TechTarget Inc (TTGT) 2008 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the TechTarget Third Quarter 2008 Conference Call and Webcast.

My name is Katie, and I'll be your coordinator for today.

(Operator Instructions)

As a reminder, this call is being recorded for replay purposes.

I will now turn the call over to Rick Olin, Vice President and General Counsel.

Sir, you may proceed.

Thank you.

I'd like to remind everyone that during the course of this conference call TechTarget will make certain statements that may be considered to be forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including particularly its guidance as to future financial results.

Investors are cautioned that any such forward looking statements are not guarantees of figure performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward looking statements.

These risks include market acceptance of its products and services, relationships with customers, strategic partners and its employees, difficulties in integrating acquired business and changes in economy or regulatory conditions or other trends affecting the Internet, Internet advertising and information technology industries.

For description of other risks, the Company encourages you to read the section entitled risk factors in its annual report filed on form 10-K, as well as other filings made with the Securities and Exchange Commission.

In addition, its forward looking statements speak only as of the date of this call and the Company undertakes no obligation to update these forward looking statements.

TechTarget's policy regarding financial guidance is as follows.

As part of its quarterly earnings call for the quarters Q1 through Q3, it will provide guidance for the then current quarter in which the call is occurring.

As part of the Q4 and year end earnings call, the Company will provide guidance for both Q1, as well as the full year.

The Company does not intend to update full year guidance on a quarterly basis, or quarterly guidance until the next scheduled earnings call.

The following other members of management will be participating in today's call, Greg Strakosch, CEO, Chairman and Co-Founder, Don Hawk, President and Co-Founder, and Eric Sockol, Chief Financial Officer and Treasurer.

I'll now turn the call over to Greg.

Great, thanks, Rick.

Obviously, we're operating in an incredibly challenging macro environment.

Although we saw marketing conditions deteriorate in Q2, the extraordinary recent events that resulted in another level of change in our business.

Spending is slowing down as many customers are take wait and see approach.

This applies to both IT spending and marketing by IT vendors.

This phenomenon has gotten worse since the financial collapse.

We continue to see the economy taking a bigger toll on the spending behavior of our smaller customers.

Because these customers tend to be further ahead on the migration from traditional to online marketing, overall cuts in their marketing budgets impact their spend with us.

We are seeing online programs coming in at smaller dollar amounts with longer periods between renewals and even a handful of running programs being cancelled.

For our larger accounts, these budget cuts tend to come primarily in the areas of their spend that are least measurable and therefore, does not affect us as much.

As you expect, our print and event revenues are under pressure.

The migration to online is hurting our two magazines.

Luckily, unlike our traditional media competitors, print only represents 4% of our revenue.

Cuts in conference and travel budgets are adversely affecting our events business.

With this in mind, we have cut back on the number of events that we are doing to focus on the ones that are most profitable.

As a result of these factors, we are not anticipating the sequential increase in revenue that we typically see from Q3 to Q4.

This is unprecedented in the nine years that we have been running TechTarget.

Despite the challenging economy, there are several bright spots to point out.

Our overall online revenues grew 27% in the quarter.

The largest 12 vendors in the IT market grew their online spend with us by 95% in the quarter.

As a result of the increased online spending from these large IT companies to do both lead gen and branding with us, our pure online branding revenues doubled in the quarter.

The reason we think why the online revenues from the biggest players is growing so fast is because of their size, they were slow to migrate to online, but they are now starting to catch up.

It think that its safe to expect that the tough macro will only accelerate this migration as marketers will come under even more pressure to measure, demonstrate and improve ROI on their marketing investments.

A key point to make is that these revenue gains are coming at the expense of our competitors.

Our renewal rate remains strong at 95% in the quarter, even though many advertisers are spending less, they continue to spend with us as we remain their core buy.

A key part of our strategy for the downturn is to gain market share so when the economy improves we are well positioned to take advantage of it.

This is the playbook we used in the last downturn in 2001 through 2003.

While the overall economy feels now than it did in the last downturn, the tech space on a relative basis is healthier today.

We continue to invest during the last downturn and the market share we gained set us up for the robust growth we've enjoyed since 2004.

We will follow the same strategy, but from even a further position of competitive and financial strength.

We remain cash flow positive and have a very strong balance sheet.

One of the places we will continue to invest is our international business.

although it is small at only 4% of revenue, it continues to grow at a rate in excess of 100%, and we believe will be a major driver of growth for us over the next five years.

We expect to open and operate direct operations in Europe, India and China over the next couple of years.

In the US, we will continue to invest by launching new websites and innovating with how we service our advertisers to maximize their ROI.

In regards to acquisitions, we will continue to be opportunistic as we look for tuck-ins and as our expectation of private valuations will eventually correct to reflect public multiples.

In regards to 2009, we are in the planning process now.

We are focused on aligning our resources against the best growth opportunities and making sure that we have the right balance between profitability and investment.

We are very confident about the long term secular opportunity, our very strong competitive position and our proven ability to execute during a downturn.

That, coupled with our strong financial position, makes me believe that when the economy does improve, TechTarget will be one of the winners.

Now I turn it over -- turn the call over to our CFO, Eric Sockol.

Thanks, Greg.

As one might expect, the severity of the macro environment had an impact on the quarter's results.

This can be seen as I comment on many of the year on year comparisons.

We are reporting revenues for Q3 of $25.2 million, which represents an increase of 8% over Q3 2007.

Our revenues broken out by individual revenue stream are as follows.

Online revenues of $18.6 million, which is an increase of 27% over Q3 of 2007 and represent 74% of total revenues for the quarter.

As we have commented on prior calls, 2008 organic growth rates are difficult to extrapolate because we have completely integrated and merged KnowledgeStorm's products and operations into those of TechTarget.

Events revenue of $5.5 million, which is a decrease of 20% from Q3 2007 and represents 22% of total revenues for the quarter.

Print revenues of $1 million, which is a decrease of 36% from Q3 2007 and represents only 4% of total revenues for the quarter.

These decreases in events and print revenues were anticipated when we communicated our most recent guidance.

Our customer concentration and renewal rate remains favorable during the quarter.

Our top ten customers represented 30% of total revenues, and only one advertiser represented more than 5% of total revenues during the quarter.

For the year to-date, no one advertiser represented more than 5% of total revenues.

Our Q3 quarterly customer renewal rate for our top 100 customers was 95%.

Moving on to gross profit for Q3, 2008, total gross profit margin decreased to 68% compared to 71% for the comparable prior year quarter.

Regarding our largest revenue stream, online gross profit margin decreased to 72% compared to 74% in Q3 2007.

The decrease in gross profit margin were anticipated when we communicated our most recent guidance, and is primarily a result of the shortfall in revenue from our original budget.

For the quarter, we are reporting $4.4 million in adjusted EBITDA, which represents a 23% decrease compared to Q3 2007.

We define adjusted EBITDA as earnings before interest, taxes, depreciation, and amortization as further adjusted for stock based compensation.

Our adjusted EBITDA margin for the quarter was 17%, compared to 25% in Q3 2007.

Moving on to operating expenses, and please note, all the amounts I'll be discussing exclude depreciation, amortization and stock based compensation.

On our last earnings call, we emphasized our company wide focus on cost control and the goal of maintaining our expense run rate with that of Q2.

Our cost control has been effective and our total operating expense for Q3, 2008 decreased slightly from Q2 2008.

We expect Q4 operating expenses to continue to decrease from our Q2 2008 run rate.

Q3 2008 total operating expenses as percentage of total revenues was 51% compared to 46% in Q3 2007.

As a general comment, our total operating expenses as a percentage of total revenues are higher than anticipated as a result of the shortfall in revenues from our original budget.

We are currently conducting our formal 2009 budget process which will be finalized in December.

A key goal of the budget process is to properly realign operating costs with our 2009 revenue expectations.

As a reminder, 2009 guidance will be included as part of our year end earnings call.

As we have commented on previous calls, stock based compensation expense reduces our net income for GAAP purposes, however a material portion of the expense is not deductible for income tax purposes.

This difference between GAAP and income tax treatment has caused our GAAP effective tax rate to be significantly higher than our true cash effective tax rate.

To illustrate, our 2008 GAAP effective tax rate is approximately 65%, whereas our 2008 cash effective tax rate is approximately 41%.

As a result of lowering our projected 2008 taxable income, we recorded a tax provision for the quarter which exceeded our pre-tax income, resulting in a 314,000 net loss for the quarter.

This compares to net income of $1.8 million in Q3 2007.

Net loss per basic and diluted share for the quarter was $0.01 compared to net income per diluted share of $0.04 for Q3 2007.

Adjusted net income, which we defined as net loss or income adjusted for amortization and stock based compensation as further adjusted for the related income tax impact was $2.5 million for Q3, 2008, compared to $3.9 million in Q3 2007.

Adjusted net income per diluted share was $0.06 for Q3, 2008 compared to $0.09 in Q3 2007.

In closing, our balance sheet and financial position remain strong.

As of September 30, 2008, our cash and investments totaled $67.1 million, and our bank debt was $3.8 million.

In addition, we have an unused $20 million line of credit at our disposal.

This wraps up my review of the financial results.

And at this time, I will turn the call over to Don.

Thanks, Eric.

It's clear that the challenging operating environment is playing out in both our Q3 results and in our guidance for Q4.

Our priorities are to mange the business prudently during this period of volatility but at the same time, ensure that we're taking the steps that are necessary to fully capitalize when the environment again turns favorable.

I'd like to elaborate on some of Greg's comments about what we're seeing in the business currently and what areas we're investing in that would drive our success going forward.

The macro related trends that we discussed in our last earnings call played out as we expected over the course of Q3, but were exacerbated by the overall deterioration in the market in late Q3 and in the early part of Q4.

Our 27% online growth demonstrates that the core of our business is withstanding the weak operating environment better than events and certainly better than print, but even within our online business, we've seen that our small to mid sized accounts are pulling back slightly on both their level of spending and the number of programs that they run throughout the year.

As we've discussed, these accounts tend to be more heavily oriented toward online marketing to begin with, so almost any marketing budget cut backs by these SMB clients will impact their spending with us.

Conversely, we're having good success with our larger advertisers that are moving dollars from inefficient areas of marketing spend to online.

For example, Greg cited the 95% online growth that we're seeing with the 12 largest IT vendors in the market.

We also saw a 55% year-over-year increase in Q3 revenue from our top 50 online advertisers.

With regard to our portfolio of specific markets within IT, our Q3 results were consistent with our outlook in our last discussion.

We're seeing strength in markets that continue to have compelling spending rationales such as storage and data center, and weakness in markets where the end user purchase rationale is less immediate, such as vertical software or enterprise applications.

Across all markets, however, we noticed in late Q3 and in the early stages of Q4, that the unprecedented upheaval in the markets has had a noticeable impact on marketing dollars that were planned for September through year end, but had not yet been committed.

For an increasing number of our advertisers, their short term reaction to market uncertainty has been a reluctance to proceed with the incremental year end spending that we generally see in late Q3 and in Q4.

We don't believe that our advertisers are spending these dollars elsewhere.

In the very short term, they may be focusing more on internal prospect lists and other low cost or no cost means of marketing.

While this clearly has a short term impact on our business, we've seen in other downturns that this is not a sustainable marketing practice.

At some point, advertisers that have cut back on their lead generation and their targeted branding activities in response to a bad economy will be forced to look outside of their internal capabilities.

So we believe that the pendulum is going to swing back in a more favorable direction it's just a question of when.

We're focused on making sure that in the short term, we're operating the business in a way that's appropriate for the low visibility environment that we're in while at the same time, investing aggressively in opportunities that will ensure that we're in the best possible position to capitalize on the inevitable recovery.

On the front side of that equation, we've maintained our expense base at Q2 levels by holding down discretionary spending and increase in labor.

With regard to labor specifically, which makes up much of our expense base, we've been able to maintain steady state by limiting new hires to areas of clear growth and offsetting those hires by taking down staffing levels in selected areas through attrition.

Given the current environment, we will continue to examine our costs base to ensure that it's appropriate and well aligned with the best opportunities for growth.

With regard to our most important objective of ensuring that we're well positioned for the eventual upturn.

We're currently investing and will continue to invest into two key areas, the first is increased targeting capabilities.

In a bad sales environment for our customers, the quality of leads that we drive for them is at a premium.

If we are able to improve our customer's lead quality in a bad environment, we put ourselves in position to take more of the scarce dollars in their current marketing budget and the lion's share of the incremental marketing budgets as the environment improves.

We're increasing our targeting capacities in two important ways, one is the topic we've discussed previously, which is our emphasis on further market segmentation through new site launches.

Further segmentation means a tighter alignment between the audience that we attract in these sites and the marketing objectives of our advertisers.

We've launched ten new sites since Q4 of last year, and were actively in the planning process for even more in 2009.

Besides site launches, we're driving significant improvements in our lead quality through investments that we're making in the management of our member database.

Starting on selected sites in Q3, we've significantly expanded our ability to capture our users' current technology and purchase related interests based on all of their interactions with us, not just their initial registration interaction as a member.

We're using this new data to communicate with these members on a much more targeted basis and to promote our customers' content assets much more effectively.

Our early testing with this approach in Q3 has shown a dramatic increase in our response rates and the alignment of leads to advertisers profile objectives.

The full rollout of this approach is an important priority for us over the coming quarters.

In addition to continuing to increase our targeting capabilities, we're also going to invest in areas where we feel we have significant revenue upside.

Greg mentioned largest area of potential upside, which is our international opportunity.

Our initial experience with opportunities outside of the US has been very promising; as was the case when we started TechTarget, incumbent players in these markets tend to be heavily print focused and they treat enterprise IT as a homogenous market, providing us with a real opportunity for our targeted approach and the level of online sophistication that our solution provides.

Well be investing to build critical mass on audience in these international markets and improve our in-market sales.

In many cases, by leveraging the relationships that we have here in the US.

Another area of significant revenue upside that we're investing into is our TechnologyGuide portfolio of websites related to product reviews.

We've been very pleased with the progress we've made on TechnologyGuide, which we acquired in Q2 of last year.

Since our acquisition, traffic to these sites has grown significantly and our year-over-year revenue has ore than doubled.

Most exciting however, is the fact that this collection of sites is uniquely position as the place where buying decisions get made.

Because their built around a deep and comprehensive collection of product reviews and pricing information, our advertisers tell us that the response characteristics of our audience exceed what they've seen from other alternatives.

We've recently brought on a new publisher for this group who left his role as a senior VP and group publisher for PC world.

A primary driver of his decision to join us was the size of the opportunity that we have in this space.

We're making a number of other investments in this business, including investments in new areas of product coverage beyond our recent launches of Desktop Review and Printer Review, as well as increased sales resources to more effectively take our story to advertisers.

In conclusion, our experience during the last major downturn in the technology space gives us a high degree of confidence in our ability to manage the business in this type of environment.

We will operate the business cognizant of the short term challenges, but continue to be focused on what we still believe to be a very compelling long term growth opportunity.

With that, I'll turn the call back over to Greg.

Sure, I'd like to share our guidance for Q4.

We expect total revenues to be within the range of $25 and $26 million, and adjusted EBITDA to be within the range of $4.3 million to $5.1 million.

I will now open the call up for your questions.

(Operator Instructions)

Your first question comes from the line of Mark May from Needham.

Please proceed.

Thank you for taking my questions.

For the fourth quarter revenue guidance, what is the general segment breakdown?

As far as between revenue streams?

Yes, between the three segments.

The breakdown for revenue, Mark, is going to be pretty to it was in Q3.

Generally speaking the mid point is 25.5, and we did an actual number of 25.2.

So I think you'll see online about a little bit short of the Q3 actual.

Okay.

And events being a little bit more than the Q3 actual.

Okay, so call online kind of in the 18 million range, and ballpark.

Which would obviously be, as you mentioned in your prepared remarks, kind of unprecedented but sequential and year-over-year decline.

Given that you have such a high gross margins, if you look out into '09 and if the kind of revenue softness that you're seeing right now persists in to '09, really the only way that you can maintain your profitability is by headcount reductions.

As you mentioned, most of your costs, you operating expense are labor related.

Is that something that you're seriously considering right now as part of our '09 review?

Yes, well we're right in the middle of the process right now, so its premature to talk about specifics.

But just reiterating what I said in the call, we're very cognizant that they have the right balance between profitability and investment.

So we're definitely -- we're very focused on maintain our margins.

And what is the -- what is the current headcount?

Its roughly 600.

Okay.

And in terms of -- I think your largest operating expense line is in the sales and marketing line, how much of that is variable in nature?

Meaning, with -- if revenues were to decline say 5% from Q3 to Q4, which is not what you're projecting, but if they were, would sales and marketing expenses be flat, go down, go up?

What --?

Mark, this is Eric.

In regards to Q4 this year, that we just gave guidance on, we expect the operating expenses, that being sales and marketing and product development and G&A to be slightly less, maybe 100,000 in aggregate from what the actual was in Q3.

And for the three classes to be very close to what the actual was, because we're expecting just about -- as mentioned, about the same revenue and between now and this quarter, the cost structure will be very similar to what it was in Q3.

Okay.

And then the last question is about the international investments.

What is sort of the general scope -- given this sort of uncertain revenue outlook, what's the scope of the kind of investment dollars that we're talking about to open up some local offices and the other initiatives that you have there?

It's relatively modest.

So we can get an operation off the ground for a modest amount of money.

So its not -- it's something that we'll be able to make that investment and get the margins we want to be at for 2009.

Okay.

All right.

Thanks for answering my questions.

(Operator Instructions)

Your next question comes from the line of Ross Sandler from RBC Capital Markets.

Please proceed.

Hey, guys.

Couple questions.

I know its tough to answer some of these questions, but we've talked in the past about visibility, how much visibility do you have these days?

And I know its -- online is becoming more of a spot buy for advertisers.

Do you even have a month out at this point?

And then, follow up on -- I know its tough to read what's going to happen in '09, but as you guys put this budget together and you start running some scenarios, what do you envision based on your experience through the last downturn?

Kind of what's the worst case scenario in terms of revenue for '09?

Don't have to pinpoint it, but a range would be helpful.

And then I've got one more follow up.

Yes, in terms of visibility, you're right.

I mean, visibility is definitely [tough] prior -- than it was because people are just being -- customers are just being extremely cautions.

With that said, in terms of the Q4 guidance we've put out, we're comfortable with that.

In terms of the downturn, its too early in the process for us to really give you ranges for 2009, but our experience in the last downturn was that online held up very well, and we're able to gain a lot of market share by being the leading player online in the IT space.

And we did that buy continue to invest, which was our plan and that really paid off for us in a big way when the environment improved.

So, that's our strategy going forward.

Okay.

And when you see budgets coming down like they have already, do you guys -- you budge at all on the kind of discounting of bundled packages side, or do you tend to maintain pricing and just deliver lower volumes, so that advertisers when the cycle comes back aren't really hitting you for lower pricing?

And then, on the cost side, just a follow up from the previous question.

So you're going to be down 100,000 quarter over quarter in terms of your cash OpEx, is this situation where -- you've seen the slow down now for several months, some of the decisions you're making are going to take place on a bit of a lag basis.

So we should expect the cost structure o become more aligned with the slow down in revenue, starting maybe next quarter -- the quarter after.

Yes, I mean, in terms of pricing, I'll just mention, we are holding firm on prices, we don't have -- we're not seeing a lot of pricing pressure.

So its not like what you're reading about in the consumer market where there's a lot of excess inventory and a lot of downward pressure on CPN, so we're not seeing that.

We're still the premium priced player in the space and those -- the prices are holding up well.

In terms of the costs, what we said about the costs, we said for '08 we had higher -- anticipate a certain level of growth, it wasn't there.

And as part of the '09 planning process we would align the costs with the '09 opportunity.

So we're in the process now of talking to a lot of our customers and getting their sense for '09.

So that we can get -- when we get comfortable with what -- what that revenue is gong to be, then we will align our costs appropriately against that.

But is it -- I mean, help me a little bit more on the cost side.

So we used to run a mid 20's margin when the market was a little bit better last year, we're now in the high teens.

I mean you guys have kind of known that the environment has gotten really tough since end of 2Q and its clearly not getting better in the next six months.

So do we revert back to a more normalized margin at any point in the next few quarters, or is it going to kind of be at this new run rate now for the foreseeable future?

Yes, so there's -- so two things, one is the difference between what's happened at the end of Q2 and what's happened in the last six weeks are two completely different ballgames, right?

So the suddenness and the drop that's happened in the overall economy recently is very different.

But in terms of -- if you look at margins we are able to run at in 2007, I think that's a good benchmark and certainly something we're very cognizant as we're doing in 2009 budgeting.

Okay, thanks guys.

Your next question comes from the line of Colin Sebastian from Lazard Capital.

Please proceed.

Thanks very much and I apologize, again, I'm a little bit late so if you already answered any of these questions.

I guess the first one is -- within the online segment, was hoping you could talk about the trends between the display advertising and the lead generation side, first of all.

Sure, this is Don.

I'll take that.

So, Greg alluded to the fact that we're seeing very good growth in the display side of the business.

And we feel that the reason for that is we've had a real emphasis this year on focusing on the largest IT vendors and really helping them understand the value that we bring to the table and helping them reach kind of a wide [breadth] of the IT market.

In the past, I think that those IT vendors have viewed us as being a good solution for specific product initiatives and we've gotten a lot of lead gen business from them over the years based on that.

But this year we're seeing a big uptake in them looking at us as a way to accomplish their branding objectives because we -- because we have all the major areas of critical mass within IT, we actually represent the largest IT audience.

And they're really starting to come to a realization on that and there's a lot of runway on that revenue stream.

On the lead generation side, we still continue to have good growth on lead generation, I think what's going on there is what I alluded to in my comments is the lead generation revenue stream has historically been supported by these small to mid sized vendors and what we're seeing there is a reaction to the environment on the part of those customers.

Those customers are spreading out their spends more, they're spending in smaller amounts than they had previously.

So our retention on those accounts has been pretty good, but our ability to grow that revenue stream as aggressively as our original plan had called for has been challenged by the overall environment.

I wouldn't say -- one last comment there, I wouldn't say that the overall business -- the overall online revenue stream business is heading towards being dominated by branding dollars.

So the overall mix is still more heavily oriented toward lead generation, but we're seeing healthier contribution than what we've seen in the past from the branding side of it.

Okay.

And I guess, other than the size of the partner or the enterprise, I mean would it be fair to assume that in this type of environment the performance based marketing would perhaps get a bit more of the mix, other than, or in contrast to display or something less measurable forms of advertising?

Yes, for sure.

I mean, performance based is going to hold up.

I think one of the challenges we alluded to on our last cal is that our customers' sales cycles are getting longer.

Its taking them -- when we send over a quantity of leads to them out of the programs that they run with us, its taking them longer to close on those leads.

And that drives the frequency of their buys from us and it drives the level of their buys from us.

So it's going to continue to be a core part of our marketing budget, and especially relative to non-measurable means of marketing that they do.

But the amount of money we can take down from that in a challenging environment is compressed somewhat by the trends that I'm talking about.

Okay, and then just lastly, I think Eric you mentioned the slowdown, picked up some steam in early October or to the present day.

So does your guidance presume for November and December flat with October or any pick up there?

No, its -- we're doing that guidance based on what we're seeing right now, so it's the current environment.

So, month over month it would be flat then from October into November and December?

And from a -- is your question from a revenue standpoint, are we projecting flat month over month revenue?

Well, in terms of our Q4 revenue guidance.

If October was significantly weaker, what are you expecting for November and December for your guidance range?

Right, I mean we usually see a ram within the quarter on a month over month sequential basis because a lot of the buys start at the beginning of the month and there's kind of ramping -- you have a critical mass of programs that are coming online in the middle of the quarter.

So this quarter won't be any different from that perspective.

It's not like we're expecting the revenue to trend in a different direction, just the overall level of revenue contribution for the quarter, based on what we're seeing in October is what we based our guidance upon.

Okay.

All right that's helpful.

Thank you.

Your next question comes from the line of Jim Friedland from Cowen.

Please proceed.

Hi, Kevin Kopelman in for Jim.

Could you give us any more color on what you're seeing in that acquisition pipeline?

How much have multiples come down?

And are you seeing sellers pull their assets out of the market waiting for multiples to come back up?

Yes, I think that there's always a lag time with the sellers in terms of valuation.

So I don't think some of the things that we've looked at, we didn't feel had realistic valuation.

So if companies want to sell, I think, they're going to have to adjust their asking prices.

So right now, I think its safe to say there's a little bit of a disconnect on valuations, but that wont last forever.

So we're still of a pretty steady stream of things that we've been looking at.

As always, the filter is it has to be high quality, it has to be for sale and has to be the right price.

So it's always difficult in any environment to hit all three of those.

But we're still looking at a lot of things and we'll continue to be opportunistic and pull the trigger on things that meet those three criteria and make sense.

Okay, thanks.

And then just on events, in Q4 you don't expect to ramp up, would you expect that to be flattish or is that going to come down?

And then if the environment stays roughly the same as it now, what would that look like going into 2009?

On the events for this quarter versus last quarter, we expect that to be relatively consistent.

Certainly we think the events line of business, on a year-over-year growth basis is going to take a hit given the overall environment going into next year.

We're also going to be pretty aggressive in terms of our planning process and making sure that the events that we do are basically no brainer opportunities for us.

The opportunity costs associated with driving a success on a particular event is relatively high.

So in this type of environment, we're focused on the highest margin opportunities for events and we're also focused on kind for the most -- the clearest revenue opportunities.

And that will be reflected in what we come out with for our plan for 2009.

Okay, thanks.

And then just last thing on events.

I mean, how much lead time do you really need to take advantage of that?

So if you see things picking up, how long does it take before you can get more events rolling?

We're pretty quick.

We can do it inside of a quarter, basically.

We've been doing this type of business for a long time, we have a pretty competent staff in this area.

Most of the events we're doing are smaller, they're not huge trade shows, or even multi day events.

So the bulk of our events business is coming from single day seminars or custom events.

Those have very quick turnaround times.

Okay, thanks.

At this time, I would like to now turn the call back over to Rick Olin for closing remarks.

Great.

Well, thank you very much for listening to the call, and we'll speak with you next quarter.

Ladies and gentlemen, thank you for your participation in today's conference call, you may now disconnect.

Have a wonderful day.