comScore's Management Presents at Deutsche Bank's DbAccess 21st Annual Media and Telecom Conference (Transcript)

Mar. 5.13 | About: comScore, Inc. (SCOR)

comScore, Inc. (NASDAQ:SCOR)

Deutsche Bank's DbAccess 21st Annual Media and Telecom Conference

March 05, 2013 10:50 am ET

Executives

Kenneth J. Tarpey - Chief Financial Officer and Principal Accounting Officer

Serge Matta - President of Commercial Solutions

Analysts

Matthew Chesler - Deutsche Bank AG, Research Division

Matthew Chesler - Deutsche Bank AG, Research Division

Welcome. Next up is comScore. As you know, comScore is a leading analytics company that has expanded its business model from Internet audience measurement to a broader scope of services to other areas including web analytics, ad effectiveness, mobile carriers, analytics and cross-platform measurements, to name a few. With us today is CFO, Ken Tarpey; and Serge Matta, the President of Commercial Solutions. I want to thank you both for being here, and welcome.

Kenneth J. Tarpey

Thank you.

Serge Matta

Thank you.

Matthew Chesler - Deutsche Bank AG, Research Division

We're going to do a fireside chat, and then we'll open it up to audience for Q&A.

Question-and-Answer Session

Matthew Chesler - Deutsche Bank AG, Research Division

So let's start with a look at 2012, a status update on your business. Those of you here who are probably familiar with this, several years ago, comScore embarked on this initiative to expand its business model beyond audience measurement, where it's known as the standard, into a number of these adjacent areas that we just mentioned. And you've been candid in saying that 2012, it was a tough year for you, where revenue growth slowed and margins contracted. And can you just kind of help us understand what the dynamic, the dynamics that you faced in 2012?

Kenneth J. Tarpey

Sure. 2012, as you mentioned, was a period of transition for our strategy, from measurement to the broader analytics. And so within that, what we were able to successfully do was maintain a strong bookings growth. Our bookings growth for the year was about 19%. Our revenue growth was about 10-plus percent, 12%, on a pro forma basis. We had to make some investments, which had some impact on our EBITDA margin, but as we talked about in our call in February, we feel very good about where we are now. We're getting very good traction in terms of bookings on our web analytics product, called, Digital Analytix, as well as the advertising measurement or campaign measurement product vCE. Such that now, as we look forward, we have a few of our revenue growth that, in the midpoint, is about 13%, range of 11% to 15%, at the early part of the year, and we feel we will continue to get good bookings growth. So as that gap, or distance, between the bookings growth percentage and the revenue growth closes, that will go through, pretty much directly to our profit line. And so from an EBITDA basis, we're indicating we think we'll be up 1% this year over last year, but we have the leverage there as these businesses turn to revenue. The turn to revenue now is more about timing of when the backlog, when the bookings, will actually become revenue, which ties more to when we measure impressions in terms of the advertising measurement product and also are tracking the web traffic, on our Digital Analytix product. Our core businesses, we're even more excited about them than we have been, because of the expansion of mobile measurement that we have done, is really getting nice traction in the marketplace. We saw evidence of that in Q4. Maybe it'd be a good time for Serge to talk about Multi-Platform. So I think that's something interesting that all investors have wanted to know about because we're so much more broad now than just online.

Matthew Chesler - Deutsche Bank AG, Research Division

Serge, you want to talk about, this will be a segue into Multi-Platform then, can you talk about when you rolled that product out, what it does and what you think it will contribute?

Serge Matta

Sure, absolutely. So Multi-Platform Media Metrix is a product that we've been challenged by a lot of our clients in the past few years saying -- especially in 2012, whereby people are saying, you know what, I don't really care what platform people access the content. It's the same individual across all platforms. So how do you -- are you able measure one individual going to, let's say, CNN or ESPN, on their mobile device, on their tablets, on their smartphone, tablet, connected devices, PC, online video, don't really care, but it's not 5 or 6 individuals, it's really just one. So is there a way for you guys to de-duplicate that audience, instead of having 5 people, then having it one? And that's what we ended up doing. We released it at, as in beta form, but available to all our clients in early November. It has, really, for just November and December, we launched a very soft launch, we signed up 60 new clients. With 60 clients for that product, they were not -- not all of them were new, actually, most of them probably not new, they're existing Media Metrix clients, we upsold to Media Metrix Multi-Platform. And the feedback from clients have been just phenomenal. One of our top 5 customers basically called it a game changer. This is something that's a complete, unique product. No one out there is providing this service. Now obviously, minutes and pages, and all that, if you're watching it from your tablet on ESPN and then you go onto your PC, that's additive. But if you're the exact same person, you're not 2 or 3 people, you're just 1, so having a service that de-duplicates that audience is really unique, and that progression, we're going to come out of beta this month, in March, and it's going to include tablets and include smartphones, online video, PC, so really, really excited about this product and it's the -- we're glad to say that it's the only one in the marketplace today.

Matthew Chesler - Deutsche Bank AG, Research Division

This is a good example of, I think -- it highlights the strength of the core business, which I think has been overshadowed by some of the business model differences we talked about, the gap between revenue bookings growth. This opportunity around extending your core to new platforms as they emerge, online, mobile, video and multi-platform, can you give us a sense so that we can kind of track your progress in terms of the number of services that clients sign up for? Any metrics around the number of Media Metrix products that you can sell to clients and where they go?

Serge Matta

Yes, so it starts off -- it's an interesting projection, right? So it starts off, obviously, everybody in the past has always started off with just the basic Media Metrix service, so the PC Web measurement service. And then over the years, we introduced Video Metrix, they got into online video. So for the most part, we've done a really good job on video and on PC. Video still has some -- a lot more growth than on PC. But what's interesting is, earlier this year -- earlier last year in 2012, we introduced Mobile Metrix, which was, again, a behavioral-based service that tracks everything on mobile devices. And so now we have PC taken care of, we have video taken care of, we have mobile taken care of, so the next logical question is to get it all combined. Now what's interesting is with Media Metrix Multi-Platform, yes, we are seeing up to 60 clients that signed up in Q4. We're seeing people sign up for this additional service, but the first question that they want to know is, what's my de-duplicated audience across all these platforms? But then the next question that they all ask is, where is it coming from? Is it coming from PC? Is it coming from mobile, is it coming from video? So what has happened is, it has helped us upsell Mobile Metrix, video as well, but not as much, Mobile Metrix is completely on fire as a result directly from Media Metrix Multi-Platform. So it's helping us upsell that product because that's the next question. They want to know, okay, this is my total number, but what is it for each of these individual platforms?

Matthew Chesler - Deutsche Bank AG, Research Division

That's in aggregate across portfolios, or is there a stat around how many products companies or customers buy?

Kenneth J. Tarpey

Well, I think one of the ways to look at it is we have about 2,200 customers, very strong majority, probably 1,800 or so, are Media Metrix customers. And Mobile Metrix customers of that 1,800 represent about 25% to 30%. So there's a lot of upsell opportunity there. We, for a long time, have been, most of our customers are multi-products, between 2 to 3, in that range, and we really see with the upsell of the Mobile Metrix, the Video Metrix and the vCE, as examples that could take customers from 2 to 4 over time, as example.

Serge Matta

We don't want to harp on too much on mobile, but really, it's a huge investment we did in 2012 on mobile and we're starting to see it in Q4 -- in Q3 and Q4 is really when we started seeing mobile revenues increase. But in Q4, we announced that we -- our sample from mobile measurement is now 1 million smartphones under measurement, that we are measuring, we're current -- measuring 400,000 tablets in the U.S. This is all U.S. numbers, and 150,000 connected devices. So this is a huge, huge mobile sample that now we're leveraging and we're reaping the benefits of it from a revenue perspective.

Matthew Chesler - Deutsche Bank AG, Research Division

What type of uplift do you get when you sign a customer up, existing Media Metrix customer, and you tack on, say, video, or say, mobile? What type of, how does that drive up...

Serge Matta

Most customers, the ASP for mobile is anywhere between 35 to 45K. That's kind of when an existing Media Metrix customer, if they want to buy mobile or video, it's somewhere each of that, it's 35 to 45K. Now some clients will pay more, obviously, the big guys will pay more because there's a lot more servicing associated with it, but for the most part, that's kind of the average.

Matthew Chesler - Deutsche Bank AG, Research Division

Okay. I think folks are laser focused on this revenue and bookings gap. Can we drill down a little bit more to give folks a flavor for what it will take for those to normalize or at least for the gap to exist at a higher revenue?

Kenneth J. Tarpey

Sure. First, I would say, traditionally, there's always been, because we are a growing company, in growth mode, we are ratably recognized revenue products across the board. So we always have some gap between, look back historically, between bookings growth and revenue growth, between 2 to 3 percentage points. So the delta we're looking at is between, say, 3% and 6%, between the 2. And on those, where that will close is, with more backlog, more bookings now, you have more activity going on, more measurement of the ad impressions, you can't just do it on a ratable basis, it has to be based on when the actual activity takes place. Secondly, on the Digital Analytix side, now that we have a reasonable book of business in the U.S., that will start to scale as well. We did not factor a close in that gap for our guidance, at this point, for 2013, as we mentioned in our earnings call. We said we want to put out there guidance that was consistent with what we experienced last year and then, obviously, as the year continues and we make progress, we'll update investors accordingly.

Matthew Chesler - Deutsche Bank AG, Research Division

For some of those products, is it all possible to have a subscription-based model that's more comparable to the core basis or is there a dynamic about the new businesses that lends themselves to...

Serge Matta

There is, vCe, especially, our Campaign Essentials product. We've started seeing -- the trend vCE, as we've announced in our Q4 earnings, we did -- in our Campaign Essentials product, we did $6 million or so verification business, we did $6 million or so in bookings in 2011. In 2012, we did $18 million. This product is resonating, our clients -- so what happened was, at the beginning of 2012, is our clients would end up buying small, little campaign projects and just testing it, it's a brand-new product. We did it in Q1. We announced it in Q1. So they just want to test it out, see what -- see the effect on it, because we're introducing a new metric, in terms of viewability. But starting in Q4, late Q3, early Q4, we started seeing these 7-figure deals from a lot of the CPG manufacturers, and a lot of -- some of the ad networks coming in and buying 7-figure, all-in, year-long deals that have a max number of impressions that they are willing to spend, but they have no idea when they're signing up for it, in December, every single campaign that they're going to use it. They just are reasonably sure that the number of impressions that they're signing up for are -- is going to be enough. And obviously, if they go over that impression count, there's an additional surcharge that we charge them. The beautiful thing about this is, it's, one, it's large, so we get the upfront commitments. A lot of the times, the payment terms are flexible, so we're getting these payment terms -- payments in advances. But then the second thing is, we have clauses in there, in every single one of these contracts, is use it or lose it. So in the sense that, even if they go 11 months without taking any of the revenue because they haven't used it, on the 12th month, we are able to take all the entire revenue. It's literally every single one of these contracts, we do put this "use it or lose it" concept and it helps us. Now will we ever get to every single month taking -- like Media Metrix, a subscription-based service? That's hard to -- we need more time for the base to increase. But so far, this product is doing phenomenal.

Matthew Chesler - Deutsche Bank AG, Research Division

Okay. Is there -- what are the prospects for taking that metric to currency status? Is that relevant?

Serge Matta

Yes, it is absolutely relevant. We are starting to see clients coming back to us and say, we want to either make goods or make goods for their clients because this campaign had an in-view measurement of less than 40% or 50% and as such, a lot of the impressions that were served, were not viewed and why should they pay for it? Makes perfect sense. We are MRC accredited. It is going to be -- we are -- there is us and OCR is out there. I think the market is so big, the advertising industry is huge, that there is more than enough room for 2 players to succeed really, really well. And as is evidenced with what we've done in the U.S., we don't know -- and overseas. Our product compared to OCR is global from Day 1. We are a -- we have campaigns that are measuring in France, in the U.K., wherever the case may be. The growth is going well and I think it's -- will become a currency, but there might be room for 2 currencies.

Matthew Chesler - Deutsche Bank AG, Research Division

You also have a Digital Analytix business here. And you -- on your call, you highlighted some recent wins and traction that you've had with new customers being brought onboard. What is it about -- I understood that, that business is something that has the potential to be very interesting because of the ability to combine web data with audience data. Is that a factor in...

Serge Matta

It is. But right now, so what we've seen is -- these are numbers that we gave to our -- in our call so, obviously, mention them here. At the beginning of the year, in 2012, we did 0, $0 in the U.S. on Digital Analytix. It was a business that we had purchased through our company called Netstat in Europe, they were doing anywhere between $15 million to $20 million a year and we brought this service into the U.S. at the beginning -- late 2011 and then into 2012. We put a really aggressive goal in bookings from -- for the U.S. only, from $0 to $10 million. So we've never done this before, let's go see if -- we're not going to probably go after new clients, we're going to go through existing clients and upsell them. We were not only able to beat that goal, we ended up the year with around $12 million in bookings and really amazing logos, from the Microsofts of the world, where we are measuring Xbox and some other campaigns, other parts of their business, on Windows, to Verizon, to VEVO, to Activision, really great logos that, for the most part, were clients of comScore, but we're also seeing -- it's an interesting piece of Digital Analytix, that we're seeing new clients come out, that were not -- had any relationship with comScore, also signing up for it. But for the big ones, like Microsofts and the Verizons of the world and Comcast, these our clients that are signing up for 7-figures, multiyear relationships. So to give you an example that we gave on the Street, on the call, the Microsoft contract was, in November -- October and November of last year, they signed up for a 2.5 year deal, $6.2 million. That's a big deal for comScore that we were able to grab and there's so much more opportunity to get out of Microsoft and other players. The thing that's resonating and why it's resonating really well with these guys, is it's a big data, very flexible platform. You can ingest as much data as you want. It's extremely scalable and this whole multi-platform thing, resonates a lot. So here, you have your web data, you have TV data, you have office data, I don't really -- we don't really care what kind of data and volume that you have. You want to ingest it into one real-time big data platform and then provide you, on a real-time basis, dashboards that you can analyze, Digital Analytix is the solution for you.

Matthew Chesler - Deutsche Bank AG, Research Division

In terms of your core business, are you seeing Nielsen pull away at all from NetRatings, while they're focusing on OCR, or are they -- they are not as competitive and is focused in that development?

Serge Matta

We don't see much of NetRatings in the U.S. We have also heard, and I think, it's public information, that NetRatings disbanded some of their service in Asia, recently, in some countries. I believe, it was Singapore and Hong Kong, I'm not sure about the countries, but I know some Asian countries. They've disbanded. So Media Metrix is the currency in terms of online measurement. I don't think anybody would disagree with that, including Nielsen. OCR versus vCE, yes. They're spending a lot of money in branding OCR, but so are we with vCE. So I think we are -- we're both aggressively pushing both products.

Matthew Chesler - Deutsche Bank AG, Research Division

Right. So if you think about the guidance that you laid out in your most recent call, it calls for 60 basis points of contraction in margin on the low end and 170 basis points of expansion on the high end. It sort of a -- it feels like a wide range and it also spans sort of the -- one is positive, one is negative. Could talk a little bit about some of the factors that [indiscernible]?

Kenneth J. Tarpey

I think, obviously, from a midpoint standpoint, that does call for the expansion I spoke about before, the 17 to 18, from where we see at this stage of the year and just being constructive, we had gone to wider ranges starting several quarters ago, there's a timing element in terms of when -- how will these work through into our P&L over the course of 2013. I think the other part, too, that we discussed with investors is, it's the beginning of the year, early part of the year, so we want to be constructive and we'll just kind of update as we go.

Matthew Chesler - Deutsche Bank AG, Research Division

What are the levers in your model to be able to get to expansion of margins at the midpoint on the revenue growth [indiscernible]?

Kenneth J. Tarpey

Sure. One of the things we did do this year as we headed into 2013, from our planning perspective, is review our product portfolio. We had previously talked last year about off-line copy testing business products that we were moving out. We looked at some other products that we decided to retire, et cetera. As a result of that, we were able to also do some reconstructing in our business. We reduced our number of people, reduced some outside cost. There will be some reinvestment on the people side, on sales primarily, but we feel very good because of those changes that we made, as we talked about in the call, in terms of the -- about $9 million of go-forward costs that we felt we could eliminate and then reinvest some of that. So we think that gives us good posture, in and of itself, to say we can improve margins even if the gap between timings of bookings to revenue stays where it was in 2012.

Matthew Chesler - Deutsche Bank AG, Research Division

You mentioned reinvesting behind the sales force as well. What are some of the areas that you're sort of stepping up focus on?

Serge Matta

The areas where we're going to invest the most is -- we did that quite a bit in 2012, we'll continue in 2013, maybe not to the same degree in 2013, but Digital Analytix is an area we're going to definitely invest in the sales force. And then also to continue investing in our agency business, just because, with the -- how well vCE is doing, we're going to continue hiring sales people in both agency and index.

Matthew Chesler - Deutsche Bank AG, Research Division

Okay. The one thing we paid attention to is the emergence of cross-platform and the potential for that -- would cross the industry to emerge into a recurring revenue stream for yourselves and for other industry players. Can you talk a little bit about how you think you might be able to convert the work that you're doing -- and you've had success in the past, working on the NBC Olympics and I think your current focus project now is around ESPN, right? What will it take for you as an organization, like what are you looking for to be able to determine whether you can convert that into something that you could package and sell to more customers?

Serge Matta

So obviously,the data is there, right? In terms of all of the assets, so when Matt mentioned NBC and ESPN, we signed a large deal for us on ESPN, ESPN chose us last year where we're measuring across all platforms for them, TV, radio, on print, online, mobile, all of the -- in terms of reach of their audience across all these platforms. We have all of the data assets to make this happen, with the exception of radio, and in radio, we went ahead and partnered up with Arbitron for that element. So for the most part, we feel very good about the data elements themselves. We're now working with ESPN to put this all together, to build the methodology, to put it all together so that it can become a syndicated service. We're not there yet. We're definitely not there yet. We're planning on launching the ESPN, in full, providing all the results to ESPN sometime around Q3 and after that, we'll assess, but I'm thinking a syndicated multi-platform product, that includes TV, will probably be a 2014 initiative and not a 2013 initiative.

Matthew Chesler - Deutsche Bank AG, Research Division

Okay. We talked a little bit about the current environment, current trends. Certainly, on the last call, there wasn't that much discussion around the economy to the extent that that's having any impact on your performance, either domestically or internationally. Maybe you can address what you saw in the fourth quarter and...?

Kenneth J. Tarpey

As what we're planning for 2013, sure.

Matthew Chesler - Deutsche Bank AG, Research Division

What's embedded in your guidance as far as the economic backdrop?

Kenneth J. Tarpey

Sure. Again, our revenue, the split is about 85% syndicated or subscription business, and about 15% more custom work, project-based business. On the syndicated side, the vast majority of our business, we are seeing consistent expanding budgets with our customers, as they go through 2013, continued commitment to us as their long-term measurement or analytics partner. So we feel very good from that standpoint, that the macro conditions are stable. On the custom side, we still see things in a reasonable position. Clearly, as we look towards the near term, we have a very good visibility in terms of where that businesses is at, typically, that's something that you have about 2 quarters' visibility on, as opposed to the subscription business. So it seems reasonably stable in our major markets, where we are geographically speaking. So we think things will be okay. But the area where Serge's sales people will certainly be putting a lot of their efforts to make sure we meet those requirements, will be more on the custom side. Cross media is a great opportunity for custom work though, in terms of the data assets we have and what customers are looking for, in terms of new dynamics, that help us, even in economies that aren't particularly -- that might be a bit sluggish at the moment.

Matthew Chesler - Deutsche Bank AG, Research Division

On the project side, are you seeing higher volatility given any broader concerns around how situations in Washington resolve themselves, either at year end or with the latest questions around sequester?

Serge Matta

Per se [ph] the business, it doesn't really affect our business. Fortunately, actually, to be honest, less than 1%, if that, probably 0.5% of our revenues come from the government. It's just not a play that we have. Volatility on overall economy, we're obviously cognizant about it, we factored it into our guidance, but I have to admit Q4 was really, really strong for us and so we look -- we're pretty excited about 2013.

Matthew Chesler - Deutsche Bank AG, Research Division

And is there any insight into any particular verticals that you can provide us? Any particularly strong ones has -- and the ones that have been weak such as [indiscernible] bottom?

Serge Matta

So media, we had mentioned on the call, Facebook, Facebook used us a lot and cited our name quite a bit on their call in Q4. They -- Facebook selected us as their audience -- online audience measurement provider for both the U.S. and global. That was a Q4 win. It was a head-to-head win. Head-to-head, competitive. This is one where we saw NetRatings, actually Nielsen, come in at Facebook, and it was an interesting win for us because Nielsen and OCR -- sorry, Nielsen and Facebook have a relationship for OCR, but even with that relationship, Facebook chose us to be their worldwide audience measurement player. So media does -- continues to do well for us. We had -- obviously, the agency with vCE did really well for us and we've highlighted as well DAX, the DAX business, plus the agency business is just -- it's ridiculous, in terms of growth.

Matthew Chesler - Deutsche Bank AG, Research Division

The Facebook relationship, how much of that is going to be incremental revenue to you, when you see that commencing?

Serge Matta

All of it was incremental in terms of when they signed up for it, it was a brand. They had -- well, I take it back. They had signed up -- they were using us for a few countries -- 1 or 2 countries in 2012, but they -- there was limited seats, they went to unlimited seats and then they expanded it to basically every single country. So all of that piece was incremental.

Matthew Chesler - Deutsche Bank AG, Research Division

Okay. And since you mentioned international, we can stick on that, go for a little bit. Last year, you won the UKOM contract, the U.K. online audience measurement contract. Has that started kicking in for you?

Serge Matta

It has -- yes and no. We are about to get -- we're working with UKOM to get the process, there's a whole approval process, in terms of methodology and all of that. Now obviously, the effect of us announcing it has helped, but in terms of getting that stamp of approval will happen in the next couple of weeks. We're not concerned about it one bit, it's just a matter of -- it's a process of working with a big association, so we kind of have to go through the process. It has helped us. International growth for us has done really well. I think now, international represents what? 1/3 of our business?

Kenneth J. Tarpey

About 30%.

Serge Matta

30% of our business. And it's doing well. We measure -- we currently measure 44 different countries, where we have a measurement service, and it's not just PC, it's mobile, it's connected devices, so we're definitely seeing -- our tagging solution, when we tag a site, we tag it for everybody in the world. So we're able to see data and report back to our clients in, really, every single country.

Matthew Chesler - Deutsche Bank AG, Research Division

You mentioned Facebook earlier, just wanted to go back to that one as well. Can you give us some insight into -- Facebook is buying Atlas, and I think there is some measurement-related implications associated, some metrics around that, how do you foresee that having an impact on the third-party measurement space?

Serge Matta

I think the ad serving business is an interesting play. I think we will work with -- Facebook is an existing client, like I said, I think they're now in the top 5 customers of ours. The ad serving business, them, the DoubleClicks, the Yahoos of the world, all of these guys are clients of ours. How we integrate our data with theirs, TBD. Right? It's something that we could be -- we have to be careful with how we work with those guys, but there might be an opportunity out there.

Matthew Chesler - Deutsche Bank AG, Research Division

Is there an opportunity around something related to real-time? Anything related to real-time metrics, where you could get more involved?

Serge Matta

Maybe. We are -- that's a space that's intriguing to us right now from a vCE and online campaign effectiveness. We're working a lot with agencies and publishers and advertisers, so we'll see how it plays with ad servers.

Matthew Chesler - Deutsche Bank AG, Research Division

Ken, on the call, you indicated you're going to hold off on acquisitions for the time being, as you focus on the initiatives that we've been talking about this morning. What would it take for you to get back in the M&A game?

Kenneth J. Tarpey

Well, I think, as we indicated to investors, through the acquisitions we've done and the investments we've made, we have what we need for 2013. We say, no material acquisitions. I think beyond that, it would depend on how the space evolves, in terms of needs, that might fill for us. Perhaps something in the area of social activity, perhaps something, again, in the area of cross media. But again, we feel we have the resources we need right now. So it's not something that...

Serge Matta

Yes, nothing significant in 2013.

Matthew Chesler - Deutsche Bank AG, Research Division

Okay. Yes, we have a question.

Unknown Analyst

Question on mobile. You talked about cross reading [ph], you talked about digital templates [ph], how are you measuring mobile, how are you looking at apps, what sort of methodologies are you applying?

Serge Matta

We measure mobile through a couple of ways. We measure mobile, first, we have an on-device meter that sits on smartphones. It's opt-in. And there, we're able to measure browsing and app usage, left and right, people to surf in their natural environment, and we're able to measure them. We also measure mobile at scale. When we tag a website, we tell them to tag, not only your PC, your mobile-optimized site, but then all of your apps. For your apps, we have something that's called SDK, Software Developer Kits, for both Android, iOS, RIM, you name it, we have that, so that we provide them the SDK, so that we can measure the apps themselves. And then we also measure mobile through -- we have relationships with ISPs whereby -- there's 2 other ways, relationships with ISPs, where we get the ISP data, anonymously, we don't know who the name of, the individual is, but the reason why the ISP data is really important is, you not only get the PC behavior, so let's say you are a subscriber to one of the big MSOs, cable companies. When you get home, you're obviously going to go use your broadband at home, but when on your iPad, or on your mobile phone, you're going to connect immediately to the Wi-Fi of your home. That, all of that usage on those mobile devices, the ISP has and can segment based on which platform you're accessing that content. So we get data that way. And then the final way that we get data on mobile is in the U.K. Specifically, we have a relationship with all of the mobile operators, where we actually have our servers embedded into their data centers, and we're getting all of their data for every single mobile subscriber in the U.K. So mobile is not easy to measure, but the reason why we have 4, 5 different ways, we feel really good about it, the scale is there. Like we mentioned, we have 1 million smartphones to be measuring. We have 400,000 tablets that we're measuring. This is at scale, and then like in the U.K., it's census. So we feel really good about where we are and to be honest, at the beginning of 2012, we were not there. At the end of 2012, we are there, and the revenues have started coming, especially from mobile.

Unknown Analyst

[indiscernible]

Serge Matta

Yes. It's interesting. Some of them, obviously, usage on specific sites that you would have never -- if you had just based on PC, you would have never seen an increase, a specific increase in their audience, right? So take for example, like Pandora. Pandora, most of its traffic comes from mobile devices and from apps. I -- the fact that once we are able to -- once we were able to tag their app and track their mobile devices, all the consumption on mobile, all of a sudden their unique visitor audience just significantly increased. Facebook, same thing. It's just there's a lot of sites out there that the -- they will get incremental audience specifically just from mobile.

Matthew Chesler - Deutsche Bank AG, Research Division

Well, I think we are out of time, but I want to thank both of you for being here.

Kenneth J. Tarpey

Sure. Thanks, good to be here.

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