Nielsen Holdings plc (NLSN) on Q2 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2021 Nielsen Holdings plc Earnings Conference Call. Thank you. And now I'd like to welcome Ms. Sara Gubins, Senior Vice President, Head of Investor Relations & Treasury. Ma'am, please go ahead. Sara Gubins: Good morning, everyone. Thank you for joining us to discuss Nielsen's second quarter 2021 financial performance. I'm joined by our CEO, David Kenny; and our CFO, Linda Zukauckas. Our COO, Karthik Rao, will also be on for the Q&A portion of the call. A slide presentation that we'll use on this call is available under the Events section of our Investor Relations website. David Kenny: Good morning. Thank you for joining our second quarter earnings call. Our second quarter results demonstrate Nielsen's continued strategic and operational transformation in an evolving global media ecosystem. These results also show that we’re executing as planned on the growth strategy we laid out at our Investor Day in December. Let me remind you of the three overarching messages and compelling opportunities for Nielsen. We are focused on driving new growth from new solutions across all of our end markets globally. Across the board we are delivering on the key elements of our product roadmap. Second, our cultural transformation is progressing well. Our associates around the globe have rallied around our growth driven mindset and we’re benefiting from their energy, enthusiasm and clarify of focus. This means focusing on accelerating revenue growth and advancing our product evolution to match the rapid changes in audience behavior and the media ecosystem. And third, we’ve a compelling and strengthening financial model, with 80% recurring revenue, expanding margins and increasing free cash flow conversion. I will provide a high level look at our second quarter results before turning to the business highlights. I will then hand the call over to Linda for a more detailed review of our results. We are building on our consistent track record of success and we are pursuing opportunities to further improve. Year-over-year revenue grew 6.2% on an organic basis. We're seeing the benefit of a COVID recovery in some markets, although it remains uneven globally. Our teams are doing a great job serving clients around the world even in markets that remain challenged. Linda Zukauckas: Thank you, David, and good morning, everyone. Similar to last quarter, my remarks today focus on our results as if the Connect sale and related $2.3 billion debt down that we completed earlier in the year took place at the beginning of 2020. This approach helps with prior year comparisons and it's consistent with how we handled Investor Day in December and our 2021 guidance. You'll find comparable prior period comparisons in the appendix of today's slide presentation. Before I get into the results, I would just like to remind you that a year-ago this time, we faced our most impacted quarter from the COVID perspective, and we had recently announced our large scale optimization plan. All of this is a relevant backdrop to these strong Q2 results I am pleased to now review with you. I'll start with Slide 7, which summarizes our second quarter revenue performance. Revenue for Q2 was $861 million, up 4.5% year-over-year on a constant currency basis, or up 6.2% organic constant currency, which adjusts for exits related to the 2020 optimization plan and the sale of our advanced video advertising business to Roku earlier this year. On a reported basis, revenue grew 6.2% which includes FX benefit of 170 basis points. Revenue growth accelerated in both the U.S and in international markets. We're continuing to see recovery from COVID related pressures and strong execution by our teams around the world, despite an uneven global recovery. For some perspective, despite the loss in the current year of revenue associated with business exits that were part of the 2020 optimization plan Q2 '21 revenue was higher than Q2 '19 revenue. The same was true for the first quarter, and we believe surpassing pre-pandemic revenue levels demonstrates that we are driving fundamental growth in addition to recovering from COVID impacts in 2020. Our solutions are resonating with clients across our end markets around the world. Audience Measurement grew 3.3% constant currency and 4% on an organic basis. solid across the board and especially strong in digital measurement. As expected, pressure in our local business has subsided, with local posting positive growth for the first time in 10 quarters. As we discussed previously, our local business was down in the mid single digits during the last 2 years due to pressure on multiyear contract renewals as we went through our local transformation. And that work was completed in late 2019. We cycled through those contracts and expect local to be roughly flat for the year. Outcomes and Content grew 7.9% constant currency with organic revenue up 12.6%. We saw improving trends in short cycle revenue and strong growth in our sports business, both of which were hard hit in Q2 '20 due to COVID. We also continued to drive solid growth in Content. The right side of the page shows revenue for the past five quarters, as well as constant currency and organic revenue growth rates. As you can see, the growth trend continued to improve nicely in the second quarter. Turning now to Slide 8. Adjusted EBITDA was $370 million, up 11.8% year-over-year on a reported basis, or up 11.1% on a constant currency basis. Adjusted EBITDA margins of 43% expanded 216 basis points reported, or 256 basis points constant currency. On the right side of the page, we show adjusted EBITDA and margins over the last five quarters, as if the sale of Connect took place at the beginning of 2020. There are several drivers to our margins. First, operating leverage from top line growth was strong. Second, we took swift actions in late Q1 '20 and reduce temporary costs by approximately $100 million. These temporary costs began to return in Q2 '21, though at a lesser pace than initially expected, but we'll continue to ramp as we progresses. And third, just over a year-ago, we did a restructuring or optimization plan. So the incremental year-over-year benefit of this plan is more pronounced in the first half of this year versus the second half. Adjusted EPS was $0.43 in the second quarter as compared to $0.35 in Q2 '20. This was driven by higher EBITDA and lower depreciation and amortization offset in part by higher taxes. Our effective tax rate was 29% in the second quarter. This includes $2 million in discrete items, which we add back for adjusted net income, resulting in a normalized second quarter tax rate of approximately 27.4%. Free cash flow was really strong at $190 million, which compares to $86 million in Q2 '20 on a pro forma basis. Key drivers of the year-over-year improvement include higher EBITDA, improved working capital, in part due to strong collections and lower interest payments. These improvements were partially offset by higher tax payments, which is timing related within 2021. And now I'll discuss our updated 2021 guidance on Slide 10. Today, we are increasing our full year guidance to reflect our solid Q2 results and our confidence in the balance of the year. We are raising the low end of our revenue and adjusted EBITDA guidance ranges, and raising our margin, adjusted EPS and free cash flow guidance. Let me take you through each of these items. For revenue, we narrowed the range and we are now guiding 4% to 4.5% organic constant currency growth. We've similarly raised the low end of the range for constant currency revenue growth, where we are now guiding 2.5% to 3%. For adjusted EBITDA, we are now guiding $1,475 million to $1,490 million with margins of 42.3% to 42.6%. This compares to 2020 adjusted EBITDA margins of 42% as if the sale of Connect took place at the beginning of 2020. As we discussed last quarter, 2021 EBITDA guidance reflects an approximately $60 million benefit of the optimization plan this year, and the underlying efficiency of the business partially offset by the return of COVID temporary cost cuts made last year, as well as incremental growth investments. The return of temporary costs is more heavily weighted in the balance of the year. We also began to implement the optimization plan in Q3 '20. As a result, the second half faces a more challenging comparison and we continue to forecast margin compression in the second half of the year. We are raising and tightening our adjusted EPS guidance to $1.54 to $1.61 versus a comparable $1.45 in 2020. This higher adjusted EPS range is driven by the tighter adjusted EBITDA guidance range and lower depreciation and amortization, which is offset in part by a slightly higher share count. And finally, we are raising and tightening our free cash flow guidance to a range of $620 million to 650 million on solid EBITDA performance, lower interest payments, and strong collections. As a reminder, adjusted EBITDA, adjusted EPS and free cash flow guidance ranges do not include the impact of one-time separation related costs, which Nielsen has absorbed under the Connect sale agreement. Today, we are lowering our expectation for these cash costs by $20 million, and now expect a range of $200 million to $220 million for the full year, with $164 million paid in the first half of the year. The vast majority of these costs are included in discontinued operations. And this is the last year of any meaningful separation related cash costs. We ended Q2 with 3.62x net debt leverage on a pro forma basis, well on our path towards our medium term net debt leverage target of 3x to 3.5x. Given this progress, we are lowering our year-end leverage guidance range to 3.5x to 3.7x. To wrap up, we are pleased with our second quarter results. The strength of key underlying drivers reinforces the confidence that we have in our ability to execute on Nielsen's growth story, and deliver our full year guidance and longer term goals. And now I'll turn the call back to Sara for the Q&A session. Sara Gubins: Thanks, Linda. With that, let's turn to Q&A. Operator, can you open up the line, please? Operator: Thank you presenters. Your first question is from the line of Andrew Steinerman from JPMorgan. Your line is now open. Andrew Steinerman: Hi, all. I wanted to follow-up on your point, David. You said we're on track with the product roadmap. So, obviously, I think back to the December 2020 product roadmap, which is laid out year-by-year. First of all, I just want to make sure that the key date, of cross-media currency launches till fourth quarter of '22. And if you could, just go over the second half of '21 in terms of which pieces to the product roadmap will be introduced in the second half of this year? David Kenny: Yes, thank you, Andrew. And we're tracking that daily as you can imagine. Part of the reason Karthik is on the call, he's driving the product roadmap. So I'm going to turn it over to him to lay out the sort of key things that our clients in the market are expecting to see in the remainder of this year, and reiterate the great progress that's been made so far. Karthik? Karthik Rao: Thanks, David. Hi, Andrew. Just a couple of things. First, Nielsen ONE is foundationally about cross-media measurement, and the three biggest components of which are obviously coverage, resiliency, and comparability. Those are the sort of three core pillars that get us ultimately to what we are going to deliver in 2022. And as a reminder, we launched all of our digital solutions already under a completely new backbone that is completely resilient for all the changes in the privacy environment. That was an important component. The Identity Spine that powers that is another component of that. And going into the second half of the year, is a little bit more focused on expanding coverage, which is all of the CTV coverage expansions that we're launching with all the players David call them out. So those are important. They start to launch in Q3. And going into the rest of the year is all of the work we're doing around granularity and addressable which is the -- which is emboldened by the launch of our Analytics Capability where we're putting out the National Capability, the National Linear Capability with big data. So you can imagine all of the flexibility and granularity that starts to add, and ultimately pushes us into next year where there's a whole host of other things, including the deduplication methodology, which is ultimately the core of where all this comes together, deduplicating across every component of media delivery that takes place. So that's what we're building towards. The roadmap is completely on track from all of the inputs, as well as what clients start to see periodically going into the rest of the year and into early next year. Andrew Steinerman: Okay. And just to be clear, in terms of your Identity Spine, obviously there are several identity solutions in the industry. Does Nielsen ONE need to be the solo identity solution? Or is it okay to be a identity solution as long as you're; b, a measurement solution? Karthik Rao: Yes, so Andrew, the key around all of the Identity Solutions that exist are what they enable in power. For us, the key is to make sure it works for measurement use cases, that's what we're focused on, and interoperability with all the other identity solutions in the marketplace. So when David talks about all the integrations we have, it's about enabling an interoperable world where identity is obviously a big challenge. So it is a team sport. But the version that we're building and have continued to build is largely around use cases of measurement. And use case new measurement is found basically -- you can think about it as deduplicating where many different versions of exposure are difficult when you have to put them together into deduplicated reach of frequency. That's the use case that we're solving for primarily. And so interoperability and deduplication that's what we're about. And that makes us a little bit different than the other solutions, but we're making really good progress on that. Andrew Steinerman: Got it. And I asked one other piece to that, and you're still on track for fourth quarter '22 launch for cross currency measurement? Karthik Rao: Absolutely. The full rollout where ultimately comes together, Nielsen ONE is completely on track. And then once the data gets put out there, it gives everybody, buyers, sellers and the ecosystem, all what they need to start to make all the adjustments because it's going to be very exciting. And what we also want to do is make sure all of the component launches, the building blocks as David calls them, continue to come out. So people start to get familiar with each of the components, ultimately leading up to the deduplication across everything for ads and content in 2022. Andrew Steinerman: Thank you very much, Karthik. Operator: Your next question is from the line of Toni Kaplan from Morgan Stanley. Your line is now open. Unidentified Analyst: Hey. Its Greg on for Toni. Thanks for taking our question. I wanted to talk about your cookieless was measurement. You noted 60% resiliency, you called out a few new data partners on the call here. So wondering, one, do you need to improve the resiliency number? I don't know if there's any targets or goals in regards to that? And does that mean new data partners or is it on the technology front? And then related, Google recently delayed its shifts. So hoping maybe you could talk about what you're hearing from clients in terms of willingness to make the shift and also timing. Thanks. David Kenny: Yes. Thanks, Greg. I would say on the client side, sophisticated clients know that privacy is still a good thing. Yes, Google delayed to give people time, but I think it's important for us to keep moving and get forward because we know this will happen. And of course, Apple has what it's doing a and that isn't delayed. So we think it's important, we continue to lead. We are big believers in privacy policy. And we believe that we have solutions that allow for the audience to be served well and respect your privacy at the same time. And that's the reason we went ahead with our launch in our cookieless solutions for measurement and for attribution. What I would say on the 50%, that's really -- it has more to do with which of the publishers have already been solved for, so we obviously started with the biggest ones and there they are. We now have this solution. And in our release we talked about the solution for the unauthenticated. For those who are smaller who may not have as much first party data, we're getting there with some added techniques that use a probabilistic models in machine learning. So we believe that methodology works, its tested. It's now a matter of sort of integrating the long tail of publishers to make sure we're covering the whole market. Toni Kaplan: Got it. Thanks so much. Operator: Your next question is from the line of Dan Salmon from BMO. Your wine is now open. Daniel Salmon: Hi, good morning everyone. For better or for worse, probably the most popular investor question of late has been about maybe some of the negative headlines related to the COVID issues. So maybe, David, could you expand on that just a little more. We've had the VAB call to remove MRC accreditation. What do you think the likelihood of that is? What would be the potential financial impact of a worst case scenario, because it does sound like the idea is acknowledging that everyone would continue to use the rating. So just maybe a little bit more color on that would be helpful. And then maybe on the brighter side, you mentioned both Netflix and Google highlighting your streaming data on the earnings calls and Google in particular, I like to get for YouTube more. How impactful is that to your business? Does your sales team start to feel that, because it feels like that's an element that isn't being recognized as much as the secular leaders promoting your products for you these days. I'd love to hear more on that as well. David Kenny: Well, those are two very different questions. So let me -- let's answer both because I think they're both valid. On the first part I'm going to like Karthik go into the details on COVID recovery. We had to do some things differently during COVID. And, of course, COVID is not done. But we did get to the point where it was safe to be back in homes, both for recruiting and replacement, and we're operating at a very strong pace and we've actually increased investment to make sure that we have the panels the way it needs to be. It's a fair complaint that people would want that instantly. So I don't love the tactics. But I would agree that it is important that we rebuild the panel. The -- I’m going to let Karthik describe how the second part of that. So to be clear, the accreditation is very important. We think it really builds trust in the industry. But it's a vote of confidence. It's not required to use the product and it's not in our contract. So, we're not required to maintain accreditation. We certainly have it as a goal. And we think the MRC is a really important partner to set standards. We're going to continue to work with them. So I'm now going to let Karthik answer the rest. He's been in the front with the MRC discussions. Karthik Rao: Yes, thanks, David. Just to reinforce what you said, we continue to work with the MRC before, during, and even now, that leads up typically to an accreditation process, which is largely an audit of every single process that goes into managing the panels and ultimately what gets produced from the panels into our products. So what our plan is completely on track, in terms of all the corrections we needed to make coming out of COVID, even though COVID is not over. We've managed to get back into field basically completely going and checking for all of the homes that we were unable to do during the peak of COVID. So our execution there to get the panel back up to where it needs to be is completely on track. And, yes, as David said, we don't love getting the added push. But look, like we work with clients as well to showcase and tell them exactly what we're doing. And so we're completely committed, and our plans are going exactly as we planned as well as working with the MRC, because they bring a lot of value to the process of reinforcing confidence in what we produce. Daniel Salmon: Thank you. David Kenny: And on the second question, the digital players, I don't know that they're promoting the Nielsen products as much as they are clearly using them. And they're using them to understand their market share, to understand their competitiveness to be able to respond and make their products better. And I was really pleased to see a couple of them use them in their earnings calls, because it means they're pretty core to the way they operate their businesses. And I think that's a really nice validation. And of course, as I said, those digital first players are driving a lot of our growth in this close COVID period and will continue to drive our growth, given the nature of the relationship. So I feel really good about that. More broadly, I would say, on the demand side the people who buy advertising, the people who invest in content, I think there's a lot more credibility that Nielsen really does measure the total audience. I think there was a narrative when I got here that maybe we were more broadcast and linear focused. And I think it's really clear were audience focused, and we're following the audience wherever she goes and is going to streaming in a lot of ways in a lot of categories. So listen, it's early days, but I think this is the kind of validation leading up to Nielsen ONE, and leading up to moving the whole market towards an integrated view of the total audience across both streaming and linear on the same basis. And already, it's being used for decisions and for folks to manage their product strategies. Daniel Salmon: Okay. That's very helpful. Thank you both. Operator: Your next question is from the line of George Tong from Goldman Sachs. Your line is now open. George Tong: Thanks. Good morning. You delivered accelerating organic constant currency revenue growth across both Audience Measurement and Outcomes and Content in 2Q. How do you envision organic constant currency revenue growth progressing in these businesses in the second half of the year? And what initiatives remain outstanding that you have to work on in order to deliver on your organic growth targets, not just from the second half, but also over the medium term? David Kenny: Yes, so, Linda, why don't you start? You and your team spent a lot of time getting behind that question. And if Karthik or I could add some color beyond that we'll come back. Linda Zukauckas: Yes, sure. So thanks for the question, George. I would just start by saying that we feel good about the Q2 results. As you noted, they are really strong results. As we think about the second half of the year, we do still continue to expect solid revenue growth. I will point out that the first half of the year was a bit stronger than our expectations. And you see that in the guidance revisions that we've provided today. The subscription portion of our business, which is about 80% of the total, doesn't have as much variability because we've got a lot of visibility into that business. But on the outcome side of the business, there's definitely more variability. And we saw that last year, and now this year with the impact of COVID. We're benefiting though from an improving ad market from a COVID and we are optimistic. But we're of the opinion that this pandemic is not behind us and it's an unpredictable environment. So we've incorporated a bit of risk at the low end around the speed or the pace of the global recovery. You heard earlier from Karthik and David that we're doing well on our product roadmap and execution on that is important. For the second half, we do have our initiatives and growth investments that we're making, which are more second half . And some of those will take a bit of time to ramp. But overall, we think the second half will be in line with, of course, the way that we've guided today. And I think that we, on an overall basis, are feeling very optimistic about the second half and our performance as reflected in the guidance revisions. David Kenny: And I -- listen -- and I would add, we remain very confident in the medium term forecasts that we laid out in December at Investor Day. These things are happening as predicted. Not everything in the macro environment the same, I think COVID continues to pop up around the world. But I think we're getting much more agile at managing that. I'm really proud of the teams for doing that. We -- I think we already covered the Nielsen ONE roadmap, which of course, is super important as a heavy subscription business. I might have Karthik spend a minute on some of the product innovations that are coming in Content and Outcomes because those are, as you saw driving even more growth. And we're really excited about all three legs of the Nielsen revenue fuel. Karthik? Karthik Rao: Thanks, David. Just calling out on Outcomes, what are we really trying to accomplish there, again, just laying out the strategy, three components there. One is vertical expansion. I think you've heard us talk multiple times about going outside of consumer packaged goods, because that's where 90% of marketing dollars get spent, or ad dollars anyway. So expanding coverage, you saw what we're doing in the automotive space. You saw mentioned about retail or non-durable retail and pharma that frame will continue to expand. Then it's about making it even more relevant to both sides of the coin, not just the buyers but also the sellers, so that sellers can really tell the story of their inventory not Just from a volume perspective, which is reach, but also from a value perspective, which is Outcomes. And so everything we've mentioned there about how we're being used, our Outcome capabilities are being used and will continue to be used by sellers as well as an important component. And then global expansion is a really important component, because, again, everything we're doing in Outcome is about telling the story about the value of marketing. And that's relevant everywhere, almost the same way. And so expanding into more markets, going again into 2022. And on the Gracenote side, just -- it's about a couple of things. One is, the world of discovery is even more exciting, just given the proliferation of platforms and the new innovations in which content is being delivered to consumers. So it's a combination of market expansions as well as capability expansion, such as advanced discovery. And then the ultimate angle there for us is the expanded use of the Gracenote ID, because in a world where content is proliferating to so many platforms, the Gracenote ID becomes a unifier to figure out exactly where that content is going, and how it's being licensed. Is it being used the way it was -- is the content being used the way it was expected to. So there's a whole bunch of components there that are very exciting for us, many of those in the second half as well as going into 2022. George Tong: Very helpful color. Thank you. Operator: Your next question is from the line of Ashish Sabadra from RBC. Your line is now open. Unidentified Analyst: This is John filling in for Ashish. Can you talk more about the pickup and short cycle work that shows in the sports resume? Any visibility on the pipeline press to the year? Thanks. David Kenny: Ashish, I think your question was about sports, right? So we don't give a line item detail. But I would say that the sports business return nicely. I mentioned the word for the IOC. There was obviously a lot of work around Olympic sponsorship. But as leagues have been returning around the world, certainly those leagues have gotten smarter about how they demonstrate the value of sponsorships and advertising. And we've been really helpful to them. So I think sports continues to strengthen and certainly we expect that to continue to be a strong business for months and years to come. George Tong: Great. Thank you. Maybe you can just touch on quickly, any impact you're seeing from the delta variant, perhaps internationally? David Kenny: Yes, I would say, we're not seeing anything that would be unexpected. I think it's been a bigger challenge as operationally. Our first priority is always going to be to keep our people and our panelists safe and healthy. So we're adapting quite agilely operationally to every market and what it predicts. Of course, even vaccination rates beyond delta variant generally vary quite a bit around the world. So we are certainly adapting to local conditions. George Tong: Great. Thank you. Operator: Your next question is from the line of Doug Arthur from Huber Research. Your line is now open. Douglas Arthur: Yes, David, this is sort of a big picture question on your IT backbone, but a lot of commentary in -- at least in the release about cloud-based solutions and the speed to market -- do you feel the IT backbone is where you needed to be, or it's still a work in progress? And -- but it's helping you provide more custom, quick solutions to the customer base. David Kenny: So, I'm well-known for never being satisfied inside of Nielsen. So you’re ready to . I think we're always going to continue to innovate and improve on the tech backbone and take advantage of the latest technologies. Because I think that is important. And technology as a science continues to evolve. What I will say is the foundation is there, the work that needed to be done from when I first got here till now to get us on a single platform, to be able to be cloud-based, which really means that more of your software can be composable. The ability to get things done in days and weeks, not months, in years, is -- it gets better every day. So I think it's a very solid foundation. I think the fact that it is a single platform makes it much easier to continue to innovate on. But it's going to be a never ending process to make sure that Nielsen is at the front edge of the technology curve going forward. The flip side is, I would say that's really helping us with talent, because people are finding that they can do really leading edge things here and they're pretty excited about that. So, as we've been bringing new people in this year, this has been an really interesting draw. They love our CTO, the love the tech team, and they love the project. Douglas Arthur: Great. Thank you. Operator: Your next question is from the line of Tim Nollen from Macquarie. Your line is now open. Timothy Nollen: Hi. David, I hope you don't mind if I come back to the accreditation question. With VAB, it sounds like if you've got your panel rebuilt, and you're rolling out streaming meters, then is this issue really actually put to bed? Or -- and I should say, does it actually have any impact on your Nielsen ONE roll out, whether negative or actually even positive if you're getting the meters out, the nanometers, the panel rebuild, any kind of further color on the status of that and how it affects Nielsen ONE if at all? David Kenny: Yes, I will start and if helpful, Karthik can add. I don't want to say it's put to bed because obviously the VAB doesn't feel it's put to bed. And they're either -- their basic argument is you can be back operationally, but they want the panel in every geography to be fully representative. And there is still recruiting work to be done, I would say the maintenance work that if the maintenance backlog has been cleared, so we're back to those procedures. But, of course, they want high standards. And there -- they ask the MRC to make sure in the accreditation process that happens every year, that they pay extra close attention, given that so much change. So, we're going to continue to invest. We're going to continue to improve, and we're going to continue to be transparent, so that everyone can have confidence and trust in the fidelity of what we're producing. That said, what I would also say is, this changing market that we're trying to measure in one is more sophisticated. It has a combination of ACR data, which is why deals like Roku were so important, why the CTV integrations are so important. And you need that for streaming, there's still a lot of cable data and there's an increasing number of homes that are broadband only. So, us making sure we're measuring all of it as key. And I think it's certainly telling the market that the Nielsen ONE solution is going to be needed and needed as quickly as we can get it out there. So, yes, I do think it creates demand as people acknowledge the changing market. And I think, we need to continue to strengthen all aspects of our data, including our panel and be transparent about that. Karthik, I don't know, if you want to add anything? Karthik Rao: I think the only thing I'll add, David is the importance of the panel as a major source continues to be reinforced. I'd say that's a good message from the market to us. And one that we want to reinforce even on this call. So it is a differentiator. But it also means that it's a critical component of everything we're building. And so we're going to continue to invest there, especially in the world of fragmentation. Because ultimately, the panel is a major source, it helps us with identity, it helps us with deduplication. And so we're going to continue to invest there. And there's definitely work to be done, but we feel pretty good about all the progress we're making, not just in general with the meters and the rollout, which is on track, but also I'd say a little bit of correction from COVID and what we needed to do there to get it back to what it used to be and what it should be. Timothy Nollen: Okay, very helpful. Thanks, David. Thanks, Karthik. Operator: Your next question is from the line of Matthew Thornton from Truist Securities. Your line is now open. Matthew Thornton: Hey, good morning, everybody. I had two quick ones. One is more of a clarification and one is more of a housekeeping. Maybe on the clarification, maybe this is for David. You talked about local or in the release it talks about your local pressures subsiding there a little bit. You guys are actually obviously getting marked with improved and improved offering there. So just to be clear, I guess is this more of a market conditions improving there or is this a function of you guys being in market with an improved offering that's allowing you to stabilize market share or even take market share or have better pricing power or what have you. So I'm just looking for some clarification there. And then just secondly, on the housekeeping front, maybe for Linda. The TVTY acquisition, I'm assuming very small, but I'm just curious if you can kind of quantify any revenue contribution from that acquisition this year. Thanks, guys. David Kenny: Yes, so I'm local, I would say it's -- a lot it's improved product, improved delivery, improved competitiveness. And I think I believe in where the roadmap is going. And the way that Nielsen ONE principles will apply to local that really matters in both the audio and in the video business, the TV business. So I think it's that. Our businesses subscription, so it doesn't tend to go up and down with what's going on in the end markets. I would just say we're more competitive. I do think the end markets are strengthening some -- audio is particularly performing well as people get back into their cars. So it's -- yes, it helps to have a good end market. But I would say most of what's happening to our results is product driven. And, Linda, I'll let you take the other question. Linda Zukauckas: Yes. And the other thing I would just add, Matt, on local is, we were coming off of a couple of years of elevated investments as well. And so I think we're seeing the benefits of that investment in our local platform. So that also is a contributing factor. On TVTY, no revenue color to really offer. It's a relatively small acquisition from a financial perspective, but it is important to us strategically with improving our -- or aligned with our strategy to deliver cross-media outcomes as a compliment to Audience Measurement. So, no financial data, though, that we're sharing relative to that acquisition, but really excited to have TVTY on board. Operator: Your last question is from the line of Richard Kramer from Arete Research. Your line is now open. Richard Kramer: Thanks very much. David, many of the data providers that you cited as existing or even new partners, seem to be resolving IDs based on household IP addresses. And there seems to be a trend now that these are likely to get blocked at source by the likes of Apple, Google, Comcast and others. Are you assuming that happens in your plans? And do you think your ID solutions will be robust if those household IP addresses are not available? And then a quick one for Linda. We couldn't help noticing that removing some of the core other items from adjusted EBITDA, which is about $38 million this year versus $2 million last year, would have taken margins down quite a bit. Can you tell us what those items were? And maybe also since you highlight international as a particularly interesting growth area, certainly at the Analyst Day, can you give us the sort of breakdown geographically of total sales between U.S and international? Thanks. David Kenny: Sure. Quickly, on the first part, our ID Solution is not dependent on ID coming from everybody. There's data we get in a number of ways. So we -- we're watching the IP address issue, but it doesn't really affect our roadmap and our ability to measure what's going on to the audience. So I think we're finding and quite resilient, regardless of how that sorts out. Increasing, I think that's why a lot of people are partnering with us is strategically, our ability to pull the data and then validate it with real examples of real people in the panel is unique, competitive and durable. So our methods are going to sustain. I will let Linda answer the accounting questions. Linda? Linda Zukauckas: Yes, thanks. So on the one-time items, obviously heavily concentrated last year from a Connect perspective, we do carve those out. And in the current year, those tend to be in discontinued operations. So it's a little bit of a tail on those costs. Aside from that, there's a fair number of moving parts that we can circle back up with you in order to give you a double click on that. But it's -- the typical items are just the mix between last year versus this year is a little bit more complicated. With regard to a breakdown on international versus domestic, we don't do that breakdown regularly. But if I use 2020, as a barometer, international exposure was about 17%. And I would remind you that Gracenote is a very global business, and so a meaningful portion of our international exposure is because of the global nature of that business. But we're very optimistic about international as a growth opportunity for us. So as we make our annual disclosures on the mix of domestic versus International, I would expect to see some proportion of that trend up, but it's on a much smaller base. So it will take time before you see that mix shift coming through in our numbers. Richard Kramer: Okay. Thank you. David Kenny: Okay. Operator: There are no further question. I'm sorry, there are no further questions. I will hand it over back to Mr. David Kenny. Sir, please go ahead. David Kenny: Yes, thank you very much. I want to thank everybody for joining this morning. Nielsen has a clear strategy, a great team. And each and every quarter, we further prove our ability to execute as planned. I am really confident in our path ahead and believe we are well-positioned to deliver growth for our clients and enhance value for our shareholders. Thanks again. See you next quarter. Bye. Operator: And with that, this concludes today's conference call. Thank you for attending. You may now disconnect.NLSN Ratings Summary
NLSN Quant Ranking
Related Analysis
Nielsen Holdings Reports Q4 Beat
Nielsen Holdings plc (NYSE:NLSN) reported its Q4 results, with EPS of $0.46 coming in better than the consensus estimate of $0.35, largely due to taxes. Revenue was $894 million, compared to the consensus estimate of $898.13 million.
Improvement in Audience Measurement was offset by a surprising decline in Content which could weigh on Q1/22 as well. Although OCC revenue growth guidance of 4-5% and flattish margins for the full 2022 were roughly in line with expectations, weaker revenue growth in the first half of this year along with margin compression could further weigh on investor sentiment.
Despite the solid progress on new products, digital transformation, and "Nielsen One", analysts at RBC Capital said that competitive concerns and changing media landscape continue to weigh on the company’s stock. The analysts lowered their price target on the company's shares to $20 from $25, while maintaining their sector perform rating.
