Enova International Inc (ENVA) 2018 Q1 法說會逐字稿

Good day, and welcome to the Enova International First Quarter 2018 Earnings Conference Call and Webcast. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Monica Gould, Investor Relations for Enova. Please go ahead.

Thank you, Michael, and good afternoon, everyone. Enova released results for the first quarter of 2018 ended March 31, 2018, this afternoon after the market closed. If you did not receive a copy of our earnings press release, you may obtain it from the Investor Relations section of our website at ir.enova.com.

With me on today's call are David Fisher, Chief Executive Officer; and Steven Cunningham, Chief Financial Officer. This call is being webcast and will be archived on the Investor Relations section of our website.

Before I turn the call over to David, I'd like to note that today's discussion will contain forward-looking statements based on the business environment as we currently see it and as such, does include certain risks and uncertainties. Please refer to our press release and our SEC filings for more information on the specific risk factors that could cause our actual results to differ materially from the projections described in today's discussion. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of a new information or future events.

In addition to U.S. GAAP reporting, we report certain financial measures that do not conform to generally accepted accounting principles. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliations between these GAAP and non-GAAP measures are included in the tables found in today's press release. As noted in our earnings release, we have posted supplemental financial information on the IR portion of our website.

And with that, I'd like to turn the call over to David.

Thanks, Monica. Good afternoon, everyone. Thanks for joining our call today. I'm going to start by giving a brief overview of the quarter then I'll update you on our strategy and progress in 2018 and finally, I will share our perspectives looking forward. After my remarks, I will turn the call over to Steven Cunningham, our CFO, who'll discuss our financial results and guidance in more detail.

We had a fast start to 2018, underscored by record financial results and driven by strong demand and stable credit in each of our 6 businesses. Our first quarter results exceeded our expectations across the board, and we are raising our full year guidance. At the midpoint, we are not expecting revenue for the year to top $1 billion. Revenue in the first quarter was a record $254 million, an exceptional 32% higher than Q1 of last year and above the high-end of our guidance. While we saw growth across Enova, our U.S. businesses led the way with revenue increasing almost $50 million year-over-year.

Adjusted EBITDA was even stronger, rising 55% from a year ago to $68 million. This significantly exceeded our guidance range of $50 million to $60 million. We generated these impressive results, even as we increased marketing spend to lean into the considerable demand we saw from customers.

Marketing expense was up 42% over Q1 of 2017, although as a percentage of revenue, it was only up slightly due to significant revenue growth we generated.

As a result of the strong demand and our increased marketing, loans to new customers rose 33% year-over-year. Lastly, adjusted EPS more than doubled to over $1.

Total company wide originations in Q1 increased 25% from last year, driven by growth in our installment and line of credit products. Installment loans and lines of credit now comprise 79% of our total revenue and 90% of our total portfolio. Originations decreased 9% sequentially, reflecting typical seasonality although this decline was less than the 13% decline we saw in Q1 of last year, again, highlighting the unseasonably strong demand we've seen so far this year.

Our success and positive results across our short-term line of credit and installment and receivables purchase agreement segments have been driven by our focus on our 6 growth businesses, which include our U.S. subprime business, our U.S. near-prime offering, our U.K. consumer brands, U.S. small business financing, our installment loan business in Brazil and Enova Decisions, our Analytics-as-a-Service product. We remained focused on actively building out each of these businesses and adding additional products within them to drive growth. Our large U.S. subprime consumer business generated another strong quarter of profitability and originations grew 11% year-over-year. This portfolio is well diversified, consisting of 44% line of credit products, 38% installment products and only 18% single-pay products.

As we've said in the past, the U.S. subprime consumer market is very large and even with our growth, our market share is still in the single digits. We continue to believe that we are well positioned to take market share and grow this business, given our efficient and scalable online model, which customers prefer over the brick-and-mortar alternatives.

In the U.K., we're pleased with the steady growth we are seeing and remained the leading subprime lender. Originations rose 39% from Q1 of last year and revenue rose 43% year-over-year, primarily driven by strong growth in revenue from our installment loan product.

Our U.K. business continues to be profitable and we remained focused on generating meaningful growth while increasing our profitability.

NetCredit loan balances reached $377 million, which is up a robust 41% from Q1 of last year. Our U.S. near-prime product represented 52% of our U.S. portfolio at the end of Q1, up from 49% in Q1 of last year. NetCredit's Q1 originations rose 74% over the prior year, demonstrating the significant momentum we've built in this large market.

Our small business financing portfolio represented 9% of our total loan book at the end of Q1. We continue to see the market rationalizing and demand remaining strong, which led to first quarter originations increasing 7% sequentially and 6% year-over-year.

Our Brazilian loan portfolio ended the quarter at $18 million. Q1 originations rose 85% year-over-year and 26% sequentially. We continue to believe that Brazil is a large opportunity. Brazil's sizable population and strong demand for credit, coupled with a stable regulatory environment and a modern banking system make it an attractive market for us. In addition, their economy is improving and hopefully, the presidential election in the fall will bring some political stability.

Finally, Enova Decisions, our real-time Analytics-as-a-Service business, continues to gain traction. While this business is still in the very early stages, we are pleased with the success we are seeing across a number of business verticals. We remained focused on increasing the rate of customer acquisition, while successfully serving our current customers.

Before wrapping up today, I want to touch briefly on the current regulatory environment. Following the CFPB's announcement that it may review the small dollar loan, it remains unclear what the timeline or outcome may be. In any case, the diversification efforts we have taken over the years have reduced our regulatory risk. And we believe that our flexible-lending platform positions us well to adapt our products to a final rule and may present the opportunity for us to gain significant share as competitors struggle to adapt.

Overall, we are very pleased with our strong start to the year. We believe our borrower-preferred online model will continue to drive growth and enable us to expand our market share. And the favorable macroeconomic trends and stable credit we are seeing positions us well to execute on our strategy for the remainder of 2018 and beyond.

I remain confident in our direction and believe that our outstanding team, focused-growth strategy, leading-competitive position and solid balance sheet will enable us to drive continued success.

Now I'd like to turn the call over to Steve, who will go over our financials in more detail. And following his remarks, we'll be happy to answer any questions that you may have. Steve?

Thank you, David. Good afternoon, everyone. I'll start by reviewing our financial and operating performance for the first quarter and then provide our outlook for the second quarter and the full year 2018. We are pleased to report another quarter of strong financial results, with revenue, adjusted EBITDA and adjusted earnings per share all exceeding the high-end of our guidance ranges. Total first quarter 2018 revenue increased 32% from a year ago, and rose 4% from the fourth quarter of 2017 to a record $254 million, exceeding our guidance range of $220 million to $240 million.

On a constant-currency basis, revenue increased 30% year-over-year. Year-over-year revenue growth was driven by an increase in total company combined loan and finance receivables balances, which rose 36% year-over-year to $844 million from $621 million at the end of the first quarter of 2017. Installment loan and line of credit products continue to drive the growth in total loans and finance receivables balances.

Compared to the fourth quarter of 2017, combined loan and finance receivables balances declined just 2%. The sequential revenue growth we experienced reflects the faster receivables growth we've been generating in our line of credit and installment loan products. Because the higher proportion of our portfolio now consists of these longer duration and larger dollar loans and finance receivables, we experienced less seasonal portfolio runoff during the quarter than we've seen in prior first quarters. And as a result, we were able to generate higher revenue, EBITDA and earnings per share.

Total company originations during the quarter increased 25% year-over-year to $557 million, as originations in our installment and RPA products increased 66%. Originations from new customers across all of our businesses were 26% of the total, 51% of the quarterly year-over-year change in total company originations were from new customers.

Domestically, revenue increased 29% on a year-over-year basis and rose 4% sequentially to $213 million in the first quarter. Domestic revenue accounted for 84% of our total revenue in the first quarter. Revenue growth in our domestic operations was primarily driven by a 40% year-over-year increase in installment loan and finance receivables revenue and a 32% increase in line of credit revenue. Continued strong demand for these products drove our domestic combined loan and finance receivables balances up 34% year-over-year.

Revenue growth and NetCredit, our domestic near-prime installment business was 42% higher year-over-year and NetCredit loans comprised 45% of total company combined loan and finance receivables balances at the end of the first quarter.

International revenue increased 50% on a year-over-year basis and 7% sequentially to $41 million. International revenue accounted for 16% of total company revenue in the first quarter. On a constant-currency basis, international revenue rose 37% on a year-over-year basis. Year-over-year international revenue growth was driven by a 66% increase in installment loan revenue and a 36% increase in short-term loan revenue. International loan balances were up 47% year-over-year and 3% sequentially. And international installment loans grew 52%. On a constant-currency basis, international loan balances were up 35% year-over-year.

Turning to gross profit margins. Our first quarter gross profit margin for the total company was 57%, which is unchanged from the quarter -- the quarter a year ago and compares to a gross profit margin of 48% in the fourth quarter of 2017.

Gross profit performance reflects steady portfolio yields and stable credit performance over the past year. Net charge-offs as a percent of average combined loan and finance receivables decreased in the first quarter to 13.7% from 14.9% in the prior year quarter, further reflecting the stable credit that David mentioned. The allowance and liability for losses as a percentage of combined gross loan and financing receivables at the end of the first quarter was nearly flat compared to the year-ago quarter at 13.7%.

Going forward, we expect our consolidated gross profit margin to be in the range of 47% to 57% and will be influenced by the pace of growth in originations, the mix of new versus returning customers in originations and the mix of loans and financings in the portfolio. Our domestic gross profit margin was 59% in the first quarter compared to 57% in the first quarter of 2017. Gross margin improved from 47% in the fourth quarter of 2017, driven by the reasons I have previously discussed.

Our international gross profit margin of 51% in the first quarter compared to 59% in the prior year quarter. The decline in international gross profit margin from the year-ago quarter was driven in large part by a 64% increase in international installment loan originations. We expect our international gross profit margin to range from 50% to 60% and will be driven by the pace of growth in both the U.K. and Brazil as well as the mix of new and returning customers.

Turning to expenses. We continue to see strong operating leverage, as total nonmarketing -- operating expenses for the first quarter grew only 7% year-over-year to $52 million. Total operating expenses, including marketing, were $80 million or 32% of revenue in the first quarter compared to $69 million or 36% of revenue in the first quarter of 2017. As David mentioned, Marketing expenses in the first quarter grew 42% compared to the year-ago quarter to $28 million or 11% of revenue, as we met the demand we saw in the market. The increase in marketing spend drove strong customer volumes this quarter while maintaining efficiency and attractive CPS.

We expect marketing expenses to remain meaningfully higher than a year ago in dollar terms, as we lean into demand and attract profitable new customer volume. Marketing spend will likely range in the low to mid-teens percentage of revenue during 2018, with the highest spend during our seasonal growth periods in the second half of the year.

Operations and technology expenses totaled $26 million or 10% of revenue in the first quarter, compared to $24 million or 12% of revenue in the first quarter of 2017 and were higher primarily on volume-related variable expenses.

General and administrative expenses were $27 million or 11% of revenue in the first quarter compared to $26 million or 13% of revenue in the first quarter of the prior year and were slightly higher primarily because of personnel-related costs. We continue to leverage our fixed cost base. In fact, G&A expenses as a percentage of revenue had seen year-over-year declines for 7 out of the 8 previous quarters.

Adjusted EBITDA, a non-GAAP measure of $68 million increased 55% year-over-year in the first quarter. Our adjusted EBITDA margin was 26.7% compared to 22.8% in the first quarter of the prior year. Our stock-based compensation expense was $2.4 million in the quarter compared to $2.3 million in the first quarter of 2017.

Our effective tax rate in the first quarter was 20.8% compared to 34.3% for the first quarter of 2017, primarily, because of the lower federal tax rate. We continue to believe that our effective tax rate will normalize in the mid-20% during 2018. Net income was $27.9 million in the first quarter or $0.81 per diluted share, which compares to net income of $13.9 million or $0.41 per diluted share in the first quarter of 2017. Net income has benefited from rising EBITDA, a drop in the company's cost of financing and the drop in the effective tax rate.

Quarterly net income included a one-time $4.7 million pretax charge for the early extinguishment of debt, related to a $50 million early redemptions of our 9.75% senior notes that mature in 2021 as well as a one-time noncash $2.3 million pretax charge from a currency translation adjustment right-off related to the final wind down of our Australia and Canada operations.

Adjusted earnings, a non-GAAP measure increased 130% to $35.4 million or $1.02 per diluted share from $15.4 million or $0.45 per diluted share in the first quarter of the prior year.

During the first quarter, cash flows from operations totaled $153 million, and we ended the quarter with unrestricted cash and cash equivalents of $70 million and total debt of $755 million.

Our debt balance at the end of the quarter includes $217 million outstanding under the $295 million of combined installment loan securitization facilities.

In addition, on April 13, we amended our bank-led secured revolving line of credit to increase borrowing capacity from $40 million to $75 million with no change in the borrowing cost of prime plus 1%.

Now I'd like to turn to our outlook for the second quarter and full year 2018. Our 2018 outlook reflects continued strong growth in each of our businesses, stable credit, a sustained higher mix of new customers and originations and no significant impacts to our businesses from regulatory changes. Any significant volatility in the British pound from current levels could impact our results.

As we discussed on our last quarterly call, we expected tailwinds into the first quarter, which is typically our strongest quarter of the calendar year. From increased -- from the increased proportion of longer duration, larger dollar loans and financing receivables in our portfolio, leading to less total receivables run-off and higher revenue, EBITDA and earnings per share compared to our historical sequential seasonal pattern. Despite the strong start to the year, we expect to experience our typical quarterly seasonality during 2018. As we continue to focus investment on new customers across our businesses.

During our peak growth periods in the second half of the year, gross margin, EBITDA and earnings per share could be impacted by higher provisions for losses during those periods. As a result, we may see a wider variation in quarterly EBITDA and earnings per share than in prior years.

As noted in our earnings release, in the second quarter of 2018, we expect total revenue to be between $230 million and $245 million; diluted earnings per share to be between $0.34 and $0.56 per share; adjusted EBITDA to be between $42 million and $52 million; and adjusted earnings per share to be between $0.41 and $0.62 per share.

For the full year 2018, we are raising our guidance and now expect total revenue to be between $980 million and $1.04 billion; diluted earnings per share to be between $1.69 and $2.25 per share; adjusted EBITDA to be between $190 million and $215 million; and adjusted earnings per share to be between $2.10 and $2.66 per share.

And with that, I'll hand the call back over to David. Thank you.

Thanks, Steve. At this time, we'll open up the call to your questions.

(Operator Instructions) Your first question comes from Vincent Caintic from Stephens.

So I'm impressed at the -- you're raising EPS guidance so quickly. And then we had -- particularly, given that the guidance you gave previously was already on February 1 with the last earnings call. I'm just wondering if you could share, what happened in February and March that changed things so much to be the upside here? And then maybe in particular, was there any maybe market share grab where competitors are pulling away, maybe pull forward from future quarters, or anything else that you might have driven this over the past 2 months?

Sure. Thanks. And so I think there's a couple of things. So as we mentioned a couple of times, demand was pretty strong in Q1, certainly stronger than we anticipated and typically see in Q1 and that was matched with really stable credit. I think the combination of the two let us generate the strong EBITDA growth even with the stronger-than-expected revenue growth in the large amount of new customers. And as Steve mentioned, our loan portfolio was longer term than it was a few years ago. And so when you have strong results, stronger-than-expected results in Q1, you get some of that benefit in the following quarters. So the raise for the year is not only the Q1 [B], but the fact that the balance sheet exited the quarter higher than we expected, which gives us some tailwinds going into the remainder of the year. And in fact, besides the larger-than-expected balance sheet entering Q2, demand has stayed strong entering Q2, as we're all now almost a month into Q2. I'm sure at some point, we'll get the question so then why didn't we raise even more. And I think the answer to that question is because it's difficult to predict demand throughout the year and I want strong now, we are more demand filler than demand creators in our industry. And just because demand is strong in April, doesn't mean it will be in September or October. We haven't seen anything at all that would lead us to believe that demand will slow, we just don't know. And so there's a combination of that, along with the message that Steve's been trying to deliver pretty consistently for the last year plus, which is strong revenue growth doesn't always lead to strong EBITDA growth, it did this quarter but in stronger growth quarters like Q3 and Q4, we saw similar levels of new customer growth while revenue might be stronger than we expected, EBITDA growth might not be strong as we expected. If we spend more on marketing leaning into that demand, plus the additional provisioning associated with the new customers. So yes, we wanted to be a little aggressive given the strength we saw in Q1, but certainly tempered that with a lack of visibility on demand, plus the uniqueness of our operating models where revenue and EBITDA don't always move hand-in-hand.

Perfect, that's really helpful. And then to your point, usually when you really have this strong level of revenue growth so you had a lot of loan growth this quarter, you'd have higher marketing cost and provisioning expense. But this quarter, your marketing costs were relatively benign and your provisions were better. And I'm just wondering, maybe on both fronts, has marketing gotten more efficient? Have you gotten more efficient with your marketing as may be the cost of acquisition just gotten cheaper? And then on the credit side just maybe are you seeing anything with the consumer that might be getting better?

Yes. All good questions. So in nominal dollars, we actually spend a lot in marketing in the quarter, especially for a first quarter, which is typically our slowest marketing quarter, but you're right. As a percentage of revenue it's only up, I think, less than 100 basis points over Q1 of last year but that was because of the very strong revenue growth. Now the thing to think about on the revenue side is really twofold. One, strong revenue growth because of the new loans rate in the quarter, but also the very strong exit from Q4. And so you combine that with -- Q1 is always a very good quarter from a gross margin perspective because the loan book typically shrinks or doesn't grow as you have seasonally lower demand than in Q4. And so you combine that with very good gross margins led to the strong EBITDA despite the higher levels of new customer and leaning into the demand with more marketing.

Great. And then from the consumer perspective, on the credit side?

Yes. So I think it's been the story I've been telling for a while, which is good demand and good credit. And I think we're on a very nice place on the economic cycle. I think the longer we stay here, the more confident the customer becomes about taking on additional credit. The category certainly is good, employment is very high, unemployment is low, which is great for us, because our customers need other source of income for us to lend to them so that's very positive. I think people are feeling good enough about their jobs and their future to be willing to take on credit. But it's not ripping along at such an aggressive rate that people are getting huge raises or huge bonuses, where they don't need to borrow at all. And so I think the combination of that -- of where we are, the strength of the economy, plus how long we've been here in the cycle is leading to good strong demand and really solid credit. And that's certainly reflective in the Q1 results.

The next question comes from David Scharf from JMP Securities.

I think most of my questions just got answered. I've got a question though on the marketing side. I guess, I'm sure I've asked it before, but can you remind me, because the description sounds a little counter-intuitive, the idea, I think to use your phrase, Dave, of increasing marketing spend to lean into increased demand. And when I hear you describe just the overall healthy level of demand, the consumer feeling good about perhaps more discretionary spend, even though we think of a lot of your borrowers is in a credit crunch. Nevertheless intuitively, maybe some of us would think, "Wait, is that the kind of environment where you almost don't have to spend as much on customer acquisition" they perhaps they are coming to you. Could you help me understand that dynamic because it helps frame sort of the -- ultimately the sort of big-picture operating margin question as well since marketing is just a proponent?

So I think if you think of us as a retail business, it doesn't make sense. But if you think of us as a kind of a broader consumer business, it makes a little more sense. And then when you take into account the comment I made earlier about us being more a demand filler than a demand creator, I think it makes a lot of sense. So if the demand is just not there, we're going to pull back on marketing, because CPS are going to be going through the roof and you just can't push on a string. So we're not like McDonald's, that might have slow demand and run $1 Big Mac sale to drive traffic to the stores, so we don't run ads encouraging people to borrow when they don't need to borrow. We don't run a 20% off interest rate special to get more people to come to us. It's just that, that's not prudent lending so we don't do that. So when we see demand, and we see our marketing being highly efficient, that's the sign of good demand, we lean into that by ramping up our advertising. So for example, we could up our TV spend during the quarter or send out a larger amount of direct mail or up our PPC buys. Those are all examples of how we can up our marketing spend, when we see demand to make sure as many customers are looking to take out loans are coming to us without raising our cost for new customer significantly. That's kind of what we mean when we talk about leaning into demand with our marketing.

Okay, that's very helpful. And I guess in that context, given the magnitude of both the earnings upside in the first quarter, and more importantly, just a upside in ending balances in the overall kind of positive consumer behavior you're seeing. Any thought to -- I know you're careful about kind of expectation management, but is there any value in really jacking up marketing as a percentage of revenue over the next 6 months per se, that just to take advantage of this environment even more or so?

Well, first of all who knows whether this environment will be here for the next 6 months, I mean, this is -- we're looking at these kind of levels of demand day-by-day, week-by-week. We're in no way trying to predict where that demand will be 6 months from now. If it remains strong, we'll continue to spend. And if we continue to spend marketing as a percentage of revenue we'll go up. Q1 is like, I'd mentioned earlier is a quarter, where you can have strong revenue growth and strong EBITDA growth. Q3 and Q4 are quarters where that's much less likely to happen. So we could be, if we see the demand, we will spend and that will increase marketing as a percentage of revenue for sure. I think, you know us well enough by now to know that we won't get out of control with our marketing spend, though obviously, we'll keep a close eye on the profitability of the overall business and the expectations we have set, but as far as the reasons, why we started the year with wider-guidance ranges so we would have the ability to do that if the market warranted.

Fair enough. Also curious, upon lender, which admittedly is extremely short-term loans, noted for us this morning that they actually had less sequential paydown this tax season than in previous years. Did you notice any similar dynamic? Or is the -- or since the duration of your product mix is shifting so much that you really wouldn't notice that as much anyway?

No, I would say we actually didn't necessarily see that. I would say the impact of the tax season was more muted this year. I think some of that's our portfolio duration, helps in the mix shift to some of the long-term products that are less impacted by the tax season. But it could have also been mashed just by strong overall demand. So we've heard some talk about delays in the tax season, we didn't see that. And as I mentioned, demand remained strong into the end of April here. So we actually saw a much more muted tax season this year than we have had in some other years.

(Operator Instructions) Your next question comes from John Hecht from Jefferies.

Most of my questions were around consumer credit demand and stuff, a lot of that has been addressed. I guess, maybe turning a little bit to customer acquisition costs, David, you mentioned being able to kind of pivot in certain marketing techniques based on opportunity sets and so forth. I'm wondering, maybe you can give us an update. What is the most effective channels -- the most productive channels, what have you learned more recently and what does that mean for the rest of the year in terms of maybe the migration in marketing technique?

Yes. Good question, it's been a while since we've talked about that. I think, we've become really well balanced in our marketing over the years. The main -- it's kind of 4 main channels for us online, with just PPC, some banner ads with some retargeting. And then FEO, lead partners -- lead and affiliate partners, which used to be largely lead aggregators have increased when we become more affiliate-based over time but still a significant portion of our new customer base. TV is actually has had some resurgent for us in the last 2 years, and then direct mail has become a very strong source of new customers for us as well. So we've become well balanced between all those 4. They each has the pros and cons. TV and direct mail, we actually have less ability to move those up and down during a quarter, we have some, but less. The other 2 channels, we have almost complete ability to turn on and off during the customer -- during the quarter as needed. So again, it's become a nice mix for us compared to say 5-plus years ago, when we were kind of heavily reliant on lead partners for our new customer growth.

Okay. And then you talked about -- that's very helpful, by the way. Then you talked about -- and I haven't had the time to kind of go through the math here. But you talked about the -- Steven talked about the balance sheet, the debt liquidity improvements that you engaged in over the quarter in terms of increasing securitization facility and the line of credit -- excuse me. I guess, the quick question is, number one is given the strong demand in Q1, is that type of demand persisted with the amount of liquidity increase you have facilitate that or would you seek additional liquidity during the year? And the second is: you have done a very good job of improving the cost of fund, as your business has matured. Do you still see some opportunity there over the next few quarters?

John, so I think we are sitting very nicely going into the rest of the year even if we do see sustained demand higher than -- like we've seen through the rest of the year or more than we expect. And we've kind of set our liquidity positioning that way so we do have standby obviously on our facilities both on the new upsized revolver as well as the open line on the NetCredit securitization. And then we also have demonstrated access to the term market as well. So I think among those 3 in addition to just the strong amount of operating cash flow we have, if you saw, it was a record number for us for quarterly operating cash as well. So all those combinations have us sitting in a stronger position as we've seen in some time.

Okay. And then final question is for modeling. Your stock is doing well, can you just give us an update, I know it's not related to adjusted earnings, but what do you expect at this point in time the stock-based comp would be in '18?

It's going to run about the same levels that you've seen. So within $100,000 year-over-year on the quarter, which tends to be the heavier quarter for stock comp in terms of if you're going to see a big increase. So you should expect pretty steady, maybe up just slightly, but not a big increase.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to David Fisher for any closing remarks.

Thanks, everyone, for joining us today. We look forward to updating you again next quarter on our progress and then throughout the rest of the year. Have a good evening.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.