Epam Systems Inc (EPAM) 2015 Q2 法說會逐字稿

Greetings and welcome to EPAM Systems Second Quarter 2015 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Lilya Chernova, IR. Thank you. You may begin.

Thank you. Good morning, everyone. By now, you should have received your copy of the earnings release for the Company's second quarter 2015 results. If you have not, a copy is available in the Investor section on our website at epam.com. The speakers on today's call are Arkadiy Dobkin, CEO and President and Anthony Conte, 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. Arkadiy?

Thank you, Lilya. Good morning everyone and thanks for joining us. Today, we are reporting another strong quarter with 25% revenue growth over last year and 33% growth in constant currency terms. Our Q2 revenue is $218 million, above both consensus and guidance and represents sequential growth of 9% against Q1.

Anthony will provide more detailed update on our financial performance in second quarter as well as explain the changes in our Q3 and 2015 guidance. Before that, I am going to share some business highlights on our operations and priorities.

As you know, we are well into 2015 plan at this point. You also know based on our previous conversations that our strategies and plans were set out some time ago in an attempt to realize new opportunities open up with service providers due to the strong digital distraction in the traditional marketplaces.

Today there is a significant number of corporate wide information programs that many large and smaller companies are undertaking as a first priority. We're also convinced now that these distractions present at a very specific opportunity for EPAM to advance in the market's so-called product development services space.

We talked previously in some level of depths about it. So during the last quarter we just continued to move forward in line with our plan. Also, if you remember, at the beginning of the year we mentioned that we wanted to bring our new brand to life and present more consistent messaging around our growth service [resident] in our target industries.

As planned in the beginning of June we launched our new website and while we consider the current state of it still work-in-progress and I think it (inaudible) will be taken into account how fast all change in technology. We believe it now better communicates our intent and direction.

During the last couple of years we invested significantly both organically and via strategic acquisitions to develop strong digital capabilities within EPAM. We view this as a holistic mindset across all [of the EPAM things] not just enhance our standalone unit.

We plan is to continually invest into such capabilities and focus on growing new type of (inaudible) which allows (inaudible) and service design and methods to drive new business opportunities for our clients and new types of engagement for us.

In addition, last month we increased our North American footprint [to weather the dips] in digital space with the NavigationArts acquisition. While on this topic I would like to mention that this acquisition strengthened also our capabilities in web content technologies, specifically with the expertise in such leading platform as Sitecore. And Sitecore was this month recognized by Gartner together with Adobe where EPAM already has a very strong (inaudible) web content management platforms.

It also brings to EPAM several interesting clients including General Dynamics, Mary Kay and Marriott, just to mention a few. But we are not (inaudible) digital area. We agree with some recent industry experts that the real key in capturing the digital shift is a push of these types of programs into the very close integration with enterprise platforms. This is exactly how we sell the next very important horizontal (inaudible) that we call Intelligent Enterprise. This is a real connective tissue that brings digital from (inaudible) information into the business at large.

For us this is about building on core strengths in agile BI, in big data while expanding into data science and analytical areas. It also provides the ability to integrate all of that with traditional ARP sharing platforms and in many cases to help move all that to the cloud and finally to assist in managing those applications in cloud infrastructure itself or take a full ownership in particular cases of those tasks.

All of that is impossible without very deep advanced skill set and strong hand-on understanding of the next generation technology platforms, enterprise agility and years of accumulated enterprise level [R&D] engagement. This is what our next advanced technologies service line is (inaudible) in next generation technologies to the modern and constantly changing delivery practices and to our internal client oriented innovation lots to test and to prototype new ideas into the associated effectiveness and applicability of, for example, (inaudible) approaches to help solving very specific line programs.

Two decades of experience sharing top global technology companies and being in expansion of their [R&D] units for years puts EPAM into new position of working in very different type of services to our demanding clients who suddenly become exposed to the very present digital disruptions. And when our expertise and technology combines with our mature (inaudible) intelligent enterprise and digital engagement, we believe it makes a very unique proposition to the market.

But we don't stop there too. As you all know EPAM has always put great emphasis on software engineering excellence. This actually was our primary deadline for a very long time. That focus allows us to attract [top software] for the companies and technology powerhouses of the world to utilize our engineering services and then in turn helped us to develop our advanced technology understanding and capabilities at a very different level and then in another turn to support our intelligent enterprise and digital engagement service lines to the full extent.

Therefore we continue to invest in and to develop that very core engineering contingency. We do it through very structured talent acquisition, very specific training and now harmonize talent retention programs including our regular software engineering clients against some local and global (inaudible) special rewards and other internal development programs.

Results of core engineering skills, not some we talked about it before, could be delivered for those new types of solutions our clients are expecting from us today. This core engineering service line really forms the foundation for much of the work we provide to customers in all our other service lines.

In addition, we also continue to see good amount of the business in our traditional independent software vendor segment which is still very strategic for us and allow us to stay in good shape and be much better and much well prepared for the new engineering and technology shifts which are constant today.

So, in overall the key challenges and investments that you face are hard to combine those type of traditionally very different service lines in the most effective way and make those work together from start to finish to solve our client problems, not just from conceptual standpoint but from final delivery, implementation and production standpoint.

Now from vertical point of view. We're seeing really interesting convergence in demand for real vertical domain expertise together with these new technology and service capabilities I mentioned today. The first strong traction this past quarter (inaudible) retail business and optimistic about the growth in life science and healthcare vertical. It's also very much in line with what's happening in financial services and media and entertainment segment as well.

From geographical standpoint, we continue to expand in large part by following our customer engagement expansions plans in Asia and Europe and also we have a new presence in Mexico. Asia is becoming more [differently] priced in terms of the verticals providing support in core engineering testing and also digital to some new customers in the retail, media and consumer verticals.

So that is the high level of go-to-market approach and that is mostly what we were focusing on and we'll continue to focus. Along with our investments in business development and the talent management practices which are changing to support new requirements from the service lines we described and clearly very serious investments in marketing and branding efforts in progress.

Finally, I wanted to share a few examples of the types of new engagements that we are seeing that I hope really illustrate the type of services we can provide now. So, one good example of our design sync in leadership driving real product development service is the work we started with Vodafone on a new product which extracts data from motor scooters. We started with our new service design team providing conceptual design and working with the customer. Took it from initial concept (inaudible) to industrial design, to application design and to a final development. We're seeing with this type of design led engagements, a real opportunity for us to capture more of the market share in this product development segment.

On the technical product development side, we have become the product development partner for [Unify], who with their new product is building a next generation cloud based collaboration platform for enterprises. While design is a big component of the engagement and we have a successfully completed global design firms there is a real lapse of technology capabilities that is required to build the product that should differentiate itself against very serious global competition. It's encouraging for us that companies like Unify see us a strategic partner to help them develop in such front.

Finally, we're seeing how our existing customers with whom we have long standing relationship like Adidas for example push into new service models for such platforms like marketing technology and utilizing capacity agile for delivery. This is potentially really interesting for us because it confirms our differentiation capabilities and our advantage in delivering this type of new service models to expand from traditional IT services to digital marketing area but very tightly relying on strong converging technology and core engineering capabilities, which is what exactly differentiates us in this product development services space.

With that, I will turn to Anthony to share more details on our performance and guidance.

Thank you, Ark and good morning everyone. I will spend a few minutes taking you through the second quarter results, then I'll talk more about our outlook for Q3 and the full year. As usual you can find the full details of our results in our press release and on the quarterly factsheet located in the Investor section of our website.

Q2 was another solid quarter of revenue, closing at $217.8 million and 24.7% over last year, 8.9% over prior quarter and beating both consensus and guidance. Currency headwinds remained, compressing our Q2 revenue by about 8%, meaning in constant currency terms, we would have grown 32.5% over Q2 2014. Sequentially, we're up 8.9% from Q1 and 6.7% in constant currency terms, meaning compared to Q1, we saw some currency tailwinds on our revenue.

The key currency mix of our revenue in Q2 has remained relatively consistent with what I shared in Q1. North America remains our largest segment representing 50.7% of our Q2 revenues, up 27.6% year over year and 30.4% in constant currency, the difference being mainly movements from the Canadian dollar.

Europe was up 27.5% year over year representing 40.1% in Q2 revenue. In constant currency terms EU would have been up 37.4% year over year. APAC continues to grow and diversify away from just banking on financial services, now representing 2.8% of revenue and growing 14.9% sequentially.

CIS continues to struggle and is down 20.9% year over year representing only 5.4% of revenue in Q2. The dynamic of this drop is both currency and volume related. But in constant currency terms CIS would have been up 8.5% year over year. In terms of our industry verticals we've seen some tempering of the growth in the banking and financial services industry.

This quarter was about 10.7% growth rate due to significant slowdown in the Russian banking customers offsetting the healthy growth in the banking sector we're seeing in other regions. We're seeing some encouraging expansions for the travel and consumer space, especially in Europe, growing 42.3% year over year and 18% versus prior quarter. The upswing represents account growth across the board and specifically increased traction in the EU market. Life sciences and healthcare, our newest vertical, grew 8% sequentially. Business information and media and ISV both demonstrated continued strength generating over 20% year-over-year growth. Our other vertical, which is a collection of customers from various industries, is down 6% year over year due primarily to the Russian ruble decline, but is up 6% sequentially. We are seeing some positive trends with our customer concentration numbers, our top 20 accounts which grew 22.3% year over year now represents 55.3% which is down 1% from last year in concentration [deal]. All other clients outside our top 20 grew 27.5% year over year.

Now turning to our expenses, we completed the quarter with over 13,200 IT professionals, an increase of about 20% compared to Q2 of 2014 and 10.8% increase year-to-date. Currency continued to generate some benefits to our cost of revenue in the quarter when compared to prior year. There was approximately 8% constant currency benefit versus Q2 of 2014 and the allocation of our currencies across our expense base also remains fairly consistent with what I shared in Q1. Utilization for the quarter was at 76%, slightly down but still on our target range. GAAP income from operations increased 27.8% year over year to represent 10.8% of our revenue in the quarter.

GAAP IFL includes stock-based compensation expense and certain other acquisition-related costs that we exclude from our non-GAAP measures. Stock-based compensation for the second quarter increased 108% over prior year. This is mainly driven by the 60% plus increase in our stock price and 40% of the total Q2 charge and 55% of this increase is related to the acquisitions that we made in 2014.

Our non-GAAP income from operations for the quarter after these adjustments increased 27.7% over prior year to $36.9 million, representing 16.9% of revenue. Our effective tax rate for the quarter was up closing at 21.3%. Overall the tax rate is increasing due to subtle changes in our organic geographic mix of current year earnings shifting towards countries with higher statutory rates.

Additionally, new tax jurisdictions or deeper concentration into some existing jurisdictions from the acquired businesses in 2014 in areas such as US, Western Europe and Asia also added to the increasing tax rate. For the quarter, we generated $0.64 of non-GAAP EPS at the top end of our guidance and $0.37 of GAAP EPS based on approximately 52 million shares diluted outstanding.

Our balance sheet remains strong. We finished quarter with approximately $205 million of cash. During the second quarter operating activities generated approximately $2.2 million of cash, unbilled revenue was at $92 million as of June 30, accounts receivable was at $135 million and DSO ended the quarter at approximately 51 days. With that I now turn to our guidance.

We are increasing our full-year 2015 revenue growth expectation to 23% to 25%, non-GAAP net income growth for [2015] is now expected to be in the range of 22% to 24% and our effective tax rate will be approximately 21%. For the third quarter of 2015 EPAM expects revenues between $238 million and $240 million, representing a growth rate of 23% to 25% over the third quarter of 2014. Third quarter of 2015 non-GAAP diluted EPS is expected to be in the range of $0.66 to $0.68 based on an estimated third quarter 2015 weighted average share count of 52 million shares. GAAP diluted EPS is expected to be in the range of $0.43 to $0.45.

With that I would now like to turn the call back over to the operator and open up for Q&A. Operator?

Thank you. At this time we will be conducting a question-and-answer session. (Operator Instructions) Anil Doradla, William Blair. Mr. Doradla? We will move onto our next questioner. Jason Kupferberg, Jefferies.

This is Amit Singh for Jason. Great quarter here. It's great that you guys raised the overall reported guidance. Just wanted to get a sense that in the second quarter it seems like the FX headwinds are slightly lower than what you guys are expecting, around 70 basis point lower. And for the full year you guys had previously talked about a 6% year-to-year FX headwind. I'm trying to get a sense of has that expectation changed as well, I mean ultimately I'm trying to get at your constant currency revenue growth guidance for the full year.

The expectation for the full year has not changed. We saw some pullback in currency in Q2, but if you look at what's happened really over the past month, it looks like the ruble is starting to fall again. We're seeing some weakness in the Hungarian forint, the pound and euro as well. So I would say our expectations remain consistent with what we've given kind of 5% to 6% full year. The Q2 coming in slightly below our initial expectations. It looks like it's reversing in Q3 at this point.

Okay, great. And then for the guidance raise, if you could break down -- I mean how much of it is from the second quarter upside versus the expected contribution from NavigationArts? And while you're speaking about it, if you could give us a little bit of sense of how much inorganic contribution is supposed to be in your 2015 revenues?

When you say inorganic, you specifically talking at NavigationArts, or are you talking about compared with the prior year?

First to start off in this year your guidance raise, how much is it from the second quarter revenue upside and from the expected contribution from NavigationArts in your full-year revenue.

Right. It's very hard to separate the two. With NavigationArts, we've actually already begun full integration and we have some plans where we're actually going to market as one company already. So the guidance actually includes a pretty well integrated go-to-market approach. So, I can't clearly separate the two from what's organic and what's coming from NavigationArts just the way we did this acquisition. Roughly speaking, I would say that if you look at the first half of the year and over performance from the first half of the year combined with our expectations for the second half and including NavigationArts you can roughly say 50:50 is organic and inorganic. But again that line is fairly blurred based on how we're moving forward with the integration in NavigationArts and what we're seeing as far as traction with their existing accounts and the growth expectations we have.

All right. Perfect. And just one last one from me. For margins, I mean, you guys are showing year-over-year adjusted operating margin improvement and this quarter it was up 40 basis point year over year. How much of that is related to FX? And as you're talking about the full year, are you guys still expecting to be in that 16% to 18% range?

Yes. We are expecting to be in that range. And the impact on margins from FX is actually relatively small. We tend to be relatively a natural hedge. We see some real headwinds on revenue but we got a lot of benefits on the expense side. So it's really a negligible benefit at the operating margin level from currency.

Anil Doradla, William Blair.

Great results and congratulations. Just a small clarification, skipped a little bit of your prepared remarks. But on infrastructure services, I know it's a very small portion of your business, but what's going on there, I mean, from a sequential and year-over-year growth not very strong?

Nothing is really special. As you said, it's really not a significant piece of our business. It's not something that we actively go after or actively market. A lot of our infrastructure services is related to other services in the software development space that we're providing. So it's not something we're really focused on. It's a relatively small piece of the overall revenue pie. So, it moves randomly within the 8% to 9% in that range there.

And Arkadiy, as a follow-up, can you talk a little bit about talent, your ability to source talent and ability to get the right personnel? Clearly you're moving in the right direction. You're hiring a lot of people. Can you at least qualitatively talk how the talent pool is? There many of your competitors are opening shops in some of the geographies that you're present in. So would love to hear what's going on on that front.

Yes, it would be good if you can share who is opening. I think we're mostly in line with our regular core maintenance hirings. So it's I am repeating probably this in each call. Look in general, there is definitely a shortage of talent and I mentioned today what we're doing in this area and how we plan to not just hiring from market, but grow people internally but at the same time working with the universities. So I wouldn't say anything new happened in this quarter and I didn't -- wouldn't say that there is some specific issues which making this (inaudible) like several quarters ago. It is one of the challenges and this challenge we kind of facing probably for the decades and probably we will facing more. So don't see any changes.

Great, guys, and congrats on the great results.

Steven Milunovich, UBS.

This is Peter in for Steve. Thanks for taking my question. Anthony, could you give us a sense of what attrition was in the quarter?

Attrition came in at about 7.5% for the quarter, voluntary, yes.

Voluntary. So that marks two quarters your 8% or below. Is that changing your plans for headcount growth for the year at all?

We are adjusting based on that and continuing to watch attrition levels. As we said in Q1 we're still at -- we're still benefiting from some of the macroeconomic issues that are going on in the CIS region and that's helping keep attrition low. So we keep watching that. We do expect it to start to go back up to normal levels at some point, but we modulate our headcount in recruiting based on what we're seeing for attrition trends.

Okay. Any sense of what type of head count growth you're looking for to exit the year at?

I'm sorry, can you repeat that question?

What's the expected head count growth that you're expected to exit this year at?

It looks we are on -- we're on target to roughly in the high teens to 20%.

And then if I look at SG&A, it's up about 300 bps as a percentage of revenue year over year, same as last quarter. Should we consider this roughly, the new base line and if currencies were to reverse and go against you, how flexible are you in controlling that spending?

We can definitely control the spending. Part of the uptick that you're seeing is related to -- we've opened a number of new locations which brings new facilities, some new overheads of an upfront investment to get those facilities up and running. So a lot of that front-runs when those locations can become billable, that's causing a spike in my SG&A.

As far as currency goes, SG&A, a lot of that tends to be in US dollars. So we don't get a ton of benefits through the SG&A line from currency. Most of that seems to impact our cost of revenue. And so that causes a little bit of a swing that you see in percentage of revenues. So we get benefits from cost of revenue which helps my gross margin go up, but SG&A doesn't get as much of the savings from currency.

That makes sense. And then if I look at revenue per engineer adjusting for currency, it looks to be up nicely about 6%, 7% year over year. Could you attribute that to more of a changing dynamic of the mix of work that you're doing or are pricing uplifts contributing to that as well?

Honestly, we don't spend a lot of time looking at that particular metric, revenue by headcount. It's not something that we have. So I can't answer that specifically as the reason for the uptick. But I think that we are seeing increases from a pricing perspective still. Unfortunately currency headwinds are taking a lot of the price increases away because we have a lot of ruble, pound, euro-based revenues. So we're seeing some headwinds taking away some of that pricing benefit. And we are seeing ourselves continue to sell the higher value services moving more and more towards higher product development services. And I don't if Ark if you want to talk more about the mix of our services.

We're not sharing specific data yet, but clearly again back to what we said it already earlier today we're seeing, as digital consultative approach in this area actually create very different entry point for us and very interesting opportunities in the market across all this verticals where we work. So again we said it already with couple of examples, but there are many more and this example is not a kind of single-out case. It's actually definitely the presentation of some type of trends.

Is this changing -- some of these new uplifts that you're seeing from this consultative approach, how would you compare that versus some of the earlier success you've had with Empathy Lab and leveraging some of the front-end capabilities of that acquisition?

It's an expansion that clearly we're getting more experience how it works. And as also we mentioned that one of the key challenges is kind of how to make this type of capabilities work in good harmony and how to work from the beginning together when we're starting to consult and design with very good understanding and how we going to deliver.

And like all its successes are actually opposite when we started to work together with people from Empathy. Now it's coming on a very different level and very different size of programs as well. So again that's an experience which we have already for two plus years. And then we added, as we also mentioned, service design capabilities with Great Friday's acquisition. And now, we hope that we would be able to do it much smoothly with new additional skill sets.

Vladimir Bespalov, VTB Capital.

Congratulations on great results. I have a question about your verticals, so if I look at the growth rates, they are quite divergent. For example in banking and financial services, we see a slowdown. In some other verticals like travel and consumer and life sciences and healthcare, we see very good growth.

So what is behind this? This is the first question. And how do you see these verticals going forward, how big trends are going to develop, in particular in your guidance for the full year for example?

Well, on the banking and financial I kind of addressed this in my script. The main issue in banking and financial is that the Russian ruble drop and the macroeconomic concerns in Russia have really impacted our banking and financial services clients there causing a significant pullback when you look at it as a percentage of our overall revenue. It's actually dropped so much it's offsetting all the positive that we're seeing in Europe and North America and the traction we're having there.

As far as travel and consumer goes, again as I kind of referenced in my script, we're seeing very kind of broad-based growth, especially in Europe and we're gaining significant traction in the travel and consumer space and we saw some real heavy growth across the board in Europe and even in North America from the travel and consumer segment -- sector.

But in general we expect, as we also mentioned before, we expect growth, similar growth across all our verticals and there is clearly volatility quarter by quarter depending on when new clients started or some spikes in delivery or special kind of -- very special deliverables for specific programs. And again with our size sometimes it's actually great, this kind of difference in growth in particular quarter. But there is nothing special or changing.

James Friedman, Susquehanna.

Congrats on a good quarter here. Anthony, I want to ask you about the pricing environment. I know that you had mentioned that some of the price actions may have gotten compromised by foreign exchange. On a constant currency basis though how would you characterize the direction in pricing?

Direction in pricing for constant currency is roughly in range with what we've discussed. We're still seeing 6% to 8% annual price increases. So we're still seeing a pretty healthy, relatively speaking, pricing environment for our services. So very consistent with what we've discussed in the past.

Okay. And then with regard to the top 10 customers, I know you called it, I see it here in the factsheet here, it looks like it was up a bit year over year, it was down sequentially. I guess my question is how far behind the top 10 is the revenue rushing in. So is this balanced across the remainder of the customer base or are there others that are up and coming that may enter the top docile here?

Yes, it's definitely across the board. I think I had shared one metric that talked about -- I looked at it slightly -- top 20 and below the top 20, but if you look at all of our customers below the top 20, they are growing at over 27%, so pretty healthy growth coming from the broad customer base. So we're seeing a lot of growth across the board, a lot of new customers coming into the pipeline and significant growth outside of the top 10 and top 20.

Alex Veytsman, Monness, Crespi.

Congrats on a strong quarter. Just wanted to ask you about Europe. It looks like you had roughly $7million to $8 million upside from the first quarter to the second quarter in the European market. What's specifically driving that upside? Where are you seeing the strongest trends right now?

In European market specifically, Alex, is that the question?

Yes, specifically in Europe. Yes.

As I mentioned the travel and consumer was actually one of our strongest sectors in the European market for this quarter. Additionally, banking and financial continues to be a very big market for us in Europe as well. Obviously, UBS is based out of Europe and continues to grow strongly for us. We have a number of new banking customers, we have a number of new travel customers and the consumer space. So those three areas tend to be the strongest growth for us in Q2 in the European market.

That's helpful. And then it looks like that CIS as a percentage of total revenues is stabilized, actually it increased for the first time in last several quarters. Is roughly 5% of total revenues is that what you expect as a run rate for the rest of the year [and it may] continue as well?

Yes, that's approximately what we're expecting it to settle in at. Q1 is typically a very slow quarter for CIS. There's just -- you have half a January with the holidays and just a low billing month in February. So Q1 is always slow in CIS, so Q2 is more of a normalized trend. I would expect it to settle in around there subject to impact coming from the ruble as you've probably seen it starting its fall again in July.

Steven Milunovich, UBS.

Last one for me. Anthony, can you just give us across the bridge between GAAP and non-GAAP for the full year and the quarter?

(inaudible) go through the specific items, amount what specifically do you mean?

Sure, that will be great. Yes, if you could just go through what the expectations for stock comp and --

I am sorry, for the forecast, you mean.

Yes, please.

Okay. So stock comp should remain relatively consistent for the balance of the year looking at probably $11.4 million, $11.5 million per quarter for the second half. And then amortization of intangibles should be around $1.5 million per quarter. And FX, I'm putting FX in at roughly about $1 million a quarter in loss and we'll see where that settles out. I mean, FX is always our big kind of crap shoes because nobody knows where that's going to go exactly.

(Operator Instructions) [Ivan Dallias HDER Bank].

This is actually [Joye Gurgava from HDER Bank]. Just curious on your guidance that you have (inaudible) $14 million to $15 million. How much of that is coming from NavigationArts? Thanks.

I kind of addressed this one earlier. With NavigationArts, it's very difficult to separate it out because we have already actually begun integration of NavArts and our go-to-market approach is much more integrated than really any other acquisitions that we've done in the past. So there is no clear separation.

Roughly speaking we've said about 50-50 is the split organic and NavArts, but again that line is heavily blurred as we've already done a lot of integration and we're really moving forward as one company, especially with a lot of their existing clients.

Is it possible then maybe to comment on just the revenue base of the Company prior to the acquisition and maybe just talk about the cost?

No, sorry we don't really share that information.

Ladies and gentleman, we have reached the end of our question-and-answer session. I'd like turn the floor back to Arkadiy Dobkin for closing remarks.

Thank you everybody again for participation today. So it was a good quarter for us and again no any specific news which is probably good as well, but too good. So we'll be talking to you in three months and have a good day today. Thank you.

Thank you. This does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day.