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The Active Network (ACTV)

Q4 2012 Earnings Call

February 14, 2013 4:30 pm ET

Executives

Brinlea Johnson - Director

David Alberga - Executive Chairman

Matthew G. Landa - Chief Executive Officer and Director

Scott Mendel - Chief Financial Officer and Principal Accounting Officer

Analysts

Aaron M. Kessler - Raymond James & Associates, Inc., Research Division

Brian Patrick Fitzgerald - Jefferies & Company, Inc., Research Division

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

Andre Sequin - RBC Capital Markets, LLC, Research Division

Rohit Kulkarni

William Sutherland - Northland Capital Markets, Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2012 ACTIVE Network, Inc. Earnings Conference Call. My name is Deanna, and I'll be the operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to your host for today Ms. Brinlea Johnson of The Blueshirt Group. Please proceed.

Brinlea Johnson

Good afternoon. Welcome to the ACTIVE Network Fourth Quarter and Fiscal Year 2012 Earnings Call. With me today is Dave Alberga, Executive Chairman; Matt Landa, CEO; Scott Mendel, CFO; and Darko Dejanovic, President.

Before we get started, we would like to remind you that our statements today that are not purely historical are a forward-looking statement. Our actual results may differ materially from those projected in any forward-looking statements due to various risks and uncertainties, including those factors in the Risk Factors section of our periodic filings filed with the SEC.

All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to revise or update these statements to reflect events or circumstances after the date hereof. I'd also like to point out that during the call, we do mention certain non-GAAP financial measures, which will be explained during the call. A reconciliation of these non-GAAP measures to the most comparable GAAP measures can be found in our earnings press release, which was made available prior to today's call.

This conference call is also being recorded and will be available for replay and Internet broadcast on the ACTIVE Network Investor Relations website at www.activenetwork.com under Webcasts and Presentations.

I'll now turn the call over to Dave Alberga, Executive Chairman.

David Alberga

Thanks, Brinlea. Good afternoon, everyone, and thanks for joining us. First, I wanted to hit a couple of financial highlights. We delivered a 23% increase in revenue in Q4 and a 24% increase for the full year. In Q4, we posted adjusted EBITDA of $5.9 million, significantly up in the prior-year period. In 2012, registrations were up 12%, and revenue per registration was up 8% year-over-year. These solid results demonstrate our progress towards our long-term strategy.

Now, before we share more about our Q4 highlights, it's been brought to our attention that there may be some misconceptions in the market. I'd like to make a few clarifying points to address these.

First, the company has a healthy balance sheet and is more than adequately capitalized to meet its obligations. The math is very straightforward, guys. Our cash balance, plus the registration receivable, is in excess of our registration payable.

Second, the company has 0 debt and has had no inter-quarter borrowings. As you can see from our filings, the company had $5 million of debt outstanding at the end of 2011. During the first quarter of 2012, we increased that to $10 million. The amount remained constant until the full amount was paid off in the third quarter of 2012. The company, of course, still has access to the existing $100 million revolver if desired.

Third, our revenue recognition policies have remained unchanged and are fully disclosed and are in full compliance with GAAP. We discussed Active Exchange in our last earnings call. We believe that it's a compelling yield management tool for certain customers. But that said, it continues to be immaterial dollar amount and is properly accounted for. During the fourth quarter, we partnered with LeftLane Sports to outsource our daily deal program, which we rebranded to be more -- to a more intuitive name, ACTIVE GearUp. The program remains immaterial, and revenue has always been recorded on a net basis.

Fourth, as we prepared for 2013 guidance, we took into consideration that revenue from our outdoors vertical can be somewhat lumpy as we bring on new states or municipalities. Our guidance assumed that this vertical would be substantively flat in 2013. We remain excited about the -- this area of our business and recently, we've won the second -- our second Canadian province as well as Puerto Rico.

Fifth, we continue to refine our branding and have always worked to harmonize our product names. ActiveWorks refers to our services-oriented platform, upon which vertically specific functionality is built. For example, after we integrated the campground technology that we acquired through -- from ReserveAmerica into our ActiveWorks platform, we rebranded the overall technology as ActiveWorks Outdoors. More recently, we leveraged our ActiveWorks platform to address Hunting and Fishing, which was a key technology milestone in 2012.

Finally, as I said in the past, we have tremendous opportunity in front of us, and we are committed to executing on our vision. Now I'll pass it over to Matt who will discuss Q4 in more detail.

Matthew G. Landa

Thanks, David. Good afternoon to everyone. Let me start off by saying that both our revenue and earnings represent all-time record results for the company, and heading into 2013, the company's capabilities are the strongest they have ever been.

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