comScore(SCOR) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited financial statements detail the company's financial position, operations, and cash flows, reflecting a major recapitalization and debt extinguishment Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Account | June 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $16,659 | $31,126 | | Total current assets | $93,844 | $137,030 | | Total assets | $627,379 | $677,970 | | Total current liabilities | $177,479 | $184,275 | | Senior secured convertible notes | $— | $192,895 | | Total liabilities | $240,873 | $448,980 | | Convertible redeemable preferred stock | $187,885 | $— | | Total stockholders' equity | $198,621 | $228,990 | Condensed Consolidated Statements of Operations and Comprehensive Loss Three Months Ended June 30 (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | | :--- | :--- | :--- | | Revenues | $87,659 | $88,566 | | Loss from operations | $(10,890) | $(2,742) | | Net loss | $(18,545) | $(10,401) | | Net loss available to common stockholders | $(22,413) | $(10,401) | | Basic and diluted EPS | $(0.28) | $(0.15) | Six Months Ended June 30 (in thousands) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Revenues | $177,989 | $178,094 | | Loss from operations | $(22,349) | $(15,493) | | Loss on extinguishment of debt | $(9,629) | $— | | Net loss | $(54,900) | $(23,585) | | Net loss available to common stockholders | $(59,703) | $(23,585) | | Basic and diluted EPS | $(0.76) | $(0.34) | Condensed Consolidated Statements of Cash Flows Six Months Ended June 30 (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $10,860 | $(1,792) | | Net cash used in investing activities | $(7,723) | $(7,881) | | Net cash used in financing activities | $(35,876) | $(1,046) | | Net decrease in cash, cash equivalents and restricted cash | $(33,061) | $(11,263) | - Financing activities in the first six months of 2021 were dominated by the net effect of receiving $188.2 million in proceeds from issuing convertible redeemable preferred stock, largely used for the $204.0 million extinguishment of senior secured convertible notes and a $14.0 million payment on a secured term note[26] Notes to Condensed Consolidated Financial Statements Notes detail significant accounting policies and events, including the March 2021 preferred stock issuance for debt extinguishment, and new data license and credit facility agreements - On March 10, 2021, the company issued 82,527,609 shares of Series B Convertible Preferred Stock for net proceeds of $188.2 million, classified as mezzanine equity due to a contingent redemption feature upon a change of control[39][42] - Proceeds from preferred stock issuance were used to extinguish $204.0 million senior secured convertible notes and a secured promissory note on March 10, 2021, resulting in a $9.6 million loss on debt extinguishment[37][65][70] Revenue by Solution Group (in thousands) | Revenue by Solution Group (in thousands) | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Ratings and Planning | $62,418 | $63,779 | | Analytics and Optimization | $17,764 | $16,894 | | Movies Reporting and Analytics | $7,477 | $7,893 | | Total | $87,659 | $88,566 | - On May 5, 2021, the company entered into a new senior secured revolving credit agreement with a borrowing capacity of $25.0 million[72][73] - Concurrent with the new investment, the company entered into a ten-year Data License Agreement with Charter Communications, involving gradually increasing license fees from $10.0 million in year one to $32.3 million in year ten[109] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, liquidity, and capital resources, highlighting flat Q2 2021 revenue, increased operating loss, and a major financing transaction Results of Operations Q2 2021 revenues decreased slightly to $87.7 million, with increased cost of revenues leading to a wider operating loss of $10.9 million Revenue by Solution Group (in thousands) | Revenue by Solution Group (in thousands) | Q2 2021 | Q2 2020 | % Change | | :--- | :--- | :--- | :--- | | Ratings and Planning | $62,418 | $63,779 | (2.1)% | | Analytics and Optimization | $17,764 | $16,894 | 5.1% | | Movies Reporting and Analytics | $7,477 | $7,893 | (5.3)% | | Total revenues | $87,659 | $88,566 | (1.0)% | - The decrease in Movies Reporting and Analytics revenue continued to be impacted by theater closures and delayed releases due to the COVID-19 pandemic[131] - Cost of revenues for Q2 2021 increased by $6.4 million (14.3%) year-over-year, primarily driven by a $3.5 million increase in data costs and a $1.3 million increase in systems and bandwidth costs[138] - A loss on debt extinguishment of $9.6 million was recorded in Q1 2021 related to the payoff of senior secured convertible notes and the secured term note[153] Liquidity and Capital Resources Liquidity was altered in Q1 2021 by a $188.2 million preferred stock issuance for debt repayment, a new $25.0 million revolving credit facility, and substantial contractual obligations - As of June 30, 2021, principal liquidity sources included $17.7 million in cash, cash equivalents, and restricted cash, plus availability under a new Revolving Credit Agreement[165] - On March 10, 2021, the company issued preferred stock for net proceeds of $188.2 million, used to repay its senior secured convertible notes[167][168] - In May 2021, the company entered into a new three-year, $25.0 million senior secured revolving credit agreement, under which $8.0 million was borrowed in July 2021[169][177] Contractual Payment Obligations (in millions) | Contractual Payment Obligation | Amount as of June 30, 2021 | | :--- | :--- | | MVPD Data Licensing Agreements | $384.9 million | | Operating and Financing Leases | $66.6 million | | Cloud-based Data Storage | $24.5 million | Critical Accounting Policies Critical accounting policies include those for new Preferred Stock classified as mezzanine equity and the early adoption of ASU 2020-06 for convertible instruments - The new Series B Convertible Preferred Stock is classified as mezzanine equity due to a contingent redemption feature upon a change of control[200] - Effective January 1, 2021, the company early-adopted ASU 2020-06, simplifying accounting for convertible instruments, with no impact on previously issued senior secured convertible notes[202][203] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company faces market risks from its $19.4 million warrants liability, sensitive to stock price changes, and interest rate fluctuations on its new revolving credit facility - The company has a $19.4 million warrants liability as of June 30, 2021, whose fair value is sensitive to the company's stock price[208] - A 10% increase in common stock price would result in a $2.5 million increase in Series A Warrants' fair value, while a 10% decrease would result in a $2.4 million decrease[209] - The company is subject to interest rate risk from its variable-rate Revolving Credit Agreement, though exposure was not material as of June 30, 2021[210] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2021, with no material changes, and expects to complete a new ERP system implementation in Q3 2021 - The principal executive and financial officers concluded that disclosure controls and procedures were effective as of June 30, 2021[213] - The company is implementing a new enterprise resource planning (ERP) system, expected to be completed in Q3 2021, to improve internal control over financial reporting[215] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports on legal proceedings, primarily a privacy class action lawsuit that received final settlement approval on April 12, 2021, with costs covered by insurance - A privacy class action lawsuit against the company received final court approval for settlement on April 12, 2021, with no admission of liability and costs covered by insurance[117][219] Item 1A. Risk Factors Key risks include restrictive covenants and potential default under the new revolving credit facility, alongside implementation challenges for the new ERP system - The new Revolving Credit Agreement contains restrictive covenants that could limit operating flexibility by restricting additional debt, investments, and dividends[223] - Failure to meet financial covenants, such as minimum Consolidated EBITDA, could result in an event of default and acceleration of outstanding debt under the credit facility[224][225] - Delays or errors in implementing the new enterprise resource planning (ERP) system could adversely affect transaction recording, financial reporting, and business process management[226] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities, no use of proceeds from registered equity, and no equity purchases during Q2 2021 - There were no unregistered sales of equity securities during the three months ended June 30, 2021[227] Item 3. Defaults Upon Senior Securities This section is not applicable as the company reports no defaults upon senior securities Item 4. Mine Safety Disclosures This section is not applicable Item 5. Other Information This section is not applicable Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including corporate governance documents, the new Credit Agreement, and CEO/CFO certifications