Thank you, Brett, and good morning, everyone. Today, I'd like to focus my comments on review of our first quarter 2012 results, followed by a few comments about the rest of 2012. I will then turn the call over to Yacov, for more details regarding the first quarter financial results and business metrics, before opening up the call for questions.
The first quarter was another great quarter for the company and the 25 consecutive quarter of growth on a year-over-year basis. We are extremely pleased with our results and accomplishments.
We made considerable progress on our long-term strategy, invested in future growth, execute well throughout the quarter on a variety of fronts and are confident that we will deliver on and perhaps exceed our original 2012 guidance.Revenues in the first quarter increased by 30% year-over-year to $11.3 million, as a result of an increase in product and advertising revenues largely due to our Smilebox acquisition. This 30% revenue growth was achieved, even though search revenue declined mainly due to significant increase in media buying from competition, which impacted the monetization of our installed base. The good news is that our installed base grew from 12.3 million to 13.3 million users, demonstrating the strength of our product focus strategy, which gives us the ability to continue to communicate with our users and consequently increase their lifetime value. We have already begun to test and successfully implement new solutions to recapture our user's monetization. We are confident that search revenue will increase in the coming quarters and should provide us with a significant growth catalyst going forward. As I mentioned on our last earnings call, we are also very proud to report that Smilebox is cash flow positive and achieved a 14% EBITDA margin in the first quarter. Operationally, our focus continues to be on broadening our product suite, addressing the needs of second wave adopters specifically on new platforms, while continuing to improve our backend systems and technology.
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