BV

Bazaarvoice, Inc. (BV)

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Bazaarvoice (BV)

February 27, 2013 3:45 pm ET

Executives

Stephen R. Collins - Chief Executive Officer, President and Director

James R. Offerdahl - Chief Financial Officer

Analysts

Adam H. Holt - Morgan Stanley, Research Division

Presentation

Adam H. Holt - Morgan Stanley, Research Division

Morgan Stanley on the research side, and I'm very happy to be starting off the afternoon session with Stephen Collins, the Chief Executive Officer; and Jim Offerdahl, the Chief Financial Officer of Bazaarvoice. So thank you so much for coming.

Stephen R. Collins

Thanks.

Adam H. Holt - Morgan Stanley, Research Division

Why don't I maybe, Stephen, start with a question for you? The last 6 months has been a busy 6 months for you all. You had a couple of acquisitions, some changes, maybe set the table for how you have moved the positioning of the company for the opportunity set that you see on a going-forward basis?

Stephen R. Collins

Okay, great. Thanks for having us today. So first and foremost, the acquisitions we've undertaken over the last 6 months have -- are consistent with our strategy that we articulated, as we went public a year ago, just about a year ago today. And number one, so I think most of you know what we do, we provide ratings and review solutions to online retailers and to the brands that sell their products through those retailers. That's a very valuable digital marketing asset. And in providing that, we have built a position where we have the largest number of online retailers and brands on a single network, on a single technology platform, with all that consumer data and sentiment data in a single database. So we've got a network that exists because it does. And the way we help create value from that network is when Procter & Gamble deployed our solution on tie.com[ph]. They collect the content. We then display that content on the retailers that sell their products like Walmart, for example. So that's how we create value. So when we think about growth and with think about how to build the value of our company and create value for customers, we think about how do we monetize that audience. And in fact, our clients, particularly our retail clients, ask us how can we monetize our site better. So the first question is how do we build a bigger audience. So when we acquired PowerReviews, the impetus behind that acquisition was to expand the consumer audience, which would help us grow our brand business, which is grow -- is the fastest-growing segment of our company. So they had 85 IR 500 or Internet Retailer 500 businesses as clients, clients like Toys "R" Us and Staples, for example. So we brought them into our network. We were able to integrate the data site and use our content operations capabilities to do more structuring of that data. And what started to happen is now Procter & Gamble is taking their content. We're now able to display that on PowerReviews clients, and Procter & Gamble pays us more money to do that. So that was a key synergy there.

The second acquisition that we made was the acquisition of Longboard Media. So again, the hereto, this was a transaction that was consistent with our strategy of monetizing the audience. What Longboard does is they sell advertising on online retail sites. And this is something that's really new in the ecosystem of interactive advertising and marketing. Online retail audience had -- it isn't really part of the equation. And one obvious reason is that retailer does not want someone to click away from their website once they spend a lot of money to get them there. So the better way to think about what Longboard does is they're bringing co-op dollars from the brands that are spent in physical stores to the online realm.

In addition, Longboard had clients and has clients like Sears, Overstock and Newegg. These are all very important retailers that are not currently Bazaarvoice ratings and reviews clients. So there's a natural channel synergy there. And very importantly, again, our retailers say, "We want you to work on site monetization." We now have that capability, and there's also a very important data synergy here. And that when you're working with your retailers and you can create value from their audience and their data, that allows us to improve and enhance our data assets and what we can do from an analytics perspective for our installed base. So that's why a media capability is important for our company. We sell a digital marketing solution. We monetize audience.

Adam H. Holt - Morgan Stanley, Research Division

Okay, got it. And then if you were to overlay a couple of things outside of the acquisitions that you've done. You've introduced some new products, and you've made some changes to your structure, could you walk us through what you've done there as well?

Stephen R. Collins

So from a product perspective, honestly, it's really pretty straightforward. Our objective is to add a lot of new accounts, build the audience, build the number of retailers and brands around the world. And that is and has been our #1 objective. Our new products include the media capability. They include what we call Connections. And so to define the 2 offerings for brands and retailers, if you have a website with lots of traffic, whether you're a retailer or tie.com [ph], you buy our ratings and reviews platform. But if your brand and you do not have a tie.com [ph] equivalent site, so you don't have that traffic, until 2 or 3 quarters ago, we had no way to do business with you. What Connections allows a brand to do, someone who sells their products and one of our retailers or more of our retailers, is directly connect to the review feed across our entire network. So they can respond to reviews, answer questions and monitor what consumers say across thousands of retail sites. So that's the offering for a brand that does not have or a need for ratings and reviews. And on our network today, just looking at our database, there are more than 50,000 brands and suppliers that have a product with at least one piece of content on our network today. And so, every single seller should want to plug right into that portal and monitor their activity there. And so that provides a great efficiency to them. Now -- so that's really where we are with the product. You've got the media capability, you've got connections, and the rest is all land grab[ph]. In terms of our structure, I would say not too much has changed. We segment our sales force by the brand side and the retailer side, because the value prop and the pricing is very different. Obviously, we had a CEO change at the beginning of the quarter. But that was not structural, that just a single position. And we aren't really making fundamental changes in that regard. We are trying to bring in additional personnel or expanding the sales force. We're bringing in more leadership talent to supplement the team that we already have. We have aspirations to expand into emerging markets and APAC through partnerships in China and things of that nature to get ahead of the e-comm curve.

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