Professional Diversity Network Inc (IPDN) 2013 Q4 法說會逐字稿

Greetings. Good day, ladies and gentlemen, and welcome to the Professional Diversity Network's Fourth Quarter and Yearend 2013 Earnings Conference call. (Operator Instructions)

As a reminder, this conference is being recorded.

Please note that, on this call, certain information presented contains forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions.

Potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements are described in the company's periodic reports filed with the SEC from time to time.

All information discussed on this call is as of today, March 27th, 2014, and Professional Diversity Network does not intend and undertakes no duty to update future events or circumstances.

I would now like to turn the program over to your host for today's conference, Jim Kirsch, CEO. Please proceed.

Thank you, operator. And thank you all for joining our Fourth Quarter Yearend 2013 Earnings call.

Joining me today will be Rudy Martinez, the Founder of our Flagship Site, iHispano.com, Mr. Kevin Williams, our Chief Marketing Officer, Miss Maribel De La Rosa, our Vice President of Business Development, and our Chief Financial Officer, Mr. David Mecklenburger.

Prior to - before turning this over to David to go through the financial highlights, I would like to express to you some very important points about our company and our future potential. I would like to express to you why I am very confident about our long-term success and my entire management team shares this high degree of confidence, and also certainty of our overall long-term success.

First of all, we are in a market that we see as very compelling. In 2012, prior to having a direct sales force, we had over 14,000 companies posting jobs on the Professional Diversity Network sites. We see that as our foreseeable market share. Our obvious goal is to convert those 14,000-plus accounts to direct sales relationships. As of today, I am pleased that we have exceeded 500 customers and we plan on aggressively pursuing the rest in the months and years ahead.

Also, important to note, that upon achieving profitability, the additional sales are at a very high margin, because our overhead structure is capable of supporting approximately $20 million of business, and doing so by supporting a 30% expense factor, primarily due to marketing and sales commissions. We're in a very high-margin business and we feel that we can achieve very strong profitability.

The second reason that I'm so optimistic is because of our unique position in the market. We've had a lot of experience interacting with clients and it is very clear to us, and has been reinforced by our customers, that we have a unique audience.

We are proud that we have recently announced that we have surpassed the 3 million register user mark, which is an important milestone for our company. We have extraordinarily strong partnerships. As an example, in the African-American space, we have a partnership with the NAACP, the National Urban League, and the National Black MBAs.

Both the National Urban League and the National Black MBAs are new relationships from last year and they have solidified our place as the leader in the African-American market, and also supported other partnerships that we have of great strength in other verticals that we serve.

Additionally, we have leading technology; our matching technology, our semantic search technology, our relationship recruitment platform is truly unparalleled in the diversity recruitment space.

Finally, we enhanced our compliance offering in 2013, generating a new product line for our company, and in the fourth quarter of last year, almost one-fourth of every transaction we had included this new compliance product.

Finally, the demand for diversity recruitment is stronger than it ever has been and we see that it is gaining in momentum. One of the reasons for that is that the United States government adopted new regulations that went into effect just a couple of days ago, on March 24th, that require companies to do two things that were not required previously, under the former OFCCP regulations.

The first is companies are required to generate an annual effectiveness assessment report. This is very important to the Professional Diversity Network; because we have a very strong platform that delivers millions of views and thousands of applies.

This is documented through our systems and available to our customers for their OFCCP-compliance reasons. We know of no other company in our space that has this level of technology, of traffic, and of partnership to be of value for diversity recruitment and for compliance.

Furthermore, we see that there is a very strong demand to recruit the affinity groups that we serve, including our American heroes who are returning from foreign wars, people who are differently-abled, those who are of various color, and the LGBT community.

I'd like to highlight some fourth-quarter events that took place that I think are of importance. First of all, we are working to diversify our client mix and, by doing so, we see that can achieve greater revenue, profitability, and a diversified customer base.

In the fourth quarter of 2013, we increased our direct sales bookings from 194,000 in the third quarter to 477,000 in the fourth quarter, representing 146% increase. This validates the beginning of the strength of our internal sales force.

As I said, our new compliance product has been transacted in approximately one-fourth of all of our sales in the fourth quarter and we are experiencing very strong demand, as the new regulations have gone into effect.

Finally, our registered members grew from 2012 to 2013, from 2.3 million to 2.8 million. And as I said earlier, we have recently surpassed the 3 million registered user mark.

Prior to turning the call over to our CFO, David Mecklenburger, I would like to reinforce that we are actively pursuing client relationships that we have had through legacy reseller agreements. We feel that there is tremendous potential for us to convert those legacy relationships to direct relationships.

I further would like to express to you that we will be calling out our direct bookings, in this financial release and in future financial releases, until our sales force matures. The reason for this is because we think it is a very important indicator of our growth and our future success. And we believe that we should be sharing this with the investment community.

I will now turn it over to David for the financial highlights. David?

Thank you, Jim.

Before I review the financial highlights of the financial statements, I just wanted to follow up on Jim's last statement there.

I wanted to point out that, due to the fact that the products we sell are consumed by our customers over a relatively long period of time, typically one year; generally accepted accounting principles call for us to report that revenue ratably over the lives of each of those contracts. That's the sales numbers that we reported on our financial statements.

However, as a growing company, we closely tracked what we call book revenue each quarter, and we feel that's a measurement of the effectiveness of our sales team. That figure does not appear on our financial statements, but throughout the call, we will refer to that, as we use that as a yardstick to measure our internal growth.

Book revenue refers to the total value of contracts sold to customers during the period, regardless of the live over which that contract will be recognized on the financial statements. As Jim mentioned, in the fourth quarter, we increased our direct sales bookings to 477,000, from 194,000 in the third quarter; 146% increase, quarter over quarter.

Looking to our fourth quarter financial statements, our total revenue for the fourth quarter 2013 was $1,159,000; an 18% decrease from $1,418,000 in the fourth quarter of 2012, primarily attributable to the transition from our relationship with Monster Worldwide.

Our total operating expenditures for the quarter ended December 31st, 2013 were $2, 029,000, compared to $1,020,000 for the year prior period; a 99% increase, attributable to the additional costs of being a public company, along with our investment in a direct sales and marketing force and some nonrecurring costs we experienced in the fourth quarter.

Our net loss for the fiscal fourth quarter ended December 31st, 2013 was $550,000; a 253% decrease from the $359,000 income that was recorded in the fourth quarter one year prior. This was attributable to the change in the business model that went into effect last year.

The loss from operations in the fourth quarter 2013 was $870,000; a 319% decrease from the $597,000 income that was recorded one year prior.

And I just wanted to make sure everyone is aware that, at the beginning of 2013, we did take the opportunity to shift our business focus to develop our own internal sales from our sales force, rather than being reliant on one customer who had exclusive rights to sell our products.

Comprehensive net loss per share was 9 cents for the fourth quarter 2013, compared to comprehensive net income per share of 10 cents during the same quarter one year prior. This was due in part to the change in the weighted average number of shares that we had outstanding as a result of our initial public offering.

Our cost of service expense for the fourth quarter was $431,000, compared to $126,000 from the year prior, due to increased investments in our tech team and our client services team.

Sales and marketing expenses for the three months ended December 31st, 2013 were $708,000, an increase of $328,000, or 86%, compared to $381,000 for the three months ended December 31, 2012.

General and administrative expenses were $790,000 in the fourth quarter 2013, compared to $485,000 in the fourth quarter of 2012. This is primarily attributable to the cost of being a public company.

Shifting to our full-year financial statements for the year 2013, our net cash used in operations for 2013 was $415,000. This was a decrease of $3,033,000 from the $2,618,000 of cash provided by operations reported in 2012.

Our net cash used for investing in acquisitions and technology was $469,000 in 2013, compared to $230,000 in 2012.

Total revenue for 2013 was $4,035,000, a 34% decrease from the $6,154,000 in 2012; again, primarily attributable to the change in the business model.

Total operating expenses for 2013 were $6,045,000, compared with $3,623,000 in 2012; a 67% increase, attributable to the additional costs of being a public company, along with our investment in our direct sales and marketing force.

The net loss for the year ended December 31st, 2013 was $1,436,000, which was 161% decrease from the $2,371,000 of income that was reported one year prior.

The loss from operations for 2013 was $2,010,000; a 179% decrease from the $2,531,000 income that was reported in 2012.

Comprehensive net loss per share was 23 cents for 2013, compared with comprehensive net income per share of 65 cents during 2012. This computation of the loss per share was significantly affected, again, by the change in the weighted number of shares outstanding, which was the result of our initial public offering.

For reference, at the end of 2012, we went from approximately 3 million shares outstanding to 6.3 million shares outstanding at the end of 2013.

Our cost-of-service expense in 2013 was $1,153,000, compared with $805,000 from the year prior; attributable to our investment in our tech team, our client services team, and costs of our New Events Division.

Sales and marketing expenses in 2013 were $2,347,000, an increase of $864,000, or 58%, compared to $1,483,000 in 2012.

General administrative expenses for the year were $2,268,000, compared with $1,222,000 in 2012; primarily attributable to the cost of being a public company.

Moving on to our balance sheet, our cash position at the end of the fourth quarter 2013 was strong, with $18,736,000 in cash; an increase of $17,868,000 over the $868,000 we had at the end of 2012. This was primarily attributable to the funds generated in our initial public offering in March of 2013.

Accounts receivable were $1,218,000 at December 31st, 2013; a decrease of $705,000, or 37%, as compared to $1,923,000 at the end of 2012.

Total assets for the period were $20 million - I'm sorry; $22,020,000, an increase of $5,126,000 from 2012.

Accounts payable at the end of 2013 were $223,000; 16 percent, or $42,000 less than the year ended 2012, which were $265,000. This was attributable to the timing and receipt of payment to vendors.

Total stockholders' equity at the end of 2013 was $20,499,000; an increase of $17,710.000 from 2012, primarily attributable to the initial public offering in 2013

Now I'd like to turn it back to Jim to give us his business update.

Thanks, David.

During the fourth quarter, we continued to execute on our strategy of strengthening our direct sales force, seeking targets for strategic acquisitions, and implementing the acquisition of Personnel Strategies Inc.; a transaction that closed at the end of the third quarter.

We are seeing adoption of our compliance product suite and we expect that adoption to increase in the months ahead.

We are approaching the official termination of our LinkedIn agreement as of March 29th. We have made numerous adjustments to our sales operation in order to address the opportunity to directly sell to 1,000 of the nation's prime potential accounts, formerly restricted to our sales force under our agreement with LinkedIn.

These actions include hiring experienced sales personnel, new business-to-business marketing collateral, and a new client services team to manage a new account base.

Currently, the company has over 500 accounts, which has significantly diversified our customer base, as compared to a year ago.

In 2012, prior to our direct sales model, the company had over 14,000 employers who posted their jobs to our networks. Our long-term goal, as I said in my opening remarks, is to convert these companies to a direct sales relationship with the Professional Diversity Network in the months and years ahead.

I am pleased to say that I am very encouraged with the progress the team is making and the growth that we experienced in 2013, and the potential for 2014.

We continue to invest in our technology, with the further integration of the matching technology acquired through Resunate, when we purchased that company early in 2013.

Also, as part of our business development, the company is hosting 20 diversity recruitment events across the nation, where leaders in diversity and inclusions are articulating and developing the nation's strategies for best practices in diversity and inclusion.

This year, we have held events in Minneapolis, Chicago and the District of Columbia. Our next event with be April 9th, New York, where the president and CEO of one of our partners, the Urban League, who is the former Mayor of New Orleans, Mr. Marc Morial will be the moderator and host.

The event will be attended by top corporate leaders in diversity, including senior executives from Goldman Sachs, Citigroup, Marsh, Morgan Stanley, NBC, Omnicom, State Street Corporation, and Verizon.

In closing, the work we are doing is incredibly important to the nation's economy and to millions of Americans, especially women, veterans, individuals with disabilities, people of color, and members of the LGBT community.

Our goal is to provide economic opportunity to our registered users and leading diverse talent to our clients. We believe that we have the potential to achieve a majority market share in the diversity recruitment employment sector in the foreseeable future.

I do appreciate you joining our call today and now I encourage your questions. Operator?

(Operator Instructions)

Our first question comes from the line of Andrew D'Silva, of Merriman Capital.

Hey, guys; thanks for taking my call.

First off, have you sent out your press release yet for the fourth quarter; 'cause I haven't gotten it yet and I haven't seen it hit the tape?

Yes, it went out just before the call began.

Okay. And then, so you mentioned that 500 customer number. Out of those 500 customers, are those all internal sales initiatives that you've derived or are some of them on your platform through working with LinkedIn, which is expected to end in two days?

Yes. Yes, many of those customers were sold and brought onto our platform through the relationship with LinkedIn. We do not have a restriction in converting those clients to direct clients. And, in fact, we have begun to convert those, or some of those already, who have joined us with a direct relationship.

So in addition to the 1,000 accounts that were protected, we do have a number of accounts that were brought onto our platform through LinkedIn and we do have a team that is working to make sure that those clients are satisfied and we're exceeding their expectations and they become long-term partners of the Professional Diversity Network.

Yes, so just to quantify, how many direct relationships do you have right now, running across your platform?

We have approximately 100 direct relationships. The balance were brought in via LinkedIn.

Got it; perfect.

And is LinkedIn helping in this transition process? I mean, it seems like they should want to make sure that it's a smooth process, so their customers aren't angry that they're not able to get the recruitment through your network.

LinkedIn has been very cooperative. Their sales organization has communicated in various ways to the customers who have purchased our product through LinkedIn; that they can use the Professional Diversity Network, going forward, directly.

And many of those communications, we've been copied on via e-mail, so we are - we are pleased with that activity.

And are you seeing them kind of move - LinkedIn, that is, move toward any other sort of diversity recruitment processes that could compete with you or are they just kind of just looking at other fish, essentially?

I certainly can't speak for LinkedIn, but we haven't - it hasn't come to our attention that there's been a product offering put forward that is similar to the Professional Diversity Network or has replaced the Professional Diversity Network.

Great. Okay perfect.

And then this is kind of just a metrics question. I know you just surpassed 3 million users. I'm just trying to get a sense of what that means. I mean, how often do your users actually come onto your website, maybe over the course of a month or a quarter?

And then, are there any initiatives that you're working on to increase that, particularly with mobile, as that's becoming a more popular means of communication and searching?

It's - that's a good question; certainly an appropriate question.

We - in latter half of 2012 and into 2013, our entire recruitment platform was newly constructed and it's been built mobile Op. Our sites are all responsive technology, meaning that when you access our sites via handheld, a tablet or a desktop, it automatically resizes. In fact, if you shrink your screen, you will see the navigation change.

We are seeing approximately 30% of our audience who is accessing our site via mobile. We are, I think, a leader in - certainly in diversity recruitment online, in providing an outstanding mobile experience. And we do believe that it is important that we continue to register new members.

But in addition to registering new members, and this is why I'm glad Kevin's on the call with us today, we have implemented, during the past year, a number of really important strategies that have turned out to be exceedingly effective in connecting recruiters with diverse talent. And do it's very important that we maintain an active and viable relationship with those that we interact with online as registered users.

We do that in a number of ways; not just with posting a job and waiting for users to come back. We do a lot of recruitment advertising, which is, in actuality, the deals that we have closed to date; approximately 50% of the value of those deals is not from job postings. It's from recruitment advertising, which could be online banners or e-mail marketing.

That's a really important part of what we do and it's an important part of the efficacy that our business partners are experiencing.

Andrew D'Silva: Got it. And then did you - I'm sorry; did you kind of mention - do you have a metric to how to monitor how often people access your website or use it or update their status or anything of that extent; their resumes?

Well we have a really powerful talent search that's available to our customers, whereby they can get into the database and source talent. And within that database, you do have the ability to source that talent by the frequency and the duration of visits.

Got it. All right; perfect, guys. I think that's all I have for right now. I'll hop back into queue.

Thank you.

Thank you. Our next question comes from Ron Chez, private investor.

Good afternoon.

Good afternoon.

How do you charge for the compliance product? Is it something that you provide data on throughout the course of the year or one time or how does that work for a customer?

It's a good question.

The compliance product is charged on a per-posting basis. We do a discovery with our clients and discern what their posting demands have historically been. We price the contracts accordingly. And there's a price of a per-posting price.

Keep in mind that our compliance product does more than just post jobs to our sites. We're actually distributing those jobs to over 7,000 locations around the nation. This includes our partners, some of which I mentioned earlier, such as the Associations of Latinos in Finance and Accounting, the National Association of Hispanic Journalists and many, many others.

But we're also distributing out to faith-based organizations, community colleges, HBCUs and veteran hiring offices throughout the nation. Furthermore, we're distributing the jobs in a manner that's acceptable to each individual state and we're documenting that distribution with a screenshot capture of each job that's posted to the state boards.

This, in fact, surpasses the requirements that are in the new regulations, but they do provide proof positive of the posting, which is the intent of the ordinance and we think it's an important point of value for our customers.

So how often do you - do you bill once a year for this product or how do you bill for it?

All of our contracts are typically annual contracts, except for those that come in via e-commerce. And our annual contracts are typically paid for at once, in accordance with our terms. On occasion, we do make exceptions and bill quarterly or monthly, but I would say that is - David could respond to that better.

That's certainly the exception in the rule. And on the compliance product, we work with the customer, estimate the number of postings that they will be using, and that's included in the initial invoicing, and then monitor that throughout the life of the contract. And if they exceed that, they've agreed that we can bill them on a monthly basis, on a per-posting cost.

And we're often including compliance with a traditional outreach program, so sometimes they're compliance-only; sometimes they are not. Our - in the - we really have experienced a sales burst in the fourth quarter; I'm not going to address what's happening now.

But I think it's important to note that the blend is approximately about a $10,000 sale, per account. And that's why we're so excited about penetrating these 14,000 accounts, because it represents a sizable market opportunity for us and we believe that, once again, we're uniquely positioned to gain the majority market share.

But we think there's every opportunity for us to secure every one of the accounts that has historically worked with our company through our relationships with either LinkedIn or Monster. So we are really focused on going company-direct and growing our company-direct relationships with corporate America.

So that represents the compliance product; something that is distinctive that belongs to you. Or are other people providing the same kind of product?

Well, there's others that are providing compliance distribution and services.

There's no other entity that we know of that has recruitment advertising that can reach the audience that we can reach; that has the e-mails that we send out -- wee send out millions of e-mails that are targeted by occupation and geography; that has a relationship recruitment platform with over 3 million registered users and has the eight affinity relationship networking sites, and finally, the breadth of partnerships that we have.

What we have brought to bear in the diversity recruitment space has not been done before. And we feel that we are adequately capitalized, not only to run our business as it is today, but to take advantage of additional strategic acquisitions, some of which we are actively engaged in now.

And I trust you will be judicious with making sure that they have the potential to be accretive quickly.

Agreed.

I've got a modeling question for David. And I'm sorry; I don't have the first quarter right now, so if I could just have a supposition with you, David. Plus or minus, is the breakeven near the $5-1/2 to $6 million area? Is that the ballpark for breakeven?

I'd say that's the ballpark; yes, Ron.

So would - to Jim's earlier point, it would be logical to assume, let's say at $6 million, that, as you would progress from $6 million to $20 million, hopefully as quickly as possible, that you would generate a gross margin of 70% on that incremental $14 million. Is that generally correct?

That would generally be correct. I think on the growth track, there certainly would be step-ups in cost, but for the most part, once we exceed the breakeven point, a significant large margin portion would drop through.

Okay, one more question. Are you generally satisfied, whoever, Jim or David; are you generally satisfied with the kind of progress that you made in the first quarter which is coming to a close in your relationship with LinkedIn? So are you generally satisfied with the progression?

Yes, we're not going to make comments about the first quarter. I will tell you that I have never been more enthusiastic about this business since I started here.

That's good enough for now and thank you.

Thank you.

Thank you.

Thank you. Our next question comes from Lawrence Goldstein, Santa Monica Partners.

Why won't you make a comment about the first quarter on the 27th of March?

Yes. I'm just concerned about making forward-looking statements at this time.

Not forward; backward.

Yes. You know, Mr. Goldstein, I'm trying to be very cautious, as a new public company, about not saying anything that's --

That we haven't --

That we haven't released publicly.

Well you've been talking a lot about the year and you haven't released your financials for last year. All you did was release, at a quarter to four, a bunch of words with a few numbers in them.

The financials will be filed after this call.

Will be filed, right. You haven't released them. You haven't filed. You haven't issued a press release with the financials and you haven't filed a 10-K and you've been talking about numbers, so what difference does it make?

Yes, we've been advised by counsel not to talk about - in any detail about the fourth quarter, but we will be reporting on the fourth quarter --

First quarter.

I'm sorry; the first quarter. We will be reporting on the first quarter on a timely basis.

Well, you haven't timely filed or reported on the year.

As I just said, the K is going to be filed --

Going to be; I understand that.

Right after the call.

I'm saying past; past tense.

Well, the K is being filed on a timely basis. The K is not going to be late. We scheduled to file the K after this call. That is what we have done since (inaudible - multiple speakers)

Well, I'm just wondering why you didn't make that public before this call so we could have a chance to absorb it, read it and question you if we felt like it. I don't understand that.

Well, you know, Mr. Goldstein, that you have open access to us and you're more than welcome to call us at any time and we'll be very happy to address your questions, as we always have been.

Thank you. Our next question comes from Walter Schenker, MAZ Partners L.P.

Thank you.

Just looking at the fourth quarter, and let me state that this is one of the hardest press releases, and I'm not quite as old as Mr. Goldstein, but having done this a long time, to actually look at, because you didn't break out the quarters and the year. You broke out components and broke each into a piece of that and so one has to then create the numbers on the side of the press release to try and figure out what the quarter really was.

But if one looks at the quarter just ended, which was a $1,156,632; $0.5 million of that would have been the payment from LinkedIn; correct?

Yes.

And how much of it would have been the ongoing relationship with the University of Phoenix; roughly?

Three-hundred-thousand.

Okay. And therefore, the balance is -- the acquisition would have been very small, so that the balance or revenues you generated from running the business --

Right, right.

That's the main part of the business going forward. I'm just trying to get some sense as to what the ongoing business is.

The recognized of that business for the quarter. So that any contracts that we sold in the month of December that didn't start until January 1st would not be reflected in those sales numbers.

Right, I got it.

And when you talk about direct sales force bookings in the fourth quarter; I know you did it, but I was trying to play with the numbers, $477,000 of bookings represents how many customers, roughly?

It represents about how many?

Forty.

Yes, about 40, approximately 40.

Okay. And how many salesmen do we now have in effect during the quarter; whether including you guys or not, 'cause I know you get involved in the sales part?

About 20.

Okay. And so, therefore, 20 salespeople generated about two actual contracts per salesman for the quarter.

Yes, I think it's important to note that we have an [Oregon] sales organization that has a small group of people who are setting up appointments and then we have a small group of people who are managing smaller size accounts. And then we have a medium-sized group of people that are really maturing the majority of our business. And then we have another small group of people that are now engaged in ensuring client success.

And I think what's important to note and what's got us encouraged, whether - what does have us encouraged is the progression. And what we've seen is the conversations that we started having in the first and second quarter really started maturing towards the end of the fourth quarter.

And it brought us into a position of really validating that those conversations were going well and that business was closing. And obviously, we want to see that growth continue into 2014. And we will be, and I know people would like us to disclose what's happening in the first quarter; we're not going to be doing that during the call.

But the sales team is demonstrating that they are having productive conversations and they are maturing very nicely.

Okay. And it really has not been meaningfully restrictive yet; I realize it's a new program, that you didn't have access to LinkedIn's thousand customers, because you had access to 13,000 other potential customers that you've touched or felt or had some action with historically, so there've been plenty of people for the sales force to be in contact with.

Yes, that is true.

Okay. Okay, let me just second, and I'm not trying to be critical; just positive advice. It really is preferable to schedule a conference call after more financial details are released so that people have some opportunity to at least see the numbers, even if it means there's a little bit more time between when you release them and when you have the conference call.

Well, no, I do appreciate that advice. As I said, we have never done that in the past. It's always been the advice that we've had from counsel and our advisors to do it within this methodology. We're certainly - we welcome optics and we have always made ourselves available for conversations and questions.

So it's not a matter of us trying to have a call when people don't have the information. It really is what we've been instructed to do, but I appreciate your comments and after this call, we'll think through how we release in the future, 'cause we certainly want to have as productive of a conversation as possible.

Good; thank you very much.

Thank you.

Thank you.

Thank you. Our next question comes from Andrew D'Silva, Merriman Capital.

Hey, just a couple quick follow-ups, guys. So you threw out that 40 customer number and then when, I think Ron was asking a question, you were saying $10,000 per customer. Is that for one product? Are you estimating that on average for bundled packages as well, where they're using multiple products?

And then, are there discounts that we can think of when a customer signs a bundled package? And then a last bundled package question is, are you seeing traction within your universe of more customers going bundled packages with multiple offerings that you have?

We're very much getting traction on our comprehensive solution, as you referred to as a bundled solution. The $10,000 average is obviously - there's some that are very large contracts and some that are small.

We don't have a big enough set right now to give us an overall clear guidance going forward, but we could tell you, historically, in the past year, the number's been a little bit north of $10,000 per transaction and we think that we can grow that.

We think it's important that we establish a relationship; we get a beachhead with the customer in a direct manner, and then we grow that relationship over time. And the nice thing is, the job posting revenue doesn't increase dramatically. What increases dramatically is the outreach.

And the recruitment market is very much moved towards outreach from static postings and our business partners get that. So we hope to not only open up new doors, but to be able to grow the business that we have planted in existing doors.

Got it. And then, previously, when we were looking at modeling, you guys, obviously, LinkedIn was a major driver and that's going away.

But should we still figure there's seasonality in the model, as far as your fourth quarter typically being a jump up, every other quarter, now that you're going to be kind of recognizing a lot of your revenue over the course of a year? Or is it going to be kind of just a steady creeping along story, as you acquire new contracts and they add into the mix?

Well, we have stated repeatedly that it is our experience that the fourth quarter is a very important quarter in the recruitment business. And so it is not unusual for 50% of a company's revenue in the recruitment business to be booked in the fourth quarter.

So it is an important quarter. We were happy that we had an acceleration to go from under $200,000 to close to $0.5 million is more than you would expect as a jump from the third to fourth quarter. And obviously we feel we're in the earliest stages of penetrating these accounts and so we're hopeful that future quarters to come that we'll continue to aggressively grow our revenue.

Yes, but so, kind of separating out revenues from bookings, obviously bookings are really important in the fourth quarter. But when we think about it on a revenue basis, would it be recognized on your P&L as a huge uptick as well, thinking about 2014's fourth quarter without LinkedIn? Or would it just kind of blend into 2015, as you go forward, because it's going to be a one-year contract?

Right, obviously, as the contracts are booked over the quarter, we're picking up usually about a twelfth each month of that contract. So, yes, they - you won't see the dramatic rise in the fourth quarter on the financial statements that you will in the booking numbers, Andrew, to your point.

Got it. OK, perfect. And then another person asked a question; you kind of had $5.5 to $6 million as breakeven. Is that at your current run rate, because obviously, you've stated before that you intend on expanded the business model?

I mean, that's - so, for example, if I were to have you model out $6 million for 2014, that wouldn't be reasonable to think that you would be breakeven or profitable, 'cause you're also going to be expanding your operating expense as well, to looking into out years.

No, we don't think so. We believe that we have the foundation to do approximately $20 million of revenue, without adding, in a material way, to the infrastructure; to the fixed expenses of the business. We do believe that approximately 30% of the additional transaction will have to be dedicated towards sales commissions and marketing expenses to support the efficacy of the program.

But we don't anticipate increasing the size of the sales force, of the marketing department, of the finance department, the size of our office, so we don't see having to increase our infrastructure to do a lot more business than we're doing now.

So once your K comes out, we can extrapolate what your fourth quarter operating expenses were, it'd be safe to say that should be, other than commissions, a steady baseline for what we can expect going forward, unless you do accretive acquisitions or looking to expand far beyond $20 million immediately.

It's a baseline; yes.

Okay. And then, as far as your sales guys go, how are they paid? I mean, commission, obviously one part; is there a draw system where they get a salary, typically?

It's a combination of salary and commission.

OK, perfect. All right; thank you very much, guys.

Thank you.

Thank you. Our next question comes from Ron Chez, private investor.

Just for clarity, a follow-on to the release of information, after listening to calls for 82 years now, to get the press release out right at the close of the market, so there is an intervening period of time before the conference call, it's common to have the press release out at 3:00 Central Time and have the call at 3:30.

There's nothing unusual about that and so, in the future, if you would do the same thing that other folks do and then, with respect to the K, it's certainly not uncommon that that is filed after the quarter is reported, or after your reporting right now; so just for clarity, OK?

Thank you.

Thank you.

And I had one more question that I wanted to ask you. Oh, are you also pursuing recruitment advertising agencies as part of your sales effort?

Yes, we are. We are and we are enjoying the benefit of that. We have a contractual relationship with TNP, which is the largest recruitment agency. But we are trading with and doing business with a number of other agencies as well.

Thank you.

Thank you.

Thank you. Our next question comes from Tony Polak, Aegis Capital.

Good afternoon.

Good afternoon.

Could you give us a little more clarity on what the thought process is on the 1,000 clients that now LinkedIn gives to you and what's your feeling is, going forward, on getting those clients as your clients?

Right, right. We spent a good amount of time going through a communication strategy, Tony. We had the marketing department come up with specific materials.

We also have done a good amount of work within our sales force infrastructure to identify logical contacts within those accounts. We also have gone into the legacy information that we have, and identified those who have used our platform in the past and where we have relationships with.

I think it's important to note that we acquired an events business, and that events business gives us the opportunity, not only to do networking events and career events, but we are hosting these diversity roundtables, as I mentioned during our call. And those roundtables are an opportunity for us to connect with numerous clients who are in that LinkedIn 1,000 list.

We'll probably be seeing approximately 40 to 50 leaders in the New York event, alone. And so we're approaching this through a number of ways. One, through our sales force infrastructure, one through traditional marketing, one through existing relationships that we have, and another through the diversity roundtables that we're hosting.

Okay. Okay, thanks.

Thank you.

Thank you.

I would now like to turn the floor back to Jim Kirsch for closing comments.

Thanks.

Well, I do appreciate everybody joining on the call; those who asked questions and those who are also just listening in. As always, we are available to you after the call; both today and in the days and weeks to come.

I must reiterate, it is of paramount importance to us that we're doing work that is life-changing to people. And we are experiencing companies that are working with us that are making hires and they're making hires of diverse candidates; veterans, protected veterans, people with disabilities, people of color.

This is an outstanding opportunity for us to do very well, financially for our shareholders and also do good work for society. We're excited about our future. We're very excited about what's happening in our company. And we know that it's a difficult transition.

We knew that. We had hoped that we would materialize a more successful relationship with LinkedIn, but we are very confident in the long-term that receiving 100% of the revenue from prime accounts is going to be in the long-term benefit of the company and not - in our former relationship with LinkedIn, we only received 20% of those sales.

So we're actively engaged in trying to convert those 1,000 accounts to direct customers. And when we book those customers, we keep 100% of the revenue, as opposed to 20% of the revenue.

So we're really excited about the future. We appreciate your participation and we look forward to speaking with you in the near future, if you should call us, or during our next earnings call.

Thank you very much and have a good day.

Thank you.

Ladies and gentlemen, this concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.