Quotient Technology Inc (QUOT) 2016 Q3 法說會逐字稿

Welcome to the Third Quarter 2016 Quotient Earnings Conference Call. (Operator instructions.) As a reminder, this conference is being recorded, and will be available for replay from the Investor Relations section of the Quotient's website following this call.

I will now turn the call over to Stacie Clements, Vice President of Investor Relations.

Thank you. Hello, everyone, and welcome to our third quarter 2016 earnings call. Please note that slides to accompany the remarks on today's call are available on the IR section of our corporate website.

On the call in here with me today are Steven Boal, our founder and CEO, and Ron Fior, our CFO. Mir Aamir, our President and COO, is 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 expectations regarding the effects of our strategy, which is focused on [both] investments and operational efficiency, our expectations about the growth of media revenue, projections for our fourth quarter and full year 2016, including our expectations regarding revenue per promotion transaction and our operating expenses, our expectations for our Retailer iQ platform and consumer and CPG patterns, as well as the expected growth of investments in our business generally. Forward-looking statements are based on information available to and as of good-faith beliefs of our management team as of the time of this call, and are subject to known and unknown risks and uncertainties that could cause actual performance [as a] result to differ materially. 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 August 9, 2016 and the Company's future quarterly reports on Form 10-Q and other filings that the Company makes with the SEC. 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 revenue, 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. Reconciliations between GAAP and non-GAAP measures are not available on a forward-looking basis as it would require unreasonable effort to the high variability and low visibility of certain items used in these calculations.

With that, I'll now turn the call over to Steven.

Thank you, Stacie, and welcome, everyone. Before I begin, I'd like to take the opportunity to officially welcome Ron, who joined us in early August. Ron brings over 30 years of public company finance and operations leadership experience to Quotient, and we've all really enjoyed working with him over the past few months.

Now, on to the quarter. We had a solid third quarter, highlighted by accelerated growth in transaction volumes, primarily coming from mobile, and increased digital marketing activities by our retailer and CPG partners. I'm also excited to announce that in Q3 we signed another large retailer in the drug channel onto Retailer iQ. Together, brands and retailers are making the shift to digital at an increasing pace, embracing the power of personalization and mobile to help more efficiently drive sales and shopper loyalty.

Revenue in the quarter was $66.5 million. Adjusted EBITDA was a record $8.8 million, well ahead of guidance, and we ended the quarter with $162 million in cash, up $5.1 million from Q2. We delivered a record number of digital coupon transactions in the quarter, up 69% from a year ago and up 28% sequentially, as marketing efforts by our retailer partners brought in new shoppers and increased overall engagement. Our reach and scale continues to grow, and I'm thrilled to say that, as of today, we have delivered approximately two billion digital coupons this year, already making 2016 by far our largest volume ever.

Since 2011, we have delivered over eight business transactions, and as this year illustrates, the rate of growth is accelerating. The demand for digital coupons is growing rapidly, and the retailers who are effectively marketing their programs are also seeing volume grow rapidly. This increased scale expands our opportunity to test alternative pricing strategies, something I've spoken about before. This has the intended effect of accelerating adoption of digital coupons while lowering the overall revenue per promotion. Ron will give more details in a few minutes, but keep in mind, volume drives scale, and that has been our key focus.

We now have over 30 million shoppers registered onto programs powered by Retailer iQ, which represents approximately 25% of all US households. This is a sizable and growing digital base of consumers, and with the significant data generated through the program, it allows CPG brands and retailers to effectively personalize and target promotions, primarily through mobile. Mobile usage on Retailer iQ remains high, at over 70%, with greater frequency of use than desktop.

As a reminder, we monetize mobile at the same rate as desktop, so mobile actually creates a better monetization opportunity for us with increased frequency. As brands experience the power of scale and the increased ROI, some are reducing budgets for offline paper coupons in the Sunday newspaper, known as the FSI, in favor of digital coupons. Those that have made the shift are seeing higher ROI. We do not believe this would have been possible without the scale we've built over the last year, and it's exciting to be at the forefront of this major industry shift.

We're also seeing some brands spend their FSI commitment not by putting coupons on their pages, as has been done for decades, but instead by running full-page ads to point shoppers where they can find digital coupons. As a reminder, CPGs spend about $3 billion in coupons last year, still distributed primarily through offline channels. This suggests significant opportunity for digital.

We believe we also have an exciting opportunity to drive efficiency in trade spend, where CPGs spend approximately $200 billion a year promoting their products in stores. We continue to hear from chief merchants at retailers and chief sales officers at CPGs that trade spend is the next major area of disruption as they look to digitally engage shoppers to drive more sales with greater efficiency. We designed Retailer iQ to address this need.

Greater scale also creates opportunities for media, as we leverage a larger shopper audience, significantly more shopper data, and our expanding distribution network. Media in the third quarter was impacted in part by growing shopper demand for digital coupons. During the quarter, CPGs shifted some committed media budget into promotions to fulfill the fast-growing demand for digital paperless coupons. We believe this to be a short-term trend and expect growth in 2017 as CPG promotion budgets catch up to the growing coupon demand, and as we expand our shopper marketing and data-driven media business.

As we think about our growth strategy, there are three key elements we're focused on - one, expanding our distribution network to reach a greater number of shoppers, primarily through mobile; two, serving those shoppers with relevant, personalized digital promotions and media; and three, using data on shopper transactions and online behavior to enable brands and retailers to grow sales. This quarter, we made progress across all three of these fronts. For example, we announced a partnership with Samsung to extend distribution of CPG coupons through their digital wallet. We're excited to work with Samsung and other partners as they come online.

Additionally, in August we entered into a multi-year agreement with Albertsons Companies that further addresses these growth initiatives. This agreement allows us to be their exclusive provider of digital offers and off-property media, along with rights to use their shopper data for media, measurement, and targeting. We've had a strong relationship with both Albertsons and Safeway over the past several years, and this renewed agreement with the combined company takes our partnership to the next level.

With our expanded network, retailer partners, and the Quotient Insights platform, we are excited about further growing our media business. CPGs are estimated to spend approximately $6 billion in digital media in 2016. We believe we are well positioned to create a digital footprint of shoppers across our network through mobile, Retailer iQ, publisher partners, in-store shopping data, and our owned and operated sites, to offer targeted media and analytics.

This not only makes our targeted media offering more robust, but highly differentiated by combining both online and in-store data. Together, it also presents additional revenue opportunities for measurement and analytics. With our robust platform, and in certain cases exclusive data sets, we believe we are well positioned to enter and participate in this exciting area of known spend.

Our digital circulars also enable retailers to offer shoppers a personalized experience that reflects a broad set of savings, national and store-specific. And perhaps most importantly, it automatically matches CPG brand offers with retailer in-store promotions, giving shoppers an easy way to determine maximum savings.

Having spent the past several years building and deploying our Retailer iQ platform, we are once again returning focus to our flagship consumer brands. In December, our new mobile app will be released, which takes on a modern, shopper-centric perspective and brings together our three industry-leading promotions products, digital print, digital paperless, and our new Shopmium receipt scanning capability.

In addition to the capabilities I've just mentioned, the new app will also have the ability to showcase brands, retailers, and deliver dynamic and personalized media, including video, that our clients have been asking for. And there are several other exciting features that will be added in Q1. We've been hard at work on this new app, and I'm really excited to release it to consumers over the coming weeks.

In summary, Q3 was a strong quarter. Scale is building, volumes are rising, and we continue to expand our network through new partnerships, and we're seeing brands shift more dollars from offline to online. As shopper adoption continues to build, we believe we have a substantial opportunity to create more value for brands, retailers, and shoppers. Now, I'll turn it over to Ron to go over the financials.

Thank you, Steven, and welcome, everyone. I'm very pleased to be here today on my first earnings call as part of the Quotient team. I've thoroughly enjoyed the last three months, gaining a deeper understanding of the overall industry and key business drivers, and learning about what's important to our customers, partners, and shoppers. I'm excited by the long-term opportunity, as we continue to drive the business forward, and I look forward to meeting you all over the next few quarters.

Now, on to the financials. Q3 was a strong quarter. Revenue was $66.5 million, in line with our guidance, and up 18% over a year ago, reflecting strong performance in digital paperless. Transactions in the quarter were $682 million, up 69% from Q3 of 2015 and up 28% from the last quarter, reflecting our ability to increase scale on the platform.

As Steven noted, since 2011, we have had over eight business digital coupon transactions, approximately two billion in 2016 alone. This is a significant accomplishment.

GAAP net loss was $11.3 million, primarily impacted by a one-time charge that I'll give you more detail about in a moment. Excluding this charge, net loss was $3.9 million. This compares to a net loss of $9.8 million in Q3 of 2015, and a net loss of $3.5 million in Q2 of 2016.

Adjusted EBITDA, which excludes this one-time charge, was a record $8.8 million, up from $2.2 million in Q3 of 2015 and $8.1 million in Q2 of 2016, reflecting a balanced approach between revenue growth and investment while pushing operational efficiencies. We entered the quarter with a cash and short-term investment balance of $162 million, up $5.1 million from Q2. Cash from operations was $4 million. All in all, we were pleased with our performance this quarter.

Drilling down into our $66.5 million Q3 revenues, we find that digital promotions came in at $51.7 million, a 24% increase over last year, and up slightly from Q2. Revenue from media was $14.8 million, flat compared to last year, and down 10% from Q2. This trend was primarily due to a shift of some Q3 committed CPG media budget to promotions to fulfill the faster-than anticipated growth in demand for digital coupons on Retailer iQ. We expect 2017 media revenue to increase as we expand our distribution, and through the Quotient Insight platform, grow our data-driven media targeting and measurement business.

Let's look at transactions. Transactions in the third quarter were $682 million, up 69% from a year ago, and up 28% sequentially, primarily due to a strong increase in digital paperless. Year-to-date, transactions are up 48% as demand increases on the platform, and we continue to drive the secular shift from offline coupons to digital.

Digital paperless transactions gained share, growing 41% sequentially and represented 70% of all transactions in the third quarter. Retailer iQ transactions represented 78% of all paperless transactions. Digital print transactions grew 4% sequentially. Average promotion revenue per transaction in the third quarter was $0.076, a decrease from $0.095 in Q2, and was impacted by a combination of customer mix and new pricing strategies.

Rapid volume growth causes lower price (inaudible) to be reached by certain CPGs, and this mix effect put downward pressure on our revenue per transaction. As volumes continue to climb, it's hard to predict exactly where revenue per promotion transaction will fall over the long-term, given the mix of upward and downward pressures on this metric.

At this time, we expect it to remain around the $0.075 level for the fourth quarter. Most importantly, we believe that the rapid volume growth can more than offset lower revenue per transaction, resulting in growing promotion revenue dollars as we saw in Q3.

During the third quarter, we signed a new large retailer in the drug channel onto the platform. To date, we now have 19 major banners implemented, and 13 of those are marketing. We continue to see a long opportunity runway in front of us as retailers and CPGs ramp their digital marketing activities to grow their sales and customer loyalty.

Moving to the P&L, gross margin in the third quarter was 47.2%, impacted by a one-time charge of $7.4 million as we took a one-time write-down associated with a nonrefundable prepaid distribution fee arrangement with a retail partner. The one-time charge is included in our cost of goods sold and negatively impacted both our GAAP gross margin and GAAP net loss. There are no other prepaid distribution fees of significance remaining on our balance sheet.

The partner, our first to sign up for Retailer iQ, has been slower than comparable retailers to adopt required digital marketing activities, resulting in significantly lower transaction volumes than anticipated. The retailer remains a committed partner. We continue to work together to help them drive additional digital marketing activities, grow their transaction volumes, and engage with their shoppers. We are encouraged by their recent programs.

Q3 GAAP gross margin was also impacted by a $1 million increase in amortization of acquired intangible assets associated with the strategic partnership we announced in August. The intangible assets recorded totaled $39.7 million and will be amortized over a period of approximately six to 7.5 years. Our definition of non-GAAP gross margin now excludes the following noncash items - amortization of acquired intangible assets, the one-time charge associated with a nonrefundable prepaid distribution fee arrangement, and stock-based compensation expense. Q3 non-GAAP gross margin was 61.7%, slightly up from 61.3% in Q3 of 2015, and down from the 64.5% in the second quarter, primarily due to the revenue mix changes described earlier and the resulting increased distribution fees.

Let's move on to operating expenses. For the third quarter, GAAP operating expenses decreased to $43 million compared to $45.4 million in Q2 and flat with Q3 of 2015. Non-GAAP operating expenses, which excludes stock-based compensation and the net change in fair value of escrow shares and contingent consideration, were $36.6 million. This is a reduction of $2.9 million from Q2 of 2016 and essentially flat with Q3 of 2015.

In percentage terms, non-GAAP operating costs declined from 59% of revenues in Q2 of 2016 to 55% of revenues in Q3 of 2016. This improvement was driven primarily by operational efficiencies and expense management actions. We will continue making investments in new product to grow the business while we focus on operational efficiencies to improve our overall profitability in the long-term. We expect operating expenses in Q4 to be higher due to the typical year-end end-of-year expenses and continued investments for growth.

In the third quarter, adjusted EBITDA was a record $8.8 million, representing a 13% margin as compared to 4% in Q3 of 2015 and 12% in the second quarter of 2016. This was primarily driven by our reduced non-GAAP operating costs, offset by higher distribution fees as the volumes increased. As a reminder, adjusted EBITDA excludes the one-time charge recorded in cost of goods sold. Year-to-date, adjusted EBITDA was $21.1 million, almost double that of the first nine months last year, outpacing revenue growth of 19% year-to-date. This reflects the impacts of our platform scaling and progress we've made in managing expenses.

Shares outstanding increased by $4 million to $87.8 million in the third quarter, driven by the $3 million share issuance associated with the strategic partnership mentioned earlier. Weighted average shares came in at 84.732 million.

Let me move on to our outlook for Q4 and full year 2016. For the fourth quarter, we expect revenue to be in the range of $68 million to $71 million. We expect adjusted EBITDA to be in the range of $6 million to $7 million. For the full year, these results would lead to revenue in the range of $267.8 million to $270.8 million, reflecting a 13% to 14% increase over 2015. Full year adjusted EBITDA is expected to be in the range of $27.2 million to $28.2 million.

As we look to the opportunities ahead of us, we will continue to balance between driving for growth while tightly managing expenses towards improving margins.

We will now open the call for questions. Operator?

(Operator instructions.) Mark [Mahoney], RBC Capital Markets.

Ron, could you describe the upward and downward pressures on revenue per transaction, going forwards? It sounds like you've got some volume levels getting hit that would put downwards pressure. What would cause the upwards pressure, and are there any other downward factors?

And then, broadly, Steven, the new partner you described in the drug channel, could you just step back and remind us of which channels have been the most material for Quotient to date, and where do you think the most interesting growth prospects are, going forwards, just in terms of channels? Thank you.

Mir is going to take the second part of your question on channels, and then I'll address the pressures.

On the channels, like we mentioned in the last few quarters, we now have representation across all grocery, drug, dollar, [mass], and club. And depending on when the retailers came on in those channels, some are larger than the others. For example, a lot more grocers came on earlier, so that's a larger channel than others. But, in terms of grocery sales also, that's a larger channel, right? So, you can think of it as mimicking what they represent in the market from a market size standpoint.

On the pressures up and down, Mark, as we've talked about in the past, so the pressure down would be much more volume, and we're starting to see the volume growth accelerate here, which is great. And that's what we had hoped for, and that's why we built into these agreements lowered pricing at much higher volume tiers.

And so, it's important to note that that doesn't have a margin implication, and it really just has a price per transaction implication. Two quarters ago I talked about the fact that revenue per transaction's not going to be the most meaningful way to manage the business on a modeling basis. And I know it's hard to get your head around, but at the higher volume, the companies that do the most business with us get a lower rate per transaction, but the higher volume across the platform drives the base of the pyramid of pricing up, which causes a rising tide effect across the board. So, that's number one.

Number two, now that we're at scale with some of these pricing strategies we're deploying, the objective of those strategies would be to drive much higher volume, shift from offline to online, and expand margin. And you saw significant margin expansion during the quarter. So, those strategies are working. And at scale, we get to test those before we roll them out for much broader use.

Upward pressure on pricing would be things like targeting, personalization optimization, yield management across our platform. and as we grow our targeting platform, which we are doing quarter-over-quarter, and again we saw growth in this quarter of programs targeted, then you'll start to see upward pressure on pricing, as well.

But, as Ron said, given where we are in the year, given the rapid acceleration in volume, and the fact that we've been shifting budget with our clients from media to promotions to satisfy the faster-than-expected volume growth, we're expecting that the pricing will stay roughly the same for Q4.

Nat Schindler, Bank of America Merrill Lynch.

You have $375 billion under contract with 19 retailers now. How much is left to the market? Is there anybody left that could really move that needle a large amount by you signing them on?

And then, a second question is of the retailers that aren't marketing, what needs to happen there for those guys to start moving into the marketing phase?

So, let's talk about the market scope. With over $350 billion under contract, if you remember the way we talked about the market, the roughly $600 billion a year of grocery sales annually, of that $400 billion in the middle that we talk about, there's really one, maybe two, left now. And so, from a field coverage perspective, I think we've pretty much accomplished what we were looking for. What was the second part of the question? I just want to clarify one thing you said, was 19. That's 19 live. That's not 19 signed. There are more than that signed.

I think you have 13, you said, are marketing right now. Of the remainder that aren't marketing, what needs to happen for those guys to start marketing? Because I think you were at 13 marketing last quarter, too, is that right?

Yes. So, this and the next quarter, we should start seeing several of them start marketing. So, like I mentioned before, there is a time gap lap between live and marketing. And then, depending on which time of the year it is, retailers prefer to start marketing at a later time when holidays figure into that, seasonality figures into that, and so on. This and the next quarter, we should see a number of those starting to market.

You really had an acceleration in transactions. How much of that was driven by CPGs shifting some of their spend to better quality coupons in 3Q for back-to-school versus just natural growth as more people come on the platform?

There is definitely growing demand that we are seeing, and we're creating it, right, with Retailer iQ, with our retail partners, marketing and driving and so on. So, there's growing demand from consumers for digital coupons. The adoption is great. Usage is great. Retailers are seeing results in incremental sales and so on. And CPGs, as we've talked before, they plan in annual cycles, so for them to react very quickly is not always easy.

But, what we saw is CPGs trying to fulfill the demand as much as possible, and you saw the effects of that coming in. And back-to-school was a key factor in that, too, just to make sure that brands want to be present when consumers are, that's in digital, that's in mobile, to make sure that they drive sales through that.

Let me just add one thing, Steven. So, you remember last year [wasn't] a terrific year from a predictability perspective, but we did enter last year expecting to see this kind of volume growth. And so, heading into this year, we were a lot more conservative because we didn't have the ability to pinpoint exactly when retailers would come on board, and then when CPGs would allocate budget.

And what you saw in Q3 is what we expected to happen last year, and knew would happen over time. So, what hit us last year on the down side of predictability is just hitting us in Q3 on the upside of predictability. We know the volumes there. We know shoppers engage. We see it on a retailer-by-retailer basis, and we're starting to see the compounding effect now of more retailers coming on board.

Ralph Schackart, William Blair.

Steven, just a question for you on that average revenue per transaction metric, given it moved around so much. Just curious, can you give us some more color on if there's fixed fee agreements here, did you hit some caps maybe in the quarter, and maybe a little bit more to the extent you could quantify what percentage of these deals may be fixed fee?

And then, I know it's a fallout metric, the average revenue per transaction, but how much of that was driven by design by the Company to drive the volume growth in the quarter?

All driven by design. It's a very [good] answer, all driven by design. Like I just said, we knew volumes would spike at some point, but just from the modeling of looking at retailers coming on board at their own pace, but the compounding effect of having them start to layer really pushes the whole platform up. And so, that happened. And in anticipation of that, we designed pricing agreements with our largest partners to allow them to start to shift much more volume when the volume was available. And so, all by design, and as anticipated.

And then, on the fixed fee question?

Clarify what you mean by fixed fee?

Sure. I was just looking under the slide deck that you provided for the earnings call, and there's a footnote talking about transactions as it relates to some fixed-fee cap, and just any more color you could add on that.

Which slide?

Just a broader question without having to look at the detail, is are there new fixed-fee agreements that came in the quarter, or had they been there previously that maybe just triggered because of the explosive growth you saw in volume?

There are no fixed-fee agreements that came in the quarter or triggered. Are you talking about the footnote that talks about a transaction is defined as any action? [That one's a long one]?

That's correct.

Including items [per] transaction fees, revenue sharing, setup fees, and volume-based fixed fees. That [by tier], so that's by tier. So, as you hit new tiers, those tiers last for a period of time at volume, and the rate per transaction is fixed in that tier until you hit the next tier.

Okay, so it's like a rate card, almost.

It's like a rate card. There's no look-back, correct.

And then, maybe just moving on to media and advertising, just to understand that a little bit more, so my understanding was there was some promotion budget that was pulled out of that during the quarter. Would you anticipate that to move back in Q4, or was that a little bit more of a 2017 commentary in terms of that revenue line item going back to historic levels?

So, some of our campaigns, as we mentioned in the past, those are media and promotion campaigns together. This quarter, quarter three, the demand for digital coupons grew much faster than anticipated, and CPGs' budgets couldn't catch up from a promotion standpoint, that some of those joint campaigns, you had the coupon budgets running out much sooner than the media was supposed to run for, so media running for longer than coupon wouldn't make sense from that campaign standpoint. So, that shifted then into getting the coupon and the media to last a little bit longer than the coupon would have lasted, but a little bit shorter than the media would have lasted.

So, we believe this is a short-term trend as CPG budgets catch up on the digital coupon paperless demand, and from a media standpoint, we're excited about the potential in our growth in 2017 on that based on a number of factors that Ron and Steven mentioned in their scripts specifically having to do with data-driven media measurement targeting, and then shopper media programs.

Tom Forte, Maxim Group.

So, three things I want to touch upon. Where is the insights effort as far as the rollout, and when should we anticipate that'll start hitting the revenue line?

And then, as it pertains to online, I think you talked before about having one customer or one retailer that was using you for [their] online efforts in addition to their offline. Can you talk about how that's affecting your results?

And then, third and final, Amazon's starting to become a little more aggressive on rolling out their fresh grocery offering. To what extent could that present an opportunity for Quotient? Thank you.

So, Quotient Insight is going well. The build continues. And we expect revenues in 2017, like we talked about. In the next earnings call, we should be in a position to give you a bit more color in terms of timing and so on.

On the e-commerce integration, so we're not going to talk specifically about individual retailers, but the question on e-commerce integration, as well as physical commerce integration, ties directly into your third question on Amazon, and that's that, right now, e-commerce integration isn't going to have a material effect on our numbers. If you look at the overall industry, aside from all the discussion about electronic commerce delivery or e-ordering of packaged good products and grocery products, it really amounts to about 3% of the total marketplace. And so, any e-commerce integrations we do are really future-facing and won't have a material impact on our numbers.

Now, stepping forward to Amazon, specifically on Amazon, again, remember, 3% of the market is e-commerce. And so, even if the e-commerce marketplace tripled over the next two or three years, given the fact that we're only about 10% penetrated into the offline business, just the secular shift alone of [90%] to go is going to outweigh any potential impact from e-commerce perspective.

That having been said, our platform is built for e-commerce. We built the entire platform for multi-currency, multi-vertical, multi-lingual, and also e-commerce. And you're starting to see that. We've already rolled out one e-commerce integration, and you'll certainly see more e-commerce integrations from us, going forward.

As I sit here today, I can't think of any reason why any retailer at all, regardless of whether their physical store, or stepping into e-commerce, or solely e-commerce can't work with our platform. And so, from those perspectives, I don't see anything.

And then, just lastly, the more Amazon does, the more every other retailer does, as well. And so, I just can't see any downside to them trying to enter the business here at scale.

Murali Sankar, Boenning.

Since you saw this really big surge in transaction volumes, can you help quantify which proportion came from, for example, the retailers that were actively marketing as of last year around this time? So, I think that you had about seven at the time, just to give us an order of magnitude of where the growth can go.

And second question is where do the international at this point figure in your priorities?

So, there is a higher proportion of that surge coming from the retailers marketing. And one of the slides in Steven's presentation, you could see what happens in the effect. Those two lines are retailers that are roughly comparable in their size of CPG sales, but you can see what happens when they market. And because the market potential is so high, marketing by them gets user adoption and volume and so on.

So, that's the general statement I'll make as opposed to when they went live, because we've seen some retailers that went live seven months ago, started marketing in quarter three, and saw some very nice surge in volume.

And then, on international, we said that international's important for us [as a] business. We've had a presence there for quite a long time. It's a very small part of our overall business today, but it also provides us an opportunity to work with some CPGs who take a global perspective, and also allows us to test-bed certain features and functionalities that we bring to the US before we scale them up.

And if you recall, the Shopmium platform was the number one receipt-scanning promotions app in France. We bought that company. We very quickly released a version in the UK, which has gone very well, and now receipt scanning is going to be featured as a major component of our new app release in December. So, international is very tightly tied into our overall plan and strategy, but today represents a small part of our revenues in the business.

Blake Harper, Loop Capital.

Wanted to ask you about the rollout of the new coupons.com app and the Shopmium [with the focus moving there]. Will there be some type of package deals that you would sell that would include marketing on both the Retailer iQ and your own platforms, or would you see some of that incremental spend or their budgets being a bit more separate?

And just wanted to ask if you could provide any update on any metrics or anything that you have on either the coupons.com app or the Shopmium app.

So, just to make a note on that, so the new app will roll out under the coupons.com brand, and so any current users of our existing app will get the new one, and then ultimately the rest of our US apps will fold into a single user experience under the coupons.com brand.

And then, to the first part of your question, yes, there will be many opportunities for our clients and partners to run promotions across all of these touchpoints, Retailer iQ, mobile apps, third-party properties, owned and operated, and our own coupons.com mobile app. And so, many of those things can be bundled together, and they can also certainly be decoupled. It really depends on where the specific audience is that each partner is trying to reach.

Great. Thank you, everyone, for joining us today. As you can see from our Q3 results, and particularly from the transformation and transaction volume growth we've seen, the shift from offline to digital is starting to accelerate, and we believe Quotient is well positioned to lead that change. We look forward to seeing you on the road, starting with the RBC Tech Conference next week in New York City. Thank you again.

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