Avantax Inc (AVTA) 2014 Q2 法說會逐字稿

Good day, everyone. Welcome to the Blucora second-quarter 2014 earnings results conference call. This call is being recorded.

With us today from the Company is the Chief Executive Officer, Bill Ruckelshaus; Chief Financial Officer Eric Emans; and the Senior Director of Investor Relations, Stacy Ybarra.

At this time, I would like to turn the call over to Stacy Ybarra. Please go ahead, ma'am.

Good afternoon, and welcome to Blucora's investor conference call to discuss second-quarter earnings.

Before we begin, I would like to remind you that, during the course of this call, Blucora representatives will make forward-looking statements, including, but not limited to, statements regarding Blucora's expectations about its products and services, outlook for the future of our Business and growth initiatives, and anticipated financial performance for the third quarter and future periods. 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 could cause or contribute to such differences include, but are not limited to, the risks and other factors discussed in Blucora's most recent quarterly report on Form 10-Q on file with the Securities and Exchange Commission. Blucora assumes no obligation to update any forward-looking statements, which speak only as 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 SEC on Form 8-K, we present GAAP and non-GAAP results, along with the reconciliation tables, and the reason for our presentation of non-GAAP information. We have also provided supplemental information to our results in the Investor Relations section of our corporate website at www.blucora.com and filed with the SEC on Form 8-K.

Now, I'll turn the call over to Bill Ruckelshaus. Following his comments, Eric Emans will review second-quarter results and third-quarter outlook. Then, we will open up the call to your questions.

Thanks, Stacy, and good afternoon. In the second quarter, Blucora performed consistent with our expectations. Our teams executed and posted solid results. To update, I'll start with tax preparation.

TaxACT completed the tax season in Q2, and finished strong. Revenue was up 17% for the quarter and 13% full season, reflecting balanced growth in filings and ARPU gains through pricing, upsell and attach. Segment income increased 19% and 21% during the same periods, on improved marketing efficiency and operating leverage.

We acquired TaxACT in early 2012. Since that time, we have partnered with their talented team to identify opportunities, invest with a multi-year view, and grow the business. We are pleased with the track record thus far: consecutive seasons of solid execution, strong financial performance, and consistent product innovation.

In the two full seasons since our acquisition, the results are impressive. Consumer eFiles are up 13% overall, outpacing the market. Paid professional eFiles are up 25%, also outpacing the market. Consumer tax ARPU is up 10%, and contribution from ancillary products is up 40%.

On the product front, TaxACT's new offerings in mobile, including an award-winning tablet application, and TaxACT Express, allowing fast, free filing of federal taxes from a smart phone, have been well received and position TaxACT to stay in front of filers as demographics change and digital habits evolve. As the value leader in the growing DDIY market, TaxACT is just getting started. We are finalizing our plans for next season, and see numerous opportunities for profitable growth and further innovation.

Moving now to search and content: InfoSpace performed according to our expectations in the quarter. The team made progress addressing challenges, and continues to navigate changes. Let me start by recapping events to provide some context. The search market has grown progressively more difficult, dating back to late 2012, due to a stream of browser updates, policy changes, and a steady shift from desktop to mobile.

On top of this, InfoSpace faced its own challenges, additionally, in 2014, most notably the following. Number one, a technology change with our search engine partners that disrupted our WebCrawler property. And number two, the removal of Google from our mobile results. Together, these dynamics, combined with the market challenges, contributed to sharply declining revenue and profitability in the first half of 2014.

Our Business has reset very quickly from performance levels in late 2013, but it has reset. Exiting Q2, we are seeing signs of stabilization at WebCrawler, and now believe the technology change issues are largely behind us. WebCrawler marketing efficiency continues to be challenged, but we see clear opportunities to profitably promote metasearch going forward.

On the mobile front, removing Google has impacted performance, but we have a viable search offering in Yahoo, and are actively testing additional partner feeds to enhance results and improve revenue yield on smart phones and tablets. Our distribution partners continue to struggle in the face of a challenging market environment, but we do have partners that are growing, both new and existing, and we will work to strengthen these relationships going forward.

There will be lingering impacts from these transitions, but we now expect the first half of 2014 to represent the significant performance step-down period. We are bringing stability to this Business by emphasizing our core strengths, aggregating multiple content sources, developing compeller user experiences, and delivering superior monetization. While strengthening our search results in mobile, offsetting distribution to clients with new partners, and continuing marketing and investment in our owned and operated sites, like WebCrawler and HowStuffWorks.

Speaking of which, we closed the HowStuffWorks acquisition in the quarter, and are pleased to welcome their talented team to Blucora. HowStuffWorks has a large, engaged, and increasingly mobile audience. Visitors come to HowStuffWorks for information, entertainment, and learning. We see opportunities to ramp content production, boost distribution through marketing and social syndication, and increase direct and indirect advertising revenue.

Our early initiatives here will carry some investment, as Eric will speak to in our Q3 guidance. HowStuffWorks is a strategic addition to InfoSpace, and brings growth opportunity for us in the future. We are encouraged by the progress the InfoSpace team has made in addressing near-term challenges, and positioning the Company for stability going forward.

Now turning to eCommerce: Monoprice performed above our expectations in the quarter, with top-line growth of 5% and contribution growth of 12% from the prior-year period. We continue to experience slowing repeat traffic on the B-to-C side, and moderated our marketing spend to a more profitable place overall. Our long view of the Monoprice business is unchanged. Monoprice delights customers in consumer electronics through quality gear, fair prices, and great service.

Last quarter, we welcomed Bernard Luthi as President of Monoprice. Bernard brings deep expertise in consumer electronics and online retailing. His operating discipline and marketing skills make him the right leader to grow and expand Monoprice going forward. Looking ahead, we remain conservative in our guidance, as we continue to make needed investments in people, process, and systems to better execute.

In summary, Blucora remains well positioned overall. Our strong balance sheet provides the ability to maneuver through challenges, and the flexibility to make operating investments and pursue acquisitions with discipline.

With that, I'll turn the call over to Eric for more details on the financials.

Thanks, Bill. Consolidated revenue for the second quarter was $141.6 million, up 21% verses prior year, and adjusted EBITDA was $29.8 million, up 2%. Non-GAAP net income was $23.9 million or $0.55 per diluted share, and GAAP net income was $8.7 million or $0.20 per diluted share. As a reminder, second-quarter 2014 year-over-year comparisons benefited from the inclusion of Monoprice.

We exited the second quarter with cash, cash equivalents and short-term investments of $278.6 million and net cash of $12 million. These totals reflect share repurchases during the quarter of 1.4 million shares for $25.7 million.

Now, let's walk through our second-quarter segment performance, beginning with tax preparation. Revenue for the quarter was $26.5 million, and segment income was $17.2 million, for a segment margin of 65%, which exceeded our expectations. Putting these results into the context of tax season, which, for financial purposes, is the first half of 2014, revenue was up $98.7 million, up 13% versus the comparable prior period, and segment income was $54.6 million, up 21%, for a segment margin of 55%.

Revenue growth on the consumer side was driven by ARPU gains of roughly 7%, and DDIY eFile growth of 5%. ARPU gains came in the form of modest pricing adjustments, software product mix shifts, and improved add-on product attach rates. We also generated year-on-year revenue growth in both DDIY small business and tax professional software offerings. Notably, eFiles for our professional software were up 12%.

Segment income growth for the first half of 2014 reflects revenue gains and marketing efficiencies. Marketing was up roughly 1% versus prior year, as we lowered cost per acquisition in our core consumer software offering.

Looking to the second half of 2014, we expect revenues of $4.5 million to $5 million, and a segment loss of $5.5 million to $6 million. Revenue will be slightly weighted towards the fourth quarter, while the loss will be more weighted, approximately 60%, towards the fourth quarter as we begin to ramp for next year's tax season. For the full year, we expect tax preparation revenue to be $103 million to $103.5 million at a segment margin of approximately 47%.

Turning to our search and content segment, which has been renamed following the completion of our acquisition of HowStuffWorks on May 30: Revenue for the quarter was $79.8 million and segment income was $14 million, down 16% and 22%, respectively, from prior year. Revenue performance was in line with our expectations, while segment margin exceeded at roughly 18%.

Owned and operated revenue was down 5% versus prior year, due to attrition in our legacy destination search sites, which was partially offset by revenue growth from acquiring users to our WebCrawler site, as well as certain partner sites. On a sequential basis, owned and operated revenue was down 42%.

As discussed, WebCrawler was significantly impacted by a technology change implemented in late February. While we believe we have addressed the technology-related issues, and stabilized the business, we continue to optimize and adapt to an evolving landscape, which we expect to continue to cause some margin volatility that will likely settle out over the back half of the year.

Distribution revenue was down 17% versus second-quarter 2013, and down 21% sequentially. Existing partner revenue was down 14% versus prior year, and new partner revenue was $1.2 million versus $4.7 million in the second-quarter 2013.

As Bill discussed, market dynamics continue to challenge our partners. In the second quarter, we experienced monthly sequential declines that present headwinds as we navigate the third quarter.

Turning to the third quarter, we expect revenue of $73 million to $81 million, and segment margin of 14.5% to 15.5%. The expected sequential margin compression, in part, is due to integrating and on-boarding of HowStuffWorks, which we expect to have a temporary impact.

Closing on the search and content segment, the business is in the midst of a transition that may extend beyond the third quarter. As a result, our current view of fourth-quarter performance is roughly in line with the high end of our third-quarter guidance. Our objectives in managing through transitions are clear: focused execution and disciplined investment in areas that we believe provide values to users and advertisers, and produce stable results. We believe this is a prudent approach, given current market dynamics.

With that, let's move on to eCommerce. Revenue for the second quarter was $35.3 million and segment income was $2.4 million, for a segment margin of approximately 7%. [Quarter 2] margin was impacted by $1.2 million non-recurring cash charge. Normalizing for this, segment income was $3.6 million or a margin of approximately 10%. Revenue on a pro forma basis was up approximately 5%, consistent with expectations; normalized segment margin was down approximately 100 basis points, which is better than expected.

Year-on-year revenue growth reflects a 13% increase in average order value, offset by a 7% decline in order volume. As Bill noted, we continue to be conservative in our forward expectations; and for the third quarter we expect revenue growth in the low- to mid-single digits, and segment margins in the 8% to 9% range.

Moving to unallocated corporate expenses, second quarter came in at $3.8 million, and we expect third-quarter costs to be a bit north of $4 million.

Closing with our consolidated third-quarter expectations, we expect consolidated revenue between $112.5 million and $122.5 million; adjusted EBITDA between $7 million and $10 million; non-GAAP net income of $3.2 million to $6 million, or $0.07 to $0.14 per diluted share; and net loss of $6.3 million to $4.2 million, or a $0.15 to $0.10 loss per share.

With that, let's turn the call over to the operator, and we will take your questions.

(Operator Instructions)

Dan Kurnos, Benchmark.

Let's start with the search and content segments. First, Eric, maybe some color on the impact of HowStuffWorks on the guidance would be helpful?

We're not going to break out HowStuffWorks specifically. It is still fairly immaterial to our overall results, and expect it to be so during the back half of the year.

As we said when we acquired the business, we expect it to be accretive, but there is some ramping as we look to integrate this and transition it out of Discover and make some initial investments to get it up and running. We're going to run it a little differently than had been run in the past, specifically focusing on some investments in content, as well some different ad models.

It's going to take a little bit to get that up to speed, but I do think it's some growth we'll be able to talk about in the future. Quite frankly, for the back half of the it's not a material story.

Alright, great. Thanks. Two bigger questions, first, on O&O, you talked about the significant step down because of WebCrawler. I know you talked about the business stabilizing. It sounds like you're investing in customer acquisition again.

How aggressive do you think you're going to be, understanding that the environment is still a bit disrupted, if you will? How long before we could see more meaningful improvement in the O&O business?

This is Bill. I'll take that one. As we talked about in May, and even dating back to our February call, the changes that we're now addressing in the search business, in part, have to do with the removal of Google from our mobile results, but also a technology issue we were having earlier in the year, very specifically with WebCrawler. We think we're largely resolved, as it relates to the technology issue.

The new realities, as it relates to economics, in the acquisition effort and promoting metasearch, as it relates to mobile. Particularly, I think we're still adjusting to. It is somewhat volatile, but it would certainly be our expectation that we could continue to actively promote that product.

Can I press you a little bit more one the mobile issue, Bill? I know that you've got Yahoo mobile as a backup.

We had talked, when you lost of Google mobile contract, that there could be some optimization within mobile. Maybe talk a little bit about how those efforts are going?

You did mention, I think, some other potential partnerships that you could press to try to recover some of that lost revenue. Any additional color would be helpful?

I think, just as I said in the beginning remarks, we do have a viable mobile solution with Yahoo. We are in discussions with other content providers, other ad feed providers that can be paired with Yahoo to create a very rich mobile experience and one that also, we expect, will generate revenue for us.

It has been a transition in removing Google and identifying partners that we can now complement with Yahoo, and it would fall into different categories. I would say it could potentially be search, but it could also be other categories like pay-for-call or native or shopping, and very likely will involve many of those together, depending on the nature of the query.

Great. Thanks. Obviously, on the distributed side, Chrome 36 is the topic du jour, and I'd love to hear your thoughts on how that's impacting your partners? Just maybe some clarification?

It sounds like from your guidance that Q3 is going to be the overall bottom for search, but maybe split that up? Do you still expect sequential declines in distributed with some recovery in O&O? Is that the right way to think about?

Hey, Dan, it's Eric. I would say that, first of all, the downloadable story for us dates back to the beginning of 2013 where we implemented the initial Google policy changes. I would say from that we've seen a drop in concentration of partners that have that business model.

Now, it still represents a meaningful amount to our overall revenue composition. Although it seems like overall our distribution business is under pressure, but part of the benefit of having a diversified network.

Certainly, that entire business has been under pressure for, basically, dating back to the second-quarter 2013. We're working with partners and working with our search engine partners to find good ways to approach the market where our distribution partners can find the lifetime values that they feel comfortable investing the capital.

We have seen sequential declines and did see them during the quarter. I think the good news about the DLA space, if anything, is it's really not susceptible to the mobile changes, but unfortunately it, it is susceptible to a steady stream of policy updates and browser updates and Chrome 36 being the latest one.

Certainly, our guidance contemplates the risk there. We are talking to our partners and we've been talking very early to our partners of how they're going to adapt. We have a lot of confidence that they'll be able to.

Given it is a B2B business and our visibility into their individual lifetime values or when they deploy capital and basically there conversions post Chrome 36. We expect them to be conservative, and that to put a further pressure on that, call if you will, sub segment of distribution business in the third quarter and probably leading into the fourth quarter, which is going to put pressure in.

Although we would like to call the third quarter is the bottom, I think that distribution remains under pressure and we have seen monthly sequential declines through the second quarter. I'm not ready to put a stake in the ground, and I think in his current dynamic it doesn't serve us any good to predict this as the low, but we're certainly doing everything that we can to make it that way.

Fair enough. Any chance you'd like to update us, then, on what the percentage of distributed is from DLA relative to the 40% to 45% that you had initially posted?

Is not a number we talk about publicly, but I will tell you it has dropped from that. The thing I would say is, it is a meaningful portion to our distribution.

It has definitely come down significantly from where we were before. We have not updated that number, and don't have plans to do so.

Okay. Last for me, just on the eCommerce side, so I don't spend all my time on search. Not only the margin enhancement but particularly gross margin enhancement you got in the quarter, understanding the challenge an order volume. If you could just give us some thoughts on to where you got some traction on the gross?

Obviously, we've gone through some transitions there with leadership. Also, we're very much in real-time, diagnosing the various levers we can pull within the business. We tried a lot of things.

In the second quarter, we tried some things that did benefit that gross-margin line. I would say some of it has to do with -- relates to a little bit of our discounting promotions, as well as a little bit around just product mix.

Ultimately, it's translated to a improvement, if you will, in contribution margin year over year, or the absolute dollar contribution margin. It's just a manifest of a lot of different things we're trying to improve. Gross margins are something we're focused on. I would even say further than that, given some of the marked inefficiency challenges we have, we really look at that business on a contribution margin basis and are looking for things that will impact that in a positive way.

Gil Luria, Wedbush Securities.

You talked about monthly declines in search throughout the second quarter. How about July? Did July continue to decline over June?

Let me clarify one thing. I was talking specifically, Gill, there -- this is Eric. Thanks for the question.

Specifically talking about the sequential declines we saw in the quarter, really related to our distribution business. In fact, we've seen some traction in growing our owned and operated business through the second quarter. I will say that the distribution trend remained challenged going into July.

We also saw also some sequential growth on our owned or operated side going into July. It's a bit of a mixed bag, and quite frankly, as we talk about stability, certainly, we want to find the bottom on distribution and turn that into sequential growth.

We also like the stability of concentrating our business a little bit more towards where we actually owned the end-user customer relationship. That certainly is there for WebCrawler and certainly a lot of the thesis behind HowStuffWorks and the content asset that that is. A little soft, continuing to see sequential declines, but only on the distribution side going into July.

Got it. Then eCommerce side, you have a new leader there. Your guidance implies sequential growth. You talked about trying a few things during the quarter. At what point are you going to be ready to communicate a broader strategy of how you return the business to higher growth rates? How much time are you going to give the new leader to establish that strategy?

Hey, Gil. This is Bill. Given that he's been on board for a few weeks, I think will give them a little bit more time. Certainly, there's not a lot of education that needs to take place.

Bernard is somebody who's spent most of his professional career in and around this space. We're already seeing the benefit of that. I imagine, on future calls, we can provide more insight as to what it is we're trying to do and try to shape what the strategy is going forward and what to expect in more detail, but this particular call we wanted to give him a hall pass.

Finally, on tax, the new forms that the IRS has published for healthcare that some of us are going to have to fill out, look fairly complicated, like a pretty decent extension to the tax form. Is there an opportunity for you to charge for those forms incrementally the same way you would charge for state incrementally if you had the opportunity, or e-file if you had the opportunity?

Gil, this is Eric. I'll take that one. I would say that, yes, the forms have recently come out, and we're digesting those. Always with DDIY the focus is on making sure the tax filers don't perceive the complexity in their return. This will be an opportunity for us to prove that we're good at that again.

As far as charging for it like we would state, I think it's too early to certainly give any pricing strategy, but I will tell you that the value of the team is really -- that is part of the federal tax process. Therefore, we haven't, in the past, employed form-based pricing on the federal side. I don't see -- we don't look at that as an opportunity to take pricing, but rather another way to offer an enhanced services to our existing base and our growing base of tax filers.

Brian Fitzgerald, Jefferies.

This is Stan Velikov for Brian. Can you give us more color on how HowStuffWorks acquisition fits into your broader strategy?

Yes, this is Bill. Happy to take that one. We are pleased to welcome the team. We really like what HowStuffWorks is doing. It is an adjacent asset. It's a content property that is now being delivered across all device types in digital.

They've been around a long time. They have tremendous eye for creating content themselves. It's not really so much network based at this point as it is original content created by their team.

It falls into about 11 or 12 different categories. The opportunity that we see there is to really extend the owned and operated footprint we have in search into more of a content model where you tend to see higher levels of engagement with users, and also in the process, it opens up more avenues for advertising models, be they search or non search, that can give us some diversification and additional ways to grow.

It was something that we came across an pursued very aggressively. HowStuffWorks had been operating inside of Discovery since 2007.

The more that we get to know the business and got to know the team, we got really excited about the opportunities. We are busy at work and integrating the business and identifying areas where we can make investment that haven't been made over the years, and we're really going to see it as a catalyst going forward.

Scott Schneeberger, Oppenheimer.

I missed on the tax segment guidance and one of the numbers tripped me up in there. Could you repeat that and qualify the time period, please?

Scott, this is Eric. The easiest way to talk about it is, for the year we're looking at $103 million to $103.5 million top line at about a 47% segment income margin. The back half of the year, we're going to lose money, which is typical for us outside of tax season and those losses will be more heavily weighted towards the fourth quarter as we wrap up for tax season.

What was the 55% margin you noted? Was that EBIT or EBITDA? Was that just for the first six months of the calendar year?

Yes, that's correct. We call segment income, but, yes, EBITDA is the right way to think about that.

Just framing it year over year, this guidance dump, it looks like you're looking for stable revenue guidance in the low to mid single digits. How should we look at margin year over year? I don't have those numbers in front of me. Is that an expansion or fairly consistent, the 47%?

You're talking -- make sure you're not getting ahead of me --

Full year.

You're thinking 2014 over 2013?

Yes. Exactly.

Actually, we did expand. We grew, year on year, about 13%, 14% and expanded margins, call it 2.6%.

Next question, going forward for the next year, how does that compare? What type of expansion you looking for?

I think I'm going to reserve comment on that. We're in the midst of our planning and wrapping that up. I think we'll give a little more clarity on that a little further into the year.

Fair enough. Just following up on the intavary offerings with INTAX. Could you give us a little bit more color on -- sounds like you had some success with the revenue generated on those. Could you elaborate a little bit on, specifically, which products and what were the leverage you pulled?

Yes and no. I would say that we don't break those out specifically. I will say that we saw improved detach rates in general on our bank products, and then we've also saw increased contribution in attach on audit, but we don't really break those numbers out specifically, but those are the headlines.

Thanks for sharing that. Lastly for me on, TaxACT Express, it's initial year here. What were some of the takeaways, in tablet as well? What were some of the takeaways? What you saw? What challenges, what are easy improvements and how happy were you with what you saw and expected?

As we talk about improvements, will reserve comment there. I think a good mobile experience tablet or smart phone is just table stakes right now. We're very excited with what the team has come up with in the last two years.

Although, it represents a very small contribution to our revenue and segment income results, we are seeing increased downloads and we are hearing good things about our product and its experience. We like the progress we're making there. I think it's a place you have to be and a place that you will continue to see us invest in.

Mitch Bartlett, Craig-Hallum Capital Group

Most of my questions have been answered. Just looking at Monoprice, though, I'm still a little confused. You talked about traffic being down.

I'm just wondering maybe at the 60,000-foot level you could just talk to what changed there? Has the value proposition for the customer weakened in any way?

Part of that strategy, I think, was that you are eventually going to put a little juice in on the marketing side yourself. Could you quantify the traffic decline and whether you instituted any marketing above and beyond what was originally there?

Hey, Mitch. This is Bill. Just for clarification, the declines that we referenced were with respect to order volume, but I'll just assume that's one in the same to address. Monoprice is -- what we liked about the business last year when we did the acquisition and we continue to like is the value they're bringing.

It's largely premised around feature parity in key product categories that are actually quite broad and deep, as well as price advantage, and wrapped with great service. The order volume falloff, we think is something we're spending a lot of time looking at. Certainly, Bernard, who's newly aboard, is going to help us get to the bottom of.

The evaluations are really centering around the price advantage in the key categories and are we holding up. In a market environment that often times includes shipping as it relates to the overall assessment as to comparative pricing. That's something that just takes a lot of vigilance and instrumentation to make sure that in the categories that really matter to you that that advantage is holding up.

The second thing is, as it relates to the company's growth over the years, they've broadened their assortment. In moving into certain categories that actually have less purchase frequency, inherently. So, you end up with comps that are little difficult as though mix shifts take effect. That's two insights I would provide.

Generally, we're extremely excited about the strength of the Monoprice franchise. The appetite at the Blucora level to invest in Monoprice is still there.

Certainly, we want to make sure that we're executing day to day in exactly the right way, such as the return on that marketing spend is going to be there. Really, I think that's what Bernard is going to help us to very quickly.

Alex Paris, Barrington Research.

It's Joe filling in for Alex. First question for Eric, and I apologize, I've been jumping between calls, so you might have addressed this. I heard your comments within search in terms of guidance. You talked about Q4 revenue being similar to the high end of Q3. Did you address margin expectations?

We basically said that the high end of both revenue and segment income. Look, I think that this is a very dynamic environment, and what we're trying to do is give some color on a relative range of where we think the fourth quarter can fall out.

We'll certainly update you guys at our next call with that, but we wanted to make sure that people understood that it is very dynamic right now and that as we think about the fourth quarter and investors think about the fourth quarter, thinking about the high end of third quarter is the right way to be thinking about that rather than maybe some of the historical trends that the business has done in 2013 and 2012.

Bill, for you. I don't know if you addressed this either. Share buybacks, did you do any in the quarter? I think you still have a repurchase outstanding, and given valuations now, could we assume you'd be a little more aggressive in buying back stocks?

Without making any predictions in that regard, you can see in the second quarter that we did take advantage of the authorization. The authorization was actually increased during the period.

I think Eric spoke to the remaining amount, but we like the flexibility that that provides us. We've talked in the past about employee equity dilution being a focus as it relates to share repurchases.

Certainly, having that flexibility going forward, and we just need to balance the use of capital in that direction versus other directions, like acquisitions. Those are determinations we make on an ongoing basis.

Matthew Galinko, Sidoti.

Just curious if you see potential -- I guess further investment or an acquisition for content originators under the InfoSpace brand?

I would say that HowStuffWorks has plenty of room to grow, and so most of our investment efforts over the foreseeable future will be around bringing that business out of its prior owner, which we're nearly complete doing. Then, also just optimizing it, which I think we have a ways to go before that's done.

We also think there's an interesting touch points with the InfoSpace search business that we're going to take advantage of. We like that area and we like HowStuffWorks, and we think it has a lot of upside potential.

This ends the Q&A session and the call for today. Ladies and gentlemen, thanks for participating in today's program. This concludes the program. You may all disconnect.