Monster Worldwide's (MWW) CEO Salvatore Iannuzzi on Q2 2014 Results - Earnings Call Transcript

|
 |  About: Monster Worldwide, Inc. (MWW)
by: SA Transcripts

Operator

Good morning. My name is Anastacia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Monster Worldwide's Second Quarter 2014 Financial Results Conference Call. [Operator Instructions] Ms. Andi Rose, you may begin your conference.

Andrea Rose

Good morning, and thank you for joining us on Monster Worldwide's second quarter 2014 conference call. We will have formal remarks from Sal Iannuzzi, Chairman, President and Chief Executive Officer; and James Langrock, Executive Vice President and Chief Financial Officer. In addition to Sal and James, Mark Stoever, Executive Vice President of Corporate Development, and other members of our executive management team are available to answer your questions during the Q&A part of the call.

Before we begin, I'd like to remind you that, except for historical information, the statements made during this conference call constitute forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties, including statements regarding the company's strategic direction, prospects and future results. Certain factors, including factors outside of our control, may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, risks associated with acquisitions or dispositions, competition and other risks discussed in our Form 10-K and our filings made with the Securities and Exchange Commission. With that, I'd like to turn the call to Sal for his comments.

Salvatore Iannuzzi

Thank you. Good morning, and welcome to Monster's second quarter 2014 conference call. This morning, I'm going to discuss our financial results and the progress we're making executing our new transformative strategy. James will then provide additional financial details and our EPS outlook for the third quarter of 2014.

During the second quarter, Monster began aggressively executing our new strategy to better connect people and jobs around the globe. Monster's making great progress against our 3 strategic pillars: reach, connections and solutions, which we reviewed with you on our May 14 strategy briefing. I have several updates to share with you in that regard, which I'll discuss further in a moment. First, let me address our quarterly results. For the first time since the prolonged economic downturn, our North American revenue grew year-over-year. Our client value proposition is strong, and we are continuing to strengthen it with our new strategy.

Summarizing the quarter's financial results. EPS was $0.08, flat to Q1. Cash flow from operations was $25 million, up from $19 million in Q1. EBITDA was $26 million, led by Careers-North America with a healthy 25% margin. Revenue was $194.4 million. In North America, several segments of the business delivered continued revenue improvements in the quarter, including the e-commerce, staffing and newspaper channels, which all achieved sequential revenue growth. And several businesses experienced solid bookings growth, which is an important indicator of future revenue.

Our Government business, for example, was recently awarded a 5-year contract with 5 option years totaling $32 million by the State of Florida Department Of Economic Opportunity. Pursuant to the contract, Monster will implement an online labor exchange and case management system throughout the state. While we are certainly pleased with these developments, they were tempered by the fact that overall revenue was somewhat muted in the quarter. This attributed -- this is attributed to several factors. First, a few of our competitors were more aggressive in the quarter, seeking to win business by reducing prices and continuing to demonetize the industry's traditional classic products. While Monster responded to some degree, we were restrained in our response as to avoid devaluing the brand. Maintaining the brand equity is especially important in light of our new expanded product offering and overall new strategy. Second, and more significant, was that in the quarter, we began executing many of the necessary changes to our sales force to ready them for the long-term success of our new business strategy. As part of this, in the second half of the quarter, we carried out a significant realignment of our mid-market and field sales organizations to bring greater focus around accelerating market expansion. This included a significant change to our account coverage model, and as a result, negatively impacted sales. While we had originally planned to do this more gradually, we are gaining more and more evidence that our new strategy affords Monster a much larger available market opportunity to go after and gain share and grow revenue. And especially in light of the competitive efforts to commoditize parts of our business, we believe it was important to speed up rather than slow down our transition, even at the risk of experiencing some disruption of our short-term sales efforts and revenue. We believe that this decision is correct and have already seen sales benefits in Q3, and are confident it will more than pay for itself in the long-term value to our shareholders. While much of this transition is complete, we do expect revenue in Q3 to be impacted, as revenue in our business typically lags sales productivity by several months. So to be clear, while Q3 revenue will be lower, we do believe the impact is short-term and expect improvement again in Q4. Moreover, this in no way changes our long-range EBITDA commitment or minimizes our excitement about the business and the progress we are making with the execution of our new strategy.

In Europe, the economy remains uneven and our results were mixed. The U.K. continued to demonstrate solid gains sequentially, while other regions such as Germany, which had been seeing some uptick, were softer in the quarter. This was further compounded by the sales force transformation. This is also occurring in Europe and ahead of the rollout of the new strategy there. Our business in Asia was up sequentially. Our Korean business was up both sequentially and year-over-year. India was up sequentially but down year-over-year, and continues to be extremely -- and continues to be an extremely challenging economic environment in which to operate. We remain hopeful China's medium-term outlook improves under the newly elected government.

As I mentioned, we made substantial progress in the quarter executing our new business strategy and preparing to launch several new innovative and disruptive products. On July 1, we successfully launched the first phase of products with more to follow in the coming months, both here and in Europe. Our goal is to increase the scale of our business with the volume of job opportunities, the volume of talent we can connect to those jobs and the end-to-end solutions to attract, engage and deliver talent for all types of customers.

We have successfully integrated TalentBin and have begun selling access to over 120 social profiles -- 120 million social profiles, with an initial focus on the high-demand technology vertical. We are highly encouraged by customers increasingly seeing TalentBin as a key component in solving their recruitment challenges in reaching the truly passive seeker. Monster's acquisition of Gozaik is now fully integrated, enabling the collection and organization of social job content, as well as the launch of our first social advertising product with Monster Twitter Cards. We ran a successful beta program in Q2 for Monster Twitter Cards and have launched the product to the entire U.S. sales force in July. The automation of the job distribution to customer's Twitter followings in a fully branded and expanded tweet format is providing customers significantly greater response on their job ads, and is an exceptional approach to engaging social audiences.

We recently launched our Talent CRM product with lines for employers to reach and engage with Monster users more easily and directly. In the initial weeks after launch, we have seen a significant ramp of engagement with user messaging growing every week by 25%. And lastly, we made major progress on All the Jobs content collection plans, moving from approximately 250,000 jobs in the U.S. network in January of 2014 to over 3 million jobs currently, on our way to more than 6 million globally. While not yet released commercially, we are beta testing this expanded job content and are beginning to see very positive data that shows users are engaging with up to 3x more jobs each time they visit the Monster network.

We are highly encouraged by these trends and look forward to rolling out the expanded set of jobs across Monster later this year, including our mobile experiences, which continue to be a growing channel for user engagement with over 35% of engagement occurring on mobile devices.

Before turning the call to James, to date, we have repurchased approximately 25% of Monster shares, reflecting management and the board's belief that Monster remains undervalued and has significant upside potential. Now I'd like to turn the call over to James, then I'll come back and conclude.

James M. Langrock

Thank you, Sal, and good morning. Slide 1 summarizes the second quarter 2014 pro forma income statement. EPS was $0.08. EBITDA was $26 million led by Careers-North America, which recorded a strong EBITDA margin of 25%. Revenue was $194.4 million, down 2% sequentially and down 3% year-over-year. North American revenue growth was positive and was up 1% year-over-year. Operating expense of $181 million decreased 2% sequentially and increased 1% compared to the prior year. Currency had a minimal impact on operating income during the quarter. Interest and Other was a negative $1.7 million. Equity gain was $100,000. Careers' minority interest was $1.5 million.

Slide 2 summarizes the quarter's pro forma adjustments. During the quarter, we recorded $9.1 million of stock-based compensation expense. While we expect stock-based compensation expense to range between $7 million and $8 million per quarter for the remainder of 2014, we anticipate our stock-based compensation for 2015 will be in the range of $4 million to $6 million per quarter.

Slide 3 shows operating expense trends. Salary-related was $94 million, flat sequentially and up 12% on a year-over-year basis. The year-over-year increase primarily relates to planned increases in quota-bearing headcount in anticipation of the rollout of our new strategy and the full quarter effect of salaries associated with our recent acquisitions. This is partially offset by a sequential reduction in FICA expenses. We ended the quarter with headcount of slightly over 4,000, up 1% sequentially and up 4% year-over-year, driven by headcount increases associated with our new strategy. Marketing expense was $37 million, a decrease of 10% on a sequential basis and a decrease of 14% on a year-over-year basis. We continue to drive quality appliers for our customers, while lowering our marketing spend. Office and general expense was $49 million, an increase of 1% sequentially and a decrease of 3% on a year-over-year basis.

Slide 4 reviews non-GAAP segment performance. Revenue in our North American Careers business was $110 million, down 1% sequentially and up 1% year-over-year. This is the first time we have seen year-over-year growth since Q3 2011, and we are pleased with this milestone. EBITDA was $27 million, and EBITDA margins were 25%. As Sal mentioned, our bookings performance in Q2 was impacted by the realignment of the sales force, which will put pressure on Q3 revenue as well. We believe it was prudent to accelerate this realignment in the second quarter, ahead of the commercial launch of our new products, to ensure the benefits of the realigned sales force are realized in the very important Q4 renewal season. This resulted in bookings in our core Monster business, excluding Government, to be flat year-over-year, which was less than we originally anticipated. Our Government business had an excellent booking quarter, which include the State of Florida deal Sal discussed earlier. However, revenue will not begin to be recognized on that deal until 2015, which is typical in our Government business. However, we did see year-over-year revenue growth in channels which were not impacted by our sales realignment, including e-comm, staffing, government and newspapers. These gains are partially offset by declines in our mid-market and larger enterprise verticals. Revenue in international Careers segment was down 3% sequentially and up 5% on a year-over-year basis, with revenue from Europe down 6% sequentially and 5% year-over-year. Revenue in the U.K. increased year-over-year, however, this was offset by decreases in Germany and the Netherlands. We continue to operate in a challenging environment in Europe, however, our bookings in Europe were flattish year-over-year. APAC revenue was up 6% on a sequential basis and down 6% year-over-year, primarily driven by the difficult macroeconomic environment in India. Korea continues to hold its own in a macro environment that is showing slight improvement. Careers-International EBITDA margins were break even. Revenue from our IAF segment was flat sequentially and down 13% year-over-year. EBITDA was $5 million.

Slide 5 is key balance sheet and cash flow items. EBITDA was $26 million in the second quarter. Net cash provided by operating activities was $25 million. We have generated $44 million of cash flow from operations in the first 6 months of 2014 compared to $34 million of cash flow from operations for the entire 2013 fiscal year. As we mentioned last quarter, we expect to continue to generate between $15 million and $25 million of operating cash flow on a quarterly basis. Accordingly, we are expecting to generate between $75 million to $100 million of cash flow from operations in 2014. Capital expenditures were $12 million. Deferred revenue was $316 million, down 8% on a sequential basis and down 4% year-over-year. This decline from Q1 to Q2 is consistent with our normal seasonal declines in the second quarter. Please note that the large deal with the State of Florida is not included in deferred revenue. Total liquidity was $193 million. We returned $12 million to shareholders through share repurchases, totaling 2 million shares in the quarter. Since the inception of the program in Q2 2013, we have repurchased 28 million shares or 25% of our float, returning $158 million to shareholders at an average price of $5.73. We have $42 million remaining on the share repurchase program and will repurchase shares opportunistically in the future.

Slide 6 is our outlook for Q3. As Sal and I mentioned earlier, we expect Q3 revenue to be sequentially lower, but expect revenue to return to sequential growth in the fourth quarter of this year. We will maintain our current operating expense run rate, as we believe it is critical to continue to support the new strategy with strategic and prudent investments. Accordingly, third quarter 2014 non-GAAP EPS is expected to be in the range of $0.00 to $0.04, which excludes approximately $8 million of stock-based compensation.

Now I'd like to turn the call back to Sal for his concluding remarks.

Salvatore Iannuzzi

Thank you, James. The implementation our new strategy is now underway. This is a complete transformation of Monster, and we are very confident its impact will be highly disruptive to our competition and fuel Monster's success. In many ways, a complete reinvention of Monster, all accomplished while generating solid positive cash flow. As James said, we are expecting to generate between $75 million to $95 million of cash flow from operations in 2014. A year ago, Monster gave seekers access to approximately 250,000 jobs in North America. Today, we have collected approximately 3 million jobs, and we're on our way to doubling that number. A year ago, Monster's global database included approximately 25 million resumes. Today, we provide access to over 150 million candidates with an additional 200 million yet to be commercialized. And lastly, as we discussed at our strategy briefing, the tripling of our available market for which we will intend to grow our market share. We are making dramatic moves which are unprecedented in the industry. I am confident these ongoing efforts will allow Monster to lead the category and significantly improve revenue and future profitability, and while we continue through a choppy short term due to the sales force realignment, we expect gradual steady growth going forward. I'd like to thank our shareholders, our global clients and entire employee base for their continued support. Thank you very much. Operator, can you please open it up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Jeff Silber with the BMO.

Sou Chien - BMO Capital Markets Canada

This is Henry Chien calling on behalf of Jeff. I wanted to ask a little bit about the recent win in Florida in terms of the Government business. Is that -- do you see the government side as being a big driver of growth for the new product strategy?

Salvatore Iannuzzi

Yes, we do. It's -- our Government business -- and really it's a solutions business building systems and solutions for both government and commercial clients. Largely, the business today is focused on the government, the federal, and state and local, but we see it as a major opportunity to expand our business, increasingly expand it on the government side, but we'll also expand it on the commercial side. So I think it's another piece in expanding that business.

Sou Chien - BMO Capital Markets Canada

Got it. And what percentage is Government roughly at this point?

James M. Langrock

Yes, the Solutions business, as we detailed at the strategy, is at roughly about 20% of the Careers worldwide business. So it's -- Government is a little smaller, but overall, the Solutions business is about 20% of the overall Careers business.

Operator

Your next question comes from Glenn Greene with Oppenheimer.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

I guess maybe for Sal, just wanted to understand sort of the sales force realignment, when you sort of initiated that. Was that contemplated in kind of the new game plan going forward? And when did you start to see the evidence that you're having some disconnect on your bookings trend during the quarter?

Salvatore Iannuzzi

Sure, Glenn. First of all, it was part of our strategy, and let me explain exactly what we did. First of all -- and this was all centered in our commercial field side and what we traditionally called Telesales, okay? First of all, with regard to Telesales, what we have done is we've broken down Telesales into 2 segments: the small business, which is now largely centered in Florence and the Carolinas. What we did is break away all accounts, it's tens of thousands of accounts, into that business. And generally speaking, they're sales of $1,000 or less, and we have a sales group that is entirely focused on covering that segment. The rest of our Telesales force, we've now renamed it, if you will, as the mid-market sales force, and what we've done there is we refocused it on bigger clients up to about 500 -- employ up to 500 or maybe 750 people. And because there, I think, we felt that customers required more service, more of a solution sell than just a transactional sell. The small business is much more transactional in nature, and so that, that sales force wouldn't be encumbered by the small business activity, and would focus on that, call it, that mid-market level and go wider and deeper than they were able to do before when they had to deal with both small and large customers. That's a big transition. And also what we did in there is we focused more -- we already had this focus, but we did it more completely, I guess, is the best way to say it, on just going after new segmenting between new business and renewal business. So a lot of change, a lot of shift in accounts in that area. The other one was field. We took the field -- before our model was, we had -- for the most part, a mixture of both renewal and new business with the same salesperson. We've broken down that sales force into roughly 2/3 of renewal and 1/3 going after new business. That caused thousands of accounts to be shifted between people. And what we realized -- once we started going, we started doing it in smaller pieces. And sometime around the beginning of June, we said -- we decided that it was better to execute it fully rather than drag it on, particularly in light of what we were seeing with some of the new products, the Twitter Cards, just as one example, that is to go for it and accelerate that change rather than have it spread over the rest of the summer. So we made that decision, and then in the last 2 weeks or so, 2, 3 weeks of June, which traditionally we've booked over 40% of our business in the last 3 weeks or so, we saw a significant slowdown, okay, in our ability to simply -- to execute. This is not -- I want to be very clear, this is not an issue of the economy or anything of that nature. This is our transformation, our execution of that transformation, and we just decided now was the time to pay the price for doing it. When you move that number of accounts, there is going to be some fallout, and we took it. What that will do -- since we're on the topic, I'll just take another moment on this. What that will cause is cause a slowdown and a little bit of drop off in revenue in Q2. But as you all know, what we book as sales in one quarter turns into revenue in future quarters. It will have a more important impact on Q3. Now we have looked at that very carefully. We've decided not to make up for that by reducing costs because we thought what that would do is damage our strategy. So we held the line on the cost side, but it will unfortunately have any impact on revenue. And, therefore, we've revised our forecast downwards for Q3. We believe, based on what we have seen and -- please realize, this is based on 1 month. We see the pick-up and we see the payback already starting. We're really encouraged by it. So we feel that Q3 will be much better in terms of sales. I think we've gone through the most difficult period of the transformation, things are building up nicely, pipeline of the new products. Gozaik, the Gozaik Twitter Cards, the TalentBin is improving, is showing some very good pipeline, excellent pipeline, I would say. And also, we have the benefit that we will be maturing into these products, introducing even the additional products, so Q4 should be strong. We believe that based on the momentum we created in Q3 in sales, and what will happen in Q4 -- and Q4, please remember, is our biggest quarter of the year -- that Q4 will show improvement in revenue and the momentum will continue from there. We very much believe that this is a very temporary situation, otherwise, we would have taken a more aggressive action on cost and things. But we think it's temporary, it's part of the transformation of the company. We made the decision to go for all of it rather than spread it, as I said, over the summer, and I'm glad we did. We now have it behind us.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

So at this point, is you think you're sort of through the sales force transition, everyone's sort of ready to go, sort of beginning of the quarter. And then should -- so I guess the question for 3Q bookings, not revenue, but should you start to see improvement from sales force execution? Let alone, are you expecting any benefit from the new products in 3Q, or are you thinking more of it's a 4Q-type event?

Salvatore Iannuzzi

No, we are expecting some benefit certainly, it's too early to tell how much. But certainly, some benefit from the new product. And we are certainly expecting to see, and we are seeing some signs of it, of improved execution in Q3. So bottom line, we expect Q3 to be a significantly better sales quarter, and we'll start to see the benefit of that in Q4 in terms of translation to increasing revenue.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

And then just to be clear, I heard that North America bookings was essentially flat and Europe flat, too. Directionally, without being too specific, how much do you think the sales force change impacted your bookings in North America?

Salvatore Iannuzzi

I would say it's under $10 million, okay? That's the best dimension I can give you. But unfortunately, that has a heavy impact in terms of conversion to revenue in the following quarter. We actually had -- from a booking perspective in North America, we actually had an excellent quarter when you include that Government transaction. The reason that you're not seeing the benefit of that in revenue is because that transaction does not turn to revenue until 2015. In other words, we have to -- we are -- the contract is now signed, we are building the capability that the contract calls for. But we do not get paid and therefore, do not record revenue on it until 2015. So it's just -- we have 2 things going on. We have a huge transaction that we've been working on for some time that doesn't convert to revenue in the near term. And on top of that, you have the transformation that we discussed, which had a significant impact, particularly in the last few weeks of the quarter. And the combination of those things is causing an issue. Europe is also -- let's not neglect that. Europe is 2 things. Europe, unlike the U.S., it is somewhat the economy and also the same transformation is going on in Europe. And that had an impact, although a little bit less than here in the U.S. because Europe already had some of these -- some of the things we have to change in the U.S. were already in place. It's the way they traditionally operated in Europe, so the impact was a little bit less. But Europe was a mixture of the economy and the transformation, and the U.S, without question, was the transformation. Okay, we saw some pressure on pricing in the quarter from some of our very traditional competitors, and that will also contribute somewhat to it. But the big issue, by far, is the transformation. Did I answer your question?

Operator

Your next question comes from Randy Reece with Avondale Partners.

Randle G. Reece - Avondale Partners, LLC, Research Division

I wanted to just get an update on the timing of new product introductions, and what you think will be the most significant ones over the next 6 months or so?

Salvatore Iannuzzi

I think that it really is a combination, because what we're selling is solutions. That is the big part of the transformation that we're making as a company. I think it's the sum total of all the products, but I think that we see great promise with Gozaik and TalentBin. We see -- we introduced into Q4 our aggregation model. I think that will open up entirely new markets for us, particularly in smaller business. There are customers, as an example, that just simply don't need or don't want a duration-type advertising campaign for the candidates. They want to just pay for x number of candidates or for very short duration, and we'll be able to feed into that market. We also think that, that will have a significant benefit by the massive growth of our presence all over the Web. It will provide enormous opportunity for us to secure more traffic, more applier starts, more SEO, I guess, is the best way to sum it up, organically than we ever had before. That will help us on controlling cost, but more importantly, bringing more and higher-quality responses to our business overall.

Randle G. Reece - Avondale Partners, LLC, Research Division

It seems like the way you put it, since the combination of products is what's more important than any individual, that going into the fourth quarter, renewal fees would be a little bit complex with a lot of new stuff to talk about. How are you planning for that issue?

Salvatore Iannuzzi

Well, one of the -- when we set out with the new strategy, one of the things that -- and then I'll remind you that was -- at this point, it's almost 2 years ago when we decided to move in this direction, and that direction really hasn't changed very much at all in that period of time. This was one of the key issues that we were concerned about in how to transform and how to train and educate our own sales force, so that they can go from a transactional sales force, largely, to a much more solution and collaborative model. And we've done all the things that you would expect us to do. A very significant amount of training has been going on, different types of training to anything we've done before. We brought in people from the outside to assist us in transforming that sales force. We've made changes. In some cases, unfortunately, there were some sales people who we felt simply could not make the transition, so we've managed through and made those changes. So in sum, there's been an awful lot of work done in preparing the sales force. I'm certainly not going to sit here and tell you that there won't still be some issues along the way, but I have never seen -- and I have spent over the past 2 months particularly, I have spoken to, at length, with sales management at all levels and sales people. I have never seen the sales force as enthusiastic and as driven as it is today. So I think they're very well prepared. Unfortunately, the results today, what the results are and what we're saying about Q3 is what it is. And I'm sure that's not the news you wanted to hear, and it's not the news we wanted to deliver. But the irony of it is that the sales force is, I believe, in the best position it's ever been in and very enthusiastic about what's ahead.

Operator

Your next question comes from Mark Marcon with Robert W. Baird.

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

Can you talk about your CapEx plans for the balance of the year and for next year?

James M. Langrock

So we're probably at a high point this quarter, Mark, around the $11 million, $12 million, as we were building out the platforms. So it should go back down to, the remainder of the year, between $7 million and $9 million on a quarterly basis, and I would think it will probably stay that way in 2015. But this will be the high point, Q2 is the high point, and it should come down to $7 million to $9 million for the remainder of the year, and probably stay around there for 2015.

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

Great. And then can you -- Sal, can you describe a little bit more about the competitive activity that you're seeing around job postings?

Salvatore Iannuzzi

Sure. What we're seeing from several of our more, let's just say, more traditional competitors is really a lowering of price. They are not selling products, they are selling price. In a number of situations, we have chosen to meet some of those prices in a few instances, but we also decided not to do it across the board. And I think in the short run, that cost us a little bit in terms of sales in Q1, but I think -- in Q2 rather. But I think that in the long run, that's the right decision. Okay, the purpose here should be to sell quality and breadth of solution, not cheapen one product. We don't have to do that. The array of products we have is strong. It's getting much stronger, what we implemented in July, what we will implement later in the year. And I think it's the quality and the delivery that our overall model brings that's going to carry the day, not whether or not we discount by another 10% or not. So we've held the line. Customers, for the most part, certainly, seem to be agreeing with that, I'll just say that, and that's it. But the 2 competitors, particularly, had gotten very, very aggressive. We don't know -- pure guess work. We don't know if it's because of the new strategy being implemented and it's trying to grab customers before that, or whether this is another plan because they have other issues or what's driving it. But it's really -- we haven't been terribly focused on that, it's sort of like looking in the rearview mirror. We'd rather look forward. And the challenge really is the array of products, which the good news is that the newer products we have and the new products we've introduced, particularly in July, are catching the attention fairly strongly by our customer base.

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

Great. And could you transition to that, and just in terms of -- so specifically, what was introduced in July?

Salvatore Iannuzzi

In July, we introduced TalentBin. We introduced the -- it is now -- it was in beta for a few customers in June. We introduced the Gozaik Twitter Cards and CRM all in July 1. And as I said before, that pipeline is growing steadily and aggressively. Now pipeline, I want to caution, pipeline does not indicate necessarily what level of pipeline closes as a sale. But having said that, I am -- we're happy with the degree that it is growing and the momentum that it is taking, and I think that will continue into August and beyond.

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

Okay. And what sort of results -- you introduced TalentBin in July. What sort of results did you end up seeing? I know it's just 1 month and there's a lot of explanation, but what are you seeing?

Salvatore Iannuzzi

Well, we're seeing -- right now, a lot of -- as I said, there's a lot of pipeline, there's a lot of discussion going on, our bigger customers are understanding it. They're excited about it because it just opens up an entirely new way and new seeker audience that they did not see before. In many, many cases -- I think, as you know, I've never been -- I've never entirely agreed with the notion that a candidate that was a passive candidate versus an active candidate indicated quality of the candidate. I don't entirely adhere to that philosophy. Having said that though, there are many companies that it just gives access to people that they simply would not have seen before, whether you classify them as passive or not, and they are very excited about that and they're showing interest. We are seeing -- I don't think it's right at this point because it's really early to talk about numbers, but the pipeline right now is very significant, and we have to wait and see if rate of conversion -- on the smaller businesses, the rate of conversion that I can tell you is quite good, but on the bigger company, bigger transactions, it just takes -- it's a longer conversation. The size of the transactions are bigger, but there is an awful lot going on that's engaging our sales force. The bigger problem we have right now, to be honest, is doing the demonstrations and showing and complying with the interest that we're seeing and moving that along. So it's a good situation to be in.

Operator

There are no further questions at this time. I'll turn the call back over to Sal.

Salvatore Iannuzzi

Okay. Well, I thank you all for listening to us this morning, and I look forward to speaking to you. I know there were calls with some of you during the day. I am available, I'll make myself available, and I thank you for your support. Take care.

Operator

This concludes today's conference call. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!