Comscore Inc (SCOR) 2014 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third quarter 2014 comScore, Incorporated earnings conference call. My name is Michelle and I will be your operator today.

(Operator Instructions)

As a reminder this call is been recorded for replay purposes. I would now like to turn the call over to Mr. Mel Wesley, Chief Financial Officer and Mr. Serge Matta, President and Chief Executive Officer. Please proceed.

Thank you. Good morning and welcome to comScore's earnings call for the third quarter of 2014. I am Mel Wesley, comScore's new Chief Financial Officer and with me today is Serge Matta, President and Chief Executive Officer.

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 the 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, expectations as to opportunities for comScore, including customers, markets and partnerships; expectations as to the strength of comScore's business, including the growth and composition of comScore's customer base and renewal rates; expectations regarding comScore's products, including regarding new releases and features, their quality relative to competitors and potential benefits of particular products; expectations as to the financial effects of comScore's expected divesture of certain business lines and related impairment losses; assumptions regarding tax rates and net operating loss carry forwards; and forecasts of future financial performance for the fourth quarter and full year 2014, including relating growth rates, exchange rates and assumptions.

Such statements are only predictions based on Management's current expectations. Actual events or 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 the 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, and comScore's Form 10K for the period ending December 31, 2013, and comScore's most recent quarterly reports on Form 10K.

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.

In addition, we may also reference certain non-GAAP financial measures in the course of our presentation. You will find in our press release and on our Investor Relations website a reconciliation of non-GAAP financial measures discussed during today's call to the most directly comparable GAAP financial measure. The link to our investor relations website is ir.comscore.com and our results are posted under Press Releases. We have a presentation posted on our IR website under Events and Presentations that accompanies our comments today and will help as you follow along.

With that I will now turn the call over to Serge.

Thank you, Mel. This is Mel's first earnings call with us and I would like to just say how excited we are to have him on our team. Thank you for all -- for joining us today, especially after a thrilling Washington Redskins win last night in Monday night football game.

Now to a more serious note. Let me first provide an overview of the quarter and then discuss key operational highlights. After that I'll turn over to Mel to review our financial performance before we take your questions.

Let's begin with slide 4. ComScore delivered another quarter of record revenues and strong profitability. This reflects continued positive momentum across our business and the strength of our partnerships, which continue to grow in number and impact.

Third quarter 2014 revenues were $82.1 million, up 15% over last year. Adjusted EBITDA was $19.1 million, a 17% year-over-year increase and a 23% EBITDA margin, reflecting the significant operating leverage we have in the business and our focus on managing expenses.

For the quarter we added 44 net new customers for the overall business and added 43 new customers to our Media Metrix Multi-Platform service bringing our total customers using MMXMP to 448. Two-thirds of these customers also bought Mobile Metrix and/or Video Metrix during the same quarter, continuing a trend I have highlighted before.

We see this as a validation that customers place significant value on our whole suite of service offerings and continue to embrace our market-leading products that measure the multiplatform world. Our contract renewal rate with existing customers again remained above 90% on a constant-dollar basis, a metric that I'm pleased to say has been consistent since we've gone public in 2007.

Turning to slide 5, let me review the market opportunity where we are positioned in the market and the priorities we have established to capitalize on this opportunity. ComScore operates at the intersection of three significant megatrends in digital media.

One, customers continue transition of their media and digital consumption to mobile and other platforms. Two, the increasing standardization of digital video for viewing TV, movies and other forms of media. And lastly, the automation of advertising fueled by advancements in media buying technology.

We are leveraging our unique position at the center of these trends in a number of ways. First, we continue to expand our cross media offerings focused on measuring total video consumption across linear TV, digital usage across PCs, tablets, Smartphones, as well as through over-the-top video game consoles and Internet connected smart TVs. We are delivering private data to major broadcasters today and continue development of our syndicated cross media product suites.

As recent industry announcements have demonstrated, the television marketplace is highly dynamic and, more importantly, increasingly complex. We're in the midst of what we expect to be a multiyear realignment of the business of television. We're committed to our thesis that digital transforms the possibilities for TV and video businesses. We're listening closely to our customers and we're going to get this right as the industry evolves.

Second, we're continuing to extend our vCE market leadership through strong partnerships and continued adoption of our vCE mobile product. In addition, we're on track to expand vCE 2.0 to new attractive international markets this year and are scheduled to launch three new countries: UK, Canada and Italy in December.

The efforts we've made to ensure comScore plays a vital role in the automation of advertising are paying off. Our vCE integration with Yahoo is going well and Yahoo has proven to be an excellent data partner for vCE and soon-to-be vCE mobile.

Our partnership with Google successfully launched in early October and I'll provide more details on it shortly. These and other partnerships I'll mention later provide strong evidence of increasing market endorsements of the value of comScore data and vCE and support our third priority, which is integrating comScore data into the places where clients use them.

Lastly, we are focused on strong execution and returning capital to investors. We have delivered on both of these items during the third quarter and through the first nine months of this year, as demonstrated by our results and our Board's authorization of a new share repurchase program in June 2014.

Turning to slide 6, last year the US market reached an important milestone when, for the first time, a majority of consumers' times spent with digital media occurred on personal computers -- occurred not on personal computers but on mobile devices, including Smartphones and tablets. The emergence of mobile and the multiplatform majority is a trend we've led the industry in measuring and we're seeing this trend across the world. In early 2013 we launched MMX Multi-Platform, also known as Media Metrix MP, providing our clients and the industry as a whole with the first de-duplicated view of their audience across Smartphones, tablets and PCs.

As expected we have seen steady growth in customer demand for Media Metrix Multi-Platform, but we still have much untapped potential in our current client base for this product. We'll be launching a new market next year but even in the US and the UK where MMXMP is available today, we estimate that our existing client penetration rate is less than 50%.

What's more, MMXMP also drives adoption of Mobile Metrix which provides a granular view of mobile platforms, tablets and app usage and Video Metrix. As we've noted previously, two-thirds of the clients who subscribe to Media Metrix MP also purchase Mobile Metrix and/or Video Metrix within the same quarter.

Video Metrix 3.0 provides a multiplatform view of video consumption giving our clients a view into audiences that are watching videos on phones, tablets and PCs. We're delivering private VMX 3.0 data to clients today and are on track to launch a beta version by the end of 2014. In 2015 we will add over-the-top content to Video Metrix.

Moving on to slide 7. Through a growing number of strategic partnerships, we are steadily growing the adoption of vCE. I'm pleased to report that vCE is live in Google's double-click platform as of October 3. We've moved from a successful pilot to a beta phase of this partnership and are seeing strong interest in growing participation from top advertisers and agencies.

Just in the past few days we have signed the top three agency holding companies; WPP, Publicist Group and Omnicom Group to utilize vCE and double-click and expect the remaining agreements to be signed during Q4. We anticipate that the Google double-click beta period will last through the first quarter of 2015 as we work to build strong adoption across the double-click client base. During this period comScore is being paid for vCE campaigns but we don't expect to have visibility into the revenue impacts of this partnership until it moves out of beta in Q2 of 2015.

Moving to slide 8. This slide highlights of the continued momentum we are seeing among advertisers and agencies as well as an update on our focused work to ensure that vCE is widely deployed to measure video advertising. It's worth noting that comScore vCE momentum continues despite the two strategic partnerships, suggesting that as of today we see no cannibalization of the comScore vCE service versus the Google or Yahoo vCE integrations.

Publicist Group renewed their annual vCE commitment and they expect an increase in volume for their advertisers in 2015. As we've noted, P&G, one of the world's largest advertisers, also renewed their preferred partnership to utilize vCE. In Q3, P&G extended their renewal to UK and Canada. These renewals which are occurring as our partner integrations with Yahoo and Google have gone live are a strong vote of confidence for vCE and a demonstration of the value we're delivering to major clients through direct relationships.

We're also strongly focused on ensuring that leading video advertising platforms integrate vCE into their systems. You may remember that last year we parted with [Vitrol], the first video platform to enable advertisers to plan, filter, optimize and report on campaigns based on comScore vCE 2.0.

Just last week we announced a similar partnership with TubeMogul to incorporate vCE into their enterprise software to provide advertisers and their agency campaigns reporting metrics such as demographics, region frequency and human growth rating points for their video campaigns. When coupled with our YouTube integration, we feel that we are well positioned in our ability to measure video advertising. Through partnerships like these we're making it simple for brands to use vCE for video advertising giving them the metrics they need to effectively deliver engaging branded content to precise audiences and improve their ROI.

Slide 9 provides an update on the work we've been doing to enhance fraud prevention in digital advertising and deliver a true human GRP to clients. On our last call because the acquisition of MdotLabs. I'm pleased to report that the integration of the Mdot technology has gone incredibly well.

In four short months we have already made substantial strides in integrating Mdot's nonhuman traffic deduction and removal technology into our core product suites, both Media Metrix and vCE. We'll shortly be sharing this enhanced data with clients and before the end of the year we will be live with these enhancements in vCE and delivering a new NHD Model nonhuman traffic module to publishers who use our validated media essentials product. Our plans in 2015 include an increase in the CPM rate for our advertising products for both the advertiser and publisher community to reflect the Mdot integration.

Turning to slide 10, as I said earlier, we have been laser focused on multiplatform solutions and products that address the rise of the mobile consumer and mobile advertising. Along these lines during in the quarter we finalized a new strategic partnership with Pandora which will integrate vCE into their system and also permits us to use their anonymous demographic data to improve all of our products.

This is a tremendous partnership for us as Pandora is a top digital player with a highly mobile user base. In fact, 84% of their audience accesses Pandora through mobile devices. The Pandora data joins data sets from Yahoo and other partners giving us a massive demographic data set to expand our mobile and global offerings, making our advertising measurement products an even more valuable service for both advertisers and publishers.

Moving to slide 11, the information gap between display, advertising and off-line sales has historically been extremely challenging for brands to correlate and measure. Closing this loop is in many ways a holy grail for marketers and we intend to deliver on that promise through a joint measurement solution we've announced with Datalogix. Through this partnership will combine comScore's vCE measurement of digital, video and mobile campaigns with Datalogix's off-line purchasing visibility into 90% of US households and more than $2 trillion in consumer level purchase data.

The resulting capabilities will provide advertisers and retailers with deep insights through access to data sets from millions of purchasing households. Through this platform brand marketers can utilize insights to help determine the most effective channels, publishers, creatives, formats and demographics for their campaigns and get a clear picture of digital advertising ROI. As you can see from this testimonial from Kraft, major brands are already embracing this new measurement. I'm happy to say that just in a matter of a few weeks after announcing this partnership, we already have commitments from craft, Kellogg's, Procter & Gamble and Starcom MediaVest to test the offering.

Finally, I would like to highlight one other important development on slide 12. Subsequent to quarter end, we signed a letter of intent with a leading telecom company to sell our mobile operator analytics division known as Subscriber Analytics for an all-cash deal of $7 million subject to customary adjustments at closing.

We're pursuing this transaction to further sharpen our focus on products and segments that we believe have the most attractive growth and margin expansion opportunities. We believe we will sign a definitive agreement and close the transaction in Q4 of this year. To help you understand the financial impact of this transaction, we will provide additional pro forma results that exclude the mobile operator business.

To sum up, we had another record quarter for revenue. We have a clear plan and are executing well against it. We continue to expand the breadth and strength of our offerings and partnerships, continue to expand our market position and remain focused on driving growth, profitability and superior value for our shareholders.

Now I'll turn the call over to Mel for a review of our financial results.

Thank you, Serge. Now let's take a closer look at our third-quarter results. Revenue in the quarter was $82.1 million, up 15% versus the same quarter last year. Subscription revenue in the quarter was $74.1 million, up 19% versus the same quarter last year. Subscription and project revenue represented 90% and 10% of total revenue respectively. The ongoing success and customer adoption of vCE continues to drive our subscription revenue mix higher.

Revenue from existing customers was $75.3 million, up 17% year-over-year and representing 92% of total revenue. During the quarter we also added 44 net new customers bringing our total customer count to 2,503. Our international revenue also continued to grow, up 18% year-over-year and representing 31% of total revenue.

Turning to margin and expenses, our gross margin was 70%, up 0.4% over the same quarter last year. The higher gross margin trends we continue to experience this year are primarily attributable to operating model leverage from increased scale and tight expense controls.

G&A expenses increased to $15 million for the third quarter, up 20% from the same quarter last year. The increase is largely related to increased stock-based compensation and severance costs relating to a change in executive officers that occurred during the quarter, partially offset by a decrease in professional fees.

GAAP pretax loss for the quarter was $5.8 million, compared to GAAP pretax income of $707,000 in the same quarter last year. The decrease was primarily the result of a $6.9 million impairment charge during the quarter related to our mobile operator division. Excluding the impairment charge, we would have achieved pretax income for the quarter of $1.1 million.

During the quarter stock compensation expense was $10.2 million compared to $2 million for the same quarter of last year. The increase relates to the change in executive officers that occurred during the quarter. We generated a tax benefit during the quarter of $2.6 million, compared to a tax expense of $789,000 for the same quarter last year. The tax benefit this quarter was primarily the result of a $6.9 million impairment charge during the quarter related to our mobile operator division.

Our cash taxes remain low as we hold net operating loss carry- forwards in the US and certain foreign jurisdictions. During the quarter GAAP net loss was $3.3 million, or $0.10 per basic and diluted share based on a basic and diluted share count of 33.5 million shares. Non-GAAP net income for the quarter was $13 million, or $0.38 per diluted share, excluding stock-based compensation, the impairment charge related to our mobile operator division, amortization of intangibles, acquisition-related expenses and other nonrecurring items. Our non-GAAP EPS calculation is based on a fully diluted share count of 34.5 million shares.

Third quarter adjusted EBITDA was $19.1 million or a 17% increase over the prior year representing an adjusted EBITDA margin of 23%. We are pleased by the continued margin expansion we have generated in our core business and we expect these gains to provide us with incremental investment dollars to accelerate key projects we believe will contribute significant ROI.

Looking at our balance sheet, we ended the quarter with cash and cash equivalents of $39.6 million, an increase of $608,000 sequentially and a decrease of $40.2 million from the same quarter last year. The decrease from last year primarily reflects $50 million of share repurchases in connection with our stock repurchase program.

Cash flow from operations for the third quarter of 2014 was $13.7 million and capital expenditures for the quarter were $1.9 million, resulting in free cash flow of $11.8 million. Free cash flow for the same quarter last year was $585,000. The increase in free cash flow was primarily the result of increased Accounts Receivable collections activity.

Slide 14 details our guidance. It is important to note that the following guidance ranges exclude the financial impact of the mobile operator division as we expect to complete the sale of this division during Q4. Factoring in this adjustment, we are increasing the midpoint of the annual revenue guidance by $1.4 million which implies 15% year-over-year growth at the midpoint. In addition, we are increasing the midpoint of the adjusted EBITDA guidance by $3.7 million as compared to the guidance provided during our August call.

For the fourth quarter of 2014 we anticipate revenue in the range of $83 million to $88.5 million. We anticipate fourth quarter GAAP income, before income taxes, in the range of $400,000 to $3.4 million. We anticipate adjusted EBITDA for the fourth quarter of 2014 to be in the range of $17.5 million to $20.5 million, which represents an adjusted EBITDA margin of approximately 21% to 23%, or 22% at the midpoint of our revenue and adjusted EBITDA guidance ranges. Our estimated fully diluted share count for fourth quarter of 2014 is 34.6 million shares.

We will now open the line for questions.

(Operator Instructions)

Youssef Squali, Cantor Fitzgerald.

Thank you very much. Two quick questions, please. Any insights from the Apple partnership that you've had going on for almost a quarter now that could help us maybe gauge the size of the opportunity both for Yahoo and for Google? And on that, is that option an opt-in or an opt out-op, just to be clear, for both Google and Yahoo?

Lastly, on EBITDA, so EBITDA margins went up nicely in the quarter. I was just wondering how has your target changed for EBITDA longer term now that it's not pressured by the mobile operator analytics business? Thanks a lot.

Sure. Good morning, Youssef.

On Yahoo and Google, it's a bit too early to say how much revenue we're going to be generating. We're both very optimistic about both partnerships. Yahoo has gone well. They've solidly given us a ton of data to integrate into vCE and mobile.

I know your question is related to revenue on both. Honestly, at this point, it's hard to say because we're still going and signing up the big agencies and the big advertisers to sign up for the service.

Both of them, Yahoo and Google -- let me give you some insight on Google. Google, as I said, just launched on the 3rd of October. Just in the past few days, we literally got the paperwork just last week, and early this week we have signed paperwork from the three top agency holding companies. So what does that mean? That means they are signing up for the service that's integrated into Google. It is, right now, an opt-in basis. I want to just say right now being the key word.

We are working with Google and the agency holding companies to see an automated way to make it opt-out, if possible. But for now, it is opt-in.

Just to give you some additional insight -- both Yahoo and Google in this beta period are not charging for the service; but we still get paid, no matter what. Both are currently opt-in. We are working to make it opt-out.

That's one of the reasons we haven't given a whole lot of clarity on the revenue, is until we really see and materially start seeing the revenue flow in, we don't want to provide guidance until we see it. So we're just being a bit conservative on that side. But for now it is opt-in, and both are going well.

As far as EBITDA expansion, we are based on -- as you can tell, the mobile operator business was definitely a drag to the overall business. That being said, we should see some margin expansion continue to happen next year and the years going forward. I have always said that you should expect at least 1 margin point increase year over year.

We will also, however, reinvest some of that margin gains back into the business, mostly to focus on mobile and multiplatform solutions. We really want to expand our mobile panels in a lot of different countries because once you do that, you then have a Mobile Metrix product. And then as a result you have a Media Metrix Multi-Platform product. So we are going to reinvest some of it; but obviously, we also expect to see additional margin expansion

Okay. Thanks a lot.

Sure.

Andre Benjamin, Goldman Sachs.

My question would be to follow up on the last. Now that the deals are live, I know you can't give any explicit revenue guidance, but is there any color that you could provide maybe on the rates that you are charging for the volumes that run through either Yahoo or Google relative to what you would charge for an average campaign?

Sure. Good morning, Andre.

Unfortunately I can't disclose the CPM rate. I can give you some color, just because I'm contractually not allowed to do that based on what we've signed with Google. I can tell you that the Google CPM rate is lower than the Yahoo CPM rate. That's to be somewhat expected, based on the volume that we anticipate coming in from Google versus Yahoo. But that's as far as color that we have right now.

That being said, like I said, during the beta period, they are not charging. Google has decided -- and we've worked with them. Google has decided to give away this product for free with the hope of getting as much adoption. And then post beta, a decision will be made whether or not to charge.

The current plans are that Google will charge post beta. But we also are kind of in a wait-and-see mode depending on adoption. That's why it's making it a bit difficult for us to project truly the 2015 numbers and what we think it's going to be because, obviously, if Google decides not to charge in 2015, then you would obviously anticipate that adoption would be much higher. If they do charge, adoption will still be very strong but not as strong as if it were for free.

Those are the kind of the things that we're working on with them. We have a very close partnership, and it continues to increase on a day-to-day basis.

Thanks. And one quick follow-up. You've announced progress on a number of different initiatives that should allow you to continue to penetrate both vCE and Mobile Metrix or multiplatform metrics. As we look at the resulting impact on, say, customer account or customer ARPU, how should we be thinking about that relative to recent trends for both the fourth quarter and into 2015?

I think the customer accounts, one, is something that we just need to continue to watch going forward. I think most of the new customer accounts, as we've indicated in the past, have come from international less so in the US.

That being said, I think with vCE ramping up in these partnerships, there is a theory out there that the new customer accounts may start declining as a result because we're going to be gaining the new customers from Google. And as such we will be -- it's not a new client, it's just the way it's being reported -- kind of TBD. We'll wait and see how it works.

We haven't yet seen it decline, as suggested by the numbers at all so far this year. We expect ARPU to continue to increase, especially for MMXMP, when we roll out to do these additional new countries. The beautiful thing about MMXMP is it's the only service in town. We are the only product that de-duplicates this audience across mobile PCs, smartphones, tablets. As a result, we definitely have a significant product advantage, both in the US and in countries as we roll them out.

Thank you.

Sure.

Jason Helfstein, Oppenheimer.

You're talking a lot more about video on this call. So just talk about -- I think historically Nielsen has had a stronger seat at the table with video. And it sounds like you are really gaining momentum. So talk about what's really driving that and kind of what you're seeing, particularly with the video and vCE integration.

And then as a follow-up to that, where are you getting your data for OTT to add that to Video Metrix? I thought that was pretty interesting.

And then, just lastly, specific on the guidance, the midpoint, organically the guidance suggests 15% growth, which is about what you did in this quarter. And then the high end assumes 18%, which would be an acceleration. But yet you're basically saying that you're not assuming any revenue from Google vCE. I just want to make sure that the high end of the revenue guidance -- that is still kind of ex-Google vCE (inaudible).

Sure. I think you raise a really good point about video. We have been really laser focused on video. Nielsen gets a lot of attention on video, understandably so, based on their heritage.

That being said, we feel we are in a very strong position in measuring all of digital video. Clients have been telling us, you don't get a lot of credit in terms of all of your video measurement capabilities. We've obviously started off with Video Metrix a long time ago. We're upgrading to Video Metrix 3.0.

But with vCE, more importantly, we made it a priority at the beginning of this year to integrate vCE into all of the major video ad platforms. That is something that we made a number one priority, and we are fulfilling that priority for us. We're doing well on that. Especially when you have relationships with BrightRoll; now with a company that you cover, with TubeMogul; obviously, with YouTube; we feel like we have a very significant position and potentially even an edge.

That being said, we are also integrating in others. It' s not like we're not integrated into Videology's and the Adaptv's and the Umi's of the world. We have integration with all of them. We just emphasize corporately that this is a very important strategic initiative of ours. And we will continue doing that on a going-forward basis.

On an OTT standpoint, it's a couple of ways we're doing it. I'm not going to go too much into the specifics because we haven't yet fully launched it. We said OTT will come out in 2015.

It's going to come from two different sources. One is, obviously, tagging. We have the capability to tag that content. And as such, we will have visibility. We will also be introducing an in-home solution that will provide us additional data regarding OTT and other forms of media content flowing through the home.

I'll provide a lot more specifics in the next call or two on that. But we feel very optimistic that we'll have a very unique offering.

As far as the guidance is concerned, I'll let Mel comment a bit on this. But at the high end of the range, there's probably some Google in it and Yahoo in it. It's just at this point, it's really hard to measure. But for sure, at the 17%-18% with a growth rate, there will be definitely some Yahoo/Google. I just can't tell you how much exactly right now.

But we're not just saying that if Google and Yahoo materialize, we're going to come in at over 18%. That's definitely not something we're saying at this point. If we are, we'll all be even in a better position.

Okay. Thank you.

Sure.

Todd Mitchell, Brean Capital.

Hello.

I didn't realize you work for us, Todd.

Always. Yes, a lot of my questions have been asked. I kind of want to go on to two questions.

One of the things you've been saying about, it seems like there's this quest for data sources between you and your competitor right now to sort of line up the world. And you talk about the data that you're getting from Yahoo and that you're getting from Google. You've also talked about the desire to invest in mobile panels internationally. Can you kind of flesh out something I don't understand, which is what is the difference between data you get through panels on mobile and data that's provided you through your partnerships in the form of what you refer to as demographic data?

Okay, sure. We do have a data quest to get as much data sources out there. Our strategy -- I'm not going to speak on behalf of Nielsen's strategy -- our strategy is very clear. We want to bring as many data sources as possible because at the end of the day, there's no one, perfect data source out there. Let's be very clear. There's always noise in every single data source out there.

Our feeling is, more the merrier, so that we can correlate and ensure that the quality at the individual level -- obviously, everything being anatomized and privacy friendly -- is clean, is better, and significantly better, when you add multiple data sources. That's our strategy. That's how we're going by it.

And as such, as you see with vCE at the beginning of the year, we started with Google. Then we went with Yahoo. Now with mobile, obviously mobile being key to our success in 2015 and beyond, Yahoo will be a very important strategic player for us in mobile as a data player. But then Pandora now provides us with a significant amount of data to increase our offering and improve the quality of our offering. Again, we are never going to rely on just one data source. We will use as many data sources as possible.

Back to your question on what's the difference between panel versus these relationships. First of all, the panel provides us clickstream information. It shows us exactly what everybody is doing. We let them surf in their natural environment.

Associated with that we get also their demographics. But it's a panel. As great as that panel is, it's still relatively small compared to what we are getting from these partnerships.

The partnerships are getting us hundreds of millions of demographic sources that we can then use and leverage in not just vCE, but across all of our products, especially with the Pandora relationship that we just announced. So it's somewhat apples and oranges, but it definitely improves the overall quality of the product.

I guess I just don't understand that last statement. How do they provide you -- if you're not capturing the whole thing like you do in a panel, how do you integrate this demographic data from these partnerships to give a sort of rating? And how do you avoid duplication?

Yes. I can go on. We will definitely take this offline. We can go on, on a big methodology document. We have that; that's publicly available on our website.

But at the end of the day, it is based on our census collection. Our census collection collects for every single -- it's a cookie-based, it's a tag-based approach. And we are able to match that data with these third-party providers all anonymously without ever knowing the identity of the individual down to the individual level.

But I hear you. Why don't we take it a bit off-line and go into a deep dive methodology, if you would like.

I'd appreciate that at some point.

Last question, and perhaps this is not an answerable one as well. If you look at the penetration of advertising that's getting tagged or measured by vCE and sources of demographic data which you are capturing, can you just roughly tell me -- you know, advertising that's getting tagged by vCE is 10%. We're now tagging and measuring 40% of the web. Do you have numbers which we can kind of get around so we can see ultimately what's the runway here?

You know, the last time we did that was at the end of last year before we announced the Google and Yahoo relationships. We mentioned on the call that we're probably penetrated in the low to mid-teens, as far as the big advertisers tagging with vCE. That being said, we also used to provide a comparison between vCE and our nearest competitor there.

That being said, it becomes somewhat of a moot point now that we've integrated with both Yahoo and Google because their shares, between the two of them, are north of 80% in both display and video. It becomes somewhat of a moot point because one of the things that we're -- and I'm sure you are struggling and so are we -- is the amount of -- how quickly the adoption rate is going to be. But assuming we can get to a ton of adoption with Google, then this will be a non issue as well because, like I said, their market share is north of 70% on display. And with YouTube being a very large player in this ecosystem, we feel very good about both of those partnerships.

So not something I can provide right now because we honestly don't know. But I think the last time we did it, it was in the low to mid-teens. It has probably increased since then because one of the things that I mentioned earlier was we have not seen any cannibalization associated with either one of those integrations with our regular core offering of vCE.

What I mean by that is a client is not coming to us and saying -- Hey, you have vCE. Now with Google, I'm going to only use the Google service; and I'm not going to use the comScore vCE resident service -- if that's how we call it. That's something that we have not yet seen. We hope that it continues. Obviously, if we start seeing it, we'll let everybody know.

Thank you.

Sure.

Sir, you have no further questions at this time.

(Operator Instructions)

Thank you for your participation today. Our third-quarter 2014 results reflect the momentum we have been building across our business. We continue to enhance the value proposition of our offerings and to enter into strategic partnerships with leaders in digital media. We remain focused on our key priorities, on the sharp execution of our strategy, and on delivering value to our shareholders.

We look forward to speaking with you again on the next conference call. Thank you.

Thank you.

Ladies and gentlemen, that concludes today's conference call. You may now disconnect. Thank you for joining and enjoy the rest of your day.