Question-and-Answer Session
Operator
Your first question comes from Mark May - Needham & Co.
Mark May - Needham & Co.
Thanks for taking my questions. I might have to start using lists in my research reports. You've given me a good idea there. Congratulations on a great year.
My first question has to do with one of the things that was really strong last year, your incremental margins. Your margin improvement was significant. I think it was over 50% in each quarter of the year and 65% incremental margins in Q4. You made the comment that you are reinvesting in the near term. I think some of that is in product and some of that is in marketing.
What should we expect in 2007? Is 50% kind of overreaching this year, and what's a reasonable margin goal over the next two years?
Eric Ashman
Mark, I think the comment that we made was in the call just speaks to the extent that we see opportunity to make reasonable investment and growth in the areas that we talked about in terms of our SCO and other traffic-driving initiatives, or in terms of investing in the ad sales team to drive revenue growth; or on the editorial side to drive content expansion. We will do that with a baseline of looking to protect the margin that we've achieved for '06.
We will only do that to the extent that we see that there's ROI, so we will use the leverage that's in the business to the extent that it's appropriate. We don't give guidance, but in terms of our expectation for '07, certainly that's how we're looking at the business right now.
Mark May - Needham & Co.
So we're trying through read your comments, but when you talk about protecting your margins, I think you were 27% EBITDA margin for the year. You exited the year obviously a seasonally strong 29%. So is what we take away from that, is that a range would be reasonable, at least for the near term?
Eric Ashman
Yes. We look at it from the full-year margin perspective. So if you look at the full-year margins for '06, we look at that as kind of a baseline in terms of our performance going forward.
Mark May - Needham & Co.
Could you give us the contribution from the Ratings acquisition in the quarter? I don't think on the release you give out a cash-flow statement. Could you give us either your free cash flow number in the quarter, so operating cash flow less CapEx, or maybe even give us those two components?
- To read the full transcript on Seeking Alpha, click here »
