Greetings and welcome to the Bazaarvoice First Fiscal Quarter 2016 Financial Results Conference Call. At this time all participants are in a listen only-mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] At this time I would like to turn the conference over to your host, Jim Offerdahl, Chief Financial Officer. Please go ahead.

Good afternoon and welcome to today’s conference call to discuss Bazaarvoice financial results for the first quarter of fiscal 2016 ending July 31, 2015. I am joined today by Gene Austin, our Chief Executive Officer. Following the remarks from Gene and me, we will have the question-and-answer session. Please note that we are simultaneously webcasting this call on our Investor Relations Web site at investors.bazaarvoice.com. The earnings release with our results for the first quarter of fiscal 2016 was issued after the market closed today. Please remember that certain statements made during this call, including those concerning our business outlook and guidance, growth plans and opportunities, potential acquisitions, outlook on legal matters, sales execution, and the 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 Factors section of our Form 10-K for the fiscal year ended April 30, 2015 filed with SEC on June 25, 2015. Additional information will also be set forth in our future quarterly reports on our Form 10-Q and our reports on Form 10-K and other filings that we may make with the SEC. 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. We do not intend and undertake no duty to release publicly any update or revisions to any forward-looking statements made during this call. The divestiture of PowerReviews was completed on July 2, 2014. As a result of this, PowerReviews’ revenues, related expenses and loss on disposal net of tax are components of loss from discontinued operations in the condensed consolidated statements of operations since our fourth quarter of fiscal 2014 and all comparative fiscal quarters presented. The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations for all periods presented. Some of the numbers that we will discuss today during this call will be presented on a non-GAAP basis. Today’s press release, together with accompanying tables, contains the calculations of these non-GAAP financial measures and its whole reconciliation between the corresponding measure, the GAAP measure and the non-GAAP measure including the reconciliations of GAAP to non-GAAP operating results from continuing and discontinued operations. With that I'd now like to turn the call over to Gene.

Thank you Jim and thanks to all of you for joining us on our call today. Eighteen months ago I seized the reins of Bazaarvoice. Our business predictability was not strong, our client satisfaction low and we lacked a plan in product development. Since that time we've worked tirelessly to right the ship in client’s satisfaction, reintegrate innovation products in both products and services and drive stronger operational cadence throughout the business. All while we managed our way to the divestiture of the competitor and unique terms of the stipulation order handed down by the department of justice. All of you have demonstrated a lot of patience in a company that has been through more than its fair share of unusual circumstances. I can tell you that I personally have felt your pain and appreciate that many of you remain believers in the Bazaarvoice store. I'm confident your patience will be rewarded. Our hard work is paying off. I see green shoots of progress on many fronts. Our customers are happier. Today more than ever before, I see changeable evidence that clients satisfaction has improved. It is showing up in surveys, conversations and reports from the field. And as we all know happier clients buy more and renew at higher rates. The mix of our new products is healthy and new product penetration improves both bookings performance and client retention. For the second quarter in a row our mix of bookings from new offerings as a percent of total product bookings exceeded 25%. Our company is transforming into the role of consumer generated content experts giving our clients various solutions to put the most powerful marketing content, the voice of the consumer to work for their business. Next, we are returning to a normal competitive environment. The DOJ stipulation requiring…

Thank you, Gene and thank you to everyone who joined the call today. Today we're reporting results for our first quarter of fiscal 2016 ending July 31st, 2015. For the first quarter, we achieved total revenue of $48.9 million, up 6% year-over-year and above our guidance range. We achieved SaaS revenue of $46.8 million, up 6% year-over-year. Advertising revenue, which we formerly called media revenue for the quarter was $2.1 million, up only 24% year-over-year as our programmatic revenue was less than desired. Adjusted EBITDA for the first quarter was a loss of $3.3 million better than our guidance range and continued improvement from a loss of $5.3 million in the same period a year ago, as we drive towards expected positive adjusted EBITDA for the full fiscal year 2016. Our non-GAAP net loss per share for the first quarter was $0.06. Before, I go into more detail on the quarter, note that in the first quarter we slightly modify our active client count methodology to gain more efficiency in our financial reporting. Previously, we counted an active client as an organization through which we've recognized revenue at any time during the last month of a quarter. Under our new methodology, we count an active client as an organization for which we have a contract and the client has launched as of the last day of the quarter. As a result, some clients who churned in last month of the quarter are counted as churned earlier. This change had minimal impact on our active client count number. Our client count number for the first quarter was 1,337. Under the new methodology compared to 1,363 under the old methodology. This slight modification impacts other metrics based on client counts, such metrics have been revised for prior periods and are available in…

Thank you. At this time we’ll be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from Nandan Amladi from Deutsche Bank.

The script sort of talked about all the changes you're making into improve customer satisfaction executing and so on, but the metrics that investors track generally look particularly promising. So how strong were bookings overall, aside from I think you mentioned 25% of bookings came from new products. Can you give us some other commentary on the underlying strength that we may not be seeing in the metrics as of yet?

I guess I would go to couple of comments for you there Nandan. First of all on the client satisfaction area, when you factor out the unique competitive environment that we've been going through regarding the DOJ stipulation and its impact on churn, it's probably 30% to 40% of the churn has been from that kind of unique environment. So we can see -- and we can see that starting to move lower, much lower going forward, which I think will have a positive impact on growth. And I think at the same time our bookings performance was right on where we expect it to be for Q1 and I like the way the pipeline has built so far in August as we head in the remainder of the quarter. As you know we don't comment directly about bookings, but I'm pleased so far with where we’re in the quarter and what happened in Q1.

Thanks. And then should we read to -- how should we interpret this change in the Chief Revenue Officer at this stage of, that you know -- you’re are obviously making changes to improve execution.

Well you know we've had -- as the company has more, we've had a number of executives both come and go in the business and I think that's a healthy part of any company that's evolving, especially that a company that's transforming. In the case of our CRO, he was one of our sales leaders for the last four years, being CRO for the last 15 to 18 months, very tough four years for the company as you can imagine and we got to a point where we decided that a transition was the right thing for everybody involved.

Thank you. Our next question comes from Stan Zlotsky from Morgan Stanley.

So wanted to continue with the question that Nandan actually started there. On the new bookings -- sorry, the bookings from new product, the 25% that you guys reported. How has that number trended? Could you give us a sense for maybe, what was it a year ago, what was it in fiscal 2015 and possibly where do you see that number going as we proceed for the fiscal 2016?

So a year ago it was really -- probably 5% or less. All of these products that we've announced had been relatively new to the market place and I think that's -- and so we've been obviously watching it very closely to see how well we transitioned as a business into selling a set of solutions versus kind of being a single solution provider. We think it can go higher than 25%, I'm not sure if its right to call it at this point, but when I look at the products Spotlights which is brand new is not really -- there has not been a lot of sales of it just yet, but the pipeline is very strong. Our curations product has been very consistent, sampling has been very important to a certain set of our customers, probably not a product that is going to be taken by a broad swap, but very important to one of our big retailers, and BV local had a great Q4 and softer Q1 but is our very big de-oriented product the organizations that I'm looking at for us have some very large opportunities as you head into the second half of this year from a bookings perspective. So for a company that's never been in this position before with the set of solutions. I think I'm comfortable with where we are at, it definitely takes a salesforce time to stimulate and be able to talk about all of those products in a cohesive way and I think we've made some good progress there.

Okay. And then just to continue that theme. When should we start thinking about these products becoming material contributors to your business growth?

Stan this is Jim. New products is 25% of our -- over 25% of our bookings given that we have a 190 million base or so of revenue. It’s going to take a while for them to actually impact the revenue growth but it will help us form a couple of ticks at least.

This year.

Okay, great. And then one more on the media business. So looking through the rest of the year what kind of growth do you expect for the media business given the performance you just saw in Q1 -- advertising?

I think we guided advertising last call to 60%. We still believe that's achievable, obviously the performance in Q1 is going to put a little bit of pressure on that growth, but at the same time Q3 is a very large quarter for the advertising business typically, so we still believe 60% is a possibility.

Okay, great. Thank you guys.

Thank you. Our next question comes from Scott Berg from Needham & Company.

Hi. Jim and Gene. Congrats on a good quarter here. Couple of quick ones. First of all, Gene, you talked about pricing improving and seeing some positive changes in the competitive environments to return towards the normal level. Do you have any total kind of examples and what you are seeing two months into that change?

Well. It is clear to me that the -- we are now, Scott, competing on the full value of our offering versus having to respond to someone picking up the phone calling our accounts and saying we’ll do exactly what they’re doing for half the price and you can walk any time you want to walk. So now normally in a SaaS business, since I’ve been involved in SaaS for many years, you do have these times when your customers call you up and they say I don’t know if I want to continue, I don’t know what -- how to look into the future and you have a chance to sit down, walk through what their concerns are, work through a plan on attack and a lot of times those conversations and engagements result in very positive developments in renewals and kind of a new birth of that relationship and the customer keeps going forward. When you are responding to, hey, you can walk, it's all about price, you have less chance to really sit down and be consulting it with the customer on how to go forward. So from a churn standpoint, we have a very strong lineup of new products and offerings that we can bring to the table on client retention. We now get to use our entire portfolio of capabilities, and so as I see that affecting churn going forward, I'm much more comfortable in how the trend line of churn looks now than I was six to nine months ago, when we were in this beginning of this unique environment. I think if you strip out the impact from PowerReviews, the Company year-over-year would be making progress on our churn goals and that’s something we said we wanted to do from the beginning when I had joined 18 months ago, and we would be on that trend line. So that has real impact down the road for the Company's growth. It is a lag effect because you take churn now but it actually hits the revenue in-out months and quarters, but as that all that churn go through the system we should start getting upward trajectory in the revenue growth from the churn contribution. Obviously, booking is the other side of it. The booking situation for our company continues to improve. We are continually focusing on productivity in sales execution. We see -- I think our international teams are poised for better performance than last year, which would be a good sign for us. And I think North America can have a good year as well. I'm confident, we had a very strong pipeline growth in August which is kind of unusual for us, but we did have a nice uptick in pipeline growth, so I generally feel like the two growth levers of our SaaS business are making progress. They certainly could go faster, but I feel like the trend lines are starting to turn in the right direction.

Great and then one follow-up from me, Jim, can you talk just a little bit about operating cash flow this year in fiscal '16. Obviously, if you look at the P&L the last couple of years, there has been a lot of additional cost from the legal components, obviously with the PowerReviews divestiture, but as you look out in '16 most SaaS companies operating cash flow typically follows adjusted EBITDA at least relatively closely, trying to understand what that potentially looks like this year for you guys?

Yes, from an operating cash flow perspective, you should see it trending with EBITDA and as well as we're expecting working capital performance improvement specifically in receivables. We are starting to do well. You'll see even better metrics in receivables on a go forward basis and we've got minimum DOJ costs this year and basically trustee type cost that we're incurring, so you should see our OCF improve significantly this year.

Thank you. [Operator Instructions] Our next question comes from Stephen Ju from Credit Suisse.

So, Gene, in your prepared remarks you mentioned tests your running with your consumer review and segment data, so what kind of tests are these and who are you running these tests with? And second, are the client churns for the competitor primarily retailers or brand advertisers? And lastly, is Spotlights the main driver for the uptake in new products and is guess the buyer of this product primarily retailer or brand advertisers as well? Thanks.

Okay, so quickly on Spotlights, I think Spotlights is -- so far it’s going to be applicable to both brands and retailers and the impact of Spotlights is that it provides enhanced SCO performance at the category level of a product or category level of shopping, which is where most searches take place. And so we are -- earlier we rolled it out in -- I think we've launched it in June formerly. We have a very nice pipeline, handful of customers, so far very pleased with what we have seen from both what customers are getting from result standpoint and how the pipeline growth is. The nice thing about Spotlights is it deploys very quickly. So for us as we sell Spotlights, the conversion to revenue is faster than probably any of our other products. On the -- I think you've asked about client churn and churn -- most of our dollar churn is associated with brands. As we've always said since we began, brands are the more volatile area for a number of reasons. Our retailer base -- we're very fortunate to this point our retailer base, which is the anchor of our network, has been very stable and overall very strong. So the brand side continues to be where most of the churn takes place. And again I'm comfortable with the progress and the trend lines that I’m starting to see from a churn standpoint. On the testing, we've done very limited tests with both -- Involving both a brand and a retailer and its impact is to basically test the efficacy of our data in attracting a segment of shoppers to take a variety of actions and whether they actually click on the page, convert, et cetera. And the performance of our data so far has…

Thank you. Our next question comes from Brendan Barnicle from Pacific Crest Securities.

Gene, I wanted to follow-up on the dollar churn commentary again. In your prepared comments you said that you estimated that less than a quarter the dollar value of your contracts were still subject to stipulation. Can you clarify that because I thought that with the expiration of the PowerReviews deal that, that stipulation was over? So can you help me understand why some people are still subject to it?

Yes, Brendan, let Jim talk to it's obviously a little bit of a complex dynamic, but I'll let Jim comment.

It's basically anybody with longer than a one year contract at July 8 of 2014 last year, that contract goes past July 8 of '15 this year, to the extent that the contracts extend beyond July 2015, they're still subject to that stipulation. So, only about a quarter for ASF, it's still subject to that and that ramps down quarterly for the next year.

It drops each quarter.

Yes.

Great, that makes sense. And then Jim back on cash flow for the current quarter, did separating out discontinuing operations, did that have any impact on cash flow?

No, we don't really separate out cash flow for discontinued operations so, it's all reported into one.

Right, but if you had would that have made cash flow numbers look, perhaps better than what they came out at?

Probably not, because those operations are pretty much gone. We discontinued the operations so, basically when we did that accounting for that this can disc-ops it was for all the prior periods and those operation now have been discontinued, so minimal impact to this quarter.

Okay I just wanted to get clarification on that, and then lastly Gene on your plans for international, obviously you mentioned that a weak in the quarter, but you're optimistic for the remainder of the year, what is that you see in the pipeline there that makes you optimistic and how is the leadership that you have there, relative to this, the change in your sales head?

What I'm most optimistic about international is that the sales teams that we have in place both in Europe and Asia Pacific have been stable and are building pipeline, in just in general and so I'm starting to see adoption of all our new products, not quite the rate of -- with the U.S. but I like my leadership team in Europe, I like my sales leadership team across Germany, France and the UK and Asia Pacific as well so I think and that's a dynamic we've just not had, I mean a year ago, we were coming off some changes, we’ve spent lot of last year kind of stabilizing the team and at this point at least into the first quarter we've been nicely stable, I can see progress in the pipeline in Europe and Asia Pacific, so that's why I'm optimistic and the customers that I've been over there to talk to are in a good spot, looking at new products. So just generally have a good feel for it, where I think international can go forth.

Thank you. Our next question comes from Kevin Liu from B. Riley.

Good afternoon. First question just in terms of pricing with the dollar churn issues behind you now and some focus on larger deals in the SMB channel, would you expect that the average revenue per client to start to bottom out here if not start to tick up? Or are there other factors that will continue to weigh on that?

Yes, Kevin this is Jim. Our ARPU was $140,000 in Q1. We do think that has a potential to start to flatten out and it's driven like you said by more normal competitive environment, change in the comp plan around SMB emphasizing dollars, we got more new products to sell, et cetera. So, time will tell but we think that might be flattening out.

Got it. And just specific to the media business, you had called out programmatic as one of the areas that struggled. Could you just talk about what percentage of your media revenues that represents? And to get to your 60% growth target do you need that to turn around materially over the coming quarters?

Kevin this is Jim again, we're not talking about -- yet about the splits of the media revenue. Media revenue in total is just too small. So, just in total it's relatively small, so to break it down any further is [multiple speakers].

I think it is significant enough that we do need it to improve as the year goes on to hit that 60% that would be -- it is significant enough for that.

Got it. Thank you.

Thank you. At this time, we have no further questions. I would turn the call back over to Gene Austin for closing comments.

Thank you for all for attending. We'll see some of you on the road here soon and we look forward to reporting to many of you again in 90 days. Thanks again.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.