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QuinStreet (NASDAQ:QNST)

Q2 2013 Earnings Call

January 29, 2013 5:00 pm ET

Executives

Matthew Hunt

Douglas Valenti - Chairman and Chief Executive Officer

Kenneth R. Hahn - Chief Financial Officer and Chief Operating Officer

Analysts

Carter Malloy - Stephens Inc., Research Division

Shyam Patil - Raymond James & Associates, Inc., Research Division

Michael B. Purcell - Stifel, Nicolaus & Co., Inc., Research Division

Bo Nam - JP Morgan Chase & Co, Research Division

Operator

Good day, ladies and gentlemen, and welcome to QuinStreet Second Quarter Fiscal 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call may be recorded. I will now like to hand the conference over to Mr. Matthew Hunt of The Blueshirt Group for Investor Relations. Sir, you may begin.

Matthew Hunt

Thank you. Good afternoon, ladies and gentlemen. Thanks for joining us today to report QuinStreet's second quarter fiscal 2013 financial results. Joining me on the call today are Doug Valenti, CEO; and Ken Hahn, CFO and COO of QuinStreet. This call is being simultaneously webcast on the Investor Relations section of our website at www.quinstreet.com.

Before we get started, I would like to remind you that the following discussion contains forward-looking statements. These are statements that relate to future events or financial performance and involve risks and uncertainties. QuinStreet's actual results may vary materially from those discussed here.

Factors that may cause the results to differ from our forward-looking statements are discussed in our most recent 10-Q filing with the SEC on November 5, 2012. Forward-looking statements are based on current expectations, and the company does not intend to and undertakes no duty to update this information to reflect future events or circumstances.

Now I'll turn the call over to Doug, CEO of QuinStreet. Please go ahead.

Douglas Valenti

Thank you, Matt. Hello, everyone, and thank you for joining us today. Revenue for the December quarter was $72 million. Adjusted EBITDA was 16% of revenue. We generated $11.3 million of operating cash flow and $12.8 million of normalized free cash flow. We also paid down debt by $3 million and closed the quarter with $108 million in cash and marketable securities.

Product and market transitions in our Financial Services and Education client verticals continue to pressure our top line results. We are, though, making good progress on key initiatives that we believe position us for a return to growth. The efforts are worthwhile.

The end markets for online performance marketing are large and growing. Our capabilities and assets are industry-leading, and our business model and balance sheet are strong. We remain enthusiastic about our long-term opportunity.

I want to spend the next few minutes sharing with you some of the evidence we see of progress on the key initiatives that we believe position us for our eventual return to growth.

First, in the Education client vertical. There, despite declines in the for-profit post-secondary industry and in our revenue, our estimates indicate that we are gaining share in our addressable market. We believe that this is due to a number of factors. The first being industry consolidation among third-party marketing services companies or lead providers, where we believe volume has dropped by 30% or more over the past 1 to 2 years. A second factor has been our focus on higher quality inquiries where demand from clients has remained strongest. A third factor has been client adoption of our newer click and call products. In the December quarter, revenue from our click product grew 500% year-over-year and 84% sequentially. Revenue from our call product was up 75% sequentially. These 2 products together are now running at more than $10 million per year.

We believe a fourth factor on our ability to gain share has been our competitive advantages in technology and monetization, evidenced by continued publisher wins and success in pay-per-click bidding channels versus competition. Also important for Education, the for-profit post-secondary industry itself appears to be closer to stabilizing. A number of client CEOs and industry analysts are projecting a slowing of declines and return to growth this year or next.

We are also making good progress growing markets and segments outside of domestic for-profit post-secondary Education. Our international efforts are off to a good start. International revenue was up over 100% year-over-year organically in the second quarter. With our revenue in the early stage, Brazil and Mexico markets each now running at over $1 million per year.

Back to the United States. Demand from nonprofit schools is growing and we are serving them. Growth in our revenue from nonprofit clients has been accelerating, up 5% year-over-year this past June quarter, 15% year-over-year in the September quarter, and 20% year-over-year in the just completed December quarter.

We are the leader in online performance marketing in the Education client vertical, and we expect to continue to be. We expect to continue to gain share as the market consolidates and as the industry stabilizes. Our footprint and products are expanding, creating new growth opportunities, and we believe our advantages are strengthening. Overall, we see the potential for good growth in Education in future periods.

In the Financial Services client vertical, our top priority continues to be the rollout of our expanded product offerings in auto insurance. We expect this initiative to allow us to significantly grow our monetization and media buying power, and to expand our addressable market and client budgets. We are making good progress with the expanded product offerings. The products and assets are in place and we are focused on signing and serving clients to get coverage to critical mass and to grow monetization.

We have good client progress to report. We are now serving 16 clients on the new products at various stages of ramp. Based on signings not yet launched and on our advanced pipeline, we expect the number of clients on the new products to grow by over 50% over the next 6 months.

Our revenue per inquiry for the auto insurance products, a key measure of monetization and media buying power, is up approximately 135% from a year ago and is expected to be up another 50% in the next 6 months. We believe these gains will allow us to meaningfully expand our media buying power and our auto insurance revenue in future periods.

Elsewhere in the business, we have now completed the integration organizationally and technically of our B2B acquisitions. And we can now focus much more effectively on revenue growth in this promising newer vertical. While it is still early on our efforts and in performance marketing for that industry, we continue to see this new leg as important for the long run in terms of revenue growth potential and diversification.

In summary, current challenges continue to pressure results. We are making good progress on initiatives that we believe allow us to work through this period and position us for a return to growth. Our markets are large and are expected to continue to grow over time. Our capabilities and assets are industry-leading. Our business model and balance sheet are strong. We are well-positioned competitively and strategically as our core markets stabilize and as we expand our products and footprint. Throughout, we continue to manage the company with characteristic financial discipline, generating attractive EBITDA and free cash flow margins with minimal demands for capital. This continues to be a period of significant change and challenge. Visibility remains limited. Our expectation for revenue in the March quarter is in the $75 million to $80 million range. Adjusted EBITDA margin will likely be in the mid-teens as we continue to invest in initiatives that we believe best position us for growth.

With that, I'll turn it over to Ken, who will discuss our financial results in more detail.

Kenneth R. Hahn

Thanks, Doug. Hello, and thanks again for joining us today. For our second quarter of fiscal 2013, we posted $71.8 million of revenue, a 21% decline compared with the same quarter last year. Adjusted net income for fiscal Q2 was $5.6 million or $0.13 per share on a fully diluted basis. Adjusted EBITDA was $11.2 million or a 16% margin. Our fundamental circumstance remains the same, albeit with more indicators of progress on our path to returning to growth, which Doug discussed, and I will do some more.

We continue to progress on our initiatives to address the market issues in our 2 largest verticals: Education and Financial Services. We believe we are still on the right path, and while long in coming, are now beginning to see some of the right supporting metrics around the actions we have been taking for some time to navigate our challenges.

So with that overall context, I'll now discuss the details of our fiscal Q2 results. Please see the supplemental data sheets available for download on the Investor Relations page of our corporate website. They provide, in tabular form, the figures that I will now walk through with you.

For revenue by client vertical, in addition to walking you through the results and computations for each client vertical, it is helpful, I think, to also discuss what we believe our outcomes over time in these client verticals, as well as the indicators we are seeing that validate to us our belief in our return to revenue growth.

Our Education client vertical represented 46% of Q2 revenue or $32.7 million. As you know well, this market continues to be challenged as clients in the vertical react to the regulatory environment. The year-over-year decline in revenue moderated to 11%, as we executed on a number of the initiatives we've been discussing. The decline is volume-driven with stable pricing as we've seen for the past year.

This is a solid profitable client vertical for QuinStreet. We are the leader in the space in terms of revenue, and we believe market expertise and competitive assets. We believe that as our clients continue to transition to better stability themselves, our business will respond in kind, and we will enjoy a better competitive environment based on our quality position and our work to partner with our clients as they adjust. We are having success with clients in helping them through new product offerings, particularly our relatively new click product, which we believe reduces risk for them and provides high overall quality.

Beyond our core U.S. for-profit market, over the longer term, we believe there's real opportunity to increase our business with nonprofits, especially as they expand to include online offerings themselves. Also, we remain excited about the growth opportunity in our international operations for Education, including Brazil, Latin America and India, which are early, but showing real promise. Doug shared data on our progress on both of these initiatives.

We remain confident that we're positioned to recover and then return to growth over time in our Education client vertical, both in our core market and through the new markets we are pursuing.

The Financial Services client vertical represented 37% of Q2 revenue or $26.5 million. The declines this past quarter were again due to a shortage of affordable, high-quality media in auto insurance with our current monetization levels for the clicks products. Our path forward in this market remains the adoption of our expanded model in which we still offer clicks, our historic model, with the addition of leads, call transfers and bound policies.

This ramping of the expanded model has taken us longer in terms of demonstrating results than we would like, given the headwinds we have faced for the clicks product. But we are now seeing the right indicators in terms of client adoption and higher monetization for our new products. We have a number of new clients signed to expanded model products and the pace of adoption and rollout is increasing. Doug discussed this in more detail, but the message is that the activity we are seeing and sharing with specific metrics validates, for us, the path forward we have been discussing on these calls.

Most significant for investors, in my opinion, is that both offline and online client marketing budgets in auto insurance are huge, and this is a very early market, particularly for performance marketing. We expect to see progress now going forward with our top line trend in Financial Services. It will evolve, and we are certainly not declaring victory, but our confidence is supported now by the leading indicators, including, again, client signings, client rollouts and revenue per inquiry.

Revenue from our other client verticals, which include B2B technology, Home Services and Medical, represented 17% of our total fiscal Q2 revenue or $12.6 million. B2B technology comprises the majority of revenue for this vertical. We've integrated our 3 historical B2B acquisitions and believe that our new operational systems and sales force position us to perform in this market.

Moving to the cost side of the income statement. Our operating cost structures remain stable with operating costs at the same percentage of revenue as they've been historically at 13% of revenue. For adjusted EBITDA, we de-levered $11.2 million or 16% margin. Our historical adjusted EBITDA target has been 20%, and we believe that is the right structural target for a long-term model. However, given the continued softness on the top line this year and our desire for continued investment in the initiatives we believe will return us to growth, EBITDA margins in the mid-teens is where we now expect to be for the fiscal year.

On the tax front, our rate, as we were close to breakeven on a tax basis, is not meaningful. For your modeling purposes, we expect our ongoing rate to be approximately 40%, as it has been for the past year or so.

Moving to the balance sheet. As discussed extensively in our press release, the recent decline in our stock price during the last few weeks triggered a need to evaluate our goodwill carrying value. We are currently conducting an evaluation as to whether goodwill is impaired. The GAAP figures are preliminary until that evaluation is complete, and we plan to make changes as appropriate before filing our Form 10-Q. Of course, any goodwill impairment charge will be noncash in nature and will not affect any revenue, EBITDA or cash flow figures.

Our cash and marketable securities balance at quarter end was $108 million, an increase of $4 million as compared to last quarter. Total debt decreased to $100 million from $103 million last quarter due to repayments, and we had no new borrowings.

Our net cash position is positive $8 million. Normalized free cash flow was $12.8 million, or 18% of revenue, an atypically high margin due to the unusual tax benefit we received this past quarter. Cash flow from operations was $11.3 million in the quarter.

To summarize, we are working to restore growth and are now seeing indicators that we are nearing the end of this difficult period. Importantly, in the meantime, we continue to deliver good profitability and generate significant cash on a consistent basis.

With that, I'll turn the call to the operator to open Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] First question comes from Carter Malloy from Stephens.

Carter Malloy - Stephens Inc., Research Division

Ken, my question, first, for you is on your confidence in guidance and can you discuss how you build it up and what the influential factors there are? In particular, I want to make sure you guys are comfortable with where the competition is for good media on the insurance side and that, that's not going to -- that situation won't further deteriorate.

Kenneth R. Hahn

Sure. And to acknowledge on the front end, it's been a little rough with our forecasting for a few quarters now, so a very fair question. The process that we use is we take the input of each of the verticals, and then we review it as a group. We have made some improvements, by the way, I believe, over the past few months on that process given some of the issues we've had historically. I believe it's more rigorous now and everybody understands the importance, and we poke and prod perhaps more than we used to. On the media side, particularly to your question on insurance, these guys evaluate all of their media opportunities. One by one, they walk through. They have a stack rank order. They look at those versus our ability to monetize, and they obviously consider that since it's been our limiting factor recently in Financial Services, auto insurance particularly. And they consider that in their forecast. So that's the mechanical answer. But again, there's been a fairly significant effort, which, I believe and we will see, I believe, has been successful in our forecasting process and what I hope is our accuracy going forward with our forecast. And so -- yes, and by the way, all that said, times are uncertain and there have been a lot of moving pieces, so there's still not complete clarity. But we're doing what we can with the information that we have, even if it isn't quite as clear and easy as it used to be for us.

Carter Malloy - Stephens Inc., Research Division

Okay. And then also -- thanks much in the beginning of the call for giving us a lot of the data guides on the absolute contribution of some of the new products. And in the true spirit of being an annoying sell-side analyst, I've got to ask, can you give us also the absolute nonprofit revenue that you're generating now and/or the absolute revenue generating on the Education click products?

Douglas Valenti

I don't think we have that in front of us, Carter. It's a fair question. I think the number -- and again, I don't have it in front of me so...

Kenneth R. Hahn

And just to be clear, you -- we -- you disclosed that the 2 combined, right?

Douglas Valenti

Click and call.

Kenneth R. Hahn

Click and call was $10 million.

Douglas Valenti

But by the way, clicks and calls are both about $5 million -- both running at about $5 million per year. I said they were combined $10 million, but it's a pretty even split between the 2.

Carter Malloy - Stephens Inc., Research Division

Okay, and -- that's across Education and insurance? Or that's...

Douglas Valenti

No, that's just somewhere in the $3 million to $5 million range or single-digit millions range. Again, which is not a -- it's -- in all of these cases, they're not that big yet, but the rates at which they're growing are impressive and important and the markets that they represent in terms of potential over the next quarters and years are quite significant.

Kenneth R. Hahn

And I think incrementally, and I apologize for being master of the obvious here, but the point of this is, of course, that the core for-profit business, it's been a tough industry for some time, and we've been trying to do things in new markets. While that comes back, we do believe it's going to come back to be very clear. Although maybe painful for a bit longer, we wanted to discuss with you and give you some more numbers around the other initiatives in these newer markets we have been exploring while that market has been painful. So no immediate bounce back, but it's actually pretty promising, all of these initiatives that we've been working on for a couple of years. And as Doug said, they're smaller numbers, but millions of dollars a year, so.

Douglas Valenti

Yes, that's where they always start, right? [indiscernible] We do want to give you good percentages to help you there [indiscernible]...

Carter Malloy - Stephens Inc., Research Division

The one thing I had confused there is when you talked on the call [ph] about the call product [indiscernible], I was making sure. So on Insurance.com and all the site traffic growth we've seen there, but that's newer products coming out there both on the call side, the call transfer side, as well as the realtime bidding -- or realtime quotes rather. That's not part of that number, right? That's a separate?

Kenneth R. Hahn

That is not. Those numbers are just Education. Those are just Education numbers that I was providing there.

Operator

Our next question comes from Shyam Patil from Raymond James.

Shyam Patil - Raymond James & Associates, Inc., Research Division

In terms of the growth rate of the growth trajectory, do you guys believe that 2014 or next year will be a year of growth or is it too early to tell, too many moving parts? And then the second question is just on the tax rate, what do you think about a tax rate for the balance of this year?

Douglas Valenti

Sure, Shyam. We have not done the forecast for next year yet. Our projections right now -- our firm projections, at least firm internally, are just we have those in place for the next 2 quarters and those 2 quarters, and as Ken indicated, with some degree of higher confidence, recognizing it's still a very noisy, uncertain, volatile time because of all the things we've talked about, looked like they will be -- looks like that we will be up from this past quarter, which we, again, based on those numbers would indicate at least a near-term bottoming and we hope a long-term bottoming. But we don't have projections beyond that. I would say that as we look at the -- the progress that is projected over the next couple of quarters, and as we look at the range of initiatives against which we're making good progress and where they -- it looked like they lead us, it certainly would be our hope and I would say that we'll be able to give you more on next quarter's call as we're closer to having next year's plan done. And at that point, I could tell you whether or not we have -- what our confidence level is. But I would say that it certainly is our hope based on the numbers we've done in the past couple of quarters and based on the progress, the next couple of quarters and beyond that next year would be a growth year over this year. And then, Ken, I don't know if you have any difference of point of view on that.

Kenneth R. Hahn

No, I don't at all. It's -- visibility still isn't great, which is what we keep emphasizing. But we're seeing more. And there really are the right indicators and we have a lot of excitement around auto insurance, what's going to happen and trying to figure out the specific timing and how that offsets, but as we look at the business, and we're not providing hard forecasts, of course, by the different vertical. The second derivative is getting better, we believe, across all of the businesses. So -- and sometimes it can take a little bit of time as you guys I'm sure know, you certainly know when you're inside a business, it can take a little while for the results to show on the top line. But things are feeling better. We don't want to get ahead of ourselves after such a hard year, but things really do seem to be getting better. And again, I think we're going to see improving trends going forward.

Douglas Valenti

And then Sean, you had a question about a tax rate.

Kenneth R. Hahn

You're going to take that one?

Douglas Valenti

I am not getting anywhere near that one.

Kenneth R. Hahn

So I think 40% going forward makes sense. There is going to be a little bit of noise in this next quarter. The R&D tax credit was extended as you might or might know on January 3 and so we'll take that this coming quarter. I think 40% is a fine number for you to use. We will probably beat that by a little bit for the next 2 quarters. But without getting too granular, I'd say just use the 40%. It's not the most important thing we're focused on right now, but that will be close enough.

Operator

[Operator Instructions] We have a question from Michael Purcell from Stifel, Nicolaus.

Michael B. Purcell - Stifel, Nicolaus & Co., Inc., Research Division

I was wondering if you could just give us a little more color on the financial side, the traction you're having with the call transfer and the bound policies. When you -- I thought I wrote down that you have 16 new clients for these products, and again, if my numbers are off, my apologies.

Douglas Valenti

That's correct.

Michael B. Purcell - Stifel, Nicolaus & Co., Inc., Research Division

And that you thought they'd increase about 50%. These are very interesting to us. I'm just wondering if you could give us any more color on how those are progressing.

Douglas Valenti

It's actually progressing very well. The client adoption is strong. The client interest is strong. We always would like for it to come faster, but the proverbial -- and I don't even want to say it because it might imply something about our clients, but the proverbial, "Dogs are eating the dog food." I mean this is a product that is fulfilling a lot of demand out there that clients have for receiving a new customers and new customer prospects in the ways that best fit their businesses and their business models. So again, when we say we now have 16 clients on the new products, the new products set, that compares to historically somewhere around 20 to 25 clients on the historic SureHits product. So that's a big deal. And the 50%, 5-0 percent, from there based on our advanced pipeline and folks that are already signed, just not launched, the confidence interval there over the next 3 to 6 months, which is the range that we have on that pipeline analysis, has us getting to -- I think it's 25 to 32 clients. So it could actually end up being 100%. And so again, these are meaningful clients with big budgets that they spend in various ways, most of which and many of which are not -- and here it is [ph] measurable or potentially as targeted and as attractive as what we do. So we are -- I think it's a super important metric that's why we shared it because we've been talking for a long time about the expanded product set. But when you get clients to invest the time to negotiate these deals and contracts with us, and very importantly to then go through the pretty rigorous technical and technology implementation flows that it takes to integrate with us for these new products, particularly when that is very often state by state, and some clients cover 40 states, it's a -- and then as we see again the revenue coming, though not coming as fast as we'd like, because you have to get them implemented and then you have to get enough clients in each of the buckets to make sure that there's enough monetization potentials that you get the media leverage. But as we said from the RPI, the media leverage is coming as well. And so we are -- I would say that we are as excited as we've ever been about the new product set and the expanded product set in Financial Services. At auto insurance, we see more evidence than ever of its potential, and we're seeing that in both the, as I said, the client adoption, the client signings, the client efforts, client indications, as well as the integrations, as well as in the effect it's having on our media buying power, which is truly game changing as we look out the next number of quarters. And I think it's -- I think we'll begin to see an inflection in the revenue side of that in probably -- certainly, quarters, not years. So this is a -- it's not fun to have been through what we've been through or to continue to battle the top line pressures that we have, but the efforts we've been putting in for the past couple of years toward a vision of a much more robust, stronger, more competitively leverageable product set are paying off, and I'd say that the team is, the team and we are quite excited about it.

Michael B. Purcell - Stifel, Nicolaus & Co., Inc., Research Division

Okay. And if I could just press one more thing there. On the transfers and [ph] the bound policy, how are you doing on volumes? And on the pricing side, are we still kind of in the experimental pricing stage with the clients, as you try to set what these bound policies are actually worth to them, or where do we stand with that?

Douglas Valenti

I don't have the numbers broken out for the new model volumes on the various products, and we don't break those out. So -- and I don't -- that one, I'm not even going to venture a range guess because I don't, literally don't have it in front of me. We track the metrics more than we do that because, as I said, you got to get the clients in place. You got to get them in the various states. You got to get enough clients in enough of the segments in order to get enough for the monetization. So what's important at this stage is clients in RPI, not yet revenue, but revenue derives from clients in RPI. On the -- it's not experimental pricing at all. Pricing is quite solid and with these clients on the bound policy side and has been so for quite some time that we haven't disclosed it, but it's a -- as you -- as I think you know, it's an agency contract and we get paid -- rather than having the historic structure of a relatively small upfront and significant PF [ph], or policy-enforced component, which is kind of a residual as individuals renew, which is a traditional agency structure. Some of what took us the time -- and by the way, that traditional agency fee structure is what hurt some of our predecessors in online and the online insurance agency business. Because they couldn't make enough money up front and then the PF [ph] for the renewals was actually declining and I don't have -- again, I don't have the specific data in front of me, but the rate of change or churn among insurance policyholders is up hundreds of percent over the past few years as individuals have learned to and have been incentivized to switch insurance carriers. So relying on the PF [ph] is quite foolhardy. But anyway, our model is to not rely on the PF [ph]. We make enough money with our clients to make the business work on the upfront. And we have plenty of margin on the upfront. But it's in the -- to give you an indication, it's in the hundreds of dollars per policy is where it is. And, of course, that depends on what policy, what risk profile or what client in what state, but that would be the general answer to the pricing question. But not experimental, pretty solid and quite attractive quite frankly, if you look at the margin on it.

Operator

[Operator Instructions] We have a question from Douglas Anmuth from JPMorgan.

Bo Nam - JP Morgan Chase & Co, Research Division

This is Bo Nam on behalf of Doug. I've got a quick clarification. I think when you were speaking about margin guidance for the -- for, I think, it was for the remaining of the year or I'm not sure if it was for the remainder or for next quarter, you said it was mid-teens. If it is for the remainder of the year or for the full year, can you kind of give us a little bit of more color, or a little bit of a split between how 3Q and 4Q will look.

Douglas Valenti

Sure. And you heard both correctly. And that's probably the confusion is we said that we expect next quarter adjusted EBITDA margin to be in the mid-teens. I said that I think Ken repeated it, and then Ken also said that we expect the year now to come in, in the mid-teens. As you know, we historically have targeted and have hit a 20% adjusted EBITDA margin, but we did say -- we have said the last couple of calls, on last call I guess in particular, that, that was very much dependent on top line initiatives. If the top line remained flat, which, of course, as you saw last quarter it has, that we are going to choose to continue to invest on our growth initiatives rather than reduce costs or cut headcount or do anything like that in order to get to 20% in the short term. So that's the main part of that story there. In terms of the mix between the 2 quarters, we don't expect -- it's noisy enough that I don't think there's a meaningful difference. I think we're in the range of where we are now plus or minus a little bit is about what we think in both of the quarters. And we're -- we certainly -- if some of the revenue initiatives come beyond where we think, then it'll be on the plus side of that. If they don't, then it'll be closer to where we were probably last quarter. Now look at the softness in revenue last quarter and we came in at 16% adjusted EBITDA. So hopefully, we've got -- we've shown that we have a lot of resilience on the downside given the variability of the model, but we do benefit quite a bit if we get a little bit more help on the top line.

Kenneth R. Hahn

And to add on, and I'll be a little bit redundant to what you said, but the -- so I don't think any of that is a great surprise if you look at the models on The Street. You guys, I think, already have this pretty much for the year, by and large. So you heard us last quarter. Important to note though that we do believe 20% is still the right number over the longer term. Nothing's changed structurally on this business. We just don't want to at this point, and as you probably know over time, we've been rigorous in making structural changes to get to that 20%. At this point, that does not make sense. With the revenue softness and the tightness in our resources and our employee base, we believe it would be a mistake at this point to do anything like that. We do see these opportunities for growth, and the investments we're making there are quite real. And we believe firstly in the space you need to be a growing company, it's important for our investors in the way you view us as much as anything else, but we need to make this a growth company again. And hence, to cut back on the investment and to eliminate some of these opportunities that we do think are very attractive and that will return us to growth, we think would be a mistake at this particular time. But don't be confused. There will be excess in the system again, and we do believe there's nothing fundamentally different about the businesses after we get through this period of time and that we'll be delivering 20% while still having lots of excess to invest. So it will be a little while, but that's where we think it's going. But no change in the model over time. It's just this particular period.

Operator

Ladies and gentlemen, this concludes today's conference call. If you would like to listen to a replay of this call, which will be available from today, 8 p.m. until February 5, 11:59 p.m., please dial 1 (800) 585-8367 or (855) 859-2056, or (404) 537-3406. Again, ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect, and have a wonderful day.

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