Finance

ComScore Shares Rise on Revenue Restatement

Stock up 7% as measurement company says review continues 9/16/2016 1:12 PM Eastern

ComScore stock rose 7% ($2.12) each to $32.20 per share in afternoon trading Friday after the measurement company said it will restate its revenue for the past three years after a months-long accounting review.

 

ComScore first revealed the review back in March, adding that it had been made aware of certain accounting practices in the month prior that warranted a closer look. In August comScore founder and executive vice chairman Serge Matta gave up the CEO role to company co-founder Gian Fulgoni.  On Sept. 12, Matta said he will resign from the company entirely as of Oct. 10.

 

In a conference call with analysts Friday morning, Fulgoni said he is “very much committed to ensuring that we get the company back on the right track and I think we can do that.”

 

ComScore shares fell hard ever since it revealed potential accounting issues in March – its stock fell 30% a that time and another 30% in June when it said the investigation would take longer than expected. But the shares have managed to regain some of that ground over the past few months.

 

In a filing with the Securities and Exchange Commission comScore said 2015 revenue will be restated to $339.9 million (about 8% lower than originally reported) and its loss from operations for that year is now $10.8 million, about four times larger than previously stated. In addition, comScore restated revenue for 2013 -- $312.9 million instead of $329.2 million; and for 2014 -- $283.6 million instead of $286.9 million. The discrepancies mainly involved non-monetary transactions.

 

ComScore had been in the habit of reporting barter transactions – like exchanging data with other companies – as revenue, which was pointed out in a Wall Street Journal article last year.

 

In the filing comScore said as a result of the investigation to date, “cannot support the prior accounting for the nonmonetary transactions.” The company said as the investigation concludes, it “also will be undertaking a significant effort to help ensure that the errors in judgment and internal control deficiencies did not impact other transactions that were not part of the investigation. Therefore, there may be additional accounting adjustments as a result of these efforts and such adjustments may be material.”

 

In a note to clients Friday, Telsey Advisory Group media analyst Tom Eagan said the SEC filing could mean “we could be closer to scraping the bottom of the barrel of bad news,” but added other questions regarding whether the company’s 2013-2015 statements will have to be re-audited or if Rentrak shareholders will sue. ComScore completed its purchase of Rentrak in an all-stock deal worth about $779 million in January.

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