Inuvo Inc (INUV) 2011 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Vertro first quarter 2011 financial results conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session with instructions following at that time. (Operator Instructions) As a reminder this conference is being recorded. Now I'd like to turn it over to the new Director of Investor Relations for Vertro, Mike Buchanan.

Thank you and good afternoon, everyone. Welcome to Vertro's first quarter 2011 financial results conference call. Joining me today on the call are President and CEO, Peter Carrao; CFO Jim Gallagher; and General Manager Rob Roe.

I would like to remind everyone that today's comments will include forward-looking statements. These statements are subject to risks and uncertainties that may cause actual results and events to differ materially from those expressed in the forward-looking statements. These risks and uncertainties will be outlined at the end of the conference call and also detailed in our filings with the SEC.

Before handing over to Peter, let me review how we measure our financial performance. In addition to the standard GAAP measurements, we utilize certain profitability based metrics to evaluate our period-to-period and year-over-year performance. They are EBITDA, Earnings Before Interest, Income Taxes, Depreciation and Amortization, adjusted EBITDA, adjusted income or loss and adjusted income or loss per share.

A description of our reasons for utilizing these measures as well as our definition of them and a reconciliation to the corresponding GAAP measurements can be found in the earnings release we issued today. Certain of the ALOT user metrics we will be discussing this afternoon are broken down by Region One and rest-of-world.

As a reminder, Region One comprises English-speaking users in the US, Canada, the UK, Ireland, Australia and New Zealand. To comply with the SEC's guidance on fair and open disclosure, we have made this conference call publicly available via audio webcast through the Investor Relations section of our website at www.vertro.com. A replay of this conference call will be available for 90 days. I would now like to turn the call over to President and CEO, Peter Carrao.

Good afternoon, everyone, and thanks for joining us. Q1 was a challenging quarter in which we continue to be impacted by the issues that we faced with the bundled distribution partner from Q4. We started the quarter behind where we wanted to be from a live users perspective and this issue was compounded by seasonal effects of Q1, which is traditionally a weaker quarter than Q4 for us anyway.

Since our last call, our focus has been to get back to growth and reach Region One live users; and while Q1 results were down on Q4, as of today we have returned back to growth in live users. As we began Q2, we decided to take a step back and look at cost structure of the business.

We've always been proud of the tight cost controls we have in place, particularly given the global reach of our product portfolio. Despite what we believed were already low operating expenses, we felt that there was room to take further costs out of our business. As a result we've reduced our headcount from 49 at the beginning of this year to 36 as of today.

Jim will talk about the positive financial impacts of these headcount reductions, but I want to stress that we believe that the streamlined team we now have in place is the right size and has the right skills to execute on our growth strategy for 2011.

In addition to reducing headcount we also took the opportunity to restructure the business somewhat. There were 2 main changes we made. The first was to increase our direct marketing team to help us drive more live user growth; and the second was to focus certain aspects of our business development product and engineering resources on the development of new, high quality apps, primarily apps built with third parties.

On recent calls I've mentioned the positive impact that high quality apps have and can have on our business, to help us with distribution, to help us with retention and additionally can deliver incremental non-search revenues for us. A key focus of our reorganized team is to develop more of these high quality apps, primarily by partnering with third parties to build them or build them on our behalf.

Since our last call we've already launched several new apps that we are particularly excited about. One that we built is the new eMusic app that offers users a free track every day and promotes the benefits of eMusic's monthly subscription package. The new app is an exciting and valuable app for our users and has great potential for our business on a number of different levels.

The free daily music download helps us with distribution and the app also drives non-search revenues we deliver new subscribers through to eMusic. Another that we have is a new app from People Deals, which offers our users coupons that increase in value when they are shared with friends via social network. This new app was developed for us by PeopleString and is part of the strategic alliance we have with the company that will drive great app distribution.

We've also recently begun testing an ALOT rewards app that was built for us by online marketing services company, Enuvo. The new app will offer cash back to our users to some of the world's largest online retailers. The app notifies users when cash back is available and then credits users' ALOT rewards account once the qualifying purchase is made. This is a potential, significant new app for us, as it offers real value for our users and also delivers a new source of non-search revenue as we generate revenue each time a qualified purchase is made.

Finally, we just introduced the ability for individual users to create their own apps from their app bar. Users are able to publish their own RSS feed, create links to their websites or build custom apps using standard html. After creating an app, our users can share their app with friends and can also promote the app on their blog or their website. This is a great opportunity for us to utilize user-generated content and at the same time promote viral distribution of the ALOT appbar.

We believe that all these apps that just I mentioned will also help us with long-term retention of all of our users. We are really excited by the progress we have made with our app strategy since the beginning of the year. We believe that partnering with high-quality companies, like eMusic, PeopleString and Enuvo, will enable us to grow our distribution channels without the need for us to increase internal fixed costs.

In addition to the new apps that I've outlined, we've also begun testing display ads to our users each time they interact with one of our apps. We are currently only testing these app ads in a small number of apps, but expect to roll these ads out more widely in the upcoming months. As the rollout continues, we expect to be in more direct sales of our app ad inventory to increase the inventory that these new app ads deliver.

Alongside our new apps, we've also continued to expand the test for distribution on our new ALOT Appbar. As I mentioned on the last call, we were a little behind where we wanted to be with the ALOT Appbar rollout as our attention was focused on addressing the buying issues that began for us in Q4.

Now that we have returned to growth in our Region One user base though, we've begun refocusing our app distribution and we remain excited by the potential of the new product and expect our app user base to become more meaningful over the upcoming weeks and months. The new apps that I previously mentioned today are all currently available on both our toolbar product and our appbar platform.

Another key focus for the business in Q1 was to explore ways to increase our search revenue. We've worked closely with our monetizing partners, to explore ways in which we can improve our actual search experience for our users. During Q1 we tested a number of optimizations to our search results pages including the addition of seller ratings. These are graphical ratings that appear alongside our sponsored listings. Further we have introduced site links, which display multiple links under sponsored listings and enable our users deep-link through to different sections of various advertisers' websites.

Early results in these search tests have been encouraging. In Q2 we rolled the search features out to all of our existing and our new users, and they are available now.

Now, and importantly, I want to be proactive and inform our investors that last night we received written notice from Google that they are implementing a new client applications guideline. Google's client applications guidelines apply to clients' applications that use Google Search or advertise in syndication services; and because of that, they apply to our use of Google's page search results.

The client application guidelines cover a wide range of subject matters, including the number of advertisements available for us to display to end users and the layout of those advertisements. In anticipation of these changes to the client applications guideline, we have been testing various ad formats and working on ways to minimize the revenue impact of any changes to the client application guidelines.

Additionally, we are in the process of reviewing the changes to the final client application guidelines and working with Google on their implementation. As we implement these changes, we expect to keep our investors up to date on the impact of our business on our earnings call or through other Reg FD compliant communications.

Overall we're looking forward to executing our app strategy in the next few quarters. We have a streamlined, refocused, reenergized team in place. We've further reduced our cost base. We are back to our strategy of rolling out our ALOT Appbar. We are aggressively pursuing our app strategy and have already made some significantly progress there. With all that said, let me turn the call over to Jim to discuss our financial results.

Good afternoon, everyone. As Peter discussed, Q1 was a challenging quarter, but one in which we believed we got issues that were related to Q4 behind us and made some real progress on a range of exciting initiatives, particularly the new app development and the optimization of our search results pages.

The continued impact of our Q4 buying issues, coupled with the effect of seasonality in Q1, resulted in revenue declining from $9.6 million in Q4 to $8.4 million in Q1. Despite the revenue increase, we maintained EBITDA and adjusted EBITDA profitability in the quarter by achieving $0.1 million in EBITDA and $0.3 million in adjusted EBITDA.

Let me provide you with a little more detail on the reduction headcount that Peter previously discussed. We reduced our headcount from 49 at the beginning of the year to 36 today. The expected in annual savings from the reduction will be over $1.2 million; and the charges for the reductions, which were partially recognized in Q1 and some of which will be recognized in Q2, were $40,000 in Q1 and $100,000 in Q2. We see the headcount reduction as a positive move.

Our focus on third-party app development has enabled us to operate with a more streamlined team. The reduction in headcount means that we now expect our monthly operating expenses, that is excluding customer acquisition cost, to be approximately $780,000 for the remainder of 2011.

Cash equivalents decreased from $6.5 million in Q4 to $5.1 million in Q1 of 2011. The decrease is primarily the result of lower payables on the balance sheet and CapEx investment of approximately $200,000 that was made in Q1. We expect this to be the only material CapEx investment for hardware and software purchases we will make in 2011. We believe that we have sufficient cash for continuing ongoing operations.

As a reminder, we continue to maintain our untapped credit facility of up to $5 million with Bridge Bank; and as we discussed on previous calls, we have no immediate plans to draw on that line. I would also like to mention that on February 15, we announced a stock purchase program of up to $1 million for a period of up to 1 year. The repurchase program is subject to restrictions on timely purchases and the Company has not made any repurchases under the program as of the current date. The Company will report any repurchases under the program on its next Form 10-Q or Form 10-K.

Overall we believe that we are in good financial position for the remainder of 2011. Furthermore, we believe we are getting back to growth in our Region One user base. With that, I'm going to hand the call back to the operator for any questions.

(Operator Instructions)

We have a question from Eric Martinuzzi of Craig-Hallum.

You talked about getting back to growth in the install base. And I'm curious, you didn't give guidance for the second quarter. I know seasonally we get into Q2 and Q3 are not strong, click-based quarters. Just curious to know, if you anticipate the 8.4 million number being up, down or about the same?

Let me tell you where we stand on live users, is we closed the quarter at 8.6 million; and as of close of business last night, we were at 9.3 million live users. So that's good news for us. We are definitely back to growth in this quarter. That's again 9.3 million live users as of last night. Importantly, the ratio of those users is heavily skewed back towards more Q1 users.

We were right on the nose 50% Q1 users -- not Q1, Region One users and 50% region-other users last night. While we are not forecasting revenues, mostly because of this Google issue that I just mentioned to you, until we see what becomes of that, we do feel good about our live user growth for sure, even in this quarter, I'm saying.

My next question had to do with exactly that, this change from Google. Do you think, is it in any way related to the fact that on the mobile side there is a lot of android development going on, that in some ways ties back into Google search and performance-based marketing? Is that what is driving it? Or is this an across-the-board, them reevaluating how syndicate partners are able to take advantage of Google ad words?

I think it's more of the latter, Eric, that it's more how they deal with their syndicated partners. And I'll tell you what we know from lots of discussion with our partners at Google, In general, Google believes, and we hope to prove it, believe me. But Google believes in general, the lesser ads displayed on a page, and then consequently more algorithmic results displayed on a page, is generally good for consumers.

So the basics of what their new guidelines mean to us is that we would display, after a keyword is typed in for our consumer, less ads per page than we would have displayed -- than we display currently. I think it's really nothing more than Google expects that consumers using -- that get their results, especially with companies like us, that utilize Google's attribution, where we say powered by Google, that those consumers would have a good Internet experience utilizing Google search; and to them, that means less ads.

We don't know what that means to us. Less ads generally isn't a good thing, because if there's less ads to click on, we anticipate that perhaps there will be less revenue coming through, but we have to learn that as we go. This for us will kick in this quarter still in about 30 days. To the extent that we have done some minor testing on this, because we have been talking with Google over the past years about what could and might happen, but frankly we have never tested exactly what the new program calls for, that I know of. We've never exactly tested that, so we don't know.

But this -- (multiple speakers)

Barring that though, Eric, the point is we are back to growth in live users. Ended the quarter at 8.6 million. We are right now at 9.3 million. So all else being equal, we feel really good about things, other than this going on. Secondly, anecdotally, you would think, again we hope to prove that, that in the short-term this might hurt revenue, but that in the long-term, because of attrition, variances being different because of better consumer experiences, that our revenue would actually come back and perhaps over time this is actually a better experience for consumers, and a better than, consequently, experience for our shareholders as well.

This Google ecosystem, it sounds like you're not the only ones that are going to be impacted here, right? Google has a number of different partners. Everybody has -- there's various combinations. I have to believe you guys have experimented with those combinations, as to how many ads you show per page, and that the system is currently optimized. Any change to that would mean a reduction in number of ads, would mean a reduction in revenue.

In the short-term that is generally our anticipation, Eric. But the exact guideline that they've given us, we've not tested anything really close to it. Let me give an example so we are not so far off. We currently display, if we get a maximum of returns back from Google, our page, this is a combination of above and below the fold for maximum results, could display as many as 18 ads. A long story short, it would be 7 on the right and 10 or 11-- or 7 on the right -- on the left, I'm sorry, more on the right and 3 at the bottom. The new Google guidelines are going to limit us to a total of 11 ads, generally speaking, 3 on the upper left and 8 on the upper right.

Like you, we anticipate that short term, that will negatively impact revenue in the short term. Further we think that, from what we understand, this is their new industry standard. They're not in any way deploying this just against just us. Lastly, we believe from what we have seen, and again we don't have much testing on this, that there is reason to believe that you take an initial dip in revenue from this change, and after that revenue begins to come back so that on a cumulative basis reasonably that you could get back to parity, but we have not experienced that yet.

Is the cost structure that you have restructured to, is that OpEx what you are anticipating that you will still be able to be breakeven or better?

Honestly on this one too, we made our changes on OpEx on the cost structure earlier this quarter, completely unrelated to this. The reason we made that change is, we were living our dream and our strategy, which is to get more, better, high quality apps; mostly delivered by third parties, the likes of eBay that you know we've already got an app with, the likes of our new Enuvo app, and the rest. And that requires less of our people to do the work, frankly, and more of their people to do the work. Most of what we did was restructure around that.

I think we'll see the cost differential for us won't be so much in the ongoing OpEx, which comes down from round figures $1 million a month, to round figures a little over $750,000 a month. While that's good, I think the biggest variance you'll see for us will be in the variable expense on ads spending. As an example, I will try to be real clear, because certainly everybody on this call understands that we've got the buy low, sell high figured out. So if today on a CPA, we are able to spend one unit to get a consumer to download our product, and the consumer returns after a year 1.6 units to us, that's a good thing and that fits our model well.

If, after early next month, we expect that our LTV would drop, and we don't know that until we start living some of those new LTVs that we will get from our new Google guidelines, what we would do would be drop the price that we are willing to pay, or the CPA that we're willing to pay, vis-a-vis display ads or bundled partners or search ads that we are willing to pay for those consumers. So I think the biggest variance for us will be variances in advertising spending as we learn how to get ourselves back to parity and beyond with the new guidelines.

One more and I'll let someone else take the microphone. Is part of your rev share with Google volume-based? In other words, if there is a potential secondary effect here, because you can't show as many ads, your volume has dropped and therefore you wind up with a less beneficial rev share?

Eric, it's a good question. Ours is a two-tiered structure. We are on the higher tier now and have not been on the lower tier. I don't think we are at jeopardy of falling to the lower tier because of the new design, but I would have to look at that. And that is one that I will get back in a Reg FD method if we think we're going to miss it, and tell everybody, but I don't think we are at risk of that now. Yes, our current contract and our past contract has been a two-tiered one, and we have always been at the higher level. I don't believe this will drop us below that.

Eric, I think it's also important to point out -- this is Rob -- that when we are talking about volume, the difference between user volume, right, the number of users we have, and the volume of both the search activity and revenue, so it is certainly possible for us to shift towards higher-quality acquisitions as we pursue our app strategy, and maybe lower volume in terms of usage, but it doesn't directly correlate to direct reductions in volumes of search or volumes of revenue. You are right to raise the question about whether there is any downside, potential downside, on revenue-shared tiers, but it's something that we are predicting.

This is Peter, again. Eric, I don't know if I answered the first part of your question. If I did, it will be redundant. If I didn't, let me do it again. You asked something about, do you think this is just for you or is it for everybody. While I can't speak for any other companies other than my own, the way understand it is that everybody in the industry is going to be impacted by this, and that everybody in our industry will be impacted with it within days of when it goes into effect for us.

Thanks.

(Operator Instructions)

We have a question from Aaron Fuchs of Fertilemind Capital. Your line is open.

One of your competitors, Conduit, just made a lot of noise when they switched to Bing. The consumer results on Bing, the Bing/Yahoo integration, has been pretty impressive. I've heard some issues with the revenue yield. Given this letter from Google, have you thought about following Conduit?

That's a good question, Eric. Remember, in our particular case we've already got a deal with Yahoo. Our deal with Yahoo, de facto, gets us back to a combination of a Yahoo and Bing feed anyways. We intend to deploy that feed as much, or more than ever after the new guidelines, but I think our early intention is to utilize Yahoo/Bing to the fullest extent that we can. And of course we want to explore everything that we can, but we feel like we are in good stead with our partnership set up with Google, our partnership with Yahoo, the way it is. And our intention is to continue to manage that way and to live up to the contracts that we have with both.

This customization is interesting. This is for the user end, the consumer end, to just hench-grade our assess feeds that they like? Is that basically what it is?

This is Rob. It allows the user to create their own apps. We have a set of templates that we provide to the user, so it makes it relatively straightforward for them to produce a variety of different kinds of functionality. They can produce apps that are simple links to website, apps that contain multiple links to websites. They can plug in, as you just mentioned, any RSS feed. They don't even need to know the RSS feed. They can just plus in the address or the website and we'll discover the RSS feed for them and publish it into an app.

For more sophisticated users, they can even use cut-and-paste code to display like a mini website or a game window and create an app for that purpose. The intention is to allow users to publish apps for their own use and then share them with their friends. Anyone they share it with, who is not currently a user of ALOT, will install the ALOT Appbar in order to use the app. So we see it as a real viral potential for viral distribution.

And this is live right now?

It is. If you go to www.ALOT.com, you will see a button that says create app.

I'm trying to understand the reduction of employees. These were people developing in-house apps, like that ALOT radio product that you said was doing well?

This is Peter again. Actually, no, they were more content people that were gathering content up from other sites. Frankly, that is good content, but isn't the focus that we have got now going on our new apps. That was more of the toolbar story. Today we are more down the app path. Developers, specifically what you're talking about, we've got as many or more than ever, developers working on our app products with our third-party out-sizers.

But just content providers, before we made the biggest change, and those people are now not with us, we are expecting to get better content than ever from third-party developers, like we've discussed in the call here. We also bolstered our buying ranks by changing the way, a little bit, changing the way we do our buying and putting some more people on the front end of the focus there.

Can you talk a little bit more about your tier 2 LTVs. Are they -- you had a big push there about six months ago. How are they progressing?

I will tell you about tier-other, rest-of-world, versus tier 2, if you would, Aaron. Actually, the push in general is sort of the same. I'll say it the way I've always said it. The results become the results. To us what matters, we buy into about 700 or 800 different categories daily. Those categories run from tier 1, which is all English-speaking countries that we made our mark in in the first place, to all of the other three tiers that we market to, which are the rest of the world for us. What matters to us is where we get the best return.

We have used as an example there of the three different markets that we have used as flagships to make the explanation, the US being a good margin. Brazil being a good margin and a good market for us; and India. To us what matters is that we get the markets coming through that have the best margins possible. And in the recent period, I'm talking over the last six weeks or so, we have been getting better margins in tier 1 markets than we have in tier 2, which is why our split of tier 1 to tier-other has gone back to 50/50, where 50% of all of our live users as of last night were coming from tier 1.

You're right, though, the last time we talked, we were having good margin improvements in tier-other, meaning the rest of the world. I think the last time we talked, we were more like 46% tier 1, and 54% tier-other. This is just reflecting the change, but we want to be wherever the margin is the highest. When we are looking, ever seeking, for that ROI, the results become the results; and for right now, it is a 50/50 split. We're happy that it's that way. If it were to change, it would be because Brazil or Spain or India or one of the other markets was returning richer results for us, and we would make the switch.

When you say margins, you are assuming an LTV there, right? Because you are just counting installs divided by -- (multiple speakers)

That's exactly right. As an example, if we are trying to get celebrity gossip users in France, where after 1 day, 2 days, 3 days, up to 30 days, we are projecting a lifetime value for those particular users in France, that will drive a different CPA, or what we are willing to spend to get that consumer. But our lifetime value expectations are pretty good, Aaron. By the time we get to 30 days and we are really after a market, we are pretty certain that those lifetime values will come through; and then that causes us to drive more volume into more markets just like that.

At the same moment, if the LTVs were dropping in another market, the first thing we would do would be to lower our CPAs, follow that through, and at some point, we might get to the point where we stop buying into that market at all. You're right, expected lifetime values built into our model, we start reviewing them literally the day we start buying. We get comfortable with them after about a week, and we don't get really comfortable with them to where we put a lot of ads spending behind a specific vertical for about 30 days.

Thanks for your time.

Thank you. Our next question is from John Gilliam of Point Clear Strategies.

Good afternoon, gentlemen. You'd mentioned earlier that you were increasing your direct marketing team, did I understand that correctly? That you guys are going to have people in-house that are doing some ad sales? Is that correct?

When we talked about increasing the direct marketing team here, John, we're talking about the buying group.

Okay.

The buying group that buys. We do have a BD team made up, really, of myself and two others. As you know for our ad sales, we are pretty much sold out. What we are doing for ad sales is really optimizing all the time, but I think that two of our BD people plus myself and Rob helps us, as well, are plenty for doing that optimization.

Okay. I just wanted to be clear on that. Thank you. Did I hear correctly, was the figure for non-ad, OpEx expectations for a month around $780,000?

That's right. After we've dropped the headcount to where we are, our ongoing OpEx -- not counting ads spend, of course, as you know, but our on going OpEx would be down to $780,000; and that is down from about $1 million or slightly less than $1 million, kind of the trailing 12 months.

One follow-up on a question that the gentleman asked earlier about the Bing/Yahoo part of the business, if -- do we have it set up somehow that when a consumer does a search, it could pull Google or Bing results, depending on who their potential clicks? Or is it divided between -- currently, all that I have noticed is that when it's the web, it's all Google, but if it's news or images, it is coming back with Bing results.

You're right about that, John, the way you said it. If you do an image search, because our provider for image search results is Yahoo, and then that gives to Yahoo and Bing results, you're accurate about that, because Google doesn't do that. But way, the majority of our pay-per-click revenue comes from regular web search. And it works a little differently than you said it, so I'm going to way oversimplify it without getting into the algorithm. If we call for 10 ads and Google doesn't have any, we fill them in with Yahoo. And now that Yahoo has buddied up with Bing, we fill them in with a combination Yahoo and Bing.

Okay, got you.

If we call for 11 or 12, let's say, and they return 11, then we would fill with 1. What I was talking about earlier, as it relates to the new Google guidelines, is Rob and I are reviewing, literally right now, the new Google guidelines which we just got last night, and I can tell you I've heard plenty about it, and have been holding them all day, but haven't read every single word of every line of about 30 pages of it, right? I don't think Rob has either.

But we are going to explore that and find out if there is a different way to deploy our Yahoo/Bing relationship along with the Google relationship than we do today. But either way, the way we might do it in the future, which is unclear how we might change it, or the way we do it today, we are allowed to distribute all, not just Google results.

Interesting, okay. I think Infospace does something like what I think you're getting at there. That's interesting, and that's what I was wondering. Good deal. You mentioned where we are currently, we're back on track with regard to our total users. Would it be fair to say that from today forward our ads spend, the majority of it would be to attract appbar users versus the legacy toolbar users?

Good question. Today, literally today, we are probably acquiring maybe 20% of our new users, that we are trying to acquire today, that we are setting out the bait for, call it, is probably for appbars. And again, I would have to go back and look specifically. As we move to early June when the new guidelines kick in, we generally think, from looking at the new guidelines, that we have got to morph ourselves from a high volume, lower quality provider to a lower volume, higher quality provider, generally speaking.

The consequence of doing that is, I'm not sure how much we'll be spending on a daily rate for advertising, but my opinion is it will probably start it out a little less. I think Rob's opinion is the same thing. If we're at about $70,000 a day today, we convert this back to trying to get the high quality apps sold through, trying to get a stickier consumer, trying to get more from less so that we can live up to the new Google guidelines, my sense is we will end up in the long haul with ultimately fewer total users than we would've have, but way stickier users utilizing the products and the services that we've got.

Retention will be a lot better; and I think that'll be what bodes well for us in the long haul. I wish I had the number for this. I don't, but from again, from a Reg FD perspective, I'll get Doc to build it for us, because I've talked about it before and I want to get the real facts. I don't have them right now, But remember, if we only change our retention by something like a half of basis point per month, on a stable model -- and I'm not claiming the model is stable with what's happened with Google, we've got to live it to see what happens there. But on a stable model, that has the effects alone of doubling our revenue in the year, right?

Our focus right now is to try to improve that retention. I'm thrilled. We didn't know this was going to happen, but I'm thrilled that we had changed our strategy against apps, against higher quality, against better retention. It looks like we have done exactly the right thing to seize the moment around these new guidelines. And hopefully we will have a consumer that retains longer with us, grows out into the future, gets good returns for us, and over the long haul is satisfied seeing less ads on a page and wants to keep our services longer instead of shorter.

Very good. Thank you.

I'm showing no further questions or comments at this time. I would like to turn the call over to Mike Buchanan for any closing remarks.

This conference call contained certain forward-looking statements within the meaning of section 27A of the Securities Act of 1933, and section 21E of the Securities Act of 1934. Words or expressions such as plan, will, intend, anticipate, believe or expect, or variations on such words and similar expressions are intended to identify such foward-looking statements.

Including, one, our ability to successfully execute upon our corporate strategies; two, our ability to distribute and monetize our international products at rates sufficient to meet our expectations; three, our ability to develop and successfully market new products and services; four, the potential acceptance of new products in the market; and five, the impact of changes to our monetization partners' implementation guidelines.

These statements are based on Management 's current expectations and are subject to uncertainty and changes in circumstances. Actual results may vary materially from expectations contained in the forward-looking statements. Key risks are described in Vertro's reports filed with the United States Securities and Exchange Commission, including Form 10-Q for quarter 1, 2011. In addition past performance cannot be relied upon as a guide to future performance. That concludes our call for today. Thank you for listening.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect, and have a wonderful day.