RetailMeNot (SALE) Cotter Cunningham on Q4 2015 Results - Earnings Call Transcript

| About: RetailMeNot, Inc. (SALE)

RetailMeNot, Inc. (NASDAQ:SALE)

Q4 2015 Results Earnings Conference Call

February 09 2016, 08:00 AM ET

Executives

Anne Bawden - Manager, Investor Relations

Cotter Cunningham - Chief Executive Officer

J. Scott Di Valerio - Chief Financial Officer

Analysts

Deb Schwartz - Goldman Sachs

Brian Fitzgerald - Jefferies LLC

Blake Harper - Topeka Capital Markets

Mark Mahaney - RBC Capital

Ralph Schackart - William Blair

Stephen Ju - Credit Suisse

Operator

Good day, and welcome to the RetailMeNot Incorporated Fourth Quarter and Fiscal Year 2015 Earnings Call and webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Anne Bawden. Please go ahead.

Anne Bawden

Great, thank you, and welcome, everyone, to RetailMeNot fourth quarter and fiscal year 2015 earnings conference call. With me on the call today are Cotter Cunningham, our Chief Executive Officer; and Scott Di Valerio, our Chief Financial Officer.

Before we begin, I would like to take this opportunity to remind you that during the course of the call, management may make forward-looking statements. 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 websites, and mobile unique visitors. Forward-looking statements are based on management's current knowledge and expectation as of today February 9, 2016, and are subject to certain risks and uncertainties that may cause actual results to materially differ from the predicted results. And reported results should not be considered as an indication of future performance.

A detailed discussion of such risks and uncertainties is contained in our most recent 10-Q filed with the SEC on November 6, 2015, as well as in our earnings press release from earlier this morning. RetailMeNot undertakes no obligation to update any forward-looking statements except as required by law. Additionally, certain financial metrics and results we discuss during the course of this conference call are non-GAAP measures. Reconciliation of the most directly comparable GAAP financial measures are provided in the tables in today's earnings release, issued today and available on our Investor Relations website.

With that, I will now turn the call over to Cotter.

Cotter Cunningham

Thanks, Anne, and thank you, everyone, for joining us today to discuss our fourth quarter and full year 2015 financial results.

Before we get started, let me start off by welcoming Scott to his first RetailMeNot earnings call. We're incredibly excited to have Scott join our team as CFO. In the 40 or so days he is been on board, he is really hit the ground hitting. I look forward to the impact and partnership he will provide in 2016 and beyond.

I also want to take a moment to thank Lou Agnese, he did a great job serving as our Interim CFO. Lou was an exemplary leader and I am pleased he is now moved into a new executive role in the company.

Although 2015 was a tough year for the business, it did end on a positive note. Total net revenue of $83.1 million and adjusted EBITDA of $30.8 million came in ahead of the high end of our guidance for the fourth quarter.

Revenue out performance was driven largely by a positive desktop trend, especially in the first half of the quarter and continued strength in our in-store and ad businesses, which grew a combined 57% year-over-year. A significant portion of the revenue upside flowed through our P&L, resulting in a fourth quarter EBITDA margins of 37% compared to our guidance of 35% at the midpoint.

On today's call, I want to focus on two areas. First, I will reflect on 2015. While there were some highlights, overall we didn’t deliver as I had hoped, that’s disappointing and frankly I expect more from the team here at RetailMeNot and especially myself.

With that, I want to share some brief thoughts and where we made progress and where we still have work to do in delivering on our commitment to be the savings destination, connecting consumers with retailers and brands both online and in-store.

Second, I'll talk about the year ahead. 2016 is a critical year for the company. I want to lay out our focus areas for the year and how we believe our planned investments will support long-term sustainable growth in future years.

Finally, I'll turn this call over to Scott, to discuss the specifics of our Q4 and full year 2015 results and our outlook for the first quarter in 2016.

Let me now provide some context around 2015. For me a couple things really stood out in the year. To start, our higher purchase intent consumer base is a strong asset, but we need to find more ways to drive greater conversion, engagement and frequency with our consumer audience.

The frequency and offer quality of promotions run by retailers and brands are typically driven by seasonality. This means there are often gaps in time where consumers can't find compelling ways to save.

We have to expand the ways in which consumers can save money everyday, while shopping through RetailMeNot and ease any purchase friction that comes to our shopping experience across devices. Introducing digital rebates and discounted gift cards were the step in the right direction, but we need to do more and I believe we can and will.

Next, while the value of our offering commands industry leading organic search ranking, we are still too reliant on that volatile traffic mix. During the year we a saw deceleration in online traffic on both desktop and mobile web, generally speaking, we believe this deceleration was driven by a weaker organic search results.

Having a strong mobile app helps our efforts to have a more direct relationship with consumers, but we're still in the early innings of building out awareness and product consideration.

Despite challenges we've had in online traffic, we've had a strong year for in-store and advertising net revenues, which we see as a significant growth opportunity for our business.

Our retailer and brand partners are seeking more ways to efficiently target and reach consumers in a rapidly evolving mobile world and we are responding. We will continue to innovate in our mobile app experience so that we become and remain the default shopping companion for consumers looking to save money.

My final observation on 2015 is that we made meaningful investments with an emphasis on product development and enhancing and expanding our retailer and brand relationships. From a product perspective, we introduced discounting gift cards and digital rebates, evolved our store page design with smart tabs for ease of navigation, change the consumer layout for improved usability and added more store information to help our consumers.

From a go to market perspective, we consider our sales force a fantastic fully ramped asset and we saw evidence of this through solid productivity during the year. That team continues to build stronger, more senior level relationships with retailers and brand.

In fact, the number of managed in-store account grew by 22% year-over-year, while revenue per account grew by 23% over the same period.

We estimate that approximately $4.8 billion in retailer sales were attributable to consumer transactions from paid digital offers in our marketplace in 2015, with more than $600 million attributable to our in-store solution.

In summary, though we've had some good wins in the business during the year, overall we did not achieve the objectives we'd hope in 2015. That said, we strongly believe we made progress towards building a stronger RetailMeNot one that will return to sustainable growth over time.

In 2016, we continue to invest in being the savings destination connecting retailers with consumers and brands online and in-store. We plan to innovate on the various components of our marketplace, so we better helped consumers save money each time they shop. With that context, here are top three priorities for the year.

First, we will continue to focus and invest in highest growing areas of our business and will lead with mobile and more specifically our mobile app experience. Second, we will continue to expand and improve our offerings for consumer, retailers and brands, with new content and experience that support more stages of the shopping journey.

And third, we will further elaborate our large and growing wealth of consumer transaction data to personalize the consumer experience and enable our advertising partners to grow their optimization on their promotional programs and marketing spend.

Let me start with mobile. It’s important to remember, our current and future growth is centered on our mobile experience, while we believe in the value of our product and content today, we understand that we must continue to iterate and improve the experience for savings minded consumers.

First, we believe we can create the most consumer value and consequently the most business value through enhancing our mobile app to drive return traffic and increase engagement. In addition, we also view mobile web as an important part of our long-term strategy and recognize the work ahead to close the gap in desktop and mobile RPV.

And while our in-store and advertising revenue segment continues to grow, we believe based on our current offerings we are only achieving a small part of the potential.

As we've discussed in the past, consumers are increasingly spending more and more time on their mobile devices, a portion of which is shopping related. More often than not, consumer preference for easy mobile shopping experience is running ahead of retailers capabilities. We view this as an opportunity to empower retailers to use our products to better leverage their and our audience.

As an example, in 2016 we will focus on enhancing our location based services to offer a greater degree of offer specificity and relevancy to our consumers on the go. We're also working to expand our dinning content which is something our consumers have been showing interest in for a while. Pairing this new content from new advertisers is particularly exciting.

We believe the work we are doing across multiple aspects of the mobile experience will help drive increased in-store and online sales over time. Given our audience size, this is particularly powerful opportunity for our retailer and brand partners. Inevitably, better targeting means more qualified consumers.

Second, expanding and improving our offering to provide more savings to more consumers is an essential aspect of our business. While the business that was born from digital coupon, there are secular trends towards the digitization of many saving oriented content types that expand the value proposition we can provide to consumers and retailers alike.

In the second half of 2015 we introduced new savings oriented content in the form of digital discounted gift cards and digital rebates and expanded our efforts in dinning. These are just a few of the ways we are looking to engage our audience.

In 2016, we expect to see our audience engage with us more frequently as we scale these new content type, while also focusing our marketing spend more on retention and reengagement of our customers through personalization.

The last area of focus in 2016 centers around our use of consumer data. Our audience size puts RetailMeNot in a position to be valuable growth enabler for our retailers and brands and in turn, enables us to make the consumer experience across all platforms a better one.

We want to be more useful and relevant to our consumers. For example, if we know you've indicated an interest in athletics shoes and camping gear, your email push notifications and the content you see in our marketplace should reflect these preferences.

We believe that using this data personalize the consumer experience is a powerful one. We made progress on 2015 on this front, but we expect to incorporate more personalization in 2016 by utilizing our SKU level purchase data to feature products that best resonate with consumer.

We also want to be more into our retailer and brand partners and offer the preferences we are capturing and other insights to help drive better investment decisions for retailers, advertising and promotional budgets. Some call it a halo effect, but done right, we can improve the RetailMeNot experience and drive a stickier, more valuable product long-term for consumers, retailers and brands.

As we tests these new products in the market, we are clear on what we need to do to deliver our 2016 initiatives. And while these initiatives will not offset the decline in online revenue in 2016, we believe it sets us up for future growth in 2017 and on into 2018. We'll continue to make decisions to do what's best for our business, for consumers, retailers and brands and for our shareholders.

With that, let me now turn the call over to Scott to discuss specifics of our outlook.

J. Scott Di Valerio

Thanks, Cotter, and thanks for the welcome. It’s been a great month and I am thrilled to have joined the executive team at RetailMeNot. So far I have been impressed with the passion and dedication of our employees and I look forward to working with you and the team to drive our strategic initiatives.

Let me spend a few minutes on 2015 results, then move to 2016 outlook. As Cotter noted, we exceeded the high end of our guidance for both net revenues and adjusted EBITDA for the quarter.

Revenue out performance in the quarter was driven largely by positive desktop trends in the first of the quarter and continued strength in our in-store and ads business which grew a combined 57% year-over-year.

When we look at our full year revenue growth, our focus areas of in-store and ads in mobile online transaction net revenues led the way, growing 73% and 56% respectively, offset by decline in desktop online transaction net revenues of 21%.

International net revenues represented 20% and 21% with the total net revenues for the quarter and full year respectively, when you adjust for the foreign exchange impact, international net revenues were up 1.3% year-over-year for the quarter and up 1.7% for the year.

Adjusted EBITDA came in above our quarterly guidance at $30.8 million and hit $71.9 million for the year, equating to adjusted EBITDA margins of 37% and 29%. Over the course of the year, we've been making investments in our business to improve the consumer, retailer and brand experiences.

Moving to our key audience metrics. Total visits in the quarter were $214.8 million, down 5%, however, for the full year visits grew 3% to $718.4 million. For the full year mobile web visits increased 51% to $297.9 million, representing 41% of total visits for the year. Desktop visits declined 18% for the quarter and 16% for the full year. Mobile unique visitors in the quarter grew 9% to $23.2 million.

Turning to expenses for the fourth quarter and full year. Our product development expense for the quarter was $12.2 million, and $51.6 million for the year, reflecting increased people cost associated with hiring to deliver our product enhancements.

Sales and marketing expense for the quarter was $33.2 million and $99.4 million for the year. The increase in sales and marketing expense primarily reflects the build out of the sales team this year and increased marketing expense to drive transactions awareness in our brand.

General and administrative expenses for the quarter was $10.9 million and $39.8 million for the year, representing a decline from last year as we continue to manage our overall costs.

Looking at our net income and EPS. GAAP net income was $9 million for the quarter and $11.8 million for the year. Non-GAAP net income was $19.1 million for the quarter and $41.2 million for the year.

GAAP EPS was $0.17 per share for the quarter and $0.22 per share for the year, and non-GAAP EPS was $0.36 per share for the quarter and $0.76 per share for the year based on $52.4 million and $54.1 million fully diluted weighted average shares outstanding respectively. Capital expenditures for the quarter were $2.2 million.

Lastly, cash flows from operations during the quarter was $8.2 million and $60.5 million for the year. We ended the year with $259.8 million of cash and equivalents. We continued to opportunistically repurchase our shares to drive strong return on investment. During the fourth quarter, we purchased approximately 1.5 million shares at an average price of $9.31 for a total of approximately $14 million.

In total for the year, we repurchased 4.3 million shares. We continue to utilize our repurchase program in January, therefore as of January 29, 2016 we have approximately $29 million remaining of our original $100 million repurchase program.

I'll also note, that within our earnings release this morning, we announced the Board of Directors has authorized an additional $50 million in capacity under the original repurchase program, which is now in its second year.

We continue to believe that our stock repurchase program demonstrates our commitment to building stockholder value, as well as confidence in achieving long-term growth.

To supplement this discussion, our expanded view on our financial and operating metrics can be found on the Investor Relations portion of our website under Events and Presentations and by our Q4 and fiscal year 2015 earnings press release and key operating metrics deck.

As Cotter mentioned, 2016 will be year where we made continued focus investments, we believe position us well with our consumers, retailers and brands. This will be key for us to return to top line and bottom line growth.

We will test products we expect to help offset the decline in desktop and capitalize on the growth in other areas of the business. While these investments will bring our adjusted EBITDA margin range to the mid to upper 20s for 2016, we believe they position us well for future success.

With that, let me give some additional detail for our first quarter and full year guidance. Fort the first quarter ended March 31, 2016, we expect total net revenue in the range of $49 million to $54 million or a year-over-year decline of 15% at the midpoint. We expect adjusted EBITDA to range between $8 million and $12 million, representing adjusted EBITDA margins of 19% at the midpoint.

For the full year, ending December 31, 2016, we expect total net revenues in the range of $225 million to $240 million or a decline of 7% at the midpoint, and we expect adjusted EBITDA to range between $51 million and $62 million, representing adjusted EBITDA margins of 24% at the midpoint.

For purposes of our full year outlook, we expect that desktop online transaction net revenues will be down 18% to 23% year-over-year, as among other things consumers continue to shift to mobile.

We also expect that mobile online transaction net revenues will grow between 10% and 17% and that our in-store and advertising net revenues will increase between 26% and 34%.

For the first quarter in 2016 modeling purposes, we expect depreciation and amortization expense to be approximately $4 million in the quarter, and $17 million for the year. Stock based compensation expense to be approximately $7 million in the quarter and $30 million in the year.

CapEx to be approximately $1.8 million in the quarter and $2.9 million for the year. Capitalization of software of approximately $1.7 million in the quarter and $6.9 million for the full year. These internal costs are primarily infrastructure, and product related initiatives.

Not taking into account the impact of any further repurchases of our stock during the first quarter, we expect our weighted average fully diluted share count for the first quarter to be approximately 50.3 million shares and full year to be approximately 50.1 million shares. And for the full year, we expect our GAAP tax rates to be approximately 39%.

Our guidance reflects the continued impact of declining desktop trends and a challenge the underlying shift to mobile has had on our business over the past few years. While we made great progress in growing in our in-store and ad business, it’s not yet been enough to offset the desktop trends.

As Cotter noted, we are diligently investing behind products that we believe extend the value proposition we offer to consumers and drive top and bottom line growth in our business again.

We are all working with clear focus on execution. I look forward to meeting many of you on the road and in conferences over the course of the year and discussing the progress we make in our business.

Thanks again for joining us. And I'll turn it over to the operator to begin Q&A.

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Deb Schwartz of Goldman Sachs. Please go ahead.

Deb Schwartz

Great, thanks for taking the question. So you mentioned that part of the out performance for Q4 was driven by better desktop performance. Can you give us a sense on whether or not your organic rankings improved or the category shift away from desktop is moving at a slower pace than you expected?

And then two, given the out performance in Q4 and what we are seeing in the macro environment which is highly uncertain right now, what's embedded in your guidance for call it a weaker macro?

Cotter Cunningham

Thanks, Deb. Good morning. I would say it’s kind of a mix of both, definitely, especially earlier in the quarter we saw some improvement in SDO. But also one of the things that we definitely are seeing as an interesting trend is while traffic is more dear.

It’s also a better traffic, it converts better - the traffic we do have tends to be a higher value than some of the traffic we've lost. And so, that’s exciting in that it means that we're still reaching the kind of most eager, more high – most high converting consumers.

In terms of kind of the way we think about the year, I think its really challenging for us to take too much of macro trends into consideration. We talk to retailers and we use their guidance around what they are seeing for the year, but we tend not to make our own judgments about overall trends or anything like that.

So anything we are doing is based upon the conversations we're having with our customers, not necessarily our own beliefs about consumer spending or something like that.

Deb Schwartz

Great. Thanks.

Cotter Cunningham

Sure. Thank you.

Operator

Our next question comes from Brian Fitzgerald of Jefferies LLC. Please go ahead.

Brian Fitzgerald

Thank you. Your Q1 and full year guidance imply a materially lower EBITDA margin, both sequentially and year-over-year. Can you just comment what's driving the softness? And you mentioned going forward a focus on data. How fresh is that data that you are using?

I know some re-targeters [ph] are suggesting that 85% of the data they use is less than three days old. But if you could give us a little more sense just on your data set. Thanks.

Cotter Cunningham

Sure. I'll start with the data and I'll let Scott talk about the margins. The data we use typically is the combination of data from your current visit in terms of we're seeing you today and you're on a camping page for example, as well as data from historical visits.

So if we can track you and see you come to the site over time we'll use that to know what you like and what you don’t like historically. And we think that while certainly fresh data is the best, knowing what you're likes and dislikes are over time, is also equally powerful. And so I think there is nice mix there sort of recency and frequency that allow us to build a nice set.

We get purchase data within about two days. So usually that can balance our stuff too. So I think it is quite fresh, I think in general. Scott, you do you want to talk about the key margins?

J. Scott Di Valerio

Sure. Yes, Brian as we think about the margins and as we look into 2016, we're really focusing our investments around mobile and other areas of high return on investment, looking at the money we're putting in and the return we get out on the backend.

Its focused on continuing to develop products and build out that product or engineering team and then in marketing we're really investing in there to increase the overall brand awareness and reengagement and reactivation of our consumers, so that we can drive additional revenues as Cotter mentioned earlier, traffic is dear, but what we're trying to do is really drive that high value traffic and we'll do a bit more brand advertising to position the company as we have into our broader savings platform.

Brian Fitzgerald

Just a really quick follow up, what is your best set channel for acquiring customers? Has it been the app-install ads, general brand advertising? Can you just comment in Q4, what drove the most customer - new customers to the platform?

Cotter Cunningham

Yes, as always an app install is a fantastic source of a new customer for us, because not only do we get someone that downloads the app and begins to use it, but almost all of our apps are full registered.

And so we get an email for you, we can start interacting with you both through the app, push notification stuff like that, as well as your email address, in most cases consumers opt in as we talked before, from both location services and in most cases they let us an email and so a new app download really has sort of a nice multiple effect to it.

Brian Fitzgerald

Great. Thanks.

Cotter Cunningham

Sure. Thank you.

Operator

Our next question comes from Blake Harper of Topeka Capital Markets. Please go ahead.

Blake Harper

Thanks, good morning, guys. So, Cotter, I wanted to see if you could talk a little bit more about the mobile in-store business. You had talked previously about some issues with running into the - for being a little bit different, as well as sometimes those retailers running out of their mobile budget.

Just wanted to see if those were issues of how it effects your 2016 guidance, and just some more maybe color there about what are some of the issues and the drivers for that 2016 mobile in-store guidance that you gave?

Cotter Cunningham

Sure, of course. And good morning. Blake, the first I am going to say about the in-store businesses, we love this business. I've said many times and still believe that in many ways the in-store business is the future of our business.

We are two years into this, two and change and so its now $50 million business, which I think is really exciting and we've done a great job of bringing in retailers, that are early adopters.

So as we talk about before, this is a really evangelistic sale, in that it’s not their traditional purchase. If you are driving traffic in store you tend to focus on radio, TV and print, selling an app to that customer can be challenging. And so we've done a great job of bringing in the sort of newer customers.

The problem is there can't be concentration when you're talking about that sort of - I guess, I'd call it, the sort of initial customers, right, the sort of – the early adopters, if you will. So having some concentration there means that you're going to see spikiness in the quarters.

But long-term, I really believe this is a great product. It’s a big market. RBS, our sales team is really fully ramped now and they are doing a great job, they had great Q4 in-store. We're seeing some momentum here. It’s our job to continue introduce customers to it, build the momentum in terms of MAUs, to build better product for this and to convince the customers we have to continue to work with us. Now I feel like this is going to be a great year for in-store and I feel really good about our prospects there.

In terms of the things we're building out in-store, I think for me it starts with location, understanding that you're at the mall, which is of the data we have today is exciting, understanding that you're at Nordstrom's – you're not at Nordstrom in the mall and I can send you to Nordstrom is really exciting.

And so, doing a better job of kind of going past the geo fence and down the X, Y location and actually knowing what store you're in is sort of the next step for us there.

I think also if you think about sales in-store, if you're at home and you are on your couch, you open your approximately, you see there is a big sale at retailer X, you're get into your car, you drive to that store and you go to that retailer, knowing the consumer made that journey and charging the retailer for that journey is important.

Today, we tend to not be able to link for sales, not coupons, but sales, just 10% off today only, now its more difficult for us to link your opening we have to your actual visit to that store and to the extent we can do that using better geo targeting and better location, I think that really opens up a world of opportunities for us in working with retailers. So I am super excited.

Blake Harper

All right, great, Thanks, Cotter.

Cotter Cunningham

Sure.

Operator

Our next question comes from Mark Mahaney of RBC Capital. Please go ahead.

Mark Mahaney

Cotter, could you just talk about your retention with retailers specifically, and how you think that's trended and your ability to expand share of wallet with those retailers? Thank you.

Cotter Cunningham

Sure. Good morning. I think what I would say Mark, is in general, you know, we've always had great penetration in the retail base, probably for the last two, three years, we really had an excellent group of retailers we worked with in total. Our job is been to expand the way we – the different products we have into all the retailers we have that we're working with.

So what I mean by that is, everybody works with us on desktop, but there is definitely a small or subset of that that work with us in-store. And so our job is really to introduce those desktop customers that work with us already to the in-store opportunity, to the extent that it makes sense, if you're an online only retailer obviously in-store is most compelling.

I think the way we continue to build out new products for the retailers and the way we continue to introduce them is really the most important thing here. And so, for me I think our market share is held pretty nicely, most of the retailers worked with us two years ago if not all of them were still with us and to a large extent its about introducing them to the full suite of products we have as opposed to just letting them come in and work with us on one aspect of it.

Mark Mahaney

Thank you, Cotter.

Cotter Cunningham

Sure. Thank you.

Operator

Our next question comes from Ralph Schackart of William Blair. Please go ahead.

Ralph Schackart

Good morning. I think during the prepared comments you talked about seeing stable trends in the first half of the quarter on desktop traffic. Just curious how those trends looked in the back half of Q4?

And then as now we are in the New Year, just curious how those traffic trends have trended year-to-date. Thanks.

Cotter Cunningham

Yes, sure. So in the back half of Q4, we did see some erosion in SCO. We talked about this a bunch. The SCO component of our business is something we want to get away from. We're working hard to develop a direct relationship with the consumer, not rely on SCO. So we've done a good job in taking the percentage of our traffic that comes from SCO down from the 90s when we bought RetailMeNot to now its I think 57 and change in Q4.

To me, that’s exciting and its not just exciting because obviously if you reduce the SCO traffic it reduces the component. But also more importantly I think we're really developing a relationship with the consumer, direct traffic is up, we like the way that we can now interact with consumers on a personalize basis.

A lot of investments we've made over the years we're now seeing to start to bear fruit. And that I get the emails from RetailMeNot obviously and they are more personalized to me. And so I find them to be more interesting, more compelling, and better experience. And so frankly, I think our products is working and that it even works for me.

I think in terms of kind of where we are today, I think we are not substantially different from where we ended Q4, traffic is not where we wanted to be, and that its down a bit year-over-year. But you know, the traffic we do have is been strong and it’s been converted nicely. I think it gives us a huge basis upon which to build new products and new opportunities.

And so again, as we always say, we have over 700 million people come to us on a trailing 12 months basis, that is such an enormous number. And so getting those people to interact with us in different ways, offering them – offering the new products and showing them a variety of ways to interact with RetailMeNot reducing friction and focusing on applying sort of a better content to that group is really the path forward.

Ralph Schackart

Okay. Thank you, Cotter.

Cotter Cunningham

Sure. Thank you.

Operator

And our last question comes from Stephen Ju of Credit Suisse. Please go ahead.

Stephen Ju

Okay, thanks. And good morning.

Cotter Cunningham

Morning.

Stephen Ju

Morning. So I think you mentioned earlier the desire to increase the amount of content and targeted content, and you called out I think dining specific content specifically for your users to engage with.

So how straightforward or difficult will it be to branch into a vertical I guess you weren't really in before? Is it just a matter of having a salesperson call the restaurant chain versus say Macy's?

And I think second, for us on the outside looking in, how will we be able to monitor progress against the 2016 initiatives that you called out earlier in the call? Thanks.

Cotter Cunningham

Yes. So its interesting, food and dinning is a category we talk about for some time. That’s the one that I am missing on the call, where we really are making a push in the food and dinning this year and it starts with the consumer, frankly.

The consumer is coming to us in droves and asking us for a food and dinning content. I could say starting with pizza, but it really has expanded beyond that nicely. And so a lot of our efforts in food and dinning are sort of meeting the demand of the American consumer frankly.

And so working with the food and dinning companies and it ranges everything from sort of pizzas to restaurants with waiters, so to speak, a Ruby Tuesday's or something like that, working with them to find ways to drive traffic to them in a way that they can respond to is been exciting.

And so things like free app with an entree or a sale on specific drinks or something like that has been fun to work through. I think we're kind of in the early innings of this and - but so far we love the progress. And so we are excited where our food and dinning can go as an opportunity, and primarily in the app, but also site wide.

In terms of how you can meet – how we can help you make progress - how we can help you understand the progress we're making in 2016, I think its coming upon us to do a good job as we come back in the subsequent quarters, and say, here are the goals we talked about earlier in the year for us on '16, here is the progress we've made.

And my plan is to come back to the investor base and say here is the progress we made year-to-date, here is what worked, here is what didn’t. We'll do a good job of keeping you updated. I think it’s important to work on communications, we'll continue to try to work hard on that.

Stephen Ju

Thanks, Cotter.

Cotter Cunningham

Thank you.

Operator

And this concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Cotter Cunningham, for any closing remarks.

Cotter Cunningham

Sure. Thank you. First, I want to close by acknowledging that our progress to date would not be possible without our amazing employees. And to take a moment to thank them for their contributions, effort and passion in 2015, and as we ahead into what will be an exciting 2016 for RetailMeNot, longer term I believe that we are undertaking efforts that will set a course for us to return to growth. Thank you. And have a great day.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.

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