Neustar, a provider of essential technology and directory services to its carrier and enterprise customers, today announced results for the quarter ended June 30, 2010. The company also increased its EBITDA margin guidance for full-year 2010 and announced the repurchase of up to $300 million of its Class A common shares.
Revenue increased 11% from the second quarter of 2009 to $129.0 million.
Net income increased 17% from the second quarter of 2009 to $28.6 million.
Earnings per diluted share was $0.37, an increase of 16% from $0.32 per diluted share in the second quarter of 2009.
EBITDA totaled $57.0 million, or 44% margin, an increase of 15% from $49.4 million, or 43%, in the second quarter of 2009.Cash, cash equivalents and short-term investments totaled $362.4 million as of June 30, 2010."Our financial results demonstrate the ability to generate strong profits and cash flows, while continuing to deliver double-digit revenue growth," said Jeff Ganek, Neustar's chairman and chief executive officer. "At the same time, we are investing in new high-growth opportunities, giving us the confidence that we can grow revenue in excess of 10% in the future while maintaining strong profits. In addition, we have announced a substantial share repurchase program that maintains our ability to invest in the business, pursue strategic acquisitions, and return wealth to our shareholders."
"We continued to benefit this quarter from our highly predictable, recurring revenue streams across the business. The growth, and resulting profitability, that comes along with this predictability is driven by customers who want secure solutions for managing their internet and data infrastructure," commented Paul Lalljie, Neustar's chief financial officer. "With EBITDA margin up substantially from the first quarter, we are raising our full-year EBITDA margin guidance to exceed 43%."
Discussion of Second Quarter Results
Consolidated revenue for the quarter totaled $129.0 million, an 11% increase from $115.8 million in the second quarter of 2009. This increase was driven by growth in both the Carrier Services and Enterprise Services business segments. In particular:
Carrier Services revenue grew 11% to $99.0 million, due to an $11.2 million increase in Numbering Services revenue. Of this increase, $9.3 million was due to the established increase in the fixed fee under the company's contracts to provide NPAC services. These revenue increases were partially offset by lower revenue from its order management services; and
Enterprise Services revenue rose 13% to $30.0 million, primarily due to a $2.6 million increase in Internet Infrastructure Services revenue resulting from greater demand from existing customers and the addition of new customers. Additionally, revenue increased by $0.8 million from its Registry Services due to a larger number of domain names and common short codes under management.
Consolidated operating expense increased 8% to $82.0 million from $75.7 million for the second quarter of 2009. The $6.3 million increase was primarily due to additional personnel and personnel-related expense to support expansion of the company's operations into new businesses and geographies. Specifically, the company continued to expand its registry offerings into new markets, such as digital media.
Segment contribution, which excludes unallocated indirect operating costs, is as follows:
Carrier Services segment contribution increased 17% to $84.3 million, primarily driven by an increase in revenue from the company's Numbering Services; and
Enterprise Services segment contribution increased 17% to $13.3 million
, primarily due to an increase in revenue from its Internet Infrastructure Services.
Cash, cash equivalents and short-term investments totaled $362.4 million as of June 30, 2010, compared to $354.9 million as of March 31, 2010 and $342.2 million as of December 31, 2009.
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