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Nielsen (NLSN) Earnings & Revenues Beat Estimates in Q2

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Nielsen Holdings plc (NLSN - Free Report) reported second-quarter 2019 adjusted net earnings of 53 cents per share, beating the Zacks Consensus Estimate of 41 cents. Also, the figure was up 12.8% from the year-ago quarter.

The increase in earnings was driven by higher operating profit and a lower effective tax rate.

Total revenues came in at $1.628 billion, decreasing 1.2% year over year. However, the reported revenues increased 1.2% on a constant-currency basis and marginally surpassed the Zacks Consensus Estimate of $1.621 billion.

Top-Line Details

Global Media revenues during the second quarter were $856 million (accounting for 53% of its total revenues), reflecting an increase of 1.1% from the year-ago level or 2% on a constant-currency basis. Audience Measurement revenues increased 3.5% from the prior-year quarter, driven by continued client adoption of its Total Audience Measurement system, partly offset by pressure in local television measurement.

However, Plan/Optimize revenues decreased 4.9% year over year or 3.3% on a constant-currency basis, owing to weakness in Telecom.

Global Connect revenues during the quarter were $772 million (47% of total revenues), reflecting a decrease of 3.5% from the year-ago period but an increase of 0.4% on a constant-currency basis.

Revenues in Measure decreased 2.5% year over year. Excluding foreign currency impact, revenues increased 1.7% from the prior-year quarter, reflecting strong retail measurement services and improved trends in emerging markets. However, Predict/Activate revenues decreased 5.8% from the year-ago quarter or 2.6% on a constant-currency basis. The decrease was due to continued softness in areas such as custom analytics.

Nielsen Holdings Plc Price, Consensus and EPS Surprise

 

Operating Results

Gross margin was 57.1%, down 50 basis points (bps) from the year-ago period.

Nielsen’s operating expenses, namely selling, general and administrative, were $483 million, decreasing 2.2% from the year-ago figure.

Adjusted EBITDA was $470 million in the second quarter, increasing 0.4% from the prior-year level. Also, adjusted EBITDA margin expanded 45 bps to 28.9% as productivity initiatives were offset by investments in growth initiatives.

Balance Sheet & Cash Flow

Nielsen exited the quarter with a cash balance of approximately $393 million compared with $530 million in the first quarter.

Net debt (gross debt excluding cash and cash equivalents) was $8.25 billion, and net debt leverage ratio was 4.48 at the end of the quarter.

Cash flow from operations was $226 million, capex totaled $108 million and free cash flow amounted to $118 million in the second quarter.

Guidance

Management reiterated its full-year 2019guidance for revenues but increased the same for adjusted earnings per share. It expects total revenues to be approximately $6.4 billion on a constant-currency basis. Adjusted earnings per share are now expected in the range of $1.70-1.80 versus $1.63-1.77 projected earlier.

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

Zacks Rank and Stocks to Consider

Currently, Nielsen carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Alibaba Group Holding Limited (BABA - Free Report) , Teradyne, Inc. (TER - Free Report) and eBay Inc. (EBAY - Free Report) , 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 Alibaba, Teradyne and eBay is currently projected at 26.8%, 11.4% and 9.4%, respectively.

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