Good morning. My name is Sean. And I will be your conference operator today. At this time, I'd like to welcome everyone to the Wix.com 2015 Second Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] Thank you. Joe Pollaro, you may begin your conference.

Good morning. Welcome to Wix’s second quarter 2015 earnings call. I’m here with Avishai Abrahami, our Co-founder and CEO; Nir Zohar, our President and COO, and Lior Shemesh, our CFO. Let me read a brief disclaimer before we begin. During this call, we may make forward-looking statements about the future performance of the company, and these statements are based on current expectations and assumptions. Please consider the risk factors included in our most recent Form 20-F that could cause our actual results to differ materially from those in these forward-looking statements. We do not undertake any obligation to update these forward-looking statements. In addition, we will comment on non-GAAP financial results, and you can find all reconciliations between GAAP and these non-GAAP results in our press release and presentation slides on the Investor Relations page of our website. As noted in our press release, this morning we are going to use a different format for today’s call. Earlier this morning, we provided on our IR site a detailed written summary of the quarter along with the materials that we normally provide. The detailed summary is intended to serve in place of extended formal comments, and we will not repeat them here on this call. So the management team is just going to run through some very brief comments on the quarter, and then we will just move straight into Q&A. So with that, I'm going to now turn it over to our Co-founder and CEO, Avishai Abrahami.

Thanks Joe and thanks everybody for joining our call today. As Joe said, we are doing something different this quarter with our call. Nir, Lior and I will provide a few comments up front and then we will move onto Q&A. This way you do not need to listen to such a long script that is big what we create in our PR, [ph] and we can have more time for question-and-answer period. So to begin, we had another great quarter. We added nearly 5 million users this quarter, our most ever. And, we added 132,000 subscriptions, which brings our total to 1.5 million or 48% higher over Q2 last year. This performance supports our belief that more people choose Wix to build their online presence than any other platform on the planet. Our collections growth was nearly 45% this quarter and it was 55% if you exclude foreign exchange. I’m also really happy to say that we generated positive adjusted EBITDA and cash flow for the first time in our history. This is significant achievement for us. It proves that our freemium business model works, and it makes Wix a rare combination of high growth and profitability. Very few companies that are growing the top line at a rate of over 40% annually are cash flow positive. But we are one, which I think is outstanding. Our vision is to make building and managing an online presence for a small business easy and affordable. A key differentiator is that our success is built with a focus on technology, product development and user experience. This is why millions of users continue to come to Wix, use our platform and tell their friends about us. It is also why we believe we are extending our leadership in this sector over our competitors. The global market to deliver technology and software to small businesses is very large and growing. In addition to providing the easiest way to create a website exactly how you want it, we have developed several software products that deliver enterprise-level functionality to small businesses, allowing owners to move all business functions online. Over the last quarter, we have made a lot of enhancements to improve products such as WixHotels, WixStores and WixShoutOut, and we will continue to increase their value. Mobile remains a focus of ours, as we have over 9.3 million mobile sites on Wix today. And we have also begun testing a new re-design of our HTML5 editor, which we believe will set a new standard for web development technology. I will just wrap up by saying that I’m very happy with our most recent quarter and believe we are well positioned for success for the remainder of the year. Our business is performing well, and we believe that new products we have planned will continue our momentum. I’ll now hand it over to Nir to talk about our cohort performance.

Thank you, Avishai. Our strong user and subscription growth continues. We are particularly happy with our results this quarter as Q2 is seasonally our lowest quarter. Our net additions of 132,000 subscriptions in Q2 were only slightly lower than Q1, which is seasonally our strongest quarter of the year, and much better than the decline we saw in last year’s Q2. We posted on our IR website the cohort slide that we normally provide, and you can see that our cohorts continue to perform very well. Our most recent cohort from Q1 2015 is following an improved upward trajectory compared to our past cohorts, and our older cohorts are following similar patterns to each other. Of our new subscriptions this quarter, 38% were from users who registered with us in this quarter while 62% came from prior quarter cohorts. Conversion of our users to subscriptions is as high as it has ever been, and our cohorts continue to produce significant value, even years after they were created. New products and improvements to our existing products continue to drive this strong performance. We also continue to see the shift of our subscription base into annual packages. This quarter, 76% of new subscriptions were annual and our overall subscription base is now comprised of 79% annual packages. The rate at which we are adding annuals has exceeded our expectations. This is a positive development for us as we can collect cash faster, and it strengthens the long term value of our cohorts. On marketing, we continue to target an investment return of seven to nine months, which we are on track for with our Q2 spend, our registered user growth spiked in Q2 partly due to some testing of new acquisition channels. These tests were primarily in geographies outside the U.S. and resulted in traffic with varying degrees of conversion rates. We continue to optimize these new channels and are optimistic about their potential. We are always testing new acquisition channels and adjusting our investment according to our targeted TROI. This quarter illustrates what is unique about our freemium business model. Cohorts that we acquired several periods ago continue to generate collections today without additional marketing investment. This behavior, which is driven by our focus on great products and a great user experience, enables us to maintain strong top line growth and generate positive cash flow. I’ll now hand it to Lior to provide some financial highlights on the quarter.

Thanks Nir, and good morning everyone. Before I begin, if you think back to when we went public about six earnings reports ago, our target was to be profitable in 2016. We have now achieved that target for the first half of 2015. This proves that our model is working better than we had anticipated and is a great achievement. So onto the results for the quarter, our strong growth in subscriptions once again led to solid financial performance. Collections were up 44% year over year to $57.4 million and 55% year over year to $61.7 million if you exclude the impact of currency. Revenue increased 43% year over year. This was our first quarter ever of positive EBITDA and positive cash flow. We generated $3.5 million in EBITDA and $3.4 million of free cash flow. We believe that producing positive EBITDA is sustainable as we continue to realize operating leverage in our model. We have continued to see a slight decline in our average revenue per subscription. Currency and the shift to annual plans continue to be headwinds on ARPU, and we expect that to continue through the remainder of the year. However, on a constant dollar basis and excluding the impact of the shift to annual plans, ARPU has actually increased year over year. To highlight a few items on our P&L, our non-GAAP gross margin remained strong at 83%. We realized significant operating leverage in our marketing expenses this quarter. Non-GAAP marketing expense fell from 56% of collections last quarter to 48% this quarter. Marketing actually decreased 12% quarter over quarter. This was partly due to a higher level of expenses in Q1 from the Super Bowl campaign, but it can also be attributed to the leverage benefits of our cohorts. We increased non-GAAP R&D expenses slightly…

[Operator Instructions]. Your first question comes from the line of Sterling Auty from J.P. Morgan. Your line is open.

I wanted to start with the conversion, the 38% of premium subscribers coming from current quarter registered users. How would you characterize the results in terms of absolute numbers? Was is that the previous cohorts just had an exceptionally strong quarter and that’s why they made up 62% or was there anything that you saw in terms of the current quarter conversions that maybe were not as strong as what’s typically say?

So generally, if you remember, we spoke about this in the past. Q2 is customarily in terms of seasonality, a slower or even the slowest quarter of the year, which kind of makes sense as to why you'll see a better performance in terms of the contribution of the older cohorts into this specific quarter. But I think that overall if you think about the past quarter performance and quarter-after-quarter, it kind of fluctuates around that 60% to 40% split.

What was that mix last June? So the second quarter of last year, how did that mix book?

I think it was similar but we’ll dive into our numbers here for a second, and I'll answer that in a minute. Okay?

Okay, great. Then onto the new channels that you talked, they talked about primarily outside the U.S. Can you give a little bit more detail either what was the geographies and what was the method of the channel? Are we talking about still just online advertising or how much of it was TV or other product ads or versus other channels?

So first of for your previous question, last Q2, it was exactly 60-40 split, Q2 of 2014. In terms of the channel that you discussed, we rather not give specifics on channels because it is very highly competitive data. But it's definitely, geographies outside of North America, a combo of traffic in Europe, in Australia, in Brazil and Russia in kind of pretty wide segment.

And then last question, you gave us the FX impact on collection. Any sense to what the FX impact was on revenue in the quarter?

If we check the revenue, it’s a thing it’s more interesting year-over-year, the effect on revenue was approximately $2 million.

Next question comes from the line of Nat Schindler from Bank of America. Your line is open.

Less on a detail and more on a kind of longer range question and strategy thing. As you look at why businesses churn off your system, outside of business churn, businesses going out of business, switching off or changing what they do, why did people leave Wix and what are you doing to address that?

I think that outside of closing the businesses or switching to some of the others which is small, rare [ph] occurring. The other reason is that not having enough functionality, so people don’t have the business become successful to the level that we can provide and that functionality will change. Good example would have been the hotels where somebody needed the booking system on your hotel and they didn't have it, only [ph] they would have to change. And is a lot of what we’re doing now is addressing the higher requirements by the customers that have successful businesses; as their business grow aligning to scale with that.

And going on that idea of scaling with the businesses, as you are looking at building in your own capabilities in your side, particularly in e-commerce versus partnering with as you’ve been the partner for a long time with players like Shopify, where do you see the line where you can no longer provide enough for the business and that you should recommend them going to another player or do you see the capability of you continuing to improve on what you do and just kind of shrinking what others can provide as additional or the value of moving on top market?

That's actually very good example. Because I think that e-commerce kind of provides a detailed example and I’m trying to explain. So, we have the WixStores and then have three other partners where simple commerce will equate with [ph] Shopify. Each one of them is addressing the different kind of any simple commerce side for one product, okay; you don’t need a shopping card for that. It's very-very basic. And the way we think about it is that it’s not selling the three [indiscernible]. And then if you look at Shopify for example versus the highest part of the market, like a lot of the customers are medium size or even very large companies and there is a very deep functionality and they are also very focused on North America, Canada, and United States mostly. So, as we move to the small businesses, a lot of time they need different and a lot of them are outside of the United States. So, it's a company we believe that we should provide solution that are not competing with our partners but allow our customers to have at least a good one choice in the market that they are at. For example in e-commerce, I don’t think we will go and do -- I know that Shopify, that might be only [ph] but Shopify is want to understand and going to do logistic distribution. So, they are going to do a shipping system; probably not going to go all the way. That's probably much [ph] more for medium and large size company. So we are going to stay on doing great online experience, integrating with existing system. And I think that the line is becoming more and more clear that both companies will be on their roadmap. We love the partnership with Shopify which is simple commerce and this is for us another way to providing a platform and not just a solution.

I just want to add that I think that a great testament to the fact that we are solving more of the issues that the small businesses have with e-commerce is if you look at kind of the growth of the WixStores, which is our new e-commerce solution, from the end of last year to today, the percentage of who actually choose to buy that out of our premiums moved from approximately 10% back then to nearly 14% now. So, clearly we are adding more value there.

Let me just say one more thing about the hotels. So, example in hotel, we try to look at different systems out there. And we still haven’t found anybody that is worth partnering. And so we didn’t have a choice except to go out ourselves. So, everything is different but I think the decline is very, very clear of what we should be doing in order to remember our customers to take that business and going.

One final question guys; this one more for Lior. As I look at your guidance particularly for profitability, you beat the quarter by 2.5 million of the midpoint but you raised your year by only 3 million. So, if I just look at this quarter versus what you would have to include into the next two quarters is you would have to delever pretty substantially from Q2 to only generate 500,000 more in the back half than you already added to that your year. Do you have any substantial investment that you are planned given your upside in this quarter but you are going to do in the back half or you are just giving yourselves a little room now?

So, first of all Nat you know that I’m never room setting a room. But basically, the way to look at this quarter which I think that was really the best ever quarter for us and because of the profitability, and just because of the fact that our model that work. And if you guys remember back in the past when we just went out to IPO, we said that we are going to be profitable in 2016 and then later on the second half of 2015 and now we are profitable quite nicely on the first half of 2015. And the reason of what we see this quarter actually comes from the two effects to that. The first one is the fact the we increased the outlook for the top line back last quarter. Obviously that's resulted with better profitability and we actually increased the outlook also for profitability last quarter. The second thing which happened this quarter is really great leverage that we've seen specifically now marketing investments, meaning that we optimize the way that we do investment. And sometimes when we see that something doesn’t work in terms of the CLI [ph] especially when we are talking about off line and brand investments, so obviously we are trying to optimize with all this time. And secondly we saw really, really good leverage of our model this quarter coming from the previous cohorts. So if ask me this is something that we will continue, well obviously we provide an outlook of what we see right now, which is reasonable. It might happen that we see a better leverage also in the future but we provide outlook of what I see and what I'm feel very comfortable about.

Your next question comes from the line of Mark Mahaney from RBC Capital Markets. Your line is open.

Two questions please. One, could you give us a little bit color on the WixShoutOut, Facebook relationship or that product or that solution and what kind of customer interest you're getting in that? And then a little bit more color on some of the verticals quickly, the WixHotels and what kind of traction you're seeing for that in the marketplace? Thank you.

Of course. So, the WixShoutOut Facebook integration, first of all, it’s significant; we're still learning on to hedge. [Ph] The reason that we went to do that is because for a small business to really be effective in advertising on Facebook is pretty hard. It’s pretty hard to do the graphic that you need and the content that you need. And at ShoutOut value [ph] to do it is very easy in simplified way. We worked with Facebook on doing that. And we think that it provides tremendous value for our customers that you see there. And if you have small businesses sophisticated to able and deal the Facebook content, then this product is going to really help you do that in more efficient way. And I think that we can see that more and more small businesses understand that Facebook is a good place to advertising. Currently it's a new product and we see good traction coming through. And we are going to continue to see how it works. It’s not substantial in anyway. This does answer your question about ShoutOut?

Yes, it does, thank you. And then on the WixHotels?

Well, WixHotels, so we recently continued to roll the product, it now supports I believe 12 languages, you can actually order around in 12 languages. We had it supported for online traveling agencies, the OTAs automatically integrated into the product, so you can really manage your inventory from one swipe. [Ph] And in fact I think this is the first time that independent hotel can actually do that, which for them is huge benefit on their ability to be aggressive hotels. So we continue to see traction. In fact, I remember correctly, so it's almost doubled since the beginning of the year. And the conversion by on hotels compared to the average on Wix and amount segmented and value is almost twice as good. It's still not huge portion of revenues or something that we feel that we need to disclose, but we're really happy about the results. You just think about it, twice the conversion of an average segmental mix, just because of it is so much better.

Your next question comes from the line of Kerry Rice from Needham. Your line is open.

Two questions, maybe first around collections. Is there any more details you can give us on what's driving the strong collection growth, obviously the FX headwinds? Is it, you think higher price packages still; are you seeing more -- I am sorry you're seeing more app download but I don't if you can give us any more insight on what the app revenue is as a percentage of total, anything also on collections?

So first of all, I think that it's important to mention that although we don't see that right now based on the ARPU because we saw that the ARPU slight decreased, but that was mainly due to the fact that we still see the impact of currencies. The second thing obviously is about the shifting from monthly to yearly. That said, if we exclude those, both FX, we actually see really nice increase in term of the ARPU year-over-year by more than 5%. So to answer your question, we still see increase in ARPU coming from added on services from the fact that and I think as Avishai or Nir mentioned that actually that we so increased with the portion of our e-commerce solution out of the overall packages which obviously is more favorable in term of the prices. So all those things actually impact, the ARPU and therefore on a constant dollar basis, the ARPU has been increased. Secondly, obviously other sorts of collection come from new premiums. And we saw that this quarter was quite amazing in terms of number of premiums, net premiums. It has been increased by 132,000 net premiums. Obviously it contributed positively to the collection.

What did you -- did you say what the first impact to ARPU was? I know the shift to monthly to yearly; what was the first one again?

So there are three impacts on ARPU, the first one is -- the first two are negative impact meaning that the currency and the shift between monthly to yearly. The third thing is about the fact that people are buying more expensive packages. And Nir mentioned the fact that we see a higher portion of our e-commerce solution that has been sold. And the other thing we see continued increase coming from added on services, as we mentioned coming from the up market from the WixShoutOut, from the different vertical and so on.

And then on maybe mobile, did you guys -- can you break out maybe how many mobile sites you had this quarter and any other details about the revenue related to the app market? And then finally, where is the rollout or what stage is the rollout of the Native App creator?

So maybe, I'll start with the mobile. Currently we have 9.3 million mobile sites published which I believe that is a by far the biggest mobile publishing platform in the world that is again by huge differentiation. I would even say that just the 1.5 million EBIT from the last quarter is far bigger than anybody else. So, we’re doing well on the mobile; we’re really happy to have it. We’re seeing fantastic utilization. On the other hand if you look at the Native product, so we dramatically increased the size of the test now and seeing very good results. The current issue that we’re trying to fix is how to make it very easy for small businesses to register on the Apple. On the Apple store it's a bit tricky because it's a complex thing that Apple is doing. So we’re trying to help our customers through that and see how it works. But it's moving to the final stages of the pre-release for this product.

With regard to the app market revenue; and we said back in the past that we actually should see two effects of the app market. The first one is the indirect effect which obviously contributed to the conversion to the fact that it increased the stickiness of our customer and it is really positive to the overall collection. The other thing is about the direct effect which we see continued increase in the APRU coming from the app market. It's still not a significant portion of our revenue and this is why we do not disclose it yet. But again it's continuing to increase quite positively.

Your next question comes from the line of Jason Helfstein from Oppenheimer. Your line is open.

Can you go into a bit more detail on the Facebook marketing product, are there any early success stories you can share, the types of ROIs, customers are seeing conversion rates? We know that Facebook wants to control the relationship with the largest advertisers but really is looking for companies like you to help them with the small businesses. So, if any additional color I think would be helpful. The second, one of the trends we’re seeing in the market, companies for example like Yelp who’re really struggling to scale local advertising which would suggest that if you bring them potential customers, traffic et cetera to your app store, you're increasingly providing more value. Can you get better terms perhaps out of some of the partners on the app store? And then lastly, can you talk about if the guidance assumes improved marketing leverage through the rest of the year, as that’s the trend in the second quarter?

So, let's start with the Facebook one. We just pretty much released this product, to say now and to talk about results now and success stories is a bit too early. I can say that the levels of efficiency that we see on this is so different that it’s going to take a while to understand how well it can adopt the Facebook platform. But overall, I love it. Regarding the second question that you have about Yelp, I think of course which is place to further -- there is amount small businesses and small businesses and of course taking all of that together and looking [ph] to provide a some leverage in order to get them better deal, we did it with Google and now we are doing some as you can see on the ShoutOut. And I think of course many more places we can go to and increase that. And probably this is not a good time to discuss relationship with partners. And the last part -- I just wanted to say one more thing that always our priority is not to have Yelp or have Facebook or even have Google, our priority is always helping our customers and better online presence and making them more and more successful and advertising of course is part of it

So, Jason, with regard to the third quarter and about the leverage in terms of marketing, we did say in the past that we think that the marketing for full year is going to be 48% to 50%. We’re still guiding toward this direction. And obviously part of the leverage will also -- implies that it will be more soft to the lower range of that. So, we feel very comfortable about it, we’re very happy about it. And as I mentioned before, we keep optimizing our marketing efforts. And I think that this was a perfect example to that.

Your next question comes from the line of Tim Klasell from Northland Securities. Your line is open.

Question on the annual subscription; what is the difference between the ARPU on an annual versus a monthly, ignoring currency?

So, there is a difference in terms of the pricing of 20% to 30% between monthly to yearly. So, obviously that imply also the amount of the differences in terms of the prices. So this is both on a constant dollar or actual dollar whatever.

And then I know it's how probably comparatively a touchy subject. But can you tell us maybe where -- just qualitatively, where your conversion rates are the highest in the new channels that you’ve been exploring.

I think that that's a something that is just far too touch subject to discuss. It puts a lot of money for us to fund each one of these. It is really highly converted channels and just by meaning it’s comparative with others. If you ask about the worse…

Your next question comes from line of Mitch Bartlett from Craig-Hallum. Your line is open.

Sure. Thank you. So Avishai, I think we've all been very intrigued by the vertical strategy, the hotels, restaurants, music and that whole thing. I think you talked -- you answered Mark Mahaney's question that the conversion rate you are seeing off of hotels has doubled. Two questions there, what is the ARPU lift that you get? I don’t know how you measure that from a person that just came in normally for the hotel to buying into a bundle; what is that ARPU left? And then more globally, you are saying it's too early at this point to really say that it has a meaningful impact that these are small numbers at this point. When does it become meaningful when you look at the vertical strategy to that it starts to affect the numbers.

Well, there are two ways to answer this, first part of your question, right. First is that what is the ARPU lift that we have in one semester [ph] and then what is the ARPU lift that you get overall and it's different because currently the average price for [indiscernible] around $20, right, if I remember correctly instead of around $12. So, overall it’s about you can say $5 to $6 above the price of a regular customer. But then we also doubled the amount of customers. So, you can add, it’s, you can say that it's doubled, plus double five right. So it's kind of a different way. I look at it on the second way, why because we paid for the same amount of traffic and just twice the value and plus there is further [ph] application. And that's why I think that it’s really positive. I think Nir or Lior mentioned here today that we also see that ecommerce move from 10% 140 That's a 40% increase and that's within the couple of months after addition the new product. I think the overall you are going to see that we start to disclose this number when improvement on the [indiscernible] is going to be such that much a difference. Currently we report the overall conversion of which in development project is being influenced the improvement by -- that is converted in the early part of it. We don’t differentiate which part of it but I think that it’s such a big portion for our conversion improvement to both and move that we did over the last year. that should give you a pretty good estimate. The other thing is that as we more have verticals which we intend to do, we are going to see again a wider improvement and then of course it is confidential and not to disclose. The one thing that we always are afraid of is that we spend the huge amount of efforts analyzing and understanding which vertical we should go after the net. And again that's a very sensitive information to what understand what to expect and what to decide and to and what is the impact. So that's why we are a bit reluctant to give the full details. And we are going to try and hold this as much as we can. And of course you always want that but I can't any more.

Just to clarify, the 10% to 14% e-commerce, lift in ecommerce that was a conversion rate lift or what was that static that you gave?

It is pretty much you can look at that that's a conversion amount list.

Okay.

It's actually from the total users, the total users coming to it but it's equivalent almost to the conversion at least on the e-commerce.

Got it.

So, it's relatively number, I can definitely say that 10% conversion overall [indiscernible] e-commerce but it says that on the execution the amount, it's plus 40% approximately.

Got it. Second question would just be on just a little bit more on the geographies and where are you seeing real success. I see on your flat deck that North America represented about 50% of sales in Q2 which is fairly consistent. I was wondering given the all the efforts around the Super Bowl and whatnot is it are you pedaling harder in the U.S. on your advertising than you are rest of world or where is that really easy business for you right now?

You have to remember that this is -- these numbers -- they are based on the current dollar. Naturally if you would exclude the foreign exchange impact and you see that it actually decreased and moving faster in other parts of the world. That being said, countries that are very strong for us, countries like Brazil, like England like Europe in general and Russia, and obviously if you look at what the Russian ruble over the euro or the Brazilian real has done, then naturally it's kind of decreasing the affect when you look at the actual dollar.

We actually have seen biggest growth that far is what’s really positive sign.

Your next question comes from the line of Aaron Kessler from Raymond James. Your line is open.

Couple of questions, first just any more color you could provide -- and I know it's small but just the revenue guidance being narrowed? Second, I didn't see in the release, maybe the headcount and kind of maybe your growth expectations for per headcount through the end of the year. And just finally competitive dynamics, anything you're seeing changed competition wise either U.S. or globally?

So, I'll start with the revenue outlook. So, as I mentioned before, we actually at the very beginning of the year, we actually increased the outlook for revenue. For this quarter, we maintained the mid-point of the revenue, just nailed the range because obviously we have better visibility in term of the rest of the year. We still feel very comfortable about it. We are very excited about it because in constant dollar actually the growth is about 50% year-over-year. So, I think that it’s pretty much impressive. Again, this is where we see right now realistically how we're going to enter the year, taking into the consideration all the FX impact on our top line.

Headcount growth in this competitive dynamic?

Yes, in terms of the headcount we are slightly above 1,000 employees.

With R&D still being our priority obviously.

I think what is also interesting that we continue to increase the headcount in R&D and other divisions obviously to support all the efforts that we do in terms of our products concern. That said, we continue to see the leverage and the fact that the top line is actually increasing higher than our expected.

And then in terms the third question about the competitive dynamics, we don't see any significant change in the last quarter.

Next question comes from the line of Samad Samana from FBR Capital. Your line is open.

The first one I wanted to ask was, was there any change in the discounting or incentive offerings on the annual packages beyond the standard discount from month to month to annual during the quarter?

So, actually we want to talk about it a bit because I think that this is something which is very exciting for us and we feel very good about it and I will try to explain. We start this quarter; we started to test some new sign up promotion programs. And obviously we are still optimizing it. And in the short-term, we see a slightly decrease in term of the ARPU coming from collections, but we didn’t see any impact or negative impact in terms of incremental collection coming from this program in this quarter. The fact that we're very -- the reason why we're very excited about it is we believe that this new program is actually going to improve the LPV of our cohort and going to have really a positive impact next year on our results. So, this is part of the effort that we continue to do all the time to try to optimize our marketing investments, both in term of TROI and also trying to improve not just the short-term but obviously the long-term meaning the LPV [ph] and the future results of our cohort.

Thanks that's helpful. And then in terms of the sales and marketing expense decline, I understand that Super Bowl made 1Q very large number. But if you think about the rest of the decline, if you had held your spending on paid customer acquisitions, would premium subscriptions have been even higher or did you choose at some point in the quarter to not spend anymore on paid acquisition?

So actually -- and I think that this is something that we need to evaluate, based on two different factors because the marketing is actually separated into two. There is the traditional marketing either online and offline but the other thing is about the investment in branding. With regard to the investment in branding, this is something that we’ll keep on optimizing and looking at the ROI coming from investments in branding. If we see something that doesn't make sense, we will shift it or we do not invest meaning that we’re trying smartly to evaluate whether we need to invest in branding or not. With regard to the traditional marketing, the direct acquisition that was online with other quarters, there was no change.

Your next question comes from the line of Deepak Mathivanan with Deutsche Bank. Your line is open.

Two questions guys. First, the mix of new subscribers from annuals continues to increase steadily. Can you comment about the renewal rate you are seeing from the annual subs came in since the ramp started in 2Q last year? Are there any meaningful differences in year one renewal stuff? And then what you expect that mix to be in the long-term for new sales from annual packages? And then I have follow-up.

Naturally, we’re very, very happy with this shift as it gives us a lot of value in terms of cash collection as well as long term retention and the value of the cohort. In terms of the retention and renewals, ever since that ramp has started, we've seen similar -- I would say it's very similar behavior in terms of the renewal. So, there is no significant change because of the ramp up. In terms of going forward, we estimate that it's probably somewhere in terms of new subscribers, probably somewhere between in the 70% to 75%.

Avishai, in your prepared remarks you had that you’re testing a new version of HTML5 editor. Can you elaborate a little bit more on that? What are the some of the new enhancements we can expect in the product? And then any thoughts on the timeline for a broader rollout in different markets for this?

Yes, I can elaborate a little bit. I would just say that we’re very excited; it’s a big change in multitude. And I think you’re going to have to see the details when we release the product. And so I believe that releasing new product to the market should probably be done by market and not by me on this conference call with the analysts for the market. So, give it a couple -- little bit longer and you’re going to see it.

There are no further questions at this time. And this concludes today's conference call. You may now disconnect.