Good day, and welcome to the IAC Q3 2013 Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Jeff Kip, Chief Financial Officer. Please go ahead, sir.

Thanks, operator. Thanks, everyone, for joining us this afternoon for our third quarter 2013 earnings call. Greg is going to go first and give you the operational and strategic review by business, and then I'll walk you through the financial results and our outlook for the fourth quarter and 2014. And then we'll take your questions. Briefly, though, I'd like to remind you that during this call, we may discuss our outlook and future performance. These forward-looking statements typically may be preceded by words such as we expect, we believe, we anticipate or similar statements. These forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our third quarter 2013 press release and our periodic reports filed with the SEC. We will also discuss certain non-GAAP measures. I refer you to our press release in the Investor Relations section of our website for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. Greg? Grégory R. Blatt: Thanks, Jeff. Overall, it was a solid quarter. We had a strong accelerating performance at Match, solid year-on-year growth at Search & Applications and real progress in a number of our smaller businesses. By segment, first, Search & Applications. There was a lot of positive this quarter, but due to 2 unexpected developments, we fell short of our expectations. Last call, we told you we'd have continued sequential revenue growth in the Websites business, driven by continued strong performance at About and meaningful query growth. Both of these things happened, but implicit in our expectation was relatively constant pricing from Google, and that didn't happen. Instead, over the last part of the quarter, we saw a significant drop in CPCs, so we…

Thanks, Greg. Starting our financial review with Search & Applications. Third quarter segment revenue was up 10% versus the prior year, 2.9% pro forma for About on 17% query growth. OIBA growth for the segment accelerated to 36.8%, 19.4% pro forma for About. Websites revenues, excluding About and CityGrid Media, were essentially flat sequentially and down year-over-year, driven by the CPC declines in the last 5 to 6 weeks of the quarter, as Greg discussed. Query growth, however, was very strong, up 11% sequentially and 32% year-over-year, driven by international query increases. Revenue for the Applications business, as expected, was down sequentially, although more than previously anticipated because our B2B partner revenue came in below expectations, driven largely by the competitive factors Greg described. The B2C business, on the other hand, performed well, with solid year-over-year growth, driven in part by expanded marketing opportunities in the quarter. For the fourth quarter, we expect total segment revenue to decline mid-single digits sequentially. Websites revenue will be down sequentially low- to mid-double digits as the third quarter CPC changes roll through for a full quarter. Applications revenue will likely be up sequentially in the fourth quarter, as year-over-year growth at B2C offsets the previously discussed issues at B2B. Fourth quarter OIBA margin will drop sequentially to its lowest levels of the year, given the full quarter of reduced CPCs. Thus, for full year 2013 for the Search & Applications segment on an as-reported basis, we now expect roughly double-digit revenue growth, with margin leverage yielding solid to strong double-digit OIBA growth. Looking ahead to 2014, we expect revenue and OIBA growth in the mid-single to low double-digit range for the segment as a whole. The Websites businesses will likely start in the first quarter flat-to-down sequentially from the fourth quarter, on seasonality,…

[Operator Instructions] We'll take our first question from Ross Sandler, Deutsche Bank.

Greg, just 2 questions. First is on the buyback. You guys typically are restricted from buying back stock historically in periods where there's some kind of corporate activity going on, whether it be with Liberty or Google renegotiation or something else. Was that the case in 3Q? Can we get an update on what's going on with the buyback strategy? And then last question, Greg. The -- there's been a few combinations out there in the Applications space. Would you ever consider selling the Search business if some other interested party were to come along and look to aggregate more of these types of assets? Grégory R. Blatt: Sure. I think on the buybacks, I think over the last 19 quarters, I think there were only 2. And I just looked, coming into the call, back to '09, so I'm not sure what we did before then. But over the last 19 quarters, I think we bought back stock in every quarter but 2, including this one. There's no -- this last quarter does not mark any change in our capital strategy or anything else. We've said before, there are a number of reasons why we may not buy back stock in a quarter, potential transactions, legal restrictions, marketing opportunities. We're not going to be specific about what they were. But suffice to say that our general approach hasn't changed. We've spent almost $3 billion buying back over -- almost 100 million shares over the last 3 years, and nothing changes about that. I can't go to the specifics of this quarter, but I don't think you can read anything into it beyond just that we didn't do it this quarter. Nothing has changed. In terms of openness to consolidation in the Search industry, look, I think -- we're IAC, we're always open to anything. We're not actively looking to do that. We evaluate every opportunity that comes along. And to the extent there was something that was very attractive, obviously, we'd consider it seriously, but we're not involved in an active process right now looking to do that.

And we'll take our next question from John Blackledge with Cowen and Company.

Two questions. Can you just give an example of some of the factors that hurt the B2B apps segment this quarter and how long these practices could impact the segment, obviously, into the fourth quarter and potentially into 2014? And then could you just expand a little bit more on the potential $120 million in EBITDA in the Other segment within Personals, how you build towards that? And just how much of Tinder does IAC own? Grégory R. Blatt: Sure. Let's see. On the B2B side stuff, I would say it's a complicated mix on Applications. There's monetization. There's also download practices. There are a series of screens you go through, series of practices. There's no one monolithic approach out there. But let's just say that there are plenty of people out there taking download approaches that are far more permissive than we do, with a different set of disclosures and different other things. And we're not doing those things, and that sort of helps monetization. And then there are people who are employing a variety of sort of ad products and other products that we don't offer, for a number of reasons, to our partners and it's theoretically possible in the future that we could. Right now, we've made a decision not to. The outlook that Jeff gave assumes that this situation does not change. So to the extent that the pendulum swings back and these practices become disfavored, that will be a net pop in our numbers next year. As for predicting sort of the length, I think we've already seen there were some news, I think, last week about -- I think it was Babylon and some issues that they were getting into with one of their partners relating to some of these practices. So we're certainly…

And we'll take our next question from Peter Stabler from Wells Fargo.

Greg, could you give us a little bit more color on the B2C Application business? You mentioned it was strong. Wondering if you could comment on whether that included any kind of new monetization strength from mobile apps you developed. Secondly, you mentioned the softness on CPC. Wondering if the query growth came in where you expected. And then a last wildcard here, any thoughts on the domain deregulation and the expansion of gTLD and whether that will impact query growth next year? Grégory R. Blatt: On the B2C side, it's really -- it's a lot more of the same. We continue to turn out really good product and products that, using our Search engine, we're able to sort of identify sort of areas where we think there's a lot of distribution opportunity, and that continues to be very strong. In addition, sort of the flip side of -- flip side of sort of the monetization, the competitive challenges on the B2B side is that most of the software partners using those sort of practices aren't able to get distribution through the same channels that we are on B2C because those distribution channels don't allow those practices. So in essence, there is a -- while there's been some pressure on the B2B side, the countervailing force there is expanded distribution opportunities on the B2C side. This quarter, they didn't balance out, meaning the strength in B2B was -- the strength in B2C wasn't enough to offset the softness in B2B, but we think that will probably change over the next few quarters. What was -- there was a [indiscernible].

I was wondering, did queries come in where you thought they would? Grégory R. Blatt: Yes. I think queries generally came in where we thought they would. We were predicting strong growth. I think due to the CPC changes, we actually had to pull back some marketing. So they frankly would have been even higher. We were on pace to do even better than we had expected. But when the CPC dropped beginning at the end of August, we had to pull back on some of our marketing there because it becomes profit-negative. And so that actually led to decline in queries, but the net of all that was about where we expected it.

So that being said, we're expecting year-over-year query growth to accelerate in the fourth quarter.

Driven by international?

Driven by international. And we've got easier compares. The fourth quarter was a little light last year. Grégory R. Blatt: On the domain deregulation, it's too early to tell, but we don't expect there to be any major effect. We'll watch it, we're watching it in a number of places. But our judgment here is that we're not going to see any real impact from it.

And we'll take our next question from Jason Helfstein with Oppenheimer. Jason S. Helfstein - Oppenheimer & Co. Inc., Research Division: Just to dig in more on the Applications side, though. Given what seems like is probably a temporary issue in the Application business, as you alluded to, I think Yahoo! actually turned off Babylon as a result of those practices. And the market has this as kind of a series of issues, right, that have been discussed in the last few quarters around this business. Would you consider taking advantage of weakness in the stock and potentially being -- leveraging up to buy back stock? That's my question one. And then as you think about some of the emerging businesses, Tinder, Aereo, it would seem that other participants might be willing to pay more. I mean, with Aereo, potentially, there might be an opportunity to sell this to the broadcast industry. Just talk about your desire to recognize that value for shareholders in the environment right now where acquisition multiples seem to be going up for growth assets, both in the public and the private market. Grégory R. Blatt: Sure. I think in terms of the buyback question, look, we're heavy buyers of our stock, and we've been buying -- this quarter aside, we've leveraged up, I don't know. We took out $500 million of debt. Before, we've been buying back stock. I don't know if that's leveraging up to buy back stock or it's just raising capital. I think that -- when we think about buybacks, we don't think about ourselves as being capital-constrained. So I think that we will have the capital to buy back stock going into the future. In terms of realizing value, look, IAC -- I mean, if you go back 7 or 8…

We'll take our next question from Eric Sheridan with UBS.

Two questions. One, I might have missed this, but did you call out the amount of revenue that would have been in Local, that ended up in Search. Just so we got a better sense of the apples-to-apples year-on-year? And then second, when we think about the Search business long-term, I noticed you did do IAC mobile with Yahoo! Sort of longer-term, how do you think about what Google brings to the table on Search today versus partnering with someone else that might be less disruptive to the business sort quarter-to-quarter and year-to-year? Grégory R. Blatt: Jeff, do you want to take the first one?

Yes. The first one, we said it would be about mid-teens million a quarter, CityGrid Media moving to Search. That's about what it was. Grégory R. Blatt: In terms of the Google question, I understand why you sort of look at Google as being disruptive. Google is great. I mean, Google is the best sort of monetization engine out there. We understand that it leads to some volatility, but we've built a $400 million EBITDA business over the last few years relying on Google's monetization, which is the best out there. And they do what they do to protect their system. And we understand that there is volatility from time-to-time. And frankly, we were the beneficiaries of that for 8 to 10 quarters running. And over the last 4 quarters, we've -- some of the changes have been negative. And despite that, we have grown and we expect to continue to grow. And doing the thing with Yahoo! is a great thing for us to do. And, obviously, we like to have alternatives, and we like to have a variety of choices as we go forward. But Google has been a great partner, and our relationship with Google is great. And we don't think about it. We don't think about them as being disruptive. We think about them as being a good partner and, overall, one that's really helped us grow our business meaningfully over a long period of time. So, obviously, anything can happen in the future, but our relationship with them is great. And our contract lasts for a long time yet, and we feel really good about the overall situation.

[Operator Instructions] We'll go next to Brian Fitzgerald with Jefferies.

It's Tim O'Shea for Brian. Just wanted to drill down a little bit more on Google and given some of the CPC changes and the volatility you saw during the quarter. Just curious, what gives you the confidence you can grow from here going forward? And then just real quick on Newsweek. I know there was a gain recorded this quarter, but I believe that you were set to operate Newsweek for 60 days following the sale. Just let me know, are there any -- should we expect any go-forward impact to the financials here?

In terms of Newsweek, the gain we registered was a combination of purchase price and liabilities that we moved on. So we're done. It's off our balance sheet. One thing that happens is we're going to take an impact of deferred revenue that we are realizing against our P&L from subscriptions taken in before this going away. So there's a slight impact going forward, but we're going to have The Daily Beast on a go-forward basis next year. Grégory R. Blatt: Yes, I think on the Google question and confidence we can grow, one answer is simply because this has happened before and we've grown. I mean, there's nothing fundamentally different or new about this CPC change than a bunch of others we've had. It was a little bigger. But, again, going back to my comments, we've seen 15% sort of swings in CPC quarter-to-quarter over 5x in the last few years, and every time, we have grown again. Despite the change that we've had, we're still -- CPCs are up 2x over what they were a couple of years ago. And since it bottomed in October when the thing rolled out, we've already started to grow again. I mean, it's sort of like we are -- one of our competitive advantages is we have a huge engineering team. We have a huge analytics team. Like you set the rules, and we're able to sort of reconfigure to play by them. And as this change took place and we've worked with Google to understand the nature of it, we've already started growing again. That's just the nature of what we do. This is a huge category, and we're still pretty small in it. And I know it's hard to look past the volatility, but the reality is that it's a great business and we're going to continue to grow it. There's a huge opportunity internationally. Domestically, there's still a lot of opportunity. We grew queries 30% year-over-year this quarter. So, of course, we're confident we can grow. The CPC whack is a whack. And, obviously, I wish you didn't have it, but then you grow from there. That's just the nature of this business. So that's not really the concern.

Just to give you a little additional sense. I mean, according to comScore, we have about 3.5% of domestic queries. Internationally, we only have 1.6%. So we have lower penetration internationally where you see the higher growth, and we think there's a lot of room to run there. But we also think that in terms of our Applications business, we have Applications on probably 4-ish percent of the desktops out there, which is a pretty low number. So we think there's ample opportunity to keep growing both businesses.

And there are no further questions left in the queue. Grégory R. Blatt: Great. Thanks, everybody. Talk to you next quarter. Go Red Sox.

And, ladies and gentlemen, this does conclude today's conference. We appreciate your participation.