IP protocols/software

NeuStar Expands in Q2

In its first earnings report as a public company, the number portability company NeuStar Inc. (NYSE: NSR) boosted revenues and beat analysts' profit expectations even though increased operating expenses cut into the bottom line.

The Sterling, Va., company reported earnings of $11.7 million, or 18 cents per diluted share, on revenues of $62.3 million, compared with earnings of $16.2 million, or 23 cents per diluted share, on revenues of $39.6 million in the year-earlier period.

In early trading Wednesday morning, NeuStar shares rose $1.33 (4.88%) to $28.56 on the news.

NeuStar says its revenue growth was driven mainly by an increase in telephone number portability transactions, the company’s core business (see Telecom's New Star).

NeuStar ports numbers between wireless and wireline service providers, including VOIP services. The company also administers several mammoth databases that allow service providers to route calls and exchange phone numbers (see NeuStar Speeds VOIP Service Activation). NeuStar says it will hit 100 million transactions by the end of this month.

The company attributed expansion costs to smaller profit numbers, as second-quarter operating expenses hit the company's bottom line. NeuStar says its operating expenses rose 40 percent year-over-year to $39.3 million, due to “personnel costs” and “business expansion,” as well as costs related to its recent IPO (see Neustar Launches IP Clearinghouse).

Still, the company beat analysts' expectations; the Street had NeuStar earning 17 cents a share on revenues of $56.6 million, according to Reuters Research.

NeuStar IPO’d on June 29, and its stock has been trading at around 20 percent higher than its offering price ever since. The IPO reaped $605 million in capital (see NeuStar Twinkles on Wall Street).

NeuStar expects to earn between $49 million and $52 million for full-year 2005, or between 63 and 67 cents per diluted share. The company expects its revenue to reach between $225 million and $235 million for full-year 2005, an increase of more than 36 percent over 2004 revenues.

Reuters analysts expect full-year 2005 earnings of 67 cents per share on revenues of $232 million.

NeuStar had $81.2 million in cash, cash equivalents, and short-term investments at the end of June. The company’s headcount rose from 367 to 483 during the past year, NeuStar officials say.

— Mark Sullivan, Reporter, Light Reading

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