Bruce Davis - Chairman and Chief Executive Officer Michael McConnell - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Matthew Galinko Andy Hargreaves - Pacific Crest Securities, Inc., Research Division Paul Sonz - Sonz Partners Nick Zamparelli Kevin Hanrahan - KMH Capital Advisors

Good afternoon and thank you for participating in today's conference call. Now, I will turn the call over to Chairman and the CEO of Digimarc, Bruce Davis. Mr. Davis, please proceed.

Thanks. Thank you and good afternoon, everyone. Welcome to our conference call. Mike McConnell, our CFO, is with me. The objectives of this call are to review and discuss the third quarter financial results, talk about significant business developments and market conditions and provide an update on our strategy and operations. This webcast will be archived in the Investor Relations section of our website. Please note that during the course of this call, we will be making certain forward-looking statements including those regarding revenue recognition matters, results of operations, investments, initiatives and growth strategies. These statements are subject to many assumptions, risks, uncertainties and changes in circumstances. Any assumptions we offer about future performance represent a point-in-time estimate. Actual results may vary materially from those expressed or implied by such statements. We expressly disclaim any obligation to revise or update any assumptions, projections or other forward-looking statements to reflect events or circumstances that may arise after the date of this conference call. For more information about risk factors that may cause actual results to differ from expectations, please see the company's filings with the SEC, including our latest Form 10-Q. Michael will begin by commenting on our financial results. I will then discuss our outlook and execution of strategy. Mike?

Thanks, Bruce. And good afternoon, everyone. Our quarterly profits grew by $2.1 million (sic) [$2.2 million] over last year on a $3.3 million or 63% increase on revenues. The balance sheet remains in excellent shape, with more than $30 million in cash and securities and no debt. We repurchased approximately 114,000 shares during the quarter, including 64,000 shares in the open market. And we continue investing in our growth initiatives, including building out our joint ventures with Nielsen, developing the second wave of retained patents and beginning commercialization of Digimarc Discover, all in support of our vision of enabling computers, networks and other digital devices to see, hear, understand and respond to their surroundings. In Q3, as I said revenues grew -- revenues were $8.6 million or 63% higher than the prior year, primarily reflecting increases in revenues from Intellectual Ventures and for increased services from our central bank customer. Gross margin of 80%, which is 8 points higher than the prior year and reflects a greater mix of license revenues to the total. Higher operating expenses reflect in increased investments and new product initiatives and the Verance litigation and operating profit of $1.4 million or 17% of revenues and a $700,000 capital contribution to our joint ventures with Nielsen, where our share of a net loss was also $700,000. Bruce will now provide his comments on our outlook and execution of strategy.

Thanks, Mike. As we near the close of 2011, operating performance continues generally in line with our expectations with 2 exceptions. Federal government business development and Verance. As I noted in our last call, our long-term anti-counterfeiting program is doing fine, with revenues in defense and intelligence customers are lagging behind our expectations. I hope then that some recent contract awards and cyber security defense would ameliorate the situation in the second of the year but this hasn't happened. Although Digimarc is part of the winning team with the Vertex Corporation on a $180 million contract to provide a broad range of research and development support to the national security community, we have not yet begun the work. It is in the nature of this area of business that the causes and duration of delays can be difficult to discern. We're ready to begin work when the customer gives us the go-ahead. In the meantime, the relevant company staffed for fully and well employed and other business, so we're not suffering from any unabsorbed fixed cost. In addition to the in Vertex award, we have other defense and intelligence growth opportunity in the sales funnel, but we cannot reliably predict any outcomes at this point, particularly given all the budget challenges and the political chaos our federal government is experiencing. There were nowhere -- where the variance from our 2011 planning assumptions is the ongoing dispute with Verance. Litigation is continuing. In the meantime, Verance is paying significantly less royalties that we believe are owed, this has a material effect on our revenues and profits. We have prevailed in all significant court decisions so far. Verance had filed a Declaratory Judgment action against us in the U.S. District Court in Delaware on September 30, 2010, alleging the invalidity and non-infringement of 22 patents held by Digimarc and asking for the contract to be voided. The court dismissed Verance's case on jurisdictional grounds. Verance had appealed the dismissal. In December of last year, we filed through [ph] against Verance in the District Court of Oregon for breach of contract that tell them to make payments under the license agreement. The court recently denied Verance's motion to dismiss or stay the action and compel arbitration. The court also ruled that Verance breached the agreement by taking a retroactive credit of $1.8 million. Verance is disputing these rulings. Despite the Verance dispute, license revenues are up materially this year, created by our Intellectual Ventures relationship. We are collaborating with IV and a number of licensing initiatives. In all other areas of the business, our execution of strategy is pretty consistent with our expectations. Development and marketing of our seeing/hearing device platform known as Digimarc Discover is our major growth initiative and it compasses work in many media markets including music, television, publishing, packaging, direct mail, free standing inserts and various experimental applications. As you know, our ultimate goal is to enable mobile devices to generally see, hear, understand and respond with optimized network services when we start it by this year's [ph] to look or listen. Our business for the platform includes Digimarc Discover, the Media-Sync joint venture with Nielsen, and the Music Discovery courtesy of our collaboration with Sony gray cells [ph]. Q3 was our second quarter from launch. The Oregonian became the first newspaper in the U.S. to adopt our solution. Numerous magazines began using Discover, most notably House Beautiful, our first publication. An increasing number of overseas magazines, particularly in the U.K. and Australia come on board. A number of new accounts and services created, downloads of reader apps and consumer reads of watermarked material, all increased each in month of the quarter. The numbers are still pretty small, and to fully tell how much of the experimentation and trial will be sustained. We have not yet invested significantly in sales as we have been refining our solution, positioning packaging, pricing and understanding of the competitive landscape. In particular, we will be offering enhanced post-click experience tools from ourselves and at least one third-party before year end. We intend to ramp up sales and marketing in coming quarters. Here are some statistics regarding usage from the program thus far, including the date of period in the first 4 months of commercialization. There had been 2,200 accounts opened. There have been more than 70,000 downloads of Digimarc Discover. We don't have reliable statistics on numerous private labeled versions so that's just Digimarc Discover branded application. We have users in more than 70 countries that have read watermarks more than 140,000 times. The revenues are not yet material. We're mindful of many practical impediments to achieving our objectives for Digimarc Discover and the associated costs and risks. It will take time, investment, patience, determination and fill our premiere set to get a better sense of how well we can exploit its potential. As we work through the market introduction, research and development continues. We're progressing toward creation of a universal reader that uses various technologies to identify the concept consumers want to experience further by working to add one beep bar code reading and television synchronization features from our Nielsen joint venture. In the packaging area, we are engaged with some perspective partners and customers. Our strategy has been and continuous to be the focus on publishing in 2011, however. In the Music Discovery we're collaborating with IV to pursue license income from suppliers. We've also increased our R&D in audio watermarking, having identified what we believe to be some promising commercial opportunities for watermarking-based solutions that we intend to test the market in 2012. As I reported in our last call, our Media-Sync joint venture with Nielsen had been sued for patent infringement by Walker Digital. That claim has been settled. The settlement terms are confidential. The marketing efforts were impeded by the overhang, and now are ramping again. This concludes our update on strategy execution for Digimarc Discover. In the R&D area, our patent estate is growing significantly. The Digimarc retained patent assets, grew by 43 during the quarter, including 4 new issuances and 39 new applications, bringing the total number of patent assets not licensed to Intellectual Ventures to 205. We have substantially increased our R&D budget and staff. We expect these investments to leave a substantial growth in our patent assets in coming years, addressing numerous exciting advancements in media identification and management and enhancement. In closing, as we complete our execute in our strategy in 2011, I've noted that our performance has been generally consistent with our planning assumptions except for the federal business that did not materialize and the ongoing dispute with Verance. For our planned outline last December, we focused on fostering success of business partners and launching Digimarc Discover. Our performance on Digimarc Discover has been consistent with our expectations. We have been expecting that 2011 would be a big year for Media-Sync, but our progress under that being impeded by the Walker Digital infringement litigation. Now that this has been resolved, we're back on track, but a bit delayed. The interest in synchronized television viewing appears to be growing as we had hoped, both for our joint venture offering and for the licensing of our patents with Intellectual Ventures. In the Government sector, the studios program has performed well. As we have discussed, other government work has been delayed despite winning some contracts. Regarding Verance, we ended the year in litigation with them and we expect to end the year that way. At this point, it looks like we may need to get our money through the court process, we are very focused and determined to do so. On the financial front, we expect to report good profitable growth, despite the ongoing poor economic conditions and the end result dispute with Verance. We expect a good cash flow and got it, returning value to shareholders by investing the proceeds largely in stocks repurchases. Overall, we're executing well on our strategy and anticipate a very exciting and rewarding year ahead, thanks to the continuing support and commitment from our partners, customers and employees for making our vision a reality. That's it for today. Thank you. Now, we'll open the call to questions.

[Operator Instructions] Your first question comes from the line of Paul Sonz of Sonz Partners. Paul Sonz - Sonz Partners: I wonder, Bruce, if you could talk a little bit more about the opportunities with the Media-Sync, the television application? And how soon we might see programs -- new programs on the air with it?

Well, we have 2 pilots, one with ABC and one with Weather Channel. We have another one that is underway, but not yet announced. And we have a queue of discussions and interests and evaluation that covers most of major programmers. And they all seem quite interested. We continue to build out the software platform, which includes tools for the development of the synchronized assets, and the iPad implementation that you're familiar with and we're working on smart phone implementations that can be used both within the program and more generally for what we call internally an all TV application akin to Yahoo!'s IntoNow application. Paul Sonz - Sonz Partners: This may sound a little farfetched, but I was just wondering would this ever be something that would be used in movie theaters?

It's not farfetched. Sure. Yes, it's consistent with the general theory of Discover. And you could have all kinds of interest in theater applications. And because there the audience is quite well-behaved once they signal that they should be, it would work very well, I think. Paul Sonz - Sonz Partners: Switching to the Digimarc Discover, in House Beautiful, I think that's the magazine, it's from a very big publishing group. Have -- they have evidenced any interest in expanding it to their other magazines?

There's a growing amount of awareness, and there's interest. The House Beautiful has been quite vocal in their excitement about the technology and the satisfaction with the way it works. So we'll -- that's the idea, where in most of the publishing groups, they allow individual publications to do some experimentation and then propagation within the group. So How's Beautiful is a nice success story within the first family. Paul Sonz - Sonz Partners: I have 2 last questions. One is, I know that you've been working with the Royal post office -- post service. And I know recently that our postal service, the union, just hired people to help reinvigorate our business here. I wonder if you could just talk to the experience they're having in England and whether there might be some interest in our postal service?

There are a number of announcements from the Royal Mail over the summer. The haven't yet formally launched. So there was not much experience to talk about yet. Currently, it will be relevant to all postal authorities whatever experience they have.

Your next question comes from the line of Kevin Hanrahan of KMH Capital Advisers. Kevin Hanrahan - KMH Capital Advisors: I see it says -- I'm looking at your cash flow statement for the year-to-date, for the 9 months, and it says you bought back about $21.5 million worth of stock. Can you break out how much of those were brought back in the open market?

Sure. About $3.1 million was brought under our share repurchase program and then just under $15 million related to the Philips share purchase. So that's the vast majority. Kevin Hanrahan - KMH Capital Advisors: Okay. So the $3.1 million that includes almost $4 million that you spent this quarter? The third quarter?

Yes. There was a couple of million this quarter in the corporate buyback, which is about 64,000 shares, I think we mentioned. Kevin Hanrahan - KMH Capital Advisors: Okay, so you said 114,000 total shares. So I should subtract 64,000 from that total to see the open market shares, is that right?

Well 64,000 was the open market, the other shares relate to our continuing program of retiring shares and options from employees... Kevin Hanrahan - KMH Capital Advisors: So those employee shares that were retirees was about 50,000 shares, is that about right?

That's correct. Kevin Hanrahan - KMH Capital Advisors: Okay, I'm with you now. I try to keep track of that stuff and we do appreciate the share buyback. My next question is for Bruce and it's a little bit related to share buyback. Bruce, talking to you a couple of years ago, it sounded like you're interested in making acquisitions because there was so many bargains. And all the markets got hit recently, so maybe there's some more bargains, I'm not sure. But can you juxtapose for us where you would be in terms of spending money on share repurchase or spending money on acquisitions?

I always told our shareholders regularly about their preferences, and I think we all had the same view of capital allocation and that is that we like our business and so the share repurchase is considered a good investment. Acquisitions are quite risky, most of them fail. And as long as we can grow the business at a reasonable rate, without the acquisitions, I think the inclination of most is to not do them. Unless we found something very attractive. And so, we continue to evaluate our acquisition opportunities regularly. And we've had some serious discussions from time to time, but we haven't closed any deals.

Your next question comes from the line of Andy Hargreaves of Pacific Crest. Andy Hargreaves - Pacific Crest Securities, Inc., Research Division: First of all, did I understand you righted the kind of GAAP in federal budget income. You guys have programs that are in line up and that -- primarily a timing issue, rather than viability issue? Or do I not hear it that right?

I'm sorry, I couldn't hear your question, Andy, could you repeat that, please? Andy Hargreaves - Pacific Crest Securities, Inc., Research Division: Yes, so just on the federal business, did I hear you right that there's programs essentially that are approved and it's just a timing issue or are there actually funding problems behind those programs that may not get done?

Well, these programs are in or near classified work. So I honestly can't tell. It's the nature of that business. We're a subcontractor in most cases, and so I don't know who to believe on these things to the extent in almost a state of position. But you got the chaos in Washington, they got the budget issues in Washington and then you're operating in a dark space. It doesn't get much worse than that for visibility. And so we have at least 1 contract, which is signed and that's the $180 million contract that I referred to. That contract is an IDIQ contract, so it operates under task orders. So what that means is that the budget is supposedly set aside and secure. And we and our team members, which is a fairly large group of companies led by Vertex, get to suggest ways to spend money to the various customers. And they know they have budget for that. So we're in that process now and we have the impression that we have business going right now, generating revenues and we don't yet -- but it's not quite clear why we don't. So the money's there, the contract's signed, we just don't have the business. And then there are other pending business opportunities which could be significant, but we can't seem to nail them down and again it's in that environment, so it's not as if I even know exactly how to nail them down. We just keep trying. Andy Hargreaves - Pacific Crest Securities, Inc., Research Division: That's helpful though. And then just -- could you talk about what the general sales cycle mean? There's not even enough experience to know, but the general sales cycle in a kind of a roll out period for the Media-Sync programs? Effectively, when do you think you could start seeing revenues?

Yes, we've got some insignificant revenues, not immaterial revenues. So we have a little bit going on. The sales cycles are variable. They could be very short. It's kind of the nature of the entertainment business, because we are working with programmers. We actually had a programmer recently who wanted to get up and going in 2 weeks and we've had other discussions that have been ongoing for a year. And what happened was when the Walker Digital suit was filed, the media companies that are not very experienced with patent matters, and they got hesitant. They said, "look at -- this is new stuff that you're offering, we're not quite -- don't know if we want to get down the road, get invested in this, if they got exposure," and so we've settled it up. And now they're not subject to any exposure from that claim and so now they're back engaged again. And so it's -- most of the programmers that we would want to be engaged with are now engaged again, but not yet implemented. And so we need to get them to implementation and again it can be a matter of weeks or months or longer to get them engaged. There isn't any 6 months, 3 months kind of standard time to closure. Andy Hargreaves - Pacific Crest Securities, Inc., Research Division: Okay. And then lastly, what's kind of timeframe for next steps in the Verance process?

We have begun Discovery, but firing off interrogatories or documentary requests to each other. We are trying to begin arbitration of the one of the rates in the agreement. And we are doing hand-to-hand combat on everything that can be combated in every litigation form available. So the guys got dismissed in Delaware. They asked for reconsideration of the dismissal, which was denied, then they appealed the dismissal to the Court of Appeals. In Oregon, we've had numerous preliminary motions that have been submitted, argued and decided by what's called the Magistrate Judge in Oregon. And in Oregon District Court, they have 2-tiered system where a Magistrate Judge is essentially working for what they call an Article III Judge. So the Magistrate Judge recommends a disposition to the Article III Judge who then -- he decides off however they decide they want to do. They want to do something different. So the Article III Judge has decided in our favor on a number of motions, and then Verance is trying to dispute the recommendation not being made to the Article III Judge. Now when the Article III Judge decides what they're doing, they'll properly dispute that. And that's just the way they're choosing to approach the matter, rather than negotiating a sensible outcome. And as they're doing that, that to us is increasing, and it is a significant amount of money and we intend to collect it. Andy Hargreaves - Pacific Crest Securities, Inc., Research Division: And you're confident that they have the balance sheet to pay that?

Well, they're not paying us. And I certainly hope they're not using our money as working capital. But in our judicial system, I can't get a security interest against that money, without having a final judgment. So it's one of the frustrating aspects of our judicial system, that someone can not pay their bills, and we can't make sure the money is safe. So we certainly hope it will be there when we get the right to retrieve it and -- but we can't provide the insurance of that.

Your next question comes from the line of Nick Zamparelli of Chartwell Investment.

Just a quick follow up on the litigation. Can you tell us how much you spent on litigation associated with Verance this quarter?

Yes, I can, Nick. I think this quarter was about $200,000 in the third quarter.

Okay. Is that for kind of -- is that a good run rate on a quarterly basis so we could expect or until this is resolved is it going to hop around a little?

It's difficult to tell. It definitely has hopped around. A little weak. We've spent I think more than $1 million so far this year. So this was a lower quarter than others, but it's just difficult to tell. Lots of activity going on right now.

Yes. It has enclosed [ph] with the amount of proceedings and Discovery can be expensive, we're just entering into that phase. So it's a bit hard to forecast. It depends again on whether there's an orderly process or kind of a process that Verance has done -- engaged in every issue is, fully litigated, which obviously makes it expensive for both sides.

Okay. And then just hopping back to Discover. Thanks for giving some stats on accounts and downloads and all that. I'm just curious as to -- I know you mentioned it's a little too early to tell how much of the testing will be sustained, but maybe just elaborate a little bit on of the 2,200 accounts that are open. How you expect that to -- how should we expect the pace that potentially turns into a sustained business?

I've been involved in market development from my entire career, so I have some experience that informs a theory about these things. But it's nothing more than that. My experience indicates that in new market development for products, the first product that gets shipped is inherently incomplete. Often times in ways you don't realize it's incomplete, and then you figure out what's missing in you add it to it and then it works. So that's why we did the brief beta period, and that's why we've been not investing more than we have been on sales and marketing, as we're cut -- poking around, figuring out what we need to have a really compelling offer. And I think I have a pretty clear sense of what's missing. And we have a clear strategy for supplying it. And what's missing in my view is the high-quality consumer experience. One of our friends in the business calls it the post-click experience. So that clicking this, which is the object recognition and that is our focus, I think we'll do very well. And I'm quite happy with the performance of our technology. But in our theory of the way in which the platform would develop, third parties fill in the blanks on the experience, mobile marketing firms, digital firms and so forth. Those have not developed as well as they need to for this thing to really take off. And some of the experiences have not been very good quality for lots of reasons that I could go into in a more extended conversation. So we're working hard on that piece, and what we're doing is twofold. One is that we will be filling some higher quality post-click experiences from Digimarc at the Mobile Marketing conference in November. Right now, we provided a URL link only to our mobile marketing webpage. We'll be providing a more elaborated set of responses to watermark detection beginning in November. And we're beginning to build what we characterize internally as kind of an App Store equivalent, where third parties will be able to market their post-click experience with our systems. And what we'll try to do there is to showcase some of the better firms that are working in those areas. And so with all of that said, the way I believe the market will develop -- and this is why I said earlier that it's kind of going like I thought it would go, I wish it would be taking off through the roof. But there's usually a tipping point associated with somebody completing the products and they're doing it well. And we believe of the examples that we've seen thus far, we have some nice examples. House Beautiful, I think, is doing a nice job. We have some Australian publications that are small publications but doing a pretty nice job. We're hoping to get some higher profile publishers involved over the course of the next couple of quarters, who will invest appropriately to make sure that the high-quality experience exists. We're also seeing a lot of experimentation, I learned just a day or two ago, about a fairly large company doing a trade show promotion in which they watermarked several hundred images associated with their business, spread them around the trade show and did kind of a treasure hunt. And then I thought it was really cool and it was successful. And they did it all on their own, we didn't even know about it. And so one of the purposes of the OSP as we call it, the Online Services Portal, is to encourage experimentation. Because that experimentation will inform us as to what is missing and we'll perhaps provide the answer. So that's where we are right now and how I see things developing, and so we're not yet at that tipping point. These numbers are -- they're okay, they're not great, they're not awful, they're just kind of okay but they will take off when those things happen.

[Operator Instructions] Your next question comes from Matthew Galinko of Sidoti.

A couple of quick questions. First, did Verance pay anything this quarter? And if it did, was is it at 10% customer?

We'll be filing our 10-Q here shortly to disclose our large customers. Verance is not in that list this quarter. And I think Bruce alluded earlier that our revenues from them have been inconsistent and not predictable, but they have paid some fees this quarter.

All right, great. And then are you seeing any trends in terms of our early discovered authors whether they are skewing towards white label adoptions or is it mostly Digimarc branded?

The biggest news so far is Digimarc Discover branded, in terms of actual watermark reading. But we have about a dozen white label Apps out now.

Okay, then last question. It sort of seems like the watermarking of images would be best to do it to a magazine-like publication, like a House Beautiful, whether large, sort of high-quality images that they're really trying to showcase. So do you see any -- I guess you're not doing any major outbound efforts yet, but that sort of going to be an area of focus going after publications along those lines?

Yes. We're becoming increasingly well known from the publishing industry, it's not that big an industry. And we're doing it through relatively low cost promotional activities like presentations at publishing events. And in fact I just did 1 and I'll be doing another one in a couple of weeks. We want to wait to put the big push on until we've got some better demonstrations of the entire experience that we're happy with. And we could considerably use some of the House Beautiful examples because they're doing a nice job. But we're still trying to build a portfolio to take on a sales call of real life as opposed to mocked-up stuff. And so I'm hoping that we'll have what we need pretty soon and then we can go and put a little harder push on. But we're also in the early stages of general adoption of what's called automated content recognition, ACR. And there's growing use sort of a cross the spectrum in publications and particularly large publications, but it still pretty incidental to the nature of the magazines and we're trying to make it intrical, so we've got work to do.

[Operator Instructions] Your next question comes from the line of Kevin Hanrahan of KMH Capital Advisors. Kevin Hanrahan - KMH Capital Advisors: Mike, I have a follow-up question. I was also going to ask about 10% customers and I heard your answer to the Sidoti analyst, so I would assume, though, that IV was a 10% customer this quarter?

That's correct. Kevin Hanrahan - KMH Capital Advisors: Okay. And I'll look at the 10-Q when you file it for more details on that. Mike, I have another question about IV, and you have talked about this in the past. So your fourth quarter -- so you'll report probably in early February, roughly, and I don't think it will matter very much this year because I don't expect and I don't think the market expects any revenue from IV for 2011. But in future years -- so have you figured out what you're going to do there? Are you going to report and then you might have to report preliminary numbers and then have a final revised number later? Is that roughly what might happen in the future?

Well, I think our goal, as well as most companies, is once you report, you file your 10-K immediately thereafter. If a later time something comes in, that falls in the quarter which you get the report. You don't go back and open it back up. But in the unlikely, the situation if you indicated, if you announced and then before you file your SEC document, you have a material of increment, you have to open that back up. Kevin Hanrahan - KMH Capital Advisors: So then you could file an amended 10-K?

Well, no. You would file your 10-K. If something happens between the press release and the 10-K filing, then you'd have to maybe do another press release. But I think our intent is we like to do our press release and have our filing shortly thereafter, and mitigate that risk of that type of event occurring. Kevin Hanrahan - KMH Capital Advisors: I see. So then subsequently, later, you did get something from IV that might just fall into the next quarter, is it? Am I reading that right?

That would be the logic, yes.

Your next question comes from the line of Paul Sonz of Sonz Partners. Paul Sonz - Sonz Partners: Bruce, you just talked about ACR, automated content recognition. Could you explain that one more time? What that is?

Sure. It's an expression that is being fairly commonly used to cover any means of recognition of objects, including watermarking, bar codes, image analysis and various other approaches. Paul Sonz - Sonz Partners: Okay. Second part, the QR codes, we're seeing more and more QR codes. And I wanted to just -- I wonder if you would talk to us a little bit about -- the as the market now is starting to develop, the differentiation you see between the QR codes and in the watermarking?

Sure. We're invisible. It's very straightforward. Paul Sonz - Sonz Partners: No, that part I understand the difference. But in terms of your -- the developing niche for each type of marking?

Well, it's the client's choice. If they want to put a big old square around their page, so that everyone sees, clearly there's something to do there. That's fine. But if they don't want to do that, we provide the same functionality without the cost. It's a client choice. I've seen lots of uses of QR codes and some of them make sense to me and some don't. But in the case of House Beautiful, the editor there and the publisher said we don't want QR codes in our magazine, it's House Beautiful.

This concludes today's question-and-answer session of today's call. I will now turn the floor back to Mr. Davis for any closing remarks.

All right. Thanks, everyone. We'll get back to work and we'll talk to you again in a few months. Thanks very much.

This concludes today's call. Thank you, ladies and gentlemen, for joining us today for our presentation. You may now disconnect.