R. Scott Turicchi - j2 Global, Inc. Hemi Zucker - j2 Global, Inc..

James D. Breen - William Blair & Co. LLC Jim R. Moore - FBR Capital Markets & Co. James E. Fish - Citigroup Global Markets, Inc. (Broker) Greg J. Burns - Sidoti & Co. LLC.

Greetings and welcome to the j2 Global Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Scott Turicchi. Thank you. You may begin..

Thank you very much. Good afternoon and welcome to j2 Global's investor conference call for the second fiscal quarter of 2015. As Matt just mentioned, I'm Scott Turicchi, the President and CFO of j2 Global, and with me today is Hemi Zucker, our Chief Executive Officer.

We're extremely proud of the accomplishments achieved during this record setting quarter, which we'll discuss in detail, as well as new developments at j2 and a review of our business units.

Performance was strong and record-setting in both our Cloud and Media segments and as a result, our board has increased the quarterly dividend to $0.3075 per 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's a button on the viewer on the right-hand side which will allow you to expand the slides. If you've not yet received a copy of the press release, you may access it through our corporate website at j2global.com. In addition, you will be able to access the webcast from this site.

After we complete our remarks, we'll conduct a Q&A session. The operator will instruct you at that time regarding the procedures for asking a question. However, you may e-mail questions to us at any time at investor@j2global.com. Before beginning our prepared remarks, I will read the Safe Harbor language.

As you know, this call and the webcast include 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, various proxy statements and 8-K filings, as well as additional risk factors that we've included as part of the slideshow for the webcast.

We refer you to discussions in those documents regarding Safe Harbor language, as well as forward-looking statements. Now, turn to the presentation on slide five, and we will review some of the high level results for the second fiscal quarter.

As I mentioned, it was a quarter filled with a number of records, starting with revenue, which was $176 million or approximately a 21% increase over Q2 2014 revenue for a growth in revenue of $30.3 million.

I would note that was in light of and after taking into account approximately $6 million in foreign currency headwinds experienced in the quarter relative to Q2 of 2014. Our M&A program continued to roll along, completing two acquisitions in the second fiscal quarter and two more in July. Now, looking at the two segments.

Our Cloud Services achieved an all-time record revenue of $124 million, that was up $18 million or 17% versus the same quarter in 2014, and it bore $5.2 million of the $6 million of total FX currency headwinds.

Our Other Cloud Services, meaning our backup e-mail security, e-mail marketing, and web hosting businesses, grew $16 million or 90% versus the prior year.

Media also had an outstanding quarter, with revenues up 33% or $12.6 million, and a very significant flow-through of that incremental revenue to EBITDA, allowing EBITDA margins to expand from a robust 29% last year to 37% in the second quarter of this year. Please turn to slide six, and you will see this laid out numerically.

As you know we report in two segments, the Cloud segment and the Digital Media segment. Our Cloud segment has two components, the Cloud Services, which are subscribers, produced almost $124 million in revenue during the quarter at 48% EBITDA margin. You'll notice a slight decline in the EBITDA margin from Q2 of 2014.

As many of you know who follow us, we've seen an increasing shift in mix over the last several years into our non-DID-based business service sets, which while they're improving in their overall EBITDA margin, operate at less than 50% EBITDA margin, which is where our Cloud Connect business operates.

So as a result, the Cloud Services business had a 48% EBITDA margin for the quarter. We add to that our IP licensing activities, which grew about 8% to $1.3 million in revs, approximately 70% EBITDA margins or about $900,000 of contribution.

Adding those two pieces together gives you the total Cloud segment, which was $125 million of revenues and $60.7 million of EBITDA or 48% EBITDA margins. Adding to that the Digital Media business, which produced slightly under $51 million of revenues for the quarter and approximately $19 million of EBITDA or 37% EBITDA margins.

I would remind you that all of our corporate overhead expenses for purposes of this slide are allocated to the Cloud segment.

So, adding Cloud and Digital Media together gives you j2 Global consolidated of $176 million of revenues, $79.6 million of EBITDA, 45% aggregate EBITDA margins, $0.99 in non-GAAP earnings per share and $0.80 in GAAP earnings per share.

And now I'll turn the call over to Hemi, who will give you more detail on both the Cloud and the Digital Media business units..

Thank you, Scott, and good, rather early afternoon today. We started earlier half an hour today since Scott needs to catch a flight. Tomorrow he and Vivek will attend a Needham conference. And also I will be a little bit light on my comments on Ziff Davis.

I would not want to steal the thunder from Vivek; those of you who are interested, you are invited tomorrow. Next time we'll go back to our regular 5 p.m. East Coast time. Before we turn to slide eight, let me just state that this is a dream quarter, a quarter that every company and every CEO is dreaming about and working so hard to achieve.

I'm inviting you all to join me and enjoy the results together. Let's go to page eight, when I will talk about our revenue mix by service. The revenue increase this quarter in all of our core services versus prior year.

Our customer count grew by 41,000 quarter over quarter, which is mostly organic since we didn't do any major acquisitions during this quarter. And if we continue like this, there is a high likelihood that we will hit three million paying users by the end of this year. Let me talk about the revenue mix.

The chart here shows the evolution of our business, when in 2011, fax was – where is it, when fax was 94% of our business, in 2012 fax is now 80% – okay, again, in 2012 fax was 80%, and $71 million. And now in 2015, fax is only 43% and $77 million. Fax continues to grow, and fax grew 8% in the last three years.

Now to the churn page in page number nine. We almost stopped showing this cancel rates page, but since we just achieved an amazing 1.9% of cancelation rate, we decided to show it again. We are very proud of it.

It is a number that we never thought we can achieve, but we did it and I'm really, really using this opportunity to thank everybody in j2 for working so hard at it. How did we get there? eFax Corporate continues to grow, with lower cancel rate, eVoice and Cloud Backup.

On the Cloud Backup, we are seeing some elements like Livedrive and SugarSync, a cancel rate that is lower than 1%. Next page will be slide 10, Cloud Connect. Cloud Connect run-rate revenue now is $350 million. The growth is coming from premium fax, voice brands. Total fax in Q2 2015 grew 3% versus last year and also 3% quarter over quarter.

eVoice, eReceptionist and City Numbers are 12% year over year and 4% quarter over quarter. Corporate Fax, 16% versus last year and 6% quarterly. International continued to grow, 8% versus last year, and this is in spite what Scott said, the FX headwinds, which is mostly hitting us on the Cloud business on the – on this one in particularly.

We have recently deployed a new Android mobile app, iOS is coming soon. This is an app when you can go and sign up on the mobile device and also do some free sending, when you can send some faxes for free. We have just in the last few days accomplished a small fax acquisition in July. It is small, but still had 1% upside for the fax business.

Next page, slide 11, where we talk about the Cloud Backup. Cloud Backup continues to go very strong. And let me touch the highlights. Annual growth, annual I mean year over year, same quarter, 40%, quarter over quarter 27%. This is mostly due to the fact that we have now SugarSync for a full quarter. EBITDA margins are 44%, still continues to grow.

There's still potential to grow there. As we scale up, I believe that we can reach the EBITDA similar to the Voice and Fax, which is 50%. SugarSync integration is completed, significant synergies achieved.

Geek Squad, which is the brand that is used by Dixons and with Carphone Warehouse in the UK, it is powered by Livedrive and it's basically backup to the customers of the 700 Carphone Warehouses. We needed to train the employees in those 700 locations. This is just completed now and we will report to you the results in the next earning call.

We have completed small three acquisitions, very small. They don't move the needle, so we're still in the range of approximately $70 million run rate for the KeepItSafe backup business. KeepItSafe has successfully launched Cloud2Cloud. Cloud2Cloud is a new thing. Basically, as everybody is moving to the cloud, they put all their data on a cloud.

It can be the cloud of Google, cloud of Office 365, cloud of Salesforce. They need to back up this cloud to another cloud. We come to the rescue and we provide them a solution that not only backs it up, also helps them to comply with compliance and other regulations.

This is increasing our ARPU stickiness and can provide new service and features to our existing customers. Slide number 12, our FuseMail business, our e-mail security business, is on a run rate of $46 million. Our highlights for the quarter are that the revenue, of course, annually 245%. This is all due to the acquisitions.

But more importantly without acquisitions, we grew quarter one to quarter two of 2015 by 7%. Excel Micro, which is our division in Philadelphia, they have integrated our Nuvotera customers that we acquired the beginning of this year. And in Denmark and in Sweden, we have made significant investment in our Danish and Swedish datacenters.

Now that we have the datacenters, we will start to do the platform integration and we are starting as we speak. The brand that we are using in Sweden is Stay Secure and in Denmark, Comendo. Slide 13, when I will talk about Campaigner. Campaigner is a run rate of $22 million.

Annual growth or quarter over quarter, year over year is 90% and Q2 over Q1 is 16%. This business grows on top of acquisition also organically at the pace of 10% plus. EBITDA there is very, very high, 50% or more.

They have been busy integrating emailDirect, which we acquired earlier – sorry, later; and Contactology that we acquired earlier, both on schedule.

As we acquire companies, we add features, we add White Labeled for resellers, and WebHooks, which is basically technology that programmatically notifies the customers about activity on the Campaigner network. In other words, we acquire companies, we add the best features into our platform, and then increase ARPU, loyalty, and lock time value.

Next, I will talk about Digital Media. As I said, I will be short, leave it for Vivek. Run rate here is $204 million, revenue for the quarter of $51 million, which is 33% versus last year same quarter. EBITDA of $90 million, up significantly, 73% year over year. EBITDA margin grew to 37% versus 29%.

I want to remind you that in the Media business 37% is unheard of, we're very proud of it. We continue to increase our performance marketing, which is cost per click, CPA, CPL, CPI, these grew up 61% year over year.

On the right hand side, you can see a sample of our side-by-side comparison, which are those new websites that we are launching; this one is dealing with best project management, and we can basically display and promote all the competing brand sites, of course, we are being paid when a solution is picked through our Ziff Davis website. Next page, 16.

Ookla that we acquired in December 2014, is beating our expectation with great performance. IGN video and mobile's growth continues. And Ziff Davis continued to expand into new territories, PCMagazine in India, AskMen in Israel – believe it or not I can read it here, and then AskMen, Portugal, which also has been launched in the last quarter.

And I will pass it to Scott to talk about our financial guidance..

Thank you. As was noted in the press release on slide 18, we are reconfirming the annual guidance for fiscal year 2015.

However, I would draw your attention to Hemi's quote in the release that given the outperformance in Q1 and Q2, he noted that any kind of significant M&A will likely cause us to have to revise our guidance and that would be in an upward direction.

On the last call, we talked about several transactions that were slightly larger in size than the typical small tuck-in deals. I think we referenced three of them at the time. While I generally don't like to talk about M&A, I'll update you and preempt the question.

One of those we were not able to reach successful agreement on the price; two others remain in diligence and I think those transactions, we'll know the outcome within the next 60 days. And then we, of course, maintain a pipeline of the smaller deals like those that were closed in Q2 and in the month of July.

Behind page 18, as usual, we have our metrics for both the Cloud and the Media business as well as a number of reconciliation schedules of the various GAAP to non-GAAP comparisons. And at this time, I would ask Matt to come back on line and instruct you on how to queue for questions..

At this time, we will be conducting a question-and-answer session. Our first question comes from the line of James Breen from William Blair. Please go ahead with your question..

Question, just a couple on the growth side, Media year over year had a pretty big growth, I don't think you've done any sizable acquisitions there. Can you talk about just sort of what drove that year over year, the growth there? And then I think you said that you had no significant M&A this quarter, most of the growth was on the organic side.

Wondering what's driving that in the Cloud business? Thanks..

So on the Media, we did have Ookla, that we acquired in December, so it did have its contribution to this year.

And on the Cloud side, I just actually prepared myself for this question, Jim, every element grew, fax business like $3 million quarter over quarter, both usage and subscription, and the backup business, SugarSync, we had – last quarter I believe, Scott, 1.5 months and now a full quarter?.

We had less than a month..

Less than a month. So this is another $2 million, $3 million. But every bit of the business grew a little bit, inch-by-inch, pennies here, pennies here, some three million customers, adds up to a big number..

I'd also point you, on slide 15, going back to the Media question, one of the trends and themes here in our overall Media business is the performance based marketing, which you may look at as cost per click, cost per lead. That constituted in the low 30%s of our total business for the quarter and is up 61% year over year.

So that's been a big contributor, as well as, as Hemi mentioned, the contribution of Ookla, getting better advertising and licensing revenue out of that that property. And then general licensing throughout all of our Digital Media properties, as you noticed on the bottom of 16, another three non-U.S. jurisdictions are licensed for PCMag and AskMen..

Great. And then just free cash flow had a good jump this quarter of $55 million from $43 million last quarter.

Is that a sustainable level there, so you're sort of on track to do $200 million plus in cash flow this year?.

Well, remember, it has its ebbs and flows. I would also remind you, it's impacted this quarter by almost $10 million. We had a $6.5 million interest payment on the convertible notes that did not exist in either Q1 or Q2 of last year. So remember, we did the converts in June of 2014. We're now paying the interest.

We paid it in the latter half of last year in December. We now made another interest payment in June. That's about $6.5 million. And then, as you know, our CapEx is not necessarily spread evenly over the four quarters. So when you look at the year-over-year comparison of CapEx and even the quarter-to-quarter sequential, you'll notice that CapEx is up.

I think we had about $4 million plus of CapEx in Q2 of 2015 versus a little over $1 million in Q2 of 2014. So there will be some volatility and ebb and flow in the cash flows. Usually Q3 is a lower cash flow quarter than Q2. So I would expect it to go down from the $54 million, $55 million level.

But I think we're probably in the $190 million plus range..

Great. And then I guess, just a last one, just on the guidance, when you gave guidance at the beginning of the year, you were basically including a couple of M&A deals.

You've done a few, wondering if you'd tell us how much you spent on the – you said you did two in the second quarter and then two in July, how much those ran up to?.

Yeah. The Q2 was almost nothing. We had $24 million of outflows in Q2, $6.5 million was the interest payment on the converts. About $14.5 million was the dividend payment and the delta, which was about $3 million-ish, was for the two M&A deals, so very small. And I'd say that in July, it was probably somewhat larger than that, but not a whole lot.

I don't have the exact number. If we get it, we'll be happy to share that. But just a few million dollars. So these were small, sort of the tuck-in garden variety deals in terms of both Q2 and July..

Great. Thanks a lot..

Our next question comes from Daniel Ives from FBR. Please proceed with your question..

Great. Thanks. This is actually Jim Moore in for Dan Ives.

Could you guys just talk a little about the churn rate? It was a really impressive churn rate for the quarter, and maybe just what's continued to drive that even lower?.

Yes. So I have some data here – give me a moment. Churn rate, the very good news is that Cloud Connect, which is by far our largest part of eVoice and fax, is actually less than 2.1.

So when the massive gorilla is less than 2.1, all the other small ones, which are – some of them are like 1%, et cetera, like when web hosting is very low and SugarSync is very low and Livedrive, they take the 2.1 and put it down to 1.9. So basically, they all are businesses that are very needed. We do very good job in savings.

We do very good job in managing the credit card and everything. I mean, it's a lot of things, everything impacts churn. Also, I can tell you that we have adjusted our marketing spending to go more after customers that we believe will stay.

Sometimes it's hard but we are improving there too, so we are able to find the customers that are serious about it, usually those that come from search or certain key words are more proved to stay. I hope I answered your question..

Yeah, you did, thanks a lot. And then on the Cloud Backup side, just in terms of as you continue to scale that business, I think you said the margins could get up to 50%.

What kind of timing do you think it will be for scaling that business?.

It is going to be – if we do no M&A, it should be better next quarter, because we'll have the benefit of the businesses that are integrating – integrated for a full quarter.

So this already should drive an improvement, and some of the large acquisitions that we are planning to do are coming in the space of backup and those that we have now in consideration are with high EBITDA. So they should push it higher..

Great. Thanks very much..

You're welcome. Regards to Daniel..

Our next question comes from James Fish from Citi. Please proceed with your question..

We have Jim, Jim and James..

Yeah. That's how it works, it's a great name..

I agree – j2 like the Js..

We liked it, yeah..

(25:16) All right. Go ahead..

Thanks for the question guys. So, I guess I want to kind of dive into sort of the EBITDA margins.

Sort of, what are you guys doing in your playbook to get to the 37% EBITDA margins for the Digital Media business? And how should we think about this longer-term? And if there was anything this quarter impacting – sort of a one-time help per se, impacting the margin?.

I'm sorry, I missed your point on what you think is a one-time help..

Oh, just asking if there was anything, whether it was FX related, or?.

No. So as you know, we have a multiplicity – about four or five different ways that we earn revenue in the Media business, which I think is a somewhat different focus than other media companies. And one of the components that I mentioned is the licensing component. And the licensing component has picked up.

It has a very high EBITDA margin, as does the performance-based marketing. So when we bought Ziff Davis back in November of 2012, and we had our first sort of Analyst Day, Media Day in July of 2013, I said at the time that our goal was to build a business of $250 million of revenues in Digital Media with a 40% EBITDA margin.

I think the Media guys wanted to choke a little bit. And I think they're going to prove me wrong, because they may get there before $250 million of revenues. As you know, Q4 is usually the seasonally best quarter, and as a result, the highest producing margin quarter of the four quarters in the year.

So it is – I mean it's really hats off to them to do 37% EBITDA margins in a fiscal quarter other than Q4. So as long as we're going for that high-margin incremental revenue off of the base, we should continue to see 50% or better flow-through of that incremental revenue to EBITDA, which will continue to drive up the EBITDA margin.

Now, to be clear, I think once we get to the 40% level then there are some questions that we have to ask about, are there books of business that we might want to take on that have a lower margin, that would prohibit that margin from growing higher in absolute margin but might give us more top line growth and more aggregate EBITDA.

So, there are different incremental margin contributors in Digital Media that can go as low as 10% to 90% plus, and I'd say that's the big differentiator between the Media business and the Cloud business. Most of the Cloud business, it's a matter of scale.

So when an incremental amount of revenue comes on, it's, where is the scale in that business at that moment in time, and is that incremental revenue going to contribute to the average margin or is it going to help build the margin.

And so in Cloud Connect, we're pretty much, I think, at a stability and a robustness that incremental revenue should flow through at about 50% and maintain a 50% EBITDA margin, but in the non-Cloud Connect businesses, there is a range of EBITDA margins from the low 30%s to slightly in excess of 50%, and so there is a different dynamic as incremental revenue comes into the system..

Great. Thanks for that, Scott. I guess – I also want to say thanks for the additional color on the M&A, but I did have one further question along that.

Were the four LOIs that you talked about last quarter the four that essentially closed already, or are more out there?.

It's a mix, it's a mix -.

It's a mix, yeah..

The small one closed and those that are the larger ones, as Scott said, one of them, they didn't like our price, the other two actually did like our price and we just have to work on the terms. One of them, we need to do more due diligence, one of them we need to do more legal work, but they agreed to our prices already..

Okay. Thanks guys..

You're welcome..

You're welcome..

Our next question comes from Greg Burns from Sidoti & Company. Please proceed with your question..

Good afternoon.

I guess you put out a press release discussing a cross sell opportunity between SugarSync and eFax, so I was wondering if you could just give us a little history on what the opportunity you see is in terms of cross-selling your services across your subscriber base, and maybe what the potential upside is from that kind of activity?.

Yes. Hi, Greg. So, we have thousands of calls coming to mostly eFax, it is our larger brand, and the upsell usually was, in the early days, upgrade to annual, take another feature, taking another city.

Then we moved to try to take a voice product, then we tried to say, if you have a voice, try to take the voice-to-text, and we ran out of upsells in a certain point.

Now, with all those calls, we're offering SugarSync, which is a backup product, we're offering it, we offered it – I think it's still going on, for a reduced price, and with a free trial. We still have to train – we have like almost 220, 230 customer support on the call, being both in here in Hollywood and in Ottawa.

We have to train everybody to get comfortable with the speech and close. I have some numbers, it's too early to tell you, but I can tell you it's not a failure and it's not a home run yet, we just need more time. Definitely we will continue and maintain it, because the cost is zero to us, so the cost of bringing customers – it's very competitive.

The reason that j2 is successful in Cloud Backup is that we never tried to go the traditional way like our competitors and spend a lot of money on search and everything, it's very expensive. We usually either do it with a bundle with Dixon or with other smart ways of free-to-pay, but we don't go the direct, pay us $6, $7 a month for backup.

So this is another way to approach a customer in a very low, inexpensive way. I can tell you based on the result that we are going to continue, because it's doing well, but how well, it's too early to tell. I hope I answered your question..

Yes. And how does, I guess SugarSync differentiate itself from some of the other kind of mobile-centric backup ....

Excellent question..

...offerings for consumers?.

First of all, it's the synching, so you basically have multiple devices and you have the same file in one of them, you can reach it from all the other devices.

Also it's a unique way, when you upload your devices, it allows you to rename the folders, so, let's say you have a folder that's called j2 Global on your home computer, but then on your iPad you were lazy and you just wrote j2.

It tries to say, are those folders the same, and if you say yes, it will make it easier to you when you go to combine it all together. So the synching element and the multiple devices, anywhere, any way. And there are other more features, but they are a little bit more detailed for an earning call. I hope I helped you there too..

Okay.

And in terms of distribution for like a SugarSync offering, do consumers go and download the application through an app store, is it white labeled through carriers, like what's the distribution?.

No. So, most of it is us. We do have some white labeling with SoftBank in Japan, it's too small to talk about. We have some other ....

Orange in France....

Orange in France, but those are two – they're small, I mean, big name, small action..

Right..

But we have- most of the distribution is direct. We have large free base, free to paid, and it's not only consumers. There is a big follow-up on SugarSync. SugarSync have a lot of customers, (33:16), because it's very simple to use and it's very – especially the way that you can hook up all your devices.

You know, today even a poor man has two devices, if you work you have three devices. So it's – the thinking is pretty unique. The ability to see everything from everywhere is pretty unique and it's a feature that, yes, some might have it but it's not the same. You hear all the time about Dropbox and those, they don't have it.

We back up everything, organize it in a very special way. It's a unique, cool product..

Okay. Thanks. And lastly on M&A, it sounds like some of the larger deals are focused on the backup space, but are ....

Not only..

Yeah..

Are you comfortable taking on larger deals across your businesses or is there any that are, kind of need to further integrate before you look to do anything?.

The only – the answer in general is yes. We're prepared and ready for deals of larger size across all the business units. Now, I temper that by saying, we have business units of different size. So something like e-mail marketing, which is only $22 million in rev, a large deal for it is very different than say for Cloud Connect or for Media.

The one business unit right now that I think is still more in the digestion phase than any of the others would be our e-mail security business, particularly in our European jurisdictions or the Nordics. We're continuing to integrate entities we bought in late Q4 of last year and Q1 of this year..

Greg, we have weekly meetings on M&A, and the mantra is, if it's complex, it rather be big and profitable, and some of the deals that we are seeing are complex and small. So we say, do we really want it, and as Scott said, in the maturity, we can take any fax deal that exists if we believe it's big enough and the price is good.

On the other element, everything that is big and the price is right, we will do it. We are very comfortable to integrate anything. It just has to make sense. There is an effort beyond the pricing – and sometimes you buy something that is so unique or in a space of a space that is declining. So you rather have the price right.

And we are seeing deals, very big deals on very profitable businesses that are kind of, kind of related to us, but not really. And we don't take them because either they are declining too fast, taking a step back. But integration is not something we're afraid of.

After 112 acquisitions, we're not afraid of it, it just has to be the right deal, the right economics, the right size, the right space..

Price..

I mean we are like a pea shop (36:09), we can buy – we can integrate elephant with giraffe if it makes sense, you know..

Yeah. Okay..

I hope you like my joke..

All right. And then just lastly, it looked like there were some one-time tax items in the quarter. Could you just discuss what those were? Thank you..

Yeah. I'll address that. It's not very big, but as you know, we have had an ongoing, shall we say, dispute with the IRS regarding a couple of years – this is not unusual by the way. We had audits between 2004 and 2008 that were settled a few years ago. So this relates to settling the years 2009 and 2010 at both the federal and the state level.

So, the impact was we made a payment of $2.8 million of cash to settle those two years. However, we had actually accrued $9.6 million, so there was a reversal, a benefit on the GAAP P&L of $6.8 million. That was reversed or taken out of the non-GAAP financials.

So the $0.99 of the non-GAAP earnings are not in any way impacted or affected by the IRS settlement, but that's what was going on there..

All right. Thank you..

Okay..

Okay. Thank you..

All right..

Okay. Mr. Turicchi, there are no further questions at this time.

Would you like to make any closing remarks?.

Sure. First of all, we'd like to thank all of the employees and investors and analysts who have participated in this call. And as Hemi noted at the beginning of the call, we will be presenting tomorrow, that is myself and Vivek, the head of our Media group, at the Needham conference. That will be webcast at 3 PM Eastern time tomorrow.

As Hemi mentioned, Vivek will have some additional color for the Media segment of our business. So I would encourage all of you, even if you've listened today, to either listen or get a copy of the transcript tomorrow.

And then, over the course of the next couple of months, we will be doing a combination of brokerage presentations and non-deal road shows. And if we don't have any major announcements, look forward to then seeing you again for our Q3 results in early November. Thank you..

You're welcome..

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