, except per share data)
(unaudited)
Revenue
$
237,457

 
$
256,767

 
$
467,354

 
$
508,155

 
$
1,040,000

 
 
 
 
 
 
 
 
 
 
Net income
$
36,847

 
$
45,058

 
$
68,530

 
$
91,272

 
$
184,000

Add: Stock-based compensation
15,559

 
9,467

 
27,285

 
17,697

 
38,000

Add: Amortization of acquired intangible assets
15,985

 
15,717

 
30,051

 
31,435

 
63,000

Add: Restructuring charges (2)
200

 
—

 
5,166

 
—

 
—

Add: Acquisition-related costs (3)
799

 
793

 
2,379

 
793

 
793

Less: Adjustment for provision for income taxes (4)
(11,741
)
 
(9,357
)
 
(23,358
)
 
(18,133
)
 
(35,793
)
Adjusted net income
$
57,649

 
$
61,678

 
$
110,053

 
$
123,064

 
$
250,000

Adjusted net income margin (5)
24
%
 
24
%
 
24
%
 
24
%
 
24
%
Adjusted net income per diluted share
$
0.95

 
$
1.10

 
$
1.79

 
$
2.18

 
$
4.42

Weighted average common shares outstanding - diluted
60,388

 
56,238

 
61,539

 
56,563

 
56,500


(1)
The amounts expressed in this column represent the midpoint of the company's guidance as of the date of this press release.
(2)
Amounts represent restructuring charges related to the termination or relocation of certain employees and reduction in or closure of leased facilities.
(3)
Amounts represent costs incurred by the company in connection with completed acquisitions.
(4)
Adjustments reflect the estimated impact of income taxes using the effective tax rate for the applicable period.
(5)
Adjusted net income margin is a measure of adjusted net income as a percentage of revenue.




Contact Info:

Investor Relations Contact:
Dave Angelicchio
(571) 434-3443
 
Press Contact:
Lara Wyss
(415) 659-6154





Exhibit 99.2

Neustar Acquires Leading Domain Name Registry Provider Bombora Technologies

STERLING, VA, July 30, 2015 — Neustar, Inc. (NYSE: NSR), a trusted, neutral provider of real-time information services, today announced it has acquired Bombora Technologies Pty Ltd (Bombora), based in Australia, for AUD $118.5 million, or approximately USD $86.9 million. Bombora and its subsidiaries, which include ARI Registry Services, provide registry services for a number of top-level domains (TLDs) including .au, .melbourne, .sydney, and over 100 new TLDs, including several in the Fortune 500.
This acquisition expands Neustar's registry services, which operates the .biz, .us, and .co TLDs, in addition to over 300 new TLDs.
“With this acquisition, Neustar continues to gather momentum as a global leader in launching and operating TLDs.” said Lisa Hook, President and CEO of Neustar. “Managing a brand's digital presence through the creation of new TLDs has become a key component of the CMO's tool kit, which aligns with the services we offer in real-time authoritative identity. By combining Bombora’s strong team and market presence in Australia with Neustar’s industry leading organization and technical resources, we are positioned to expand our footprint to the Asia-Pacific region.”
This acquisition is expected to contribute AUD $10 million, or approximately USD $8 million, of revenue and AUD $1.5 million, or approximately USD $1.1 million, of operating income in 2015, which reflects the adjustment for deferred revenue on a fair value basis in accordance with business combination accounting principles. Over the last two years, Bombora has grown revenue at a compounded annual growth rate of 12% to AUD $28.2 million, or approximately USD $20.6 million, in 2014 with operating margins between 25% and 30%.
About Neustar, Inc.
Neustar, Inc. (NYSE: NSR) is the first real-time provider of cloud-based information services, enabling marketing and IT security professionals to promote and protect their businesses. With a commitment to privacy and neutrality, Neustar operates complex data registries and uses its expertise to deliver actionable, data-driven insights that help clients make high-value business decisions in real time, one customer interaction at a time. More information is available at www.neustar.biz.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements in this press release regarding Neustar, Inc.’s acquisition of Bombora Technologies Pty Ltd including, without limitation, benefits of the transaction and any other statements regarding future expectations, beliefs, goals or business prospects constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. The company cannot assure you that its expectations will be achieved or that any deviations will not be material. Forward-looking statements are subject to many assumptions, risks and uncertainties that may cause future results to differ materially from those anticipated. Among the important factors that could cause future events or results to vary from those addressed in the forward-looking statements include without limitation, the




ability to realize the benefits of the transaction at the expected times or at all; risks and uncertainties related to doing business in Australia; and the ability of the acquired business to retain existing business relationships and key employees. More information about potential factors that could affect the company's business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K for the year ended December 31, 2014 and subsequent periodic reports. All forward-looking statements are based on information available to the company on the date of this press release, and the company undertakes no obligation to update any of the forward-looking statements after the date of this press release.

Contact Info:

Investor Relations Contact:
Dave Angelicchio
(571) 434-3443
 
Press Contact:
Lara Wyss
(415) 659-6154




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