iMedia Brands Inc (IMBI) 2005 Q2 法說會逐字稿

Good morning, and welcome to the ValueVision Media second quarter 2005 earnings conference call. At this time all participants are in a listen-only mode. After the presentation we will conduct a question-and-answer session. To ask a question, please press star one. Today's conference is being recorded. Now, I would like to turn the meeting over to Ms. Heather Faulkner, Director of Communications for ValueVision Media. Ma'am, you may begin.

Thank you. Today's conference call may contain certain forward-looking statements within the meaning of the Private Securities Reform Act of 1995. Listeners are cautioned that such forward-looking statements may involve risks and uncertainties that could significantly affect actual results from those expressed in any such forward-looking statements. More detailed information about these risks and uncertainties is contained in ValueVision Media's filing with the SEC. I would now like to turn the call over to Mr. William Lansing, President and CEO.

Good morning. I'm pleased to be able to share with you our financial results for the second quarter. Our efforts to make ValueVision a growing and profitable business are bearing fruit. The results we share with you today mark an important milestone for our Company's turnaround. ValueVision has achieved EBITDA profitability in this quarter, and it is with pride that I tell you that our team believes that we will continue to grow and deliver continued profitability going forward. First, I'll share with you our results and then I'll try to put some detail around what drove them. I'll share with you our most recent initiatives and what we believe they will do for us and then I'll take your questions.

As you saw in our Press Release, ValueVision's first quarter revenues were up 6% to approximately $172 million. The core television and internet business delivered an even stronger performance, up 8% to $167 million. The first quarter net loss was $1.3 million versus 7.8 million a year ago. On an EBITDA basis, ValueVision was profitable, about 2.2 million in EBITDA profit for the quarter. This compares with a 3.2 million EBITDA loss a year ago. Now, I should point out that our EBITDA profit is inclusive of a $400,000 loss for our soon to be discontinued FanBuzz operation. Without FanBuzz, which is how we will report our results going forward, our EBITDA profit for the second quarter is 2.6 million. Now, you may be wondering what's happening with FanBuzz. As you know, we've essentially written off the FanBuzz asset. We're in the process of winding down remaining contracts and anticipate that FanBuzz will not influence our financial results going forward. We expect to treat FanBuzz as a discontinued operation in the third quarter.

So, our revenue's up nicely and our business has moved into EBITDA profitability. To what do we attribute this improvement? The fact is that the improvement is not the result of any single factor. The growth in revenue reflects solid merchandising and strong execution across our major product categories. Our profit improvement is a function of two things; first, higher sales, a key factor in achieving profitability in a business, such as, ours with such high operating leverage; and second, gross margin improvement.

A word about gross margin. We've improved about 180 basis points over the comparable quarter last year from 33.4% to 35.2%. We have also improved 170 basis points in margin versus the first quarter of this year. Some of the margin improvement is directly a function of what we call "merchandise margin." The difference between the prices we charge and our product cost. The balance of the improvement came from other related disciplines, things like coupon and marketing expenses, and shipping and handling revenue versus cost. I should say that while we are pleased with the improvement in gross margin, we continue to believe that there is potential for additional gross margin improvement. Over the coming quarters, and certainly by the end of the year, we intend to get our gross margin up to 37%.

Most of you are familiar with our strategy. It's fairly simple -- in order to cover our highest fixed cost structure, which is driven primarily by our large cable and satellite distribution expense, we want to sell our products to more customers in the homes in which we are distributed. In order do this, we believe we must continue with our product diversification efforts and continue to press merchandising strategies that emphasize value. We have invested a great deal in 2004 and the first half of this year in the infrastructure to support a generalized merchandise business. As you know, we added merchants and hosts to support our diversification efforts. I should point out that we are far from abandoning our roots in jewelry. Jewelry, is a category that continues to represent over half of our product mix and it will into the foreseeable future. We simply want to augment the jewelry products with Cosmetics, and Ready-to-Wear, and Home, and Electronics, and so that is our strategy and that is exactly what we are executing.

We continue to improve our revenue initiatives and expect them to continue to propel our growth. Specifically, "Our Top Value," which is the offer of a single item at an exceptional value for one day only. Our Top Value, remains a key element of our strategy and a continued driver of our performance. We're coming up in the middle of the month to the anniversary of the launch of Our Top Value at ShopNBC and we're building a significant promotion around that anniversary. Our add-on sales and warranty programs continue to grow and we expect additional contributions from these important initiatives. Our active customer base continues to grow while our retention rate remains stable. Though our quarter-end numbers are not yet finalized, we ended June with 773,000 active customers, up 3.3% versus a year earlier. Our new customers comprise 59% of the active customer base, while our retained customers comprise the remaining 41%.

Before I take your questions, I'll make a comment about our outlook for the future. We believe our Company is on the right trajectory. We have a solid turnaround strategy and we are turning around. Our customer base is growing; our revenue is growing; and our profit is growing. We expect continued improvements in our Company's financial performance. Specifically, we reaffirm our prior guidance of better than 5% revenue growth and EBITDA profitability in the second half of the year. On that note I'll stop and take your questions. Thank you.

Thank you. [OPERATOR INSTRUCTIONS]. And our first question comes from Barton Crockett of JPMorgan.

Okay, thanks a lot. I wanted to ask a question, I guess first about the outlook here for this next quarter. You guys had a tough quarter in the year-ago period. I think we've all been kind of assuming that it could be very strong sort of year-over-year growth in the October ending quarter this year versus kind of easy comps in the year-ago period. And I was wondering if you had any really thoughts about whether that still seems like a plausible expectation or maybe should we lap that down a little bit at this point?

Secondly, I was wondering if you could tell us -- give us some of the metrics in terms of homes reached average and then the full tally? And then finally, some color on what the drivers are of the improvement in gross margin that you see over the balance of the year? Thank you.

Okay, thanks, Barton. First, with respect to the third quarter, it is absolutely right that we are lapping a weak third quarter a year ago, and so we have every expectation of strong comps. I'm being cautious about what we say about the third quarter because our business is so sensitive to sales on the margin; it's so sensitive to swings and sales on the margin. We feel very good. We're bullish and optimistic about our prospects. The trend is good. Our operating performance is good today. It's been good and accelerating through the second quarter. We have every expectation that that will continue in the third quarter. And yet, I think you see us sticking to conservative guidance better than 5% revenue growth for the year. And you do the math, if we were flat on revenue in the first quarter and we're up 8% in the second quarter, achieving better than 5% revenue growth for the year says we have got to do about 6% in the third and fourth quarters. And I think we are very comfortable saying that we expect to do that or surpass that. By how much, we don't know, and I think that's going to turn on all kinds of events, some in our control and some not in our control. But we're very comfortable with that kind of a revenue outlook and I do think you'll see a strong third quarter. Certainly, very strong relative to a year ago.

In terms of the -- some of the metrics that your customers are seeing, this call is a little bit early for us. These are preliminary results, and so we will publish the homes statistics when we put the final Press Release out when we get the numbers absolutely finalized.

Regarding gross margin, your question on gross margin, I think what you're seeing there is discipline across the board. The single biggest benefit is the shipping and handling; the shipping and handling change. I mean we're obviously charging money for shipping and handling today that we did not charge for a year ago. And we're managing the shipping/handling costs quite well and making improvements in the cost structure of how we handle shipping and handling. So there's a margin improvement associated with that.

There's also improvement around the merchandising discipline. We are providing great value to our customers, but we're not doing it by giving in to falling away from price. And we have pricing discipline and we have good discipline around our cost structure there for the product. And so, our merchandise margin is strong. And I guess the final contribution to gross margin improvement has to do with marketing expense, where we are increasingly strategic in how we do it; we're refining the way we do it; and I think we're becoming more efficient. And so we get more response for less dollars spent in coupon redemption and in our direct marketing efforts, and I think that was a contributing factor as well.

Okay. That's very good. I'll leave it for others to ask questions. Thank you.

Thank you. And our next question comes from Bob Evans of Craig-Hallum Capital.

Good morning.

Good morning.

Can you comment further, Will, on the -- I don't know if you have all the details yet -- but the ASPs. If you don't have specifically, were they about the same as last quarter? Did they move up? Did they move down? And anything from a quality -- in terms of product mix, where we may have seen the movement of product mix this quarter?

Yes, happy to. Our ASP is up a little bit versus last quarter and versus a year ago. It's going to be a little over $200 is what it looks like. And that is attributable primarily to a mix shift upward with things like LCD television. So we've sold more big ticket items this quarter, things like LCD TVs with a $1,000-plus price tag, and that's pulled up the ASP a little bit. Not something we're unhappy about. We're actually very pleased about that. I think what we're going to try to do going forward is start to share with you our average order size and how that's growing, because that's, I think that's going to be an indication of our success with things like add-on sales. And we don't believe that ASPs should be -- pushing down ASPs should be an end in itself. It will be where it will be. As long as we can grow our revenue, it can be at $200, it can be $180, it can be 205, it doesn't really matter. We do want to see the average order size going up over time, and so that's a number that we're going to start to share with you and you'll see the units per order going up and the average order size going up.

With respect to the mix shift, we are today about 57% jewelry, which is a full 10 points less jewelry than a year ago, and I think that's a pretty strong indication of the success of our diversification efforts. I would also tell you that the productivity of the airtime that goes with the categories outside jewelry is every bit as good as the jewelry category. It's actually right on a par with. And so what you see is across the board, all of our categories are now performing at a competitive level. And we are able to offer non-jewelry product to our customers and would-be customers without subsidy, is how I think about it. We're no longer subsidizing. We're no longer -- yes, we're investing and we're bringing in new categories, but we're no longer subsidizing the airtime to try to get it to catch on. It has caught on. And we are a general merchandise retailer at this point and we're feeling really, really good about the mix.

No intention of abandoning jewelry any time soon. Jewelry is a great business. Our core customer loves jewelry. You will not see us less than half jewelry for quite some time and that's fine. That's a wonderful thing too. I actually think that the two categories -- I shouldn't call them two categories -- but jewelry and non-jewelry product do reinforce one another. They give us credibility across the board and we're doing well with the mix and we're going to keep it this way. So I hope that answers your question.

It does. Can you -- I just want to make sure I heard you correctly on the gross margin. You're over 35% now. Do you expect to be able -- do you expect that to stick? And you said your target is 37%. What time frame do you think is reasonable for that?

Okay. Do we think it will stick? Yes, we think it will stick. I would caution everyone on this call that nothing in our business is in a straight line, and so there's always a little bit of fluctuation around the margin, and I can't promise you it will be higher next quarter. It might be a little lower. It might be higher. I hope it's higher, but that will be a function of a lot of things. And over time, and I mean over the next two, three, four, five quarters, I do think that we'll be pushing in the direction of 37%. I'd be surprised if by the end of next year we're not at 37% gross margins because the disciplines in place and the trajectory is right.

What could change that? Let's just talk about that for a second. We have a very successful electronics business, and at the end of the day, the most important thing to us is gross margin dollars per minute, not gross margin rate. Now, we'd like to have a high gross margin rate, but on a gross margin dollars per minute basis, which is the ultimate measure of whether we're using our airtime effectively, we don't really care. We are somewhat indifferent to whether we make it on unit volume with the lower margin or make it with less unit volume with the higher margin. And so there are categories and specifically computers and LCD TVs and other electronics fall into this category, that are on a rate basis lower, but on a revenue-per-dollar basis comparable or higher. I mean, LCD TVs are among the highest revenue per minute items that we have. And so I don't want to just promise a rate. At the end of the day, we care most about EBITDA. And we will optimize this business to produce as much as we possibly can; EBITDA. And it may be a higher rate. It may be a lower rate. But it will certainly be in the direction of getting the absolute maximum revenue dollars per minute out of this business.

Okay, fair enough. And final question, any new programs, promotions that we might be seeing in either the Q3 or Q4?

Yes, thank you for asking that question, Bob I appreciate the opportunity to share with you a little bit of where we're going. As you know, we spent a long time preparing to launch Our Top Value, which is a tried, and true, tested, promotional approach in the Home Shopping industry. And after months of effort in 2004, we launched in August 2004 Our Top Value and it has been a screaming success. I mean Our Top Value is now approaching 15% of our business. It is a great mechanism for winning new customers. It's a great mechanism for teaching our existing customers about our new products and new product categories and pushing our diversification efforts. It has been everything we expected and more. But for the benefit of those of you who don't know what Our Top Value is, it is a single item offered at an exceptional value on a one-day-only basis.

Now, where are we going from a promotion standpoint? I think that our business has the capacity to embrace one or two or three really major promotional concepts a year, and the next one that we're doing is called -- we call it "Spotlight." We've just launched it this month, August '05. We just launched Spotlight. And what is that? Before I explain what it is, I guess I should emphasize something about the nature of our business. The Home Shopping Business, the retail side of Television Home Shopping is all about being an item business. It's not about assortment; it's about having a screaming value on a particular thing. And what the Spotlight promotion does for us is it puts a lot of emphasize around unique items. And so what we've done is we've identified the top items in every hour. The top items in every concept. And we are putting a lot of additional promotion around those items so that our customers can really distinguish between the screaming deal and the thing that we believe is the thing they need to pay attention to. And the other stuff, which is interesting, but isn't what is driving the business.

And so you'll see we are already seeing a lot of additional promotion around these key items, and we call it Spotlight. We have 10 or 12 Spotlight items per day. This has the potential for being bigger than Our Top Value from the standpoint of revenue and promotional energy. And so it's early days. I mean we've only been at it for about a week and a half now. But I fully expect that the Spotlight promotion will be a major component of our promotional strategy going forward.

Okay, thank you. One other question. Your cash was down roughly 10 million, I believe, sequentially. Was that a function of AR inventory? Can you give us some color?

Yes, I sure can, and I'm -- again, I'm happy you asked that question because the cash was not down because we lost money this quarter. The cash all went to good uses. We essentially put it into accounts receivable. The entire difference between our quarter-end cash position a quarter ago and today about a $10 million difference, is attributable to our growing accounts receivable. There's a little bit of growth in inventory as well, but that's not a bad thing. We're very happy with our inventory position, still on the lean side. If anything, it should probably be up a little bit from where it is, given the size of our business. But what you're seeing is growth in accounts receivable.

Okay, thank you.

Thank you. And our next question comes from Chris Krueger of Miller Johnson Steichen and Kinnard.

Good morning, guys.

Good morning, Chris.

Did you say that your jewelry percentage was 50% or was it over 50%? I kind of missed that.

It is 57% today, and we expect it to be more than half for the foreseeable future.

So 57% for the second quarter. What was computer and electronics? Roughly --.

12%.

Okay. Talked about a couple of your sales initiatives. Have you guys started selling the warranties on the jewelry products yet and how is that going?

Well, thank you for asking. We introduced jewelry warranties in June and it's going very well. We're really pleased with the reception. We're testing our way into which items you offer the warranty on. So, if you think about how to do warranties, there's a balance between antagonizing a customer who's not interested in something and offering them something of value that gets us to a higher order size. And so we're always working that balance and we manage the conversion -- what we call the "conversion" rate. We focus a lot on how many people who get the offer take the offer, and if the numbers -- if it's a high percentage -- and a high percentage for us would be high single-digits would be a high percentage, that would be a tremendous percentage. If it's a high percentage, we're thrilled with it. If it's a low percentage, we figure the breakage with the customer is not worth the cost and we don't want to make the offer.

And so with our jewelry warranties, as with all of our add-on sales, the question is -- when do you offer it? Under what circumstances? Attached to which products? At what price points? And we launched our jewelry warranties across the board testing all different price points, all different subcategories of jewelry, and we've learned a great deal from it. And we're really pleased with the initial conversion rates and we expect that they'll windup going up as we refine where we offer, because we're really in a test mode.

Okay. As for as -- your Our Top Value, did you have -- how many million -- $1 million days did you have in that? I think you stated that the last couple of quarters.

Oh, I don't know that we're going to get into the mode of publishing million-dollar days. I mean, yes, I brag about it now and then, but we're not going to be giving you account.

Okay. Can you indicate how --?

We have had a number of additional successes. I mean, Our Top Value, for us, it's a balance between the higher price point OTVs, which tend to give us the million-dollar days, and the lower price point ones which generate lots of new customers. They don't produce as much revenue, but there's a great benefit in generating a lot of new customers. And so we're constantly balancing those two things.

Okay. Can you provide total sales from Our Top Value during the quarter?

It's between 10 and 15% of our business today.

Okay, last question. I think a year -- it was about a year ago you had a lot of turnover with your TV hosts. Is that stabilized by now and any thoughts there?

Yes, absolutely. Our host, Codray, is very stable today. We're pleased with our host ranks. We really have a lot of competent hosts. A year ago we did go through some transition. We've brought in some hosts from some other networks. We've brought in some hosts from other sources. And right now we have a really strong host core. A bunch of very talented individuals who are working as a team, and we could not be more pleased with the host ranks.

Okay. That's all I've got, thanks.

Thank you. [OPERATOR INSTRUCTIONS]. Our next question comes from Ned Davis of Taconic Group.

Yes, good morning. I haven't seen the figure on the web sales. Can you just tell us what your internet sales were versus your phone sales?

Our internet sales continue to represent about 20% of the total. From a strategic standpoint, we have put more energy into turning around the television business than into the internet business. As you probably know, we lead the television Home Shopping Industry in percent of internet sales even with QVC's recent improvements, they're still in kind of the mid-teens range and we are at 20%. We'd love for that to be higher and we do think of ourselves as a direct marketing business, and television is a very important component of that, but it's far from the whole story and we think that TV and internet are really complementary, and you will see us putting more energy into the internet side of our business. We have some really talented people over there who are starting to produce some really good things. But at this point, it has not moved. It is about 20% of total and I'd expect it to be in that range for the near future. Although over time I'd love for it to be bigger.

Okay, just one other thing relating to that, you've made some changes and reorganized your buying team, I think over the last year. Can you kind of bring us up to date on where you are with that whole process?

Yes, I guess the changes we made in the buying team were really quite a long time ago, about a year and a half ago; a year to a year and a half ago. We have a pretty stable merchandising organization at this point. Under Brenda Boehler's leadership, where she runs TV and internet sales, underneath her we have Karen Johnson, who runs all of merchandising, all the buying side, both jewelry and non-jewelry. So that was a promotion for her. She moved up from -- Karen moved up from running the non-jewelry side of the business to all of the merchandising for ShopNBC ValueVision. But she's been with us for a long time and she's a really talented person and she's got a pretty stable team underneath her.

Okay, thank you very much.

Thank you. And our next question comes from Robert Routh of Jefferies.

Yes, good afternoon, guys. A couple quick questions. First, I was wondering if you could comment a little bit on what your long-term plans are for the stations, I think in Boston and Atlanta? Because it seems to me like they're not really that strategic or core and it could be a good source of cash for the Company if you were to consider divesting them in some way, shape, or form.

And second, I'm wondering if you could comment a little bit, and there's a follow-on to the proceeding question of the other gentleman regarding the internet and television in convergence. Given the Shopzilla, Shop at Home transaction, it would seem that the Home Shopping internet opportunity is far larger than most people realize, given what Scripps is already doing. I'm wondering if you can comment on if you're having any talks with any internet providers or considering doing anything with them that would complement your existing businesses?

Okay. First, on the stations, I would say that the Atlanta Station, which is a low-power station, is far from strategic for us, and that's something that we -- that's an asset we really shouldn't own, frankly. And so we're working on disposing of that. That's not a very big asset. On the Boston Station, which is a big asset, has a value of $35 million or more. That one is -- that's an interesting question for us, because on the one hand, we don't need to own a television station to be in the business we're in. On the other hand, we get some really favorable economics out of it, and we have -- Boston is a key market, a top 10 market, and we get some value out of that. There's an EBITDA benefit to our owning that station, and so without being cash constrained, I think we would continue to own that into the foreseeable future. That said, I think that as you see our business continuing to improve financially and us start to really generate the EBITDA from the business operations, it becomes less and less important for us to continue to own that, and so I think it is a future source of cash for us. I think that at some point in our future we would likely dispose of that asset and free up the cash. So that's the stations.

The internet piece, I could not agree more that television and internet are really complementary. If you think about most internet retailers that don't already have a huge dominant established franchise; the Amazons and eBays of the world. If you think about everybody else their biggest challenge is customer acquisition. Their biggest -- you go through their P&Ls, and over and over and over retailing internet sites kill themselves spending money trying to get customers to show up. And if you think about the advantage that we have, we spend $125 million a year on television distribution, cable distribution, and we generate tremendous traffic out of that. We have a huge audience. We've got 800,000 customers already, and millions upon millions of viewers. And they're all -- we send them to our website and they show up at our website. So we don't have a lot of incremental marketing expense to bring customers to our website. We spend some, but we don't have anything like the challenges that your average internet retailer has.

And so when we think through, what can you do with television and internet together? We see a lot of opportunity. We have the traffic that comes with that. There's also the fact that we have such limited airtime and there's limits to what we can present at any moment in time. If we show 10 or 12 items in an hour and we have a customer that's interested in that product line in that concept, there's nothing better for us than to be able to send that customer to the internet and find the next 75 or 100 products that come from that vendor; that come from that designer; that come from that product line. And so we get a tremendous amount of incremental sales out of -- on the internet driven by the television business, even though it's not exactly the same products. And so you'll see us developing that as more, and more of a strategy. Our merchandising team is increasingly focused on what are the right internet products to put on offer as a complement to what you see on air. Things are being bought specifically for the internet today, not independently. We run the businesses together. It is a single business. It is a business in which we're talking to our customer base through multiple channels, through multiple media, but we try to optimize each one.

In terms of deals with others, I think that there's a lot of different flavors and varieties of things we could do. We are spending more and more time on search; on natural search; on paid search; on affiliate programs. We are constantly doing all the direct marketing things that go with, where should you spend your money to bring more business to the website, and so we're working those things too.

Okay, great. And just one quick follow-up. I was wondering if you could comment a little bit on Polo.com and what your plans are with respect to that at this point in time? And are you continuing to receive cash distributions from that entity at this point?

We have two relationships with Polo.com. One is an ownership interest in Polo.com, where we own about 12.5% of Polo.com, and we do get dividends from them from time to time, twice a year is what it looks like right now. And we have no intention of changing our ownership in Polo.com at this time. On the partnership side, we do fulfillment for Polo.com out of our Bowling Green facility, and that's something that -- that is business that we like to have. It's very complementary to our own and it's a nice way to manage the -- to optimize the utilization rates in our fulfillment center, and so we do that. We also do customer service for Polo.com out of our Minnesota customer service facility.

Okay, great. Thank you very much.

Thank you. And our next question comes from Barton Crockett of JPMorgan.

Yes, hi. I just wanted to follow-up. Can you give us an update on where you guys stand in terms of the review of the possibility of using some of of your cash on your balance sheet for share repurchase? And it seemed -- if you trend maybe better on EBITDA and we start to use -- potentially see free cash flow profits that there might be some potential for you guys to step up there.

This is a subject that we talk about a lot, internally and outside, and I have said in the past that I believe we have more cash on our balance sheet than we need to support our business, and so it's a subject of continued debate. As you probably know, we do have a stock buyback authorization in place on the order of about $20 million. However, we have not been active in the market over the last couple of years. And that's something that we talk about at virtually every Board meeting. And at some point one could easily imagine us becoming more active in the market, but I'm not in a position to say that we will be doing that at this time.

Okay, I'll leave it there. Thank you.

Thank you. And our next question comes from Campbell Gibson of TGT Capital.

Hi. Hello, thank you. I was calling -- I wanted to ask a question about the GE stock sales and sort of where that stands and where you see that going? Also what happens to their Board representation with the stock sales? And also I want to echo the comments about the stock repurchase. On the last call I'd say at least half the questions were focused on stock repurchase. We had an authorization in place and didn't buy any stock at eight and nine with business trends improving, now the stock is 12.70. And we've not done anything with the cash. It just seems like we're missing a real opportunity there. And I'm questioning why with shareholders actively asking for a stock repurchase, why the Board is unresponsive -- what the rationale is for that cash use?

Okay. The GE sale, GE sold about 2.6 million shares of stock to a number of investors about not quite a month ago, less than a month ago, and that completes the sale of GE Equity's common shares of ValueVision. GE Equity continues to own 5.3 million shares of Preferred and NBC continues to own around 8 million shares of common. At this time, I don't think that there are any plans to dispose of any additional shares. That's obviously something that's up to GE, and they could change their view at any time, but right now there's no intention, there's no plan for them to dispose of any additional shares.

With regard to the stock buyback -- oh, and just on the GE Board seats, the way that works is when their ownership drops belong 20%, they will lose one Board seat. Their ownership today is around 29%, so the Board composition is likely to remain roughly the same into the indefinite future.

With respect to the stock buyback, I think I've really said all that I can say. The fact is that we have a lot of cash. That's indisputable and I hope the cash flow grows. Could some of that be redeployed into stock repurchase? It certainly could, and it's a subject of discussion that we have often. I believe that there is some amount of conservatism on our Board. Some view that until the Company's EBITDA profitable, solidly EBITDA profitable, we should be careful with our cash, cautious with our cash. As you can see from today's results, we're going in the right direction. Here we have EBITDA profitability. We anticipate EBITDA profitability going forward. I would love for us to never see another unprofitable quarter. And could that change the thinking around stock buyback? It could. I can't make any promises, but I think that's a subject that is constantly discussed.

Thank you. [OPERATOR INSTRUCTIONS].

Okay, well, thank you very much for joining us on this call. It's great to talk to you guys, and we'll talk to you at the end of the next great quarter.

And thank you for participating in today's teleconference and have a good day.