Neustar Reports Results for Second Quarter 2015

Acquires Strategic Domain Name Registry

Neustar, Inc. (NYSE: NSR), a trusted, neutral provider of real-time information services, today announced results for the quarter ended June 30, 2015, and increased its guidance for full-year 2015.

In a separate announcement, the company stated that it has acquired Australia-based Bombora Technologies Pty Ltd, the registry services provider of the .au top-level domain and numerous other top-level domains, for approximately AUD $118.5 million, or approximately USD $86.9 million in cash.

Results for Second Quarter 2015 Compared to Second Quarter 2014

• Revenue increased 8% to $256.8 million

• Marketing Services revenue increased 17% to $40.9 million

• Security Services revenue increased 18% to $40.5 million

• Net income increased 22% to $45.1 million

• Net income per share increased 31% to $0.80

Non-GAAP Results for Second Quarter 2015 Compared to Second Quarter 2014

• Adjusted net income increased 7% to $61.7 million

• Adjusted net income per share increased 16% to $1.10

“Our strong second quarter results reflect increased demand for the differentiated services we provide clients, based on our unique datasets and proprietary algorithms,” said Lisa Hook, Neustar’s President and Chief Executive Officer.  “With exceptional accuracy and our core expertise in authentication, we help clients make informed, real-time decisions to promote their services and protect their brands online.”

Paul Lalljie, Neustar’s Chief Financial Officer, added, “Information Services continued to deliver impressive revenue growth, with a 10% year-over-year increase.  In addition, our strong profits and cash flows reflect the strength in our business model and the ability to execute on our strategic initiatives.  With this continued momentum and the registry acquisition announced today, we are increasing our full-year revenue and adjusted net income guidance.”

Discussion of Second Quarter Results
Revenue totaled $256.8 million, an 8% increase from $237.5 million in 2014.  Marketing Services revenue grew 17% to $40.9 million driven by increased demand for the company's services that help its clients make informed and high-impact decisions to promote their products and services.  Security Services revenue grew 18% to $40.5 million driven by increased demand for the company's DNS Services and additional revenue from domain name registries.  Data Services revenue was flat at $49.2 million.  NPAC Services revenue grew 6% to $126.2 million driven by an increase in NPAC fixed-fee revenue.

Operating expense totaled $178.7 million, a 3% increase from $172.7 million in the second quarter of 2014.  This $6.0 million increase was driven by a $3.3 million increase in personnel and personnel-related expense, and a $4.6 million increase in costs related to information technology and systems.  In addition, the company incurred an increase of $1.1 million in professional fees and marketing expense associated with the NPAC.

As of June 30, 2015, the company's cash and cash equivalents totaled $412.0 million, an increase of $85.4 million from $326.6 million as of December 31, 2014.  As of June 30, 2015, the company's outstanding debt under its term facilities and senior notes was $779.3 million.  During the quarter, the company purchased approximately 1.4 million shares at an average price of $27.72 per share, for approximately $38.0 million.

Business Outlook for 2015

The company increased its full-year 2015 guidance provided on April 29, 2015:

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• Adjusted net income per share to range $4.34 to $4.51 or flat to 4% growth

The company's business outlook excludes the impact of any future share repurchases.

Conference Call

As announced on July 16, 2015, 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 877-704-5378 (international callers dial 913-312-1485) and entering PIN 8258371.  For those who cannot listen to the live broadcast, a replay will be available through 11:59 p.m. (Eastern Time) August 6, 2015 by dialing 877-870-5176 (international callers dial 858-384-5517) and entering PIN 8258371, or by going to the Investor Relations tab of the company's website (www.neustar.biz).

Neustar will take questions from securities analysts and institutional investors; 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 are available on the company's website under the Investor Relations tab.  The supplemental information includes reconciliations of certain non-GAAP measures to their most directly comparable GAAP measures.  These non-GAAP measures may be used periodically by management when discussing the company's financial results with investors and analysts.

About Neustar, Inc.
Neustar, Inc. (NYSE: NSR) is the first real-time provider of cloud-based information services, enabling marketing and IT security professionals to promote and protect their businesses.  With a commitment to privacy and neutrality, Neustar operates complex data registries and uses its expertise to deliver actionable, data-driven insights that help clients make high-value business decisions in real time, one customer interaction at a time.  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 and beliefs about its future results, such as its guidance regarding future results of operations.  The company has attempted, whenever possible, to identify these forward-looking statements by 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, the uncertainty of future revenue, expenses and profitability and potential fluctuations in quarterly results due to such factors as modifications to, terminations of, or failures to renew (or announcements related to any of the foregoing) the company's material contracts, including its contracts to serve as the Local Number Portability Administrator, disruptions to the company's operations resulting from network disruptions, security breaches or other events, or an inability to obtain high quality data on favorable terms or otherwise; general economic conditions in the regions and industries in which the company operates; 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; the company's ability to incur additional debt; the variable interest rates applicable under the company's indebtedness and the effects of changes in those rates; the company's ability to acquire Bombora Technologies Pty Ltd and realize the expected benefits in a timely manner or at all; the company's ability to successfully identify and complete other acquisitions and integrate and support the operations of other businesses the company acquires; increasing competition; market acceptance of the company’s existing services; the company's ability to successfully develop and market new services and the uncertainty of whether new services will achieve market acceptance or result in any revenue; the company’s ability to raise additional capital on favorable terms or at all; business, regulatory and statutory changes related to the communications and Internet industries; and the impact on the company of any litigation, arbitration, investigation or other similar proceeding.  More information about risk factors, uncertainties and other 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.

NEUSTAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended  June 30,								Six Months Ended  June 30,
	2014				2015				2014				2015
	(unaudited)
Revenue	$	237,457			$	256,767			$	467,354			$	508,155
Operating expense:
Cost of revenue (excluding depreciation and amortization shown separately below)	60,844				67,551				119,455				131,709
Sales and marketing	48,637				50,942				98,628				97,676
Research and development	6,932				5,997				13,991				12,451
General and administrative	26,008				24,729				52,299				49,386
Depreciation and amortization	30,086				29,438				57,726				59,362
Restructuring charges	200				—				5,166				—
	172,707				178,657				347,265				350,584
Income from operations	64,750				78,110				120,089				157,571
Other (expense) income:
Interest and other expense	(7,270		)		(6,481		)		(13,267		)		(13,203		)
Interest income	163				69				258				295
Income before income taxes	57,643				71,698				107,080				144,663
Provision for income taxes	20,796				26,640				38,550				53,391
Net income	$	36,847			$	45,058			$	68,530			$	91,272
Net income per common share:
Basic	$	0.62			$	0.81			$	1.14			$	1.64
Diluted	$	0.61			$	0.80			$	1.11			$	1.61
Weighted average common shares outstanding:
Basic	58,973				55,377				60,100				55,676
Diluted	60,388				56,238				61,539				56,563

NEUSTAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31,  2014				June 30,  2015
	(audited)				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	326,577			$	411,975
Restricted cash	2,191				2,531
Accounts receivable, net	155,086				162,847
Unbilled receivables	13,084				13,498
Prepaid expenses and other current assets	24,392				31,187
Deferred costs	6,951				7,758
Income taxes receivable	15,956				—
Deferred income tax assets	10,380				16,513
Total current assets	554,617				646,309
Property and equipment, net	161,604				147,611
Goodwill	692,269				691,033
Intangible assets, net	302,622				271,187
Other assets, long-term	30,996				32,491
Total assets	$	1,742,108			$	1,788,631
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,439			$	6,455
Accrued expenses	94,771				89,073
Income taxes payable	—				4,847
Deferred revenue	73,908				74,244
Notes payable	7,972				7,972
Capital lease obligations	3,702				4,175
Other liabilities	23,125				24,116
Total current liabilities	211,917				210,882
Deferred revenue, long-term	27,017				21,872
Notes payable, long-term	775,318				771,331
Capital lease obligations, long-term	5,579				3,928
Deferred income tax liabilities, long-term	49,111				60,372
Other liabilities, long-term	53,683				61,200
Total liabilities	1,122,625				1,129,585
Total stockholders’ equity	619,483				659,046
Total liabilities and stockholders’ equity	$	1,742,108			$	1,788,631