Edgio Inc (EGIO) 2017 Q2 法說會逐字稿

Good afternoon, and welcome to the Limelight Networks Second Quarter 2017 Earnings Conference Call and Webcast. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Dan Boncel, Limelight's Chief Accounting Officer. Please go ahead.

Good afternoon, and thank you for joining the Limelight Networks Second Quarter 2017 Financial Results Conference Call. This call is being recorded on July 26, 2017, and will be archived on our website for approximately 10 days.

Let me start by quickly covering the safe harbor. We'd like to remind everyone that we will be making forward-looking statements on this call. Forward-looking statements are all statements that are not strictly statements of historical fact, such as our outlook for 2017 and beyond, our priorities, our expectations and our operational plans, business strategies and feature functionality announcements. Actual results could differ materially from those contemplated by our forward-looking statements, and reported results should not be considered as an indication of future performance. For more information, please refer to the risk factors discussed in our periodic filings, including our most recent annual report on Form 10-K. The forward-looking statements on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law.

Joining me on the call today are Bob Lento, our Chief Executive Officer; and Sajid Malhotra, our Chief Financial Officer. We will be available during the Q&A session at the end of the prepared remarks from Bob and Sajid. I would now like to turn the call over to Bob Lento.

Thanks, Dan, and good afternoon. I'm pleased to say this was another great quarter. Our 2017 plan focused on accelerating revenue growth and margin improvement by continuing to focus on the success and satisfaction of our customers. The first quarter results were strong, and this momentum continued through the second quarter as well. Revenue was up 4% and was our highest quarterly revenue in over 4 years. GAAP gross margin was up over 390 basis points over last year, and we reported our highest-ever non-GAAP earnings and adjusted EBITDA. We are confident that the trend of solid year-over-year improvement in our financial and operating performance will continue in the second half of 2017. We are very pleased with these results. We continue to build a solid foundation and believe that our strong financial performance is sustainable, positioning us well to achieve our financial goals this year and beyond.

Customer satisfaction continued to improve in the second quarter. Customers trusted us with more traffic, and we again delivered record traffic volume that was up over 20% from the second quarter 2016, while incident tickets were down by more than 20%. Employee satisfaction continue to be strong as our attrition levels remain low, and pride in Limelight continues to grow.

During the second quarter, we made good progress on expanding our network capacity. We completed our expansion goals for this year in India, growing our capacity by 650% in the last 12 months. We also successfully upgraded our presence in Canada and continue to expand our capacity globally through software enhancements. We launched projects to add capacity in South America, the Middle East as well as South Africa during the second half of 2017. Based on feedback from our customers, these geographic locations represent an important opportunity for additional growth.

During the second quarter, we continue to improve our network performance and expand feature functionality. We deployed a tremendous amount of software changes, generating more software innovation in Q2 than at any other time in Limelight's history. Through these efforts, our network efficiency and performance are at an all-time high, and we delivered differentiating software features at a fast pace. While improving performance, these innovations also drove down the capital intensity of our business. We are able to expand both our services and network capacity with fewer servers, supporting our belief that we are the greenest and most efficient CDN in the world. For example, over the last several months, our server count is down slightly, while our capacity is up by more than 2 terabits per second. I'm proud of these efforts and excited that we have more to come in the second half of 2017. We have a number of important network efficiencies and software enhancements scheduled for release over the next few months that we expect will be important to our customers.

During the second quarter, we announced a few product and research-related development that I'd like to share. In April, we introduced Limelight Security Alert and Limelight WAF Express, 2 new additions to our cloud security services that enhance protection against attacks on websites and unauthorized access or theft of content. We followed that up in May by announcing breakthrough performance and functionality advancements to our Limelight Orchestrate Platform that cuts rebuffer time by more than 25% and provides superior quality of experience for customers over any network connection, especially in emerging regions where lower-quality bandwidth can create issues. We also developed new software technology to accelerate and improve the consistency of video delivery speeds, which will lead to higher end user satisfaction. We believe this new technology makes us the highest-performing video CDN in the world. To prove it, we introduced the money back guarantee in Q2 for new customers.

In June, we continued our thought leadership research with our State of Digital Downloads research report, the latest in the series of semiannual surveys that explores consumer perceptions and behaviors.

Looking ahead to the -- at the remainder of 2017 and beyond, we will continue to focus on our long-term strategic priorities: creating customers for life, growing profitable revenue while generating cash and improving our position as employer of choice. I'm very encouraged by our solid momentum on these priorities over the past few quarters, and I expect this trend to continue. Customer demand is healthy. Market trends are positive, and our customer employee satisfaction continues to improve.

With our core business stable and growing, we are exploring potential new higher-margin revenue streams. Let me talk about 2 opportunities: distributed computing at the edge, and data mining and analytics. We believe that our IT assets and expertise uniquely position us to solve complex business problems. We intend to use our platform to underpin our customers' distributed computing needs. We are conducting trials and validating the business model with several large customers. This effort could add meaningful revenue in the years to come.

Similarly, we collect a wealth of relevant traffic-related information, over 100 terabytes of data per day that we believe is valuable to our customers. We are currently exploring ways to monetize this important data to our customers in support of their analytics efforts. If we are successful, these efforts will add to our growth and profitability. They do not require heavy investments or inorganic pursuits. We look forward to sharing our progress as these initiatives develop over the coming quarters.

In summary, this was another very good quarter that I believe is sustainable given the foundational changes we've made over the past few years. Our performance in the first half and our increasing confidence for the second half demonstrate that our strategy, focus and discipline are working. We have a strong team in place that is aligned and focused. I'm confident about Limelight's ability to meet our goals and strengthen our competitive position to be a more reliable business partner and a stable and secure employer. Our goal is to grow the company responsibly and profitably and generate above-market returns for our shareholders. I'm very proud of the work and commitment that the Limelight team demonstrates every day.

With that, I'll turn the call over to Sajid to discuss the second quarter's financial performance in greater detail and our guidance for the rest of 2017. Sajid?

Thank you, Bob, and good afternoon, everyone. We are excited to report another excellent quarter in terms of operational and financial results. As you recall, last quarter, we achieved many significant milestones on revenue, GAAP gross margin, GAAP net loss and adjusted EBITDA. We continue to build on that momentum and in many cases, exceeded the results from last quarter. The second quarter was our highest reported revenue since the first quarter of 2013. We continued our trend of reducing our GAAP net loss. Our non-GAAP net income and earnings per share and adjusted EBITDA were the highest we have ever reported in our 10 years as a public company. All this reinforces our view we operate in a healthy and growing industry, and our position in it is improving at an accelerating pace.

Let's take a deeper dive into how we achieved these results. Revenue in the quarter of $45.4 million increased 4% year-over-year. We experienced foreign exchange headwinds in the quarter of approximately $300,000 or almost 1%, primarily due to the devaluation of the British pound. International customers accounted for 37% of total revenue in Q2 compared to 40% a year ago. And approximately 17% of our second quarter revenue was in non-U. S. dollar-denominated currencies. Our top 20 customers accounted for approximately 65% of total revenue in Q2. Delivered revenue with our top 20 customers in the second quarter of 2017 grew 14% compared to the prior year period. As I said last quarter, we remain focused on our largest customers, and this focus is being well rewarded. We continue to win market share in the CDN segment we serve. This separation from our competitors is increasingly based on quality, feature functionality, account management and total cost of ownership. We are maintaining price discipline and are confident in our competitive position.

GAAP gross margin was 47.1% in the second quarter, an increase of 390 basis points year-over-year. Cash gross margin was 57.9%, an increase of 340 basis points year-over-year. We continue to see year-over-year cost reductions in our colocation fees as a result of server efficiency and throughput improvement. We believe there continues to be opportunity in this area with technological advancements of the equipment installed in our network as well as software enhancements. We are also focused on reducing our bandwidth cost through changes in our network architecture and contract negotiations as a result of increased volumes we are experiencing. This is very, very strong margin performance for the first 6 months and follows a huge improvement in 2016. We expect margin expansion to continue throughout the remainder of the year and are substantially increasing our guidance in this area, which I will discuss a little later.

Total GAAP operating expenses were $23.1 million, which is an increase of $800,000 from the second quarter of 2016, and excludes the $54 million settlement provision with Akamai recorded in the second quarter of last year. G&A expense decreased by $400,000. Sales and marketing expense increased by $900,000, and R&D expense increased by $400,000 year-over-year. With the strong performance, variable competition expense is up significantly and has captured an operating expense across all departments. At the same time, we had the positive impact from a onetime state sales tax refund. The positive and negative impact from both of these items is essentially equal in the quarter.

We had net interest income of $100,000 in the second quarter of 2017 compared to $300,000 of net interest expense last year. We have other income of $150,000 in the second quarter of 2017 compared to $100,000 of expense last year. This change was primarily due to foreign currency fluctuations from 2016.

GAAP net loss was $0.01 per share in the second quarter of 2017, and we achieved positive $0.03 in non-GAAP earnings per share. This is our best non-GAAP net income and EPS ever reported. In the second quarter of 2016, we reported a $0.56 GAAP net loss and a $0.01 per share non-GAAP net income. Adjusted EBITDA was approximately $7.9 million, up 27% from $6.2 million in the second quarter of 2016. This is our highest adjusted EBITDA ever reported.

Moving to the balance sheet and cash flow. We have cash and marketable securities of $60.6 million at the end of second quarter, down just $200,000 from the first quarter. Driven by improved profitability, cash flows provided from operations would have been $8.7 million, excluding the $4.5 million payment under our settlement agreement with Akamai. This compares to $6.8 million in the second quarter last year. We spent $4.7 million in capital expenditures during the quarter.

DSO as of June 30, 2017, was 52 days compared to 55 at the end of the fourth quarter of 2016. We typically expect DSO in the range of 50 to 55 days based on our global revenue distribution. We had approximately 109 million shares outstanding as of June 30.

Total headcount at the end of the quarter was 533, up 21 from the second quarter of 2016 and up 23 from the end of last year. We have said we intend to increase headcount to support our sales efforts in addition to overall operational support.

Bob touched on our improving capabilities and initiatives in edge computing and data mining. Let me just expand a little on how we are improving our capabilities and expanding our addressable market and why we picked these adjacent opportunities. We have been very focused on improving our core delivery capabilities. We have worked very hard to ensure stability for our customers. We've also undertaken projects in what we call first, middle and last mile of delivery. In the first mile, we have improved how we get content from the customers' origin. This includes our recent innovations in our object storage product and allows customers a no-touch transition to using our on-network object storage system as their origin even if they use multiple CDNs for delivery. In the middle mile, we have completed projects for the improvement of efficiency in our software, and we have scaled up our private backbone network. The use of our own network is a strategic advantage as it allows us to carry traffic directly instead of relying on the public Internet. Customers get the benefit of a secure private environment and assured network delivery. In the last mile, we have significantly grown our interconnection and egress capacity and have introduced methods to prioritize latency-sensitive traffic. In addition, we have tuned our software for our content for our current and future hardware mix from storage, to servers, to switches, to routers and beyond. This differentiates us. This gives our customers and their customers better availability, higher throughput, lower latency and higher quality. It is our ambition to deliver the best Internet experience at extraordinary efficiency to the actual end user clients 24/7 by 365 anywhere in the world.

Remember, we cater pretty much to every use case there is, web pages, firmware updates, live sports, premium video and so forth, and our software includes a number of special features in order to serve our diverse and highly demanding user base.

Now let me switch to expanding into adjacencies. We test to seek out the biggest opportunities where our existing investments and infrastructure give us a head start with limited additional investment and a sustainable competitive advantage. We have scalable, distributed, Internet-based, standards-based IT assets. We use them primarily for delivery of our content, but they can be rearranged to solve other technical business problems. We are exploring with our customers ways to solve difficult problems by leveraging different combinations of those assets. We have 7 unique IT capabilities to leverage: CDN, globally distributed points of presence, more than 20 terabytes per second of ingress and egress connectivity, a secure private backbone, worldwide object storage, dynamic rules capability and the edge and real-time analytics. These capabilities are backed up by a team of advanced service architects who can help our customers combine the capabilities to solve their own unique business problems. This is edge compute and more. I think the exciting thing we are doing is unbundling the component parts that we use to provide CDN service and using the parts in any combination that our customers value. We will start our effort on a project-by-project basis. We expect that as we work on projects with customers, we will identify repeatable products to efficiently make available to a wider customer base.

Similarly, today, we are focused on transmitting the information in the most efficient manner, the purpose of our content delivery network. As you can imagine, the information about the content itself is a data-rich environment. Today, we process 1.5 trillion Internet activity records a day, performing some 17 billion computations a second across our network, resulting in a vast capability to support real-time analytics. We're seeing how we can work with our customers to help them use this data to provide a rich, targeted, personalized experience. We have both real-time APIs and access to our analytics data stores. Lots of opportunity, and we are at an early stage. We believe these pursuits can be material in the coming years. We look forward to sharing our success as these initiatives develop further.

These opportunities provide a lot of excitement about the long-term future. I'm equally enthusiastic about improving near-term results. After putting in place an aggressive plan for 2017 and raising guidance after the first quarter, our current forecast suggests we can again raise guidance for the full year. Based on current conditions, for the full year of 2017, we are increasing our revenue guidance to between $180 million and $182 million, up from previous guidance provided last quarter of between $177 million and $181 million. We now expect gross margin to increase by more than 300 basis points over 2016 compared to prior guidance of a 200 basis point improvement. We are also raising non-GAAP earnings per share to be between $0.05 and $0.07 per share. Adjusted EBITDA range is also raised to $24 million to $28 million from previous guidance of $23 million to $27 million. Capital expenditures will be approximately $20 million, unchanged from previous guidance.

Our company is performing at its best level in years. Revenue at $45.4 million was the highest in 17 quarters. GAAP gross margin of 47.1% was the second-highest in company history and was up 390 basis points over last year. Cash gross margin came in at 57.9%, second-highest since 2008. GAAP net loss of $1.6 million was the lowest in 20 quarters. Non-GAAP net income of $2.9 million resulted in the best non-GAAP net income and EPS performance in the company's history. Adjusted EBITDA of $7.9 million was the highest in company history. And if we meet our upward revised guidance, 2017 should be our best overall financial performance ever.

Some time next month, we will be prepared to share with you the potential long-term financial model for Limelight. Over a short period of time, we've made very consequential improvements to our operational and financial performance. At the same time, we are convinced there's a lot more to be done internally, and our industry is growing fast and remains opportunity-rich. We have architectural advantages over our competitors and remain focused on the core CDN business. We see adjacent market opportunities using our asset base. There is always risk. However, we believe the opportunities far outweigh the risk, and the possibility of creating significant shareholder value from these levels is real and tangible.

With that, I'll open the call for your questions.

(Operator Instructions) Our first question comes from Michael Turits with Raymond James.

This is Austin Dietz on for Michael. So your competitor Akamai began to talk about going to market a little bit more aggressively last night. Are you beginning to see any evidence of that?

No, we don't really see any change in the competitive landscape. I haven't had the chance to fully digest what they announced last night. But in terms of customers that we work with and the activities that we have going on regarding acquiring new, we don't see any significant change to the competitive landscape.

And I'll just add to that. Our industry has been competitive all along. It just seems that the players have been different. At some point -- at different points, we've been the lowest-priced offering. And at other times, it's been others. It is, obviously, surprising to see the largest player with incumbency and brand and all of the money that they spend kind of have to revert to the pricing point that I hear you repeat. But at the same time, we are more focused on total cost of ownership and on building a premier offering for our customers. And that seems to be going well and paying a dividend.

Our next question comes from Mark Kelleher with D. A. Davidson.

One quick question is were there any 10% customers in the quarter?

Yes, there were. Same as the first quarter, I think Amazon continues to be a 10% customer in the second quarter.

Okay. And how about -- can you give us any insight into which sectors were doing particularly well? I know -- referring back again to last night, the gaming sector seemed weak. Are you seeing that or not?

Not really seeing weakness there. I would say, in the video, whether it's video-on-demand or live streaming, we're probably seeing the most amount of growth there. But for us, I wouldn't call the gaming or the software download, which would include gaming unless you're talking live gaming. We see those as being healthy for us. And I wouldn't say there was any segment that was particularly weak. Strength coming from the video side, for sure.

Yes. Traffic is growing, Mark. And I think what you might have heard is the even years tend to have the big gaming events like the Olympics and FIFA, et cetera.

Sporting events, yes.

And so that seasonality, obviously, is absent in the odd years. But there's plenty of traffic in the industry.

Our next question comes from Jonathan Charbonneau with Cowen and Company.

At this point in the year, how much visibility or line of sight would you say you had into 2017 revenue guidance, especially given the fact that you increased it again this quarter?

Jonathan, I think we started the year off with a pretty good view of what history is, what traffic is. Our customers are telling us what kind of traffic they anticipate giving us. We then go ahead and model that and build a plan around it. I would say that we feel pretty confident around the numbers that we've suggested here. By that, I mean, we obviously can have variances. But I would be more susceptible to variances within the quarter, so a large software upgrade or a firmware upgrade if it happens in -- or a launch of a new product or a new game. If it happens in Q3 versus Q4, that can kind of shift revenue between quarters. But I think overall, if we continue to perform, we should make these numbers. That's the way this business goes. You had to go ahead and perform every year. We have agreements with our customers. But I think of them as hunting licenses. Customers go ahead and suggest what commitment they expect to give us and what kind of traffic, but you have to go earn it every day.

Yes. In terms of the guidance, what sort of traffic growth are you expecting within it for the second half of this year? Is it basically similar to what we saw on the first half or it's a little bit different?

No, it should be similar, with the exception that Q4 -- seasonally, Q4 is always the highest quarter of the year. So I don't think we're anticipating any different pattern this year than we've seen in previous years, yes.

So here is what is different, right? I mean, for the last 2 years, Q3 has not delivered for us. And so now it's -- I'm almost a month into Q3, and we are very focused on making sure that we don't repeat the mistakes from those years. And we feel good about where we are. So we kind of suggested to you that both these quarters can see revenue growth approaching 10%. I would've said 10% or more if I thought that, that was the number. But I think we can get close to that double-digit number from a revenue growth standpoint in both of these quarters. And I think the third quarter is, when you look at it, if we are able to deliver that, the biggest difference compared to the third quarter last year.

Our next question comes from Sameet Sinha with B. Riley.

A couple questions here. So if you exclude the litigation expense and the payments to Akamai, your free cash flow margins were kind of 22%, which is pretty good. Can you give us a kind of a range for free cash flow, excluding these 2 expenses for the full year based on your guidance? And my second question is you spoke about bandwidth and colo. That's, if I remember correctly, about 30% of your cost of sales. What is the potential there? And how much -- what sort of efficiency can you gain from that? And then I have one follow-up question.

Okay. So in terms of free cash flow, I think I'm going to lay out a model, and I'll share with everybody shortly. We're just kind of finalizing that. I'm going to discuss some of this with the board next week. But then we should be able to come back to you and tell you, "Here are the targets that we see that the company can get to over the course of the next few years." And they won't be all even. It's not all of a sudden, on a particular date in a particular year we hit them all. We'll get to some early, some later. But I'll go ahead and detail all of that and what we expect on all of those line items, right? Your second question was around colo and bandwidth. Yes, you are right. But I don't think we had done -- so Bob talked about the fact that we actually took server count down in the quarter and delivered more traffic. And we still have servers that we're trying to take out of our installed base. And as we take those out, we still anticipate more bandwidth availability, more CDN capacity availability, more network availability. So we are still working on all of that. When we talk to the software engineers in our R&D shop, they tell us they still got a long way to go. So our ability to go get a lot more from what we have deployed, I think, is there and it's there in space. If I saw that it was approaching the end, I'd let you know. But when we are suggesting 300 basis points margin improvement, it's coming from the same buckets where it has been. And before it begins to top out or flatten, some quarter -- some year, we'll have maybe 50 and before that, we'll have 150 kind of a year. I think 300 is a pretty strong number and should suggest that there's more to go.

Yes, I agree. And on the bandwidth side, we are -- we have just started to really aggressively manage that in a more comprehensive fashion. And so while we're doing a much, much better job today than we've done in the past, we're still -- I would still say we're early days on that and there's a lot more to go.

Yes. And it'll be interesting, some of these other initiatives that we are talking about, right, because it's all one segment. We've got one leader, one sales team. We are organized as just one group here. And so some of the initiatives we are undertaking, they could change the profile of the business overall. If we are successful in analytics, for example, it's low bandwidth usage, it's low CDN capacity usage. If it's successful in the edge compute initiatives, a similar answer there. You could get revenue without much usage on the bandwidth. So I think there's more to come. It's shifting game, but we look forward to continuing growth across the spectrum.

Just a quick question on kind of the new products. Can you talk about some use cases for your edge computing and data mining initiatives that you're talking about so we get -- kind of get a sense of which direction you are headed?

Yes. So on the edge compute side, we're really talking to customers who have a need for the computing power to be very, very close to the end user. So I think the first step was going from massive corporate data centers into cloud providers that might have had a handful or so big data centers around the world. And you could distribute that computing to large data centers around the world. And we're seeing applications today where customers want to get even closer to the end user. And there are particular use cases that we'll talk about in the coming quarters as we hopefully close some of these deals that are very interesting and very exciting. A lot of it's around the Internet of Things, IoT providers. And so there are a very few companies like Limelight that has computing resources in as many locations around the world that we do, and so we think that's a fairly unique set of assets. On the analytics side, especially when it comes to video, we know that our customers really want to better understand user behavior, quality metrics. And what we're finding is they have some pretty good systems on their side, but they're missing a lot of the data that we are collecting every day. And so we're talking to customers about, in many cases, how do we combine the data that we have with the data that they have to provide a more comprehensive picture of what's happening with the content around the world. So early days on both, but pretty exciting opportunity given the uniqueness of the position that we have.

(Operator Instructions) Our next question is from Rishi Jaluria with JMP Securities.

It's nice to see some continued margin expansion here. I just wanted to get -- for starters, wanted to get an idea of what sort of momentum you're seeing with some of your partnerships. And I know you talked about the Neustar partnership around this time last year, so maybe if you could dive into the partner side a little bit.

Sure. I think that's another area that's exciting for us. Obviously, if we talk about Neustar in particular, we announced that about a year ago. Over the last year, we've been building out their capabilities, their requirements inside of our data centers. We're about halfway towards giving them the full capability and capacity that they're looking for. And so as we go into 2018, I think we'll be fully deployed and fully ramped up with Neustar, including the ability for our sales force to resell their capabilities and their sales force having the ability to resell our capabilities. But obviously, this is a long-term relationship. And it's literally going to take us 12 to 18 months from sign to full effectiveness. But when we get there -- and as I said, we're about halfway or more there. In terms of the number of locations that they are embedded in within our network around the world, I think both of us will have something that's very unique.

Yes. And keep in mind, I mean, this took a little bit longer because they had a take-private transaction in the middle of the announcement. So this could -- I have suggested before that this would be about a year. But we still think that within the year, 1.5 years, we'll be up and running with everything that we've set out to do with them.

And I think what we're doing with them is applicable with other companies, and we've initiated some discussions along those lines with some other companies as well. And so we don't really view -- well, we view the Neustar deal as very important to both companies. We don't view it as being a one-off or unique in any way in terms of our ability to do that with other companies.

Okay, got it. And on the international side, I know, Bob, you talked about the new PoPs in India and a few of the other expansion opportunities. Can you give us an idea for maybe how your international business and momentum has been trending? And is the focus on the international business with existing customers? Or is there a potential shift here to start getting some net new logos that you weren't able to reach before?

Yes. So there's 2 ways to think about international from our perspective. One is what is the traffic that we deliver by geography? And so for example, many of our U.S. customers rely on us to deliver into India, Japan, Korea, other points around the world. And then to your point, it's customers in-region that are relying on us to deliver content in-region and using our global CDN to deliver out of region. So in the case of India specifically, we've grown capacity by a tremendous amount, as we said, 650% over the last 12 months. We're starting to see that fill up from our existing clients. But at the same time, we're adding new people and building pipeline inside of India to help build our business on the ground there and utilize those assets for companies that are located in India. So we're seeing both.

All right. And then, Sajid, you talked about the pricing discipline that you've been able to maintain. Just -- I mean, have you seen any changes in the general pricing environment when it comes to CDN?

I think we saw pricing pressures last year. I think we saw pricing pressures the year before. And the customers expect it. I mean, if you have a lot of volume and you've got a couple of people who are willing to go ahead and take that volume on at low prices, the customers want to know why you cannot match it or why they should pay a slightly higher price for you. Now in some cases, it's because we have more quality or we may have capacity in a particular region or because we are providing them with some features that others cannot. So I think that price battle has continued for some time. I think the differences are becoming smaller. There is no -- in the industry, we should just be clear. I mean, this is not secret. What price some of the largest customers are getting gets known and is very visible across the industry. So it's -- there's always awareness that this is what the price that's available in the marketplace, and we have done well with that because of the discipline.

Yes. The other thing I would add is the price compression, for example, that we've seen in the first 2 quarters of this year is no different than what we've historically seen as a percent. And it is in the range that we expected from a budget perspective. So we're not seeing anything crazy there. And as we've said in the past, I think, and we think, that price compression is a good thing for the industry. It helps our customers expand as they look to move more and more of their content online. What we have to do is make sure that it happens in a managed way so that as our costs are lowered, we can then lower price, good for our customers, and we still have the ability to make enough money to reinvest in the business. That's really our goal. It isn't trying -- to try to get price compression to 0. I think that long term is bad for our customers, but it isn't to have it get out of control either where it affects our ability to invest in delivering quality for our customers.

I'm showing no further questions. So at this point, we will conclude today's conference. We thank you for attending today's presentation, and you may now disconnect your lines.

Thank you, everyone.