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Nielsen's (NLSN) Q1 Earnings and Revenues Miss Estimates
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Nielsen Holdings plc reported first-quarter 2020 adjusted net earnings of 29 cents per share, which missed the Zacks Consensus Estimate by a penny. Further, the bottom line was down 17.1% from the year-ago quarter.
Total revenues came in at $1.56 billion, which declined 0.3% year over year. Further, the top line missed the Zacks Consensus Estimate of $1.58 billion.
However, the figure improved 1.5% on a constant-currency basis.
As part of the ongoing strategic review plan, the company had made the announcement in November 2019 that it will separate into two independent publicly-traded companies — the Global Media business and the Global Connect business.
The company expects to close the spin-off transaction in early 2021 due to temporary shutdown of government agencies that are necessary to move forward with the separation.
Segments Details
Nielsen Global Media: The company generated revenues of $842 million (accounting for 54% of total revenues) from this segment, reflecting an improvement of 1.9% from the year-ago level or 2.6% on a constant-currency basis.
Nielsen Global Connect: The company generated revenues of $717 million (46% of total revenues), reflecting a decline of 2.7% from the year-ago period. However, the figure increased 0.3% on a constant-currency basis.
Operating Results
Adjusted EBITDA was $395 million in the first quarter, down 4.8% from the prior-year level. Adjusted EBITDA margin contracted 121 basis points (bps) to 25.3%. The decrease reflected increased investments in Media and weakness in Global Connect due to the COVID-19 pandemic.
Nielsen’s selling, general and administrative expenses were $515 million, increasing 7.3% from the year-ago figure. As a percentage of revenues, the figure expanded 230 bps year over year to 33%.
Operating income was $98 million against operating loss of $174 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2020, cash and cash equivalent balance was $359 million, down from $454 million on Dec 31, 2019.
At the end of the first quarter, gross debt was $8.41 billion compared with $8.31 billion at the end of the prior quarter. Net debt (gross debt excluding cash and cash equivalents) was $8 billion and net debt leverage ratio was 4.39 at the end of the reported quarter.
Cash flow from operations was ($5) million versus $470 million in the previous quarter. Further, capex totaled $112 million and free cash flow amounted to ($117) million in the first quarter.
2020 Guidance
The company has updated its 2020 guidance to reflect the uncertainties associated with COVID-19 and greater FX headwinds.
The company now expects 2020 revenues to decline 1-4% (versus the previous expectation of 1.5-3.0% growth) on a constant-currency basis.
Further, adjusted earnings are expected between $1.43 and $1.58 per share versus prior expectation of $1.67-$1.80.
Adjusted EBITDA is anticipated in the range of $1.790-$1.860 million versus $1.83-$1.91 billion projected earlier. Adjusted EBTDA margin is expected between 28.5% and 29.5% versus earlier expectation of 27.7-28.5%.
Additionally, Nielsen expects free cash flow in the range of $460-$530 million versus prior projection of $530-$580 million.
Long-term earnings growth for Akamai, Inuvo, and Shopify is currently projected at 12.3%, 30% and 25.8%, respectively.
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Nielsen's (NLSN) Q1 Earnings and Revenues Miss Estimates
Nielsen Holdings plc reported first-quarter 2020 adjusted net earnings of 29 cents per share, which missed the Zacks Consensus Estimate by a penny. Further, the bottom line was down 17.1% from the year-ago quarter.
Total revenues came in at $1.56 billion, which declined 0.3% year over year. Further, the top line missed the Zacks Consensus Estimate of $1.58 billion.
However, the figure improved 1.5% on a constant-currency basis.
As part of the ongoing strategic review plan, the company had made the announcement in November 2019 that it will separate into two independent publicly-traded companies — the Global Media business and the Global Connect business.
The company expects to close the spin-off transaction in early 2021 due to temporary shutdown of government agencies that are necessary to move forward with the separation.
Segments Details
Nielsen Global Media: The company generated revenues of $842 million (accounting for 54% of total revenues) from this segment, reflecting an improvement of 1.9% from the year-ago level or 2.6% on a constant-currency basis.
Nielsen Global Connect: The company generated revenues of $717 million (46% of total revenues), reflecting a decline of 2.7% from the year-ago period. However, the figure increased 0.3% on a constant-currency basis.
Operating Results
Adjusted EBITDA was $395 million in the first quarter, down 4.8% from the prior-year level. Adjusted EBITDA margin contracted 121 basis points (bps) to 25.3%. The decrease reflected increased investments in Media and weakness in Global Connect due to the COVID-19 pandemic.
Nielsen’s selling, general and administrative expenses were $515 million, increasing 7.3% from the year-ago figure. As a percentage of revenues, the figure expanded 230 bps year over year to 33%.
Operating income was $98 million against operating loss of $174 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2020, cash and cash equivalent balance was $359 million, down from $454 million on Dec 31, 2019.
At the end of the first quarter, gross debt was $8.41 billion compared with $8.31 billion at the end of the prior quarter. Net debt (gross debt excluding cash and cash equivalents) was $8 billion and net debt leverage ratio was 4.39 at the end of the reported quarter.
Cash flow from operations was ($5) million versus $470 million in the previous quarter. Further, capex totaled $112 million and free cash flow amounted to ($117) million in the first quarter.
2020 Guidance
The company has updated its 2020 guidance to reflect the uncertainties associated with COVID-19 and greater FX headwinds.
The company now expects 2020 revenues to decline 1-4% (versus the previous expectation of 1.5-3.0% growth) on a constant-currency basis.
Further, adjusted earnings are expected between $1.43 and $1.58 per share versus prior expectation of $1.67-$1.80.
Adjusted EBITDA is anticipated in the range of $1.790-$1.860 million versus $1.83-$1.91 billion projected earlier. Adjusted EBTDA margin is expected between 28.5% and 29.5% versus earlier expectation of 27.7-28.5%.
Additionally, Nielsen expects free cash flow in the range of $460-$530 million versus prior projection of $530-$580 million.
Zacks Rank & Key Picks
Nielsen currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Akamai Technologies, Inc. (AKAM - Free Report) , Inuvo, Inc. (INUV - Free Report) and Shopify Inc. (SHOP - 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 Akamai, Inuvo, and Shopify is currently projected at 12.3%, 30% and 25.8%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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