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Nielsen (NLSN) Q4 Earnings Fall Y/Y, Revenues Top Estimates
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Nielsen Holdings plc reported fourth-quarter 2016 diluted net earnings of 44 cents per share, down 36.7% year over year.
Over the last one year, shares of Nielsen have underperformed the Zacks characterized Business Information Services industry. The stock has registered a loss of 6.80% compared with the industry’s gain of 20.29%.
Revenues
Reported revenues came in at $1.66 billion, up 2.2% year over year on the back of solid performance by the company’s Buy and Watch businesses. However, revenues were slightly above the Zacks Consensus Estimate of $1.646 billion.
On a constant currency basis, revenues increased 3.4%.
Revenues by Segment
Buy business revenues were $868 million (52% of total revenue), down 1.3% year over year but up 0.9% on a constant currency basis. Excluding the foreign currency impact, revenues in the Developed market were down 1.4% due to softness in the discretionary services, especially in the U.S. market. However, revenues from emerging markets were up 7.2% on a constant currency basis.
Watch business revenues were $788 million (48%), up 5.8% year over year or 6.2% on a constant currency basis. The increase came on the back of continued strength in Audience Measurement and Marketing Effectiveness, which improved 9.0% and 9.2%, respectively, on a constant currency basis.
Operating Results
Reported gross margin was 59.5%, down 20 basis points (bps) from the year-ago period.
Nielsen’s operating expenses, namely selling, general and administrative expenses of $460 million, decreased 9.2% from the year-ago figure of $510 million. Operating margin decreased 1,090 bps year over year to 15.8%.
Net Income
On a GAAP basis, Nielsen recorded net profit of $159 million or 44 cents per share compared with $251 million or 68 cents in the year-ago quarter.
Balance Sheet & Cash Flow
Nielsen exited the quarter with a cash balance of approximately $754 million compared with $446 million last quarter.
Net debt (gross debt excluding cash and cash equivalents) was $7.172 billion and net debt leverage ratio was 3.70x at the end of the quarter.
Cash flow from operations was $543 million in the fourth quarter versus $456 million in the prior quarter and $401 million in the year-ago quarter. Free cash flow was $476 million in the fourth quarter versus $353 million in the prior quarter and $306 million in the year-ago quarter.
Outlook
For full-year 2017, management expects total revenue growth on a constant currency basis in the range of 5.0% to 6.0%, adjusted EBITDA margin to be flat and adjusted net income per share in the range of $1.40 to $1.46. Also, free cash flow is expected to be approximately $900 million.
Our Take
Nielsen Holdings is an information and measurement company which offers media and marketing information on what consumers watch and buy both locally.
Continued dividend payment and share repurchase reflect Nielsen’s financial strength and commitment to return value to its shareholders. Also, the company's product launches are progressing well and should drive revenues in the near term.
However, continued investments in technology and infrastructure could weigh on margins and profitability, going forward.
Texas Instruments delivered a positive earnings surprise of 7.09%, on average, in the trailing four quarters.
FactSet Research Systems Inc. delivered a positive earnings surprise of 1.89%, on average, in the trailing four quarters.
NVIDIA Corporation delivered a positive earnings surprise of 24.93%, on average, in the trailing four quarters.
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Nielsen (NLSN) Q4 Earnings Fall Y/Y, Revenues Top Estimates
Nielsen Holdings plc reported fourth-quarter 2016 diluted net earnings of 44 cents per share, down 36.7% year over year.
Over the last one year, shares of Nielsen have underperformed the Zacks characterized Business Information Services industry. The stock has registered a loss of 6.80% compared with the industry’s gain of 20.29%.
Revenues
Reported revenues came in at $1.66 billion, up 2.2% year over year on the back of solid performance by the company’s Buy and Watch businesses. However, revenues were slightly above the Zacks Consensus Estimate of $1.646 billion.
On a constant currency basis, revenues increased 3.4%.
Revenues by Segment
Buy business revenues were $868 million (52% of total revenue), down 1.3% year over year but up 0.9% on a constant currency basis. Excluding the foreign currency impact, revenues in the Developed market were down 1.4% due to softness in the discretionary services, especially in the U.S. market. However, revenues from emerging markets were up 7.2% on a constant currency basis.
Watch business revenues were $788 million (48%), up 5.8% year over year or 6.2% on a constant currency basis. The increase came on the back of continued strength in Audience Measurement and Marketing Effectiveness, which improved 9.0% and 9.2%, respectively, on a constant currency basis.
Operating Results
Reported gross margin was 59.5%, down 20 basis points (bps) from the year-ago period.
Nielsen’s operating expenses, namely selling, general and administrative expenses of $460 million, decreased 9.2% from the year-ago figure of $510 million. Operating margin decreased 1,090 bps year over year to 15.8%.
Net Income
On a GAAP basis, Nielsen recorded net profit of $159 million or 44 cents per share compared with $251 million or 68 cents in the year-ago quarter.
Balance Sheet & Cash Flow
Nielsen exited the quarter with a cash balance of approximately $754 million compared with $446 million last quarter.
Net debt (gross debt excluding cash and cash equivalents) was $7.172 billion and net debt leverage ratio was 3.70x at the end of the quarter.
Cash flow from operations was $543 million in the fourth quarter versus $456 million in the prior quarter and $401 million in the year-ago quarter. Free cash flow was $476 million in the fourth quarter versus $353 million in the prior quarter and $306 million in the year-ago quarter.
Outlook
For full-year 2017, management expects total revenue growth on a constant currency basis in the range of 5.0% to 6.0%, adjusted EBITDA margin to be flat and adjusted net income per share in the range of $1.40 to $1.46. Also, free cash flow is expected to be approximately $900 million.
Our Take
Nielsen Holdings is an information and measurement company which offers media and marketing information on what consumers watch and buy both locally.
Continued dividend payment and share repurchase reflect Nielsen’s financial strength and commitment to return value to its shareholders. Also, the company's product launches are progressing well and should drive revenues in the near term.
However, continued investments in technology and infrastructure could weigh on margins and profitability, going forward.
Nielsen N.V. Price, Consensus and EPS Surprise
Nielsen N.V. Price, Consensus and EPS Surprise | Nielsen N.V. Quote
Currently, Nielsen carries a Zacks Rank #4 (Sell). Stocks worth considering in the industry include Texas Instruments (TXN - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and FactSet Research Systems (FDS - Free Report) and NVIDIA Corporation (NVDA - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Texas Instruments delivered a positive earnings surprise of 7.09%, on average, in the trailing four quarters.
FactSet Research Systems Inc. delivered a positive earnings surprise of 1.89%, on average, in the trailing four quarters.
NVIDIA Corporation delivered a positive earnings surprise of 24.93%, on average, in the trailing four quarters.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>