comScore has adjusted its earnings reports for the past three years following an investigation into accounting practices at the firm that erroneously gave the company credit for revenue in some non-monetary transactions.
As a result, the company’s 2015 revenue was $339.9 million, 8% lower than previously reported, and its loss from operations was $10.8 million, about four times larger than previously reported.
Related: CEO Vows To Get comScore Back On Track
The investigation was disclosed by comScore in June. Since then CEO Serge Matta and other executives have left the company.
In an 8K SEC filing late Thursday, the company said the investigation is now substantially complete.
“The Audit Committee identified areas of concern in the matters reviewed, including certain activities that reflect errors in judgment with respect to certain accounting practices and resulting disclosures as well as deficiencies in the Company’s internal control system,” the filing said. "The transactions under review in the investigation principally relate to nonmonetary transactions. Management with input from accounting consultants has been analyzing these transactions, and as discussed below, management has concluded that these transactions have been recorded in error.”
The company said it will be making “a significant effort to help ensure that the errors in judgment and internal control deficiencies did not impact other transactions that were not part of the investigation” but noted there might be future adjustments to earnings and those adjustments could be material.
“As previously disclosed, the Company does not expect in the future to enter into any nonmonetary transactions that would result in the recognition of revenue," according to the filing.
The investigation prevented comScore from filing its annual report and other financial reports on time, resulting in the possibility it could be delisted from NASDAQ.
Analyst Tom Eagan of the Telsey Advisory Group said that comScore has said non-monetary transactions were not included in guidance provide for 2016.
“With this 8K, we could be closer to scraping the bottom of the barrel of bad news,” Eagan said.
But he noted there could be other liabilities for comScore including a new audit for 2013 through 2015, shareholders of Rentrak—which was acquired by comScore—could sue comScore, and the disclosures could affect bonuses paid to executives that wouldn’t have earned them without including the non-monetary transactions.
“We continue to believe that the cross-platform services that comScore provides have tremendous value to the digital and TV advertising ecosystem. It doesn't appear that comScore has lost many clients, but comScore has undoubtedly lost ground to Nielsen in the race for cross platform."
News of the investigation and uncertainty over comScore's numbers sent it stock lower.
The company held a conference call Friday morning to update shareholders.
It said it planned to be up to date with its SEC filing by early 2017.
It also said it would hold an investor luncheon in October and a more comprehensive event for investors in February.
comScore stock was up more tha 4% midday trading Thursday.
(Photo via Pictures of Money's Flickr. Image taken on Sept. 17, 2015 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)
