Good day, and welcome to the Perion Fourth Quarter 2014 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Stephanie Mazur, Perion Investor Relations. You may begin.
Thank you and we appreciate the attention of everyone who is joining us today. On today's call, management will be reviewing the financial results and business highlights of the Q4 and full year results of 2014. The press release detailing the results is available on the company's website at perion.com. Before we begin, I'd like to read the following Safe Harbor statement. Today's discussion will include forward looking statements.
These statements the company's current views with respect to future events. These forward looking statements involve known and unknown risks, uncertainties and other factors, including those discussed under the heading Risk Factors and elsewhere in the company's annual report on Form 20 S and subsequent filings on Form 6 ks that may cause actual results, performance or achievements to be materially different from any future results, performances or achievements anticipated or implied by these forward looking statements. The company does not undertake to revise any forward looking statements to reflect future events or circumstances. In addition and as in prior quarters, the results reported today will be analyzed on a non GAAP basis, which management believes better conveys the operational state of the business. We have provided a detailed reconciliation of non GAAP measures to the comparable GAAP measures in our earnings release, which is available on our website and has also been filed on Form 6 ks.
With that, I'll turn the call over to Joseph Mandelbaum, Chief Executive Officer. Joseph?
Thank you, Stephanie, and good morning, everyone. Welcome to our Q4 and full year 2014 earnings call. This morning, I'd like to briefly review our Q4 and full year results, discuss our strategy going forward for our search monetization business and conclude my remarks with an update on our mobile business. Yaacov will review the financial results in more detail and we will then open the call to your questions. To start, our 4th quarter results were slightly better than our expectations and guidance, despite a very challenging market backdrop.
Revenues were $78,700,000 at the higher end of our guidance. EBITDA was $25,200,000 and net income was $20,000,000 both exceeding our guidance with earnings per share of $0.27 for the quarter. For the full year, we had $394,200,000 in revenue, $126,300,000 of EBITDA and $101,600,000 in net income with $1.44 of earnings per share. While our search monetization business continues to face headwinds, we see positive signs emerging from the industry as it finally seems determined to improve overall practices. In the meantime, we continue to manage our service business to ensure robust profitability and cash flow, albeit at a lower revenue level.
As a reminder, in the middle of last year, we made the strategic decision to improve the quality of our partners, reduce our marketing spend, shift more of our search business to a revenue share model and rightsize our expense base to better reflect the current business environment. In addition, we have dedicated resources to organically enhance our monetization portfolio to include other forms of advertising and to expand into mobile. In summary, our strategy is focused on developing a more stable foundation for the search monetization business, diversifying our portfolio of monetization products and expanding to other platforms, thus returning to growth while maintaining a strong profitability and cash flow. Looking forward, we continue to invest our ample free cash flow into the development of our mobile platform, which we expect to be a significant growth driver for Perion over the medium term. As we have discussed, the mobile advertising market with forecasted growth rates of 40% a year until 2018 represents a huge opportunity for Perion.
While the market is rapidly growing, real challenges exist for mobile advertisers with a new technology stack very different from the existing advertising technology used on the PC today. Mobile advertising technology is fragmented with mostly single point solutions that must be cobbled together by advertisers in order to run campaigns. A typical advertiser will use up to a dozen different systems for the average ad campaign. Each system involves a lot of reporting, analytics and technical integration along with tedious manual processes. This complexity often results in poor campaign performance and a low ROI.
Perion's Grow Mobile proprietary platform offers an end to end solution that effectively addresses this complexity, improving campaign performance and ROI. Our automated interface both streamlines the work necessary to run and scale a campaign as well as provide the data required to measure and optimize its effectiveness. We have recently reached a very important milestone in our strategic development by launching the beta version of our self serve advertising platform and are very happy with the initial customer feedback. We plan to go live with the full version in the next few months. The second important milestone we completed is the acquisition of MakeMeReach, a Paris based premium social advertising startup for approximately $12,000,000 MakeMeReach is profitable with revenues that doubled year over year in 2014 and are expected to do so again in 2015.
Make Me Reach has proprietary self-service technology and is a Facebook preferred marketing developer or PMD as well as a Twitter marketing platform partner or NPP. By adding Make New Reach to our Go Mobile platform, we now have a complete mobile marketing platform for advertisers with connections to Google, Facebook, Twitter, ad exchanges and most of the large ad networks. MakeMyReach also expands our potential client base by providing us with a strong European presence, a new breed of premium customers and cross sell opportunities between our different locations and platforms. Combined, Grow Mobile and Make A Reach already have over $80,000,000 in managed revenues, representing over 50 active clients. These two metrics, media spend managed VITA platform, AKA managed revenues, and the number of clients using the platform are key indicators for the business.
Our goal is to be the platform of choice for mobile advertisers and to manage 1,000,000,000 of dollars of media spend through our platform. With access to all the main mobile traffic sources, Grow Mobile is now well positioned to be one of the industry leaders in this $100,000,000,000 plus mobile advertising market. Now, let me turn the call over to Yaacob, who will walk you through our financials. Yaacob?
Thank you, Joseph. As we've done since the acquisition of ClientConnect in the beginning of 2014 and explained in our aggressive calls since then, being that this acquisition was viewed by U. S. GAAP as a reverse merger, we are required to compare our 2014 performance to that of ClientConnect in 2013. Therefore, obviously, the gross theme is to a great extent and sometimes entirely due to the 2013 Perion performance not included in the ClientConnect business in 2013.
Revenues comparing on this quarter were $78,700,000 decreasing 8% compared to $85,600,000 at ClientConnect in the Q4 last year. In the Q4 of 2014, non GAAP revenues included $600,000 of Perion's deferred product revenues, which were deducted in accordance with U. S. GAAP as a result of the acquisition. In the Q4 of 2013, non GAAP revenues included $1,500,000 of revenues, which in the GAAP report were associated with discontinued operations.
The decrease in revenues was primarily the result of our decision a couple of quarters ago to significantly draw back on our investment in customer acquisition. In the Q4 of 2014, we continued to be selective in engaging our marketing partners, preferring premium and higher margin partners. As a result, customer acquisition expenses were $29,000,000 similar to the prior quarter, although substantially lower than the 1st 2 quarters this year and as compared to the $53,600,000 in the Q4 of 2013 spent by Pine Connect. It is also worth noting that to mitigate some of the risk inherent in our lack of visibility going forward, besides raising the margin bar, we are transitioning a growing portion of our partnerships from a model built on upfront fees to 1 built on sharing revenues. Given this business model shift and the reduction in risk, some of our search revenues in 2015 will be reported as net revenues.
As to the rest of our OpEx, we had extraordinary GAAP expenses this quarter that I would like to explain. The largest was a $19,900,000 non cash impairment cost, mostly related to writing down the desktop technologies previously acquired in the SuiteIM transaction may be done by ClientConnect Technology and the integration with Perion, which was completed in the Q4 of 2014. In addition, as you may recall, we announced last quarter reorganization of our business, including the dismissal of about 20% of our workforce. We have accrued a $4,000,000 one time expense related to this reorganization. Adjusted EBITDA in the Q4 of 2014 increased to $25,200,000 or 32% of non GAAP revenues as compared to $11,700,000 or 14% of non GAAP revenues at ClientConnect in the Q4 of 2013.
This improvement was primarily due to the reduction in customer acquisition costs I mentioned earlier. Perio's net income in the Q4 of 2014 was $20,000,000 representing a 25% net profit margin compared to $12,500,000 or 15% net profit margin at Clients Connect in the Q4 of 2013. While there was an increase in share count, non GAAP earnings per diluted share in the Q4 of 2014 was $0.27 compared to $0.23 at ClientConnect in the Q4 2013. Looking at our annual performance, revenues for Perion in 2014 were 390 $4,200,000 increasing 20% compared to $328,500,000 at Klein Connect in 2013. In 2014, non GAAP revenues included $5,500,000 of Perion's deferred product revenues, which was deducted in accordance with U.
S. GAAP as a result of the acquisition. While in 2013, non GAAP revenues included $3,000,000 of revenues, which in the GAAP report were associated with the discontinued operations. Customer acquisition costs in 2014 decreased to $174,600,000 representing 44% of non GAAP revenues compared to $185,400,000 which were 56% of non GAAP revenues at Clyde 10th in 2013. The decrease was the result of our aforementioned decision to significantly reduce this expenditure in the second half of twenty fourteen, reflecting the headwinds we've been suffering from.
Adjusted EBITDA in 2014 increased to $126,300,000 or 32 percent of non GAAP revenues, almost double the $69,000,000 or 21% of non GAAP revenues at client connect in 2013. Perion's non GAAP income in 2014 was $101,600,000 representing a 26% net profit margin compared to $57,900,000 18% net profit margin at Klient Connect in 2013. As a result and despite the increased share count, non GAAP earnings per diluted share in 2014 was $1.44 compared to $1.05 at KleinConnect in 2013. I would like to sum up the expenditures affecting our GAAP net income and that included in our non GAAP results. Some of these were, if you wish, standard adjustments and others were, as I mentioned, unique to this last quarter.
In 2014, we recorded $18,700,000 in non cash amortization of acquired intangible assets, $14,900,000 of non cash share based compensation and $19,900,000 impairment charges mainly associated with Zestar Technologies acquired and no longer being used, totaling $53,600,000 in non cash expenses. In addition, we had $5,200,000 acquisition related expenses and $4,000,000 reorganization costs described above, bringing the total GAAP expenses not included in our non GAAP report to $62,800,000 In 2013, the GAAP reports included $13,200,000 of share based compensation, $2,100,000 of acquisition related expenses and $36,300,000 which in the GAAP report were associated with discontinued operations. As a result, net income in accordance with GAAP in 2014 was $42,800,000 compared to $28,600,000 at Clients Connect in 2013. GAAP cash flow from operations in 2014 was $72,000,000 and as of December 31, 2014, we had cash, cash equivalents and short term deposits of $116,200,000 including $37,300,000 of net proceeds from the issuance in Israel of long term convertible public debt. This concludes my financial overview.
Let me now share with you our financial outlook for the Q1 of 2015. Given the aforementioned business model shift, some of our search revenues in 2015 will be reported as net revenues as required by U. S. GAAP. While this will not affect our EBITDA and net income, it is expected to cause our revenues to be lower than it otherwise would have been by approximately $7,000,000 to $10,000,000 in the Q1.
With that in mind, we expect revenues to be in the range of $50,000,000 to $53,000,000 adjusted EBITDA to be in the range of $13,000,000 to $15,000,000 and non GAAP net income to be in the range of $9,000,000 to $11,000,000 With that, we will now open the call to questions. Operator?
And we'll go first to Dan Kurnos of Benchmark Company.
Great. Thanks. Good morning. Let me just start with core search here before we get into some of the other things. If I add back the $7,000,000 to $10,000,000 for the revenue adjustment, you guys are maybe only a couple of million below what we were looking for Q1.
The only thing I would ask is given the fact that we've heard from other people in industry that the chrome headwinds have largely passed, starting to see a little bit of even CPM or CPC however you want to call it tailwinds from some of the policy changes. Your Q4 wasn't down significantly sequentially from Q3, but it's a fairly significant step down in Q1. Could you just talk about some of the factors impacting that step down in search, if you're churning any of your partners? Or what might be causing that increased step down, Joseph? Thanks.
Sure. Dan, Yakov, I don't know if they tag you on that one. Thanks for joining the call as usual. So the answer I think is 2 fold. The Chrome issue I agree has largely passed.
I mean it's kind of reset the bar and we've seen that as you know with mostly other public companies as you can see it with in their reporting of the numbers and search as well. What we are seeing is there are still some changes in the marketplace that will affect the business. But the biggest reason you see the decrease in Q1 than Q4 is because we stopped spending money in Q3. And as you know how the business model works, it's accumulative, right? So basically, we lower our spend by $20,000,000 $30,000,000 in Q3, another $20,000,000 $30,000,000 in Q4.
The impact of that of all the tail that you had from Q1 and Q2 earlier in 2014 has now pretty much been recognized as revenue. And then you're now going into a new year with usually it's a 4th quarter looking forward from the time you spend the money. So what you should see is Q1 and pretty much throughout the course of the year with Q2 potentially being a little lower, looking at a relatively flattening out and then hopefully increasing over the latter half of the year. The reason that I say there's still some headwinds in the marketplace mostly relates to competitors and some issues that for example Microsoft just announced a few about a month ago where they implemented it where Microsoft, the MMPC, the Microsoft Network Protection Center has now forbid all companies invoking what they call search protection mechanisms in their search in their products. We are fully compliant with that as a few others in the industry and Microsoft has been leading the charge.
We've been supporting them on that. But there are many companies out there and most of them private companies who are still doing aggressive practices out there and not being compliant and trying to avoid it. And as you know, it's relatively binary. So we're working hard to kind of bring in line some of the private companies so that they too adhere to these standards and Microsoft is working hard. And hopefully, we'll have as an industry, we'll work together to do that.
But that's probably still the wildcard out there today in terms of what's going to affect our numbers going forward. But the biggest reason, just to sum up, the reduction from Q4 to Q1 is just the expiration of the strong revenue we had in Q1 and Q2 of 2014 and the lower revenue spend we had the lower media spend or acquisition spend we had in Q3 and Q4. It is now we think leveled out roughly in terms of the acquisition cost. We're hoping during the course of the year it will go up again. And obviously we're hoping that obviously all of our investments will start eventually contributing in a much more meaningful way.
Anything to add to that?
No. I would just advise that you should focus on the customer acquisition cost just to prove out if you wish what Joseph said and that is you'll find that in the Q4, our customer acquisition costs were similar to those in the 3rd quarter. We're expecting a similar level of costs in the Q1 of 2015. And basically the deterioration or the decrease that you're seeing is a result of the aging of our past higher level of spend.
Actually just one other thing I forgot to mention Dan. You asked about churn of customers. And yes, we have had a churn. We have eliminated a not small percentage of partners who we have just stopped dealing with, mainly because when we look at our partnerships with the Bing or the Yahoo! The Googles of the world, they have their guidelines and we are always trying to be compliant with their guidelines.
And some of our partners, we just couldn't trust anymore based on previous experiences. So we stopped working with a good percentage of people who are in the year and we stopped working with them as we realized some practices just weren't acceptable.
Just one other item I would like to add, if I may. We did mention that the net revenues will go down to $7,000,000 $10,000,000 The reason for that is because what you're doing is you're going to you have a number of revenues and you're offsetting from that a similar amount in customer acquisition costs. So that just like your and that's why the EBITDA remains unchanged. So in other words, looking into the Q1, we would expect $7,000,000 to $10,000,000 decrease in revenues. We would expect a similar $7,000,000 to $10,000,000 decrease in customer acquisition costs, which is why we expect the EBITDA not to be affected.
So there's a lot there. That's all very, very helpful. Let me just make sure that I'm getting this completely, Joseph. I don't want to put words in your mouth. But it sounds like customer acquisition costs are flattening out.
Search is going to potentially stabilize in Q2 and could possibly return to sequential growth in the back half of the year. And from this point on, it's you hope also in the back half of the year to get a larger contribution from inorganic product growth or possibly acquisitions. Is that fair?
Yes. Just one minor correction. I think it's probably Q3 is when we'll see I think Q2 may be a little bit lower. It's really unclear yet. There is some lack of visibility that we're still seeing.
But otherwise everything you said, yes, that's what we believe will happen. And we're we are excited about some of the things we're seeing in the marketplace in the search side specifically as well as other opportunities. But that is correct. Great.
And can you just tell us how much contribution you do expect, call it, maybe in Q1 or the first half of the year from inorganic
contributions? Right now, I couldn't answer that. I don't I mean, I don't have anything specific to we announced to make the Reach acquisition. That is immaterial. It was a small company.
We liked them. Great technology and they were profitable, but very small revenue base. In Q1, it will have almost no impact. In Q2 and for the rest of the year, it will have minor impact, but it's growing and doing nicely. Other inorganic stuff, listen, as I think you know, Dan, when we have something to announce, we certainly announce it.
At this point in time, it's not baked into our forecast revenue. We would if we do something, it would be above and beyond.
Yes. I was just referring more to the Big New Reach and the other small tech plays, acquisitions you made before. But that's helpful, Joseph. So let's let me then shift to the other side. Yes, go
ahead, Joseph.
No, go ahead. Please go ahead.
I just wanted to shift over to the other side of the business for a second. Just on the first of all, Yaacob, if you can just give us a quick housekeeping question, the split the breakdown between product and other in the quarter. And just your thoughts on Joseph, you mentioned in the script and possibly in your prepared remarks about pursuing alternative or additional forms of advertising. We had talked before about getting more heavily into display. Obviously, that's been an area a challenging area.
AOL has seen some pressure in that vertical. And I'm just curious your thoughts on what you're going to do from an advertising front possibly to enhance monetization of the portfolio?
So just a housekeeping question. We had in the 4th quarter about $5,900,000 in advertising revenues and about $4,700,000 in product revenues.
And to answer the second half of your question, it's probably possible Jacque said. The advertising revenues most people see are declining mainly as a result of the lower number of searches we have and the number of home pages we have. That's where most of the inventory comes from. So that declines 1 to 1 with the search revenue. The advertising we're talking about is actually we've had relatively good amount of interest from other partners in the performance space, who are looking for us to leverage the data we have to do some targeting on the advertising side.
So we started building out our own ad network representing other publishers' inventory. We started that about 2 months ago or about 3, 4 months ago. We're seeing some good initial progress. It's still small, but we're hopeful about that. The focus there is probably more on video advertising with some display and frankly even native advertising even on the web.
And by the same token on the mobile front, we are developing in house now our own mobile monetization solution, again, using a lot of our data and our back end systems, which we've had to do that. Previously, as I think you know Dan, we were looking mostly at a large acquisition or acquisitions that kind of buttress the mobile monetization space. And we just haven't been able to find the right acquisition either at the right price that we were willing to pay or with the right set of metrics that due diligence we decided to move forward. So we're still we're not waiting. We're building organic sales.
We'll still look. If there's something great, we'll combine it with our internal efforts.
Great. And the last one for me and I'll step aside. Just on mobile, Joseph, I'd love to hear sort of your high level strategy on how you're going after new business now that you've got a complete product offering which includes both self serve and a full service platform? Thanks.
Sure. We're actually really excited about the opportunity here. On the demand side of the mobile equation, as you know, there are a few but aren't many companies who are trying to solve this problem and we certainly hear the problem from all the large advertisers and agencies I've spoken to. So we think it's still early in the game and we have a good positioning especially now with the Make and Reach acquisition. So there's 2 things you have to do strategically to really ramp it up.
And our objective here is to ramp it up as really fast as we can in the next year or 2. The first is, we have to now continue to do the integration of the products to make one seamless platform and still add some features. So while we launched in beta, as you can imagine, we get the gift of feedback from our partners. And there are still some components of the platform that we need to add. So our focus certainly at the beginning of the first half of the year is going to be really focusing on developing those extra pieces or components of the platform that our partners need.
Could be reporting as a good example. We have a few different reporting mechanisms. They want more. It could be more integration into other traffic sources, so things like that as well as and most importantly, integration of the Make Me Reach platform with the Grow Mobile platform. So the first one is all about product and technology integration.
The second one and equally if not more important is we have to build out our sales organization. So we have we just haven't had the opportunity yet because we haven't had the platform to sell. So really our main focus for the first half, probably 1st three quarters of the year is to build a world class sales organization. We're absolutely recruiting now people and ahead of the sales ahead of that sales group to really help spearhead in building that organization. And the good news is as you know in the ad world especially in mobile ad world, there are a lot of good candidates out there.
We think we're very attractive opportunity for a lot of people. A lot of it do because our stock price is low. So it's a good time to get in for somebody we're trying to hire. And that will be Global Head of Sales. And then with that, we'll really ramp up the organization both domestically in the U.
S. As well as internationally. Those are the 2 main things we're doing to really help us grow the business.
Great. Thanks for all the color, Joseph and Jakob. Appreciate it.
Thanks, Dan.
And we'll go next to Jay Srivabhsa of Chardan Capital Markets.
Just one question, Joseph. All the work you're putting in on the mobile side, when do you expect that business to start to become really material for you?
So Jay, first of all, thanks for joining and thanks for the question. As Jacob said earlier, part of the issue on the mobile front as you know Jay is it's a net revenue business, right? So we said it today. Right now in 2014 combined, we managed over $80,000,000 in managed revenues for our clients. We expect that to grow nicely in 2015.
If you look at companies other public companies out there, they're managing revenues or the gross revenues or managed revenues in the same space we're in is anywhere from $300,000,000 to $500,000,000 or $600,000,000 somewhere $700,000,000 It's not like we're smaller because we started recently. But the weeks have to be well over $100,000,000 in 2015. And as we ramp up our sales, we would expect to be managing revenues, as we said, in the 100 of 1,000,000 of dollars and hopefully growing. Because of the way the structure of the business works, we only get, right, a portion of that revenue, whether it's on a self serve business, it's probably anywhere between 2% to 5%. Sometimes it's a SaaS model, where it's a subscription model.
Some ad agencies like that better. And sometimes it's a full on a fully managed business, you can get anywhere from 10% to 20% to manage someone's campaigns. But if you look at that, the meaningfulness of the business will be if we're managing a few $100,000,000 by the end of next year or let's say 12 to 18 months from now, it's already a big piece of the business. On the net revenue basis, it's just it's still be a relatively small net revenue number. But obviously, we think and we see the Street will give a higher multiple to those revenues because of the higher quality revenue than today that we're getting credit for on the search side.
So I think it depends on how you define relevance to the company. I think from a market cap standpoint or value creation standpoint, I think by the end of 2015, we should see should already start seeing it be relevant. In terms of revenue contribution, I think you won't see that probably until end of 2016, 2017. I don't it was just as hard to ramp up that number on a net revenue basis. I mean, I'll give you just an example because I like the company, but Marin Software, it's a public company.
So it's probably and they can check it out. They said they're managing about $7,000,000,000 of managed revenues and they're doing about $100,000,000 of net revenue. That's a lot of money to be managing and only making $100,000,000 That's just the business model. The $100,000,000 is actually a very nice number and they're getting decent credit for it. So I think you just have to look at proportionally these 2 completely different business models and they'll be valued differently over time.
Thank you very much.
And we'll go next to Aram Fuchs of Fertile Mine Capital.
It's Aram Fuchs. Good morning, Joseph and Yaacov, or good afternoon.
Hey, Aaron.
When you purchased the ClientConnect business and then the Grow Mobile, the strategy seemed to be that once you have the scale that you get from combining the old IncrediML and Suite I'm with ClientConnect would allow you to offer monetization strategies that are probably more economic for your partners. It now seems that you're more focused just on managing the actual media buy. That a fair way to look at it? Or do you still see a competitive advantage from the scale that you
No. It's yes, I'll clarify. It's 2 different pieces of business. We still believe there is leverage and we will get the leverage as the service business stabilizes and we expand to video and display and other forms of advertising on the supply side, which means helping other companies monetize. We actually think we have some advantages that we will be able to leverage.
What you're talking about on the mobile side, which is something which we just focused on this year, that's on the demand side. That's actually helping people acquire customers. We also are leveraging a lot of our back end systems that we had whether it's from Ode, CarryOn, or client cadets. Those back end systems help us manage help advertisers manage our campaigns better. That business pretty much by everybody in the marketplace is on a net revenue basis.
And we're leveraging some of our assets, but the 2 actually don't necessarily go together. They complement each other because if you're making more money, you have more money to spend on user acquisition, which then we could help you effectively get a higher yield, which then gives you more profit and so on and so forth. But with regards to the original premise, it still applies. I think the disappointment for us this year was we had a few different opportunities to acquire something on the monetization side in mobile and or video. And for various reasons, they just didn't pan out the way you want it.
And that happens takes 2 to tango.
Right. And then you mentioned that about Marin that they're getting a nice multiple. But are you looking at this on sort of a generic return on invested capital basis? I mean, what are the costs underneath the net revenue? I don't care about the revenue line.
I just want to see the free cash flow. Yes. So
in Marin's again, I'll use that. Marin's actually still investing in the business heavily. Let's call that. The actual the cost basis, at least as we see it on a long term basis, obviously, the gross margins on the net revenue are very, very high. So it's a good business.
The actual cost involved, really ultimately depends on what percentage breakdown is the self serve versus the fully managed campaign. But we think the EBITDA margins on that business over the long term can be easily in the 15% to 20% range on that piece of the business from the net revenue, so which we think is very good. It will take a couple of years to get there as we ramp up the business. But as we see it and we look at cost base and what it's going to take to build the business, we're pretty confident that we can hit those margins on that business going forward.
Right. And there's not in regards to bringing it all the way down to free cash flow, there's not much D, right? There's not much capital expenses, all mainly office.
No. That's correct. Again, it's a low capital intensity business. It's mostly labor costs and actually pretty much mostly all labor costs.
Right.
Some hosting and so on and so forth, but nothing material.
Okay, great. Great. Thanks for your time there.
Thanks, Aaron.
And we'll go next to Robert Sussman of Bentley Capital.
Good morning. I've got one question. On the last conference call, you indicated, Joseph, that you would be buying stock as soon as the window opened after the Q3. Did you I was looking for that, but I never saw it. Did I miss that or?
Great question, Robert. So, no, thank you for asking. I did buy stock, but you did miss it. For a foreign private issuer, there is no obligation to file that. In fact, it's not recommended we file it for a lot of different legal reasons, which I don't want to get into.
But trust me, my General Counsel was very adamant about that for a lot of different reasons. I did buy stock. But as I mentioned, I bought it at $7.40 So for all of you shareholders, I feel you're paying with you. I still believe that the stock ultimately will grow and we'll get a good return on it. But I did buy, I think before the window closed roughly $50,000 worth of stock at the time.
And as soon as the window opens again, I would buy more.
Thank you very much.
And we'll go next to Carey Rice of Needham and Company.
Hi. This is actually James Nye for Carey. So my question Hi, James. Hey, how are you doing? My question is focused on the workforce reductions and kind of what you see the cadence of that going into 2015 is?
I know you're kind of ramping up the sales effort in the mobile advertising space. So what can we expect in terms of the G and A line in 2015?
Well, thank you very much for your question. As we indicated last quarter, generally speaking, we're expecting those cost reductions that we implemented to save us approximately some $10,000,000 going forward. That being said, while we are reducing our costs and generally in the desktop area, we are increasing our investments in the mobile space. So as we go forward, we're not expecting dramatic changes in the G and A. We expect the ability to reduce from where it is today, but we don't expect that we're not expecting otherwise dramatic changes.
Okay, great. And a follow-up question, just focusing on the advertiser profile. What's the geographic presence of your advertisers? I know Make New Reach really gets you into the European markets. Kind of what's the current profile of the advertiser base?
Sure. So let's say roughly we have, let's say, 50 plus active clients. We have obviously more than that to depending on their marketing or spend. Sometimes they do a product launch in a quarter and they stop. But the 50 active clients we have, so on the as you'd imagine, France and Spain, Italy, Germany and a little bit in Scandinavia, the U.
K. Is probably from a client basis 50% -plus of our clients. We have in Asia Pacific, a couple of big clients. So probably a small number, but big in spend. And the rest is in North America, U.
S. And Canada. So it's probably Europe 50% to be more precise U. S. Probably around 30% 35% and then 40% and APAC is about 10%.
Great. That's very helpful. Thank
you. And this does conclude today's question and answer session. At this time, I would like to turn the call back to Joseph Mandelbaum for any additional or closing remarks.
Thank you. Our focus in 2015 is to strengthen the foundation and to diversify our business by expanding aggressively into mobile. The year is off to a good start. And while our revenues and profits will be significantly lower in 2014, we will be very profitable and are committed to building a sustainable long term growth company. At the end of this year, we strongly believe our foundation will be stronger, our business will be stronger and our bright future will be obvious to all.
Over time, we believe our stock price will reflect the true value of our company and those with patience will be rewarded. As always, none of this will be possible without the professional support and hard work of our dedicated employees. To them, I would simply like to say thank you. Thank you all and have a good day.
And this does conclude today's conference. We thank you for your participation. You may now disconnect.