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F2Q13 Earnings Call
November 26, 2012 4:30 p.m. ET
Brian Smith - VP, Finance
Stephen Collins - President, CEO, and CFO
Brendan Barnicle - Pacific Crest Securities
Mark Murphy - Piper Jaffray
Thomas Ernst - Deutsche Bank
Jen Swanson Lowe - Morgan Stanley
Stephen Ju - Credit Suisse
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Good afternoon, and welcome to today’s conference call to discuss Bazaarvoice’s financial results for the second fiscal quarter of 2013 ended October 31, 2012. I’m joined today by Stephen Collins, chief executive officer, president, and chief financial officer.
Following prepared remarks from Stephen and me, we’ll have a question and answer session. Please note that we are simultaneously webcasting this call on our investor relations website at investors.bazaarvoice.com.
The earnings press release with our results for our second fiscal quarter of 2013 was issued earlier today, and is also posted on our investor relations website. Please remember that certain statements made during this call, including those concerning our business outlook and guidance, growth plans and opportunities, potential acquisitions, and our ability to capitalize on our opportunities, are forward looking statements.
Forward looking statements are subject to a number of risks, uncertainties, and assumptions that are described in our SEC filings, including the risk factors section of our Form 10-K for the fiscal year ended April 30, 2012, our Form 10-Q for the fiscal quarter ended July 31, 2012, form S1 as filed with the SEC on July 12, 2012, and other documents we may file with the SEC in the future.
Should any of the risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, actual results could differ materially and adversely from those anticipated or implied in these forward looking statements. Should any of the risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, actual results could differ materially and adversely from those anticipated or implied in these forward looking statements.
In addition, forward looking statements are also based on currently available information and we undertake no duty to update this information, except as required by law. Additional cautionary language regarding these forward looking statements is further described in today’s press release.
Finally, some of the numbers that we will discuss during this call will be presented on a non-GAAP basis. Today’s press release, together with the accompanying tables, contain the calculations of these non-GAAP financial measures and a full reconciliation between each non-GAAP measure and its corresponding GAAP measure.
With that, I would now like to turn the call over to Stephen.
Thanks everyone for joining us today. I’m going to start by covering some basics about our core value proposition, economic model, and strategy, and how media fits into our business plan. Then I’ll hit key highlights for our second quarter operational results, and after that turn it back over to Brian Smith, our vice president of finance, to address financial results.
But first, the headlines. With the acquisition of Longboard Media, we’ve now achieved three critical strategic objectives in 2012. First, we reinforced our lead position in retail with the acquisition of PowerReviews. We have developed a powerful new version of our technology platform that will lower implementation costs, make self-adoption easier, and has far greater data extensibility, and we have launched our shopper media business with the acquisition of Longboard Media on November 5.
I’m incredibly proud of our R&D team, with the release of our updated Conversations platform. This was the culmination of over a year of intense effort that really began with the buildout of the team as it exists today from only about 35 people two years ago.
We anticipate this release will accelerate implementation times, facilitate greater self-service functionality for our clients, and importantly, allow others to develop applications on top of our platform through open source APIs and SDKs. As a result, costs should come down for both the company and our clients, and it should be much easier for us to drive new product and feature adoption.
We’re very pleased with the initial performance of our Connections business, which we announced last quarter. We added over 225 brands to our pilot base of approximately 75. And we beat our adjusted EBITDA guidance significantly through improvements in gross margin and scaling and R&D and G&A.
Since this is my first call as CEO, I’d like to begin my remarks by focusing on our core value propositions, what we do, and why our clients do business with us. We have a straightforward business, with a simple but compelling value proposition for our clients. We sell a consumer-facing technology platform to provide ratings and reviews solutions to help consumers make great purchase decisions.
Data shows that when consumers use ratings and reviews, they buy more and return products less often. As a result, our clients increase their revenue and receive valuable content and data to help their businesses in a number of other ways. It is already well-documented that authentic review content is the most important content consumers rely upon to make purchase decisions and as such, we think we have a very significant and somewhat unique ability to directly influence our clients’ revenue, as well as aid in pricing and inventory management and product design decisions.