Jonathan Huang - VP, IR and Treasury Louis Hernandez, Jr. - Chairman, President and CEO John Frederick - EVP, CFO and Chief Administrative Officer

Steven Frankel - Dougherty & Company Ali Mogharabi - Singular Research Anup Suresh - Morgan Stanley

Good day and welcome to the Avid Technology Fourth Quarter 2015 Earnings Release Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jonathan Huang. Please go ahead, sir.

Good afternoon. I'm Jonathan Huang, Avid's VP of Investor Relations, and welcome to our 2015 Q4 and full year earnings call. Joining us today are Louis Hernandez, Jr., Avid's Chairman, CEO and President; and John Frederick, Avid's Executive Vice President, Chief Financial and Administrative Officer. On our call today, we will be using both non-GAAP measures and certain operational metrics, both of which are defined in our Form 8-K and supplemental financial and operational datasheet available on our Investor Relations Web-page. These non-GAAP measures are also reconciled with GAAP measures in tables to our press release and in the supplemental financial and operational datasheet. I would also like to remind you that certain statements made on this call are considered forward-looking statements within the meaning of the securities laws such as, for example, statements about expected future operating results and financial performance and the progress of our transformation. Forward-looking statements are inherently uncertain, not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Any forward-looking information relayed on this call speaks only as of this date and we undertake no obligations to update information, except as required by law. For additional information, including a discussion of some of the key risks and uncertainties associated with these forward-looking statements, please see the Forward-Looking Statements section of our press release issued today as well as the Risk Factors and Forward-Looking Statements section of our 2015 annual report on Form 10-K. Copies of these filings are available from the SEC, the Avid Technology Web-site or our Investor Relations department. We've also added a supplemental presentation in an effort to complement today's narrative. We hope that you will find it helpful. We will be recording today's call, which will be made available for a two-week replay. You may replay this conference call and access the supplemental presentation by going onto the Investor Relations page of our Web-site and clicking the Events & Presentations tab. Later, we will be conducting a question-and-answer session and instructions will be given at that time. And now, I would like to turn the call over to our Chairman, Chief Executive Officer and President, Louis Hernandez, Jr. Louis Hernandez, Jr.: Thank you, Jonathan. I'm going to be referring to the presentation supplemental materials that we've provided. Good afternoon and thank you for joining us today on the fourth quarter business update call, and I'm going to refer to Page 6. You'll see that we have a lot of information to share with you today, as you probably read from the press release as well. I'm just going to review the agenda very quickly. We're going to provide a quick update on the Avid strategy. We'll review the 2015 progress on the transformation, which is on track for completion in mid-2017. We'll review the 2016 initiatives that will be driving growth and the efficiency initiatives. And then we'll review the post-transformation financial review and what our expectations are in that regard. John will then go into the detailed 2015 full year and Q4 financial results. He'll review some of the key metrics that drove those results and that we think are relevant to shareholders. We'll then look at the 2016 full year guidance, the 2017 and 2018 long-term model that we felt would be helpful for investors, and then we'll review finally the Q1 2016 guidance. You'll also note that we're going to be complementing this presentation with a [indiscernible] chart presentation reviewing further details about our guidance, which John will provide more information on. I'm going to turn your attention now to Slide 7. These are some of the investment highlights the management team gets excited about. You know that it's a large and growing media technology market with very attractive high growth areas that Avid is positioned to take advantage of. It's a $54 billion market, highly fragmented. And because of the changes occurring in the industry, there's some very exciting high growth segments that we're trying to take advantage of. You know that Avid has very deep penetration in the heritage and new media markets with our category leading products, and the digitization of the connection between the time you have an idea to create a media asset to the time you can consume is changing rapidly and it's creating opportunities for both media companies and for vendors such as ourselves, and we believe those opportunities are being created in a way that really leverages our heritage strength. Avid we believe is very uniquely positioned to capitalize on this media transition. We have massive distribution in almost 140 countries. We're a very trusted brand to the largest global media companies. And if you look at the uptake on Avid Everywhere, which from a standing start really has accelerated, I think that speaks mostly to the brand. And while the product itself is working very well and people are using it, it's really the brand that allows us to get in the door and become this trusted advisor, and that's complemented by a massive reseller network that we have globally. The open and extensible platform provides an opportunity for us also to participate in those high-growth segments. There has been dramatic market acceptance of the new platform approach and because it uniquely addresses the industry needs, and while it's not always easy economically to see those trends and that acceptance because of the unique accounting coming from the restatement, I think some of the business metrics that we've been providing show that there is continuing to be accelerated momentum. You've seen in Q4 strong bookings, revenue and adjusted EBITDA with bookings increasing 26% over the same, over the prior year. You've seen revenues increase 9%. You've seen adjusted EBITDA increase 19%. You've seen over 32,000 MediaCentral Platform users, a 54% annual increase, capped by the Record Sinclair transaction, which really validates the strategy and which we'll go into again here in a minute. I think if you look at the 2016 guidance, it demonstrates a continued progression, and then with the modeling information we provided on 2017 and 2018, we're more confident that we can see a clear line of sight to the end of this transformation. And that's really what Q4 was about. I think it was strong enough that it made the year respectable in what otherwise has been a very volatile transformation, as most are. I think the other thing you'll notice is the significant increase in the visibility with the transition to the recurring revenue base and that has been accelerating. Revenue backlog increased 16% annually. Recurring revenue bookings were 55% for Q4, obviously helped by the Sinclair transaction. But they were 38% for the full-year. And I'll just remind you it was around 21% for 2013. Also some other exciting metrics are that the active paying subscriber has increased over 400% since last year. The transformation is on track, as some of the metrics we just provided demonstrate, Q2 2017 completion, and we believe it will convert to a very attractive financial model. You know that one of the things that had a negative impact on us the last two years was a non-marketed product which we were rolling off. Those have now been largely completed, as we had hoped, at the end of 2015. The efficiency gains, which were a key pillar to completing the transformation, have been clarified and we have a clear path to completion. Adjusted EBITDA and cash flow are expected to increase dramatically post-transformation. If you look at the 2016 guidance that we provided on the press release of $50 million to $65 million of adjusted EBITDA and a $2 million to $12 million of free cash flow, and then things begin to accelerate post-transformation with an $80 million to $95 million expected adjusted EBITDA and $25 million to $40 million free cash flow generation, leading to 2018 where we're modeling $90 million to $105 million of adjusted EBITDA and $40 million to $60 million of free cash flow. These are dramatically higher conversion of the adjusted EBITDA each year. You know it's been a challenging transformation. We knew it will be a challenge when we came in. Now is a really exciting time as we turn the corner and spent the last few quarters to the end of the transformation. So those are some of the things that the management team gets excited about and we think investors should pay attention to. I'm going to turn your attention to the next page, Page 8, and just remind you of the work we did when we first came in. We did a full analysis of the external markets. We looked at who we were serving, how those clients make money, who makes money and how they're making the money, how that impacted their tech budgets, how Avid was anticipating and where Avid should be participating. We also looked internally at every aspect of the Company performance from indirect cost structure to product profitability, et cetera. We worked at reward systems governance. We went through that on prior calls. And we created from that an ambitious plan to solve the most critical issues that we were hearing about that the industry is facing from the individual creative user all the way up to the largest media companies in the world. And we did that by creating an enterprise-wide operating system for media, much like an Android operating system or the iOS for mobile phones, where our apps and other apps can share common services so that people can participate in just one piece or the entire workflow much more efficiently. And that really allowed us then to participate in more of the value chain and we used our heritage position to first anchor the platform, and once landed, began to expand and maximize the lifetime value of each customer. Really early in the process but you've already seen some pretty significant adoption. It also causes to realign our go-to-market strategy to participate in the entire workflow and the ability to price and package by tiers for all segments, creating significant new opportunities. You saw this first in Tier 1, then moving down into Tier 2, and you've seen in Q4 a surge on some of our Tier 3 particularly in audio which I'll go over in a second. The three pillars if you remember was the launch of Avid Everywhere. Of course I hope you've heard of that by now. It was the most sweeping technology innovation since our inception. You may be interested to note that we produced 66 patents from this new platform that we filed since launch, 36 of which have been granted, 30 are still pending. This is true innovation. We have won 25 product related awards of the platform so far. It's been really exciting and a lot of work but we're being recognized for the innovation that it represents. You do remember also the Avid Global Services, a completely revamped set of services to match a totally new way to market our strategy. And then the Community ACA, a separate legal entity of our clients, for our clients, run by our clients, that has now grown to over 5,500 members led by some of the most sophisticated media companies in the world. And remember, this is designed not as a marketing tool, it's designed to help us create products that drive our client businesses more powerfully and provide a better return on our deployed capital. So it's been a challenging project designed to position Avid for long term sustainable growth. We have replaced 100% of the senior team. The majority of next level down are new to the leadership team. The organization was completely realigned with launch of series of new products. We rationalized facilities. We looked at the indirect costs. We re-evaluated products many of which were shuttered. And it took a really deep commitment by the team, and that's why I'm so excited that it's nearing the end and now we're just sprinting to the end of this last phase to complete this transformation. So going to the next page here, it's really hard to believe that it was three years ago that we took over a company that saw a pretty steady declines in a number of its key metrics, including bookings as you'll see in the pre-2013 period dropping consecutively for three years in a row. And as I mentioned and as many of you are aware, the transformations are inherently volatile. The restatement of course slowed us down, taking about 18 months, $45 million of restatement cost, it really delayed the transformation overall and the financial statements became more difficult to understand, as many of you know. And all the benefits that have been occurring through the transformation are largely masked by the over $100 million of cumulative restatement revenue headwinds that really masked the benefit of the transformation. What we were excited about is, once these headwinds roll-off, we believe you'll see the financial impact more clearly of what we've been able to do and we think you'll see that here exiting 2015 and into 2016 and 2017. I'm going to turn your attention now to Slide 10. No matter how you look at it, there has been pretty broad adoption. Some of you know I've worked in a variety of industries including media before. From a standing start, to have this kind of market acceptance is pretty dramatic, and I know that it would be nicer if the financial expression were more clear and didn't have the noise of a couple of the variables, the non-marketed products, the amortization of that pre-2010 revenue or even the shift to recurring, but no matter how you look at it, this is pretty dramatic in my mind anyway, 32,000 plus users on the platform itself. We talked about the annual increase. And this is really the vehicle for future cross-selling to maximize the lifetime value of our customers. If you look at the revenue visibility, going forward a 16% increase in revenue backlog versus 2014, a 37% increase since 2013. So it's been really exciting to see that backlog and visibility as we've been driving this transformation. And the marketed product growth is up about 31%. And for Q4, really seeing a nice uptick in Q4, 11% for the full-year, and if you remember, the non-marketed products have now been sold through for the most part. So that won't be quite the drag it was in prior years. I think it would be hard for you to find a company in our segment that has had these kinds of metrics, either on the backlog growth, the total bookings, the platform adoption or the new product growth. Recurring revenue is also a transition that we've had to deal with. As you know, it's had a revenue and a cash impact on us, but if you look at recurring revenue bookings, they are accelerating. In Q4 it was 55% and 38% for the full-year are recurring in nature. Now I want to remind you to compare that to 26% in 2014 and 18% in 2012. So it's been pretty dramatic. Now of course the Sinclair had an impact on 2015 as the entire managed service contract was recurring in nature and we're having similar types of discussions with customers but have not modelled that into any of our disclosures here to have any other Sinclair like signed deals and we're not sure whether or not these significant actions we're having will result in any contracts, or if they do, the size or duration of those contracts. But what we do know is as the platform has been adopted, more and more people are seeing the possibility that Sinclair did and are having pretty significant conversations with us. If you look at Tier 3 and Web Store, that's also surging. Paying subscribers is up 400% over the end of 2014. We have 25,000 active paying subscribers and the active paying subscribers continues to accelerate. It's up over 32,000 by the end of February of 2016. So the Web Store bookings are also up 42% in Q4 and 27% for the year. I think no matter how you look at it, there is significant progress in the adoption of Avid Everywhere, in the key metrics that are driving this transformation, and we're excited to see that. I'm going to turn now to Slide 11. You know I've mentioned before, I've sold to many industries. Some of you know, I've started plenty of companies that have had a lot of success. And I find it amazing that from a standing start, we're able to convince hundreds of the largest global media company enterprises to adopt Avid Everywhere and the vision thus far. We mentioned the platform units. These are very sophisticated organizations who are doing a lot of work before they are purchasing these kind of products. And if you look at the paying subscribers, those are mostly individuals who are now starting to see some of the benefits. You guys know I'm on the road quite a bit. I've met with almost every major media company in all major markets, and at first we were really pulling them along, but now they're really pushing us. Our solutions are now credible enough and they're getting enough benefits with enough clients that we're really starting to see across the board interest, and I think you saw that here in Q4. We've also seen a recovery of the Orad business. It still didn't meet our initial expectations but we believe we're on track to make up for that and Q4 was a nice uptick in that business as well. And we're only starting to see the Tier 3 push. We've not even begun to really push on the cross-selling in earnest the Connectivity Toolkit, and alliances in marketplace have significant upside, and the audio business started to rebound in Q4 and we expect more recovery as the benefits of platform are now only starting to be more obvious. If you read our announcements at NAMM, the Artist Community, the Cloud Collaboration has generated significant interest which will be launched here in this first half and we saw that beginning to surge in Q4 and we're hoping those announcements continue to push. So pretty amazing group of clients who've decided to join our strategy, and of course I couldn't go any further on Page 12 without mentioning the record-breaking Sinclair contract that we announced earlier this year. This is one of the largest television station operator in the U.S. adopting the Avid Everywhere vision. And the reason we're so excited about it is it demonstrated a couple of things. One, that the MediaCentral platform can not only address the entire media workflow but it also allowed Avid to access the higher growth segments of the value chain, like managed services. It connected Avid's products and also third-party products, demonstrated the openness and flexibility and there was an amazing amount of due diligence that Sinclair Broadcasting Group did. If you know that company, they are aggressive-minded, they are smart people, they are very financially disciplined, and it was really after all that work that they signed a ten-year agreement where we're delivering really an end-to-end newsroom production and content management solution that uniquely address their needs in a tailored way because of the flexibility of the platform, and it also replaces many legacy technology vendors. Sinclair is expecting to realize meaningful operational savings by standardizing across the entire platform but yet retaining the flexibility, and that's really what it came down to for them. They wanted updates on the latest technology, they wanted flexibility to adapt, they wanted a more extendable platform and they wanted a meaningful ROI, and really those four pillars is what drove them to this agreement with us. And like a lot of our clients, they tend to use the platform first with our heritage products, and this is not that dissimilar to Sinclair. And then after they begin to use it and experiment, what they start to realize, there's a lot more benefits, things like indexing, things like connectivity, efficiency, resolution independence from HD, 4K and beyond all from a common services bus, and that's where they start to see that more can be done, and that's exactly what happened at Sinclair. And then as we started to have similar conversations with other clients, we noticed there is some kind of incubation period before they really start to see what's possible. So let's hope that those other conversations turn into kind of relationship that Sinclair did. I want to turn your attention now to Slide 13, and let me review with you what's left to do, and these are really our initiatives for 2016 that we'll be reviewing with you on an ongoing basis as we get prepared to close out 2016, end the transformation and really focus on just profitable growth going forward and sustainable growth. First of all you'll see on the upper left, profitable growth. And the first thing we want to do is continue to drive platform adoption. The second bullet on the left is start to in earnest drive greater cross-selling and up-selling. Now that we feel we have enough clients mature enough on the platform that we can start in earnest to start adding alliance partners' and our own new products more rapidly. We want to better leverage our reseller network. Our resellers globally are just as eager to drive growth because they are seeing the transition in the market as well, they are seeing our growth and they should be matching, this incredible network should be matching the growth that we're delivering on the unit economics that I mentioned earlier. And we want to be able to expand our customer ecosystem. What that means is, now that we have a platform where we can certify third-party products, many of those products now are enjoying economic because we facilitate a lower cost delivery model. So we can now go into those alliance partners' bases and sell them the rest of the ecosystem. So it may have been that there was somebody who was viewed as a competitor before. We certify them onto our platform. Now we can help them go into their base and cross-sell the rest of our products, things like storage, RAM systems layout, et cetera. So that's what we mean by expanding the customer ecosystem under profitable growth. If you go over to the efficiency programs, the exciting thing is that platform is mature enough now that we can really take advantage of consolidating the silos. Some of you know from our earlier announcements, we have built this incredible platform and we also maintain the silos around them on top of the platform and shared some of the common services, but still made sure that we don't want to disrupt the experience of the client. We now feel the platform is mature enough. We can begin eliminating the silos and run these apps as thinner more agile applications. We've been doing transitioning there over the second half of the year and now we're going to embrace that strategy completely, which is the whole reason you would create a platform, sharing common elements, making it easier for us to launch new products quickly, making it more efficient for clients and that's what we wanted to do, and Sinclair really helped us with that because they tested that thesis out pretty heavily during their due diligence. And then we have the final stages of the talent optimization, the facility rationalization, something we've talked about many times before, the analysis we did when we first got here. We've been very careful in the way we've executed this and now we feel like now that we have offices set up in the Philippines and the Taiwan and we expanded in Poland and down at Boca and we've been hiring in those locations, it's now time to eliminate the duplication and that's where you're getting the annualized savings that we have mentioned before, really taking advantage of the whole organizational structure and the platform that we created. Under community engagement, it's really about making it easier for third parties to certify under our alliance partners so we can cross-sell and up-sell them into our base with that distribution and brand acceptance that we have and then make it easier for things like Cloud Collaboration that takes artist and the community to the next level by getting more people engaged in the ecosystem. And finally under culture and people, there's been a tremendous amount of organizational changes since we got here. We want to finalize these components and make sure that the organizational alignment is aligned around the achievement of the initiatives themselves. So those are some of the initiatives that we're targeting this year. And if you go to 14, while I wrapped up here on these last couple of slides, you know I mentioned the transformation is on track. Q4, we had a very, we saw a lot of good metrics driven in Q4, a lot of growth in several areas, and it really made it a respectable year, a year that was critical for the transformation and good enough that we can stay on course to finish the transformation. Lot of things we wish would have gone better in 2015, but I'm really happy that the team pulled together and found a way to deliver on a lot of the key metrics. Now we had outlined before on 14 what's left to complete the transformation, and I repeated those at the top of here on 14. We said that, number one, we needed to complete the roll-off of the non-marketed products. You can check that off. That's largely completed. That's behind us. We said that we needed to complete the efficiency programs by middle of 2016. We have now better defined what those are, and as we mentioned to you, the majority of the personnel related actions have already taken place. We then needed to have the end of the amortization to the pre-2011 deferred revenue in all material respects, and that will largely happen in the first half of 2017. In between those three steps, there's all the remaining operational items that I laid out in the initiatives, and that's why we're working hard to sprint to the finish, so once we finish we're not talking about people in the right locations, which offices reconcile the indirect costs, we'll continue to refine those, but really just want to talk about how do we drive profitable and sustainable growth. All the noise will be out of the system, all the accounting adjustments will be out of the system and all these huge initiatives that were part of the transformation will be finished and that's what we're trying to do. And I think you'll see at the bottom of this screen here, a materially improved post-transformation financial model. Something that we've always believed, we now have a clear enough in sight, we were confident enough to give you what we're expecting. If you look at the 2016 guidance, you'll see that a 9% to 36% estimated increase in adjusted EBITDA growth, you'll see a $37 million to $47 million improvement in free cash flow generation. If you go over to the 2017 and 2018 modeling guidance, you'll see a 16% to 19% adjusted EBITDA margin and you'll see 31% to 57% adjusted free cash flow conversion rate. So pretty dramatic increases in what we expect there. And then if you look at post-transformation, we still believe that there's a path to get to 28% to 32% adjusted EBITDA margins and a 78% adjusted free cash flow conversion over time. Our hope and our goal is that the transformation will be officially completed by mid-2017. We're on track, we're looking forward to a time where we're just offering new apps and new alliance partners and nothing else, and that's what we're on track to do and we're happy that Q4 did well enough to allow us to maintain the path that we're on. So with that I'm going to turn you back over to 2015. You know we've made good progress in 2015. We're on track to complete the transformation as we had hoped. There's still a lot to do in 2016, including the execution of those specific growth and efficiency initiatives that I discussed. The MediaCentral Platform will continue to drive long-term sustainable profitable growth. With a dramatically transformative future financial profile we've outlined that we think will lead the industry in innovation. And 2016 is going to be a critical year. There are still some key pieces we have to do as I mentioned, and we expect to reach the next level of success and rewards as soon as we complete that transformation. But however, some of the financial benefits will appear earlier than the end of the transformation, as illustrated by what we've known so far. If you look post-transformation, as reflected in the longer-term 2017 and 2018 guidance, you'll really see the levers of the platform approach to cash flow generation, EBITDA growth start to merge. So with that kind of strategic summary, let me take a deep breath and turn it over to John who will go over the detailed financial results. John?

Thanks, Louis. Hi everybody. As you've just heard, we're entering the final stretch of the transformation and we're excited about the improved financial expression on the Avid side. As you can imagine, 2015 will be a pivotal year for us as we continue to execute on our key strategic actions, enable and support other various growth drivers and make the right cash investments to complete the transformation by mid-17. Now before I get into the traditional quarterly financial results, let me review a few key metrics that we believe are reflective of the progress being made on in the transformation. And as many of you know, if you've been following our story as an investor for any period of time, you are aware of just how complicated our financial results can be as a result of the restatement related accounting. We believe that certain metrics that point out future growth trends, the effects of operational efficiencies, improvements in profitability as well as future revenue visibility, should help you understand what we've been working on, and frankly more importantly help you understand what we've been working towards. As you may recall, turning to Page 17, we've frequently talked about our primary goals of stabilizing bookings, improving margins and driving platform adoption. As it relates to profitable growth, marketed bookings, non-GAAP gross margin and platform adoptions are three key indicators. As we closed out 2015, we're pleased with the progress we've made in each of these areas. Just to provide some context around the significance of what we've already accomplished to date, Avid's bookings were declining at a CAGR of around 11% in the two years leading up to the transformation. Exiting 2015, bookings grew on a CAGR of about 4% on a constant currency basis since 2013. While constant currency bookings grew by approximately 9% in 2015, marketed bookings grew by 11%. As a reminder, our marketed products include a number of products from our portfolio that we believe drive the highest margins and you'll see that favorable margin mix reflected in our gross margin improvement of 130 basis points since 2013, notwithstanding the 6 percentage points of decline caused by the lower pre-2011 deferred revenue amortization during that same period. Lastly, we believe that the platform is central to our long-term growth strategy, which increases our ability to access larger portions of our customer ecosystem and therefore increases future cross-selling opportunities. We made platform adoption one of our primary areas of focus in 2015 and by the end of the year we've deployed over 32,000 cumulative licenses, which is more than 50% higher than last year and more than 500% increase since the end of 2013. Further, we believe we're only about halfway through our penetrable base of platform users and look forward to the potential for creating this trend of the platform adoption in 2016. Turning to the next page, another key objective of ours is to migrate to more of a recurring revenue model which provides better predictable visibility for both revenue and cash flow. This shift to recurring revenue is driven off of; one, our subscription strategy which has over 30,000 active paying subscribers; two, the continued focus on selling more annual and multiyear support agreements; and more recently, three, the move towards long-term managed services agreements. The percentage of our 2015 bookings which are recurring in nature have increased meaningfully from 21% when the transformation began in 2013 to about 38% in 2015. Furthermore, this continued shift towards recurring revenue is also resulted in a 16% increase in revenue backlog for transactions entered into after 2010. While we're encouraged by the faster than planned shift towards more recurring revenue and its ability to drive better future revenue and cash flow predictability, it does have a near-term effect on the timing of our cash collections. As another part of our strategic plan, this was to rationalize our product portfolio and deemphasize those products in lower growth areas or which had lower margins, and while we've seen the benefit of our expansion in non-GAAP gross margins as a result, it's created a drag on bookings growth of roughly 47 million from 2012 through 2015. But the good news is, as of fourth quarter we have no more non-marketed products to go. The other headwind is the pre-2011 deferred revenue amortization which is the by-product of the restatement. As we enter 2016, we have about $25 million of pre-2011 deferred revenue and roughly another $1 million left in 2017 to amortize. However, the $25 million of pre-2011 deferred revenue I just referenced reflects a decrease of about $33 million from 2015. So really to say it another way, we started out 2016 already $33 million in the whole from a comparative perspective, which is important to remember as we bridge the 2015 results with the 2016 expectations. To put this in its full perspective, while successively lower pre-2011 deferred revenue amortization has reduced revenue and EBITDA by approximately $121 million since 2012, EBITDA has only declined by about $63 million. So saying it differently, the positive effects of the transformation we believe has enabled us to cover approximately half of the earnings pressures created by the restatement related accounting. As a reminder, we posted our financial datasheet on our IR site which provides a detailed breakdown of all the various numbers for your reference and may help you think through our financial information. Now let me shift over to highlight our progress that we've made on our cost structure. We've been able to keep our non-GAAP, our total non-GAAP operating expenses roughly flat year-on-year, even taking into consideration the Orad acquisition. If one was to exclude the Orad's expenses, our operating costs would've decreased about 4% for the year. Furthermore, since 2013, when we embarked on our transformation, non-GAAP operating expenses are down 3% and this is even after we added approximately $4 million to $5 million a year related to annual compensation and benefits inflation to the business. Now I'd like to share a little bit more about our recently announced efficiency program and its impact on 2016 and beyond. As you heard us talk about before, we're aiming to achieve about $68 million annualized run rate savings as we enter 2017 and reflect about $40 million to $45 million of that as savings in our 2016 operating results. The costs associated with the efficiency programs is expected to aggregate approximately $25 million. As the buildout and adoption of our platform strategy continues to mature, we'll now be positioned to more fully leverage the common services aspect of the platform internally and scale more efficiently, eliminate redundancies and further optimize costs. Lastly, and you've heard Louis talk a little bit about this, we're in the last phases of our talent alignment and facilities rationalization project, which is designed really to get the right people in the right places to best serve our markets. Roughly two-thirds of the savings are personnel related and the remaining savings will be generated from rationalizing underutilized facilities and optimizing third-party vendor spend. The various efficiency work streams have started and will largely be completed by the end of 2016, with much of the work completed by midyear. As it relates to the cash cost associated with the efficiencies programs, we expect to incur the majority of the $25 million cash spend in 2016, with a bit of a tail covering through the early part of 2017. Now turning to the fourth quarter, bookings grew approximately 26% year-over-year to more than $193 million. However, if we were to remove the effects of the stronger dollar and the products we no longer market, bookings grew by approximately 31% year-over-year. The strong performance in the fourth quarter drove the over-achievement in bookings for 2015 and we ended at $538 million as reported and $562 million in constant currency marketed bookings, which represents a 6% and 11% growth respectively on a year-over-year basis. As a reminder, entering 2016, we no longer have any non-marketed products running through our quarterly results. During Q4 2015, bookings growth was driven by the 10-year Sinclair deal and Orad Broadcast Graphics Solutions. In line with our strategy, we continue to focus on growing subscription bookings and saw a 2 million or over 300% increase in bookings for the quarter. Sinclair combined with the increase in subscription bookings increased our recurring revenue mix to about 55% in Q4 as compared to 42% in the last year period. For the full-year, our recurring revenue bookings were 38% of total bookings, up from 26% a year ago and 21% in 2013. We also saw a continuation of bookings growth coming from the European region which compared to recent competitor public comments would indicate share gains as the platform strategy continues to resonate with our global customer base. As a point of reference, bookings outside of the Americas accounted for over 51% of our full year 2015 bookings. From a customer tier perspective, we continued to execute solid quarterly and annual bookings growth in tiers 1 and 2. During our Investor Day in November, we talked a lot about Tier 3 growth challenges given the lack of platform benefits available to that tier. While certain key platform services will not be available until the first half of 2016, we nonetheless saw an impressive 47% Q4 sequential improvement in the Tier 3 space. Now as you may have picked up from our public communications at NAMM in January, we have enabled Cloud Collaboration feature in the latest version of Pro Tools, which is version 12.5, to offer platform benefits to this customer tier, which we believe could drive future upgrades and new subscribers in 2016. We'll provide an update on progress as this feature becomes more widely adopted in the marketplace of course. Lastly, our Web Store sales is an important component of our Tier 3 strategy, exhibited annual bookings growth of over 42% for the quarter and 27% for the full year. Turning to the Q4 operating results, fourth quarter non-GAAP revenue was $139.7 million, which is 9% higher than the year ago period. Non-GAAP revenue has been adjusted to reverse the impacts of purchase accounting adjustments from the Orad transaction. As part of the purchase accounting process, it's typical to adjust down the deferred revenue to fair value which results in certain revenue never being reported for GAAP purposes. This non-GAAP adjustment reverses that effect for illustrative purposes. Revenue was higher by approximately 13% on a constant currency basis. And as a reminder, during the quarter we had about $7.5 million less of pre-2011 revenue than we did in the same period last year. The increase over last year was largely driven by shipments of our new S6L live console and the addition of Orad Solutions. On a sequential basis, revenue increased 1.5%, even with roughly $2 million less pre-2011 revenue in the quarter, again driven by the shipment of the S6L. Q4 gross margins were 60.8%, which is the same as last year. Sequentially, gross margins were down reflecting both the heavier mix of hardware related revenue and the difficult comp we had in Q3 from the acceleration of Media Composer deferred revenue. Q4 non-GAAP operating expenses were $71.3 million, up $3.8 million year-on-year due to the impact of the Orad acquisition, and up $3.2 million sequentially reflecting higher seasonal expenses. Excluding the impact of Orad, quarterly non-GAAP operating expenses were down as compared to the prior year as we continued to see the flow-through of cost optimization projects including the ongoing wage rate arbitrage and facilities rationalization projects. Q4 adjusted EBITDA of $17.0 million grew more than $2 million over the same period a year ago, reflecting higher revenue levels, notwithstanding having $7.5 million of less pre-2011 revenue and the related margins with that tranche of revenue. Sequentially, adjusted EBITDA was down from Q3 results, but as a reminder, Q3 represents a challenging comp due to the accounting impact related to eliminating free of charge software updates for our Media Composer software which added about $12 million to revenue in Q3. Shifting over to the full-year 2015 results, non-GAAP revenue of $506 million was $24 million of 4.5% lower than 2014. Lower revenue from pre-2011 revenue of $34 million and the wind-down of non-marketed products of $12 million created a stiff headwind of $46 million. Partially offsetting this was growth in recurring revenue products and services which rolled in the revenue from revenue backlog to offset about half of the $46 million of headwinds. Non-GAAP gross margins of 62% are higher than 2014, notwithstanding $34 million less of 100% margin pre-2011 revenue which largely reflects the move to improved mix and better services margins. Non-GAAP operating expenses of $272 million were about $2 million or 0.7% higher than the prior-year due to the addition of Orad to our cost structure. Excluding the impact of Orad, 2015 non-GAAP operating expenses were down 4% compared to the prior year. We continue to see the flow through of cost optimization projects, including ongoing organizational alignment and facilities rationalization projects in both non-GAAP gross margin and non-GAAP operating expenses. And finally, 2015 adjusted EBITDA of approximately $55 million was $17 million lower than 2014, again mainly reflecting the impact of $34 million of lower pre-2011 revenues, partially offset by increased revenue from higher-margin products. Adjusted free cash flow in Q4 was a generation of $2.3 million, as compared to $16.2 in the prior year. On an annual basis, we used about $35 million of adjusted free cash flow, which was consistent with expectations as compared to approximately $30 million of adjusted positive free cash flow generated in 2014. During our Investor Day as part of our Q3 earnings call, we discussed in depth the key drivers of adjusted free cash flow for 2015. As a reminder, the key drivers of cash flow usage in 2015 included the bookings mix shift to more recurring revenue items and lower Tier 3 audio bookings. A few other factors impacted cash flow in the quarter. Entering Q4, we had about $17 million of S6L console related backlog and we expected to cash convert somewhere in the neighborhood of $10 million to $12 million of that in Q4, which was central to our free cash flow projections in the quarter. Ultimately, we shipped about $15 million of the $17 million of backlog and only cash converted about $7 million of this product backlog during Q4 and expect to convert the remaining cash in the first half of 2016. While we're pleased with the uptick of new products for the year, we fell short of our cash conversion expectations in the quarter, reflecting the S6L shipments going into the market about 30 days later than we expected. The balance of this backlog will largely ship in Q1 2016. In addition, our cash flow outlook for the quarter assumed a normal level of cash converting business with Sinclair and while the Sinclair deal represented a very attractive proof point of the Avid Everywhere strategy and materially increased Q4 bookings, it had no cash effect in Q4. This deal will begin to have a meaningful cash impact however starting in Q1 2016. So with that, let me turn to the balance sheet. At the end of Q4, we had total liquidity of approximately $46 million which included $18 million of cash on hand and $28 million of undrawn committed funding under our cash flow revolver. As you've seen in recent announcements, we've since improved our liquidity position with the addition of $105 million credit facility that we closed at the end of February. This facility includes a $5 million revolver and $100 million term loan. This new financing replaces the $35 million revolver in its entirety as liquidity to cover the roughly $25 million of one-time costs associated with efficiencies programs that I mentioned earlier and provides additional liquidity to address any further continuation of market volatility that we observed in the back half of 2015. Naturally, if we determine we have excess capital after we complete the transaction, we'll consider various alternatives including refinancing. As at quarter end, our accounts receivable were $59 million with a DSO of 38 days, which is the same DSO as compared to the prior year. Inventory was $48 million, which is essentially flat year on year and sequentially. Revenue backlog was $552 million on December 31 versus $540 million in the year ago period. If you remove the pre-2011 deferred revenue, you'd see revenue backlog was $526 million, up 16% year-over-year, which provided significantly improved revenue visibility and reflects a continued shift to a more recurring revenue model. Now I'd like to move over to our 2016 guidance, which you may have noticed includes full-year 2016, first quarter guidance for 2016, and over and above that, longer-term guidance covering 2017 and 2018. As with any transformation, the process is inherently difficult and the resulting financial expressions are often volatile making it difficult for analysts and investors to model the near-term. Additionally, the complexity of our revenue recognition model makes it difficult to identify trends, including the effects of the Company's ongoing transformation. Therefore we have decided to introduce quarterly guidance for the upcoming quarter and annual guidance for 2016 which will be updated with each passing quarter to reflect our current views of our progress and the conditions in the end markets, and lastly, we've added multiyear guidance for each of 2017 and 2018. We posted a video presentation on our Investor Relations Web-site to provide some modeling guidance, bridging information and insight into certain key planning assumptions. I'd encourage you all to review this presentation which is intended to provide a new level of transparency on our planning process and financial guidance and I hope you find it helpful. Earlier Louis shared our strategic goals and initiatives for 2016 which are key drivers of our financial guidance. First, with respect to 2016, we expect bookings to be between $500 million and $536 million on a reported basis and between $530 million and $566 million on a constant currency basis. We're essentially flat with 2015 at the high end of the range. However, it's important to remember that in Q4 2015, we signed the 10-year record agreement with Sinclair Broadcasting which creates a more challenging year-over-year comparison. In just a moment, you'll see how our 2016 targets compare to both 2015 and 2014 performance. We expect to recognize between $500 million and $525 million of revenue in 2016, of which over 50% will roll in from backlog. This includes about $25 million remaining from the pre-2011 restatement revenue. This $25 million of pre-2011 revenue is $33 million lower than that of 2015. 2016 will benefit from the strategic goals that Louis discussed earlier, highlighted by an uplift from the platform enabled Orad Solutions, new alliance partners and improved production from our reseller networks and new product launches. We expect adjusted EBITDA to grow from $55 million in 2015 to between $60 million and $75 million in 2016. This represents a 36% increase at the high end of the range, notwithstanding that pre-2011 revenue of $33 million of revenue headwind that I just referenced. This increase primarily reflects our expectations of achieving cost savings and both the full effects of our first phase of our efficiencies programs as well as the new efficiency program that we just recently announced. We expect the new efficiency gains to contribute between $40 million and $45 million of savings in 2015 and be a significant driver of achieving our 2016 financial goals. We also expect efficiency gains to have material contribution to our 2016 free cash flow generation target of between $2 million and $12 million. This free cash flow target translates to roughly a $37 million to $47 million improvement in free cash flow over 2015. However, as you'll see in our Q1 guidance, we expect to use cash in Q1 which reflects an approximately $10 million rebuild of inventory related to new products that will ship later in the year as well as normal seasonality within our business. One way to think about our cash flow usage is, on average we believe the unlevered cash flow breakeven point of the business excluding one-time items is roughly give or take $120 million, and this includes the items you'd normally expect, operating spending, purchase of inventory, capital spending, cash taxes and the like. After we complete the implementation of the operational efficiencies, the estimated breakeven point will be reduced to around roughly $103 million. Until then, the first half of 2016 is expected to be a period where we expect to use cash. Turning to the next page, although we talked about the financial model significantly improving post-transformation, if one were to put the 2016 guidance in historical context, you'd already see a marked improvement especially considering the material restatement runoff in revenue. While both reported and constant currency bookings are expected to be about flat with last year at the high end of the range, it's important to remember that we had the record 10-year deal with Sinclair that drove bookings higher than we expected in the prior year. While we certainly see opportunities for more managed services deals and we have a few in various stages of discussions right now, we've not built anything into our 2016 projections for another deal of that magnitude. As another data point, if we compare 2016 guidance with 2014 results, you'll see growth of between 2% and 9% on a constant currency basis. Furthermore, if I was to further normalize to exclude the non-marketed products that we've now burned off, you'd see an increase of between 4% and 11%. So we believe there is some strong growth underlying the booking trends that will become more demonstrable over time. That underlying improvement is a bit more visible with revenue and adjusted EBITDA. In 2016, you'll start to see more clearly the impact of efficiencies programs and growth initiatives which were offsetting the $33 million of pre-2011 revenue headwinds which carry 100% margins as compared to last year and about $67 million of headwind as compared to 2014. As a result, the operational improvements will become more clear and we expect 2016 adjusted EBITDA to be between $60 million and $75 million and revenue to be between $500 million and $525 million. At the high end of guidance ranges, revenue is expect to see about 4% improvement and adjusted EBITDA is expected to grow by approximately 36% year-on-year. Turning to the next slide, we expect 2016 non-GAAP operating expenses to be between $250 million and $262 million, which represent a 4% to 8% decrease compared to 2015. Now keep in mind that 2016 includes the full year of Orad operating expenses and you may recall in the year prior we had about half a year, and the efficiency gains of $40 million to $45 million related to both operating expenses and cost of sales. At this point, again I'd point you to our video presentation on our Investor Relations site for some bridging information on expenses to see how the $40 million to $45 million of savings is reflected in our 2016 guidance. We expect non-GAAP gross margins of about 59.5% to 60.5%, which continues to reflect the headwind of the 100% margin pre-2011 revenue, partially offset by improvements in product mix, reflection of savings from the efficiencies programs and growth areas like subscription revenue and Orad products. It's worth mentioning here that our growth initiative around adding more alliance partners will have actually a slight muting effect on gross margin percentages due to the revenue share nature of those transactions. Lastly, we expect adjusted free cash flow to contribute between $2 million and $12 million, reflecting a $37 million to $47 million improvement over 2015. Again, we'll talk more about how to bridge adjusted free cash flow performance from 2015 to 2016 in the video we posted on the Investor Relations site, but as most basic level we can expect to see cash savings impact of our efficiencies programs really reflected pretty significantly in the back half of 2016. Turning to the next page, we also thought it would be helpful to provide our current financial views of 2017 and 2018. You'll see that even with modest revenue and bookings growth aligned with market rates of growth, we're able to dramatically improve the amount of revenue that can be converted into adjusted EBITDA and the amount of adjusted EBITDA that in turn converts into adjusted free cash flow. Once the pre-2011 revenue burns off, the cost efficiencies are fully within the run rate and the shift to recurring revenue starts to hit the third and fourth years, the financial model should change dramatically and generate significantly more cash from EBITDA. Turning to Page 30, with any transformation, and we've said this before, the process is inherently difficult and resulting financial expressions are often volatile. And this is why historically we've provided annual guidance that we would update quarterly. And as you heard Louis mention earlier, we recognize the difficulty for public investors and analysts. We're trying to model our business on a quarterly basis, and so we'll now begin to provide next quarter guidance starting with Q1 2016. So moving to that Q1 2016 financial guidance, we expect bookings to reach between $100 million and $112 million on a reported currency basis and between $108 million and $118 million on a constant currency basis; revenue of between $120 million and $125 million; non-GAAP operating expenses incurred of $64 million to $66 million; adjusted EBITDA between $11 million and $14 million; and adjusted free cash flow use of between $9 million and $15 million. Q1 guidance reflects the typical seasonality of the business which includes lower than average bookings as well as roughly $10 million of incremental inventory purchases in advance of new product releases that will be released later in the year. As I mentioned previously, we expect to use cash in the first half of the year as we work to get the efficiency gains and as the growth initiatives get more fully reflected in our run rate. So with that, and I realize that was a lot of material, I'll turn it back over to Louis for some closing remarks. Louis? Louis Hernandez, Jr.: Thank you, John. Hopefully the investors found that helpful. I know it was a lot of information as I warned you at the beginning, but we feel we're excited that we're turning the corner and sprinting towards the end of the transformation, confident enough to supply not only full-year 2016 but 2017 and 2018 year guidance as well. Q4 was strong. We saw some nice growth in several areas making it a respectable 2015, more importantly completing some of the real building blocks to complete the transformation. We had huge adoption and progress in new products across the board. Recurring revenue provided an important increase to visibility. And so far, the post restatement revenue amortization has really masked many of the benefits that you can see occurring and those will start to shine through in 2016 as we again are on track to complete the transformation in 2017 and beyond. Now it's just about staying focused and executing on the initiatives that we outlined and finishing this phase and what we hope will end up with a dramatically improved financial profile. I want to thank you for your partnership and your feedback. And with that, operator, we can turn it over to questions. Thank you.

[Operator Instructions] We'll take our first question from Steven Frankel with Dougherty & Company.

Given the size of the Sinclair transaction and its impact on the quarter and the go-forward look of the business, I wondered if you might help us size that.

Steve, by the way, sorry to interrupt you while you're travelling. So as we previously mentioned, we're unable to talk about the size of that transaction because of the agreement that we signed with Sinclair unfortunately.

Okay. How would you characterize kind of the everyday business in the quarter? Did the everyday business hit its metrics or did you kind of put all your efforts behind Sinclair and that's really what we should take away, that you got one very important strategic deal this quarter?

I think what we saw overall was the uptake of the platform continues to perform very, very nicely and that really is demonstrated by the uptick that we got from Sinclair. I think it's also important to remember that the products that's included in Sinclair is really all the products that we already sell. So it's really just – it's part of our normal business, albeit I wouldn't anticipate – we didn't anticipate in our 2016 guidance that we'd have another one of that size. Louis Hernandez, Jr.: Steve, I would just add that obviously it had a pretty significant impact on the bookings but it had a much less impact, John if you want to comment, on cash and revenue and also had virtually no impact on some of the other metrics including the subscription, the Web Store sales, et cetera. So, John, would you like to clarify some of those components?

I think what I would say is, and Louis is right, so the impact on Q4 was primarily bookings. It had a very modest impact on revenue. It essentially had no cash flow effect in Q4. And as you heard in some of my remarks, we do have a run rate business with Sinclair. Ordinarily, we would have had some revenue that would have cash converted in the quarter. Effectively that revenue and cash will be collected in 2016. In fact, the cash will be collected in the first quarter.

Cash for the full year is collected or does that get cut ratably?

No, it gets collected in the first quarter.

Okay. And the other thing I noticed in the P&L is you had pressure on product gross margins and nice uptick in services gross margins. Is this how we should think about the business going forward, is this the new normal?

It was really more of a specific mix shift in the quarter. So I'd say our guidance is probably a better reflection of where we think we're going to be.

And while your guidance said the total gross margin, but you didn't really say directionally what's happening with product or service.

And really, so overall we'd expect the full year mix to be roughly comparable. The thing that really puts a little bit of pressure on margins is the same thing we talked about before, which is the burn-off of the pre-2011 revenue. But mix I think you can reasonably assume is roughly comparable on a year-over-year basis.

Okay. And when will the Collaboration in Pro Tools be fully released? I did see the NAMM announcement that seemed to me like saying it was going into beta. When is that generally available?

Right now it's projected to be in the first quarter, beginning of second quarter.

Okay. And do you think that alone is enough to kind of restart the engine for the Tier 3 part of Pro Tools or do other things have to happen as well? Louis Hernandez, Jr.: This is Louis. I can comment about it, John, thank you. Steve, thanks for asking for the clarification. By the way, Sinclair, because I know that they had asked per our agreement we can't disclose much about it, but as John said, I think you can mainly factor that into the bookings. So if you look at 2016, that's where you see the compare not increasing quite as much because we didn't factor additional. Almost every other metric was not significantly impacted by Sinclair, so if you wanted to take insights on how we're doing overall. The Web Store sales that were up so significantly, that and paying subscribers, was helped mainly by the surge in Tier 3 and audio started seeing some benefit of that. One of the things in the audio business as you mentioned was we started getting pulled significantly towards Tier 1 client as these new products are being pulled out and we had to make a decision. Originally we had planned on going subscription first, didn't get much uptake on that alone. We're trying to pull all those users on 9 to 11 that really haven't upgraded and don't have an economic relationship with us that is sustainable. First, we're going to do that, then we're going to add platform benefits like Collaboration and the Artist Community and then we are going to do point releases for features and enhancements. Because the platform was delayed, we decided to go with 12.x through 12.5 and that's where you started seeing the surge where we actually started delivering direct benefits, features and functions, and that's what helped Q4. One of the biggest things about the audio business is, even when they understood Avid Everywhere, and many of them did not, they didn't see how it would benefit them. And we have to be careful about audio. Tier 1 are one of the biggest buyers of S6L and a lot of the platform benefits, and I think – I was at one of the major sound studios in Hollywood recently and they said, the only place you can get Tier 1 audio and video is through Avid and that's why they were going all Avid on all their sound studios and upgrading across the board. But on Tier 3, as you know, what we heard was, that all sounds really interesting/I don't know what you're talking about, all I know is I don't see any benefits to me, and that was really the conversation we are having with the individuals. Cloud Collaboration and the Artist Community is the first time we're actually showing those benefits. So far the beta users, and if you look at the blogs which up until now have not always been favorable because they've been begging for features and didn't understand Avid Everywhere, you're finally starting to see articles and blogs and a lot of folks kind of saying, I get it, I get now that if you saw what we did on NAMM and you watch the video, for a lot of people it's mind blowing how simple it is to do in-track and session management, real-time syncing via the cloud and work with anybody around the world. They didn't fully appreciate what that meant for them. We're getting great reviews on beta. I don't know if that will be enough but that's going to be the stake in the ground because finally we have a platform benefit for Tier 3. And then you will continue to see a steady diet of more of the components, and it's really the artist community to meet people and engage. So if you're a singer, Steve, where you are today on the West Coast and I'm here on the East Coast, I can invite you to a session with Cloud Collaboration. It manages as though we are next to each other. So we're hoping it will be and we'll be anxious to report what some of those metrics are, but so far we've gotten fairly positive feedback from the beta community and anxious to launch that, as well as the contest that we launched and the announcement from Berklee School of Music where they are offering training courses for free. As you probably read about Cloud Collaboration, they feel it's an important element for artists who want to work with the best inexpensively.

Great. I'll jump back in the queue. Thank you.

We'll take our next question from Ali Mogharabi from Singular Research.

Just a few questions here. Can you provide more color on these restructuring costs? I mean how are they different from the efficiency program costs and do you expect additional restructuring costs going forward? I guess what I'm trying to do, let's put another way, given your adjusted EBITDA guidance for 2016, 2017 and 2018, how much restructuring costs are excluded?

This is John Frederick. So first of all, we expect to have about $25 million of spending on the next phase of our operational efficiencies. The restructuring charges that we had under the old plan is really burning off and it's relatively small. It's in the hundreds of thousands of dollars. So that piece isn't going to be very material. It's really just the current program that we're working on and that's really a combination of a number of factors, but primarily it's related to people related costs as well as some of the facilities related darkening costs.

Okay. So that $25 million in operational efficiency cost, that's basically what you guys have taken out to derive the adjusted EBITDA guidance for 2016, correct?

Correct. Most of it will be spent in 2016. There will be a little bit of a tail that goes into 2017, but yes, that's the concept of what we're taking out.

Got you. That's very helpful, John. And going to gross margin, with pretty much no more non-marketed products out there, your gross margin guidance doesn't indicate expansion, and why is that?

Remember we're still dealing with the burn off of the pre-2011 revenue and that has 100% gross margin. So that's a $33 million headwind at a 100% gross margin on a year-over-year basis that we have to overcome. So frankly even just getting back to flat is actually pretty good improvement. And the way to think about that is, that improvement that we've been able to drive historically actually has cash flow characteristics to it whereas the burn-off of the pre-2011 revenue is non-cash.

Right. So with that said, I see some expansion indicated in your, I know it's long-term, but indicated in your long-term guidance, 2017 and 2018. So what drives that gross margin expansion after 2016, because again, you no longer have those pre-2011 deferred revenues in the amortized?

That's exactly what drives it. Once you get clear of the amortization of the pre-2011, you start to see cleaner margins that doesn't have the same sorts of pressures associated with it due to the accounting.

Okay. And then last question I have, in terms of restructuring and/or efficiency, or just say efficiency actually, because that's basically what you guys are still planning on completing, is that larger office that you have in Mountain View, California involved in any of this, are you planning on keeping that office open, can you provide some color on that?

So as you can imagine, we usually don't comment on specific offices, but I think one way to think about it is, part of our thesis is we will be relocating one office to a less expensive location that will be a meaningfully sizable office.

Okay. Louis Hernandez, Jr.: John, I think said simpler, I mean in terms of regional, I think you know, Ali, that process we went through. We mapped out every customer we want, we mapped out every employee who should be near the customer who should be in the region, and if you don't need to be one of those, you can be in the lowest cost center. We've opened up offices, as you know, all over the world in low cost centers and now we're eliminating duplication. So where there are people who are not near customers, and given that 70% of our U.S. revenue is basically between New York and LA, you'll see an uptick in the investment in those offices. If you need to be in the region, you'll be pushed to a low cost center which will be in Boca otherwise, depending on what your category employee is, like a knowledge center. So many of those heritage sites will be deemed knowledge centers and they'll be shrunk to the folks that we really deem are important. The majority of those efforts have already taken place. In terms of the facilities, I doubt you'll see an abandonment of those knowledge centers regionally but we may look to a more efficient model that matches the intents of your back office or development center. You don't need fancy offices, you just need a comfortable clean work environment where you get the work done. We have the tools to get your work done efficiently. And that's how I would think about it. Every office is in play, every office has been reviewed. And in that particular region, those were treated historically as sales office or production houses and now they are probably going to be deemed more knowledge centers where we have key employees that we do not want to lose and working hard to retain. But the environment they work in is going to more reflect the type of office it is. And that's what you should expect overall. I doubt you would see an abandonment of the region though.

Got you. All right, thanks guys.

We'll go next to Anup Suresh with Morgan Stanley.

So my question is primarily on the Orad acquisition. Any color around kind of how bookings are going or what we can expect for the full year ahead?

It's a great question. So as you may recall from our third quarter call, bookings started out reasonably slow after or post acquisition. Number of lessons learned but I think the long and the short of it is, as we accelerated our plans to integrate a little bit quicker and a little bit more clearly, we saw resurgence in bookings. So I think if memory serves, we were up about 33% sequentially from a bookings perspective between Q3 and Q4. So we certainly saw the pickup in bookings. Candidly, it hasn't hit the level that we would like. Having said that, we're really just starting to see the benefits of tying it into the platform and starting to put it through our global distribution. So we're still just as excited about that transaction as the day we transacted on it. We've also been able to at this point execute on all the cost synergies, and you'll recall that that was really the central thesis that we had for the acquisition. While we had aspirations of cross-selling beyond that, we really stuck to a very conservative model built off of the cost synergies basis. So overall, I'd say excited, bookings are improving, not quite the way we'd like it to be but certainly meeting our financial thesis. Louis Hernandez, Jr.: And I'll remind you also Suresh that all the themes that we hoped for Orad are still in place. We're strongest distribution-wise where they are weakest. We have a lot more scale in our distribution arm. And as John mentioned, what we learned was, we were monitoring them very closely to identify there was a sales execution issue right away. We had to change, make several changes, and once we did that and then trained our team, we started seeing an uptick, as John mentioned, 33% sequentially for Q4. And it looks like it's on a trajectory to get back to what we had hoped. Remember the original price that we paid was based mainly on expense synergies which were fully realized, but we felt there was a big upside on the revenue side and we're going to try and realize that now. The other big theme is, if you talk to broadcasters, one of the few bases to justify the infrastructure and ROI on a broadcast network today is mostly with live venue events. So news and sports, and that's their strength, they are now fully integrated into the platform and they are showing very well. So we're still pretty optimistic because it ties into the business theme points, and those products, not only are they very strong, they are very well priced. So, unusually for me anyways, we're walking in a situation where actually the value based priced product that's extremely competitive sitting on a platform that is the most innovative in the industry. So those have been fun conversations and let's hope that we continue to drive the gains that we've seen so far and fulfil the original model that we had hoped to achieve.

That does conclude today's question-and-answer session. At this time, I'll turn the conference back to Mr. Jonathan Huang for any final remarks.

That you, Don, and think you everyone for joining our call today, and we look forward to connecting with many of you very soon.

This does conclude today's conference. Thank you for your participation.