Forrester Research Inc (FORR) 2007 Q2 法說會逐字稿

Greetings, ladies and gentlemen. Welcome to the Forrester Research second quarter 2007 financial results conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Phyllis Paparazzo, Director of Investor Relations for Forrester Research. Thank you, you may begin.

Thank you. Good morning and thank you for joining our second quarter 2007 call. With me today are George Colony, Forrester's Chairman of the Board, Chief Executive Officer and Acting Chief Financial Officer; Charles Rutstein, Forrester's Chief Operating Officer; and Paul Burmeister, Senior Financial Advisor to the CEO. A replay of this call will be available until Wednesday August 8. And can be accessed by dialing 877-660-6853. Please reference the confirmation ID 248355 and the confirmation account 242. This call is also available via Webcast and will be archived in the Investor Section at www.forrester.com.

Additionally, we will be reporting our third quarter 2007 financial results on Wednesday, October 24. Before we begin, I would like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expects, believes, anticipates, intends, plans, estimates, or similar expressions are intended to identify these forward-looking statements. These statements are based on the Company's current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements.

Some of the important factors that could cause actual future activities and results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Now, I would like to turn the call over to Paul Burmeister.

Thanks, Phyllis. And good morning, everyone. I'll review Forrester's preliminary and selected second quarter results as of June 30 and then turn the floor over to George for a business update. As we have previously disclosed, the Audit Committee of the Board of Directors of Forrester is overseeing an investigation of practices relating to the granting of stock options. And as a result, we will be restating our historical financial statements.

In our press release this morning, we disclosed what we believe to be a reasonable range for the cumulative adjustment to noncash stock-based compensation expense. More about that in a few minutes. With the restatement still pending, for purposes of our press release and conference call, we have again chosen to present only selected financial information that is unlikely to change as a result of this restatement process.

Now, for our second quarter and year-to-date results. Forrester's second quarter revenue increased 15% to $55.2 million from $47.8 million in the second quarter of last year. Second quarter research services revenue increased 15% to $32.1 million from $27.8 million last year. Research services revenue comprised 58% of total revenue for the quarter. Second quarter advisory services and other revenue increased 15% to $23.1 million, from $20 million in the second quarter of '06 and comprised 42% of total revenue for the quarter.

International revenues were 30% for the second quarter, compared to 29% in Q2 of last year. Forrester's year to date revenue increased 16% to $102.6 million, from $88.4 million in the second quarter last year. Research services revenue comprised -- grew 16% to $63.4 million, from $54.6 million last year and comprised 62% of total revenue. Year to date, advisory services and other revenue increased 16% to $39.2 million, from $33.9 million last year and comprised 38% of total revenue for the quarter.

International revenues were 30% year to date, compared to 30% last year. And we expect international revenues to comprise 28% to 30% of total revenues in 2007. On our balance sheet, cash and marketable securities at June 30 totaled $233 million. Accounts receivable as of June 30 was $37.8 million, compared to $32.2 million a year ago, a growth rate of more than 17%. Days sales outstanding was 79 days.

Bookings, level with last year. And account receivable over 90 days was 13% at June 30, which was down from 16% last year. Deferred revenue, that's the amounts billed but not yet taken into revenue, was $92 million at June 30, up 16% over June 30, 2006. We look at the total of deferred revenue plus future accounts receivable, the amounts under contract but not yet invoiced, as a useful indicator of future revenue growth. This total is up 20% over the second quarter of last year.

Agreement value, the total value of all contracts for research and advisory services in place without regard to the amount of revenue that has already been recognized or is yet to be recognized, was $173.9 million at June 30, a 13% increase from last year. At June 30, Forrester's retention rate for client companies -- I'm sorry. In the -- yes, in the second quarter, Forrester's retention rate for client companies was 76% and our dollar retention rate was 87%. Both rates are calculated on a 12-month rolling basis and both are within our target ranges. Our enrichment rate was 106% for the 12-month period ended June 30, also within our historical range.

At the end of the quarter, our total number of client companies was 2,364, down three from March 31. George will be commenting on this result in his remarks. For head count at June 30, Forrester had a total staff of 848, up 102 from 746 a year ago. Current headcount includes a research staff of 320, up 28 from last year, and a sales staff of 275, up 22 from last year.

Now, I would like to cover our pricing strategy and business outlook for the rest of the year. In assessing our prices, we look carefully at product demand, value delivered and the competitive landscape. Effective July 1, we have implemented selective price increases that average about 5% overall. Our decision to raise prices is based on three factors, market conditions, competition and the value we're providing to our customers. We have increased our RoleView prices by 5%.

RoleView, a major product enhancement to our previous WholeView 2 product was launched in the first quarter. At that time, despite substantial the enhancements in value provided to our customers, we held prices at previous levels. Since the launch, we're very pleased with the market's receptivity to RoleView. Based on the very positive response, we have raised the price of this core syndicated offering.

Looking at these same factors of market competition and value, we've increased our Forrester Leadership Board product prices by 10%. We do not anticipate push-back from the market on these price changes. As you know, the full affect of these price increases will be realized over the course of the next 12 to 24 months as annual contracts come up for renewal.

In our press release this morning, we disclosed that we expect to record a cumulative adjustment to noncash stock-based compensation expense of $45 million to $50 million, with most of that charge relating to years prior to 2003. We do not expect that the anticipated restatement will have any impact on previously reported revenues or cash positions. Forrester has not provided third quarter guidance. For the full year, we are reiterating revenue guidance in the range of $207 million to $212 million. Thank you. I will now turn the floor over to George.

Good morning, everyone. For the next few minutes, I will give some color to the numbers and after my remarks Paul, myself and Charles Rutstein, our Chief Operating Officer, will take questions. Our transition to role-based remains on track. Our sales force is now focused on three sets of roles, IT, technology industry and marketing strategy, is evolving towards increased targeting and fluency with clients. Our research agenda is increasingly set by our clients and at varying speeds. Each of the 17 role sites are adding features that increase relevancy for roles and stimulate client involvement.

External observers continue to give positive analysis. Lighthouse, this is an analyst relations consulting firm, recently stated; "Forrester has made impressive progress over the last year. It's role-based organization is increasing value to clients." Forrester was named the Number One Provider of Outsourced Research Data Services according to the latest edition of the Black Book of Outsourcing. This is based, by the way, on more than 22,000 survey respondents.

Finally, Forrester was named one of the 100 Fastest Growing Small Public Companies by Fortune. But keep in mind, it is a year of transition with expected challenges. While we added new 1B+ companies including Mega International, Ameristar Casinos and [Haniford] Brothers, total client companies dropped by three in the quarter. Our original goal was to increase client companies by 300 to 350 in 2007. We now believe that this number will increase by 150 to 250 in the year.

The primary reason for lower net client additions is that we made a sizable investment in new business sales teams this year. Those teams are ramping somewhat more slowly than planned. There is no evidence of the decline in -- that the decline is related to our move to role-based or a fundamental competitive shift.

And please note, that deferred revenue plus future AR grew 20% in the quarter, indicating a deepening of our relationship with existing clients. And this is one of the long-term goals of our role-based strategy. The primary action we are taking to correct this problem is the rollout of a new higher train ramp program that will enable to us select, on board and develop sales people more effectively and with more speed.

I would now like to review progress for each of our product, starting with research. In Q2, 548 new research documents were added to RoleView.

49,000 clients have now chosen a role and the top three roles are, number one, application development and program management professionals with 4,900 clients; enterprise architecture professionals with 4,500 clients; and strategy professionals with 4400 clients. We hosted 92 teleconferences in Q2, with a total attendance of 5,264 participants and all 17 roles were represented. RoleView stays on track to attain revenue growth in the 6% to 8% range for the year.

Turning now to Forrester Leadership Boards. The five boards focused on IT roles now have a total of 572 members. Technology industry boards, include the analyst relations and technology marketing councils, with a total membership of 233. And finally, the marketing and strategy boards, which includes the CMO group, the database marketing council and the interactive marketing council, now have total membership of 138. So the end of Q2, the Forrester Leadership Boards had 943 members. The FLB business is on track to attain revenue growth of between 70% and 72% in 2007.

Forrester's data business continues to attract an impressive client list. North American and Consumer Technographics added or renewed 17 1B+ companies including Citigroup, Walgreens and Visa. European Consumer Technographics added or renewed five 1B+ companies including Google U.K., Dell Europe and Telecom Italia. And finally, Hispanic Consumer Technographics added four new clients, including Honda U.S.A. and H&R Block.

Turning to Forrester's consulting business, consulting projects for IT roles, centered in three topics. Number one, IT planning. Number two, vendor sourcing. And number three, security strategy. In the marketing and strategy roles, primary consulting topics were eBusiness strategy, interactive marketing and finally Website transformation. And for technology industry roles, projects centered on total economic impact, we call it TEI studies, market assessments and finally effective market research initiatives. We believe that our consulting business will grow approximately 14% in 2007.

Our events business had a very busy quarter. We hosted five events. For IT and technology roles, we hosted the Security Forum, the North American IT Forum and the IT Forum EMEA. And for marketing and strategy roles, we held two events, The Marketing Forum and the Finance Forum. In the third quarter, we will be holding two events, both for IT roles.

I am very pleased to have Mike Doyle joining us as our new CFO. Mike has great experience. He will bring systems expertise, financial wisdom and management insight to the team. He has been a planner, an operator and a senior financial officer with large companies and small. A broad background that prepares him to take financial charge at Forrester. I look forward to introducing Mike to investors in the very near future.

So to conclude. As expected, 2007 is unfolding as a transition year to role-based, replete with inevitable adjustments and adaptations. We believe that we are on the right path for our clients and for our business. We hope to see many of you as we visit with investors in the third quarter. Among other trips, we will be at the Canaccord Adams Conference in Boston and the Sidoti & Company Conference in San Francisco. Thanks for listening to the call. I would now like to welcome Charles Rutstein, Forrester's COO, to join us for questions.

Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. (OPERATOR INSTRUCTIONS) Our first question comes from the line of Laura Lederman with William Blair & Company.

Good morning. A few quick questions. One is, can you talk about why the reps aren't ramping as quickly on the sales side because you've been hiring sales reps for a really long time? Why is it having that impact now? And on a related question on the less than expected customer count, I realize that you think it's -- or that you attribute it to the sales reps ramping more slowly but any thought at all as to what it means for the industry, or do you think that would be a spurious correlation, saying it has something to do with the industry not maybe growing as fast?

Hi Laura, it's Charles. Let me try and tackle both of us. With respect to the first question about, we have been hiring sales people historically. A, we hired a lot more of them and so we have some new managers who are overseeing those teams as we've had to scale. The second is, is I would say it's fair to say that we're in the midst of a shift from a sort of art to science. We're shifting from a methodology that was a bit ad hoc to a methodology that is much more rigorous and I think we got -- we thought we could get that done a little bit faster than it turned out. So that's with respect to the first. With respect to the second, no, I don't think that this implies any industry-wide trend or anything like that. I think what you're seeing is some challenges in scaling and execution within the quarter.

But you're also seeing a deeper not broader trend, Laura, which is really being brought on by role-based.

That brings me to my final question and then I will pass it on, which is the price increase, despite the fewer customers seems to be a bit counterintuitive. So, I wanted to talk a little bit about that. If there are fewer customers that would tend to mean that maybe it's not a good time to raise price.

So, Laura, Charles again. A couple of things. First off, we instituted the price increase on July 1, so there was no impact within the quarter. Second, as we look forward, as Paul mentioned, there are a handful of reasons why or -- reasons that we look at when we contemplate a price change. The three mentioned were competition, market conditions and value.

If we look at competition, it's no secret what's been going on in our industry with consolidation. We think that we are in a good place competitively. With respect to market conditions, the underlying tech economy feels very sound to us, and looks like perhaps a bit of an uptick in the second half of this year. With respect to value, as you know, we did extensive testing with RoleView. Before we launched we had more than 1,500 clients using it. We know from feedback from those clients that they are seeing increasing value from it. Moreover, even on the service front, you heard the bits from AllTel and others indicating the value that clients are getting from us. That's ultimately what gives us confidence to say that we can ask for and get more money for the product.

Actually, I do have a final question if I may, which is, if you look at agreement value, what did core research grow if you take the Boards and you take out the data subscriptions? What did it grow, just the core research In agreement value? Sorry.

Laura, I don't know that we've disclosed that in the past.

Yes, last quarter did you on the call. You mentioned it was about 6%.

Let me get back to you, just to confirm what we gave you last quarter and have that number.

Thank you.

Our next question comes from the line of Dom Lacava with Canaccord Adams.

So, just to kind of dig deeper into the sales question. So what specifically -- you're saying that you have a process that's now going from ad hoc to kind of more focused. So what specifically are you seeing that's perhaps not working or looking differently as far as going from ad hoc to a more focused approach? What specifically might not be working or what else is there that we could look at as to why sales might be down a little bit right now?

So the real -- let me zero in the question on, Dom, it's Charles again, on the new biz side. As George mentioned, the aggregate deferred revenue, plus future AR in particular, which gives a good snapshot, actually was up nicely year on year. So what we're really focused on here is a new biz challenge. In that particular part of the market, we know that sales cycles tend to be long. We had hoped that we could do some things to shorten those sales cycles and ramp some sales people more quickly. Some of those things include improved lead generation, improved training and fluency early in the process. To date, we have not seen the results that we had hoped. But we still have those teams in place, still chugging away and I would anticipate seeing improvement in those teams later in the year.

I think it's also a factor here, Dom, around the transition of the sales force to selling role-based versus selling on a topic basis. So, as I said several times in my remarks, this is a transition year, we're all trying to understand that and figure that out but that's a work in progress.

Sure, I understand. I just assumed that if you were moving to sort of a format that's more well received by clients that selling in on a role-based basis would be sort of a no-brainer. I didn't anticipate there would be as much friction in the transition.

It's going to take awhile.

And then, as far as the customer total going down, can you break that into gross versus net? Were there significant number of new clients kind of offset by some historical clients that you lost?

We're trying to get our heads around this.

I don't have the numbers.

Looking for a number. Is the gross number of new clients that you're adding kind of trending in the right direction and it's just a matter of clients that you've had that are kind of peeling out for one reason or another? The major factor here is new business, Dom.

That's the major impact on the net. If you look at both the dollar retention rate and the client retention rate, the dollar retention rate was very solidly within our historical range. Client retention rate was also in our historical range. There's some hint in that, that the losses were among smaller customers, but we're not seeing longstanding major customers peeling away, to the contrary. Those are not the hints that we would have been looking at in implementing a 5% price increase.

Okay. Right. And that's kind of what I was trying to get at now. Now, as far as shifting to the CFO, can you kind of walk us through that process a little bit as to -- I know you had talked about having 10 of 20 candidates interviewed on the last call. Can you talk about the process? What were kind of the deciding factors? I know you probably can't name the other candidates involved but just qualitatively what the final few candidates look like and what led to the ultimate decision?

Well, as you know, Spencer Stuart was the firm we were working with on the search. We interviewed, not me personally or the group at this table did not interview, but we interviewed -- the Company interviewed probably 50 to 60. Getting to our level was in the range of five to six. We came down, and actually I was very surprised, to three very good candidates, and those candidates all had different expertise.

We liked Mike for his experience. The chemistry worked. Culturally, he worked. He's coming off, as you know, as CFO. He has large company experience but he's just coming off the experience as the CFO of a smaller company. It all sort of worked for us. So, we think he's going to really enable to us get to the big numbers, as you know, Dom, we're very ambitious. We think he, as CFO, can really get us to big numbers. So, the process ran smoothly.

I think about the speed we had expected. We'd like to have Mike here a little bit earlier but as you know, he's selling a company right now. And he will be joining us on September 24. That being said, he's already engaging with us. He will be engaging with us through August and September. When he arrives here, he will arrive here very smart. Hope that helps.

That helps. And then, he's looking to come on board September 24 and I know the new deadline here for filing is around September 12. So, we'll start to get more visibility into that whole process sort of the beginning of September.

I'd say that's a good bet.

Okay. The final few questions I wanted to touch on which -- attrition. Not sure if you mentioned that. I just wanted to get a sense as to what attrition looked like in the quarter as far as voluntary, involuntary and then by research versus sales?

Sure, Dom, Charles again. I would say on the sales side the attrition was probably similar, a little bit down sequentially from what we saw in Q1. And again, the substantial portion of that was involuntary, as we continue to raise the bar on performance. Within the research side of the house, the attrition was extremely low. In fact, it was as low as I can remember seeing it. So, I'd say very good news there on both the voluntary and involuntary side.

Okay. And then as far as the transition expenses, I think we had talked a little bit about bringing everybody to Cambridge, kind of a retraining process. Are those expenses that are likely just kind of limited to Q1, or are there expenses that kind of bled into Q2? How can we look at that?

That was virtually all in Q1. The event itself was Q1, and those transition expenses were virtually all Q1.

Okay. Great. Thanks.

Our next question comes from the line of Andrew Thut with BlackRock.

Just a question on the sales turnover. After last quarter when it was 9%, and it sounds like it's in the 7% to 8% range, it's sort of -- the conventional thinking was that if sales people were going to leave, they were going to leave in the early part of the year. And then that was going to tick down pretty significantly. And just wanted to understand if there's something different that happened there?

Two things, Andrew. The first thing, I would note is that in some of the sales teams, as we've noted, we didn't see the performance that we wanted. Obviously, we take action based upon that and make changes where we have to make changes. We didn't anticipate that in Q1.

Second, is sort of a broader statement, which is that the market I would say is very good for sales people. In particular, we saw some challenges in the European side of the sales teams and substantial turnover there. And again, in large measure based on performance. So I'd say it's kind of those two factors. We continue to manage and raise the bar. And two, it's a competitive market for sales people.

But Europe grew 30%, though, right?

That's outside of the U.S.

Okay.

That's all about --.

Okay. And just trying to reconcile. If enrichment was down another tick to 106%, that wouldn't imply that you're going deeper into your customer base.

There's some seasonality in that, Andrew. And when I look at the pattern over the years, that's in line with the kind of pattern of enrichment rates that you see over the quarters. That's also a four quarter rolling number. So if it ticked up, that wouldn't show in the fourth quarter rolling number really kind of until the next time around in the graph here.

But if I'm thinking about it correctly, if you're adding fewer clients and you're going deeper into existing clients, we should see that rolling number start to tick up as we move through the year, right?

As we roll forward, I think that's a reasonable expectation.

Okay. Putting number around the noncash restatements, one could draw the conclusion that this is all sort of coming to an end. Is that a reasonable assessment?

Well, Andrew, it has to end sometime. We have the extension from the [SEC] through September 12.

NASDAQ.

From NASDAQ, I mean, through September 12. We have a lot of heavy lifting yet to do. And we've said all along that these things take five to 10 months, and this is the end of month seven, so we're still chugging along.

But you actually have a hard number out there that you think --?

Right.

What are sort of the gating items from here that get this to bed?

There are a lot of steps that have to be taken around determining what happens with taxes, both in terms of tax benefits and withholdings. There are steps that have to be taken in terms of communication with employees and sorting out the individual employee option accounts going forward.

Working with third parties, auditors.

Exactly. And at this point, we've determined the charge but we need to put together books that our auditors will audit and say are ready for prime time.

Do the auditors have that stuff at this point?

We've been working with BDO since day one on this. And we talk to them virtually every day. So, they're as current as they can be.

I would say, Andrew, let's consider this to be a very encouraging milestone.

Okay. In terms of -- do you have any color on whether you can go ahead with the buyback before this option thing is finished? Are you pretty sure that you can't?

No, we will not resume the buyback until we're back in compliance.

And where are you on the acquisition front?

I would say we've been more active this year than in any other year. Certainly, in the last several years. We have several targets we're looking at. I'd say, Andrew, we have been slowed down a little bit by all these restatements because we have a limited financial staff, as you know. It's a finite resource. And so we've been slowed down a little bit but the side that's developing our targets and developing our thinking and logic continues in force. So, I would say watch this space.

Okay. Thanks.

Our next question comes from the line of Laura Lederman with William Blair & Company.

It's been asked and answered. Thank you.

Our next question comes from the line of Dom Lacava with Canaccord Adams.

Hi. Just one follow-up question. You did mention that there's -- that you're taking an action that involves the rollout of a new higher train ramp program. I know you kind of mentioned that a few times. I'm just wondering if you could give us more color around what that involves.

Sure, Dom, Charles again. So, we actually embarked on this for the first time last year in the research world and are now doing so in the sales world. One of the things that we recognized, if that we wanted to scale the Company to the level that we have aspirations, we had to get more systematic about this stuff. So it it's sort of a three-step process.

Hiring is about creating profiles, figuring out who are the type of people who are likely to be successful in each of these roles. And then tuning up the mechanics of tame and cost to hire those people. Training is about building an infrastructure that allows those people to come in and get educated about what we do and the sales side, for example, to get fluent about the product. Ramp is about the methodology of managing the day to day in the early stages of their employment to make sure that they reach full productivity quickly. Does that help?

That's helpful. And then the last thing I wanted to touch on was the split between advisory and research services. I know June quarter is typically seasonal, right, because I think a year ago it was about the same, if I'm not mistaken, the 42%?

Pretty close, yes.

For other? And I know that we had talked -- or that you had mentioned recently that you're looking to kind of skew the overall mix towards a 70/30.

That's long-term view.

So, I was looking for probably less of a pronounced bounce back towards advisory for the quarter. Was this just a matter of upside revenue from events this quarter, or what else can we look at there?

Well, that's part of it. And what we had was really stronger results in advisory than we anticipated. Early on in the year, we said that we anticipated 63% to 65% as the split for the year. And our year-to-date results are a little closer in line with that at 62%. So I think what you've seen is a little bit of seasonality and a little bit of strength in advisory.

You also have -- I'd say it's the busiest events quarter we ever had in our history, Dom. We had our two big IT forums. And security, marketing and finance all did extremely well. So, five major events in the quarter. That also affect the number.

How much upside was there versus your expectations? Do you have a number, as far as event? Upside on events?

No, I don't have the number. I'd say we're very comfortable, Dom, with how the events business continues to tick along.

It's still doing very well.

Got it. And then, did you mention -- I know you said that 6% to 8% was kind of targeted '07 growth for RoleView. Did you mention what the growth was in the quarter for RoleView?

No, we didn't specifically mention growth in RoleView for the quarter, but the 6% to 8% is a good number for the year.

Okay. And then going forward, I know historically you've mentioned the 15% to 20% range for research. Now, I know that that -- now is is that still kind of your target for the core research component, or is that more of the goal for syndicated overall?

What are you referring to Dom?

The 6% to 8% that you're looking that it year, and I'm wondering -- because it looks like the core RoleView, what used to be WholeView 2, used to be nice middle teens and then it kind of came back to single digits. Then we saw kind of a -- it ticked up back again over 10% as far as the core of RoleView. Now, we're looking at single digits again. And I know you've historically talked about 15% to 20% growth in that. And I'm just wondering if that's still kind of the realistic long-term goal or is that more the number you're looking at for syndicated overall?

There's some arbitrage going on here with FLB, with clients moving from RoleView to FLB. So, there's some arbitrage there. That all being said, I think on a go forward basis, we want to be in the 10% to 15% range in RoleView growth. Not going to happen this year obviously but that's our long-term view.

Can you explain a little bit more about that arbitrage towards Leadership Boards?

Sure. So, what you get, Dom, when you buy the Leadership Boards membership, is you get everything you got with the core RoleView plus the community stuff, the network of peers and so forth. And so we see some people who say, I want to sit in first class, not business class here. I want to move up. And of course, they pay more for that privilege.

So any of the research privileges they get in Leadership Boards, obviously it's not double counted as research?

No. From where I sit, it's a good thing.

Sure. It's a little misleading as to the success of the core research.

Yes, it can be. It it's dilutive to the core research. Right? They move out of that bucket and into the FLB bucket.

That's helpful. The 6% to 8% number was out there and I think people were looking at the 15% to 20% long-term growth and trying to kind of see where that disconnect -- where that gap was going to be closing but that's helpful.

The FLB arbitrage is the answer.

Got it, okay. Thank you.

(OPERATOR INSTRUCTIONS) Seeing as there are no further questions at this time, I would like to turn the call back to Phyllis Paparazzo.

We'd like to thank you for listening to our call today. And to just to remind that we will be on the road this quarter and presenting at the Canaccord Adams conference in Boston in August and the Sidoti & Company conference in San Francisco in September. Also, just to reiterate, we will be announcing our third quarter results on Wednesday, October 24. Feel free to contact us if you have any questions or need anything. Thank you.

Thank you very much.

Ladies and gentlemen, this concludes today's teleconference. Thank you for your participation.