SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                          to

comScore, Inc.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2007

TABLE OF CONTENTS

PART I.		FINANCIAL INFORMATION			3
Item 1.		Financial Statements			3
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3.		Quantitative and Qualitative Disclosure about Market Risk			41
Item 4.		Controls and Procedures			41
PART II.		OTHER INFORMATION			42
Item 1.		Legal Proceedings			42
Item 1a.		Risk Factors			42
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			64
Item 3.		Defaults Upon Senior Securities			65
Item 4.		Submission of Matters to a Vote of Security Holders			65
Item 5.		Other Information			65
Item 6.		Exhibits			66
SIGNATURES					67
EXHIBIT INDEX					68

Exhibit 31.1 —		Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
Exhibit 31.2 —		Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
Exhibit 32.1 —		Certification of Chief Executive Officer Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
Exhibit 32.2 —		Certification of Chief Financial Officer Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

     This Quarterly Report on Form 10-Q, including the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosure About Market Risk” under Items 2 and 3, respectively, of Part I of this report, and the sections entitled “Legal Proceedings,” “Risk Factors,” and “Unregistered Sales of Equity Securities and Use of Proceeds” under Items 1, 1A and 2, respectively, of Part II of this report, may contain forward-looking statements. These statements may relate to, but are not limited to, expectations of future operating results or financial performance, capital expenditures, introduction of new products, regulatory compliance, plans for growth and future operations, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These risks and other factors include, but are not limited to, those listed under the section entitled “Risk Factors” in Item 1A of Part II of this Quarterly Report on Form 10-Q. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue,” “seek” or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events and/or results may differ materially.

     We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we do not plan to publicly update or revise any forward-looking statements, whether as a result of any new information, future events or otherwise, other than through the filing of periodic reports in accordance with the Securities Exchange Act of 1934, as amended. Investors and potential investors should not place undue reliance on our forward-looking statements. Before you invest in our common stock, you should be aware that the occurrence of any of the events described in the “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q could harm our business, prospects, operating results and financial condition. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements

PART I. FINANCIAL INFORMATION

Item 1.		Financial Statements

COMSCORE, INC.

CONSOLIDATED BALANCE SHEETS

						Pro Forma				December 31,
		June 30, 2007				June 30, 2007				2006
		(Unaudited)				(Unaudited)
						(In thousands)
Assets
Current assets:
Cash and cash equivalents		$	6,245			$	82,970			$	5,032
Short-term investments			15,500				15,500				11,000
Accounts receivable, net of allowances of $189, $189 and $188, respectively			15,033				15,033				14,123
Prepaid expenses and other current assets			1,536				1,536				1,068
Restricted cash			537				537				270
Total current assets			38,851				115,576				31,493
Property and equipment, net			6,729				6,729				6,980
Other non-current assets			3,374				205				1,267
Intangible assets, net			397				397				983
Goodwill			1,364				1,364				1,364
Total assets		$	50,715			$	124,271			$	42,087

The accompanying notes are an integral part of these consolidated financial statements.

COMSCORE, INC.

CONSOLIDATED BALANCE SHEETS — (Continued)

						Pro Forma
		June 30,				June 30,				December 31,
		2007				2007				2006
		(Unaudited)				(Unaudited)
		(In thousands, except share and per share data)
Liabilities and stockholders’ (deficit) equity
Current liabilities:
Accounts payable		$	1,462			$	1,462			$	1,353
Accrued expenses			6,337				6,337				6,020
Deferred revenues			26,642				26,642				22,776
Capital lease obligations			1,448				1,448				1,726
Preferred stock warrant liabilities			2,282				—				1,005
Total current liabilities			38,171				35,889				32,880
Capital lease obligations, long-term			1,530				1,530				2,261
Deferred tax liability			39				39				77
Other liabilities			356				356				374
Total liabilities			40,096				37,814				35,592
Commitments and contingencies
Redeemable preferred stock:
Series A preferred convertible stock, $0.001 par value; 9,187,500 shares authorized, 1,837,503 shares issued and outstanding, liquidation preference of $7,715 at June 30, 2007 and December 31, 2006; no shares issued or outstanding pro forma			8,012				—				8,154
Series B preferred convertible stock, $0.001 par value; 3,535,486 shares authorized, 695,865 shares issued and outstanding, liquidation preference of $14,315 at June 30, 2007 and December 31, 2006; no shares issued or outstanding pro forma			14,868				—				15,130
Series C preferred convertible stock, $0.001 par value; 13,355,052 shares authorized, 2,647,209 shares issued and outstanding, liquidation preference of $25,220 at June 30, 2007 and December 31, 2006; no shares issued or outstanding pro forma			26,178				—				26,633
Series C-1 preferred convertible stock, $0.001 par value; 357,144 shares authorized, 71,430 shares issued and outstanding, liquidation preference of $420 at June 30, 2007 and December 31, 2006; no shares issued or outstanding pro forma			436				—				443

The accompanying notes are an integral part of these consolidated financial statements.

						Pro Forma
		June 30,				June 30,				December 31,
		2007				2007				2006
		(Unaudited)				(Unaudited)
		(In thousands, except share and per share data)
Series D preferred convertible stock, $0.001 par value; 22,238,042 shares authorized, 4,312,813 shares issued and outstanding, liquidation preference of $40,723 at June 30, 2007 and December 31, 2006; no shares issued or outstanding pro forma			36,486				—				34,682
Series E preferred convertible stock, $0.001 par value; 25,000,000 shares authorized, 4,801,116 shares issued and outstanding, liquidation preference of $19,565 at June 30, 2007 and December 31, 2006; no shares issued or outstanding pro forma			17,523				—				16,653
Common Stock subject to put; 347,635 shares issued and outstanding			4,428				4,428				4,357
Stockholders’ (deficit) equity:
Preferred stock, $0.001 par value; no shares authorized, issued or outstanding at June 30, 2007 and December 31, 2006; 5,000,000 shares authorized pro forma, no shares issued or outstanding pro forma			—				—				—
Common stock, $0.001 par value; 125,000,000 shares authorized at June 30, 2007 and pro forma and 130,000,000 shares authorized at December 31, 2006; 5,010,980, 27,268,342 and 4,000,165 shares issued and outstanding at June 30, 2007, June 30, 2007 pro forma and December 31, 2006, respectively			5				27				4
Additional paid-in capital			31				179,350				—
Accumulated other comprehensive income (loss)			28				28				(75	)
Accumulated deficit			(97,376	)			(97,376	)			(99,486	)
Total stockholders’ (deficit) equity			(97,312	)			82,029				(99,557	)
Total liabilities and stockholders’ (deficit) equity		$	50,715			$	124,271			$	42,087

The accompanying notes are an integral part of these consolidated financial statements.

COMSCORE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
		(Unaudited)
		(In thousands, except share and per share data)
Revenues		$	20,809			$	16,906			$	39,490			$	31,891
Cost of revenues (excludes amortization of intangible assets resulting from acquisitions shown below)(1)			6,000				5,205				11,388				10,353
Selling and marketing(1)			6,683				5,323				13,134				10,668
Research and development(1)			2,813				2,258				5,369				4,395
General and administrative(1)			2,428				2,176				4,935				4,094
Amortization of intangible assets resulting from acquisitions			293				333				586				704
Total expenses from operations			18,217				15,295				35,412				30,214
Income from operations			2,592				1,611				4,078				1,677
Interest income, net			144				23				241				34
Loss from foreign currency			(202	)			(33	)			(210	)			(27	)
Revaluation of preferred stock warrant liabilities			(1,288	)			(211	)			(1,277	)			(209	)
Income before income taxes			1,246				1,390				2,832				1,475
Provision for income taxes			(6	)			—				(52	)			—
Net income			1,240				1,390				2,780				1,475
Accretion of redeemable preferred stock			(923	)			(777	)			(1,808	)			(1,519	)
Net income (loss) attributable to common stockholders		$	317			$	613			$	972			$	(44	)
Net income (loss) attributable to common stockholders per common share:
Basic and diluted		$	0.00			$	0.00			$	0.00			$	(0.03	)

The accompanying notes are an integral part of these consolidated financial statements.

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
		(Unaudited)
		(In thousands, except share and per share data)
Weighted-average number of shares used in per share calculation —common stock:
Basic and diluted			4,933,081				3,843,579				4,567,908				3,727,411
Net income attributable to common stockholders per common share subject to put:
Basic and diluted		$	0.10			$	0.10			$	0.20			$	0.20
Weighted-average number of shares used in per share calculation —common share subject to put:
Basic and diluted			347,635				347,635				347,635				347,635
(1) Amortization of stock-based compensation is included in the line items above as follows:
Cost of revenues		$	60			$	2			$	69			$	2
Selling and marketing			172				26				211				32
Research and development			53				2				61				2
General and administrative			186				10				237				11

The accompanying notes are an integral part of these consolidated financial statements.

COMSCORE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six Months Ended
		June 30,
		2007				2006
		(Unaudited)
		(In thousands)
Operating activities
Net income		$	2,780			$	1,475
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			1,842				1,381
Amortization of intangible assets resulting from acquisitions			586				704
Provisions for (recoveries of) bad debts			31				(47	)
Stock-based compensation			578				47
Revaluation of preferred stock warrant liabilities			1,277				209
Amortization of deferred finance costs			3				11
Deferred tax benefit			(39	)			—
Changes in operating assets and liabilities:
Accounts receivable, net			(770	)			424
Prepaid expenses and other current assets			(411	)			(170	)
Other non-current assets			206				189
Accounts payable, accrued expenses, and other liabilities			(2,012	)			636
Deferred revenues			3,588				(1,894	)
Net cash provided by operating activities			7,659				2,965
Investing activities
Payment of restricted cash			(267	)			(5	)
Purchase of short-term investments			(8,900	)			(3,700	)
Sale of short-term investments			4,400				1,500
Purchase of property and equipment			(1,561	)			(770	)
Payment of additional consideration for acquired businesses			—				(300	)
Net cash used in investing activities			(6,328	)			(3,275	)
Financing activities
Proceeds from the exercise of common stock options			640				215
Principal payments on capital lease obligations			(1,009	)			(784	)
Net cash used in financing activities			(369	)			(569	)
Effect of exchange rate changes on cash			251				74
Net increase (decrease) in cash and cash equivalents			1,213				(805	)
Cash and cash equivalents at beginning of period			5,032				5,124
Cash and cash equivalents at end of period		$	6,245			$	4,319
Supplemental cash flow disclosures
Interest paid		$	164			$	147
Accretion of preferred stock		$	1,808			$	1,519

The accompanying notes are an integral part of these consolidated financial statements.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

     comScore, Inc. (the Company), a Delaware corporation incorporated in August 1999, provides a digital marketing intelligence platform that helps customers make better-informed business decisions and implement more effective digital business strategies. The Company’s products and solutions offer customers insights into consumer behavior, including objective, detailed information regarding usage of their online properties and those of their competitors, coupled with information on consumer demographic characteristics, attitudes, lifestyles and offline behavior.

     The Company’s digital marketing intelligence platform is comprised of proprietary databases and a computational infrastructure that measures, analyzes and reports on digital activity. The foundation of the platform is data collected from a panel of more than two million Internet users worldwide who have granted to the Company explicit permission to confidentially measure their Internet usage patterns, online and certain offline buying behavior and other activities. By applying advanced statistical methodologies to the panel data, the Company projects consumers’ online behavior for the total online population and a wide variety of user categories.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

     The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and accounts have been eliminated upon consolidation. The Company consolidates investments where it has a controlling financial interest as defined by Accounting Research Bulletin (ARB) No. 51, Consolidated Financial Statements, as amended by Statement of Financial Accounting Standards (SFAS) No. 94, Consolidation of all Majority-Owned Subsidiaries. The usual condition for controlling financial interest is ownership of a majority of the voting interest and, therefore, as a general rule, ownership, directly or indirectly, of more than 50% of the outstanding voting shares is a condition indicating consolidation. For investments in variable interest entities, as defined by Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities, the Company would consolidate when it is determined to be the primary beneficiary of a variable interest entity. The Company does not have any variable interest entities.

     Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

Unaudited Interim Financial Information

     The condensed consolidated financial statements included in this quarterly report on Form 10-Q have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Securities Exchange Act of 1934, as amended, for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein, reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s prospectus dated June 26, 2007. The results of operations for the three and six months ended June 30, 2007 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2007 or thereafter. All references to June 30, 2007 and 2006 or to the three and six months ended June 30, 2007 and 2006 in the notes to the consolidated financial statements are unaudited.

Initial Public Offering and Pro Forma Balance Sheet

     On July 2, 2007, the Company completed its initial public offering (IPO) of common stock in which the Company sold and issued 5,000,000 shares of common stock (see Note 12). The condensed consolidated financial statements, including share and per share amounts, do not include the effects of the offering as it was completed subsequent to June 30, 2007. In connection with the Company’s IPO, the Company’s Board of Directors and stockholders approved a 1-for-5 reverse stock split of its outstanding common stock and convertible preferred stock effective June 21, 2007. All share and per share amounts contained in the condensed consolidated financial statements have been retroactively adjusted to reflect the reverse stock split. Upon completion of the Company’s IPO, (i) all outstanding shares of convertible preferred stock converted into an aggregate of 17,257,362 shares of common stock ,(ii) all warrants for convertible preferred stock were converted into warrants for common stock resulting in the reclassification of the Company’s preferred stock warrant liabilities from current liabilities into additional paid in capital, and (iii) the Company issued 5,000,000 shares of common stock resulting in net proceeds of $76.7 million and the offset of deferred IPO costs against additional paid-in capital. Deferred IPO costs were $3.2 million at June 30, 2007. Considering the significant impact of these events on the Company’s capitalization, the Company has presented a pro forma balance sheet reflecting these events as if they occurred on June 30, 2007.

Use of Estimates

     The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Accounts Receivable

     Accounts receivable are recorded at the invoiced amount and are non-interest bearing. The Company generally grants uncollateralized credit terms to its customers and maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables. Allowances are based on management’s judgment, which considers historical experience and specific knowledge of accounts where collectibility may not be probable. The Company makes provisions based on historical bad debt experience, a specific review of all significant outstanding invoices and an assessment of general economic conditions. If the financial condition of a customer deteriorates, resulting in an impairment of its ability to make payments, additional allowances may be required.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Goodwill and Intangible Assets

     Goodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed when other businesses are acquired. The allocation of the purchase price to intangible assets and goodwill involves the extensive use of management’s estimates and assumptions, and the result of the allocation process can have a significant impact on future operating results. The Company estimates the fair value of identifiable intangible assets acquired using several different valuation approaches, including the replacement cost, income and market approaches. The replacement cost approach is based on determining the discrete cost of replacing or reproducing a specific asset. The Company generally uses the replacement cost approach for estimating the value of acquired technology/methodology assets. The income approach converts the anticipated economic benefits that the Company assumes will be realized from a given asset into value. Under this approach, value is measured as the present worth of anticipated future net cash flows generated by an asset. The Company generally uses the income approach to value customer relationship assets and non-compete agreements. The market approach compares the acquired asset to similar assets that have been sold. The Company generally uses the market approach to value trademarks and brand assets.

     Under SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), intangible assets with finite lives are amortized over their useful lives while goodwill is not amortized but is evaluated for potential impairment at least annually by comparing the fair value of a reporting unit, based on estimated future cash flows, to its carrying value including goodwill recorded by the reporting unit. If the carrying value exceeds the fair value, impairment is measured by comparing the derived fair value of the goodwill to its carrying value, and any impairment determined is recorded in the current period. In accordance with SFAS 142, all of the Company’s goodwill is associated with one reporting unit. Accordingly, on an annual basis the Company performs the impairment assessment for goodwill required under SFAS 142 at the enterprise level. The Company completed its annual impairment analysis for 2006 and determined that there was no impairment of goodwill. There have been no indicators of impairment during the three and six months ended June 30, 2007.

     Intangible assets with finite lives are amortized using the straight-line method over the following useful lives:

		Useful Lives
		(Years)
Non-compete agreements		3 to 4
Customer relationships		1 to 3
Acquired methodologies/technology		1 to 3
Trademarks and brands		2

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Impairment of Long-Lived Assets

     Long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be addressed pursuant to SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). Pursuant to SFAS 144, impairment is determined by comparing the carrying value of these long-lived assets to an estimate of the future undiscounted cash flows expected to result from the use of the assets and eventual disposition. In the event an impairment exists, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset, which is generally determined by using quoted market prices or valuation techniques such as the discounted present value of expected future cash flows, appraisals, or other pricing models as appropriate. There were no impairment charges recognized during the three and six months ended June 30, 2007 and 2006. In the event that there are changes in the planned use of the Company’s long-term assets or its expected future undiscounted cash flows are reduced significantly, the Company’s assessment of its ability to recover the carrying value of these assets could change.

Foreign Currency Translation

     The Company applies SFAS No. 52, Foreign Currency Translation, with respect to its international operations. The functional currency of the Company’s foreign subsidiaries is the local currency. All assets and liabilities are translated at the current exchange rate as of the end of the period, and revenues and expenses are translated at average exchange rates in effect during the period. The gain or loss resulting from the process of translating foreign currency financial statements into U.S. dollars is included as a component of other comprehensive income. The Company incurred a foreign currency transaction loss of $202,000 and $33,000 for the three months ended June 30, 2007 and 2006, respectively, and $210,000 and $27,000 for the six months ended June 30, 2007 and 2006, respectively. These losses related to U.S. dollar denominated cash accounts and accounts receivable held by the Company’s foreign subsidiaries.

Revenue Recognition

     The Company recognizes revenues in accordance with Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition (SAB 104). SAB 104 requires that four basic criteria must be met prior to revenue recognition: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or the services have been rendered, (iii) the fee is fixed or determinable and (iv) collection of the resulting receivable is reasonably assured.

     The Company generates revenues by providing access to the Company’s online database or delivering information obtained from the database, usually in the form of periodic reports. Revenues are typically recognized on a straight-line basis over the period in which access to data or reports are provided, which generally ranges from three to 24 months.

     Revenues are also generated through survey services under contracts ranging in term from two months to one year. Survey services consist of survey and questionnaire design with subsequent data collection, analysis and reporting. Revenues are recognized on a straight-line basis over the estimated data collection period once the survey or questionnaire has been delivered. Any change in the estimated data collection period results in an adjustment to revenues recognized in future periods.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     Certain of the Company’s arrangements contain multiple elements, consisting of the various services the Company offers. Multiple element arrangements typically consist of a subscription to the Company’s online database combined with periodic reports of customized data. These arrangements are accounted for in accordance with Emerging Issues Task Force (EITF) Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. The Company has determined that there is not objective and reliable evidence of fair value for any of its services and, therefore, accounts for all elements in multiple elements arrangements as a single unit of accounting. Access to data under the subscription element is generally provided shortly after the execution of the contract. However, the initial delivery of periodic reports of customized data generally occurs after the data has been accumulated for a specified period subsequent to contract execution, usually one calendar quarter. The Company recognizes the entire arrangement fee over the performance period of the last deliverable. As a result, the total arrangement fee is recognized on a straight-line basis commencing upon the delivery of the first report of customized data over the period such reports are delivered.

     Generally, contracts are non-refundable and non-cancelable. In the event a portion of a contract is refundable, revenue recognition is delayed until the refund provisions lapse. A limited number of customers have the right to cancel their contracts by providing a written notice of cancellation. In the event that a customer cancels its contract, the customer is not entitled to a refund for prior services, and will be charged for costs incurred plus services performed up to the cancellation date.

     Advance payments are recorded as deferred revenues until services are delivered or obligations are met and revenue can be recognized. Deferred revenues represent the excess of amounts invoiced over amounts recognized as revenues

Stock-Based Compensation

     Prior to January 1, 2006, the Company accounted for its stock-based compensation plans under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees, and related interpretations, as permitted by SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123). Effective January 1, 2006, the Company adopted SFAS No. 123 ( R), Share-Based Payment (SFAS 123R), including the fair value recognition provisions, using the prospective method. Under SFAS 123R, a non-public company that previously used the minimum value method for pro forma disclosure purposes is required to adopt the standard using the prospective method. Under the prospective method, all awards granted, modified or settled after the date of adoption are accounted for using the measurement, recognition and attribution provisions of SFAS 123R. As a result, stock-based awards granted prior to the date of adoption of SFAS 123R will continue to be accounted for under APB 25 with no recognition of stock-based compensation in future periods, unless such awards are modified or settled. Subsequent to the adoption of SFAS 123R, the Company estimates the value of stock-based awards on the date of grant using the Black-Scholes option-pricing model. For stock-based awards subject to graded vesting, the Company has utilized the straight-line ratable method for allocating compensation cost by period. In accordance with SFAS 123R, the Company recorded stock-based compensation expense of $471,000 and $40,000 for the three months ended June 30, 2007 and 2006, respectively, and $578,000 and $47,000 for the six months ended June 30, 2007 and 2006, respectively.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Comprehensive Income

     Comprehensive income includes net income as well as the effects of foreign currency translation adjustments reflected in the table below:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
		(Unaudited)
		(In thousands)
Comprehensive income:
Net income		$	1,240			$	1,390			$	2,780			$	1,475
Other comprehensive income:
Foreign currency cumulative translation adjustment			98				57				103				74
Total comprehensive income			1,338				1,447				2,883				1,549

Income Taxes

     Income taxes are accounted for using the liability method in accordance with SFAS No. 109, Accounting for Income Taxes. Deferred income taxes are provided for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized.

     In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109. This interpretation clarifies the accounting for income taxes by prescribing that a company should use a more-likely-than-not recognition threshold based on the technical merits of the tax position taken. Tax provisions that meet the more-likely-than-not recognition threshold should be measured as the largest amount of tax benefits, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement in the financial statements. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition, and explicitly excludes income taxes from the scope of SFAS No. 5, Accounting for Contingencies. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Earnings Per Share

     The Company computes earnings per share in accordance with the provisions of FASB No. 128, Earnings Per Share (SFAS 128). In prior years, the Company has issued shares of common stock in connection with business acquisitions that give the holders the right to require the Company to repurchase the shares at a fixed price at a specified future date (“Common Stock Subject to Put”). The difference between the fair value of the shares of Common Stock Subject to Put on the issuance date and the price at which the Company may be required to repurchase those shares is being accreted over the period from issuance to the first date at which the Company could be required to repurchase the shares as a dividend to the holders. EITF Topic D-98, Classification and Measurement of Redeemable Securities (EITF D-98) states that when a common shareholder has a contractual right to receive, at share redemption, an amount that is other than fair value, such shareholder has received, in substance, a preferential distribution. Under SFAS 128, entities with capital structures that include classes of common stock with different dividend rates are required to apply the two-class method of calculating earnings per share. Accordingly, the Company calculates earnings per share for its common stock and its Common Stock Subject to Put using a method akin to the two-class method under SFAS 128.

     In addition, the Company’s series of convertible redeemable preferred stock are considered participating securities as they are entitled to an 8% noncumulative preferential dividend before any dividends can be paid to common stockholders. The Company includes its participating preferred stock in the computation of earnings per share using the two-class method in accordance with EITF 03-06, Participating Securities and the Two-Class Method under FASB Statement No. 128 (EITF 03-06).

     The two-class computation method for each period allocates the undistributed earnings or losses to each participating security based on their respective rights to receive dividends. In addition to undistributed earnings or losses, the accretion to their redemption or put prices is also allocated to the Common Stock Subject to Put and the convertible redeemable preferred stock. In periods of undistributed losses, all losses are allocated to common stock in accordance with EITF 03-06 as the holders of Common Stock Subject to Put and participating preferred stock are not required to fund losses nor are their redemption or put prices reduced as a result of losses incurred. In periods of undistributed income, income is first allocated to the participating preferred stock for their preferential dividend, currently $7.1 million per annum. Any undistributed earnings remaining are then allocated to holders of common stock, Common Stock Subject to Put and preferred stock (assuming conversion) on a pro rata basis. The total earnings or losses allocated to each class of common stock are then divided by the weighted-average number of shares outstanding for each class of common stock to determine basic earnings per share. EITF 03-06 does not require the presentation of basic and diluted earnings per share for securities other than common stock; therefore, earnings per share is only computed for the Company’s common stock.

     Diluted earnings per share for common stock reflects the potential dilution that could result if securities or other contracts to issue common stock were exercised or converted into common stock. Diluted earnings per share assumes the exercise of stock options and warrants using the treasury stock method and the conversion of the Company’s convertible preferred stock using the if-converted method. No potentially dilutive securities are convertible or exercisable into shares of Common Stock Subject to Put.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     For all periods presented, all potentially dilutive securities have been excluded from earnings per share calculations as their effect would have been anti-dilutive. The following is a summary of common stock equivalents for the securities outstanding during the respective periods that have been excluded from the earnings per share calculations:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
		(Unaudited)
Stock options			2,445,945				2,845,100				2,508,068				2,962,412
Convertible preferred stock warrants			113,129				113,129				113,129				113,129
Common stock warrants			51,727				62,057				56,863				167,655
Convertible preferred stock			17,257,362				17,257,362				17,257,362				17,257,362

     The following table sets forth the computation of basic and diluted EPS:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
		(Unaudited)
		(In thousands)
Calculation of basic and diluted net income per share — two class method:
Net Income		$	1,240			$	1,390			$	2,780			$	1,475
Accretion of redeemable preferred stock			(923	)			(777	)			(1,808	)			(1,519	)
Accretion of common stock subject to put			(35	)			(34	)			(68	)			(69	)
Undistributed earnings (loss)			282				579				904				(113	)
Allocation of undistributed earnings (loss):
Common stock			—				—				—				(113	)
Preferred stock			282				579				904				—
Total allocated earnings (loss)			282				579				904				(113	)
Net income (loss) attributable to common stockholders per common share:
Basic and diluted		$	—			$	—			$	—			$	(0.03	)
Weighted average shares outstanding — common stock basic and diluted			4,933,081				3,843,579				4,567,908				3,727,411
Net income (loss) attributable to common stockholders per common share subject to put:
Basic and diluted		$	0.10			$	0.10			$	0.20			$	0.20
Weighted average shares outstanding — common stock subject to put basic and diluted			347,635				347,635				347,635				347,635

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Recent Pronouncements

     In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. The purpose of this statement is to define fair value, establish a framework for measuring fair value and enhance disclosures about fair value measurements. The measurement and disclosure requirements are effective for the Company as of January 1, 2008 and are applied prospectively. The Company is currently evaluating the potential impact of adopting this new guidance on its results of operations and financial position.

     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159), to permit all entities to choose to elect, at specified election dates, to measure eligible financial instruments at fair value. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date, and recognize upfront costs and fees related to those items in earnings as incurred and not deferred. SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with early adoption permitted for an entity that has also elected to apply the provisions of SFAS No. 157. An entity is prohibited from retrospectively applying SFAS No. 159, unless it chooses early adoption. The Company is currently evaluating the impact of the provisions of SFAS No. 159 on its consolidated financial statements.

3. Goodwill and Intangible Assets

     The carrying amounts of goodwill and intangible assets as of June 30, 2007 and December 31, 2006 are as follows:

		June 30,				December 31.
		2007				2006
		(Unaudited)
		(In thousands)
Goodwill		$	1,364			$	1,364
Intangible assets consist of the following:
Trademarks and brands		$	662			$	662
Non-compete agreements			326				326
Customer relationships			3,467				3,467
Acquired methodologies/technology			688				688
Total intangible assets			5,143				5,143
Accumulated amortization			(4,746	)			(4,160	)
Intangible assets, net		$	397			$	983

     Amortization expense related to intangible assets was approximately $293,000 and $333,000 for the three months ended June 30, 2007 and 2006, respectively, and $586,000 and $704,000 for the six months ended June 30, 2007 and 2006, respectively.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     Future expected amortization of intangible assets as of December 31, 2006, is as follows:

		(In thousands)
2007		$	967
2008			16

4. Commitments and Contingencies

Leases

     In March 2007, the Company modified its lease for its New York office resulting in (i) vacating existing space once new space is available, (ii) an increase in the space rented, (iii) the lease termination date being revised from October 2012 to November 2012, and (iv) an increase in the monthly lease rate from $21,000 to $45,000. In April 2007, the Company modified its lease for its Reston office resulting in (i) an increase in the space rented and (ii) an increase in the monthly lease rate from $77,000 to $89,000.

     The Company is required to maintain a letter of credit in the amount of approximately $256,000 as additional security deposit pertaining to its New York office lease. In connection with the modification of this lease in March 2007, the amount was increased to $537,000.

Contingencies

     The Company has no asserted claims, but is from time to time exposed to unasserted potential claims encountered in the normal course of business. Although the outcome of any legal proceedings cannot be predicted with certainty, management believes that the final resolution of these matters will not materially affect the Company’s financial position or results of operations.

5. Income Taxes

     The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate for each of its legal entities. During the three months and six months ended June 30, 2007, the Company recorded an income tax provision of $6,000 and $52,000, respectively. The tax provision for the three and six months ended June 30, 2007 is comprised of an income tax expense of $25,000 and $91,000, respectively, reflecting our alternative minimum tax and is partly offset by a decrease of $19,000 and $39,000, respectively, in the deferred tax liability associated with a temporary difference related to certain acquired intangible assets. The Company did not record a tax provision for the same periods in 2006.

     The Company adopted FIN 48 on January 1, 2007. As of January 1, 2007 and June 30, 2007, the Company does not have any material gross unrecognized tax benefit liabilities. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. For income tax returns filed by the Company, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for years before 2002, although carryforward tax attributes that were generated prior to 2002 may still be adjusted upon examination by tax authorities if they either have been or will be utilized.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     As of June 30, 2007 and December 31, 2006, the Company had a valuation allowance of $32.2 million and $33.7 million, respectively, against certain deferred tax assets, which consisted principally of net operating loss carryforwards. Management believes that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a full valuation allowance is required. Such factors include the lack of a significant history of profits, recent increases in expense levels to support the Company’s growth, the fact that the market in which the Company competes is intensely competitive and characterized by rapidly changing technology, and the lack of carryback capacity to realize deferred tax assets. The Company will continue to evaluate its valuation allowance position on a regular basis. To the extent that the Company determines that all or a portion of our valuation allowance is no longer necessary, the Company will recognize an income tax benefit in the period such determination is made for the reversal of the valuation allowance. Once the valuation allowance is eliminated in whole or in part, it will not be available to offset our future current tax provision. It is expected that any such reduction of the Company’s valuation allowance would have a material impact on our results from operations and financial condition.

     Under the provisions of the Internal Revenue Code Section 382, certain substantial changes in the Company’s ownership may result in a limitation on the amount of U.S. net operating loss carryforwards which could be utilized annually to offset future taxable income and taxes payable. Additionally, despite the net operating loss carryforward, the Company may have a future tax liability due to alternative minimum tax, foreign tax or state tax requirements.

6. Convertible Preferred Stock

     The Company’s certificate of incorporation provides for the issuance of 9,187,500 shares of Series A Preferred Stock (Series A), 3,535,486 shares of Series B Preferred Stock (Series B), 13,355,052 shares of Series C Preferred Stock (Series C), 357,144 shares of Series C-1 Preferred Stock (Series C-1), 22,238,042 shares of Series D Preferred Stock (Series D) and 25,000,000 shares of Series E Preferred Stock (Series E). All classes of preferred stock are redeemable by the holder on or after August 1, 2008. The carrying values of Series A, Series B, Series C and Series C-1 are in excess of their individual redemption values. The carrying value of Series D is below its individual redemption value. The differences between the carrying value of each series of preferred stock and its respective redemption value is being accreted as preferred stock dividends using the interest method over the period to the redemption date. Such accretion amounted to $923,000 and $777,000 for the three months ended June 30, 2007 and 2006, respectively, and $1.8 million and $1.5 million for the six months ended June 30, 2007 and 2006, respectively. In connection with the closing of our IPO on July 2, 2007, all shares of convertible preferred stock were converted into 17,257,362 shares of common stock.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7. Convertible Preferred Stock Warrants

     In prior years, the Company issued fully vested warrants to purchase 97,324 shares of preferred stock in connection with a master lease and various equipment lease agreements. The exercise prices of the warrants range from $2.50 to $24.50 per share and the warrants expire 10 years from the date of issue.

     In accordance with FSP 150-5, the Company classifies warrants to purchase shares of its convertible preferred stock as a liability and adjusts the warrants to fair value. The fair value of the convertible preferred stock warrants at June 30, 2007 and December 31, 2006 was approximately $2.3 million and $1.0 million, respectively. The fair value of warrants was estimated using the Black-Scholes option pricing model.

     To reflect the increase in fair value of the preferred stock warrants, the Company recorded a charge of $1.3 million and $211,000, for the three months ended June 30, 2007 and 2006, respectively, and $1.3 million and $209,000 for the six months ended June 30, 2007 and 2006, respectively. The Company continued to adjust the liabilities for changes in fair value until the completion of the Company’s initial public offering, which closed on July 2, 2007, at which time the liabilities were reclassified to stockholders’ equity (deficit) (see Note 2).

8. Common Stock Subject to Put

     In prior years, the Company issued 347,635 shares of Common Stock Subject to Put. The carrying value of the Common Stock Subject to the Put right is being accreted to the put obligation over the three year term using the effective interest rate method. For the three months ended June 30, 2007 and 2006 the Company accreted a total of $35,000 and $34,000, respectively and for the six months ended June 30, 2007 and 2006 the Company accreted a total of $68,000 and $69,000, respectively.

9. Stockholders’ Deficit

1999 Stock Option Plan

     In September 1999, the Company established the 1999 Stock Option Plan (the Plan) under which eligible employees and non-employees may be granted options to purchase shares of the Company’s common stock, restricted stock or restricted stock units. The Plan provides for the issuance of a maximum of 5.4 million shares of common stock. The exercise price is determined by the Board of Directors, which is generally equal to fair value for incentive stock options and is determined on a per-grant basis for nonqualified options. The vesting period of options granted under the Plan is determined by the Board of Directors, generally ratably over a four-year period. The options expire 10 years from the date of the grant. As of June 30, 2007, 438,980 were available for grant under the plan.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R using the prospective transition method, which requires the Company to apply its provisions only to awards granted, modified, repurchased or cancelled after the effective date. Under this transition method, stock-based compensation expense recognized beginning January 1, 2006 is based on the following: (1) the grant-date fair value of stock option awards granted or modified beginning January 1, 2006; and (2) the balance of deferred stock-based compensation related to stock option awards granted prior to January 1, 2006, which was calculated using the intrinsic-value method as previously permitted under APB 25. Results for prior periods have not been restated. In connection with the adoption of SFAS 123R, the Company estimates the fair value of stock option awards granted beginning January 1, 2006 using the Black-Scholes option-pricing formula and a single option award approach. The Company then amortizes the fair value of awards expected to vest on a straight-line basis over the requisite service periods of the awards, which is generally the period from the grant date to the end of the vesting period. The weighted-average expected option term for options granted during the year ended December 31, 2006 was calculated using the simplified method described in SAB No. 107, Share-Based Payment. The simplified method defines the expected term as the average of the contractual term and the vesting period. Estimated volatility for the year ended December 31, 2006 also reflected the application of SAB No. 107 interpretive guidance and, accordingly, incorporates historical volatility of similar entities whose share prices are publicly available. The risk-free interest rate is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the stock option award is granted with a maturity equal to the expected term of the stock option award. The Company used historical data to estimate the number of future stock option forfeitures.

     As of June 30, 2007, total unrecognized compensation expense related to non-vested stock options, restricted stock and restricted stock units granted prior to that date is estimated at $6.7 million, which the Company expects to recognize over a weighted average period of approximately 2.24 years. Total unrecognized compensation expense as of June 30, 2007 is estimated based on outstanding non-vested stock options and may be increased or decreased in future periods for subsequent grants or forfeitures. During the three and six months ended June 30, 2007, no stock options were granted The following are the weighted-average assumptions used in valuing the stock options granted during the three and six months ended June 30, 2006 and a discussion of the Company’s assumptions.

		Three Months				Six Months Ended
		Ended June 30,				June 30,
		2006				2006
Dividend yield			0.00	%			0.00	%
Expected volatility			64.53	%			65.24	%
Risk-free interest rate			4.87	%			4.80	%
Expected life of options (in years)			6.02				6.02

     Dividend yield — The Company has never declared or paid dividends on its common stock and does not anticipate paying dividends in the foreseeable future.

     Expected volatility — Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company has used the historical volatility of its peer group to estimate expected volatility. The peer group includes companies that are similar in revenue size, in the same industry or are competitors.

     Risk-free interest rate — This is the average U.S. Treasury rate (with a term that most closely resembles the expected life of the option) for the quarter in which the option was granted.

     Expected life of the options — This is the period of time that the options granted are expected to remain outstanding. This estimate is derived from the average midpoint between the weighted average vesting period and the contractual term as described in the SAB No. 107.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     A summary of the Plan is presented below:

										Weighted
										Average				Aggregate
						Weighted-				Remaining				Intrinsic
		Number of				Average				Contractual				Value (in
		Shares				Exercise Price				Term (in years)				thousands)
Options outstanding at December 31, 2006			2,723,940			$	2.00
Options granted			—				—
Options exercised			367,965			$	1.47							$	3,134
Options forfeited			50,709			$	3.34
Options expired			942			$	5.67
Options outstanding at June 30, 2007			2,304,324			$	2.04				7.05			$	48,646
Options exercisable at June 30, 2007			1,502,491			$	1.15				6.61			$	33,057

     The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing market price of the Company’s common stock at June 30, 2007. The aggregate intrinsic value of stock option awards exercised was determined at the date of option exercise.

     During the six months ended June 30, 2007, the Company awarded an aggregate of 634,750 shares of restricted common stock to certain of its employees. The weighted average estimated fair value for these shares is $11.26. The aggregate intrinsic value for all non-vested shares of restricted common stock outstanding at June 30, 2007 was $7.1 million. The Company has a right of repurchase on such shares that lapses at a rate of twenty-five percent (25%) of the total shares awarded at each successive anniversary of the initial award date, provided that the employee continues to provide services to the Company. In the event that an employee terminates their employment with the Company, any shares that remain unvested and consequently subject to the right of repurchase shall be automatically reacquired by the Company at the original purchase price paid by the employee.

     During the six months ended June 30, 2007, the Company awarded an aggregate of 53,050 units of restricted common stock units to certain of its employees. The estimated fair value for these units is $11.25. The aggregate intrinsic value for all non-vested restricted stock units outstanding at June 30, 2007 was $596,000. The Company has a right of repurchase on such units that lapses at a rate of twenty-five percent (25%) of the total shares awarded at each successive anniversary of the initial award date, provided that the employee continues to provide service to the Company. In the event that an employee terminates their employment with the Company, any units that remain unvested shall be automatically reacquired by the Company.

Incentive Plan

     In connection with the Series E offering, the Company created a management incentive plan (the Incentive Plan) for certain officers, founders and key employees of the Company. Under the terms of the Incentive Plan, up to 10% of any liquidation proceeds from the consolidation, merger, or sale of the Company will be distributed to the plan participants. Of the potential payout to a plan participant, 75% is based on a pre-determined formula with the remaining 25% of the payout at the discretion of the administrators of the Incentive Plan. The potential payout is reduced by any amounts the participant would receive in the liquidation through stock option exercises or stock ownership. The Incentive Plan terminated upon the closing of our IPO on July 2, 2007.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Common Stock Warrants

     In prior years, the Company had granted an aggregate of 403,368 warrants to purchase common stock. The common stock warrants began to expire in February 2006 through to April 2015 with exercise prices ranging from $3.00 to $24.50. As of June 30, 2007, warrants to purchase 42,057 shares of common stock were outstanding.

Shares Reserved for Issuance

     At June 30, 2007, the Company has reserved for future issuance the following shares of common stock upon conversion of preferred stock and the exercise of options and warrants:

Series A			2,136,623
Series B			1,380,436
Series C			4,004,690
Series C-1			84,746
Series D			4,849,751
Series E			4,801,116
Common stock available for future issuances under the Plan			438,980
Common stock available for outstanding options and restricted stock units			2,357,374
Common stock warrants			42,057
Common stock available for conversion of preferred stock warrants			113,129
			20,208,902

     In addition, the Company has reserved 11,250 Series B shares, 38,074 Series D shares and 48,000 Series E shares pursuant to outstanding warrants.

      Upon the closing of the IPO, all shares of convertible preferred stock outstanding automatically converted into 17,257,362 shares of common stock and all preferred stock warrants converted into common stock warrants (see Note 2).

10. Related Party Transactions

     On August 1, 2003, the Company entered into a Licensing and Services Agreement with a counterparty that until November 27, 2006 was a stockholder of the Company. Pursuant to the terms of the Licensing and Services Agreement, the Company granted the counterparty a license to certain digital marketing intelligence data and products. During each of the three month periods ended June 30, 2007 and 2006 the Company recognized revenues of $925,000. During each of the six month periods ended June 30, 2007 and 2006 the Company recognized revenues of $1.8 million. In relation to this counterparty, there were no outstanding amounts included in our accounts receivable balance as of June 30, 2007 and December 31, 2006.

COMSCORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11. Geographic Information

     The Company attributes revenues to customers based on the location of the customer. The composition of the Company’s sales to unaffiliated customers between those in the United States and those in other locations for three and six months ended June 30, 2007 and 2006. is set forth below:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
		(Unaudited)
		(In thousands)
United States		$	18,476			$	15,596			$	35,359			$	29,454
Canada			1,117				740				1,963				1,447
United Kingdom/Other			1,216				570				2,168				990
Total Revenues		$	20,809			$	16,906			$	39,490			$	31,891

     The composition of the Company’s property, plant and equipment between those in the United States and those in other countries as of the end of each year is set forth below:

		June 30,				December 31,
		2007				2006
		(Unaudited)
		(In thousands)
United States		$	6,287			$	6,525
Canada			256				305
United Kingdom			186				150
Total		$	6,729			$	6,980

12. Subsequent Event

     On July 2, 2007, the Company completed its IPO of common stock in which the Company sold and issued 5,000,000 shares of its common stock at an issuance price of $16.50 per share. In addition, selling stockholders, including officers and directors of the Company or entities affiliated therewith, sold an aggregate of 1,095,000 shares of common stock, including the underwriters’ over-allotment, held by them in the IPO. As a result of the IPO, the Company raised a total of $82,500,000 in gross proceeds from the IPO, or approximately $76,725,000 in net proceeds after deducting underwriting discounts and commissions of $5,775,000. The Company did not receive any proceeds from the sale of shares in the IPO by the selling stockholders. Upon the closing of the IPO, all shares of convertible preferred stock outstanding automatically converted into 17,257,362 shares of common stock and all preferred stock warrants converted into common stock warrants.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk factors” and elsewhere in this document. Please see the section entitled “Cautions Regarding Forward-Looking Statements” at the beginning of this Quarterly Report on Form 10-Q for additional information regarding forward-looking statements.

Overview

     We provide a leading digital marketing intelligence platform that helps our customers make better-informed business decisions and implement more effective digital business strategies. Our products and solutions offer our customers deep insights into consumer behavior, including objective, detailed information regarding usage of their online properties and those of their competitors, coupled with information on consumer demographic characteristics, attitudes, lifestyles and offline behavior.

     Our digital marketing intelligence platform is comprised of proprietary databases and a computational infrastructure that measures, analyzes and reports on digital activity. The foundation of our platform is data collected from our comScore panel of more than two million Internet users worldwide who have granted us explicit permission to confidentially measure their Internet usage patterns, online and certain offline buying behavior and other activities. By applying advanced statistical methodologies to our panel data, we project consumers’ online behavior for the total online population and a wide variety of user categories.

     We deliver our digital marketing intelligence through our comScore Media Metrix product family and through comScore Marketing Solutions. Media Metrix delivers digital media intelligence by providing an independent, third-party measurement of the size, behavior and characteristics of Web site and online advertising network audiences among home, work and university Internet users as well as insight into the effectiveness of online advertising. Our Marketing Solutions products combine the proprietary information gathered from the comScore panel with the vertical industry expertise of comScore analysts to deliver digital marketing intelligence, including the measurement of online advertising effectiveness, customized for specific industries. We typically deliver our Media Metrix products electronically in the form of weekly, monthly or quarterly reports. Customers can access current and historical Media Metrix data and analyze these data anytime online. Our Marketing Solutions products are typically delivered on a monthly, quarterly or ad hoc basis through electronic reports and analyses.

     Our company was founded in August 1999. By 2000, we had established a panel of Internet users and began delivering digital marketing intelligence products that measured online browsing and buying behavior to our first customers. We also introduced netScore, our initial syndicated Internet audience measurement product. We accelerated our introduction of new products in 2003 with the launch of Plan Metrix (formerly AiM 2.0), qSearch, the Campaign R/F (Reach and Frequency) analysis system and product offerings that measure online activity at the local market level. By 2004, we had built a global panel of over two million Internet users. In that year, in cooperation with Arbitron, we launched a service that provides ratings of online radio audiences. In 2005, we expanded our presence in Europe by opening an office in London. In 2006, we continued to expand our measurement capabilities with the launch of World Metrix, a product that provides worldwide data on digital media usage, and Video Metrix, our product that measures the audience for streaming online video.

     We have complemented our internal development initiatives with select acquisitions. On June 6, 2002, we acquired certain Media Metrix assets from Jupiter Media Metrix, Inc. Through this acquisition, we acquired certain Internet audience measurement services that report details of Web site usage and visitor demographics. On July 28, 2004, we acquired the outstanding stock of Denaro and Associates, Inc, otherwise known as Q2 Brand Intelligence, Inc. or Q2, to improve our ability to provide our customers more robust survey research integrated with our underlying digital marketing intelligence platform. The total cost of the acquisition was approximately $3.3 million, consisting of cash and shares of our common stock. For the ninety-day period beginning July 28, 2007, the former shareholder of Q2 (or its transferees) has the right to sell 212,000 shares of our common stock back to us for an aggregate price of $2.65 million, or $12.50 per share. On January 4, 2005, we acquired the assets and assumed certain liabilities of SurveySite Inc., or SurveySite. Through this acquisition, we acquired proprietary Internet-based data-collection technologies and increased our customer penetration and revenues in the survey business. The total cost of the acquisition was approximately $3.6 million, consisting of cash and shares of our common stock. For the ninety-day period beginning January 1, 2008, the former shareholders of SurveySite (or their transferees) have the right to sell 135,635 shares of our common stock back to us for an aggregate price of approximately $1.8 million, or $13.35 per share.

     Our total revenues have grown from $15.4 million during the fiscal year ending January 31, 2003 to $66.3 million during the fiscal year ended December 31, 2006, a compounded annual growth rate of approximately 63%. By comparison, our total expenses from operations have grown from $35.2 million to $60.7 million over the same period, a compounded annual growth rate of approximately 20%. The growth in our revenues was primarily the result of:

	•		increased sales to existing customers, as a result of our efforts to deepen our relationships with these clients by increasing their awareness of, and confidence in, the value of our digital marketing intelligence platform;
	•		growth in our customer base through the addition of new customers;
	•		increases in the prices of our products and services;
	•		the sales of new products to existing and new customers; and
	•		growth in sales outside of the U.S. as a result of entering into new international markets.

     As of June 30, 2007, we had 776 customers, compared to 334 as of January 31, 2003. We sell most of our products through our direct sales force.

Our Revenues

     We derive our revenues primarily from the fees that we charge for subscription-based products and customized projects. We define subscription-based revenues as revenues that we generate from products that we deliver to a customer on a recurring basis. We define project revenues as revenues that we generate from customized projects that are performed for a specific customer on a non-recurring basis. We market our subscription-based products, customized projects and survey services within the comScore Media Metrix product family and through comScore Marketing Solutions.

     A significant characteristic of our business model is our large percentage of subscription-based contracts. Subscription-based revenues accounted for 78% of our total revenues in 2004 and decreased to 70% of total revenues in 2005 primarily due to the acquisition of SurveySite. Subscription-based revenue increased to 75% of total revenues in 2006 and to 78% of total revenues during the three month’s ending June 30, 2007.

     Many of our customers who initially purchased a customized project have subsequently purchased one of our subscription-based products. Similarly, many of our subscription-based customers have subsequently purchased additional customized projects.

     Historically, we have generated most of our revenues from the sale and delivery of our products to companies and organizations located within the United States. We intend to expand our international revenues by selling our products and deploying our direct sales force model in additional international markets in the future. For the fiscal year ended December 31, 2006, our international revenues were $5.7 million, an increase of $2.4 million over international revenues of $3.4 million for the fiscal year ended December 31, 2005. For the three months ended June 30, 2007, our international revenues were $2.3 million, an increase of $1.0 million or 78 percent over international revenues of $1.3 million for the three months ended June 30, 2006. International revenues comprised approximately 7%, 9% and 11% of our total revenues for the fiscal years ended December 31, 2005 and 2006 and the three months ended June 30, 2007, respectively.

     We anticipate that revenues from our U.S. customers will continue to constitute the substantial majority of our revenues, but we expect that revenues from customers outside of the U.S. will increase as a percentage of total revenues as we build greater international recognition of our brand and expand our sales operations globally.

Subscription Revenues

     We generate a significant proportion of our subscription-based revenues from our Media Metrix product family. Products within the Media Metrix family include Media Metrix 2.0, Plan Metrix, World Metrix and Video Metrix. We intend to commercially launch Ad Metrix in the third quarter of 2007. These product offerings provide subscribers with intelligence on digital media usage, audience characteristics, audience demographics and online and offline purchasing behavior. Customers who subscribe to our Media Metrix products are provided with login IDs to our Web site, have access to our database and can generate reports at anytime.

     We also generate subscription-based revenues from certain reports and analyses provided through comScore Marketing Solutions, if that work is procured by customers for at least a nine month period and the customer enters into an agreement to continue or extend the work. Through our Marketing Solutions products, we deliver digital marketing intelligence relating to specific industries, such as automotive, consumer packaged goods, entertainment, financial services, media, pharmaceutical, retail, technology, telecommunications and travel. This marketing intelligence leverages our global consumer panel and extensive database to deliver information unique to a particular customer’s needs on a recurring schedule, as well as on a continual-access basis. Our Marketing Solutions customer agreements typically include a fixed fee with an initial term of at least one year. We also provide these products on a non-subscription basis as described under “Project Revenues” below.

     In addition, we generate subscription-based revenues from survey products that we sell to our customers. In conducting our surveys, we generally use our global Internet user panel. After questionnaires are distributed to the panel members and completed, we compile their responses and then deliver our findings to the customer, who also has ongoing access to the survey response data as they are compiled and updated over time. These data include responses and information collected from the actual survey questionnaire and can also include behavioral information that we passively collect from our panelists. If a customer contractually commits to having a survey conducted on a recurring basis, we classify the revenues generated from such survey products as subscription-based revenues. Approximately half of the revenues derived from survey products are generated on a subscription basis. Our contracts for survey services typically include fixed fee agreements that range from two months to one year.

Project Revenues

     We generate project revenues by providing customized information reports to our customers on a nonrecurring basis as part of our comScore Marketing Solutions. For example, a customer in the media industry might request a custom report that profiles the behavior of the customer’s active online users and contrasts their market share and loyalty with similar metrics for a competitor’s online user base. If this customer continues to request the report beyond an initial project term of at least nine months and enters into an agreement to purchase the report on a recurring basis, we begin to classify these future revenues as subscription-based.

     In the second quarter of 2007, we launched Campaign Metrix, a suite of products that enables our customers to measure their ROI from their investment in digital marketing campaigns and will help their revenue growth. Project revenues from Campaign Metrix will be generated when a customer accesses or downloads a report through our Web site. Pricing for our Campaign Metrix product will initially be based on the scope of the information provided in the report generated by the customer.

Critical Accounting Policies and Estimates

     Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the amounts reported in our financial statements and the accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. While our significant accounting policies are described in more detail in the notes to our consolidated financial statements included in this prospectus, we believe the following accounting policies to be the most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

     We recognize revenues in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104). SAB 104 requires that four basic criteria must be met prior to revenue recognition: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or the services have been rendered, (iii) the fee is fixed or determinable, and (iv) collection of the resulting receivable is reasonably assured. We generate revenues by providing access to our online database or delivering information obtained from our database, usually in the form of periodic reports. Revenues are typically recognized on a straight-line basis over the period in which access to data or reports are provided, which generally ranges from three to 24 months. We also generate revenues through survey services under contracts ranging in term from two months to one year. Our survey services consist of survey and questionnaire design with subsequent data collection, analysis and reporting. We recognize revenues on a straight-line basis over the estimated data collection period once the survey or questionnaire design has been delivered. Any change in the estimated data collection period results in an adjustment to revenues recognized in future periods.

     Certain of our arrangements contain multiple elements, consisting of the various services we offer. Multiple element arrangements typically consist of a subscription to our online database combined with periodic reports of customized data. These arrangements are accounted for in accordance with Emerging Issues Task Force (EITF) Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. We have determined that there is not objective and reliable evidence of fair value for any of our services and, therefore, account for all elements in multiple elements arrangements as a single unit of accounting. Access to data under the subscription element is generally provided shortly after the execution of the contract. However, the initial delivery of periodic reports of customized data generally occurs after the data has been accumulated for a specified period subsequent to contract execution, usually one calendar quarter. We recognize the entire arrangement fee over the performance period of the last deliverable. As a result, the total arrangement fee is recognized on a straight-line basis commencing upon the delivery of the first report of customized data over the period such reports are delivered.

     Generally, our contracts are non-refundable and non-cancelable. In the event a portion of a contract is refundable, revenue recognition is delayed until the refund provisions lapse. A limited number of customers have the right to cancel their contracts by providing us with written notice of cancellation. In the event that a customer cancels its contract, it is not entitled to a refund for prior services, and it will be charged for costs incurred plus services performed up to the cancellation date.

     Advance payments are recorded as deferred revenues until services are delivered or obligations are met and revenue can be recognized. Deferred revenues represent the excess of amounts invoiced over amounts recognized as revenues.

Goodwill and Intangible Assets

     We record goodwill and intangible assets when we acquire other businesses. The allocation of acquisition costs to intangible assets and goodwill involves the extensive use of management’s estimates and assumptions, and the result of the allocation process can have a significant impact on our future operating results. We estimate the fair value of identifiable intangible assets acquired using several different valuation approaches, including the replacement cost, income and market approaches. The replacement cost approach is based on determining the discrete cost of replacing or reproducing a specific asset. We generally use the replacement cost approach for estimating the value of acquired technology/methodology assets. The income approach converts the anticipated economic benefits that we assume will be realized from a given asset into value. Under this approach, value is measured as the present worth of anticipated future net cash flows generated by an asset. We generally use the income approach to value customer relationship assets and non-compete agreements. The market approach compares the acquired asset to similar assets that have been sold. We generally use the market approach to value trademarks and brand assets.

     Under Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets (SFAS 142), intangible assets with finite lives are amortized over their useful lives while goodwill and indefinite lived assets are not amortized, but rather are periodically tested for impairment. An impairment review generally requires developing assumptions and projections regarding our operating performance. In accordance with SFAS 142, we have determined that all of our goodwill is associated with one reporting unit as we do not operate separate lines of business with respect to our services. Accordingly, on an annual basis we perform the impairment assessment for goodwill required under SFAS 142 at the enterprise level by comparing the fair value of a reporting unit, based on estimated future cash flow, to its carrying value including goodwill recorded by the reporting unit. If the carrying value exceeds the fair value, impairment is measured by comparing the derived fair value of the goodwill to its carrying value and any impairment determined is recorded in the current period. If our estimates or the related assumptions change in the future, we may be required to record impairment charges to reduce the carrying value of these assets, which could be material.

Long-lived assets

     Our long-lived assets primarily consist of property and equipment and intangible assets. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we evaluate the recoverability of our long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable. If an indication of impairment is present, we compare the estimated undiscounted future cash flows to be generated by the asset to its carrying amount. If the undiscounted future cash flows are less than the carrying amount of the asset, we record an impairment loss equal to the excess of the asset’s carrying amount over its fair value. The fair value is determined based on valuation techniques such as a comparison to fair values of similar assets or using a discounted cash flow analysis. Substantially all of our long lived assets are located in the United States. Although we believe that the carrying values of our long-lived assets are appropriately stated, changes in strategy or market conditions or significant technological developments could significantly impact these judgments and require adjustments to recorded asset balances. There were no impairment charges recognized during the three and six months ended June 20, 2007 and 2006.

Allowance for Doubtful Accounts

     We manage credit risk on accounts receivable by performing credit evaluations of our customers on a selective basis, by reviewing our accounts and contracts and by providing appropriate allowances for uncollectible amounts. Allowances are based on management’s judgment, which considers historical experience and specific knowledge of accounts that may not be collectible. We make provisions based on our historical bad debt experience, a specific review of all significant outstanding invoices and an assessment of general economic conditions. If the financial condition of a customer deteriorates, resulting in an impairment of its ability to make payments, additional allowances may be required.

Income Taxes

     We account for income taxes using the liability method in accordance with SFAS No. 109, Accounting for Income Taxes. We estimate our tax liability through calculations we perform for the determination of our current tax liability, together with assessing temporary differences resulting from the different treatment of items for income tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are recorded on our balance sheet. We then assess the likelihood that deferred tax assets will be recovered in future periods. In assessing the need for a valuation allowance against the net deferred tax asset, we consider factors such as future reversals of existing taxable temporary differences, taxable income in prior carryback years, if carryback is permitted under the tax law, tax planning strategies and future taxable income exclusive of reversing temporary differences and carryforwards. To the extent that we cannot conclude that it is more likely than not that the benefit of such assets will be realized, we establish a valuation allowance to adjust the net carrying value of such assets.

     As of June 30, 2007 and December 31, 2006, we had a valuation allowance of $32.2 million and $33.7 million, respectively, against certain deferred tax assets, which consisted principally of net operating loss carryforwards. We believe that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a full valuation allowance is required. Such factors include the lack of a significant history of profits, recent increases in expense levels to support our growth, the fact that the market in which we compete is intensely competitive and characterized by rapidly changing technology, and the lack of carryback capacity to realize deferred tax assets. We will continue to evaluate our valuation allowance position on a regular basis. Depending upon our actual results for the third and fourth quarters of 2007, we may conclude that all or a portion of our valuation allowance should be reduced during the second half of the year. To the extent we determine that all or a portion of our valuation allowance is no longer necessary, we will recognize an income tax benefit in the period such determination is made for the reversal of the valuation allowance. Once the valuation allowance is eliminated in whole or in part, it will not be available to offset our future current tax provision. It is expected that any such reduction of our valuation allowance would have a material impact on our results from operations and financial condition.

     In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109. This interpretation clarifies the accounting for income taxes by prescribing that a company should use a more-likely-than-not recognition threshold based on the technical merits of the tax position taken. Tax provisions that meet the more-likely-than-not recognition threshold should be measured as the largest amount of tax benefits, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement in the financial statements. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition, and explicitly excludes income taxes from the scope of SFAS No. 5, Accounting for Contingencies. FIN 48 is effective for fiscal years beginning after December 15, 2006, and was adopted by us on January 1, 2007. As of the adoption date of FIN 48 of January 1, 2007 and June 30, 2007, we do not have any material gross unrecognized tax benefits. We or one of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. For income tax returns filed by us, we are no longer subject to U.S. federal, state and local tax examinations by tax authorities for years before 2002, although carryforward tax attributes that were generated prior to 2002 may still be adjusted upon examination by tax authorities if they either have been or will be utilized. It is our policy to recognize interest and penalties related to income tax matters in income tax expense.

Stock-Based Compensation

     Through December 31, 2005, as permitted by SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), we applied the intrinsic value method for accounting for stock-based compensation as set forth in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). For purposes of the pro forma disclosures required under SFAS 123, we used the minimum-value method to estimate the fair value of our stock-based awards. On January 1, 2006, we adopted SFAS No. 123R, Share-Based Compensation (SFAS 123R). Under SFAS 123R, a non-public company that previously used the minimum value method for pro forma disclosure purposes is required to adopt the standard using the prospective method. Under the prospective method, all awards granted, modified or settled after the date of adoption are accounted for using the measurement, recognition and attribution provisions of SFAS 123R. As a result, stock-based awards granted prior to the date of adoption of SFAS 123R will continue to be accounted for under APB 25 with no recognition of stock-based compensation in future periods, unless such awards are modified or settled.

     Subsequent to the adoption of SFAS 123R, we estimate the fair value of our stock-based awards on the date of grant using the Black-Scholes option-pricing model. The determination of fair value using the Black-Scholes model requires a number of complex and subjective variables. One key input into the model is the estimated fair value of our common stock on the date of grant. Our board of directors has estimated the fair value of our common stock for the purpose of determining stock-based compensation expense. Our board utilized valuation methodologies commonly used in the valuation of private company equity securities for purposes of estimating the fair value of our common stock.

     Other key variables in the Black-Scholes option-pricing model include the expected volatility of our common stock price, the expected term of the award and the risk-free interest rate. In addition, under SFAS 123R, we are required to estimate forfeitures of unvested awards when recognizing compensation expense. If factors change and we employ different assumptions in the application of SFAS 123R in future periods, the compensation expense we record may differ significantly from what we have previously recorded.

     At June 30, 2007, total estimated unrecognized compensation expense related to unvested stock-based awards granted prior to that date was $6.7 million, which is expected to be recognized over a weighted-average period of 2.24 years.

     We expect stock-based compensation expense to increase in absolute dollars as a result of the adoption of SFAS 123R as options that were granted at the beginning of 2006 and beyond vest. Beginning in 2007, we expect to make use of restricted stock awards and reduce our use of stock options as a form of stock-based compensation. The actual amount of stock-based compensation expense we record in any fiscal period will depend on a number of factors, including the number of shares subject to the stock options issued, the fair value of our common stock at the time of issuance and the expected volatility of our stock price over time.

Estimation of Fair Value of Warrants to Purchase Redeemable Convertible Preferred Stock

     On July 1, 2005, we adopted FASB Staff Position 150-5 (FSP 150-5). Our outstanding warrants to purchase shares of our redeemable convertible preferred stock are subject to the requirements in FSP 150-5, which require us to classify these warrants as current liabilities and to adjust the value of these warrants to their fair value at the end of each reporting period We recorded an increase in the estimated fair value of the warrants during the three and six months ended June 30, 2007 of $1.3 million. We estimated the fair value of these warrants at the respective dates using the Black-Scholes option valuation model, based on the estimated market value of the underlying redeemable convertible preferred stock at the valuation measurement date, the contractual term of the warrant, risk free interest rates and expected dividends on and expected volatility of the price of the underlying redeemable convertible preferred stock. These estimates, especially the market value of the underlying redeemable convertible preferred stock and the expected volatility, are highly judgmental and could differ materially in the future. Upon the closing of our IPO on July 2, 2007, these liabilities were reclassified to stockholder’s equity (deficit).

Seasonality

     Historically, a slightly higher percentage of our customers have renewed their subscription products with us toward the end of the fourth quarter. While we execute projects for our customers throughout the year, we have historically experienced a slight upturn in our project-based business in the fourth quarter.

Results of Operations

     The following table sets forth selected consolidated statements of operations data as a percentage of total revenues for each of the periods indicated.

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
		(Unaudited)
		(In thousands)
Revenues			100.0	%			100.0	%			100.0	%			100.0	%
Cost of revenues			28.8				30.8				28.8				32.5
Selling and marketing			32.1				31.5				33.3				33.5
Research and development			13.5				13.4				13.6				13.8
General and administrative			11.7				12.9				12.6				12.8
Amortization			1.4				2.0				1.5				2.2
Total expenses from operations			87.5				90.5				89.7				94.7
Income from operations			12.5				9.5				10.3				5.3
Interest income, net			0.7				0.1				0.6				0.1
Loss from foreign currency			(1.0	)			(0.2	)			(0.5	)			(0.0	)
Revaluation of preferred stock warrant liabilities			(6.2	)			(1.2	)			(3.3	)			(0.8	)
Income before income taxes			6.0				8.2				7.1				4.6
Provision for income taxes			—				—				(0.1	)			—
Net income			6.0				8.2				7.0				4.6
Accretion of redeemable preferred stock			(4.5	)			(4.6	)			(4.5	)			(4.7	)
Net (loss) income attributable to common stockholders			1.5	%			3.6	%			2.5	%			(0.1	)%

     Revenues

		Three Months Ended																Six Months Ended
		June 30,								Change								June 30,								Change
		2007				2006				$				%				2007				2006				$				%
		(Unaudited)
		(In thousands)
Total revenues		$	20,809			$	16,906			$	3,903				23.1	%		$	39,490			$	31,891			$	7,599				23.8	%

     Total revenues increased by approximately $3.9 million and $7.6 million during the three months and six months ended June 30, 2007, respectively, as compared to the same periods in 2006. This increase was primarily due to increased sales to existing customers based in the U.S. totaling $16.0 million and $30.6 million in the three and six months ended June 30, 2007, respectively, which was $2.2 million and $4.5 million, respectively, higher than in the same periods in 2006. In addition, revenues in the three and six months ended June 30, 2007 from new U.S. customers were $2.5 million and $4.8 million, respectively, an increase of approximately $665,000 and $1.4 million, respectively, as compared to the three and six months ended June 30, 2006. Revenues from customers outside of the U.S. totaled approximately $2.3 million and $4.1 million, respectively, or approximately 11% and 10% of total revenues, in the three and six months ended June 30, 2007, respectively, which was an increase of $1.0 million and $1.7, respectively, as compared to the same periods in 2006. This increase was due primarily to our ongoing expansion efforts in Europe, plus continued growth in Canada.

     During the three and six months ended June 30, 2007, our total customer base grew by a net increase of 33 and 70 customers, respectively, from 743 at March 31, 2007 and 706 at December 31, 2006 to 776 customers at June 30, 2007. There was continued revenue growth in both our subscription revenues, which increased by approximately $3.7 million from $12.6 million in the three month ended June 30, 2006 to $16.3 million in the three months ended June 30, 2007, and, to a lesser extent our project-based revenues, which increased by $142,000 from $4.4 million in the three months ended June 30, 2006 to over $4.5 million in the three months ended June 30, 2007.

  Cost of Revenues

		Three Months Ended																Six Months Ended
		June 30,								Change								June 30,								Change
		2007				2006				$				%				2007				2006				$				%
		(Unaudited)
		(In thousands)
Total cost of revenues		$	6,000			$	5,205			$	795				15.3	%		$	11,388			$	10,353			$	1,035				10.0	%
As a percentage of revenues			28.8	%			30.8	%											28.8	%			32.5	%

     Cost of revenues consists primarily of expenses related to operating our network infrastructure and the recruitment, maintenance and support of our consumer panels. Expenses associated with these areas include the salaries and related expenses of network operations, survey operations, custom analytics and technical support, all of which are expensed as they are incurred. Cost of revenues also includes data collection costs for our products and operational costs associated with our data centers, including depreciation expense associated with computer equipment.

     Cost of revenues increased by approximately $795,000 and $1.0 million during the three months and six months ended June 30, 2007, respectively, as compared to the same periods in 2006. This increase was primarily due to increased salaries and related costs associated with supporting our consumer panel and data centers. Our data center costs increased as a result of the relocation in June 2006 of our Illinois data center to a new service provider and increased utility costs at our Virginia data center. Cost of revenues declined as a percentage of revenues by 2.0 percentage points and 3.9 percentage points for three and six months ended June 30, 2007, respectively, over the same periods in 2006. This decrease was primarily due to the increases in revenues as described above and a moderation of the increases in costs to build and maintain our panel. In addition, the headcount and costs associated with our technology staff grew at a lower rate than our growth in revenues.

     We expect cost of revenues to increase in absolute dollar amounts as we seek to grow our business but vary as a percentage of revenues depending on whether we benefit from investments in our panel and network infrastructure.

  Selling and Marketing Expenses

		Three Months Ended																Six Months Ended
		June 30,								Change								June 30,								Change
		2007				2006				$				%				2007				2006				$				%
		(Unaudited)
		(In thousands)
Total selling and marketing expense		$	6,683			$	5,323			$	1,360				25.5	%		$	13,134			$	10,668			$	2,466				23.1	%
As a percentage of revenues			32.1	%			31.5	%											33.3	%			33.5	%

     Selling and marketing expenses consist primarily of salaries, benefits, commissions and bonuses paid to our direct sales force and industry analysts, as well as costs related to online and offline advertising, product management, industry conferences, promotional materials, public relations, other sales and marketing programs, and allocated overhead, including rent and depreciation. All selling and marketing costs are expensed as they are incurred. Commission plans are developed for our account managers with criteria and size of sales quotas that vary depending upon the individual’s role. Commissions are paid to a salesperson and are expensed as selling and marketing costs when a sales contract is executed by both the customer and us. In the case of multi-year agreements, one year of commissions is paid initially, with the remaining amounts paid at the beginning of the succeeding years.

     Selling and marketing expenses increased by $1.4 million and $2.5 million during the three and six months ending June 30, 2007, respectively, as compared to the same periods in 2006. This increase was primarily due to increased employee salaries and benefits and related costs associated with an increase in account management personnel for our sales force, the formation of our product management team and an increase in commission costs associated with increased revenues. Our selling and marketing headcount totaled 165 employees as of June 30, 2007 an increase of 14 employees as compared to June 30, 2006. In addition, we experienced an increase in recruiting and relocation fees associated with the hiring of additional personnel and an increase in advertising costs.

     We expect selling and marketing expenses to increase in absolute dollar amounts as we continue to grow our selling and marketing efforts but to vary in future periods as a percentage of revenues depending on whether we benefit from increased productivity in our sales force and from increased revenues resulting in part from our ongoing marketing initiatives.

  Research and Development Expenses

		Three Months Ended																Six Months Ended
		June 30,								Change								June 30,								Change
		2007				2006				$				%				2007				2006				$				%
		(Unaudited)
		(In thousands)
Total research and development expense		$	2,813			$	2,258			$	555				24.6	%		$	5,369			$	4,395			$	974				22.2	%
As a percentage of revenues			13.5	%			13.4	%											13.6	%			13.8	%