BrightView Holdings, Inc. (BV) Q1 2017 Earnings Report, Transcript and Summary

Greetings and welcome to the Bazaarvoice First Quarter 2017 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Linda Wells, Director of Investor Relations. Thank you. You may now begin.

Good afternoon and welcome to today’s conference call to discuss Bazaarvoice’s financial results for the fiscal first quarter 2017 ended July 31, 2016. I am joined today by Gene Austin, Chief Executive Officer and Jim Offerdahl, Chief Financial Officer. Following the prepared remarks, we will have the 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 fiscal first quarter of 2017 was issued after the market closed today. 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, 2016 filed with the SEC on June 20, 2016. Additional information will also be set forth in our future quarterly reports on Form 10-Q, annual 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. 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 the accompanying tables, contains the calculations of these non-GAAP financial measures and a full reconciliation between the corresponding measure of the GAAP measure and the non-GAAP measure. In addition, during his portion of the call, Jim Offerdahl will be discussing our adjusted EBITDA and providing updated guidance on adjusted EBITDA for the second quarter and fiscal year 2017 that reflects the change to the manner in which we calculate adjusted EBITDA. Beginning with our first fiscal quarter of 2017, we define adjusted EBITDA as our GAAP net loss adjusted for stock-based expense, contingent consideration related to acquisitions, depreciation and amortization, restructuring charges, integration and other costs related to acquisitions, other non-business costs and benefits, income tax expense and other income expense net. Our previous definition of adjusted EBITDA excluded amortization of capitalized internal use software development costs from adjusted depreciation and amortization and included capitalized stock-based compensation and stock-based expense. For comparison purposes, in today’s press release, we have recast adjusted EBITDA for prior periods to reflect the new definition. The guidance for adjusted EBITDA that we will provide in this call has not been reconciled to guidance to the comparable GAAP measure, GAAP net loss because we are unable to predict with reasonable certainty the future impact of the adjustments to GAAP net loss required to derive our adjusted EBITDA without unreasonable effort. I would now like to turn the call over to Gene.

Thank you, Linda and thank you all for joining the call today. I am pleased to report that our first quarter was a very good start to fiscal 2017 and the best overall quarter in my tenure as CEO. Revenue for the quarter was $50.1 million, well ahead of guidance and adjusted EBITDA improved by over $5 million from a year ago. Also, we produced another consecutive quarter of positive operating cash flow. During the quarter, we saw year-over-year improvements in dollar churn, stronger sales productivity in our core SaaS business and continued acceleration of our shopper advertising initiative. Combined, these results give us the confidence to raise both our revenue and EBITDA guidance for the year, which Jim will highlight shortly. We are now well on our way to transforming Bazaarvoice from a ratings and review platform provider to a company that is creating the world’s smartest shopper network, a network that is rich in the most powerful marketing in the world consumer-generated content and a large untapped asset of shopper data that we believe is a huge opportunity for our clients and will drive long-term revenue growth and value creation for our company. We continue to see a path to doubling our revenue over the next 5 years. We believe our current core SaaS solutions provide a revenue growth opportunity in the mid to high single-digit range, while our new investments in shopper data initiatives can drive our company’s annual growth to 15% to 20% over the long-term. As I mentioned earlier, we experienced a number of positive trends in the quarter, which suggest the business is turning the corner. For the first time in many quarters, both gross bookings and dollar churn were better than our internal expectations. And on the advertising front, momentum is building with more campaigns and high repeat business rates. Additionally, we made good progress on our next wave of innovation that we believe will contribute meaningfully to our bookings later this fiscal year and in 2018. Let me elaborate further on our SaaS business. Dollar churn for the first quarter was better than expected and a significant improvement from a year ago. Q1 was our largest dollar renewal quarter of the year and included the renewal of our largest client on a multiyear contract. Now, over 50% of the revenue from our top 100 clients is on multiyear contracts. Our work to improve the client experience continues to pay off. And as a result, we expect dollar churn for fiscal 2017 to improve by roughly 10% from last year. Turning to sales, gross bookings for the quarter also exceeded our expectations even though they were flat with Q1 of last year. Recall that during 2016, we halted sales of BV Local and shutdown our sales operations targeting Asia-Pacific and North America small business. Adjusting for those changes, our bookings grew 7% year-over-year. Pricing in our core business appears to have stabilized over the last few quarters and we have seen improvement in sales productivity in both dollars and transactions. We continue to believe that gross bookings will grow in fiscal 2017 fueled by productivity improvements, good demand for our offerings worldwide and a steady stream of innovation in both products and services in the second half of this year. The economic engine of our SaaS business is net bookings or the difference in gross bookings in dollar churn. We continue to expect a significantly improved net bookings performance versus fiscal 2016, but due to the seasonality of our sales, most of the improvement will be in the second half of this year. As a result, the impact to our SaaS revenue growth will primarily come in our fiscal 2018. As we have said repeatedly, restoring our revenue growth to 15% to 20% relies significantly on our ability to monetize the shopper data inside our network. The consumer-generated content in our network draws more and more shoppers and the more shoppers are engaged, the more data we capture. Since our last earnings call, we have grown our targetable shopper data base by 40% to over $140 million, which we believe represents approximately 70% of the online U.S. shopping population. This is up from zero targetable shoppers just 15 months ago. We believe the shopper data on both behavior and purchases from our network is a game changer that provides our brand and retail clients the opportunity to engage consumers in a dramatically enhanced manner. For Bazaarvoice, monetizing our shopper data is the fuel to power stronger revenue growth with innovations coming in both advertising and SaaS offerings. Our first monetization strategy is shopper advertising, which is largely targeted at our brand clients. Our network contains invaluable first party data based on shoppers engaging with all types of content, such as ratings and reviews, photos and videos as well as recent purchase history. That information can provide very strong purchase intent signals against which we can assemble specific segments of shoppers. We then create advertising campaigns targeted those segments, which drive traffic to our retail clients for purchase. An important metric of a campaign is return on advertising spend, or ROAS, which is the return of $1 of advertising. To-date, our ROAS results compare very favorably to published case studies from Kurtail [ph] and Amazon and customer feedback has been strong. A recent campaign for a very popular sports and apparel retailer produced $4 in ROAS, outperforming all other advertising solutions. In addition, within the targeted segment, an impressive 76% of the shoppers who clicked on the ads made a purchase. Shopper advertising is building momentum with strong sequential revenue growth of 50%, including five clients who have now spent in excess of $500,000. Additionally, we just signed our largest transaction to-date at just under $1 million. Our focus is now ramping our go-to-market strategy to provide more sales capacity and stronger brand awareness. Based on the momentum to-date, we now expect our overall advertising revenues to increase 25% to 35% for this fiscal year. Our next data monetization strategy is a SaaS offering that provides a unique personalization capability for our clients that we plan to bring to market later this year. Because we see hundreds of millions of shoppers every month, we often know what they are shopping for before our clients do. We can use this knowledge to serve up product recommendations on home pages, category pages or even product pages for our retailers and brands that sell direct. For example, if a shopper is in market for women’s shoes, we will know that from the fact that we have already seen her reading reviews at sites in our network. When she lands on the homepage of a client that has our recommendations engine, we can immediately personalize the specific product recommendations based on her recent shopping behavior. We know of no other recommendations product that can aggregate this kind of data across a network. Today’s market offerings generate recommendations based solely on the activity at one site. Currently, three large retailers are testing recommendations. And to-date, we have been very encouraged by the impact to their online sales. In summary, the first quarter was a very good start to important year for Bazaarvoice. We continue to see positive trends across our business as our transformation begins to take shape. In fiscal 2017, we expect to deliver stronger net bookings while investing for additional growth in our shopper data initiatives. Bazaarvoice has three key assets that are now all producing value our CGC expertise, our network and our shopper data. Our mission over the next quarters and years is to fully unleash that value to our clients and our shareholders. We look forward to seeing many of you at our Investor Day on October 13 in New York City, where we will elaborate on our strategy for long-term growth and drill deeper into the value of our key assets. We will have demos on our newest innovations, such as product recommendations and shopper advertising and give you all a chance to meet with some of our customers. I look forward to seeing you all there. And now I would like to turn the call over to Jim.

Thank you, Gene and thank you again to everyone who joined our call. Today, we are reporting results for our first quarter of fiscal 2017 ended July 31, 2016. As a reminder, all the non-revenue financial measures I will discuss are non-GAAP unless I state that the measure is GAAP. Also as Linda noted, we changed our adjusted EBITDA definition to align with the definition used by our SaaS peers to report adjusted EBITDA. For the first quarter, we achieved total revenue of $50.1 million, up 2% year-over-year and above our guidance range of $48.8 million to $49.3 million. We achieved SaaS revenue of $47.8 million, up 2% year-over-year. Advertising revenue for the quarter was $2.3 million, up 12% year-over-year, as we stabilized our legacy advertising revenue while ramping our shopper advertising solution. Given the ramp speed of shopper advertising, we now expect our advertising revenue to grow 25% to 35% in fiscal 2017, up from 20% to 30% that we noted last quarter. We achieved positive adjusted EBITDA of $3.9 million in the first quarter, up significantly from a loss of $1.3 million in the same period a year ago. Under our old definition, our adjusted EBITDA was positive $1.9 million, well above our guidance range of negative $0.5 million to $1 million and also significantly better than our loss of $3.3 million last year. These adjusted EBITDA achievements were driven by higher than expected revenue and continued management of our headcount. Our GAAP loss per share for the quarter was $0.06. Our non-GAAP loss per share was $0.00, well above our guidance of a loss of $0.03 to $0.05. We achieved positive cash flow from operations of $129,000, positive for the fourth quarter in a row and a significant year-over-year improvement of $6.5 million despite hosting prepayments and prior year bonus and commission payments, all typical in our first fiscal quarter. We launched 65 clients in the first quarter and ended the quarter with 1,397 active clients, up 4% from a year ago. Annualized SaaS revenue per average active client in the first quarter was $137,000. Our client retention rate was 95.2%, a slight improvement from Q1 of last year as well as from last year’s average. As we noted two quarters ago, we discontinued sales to the small business market. And even though losses of such clients continued to impact our client retention rate, they have had minimal impact to our revenue, given our focus on selling to midsize and enterprise clients and prospects. A good way to illustrate the impact of such focus is to look at our SaaS revenue retention rate. This rate is calculated for a particular period by comparing the trailing 12 months revenue for all of our active customers at the end of the prior period to the trailing 12 months revenue for the same customers at the end of the current period. We are pleased that our SaaS revenue retention rate at the end of fiscal 2016 was approximately 102%, demonstrating that even though dollar churn was elevated in our core business in fiscal 2016, we were able to replace such churn with up-sells and cross sells to our existing clients. Moving to our P&L. Cost of goods sold under our new adjusted EBITDA definition now excludes amortization of capitalized software development costs such that gross margins for the first quarter were 68.4%, up 220 basis points from the same period last year due primarily to economies of scale. Under our old adjusted EBITDA definition, gross margins were 64.1%, up 210 basis points from Q1 of last year. Our sales and marketing expenses for the first quarter were $14.5 million or 29% of revenue, down from $17.7 million or 36% of revenue in the same period last year, as we have continued to tightly manage such expenses and focus on midsize and enterprise clients and prospects in North America and EMEA. Looking forward, we expect price stabilization, improving sales productivity and additional quota carrying reps to translate into higher bookings dollars and efficiency in fiscal 2017. R&D expenses for the first quarter were $9.8 million or 20% of revenue, as compared to $9.6 million or 20% in the same period last year. G&A expenses for the first quarter were $6 million or 12% of revenue, down from $6.3 million or 13% of revenue in the same period last year. We ended the quarter with 766 employees, down 68 from a year ago and achieved annualized revenue per average employee of $263,000, up 12% from the same period last year as we have continued to manage headcount across all functions. Moving on to the balance sheet and cash flow, we ended Q1 with DSOs of 70, a significant improvement from 95 in Q1 of last year, reflecting strong collections, improved CSAT and quote to cash processes. Our deferred revenue balance of $68.2 million at the end of Q1 compared to $65.4 million at the end of Q1 last year and $65.2 million at the end of Q4 last year. We ended the quarter with $92 million in cash, cash equivalents and short-term investments. We recently chose to pay down another $5 million on a credit line such that as of today, we have $37 million debt outstanding, $20 million less than a year ago. CapEx was $2.8 million, which included $2.1 million of capitalization of developed software as we continue innovation on our new products. Now, I would like to finish with our financial outlook. For the second quarter of fiscal 2017, we expect total revenue to be in the range of $50.3 million to $50.9 million. With our new definition, we expect adjusted EBITDA to be in the range of $4.1 million to $4.7 million. Non-GAAP loss per share is expected to be in the range of $0.00 to $0.02 based on 82.9 million weighted average shares outstanding. For the full fiscal year 2017, we are raising our revenue guidance to be in the range of $202.3 million to $204.3 million, reflecting our Q1 performance as well as a relative strength of our pipelines and our churn performance. As I noted earlier, we now expect advertising revenue to grow 25% to 35% for fiscal 2017, up from 20% to 30% we noted last quarter. We expect adjusted EBITDA with our new definition to be in the range of $15.3 million to $17.3 million, an improvement at the midpoint of over $7 million from fiscal 2016. Non-GAAP loss per share is expected to be in the range of $0.01 to $0.05 based on 83.1 million weighted average shares outstanding. In summary, we continue to deliver improving financial metrics while investing in key growth opportunities. We are on very sound financial footing to support such growth and we are excited what the future holds for Bazaarvoice. Before I turn the call back to the operator, note that we will be presenting at the Deutsche Bank Conference on September 13 in Las Vegas. We will also be hosting our Investor Day on October 13 in New York City. With that, operator, please turn the call over for questions.

Thank you. [Operator Instructions] Our first question comes from Kevin Liu from B. Riley & Company.

Hi, good afternoon. Congrats on a strong quarter. First question, I was just wondering if you could give us an update on your Curations product. Obviously, some acquisitions have happened within the past couple of quarters of competing solutions. Curious what you are seeing in terms of kind of the broader competitive landscape and where you guys stand currently in terms of revenues from that product as well as the growth profile?

Yes, Kevin, Curations is currently our strongest product and our SaaS offering outside of the Conversations platform has been a fairly steady performer for us for the last several quarters. Our hope and our aspiration with Curations is to be able to build a syndicated network using the content that’s deployed with Curations, obviously, photos, videos and other types of non-text based review type of content. And we have had some pretty strong acceptance in the retail channel of Curations wanting to accept more content from our brands. So, we are early stages in doing that kind of work, but we are seeing interest in broadening the ability to move content across our network other than reviews. So, Curations fits that well. We have also seen a better uptake in Europe of our Curations product. Europe got off to a slower start. But as Europe kind of – has trailed U.S. in adoption of our new products, we are now starting to see Curations starting to take hold there as well. So, overall fairly pleased. We have got more work to do with Curations. We have got plans to add even the ability to do more types of content there that we will talk about at Investor Day, but overall, fairly pleased.

And then maybe more generally, in the past, you have talked about the percentage of your bookings that are accounted for by solutions outside of Conversations. Curious what that metric looked like in Q1. I mean, how you would kind of characterize the selling environment from a gross bookings perspective?

Yes, the selling environment, overall, I am encouraged. Just overall, I like what I see in our pipelines. I like the stability we are seeing in pricing. We are starting to see kind of the new world big deals come back. Meaning, our big deals now are measured a little bit smaller than they used to be, but we have a healthy pipeline of 250k and larger opportunities. Who knows how many of those are closed? But the pipeline seems strong. In the SaaS business, I think the new – well, we still use the term new products. It’s not really new products anymore, it’s our core business. The non-conversations mix of our core business is about 25% and plus or minus few percentage points. It’s interesting. It fluctuates quite a bit. In Q4, what I have told you I was disappointed with Europe’s performance on those products and yet Europe rebounded fairly well in Q1. So, it fluctuates quite a bit. But product right now that is still slower than we would like is Spotlights. And we have got a lot of work to do to kind of right that ship. And we have fairly good opportunity from pipeline standpoint. But overall, reasonably happy with how the core business is performing. So again, when we call our core business, it’s our SaaS business. I like the pipeline. We still talk about bookings growth related to our core business and generally feeling like that business is – continues to strengthen each quarter just a little bit.

And just one last housekeeping one for Jim, just with respect to the full year adjusted EBITDA guidance, what’s kind of the delta between how you are calculating it now versus before?

It’s about $8 million is the delta, which is basically the amortization of cap software.

Okay, thanks for taking the questions.

Yes.

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

Hi, this is Peter Levine in for Scott. Just a couple of quick ones for me. You mentioned attrition is improving. Can you give a little bit more color on what you are seeing on the attrition side that gives you confidence, the headwinds from ‘15 and ‘16 are behind you guys?

So, you are talking about revenue attrition in churn, is that what you mean?

Correct.

Okay. Yes, I just – we continue to make strides in the overall client experience. I mean, we certainly still have work to do and we are committed to providing even higher qualities of overall client experience. But generally speaking, when we survey our clients and we do that often, we are seeing much higher scores in overall satisfaction and that always leads to churn, I think lower churn. I think our clients are also – they see a vision for where the company is heading and there is a lot to get excited about whether you are a brand or retailer with Bazaarvoice. And so I think that contributes as well. I think the fact that we have signed clients up to multiyear agreements contributes as well, because it offers a level of stability. And obviously, we went through many quarters of rightsizing accounts, if you will, meaning making sure that the price to value equation in our client base was in a good spot, so that we – because we knew we were building a business with other capabilities and other products for the long-haul and doing that setup a foundation of satisfaction with our core offerings. It allows us to expand our footprint going forward, because we think we have the opportunity to expand the revenue inside our client base, whether it be with advertising, whether it be with our recommendations product or other innovations we are thinking about going forward and the stability of that client base is fundamental to our success.

And this is Jim. Let me just add one point there regarding PowerReviews. The impact of PowerReviews on churn has had less and less an impact to each of the last four quarters in a row. So, that’s – as we said before, that’s pretty much modest.

I mean, many quarters ago, it was 40%...

40% of churn.

It amounted to 40% of our churn. I think that was like five or six quarters ago. In Q1, PowerReviews impacted about 5% of churn.

And then can you quantify the pipelines entering the year versus a year ago and if you could break out the mix of new bookings or pipeline activity that are new logos or up-sell/cross-sell opportunities?

I think the way to describe new bookings. In Q1, we are very pleased with the new account acquisition in our SaaS business. Again, we saw new account acquisition growth when you factor out some of the things we discontinued last year. So that’s a very healthy sign that we saw a good growth in new bookings. The pipeline in general for SaaS is in good shape. And I like the way we said as we hear – are hearing about the fifth week of Q2. So our products are resonating. Our innovations are resonating and where we are trying to take the company is resonating. So I think as we sit here going into Q2, I feel good about our position.

That’s all I have, I appreciate it. Thank you.

Thank you.

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

Hi guys. Good afternoon and thank you very much for taking my questions. So on the advertising business, just maybe qualitatively or quantitatively, what are some of the success metrics that you are seeing in that part of the business. And as a follow-up question to that, what kind of take rates are you seeing in the media that the customers are spending in that business. And then a second question on sales and hiring – sales hiring and how that’s trending and how retention has been with the sales force? That’s it for me. Thank you.

Okay. More questions, so let’s take the sales retention, has improved in our company overall. So it’s – we probably got more work to do there. But I am encouraged by the trend line on that. The – say...

Take rates.

Take rates, we don’t really discuss that Stan, for competitive reasons and other reasons. But I will tell you that when I look at the advertising business, high repeat business. So something like 60% of our business is now repeat from clients. So once we get in, we have had a high degree of success. The metric I threw out in my commentary about ROAS, return on advertising spend, we have seen phenomenal results in that area. The $4 I gave you was kind of on the low end of some of the campaigns we have seen. And it compared very favorably to the people that are doing this the best, which would be Kurtail and Amazon. I mean frankly, what we were doing in shopper advertising is analogous as what Amazon does inside of its environment. We are just using our network to do it. And we think it has – so far, it has broad appeal. Our challenge in advertising is we are not known. We have to spend time, effort and individuals to get in front of the right agencies and the right buyers inside of our brands in the advertising business. But that’s – we have made a number of significant hires there and that’s trending better. Overall sales headcount, we finished the quarter – we actually had significant sales productivity in Q1 from a dollar standpoint. Part of that is because we are under our sales headcount for Q1. Our hiring has gone a little slower on the sales side than we would like. We are seeing that change and we are building – we are getting some people onboard now going forward. But we feel – we are building the sales team like we won. We are adding sales capacity to the company on a selected basis. We typically make more decisive decisions on sales in the next 90 days to 120 days. So we probably have an update for you all then about what we are doing in a more definitive way as we look to ‘18 going forward.

And Stan this is Jim. One more thing to add on take rates, we are satisfied with the levels and they have been relatively consistent in the last number of quarters as well.

Okay, perfect. And maybe if I can sneak in a quick follow-up, you mentioned the $1 million advertising business that you signed with a specific customer, is that just – is that the amount of media that they have committed to spend, just a clarification?

It’s a fraction of what they spend, right. So...

It’s a fraction of what they spend in total.

In total, right. So their media budget is – it’s a very large consumer electronics business. Their media budget is quite big and there is continuing growing opportunity if we continue to perform well, so.

No, I meant as in that’s the million – that’s the $1 million of media that they committed to spend with you, so that’s not actual...?

Correct. Yes, it is. That’s a gross amount they commit.

Perfect. Thank you.

Thank you. Our next question comes from Ilya Grozovsky from National Securities.

Thanks guys. I have a question on the seasonality in the fiscal ‘17, if you can just sort of talk about the second half of the year and kind of how you see the revenues playing out, I know you have given the guidance for the year, but just from quarter-to-quarter, do you – is there a step function here or is it pretty much just going to be small incremental growth?

Yes. Ilya, this is Jim. Let me start. We do have – certainly have seasonality in our advertising revenue around the holiday season. That typically ticks up in Q2, our Q2 – fiscal Q2 and Q3. The SaaS portion of the business, there really isn’t any seasonality to that. But we did – we are raising our guidance on total revenue, which includes SaaS and advertising. And so we did well from a net bookings standpoint in Q1. And also from a bookings standpoint, our bookings in the second half from the seasonality perspective are typically higher for SaaS bookings than they are – second half is typically higher than the first half.

Okay, got it, great. Thank you.

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

Okay. Thanks. So Gene, interesting that you are seeing brand advertisers in there versus direct response, but and overall, it seems like what you are capturing in terms of budget share is still tiny versus what they can be spending, so what can you do to catalyze, I guess greater budget wins and move out of what they might view as a test budget. And anything you can share with us in terms of velocity of reviews being written across your network, has that changed significantly over time? Thank you.

Yes. The second question, I think I saw the overall content in our network quarter-over-quarter grew 9%, so that’s all content. The last that I saw Stephen, was 125,000 reviews a day. So that’s a huge amount of content contributed every day across the network. We – so yes, we have – our challenge right now in shopper advertising is an awareness in brand building inside the – our marketplace. So the good news on that front is we know the brands fairly well. We are not necessarily over in the advertising side or the digital media side of those brands, but we know the brands well. And so crossing that chasm into the advertising side is what we are working on quite hard now. We are doing it direct using our SaaS teams to bridge the relationship for advertising sales folks, but we are also getting involved with the large holding companies from an advertising standpoint, striking relationships with them, so that we are much more of a “household name”. And we have rate cards and the ability to work with them very quickly as campaigns come up. One other things we have learned about our advertising business is that pipeline is created quite quickly, sales cycles are – can be very short. And just being able to adapt to that, I think is very important. Obviously hiring a CRO from the advertising business has helped us quite a bit. She has brought in a ton of expertise to the business and has made a big difference in the way we look at the business and what we think it can do. We are still a work in progress as we get going, but we feel like we have made a tremendous amount of progress over the last three quarters. The next couple of quarters are big in the advertising business, so we will learn just kind of how far we have come since those are the prime quarters for advertising. But there is a lot of opportunity out there and we are getting engaged. We are having – we are getting more and more at bats on some big campaigns, which I am encouraged about.

Yes. This is Jim. I want to pile on, we are still getting initial campaigns from new clients, but we are getting high repeat business rates as well. And as Gene said on the call, we grow out to five clients now that spent over $500,000 with us and we just got a $1 million order. So we are beyond the test stage in some of our base.

Thank you.

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

Thank you all for attendance today. And as I said in the close, we are excited to invite you to our Investor Day on October 13 in New York City, where we will dive into a lot of these topics in a lot more detail. And we hope to see you all there. Thank you all very much.

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