Neustar tops 1Q

Neustar reported results topping analyst estimates for the first quarter of 2012 on crisp execution and new offerings, driving growth. Revenues increased 37% to $199.6 million. Income from continuing operations increased 1% to $34.0 million. Diluted EPS increased 11% to $0.50. For the quarter share repurchases total $23.8 million or 655,000 shares. This comes on the back of a $250 million share repurchase in the fourth quarter of 2011, demonstrating management’s confidence in the future of Neustar. As President and CEO Lisa Hook stated during the call, Neustar “demonstrated that we [they] are executing on our [their] strategy”, delivering the highest quality services to their NPAC customers, successfully integrating Information Services, TARGUSinfo, and growing its revenues, and achieving their consolidated financial targets.

Looking forward, key drives include its highly recurring revenue, positive exposure to wireless and IP-based services, high operating leverage, and significant EPS accretion from more aggressive capital allocation. We believe that the street is still underestimating the accretive benefits of NSR’s buyback efforts, which continued in the first quarter, and the long-term benefits of its newly formed Information Services segment. Although no new details surfaced, NSR remains well positioned to successfully renew its NPAC contract(53% of revenues), given their successful operating track record, high service level delivery, and the complex management skills required to run this contract. A decision is not expected until 2013 and a successful renewal is key to further multiple expansions.