Perion Network Ltd (PERI) 2011 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Perion third-quarter 2011 results conference call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded November 14, 2011.

With us today from Perion, we have Josef Mandelbaum, CEO, and Yacov Kaufman, CFO. I will now hand the call over to Rob Fink of KCSA for the Safe Harbor information. Mr. Fink, would you like to begin?

Thank you. Good morning and good afternoon, everyone, and thank you all for joining us today for the first earnings conference call following last week's announcement that the Company has changed its name to Perion Network as part of a rebranding effort to better reflect its portfolio strategy.

On today's call, management will be reviewing the financial results and business highlights of the third quarter 2011. The press release detailing Q3 results is available on the Company's new website, Perion.com. Also posted on the website is a live webcast that contains a slide presentation that will be used on this call and which will later be archived.

Before we begin, I would like to read the following Safe Harbor statement. Today's discussion will include forward-looking statements. These statements reflect the Company's current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including those discussed under the heading Risk Factors and elsewhere in the Company's annual report on Form 20-F, that may cause actual results, performance or achievements to be materially different from any future results, performances or achievements anticipated or implied by these forward-looking statements. The Company does not undertake to revise any forward-looking statements to reflect future events or circumstances.

With that, I will now turn the call over to Josef Mandelbaum, Chief Executive Officer. Josef, the call is yours.

Thank you, Rob, and welcome, everyone, to our third-quarter 2011 earnings call. Today, I'd like to focus my comments on three items. First, a progress update on our strategy, specifically our recent rebranding to Perion. Second, a top-line summary of our financial results. And third, an update on the Smilebox acquisition and other operational highlights of the past quarter.

After my prepared remarks, I will turn the call over to Yacov, who will review the Q3 financials in detail and provide updated guidance for 2011. We will then open the call up for questions.

These are exciting times for our Company as the strategy we outlined comes to life through the execution of our plan. In the past 14 months, we have methodically and successfully executed the initial phases of our strategy. We have made investments in our infrastructure to allow us to scale, reduced headcount in some areas to invest in adding and investing in new skill sets and people, established a labs group and corporate development team to grow our product portfolio through organic and nonorganic means, all to help transform our business from a single product, overly dependent on one revenue stream, to a multiproduct company with multiple revenue sources.

The rebranding and renaming of our Company to Perion is the next phase of this effort. Our new name signifies a big step forward towards advancing a vision that I discussed since joining the Company as CEO over a year ago. While this may seem trivial, it is an essential part of how both internally and externally the Company behaves and is perceived.

Perion, which was derived from the English translation of the Hebrew word for productivity, embodies our corporate vision, to make the everyday digital life of our users simpler and more enjoyable through a portfolio of quality, productivity-based products and services customized and targeted to second-wave adopters.

While IncrediMail continues to be one of our primary brands, following the acquisition of Smilebox, we have really expanded beyond a one-product Company. And as we continue to build our product portfolio of ease-of-use productivity tools, we want consumers to recognize our brands under the Perion umbrella, which over time offers us the perfect branding platform to grow the business, establish an emotional bond with our consumers, earn their trust and in so doing increase their loyalty and lifetime value.

Now I would like to discuss our year-to-date and third-quarter performance. In the first nine months of 2011, top-line revenues increased by 19% to $25.7 million. This is a result of strong search revenues, an increase in advertising and premium product revenues, and the latter larger largely driven by the addition of Smilebox.

The $900,000 decrease in net profit from $7.6 million to $6.7 million seen in the first nine months of 2011 is primarily a result of increased customer acquisition cost and expenses resulting from investments into the infrastructure necessary for accelerated growth. These investments are part of our strategy to accelerate top-line growth and maintain a robust bottom line.

While we see a positive return on investment as we ramp up our customer acquisition efforts, the expense precedes revenues, and year to date, this has impacted our short-term profits, particularly in the second half of the year, as we have been anticipating.

In the third quarter, our revenues were $9 million, a 20% increase over the third quarter of last year, while our net income was $1 million lower than the third quarter of last year at $1.8 million, primarily as a result of a $2.2 million increase in customer acquisition costs. As you can see, we have maintained a very healthy profit margin even as we invest in future growth. Although only one month of consolidated activity is included in these results, the positive impact that the Smilebox acquisition has had on our top-line growth and revenue mix can already be seen.

With that as a backdrop, I would like to provide an update on the integration of Smilebox and review some operational highlights of the third quarter. Orchestrating and successfully completing the acquisition of Smilebox in Q3 was the major development and key highlight for us. But, as I said in our last call, it has been my experience that the biggest challenge in the acquisition is the execution and actual merger of the two companies, cultures and teams.

To that end, I am happy to report that everything is going according to plan, and in the 75 days since we closed the acquisition, we have been focused on execution and making real progress leveraging synergies. Thanks to this progress, we believe that on a non-GAAP basis, Smilebox will be breakeven Q4 this year and are confident it will be profitable in the first quarter of 2012.

We feel comfortable making these projections because of the execution of two main synergies that were identified before the acquisition. The first relates to search. If you recall from our last call, Smilebox has been growing the top line more than 35% each year for the past few years, mainly through its strong user base and subscriber growth. Our ability to introduce and leverage our search and monetization expertise to the Smilebox freemium model was an area of opportunity for us, and this effort is progressing as we had hoped.

Maintaining the Smilebox brand is critical to our effort, however, and as such, we are taking a slower, more careful approach to rolling this out to all users; but so far, the initial indications are very encouraging.

The second relates to costs. There were some expense synergies and cost reductions that were quickly identified following closing. One such area is content licensing. My previous experience at American Greetings gives me confidence that we can and will realize significant savings without impacting the quality of our product by paying market rates to either own the content outright or through reduced royalty rates, in line with industry standards. Both of these examples, once fully implemented, have the ability to enhance the top-line and bottom-line results going forward.

Operationally, the third quarter was highlighted by a number of developments. We launched a beta version of webmail for IncrediMail. This was not done to compete with many of the well-established webmail providers in this space; rather, in response to feedback we received from our consumer research we did last year that identified the lack of portability of IncrediMail as a major concern for our consumers.

I am happy to report that the addition of Facebook to our IncrediMail client in Q2 recently passed 1 million active users who are posting photos and messages on Facebook from IncrediMail. We are still monitoring the metrics, but it would seem that retention among these users is higher than the regular base, which was the main objective of the project.

In addition to IncrediMail, we have also integrated Facebook into PhotoJoy. Now, you can automatically get your Facebook photos on your desktop, in addition to your personal photos from your desktop.

We also launched our first mobile app with Smilebox Mobile on the iPhone, and in its first 60 days, we have already more than 160,000 active users who have downloaded and accessed the app more than 800,000 times. Social and mobile are two critical areas we will continue to invest in and believe it to be critical to our long-term success area.

Lastly, we expanded the Perion portfolio into a new category, safety and security,0 with the beta launch of our new brand, Fixie, late in the quarter. Fixie helps users optimize the speed and performance of their personal computers by locating errors and fixing them in a click. Fixie includes backup and scheduling features, making PC optimization easy and convenient. Fixie will monetize primarily as a premium product, but like other brands in our portfolio, there will be a freemium version that uses search to monetize the use of the product by some of the users.

I would now like to turn the call over to Yacov for more details on the financial results of this quarter.

Thank you, Josef. Before reviewing the financial results, I would like to discuss the financial measure we will report in going forward. As we further implement our M&A strategy following the completion of the Smilebox acquisition, we have decided to focus on non-GAAP results. While we continue to offer a detailed reconciliation of GAAP results in the financial tables, in the earnings press release, the decision to focus on non-GAAP was made to better convey the operational state of the business.

In general, the differences between the two bases of presentation are acquisition-associated expenses, accounting treatment of deferred revenues and other non-cash or non-recurring expenses that we believe do not present fairly the operational aspects of the Company. With that said, I will now go on to analyze our performance in the third quarter.

As Josef already mentioned, this has been a very busy quarter. Revenues this quarter were $9 million, bringing revenue to a total of $25.7 million for the first three quarters of 2011, reflecting 19% growth year-over-year. This quarter's revenues included $6 million in search-generated revenues, which despite a slight dip in overall queries, continued to grow year-over-year. Product revenues were $2 million, which included $900,000 generated by our Smilebox product in the single month consolidated this quarter, generating 56% year-over-year growth in product sales. And finally, $1 million in other income, which moved threefold compared to the third quarter of 2010.

All in all, as a result of the accelerated product growth and growth in other revenues, we have a much more diversified base, with search-generated revenues accounting for only 66% of total revenues in the third of 2011 as compared to 78% in the same quarter last year. As we consolidate the increasing sales of Smilebox and grow our other revenue streams, we can expect this trend of decreasing dependence on search-generated revenues to continue.

The difference between GAAP and non-GAAP revenue during the period covered was $561,000 in deferred revenues deducted in the GAAP presentation. Gross profits also continued to grow, from $7.1 million in the third quarter of 2010 to $8.4 million this past quarter. The gross profit margin was high at 92%, although lower than previous periods, as Smilebox products include content costs and other costs included in the cost of goods sold.

Going forward, we can expect to continue and have a very high gross profit margin, although lower than those recorded prior to the acquisition of Smilebox. The $561,000 difference between GAAP and non-GAAP revenues has the same effect on gross profits.

Research and development expenses for the third quarter were $1.7 million, similar to those in the third quarter of last year, and were 20% as a percentage of sales compared to 23% in the third quarter last year. We expect R&D expenses to remain at this level as a percentage of sales in coming quarters. There was no material difference between GAAP and non-GAAP R&D numbers.

Sales and marketing expenses, other than customer acquisition costs, for the third quarter of 2011 were approximately $700,000, same as in the third quarter of 2010.

Customer acquisition costs went up significantly to $2.6 million in the third quarter of 2011 compared to $400,000 in the same period last year. This increase is in line with our strategy to invest in accelerating growth, generating revenues later this year and in 2012. In addition, these investments now include those required to acquire Smilebox users.

Our media buying program has been ramping up, and we have invested great effort in creating the systems required to track the success of these investments, ensuring they are ROI positive beyond the testing stage. Our efforts are indeed showing a positive return on investment, and therefore, we can expect these expenses to further increase in the fourth quarter. A large amount of the return of these investments, as I said, will come in 2012, as we have previously indicated, increasing revenues and contributing to profitability.

General and administrative expenses were $1.3 million in the third quarter of 2011 compared to $700,000 in the third quarter of 2010. This increase stems primarily from an enhanced management structure put into place in the fourth quarter of 2010 and the first quarter of this year, as well as some costs brought on with the consolidation of Smilebox.

Smilebox acquisition costs of approximately $800,000 in the third quarter for a total of $1 million in the first nine months of 2011, as well as $150,000 of intangible assets and amortization in both periods, were deducted from the non-GAAP numbers. In addition, share-based compensation was adjusted for the non-GAAP numbers for all periods reported.

While in the first [new] quarter of this year we benefited from a nonrecurring cash credit of $1.4 million, there were no such credits this quarter. These nonrecurring tax credits were deducted from net income and the non-GAAP numbers for the first nine months of this year.

The effective tax rate was higher this quarter, primarily due to the combination of GAAP and the non-GAAP losses in Smilebox, for which we did not record a tax credit. We expect this effect to continue until Smilebox establishes significant profitability on a GAAP basis. The effective tax rate for the Israeli operations is expected to be approximately 20%.

Net income in the third quarter of 2011, after all the investments mentioned above, was a robust $1.8 million or $0.18 per diluted share, compared to $2.8 million or $0.29 per diluted share in 2010. In the first nine months of 2011, net income was 26% of revenues, reaching $6.7 million or $0.67 per diluted share in the first nine months of 2011, compared to $7.6 million and 78% (sic -- see press release) per diluted share in the first nine months of 2010.

In the first nine months of 2011, cash generated from operations totaled $5.4 million as compared to $7.3 million for the first nine months of 2010. The decrease in cash flow from operations reflected an increase in trade accounts receivable of $1.7 million, which was received shortly after the end of the quarter, as well as the aforementioned lower net income, which was due primarily to investments in customer acquisition costs, which had increased by $3.6 million during the period.

As of September 30, 2011, we had cash, cash equivalents and investments of approximately $9.5 million. In addition to our cash flow being generated from operations, we have secured a $20 million long-term bank credit facility, which remains unutilized.

Before returning the call to Josef, allow me to highlight some of the metrics driving our business. Total downloads this quarter were approximately 4 million compared to 2.9 million in the third quarter of 2010. A significant portion of that growth was driven by our newly-acquired Smilebox product, and we believe this product will continue to drive product diversification and future product sales.

Our installed base has grown by 31% since last September and reached 9.6 million during the third quarter. This increase as well reflects the broadening of our installed base with the acquisition of Smilebox.

We had approximately 276 million search queries this quarter, decreasing 6% compared to the third quarter of 2010. This decrease was due to the previously mentioned terms of service changes instituted by Google to all their partners in June of 2011, as well as some technical difficulties experienced by one of our partners, which directly impacted a number of queries in the quarter.

And finally, the acquisition of Smilebox has dramatically increased the number of premium subscribers to 370,000, increasing 125% compared to the third quarter of 2010. We expect the number of premium subscribers to continue and grow in the coming quarters.

With the addition of Smilebox, we are updating our guidance for 2011, and projecting non-GAAP revenue of $37 million and net income of approximately $8 million for this year. We expect to issue guidance for 2012 in January, well before we report Q4 and 2011 year-end results. With that said, I would now like to turn the call back over to Josef for closing remarks before opening the call to questions.

Thank you, Yacov. With a new brand to reflect our strategy and future aspirations, strong financial results, continued progress in improving our operations, products and customer acquisition efforts, as well as the successful integration of Smilebox, we are very excited about our current and future position. Thank you for your time, and we will now open the line up for questions.

(Operator Instructions) Nick Halen, Sidoti & Company.

Thanks for taking my questions. The first question I had is I know it has only been about a month or so, but did you mention -- I apologize if I missed it -- how much revenue you guys did from Smilebox in the quarter?

Yacov did mention it; in the month, it is about $900,000.

$900,000, okay. Just in terms of the media buying, it seems like you guys are pretty happy with the ROI you are seeing on that. But do you guys kind of have somewhat of a timeline as to when you expect to maybe scale back a little bit of that spending? Or is it as long as it is ROI positive, we can expect to continue seeing higher expenses on that end?

As long as -- I think from our standpoint, as long as the ROI meets certain thresholds -- obviously, it has to exceed our weighted average cost of capital; it has to be good return -- we expect to continue. However, these things have a natural ceiling, and usually at some point in time, you get to a place where your return just isn't worth it and you leveled out and then you start optimizing, and you will not see increases so significantly.

I don't think we are there yet, but as you even see from the chart that Yacov showed during his presentation, part of the testing process we did had ups and downs, as we mentioned in our previous phone calls. And it's really finding where to get the best return, try to frankly put the pedal to the metal and see how far we can push that. And ultimately what happens when you do that is you reach a ceiling and you've got to keep on looking at expanding it horizontally.

I think there is still a lot of opportunity there, and the ROI is positive, so we are excited about that. And we think it can continue to fuel growth hopefully for many, many more quarters to come.

Okay. And just lastly, I noticed there was a pretty big -- pretty significant jump in accrued expenses on the balance sheet this quarter. Did that have anything to do with the acquisition, and, I guess, where can we expect that to be by the end of the year?

You hit it on the nose. That expense is accrual of the coming payment that we are expecting to pay for the most part in March of 2012 for the acquisition of Smilebox. And we're expecting that number to be in the neighborhood of $6 million to $7 million.

$6 million to $7 million, okay. All right, great. Thank you, guys.

Christopher Ferris, Noble Financial.

Thank you for taking the question. You touched a little bit on the lower search in the quarter, and I was wondering, is that a kind of number we should expect to see going forward over the next couple of quarters, a down mid-single-digits number, or is that a one-time item in the quarter?

And then, I think Nick's question kind of touched on this, but I was just curious about the customer acquisition costs, and if you could drill down a little bit more there. And is that sort of the run rate we should expect going forward for the next couple of quarters?

Sure. Nice to have you on the phone call, Chris. I'll answer the first one, in order.

So the answer is that as we look at the business, the searches to date, we believe was a one-time issue as we adjusted to, A, Google's changes. I think if you look at a lot of comps out there, there were a lot of companies that had a little bit of dip, as you have to kind of readjust to the new terms of service. We are already seeing -- we're in the middle of Q4, so we are already seeing the uptick. So we don't expect -- we expect Q4 to be much stronger than it was -- than Q3. So we think it's one-time.

And the bug from one of our partners -- it happens sometimes -- there was a bug in one of our partners we had, and it caused us some issues. And we think we are past it, so we think going forward we shouldn't see a decrease in the single digits on a going-forward basis. That's number one.

Number two, with regard to customer acquisition, I guess I am not sure what you are looking for for more clarity, but I will say the following. We are looking -- I think we've mentioned this -- for the first six to nine months of the year, we are pretty consistent in saying we're doing a lot of testing, we are building our infrastructure and we are testing in multiple countries, multiple campaigns, multiple channels, from affiliates to PPC to display advertising.

And as long as the return, we think, is double digits and higher for us, as we look at how we spend our money, given where we can make money today using our cash, it's a pretty good return on investment for us. It also helps us in the long term by building up our base, which ultimately leads to more viral acquisitions, as well, both for IncrediMail and for Smilebox.

So I think the run rate you are seeing today -- I can't guarantee it, but I would say it would look more like the run rate today than it looked in the first half of the year on a going-forward basis. That would be our best guess today, that the run rate you'll see in Q3 and Q4 will likely be the run rate you will start seeing in 2012, which is what we predicted at the beginning of the year, if you recall.

Okay. Thank you very much.

Aram Fuchs, Fertilemind Capital.

How does the interruption of this one partner and the change in the Google SERP impact the accuracy of your ROI calculations on this media spend, because your media spend has gone up dramatically and search queries have gone down? Just from a public -- an analysis of your public filings, it is difficult to see how you can be getting a positive ROI.

First of all, nice to have you on the phone, Aram. Thanks for the question. If you notice the slide that Yacov had, you saw a dip in July, as an example, where we had to recalibrate. After the Google changes and some of the issues we had with a partner, we had to recalibrate and make sure that in fact we weren't losing our shirts on the ROI.

We did recalibrate in July, and we really took the media spend down significantly. But what we did in the month of July as well is we optimized for the revenue per click that we get and how we get more money from our partnership with Google, frankly, working with them, and just doing a lot of work ourselves to increase the lifetime value.

And what we've built internally over the last -- Yacov -- year, maybe nine months to a year -- is we've built some pretty sophisticated statistical models that take into account these variables on a daily basis. And literally, every day, we go into our systems and we have predictive models that tell us what we expect the lifetime value to be. And it does that on a campaign basis, on a country basis, on a channel basis.

And we have people -- analysts poring over this all day long to make sure that if we do find something that isn't making money, we shut it down. We give it a few days to see if it is something which is abnormal; if it is not, we shut it down. Or we recalibrate and as soon as it is working, we start spending more.

So right now, the models are telling us -- and we have pretty high confidence level that our models are accurate, based on what we've seen so far this past year -- that we think it is a pretty accurate number and that so far we are very confident that the ROI is there and will be going forward. And as changes will happen, and they always do, we will take that into account and we will adjust accordingly.

But as in most downloadable software, aren't you getting most of -- the majority or a huge portion of the revenue in the first quarter or two? And then that would imply that we should have seen some revenue impact from this already?

First of all, I think we are showing significant growth, so I think -- and excluding even Smilebox, I think we're starting to see some of the revenue from Q1 and Q2. And in Q3, where we had the big spend, you will start seeing it in Q4 and beyond. I think in Q4, as you know, most of the revenue is in the first six to nine months. But [our target value model] right now is a year, but most of it in the first six to nine months, and you will see that. And if we spend money in Q4, you will primarily see it in 2012.

All right. And then on the Smilebox integration, you mentioned that they were growing their top-line sales at 35%. But judging from their filings, they are also consuming a fair amount of capital during that point. So is there any sense that you can get of what a growth would be like if they were actually producing -- well, first, self-sustaining and then producing free cash flow for shareholders?

Two things. One is, I'm not aware of any filings they did, so --

Not filings -- they announced they are raising equity. I mean, they are a private company (multiple speakers).

Yes, but I'm happy to answer the question anyway. I think we mentioned today on the phone, we are hopeful and expect that they should be breakeven already in Q4. And then in Q1, they will be profitable as we go forward, based on what we've seen. We knew that when we made the acquisition, obviously, although harder for investors to see, because you didn't do the due diligence, and we did.

And we expect the growth, frankly, to continue, potentially even more so, that once we get to free cash flow on a positive basis, Q4 or Q1 of this coming year, we should -- I mean, I don't see any reason why the growth would slow down because they get to free cash flow. Their investments -- and some of the investments, actually, as I mentioned on the phone in my remarks, was in content licensing, for example. Where, again, it made sense what they did, but the reality is there are easier ways of conserving more cash, still getting the same quality product out there, and it doesn't impact your top line.

There is also optimizations we can do with media buying and customer acquisitions. They also have a viral organic part of their business, which is doing well. So overall, we expect it to continue to grow; just that once you get over a certain threshold, as you know, from a fixed cost base, your profitability starts increasing, and that is the point that Smilebox was at when we bought them. And that is what we assumed, and so far, knock on wood, that is what is happening.

Great. Thanks for your time.

(Operator Instructions) Aram Fuchs, Fertilemind Capital.

Maybe you could just tell us -- give us a hint of what is working in the media buying. You can slice and dice it in so many different ways via PPC, banners, geographies, verticals, key words. Can you extract broad lessons from it already or are you still in the learning phase?

First of all, you're always in learning phase. Anybody that says you're not in media buying, frankly, I don't think is being completely honest. There will always be things we do that won't succeed and we learn from it and keep on moving. And frankly, if we are not taking risks like that, we are not pushing the envelope to see where we can really grow the business.

But on a broad strokes, I would say a couple things. One, the US market, while it has clearly the highest lifetime value, is also the most competitive market. And we are making an ROI, a positive ROI, but it is tougher. You see much better ROI opportunities outside the United States. Not necessarily in Third World countries; I'm just saying outside the United States. It could be France, it could be Germany, it could be the UK, could be Canada, could be Brazil.

Then you have emerging countries, Eastern Europe and like India, that I think are definitely opportunities as well. The problem with those is the lifetime value is very low, but the acquisition cost is even lower. So on a pure margin basis, you can make more money, but we are also looking to get users as well.

In terms of -- that's on a geographic basis. We are still doing significant (technical difficulty) in the US. I don't know the exact breakdown off the top of my head. But the ROIs on a percentage basis are usually higher outside the United States because there is so much competition in the US.

In terms of what channels are working, I don't think it is a mystery. I mean, PPC works. There are natural feelings on PPC, which is the biggest problem, in terms of you can't buy as much as you'd like to buy because the higher up you go, the more money you end up paying, which then lowers your ROI. So you have to really go -- we have 50,000 key words we are buying, something like that. So it is a lot of key words we are trying to buy and optimize and continually -- as literally, as looking by the hour, by the minute, by the day, to kind of optimize that.

Affiliates are working well for us. It works well for Smilebox (technical difficulty) IncrediMail. There are partnerships that we do, and I think you guys probably know the affiliate business well. That is actually working relatively well for us.

And I think the place where we are seeing some good opportunities is in the content display networks. Whether it is Facebook, whether it is Google content display network or Yahoo or other places like that, we are certainly doing some more targeting. The CPMs are a little higher when you target, so we are still in the testing phase on that more than rolling it out. But the more targeted we can be for our products, given our strategy, we believe over the long term that will also be a very good channel for us to invest in.

Okay. Yacov, given that your stock has been incredibly volatile, how do you get an accurate take on the equity component of your WACC, of your weighted average cost of capital?

We have -- you know, we've recently secured a long-term loan from the bank, and we did this as a consortium. So we know what the price accessing the markets would be, and we have a pretty good feeling for that right now. In the meantime, we have not yet tapped into that, but is available to us and it is at quite favorable terms right now, actually.

What are the basic terms on that?

We haven't disclosed (inaudible), but they are a couple of points above the LIBOR, a few points above LIBOR. But it is a moving -- it's a floating rate, so it changes (multiple speakers).

(inaudible)

Right. As Josef clarified, it is a floating rate until we take it down. Once we take it down, it will be a fixed rate.

I see. Great. Thanks for your time. Those are my last questions.

There are no further questions at this time. Before I ask Mr. Mandelbaum to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available in three hours on the Company website, www.Perion.com.

Mr. Mandelbaum, would you like to make your concluding statement?

Thank you. Thank you, everybody, for joining us today for our Q3 2011 earnings call. I hope as you listened to our comments and followed us in the presentation, you will notice that we are really being methodical about executing the strategy we outlined. We have full confidence and belief in the efficacy of our strategy and execution. And as we see over time, we strongly believe that shareholders will be rewarded for sticking with us as we come out of this as a stronger company called Perion, with multiple products, multiple revenue streams, growth and profitability. Thank you very much. Have a nice day.

Thank you. This concludes the Perion third-quarter 2011 results conference call. Thank you for your participation. You may go ahead and disconnect.