Harris Interactive, Inc. ( HPOL)

F1Q2011 Earnings Conference Call

October 28, 2010 5 PM ET

Executives

Michael Burns – VP, IR and External Reporting

Kimberly Till – President and CEO

Pavan Bhalla – CFO, EVP and Treasurer

Eric Narowski – Interim Principal Accounting Officer and SVP, Global Controller

Analysts

Bud Susanna [ph] – Voice and Associates

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Q1 Fiscal 2011 Harris Interactive Active Earnings Call. (Operator Instructions) I would now like to introduce your host for today’s conference, Michael Burns, Vice President of Investor Relations and External Reporting. You may begin.

Michael Burns

Thank you. Good afternoon and thank you for joining us to discuss Harris Interactive’s First Quarter Fiscal 2011 Financial Results. With me today are Kimberly Till, our President and Chief Executive Officer; Pavan Bhalla, our Executive Vice President, Chief Financial Officer and Treasurer; and Eric Narowski, our Interim Principal Accounting Officer and Senior Vice President Global Controller.

The format for today’s call will include formal remarks by both Kimberly and Pavan on the state of the business and our performance for first quarter. After the formal remarks, Kimberly, Pavan and Eric will be available for questions.

A webcast replay of this entire call will be accessible via the Investor Relations section of our corporate website later this evening and will be archived there for at least 30 days. However, no telephone replay of this call will be provided. We’ll post a transcript of this call as soon as we can following the call.

We would like to take this opportunity to remind you that certain statements made during this conference call are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements include beliefs, predictions and expectations related to the company’s future financial performance, other business and operating metrics, as well as statements regarding the company’s future plans and operations. They involve a number of risks, known and unknown, that could cause actual results, performance and/or achievements of the company to be materially different from the beliefs, predictions and expectations discussed on this call.

Factors that could cause the company’s results to materially differ from the forward-looking statements made today and which are incorporated by reference herein are more fully described in today’s press release, as well as the company’s SEC filings, particularly under the Risk Factors section of the company’s most recent annual report on Form 10-K as updated quarterly in our quarterly reports on Form 10-Q to reflect additional material risks.

You are urged to consider these factors carefully in evaluating such forward-looking statements and are cautioned not to place undue reliance on them. The forward-looking statements are only made as of the date of this presentation, and the company undertakes no obligation to publicly update them to reflect subsequent events or circumstances.

We also will be discussing non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA with the add-back of restructuring and other charges. These items are reconciled to GAAP financial measures in today’s press release and are posted on the Investor Relations section of our website.

I’d now like to turn today’s call over to Harris Interactive’s President and Chief Executive Officer, Kimberly Till. Kimberly?

Kimberly Till

Thank you, Mike. Good afternoon, everyone, and thank you for joining us and for your interest in Harris Interactive. Since our last call, we have continued to make progress in executing on our key initiatives within the three phases of our strategic roadmap. Before I give you I give you an update on our progress, let me touch briefly on the highlights for the quarter and then, Pavan will cover our Q1 results in more detail later.

Revenue declined in the quarter by 5% versus Q1 of last year, primarily as a result of tracking studies lost during fiscal 2010 in the U.S. and the U.K., the deferral of a large tracking study in the U.K. and revenue declines in the public affairs and policy, and healthcare U.S. sectors. This was partially offset by increased revenue in certain other U.S. sectors. Our U.K. client who deferred the large tracking study is doubling up on the tracking in Q2, so we expect to recognize the lost Q1 revenue in Q2.

The revenue decline coupled with changes in the mixed of our business resulted in a higher operating loss and a lower adjusted EBITDA than last year’s Q1 results. Our consolidated bookings or sales for Q1 were up 8% compared with Q1 of last year, excluding foreign currency exchange rate differences.

This growth was driven primarily by increasing bookings in the U.S., Canada, France and Germany. As I mentioned on our last earning’s call, we expected Q1 to be our weakest quarter as there is generally less activity in our industry during the summer months. We continue to believe that we are well-positioned to achieve revenue growth and profitability growth in fiscal 2011.

Over the past year, I’ve said that to accomplish phase one of our roadmap, turning around all parts of the business. We need all of our worldwide businesses to achieve sustainable revenue growth and profitability. The U.S. is gaining traction. France, Germany and Asia are all performing well. So, this leaves us with the U.K. and Canada, where we have a strong sense of urgency to complete the turnaround of those businesses.

I will add more contexts and commentary regarding the individual business units’ performance after Pavan provides the financial details.

Read the rest of this transcript for free on seekingalpha.com

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