LivePerson Inc (LPSN) 2017 Q1 法說會逐字稿

Good afternoon, my name is Adam, and I'll be your conference operator today. At this time, I would like to welcome everyone to the LivePerson First Quarter 2017 Earnings Call. On the call today are LivePerson's Founder and CEO, Rob LoCascio; and CFO, Dan Murphy. (Operator Instructions)

LivePerson's CFO, Dan Murphy, you may begin your conference.

Thank you very much. Before we begin, please note that we will make forward-looking statements during today's call, which are predictions, projections or other statements about future results. These statements are based on our current expectations and assumptions as of today and are subject to risks and uncertainties.

Actual results may differ materially due to various factors, including those described in today's earnings press release, in the comments made during this conference call and in 10-Ks and in 10-Qs and other reports we file from time to time with the SEC. We assume no obligation to update any forward-looking statements.

Also, during this call, we will discuss certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release, which is available in the Investor Relations section of our website.

I will now turn the meeting over to Robert LoCascio, CEO and Founder of LivePerson.

Thanks, Dan. Thank you for joining LivePerson's First Quarter Conference Call. 2017 marks a new chapter for LivePerson as we execute on our LiveEngage growth strategy. LiveEngage are giving brands the power to reach huge efficiencies and strengthen customer relations by replacing outdated voice contact center technology. LivePerson's creating a real industry buzz as our mobile messaging platform gains momentum. We signed several new messaging deals in the first quarter, and now scaling multiple large enterprise customers in each region of the globe. These include several of the world's largest telcos and will soon include many leading financial service institutions.

Our ability to power an always-on digital connection with consumers is already spurring transformation of the customer care industry. Our announcement last week of LiveEngage for Bots further unlocks the potential of our platform to build a true, game-changing scenario. This revolutionary extension of our platform treats bots and AI just like traditional agents, and enables enterprise brands to match multiple bots at scale in tandem with human agents. It's what we call Tango.

AI and human agents seamlessly hand off conversations to each other, with bots providing instantaneous intelligent responses to consumer queries and human agent supervising the exchanges. By marrying messaging with bots and AI, the brand can virtually eliminate capacity constraints, multiplying the benefits generated from a digital connection with consumers. And with LiveEngage, large enterprise can leverage one platform to power, measure and report on all messaging conversation regardless of channel, or if they are led by human agents, AI or a combination of the 2.

Over the next years, we expect every leading brand to shift voice agents, and even store-based employees, to messaging. We also expect brands to leverage LiveEngage to add robust AI and bot capabilities into their messaging communications. Early adopters are already leading the way and the masses are looking to follow. They just don't know how to implement these new solutions in a scalable, successful way, but we are proving we know how to this at scale.

In fact, we shared our vision, our strategy and success stories just last week when we held the customer care industry's first AI Bot Summit at Carnegie Mellon's prestigious Human-Computer Interaction Institute. This was an amazing event. Attendance exceeded our planned capacity of approximately 130 senior leaders from 80 of the top brands across the globe heard firsthand from their peers how messaging is, the killer app and brands should deploy messaging with AI now and deploy it quickly. LivePerson customers Vodafone and Royal Bank of Scotland shared some of their successes embracing LiveEngage and AI to manage the Tango between AI and human agents. According to Vodafone's U.K. Head of Contact Center Transformation, the combination of person and chatbot is where the real magic lies.

We also introduced our customers to some of the many AI and chatbot providers already running live with leading brands on the platform, including IBM's Watson, Toshiba and ChatFuel, whose bot integrated with LiveEngage was recently showcased at Facebook's F8 conference. This is the power of our open platform, more APIs enable third-party developers to rapidly integrate new capabilities into LiveEngage.

The sophisticated combination of bot technology and messaging is just one of LivePerson's key differentiators. We have been a leader in digital transformation for the past 20 years, and we had the foresight to build LiveEngage from the ground up to match the unique challenges of running an always-on enterprise messaging connection center versus a traditional, inefficient call center. We understand the changes that have to happen in the workflows, analytics and measurements to capture the transformative potential of messaging. And we are extending our lead in messaging by rapidly expanding our list of enterprise referenceable customers.

For example, in the first quarter, we won back one of Europe's largest broadband providers who left a few years ago to try a me-too chat solution from a voice vendor. I'm satisfied they joined one of our mobile messaging events and immediately aligned with our vision. The brand is now live on a 7-figure deal, but substantially larger than the web-based chat program we once had with them. We signed another 7-figure deal in the first quarter with an existing multibillion-dollar financial services provider. This leading brand use messaging as a primary destination where customer service will happen and is looking to use it to reduce phone volumes substantially. They're also using messaging to replace a competitor's e-mail solution.

We achieved a milestone in the Asia-Pacific region by signing an expansion that landed us our first 7-figure customer in Japan. This leading telco started working with LivePerson a little over a year ago with just a handful of agents. Today, they are blazing the trail for other brands in Japan by focusing on digital transformation of their contact center. Other mid to high 6-figure contracts include one of the world's largest music subscription services, a leading automotive financial services firm and a global provider of corporate travel services.

As we emerge from our transition and execute on this tremendous opportunity, we sought to enhance our board with new directors that have a track record for developing high-growth operating cultures, outstanding customer experiences. We recently added 2 directors who exemplify these skill sets. Jill Layfield, the former CEO of Backcountry and current CEO of Tamara Mellon; and Fred Mossler, who was at Zappos from the beginning and ran day-to-day operations at Zappos and was instrumental in growing it to be a multibillion-dollar revenue company, and -- and further to its sale of Amazon. Jill and Fred's guidance will be invaluable as LivePerson sets its sights on capturing a meaningful share of the multibillion-dollar brand-to-consumer messaging market.

Our strategy to win in this market is clear. In each region of the globe, we have identified a select group of brands that hold the power to change the face of customer care. Each of these brands have thousands of agents in their contact centers, they collectively connect with billions of consumers every year. Our regional sales teams are intimately familiar with these target customers, many are already customers with local relationships. As a result, over the last 6 months, we have empowered the sales directors in each of our region to direct their own local selling effort. This places the decision-making closer to the customer, aiding execution and speed to market.

LivePerson has reinforced the local selling effort with a globally-driven marketing program that brings customers, prospects and field organizations together through high-touch, high-value regional events such as the messaging AI bot we just recently did. These events showcase the power of LiveEngage platform, and how our thought leadership is already helping enterprise shed their roots in analog voice to embrace a digital connection that transforms customer care. This combination of regional sales approach and targeted marketing efforts are providing success of -- being successful and have been key to our win so far with messaging and AI in 2017.

As the efforts solidify, it became apparent that maintaining an overlay of the global sales manager role is no longer necessary for executing on our strategy. As such, Dustin Dean has decided to pursue new opportunities, and we want to thank Dustin for his incredible contributions to LivePerson over these past years, especially the last 2, where he was instrumental in helping us successfully navigate the transition to our new platform.

Our field and marketing structure is growing nicely. We are focused on building momentum through 2017 and growing second-half revenue over first half. This should position LivePerson for a return to a year-over-year revenue growth. First quarter results sets us on a path to meet this target. Selling activity accelerated sharply over last year's pace, returning to pre-migration levels. We set a record for average selling prices, and we delivered revenue at the high-end of our guidance range. We also saw our Q1 metrics by continue to validate our key assumptions on the LiveEngage platform and our vision.

Mobile usage is expanding rapidly on LiveEngage, an average 35% of interactions in the first quarter as compared to about 7 -- 10% historically on legacy. Customer interaction on LiveEngage continue to grow faster than 10% year-over-year. The dollar retention rate remained greater than 100% over the trailing 12 months, a solid indicator of the future potential growth of LivePerson once our entire customer base is on LiveEngage. It is encouraging to see such healthy metrics even before messaging adoption becomes fully reflected in the numbers.

Customers are only able to reap the benefits of mobile messaging, AI and bots once we move them onto our LiveEngage platform. As such, we continue to aggressively migrate customers. We ended the first quarter with less than 20% of revenue on legacy and on target with our migration schedule. We expect to end the second quarter with approximately 12% of revenue on legacy, and then to complete our platform transition in the third quarter with less than 5% of revenue on legacy. The remaining legacy customers will be sand-boxed to maximize profitability.

LivePerson also remains on target to generate between $16 million and $19 million of savings in 2017, excluding onetime restructuring and noncash expenses, as we wind down our legacy infrastructure and realign our operations. This is on top of the nearly $15 million of savings captured in 2016. It's exciting to see our vision, strategy and execution come together in 2017. The investments we made in our LiveEngage platform and in customer migration are paying off as leading brands across the globe are now relying on LivePerson to change how they connect with their consumers.

With the migration winding down, our sales ended revitalized and our primary focus is to extend our lead in messaging, and to shift a portion of the 270 billion 1(800) calls made each year onto our platform. We look forward to building on the progress we have already seen in 2017.

I will now turn the call over to Dan, who will discuss our first quarter results and outlook in more detail. Dan?

Thanks, Rob. We are pleased with the start of 2017 as we entered the year with 4 key priorities and hit the mark on each of them. Our first priority is to refocus on selling and growth as we put migrations behind us and has successfully shifted back into that mode in the first quarter, accelerating selling activity back to premigration levels and generating a record average selling price.

Our second priority is to extend our lead in the mobile messaging space, and we did made solid progress here as well. We signed multiple messaging wins in the first quarter, launched LiveEngage for Bots and held the customer care industry's first summit on leveraging AI and bots alongside messaging for customer care.

LivePerson's third priority is to complete the platform transition to LiveEngage, and we're on track with that goal. We exited the first quarter with less than 20% of revenue on legacy, we're now on target to end the migration in the third quarter with less than 5% remaining on legacy.

Finally, we aimed to position LivePerson for steady margin improvement with a return to growth by capturing savings and efficiencies as we wind down legacy and realign on LiveEngage. We are executing on this goal, and expect to reduce total expenses excluding onetime restructuring and noncash charges by $16 million to $19 million in 2017. This is in addition to the nearly $15 million we saved in 2016.

As Rob stated earlier, LivePerson started a new chapter in 2017, and we're looking forward to capitalizing on the investments we have made in our product, customers and infrastructure this past few years.

I will now review our first quarter operating results and 2017 financial guidance. Total revenue of $50.9 million is at the high end of our guidance range and consisted of B2B revenue of $46.7 million and consumer revenue of $4.2 million. As outlined on last quarter's call, we set a clean start for LivePerson in the first quarter of 2017, recognizing the majority of the final revenue impacts from winding down our legacy offering. We expect the first quarter to mark the bottom of our platform transition and for revenue to build sequentially as we move through the remainder of 2017.

Trailing 12 month average revenue for enterprise and mid-market customer was above $200,000 in the first quarter, in line with our 2016 average. We signed 74 deals in the first quarter of 2017 compared to 84 in the first quarter of '16. The low deal count reflects our LiveEngage growth strategy, which is the focus on our targeted list of leading global brands where we have the opportunity to drive transformation. Our strategy is working as LivePerson's average selling price increased significantly versus the first quarter of last year. We also signed 25 new customers, up from 20 a year ago.

For the trailing 12 months ended March 31, 2017, the dollar retention rate for customers on LiveEngage exceeded 100%. This measure takes into account the full impact of up-sells, down-sells, renewals and cancellations from our existing customer base. The B2B revenue breakdown by industry was: retail, 25%; financial services, 20%; telecommunications, 17%; auto, 15%; technology, 8%; and other at 15%.

International operations accounted for approximately 30% -- 38% of total revenue in the first quarter of this year. As planned, we continue to wind down our legacy infrastructure and realign our organization around our LiveEngage growth strategy. We recorded $240,000 of charges in the first quarter tied to this effort. We also incurred approximately $1.8 million of nonrecurring litigation cost. Total first quarter charges of $2 million were within our guidance range of $1.9 million to $2.3 million. Excluding onetime restructuring and noncash charges, total LivePerson operating expenses decreased $3.4 million year-over-year.

Gross margin increased 150 basis points to 72.9% in the first quarter from 71.4% a year ago. Excluding onetime charges, the gross margin was 73.1%, an increase of 170 basis points. This improvement primarily reflects the diminishing costs of our legacy operation and lower production cost to LiveEngage as the platform matures at the enterprise level. First quarter GAAP net loss per share of $0.10, adjusted net income per share of $0.01 and adjusted EBITDA per share of $0.06 were all within the respected guidance ranges.

At the end of the first quarter, cash on hand, including restricted cash was $51.7 million or approximately $0.92 per share, approximately $3 million higher than a year ago period. LivePerson used cash from operations of $3.1 million in the first quarter, reflecting typical first quarter cash flow patterns. Deferred revenue increased more than 50% to $33.1 million in the first quarter from $21.9 million a year ago, primarily based on moving customers to cash payments in advance.

Capital expenditures totaled $2.7 million in the first quarter. The company also spent approximately $1 million to repurchase 142,000 shares of its common stock in the first quarter. An additional $19.2 million remains available under the share repurchase authorization.

As we turn our attention to guidance, we are raising the low-end of our previously issued revenue guidance range due to solid initial traction of the efforts to reignite our sales engine and our continued progress winding down legacy. We expect modestly higher revenue in the second quarter of 2017 than in the first, and continue to target second half of 2017 revenue better than the first half. Our goal is to exit 2017 with a run rate that positions LivePerson for renewed growth in 2018.

Full year guidance for 2017 net income, adjusted net income and adjusted EBITDA is unchanged. However, as efforts to wind down legacy infrastructure and realign on LiveEngage are proceeding slightly ahead of plan, the pacing of forecasted restructuring and severance charges is likely to pull forward a bit.

Our revised expectations are as follows: restructuring and severance charges of $300,000 to $500,000 in the second quarter; and $2 million to $2.2 million in the third quarter. This compares to prior guidance for the entire $2.3 million to $2.5 million of charges that take place in the third quarter. Timing of nonrecurring legal expenses tied to IP litigation is unchanged and expected to total $6 million to $6.5 million for the full year 2017.

Our intent remains to maintain, if not improve, GAAP and non-GAAP margin in 2017, relative to 2016, and position LivePerson with a leaner and a more nimble footprint as we prepare for growth in the years ahead.

I will now review our more detail financial expectations. For the second quarter of 2017, we expect revenue of $51 million to $52 million, GAAP net loss per share of $0.12 to $0.10, adjusted net income per share of $0.01 to $0.02 and adjusted EBITDA of $3.3 million to $4.2 million or $0.06 to $0.07 per share.

For the full year 2017, our expectations are as follows: revenue of $204 million to $209 million, from $201 million to $209 million previously. The revenue guidance includes a negative foreign currency impact of $3 million; GAAP net loss per share of $0.40 to $0.31, which includes 16% -- $0.16 per share in onetime and restructuring. Adjusted net income per share of $0.07 to $0.12; and adjusted EBITDA of $17.3 million to $21.3 million or $0.30 to $0.37 per share.

Furthermore, as a percent of revenue of the year, excluding onetime charges, we anticipate gross profit to be approximately 73.5%; sales and marketing, 38.5%; G&A of 16.5% and R&D to be 20%. Note that these largely exclude the above-discussed onetime restructuring and litigation charges.

Also, as a reminder, we have updated the methodology for calculating adjusted net profit per share in 2017. Whereas we've previously incorporated the GAAP tax rate into our calculation, we now start with GAAP pretax profit loss, add back restructuring onetime and noncash expenses, and then apply a standardized 35% tax rate. To goal of the revised calculation is to limit the volatility of GAAP tax rate fluctuations and to more closely align non-GAAP taxes with cash taxes.

Please refer to LivePerson's earnings release issued earlier today for details on our full year 2017 assumptions. We have also published a supplemental presentation on the Investor Relations page of our website that reviews key points from the earnings call and a full reconciliation of 2016 adjusted EPS under the historical and updated methodologies. You may find a presentation on the Investor Relations section of the company's website.

I'll close with what I view is a summary of key takeaways. The migration to LiveEngage is on track to end in 2017, improving our visibility to target the first half as the bottom in revenue for LivePerson's transition. This visibility, along with the initial traction from reigniting our sales engine, has enabled us to raise the low end of our revenue guidance range in 2017.

We are extending our leadership in messaging and now building on our value proposition by integrating the management, measurement and reporting of bot and AI at scale for enterprise. We continue to see greater than 100% dollar retention rate on LiveEngage for full-service customers, a solid indicator of future growth potential. We're on target to shed approximately $16 million to $19 million of 2017 expenses, and, by the fourth quarter of 2017, rebuild our gross margin back to 75% in line with historical peaks. We have a healthy capital structure with $52 million in cash and no debt, providing us with ample resources to execute on our vision.

With that, I will open the call to questions. Operator?

(Operator Instructions) Our first question comes from the line of Koji Ikeda from Oppenheimer.

Just quick questions here on the -- it looks like there was a pretty big jump in the percentage of recurring revenue that is being generated on the LiveEngage platform in Q1. Was there anything in particular in the quarter that was contributing to that good pace of that recurring revenue migration? And I guess just speaking about that remaining, that less than 20% out there that's left, is the profile of these revenue transitions more or less the same as what has been going on over the past few months? Or is the profile of these transitions a little different?

So I'll answer the second question first. The profile of these customers is relatively the same. We've gone through a lot of migrations with enterprise clients, mid-market clients, and these transitions are relatively the same, it's just timing for us. And as far as the first part of the question, just remember, Koji, on the RMR, there's 2 things that are occurring. We're selling obviously, the LiveEngage to the new customers, and that has an impact on the RMR. And the second thing is that we're migrating customers over from our legacy onto the LiveEngage platform, which has an impact on RMR as well. So we made quite a bit of headway from Q4 into Q1. And as we've talked about on previous calls, our expectation is to be done with the migration to have less -- approximately 5% or less of revenue on the legacy platform, which, of course, we'll sandbox and manage for profit.

I guess just a follow-up, I think you had about $10 million, those $10 million in recurring revenue that you say you're going to be sand-boxing in the third quarter. And I believe you mentioned on a couple of calls before that some of the timing of those transitions is due to new product features. And if you could, could you please give an update on those updates? And how to think about the product road map going forward?

Yes. We're very focused on those road map items to move that revenue back onto the LiveEngage platform. So I mean, we're juggling between features that they want to make the move from the old platform to the new one, and then also all the new features that we have around messaging and AI and all that stuff. So -- but they're being prioritized around the revenue opportunities. But we're very focused on obviously migrating all those customers, or as much as we can, onto the platform. That's why we're seeing the target will be down at less than 5% of revenue in Q3 because of all the capabilities that we've delivered in LiveEngage.

(Operator Instructions) And the next question comes from the line of Richard Baldry from Roth Capital.

Can you maybe talk a bit about the breadth of sales on the messaging, maybe across your sales quota teams, how well you think that's spread around them, maybe geographically as well, so we get a feel for how that's playing out in your cost in your go-to-market?

Yes. I mean, we're seeing the high demand around the world, U.S. and Europe being the largest segments of customer demand. And the enterprise sales reps are just focused on that. There's focus on new sales. We've put their compensation against selling messaging and all the capability, so that's -- it's a pretty good -- a very high focus obviously for each of them. As we know, last year, they were very focused on migrations and not really new revenue opportunities. There's a big focus on new revenue opportunities. And we had a very strong Q1 from a bookings perspective, and so we're seeing some good traction with those guys.

You've had a lot of success with telcos like Orange, T-Mobile, Telstra. Can you talk about whether you see them as a really strong channel for you to get into their own customer bases on a go-forward sort of a leverage channel for you?

Not today. I mean, it's a possibility in the future. We're just very focused on, as you pointed out, telcos. We have telco -- we have the largest telcos in every region now, except for South America where we're really not active direct, we have some partners. But we have the largest telcos that are on messaging. So they were the first to adopt and go live. Part of it is because they have control over their devices. They have very active apps and they understand messaging because they see it all day on those apps. So that's really a focal point from selling. I think there's other areas that you're going to see some channel pickup for us, especially in the AI space and the cognitive space. And there's some partners there that we'll be announcing in the next quarter. So I think there's some exciting things happening on that side. We're also becoming -- because we built a platform, it's truly an open platform. We have many companies that are integrating with us now too. So if we look at -- I'd go back to bots. I mean, it's kind of like there's a lot to talk about them, but actually implementing them and managing them and getting them on to a platform where they're transparent, most of the platforms don't do that, they just provide core AI technology. But we're able to put them onto a platform and you're measuring them and deploying them like an agent. And so where we've been very direct in the past, I think you're going to see more indirect opportunities for us coming up shortly. That's what I can see.

And the last one would be if you look at the customer that you won back, was there anything unique about that customer that made that an opportunity to bring them back? Or it's something that would be more of a pattern that you think you could take that same sort of characteristics and look at the customers that have turned and put a concerted effort on bringing them back because of something that's consistent across the base.

I think the most unique thing about this customer is that the person who let us go is the person who signed the deal. And so 2 years ago, he went to one of the voice platforms that he has, they threw chat in and he did think it was strategic. And if we look -- we worked with that customer for 4 or 5 years and we got it to a certain place. Well, a few years later, we just fit the strategy that he was thinking. And he signed with the deal at the start, which was the size of what chat was at its end. And there's an excitement around really, they are attacki3G voice, in that instance, went to about 500, 600 agents already in a matter of weeks. So that's really -- I don't think it's -- I think it would be -- the unique part is usually that doesn't happen. Like somebody fires you 24 months ago, they usually -- they believe you're backing up something new and cool. But our platform is so different and so unique in what it can provide, that this person did that. So I do think there's an opportunity to go back. We are inviting customers back to look at what we have on the platform. And so that's been very exciting opportunity in those customers, who maybe left us, that we can bring back.

And your next question comes from the line of Jeff Van Rhee from Craig-Hallum.

Rob, a couple of questions. Just first on the bots. I don't know how to best frame the question, but I guess I'm curious in terms of the cycles that you're working on. What the frequency is, where sort of one of these key central features of that cycle revolves around your ability to cope or handle bots. I'm just curious where the adoption cycle is among the target customer base.

Fundamentally, what I'm seeing today is that most deals will include AI and -- until we term that as a bot. So I believe we're going to see a pretty heavy mix of bot and human together. And the way we built the platform is pretty unique in that they actually live together side by side so the agent can come in and there's no transfer. Agent comes in when a bot is not working. An agent can watch a bot and see its performance. And actually, we have a system to manage the performance and rate the performance on a scale which we're using the Meaningful Connection Score that we developed in the platform. And then we also have the ability for the human to call in the bot if they want to -- want an automated process. So they could be talking and messaging and then they say, okay, you want to pay your bill, let me bring in the bill pay bot and we'll run the automated process on that. So we have Watson. We worked with Watson. We showcased Watson with a couple of clients at the conference last week, and it's a pretty integrated, very, very comprehensive experience that the consumer gets with it and will bring power of the bot to care. So I think we really have a really good offering there. But I wouldn't suspect going forward and see a lot -- most of our deals having both.

Okay. And then with respect to sales. Dustin's departure, can you expand on this a little bit, the timing? He -- obviously, you haven't had a lot of outbound sales, you've been much more focused on migration. Given his sort of core expertise in the outbound, let's go book new business kind of mode, it would seem he would just be coming into a window that fits him really well. So I guess, 2 things: one, just the timing and a little more color as to what led that departure; and then two, churn. I'm just curious how the churn in the sales orders has trended over the last 2 or 3 quarters.

So there's been a little churn over the last couple of quarters. And we've had -- we have a stable enterprise customer base. And Dustin's been with us close to 10 years. He went from sales rep to running Asia, and then really came back during the transition and helped with the migration. But we really are not going to go back to a global role. So we have a very small group of customers that we are focused on. We have strong regional heads that are working those deals. And I hired a new global head of marketing 10 months ago, who's really doing a fantastic job overlaying all these conferences and go-to-markets. And marketing is playing a far greater role on a global way to bring us the expertise to our customers and bring them together. So it's kind of like, for him, and it's -- there's not much to do here anymore. And unless you are going to go back to run a rep or run a region, and we have people doing that. So it just seemed like a good time that we're exiting odd migrations. And we wish him the best, and it's all on very friendly terms. And we want to thank him for all the service he did. But today, we have to align to where the business is, and that's more of a regional-focused head, very targeted group of accounts.

Last one from me then. What is -- where are you with the rep count now? And how do you think about it, I guess, at year-end?

We're at about 45, 46 reps right now based on at quarter time. Based on where we are in the first quarter, we're comfortable with that number. But as the quarters pick up, we can add to it if we think it's necessary.

But once again, our goal is this very targeted group of enterprise customers that runs very large contact centers, and that's where we are. This is a very targeted list. So we don't need a ton of reps to do it. It's more of a very focused approach to those reps owning telcos, banks, cable, some retail, health care in these different regions.

And there are no further questions in the queue. At this point, I'll turn the call back over to the presenters.

Thank you, everyone, and we will see you on the next 2Q call. Thank you.

Thanks, everybody.

This concludes today's conference call. You may now disconnect.