comScore, Inc. (SCOR) Q4 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the comScore Fourth Quarter 2012 Earnings Conference Call. My name is Keith, and I'll be your operator for today. [Operator Instructions] As a reminder, today's conference is being recorded for replay purposes. And the first speaker today will be Mr. Ken Tarpey, Chief Financial Officer. Please go ahead, sir.

Good afternoon. Thank you very much. Welcome to comScore's Earnings Call for the Fourth Quarter and the Full Year of 2012. Again, I'm Ken Tarpey, CFO of comScore. With me today is Magid Abraham, our President, CEO and Co-Founder; also with us today are Cam Meierhoefer, our Chief Operating Officer; and Serge Matta, our President of Commercial Solutions, will be available during the question-and-answer period. Before we begin, please allow me to read the following disclaimer regarding our use of forward-looking information and non-GAAP financial measures. During the course of today's call, as well as during any question-and-answer periods that may follow, representatives of the company may make forward-looking statements within the meaning of the Security Act of 1933 and the Securities Exchange Act of 1934 regarding future events or performance of the company that involve risks and uncertainties, including, without limitation, the strength of comScore's business; expectations as to opportunities, including new customers and markets for comScore; expectations as to the growth and composition of comScore's customer base and renewal rates; expectations regarding the impact and benefits of particular lines of business and products; expectations regarding the relative quality of comScore's products; assumptions regarding tax rates and net operating loss carryforwards; and forecasts of future financial performance for the first quarter and full year of 2013, including related growth rates, exchange rates and assumptions. Such statements are only predictions based on management's current expectations. Actual events or results could differ materially from those predictions due to a number of risks and uncertainties, including those identified in the documents comScore files from time to time with the Securities and Exchange Commission. Those documents specifically include, but are not limited to, comScore's Form 8-K filed earlier today relating to this call; comScore's Form 10-K for the period ending December 31, 2011, and comScore's Form 10-Q for the period ending September 30, 2012. We caution you not to place undue reliance on any forward-looking statements included in these presentations, which speak only as of today. We do not undertake any obligation to publicly update any forward-looking statements to reflect new information after today's call, or to reflect the occurrence of unanticipated events. In addition we may also reference certain non-GAAP financial measures in the course of our presentation. You will find in our press release and on our Investor Section's website a reconciliation of non-GAAP financial measures discussed during today's call to the most directly comparable GAAP financial measure. The link to our investors section of our website is ir.comscore.com. And our results are posted under press releases. With that, I will now turn the call over to Magid.

Thank you, Ken, and thank you all for joining our earnings conference call for the fourth quarter of 2012. We have some slides that accompany our comments and it might be helpful to follow them. I'll first provide some highlights for the quarter of the year and then Ken will provide more detail on our financial performance. Look, there is no question that 2012 was a tough year, but I am happy to report that we ended the year on a strong note. I'm happy with Q4 results. I'm also excited about the progress we're making in our transformation strategy from a pure measurement company to a realtime analytics company. As you see on Slide 5, revenues reached a record of $68.4 million in the fourth quarter, and Q4 revenue growth -- rather, to a year ago was 9% on a reported basis and 12% on a pro forma basis. Pro forma revenue is adjusted for the non-health portion of our offline copy testing business and the elimination of a former Nexius application called Configuration Manager, that we will discuss a little bit later. Adjusted EBITDA came in at $12.2 million, representing an adjusted EBITDA margin of 18%. During our last earnings call, we provided a measure of trailing 12 months bookings as we believed that bookings growth at this stage of comScore's evolution can provide a better sense of our overall business momentum. As such, we plan to continue to provide this metric for this quarter and during 2013. Trailing 12 months booking grew by 15% in the fourth quarter on a reported basis, as Slide 6 shows, and they grew by 19% on a pro forma basis. On the other hand, the pro forma revenue growth in the fourth quarter was 12% and -- for the fourth quarter and 13% for the entire year. As you can see, bookings growth exceeds revenue growth for the full year by 6 percentage points. The lag is due to our ratable Software-as-a-Service business model for most of our new products, and the bookings to revenue conversion lags from these products. We believe these strong booking growth rates are a good indicator of the underlying health and long-term growth of our business. Last year, we talked to you about our strategy to evolve comScore from a pure data measurement company to a measurement and software-based realtime analytics company. Our broadened business scope capitalizes on comScore's expertise in measuring all kinds of digital objects, as well as our extensive experience in modeling technology and big data. Our products combine both clients' internal data and various proprietary comScore data assets to provide compelling and differentiated solutions that fulfill clients needs every day. We've made good progress in each of the 4 business pillars that support this strategy. First, our -- in our Audience Analytics business, that business remains strong, will continue to benefit from our recent enhancements and future enhancements in mobile, and also in multi-platform measurement. Number two, in the advertising analytics area, vCE is doing well in providing realtime, cloud-based, on-demand monitoring and optimization of digital advertising campaigns. Our Digital Analytix suite of on-demand cloud-based and Web monetization analytics is also enjoying a gratifying market success. Finally, our mobile operator products are now focused on 2 mission-critical applications, customer care and marketing intelligence. We are now well-positioned for expansion outside of our current carrier base. In order to provide color on these initiatives, I would like to give you some product-specific information to help you assess the scale that we have achieved in some of these key areas. I will primarily use bookings to highlight the magnitude of these products, because as you know, revenue does not yet fully reflect the full impact. While we do not intend to provide this kind of detailed product level information every quarter, we believe it's appropriate to do so on this call to give you a cumulative perspective of our transformation strategy as we exit 2012. So on Slide 8, we highlight some of the key accomplishments in Q4 and throughout 2012. First, we have significantly enhanced our mobile offering, including our recent announcement of expanded data collection in the U.S. to more than 1 million mobile phone users, 400,000 tablet owners and 150,000 connected device households. This is orders of magnitude larger than our panel of thousands of users at the beginning of 2012. Our sales responded accordingly and with bookings growing 29% over 2011. Our campaign measurement family of products, including Campaign Essential and validated Campaign Essential experienced accelerated momentum in Q4, ending the year approaching $20 million in 2012 bookings, which is nearly triple its levels in 2011. And for Digital Analytix, 2012 was a banner year. I'm thrilled that, that beat our own expectations, with bookings exceeding $12 million in 2002 (sic) , which is more than 8x the modest bookings in 2011. Globally, the DAx business is more substantial and grew over 50% in annual bookings. While the DAx sales cycle is somewhat longer than those of our other products, DAx yields generally have higher price points. But just as important, DAx has been adopted by a large number of savvy clients as illustrated on Slide 9. This client roster speaks well to the unique advantages of the product and has some momentum that's building around it. The good news is that this should help build momentum in 2015 as these clients get up and running, and can serve as references to new prospects globally. While our base overall, Media Metrix audience measurement business continues to grow between 15% to 20% a year, the new products in the advertising website Analytix and mobile Operator Analytix areas are making a growing and meaningful contribution to comScore's revenues and bookings. In Slide 10, we combine the campaign measurement products, CE and vCE, our Digital Analytix product, DAx, and the mobile Operator Analytix product to reflect the new initiatives involved in our transformation. In total, these products have already contributed 21% of 2012 bookings, and we expect [Audio Gap] to 30% of total company bookings in 2013. So we think our analytics transformation strategy is working, and based on the revenue accrual dynamics we have discussed with you in the past, we expect the higher bookings. We are generating now to increasingly translate into revenue over 2013 and beyond. Finally, we have conducted a thorough review of our product portfolio to prune nonstrategic, low-margin offerings, as well as to limit our focus to key strategic areas of growth. Based on this review, we expect to dispose, in 2013, of the non-health portions of our off-line copy business -- copy testing business and to eliminate a Nexius product called Configuration Manager, which is a complex, wireless network configuration product that requires a lot of customization and is primarily sold in the Middle East. We've also provided a historical performance table that compares the results of comScore on a reported basis and also on a pro forma basis, excluding these activities, and you see that on Slide 11. The products we are taking out have contributed about $8 million in revenue and $1.6 million in EBITDA, we've also implemented some significant cost reductions, that Ken will speak to later to give us room for margin expansion in 2013. Now looking ahead for this year, our priorities are consistent with our ongoing digital business analytics strategy. We will be focused on 4 top priorities outlined in Slide 12. We will maintain and expand our leadership in Audience Analytics. We will particularly focus on enhancing our mobile and multi-platform measurement, including ubiquitous measurement of video. Number two, is we will continue our momentum in advertising measurement by expanding the robust and the rollout of vCE and enhancing our advertising effectiveness measurement products. Number three, we will extend our Digital Analytix business, both in the U.S. and internationally, building on the momentum that we have achieved during 2012, and on DAx's solid big data architecture and powerful capabilities. And then finally, we will maintain our focus on execution on improving margin and growing our free cash flow, which will contribute to the strength of balance sheet. We are committed to organic growth, and we have no plans to make any material acquisitions in 2013. Net, we are pleased with the progress of our strategic transformation, albeit at a short term cost in 2012. We intend to double down on execution. We will fine tune the strategy when needed as we did this year, and we will focus on profitable growth and enhancing shareholder value. Given our free cash flow, which well exceeds the organic investment needs, we are considering options to return cash to shareholders, including a possible share buyback, particularly if our stock price remains at current levels. And now I'll turn the call over back to Ken, to comment on our financial performance in more detail for the quarter and the outlook for 2013. Ken?

Thank you, Magid. Reported revenue for the fourth quarter was $68.4 million, up 9% year-over-year. On a non-GAAP pro forma basis, excluding the financial performance of our non-health copy testing and Configuration Manager products, which Magid mentioned earlier, which we expect to divest or eliminate, revenue grew 12%. Subscription revenue in the fourth quarter was a quarterly record of $58.4 million, up 12% year-over-year. Subscription revenue represents 85% of total revenue, a consistent trend. Project revenue was $10 million or 15% of revenue, also consistent with prior trends. GAAP revenue from existing customers was up 8% year-over-year in the fourth quarter to $60.4 million, and represented 88% of total revenues. On the pro forma basis, existing customer revenue in the fourth quarter of 2012 was up 10% year-over-year. Our renewal rate with existing customers remained above 90% on a constant dollar basis, and we added 45 net new customers in the fourth quarter, with our customer count now totaling 2,159. Our focus on international expansion continues to drive an increase in International revenues. In the fourth quarter, revenue from outside the United States was $20.5 million or 30% of revenue, and was up 20% year-over-year. Our top 10 customers represent 21% of revenue in the fourth quarter, reflecting the continued diversification in our overall customer base. Now let me turn to expenses and margins. Our gross margin was 65.4%, down slightly as we strategically invest to support our expanding multi-platform and cross media sales initiatives. As we expand our cross sell and upsell efforts with these products, we expect the resulting operating leverage will drive improvement in our gross margin throughout 2013. In preparing for 2013, we have streamlined processes and identified service offerings for disposition or deemphasis. We also looked to other cost areas for expense optimization opportunities. These efforts identified annual expense savings of approximately $9 million. We're implementing these changes over the course of 2013 while also making modest targeted investments, primarily in sales and marketing efforts for these strategic priorities, which Magid just discussed. GAAP pretax loss was $1.9 million in the fourth quarter, as compared to a GAAP pretax loss of $4.4 million in the fourth quarter of 2011. Our effective GAAP income tax rate in the fourth quarter was a 14% tax benefit rate due to the current booked pretax loss position. GAAP net loss was $1.6 million or $0.05 per basic share and diluted share in the fourth quarter of 2012 based on a basic and diluted share count of 33.7 million shares. Non-GAAP net income for the fourth quarter of 2012 was $7.9 million or $0.22 per diluted share, excluding litigation costs, stock-based compensation, amortization of intangibles, acquisitions-related expenses, restructuring and other nonrecurring items. This amount compares to a non-GAAP net income of $11.8 million or $0.35 per diluted share in the fourth quarter of 2011. We believe that adjusted EBITDA is a useful measure for investors to use to evaluate our operating performance. Adjusted EBITDA takes non-GAAP net income and adjusts it to exclude the cash tax provision, depreciation, intangible amortization cost, stock-based compensation expense, acquisition-related expenses, litigation costs, net interest income, restructuring and other nonrecurring items. On this basis, adjusted EBITDA was $12.2 million in the fourth quarter and represented an adjusted EBITDA margin of 18%. This compares to an adjusted EBITDA of $15.4 million in the fourth quarter of 2011. This decline primarily reflected the reduced contribution from the non-health copy testing and configuration manager products and the lag in revenue conversion for vCE, DAx and other mobile Operator Analytix bookings. Now looking at our results for the full year, reported revenue was $255.2 million, up 10% from 2011. Excluding the financial impact of our discontinued and deemphasized offerings, 2012 revenue grew 13% on a non-GAAP pro forma basis. GAAP pretax loss was $9.4 million and GAAP net loss was $11.8 million or $0.35 per basic and diluted share. Non-GAAP net income was $28.1 million or $0.79 per diluted share, and adjusted EBITDA was $44.4 million. While the adjusted EBITDA margin of 17% for 2012 was impacted by expenses associated with our expanded analytics offerings, we believe improving margin trends that we reported in the second half of 2012 will continue during 2013. Our full-year GAAP tax rate was 25%, and our cash tax rate was 16%. We continue to hold significant net operating loss carryforwards in the United States, certain U.S. states, as well as foreign jurisdictions predominantly the Netherlands and to a lesser extent, the U.K. Turning to our balance sheet. We ended the year with cash and cash equivalents of $61.8 million, an increase of $2.6 million from September 30 and an increase of $23.7 million from a year ago. Our receivables of $68.3 million increased from $64.4 million a year ago due to the growth of our business. Total deferred revenue was $82.5 million, up 17% from a year ago, with current deferred revenue of $80.8 million and an increase of 18% from the end of 2011, which reflects our strong bookings growth. The majority of our subscription deferred revenue was composed of contracts rewritable revenue recognition, which provides us with high near-term visibility. It was a smaller component of deferred revenue for vCE, for example, whose revenue recognition can be dependent on the timing of customer campaigns. Additionally, it should be noted that current deferred revenue does not represent the full anticipated billings value of current customers over the next 12 months as some customers have moved from annual billing to multiple billing cycles per year. Cash flow from operations for the fourth quarter of 2012 was $11.7 million. Our capital expenditures were $2.6 million in the quarter. This resulted in a free cash flow for the fourth quarter of $9.1 million. Looking at the year, cash flow from operations was $44.9 million, a 68% increase from cash flow from operations of $26.8 million in 2011. Our capital expenditures for the full year were $7.6 million, which resulted in a 2012 free cash flow of $37.3 million. In summary, while 2012 was a tough year, we ended it on a strong note and believe the actions we have taken position us well for 2013 and beyond. We continue to make progress in transforming comScore from a focused data company to a software and analytics company. Our core businesses are strong, and our new products are gaining good traction. We are focused on execution and generating operating leverage. Now I would turn your attention to Slides 13 and 14 of our slide deck, which relate to 2013 guidance. As we turn to those slides and that guidance, as Magid indicated, we're committed to delivering top line growth with margin improvements. We believe our strong bookings growth in 2012 positions us well to deliver faster revenue growth in 2013. At the same time, healthy pipeline trends across our product portfolio suggest our recent booking trend should continue, though we expect some back end waiting, 2 bookings during the year, due to, primarily, the renewal cycles of our customers. We are committed to improving profitability, and I mentioned a number of steps we believe can reduce our annualized cost structure by approximately $9 million in 2013. At the same time, we will -- we expect restructuring actions we are taking in the first quarter to reinforce our focus on improving efficiencies enterprise-wide, as well as permit necessary investment to some extent to support the offerings of our newer products. So with that backdrop, we anticipate full year revenue for 2013 to be between $273.4 million and $283.2 million, representing a growth of 7% to 11% as compared to 2012 GAAP revenues. However, on a non-GAAP pro forma basis, excluding the financial performance of our non-health copy testing and Configuration Manager products, 2013 revenue growth range is 11% to 15%. From a profitability perspective, we anticipate GAAP income loss before income taxes to be in the range of an $8.1 million loss to a $1.0 million income. We anticipate adjusted EBITDA to be between $46 million and $54 million in 2013, representing an adjusted EBITDA margin range of approximately 17% to 19%. Currently for 2013, we project an annual GAAP tax rate approximately 50% and an annual cash tax rate of 15%. For 2013, we expect approximately $8.1 million in amortization of intangibles and patents and $26.4 million in stock-based compensation. For the full year of 2013, we anticipate average fully diluted share count of 37.8 million. Now for focus on the first quarter of 2013, we anticipate revenues in the range of $65.8 million to $67.2 million, which represents an expected increase of 6% to 8% over the first quarter of 2012 on an as reported basis. However, on a non-GAAP pro forma basis, excluding the financial performance of our non-health copy testing and Configuration Manager products, Q1 2013 revenue growth is 9% to 12%. We anticipate first quarter GAAP loss before income taxes in the range of $4.3 million loss to $3.1 million loss. We anticipate adjusted EBITDA for the first quarter of 2013 to be in the range of $10 million to $11.2 million, which represents an adjusted EBITDA margin of 16% at the midpoint of our revenue and adjusted EBITDA guidance. Our estimated fully diluted share count for the first quarter is 37.3 million shares. A reconciliation of GAAP net income, net loss before income taxes to adjusted EBITDA guidance for the first quarter and full year of 2013 is included in the tables to our earnings press release as well as the slides I mentioned before. And Slide 19, for your use, we are providing comparative 2012 information for the pro forma -- or products, which we are divesting or eliminating so you get a sense of the revenue and EBITDA contribution of those products during the quarters of 2012. Now with that, operator, we can open the lines to take questions.

[Operator Instructions] And your first question is from the line of Jason Helfstein with Oppenheimer. Jason S. Helfstein - Oppenheimer & Co. Inc., Research Division: So a few questions. So, first, I mean, in the Slide 8, you talked about Media Metrix growing 17%. You talked about strong momentum in advertising analytics. Basically, what's the delta between those robust numbers and then the -- effectively the pro forma growth that you actually are reporting on a consolidated basis? I guess what other products are offsetting that strain? Then my second question -- I noticed on the Facebook earnings call, they cited comScore numerous times where, basically, the first time I recall them doing that they usually cite Nielsen. So it would seem that there is a change in the relationship there. If you can go into more detail. And then what that means for you both with Facebook and then potentially with all other companies out there who want to buy social data. And then last question, there's obviously a big push right now in the industry towards algorithm buying, realtime bidding. In those cases, you don't have people using effectively data to make decisions. How do you think that impacts comScore and kind of may change your position positive or minus in the whole ecosystem?

Thanks, Jason. On your first question, a couple of things. Number one, there are some businesses and verticals that experience a slowdown or decline slightly in 2012 like retail, and some survey activities. But the primary reason for the differential between the 13% -- 13% revenue pro forma growth and the 19% revenue bookings growth, that's a 6 percentage point difference. And the primary difference -- I mean, this is really contributed primarily by this new product activity that we are experiencing. When we -- I mean, these new products are now contributing 21%, 22% of bookings, but not nearly as much, almost half as much on revenue. And so as a result, we have that -- we have that differential. As far as Facebook is concerned, Facebook is a great customer. They have become 1 of our -- 1 of our 5 -- top 5 customers, and I believe we have been designated as their principal or official measurement source that they use on a worldwide basis. And that's probably reflected in what you heard in the earnings call. So the relationship with Facebook is growing. We're happy with it, and we expect to deepen it over time. Finally in terms of the push -- the push for realtime buying or RTB, while it is true that some of that buying does not require preplanning -- preplanning data, the -- we have 2 products in our kind of mission -- new mission of realtime analytics, vCE and DAx, that allow somebody to essentially make a decision on the fly on which cookie to bid on and how much to bid, which impression to bid on and how much to bid based on the information that is currently available. I think I answered all 3 questions. Anything I missed? Jason S. Helfstein - Oppenheimer & Co. Inc., Research Division: No. You got it.

Your next question is from the line of Youssef Squali with Cantor Fitzgerald. Youssef H. Squali - Cantor Fitzgerald & Co., Research Division: A couple of questions, please. I guess starting with, maybe, Ken. I'm looking at Slide #15. The non-GAAP pro forma guidance, where you've stripped out the adjustment to exclude the non-health copy testing and the other business for 2012 versus projected or forecast for 2013. I was wondering if you can actually give us that number for 2011 as well? So what's the equivalent of that $8.3 million, which those discontinued or soon to be discontinued businesses contributed in 2011 just for us to see kind of their acceleration -- that deceleration on the core. And then I guess staying with Ken, what's driving that increase in the share count from Q4 to Q1 and then into 2013? I think it's going from 33.7 to 37.3. That's a pretty big increase.

Okay. Sure. So the first part, if I could, in terms of the impact of these businesses and I think this really gets to the heart of why we're moving beyond these products. You're right. It's about $8.3 million of revenue from those products in 2012. But it was a little bit over $14 million of revenue in 2011. And as we've discussed previously, we had these products, which were really just not heading in the right direction, number one. Number two, tended to be choppy and more difficult to predict. And lastly, really, we're not just strategic with the other new offerings that we have from the first part. I think from the second part in terms of the share count, there are share grants that are done in the beginning of the year, first quarter of the year, which account for some of the increase. The second part is I think you just have the averaging impact over the course of the year on the share count are the 2 differences. No new -- nothing new or different in terms of trending than in the past. Youssef H. Squali - Cantor Fitzgerald & Co., Research Division: What's the aggregate number of share grants?

I'll have to get back -- we'll dig that out for you.

We'll dig it up for you. Youssef H. Squali - Cantor Fitzgerald & Co., Research Division: Okay. Not a problem. And then maybe, Magid, just one quick question. Can you maybe update us on the MMX multi-platform beta process, how is that going and when do we go live?

Well, actually, we are calling Media Metrix multi-platform as a beta. But it is really open for all customers. The term beta is -- it's now common for software companies to put things in beta for a long time to manage expectations in terms of any kind of glitches or whatever. But from a business standpoint, multi-platform is off to a great start. We've had over 60 clients, I think, sign up for it. And we have received terrific response from the industry. My favorite is an e-mail from one of our top clients. And I quote, "Congratulations, this is a game changer." And I think the reason is that it is a really unique offering, where for the first time, people can get audiences combined and deduplicated from PC, mobile and online video. I will also note that tablets are being added to multi-platform in the first quarter, so that will plug that gap. Youssef H. Squali - Cantor Fitzgerald & Co., Research Division: Will you be charging differently for that or will it just be used as a kind of a -- I guess enhanced value and lower churn?

No, there is a specific up charge for that. And I think it ranges, depending on the specifics of the contract between 20% to 30% of the upside for that contract.

Your next question is from the line of Matt Chesler with Deutsche Bank.

A few questions. So I think one of the dynamics that you are facing last year with vCE and the differential between bookings and revenue recognition was that, the early commitments I believe were smaller, but that there were -- these were guaranteed or they were fully committed to spending a certain amount on a 12-month basis. So I guess the concept was that -- well, if clients weren't spending at a rate early on in that period that you were assured of revenue growth by the conclusion of it. Assuming I'm understanding that correct, I'm just trying to get a sense in terms of how those clients spending patterns are and whether they've caught up with their commitment, or whether we should expect to see that true up.

Well, I think we -- I think that some of the contracts that we have on vCE contain 2 models. One model is, as you mentioned, a fixed commitment -- a fixed commitment for the year, which is really a minimum commitment and then if they exceed a certain threshold, then there is a per impression charge. And a lot of clients are going on a volume or a charge per impression basis. Now in many cases, even though the commitment, I believe can -- even the commitment is kind of held constant for the year, we're still accruing on a volume basis, right?

That is correct and most of these minimum items are through the course of the year and wouldn't be until the middle of this year, this year 2013. And then as we see these businesses continue to grow, with the additional new bookings that we have. You have some of that same impact as well.

And hey, Matt, this is Serge. Just wanted to give you additional color. So at the beginning when we launched vCE, as you know, people were just testing it out. It's a new product, so they were doing all these test campaigns, towards the end of the year especially in Q4, we started seeing a lot of 6 and 7-figure all-in deals from clients where they're now saying, okay, we tested this. We like it. And now we're going full in for all of 2013. Some examples include Kellogg's, Mars, Ad.com, the list can go on. But those are at least 2 or 3 big clients that have signed up for 6- to 7-figure deals.

Okay. Next question would be, in the -- in anticipation of the -- likely, the Nielsen Arbitron acquisition gets approval and goes through, do you feel it necessary to come up with any contingency planning or plan B, or alternative strategies to go after the cross-platform business after your contracted revenue in this particular arrangement runs out? I'm just trying to get a sense for how that fits in and what you're thinking about that.

Well, I guess the first thing is that as you know that deal is still being reviewed by the FTC, and it would be premature to comment on it before the antitrust review is finalized. At the same time, we are highly bullish on our business analytics strategy that is really not affected by this. As far as backup plans for cross media, we have done all of our cross media work in the past and we're developing methodologies to do it based on set-top box data, and that would be some of the contingency plans that we'd have.

I guess the concept though is that whether or not Arbitron, or Nielsen Arbitron, chooses to remain in partnership with you, that you have the capabilities and you intend to continue to go to market on your own, without an operator?

I really don't want to comment on that, given the antitrust review.

Okay. Sure. And then just finally on cost, the -- your anticipated $9 million of savings, could you just give us a sense as to how much relate to the disposed businesses versus other actions you're taking? And then if you can give an FTE count for year-end, that will be great.

Sure. This is Ken. I can take those. Between the split, it's probably about $4 million relating to disposed businesses and the balance on the ongoing businesses. And so on a net basis, there'll be some reinvestment, but that's going to give you a sense of how it is. At the end of the year all in, our FTE is 1 1 3 7 from -- at 12/31/12.

Your next question is from the line of Shyam Patil with Raymond James. Shyam Patil - Raymond James & Associates, Inc., Research Division: I just had a few questions. In terms of the revenue, it looks like over 2012, you're expecting about $30 million to $31 million in incremental revenue. Just curious if you could break out how much of that incremental amount is from these new products or newer products, versus the core Media Metrix business.

Sure. This is Ken. I would say probably at about a 2/3, 1/3 mode from that standpoint overall. I mean, we're going to see continued strong growth as Magid mentioned, in terms of double-digit growth, with our core business. But we will see more acceleration, as Magid showed in terms of the contributions on a bookings and that standpoint. So in terms of the 85% subscription, I'd kind of take something in that neighborhood. Then of course, we also have our project business on top of that. Shyam Patil - Raymond James & Associates, Inc., Research Division: Got it. And then in terms of the gross margins, you said you expect improvement in 2013. Just wondering what -- should we be using 67% as kind of the baseline and expect improvement from that level?

Well, I think we ended the year, as you know, at the 65 plus, I think you start dealing with 60 over the course of the year from where we are, the 67 to 68 range makes sense. And just kind of progress up during the year. You might see it tick up a little bit more starting in Q3 because we do have the impact of the social taxes and vacation accruals, which do impact the people cost in cost of goods sold in the first half of the year. Shyam Patil - Raymond James & Associates, Inc., Research Division: Got it. And then on the operating margins, or EBITDA margins, how should we expect those to trend as well throughout the year?

Sure. Again, you have obviously, the midpoint of the 16% in the beginning. If you get up to kind of the midpoint of the 18% or so, I would say it's going to be in the second quarter maybe getting to 17% and then start to expand from there. And the faster we get the expansion, the higher we are in our range as we go through the year.

Ladies and gentlemen, we have no other questions at this time. So I'll turn the call over to Magid Abraham, for some closing remarks.

Okay. Well, thank you and thank you very much for your participation today. We believe our performance in 2012 has positioned us well to deliver improved top line growth in 2013. And that as we drive operation -- operational efficiencies, we can simultaneously deliver increased profit margin. We are focused on that and we look forward to speaking with you again on the next conference call. Thank you.

Ladies and gentlemen, that will conclude today's conference. Thank you very much for joining us, and you may now disconnect. Have a great day.