NeuStar, Inc. Reports Results for the Third Quarter
Projects Revenue Growth for 2005 to Exceed 40 Percent
Sterling, VA - October 27, 2005 - /PRNewswire-FirstCall/ - In its second quarter as a publicly traded company, NeuStar, Inc., (NYSE: NSR - News), a provider of essential clearinghouse services to the communications industry, today announced results for its third quarter ended September 30, 2005 and raised its guidance for full year 2005 financial performance.
Summary of Third Quarter Results
Revenue for the third quarter of 2005, net of $5.0 million in contractual, volume-based customer credits, totaled $59.0 million, as compared to $45.2 million reported in the third quarter of 2004; there were no volume credits in the third quarter of 2004.
Net income attributable to common stockholders for the third quarter of 2005 totaled $13.1 million, or $0.17 per diluted share, compared to $6.4 million, or $0.11 per diluted share, reported in the third quarter of 2004. Diluted per-share calculations are based on diluted weighted average common shares outstanding of 77.5 million for the third quarter of 2005 compared to 83.8 million in the comparable period last year.
Increase in Guidance for Full Year 2005 Revenue and Net Income
As a result of the company's strong third quarter performance, it is increasing its prior guidance for full year 2005 financial performance. The Company now projects:
* Full-year 2005 revenue to range between $237 million to $239 million, representing growth in excess of 40% over 2004. Revenue guidance provided on August 2 was $225 million to $235 million. * Net income for 2005 to range between $52 million and $53 million, or $0.67 to $0.69 per diluted share. Per-share calculations are based on an estimated 77.5 million diluted weighted average shares outstanding. Net income guidance provided on August 2 was $49 million to $52 million.
Projected results for the full year include the effect of an additional $2.5 million in annual volume credits expected to be earned in the fourth quarter of 2005, resulting in $7.5 million of credits for the full year. Annual volume credits are earned on all transactions in excess of the pre- determined 100 million transaction cumulative annual volume threshold under NeuStar's contracts to provide telephone number portability services in the United States. Based on the strong growth in transaction volume in 2005, the company reached the 100 million transaction threshold in August; in 2004, the 100 million transaction threshold was reached in November.
Discussion of Third Quarter Results
NeuStar's year-over-year quarterly revenue growth of 30% was driven primarily by increases in transactions on contracts to provide telephone number portability services:
* Addressing revenue increased 35% to $19.2 million, as a result of continued growth in the number of wireless subscribers, new communications services, such as Internet telephony, and the increase in wireless data services offered by NeuStar's customers. In addition, the continued expansion of carrier networks contributed to the demand for addressing services. * Interoperability revenue increased 31% to $12.2 million due predominantly to increased competition for existing subscribers among traditional wireline, VoIP and wireless service providers as well as consolidation of service providers, requiring the integration of disparate systems and networks. Also contributing to this growth was revenue from the company's order management clearinghouse services. Demand for the company's clearinghouse services continues to increase as new technologies and applications drive interoperability in the industry. * Infrastructure and other revenue increased 27% to $27.5 million primarily due to increased demand for the company's network management services in support of activities such as service disconnects, changes to the features and functions provided by service providers, as well as the vendors that supply those features and functions and the implementation of new technologies.
Total operating expense for the third quarter of 2005 rose 22% to $37.3 million from $30.4 million in the comparable quarter of 2004, primarily due to higher costs related to support ongoing revenue growth and business expansion initiatives, as well as expenses related to operations as a public company. Total headcount at September 30, 2005 increased to 491 from 394 at September 30, 2004.
At September 30, 2005, the company had $84.3 million in cash, cash equivalents and short-term investments, an increase of $3.1 million compared to June 30, 2005. This increase resulted principally from cash provided by operating activities.
Management Commentary
"Our results demonstrate the essential role NeuStar plays at the hub of the communications industry," said Jeff Ganek, NeuStar's Chairman and Chief Executive Officer. Ganek continued, "Communications service providers continue to look to NeuStar as their trusted partner. They are using increasing volumes of our service to manage change, especially in Internet telephony and in wireless."
Jeff Babka, NeuStar's Chief Financial Officer, added "Growing our number portability transaction levels for the 14th consecutive quarter and increasing our bottom line over the second quarter of this year, while returning $5 million in volume credits back to customers is significant, and continues to demonstrate how changes in the communications industry benefit both NeuStar and our customers. On the strength of our third quarter performance and visibility as to future revenue, we are increasing our guidance for revenue and earnings for 2005, and re-affirming our previous projection of 25% revenue growth for 2006."
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