New York Times Co (NYT) 2015 Q2 法說會逐字稿

Good morning.

My name is Chris and I will be your conference operator today.

At this time and like to welcome everyone to The New York Times Company Q2 2015 conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you.

Andrea Passalacqua, Director of Investor Relations, you may begin your conference.

Thank you, and welcome to The New York Times Company's second quarter 2015 earnings conference call.

On the call today we have Mark Thompson, President and Chief Executive Officer; Jim Follo, Executive Vice President and Chief Financial Officer; and Meredith Kopit Levien, Executive Vice President and Chief Revenue Officer.

Before we begin, I would like to remind you that Management will make forward-looking statements during the course of this call and our actual results could differ materially.

Some of the risks and uncertainties that could impact our business are included in our 2014 10-K.

In addition, our presentation will include non-GAAP financial measures and we have provided reconciliation to the most comparable GAAP measures in our earning press release which is available on our website at investors.nytco.com.

With that, I will turn the call over to Mark Thompson.

Thanks, Andrea, and good morning, everyone.

In fact, I want to press my remarks with the development that took place after the second quarter closed.

A few days ago our digital-only subscriber count passed through the one million mark.

This is a very encouraging milestone for digital pay model, which only launched in 2011 and which continues to grow strongly.

It's also a first in world journalism.

We believe that no other news organization has achieved digital subscriber numbers like ours or comparable digital subscription revenue, a great credit to the shared quality of the work of our newsroom and editorial department and to the brilliant consumer marketing product and technologies teams who have made it possible.

This digital-only subscriber number is, of course, in addition to our 1.1 million print and digital subscribers.

This news is evidence of the progress we are making on the digital side of our business.

That progress was clear in the second quarter of 2015, to which I will now turn.

We posted double digit year-over-year growth in both digital advertising and digital subscription revenue in Q2.

This is the fourth consecutive quarter of double-digit growth in digital advertising revenue.

The print advertising headwinds that began in late 2014 also continued into Q2, though we saw some reduction in those headwinds in July.

Nonetheless, ongoing and effective expense management contributed to a 16% increase in the Company's adjusted operating profits and adjusted earnings per share of $0.13 compared with $0.07 in the prior year.

Let's now take a closer look at our Q2 results, beginning with digital subscriptions.

In Q2 we added 33,000 net paid subscribers, which is a better result for the second quarter than we saw in either of the past two years.

That means that we ended Q2 with 990,000 paid digital-only subscribers a 19% year-over-year increase.

That's why we were able to exceed one million subs early in the current quarter.

The growth in Q2 is particularly pleasing since it includes the impact of our decision to convert NYT Now into a free product.

Although we were successful in migrating many Now subscribers to core subscriptions, some, understandably, elected to continue to use Now for free.

Had it not been for this one-time effect, the number of net new subscribers would have been higher still.

A digital consumer growth in the second corner was driven by growing strength in international subscriptions, as well as improved retention.

International subs now represent 13% of our digital total, a percentage which we expect will continue to grow very nicely in the coming quarters.

As I mentioned last quarter, the results of the program we put in place in the second half of 2014 to develop our audience so far have been very encouraging and are contributing to the continued growth in digital subscriptions.

US digital traffic, for instance, in the form of unduplicated unique users across all devices was up 27% year-over-year in the second quarter.

It was even better than the solid 22% increase we saw in Q1, to an average of 60 million monthly users.

We aim to continue on this trajectory and we expect these results to help both digital advertising and consumer revenue over time.

Let me focus now on digital advertising, where we also saw continued momentum in the quarter with year-on-year growth of more than 14%.

Mobile, paid post, video and programmatic all contributed to that growth.

I also want to provide an update on the ad viewability issue that introduced to you last quarter.

This is the new industrywide effort to ensure that advertisers only pay for impressions that have actually been viewed by users.

Given the quality and engagement of the Times' audience, we expect this new standard to benefit our digital advertising proposition in the long run and we're currently optimizing our digital properties to meet it.

But as I suggested last quarter, we may see a moderate revenue impact in the second half of 2015 as we transition to the new standard.

Digital advertising revenue will also face challenging year-over-year comparisons and the second half of the year Q3 2014, for example, was up 17%, while Q4 2014 was up 19%.

For these two reasons, we expect growth in digital advertising to be somewhat lower in the second half of the year than the first.

In Q3 we estimate it will grow in the mid single digit percentage range.

Jim will put this piece of guidance in context in a few minutes' time.

We remain very bullish on our ability to continue to innovate and grow our digital advertising business on a sustained basis.

Earlier this week, for instance, we announced the launch of a major new mobile ad product.

Mobile Moments is an advertising solution based on the insight that our readers' appetite for different kinds of content and the attendant advertising opportunity changes radically across the course of the day from the early-morning need to get caught up on the news, through the working day, to the evening when the entertainment lifestyle among the features may all come to the fore.

Mobile Moments enables marketers to target the right readers with the right messages at the right time.

And while we won't launch it until next month, it is already selling strongly.

So now let's look more closely at the print side of our business.

As I said at the start, the print advertising headwinds that began in late 2014 continued into the second quarter.

Print ended down 13% year-over-year, which includes steeper falls in advertising for our international newspaper, as well as some foreign currency effects.

When combined with the gains in digital, the overall advertising decline was 6%.

As I mentioned at the start, we do expect print advertising headwinds to ease a bit in the third quarter.

While growth in digital subscriptions enabled overall circulation revenue to grow in the quarter by just under 1%, there was a decline in print circulation revenue of 2.3%, as lower volume more than offset the positive effects of our January price increase.

Nonetheless, similar to the digital consumer side, we are putting more emphasis on print circulation retention, including increased focus on our delivery service experience, better use of customer analytics and improved customer service and hope to report progress on this front soon.

Since our last earnings call, we've entered into three important relationships, all of which we believe will help us to reach large new audiences with our unparalleled journalism.

Facebook's Instant Articles is already underway and, for the initial test audience, has resulted in significantly reduced article load times and thus improved reader experience.

Apple News will launch later this year and will allow us also to distribute our content to millions of potential new readers.

We've also announced a deal with Starbucks last month to make our top news and a selection of other articles available for free via the Starbucks mobile app for all 10 million Starbucks Loyalty Members, beginning in the first half of next year.

We expect all of these platforms to contribute to our digital audience and revenue growth story.

We also made some additional leadership announcements in the second quarter, building on the executive appointments I announced earlier this year.

We have created a new role called Senior Vice President of Consumer Marketing who will supervise an already strong marketing team and will aim to accelerate subscription growth across our expansive product portfolio.

We've also brought in an SVP for our events business, NYT Live, who will assume responsibility for the commercial aspects of all Times' conferences, Times' talks, and other live events.

Both of these positions will report to Meredith.

But now to give you more detail on the financial picture, let me hand you over to Jim Follo.

Thank you, Mark, and good morning, everyone.

As Mark highlighted, we maintained our digital momentum in Q2 as we again saw strong performance on both the digital advertising and digital subscription sides of the business.

There's still much to do to accomplish though, as even this solid digital progress did not offset the overall print declines, which resulted in total revenues finishing down for the quarter.

Operating expenses decreased again in the second quarter by nearly $18 million overall, due to print distribution efficiencies and declines in a broad set of other expense categories.

Furthermore, cost comparisons benefited as marketing spend that occurred in the second quarter of 2014 around the launch of some new digital products did not repeat.

Our focus on reducing legacy costs remains a top priority, but as I've said previously, we do not expect to see the same level of cost reductions in the second half of the year as we achieved in the first half.

Adjusted operating profit rose 16% in the quarter to $64 million.

We reported GAAP operating profit of approximately $38 million compared to $16 million in the same period of 2014.

Circulation revenues increased approximately 1% with our digital subscription revenue stream more than offsetting print declines.

We benefited from January's home delivery price increases, although higher revenue associated with the new rates was outweighed by overall print volume declines.

In the second quarter, digital-only subscription revenues were approximately $47 million, an increase of 14% over the same quarter in 2014.

Advertising continued its strong digital run in the quarter, finishing up 14% and partially offsetting the print advertising decline of 13%.

Digital advertising continued to benefit from revenue growth in mobile, paid posts, including related production, video and programmatic, but the print losses still led to an overall advertising decline of 6%.

The month-to-month volatility in advertising has not abated, as illustrated by the fact that overall advertising was down 2% in April, 10% in May and 6% in June.

Print advertising revenue declined across the board, while digital was consistently strong, particularly in April.

And finally on the revenue side, other revenues grew 5% in the quarter, driven by higher revenues from a [crossword] product, where we recently increased prices, as well as increased rental income associated with the lease of an additional floor of our headquarters building that began in Q1.

Expense management remained front and center in Q2 as we continue to target cost reductions while maintaining investment in our digital future.

Costs were down 5% on a GAAP basis and we reported diluted earnings per share of $0.10.

Expenses declined mainly due to production distribution efficiencies as well as decreases in depreciation and amortization, raw material costs, and outside printing expenses.

Adjusted diluted earnings per share was $0.13 in the quarter compared to $0.07 in the prior year.

Our nonoperating retirement costs were up in the quarter at $8.7 million, although retirement costs are generally flattening out in 2015.

We expect nonoperating retirement costs in the third quarter to again be approximately $9 million, versus $8.3 million in Q3 of 2014.

The joint venture line had a loss of approximately $356,000 in the second quarter of 2015, due to losses at the paper mills, compared to a small income in last year's second quarter.

In Q2 2015, we also made a $2.3 million investment in Women in the World, led by Tina Brown, whose annual summit brings together female leaders from around the world.

As for the balance sheet, our liquidity position remains solid in the second quarter; our cash and marketable security balance was $880 million; and our total cash position exceeded total debt and capital lease obligations by approximately $451 million.

Late in the first quarter we repaid the remaining $224 million principal amount of our 5% senior notes, and we began to recognize the full benefit of that repayment in Q2 as interest expense declined by more than $3 million.

We expect similar expense savings related to the repayment for the remainder of 2015.

Earlier this year, as part of a warrant exercise, we announced the intention to make share repurchases of approximately $101 million equal to the proceeds received for the warrant transaction.

As we've said, we believe a repurchase program is the best use of cash in this instance as it will largely neutralize the transaction's impact on our diluted share count.

To that end, the Company has repurchased approximately 1.4 million class A shares for approximately $18.9 million to date as of August 4.

Moving to our outlook, third-quarter circulation revenues are expected to increase at a rate similar to the second quarter trend, driven by the benefit from our digital subscription revenue growth despite continued challenges on the print side.

We expect the total number of net digital subscriber additions to be in the high 30,000s.

Third-quarter advertising are difficult to forecast because as typical at this time of year, we have limited visibility into September, which contributes a disproportionate share of the quarterly revenue.

That said, we currently expect overall advertising revenue to again be down in the mid single digits, though with some sequential improvement from Q2.

We are seeing some moderation in the headwinds we have been experiencing on the print side, but as Mark has already said, the impact of viewability and tough year-over-year comparisons means that we expect digital advertising will grow in the mid single digits and other revenues are expected to increase in the low double digits.

Third-quarter operating costs are expected to decline in the low single digits as we will be cycling $21 million in severance expense in last year's third quarter and adjusted operating expenses are expected to be flat to slightly down in the quarter.

With that, we would be happy to open it up for questions.

(Operator Instructions)

Doug Arthur, Huber Research.

Jim, when you say sequential improvement in the third quarter, you're talking about sort of nuances on mid single-digit decline versus Q2?

Is that fair?

I would suggest that Q2 advertising numbers down negative 55%, so we're suggesting it will be below that number, but still it still puts it in the mid single-digit down range.

And then just a follow-up Mark, can you or Meredith, talk about your initial experience with making New York Times Now free, how that sort of affected -- what kind of traction it's getting?

And obviously it's not having much of an impact, I mean a bad impact on terms of digital sub growth, paid growth.

So how is that playing out versus your expectations?

Just on the last point, on the digital subscription story, I think that we had a one-off affect, obviously, at flipping it from subscription to free.

But actually we were pretty happy with the conversion rates of Now subscribers.

And the intention of doing it was to promote Now as a free experience at Times journalism and to encourage as many people to use it.

We're pretty happy with the Now story.

It had a slight impact on our Q2 overall subscriber adds, but to be honest, even with that impact, we had gotten a high number of net digital subscribers this year than we had a year ago.

We're at the point where Now was launching as a subscription product.

So I feel very good that the core subscription and our superior marketing tactics, in particular, the growing success for having internationally means the digital subscription story is very strong at the moment and we've now freed Now to find its audience.

Do you want to talk about any initial thoughts about how Now is doing?

Yes, sure.

I'll just say that we did a bit better than we expected on converting I think slightly more than half of the Now subscribers to bundle A, so that's good.

And we see Now as part of a broader effort to grow audience with some limited amount of free content that brings new audiences to the Times.

And we're excited about it.

And I think that the fact that we were able to put up a brisk second quarter in digital subs, while all this was going on is a very promising sign.

Great, thank you.

Bill Bird, FBR

Good morning.

I was wondering if you would talk a little more about how the Facebook Instant Articles program is going?

Could it enable another spurt in digital sub growth because of sampling?

And then separately, with cash continuing to build, what are your thoughts on how you might deploy cash?

Thank you.

I'm happy to take Facebook.

Jim can take cash.

In general, I'll say this is very much an experiment.

We think it's a deliberate, an important experiment for us in that the basic idea is threefold.

One, to keep growing the Times.

We know we have to keep growing the audience for the TImes and we see Facebook as a good way to do that.

It's bringing new audiences to us.

If we look at who uses us on Facebook, it tends to be folks who are not already subscribers to the Times.

So we're excited about that.

And two, I would say we are playing a long game here in trying to make sure we understand and have access to the best information at the front tier of consumer media experience and how people engage with content on social platforms is a very important part of that.

It's worth saying that we are really focused on every bit of the funnel, from the top to the bottom.

All the way through from the first touch-point we have with a user through to someone becoming a full long-term subscriber.

I think, if you ask me, I think we think the -- a lot of our fundamental [audience] in development is quite high up the funnel.

Yes.

I think we're going to learn over time how we can use our platform partnerships, like Facebook Instant Articles, and where in the funnel it helps us.

As you've heard me say already, we think we've got quite a few significant growth drivers already at work in our digital subscription business which is why we're pretty bullish about progress on that front.

And we're making a deliberate choice to sort of do more work at the top of the funnel, and we would say what we're doing with Facebook and Apple and Starbucks and NYT Now are all a part of that.

Great.

That's right.

On the cash side is we are executing on our $100 million share repurchase, so we're about $20 million into that.

We will continue and we expect to execute on that fully.

We are mindful of that issue, it's top of mind, I don't feel like we have anything more to report.

You know, we're -- what I will say is we're not putting cash towards our pension obligations, we're still pretty confident that those things will take care of themselves.

We hope the interest rate rises and we will have to continue to evaluate use of cash.

Our debt position continues to come down.

We do have a maturity towards the end of next year, that $180 million which we will evaluate as we get a little bit closer to that point, but we continue to evaluate use of cash and we're -- we'll prefer capital with the way we deploy it, but right now we like where we're positioned.

And just an add-on on the digital subscribers, is the slight uptick in digital subscriber additions in Q3, do you attribute that more to seasonality or is there some other thing going on?

I would say it's three things.

Four things actually.

One, better international growth, and that's from rolling out more in currency billing and also marketing more effectively to international customers.

We also saw a brisk business in groups, corporate and education subscriptions.

We are seeing better retention.

And I would say broadly we are executing better and we think all of those things will continue.

I just wanted to say, as I mentioned, we've just been joined by [Ty Fisher] as our new Head of Direct Marketing, he came from DirecTV.

We think there's plenty of opportunity to continue to improve the way we market our digital subscriptions and hold complete customer lifetime value piece from the moment they become a customer and the tension and so forth.

So plenty more work to do, but what's encouraging, I think we're now seeing from where we started something like 15 months ago in areas like retention and international is really paying off, so we're very encouraged by that.

Yes, and I would say there's still good distance to be traveled in all of those areas.

Great, thank you.

John Janedis, Jefferies.

Meredith, this may be for you.

You talked about plans, I think it was in the press, to introduce a video version of Mobile Ads.

Can you talk more about that opportunity and what it could mean longer term for monetization to mobile?

Sure.

We are hugely focused on Mobile right now.

Mark just talked about in the Mobile Moments product that we launched this week, that is a product that is enabled for basically any format a marketer wants to use, including video, and I expect we will have a meaningful amount of video in that.

We've also done some work on our text stack to make, frankly, selling mobile video advertising an easier thing here, so I'm optimistic about that.

And then I would say in branded content, video has been one of the areas where we've been most successful.

So video in two ways, either developing short films with and for marketers or developing you know major multimedia storytelling instances that include videos as a major part of them, so it's a huge area of focus for us.

Got it.

And, Mark --

And maybe look at our most recent paid posts.

Most of them have video in them and most of them are optimized.

They're all actually optimized for a mobile experience.

Thanks, Meredith.

Mark, you talked about your digital and print subscriber count.

I think you are now at a point where your reach is probably something in the range of a top-10 cable network and I know there's no perfect overlap in advertisers, but is there any kind of opportunity to compete for wallet with cable networks, given the ratings issues they're having more as your reach is more stable?

I think that's really interesting.

And, I mean, in a sense, I think part of this is a question about the counterpart to the advertising industry and to what extent the advertising industry is prepared to be more -- and, indeed, ultimate -- customers, marketers, are prepared to be open-minded.

But as platforms come together, I think this kind of opportunity absolutely looms large for us, so it's a definite, I think.

But, Meredith, do you want to -- (multiple speakers).

I would agree with that.

I would say you know the number of entities and the nature of entities that we're competing with is far more broad than it's ever been.

And to the question I was just asked, video is becoming a much more meaningful part of our solution set for advertisers and it will continue to get bigger and that will put us in direct competition with those coming from the television space.

And what's interesting about this, to me, is -- I think the traditional -- it's got a [most] recent, kind of fixed narrative about newspapers is that they are the victims of new entrants competing with them.

I think your suggestion is a really good example of there as well.

We can, ourselves, be disruptors and can get in and get dollars out of advertising markets which were historically closed to us.

That's right.

Thank you.

Craig Huber, Huber Research.

Yes, good morning.

I missed a little bit about what you said about the slower growth for digital ad revenue in the -- at least Q3, if not the back half of the year, and you talked about a new standard.

I was wondering if you could just go over that a little bit further, please?

I will take that and, Jim, you can fill in anything I miss.

So we were coming off a full year of double-digit digital advertising increases, and then Q3 of last year we grew 17%.

So we're comping against a very strong period of growth in Q3.

In addition to that --

(Multiple speakers) 19% in Q4

19%, right, so a full half year of strong growth.

In addition to that, we have been working to make viewability a meaningful part of our ongoing operations.

So essentially optimizing our site for the viewability standard that the ad market is seeking.

And as we cycle through that, we expect viewability to have some impact in the near term on revenue, less so over time as it just becomes standard operating procedure.

But those two things -- and also, frankly, of whole lot of uncertainty about September, and it's always this way about September, because September is such a big month, lead us to give the guidance we've given.

It's worth saying, though, and I tried to say this in my remarks.

We also feel that we've got real growth drivers in place in digital advertising, lots of innovation.

Our branded content business is going great guns, really striking growth there.

I mentioned Mobile Moments as part of a broader story of innovation in mobile advertising.

We're very encouraged by the track of mobile advertising and the way the percentage of digital advertising coming to mobile is growing very rapidly.

So we've got one of two specific issues which are to do with comps and viewability.

The biggest story we think about digital advertising remains extremely encouraging.

Yes.

And I'll just add to that, on mobile specifically, we -- in Q2 we actually went from about 10% of our digital advertising business coming from mobile to a full 15%.

And we think that number should only go up as we launch this new suite of premium mobile products.

We're very encouraged by what we're seeing there.

There's a lot of demand in the market.

Along those same lines, please, could you also just talk about potentially how much of a problem it might be coming here with more and more people using these advertising blockers on mobile devices and also on desktop and I understand that Apple and the iPhone is likely going to allow that to be downloaded here soon.

How much of a problem is that for your business, but also for the whole ecosystem as well that are advertising focused?

Yes.

I think it's a real issue for the ecosystem.

And we, like everybody else, are trying to understand what impact it will have on our supply.

It has not had a material impact on supply so far.

Certainly becomes a bigger issue with what you've just described.

But I think we feel pretty good about the fact that a lot of the new products we are putting out in the market are more native to the experience, to the journalistic experience, and that may allow us to get around some of the pressure that ad blockers would otherwise provide.

And also nitpick question, can you talk a little further about how digital and print ad revenue did in the month of July year over year?

If you'd quantify it for us, if you would?

Sure, sure.

We had a better-than-expected July in print, actually year over year as a month.

Better performance than we've seen in some time.

So optimistic about that.

And we grew in digital in July as well.

So I think, in general, July will be a good month.

Look, the comps on digital really were up (multiple speakers) in July, so it's not a clean indicative month, but as we've said the month of September makes our quarter.

It's a very high percentage of (inaudible) not quite [50], but it's in the [40s], the total revenues, so you really got to be mindful of that.

We don't have a ton of visibility there, but we're up to a --

Pretty good start.

-- a decent start, but that's somewhat embedded in our guidance that we gave this morning.

Last little question, please, daily and Sunday print circulation volume.

What was that percent changes year over year, please?

Daily is down 68% and Sunday is down 51% and I think that's consistent with the prior quarter.

Great.

Thank you.

Kannan Venkateshwar, Barclays

Thank you.

Just one question from my side.

Jim, on the margin side of it, now digital is, I think, close to $100 million for you guys in the quarter and obviously it's growing at a faster clip than the rest of the business.

So when you think about the contribution margin from the newer revenue sources versus the legacy (inaudible), how should we think about the impact of that on margins, especially as you go more to mobile and video and so on and so forth?

I'd say it's a pretty complicated story and it depends -- look, I think broadly speaking, obviously digital is a business.

It doesn't come with a big kind of legacy cost that digital does, but there's dynamics around digital in certain cases that come with costs that maybe print doesn't.

For example, margin in certain aspects of digital advertising could be slightly lower, so print -- when we lose print advertising, we regularly say, comes out at 90%.

Paid post, for example, there's production cost behind that, but it's still a very high-margin business, but 90% margin is 90% margin on print.

So, look, I think -- look, we continue -- as the digital business grows rapidly, we continue to invest quite a bit behind that.

The payback on that investment comes a year or two later, so you don't fully feel the margin expansion early on in a growing business that you might otherwise.

But, look, we're going to have to make -- we're going to have to continue to be pretty aggressive in taking costs out on the print side.

We're very focused on margin and protecting margin in the business and we will continue to be aggressive, particularly on the print side and taking costs out.

And if I can just second that and just say, you can see from the Q2 results that we are focusing very hard on the cost side, while investing enough to build digital business.

We absolutely believe that the digital transition that we're going to in this Company requires us to have a strategic view about our cost base and about long-range future margin.

And that's a large focus of Management attention, as well as the business of growing digital revenue.

And I've seen nothing yet that suggests to me that it will not be possible for us to effectively defend margin as we went through the transition.

And, by the way, to do that while still maintaining the quality of the journalism that the Times produces.

Just to follow up with that, if I look at the margin expansion that you saw this quarter or the -- in general, the job that you guys have been doing with cost cuts, that's obviously helped a lot from the margin side of it, but the operating leverage that you would expect from the digital side, initially is obviously capped by all the investments you guys have made.

But as we go forward and as you lap those investments, just wondering from a timing perspective, when we start seeing that operating leverage now that costs, to a certain extent, are optimized and you continue that process and then you have this new revenue lines which keep adding on the margin side of it.

So when we go to 2016 and so on, should we expect the profile of the business from a margin perspective to be different compared to what it is today?

A lot of that tends to be driven by our view of advertising.

And, as I said, because it is such a volatile ad market, the margin discussion tends to be around what our view of the mix of our business is between consumer and print.

And then even within advertising, digital and print.

And as I said earlier, when you lose a dollar -- or you gain a dollar of revenue, it is coming in and out at 90%, so it has a big impact on the margin story.

So if we can grow advertising, you'll see margin expansion.

When there's pressure on advertising, it puts a lot of pressure to take cost out.

Without getting too philosophical about it, another way to look at this is the question of to what extent you can grow your engaged audience.

A significant number of the costs -- for example, your journalism costs in a high quality digital journalism business are relatively fixed costs.

There are critical strategic questions about how much you can grow -- not just your headline audience, but your engaged audience and your paying audience.

And that's what the significant part of our focus on what I described earlier as the funnel is around the issue of how you grow and how you accelerate growth in your audience.

Because in the end, if you can get a strongly grown audience, and maintaining engagement measured by time spent and our effectively marketing and managing the funnel of the audience, you have a chance of growing your audience sufficiently to get a great margin story.

Thank you.

There are no further questions at this time.

We'll turn the call back over to Ms. Passalacqua for any closing remarks.

Thank you for joining us this morning and we look forward to talking to you again next quarter.

Ladies and gentlemen, this concludes today's conference call.