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

Matthew Galinko - Sidoti & Company, LLC Corey Barrett Unknown Analyst Andrew Wiener

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

Thank you. Good afternoon. Welcome to our conference call. Mike McConnell, our CFO, is with me. On the call today, we'll review and discuss our 2011 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'll 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. And 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. Mike 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. Overall, our 2011 revenues increased by 16% to $36 million from $31.2 million in 2010, and our net income improved 36% to $5.7 million or $0.76 per diluted share compared to $4.2 million or $0.55 per diluted share in 2010. Balance sheet remains in excellent shape with more than $33 million in cash and securities and no debt. Throughout the past year, we made a number of strategic investments in the company. We repurchased more than 700,000 shares for more than $20 million. We invested in potential growth areas, including developing and marketing Digimarc Discover, developing the second wave of retaining the patents and doing foundational work in our joint ventures with Nielsen, all in support of our vision of enabling computers, networks and other digital devices to see, hear, understand and respond to their surroundings. We also had some extraordinary spending on litigation with Verance that was settled favorably in January 2012, resulting in extension of our license with them and payment of $8.9 million of past royalties. More specifically for 2011, our 16% revenue growth was primarily attributable to higher revenues from Intellectual Ventures and Verance. Our gross margin was 81%, 33 points higher than the prior year reflecting a greater mix of licensed revenues to our total. We experienced higher operating expenses reflecting investments and new product initiatives and approximately $1.7 million of Verance litigation costs. Our operating profit was $6.4 million, or 18% of revenues. We contributed $2 million in capital towards our R&D joint ventures with Nielsen, where our share of the net loss for the year was $2.7 million. And a deferred tax asset valuation reserve of $2.6 million was reversed in the second quarter of 2011, reflecting the determination that it's more likely than not that our deferred tax assets will be realized in current and future periods. Assessing our financial performance for 2011, we note that most of the financial planning assumptions we made at the beginning of the year were either met or exceeded. Specifically, we assumed double-digit revenue growth for the year and revenues grew at 16%. We assumed a license-to-service revenue ratio of approximately 60% to 40% resulting in gross margin of 70%. The ratio turned out to be 66% and 34% with the gross margin at 81%. We expected revenues and operating income to be more consistent on a quarter-to-quarter basis then was the case in 2010 with the first quarter being the smallest of the 4. This did not turn out to be the case largely due to the Verance litigation and its effects. Lastly, we assumed operating cash flow would be greater than GAAP earnings due primarily to more than $5 million of noncash charges associated with stock compensation and depreciation. Our operating cash flow ended up just north of $10.2 million compared to GAAP income of $5.7 million. Looking forward, our financial assumptions for 2012 include double-digit revenue growth for the year with more than $35 million coming from a combination of a beginning backlog and receipt of past due royalties from Verance in January of 2012. We expect our license to service revenues ratio will be closer to a 70%, 30% split and result in gross margins near 80%. We'll continue to invest in our growth initiatives, including directed research and intellectual property development and marketing and development of Digimarc Discover. Operating expenses should come in lower than 2011 with Q1 being the highest level, reflecting completion of the Verance litigation. We expect our operating cash flow to be greater than GAAP earnings, due primarily to more than $6 million of noncash charges associated with stock compensation and depreciation. And we're planning for a combined federal and state income tax rate of approximately 38%. It could end up being several points lower if the Feds reinstate the research and development tax credits. Please keep in mind that these highlights of our financial assumptions and operating plans represent our current view of expected values based on our assessment of the most likely unfolding of events over the course of 2012. As is our general practice, we intend to update you each quarter regarding strategy execution, but don't plan to provide financial guidance. For further discussion of Q4 and 2011 results, our business and financial models and the risks and prospects of our business, please refer to our Form 10-K that we expect to file very soon. Bruce will now provide his comments on our outlook and execution of our strategy.

Thanks, Mike. At the outset of 2011, we saw opportunities for growth in all areas of our business. We identified key areas of focus including fostering the success of our new licensing partner, Intellectual Ventures, developing the market for Digimarc Discover and working with another important partner, the Nielsen Company, to continue development and promote adoption of media-synchronized television services. As we noted in our last call, 2011 operating performance was generally in line with our expectations with 2 exceptions: Federal government business development and the Verance dispute. Regarding the government business, we noted that revenues from defense and intelligence customers had not materialized as we anticipated. Although we still have a significant sales follow-up identified opportunities, we are assuming that the results from this area will be immaterial in 2012. This assumption is based on our inability to reliably predict outcomes given the secrecy surrounding some of the potential projects and the continuing federal budget challenges and political gridlock in Washington. The Verance dispute was the other noteworthy deviation from our 2011 planning assumptions. This dispute was resolved in January of this year. Verance paid us $8.9 million for past due royalties and agreed to a 3-year royalty-bearing license with 9 1-year extension options. 2011 was the first full year of our relationship with Intellectual Ventures. As you will remember, we have a 20% retained interest in licensing transactions involving our patents after IV recovers its expenses, and they will report annually on their licensing activities. Their report on financial results for 2011 is due on March 15. We will defer commenting on the 2011 performance until after we receive and review that report. We continue to collaborate with IV in a number of licensing initiatives. Digimarc Discover is a major growth initiative for our company, and it encompasses 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 that see, hear, understand and respond with optimized network services when instructed by users to look and listen. Our vision-filled platform includes Digimarc Discover, the Media-Sync venture with Nielsen and Music Discovery courtesy of our collaboration with Sony Gracenote. We finished the publishing industry beta program for Digimarc Discovery in May of last year and began market development in newspapers and magazines. Magazine market development has been progressing well. During 2011, we witnessed many early successes led by House Beautiful, a Hearst publication, and numerous small circulation magazines overseas, particularly in the U.K. and Australia. Since then, we have been making good progress domestically and now have publications from each of the 3 leading group publishers: Hearst, Conde Nast and Time Inc. working with us. We were not able to get traction that we were expecting in the newspaper business. There are many contributing factors, mostly revolving around the continuing rapid decline in circulation and financial performance in the industry. As a result, we have backed off on further investment in this segment for the time being. Media-Sync, our television joint venture with Nielsen, made progress in development and marketing during 2011. As we discussed in our last call, our early marketing initiatives were somewhat impeded by the Walker Digital dispute. It's proving to be a very exciting space, with lots of experimentation and funding flowing into various synchronized service offerings by a large number of companies. Our company is still in the early stages of development as is the market, and we continue to work with our partner to determine the best way to effectively create value in this space. We had a productive year in IP development. Our issued U.S. and foreign patents, including those licensed to Intellectual Ventures, grew from around 630 to over 760. Patents and applications that we did not license to IV grew from 140 to 248 including 12 new issuances and 96 new applications. All totaled, we have approximately 1,200 patent assets. In all other areas of the business, our executional strategy was consistent with our expectations. In 2012, we will continue working to pave the way for a new pervasive intuitive computing paradigm that greatly signifies and enhances access to computer power in everyday life. Our key goals and objectives are to deliver operational excellence, providing quality user experiences with Digimarc Discover, establishing the technical feasibility of robust and reliable watermarking for music and growing our second wave portfolio. Another focus area will be on providing cost-effective solutions that foster the adoption of Digimarc Discover and that grow our government business outside our counterfeit deterrence work with central banks. We will continue to optimize support for partners, helping IV to successfully license our IP, help Nielsen to make our joint ventures successful and complete negotiation of a contract renewal with our central banks. We will continue to manage our projects well. We've already favorably resolved the Verance litigation and are pleased to be back in a normal and income-producing license with Verance. We will continue the excellent quality of service to central banks and Nielsen. With respect to our sustainability and our employees, we will continue to provide a learning environment. We will hire trained and retain a winning team. And all of this should result in significant improvement in financial performance in 2012. As Mike noted, we are anticipating excellent financial performance with significant growth in revenues, profits and cash flow. We do not anticipate increasing our operational budget in order to accomplish this. Within these constraints, we're devoting a greater share of budget to R&D. We expect these investments to lead to substantial growth in licensable technology and patent assets in the coming years, addressing numerous exciting advancements in media identification, management and other enhancements. In closing, I note that we had a very good year in 2011 with significant growth in revenues, earnings and cash flow, despite general poor economic conditions and the dispute with Verance. Looking forward, 2012 should be a very good year for shareholders, with significant revenue and earnings growth and notable progress in execution of our strategy. That's it for our prepared remarks for today. Now we'll open the call to questions.

[Operator Instructions] Your first question will come from the line of Matthew Galinko with Sidoti. Matthew Galinko - Sidoti & Company, LLC: A couple of questions for you. First, Bruce, I think you mentioned, I think, to the media a couple of months back that you were possibly pursuing venture funding for a joint venture with Nielsen, I was wondering if you had any update on that?

No, I don't have any update. We've done working on our plan and our funding strategy for the business and the space continues to develop and become more elaborated. And so there are a lot of players doing lots of things. We're trying to figure out what the optimum strategy is for our companies to participate, whether it be on our own or in combination with someone else. Matthew Galinko - Sidoti & Company, LLC: Got it. And then on the Discover side, can you elaborate a little bit more on how the development is going outside of the magazine space, the packaging or the mail areas?

Yes, we have a staged strategy for the unfolding of Digimarc Discover, and so the initial market development activities were focused on publishing, specifically newspapers and magazines. As I noted, the newspaper business is proving quite difficult to work with for reasons, I think, unrelated to our offering. And so rather than continue to work that space, we have focused more heavily on the magazine publishing business where we are getting a good response and since the opportunity for significant growth. So the first stage then of the unfolding is in publishing newspapers and magazines. Magazines are going well, newspapers are not. The next stages of development then are in the research and development phase and those encompass the other areas that I often speak about, including packaging, free-standing inserts, direct mail and other, what I'll call experimental uses of the technology. So we have a good development plan. We're working on trying to begin commercialization in direct mail. We have an R&D -- undisclosed R&D partner in packaging. And so I'd say we're doing fine according to strategy with the note that the newspaper business, which I had always presumed would be a great challenge and perhaps not salvageable is, in fact, proving to be so. I had hoped that we could help them to save themselves better than we've been able to, but they continue, in most publications, to reduce staff, to continue to not appreciate the commoditization that's at the heart of their strategic problems and to seek to reduce budgets wherever possible and to reduce actual experimentation in favor of further digitization of their publications. And you may have seen U.S. rumor today about Gannett selling some of its -- some or all of its newspaper properties and The New York Times making some sales and so forth. So except for the newspaper business' continuing and worsening woes as an industry, the strategy is going pretty much as we have figured. Matthew Galinko - Sidoti & Company, LLC: Great. And one more quick one, if I could. Was Verance a 10% customer this quarter?

Are you talking about Q1? Matthew Galinko - Sidoti & Company, LLC: No, Q4.

No, it was not.

Your next question will come from the line of Corey Barrett with Pacific Crest Securities.

Just a couple of quick questions. First, so you're expecting to rev rec the Verance catch-up payment in Q1 then?

That's correct.

Okay. And I guess, to the last question, are you expecting Verance then to be on a run rate of roughly 10% customer? Or can you comment on that?

Well, I really can't comment on the quarterly details. Obviously, with the almost $9 million payment received in the first quarter, that will likely be more than 10% for the quarter and possibly for the year. But on an ongoing basis, I'm not prepared to comment on the estimates there.

Okay. And then should litigation expenses in Q1 from Verance be roughly flat with what they were in Q4? Or should it be slightly down?

I would expect that to be similar in Q1, and then the balance of the year, we'll see substantial reduction in the G&A line without any litigation expenses.

Can you comment on how much that was costing you on a quarterly basis?

Well, it varied during the year last year. I think the high point was $500,000 to $600,000 in the quarter during the year.

So the litigation expenses from last year. Total ligation expenses last year, Mike?

It was $1.7 million or so for Verance alone and then we had some of the small minor items, but, yes, it's going to be a nice reduction in the G&A line going forward beginning Q2.

And Corey, with the settlement of the Verance litigation, we have essentially no litigation outstanding.

Okay, that's very helpful. And then, do you expect the Nielsen JV losses to be fairly flat year-on-year in 2012?

Well, we -- again, we don't give any specific financial guidance. I think in that space, as one of the prior questioners had noted, we're examining different approaches to continuing investment in the business. And so it is really hard to say what the effect will be. We'll give you more information when we feel comfortable in making a general public disclosure.

And then lastly, I guess, can you just sort of comment on what you're seeing in Discover sales into magazines. As you begin to pick up a larger portfolio of work there, is the sale becoming easier and just can you comment on what you're seeing there?

Yes. We -- I think we are starting to demonstrate very persuasively to the magazine industry that the quality of our technology, the latest and high-profile implementation was in the Sports Illustrated Swimsuit Edition. And I'd recommend everyone on the call to get a copy and try it out. Our technology worked superbly there. The images are beautiful, the reads are super fast and reliable. And so I expected that to be a teaching moment for the publishing industry in general. And so we've made sure everyone is aware of it and we will be increasing our sales and marketing initiatives in the magazine publishing business during the year and seeking to gain more substantial distribution beyond the early successes that we've had. And in that swimsuit edition, we displaced the Microsoft Tag visible codes and we've gotten a lot of favorable press about the sensibility of that for the industry in general. So I'm feeling pretty encouraged by what I saw there. And then, House Beautiful continues to do an outstanding job with innovation using our technology, the Hearst publication, and then the Condé Nast leader within the publishing group is Lucky, a fashion magazine. And each of the 3 of these publications have different perspectives, if you like, or different approaches to use of the technologies. So I think they're all doing a nice job of demonstrating to the industry case studies of the various things that can be done to enhance profitability and viewer engagement or reader engagement for the publications.

Your next question will come from the line of Paul Sonz [ph] with LG Capital Management [ph].

Bruce, I know that sometime though you talked about looking for a CEO for the joint venture and I wondered if that is an ongoing process or has there been a shift in your focus.

That's an ongoing process. We don't have an announcement to make just yet on that.

Okay, okay. Could you speak -- talk a bit about -- when you talked about your focuses for 2012, you talked about music identification. Could you just add--go through in more detail about what that means and what you plan to do?

Yes, we have a significant R&D project underway. It's been underway for some time now to produce a new watermarking algorithm for audio that will be as robust and imperceptible in music as our image-oriented watermarking is in print. And we have identified what we think are substantial commercial advantages over fingerprinting to the use of that technology, if it proves to be feasible. So we're still not yet at technical feasibility. But we're making good progress. And if we get there, then we'll present the results to the various stakeholders in the music business along with the business proposition and we'll see if we can gain adoption.

Good. In the Digimarc Discover in the magazine, have you isolated a pricing methodology? Or are you still in the demo mode allowing people to use it at a relatively low cost to do it as a teach-in?

The pricing is public. It's disclosed in the Online Services Portal and it is not introductory pricing. And so there are 2 ways to gain access to the advantages of the technology: One is in the Online Services Portal, which is effective for relatively small numbers of watermarks in a publication; and then, we have a growing number of what we refer to as value-added service providers who will help companies who want to more intimately, and at larger scale, integrate the technology into their publishing operations. And they will pay differently.

That was the group in Massachusetts, I think it was that helped -- that was in the press release about the Sports Illustrated issue.

We actually about half a dozen so far and more in the pipeline.

All right. So the Sports Illustrated, the time paid for that and it was a standard pricing model and it wasn't a demonstration?

That's right.

Okay. Last question, you talked about one of the last focuses, I think, was developing more government work. And I wondered if you'd talk about that in light of the fact that, in terms of what you thought you'd generate in revenue in 2012 in government work was, you didn't put anything in your numbers for that. I wondered if you could just talk about your -- your making a focus with government work.

I think you maybe misheard what I said. I said that we were anticipating for planning assumptions that revenues from government work outside of the counterfeit deterrence work we do would be immaterial. So we're not investing in it. We're not -- the point is we're not investing in it. Not that we are investing in it, we're not. It doesn't mean we won't get it, it just means we're not investing in it and I'm not assuming that it will materialize.

And so in 2012, you're not making government work a focus?

That's right. Then, the non-counterfeit deterrence, government market development is not a priority.

Okay, okay. And then you said that you're the -- you were in the process of renegotiating your central bank agreement?

Yes.

And when do you expect to have those negotiations concluded?

During this year.

Your next question will come from the line of Andrew Wiener with Samjo Capital.

Mike, I wanted to just clarify a couple of things. The $8.9 million you referred to on the Verance settlement, that reflects past royalties and Q4 of the new agreement. Correct?

That's correct.

Okay. So then in addition to that, I assume there will be a revenue -- and that cash has been received?

That's correct.

Okay. And then in addition, when I think about Q1 revenues, there will be the normal now quarterly rev rec from Verance for which there'll likely be a receivable that they'll pay us sometime in Q2, correct?

Let me cover a little bit on our rev rec for most of our licensees. Our policy follows when it's fixed indeterminable and when licensees report to us after we've filed our quarterly reports, it's fixed indeterminable in the period that we receive the cash, generally. So that's generally the way -- I don't expect to see Verance receivables, but we'll see how the period goes. But generally, our customers are on a fixed indeterminable basis and that's generally when they report and pay us the cash.

Okay. So the Q4 license agreement would've likely been a Q1 revenue event anyway because of the timing of the cash payment and when it was fixed in receivable?

That's correct.

So starting in Q2 then we will refer it to sort of normal, sort of policy where we should get some cash based on a report of first quarter results -- for first quarter Verance licensing activity.

That's right. And that's pretty typical in many companies' licensing revenue models.

Okay. When you said you expect double-digit revenue growth for the year, I just wanted to clarify, was that excluding the $8.9 million payment? Or that -- was that inclusive of the $8.9 million? Obviously, the $8.9 million has a huge impact in that.

It does and that's an all-in number.

I mean, is there some expectation in the $36 million base coming into the year? Are there sort of revenue lines that you expect to decline?

I don't think offhand about any declining revenue, but generally our overall -- again, our specifics are what do we think for the entire year without getting any details amongst the licensees, the different product categories. Obviously, we focus on increasing every line item with every customer. But we really don't get into that level of detail.

Well, effectively, you're offering a very broad range of double-digit revenue growth.

Yes, that's typically what we do, Andrew. We don't break the business down into specific lines. We found that to not be very useful and often distracting.

I understand that. I mean -- but the $8.9 million in and of itself would increase revenues by, what, 25-plus percent assuming everything else was flat. So you start with 11% and then you go to 99%. It just offers a very -- I'm not sure if you're trying to intuit something else or just offering a range that wide.

What -- all that we're trying to say is that it'll be a good year for growth and revenues and profits, in absolute terms and in relation to last year. That's all we're seeking to achieve.

Okay. Now we shouldn't go into too much detail. In the past, you've talked about the nature of Digimarc being sort of a step function-like creation of value. And while certainly we have a lot of sort of ongoing, more incremental opportunities like the way Discover rolls out, can you talk about your focus and sort of direct our attention to areas we should think about where there are step function-like opportunities to create value in 2012?

Sure. That's what I was trying to do in talking about the 2012 outlook. So just to reiterate a sample. We are commercializing Discover and that has an opportunity to create a step function and value in my view. We are working on technical feasibility for watermarking for music, which would be a new offering from us. We are substantially investing in and making great progress on building the second wave IP portfolio. We still believe we may get some federal government business, although it's not a priority, as I noted, with respect during the last, last question that I got. We're working extensively with Intellectual Ventures on monetization of patent assets that we licensed to them. We're working hard with Nielsen to make our joint ventures successful. And we are continuing to explore opportunities for growth in new areas including the research and development into packaging and direct mail and free-standing inserts and various other applications of our technologies. So I hope that's responsive, that's what I was trying to get out.

When you think about Discover, I mean, is it likely you can create that step function-like acceleration and adoption internally? Or is it -- or are you talking to a handful of strategic partners who, if they were to choose to work with us, would be sort of the cause of that acceleration?

Yes and yes. We're doing both, and either one would be fine. Both would be really nice, so. We're trying to change the world. I mean, this is a different business model for publishing. It's a different business model for the media business in general. And we're somewhat indifferent to the way in which it happens as long as it happens because we'll make a lot of money when it happens. So we're working both angles, if you like. And either one could happen or both could happen.

So after sort of normal quarterly cash flow and now that we received the $8.9 million, by the time you report next quarter, you'll be back close to $45 million or so in cash and $6.5 a share, 25% of the market cap. Can you talk a little bit about your view on capital allocation and what you plan to do with the cash?

Sure. As you know, Mike and I and the board discuss regularly optimization and return on capital for the benefit of our shareholders. And we've engaged in investment in organic growth last year. This year, as I noted, we anticipate OpEx will be lower than last year while delivering higher revenues and profits. We have done stock repurchases for the last couple of years, so they're quite a substantial use of capital. And we kind constantly or presented with opportunities to evaluate nonorganic growth, haven't found any at the right price that would make sense yet. And the last piece of a normal capital allocation strategy encompasses dividends, which we also have been considering. So as we go through the year here, it's quite clear we're going to be generating substantial cash flow. And so we'll continue to evaluate the best means to deliver optimum value for you guys in doing that. And as we change the capital allocation model, if we do, we'll let you know when we're ready to make any change that we're doing it. In the meantime, of course, it's just a discussion, ongoing discussion and evaluation.

And there are no further questions at this time.

Looks like we have another question.

Okay. You do have a follow-up question from Matthew Galinko with Sidoti. Matthew Galinko - Sidoti & Company, LLC: Sorry, just one more quick one. I was just wondering if you have anything you could share with us on maybe an uptick in maybe downloads of the Digimarc-branded app, sort of in light of the SI Swimsuit rollout last week, if there's been any uptick in at least the Digimarc-branded app?

Yes, I am--providing from early statistics a while back and I decided not to carry on with it in this quarter, and my rationale is quite simple. We license our detective technology into a number of private label applications. So for instance, with respect to Sports Illustrated, they have their own Swimsuit Viewer application. And so giving you the Discovery numbers is not very informative because it isn't the heart of our strategy that the branded app. And right now, it looks as though the majority of the detectors are actually in private labels. And yet, I can't give up the private labels because of confidentiality agreements with all of the private labelers. And then with respect to reads and users, I'm not comfortable that, given the early stage development of our system here, that we can adequately characterize trials and samples versus ongoing use. And so I don't want to give you information that isn't reliable. So for all of those reasons sort of lumped together, it seemed best not to try to continue to update numbers for you. But the numbers are still fairly small. And at some point, we're uncomfortable that the ongoing use is -- can be reliably estimated then I may come back to giving numbers. But I felt that it was best for all involved for me not to try to characterize things I wasn't comfortable were reliable. Matthew Galinko - Sidoti & Company, LLC: Okay, that's helpful. And then one other one. You had that, I guess, sort of -- in the last House Beautiful magazine, you worked with an advertiser that sort of marked an ad which was, I think, relatively new. Are you working with advertisers directly to do more of those sorts of projects?

Part of the development plan in 2012 is to expand our involvement with agencies, mostly in an educational sense, because with respect to the publications, what we're trying to teach, and this is why I said earlier, we're trying to change the world, we're trying to teach a different model. We're much less interested in the marketing ads than we are in them thinking about redefining their publications. And I'll give you a specific example of what I mean by that by referencing House Beautiful. House Beautiful is in the category of magazines known as shelter magazines. People buy those magazines because they want to make their house look like the stuff that's discussed in the magazine. So naturally, if they see something that is appealing, they want to buy it. And so the old model of publishing is, if I'm the supplier, I'd buy ad space in the magazine and hopefully, someone sees something they like and they're provoked to make a purchase. I think in the new model of magazines that we enable, that every page, in every presentation of images and text can be a provocation to a purchase. And with our technology, there's no reason that can't be true. And thus, it really does fundamentally alter the financial model of the publication if they were to go all the way in using our technology. So I'm really not looking to go to advertisers to have advertisers insert their ad in the magazine as much as I am going to agencies to talk to them about talking to their clients, about talking to the publishers to develop a new model, which would be more robust in delivering qualified leads and sales. So that's all part of the 2012 plan. As I said, we're opening our sales and marketing investments here. We're going out to the agencies as well as to their clients, as well as working directly with the publishers in order to get them all to collaborate on creating this new reader engagement in magazines.

[Operator Instructions] And there are no further questions at this time.

Okay. Thanks very much, everyone. We'll be talking to you again next quarter. Bye-bye.

This concludes today's conference call. You may now disconnect.