Good day, 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 Maeser, Perion Investor Relations. You may begin.
Thank you, 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 fourth quarter 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 reflect 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-F and subsequent filings on Form 6-K 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, 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-K. With that, I'll turn the call over to Josef Mandelbaum, Chief Executive Officer. Josef?
Thank you, Stephanie, good morning, everyone. Welcome to our fourth quarter and full year 2014 earnings call. This morning, I'd like to briefly review our fourth quarter and full year results, discuss our strategy going forward for our search monetization business, conclude my remarks with an update on our mobile business. Yacov will review the financial results in more detail, we will then open the call to your questions. To start, our fourth quarter results were slightly better than our expectations and guidance, despite a very challenging market backdrop. Revenues were $78.7 million at the higher end of our guidance. EBITDA was $25.2 million, net income was $20 million, both exceeding our guidance, with earnings per share of $0.27 for the quarter.
For the full year, we had $394.2 million in revenue, $126.3 million in EBITDA, and $101.6 million 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 search 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 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 web 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 million. MakeMeReach is profitable with revenues that doubled year over year in 2014 and are expected to do so again in 2015. MakeMeReach has proprietary self-serve technology and is a Facebook preferred marketing developer, or PMD, as well as a Twitter marketing platform partner, or MPP. By adding MakeMeReach to our Grow 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. MakeMeReach also expands our potential client base by providing us with a strong European presence, a new breed of premium customers, and cross-sale opportunities between our different locations and platforms. Combined, Grow Mobile and MakeMeReach already have over $80 million in managed revenues, representing over 50 active clients.
These two metrics, media spend, managed media 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 billions of dollars in 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 billion-plus mobile advertising market. Let me turn the call over to Yacov, who will walk you through our financials. Yacov?
Thank you, Josef. As we've done since the acquisition of ClientConnect in the beginning of 2014 and explained in our investor calls since then, being that this acquisition was viewed by US GAAP as a reverse merger, we are required to compare our 2014 performance to that of ClientConnect in 2013. Obviously the growth seen is to a great extent and sometimes entirely due to the 2013 Perion performance, not included in the ClientConnect business in 2013. Revenues for Perion this quarter were $78.7 million, decreasing 8% compared to $85.6 million at ClientConnect in the fourth quarter last year. In the fourth quarter of 2014, non-GAAP revenues included $0.6 million of Perion's deferred product revenues, which were deducted in accordance with US GAAP as a result of the acquisition.
In the fourth quarter of 2013, non-GAAP revenues included $1.5 million 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 fourth quarter 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 million, similar to the prior quarter, although substantially lower than the first two quarters this year, and as compared to the $53.6 million in the fourth quarter of 2013 spent by ClientConnect.
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 one 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 $19.9 million non-cash impairment cost, mostly related to writing down the desktop technologies previously acquired in the SweetIM transaction, made redundant by ClientConnect technology and the integration with Perion, which was completed in the fourth quarter 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 million one-time expense related to this reorganization. Adjusted EBITDA in the fourth quarter of 2014 increased to $25.2 million, or 32% of non-GAAP revenues, as compared to $11.7 million or 14% of non-GAAP revenues at ClientConnect in the fourth quarter of 2013. This improvement was primarily due to the reduction in customer acquisition costs I mentioned earlier. Perion's net income in the fourth quarter of 2014 was $20 million, representing a 25% net profit margin compared to $12.5 million or a 15% net profit margin at ClientConnect in the fourth quarter of 2013.
While there was an increase in share count, non-GAAP earnings per diluted share in the fourth quarter of 2014 was $0.27 compared to $0.23 at ClientConnect in the fourth quarter of 2013. Looking at our annual performance, revenues for Perion in 2014 were $394.2 million, increasing 20% compared to $328.5 million at ClientConnect in 2013. In 2014, non-GAAP revenues included $5.5 million of Perion's deferred product revenues, which were deducted in accordance with US GAAP as a result of acquisition. While in 2013, non-GAAP revenues included $3 million of revenues, which in the GAAP report were associated with the discontinued operations. Customer acquisition costs in 2014 decreased to $174.6 million, representing 44% of non-GAAP revenues, compared to $185.4 million, which were 56% of non-GAAP revenues at ClientConnect in 2013.
The decrease was a result of our aforementioned decision to significantly reduce this expenditure in the second half of 2014, reflecting the headwinds we've been suffering from. Adjusted EBITDA in 2014 increased to $126.3 million or 32% of non-GAAP revenues, almost double the $69 million or 21% of non-GAAP revenues at ClientConnect in 2013. Perion's non-GAAP income in 2014 was $101.6 million, representing a 26% net profit margin compared to $57.9 million and 18% net profit margin at ClientConnect in 2013. As a result, despite increased share count, non-GAAP earnings per diluted share in 2014 was $1.44 compared to $1.05 at ClientConnect in 2013. I would like to sum up the expenditures affecting our GAAP net income and not 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 $18.7 million in non-cash amortization of acquired intangible assets, $14.9 million of non-cash share-based compensation, and $19.9 million impairment charges, excuse me, mainly associated with desktop technologies acquired and no longer being used, totaling $53.6 million in non-cash expenses. In addition, we had $5.2 million of acquisition-related expenses and $4 million reorganization costs described above, bringing the total GAAP expenses not included in our non-GAAP report to $62.8 million. In 2013, the GAAP reports included $13.2 million of share-based compensation, $2.1 million of acquisition-related expenses, and $36.3 million, which in the GAAP report were associated with discontinued operations. As a result, net income in accordance with GAAP in 2014 was $42.8 million compared to $28.6 million at ClientConnect in 2013.
GAAP cash flow from operations in 2014 was $72 million, and as of December 31st, 2014, we had cash equivalents, and short-term deposits of $116.2 million, including $37.3 million 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 first quarter of 2015. Given the aforementioned business model shift, some of our search revenues in 2015 will be reported as net revenues as required by US 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 million-$10 million in the first quarter.
With that in mind, we expect revenues to be in the range of $50 million-$53 million, adjusted EBITDA to be in the range of $13 million-$15 million, and non-GAAP net income to be in the range of $9 million-$11 million. With that, we will now open the call to questions. Operator?
If you would like to ask a question, please signal by pressing *1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is disengaged to allow your signal to reach our equipment. Again, that is *1, the signal for a question, and we will pause for just a moment to assemble the queue. We will go first to Dan Kurnos of The 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 million-$10 million for the revenue adjustment, you guys are maybe only a couple million below what we were looking for Q1. The only thing I would ask is, given the fact that we have heard from other people in the 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 is a fairly significant step down in Q1. Could you just talk about some of the factors impacting that step down in search, if you are churning any of your partners or what might be causing that increased step down, Josef? Thanks.
Sure. Dan, Yacov, I don't know if I tagged you on that one. Thanks for joining the call, as usual. The answer, I think, is twofold. The Chrome issue, I agree, has largely passed, and it's kind of reset the bar, and we've seen that, as you know, with mostly other public companies, and you can see it in their reporting of their numbers in search as well. What we are seeing is there are still some changes in the marketplace that will affect the business. The biggest reason you see the decrease in Q1 from Q4 is because we stopped spending money in Q3, and as you know how the business model works, it's cumulative, right? Basically, we lowered our spend by $20 million, $30 million in Q3, another $20 million, $30 million 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. You're now going into a new year with usually it's a four-quarter looking forward from the time you spend the money. What you should see is Q1
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 about a month ago, where they implemented it, where Microsoft, the MMPC, the Microsoft Malware Protection Center, has now forbid all companies of invoking what they call search protection mechanisms in their products. We are fully compliant with that, as a few others in the industry, and Microsoft's been leading the charge. We've been supporting them on that. 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.
As you know, it's relatively binary. We're working hard to bring in line some of the private companies so that they too adhere to these standards, and Microsoft's working hard, and hopefully as an industry, we'll work together to do that, but that's probably still the wild card out there today in terms of what's going to affect our numbers going forward. The biggest reason, just to sum up, of 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 media spend or acquisition spend we had in Q3 and Q4. It has 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, Yacov?
No, I would just advise that you should focus on the customer acquisition cost just to prove out, if you wish, what Josef said, and that is, you'll find that in the fourth quarter, our customer acquisition costs were similar to those in the third quarter. We're expecting a similar level of cost in the first quarter of 2015. Basically, the deterioration or the decrease that you're seeing is a result of the aging of our past higher level of spend.
Yeah, 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 Bings or the Yahoos or 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. We stopped working with a good percentage of people who were in our 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 would go down to $7 million-$10 million. The reason for that is because what you're doing is you have a number of revenues, and you're offsetting from that a similar amount in customer acquisition costs, and that's why the EBITDA remains unchanged. In other words, looking into the first quarter, we would expect a $7 million-$10 million decrease in revenues. We would expect a similar $7 million-$10 million decrease in customer acquisition costs, which is why we expect the EBITDA not to be affected.
there's a lot there. That's all very helpful. Let me just make sure that I'm getting this completely, Josef. 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. From this point on, 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. With 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. Otherwise, everything you said, yes, that's what we believe will happen. We are excited about some of the things we're seeing in the marketplace, in the search side specifically, as well as other opportunities. That is correct.
Great. 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 have anything specific to We announced the MakeMeReach acquisition. That is immaterial. It is a small company. We liked them, great technology, and they were profitable, but very small revenue base. In Q1, it'll have almost no impact. In Q2, and for the rest of the year, it'll have a minor impact. 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, our revenue. If we do something, it'd be above and beyond.
Yeah, I was just referring more to the MakeMeReach and the other small tech plays, acquisitions you made before, but that's helpful, Josef. Let me shift to the other side.
Dan, may I?
Yeah, go ahead, Josef.
No, go ahead. Please go ahead.
I just wanted to shift over to the other side of the business for a second. First of all, Yacov, if you can just give us a quick housekeeping question, the split, the breakdown between product and other in the quarter. Just your thoughts on, Josef, 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 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.
Just a housekeeping question. We had in the fourth quarter, about $5.9 million in advertising revenues and about $4.7 million in product revenues.
Dan, to answer the second half of your question, it's probably what Yacov 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 homepages we have. That's where most of the inventory comes from, so that declines one to one with the search revenue. The advertising we're talking about is actually, we've had some relatively good amount of interest from other partners in the performance-based space who are looking for us to leverage the data we have, to do some targeting on the advertising side. We started building out our own ad network representing other publishers' inventory. We started that about two months ago, or about three, four 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. 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 you know, Dan, we were looking mostly at a large acquisition or acquisitions to kind of buttress the mobile monetization space. We just haven't been able to find the right acquisition, either at the right price that we're willing to pay, or with the right set of metrics that due diligence, we decided to move forward. We're not waiting. We're building it organically ourselves. We'll still look, and if there's something great, we'll combine it with our internal efforts.
Great. The last one from me, I'll step aside. Just on mobile, Josef, 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. Yeah, 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. We certainly hear the problem from all the large advertisers and agencies I've spoken to. We think it's still early in the game, and we have a good positioning, especially now with the MakeMeReach acquisition. There are two things we 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 two. 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.
While we launched in beta, as you can imagine, we get the gift of feedback from our partners. There are still some components of the platform that we need to add. Our focus, certainly at the beginning, at the first half of the year, is going to be really focusing on developing those extra pieces of 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. Could be more integration into other traffic sources, things like that, as well as, and most importantly, integration of the MakeMeReach platform with the Grow Mobile platform. 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.
We just haven't had the opportunity to do that yet because we haven't had the platform to sell. Really our main focus for the first half, probably the first three-quarters of the year, is to build a world-class sales organization. We're actively recruiting now people and a head of that sales group to really help spearhead in building that organization. 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 a very attractive opportunity for a lot of people. A lot of it due to because our stock price is low, so it's a good time to get in for somebody we're trying to hire. That will be a global head of sales.
With that, we'll really ramp out the organization both domestically in the U.S. as well as internationally. Those are the two main things we're doing to really help us grow the business.
Great. Thanks for all the color, Josef and Yacov. Appreciate it.
Thanks, Dan.
We'll go next to Jay Srivatsa of Chardan Capital Markets.
Just one question, Josef. 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?
Jay, first of all, thanks for joining and thanks for the question. As Yacov said earlier, part of the issue on the mobile front, as you know, Jay, is it's a net revenue business, right? We said it today. Right now in 2014 combined, we managed over $80 million in managed revenues for our clients. We expect that to grow nicely in 2015. If you look at other public companies out there, they're managing revenues or their gross revenues or managed revenues in the same space we're in, is anywhere from 300 to 500 or $600 million, some are $700 million. It's not like we're smaller because we started recently. We expect to be well over $100 million in 2015.
As we ramp up our sales, we would expect to be managing revenues, as we said, in the hundreds of millions of dollars and hopefully growing. Because of the way the structure of the business works, we only get a portion of that revenue. Whether it's on a self-serve business, it's probably anywhere between 2%-5%. Sometimes it's a SaaS model, where it's a subscription model. Some ad agencies like that better. Sometimes on a fully managed business, you can get anywhere from 10%-20% to manage someone's campaigns. If you look at that, the meaningfulness of the business will be, if we're managing a few hundred million dollars by the end of next year or, let's say, 12-18 months from now, it's already a big piece of the business.
On the net revenue basis, it'll still be, excuse me, a relatively small net revenue number. Obviously, we think, and we see The Street will give a higher multiple to those revenues because it's a higher quality of revenue than today that we're getting credit for on the search side. I think it depends on how you define relevant to the company. I think from a market cap standpoint or a value creation standpoint, I think by the end of 2015, we 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. It's just hard to ramp up that number on a net revenue basis. I'll give you this example because I like the company. Marin Software, it's a public company, they can check it out.
They said they're managing about $7 billion of managed revenue, they're doing about $100 million of net revenue. That's a lot of money to be managing and only making $100 million. That's just the business model. $100 million is actually a very nice number, and they're getting decent credit for it. I think you just have to look at proportionately, it's two completely different business models, and they'll be valued differently over time.
Thank you very much.
We'll go next to Aram Fuchs of Fertile Mind Capital.
It's Aram Fuchs. Good morning, Josef and Yacov, or good afternoon.
Yeah.
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 IncrediMail and SweetIM 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. Is that a fair way to look at it, or do you still see a competitive advantage from the scale?
No. I'll clarify. It's two different pieces of the business. We still believe there is leverage, and we will get the leverage as the search 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've 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 old Perion or SweetIM or ClientConnect. Those back-end systems help us help advertisers manage their campaigns better. That business, pretty much by everybody in the marketplace, is on a net revenue basis.
We're leveraging some of our assets, but the two 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 can help you effectively get a higher yield, which then gives you more profit, and so on and so forth. With regards to the original premise, it still applies. I think the disappointing thing 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 we wanted. That happens. Takes two to tango.
Right. Then you mentioned about Marin, that they're getting a nice multiple. 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 per share.
In Marin, again, I'll use us, Marin's actually still investing in the business heavily. Let's call that. The cost basis, as we see it on a long-term basis, obviously, the gross margins on the net revenue are very, very high. It's a good business. The actual cost involved, it really ultimately depends on what percentage breakdown is a self-serve versus a fully managed campaign. We think the EBITDA margins on that business over the long term can be easily in the 15%-20% range on that piece of the business from the net revenue, which we think is very good. It'll take a couple of years to get there as we ramp up the business.
As we see it, and we look at our 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. In regards to bringing it all the way down to free cash flow, there's not much D, right? There's not much capital expense. It's all mainly office.
No. That's correct. Again, it's a low capital intensity business. It's mostly labor cost. Actually, pretty much mostly all labor cost.
Some hosting and so on and so forth, but nothing material.
Okay, great. Thanks for your time then.
Thanks, Aram.
We'll go next to Robert Sussman of Bentley Capital.
Good morning. I've got one question. On the last conference call, you indicated, Josef, that you would be buying stock as soon as the window opened after the third quarter. I was looking for that, but I never saw it. Did I miss that?
Great question, Robert. Nope. Thank you for asking. I did buy stock, but you didn't 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. Trust me, my general counsel was very adamant about that for a lot of different reasons. I did buy stock. For anybody who's interested, I bought it at $7.40. For all of you shareholders, I feel your pain with you. I still believe that the stock ultimately will grow, and we'll get a good return on it. I did buy, I think before the window closed, roughly $50,000 worth of stock at the time. As soon as the window opens again, I would buy more.
Thank you very much.
We'll go next to Kerry Rice of Needham & Company.
Hi, this is actually [James Nye] for Kerry.
Hey, James.
Hey, how you doing? My question is focused on the workforce reductions and 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. What can we expect in terms of the G&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 million going forward. That being said, while we are reducing our costs, and dominantly in the desktop area, we are increasing our investment in the mobile space. As we go forward, we're not expecting dramatic changes in the G&A. We expect it really to reduce from where it is today, but we're not expecting otherwise dramatic changes.
A follow-up question, just focusing on the advertiser profile. What's the geographic presence of your advertisers? I know MakeMeReach really gets you into the European markets. What's the current profile of the advertiser base?
Sure. Let's say roughly we have 50-plus active clients. We have obviously more than that who, depending on their marketing or spend, sometimes they do a product launch in a quarter, then they stop. Of the 50 active clients we have, as you'd imagine, France and Spain, Italy, Germany, and a little bit in Scandinavia, U.K. is probably, from a client basis, 50-plus% of our clients. We have in Asia Pacific, a couple of big clients. Probably a small number, but big in spend. The rest is North America, U.S., and Canada. It's probably Europe 50%, to be more precise, U.S. probably around 30% and 35%, and then 40%, then APAC is about 10%.
Great. That's very helpful. Thank you.
This does conclude today's question and answer session. At this time, I would like to turn the call back to Josef 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 gradually 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.
This does conclude today's conference. We thank you for your participation. You may now disconnect.