Good afternoon, ladies and gentlemen, and welcome to the j2 Global first quarter earnings conference call. It is now my pleasure to introduce your host, Mr. Scott Turicchi, President of j2 Global Communications. Thank you. Mr. Turicchi, you may now begin.

Thank you. Good afternoon, and welcome to the j2 Global Investor Conference Call for the First Quarter of Fiscal Year 2013. As the operator just mentioned, I'm Scott Turicchi, the President of j2 Global, and with me today is Hemi Zucker, our Chief Executive Officer; and Kathy Griggs, our Chief Financial Officer. This has been, and continues to be, a very exciting time for j2. We will use this earnings call to discuss our first quarter fiscal year results and provide you with an update on our 2 business segments, as well as our updated guidance for the fiscal year. In addition, our board has increased the quarterly dividend to $0.24 a share from its previous dividend rate of $23.25 a share. We'll use a presentation for today's call. A copy of this presentation is available at our website. When you launch the webcast, there is a button on the viewer on the right-hand side, which will allow you to expand the slides. If you have not yet received a copy of the press release, you may access it through our corporate website at j2global.com/press (sic) [investor.j2global.com/releases.cfm]. In addition, you will be able to access the webcast from this site. After we complete our presentation, we will conduct a Q&A session. At that time, the operator will instruct you regarding the procedures for asking a question. I remind you that at any time, you may e-mail us questions at investor@j2global.com. Before we begin our prepared remarks, allow me to read the Safe Harbor language. As you know, this call and the webcast includes forward-looking statements. Such statements may involve risks and uncertainties that would cause actual results to differ materially from the anticipated results. Some of those risks and uncertainties include, but are not limited to, the risk factors that we have disclosed in our various SEC filings, including our 10-K filings, recent 10-Q filings, proxy statements and 8-K filings, as well as additional risk factors that we have included as part of the slide show for the webcast. We refer you to discussions in those documents regarding the Safe Harbor language, as well as forward-looking statements. At this time, I'll turn the presentation over to Kathy who will review our Q1 results.

Thank you, Scott. Good afternoon, ladies and gentlemen. Let me first say that I am pleased to report that our business is performing in line with our first quarter estimates. And without stealing Scott's thunder, in light of our recently reported patent license agreement, today, we are providing an increased fiscal 2013 revenues and non-GAAP EPS estimates. With this said, let me get into Q1's results. I'm pleased to report that yet again, we achieved record quarterly revenues. Our Q1 2013 revenues were $113.6 million, an increase of 11.4% over Q4 of 2012 and 31.1% over Q1 of 2012. We have enhanced the financial presentation now that we operate in 2 segments. Because the Digital Media business experiences relatively higher amortization of intangibles, as a percentage of revenues, than does the Cloud business, we believe our overall company is now best evaluated based on the following measures: revenues, gross margins and EBITDA. For Q1, amortization of intangibles was 11.2% for Digital Media segment versus only 4.6% for the Business Cloud Services segment. Please refer to Slide 5 in our presentation relating to our Business Cloud Services segment's financial results. For Q1 2013, that segment achieved revenue growth of 4.7% versus Q1 of 2012 to $90.7 million; non-GAAP gross margin of 81.9%; non-GAAP operating margin of 43.4%; non-GAAP operating income of $39.4 million; and EBITDA margin of 49.6% or $45 million. Moving to Slide 6. Our Digital Media segment achieved revenue of $22.9 million; non-GAAP gross margin of $84.7 million (sic) [84.7%]; non-GAAP operating margin of 0.2% or $38,000; and EBITDA margin of 14% or $3.2 million. Q1 2013 represents the first full quarter of our Digital Media business. It is also the seasonally lowest quarter in this business, where Q1 revenues are expected to contribute approximately 15% to 20% of…

Thank you very much, Kathy, and good afternoon, everybody. We had an amazing quarter for total revenue grew to approximately $114 million and our Cloud business grew approximately 5% year-over-year. With that, let's turn to Page 9, where I'll talk about our Cloud Services. I'll start with online faxing. We acquired, at the end of this quarter, MetroFax. MetroFax are better than j2 with their affiliate growth, getting customers from affiliates, and we are learning and adopting their know-how to improve the entire business of j2. Our corporate revenues are up 9% year-over-year to approximately $8 million -- over $80 million a year. Our contract dollar value is up 41% year-over-year. Our deal size -- sorry, we have new deals. New deals are 144% year-over-year. As you know, we are sending our corporates mainly through 2 channels, one is our executive accounts in the field, and the other one is the telesales group. We have increased our telesales group and increased as well in productivity. Our corporate telesales' average DID per deal is up 3%, taking into account that we added agents, it is -- the number per DID per month are higher than Q1 last year, with 32% and are averaging now 3,000 DIDs per month for this group. Our online backup, KeepItSafe, revenues are up 60% year-over-year, we are profitable [ph] since 2012. Average revenue per employee there is about $400,000 per employee. And we are approaching $10 billion per year on a run rate. We have acquired recently Backup Connect, a Netherlands company. And through our organic growth and our acquisition, we are now the number one in our category in New Zealand, in Ireland and in the Netherlands. j2 now has customer support in multiple countries, in Ireland, in the U.S., in New Zealand and in…

Thank you, Hemi. And if you'd turn to Slide 16. We are updating and increasing our guidance for fiscal year 2013. As both Kathy and Hemi mentioned, we had a patent license settlement earlier this quarter, in the second fiscal quarter for a $27 million payment. Although, the accounting is still being worked on, we believe that at least $10 million of that will relate to prior year past damages, and as a result, will be booked as revenue in Q2. Since that's a very high margin revenue, that also will boost bottom line earnings by approximately $0.13 per share. As a result, we have moved the previous range of revenues up by $10 million, such that the new range of revenues is now $510 million to $535 million. And similarly, we've increased the non-GAAP EPS range by $0.13 so the new range is now $2.78 per share to $2.98 per share. Finally, as I mentioned at the beginning of the call, the board approved a $0.24 per share quarterly dividend, payable to those of record as of May 20, with the payment date of June 4. It is still approximately $10 million of quarterly cash. And as we've said before, these levels of dividends do not impact either operational or M&A activities. And then, finally, Slide 18, and following are the metrics for both the cloud and the Media business, as well as the consolidated entity. As Kathy mentioned, we believe that EBITDA is an increasingly important metric to look at within j2 as it is one way to look at the 2 segments of the business. So Slide 21 gives you the reconciliation for both free cash flow and EBITDA back to their nearest GAAP equivalents. And then, we have the reconciliation between GAAP and non-GAAP for the P&L on Slide 22. Reconciliation of cloud and media GAAP on 23, Ziff Davis on 24. I would note that Ziff Davis is only the Ziff Davis properties that does not include IGN. And then, finally, for our bondholders on Slide 25, we have recalculated the covenants based on the March 31 numbers. We continue to be very strong in our capitalization and have tremendous flexibility under our covenants. At this time, I would ask the operator to come back and to instruct you on how to queue for questions.

[Operator Instructions] Our first question comes from James Breen from William Blair. James D. Breen - William Blair & Company L.L.C., Research Division: Just 2 questions. One, can you give us some clarity on the patent stuff? So you won the settlement, and you'll get some cash in there. Is that -- is there a way to frame what sort of recurring patent revenue is from that, or is that something you're just not going to know until you get the payment from the company? And then, secondly, with respect to the Media business, just thinking about M&A again and sort of what -- any near-term plans are there, and then, lastly can you just update us on the Carbonite situation with the pending offer there?

Okay. So let's deal with the patent. First of all, I think you're specifically referring to the $27 million transaction. Each settlement has its own unique characteristics which influence the accounting for it. Now in this case, there is actually 2 pieces to the settlement. So there's a payment already received by j2 of $27 million. We are still working on the accounting allocation. But based on what I just said, assuming $10 million is for past damages, and therefore, booked in Q2, then the remaining $17 million would be amortized over the remaining useful life of the patents that were in question, which go out to roughly middle of 2018. So that would be amortized over those succeeding quarters, not necessarily a straight line, but that would be, certainly, the average approximation. Now in addition to that settlement, there also is the opportunity for a running royalty rate to the extent that customers who take 10 or fewer DIDs and reach a certain revenue threshold over a fiscal year, an annual fiscal year of a relatively de minimis amount, we will then receive either $0.80 per DID or 8% of that revenue. Having said that, the entity that we settled with, both on -- in our judgment, currently, is not offering those services. So at the moment, we're not expecting anything to come in under the running royalty although circumstances may change between now and when the patents outrun their useful life. Second question, on the media, on the M&A. I'll answer that question more broadly. We continue to look for acquisitions in both segments of the business. As we talked about during the last quarter, the primary focus for Media over the last 90 days has been to integrate IGN. As Hemi mentioned, it was a fairly herculean…

James, let me add a few comments of my own. The patents, as Scott said, and as we said last quarter, we are projecting it to be lumpy. And we're continuing to get -- of the license deals, we have many deals that are licensed already and they're paying on a monthly, quarterly basis. We said it's lumpy, so actually this quarter, it came short of expectations for over $1 million. But immediately, in the beginning, in April, it caught up. So lumpy but it's coming. On the M&A front, when we budgeted this year, we already knew about the IGN and the MetroFax deals because we're -- they were in an advanced stage. So they were budgeted in and executed in the first quarter. We have just finished 4 months, and we have another large part of the year to continue to do deals. And we -- I will not be surprised if you will hear about something coming in the near future. On Carbonite, we are the owners of 9.9%. And we are actually disappointed that shareholders that they grew quarter-over-quarter only 3.6%. We expected the company at this stage to grow much faster than only that. And we hope that common sense will prevail. We are not talking with them, but we are definitely watching it carefully. James D. Breen - William Blair & Company L.L.C., Research Division: Just one quick follow-up to what Scott was talking about on the expense side. So the expenses that were in IGN, you said it was some pretty heavy lifting there, those should come out in the second quarter but were probably in there during the first quarter?

Yes, that's correct. Well, they were out -- they're out of our non-GAAP numbers because the combination of costs borne and exit costs, and those totaled about $3 million. The answer is, as of -- the things happened over a period of time, but basically, the last event happened around April 8. So we have the cost structure of IGN -- basically, as of the beginning of the second fiscal quarter, that is in the format that we think makes sense. And now the time and attention is being turned to optimization of the traffic and also, where possible, growth of the traffic.

Our next question comes from Daniel Ives from FBR Capital Markets. Daniel H. Ives - FBR Capital Markets & Co., Research Division: So now with the integration mostly done, do you feel -- is there any change to the sort of growth expectations for the year in the Media business?

I think, no, Dan. Right now we are holding firm with what we had articulated a quarter ago, obviously, when we gave the annual guidance and we split it into Cloud and Media, we had just acquired IGN. There is nothing there, at this point, that would cause us to alter that viewpoint. I do believe there may be some upside later in the year. Part of the question will be the timing of when we'll actually be able to see some optimization on the existing traffic. It takes a while to be able to collect that data and then, present that to advertisers. If that can occur before year-end, that's good, that would probably be some additional upside to the numbers. We did not budget that this year, we are leaving that for '14. But if I look at Ziff Davis's numbers, I'd say they are tracking to what we thought they would do for the full fiscal year which, as you'll recall, was about $60 million of revenue just for the Ziff piece.

And Daniel, by the nature of the business, even though we are not buying more assets now, the way they're structured, Q4 is approximately 2x maybe even of Q1. So there will be growth in revenue and even more growth in profit because of the nature of the fixed expense of this debt [ph]. So growth from financial standpoint quarter-over-quarter, absolutely.

And one thing that you can look at, just to follow-up on Hemi's comments is, you will see that in the 50 days of Q4 of 2012 that we own Ziff Davis, we generated about $10 million in revenues and 40% EBITDA margins. And then, for the full fiscal quarter of Q1, the Ziff piece was a little over $11 million of revenue and about 13% EBITDA margins. So you can just get a sense of the leverage in that business because a lot of the costs are fixed but as you pile on those incremental revenues, whether it's through organic growth or through the seasonality of the year, you get very, very large flow-through of that to the bottom line. And we're very, very pleased that for Ziff Davis, not only was there strong revenue growth in Q1 of '13 versus Q1 of '12, but the EBITDA flow-through was even better, I mean, EBITDA almost tripled year-over-year. Daniel H. Ives - FBR Capital Markets & Co., Research Division: Okay. And then, Hemi, does this mean you're an official Miami Dolphins fan now?

Yes, he's got a cap on.

I'll meet you in my booth.

Our next question comes from Mike Latimore from Northland Capital Markets.

This is Ryan MacDonald on for Mike Latimore. I know you just quantified the revenue and the EBITDA contribution from Ziff, but maybe I missed it, did you -- could you quantify the contribution from IGN during the quarter or did you quantify that?

We did not, I will. But I'll also let all of you know, we will not be breaking out Ziff and IGN in the future. It will be reported as a consolidated segment, revenues and EBITDA. However, since this is the first full quarter of reporting for Ziff and 2/3 of the quarter for IGN, we thought it would be instructive for people to see how the business flows over the 4 quarters, how the margins expand. So instead of giving you the Ziff numbers, by implication, the IGN numbers for 2 months were about $11 million in revenue and about $1.7 million in EBITDA. But that EBITDA, though, is exclusive of some of the costs that Kathy talked about earlier. So we actually got a little bit more of EBITDA, both in aggregate dollars and margin, out of IGN than Ziff in Q1. And the total consolidated group for the quarter was slightly under $23 million of revs, $3.2 million of EBITDA or 14%. And you'll notice that both of them are strong gross margin businesses, Ziff did about $9 million of gross margin in Q1; IGN, for the 2 months, did a little over $10 million. And the consolidated group, that's $19.4 million, which is actually at or in excess of the traditional gross margins of j2 Cloud, which are usually around 82%.

Okay. And then, could you quantify roughly what organic growth was for the quarter for the overall business?

Well, the Cloud was basically all organic which was the 4.6%. Media would also be all organic on the Ziff side. There is really no way to talk about IGN organic growth since it's new to us and it's in a different format than it was under the News Corp's ownership. So I would look at the Cloud business at about 4.6%, and I'd look at the Ziff piece at 22%, add them together and that'd probably be a good proxy for your organic growth.

Okay. And then, just a final question, do you expect cancel rates to stay in this general ballpark going forward for the rest of the year?

Yes.

Our last question comes from Greg Burns from Sidoti & Company. Gregory Burns - Sidoti & Company, LLC: [Indiscernible] about the display advertising, I know you were kind of running some files, getting back into that market, do you have any update on how those files are going?

Yes. I'll tell you this. As a practical matter, we did have a little bit of incremental spend. We started about mid-February, reintroducing and testing display advertising for our cloud services. As you may recall, one of the things that -- it's one of the synergies of owning a media company was it gave us the ability to put forward a very good test that we hope will run the full course of the year to be able to put more core marketing dollars to work. I think in Q1, given the mid-February start date, we spent a little under $300,000 of incremental marketing in that testing. And I'll let Hemi comment on what we're doing in some of the early results.

So because it was mid-quarter, I have to be careful. This is why I did not publish real numbers, but what I know based on the data that I'm getting is that the CPA is dropping, it's improving week after week. We have cut off the program that were not successful, and we'll increase the spending on the programs that are successful. And one of the successful-list initiatives on the display is what you're seeing in our telesales with the corporate. We started to generate leads through displays and other ways for the corporate and that's why they're going now to 3,000 DIDs per month for a group of 7 or 8 people. So we are very pleased, we are going to continue. We are eliminating those that are not so good and we are putting more money behind those that are very good. Gregory Burns - Sidoti & Company, LLC: Okay. Another question around the organic growth rate. So the -- of the 60,000 DIDs that you added...

61,000. Gregory Burns - Sidoti & Company, LLC: 61,000 -- 6, I'm sorry, didn't want to shortchange you. So of that, how much of that was organic?

Less than half. You have to remember, we have acquired this quarter MetroFax and next -- the next quarter, if we didn't acquire anything else, you'll see organic only. Next quarter I meant.

This quarter we're in.

But it's working well. Gregory Burns - Sidoti & Company, LLC: Okay. And can you give us any color on some of the -- the status of some of your other litigation that you have out there? Is there anything that is in the order of magnitude of what you just announced?

No, we had another settlement a few days later which we got a 7-digit, but immaterial, amount of money. We still have some going but not in the magnitude. And we have a running program that, as we originally said, is anticipated to be like $10 million, $12 million a year, which some of it is already under the belt. Gregory Burns - Sidoti & Company, LLC: Okay. And lastly, in terms of M&A and the online backup market, do you have a preference, or, geographically?

Seriously. Look, we talk like businessmen, right? But...

What's the end of the question? What was the end of the question again? Gregory Burns - Sidoti & Company, LLC: The end of the question was that you're expanding geographically, so is there a preference for geographic expansion or getting scale in any particular market, how are you looking at that going forward?

Okay. So first of all, we go after the easier one, which are the English speaking markets. Then, we feel very comfortable with the Netherlands. And we made, actually, I think we are now largest or very large in the Netherlands. We have continued -- there are many, many millions of companies that are using the same method that we are doing it. We have made efforts to find out who they are and we're approaching them, and we are trying to do more in the English speaking countries. But because of the nature of the product, we are comfortable in going into non-English. So far, we have not found any -- so the first acquisition, let's say, in the market that doesn't talk English, let's say, Germany, for example, has to come with a team because we need people on the ground. So we did not find something that is $1 million and also fit in a country that is not in the countries that we just mentioned, but we are actively looking. We have a team of people, we actually even hired now one of our -- of the CEOs that sold us his company, he's very well connected. We actually did a contract with him for 2 months, and all he had to do is go around and find, in any country, a company that are like what he sold us and generate leads for us.

Thank you. And I'll turn the call back over to our speakers for closing comments.

Okay. Thank you very much. We appreciate your time today to review with us Q1 results, as well as looking forward to the balance of the year. As usual, look for press releases for upcoming conferences that we'll be presenting at. I know specifically, there's a conference in Santa Monica, California, B. Riley, in a couple of weeks that we will be at, and we will put out releases for other ones as they're scheduled between now and our early August earnings call to report Q2 results. Thank you.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.