Digital Generation (DGIT) Q2 2012 Earnings Call August 09, 2012 5:00 pm ET Executives Neil H. Nguyen - Chief Executive Officer, President, Director and Member of Executive Committee Omar A. Choucair - Consultant Analysts Robert Coolbrith - ThinkEquity LLC, Research Division Darren Aftahi - Northland Capital Markets, Research Division Richard Ingrassia - Roth Capital Partners, LLC, Research Division Jed Kelly - Oppenheimer & Co. Inc., Research Division Richard Fetyko - Janney Montgomery Scott LLC, Research Division Mark J. Zgutowicz - Piper Jaffray Companies, Research Division Presentation Operator
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Today's call and webcast will include non-GAAP financial measures within the meaning of SEC Reg G. A reconciliation of all non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP, can be found in today's press release.At this time, I'll turn the back -- call back to Neil. Neil H. Nguyen Thank you, Omar. We continue to make progress in the quarter towards executing our vision as the first global multi-screen advertising platform for agencies and advertisers. But our second quarter financial performance was below our expectation due primarily to the underperformance of our online segment. The substantial deceleration of business in Europe in the back half of the quarter as well as an FX impact, accounted for the majority of our revenue pressure in Q2. In the TV segments, revenues were relative -- were largely in line with plan, with HD penetrations growing to 26% of deliveries, and HD revenue is up 19%. Despite this disappointing near-term results, I remain confident in our long-term strategy supported by industry trends and a few key company prove points. First, to the industry trends supporting our strategy. 70% of all Internet users globally watch video online according to the Nielsen's latest report. 63% of all U.S. TV viewers browse the Internet while watching TV, providing for a greater opportunity for advertisers to further engage with their audiences. Consumers are now watching, on average, 21 hours of digital video a week. Video advertising spend, as a category, will reach $5.6 billion by 2016, for roughly $2 billion according to Forrester Research; Second, we continue to receive positive feedback from both TV and online advertisers and agencies regarding our products and innovation roadmap, supported by several major customer deals; third, the completion of several strategic technology partnerships and alliances; and finally, one of my goals for the past few quarters has been to deepen the executive team at DG to infuse the company with leadership and experience to execute our vision and strategic objectives.
I'm delighted to welcome several new members who have all joined the company due to their belief in our vision and strategy. First, Ricky Liversidge, our Chief Marketing Officer came to DG from a successful career at Adobe, where he held product marketing leadership positions for some of Adobe's flagship solutions and products. At DG, Ricky will be responsible for all product management, marketing and corporate communications. He will be working closely with our clients and technology partners to bring to market our product roadmap.Also in the quarter, we successfully recruited and hired a Chief Technology Officer. Noam Sharon brings several decades of experience for Mercury Interactive and most recently, Hewlett-Packard, where he was GM and Head of Global R&D. At DG, he is responsible for all of our research and development and engineering teams around the road. He joined Andy Ellenthal, who I noted on our last call, is now leading global sales and operations. Read the rest of this transcript for free on seekingalpha.com