Good day, and welcome to the Bazaarvoice Fiscal Fourth Quarter and full year 2014 Financial Results Conference Call. Please note today's conference is being recorded. At this time, I would like to turn the conference over to Linda Wells. Please go ahead, ma’am.

Good afternoon, and welcome to today's conference call to discuss Bazaarvoice's financial results for the fourth fiscal quarter and fiscal year 2014 ended April 30, 2014. I'm joined today by Gene Austin, our Chief Executive Officer and President; and Jim Offerdahl, our Chief Financial Officer. Following the remarks from Gene and Jim, we'll have a question-and-answer session. Please note that we are simultaneously webcasting this call on our Investor Relations website at investors.bazaarvoice.com. The earnings release with our results for the fourth fiscal quarter and fiscal year 2014 was issued after the market closed today; in addition we announce that we have entered into a definitive agreement to divest PowerReviews to View Point for $30 million in cash. Please remember that certain statements made during this call, including those concerning the business outlook and guidance, growth plans and opportunities, potential acquisitions, outlook on legal matters, sales execution and our ability to capitalize on our opportunities are all forward-looking statements. Forward-looking statements are subject to a number of risks, uncertainties and assumptions that are described in our SEC filings, including the Risk Factor section of our Form 10-K for the fiscal year ended April 30, 2013; our Form 10-Q for the third fiscal quarter 2014; and our form S-1 filed with the SEC on July 12, 2012, as well as other documents that we may file with the SEC in the future. Should any of the risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, actual results could differ materially and adversely from those anticipated or implied in these forward-looking statements. In addition, forward-looking statements are based on currently available information and we undertake no duty to update this information. Additional cautionary language regarding these forward-looking statements is further described in today's press releases. On April…

Thank you, Linda, and thanks to all of you for joining us today. With today’s call, we will close the books on fiscal 2014 for Bazaarvoice. 2014 was a year of transition in many ways, but I can confidently report that we exit the year much stronger than when we entered it 12 months ago. Before I begin, let me first give you a quick update on the settlement process related to our Department of Justice litigation. Today, we’ve signed a definitive agreement to sell PowerReviews to Viewpoints for $30 million in cash. The transaction remains subject to the closing conditions specified in the definitive agreement including among other things approval of the transaction by the Department of Justice. This development means that we are now underway to move the PowerReviews asset and some team members to Viewpoints. And we’re committed to a successful transition process. We have taken a major step for turning our full attention to the large market opportunity we have ahead of us by delivering great innovation, superior client services and improving our overall execution. Jim will cover in more detail the financial impacts of the completed divestiture in just a few minutes. We turned in our best performance of the year in the fourth quarter. Key highlights include our best quarter of year for gross bookings within especially strong quarter from Europe. Overall, great new customer acquisition and impressive number of customer launches and the completion of a very strategic acquisition that should produce immediate pipeline in sales as we head into fiscal 2015. As a result, we are entering the new-year with momentum on many fronts as we continue to make steady progress in executing our business. A great example was the recent strong attendance at our Summit held in Austin just a few…

Thank you, Gene. And thank you to everyone who joined the call today. Before I review our reported results for Bazaarvoice continuing operations for our fiscal fourth quarter and full year 2014, let me talk briefly about PowerReviews. The results for which as Linda noted earlier are included in discontinued operations. As we have previously discussed, after the acquisition of PowerReviews in June of 2012, Bazaarvoice gained significant cost energies primarily via redundant positions. Such as the PowerReviews contributed positive EBITDA and cash flows soon thereafter. For fiscal year 2014 PowerReviews' revenue and EBITDA contributions were $17 million and $8.8 million respectively and on a non-GAAP basic earnings per share basis, PowerReviews was $0.12 accretive for the year. Please refer to our earnings release tables and FAQs filed with our press release for further information regarding the divestiture of PowerReviews and its impact on various financial information and metrics. So now I will provide commentary on our reported fourth quarter and full fiscal year 2014 financial performance for our continuing operations which excludes PowerReviews. Accordingly all financial results, business metrics and outlook discussed here after will exclude the impact of PowerReviews from our business for all periods. For the fourth quarter, we achieved total revenue of $43.1 million and SaaS revenue of $41.9 million, up 11% and 10% respectively year-over-year. Adjusted EBITDA for the fourth quarter improved the loss of $7.6 million from a loss of $9.1 million in the fourth quarter of last year. Our non-GAAP net loss per share for Q4 was $0.11 per share. Given our divestiture of PowerReviews, we’re modifying our definition of a client. We have two types of clients; those that have recurring revenue are now categorized as active clients. And those who do not have recurring revenue, such as clients on our connections…

Thank you sir. (Operator Instructions). Our first question will come from Brendan Barnicle with Pacific Crest Securities.

Thanks so much guys, and thanks for all the detail on this. This will take us some time to work through. But I did want to go back to something, a press release that happened recently about your relationship with Hybris and how you'd be working there. I was wondering if that may extend into any additional work with SAP?

Yeah, Brendan we’ve been doing business with Hybris for some time and we took the time to strengthen that relationship in a more formal relationship, since they are a provider of ecommerce solutions. I think it’s a great relationship and I think it’s an important relationship for us. I can’t speculate on where it might lead for longer term strategic relationship with SAP at this point, but we do see a lot of activity with Hybris and expect it to be an important relationship going forward.

Great. And then Gene, on your comments about gross bookings, you gave some kind of qualitative commentary around it. Do you have any more quantitative in terms of how much that grew, or what that number is, or some other ways that we can measure that success?

No I think the most important points are, that was our best quarter, the year I also was very happy with the quality of the bookings. It was not led by any one large deal; it was a very broad base of transactions. So I can see that very healthy, we did not need a large transaction to have the strong quarter we had. So I think that’s the most salient point of the quarter.

Our next question will come from Jennifer Lowe with Morgan Stanley.

Great. Thank you. I wanted to dig into the divestiture just a little bit more, and specifically on two fronts. The first question is, you've mentioned a couple times that there was a lot of cost synergies between the two business that's you benefited from. Is there an investment that you're going to need to make to rebuild up any of your infrastructure post the acquisition, or should we assume that the bones of Bazaarvoice are going to be relatively unaffected by the divestiture outside of the products, and you kind of have the run rate staffing you needed? Just a little clarification there would be helpful.

This is Jim, we have our operations in people all in place to handle our business going forward. So no incremental investment required as a result of the divestiture.

Great. And then just the second question there, this is sort of the official statement, but the talks that you've had with the Department of Justice around this has been out there for at least a few weeks now. Just curious if you've gotten any feedback from customers, or if that's changed at all, either the rate of PowerReviews' customers looking to migrate to Bazaarvoice ahead of this, or just if there's any additional color there on the initial customer feedback, if there is any at this point?

If I want to give you customer feedback I would say that the strength of our quarter and new acquisitions and overall bookings I think is illustrative of the fact that customer see this coming to an end and moving on. And frankly when I was at the summit in Austin it was really not a topic of conversation, the topic of conversation was all the new products we had, the many insights, some of the alpha products if you will that are coming on the pipe that we demonstrated that was really much more of the topic from a customer standpoint. The PowerReviews customers I have not spoken to any, recently at all. I am sure that they are excited to see closure coming on this process and I think that we have maintained from the entire beginning that the customers are the most important part of this entire process and making sure that this thing ends in a way that is good for all customers involved, both Bazaarvoice and PowerReviews. And I think this definitive agreement is a clear step in the right direction. It adheres to the wishes of the partner justice. It creates a very clear competitor and I think it’s an important step for everybody involved.

And actually just one quick clarification as well. I think in the press release around the divestiture it mentions that the deal is pending Department of Justice approval, but it sounds like this is also a deal that you and the Department of Justice have jointly submitted to the court. So I just wanted to clarify, is this something that the DOJ has indicated that they would sign off on? I was just a little confused by that statement in the divestiture announcement.

Yes, the Department of Justice, this deal is subject to approval by the Department of Justice, I do not believe it has to go to the court; the Department of Justice will be the organization that approves it. We believe, we have every reason to believe that they will approve it because it adheres very well to the structure and frame and guidance of the final judgment that we agreed with the Department of Justice on, we came to a settlement with the Department of Justice and we believe this adheres to that law. The Department of Justice had 21 days to decide and approve the deal and we look forward to them doing so.

And we’ll move onto to Mark Murphy with Piper Jaffray.

Thank you, Gene. You gave us very some encouraging commentary about being at or near revenue growth rate bottom, and I want to dig into your basis for making that comment. Can you clarify, does it feel more like hard visibility due to the recent client adds which are going to inevitably go live near term and start producing revenue. Or is it fairly dependent on improving new bookings in the next quarter or two? In other words, are you pretty confident in projecting forward this improvement in new bookings?

Well, Mark I think there’s a, as I said in my prepared remarks there are number of factors that come into play, so it’s not any one factor, it’s a combination. The sales performance over the last two quarters is quite encouraging and we enter the year with more sales capacity than we had one year ago because of the investments we made in 2014. We have new products for them to offer so we not only have the ability to go acquire new accounts which we continue to believe will be highlight of our business but we also have more to go back and capture more share lost. So I think the new sales side of it is encouraging and I’m excited that Europe took a major step forward, I mean Europe turned in a record quarter in Europe. On the launches side, obviously our revenue recognition begins with launches so it’s a key metric and I’ve seen significant improvement in our operating gains in the launch side, which gives me great hope that we will continue to see that progress over the course of ’15 and if that does that’s going to contribute significantly to revenue. And then lastly on churn, core churn, when I look at the churn of our client base, on the core side, it really looks like we’re making clear progress, you know I’m not declaring complete victory yet on that because that’s always a work in progress but we have definitely made significant improvements, specially compared to a year ago when we had our first discussion on churn with you all on quarterly call, so those three factors are very important to lighting the revenue growth rate ship if you will, and you know I feel like tangible progress is being made on all three fronts.

Okay. And Jim, I wanted to ask you, what can we expect regarding the change in headcount for the business once PowerReviews is divested? Are you at a point where you're able to approximate that?

Yes, we will continue to invest on the sales, marketing and R&D side, even though we do expect some percentage leverage on our P&L, so that means we will continue to add folks in those organizations and of course as our customer base grows we’ll continue to add folks in our client services organizations as well. So I do expect us to continue to add people but at the same time we’re projecting improving EBITDA and EBITDA percents as our operation gets more efficient.

Just to clarify, Jim. How many employees do you think transfer over to the buyer? How many PowerReviews employees transfer out of Bazaarvoice?

Approximately 30.

About 30 employees. Okay, great. And as well, the one large customer you referenced with the early contract termination and the one-time fee, can you shed any light on what was your strategy in that negotiation, and do you feel that that was a favorable outcome? And also relating to it, how confident are you that that's -- that we could look at that as a one-off situation for now?

As I said in my remarks I do not see any client in our base that, this is a large account, we’ll start with the account, this is a large account that has gone through significant financial issues, including bankruptcy and we have been in conversations with them, we were concerned about their ability to renew several months ago and as we came down to starting to look at 2015 at the same time customer board and we felt it was in everybody’s best interest to go ahead and terminate the agreement early with a termination fee. I feel like we have a good handle on our client base and as I said in my statement I don’t see any client, large client that have this kind of significant risk in our portfolio. Are we going to have churn? Yes. We have churn in our enterprise base like every SaaS company should but all the trend lines are going in the right direction and I know we have talked about two large ones in the last six months or so. And I think we are at the end of talking about these kind of lumpy relationships, both of them are unique, both of them have challenges with them in the beginning as I talked about some of our challenges of overselling, not been able to deploy fast enough. This one have, also happen to have an organization it was financially distressed and so in my opinion we have cleaned that up and as I look forward to churn going forward it’s going to get better and we are going to operate like a SaaS company should. And as I said before I believe that the churn at Bazaarvoice should reflect that of leading SaaS business. There is no reason why our business model can’t be, have the type of churn rates that we believe are going to be good in the marketplace. Despite that large deal that we just talked about, I want to reaffirm everyone that our net bookings growth for 2015 looks strong. As I said we saw it coming. We have got it built into our plan. It just did happen a little earlier than the third quarter that we expected.

Thank you, Gene. One last one, just on the flip side of that equation. You had said you had record bookings, but they were not dependent on large deals in the quarter. So just given the runway that you have, I think with brands in particular, do you sense larger deals that are in the pipeline that could materialize through the course of this fiscal year?

Yes, most definitely. There are definitely larger deals out there but one of the things about Q4 and frankly Q3 which was a good quarter as well is we have broad based client demand and we weren’t dependent on any one deal for our performance. But so the good news about that is that continuous that large deals become good upside for what we are trying to accomplish.

And I would add to that there’s both North America and Europe.

Both North America and Europe right.

Our next question comes from Greg Dunham with Goldman Sachs.

Hi. Thanks for taking my question. First off, congratulations on at least getting closer to resolution on the PowerReviews settlement. I guess my first question is when you look at the adjusted EBITDA guidance, especially in light of accelerated revenue growth and the $8 million in EBITDA contribution positive that PowerReviews gave you, that's some fairly significant leverage that you guys are forecasting. Where are those points of leverage on an operating margin -- on an operating line basis? Where are you getting that leverage from? Thanks.

Yes, Greg, this is Jim. Several areas, obviously our revenue growth rates are picking up which helps, okay. We are also gaining efficiencies in our cost of acquisition and sales and our media business is also going to be more efficient in this next year. And in addition and while we do that we are investing as Gene mentioned in a new media product for later this year. We will get it may be a little bit from a percentage standpoint from R&D and maybe a bit from G&A but it’s mainly the revenue growth of sales efficiency. We have got a more experienced and larger sales force now and we have got new products to sale-through that sales force as well and then media business is sized little bit better from expense standpoint.

Okay, great. And then just one clarification. You mentioned gross bookings this quarter was a record. Was net bookings a record, or was it close to a record or anything to cause that to be significantly divergent from gross bookings? Thanks.

Net bookings when you look at net bookings, our second half of the year was considerably stronger than our first half of the year. I don’t believe net bookings in Q4 was a record but as you can imagine with gross bookings it was a good performance and consistent with what we saw in Q3 as well. So, the good news about our business is that the second half net bookings picked up quite a bit over first half net bookings which again is emblematic of the better operational efficiency through our management of client base.

(Operator Instructions) Our next question comes from Stephen Ju with Crédit Suisse.

Thanks, guys. Sorry to keep going on in regards to the divestiture, but I'm a little bit surprised by the amount of sort of the near term dyssynergy from this transaction. So it seems like most of the realized synergies should have been at PowerReviews. But your commentary seems to suggest that you are expecting to, I guess, restaff up here at Bazaarvoice. ¦ Can you help to bridge the gap for us in terms of what you need to do from a practical perspective. Is it salespeople that you need to hire? Is it engineering resources? Is it real estate? And also, maybe a little early to tell, but any sort of initial observation on the conversion rate from free to paying for those clients who are now what you're defining as network clients who have opted in for the Freemium model? Thanks.

I’ll start, maybe Jim will add on. I don’t think we see the need to add staff post-divestiture based on losing individual et cetera from the divestiture. The individuals that are moving across are former PowerReviews employees. Most of them were supporting PowerReviews customer. So it’s a logical transition of individual. We are in a great shape staff wise. Our field headcount and R&D, all of things we’re looking are sound and are in position to help us execute the 2015 plan. So, if we miscommunicated or what have you - there is no dyssynergy involved in this divestiture.

Agreed. As our business gross, we’ll add service employees to serve our new customers.

We’re in great shape to support the continuing operation P&L and guidance that Jim gave, there is no -- we don’t have any gaps to fill that any company of our size would. We always have open headcount but it’s the practice normal course of business.

And regarding conversion rates, I believe the second part of your question. And I believe your question was conversion of Freemium connections to say conversions clients or Freemium. I am not for sure which one. But just -- we do have -- we view Freemium as the lead generation mechanism if you will not in addition to adding to the network asset we have. We viewed as lead generation to connection premium and as well as the conversations and that up-sell is in the mid to upper single digits of our booking from came from Freemium clients moving up.

Got it.

Which is it’s trending the right direction.

Understood. Okay, thank you.

And our next question will come from the Nandan Amladi with Deutsche Bank.

Hi, good afternoon. Thanks for taking my question. So a first question on continuing on this divestiture theme. Any of the terms of the original ask from the DOJ change as a result of this? Specifically there was, I think, one condition on sharing some of the content data for a particular period of time. What were some of the original conditions, and how many of those are you actually agreeing to?

None of the conditions stipulated in the final judgment have changed. We do have -- we’ll have a relationship with Viewpoints on syndication of data which we - while we compete with Viewpoints, I think it is also the right decision to have us syndicate content between the two organizations because they have retail sites in our brands when we continued to post content and vice versa. So that will be part of the relationship, but nothing has changed.

Thanks. And a quick follow-up, if I might. Does your guidance embed any significant contribution from the three new products that you launched, or is it mostly from the bookings that you already have and just increasing sales productivity?

There is certainly some reflection of the new products, but I will say that like any new product you do your best understand what the contribution will be over the course of the year. And we’ve probably done our best job to forecast the performance of those products. If anything, we are probably a little conservative of what they can do, but our guidance is -- our guidance does reflect contribution from the new guys.

Thank you.

And this concludes today’s question-and-answer session. At this time, I’d like to turn the conference back over to management for closing remarks.

Just want to thank everybody again for your participation today. We are wrapping up 2014 on a very positive note, in our opinion and looking forward to giving you the updates as 2015 unfold. Thank very much.

This concludes today’s conference. We thank you for your participation.