Innodata Inc (INOD) 2014 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Good morning and welcome to the Innodata fourth-quarter and fiscal-year 2014 earnings conference call. Today's conference is being recorded.

At this time I would like to turn the conference over to Ms. Amy Agress. Please go ahead.

Thank you, Paula. Good morning, everyone. Thank you for joining us today. Our speakers today are Jack Abuhoff, Chairman and CEO of Innodata; and O'Neil Nalavadi, our CFO. We will hear from O'Neil first, who will provide a detailed review of our results for both the fourth quarter and the 12 months ended December 31, 2014; and then Jack will follow with additional perspective about the business. We will then take your questions.

First, let me qualify the forward-looking statements that are made during the call. These statements are based largely on our current expectations and are subject to a number of risks and uncertainties, including, without limitation, that contracts may be terminated by clients; projects or committed volumes of work may not materialize; our Innodata advanced data solutions segment, IADS, is a venture with minimal revenues that has incurred losses since inception and has recorded impairment charges for all of its fixed assets; we currently intend to continue to invest in IADS; the primarily at-will nature of contracts with our content services clients and the ability of these clients to reduce, delay, or cancel projects; continuing content services segment revenue concentration in a limited number of clients; continuing content services segment reliance on project-based work; inability to replace projects that are completed, canceled, or reduced; depressed market conditions; changes in external market factors; the ability and willingness of our clients and prospective clients to execute business plans which give rise to requirements for our services; difficulty in integrating and deriving synergies from acquisitions, joint venture, and strategic investments; potential undiscovered liabilities of companies that we may acquire; changes in our business or growth strategy; the emergence of new or growing competitors; various other competitive and technological factors; and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to update forward-looking information, and actual results could differ materially.

Thank you. I will now turn the call over to O'Neil.

Thank you, Amy. Good morning, everyone. Thank you once again for joining us today to review our financial results for the fourth-quarter and financial year 2014.

I will start with our full-year 2014 performance. Our revenues in fiscal 2014 were $59 million compared to $64 million in 2013. The decline was primarily attributable to a $1 million decline in e-book revenues from a key e-book customer and the completion in 2013 of a $5.3 million project for another client in our content services business. These declines were partially offset by $1.7 million revenues in our media intelligence business.

Let me now review the segment-wide analysis. Content services was the main contributor to our top line in 2014 with $57 million in revenues compared to $63 million in 2013. Gross margins from the segment were 32% and operating margins were 8% compared to 30% and 7%, respectively, in 2013. Despite the decline in revenues, we maintained our gross and operating margins by managing cost efficiencies and as a result of favorable exchange rates.

In our IADS segment, in which we continue to invest in new products with the goal of achieving long-term recurring revenues, revenues were $600,000. And we incurred losses of $5.6 million in 2014 compared to revenues of $1.1 million and pre-impairment losses of $6.2 million in 2013. We are pleased to report that we commenced providing Synodex services for a large insurance carrier in November.

Our media intelligence segment, consisting of MediaMiser and Bulldog products, contributed $1.7 million in revenues for five months during FY 2014. We acquired MediaMiser in July and Bulldog Reporter in December 2014. At the end of Q4 MediaMiser products empowered 120 customers, including Fortune 1000 companies; small and medium businesses; government institutions; and not-for-profits by providing real-time media intelligence through monitoring and analyzing both traditional and social media for brand impressions, competitive trends, and operational risks.

I will now review the consolidated adjusted EBITDA, pretax numbers, and net earnings. Our adjusted EBITDA in content services was $8.4 million in 2014, offset by EBITDA losses of $5.4 million in IADS and $50,000 in media intelligence. Pretax operating earnings in content services were $4.4 million, offset by pretax losses of $5.4 million in our IADS business and $300,000 in our media intelligence business.

Excluding acquisition-related amortization costs, media intelligence incurred a loss of $50,000. Total Companywide pretax loss was $1.5 million compared to $7.4 million in 2013. Net losses in 2014 were $970,000 or $0.04 per diluted share compared to $10.6 million or $0.43 per diluted share in 2013. The 2013 losses included a valuation allowance of $7.1 million in respect of our deferred tax assets in addition to the impairment expense of $5.5 million.

As we have discussed, our investments in IADS and media intelligence represent our ongoing efforts to expand our portfolio of recurring revenue engagements to achieve growth. In both of these business segments, our vision is to provide high-value digital data services to businesses in the context of long-term relationship with clients. In both IADS and media intelligence we are providing our Big Data analytics products that help our customers make better decisions and improve performance with meaningful, relevant, and accurate digital data.

Here is why these new businesses make sense: first, there is a growing market for relevant and accurate digital data and analytics from all sorts of users; two, these products leverage our core competencies in creating high-value digital data with a low-cost operating structure and advanced technologies; three, the business models for these new businesses are based on predictable and recurring revenues combined with new addressable markets for Innodata. We acknowledge that these new products have both new venture and scaling risk. Jack will talk more about the progress we are making in executing our strategy to achieve growth in a few minutes, after I complete my review.

I will now review the fourth-quarter results by comparing them with the third quarter on a sequential basis. Total revenue in the fourth quarter was $15.9 million compared to $14.8 million in the third quarter, a sequential growth of 7%. Revenues from our top three clients as a percentage of revenues was in the range of 41% to 42% in both quarters. All three segments contributed to our growth in the fourth quarter.

On a segment basis, content services reported $14.6 million this quarter compared to $14 million in Q3. The increase was driven by higher volumes from a large cable customer and further ramp-up in our new European projects, together amounting to $750,000, which was offset by lower volumes and revenues of $150,000 in other projects.

Revenues in IADS business were $250,000 this quarter compared to $100,000 in Q3 as a result of having commenced providing Synodex services in November for a large life insurance client. Media intelligence contributed $1 million to the top line, ending the quarter with 120 subscriber customers compared to 113 at the end of Q3. Our retention rate exceeded 90%. These figures in media intelligence do not include any revenues or customers from the recently-acquired Bulldog Reporter business.

Our revenues in Q4 at $15.9 million were higher than our guidance range of $14.5 million to $15.5 million, because some of the volume for our large e-book customer which we had slated for Q1 2015 came in faster than expected, as publishers were anxious to get these titles in the store before holidays. As far as we can anticipate, this will lead to lower revenues in Q1, which we have baked into the guidance we will share with you later on the call.

Let me now review our gross margins. On a consolidated basis gross margins in Q4 were $4.3 million or 27% of revenues compared to $4.1 million or 28% of revenues in Q3. This increase was primarily driven by a $150,000 increase in contribution by our media intelligence business.

On a segment basis, gross margins in our content services business was $4.8 million in both Q4 and Q3, although our revenues were higher by $600,000. Our cost of sales were higher primarily because of ramp-up expenses of $200,000 not covered by revenues in respect of the European projects we recently won.

Our media intelligence business reported gross margins of $400,000 for three months, or 40% of revenues, compared to $270,000 or 41% of revenues for two months in Q3. Excluding acquisition-related amortization expenses, gross margins in media intelligence were approximately 55% of revenues in both the quarters.

Our selling, general, and administrative expenses increased marginally to $4.5 million or 28% of revenues this quarter compared to $4.3 million or 29% of revenues in the previous quarter. The increase in SG&A expenses was primarily due to the inclusion of MediaMiser for full-quarter basis, whereas MediaMiser was only included for two months in Q3.

In Q4 we incurred in impairment expense of $400,000, primarily for writing off assets as a result of consolidating two of our India production facilities to achieve efficiencies. This consolidation will reduce our rental and facility expenses by approximately $500,000 per annum, commencing partly in Q2 of this year.

Moving down to pretax earnings, we incurred a pretax loss of $550,000 this quarter compared to a pretax loss of $120,000 in Q3. This quarter's pretax loss includes the impairment charge I just mentioned. Pretax earnings in our content services business was $1 million or 7% of revenues compared to $1.4 million or 10% of revenues in the prior quarter. Pretax losses in IADS were $1,350,000 million in Q4, which is about $100,000 lower than the losses in Q3.

Media intelligence reported pretax losses of $200,000 after taking into account $150,000 of acquisition-related amortization expenses; $15,000 for acquisition expenses relating to the Bulldog business; and $50,000 for the development of a new database product, which we hope to launch in Q2 2015. Excluding these expenses, the media intelligence segment was profitable in Q4 2014.

We had a net tax benefit of $100,000 this quarter as a result of year-end true-up from transfer pricing adjustments compared to a tax expense of $300,000 last quarter. Net loss after minority interest was $280,000 this quarter compared to $220,000 in the third quarter.

Turning now to our adjusted EBITDA and cash flows, our adjusted EBITDA in Q4 was $1 million compared to $900,000 in Q3. Our adjusted EBITDA was comprised of $2.3 million from content services, offset by a $1.2 million loss in IADS and a $50,000 loss in MediaMiser.

I will now review our balance sheet. We had cash and investments totaling $24 million at the end of Q4 compared to $26 million at the end of Q3. Of this approximately $1.7 million was held in the US, and the rest was held overseas by our international subsidiaries.

We used $1.8 million of cash this quarter compared to $2.1 million in the prior quarter. The use of cash included $2.4 million increase in working capital; $500,000 in capital expenditures, including the Bulldog acquisition costs; offset by net EBITDA of $1 million. We expect our Q1 2015 CapEx to be in the range of $400,000 to $500,000.

Looking at our working capital, accounts receivables were approximately $10.4 million at the end of Q4 compared to $8.6 million at the end of Q3. In terms of days sales outstanding, our AR balances averaged at 69 days this quarter compared to 65 days in Q3.

I will now turn to our foreign exchange hedging program. At the end of the fourth quarter, we had $19.4 million in outstanding foreign currency forward contracts to hedge our ForEx exposures. In Q4 the US dollar gained 2% against the Indian rupee and Philippine peso. And based on mark-to-market, this resulted in a $300,000 notional unrealized loss on our outstanding hedges. These forward contracts will mature over the next 12 months, and any loss or gains on these contracts will be recognized upon maturity.

Let me now review our guidance for Q1. We expect revenues in the range of $13.5 million to $14.5 million. The segment-wise breakdown is: content services, between $12.2 million to $13 million; IADS, between $300,000 to $400,000; and media intelligence, between $1 million to $1.1 million.

Content services is going to be lower, as we benefited from higher e-book volumes in Q4, and this is likely to result in lower volumes in Q1. We also have a gap of approximately $500,000 from project completions in Q4 combined with the flow of lower volumes of new projects commencing in Q1.

This guidance also takes into account the impact of recent dollar appreciation against the euro and Canadian dollar, which is expected to reduce our content services revenues by $250,000 and media intelligence revenues by $150,000 on a quarterly basis. This erosion is on account of currency translation, as the US dollar has appreciated 15% against both euro and Canadian dollar when compared to the average exchange rates in 2014.

The revenue range that I just provided is below our breakeven-level revenues, and therefore we expect to incur pretax losses of approximately $1.8 million to $2.1 million in Q1. Our breakeven revenues on a consolidated basis is approximately $16 million per quarter. Segment-wise it is: one, $12.8 million to $13 million per quarter in content services; between $2 million to $2.5 million per quarter in IADS; and between $1.2 million to $1.3 million in media intelligence.

For the purposes of this breakeven analysis, we have made the following key assumptions. First, we will achieve labor margins of approximately 65% in our content services and IADS business. Two, we are excluding acquisition-related amortization costs of $150,000 per quarter from our cost structure -- and also any capital expenditures in IADS, which we are continuing to expense through the income statement.

Thank you. And now I will pass the call over to Jack.

Thank you, O'Neil. Good morning, everyone. Thank you for joining us today. O'Neil has provided a detailed financial review of the fourth quarter and 2014.

I'll now segue into sharing with you my perspectives on 2015 as we kick off the year. And I'll do this by running through each of our reporting segments, providing my thoughts on where we are now and what we're looking to accomplish in the course of 2015.

I'll start with the Synodex division of IADS. In the fourth quarter our revenue increased from $70,000 to $200,000, as we successfully launched our Synodex 3.0 solution with the new insurance carrier client we had announced earlier in the year. We have approximated the value of this contract at $1.6 million per year. We are in the final stages of putting in place new contract with a large reinsurance client under which we believe we will achieve an annual revenue run rate of approximately $2 million, taking into account both current work with this client as well as new scope, with possible expansion opportunities beyond that.

We are continuing to get a very positive reception to our new Synodex 3.0 product, and we are forecasting a number of additional opportunities closing near-term. For example, we are now in contract negotiations with a leading life insurance company which wants to incorporate our technology into their underwriting environment.

We expect that this contract will be worth approximately $700,000 per year in combined licensing and services fees. There is quite a bit of momentum on the client side to get this closed, and the client has assembled an internal task force consisting of IT professionals, product managers, attorneys, and underwriters to get it done.

Another example: senior management of a leading domestic and international insurer and financial advisor has decided, after extensive testing and numbers crunching, that it wants to move forward with Synodex 3.0. They feel that our service comports well with their overall strategic emphasis on Big Data. We are currently in contract discussions with this company as well, and the company is in the process of making final decisions about scope and timing. There are two other smaller companies who have also indicated a desire to start work with us by the end of March.

Looking beyond the next couple of months in terms of what we hope will be the next wave of closed deals, an industry-leading mutual company that has been struggling to keep up with its medical file review has indicated that it wants to proceed with us. They've scheduled a due diligence visit to our production site in March. This client could represent several million dollars in opportunity value for us.

In Q4 we also conducted a successful first phase of a Synodex 3.0 pilot with a top-five mutual insurer, and we are now engaged in the next phase of this pilot. And we are keeping an eye on what could be a multimillion dollar opportunity there, as well.

Beyond these clients, we are prioritizing another five companies from amongst the longer list of companies with which we are engaged in discussions. In the quarter -- and again, based on word getting out about Synodex 3.0 -- we were quite pleased that five companies reached out to us to request initial meetings, including a large reinsurer that we met with several years ago.

So with all of this activity taking place, I am feeling confident about the year ahead for Synodex. That said, there will be a lot of careful work required to get these deals closed, and timing is always hard to predict.

I'll now turn to the content and services segment. The challenge with the content and services business is, of course, the one-time, project-based nature of a considerable portion of its revenue stream. As you may recall, we signed letters of intent, announced last July, with two divisions of a large European information company that selected us to provide end-to-end content creation and management services. We started work on these engagements late in the third quarter of 2014, and we continued our ramp-up in the fourth quarter.

In terms of new content services bookings, we reported to you in the third quarter that we'd signed a contract worth nearly $350,000 in revenue with a large e-commerce retailer of college textbooks and learning solutions that is a key supplier to Amazon. This account continued to strengthen in the fourth quarter. We created 50 online study briefs and solution sets to assist college students in critical subject areas including sciences and mathematics.

We will be creating 50 more study briefs in Q1 2015. The total booking value of our engagement with this client has crossed $500,000. In 2015 we also expect to help this client build out its capabilities in mobile technologies and e-pub.

In the fourth quarter we also had a few notable wins from existing customers. We doubled our current technology work with a leading nonprofit global rights and licensing company that serves the publishing industry. Our engagement is now worth $250,000 annually, with a total contract value of $750,000. For one of our large clients, a $5 billion information company, we signed a recurring revenue contract worth $240,000 annually, with a three-year term providing ongoing development and support for its MarkLogic content management platform.

We are also looking at ways of teaming with our clients to pursue market opportunities. We have entered into an agreement with a leading education company that provides instructional curriculum, services, assessments, and technology for the pre-K, higher education, and professional learning markets, under which we will team with their learning solutions professional services division to jointly sell our combined products and services to North American trade and professional associations. We have had several joint engagements already, supported two RFP submissions, and are in advanced conversations with another leading North American association about building a digital delivery content platform.

As O'Neil mentioned, we are anticipating a relatively weak first quarter in our content services segment as a result of approximately $500,000 of projects ending in the fourth quarter; approximately $400,000 of e-book revenue having been shifted from first-quarter 2015 into fourth-quarter 2014 to accommodate publishers; and weakness in the Canadian dollar and the euro relative to the US dollar. That said, we are expecting an improved second quarter based on our e-book revenue forecasts and our general pipeline.

I'll now turn to our media intelligence solutions business. Given that the business is almost entirely recurring-revenue based, all new bookings essentially go to growth. There is little replenishment required. In Q4 we booked approximately $350,000 of annualized contract value comprised of seven new customers, with an average value of $50,000 each and another $40,000 of upsells and additions.

Key account wins included one of Canada's largest banks, a recurring annual contract in excess of $125,000 per year for a subscription to MediaMiser Enterprise and associated monitoring. We also added new clients in tourism and the Canadian federal government, as well as a significant subscription with a large US retail bank with a contract value of over $120,000 annually.

In the fourth quarter we continued with our plan to add MediaMiser staff to our Manila and Noida offices. We now have 20 new MediaMiser staff in our overseas locations. The team in Manila is assisting in production work related to media monitoring and database research. And the team in Noida is helping with research and development, code review, and testing procedures. This foundation oversees will help increase the scalability of the business and improve margins further.

In the fourth quarter MediaMiser successfully acquired Bulldog Reporter, a well-regarded Oakland, California-based media intelligence company, purchasing its assets through a bankruptcy sale. Bulldog Reporter has been a fixture in the PR community for over 30 years, but shut down briefly in October 2014 before MediaMiser brought it back online.

We believe the acquisition will provide MediaMiser attractive cross-selling opportunities as MediaMiser seeks to expand into the US market. Bulldog Reporter's media intelligence products reach over 70,000 US-based PR and communications professionals every day. We have successfully reopened Bulldog Reporter's Oakland office and rehired the key employees responsible for its successful trade journals, databases, and industry awards program.

I'll now open the line for questions, after which I will wrap up with some final comments. Operator, we are now ready for the questions.

(Operator Instructions) Tim Clarkson, Van Clemens Capital.

A couple of questions, guys. Jack, I was just wondering -- have you -- in your attempt to get new business, do you have the new features that you developed last year as part of your package in trying to get the new business?

We do, Tim. And clearly, the work that we did last year in completely incorporating feedback we got from over 16 companies in life insurance has been instrumental in the success that we are now seeing. The other thing that is working for us is word is getting out -- you know, we started with our first large company under the new platform in November, and life insurance is a very closely-knit community.

Word is getting out. And people are getting the fact that we can be very helpful to them in their underwriting operations, as evidenced by the fact that we've got deals that are accelerating, number one; and number two, we've got big companies actually calling into us, asking us for meetings. So I'm feeling very good about it right now. I think we did the right things last year, and we've got a strong product.

And in terms of the actual execution for your first customer, has it turned into pretty basic, standard deal, where you're just handling the information as it comes, and it's relatively routine? Or are there problems?

No. We are finding that -- you know, initially, back in November there were some problems getting the integration right, getting the necessary IT work done on their side. But once we got that out of the way, it's been very, very smooth.

And you never know if it will be. When you start something, when you turn the key on something for the first time, there's always some lingering doubt, no matter how confident you are, that -- whether things will go smoothly. But I'm happy to say that they went very smoothly, and the client has been very happy with the results that they are getting using our data.

Is Innodata getting a decent gross margin on this business? Or is it just too small a volume to know yet?

No, our margins are intact. Again, a reason for confidence. We are targeting the margins that we get on this new work to be comparable with the margins we get off the best of the kinds of work that we do. And that appears to be intact. And we see further opportunities for innovating and increasing efficiency even beyond where we are today.

Okay. One more question. This is for O'Neil. On the financial end, you are projecting your revenues essentially to drop from $16 million to $14 million, you know, fourth quarter to first quarter. I would think that if your gross margins are 35%, 40%, that you have a loss of gross margin of $700,000, $800,000, that you would have about a $1 million loss. How come you're projecting almost a $2 million loss?

The gross margins in Q4 were 27%.

Okay.

That's one. The second thing is at this scale of operations, Tim, the operating leverage plays a pretty important, significant impact on the bottom line. We are maintaining our production capabilities and not adjusting that. So as a result of that, the impact of lower revenues goes straight to the bottom line.

Okay, okay. You mentioned something about CapEx and expensing it off. How does that play into the losses?

The guidance that we had given exclude any CapEx in IADS.

Okay, okay. Do you expect significant CapEx there?

It has not been significant so far, but we are -- we may incur something in the month of March. It all depends on what the client requirements say and how much we can optimize it. So right now I don't have a number to provide on that.

Okay. I'm good. I'm done. Thank you.

Vincent Colicchio, Noble Financial.

You're doing a nice job continuing to show improvement on your recurring revenue businesses, which is nice to see. On the content services side, I'm curious if you could help us model out what we could expect for the year. Should we expect it to continue to trend lower and end up lower than it was in 2014? Or could we expect, maybe, a flat or better year?

Sure, Vince. Thank you for the question. I think, as you know, one of the reasons that we've been investing heavily in some of these other businesses is because of the choppy inherent nature of the content services business. It's essentially dominated by a few very big players on the customer side. And it has a large project-based component, and timing is tough there. So it's inherently difficult to forecast.

You know, we are going to -- we're continuing to build that business. We've got some new strategies, new ideas. We've got new things going on with customers. We've got some new -- completely new opportunities that we are in discussions with our largest customers about. So we are enthusiastic about the business, but we hate the fact that it's choppy. We hate the fact that it's hard to forecast.

On Synodex, has anything changed on the competitive front? How unique do your customers think your capabilities are? It would be nice to -- interesting to hear color on that.

You know, we are hearing a lot of great things. The customers, generally speaking, are very interested in Big Data. They are very interested in being able to understand their portfolios better and mine their data better -- which they cannot do today, but they will be able to do and can do with our solution.

They are very interested in efficiencies, and they're very interested in being able to underwrite more quickly and even improve underwriting -- improve what they refer to as mortality, their ability to accurately underwrite the risk that is inherent in the medical file. And our solution goes to all of that.

From a competitive perspective, they are telling us that there is no other solution on the market that does what we do the way that we do it. And they find that compelling.

Okay. Thanks, guys.

Benj Gallander, Contra the Heard.

I've been a shareholder for a while, and I have to congratulate you guys on how you've managed to just about break even on receding revenues. But I guess that's one of my big concerns, is -- you're taking over companies, but revenues keep on going down overall. So this obviously is not a good trend. And I'm just wondering if you really see revenues going up quite a bit in the next couple of years?

Thank you for the question. I think that clearly we've known for a long time -- and we've talked about for a long time -- that there is an inherent mismatch between what public investors want to see in the companies they're investing in and the nature of our content services business. But the content services business is by its very nature lumpy and tends to be dominated in good times by very large, one-off projects. We've got a few more of those in sight, but they are what they are.

So we have been investing very heavily in things that we think are differentiating -- highly differentiating -- and that bring with them recurring revenue that creates a type of visibility that we do not have in the content services business. So my prediction for the content services business is that it continues to be what it is: it continues to be a good business for us. It will be somewhat unpredictable, and it will be lumpy. But we do a good job for our clients, and we believe that we will continue to earn their trust and see new engagements coming.

In terms of growth, I think the new businesses that we investing in have huge growth potential. We are seeing that now in terms of how we are managing late-stage pipeline in the Synodex investment. I think we made the right investments last year. We've got a differentiating product. We've got a lot of people interested in that. That should bring us growth.

MediaMiser is -- you know, it's just a gem. It's got wonderful technology; wonderful customer references; great ideas for new products; and a very ambitious, talented management team. So we are expecting growth from there, too. And of course it has almost an entirely recurring revenue base -- subscription-like revenue base with great retainage. So I'm very confident that growth will come from those things.

Okay. And the recurring revenue, of course, as we all know, it's exceedingly important. I'm just -- again, having followed and invested in this Company for a number of years, I'm wondering if it wouldn't be much better as part of a larger enterprise, and it isn't time to look at strategic alternatives? Anything going on there? Any thoughts on that?

Sure. Well, our Board is always looking at strategy, and how should we be best positioned, and how do we best create value. And I think especially as we see some of the work that we've been doing over the past couple of years now starting to bear fruit for us and creating return on that investment, it will be important to continue to look at that: how do we best create shareholder value under those circumstances? So you certainly have my assurances that that's always part of the Board agenda and will continue to be part of the Board agenda as we to move forward into 2015.

Okay. Because with about $50 million in sales, with another organization that can then strip out some of the costs, if you guys -- you know, I perceive there is a lot more value in this Company, especially with the potential for the growth. Maybe it's time to look at putting the Company up for sale. But I do appreciate your work and hope that might be considered.

Thank you for your thoughts.

(Operator Instructions) And it appears there are no further questions.

Thank you, operator. So I'll close, I guess, with a quick summary. Our most significant fourth-quarter accomplishment was the successful launch of our Synodex 3.0 platform. We have been producing data now on this new platform since mid-November for our first large client on the platform, and they are real happy with the results they've been getting. It seems they have been spreading the word.

Life insurance is a close-knit industry, and it seems good news travels fast. We had five potential clients seek us out for meetings in the past couple of months, and that includes a couple of big prospects.

More importantly, we've got several contract negotiations going on right now with new Synodex customers that we expect could close in the first quarter or early in the second. And on top of that, there are some large potential clients who have expressed a desire to integrate Synodex 3.0 into their operations. These would likely be the next wave of contract closings.

In content services, our large e-book client requested that we accelerate production of certain publisher lists; so some of the production we were anticipating for Q1 moved into Q4, resulting in higher revenues this quarter than we were expecting. The offset, unfortunately, is that we will see lower revenues in content services next quarter, in part as a result of this; in part because a result of some Q4 project ends and a devalued euro, as O'Neil explained. With that said, we see improvements likely coming in the second quarter.

In our media intelligence segment, we acquired Bulldog Reporter. With its daily outreach to 70,000 US public relations professionals, we think Bulldog Reporter provides MediaMiser with really a great way of opening doors in the US as it seeks to expand beyond the Canadian borders. In 2015 we will be focused on harvesting value from all the work that we did last year in creating the new Synodex 3.0 platform and in establishing our new media intelligence division.

So thank you, everyone, for joining us on today's call, and for your continued support and your continued interest. Thank you.

And that concludes the presentation. Today's conference is available for replay by dialing 719-457-0820 or 888-203-1112. And the passcode is 2972181. Again, those numbers are 719-457-0820 or 888-203-1112, and the passcode is 2972181. That concludes today's conference. You may now disconnect.