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magicJack VocalTec Ltd (NASDAQ:CALL)

Q4 2012 Earnings Call

April 2, 2013 5:00 pm ET

Executives

Gerald Vento – President and Chief Executive Officer

Jose Gordo – Senior Vice President of Finance

Analysts

Timothy Horan – Oppenheimer & Co.

Operator

Good day and welcome to the magicJack VocalTec Fourth Quarter and Fiscal Year 2012 Earnings Conference Call. Today’s conference is being recorded. Joining us today on the call are Gerald Vento, Chief Executive Officer; and Jose Gordo, Senior Vice President of Finance.

At this time, I’d like to turn it over to Mr. Gordo. You may begin, sir.

Jose Gordo

Thank you, operator. Good afternoon and welcome to the magicJack's fourth quarter and full-year 2012 earnings call. We will be discussing the results announced on our press release issued after the market close today. I’m Jose Gordo, Senior Vice President of Finance at magicJack. With me on the call today is Jerry Vento, President and CEO.

During the call, we may make statements related to our business that may be considered forward-looking in nature under Federal Securities Laws. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent dates. These statements reflect our current views regarding the future and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

For discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our Annual Report on Form 10-K which was filed with the SEC this afternoon. Also, during the course of today's call, we will refer to certain non-GAAP financial measures. There is a reconciliation schedule showing GAAP versus non-GAAP results currently available in our press release issued after the close of the market today, which is located on our website at www.vocaltec.com.

With that, I would like to turn the call over to Jerry.

Gerald Vento

Thanks, Jose. Good afternoon and thanks for joining the earnings call to discuss our fourth quarter and full-year 2012 financial results. Having been a member of the magicJack Board of Directors since 2008. I’m excited about the opportunity to lead the company and build upon the strong foundation that Dan Borislow, the Founder of the company has created over the last few years. Since officially becoming the CEO at the beginning of the year, I’ve done a full review of the operations evaluated our strategic and financial positioning within the marketplace and began to chart the course for the future. And while I believe our stock is significantly undervalued relative to any meaningful metric, I’m pleased to report that the company is in excellent shape to continue its strong growth in 2013.

Jose will cover the financials in greater detail shortly, but I want to review a few metrics that underscore our outstanding financial performance in 2012. For the year, we grew total revenue by 43% to $158.4 million and access rights revenue by 20% to $43.9 million. We generated $43.6 million in GAAP operating income and $55.9 million in net income, relative to $4.6 million operating loss and $0.8 million in net loss for 2011. We generated $65 million in free cash flow for the year. That's the 167% increase over 2011, and we ended the year with $38.3 million in cash and no debt. All of these results were the highest that magicJack ever achieved.

During 2012, we significantly enhanced our market position and firmly established magicJack as the top consumer voice service provider in the U.S. From an industry perspective, we continue to benefit from the growth of broadband, the proliferation of smartphones, and tablets worldwide.

magicJack is well positioned to capitalize on these trends with our award-winning products that provide users with VoIP solutions for residential, small business, and international customers.

During the fourth quarter, we received the 2013 Frost & Sullivan North America Consumers' Choice Award for Overall Best VoIP Service Provider. MagicJack was ranked number one in all five categories measured, including overall quality, ease of use, billing practices, value and pricing.

Frost & Sullivan also reported that magicJack ranked four in market share for VoIP customers in the United States only behind AT&T, Comcast, and Time Warner. I’m also pleased to report that RadioShack named magicJack as its consumer Electronics Vendor of the Year provider. We have a longstanding relationship with RadioShack and look forward to continuing our growth with them and our other retail channel partners in 2013.

Turning to product development, since 2008 magicJack has had a track record of successfully developing, rolling out, and marketing high quality and low cost easy to use products. I believe our research and development capabilities are among the best in our industry. I’m very pleased to announce that in Q2, we will launch the new magicJack PLUS our newest consumer device. We expect to begin rollout and mass marketing through direct sales and our channel of loyal retailers towards the latter half of Q2 2013.

The new magicJack PLUS will have superior voice quality as compared to the magicJack PLUS. It will also have three times the processing power of the prior magicJack PLUS and two times in memory capacity. The new magicJack PLUS will enable consumers to make and carry two simultaneous calls at the same time and consumers will also be able to attach Wi-Fi for the new magicJack PLUS and turned it into a router or use Wi-Fi as a source to access the Internet and make calls. The new magicJack PLUS will also have two USB ports, offering consumers the ability to plug in a 4G source. And in the second half of the year, we will start reselling competitively priced 4G data card.

Finally, through the new magicJack PLUS, consumers will be able to add and connect a portable DECT phone or a cordless phone and make simultaneous calls. The new magicJack PLUS will also be a new affordable device for small business applications. It will be able to wirelessly connect up to 10 business phones in an office environment.

Turning to the magicJack APP. In late 2011, we introduced a mobile voice app for use on an iPad, an iPhone, iTouch, or an android device, as well as on a PC. It allows users to make calls on their devices when connected to Wi-Fi. The magicJack APP has excellent features, including superior voice quality and ease of use. We offer a freephone number for incoming and outgoing calls, the ability to call landline and/or other mobile phones for free, and we have live online customer care. We’re currently working to add full texting capability to that app.

The app has had over eight million activations since its launch. And we expected in the second half of 2013, we’ll begin charging a subscription service for usage of the app. And while we do not expect revenue in 2013 from sales of the app to be material, our objective is continued to grow customer base for revenue contributions for the future.

On our Q1 earnings call, I will provide further detail on our pricing, marketing, and rollout strategy for the new magicJack PLUS, as well as the subscription model for the app. In terms of what's next in the product line, we have a number of products in the innovation stage, which I look forward to discussing in greater detail in the future.

Let me make a comment about Dan Borislow, his visionary ways that paves the way for what I believe is a terrific future with great upside potential for this company. Dan has been very supportive of me in the last 90 days of transition.

As you may know, Dan resigned from the Board of Directors and from his position as CEO in December 2012. However, I’m pleased to announce that Dan has transitioned into a consulting role in the area of product development and innovation. And the company is currently in discussions with Dan on the terms of that arrangement.

As you'll hear in a few moments, we have disclosed in our Form 10-K that during our 2012 audit, we identified a material weakness in our internal controls relating to our accounting for income taxes. While we will be implementing in aggressive remediation plan to address this issue as promptly as possible, we want to emphasize that we received a clean audit opinions on our financial statements from our independent external auditors and that management believes that our 2012 Form 10-K fairly represents in all material respects, our financial results, and the positions for the periods presented.

Next, I'm pleased to announce that Rich Harris has joined our Board of Directors. Rich has a strong operational and management experience along with significant expertise with telecommunication sector. I look forward to working with Rich in the future.

In addition, I would also like to announce that Donald A. Burns who has been on the Board since 2010 has become Chairman of the Board of Directors. Don has provided me with good counsel and has been a valuable contributor to the company since its inception.

With that, I’d like to turn the call over to Jose to review our financial performance and outlook. As we announced earlier today, Jose has joined magicJack as Senior Vice President of Finance. He has been serving as a consultant to the company since January 1, and will work directly with me and the rest of the management team on various strategic financial and operational matters. Jose?

Jose Gordo

Thank you, Jerry. Good afternoon, everyone. We are very pleased with our storng fourth quarter performance which contributed to what was a record year for magicJack as we set new milestones across the board in a number of financial categories.

I would like to provide more details on the company’s fourth quarter and full-year 2012 financial results. Let me begin with the fourth quarter starting with the P&L. We reported total net revenues of $41.4 million, an increase of 56% on a year-over-year basis.

Revenues from magicJack sales increased 88% to $19.1 million, primarily due to the demand from magicJack PLUS, which was launched in September 2011. Access rights renewal revenue was $12 million, an increase of 19% on a year-over-year basis and accounted for 29% of overall revenue.

The increase in our net revenue for the quarter was driven by various factors, including the recognition of revenues on magicJack PLUS sales that began in September 2011, higher average unit prices, magicJack access rights renewal price increases which became effective in early 2012, and a higher number of units sold directly to consumers at retail prices. We are particularly pleased with the growth of access rights renewal revenue, since it represents the recurring potion of our business and is becoming a more important component of our overall revenue stream.

Prepaid minute revenue during the quarter was $3.3 million and access and termination charges were $3.4 million. Other revenue contributed the remaining $3.6 million of total revenue for the quarter.

Turning to profitability, GAAP operating income for the fourth quarter was $16.2 million, compared to a GAAP operating loss of $6 million for the fourth quarter of 2011. GAAP net income for the fourth quarter was $22.3 million, compared to a loss of $4.7 million for the same period last year.

GAAP diluted earnings per share for the fourth quarter was $1.17 based on 19 million weighted-average diluted shares outstanding, that compares to a loss per share of 26% based on 21.8 million weighted-average diluted shares outstanding for the same period last year.

Turning to the balance sheet, as of December 31, 2012, magicJack had cash and marketable securities of $38.3 million and no debt. Deferred revenues increased to $125.2 million as of December 31, 2012, compared to $117.8 million as of December 31, 2011.

Taking a look at our results on a non-GAAP basis, adjusted EBITDA was $18.3 million, compared to a loss of $400,000 for the same period last year. Non-GAAP net income was $17.3 million for the fourth quarter versus a $900,000 loss for the same period last year.

Non-GAAP net income per diluted share for the fourth quarter was $0.91 based on 19 million weighted-average diluted shares outstanding, that compares to a $0.04 loss per share based on 21.8 million weighted-average diluted shares outstanding for the same period last year.

In terms of free cash flow, I’m pleased to report that we generated $20.8 million in free cash during the fourth quarter, which was partially offset by the repurchase of 627,000 shares for a total of $13.5 million. A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in our earnings press release from earlier today.

Turning to a quick summary of results for the full year 2012; total net revenues was $158.4 million, an increase of 43% on a year-over-year basis. Revenues from magicJack sales increased 66% to $73.8 million. Access rights renewal revenue was $43.9 million, an increase of 20% on a year-over-year basis and accounted for 28% of overall revenue.

GAAP operating income was $43.6 million, compared to a GAAP operating loss of $4 million in 2011. GAAP net income for the full-year of 2012 was $55.9 million, compared to a loss of $800,000 for the same period last year. GAAP diluted earnings per share for the full year was $2.73, based on 20 million weighted-average diluted shares outstanding. That compares to a loss per share of $800,000 based on 23.3 million weighted-average diluted shares outstanding for the same period last year.

Taking a look at our full-year results on a non-GAAP basis, adjusted EBITDA was $47.1 million as compared to $8.7 million in 2011. Non-GAAP net income for the full year was $44.2 million, as compared to $5.5 million in 2011. Non-GAAP net income per diluted share for the full year was $2.21 based on 20 million weighted-average diluted shares outstanding, as compared to $0.24 per share based on 23.3 million weighted-average diluted shares outstanding in 2011. For the full year, the company generated $65 million in free cash flow, up 166% compared to $24.4 million in 2011.

Turning now to our previously authorized $100 million stock repurchase program. In the fourth quarter, we repurchased 627,000 shares at an average price of $21.49 per share for a total of $13.5 million.

For the full year, we repurchased a total of $3 million shares at an average of $18.69 per share for a total of $55.9 million. Combined with the $32.2 million we used to repurchase shares in 2011, we have now completed a total of $88.1 million in repurchases over the past two fiscal years at an average price of $15.74 per share, and still have the ability to complete the remaining $11.9 million in repurchases authorized under the program as of December 31, 2012.

As we have said, we believe our stock price is significantly undervalued. As a result, we may opportunistically evaluate additional share repurchases in the future both under the existing room remaining under the current program and under any new program that our Board of Directors may approve in the future.

In general, we believe we have one of the strongest balance sheets in our industry. And combined – and when combined with our strong free cash flow generation, this gives us significant flexibility to increase shareholder value.

Our Form 10-K, which includes more detailed financial and other information on our Q4 and full-year 2012 results, was filed with the SEC this afternoon. As discussed earlier by Jerry, during the course of completing our 2012 audit in early 2013, we identified material weakness in our internal control over financial reporting relating to our reviewing and monitoring accuracy of the income tax provision and calculation. Although the material weakness resulting any material misstatement of certain tax items as further described in the Form 10-K. The material misstatement was impacted and corrected prior to the issuance of our consolidated financial statements for 2012.

As included in the Form 10-K, our independent external auditors provided us with a clean audit opinion on our 2012 financial statements. And management has included that the consolidated financial statements included in the 10-K fairly present in all material respects the company's financial position, results of operation, and cash flows for the period presented.

We plan to implement an aggressive remediation plan in 2013 to address this material weakness as expeditiously as possible. This plan includes reinforcing our existing processes for the resolution of significant tax matters and for determining, documenting, tracking, and adjusting our deferred tax assets and liabilities that fully analyze the issues and provide sufficient authority for our tax positions going forward.

Turning to our financial outlook; as Jerry discussed, we are still in the process of finalizing the launch details of the new magicJack PLUS and the subscription model for the magicJack APP. We intent to issue full year guidance on our Q1 earnings call when these items are completed. Our first quarter results will reflect no sales in the new magicJack PLUS, which are expected to begin in the latter half of Q2 2013, and no sales of the magicJack APP, which are expected to begin in the second half of 2013.

With that, I would like to turn the call back over to Jerry. Jerry?

Gerald Vento

Thanks, Jose. In closing, we are pleased with our fourth quarter and year-end results. We have a strong balance sheet. We have a new product launch. We have a product development pipeline that we believe will pave the way for continued growth going forward. We believe these factors position us well to continue to generate long-term shareholder value.

So with that, I would like to open the calls to your questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And we’ll take our first question from Tim Horan with Oppenheimer.

Timothy Horan – Oppenheimer & Co.

Great quarter. The renewals, is that the – sorry the access rights renewals, that’s the right for customers to use either a one-year or five-year license or is that with that line item is?

Gerald Vento

That’s correct, Tim.

Timothy Horan – Oppenheimer & Co.

And your renewal rate has that been kind of pretty steady throughout the year, or did it change much in the fourth quarter, it was a good tick up here, say, what caused the tick up in the renewal rate?

Gerald Vento

We haven’t really in the past disclosed the actual renewal rate. I think what we would say is that as we continue to grow in our customer base grows and matures, we would expect that rate to continue to move in a positive direction.

Timothy Horan – Oppenheimer & Co.

But – so what caused the pickup in the quarter, was it volume related, or was it price related?

Jose Gordo

You probably have a little bit of both in there.

Timothy Horan – Oppenheimer & Co.

All right, gotcha, gotcha. And then the same thing on the device side, for the – basically your hardware sales were, were the volume you sold in the fourth quarter were they similar to volumes you sold in the last couple of quarters, were they down materially up, and or did they change materially up, I guess what you’ve seen in the prior two quarters?

Jose Gordo

I would say, they've been pretty consistent with the prior quarters.

Gerald Vento

Tim, this is Jerry. We don't put out unit metrics by quarter. We've been sticking for dollars, so we had $34 million in direct sales for the year. We had $39.7 million in retail sales for the year. So we had a great year, not just the great quarter.

Jose Gordo

And if I'm just – I just have the quarterly numbers breakdown here in front of me by devices. And I can give you a direction, it would be the one thing that I think is generally seems true of the fourth quarter is that, we tend to move more volume generally and specifically on the direct side, because we tend to launch for promotions. So relative to Q2 and Q3, we had more device sales on the direct side than in those two quarters.

Gerald Vento

And there was a large pickup from large sales of magicJack PLUS. The renewals also went up in December 2012 and January 2013 because of the sales, direct sales and the promotions we are running.

Timothy Horan – Oppenheimer & Co.

Gotcha, gotcha, helpful. Do you have enough inventory of the magicJack PLUS is continue, so just a way to understand the sales of devices have been fairly steady in the fourth quarter similar to what you saw in the second and third quarter with the actual number of devices in. And I guess do you have enough devices to continue with that sales rate through the first and second quarter?

Gerald Vento

I’d say, yes, we've been managing our inventory pretty well, knowing that in the second quarter, we're going to have a new product launch. But we've been doing quite well in terms of managing that inventory through the first few months of this year at least.

Timothy Horan – Oppenheimer & Co.

Okay, great, great. And the new device, do you have a rough idea of how much inventory you are going to have in the second quarter? And into the third quarter are you going to - are you going to basically, we are kind of siting blind here just trying to do some projections for the next couple of quarters, and any kind of any guidance you can give would be great. And I guess related to that you basically already know the first quarter numbers at this point. So if you give us some directionally what’s going on, what revenue and EBITDA for the first quarter? That would be helpful. Thanks.

Jose Gordo

Yeah, Tim, we thought you'd ask that. So I think what we say is, in terms of guidance for the full year, we really do need to finalize the planning and the details of launch and get comfortable going past. I think for the first quarter what we feel comfortable telling you is that, revenue will be directionally materially close to last year’s Q1. And that we, that our profit numbers i.e., non-GAAP operating income, non-GAAP EPS will be, or what I call adjusted EBITDA, excuse me, and non-GAAP EPS will – we expect those to be above last year’s results.

Timothy Horan – Oppenheimer & Co.

Okay, great.

Gerald Vento

And remember Tim, the way that deferred revenue goes, the sales we made in 2012 come into 2013 just as you’ve seen historically in 2011 when the magicJack PLUS was launched, we went into 2012 with a pretty significant deferred revenue. But look what we proposed and mentioned on the call in our script was that, in the first quarter earnings call which isn’t very far away, we’ll have better visibility on a number of things, the launch date, the – some of the pricing and marketing approaches, the – really the design for the magicJack APP, and we'll talk in greater detail about, obviously the rest of the year and the financial expectations for the rest of the year.

Timothy Horan – Oppenheimer & Co.

Great. And then on the tax rate, sorry lost you there a little bit there was fairly large one-time gain, it looks like here in the quarter. What was that gain related to? And kind of – what type of tax rate should we think about going forward at this point? It sounds like are you running out your NOLs at this point?

Jose Gordo

Tim, I think there's a lot of work obviously went into our various tax positions in the 10-K. And what I think we could say is our tax rate going forward is not really ascertainable with precision at this time, we’ve got a lot of expertise on it and we will get it right. There’s a reason why we didn’t put a number in our MD&A on that is, because we are still working through a number of issues relating to the NOLs.

And so directionally though we think we are – we have either used up or we'll use up intra order the U.S. NOLs. And then I think you are aware, we have significant Israeli NOLs and we're going to do our best to maximize the use of those. As it relates to the one-time pickup, that's really about the fact that because we become more profitable, we are in essence able to bring that deferred tax asset on our books that year Q4 had been unusable.

Timothy Horan – Oppenheimer & Co.

Gotcha. But that really didn’t affect the cash in anyway, correct?

Jose Gordo

That's correct.

Timothy Horan – Oppenheimer & Co.

So going forward we should think about you as the taxpayer on one form or another. And do you think you'll be kind of a more of a U.S. tax rate, or will it be more Israeli-based tax rates?

Jose Gordo

I mean I hope you don't think just take into account down the road, but I think we need – I think we need loopholes on that until we can give us a real clear picture rather or not give you something that’s imprecise.

Gerald Vento

We got a complex tax structure Tim as you know, and I’ve only been on job for like 90 days, so I think there will be more visibility in the future on that issue.

Timothy Horan – Oppenheimer & Co.

Right. But I guess the problem with the audit, while the profit controls is on the tax side rate, nothing else?

Jose Gordo

Yeah, yes. But I emphasize due to the help of our auditors, we got the numbers right, and we’re going to fix that material weakness. So I think you can give align the numbers that are in there, and as I said, if you take the fact that we believe we potentially use that the U.S. NOLs and in certainly from U.S. perspective we will be U.S. cash taxpayer going forward, and in Israel like I think that I’d summarize that we are going to do everything we can to get the benefit of those analog as well.

Gerald Vento

We still have to file the 2012 tax return and then we’ll obviously know more as we filed that.

Timothy Horan – Oppenheimer & Co.

Gotcha. And then just on some of the expense line items, your advertising was kind of well below, we kind of have been expecting and I guess fourth quarter of last year you spent a $11 million, you spent below $4 million this quarter, is that a good run rate, so you launch a new device or how should we – and even on the first quarter of this year is $8.7 million, I mean if you’re going to do EBITDA just above the first quarter, we would seem like this got material change in the model here from the fourth quarter to the first quarter obviously just did $18 million of EBITDA versus the $5.4 million on the first quarter of this year. So if you think you are going to do, are you saying it’s a little bit above the first quarter, materially above and you had some pretty big gap $5 million to the $8 million that we just did in the fourth quarter?

Jose Gordo

We can get a little bit of lead way there, we rather not guide you. We feel comfortable with the word about. I know it's not what you want to here, but we feel like, we probably are more prudent to close out the quarter, really get our arms on any adjustments one-time or others that need to get made and probably as I said put more thought into the full-year guidance.

Timothy Horan – Oppenheimer & Co.

Yeah, gotcha, but you're talking the material change of the fourth quarter into first quarter, talking about, could you just spend a lot more I guess in the first quarter versus the fourth quarter, but I understand what you’re seeing on the revenue side, but the expenses we should have a rough idea at this point?

Jose Gordo

Yeah, I don't have the answer. We don’t have the advertising spend for Q1 right in front of us at this moment. But just directionally if you look at our history when we launch a product and we're very active with it, we tend to spend a lot more than. And then as we end up preparing for the launch of the new device, we end up spending less. So I think that's what you're seeing in the numbers. And I think that’s probably going to be directionally consistent with Q1 without giving you a specific quarterly number.

Timothy Horan – Oppenheimer & Co.

Okay. And Jerry, where are you with maybe bringing some more of the management team, we never have the CFO on the call here, I don't think you’ve had a COO or Chief Marketing Officer or Chief Product Officer, can you maybe talk about where you are filling some of the other people?

Gerald Vento

Yeah, you noticed that we got strength on the bench on the call today, Jose is doing a job with financial operations. We’ve added him since the first of the year, there will be more adds. We’ve got a great management team. You’ve been good enough to visit several of our facilities and spend time with the management team across the country, so you know we have on the bench, and you’ll obviously see us strengthening that. The objective of this operation is to continue with these very positive results to continue to launch interesting products that are easy to use, and simple to buy, and very economical.

Dan has done a great job of creating a very disruptive technology in the marketplace and doing an extraordinary job of getting that product on the shelf of some of the great retailers around the country, and the adoption rate continues to remain strong. Look at what we're doing with these downloads and registrations on the new magicJack APP that we have and even begun to monetize yet. So that takes good people. I guess is back to your point and those good people do exist today in magicJack and there will be more of them, and I'll be talking about that a little bit more in the near-term.

Timothy Horan – Oppenheimer & Co.

Great. Well, maybe we can talk after the call, but obviously it was a great quarter, I really appreciate. Oh, sorry, lastly the APP, when you're going to have the text and capability with the APP, and I think that's going to gaining factor for charging on the APP?

Gerald Vento

It is, you are right. The APP with texting thing, we believe is the second half of this year, I'll be in a position I think on the May call, the first quarter earnings call to discuss in greater detail the pricing scheme, the launch schedule, et cetera. But we're very, very excited about that opportunity, because about 50% of those downloads, so those eight million downloads there in the U.S., and the rest are basically worldwide. So we like the fact that that app has worldwide appeal and it enhances the opportunity to sell more of the new magicJack as well. So one, we really strongly believe compliments the other if demographic is downloading that app, that same demographic whether it’s a family member, whether it’s a friend or business colleague is also interested in the magicJack PLUS product.

And frankly our voice quality is extraordinary, and I’m not just saying that Dan Borislow was not just saying that. We have independent verification of that, in terms of getting the Frost & Sullivan Award in 2013 for not just voice quality, but ease of use, pricing, customer care and that really means something. And I think you’ll see when we launch the new product in Q2 that the voice quality on the new magicJack PLUS is going to do exactly what I described in my script.

Timothy Horan – Oppenheimer & Co.

And lastly, why don’t you give volumes, basically you are the only company I follow that that doesn’t give volumes. And just curious how the rational it is, and may be – where you give volumes going forward at some point? Are may be at least kind of customers on the contract, there are some kind of measurement?

Gerald Vento

I think it’s a fair point, and I think it will be on the tables in terms of what metrics, operating metrics we disclose going forward. No one that show seems that went out, but I think for now we wanted to keep some level of consistency with how we’ve done it, and not move too quickly on that and sensitive to any competitive information we might be putting out there, so that we’re not ready to. So I think we’ll evaluate that and I think we can give you more clarity on what metrics we’ll disclose going forward on future calls.

Jose Gordo

Tim, we are also trailing out different pricing schemes, and we don't want people to know right now how well, we are doing in any one of those. But as the month goes on and we get to the next earnings call, we'll talk a lot more about that. And give consideration to some of the metrics that you’ve talked to us about reporting on. I think if you just look at that what we've done in this recent release for the quarter and the year. And the script for the call and some of the metrics that we've disclosed both GAAP and non-GAAP, you see that we begun a process of transparency that hopefully in order to have benefit.

Timothy Horan – Oppenheimer & Co.

Great. Thanks a lot guys.

Operator

(Operator Instructions) And it appears there are no further questions at this time. Mr. Vento, I’d like to turn the conference back to you for any additional or closing remarks.

Gerald Vento

Just thank everyone for participating today and look forward to the first quarter earning call coming up in May. Thank you.

Operator

That does conclude today's conference. We appreciate your participation.

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