Avantax Inc (AVTA) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the fourth quarter and full-year 2010 InfoSpace earnings conference call. My name is Jennifer. I will be your operator for today. At this time all participants are in listen-only mode. And later we will conduct a question-and-answer session. (Operator Instructions)As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Stacy Ybarra, Senior Director of Investor Relations. Please proceed.

Good afternoon and welcome type to InfoSpace's fourth quarter and full year 2010 earnings conference call. I'm Stacy Ybarra, Senior Director of Investor Relations.

On the call today are Bill Ruckelshaus, President and acting Chief Executive Officer, and David Binder, Chief Financial Officer.

During the course of this call InfoSpace representatives will make forward-looking statements including, but not limited to, statements regarding InfoSpace's expectations about its products and services, outlook for the future of our business and growth initiatives, acquisition strategy, and anticipated financial performance for first quarter 2011.

Other statements that refer to our beliefs, plans, expectations, or intentions which may be made in response to questions are also forward-looking statements for purposes of the Safe Harbor provided by the Private Securities Litigation Reform Act.

Because these statements pertain to future events, they are subject to various risks and uncertainties and actual results could differ materially from our current expectations and beliefs.

Factors that cause or contribute to such differences include but are not limited to the risks and other factors discussed in InfoSpace's most recent quarterly report on Form 10-Q on file with the Securities and Exchange Commission.

InfoSpace assumes no obligation to update any forward-looking statements which speak only as of the date the statement is made.

In addition, during this call our management will discuss GAAP and non-GAAP financial measures. In the press release, which has been posted on our website and filed with the SECon Form 8-K, we present GAAP and non-GAAP results along with reconciled -- reconciliation tables, and the reason for our presentation of the non-GAAP information.

Now I'll turn the call over to Bill Ruckelshaus. Following his comments, David will review fourth quarter results and first quarter outlook. Then we'll open up the call to your questions. Bill?

Thanks, Stacy, and good afternoon. Today is my first opportunity to address investors and analysts as a group since joining the management team as President and acting CEO.

I'm pleased to report that InfoSpace had solid operating results in the fourth quarter.

Before David outlines details of our financial performance, I'd like to share a bit about why I joined the team here and how we are thinking about growth and value creation going forward.

I took this role at InfoSpace because I truly believe in the Company's potential. Since joining the management team late last year, I have spent considerable time meeting with our teams, evaluating and understanding their plans in greater detail, and also assessing the potential of the businesses we operate.

We have a great team here, and as a Board member for the past three-and-a-half years, I have been consistently impressed with the people behind our Company.

Over the last few months, I've experienced an even greater appreciation for the extended team, witnessing firsthand the energy, can-do attitude, and dedication that our employees possess.

For my part, I am committed to providing direction and leadership that sharpens our focus and facilitates success. As part of this effort I plan to improve the pace of decision-making and operate with discipline, efficiency and intensity.

Through these efforts we are confident that we can augment the results with a performance-based accountability.

I am also encouraged by the product roadmap for 2011. Using our current infrastructure, we will be making a few targeted investments in initiatives that are natural extensions of our core business.

One area of focus for us this year is on improving the user experience on our search sites with feature development and other UI enhancements.

In the fourth quarter we launched several new features that have already led to better paid click-through conversion.

We are also working on initiatives that apply our inherent capabilities to extend monetization beyond search.

We are developing new tools and features that add value for both our consumer audiences and our B2B customers.

One example is the new social commerce aggregation service we are piloting that delivers a list of the best daily deals throughout the country all in one spot.

Internet consumers can subscribe to Daily Deal Fetcher to receive the top daily deals negotiated by all the leading social commerce sites including Group-On, Living Social, and Tipper.

In addition, we are evaluating opportunities to expand inorganically where it makes sense. We will pursue new innovation that we believe has strong potential for growth but that also and importantly leverages our existing businesses and generates return.

I have focused a lot of my attention thus far in helping work with the team to further stabilize our position in 2011, but also put the -- lay the groundwork for thoughts beyond 2011 and setting us up for long-term growth potential.

We are off to great start, I believe, in building a sustainable and meaningful business, and there is still a lot of work to do.

I am very confident in the future of this Company. We have a very solid foundation upon which to build.

The renewal of our 12-year relationship with Yahoo!, which was announced today and which also includes access to Bing's advertiser network, is a testament to the value we continue to bring to our search providers.

We are pleased with the terms and the agreement -- of the agreement which are consistent with our current business performance and to the extent that it brings more traffic, we will benefit even further.

In addition, our value proposition to our search distribution customers is intact and extremely compelling. We are uniquely positioned to capitalize on our ability to drive quality traffic to highly relevant and monetizable search results pages.

I believe there are further opportunities to exploit both our owned and operated and distribution lines of business. We have a variety of initiatives we've identified that will over time stabilize and expand our top line for search on both sides of the house.

Through continued investment and focus, I believe we can thrive and continue to thrive as innovators in search.

Regarding our e-commerce business, David will speak to the specific trends but overall we continue to like this specialty nature of the business, and we will continue to invest for the long term.

While we've enjoyed significant revenue growth, we're not satisfied with the margin performance here, and much of our initiatives in the coming year 2011 will focus on improving the margins and driving to profitability as quickly as possible.

Now turning my thoughts -- to my thoughts regarding M&A. While I believe there are many short and intermediate term wins, in the current businesses M&A continues to be a key area of focus for the Company.

I am personally devoting a significant amount of my time to this pursuit. Consistent with past updates ,we are looking for opportunities to deploy our cash in pursuit of strategically well positioned financially attractive businesses where we feel we can succeed.

Our entire Board and management team are committed to this strategy. We do not have anything to report today, but we are actively evaluating a number of opportunities and will update you all when appropriate.

Creating sustainable shareholder value is our top priority, and I'm interested in sharing our vision with you further over the next couple of months.

With that, I'll turn the call over to David for more details on the operating results for the fourth quarter and full year 2010.

Thanks, Bill, and good afternoon to the folks on the call. I'll start with a review of our financial results in the fourth quarter and full year 2010.

And then give greater details on the performance of each of the segments. I'll end my comments with overall guidance for the first quarter of 2011.

Total revenue in the fourth quarter was $63.9 million. This represents a decrease versus the fourth quarter of 2009 of 9%.

However, it represents growth of 4% from the third quarter of 2010. The decline versus the prior year is driven by performance of our search distribution business which struggled in the first half of 2010.

The decline was partially offset by new revenue from our e-commerce business which we acquired in May last year.

Sequentially, our growth came from both our search distribution business, which began to stabilize in the second half of 2010, as well as from our e-commerce segment which grew impressively through the holiday season.

These positive trends were partially offset by our own search sites which declined solely due to the continued attrition of the Make The Web Better user base we acquired earlier last year.

For the full year, total revenue was $246.8 million which represents an increase of 19% versus 2009. Both of our core search and e-commerce segments grew, with the lion's share of our growth coming from the newly acquired e-commerce business.

Adjusted EBITDA in the quarter was $6 million which compares to $11.2 million from the fourth quarter of 2009, a decrease of $5.3 million or 47%.

It's worth calling out that when compared to the prior year, we recorded a $2.4 million tax benefit in the fourth quarter of 2009 and a severance charge of $1.7 million in the fourth quarter of 2010.

The combination of these two items drove the majority of the sequential decline. Compared to the third quarter of 2010, adjusted EBITDA increased by $1.2 million or 25%. Better performance of our core search business was partially offset by greater losses in our e-commerce segment.

For the full year 2010, we posted $27.6 million in adjusted EBITDA compared to $27.4 million, or $200,000 better than the prior year.

Net income in the fourth quarter was $11.6 million or $0.31 per diluted share, which compares to net income of $7.7 million or $0.21 per diluted share in the fourth quarter of 2009, and compares to a loss of $100,000 in the third quarter of 2010.

This result includes $19 million of other income associated with the settlement of a derivative lawsuit which was completed in the fourth quarter last year.

This gain is partially offset by a GAAP-based tax expense of $6.6 million which is primarily related to the settlement gain, as well as severance charges associated with our prior CEO of $1.7 million in operating expenses and $3.4 million in accelerated stock-based compensation expense.

For the full year, net income was $13.7 million, equal to $0.37 per diluted share, and compares to net income in 2009 of $7.4 million equal to $0.21 per diluted share.

Turning to our balance sheet, we ended the year with $254 million in cash and short-term investments, equal to $7.03 per ending share.

It's important to note that this balance includes roughly $8 million in payables associated with the derivative lawsuit and certain executive severance charges that will be made in the first quarter of 2011.

Net of these payables, our cash balance is $246 million, and we continue to hold no debt. The fully diluted share count in the quarter was 36.9 million, and we ended the year with 36.1 million shares outstanding.

Now turning to the details of our two segments, in the fourth quarter, our core search segment generated $49.7 million in revenue, representing a 30% decrease versus the fourth quarter of 2009 and a decrease of 2% versus the third quarter of 2010.

These results are impacted by the performance of Make The Web Better which generated $3.8 million in revenue in the quarter, down by $13.7 million versus the fourth quarter of 2009 and by $1.5 million versus the prior quarter.

While the performance continues to decline, this is consistent and actually better than the performance we expected when we purchased the assets.

Excluding this impact, our core revenue is down 13% versus the fourth quarter of 2009 but up by 1% versus the prior quarter.

The decline versus the prior year is solely driven by our distribution business. As I mentioned earlier, we experienced relatively weak performance from some of our partners in the first half of the year which stabilized by the third quarter of 2010.

Sequentially, growth in the fourth quarter came from both our owned and operated as well as our distribution business.

In total, distribution equaled 67% of our core segment revenue, down from 81% in the fourth quarter of 2009, but up from 64% in the third quarter of 2010.

For the full year of 2010, our core business generated revenue of $214 million, up by 3% versus the prior year.

Our owned and operated revenue grew by 27%, partially offset by a decline of 6% from our distribution business.

Income from our core segment in the fourth quarter equaled $8.3 million or 17% of revenue. This compares to $11.2 million in the fourth quarter of '09, a decrease of $2.9 million.

As I mentioned earlier, this comparison includes the tax benefit of $2.4 million we booked in the fourth quarter of 2009 as well as a severance charge of $1.7 million booked in the fourth quarter of 2010. Excluding these items, segment income was up slightly.

When compared to the third quarter of 2010, income from our core segment grew by $1.7 million or 25%.

For the full year 2010, income from our core segment was $32.5 million and compares to $27.4 million from the previous year.

Now turning to the performance of our e-commerce segment, in the fourth quarter we generated $14.3 million in revenue, up by $3.1 million or 27% from the third quarter of 2010.

Gross margin equaled $1.5 million, up by $200,000 versus the third quarter and equal to 11% of e-commerce revenue.

Total segment loss was $2.3 million in the quarter compared to a loss of $1.8 million from the third quarter.

While top-line performance exceeded our expectations, our loss expanded with higher cost of logistics and marketing. For the full year, our e-commerce segment generated revenue of $32.5 million and a loss of $4.8 million.

Now for our outlook, in the first quarter of 2011 we expect revenue to be between $57 million and $60 million, adjusted EBITDA between $5 million and $6 million, and net income between $500,000 and $1.5 million, from $0.01 to $0.04 per diluted share.

For our topline guidance we expect some reduction in our owned and operated search, mostly due to the continued attrition of the user base associated with Make The Web Better, and we also expect relatively stable performance from our distribution business.

For our e-commerce segment, we expect lower sequential revenue due in part to seasonality coming off of the fourth quarter. Additionally, we are reducing our investment in certain low-margin categories which will further contribute to a sequential decline in revenue.

As a result of this pull-back, we also expect to improve the profitability of the segment with the loss between $1.5 million and $2 million.

With that, I will turn the call over to the operator, and we're happy to take your questions.

Your first question comes from the line of Clay Moran from Benchmark.

Couple questions. Bill, seeing as it is your first time on the call, wanted to get your thoughts on a couple of things. First, could you expand a little more on the acquisition strategy?

Do you think that will change at all from sort of pursuing first and foremost Internet-type plays, relatively stable cash flow creating businesses? Any more color you can give us on that would be helpful.

And secondly, there's been a number of changes to the Board of Directors, including the Chairman in the past three months or so. Could you talk through sort of what drove those changes?

Sure. Happy to address both those questions. So on the -- with respect to the first question around the M&A strategy, I don't think it is a significant or revolutionary change, Clay, in terms of the approach that we've been taking in the past months.

In terms of really being aggressive and prioritizing our transactional focus and our activity surrounding M&A. We see that there's a lot of value overall with respect to InfoSpace around our existing businesses, and that those can be optimized, we think, in ways that are -- I think offer the potential to improve performance.

There is also, I think, a lot of opportunity to diversify those businesses in directions that don't rely on search revenue and sort of further stabilize those businesses and solidify them.

Then to complement that activity with M&A efforts, acquisitions that would in many respects dove-tail with those diversification strategies, that's absolutely something that we see as being interesting and something we prioritize. In addition to thinking more about how we can use an acquisition to take the Company potentially in a different direction.

So it's a fairly open-ended set of strategies, but I think not altogether different than what we've said in the past. And I think in terms of what we're looking for, it is absolutely, I think, critical that in looking at any opportunity that first and foremost we like the business.

And we think the business is interesting, and it's well-positioned, and it's in a market segment that has favorable dynamics and the Company is well positioned.

And then very closely on the heels would be the financial attributes of the Company, which is, I think, as you were referring to, there is a bias on our part in acquiring a more established business with solid profitability and the value we can create in acquiring a business like that I think is pretty straightforward.

The chances of succeeding in a transaction I think are improved to the extent that we understand the business and it leverages skills that we have at the Company. And so as you mentioned, Internet, we are an Internet Company.

We have a long experience, track record in terms of operating on-line businesses, both B to C and B to B businesses. So that would certainly be an area where we feel like we can understand a Company and diligence it and fairly price it and then execute on the back end.

And then all the other common things that anybody looking to do an acquisition would think about in terms of the team and the culture of the target company and how well those would mesh with our existing Company and valuation and financial impact and things like that.

So that's a long-winded answer to your question. But I think the short answer is that not a lot of significant change, but a lot of focus and prioritization, absolutely.

And your second question I think was around the Board changes, and I think it's really not -- there's nothing particularly newsworthy to talk about there other than the fact that Jim Voelker had been our Chairman for some time, and we were lucky to have him as our Chairman, and he's transitioned off.

And John Cunningham, who's been on our Board for some time, has now agreed to step in and take the Chairman role. So I think it's a natural transition on Jim's part.

We're fortunate to have John, who has got a great history with the Company, stepping in. So I don't think we'll skip a beat or miss a beat in the transition. Everybody's still very supportive and focused on what we're doing.

Okay. And then one more question on the fourth quarter results. Just to be clear, the EBITDA of $6 million that includes a $1.7 million one-time charge, so a clean number would be $7.7 million. Am I reading that right?

Then also, can you give us a sense of how much Make The Web Better contributed to that EBITDA?

Sure, Clay. This is David. You're reading that correct. The $1.7 million was a direct reduction to EBITDA, so without that, we would have been at $7.7 million for the quarter.

Make The Web Better contributed $3.8 million in revenue. Roughly $3.5 million toward the total EBITDA number.

Great, thank you.

Your next question comes from the line of Kerry Rice from Wedbush.

Hi, guys. Just a couple kind of higher-level questions. You obviously mentioned the contract signing with Yahoo!, the extension there.

And I think just to make sure I understand, the terms consistent -- I think you said with current business. Does that mean that they were essentially the same kind of economics that we saw in the previous contract and does it, for any reason, preclude you guys -- I don't know if there was any exclusivity in the sense of you're still going to negotiate with Google for the contract you have with them.

And then on the other question is, maybe you can provide a little bit more color around how you think you can grow maybe the O&O business, or traffic to that O&O business?

It's obviously got great economics, and if you guys got that reaccelerating, it would drop to the bottom line pretty quickly. Thank you.

Thanks, Kerry. This is David. So first on the Yahoo! agreement, we shifted terms around in terms of the economics, and net-net of those shifts, it's pretty much neutral in terms of the yield that we get from traffic that we send to Yahoo!'s network.

So the financial impact to us is consistent in terms of the participation we were getting in the prior deal.

We also continued to benefit to the extent that our business grows, those economics improve. So we were pleased with that continued benefit in the agreement.

And then finally, we have a number of rights that we think are very key to the metasearch capability and our ability to distribute search results to syndicated partners, and all of those rights have continued throughout this renewal.

So we came through this process intact with some upside if we can continue to grow the business.

Your second question regarding owned and operated is a great one. We view that as the greatest yield in sustainable value that we could generate, to the extent we can stabilize and grow that business.

Right now we are focused very much on user experience, bringing through more advanced features so that our search products through all of our websites are better than they have been in the past, and we think that that's a good beginning to growth.

And then in the long run to really get this business beyond stable and to a growth position, we need to focus more on products and applications to acquire users around that search capability.

And I think that that's something for a longer-term initiative that we're hopeful we can speak about more in the future.

Okay, thank you.

Your next question comes from the line of Eric Martinuzzi from Craig-Hallum.

Thanks for taking my question. And welcome aboard, Bill. The Google renegotiation that you guys are looking at, is that a March or April time frame?

That's April 1.

April 1, okay. Obviously it's good to have Yahoo! in the rearview mirror. Is there any impact from that relationship on the potential for the renegotiation with Google?

We're following the process that we always expected, where we get Yahoo! complete first, then focus all of our attention on Google. So that's going as expected. The one thing is, with Yahoo! and the ability to earn more as volumes increase, it provides us with more options as we go forward with our Google renewal.

So I would say that we're moving forward as expected and getting Yahoo! in the rearview mirror helps with us that position.

Okay. And then taking a look at the margins, you talked about the e-commerce business here. This is now two quarters in a row with the loss in the neighborhood of 16%.

You are going to try and fix that by eliminating some product categories. Specifically what are we talking about? Where does e-commerce grow from a product perspective?

That's a great question on e-commerce. What we really saw in the fourth quarter is that, in certain categories the low product margin, coupled with tough logistics and getting product to the end users is putting more pressure on the business than we would like. So the first thing we're doing is we're focusing on products that we can earn a higher gross margin, first and foremost, but also has greater efficiency through fulfillment, through customer satisfaction and returns, so that the net margins of those products can improve over time.

Throughout the course of 2011, our intent is to shift focus more towards those higher net margin production and categories, to expand total top line through better customer experience on the front end, specific across those categories, and then to continue to grow and get the business to a much better profitability position.

But, I mean, within those categories, was the pressure on furniture, was the pressure on exercise equipment? Where are we turning away from and turning towards?

We had a lot of pressure in kids and furniture categories. I would say that we are pulling back to a certain extent, but if we can source product that would provide better logistics and better margin within those categories, we would expand back into them.

So it happened to be specifically in the furniture and kids categories. But I also think there's others that we should be looking at as well.

Okay. And I did see you signed up some new partners on the search side. You're obviously hesitant to put a time line on the -- when do we come out of stabilization on owned and operated in particular and then total search in general?

Is this something that we could see to the point where we're back to a growth trajectory within the current calendar year?

Yes, I think notable is in the fourth quarter, other than the attrition on Make The Web Better, which is as we expected, the business actually grew.

In the first quarter, we're really expecting flat performance from search, which is -- I would call that a stable position, and we believe the distribution business is poised to return to growth.

Thank you.

Your next question comes from the line of Ross Sandler from RBC Capital Markets.

Thanks for taking my questions. Just a quick follow-up on the Yahoo! deal. So is the advertising piece of this deal with Yahoo! or directly with Bing? And does Yahoo! get a rev share?

I was under the assumption that everything on the ad side had already shifted to Bing, but that may not be the case.

And then you mentioned some restrictions around distribution. Can you just elaborate on what those are? Then kind of what's shifted around in terms of the economics.

And then on your Daily Deals initiative, just a quick question? We've heard some push-back on the space from some of the deal originators towards some of the deal aggregators, Living Socially cut off a few of these guys early in the year. Is that the case or how do you work around that issue? Is it just Living Social, or how is that playing out? That's it, thanks.

Okay, hey, Ross, it's David. I'm going to try to keep up with all of your questions. I may have to ask you to repeat some of the later ones.

On the agreement, we're working directly with Yahoo!, which has always been our legacy, and it's our point of contact. The Yahoo! negotiation in the terms of the agreement includes access to Bing's network, to their technology and to their advertiser base.

And I can't speak to how they are sharing the technology or the revenues amongst the advertisers. But that our deal with Yahoo! now covers Bing's capabilities and Bing's reach.

You had followed on with the questions regarding distribution rights. And my comments are really that nothing has changed. Our ability to syndicate results to blend results between the different search engines has not changed in this Yahoo! renewal, which is something that we've always viewed as fundamental to our business and our ability to grow. So no changes is good for us. And in terms of the rates shifting, really it's just a cleanup of various tiers and structures that in total created a neutral financial impact to the business.

So I think those are your questions regarding the Yahoo! agreement.

Yes. Just one on the distribution. So I understand how the blending of the ads and the search results will work. But have they placed any restrictions on the kinds of third-party distribution sources that you guys can partner with or no?

Well, there's always approval of individual partners, and any time we launch a new partner, we receive approvals from all of the search engines that participate. And then there are some broad category exclusions or concerns that have been expressed. None of that has changed in this agreement. It's the same dynamic, the same types of partners that our partners are happy to support, so there's no changes on that side.

Okay, great. Then on the daily deals?

Daily deals, it's a product that we've been in pilot with for about six months, and our take on it is really an extension on metasearch into meta-aggregation. And it's more on the discovery of those deals and the aggregation across the various local providers.

We've got very good relationships with the different groups, including Living Social. And we haven't, in those relationships, received any indications that they have concerns about providing us with the content in the way that we're aggregating.

So the noise or the concern that you may have heard in other areas isn't consistent with our experience. And it may not be consistent with our take on this aggregation product.

Okay. That's very helpful. Thanks for the clarification, guys.

Your next question comes from the line of Rich Tullo from Albert Fried & Company.

Hi, guys, thanks for taking my questions. My first question is, is the net number from the settlement roughly $12.4 million?

Hey, Rich, it's David. That's a way to look at it for the fourth quarter. So net in this quarter, what we booked is $19 million, less the $6.6 million tax expense, and less about $5 million -- actually, no, the $5 million is not covered, so it's $19 million less the $6.6 million.

I just wanted to make sure my numbers were right there. Given the change in the Board, change in the management, how is INSP and the Board thinking about capital structure as we're going forward? It seems like enterprise value is declining as cash is building.

Is there any ideas about returning cash to the shareholder? It's been quite some time since you've executed on a deal.

We understand that that process has probably gone under some change over the last three months, but is there any plans to return cash to shareholders, or can you give us any insights as to a time line as to when you are likely to announce acquisitions?

It's Bill Ruckelshaus. I'll take that question. I think that there is absolutely a lot of thought being given to what the right capital structure is, and your comments are spot-on in terms of the business that we -- the businesses that we're in together generate positive cash flow.

So what was already a sizable cash balance heading into 2010 is even bigger exiting 2010, and as you have no doubt followed, it has been the sort of announced strategy of the Company to put cash to work against transactions, strategic transactions that have opportunity to create enterprise value in the business.

And that being perceived as the best way to create value, the best of alternatives that would include a dividend or share repurchase, or asset divestitures.

So I think for the time being, that is going to continue to be the priority. We have an active M&A process, I was alluding to earlier that we think has a lot of viable directions we could go there. And being able to create value post one of those transactions, ideally if we execute and some of the tax deficiencies associated with our ownership of an asset that's profitable.

And where we're operating well, that is still perceived as an attractive path to pursue and continues to be a focus of ours.

Thank you very much.

Your next question comes from the line of Scott Kessler from Standard & Poor's Equity.

Two questions. The first involves the deal with Yahoo!. Can you provide any more specifics in terms of what's different about the deal now than, say, last year?

And my second question involves something that we get asked about occasionally, which is, can you maybe detail three points about your search technology and why it's proprietary and differentiated and valuable? Thanks.

Hey, Scott, this is David. Thanks for the questions. The first one is easiest. Really, there's nothing different about the Yahoo! deal than last year.

There's certainly certain terms have changed, but net-net of those terms, there's nothing different to the performance of the business, how we expect to grow and how we monetize search queries. So it's a continuation from the next three years as we've been performing in the past.

The second question is an interesting one. The key to our search business, what's uniquely value about it is metasearch. Our ability to bring in multiple search engines to blend the result, including the advertiser results, on a single page creates what we believe to be a good user experience, superior monetization, and also gives us the ability to provide a feature-rich, content-rich search experience, leveraging the development of Google, Bing, and Yahoo!, as well as the other search engines.

To the extent that we leverage even beyond those providers, we can provide comprehensive search results where our proprietary technology sits on top of the development that those engines do.

So we focus more on user experience as opposed to just the search results.

So, David, if could I follow on to that, number one, are there specific patents that are in place and have been, let's say, supported by the PTO, or a court underlying the technology?

And in addition, would it be possible for you guys to build out the search affiliations in a way where, hey, maybe people would want to pick and choose who the metasearch-provided results were from. Because obviously we have seen no lack of new providers over the last couple of years, and could you, in theory, build out the platform in that way with their advertising if, of course, that's the way the offerings are set up? Thanks.

Sure. The first question, yes, we do hold patents, and we hold unique licensing agreements, exclusive licensing agreements, specifically around the metasearch technology. The end user's ability to filter their results is something that we had done in the past on some of our key properties, and it's something that we're currently doing on infospace.com, where you can choose Bing, Yahoo!, Google, or any blending of those different search engines within your results.

We also bring in Twitter, so that you could try to see some real-time conversations that are going on specific to your queries.

So we've experimented with those kinds of extensions to the metasearch capabilities. We'll continue to experiment.

For us, we think they're great user experiences and it's now about expanding that and trying to acquire users behind those experiences.

Great, thanks. And just the last point I would make is, I think a lot of people don't understand or appreciate the, let's say, proprietary nature of the metasearch technology. And I think it would probably make sense to provide a little bit more information about that in the context of maybe even your Investor Relations part of your website. Thanks.

Thanks. We will do that, and you go out and spread the word, too.

Sure.

There are no further questions at this time. Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.