Think Partnership, Inc. Q4 2007 Earnings Call Transcript

Think Partnership, Inc.

Q4 2007 Earnings Call

March 13, 2008 4:30 pm

Executives

Scott P. Mitchell – CEO

Jody Brown – Chief Financial Officer

John Linden – Chief Technology Officer

James Banks – Chief Executive Officer of Web Diversity

Analysts

Colin Gillis – Canaccord Adams

Paul Thomas – Roth Capital Partners, LLC

Kim Yun – Pacific Growth Equities

Michael Pituitary – Private Investor

Chandler Jadwani - Private Investor

George Stoffan – Stoffan & Company

Presentation

Operator

(Operator Instructions)

Ina Mcginnis

This is Ina Mcginnis with ICR. Earlier this afternoon Kowabunga released Financial Results for the Fourth Quarter and year ended December 31, 2007. If you did not receive the press release and it is available on the investor relations section of a Kowabunga website at www.kowabunga .com. This call has been web cast and a replay will be available on the company’s website for 30 days. We would like to remind you that today have the most contained forward-looking statements for the meaning of Federal Securities Law.

These statements do not guarantee future performance and therefore, under reliance should not be place on them. We refer all of you to the risk factors contained in the Think Partnership 10K filed March 29, 2007 and subsequent quarterly filings for more details and discussions of the factors that could cause extra results to differ materially from those projected on any forward looking statement.

Kowabunga assumes no obligation revised any forward-looking statements of projections that maybe made in today’s call. This conference call contains time spent of information that is accurate only on to data of a live broadcast, Thursday, March 15, 2007. Kowabunga undertakes no obligations to revise or update any statements to reflect the venture circumstances, after the date of this conference call. The speaker on today’s call from the company is the President, a Chief Executive Officer, Scott Mitchell. Chief Financial Officer, Jody Brown and Chief Revenue Officer, Steve Lerche.

And, with that I would like to turn the call over to Scott.

Scott Mitchell

We are here to discuss the new Kowabunga. Cause the (inaudible) 3 now it represents a time-year, work setting of names and by the energy of our culture, passion for Kowabunga business. But, also fundamental shift in focus to our trends, strategy, (inaudible) , I think we are a bit engage here in today’s conference call.

I am please to report that we have improved our operating result in the second half of 2007, compared to the first half of the year. The second half revenue of $38.8 million, up from $34.6 million, (inaudible) a $5.4 million, up from $3.7 million. This equivalent is very much in line, which will guide us (inaudible) expected half of the year. As to the interest call, by giving you some context of how we look to our business for 2008 and beyond, following that, I would like to turn the call over Jody Brown, the Chief Financial Officer to discuss our fourth quarter and full year financial results. Steve Lerche, our Chief Revenue Officer to discuss the progress shift in making our sales and business developed facts. Finally, turn the call for all of your questions.

Steve Lerche

In accordance to discuss our store per results, I would like to provide some complex in guidance of how do we anticipate our business currently or in the remainder of 2008 and beyond. As all we know, we operate our marketing and advertising businesses in three distinct segments. Our direct division comprising time daily marketing, lifestyle marketing and superior products, prioritizing division, which can maintain the traditional business and our network division, where we operate our reunited business.

First and foremost, I want to emphasize that while we are fortunate to have some very valuable properties operating in all three segments. We view Kowabunga’s core business as providing interactive performance-based advertising networks. What this means is that our (inaudible) is to provide exchange platforms, where on-line content publishers can intelligently arched in their traffic to the highest bidder, to best monetizers’ site, while correspondingly, on-line advertisers can use their platforms to intelligently pay for traffic contained on a performance basis to maximize the return of investment from their advertising dollars. We have a few differentiating the in proprietary technologies that we believe that enable us to provide previous procedure better and more efficiently than anyone else.

First, is our unique intended pending, quick fire prevention technology. We believe absolutely the most subscribed effective quick fire prevention technology available. We believe that effective real time quick fire prevention is actually imperative in operating the efficient -- on-line segments and that many competing on-line advertising networks, both large and small are beginning to realize the impact of quality erosion and the resulting consequences that quick fire will have on their overall networks, both from the advertisers’ side and publishers’ side. For the last three years, we have been able to distribute the forefronts in adjusting quick (inaudible), NBA leader and the quick fire prevention stage. This enabled us to accumulate a very comprehensive set of data and analytic that allows us to continue the fine tune the effectiveness of our technology situation.

Second, we are now levering in dynamic conversion straw in technology under a tenure associative agreement with (inaudible). Consider by many could be the world-wide leader in predictive forecasting, web casting and data analysis. (inaudible) in technology into a class one, gives us the ability to use conversion data that is the information regarding whether a click actually resulted to an actual transaction to -- assign in score, should look to affect those score, key publisher and keyword combination. This drawing was a bind with the quick fire protection provides the unique automated sculpture to gold can traffic from our publishers and gain a higher amount for the high quality traffic and send in traffic to our advertisers to enjoy a higher and more consistent return of investment file. The mark data weekly into - become as a greater analysis and the better goal tenders we become.

We believe that this puts us in a very variable market position such it allows us to slightly aggregate high quality traffic and an approach on to a less desirable en vogue converting traffic will lead as for our competitors. This (inaudible) 5 quality traffic will ultimately increase the relatively return of investment we provide to participating advertisers. The ****10:36 leveraging of this technology, the gross network assets, we have realized accelerate growth in traffics throughout the fourth quarter and please to tell you that the growth ****10:45 for our first quarter faster than we anticipated.

It is important to note that increase searches in themselves do not always immediately translate into increase revenue. Revenue growth, which primarily function of the type of traffic that participate in publishers brings to the scene, the types of advertisers we have available and one of such traffic transfer master as will be real quick, as well as strong converting click. Assuming, while ****11:13 has restrained by the ability of every publishers in building higher volumes of traffic. We are faced (inaudible) of having increasing volume of traffic and 3 up with more high quality advertisers. Continue for traffic grows, there are billions of service ads and its search request increases, which generally monetized research request of the ad advertisers that are competitively linked on that key word. This is just why sale focus has become more important as additional advertisers or more importantly, advertising networks bring immediate and do sell of revenue and margin.

Developing -- seems in other performance network marketing platforms constitute our core business and in our network division, we believe will be the business at the market will try to sign in 2008. What we currently have is casual positive, none for business presentation. Our advertising segments are never business and it is the model that will be digging in year-end.

Throughout 2008, we expect our non-core businesses to continue to provide revenue and cash flow help towards growth. However, we will continue to evaluate alternatives for these segments and products, as we nail our focus upon our core business and as appropriate we will look at statistic merger opportunities, -- equity deals and - or otherwise, using operations as necessary. The most helpful, be mind full that many of the non-core products are positive contributors to both revenue and EBITDA and also, operated and somewhat self-contained and in a non distracting manner and we must be both prudent and aggressive in these -- efforts.

Long-term however, it is our goal to not only nail our management in research focus, but also further strengthen a balance sheet in more precisely defining our business in the market place. One of the most compelling features of our network division of the network division of (inaudible) are the opportunities for strong growth with scale ability, strong market position and compelling competitive advantage. We believe that with appropriate levels of focus-, we will be able to double the size our network business in 2008, through an excess of $40 million in revenue. In the long-term our goal is towards business to ultimately be able to generate 20% EBITDA margins. Although, we nearly expect to realize all the operating -- in this kind of scale to enjoy its margins in 2008, with do expect that with our nine core business continuing to generate revenue EBITDA that on every year basis, we will pull up provide for positive of the year-over-year growth, on both on EBITDA and revenue basis between 2007 and 2008.

Now, let me give you some contacts about how we will make our business will grow in 2008. Let us review some of our recent company EVATS. In February, we completed a new - credit with Wachovia bank. This type of credit represents more flexible access to capital, under what I consider to be very attractive trends for Wachovia, but it has been long-term banking partner of ours. It also represents a bout of confidence by Wachovia in our business file and it is quite a very conservative credit market with seemingly much higher standards for lending.

We also announced -- right plan at February. With the growth and opportunities, we believe we are currently managing and what we see as an aggressively consolidating markets segment that we can pick 1. We determined that we sure hold the right span as necessary to protect the long-term value of our company’s asset for our share holders. The plan’s primary objective is to write our Board of Directors more time to fully consider any -- before the company. The rights will not be vindicated over time, but strongly encourage anyone seeking through acquire the company, to negotiate directly with our board.

In January, we announced initially our $5 million stock repurchase plan. We believe our current common stock price is substantially under value by the market and it does not reflect the current and long-term prospects of our company’s business. We therefore, determine that in the plan should be an icon investment and an opportunity to improve circular value, by reducing the number of series of standing. We also believe that it can enhance collaborates of our launch in service, as well as to provide another valuable tool to better man their company’s financial strength.

By the end of first quarter, the company has made a market purchase development stock. By the first quarter, we only purchase about 100,000 shares. We will continually evaluating open market -- opportunity, as our chance to -- and build confidence for men. It is important to note that in our near line credit is a hands-free purchase capability. In our nine core businesses, our agency in North Carolina, NSA recently received 3 Emmy awards and it is performing well, to continue to be incurred by their -- relationships with Subway North Carolina Health System. Our wide sell mix market business is well established that we can expected to -- modern growth -. The Touch-tree marketing business17:10 districts is three years drawn that we are hopeful that the home-base business sector, a target market or many of their offers will continue to favor us with a strong economy end-up growth.

The company is enjoying now the strengthen relationship of our largest and most (inaudible) partners with Microsoft, Yahoo, Subway and Semmet, but also (inaudible) new customers like Apple, (inaudible) , (inaudible) . The way it succeeds through our pipeline of business of opportunities. Now, turning the call over to Jody Brown to review details about the fourth quarter and full year -:49 results.

Jody Brown

Today I am going to provide you with more detail on our quarterly and fiscal year performance in the past, because usually we follow 10K in conjunction with our annual call. The company was previously unite thorough follows for such for confined purposes. In 2007, we achieved accelerated power status, which require applying at an internal controls or a financial reporting for 2007 and 2009.

While the other financial statement is complete and the company is ready to file, our ****18:27 have not yet completed the -- played forward. In the event that they had not completed heir procedures in time for us to follow our 10-K by Monday, March 17^th, we will file an extension with the Securities Exchange Commissions, which extends the due date for Form 10K filing by 15 days. If our 10-K file is delayed there will be always to complete survey - for requirements. With that, now when we cover our financial goals for 2007, revenue from the 12 months ended in December 31, 2007 was approximately $73.6 million, an increase of approximately $1.7 million or 2% for 2006, our network revenue from 2007 to 2006. Our network revenue with $19 million of approximately $2.4 million, within our network our search revenue was approximately $8.8 million and an increase of $1.8 million. Our - revenue with approximately $9.0 million, an increase of approximately $0.5 million and our (inaudible) remain constantly year to year and expects with $1.2 million.

Our direct statement revenue was approximately $36.5 million and an increase of approximately $5.9 million. Some internal offers contributed approximately $26.4 million in 2007 and an increase with $5 million. Revenue from our (inaudible) property contributed approximately $9 million, an increase of approximately $1.2 million, over 2006. Revenue from on-line -- properties contribute to approximately $1.1 million, -- approximately $1.5 million during 2006. Our advertising segment revenue with approximately $19.4 million, of approximately $5.9 million. (inaudible) in wet revenue, decline by approximately $7.2 million from 2006. Additional off-line advertising services of approximately $10.4 million, increase approximately $21 million, in revenue of complete search total approximately $7.4 million, an increase of approximately $1.2 million for 2006.

The gross profits for this -- we send December 31, 2007 were approximately $37.20 million or 51% of revenue. In contrast, the gross profit for equipment period in 2006 was approximately $44.2 million or 61% of revenues, a growth profit across all segment in comparing 2007 to 2006. Our network segment gross profit was approximately $11.3 million or 60% of revenue, compare with approximately $11.5 million or 69% of revenue in 2006. Our - network contribute approximately to $7.3 million to gross margin, down from $8.3 million. This $0.9 million decrease was just a decline in margin and primary as a facility network that we have been diversified the office within that network. Our search network contribute approximately contributed approximately $3.1 million to gross profit during 2007, an increase of $4.8 million, over 2006. Gross profit from the search network has increased dramatically from approximately $0.4 million in the first quarter of 2007 to approximately $1.1 million n he fourth quarter, but Martin, who is in the search network was approximately 36% during 2007. While the margins within our affiliate network, is approximately 8% of the same period.

Out dress segment gross profit $21.4 million, 59% of revenue, compared with approximately $22.5 million or 74% of revenue for 2006. The decrease was mainly attributable to a decrease of email marketing campaign in 2007, as well some acquisition of May of 2006 that gradual scope of our internal office memory base. With mark gross margin due to slightly higher customer acquisition cost and customer turn-over. Our advertising segment gross profit was approximately $5.4 million or 28% of revenue compared to roughly $10.7 million or 42% of revenue for 2006. Again, search engine enhancement services contributed approximately $0.6 million to gross profit, a decrease of approximately $5.5 million from 2006. As the revenue for this segment is shifted to more traditional outline advertising in Cape search management, the gross profit decline. The gross profit fro Search Engine in - was nominal and both the third and fourth quarter in 2007, which help stabilize our gross profit margin plunges.

Our additional -- marketing services produced gross margin with approximately 35%, while pace search margin to approximately 15%. Fred that is generic expenses were approximately $34.4 million, 40% of revenue down from approximately $39.1 million or 54% of revenue in 2006. Network was approximately $7.1 million or 38% of revenue, compared with approximately $0.1 million, 36% of revenue for 2006.

In our direct segment, SG&A expenses were approximately $14.7 million, 40% of revenue as compared to approximately $16.6 million, 64% of revenue for 2006. We have experience significant growth in internal offers during the year that require less work. Advertising segment SG&A expenses was approximately $6.3 million, 33% of revenue down fro approximate level of $1.1 million of 2006 or 44% of revenue for the prior year. As the result of the large reduction in revenue derived Search Engine (inaudible) 27, corporate overhead expenses increased your - $6.6 million 2007, approximately $5.8 million in 2006. Professional fees decline by approximately $0.9 million during 2007. The savings in which would set-up by increase corporate pay-roll expenses of approximately $0.7 million and increase stock base compensation cost of approximately $27 million.

(inaudible) of purchase from approximately $4.2 million and $3.5 million for the twelve (inaudible) in December 31, 2007 and 2006 respectively. For both 2007 and 2006 were approximately $29 million. Our net applicable becomes approximately $1.2 million or 2 cents per share for 2007 and $9.7 million, 20 cents per share for 2006. In --, we encourage to approximately $0.1 million for dividend and incretion of relievable preferred stock if compared to cost of $4.2 million in 2006. We also incurred of a charge of approximately $6.0 million during 2006 for (inaudible) issued to effective conversion of (inaudible) per stock. That completes the year-over-year comparison.

Now, we will review the results for the fourth quarter. Revenue for the three months ended December 31, 2007 was approximately $20.1 million, an increase of only $1.1 million or 6% over the same quarter of 2006. Each revenues by segment in comparing the fourth quarter of 2007 and fourth quarter of 2006, revenue from our network segment was approximately $6.4 million, an increase of 65% of approximately $2.5 million over 2006. Search network revenue with approximately $3.3 million, of 164% or approximately $2.1 million over 2006. Our affiliate network revenue was approximately $8 million, an increase of approximately $0.4 million and revenue remain constantly year and year $0.3 million.

Direct segment revenue with approximately $8.8 million, a decrease of 1% or $5.1 million from the previous year. Internal offers contributed to approximately $6.1 million, down 12% or approximately $48 million. (Inaudible) contributed to approximately $2.5 million during the fourth quarter, an increase of 40% over prior year or $0.8 million. Online education properties contribute approximately $0.2 million, a decrease of approximately $0.1 million fro prior year. The outside segment contributed approximately $5.4 million, a decline of 14% or approximately $0.9 million from 2006, again, decline with decrease Search Engine of half of the revenue of approximately $1.1 million. (inaudible) search revenue of approximately $0.4 million. Tape search revenue for the fourth quarter was approximately $1.99. Traditional all find advertising services produce approximately $3.4 million, an increase of $0.7 million over 2006. The gross profit for the 3 months ended December 31, 2007 was approximately $9.9 million or 49% of revenue. In -- the gross profit for the equivalent sharing 2006 were approximately $10.3 million or 54% of revenue. That segment comparing the fourth quarter of 2007 from the fourth quarter of 2006, gross profit high network segment was approximately $3.1 million, 40% of revenue, compared to approximately to $0.9 million or 75% of revenue for 2006. Our search network contributed approximately $1.1 million of gross profit, an increase of $0.7 million from the prior year.

As mentioned before, gross profit of search network has increased dramatically, quarter-over-quarter 2007. Our affiliate networks contributed approximately $1.8 million, a decrease of $0.5 million. District due to a decoy in March and in our primary accessibility network as we work to diversify the offers within that network. Gross profit from our direct segment was approximately $5.4 million, 61% of revenue compared with approximately $5.6 million, 62% of revenue for 2006. Gross profit from our advertising segment was approximately $1.5 million or 27% of revenue, compared to approximately $2.0 million or 32% of revenue for 2006. A decline again contribute both. Our selling general administrative expenses were approximately $9.0 million, 45% of revenue for the fourth quarter of 2007. For the (inaudible) of 2006, these expenses total approximately $8.8 million, 46% of revenue. Amortization of purchase was approximately $1.0 million for the three months ended December 31, 2007 and 2006. And, interest expense for the fourth quarter of 2007 and 2006 was approximately $0.2 million. That concludes the financial summary, now let me turn the call over to Steve Lerche.

Steve Lerche

I am pleased to end-up 41 you to share with you today, some of the (inaudible) development that are currently underway in our company. I enforced to work in the revenue side of our business, across the leadership of Kowabunga. For today, - with Scott (inaudible) product, works primarily concentrate. (inaudible) network business. 3004 future scalability and profitability of those operations; first, a level set around the proposition on the network business. In the broad extents our network division provides performance based marketing and technology solutions for advertisers. We provide advertisers an opportunity to increase and better manage their return on investments. Those advertisers that are also retail merchants are better advertising -- as well as the platforms from these operations. In order to accomplish that, we develop exchanges that allows our merchant and advertisers and pay for it based on performance. - is generated from the -- publishers and websites that are anxious along this side of the -- . As a result, our sales and business development focus -- the advertising and distribution side (inaudible) networks. We need the prospective advertising with merchants; we are able to offer them either our CPA or -- and platforms or our features PPC or cost platform.

The CPA product is traded to the brand names PrimaryAds MyAP which stands for My Affiliate Program. Those are variations -, we take - offers some advertisers in the case of PrimaryAds, or trapped at retail products to merchants retailers in the case of MyAP. We - that the consumers - networks will trap the traffic to their respective sites. Obviously, to better the content of the publishers site, the more - traffic they produce. - generated in all (inaudible) in avocation file were product purchase.

To make our money out of the revenue share from the transaction for providing the platform. A contract with the merchants the platform also stipulate the pro formal balance by - for the monthly actions generated exceed the monthly fees. We view this is important and - as a performance based, valued end partner not just in software and technology provider. This affects the sales structure -- products, our focused - to set up the ultimate consumer action. (inaudible) looking for quality offers and the advertisers, effectively - the predominantly business; or they are merchant retails in this phase in the program.

On the distribution side, our affiliate manages our prodding affiliate of the respective programs and the continuous contact with them regarding offers and opportunities throughout the drive track. We have increased personnel of both each sales team over the past few months and we - release of the second quarter. MyAP product; this product is a well-known CPA program that has been around since the late 1990’s. We continue to get very good competitors in this phase. Our differencing factor is traditionally been the transparency and recording we provide our merchants and develop affiliates that. As long as it is providing the affiliates are attracted to the program.

(inaudible) of the merchants at the competitive end over the past few years, is a larger merchants - we referred to in the past calls attracted to our technology platform and the opportunity to quite label their own program; and as - network we managed on their behalf. With the exciting new release of the Maya applications for this summer, should further enhance the feature and functionalities of the platform. We believe it allows to further expand and improve upon this private label opportunity. (inaudible) click programs, is the scenario we are truly proposition and the opportunity to take advantage of the evolving market place. It continues to attract the greater share of advertising changes and upheaval. With that that we have the working technology that no one else has makes us uniquely qualified to address many of the issues that exist today with PPC. And consequently, can grow quickly while building a scalable and profitable business.

A PPC product brands are ValidClick, the legacy -- network; we will - introduce ValidClick AdExchange. -- combined of proprietary click broad technology, the dynamic keyword -- tool is based on the probability that click converting (inaudible) of some kind. More importantly, introduces a (inaudible) to advertisers. The Kowabunga is leading the way to fair market pricing for PPC advertisers based on quality and conversions. (inaudible) to detail the technologies we import as PPC products, to stop the faradic relationships and outline the market relation opportunities. (inaudible) is an important points (inaudible) business application itself why we feel so strongly -

We believe that the AdExchange create a quality control access point for advertisers and publishers years before its not existence. The market place that has been and continues to be dominated by one player, - engage - with control. Many existing distribution partners and certainly most of the emerging diverse content publishers -- utilize different technologies and format, have very little chances to striking direct deals are taking full advantage to interact with the advertising universe. The advertisers -- uncontrolled marketing dollars being spend as a the result of the ever growing - as well as going in consistency in return on investment levels around interest unit of advertising expense, as you cover insurance in moving beyond - regardless of paying more and making less.

The unique selling proposition of the ValidClick AdExchange takes on - with compelling proposal to both advertising and publishers - functional technology platforms. Advertisers, whether they participate directly or come to us (inaudible) agencies, or introduced by a large speed providers in a far more comfortable - system that they that they know - wants to pay for - for legitimacy - conversion. Likewise, - publishers of all types consists - revenues from joining AdExchange in gaining access to advertisers during the past - deal with them, its perception of good quality and bad content. (inaudible) creation govern by quality and market pricing

We further believe we are set uniquely qualified to provide the access and take full -- of the market opportunity. Our technology is already working and operable and doing just as we designed it too. The opportunity to earn revenue shares with these transactions -- the totaling charge for providing platforms based on performance based models and set the stage for a stronger revenue growth leaning forward. -- these opportunities are not without challenge. A sales in the business developing teams of our PPC products and in particular the AdExchange, has moved quickly -- the same time. There are two side of this equation, -- content publishers, advertisers -- we have more advertising employment -- can become problematic.

Our approach to addressing these challenges -- while maintaining in some level -- groups. -- we have enjoyed promoting success on any content publishers by working -- advertisers to the network. We are also focused by adding distribution to provide -- for advertisers, to allow us to successfully -- the ever growing - in our exchange products. With that let me please turn it over to Scott.

Scott Mitchell

(inaudible) to personally thank - shareholders, our customers, employees, and partners for continuing to make this company successful. - we also have finance special COO and - CPO. Right now - your questions, operator can you please give instruction.

Operator

[Operator Instructions]

Our first question comes from the line Colin Gillis with Canaccord.

Colin Gillis – Canaccord Adams

Hey Scott, can you just give me some color about what visibility do you have to double the network revenue in 2008.

Scott Mitchell

(Inaudible) performance is still far this year and we are very optimistic. Moving forward the balance is going to be how we focused more narrowly in our core business while we look at opportunities of our business segments. - from navigating our strength going forward.

Colin Gillis – Canaccord Adams

Is that call based on any other major partners joining - can you give us some color about any progress in terms of adding in additional new partners into this chance.

Scott Mitchell

Yes, we are absolutely - partners as much as possible to exchange going forward, but the current growth that we are seeing in our network division is I think - for the year.

Colin Gillis – Canaccord Adams

I am speaking about the incremental revenue in network, can you help me get a sense to what causes those shady with those extra dollars that are flowing in; or any color on what that EBITDA margins on the incremental revenue should be? They should be ***4050 high.

Scott Mitchell

Yes basically on margins has been lower - higher than our advertising division. Going forward there is obviously some fixed cost, there is more that represents that dropped to bottom line. If you heard during our guidance statements, our goal for our network division is that we get the 28% EBITDA distribution margin and we think at some point during our next year, we are --.

Colin Gillis – Canaccord Adams

To be clear, that is why you have sent EBITDA margin - right?

Scott Mitchell

Right.

Colin Gillis – Canaccord Adams

Okay I got it. Are you saying - scores on the AdExchange and now you have some significant flow; Click center is coming in; you are just growing particularly low or particularly high?

John Linden

This is - which shows that the systems were working; - build the model around the - and then the - on the back and we -by partner. - We have actually some partners that have commanded fairly high -. I think we have learned a lot, we are actually working on kind of narrow version of - which I think it has more pure valid - but it is really been all over the board it is not kind of consistent number - in the advertising network.

Colin Gillis – Canaccord Adams

Do you have any plans to get up there, perhaps - CCO again; any other major event - San Francisco or—

Scott Mitchell

John is going to - forum. He will be at NASDAQ in San Francisco on 14 and 15 - of April and then - and really pushing our -. And then --will be doing a lesson speech -.

Colin Gillis – Canaccord Adams

Okay great. Scott two more quick ones; would there any extra cost in the network - to maybe consolidate the office space down, that rolled off in 2008?

Scott Mitchell

Yes there is definitely some link to that; we are going to be firing; - fourth quarter 2007 that are going to be returning - dividend - in 2008 - the entire network than being located in one office and obviously there is - and scale opportunities that are -.

Colin Gillis – Canaccord Adams

Have you lost any major mile MyAP customers?

Paul Thomas – Roth Capital Partners, LLC

No it is just really a reshuffling of offers.

John Linden

There has not been any lost that is major.

Scott Mitchell

I would know that the number of MyAP buying overall has never really decreased throughout 2007, the reason for that decrease though was the client that we no longer have are clients that we - $100 to $400, we are managing a -- for 2007 there has been -- has removed from - to a performance based - possibility with the next -.

Colin Gillis – Canaccord Adams

Okay great, I would still go back, thank you.

Operator

Our next question comes from the line of Paul Thomas with Roth Capital.

Paul Thomas – Roth Capital Partners, LLC

A couple of question, first off thanks for giving us some clarity there on the network and what is your expectation for next; I just want to know right now with this search revenue look like it is growing quite a bit faster than the affiliate revenue and all state revenues are kind of in transition from the old model to the new model, and you expect that is going to catch up at the end of the year or are we going to end the year roughly to half and half between those two parts of the network or is it going to be more search; what do you guys think at this point?

John Linden

I think right now, I think the facilitate revenue - roughly around 60 on the -.

Paul Thomas – Roth Capital Partners, LLC

Okay, for the whole year?

John Linden

(inaudible) the MyAP are - we often use - market expansion.

Paul Thomas – Roth Capital Partners, LLC

Okay, and also kind of related search traffic is growing quick and you talked about revenues back in a perfectly correlated with that; can you say anything about conversion rate trend at this point then does it seem like there has been any change or they have slow this traffic is going faster, what does the trend look like?

John Linden

What do you mean conversion; what exactly is your point there?

Paul Thomas – Roth Capital Partners, LLC

Again I am trying to relate this rapid growth in traffic due revenues; so what is the right way to think about that?

John Linden

(inaudible) we are a little bit - when it officially happen - and we have our newer - exchange. (inaudible) to go very quickly. There are different sense of advertising - so they do it on different race which makes it a little difficult to really - and things like that. But we do -- since we watched that exchange we have some - we are talking through with more like potential traffic that we cannot modify with the current advertisers we have in the system. So every day we actually have more and more advertisers - which allows us to - and then be able to - we are going to advertise - so it is kind of hard to - the exact numbers because it changes every month honestly. (inaudible) pretty composed with the advertisers and publishers, I think that is the main goal we are watching on --

Paul Thomas – Roth Capital Partners, LLC

Okay, so those two starts at change a little bit because you are adding more advertisers than the - starts to close than it starts going faster.

John Linden

At one point we want - for advertisers - without - relation with revenue and at one point that can actually reverse, - search traffic flowing through the network and as the advertisers you have seen some of the more exponential growth from the advertisers side towards some point you can actually see more - revenue growth factor than your distribution so with that point we start to require traffic as fast as we can but --.

Scott Mitchell

I think - since we have launched the - the exchange for traffic has been the faster pace than our advertisers -. still a much, it is a good cost -.

Paul Thomas – Roth Capital Partners, LLC

Quickly on the other business than; did I hear it right did advertising generate positive EBITDA in the quarter in Q4?

John Linden

Yes.

Paul Thomas – Roth Capital Partners, LLC

It did, okay. And you are going to be evaluating through the GAAP, did I hear correctly also that even ceasing operations or I guess you said shutting down operations for some of the divisions it might be a consideration?

Scott Mitchell

Yes we are looking to really deep and ***5014 of our division, and ***5018 will become. As we go to the year, we have non-profitable or under performing operations and of course we all look forward to the strategic alternatives for our shareholders but in some case that means ceasing operations and that is the best decision to growth the value of these companies and that is what we will do.

Operator

Our next question comes from the line of Yun Kim with Pacific Growth Equities.

Yun Kim - Pacific Growth Equities

Can you tell us whether the revenue contribution from these -- relationship with meeting for in the quarter and also how fast do you expect that business to ramp up this year and what you think that business impact will be on the EBITDA margin or the network business once it becomes ramp up?

John Linden

I think we just - to some degree we talked about right now the early success we are having recruiting publishers to the AdExchange and you see that in terms of ***5126 with the key ***5128 that we talked about and similar questions Paul asked ***5131 quality traffic, internally we have the match up and the advertise system serve the Ad master keyword. So for us right now - delivery I would say the - with the publishers side we had publishers that were moving quickly to try to add more and more advertisers -. And hopefully it would continue - we look forward to that this year. - we did actually launched the - in the middle of November so we - of operation from the very beginning but there were traffic generated for -

The traffic generated on the efficiencies is that the technology that is going to be much more significant.

Yun Kim - Pacific Growth Equities

At what level do you feel that the scale of AdExchange will begin before you can start to have a limited risk - with your tax acquisition that you can actually consistently put a certain dividend margin? At what level of scale that AdExchange has to get to before you would feel comfortable around the consistency of the margin around that business?

John Linden

We can actually see - growing very, very fast. I think that -the quarter will have a good idea of - margins on this quarter but - extremely fast; I think you saw our - big in the fourth quarter, I have noted in my - within this call that - for the first quarter or dealing - traffic based is going extremely fast we are playing catch up in terms of attracting enough high quality advertisers that has been on that traffic and - that these can take a couple of quarters - realize what the long term dividend this generation opportunity. We think it is very, very attractive and - taking such a big plan in making such a big investment. There have been a lot of times we have discussed our guidance statement for; well the long term goal is to get 20% on that contribution margin.

Yun Kim - Pacific Growth Equities

And then just give us the latest updates from the affiliates programs you guys have with the Microsoft, Apple, Siemens and others; just what are - are those programs contain to ramp up and how do you see that affiliate program being up from those major partners that you have ramping up this year, tell us the update on that.

John Linden

Sure, the relationship with price results – you see is getting stronger. Yes you have seen that and seen through strong relationships where you briefly signed on as we mentioned earlier in the call, we are noble, we can that drag from our larger clients. We seem to have encouraged that fairly nice – for our selves with in kind of an enterprise client based for the – network station. I think it is different because larger enterprises that have most offers are looking for a more private network solution and our technology speaks very well. In terms of wrapping up the relationship this enterprise over relationship and what we call management are only growing offering makes this change literally – and we consult clients on moving in and out of offers everyday. I think that number of new offers that the enterprise finds is that when you have gone in that fourth quarter and (inaudible)

Yun Kim - Pacific Growth Equities

And then, in terms of the actual margins for the narrow business in the quarter, it declined sequentially a lot of revenue and was there anything that the cost it besides primary as becoming less part of the business?

John Linden

Maybe you edited this so, there is a place that has got impact from adding any (inaudible) web through your partner. There is definitely margin mix impact between dealing with our director and our network spacing going up. (inaudible) affected the net margining network.

Scott Mitchell

Some of the drastic slings in the fourth quarter has been going on actually throughout the year in the network. I have searched is really picked up being throughout the year with our – results three times. In my call script, the revenue of the search network were $4.3 million at the first quarter up to about $3.3 in the fourth. And that is including the (inaudible) 30% gross margin. So as that continues to increase and be the much bigger player in our network segment, we even see much lower gross margins.

Yun Kim - Pacific Growth Equities

And that is kind of impacting the overall EBITDA margin for the network.

John Linden

When you get down to the EBITDA margin we have spent a lot of time and a lot of money developing technology, so we are doing a seminar, our tech group and speaks out a little bit more. We have really solidified that group as in a lot of (inaudible) in your development, so you know, we did not have one single point of failure. So we have a lot of payroll in the network segment to really build it out.

Yun Kim - Pacific Growth Equities

Okay, that makes sense and then the deprecation in number for the quarter was up with a bit of, or was there anything there that we should be aware of?

John Linden

No, our appreciation has been going up throughout the year but the majority of that is we have build up during the – stages, during the first quarter we pulled up our office in South Carolina and then we build up this new office space here and that we moved into October 1. So, our toll fee has really depreciated things as quickly as we can. I do not like to keep assets on the boat very long so we filled that office space and we got equipments. It is coming off that.

Yun Kim - Pacific Growth Equities

And then just lastly, I am sure you covered some of these but is there like a cash number in this quarter, you know cash flow from operations and shared counts information, can you share that again with us?

John Linden

I did not share it but there is a followup. We have the exact same share – we expect $66 million of shares outstanding. We have not – anymore shares or had any ops – for nine months now. We actually have a lot less options and warrants outstanding. We have – they will be out in a few days, I am expecting, we have a lot of shorts expiring like four months. Cash flow for operation over the year with – like $4 million dollars.

Yun Kim - Pacific Growth Equities

And with you guys end of the year – in terms of cash balance.

John Linden

At the end of the year we had about $2.5 million dollars in cash we had about 1.6 million of restricted cash on our books and our outstanding GAAP was approximately $13 million.

Operator

Our next question comes from the line of Michael Pituitary (ph), private investor please go ahead.

Michael Pituitary – Private Investor

I want to call in the share holder and offer some type of representation for the majority share holder, speaking on behalf of my – like concerning with the shared price, I wanted to speak to you in case you had any enthusiasm to offer.

John Linden

I do not think you can categorize our feelings about the shared prices, we are really focused to demands and things that build value and the company to build philosophy and value for our shareholders and really our first top priority is building a great company. You know, I think that – from the fourth quarter, I hope it showed concerns with share prices – where they put together what I consider to be a very common shareholder friendly shareholder for searching plan. We put together a – authorized us to buy back $5 million shares and we have been able to buy back shares in the first quarter and we do have a very friendly in dollar share about our clients. We have shares in the first quarter and we can intend to clear installing that plan over the next few years and buy back $5 million dollars of cash. We are also concerned about the market conditions and the share price I think is more than our share holders and again, we cannot grow a lot to manage the market but we can do a lot to build a great business and that has really been our focus.

Michael Pituitary – Private Investor

Okay, one other concern is, when you look at the amount of shares you did purchase in the first quarter and you contract that against the amount of shares that are spilled off by your cabinet, I use the term cabinet loosely, you know there is a continuous sell off through members of your team monthly and it doesn’t really make out for the hundred thousand that you already purchased. Is is going to be more of an aggressive buyback implemented film?

John Linden

CFL on a weekly basis was that cash on hand the education of paying of our debt and available credits with our new line. We do have a lot more flexibility with our new line of credit from Wachovia to be more aggressive with our share repurchase program but that is against the evaluated week to week basis. In terms of the monthly sale of our shares, I mean the insiders that have that you know, I think all of our insiders shares have been provided with insiders as a consideration for selling companies that have a lot of cash flow. With the one shareholder I think you are referring to, they only serve connections that is still flat in the last six months or nine months. You know I think his precision is more driven by personal cash and having a long term investment attitude where he holds very large concentrated position and as they all can stop it, we are listening over a long period of time, having that personal choice of his and as a company I don’t think that is our place to defend.

Michael Pituitary – Private Investor

My last question is this, and I will leave it on this point. It is becoming a growing practice that when a stock price is deteriorating as such many CEOs are pitching with the company, stand by their company and purchase on their own. I mean we have seen this with – is there any, can you make any announcement that you plan to buyback shares on your own.

John Linden

I do not have a plan that is far with the SEC to buyback, right now and for several months now we have been in a closed window, our training policy does prevent any insiders from buying, selling or trading and it is 38 right now. I think there is a possibility of seeing a number of insider activities and I am sitting at the table right now with three or four gentlemen that are being – with our company in the last nine months we have purchased back hundreds of thousand per share and we will be wearing those windows so I do not think, first sales – inside purchases, I understand the market’s frustration with whatever it is inside our sales and sincerely sympathize with that but I think that, I do not know if purchases or sales are necessary, or barely always indicative of the increased demands and existing heads in their company.

Michael Pituitary – Private Investor

Great, I appreciate your honesty have a good day.

Operator

Our next question comes from the line of Chandler Jadwani, private investor, please go ahead.

Chandler Jadwani - Private Investor

Could you please give us some light in what is happening in quarter one. Is it going to be much better, more flat, more heights, where do we go?

John Linden

You know I can tell you that, I think (audio gap) of the entire year of 2008, I think they are excited but we gave in our advice statement about doubling the size for network solutions and (inaudible) year-over-year gross rates of our company – where we think the year is going. I also think that the other was insignificant where we talk about narrowing our focus on network solutions and looking at opportunities for the rest of our non-core businesses.

Chandler Jadwani - Private Investor

Could you set some light on uses of funds that you have from Wachovia, for investment and equipment for the growing demand, shared purchases or anything.

Executive

The lighter credit for general corporate services that could include daily purchases that could be investment and equipment, again from our statements we are definitely more about the salary of business but specifically for general public purposes and especially appreciated getting I consider being very, very favorable rates in this credit market. We have a long standing good relationship with Wachovia but we have – such a favorable line of credit after, with devoted confident in our company’s operations business style of management (inaudible) line of credit and it is good to have funds available for general and public purposes.

Chandler Jadwani - Private Investor

My next question is to John Linden. John, Microsoft announce engagement mapping on March 1, how is it difficult?

John Linden

I am sorry what was your question again?

Chandler Jadwani - Private Investor

Microsoft, did announce engagement mapping starting March 1. Is it complete with it?

John Linden

Yes basically, (inaudible) that this was announced it will be developed by (inaudible) which is their adequacy and most of that technology is really more round branded and all the (inaudible) tremendous sign by counter analyzing but for what it looks like, these are trying to justify you know bigger clients that are spending a lot of money on branding (inaudible) based advertising and trying to show that (inaudible) does have is advertised in later transaction. So that is how the of what their technology and it is different from what we do, which is a real great transaction, we are trying to do is create our life from transactional performance based purchases, which is very different from branding. That is one form of advertising that we do not do a whole lot of, is kind of the traditional (inaudible) and like I said it is kind of a whole different set of issues that are settled. That really is kind of unrelated to what we are doing and what we are doing in Microsoft, trying to end the relationship there.

Chandler Jadwani - Private Investor

So, Microsoft too is a major account.

John Linden

Yes.

Operator

Our next question comes from the line of George Stoffan with Stoffan & Company

George Stoffan – Stoffan & Company

Did you spend $40 million guidance for the network at 2008, is that what I heard?

John Linden

Yes, we are looking at – the guidance we gave as well as for that increase, our network grew by a hundred percent - $40 million and then we also good clients that we are going to have on a (inaudible) year-over-year towards its growth in 2008.

George Stoffan – Stoffan & Company

Okay, and of that $40 million, how much of that do you expect to come from this new ad exchange?

John Linden

Combined the (inaudible) the – quick legacy got along with (inaudible) was about 50% if we hit our target for this.

George Stoffan – Stoffan & Company

And on the legacy of the ad exchange about 50/50.

Scott Mitchell

I said right now about the legacy is it had the clarity of by luck right now and the actual date we are doing the book – and I think that we put a really good point to remember and that is that we are building a market place right now, that is the word we are trying to create here and, we feel very strongly than if we build that crystal map of publishers and advertisers on both sides of this. We are going to create an atmosphere where people have to play, which means we are going to be a part of it and that is what we think this will continue to move…

John Linden

It is also hard to answer that exactly because more and more of our legacy business kind of grow well into the secondary and end of the (inaudible) for the next call, probably it will have a little bit more of the – network (inaudible) combined innovative point. We mentioned there are different networks right now with different advertising, there are goals, new products leverage base scale of those networks in to one. So it is kind of hard because we (inaudible) we have a lot (inaudible)./

George Stoffan – Stoffan & Company

And then the last call was asking about Microsoft and that they are still a big customer, I think on the last conference call you guys are talking about how many offers you had with Microsoft or do expect that to grow. Is that still should be big as growing, are they big and stay the same, what is your feeling on that?

John Linden

There is one offer some couple of months ago that we consulted Microsoft, (inaudible) few toolbar offers (inaudible) and we definitely could not advice and the longer competing against each other. We really expect the number of offers within our Microsoft, cluing numbers, can you see that demand for services and Microsoft too, only be an increasing factor.

Operator

Mr. Mitchell, there are no further questions at this time, please continue with any closing statements.

Scott Mitchell

I would like to thank all of our shareholders (inaudible) to continue to make this company as discussed. I think we are looking forward to a very exciting year. I am thrilled to be at a position to enterprise (inaudible) for next year and some models to (inaudible) analysts and investors rotate our company. Thank you for your time this afternoon and as always our Investor relations group and our management are available for follow-up questions.

Operator

Ladies and gentlemen, this concludes the Think Partnership Incorporated fourth quarter and full year 2007 earnings conference call. If you would like to listen to a replay of today’s conference, please dial 303-590-3030 or 1-800-406-7325 entering pass code 3846543. ACP would like to thank for your participation you may now disconnect, have a pleasant evening.

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