Good day, ladies and gentlemen, and welcome to Cogint’s Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Jordyn Kopin, Investor Relations. Please go ahead.

Good afternoon and welcome. Thank you for joining us to discuss our third quarter 2017 earnings results. With me today are Derek Dubner, our Chief Executive Officer; and Dan MacLachlan, our Chief Financial Officer. Our call today will begin with comments from Derek Dubner and Dan MacLachlan, followed by a question-and-answer session. I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website. To access the webcast, please visit our Investor Relations page on our website www.cogint.com. Before we begin, I would like to advise listeners that certain information discussed by management during this conference call are forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Form Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. The Company undertakes no obligation to update information provided on this call. For discussion of risks and uncertainties associated with Cogint's business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K and the subsequent 10-Q. During the call, we may also present certain non-GAAP financial information relating to adjusted EBITDA. Management evaluates the financial performance of our business on a variety of key indicators, including adjusted EBITDA. The definition of adjusted EBITDA and the reconciliations to most directly comparable GAAP financial measure is provided in our earnings press release issued earlier today. With that, I am pleased to introduce Cogint's Chief Executive Officer, Derek Dubner.

Thank you, and good afternoon to all who are joining us today to discuss our third quarter results. Cogint is pleased to report a very strong third quarter with record revenues of $57.2 million, a 10% increase over the third quarter 2016. Gross profit margin increased 10 percentage points over prior year to 34%, and adjusted EBITDA increased 84% to $5.8 million. We experienced continued strong broad-base customer demand from existing and new products across both our risk management and marketing services business. Our record revenues and achievement of our set goal of very significant gross profit margin expansion is despite the unique non-recurring challenges we experienced in the quarter. We were impacted by the hurricanes in Texas and Florida as these events affected not only traffic acquisition, but key customers. Of note, our ability to target consumers in both key states was impacted by outages as well several key customers on the marketing services side of the business with reliance on large call centers were impacted by not only the reduction in workforce in preparation for the storms, but also during and after the storms which caused these customers to pull back impacting revenue, as well senior management across the businesses had to devote very significant time, effort and expense in negotiating and constimating [ph] an agreement with BlueFocus International in regard to our transformational transaction which I would discuss in detail shortly. Notwithstanding these challenges, we still posted strong numbers and I am very encouraged by Q4 pacing to date. Our information services segment revenue increased 54% to $22.8 million. Information services gross profit increased 182% to $10.1 million a 44% gross profit margin. Our performance marketing revenue decreased 8% to $34.4 million as we focused on higher-quality revenue which delivers greater margin. This is demonstrated by our…

Thank you, Derek and good afternoon. This time last year, we talked about spending into some key initiatives, seeing strong proof points within our business model that would allow them to continue to leverage the scalability. At the end of 2016, we talked about the acceleration of our product roadmap, the relief of innovative new products driven by our technology platform, and the increasing adoption of our solutions by customers across markets. What we have seen in 2017 and particularly with our third quarter 2017 results, earning record revenue and record gross profit is the re-affirmation of the continued execution of our business model and market strategy, focusing on those growth categories and clients that provide us the greatest opportunity for margin expansion and ultimately leading to bottom-line profitability. We experienced a number of onetime non-recurring expenses that impacted our P&L in 2017, and the total amount 17.6 million, including 9.2 million and non-recurring legal and litigation costs and 8.4 million in acquisition and restructuring costs. However, we remain intensely focused on driving the company to bottom-line profitability and believe we are now well-positioned to do that. Our information services segment continues to scale expanding our consolidated margin; our performance marketing segment continues to drive consistent growth across multiple verticals and channels. We are well-positioned for accelerated growth in the coming quarters at both the top and bottom line. Moving onto our third quarter results, revenues were $57.2 million a 10% increase over third quarter 2016, driven by strong growth within our information services segment. Adjusted EBITDA was $5.8 million, an 84% increase over third quarter 2016. Adjusted EBITDA margin expanded 400 basis points to 10% as compared to third quarter 2016. Continuing to the details of our P&L, as mentioned, revenues were $57.2 million for the third quarter, despite…

Thank you, Dan. In closing, we posted yet another strong quarter. We delivered record revenue and we executed upon our goal of delivering margin expansion. We’re not building the company for today or tomorrow or even next year. We are building a company for the future. I’m very proud of what we have built, but not complacent. We have much to do on our roadmap. We had unique and valuable technology, approving and dedicated team, a differentiated suite of solutions and demand from our customers, and we are embarking upon a transformative period where we are setting our two businesses in motion on an accelerated path to growth. Given the unique circumstances impacting us this quarter relating to the hurricane and resource allocation to the BlueFocus transaction, we see full year 2017 revenues north of $220 million. We are very optimistic about the fourth quarter and our prospects for 2018.

[Operator Instructions] And our first question comes from Jim McIlree with Chardan Capital. Please go ahead.

Yes, thanks a lot and good afternoon.

Good morning, Jim.

Thanks. Did the comp report have any impact on Q3 revenue, was there any revenue from the comp report in Q3?

I would say it would be diminimus in Q3, we launched at the end of Q3 beginning of Q4. And Jim, it’s very traditional for us to provide for example, a seven day free trial in this business to let customers access that product, so in fact that’s consistent what Dan is saying.

All right, so is it reasonable to expect that the Q4 that the impact from the comp report in Q4 will be I don’t know, let’s call it noticeable, but not overwhelming ?

I think, look when you look at the information services inside the business, we feel Q4 you’ll see a bit of that the revenue come in but really see notable noticeable material revenue in Q1 of 2018 from the comp report.

And Jim, it’s really not – it’s for me it’s not a straight line to the comp report. The comp report is a tool within as I say the arsenal. And so, when you go to a customer and you bring a full suite of solutions, it’s that essential part of that solution that wins the customer. And so it’s really the exponential effects of having the comp report and bringing on new customers, getting them to utilize the system, in expanded ways rather than just basic ways. So, it’s while it’s not – it really have an effect throughout the revenues much greater than just seeing it in the comp report.

Okay, that’s understood. And just to stick on that a little bit, so you talked about a product development pipeline, as we go through 2018. So would it be reasonable to expect that those impacts build on each other throughout the year as more and more is developed and released, that – is that a reasonable way to look at it?

That’s an extremely reasonable way to look at it, that’s really the way these systems are built. You know we, we’ve often said that we released very early iteration very basic products along the way just to the word out, get the branding out, let customers know we’re back in the marketplace, but each solution complements the other. If you are doing a deep due diligence you’re really looking to mitigate risk or figure out information regarding a subject, it’s the comprehensive suite that matters. So every offering as we not only develop it, but every new release is more effective in winning over the customer and then getting fully ingrained in their workflow.

Got it. And you guys mentioned the hurricanes a couple of times, I know is difficult to put a dollar amount on how much you think that had an impact, but if you put a – could you put a dollar amount on what the impact was from that hurricanes?

It is extremely difficult to quantify the impact of the hurricane with great detail. Now as Derek articulated in the call, there were a number of ways in which it impacted us as a company. We have however tried to quantify that number based on some internal trending reports, and we have estimates as high as $1.5 million to $3 million in total impact in the third quarter. But again, it’s very difficult to accurately quantify that number.

Right, and then the BlueFocus impact would be on top of that.

Correct. I mean the amount of time for management across the board, high level management, you know kind of middle management if you will dealing with the due diligence, trying to consummate the transaction, it was a tremendous effort across the entire organization focused on that while running the day-to-day operations of the business.

And on that BlueFocus issues, so it’s we should expect G&A and Q4 to include some element of a BlueFocus work as well, is that correct?

Yeah, there was a good portion of the BlueFocus transaction cost included in Q3. There was some in Q2 but however at that point we hadn’t announced the transaction yet, there will be some additional work in Q4 related to the transaction as well.

And is that likely to be higher than, less than, or equal to what was on Q3?

It’s likely to be lower than what we saw in Q3.

Okay. I think that’s it. I’ll let someone else ask questions. Thanks a lot.

Thanks, Jim.

Thanks, Jim.

Our next question comes from Jim Goss with Barrington Research. Please go ahead.

Thanks. I think this was probably addressed earlier when the deal was announced but the motivation of the combination of Fluent in IDI was partly to create critical mass as the business of idiCORE was created. I am wondering what makes now the right time to have the separation, are you saying that the progress is such that there will be sufficient critical mass for it to stand [Indiscernible] idiCORE to stand on its own or are there other aspects that are driving the deal?

Yeah thanks, Jim this is Derek. I think you hit it on the head on one of them. There are two primary aspects. We’ve said all along that the first two years during this company on the risk-management side, we were in development mode. And so, we also said that the turn of 2017 that we would switch from development to sales driven, and we built out our sales floor, hired some outside representatives, and have taken products to market. And so you are correct that this was a nice inflection point for us, a turning point for us to look at a transaction such as this. As important, however if not more so, you can see on the marketing services side of the business, we have an incredible business. We have, it’s a very unique business. I don’t know of any company out there that engages with the consumer and can deliver such a targeted consumer to the right advertiser the way Fluent can. And when we were presented with the opportunity of taking Fluent International upon the signing of a [Indiscernible] essentially and combining it with two incredible international assets. As I said, I think this is a path that propels both businesses, it really accelerates the businesses far faster than we probably could individually or collectively excuse me as one company. That said, I think we’ve been doing a great job doing that, but again, you also identified that the risk management side of the business is at a nice inflection point, and again this is a great opportunity for it to be a springboard for Fluent, to expand its business very significantly.

Okay, do I understand correctly that FOREWARN is part of the idiCORE business?

That’s correct.

Could you discuss maybe the scaling of it and the relative importance is this something that’s that you’re expecting to be very major in and have additional applications beyond the real estate market that you are starting with. And other, is this an example of other specialty products -- you and services you expect to be on the come?

Yeah, definitely yes, Jim. The core platform that we built, this proprietary platform developed by none other than Ole Poulsen and our Seattle-based technology team. Proprietary next-generation cloud based, you’ve heard me say those terms, Jim. It’s a incredible platform one that confused billions of records it’s highly scalable, and it’s unmatched in power that I’ve seen in the industry since I’ve been in it. And with that platform, we can power many, many solutions and we were not even scratching the surface yet, Jim. We’ve talked before about our longer-term initiatives of taking that platform and not only having it layered over our existing data, from layering it over end-user databases, large Fortune 500 companies understanding their complex problems and solving for those problems by fusing their disparate data along with ours. So there’s an extraordinary platform of which we are going to use to power solutions for many years to come. FOREWARN is just one solution that again through our research we identified a market need, and frankly the response is overwhelming. We had to staff up the team in the last two weeks to accept the inbound demand for this product. And it’s quite extraordinary, it’s an industry that you’re primarily mobile as a real estate agent. You are contacted by an individual, who claims they want to see that multimillion dollar property and yes there are few businesses where you walk into a scenario where you’re completely vulnerable and you have no idea who you’re dealing with. And really, those are the solutions that our platform and idiCORE bring to market. And so yes, you are going to see these are applicable to many areas, we are running down those paths today. And again, for much broader uses and solutions in the future.

Okay, and maybe the last one. You did outline why the revenues, while increasing, were not increasing to the scale that I think we probably expected, and then you talked about the fourth quarter, full year guidance of $220 million, which suggests that the fourth-quarter might have some of the same issues, now I’m wondering why it would carry over into the fourth quarter, that it might lag the expectations that might have been there certainly around midyear?

No, Jim. I think perhaps I’m being conservative, but given where we are today and entering into the fourth quarter, I felt that was an appropriate place to say north of $220 million. I feel very good about what I’m seeing in Q4. I like the trends a lot. We’re still focused on very profitable revenue and that the trending is looking very strong. So I feel good where with that – with north of that number today, and we’ll see where we go, and we are entering our best quarter.

All right. Thanks so much.

And this concludes our question and answer session. I would like to turn the conference back over to Derek Dubner for any closing remarks.

Great. Thank you very much. Well I’ve basically stated what I wanted to as far as closing again. Thank you all for joining us today. I think this is just another fantastic quarter and I attribute that to an incredible technology, incredible data sets and most importantly, incredible people. We have an incredible organization with just all kinds of people from disparate areas, disparate education, disparate capabilities but together as one. The synergies are outrageous and we are building an amazing company. So I want to thank everybody for joining us today, and have a great evening.

The conference is now concluded thank you for attending today’s presentation. You may now disconnect.