Tuesday, November 6, 2012

Neustar (NSR) 3Q12 Earnings

Neustar reported financial results for their fiscal year 2012 third quarter yesterday after the close. Diluted earnings per share increased 50% to $0.90 per share and total revenue for the quarter grew 38% to $211.2 million. The street was looking for EPS of $0.72 per share on revenues of 210.25 million. Shares of NSR have reacted favorably to yet another “beat and raise”, up ~6% mid-way through trading Tuesday.

The integration of TARGUSinfo, reported as Information Services (IS), continues to proceed extremely well. While only the back office has been fully integrated into the company and management did not expected to see revenue synergy until late 2013 or early 2014, revenue synergies are already being realized. Neustar is reaping the benefits of a single coherent sales operation platform they have just finished developing, allowing them to cross-sell and up-sell new and existing services. IS revenue totaled $42.3 million, representing an 11% sequential growth. We see the early success of the IS segment as a positive near-term catalyst for Neustar as it is showing strong early signs of being a significant contributor to the company’s overall business, further diversifying revenue mix.

Neustar continues to participate in the recompete process for the NPAC contract. President and CEO Lisa Hook believes that based on the three criteria the RFP uses to evaluate potential bidders, Neustar is “well-positioned to retain the contract to manage the impacts of any term that will begin in July 2015”. Neustar has been the NPAC administrator for the past 15 years building the world’s largest and most complex local number portability system.

The company repurchased 688k shares for approximately $25 million during the third quarter. Despite the share repurchase, cash, cash equivalents, and investments increased $34.2 million, to $269.2 million. 

No comments: