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The Active Network (NYSE:ACTV)

Q4 2012 Earnings Call

February 14, 2013 4:30 pm ET

Executives

Brinlea Johnson - Director

David Alberga - Executive Chairman

Matthew G. Landa - Chief Executive Officer and Director

Scott Mendel - Chief Financial Officer and Principal Accounting Officer

Analysts

Aaron M. Kessler - Raymond James & Associates, Inc., Research Division

Brian Patrick Fitzgerald - Jefferies & Company, Inc., Research Division

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

Andre Sequin - RBC Capital Markets, LLC, Research Division

Rohit Kulkarni

William Sutherland - Northland Capital Markets, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2012 ACTIVE Network, Inc. Earnings Conference Call. My name is Deanna, and I'll be the operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to your host for today Ms. Brinlea Johnson of The Blueshirt Group. Please proceed.

Brinlea Johnson

Good afternoon. Welcome to the ACTIVE Network Fourth Quarter and Fiscal Year 2012 Earnings Call. With me today is Dave Alberga, Executive Chairman; Matt Landa, CEO; Scott Mendel, CFO; and Darko Dejanovic, President.

Before we get started, we would like to remind you that our statements today that are not purely historical are a forward-looking statement. Our actual results may differ materially from those projected in any forward-looking statements due to various risks and uncertainties, including those factors in the Risk Factors section of our periodic filings filed with the SEC.

All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to revise or update these statements to reflect events or circumstances after the date hereof. I'd also like to point out that during the call, we do mention certain non-GAAP financial measures, which will be explained during the call. A reconciliation of these non-GAAP measures to the most comparable GAAP measures can be found in our earnings press release, which was made available prior to today's call.

This conference call is also being recorded and will be available for replay and Internet broadcast on the ACTIVE Network Investor Relations website at www.activenetwork.com under Webcasts and Presentations.

I'll now turn the call over to Dave Alberga, Executive Chairman.

David Alberga

Thanks, Brinlea. Good afternoon, everyone, and thanks for joining us. First, I wanted to hit a couple of financial highlights. We delivered a 23% increase in revenue in Q4 and a 24% increase for the full year. In Q4, we posted adjusted EBITDA of $5.9 million, significantly up in the prior-year period. In 2012, registrations were up 12%, and revenue per registration was up 8% year-over-year. These solid results demonstrate our progress towards our long-term strategy.

Now, before we share more about our Q4 highlights, it's been brought to our attention that there may be some misconceptions in the market. I'd like to make a few clarifying points to address these.

First, the company has a healthy balance sheet and is more than adequately capitalized to meet its obligations. The math is very straightforward, guys. Our cash balance, plus the registration receivable, is in excess of our registration payable.

Second, the company has 0 debt and has had no inter-quarter borrowings. As you can see from our filings, the company had $5 million of debt outstanding at the end of 2011. During the first quarter of 2012, we increased that to $10 million. The amount remained constant until the full amount was paid off in the third quarter of 2012. The company, of course, still has access to the existing $100 million revolver if desired.

Third, our revenue recognition policies have remained unchanged and are fully disclosed and are in full compliance with GAAP. We discussed Active Exchange in our last earnings call. We believe that it's a compelling yield management tool for certain customers. But that said, it continues to be immaterial dollar amount and is properly accounted for. During the fourth quarter, we partnered with LeftLane Sports to outsource our daily deal program, which we rebranded to be more -- to a more intuitive name, ACTIVE GearUp. The program remains immaterial, and revenue has always been recorded on a net basis.

Fourth, as we prepared for 2013 guidance, we took into consideration that revenue from our outdoors vertical can be somewhat lumpy as we bring on new states or municipalities. Our guidance assumed that this vertical would be substantively flat in 2013. We remain excited about the -- this area of our business and recently, we've won the second -- our second Canadian province as well as Puerto Rico.

Fifth, we continue to refine our branding and have always worked to harmonize our product names. ActiveWorks refers to our services-oriented platform, upon which vertically specific functionality is built. For example, after we integrated the campground technology that we acquired through -- from ReserveAmerica into our ActiveWorks platform, we rebranded the overall technology as ActiveWorks Outdoors. More recently, we leveraged our ActiveWorks platform to address Hunting and Fishing, which was a key technology milestone in 2012.

Finally, as I said in the past, we have tremendous opportunity in front of us, and we are committed to executing on our vision. Now I'll pass it over to Matt who will discuss Q4 in more detail.

Matthew G. Landa

Thanks, David. Good afternoon to everyone. Let me start off by saying that both our revenue and earnings represent all-time record results for the company, and heading into 2013, the company's capabilities are the strongest they have ever been.

The primary goal of the organization for the upcoming year will be gaining further adoption of our technology and increasing our penetration within the Activity and Participant Management market. In 2012, we had a solid year, growing our customer organization by 7% to 55,000. To continue this momentum, we are focused on 2 key initiatives.

The first is innovation. We are committed to delivering even greater customer experiences by driving innovation of our ActiveWorks platform within each of our verticals. Our clear mission is to have the best APM solutions in the market. And as we complete the foundational development of our ActiveWorks platform, we are shifting our resources towards the high-value, innovative development projects with focus towards stimulating the growth of the business.

And second is sales. We are increasing our investment in sales and marketing with a focus on driving new customer acquisition and improving our overall sales and marketing execution. The market opportunity is in front of us. We have the products to serve the market. We have the right sales leadership in place, and we've implemented the right infrastructure to support the growth. Now is the time for the investment. I'll review our Q4 operating highlights within the framework of these 2 initiatives with the goal of increasing adoption and penetration of our Activity and Participant Management technology solutions.

So whether an activity organizer is big or small, they typically face similar road blocks, such as manual processes, multiple systems and limited resources. And one efficient platform, our APM solutions, eliminates the array of challenges each of the organizers encounter.

The 3 building blocks for extending our market-leading position through innovation are: number one, delivering the best, vertically-specific technology solutions by setting the pace of innovation within the APM market; two, continuing to build on our ActiveWorks horizontal platform and scaled with our business and our customers' businesses; and three, successfully creating the tools to drive the marketing and distribution of our customers' activities. Here are a couple of the innovative solutions we've recently released.

Endurance customers continue to leverage our ActiveWorks platform, with hundreds of customers going live on ActiveWorks in Q4. The largest trend in the Endurance space has been the explosive growth of social events, commonly referred to as Mob events. Adding more power to this trend, we released enhanced team registration functionality that allows participants to quickly and easily sign up for events like Color Run with up to 20 of their closest friends. We also launched our Registration Protector tool in partnership with Allianz Global to protect the registration fees for both event organizers and participants when participants can't show up on race day.

Internationally, we extended our ActiveWorks Endurance platform to Australia in October and are experiencing strong initial adoption down under. During the quarter, in advance of summer camp registration, which starts in Q1 and Q2, we released season dashboard for our ActiveWorks camp solution. Organizers at the thousands of camps we serve can now easily see a sophisticated view of enrollment and revenue totals as well as year-over-year comparisons to help them maximize their return through pricing and capacity optimization.

We also continue to evolve our Business Solutions applications. In Q4, we released a highly requested feature in spend management named meetings360 integration to better track and match multiple complex [indiscernible]. And we've expanded StarCite MarketView's sales center and RFP response capabilities.

Our technology foundation is the key reason we're able to continue expanding our vertical applications. We are entering 2013 with the most sophisticated services-oriented platform in the industry. We are delivering our technology through next-generation SSAE 16 certified data centers and surpassing PCI Level 1 Compliance standards. This infrastructure provides us with a significant advantage and scales with our business as we grow.

Also, we've been developing new ways to market and distribute activities on behalf of our customers. In Q4, we relaunched our developer center, bringing together all aspects of ACTIVE Network's distribution offerings, including our activity API, campground API and golf API, all into a single user-friendly site. We also released a sneak peak to our new and improved Active.com site scheduled for full data launch in Q2. Our enhanced site will feature a new visual style, activity fees based on location and new search user profiles and advertising opportunities. On the mobile front, our Couch-to-5K app is recognized as one of the 2012 top paid health and fitness app on iTunes, showcasing how our mobile applications are driving distribution and awareness of ACTIVE.

Delivering an excellent customer experience through innovation is essential to maintaining and growing our leadership position as well. We powered the Electric Run, who hosted its inaugural event on November 30 with emcee, Carmen Electra. The event welcomed over 10,000 people to a nighttime Wonderland of Lights and music, and our technology is helping this series scale rapidly as it plans to sell out in each city it visits.

At the end of 2012, we celebrated some significant accomplishments with key business customers. Our technology tools helped Loews Hotels realize a 57% year-over-year increase in booked room revenue in 2012. In the U.S., Nestlé continue to expand its strategic meetings management program, from managing 150 meetings when it started to more than 500 meetings, while at the same time achieving year-over-year cost reduction targets. In 2013, we will be launching new products for mid-market businesses that integrate strategic meetings management with our attendee management platform to give our customers a 360-degree view and better control of their events.

Additionally, you may have seen our announcement this week about WannaDo, our new self-ticketing platform. WannaDo creates a marketplace for events and activity by crowd-sourcing consumer interests within a single platform, connecting to social networks and providing organizers easy-to-use ticketing tools to immediately fulfill this demand. We believe we can create a fundamental shift in the way events and activities go to market by allowing organizers to understand consumer demand before they take on the risk and cost of producing events or activity. Ultimately, if we can find out what people want to do, we can now -- we can more quickly and profitably match them with the activity organizers who produce those experiences.

Shifting gears here to sales. As we've shared, we are making targeted investments to further build our sales and infrastructure capacity. These investments are based on our market opportunity, the scope of our products and the expected returns. In 2013, we plan to add approximately 100 salespeople folks and driving new customer acquisition. We are focused on increasing IRRs by increasing bookings per rep, shortening sales ramp and implementation times, improving up-sell and retention rates and becoming more efficient at maintaining our accounts.

In Q4, we have seen improvements in our sales execution and continue to grow our public sector footprint with the addition of new customers, including the city of Des Moines and Santa Monica. We have also expanded reach into local communities and sports relationships, including Master Yoga Foundation, San Antonio YMCA, as well as the Indian Monumental Marathon and the energy event series.

Our Business Solutions' momentum continues with Toyota, HP and Honeywell, among others, all expanding their partnerships. Cross-selling efforts has continued as a number of Fortune 500 customers are now using multiple solutions across our technology suite that includes ACTIVE's conference for large flagship conferences, RegOnline for mid-market attendee management solutions, StarCite SMM or strategic meetings management and the StarCite Supplier Marketplace. By bringing these solutions together within ACTIVE, customers like CA Technologies and Macworld are increasing their engagement efficiency and growth of their events.

So in summary, I'm excited about the progress we made in 2012. During the past few years, we've been building a strong foundation for the future of ACTIVE. As we move into 2013, we will be focused on leveraging our technology platform, increasing sales productivity and delivering great customer experiences.

Now I'll turn it over to Scott to discuss our Q4 results and our longer-term 2013 outlook.

Scott Mendel

Thanks, Matt, and good afternoon, everyone. I'll begin by walking you through our fourth quarter results, provide some full year highlights and address key metrics, which unless otherwise noted, are compared to the same period of the prior year, and then I'll move on to guidance.

In the fourth quarter, revenue increased to $93.7 million, within our guidance range and up 23%. For the full year 2012, revenue was $418.9 million, up 24%. One of the key drivers of revenue growth, registrations, was up 7% to approximately 18.4 million registrations in the fourth quarter, and revenue per registration grew 13%. For the full year, registrations grew 12% to 89.9 million, and revenue per registration grew 8%. We continue to add a broad range of both large and small organizations, and in 2012, the number of organizations that utilized our technology grew to approximately 55,000, up 7%.

Turning more specifically to our fourth quarter results. Our technology segment revenue constituted 80% -- 88% of total net revenue or $82 million, up 25% from $65.5 million. Within technology revenue, net registration revenue for the quarter was $55.8 million. The remaining technology revenue increased 38% to $26.3 million as a result of higher subscription and implementation revenue, including a portion of StarCite and RTP.

Marketing services, our other reporting segment, was $11.6 million in the fourth quarter. And for the total year, marketing services revenue was $48.4 million. Marketing services revenue made up approximately 12% of total revenue in 2012. And in the near term, we expect this segment to remain at about the same proportion.

Gross margin this quarter was 52.5%, up 70 basis points. Excluding our noncash items and the impact of business combination accounting rules on deferred revenue, our gross margin this quarter would have been 62.8%, up 180 basis points. For the total year, gross margin, excluding the same items, improved 80 basis points to 63.3%.

Moving on to fourth quarter operating expenses. We continue to balance investing in the long term as well as scaling our business. The total operating expenses were $64.2 million, up 18% from $54.2 million. Sales and marketing expense was $23.6 million, up 37% as we invested in our sales and marketing staff in order to capitalize on our large market opportunity. The number of employees in sales and marketing at year end was 638, up from 540 at the end of 2011, with the majority of the increase related to quota-carrying reps.

In the fourth quarter, R&D expense was $18.5 million, up 11%, and we capitalized $5.8 million of software development related to new functionality. G&A expense was $16.6 million, up slightly. If you exclude the $2 million in severance costs associated with the StarCite acquisition in the fourth quarter of 2011, G&A would have increased 14%. The increase was primarily driven by employee-related costs, plus additional contractor costs associated with the initial SOX 404 certification.

Loss from operations in the fourth quarter was $15 million compared to a loss of $14.9 million, and for the full year 2012, loss from operations increased to $39.6 million. Net loss was impacted by depreciation and amortization associated with the StarCite and RTP acquisitions, as well as an increase in stock-based compensation. Fourth quarter net loss was $14.3 million, or a loss of $0.24 per share. On a non-GAAP basis, excluding the impact of certain noncash items, fourth quarter loss was $0.10.

The weighted average common share this quarter was 60.4 million. For the year, net loss was $43 million or a loss of $0.73 per share. And on a non-GAAP basis, excluding the impact of certain noncash items, full year loss was $0.10. The number of weighted average common shares used to calculate earnings per share was 58.8 million for the year.

Adjusted EBITDA for the quarter was $5.9 million. Excluding the impact of business combination accounting rules related to deferred revenue, our EBITDA was $7.4 million. For the full year, adjusted EBITDA was $38.4 million, or $50.8 million excluding the same purchasing accounting -- purchase accounting impact.

For the quarter, depreciation and amortization expense was $16.2 million, and stock-based comp was $4.7 million. For the quarter CapEx, which includes software cap, was $10.9 million. Cash flow from operations for 2012 was $27.6 million.

From a balance sheet perspective, we ended the year with current assets of $141 million, total assets of $542.5 million and current liabilities of $182.3 million. We closed the year with $66.8 million in deferred revenue, up 22% from 2011.

Turning to our first quarter 2013 outlook. We are targeting revenues to be in the range of $102 million to $107 million and adjusted EBITDA to be in the range of $2 million to $5 million. We expect registration growth of approximately 2% to 7% and revenue per registration growth of approximately 7% to 9% over the prior year. Net loss is expected to be in the range of $21 million to $17 million and our basic share count to be approximately 61.5 million shares.

For the year, we are reiterating our guidance and expect total revenue of $470 million to $480 million, which represents revenue growth of over 13% at the midpoint of the range versus 2012. Net loss is expected to be in the range of $38 million to $31 million and adjusted EBITDA to be in the range of $50 million to $54 million.

We'll now move on to Q&A. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] And our first question will come from the line of Aaron Kessler, Raymond James.

Aaron M. Kessler - Raymond James & Associates, Inc., Research Division

A couple of questions. If possible, can you give us maybe an update on just maybe the rough vertical sizes? And then also, it looks like the -- just in terms of the revenue mix for 2013, it looks like you're projecting a little lower volume growth and higher pricing growth, if you can give us maybe some explanation behind that. And then just maybe if you can give us your current salespeople count as well?

Matthew G. Landa

Yes, okay. Just quickly from the lower volume and from a revenue standpoint, what we are looking at is just the flow through from the outdoor space, right, the impact of that. The lower revenue growth in outdoors, which has the lower revenue per registration, as that stays flat and the rest of the business grows, we can see is an uptick necessarily in the overall revenue per registration metric. So I think that's purely a function of just that. The first question -- sorry, Aaron…

Aaron M. Kessler - Raymond James & Associates, Inc., Research Division

[indiscernible] if you can give us an update on vertical sizes and maybe also just maybe what's the outlook for the kind of the key verticals? I think you've given the outdoors outlook, but just maybe an update.

Matthew G. Landa

Yes, and once again, in general, as we've talked about in the past, the overall vertical sizes are somewhat similar, right. So there's not a big differential between those different verticals at this point, right. So they're run around the $100 million range, somewhere in that range.

Aaron M. Kessler - Raymond James & Associates, Inc., Research Division

Got it. And just do you have a current sales count as well? I think you said you're adding 100 people. Do you have a current number?

Scott Mendel

Yes. The way to think about the increase in 100 people for the year, which is our goal, is we'll probably do roughly 1/3 this quarter and we're on track to deliver that.

Matthew G. Landa

Yes, but the total sales and marketing headcount was up to 638 at the end of the year.

Scott Mendel

Yes.

Operator

Your next question comes from the line of Brian Fitzgerald, Jefferies.

Brian Patrick Fitzgerald - Jefferies & Company, Inc., Research Division

As we think about 2013, how much of a factor is seasonality going to play in the revenue growth?

Scott Mendel

Brian, this is Scott. I'll take that one. In seasonality for 2013 will be relatively consistent to what we always see, with second quarter being our seasonally strongest and third quarter being the next strongest. So that won't change. But one of the things that I think we should be aware of is let's kind of break it down into the 2 segments. I think that's the best way to think about it. Technology revenue, starting there, we are, like we talked about on the prior question, adding salespeople throughout the year. It takes time for them to ramp up, generate bookings and translate those bookings into revenue. So what you will see on the technology revenue side is pretty even growth on a total basis for each of the 3 quarters with a ramp-up in the fourth quarter. So if we're talking about 13% growth at the midpoint for the total business, I think that's a pretty good way to think about it for technology revenue, with a bit of a step-up in the fourth quarter as we start to generate some revenue for those new -- from those new salespersons. The second piece of our business, marketing services, we certainly had a little bit of re-profiling of the seasonality or the quarterly splits on marketing services in 2012. We're continuing to see a little bit of shift there. What I think we should think about from a marketing service perspective is relatively flat growth year-over-year in the first half of the year, with accelerating growth in the second half of the year. As we talked about, we got the right leadership in place. We've been refocusing those efforts on our technology customers with our online advertising, our technology customers, as well as we've got some commerce opportunities across some of our other verticals outside of Endurance. So we'll see, again, kind of flat growth on the first half of the year is what we're thinking for marketing services, with an acceleration in the second half.

Operator

Your next question comes from the line of Jeff Houston, Barrington Research.

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

The first one, regarding the 100 new salespeople, what's -- how are they going to be divided up before the -- between the 4 business segments? Should it be about 25% each? Or how should we think about that?

Matthew G. Landa

Yes. What we've -- what we're actually doing this year is a pretty even split between the 3 non-outdoors verticals. The outdoor space, given the relatively few number of customers, doesn't require that type of ramp-up and effort. We are -- excuse me?

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

Yes. Yes, that makes sense.

Matthew G. Landa

Yes. As so when you look at it, we've got a slight prioritization based on the actual IRRs from the salesperson standpoint and market coverage. So they're not exactly even. But in general, the spread is somewhat even.

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

Okay. Then separately, just curious if you could talk about some of this trends in the marketing revenue, maybe how it differs between desktop and mobile and just how that's affecting business as you look at it. It sounds like it's going to be growing faster probably in the second half of the year, but in the first half, too. Just some color there would be great.

Matthew G. Landa

Yes. So just a quick stab here. Our mobile traffic was up to 31.9% of overall traffic in the quarter, so that continues to grow. Once again, we are pushing traffic down that path, increasing the convenience for our participants to register online. That registration is currently what we get paid on going forward. So that's #1 from a strategic standpoint for us. We've actually brought out some interesting new technology. We've just recently launched a mobile -- the mobile service for the Tennessee Hunt and Fish program to allow folks for the first time to register online for hunting and fishing licenses, and we're looking forward to the -- and hopefully, the increased conversion that could be driven because of that as we move forward. In terms of how that plays out into marketing services revenue, and for us, we've talked about increasing the optimization, if you will, of the flow within our sites as well. That, combined with mobile, is clearly kind of driving down the, what you would say, maybe high-dollar impressions that are available from a marketing services standpoint. So what we see is kind of that brand advertising compliance, shrinking a little bit though. It has been shrinking a little bit over the course of this past year from an impression standpoint and some of the ability for us to drive revenue there. We do see other areas in our business, though, continuing to grow; so some of the commerce areas, some of membership areas continuing to grow as we expand our offering through more and more of our registration customer base. And we see that starting to take hold towards the back half of the year. We're also coming out with some interesting new technology on our -- on communities, what we're calling our Active.com 3.0 site. And that's going to have more interesting opportunities for advertisers going forward, so as that gets rolled out the middle of the year, the opportunity for us to take advantage of that allows us to be a little more bullish on the overall market services revenue as well.

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

Okay, great. Then lastly, regarding the outdoor segment, were those 2 customers you mentioned, the Canadian providence and Puerto Rico, I think, were those added in the fourth quarter?

Matthew G. Landa

Those customers -- Saskatchewan, actually, was the province, it actually was, and Puerto Rico was kind of a reaffirmation that they were going to roll out the product, which occurred in Q4 as well.

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

And it sounds like the deal's going to be a bit more lumpy in outdoors. But could you talk a bit about the pipeline in that segment of your business?

Matthew G. Landa

Yes, there are a number -- now, this is all ARPU-driven, and there are a number of opportunities in the pipeline, but those all take time. And even the recent wins there, we're really not going to see revenue from those wins until implementation occurs, and that's going to take probably throughout the course within all 2013. So you're not going to see much revenue impact until 2014. And the pipeline that we have out there, which is double-digit in terms of opportunities, once again, takes time to work its way through in terms of when you actually -- when it counts when you actually -- how long it takes to work through the contract actually after you win that account and then the implementation process. So it's a fairly long process, but the pipeline is there.

Operator

Your next question comes from the line of Andre Sequin, RBC Capital Markets.

Andre Sequin - RBC Capital Markets, LLC, Research Division

I was wondering, is there any more color you can give us on the migration to ActiveWorks? I believe in 3Q, you mentioned there will be 2 new customers moving on to the platform in 2013. Is that still where we stand? And then when during the year is it expected to happen? And then, Matt, I wonder, since taking over the supervision of the sales function, is there anything you would point to where you've made a significant change to the department? Or is it more a matter of just refocusing the group?

Matthew G. Landa

Well, from an overall migration standpoint, we've got -- we still have those 2 that are keyed up to go in 2013. We're looking to do that in the second half of the year for both of those. Those are on track. We feel good about getting those completed. As we move into 2014, we hope to accelerate that number going forward and then pick that up. But we've got those 2 on tab for this year. From a sales change standpoint, well, I think really what we're doing here is just changing the way we think about sales in terms of moving a fair amount of our resources that were focused on account management and actually driving revenue out of the existing customer base, much more so towards new customer acquisition. So not only are we adding the additional sales folks that are focused on new customer acquisition, we're actually really focusing on how to increase the efficiency of our maintenance spend. And that's the spend against maintaining the existing customer base so that we can redeploy resources back towards new customer acquisition. And so really kind of digging in and understanding how we go about doing that is really kind of a big part of our focus, truly kind of understanding the underlying metrics associated with what it takes to take a new sales rep through ramp time into building a pipeline, the pipeline into bookings and then into revenue recognition and understanding how those percentages all flow through and tie back to the overall growth of the business. We've been spending a fair amount of time working on that bottoms-up model and then making sure that the concept of lifetime value of a customer and salesperson IRRs are really being used to drive where we make our investments and how we make our investments. Those are a lot of things that we're actually focused on right now as we move into 2013, much more keenly and acutely than we were really as we moved into 2012. We've also added some key personnel from a sales leadership standpoint. And so by far, our VPs across the top of our markets are the strongest they've ever been within the company and much more stronger than they were as we moved into 2012. So we feel really good about our sales effort and the team that we've put in place, and also the systems that we've put in place. We've brought up sales force like [indiscernible] just recently across the entire business. And so we've actually gone through that process of making sure the entire team is up on the same system and functioning as one unit. So we feel good about the progress we've made, and we think we've made significant changes from where we were going into 2012.

Operator

[Operator Instructions] Our next question will come from the line of Rohit Kulkarni, Citigroup.

Rohit Kulkarni

Can you talk about Q4 registration growth? It came in slightly closer to your lower end of your guidance. Any segment you would highlight that was particularly a source of weakness? And on the flip side, revenue per registration exceeded your high-end guidance; any particular source of strength there?

Scott Mendel

Yes, Rohit, this is Scott. I'll take it. So on the Q4 registration growth that we saw, it was within our guidance, maybe a little bit lower than we'd anticipated, with a few less on the outdoors space which then bumps up our revenue per registration growth in the fourth quarter. So if you remember, those are kind of 2 sides to the same equation. So a little bit lower registration growth, but higher revenue per registration growth based upon that mix.

Rohit Kulkarni

Okay. And a follow-up on the sales ramp up, how long does it typically take for a salesperson to become fully productive? And it looks like you added around 3,600 new organizations this year. How should we think about -- as you ramp up sales, how should we think about new customer additions, internal goal that you might have for 2013?

Matthew G. Landa

Yes, so what we look at is -- about a 12- to 24-month ramp to productivity. So a sales rep will continue to increase even past that in terms of their overall productivity standpoint. But I would think from that standpoint, that's where they are, booking revenue kind of at the rate that we expect them to book. Now as that flows through to actually seeing revenue recognized, there's a factor that applies -- what's helping this book to when it actually gets recognized and that -- so that point in time, where you actually see that organization being included in our metrics, it has to be actually showing revenue for us to include that organization within our calculations here. So I wouldn't expect to see tremendous uptick in 2013 from an organization count standpoint due to this investment that we're starting really now. Having said that, the ramp, we still shouldn't have any problems to our ramp throughout the year largely based on the existing sales team that was in place.

Operator

Your next question will come from the line of Bill Sutherland, Northland Capital Markets.

William Sutherland - Northland Capital Markets, Research Division

What is the thinking right now in terms of M&A as you look into the year? Any thoughts?

Matthew G. Landa

Yes. You know what? The interesting thing is as we kind of did the last couple of acquisitions at the end of 2011, those really were filling -- particularly starts like filling a strategic gap for us that we felt we needed to do something to kind of turbocharge our efforts there. As we look forward in terms of what our marketplace is and our competitive position within that marketplace, there aren't any gaps that we feel compelled to fill at this point in time that we can't fill with some organic research and development work. So for us, there isn't any kind of urgency to do that. From our standpoint, we will -- we'll be able to consider acquisitions on an optimistic basis, but feel very strong about our organic position and what we can do with the development team that we've put together over the course of the past 2 years to really drive great innovation and take advantage of the opportunities in front of us.

William Sutherland - Northland Capital Markets, Research Division

Great. Are then are there any large renewals that are coming up this year that we should be aware of?

Matthew G. Landa

Yes, we've got a handful of renewals with state customers that we're looking to close out this year. But once again, nothing that is anything more than 1% of revenue.

William Sutherland - Northland Capital Markets, Research Division

Is National Park this year?

Matthew G. Landa

We actually received an extension from National Park, so that does not renew this year.

William Sutherland - Northland Capital Markets, Research Division

Okay. And then I may have -- I had to drop off. I apologize if I missed this. But in your business meetings space, I think in your introductory remarks, you were taking about a couple of wins there, and I know you've had a lot in the pipe and it's been slow to convert. So unless you're covering the same ground, I'd like to hear how things are looking going into the year ahead?

Matthew G. Landa

Yes. Our pipeline is much healthier heading into 2013 than it was in going into 2012. And so we feel really, really good about that as we move forward. We've done a substantial amount of work across the business to do just that. The -- obviously, the area of concern for us from a revenue standpoint has been the fact that we don't have any new states coming online in 2013. But from a pipeline standpoint, in terms of where we think we can drive bookings, we're looking for a very healthy bookings growth 2013 over 2012.

William Sutherland - Northland Capital Markets, Research Division

But I was -- I was actually -- I wasn't clear. I was actually thinking specifically about in the business meetings and with StarCite and the cross-selling.

Matthew G. Landa

Oh yes, sorry, with the Business Solutions group. Yes, same thing holds there. The work that's been done over the course of the year. The shift in focus from existing accounts, the new name accounts is working to build off the pipeline there.

William Sutherland - Northland Capital Markets, Research Division

And you had -- I think you actually noted a couple of wins?

Matthew G. Landa

Yes, we did. I'll tell you, I'll throw a couple [indiscernible] ones out to you as well. We noted Macworld, I think we actually just did recently, but we've also have some interesting cross-sells, including GlaxoSmithKline, which is now taking our conference product toward the StarCite customer. And Autodesk, which was a conference customer, which is now also a StarCite customer. So we've got those. We brought on UBS as well as a conference customer. So some big names that we've actually won within Q4 as we move forward, and feel good about the ability to kind of bring in some of those big names and global accounts moving forward. And also feel good about some of the products that we're looking to release in the first half of the year, particularly our product for the mid-market that combines both the attendee management with the strategic meetings management product.

William Sutherland - Northland Capital Markets, Research Division

Now that's not the ticketing product you just announced, right, that's in the Eventbrite side?

Matthew G. Landa

No. No. The ticketing product is really a product to go after the low-end market. So if you're familiar with Eventbrite coming in kind of the lower-end position than the space that they've been in the past. The mid-market product is more the integrated product that includes strategic meetings management with attendee management. That's going out to that middle level as opposed to the lower end, if you will.

William Sutherland - Northland Capital Markets, Research Division

Do you could sell that on an inside sales basis?

Matthew G. Landa

We do sell that on an inside sales basis. That's exactly right. So there's a lot of inbound and outbound telesales is the focus of that.

William Sutherland - Northland Capital Markets, Research Division

And last one, I guess, for Scott. Operating cash flow and free cash flow were lighter than in 2011. What should we be looking for there based on kind of the guidance you've laid out in '13?

Scott Mendel

Yes, so in 2012, the operating cash flow, as I mentioned, was about $27 million. The big driver in our operating cash flow calculation tends to be within the change in working capital, specifically, where we catch the balance of registration fees payable. And that's what you can see on our cash flow statements. You can see the big change year-over-year from 2011 to 2012 in registration fees payable. There was a massive decline in registration fees payable associated with the timing when we made some large payments. Going forward, Bill, the way we've laid out, we think we've taken appropriate levels of change in working capital into consideration, forecasting forward when we pay out to some of the larger clients. I think next year, will probably look around, call it, around $15 million or so from a free cash flow perspective. That's what we're thinking right now. Again, we have to watch it very closely. To note [ph] only make different payments out on that registration fees payable account. But again, what we're thinking right now from a free cash flow basis, '13 is about $15 million.

William Sutherland - Northland Capital Markets, Research Division

That's 1-5, Scott, right? My line's not good at...

Scott Mendel

Yes.

William Sutherland - Northland Capital Markets, Research Division

That's $15 million, 1-5. Okay.

Scott Mendel

1-5, yes, correct.

Operator

And, ladies and gentlemen, this concludes the question-and-answer portion for our conference. I'd now like to turn the call back to Matt Landa for closing remarks.

Matthew G. Landa

Yes, once again, I just wanted to thank everybody for joining us here today. We appreciate your continued interest in the company and look forward to keeping you updated on our progress. Thank you.

Operator

Thank you, ladies and gentlemen, again for your participation. This concludes today's conference call. You may now disconnect, and have a great day.

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