NeuStar Inc. (NSR, Financial) filed Quarterly Report for the period ended 2011-06-30.
Neustar Cl A has a market cap of $1.91 billion; its shares were traded at around $25.84 with a P/E ratio of 16.4 and P/S ratio of 3.7. Neustar Cl A had an annual average earning growth of 12.3% over the past 5 years.
We provide NPAC Services pursuant to seven contracts with NAPM, an industry group that represents all telecommunications service providers in the United States. The aggregate fees for transactions processed under these contracts are determined by an annual fixed-fee pricing model under which the annual fixed fee, or Base Fee, is set at $362.1 million and $385.6 million in 2010 and 2011, respectively, and is subject to an annual price escalator of 6.5% in subsequent years. These contracts also provide for fixed credits to customers of $25.0 million in 2010 and $5.0 million in 2011, which were applied to reduce the Base Fee for the applicable year. Additional credits of up to $15.0 million annually in each of 2010 and 2011 may be triggered if the customer reaches certain levels of aggregate telephone number inventories and adopts and implements certain IP fields and functionality. Moreover, these contracts provide for credits in the event that the volume of transactions in a given year is above or below the contractually established volume range for that year. The determination of whether any volume credits have been earned is done annually at the end of each year and any credits earned are applied to the following years invoices. To the extent any additional credits expire unused at the end of each year, the credits will be recognized in revenue at that time.
We determine the fixed and determinable fee under these contracts on an annual basis and recognize such fee on a straight-line basis over twelve months. For 2010, we concluded that the fixed and determinable fee equaled $322.1 million, which represented the Base Fee of $362.1 million, reduced by the $25.0 million fixed credit and $15.0 million of additional credits. For 2011, we concluded that the fixed and determinable fee equals $365.6 million, which represents the Base Fee of $385.6 million, reduced by the $5.0 million fixed credit and $15.0 million of additional credits. During the first quarter of 2011, we determined that our carrier customers have earned all of the additional credits of $15.0 million attributable to the adoption and implementation of the requisite IP fields and functionality and the achievement of specific levels of aggregate telephone number inventories.
Carrier Services. Revenue from our Carrier Services operating segment increased $13.1 million primarily due to an increase of $7.9 million in revenue from our Numbering Services, an increase of $4.3 million in revenue from our Order Management Services and an increase of $0.9 million from our IP Services. The $7.9 million increase in revenue from our Numbering Services was the result of an established increase of $10.9 million in the fixed fee under our contracts to provide NPAC services, offset by a decrease of $1.9 million in system enhancements and a decrease of $1.3 million from our international LNP solutions. The increase in revenue from Order Management Services was primarily due to greater demand and usage from existing customers and the addition of new customers. The increase in revenue from IP Services was primarily due to transition services revenue pursuant to the sale of certain assets and liabilities of our Converged Messaging Services business. These transition services were completed as of June 30, 2011. There was no corresponding transition services revenue in 2010.
Cost of revenue. Cost of revenue increased $4.4 million primarily due to an increase in personnel and personnel-related expense of $1.7 million primarily due to an increase in headcount for IP geolocation services and systems management. In addition, contractor costs increased $1.3 million primarily due to increased costs in customer deployments and customer support. Royalty expense increased $1.1 million for our Registry Services related to the increase in revenue from managing a larger number of common short codes. In addition, cost of revenue increased $0.6 million due to additional telecommunications and maintenance costs primarily the result of the addition of our IP geolocation services.
General and administrative. General and administrative expense increased $7.4 million, primarily due to an increase in consulting costs of $1.8 million incurred to pursue new business opportunities and $1.2 million in additional costs to support business growth and strategic direction. In addition, general facility costs increased $2.3 million primarily due to office expansion related to the relocation of our corporate headquarters and the acquisition of the IP geolocation assets. Personnel and personnel-related expense increased $1.9 million, primarily as a result of headcount additions in support of business operations.
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Neustar Cl A has a market cap of $1.91 billion; its shares were traded at around $25.84 with a P/E ratio of 16.4 and P/S ratio of 3.7. Neustar Cl A had an annual average earning growth of 12.3% over the past 5 years.
Highlight of Business Operations:
In the second quarter, we experienced increased demand for our solutions around our Numbering Services, Internet Infrastructure Services, or IIS, and Registry Services. Total revenue for the quarter grew 15.6% to $147.7 million as compared to $127.7 million in the second quarter of 2010. This revenue increase was primarily driven by an established increase in the fixed fee under our contracts with the North American Portability Management LLC, or NAPM, for our number portability administration center services, or NPAC Services. We recognized $91.4 million of revenue under our contracts to provide NPAC Services in the second quarter of 2011, a $10.9 million increase, or 13.5%, from the corresponding period in 2010. In addition, we continued to see strong demand for our IIS portfolio, both from new and current customers. For the quarter, we recognized $20.1 million of revenue from IIS, a $4.5 million increase, or 29.1%, from the corresponding period in 2010. Registry Services grew as a result of an increased number of common short codes and domain names under management. For the quarter, we recognized $16.7 million of revenue from our Registry Services, a $2.3 million increase, or 16.3% from the corresponding period in 2010.We provide NPAC Services pursuant to seven contracts with NAPM, an industry group that represents all telecommunications service providers in the United States. The aggregate fees for transactions processed under these contracts are determined by an annual fixed-fee pricing model under which the annual fixed fee, or Base Fee, is set at $362.1 million and $385.6 million in 2010 and 2011, respectively, and is subject to an annual price escalator of 6.5% in subsequent years. These contracts also provide for fixed credits to customers of $25.0 million in 2010 and $5.0 million in 2011, which were applied to reduce the Base Fee for the applicable year. Additional credits of up to $15.0 million annually in each of 2010 and 2011 may be triggered if the customer reaches certain levels of aggregate telephone number inventories and adopts and implements certain IP fields and functionality. Moreover, these contracts provide for credits in the event that the volume of transactions in a given year is above or below the contractually established volume range for that year. The determination of whether any volume credits have been earned is done annually at the end of each year and any credits earned are applied to the following years invoices. To the extent any additional credits expire unused at the end of each year, the credits will be recognized in revenue at that time.
We determine the fixed and determinable fee under these contracts on an annual basis and recognize such fee on a straight-line basis over twelve months. For 2010, we concluded that the fixed and determinable fee equaled $322.1 million, which represented the Base Fee of $362.1 million, reduced by the $25.0 million fixed credit and $15.0 million of additional credits. For 2011, we concluded that the fixed and determinable fee equals $365.6 million, which represents the Base Fee of $385.6 million, reduced by the $5.0 million fixed credit and $15.0 million of additional credits. During the first quarter of 2011, we determined that our carrier customers have earned all of the additional credits of $15.0 million attributable to the adoption and implementation of the requisite IP fields and functionality and the achievement of specific levels of aggregate telephone number inventories.
Carrier Services. Revenue from our Carrier Services operating segment increased $13.1 million primarily due to an increase of $7.9 million in revenue from our Numbering Services, an increase of $4.3 million in revenue from our Order Management Services and an increase of $0.9 million from our IP Services. The $7.9 million increase in revenue from our Numbering Services was the result of an established increase of $10.9 million in the fixed fee under our contracts to provide NPAC services, offset by a decrease of $1.9 million in system enhancements and a decrease of $1.3 million from our international LNP solutions. The increase in revenue from Order Management Services was primarily due to greater demand and usage from existing customers and the addition of new customers. The increase in revenue from IP Services was primarily due to transition services revenue pursuant to the sale of certain assets and liabilities of our Converged Messaging Services business. These transition services were completed as of June 30, 2011. There was no corresponding transition services revenue in 2010.
Cost of revenue. Cost of revenue increased $4.4 million primarily due to an increase in personnel and personnel-related expense of $1.7 million primarily due to an increase in headcount for IP geolocation services and systems management. In addition, contractor costs increased $1.3 million primarily due to increased costs in customer deployments and customer support. Royalty expense increased $1.1 million for our Registry Services related to the increase in revenue from managing a larger number of common short codes. In addition, cost of revenue increased $0.6 million due to additional telecommunications and maintenance costs primarily the result of the addition of our IP geolocation services.
General and administrative. General and administrative expense increased $7.4 million, primarily due to an increase in consulting costs of $1.8 million incurred to pursue new business opportunities and $1.2 million in additional costs to support business growth and strategic direction. In addition, general facility costs increased $2.3 million primarily due to office expansion related to the relocation of our corporate headquarters and the acquisition of the IP geolocation assets. Personnel and personnel-related expense increased $1.9 million, primarily as a result of headcount additions in support of business operations.
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