Nielsen (NLSN) Earnings & Revenues Beat Estimates In Q1

Nielsen Holdings plc (NYSE:NLSN) reported first-quarter 2019 adjusted net earnings of 35 cents per share, beating the Zacks Consensus Estimate of 31 cents. However, the figure was down 12.5% from the year-ago quarter.

Moreover, total revenues came in at $1.563 billion, decreasing 2.9% year over year. However, the reported revenues increased 0.4% on a constant-currency basis and marginally surpassed the Zacks Consensus Estimate of $1.561 billion.

Operating Results

Global Media revenues during the first quarter were $826 million (accounting for 53% of its total revenues), reflecting an increase of 0.2% from the year-ago level or 1.3% on a constant-currency basis. Also, Audience Measurement revenues increased 1.5% from the prior-year quarter, driven by continued client adoption of Total Audience Measurement system, partly offset by pressure in local television measurement. However, Plan/Optimize revenues decreased 3.1% year over year or 0.9% on a constant-currency basis. Excluding the impact of acquisitions and one-time items, Plan/Optimize revenues were flat on a constant-currency basis.

Global Connect revenues during the quarter were $737 million (47% of the total revenues), reflecting a decrease of 6.2% from the year-ago period or 0.7% on a constant-currency basis. Revenues in Measure decreased 4.3% year over year. Excluding foreign currency impact, revenues increased 1.7%, reflecting strong retail measurement services and improved trends in the United States. However, Predict/Activate revenues decreased 11.2% from the year-ago quarter or 6.6% on a constant-currency basis. The decrease was due to continued softness in areas such as custom analytics.

Gross margin was 55.5%, down 20 basis points (bps) from the year-ago period.

Nielsen’s operating expenses, namely selling, general and administrative, were $480 million, decreasing 2.6% from the year-ago figure.

Adjusted EBITDA was $415 million in the first quarter, decreasing 1.9% from the prior-year level. However, adjusted EBITDA margin expanded 28 bps to 26.6% as productivity initiatives were offset by product mix and investments in growth initiatives.

Balance Sheet & Cash Flow

Nielsen exited the quarter with a cash balance of approximately $530 million compared with $524 million in the last reported quarter.

Net debt (gross debt excluding cash and cash equivalents) was $8.23 billion, and net debt leverage ratio was 4.47 at the end of the quarter.

Cash flow from operations was ($43) million, capex totaled $122 million and free cash flow amounted to ($165) million in the first quarter.

Guidance

Management reiterated its guidance for full-year 2019. It expects total revenues to be approximately $6.4 billion on a constant-currency basis.Adjusted earnings per share are expected to remain in the range of $1.63-$1.77.

The company also expects free cash flow in the range of $525-$575 million.

Zacks Rank and Stocks to Consider

Currently, Nielsen carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the broader technology sector include Facebook, Inc. (NASDAQ:FB) , Shopify Inc. (NYSE:SHOP) and Square (NYSE:SQ) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Facebook, Shopify and Square is currently projected at 18.2%, 23.7% and 25%, respectively.

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