Ladies and gentlemen, thank you for standing by and welcome to the CoStar Group's Second Quarter 2012 Earnings Conference Call. [Operator Instructions] And also as a reminder, this conference call is being recorded. And at this time, we will turn the conference call over to your host, Director of Investor Relations, Ms. Richards Simonelli. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Welcome to CoStar Group's second quarter 2012 conference call. We're delighted that you could join us. Before I turn the call over to Andy, I have some important facts for you. Certain portions of this discussion contains forward-looking statements which involve many risks and uncertainties that could cause actual results to differ materially from such statements. Important factors that cause actual results to differ include, but are not limited to, those stated in CoStar Group's July 25, 2012 press release on second quarter earnings results and in CoStar's filings with the SEC, including our Form 10-K for the period ended December 2011, under the heading Risk Factors. All forward-looking statements are based on information available to CoStar on the date of this call, and CoStar assumes no obligation to update these statements whether as a result of new information, future events or otherwise. As a reminder, today's conference call is being broadcast live over the Internet at www.costar.com. And a replay will be available approximately an hour after this call concludes and will be available until August 26, 2012. To listen to the replay, call (800) 475-6701 within the United States or Canada, or (320) 365-3844 outside of the United States. The access code is 252801. A replay of the call will also be available on our website soon after the call concludes. I will now turn the call over to Andy Florance. Andy?

Good morning, everybody, and thank you very much, for joining us today for this earnings call. As you might expect, this has been a very busy quarter for us. As you know, we've closed LoopNet transaction on April 30. Today, just a few months into integration, we know dramatically more about the potential of the 2 businesses in combination. What we have learned has not changed our investment thesis. In fact, it has strengthened our belief in it and our excitement about the scale of our potential upside here. I'm very happy the way our 2 organizations are approaching the integration process. Both LoopNet and CoStar Group have a very talented team of great professionals. Everyday, I've seen enthusiasm, open communication, hard work and commitment to strengthening our position as the #1 service provider to the commercial real estate industry. Our greatest strength in this combination is the expertise, professionalism and commitment of our 1,900-person-strong team. The core investment thesis behind the CoStar Group-LoopNet merger is that CoStar Group is a great information service and that LoopNet, a great marketing service. In combination, each service could be effectively cross sold to one another's huge client basis. The combined company is the clear #1 player in marketing commercial real estate on the Internet as well as the #1 go-to source of information for the commercial real estate industry. With common customer profiles and content, we believe the combined companies will enjoy significant cost synergies. I would like to begin today's call by telling you what we have learned so far. I will tell you how we expect to pursue the opportunity to upsell our LoopNet members, who are using LoopNet for information to CoStar's information products, while retaining them as LoopNet marketing customers. I will also tell you how we will…

Thank you, Andy, and appreciate the kudos, which I think I've said before, it's really a team effort, the entire team at CoStar, so I accept the honor on behalf of the entire team. As Andy mentioned, we are very pleased with our performance in the second quarter of 2012, we closed LoopNet acquisition at the end of April. It had included 2 months of LoopNet's financial results as well as some significant acquisition and integration related cost in the second quarter of the consolidated financial statements. Today, I'm going to primarily focus on year-over-year comparisons for the second quarter, on our outlook for Q3 and the remainder of the year and a peak into how we think the next few years will develop. Now to review CoStar Group's results for the second quarter of 2012 beginning with revenue. The company reported $85.2 million of second quarter 2012 revenue, an increase of $23.1 million, or 37.2% compared to revenue of $62.1 million in the second quarter of 2011. CoStar's organic growth rate continue to steadily accelerate in the first half of 2012 compared with the organic growth rates we witnessed throughout the 4 quarters of 2011, which were in the range of 8% to 12%. CoStar's revenues increased 13.8% from the second quarter of 2011, continued by strong sales performance and a small one-time revenue item in the quarter. LoopNet annual revenue on a pro forma basis, before any adjustments, grew 10.7% year-over-year for the second quarter of 2012, which is relatively consistent with their 2011 reported annual growth rate. Therefore, the combined business is currently growing in the approximate 11% to 13% range in a pro forma basis, before any accounting adjustments. We believe that we can continue to accelerate revenue growth rates with the cross-selling and synergy opportunity…

Seriously?

Seriously, all-time high. I wasn't sure it was possible. I had the Yinger Group check it 5 times. The in-quarter renewal rate was 94.3%, just above last quarter's 94%, up from 93.2% in the second quarter. As discussed in prior quarters, one of our large customers, Grubb & Ellis, now Newmark Grubb Knight Frank, filed for bankruptcy in the first quarter of 2012. We expect that contract will be renegotiated. However, if the contract is eventually terminated, it would have a significant impact on our short-term renewal rates, reducing the in-quarter renewal rate by up to approximately 5 percentage points. And the annualized renewal rate by 1 to 2 percentage points. We believe our revenue guidance for this year adequately accounts for the uncertainty related to this customer. Additionally, we received a termination notice from RMS, a DMGI-owned company, that has a data license with CoStar. In connection with the closing of the LoopNet merger, and as mandated by our consent order with the FTC, LoopNet sold its interest in Xceligent to DMGI and has now become one of our primary competitors. The termination is expected to have a one-time impact in our in-quarter renewal rate in the fourth quarter of 2012 of approximately 1%. At the end of the second quarter 2012, the existing CoStar business had 96,096 paying subscribers while the LoopNet business had 100,507 paying subscribers, so one or more of LoopNet's commercial real estate_ related services. Both subscriber numbers increased compared to the first quarter of 2012 and the second quarter of 2011. In the quarter, CoStar products featured 1.5 million listings while the LoopNet commercial real estate marketplace included 823,000 active listings. As Andy discussed earlier, we're making great progress in aligning the CoStar and LoopNet databases in an effort to ensure our information services…

[Operator Instructions] And we'll take our first question in queue from Bill Warmington from Raymond James.

The -- a couple of housekeeping questions, the -- I wanted to ask what the CoStar, or are they actually the LoopNet revenue contribution was? I wasn't sure if I caught that on a stand-alone basis.

I don't think we've put it on a stand-alone basis, but we gave you the pro forma before adjustments, it grew year-over-year at about 10.7%. I think the businesses are combined so we're going to continue to report a combined number.

Okay. So is there a way to get to the CoStar revenue without Loop, is what I'm trying to back into...

I think we gave the year-over-year growth rates on that, too, on an organic basis, so I think that was 13.8%.

And then it's important to note that going forward, there's going to be a lot of revenue moving back and forth between these entities. So if we're taking somebody from $89 of information or in product in LoopNet over to $509 of CoStar-ran revenue, you're going to see -- it'd be difficult for it to track what's happening there and what's actually original LoopNet revenue, what's original CoStar revenue. So it will get very blurred pretty quickly. What will be more relevant is probably total marketing revenue and total information revenue.

What I can tell you, Bill is that when we announced the combined company's guidance, I gave a range of the CoStar's business to $70 million to $71 million, I can tell you we came in much above that number. And then, you get back in the Loop number, they came in much above the guided number, too. So both businesses, it wasn't like one did better than the other, they both were above the guided range, which is you can see the combined numbers of 85.2, well above the guided range. So that's...

Got you. On the marketing spend, the -- it looks like it's about $2.2 million to $2.7 million, I want to make sure that, that number is right, does that include the $700,000 in the U.K.? And I just was going to ask how you plan on -- some detail on how you plan on spending the incremental marketing spend?

Yes. I'll answer the first part and I'll let Andy answer the second part of it. The marketing spend -- now the U.K. is a separate number but again, it's all included in the guidance. I think your number is a little bit low, you'd have to sort of divide by the number -- you have to multiply by the number of shares and divide it by sort of the non-GAAP EPS tax rate of 38%. So your numbers are probably a little bit low, but the U.K. is not included there, but of course both of them are included in the guidance number. The timing -- we're working through the timing of that now so it might be late in Q3, it might push into Q4, it might push in a little bit next year, I think there'd be a big push in Q4 for sure. So that's why it's a pretty big range and the majority of it will hit in the fourth quarter. And so that will depend on where we end up in sort of our guidance range. And I'll let Andy talk about sort of what his thoughts are around the details of the marketing.

Sure, I'd be happy to. So in the U.K., obviously it's a much smaller number of cities, a smaller economy. It will be a rollout of the CoStarGo app similar to the one we did in the United States with event-based marketing but just a much smaller scale because it's a smaller country. And that was very successful for us here in the U.S. So it's just a repeat of that. Then you have to consider those 130,000 leads and you're going to want to communicate with them with at least 4 pieces of direct mail along with supporting electronic initiatives. And then on the LoopNet side, creating -- we want to create awareness among the million listers in the -- million listings universe of CoStar for -- we want to let them know about the opportunity to generate greater awareness that are listings in the general business community, investor community through again a series of direct mail campaigns. We retained an agency in San Jose, that's done a great job putting together a campaign. We're going to be communicating with the people who broker the listings as well as the owners behind the listings. And we're going to do one marketing event that I'm not going to talk about and you couldn't imagine it in your wildest dreams, you'll see it on YouTube, I think you'll agree it's sort of funny and useful and effective. So we just believe that the opportunity is there. There's never -- if I'm a broker in San Diego working for CB Richard Ellis, it doesn't have any listings in the LoopNet systems, I don't think that person's ever considered trying to generate more leads for their listings using LoopNet. They've never received a direct mail piece from LoopNet, they've never received any sort of marketing from LoopNet, so I want to -- I mean any sort of traditional marketing media from LoopNet, so we want to break that ground quickly.

Okay, Well now the Chicago tests sound very promising and I wanted to ask, what -- a couple of things. One is your thoughts on what it is -- and we went through some real detailed statistics but conceptually, what it is that has kept people from switching over from LoopNet to CoStar in the past and how are you going to overcome that? And then the -- also how you plan on attacking the markets? You'd go after the larger ones, smaller ones, how do you plan to do that?

We'll definitely do a staggered lead system. We're going to migrate more people from our centralized operations into field operations to try to scale the number of people we've got in the field to deal with the opportunity. We'll definitely pursue some of the more likely leads based upon search activity, intensity of search activity, tenure inside the LoopNet system, and we will allocate out these leads to sales people, based upon their success in closing the leads they do receive. We feel comfortable with -- I mean we spent a fair amount of time and effort in researching how to present the products to these prospects. We -- I mean the reason they weren't considering it before is because LoopNet and CoStar Group were not one company, neither company could make the promise of having a one-stop shop where all the listings were in one place. Neither company could effectively communicate what was happening in a multimillion record databases that were changing by the hundreds of thousands every day, just it was too complicated. Now with one uniform back end, you can clearly communicate it, your message is completely credible, because they know that your briefcase has both LoopNet and CoStar. And so we're pretty excited about it. I described it briefly -- coming out that day in Chicago, I have described it briefly as the most exciting day of my life.

Our next question in queue will come from the line of Brandon Dobell with William Blair.

A couple of things. First, I guess if I were to add up all the different metrics you guys have given us the past several quarters, it would be like 1,012. I'm trying to get an idea on a go-forward basis, are we going to get some consistent metrics like LoopNet used to provide on paying premium subscribers, that kind of stuff, so we can start to model this thing a little bit more accurately, if I guess on both the CoStar side, and the LoopNet side? Or how should we think about what metric should be the ones that we should be paying attention to that you guys are going to give us.

Yes. So Brandon, it's Brian. So actually, if you went through the call, the reason why there's so many metrics because I gave pretty much almost every metric that CoStar had been giving in addition to every metric that LoopNet has been giving, so if you go back through it, you'll see all of them. And so we didn't really take any away, we gave the premium member number, we gave what they call ARPU, average revenue per member, we pretty much gave -- we gave the CoStar bookings number, I mean, we gave every number that each company always does. So it has been only 2.5 months, so we are looking at which -- how do we sort of combine these. We're obviously going to skinny it down and not give so many numbers. It's sort of funny, some people want more data and metrics and then other people want it streamlined. So we are going to streamline it, that's what I was saying. I think that -- obviously continue the renewal rate and the CoStar bookings numbers, are going to be is relevant because 75% of the business is still sort of CoStar, core CoStar information services. And I think that the LoopNet stuff will sort of be toned down a little bit, but we'll also come up with some new combined numbers. So next quarter I think we'll give you a little bit more clarity on some of those numbers. But if you go back through it, we gave you all of them.

And Mr. Dobell, another thing that's going to be a little tricky is we don't want to spend too much time and energy focusing on the total LoopNet premium customers and the number of CoStar users. Because over the last -- over the next 12 months, I think that number will be a little deceptive because you don't quite understand the overlap in the duplicate level. Within -- our goal will be to try to integrate -- for exactly that reason, we're going to try to integrate the back ends of LoopNet and CoStar Group on an expediated basis. We'll make it a higher priority for the company. And the benefit, among other benefits -- one of the benefits will -- is that we'll be able to give you a -- just a unique customer number for the combined company that will actually allow you to effectively measure how we are doing in terms of capturing the scope of the opportunity. But when you're looking at LoopNet premium and CoStar members, that's going to have duplicative -- it's going to have overlap.

Okay. And then Brian, I wanted to clarify something in your remarks about the run rate. Exiting '14, you said low- to mid-30s adjusted EBITDA margins, is that for the whole of 2014? Or should we think of that as a fourth quarter -- potential range for 2014?

Yes. I think both numbers are sort of an exiting run rate. And I think that's sort of the goal we're putting out there today. Obviously, Andy and I are very competitive, we like to beat goals, but the goal of $500 million run rate at a low- to mid-30% range exiting '14, which I think is a pretty good number. And that's really with all the things that we've talked about today sort of organically. So I think that again -- Andy and I obviously will do our best to do better.

Right. And then final question. Organic growth rates at both companies, a little bit faster than we thought we'd see it at CoStar, but pretty much in line with LoopNet. The CoStar organic growth rate, maybe some color on the puts and takes as we think about the next couple of quarters? You mentioned the Grubb and the DMGI termination in Q4 as potential noisy bits. But what else is out there that could move that organic growth rate around? And/or I guess in the back half of the year, are you assuming any material difference in those organic growth rates within your guidance? .

Yes. I think last year we were anywhere from 8% to 12%, so it's fairly, steadily accelerating. Obviously you can see, we continue to accelerate for the first half of this year. LoopNet's, obviously, running at lower growth rates. So as a combined company, it obviously brings down the combined number. There are -- there is lots of noise in the back half of the year, accounting adjustments, deferred revenue adjustments. I did talk a little bit about -- we are evaluating various services that the company has that we might deemphasize or decide not to do anymore. We factored all that into there. So there is going to be a lot of noise in those numbers. But I think the 11% to 13% range, factoring in all that noise, is sort of a good range. And then obviously, as we see how those cross-selling goes -- I mean it's obviously going to be a big topic of conversation on the next couple of calls, what kind of results we see. Then, we can then give a little more clarity for next year. But clearly, I don't -- talking about all of those numbers, there's a good range out there for next year. And as we get more clarity in the cross-selling, hopefully, again, we can do better. But there is a lot of noise in the back half of the year, and I think I mentioned here, the fourth quarter typically -- again, I mean, everyone on the call has been following LoopNet, too. It's typically seasonally low for them. So again, we have to factor a lot of that noise in. But I think we're feeling very, very good about '13 and '14 based on the prospects. There are several important days in there.

Our next question in queue will come from Brett Huff with Stephens.

Congrats on a nice quarter and giving us some longer-term guidance, guys.

You're very welcome, we're glad to do that.

As you guys think about uses of capital, it seems like you're -- it's just all piling back into the business. And when you guys are doing that, give us a sense of how you make those decisions? I mean you've outlined them a little bit, you have a lot of levers that it seems that you can pull and invest in, and you've chosen a $0.10 to $0.12 lever with the cross-sale. How do you guys internally manage how you allocate that money, is it ROI-driven? Or -- what's the kind of process because it seems like there's a lot of choices that you could make?

Well, it's ROI-driven, I would say. So there are a lot of choices you could make. We obviously -- you know we are -- we would have a 5-hour conference call -- earnings call, if we were to go through all the different things that are going on in the business. So when you look at all the opportunities out there, like we didn't touch on our French operations, our residential information product in Paris. So we look at things like -- the cross-selling opportunity to us, and to our board, is obviously the biggest ROI. And it has, in addition to having a what we perceive to be, or believe to be a very high ROI, it also has a real strategic urgency to it. You'd like to create the single stop-shop as quickly as you possibly can and get brand recognition for it. So that's what we're thinking about. It's the things that we believe are the "unconscionable if you don't do them" things.

And Brett, there's so much leverage in the model. As everybody knows, going after this opportunity and then you talked about on the cross-selling and synergies is extremely high margin. Obviously, you're paying out some commissions on that, but we know -- we talked about having a 300-plus person combined sales force now. You have a large sales force, you have this large opportunity and ease dollar that you get in there is significantly high margin dollars. So I think clearly, when you look at the ROI and the potential for that, right now, it's -- I mean I think it's easy to say it's #1. I mean, it's the #1 opportunity for the company.

Okay, it's helpful. And then in terms of small cities, I know you all have -- were building the CoStar-based product to small cities, right, kind of as the recession started. LoopNet, I think, has probably better penetration there, and even Xceligent has some better penetration in the smaller cities. But I think that's -- to me, it seems like low-hanging fruit. Can you be fairly specific or give us a sense of what the small city strategy is from here? You know, is it CoStar Suite, I think, is what you call a particular product that might work there? Kind of where are we on that strategy?

Sure. I would not begin my answer with accepting your characterization that Xceligent has achieved meaningful penetration in a small way, in small cities or anything of that nature. So in fact, we've actually done extremely well over the last 2 years in penetrating those smaller markets. So in the bottom 200 cities, we've seen phenomenal year-over-year growth and through our fly teams, which are based in DC and periodically travel in to certain targeted markets, they got -- they had great growth over the last 2 or 3 years. So these markets are now -- I would say, as a group, the smaller markets are profitable for us and are doing well. I would actually say that LoopNet's client base -- so you take Corpus Christi, Texas, LoopNet might have 100 customers there, 150 customers there, and that is more than CoStar has there. However, what I'm more focused on is the fact that LoopNet has 11,500 customers here in Los Angeles that we don't have. So the small markets today are successful and profitable for us. There is no market anywhere in the United States that I'm aware of, where anyone has any more penetration than we do. So the smallest market, biggest market, we got more penetration. But the story -- that smaller set's profitable and you can't walk away from them because they do make money, and -- but the real story is going to be Texas, Florida, California, the New York Tri-State area, that's just overwhelming, it's just stunning. Like if you -- we now have 19,000 users here in Los Angeles County. And that is just -- that's an amazing number. And so up selling that group is still just the 800-pound gorilla.

Our next question in queue will come from Ian Corydon with B. Riley & Company.

I wonder if you could just provide an update in CoStar Fusion and the analytical products that you have under development.

Sure, I'd be happy to. We -- those hit the cutting room floor last night at Page 20 and 25. So we are making it -- the absence of discussing, I don't want anyone to think that we're not working on that. We -- I spent all day, Monday and Tuesday, with a combination of senior software execs from LoopNet and CoStar, and private design people from CoStar who are working on that. And I believe the specification for Fusion is now over 2,400 pages long. And we viewed and discussed the designs covering maybe only 700, 800 screens, Monday, Tuesday. And I am blown away by what the analytic side of our design team has produced, as led by a guy named Jay Spivey who came to us from -- the analytics side is led by a guy name Jay Spivey, who came to us from Jamison acquisition back in 1998, '99, been with us for a while. He did a phenomenal job, it was just stunning. It takes what we're doing in the analytics up 5 or 6 levels. In addition, our R&D quantitative team based at PPR has been working on some very interesting initiatives that will keep confidentiality part of that new analytic release. So it's very impressive stuff, it will not -- there's no chance that it will release anytime in the next 2 or 3 quarters and we will likely -- well, we'll be developing it. We will prioritize integration, we'll likely prioritize integration of the LoopNet, CoStar database first and foremost, because once you do that, it gives you more stability in the platform, it gives you better intel, better communication with shareholders, better marketing capability. It also frees up a lot of development resources to work on one common set of goals. So it's alive and well, it's fantastic, it will blow your mind when you see it, but it's of a scale and the scope that's quite significant.

Our next question on queue will come from Marc Fuller with Needham.

Just a question on the Chicago cross-selling. I'm kind of wondering, can you give us any more color on kind of how many regions outside of Chicago by the end of the year you might be penetrating or kind of selling into? And how many users -- end users does this kind of represent?

Well, what we're going to do is -- we are now in a process of taking what we learned in Chicago. And initially, we have given a day of training to the sales force, we're going to do a follow-up training with them. We are, today, working on our strategy for utilizing an additional 40 of our salespeople, who've initially have worked in our centralized sales role to go out and hit the opportunity which is too big for our current field sales force to fully cover. Our first priority will be to go after the biggest cities. These massive pockets in California, Texas, and the like. So that will be the priority for the first 2 quarters or so. And then we'll be fanning out to cover the Corpus Christis and Albanys in 2013. And the number of users that this impacts, again, both LoopNet and CoStar, probably 80-plus percent of our users are in the top 100 MSAs, which is where we initially focus. And probably 80-plus are in the top 50 MSAs. So that's where the user accounts are, initially.

Got you, got you. And then I'm not sure if I missed this, but did you say kind of how many -- what percentage of your bookings is from new users versus up sells?

In Chicago?

No, overall.

Overall. It was approximately where it's always is, in the 50-50 percent range. I think some of the things that Andy was talking about was pretty much a couple of weeks ago.

2 weeks ago.

So -- yes. There was really no impact at all in the second quarter. And obviously we'll have a lot more color on our next quarter's call for you guys.

Cool. And then last question, did you mention how many CoStarGo users were added in Q2?

We did not. Do we have that number?

CoStarGo users. We do not have that in front of me but it's has continued to trend up.

We're still getting -- we're still on year 1, I guess, probably a 10-year product life cycle on that and getting great feedback.

Our next question in queue will come from Todd Lukasik with MorningStar.

Just a question on, let's say, the integration and the synergy. It sounds like you guys are still comfortable at sort of the $20 million in expected expense synergies.

That's correct, yes.

And given the initial information you have from the Chicago market, are you guys -- can you share with us a number that you're thinking about for potential revenue synergies? Or maybe just ballpark, I mean, no greater than or less than expense synergy expectations?

Well, without any doubt, dramatically greater than -- orders of magnitude greater than the expense synergies. So if you -- I don't know, if you took the -- what was the average sale so far? If you take the 15 units in Chicago and divide them into -- divide with it $8,800 sold so far. And then assume it's a 500% increase and then run that against the $130,000 against the 54% that said they would upgrade, the number's stupid big and we won't even say it. So it's orders of magnitudes larger than the synergies side.

Okay, got you. And then just with regards to the listings, are those -- did you say whether they are being integrated now, so anything that was in the LoopNet system but was not into CoStar, is now also in CoStar now? Or is that a future enhancement?

No, that's done. We didn't waste any time there. It completed today, basically. So the systems ran today. And they've gotten through the listings. I think there were a handful of calls out still that were not in there, but basically they moved through the whole file. It's over 50,000 listings, several thousand new listers. And that was done in a combination of -- with Wayne and his team and Frank and his team connecting the databases automatically on a one-time basis, sort of in an automated fashion, one-time basis. And then taking out all of the exceptions to the research department, who then reached out and had conversations with those 50,000-some-odd listings over the last 2 weeks, 3 weeks. And -- but long term, we want us to be automated which is why we're going to integrate the back end, so that when you enter a listing in LoopNet, it's basically entered into CoStar automatically. It will go through a verification process but it gets -- it's basically the same database. So it will be technically impossible to have a valid listing in LoopNet that's not in CoStar. And ultimately, I think it will -- like initially, it actually increased our cost of research because your adding 50,000 listings, making hundreds of thousands of phone calls. Longer term, I think it will reduce our costs when it's automated.

Right, okay. But all of that, sort of, user-generated content is still going to be verified by your researchers?

That's come across loud and clear in the focus groups with our customers that they are -- that's a top priority to them and it will.

Okay. And by your expectation is that -- that doesn't -- and you're not going to need more researchers to do that? You can do that with the current staff?

I would guess we're going to get a significant productivity gain here, especially after we connect the databases and for a number of different reasons. You still have a trend, which I think that the coming together of LoopNet and CoStar Group will accelerate that trend, because now you have an even clearer picture in the industry of what the main clearing house is. And that trend is, people are creating more and more listings. So that prior -- putting a building up for sale was done with a lot of forethought and it was done less frequently. People are putting their buildings up for sale more and more frequently. So if I go back to 10 years ago in Washington DC, approximately 1% of the buildings in Washington DC were marketed for sale. Today, I believe the number is closer to -- 12% of all properties in Washington DC are being marketed for sale. So -- and against a database that's more than 50,000 properties in Washington DC. That's significant growth. So you've got people using CoStar or LoopNet as a clearing house more aggressively. That's good news, big picture for our role in the industry, the utility of the company and our potential revenue, it does put up a pressure to continue to grow the scope of people dealing with all of these people selling their buildings. But I think the 2 will balance out, and I think you'll get continued productivity gains and you get continued accelerations with the amount of content coming at us.

Right, okay. And then with regards to the sort of the year-end 2014 goals, $500 million run rate in annual revenue. I'm assuming that's based on an expectation of organic growth as opposed to unannounced acquisitions at this point?

That's correct. I think, that should be clear, that's based on what we've talked about here today. So with, sort of, the product services, geography, things that we've talked about.

Yes, I guess you guys will be busy with the LoopNet stuff for a while. And then just with regards to the adjusted EBITDA margin, I mean as the low-30s to mid-30s that you gave there, is it safe to assume that the only adjustment between reported EBITDA and adjusted EBITDA, that the expectation for that will be stock-based compensation expense at this point?

Yes, I mean it's the same -- to say the same adjustments. So if we were to be doing other acquisitions or anything else down the road, which would be on top of those numbers, those -- it would be the same adjustments that we always have. But so barring any of those, yes, it's the same adjustments, nothing new.

At this time, we have no additional questions in queue. Please continue.

And with that, we'll conclude the call. Thank you all for joining us and we appreciate your support. And we look forward to talking to you next quarter.

Thank you very much. And ladies and gentlemen, this conference will be available for replay after 2:30 p.m. Eastern time today, running through August 26 at midnight. You may access the AT&T executive playback service at any time by dialing (800) 475-6701 and entering the access code of 252801. International participants may dial (320) 365-3844. That does conclude your conference for today, we do thank you for your participation and for using the AT&T's Executive Teleconference. You may now disconnect.