QVC Group Inc (QVCGA) 2014 Q3 法說會逐字稿

Good day, everyone, and welcome to the Liberty Interactive Corporation Q3 2014 earnings call. Today's call is being recorded. At this time for opening remarks and introductions I would like to turn the call over to Courtney Ulrich, VP Investor Relations. Please go ahead.

Thank you, Angela. Before we begin we would like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about business strategies, the pending Provide Commerce transaction, market potential, stock repurchases, future financial performance, new service and product launches, and other matters that are not historical facts. ;

These forward looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including without limitation, possible changes in market acceptance of new products or services, Liberty's ability to complete the pending Provide Commerce transaction, market conditions conducive to repurchases, competitive issues, regulatory issues, and continued access to capital on terms acceptable to Liberty Interactive.

These forward looking statements speak only as of the date of this call and Liberty Interactive expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein to reflect any change in Liberty Interactive's expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.

On today's call we will discuss certain non-GAAP financial measures including adjusted OIBDA. The required definitions and reconciliations, preliminary note and schedules 1 through 3 can be found at the end of this presentation.

And now I'd like to introduce Greg Maffei, Liberty President & CEO.

Thank you, Courtney and thank you for all out there joining the call. Today speaking on the call besides myself we will have Liberty's CFO, Chris Sheen, and here at the home office in Englewood, Colorado, QVC's CEO, Mike George. So on to some of the highlights. It has been a busy quarter. At Liberty Interactive we reattributed our interest in the digital commerce companies and approximately $1 billion in cash from the newly named QVC Group to Liberty Ventures in exchange for 67.67 million newly issued Liberty Ventures shares.

For Liberty Ventures this is appealing, we think, because it will build their cash balance to approximately $2.7 billion at year end. This incremental cash provides us a whole host of new opportunities to make significant investments across a broad universe of potential TMT transaction. In general, our experiences scale larger deals have been better priced and more attractive for us. It provides improved liquidity of the Liberty Ventures stock through the share issuance. It lessens our concentration on being Expedia focused, and it increases the focus on the digital commerce companies where we believe there are a host of opportunities.

For the QVC group, we think it provides a pure play entity with the leader in video commerce, QVC, and a close pair in HSN. It provides cleaner comparable analysis for the operating results of those companies, a more focused currency, and provides for tax efficient monetization of our digital commerce assets. Oh, yes, during the quarter we also completed the spinoff of Liberty Trip Advisor Holdings back on August 27.

So let's turn to the operations and first look at QVC which grew with US revenue 5% and adjusted OIBDA 8%; good results. They also had strong adjusted OIBDA increases across all of the European operations. And they completed the issuance of $1 billion in new senior notes largely to fund the $1 billion that was reattributed from the QVC Group to Liberty Ventures.

At the digital commerce companies revenue increased 12% in the quarter. They improved their adjusted OIBDA loss which was seasonally appropriate, and we are encouraged by the results but are still focused on driving revenue growth and improving margins at those businesses. Notably the FTD transaction which we think is quite attractive with Provide Commerce is progressing. There will be definitive proxy filed on November -- was filed rather on November 3, yesterday, and the shareholder vote is expected for December 11.

Also during the quarter we repurchased $165 million of QVC stock from August through October 31. I would note that beginning in mid-September, we were unable to purchase further shares pending the public announcement of the reattribution and then quarterly earnings. So finally, looking at Liberty Ventures it received approximately $350 million in cash in conjunction with the spinoff of Liberty Trip Advisor, as I said on August 27, and it announced an incremental $650 million repurchase authorization of its own shares.

With that, let me turn it over to Chris Sheen to talk more about the financials.

Thanks, Craig. QVC Group's revenue increased 5% in the third quarter while adjusted OIBDA increased 9%. These figures include the results of the digital commerce companies. On October 3 the digital commerce companies were reattributed to Liberty Ventures Group and will be reported as part of the Liberty Ventures Group beginning with the fourth quarter.

We've always dealt with transfers and re-attributions between our tracking stock groups on a prospective basis, and that's the way this one will be reflected as well. The digital commerce businesses' revenue increased 12% for the quarter. (sic - see Press Release "12%".) And the adjusted OIBDA loss improved by $3 million to a negative $2 million.

Each of the significant digital commerce businesses experienced varying increases in revenue, provide experienced modest revenue growth due to softness in demand for their products, and slightly lower average order values. Body Building and Back Country revenue grew due to increases in transactions on relatively stable average order values. Commerce Hub grew revenue 32% due to an equivalent percentage increase in the number of transactions processed.

The improvement in adjusted OIBDA margin was primarily due to improved gross margins at Body Building and Back Country, cost savings initiatives and the revenue growth at CommerceHub. These improvements were partially offset by a $5 million reserve that was reported on Red envelope inventory during the period in anticipation of winding down that business in early 2015, combined with $2 million of transaction cost associated with the FTD merger with Provide. Excluding these items Provide was relatively flat for the quarter, and the other digital commerce businesses experienced increases in adjusted OIBDA.

Now let's take a quick look at the liquidity picture. At the end of the quarter the QVC Group had attributed cash and liquid investments of $749 million and $5.4 billion in principal amount of attributed debt.

QVC's total debt to adjusted OIBDA ratio as is defined in their credit agreement was approximately 2.2 times, as compared to maximum allowable leverage of 3.5 times. As part of the re-attributions on October 3, QVC increased the balance on its credit facility to $1.06 billion, and the leverage ratio pro forma for this increase is 2.7 times.

With that, I'll hand the call over to Mike George for additional QVC insights.

Thank you, Chris. We were delighted with our strong and balanced performance in Q3 with good revenue growth across all markets, except Japan, and outstanding adjusted OIBDA gains in the US and also in Europe. Our e-commerce business remains strong up 11% to represent 39% of our global net revenue up from 36% last year.

And mobile commerce remains a particular highlight with mobile orders up 47% to $407 million. Mobile now represents 43% of all e-commerce orders and over 60% of e-commerce orders in the UK and Japan. And that growth has been supported by our investments this year in responsive design technology, and the global rollout of enhanced apps with richer functionality.

The just-released 2015 Internet Retailer Mobile 500, highlighted QVC as the third-largest mobile commerce player among multi-category retailers trailing only Amazon and China's JD.com. We continue to strengthen our customer funnel with strong engagement on existing customers and strong additions of both new and reactivated customers. All three of these customer segments showed good growth on a global basis.

Customers are clearly responding to our elevated content and programming which now synchronized across our primary and also secondary TV channels and our digital and social platforms, our richer service features; from live chat, to value-added post purchase video e-mails, an expanded campaign management, and online marketing programs that increase brand awareness by leveraging our deep customer insights and analytics.

Good expense management, tight control of inventories, and a focus on reducing return rates also contributed to a strong quarter. And we continue to invest in the global expansion of our brand. In France, we're on track for our launch next summer. We now have 24 team members on board and incurred $3 million in expenses in the quarter as we began ramping up staffing. We remain active exploring other opportunities for expansion into additional markets.

Now turning to the results by market, I'm really proud of our US team. The new reporting structure is working well, and they're executing at a high-level driving 5% revenue growth with strength across home, apparel, accessories and jewelry. In the home division we saw strength in home decor, cook, garden, fitness, and cleaning. Our Christmas programming which we expanded to over 100 hours in the quarter drove outstanding results in holiday decor, Christmas trees, and key gift items including Disney's Frozen merchandise.

Other strong performers in the home division included Total Gym, Bodyblade and Aero Pilates in fitness, Vitamix and best-selling cookbook author Ina Garten in kitchen and popular discoveries from ABC's Shark Tank; particularly an innovative household cleaning item called the Scrub Daddy which sold 90,000 units in one day. A really amazing product that everyone on this call should get one.

Apparel and accessories also delivered a strong quarter. Fueled by our highly successful fall fashion event our customers responded well to proprietary brands such as Logo by Lori Goldstein, Isaac Mizrahi Live and Liz Claiborne New York, as well as, Clark's and Bionic. The steady growth of our US customer base continued in the quarter with new customer count up 6% and reactivated customers up 11%.

Adjusted OIBDA in the US grew over 8% with OIBDA margins up 72 basis points due to improved product margins, lower state franchise tax expenses, associated with the timing of credits and audit settlement, and higher income from our proprietary Q card program due in part to unfavorable regulatory bank reserve adjustments experienced last year as well as the positive impact of our renegotiated contract terms.

Now turning to Japan, we continue to struggle with the impact of the April 1 consumption tax increase with net revenue down 4% in local currency. While these results are certainly disappointing, they are in line with what is occurring in the Japanese marketplace more broadly, and they do reflect an improvement over the double-digit decline we experienced in Q2. Adjusted OIBDA fell 7% in local currency due to the negative volume leverage on fixed costs, higher commission fees, and a decline in product margins.

Despite these pressures the team did a terrific job in a tough environment controlling expenses and bringing return rates down over 200 basis points. With continued poor academic indicators in a market and a difficult sales reports emerging from numerous retailers, we do remain cautious about our outlook in Japan. Germany posted another strong quarter with net revenue up 3% and adjusted OIBDA up 12% in local currency.

We were especially encouraged by the strong spend from both new and reactivated customers, up 18% and 9% respectively, as well as: our 17% growth in e-commerce revenues, our benefiting from significantly lower return rates, improved product rotations, tight management of inventories, and reductions in our fixed cost. I think the team is executing well and business fundamentals have clearly improved. Although I would caution that we are beginning to comp more normalized return rates.

The UK continues its string of positive results with solid revenue growth up 3% in local currency and strong adjusted OIBDA margin expansion up 98 basis points due to improvements in fixed costs and fulfillment expenses and record low inventory days. A change in the legal requirements concerning refunding shipping and handling charges on returned products reduced our revenue in OIBDA by about GBP750,000. We also benefited from a one-time GBP640,000 adjustment in our real estate taxes.

E-commerce continued to be a highlight up 23%, and mobile now represent 61% of all e-commerce orders. In Italy, we were pleased to see revenue up 18% in local currency, while our adjusted OIBDA loss fell to just EUR1.1 million.

Our home business, which had been a drag on our results for the last few quarters, returned to positive revenue growth. We also benefited from a relatively soft comparison to Q3 of last year when some shipments got pushed to Q4 during the transition to our Italy distribution center. We continue to be encouraged by our strong results in China with net revenue up 14% in local currency.

We added 215,000 new customers in the quarter bringing our total rolling 12 month customer count up to 1.2 million. And we now reach 86 million homes up from 63 million a year ago. Our growth rate did decelerate from the rate in the first half due in part to higher return rates and a shift to lower price point products. Our average selling price declined 12% in local currency while units leapt 40%.

This ASP decline put some pressure on top line growth in the short term, but we believe it's a healthy strategy for the long term. By bringing our selling prices more in line with our other markets, we believe we will drive higher customer visits, higher retention rates and higher repeat purchase rates, and we are seeing positive early signs of that.

In closing, we are encouraged by the strong momentum across our business, and we feel we're well-positioned to delight our customers this holiday season and take market share. In contrast to the deal oriented strategies of most retailers, this Q4 we're focused on creating informative and entertaining and hassle-free shopping experiences for our customers.

We are preparing new holiday programming like Ellen Degeneres' seasonal home collection exclusively for QVC, which brings together Ellen's love of design and home decor and the holiday season across multiple product categories; including holiday trim, tabletop, scented candles and other decorative items. And we're using our digital platforms to deepen customer engagement through the season. Every week we'll be publishing a new interactive digital guidebook featuring the hottest gift trends, DIY holiday project videos, and meal planning ideas from our program hosts, celebrity chefs, and on air guests.

And customers will be able to create their own curated wish list collections on toGather, our social shopping platform, which they can share with other customers. We also just launched enhanced second screen capabilities to transform the iPad into the perfect companion device for our on-air programming.

Customers are now able to watch the live program and browse detailed product information simultaneously and take advantage of rich interactive features like customer reviews and social feeds to inform their purchase decision. And to further simplify the shopping experience on mobile devices, last week we launched an in-app mobile payment feature that enables our customers to make purchases on their iPhones with just a touch of the finger using Apple's fingerprint sensor technology.

We are one of the very first retailers to make such functionality available for purchases, and our speed to market reflects the level of leadership and innovation we will continue bringing to mobile commerce. And with that, I'll turn it back to Chris.

Thanks, Mike. Taking a look at the Liberty Ventures liquidity picture, at the end of the quarter, the group had attributed cash and liquid investments of $1.5 billion and $2.1 billion in principal amount of attributed debt. Pro forma for the re-attribution on October 3 the cash balance increased by $1 billion. The value of the public equity method securities and other public holdings attributed to this group was $2.4 billion and $1.1 billion respectively at the end of the quarter.

Now with that, I'll turn it back over to Greg.

Thank you, Mike, and thank you, Chris. And to the audience, we appreciate your continued interest in Liberty Interactive. With that, I'd like to open the call up for questions. Operator?

(Operator Instructions)

And we'll take our first question from James Ratcliffe with Buckingham Research Group.

Hi. This is Denis Kelleher subbing in for James. Just two related to Ventures if I could.

First can you discuss any potential synergies among the e-commerce assets that now sit at Liberty Ventures and how readily separable are these business? And secondly related to your $300 million Solana investment that you announced last year, I think you mentioned you returned $200 million within 18 months. and is there any way to clarify how much has been returned thus far?

First, on the question of Ventures synergies, we bought these businesses as independent units. They'd largely been run as independent units. There have been synergies around the areas of shared expertise and some synergies around things like shipping rate and the like. But in general, these have been run at somewhat -- as largely independent units with many of the founders still involved or running the business.

And as you've witnessed by the FTD transaction, we have found at least in some cases innovative ways to separate them. And I don't think there's anything that would prevent us from separating any of these business and running them as an independent unit or as something that's inside. We will look to see how that plays.

Hold on one half second. That's how much is left or how much we have got back?

That's what we've gotten back.

Okay. On Solana, the week to date the number is $60 million we have received back. The rest of that is dependant on some filing of our returns and the like that will come into get to that 18 month number.

But this has -- the benefit of this is in all these green investments we are sort of torn between getting quick return of our capital which is very positive and attractive or having a continued investment which we earn a continuing rate of return. On this one Solana we have a little bit of both the benefit of both, but we will receive as you noted a large part of it back within 18 months but only $60 million to-date.

Great, thanks, Greg

Next question please

And we will now go to Matt Nemer with Wells Fargo Securities.

Thanks for taking my questions. Mike, it's great to see the e-comm rebound in the US in terms of the growth rate. But just curious with hindsight, if you have any thoughts on why the US slowed to single digits in the first half, and why the US is growing slower than some of the other develop markets like the UK and Germany?

On the e-commerce side particular?

Correct.

Yes, I think it's a couple of things. We have reached a certain level of size and scale on the e-commerce benefit business with it being at such a high penetration level.

Some of it is as you get penetration level approaching half of the business I think there's some natural kind of normalization of growth rates between the platforms. I think that is part of it. And I think part of it is that our electronics business was relatively soft in the first half of the year. And our beauty business a little softer than it's typically been, and those tend to have a disproportionate impact on your e-commerce growth, because they are our highest penetrated businesses in e-commerce.

We also made as we talked on the last call we made some substantial investments in online marketing, and we made those with an expectation that they would have a bit of a lag benefit. We were kind of seeding the market in the first half of the year.

So I think what we are now starting to see is a little bit of -- a little bit of improved performance in the electronics business with a little bit of improved performance in the total business which brings e-commerce with it. And maybe starting to see a little impact from those online investments.

Okay. And then, secondly, I think we're about to lap the launch of Q Plus. Does that still drive incremental households from here, or is it kind of a one year benefit that we've captured in terms of the number of potential viewers?

We think will see continued growth and benefit from Q Plus, and it will sort of come in two ways. One is that we have launched additional distribution, so when we launched it back this -- a year ago we were in 30 some million homes and I think we've added 15 million to 20 million homes over the subsequent several months.

So we will still kind of benefit from new distribution, and we hope to keep adding more distribution on top of that. So there is room for distribution growth, and we've already got some of that implies post last Fall.

And in the second way we see ourselves driving growth with Q Plus is when we launched it we really kept it very simple. We added purely sort of a three-hour delay of our live programming. We are was there we wanted to start to do more with it than that, and we have started to do that. And we now have many, many hours a week that have some flavor of counter programming to the main channel.

It could be showing best of products. It could be a simultaneous live show. It could be a new show that was taped and replayed.

We are trying do that in a way that is very synergistic to what we are doing on the main channel. We're learning as we go. We're investing in some new technology to make that scalable, and I think as we improve the programming on Q Plus that will also drive incremental growth in addition to the distribution gains.

Okay great and then just lastly for Greg regarding the share repurchase. Should we assume that we are back to business as usual following the blackout the blackout related to the attribute -- re-attribution and the earnings?

Yes. I think there's no reason to think we are constrained from that. Of course as you know we don't we don't announced in advance what our share repurchase total is likely to be for the quarter.

But I don't see any reason to think that recent trends would be discontinued or not going to continue going forward this quarter. And we will not have the restrictions that we had last quarter because of the spin.

And we will now go to Jason Bazinet with Citi.

A question for Mr. Maffei. Our firm and may be wrong, but Citi has pretty significant strengthening of the dollar over the next few years relative to a lot of the countries at year end. And so my question is twofold.

Do you -- can you remind us of your philosophy regarding FX hedging. And second, are there any countries where you don't -- where you have a mismatch between your revenues and cost? In other words the cost are not incurred in the same local currency that you're generating revenues in?

So, on the first point we do not have to hedge FX. That's largely been an effort in our judgment that might make sense to some of my former employers if you want to make -- if you set out guidance, and you want to make sure you're going to make guidance, maybe as a reason to do it.

But since we don't provide that guidance, and we are unlike Citi perhaps not great prognosticators on where the currencies are going, we tend to let these fall as they may. And in general we don't have enormous mismatches between local currency received and local currency expenditures.

Thank you very much.

We will now go to Ben Mogil with Stifel.

Hi, guys. Good afternoon and thanks for taking my question. On the lower state taxes that you mentioned, some of the other puts and takes, can you quantify for us what you think the EBITDA margin savings if you will were? And kind of should we be thinking about -- how we should be thinking about general margins in Q4 given those issues?

The tax issue specifically was a $5.8 million pickup through a couple different line items, but $5.8 million in total. Now there's always a handful of one-time puts and takes in any quarter, and we had a fair share of them this quarter. You know probably the net of all those one-time moves I think it's fair to say that it's probably a few million favorable to us.

Looking at the positive impact of the tax change, some other negatives, so I think you're probably seeing a few million of benefit in the quarter but not a highly material number.

Those tax credits are sometimes recurring, too. I mean I think it's an annual application process

Part of it, yes, that's right

Okay. That's great, thanks.

And a second question I know it's before Thanksgiving, before Black Friday, so it's a little bit early, sort of maybe talk about how you see the consumer five weeks into the quarter. And are you seeing gas -- are using seeing on days when gas -- weeks when gas has come down a lot, are you seeing more activity on that front?

You know we never talk about our own results in the quarter. We won't comment on what we are seeing with our sales, but my general read on the market right now as best we can tell is I do think there's some signs of -- some encouraging signs out there. I do think when you look at the improvements in consumer sentiment scores, in the last month or two, when you do look at this really dramatic reduction in gas prices, which I think whenever the consumer has more discretionary dollars in her pocket I think it helps everyone, us included.

So it's always hard to get a read on the customer at this stage in the holiday season. But I think I guess our view would be it appears to be certainly no worse off than the last few years and maybe a little bit more positive. An early indicator that I can comment on is the fact that we had a lot of Christmas programming in Q3, and we will were quite pleased with the results of the programming.

That's great. Thanks, Mike, for the color.

We will now go to Barton Crockett with FBR Capital Markets.

Okay, thanks for taking the question. I was curious about your thoughts about HSN's capital return policy. They announced at 40% increase to their dividend, but for the past quarter they haven't been repurchasing stock, and that's still not been reauthorized.

Do you guys have tax leakage on dividends from HSN? And do you have a preference for getting money back or then doing share repurchase versus giving money back to you by a dividend?

So, we've recently had some good productive meetings with HSN to chat with them about our thoughts including capital policy. And I think in general I would say while we do have tax leakage on dividends, it is not enormous. It's manageable.

Frankly, and this is boating with our feet, if you looked for today date given the spread of multiple between QVC on an EBITDA basis and HSN, and even the larger spread between free cash flow yields and between HSN and QVC, when I look briefly it was something on the order of 6 or 7 percentage points of difference, I would tend to think that a dividend is a more favorable and attractive policy at HSN today. And, frankly, many of the issues that HSN might have about increasing our percentage ownership and what that might mean, therefore are not brought into the front forefront and become a non-issue.

So given that spread, I think as a shareholder we are probably endorsing a dividend. And clearly I think we would probably agree with some of the commentary we've heard about them being under leveraged.

Okay, cool, great. Thank you

We will now go to Eric Sheridan with UBS.

Great. Thanks for taking the question. I guess another broader question just on capital allocation goals going forward now, post the e-commerce business being disposed and QVC, sort of now where you guys were hoping to get it from the perspective of last year's analyst day.

And thinking about the choices in front of you on capital allocation for QVC and how you might rank order those priorities going forward. Thanks

Well I think you know one of the things, one of the reasons why we did the re-attribution that we did was to help drive the leverage up and the equity returns up at QVC aggressively by taken that $1 billion dollars and shifting it over to an entity that probably had a broader permission slip in terms of what it's investment capabilities are.

We believe the marketplace looks forward to a focused QVC with a -- its focus on capital return not only in share repurchase but also capital investment into areas that are logical adjacencies to most. And we've talked about the potential for some of those international growth or international acquisitions. Probably be harder to imagine particular given current prices in any domestic acquisitions, but our focus would be first on return of capital, and on extending the business primarily probably internationally.

Mike, would you add anything to that?

I think that's right. We continue to look at options for expanding internationally, many of those would be green field, but we do think there are acquisition opportunities internationally that we want to keep an open mind to. And of course we reinvest around $200 million a year give or take in -- back into the business primarily in technology and staying on the forefront of innovations on our platforms is important to us. But that should be a relatively stable level of spend going forward.

Thanks, guys

And we'll take our next question from Alex Fuhrman with Craig-Hallum Capital Group.

Things for taking my questions. A couple questions on the QVC side, been noticing a lot of external marketing that QVC used to do particularly a lot of the YouTube videos and putting out things like. It seems like that has been a little bit more frequent. I was wondering if you could comment on the percentage of your revenue that's coming from those, whether you want to call it off air sales or 25th hour on revenue per product that hasn't been aired on TV in the last 24 hours how that's been trending.

And kind of curious just as to how you are able to measure the upside that you're creating for brands through their other channels just given the value of all this more comprehensive marketing platform that it seems like QVC's really been creating especially just over the past year.

And then I guess related to that, as you think about the landscape of brands that are out there to partner with, is it still the same categories that you're looking to emphasize and see more beauty and things like that. But is there an opportunity to perhaps branch out to even categories outside of what you're traditionally been doing? And are there other opportunities for you to be partnering with brands to be driving revenue and external to QVC.com. Like for instance I think HSN mention this morning they're going to be doing some long form infomercials with a few of their brands.

Is that the kind of thing we've seen at QVC in the past and just curious to how that type of evolution is going to impact your gross margin especially when you think about things like reverse royalties that you've done in the past. Just curious as to how that will look going forward.

Great. Thanks for the question. Let me try to cover the key points, and if I miss something let me know.

The external marketing is definitely ramping up as we get smarter about how best to engage the consumer off our platforms. Just in terms of the sales metrics about 60% of our QVC.com business saw -- 60% of our e-commerce business, is off air sales. That's been trending up over the years, but I wouldn't say it's been trending up at an accelerating rate. Those have been fairly stable trends over a long period of time.

We view it as a very imperfect metric for kind of off platform business, because the products we classify as on air sales are our strongest products, so we think we have people buying those products. We classify it as an on-air sale, but they may never have turned on the TV. They may have been exposed to that product in other ways.

So we don't have a perfect way to measure what are all the influences on that customer that gets her to make a purchase. Off air sales is a fairly imperfect proxy for it, but we have a multi-tier strategy. It starts with a more comprehensive call it lifecycle approach to online marketing where we're trying to seed the market with really kind of rich banner and display advertising associated with key verticals like gardening or cook, those -- that kind of advertising doesn't tend to pay off on its own.

But we think it begins to create a halo for QVC as a player in e-commerce, and then we drive to more specific and targeted forms of online marketing against that. And apparel effort is on social platforms our own social platforms but also trying to do more with YouTube for sure. So I would say YouTube, Twitter, Pinterest, Facebook continue to be the most important external platforms for us.

It's hard to exactly pinpoint cause-and-effect of all of those initiatives. We have in fact invested in what we think will be a really innovative and leading edge attribution tool that will try to enable us to refer customer behavior as we look at how she responds to TV programming, our own e-commerce programming and programming on these off platform channels. Kind of putting all that into a big black box and trying to sort out cause-and-effect from that.

So I think we will keep investing in the analytics to get smarter and be able to answer your question more precisely. But there's a lot there, and we think we're in kind of the first inning of really trying to figure out how to optimize the ways in which we reach that customer both through our platforms and through other platforms.

In terms of other forms of outrage or brand partnerships, we've occasionally experimented with the long form commercials if we think we've got a brand that we have a proprietary ownership in that can live in that space. So we've done some of it. I wouldn't say it's been a huge opportunity for us, but we always look at.

And actually in Japan right now were doing an interesting program we launched about a month ago through all the pressures on getting carriage -- getting sufficient carriage in Japan. We're now doing 30 minutes essentially infomercial kind of programming with our own products and brands on other TV platforms beyond our own.

So we think there are those kinds of opportunities, and we'll keep looking at them. And again good thing about our business is up with those kinds of models you can pretty directly see the cause-and-effect, and if it's working expanded it. So I wouldn't say it's a big part of the mix, but it's something we may be doing a little bit more of going forward.

So, with that, operator, I think we're done for the questions. And I want to thank the listening audience for their interest in Liberty Interactive, QVC, Liberty Ventures.

We will see many of you in a couple of weeks. And we will hope to hear from all of you next quarter. Thank you very much.

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation.