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Operator
Good afternoon, ladies and gentlemen, and welcome to the j2 Global Communications Third Quarter Results Conference Call.
It is now my pleasure to introduce your host, Mr.
Scott Turicchi, President of j2 Global Communications.
Thank you, sir.
You may begin.
Scott Turicchi - Co-President
Thank you, everyone.
Good afternoon, ladies and gentlemen, and welcome to the Q3 conference call for j2 Global.
As the operator just mentioned, I'm Scott Turicchi, Co-President of j2, and joining me today on the call is Hemi Zucker, our Co-President and Chief Operator Officer, and Kathy Griggs, our Chief Financial Officer.
We will be discussing the Q3 financial results, guidance for Q4 2007, and our initial outlook for 2008.
In addition, we will provide an operational update on our voice service offerings, corporate channel, and international channel activities.
We will use the IR presentation as a roadmap for today's call, a copy of which is available at our website.
In addition, if you've not received a copy of the press release, you may access it through the corporate website at j2global.com/press.
In addition, you will be able to access the webcast from this site.
After completing the formal presentation, we'll be conducting a Q&A session.
The operator will instruct you at that time regarding the procedures for asking a question.
In addition, you may email questions at any time to investor@j2global.com.
Before we begin our prepared remarks, allow me to read the Safe Harbor language.
As you are well aware, this call and the webcast will include forward-looking statements.
Such statements may involve risks and uncertainties that would cause actual results to differ materially from the anticipated results.
Some of those risks and uncertainties include, but are not limited to, the risk factors that we have disclosed in our SEC filings, including our 10-K filings, recent 10-Q filings, various proxy statements, and 8-K filings, as well as additional risk factors that we have included as part of the slideshow for the webcast.
We refer you to discussions in those documents regarding Safe Harbor language as well as forward-looking statements.
I'd now like to briefly turn to the results for the quarter.
This was a good quarter for j2 in light of very difficult market conditions for our credit sensitive customers, which we'll discuss in greater detail.
The revenues for the quarter were 55.7 million, up 21.5% from the same quarter in 2006.
Our gross profit margin on a non-GAAP basis, excluding 123(R) expense, was 80.3%, up slightly more than 1 percentage point from the same quarter in 2006.
Operating earnings exclusive of non-cash comp charges were $23.1 million, resulting in an operating margin of 41.5%.
Net earnings were 19.4 million, or $0.38 per share, inclusive of $0.02 per share, or 1.1 million, that resulted from the required reversal of a tax reserve.
On a GAAP basis, net earnings were 18.1 million, or $0.35 a share.
123(R) expense in the quarter was $0.03 and is expected to be approximately $0.10 for the full fiscal year.
Funds available to grow our business rose to 240 million after repurchase of additional shares of common stock and including the acquisition of YAC.
Now, we'd like to turn to some of the highlights for the quarter.
As you know from our release, in August, j2 crossed the millionth paid DID threshold in August of this year.
We ended the quarter with approximately 1,018,000 paid DIDs, and a total DIDs deployed of 11.7 million.
That you will find on page five.
If you go to page six, subscriber acquisition now has expanded to include some additional brands, both for the individual and the small to mid-size business.
In the individual channel, we are marketing fax.com, as well as the core brands of eFax and j2.
And in the small to mid-size business, we've begun to actively market Onebox and eVoice Receptionist, which is sold either directly through a website or into the hybrid model where the customer comes to the website, but then is handled through telesales in terms of actually closing the deal and getting the customer provisioned.
On slide seven, you'll see our paid subscription drivers, which continue to be the same, the six modes by which we acquire new paid DIDs in a given month or quarter.
It continues to be the case that in excess of 40% of our new paid DIDs come directly to one of our websites without specific direct marketing costs associated with them, which is very helpful in maintaining acceptable subscriber acquisition cost levels.
At this time, I'd like to turn the presentation over the Hemi, who will discuss the voice services, the corporate, and the international segments of our business.
Hemi Zucker - Co-President, COO
Good afternoon, everybody.
I'm happy and glad to be here again.
Today I will talk about our voice services, corporate business, and our international.
As you all know, we have continued and will finish this quarter with the price change of the eFax [class] base.
This quarter we focused mainly on the [corner] cases, the customers that have lower usage, and what we call the fragile customer that (inaudible) that would command a higher churn rate.
We are happy to tell you that despite that, we had our best quarter this year with 45,000 new customers.
And all of that was aided by voice, corporate, and international business, and that's what I'd like to talk about.
Let's go to my next slide, nine, for those who have a copy.
As you see here, we have added to our logos of eVoice, eVoice Receptionist, and Onebox, the logo of YAC.
YAC is an Irish company that we acquired during the quarter.
And YAC stands for You're Always Connected.
And let's talk about the progress that we have done in our voice services.
During this quarter, our percentage of voice services--as our entire base is very easy to calculate because we are around 1 million customers.
So 7.5% of them are now mostly eVoice and Onebox, but also, YAC brought some small addition to those Receptionist site services in Europe.
And we are up from 5% of our base, or 50,000 to 75,000 units as of the end of October.
Our DID growth in the voice services grew 32% in the last quarter and year-over-year 128%.
These high percentages also reflect our 2008 targets that we are budgeting to grow in similar or in double over the next year, especially now when we will start to focus more and more on the voice services, not only in the U.S., but also outside.
Our ARPU for those services, or what we call the Receptionist, is around $12 per extension per month.
We are now testing some price changes.
We started with [administration] prices and now we are testing the capability to increase those prices and I'm sure that during the next earnings call I will be able to report to you about the success.
But we have very good reason to believe that the prices are low, because if you think of the value that you get with a phone line versus a fax line, there is no reason to sell it for an average price of $12 per month.
And we are targeting customers in the SMB, 2 to 15 employees.
We are doing well with the telesales reps, meaning customers that called and complete the purchase through the phone.
We also this quarter have done phenomenally well in introducing to those customers (inaudible) a way to buy it online.
Those customers call.
They don't--so they go online, they don't call, and they do all the work choosing numbers, transferring numbers, and everything online.
And of course, by being able to perfect our website and do it online our cost requisitions are going down and customers, especially those that feel that they have more control when they do the work themselves, are welcome to do it.
Our marketing is consisting of a lot of internal and cross selling.
As you know, now with 1 million customers at hand, it's a big benefit and it's a big advantage of j2 that we can go to our existing paid base or free base and offer them another service from the house of j2.
We also do well with search and radio advertising on voice services.
And with the acquisition of YAC, we are planning to localize a local receptionist service in Europe next year--early next year.
As you know, we do today sell phone numbers in Europe, but those are mostly served to our American customers that are seeking extensions or virtual office in Europe.
With the acquisition of YAC, we will be able to offer to local Europeans a local service plus we will enhance this to get into the multiple languages that we support in Europe.
Now let's go next to page 10, our corporate sales.
Our corporate sales are doing very well.
Our year-over-year growth is 21%.
This is when it comes to how many fax number DIDs we have.
On the segment of SMB, the SMBs are the smaller customers, those that are lower touch.
They either signed online or called our telesales, and therefore they represent also higher profitability.
In this segment of the market, which we like a lot, we grew even faster - 23%.
We still count our Fortune 100 customers.
They have increased year-over-year by 78%, so now we have 41 of them.
We added three large accounts during Q3, bringing the total of the largest account--not necessarily Fortune 100, but large accounts--usually around 1,000-plus each.
We brought those to a total of 35.
And our pipeline is healthy as ever with 50 large accounts, eight of them in Europe.
Next page, our international.
Our international grew year-over-year 40%.
We have launched--or we are working on launching the Receptionist early in 2008, as I mentioned before.
We are continuing to invest in our international business.
We are covering currently seven languages--actually, it's eight if you count English--American English and the British English.
We also are working on multi byte capabilities.
To explain it, we do, of course, have services in Asia where you can get faxes into, for example, your Japan number.
But we have some deficiencies there.
For instance, the CSA (inaudible), the header of the fax will be garbled and if somebody is sending a header of a fax in Japanese, many times we will not be able to pick the letters.
We are working on that.
We have worksites in Chinese and Japanese, et cetera.
But we do not have all the capabilities we would like to have in our database.
So we are working on that and as a result we are hoping to open our physical presence in Asia, most probably to be Japan, either through an acquisition of a small company or by renting office and hiring people.
During Q3--or Q3 year-over-year, our staff mostly in Europe grew by 52% to 44 people.
And this number includes now two major offices - one in Dublin and the second one in Galway, or the offices of YAC, the company we just acquired.
And last, but not least, our subscriber acquisition cost in Europe - as you know we are very disciplined when it comes to calls - is around USD50 and this is despite the fact that we are building a brand.
We do not have in Europe as much (inaudible) signup as we have here in the U.S.
And the eFax brands needs more work than here.
Despite that, we are very happy to deliver customers at the level of $50 each.
If you calculate it, it takes two to three months to get the money back.
Okay.
With that, I am going to pass the conversation to Kathy.
Kathy Griggs - CFO
Thank you, Hemi.
Good afternoon, ladies and gentlemen.
If you'd please refer to page 13 of the investor deck.
Our revenues were approximately 56 million this quarter, compared to 46 million in the prior year third quarter, for an increase of approximately 21.5%.
Revenues increased 3%, compared with Q2 revenues of 54 million.
We are pleased that this growth has given us softness in the quarter's usage revenues from customers and credit sensitive businesses, which we estimate had an impact of $1 million to $1.25 million in the quarter.
Additionally, our DIDs grew by 45,000 in Q3, up from Q2 of 42,300, and Q1 of 23,000.
Year-to-date revenues were at 164 million, up from 132 million in the prior year-to-date period, reflecting an overall increase year-over-year of 24%.
Non-GAAP gross margins were at 80.3%, compared to the previous quarter at 81.3%.
From comparing to the same period last year, our gross margins improved slightly more than one percentage point, from 79.2% to our current 80.3%.
As mentioned earlier, this quarter's results reflect the impact of lower usage revenues that we experienced in Q3 from customers that we believe were adversely affected by domestic credit market instability.
Additionally, results reflecting impact from YAC, which was not yet fully integrated, and increased compensation driven by our annual Q3 salary increases.
Our operating expenses were up in the prior quarter due primarily to increased compensation associated with additional headcount and the increases I just mentioned and higher professional fees.
In addition, we wrote off certain receivables from certain of our credit sensitive customers.
Overall, aggregate expenses were in line with our expectations.
Operating profits on a non-GAAP basis were 23.1 million, or 41.5%, compared to Q2 at 23.9 million and 44.2%.
Our diluted non-GAAP EPS, which excludes 123(R) expenses, was $0.38 a share, an increase from the prior quarter's $0.36, due to a reduction in our expected annual effective tax rate.
The tax rate change resulted from the lapse of the statute of limitations requiring us to reduce our liability for unrecognized tax benefits by $1.1 million.
We have 51.4 million fully diluted shares outstanding for the quarter.
And free cash flow was 15.7 million during the quarter.
You will see on slide 18 the computation of free cash flow.
Cash flow is generally lighter in Q3 due to the timing of tax payments.
And in addition, our capital spending is not evenly distributed throughout the year and in Q3 2007 saw capital spending of approximately $3 million.
Our cash and cash equivalents, short and long term investments, increased to 240 million in the quarter.
We spent approximately $5 million and bought back approximately 140,000 shares of stock during the quarter, and we will continue to repurchase shares in Q4.
One final comment with regard to page 14 of the investor deck.
This slide shows you an overview of our margin trends over time.
We're proud of the fact that we have maintained our gross and operating margins over time despite fluctuating market conditions.
We believe that this performance demonstrates an enduring appeal for our services and the diversity of our customer base.
With that, I would now like to turn the call over to Scott, who will provide the guidance.
Scott Turicchi - Co-President
Thank you, Kathy.
Slide 15 is our financial guidance and I understand that some of you may not have access to the slides.
So when that technical glitch is repaired we will alert you of that.
Our revenues for Q4, and I'll give you some of the assumptions underlying it, are 56.1 million to 57.6 million.
I'd remind you that in every Q4 there is a shortfall in effective business days relative to Q3, generally three-plus business days.
And to quantify it for you, a business day is worth about $200,000 in usage revenue on a worldwide basis.
It's a combination of the usage revenue from all of our paid customers, plus our international revenue that comes through call-in party paid.
So as we enter Q4, we expect a shortfall of about 600,000 just in usage because of the lack of business days.
Secondly, we're not assuming any improvement in the quarter, or for that matter in our current budget, in '08 in the credit sense of the sector.
And to give you an idea, this is commercial banking, security and commodity brokers, accounting and financial advisory firms, and real estate.
And that book of business is about a $14 million a quarter business, roughly half fixed, half variable.
And we're not assuming that off of these levels that business improves.
This will result in a non-GAAP EPS, excluding non-cash comp expense for the quarter, of between $0.36 and $0.37, assuming 51.4 million shares outstanding at approximately a 30% tax rate for the quarter.
As we look into '08 we are continuing to be in the midst of our budgeting process, however, we've reached that point where we believe that there, as usual, are a few items that will go back and forth between now and when we give final guidance in conjunction with the Q4 call, likely to be the first week of February.
As I just stated, we're not assuming any improvement in the market conditions for our credit sensitive customers, which probably has an impact of between 4 and 5 million of usage revenue in 2008.
Notwithstanding that, we believe the company will grow approximately 17% on the top line.
In EPS, we'll grow at least at that same rate, if not higher.
However, as we begin to build the brand in the voice services space, as well as invest in some of our other alternative brands, like fax.com, and begin the reenergize our free base of customers, there's several million dollars currently in the budget in '08 to be spent on those activities, which will have either a payback later in '08 and going into '09 or will be involved in brand awareness, and as a result, there will not be specific direct customer acquisition in the current fiscal year.
Those issues as well as the exact headcount are things we'll continue to study over the next 60 days, and then we will come out with the full range of revenue and EPS guidance within the context of the Q4 call.
At this point--oh, the slides, by the way, I've been told they're available at the investor/events and webcasts link.
Okay.
On our investor website at j2 Global, the events and webcast link is where you can find the slides, if you don't already have them.
The remaining slides are the supplemental slides, which include our metrics rolling through now Q3 of 2007.
That is slide 17.
18, 19, and 20 are reconciliations of non-GAAP financial metrics to their nearest GAAP financial metric.
And then, we've included slide 21, which is just illustrative to show you the pattern of our corporate users and we call high volume web users.
And they're broken down into these two categories going back for four rolling quarters.
And what you will see is both the web high volume users and the credit sensitive users having this drop-off in usage from Q2 to Q3, but the non-credit sensitive corporate users continuing to show strong growth on a quarter-to-quarter basis in terms of their overall usage.
And at this time, we'd like to have the operator come back on and instruct parties in terms of how to queue for a call--for the questions.
Operator
Thank you.
(OPERATOR INSTRUCTIONS.) Our first question comes from the line of Daniel Ives with Friedman Billings Ramsey.
Daniel Ives - Analyst
Thank you.
A few questions.
First, so the credit sensitive customers, how--Scott and Hemi, how are you going about kind of digging into that and really trying to figure out the risk or opportunity going into the next quarter, but especially into '08?
Can you just walk us through that process, how you're kind of (inaudible) the customers?
Scott Turicchi - Co-President
Well, I'll ask--I think one is an analytical question and I think there's an operational aspect to it.
Let me start with the analytical.
In our corporate business where we've got direct billing relationships to the entity, to the business entity, we go through and we sort the customers and we put them in a variety of categories.
We've probably got 20-some of them that range from technology companies to manufacturing companies to what we deem the credit sensitive sector that I mentioned.
So we look at each of the types of customers, put them in their buckets, and then look at their behavior patterns in terms of pages of usage, whether it's inbound or outbound or combined, and then the aggregate statistics, which are indexed and shown in slide 21 in the presentation.
So it shows us that there's always going to be that element that will be usage based.
The question becomes is there a way to mitigate the impact as those credit sensitive customers go through positive or negative cycles.
And I think that our data and our analysis has led us to the conclusion that there--it may be desirable to push even more of our revenue into fixed.
Recognize though that if there's a reversal, you then trade off some of the upside, if and when the sectors rebound.
And so, I'll turn it over to Hemi to talk about some of the ideas of things we're currently contemplating doing in terms of how we might further shift the mix of revenue further in favor of our fixed.
Hemi Zucker - Co-President, COO
Hi, Daniel.
Nice having you again.
Daniel Ives - Analyst
Hemi.
Hemi Zucker - Co-President, COO
As you know, we went--we just completed a price change on the web channel.
The price change was basically pay us a little bit more and get more pages included.
Had we not done it, probably the impact now would be even larger.
But we did it only on our web customers, which some of them are mortgage, some of them are the smaller guys.
But for the corporate, especially in the segment of the SMBs, we have very low level of included pages.
And what we are going to do is through testing and through all the other tools that we have here at j2 change it so that we will have higher price points, but more pages included, and therefore reduce the sensitivity to those markets.
Also, because we are not sure, we have lowered our forecasts for Q4 and Q3 to basically freeze the situation [ASAP].
And even though it's kind of early, we do have our October numbers, and it seems to us that the usage is climbing up again, not to the highest level that we have seen, but much higher than we had growth Q3.
So all in all, this is one of the reasons that we were kind of taking more time to budget and we need a few more months to see what's really happening.
Because sometimes--an example, we had a customer that we wrote off, and then immediately they were acquired by another company and they came and turned all the numbers off again--on again.
So we're observing it.
But we believe that we will take some measures through the contracts and through our included pages and through other mechanisms of our system to lower our exposure to this usage.
Daniel Ives - Analyst
Okay.
And just a few other questions.
What was the revenue growth of the web versus SMB and enterprise in the quarter?
Hemi Zucker - Co-President, COO
The web channel was less sensitive to the credit market.
The web channel on the other hand, as I told you, went through the toughest part of its price change.
And we believe that from now on the web channel will become again the strongest channel and the leading.
We are lucky that our international corporate and our voice services had a tremendous quarter, so they aided us to come to 45,000.
Daniel Ives - Analyst
Okay.
And just what--is there anything on the buyback front?
I mean, I know you guys have had board meetings.
Is there any update in regards to the cash or strategy?
Scott Turicchi - Co-President
Yes, there actually is some update.
Obviously, the--we've continued to build cash, as Kathy mentioned.
We've continued buybacks through Q3 that have actually accelerated into Q4 and I believe will continue.
In terms of the current program that's in place, one of the things that we've been--that has I think been aided by the volatility in the credit sensitive sector is that we've seen quite a pick up in M&A activity over the last 60 days.
Now, these situations range from discussions to letters of intent to we think we may be close to signed purchase agreements.
So we've held off on dedicating the cash at this point to any specific buyback or dividend proposal, one, until we can see what is the landscape of how many of these M&A deals will come to fruition and over what timeframe.
Some of them continue to be small, like you've seen before, ala YAC.
Some of them though are much larger, meaning tens of millions of dollars could be deployed in a given single transaction.
So we want to see how those will play out.
That will probably take another 60 or 90 days to get further clarity on that.
Also, some of the transactions that we looked at three or four months ago have become less attractive with the volatility in the credit sensitive markets.
Certainly, that does not affect the ability of buying back our stock with cash on the balance sheet, which is something we are doing and will continue to do.
But in terms of introducing leverage to the equation, some of those are just--they're not unattractive, but they're certainly less attractive on a relative basis than they were.
So we'll continue to study those, watch the M&A situation, and see if that ends up accelerating in terms of the number of deals and the cash spent there, and continue to monitor.
Daniel Ives - Analyst
Just one last--one last one, then I'll hand it off.
[So really], I know it's initial, but when you look at the different channels - web, corporate SMB - can you maybe just sort of talk about what sort of growth rate you're expecting each of those implied in your overall revenue growth for '08, or can you get to that level of detail or just give us--?
Hemi Zucker - Co-President, COO
We never give the exact percentage, but I will say--.
Daniel Ives - Analyst
--Yes, but just more like--.
Hemi Zucker - Co-President, COO
--I will give you color.
I will give you color.
I already said that the voice services are growing more than double.
And I don't remember the exact number, but it's in the 120% range if we are budgeting it.
We believe that, again, the corporate--the international will be above and pulling up our average, our corporate will be slightly above our average, and our web will be the bottom.
Daniel Ives - Analyst
Okay.
Well, thanks, guys.
Scott Turicchi - Co-President
Thank you.
Hemi Zucker - Co-President, COO
Bye-bye.
Operator
Our next question comes from the line of Corey Tobin with William Blair and Company.
Corey Tobin - Analyst
Hi.
Good afternoon.
Scott Turicchi - Co-President
Hi.
Corey Tobin - Analyst
A couple of things I just wanted to clarify.
Your assumptions in terms of your guidance for Q4 on the more credit sensitive customers, as you call them, implies just sort of steady state from where they're currently at.
There's no further degradation on the other side, there's no improvement.
Is that correct?
Hemi Zucker - Co-President, COO
That's correct.
Scott Turicchi - Co-President
As Hemi pointed out, although it's on very limited data, there may be some improvement in some of those sectors, but we don't--we've not included that--or could say it's subsumed within our aggregate range.
Hemi Zucker - Co-President, COO
Yes.
We are (inaudible) for $1.25 million approximately for those type of customers.
Corey Tobin - Analyst
Okay.
Scott Turicchi - Co-President
And then, in addition to that, we have taken the $600,000 hit just in the sheer diminution in business days quarter-to-quarter sequential.
Corey Tobin - Analyst
Yes, got you.
And then, on the amount of the AR write-down that stemmed from the screw-up in the quarter, how much was that roughly?
Kathy Griggs - CFO
About $200,000 all total.
Corey Tobin - Analyst
That's going through--.
Kathy Griggs - CFO
--It was between a number of customers that were in mortgage--for instance, mortgage banking would be a good example.
Corey Tobin - Analyst
And is that for--just to be clear, is that for items that you've already recognized as impaired, so to speak?
Or is that also projecting for what you may need to take here in Q4?
Kathy Griggs - CFO
Those are impairments under bankruptcy.
Corey Tobin - Analyst
Okay, great.
And I'm assuming all of that's going through G&A, right?
Kathy Griggs - CFO
That's correct.
Scott Turicchi - Co-President
That is correct.
That's part of the reason why you see G&A as a percent of revs elevated in the quarter.
But that's almost half a point in G&A.
Corey Tobin - Analyst
Got you.
Okay.
Then shifting gears for a second, I think you had mentioned last quarter that given the dynamics of the price increase, which correct me if I'm wrong, that's complete at this point, right (inaudible)?
Hemi Zucker - Co-President, COO
We have very few [corner] cases of either customers that are into [annuals] and we missed them last time, or complicated customers that have one jConnect, one eFax, one free.
But we are--those that are not converted are in the one digit range.
Corey Tobin - Analyst
Got you, okay.
So on the rough metrics that we're able to back into, it shows that fixed ARPU was either flat to slightly down this quarter.
And I was under the impression that we might see that tick up given the impact of the price increase.
So the question is what happened to fixed ARPU this quarter, and a little bit of commentary as to why.
Scott Turicchi - Co-President
Okay.
Remember you've got, in terms of fixed ARPU, the web pushing it up, but then you've got corporate, which had a good quarter, pushing it down, and you also have voice services pushing it down.
So those two, which were material contributors in terms of net DID adds for the quarter, bias both your fixed and your total ARPU down.
Corey Tobin - Analyst
Okay.
And then, just to follow up on that--.
Scott Turicchi - Co-President
--That's just the fixed ARPU.
The variable ARPU, which is where most of the degradation in aggregate ARPU came from, which is usage based, is all corporate and a little slice of the individual web channels, called [paid user], which are really businesses.
It just so happens they pay vis--vis credit card.
They are handled through our web channel, but they're really businesses.
That's where the variable component comes from.
Corey Tobin - Analyst
Got it, okay.
And then, just sort of carrying through, one last one on the ARPU side, if I could.
Given the moving product here, given that you expect the lowest fixed ARPU pieces to contribute more next year from a growth standpoint, and given these dynamics we're seeing, can you just give us a feeling directionally what sort of ARPU assumption do you have implied in your 2008 guidance?
Scott Turicchi - Co-President
I don't think we're quite ready, because some of those things are still moving around.
I mean, I think that given what Hemi said, you will probably see a biasing down in the ARPU, the aggregate reported per DID ARPU, given the contribution mixes.
But some of those things are still moving around.
So, no, I don't think we're quite yet ready to report that.
Hemi Zucker - Co-President, COO
If I was doing what you're trying to do, I'd say that if it will go down, it will be in a modest way, plus we have growing business in Europe that has currency issues that aid us.
So it's a push with maybe a small shaving down, but insignificant.
And if our price change will be successful with the voice services, probably will climb again.
And if we would become less competitive or less crazy on going on these last corporations that come with big volume of DID, but lower price, might even keep it.
So it's really a toss up.
Corey Tobin - Analyst
Okay.
And then, finally, just shifting gears for a second.
I think the churn came in a little bit higher sequentially and a little bit above the range you've talked about in the past.
Any additional color there would be great.
Thanks.
Scott Turicchi - Co-President
Sure.
I mean, you have the--as we talked about before, you had a deceleration of the price change in Q2 and a reacceleration in Q3.
And as a result, the 2.8 million in Q2 should not be taken as a low watermark for the price change, because it really continues through Q3, and ends up with a level very similar to where we were in Q1.
So we thought it was within the range given the reacceleration of the price change.
And although it was not large in number, there were some DIDs lost in the credit sensitive area.
As Kathy mentioned, those that went bankrupt, basically those DIDs were deemed cancelled.
Corey Tobin - Analyst
So going forward is three still what we should think of as the high and it should trend down from here or--?
Scott Turicchi - Co-President
--I think it should come down.
I think that, as we said before, the range should be now between 2.5 and 2.75% per month for the aggregate amount of DIDs.
We should be seeing much less cancels from the price change, particularly as we enter the last couple of months of the year here.
Corey Tobin - Analyst
Thank you.
Hemi Zucker - Co-President, COO
You're welcome.
Operator
Our next question comes from the line of Shyam Patil with Raymond James.
Lawrence Shada - Analyst
Good evening.
This is [Lawrence Shada] filling in for Shyam Patil.
Your voice services business seemed pretty strong in '07.
I guess my question was does 2008 guidance assume similar growth or did you say double the growth?
Hemi Zucker - Co-President, COO
Yes.
Hi, Lawrence.
We assume more than 100% growth in 2008 in the voice services.
And as you see, we are growing very fast, almost 10% every month.
Lawrence Shada - Analyst
All right.
What kind of gross margin and operating margin expansion do you expect in '08, if any?
And what would be the drivers for that?
Hemi Zucker - Co-President, COO
We expect no changes on the gross margin.
The drivers of our--we are working and it's around 80% when the cost--our telecom costs, they shouldn't change dramatically.
Our credit card processing costs, they have a slight negative change because of the credit card companies are using their power there.
And we had a little growth in our cost of customer support as we get more (inaudible).
And then, the other item there is depreciation.
So I think if you want to assume that we'll keep it with every quarter playing up and down slightly, you're safe.
Lawrence Shada - Analyst
All right.
And operating margins?
Is that expected to expand at all?
Scott Turicchi - Co-President
In '08.
Hemi Zucker - Co-President, COO
Yes.
Scott Turicchi - Co-President
Well, I think the question there, and that's why this is a budget that's still a work in process, really goes to the comment that I made about the marketing spend and probably a few heads in terms of whether--how much of that ultimately flows through the budget and is in versus out.
I'd say right now, given that we're sort of at an equal rate of growth in the bottom line and the top line, you should assume a stable margin level.
Looking at a four-quarter rolling average, not a stock quarterly average.
However, as we said before, that may and probably will quarter to quarter accordion within a two to three point band, in large part depending upon how much money we spend in marketing and how we distribute that money over the four quarters and for what purposes.
For example, when we start spending more money to acquire free customers, that will hurt the margin in the quarter in which we spend the money, as that gets all expensed.
But the advertising revenue and the conversion revenue comes one to four quarters later.
To the extent we start spending more money more quickly on the branding of eVoice and Onebox Receptionist, while some of that is targeted to gain customers, there's also a piece of that is designed really to build the brand, much like what occurred with eFax going back in history seven, eight years ago, much like we're doing with the eFax brand in Europe today.
So those are kind of questions that we continue to go back and forth on as far as the budgeting process, but even once the budget is locked, we have monthly and quarterly discussions in terms of how much of the aggregate marketing dollars get spent in the various categories.
Some of them, because they bring in customers, can aid the margin.
Some of those, if they're designed for other purposes, may hurt the margin in that quarter.
But in the aggregate right now, including spending several million dollars in these areas to build some of the brand, we're looking at margins that are stable.
Lawrence Shada - Analyst
All right.
And what are your expectations for net adds in '08?
Can you give us some color on that?
Hemi Zucker - Co-President, COO
No, I think not yet.
I'll give you only one clue, (inaudible).
I tell you something, I don't tell you [alone].
It will be faster than our revenue growth.
Lawrence Shada - Analyst
All right.
That's helpful.
And this last question--.
Scott Turicchi - Co-President
--I mean, to give you a highlight, obviously in the quarter that just ended, we're starting to get back to that 50,000 net DID contribution across all the brands and channels.
We still have obviously some wind in our face in Q3 from some of the cancels and the price change that was noted in the cancel rate from the previous question.
But I think you could use that as a ballpark number, something that we see ourselves coming back into that range.
But once again, we're going to square up some of these numbers and tighten them up.
And I think when we do the Q4 call we'll be able to tell you if 50--obviously, 50 a quarter would be 200,000.
It's going to be plus or minus that by some delta.
Lawrence Shada - Analyst
All right.
And a last question here.
How many enterprises do you--did you have in the quarter, and how many new enterprises does the 2008 guidance assume?
Hemi Zucker - Co-President, COO
Okay.
We don't even know.
Even if I wanted to tell you, I couldn't.
But--.
Scott Turicchi - Co-President
--3.25.
Hemi Zucker - Co-President, COO
We are 3.25.
Scott Turicchi - Co-President
And we've been averaging 2 to 3.
I'd say we've been averaging 2.5 a quarter.
A couple of years ago it was 2.25.
Now I'd say it's about 2.5 a quarter.
So you can assume between 10 and 12 there.
Lawrence Shada - Analyst
All right.
Thank you.
Hemi Zucker - Co-President, COO
Okay.
Bye-bye.
Operator
Our next question comes from the line of Ray Archibald with Kaufman Brothers.
Ray Archibald - Analyst
Thank you.
I apologize if you've answered some of these questions before, but I got cut off.
One is on the voice services.
Can you give us an update in terms of what the penetration is?
And can we assume that--again that it's been largely sort of selling into the installed base?
And then, as a follow up, when do we start to see more of an internal focus on the marketing of the voice services?
Hemi Zucker - Co-President, COO
Okay.
Hi, Ray.
How are you?
Ray Archibald - Analyst
Good.
Thanks.
Hemi Zucker - Co-President, COO
We--in case you missed it, we said that it's now 7.5% of our base.
This is for October.
And it's 75,000-plus extensions.
And we said that we are seeing good success in selling to our existing base, but we are also doing very successfully in radio and search and other online activity.
We also mentioned, if you missed it, that we are selling (inaudible), but are very pleased to see that especially with our--one of our products that's called eVoice Receptionist, when we launch new websites with all the know-how that we have, we have seen a ramping up of people that come and buy it online without the need for human touch.
Ray Archibald - Analyst
Okay.
And then, also, I think, Hemi, I thought I heard you talk to some price changes related to the voice services.
So--.
Hemi Zucker - Co-President, COO
--You did.
I said that (inaudible).
We started by--with Onebox.
Onebox is the company we acquired several years ago.
Ray Archibald - Analyst
Right.
Hemi Zucker - Co-President, COO
(Inaudible), make them profitable, and then say, okay, you have a lot of stuff here.
Let's find something that is a winner.
The winner was virtual PBX, or more specific, virtual receptionist.
And then, we said, okay, let's launch another product, which we call eVoice Receptionist, which has less features, more simple, a little bit less costly, more simple.
In that product we invested also a lot of work on building [pay to site], meaning that people can just buy it without calling us.
And we started at low prices to penetrate.
We believe that the success there is so strong while the Onebox is selling for much more and doesn't give us more.
And we are now going to test and increase the price on the eVoice Receptionist to bring it closer to the levels of the Onebox Receptionist (inaudible) other brand.
And therefore, we believe that we are just giving it too fast, too cheap in the eVoice Receptionist and we are probably in the next few days, maybe they already started, with price--$5 more a month or $10 more a month.
And then, we'll see what the winner is.
Ray Archibald - Analyst
And can we assume that you've already tested these price points and that's why you still remain confident in the voice services doubling in 2008?
Hemi Zucker - Co-President, COO
No.
The way--the confidence level comes from the fact that we have another brand that doesn't give so much more and it sells for much more money.
Therefore, we believe that because what we sell is very similar, we can command a higher price.
Ray Archibald - Analyst
Okay.
Scott Turicchi - Co-President
And I think the confidence in the '08 number comes from what you've seen the last couple of quarters in terms of the--our own rate of growth, both leveraging the internal cross selling and now starting to move more into the external marketing.
But also, what we sense, and it's probably the right word, in the overall space of virtual PBX, as we've talked about before, there's 16 or 17 other companies that we've identified - I believe they're all private - who either in whole or in part sell a virtual receptionist or PBX-like service.
And although that data they don't report, there's a sense in some conversation of the data we've gleaned that the whole marketplace is growing at a very healthy rate, whether that's high double-digits or triple-digits on an annual basis.
Ray Archibald - Analyst
Yes.
Scott Turicchi - Co-President
So I think there's becoming a very--there's an adoption of this service--more (inaudible) understood and accepted.
Hemi Zucker - Co-President, COO
Yes, Scott is correct.
Plus, look, we are giving a fax line that is being rang several times a day with several pages for $16.95.
The phone line that we give has much more capability.
Why sell it at $12?
It's a two-way line.
It's always up.
It's--it gives you much more power and it has a lot of tricks that no regular PBX can do.
As a matter of fact, we are now testing with a very large retailer in the U.S.
that has almost 1,000 shops.
And they are testing with I think like 10 or 20 shops to just yank out the PBX and bring ours in.
This is not in our focus, but it's something that--it's an ongoing test for the last month or two.
And so far, it looks very good.
It's saved them tons of money.
Instead of having this floating maintenance guy that had to go from shop to shop and deal with employees that got confused with the technical challenge, they have one point--he goes on the website and he changes lines and moves on.
So our forecasts do not even include this segment of the market, of retailers that have distributed--that have four lines in each business.
Ray Archibald - Analyst
Right.
Very good.
Thank you.
Operator
Our next question comes from the line of Youssef Squali with Jefferies & Company.
Heidi Reindale - Analyst
Hi, thanks.
This is [Heidi Reindale] for Youssef.
You mentioned the price change that you're planning in the corporate channel.
Can you just talk a little bit about it?
Has it started already?
How is that going to be rolled out?
And what kind of an impact do you expect to see on the fixed ARPU?
Scott Turicchi - Co-President
Hi, Heidi.
It's Scott.
I think that the--in the corporate channel what we're talking about is not so much a price increase as a change or evolution in the packages that really the goal is to shift more revenue into fixed versus variable, not so much raise prices.
That segment of the business today, in general, has an ARPU per DID that's roughly 50/50.
50% is fixed, 50% is variable.
So the goal there is to try to make that more fixed than variable.
Heidi Reindale - Analyst
So you haven't started rolling it out yet?
Scott Turicchi - Co-President
No.
Heidi Reindale - Analyst
And is that planned for Q4 or is that a 2008 initiative?
Hemi Zucker - Co-President, COO
It's something that we'll analyze and test in 2008, but roll-in--in '07, sorry.
But we'll roll-in in '08.
Heidi Reindale - Analyst
Okay, great.
And then, you mentioned the $50 subscriber acquisition cost in Europe.
Could you just help us compare that to what you're seeing in the U.S.?
Scott Turicchi - Co-President
It's very similar on the margin.
The difference is that in the United States, we get almost an equal number of customers that come direct to site resulting in an average SAC cost of 25.
Whereas in Europe, because there's a much lesser direct to website, you're average in your marginal SAC cost almost converged.
Heidi Reindale - Analyst
Got it.
Great.
Scott Turicchi - Co-President
But in terms of the aggregate spend, to be able to get customers in a market--actually, it's marketplaces, because it's really not just European spend, it's by country.
To be able to get numbers--or customers at $50 where the brand is not as well known and you don't have the aid of (inaudible) paid model and direct to website, we think is actually excellent.
Heidi Reindale - Analyst
Great.
So lastly, just a housekeeping item.
Could you talk about licensing and advertising revenues in the quarter?
Scott Turicchi - Co-President
Yes.
They were up quarter to quarter about 300,000 combined with licensing doing better, advertising a little bit weaker.
The aggregate was up 300,000.
But licensing had a good quarter, advertising a slightly weak quarter.
Those two probably normalize in Q4, meaning that the aggregate will probably come in a little bit from the Q3 number, which I believe was 1.7 million.
It will probably come down a little bit in Q4.
Heidi Reindale - Analyst
Great.
Thank you.
Operator
Our next question comes from the line of Tavis McCourt with Morgan Keegan.
Tavis McCourt - Analyst
Hi.
Just a couple of follow ups.
The--on the cash flow statement, the 6 or 7 million for business acquisition, was that all YAC?
Scott Turicchi - Co-President
Yes.
Tavis McCourt - Analyst
And I suspect it was minimal revenue contribution in the quarter.
Was there any material accretion or dilution on the bottom line from that?
Scott Turicchi - Co-President
No.
No, in fact, if anything, it was probably a push on the bottom line.
It was not accretive or dilutive, but it penalized our operating margin.
And part of that is due to the purchase price accounting and the amortization of the intangibles.
Tavis McCourt - Analyst
Right.
And then, remind us how you calculate churn?
At what point is a customer counted as churn after they--?
Scott Turicchi - Co-President
There's two pieces to it.
For the corporate customers--remember, it's all DID based.
So it has to do with the behavior of the DID, not the account.
Tavis McCourt - Analyst
Right.
Scott Turicchi - Co-President
So in the corporate piece, the DID, if they cancel at any moment in time upon sign up, it is deemed a cancel.
So if you signed up today for 100 DIDs and by the end of the month you cancelled 10, there'd be 100 gross sign up, there'd be 10 cancels within that account.
In the credit card based area, or the individual channel, customers are not computed within the churn calculation until they're at least 120 days old.
And that means they've made it through two billing cycles on their credit card.
Hemi Zucker - Co-President, COO
And the reason is because many of them get the first month free.
Tavis McCourt - Analyst
Right.
Hemi Zucker - Co-President, COO
And by the time we see the first payment they are 60 days into the service.
And that's the reason.
Tavis McCourt - Analyst
Okay.
And then, the receivables were up pretty sharply sequentially.
Was that all related to YAC or was there something else going on there?
Kathy Griggs - CFO
No.
Most of the receivables are in line with our corporate customers quarter over quarter.
There's not going to be much else in there except for that.
Tavis McCourt - Analyst
Okay.
Kathy Griggs - CFO
You have some--you will have some outstanding--you will have outstanding--one of the calculations is the outstanding cash obviously at the end of the quarter.
So that's a component of it as well.
And we had probably three or four days of outstanding cash on the web customers as well.
Tavis McCourt - Analyst
Okay.
Kathy Griggs - CFO
But you will see that fluctuate based on the days in the quarter--quarter over quarter.
So--.
Hemi Zucker - Co-President, COO
--It's complex because they have credit cards if the months end in the 31st or the 30th of the--if the quarter lasts 30--.
Scott Turicchi - Co-President
--Which it was this quarter--.
Hemi Zucker - Co-President, COO
--Then it's higher versus (inaudible) 31st.
Tavis McCourt - Analyst
Got you.
And then, a couple of follow ups.
On the voice business, what is the--is your CPGA for the voice business right now higher or lower than it is for the eFax business?
Hemi Zucker - Co-President, COO
CPGA?
Tavis McCourt - Analyst
I'm sorry.
They call that--the SAC.
Scott Turicchi - Co-President
It's our SAC cost.
Hemi Zucker - Co-President, COO
They are higher from the standpoint of advertising, but they are blended down (inaudible) as we go up to our--.
Scott Turicchi - Co-President
--The internal--.
Hemi Zucker - Co-President, COO
--Internal base.
But all in all, we allow our marketing guys to spend more money on those customers because we are building our brands and a (inaudible) better [team] and strategic as well.
Tavis McCourt - Analyst
And with 75,000 customers, I would imagine you guys have a big enough base now to have a full understanding of kind of support costs.
Are those kind of what you expected when you kind of got more--?
Hemi Zucker - Co-President, COO
--Yes.
The margins are very similar to the margins that we are seeing in the fax business, which we are very happy.
Honestly, at the beginning we were not sure.
While you have more complexity, each customer represents four or five, six, seven lines.
So they are not calling all of those lines.
One guy calls all of them.
Tavis McCourt - Analyst
Yes.
And then, the $12 number, Hemi, you referenced for the ARPU on the voice products, was that just for eVoice Receptionist or is that the blended ARPU--?
Hemi Zucker - Co-President, COO
--It's a blend of eVoice Receptionist and Onebox Receptionist, Onebox Unified Messaging, which is one--.
Scott Turicchi - Co-President
--eVoice.
Hemi Zucker - Co-President, COO
eVoice, which is pulling it down.
Scott Turicchi - Co-President
It's all voice services.
Hemi Zucker - Co-President, COO
Yes.
Tavis McCourt - Analyst
Fine.
And that price increase you talked about was on the--was specifically for eVoice Receptionist?
Hemi Zucker - Co-President, COO
Yes.
It was Receptionist.
It's the fastest growing part there.
Tavis McCourt - Analyst
All right.
Hemi Zucker - Co-President, COO
And it's growing because it's not expensive and it has good web tools.
And we believe that we are giving it away too fast, too cheap.
Tavis McCourt - Analyst
And what is the--and is that price point coincidentally also $12?
Hemi Zucker - Co-President, COO
No.
The $12--once again, maybe--.
Scott Turicchi - Co-President
--That's close.
Hemi Zucker - Co-President, COO
You're right.
Yes, it's close.
Close.
Yes.
Tavis McCourt - Analyst
Okay.
Scott Turicchi - Co-President
It was--once again, remember, on a DID basis, it's a lot of it depends on how many DIDs are taken in the package.
But if you take what has been the--at least the history to date, the answer's going to be pretty close to $12.
Tavis McCourt - Analyst
Yes.
Scott Turicchi - Co-President
If you take all of the DIDs, it will actually be a little lower.
It could be closer to 10.
Tavis McCourt.
All right.
And that's where you're testing either $5 to $10--.
Hemi Zucker - Co-President, COO
--Yes--.
Tavis McCourt - Analyst
--It's per DID.
Hemi Zucker - Co-President, COO
Yes.
Tavis McCourt - Analyst
Great.
Thanks a lot.
Hemi Zucker - Co-President, COO
Sorry.
Not per DID, per account.
Scott Turicchi - Co-President
Per account.
Operator
Our next question comes from the line of Corey Tobin with William Blair and Company.
Corey Tobin - Analyst
Two very quick follow ups, if I could, please.
You gave the percentage of--the percentage of DIDs that come from the voice services.
Any chance we can get some granularity as to what percentage of DIDs come from either corporate or the international side?
Scott Turicchi - Co-President
Yes.
Rough orders of magnitude, you've got about corporate from SMB to enterprise is, call it, roughly 25%, excluding the paid users, and if you include them it's about 30.
And the international DIDs are going to be about 12, 13%.
Corey Tobin - Analyst
12 to 13%.
Scott Turicchi - Co-President
Yes.
There's going to be a little bit of overlap because you have some corporate DIDs that are also international.
But it's a very small overlap.
Corey Tobin - Analyst
So 12 to 13% total DIDs are international, and then--.
Scott Turicchi - Co-President
--Yes--.
Corey Tobin - Analyst
--Scott, (inaudible) 25% of all DIDs are corporate.
That's right?
Scott Turicchi - Co-President
Yes.
But the paid user I deem as corporate, so it's really closer to 30, if you include that group.
Corey Tobin - Analyst
Okay.
Scott Turicchi - Co-President
And then, you've got the voice services and then what's left is going to be basically domestic fax brands.
Corey Tobin - Analyst
Great.
Okay.
And then, finally one question--.
Scott Turicchi - Co-President
--And that's individual fax brands.
Corey Tobin - Analyst
Understood.
Thank you.
And then, finally, on the 1 million to 1.25 million revenue impact that you mentioned, is that a year-over-year number or a quarter-over-quarter number?
Hemi Zucker - Co-President, COO
Per quarter.
Scott Turicchi - Co-President
Well, no, no, no.
The 1 million is an actual number quarter to quarter.
Kathy Griggs - CFO
Right.
Scott Turicchi - Co-President
Q2 to Q3 impact that we observe.
So it was a degradation in the usage of those customers by a little over 1 million.
Now, under normal circumstances, we would have expected that to have grown.
And I'll have to get you what the year-over-year impact was.
I don't recall off the top of my head.
Corey Tobin - Analyst
But I guess we could assume--I mean, I guess I should say--phrase it this way.
Is it safe to assume that the year-over-year effect will be larger than that, given some trends we've seen in variable usage in the last couple quarters?
Kathy Griggs - CFO
Yes.
Scott Turicchi - Co-President
I want to say it was 1.4 million, but I've got to look at something.
Yes.
It looks like 1.4 million.
Corey Tobin - Analyst
Year-over-year?
Scott Turicchi - Co-President
Correct.
Corey Tobin - Analyst
Great.
Thank you.
Scott Turicchi - Co-President
We have two questions that have come by email we want to address before we take anymore live questions.
One of them has to do with something we've talked about in the past.
In fact, it is on our product roadmap, which is the delivery of voice messages as text.
Some call--people call it voice transcription or voice-to-text.
And I want Hemi to give an update in terms of where we're at because we've been doing some testing with a variety of providers, so that we can deliver that service to our customers.
Hemi Zucker - Co-President, COO
Excellent question.
And we are talking with three or maybe even four vendors that are out there.
And they are different from each other in mostly quality and price.
Those that have high quality using human intervention, meaning they have a machine that tries to pick up on the voice and translate it, and then on top of it, it goes to human beings that are listening and trying to pick up the rest.
And then, you get a text that is accurate, but pricey.
On the lower end are those that say no human intervention, and they just do the best they can do with the machines in the system, and therefore deliver in some cases messages that are good enough or sometimes not good enough.
We believe - and this is a personal belief that I have - that over time like OCR--this is OCR-to-voice--over time, you can get much more higher quality for less price.
And then, all of those companies that are basically in our mind just an application being ready to be launched into companies like us or carriers that actually deliver traffic or voice.
So companies that command big traffic, big voice traffic, can use this service to convert the voice to text.
So basically, we believe that it's a nice application.
We are testing and probably will deliver something soon.
We would like to see the technology get better and less expensive, so we can give it and play the game that we are very comfortable with, which is give it free and then upgrade.
But my product guys are working--our product guys are working on it.
And I believe that we will launch a premium service to some of our customers that are on the receptionist side or the voice services soon for a price.
And hopefully, over time we will be able to get better technologies, less expensive, and get more out of it.
And I hope I covered the topic (inaudible).
Scott Turicchi - Co-President
The other--another question that's come by email has to do with targeting the mobile sales force market for the Onebox product, and whether that's a priority for us or not.
Hemi Zucker - Co-President, COO
We do serve and we know that our Onebox has a lot of attraction with mobile sales people, because those are the type of guys that need--first of all, every call they get is important for them.
And secondly, they have office and mobile phones, which is a perfect home run for the Receptionist.
We've seen many times and in many cases that customers take an office number, a home number, and a mobile number.
Are we 100% sure who is a salesman?
No.
But we know that sales people are--first of all, have the budget to support it, because those calls are business for them.
Secondly, usually they are those guys that are equipped with the PBX that basically can enjoy the full fledge of our services, including the fact they are on the run and move their call from home to mobile, and then again, and then get the voice and then transfer.
So we believe those are our core customers.
But we are not focusing on them.
We are focusing on everybody who wants a virtual PBX.
Scott Turicchi - Co-President
And one clarification that came also by email.
Hemi was mentioning if prices go up for Receptionist between $5 and $10 per account, the implication is between $1 and $2 per DID or extension, because the raise would be on the total account, then that would be divided by the number of DID/extensions that that customer [takes].
Hemi Zucker - Co-President, COO
I'd say $2 to $3, but--.
Scott Turicchi - Co-President
Are there anymore live questions?
Operator
We have a question from the line of Ray Archibald--.
Scott Turicchi - Co-President
--All right--.
Operator
--With Kaufman Brothers.
Scott Turicchi - Co-President
Okay.
Hemi Zucker - Co-President, COO
Ray.
Ray Archibald - Analyst
Thank you.
Just to follow up, I want to see if I understand sort of the assumptions in the guidance.
So you said that about 14 million of annual revenues are credit sensitive, about half of that is variable.
And it sounds like in your guidance you're assuming about 4 to 5 million of that goes away.
Is that--?
Scott Turicchi - Co-President
--No.
What I'm saying is that we're keeping it at the level that it is right now.
If you had gone back to Q2 and Q3 had not happened, it would have implied 4 to 5 million more revenue in '08.
Ray Archibald - Analyst
Okay.
Scott Turicchi - Co-President
If (inaudible) came down, we're keeping at this level.
We don't know if this is the low watermark, and that is a--we think it's a conservative assumption to carry this all the way through the end of '08.
Ray Archibald - Analyst
Okay.
Scott Turicchi - Co-President
We're also not in the game of trying to predict when credit sensitive markets are going to rebound.
Ray Archibald - Analyst
All right.
Understood.
And then, other than that, were there any other meaningful adjustments in terms of your--if you will, your macro outlook in the business?
Scott Turicchi - Co-President
No.
Ray Archibald - Analyst
Okay.
Scott Turicchi - Co-President
No.
Ray Archibald - Analyst
All right.
Very good.
Thank you.
Scott Turicchi - Co-President
All right.
Hemi Zucker - Co-President, COO
Bye, Ray.
Operator
Seeing that there are no further questions, I'd like to turn the call back to Management for any concluding remarks.
Scott Turicchi - Co-President
All right.
Well, we thank you all for joining us for this Q3 call.
You may have seen a release that went out last week.
We will be presenting at the UBS Conference next week in New York on November 15, and you can see our website for the exact time of that call, which will be webcast.
And then, we look forward to speaking to you on the Q4 conference call, which has yet to be scheduled, but likely to be the first week of February, where we'll obviously review the Q4 results and provide the full-fledged 2008 guidance and also give an update on the (inaudible).
Thank you.
Operator
Ladies and gentlemen, this concludes today's teleconference.
Thank you for your participation.