A powerful rally seems to be brewing up in COMSCORE, Inc. (OTCMKTS:SCOR). This comes after the company provided a clear and insightful update on what it has done and plans to do to move forward to a more prosperous future.
For months, SCOR scored little to impress its shareholder base, but the situation is beginning to change for the better and the market is taking notice. In this piece, we try to decode SCOR’s future by dissecting its recent updates. Before we get into the details, take a look at the company’s share price action.
For those readers coming across SCOR for the first time, here’s a little background on the company.
SCOR has been around for quite a while. The company was founded in 1999 and it is based on Reston, Virginia, United States.
SCOR is a media measurement and analytics company. Its clients include media and advertising agencies and publishers. Publishers use SCOR analytics to understand the composition of their audiences, while marketers use SCOR analytics to understand the performance and effectiveness of their advertising campaigns.
SCOR provides media measurements across multiple device platforms, including smartphones, desktop computers and television. As such, a social media analytic is also within its purview. According to a study report by Research and Markets, the global social media analytics market size will swell to $9.5 billion by 2020, up from an estimated $2.7 billion this year.
Before we get into analyzing the recent developments around SCOR, it’s important to first have some background of the situation.
SCOR has been in a chaotic situation – if that means dealing with overdue financial filings. SCOR’s woes even led to its stock being delisted from the Nasdaq in May this year. The stock plunged as a result.
However, a reading of SCOR’s press releases and securities filings in the recent months reveals that the company is steadily putting its troubles behind it.
On September 11, for instance, SCOR provided a detailed update on the significant actions it is taking to move forward – to a more peaceful and prosperous future. The update highlighted retooling of SCOR’s board of directors, revision and restatement of past financial statements and settlement of litigations.
Board of directors refresh: SCOR made sweeping changes to its board of directors. It axed out seven board seats to leave the board lean with just five members. For a company like SCOR that is trying to turn around its fortunes, a simple, lean and sharply focused board is crucial to guide the management on speedy execution on the turnaround plan.
SCOR shrank its board of directors on the recommendation of a special committee that it created as part of its turnaround efforts. The special committee, which is composed of two independent directors, namely Jacques Kerrest and Sue Riley, remains fully at work.
Although the special committee is primarily focused on near-term issues, its scope is wide. For example, it intends to undertake financial, operating and strategic review of SCOR’s long-term opportunities so as to maximize shareholder value.
It’s important to note that a number of prominent firms are working with SCOR in its turnaround journey. Goldman Sachs Group Inc (GS) is the company’s financial advisor; Jones Day is the company’s legal advisor; and King & Spalding is the legal advisor to the special committee.
In addition to the board shakeup, SCOR also tapped CrossCountry Consulting cofounder and managing partner David Kay as its CFO. Kay replaced David Chemerow, who decided to pursue other opportunities outside SCOR.
Revisions of financial statements: SCOR is working to get current on overdue financial filings. The company needs to revise and restate financial statements for periods going back to 2013. It is doing this because internal investigation revealed accounting problems for 2013, 2014 and 2015.
As SCOR is taking care not to carry problems into the financial statements it is revising, and considering that it is also working on its securities filings for 2016 and 2017, the financial revisions work is taking time. However, SCOR expects to be current with its filings by March 2018.
Settlement of litigations: SCOR has reached settlements in several legal proceeds and the only thing pending is court approval. One of the proposed settlements is for a class-action lawsuit filed by shareholders against the company and its current and former directors. SCOR agreed to settle the suit by releasing $110 million to the shareholders. The settlement amount comprises $27.2 million in cash and $82.8 million SCOR shares.
Gian Fulgoni, the CEO of SCOR, expects the settlements to free the company in a number of ways. Here’s what he said:
“We believe this proposed settlement eliminates the burden of further time, expense and risk related to the class action, allowing the comScore team to focus on the restatement and executing on our operational initiatives for growth.”
To sum up, the cloud is clearing up over SCOR and visibility is improving for both the management that is guiding the company forward and investors who are looking to pick up gains in SCOR’s turnaround story.
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Disclosure: We have no position in SCOR and have not been compensated for this article.