RingCentral Inc (RNG) 2014 Q2 法說會逐字稿

Greetings, and welcome to RingCentral's second-quarter 2014 conference call.

(Operator Instructions)

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Clyde Hosein, Chief Financial Officer for RingCentral. Thank you, Mr. Hosein, you may begin.

Thank you. Good afternoon, and welcome to RingCentral's second quarter of 2014 earnings conference call. I am Clyde Hosein, RingCentral's Chief Financial Officer. Joining me on today's call are Vlad Shmunis, Founder, Chairman and CEO; and David Berman, President. Our format today will include prepared remarks by Vlad, David and I, followed by Q& A.

The primary purpose of today's call is to provide you with information regarding our performance for the second quarter of 2014, our financial outlook for our third quarter and an update on our full-year 2014 forecast.

Some of our discussion and responses to your questions may contain forward-looking statements, including statements regarding our expected financial results for the third quarter and full-year 2014. Our future plans, prospects and opportunities, trends in the business communications market, our expectations regarding our current and future carrier and other re-seller relationships, our growth strategies, future market position and expected growth.

These statements are subject to risks and uncertainties. Actual results may differ materially from our forward-looking statements and projections for a variety of reasons. Including but not limited to general economic and market conditions, the effects of competitive competition and technology [can] change, and customer demand for and acceptance of our products and services. A discussion of the risks and uncertainties related to our business is contained in our 10-Q for the quarter ended March 31, 2014, and filed with the Securities and Exchange Commission, and is Incorporated by reference into today's discussion.

We disclaim any obligation to update information contained in our forward-looking statements, whether as a result of new information, future events or otherwise. I encourage you to visit our Investor Relations website at www.ir.ringcentral.com to access our second quarter of 2014 earnings press release, our non-GAAP to GAAP reconciliation, our periodic SEC reports, a webcast replay of today's call and to learn more about RingCentral. With that, let me turn the call over to Vlad.

Thanks, Clyde. Welcome, everyone, and thank you for joining us today for our second-quarter 2014 earnings call.

Our financial results showed continued strength in the quarter as we delivered both strong top-line growth, as well as significant margin improvements. Total revenue came in $52.8 million, up 40% year over year. And we improved our non-GAAP operating margin by 3.5 points compared to Q2 of last year. Our flagship product, RingCentral Office, continued to grow rapidly, with annualized additive monthly recurrence of subscriptions, growing 58% year over year to over $139 million.

In addition, we made [throughout the] progress with both our plan to expand our presence with larger customers and with partners through a new carrier relationship with BT. As you can imagine, this deal was highly contested, and we are incredibly proud to have been chosen for this strategic program. Both our team and BT are working together to launch in 2015.

With the addition of BT, this expanse will lead with [us] over our competition. We remain the only pure-play cloud provider with multiple carrier relationships, attesting to the carrier great robustness of our platform. Dave will provide an overview of our growth initiatives in a moment, but the results continue to be encouraging.

Our platform remains at the forefront of the market, and our value proposition continues to resonate with customers. Our cloud-based model provides significant course and functionality benefits when compared to the legacy hardware providers in the business communications market. When we compete with other cloud service providers, we believe that our mobile-centric approach, advanced functionality, ease of use and carrier-grade performance provide us with significant differentiation. These advantages are helping to drive our financial results.

We also received some strong external recognition during recent months. The RingCentral Office Edition was named as the 2014 Unified Communications Product of the Year Award winner by TMC, reflecting the ingenuity and excellence of the product compared to others in the market.

We also received the Strategic Innovation Award at the San Francisco Chief Strategy Officer Summit, as our Mobile First strategic initiative was recognized as the most disruptive strategy. Finally, we were given The Big Idea Award at the recent IBF Venture Capital Investing Conference in San Francisco as a reflection of having the most disruptive business model in the past 12 to 18 months.

It's incredibly rewarding to receive recognition like this for all of the hard work was put in over the years, but our mission has just begun. We will continue to invest in growth on the direct portion of our business, along with our partner efforts, as both channels are producing strong returns on this investment.

Our expansion of market is working, as evidenced by our traction with both larger customers and carriers. The fact that we now have three major carriers signed up to distribute our services is a substantial validation of our efforts as well. The business communications market remains ripe for disruption as the needs of today's businesses are not being met adequately by the legacy solutions in the market.

We remain encouraged by our position and traction in this large and growing market. I will now turn the call over to Dave to provide additional color on our growth strategy and some of our recent wins.

Thanks, Vlad. As we've discussed previously, our growth strategies focus on three main components: expanding upmarket to larger enterprises, adding additional distribution channels and growing our international presence. We made progress on all three fronts in the past quarter. Let me dive into each one.

First, moving upmarket. We've implemented several enhancements to our sales organization to help expand our presence with larger customers over the past few quarters. The additional resources, targeted programs and focus applied to this effort showed further progress in Q2. Our bookings from enterprises with 50 users and greater grew faster than our overall office bookings growth rate once again in the quarter. In fact, our exit monthly recurring subscriptions or MRS run rate from this customer tier continued to grow by one more than 100% year over year.

Importantly, we've also been able to sustain meaningful growth with our customers with a user count below 50, while concurrently adding larger customers. We are still in the early stages of our plans, and expect to see continued benefit from the approach we are taking to accelerate our growth with larger customers while continuing to grow our business with smaller customers.

In addition, we are seeing our higher-tier premium in Enterprise Editions comprise a bigger percentage of our bookings mix. This is driven by both our success with larger customers with more complex needs, as well as a decision we made last quarter to add different tiers RingCentral Meetings, our fully integrated high-definition video and web conferencing solution, to all of our office additions.

Second, distribution channels. Our indirect channels posted strong growth again in the quarter. The major highlight in the segment from Q2 was with our win with BT, one of the world's largest telecommunications providers. As Vlad noted earlier, having relationships with AT&T, Telus, and now BT is a tremendous validation of our offerings and people, along with the value they both provide. We believe that we are emerging as a partner of choice for carriers around the world.

Timing-wise, we remain on track to launch Telus in the Canadian market by the end of the year, and we plan to launch with BT in the UK market in 2015. We're very excited about our go-to-market plans with each of these carrier relationships.

In addition, our work with [barb] partners such as Ingram Micro remains a key component of our overall efforts to move upmarket. On that front, we're very pleased to add a relationship with the Imago Group, PLC, Europe's largest video solutions distributor, last week. This alliance will extend our coverage of the UK market by adding Imago and the reseller network to our growing list of distribution partners.

Third, global expansion. Our business in the UK continues to grow. The people we've put in place and the investments we've made in recent quarters are paying dividends. In addition, we've begun to ramp our indirect efforts with Ingram Micro UK that we announced last quarter, and will launch shortly with Imago. We will add additional resources here over the coming quarters to support our growth plans in the UK.

Let me also share with you a few customer examples from the past quarter. Dycom Industries, a leading provider of specialty contracting services for the telecommunications industry, is an existing client we mentioned on the last call. As they look to optimize the telecommunications systems for their 10,000 employees spread over 40 subsidiaries, Dycom has continued to expand the footprint of RingCentral in the organization.

We now serve more than 1,200 employees throughout multiple offices, including their headquarters, after adding roughly 300 users in the past quarter. We currently plan to add another 200 to 300 users in the third quarter, and believe we have further opportunity in the future.

One of our largest new customer deals in Q2 was a 500-user account win with Capri, one of Canada's largest owners of multi-family rental communities. They have built out a footprint of multiple on-premise PBXs across their locations. As this became more and more unwieldy, they came to us to help provide one solution across all of their locations. Now they have one single account for the entire company and are able to add new locations quickly as they continue to grow.

We also signed a multi-year expansion with an existing client, ConnectOne Bank. They are a community-focused bank with 24 locations in New Jersey. After recently expanding their company through acquisition, ConnectOne was looking to replace the legacy PBX systems currently serving the roughly 150 employees within the acquired company.

ConnectOne was already well-acquainted with the simplicity, cost savings and advanced functionality provided by the cloud-based platform. In particular, they use our mobile application to enable their employees to stay connected while away from the office. The expanded relationship now in place will allow ConnectOne to extend these capabilities and others across the acquired employee base, while still managing the phone systems for all of their employees from one account.

These examples are just a few highlights of the customer successes in the past quarter. I'm pleased with the progress we're making across all these fronts, but we've just begun to capitalize on this large and growing opportunity. I will now turn discussion over to Clyde.

Thanks, Dave. We reported total revenues of $52.8 million in the second quarter, up 40% year over year and 9% sequentially from the Q1. This was above our guidance of $50.5 million to $51.5 million. Within total revenues, service revenues grew to $47.9 million, up 39% year over year and 9% sequentially. Byproduct revenues grew to $4.9 million, up 52% year over year and 12% sequentially.

Total Company annualized exit monthly recurrence of subscriptions grew to about $204 million, up 38% year over year and 9% sequentially. Annualized exit monthly recurrence subscriptions for our Office product grew to about $139 million, up 58% year over year and 11% sequentially. Our overall net monthly subscription dollar retention rate improved slightly on a sequential basis and was over 99% in the second quarter. As the mix of our business continues to shift towards bigger customers, we are seeing some benefit to this metric, due to the higher retention characteristics of larger enterprises.

Before I move further down the income statement, I want to remind you that my commentary will be focused on non-GAAP results. A reconciliation of all non-GAAP to GAAP results is provided with our earnings press release issued earlier today.

Service gross margins were 69.8% in the quarter, up more than 2.5 points from Q2 of last year, and up slightly from Q1 of this year. The leverage we are getting from prior infrastructure investment on [telco] savings is offset in the additional expenditures related to our growth initiatives in the UK and support for larger customers.

Consolidated gross margins, including phones, were 63.6%, up over 2 points from Q2 of last year, and up slightly from Q1 of this year. Sales and marketing expenses were $24.4 million for the quarter or 46% of revenues. This compares to $16.1 million or 43% of revenues in Q2 of last year, and $23 million or 48% of revenues in Q1 of this year. We saw roughly 1.5 points of leverage on this line item sequentially, as we have [sold] the elevated level of investments from our Q1 associated with the expansion of our sales effort targeting larger customers.

We are pleased with the early results from these initiatives. But we should remind you that the time required to close these larger deals is often longer than our traditional sales cycle. The positive trade-off of these longer cycle times should result in both larger deal sizes and stickier customers, an equation that drives higher long-term customer value.

We will continue to invest in sales and marketing, both here and abroad. The payback on this spending remains strong, as we continue to see each level of sales and marketing invested contributing $8 of lifetime revenue and $5 of contribution margin over the projected life of a customer.

R&D expenses were $10 million in Q2 or 19% of revenues. This compares to $8.4 million or 22% of revenues in Q2 of last year, and $9.0 million or 19% of revenues in Q1 of this year. We continue to invest in R&D to expand the functionality of the platform and to better serve larger customers.

G&A expenses were $8.1 million in Q2 or 15% of revenues. This compares to $6.3 million or 17% of revenues in Q2 of last year, and $7.7 million or 16% of revenues in Q1 of this year. The year-over-year increase in G&A largely reflects the increased costs related to being a public Company. However, going forward, we expect a more moderate rate of growth on this line item versus our overall revenue.

We had an operating loss of $8.9 million on operating margin of negative 16.8%. This was ahead of our guidance of negative 17% to negative 19%. This is a significant improvement from an operating margin of negative 20.3% in Q2 of last year and negative 18.8% in Q1 of this year.

We saw in improvement of 3.5 points on a year-over-year basis, and 2 points on a sequential basis, highlighting the leverage in our model. We expect to further improvement going forward, as evidenced in the guidance that we'll provide shortly.

Non-GAAP net loss was $9.4 million compared to a loss of $8.1 million in Q2 of last year, and a loss of $9.7 million in Q1 of this year. Loss per share was $0.14 based on a share count of 67.3 million shares. This is at the high-end of our guidance range of a loss of $0.14 to $0.16 per share. On a GAAP basis, our net loss was $13.3 million or $0.20 per share. The difference between our GAAP and non-GAAP results include $3.9 million or $0.06 per share in stock-based compensation.

We ended the quarter with cash and equivalents of about $151 million compared to about $167 million at the end of the prior quarter, and about $116 million at the end of 2013. For the quarter, cash flow from operations was negative $8.5 million compared to negative $2.9 million for Q2 of last year, and negative $2.5 million for Q1 of this year. The change was largely driven by the timing of some payments in the quarter.

Now to expectations for the third quarter and full-year 2014. For the third quarter, we expect revenue of $55 million to $56 million, or growth of 31% to 34% year over year. We expect non-GAAP operating margin of negative 14% to negative 16%. This should lead to a non-GAAP EPS loss of $0.12 to 0.14 per share, based on 68 million weighted average shares outstanding.

For the full-year fiscal 2014, we now expect revenue of $213 million to $216 million, or growth of 33% to 35% year over year. This is an improvement compared to our prior guidance of revenue of $207 million to $211 million, and boosts our expected growth rate this year by about 4 points.

The increase in our full-year revenue guidance reflects our strong results in the second quarter, along with the continued momentum we expect in our business. Non-GAAP operating margin of negative 14% to negative 16%, an improvement over our prior expectations of negative 15% to negative 17%, and a reflection of the leverage in our model. This would lead to a non-GAAP EPS loss of $0.50 to $0.54 per share, based on 67 million weighted average shares outstanding, compared to our prior guidance of a loss of $0.50 to $0.55.

In summary, our business showed a combination of strong growth and margin improvement in the quarter. We are executing successfully on our growth strategies, as evidenced by the continued traction we saw with both large enterprises and carriers in the quarter. We believe that our differentiated product offerings will continue to be a disruptive force in the large and growing market for business communications. I'll now turn it over to the operator for Q&A.

Thank you.

(Operator Instructions)

Greg Dunham, Goldman Sachs.

Thanks for taking my question. Want to start with the BT announcement. First of all, is this British Telecom? Can you confirm that?

Yes. Hi, Greg; this is Vlad. Yes, it is indeed. BT stands for British Telecom.

Okay. And with the AT&T relationship that you have in place, it's co-branded, and it's a go-to-market out of their mobile division. Can you give us a little background in terms of how this relationship is a structured? Is it co-branded RingCentral?

What kind of capacity does this add from a distribution standpoint in the UK? Any sense of quantifying that would be helpful.

It is a co-branded product, just like AT& T and the forthcoming Telus offering that we've announced last quarter. So it is indeed co-branded. It is not limited to mobility or any other segment or platform that we have. It is our understanding that it is generally going to be promoted throughout their entire business -- BT business organization.

And as to the details of their go-to-market strategy, I think it would not be appropriate for me to comment at this time. But I can say that there is involvement and engagement and quite a bit of excitement at the executive level of both Companies with this offering. It's going to be a well-differentiated, cloud-based offering, which would define a leadership position, we think, for both Companies in that particular geography.

Okay, great. And then, switching gears a little bit. Obviously revenue accelerated, and then if I look at the Office annualized exit monthly recurring revenue, that's still very high at 58%. Are we seeing the early returns of some of these efforts in Denver and the inside sales force and the more aggressive investment? Or is that more on the come?

Greg, this is Clyde. Yes, early -- and underlining early -- last quarter, we outlined a couple of initiatives. One is expanding upmarket. Two is putting some support in Denver as we go upmarket. So you begin to see the early results of that. But to be fair, these things take multiple of quarters. So I would like to say, I think this is the early stages of that. So very good positive results so far, but we're just beginning.

Okay, great. I'll end there. Thanks, guys.

Thanks, Greg.

Kash Rangan, Bank of America Merrill Lynch.

Hi, thanks, guys. Congrats on your BT win. I'm also wondering if you could shed some light on what seems to be pretty strong performance on the product side. I think the product side has moved up almost $1 million in the last two quarters or so. Just wondering if you can give me some insights into what might be driving that.

And also, it probably is the case that you are investing pretty aggressively in sales and marketing, that number [common share it] with your revenue. But it also seems to be moving up very nicely. I'm wondering if you are planning to accelerate sales account growth rate as evidenced by your sales and marketing numbers that seem to move along?

And finally, how are you balancing the move upmarket, where you're clearly signing and turning on some big customers versus keeping that consistent growth track on the low-end? Thank you.

I'll take that, Kash. So, appreciate it. Things are working on many of the cylinders, but we obviously have a long way to go. So good results in Office. We are very pleased with our growth rate in Office, which is going about three X our nearest competitor. We are the largest and fastest-growing [fuel-play] cloud provider in the industry.

And to your question, so a couple of questions. Will growth sales headcount consistent with our revenue growth? Now obviously, as you very well know, Kash, you invest ahead. And so sometimes from time to time there'll be timing and quarter-to-quarter fluctuations, none of which involve people. But as we grow year over year, we will increase sales investments concurrent with that.

But we are focused on a number of areas concurrently right now. I think this is important for you and other investors to understand. First, we are expanding our presence with larger customers, and you can see some of the indications, metrics we gave, that customers with 50 seats and above, more than doubled last quarter. So that's one example.

We added carrier partnerships. You heard about BT today, and that makes us the lead fuel-play cloud provider, with three carrier relationships right now. And we think there is more in our future. To do both of those requires investments in the short-term, but they have strong long-term payback, both in the upmarket larger customers and with carriers.

Third, we continue progress towards breakeven and cash-flow positive, and eventually towards our long-term model. We obviously are focused on that. So as you expand upmarket, as you add carriers, we still have to be cognizant of projections to get cash-flow positive and breakeven.

So we've got to do all of those things at the same time, maintaining a healthy growth rate. And I think what you saw today was the management team and employees creating a very good balance of doing all of those things concurrently, and doing it very well. So we're very pleased with that.

Terry Tillman, Raymond James.

Hi, this is Brian Peterson filling in for Terry. Just wanted to get to back to the BT opportunity and maybe any color that you could provide on the potential size of that, relative to some of your other carrier relationships. And any more detail on if that will be maybe a first-half or second-half 2015 opportunity?

Sure. Vlad here. So as you well know, BT is one of the largest and best-known carriers in the world. This is going to be a -- as I already mentioned, a differentiated cloud-based offering that they, from what we understand, are planning to throw quite a bit of weight behind. It has buy-in at the highest levels in the company.

As far as exact projections, I think it's a little bit too early for that. As with any cloud business, it takes time for significant revenues to accumulate. Of course, the good news is that, assuming that we can demonstrate a similar retention pattern -- and as a reminder, our retention here in the US is over 99% overall, and better than that for Office. So I'm assuming that the same success can be replicated there. We, of course, expect for this to make a significant contribution over time.

Now having said this, we have not yet made public our projections for year 2015. But again, given that this is a 2015 launch, which will be basically a brand-new launch in the UK market, we would not project too much revenue in the next 12 months.

Okay. And a follow-up on that. Can you potentially give us an update on the size of the AT&T relationship as it relates to this quarter?

We haven't disclosed the size of that, Brian. I would say it's doing very well for us, and continues to do well.

Okay, thank you.

Thank you.

Bhavin Suri, William Blair.

Hi, Vlad; hi, Clyde. Congrats, nice quarter. Just a few questions. First, obviously the move upmarket has been nice, and you've got this set of customers above 500. Can you give us some color of how big that is, or how much that contributes as a part of revenue?

Bhavin, good question, but we haven't (laughter) [committed] to how much that is as of yet. Hopefully, that might come in the future. But right now, we have not disclosed that.

Okay. And then, as you move upstream, one of the investments you've made in the product was more administrative functions -- loading in lots of users and administrative functions. When you look at what the customers want, from the larger customers, where would you say you are in terms of R&D investments? Obviously they'll always want for you to feature some functionality, but are you through the bulk of that investment, or is there still a ways to go to get fully functional administrative capabilities there?

Well, we do have fully functional administrative capabilities, as evidenced by our continual penetration upmarket, our largest customer now standing meaningfully over 1,000 users and growing. So there's very clear adoption upmarket and now in the true enterprise space.

So having said this, it's always a work in progress. There are always things to improve. There are systems that are particular to these larger customer that we are always working on integration with. We do have a road map of the [service pool]. If you look at our financials, you will see that we continue having a very meaningful investment into R&D. It is substantially larger than that of the nearest competitor.

We believe these results speak for themselves. What we're able to gain with this investment is superior performance, carrier great quality, as is evidenced by us being able to announce a major carrier win two quarters in a row now. And then of course, prior to that, our AT&T relationship.

So we feel very good where we are with all of this, but there's definitely more to do. Remember, what we're doing is, we really are re-imagining the entire business communications opportunity, given the reality of cloud and mobility and smart phones, and that's a very ripe field for innovation. So we'll continue [investing].

Thanks, Vlad, for that comment. And then, as you look at the BT relationship and you look at your investments prior to the BT relationship in the UK, is there a chance that over time your investment in that market reduces a little bit? Because BT obviously takes on some of the roll of the go-to-market and so on and so forth, in the United Kingdom?

Right. Very fair question. I just want to remind you and everyone of our strategy, which is quite differentiated. We don't view this as an either or game, where we are either a direct-to-the-customer business or a partner with an incumbent. We really feel strongly that one feeds and supports the other.

The reason we are being chosen by the likes of BT, by the likes of Telus -- prior to that, AT&T -- has a lot to do with the fact that we have a sizable direct-user base, that we have a direct, unimpeded line of communication to these customers. We have a -- presales, sales, [full] sales, customer service organizations and processes in place that allow us to capture an incredible amount of data and input from these customers.

And all of this we are able to channel back into the product and back into the processes that go along with it. And all of this, in the end, gets to be enjoyed by our carrier partners, another resource. So that's a differentiated position. I can tell you with 100% certainty that if we were not on the ground in the UK with a direct product, I don't think we'd be sitting here announcing a BT win today.

We feel that this dual-pronged strategy is exactly the right one. And hopefully, both direct and indirect channels will continue proving to be profitable on an economic basis in the long-term, which means that we should we continuing and even accelerating our investments into both of those.

Yes, agreed. I think that's pretty clear, given the results of AT&T and the US numbers to date. One quick last one for me, guys. When you look at the competitive win you had in the quarter, the 500-[seat]-plus win, can you give us a little color on who you displaced, and who was involved in the competitive process? Thanks.

Sure. I believe you're referring to Capri. They had multiple locations -- actually, multiple on-premise vendors of that we were able to displace because of our Mobile First and our ability to serve all vendors -- all offices from one location. So it was a great win in the quarter, and we're building a meaningful pipeline in the future with our larger customer base.

Great, thank you.

Thank, Bhavin.

Mike Latimore, Northland Capital.

Congratulations on the quarter. Again on it BT here, are you replacing any system they currently have in place, or is this more of a greenfield opportunity?

Well, look, BT is a very large company. They have all kinds of offerings, just like AT&T, for example. Having said this, we do believe that this is a renewed focus for BT's business. And this is, from what we understand, really the first time that they are planning to put as much muscle and firepower behind a cloud-based offering. But it really is more of the question to BT. They're the ones responsible for the go-to-market.

Sure, okay. And then, just as you think about the third quarter here, August can sometimes be a little bit soft, just generally. Is there seasonality in your business in third quarters, or not really?

Mostly during Q4 -- of course, August, Mike, has some lazy days of summer. But that's contemplated in the forecast we provided.

Sure. And then, what are you thinking about in terms of CapEx as a percent of revenue for the year?

I think probably in a run rate to about $20 million, $25 million-ish for the year, which -- plus or minus. And that includes a couple of things. One is investments and platforms, as well as what you saw in Q2. As we expand the business, we had some [rule and state of] facilities, building expenses, and you might see another one of those before the end of the year. But probably in the $20 million, $25 million range per year.

And then, just back on the product itself. A lot of things in R&D, it sounds like. Could you highlight maybe one or two top priorities there? Is it the administrative function for large customers, or is it a broader feature set? A little bit more on that would be helpful.

Sure. Well, generally we tend to not pre-announce. But directionally, look, each and every one of these carrier wins or carrier relationships takes some cycles. We're still working hard on ensuring a successful Telus launch. Of course, with this new BT relationship, they're going to require some R&D cycles as well. So this one area where we are looking at.

The recent number of upmarket features that's still outstanding on the road map, we will be closing that list down in a fairly short order, but there's still items outstanding. You already mentioned administrative improvements. And as I mentioned already now, that's going to be in an ongoing effort for us. It's all along these lines.

But we continue to stay committed to our stated strategy. Which is profitable growth, with emphasis on out-based upmarket growth, and continued push internationally, both directly, as well as through various channel partners, including carriers. So that's where our engineering cycles are going into.

Okay, thank you.

Thank you very much.

Thanks, everyone, for joining us today for our second-quarter earnings call. We are pleased to deliver strong results once again. We are making consistent progress across all of our strategic initiatives, and believe we have a bright future ahead of us. We appreciate your interest in our Company, and look forward to providing you with further updates in the future. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.