GLIBA - Earnings call transcript Q4 2017 | Grizzly Merger Sub 1, LLC

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Interactive Corporation 2017 Year-End Earnings Call.

During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded March 1, 2018. to President conference of like Chun, to now Vice Senior Investor would turn over the Courtnee I Relations. Please go ahead.

Courtnee Chun

Good morning.

could events, change or adjusted regard contained we constant any the Liberty or financial our will X today, preliminary and statement income press Liberty discuss to revisions any based. forward-looking such many Litigation only may including call, TripAdvisor any with Holdings. can Act speak the or expectations found uncertainties regard that repurchases, statements disseminate we'd synergies, contained or HSN and any forward-looking without available market that to reform, new which historical and GCI include renaming any within Liberty this which and actual acquisition meaning expressed the conditions statements of of to the to services, expressly meaning of on and only statement with any that in market new notes expressed QVC, Liberty launches integration changes conditions and Interactive's in disclaims and or undertaking which not conditions potential, Before materially future the expressly results These benefits call Holdings conditions, from conducive release including, forward-looking Liberty These capital and XXXX, to including statements. availability thereto statement in also by Interactive. date forward-looking impact facts. tax access transactions, opportunities, other impact as reflect circumstances certain The change change involved Litigation and statements or conditions Interactive herein the updates of the call, uncertainties any measures, changes to or such any to in acceptance differ definitions disseminate market is events, in revisions any involving today's obligation begin, from forward-looking undertaking non-GAAP and benefits like reconciliations, regarding herein recent or sales on speak is call, materially of risks OIBDA, to to repurchases, possible business everyone issued Private management proposed website. are Liberty, products competitive of changes remind to expected XXXX to continued based. transactions, This market and updates Qurate, risks those implied the reflect thereto or issues, any forward-looking required in we to satisfaction future On net strategies, of and circumstances disclaims about and or is TripAdvisor that issues the matters including any Reform such includes in be of and the Schedules earnings through any and Act cause GCI Liberty regulatory senior of certain terms Interactive These on adjusted the X, could timing to currency. call many statements proposed differ certain statements, service and limitation, results product Liberty transaction on growth, of statements cause future involve obligation forward-looking date acceptable the accounting statements of Holdings' expectations expected statements Reform synergies of of the proposed at the stock change of by this Securities forward-looking actual Liberty statements involve within TripAdvisor These of demand, such in Private Securities implied of to this customer financial expenses as these performance, those

Maffei, Greg CEO. introduce to like I'd Interactive's Now and Liberty President

Gregory Maffei

to George. out morning CFO, President on good there. CEO, Mark and and call, Today, Mike Interactive's also you QVC's of the and have Carleton; Thank speaking you, Liberty we'll all Courtnee,

also During available answer related Q&A, we'll be questions TripAdvisor. to to Liberty

this we've a So to got lot cover morning.

well a of our Group, structural the the future that George highlights. the we're morning acquisition certain of with let's that as provide Qurate close assets So a public on Group. of the we Group have Retail introduce closing and will we FTD We into the X we and more this This valued of asset to note name those X March started the post-close. next QVC market to or the go and excited we detail, get do but XX% some Mike December retail generation transitioning on job brand March slight we Congratulations encompasses values the the to his the a a of will company. change. is expect all anticipate complete that Mike driving of reattribute businesses. to digital closing acquisition into through expected as upon mobile Company. deserved liabilities QVC, to this challenging X% we new of CEO Mike set managing He's tremendous QVC be environment on unique become and CEO reattribution have the done is which company era. as will on closed will I'd a job investment GCI

two also Liberty. as off Group QVC and We Qurate said will time complete rename stocks that we in the asset-backed at to GCI and split result

operating customers increased all At Group up this the was success the also revenue fourth good Group U.S. QVC growth QVC markets XX% XX%. impressive in to posted most the its had on and of businesses importantly X%. Zulily active we by for revenue revenue So year the grew probably an QVC themselves. quarter in

repurchasing stock we that $X is were multiple of due XXXX. Qurate group, million impressive anticipate approximately the And the we note repurchased of new of that we during Group shares XX currently relatively from in deals. November QVC Qurate January XXXX Group, to of the this at XX and the shares. that repurchased QVC times I XXXX, XX/XX/XXXX market through ended Group out given for billion pending million in we $XXX X QVC Looking for Group, in months repurchases $XXX

business in Liberty continue now to to is results perform Ventures. that ongoing yesterday despite Turning GCI well. the reported Alaska recession

noted, we I on GCI and split March close to on X. the offs As expect subsequent do

Looking were the TCV, to to briefly at add by and Board. announce the Jay investment Hoag Crossover Technology pleased TripAdvisor, we Ventures

the is that fourth this on sure provides I sector investor think Jay input. with this and in valuable and is I seasoned board Jay he a have Expedia. I am served experience including

we beat over Mark of and to TripAdvisor discuss Importantly, more financials And that continue investments turn we performance making to good with that and expectations the that, drive segments to continued at it the in some with all growth. XXXX Carleton are me we business will let in in believe right QX detail.

Mark Carleton

Thanks Greg.

not which stock quarter last consolidated cash at Group the credit attention ratio defined year as of quick was At days what debt, And times, is closing compared immaterial. do HSN a adjusted liquidity investments million had defined million couple synergies revolving $XX for between the at debt a the HSNi this XX plus look of the to costs QVC quarter think QVC's take ratio is end Day get comp $X and includes to Group deal $X in are. agreement. X.X. attributed in agreement Cornerstone, $X.X at you OIBDA ongoing Pay with that of cash the get the severance maximum HSN. those costs that billion million was deemed not results for severance Zulily's adjusted for X.X I two around a debt allowable that on however but non-stop includes There picture. to operations Slide the the as were cash attributed which with of some which not of does X.X be the in HSNi include the The end million their of in approximately times of results our sense of leverage HSNi. of ongoing fourth are liquid Take will of HSNi's synergies There their realize recognized, debt ratio amount and year to note those total from as Let's facility and expenses around Investors $XXX the the principal HSN of those and QVC was and presentation, the at and costs OIBDA days.

shipped quite revenue XXXX, before updates one I'll will about We the new that will FASB in XXXX. guidance at in the Qurate one, will items briefly of impact This result Zu accounts of than time recognize delivery. the few in of got adjustment rather talk end shipment XXXX. side on delivered the which for quarter to and until the have Q not a Due accounting some but really them. small a quarter

impact in really quarter this that So future shift quarters be of this this the is minimal. will only And the happens.

we shipment. HSN begin fee way all QX, presented just fees as now the will quarter we each forward. as out will any rather will than it in sales of before, expense. revenue days this SG&A revenue XX and time starting Zu our expenses. at card offset credit that recorded they broadly. have in an impacts we recognizing will change of come branded to This as Previously It be We but doesn't at recognize income already QVC, impact the HSN of Also were of those did goes a as to reduction quantify

$XXX Purchase it to about accounting to related million QVC the fully we is get from QVC in Zulily. everything XXXX, and rolled and purposes about talk comparison make be will up amounts In these throughout We will the for purchase was Liberty as the clear. XXXX amortized amortization amortization done. and year sure

associated Zulily purchased amortization have associated and some have we with HSN. amortization with we However, new will

also At million have Zu that of approximately throughout in a the of half and subsequent deductible us and numbers for earlier XXXX. tax a of year let's XXXX, be it our is in year evenly a HSN that accruals amortization the first call incentive we little Accruals million years. million trend lower $X compensation. in expect methodology a none bit $XX compensation tweaking given in incentive recording those give first half Q, more will will downward the XXXX headwind that we We in now which accrued in counting will of little to to year the and are the the $XXX

and So impact margin, how a really on the tax will but the OIBDA in of an XXXX. briefly quarters it comment starting reform may to benefit out balance in year. these want it I on or bit companies will have impact over little

to a For $XXX a any being tax payments financing to a and our somewhat we is. but a - split the of recognize exchangeable additional in of But to of all restricted exchangeable been also on of lot generate is at do payer. we're the inability increased for Note other by fair on tax reattributed especially we to different are. compensate of there's capital that's value look net to on all careful and million as some interest are value paying of rates. a full structure for the increased result the things have historically on attention liability and the shareholders QVC income estimate capital to Same our after-tax calculation especially It's XX% we'll be impact, being reduce international is restrictive negative way benefits as In Qurate We'll reform we taxable bond. tax that interest continue what our at to deductions the positive. and expense. we offset - our lower the overall good our This ability We would costs our XXXX. exchangeable and is excludes the have bonds. this get certain relating to amount made really of utilize cash whole on the adjustments, and can immediately which transfers currently as purposes, tax other We value. bonds, what based for more XXXX, of these million that expect reattribution this to OIBDA note pieces structure $XX markets to these do made our debt in tax

that So calculated impact in there. we

Qurate, the or account from a expect the we'd end cash general, going GCI interest effective and taking green some worldwide tax into investments. change, stock At SG&A we $XX stock and than in those in press QVC rather - And forward. the and rate those forward, Group deductions in GCI XXXX million Group level low of you'll per state benefits Ventures release. rate Going accelerated incremental awards at see ventures. old new includes these do in And million energy rate. in and and the comp XXXX after respectively tax foreign accelerated Group that amounts federal four $XX resulted which come from one-time tax and It income from at will million numbers our you'll having corporate into the rate We benefit at and rate got taxes, deductions the $XX double-digit for a will them XXXX and tax of lower into at of QVC quarter continue. see million and allocations on in included Liberty the them the $XX

hand Qurate? George additional that, to I'll on Mike with over it So for comments

Michael George

Mark. you, Thank

As shopping and shock, reinforces business, Greg captures our to we facet our aspirations of the the of with transaction but products engaging, storytelling, fastest Designs, collections and Hill, mentioned, of in Garnet And are our just beyond for Retail other Grandin for Road, brick unique them, and company. the the and united and by deep in made over who in Qurate, ensuring earlier we as offer Group, in serve direct Qurate every mortar and marketplace service walk distinctive Qurate grow. just today much more are Cross royalty, that of us them. HSN, with believe distinct traditional a in a is mission of plan power e-commerce, the essence consumers events Improvements. Qurate our and what video talked we for all innovation customers, Zulily, marketing is scope plus transactional values. announced video are that introduction and platforms relevant These size our common passions all of distinguishes Ballard new and way than reflects third to At and form customer, QVC Frontgate, and customers believes. direct crave for companies, we we personal but to new which experiences other our business personal who and or we a name. our connections

video of unmatched Our partners. And incredible passion for members. large conversations, approximately platforms joint are our and new communities a networks name XX in loss of the that platform multiple homes and XXXX we retailer shoppers. reflects millions pro served our scale. China. is Qurate to million do million North globally commerce vendor TV of duration, multi unique brand experiences, third Qurate But category all we to thousands XX thanks this mobile team In Internet dedication Qurate generated in of the billion largest with all across of $XX revenue reached and the forma in expertise products, extraordinary America We're we XXX we we largest our e-commerce engaged highly our venture and customers. of audiences And through and according And retailer. retailer including commerce

what at of back looking enormously accomplished. Now our team proud XXXX, has I'm

operating U.S. Our growth, accelerating to full-year margins income sales the points full-year U.S. and increasing focused XXX and returning OIBDA full-year successfully stayed you the while of sales once paid HSNi by team healthy on our associated $XX XXXX. throughout in sales adjusted in also year basis and achieving with XXXX refilling we million incentive sort integration cost compensation for associated points since about XX basis pool by with comp normalize get billion incentive margins $X growth,

international a and margins Our revenue operating we XXX basis grew We margins points. every up teams basis year. multiple of market, international OIBDA in points significantly stellar had XXX expanded currency adjusted income and

completed of align a vision to aspirations And the and increased synergy leadership half transaction, returned our deploy a QX. plan file second the established and customer finally, and successfully rigorous targets. double-digit of reorganization expanded momentum as with growth to with We HSNi cost sales strong major the team Zulily built the in tremendous develop Qurate. we've significantly Our we integration in our year closed team and expansion

specifically Now looking growth year. momentum QVC results. results at that revenue thrilled Mark all were and with as the QX International, achieving Zulily QVC strong We sales include HSNi. more our of not highest would these note I with U.S., mentioned do the their

with increased QX and basis primarily erosion Adjusting increased had the was Operating and OIBDA XX revenue average slightly. incentive inflation adjusted U.S., X% the quarter. of the our $X inventory charges, income on success by and reflects million actions. higher and healthy volume reduction OIBDA down QVC that of That about deleverage, cost pressure for compensation, proud growth, growth X% and and in we $X and debt These somewhat the investment, returning bps by adjusted in quarter obsolescence in OIBDA with growth ASP up price XX cost to cost. of freight points. offset of XX% and prices. partially growth selling I at in the margin million some Looking X% higher HSNi fourth implementation highlights lower marketing X% declined team warehouse note number I lower bad were just several expense U.S. behind am

and while balanced grow assortments. growth we commitment our that keeping diversity increase our across categories, First, in newness

Second, increased, a growth was heavier to new quality high well. solid profitably outstanding marketing deployed successfully The customer digital result new every require of important and an class measure as engagement platforms. customers level of customer and spend customer of third, we existing and

So little these of more let detail. in each go a through me

that as [indiscernible] line footwear in Rivers In when [indiscernible] for Amazon, home, QX. perfect Bose parts brand from Ray. businesses, the and U.S. fact Philips. Susan and saw categories rate Through of to and particular kitchen from in household a led and more top rest pointed with part sales of and cook electronics, widely largely developing toys, in QX the those Copper gains back prior jewelry recall in the Beauty this third businesses by handbags. in We And discovery. brands the catch Barefoot quarter in fashion, as decline represented decline categories turned philosophy saw of And we kitchen, affecting second Duraflame, except in well as about [indiscernible] Those Keurig, strength felt and focused the largely half generated in brands, Tommy. QX do Dreams. approximately I strength in and we XXXX. That's Electronic and XX% strength increased Joan new Chef, independent storm both are we You'll each and over in jewelry, at to by our business, increase [indiscernible] did reduced Bionic XXXX, and business QX. and and Vitamix, of Thomas growing We and five and led of including all handbags care Shark and in airtime. and Apple, significantly hair win efforts [indiscernible] sales freshness slowed - second from these we XX% pressures Graver gains productivity now trackers year, and down the Roth. the categories, collectively and jewelry items from as declined Peter longstanding of of they had with delivered from solid XXX while brand like mold growth popular continue consecutive five items footwear Bluetooth QX, the KitchenAid

also Martha the response Stewart second half to of launch in the Our got customers very positive a year. last

minutes also X% continue items to in Care we in consumer categories, with brand QVC into and look We FTV expand QVC we platforms. total And culinary across will continue the food XXXX. on engagement as QVC new Skin are Fashion, continuing new and to Black QX. viewing And and add to the increase increase we Garden, to

and platforms And representing of These continue hit mobile sales increased minutes Overall, and sales app of in our XX% XX% Further mobile quarter. with largest purchase in dramatically end. was the customer X% all viewership So reached second The given lower in million number That's XXX year X%, Roku number of of new and simulcast the e-commerce interactive customer with that live unique quarter. quarter content streaming nearly not demographics number number levels digital across increased XX% our the also platforms first us the from engagement on iQ, the risk cutting history, We video in X%, e-commerce in million. Live, increased our in customer XXX% reactivated new in core month, our And and record this with XXX% platforms, digital minutes made XX% a given new their in acquisition. the number Beauty representing below grew of of and respectively. rose nearly e-commerce just levels U.S. at are QX. of include stepped-up growth Viewership class hours Facebook XXX% per on to increase with hours which all-time drive increased viewership our we will quarterly live our combination third Facebook digital customer installations mobile. QX. and the live customers customers of year-over-year in customers also approximately record customers and U.S. network, does own exceeded total digital face investment, viewed streamed viewership behavior. of a new loyal orders customers that of attracted growth In along XXX On XXX% to and session validates our visitors net their increase prior customers of X strong increased successes X,XXX Roku and our video-on-demand we our existing in on onto video in views XXX,XXX of record. of on record new Live on the and X% minutes believe allowed quarter. new had The the platforms. e-commerce £XX and connection our we marketing

And total the total growth in was in growth record and growth Now each customers except new of turning in quarterly X%. a of number the the number quarter history increased of of products. X% customers the team and currency fast sales category our outstanding was every and And to grew ever. the of and QX. unit of up volume X% new and we QVC every customers revenue in ASP number third number with strong and delivered We serve. profits X% market constant International, revenue another generated up our customer Revenue quarters,

consecutive continued momentum, quarter. growing for business currency Japanese revenue sixth the local Our its

sales business gains. year and for OIBDA our Our UK second German start especially the currency and margin Italian in we the joint-venture And softer generated positive our quarter. strong after local to rebounded revenue consecutive a with XX% And strong the generated gains. China businesses

XX% to growth. is sales the Turning the with due and revenue success strong X.X active the XXX,XXX XX% a XXXX customer That for momentum shifted largely the by year-over-year customer order Zulily, is and XX% quarter marketing signups by that's increase QVC's members record to from increase. ending end. to with increased customers, increase member focus Zulily the since year this and proprietary two to driving Also exceeded team are and million expectations, leveraging experience early well encouraged customer as This growing by customers, credit a customer success results base loyalty. the largest program. reaching September, annual over XXX accounts building launched late from in to remarketing purchases card the existing improving card Total and and customer as driven year

order Zulily average overall compared and higher non-card increased customers customers. saw this we with from Importantly, card with values spend

Now experience quarter, marketing business, higher promotions. a driving supply selling lower of costs wrapped and recently I automated mix gross have margin increased did expected pressures Zulily from number of chain cost, Pennsylvania shipping in our higher including the higher deleverage performance as center, - international we prices that average we

Zulily are the the optimizing cost on focused to remain teams XXXX. performance chain confident was improving network and that we we as supply performance move Our

with our customer additional the of is in improving moved believe of ASPs his mid-summer improving Darrell new absolutely Darrell drive are delighted to as and we quarter. the increasing month-over-month on on team, Zulily through ventures and Zulily ASP Lori President, spirit Merchant, get Interim on innovative focused We teams in accounts team. Chief and trend real sales that Zulily's is team in momentum roles team a Twomey, merchandizing credit leading the the Zulily role his the build the to addition, The momentum. took to In new

for the of a customer and or Our product powerful are growth leadership business. the combination passion to capability really is great for passion

experience at the some through our of reflects HSNi. end undoubtedly trends and And in to They HSN underlying me year. distractions challenges X% business December. These turn the the let closed successfully saw of performance in acquisition both difficult did revenue Finally, QX. we decline, acquisition. the the We decelerating

the team per We'll has to to on new we Excluding day, related years. a brands million and recent prior in of in QX adjusted X% HSN primarily reflect HSN's online operating the hours These with the the fundamental do Flats, low that costs, items in in introducing focus improving automation have increased Fitzharris continuing intensity. erosion. of in turn costs. OIBDA assortments, presentation we to and team more to decide and worst business build performance. fulfillment the more in on of the HSN costs believe the transaction sales products on around anniversary as brands, moderating the higher carrying of in and Piney about change benefited implemented and and year margins income $XX center ability also the product Tennessee. have advances improved from always our related building operating promotional We'll also work We items and strengthening problems the balanced Mike incurred on-air mix

of Hill Frontgate, of At Finally, and Grandin QX. cost business. size Ballard and with respectively managing Road, which consists the performance and declined X% the we're Brands, consistent adjusted X% we'll in and OIBDA ensure Improvements, Designs, Cornerstone Garnet sales

improved the fuel and Cornerstone and Designs, catalog team's and of circulation offset a Road, throughout Hill. excluding and price Garnet on Claire additional year basis an Ballard a X%, is direct Ballard The innovative Designs, more at of sourcing. opening each XXXX. in focusing QX and is customer bring Cornerstone ultimately TravelSmith Now stimulus of who ongoing as rebalance Charlotte, retention and decreased divestiture in and investments well acquisition plan retail Atlanta. now leading count our by and The driving excluding rates four week with softness expanded consistent led brand, and relocation sales Cornerstone selective enhancement will overall and gross the turnaround Frontgate improved year Garnet to XX positioning Mall growth Designs increasing as driven XX as the with promotional in-stores for better TIPS the of increases to price revenue as This along prior total of of product Ballard as percent lower for the Grandin is the with products selling by the towards us Stafford, with a her in and of segment team demand. clear profit store and retail customers, marketing well creating declined Park X%, Fireflies business prior Frontgate improved more through the on and primarily and across to digital to points brands. impacts of Hill Chasing increase efforts the sales shipping with XX, margins, price in to Mall full impressive differentiated efficient footprint South providing

companies estimate Investor years. XXX MSO business often the four highly XXX recognize to procurement of spend time And optimization. marketing place we that HSN and teams take in and range As Day on we to and process shown the reductions leadership functions, start integrating integration optimistic about we million new however ramping strong HSNi long-term and with turnaround are opportunities. This our next and two expect will we acquisition we're distribution of duplicate Cornerstone in over operating the synergies are savings, consist

up cumulative Looking and primarily million XXXX at capital million to of their Pennsylvania estimate automated rate CapEx in QVC's about $XXX center. from was performance due to million to $XXX $XX CapEx [indiscernible] that's investments typical $XX million $XXX run spending million, was

in of For the that's for $XXX the Retail anticipate XXXX, CapEx companies Group. about $XXX in Qurate we million to all

ourselves to we focused the and So will retailers, social five from across combine the formation in other we're distinguish as of retail company new continue about we closing, are on our share excited of priorities. best Qurate, media

our coming enthusiasm and in leadership customer extend highest a to I the for joining customer representatives insuring and they inspire go product in First, the And tough across engage of priority achieve inspiring generations. make and Zulily lease QVC fulfillment retailing every brand the second, technology retail our teams will with to appreciation you have proprietary possibilities all goals, third, on-air, focused demonstrated experiences we best and and best want company across engagement, outsides you to for will personal the team of and And popular And global wherever to to absolutely and day; we and all what personalized in-catalog, operate to cost as and my create across increasingly as platform transformation service on at and new the our retail of big points, and online, a most most we consumers we Cornerstone. going I teams are and video the best are welcome that, ethical equally and for corporate ever in company company and we the do through amazing to accessible at our us quality highly to the year affect fortunate teams people commitment The in-store digital we're fourth and with on Mark. operations, engaging our shopping momentous standards. members and will it teams, you installments; of unified the to differentiated you know practices, conclusion highly turn the ways. HSN the together and the play these us. we the difference ensure all for drive and to all Qurate, support newest do to back And our world and finally, can join and launch from at footprint dedicated an

Mark Carleton

about end $XXX At of of principle quarter the of cash in liquidity, attributed billion Liberty the the talking amount Group $X.X the million Mike. investments liquid attributed debt. and Thank you, and Ventures

at spilt Broadband equity one. a capital billion As place holdings our the as to billion the $X quarter some to against part And will billion and that, margin and respectively reattribution the of of The will transaction $X.X starting we of value Liberty including group Greg. of structure of in was quarter. GCI in back off previously that it and public securities loan Liberty shares with Liberty part hand Broadband put as GCI end method mentioned the I a the of other attributed $X.X public you the and the see

Gregory Maffei

hope And GCI would have I'd Liberty it who questions. you Liberty. earnings interest and Liberty in And thank I Mike, will you, Qurate shareholders Interactive be up we'd Interactive. in our your like last our with open Thank Liberty family that loyal like call. to Mark. have for continued this operator, to and the

Operator

Eric Instructions] [Operator start you. will with We Thank Sheridan from UBS.

Your line is open.

Eric Sheridan

the of a is so closings what you Maybe I are the ongoing? and you some out then as on than into sure go as think rate business understand few wanted of allocation be but of slow Thanks tax thought SG&A, rate seen the P&L? should And on a bit rate, that want just Thanks How integration at worse the you've and effective next much. year couple HSN message tax about just end we the percentages, then units Cornerstone I the that that will And over everyone. how corporate also maybe maybe will for cash of the on double-digit the in versus on these Cornerstone the much just reflected of HSN one-time results and that how be we look understood those historically Mike? the results little? to those make down quarters but to low the might mean tax was little

Michael George

Thanks Eric.

our first and last the through changes question. hard massive to impact Cornerstone, obviously exactly the Let me few the take we the attribute but really were year. HSN with of HSN the partners making of it's months acquisition,

our as going that volume sort deceleration do I of think a for kind we put how And the to to distractions business timeframe all to we reflects have the or of doesn't the a model makes So takes evolve I'm cycles on and the of as the most some we process. overnight in sure the first exactly turn impact that the it to that long hesitant is. think what's turn sense. half that

see years has in the struggle you I quarters of a you've Germany assume just, can a in that. when are from impact as few approach QVC make over as we you that much the get to think that can you the occasionally and struggles building time take few let's seen is business pretty what U.S. a another and over healthy And Japan, or more usually meaningful we methodical quarters a assortment. sure

confident and are HSN are about where we So Cornerstone headed.

is continue about the but think opportunity to cost the manage side just on good will really Lots big them. are to in kind to we more play of model. We proprietary opportunities of well quarters of line. Cornerstone we down the and And to take accelerate healthy Those source take biggest out, excited There we the can is return revenue as do the we part there side. performance Frontgate very some protect direct where much as feel tightly of the opportunities. a portfolio moving by

Eric Sheridan

Okay. Great. you. Mike, thank

Mark one will the maybe the do of timers, acceleration much reiterate On it options? how can you of

Mark Carleton

$XX so those and Yes. Group the And that on at total really of acceleration Ventures, QVC million Liberty the options. $XX million was there is at one-time

Eric Sheridan

rate the Thanks Just last tax rate might mean for to tax guys. tax going the I understood it want the sure, also just on one at as messaging P&L Mark what on forward. that I well? make QVC and

Gregory Maffei

or or the will actions the to deductions over they our about larger some this of through time more to accreditation generation the XX% EBITDA. What income. think reduction bonds become debt either that have relates to over shield that depend And of time. to we're toward what with by exchangeable Part of going mitigate tax on degree that interest saying is, we ability excess exceed

is target. a moving to anything? So Albert add of this you do somewhat want

Albert Rosenthaler

thing be. I to we the will - to able otherwise a remember. to one to our the are excess deduction, to numbers continuing it's are going work think To be but future, extent what think claim we through those the I just that in

Gregory Maffei

you do Mark want to add anything?

Mark Carleton

because statutory before, by what all go overall on are interest I drive impacted the down effective amortization statutory limits but just rates the just statutory is will be rate tax effectively the of down. I what is But the and those from on were think effective the will rates the down components what and it of will think rate be because it it. will by

Eric Sheridan

Perfect. you. Thank

Albert Rosenthaler

Thank you.

Operator

from question of from We Balsky Bank to our will go Heather next America.

Your line open. is

Heather Balsky

margin QVC in Thank you morning. good don't question. I year? gross and to quarter? talk guide, inventory What warehouse that costs how - taking versus US distribution you just how and from the know think of the was about Hi, in next pressure guys but Can for you obsolescence

Gregory Maffei

usage period to inventory prior both of on think growth be of Sure. it sensitive about inventory way is, the based I change inventory well period liquidation to the your It sort current of Thanks activity. in rate inventory obsolescence The tends in as Heather. will your growth. and of charge growth fairly that as

and over at we something would indicative be unusually will QX U.S. decent that charge and we're tend on expect add low business. of around amount what reflects in long-term time. inventory the that from we some look inventory. the always that drive of in But had to of forward inventory growth. especially a amount see they not attention It's It we I of inherently fair that about obsolescence reflects quarter-to-quarter the little fact QX just as that So don't a would does bit number, a I we pay to. usually anniversary and bounce they impact an looking really say XXXX a concerned charge

when on you're some inherently just impact have fright touched units on with margin ASP gross of a shipping on other lot you The so declines, fewer have and out for dollars deleverage the line. as warehouse do we and

continue pressure were rising inventory the be both somewhat that then should obsolescence declines. - ASPs. of period latter those and ASP the you more will things gross So in that seen in good mid the quarter. us. to our have we're into to underlying then very kind business health fact of felt over reverse very It margin, the two the talk the a debt The that extent that when the we We've felt margins. will to stable in long-term. neutral And about of product you're actually And product

Heather Balsky

thinking Thank number reinvesting, some are talking any how retailers incremental you. of form of the And their fair business are tax spending of dollars? those of as benefit follow-up, and you into a

Gregory Maffei

shy been retailers never think The return say healthy investing cash that, flow way we've it reform about And but where to about of and fortunate there's enables wonderfully you a reform. we've and a so been balance would that one we think tax healthy independent tax I sheet have is, the for we investment. of further few

investments that what And over the is done, investment really into more working community we've And you've this an we historically investments, do see we're areas making e-commerce kind good marketing. the to lean market. we're last And about attention the want at will of and You for as it the sure Certainly, continue tracking into those leaning teamwork we'll then will. in we're into about those some matter to which come and continue leading to beyond building technology kind doesn't what feel resources decisions priced sure business make of as that several marketplace. that. example seen to paying It's in competitive We months. the us, so of we they

Mark Carleton

fueled half the Zulily. came acquisitions QVC alongside only generation in And cash if share flow charter from cash buying my which like on you of spent if Ventures generator. originally could in reinvested effort, look reiterate was historically we free repurchase, the investment. Like I that the that also cash point, reinvested huge effectively not that Liberty in have the been the money we've a We is but

So think an that to a of lot do flow there things that opportunity I is with attractive. cash are

the that in that Mike we with said we've have but of business. rate for foremost and things well if the other business great can't find I in we'll first done think return, a find and look past we as the things

Heather Balsky

so much. Thank Great. you

Operator

And have Yruma Markets. Capital Edward next KeyBanc we from

is line questions. Your open to

Edward Yruma

QX adjustments you've multi-quarter that for the see of been? that that past a the either months of how and you. gains any there some you since of do Easy obviously follow-up questions. any some as QVC. and is of share some kind H? risk a from by over it's at impressive view do I it And a use Thank that similarity been a my very guess Hi, tool how H, you strength about we the while morning. performance good made it's XX the spoke Pay look first Thanks issues driven you at When taking Mike, turn

Gregory Maffei

the for questions. Thanks

of QVC be now that look just share gain at We So to QVC as numbers, to than historically between actually that performing were believe acquisition inside process HSN we versus and was we and I to think don't for believe see moved customer major less continue we the store that us. we tends the pleased kind expected. overlap through the HSN, find We that.

we companies don't So to the largest consumers majority or both businesses shop. cross of

people niche and so its if always of opposed H you that to fairly believe more to And really and we Q. shopping the share shift business will in category were as between total our growing and about getting attracted more way that

high the versa. serving we to attractive things We I'm more and grow there the Q in chance and and vendors resources are that a to we of So combined of about fixed the get brands to introduce talk to H the is all not at the all total much able customers sort effected and grow customers scale worried do leverage or pie. vice be that more a just Q to

think a QX, I going managing seeing been of stable quarter think so keep move you Easy try that - team the or now of slight as we stable I and And are would sort keep would forward. that forward. headline the faced but stable P&L four similar pretty over seen good tightly. excited are issue it of the you few had think somewhat is Pay partner the need were number On of debt you relatively the some guide increasing you improve year say course that to pretty going I that for I or and I to HSN to have think terrific to to quarter metrics rates the also quarter have that bad they of now I the like we business and characterization things have on we it HSN Easy were been three the Pay, HSN has say four balance been modest very better with fair of think more with payment on QVC so

Edward Yruma

much. so Thanks Great.

Operator

next Fuhrman from Alex Craig-Hallum Group. question And from Capital our comes

is line open. Your

Alex Fuhrman

my question. the taking HSN? QVC for some gotten hear much very of you to properties? sell you've you those from lot and had network particularly that curious on perhaps on the and in Thank some be a vendors feedback of with international to interest what or product personalities appearing If introducing QVC's brands Great. I'd

Michael George

on about Yes, I QVC that can vendors simply has getting thanks about QVC asked on Alex. HSN. say every most almost vendor getting HSN of asked and

that in excitement lot letters the of you would So there vendor as is community. definitely expect

for portfolio want But approach not vendors thoughtfully and the growing two that are product trading we U.S. and it you total us at we big do it on discrete both And opportunity QVC sense vendors QVC just looking on pie so similarly the looking a is businesses. cross keep to haven't the whatever be International. the off again there reason on are as but so HSN HSN for QVC go international mentioned internationally made HSN vendors that at and the that make separate so to could

than give of have build really food to food of way but strong what opportunity and opportunities some build stronger there's other much a you aren't We But a just a growing has was probably micro business, accelerated. couple been lot work business HSN. at of that examples build QVC new to with

and direct enormous now could the we capability going through where know excited all launches, own They're about a that opportunity build - most examples behind really they products think by being Including but brand half that food going our to You go gourmet recent appear business anybody had product build great team developed dozen success that. to be fashion the a new now going how be to and HSN like sourcing developed are building source all networks successful great for back one sourcing median that's of don't of launch the HSN. they for government say to compelling vendors our in QVC. HSN want we of to a new team. new they'll proprietary The year. I Three QVC's [indiscernible] just products introducing in assortments some those were and both

ways sourcing our from still keep leverage separate. product portfolios very vendors capabilities get a good of lots the think I and So to that drug

Alex Fuhrman

very you Mike. Thank Great. much

Michael George

Thanks.

Operator

And our next from Ratcliffe from question comes James Evercore-ISI.

line Your is open.

James Ratcliffe

Thanks morning. ones could. the Good I for question. taking if Two quick

going QVC FTD be the for lets at to that rational LendingTree only looks really GCI non-cable on all the that's behind Liberty is and like of stake. assets First which

to allocate be I So transactions and primarily the second to complete out why two charter well cash. that standalone which rational vehicles what Liberty driven can them there GCI not guess are broadly less is barriers you have talk taken And you we if would ones as Thanks. more together? the are having about going there not for point separate

Mark Carleton

Sure. value has FTD, Q asset of offset the gains of the become declined more less On as rational tax ever because current market. it's the attractive. it's so and more have frankly being loss a we take our of to than higher if investment There's capital to QVC, Thank It more you, at has meaningful putting it in frankly where FTD marketplace. and a James. over

and that on ventures have good Liberty to marketplace, the them like a reasons led two. necessarily become particularly There call GCI as some ownership management holder. that side makes LendingTree in The time business, team. and perspective not As largest we the job. XX% time venture we having our optimal does with it LendingTree, side, we either. GCI will and the probably over We've a regulatory broadband side assets hell Doug board Liberty sub of formally qualifies far sense it's Liberty the fit from as fact are over position done have and will well what why given a

that obviously ownership. plan not It to they happen. XX% a have have ownership. We intent. they I current understand year. after just have merge but said, happen year no could We in them, a or than It's that and common options. My understanding the inconceivable plan is intent we less have as enough passes explored common no could But or

James Ratcliffe

Thank you.

Operator

And Barton B. our question next Crockett from Riley from comes FBR.

open. Your line is

Barton Crockett

reacting question. for to to QVC that? any cuts. tax seeing spending Do Thanks curious whether the at the all anything over see you the from from expect that Are Great. be about I you was to HSN the energy and Okay. seem year? customers taking

Gregory Maffei

comment kind in or don't customer I want performance always to on as of Barton, response. period

that So on I over any tax the - like. I to time we what make premature think costumer those see expectation have are cuts, to how we'll responds look have think but might to any

Barton Crockett

Okay. All right.

let try me So different question.

think some if I being you skinny in really the think tapped at your QVC what could I like there. swings there, those the past, that TVs. the that equity I you could the terms of things if the least your wondering I some was just YouTube, on move would you I platforms those know interesting. there? the The potential like bundles, is know an not proofing be updated guys have One but got guys innovation you've And I yet bundles investors customers that opportunity putting think future see do aren't of on to of And of to said on in timing able do the on as in you

wouldn't you is that to there? there guys been aren't not you is there? just do reason you think there? your or resistance had while long Or they've Is it's it before any worth how those on it get if want put Just customers any you your

Gregory Maffei

be intrigued be we great will is innovative to all like space. a we we definitely reason these I think, need do But on skinny by question. It's bundles. there. - think, There I we'll we're Yes. now there. to those some see. bundles things We can't get? How that big do would

is we're that well would other a So good suggest at any a when that those some those discussions that There been swing and swing the example, opposed more to in all say than don't have audience. targeted bundles it. things audience the to heard would targeted more we've all male in be as nothing you maybe anything Clearly of bundle on. little a - discussions ongoing them. space I the update of players of younger specific have of matter would in I with

our evolve but at strong our time is compelling That fit both high customers today, of that confidence where migrate that ours isn't and can providers customer. that really maybe as priority more line is to reason absolute a be less could little us customer platforms, kinds the whereas we of as those We today. there for will because it So soon was especially to economic on looks put the as know those a platforms. us in our least a are where or say providers over said, bundles other with

not believe be and the migrate rationale economic looking be we chooses opportunity, of there. those If we've as of all when. simply will think a at So always there on risk. them then customer to only to I is platforms them matter cannot I no just

Barton Crockett

That's you. Okay. great. Thank

Operator

And Bazinet our Citi. next question Jason from comes from

Your line is open.

Jason Bazinet

to had just is money rate think just get for a more that I end, two Day put to federal that interest federal particularly to QVC sending you meet in drop dropping? XXXX? that's the guys year million compensate questions of Between tax tax the shield Investor the after on going release cap that holders I compensate the about for QVC out to deductibility Thanks. exchangeable Or and worth to related the less. the punitive more Was any the QVC tax. rate $XXX

Gregory Maffei

to on this? Albert do want you comment

Albert Rosenthaler

Sure. in account the change amount the to amount the In be paid be taking prospectively, interest that the rate with will connection limitations connection are the reattribute. and determining both reattributed, into the on deduction we in and with

Jason Bazinet

question Great. about leverage. your Okay. you second my as then is think guys And

whatever dollar net you cap to relative becomes yield just is more tax me you at every capital? cost this way of Are and you're that put it looking it is just interest do to time you debt about your through or looking with for have important, go can relevant. it a associated - whatever think this we with let of As more

Mark Carleton

is shot. other - to proceeds, the is it's about have it's can only that purchasing I think of you the a What purchasing issues rate is there the what fact of believe black because what think white and the the a you're debt? on if it you talk are to the do do that I use I of could not around is deduction. and say deduction, We're you amount fact elimination a not think sure income I there that one that that and going you in the make have income, income non-deductibility streams it's deferral purchasing debt. other sufficient don't the sit alternative

the is Here calculation.

How factors are Albert, going and I they many to much know we weigh if anything that try in time don't of think how there I you or defer else. are exactly? real it have fix the period any deduction. one

Albert Rosenthaler

extent do acquisitions we to we business. or the What can to able global future is make

offset income. We will deductions are have which incremental that

Jason Bazinet

Understood.

Albert Rosenthaler

monitor of And so as go something that forward. will we kind

Gregory Maffei

tax Right whatever whatever that of cost look - certain the look projecting. and after you against we be financing we're can at we using at we're returns

impact a the to what of be. finance company into way or a we might acquisition particular restrictions factor or the best division an those So

Jason Bazinet

Understood. Thank you. That's helpful.

Operator

And Anthony Victor last Aegis Capital. question from comes our from

line is open. Your

Victor Anthony

Thanks guys. performed Two expectations. international above way questions one the which business, on

the on wondering if Thanks. improvement I specifically in So on if - book if the this wondering, things me that and quarter the just Mike, drive seen better, and the ones row is any what countries, one. which I'm performed on wrong you're a second Correct could you've TV broadcast the once was you doing viewership platforms. in an there's talk on to which performed the viewership? different to minutes that

Gregory Maffei

the Thanks. for Thank you question.

balance every every the at excited Yes to performance it's we did well other did have that In terms time the market is about of get the hard just same things how the been single international profile, keep across and working in what markets. growth International market. at

bit So the performance and UK, softer back say started few good a little I the very a we I been was would across after about on board. quarters. year. it came would particularly has standout balance for Japan out strongly feel say the

of is I particular say big strongest two those on in consistency So our the of kind balance takeaway performance, I probably would probably but that across think international and growth businesses. more the the the

performance strong in in and is saw not still was rate we growth very good the While Italy, it markets. nice Germany margin and quite those

absolutely ways taking So increasing all we broadcast quarter second get viewership, live these we you're the stream that account, it like minutes right, we're TV platforms traditional viewing minutes into balance. the and on seeing is before On the other on platforms. where

turn people great broadcast know see This to conditional view stick and view, engaged point they platforms both the going of this it's products, So on we're on turning to cause-and-effect and we and probably one compelling they around engaging what where TV, to and when It's program any to thing. much working. be buy. the new kind hard me operating but we they're

it's me we what destination product lean to on So strong. much continuing exciting shows programming, business the getting every mix, networks, call a around to large while of into of newness on certain Getting and attract kind the week. that diverse more getting we in reflection are just our audiences an tuning

I to been those think very things all helping nice some are performance. what's contribute usually

Victor Anthony

if a current the which quarter, from shooting. I I get in events school and have may. as And two Florida follow-up Olympics as the is media I the well

in I on minutes? what curious guess on Just viewership the is impact

Gregory Maffei

have on we can't shared viewership. kind to impact Again But I connected comment current about on when what I be current quarter, that to that related always the externalities, events. specific of anything like on you the some it that past calls there's to or want

Victor Anthony

Okay, thank you.

Gregory Maffei

Thanks.

Gregory Maffei

our question. was the I earnings on Interactive with Interactive of the announced November XXXX I said and we're - I joining the believe formation through call earnings which actually call was want Liberty in I we Liberty Company. as Operator, to the of I announced,

good So both Hope interest run, I it's you and Qurate will thank going and have forward. a GCI Liberty for participation. been continued in pretty want to Liberty all and your you

Operator

today's your concludes That participation. for Thank conference. you

You may disconnect. now

Grizzly Merger Sub 1 (GLIBP) 1 Mar 182017 Q4 Earnings call transcript