Good day, ladies and gentlemen, and welcome to the Tree.Com Third Quarter 2012 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Alex Mandel, Chief Financial Officer. Please go ahead.

Thanks, operator, and thanks to everyone for joining us today for Tree.Com's Q3 2012 earnings conference call. First, a quick disclaimer. During this call, we may discuss Tree.Com's plans, expectations, outlook or forecasts for future performance. These forward-looking statements are typically preceded by words such as we expect, we believe, we anticipate, we are looking to or other similar statements. These forward-looking statements are subject to risks and uncertainties, and Tree.Com's actual results could differ materially from the views expressed today. Many but not all of the risks we face are described in Tree.Com's periodic reports filed with the SEC. On this call, we will discuss a number of non-GAAP measures, and I refer you to today's press release available on our website at investor-relations.tree.com for the comparable GAAP measures, definitions and full reconciliations of non-GAAP measures to GAAP. Thanks for making time to join us today as we review our third quarter results relative to busy earnings calendars and excitement in advance of tomorrow's elections. To put my comments in context, this was our first full quarter as a pure-play asset-light performance marketing company following the divestiture of our mortgage origination business in early June. Therefore, we very much view our performance during this quarter as an important validation of our ability to profitably monetize the substantial additional lead volume that became available to our mortgage exchange and a revalidation of the efficacy of our entire business model. I note that, for the third quarter, there is no longer a distinction between our actual results and the adjusted Exchanges metrics that we used in preceding quarters to demonstrate model results as if the company did not operate our former LendingTree Loans business during such periods. We do, however, continue to provide adjusted Exchanges figures for prior periods, and I…

Thanks Alex. And thanks to all of you for joining us on the call today. Since Alex already touched on the important financial measurements and you've gotten the release, I'll be fairly brief and focus more on the future and what we're working on. Q3 is clearly an important one for us. For the first time since we announced the sale of the Home Loan Center assets, we had an entire quarter with total focus on managing and improving our core business and driving top and bottom line results. And we grew revenue, variable marketing margin and adjusted EBITDA substantially year-over-year. Sequentially versus Q2, I'm also really pleased we grew adjusted EBITDA by 16%. These are terrific results and served to solidify our message of being a nimble, flexible performance marketing company. On the last call, I highlighted 4 areas of concentration for us: one, accelerating growth; two, improving our product; three, utilizing our cash effectively; and four, setting the stage for aggressive financial goals. Today, I'll use that framework to update you on our progress. First, accelerating growth. In our mortgage business, the 27% year-over-year growth speaks to our success. We're seeing growth because of increased success in sales to our clients, as Alex already addressed, and because of improved marketing, which I'll touch on here. The net of these is that we're seeing an increase in mortgage consumer volume of more than 20% over Q3 of last year and a 15% increase in variable marketing margin on those leads. In marketing, we're continuing to see performance improvement based on our investments in people, technology and testing. Display advertising, which one year ago was practically nonexistent, grew consumer volume over 50% from the second quarter of this year while more than doubling VMD [ph]. We expect display to continue…

[Operator Instructions] Our first question comes from Ben Hearnsberger from Stephens Inc.

So first, can you give us a little bit more detail about your guidance and kind of what it assumes from new products and volumes and pricing and, overall, what kind of mortgage market that assumes?

Sure. On the -- it actually doesn't assume -- I think it's actually fairly conservative. We're not assuming in the guidance many game-changing sort of product improvements. We're very -- for example, in the rate table product, we're being very conservative about the revenues that we're expected to earn from that and are ramping it very slowly. On the mortgage market, I'm going to have one of my colleagues here tell me if it's up or down, but it's basically in line with the MBA forecast. So whatever the MBA forecast is, we do it that way. In a way, we basically do our -- we do both a bottoms-up and a top-down, so we assume -- what we expect on marketing costs, of customer acquisition, we assume what we believe revenues are going to come in. But generally speaking, we're expecting a tightening mortgage market modestly next year.

And can you give us a little bit more on the pricing dynamic if we do see a tightening mortgage market?

Yes. We're assuming a -- that rates continue slight increase -- that lower rates continue with a increase in rates, but we don't bank on -- we're not banking on across-the-board increased pricing or increased revenue. It's basically we're increasing sales but we're not increasing price per lead, if at all. So there could be some outside opportunity there. So now what I would say, though, is I plan to manage to these numbers. So if we got some improved pricing, what we're going to see is -- it's because we do expect -- normally, you'd expect that, as the market would go down, that pricing would -- that we'd get better pricing. Obviously, some of that will come back out in marketing, but then the other thing is, if I do have opportunity, which clearly we always anticipate we can beat or exceed guidance, we plan to reinvest. We want to deliver what we promised, but then we take the opportunity to either test more in marketing -- as I said in my prepared remarks, test more in marketing or accelerate the product development timeline.

Okay. And on the marketing line, obviously, significant efficiencies since you put the new team in place. Have they taken all the low-hanging fruit there? Or do you think you have a lot of room there?

No, I think we actually have a lot of room there. And again, you got to build supply and demand in balance. Display, as I highlighted, we're seeing very large percentage increases but we're -- those are still small numbers, so competing against a company like LowerMyBills, there's a lot of room to go there. And there's a significant offline spend assumed in marketing, which costs you some money in the short run. So that shows some -- which if that didn't bear fruit, we don't need to do that as aggressively as in the plan. So I feel like I've got a lot of conservatism baked into that up, down and sideways. At the same time, saying we're going to grow north of -- well north of 20% just didn't feel like that's something that anybody is expecting of us.

Okay. And then you mentioned customer satisfaction, with the side as up [ph]. What kind of metrics do you guys look at there? And if you can share any of that, that would be great.

Okay. So customer sat, we're always looking at rate. We're basically looking at ratings and reviews, and that is, customer sat is always related to -- is related simply to how good the customer experience is. Typically, it's the key drivers or how many times we refer you and what the alternate rate is that you received. And what I said on customer sat, we're not actually publishing numbers on customer satisfaction, we're basically looking to change the game on the customer experience. So now that will increase satisfaction but that really gets to the tools that we've talked about for a long time, like lower rate for life, like the rate table experience and improving our site, which we just -- which as I said we just released. So we're definitely seeing a lot of improvement, but there is a lot of room to go. And I think this year's the year -- 2013 is the year that a lot of that's going to come home to roost. We have a phenomenal new head of product in Nikul Patel, who joined us about 3 months ago. He's and -- he and the tech team are really delivering for us.

Okay. And then just a point of clarification: In your revenue guidance, does that assume any deployment of cash or any contribution from cash deployment?

Meaning, acquisitions?

Yes.

No. That would all be bolt-on.

Our next question comes from Hamed Khorsand from BWS Financial.

Just had a few questions here. Could you tell me what's been the price -- or the pricing that you're getting from your customers now given that we're off from Q3 and going to Q4, to a seasonally slow period?

We are seeing pricing in general rising modestly, which is very good because it's happening despite the fact that lenders are still overwhelmed. The way we're doing that is our new sales team is being very, very effective at signing up a weak -- getting what I call increased cap, increased orders. The first place you get that is from your competition. So we are very effective at selling. Higher lead quality equals higher conversion, it means you can pay us more and it means you'll get more. So as we target their total cost per funded loan that a given lender's trying to hit, depending on their given pricing strategy we're able to essentially put an order in, just like any media company, and tell them what it takes. In addition, about a year ago, we announced the release of what we call our predictable volume planning, and given that, we can now hit within a very degree -- a very precise degree of precision on the exact number of leads that they're looking for in a given segment. So given all of that, we're able to get increased order flow from our lenders on a pretty consistent basis, and Alex hit on a lot of that. That's what drives pricing. The ability to move pricing up over time is that cost per funded loan and the consistency. And I can tell you, in an environment where we're seeing less-than-great performance from our public competitors, I believe it's a direct result of us stealing share. So we are absolutely seeing other competitors getting turned off or turned down and lenders are upping order flow with us. So I think that's a net good thing for us as a company. It's a -- and we're going back to the days when lenders could build a business around LendingTree.

How much capacity do you have and -- as far as generating referrals?

Substantially more at any given time than we are actually providing. And the reason is it's also -- so we don't publicly disclose that because it would be competitive intel, but it's generally -- you generally look to have more capacity than you do volume. And it also relates to price. So for example, we've recently put in place a pricing model that actually has 3 pricing tiers. It has standard, it has overflow and overflow plus, in the same way that a media company would have sort of upfront buying and then remnant and spot market purchases of ads. So if you want guaranteed delivery, you buy in the upfront. And if you're willing to get remnant leads, which are less quality, smaller-loan amounts at less desired lead flow, and/or you're willing to let your volumes fluctuate, you can buy more -- on more of a remnant basis. But there is massive, more capacity out there. I'm working on market share numbers right now. Anecdotally, we are getting an increasing but still relatively small percentage of lender spend. And by the way, we're not even tapping into yet the -- in a major way the major banks. We're having some success with some of the larger banks, but as we move into the rate table product and continue to improve our product, we're not -- we're still tapping the correspondent mortgage companies for the most part and not yet into the big-money center banks, which is where the big ad spend is. And that, if we can move that online, that's very, very significant.

Okay. Two more quick questions here. The -- is it just going to be early Q1 '13 for the rate table, or later on in Q1?

I think it'll be on the earlier side.

Okay. And then the last question was, any estimate as what you're incremental profit would be from the rate table revenue?

I'm not expecting much in 2013 because we're going to basically -- we're going to pay out to -- our plan is to get share to pay out a higher -- this is something we're going to grow through syndication network, the same way that Bankrate and others do it. We're going to target paying out higher than -- we're going to try to pay out more to the distribution partners to get critical mass, which is what we need, and have generally more attractive pricing to get -- to gain share and then are going to continue to invest back in the product. So I'm not counting on a lot of incremental profit, but it -- I think that's upside to our business.

Our next question comes from Nick Zamparelli from Zeke.

Just one quick one for me, it's on the non-mortgage business. I was hoping if you guys could just provide a little bit of commentary into the verticals there, Education, Auto, Home Services, maybe talk a little bit about what's working, what's not and what the outlook is in terms of returning that to growth next year.

Great question, and quite frankly, it's one of -- in general, it's one of my -- things I'm more disappointed about this year that we weren't able to affect, and that's just really a function of early stage. These things are great at scale but you got to get them to scale before they get really fun. So mortgage is not succeeding because of the market, it's exceeding because of the initiatives and the execution because we're at scale. What I would say is, Home Services -- first off, Auto is fine. It's small but it's profitable and growing decently, nicely. Our problems are in -- in general, the disappointment, I'd say, is in Home Services and edu. Education is just like the industry, except that we're really small so it doesn't hurt the overall company. And we're generally higher-lead quality so we're not getting nailed in Education as bad as some competitors are, who are also public, but it's just subscale. So I'm not letting those businesses lose a lot of money, which is why they can't really grow at the moment. So I would say, longer term -- so Education is challenged because our advertisers are all pulling back, as you've seen in all their stock prices. So you're fighting for a shrinking pie, and we're smaller. Now the good news is we're high quality. So I'm not going spin you a tale of -- I'm not going to sell you any spin on Education. It's a challenging industry, but that said, our team is working hard. Home Services, I feel much more optimistic about the long term. It's a growing business. It's not yet online. There's one major competitor in ServiceMagic. We have a -- the good news there is, I think, we've solved the marketing side of the house, we can generate substantial lead flow. We really just have a sales challenge, and the good news is it's not rocket science for how you sign up sales people and they go sign up local merchants. So I feel like we know the path forward on that one. What's causing noise in the Home Services numbers is we're -- effectively, the business we bought had an online component and an offline component in dropping actual physical book directories. We're moving away from that book business now that the online business is scaling. But the book business drove a lot of the revenues. So there's a shift going on there underneath the surface of -- when you exclude the book revenue, that business is actually growing substantially, albeit very small.

Our next question comes from Howard Rosencrans from Value Advisory.

In terms of the -- Doug, you said you were going with the MBA assumptions regarding the housing market. Can you give us some insight as to whether or not you have granularity in your mind regarding whether it's refi business, whether it's new lending. I'm always concerned that if it's a -- that you'll do better on the refi environment, that it's more of a commodity shop as contrasted with a sophisticated sales.

Yes, so the MBA statistics, our purchases, up 16, refi, down 36 for a net market contraction of down 20. Keep in mind, the interplay for us, though, is when refi goes down, lenders still want to do it but they'll just pay more to get it. And so our pricing will go up, our transmit rate, transmits per et cetera will all go up. We do not give detailed transparency on that because, when we did it before, honestly, everybody modeled it wrong. So then people did, "Oh my god. When refi goes away, your current metrics hold," and they believe the metrics is constant. We take the volume away and it just doesn't happen. It switches on a dime, and we see it even inside of a week. If rates tick up a little bit, our marketing cost goes up, but so does our unit economics on the revenue side and so we manage the business at that VMM dollar level. So it'll be harder to get the lead, but lenders will pay a lot more for them. And net-net, we feel that those balance each other out and that it's a share gain. It's how can we get more share of spend, and how can we get more share of traffic? And seeing that we're a 1% share player today, should LendingTree, with a 17-some-odd-percent brand awareness, be a 2%, 3% and 4% share of the U.S. mortgage market? We think the answer better be yes, or we don't deserve to do what we're doing. And so that's where it comes into -- I mean, it's -- there's really only 3 things we do here. We sell to our advertisers, we market to our consumers and we build a better product that'll make us less dependent on paid marketing over time and given our share of consumers, if you look at our competitors, they're -- a lot of them are bigger and we can steal share of the consumer side with airways that we know. We know we can have a better product to make us indispensable to the consumer. And we can certainly sell more to lenders. So that's what drives us, not the overall -- not the market going up or down. We intentionally put variability of pricing and on the marketing side into the business so that we -- so that our overall business is not variable. It's just a different equation of supply and demand.

And in terms of your display business that you mentioned, what -- I -- can you give us some sense as to how big that part is and...

Yes. So the -- on our display, I mean, that's on the marketing side. So that's us advertising, display advertising across websites. It was literally nonexistent a year ago and it's growing. The numbers, I referred to in my prepared remarks. I don't have them in front of me. But it is very significant growth. And this is us advertising display advertising as a channel, so running banner ads, buttons and display advertising on people's websites. There's a lot of room to grow. LowerMyBills, in particular, has used this very, very effectively. And it's happened because we've got a phenomenal group of marketers in here, some formerly from our competitors. We've got great creative. And we're buying very, very smartly and just scaling it up very rapidly.

And my last question is, your rate table product, is it, itself a real differentiator of the products you're going to have? Or do you just feel like people are going to come the site anyway so they want rates and so you can just grab share of the rate being just [indiscernible]?

Yes, it's a great question. So a rate table experience basically is a list of -- you enter in some very basic information and you get a list of banks with rates. Think of these as ad units for an advertiser. If you're a lender, there's basically 3 types of ads you can buy from companies like us. You can buy what's called a long-form lead, which is a lead that has a social security number and a credit score associated with it. That is generally a very high-quality consumer, very intent on purchase, on buying, and they cost a lot. You could buy those through us and you can buy them through LowerMyBills. That's really about it. To get -- to sell that, you need to be licensed as a mortgage broker and you -- there's -- there are a whole host of regulatory hurdles. But a lot of lenders are very good at that. You can also buy from companies like LowerMyBills or LeadPoint or QuinStreet, something that would be known as a short-form lead, generally name, address, type -- property type, et cetera, et cetera; and what's known as self-graded credit, a lower-quality lead but a lower price. And then the third type of lead you can buy is what's known as a rate table lead. A rate table lead is you give us your rates and we charge you for every click to your own website. That's the rate table product we're referring to. And some lenders are great at form-based leads and some lenders are great at rate table-based leads. So the reason we're going into this is because, on some types of websites -- when you come to lendingtree.com, you will not see -- if you just typed in lendingtree.com, you would not necessarily…

Our next question comes from Michael Wood from Oppenheimer.

I've got a question in the sense of hiring other people for the business. Is there a -- you just had another hire on. Is there some -- anyone else that you need to hire in order to build out the team? Or are you set at this stage?

No. I think, from a leadership standpoint, we are totally set, total new marketing leadership, sales leadership. We've put this in place over the last 2, 2.5 years. I've said before, those of you may not have heard this, the first 2 years were very much restructuring. The second 2 years since our spin-out have been all about expansion and really a fly hood -- a flywheel that you haven't seen but that we've seen as we rounded out the senior team. Headcount next year is going to go up a little bit but modestly, and it's basically going to be filling in underneath. We're hiring. We've got engineer -- we're going to hire more in engineering, for example, so we can get more product throughput through the funnel and really try to -- as I said, we're set in -- we've got great sales leadership, we've got great marketing leadership. Now it's about we got the chiefs, now we got to get the indians who can help us execute and push more stuff through the funnel and be a great -- the last missing piece is to be a great product and technology company. I think we're very good, but we're no -- we're not yet Zillow, although we aspire to be as great at rolling out product as guys like LinkedIn and Zillow and Trulia and lots of others.

Our next question comes from Josh Goldberg from G2 Investment.

Just 2 quick questions. Doug, on the VMM guidance for '13 of 45% to 48%, is that just a level of conservatism? Or is that more kind of in a lower refi environment and maybe higher interest rate environment you might just be a little bit more aggressive on trying to win some leads? And I have a follow-up.

It's basically -- no. The thing is it's a -- it's moving back in the -- it's adding in offline TV at expected lower margins during year one. So you add in a whole bunch of spend, which by the way again, we have very quick apps on all this stuff. You have to create TV. You have to spend some real money on actually producing TV ads. So it's basically that, it's adding in big spend -- bigger spend at lower margins for that channel. And what happens with offline is it always benefits your online channels but it comes really a few quarters later. So that'll pay dividends late in 2013, early 2014. As we do that, it'll pay much bigger online dividends. But we believe that, by the time we're going to launch this, we're going to have a product that is so awesome we can really count on the table and say, "Hey, LendingTree is an indispensable part of everything related to your loans." And if we can say that to the consumer, we'll invest early and let it pay sort of longer-term dividends in the online channel. It's also the brand is the competitive mode. What you're seeing in a lot of our competitors, guys without brands who have to succeed in online marketing, they just can't do it because your -- everyday, your margins just get thinner and thinner and thinner. If -- so if you have a brand and really great marketing techniques, that's your competitive advantage and that's the competitive advantage we have. And we got to make sure that's healthy. So -- and then keep in mind too, we don't manage the business to a VMM percentage, we're giving guidance on a percentage basis, but we think about VMM dollars full stop.

Okay. So the bottom line is you're not seeing a degradation in your kind of core...

Oh god, no, no. We're actually -- it's actually getting much better. And so we're able to layer in the offline spend because we're seeing performance better across the board, better margins in search, display, affiliate, organic. We're seeing great, better margins everywhere so we're layering in offline. I could -- if we wanted to not invest for the longer term, we could have substantially better numbers next year. We just think stealing share from our lenders and -- or from our competitors and sowing that brand -- sowing the seeds of continued brand strength is the right way to do it. Offline spend too, by the way, really improves lead quality. And you're seeing it -- look at Bankrate's insurance business. I mean, that's what happens when you have a business with -- that's affiliate based and low lead quality, with no brand name. It's just incredibly difficult to sustain that over time because, once the advertisers figure out that the conversion rates are low and that the leads -- lead quality isn't there, it's -- the game is up. And then you have to take the pain to improve your lead quality. But you can't really do it without a brand, or you just have a much smaller business.

Roughly, how much is the offline campaign next year?

We're actually not disclosing that yet, but it's north of -- it's in double-digit millions.

Okay. And just in terms of the net operating losses, I think you had $51 million in the federal and $308 million in the state. I mean, how different will the adjusted EBITDA number be from net income next year?

Let me defer to my trustee. I don't think we know yet. Let us work on that and get back to you because I'm -- I don't know. Because if you also have a lot of stock-based compensation charges, which are in there...

But it's certainly like a non-GAAP adjusted EPS that some technology companies use. So it probably gets pretty close to what the adjusted EBITDA could be next year.

Let us look --let us take that and get back to you on that because it's something that we should look at. And we also want to look at -- the other enhancement we want to make, you're seeing us dribble it in here, is get the per-share numbers. I enjoyed the days, it might be a little old-school, where we were making real earnings and real earnings per share, and it was actually GAAP. And we'd like to be there again without all these adjustments. It gets honky with the discontinued operations and the stock charges and weird write-offs for selling assets and things that accountants make you do. But we will definitely look at that and get back to you.

Okay. One last question on the share buyback. It sounds like you're continuing to accumulate shares. Is there a certain amount that you can't buy on a given month or day?

Yes. We are limited under, I think, in the 10b-5 plans or what -- 18 -- what is it?

The 10b-18 one.

10b-18 limitation to a certain percentage of the stock in any given day. So We're pretty limited. But we also set our own limits kind of on top of that, that are priced based, so that we're buying more on weak pricing days and less on stronger pricing days. And we also have a certain target that we want to buy over the quarter. And it's all aimed at trying to be opportunistic but also consistent but also listening to those kind of growth investors that have said, "Hey, listen. I think your floats are already really low. Don't make it lower." So I think we're trying to be opportunistic and supportive but not go crazy.

Our next question comes from Carson Yost from Yost Capital.

Given all the unrestricted cash you have today and the cash you'll have next summer when you anniversary the divestiture, your stock is now trading at a 33% discount at QuinStreet and, literally, about 1/3 of Rate. And I wouldn't say those are 2 incredibly well liked companies. I'm frankly surprised to hear you talk about making acquisitions because I can't imagine you could possibly find an acquisition with as high a return on invested capital as your own stock. So my question is, why not get more aggressive on the stock buyback? I mean, the growth investors are clearly not in our stock because this is trading at 3.3x next year EBITDA, or look at companies -- taking our company private.

So we should sync up on the 3.3x because I don't think that's the case. If -- you have to look at networking capital, not cash. And the numbers we get to, I defer to Alex sitting here next to me, I want to say, are more in the 7-ish-x, which I still think -- which I think has upside. As I look at -- as I think of long-term multiples, we -- look, we should clearly see multiple expansion. I think we have. Since Q2, we were trading at, I mean -- and so it's -- we came out 4 years ago at 0 enterprise value and we've been moving generally in the right direction ever since. I'm expecting that we're going to continue to see upside in pricing or in multiple expansion and in the price of the stock, with performance. So Q3 last year, I think, was a seminal moment when we actually started making, executing and having clear line of sight, clear guidance. People understood what the business can be like post HLC. So we got Q3, Q4, Q1 and Q2, so we got 5 quarters in here of execution, and I would expect that we're going to continue to see that. And if we don't, we should do all the things that you're talking about, or explore them. I do believe we can find accretive acquisitions that utilize the cash balance in the zone of what I would call a tuck-in. Think of, like, rebranding a company that doesn't have a great brand name and being able to leverage the LendingTree brand name and be able to get significant synergies out of that. That's kind of where we're targeting. And I'll be honest with you, I got 2 schools of thought in my Board in terms of float versus aggression on buyback. I generally am more in your camp, but we got to persuade everyone around the table. So we're kind of dipping our toe in the water. We'll -- and to the extent -- but I appreciate your comment because it'll -- I got my board meeting tomorrow and I'm certainly going to pass it on and this will be a subject of hot debate about how aggressive we move.

Great. And happy to talk to you about a further note. I definitely want to sync up on the math because I think it's cheaper than you do, but we'll reconcile that offline.

Yes, please get with Alex on that over the next couple of days because I've -- Alex does my numbers, and I want -- I would love you and he to be in sync. So alex.mandel@tree.com, and he would love to dig in with you.

Our next question comes from Micah Feitz from ADK Capital.

In light of the gentleman's last question, it'll be helpful to -- if Alex could chime in regarding this networking capital number because, if you do 16 times 7, it would basically imply that half your cash balance is tied up somewhere in the business. So it'd be great if you could spend a moment on that, for clarity's sake. And two, I joined the call late so I apologize, but I certainly think that a dividend would be something that the Board considers, as opposed to investing everything in what's arguably a very competitive space. So I'd love to get thoughts on both those questions.

While Alex is sitting over here with his calculator, I will address the dividend thing conceptually. I have a commitment -- it's getting close to the end of the year, I understand. I've got a commitment to explore special dividends. I'll give you 2 schools of thought we can have -- before the -- before year end. And I recognize the dividend rates potentially could change, although what happens tomorrow will probably have some input to that. Those 2 schools of thought on special dividends are, one school is, a significant excess cash and rates are going to go up. The other school of thought is, your -- the -- if you look at history, you don't see a lot of credit -- that companies don't get a lot of credit for special dividends and people ask for them. But you don't necessarily -- but it doesn't really reflect in stock price or shareholder returns. So I don't know. I -- we're looking at it. We will reach a decision in the coming, call it, the next month or so based on all those variables. I've heard some shareholders asking for it. I've also heard others that say that sends a very different signal, that you have nothing else to do with your cash except give it back. So again, we've been all -- I've gotten -- and so we're looking at it very thoughtfully. And I'll give you all an answer in the next -- before the middle of December...

Okay. Well, as long as you're reflecting on it as a top 10 [indiscernible], I certainly will give you credit for it and encourage it.

Great. And then on valuation, do you want to touch on how you get to...

Do you -- would you like to rephrase the question? I sat here looking at it, I just...

I guess, in light of the gentleman's last question, if we assume a 12 million shares outstanding, plus or minus, at a $14 share price, that's 168. If you take 168 minus 7x next year, so from, let's say, 16, that's 168 minus 112, so that's 56 on a cash balance of approximately 90. Obviously, that doesn't include some of the restricted cash and future cash payments. You're looking at 90 minus 56, so what is that? That's 34 million that's tied up in working capital, based on what’s...

Yes, it's not -- oh, I can answer the working capital question very easily. So you need to look at the networking capital number and then add 10 million to it, I believe, is the best accurate reflection of cash. In the liability section, of the -- which by the way, I don't want to be lost on anybody. In the liability section of the balance sheet is a reserve for expected loan loss settlements that we'll have to pay out over the future years from the LendingTree -- in the discontinued ops of LendingTree Loans. And that number went from $33 million down to $23 million -- $26 million as of the end of the quarter. So we've actually reduced that substantially, which should -- which was a net improvement in networking capital, which shouldn't be lost on people. So there is more cash there, but yes, that's the cash that gets tied up in the business, so to speak, between cash and networking capital. It's that -- essentially, that lies -- it's the liabilities in the discontinued ops.

I see. Okay, so you're saying that...

[indiscernible] liabilities you'd arrive. As we work out at...

So we should think about this as the $90 million less the $26 million or $29 million, with equities.

Yes. Yes, and we actually published that networking capital number, didn't we?

Yes. I mean, you can look at it however you feel. It's not [indiscernible] appropriate. We publish a measure called working capital, which is all of our current assets, including continuing and discontinued operations, lees all of our current liabilities...

Fair enough. Does that reveal happen quarterly? Or how often does that happen?

Sorry?

Does the revaluation of the liability happen quarterly? Obviously, as Doug said, it went down already quarter to quarter.

I'm not sure I -- sure. I'm not trying to phrase it as a revaluation. It's a reserve that we estimate each quarter. And Doug was commenting on the amount that is...

Yes, and I can -- yes. And we can talk more -- I'm happy -- I've given a lot of -- we've given a lot of investors, we've gone very deep on that. If you'd like to do that, give us a call and we'll give you the insight on that. These are -- this is expected future payments. And now -- short story is, now that we're out of that business, the negotiating posture between us and our lenders gets very different than it was in an ongoing operation.

Fair enough. We've discussed it over the summer, and you did a great job with it, so let's keep bringing that down.

That ends our Q&A. I will turn it back to management for closing.

Well, we appreciate your attention. It's great to see we've -- we can see statistics as we're sitting here. It's great to see increased participation on these calls from investors. It's been enjoyable spending a lot of time with many of you this summer. I appreciate your continued support of the company. And we are going to continue to execute here. As you all know, Q4 is a seasonally slower quarter in our industry, and that's reflected in our guidance. But we feel obviously very good about our current guidance, we feel very good about 2013. And we look forward to executing with you both on top line and bottom line and making customers happy in the future. And thank you all, very much. And call us with any questions you ever have.

Ladies and gentlemen, thanks for participating in today's conference. This concludes the program. You may all disconnect.