Nielsen (NLSN) Q1 Earnings Beat Estimates, Revenues Rise Y/Y

Nielsen NLSN has reported first-quarter 2022 adjusted earnings of 45 cents per share, which beat the Zacks Consensus Estimate by 7.1%.

However, the figure declined 4.3% year over year.

Total revenues were $877 million, which increased 1.6% on a reported basis and 2.5% on a constant-currency basis from the year-ago quarter. Further, it rose 3.4% from the year-ago quarter on an organic constant-currency basis. Also, the figure surpassed the consensus mark of $875.9 million.

Year-over-year revenue growth was driven by solid momentum across the company’s Measurement Solutions.

At the end of the first quarter, Nielsen signed an agreement for its acquisition by a consortium of private equity firms, including Evergreen Coast Capital Corporation, an affiliate of Elliott Investment Management, Brookfield Business Partners and other institutional partners. The consortium has offered Nielsen $28 per share for the acquisition, giving Nielsen an enterprise value of $16 billion. The buyout is expected to be completed later this year, following approvals from shareholders, regulators and the U.K. court.

Top-Line Detail

In the first quarter, Measurement Solutions’ revenues rose 2.1% year over year to $645 million (72.4% of total revenues). This was primarily attributed to the strength across national and digital measurement products in both United States and international markets. Also, solid momentum across local products contributed well.

Impact/Content revenues increased 0.4% year over year to $232 million (27.6% of the total revenues). Improving Sports business in Impact and robust growing short-cycle revenues contributed well. However, a timing-related decline in Content was concerning.

Nielsen Holdings Plc Price, Consensus and EPS Surprise

Nielsen Holdings Plc Price, Consensus and EPS Surprise

Nielsen Holdings Plc price-consensus-eps-surprise-chart | Nielsen Holdings Plc Quote

Operating Details

Adjusted EBITDA decreased 4.1% year over year to $372 million. The adjusted EBITDA margin contracted 254 basis points (bps) to 39.3% in the reported quarter.

Nielsen’s selling, general and administrative expenses were $224 million, increasing 8.7% year over year. As a percentage of revenues, the figure expanded 160 bps to 25.5%

The operating income was $197 million, which fell 22.1% year over year. As a percentage of revenues, the figure contracted 680 bps year over year to 22.5%.

Balance Sheet & Cash Flow

As of Mar 31, 2022, the cash and cash equivalent balance was $482 million, up from $380 million as of Dec 30, 2021.

At the end of the reported quarter, gross debt and net debt (gross debt minus cash and cash equivalents) were $5.6 billion and $5.1 billion, respectively. Notably, gross debt and net debt were $5.6 billion and $5.2 billion at the end of the previous quarter, respectively.

The company generated $219 million of cash from operations compared with $227 million in the previous quarter.

Its free cash flow was $137 million in the first quarter.

2022 Guidance

For 2022, the company expects revenue growth of 3.5-4.5% on a constant-currency basis. Organic revenue growth is anticipated between 4% and 5%. The Zacks Consensus Estimate for 2022 revenues is pegged at $3.6 billion.

The company expects adjusted earnings between $1.81 and $1.91 per share. The consensus mark for the same is pegged at $1.88.

The adjusted EBITDA margin is expected to be 42.6-42.9%.

Free cash flow is expected between $650 million and $700 million.

Zacks Rank & Other Stocks to Consider

Currently, Nielsen sports a Zacks Rank #1 (Strong Buy).

Investors interested in the broader technology sector can consider other top-ranked stocks like Jabil JBL, Jack Henry & Associates JKHY and Broadcom AVGO. While Jabil currently sports a Zacks Rank #1 (Strong Buy), Broadcom and Jack Henry & Associates carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Jabil has gained 4.3% over a year. The long-term earnings growth rate for JBL is currently projected at 12%.

Jack Henry & Associates has gained 18.4% over a year. The long-term earnings growth rate for JKHY is currently projected at 17%.

Broadcom has gained 22% over a year. The long-term earnings growth rate for AVGO is currently projected at 14.5%.

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