Becky Herrick - IR Kai-Shing Tao - Chairman & CEO Douglas Osrow - CFO Michael Reichartz - Co-Founder, Roomlia.

John Tinker - Gabelli Jake Long - Capital Investment.

Good day and welcome to the Remark Media Second Quarter Financial Results Conference Call. 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..

Thanks, Angela. And thank you all for joining us today for the Remark Media second 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 will open the call to questions. A webcast replay of today's call will be available at www.RemarkMedia.com 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 uses financial measures not prepared in accordance with generally accepted accounting principles commonly known as GAAP to monitor the financial performance of operations.

Non-GAAP financial measures should be viewed in addition to and not as alternative for the reported financial result as determined in accordance with GAAP.

To support the Company's use of adjusted EBITDA later in this call our reconciling table's provided at www.remarkmedia.com, and a similar reconciling table will be included in the Company's Form 10-Q, which will be filed with the SEC tomorrow. It's now my pleasure to turn the call over to CEO, Shing Tao. Please go ahead..

the millennials. By improving content, incorporating and leveraging our data mining technology, and adding new features. Revenue is up 10% year-over-year in the second quarter, driven by increased conversion of the strong visitor traffic and show ticket sales we have on Vegas.com.

Year-over-year in the second quarter, hotel conversion increased 24%, conversion on mobile devices increased 17%, and show ticket conversion on mobile devices increased 20%. Year-to-date, hotel conversion increased 14%, conversion on mobile devices increased 17%, and show ticket conversion on mobile devices increased 18%.

We are on track to sell well over one million show tickets by the end of the year, which makes us one of the top ticketing hubs for shows in Las Vegas. Our success is largely driven by the technology and product enhancements which we have implemented.

We are committed to delivering what our customers want and to better understand this improved conversion, we ran over 100 AB tests in the first half of 2016. In the first quarter, we implemented more than 25 new product enhancements and features.

And we continued to build on that momentum in the second quarter by implementing features across product verticals such as ticket purchase cut-off countdown, which lets visitors know how long they have to purchase a ticket before sales are closed; popularity indicators, which display how many tickets have been booked in a specified time period; and the number of people looking at each product.

To enhance customer experience, we redesigned our home page and resource page and updated our hotel room type selection. And there are many more features and enhancements to come. Key to further differentiating Vegas.com from the competition in the travel and entertainment sector is leveraging our advantage in mobile.

As of June 30, 34% of Vegas.com's customers' transactions were completed via mobile device and we believe this number is only going to grow as people become increasingly tech-savvy. This provides us a continued growth opportunity as our competition in Las Vegas tend to be brick and mortar retail ticket desks.

We believe our technology focus will provide us with significant advantages in building out a mobile platform.

We have made great strides in mobile checkout, redesigning resort and hotel pages, a seat selection feature specific to mobile, and we'll continue to make meaningful improvements that will make it even easier for consumers to purchase on Vegas.com.

We expect to drive substantial increases in advertising and sponsorship revenue as we continue implementing these upgrades, especially with the future addition of the China Branding Group. As you know, earlier this summer we signed an agreement to acquire China Branding Group, also known as CBG.

We continue to work towards closing the acquisition, which will provide significant benefits and synergies. CBG's main asset is FansTang, which is the largest provider of localized international live events, social media, and Hollywood video content in China.

Its clients include Hollywood agencies, studios, international advertising agencies, and major consumer marketers, including Coca Cola, AB Inbev, Red Bull, Vitacoco, the Los Angeles Tourism and Convention Board, and more. Our strategy in acquiring this asset is to advance our appeal to highly lucrative Millennial demographics in both the U.S.

and China.

By leveraging FansTang's sales efforts and advertising relationships, integrating its content portfolio with that of other assets, and utilizing its community of over 100 million social media followers, while combining its data platform with KanKan, we believe we can accelerate our growth to become a more dominant player in the digital media industry globally.

FansTang is a growing business with a strong pipeline of deals and opportunity for further expansion. In fact, they were recently awarded the China exclusive multiyear media rights, including broadcast and live stream, for the Emmy Awards. This enhances the portfolio of major accounts in building upon its industry-leading portfolio of content.

This, like the other award show and major events rights owned by FansTang, includes armside, red carpet and other platforms that allow for pre- and post-event broadcasting sponsor integration. We believe there are several synergies between FansTang and all of our existing assets.

For instance, with Vegas.com, FansTang can develop and sell content marketing activities to be activated within Vegas.com's online and offline media assets. Vegas.com can share its existing content or create custom content for FansTang.

FansTang can develop China-specific content for Vegas.com, leverage its travel client relationships, and promote Vegas.com in China. In fact, Hinan Airlines is launching a new nonstop flight between Beijing and Las Vegas in the fourth quarter of this year, demonstrating that Las Vegas is truly becoming an international city.

And lastly, we can strengthen Vegas.com's geographic reach via FansTang's international relationships. There are also multiple synergies with KanKan. We can integrate FansTang's social media inventory into KanKan's data intelligence platform and integrate KanKan into FansTang's digital media assets.

And we can combine data analytics capabilities and establish content curation for KanKan's platform. We have already made progress in demonstrating the benefits of this acquisition as evidenced by the following examples.

We are working with a major advertising agency and consumer marketer to develop a series of video content cantered to Las Vegas, which would be activated through a combination of Vegas.com's online and offline media assets, as well as the integration of a large network of influencers.

And two, we're also working with a major advertising agency and its international brand client on growing its presence in China through a series of marketing activations to be developed based on output from the KanKan analytics platform and its success measured by KanKan.

And lastly, we are developing premium content in conjunction with bikini.com and generally selling brand integration into this content. KanKan is a pillar of our company as it serves as an extremely valuable data intelligence platform that feeds into all of our assets.

The KanKan mobile app is unique in the social media space as it represents a single platform where visitors can see the best posts in the social space, including food, travel, and other activities in which they are engaging.

In addition, it allows users to easily find both friends and friends of friends and connect them post [ph] across all major social media platforms. It also provides map-based social media posts based on location, time, relevancy, and preferences.

To date, we have amassed -- we have achieved massive scale, with over a billion active social user profiles and billions of images, social media posts, and comments, reviews or likes on the KanKan platform.

This provides us with an enormous amount of valuable data related to user likes and preferences their friend circle and their likes and preferences, locations, buying habits and ultimately predictive analytics.

Our KanKan impropriety data intelligence platform collects and analyzes this information, without reliance on API's and without them actually being a user of Kankan at which automatically lowers our customer acquisition costs.

Recognizing the value of this data Ali Baba agreed to provide KanKan with access to the dedicated internet gateway enabling us to bypass the Chinese government's great firewall. In addition to this, Ali Baba chose KanKan as a partner in this big data research unit.

Through this relationship we're able to model our own data with Ali Baba's shopping Wi-Fi retail and healthcare data. Last quarter we introduced our latest effort to leverage KanKan extensive platform and Ali Baba data by building a user capability and behavior analysis platform.

In the second quarter we form Remark social credit service in China, this enables us to verify via machine learning based data model, Any user with a phone number or ID card, we can then provide credit, fraud risk, health condition, and access course, as well then ID verification, brand or merchandise preferences And information on consumer behaviors within this data repository.

This provides us with a very viable proposition for companies and micro finance P2P O2O Currier and logistics. E-commerce and virtually any type of company that wants to find someone qualified. In fact, in China, currently no reliable credit system for customers which further underscores the market opportunity.

We're excited to provide you with an update on the progress as this feature rolled out. KanKan intelligence platform data intelligent platform has teamed up with several partners in China, Including Ali Baba to provide enterprise data solution services.

Such as company in senior management profile, financial statements, Investment, Lawsuits trademarks, patents, Suppliers, vendor's current business partners and more, For complete a multi-dimensional enterprise profile. This is extremely valuable to companies seeking such solutions.

Our platform has started a social listening service in China, aimed at local major news and publication agencies or eager but not able to monitor the spread of their content, An audience response via social channels including social networks outside of China in real time.

The social listening service is also helping local or global brand to find and reach up to the right audience Based on their social behaviors with the most relevant content and products. Last quarter we began providing a large coke consumer Products Company in China, Which services within our kind KanKan intelligence platform.

Our data intelligent being utilized in the company's procurement system and feedback thus far is very positive. Based on the success of this rule out we expect continue working with this customer, Providing similar services to different branches of the company in the second half of this year.

In terms of revenue generation our internal expectations where the Kankan would begin general revenue in 2017. However there's a consumer amount of external interests in the data intelligent platform and we believe we may begin seeing a revenue contribution from KanKan of 2016.

Now turning to review additional digit media properties; in our finance vertical we continue to see traffic ramp up sharply, for IRS.com. During the second quarter goods were up 14% from the same period last year. We expect visitation to be over 10 million in calendar year 2016.

While the finance vertical industries strong improvement due to the technology upgrades we've implemented over the last several months, we determine if it's outside our scope of digital media core competencies. As a result we're beginning to evaluate strategic alternatives for this asset.

Within our life style segment Bikini.com distinct euro has enabled it to establish an identifier brand present the millennial female demographic. The brand's recent entry into the video space combined with its utilization Vegas.com resource has strengthened influence insignificant deep and audience engagement.

As evidenced by the $15 million our investment recent investment by time Warner's Turner group into a lifestyle but refinery 29 video initiatives, is a strong demand for content targeting millennia women.

The lack of key distinguishable players in the female media space of a bikini.com competitive opportunists organic growth multiple revenue generating pass and global scalability. Next, I'll provide a brief update on Sharecare, a health and wellness website in which Remark Media has a minority equity interests, as well as board representation.

As a reminder in 2009 Remark Media along with Dr. Mehmet Oz, the founder of WebMD [ph] Jeff Arnold, Oprah Winfrey of Harpo, Discovery Communications & Sony Television co-founded Sharecare.com. Since it was founded Sharecare has made 10 acquisitions.

In July Sharecare announced it acquired the population health business of Healthways shoveling the size of the business and adding 1,700 staff. Sharecare beat several companies buying to buy the companies unit; its ability to win the deal was not based on pricing but on the technology enabling platform created by Sharecare.

This deal continues the momentum generated from a joint venture by Sharecare before the blue parent company guide well. Between the deals with both Guidewell and Healthways, Sharecare now embarked on a massive rollout in health and wellness app, to millions of client members and employees.

Deep blue chip companies include AT&T, Lockheed Martin and FedEx. The Sharecare access to provider's services such as health risk assessment, the real age test, Symptom checker [ph], health coach and stress management technology.

The dealer Healthways' also includes integration of services, like it intensive cardiac rehabilitation program intended to reverse heart disease. Jeff Arnold who is this Sharecare CEO and was the founder of WebMD 18 years ago recently credit the consumerization trend in healthcare, enabled by smartphones with dealing Sharecare's growth.

Also said and I quote, we will see more innovation in healthcare in the next 18 months than in the past 18 years because smartphones have given us this vessel. This acquisition greatly enhances your cares valuation and opens up a variety of monetization inopportune. We are pleased with the company's growth and scaling of its operation.

And we look forward to keeping a prize of any updates concerning our ownership interest. In summary our second quarter financial performance demonstrates a positive continuation of the momentum we began generating since our acquisition of Vegas.com in September of 2015.

We look to continue expanding our digital media asset portfolio to include another revenue driving assets and CBG, and we are more excited than ever about the future of our Company. Now turn the call over to Doug for a review of our financial, Doug. .

Thank you, Shing. Before reviewing our consolidated financial results, is important to note that our second quarter 2016 financials reflected Vegas.com acquisition, Which closed on September 24, 2015 where's the second quarter 2015 results do not.

For the second quarter of 2016 compared to the same period in 2015 net revenue was 15 million compared to 821,000. Gross margin was 12.4 million compared to 739,000. Operating expenses were 15.9 million compared to 3.8 million. Operating loss was 3.5 million compared to 3.1 million.

Net loss was 5.4 million or $0.27 per diluted share compared to 3.2 million or $0.23 cents per diluted share. In our travel segment, our adjusted EBITDA was 2.4 million for the second quarter of 2016 which exceeded 10% of net revenue.

We expect we will maintain or increase this level through 2016 meeting at 2017 where we will drive significant growth in both our top and bottom line. For the first six months of 2016 compared to the same period of 2015. Net revenue was 29.2 million compared to 1.6 million. Gross margin was 24.3 million compared to 1.5 million.

Operating expenses with 32.9 million compared to 7.6 million. Operating loss would be 0.7 million compared to 6 million. Net loss was 7.8 million or $0.39 per diluted share compared to 6.2 million or $0.47 per diluted share. In our travel segment our adjusted EBITDA was 3.1 million for the first six months 2016 which exceeded 10 % of net revenue.

At June 30, 2016 cash and cash equivalent to 8 million compared to 5.4 million at December 31, 2015. While our restricted cash position was 11.7 million at both ends. Our combined cash position at June 30, 2016 was 19.7 million compared to 17.1 million at December 31, 2015. Now with that, I'll turn the call back to, Shing. .

Thanks, Doug. we're excited and encouraged by the progress they're making an accelerate in the modernization of our digital media properties enhancing our appeal to the millennial demographic and ultimately driving long term profitable growth in shareholder value. We remain committed to the following strategic initiatives.

First, continue to enhance Vegas.com their technology upgrades, future editions, improving conversion of traffic. Second, continue building out KanKan user base and going our date intelligent platform, enabling us to leverage is valuable data to enhance all of our assets and monetizing the after through sales of the platform.

Third, closing the acquisition of China branding group, integrating its assets and beginning to realize synergies. Fourth, enhancing our lifestyle vertical to increase brand awareness, and expand strategic alternatives for the finance vertical.

And fifth, we will continue to monitor the market for acquisition candidates that fit within our core focus on the millennial demographic and accelerate our revenue growth. Before we open the call for questions, I just wanted to share that we continue to be active in meeting with investors via roadshows and conferences.

We'll be presenting at the Drexel Hamilton Telecom Media and Technology Conference of September 8 in New York City. If you're interested in meeting please contact our investor relations from LHA was contact information is in today's press release. Operator, we are now ready to begin the Q&A session..

[Operator instruction] And we'll go ahead and take John Tinker with Gabelli..

Several quick question, you mentioned that you're selling million dollar tickets down Vegas. Could you highlight what kind of revenue comes from that? And the kind of ups the sort of substantial market size given, I think you suggested a lot of the tickets are sold physically and as you move people to online it could be a lot more attractive thanks. .

Sure, good afternoon, it's Michael here. So if I want to tell you is from a unit basis that sale of show tickets is much more attractive to us than to sell in hotel room.

Well we certainly are working hard to improve the amount of hotel rooms we sell just like show tickets, we see better economics currently because we're just we execute better on the show side of our business.

As it relates to the delivery of tickets we've always been in a position where of that the tickets have been sold in an online format, what we're seeing is a shift from a desktop to mobile and we think that there are just a number of strategic advantages for us there, while one to booking window obviously up comes closer into event date when the transaction occurred on mobile versus desktop, that that is one factor that plays into our business that we have to monitor closely but the upside of that is consumers are walking around on the strip with their handset and that it is very easy for us to get in front of those consumer.

And as we get in front of those consumers and can provide a better experience than offline brick and mortar experts, that's where we think we have a short term and long term strategic advantage, that I think in the coming quarters just accelerate our growth in that business. .

Thanks..

We will now move on to Bes Leski with Leski Investment [ph]..

Yes. I was going to ask one -- I have actually two questions; I'll start with the first. What is your overall strategy to grow the business now that the China branding group acquisition near to close. And will it be organic growth or in organic growth through this acquisition. .

Yes, so I think you know with the Vegas.com. I know that -- is the answer that is we're going to grow through both organic growth and through acquisition.

Now the Vegas.com acquisition that was done as a turnaround situation in a restructuring play, and even over the 10 or so months since we've acquired it, we think the acquisition has been a no home run for Remark Media and we have been able to turn the business around and will continue to now add growth to the business.

I know as we look to expand the platform now especially with the impending closing of China branding group, we kind of look what's ahead of us the next year, two or three years.

And as we approach different brands that want to touch the millennials which we're so focused on, we view it as kind of a chess game, which we -- as we approach it as a brand, we don't let them have an excuse to go to anyone else.

So we kind of look at our portfolio where if we go to a brand, we say, with Vegas.com, now you touch the entire country, all on one street. And then with our CBG assets, clearly that has the expertise and the proven track record of monetizing, creating traffic in, and social awareness in China.

With KanKan, with that data platform, we're now able to not just target a person, but the individual and their entire friend circle and do it with the type of granularity I think other platforms don't offer.

So what's missing, I think are areas that may be including in terms of a strength in marketing in the U.S., one or number two, something in the offline experiential marketing space as well. So really I think looking outside, when we look at different opportunities, no brand can kind of leave within our grasp..

Good. Well then, secondly, you mentioned a number of large brand names like Coca Cola and Red Bull being customers of the China Branding Group.

And after you integrate the acquisition, how large are the deal opportunities you'll be pursuing for Vegas.com and bikini.com?.

I think in the past with China Branding Group, when they market to brands, in China they're looking for mid-six-figure numbers.

Now with -- once they've joined kind of our family and platform, they have the ability to sell across Vegas.com, sell across Bikini, and now we're looking at seven figures but more -- in single-digit, low single-digit seven figure numbers..

Thank you..

Thank you..

[Operator Instructions] And we will now move on to Jake Long with Capital Investment..

Hi, good afternoon. Looking at Sharecare's acquisition of Healthways Population Health business, it seems that you've developed the company's potential for monetization possibly.

Could you comment on the impact of valuation and on Remark's ownership interest?.

I can say -- I can't comment on the valuation, because it's part of our agreement with Sharecare, so anything regarding that will have to come from their side. But in terms of what that does for us, in terms of our stake, the deal is very, very -- it's diluted to a very, very small degree..

Understood, thank you.

And just as far as the impact -- is there an impact on your balance sheet in any way? Any kind of accounting change we should expect?.

This is Doug. No expected accounting change as of yet..

Terrific. Thank you..

There are no other questions and at this time. I'll turn the call back over to Mr. Kai-Shing Tao for additional closing remarks..

I think that's pretty much it. You know, we look forward to meeting any new investors, any potential investors, please contact Doug or myself, and we'll talk to you soon..

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation..