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Nielsen Holdings plc reported third-quarter 2018 net earnings of 27 cents per share, down 34.1% from the year-ago quarter.
Weakness in the U.S. Buy segment and emerging markets continue to be a concern.
Reported revenues came in at $1.600 billion, decreasing 2.5% year over year. Also, revenues decreased 0.6% on a constant-currency basis.
However, revenues surpassed the Zacks Consensus Estimate of $1.58 billion, driven by strength in the company’s Watch segment.
Shares of Nielsen have lost approximately 29.8% on a year-to-date basis against its industry’s growth of 8.4%.
Revenues by Segment
Watch business revenues were $845 million (53% of total third-quarter revenues), reflecting an increase of 0.8% year over year or 1.4% on a constant-currency basis. The increase was due to continued strength in Audience Measurement. Audience Measurement of Video and Text revenues increased 4.7% from the prior-year quarter, driven by ongoing investments and continued client adoption. Marketing Effectiveness revenues decreased 10.1% year over year, driven by consistent investment in product portfolio and continued strength in product initiatives.
Buy business revenues were $755 million (47% of the total revenues), reflecting a decrease of 6% from the year-ago quarter and 2.7% on a constant-currency basis. Excluding foreign currency impact, revenues from the Developed market declined 0.8% on a constant-currency basis. Also, revenues from emerging markets were down 9.4%, or 2.5% on a constant-currency basis, due to weakness in multinational client spending and softness in China.
Operating Results
Gross margin was 57.4%, down 40 basis points (bps) from the year-ago period.
Nielsen’s operating expenses, namely selling, general and administrative expenses of $464 million, increased 3.6% from the year-ago figure. Therefore, operating margin decreased 490 bps year over year to 9.8%.
Adjusted EBITDA was $471 million in the third quarter, decreasing 9.2% from the prior-year quarter. Also, Adjusted EBITDA margin contracted 219 bps to 29.4% due to softer revenues, and continued investments in Buy and Watch segments, partly offset by productivity initiatives.
Net Income
On a GAAP basis, Nielsen registered a net profit of $96 million or 27 cents per share compared with $146 million or 41 cents in the year-ago quarter.
Balance Sheet & Cash Flow
Nielsen exited the quarter with cash balance of approximately $446 million compared with $394 million in the last reported quarter.
Net debt (gross debt excluding cash and cash equivalents) was $8.17 billion, and net debt leverage ratio was 4.21 at the end of the quarter.
Cash flow from operations was $387 million, capex totaled $121 million and free cash flow came in at $266 million in the third quarter.
Share Repurchase
The company repurchased $10 million of shares in the third quarter of 2018. It has a total of $228 million shares remaining under the existing share repurchase program.
Outlook
Management reiterated its guidance for full-year 2018. It expects total revenue growth to be approximately 1% on a constant-currency basis. GAAP net income per share is expected to remain in the range of $0.95-$1.00.
However, the company decreased its free cash flow range to $450-$500 million from the prior expectation of $550-$575 million.
Nielsen Holdings Plc Price, Consensus and EPS Surprise
Currently, Nielsen carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are EVINE Live (EVLV - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and AMETEK, Inc. (AME - Free Report) . While EVINE Live sports a Zacks Rank #1 (Strong Buy), both IAC/InterActiveCorp and AMETEK carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for EVINE Live, IAC/InterActiveCorp and AMETEKis currently pegged at 3%, 15% and 10.97%, respectively.
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Nielsen's (NLSN) Q3 Earnings Decline Y/Y, Revenues Beat
Nielsen Holdings plc reported third-quarter 2018 net earnings of 27 cents per share, down 34.1% from the year-ago quarter.
Weakness in the U.S. Buy segment and emerging markets continue to be a concern.
Reported revenues came in at $1.600 billion, decreasing 2.5% year over year. Also, revenues decreased 0.6% on a constant-currency basis.
However, revenues surpassed the Zacks Consensus Estimate of $1.58 billion, driven by strength in the company’s Watch segment.
Shares of Nielsen have lost approximately 29.8% on a year-to-date basis against its industry’s growth of 8.4%.
Revenues by Segment
Watch business revenues were $845 million (53% of total third-quarter revenues), reflecting an increase of 0.8% year over year or 1.4% on a constant-currency basis. The increase was due to continued strength in Audience Measurement. Audience Measurement of Video and Text revenues increased 4.7% from the prior-year quarter, driven by ongoing investments and continued client adoption. Marketing Effectiveness revenues decreased 10.1% year over year, driven by consistent investment in product portfolio and continued strength in product initiatives.
Buy business revenues were $755 million (47% of the total revenues), reflecting a decrease of 6% from the year-ago quarter and 2.7% on a constant-currency basis. Excluding foreign currency impact, revenues from the Developed market declined 0.8% on a constant-currency basis. Also, revenues from emerging markets were down 9.4%, or 2.5% on a constant-currency basis, due to weakness in multinational client spending and softness in China.
Operating Results
Gross margin was 57.4%, down 40 basis points (bps) from the year-ago period.
Nielsen’s operating expenses, namely selling, general and administrative expenses of $464 million, increased 3.6% from the year-ago figure. Therefore, operating margin decreased 490 bps year over year to 9.8%.
Adjusted EBITDA was $471 million in the third quarter, decreasing 9.2% from the prior-year quarter. Also, Adjusted EBITDA margin contracted 219 bps to 29.4% due to softer revenues, and continued investments in Buy and Watch segments, partly offset by productivity initiatives.
Net Income
On a GAAP basis, Nielsen registered a net profit of $96 million or 27 cents per share compared with $146 million or 41 cents in the year-ago quarter.
Balance Sheet & Cash Flow
Nielsen exited the quarter with cash balance of approximately $446 million compared with $394 million in the last reported quarter.
Net debt (gross debt excluding cash and cash equivalents) was $8.17 billion, and net debt leverage ratio was 4.21 at the end of the quarter.
Cash flow from operations was $387 million, capex totaled $121 million and free cash flow came in at $266 million in the third quarter.
Share Repurchase
The company repurchased $10 million of shares in the third quarter of 2018. It has a total of $228 million shares remaining under the existing share repurchase program.
Outlook
Management reiterated its guidance for full-year 2018. It expects total revenue growth to be approximately 1% on a constant-currency basis. GAAP net income per share is expected to remain in the range of $0.95-$1.00.
However, the company decreased its free cash flow range to $450-$500 million from the prior expectation of $550-$575 million.
Nielsen Holdings Plc Price, Consensus and EPS Surprise
Nielsen Holdings Plc Price, Consensus and EPS Surprise | Nielsen Holdings Plc Quote
Zacks Rank & Stocks to Consider
Currently, Nielsen carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are EVINE Live (EVLV - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and AMETEK, Inc. (AME - Free Report) . While EVINE Live sports a Zacks Rank #1 (Strong Buy), both IAC/InterActiveCorp and AMETEK carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for EVINE Live, IAC/InterActiveCorp and AMETEKis currently pegged at 3%, 15% and 10.97%, respectively.
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Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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