Shutterstock Inc (SSTK) 2015 Q4 法說會逐字稿

Good day ladies and gentlemen and welcome to the Shutterstock, Inc.

full-year and fourth-quarter 2015 earnings conference call.

(Operator Instructions)

As a reminder, this call may be recorded.

I would now like to introduce your host for today's conference Mr. Craig Felenstein, Senior Vice President, Investor Relations.

Please go ahead, sir.

Thank you, operator.

Good morning everyone and thank you for joining us for Shutterstock's fourth-quarter and full-year 2015 earnings call.

Joining me today is Jon Oringer, our founder, Chief Executive Officer and Chairman, and Steven Berns, our Chief Financial Officer.

During this call management may make forward-looking statements that are subject to risk and uncertainty including predictions, expectations, estimates and other information.

These include statements relating to the expansion of our addressable market, the success of new product offerings including products we recently acquired, revenue growth and the predictability of our revenue, adjusted EBITDA, equity-based compensation, taxes and capital expenditures.

Our actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance.

Please refer to today's press release and the reports and documents we file from time to time with the US Securities and Exchange Commission including the section entitled risk factors in the Company's Form 10-K filed this morning for discussions of important risk factors that could cause actual results to differ materially from those discussed in any forward-looking statements we may make on this call.

On this call we will refer to adjusted EBITDA, non-GAAP net income and free cash flow which are non-GAAP financial measures.

You can find a description of these items along with a reconciliation to the most directly comparable GAAP financial measure in today's earnings release which is posted on the investor relations section of our website.

We believe that the use of these measures provides important additional insights for investors.

However, these non-GAAP financial measure should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

And with all that out of the way let me turn the call over Jon.

Thanks, Craig, and thank you everyone for joining us this morning.

2015 was another strong year for Shutterstock with sustained operating momentum across our diverse content portfolio driving consistent financial results.

Our commitment to maintaining an unmatched content library and developing unparalleled search technology continues to attract an increasing number of customers and contributors to our platform, fueling robust revenue and profit growth.

Steven will cover our financial results in a moment but before he does let me take a few minutes to discuss the key drivers of our business this past year and how we are further positioning ourselves to continue to build additional long-term value moving forward.

When I founded Shutterstock in 2003 I was the first customer as well as the first contributor and experienced firsthand the unique opportunities and challenges that both sides of the content landscape face.

From day one we made it a priority to connect with our global users, to understand what excites them and the obstacles that make their jobs difficult.

Maintaining this kind of connection with the creative community has enabled us to focus on the things that matter most across our user base.

And while priorities tend to shift over time the one consistent question is that content -- the one constant without question is that content matters.

We hear this from customers of all types and sizes and it is why we remain focused on maintaining the most robust and freshest content worldwide.

In 2015 we added more content than ever before, increasing our library by 53% or nearly 25 million images.

This was a 68% increase compared with 2014 and our royalty-free library now contains over 71 million photos, vectors and illustrations.

We also continue to build out our unique video offering which expanded by over 60% this past year and now includes more than 3.7 million video clips.

As demand for stock video content continues to grow rapidly we have focused on building a wide array of video offerings to satisfy the diverse users of stock video content.

As we announced last quarter we further bolstered our footage library through a partnership with Red Bull Media House to serve as the exclusive distributor of their unique video collection.

While we are proud of the scale and diversity of Shutterstock's commercially licensable content library, equally important to our customers is the quality and freshness of the content we provide.

Overall, we now have over 100,000 contributors submitting content, almost 1 million pieces of content per week, and despite the significant quantity of submissions we receive daily we still review every single piece of content to ensure it meets the rigorous quality standards we have implemented.

We also worked diligently to get approved content up on the site within 24 to 36 hours so our library remains fresh and our contributors can get paid as soon as possible.

With a growing and engaged customer base and nearly 1.5 million users downloading an average of 4.7 images per second our contributor base is encouraged to provide the best and freshest content to Shutterstock which only attracts additional customers and download activity.

The network effect of our business has never been stronger.

This past year we also took steps to further broaden Shutterstock's product offerings, expanding our addressable market by investing in music and editorial content, natural offshoots of our existing business and content types where clients were looking for alternatives.

We are just one year into our acquisition of PremiumBeat and Rex and we couldn't be happier with the results thus far.

PremiumBeat, our curated royalty-free music collection, is a perfect complement to our video business.

And we have recently rolled out a comprehensive music offering to our enterprise customers.

Rex spearheaded our entry into the editorial business.

And we further bolstered our editorial content by exclusively partnering with Penske Media, combining our innovative platform and loyal customer base with Penske's event access and quality content.

Already in 2016 we have covered well over 200 events including the Golden globes, BAFTA, the Sundance Film Festival and Fashion Week in New York and today we have supplied over 200,000 images to our customers in real-time.

It is still very early days of our editorial expansion but we believe there is significant opportunity in the years ahead to further meet the needs of our customers.

The primary beneficiaries of our editorial investment is our enterprise customer base which now exceeds 24,000 customers thanks an increase of more than 75% in the past 12 months.

Enterprise revenue now accounts for over 25% of our overall revenue as we regularly transform customers who are spending a few thousand dollars per day into clients with deep relationships who spend tens of thousands or even hundreds of thousands of dollars annually.

In the past year alone, the number of customers spending over $100,000 annually has increased by over 70%.

With less than 2% of our existing customer base converted to enterprise accounts thus far, we see significant opportunity to upgrade additional e-commerce clients over time.

As we further expand our content offerings to include music and editorial we fully expect our existing enterprise customers to continue spending more and more moving forward.

I have spent the last few minutes discussing the quality and freshness of content as a key driver of our business but it is also vital for our customers to be able to quickly find the content they need.

We have spent considerable time and resources to develop technology and functionality that makes the search process more efficient and effective for our customers.

In 2015 we improved our local language search capability while also beginning to move away from reliance on keywords with considerable investment in computer vision.

And earlier this week we began to see the results of this investment with the launch of reverse image search which allows users to upload any image they want and in a split second find similar images on our sites that are ready to be licensed.

It is these types of innovations along with dozens of algorithmic improvements and interface changes which enhance our customer experience and why we frequently hear from our users that our search capabilities are another key differentiator for Shutterstock.

While we continue to innovate our search functionality we are also focusing on workflow tools to further increase engagement with our customers and make the creative process more efficient.

Our cloud-based digital asset management service, WebDAM, further integrates us into the workflow of marketing, creative and brand professionals.

And during the fourth quarter we launched Shutterstock Editor, and in-browser editing tool to simplify and speed common steps in the creative process.

It is still very new but early signs are encouraging with users of Shutterstock Editor twice as likely to download an image.

Innovating from both the product and tools perspective remains a priority and we will continue to invest in these areas even as we focus on delivering continued strong financial results.

We are also investing today in migrating our technology platform from our legacy structure to a fully services-oriented architecture that will enable us to be even more nimble and pioneering in the years ahead.

We expect this migration to finish up later this year but the impact of this transition is included in the financial guidance that Steven will provide shortly.

From its founding Shutterstock's primary focus has been providing the highest-quality product along with cutting edge tools and technology to empower the world's storytellers.

The stock content business continues to evolve but the foundation we have built and the investments we continue to make have us ideally positioned to capitalize on the significant opportunities across the creative landscape.

It is still very early days.

And while I'm certainly proud of what we accomplished in the past year I am even more excited about what the future holds.

So now I'll turn the call over to Steven to walk you through our financial results.

Thanks, Jon, and thanks everyone for joining us on the call this morning.

Before I discuss our performance I want to let you know that we have posted a brief presentation deck on our website which contains supporting materials for our quarterly and annual results as well as other items discussed on today's call.

As Jon highlighted Shutterstock delivered another strong year in 2015 as the powerful network effects of our business model drove significant growth in our content library customer base.

The sustained operating momentum we delivered translated into full-year revenue growth on a reported basis of 30% and adjusted EBITDA growth of 19%.

Excluding the impact of currency as well as the financial impacts from our acquisitions of PremiumBeat and Rex earlier in 2015, our 2015 revenue growth was approximately 27% and adjusted EBITDA increased 31%.

Looking at just the fourth quarter, total Company revenue increased 27% on a reported basis despite a greater than anticipated impact from currency movements.

Excluding that impact of currency movements as well as the contributions from the acquisitions I just mentioned the fourth-quarter revenue grew 24%, driven by significantly increased results from our expanding video and enterprise offerings as well as from sustained growth at our traditional e-commerce business.

We continue to see solid trends across all key metrics as we attract new customers across multiple content types and build increasing customer lifetime value.

This past quarter our user base expanded to nearly 1.5 million customers including a 77% increase in our enterprise customer base versus the fourth quarter a year ago.

We also saw a 19% increase in paid downloads, primarily from a higher level of activity across our subscriber base in conjunction with the new monthly download limits and the 350 image subscription plan we introduced earlier in 2015.

As I mentioned last quarter, this increased engagement is expected to deliver greater lifetime customer value from longer retentions as customers further integrate our products into their workflow.

We also continue to see growth in revenue per download which was up 7% on a reported basis in the fourth quarter and 11% when excluding the impact of currency.

This reflects the impact of higher enterprise sales as well as increased consumption across our video, editorial and music products which carry higher average prices than our e-commerce image platform.

Similar to the third quarter, the increased usage across our subscriber base and lower price point for the 350 image subscription plan partially offset the impact that these new businesses had on revenue per download growth.

But we do anticipate that they will increase the overall lifetime value of our customer base.

As Shutterstock generate strong revenue growth across a diverse set of asset types, we are also benefiting from the geographic diversity of our customer base.

Currently 39% of our revenues are from customers in North America, 34% from customers in Europe and 27% from the rest of the world.

Each of these regions is growing at double-digit growth rates for us and we continue to see strong momentum in nearly every country and region including most notably Korea, Germany and the UK.

Shifting to the cost side of the business, we continue to align our spending with the revenue opportunities we see across our platform.

Fourth-quarter operating expenses increased 28% versus the same period a year ago, driven primarily by higher contributor royalties associated with our growing revenue.

Contributor royalties were approximately 29% of our revenue for the fourth quarter which was consistent with the full-year level.

Overall our contributor royalty rate has remained relatively steady but please note that this rate may increase slowly over time as we generate additional revenue from businesses that traditionally have higher royalty payouts such as editorial.

However, the contribution dollars from these products will be greater due to their higher price points.

Given the overall relative consistency in our contributor payout ratio, our gross margin remained steady at approximately 60% in the fourth quarter when excluding the impact of currency and acquisitions.

Sales and marketing expenses increased 31% versus the fourth quarter a year ago and that excludes stock-based comp and was approximately 23% of our revenue base.

Although we continue to see higher keyword costs in the fourth quarter, our total marketing spend as a percentage of revenue was down slightly versus the full-year 2015.

The return on our marketing investment remains strong as we continue to drive new customers to our platform while keeping retention and repurchase rates high across both subscription and on-demand products.

Excluding stock-based compensation, general and administrative expenses increased 82% for the fourth quarter versus the same period a year ago, driven primarily by increased personnel costs including severance associated with certain executives.

Product and development costs excluding stock-based comp declined slightly in the fourth quarter versus the fourth quarter a year ago, primarily due to the capitalization of approximately $2 million in additional development costs as our technology teams are increasingly focused on building new tools such as Editor as well as a more expansive user experience.

Overall, our revenue growth in the fourth quarter along with a controlled cost base translated into solid adjusted EBITDA growth.

On a reported basis this past quarter, adjusted EBITDA increased 14%.

However, excluding the impact of currency as well as the acquisitions I mentioned earlier and the severance costs I mentioned our adjusted EBITDA growth was approximately 25%.

It is important to note that we are delivering this growth even as we focus on expanding our capabilities by investing in personnel, product development and technology so we can further strengthen top-line results and continue to innovate to build additional long-term value.

GAAP net income in the quarter was $6.9 million, or $0.19 per share as compared to $7 million or $0.20 per share in the fourth quarter of 2014 as the improved operating performance and lower stock-based compensation expense was more than offset by amortization of acquisition-related intangibles and changes in the fair value of contingent consideration related to acquisitions.

For the full-year 2015, GAAP net income was $19.6 million, or $0.54 per share as compared to $22 million of $0.61 per share in 2014.

The decrease primarily reflects the improved operating performance which was more than offset by increased stock comp expense, amortization of the acquisition intangibles I just mentioned as well as the contingent consideration related to those acquisitions.

Non-GAAP net income, which excludes the after-tax impact of non-cash equity-based compensation as well as the acquisitions and contingent consideration I just mentioned, that non-GAAP net income increased 8% in the fourth quarter to $13.8 million or $0.38 per share as compared to $12.8 million or $0.36 per share in the fourth quarter of last year.

For the full year non-GAAP net income increased 14% to $44.2 million or $1.22 per share as compared to $38.6 million or $1.07 per share in 2014.

Turning to our balance sheet, we generated $21 million of free cash flow this quarter and $68.3 million for the full year, finishing 2015 with $288 million of cash and short-term investments.

This equates to approximately $8 of cash per share.

Given the strength of our balance sheet, the sustained operating momentum across the Company and our belief that our current share price is not reflective of the value of the Company and our prospects we commenced returning capital to shareholders through execution of a $100 million share repurchase program.

This past quarter, that is the fourth quarter of 2015, we repurchased over $15.6 million of stock, reducing our count by approximately 460,000 shares.

Through February 22, 2016, we've repurchased an additional 578,000 shares which takes our total purchases under the plan to date to over 1 million shares for approximately $32.8 million.

It is important to note that our first priority for capital allocation remains unchanged.

And that is investing in our existing businesses and external growth opportunities that will enhance our long-term profitable growth profile.

Turning to 2016, we remain very encouraged by the operating momentum across the entire business.

And despite the continued negative currency impact on our financial results we anticipate significant growth in the year ahead.

For the full-year 2016, our guidance is as follows.

We expect revenue of approximately $495 million to $510 million and adjusted EBITDA of between $95 million and $100 million.

It is important to note that 2016 estimates include the impact of our technology platform migration which Jon mentioned a few minutes ago.

In addition, assuming that current FX rates hold these rates will negatively impact our revenue growth by 3 to 4 percentage points and our EBITDA growth by 8 to 9 percentage points in 2016 as compared to 2015.

These amounts that I just mentioned are included as impacts in the guidance I gave.

Let me also remind you that we record revenue at the exchange rates at the time a product is sold as opposed to when the actual download by the customer occurs.

As a result of that, the impact of currency movements tends to lag the shift in market currency rates and the ultimate effect in 2016 of the currency rate movements will depend on the actual exchange rates and the timing of downloads.

We do anticipate that at current exchange rates revenue and EBITDA growth will accelerate throughout the year with the first and second quarters being significantly negatively impacted by foreign exchange rates.

In the first half of the year EBITDA will also include costs related to the migration of our tech platform which Jon mentioned a bit ago as well as costs associated with expanding our editorial business.

In addition to the revenue and EBITDA guidance for 2016 we also expect the following items to occur in 2016: non-cash equity-based compensation expense of approximately $35 million, capital expenditures of approximately $25 million and in 2016 we anticipate that we will begin to reduce our effective tax rate.

Our current assumptions include a couple hundred basis points decline in 2016, that's 200 basis point decline in 2016, with the majority of that improvement coming in the back half of year.

But the actual timing and amount of the reductions are dependent on several moving parts and we will update you on our tax expectations as the year progresses.

We appreciate your time this morning.

And now Jon and I would be happy to answer any questions you may have.

Operator, please open the line for questions.

(Operator Instructions) Youssef Squali, Cantor Fitzgerald.

Thank you very much.

Good morning guys.

A couple of questions, maybe starting with you Steven.

Going back to what you just said in terms of the headwinds to your 2016 guidance, can you maybe just provide a little more color on the FX and the I think you mentioned three things?

One was FX, one was the tech platform migration and the third was the editorial business.

I guess in trying to parse out those how much is this -- I guess FX you can't really project beyond 2016.

But for the others, are these one-time events, i.e., we go through them in 2016 and then we see kind of a catch-up in 2017?

Or are these investments that will sustain for multiple years?

And then maybe Jon, can you just talk broadly about the competitive landscape, what you're seeing out there?

I think the top-line guidance for 2016 implies some decent deceleration, how much of that is baking in potentially pricing pressure or lower demand from driven by competition?

Thanks.

So thanks for the question.

In regards to the impacts of the technology re-platform and our increased investment in editorial as we continue to integrate the Rex business and build out our capabilities, those are both 2016 items which we do not expect to recur in 2017.

And so we expect this to be once again a 2016 event which we'll start to see benefits even later this year.

And I can talk about the competitive landscape a bit.

It's always changed around us and for the past 10 years there has been consolidation, there's been new companies that start.

We don't see any underlying trends of our business change.

And in addition we do not compete on price.

We are building, we are investing, we are re-platforming, we are releasing some amazing stuff out there in terms of editorial product features and also workflow features.

And we are going to continue to differentiate our product from the rest of the competitors that way and stay ahead of them like we always have.

All right, so it's fair to assume that at least so far you have not seen any pressure from Adobe?

No.

All right, thanks.

Rohit Kulkarni, RBC.

Thank you.

One for Jon and one for Steve.

Jon, in terms of thinking out your product roadmap over the next 12 to 24 months, when you talk about workflow and it's interesting that you launched this Editor in Q4.

Can you talk about what other tools do you think as you interact both more with enterprise customers and other forms of media that Shutterstock needs to build or buy or partner as you further look ahead over the next 12 to 24 months?

Are there any obvious holes that you think you need to fill to be able to get a greater share of wallet of your customers as you build out your enterprise capabilities?

And another one for Steve, on your gross margin comments can you peel back a little bit in terms of what is the effect of the unlimited downloads on gross margins?

And also what are you assuming with respect to mix shift towards editorial and offset on gross margins?

Thank you.

Yes, I can jump in first and then Steven can answer the second part.

On our product roadmap we're doing what we have done for the past 13 years which is listen to our customers and build the things that they need.

We're starting from an amazing place.

We sell 4.6 images every single second and we spend very little time with that user before and after today.

But as we start to expand into products like Editor where we start to spend more time with the user and we can see that they start to download more images because they are spending more time with us that gives us an opportunity to continue to expand along the entire workflow of the user.

We do this incrementally.

We release product.

We spend some more time with the user, we interview them, we talk to them, we watch them and then we build more for them.

And we continue to build into the pain points that we experience with them.

As far as build or buy, again same story.

We're always looking around for world-class companies.

When we find them we buy them.

When we find them we partner with them.

When it comes to acquisition we've done that with Rex, we've done that with PremiumBeat, we've done that with WebDAM.

We did that back in the day with Bigstock and we will continue to do that going forward.

Fortunately, we're very good at building stuff and so that's where we start.

When we see something out there that can accelerate our build efforts we buy and we integrate.

And that's been our strategy and that's what we're going to continue to do.

As it relates to the gross margin question we haven't really, the unlimited download has not really had an impact on our gross margin.

What I did mention in my comments in terms of editorial and music and products where we have a lower, slightly lower gross margin we're accepting of that because we're getting higher contribution dollars.

And that's why as those businesses grow we might see some increase in our contributor royalties as time moves on but we don't see that as anything but really indicative of the strength of the business overall versus just stock image really across all of our products, both on our e-commerce platform and enterprise customers as well as for WebDAM.

So we feel good about like I said the absolute level of profitability and the trajectory that we see.

Okay, thanks, Jon.

Thanks Steve.

Aaron Kessler, Raymond James.

Yes, hi guys.

Just a couple of questions.

First, on geography any updates just on trends in different geographies?

Second, I don't know if you provide a video and music percentage in Q4 roughly?

Then is it possible to quantify the rough EBITDA impact from the tech re-platform and the editorial investments?

Thank you.

So as it relates to geography we still see Europe as choppy.

Despite the fact that we mentioned Germany and the UK we are seeing not the same level of robustness that we would like to see going forward.

The US continues strong.

Asia has been particularly strong as well.

And so we feel that overall there's nothing that we're seeing that's if you would or cause for concern but we want to make sure that we're being mindful as to those areas of the world where there's opportunity and those where we see greater strength.

And as it relates to the video and music percentage, we don't break out those percentages but at the moment they are on a combined basis they are about 10%.

Okay, so when you look at video and music but we certainly look forward to the day when we're having more conversations and we feel like those are coming soon because we believe that both our product as well as the user acceptance of that product, the functionality of those products will be far greater for the customer.

And we think as Jon said earlier we're going to continue to be a leader in those product areas.

Is it possible to quantify the impact from the tech platforming on EBITDA?

Yes, so really the impact I would say is twofold.

One is we're making sure that we position ourselves as Jon indicated really a platform on a go-forward basis that as nimble and flexible and as user-friendly as it possibly can be.

And so that we would expect is going to be call it several million dollars of EBITDA impact.

Cash is going to be higher because there will be some capped labor involved there but overall, we see this as a 2016 event.

So impact on EBITDA call it below $10 million but once again there is capped labor involved there as well.

Great, thank you.

Lloyd Walmsley, Deutsche Bank.

Hi, this is Kevin LaBuz on behalf of Lloyd.

For 2016 if I assume you grow your enterprise business about 40% year over year and video 50% year over year that implies that the core business is growing about 6%.

Just wondering if you could comment on your core, the outlook for your core business for 2016?

And related to that does 2016 guidance incorporate any price cuts or lower tier subscriptions?

And I've got a follow-up.

Thank you.

So as it relates to the latter part of your question in terms of price cuts it doesn't incorporate anything other than us continuing to offer packages that are desired by consumers.

So there's no expectation of a price cut.

As Jon indicated we see our value proposition as one that has not just been successful but continues to be highly desired by our customers.

We'll continue to test new packages as and when our customers ask us about that.

But at the moment as I said there's nothing incorporated into guidance that that would be the case.

As it relates to the core business, it continues to grow nicely.

The on-demand business is better than the subscription business but both are growing.

And I can't comment on your particular assumptions, all I can say is that as we continue to go through 2016 we believe that the businesses will grow and we'll be positioning ourselves for even accelerated growth as we move into 2017 and beyond.

And one more important thing, you can't really split them out that well.

The way that the core and the enterprise businesses work is that they are very intimately related.

We're getting better and better at converting some of our core customers and identifying which ones will become premier customers quicker and more effectively and bringing them into the enterprise product.

So as we get better and better at bringing new clients into core we get better and better at also bringing them up into the enterprise product.

All right, thank you for that.

And just as a follow-up, you had mentioned during your Analyst Day that the productivity of your enterprise salesforce is ramping.

So just wondering if that continues to be the case and if that's incorporated in the guidance for 2016?

That's all.

Thanks.

Yes, we see the enterprise sales team continuing to produce improved results.

They've done a phenomenal job.

And we also have all that's been incorporated into our 2016 guidance.

As we do bring on new hires there is a period of ramp-up but they pay for themselves within a 12-month period.

So we feel very positive about the people that we have and the new talent that we're also adding on top of that to build capabilities on a more global basis.

So as Jon said adding enterprise customers at a continued rapid clip.

Blake Harper, Topeka Capital.

Thanks, good morning guys.

John, I wanted to ask you two questions.

First, I wanted to see if you could comment on the Corbis deal and the partnership with Getty if any of the changes there have had any positive or negative effect to you with contributors or customers?

And then my second question is related to your API strategy.

Some of the partners that you have there have had some traction with their advertising business.

And just wanted to see if you have seen anything similar there or what you can comment there as far as the level of activity that you've seen with those partners on your API.

Thanks.

Sure.

On the competitive environment it's kind of the same answer I gave before the competitive environment.

It continues to change around us.

It's always changed around us for the past 13 years.

Nothing surprises me anymore and this is business as usual.

We have not been stronger with our contributor community.

We're ramping up our imaging intake and we're getting a lot more efficient with it.

And we see contributors continuing to use us over other companies more and more as the environment around us changes.

So that goes to the impact.

On the API, it's a business line for us.

We continue to sign on new partners all the time.

We signed on a couple in the past quarter and those were in our release, Optimizely and Sprinklr and some others.

And it will continue to be a growing business unit for us.

We want to get more integrated into our partners.

And if we can help them with deeper and deeper integrations directly into our product, that benefits both us and our partners and we continue to keep those clients for a long period of time because of that deep integration.

This kind of goes back to the re-platform we're talking about, too.

As we start to move over to a fully service-oriented architecture the API becomes a more efficient and powerful tool for us to integrate.

And it lets us do it across the entire workflow of the user instead of just delivering images in the future.

So hopefully that answers both.

Yes, thanks, Jon.

Brian Fitzgerald, Jefferies.

Thanks guys.

A couple of questions on maybe on the API integration.

Do those tend to start out as exclusive, how long to those usually run for maybe before they fall off exclusive?

And then the follow-up to some of the enterprise questions, as you look at your enterprise sales efforts, how much are dedicated towards current customers versus new customers?

Any noteworthy dynamics in the length of sales cycle or product cross promotion, maybe specifically as you continue to broaden your offerings and toolsets?

Thanks.

On the API they are all different.

Some of them are exclusive, some of them are not.

They tend to stay with us for a long time when they integrate with us because it's a pretty deep partnership.

But it's something we focus on.

We have a team and we continue to build out.

And as it relates to the growth in enterprise customers, it's coming equally from expansion of new customers as well as growth with existing customers.

As they see the benefits of the platform, as we continue to enhance the platform, as we listen to their needs and solve their problems and workflow issues I think that will even become a greater amount of connectivity with our customers.

We've just added music to our enterprise platform and so we're also rolling out editorial on our enterprise platform.

And so therefore we only see future growth continuing and accelerating from here.

Thanks Jon, thanks Steve.

Operator, we have time for one last question please.

Dean Prissman, Morgan Stanley.

Thanks for taking my questions.

I may have missed this, so apologies if so, but can you please comment on the growth rate of your enterprise revenue stream in the fourth quarter?

Then within your 2016 revenue growth guidance, how meaningful are the Red Bull and PMC Media partnerships and how should we think about the margin profile of these deals?

So we don't actually speak to specific growth of enterprise.

But what we have said in the past where it is directionally and it's now approximately it's more than 25% of our overall revenue.

And so that is certainly as Jon said important as we've grown the customers as well as the amount of business with each of those customers.

As it relates to Red Bull Media and our deal with Penske Media that we closed in 2015, we haven't discussed specifics but in terms of what it does for our business I think a couple of things.

It makes our platform, overall platform more desirable by customers.

It attracts both other contributors and other players because they want to be part of that platform.

We are an extremely customer-friendly organization and I think that that has historically differentiated us from some others.

And so being able to provide this first-rate, high-quality content in real-time really puts us in a very good position with our customers.

But once again it's not beneficial to break that out independent of any other the overall business.

Thanks.

Thanks everybody for joining us today.

We appreciate your time and if you have any follow-up questions please let us know.

We're happy to answer them over the next couple of days.

Thanks.

Ladies and gentlemen, thank you for your participation in today's conference.

This does conclude today's program.

You may all disconnect.

Everyone have a great day.