Neustar Reports Results for Fourth Quarter and Full-Year 2012

Neustar Reports Results for Fourth Quarter and Full-Year 2012

Expects 2013 Revenue to Grow 8% to 10%

STERLING, Va.--(BUSINESS WIRE)-- Neustar, Inc. (NYS: NSR) , a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, information services, financial services, retail, media and advertising sectors, today announced results for the quarter and year ended December 31, 2012 and provided guidance for 2013.

Summary of Fourth Quarter Results Compared to Fourth Quarter of 2011

• Revenue increased 23% to $214.2 million

• Income from continuing operations increased 102% to $37.8 million or $0.56 per share

• Adjusted net income increased 37% to $50.7 million, representing a margin of 24%

• Adjusted earnings per share increased 47% to $0.75

• Adjusted EBITDA was $101.3 million compared to $78.5 million

Summary of 2012 Results Compared to 2011

• Revenue increased 34% to $831.4 million

• Income from continuing operations increased 26% to $156.1 million or $2.30 per share

• Adjusted net income increased 30% to $206.4 million, representing a margin of 25%

• Adjusted earnings per share increased 43% to $3.04

• Adjusted EBITDA was $398.2 million compared to $298.7 million

"We successfully executed on our priorities in 2012. We exceeded our financial performance targets, we successfully integrated a major acquisition that furthered our transition into information and analytics, and we made strong progress in instilling a culture of ownership," said Lisa Hook, Neustar's president and chief executive officer. "We look forward to continuing to capitalize on the opportunities we see in the market and renewing the NPAC contract."

Paul Lalljie, Neustar's chief financial officer added, "Our 2012 operating results demonstrate strong execution across all of our business segments while integrating a significant acquisition. In addition, we repurchased nearly $100 million of our common stock and improved our financial flexibility through our recently executed credit facility and notes offering. Our guidance for 2013 reflects the momentum from 2012, operating leverage, and the impact of our new debt structure."

Business Outlook for 2013

• Revenue to range from $895 million to $915 million or growth of 8% to 10%

• Adjusted net income to range from $220 to $230 million or growth of 7% to 11%. This growth rate was influenced by discrete tax benefits totaling $6.8 million which resulted in higher adjusted net income in 2012. On a per share basis, adjusted net income is expected to range from $3.28 to $3.43

Discussion of Fourth Quarter and Full-Year 2012 Results

Fourth Quarter Revenue

Consolidated revenue totaled $214.2 million, a 23% increase from $174.2 million in the fourth quarter of 2011. In particular:

• Carrier Services revenue totaled $126.2 million, an 11% increase from $113.3 million in 2011. This increase was primarily due to an $11.2 million increase in NPAC Services revenue;

• Enterprise Services revenue totaled $45.2 million, a 14% increase from $39.7 million in 2011. This increase was due to higher revenue in both Internet Infrastructure Services and Registry Services; and

• Information Services generated revenue of $42.8 million in the fourth quarter as compared to revenue of $21.2 million from the November 8, 2011 acquisition date through the end of the year.

Full-Year Revenue

Consolidated revenue totaled $831.4 million, a 34% increase from $620.5 million in 2011. In particular:

• Carrier Services revenue totaled $502.1 million, a 12% increase from $447.9 million in 2011. This increase was primarily due to a $43.8 million increase in NPAC Services revenue;

• Enterprise Services revenue totaled $170.4 million, a 13% increase from $151.4 million in 2011. This increase was due to higher revenue in both Internet Infrastructure Services and Registry Services; and

• Information Services generated revenues of $158.9 million for 2012. Revenue from Information Services was $21.2 million from the November 8, 2011 acquisition date through the end of 2011.

Operating expense for the fourth quarter totaled $144.9 million, a 7% increase from $134.8 million in 2011. This $10.1 million increase was driven by incremental operating expense of $19.2 million from the acquisition of our Information Services segment. This increase of $19.2 million was partially offset by $9.6 million of acquisition costs incurred in the 2011 quarter.

Operating expense for 2012 totaled $554.7 million, an increase of 35% or $143.3 million from $411.4 million in 2011. This increase was driven by incremental operating costs of $130.4 million from the acquisitions completed in 2011. This increase of $130.4 million was partially offset by expenses incurred in 2011 driven by acquisition costs of $11.6 million. The remaining $24.5 million increase represents a growth of 6% in the Company's operating expense.

For 2012, adjusted net income totaled $206.4 million, including the impact of discrete tax benefits totaling $6.8 million, primarily associated with a domestic production activities deduction. Excluding the impact of these discrete tax benefits, our effective tax rate was approximately 38.6%.

Cash, cash equivalents and investments totaled $343.9 million as of December 31, 2012, an increase of $208.6 million from December 31, 2011.

As of December 31, 2012, the Company's outstanding debt under its 2011 credit facility was $592.5 million. On January 22, 2013, the Company refinanced this credit facility. In particular, the Company issued $300 million of 4.5% senior notes that mature in 2023. In addition, the Company completed a $525 million credit facility that includes a $325 million term loan A and a $200 million revolver. The interest rate for the term loan A and the revolver is leverage-based and ranges from LIBOR plus 1.50% to LIBOR plus 1.75%. At the Company's current leverage, the applicable interest rate is LIBOR plus 1.50%. The Company will record a non-operating expense of approximately $11.0 million in the first quarter of 2013 related to the modification and extinguishment of its 2011 credit facility.

Conference Call

As announced on January 23, 2013, Neustar will conduct an investor conference call to discuss the Company's results today at 4:30 p.m. (Eastern Time). Prior to the call, investors may access the conference call over the Internet via the Investor Relations tab of the Company's website (www.neustar.biz). Those listening via the Internet should go to the website 15 minutes early to register, download and install any necessary audio software.

The conference call is also accessible via telephone by dialing (877) 440-5791 (international callers dial (719) 325-2271) and entering PIN 5221477. For those who cannot listen to the live broadcast, a replay will be available through 11:59 p.m. (Eastern Time) Tuesday, February 12, 2013 by dialing (877) 870-5176 (international callers dial (858) 384-5517) and entering replay PIN 5221477, or by going to the Investor Relations tab of the Company's website (www.neustar.biz).

Neustar will take live questions from securities analysts and institutional portfolio managers; the complete call is open to all other interested parties on a listen-only basis.

This press release, the financial tables and other supplemental information, including a reconciliation of segment contribution to the nearest comparable GAAP measure and reconciliations of certain other non-GAAP measures to their nearest comparable GAAP measures that may be used periodically by management when discussing the Company's financial results with investors and analysts, are available on the Company's website under the Investor Relations tab.

About Neustar, Inc.

Neustar, Inc. (NYS: NSR) is a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, information services, financial services, retail, media and advertising sectors. Neustar applies its advanced, secure technologies in location, identification, and evaluation to help its customers promote and protect their businesses. More information is available at www.neustar.biz.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements about the Company's expectations, beliefs and business results in the future, such as guidance regarding its 2013 results. The Company has attempted, whenever possible, to identify these forward-looking statements using words such as "may," "will," "should," "projects," "estimates," "expects," "plans," "intends," "anticipates," "believes" and variations of these words and similar expressions. Similarly, statements herein that describe the Company's business strategy, prospects, opportunities, outlooks, objectives, plans, intentions or goals are also forward-looking statements. The Company cannot assure you that its expectations will be achieved or that any deviations will not be material. Forward-looking statements are subject to many assumptions, risks and uncertainties that may cause future results to differ materially from those anticipated. These potential risks and uncertainties include, among others, general economic conditions in the regions and industries in which the Company operates; the uncertainty offuture revenue and profitability and potential fluctuations in quarterly operating results due to such factors as disruptions to the Company's operations, modifications to or terminations of its material contracts, the financial covenants in the Company's secured credit facility and their impact on the Company's financial and business operations; the Company's indebtedness and the impact that it may have on the Company's financial and operating activities and the Company's ability to incur additional debt; the variable interest rates borne by the Company's indebtedness and the effects of changes in those rates; its ability to successfully identify and complete acquisitions, integrate and support the operations of businesses the Company acquires, increasing competition, market acceptance of its existing services, its ability to successfully develop and market new services, the uncertainty of whether new services will achieve market acceptance or result in any revenue, and business, regulatory and statutory changes in the communications industry. More information about potential factors that could affect the Company's business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, the Company's most recent Annual Report on Form 10-K and subsequent periodic and current reports. All forward-looking statements are based on information available to the Company on the date of this press release, and the Company undertakes no obligation to update any of the forward-looking statements after the date of this press release.