Rapid7 Inc (RPD) 2017 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Rapid7 First Quarter 2017 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded, Tuesday, May 9, 2017.

I would now like to turn the conference over to Mr. Jeff Bray, Vice President Investor Relations of Rapid7. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. We appreciate you joining us to discuss Rapid7's Q1 2017 financial and operating results in addition to our financial outlook for the second quarter and the full fiscal year 2017. I'm Jeff Bray, VP of Investor Relations, and I'm here today with Corey Thomas, our President and CEO; and Jeff Kalowski, our CFO. We distributed our Q1 2017 earnings press release over the wire and posted it on our website at investors.rapid7.com.

We have also posted our updated company presentation on our Investor Relations website. This call is being webcast and can be accessed at investors.rapid7.com. The webcast of this call will be archived, and a telephone replay will be available on our website until May 12, 2017. We would like to bring the following to your attention. The date of this call is May 9, 2017.

Our discussion today contains forward-looking statements about events and circumstances that have not yet occurred, including, without limitations, statements regarding our objectives for future operations and future financial and business performance. These forward-looking statements are based on our current expectations and beliefs and on information currently available to us. Statements containing words such as anticipate, believe, continue, estimate, expect, intend, may, will and other similar statements are intended to identify such forward-looking statements. Actual outcomes and results may differ materially from the expectations contained in these statements due to a number of risks and uncertainties, including those contained in the Risk Factors section of our most recent annual report on Form 10-Q filed with the Securities and Exchange Commission and subsequent reports that we filed with the Securities and Exchange Commission.

The information provided on this conference call should be considered in light of such risks. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered an indication of future performance. Rapid7 does not assume any obligation to update the information presented on this conference call except to the extent required by applicable law.

On this call, we will provide and talk about our results using non-GAAP financial measures and provide non-GAAP guidance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in understanding company performance and trends but note that the presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for directly comparable financial measures prepared in accordance with GAAP. We have provided a reconciliation of the historical non-GAAP financial measures to the most comparable GAAP measures in the financial statement tables included in the press release issued today announcing our results. The press release announcing our financial results is available on our website at investors.rapid7.com.

At times in our prepared comments or in the responses to your questions, we may offer incremental metrics to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that this additional detail may be onetime in nature, and we may or may not provide an update in the future on these metrics. Finally, I would like to note that we have updated our definition of recurring revenue and introduced calculated billings and adjusted EBITDA as non-GAAP financial measures. The history of these and other metrics is available on the financial data tables on our Investor Relations website.

With that, I'd like to turn the call over to Corey. Corey?

Thank you, Jeff, and good afternoon, everyone. Thank you all for joining us on our first quarter 2017 earnings conference call. Q1 was a solid start for 2017 and a great step forward to achieving our full year objectives for growth and profitability. A healthy market and good execution showed Q1 revenue growth of 30%; additional operating leverage; billings growth, 21%; and another quarter of positive cash flow from operations. We saw healthy results across all of our product groups, with consistent performance in Threat Exposure Management and another strong contribution from Incident Detection and Response, or IDR.

In April we announced the evolution of the Rapid7 Insight platform, with the release of InsightVM and the announcement of InsightAppSec. With these latest innovations, we're executing against our vision and delivering the product and platforms that we -- that will drive our company's growth. When we release InsightOps later this quarter, the Rapid7 Insight platform will be the first to offer all of the 3 major pillars of security and IT analytics: vulnerability management, UBA-powered SIEM and IT log analytics, all operating on a shared cloud and data collection infrastructure. Our platform uses the same lightweight agent and data collectors across all of its solutions to aggregate data from end points, machine logs, cloud assets, scanners and other sources. Instead of trying to manually integrate a variety of overlapping point products, security and IT professionals can collect data once and use that single source of data across a range of solutions that leverage threat intelligence and analytics. The Rapid7 Insight platform dramatically reduces complexity with one consistent simple view of the IT environment and activity taking place inside, helping IT and security quickly solve their most critical issues with a reduced total cost of ownership. The breadth of the Rapid7 Insight platform truly differentiates us in the analytics market, and we strongly believe that it will help drive both new customer growth and consolidation of our customers' analytics spending with Rapid7.

Now let's review our business and in context of our 2017 goals. Looking at our first goal, we are well positioned to add more customers in 2017 than 2016, as we continue to broaden our product set and expand subscription pricing across our portfolio. Our go-to-market performance is right on plan, as our midmarket engine continues to be strong and our enterprise group is executing better. I have growing confidence that our effort to improve the productivity of our enterprise sales team will yield long-term benefits for Rapid7.

Last month, we launched InsightVM, our cloud-based vulnerability management product, which builds upon our Nexpose franchise and fully leverages our Rapid7 Insight platform. InsightVM brings more features, better usability and a reduced total cost of ownership, making it even more acceptable to the resource-constrained mass market. Combined with our upcoming launch of InsightAppSec, we believe we are well positioned to continue to gain market share in the Threat Exposure Management market by providing integrated solutions that reduce complexity and total cost of ownership. We believe we can drive new customer growth and make it attractive for users to consolidate on our platform. While it's very early, we are so far pleased with the initial reaction to the InsightVM from both our sales team and our customers.

Turning to a customer win this quarter. One example was a Fortune 500 retailer that was looking to upgrade their MVM, or McAfee Vulnerability Management, installation. After a detailed evaluation, they concluded that Nexpose met their compliance, auditing and their reporting needs and were also convinced that Rapid7 would provide a smooth transition from MVM. They will be taking advantage of the cloud features of Rapid7 Insight platform, and with this project, this customer is more than doubling the coverage of their IT environment for analytics. This was a great example of how our market-leading technology can help us continue to gain share in the vulnerability management market.

Now our second goal, which is to disrupt the SIEM and IT log analytics market. In 2016, we expanded our addressable market with the launch of InsightIDR to address the SIEM opportunity. And we built great momentum through the year that has continued into 2017. Customers recognize the need to have a simple, easy-to-use solution that would help them quickly detect anomalies in their environment and then rapidly conduct forensic investigations, all at a reasonable TCO. As a result, we're quickly reaching scale and earning recognition in the SIEM market. This quarter, as an example, a Fortune 500 manufacturing company tasked their security department with adding a SIEM but without adding any headcount or doing an expensive integration. We got an excellent referral from one of our satisfied customers who allowed this prospect to observe their InsightIDR installation in action. They were quickly convinced that InsightIDR's ease of use, fast deployment and prebuilt threat detection analytics would lead to an accelerated time to value for their investment. And as a result, this customer didn't seriously consider any competitive products. During their proof of concept, the prospect validated InsightIDR's ability to provide visibility across security events, high-risk accounts, log correlation, cloud usage and to quickly find intruders and provide accelerated investigations. This was a great example of how our focus on ease of use and customer service can drive growth for Rapid7.

Later this quarter, we plan to launch InsightOps, the evolution of Logentries, which will again expand our opportunity by bringing the usability of power of the Rapid7 Insight platform to the IT log analytics market. Once again, we believe we can expand an already attractive market by delivering a product with better ease of use and a more reasonable total cost of ownership.

As for our final goal, we showed strong margin improvement in cash flow generation this quarter, as we continue to take advantage of our scale, while making disciplined investments in our businesses. As a result our strong performance in Q1, we are modestly improving our profit outlook for 2017.

In summary, 2017 is off to a strong start for Rapid7, and we have increased confidence in our ability to hit our 2017 and long-term goals. We've already seen many great examples of what our platform can deliver to our customers, and we're confident that our strategy of a single platform that helps the resource-constrained IT and security teams is the right one.

Jeff Kalowski will now take you through our financial results and guidance. Jeff?

Thanks, Corey. We are pleased with our strong performance in the first quarter. Total Q1 revenue was $45.2 million, an increase of 30% year-over-year and above the high-end of our guidance. Product revenue was $25.9 million, increasing 29% year-over-year, driven by increasing demand across our offerings, with particular strength in IDR and expanding recurring revenue. Maintenance and support revenue was $10.8 million, increasing 29% year-over-year. And our professional services revenue was $8.5 million, an increase of 36% year-over-year.

We continue to have very high visibility into our revenue forecast, with 89% of Q1's revenue having been on the balance sheet as of the first day of the quarter and 69% of our revenue being subscription-based recurring revenue. We made a change this quarter in how we calculate recurring revenue, and we have updated our history on our website. The main difference is that we now include revenue from term-based licenses. On an apples-to-apples basis, the 69% compares with 67% last year, up 33% in dollars. In Q1 2017, 78% of our product revenue was recurring, up from 74% last year. Total deferred revenue grew 27% year-over-year to $167.6 million at the end of Q1. Calculated billings for the first quarter were $43.8 million or up 21% year-over-year, driven by another strong quarter for IDR, ongoing strength across midmarket and improving momentum in our enterprise segment.

Average contract lengths were 23 months this quarter compared to 22 months in the prior year period. With the evolution of the Rapid7 Insight platform and the availability of our 2 new cloud-based subscription products, InsightVM and InsightAppSec, and as we said in our Q4 call, we continue to expect that more of our billings will come from our new subscription products, which tend to have shorter contract lengths. Therefore, we believe that our average contract duration will begin to shorten as the year progresses.

Looking at the business geographically. In Q1, North America revenue was $38 million, an increase of 26% year-over-year and comprised 84% of revenues. Rest of world revenue increased 55% year-over-year and contributed 16% of total revenue in the first quarter compared to 13% in Q1 2016. We are benefiting from the investments we have made to grow our sales and go-to-market presence internationally, and we will continue to enhance our infrastructure globally to drive the momentum in this underpenetrated market. Our new customer acquisition also exhibited solid growth, with customer count increasing by approximately 18% year-over-year, as we ended Q1 with more than 6,300 customers globally.

Our renewal rate was 120%, and our expiring revenue renewal rate, which measures the renewal of the prior year's revenue run rate, was 88% in the first quarter.

Turning back to the P&L. Non-GAAP total gross margin for Q1 2016 was 74%. Non-GAAP product gross margins were 84% and as expected were down from 89% last year. As more of our revenue comes from products that are SaaS or managed services, we expect to see modest year-over-year declines in our product gross margin in 2017. But they should stay around the current level for the rest of the year.

Our non-GAAP maintenance and support gross margin increased to 83% from 81% in the year-ago period. And our non-GAAP professional services gross margin increased to 34% in Q1 compared to 30% in the year-ago period due to higher utilization as well as a higher percentage of our services bookings coming from services that are sold on a stand-alone basis. We expect our services gross margin in 2017 to remain healthy and in the mid-30% range. Net-net, we expect our total gross margin to stay around the Q1 level for the rest of 2017. Reviewing our Q1 non-GAAP operating expenses, R&D expenses were $9.9 million or 22% of total revenue, a meaningful improvement from 31% in the prior year period. In 2016, we're absorbing a large increase in R&D staff in the Logentries acquisition, and we also incurred some earn-out expenses in last year's Q1. Going forward, we expect to have steady hiring R&D to support our continued product innovation.

Non-GAAP sales and marketing expenses were $23.4 million or 52% of revenue in Q1, an improvement from 57% in the prior year period. Our sales and marketing expenses in Q1 reflected the timing of sales hiring in the quarter. Early in the quarter, we focused on filling leadership positions, and the account executive positions were filled later in the quarter, and Q2 will include their full expense run rate.

G&A expense in Q1 2017 was $6.1 million or 13% of revenue in Q1, an improvement compared to 16% of revenue in the year-ago period. As a result, Q1 non-GAAP operating loss was $5.7 million or a margin of negative 13%, an improvement compared to a non-GAAP operating loss of $9.5 million or a margin of negative 27% in Q1 2016. During the first quarter, adjusted EBITDA loss was $4.6 million in the quarter, an improvement compared to a loss of $8.4 million in the first quarter of 2016. We've also provided the history of our adjusted EBITDA calculation on our Investor Relations website. Non-GAAP net loss per share was $0.14 in Q1 2017, a meaningful improvement from a non-GAAP net loss per share of $0.23 in Q1 2016 and ahead of our guidance.

We ended Q1 with cash, cash equivalents and short-term investments of $79.2 million compared with $71.9 million as of December 31, 2016, and grew our total cash and investments to $96 million. Our operating cash flow for Q1 was positive $3.3 million and free cash flow was $2.0 million. Moving to our second quarter and full year guidance.

For Q2 2017, we anticipate total revenue to be in the range of $45.4 million to $46.8 million. This equates to year-over-year growth of 22% to 25%. We anticipate non-GAAP operating loss for Q2 to be in the range of $8.3 million to $7.3 million. We anticipate non-GAAP net loss per share for Q2 2017 to be in the range of $0.20 to $0.18. This is based on an anticipated 42.5 million weighted average shares outstanding.

For the full year 2017, we continue to expect calculated billings to be in the range of $224 million to $234 million, representing 14% to 19% year-over-year growth. We are slightly raising our revenue guidance range and now expect revenue to be in the range of $193 million to $198 million, representing 23% to 26% year-over-year growth. We are also improving our non-GAAP operating loss for the full year 2017 and expect it to be in the range of $28 million to $25.5 million. And we anticipate non-GAAP net loss per share for the full year of 2017 to be in the range of $0.66 to $0.61. This is based on an anticipated 42.8 million weighted average shares outstanding for the full year of 2017. We also continue to estimate the shift in product mix will impact our growth and operating cash flow. And as a result, we expect 2017 operating cash flow to approximate 2016 levels.

In summary, we are off to a great start to the year,. The business is performing well, and the Rapid7 Insight platform is enabling our ongoing product innovation. We believe we are well positioned to achieve our 2017 and long-term goals. With that, we appreciate your time and support, and we'll open up the call for any questions. Operator?

(Operator Instructions) Our first question comes from the line of Gregg Moskowitz with Cowen and Company.

Corey, you mentioned that with the release of InsightVM, your first platform to offer a VM, UBA-based SIEM and IT log analytics. But do you think many of your customers currently see the world this way as well or is a lot of evangelism required? And then also what kind of cross-selling activity would you expect to see going forward across these 3 areas?

Great question, Gregg. And we expect to see a lot of cross-selling activity. I would really put customers into 2 broad buckets. One is very mature customers which are well established. And of course, they buy best of breed, as you would expect. And the great thing there is that even in that set of customers we already have a strong position in vulnerability management, and we are increasing our position in Incident Detection and Response with InsightIDR. So we see strong performance there. I think the most important fact though is that the majority of the market is untapped. If you think about successful deployments on any of these metrics, whether you look at vulnerability management or SIEM, there's simply too much complexity. And by a large margin, whether you look at the mid-market or the resource-constrained enterprise, people are looking to actually get outcomes and results from their data. And they're looking to consolidate their data on a simple -- single platform. And so if you really think about opening up the market to the full potential that's there from an IT and security data analytics perspective, we absolutely see strong demand for an integrated offering.

Okay, that's helpful. Then a question I guess either for Corey or for Jeff. You noted that you're well positioned to add more customers in 2017 than 2016. Although the net new customer adds did appear to be lower on a year-over-year basis, it looks like the expiring renewal rate did tick down very marginally as well. Is there anything that you would call out in relation to this?

Well, we set the goal to aggressively add customer at a faster clip this year than last year. And we still feel we're on track for that. The key consideration there though is when we set the goal we knew that most of our customer-expanding offerings that were going to reduce friction and increase the affordability were going to be launched in Q2, our current quarter this year. That includes InsightVM, which increases the ease and simplicity as well as has additional price points; InsightOps, which provides a new on-ramp into the platform and addresses the large market of IT log analytics; and InsightAppSec. If you think about InsightAppSec, our AppSpider product had huge appeal to the large enterprise, but InsightAppSec has much broader appeal. So a core part of the assumption behind that goal was that these new offerings would drive increased adoption. And we're seeing good start to that effort.

The [addressable] market...

Gregg, on the renewal rate. Gregg, it was less than 1%. And the difference is really due to rounding. It's typically been between 88% and 89%. So we had some late renewals that came in Q2 that affected the renewal rate. But we don't see a significant change in that going forward or no significant amount of deals lost.

Okay. And then just lastly, there was a really nice Fortune 100 retailer win. I would love to hear though how the MVM business did overall in the quarter.

This is Corey. The MVM business has been solid for us. The thing that I reiterate is it was not a very large business for McAfee. And we continue to expect it to perform on pace with our expectations. But as our business continues to grow at a healthy pace, it's just not a significant part of McAfee's business. And it's not going to be a significant part of our business. But it might -- it continues to add nicely to our overall position in the market.

Our next question comes from the line of Michael Turits from Raymond James.

Jeff, can you just walk through what the impact is right now of the shift to subscription? And then how we should be thinking about it from a 606 perspective and when?

Yes. So with respect to the revenue, the only real significant change is that the bundled services deals will be recognized as delivered on a percent of complete basis. Today, they're recognized over the contract term. So that's really the only change and that -- we're not estimating a significant change on the total revenues right now. The other difference that will happen with 606 is on commissions in that we're going to have to spread that over the economic life. We're still computing that, but that's the other change, and we are adding disclosure in the 10-Q about that.

Okay. So both your comments were with respect to 606, right, as opposed to just going from a -- moving to a -- moving to the move over subscription itself?

Yes. The old model there's really no change, Mike, because we were spreading it. And even going forward on those perpetual deals if we were to sell them, there's really no change. It still be amortized over the same period.

And there's a question for you -- that's fine. I mean I have questions about whether the -- where the breakeven point is and if that'll have an impact, but I understand directionally it should be about the same. I have a question now for Corey -- oh, I'm sorry Jeff.

If the contract lengths comes down as we shift to more subscription, then obviously that will affect the revenue. But that -- we baked that into the guidance.

Got it. And then Corey, just any new thoughts at all in terms of InsightOps in terms -- and obviously it's yet to launch, but how are you're seeing that competition shape up? And where you -- how you think it's going to be playing out or who you will be seeing?

Yes. As you mentioned, this is the quarter where we launch. That said, we're very optimistic. We continue to see an opening in the market for an IT log analytics solution that is both affordable and easy to use. And we believe that we have a fairly disruptive solution that we're introducing to the market.

Michael, as we said on when we prereleased in terms of the pricing or the payback, we -- it's similar to other deals when you convert from perpetual to SaaS. There's really no difference. I think if you look at the guidelines, we're right in line.

Our next question comes from the line of Matt Hedberg with RBC Capital Markets.

This is actually Matt Swanson on for Matt. It sounds like Q1 was a good start here for doing the enterprise sales hires. Could you talk a little about where you are in that process, what's in plan for FY '17 and then having a quarter with Eric on board as the head of U.S. sales? Are there any changes that you've seen in that early on or impact his making?

Yes. Our strategy was to get out of the gate really building the leadership bench and team and then improve both the hiring and the process. And we feel that we are on track for that. As we described earlier, it's going to be a multi-quarter lift. I think we got off to a great start in Q1. We're going to continue to work on that in Q2, and we expect to see ongoing improvement as we go forward. But I would say it's pretty much at or above expectations for what this type of leadership transition in a sales org what you would expect. There has not been any surprises, which is always good. And there's been several positives.

Great. And in the last 2 quarters, we've seen some uptick in the international markets. Do you think you'll see any impact from GDPR as a catalyst for spending towards the half of the year?

I would love to think it would be a catalyst. The -- if you think about the spend on security when you look at the U.S. versus lots of different regions around the world, you still see a lower security spending environment, which would definitely impact us. And GDPR can definitely be a catalyst for that. It remains to be seen on how the implementation will affect the urgency of when we see shifts in company's behaviors that are going to be impacted by GDPR. The other caveat that I would give is, the nice thing about it is that it affects and impacts lots of global companies and companies that operate around the world.

Our next question comes from the line of Robert Breza with Northland Capital Markets.

Maybe as a follow-up to Matt's question on the international side. When you think about it, you grew over 55% in the quarter, which is a fantastic showing. How should we think about maybe, Jeff, for you, should we think about the splits between North America and the rest of the world about the same? Or how are you think about modeling or -- if you could just -- could actually talk us through to think about the modeling split between North America and the rest of the world.

Yes. The international revenue should grow faster than the North American revenue. It won't probably be a significant change in the mix shift this year. But over time, it will grow faster. So not a big difference in the 16% overall mix this year.

(Operator Instructions) Our next question comes from the line of Melissa Gorham with Morgan Stanley.

I just want to follow up on the earlier question on the impact from the move to subscription. Jeff, when we're thinking about your outlook for FY '18, is there any way you could help quantify what are embedded in terms of the headwind to growth? So you're assuming some level of deceleration in the guide. I'm just wondering to what extent is that coming from lower contract durations or more pay-as-you-go subscription offerings?

Right. So Melissa, I think if you look at our second half billings growth based on those implied growth rates, I would think of those as a proxy for '18 growth. But there's 2 more points that you want to consider in that. We do have an easier comp in Q3 in the second half versus first half. So I would consider that. And I'd also consider the contract lengths coming down in the second half. We're not guiding to '18 now, but I think you have to take both those elements into consideration and look at the second half billings growth as a proxy. But all that would -- you'd have to consider in that growth rate.

Okay. That's helpful. And then just one follow-up on InsightOps. I'm wondering what investments do you all need to do in terms of ramping your sales force as well as the channel to sell that solution. And to the extent that you're perhaps maybe selling that to a different end user or a different customer, do you plan on building out any sort of specialty sales team to address a particular use case?

Yes. Thanks a lot. It's a great question. So one, we do have some experience selling to that audience with the Logentries, both sales base and customer base, of which we actually retained a good part of the talent from the original Logentries acquisition. So we have some experience selling to that audience, and we have some knowledge, understanding and expertise. That said, it is a business that we expect to -- it's performed well, and we expect to continue to see it scale and grow and become a material contributor over time. And we do have to invest for that to occur. But we're very comfortable with the investment profile and return window of that investment. Even though it's early, we have enough experience to have visibility and the insight about what's required to grow that business.

Our next question comes from the line of Jonathan Ho with William Blair.

I just wanted to start out with a question around operating leverage. It's clear that you guys have made some investments here this year relative to the sales force and sales management. How should we think about incremental investments here and incremental margin leverage as we start to look at 2018 and beyond?

I think Jeff and I will tag team this one. So first, we are seeing are -- whether you talk about the business or the model, we are seeing general leverage in the business from both our customer base, our ability to cross-sell and upsell. We're seeing that our international teams are at scale, and we're in a period now where we've been investing heavily in a platform, multiple product strategy. And for the first time, we're actually really selling a full suite of products on a single platform. We think all of those things contribute to leverage, not to mention the leverage that you get from the SaaS business in itself. What that really means is as you think about the operating expenses and how they scale versus revenue growth, we expect to see ongoing leverage as we move forward across the business. And I think that's one of the things that when you look at it's sort of year-over-year from a full year perspective, I think you continue to see leverage as we go forward. Although quarters can vary, you'll definitely see leverage in the business as we go forward based on our experience to date.

Yes, Jonathan. I would just add that we are modeling out the next couple of years. And I think what we'd said is that before the year is over and probably at our Analyst Day in the second half of the year, we're going to provide more color on our long-term model and also when we do turn profitable. So we are working on that, and we'll inform everyone the second half.

Excellent. And then just relative to your selling of the InsightOps, InsightVM and InsightIDR, how often are customers requesting sort of the multiple solutions? And what's been the feedback relative to this solution suite? I know it's relatively early, but I just want to get a sense of what you're hearing.

It's relatively early. I mean, the way that we see it so far -- and again, it's based on limited experience, is customers still buy projects today. But one of the things that we're addressing is that most customers, except for the very, very resource rich, are looking to actually get leverage. And most customers view that if you look at IT log analytics, UBA-based SIEM or vulnerability management, that these are all mandatory things that they have to do. And their choice has really to come now to actually buy 3 different things, collect data in multiple different silos and try to reconcile it over time. Or do I buy something that allows me to actually scale my investment over time. And what we are finding is that what we think of as the mainstream buyer, that buyer that's resource constrained, that has to address security, that has to address their IT evolution is really looking at how they can get more bang for the buck, how they get more leverage, how they can consolidate their spend. And our strategy works well for them. The behavior that we see though specifically is that they do buy 1 solution, but really they buy that initially with an eye towards adding. And we continue to see customers adding additional products and solutions as they scale. With the caveat that it's still early, but we've seen enough momentum to know that our strategy is pretty good.

And we have no further questions at this time.

Thank you all very much. We appreciate your time.

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation, and ask that please disconnect your lines.