Comscore Inc (SCOR) 2012 Q2 法說會逐字稿

You may begin.

Good afternoon, and thank you for joining comScore's Earnings Call for the Second Quarter of 2012.

I'm Ken Tarpey, CFO at comScore.

On the phone with me today are Dr. Magid Abraham, our President, CEO, and Co-founder, Cam Meierhoefer, our COO, and Serge Matta, our President of Commercial Solutions.

Cam and -- we'll all be available for the q and a session.

Before we begin, please allow me to read the following disclaimer regarding our use of forward-looking information, and non-GAAP financial measures.

During the course of today's call, as well as during any question and answer periods that may follow, representatives of the company may make forward-looking statements within the meaning of Securities Act of 1933, and the Securities Exchange Act of 1934, regarding future events or performance of the company that involve risks and uncertainties, including without limitation the strength of comScore's business, the expectations as to comScore's sales and booking cycles, particularly with respect to new products; expectations as to opportunities, including new customers and markets for comScore; expectations as to the growth and composition of comScore's customer base, bookings, and renewals rates; expectations regarding the impact and benefits of particular lines of business and products; expectations regarding the relative quality of comScore's products; expectations regarding the potential discontinuation or divestiture of certain product lines and associated impairment of intangible assets; assumptions regarding tax rates and net operating loss carry forwards; and forecasts of future financial performance for the third quarter and the full year 2012, including related growth rates, exchange rates, and other assumptions.

Such statements are only predictions based on management's current expectations.

Actual events and results could differ materially from those predictions due to a number of risks and uncertainties, including those identified in the documents comScore files from time to time with Securities and Exchange Commission.

Those documents specifically include, but are not limited to comScore's Form 8-K filed earlier today relating to this call; comScore's Form 10-K for the period ending December 31, 2011; and Form 10-Q for the period ending March 31, 2012.

We caution you not to place undue reliance on any forward-looking statements included in these presentations, which speak only as of today.

We do not undertake any obligation to publicly update any forward-looking statements to reflect new information after today's call, or to reflect the occurrence of unanticipated events.

During today's call, we also reference certain non-GAAP financial measures.

You will find our press release and on our Investor Relations website, a reconciliation of non-GAAP financial measure discussed during today's call to the most directly comparable GAAP financial measure.

In addition, we have posted a slide deck to supplement our prepared comments in the Investor Relations section of our website under the Events and Presentations section of the site.

Both of these documents may be accessed at our Investor Relations website at ir.comscore.com.

With that, I will now turn the call over to Magid.

Thank you, Ken, and thank you all for joining our Earnings Conference Call for Q2 of 2012.

We faced some challenges in the second quarter with total revenue that was below our guidance range at $60.3 million, which resulted in adjusted EBITDA that was also below our guidance range at $9.6 million.

The most significant factor contributing to lower than anticipated revenue was a sharp year-over-year decline in non-core traditional TV copy testing revenue.

In addition, fluctuations in exchange rate adversely impacted revenue in the quarter.

I'd like to address these factors, and then move to provide a more in-depth analysis of the business, which provides you with a very different color than the reported would imply.

If we go to slide 5, I would like to talk a little bit about the traditional TV copy testing business.

We entered that business through an acquisition of ARS Group in early 2010.

Basically, TV copy testing services are survey-based studies that help advertisers optimize TV commercials by pre-screening them before putting them on the air.

Our motivation for the acquisition was to extend copy testing to digital advertising.

The legacy business has been popular with large consumer-oriented companies like Walmart and Proctor & Gamble, who require minimum creative standards before they invest millions of dollars in TV media costs.

However, our market experience in the online space demonstrated entrenched resistance to pre-testing digital creative, and a clear preference towards in-flight creative optimization, which, by the way, we're very equipped to handle through our Campaign Essentials Service.

We've also gradually seen an increased requirement from global clients to conduct copy tests globally, including in low internet penetration markets, where offline research fielding capabilities are required, something which we do not have and have we have no plans for building.

As a result, we saw a 50% decline in year-over-year TV copy testing revenue, a cost to drag on our growth and margins, for a business that is no longer a good strategic fit.

After a thorough review, we expect to divest this business as we focus on our core priorities.

Slide number 6, titled Revenue Trends Excluding TV Copy Testing Business Are Much Stronger, that slide illustrates the magnitude of the drag on our growth in the second quarter.

Copy testing revenue declines reduced our reporting -- reported revenue growth by 500 basis points.

In other words, excluding the impact of declines in this copy testing business, revenue growth would have been 9% in the second quarter.

This graph does not quantify the foreign currency effects on growth as well, but we estimate the effect of currency fluctuations to negatively effect our growth by an additional 2%.

On a constant currency basis, this growth would have been 11%, a full 7% higher than the reported 4% growth.

Taking a deeper look at our critical metrics for the quarter, the impact of the copy testing business effected most of those metrics.

For example, pro forma subscription revenue growth in the quarter would have been 6% higher, at 11% growth year-over-year, if we exclude the copy testing business.

International revenue was up 21% in the second quarter, despite adverse currency impact and weaknesses in the European economy.

Excluding the impact of copy testing, international revenue would have grown 24% from a year ago.

On a pro forma basis, the international business now represents 30% of our revenue, and we believe will continue to be an added catalyst for growth.

Furthermore, we added 47 net new customers in the second quarter, which is in line with our performance over the past several quarters.

But when we exclude the copy testing business, net new customer additions -- net customer additions would have been stronger, up by 54 net adds.

Going to slide 7, titled Health Check, while we have traditionally not discussed booking trends, we are including a snapshot of booking growth in slide 7 to give you a sense of our overall business momentum, beyond what can be ascertained from looking at our financial statements.

First, let me say how we define bookings.

We look at bookings as the total non-cancel or value of contracts in the first six months -- in the first twelve months, following contract commitment.

As such, pro forma bookings, which exclude the copy testing business, grew 22% in the second quarter of 2012 from the same period in 2011, reflecting underlying strength that's not evident by looking at revenue growth alone.

In fact, we now expect a continued gap between our bookings and our revenue guidance throughout 2012 for reasons that Ken will explain later.

Let's now take a look at the factors that are driving this strength in booking growth.

So, in slide 8, which is titled The Strong Underlying Business -- The Whole Picture.

So, our product momentum is fueled by adoption of new products, including Validated Campaign Essentials, Digital Analytix, and our latest mobile solutions.

It's also important to note that we have observed continuing solid growth in Media Metrix 360.

Our renewal rates, measured on a constant dollar basis, remain about 90%, an indication of the enduring value our products deliver to customers.

As I mentioned, we continue to also perform well internationally.

A weaker environment in Europe was more than made up for the strength in Latin America, Asia-Pacific, and Canada.

Going to slide 9 to talk about digital campaign ratings, I would like to discuss the momentum of this business that is continuing to grow.

Starting in December 2011, the date when a competitor's campaign rating service was released to the broad market, we have compared the number of campaigns reported as having run through that service with the number evaluated with our Campaign Essentials family during the same time period.

With that analysis, we estimate that comScore's share is approximately 70% of this rapidly growing market.

In particular, we are finding that customers are attracted to our ability to measure ad visibility and validate ad impressions in near real time, providing an accurate picture of a campaign's reach of real people, rather than the inflated reach based on served impressions that were never seen by a real user.

We also provide marketers with the ability to optimize and perform campaign course corrections in real time.

Finally, we possess a number of patents for these capabilities, which adds to our competitive differentiation.

Adoption rates of Campaign Essentials and Validated Campaign Essentials are tracking well for the year, while our sales pipeline becomes increasingly robust with worldwide interest.

Since our more recent global launch, we have executed many campaigns in as many as 30 countries overseas, reflecting strong interest in campaign measurement and validation, both on a global and local market basis.

Moving on to slide 10, beyond customer progress Campaign Essentials and vCE are being thoroughly reviewed and accredited by industry standard bodies around the world.

For example, vCE was recently accredited by the Media Ratings Council, known also as MRC, for campaign verification, including real-time brand safety assurance, and viewability measurement.

vCE is the only service that has been, to our knowledge, accredited for viewability measurement of impressions served within cross domain iFrames.

This is a type of iFrames that has proven to difficult to measure, but it is also crucial to measure as it accounts for well over 60% of display ad impressions.

The Audit Bureau of Circulations, a UK industry body, also recently accredited CE and vCE, as well as comScore's audience measurement and web analytics products.

In a somewhat related development, we also received accreditation from the OJD organization in Spain for audience measurement and census web analytics.

Moving forward, we are extending the capability of Campaign Essentials to meet customer demands for multi-platform, cross media, and office.

With several customers already working with us in a charter program, we are really excited about bringing this revolutionary technology to four screens, including the desktop, tablets, mobile devices, and TV sets.

Our full-screen measurement of the London Olympics with NBC is proceeding well.

We also recently got a sizable commitment from a major TV network for a joint cross-media measurement initiative with Arbitron.

More details on this initiative will be released in due time.

In slide 11, we will review progress on Digital Analytix.

Digital Analytix, our web validating solution, delivered a strong performance in the second quarter.

Notable North American wins in the second quarter include Cablevision, Newsmax, The Globe and Mail, The New York Times, Photobucket, Salary.com, and Vevo.

Customers are attracted to the products' on-the-fly real-time analytics, scalable big data architecture, user demographic profiles, and unique capabilities like [Dax] monetization, designed to help publishers more effectively monetize their display advertising inventory.

In the mobile arena, our recently launched Mobile Metrix 2.0 has seen excellent adoption, which has invigorated growth of our Mobile Against Measurement Solutions, using comScore's unified digital measurement technology, or UDM, Mobile Metrix combines census mobile data with panel data for highly accurate and comprehensive mobile measurement.

In summary, we believe our underlying business is strong.

While decreasing revenue from copy testing, and a fragile economy in Europe, reflected with a weaker Euro, have negatively effected our revenue, our base business and new product initiatives are helping solidify our position as market leader, while also driving order growth faster than reported revenue growth.

We believe our strategy is working, and we are proud to be aligned with our investors as demonstrated by Gian and my continuing to receive our full compensation in stock.

Now, I'd like to turn the call over to Ken for his comments on our financial performance and the outlook for 2012.

Ken.

Thank you, Magid.

Revenue in the second quarter was $60.3 million, up 4% year-over-year.

Excluding our copy testing business, revenue grew 9% on a non-GAAP pro forma basis.

We also expect that foreign currency fluctuations negatively impacted growth by approximately 2% over that period as well.

Subscription revenue in the second quarter was $51.8 million, or up 5% year-over-year, representing 86% of total revenue, in line with the recent trends.

Subscription revenue was also impacted by decreasing minimum annual copy testing commitments, and to a smaller degree by anticipated foreign currency fluctuations.

Excluding copy testing, subscription revenue grew 11% from the prior year, and 13% including the currency impact.

Project revenue was $8.5 million, a decrease of 1% from the second quarter of 2011.

Revenue from existing customers of $53.7 million was up 9% year-over-year in the second quarter, and represented 89% of total revenues, while revenue from new customers of $6.6 million was consistent with the past several quarters.

Revenue from new customers is a decrease from a year ago because of the impact of our past acquisitions.

For the first year after acquisition, any new customer to comScore's revenue is considered a new revenue customer until the anniversary of the acquisition.

During the quarter, we added 47 net new customers with a total gross customer count of 2,069 at the end of the second quarter, or 54 net new customers excluding the impact on the copy testing business.

Growth in revenue from outside the US continues to outpace our overall growth.

International revenue in the second quarter was $17.8 million, up 21% from a year ago on a reported basis, and 24% on a pro forma basis, despite a weaker economic environment in Europe, and greater than anticipated foreign exchange headwinds.

Our top ten customers represented 22% of revenue in the second quarter, compared to 29% a year ago, continuing our increased diversification of our customer base.

Turning now to expenses, gross margins were 66.2%, compared to 66.8% in the second quarter of 2011.

Cost of revenue increased somewhat due to additional costs to support our increasing data collection for our tag products.

Costs were flat sequentially from Q1 of 2012.

Sales and marketing expenses increased from a year ago, and sequentially, primarily due to incentive compensation for our higher bookings growth, and our expanding worldwide sales force.

R&D expenses have remained flat as a percentage of total revenue over the comparable periods.

G&A expenses have decreased from a year ago due to significantly decreased litigation costs in 2012.

Sequentially increased G&A expenses reflect an additional provision for doubtful accounts based on the softer economic environment.

GAAP pre-tax net income was $6.4 million in the second quarter compared to a GAAP pre-tax net loss of $6.2 million in the second quarter of last year.

This pre-tax loss includes a $3.3 million impairment charge related to the copy testing business intangible assets.

Our year-to-date effective GAAP income tax rate through the second quarter was 21%.

We've recorded a year-to-date income taxing expense instead of benefit for the year-to-date losses mainly because of our inability to recognize income tax benefit for losses primarily in Netherlands, Australia, and Spain.

We also had to reverse a deferred tax asset in the quarter, as certain market-based stock awards expired in May.

The tax expense recorded in the second quarter represents the change in expected income tax due to the changes in the projected annual GAAP pre-tax income, and other items which impacted tax expense.

A year-to-date cash tax benefit was 120%, which is significantly higher from that which we expect, and for the course of the year, which I'll speak about in a minute.

GAAP net loss was $6.6 million, or $0.20 per basic and diluted share in the second quarter of 2012 based on a basic and diluted share count of 33.2 million shares.

The GAAP pre-tax loss and GAAP loss in the second quarter again included a $3.3 million impairment of intangible asset charge related to our copy testing business.

We now project a GAAP annual tax rate for the year of approximately 20 -- 40%.

The GAAP tax rate for 2012 again has been impacted by several items, the inability to take losses in the Netherlands and Spain due to valuation allowances, and also the impact of the reversal of the tax impact of the stock-based compensation which lapsed.

For 2012, we anticipate an annual cash tax rate of 19%.

This rate is somewhat higher than previous periods, primarily due to an increased tax expenses in certain states and foreign jurisdictions as a result of fully utilizing our net operating loss carry forwards in those jurisdictions.

We continue to hold significant net operating loss carry forwards in the United States, certain states in the US, and in certain international subsidiaries, principally, Netherlands and U.K.

Non-GAAP net income for the quarter was $13.1 million, or $0.37 per diluted share, excluding stock-based compensation, amortization of intangibles, and payment of intangible assets, acquisition and restructuring costs, and deferred tax expense.

This represents a growth of over 100% from the non-GAAP net income of $5.4 million, or $0.16 per diluted share in the second quarter of 2011.

With our varying tax rates and non-cash expenses, we believe the adjusted EBITDA is a useful measure for investors to use to evaluate our operating performance.

Adjusted EBITDA takes non-GAAP net income and adjusts it to exclude the cash tax provision, depreciation, intangible amortization costs, stock-based compensation expense, acquisition related expenses, net interest income, and the impairment of intangible assets.

On this basis, adjusted EBITDA was $9.6 million the second quarter, compared to $11.1 million the second quarter of 2011.

Adjusted EBITDA margin was 16%, compared to 19% a year ago.

Adjusting for the impact of our copy test business, pro forma adjusted EBITDA would have been about $9.2 million, compared to $10 million a year ago.

As of June 30, 2012, cash and cash equivalents totaled $50.3 million, an increase of $7.9 million since March 31, and an increase of $12.2 million since the end of last year.

Our receivables of $57 million increased from $53 million a year ago due to the growth of our business.

Our DSOs are 78 days, decreased sequentially from the first quarter of 2011.

Total deferred revenue was $74 million, with current deferred revenue of $73.3 million, and long-term deferred revenue of $0.7 million.

It is important to note that some customers moved from annual billing to multiple billing cycles per year, so current deferred revenue does not fully represent the anticipating billing value form customers over the next twelve months.

Cash flow from operations for the second quarter 2012 was $12.9 million.

Our capital expenditures were $2.4 million, resulting in a free cash flow of $10.5 million in the second quarter.

Please note that in the future third and fourth quarter 2012, we anticipate expenditures will increase to approximately $5 million per quarter, primarily to planned lease hold improvements in our expanded New York, London, and Reston, Virginia facilities.

This will be our first lease expansion since 2009, and we anticipate CapEx returning to more normalized levels in 2013.

Now, I will outline -- I'm turning now to the financial outlook, slide 12, and I will outline our guidance for the third quarter of 2012, and the full year of 2012.

Included in our expectations for the second half, our revenue declines from our copy testing business, a greater impact from foreign currency, and some caution due to the fragile nature of the economy, especially Europe.

Another important factor is that certain new products have a longer period between bookings to the start of revenue recognition than our established products.

This effect was more pronounced in the second quarter than we had anticipated earlier in the year.

Turning now to slide 13 entitled Revenue Accrual Dynamics.

As shown on this slide, for example, new bookings for Campaign Essentials, vCE, and Digital Analytix, will see only about 20% of contract value recognized in the first six months after deal signing, compared to 45% for Media Metrix, and 70% for project bookings.

For Operator Analytix transactions, this delay is even more pronounced.

As a result, were now using our best estimates for the impact of these revenue lags, which yield a somewhat higher sequential increase in revenue in the third quarter to the fourth quarter than the second quarter to the third quarter.

Turning now to slide 14 for guidance.

With that backdrop, we anticipate revenues for the third quarter of 2012 in the range of $60.5 million to $63.5 million, which represents an increase of 3% to 8% over the third quarter of 2011.

We anticipate a third quarter GAAP loss before income taxes of between $4.6 million loss to a $2.7 million pre-tax loss.

We expect adjusted EBITDA in the third quarter to be in the range of $8 million to $10 million.

This represents an adjusted EBITDA margin of 15% at the midpoints of our revenue and adjusted EBITDA guidance.

Our estimated fully diluted share count for the third quarter is 35.8 million shares.

As in the second quarter, third quarter GAAP income before taxes will be impacted by certain non-cash items.

We currently expect approximately $2.4 million in amortization of intangibles and patents, as well as $6 million in stock-based compensation.

Now looking at the full year, we expect revenue growth of $7 million to $10 million with revenues expected to be a range of $148.1 million to $255.1 million for 2012.

As mentioned, the copy testing business, a non-strategic asset, and we're currently considering various options for this business as a divestiture.

Due to the uncertainty on the impact and the timing of the planned divestiture, we believe it is useful to provide pro forma results, excluding our copy testing business in current and year ago periods.

As such, we expect pro forma revenue growth to be 9% at the midpoint of our guidance.

For the full year, we anticipate non-GAAP pro forma revenue growth of 10% to 13% on this basis.

For 2012, we expect approximately $9.3 million in non-cash amortization of intangibles and patents, and $23.3 million in non-cash stock-based compensation.

We anticipate a GAAP loss before income taxes to be in the range of $12.1 million to $8.1 million.

We expect adjusted EBITDA to be in a range of $42.2 million to $44.2 million.

For the full year 2012, we anticipate average fully diluted share count of 35.2 million shares.

And a reconciliation of GAAP net income before income taxes to adjusted EBITDA guidance for the third quarter and the full year is included in the tables in our earnings press release.

In summary, we're addressing the challenges related to our non-core copy testing business.

We're very pleased with our booking momentum and market place traction, confirming that our business fundamentals remain very healthy, although not appropriately reflected in our current reported revenue growth.

Based on the full picture, our momentum remains strong, and our enthusiasm for our long-term prospects remains intact.

With that, Operator, we can now open the lines to take questions.

Thank you.

(Operator Instructions).

And our first answer comes from Matt Chesler with Deutsche Bank.

Please proceed.

Good afternoon.

Thanks for taking my call.

Where do I start?

Can you just provide a little bit more clarification on within vCE what you mean about the extended revenue recognition ramp?

Is this simply because it's sold on a CPM basis, and we still see a significant ramp in revenue in the fourth quarter, or is there another factor?

No, what happens with vCE is that by the time you get through the sales cycle, and you get a customer to commit to a package of campaign that they want to test, the billings in a lot of cases are related to impressions that are served.

Now the campaigns do not start right away.

The clients are not interested in evaluating campaigns that are currently running.

They will wait for new campaigns to start, and that could take on average anywhere from 30 to 120 days.

I will give you an example.

We had received a contract recently for a client to evaluate all their advertising next year, a significant number of billions of impression.

The contract was, I believe, $1.3 million, but we're only able to take $45,000 of it in the third quarter based on the media schedule, and the timing of the impressions that they will run as related to their marketing activities.

So, in a situation like that, this is even less than that 20% that we talked about that you can take for vCE.

Now, the flip side of that is that, in the second half we would expect higher than the pro rata share of the second half.

So, if we get 20% in the first half, we will get more in the second half if the client stays on their budget commitment.

It is at this point very hard to gauge the balance between new project starts that, or new contract starts, which have a significant lag in revenue accrual, and then the projects that have been there for a while, where the -- actually, the revenue accrual is higher than what it is prorated on a straight line business.

We are trying to work with clients on figuring out ways to straighten out this thing, and ideally would like to figure out a way get these contracts accrued on a pro rata monthly basis, but it is something that were still working on, so I hope we can accomplish it to simplify our lives and your life.

Two quickie follow ups.

The accreditation by the MRC, can you just clarify whether you've received accreditation for the whole solution, including demographics and GRP, or it's just viewability?

And then I just want to get a sense -- I know earlier in the year you had some expectations on recognition of the telco contracts.

I know that those are longer cycle.

Can you just comment on how your view on the likelihood of those hitting in the third or the fourth quarter effected your guidance revision today?

Okay, so, on the MRC accreditation, we were explicitly focused on the new features that we have introduced, primarily around accrediting viewability, and accrediting brand assurance, which allow us to block offensive advertise -- sorry, advertising falling in inappropriate contacts in real time.

We are in the process of completing the other parts.

I would say as far as GRP accreditations is concerned, and if you consider that our impression counts have been accredited, GRP is simply the number of impressions divided by 3 million, so the GRPs already accredited.

The question that we are working with is accrediting the demographic composition.

Then, just a quick follow up on that.

On the telco contracts in terms of how it effected your outlook for the back half of the year.

There is -- the telco contracts are lumpier than what we would like.

So, if things break our way, we will get more than we expected.

If things don't break our way, we will -- it will negatively effect us.

We know we have a number of large contracts that we are working on, actually we're working on delivering, but we also have a number of large contracts in the pipeline, and one of the frustrating things about this particular area, and the revenue accrual rules, is that the user acceptance testing is really beyond our control, and has added an element of variability to our quarter-to-quarter revenue.

And it is, again, something that we are working on to smooth it out, by resorting to things like percent of complete accounting, and thinks like that.

Again, from my standpoint, the quicker we get to whole straight line accrual that's very simple and easy to understand, the better off we will all be.

Alright, thank you.

Our next question will come from Shyam Patil with Raymond James.

Hi, thank you.

Just -- high level question in terms of the growth in margin profile for the company.

Given there the issues you talked about this year, and the mismatch between the bookings growth, it looks like low- to mid-teens kind of revenue growth on an adjusted basis, what's the right way to think about the intermediate term revenue growth profile on an organic basis, as well as the margins?

Well, I mean, I think that, as you know, bookings are a leading indicator of revenue growth.

So, at some point, we expect the gap to narrow.

We have not studied very carefully how long it will take for that gap to narrow.

So, there is really nothing in our business that would cause us to believe that we have seen a new plateau of growth here, and I personally believe that the growth rate in the teens is an aberration that's the result of this transition period.

This is, by the way, something that probably happens quite a bit for software companies that go from a [campy] license model to a SAS model, where the same sales results end up delivering a different revenue profile over time.

As far as margin is concerned, one of the things that I'm really pleased about is that we are able to deliver 16% EBITDA margin, even at 4% growth rate, and -- in the quarter.

And so, given the leverage in our business, where you'd expect an average at least $0.50 of an incremental dollar to drop to the bottom line, if we are able to close an 8 to 10 point gap in revenue recognition, a lot of that will drop to the bottom line, and we'll have the margins.

Great.

That was helpful.

And just a quick, quick follow up.

What were the gross customer adds?

177.

Great.

Thank you.

And our next question comes from Mark Zgutowicz with Piper Jaffray.

Please proceed.

Yes, you've got [John Kratheround] for Mark.

Real quick question first on the carrier side, or the telco.

So, obviously, you sort of laid out here that you don't expect any recorded revenue over the first six months.

I'm just wondering if you could sort of give the profile of the contracts that you have won, what's the time length there, and how it sort of flows on after that first six months?

And then, I'm assuming that, given while you're saying six months without any revenue, that you're expecting to see that ramp in Q1 of next year.

Is that correct?

Most likely.

But there is a possibility it will happen earlier.

So, here is the way your typical telco contract would go.

You win the contract, and then you have to go and work with the IT, the telco IT, for essentially gathering the requirements, and agreeing on specs.

And then we install the software, but the software is not considered complete until the data and any customization of the applications are delivered.

And that's where we run into trouble, where access to the data can be delayed.

I'm sure that's not a big surprise in telco.

And where things move around a little bit.

And, given kind of the strict requirement that everything in the contract must be delivered, you're unable to really recognize revenue until that happens.

And if you have a revenue -- if you have a plan that will say acceptance will happen within seven months, you -- that's your best estimate at the beginning, but it could easily be ten months or twelve months for things that are beyond our control.

The probably the best example of that was some work we were doing in Egypt that, as you know, for understandable circumstances, the delivery cycle was -- ended up being a lot longer because the whole operation shut down.

Okay, and then, just sort of following up on the revenue recognition here.

Just wondering if you could sort of highlight how the core Media Metrix product is growing here.

What the impact of sort of the economy is there?

We sort of start to back out some of the numbers here.

It certainly looks like there's -- given some of the incremental on the mobile side, that there's been some slowing there.

Just wondering if you could comment about that.

No, I think the Media Metrix business is going pretty robustly in the high teens in the US, and stronger than that internationally, particularly on a constant currency basis.

The only thing I would have a caveat on is exactly what happened in Europe because of the decline in the Euro on a constant currency basis.

But that business continues to perform really, really well for us.

On the mobile side, on one hand we did have the positive impact of Mobile Metrix 2.0.

On the other hand, we had a lower than expected quarter of revenue accrual on the carrier software side, just because of the standing issues that we just discussed.

And just real quick, a follow up on mobile.

If you could five us an update on how sort of your cross panel initiatives with AT&T are going, and sort of the outlook for that product here over the next twelve months or so.

Well, as I mentioned in the script, we have made a lot of progress.

We've made a lot of progress in there.

We have almost a dozen clients that are now working with us on a -- on four stream measurement.

And we are delivering data, and it is -- there's actually just amazing data that is being delivered to the market for the first time.

And we're not just focusing on web and TV.

We are doing all four screen -- web, TV, -- web, TV, tablets, smartphones, etc., etc.

We are also starting to take advantage of the millions of set top boxes that we have rather than working with the kind of the single source panel that we initially developed with AT&T.

We have gotten other TV providers to participate and share with us TV data.

So, we have a more representative national panel, the end result of which is that we fully expect that, in the fourth quarter, we will have out in the market a measurement of campaigns using all outlets, and we will have also just measurement -- just general measurement of media and net incremental reach generated by digital on top of stand-alone TV.

I also mentioned the TV Olympics project with NBC, and we are working very hard on that, and that's going really well.

We're getting a lot of positive feedback from the client on that.

And then finally, I also mentioned, and this is I think pretty significant, is that one of the major networks has signed a significant contract with us and Arbitron to develop what they believe is a unique capability for the most comprehensive cross-media measurement system.

So, in a nutshell, it is going well.

We're excited about it, and we think that we will be in a great position to meet client needs in this area.

Great.

I appreciate the commentary.

Thank you.

Ladies and gentlemen, with no further questions, this concludes today's question and answer session.

I would now like to turn the call back over to Dr. Abraham for closing remarks.

Well, thank you very much for your participation today.

We look forward to speaking with you again in the future.

Goodbye, and see you soon.

Ladies and gentlemen this -- thank you for your participation in today's conference.

This concludes the presentation, and you may now disconnect.

Have a good day.