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FriendFinder Networks' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Thank you and welcome to the FriendFinder Networks second quarter 2012 earnings conference call, and my first as CEO. Before we get started, I would like to thank Marc Bell for his continued support and guidance, which has ensured a smooth transition into my new role as CEO. During today’s call, I will provide a high-level overview of the second quarter, discuss operational updates and review our strategic plans. I will then turn the call over to Ezra, our Chief Financial Officer, to review our financial results for the second quarter before opening up for questions.

During the first half of 2012, we undertook additional actions to further optimize our business, maximize our brand equity and retain greater control of our cost structure. Simply put, we have redirected our efforts to support the 100 primary brands that contribute approximately 90% of our total subscription-based services revenue. The consequence of the shift was to begin the process of closing nearly 5,000 co-brand sites during the quarter. Even though our affiliate network attracted thousands of new registrants per day to these sites, it became too cumbersome and is cost-prohibitive to continue to support them.

To further develop our primary brand, we continue to focus on improving our three core metrics. The first is member conversion, which is the percentage of our members who subscribe to our services. The second is renewals, which is the percentage of our subscribers who renew their subscription. This is a byproduct of our return metric. And the third is cost per gross addition, which is the customer acquisition cost we have discussed in detail on previous calls, and a direct indicator of our marketing efficiency. Member conversions and renewals are primarily driven by the products, which is why we are focusing our efforts on our core brands and we feel that is so important.

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