MIX Telematics Ltd (MIXT) 2019 Q1 法說會逐字稿

Good day, ladies and gentleman. Thank you for standing by. Welcome to the MiX Telematics Fiscal First Quarter 2019 Earnings Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Paul Dell, Interim Chief Financial Officer. Please go ahead.

Good day, and welcome to MiX Telematics' Earnings Results Call for the First Quarter of Fiscal Year 2019, which ended on June 30, 2018. Today, we will be discussing the results announced in our press release issued a few hours ago. I'm Paul Dell, Interim Chief Financial Officer, and joining me on the call today is Stefan Joselowitz or as many of you know him, Joss. He's President and Chief Executive Officer of MiX Telematics.

During the call, we will also make statements relating to our business that may be considered forward-looking pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our results, please refer to those contained in our Form 20-F and other filings with the Securities and Exchange Commission available on our website at www.mixtelematics.com under the Investor Relations tab. Furthermore, we will also be referring to certain non-IFRS financial measures. There is a reconciliation schedule detailing these results currently available in our press release, which is located on our website and filed with the Securities and Exchange Commission.

With that, let me turn the call over to Joss.

Thanks, Paul. I would like to thank you all for joining the call today. MiX reported a strong first quarter, and I'm very pleased with the team's execution. The quarter was highlighted by subscription revenue growth of more than 18% on a constant currency basis as well as adjusted EBITDA margin of 27.7%. This represents a more than 250 basis points margin improvement compared to the prior year's comparative period, and it is the eighth consecutive quarter of year-over-year margin expansion.

These strong results are further evidence we are continuing to benefit from our diversified portfolio of premium free subscriptions. As a result, we remain confident in our ability to maintain the momentum for the balance of fiscal 2019 and beyond and achieving our longer-term adjusted EBITDA margin target of 30%-plus.

Turning to a summary of our first quarter performance. Our subscription revenue of ZAR 390 million grew over 18% year-over-year on a constant currency basis and ahead of guidance. This was driven by the ongoing demand from our higher [ARPU] premium fleet customers globally across all verticals.

It was also pleasing that all of our regions contributed positively to both our top and bottom line performance. We also added over 15,000 net new subscribers during the quarter, bringing our total base up to 692,000, a year-on-year increase of 11%. We are also driving material ARPU expansion, as we benefit from the positive impact of our bundle deals and premium add-on features.

This is worth reiterating that our ARPU has materially improved over the past decade, driven by a combination of our ability to sell a range of solutions on top of our core application as well as our focus on branding deals to our premium fleet customers. Over the past year alone, our ARPU has improved by over 7.5% in constant currency terms. As a reminder, bundled deals delivered significantly more cash over the average customer lifetime and contribute around $1,000 more in cash compared to an unbundled deal.

Over 80% of our new sales are now being completed on a bundled deals basis. And looking at our premium fleet portfolio, approximately 30% are now on bundled deals versus around 5% 5 years ago. The progress we've made with ARPU can clearly be seen in Q1, given over 18% year-over-year growth in subscription revenue on 11% growth in subscribers.

During the quarter, we secured some notable wins and successes, including signing new customers, completing renewals and expanding our footprint with existing clients. At our last earnings call, we announced a win with a very large multinational customer in the finance business. And we are pleased to report that we now have more than 3,000 active subscriptions with this customer.

In South Africa, we had won yet another multinational car rental company and have already installed solutions into about 1,000 vehicles with another 5,000 to follow during the course of the year. Globally, the bus and coach vertical continues to be a strong performer. For example, in Australia and Brazil, we signed up multiple public and private bus companies for contracts totaling close to 1,500 vehicles.

In the Middle East, MiX signed a 5-year agreement with the United Nation's development program to provide our services after delivering on a successful proof-of-concept. This agreement provides flexibility to all United Nation's agencies to utilize MiX for their requirements. We are now looking to continue our expansion into the humanitarian sector by signing up agencies that operate multiple fleets in order to realize the safety benefits and cost savings that we have proven to be achievable.

And finally, we continue to release new software features to customers every month and also commenced the rollout of our new generation premium fleet hardware platforms, which I've touched on earlier this year to customers in the United Kingdom and New Zealand.

Unlike many of our competitors, we still design and develop our core hardware platform. This enables us to control the entire ecosystem and effectively manage the customer experience from end to end. Our new premium fleet hardware product, the MiX 4000 and 6000 deliver a -- leverage off a common code base, new technologies and features that help to further future proof our business.

Given Q1's solid performance, our visibility into strong pipeline of firm orders and continued efficiencies we're driving through the organization, we are reiterating our fiscal 2019 total revenue, subscription revenue and adjusted EBITDA margin guidance on a constant currency basis. Paul will provide more detail in a few minutes. But bear in mind that the updated guidance he will provide only reflects changes in foreign exchange rates since our last earnings call.

So in summary, our strong first quarter results are further evidence that MiX continues its meaningful acceleration in margins after years of investment. As a result, I continue to believe we are executing on an opportunity to create a large company with a compelling financial profile, driven by double-digit subscription revenue growth, enhanced scalability and growing cash flow.

With that, let me turn it over to Paul to run through the details on the quarter.

Thanks, Joss. Let me review our first quarter fiscal year 2019 performance and recall that our reporting currency is the South African Rand. For convenience, we have translated our results into U.S. dollars, both for the 2019 and 2018 periods, using the June 30, 2018 spot rate. You can find these conversions in our press release. In addition, please note that our results are presented on an IFRS basis unless otherwise noted.

In the first quarter, total revenue came at ZAR 457 million. Of this total, subscription revenues were ZAR 390 million, up 16.4% on an as-reported basis. On a constant currency basis, subscription revenue growth was 18.4% and above our guidance range. This strong performance was driven by the ongoing traction from our premium fleet customers across all geographies and vertical markets.

We added 15,100 subscribers in the quarter and ended with over 691,000 subscribers, an increase of 10.6% year-over-year. Subscription revenue now represents more than 85% of total revenue, an improvement compared to 83% in the first quarter last year. We again saw more than 80% of our net subscriber additions comprising of bundled contracts and expect that subscription revenue as a percentage of total revenues to continue to increase.

The layering of bundled subscription contracts, combined with ongoing customer adoption of ARPU-enhancing add-ons, such as MiX Vision has resulted in a constant currency ARPU increase of over 7.5% when compared to the first quarter of fiscal 2018.

Hardware and other revenue was ZAR 66 million compared to ZAR 70 million in the first quarter of fiscal 2018. Our gross profit margin in the first quarter of fiscal 2019 was 66.9% and consistent with the gross profit margin reported in the first quarter of fiscal 2018. We continue to focus on scaling our business, with operating expenses representing 52% of total revenue compared to 57% of revenue in the first quarter last year. Recall that our general and administration costs include research and development costs [are not] capitalized.

For those of you interested to see our historical capitalization and development cost expense, we have provided the table in our earnings press release.

To provide investors with additional information regarding our financial results, we disclosed adjusted EBITDA and adjusted EBITDA margin as well as adjusted earnings for the period, which are non-IFRS measures. So we have provided full reconciliation tables in our press release.

First quarter adjusted EBITDA increased 35% to ZAR 126 million or 27.7% of revenue compared to ZAR 94 million or 23.1% of revenue last year. This represented a 460 basis points year-over-year improvement in adjusted EBITDA margin. The continued improvements in our adjusted EBITDA margin highlights our ability to achieve margin accretion as it scales the business globally by successfully leveraging our return on our historical investments while remaining focused on cost management throughout the business.

Note that as expected, our first quarter 2019 adjusted EBITDA margin of 27.7% was lower than the margin of 28.7% reported in the fourth quarter of fiscal 2018, when elevated hardware revenues and resulted gross profit increased the reported margin by 1.3%.

We remain pleased with the trajectory of our ongoing improvements in adjusted EBITDA margin. Adjusted earnings for the quarter was ZAR 49 million or ZAR 0.08 per diluted ordinary shares, which was up from the ZAR 31 million or ZAR 0.05 per share we posted a year ago.

The tax rate used in reporting ordinary earnings per share was elevated due to noncash deferred tax charges, resulting from the effect of foreign exchange rate fluctuations. At an adjusted earnings level, where we ignore the impact of foreign exchange gains and losses and related tax consequences, our effective tax rate was 28.4% compared to 50.8% in the first quarter of fiscal 2018.

From a cash flow perspective, we generated ZAR 23 million and net cash from operating activities and invested ZAR 78 million in capital expenditures, leading to a negative free cash flow of ZAR 55 million for the first quarter, an improvement compared with negative free cash flow of ZAR 64 million during the same period last year. The use of cash includes investments in in-vehicle devices of ZAR 57 million, driven by the demand for our bundled offering. As a reminder, the first quarter is typically our lowest cash flow quarter due to payment of prior year bonuses. In the current quarter, prior year bonus payments were in excess of ZAR 50 million.

Now let's turn to our financial outlook. In regards to our expectations for fiscal 2019, we have increased our guidance in respect of total reported revenue and reported subscription revenue, as the weakening of the rand primarily against the U.S. dollar has a positive impact on our reporting currency revenues.

At the midpoint of our total revenue guidance, we expect fiscal 2019 revenue of ZAR 1,880,000,000, which would represent constant currency growth of 10%, consistent with our previous guidance issued in our press release on the 10th of May this year. At the midpoint, we expect subscription revenue to be ZAR 1,635,000,000, which represents constant currency year-on-year growth of 14.25%. This was consistent with our previous guidance in respect of constant currency subscription revenue growth.

We remain confident in our ability to achieve this, given the first quarter performance as well as our strong pipeline of firm orders and sales opportunities.

At the midpoint of our guidance, we are now targeting adjusted EBITDA of ZAR 536 million, which represents an adjusted EBITDA margin of 28.5%. Adjusted EBITDA margin guidance is consistent with our previous guidance and at the midpoint is up approximately 300 basis points compared to last year. This, again, shows our intention of achieving ongoing margin accretion, as we progress towards our long-term adjusted EBITDA progress of 30%-plus.

In regards to adjusted diluted earnings per share for fiscal 2019, we are increasing our expectation to ZAR 0.322 at the midpoint of the guidance range. This compares to our previous guidance of ZAR 0.307 at the midpoint. Our new guidance is based on 587 million diluted ordinary shares and an effective tax rate of between 28% to 31%.

As we have discussed previously, our intention is to focus on annual targets, as this is how our management is focused, and we do not wish to close deals on suboptimal terms in order to achieve quarterly objectives. This is most relevant as it relates to the hardware and other revenue line items in our profit and loss. The area of revenue, where we have the highest level of visibility and predictability is our subscription revenue, which, as we have discussed, is the largest, fastest-growing and highest-margin component of our business. For the second quarter of 2019, we're targeting subscription revenues in the range of ZAR 401 million to ZAR 406 million, which would represent year-over-year growth of 15.1% to 16.6% on a constant currency basis.

In summary, MiX has gotten off to a strong start to fiscal 2019. We are very pleased with the subscription revenue growth and improvements in our adjusted EBITDA margins in the first quarter. Looking ahead, we believe that MiX is well positioned to continue the momentum in fiscal 2019 and beyond, given our industry-leading integrated telematics platform, diverse product portfolio, ongoing traction in key verticals and geographies, and our commitment to sustaining profitable growth.

I will now hand it back over to Joss for some closing remarks.

Thanks, Paul. In closing, we executed very well during the first quarter. And I will take this opportunity to extend my thanks to our team for this great start to the 2019 fiscal year. Our progress was highlighted by our ability to grow subscription revenue more than 18% on a constant currency basis as well as expand our adjusted EBITDA margins to almost 28%. These strong results are further evidence that our strategy is working, and we remain confident in our availability to achieve our long-term adjusted EBITDA margin target of 30%-plus.

With that, we will turn the call over to the operator to begin the Q&A session.

(Operator Instructions) Our first question will come from Bhavan Suri with William Blair.

I guess, I just want to touch first at a high level, obviously, just a strong quarter. Joss, maybe this is for you or someone else there, but I'm surprised about sort of maintaining full year guidance. It just feels like you've given yourself some room, but you beat very, very handily, sort of, just the thought processing, given the strong quarters and such a clean quarter, why you sort of just kept guidance where it was on a constant currency basis.

Bhavan, thanks for the comments and thanks for the question. It's early in the year, we're certainly feeling good about the year. You are correct, we had got off to a strong start. And I guess, in my inimitable fashion, I've generally chosen to get a few more data points before we take a different view on the year ahead. So I'm really taking a position where we're not going to get ahead of ourselves right yet. We need to carry on focus on executing our business. And -- but certainly, don't misread anything into the fact we are reiterating our full year guidance. And having said that, we are building a great pipeline, and I'm feeling good about the year.

Great. So then, I guess, touching on the business, if we go back, you had been sort of a little disappointed, I guess, I would say or just not, had not been as happy with the performance in Europe. Just wondering sort of -- it seems to have come back. What actions did you take to sort of reinvigorate that business? And then did that sort of meet your expectations or beat your expectations in the period?

Yes, so these -- whatever moves you make or not, as you know anyway are not generally overnight fixes. We have been working with our leadership there, we're increasing investment -- in strategic investments, sales and marketing, particularly, trying out a few new things in terms of how we distribute or get to our customers maybe in a more efficient manner, and it's early days in some of those tweaks that we've made. Having said that, it's early signs that we are making progress. And certainly for the first quarter, the business is running more or less according to plan. So I'm happy with that. But it's a 4-quarter year, and we have to keep on executing. So we'll have to see how it pans out over the balance of the year. But in summary, primary focus on strategic investments mainly around sales and marketing.

Got it. Then I want to touch on sort of the ARPU piece, obviously, sort of cross-selling the product, bundling MiX Vision, Tabs, et cetera, driving ARPU. As we look out, and I'm -- I don't even care about this fiscal year. But as we look over the next, say, 12, 24 months, how do you think of sort of the unit growth and the ARPU growth balance while still maintaining sort of that subscription guidance you've given us? What do you think ends up being the drivers? Is it the cross-sell of more product into the base? Or do you think it's more addition of units? Or what that mix might look like?

Yes, we certainly expect our ARPU on balance to continue for the foreseeable future and certainly the kind of time period you're talking about and beyond the 24 months plus to continue to accrete upwards, we've made lots of investments to make this happen. And we are seeing concrete evidence that these investments are now solidly paying off. And ARPU will be driven by a combination of the -- ongoing growth in the bundled component of our premium portfolio. So we're now at 30%. But clearly, we've got a huge amount of runway to continue growing that penetration into that portfolio. And we've got some premium add-ons that are showing good success, and we're having increasing success in selling that not only to new customers but to existing customers as well. So that's the other driving factor. Bear in mind, on your other portfolio, certainly our asset tracking portfolio, other than inflationary increases in the Southern African region, we don't expect to see any major growth in ARPU, primarily because there's really nothing -- that product has already been -- is being bundled since inception, and there's no real add-ons that we sell on to that product. But we are looking at global expansion of that portfolio. And we must also bear in mind that it depends on the mix of our sales -- our portfolio sales in terms of the impact that, that will have on our ARPU accretion. So obviously, the higher number of Beame sales or Ted sales we have, they are high-margin, lower-ARPU sales that could slightly mute the growth in our overall ARPU. But on balance, I would still expect our ARPUs to trend up, blended ARPUs taking everything into account to continue to blend upwards -- to trade upwards, I beg your pardon.

Our next question will come from Brian Peterson with Raymond James.

So this is, I believe, the second or third quarter in a row now where the premium fleet customers have been really strong. In this quarter, you mentioned that it was across a lot of different verticals, which is positive. So I'm just curious what's changed over the last few quarters that's really improved your results there? I'm just curious to get an update on how things trended in the Americas versus your expectations?

Thanks, Brian. In terms of what's changed, I guess, we -- the one significant change, I guess, the most important change is that we're seeing a lot of activity in the energy sector, which was going back sort of 6 or 7 quarters. There was no activity or even worse, there was sort of negative contraction, negative activity from our perspective and it was other verticals that were carrying us. So now we are in a position where we're seeing all of our key verticals performing well. And we're also seeing some success in some new verticals, where it's early days. And we really haven't got the kind of traction I want to brag about yet, but we're seeing some new verticals starting to show some contribution and that's exciting. But what we're seeing right now is, we're seeing existing verticals for us, where we are seeing good new customer growth. And on top of that, we are seeing solid activity from existing customers that are expanding their fleets in many instances. And combined with that, they are opting for ARPU-enhancing add-ons in certain instances. So it's that combination that's really starting to come together nicely for us now.

And Joss, just given the premium fleet momentum in a shift to bundled deals, I'm just curious how would you characterize your revenue visibility into fiscal year '19 results versus maybe prior years given those dynamics?

It's -- we certainly have a -- we have more confidence in our visibility, I guess, than we did, as I mentioned, when we were struggling with energy sector, let's call it, 18 months ago and beyond. It was that -- we had a sort of 5-quarter rough patch. And we'll stretch that -- we still grew through that patch. So it was just not the growth we were hoping for, planning for. So we have visibility. We signed a lot of solid deals, many of which or some of which we've announced in various earnings calls. We do -- it's not always easy to predict what the cadence or run rate is going to be on some of these deals. And a lot of that is in the customers' hands, I wish it was more in our hands because we would be driving it in some instances, a lot harder than it's actually happening. So signing the deal is really only the first step in getting a large new customer on board. And getting access to vehicles to do installations to get that subscriber on board is primarily in the customers' hands. So some run a lot better than others. I mentioned the one deal that we announced last quarter. We've already put 3,000 on in this quarter that we've just reported on. So that pace is fantastic and that gives us a bit more confidence in our ability to predict that particular customer. Then there are other big deals, where we signed, which have run much slower than anticipated or not anticipated, but hoped for. And we're working with the customers to -- sharing our frustration. And in some instances, they have the same frustration. They want to see it moving faster because they recognize the value and the benefit that will bring to their business. So it's managing a lot of moving parts, I guess. But we base our guidance, our forward guidance on our best judgments. At any point of time, we've given a view into this coming quarter, and we work very hard to, obviously, meet and, hopefully, beat the position we've put forward to the market.

(Operator Instructions) We'll now hear from Mike Walkley with Canaccord Genuity.

My question is for -- yes, sure. With your installed base of customers, I think you shared 30% now on bundled deals. How do you look at, maybe, converting that other part of the base over time? Are there certain regions in the world where you see maybe a technology risk or 2G or 3G technologies are ending in a few years? You need to upgrade to new hardware. And does this create an opportunity to upsell your base to more bundled deals to help drive ARPU over time?

Yes, thank you. It's a great question and absolutely that should be a part of the opportunity to expand that penetration into the base. It typically happens at renewal time or getting close to renewal time, where we engage with customers about what the opportunities are. And it's not so much the network issues that drive that opportunity. What's driving it more is the opportunity for customers to take on some of their other options like MiX Vision or some of our other ARPU-enhancing add-ons that creates an opportunity to have that discussion. And by the way, I'm equally happy to take a cash deal. So I have a particular fondness for cash and always happy to do a nonbundled deal. And the customers really have the choice, but we are definitely seeing, for whatever reason, a trend from large customers towards bundled deals. Even though doing the mathematics, economically, a nonbundled deal would make more sense for them. So that -- I suppose it simplifies the sales process. It takes it really off their balance sheet and puts it into an OpEx kind of situation. So there is a particular fondness for bundled deals right now. And I think that trend will naturally continue. So we expect that percentage to grow. And I can certainly see a world in the future. I don't believe it will be this year or next year, but I can see a world in the future where we eliminate our hardware line all together and only have the one offering to our customers. But at this stage, we have both.

And just following up, you highlighted on the call your differentiated hardware because you can make it yourself and customize for customers. As your business continues to scale, how do you see costs coming down, maybe, in hardware to potentially expand overall contribution margins going forward? And I think you highlighted some new hardware products also. Are those helping that mix of margins over time?

No, I appreciate it, thank you. Yes, we've just launched now -- we're physically rolling out, we started to roll out the NexGen platform effectively the MiX 6000, 4000 which are new premium fleet platform. And we're excited about it. We -- it's got a lot of inherent design functionality and capability that we believe further helps to future proof our business. We constantly revisit this build or buy decision point. And when we started -- prior to starting development on this new platform sometime back, probably about 18 months ago, we revisited, again, at that stage and decided to take a run at this latest platform. And we believe it'll stand us in good stead for the next 4 or 5 years certainly. And at that point, we'll take another view on whether we are going to develop another platform or whether at that stage we believe that there'll be a sufficient or there'll be available options that will be good enough or sufficient for our needs from a third-party supplier. And also bear in mind, we need to -- it's also a strategic decision whether a third-party supplier poses a strategic risk to us or not. So that becomes part of the strategic process. But right now, we're very happy with the fact that we're doing our own design that does give us more flexibility. It has enabled us to leverage diversified revenue streams, which I particularly like about our business, it derisks the business. And we believe that it supports our modern plans for the foreseeable future by doing it ourselves. So we're happy with where we are.

Our next question will come from David Gearhart with First Analysis.

My first question, I wanted to ask since you talked a bit about the take rates and bundled deals and the penetration in your base. If you can kind of give us some visibility into the attach rates of your add-on solutions in aggregate and the level of penetration in your existing base? If you can kind of give us a sense of where it is and the runway that you have in front of the company.

Thank you for the question, David, and your attention. I don't think we're certainly in a position where -- we haven't announced specific attachment rates. What I will -- what I think I can safely say is that our attachment rates are, in terms of our current base, on some of these major ARPU drivers are relatively small, and off the top of my head, I don't think any of them are above 20% right now. So I think that could be a safe statement that in anyone of our add-on opportunities, we have at least 80% of our base. And in some of those opportunities, there will be a -- it'll be a runway larger than that of our existing base that still present marketing opportunities to upgrade some of those installations. So the run rate from our perspective is pretty large indeed.

Okay. And then premium fleet. You've been doing well selling to premium fleets. Just wondering if you could give us an update on the mix of subscriber adds in the quarter. I think last quarter, it was running ahead of the 50-50 between premium fleet and lower-value subscribers. I was just wondering if you could break that out for us.

It's -- in this quarter, nicely balanced. It was a nicely balanced quarter. So we did get unplanned contributions, really, from all 3 of our portfolios. So our premium fleet portfolio, our [large] fleet portfolio, and of course, our asset tracking portfolio. So premium fleet made up a good-sized percentage of that, not quite 50%, but I'm talking now from subscriber add-on perspective. Remember, it's much more overweight from a subscription revenue perspective. That's why we particularly love that portfolio. One premium fleet subscriber is like 10 asset tracking subscribers from a revenue perspective. I will stress that the margins we enjoy even from our lowest ARPU asset tracking portfolio are extremely attractive. So we are very happy to add them on. But we get an overweight revenue contribution, obviously, from the premium fleet side. And it made up a sizable chunk of the subscribers that we added and was marginally ahead of plan for the quarter which I was pleased about.

And then last question for me, I mean, in past quarters, talking about the pipeline, you've talked about it being as robust as you've seen in years in the pipeline and being pregnant with growth. I'm just curious if you could just give us a qualitative overview of what the pipeline looks like? Is it still similar to what you saw in past quarter? Has it expanded? Just some thoughts around pipeline.

No. It's definitely expanded. So we're -- and particularly, we're seeing -- continuing to see and win more of these global contracts, which really plays to our strength. So that's the exciting part of it. The complicated parts to some of these contracts are not as smooth rollout as we would -- dearly really like to see. And I mentioned before that it depends on the, I guess, the cultural style of an organization, how dictatorial they are from a head office perspective, et cetera. So some of them are very easy rollouts, and I mentioned the one we've just seen where there seems to be, from head office downwards, a very clear understanding that there is a commitment to rolling out. And others, we sign huge contracts with potentially tens of millions -- sorry, tens of thousands of subscribers that are potential and while we signed the deal, we're still viewing them as, let's call it, super-qualified leads. We still have to do a lot of work regionally to get regional management behind the deal that the head office put in place. So that's an ongoing challenge in our business, I don't think it's anything particular new other than we're seeing more of them. And that's certainly aiding our pipeline. What we're also seeing as you referenced my -- now I'm not sure if it's a famous or an infamous comment about pregnant with growth, but we're certainly delivering on that. So we're seeing large customers that are expanding their fleet. And for very little sales effort or cost, we're getting subscriber growth and subscription revenue benefit out of it, and that's very exciting. So I'm very pleased with the trajectory that best -- and we're building up a real head of steam on mining existing customers, which is great.

Thank you. And with no additional questions, I'd like to turn the floor back over to Joss for any additional or closing remarks.

Thank you. Thank you all for joining us today. We appreciate your attention and your questions. We will be presenting at the Oppenheimer and Canaccord conferences in Boston next week. And we certainly hope to see some of you there. And thanks, again, and have a great day.

That does conclude today's conference. Ladies and gentlemen, thank you, again, for your participation. You may now disconnect.