RetailMeNot Inc. (NASDAQ:SALE)
Q2 2014 Earnings Conference Call
August 4, 2014 04:30 PM ET
Mike Magaro - VP, IR
Cotter Cunningham - President and CEO
Doug Jeffries - CFO
Deb Schwartz - Goldman Sachs
Brian Pitz - Jefferies
Mark Mahaney - RBC Capital Markets
Ralph Schackart - William Blair
Stephen Ju - Credit Suisse
Blake Harper - Wunderlich Securities
Good day, ladies and gentlemen, and welcome to the RetailMeNot Second Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only more. Later, we will have a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.
I would now like to turn the call over to Mr. Mike Magaro, Vice President of Investor Relations. Sir, the floor is yours.
Great, thank you. Welcome everyone to RetailMeNot's second quarter 2014 earnings conference call. With me on the call today are Cotter Cunningham, our Chief Executive Officer, and Doug Jeffries, our Chief Financial Officer.
Before we begin, I would like to take this opportunity to remind you that during the course of this conference call, management may make forward-looking statements, which are subject to various risks and uncertainties. These include statements relating to expected financial results such as net revenues, adjusted EBITDA and net revenues per visit as well as non-financial metrics such as visits to our Web site, the mobile application downloads and app sessions. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.
Also, I would like to remind you that during the course of this conference call, we may discuss non-GAAP measures when talking about our performance. Reconciliation to the most directly comparable GAAP financial measures are provided in the tables in the earnings release issued today and available on our Investor Relations Web site. We have also posted a management commentary on our Investor Relations Web-site which discusses our quarterly financial and operational results in detail. This management commentary was developed to provide investors and analysts with additional detail in advance to the quarterly conference call and will not be read on the call. During the call today, we will provide prepared remarks before hosting the Q&A session.
With that, I will now turn the call over to Cotter.
Thanks, Mike, and thanks everyone to our joining us today to discuss our second quarter 2014 financial results. RetailMeNot reported another solid quarter, with consumer engagement expanding across channels including mobile, e-mail and Web, and continued strong growth in our key markets. We continue to be very optimistic about the long term potential of our business and remain focused on the key elements of our growth strategy, expanding consumer engagement, increasing awareness of our brands, and expanding our product offering organically and through acquisitions.
Turning to our results in the second quarter, we once again saw strong top line growth in margins. Total net revenues for the second quarter were $59.5 million. That’s an increase of 37% compared to the same period last year. International net revenues increased 57% to $13.5 million versus last year, and international net revenues now comprise 23% of total net revenues, and that’s up 20% versus the same period a year ago.
Mobile net revenue, including our in-store platform, surged to $10.7 million, and that’s up 114% from the same period a year ago. And we also delivered adjusted EBITDA of $19.7 million or adjusted EBITDA margins of 33%, while continuing to investing in our long term growth.
Our Web traffic in the quarter grew to 154 million visits, of which 35% came from mobile devices. We did see our organic search rankings impacted beginning mid-quarter and while we’ve seen a partial recovery over the past two months in overall organic search rankings, we're not back to the growth levels we were seeing in the first quarter. Overall, organic search represented 64% of our total traffic on our Web sites for the quarter, relatively consistent with prior results.
As we’ve discussed recently, 2014 is a very important time in the growth and evolution of our company. We’ve achieved much success to-date through our quantitative test and learn approach to digital marketing, establishing direct relationships with our top retailers and building an advanced technology platform that together have allowed us to create significant scale in the digital marketing segment.
Today we work with 90 of the top 100 Internet retailers, experienced over 625 million visits during the last 12 months and have nearly 23 million e-mail subscribers, 18 million mobile downloads and in-store geo-location capabilities in the combination of nearly 15,000 malls, shopping areas and other venues. Our scale has provided us with strong revenue growth and consistent profitability.
We are strong believers in the saying what got you here won’t get you there and we continually challenge ourselves to look for new ways to evolve and expand our business. We’ve thrived in a very dynamic segment of the economy. Retailers are under an increasing pressure to reach consumers in the most effective efficient way possible. We believe that the a very large retailer budgets that we that we’re traditionally focused on print media, are just now beginning a meaningful shift towards digital marketing solutions. At the same time, continued progress and the availability of technology and data analytics tools and services provide new opportunities to better serve consumers and increase the value of digital marketing retailers.
This is our opportunity. This is where we will build a very large business. To do so, we will continue to aggressively strengthen our teams and technology base to further enhance our ability to attract consumers and expand our retail product offerings.
From a consumer perspective, this means increasing engagements and developing more knowledge of our consumers, while continuing to advance our ability to deliver the most relevant offers and content in the context of their current shopping needs.
During the past few quarters we’ve been building on our personalization infrastructure, both via e-mail and geo-targeting and have begun delivering offers through our mobile app and e-mail that reflect both explicit and implicit user signals. Increasing the use of our proprietary information on consumer shopping behaviors and preferences will only strengthen our value proposition, enabling us to provide a personalized, compelling and in-context user experience across all channels.
Here are a few additional consumer enhancements to our product offerings from the second quarter. We released a new content algorithm that now organizes those offers based on user signals to make our readers’ best offers easier to find. We expanded high engagement content with the addition of thousands of new offers from quick service and other restaurants which help drive increased visit frequency to our sites; we deployed a new e-mail infrastructure that enables us to provide a richer, more personalized consumer experience to our nearly 23 million e-mail subscribers; and finally, we released the RetailMeNot Amped App, which together with our other platforms gives consumers the ability to access their favorite retailers with seamless integration across devices.
In short, we will continue to invest behind providing consumers with high quality content that engages them with timely and contextually relevance. Our data analytics and mobile infrastructure will be at the center of our ability to deliver on this front and these continue to be in our top investment areas.
From a retailer perspective, our focus is on creating platforms that will allow retailers to efficiently deliver targeted offers and other branded content to consumers anytime, anywhere and to drive their consumer acquisition brand and overall financial goals. Our current mobile platform comprised of our mobile Web-sites and mobile apps including geo-location capabilities and our in-store offer delivery platform, represent the initial installment toward our long term goal of broadening our retailer solutions to help them expand their customer base, enhance their brand and efficiently grow their business.
While today’s consumers have a mobile first mindset, retailers have been slower to shift funds away from traditional media towards digital solutions using mobile. We believe this is quickly evolving and we continue to see incremental progress as our second quarter set a record for in-store revenues.
Here are a few additional retailer focused initiatives from the second quarter. We are expanding the services we provide retailers through our mobile app. During the second quarter, we tested two digital circular formats with over 20 retailers and saw positive consumer engagement across both. We expect to further expand our content and promotional services to retailers with our new mobile app release planed later this year. We also began opening up our proprietary RetailMeNot AB test offer testing platform to a few top pay retailers. Even largest retailers do not have the resources or infrastructure to build out testing platform, which forces many to struggle with visibility into their customer base and the optimization of their marketing channels.
Our testing platform enables them to understand how different offer types, like how a specific dollar amount off versus percentage off will perform given a particular desired outcome such as order size, new customer acquisition or ROI. We’ve now begun to expand this availability of our AB offer testing service to a broader set of retailers in the third quarter.
And lastly, we’re seeing stronger commitments from retailers to expand the scope of our relationship across channels. For example, a large big box retailer recently ran non-offers over a three month period on RetailMeNot in-store platform with a goal to increase sales, focus on new customer acquisition and drive foot traffic to their brick and mortar locations. The results across all three initiatives were so compelling, they’ve now committed to a seven figure deal for the second half of 2014. We believe this example has the potential to become the norm for hundreds of retailers who are looking to leverage our digital solutions to drive their Omni-channel success. By serving the needs of retailers in this way, we clearly differentiate our services and expand our role in helping our retailers build their business.
Before I turn the call over to Doug, let me directly address the topic I know is top of mind with our investors; that is the specific impact of the organic search changes on our financials going forward. First, we think we’ve seen the worst of it. This is evidenced by the fact that organic search results have also improved nicely the initial change but this unexpected change did reduce the growth rate of our organic search traffic. The reduction in traffic was far from the amount that many people speculated but has created a headwind against our existing plan for the second half of the year. To be specific, based on our current observations, we project that top line impact for our full year outlook will be roughly 5% of projected revenues and the impact on the second half outlook is approximately 8%, when compared to the midpoint of our guidance in May.
While financially it’d be great to get organic search growth back to our prior levels we don’t think it’s prudent to plan for that. In the short term this will lead to some margin compression as we continue to invest for the long term. So you will see that impact in our revised forecast for the rest of the year. We’re confident that the long term outlook for continued rapid growth in both revenue and adjusted EBITDA remains unchanged, albeit from adjusted base that Doug will now walk you through.
Thanks Cotter and thanks everyone on the call for joining us today. As we provided details on our financial results for the second quarter in our management commentary posted to our investor Web site, I’d like to focus my comments today on current trends and our outlook for the rest of 2014.
Before turning to guidance though, I want to add to what Cotter just discussed and look at some of the recent trends we’re seeing and how they are influencing both traffic growth and monetization. Strong momentum early in the second quarter allowed us to deliver expected levels of revenue growth, profitability and strong consumer metrics, despite the disruption at our page rankings and organic search traffic, which occurred mid quarter. Overall traffic grew 27% in the second quarter as compared to 26% in Q1 of this year, reflecting the very strong growth we saw prior to the organic search changes.
Following the page rank disruptions in the second quarter; we’ve seen some shifts in our traffic mix that have resulted in lower monetization levels than we’ve seen in recent quarters. These trends include a reduction in traffic growth from organic search. While we’ve seen some recovery in organic search rankings organic traffic growth rates are not yet at the levels we experienced earlier this year. Organic search business have high conversion rates and strong monetization, though slower growth rate from this traffic source has an outside impact on monetization.
Second following the organic search changes, we’ve seen an increase in the proportion of our organic traffic that is directed to un-monetized offers. And lastly, we’ve seen continued strong growth in our non-organic traffic sources including email, social media and direct navigation to our Web sites, which has helped to mitigate the impact on total visits of slower traffic growth from organic search.
Let me now turn to our third quarter guidance and update our outlook for the full year 2014. Given the range of potential outcomes, we are factoring in more variability in our top line outlook than we would normally at this point in the year. And in this context we intend to be thoughtful about the level of our investments. While our top line growth outlook reflects some near term headwinds, we believe the long term outlook for our business remains unchanged. Accordingly, we are continuing to invest against the long term opportunity. As a result, we currently expect somewhat lower EBITDA margins for the full year to ensure we continue to make the necessary investments to achieve our long term growth objectives.
Our investment focus will continue to be on growing our brand and building relationships with consumers through web, email and our mobile app. Growing brand awareness and direct consumer engagement is consistent with our long term strategy of expanding our solutions for helping retailers connect more effectively with consumers wherever they shop. This strategy also has the ancillary benefit of reducing our reliance on traffic from organic search.
For the third quarter ending September 30, 2014, we expect total net revenues in the range of $53 million to $57 million or growth of 16% at the midpoint. We expect adjusted EBITDA to range between $14 million and $16 million or adjusted EBITDA margins of 27% at the midpoint.
For the full year 2014, we are revising our total net revenues outlook to $262 million to $270 million or growth of 27% at the midpoint, which is back to the guidance range we provided at the beginning of the year. We expect adjusted EBITDA to range between $87 million and $95 million or adjusted EBITDA margins of 34% at the midpoint.
Our lowered outlook for the second half of the year is based on the lower monetization we are seeing from shifts in traffic mix and does not reflect any significant changes in commissioned levels or average order size. How these traffic mix shifts manifest themselves in the near term will determine where we fall within our outlook ranges. While our teams continue to focus efforts to improve our overall user experience, which can influence organic traffic growth, the effect of product changes on organic search results can take several months to play out.
For purposes of our outlook, we are current planning on slower rates of growth in traffic from organic search throughout the second half of the year. With respect to other outlook details, there are no major changes to our full year forecast for depreciation and amortization, stock based compensation, CapEx, weighted average shares outstanding or tax rate.
For the third quarter we expect depreciation and amortization expense will be approximately $4 million, stock based compensation of approximately $7 million, CapEx of $2 million, and our weighted average fully diluted share count will be approximately 55.5 million shares. Our effective tax rate will be approximately 48%, reflecting the transition cost of implementing our international corporate structure discussed earlier this year.
Before I turn the call back to Cotter, I wanted to touch briefly on one of our key metrics, net revenues per visit. We expect our sources of traffic and our monetization strategies to continue to evolve. The sources of our traffic will continue to shift over time as our product and other consumer engagement initiatives bring increased traffic directly to our marketplace.
As to other revenue sources, in the second quarter over 9% of our net revenues came from advertising and our in-store products compared to 3% last year. Looking ahead, we expect to see an increasing proportion of our net revenues coming from monetization models that are not directly related to a visit. Accordingly we believe that net revenues per visit metric will become a less meaningful measure of our Company performance over time.
Our guidance currently reflects lower net revenues per visit in the second half of the year based on the shift in traffic sources. We’ll continue to evaluate and adjust our key metrics as needed in the future to provide additional insight into our business trends.
In summary, as we work through some near-term transitions in the second half of the year, we continue to be excited about long-term opportunity. We believe the investments we are making in the business will further strengthen our leadership and competitive position and look forward to updating you on our progress.
Let me now turn the call back Cotter.
Thanks Doug. Before we open the call to your questions. I just want to touch on a few key initiatives for the remainder of the year. First we continued to invest in brand awareness and growing our consumer audience and membership across all channels. Starting this month, we’re launching new television ads that will run periodically through the end of the year. The goal for the new campaign is to increase brand awareness and expand consumer engagement and bring additional exposure to some of our valued retailers.
We’re really excited about the interest we received from retailers to be part of our new campaign during an important holiday shopping period including eBay, Macy’s and Best Buy. Attracting new consumers and growing our audience enables us to better understand shopping behaviors and preferences, which ultimately strengthens the value of our marketplace for both consumers and retailers.
Also we have several initiatives underway that involve partnering with our top retailers to increase multichannel and exclusive retailer offers, especially around key shopping periods like back to school. More exclusives help drive retailers significant initiatives in addition to delivering the high quality content consumers cherish.
To close, in the quarters ahead you can expect to see further signs of our strategic progress as we continue to increase the value we bring to consumers and to our retailers as we work to extend our lead as the largest marketplace for digital offers. We believe our product investments will continue to increase our relevance to a broader set of retailers as we expand our suite of digital marketing capabilities.
You can expect us to consistently grow our share of the billion spent annually by retailers and brands on digital advertising and promotional marketing as consumers and retailers continue to expand their use of digital channels to connect.
With that let me turn the call over to Mike to begin the Q&A.
Thanks Cotter. Operator we’re ready to begin the Q&A portion of the call.
(Operator Instructions). And our first question comes from the line of Deb Schwartz with Goldman Sachs. Your line is now open. Please proceed with your question.
Deb Schwartz - Goldman Sachs
Just two questions. First on the organic rankings, since you haven’t really seen your rankings fully recover yet; one, can you talk about whether or not this is different from search algorithm changes that you have seen in the past? And then similarly what you understand to be happening with this change and why your ranking still hasn’t fully recovered? And then second, with back to school coming up, can you talk about what your back to school strategy is, particularly with in-store, the products that you’re most focused on as well as your marketing strategy around it?
I think in general Deb every search impact is a little bit -- every search change is a little bit different, every algorithm shift has a different impact on us. In general though we don’t see anything in this one that gives us more pause than previous ones or increases our concerns. There are always something that you just have to kind of knuckle down and work through. So I think the short answer is nothing unusual or exceptional in this particular algorithm change versus previous ones.
We have had progress. So far we’re pleased with the results to date. It does take some time. But certainly my goal to get back our rankings like we had prior to the change. And I think its first goal of everyone in our company.
In terms of back to school, obviously the TV campaign I mentioned has a huge impact on back to school. One of the reasons we’re rolling it out now is back to school basically started Friday, as far as we can tell. In terms of traffic and interest in the consumers we’re seeing a nice pick up as people do start thinking about back to school and back school topics. And the stores on our site, they are getting traffic. The things people are looking forward definitely reflects that sort of back to school character. You’re going to see some nice in-store promotion from us and we’ve got some nice things coming out around the back to school timeframe that I think especially sort of use the app nicely. So more to come there but I think -- we feel confident that back to school can be good for us. We all have a new design for the app. With luck, that launches right before the biggest back to school period and so look for that. And then finally one new addition this year that’s different than previous years is we do have the new circular products. We have two that we’re testing and we think both of those resonate nicely with back to school shoppers. So we’re excited to see those in the back to school period. Doug did I miss anything.
The only thing I’d add is just the rollout of the targeted emails. We're starting to utilize personalization in the email process to deliver the messaging that’s kind of appropriate to the circumstances and our really first opportunity to use that will be back to school.
Yes, we’ve done some nice initial campaigns here and obviously as the offers become more targeted to the user’s history and preferences on the site, you see excellent increases in click through and conversion. It’s obviously powerful on several levels so that’s exciting.
Our next question comes from the line of Brian Pitz with Jefferies. Your line is now open please proceed with your question.
Brian Pitz - Jefferies
Two questions; number one you mentioned I think 54% organic traffic. If you have an adjusted number of factoring in the mobile app traffic, I think last quarter you provided a number that was around 50%. Also any color on when mobile becomes more meaningful to the overall results by leveraging that traffic? And then secondly any additional color on international? How is Europe doing compared to expectations and any comments on individual markets? Thanks.
Do you want to take that Doug?
The organic traffic, I think mobile continues to be a fast growing segment for us in terms of monetization of organic search traffic. I think we’re making progress there but it’s slower honestly that we’d like. Conversion is just slow on a small screen. But at the same time we also see a great way to engage. And so Cotter mentioned in his script about for example putting some kind of fast food, casual dining sorts of content on the Web site, that’s particularly attractive to mobile app users and also mobile web users. And so, right now we’re looking at mobile web being a really great opportunity for us to engage people, build brand and convert them to paying customers on the web or the app over the long run.
In the background, the experience that kind of prohibits m-dot, m-Web [ph] capabilities were becoming more mainstream we think -- it just is not as compelling experience as desktop of tablet and so we’re encouraged about the outlook for larger screens coming into the marketplace and I think that could be a factor that helps all of us do better with these mobile devices and conversion and shopping.
And in terms of the international part, obviously 57% year-over-year growth 23% of our total growth. International does represent a nice chunk of our business and something we’ve always been proud of and we're even more -- especially proud of in this quarter. The international properties did not see an algorithm shift as much and certainly it wasn’t so negative to the extent there was any change. It was almost all to the positive. So they had a little bit healthier traffic quarter. So there was some nice progress there. We are always on the outlook for additional countries, additional opportunities to go into either by acquisition or Greenfield as we’ve talked about in the past. So more to come there but I think we’re proud of the international efforts today and congratulations to them.
Our next question comes from the line of Mark Mahaney with RBC Capital Markets. Your line is now open please proceed with your question.
Mark Mahaney - RBC Capital Markets
Doug can I ask you to clarify your comments about the monetization changes in the second half. It sounds like those are -- they’re being created for -- not created but you’re looking opportunistic about new paths to monetization in the wake of these algorithm changes -- Cotter’s comments were that there is nothing unusual in this algorithm change versus the prior ones. And I can’t tell. It sounds like they're more severe if they’re causing you the reassess how you want to monetize -- drive revenue in the future. So, can you just clarify that a little bit? To what extent are these monetization changes driven by these algorithm changes? Thanks.
Yes, so I can say two parts to that Mark. I think the main thing that we’ve been for a while talking about personalization and driving direct relationships with consumers. So this quarter continued part of our strategy and we're starting do those because the revenue contribution from these other initiatives is starting to become more significant. We started to break it out and focus on it. So in-store has been a focus for us for a while. The advertising has been a nice add jump to what our core business has been. Looking ahead though as I said in my comments, we see a potential to grow both of those in terms of their role within our revenue mix.
And so that’s actually incremental revenue through us. So the core Web based business continues to be strong. We’re excited about what we can do with that and including organic search capabilities and recovering those rankings but at the same time as we’re out there working with retailers on their Web businesses we’re expanding that relationship, engaging them more broadly, doing more cross channel work and you start to see the results of that and revenues coming from advertising and in-store. So it’s really is the continuation of the strategy we've had for several quarters now.
Our next question comes from the line of Ralph Schackart with William Blair. Your line is now open. Please proceed with your question.
Ralph Schackart - William Blair
Just curious, can you provide maybe a little bit more color on sort of the linearity of the monetization rates you saw since the Google change? In other words, obviously you took an initial hit and then you deployed the engineers. But has it been sort of trending in a positive direction or has it been sort of choppy since you've addressed the changes.
Yes, I mean I think as we sort of discussed publically after the initial algorithm change, we were able to get back about two-thirds of what we lost within say a month or so. We’ve continued to see progress since then. So I don’t think -- I don’t mean to imply that it’s steady by any means. It tends to come in chunks. But on the whole we’re pleased with the progress we have made today in terms of monetization. I think in general it’s tracked pretty nicely to visits, I don’t see it as being dramatically different. Doug?
I think just to highlight, when the algorithms reset, there was a period we talked about, a few weeks to couple of months following the algorithm change where rankings move around. And we’ve been going through that and we see nice recovery in our rankings. Really no changes we have made. Honestly it's just really kind of the algorithm grabbing the data and doing what it does to figure out who belongs in what position on the search outcome. So that will continue to basically move forward here as the algorithm does what it does.
In the background, we’re kind of continuing to do what we do which is either have a product teams, the content teams just make sure that what we’re doing is competitive and the kind of best experience out there for consumers and despite shifts in algorithms over time, we continue to believe that is the best focus for us and gives us kind of the best opportunity long-term.
Ralph Schackart - William Blair
One more if I could. After this change would you sort of reassess or have you been sort of reassessing -- potentially deploying more SCM or something that would be a little bit more in your control or is it sort of steady she goes with the with the old strategy and sort of have not many changes.
Yes, I think that’s a great question. We've talked publicly I think since the road show that we had a goal of moving people off of SEO and into a more direct relationship. It’s why we’re building the brand. It’s why we’re focusing so heavily on email. And the app too is obviously a great way to extend our brand onto your phone and there is no search engine or any other intermediary in that relationship. You come straight to RetailMeNot when you use the app. So while we certainly want to get the rankings back and we’re working hard to get them, we continue work just as hard on the initiatives that just kind of went through that we’ve been working on literally for the last year to move away from search as the dominant source of our traffic or the majority of our choice a better word and instead have people come to the site directly, have a direct relationship with us. And that’s where we’re putting so much money, time and effort into that. And we’re pleased with the progress we’ve made there. And I think you can only hope to see more there.
Our next question comes from the line of Stephen Ju with Credit Suisse. Your line is now open. Please proceed with your question.
Stephen Ju - Credit Suisse
Cotter, does the impact to your search on the organic search traffic change your willingness to spend on a mobile app instead advertising. I think you mentioned in prior calls that you are in observe and study mode. And secondarily it seems that you should be getting more data on the consumer and mobile versus desktop. So I guess thinking over the longer term, what can you do to offer a more I guess robust new customer versus repeat customer product for your retailer clients?
Stephan if you think about, we love the engagement through mobile app. We get so much more data on consumer behavior and how we can better kind of service their needs because of the direct linkage there. So it’s a big focus for us, we’re looking at ways to increase the installed base. That’s the big focus and we’ve got a new app coming out as Cotter mentioned. So I think it’s going to be interesting time for us to evaluate investment behind app downloads and other source of marketing activities, as we come into holiday season getting that app install base to grow fits nicely with kind of our strategy.
And the other fun thing about an app download -- and to be clear I think we’re still only -- the vast majority of our app downloads are unpaid. So that’s really exciting and that’s been consistent over time. I want to say about two thirds approximately are still unpaid or free.
The other fun thing about app downloads is almost always the consumer gives us their e-mail in most cases, they accept the geo-printing and they favorite over 10 stores typically. So we have a great indicator from the start of that relationship, what stores they like, where they live and their email address. So it’s a great relationship. So we are excited to kind of extend that relationship even further and to grow those even faster.
In terms of having more data on mobile customers, yes you’re absolutely correct. So when we think about targeting, as we talked about earlier for personalization, mobile has better targeting capabilities than email because we have such precise. We know for example if you live in South Boston, there are two targets within a few miles of you as opposed to if it’s an email IP, then typically we might just know that you live in Greater Austin or somewhere like that and it’s harder for us to know what locations are near you. So it’s obviously much better for us, the target focusing on specific stores when we have a mobile relationship with you. So I think we’re working to try to figure out how we can best leverage that and this whole personalization effort I think is an amazing first step to that.
And our last question comes from the line of Blake Harper with Wunderlich Securities. Your line is now open. Please proceed with your question.
Blake Harper - Wunderlich Securities
You had mentioned in your prepared remarks that you had a higher amount of traffic going to un-monetized deals. Could you just remind us where we stand right now in your platform, the number of deals on that are monetized and the percentage that aren’t now?
So it’s still the same percentage. Roughly 40% or so of the out-click on our site are to un-monetized merchants. And the big examples of those of course are like pizza, things like that. That percentage has not changed dramatically but the devil is in the details. And so even if it just shifts to 61 over 60, that can skew the overall data. So yes, it’s small change but not a subtle one.
Blake Harper - Wunderlich Securities
And then one more. You had mentioned that you had about 9% of your revenues now from some advertising and the mobile in-store there and you've done a good job to lay out what the mobile in-store opportunity looks like? But could you maybe just elaborate there more on what you think about as far as far the advertising and potential revenue streams growing there?
Sure. We’ve talked a lot about in-store over the past few years. The in-store to me still represents a significantly larger opportunity for us than the online traditional business we’re in. We’re still in the early innings of that but we love the progress. Every sort of measure we have is up and to the right. We love the growth there. We have great teams on it. We’re proud of them. We’re proud of the work they have done. I can’t say enough about that. Advertising comes in several forms, both on the site and on the app. So -- but it truly is sort of native in appearance, as the popular phrase, basically it just means that -- it’s not necessarily viewed as advertising by the consumer, it is viewed as editorial. Obviously coupons, if you come to a coupon site, coupons are why you are there? So it’s sort of ironic that we have this original form of native advertising.
I think retailers remain interested in finding new and different ways to get exposure to this sort of very motivated audience. And I think we work hard to find ways to introduce them, either through couponing or other sales or anything that they want to promote, buy one get one, et cetera, we want to get them in front of this audience. The new app design, which will come out in just few weeks, goes further in advertising in that it has significantly more opportunities on the home page for retailers to showcase their products and offerings.
And I think you’ll see when you see it and it becomes sort of crystallized, what we’re trying to say here which is by expanding the offerings, by expanding the opportunities, we think there is a great potential chance here, a great opportunity here to sort of further increase the advertising that we’re going to -- advertising opportunity we have with retailers.
Obviously anything on the app is geo-targeted. So that just again further fits into the type of advertising we are eager to et cetera.
Thank you. And we have no further questions in the queue. I would like to turn the call back over to Mr. Cotter Cunningham, CEO for any closing remarks.
I want to thank everyone first of all for their time today. We appreciate the opportunity to update you on RetailMeNot and our second quarter. I want to thank our employees, many of whom are listening to this call for their hard work over the past few months and their ongoing hard work as we go into the super busy back to school and always busy holiday season. And I want to remind all of our investors that we will be out on at a number of conferences in the upcoming few weeks and so we look forward to seeing you there. Thanks again.
Ladies and gentlemen thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Have a good day everyone.