Nielsen Soars on Strong Quarter

Shares Rise Nearly 6% as Revenue, Cash Flow Grow
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Nielsen shares rose nearly 6% ($2.59 each) to $47.39 per share on Tuesday after the ratings giant reported yet another strong quarter, with revenue up 4.8% on a constant currency basis.

Revenue for the period was $1.56 billion, fueled by gains in its Watch and Buy segments. According to the company, revenue at the Watch segment – which provides media and advertising clients with Total Audience measurement services across all devices where video, audio and text is consumed – was up 4.7% on a constant currency basis, due to continued strength at its Audience Measurement and Marketing Effectiveness units. At the Buy segment, which offers consumer packaged goods manufacturers and retailers a global view of retail performance measurement - revenue rose 4.8% on a constant currency basis.

Adjusted EBITDA for the second quarter increased 1.7% to $468 million, or 7.3% on a constant currency basis compared to the second quarter of 2014. As a percentage of revenues, adjusted EBITDA grew 116 basis points, or 72 basis points on a constant currency basis, due to the accretive impact of our investments in coverage and analytics capabilities and the benefit of our ongoing productivity initiatives.

“We have strong momentum around Total Audience Measurement with Digital Content Ratings progressing well towards its fall launch,” said CEO Mitch Barns in a statement. “And by year end, Digital Ad Ratings will be available in 16 markets, covering 95% of global digital advertising spending. We are also pleased with the ongoing integration of eXelate and are increasingly excited about its abilities to serve as the platform by which we can help clients improve the precision of marketing decisions.”

The news helped drive up Nielsen shares – they closed at $47.18 each, up 5.3% or $2.38 per share on July 28. With today’s gains, the stock is up about 5.9% since the beginning of the year.

The quarter performance was typical for Nielsen – Sanford Bernstein media analyst Todd Juenger said in a reasearch note that "revenue and earnings continue to grow with an annuity-like consistency that keeps compounding over time" – and analysts were hopeful that it could lead to a boost in the stock. In his note, Juenger wrote that he anticipates two potential catalysts for the stock in the not-too-distant future: big media companies using Nielsen data to prove viewership on new platforms,“as opposed to blaming Nielsen for not reporting those audiences;” and the ultimate adoption of a new currency to replace C3, which will better reflect new platforms and time shifting practices, “which we strongly believe will be provided by Nielsen.”

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