Quotient Technology Inc (QUOT) 2015 Q4 法說會逐字稿

Good afternoon, my name is Mike, and I will be your conference operator today. At this time I would like to welcome everyone to the Quotient Q4 and full year 2015 conference call.

(Operator Instructions)

I will now turn the call over to Stacie Clements, VP of Investor Relations. You may begin your conference.

Thank you. Hello, everyone, and welcome to our fourth quarter and full year 2015 earnings call. Please note that slides to accompany the remarks on today's call are available on the IR section of our corporate website, investors.quotient.com, and I urge everyone to take a moment to download them, along with our financial results press release.

On the call on here with me today are Steven Boal, our founder and CEO, and Jennifer Ceran, our CFO. Mir Aamir, our President and COO is also here and available for Q&A after our prepared remarks.

Before we begin, please note that during this call, you will hear forward-looking statements. These forward-looking statements include our projections regarding future financial performance; our ability to grow our business; the continued shifts in our industry; our expectations regarding the continued rollout of our Retailer iQ platform and bringing new retailers live on it, as well as the anticipated financial benefits therefrom; our expectations regarding our targeted digital circular product, our digital print initiative, our media and data analytics offerings, and our efforts with respect to attracting additional retailers; Shopmium's integration and benefits; and our expectations to successfully leverage our investment operating expenses.

Forward-looking statements are based on information available to and of the good faith beliefs of our management team, and as of the time of this call, and are subject to risks and uncertainties that could cause actual performances or results to differ materially from those expressed.

Additional information about factors that could potentially impact our financial results can be found in today's press release and in the risk factors identified in our quarterly report on Form 10-Q filed with the SEC on November 12. We disclaim any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise.

Please note that with the exception of revenues, financial measures discussed today are on a non-GAAP basis, and have been adjusted to exclude certain expenses. A reconciliation between GAAP and non-GAAP measures can be found in the financial results press release issued today, and on the slide deck posted on the Company's website. And with that, I'll now turn the call over to Steven.

Thank you, Stacie, and welcome everyone. We had a great fourth quarter and end to a challenging year, and I'm very pleased with the momentum across our business. Both revenue and adjusted EBITDA came in ahead of guidance, driven by digital paperless and print, strength in media, and increased mobile traffic. Revenue in the fourth quarter was $69.4 million, up 16% from last year, and adjusted EBITDA was $7.5 million.

As part of our corporate rebranding, I will begin referring to the primary areas of our business as Quotient promotions, Quotient media, and Quotient insight, which refers to emerging offerings tied to our data and analytic capabilities.

I'll start with Quotient promotions. We delivered a record number of transactions in the quarter, up 25% from a year ago. Digital paperless transaction growth accelerated, with the majority occurring on mobile devices.

We are also pleased that we saw an increase in digital print transactions coming from mobile. This occurred as we continued to roll out our mobile printing experience during the quarter. This experience enables shoppers to print offers directly from their mobile phones or tablets. In fact, in the fourth quarter, we saw more than 5% of all digital print transactions occur from mobile devices, and we expect that number to grow over the coming quarters. We also started releasing this new printing experience on desktop, so that shoppers no longer need to download software in order to print coupons.

Growth on our Retailer iQ platform continued to accelerate, with transactions up 48% from Q3. In the quarter, an additional five banners went live on Retailer iQ, and as of today, there are almost 16 million registered shoppers on the platform, already representing almost 13% of all US households.

The power of our network effects were evident in the quarter as more retailer banners use Retailer iQ, CPGs offered more promotions, and that led to greater shopper adoption and engagement. Keep in mind that as the platform grows, so does our ability to deliver personalized and targeted offers at scale, creating even greater value for CPGs, retailers, and shoppers.

Increasingly, retailers are turning to Quotient for help with their digital marketing efforts. For example, we are creating themed events to help retailers drive consumer adoption, and CPGs drive sales. Such events include everything from promotional programs around the Super Bowl, to unique themes such as January Health Month.

We're also seeing momentum in targeted promotion campaigns. For example, we worked with one of our largest CPG customers to develop a campaign targeting a specific audience segment. This campaign was developed in collaboration with the CPG shopper marketing team, and a specific retailer, with a goal of driving sales across several of their brands.

Shoppers responded and the campaign was a big success. 40% of the targeted recipients were tracked directly to in store traffic. In addition, the campaign drove three times the average engagement level on our platform, as shoppers found relevant and personalized offers. As CPGs and retailers embrace new digital strategies to remain competitive, we believe Quotient has the opportunity to lead the shift of the $200 billion offline trade promotions business to digital.

Turning to Quotient media, revenue grew 29% year-over-year, driven primarily by increased inventory from our new product, and high demand as brands turn to Quotient to amplify their promotion campaigns with digital display and video ads.

In the fourth quarter we also deployed a new ad serving platform to deliver media on partner sites and grow our available inventory. And we released new Brandcaster media units to some of our top publishers. Early results are strong, and we expect to roll these enhancements out to other publishers in the near future.

As a reminder, Brandcaster is the cornerstone of the Quotient publisher platform, and lets our approximately 30,000 publisher partners feature coupon galleries, dynamic offer modules, targeted media, on their sites and across the networks.

We also acquired Shopmium, a mobile receipt scanning cashback platform. We think Shopmium provides a great mobile consumer experience, and we've already started expanding beyond France, where Shopmium is already a market leader. In fact, just a few weeks ago, we soft launched the Shopmium app in the UK, and here in the US, our sales team has just begun selling into it. Leveraging our existing CPG relationships to bring the offers currently available across our network into the Shopmium experience.

This is a new opportunity for us to create closer economic relationship directly with shoppers. With this service, shoppers take a picture of a receipt and upload it to Quotient, where we validate the purchase, and pay the consumer directly to their bank or PayPal account. This marks the first time that we've had a direct payment relationship with our audience. This is just one area of focus for us in 2016.

I'll now go through the other major areas. First, Quotient promotions. We'll continue to grow our network by working with retailers to build shopper adoption onto Retailer iQ, and implementing the remaining signed retailers onto the platform.

With the increased shopper demand, we're focused on running larger programs and capturing more budget dollars per CPG brand. At the same time, this enables shopper marketing teams to leverage national campaigns to drive incremental volumes, with specific retailers, primarily through mobile.

Second, Quotient media. We believe we have a large opportunity to continue to grow our network. Last year we added to our media capabilities in two significant ways. We launched Retailer iQ media, adding media distribution to the mobile and website experiences of retailers, and we enhanced our ad serving platforms to use significantly more behavioral and transactional data to help us deliver targeted media at scale. We're also focused on integrating more dynamic experiences and targeted media onto our brand page and digital circular platforms.

And lastly, our newest segment, Quotient insight. Now that Retailer iQ is operating at scale, we have real-time shopper insights that are valuable to our CPGs and retailer partners. Our targeted promotion offering is just one example of how we can use the platform to drive more value across the network. We also have the growing capability to directly link digital campaigns and media to in-store purchase data, which is another example of why we believe we are in the unique position to deliver new products around these capabilities. As we think about the next step in the digital evolution of this industry, we believe that Quotient insight is a large opportunity, with scale and data as key components of our competitive advantage.

This year is also about a continued focus on shoppers who can increasingly turn to coupons.com to save money on their in-store and online purchases. We are continuing the successful consumer marketing campaign that we launched in the third quarter as we expand our shopper network and create deeper and direct relationships with consumers. As I mentioned, we expect Shopmium to play important role on this front. I'd like to remind you that in times of economic uncertainty, households still need groceries, and increasingly they turn to coupons to help manage their tightening budgets.

In summary, I'm pleased with our Q4 results and our early momentum as we start the new year. 2015 was a transformative year for us, and we believe we are well positioned to capitalize on our investments. The industry as a whole moves slowly, but consumers are bringing retailers and CPGs into the digital era at an unprecedented pace. As the evolution continues, we believe it will provide a tailwind to our long-term growth.

I'll now hand the call over to Jenny to discuss the financial results in more detail.

Thank you, Steven, and welcome, everyone. We had a strong fourth quarter and ending to 2015. Revenue for the quarter was $69.4 million, up 23% sequentially and 16% over a year ago, reflecting strong media performance, stable print volume, and acceleration in digital paperless, driven primarily by growth in Retailer iQ.

We delivered 469 million transactions, the highest number in history of our Company, up 16% versus last quarter, and 25% versus a year ago. Driven by top line strength, adjusted EBITDA came in at $7.5 million, while we continued to make the necessary investments to enhance our platform.

We ended the year with a cash balance of $160 million, which includes approximately $17 million to acquire Shopmium, and $14 million used to acquire stock under our repurchase program. And today we're announcing a new $50 million repurchase program to be available for use over the next 12 months.

Let me now provide more details on the quarter. As I just mentioned, total revenue for the quarter was up 16% versus a year ago. Breaking it down even further, revenue from digital promotions was $51.3 million, a 12% increase over last year, and revenue for media was $18.1 million, a 29% increase over last year. Promotion revenue includes two months of Shopmium. Excluding Shopmium revenue growth would have been about 1 percentage point lower.

Let me now provides details on transactions. As Steven mentioned, we had a record quarter for transactions, driven by improvement in digital prints, and acceleration in digital paperless. Digital print transactions were up 1%, and digital paperless transactions were up 31% over last quarter.

Retailer iQ transactions, a growing subset of digital paperless, were up 48% sequentially, as retailers who've implemented the platform in their stores continued to ramp their marketing efforts. We were very pleased with the shopper adoption of paperless transactions, growing 58% year-over-year, and our digital print volumes reflected the positive impact from our new mobile printing experience.

Finally, average revenue per promotion transaction in the fourth quarter was $0.11, which was in line with our historical range. As we've mentioned before, this metric will fluctuate slightly, as it's dependent upon the mix of transactions and customers.

Moving on to Retailer iQ. During the fourth quarter, we implemented five new retailer banners, bringing the total to 15 banners implemented and seven marketing. As a reminder, retailers drive shopper adoption through marketing efforts after they launch Retailer iQ. We expect to continue to roll out new retailer banners onto the platform, and help drive marketing programs over the next several quarters. As of today, we have 16 retailer banners live.

Moving down to P&L. Non-GAAP gross margin, which excludes stock-based compensation expense, was 64% in the fourth quarter up, from 60.4% in the third quarter. The improvement was driven by revenue growth and expense leverage. Compared to a year ago, gross margin was down about a 0.5 point, primarily due to a higher proportion of distribution fees from the growth in Retailer iQ.

Let's move to the next slide. For the fourth quarter, non-GAAP operating expenses were $41.5 million, compared to $34.5 million in the fourth quarter of last year. This quarter we saw an increase in sales and marketing expense, driven primarily by increased advertising, as well as headcount related costs.

Research and development declined 1 percentage point, as we continued to grow engineering headcount in lower cost locations. Finally, general and administrative expenses were 11% of revenue, up from 9% a year ago, due to headcount growth, one-time transaction costs related to the Shopmium acquisition, and other operating expenses.

Let's move on to profitability. In the fourth quarter, adjusted EBITDA was $7.5 million, representing an 11% margin, compared to a 4% margin in the third quarter, primarily driven by stronger revenue. Adjusted EBITDA was down compared to a year ago, due to higher marketing expenses, headcount growth, and other operating costs. We ended 2015 with 618 full-time employees, compared to 552 employees at the end of 2014.

Let's move to our stock buyback program. During the quarter, we repurchased over 2 million shares of our common stock for $14.3 million. And as of February 10, we have repurchased 4.3 million shares in total, for $30.3 million. We continue to believe in the long-term prospects for the Company, and today we are announcing a new $50 million buyback program which will replace our expiring program. The new program will be available for additional purchases over the next 12 months.

Let me move on to our outlook for 2016. We begin the year with increasing confidence in the business. As we look at 2016, we expect the number of transactions to grow, particularly within digital paperless through ongoing deployment and marketing efforts of Retailer iQ. As consumer demand builds across our network, so should content from our CPG customers. For the first quarter, we expect revenue to be in the range of $59 million to $62 million, representing year-over-year growth of 6% to 12%, and consistent with a seasonally softer revenue quarter. We expect adjusted EBITDA to be the range of $2 million to $3 million.

For the full year, we expect revenue to be in the range of $250 million to $260 million. We expect adjusted EBITDA to be in the range of $20 million to $25 million, inclusive of ongoing investment to build out robust analytical capabilities around Quotient insight.

We expect CapEx for 2016 to be 4% to 5% of revenue, a portion of which will be used for the buildout of our office expansion in Cincinnati, Ohio. And for modeling purposes, we expect weighted average basic share count to be approximately 82 million shares for both the first quarter and full year 2016.

In summary, we ended a challenging year on a bright note. We delivered a record quarter for both revenue and transactions, grew digital paperless 58% over last year, and saw improvements in digital print through a new mobile printing experience.

We saw new retailers launching Retailer iQ, and shopper adoption built through marketing efforts. We also continued to see great momentum in media, as CPGs recognize the value of our networks, coupled with robust targeted offerings that amplify their promotional efforts.

We'll continue to make investments around future opportunities, including our media offerings, our cashback application platform Shopmium, and data and analytics to drive more targeted promotions and retailer insights to our partners. We also plan to repurchase stock opportunistically, with cash generated from our business.

As we begin 2016, we are increasingly confident in the business, and believe we can continue be well positioned to lead the industry, as retailers adopt digital solutions, and consumers migrate from offline to digital promotions. We will now open it up the call for questions. Operator?

(Operator Instructions)

Mark Mahaney, RBC Capital Markets.

Great, thanks, and congratulations on regaining some momentum. If we look ahead into 2016, would you provide any more color on the drivers of the growth that you're expecting, and maybe if you think about those three areas that you talked about, promotions, insights and media, would you expect one or two, them all to grow roughly in line with your forecast, is there greater growth in one of the three segments versus another?

Thank you.

Sure, hi, Mark, it's Mir, I'll take that question.

So as we look ahead in 2016, we do expect promotions and media to grow significantly. And Quotient insights, this is sort of as we had talked last year about being discovery, this is the year that we start products to market, so you can expect some impact some growth in that as well, but obviously from a very small base.

And in terms of media and promotions, you can expect both those growth rates to be at least as robust as what we saw in 2015, but media for some quarters, consistent likely measured, manage said before, could outpace promotions growth until such time that both those growth rates coincide.

Mark, it's Steven, let me just add one thing to that. I know you know this, but know that media and promotions often come hand in hand together, and increasingly media, whether it's display, ad, or video, or native ads are tied very closely with promotional spend to try and amplify the promotions. And so those two should be relatively in step, but because of availability of inventory, sometimes the media grows a little bit faster.

And Steve, if I could follow up, could you all talk then about like share of wallet spend per retail partner? And what I mean is, could you talk about, as you've laid out more products, especially as Retailer iQ rolls out too, could you talk about how the growth of the business in terms of adding on new partners versus getting more spend per partner, how that's progressing?

Sure, and you're specifically, Mark, talking about from a retail perspective, correct?

Yes, please.

Yes, sure, so going back to where Jenny mentioned in terms of the retailers live on our platform as of today, 16, 7 marketing, and we do expect the rest of them that are live that haven't started marketing yet to start marketing. And then if you recall, we've talked about the number of signed retailers that we have on the platform that represent more than to the $350 billion in sales. And so, a number of them haven't gone live yet, which we expect for them to go live in the next quarter or two.

So if you look at the growth from Retailer iQ, it's going to come off, also, from all these buckets, meaning retailers have signed and go live, retailers that have gone live, starting to market, and the retailers that are already marketing, to do more things. And I think that's what your question was, is what are those more things mean.

There are two things within that: one is the consumer adoption, so as they continue marketing, we're seeing in that even months and months into their marketing efforts, the consumer adoption and new consumer acquisition continues to grow. So we see that, and that's a multi-quarter and multiyear curve in many cases. But also like Steven mentioned, that we're bringing new products to that relationship and that platform, like Retailer iQ media, like digital circulars. And more and more retailers are adopting more and more of those products, and that's also helping with growth, and will help with growth this year and beyond.

Thank you, Mir, thank you, Steven.

Jason Mitchell, Bank of America Merrill Lynch.

Hello. Great quarter. I'm Jason here for Nat Schindler. Just a question on your average transaction, revenue per transaction was down a little bit year-over-year, can you maybe give a little bit of color there. And then just on your coupon code business, how has that been doing? One of your competitors has had some issues with the mobile transition there. Is that affecting you at all?

Sure, Jason, let me take the first one. On average revenue per transaction, it's been roughly consistent. I know it's down from around a rounded up $0.12 to a rounded up $0.11 right now -- or rounded down $0.11. But the reality is that as I mentioned earlier the mix of transactions between customers and between specific products within our mix, of promotion products, has an impact on that.

And the example that we've given in the past, which holds true as well is, when a large CPG that has negotiated volume rates that are lower than average, there's a lot of volume, and a bunch of campaigns in a particular quarter, it has downward pressure on revenue per transaction. And the opposite is true in some other quarters.

Because you saw last year, in quarter two, you saw some uptick for example. So those are some of the puts and takes, largely driven by mix. And then over the long term, one of the factors that would put upward pressure on pricing, of revenue per transaction, is targeting, which we've said before comes at a premium.

Yes, this Jenny. I just want to add that if you look at this year for the full year versus last year, it was flat at $0.10.

On the follow up question on transition and mobile, we actually view mobile as a really positive transformation for our Business. We've said all along that the higher use of mobile, the more frequently people are going to engage. Remember, we're in a little bit of a different business than some of the other businesses that you think about, that may face some headwinds from mobile.

In particular, our shoppers shop over three times a week, so very high frequency of engagement, and those shoppers are using their mobile phones on a very regular basis. And so the more use of mobile in our platform, the more engagement we get, the higher volume of transactions we get.

And so we've said before, very high proportion of our Retailer iQ transactions are now coming through mobile. And also if you recall, mobile monetization for us is exactly the same as desktop monetization. So on a transaction by transaction basis, mobile monetizes the same way, but with a higher frequency of engagement, more frequent use, we think mobile is actually a tailwind for us.

Deb Schwartz, Goldman Sachs.

Great, thanks. I have two questions if I may. First, Steven, you mentioned the macro environment. Just wondering if you're starting to see weakening or uncertain macro environment impacting the business, and to the rate it does, would that actually be potentially positive for your business?

And then second, just curious about how you're thinking about product spend for next year, your product expenses were down slightly in 2015. How should we sort of think about it going forward? And are there any projects that you plan that we can expect that to -- go up for next year. Thanks.

Sure, let me take the first part, I'm going to punt the second question here. But the first on the macro environment, so like I said before, we've had a great start to the year. And I think it may be a little early to call whether or not we're seeing significant increase based on the fact that the environment seems like it's getting a little bit tougher.

But as we all know, when the market is uncertain and the macroeconomic marketplace gets a little bit rocky, consumers use promotions more than not, and they use them to put food on the table at home. And so consumers will give up things that are considered luxury, and use those dollars to buy things that they absolutely need.

At the same time, knowing that, the environment around them, manufacturers and retailers, turn to promotions to drive those products, these consumers become more price-sensitive. So again, we've had a great start to the year, a little bit more time we might be able to draw some conclusions about what the macro environment looks like for longer term. But so far it certainly looks like we've had a good start to the year.

One more thing to add to your macro environment question before the product question. So if you look at what we do, in the world of digital versus offline, it is designed to be more efficient marketing and more efficient promotions. And as companies, whether it is retailers or CPGs feel the need to move continually and faster in the direction of efficient marketing, that's a tailwind for us.

So that was on the macro question. Can you repeat your product, I know you had a question on products?

Yes, just curious how to think about the expense line going forward, and are there initiatives that would cause spending to increase from the levels it was at at 2015?

Are you talking about the R&D line?

Yes.

Okay, sure. So if you look at our R&D expense, it did go down as a percentage of revenue, which is exactly what we wanted. Even though we added headcount, a lot of headcount legend mentioned that we added was offshore, so we're being more efficient.

It's very important for us to make sure that we maintain the operating expense leverage, and we've demonstrated that, but also to make sure that we have the investment capabilities to do the new products and enhancements on existing products, like we've been bringing to market. 2015 was a great year for us, not only deployment of Retailer iQ, more in the back half of the year, but also in terms of the new product that we brought to the market.

Great, thank you.

Mitch Bartlett, Craig Hallum.

Hi. I wonder if you could spend a little bit more time on what happened underneath the covers, so to speak, in digital paperless, digital print? And was there anything special or unusual about CPG promotions in the quarter that affected those two areas? And on digital paperless, as a Retailer iQ guy comes on, what happens to the volumes that they were formerly doing that were paperless? Does it cannibalize that entire amount?

Sure, let me take the first part. So most of our clients, our customers, CPG customers, budget with us on an aggregate basis. So they give us budget and then we deploy those budgets across paper and paperless. And so there was nothing remarkable that happened in the quarter with one versus the other from a budget perspective, okay, or deployment perspective.

We did talk last year about some of the headwinds we faced during the year from mobile printing experience. We continue to roll out a new mobile printing experience throughout the fourth quarter, and as we ended the year we were certainly over 50% of the way through that rollout, and already 5% of all print transactions were happening on mobile. And so with regard to getting that out of the way, we're well underway from that perspective.

On the question of cannibalization, because of the fact that most of the budgets are unified print and paperless, digital print and paperless in one place, to the extent we can grow volumes in one or the other side of that equation, we will in effect be driving cannibalization ourselves. So, if there are finite number of dollars in a budget, and we deployed 60% of that budget through paperless versus paper, we are in a sense controlling the outcome of that question.

And so as Retailer iQ continues to come online, and these retailer banners start marketing, and the compounding effect that needs to take to take place, we will see faster growth in paperless, and so at our hands, we will be driving more volumes through paperless than paper.

And then just add on to that, if you recall last year we talked about how we've been forecasting and sharing forecasts with CPGs on when retailers are coming on and so on, to make sure they have budget available. And if you recall our, it was in our second quarter and third quarter earnings call, we touched upon the fact that the headwinds that we saw had to do with the mobile trapping and us not having the mobile print experience that took advantage of that, which we fixed and rolled out in quarter four, and also about Retailer iQ delays.

And we summed that up by saying that it's more of a demand question than a supply question, right? So if you peek under the covers of Quarter Four and you look at the good performance that we had, we were able to do things like a better mobile print experience, like bringing more retailers, and create the demand, and the budgets were there to fulfill that demand, and that's what together culminated into the revenue growth that we saw.

Got it. One second question, last question, you mentioned that there'll be an investment in data and analytics infrastructure. What does that entail, how big is that?

Not to specifically quantify, and you can see some of the effects of that in terms of our expense structure forecast in our guidance, but the important factor to consider there is that we've always said all along that as we build our platform both from our own operating properties, and our mobile experiences, and our Retailer iQ platforms, and our publishers and networks, we have a lot of data that is being generated in terms of purchase intent, in terms of which shoppers view, and so on so forth.

And we have begun the work already in quarter four of starting to leverage that, to drive more sales for our CPG and retailer partners, which was objective number one. And then we continue to grow that and leverage that for even more products and capability, and we will do that this year. So in terms of, specifically in terms of investments, that will be in the form of teams with certain capabilities and qualities, it will be in the form of certain new products and infrastructure that comes together to bring this capability to life even more in 2016 and beyond, frankly.

And these products roll out over the course of the year?

Yes.

Thank you.

Ralph Schackart, William Blair.

Good afternoon and congratulations on that Retailer iQ growth. Steven, as you look at your 16 banners that you have implemented today, as well as the seven that are currently marketing, how fast do you think that gap can close? And then the follow up question is, how much influence do you have to help those banners get live and market the product?

Sure, in quarter one, we expect, and this is just a forecast, another one to three banners to start marketing, just to give you a sense of how that starts to close. And in terms of influence, consistent with what we talked about last time, we do spend, we have teams that work with retailers to actually work out the efficient ways to market this.

Now recall, retailers take the effort and the initiative to do their own marketing because these are cornerstone programs for their own growth strategy and loyalty strategies. But we do help them in working through the most efficient ways and efficient channels to market this. And we bring best practices to them because of the experience that we have. And by the channels I mean in-store marketing, in-ad weekly circular marketing, email and so on.

Great and if I could jump in with one more, if you were to have one to three more markets, I'm sorry, one to three more banners start marketing, how dramatic of effect do you think that will have on your Retailer iQ metrics or re-acceleration?

You know it will help continue to accelerate the growth, and as you saw the, growth has been accelerating in the last few quarters for that precise reason.

Okay, thank you.

(Operator Instructions)

Jason Mitchell, Bank of America Merrill Lynch.

Hey guys. Sorry. Just two questions, one quick. A clarification on your slide, you said paperless coupons are up 58% year-over-year, right, I think, and then digital paperless is up like 38%? Could you just clarify what the difference between those two are?

And then just on your quarterly guidance, you ended that practice for a while because of the variability in your business and unpredictability on when CPGs are going to market. What gives you the confidence to start guiding quarterly again?

Yes, so I'll take those questions. With respect to Retailer iQ versus paperless in the total, the other area is safe to card, which is our legacy technology. That would be the component, makes up the difference.

And with respect to guidance, this quarter, in particular, we had an extra week to see what was going on with our Business. And so, that gave us sort of more confidence to deliver quarterly guidance. And the hope is we'll continue to give it, to the extent that we have the insights and confidence that we can, to make sure we give you the right kind of insights.

Okay, great, thank you.

Mitch Bartlett, Craig Hallum.

Yes, just one last one. I wonder since the last time you gave us some guidance, whether you've signed up any more Retailer iQ customers, and whether you've lost any.

So we have not lost any, and we have absolutely no indication from anyone to not do this. We have on the contrary a lot more interest, and really we have a lot of signed retailers, more than 20 on the platform that represent $350 billion as I mentioned earlier. And really there's only a handful, Mitch, of large retailers that aren't signed, that, in the pipeline or in discussions, to come on to the platform. So really our focus more and more is, let's get these retailers live, let's get them marketing and grow volume.

And if I could push it just one level further, the one to three to might go live in marketing, would one of them be a mass merchant in the first quarter?

Mitch, you know I can't answer that question.

Okay. Good enough, thank you.

There are no further questions at this time. I will turn the call back over to you, Steven Boal, for closing remarks.

Thank you, and thank you all for joining us today. As you've heard, we ended 2015 on a great note, and I believe 2016 will be an exciting year. I look forward to sharing even more developments with you as the year goes on. Thanks again.

This concludes today's conference call. You may now disconnect.