Question-and-Answer Session
Operator
(Operator Instructions) Your first call comes from Kerry Rice - Wedbush
Kerry Rice - Wedbush
You’re obviously doing really well in the distribution channel, should we think of this as the new kind of level of revenue you should be maintaining? I guess initially or historically Q2 has been down and you guys actually did a really good growth here sequentially and year-over-year. The guidance being $48 million, should we assume that that’s the new level of revenue growth or is there some seasonality or can you maintain adding nine plus distribution partners a quarter?
David Binder
Well first of all, the underlying seasonality in our business is still there. We typically see summer as being a relatively weak period for us. We anticipate that the holiday seasons we’ll see more activity on our site than our partner sites.
The strength that we’re seeing going into the third quarter and what we’ve seen in the second quarter is really driven by first of all the new distribution accounts as well as the marketing campaigns on some of our existing accounts performing in a very strong way to offset that underlying seasonal weakness.
On our owned and operated sites, the initiatives we have in particular with the direct marketing initiatives are driving volume that has helped to offset that underlying trend, seasonality trend.
Kerry Rice - Wedbush
Can you maybe expand? Is there one of your marketing initiatives doing better than the other? Are we seeing any traffic growth on Dogpile.com or is it primarily these new initiatives and is there any particular one?
David Binder\
We don’t break out the revenue or traffic by site. I would say that our core trends on Dogpile have not changed a whole lot. We’ve seen a lot of good traffic growth coming to Webcrawler and the initiatives are still relatively small. The other initiative, including Dogreatgood and infospace.com are still relatively small and we’re more looking forward to those initiatives creating future growth and they’re less of a factor in the second quarter performance.
Kerry Rice - Wedbush
I know that distribution revenue generally has a little bit lower margin structure than your owned and operated revenue. Are we seeing a big uptick in operating expenses?
David Binder
I would say that the margin profile going into the third quarter is mostly impacted by the product mix shift, less so about an expansion in cash operating expenses, and more of a shift toward the distribution business.
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