Ziff Davis Inc (ZD) 2011 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the j2 Global third-quarter conference call.

It is my pleasure to introduce your host, Mr.

Scott Turicchi, President of j2 Global Communications.

Thank you, Mr.

Turicchi, you may begin.

Thank you.

Good afternoon and welcome to j2 Global's investor conference call for fiscal Q3 2011.

As the operator just mentioned, I'm Scott Turicchi, the Company's President, and with me today is Hemi Zucker, our Chief Executive Officer, and Kathy, Griggs, our Chief Financial Officers.

On this call we will be discussing the Q3 financial results, provide an update on our operations and acquisition integrations, as well as an outlook for the remainder of the year.

Based on both the 3 and 9-month results, we have increased the dividend, which was initiated last quarter, to $0.205 per share, payable in November.

We will use this presentation as a roadmap for today's call.

A copy of the presentation is available at our website.

When you launch the webcast there is a button on the viewer on the right-hand side, which will all you to expand the slides so they're more easily visible.

If you've not received a copy of the press release you may access it through our corporate website at j2global.com\press.

In addition, you'll be able to access the webcast from this site.

After completing the formal presentation we will conduct a Q&A session.

The operator will instruct at that time regarding the procedures for asking a question.

I remind you that you may any time e-mail questions to investor@j2global.com.

Before we get begin our prepared remarks, I will read the Safe Harbor language.

As you know 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 slide show for the webcast.

We refer you to discussions in those documents regarding Safe Harbor language, as well as forward-looking statements.

I would now ask you to turn to slide 5 and I'll turn the presentation over to Kathy, who will review the third-quarter financial results.

Thank you, Scott.

Good afternoon, ladies and gentlemen.

Please refer to slide 5 of the presentation for a recap of our Q3 GAAP and non-GAAP operating results.

For Q3 2011 we achieved record quarterly revenues of $86 million, up from Q2 and 37% higher than the year-ago quarter.

Our quarterly fixed subscription revenue grew at an even higher rate of 40% versus the year-ago quarter of $70.4 million.

We are happy that Q3 revenues increased and this is despite an anticipated decrease in revenue from two sources.

First, we elected to discontinue doing business with some borderline profitable Venali customers by allowing their contracts to lapse.

Second, as we stated earlier this year our immaterial broadcast fax business has continued as planned to decline as we are no longer pursuing the broadcast fax service.

Combined, these two had $681,000 of lower revenue in Q3 than Q2, almost all of which is variable revenue.

Q3 2011 revenues also grew despite a $150,000 adverse effect of foreign exchange rates due to the strengthening of the US dollar versus the European currencies.

Most importantly, our quarterly fixed subscription revenues continued to grow, increasing by more than $1.1 million and 1.7% compared to Q2 2011 and more than $23 million and 40% compared to Q3 2010.

At the end of Q3 2011 our paid DID count was 7,000 DIDs shy of 2 million growing by nearly 33,000 DIDs in the quarter.

Our voice brands and corporate fax brands were the biggest DID gainers for the quarter.

Our cancel rate for the quarter was 2.5%, remaining near historic lows and a Q3 record.

ARPU decreased slightly to $13.27 per DID for the quarter versus $13.49 last quarter, mostly due to lesser variable revenue experienced from the departed Venali and broadcast fax customers.

On a non-GAAP basis our earnings quarter were $30 million, an increase of 38% from Q3 2010.

Non-GAAP gross and operating margins were 82.9% and 45.2% respectively.

GAAP net earnings for the quarter were $25.5 million.

Our operating earnings increased to $36.4 million compared to $27.2 million in the same quarter last year.

Gross and operating margins were 82.6% and 42.4% respectively.

In Q3 we achieved non-GAAP EPS of $0.64 per diluted share, up 36.2% from $0.47 per diluted share in Q3 2010, while GAAP EPS for this quarter was $0.54 per share, up 25.6% from the year-ago quarter.

Free cash flow for Q3 2011 was $37.2 million and for the 9 months ended September 30, 2011 reached a new 9-month record of $117 million.

This is a quarterly increase of 40% and a 9-month increase of 35% compared to same period last year.

Our cash and investment balances totaled $194 million as of September 30th.

As mentioned on the call last quarter, we increased our marketing investments in Q3 and are seeing significant success are continuing to new to invest in our cross-selling initiatives.

Hemi will provide more information on our cross-selling program during his part of the presentation.

For Q3 2011 we incurred $2.5 million in non-cash amortization expense on intangible assets of acquired companies.

For the remainder of 2011 we expect to incur an additional $2 million to $3 million in non-cash amortization expense on intangible assets.

We expect the full-year effect of this to be between $0.15 and $0.17 per diluted share.

Our estimated GAAP tax rate -- effective tax rate for the 3 and 9-month periods ended September 30, 2011 was 30.6% and 13.1% respectively.

Let me remind you that we have released over $15 million in FIN 48 reserves this year, which are driving the low GAAP effective tax rate.

We do expect our normalized effective tax rate to be between 25% and 27% for the balance of 2011.

In conclusion, let me remind you that the supplemental schedules at the end of presentation will provide you with more permission on our metrics, as well as the GAAP to non-GAAP reconciliation schedule for all financial measures included in our remarks.

Now I'll turn the call to Hemi, who will provide you with a recap of the quarter and additional 2011 overview.

Thank you, Kathy, and good afternoon, everybody.

I don't know if you have a chance to look in our press release.

In my quote I mentioned three things that are most exciting to me.

The first one is the healthy growth in our fixed subscriber revenue.

The second one is that our integration are progressing very well.

And the third one that our cross-selling upselling initiatives are exceeding our expectations.

Let's turn into page 7 when I talk about those things.

Our Q3 success drivers were, first of all we have added 33 net DIDs this quarter versus 31 only last quarter.

And these additional 33,000 DIDs correlates very well with the addition of $1.1 million into the fixed revenue.

Fixed revenue is extremely important to us for several reasons.

First of all, it sets up to the base.

Secondly, the margins on those fixed revenues are the highest.

And thirdly, they are not impacted by seasonality, so we take those things very importantly.

Second thing is the cancel rate.

Our cancel rate was 2.5%.

It's the best one ever we had on the Q3.

We never had a better one for Q3 and this is really important during this period when we are migrating so many customers and integrating.

Maintaining this 2.5% during this stormy period for our customers is an excellent achievement that we are very proud of.

The main contributor for our net DIDs were corporate and the voice services.

On the corporate side we have added 6 new large corporate contracts and corporate DIDs have contributed more than 50% of our 33,000 net adds.

The voice contributed 33,000, so 11,000 DIDs came from the voice.

Now, let's talk about our cross-sell results.

As you know, at the beginning of the year we started with this initiative, very important as we are having almost 2 million customers.

And the quarterly gross sales we are developing are developing metrics and we are following up on them.

This quarter was better by 21% better than the second quarter, so I don't think that we have reached our momentum.

There is still a lot of room to grow but we are very proud with the progress.

The program is resulted year-to-date 11,000 new DIDs.

And if you look into our net DIDs it counts for 12.5% of our net DIDs.

So 12.5% of our net DIDs came from cross and up-selling and it saved us at least $1.5 million.

Why am I saying it, please?

Because $1.5 million calculated at the average cost to get the customers.

Obviously when you get another 11,000 this should not be calculated at the average, but with the margin, of course, which therefore drive even higher savings.

We have also launched a j2.com -- www.j2.com, which is our cross-sell portal.

We are very excited about it.

We have 210,000 visits there, and 2.4 sign-ups.

I'll show you a moment how it looks.

And also, encouraged by the success of the web portal, we have added an enterprise one.

Go please to page 8.

Here in page 8 you can see the SMB portal that, as I said, brought something like 210,000 visits, 2.4 -- 2,400 new sign-ups.

And the 11,000 sign-ups do not include leads generate -- leads generation.

Leads are mostly those that we get when we are trying to sell the KeepItSafe, FuseMail or eFax corporate when the lead actually is followed up by a call or a meeting.

So we just launched this additional j2 portal for enterprise and we are very encouraged by this.

And as I said, the leads are not counted at the 11,000 sign-ups that we got.

Move on to page number 9.

Here we will talk about our expansion, integration and acquisition.

We continue with our city expansions.

We added 55 cities.

We have added some unique cities in China, Indonesia, Macau and Taiwan.

We are not going to add them for the 49 countries that we are counting because we added those only for the benefit of the Venali customers.

So we do have those cities but we don't inventory beyond the Venali but it's still exciting that we are exceeding those -- in those countries.

Let's continue to Japan.

Japan is, again, showing a very strong growth.

We are approaching 10,000 paying DIDs.

I hope that in our earnings call I will be able to announce it.

And also, if things continue the way they are we should be profitable next year in our Japanese activity.

We are planning to launch during this quarter -- the coming quarter an app for an iPhone and then followed by the Android.

As you know, the Japanese are very, very mobile intensive.

They commute and a mobile application there is even more important that in my -- I believe is more important than in the US.

We also have achieved an improvement in our organic search, this is extremely hard for us.

We're now the number one organic -- on the organic search if you search for Internet facts in Japan.

Move on to our acquisitions.

Venali, as I said and it was mentioned by Kathy, we have completed the integration.

All the customers now are on a long-term contract, something that we did not have with Venali.

The Venali contracts were terminated on a very short notice and some of the customers did not agree to go to a long-term contract and prices and terms that we deem profitable, we let them go.

It is done so whatever we have now it sits on a long-term contract.

KeepItSafe, we've completed the integration of Data Haven, and just recently last week, I believe, we closed on the other small acquisition of a company called C Infinity that will enhance the technical opportunity there.

My1Voice was the lead brand for Protus.

We just finished last week to migrate all those customers.

We rebrand them as eVoice because we don't think that My1Voice has such a strong brand.

We now have approximately 280,000 voice leads and as we will finish to reconcile them because we are counting them a little bit different and we prefer to count the ones we migrate to our system.

As we will count them, I believe, in the next few days I would be very happy to announce that j2 have reached 2 million customers and once we get there we'll be issuing a separate press release on that.

Buzz Networks we are planning -- the integration is underway.

And now very important, MyFax.

As you know MyFax has MyFax Corporate and MyFax Web -- MyFax is small business.

On the corporate side, we have decided to move the MyFax Corporate to eFax Corporate.

The reason is that eFax Corporate has much more and better and richer features in more countries and much more to offer for the customers.

We are planning to do that first.

Once we complete that we will have 550,000 corporate DIDs under the eFax Corporate.

We do have 550,000 now but some of MyFax and some of eFax.

They would be all eFax Corporate, which will be something like 29% of our total base on the corporate.

And then on the Web, we are going to migrate those, as well, and the benefit to the MyFax customers, they will stay with the MyFax brand, of course, which we are -- we believe is the second strongest brand out there.

They will get additional benefits, like search, like lifetime fax storage, additional countries, and we're taking the both of -- the best of both worlds.

Also the eFax customers get some of the benefit of MyFax.

For example, they have the ability to preview faxes and other neat features that MyFax brings into the eFax.

On the acquisition front, we have healthy M&A pipeline.

Our cash position now is again at the level of $200 million, which is almost as much as we paid for Protus as we acquired 11 months ago.

We have several bids in LOI stage and might close some of them before the next earnings call.

But I want to emphasize that our guidance does not include any additional revenue coming from M&A, just as I want to mention that.

As with that I will pass the call to Scott, who will talk with us about the guidance and the dividends.

Thank you, Hemi.

On slide 11 we are reaffirming the guidance that we increased last quarter in Q2.

Just to remind you, revenues for the full fiscal year are expected to be between $335 million and $345 million.

And non-GAAP EPS between $2.46 and $2.56 per share with the appropriate caveats that are listed on slide 11.

Now since we initiated the dividend in August we've had many new shareholders that I just like to remind -- so for some of you this will be a repeat and you've heard it before -- about Q4.

Although we don't give quarterly guidance I think there's a few things that are important to remember.

That our business on a sequential basis usually suffers on an organic basis from Q3 to Q4 for three reasons.

One, they are generally five fewer business days in Q4 than Q3.

Today, a business day is worth about $240,000 of revenue, so if we just freeze the business and it doesn't grow or shrink, we would expect that Q4 just on usage or variable-based revenue alone would be lighter by about $1.2 million.

Number two, it is traditional that once we hit Thanksgiving, the last five weeks of the year we pare down our marketing.

And the reason for that is since we do almost all of our marketing online and there are many retailers who come in for the holiday season, it is not cost effective to continue some of the programs during that last five weeks of the year, which can put some pressure on gross sign-ups.

And finally, it is also not uncommon for there to be a tick-up in the cancel rate as particularly larger business do, we call, DID cleanup, meaning they look through their inventory, they see if they have employees that have departed over the course of the year but not yet canceled the DIDs.

So all those things lead to generally -- if you look historically where Q4 revenue is, if there are no acquisitions, it is not uncommon to be less in revenue than Q3.

Although, as Hemi mentioned, we continue to pursue a number of acquisition opportunities and depending upon the timing of closing those deals and the size that would influence Q4 revenue.

Finally, the dividend, slide 12.

This is our second dividend now -- quarterly dividend.

It'll be paid to those who are shareholders of record as of November 14th.

The payment date will be November 28th.

We increased the dividend from $0.20 last quarter to $0.205.

This continues to represent approximately 30% of non-GAAP earnings, will bring us to a quarterly cash payment of about $10 million.

And once again, is not designed to impact either our operational activities or M&A activities.

And as Kathy mentioned, the slides following, 14, 15 and 16, are the metric supplemental information and various reconciliations of non-GAAP measurements to the nearest GAAP measurement.

At this time, I'd ask the operator to come back on to give you instructions to queue for questions.

(Operator Instructions).

Shyam Patil, Raymond James.

Around the churns that you talked about; 4Q you typically see a pickup in churn.

Have you already started to see that in the quarter, or is that something that you're citing from previous experience?

I'm citing previous experience, and usually is a December event.

We don't see anything yet.

In the past you've talked about using your free cash flow to expand into adjacent services areas.

Could you provide an update on where you are with that in terms of new areas where you haven't made an acquisition yet that you're thinking about?

How many of those areas do you currently think are possible?

Could you also talk about the IT backup space?

It seems like you have made a couple more acquisitions there.

Yes, we are looking into several spaces.

I mentioned last time that we are interested in looking into CRM; we are interested in looking into invoicing.

We believe that many of our customers, typical small businesses, will be interested in those and there are several players in the market.

We are actually looking into some other areas, but on those areas there very few players and therefore I cannot mention just to be cautious not to push up the price.

But the 2 areas that I mentioned, which are CRM and invoicing, there are many players so I'm more comfortable sharing with you.

On the online backup, this is something that we believe is going to be the strongest -- in percentage, of course -- grower for next year.

We have identified many opportunities.

We are going to go beyond Ireland and the UK, going to the US, going to Canada, and maybe even another English-speaking country like Australia.

On this space we are very excited.

We found our niche and it's extremely profitable for us and we are adding services to be more like a disaster recovery and all those other high-end services when you pay higher prices.

We identified many opportunities and it will be an aggressive grower for us next year.

Are you primarily looking at service that you can sell into your SMB base --

Yes.

-- or are there services you could also sell into your individual or even your corporate base?

Anything that we can sell to our existing base.

Now our base is approaching 2 million on the paid side and 10 million on the free.

We are very strong in driving free to paid.

We have done several times, so services that have a strong efficiency.

If I wanted to generalize it, it has to be something that is on the efficiency side for businesses.

When it correlates to the services, it's direct so we sell it directly to the end user, it's recurring revenue and it's sold online.

Mark Murphy, Piper Jaffray.

Hi, this is Benjamin sitting in for Mark.

Seems like corporate is growing nicely.

Is that mainly driven by voice again inside corporate or is it fax?

No, Benjamin, it is mostly the fax corporate.

We are replacing more and more fax servers.

We are also able to allow corporate customer distributed in more than 1 office to get our fax services.

The corporate is mostly fax and we have some sales only to corporate, which are related to (inaudible) services, like services of FuseMail but we do not count them.

For now the Company's counting actually only DIDs, even though the non-DID revenue is continuing to grow and we'll address it in a certain point.

Is it possible to give us a number in terms of what percentage of total revenue is the corporate segment?

It is something like 20% more.

Yes, low 20's, 21%, 22%.

I know you were trying in the public sector.

Wanted to see if you are seeing any steam in there in that vertical?

What do you mean public sector?

Can you --?

I think you mentioned the last quarter about getting into government.

Oh.

Yes, government.

Yes, we are continuing and we get sign-ups all the time.

None of them is huge enough for me to make it a main event, but we are always continuing into the government sector.

But we did not reach a breakthrough.

Once we reach a breakthrough and we have tens of thousands of those it will be another upside for j2.

The government still mostly relies on older technologies.

Mike Latimore, Northland Capital Markets.

Hi, this is Ryan McDonald for Mark.

I was just curious if you could give us a view of how the cancel rate may have been trending so far this quarter since October?

Last quarter we said that it was 2.4%, this quarter we say 2.5%.

2.5% is very strong for the third quarter.

Third quarter usually in the past was higher than second quarter.

So it's a record for us, it's very good, and it is especially good and encouraging because churn usually suffers when you move customers from system to system.

You change with them the name, we forced Venali customer to take contracts with us.

Despite all of this we were able to maintain low churn rates because of the excellent job that the employees here did in every customer account.

The churn rate that we are seeing now is very low.

I think the last 8, 9 years we never had 2.5% and we never had better than 2.5% in the third quarter.

Looking towards the beginning of fourth quarter here, has it been trending any certain direction?

No, it's the same for October as much as I can see and the numbers for October are still not reconciled.

As Scott mentioned it, in the past we have seen some softness in the end of the year.

Scott was trying to talk about where the guidance is so we are still very (inaudible) that we are going to meet the guidance -- just within the guidance.

Bullish.

Bullish, sorry.

Bullish, I'm sorry, it's my English.

But we are very confident that we will fall within the guidance.

Scott was just trying because we have lot of new cust -- new (inaudible) dividend, we have a lot of new shareholders, we're trying to guide them that usually Q4 for us is a lower quarter.

As you know, we already have $250 million -- over $255 million revenue and it's going to be easy to get within the range of the guidance.

Do you have an idea of what the organic growth rate for revenue was in this quarter?

The vast majority was organic.

I don't know exactly but I'd say more than two-thirds.

Daniel Ives, FBR.

Can you talk about the success in corporate?

Is this something that you think could continue to increase going to next year?

And where are you thinking dynamics driving this success in corporate?

Our corporate sales I do see the numbers on the quarterly, they are continuing to grow.

We have more and more success there.

As you know, we eliminated Venali as the low-end bidder and now all their customers that are coming are much more matured about what they want and we are the solid option there and they're just growing.

This quarter it was 50%, so we are very confident about this.

James Breen, William Blair & Co.

Hello, this is Louie DiPalma on behalf of Jim Breen.

I was wondering if you could provide some color on your go-to-market strategy for corporate and enterprise accounts given its recent success?

I know that one of your competitors in the high-end eFax market uses AT&T as a reseller.

I was wondering if you guys are also using resellers and other channels to penetrate these high-end accounts in addition to the portal and your sales force?

First of all, eFax you cannot use it as a generic term, it's our brand --

Right.

-- so it's very important.

It also answers your question.

People want to buy eFax and they want to buy it from us.

AT&T and all those things we didn't even hear about us losing any deal to this.

There are people that are strong in issuing press releases and their companies are strong in issuing revenues and numbers.

Our corporate sales team productivity it has increased.

We have launched new products.

We are selling more and more without even a face-to-face meeting, which actually is very important to us because the corporate market is late adopters and they figured out that eFax is the place to go and fax to email these is the solution for them.

We get more and more people on the [telesis] that are dedicated to those calls and we are selling more.

With the addition of MyFax.

MyFax actually brings to the table 98,000, almost 100,000 corporate fax users.

So our go-to-market approach is, A, take a lot of our free or SMB customers, figure out if it's a larger shop.

Because many times you see that you have 3 or 4 users in the company, you dig into the domain name, you figure out it's a big company, you take those 3 users, call them and voila, they say, yes, we need it for the entire office and then you have the sale.

The other angle that we are seeing, on our web we are offering on the search, we are very aggressive there.

All our competitors that are selling to the corporate are very weak on online.

They don't have online presence.

They are usually competing with us with what they call feet-on-the-street and there's so much you can reach with people versus the web.

Our go-to-market approach is strong brand, strong ability to sell on the spot, attractive pricing, reliable service, strong financial -- a financially strong company and we have 10 million free customers that are also many of them are corporate users if we just are able to move into paid users.

I was wondering if you could provide some commentary on competition in your main international market, specifically within Europe and the Japanese market?

In Japan our competitors are the 2 telcos.

Japan has built itself around local and long-distance provider, MTP and KBB.

They're both competing with us.

Their prices are the same as ours; their offer is significantly inferior.

They offer only 050 numbers which are non-geographical numbers.

They are limited; they cannot sell a geographical.

So you cannot buy from them a Tokyo number, Osaka number or something like this.

They're offering another number due to the regulation.

They're not strong.

They're web players but we are very excited.

They were dormant until we showed up and now they are playing in it.

We are growing, I'm sure that they are growing, too.

The nice thing about Japan it's a almost virgin market where there are endless opportunities.

It's a very fax-intensive market.

Now the rest of the world we have lots of competitors in each country.

There are certain countries that we are sure that we are the largest.

I'm sure that we are the largest in most of the English-speaking countries.

We have some competitors in Germany; we have strong competitors in other countries that we are computing with or maybe one day we'll acquire them.

We are still very, very low on our curve internationally.

Our international -- or let's say our European revenue is less than 10% of the entire Company and definitely Europe is larger than the US, so there's a lot of upside there.

Youssef Squali, Jefferies.

This is actually Naved Khan for Youssef.

If I look at the variable ARPU, it seems like this was down sequentially.

Am I doing the math right, or is there some reason behind the declined?

Yes, you are correct.

That has to do with what Kathy mentioned earlier that the non-pursuit of broadcast fax revenue and certain Venali customers that we anticipated would not move to our standard contract who were on highly variable revenue contracts bled off during the quarter.

Combined, those represented about $700,000 of revenue, almost all of which was variable.

We ended up being lucky.

Originally we were planning when we bought Venali to lose more business and lose it sometime in Q2.

But what happened is those customers actually asked us to keep the system up and running while they are paying us and while they are looking for an alternative.

We agreed and the outcome was more than $0.5 million of revenue, something like that.

But we always feel that the only way for them to continue is for them to make it more profitable for us, and we were able to convince some.

And the others that we didn't, they did not want to agree to our long-term contract, we let them go.

And to the best of my knowledge, the largest of them went to self service.

But it was planned and that's why the ARPU went down because the ARPU is mostly driven by our usage and those Venali customers were mostly usage rather than DIDs.

They were like heavy faxers.

So was the entire impact affected in the quarter but you do think that Q4 might actually have some more incremental --?

No, all of the customers of Venali now are on long-term contract.

Right, but not all of them bled off at the beginning of Q3, so there'll be a little bit of catching up for the full-quarter effect in Q4.

But that'll be somewhat mitigated by the fact that Q4 has fewer business days, which dampens the impact of any loss of variable revenue.

And some of the customer that moved to contract moved to paying us higher than the previous Venali contract.

Can you break out the total amount of voice subs that you have and how many you added in the past quarter?

We have approximately 275,000 to 280,000 voice DIDs.

We have to count them exactly at the end of October as we finish the integration with My1Voice, but that's approximately the number.

About 11,000 were added in the quarter.

And if you ask for the revenue it's approaching $40 million.

$40 million annual run rate?

$40 million annual run rate for voice, yes.

So on the cloud initiative, when do you anticipate getting to a point where you actually start breaking it out and talking about the revenue contribution and the growth in this business?

Well, the revenue is already there.

It's already broken out in the non-DID-based revenue.

You're asking about our non-DID-based revenue.

Is this your question?

Yes.

The way I'm looking at it's -- the non-DID is probably a combination of different things and some the areas are focus areas?

Right, the email, the email marketing and the online backup.

I'm more focusing on a backup and the 2 new (inaudible) you are thinking about?

In terms of where it will be reported as revenue, it will flow through non-DID-based revenues, and at this moment I don't anticipate altering how we report the break out between DID- and non-DID-based revenues.

The second element of that is at what point I think will we have specific metrics that surround non-DID based revenue and whether that's even the appropriate presentation.

That is something that will evolve over the next number of quarters.

In large part at what point does it become such a material part of j2's overall revenue that additionally their metric insight or even new metrics make sense.

But I don't believe that time is now.

It is $25 million run rate now and we believe that once it will grow to become something higher it's less than 10% still.

We believe that the backup is going to be fastest, but on a smaller base, the fastest-growing business we presented next year.

As we get deeper into it, we will sure start to give you more color on it.

There are no further questions at this time.

I would like to the floor back over to management for closing comments.

All right, thank you, we appreciate you joining us for the Q3 call.

As usual, our Q4 results will most likely be reported in mid-February, but obviously as it gets closer to that time frame we'll issue a release with the exact specifics in terms of the date and time for that call.

Between now and then there will be a combination of non-deal road shows, as well as conferences that we'll participate in.

Once again, the conferences will be noted through press releases and we look forward to speaking to you either at that time or on the Q4 call in February.

Thank you.

This concludes today's teleconference.

You may disconnect your lines at this time.

Thank you for your participation.