Epam Systems Inc (EPAM) 2013 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the quarter two 2013 EPAM Systems, Inc. earnings conference call. At this time all participants are in listen only-mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Anthony Conte, Vice President of Finance. Please proceed, sir.

Thank you, operator, and good morning, everyone. By now you should have received a copy of the earnings release for the Company's second-quarter results. If you have not a copy is available on our website at www.EPAM.com, together with our supplemental data sheet.

The speakers we have on today's call are Arkadiy Dobkin, CEO and President, and Ilya Cantor, Chief Financial Officer. Before we begin I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties as described in the Company's earnings release and other filings with the SEC. I would now like to turn the call over to Arkadiy Dobkin. Please go ahead, Arkadiy.

Thank you, Anthony, and welcome, everyone. I'm happy to report that EPAM's second-quarter performance was strong and at the top end of the guidance for the quarter. Revenue was $133.2 million, representing an increase of 28.3% year over year and 7.2% sequentially. Non-GAAP operating margin was [15.3]% or a 110 basis points sequential improvement and within our target range.

Market demand for our services continues to be strong; we saw growth across all geographies and segments. Services and financial verticals were up [54%] on continued strength in investment banking, mostly in (inaudible). And (inaudible) technology increased by 36% on positive momentum in several key accounts and continued demands for innovation and expertise in emerging technologies.

We have seen important growth in our (inaudible) consumer vertical especially in North America. This was driven by both organic efforts and synergies related to the acquisition made in 2012. This was our second fastest-growing vertical in North America with 52% growth. It also was one of our new top 10 clients to the Company.

North America was up 35% year over year benefiting from growth in the USA (inaudible) technology clients as well as from recent acquisition synergies. Europe continued to show strength with 33% growth, much of which was coming from the financial services sector.

(Inaudible) was down 1% and this requires short explanation. You might remember from our call at the same time last year that we had one operating recognition in the second quarter of 2012 related to the [pilot of the Ukraine] sponsored by World Bank. Excluding this one-off nonrecurring revenue, CIS would have been 35% on a year-over-year basis. Today sales represent still 12% of total revenue.

Our available headcount increased by 15% to 8,900 engineers. While we have slightly increased utilization versus last quarter we continue to [carefully] manage the (inaudible) branch within our global [delivery] organization to make sure we are fully capable to engage experienced and trusted professionals into new production activities. This also allows us to have enough challenge in specific situations to prepare delivery personnel for new (inaudible) challenging opportunities [require the best] technical skills and strong industry knowledge.

In addition to closely managed branch we are working on improving our talent acquisition and talent management (inaudible) across all locations, which is one of our corporate priorities. While mentioning [investments] I would like to share that, as is stated in our previous calls, we continue to focus on our client (inaudible) sales and marketing capabilities.

During Q2 we brought to the Company new senior talent in that area both in North America and Europe. We also just hired a new global head of marketing. And in addition to being closer the proximity to a number of strategic clients, they expand EPAM's presence in several new locations across North America and Western Europe.

Finally, additional investments were addressed in our ultimate goal of continuously improving software engineering skills and developing projects key [emerging countries] (inaudible) EPAM. During the second quarter we brought on board a new [CTO] to lead our investments in developing [two new] specific engineering processes and to specialized application frameworks, a number of other software assets critical to differentiate our services and solutions both in value and in quality within our competitive market.

Also in second quarter we deployed the EPAM private cloud which makes our delivery environment even more sophisticated and agile with faster deployment and real time cloud (inaudible). Most importantly, it has given every one of our engineers the ability to understand how to work in [cloud] environment and translate this knowledge to the current and future client initiatives with ability to improve time-to-market cycles.

We also brought strong experienced leadership to our deep data (inaudible) center by attracting several senior technologists to our US (inaudible). We have recruited over 100 people in -- into upgrading almost entire internal system portfolio. This is also significant for us (inaudible) this year including (inaudible) internal labor.

While we already have one of the best in the market internal applications and tools, which allows us to ensure control and [deliverability] across all project wide cycles -- stages, we are now focused on the (inaudible) highly social and cooperative environment, robust data analytics and (inaudible) and very efficient and tightly integrated into our system and scale customer relationship management functionality.

Our recent acquisitions continue to perform in line with our expectations. Our Canadian business is strong with retail and [telco] making significant progress. Our newly created digital strategy and experience design solution practice based on Empathy Lab's acquisition at the end of last year. It's successful by (inaudible) measures. (inaudible) joint account acquisition and demand from existing (inaudible) accounts are strong and creating new synergistic opportunities among power solution units.

In most of these situations the combination of local relationships and technical expertise together with our proved global delivery platform is demonstrating an (inaudible) for us and for our clients. Our (inaudible) and visibility continue to be stable and predictable. This allows us to invest in the business (inaudible) strength and improve how we run our operations.

We also continue to feel good about our leading position in complex software engineering services and solutions segments of the (inaudible) active services market which contributes to our ability to continue growing above the industry (inaudible).

I think it will be appropriate to mention at this point (inaudible) specific conditions. First of all, in June we were ranked number six in the Forbes 2013 list of America's fastest-growing tech companies. This is prestigious company (inaudible), and we were ranked just behind some of the most well-known tech companies like LinkedIn, Facebook and Apple and ahead of many other very well recognized global technology brands.

It is a tough list to get in (inaudible) applied. So we were very proud with this recognition in general and also by the fact that we are one of the only two companies from (inaudible) services industry included into Forbes Fast Tech 25.

Second one, results from the (inaudible) second-quarter 2013 (inaudible) survey were issued where 250 (inaudible) were out of the question. These (inaudible) services were under agreement or losing share of their IT spend in dollars with the organization. (Inaudible) EPAM and Cognizant were the key [world] share gainers.

Likewise this is very respectable company to keep. It also reaffirms the fact that EPAM continues to gain market share on the strength of our differentiated service offering and expertise in emerging technology solutions. Now I will turn it over to Ilya who will discuss financial performance in more details.

Thank you, Ark, and good morning, everyone. I am going to spend a few minutes taking you through the details of the second-quarter results and then I will talk about our outlook for the third quarter of 2013 and our guidance for the year. As usual, the full details of our results can be found in our press release and the quarterly stock sheet located on the Investor section of our website.

As detailed in that press release, our second-quarter revenues grew 28.3% over last year to $133.2 million and 7.2% sequentially, and at the top end of our guidance, while non-GAAP net income grew by 13.5% to $19.2 million compared to last year and [60.5%] sequentially. Revenue and constant currency grew 28.6% year over year and 8% sequentially. Non-GAAP earnings per share were also at the top end of our guidance with $0.40 per share for the quarter compared to $0.37 per share in the year ago quarter.

Looking at revenue by service line, software development continues to be by far the largest service offering growing 30% year over year to $90.3 million and representing 68% of total revenue. Testing also grew 30% over last year and now represents almost 20% of our revenue. Maintenance support and infrastructure services together grew 18.8% to 10.6% of revenue.

As we grow we continue to diversify and broaden our customer base. While our top 20 accounts have solid growth in the quarter of 18.7%, the rest of the client base increased by 46% over last year. At the same time we continue to strengthen our relationships with our top accounts. Barclays, where we had a solid relationship over the years, remains our largest account and now represents 10% of revenue in the quarter.

Our customer loyalty remains strong with 93.7% of revenues coming from customers who have been with us for at least a year and 78.3% of revenues coming from those who've been with us for two years or more.

Excluding stock compensation and acquisition-related costs, SG&A was 19.3% of revenue as compared to 18.8% last year and 20.3% in the preceding quarter. The increase over last year is primarily due to the investments we continue to make in order to support the rapid growth and expansion of the business.

Non-GAAP income from operations was $21.8 million for the second quarter representing a 14.2% gain over the second quarter of the previous year. For the second quarter of 2013 non-GAAP operating margin was 16.3%, up 110 basis points from the preceding quarter, but down from 18.4% a year ago due again to the investments needed to support our growth.

As discussed before, our target non-GAAP operating margin range is 16% to 18% on a full-year basis. Diluted share count for the quarter has increased by 1.6 million shares to 48 million from the same quarter last year, mainly due to equity grants to employees and acquisition consideration.

Turning to the balance sheet, we ended the quarter with $107.5 million in cash. Cash provided by operating activities during the quarter was $8 million. Unbilled revenue was $57.7 million at June 30 compared to $33.4 million at December 31, which follows normal seasonal pattern. In July we subsequently billed $26 million of the $57.7 million unbilled.

Net cash of $7.5 million was used in investing activities during the quarter, down [$5.3] million from the second quarter of 2012 primarily as a result of the Thoughtcorp acquisition. Net cash provided by financing activities was $4.6 million primarily due to the funds received in connection with employee stock option exercises. Accounts receivable were $82.8 million at the end of Q2, up 5% from year end. And we finished the quarter with a DSO of 59 days.

IT professional headcount increased 15% over last year to support 28.3% of revenue growth. Our ability to leverage headcount to drive revenue growth is primarily due to two things -- one, a favorable pricing environment; and two, as Ark mentioned, slightly improved utilization. We ended the quarter with 8,900 engineers.

Our effective tax rate was below guidance by about 100 basis points at 19% compared to 16.2% in the prior year quarter. The increase over last year was due to the impact of acquisitions made in 2012 in North America.

Turning to our guidance for Q3 and the balance of the year. We are seeing a healthy demand environment from existing accounts and we see solid business development activity in pipeline. Therefore we continue to feel confident in the outlook we had provided to you last quarter. As such, for the full year we are reiterating our prior guidance of revenue growth of 23% to 25% year over year.

On a full-year basis we continue to expect non-GAAP net income growth to be in the range of 12% to 15% with a tax rate of approximately 20%. For the third quarter of 2013 we expect revenues to be $135 million and $137 million representing growth of 23% to 25% over the third quarter of 2012.

Non-GAAP diluted earnings per share are expected to be in the range of $0.41 to $0.42 based on a weighted average of 48.7 million diluted shares and a 20% tax rate. All guidance excludes any non-operating currency gains or losses. With that I would like to turn the call back to the operator to open it up for Q&A.

(Operator Instructions). Moshe Katri, Cowen.

Nice quarter, Ilya and Arkadiy. Can you talk a bit about your pipeline, especially looking at your visibility for the next six to 12 months? Maybe in the context -- in this context you can talk about new client wins for the quarter, the number of new client wins, which verticals and then which regions. Thanks.

I think our visibility is very similar to what we saw in the past. So we usually can project for the next 12 months around 80% of our revenue. So it's very similar right now for the next quarter, again, we talking about like we provided guidance already. So you saw the number; you heard the number.

So during the last quarter we probably brought around 12 to 15 new clients, some of them potentially big, some of them more kind of on discretionary side, we don't know exactly how it will be developed yet. But again it is very, very usual. I don't think we've seen any differences as we were like communicating in the previous calls in comparison with previous periods.

In regards to locations or geographies it is also distributed pretty normally for us, basically proportionally to our main focus verticals. I would say that we have also interest in opportunities still with clients which we work -- opportunities which we working together with our recently acquired companies. Not necessary for existing clients but exactly on the synergies between what these companies were doing before and what we are doing together right now.

Great, just two small ones here. Just to supplement the spreadsheet that you have on your website. I didn't see the numbers for top one client for the quarter, you have top five and top 10. And then maybe kind of talk a bit about the FX losses that you had during the quarter. Thanks.

Our top one client is now Barclays and has been Barclays, they have just reached 10%. And what was the second part of your question, Moshe?

FX losses for the quarter.

FX losses, we had some sort of regular translation re-measurement losses that we included in the P&L of about -- I want to say $160,000. The actual economic currency losses that impact margins were actually around $200,000 or $300,000 because we remain relatively naturally hedged. As far as impact on the top-line, year-over-year FX impact was a negative (technical difficulty) or so, sequential was about negative $900,000 or so.

All right. Thanks, guys.

Steve Milunovich, UBS.

Could you make some more detailed comments on the pricing and wage rate environment, please?

So, on the pricing, as we mentioned in the script, we see a relatively favorable pricing environment. And this is consistent with the last two or three years. We are able to leverage the skill set that we provide our clients and the sophistication of our solutions to warrant relatively good price increases. So that remains strong.

As far as the wage inflation, the year is not yet done. We have typically one promotion cycle, one fine promotion cycle at the beginning of the year and one smaller cycle mid-year. Those are in line with our expectations so far, but, again, the year is not over yet.

Ashwin Shirvaikar, Citibank.

Good quarter. I guess my first question is with regards to sales productivity. Could you comment on how that initiative is progressing?

So by sales productivity you mean what exactly?

So, you have traditionally obviously grown the most through word-of-mouth and so on. But more recently you have both hired and through acquisitions got a larger salesforce. How is the integration of that salesforce progressing? How are you -- are they able to bring larger contracts to you? How are you managing that, if you could provide commentary?

Yes, we increased sales capacity and we mentioned during today's talk already that we invested in this area. So at the same time, on the big picture the proportion of contribution of new deals probably very, very similar to what we said in the past. In absolute numbers it's clearly growing approximately 30% in comparison. So, and it is requiring a new number of people.

So I mentioned also that salesforce which we inherited from through acquisitions actually working pretty productively. In some cases it is very solution oriented salesforce which is opening for us doors for new big accounts and we are leveraging our global delivery capability to expand there, which is not necessarily related to bringing like very large deals right away.

On another side we have examples like this where we mentioned that already that we have one of the accounts, which we started with 12 months ago, coming to be one of the top 10 accounts this year. So I think it is improving and it is improving with our expectations, but there is no yet any [dramatical] changes. And we're not expecting so -- such.

Okay no, that's useful. Just to clarify, are these salespeople generally quota carrying salespeople? And if they are how are they doing versus that quota?

Yes, this is like there is a number of people who have quarterly targets and when they reach they do it well. So I don't know what level of details you would like us to comment right now. But --.

Ashwin, this is Ilya. I mean so far, as you have seen, our year has stacked up pretty much in line, slightly above our expectations and what we had guided to at the beginning of the year. So the targets are likewise relative to that cadence. There has been some good wins to where some things are little bit higher than others and it all kind of averages out to be relatively similar to how we perform against our guidance.

You also, Ashwin, you can see this from some (inaudible) numbers when the proportion of the top five and 10 clients is decreasing, which means that we bring in more revenue on the bottom-line which potentially growing. But as we always say, talking with big number of accounts in $5 million range which is still growing.

So it is very difficult to kind of draw the line what is coming from -- what contributes significantly from new accounts or existing accounts right now. And we actually are focusing on growing existing accounts very, very seriously as well.

Okay. My last question really is with regards to M&A. You have made these two acquisitions, Thoughtcorp, Empathy, both seem to be going well. You do have a very strong balance sheet here and cash generation. Any thoughts on M&A pipeline from a strategic perspective or from just from an opportunistic perspective?

So we're clearly looking at this from a strategic perspective, but we not declining when opportunistically something interesting is coming. That is all I can say and we have -- we are always open for new opportunities there and we are constantly working on this. But I don't think we can comment anything more than that right now.

Okay, good. Thank you, guys.

Mayank Tandon, Needham.

Ark and Ilya, I wanted to get a sense from you if you could give us some color on the penetration level within your, say, top 20, top 30 clients. Where are you in terms of their budget? I'm trying to get a handle on how much you can grow with these clients. And then also if you could just talk generically about you win rate versus your competition in the market, how that has been trending the last, say, six to 12 months?

So the first question, as I mentioned, we do have big potential with our top 20 or even probably 40 clients. So usually our portion of the budget there is relatively small in comparison to some big players, which we compete in. Like if you think about financial services, large players have $100 million, $150 million budget, some of the largest world banks where we have right now like in tens of millions. So, and this would be true practically for all our -- not all, but majority of our top 20 clients. So it is a big potential there. So, and the second question was?

(Inaudible) your win rates, how that has been trending.

You ask how we compare this with our competitors and here I have difficulties to comment because I don't know exactly statistics how it's working for our competitors.

Let me ask you this. Have you seen a change in the competitive landscape at all in terms of who you are baking off against when you are in the market for these deals?

Okay, that is easier to answer. I think it is very consistent for us for the last couple years. Depending on specific vertical geography, we have -- we've seen a different type of competitors. But it is very consistent for -- again, for the last couple years.

Okay, thank you for that. Just one more follow-up. I wanted to get a sense from you if the regulatory side of healthcare and financial services is an opportunity, many of your peers have been talking about that as a key growth driver for the next, say, 12 to 18 months. Are you investing in those areas? Should we count on that as being also a growth engine for you?

We're looking at this and we're doing some specific efforts to benefit from this. But how it would work we will see like in next period. Because this is also a very competitive area where a lot of people are focusing on. So we -- including ourselves in it too.

Great, thank you. Good job.

So, like for example, we're bidding right now for one of the largest deals probably in financial services. But it's very big competition there and many hundreds of million dollars. So what happened with this, who knows.

Thank you.

David Grossman, Stifel.

Thank you. I wonder if we could just go back to some of the investments that you are making in the business, and obviously this has been a fairly big investment year for you. Do you think that we are at some steady-state equilibrium, if you will, in terms of spending levels as a percentage of revenue? Or do you think just based on where we are here mid-year that the growth, even relative to the strong growth of the business, that those investments may need to increase over the next 12 to 18 months?

So, I don't think we're looking at this as a percentage of the revenue. So we're more looking at this as what actually should be done to make sure that we can grow in the future. So -- and it is a little bit like try and see and that is what probably will be continuous for (inaudible). I don't think will be working from just percentage basis investment time.

So I guess with that said, Ark, are there any areas -- if we kind of look at the portfolio of investments we've made over the course of the year, where do you feel you have made the most progress and where are areas I guess that you feel you need to step it up even more?

So like investment, for example, in sales organization and marketing or internal software assets. So we did an investment during the last period and we're doing this right now, some of them starting to bring some returns, some we still need to see. So I cannot like really predict what would be happening exactly during the next 12 months. We're analyzing different areas and changing kind of directionally, albeit we are keeping it. So very difficult, very difficult to speculate on this topic.

Okay, fair enough. And just looking at the maintenance business, as always your maintenance kind of stream as a percentage of your overall mix has been different than the competition. I think obviously your model is a little bit different. Are you thinking any differently about the maintenance business and how big you want that to be as a percentage of the mix? Are you pretty comfortable with where it is and how it is trending relative to the growth of the overall business?

I think there is like also, just from understanding of maintenance and support in changing environment when there is like very difficult questions how (inaudible) for example or any new technology trends actually changes that landscape. And what we've seen with our clients, which is we do believe more kind of technology driven, that maintenance and support type of services changing as well.

It is not like regular legacy maintenance and support it is maintenance and support of very kind of live systems where deployment could be happening like in daily times or even more often for online marketing or e-commerce systems. And in this case in reality maintenance and support means something very different from what traditionally were considered.

And it is very difficult to separate as well because it is practically nonstop lifecycle of development and support and assistance. So we are looking at this differently and it's even statistically very difficult to separate what's the development of new features and new releases, again, if you talking about the systems like online booking for travel industry, for example.

Or it's traditional maintenance and support. From this point of view, yes, it is a small percentage, but it is mostly probably related to more traditional parts. And for this new type of systems it is very difficult to separate so it is a little bit a gray area.

Very good, thank you.

(Operator Instructions). [Alexander Van Jovovich], [Octoright Capital].

I want to come back actually to the split of your revenues by vertical. So I see that the banking and financial services vertical is continuing to grow faster than the others. So I am just wondering whether this trend is driven by the market is more the client specific issue for you, so we see more demand from your specific client.

And what are actually the drivers of faster growth for financial services industry? And do you continue to probably -- and do you expect to increase the share of that vertical in your revenue mix? Thank you.

I think you could look at this a little bit differently, because if you look at most of our competitors financial services would be a very big proportion of their business. Sometimes 40%, 50% or even 60%, 70%. And this is for a very, very big number of companies in our competitive landscape. EPAM, based on history and how it was developed, we started, as we mentioned many times, from strictly software engineerings for technology companies.

So we're kind of catching up in this area and growing this proportionally to the size of the total market. Because clearly financial services still is a number one champion in global services. So that is why it is a growing faster, we become bigger and financial services recognizing that they need for more technology driven vendors and we are getting our share. So that is probably the reason why it's growing faster than anything else. And I think we still have some room to grow there.

Okay, and with regards your revenues are you growing more with existing clients or you are adding more of new accounts to financial service industry?

We have very good growth in several existing large clients, but we added a number of very interesting new clients to the list as well.

Okay, thank you.

John Citron, JPMorgan.

I had two questions. Firstly, just on the sales force I think you mentioned you hired a new head of marketing during the quarter and also put some new salespeople into various places in Europe and North America. Could you just give us a little background on the kinds of people you are recruiting for these kinds of roles, firstly? Are they coming from competitors or are you hiring people with specific vertical expertise? So that is the first part of that.

The second question I had, more for Ilya, was just on the difference between GAAP and non-GAAP net income this quarter. It was one of the biggest divergences in the past several quarters primarily driven by quite a large stock-based compensation line. Is there any reason it was big this quarter and is there any guidance you can give on how that might trend for those of us that look at the GAAP measure more than the non-GAAP measure? Thank you.

So, on the first question it is an easy answer. So it is mostly hiring people with very strong industry expertise who have experience to manage very large accounting -- very large accounts and work -- have experience in the industry like in five to 10 years. On another side we bring in some people who have specific expert knowledge in our focused areas. So it is really both.

And on your question about the difference of GAAP and non-GAAP and divergence, there was in particular a one-time charge in the stock comp line related to an acceleration of a restricted stock award that we gave as part of the -- one of the two acquisitions we made last year. We basically parted ways with one of the senior managers who got a stock award and by GAAP we had to accelerate. That was about $900,000 worth.

In other words, our stock comp would then benefit from not having that piece amortized over the next two years. As you probably know, looking at the reconciliations other areas of difference between GAAP and non-GAAP, net income is purchase accounting foreign-exchange and other one-time gains or losses. But that was the biggest thing contributing to the uptick in stock-based compensation.

Thank you. If I could ask one follow-up question on -- now the acquisitions have been with the Company for at least a small amount of time, is there anything you can say about how -- your confidence that you can maintain the culture that has made the Company successful so far while adding on more on-shore acquisitions which obviously come with a different culture and heritage? Thank you.

Yes, that is interesting question; it is clearly a challenge for anybody. At the same time we have a history of kind of doing pretty well there because, if you look at history of our acquisitions, most of the people which came to us stay with the Company for very long time and becoming part of our management team.

So, when the last acquisitions, you're also correct, were a little bit different, it was mostly done with staff in North America. And from another point of view, I think it creates really good opportunities for the employees of these companies to work in global big companies and kind of integrate and start to work with global delivery. I think it's (inaudible) a lot of people with much bigger opportunities. So far we didn't see any real problems in this area.

Okay, thank you very much. Those are all my questions.

Moshe Katri, Cowen.

I just have a follow-up on the two acquisitions that you have done last year, Empathy Labs, Thoughtcorp. Maybe you can give us an update on maybe the integration. Maybe you can give us an update on some of the benefits that you've been able to get through your pipeline from this acquisitions.

Obviously Empathy focuses more on digital media and entertainment. Have you seen anything -- obviously this is kind of the hot area right now in terms of demand, maybe can talk about that. And Thoughtcorp is based out of Canada. Maybe you can talk about that too in terms of your ability to kind to penetrate that market? Thanks.

Yes, we mentioned some stuff in our first talk today. And in regards to Canada, we talked about it several times, I think we see confirmation of our original kind of expectations about synergies between strong on-site present in the market and our global delivery capabilities. And what is happening exactly confirming all these expectations we have pretty visible growth in the Canadian market today. We have a couple clients which one of them already top 10 and we're quoting that during the next 12 months maybe another one will become pretty large as well.

So it's again, developing based on our expectations pretty much. Also on Empathy Lab's side we've done this specifically to improve our capabilities in media entertainment and retail space, where you have seen that our technical skills and our ability to deliver complex applications like in some solution expertise and solution leadership to kind of get engaged in big deals from the very beginning.

What we seeing after practically only six months of working together that it not only allow us to open new doors and offer much broader total solution to the clients, it is also bringing a lot of benefits to the existing clients where we're coming and offering services which they didn't expect it from us before where we're starting to push some competitors in the areas which they really didn't expect us to play.

And it is also this type of expertise we usually bring actually are generating additional revenue around it for us. So we're already seeing this confirmation, so we hope like in another six to 12 months it would become much, much more visible.

Thanks.

(Operator Instructions). Steve Milunovich, UBS.

Yes, I just wondered -- I think you're talking about hiring a marketing executive and trying to enhance your branding over time. Can you give us any thoughts there?

We just hired a person, so let's talk about it next quarter.

Okay, thanks.

Thank you. And I'd like to turn the call back over to Arkadiy Dobkin, CEO and President, for closing remarks.

Yes, thank you, everyone, again for joining. We are happy with the quarter results and we look forward to talking to you next quarter; probably we will be able to address your questions better. And in more details like we saw some of them which we tried to defer to the next periods. Thank you again very much.

Ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thank you for joining. Have a very good day.