Communications infrastructure provider Neustar is in the midst of a change, one reflected in the growing importance of its marketing and security services.
“We’ve succeeded in pivoting in becoming an information services and analytics company,” said Neustar CEO Lisa Hook during the company’s Q2 2014 earnings call.
Neustar reported Q2 2014 results at $237.5 million, a year-over-year increase of 8%. Its marketing services division saw a YoY increase of 19% to $35 million. Combined with its security services ($34 million at a 28% YoY increase), the two divisions constitute a little less than a third of Neustar’s total revenue.
Neustar’s pivot comes at an opportune time. As a whole, the company is in a bit of a bind, facing concerns that it will lose a huge contract as the provider of technology enabling cell phone users to keep their numbers when they switch carriers.
Services related to number portability constituted the bulk of Neustar’s Q2 revenues ($118.7 million, a 6% YoY increase). This impact contract made up 49% of Neustar’s 2013 revenue, and while analysts hammered Hook for a resolution timeline, she couldn’t commit to one.
So Neustar’s performance in other arenas, like marketing, is of growing importance for the company’s future.
The company has gradually built up its marketing solutions stack. In 2011, it acquired TargusInfo, which powers Neustar’s lead verification and scoring business. But it’s splashy software acquisition occurred last year with the $119 million purchase of data-management platform (DMP) Aggregate Knowledge.
One month later, Omnicom standardized globally on the Aggregate Knowledge DMP for its Annalect business, the agency holding company’s data analytics and programmatic arm that includes search, social and display. Hook mentioned during the earnings call that Omnicom is in the process of licensing other portions of Neustar’s services.
Aside from that, the DMP as a standalone seems to be gaining traction, and Hook hinted that Neustar has been successfully able to upsell the product to existing customers. “By the second quarter of this year, we’ve exceeded installation expectations by launching the DMP across our large, worldwide client base,” she said.
The DMP also forms the foundation of Neustar’s marketing solutions product PlatformOne, released in beta in March. The product combines Neustar’s offline assets with Aggregate Knowledge’s online capabilities, in theory providing an end-to-end solution through which clients can fully leverage offline and online consumer data.
It’ll be important for Neustar to maintain this positive growth among its marketing services division amid a galaxy of uncertainty. But while Hook mentioned that Neustar has become increasingly attractive as an employer, there have been some key losses. Its SVP of marketing services, David Jakubowski (Aggregate Knowledge’s former CEO), left in April for a position at Facebook.
