Becky Herrick - LHA Investor Relations Kai-Shing Tao - Chairman and Chief Executive Officer Douglas Osrow - Chief Financial Officer Michael Reichartz - Co-Founder, Roomlia.

Good day and welcome to this Remark Media First Quarter Financial Results. Today’s conference is being recorded. At this time, I would like to turn the conference over to Becky Herrick of LHA. Please go ahead madam..

Thank you operator and thank you all for joining us today for the Remark Media first quarter 2016 financial results conference call. On the call today are Chairman and CEO, Shing Tao; and CFO, Doug Osrow. After the prepared remarks, we’ll open the call to questions.

A webcast replay of today’s call will be available at Remark Media’s website for 90-days. Some of the statements made today may be forward-looking statements. These statements involve risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by these forward-looking statements.

Any forward-looking statements reflect Remark Media’s current views and Remark Media expressly disclaims any obligation to update or revise any forward-looking statements after the date hereof. This disclaimer is only a summary of Remark Media’s statutory forward-looking statements disclaimer which is included in its filings with the SEC.

Also please note the Company’s uses financial measures, not in according with generally excepted accounting principles countering on the GAAP. To monitor the financial performance of Operation, non-GAAP financial measures should be did in addition queue and not as alternative report, reported financial result as determined according to GAAP.

To support the Company’s use of EBITDA later in this call our reconcilement table will be included in the Company’s form 10-Q to fully valid with the SEC model. It’s now my pleasure to turn the call over to CEO, Shing Tao. Please go ahead, sir..

Welcome and thank for joining us. For the first quarter 2016, we demonstrated strong year-over-year improvement as net revenue increased to 14.3 million from 800,000 in the same period last year and we believe this is just the beginning. We’re currently in the late stages of valuing an acquisition that provides many exciting benefit to Remark Media.

In general, our criteria for acquisitions consist of, one being near-term accretive, two enhances our platform of assets and three provides immediate synergies. This assets meets and exceed in this criteria.

We expect this new business to accelerate monetization across all of our digital media platforms, providing additional content and analytics that give us a more comprehensive and complete approach to addressing the highly lucrative Millennial demographic.

We also expect acquisition will provide us with sales and marketing capabilities and relationships with large advertising agencies and world famous brand names, which we can leverage across our entire business. It is obviously too early to get into more details but we’re excite to share more about this important transaction in the very near term.

Please stay tuned. Now I’ll review our recent highlight within our digital media technology platform. We continue to expand and enhance KanKan our proprietary data intelligence platform. During the first quarter we introduced KanKan version 2.0 and the roll out is going quite well.

Within two-weeks we organically grow registered users without any promotional activity. KanKan is a unique and competitively spear offering. It creates the best pose in the social space according user interest and social activity.

In addition, it finds and connects users of friend and friends of friend, while enabling posting across all major social media platform. It also provides math based social media post, based on location, time, relevancy and preferences.

Another key component of KanKan strategy is leveraging data from its base of well over 1 billion socially active users around the world. This data allows us to significantly improve user engagement and brand awareness across all of our digital media property.

It also provides a revenue generating opportunity for retailers and advertisers in need a predictable analytic and location based services. As we recently announced we are officially data partners with Alibaba data business unit.

Beginning this month, we are open to utilize Alibaba’s non e-commerce data including [uming] (Ph), goverMap, UC browser and more. Additionally, we may also utilize their partners’ data, this encompasses hospital, wifi, wireless services and other vertical. This will be tremendous boost to our KanKan data business.

In addition, we are pleased to announce the procurement of our first client, a leading Chinese consumer group for KanKan powerful data services. KanKan will provide advanced facial recognition technology for verification of suppliers goods origin and quality.

KanKan’s data services will also be utilized to expand the consumer groups higher end customer base for premium product roll out. KanKan’s data services application are limitless across different industry. We are partnering Alibaba’s data unit to build a user capability and behavior analysis platform.

Any user with a phone number, name or id card maybe verified via data model that combines Alibaba’s Taobao, Tmall, and Alipay data with our largely repository of social data. From its immense data repository, KanKan can provide credit and fabulous course for individual and any of their social site. And this is just tip of the iceberg.

We also have the capabilities to provide health conditions course, athlete course, ID verification, brand or merchandise preferences and information on consumer behaviors specific to where they live and work. Such information represents significant value to company in microfinance, O2O, career logistics, e-commerce and banking.

Now, I'll provide you an update on Vegas.com. During the first quarter, we made progress on our plan transfer on Vegas.com from a traveling and ticketing hub into a digital media platform, representing the multiple facets of Las Vegas experience targeting the millennial demographics. Within the U.S. this demographic has significant purchasing power.

Currently at 600,000 billion per year and expected to reach 1.4 trillion by 2020 according to peer research. We refined and improved content within the site to and enhance our peer to visitors. Doug will cover our conversion metrics more in the moment.

First cover over 40 significant consumer facing features available on competitors sites that are missing from Vegas.com and we took it over in September of 2015. Our focus on data driven technologies has helped us improve our Vegas.com partners performance.

For example, multiple customers we’re able to use our data to improve their customer conversion, fine tune their pricing models and increased volume. We added almost two dozen new features to the site in the first quarter. That has helped increase a sharper conversion. Here is a small sample of updates we introduced.

A, we designed a show and search results pages on mobile and desktops, we conducted a redesign of the hotel search result pages, we redesign the booking widget in mobile and desktops and we added a new homepage for mobile website.

We have begun our rebranding initiatives to enhance our appeal to our target millennial demographic and visitors to the platform, to begin the see changes over the next few quarters. We also plan to unveil a new night club and entertainment offering in the second half of 2016.

This is expected to provide visitors a complete guide to nightlife in the city. This ranges from which DJs are performing at which clubs, and what special events are taking place in an around town. As we are the largest traffic as aggregator of all things Las Vegas.

We have a special perspective on the who and the what of the city and can direct traffic to any number of our partner's eventual services. Basically the digital process show [indiscernible] through Vegas.com. We know where they are going, what is nearby, what their interest are and then make suggestions that direct them to our partner's site.

Like look for transportation to or from the show, or night club in the area with a special guest DJ. We are basically making Vegas.com a one-stop-shop for all things Las Vegas. There is significant opportunity to expand into related vertical such as food, sports, gaming, comedy, dating and more.

We are constantly evaluating these opportunities and will provide you with update as we move forward. To further improve Vegas.com, we are undertaking several technology improvements to the site architecture. To make it operate faster which helps conversion, we expect these to be completed between the second and third quarter of this year.

I’m excited to announce the private data launch of our new social networking platforms [SUZA] (Ph) on June 20 during the heavily traffic Electronic Daisy Carnival weekend in Las Vegas. Through the connect people crew experience is real time.

Its actual virtual [indiscernible] what is doing around you and encourages participation, video base live snap chat, SUZA feature ample customization and streamline contact imaging functionality. SUZA’s backend [indiscernible] structure has been built on the KanKan platform in order to maximize competitive marketplace advantage.

KanKan data set of social profiles and user histories allow SUZA to micro target relevant users. SUZA’s strength lies in the ability to re-replicated in large market both nationally and globally. Vegas is a perfect launch market, millions of party hunger millennial tourists looking to connect and share memorable experiences in a short amount of time.

Vegas.com saw millions of visitors to the site monthly looking at purchase ticket and expenses while in town. SUZA gives these users a simple fun and efficient tool to enrich their stay, SUZA drive people to actual events and happenings giving the venues what they want, paying customers and the ability to offer customized packages.

As I mentioned, we're aiming to launch in a private [indiscernible] on June 20 through the Electronic Daisy Carnival and if this becomes successful, we believe this is very replicable in other markets targeting Los Angeles, San Francisco, San Diego and New York. Now turning to a review of our additional digital media property.

In the first quarter, our finance vertical was active in parallel with tax filing season. Earlier in the quarter, we introduced our tax filing feature, it became evident that in the first several weeks the better revenue generating model for the site was regeneration.

As such, we reverted back to our original model which resulted in an improved performance in March and April. Leveraging the analytic experience of our Vegas.com team, we continue to see traffic ramp up sharply. As this was the first season of Vegas.com team was involved with IRS.com we expect future tax seasons to improve even more.

Doug will review IRS.com's performance metrics in a moment. Within our lifestyle segment, we continue to develop revenue generating capabilities within Bikini.com a luxury beach lifestyle site where followers can tap into their inner daydreamer anytime and anywhere.

The first quarter of 2016 saw positive results across the board for the brand due to the realization of past strategic initiatives.

The lifestyle component of Bikini.com brought in [indiscernible], video content on this media channel delivered increased views in its core millennial women's demographic and enhanced special regimen and created partnership opportunity.

The retail platform outperformed the first quarter of last year with increased traffic, revenues growth, improved conversion rate and higher average order value.

And as a result of Victoria's Secrets recent $200 million exit from the swimwear category Bikini.com is well positioned to size new market share in 2016 and further the brand's authority as the online expert in the beach lifestyle space.

In summary, I'm very encouraged by our first quarter financial performance, and remain very excited about the future for Remark Media. Vegas.com continues performing well and provides us with significant avenues for growth within the Travel and Entertainment segment.

We enhance KanKan with a roll upgrade version 2.0 and our partnership Alibaba continues to grow and strengthen our Big Data offering. With all the progress we've made coupled with near-term growth initiatives I'm confident we'll accelerate the monetization of all our assets this year.

Now, I'll turn the call over to Doug for a review of the financials. Doug..

Thank you, Shing. Before reviewing the financials I would like to provide a brief overview of operating metrics for the quarter. In our Vegas.com business hotel shopper conversion improved over 9% year-over-year in the first quarter. Mobile transactions increased 44% and mobile conversion improved 18% year-over-year.

For IRS.com at this time of the year I feel it’s important to look at these metrics for the entire tax season which is from January through April. during this period, site traffic was up 26% over the same period last year and we expect this site traffic to be over 10 million in calendar year 2016.

Earlier in the quarter, we experimented with offering our own tax operation product as Shing mentioned and giving the initial results in the beginning of March we shipped it back to the lead generation revenue model.

For the quarter, revenue declined 14% year-over-year but since the shift in March, revenue increased 16% in March and 40% in April compared to prior periods. Now turning to Remark Media's consolidated financial results.

It is important to note that our first quarter of 2016 financials reflect the Vegas.com acquisition, which closed on September 24, 2015 whereas the first quarter $2015 results do not.

Net revenue was $14.3 million compared to $800,000, gross margin was $11.9 million compared to $800,000, operating expenses were $17.1 million compared to $3.7 million, operating loss was $5.2 million compared to $3 million, net loss improved to $2.4 million or $0.12 per diluted share compared to $3.1 million or $0.24 per diluted share.

It's also important to note that the Travel segment experienced positive EBITDA of roughly $650,000 in the first quarter of 2016 given Q1 is historically the weakest of the year we're strongly encouraged by these results.

At March 31, 2016 cash and cash equivalence were $10.3 million compared to $5.4 million at December 31, 2015, our restricted cash position was $11.6 million compared to $11.7 million over the timeframe. Our combined cash positions at March 31, 2016 was $21.9 million compared to $17.1 million at December 31, 2015. Now I'll turn the call over to Shing..

Thanks, Doug. 2016 is off to a strong start, we made significant progress in executing on growth opportunities within our digital media properties and furthering our penetration as a millennial demographic. To accelerate our path towards revenue growth and long-term profitability remains committed to the following strategic initiative.

Number one, continuing to build KanKan as a consumer brand and increasing its user base, and number two, building continuing to build up its Big Data capability.

Second, we'll continue to improve on our operational Vegas.com some more and finally expand its platform into digital media final where we continue to leverage upon the strong biggest dotcom brand.

Third, enhancing our finance and lifestyle verticals to increase brand awareness and monetization opportunities and fourth evaluating opportunities to core complimentary business that strengthen our core offering and accelerate our path of profitability.

We look forward to updating you on our continued progress doing, we’ll be in Los Angeles area conducting meanings for May 25 to 27 including presenting at the B. Riley 17th Annual Conference on May 26. Please contact Becky Herrick at our IR from LHA, if you are interesting in a meeting, for contact information is included in today’s press release.

Operator we are now ready to begin the Q&A session..

[Operator Instructions] And we’ll take our first question from [George Kiscarco] (Ph) a Private investor..

Thank you operator. Hey guys can you hear me, okay..

Yes, hey George..

Congratulations, a very encouraging start to the year, I must say. I have a few questions that revolve around Vegas.com and KanKan if that’s okay. How do you think, Vegas.com clearly made a lot of improvements and that’s very encouraging.

How you do you tie out or how do you think about Vegas.com and the other verticals that you have at Remark Media, right we have Bikini.com, we have a few other verticals there, can you just talk me through, how you think, how that relationship works?.

So through Vegas.com I think in general we, most believe that Vegas represents the best-of-class in most things in and meaning something different to everybody, so within Vegas.com we certainly believe that we can build different verticals under that umbrella.

As it relates to for example Bikini.com currently the day parties - the culture here is very strong, but more importantly how we relate, we actually relate Kankan as the way that will differentiate the Bikini and how Bikini.com’s growth in the future.

With the available it’s to target people that live in that particular area, we can now as sort of the - how we initially start the KanKan and the ability to target with a laser versus a shocker.

Now we are able to target people that live in these particular beach destination, know what they like, know what they do and to be able to target kind of offering to them, no offering being product in content..

Okay, I get that. So talk to me a little bit if you could - you mentioned there is new night club offering okay that’s coming in the second half I think I’ve heard over this year under Vegas.com.

so that would be new vertical, I see them?.

No, I won’t consider it a new vertical, it’s something that Vegas.com in a path does not focused on, primarily the content and offering that Vegas.com is offered in past were during the day time hours.

And as that the big shift in, in Vegas as you know is non-gaming revenue has now surpassed gaming revenue and a lot of comes after 9 0 clock night, and so where a big book of the revenue, it’s generate by restaurant and night clubs. We haven’t had an offering to target that opportunity.

So we been building that up over that last couple of months into offering the kind of the comprehensive solution to the person that comes to Vegas does not look in to gamble.

And that’s not just going to eat at a restaurant, going to a show but what happens after they are done with the show, but they need to know where they want to go, what DJ is particularly performing, if they want to book a table, or they want to just go in as a general admission person.

We haven’t had those offering in the past and those are significant revenue opportunities for us, a specially given our trusted name, our strong name and the high amounts of traffic that we have here in town..

Right, so the night club offering, now would you offer incremental revenue opportunities both in terms of ticketing and also that in advertising, right?.

Yes absolutely..

Alright okay and just one more on Vegas.com, before I go to KanKan, you mentioned significant improvements in the user experience, in the conversion, addition more feature sets to the Vegas.com to help drive revenue and there is more features coming I think it’s the between Q2, Q3 or this year.

The improvement in the mobile number was the most impressive or startle impressive number, is the whole mobile experience of Vegas.com generally a new initiative because it must have existed before right? Or is it significantly enhanced, how do you guys think about that?.

George hi there it’s Michael, so the way we think about that, I get there is kind of industry trend right which is the continued colonization from desktop to mobile, right as its screen sized gets bigger at the user adoption increases, you’re certainly seeing consumers get more comfortable transacting and I don’t think that’s a exclusive to just the travel category right? But what we are seeing specifically is, as we add improvements that help customers to make better decisions whether it is providing more information, whether it is about price, whether it is about helping get a customer kind of get a sense of the demand for a given product.

We are introducing a lot of features and we have product roadmap to continue to enhance the experience on mobile and desktop that we are really confident will help us increase conversion. Obviously we have done that in the first quarter and we will continue to see that I think in the upcoming quarters.

But we are really getting a nice tailwind on the traffic and then I think where we are getting an extra benefit is increased conversion on that increased traffic.

Certainly there is a shift [indiscernible] is happening probably slightly faster than we forecasted but the great news is that we've been in front of it, we've been able to capture that market share..

Right but I’m right in thinking that obviously both Vegas.com and Vegas.com on the mobile experience are both growing, I get that, but I’m trying to match how you guys think about the additional functionalities you are providing of 2Q, 3Q so it seems it’s both mobile and the website is that fair to say?.

Yes, for our market place we do think that there is a customer that transacts with us on mobile that’s not in Vegas, and then I think at this point particularly as we entered the nightclub vertical and get deeper into that there is a customer that visits our marketplace and transacts with us while they are in town.

So we do think about desktop and mobile slightly differently, but then we think in market, out of market differently as well. And so we are making sure that from a technology and architecture standpoint we are able to have different conversations with customers.

So I think that a comment that Shing made earlier, we know where folks are in terms of show and how do we continue to have a conversation with them during their time here and Las Vegas. Yes, we absolutely do think about that way..

So it wouldn’t be wrong necessarily for me to think Vegas.com as an asset that has a lot of [indiscernible] there is lot of growth opportunities [indiscernible]..

Yes, absolutely I think we are just - at the beginning, first six months or so after we closed on the transactional was really to kind of fix some of the problems that weren’t addressed in the previous just say three to four years. And so we are aggressively fixing those issues and then now we can look forward instead of backward..

Okay very good thank you for that. So if I could just a few more questions on KanKan if I could. I think of KanKan in two categories, I think of the act, but I think frankly much more about the business integration of platform, business intelligence - the data intelligence platforms. That’s how I think of KanKan primarily.

It seems to me there are world of opportunities there and it's much more if I can say a B2B business opportunities. How do you guys think of that data intelligence platform versus the act? It’s the waiting more on the intelligence platform like [indiscernible]..

So I think in terms of value, it is clearly the targeting the enterprise market is where the bulk of value is and our strategy has always been number one to use our proprietary technology to enhance our own businesses.

Number two, to take the data that we have collected and to be able to put that in a kind of understandable format and where we could sell that to other businesses. One of our I guess successes, which certainly accelerated with our partnership with Alibaba is securing this first client, which is a very large consumer products company based in China.

And they are able to capture only the transactional data of the different customers, but also able to use our social data to enhance the platform of customers. And that’s really - go ahead..

Okay, [indiscernible] Alibaba at the moment but the backend to me at least is how I think about. - it’s more important how you think about, I want to understand it.

The backend it seems to me it can expanded itself to several other business opportunities right?.

Absolutely, I mean just the ability to breakdown the technology kind of a wall that exist between all these different networks and allow these different business that have a lot of data and to be able to extrapolate it and understandable ways allows us to be able to target with much more focus and then through that we can launch a bunch of different business off of it.

One of the thing that I mentioned on the call is the launch of SUZA, which essentially is a leading platform and the ability to where we launching it in Vegas.

In the past, we would only be able to target people that had booked there something through Vegas.com, but through the KanKan platform now we can expand that platform that people [indiscernible] focus on Vegas.com is obviously opened up our universe much more broad..

Okay. Just a couple more questions and I'll follow-up with you guys offline maybe but about Alibaba clearly a world impressive name.

why did Alibaba do a deal with you guys?.

I think we are pretty - I mean I think it's pretty understood that Alibaba is the king of e-commerce in China and through that it has been very aggressive in expanding their efforts to other different verticals. Through that whole process they have amassed a lot of data in a lot of different businesses.

But the one thing that they have lagged is the social data, right and that's really where we come in and we complete the circle for them. And [indiscernible] especially not only here in the U.S. where Facebook and Instagram dominate, in China there are six or seven different large social networks where people use it for different reasons.

And the ability to take the information from all of them and now you put that together with Alibaba's information, it really makes it pretty comprehensive kind of information source to build their business on..

I mean clearly it's very visible the impression that you guys give, that you now have access to Alibaba's data right and potentially their partner's data.

Is this an exclusive relationship with Alibaba you have with the KanKan?.

I wouldn't say it's an exclusive relationship that would be something that they would, it would certainly come from them if it is exclusive or not, we're very fortunate to - we're pretty confident there are not many partners that had been granted this type of data like us and we'll continue to kind of build our business today..

And you've done deals in Q1 right on the KanKan platform through Alibaba. I mean I noticed a tweets from the company about Oreo cookies, or I should say among the leads who own Oreo cookies. I noticed a tweet earlier on - three or four weeks ago, talking to that.

So I assume deals have already taken place on the KanKan platform there is revenue in your Q1 numbers from KanKan already from the data intelligence platform?.

We haven't booked the revenues yet, but we obviously can't disclose who the current customers are. But in terms of are we monetizing KanKan right now? The answer is yes..

And a very difficult…..

And George just to give a little more clarity on that. When the Q comes out you will see segment reporting on just the travel segment..

Okay. So I wouldn’t be crazier thinking there is a lot of upside and headroom in both Vegas.com and KanKan right guys, I mean you just started..

Yes, we're just really just at the beginning and that is really important to first to build a base and without a strong base we really couldn’t go anywhere and the ability - we build this to be able to have its scale globally. So good things take time and we took our [indiscernible]..

I get it. Okay, guys I have got many more questions [indiscernible]. Maybe I'll call you guys offline. Very good quarter, congratulations. Very exciting future I think. Thank you..

Thank you..

Thank you..

[Operator Instructions] And this concludes today's question-and-answer session and our call for today. We thank you all for your participation and you may now disconnect..