Web.com Group (WEB) David L. Brown on Q4 2015 Results - Earnings Call Transcript

| About: Web.com Group, (WEB)

Web.com Group, Inc. (NASDAQ:WEB)

Q4 2015 Earnings Call

February 11, 2016 5:00 pm ET

Executives

Ira Berger - Vice President-Investor Relations

David L. Brown - Chairman, President & Chief Executive Officer

Kevin M. Carney - Chief Financial Officer & Executive Vice President

Analysts

Eugene Charles Munster - Piper Jaffray & Co (Broker)

Samad S. Samana - FBR Capital Markets & Co.

Deepak Mathivanan - Deutsche Bank Securities, Inc.

Matthew C. Thornton - SunTrust Robinson Humphrey, Inc.

Rohit Kulkarni - RBC Capital Markets LLC

Sameet Sinha - B. Riley & Co. LLC

Mitchell Palmer Bartlett - Craig-Hallum Capital Group LLC

Hamed Khorsand - BWS Financial, Inc.

Operator

Greetings, and welcome to the Web.com Fourth Quarter 2015 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Ira Berger, VP of Investor Relations. Thank you, you may begin.

Ira Berger - Vice President-Investor Relations

Good afternoon, and thank you for joining us today to review Web.com's fourth quarter 2015 financial results and the announcement of our acquisition of Yodle. With me on the call today are David Brown, Chairman and CEO; and Kevin Carney, Chief Financial Officer. After prepared remarks, we will open up the call to a question-and-answer session.

In the Investor Relations section of our website, we have provided our summary slide presentation, which is intended to follow our prepared remarks and provides a reconciliation of differences between GAAP and non-GAAP financial measures.

Please note that our remarks today contain forward-looking statements. The words expect, believes, will, going, begin, see, plan, continue and similar expressions are intended to identify forward-looking statements. These statements are based solely on our current expectations, and there are risks and uncertainties that can cause actual results and the timing of such results to differ materially from those projected in the forward-looking statements.

Please refer to our filings with the SEC, and the risk factors contained therein, including our Annual Report on Form 10-K for the year ended December 31, 2014, and our quarterly report on Form 10-Q for the quarter ended September 30, 2015 for more information on these risks and uncertainties, and our limitations that apply to our forward-looking statements. Web.com expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements made herein.

With that, I would like to turn the call over to our Chairman and CEO, David Brown, David?

David L. Brown - Chairman, President & Chief Executive Officer

Thank you, Ira, and thank you all for joining us on the call. As many of you saw earlier today, we announced we've entered into a definitive agreement to acquire Yodle, a leader in local digital marketing for small businesses. There's a lot about this deal that gets us very excited, but first and foremost is that Yodle's business is perfectly aligned with our strategic direction. This acquisition further enhances our competitive position in the large and fast-growing value added digital marketing solution segment of the market where Web.com has differentiated itself. We also expect this transaction to accelerate our topline growth and be accretive to non-GAAP EPS within the first year after closing. For today's call, I will review fourth quarter highlights, provide a recap of 2015 and then discuss the Yodle acquisition; Kevin will then provide additional perspective on the financial terms of the transaction, a detailed review of the fourth quarter and our guidance for the full year and first quarter of 2016.

Web.com reported strong fourth quarter results with revenue and profitability that exceeded the high end of our expectations. Strength in our value added solutions and our domain business contributed to our revenue outperformance. At the same time, we utilized our significant cash generation and strong balance sheet to pay down $28 million of debt and repurchased $10 million of stock, providing additional value to our shareholders.

We ended the year making meaningful progress against our primary objectives of returning to growth via continued strength in value added solutions such as our Do-It-For-Me offerings and further improvements in reducing product churn. We've made significant strides this year in focusing our incremental investments and efforts in these areas, where we are able to provide a differentiated marketing offering for small businesses and where we can drive positive change more quickly.

Turning to our summary financial results for the fourth quarter, we've reported non-GAAP revenue of $141.3 million, which was above our guidance range of $138.5 million to $140 million. The outperformance was driven primarily by strength in our Do-It-For-Me and domain business. Our premium domain business benefited from increased demand from China. From a profitability perspective, we delivered a strong earnings quarter. Non-GAAP net income was $34.2 million, which led to non-GAAP EPS of $0.66 which was also above the high end of our guidance range of $0.62 to $0.64. We generated adjusted EBITDA of $42 million which equates to a 30% adjusted EBITDA margin. We're very pleased to have exceeded our goal of exiting the year above our historical target of 29% margins. Our strong margin performance in 2015 reflects our improving growth profile over the course of the year, our sharp focus on expense management, and our disciplined investment approach. We feel good about the progress we've made this year on the profitability front, which will remain a focus in 2016.

In the fourth quarter, we generated $36.6 million of free cash flow, which capped off a very strong year of cash flow generation for Web.com. For the year, we generated $138 million of free cash flow, up 35% year-over-year. We're very pleased with our cash generating performance, which reflects strong bookings and good working capital management. Our cash flow provides the company with greater capacity to drive shareholder value to investing in the business, pursuing acquisitions, and prudently managing our capital structure.

Turning to our operating metrics we added approximately 22,000 net new subscribers in the fourth quarter bringing our total subscriber base to approximately 3.4 million subscribers. This is modestly ahead of our 10,000 net new subscribers to 15,000 net new subscribers quarterly targets and reflects solid operational performance. With a subscriber base that is now well north of 3 million subscribers generating improvements in both our customer and product retention is a significant lever to drive improved financial performance.

I'd like to take a moment to review some key accomplishments from 2015. Our first objective in 2015 was to stabilize the business. It was essential that we focus our resources on the areas of the business where we have the strongest competitive position and where we could generate attractive returns on our marketing investments. We established two goals for the year in this regard; generating sequential revenue growth each quarter during the year and returning to our historical adjusted EBITDA margin of 29%. I'm pleased to say that we achieved sequential revenue growth each quarter, and as I mentioned earlier, exceeded our profitability target with a 30% adjusted EBITDA margin in the fourth quarter. To accomplish this we made meaningful strides in strengthening our competitive positioning in two key areas.

First, we introduced our Do-It-With-Me offering, which combines our easy to use DIY tools with our highly differentiated customer support and coaching to distinguish ourselves in the highly competitive DIY market. We steadily expanded this program throughout the year and we've seen positive results from Do-It-With-Me particularly in the area of product churn. Second, we directed additional marketing, product and organizational resources towards our suite of value added solutions such as Do-It-For-Me, lead generation, and social media products. This included enhancing the products, improving the efficiency of our Feet on the Street channel, and expanding our partnerships. The results of these efforts showed up in a significant improvement in our already healthy free cash flow. The $138 million of free cash flow we generated for the year was used to pay down $95 million of debt and repurchased $51 million of stock.

We exited the year with a leverage ratio of 2.8 times adjusted EBITDA to net debt down from 3.3 times at the beginning of the year. While repurchasing 6% of our outstanding shares since we started our buyback program. Overall, we are pleased with the positive steps we've taken to improve the business in 2015 and we exited the year in far better shape than we entered it. We believe that the acquisition of Yodle is a great complement and natural extension to the progress we made in 2015. These benefits which I will provide more detail on include – one, Yodle will accelerate our growth profile going forward by dramatically increasing our exposure to the large and faster growing value added digital marketing solution segment of the market. Two, strategically we've been moving in this direction on our own because we believe this market is underserved and that is an area where Web.com is most differentiated competitively. The addition of Yodle's capabilities and size further strengthens our place in the value added digital marketing solutions market and establishes Web.com as a leading provider in the market. Three, between Web.com and Yodle, we will have increased financial and operating scale with 50% of our revenue base in value added solutions. Four, we will realize significant synergies including cost savings, tax benefits, and cross-sell and up sell opportunities. And five, we anticipate the transaction to be accretive to non-GAAP EPS in the first 12 months of our ownership with growing accretion thereon.

Now let me tell you a little bit more about Yodle and its business. The company was founded in 2005 in New York and had about 1,400 employees. They've established themselves as a leading provider of cloud-based local marketing solutions for small businesses serving approximately 58,000 subscribers, including 9,000 franchise customers, with $208 million in revenue in 2015. Yodle provides small businesses a comprehensive platform of solutions that includes marketing optimization, which include services that get website found like SEO, as well as email marketing.

Applications that drive office automation, such as practice management applications, designed for vertical markets like dentist to manage patient appointments; a franchise platform specifically designed to manage digital marketing across multiple locations; and finally, tools to automate and manage digital advertising like optimizing pay per click spending. In addition, they have a targeted product and marketing approach that focuses on specific verticals. Their ARUP of approximately $300 a month illustrates the high end value-added offerings they provide. With gross margins at 73% and 9% revenue growth last year they have an attractive and scalable business model.

Turning to the various markets that Web.com and Yodle serve, the key takeaways are the markets are all large and growing with business applications and digital advertising growing faster than the web presence market. As the market has evolved so has our strategy, over the past year, we've spoken about the three segments of the small business online marketing industry – presence, engagement and interaction. We think about business applications and digital ad spending as being part of the engagement and interaction segments. We've been very focused on directing our investments in marketing dollars up the value curve by increasing our participation in the engagement and interaction areas. Presence is necessary, but not – but does not get businesses found. Doesn't generate new sales or engage with existing customers. In addition, we've seen a rising cost of customer acquisition and limited product differentiation in the presence market. The acquisition of Yodle increases our participation in the engagement and interaction space, expands our product portfolio, and further differentiates us in the market.

We now have more comprehensive solutions that small businesses can use to drive more and higher quality prospects to their online and mobile websites. At the same time we also have an expanded set of tools that help small businesses proactively engage their customers to drive repeat sales and customer loyalty. Finally, combining a broader and more robust set of solutions with Web.com's ability to provide hands on high touch service economically and at scale makes our competitive position even stronger. Some specific areas that we're really excited about includes Yodle's franchise multi location solution, their vertical market approach, and their growing set of office automation application. Yodle has developed business intelligence solutions that are custom tailored to the needs of franchise businesses allowing franchisors to monitor and optimize online marketing across their networks real time. They've also built out this channel with a sale force of over 20 professionals to serve approximately 9,000 franchise locations. We were in early stages of building out our own multi-location channel and now with Yodle, we have a team and an improved product with a strong foothold in the market.

Yodle has customized their products and sales process towards specific vertical markets. The products include content specific to verticals like dentist, chiropractors, and auto shops. Web.com has taken this approach in the home contracting vertical, but this acquisition accelerates a more vertically oriented product and distribution strategy. Also Yodle has developed robust office automation applications with many of these verticals that drive value for customers and are embedded in their day-to-day operations which improves customer retention. The acquisition of Yodle enhances our long-term revenue profile and makes Web.com a leading provider of value added digital marketing solutions to small businesses. Post-acquisition on a pro forma basis, we'll have close to $400 billion of value added solutions revenue and when taking ARPU as a proxy for value added solutions this combination increases our distance from a noisy presence oriented competitive marketplace.

From a financial perspective, we're very excited about what Yodle can bring Web.com in terms of sales and earnings growth. We believe there are about $30 million of cost synergies that we can realize by the first full year of ownership. We also anticipate that there are cross-sell and up-sell opportunities available to us once we put the two companies together. That will provide additional benefits. Web.com has 3.4 million customers who are potential candidates for Yodle's high-end solutions. The reverse is also true as Web.com has solutions which can be offered to Yodle's customer base. Also over time we will work to optimize our marketing spend across the combined customer acquisition channels.

In addition we will be acquiring approximately $50 million of NOLs that will provide additional earnings and cash flow benefits. Kevin will cover this in more detail later, but on a combined basis pro forma for 2015 we would have generated $767 million in non-GAAP revenue and $189 million in EBITDA including full realization of synergies. Yodle has historically been focused on high growth and generated minimal EBITDA. We expect our EBITDA contribution to improve over time driven by two dynamics one at a little over $200 million the business is nearing an inflection point of operating leverage. Two, our operating philosophy at Web.com is to balance growth and profitability. We would anticipate seeing margin improvement after the first year of ownership. As far as our outlook on top line growth we would expect Yodle to grow into high single digits this year with the opportunity for improved growth beyond that.

In 2015 Yodle began to shift its mix towards it platform business; high end vertically oriented websites, franchise oriented and office automation solutions, and away from media which is lower margin. While media revenue has dropped, the other platform businesses have grown at double-digit rates. In 2016, we intend to continue the emphasis towards the platform businesses. In addition to the improving margin profile at Yodle we will continue to generate strong free cash flow which will be used to deleverage driving benefits to net income and EPS. Over the first 12 months of ownership, we expect Yodle to be slightly accretive to non-GAAP EPS with increasing accretion thereafter.

In summary, we're very excited about today's announcement. Web.com finished the year with strong results and the acquisition of Yodle positions us for an even stronger future.

Before turning the call over to Kevin, I think it's important to remind everyone that M&A is a core competency of the team at Web.com and is an avenue we have used effectively to grow the business. Since our founding, we've successfully purchased and integrated 14 companies realizing significant synergies and creating shareholder value. With that, Kevin will provide more detail behind the numbers. Kevin?

Kevin M. Carney - Chief Financial Officer & Executive Vice President

Thank you, David. Let's start with reviewing the financial details associated with the Yodle transaction. We've agreed to purchase 100% of the outstanding shares of Yodle for all cash. The total consideration is $342 million, with $300 million due at closing, $20 million at the first anniversary date of close, and the remaining $22 million at the second anniversary of close. The final purchase price is subject to customary working capital adjustments.

We will fund the purchase with fully committed bank debt consisting of a roughly $100 million draw on our revolving credit facility and $200 million from a new term loan. At the close of the financing, the maturity on the existing and new term loans and the revolver will reset to five years extending maturity of the existing credit facility. The transaction has been approved by both Web.com and Yodle's Board of Directors, and is subject to HRS approval and other customary closing conditions.

We anticipate that the deal will close by the end of the first quarter. Moving to the capital structure, on a pro forma basis as of the end of 2015, we would have had approximately $756 million of gross debt representing a leverage ratio of four times pro forma adjusted EBITDA including run-rate synergies. The term loan and revolver carry an interest rate of LIBOR plus 300 basis points with step downs on the interest margin based on leverage. Our convertible note remains unchanged at 1% fixed rate. At pro forma debt levels in the current market, we would expect our weighted average cost of debt to be 2.6%.

There are two important points I want to highlight; first, the deal is being financed with attractively priced committed bank debt, which does not require us to go the market; second, we're comfortable with the initial leverage levels having started the Network Solutions acquisition at over five times leverage. In this case, we used our strong free cash flow to deleverage, and that's the same approach we plan to take following the Yodle acquisition. The financial profile of Yodle is different than Web.com, so we wanted to layout some key financial and operating metrics to give you a better sense of what the combined entity will look like.

This slide shows pro forma 2015 numbers in metrics. Yodle's higher ARPU and gross margins have a positive impact on Web.com. In addition Yodle's high single digit revenue growth rate will enhance our overall growth profile in the near term with an opportunity for further acceleration as the faster growing value added solutions become a larger percentage of total revenue. As David mentioned, Yodle has historically operated with minimal EBITDA as the company has been investing in growth while trying to reach scale. We have a clear line of site to adjusted EBITDA margin expansion following the acquisition from the $30 million of estimated cost synergies. We anticipate realizing those synergies by the end of the first year of ownership and estimate we could – we would incur $6 million to $8 million in cost to get there.

As David mentioned, we believe this transaction will be slightly accretive to non-GAAP EPS over the first 12 months of ownership. More specifically, assuming a March 31 close we would expect the transaction to be dilutive in the first quarter or two quarters of ownership and accretive thereafter. While slightly dilutive in 2016, as synergies are more fully realized we expect to see low double-digit accretion in 2017. We would expect free cash flow accretion to follow a similar pattern exclusive of deal cost of approximately $8 million and expenses to achieve the synergies.

Shifting to standalone Web.com, let me begin with a review of our financial results for the fourth quarter, and then I will finish with our guidance for the first quarter and full year of 2016. Beginning with the fourth quarter P&L non-GAAP revenue was $141.3 million, which excludes the $3 million impact of the purchase accounting fair value adjustments deferred revenue in the quarter. Revenue was up about 1% compared to the third quarter of 2015 and year-over-year. The improvement in revenue exceeded our expectations and was driven primarily by growth in Do-It-For-Me and our domains businesses. In addition, we recognized $700,000 of premium domain revenue outperformance for the quarter, which as we've discussed in prior calls is not in our guidance numbers. This outperformance has been a bright spot, but one that remains difficult to predict. Excluding the $700,000, revenue increased slightly sequentially and year-over-year. It's worth noting, this is the first quarter this year we delivered year-over-year growth. Non-GAAP revenue for the full year was $559.4 million.

ARPU in the fourth quarter was $13.92, which was up $0.02 from $13.90 last quarter. Excluding the impact of premium domains outperformance from both periods, ARPU was roughly in line with last quarter. We ended the quarter with approximately 3,353,000 subscribers, which was an increase of approximately 22,000 subscribers from the third quarter of 2015. We've been focusing incremental investments towards value-added solution subscribers that can be acquired for attractive customer acquisition costs and lifetime values, which we believe is the most effective way to generating profitable revenue growth.

Our trailing 12 months customer retention rate was 87.5%, which was down from the third quarter of 2015 and the same period last year, while the elevated churn from the breach is behind us it is impacting our trailing 12-month metric slightly.

Turning to profitability, we generated $95.7 million in non-GAAP gross profit for the fourth quarter representing a gross margin of 68%, which is an improvement over the last quarter and the same period last year. Our fourth quarter non-GAAP income from operations was $36.9 million, representing a 26% non-GAAP operating margin. This compares to a 25% margin last quarter and 24% a year ago. The improvement is due to a combination of revenue outperformance and cost control.

We generated non-GAAP net income of $34.2 million or $0.66 per diluted share. This was above the high end of our guidance range of $32.1 million to $33.6 million, and $0.62 to $0.64 per share. Non-GAAP net income for the year was $127.6 million or $2.43 per diluted share.

Moving on, our adjusted EBITDA was $42 million for the fourth quarter, representing an adjusted EBITDA margin of 30%. As expected, we generated sequential margin improvement in the fourth quarter.

Turning to our GAAP results; for the fourth quarter, revenue was $138.3 million, gross profit was $92.1 million, income from operations was $18.9 million, net income was $77 million, and net income per share was $1.48. On a GAAP basis for the full year, revenue was $543.5 million, gross profit was $355 million, income from operations was $61.7 million, net income was $90 million, and net income per share was $1.72.

The large favorable GAAP tax benefit in the quarter was due to the release of a valuation allowance on our deferred tax assets. The release resulted in the $68.8 million benefit to GAAP income taxes for the quarter and the year.

In terms of cash flow, we generated $40.2 million of operating cash flow in the fourth quarter, which was up 10% from $36.4 million in the same period a year ago. Capital expenditures in the quarter were $3.6 million, which led to $36.6 million of free cash flow. This compares to $34 million in the same period a year ago, in which there were capital expenditures of $2.4 million. This capped off a strong year of cash generation with free cash flow of $138 million, up 35% over the last year.

Moving to the balance sheet, unrestricted cash and investments were $18.7 million at the end of the fourth quarter, which compared to $18.4 million at the end of the third quarter. We ended the quarter with a total debt balance of $422.6 million after paying down an additional $28 million of debt during the quarter and $95 million for the full year.

As it relates to our share repurchase program, during the fourth quarter, we repurchased 426,000 shares for $10 million. Through December 31, 2015, we have repurchased 3.1 million shares for $61.4 million since the Board approved a $100 million buyback authorization in November of 2014. With the Yodle acquisition we will continue our practice of deleveraging and the stock repurchase program remains in place with capacity.

With that, let me turn to guidance. The guidance we are providing in today's call is for standalone Web.com. After the Yodle transaction closes, we will provide guidance for the combined company. For the full year, we are projecting non-GAAP revenue to be between $570 million to $580 million. From a profitability perspective, we are targeting historical adjusted EBITDA margins of 29% for the year. We expect that our – we expect our adjusted EBITDA margin to increase through the year along with revenue. We are targeting non-GAAP net income in the range of $135 million to $142 million, or $2.62 to $2.76 per diluted share. This assumes 51.5 million diluted shares outstanding.

For the first quarter of 2016, we are targeting non-GAAP revenue in the range of $138 million to $140 million, and for sub growth we are targeting 10,000 net adds to 15,000 net adds. We expect professional services revenue to be similar to Q4 2015 levels. We anticipate EBITDA margins of approximately 28%, and non-GAAP net income to be in the range of $31.4 million to $32.4 million or $0.61 to $0.63 per diluted share. This assumes 51.4 million diluted shares outstanding.

Given our current NOL position, we expect cash taxes to remain in the low single-digit range through 2017 with a gradual increase after that. Free cash flow for the year should be around $130 million, which assumes CapEx in the range of 2% to 3% of non-GAAP revenue.

For the year, we expect strong growth from our Do-It-For-Me and online marketing businesses that will be offset by declines in domains and Do-It-Yourself. As David mentioned given the competitive dynamics we have been reallocating investments in this area to our value added solutions. The combination of market forces and choosing to de-emphasize this area makes us a headwind on revenue for us for the year. We will continue our efforts on DIY retention, but on a net basis, we expect this area to decline. Part of the year-over-year decline in domains is due to lower forecast for premium domains, given the difficulty of projecting this revenue stream. In addition, for the year we estimate lost revenue from the breach negatively impacts growth by about 1% or $1 million a quarter. The sequential revenue decline from the fourth quarter of 2015 implied in our guidance is partially due to softness in our DIY revenue compared to our value added solutions growth which accelerates throughout the year.

Other factors include lower premium domain contribution and seasonal slowdown in the fourth quarter selling activity that manifest itself in the following quarter. The overall sequential decline in revenue is also the driver behind the sequential decrease in EBITDA margins that reverses as revenue builds in later quarters. For our share count, we do not take into consideration additional share repurchases which would increase our EPS guidance. Finally as a reminder, in 2015 our free cash flow benefited from a lower incentive payout and other working capital benefits. We are pleased with the results of the quarter. In summary, we executed well and made steady progress over the past several quarters in returning the company to growth. We take a long-term view of the business and are excited about the opportunities in front of us to grow profitably. We are especially pleased with the potential that Yodle brings and we look forward to updating everyone after the transaction closes.

With that, we would now like to take questions. Operator, if you could please begin the Q&A session.

Question-and-Answer Session

Operator

Thank you. Thank you. Our first question comes from the line of Gene Munster with Piper Jaffray. Please proceed. Gene Munster, your line is live in conference. Please proceed.

Have you put yourself on mute?

Eugene Charles Munster - Piper Jaffray & Co (Broker)

Can you hear me now?

Kevin M. Carney - Chief Financial Officer & Executive Vice President

Yeah.

David L. Brown - Chairman, President & Chief Executive Officer

Yeah, we hear you now.

Eugene Charles Munster - Piper Jaffray & Co (Broker)

Okay, great, sorry about that, mute problems. Great, thanks, congrats on a solid quarter and the acquisition. I was wondering if we could drill down into two components of the acquisition. First on the synergy detail, can you go into a little of description on how much of that is kind of tech infrastructure synergies versus head count and other synergies? And then on the growth outlook for Yodle, how much of that is going to be ARPU based growth versus customer acquisition?

Kevin M. Carney - Chief Financial Officer & Executive Vice President

Sure, this is Kevin. Let me take the synergies question first. I think, again, we're talking about $30 million of cost synergies. I wouldn't – I would expect – we've done a number of deals now, I think, the nature of the synergies would not be that dissimilar from deals that we've done in the past. I think, if I had to highlight three typical categories there just kind of normal redundant expenses, you've got a public company here. You've got another company that was preparing to go public. So the things you might think of D&O, insurance, et cetera, things of that nature. And then again duplication in control and admin functions, I think, back office and accounting, audit, HR, things of that nature. And then finally, I would characterize there's really cost arbitrage opportunities, it's a little unique here where we intend to continue to make the investment, the growth investments that Yodle has in their plans, but we'll look for and have identified opportunities to fulfill that planned growth in lower cost geographies and see that benefit.

David L. Brown - Chairman, President & Chief Executive Officer

And let me add a comment too. One of the things that we really like about Yodle is their significant focus and investments they've made in software assets. They really have a great platform to helps small businesses. We have a great service orientation. We don't – we love the fact that they've got that. It's going to really accelerate our ability to help small businesses and create value. So we plan to protect that and really have left in all – into our plan, all of the assets, all of the growth assets they had focused on in the technology arena and really are using this cost arbitrage to make sure that we get the most bang for our buck.

And to your second question, in terms of subscribers and ARPU, there is a balance of subscriber and ARPU. Their – obviously, their ARPU is much higher than ours or anybody else's for that matter in our segment. And we'll benefit from that, it will help. We'll see a significant step up in ARPU, when we close this transaction as we blend them in. And then they'll be adding both subscribers and adding additional ARPU somewhat offset as their media business, we alluded to this as their focus is, we're really focused on the platform businesses and they have very high ARPU but slightly lower ARPU than the media business. So as the media business which is being de-emphasized that will create what appears to be a little bit of a headwind in ARPU but in fact you are talking about $300 a month ARPU business here, and that will stabilize sometime down the road here later this year or early next year, so we'll then begin to see ARPU grow even in their business. So, I would say overall net strong ARPU driving as well as subscriber driving.

Eugene Charles Munster - Piper Jaffray & Co (Broker)

Good. Thanks, guys.

Operator

Thank you. Our next question comes from the line of Samad Samana with FBR Capital Markets. Please proceed.

Samad S. Samana - FBR Capital Markets & Co.

Hi. Thanks for taking my questions. So, David, I wanted to ask a couple questions about how you – Web selected Yodle, did you approach them, did they approach you, was it a competitive bid, and was it something in particular about them that stood out that ultimately made you select them?

David L. Brown - Chairman, President & Chief Executive Officer

Yeah. So, we've known Yodle for several years. We've had an ongoing dialogue with Yodle. We both are in the same space. We both exist to serve small businesses and help them succeed online. So, we've compared notes and known many of the management team for a number of years. And as our strategy began to evolve that we wanted to really differentiate ourselves by owning the kind of the value added space, Yodle was a natural selection for us. It really complements that strategy, it accelerates that strategy, so we reengaged with Yodle and had a discussion about combining forces and fortunately were successfully in putting this deal together.

Samad S. Samana - FBR Capital Markets & Co.

And then Endurance recently acquired Constant Contact also in digital marketing, but slightly different places. Can you talk about what you're seeing in the industry, do you expect further consolidation, or do you think it's getting overcrowded? What are your views on that and how much does that impact timeliness impact the timing of this deal?

David L. Brown - Chairman, President & Chief Executive Officer

We – first off, the market is increasingly competitive as small businesses wake up and understand that they need to be online in order to market themselves, it's created an opportunity for new entrants into this space. Especially in that what we call the presence part of the space, which as we saw that competition began to adjust our strategy. We are – we want to continue to play in presence, but we want to frankly own the space that adds real value. It's not about having a website, it's about getting found, it's about getting conversion, it's about interacting and engaging with customers. And so we've set that as our strategic direction. Yodle is perfect in that space. There are very few players like Yodle and certainly none with the scale of Yodle in this space. So, they were a perfect fit for us. I do think we'll see more consolidation in the space. It didn't have anything to do with our timing on this particular deal. This really is just the perfect match for Web.com given our strategy and our desire to differentiate ourselves from the presence marketplace.

Samad S. Samana - FBR Capital Markets & Co.

Great, and then a question on the core business, so – the 2016 was a much better – 2015 was a much better year as you stabilized the business, and it's in much better shape heading into 2016. As you think about the growth by buckets, for value added services can you give us an idea of what your growth expectations there are? And then on the core domain registration side, are you expecting that to be stable or are you expecting slight softness there going forward?

Kevin M. Carney - Chief Financial Officer & Executive Vice President

Yeah. This is Kevin. I mean, I think, you can see that the overall guidance, and what I would tell you is stability around domains, Samad, it depends on – again, we're – relative to our guidance, again we pointed out the fact that last year in our numbers we've got several million dollars I guess over the course of the year in premium domains, which we're not guiding to, so that's number one. Two, I would just say stable to some softness there. DIY is where we really expect to see some decline and that has – and then again good growth in the other areas of value added services where we're continuing to make incremental investments. I think, the real point is we're having good success. We talked a lot about the Do-It-With-Me offering that we're continuing to rollout in some of the other areas around not to the DIY website, but hosting and e-mail which will help in those areas. And they are helping, but I think more importantly as we're reallocating investments away from DIY to the other areas and so that will have and is going to have an effect on the growth rate there, to the decline in this case.

Samad S. Samana - FBR Capital Markets & Co.

Great, thanks for taking my questions, and congrats on a great quarter and an exciting acquisition.

David L. Brown - Chairman, President & Chief Executive Officer

Thanks.

Kevin M. Carney - Chief Financial Officer & Executive Vice President

Thank you.

Operator

Thank you. Our next question comes from the line of Deepak Mathivanan with Deutsche Bank. Please proceed.

Deepak Mathivanan - Deutsche Bank Securities, Inc.

Great. Thanks, guys. Two questions. So first perhaps can you provide a little bit more color on the mix of customers in Web.com's base that you think is the right target base given that, Yodle's ARPU is $300 per month perhaps for the up sell opportunity. And then I have another follow-up?

David L. Brown - Chairman, President & Chief Executive Officer

Sure, so I think, with 3.4 million customers we have an array. It's a very heterogeneous mix of customers, and so we've got more mature, larger small businesses, and we've been successfully reaching those customers with our Leads by Web product. So we know, we've already proven to ourselves that we can sell $1,000 and multi-thousand dollar a month subscriptions in our base, but having a company that's literally got hundreds of sales people that are already skilled at selling into more mature larger small businesses is going to do nothing but accelerate our move up the value chain and our effectiveness both to outside prospects, but even to our own customers. So we think there is a great opportunity to sell to our existing customers.

Deepak Mathivanan - Deutsche Bank Securities, Inc.

Got it. That's helpful. And then related to the core business, you mentioned about the softness in DIY during the fourth quarter and also expectations going forward. So what was the driving factor for that, was it related to the customer acquisition, perhaps due to competition, or is it due to increased churn in the business – on the customer side. And then can you also update on you know the progress on the Do-It-With-Me offering, that was a great product offering for you guys last year, so just wanted to get a little bit more color on the progress there?

Kevin M. Carney - Chief Financial Officer & Executive Vice President

Sure. Yeah, let me start. This is Kevin. So, I guess to sum it up, I would say it has to do with new customer acquisition in the DIY area. You know, I – to touch on your other point the Do-It-With-Me, as I mentioned, we've had good success with that. That has – we've seen significant improvement in product retention in that product area, when we engage with the customers with the Do-It-With-Me coaching. So it's not really a churn issue. We are having positive impact there. It's one of customer acquisition. And so, we've said again – we acknowledge the fact that very competitive landscape, commoditized marketplace or product, and therefore we're not chasing those customers. We're going to allocate those investment dollars where we can get a better return for investment – on our investment. And so that's what we're doing. So, it's to a certain extent self-induced, we're just acknowledging the market that we're playing in and focusing on the areas where we have strength in the market.

Deepak Mathivanan - Deutsche Bank Securities, Inc.

Great. Thanks, guys.

Operator

Thank you. Our next question comes from the line of Matthew Thornton with SunTrust. Please proceed.

Matthew C. Thornton - SunTrust Robinson Humphrey, Inc.

Yeah. Hey, guys, thanks for taking the question and congrats on the quarter and the acquisition. Couple questions, if I could, I guess first David on the – can you maybe give us a couple examples of Yodle kind of comps and competitors, and kind of who they're going head-to-head in various bakeoffs. And I guess, as this market continues to kind of consolidate, is there a risk that backing off maybe the top of the funnel, if you will, if others also kind of pursue this and still have that top of the funnel piece does that kind of risk your sub growth longer term, I guess, how do you kind of think about that? And then I have got a follow-up. Thank you.

David L. Brown - Chairman, President & Chief Executive Officer

So, I think, to give you a sense of the space that Yodle plays in, it's filled with lots of very, very small scale players. Someone wakes up one day and has a brilliant idea that they're going to create some scheduling software for a specific vertical market and they are able to achieve relatively small scale with that a very valuable product. But they don't have the muscle to reach the market at large. And so you see lots of the applications that Yodle has developed, they are able to push out because they have scale. They are able to reach a wide, much wider audience. But again it's these innovative new things like if you were in the – let's say you were in the field services business and you were on a job site and you wanted to get somewhere an estimate, they created an application that allows you to online create the estimate and store it in their CRM, so that later they can compare the estimate to the actual field job, and that kind of value really makes the contractor a lot more efficient.

So it's those types of things online scheduling, estimating, even taking payments in the field, those kinds of things are the kinds of application that Yodle has developed and there are many more examples, these are just a few examples. They've got a great series of applications in the dentist vertical market. They've got some applications in the chiropractor vertical market, in the automobile market, in the field services market, and they have some additional vertical market applications already being developed for additional vertical markets. And then of course we have our own contracting market. So I think that might give you a sense of the kinds of things and we don't see many players out there with any scale competing, so we want to grow fast in this area and you will see us continue to make significant investments going forward in this software development area. And then to your second question we're not giving up on DIY. We're not giving up on domains, but we are going to be realistic. There is only so far you can chase cost of acquisition and realize a reasonable return on investment and frankly the market is very competitive and there are crazy things going on in the market right now and we'd rather put our money where we can acquire a new subscriber even if it's fewer subscribers, but at higher ARPU. We think we can actually generate better revenue growth by going in that direction. So – but we're not giving up. We still have a significant amount of money spent. We're still going to be very focused on our Do-It-With-Me approach, so that we keep – we drive our product retention to higher levels than anyone in the marketplace. And if there are opportunities to invest in this space, economically, we'll take it. But we're not particularly concerned about the top of the funnel because frankly, we are moving in a different direction strategically. We've said, we're going up market. The market is going to need these kinds of services and we're going to be the largest best player to provide them here and this acquisition is going to help us tremendously with that scale.

Matthew C. Thornton - SunTrust Robinson Humphrey, Inc.

Great that's helpful. And then just quickly, I guess, logistically is the Yodle leadership staying on board and how are you thinking about New York versus Jacksonville from a logistic standpoint. And then just housekeeping wise and you talked about their media versus the platform business. Platform growing double-digits, media is declining, can you size those two stubs of the business, if you could? Thanks, guys.

David L. Brown - Chairman, President & Chief Executive Officer

I'll take the first part.

Kevin M. Carney - Chief Financial Officer & Executive Vice President

Yeah, let me start with the last piece, and take care of that, and then David can come back. Yeah, the media, now what we've been talking about is what I would call the paid search product on a standalone basis, which is – just think about budget based online advertising, the PPC management. And that is a – it's a higher churning product, lower margin that – so think about that as roughly 30% kind of revenue and declining. There are other elements of media that are embedded in some of the other products, which are very profitable, with very high retention. So those are attractive and we'll continue to invest and grow those areas. And so, again just to kind of sum it up, you got 30% here in what they call Local MAC, (50:00) it's their paid search product declining by design because we're making investments elsewhere and the rest of it growing in double-digit kind of growth rates.

David L. Brown - Chairman, President & Chief Executive Officer

And to your first question, I want to be crystal clear that one of the reasons we made this acquisition is we like the Yodle team. We admire what they've created. We think they're sharp. It's a well-tuned sales organization. They have a strong product organization and a strong IT organization, and we intend to take care of that team and have it be part of our ongoing team. It will significantly strengthen Web.com in its ability to help small businesses, and markets like New York are going to be important to us because they are good source of some of that intellectual talent that's going to be help drive Web.com in its next chapter of growth.

So now having said all that we have some unique advantages in how we have handled the cost arbitrage with some employee basis. So when you think about the growth of the employee base in the future, we'll look for opportunities to add resources in our Canadian operations, or in their Austin operations, their Scottsdale operations, or our Argentina operation, and we'll get – that would give us more bang for our buck, so we plan to use that but we love the team that's there, and we plan to frankly embrace them and have them be part of the Web.com team going forward.

Matthew C. Thornton - SunTrust Robinson Humphrey, Inc.

Great. Very helpful. Thanks, guys.

Operator

Thank you. Our next question comes from the line Rohit Kulkarni with RBC Capital Markets. Please proceed.

Rohit Kulkarni - RBC Capital Markets LLC

Great. Thank you, guys, and a nice acquisition actually. In terms of kind of just the Do-It-With-Me product, can you talk about how you are thinking about the up sell and the ARPU? I remember, you had mentioned that it's similar to DIY ARPU levels, but you think you're giving much greater value to customers and Do-It-For-Me ARPUs are maybe five or six times your DIY, so wondering where you are with what kind of products can be sold as part of your Do-It-With-Me offering. Probably it was restricted to hosting and you had talked about plans to do e-mail and marketing, and just layer on more value added services, so can you talk about that a little bit?

David L. Brown - Chairman, President & Chief Executive Officer

Yeah. So we've begun that process. We're very cautious. The principal driver behind the Do-It-With-Me product was retention. We wanted to make sure that customers publish their website successfully, that's the biggest single reason that drives churn in all of the presence marketplace is you buy the product and it turns out to be too hard to get to the finish line and published. So our Do-It-With-Me coaching is designed to assist our customers and improve our retention, and that's working and we've talked about that. We then – and but we – and we want to preserve that. So any selling we do is going to be very soft and it's going to be frankly more akin to serving and you put your finger on it. Selling someone things like professional e-mail with the domain name that goes with their website is a very positive step for a small business in their branding programs, making sure that if once their website is built, if they want to buy e-commerce capabilities so that they can sell online is an obvious upsell for us. And we're early in the days of doing that. We're absolutely convinced that as you improve the quality of your service and that's reflected in retention, it gives you better opportunities to upsell and cross-sell, but it's still too early and we don't have any real metrics to provide on today's call.

Rohit Kulkarni - RBC Capital Markets LLC

Okay. And if I could ask another big picture question on your marketing spend as in some of your peers are doing Super Bowl advertising. Obviously you haven't done that, but you do selective TV ad campaigns specifically. Somehow I seem to see a lot more Web.com TV ads, maybe I'm – I've been screened properly by you guys, but wanted to ask you how are you thinking about your marketing spend? And particularly how does Yodle think about their marketing spend. Probably they may screen for not just a 20 employee company, but a larger company given their monthly ARPU?

David L. Brown - Chairman, President & Chief Executive Officer

Sure. Well, I think, as distinguished from many other companies we are very oriented towards direct marketing. We spend our dollars where we can measure the return on investment and so you've been watching our TV ads which are in fact direct response TV advertising and we literally monitor those by the 15 minutes segment and look to see whether we're getting a reasonable and positive return on investment. You're seeing more of them because we're having more success with them right now. And you know – and as we continue to find other ways to spend dollars where we can measure the positive return on investment you're likely going to see those. In Yodle's case, they are also a very direct sales and marketing oriented company. They spend very little money in fact virtually nothing on branding and together we'll be able to take our marketing budgets together our – both of our direct marketing budgets and we plan to look at those after close and come up with the most efficient and optimized way to spend those dollars going forward.

Rohit Kulkarni - RBC Capital Markets LLC

Okay. Thank you, guys.

Operator

Thank you. Our next question comes from the line of Sameet Sinha with B. Riley. Please proceed.

Sameet Sinha - B. Riley & Co. LLC

Yes, thank you very much. Couple of questions. So, David, in the past – specifically you're talking about media versus platform at Yodle, in the past you had an instance where you had to shutdown the national or enterprise accounts business, so which caused a one-time drop off. Would you think it's possible for you to may be shutdown this PPC division before the acquisition happen, so that we don't have an issue – similar issue like that later on down the line?

Secondly talking about China, can you elaborate on your strategy there obviously there's significant demand for domain names and if you can elaborate on where you're seeing that demand is it primary or on the secondary business. I understand SnapNames has just opened up an office there, so what's your strategy there. And lastly just talking about free cash flow guidance, seems like it's going to be probably down a little bit year-over-year, can you talk to the dynamics there and specifically if you can touch on the retention rate of .XYZ, could you do a similar sort of an exercise to continue to add value and boost free cash flow? Thank you.

David L. Brown - Chairman, President & Chief Executive Officer

Sure, so I'm going to handle two of them, and Kevin will handle two of those. First on China, where we play in China really in a secondary way are SnapNames, premium domain activity that's how we're benefiting in China right now. We don't – we're not an active registrar selling domains to the population in general, but we are a recipient of an inventory of domains and the market has been very interested certainly the last couple of quarters in entering the domain business and buying domains. And frankly buying premium domain, so we benefited, we commented in our script that there have been some benefits from the premium domain business in China, it's a bit uncertain how long that will last. And, so you know we've not included it in our going forward guidance.

On the .XYZ promotion that we ran well over a year ago that was a successful promotion for us. We ran a few others like it, that were also successful, they resulted in improved bookings for the business as we saw renewals from those customers at the end of their promotion period. It's likely that we'll continue to look for innovative ways like that to drive bookings, and drive frankly value for our customers. So you should look for us to continue to have different types of programs. We're testing, we're always testing something in this space. And if we find something that works then we'll invest in it.

Kevin M. Carney - Chief Financial Officer & Executive Vice President

And then Sameet on the other two questions, let me hit the cash flow one first. I think that, the principal thing and I think we called it out in the script is around working capital, we talked about the past that in 2015 we had a cash flow benefit around our management incentive compensation. In that we paid – in 2015, we paid out less than we expensed. And the opposite is true for 2016. So we're not, not – so basically to cut through it. Year-over-year you've got about a $10 million negative impact there as you look at 2015 versus 2016. So that's the principal driver of what you're seeing from relative to the cash flow guidance.

And then on the question around Yodle's media and is it sort of analogous to our national accounts business, as a reminder, I mean the national accounts business was highly concentrated, again $5 million or so a quarter with a handful of customers and again very nonstrategic, this I would say is different than that. I understand the point, but it's a lot of smaller. They are our target customer, a lot of smaller – small business customers. It is profitable. It just happens to be higher churn. Now, that churn as the base of customers mature that churn will improve. And again, it is a profitable business. So, and we haven't talked about it, but I think that from a revenue synergy perspective, I think that there are probably ways that we can improve that. We've got our Leads by Web product. There may be opportunities around that from a revenue synergy perspective. So, I don't think it's something we would look to jettison kind of going into a deal, but we would probably take a different strategy.

David L. Brown - Chairman, President & Chief Executive Officer

Yeah.

Sameet Sinha - B. Riley & Co. LLC

Just one final question, even within Web.com, you've always had a PPC business, do you think there's an opportunity to kind of move or combine those two programs, and I'm assuming here that Web – the program at Web.com was profitable and within the norms of your profitability metrics, is that possible you combine the two and say retain the customer and the product?

David L. Brown - Chairman, President & Chief Executive Officer

Yeah, I think, it's a good question – it's a great question actually, it's something that we didn't mention is one of the strengths of Yodle in their software development areas is they've developed tools to manage pay per click campaigns that frankly are superior to the tools that we have. So, we expect to benefit by using some of those tools in our existing programs going forward. So, absolutely we'll be combining the efforts. We'll be utilizing their tools going forward, and again they'll probably benefit from some of our lessons on retention of customers as well.

Sameet Sinha - B. Riley & Co. LLC

Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Mitch Bartlett with Craig-Hallum. Please proceed.

Mitchell Palmer Bartlett - Craig-Hallum Capital Group LLC

Yeah, I just was looking at the size of the inside sales force and then the 20 national sales people, just wondering about how many offices, how dispersed our folks have decentralized, what is the kind of the normal path a customer comes in? And what's the split of revenues between those two kind of groups?

David L. Brown - Chairman, President & Chief Executive Officer

Yeah, so we'll start with the sales offices and their concept. They have significant concentrations of employees in Austin, Texas; Scottsdale, Arizona; Charlotte, North Carolina; and then their headquarters is in New York City. Their principal sales offices are really in the first three, although they have a small sales group in New York. Principally, it's Austin and it's followed by Scottsdale and then Charlotte and these are significant offices with hundreds of employees in the offices. So, good scale in those offices, well run offices with all of the infrastructure needed to run a tight well run operation, and they do practice a concept of – they have a great management team frankly. There I would say a core strength of Yodle is sales, and so they've got really good strong sales people in all of those offices and we intend to continue giving them the freedom to run their businesses, and it's – frankly it's inside sales teams. So, to answer your question, it's people on a telephone calling customers, and it maybe take four or five phone calls before a customer finally there is enough rapport built up between the team member and the customer before a sale is made, but that's how they approach it.

Mitchell Palmer Bartlett - Craig-Hallum Capital Group LLC

So, the business scales very well, it's not – I think, it's not too...

David L. Brown - Chairman, President & Chief Executive Officer

It does, very much like our business by the way. We're very comfortable with this acquisition because when we visit their offices, we feel like we're home. There's a lot to learn from them and they have something to learn from us, but where fundamentally there are lot of similarities. So we're very comfortable from a management perspective taking this on.

Mitchell Palmer Bartlett - Craig-Hallum Capital Group LLC

Would their business at maturity have a target margin you'd share or it seems like apart from the synergies it's pretty low margin at this point because obviously they've been growing rapidly and whatnot, but what would be their target?

David L. Brown - Chairman, President & Chief Executive Officer

It has high gross margins and today relatively low net margins, but we expect those to expand over time and over the coming years to get into the range of where our net margins are. So, it has the legs, it's really a function of scale now, and we think they're really just passing through the tipping point where the scale benefits begin to result in growing margins. So, between some good arbitrage opportunities, the synergies that will take place, and the benefit scale, they should be able to get into the same range of net margins that we've been operating in here. It may take a few years, but we'll see it in a few years.

Mitchell Palmer Bartlett - Craig-Hallum Capital Group LLC

And I apologize, but I was a little late, did you dedupe the customer lists, are they – is there a big crossover – overlap?

David L. Brown - Chairman, President & Chief Executive Officer

There's not going to be a big crossover, Mitch, because they are very, very focused up – think upscale, larger small businesses, more mature small businesses that are willing to pay hundreds of dollars a month, and as we've talked about in previous quarters, we're just beginning to move in that direction with our Leads by Web program and some of our other value added services. So good news is this is going to be mostly additive from a customer perspective to our business.

Mitchell Palmer Bartlett - Craig-Hallum Capital Group LLC

Got it. Thank you very much, David.

David L. Brown - Chairman, President & Chief Executive Officer

Okay.

Operator

Thank you. Our next question comes from the line of Hamed Khorsand with BWS Financial. Please proceed.

Hamed Khorsand - BWS Financial, Inc.

Hi, just a couple of questions here. One is could you just walk us through on – how you guys came up with a valuation metric for a company that's barely profitable and hasn't been successful going public for the past year and half given where the market is with the technology startups?

David L. Brown - Chairman, President & Chief Executive Officer

Yeah. So, well, first off, let's – our perspective is, it's a pretty tough market out there for any company to go public and the ones that do go public generally haven't enjoyed themselves that much. So, these guys probably were pretty wise not to take it on given the volatility in the markets and the lack of receptivity. We've know them for years and from a strategy perspective, let's just – first and foremost, this is a strategic move for our company. We said, we want to go up market, we want to differentiate ourselves, we found what we believe is the very best strategy partner to combine with to affect that change and accelerate it so that's point one.

Point two, we're buying the company for about 1.6 times 2015 revenues. We think that by the time you look at throwing in synergies into the deal plus the EBITDA that they had in 2015, it's about 10 times EBITDA type of a deal. But they are just breaking through the tipping point. Their EBITDA in 2016 would have been greater and we think it will accelerate because of the scale. So from our perspective, we're very comfortable with this acquisition. You know, it's a low multiple of revenues, it's a reasonable multiple of EBITDA and they are taking off and it's a higher growth business, so it's going to improve our growth profile and fit our strategy.

Hamed Khorsand - BWS Financial, Inc.

Okay. And the other question I had was – I would have – I had the opposite thinking process as you guys as far as the strategy on domains. I was thinking, I mean, why wouldn't you discount the price point to bring in a bigger flow of customers and cross sell in this competitive market. Why continue to be a premium priced product in domains?

David L. Brown - Chairman, President & Chief Executive Officer

Yes. So it's all about acquiring new customers and the market for years has been low priced and the lower price you go, the lower quality of customer you get and we've talked about this on previous calls. We've tested and experimented and even played in this space and the repercussions of playing in the price game are getting customers that don't generate good returns on investment over time. So if we can find pools of customers and mechanisms to acquire them where they generate good returns, we're definitely going to still play in both the domain and the DIY business but we're not going to throw money away just to be – just to play in what is becoming an increasingly competitive and sometimes even a foolish marketplace.

Hamed Khorsand - BWS Financial, Inc.

Okay. I appreciate. Thank you.

Operator

Thank you. We have no further questions in queue at this time. I'd like to turn the floor over to management for closing remarks.

David L. Brown - Chairman, President & Chief Executive Officer

Thank you all for joining us today to review our fourth quarter and the outlook for our business. We appreciate your interest and look forward to speaking with you about our progress. We'll be participating in the Roth Technology Conference in March. As always, feel free to contact us here at Web.com if you have additional questions. Thank you and good night.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.

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