ComScore’s accounting woes continue to weigh on the audience measurement company: Its shares are down nearly 26% in midday trading after it disclosed that it will not meet Nasdaq’s February 23 deadline to update its financial reports to deal with questionable “accounting judgments and estimates for transactions that occurred during 2013-2016.”
As a result, comScore says, its shares “may be suspended from trading and delisted from Nasdaq.” The company says that it would appeal such a decision.
“Although we are disappointed that we will not meet Nasdaq’s deadline, we have made significant progress towards the restatement and in strengthening our internal audit and compliance functions,” co-founder and CEO Gian Fulgoni says. “Furthermore, our business fundamentals continue to be strong, underscored by our healthy balance sheet with $116 million in cash. We are confident in our strategy, our roadmap for innovation, our unique data and technology assets, and in the value we deliver to more than 3,000 clients, all of which we believe will drive long-term growth for our Company.”
ComScore says it expects to complete its review this summer “although there can be no assurance that the process will be completed by that time.”
The company said in November that it “cannot support the prior accounting for the nonmonetary transactions recorded by the Company during the years ended December 31, 2013, 2014 and 2015.”
Nasdaq already gave comScore multiple extensions to comply with SEC reporting requirements. The exchange set the February 23 target on October 25.
If delisted, then comScore shares would trade over the counter.
Early last year, comScore launched a review with help from independent counsel and advisers. In August, it announced a management restructuring with Fulgoni replacing Serge Matta as CEO.
The new chief told analysts that the board “has recognized that we have [an] emergency to regain our business focus.”
In November, comScore said that the review involved “revenue recognition practices, disclosures, internal controls, corporate culture, and certain employment practices.” The board’s Audit Committee found that “as a result of certain instances of misconduct and errors in accounting determinations, adjustments to the Company’s accounting for certain nonmonetary and monetary transactions were required.”
Matta resigned from the board in December. Last month, General Counsel and Chief Privacy Officer Christiana Lin resigned.
Today’s announcement led SunTrust Robinson Humphrey’s Matthew Thornton to downgrade comScore to “not rated” from “hold.”
A little more than a year ago, comScore closed a stock-swap acquisition of Rentrak hoping to create a digital and TV audience measurement power that could give Nielsen pause.