Greetings and welcome to the Bazaarvoice Fiscal Third Quarter 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. I would now like to turn the conference over to your host, Linda Wells, Director of Investor Relations. Please go ahead.

Good afternoon and welcome to today's conference call to discuss Bazaarvoice's financial results for the third fiscal quarter of 2015 ended January 31, 2015. I'm joined today by Gene Austin, our Chief Executive Officer and President; and Jim Offerdahl, our Chief Financial Officer. Following the remarks from Gene and Jim, we'll have a question-and-answer session. Please note that we are simultaneously webcasting this call on our Investor Relations' website at investors.bazaarvoice.com. The earnings release with our results for the third fiscal quarter of 2015 was issued after the market closed today. Please remember that certain statements made during this call, including those concerning our business outlook and guidance, efforts to move more quickly to profitability, growth plans and opportunities, strategy, potential acquisitions, outlook on legal matters, sales execution, future innovation and growth, and the ability to capitalize on our opportunities are all forward-looking statements. Forward-looking statements are subject to a number of risks, uncertainties, and assumptions that are described in our SEC filings, including the Risk Factors section of our Form 10-K for the fiscal year ended April 30, 2014 filed with the SEC on June 26, 2014. Additional information will also be set forth in our future quarterly reports on our Form 10-Q, annual reports on our Form 10-K, and other filings that we make with the Securities and Exchange Commission. Should any of the risks or uncertainties materialize or should any of our assumptions prove to be incorrect, actual results could differ materially and adversely from those anticipated or implied in these forward-looking statements. We do not intend and undertake no duty to release publicly any update or revisions to any forward-looking statements made during this call. The divestiture of PowerReviews was completed on July 2, 2014. As a result of this, PowerReviews' revenues, related expenses and loss on disposal, net of tax, are components of loss from discontinued operations in the condensed consolidated statements of operations since our fourth quarter of fiscal 2014 and all comparative fiscal quarters presented. The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations for all periods presented. Some of the numbers that we will discuss today during this call will be presented on a non-GAAP basis. Today's press release, together with the accompanying tables, contains the calculations of these non-GAAP financial measures and a full reconciliation between the corresponding measure, GAAP measure and the non-GAAP measure, including the reconciliation of GAAP to non-GAAP operating results from continuing and discontinuing operations. With that, I would now like to turn the call over to Gene.

Thank you, Linda. And thanks to all of you for joining us on today's call. In the third quarter, Bazaarvoice posted more proof of the progress we have made in strengthening our company. Q3 was the highest booking's quarter of the year and we posted revenues of $49.6 million, an increase of 14% year-over-year and at the high end of our guidance. Additionally, for the first time as a public company, we were profitable on an adjusted EBITDA basis. I was pleased to see our EMEA business have a much better quarter. Our Europe team has been focused on adding important retail clients all year, which I believe will be very important to our success with retail and brands alike. Consistent execution by EMEA is still a work in progress, but with better focus on retail organizations, good leadership and a strong team, I am optimistic about our future in Europe. Client acquisition remained strong during the quarter for both active or paying clients as well as network clients. New client additions and expansion deals include Shell, Kimberly Clark and Kraft. One of the more exciting programs recently launched is Brand Invite where we partner with our large retailers to invite brands to participate in the Bazaarvoice network. To-date, about 13% of brand invitees joined the network with most of them signing on as premium clients using our Connections application. To-date, 9% of premiums have converted to a paying client, which is a good result but one we would like to drive higher. In Q3, we added a record 550 premium clients, bringing our network total to over 2,900. Our media business had a disappointing quarter overall, as we suffered from some sales execution challenges and businesses slipped out of the quarter and dampened our growth to less than 10%.…

Thank you, Gene, and thank you to everyone who joined the call today. Today, we are reporting results for third quarter of fiscal 2015 ending January 31, 2015. For the third quarter, we achieved total revenue of $49.6 million, up 14% year-over-year at the high end of our guidance and above Street consensus. We achieved SaaS revenue of $46.4 million, up 14% year-over-year. Net media revenue for the quarter was $3.1 million, up 6% year-over-year. We achieved positive adjusted EBITDA for the third quarter of $2 million, a huge improvement from a loss of $3.5 million in the same period a year ago. This was significantly better than anticipated and largely the result of continued leverage from efficiencies in our sales and marketing activities, a favorable adjustment to our corporate bonus expense as well as lower hiring in the second half of the January quarter as we have chosen to move more quickly towards profitability. Excluding the impact of the favorable adjustment to corporate bonus expense we delivered breakeven results on an adjusted EBITDA basis. Our non-GAAP earnings per share was $0.00. Moving on to client additions and launches, net new client additions were 57 in Q3, up strongly from Q3 of last year and up over 40% on a year-to-date basis. Our client retention rate was 96.4% better than Q3 of last year and consistent with our average over the last six quarters. Launches were also up nicely at 102, an increase of 40% year-over-year. Client acquisition and subsequent launches had been a bright spot for us over the last year or so as we have made an aggressive push to grow our client base especially SMB. Going forward, however, we expect the pace of our active client acquisition and subsequent launches to moderate as we have shifted our…

Thank you. At this time, we will be conducting a question and answer session. One moment please while we poll for questions. Our first question comes from Brendan Barnicle from Pacific Crest Securities.

Thanks so much. Gene I was wondering if you had any information on renewal rates on customers. I don't know if I missed that, but I think historically you've given us some guidance around that or some commentary around that.

Yeah, Jim's got that right in front of him, so – but my commentary would be, on the customer renewal rate, it's pretty much what we've been seeing, but Jim go ahead and do with the same – with the numbers.

Yeah, 96.4% and that's consistent with the average over the last six quarters or so.

All right, great. And Jim any FX impact at all in the quarter?

No minimal, a couple of hundred thousand on a year-over-year basis Q3 to Q3.

Terrific. And then, Gene on all those new products that you laid out that product roadmap, how are you in terms of staffing for that and in terms of having the development talent around that you're going to need?

I think we're in actually really good shape. As we transition the business to focusing on profitability, our core investment thesis is going to be around client retention and product innovation. And so, the products that I outlined in the script are very much in line – all staffed well, making progress most – almost all of them are in at least some type of pilot phase with customers. So I feel really good about where we are from an investment and rollout standpoint.

Terrific. Thanks, guys. Look forward to seeing you tomorrow.

Great. Thank you.

Thank you. Our next question comes from Stephen Ju from Credit Suisse. Stephen Ju - Credit Suisse Securities (USA) LLC (Broker) Hey, thanks. So, Gene following up on your commentary on the revenue growth outlook for fiscal 2016, I guess, your premium products are exerting some amount of pressure on your overall ARPU levels, but I guess the strategy here is to convert those free or low ARPU users with upsell and cross-sell opportunities. So anything you can share in terms of a success rate of the upselling activity and how you can improve that? Thanks.

Yeah, let me answer your question, Steve and then let me talk a little bit more broadly about the guide for next year. So the conversion rate of our premium products to a revenue client is about 9%. So we signed up 550 organizations this quarter, down the road, probably more than three months, but somewhere between three and nine months. 9% of those, if past history is a predictor, we'll convert to some type of paying customer, whether it's a Connections premium customer or actually a Conversations customer. So that's a reasonable rate. It's not as good as I'd like it to be and that's where we're going to focus on. But let me talk more broadly about our revenue guide as we look at 2016, because I think we want to be very transparent about how the business has been unfolding over 2015. So when we entered 2015, we had a significant amount of launch backlog that we were looking at and one of the things that we told you all as investors was that we were going to improve our operational cadence, one of those areas being launches and at the same time we obviously wanted to have a good solid bookings plan as well. The launch program was successful. We had a good year on launches so far and that really of the 14% roughly that we've been growing each quarter this year that has been worth 3 points of that growth. So working down the backlog and launches and being much more efficient in getting launches done, which is our revenue recognition standpoint is really what's happened on 3 points of that growth, has accounted for 3 point of the growth. When you look at the bookings side of it, the core business the booking…

Our next question comes from Kevin Liu from B. Riley & Company.

Hi, good afternoon. Gene, I was hoping you could talk a little bit more about some of the ASP pressures you're seeing specifically. I think to this point in the year, we have seen some of that pressure already. Are you expecting it to decline further and is this primarily reflected in kind of your new bookings or are you seeing pressure in your renewals as well?

Yeah. Kevin, let me talk a little bit about that. When you look at our business you've got to look at obviously our retail business and our brands business. On the retail side, I would call that side of the business as stable. Renewal rates are very good. We are seeing expansion in to our retail base due to some of the new offerings like Sampling has been a product that has been particularly well received in our retail base. On the brand side of it, it's more volatile. New business ASPs are lower and renewal rates are a little tougher as well. Let me talk a little bit about that. On the renewal side, I see brands having a lot of options now to have direct consumer engagement and direct consumer feedback. And while they are all very much onboard with ratings and reviews and will be a fundamental part of who they are, they are trying to make more room in their budget, if you will, for other ways to interact with the consumer and I don't want to dismiss the fact that we have a new competitor that's been brought back into the market since July. That competitor has a very favorable environment right now based on the ruling in which our clients are allowed to get out of their contract. That competitor has all of our customer names and is able to and knows all the renewal dates that was all part of the settlement. And so, while we're not losing many accounts to them we are obviously seeing more price pressure because they are calling all of our accounts. I think this is a very temporary situation because once we get to July, the market more or less normalizes for the majority of the situation but right now we are seeing a little more renewal pressure than we normally would. And I think that's to be something we will deal with and continue to work with going forward. But the net-net of it is the price pressure we see is most notable in brands. It's a combination of things, one being them wanting to spend money in other areas as well as ratings and reviews. Also, we are seeing, we are in an unusual competitive environment for another three or four more months.

Understood. And I think you had also mentioned some changes in the comp plan pursuing kind of more dollars within the SMB market as opposed to number of clients. When were those changes made and is there any risk of sort of near-term disruption as you guys try to refocus somewhat on the opportunities you're chasing?

No, we wanted to move the SMB sales organization up on their dollar focus. They still have incentive to drive new logos but more of their incentive is on the ASF or the cash that they bring in, the actual dollars. We did that purposefully because of the success with Brand Invite. Brand Invite is generating a lot of new logos. We'd like to convert all those at a much higher dollar rate and that was done at the beginning of November.

Okay. And then, just lastly, in terms of the 6% to 10% growth for next year, what's assumed for the media side of the business?

Yeah, this is Jim. We did – let's just put this in perspective. This year we said we expect a range in the 30% to 40% range and we're still going through our planning process now and for the time being that's probably a pretty good mark but let us get through the planning process and get back to you at after the end of the next quarter.

All right. Thank you for taking the questions.

Thank you. Our next question comes from Greg Dunham from Goldman Sachs.

Hi, yes. Thanks for taking my question as well. I want to get back to Conversations and when we think about the long-term opportunity, we've talked before about how retail was more penetrated and more of a growth opportunity was going to come from brands going forward. So, given the lessons learned in the past couple of months, how should we think about the size of that addressable market specifically related to brands? Help us size that?

I mean, I think, the size of the market is still very large. The dollars that are going to be paid for the price point for a raw Conversations deal is going to be less than it has been in the past. And as you look at Bazaarvoice going forward, in the past we've been 95% dominated business on Conversations and I want the business to be a healthy mix of continued Conversations business but also a number of new offerings that make up half of our overall performance of the company and that's what we aspire to be, we're not there yet but we have a tremendous opportunity to grab more share of wallet; we have a tremendous opportunity to go in some new verticals like food and beverage, and financial services, but to evaluate our company, going forward, on a Conversations basis-only is not really the direction we're trying to take the company. We think ratings and reviews are foundational piece of functionality. But going forward, we believe that enhancing and complementing R&R is really in the best interest of both our clients and our business going forward. So I think we still have a very strong market opportunity, but we are in a transition to become a portfolio-based company in all shapes and sizes. Not only do we have products in a portfolio manner, we have to go to market that way, which I think will differentiate us from any of our competitors. We also have to service and support and install those folks as well. So it's a change our business is going through. The good news is we're on our way. The bad news is we're still in a transition, but I feel very good about the direction. Again the last thing I'll say, Greg, is having talked to some longtime BVers, we've just never had a roadmap like this in our company's history, which I think is going to be great for our customers and long-term great for our business.

And maybe a couple of follow-ups. You mentioned the SEO launch. How should we think about pricing or kind of the uplift that you get from that on a deal? Are you thinking about that product as a separately priced product or is that something that can actually lift pricing in the core?

Yeah, the interesting thing about our SEO new offering is it's going to tap into new budgets, which I think is exciting. Right? It's going to get into the advertising and SEO spend in our brands, which has – obviously, that's a deeper pocket. And so I think – I don't really want to put myself out there yet on the pricing for SEO because we're still evaluating it. We have a number of pilot accounts. Many of them seeing some nice uplifts in SEO with their rating and review content, which I think is just going to be a fantastic solution if it all comes out. So give me 90 days on that one and then we'll have lot more specificity about where we think it can go. But it's not going to be – Sampling is a product that we came out, which is a nice little add-on. I think SEO is going to be a pretty meaty product. So I'll just leave it at meaty versus add-on is my best descriptor at this point.

Okay. Last one for me, real quick. You've made a number of changes early this year instilling more discipline in the sales force, right, term fees and things like that, statements of work to ensure they're doing the right deals. Is the more sluggish bookings this year anything or any a result of that dynamic or is this more just a market and pricing issue?

Well, I mean, I'm a believer that whenever you're not tracking to your sales plan that you have, there are different market environments, but there is also execution environment. What we did for our sales force as far as shoring up the quality of the business and making sure they were doing the right thing for the customer in the company was the right business decision to make. And I am not about to put that in front of as an excuse to our soft bookings. I think our need is to – I think we've had inconsistent performance in EMEA, which is a pretty important part of our business going forward. And I think North America is under a little bit of pressure partly due to some of the things we talked about earlier with the current competitive environment being very favorable based on the one year timeframe that our local competitor has and being able to call our accounts and do some discounting that's kind of unusual. So I think that's going on a little bit. But we need to execute better as a sales organization. No question about it. Fundamental change that our sales team has to go through and is going through right now is to get above and be much farther along from a ratings and review vendor and moving into an organization that represents all the things that consumer-generated content can bring to a brand or a retailer. And that is a level of expertise, that's the level of new solutions that can drive significantly higher levels of results than the core Conversations business. And I think we've got plenty to do on both the execution side as well as worry about how the environment is unfolding.

All right. Thanks, guys.

Thank you.

Thank you. Our next question comes from Ilya Grozovsky from National Securities.

Thanks. It's Ilya Grozovsky at National. I just had a question about the annual revenue per client and kind of where do you see that going next quarter and also for 2016, how low do you think it goes? Thank you.

Yeah, this is Jim. Thanks for the question. Just to reiterate, that metric is $144,000 this last quarter. It has been going down sequentially quarter-to-quarter as we expected and as we continue – as we focused on new client adds and we are adding clients at initial pricing lower than our average. That will continue for the reasons we've already described for the foreseeable future. We are going through our planning process now and I think we'll have more information in the next couple of quarters about that as to where that's going. We do expect at some point for that to bottom out and the new products to basically take that over, but that's a question of time and we just haven't called that timing yet.

Okay. Thanks.

Thank you. At this time, we have no further questions. I would like to turn the call back over to our CEO for closing comments.

Thank you, everyone, for attending today's call. Our company continues to make good progress. We look forward to reporting our results in coming quarters. Thanks very much.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.