Safeguard Scientifics Inc (SFE) 2020 Q2 法說會逐字稿

Good morning, and welcome to Safeguard Scientifics' Second Quarter 2020 Financial Results Conference Call. Please note, this event is being recorded. (Operator Instructions)

I would now like to turn the conference over to Matthew Barnard, Safeguard's General Counsel. Please go ahead.

Good morning, and thank you for joining us for this update on Safeguard Scientifics' second quarter 2020 financial results. Joining me on today's call and webcast are Robert Rosenthal, Safeguard's Executive Chairman of the Board; Eric Salzman, Safeguard's Chief Restructuring Officer; and Mark Herndon, Safeguard's Chief Financial Officer. During today's call, Bob and Eric will provide some corporate and strategic updates, and Mark will discuss our results. Afterwards, we will open up the call to your questions.

Today's presentation includes forward-looking statements, and those statements are subject to risks and uncertainties. The risks and uncertainties that could cause actual results to differ materially include, among others, our ability to make good decisions about the monetization of our ownership interest for maximum value or at all and return value to our shareholders; the ongoing support of our existing ownership interest; the fact that our ownership interest may vary from period to period; challenges to achieving liquidity from our ownership interest; fluctuations in market prices of any publicly traded ownership interest; competition; our ability to attract and retain qualified employees; market valuations in sectors in which our ownership interest operate; our inability to control our ownership interest; our need to manage our assets to avoid registration under the Investment Company Act of 1940; and risks associated with our ownership interest, including the fact that most of our ownership interests have a limited history and history of operating losses, face intense competition and may never be profitable; the effective economic conditions in the business sectors in which Safeguard's ownership interest operate, including the impact of COVID-19; and other uncertainties described in our filings with the SEC.

Many of these factors are beyond the company's ability to predict or control. As a result of these and other factors, the company's past financial performance should not be relied on as an indication of future performance. During the course of today's call, words such as expect, anticipate, believe and intend will be used in our discussion of goals or events in the future. Management cannot provide any assurance that future results will be as described in our forward-looking statements. We encourage you to read Safeguard's filings with the SEC, including our Form 10-K, which describe in detail the risks and uncertainties associated with managing our business. The company does not assume any obligation to update any forward-looking statements made today.

With that, here is Bob.

Thank you, Matt. Good morning, and thank you for joining us today. The second quarter was a challenging period due to the COVID-19 pandemic and the follow-on impacts to our economy. In a few cases, the pandemic has provided a tailwind and has accelerated certain trends, which were underway prior to the outbreak. Overall, we continue to assess the value and timeframe for our exits and work with the management teams to drive value regardless of the macro environment. Safeguard holds a value portfolio of ownership interest in companies operating in exciting sectors of our economy and where we remain dedicated to maximizing ultimate value for our shareholders.

I continue to be encouraged by the direction and activities of many of our ownership interests, which we believe will eventually lead to valuable exit transactions. Eric and Mark will now review our recent activities and this quarter's results.

Thanks, Bob. And thank you all for joining us this morning. While the current operating environment has been heavily impacted by the pandemic, we are happy to report that our companies are, by and large, tracking ahead of their COVID-19 plans. And in some cases, we are seeing pockets of strength and even tailwinds. Overall, we are at the early stages of a recovery, but are substantially more encouraged today than we were when we spoke to you in April.

We'd like to start by reviewing with you 5 areas we've been focused on since the last earnings call. The first is making sure our companies have sufficient liquidity to operate in the current environment. The second is working at the Board level of our companies to drive operating and financial performance. Three is helping the management teams position our companies for the most attractive exit opportunities. Fourth is, at the Safeguard level, driving down our costs to operate and taking steps to ensure we can support our companies. And fifth is, at the shareholder level, providing greater visibility and engagement with Safeguard investors.

On the company liquidity front, our companies have been able to weather the COVID-19 storm reasonably well. This was achieved through a combination of cost cutting, improved working capital management, business model alignment, access to PPP funds and securing other sources of capital. To provide greater detail, the majority of our companies are operating at cash flow breakeven or are funded with the expectation that they will get to cash flow breakeven. The remaining companies are exploring capital raises at different stages.

3 of our companies are currently in term sheet phase that may involve participation by Safeguard. We are evaluating these opportunities. And if we do participate in these financings, we expect total investments in 2020 to fall within the guidance range we previously provided.

Our second area of focus has been supporting our companies. As you know, we take an active role with our companies, and we have spent considerable time over the past few months with our management teams and co-investors. We and they have had to make hard decisions, decisions that test the leadership and capabilities of management at all levels: head count reductions, furloughs, product and market alignment, capital allocation, decisions on credit extension to customers, pushing to collect accounts receivables early, personnel issues and others. These have required thoughtful consideration and deliberation at the Board level. As mentioned at the outset, we are pleased with how the teams have performed and are looking forward to shifting our attention from managing crisis to focusing on growth.

The third area I'd like to touch on is exits. We are working to exit our companies at fair values, which will drive shareholder returns and will allow us to return value to Safeguard shareholders. There are 2 basic ways to exit; one is what we call a natural exit and the second is a secondary exit. A natural exit is when the company is sold through a banker process, and we sell along in the deal. A secondary exit is when we sell our minority stake through a third party, but there's no control premium, and there's usually an embedded discount in the transaction.

While natural exits generally provide greater values than secondary sales, we are open to exploring secondary deals as long as we can get reasonable value as compared to what we believe we can achieve in a natural exit, factoring in time and risk. We had conversations with a couple of secondary buyers in Q2, but did not find their indicative interest levels attractive versus what we expect to get in a natural sale over a reasonable timeframe.

We had no exits in Q2, but we currently have one company under LOI with a PE buyer and another company about to launch a process after a robust banker selection. We cannot provide further info on today's call about these 2 situations, but we'll look to update you next quarter on progress. We are cautiously optimistic on both of these processes, but deal risks obviously remain, and these risks are magnified in the current M&A environment.

The fourth area is Safeguard's costs and capital that we have to support our companies. We continue to focus on bringing our costs to operate down, and we've made a lot of progress on this front. We are currently running at mid-$5 million a year to operate, with corporate expenses down 36% year-on-year. We are not done and continue to look at both internal and third-party costs. Mark will provide more detail in his section.

On the capital front, we believe we currently have sufficient funds to operate and support the expected needs of our companies over the next 12 months. We expect sales of our companies will fund needs beyond that period. Given the uncertainty of exit timing, we will prudently explore contingency plans to ensure we have sufficient liquidity to meet our needs as necessary.

On our shareholder engagement, we remain committed to improve the level of engagement and transparency with our investors as well as providing better exposure and insight into our companies. We held our first fireside chat with Jan Bruce of meQuilibrium on July 30, and the replay is on our website. If you haven't listened to it, we would highly recommend you do so. This was the first in the series of fireside chats that we're launching, where you can meet the CEO, and you can ask questions via the Zoom webinar. Beyond that, please feel free to reach out to Bob, Mark or me with questions or suggestions.

I'd like to provide some detail on our companies and provide some company highlights. We've selected 5 companies that are among the top 10 in expected exit values. To be clear, these are not necessarily the top 5 positions in exit value, but they are among the top 10. So they're meaningful for us, and we thought they'd be meaningful for you to learn more about them.

To walk you through them briefly, we've looked at these in 4 different categories. We'll provide a very quick business description, what we like about the opportunity, the impact of COVID-19 on the business and some Q2 highlights that we can cite publicly. And just to run through these companies, we'll talk about meQuilibrium, Prognos, Zipnosis, Clutch and Flashtalking. You heard about meQuilibrium on our webinar, so I won't go into too much detail. But meQuilibrium falls in our revenue bucket of $5 million to $10 million, a SaaS talent development solution using predictive analytics to support a resilient, engaged and agile workforce. Their customers are Fortune 500s and SMBs, and we like the opportunity because they're well positioned in the growing HR, tech and human capital management space.

The impact of COVID-19 on their business has been mixed to positive. There's been some accelerated demand for talent development and employee engagement solutions, particularly among disrupted workforces. In terms of highlights, they had very strong Q2 bookings with activity across renewals and new logos. The company also closed a $4 million Series C funding -- extension funding.

The next company is Prognos. Prognos falls in our $15 million to $20 million revenue bucket. The company takes clinical and diagnostic data and analyzes this information for pharma companies and payers to better track and predict disease activity. We like the company because they're a leader in this emerging area of drawing insights from clinical and diagnostic test data. COVID has had a mixed to positive impact on Prognos. The sales process has been disrupted in terms of their ability to meet with pharma sales teams, but there's been increased interest in their digital marketing offering. Some highlights over the quarter is they launched a prognosFACTOR platform, a new analytics platform for pharma customers. And they announced a partnership with Livongo to leverage Prognos' lab data capability.

The next company is Zipnosis. Zipnosis falls in the $5 million to $10 million revenue bucket. Zipnosis is a white-labeled virtual care platform, offering patients convenient access to care while improving clinical -- clinician efficiency. We like the opportunity because they're obviously in a growing telehealth space, and they enable health systems to improve the patient experience and decrease time-to-treatment decisions. The impact of COVID-19 has been a positive. It's greatly expanded interest in telemedicine and the use of virtual care solutions. Some Q2 highlights are that they recorded their highest number of virtual visits in company history, and Zipnosis launched a ZipCheck product, which is an end-to-end return to work solution for employees to test COVID-19.

The next company that we'll highlight is Clutch. Clutch falls in the $10 million to $15 million revenue bucket. And Clutch is a data-driven marketing and customer relationship management platform, focusing on loyalty, gifts and channel marketing to marketers. What we like about it is the platform provides deep insights into customer behaviors, and they have an industry-leading product. COVID-19 has had a negative impact on Clutch because many of their customers are in the retail, travel and hospitality sector, which is obviously in different levels of disruption. The company is doing a good job to pivot to other sectors, and they are seeing growth in development with their channel partners. In Q2, they've method COVID-19 plan. They've won 2 new strategic accounts, and they have achieved SOC 2 compliance and completed a new release to the platform.

The last company I'll touch on is Flashtalking. Flashtalking is the above $20 million revenue bucket. They are an independent ad-serving identity management analytics platform. What they do is they drive ad relevance and campaign performance for major brands. We like the opportunity because it's a large and growing addressable market. It has strong ROI, and they've been growing market share. COVID-19 has had a mixed impact on their business. They have some exposure to retail, travel and hospitality, but they have other -- they also have exposure to other sectors, which are more resilient through the pandemic. They successfully rolled out the first of 14 countries for Procter & Gamble, a large new customer. And as part of that rollout, they successfully launched an API-based trafficking integration with The Trade Desk and a division of Oracle. After COVID dip in April and May, the company has returned to year-over-year revenue growth in June.

So we hope this helps frame our thinking on some of the companies. What we plan to do is next quarter we will review the other 5 companies, which sit within the top 10 and estimated exit values to provide you some greater insight into how we're thinking about the companies and what we like about these opportunities as well as how they're performing in the current quarter, or in this case, there'll be just some Q3 highlights.

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

Okay. Thank you, Eric. For the quarter ended June 30, 2020, Safeguard's net loss was $9.9 million or $0.48 per share compared with a net income of $36.1 million or $1.75 per share for the same period of 2019. Safeguard's cash, cash equivalents, restricted cash at June 30 totaled $13.6 million, and we have no debt obligations.

Our funding to existing ownership interest continued this quarter, including $3.8 million to Syapse, which results in $4.4 million during the year-to-date period, so with the Syapse after considering bridge loans during the first quarter. We made 2 other small deployments during the quarter, and we continue to expect that deployments for the full year of 2020 will be between $8 million to $12 million. However, we expect to evaluate deployment activity for only 3 to 4 companies for the remainder of the year due to the circumstances Eric described earlier.

The quarter's results also included impairments of $5.7 million related to the lowering of our estimate of fair value for our ownership interest in Sonobi, T-REX, Beta and in other ownership interest. These declines in fair value were impacted by our outlook for transaction values as well as other company-specific factors.

Our general and administrative expenses were $2 million for the 3 months ended June 30, 2020, as compared to $2.6 million in the second quarter of 2019. Our G&A expenses benefited from lower employee compensation, lower professional fees, lower office rental costs, lower depreciation and other costs.

Corporate expenses for the second quarter, which represents general and administrative expenses excluding depreciation, stock-based compensation, severance and retirement costs and other nonrecurring or other items, were $1.2 million as compared to $1.9 million in 2019.

In addition to the G&A reductions mentioned above, corporate expenses benefited from the reflection of director fees as a stock-based compensation item as well as a change that will result in a portion of management's estimated incentive bonus compensation to also be paid invested equity instead of cash.

Note that we made this change in the second quarter, but it will be applicable for the year-to-date period. So approximately $0.1 million of the decline is attributable to this catch-up in the first quarter's portion.

As we've mentioned before, we will continue to look for ways to reduce our cost structure. Some of the steps that we are making now or plan to make are relatively small, but we understand every step counts. So, as an example, we are continuing to seek to minimize our office-related costs as we've been able to effectively work remotely over the last few months. As a result, we expect that our corporate expenses for the full year of 2020 will be at the low end or below our previously disclosed range of $5.6 to $6.0 million as compared to $7.1 million reported for the full year of 2019.

With respect to ownership interest at June 30, 2020, we have an aggregate carrying value of $61.4 million. As we've discussed before, this is a GAAP carrying value, which results from the application of equity method accounting. It typically reduces the carrying value for our share of the losses of the underlying companies and generally does not represent the fair value or expected exit value of those same ownership interests. Only when the fair value declines below our carrying value would we consider making a downward adjustment to the carrying value of our equity method investments. We also have a few ownership interests that are accounted for under the other method, which can have upward or downward adjustments resulting from observable price changes if there are transactions in their securities.

Our share of the losses of our equity method ownership interest for the 3 months ended June 30, 2020, was $3.1 million as compared to $8.3 million for the comparable period in 2019. The decrease is the result of fewer companies being accounted for under the equity method due to exits, changes in the basis of accounting in 2 companies that moved from the equity method to the other method as well as lower losses on a net basis from our equity method ownership interest. There was also a benefit recorded resulting from a technical accounting change, the new revenue recognition standard, at one of our ownership interest. This benefit essentially offset the cumulative effect of that same accounting change that was also required to be recorded directly to one of our ownership interests. So while this accounting change was offered in an income statement benefit for the quarter, there was not a significant cumulative impact to our ownership interest balance as of the end of the quarter.

I would also like to remind everyone that we report our share of the losses from the equity method companies on a 1-quarter lag. So this quarter's share of the losses reflect the calendar -- first quarter for those companies. While many companies saw some impact from COVID-19 in the first quarter, their results in the second quarter will reflect the full quarter of operating in this environment, which we will report to you as part of our third quarter results due to the 1-quarter lag policy.

So now it is time for us to turn to the Q&A segment of the call. So operator, please open the phones up, which I know you've already done, so we can answer a few questions.

(Operator Instructions) Our first question comes from Michael Potter with Monarch Capital.

Congratulations on continuing to move this company forward. Just a quick question. The meQuilibrium presentation that we had the fireside chat, Eric, what are the plans for additional presentations? Do you have the next company lined up already? Is this something that we can perhaps get scheduled for this month or early next month?

Yes. Michael, it is definitely a priority of ours. We're talking to management teams to see which companies, both are at the right stage to talk to the public and which CEOs are -- will build it in. So we'll get back to you, I would say, within the next week. We'll endeavor to make an announcement on who that company will be. And we look to do this on a regular basis, obviously, respecting the time challenges that the management teams have.

And just a follow-up on that, prior to your joining the company, one of the questions that I proposed was a lot of our portfolio companies have news flow of their own, especially Zipnosis during this time period. Is there any way that this can -- we can make releases or that our portfolio companies are issuing news and that have events on their own?

So we've tied in the press releases for our portfolio companies to both auto -- in most cases auto-populate on our Investor Relations section. In some cases, we have to do it manually. So that's a process that we started a couple of months ago. We obviously can't control the timing of the press release of the -- of our portfolio companies. But it should be the case that if there's a press release at the partner company level, then it should show up at our -- on our investor site. And if that is not happening, that is something we'll make sure is happening. We implemented it in the last 4 weeks or so. I definitely have seen it in a few cases, if you go to the -- our Investor Relations site. But we think that's helpful. We do think that's helpful.

There's probably a step beyond that, which could be webinars and white papers that our partner companies post having those pulled into our website, would be maybe a next stage for us to explore. But on the press release side, we've been working on that. And that should be operating, if not at 100%, pretty close to it.

(Operator Instructions) We have a question from Brian Cowens.

My name is Bruce Kallins, Yakira Partners. (technical difficulty).

Bruce, we're having some trouble hearing you.

Bruce, you just got a little muffled there.

(Operator Instructions) And we have a question from Lee Zimmerman.

Could you give us a little color on what MediaMath came out with the statement that they're looking to reorganize or possibly so. Could you give us a little color on that value and what's going on there? They've just...

Sure. Yes, yes. So the -- it wasn't a press release from MediaMath. It was picked up, I think, by an industry news outlet. But regardless, I'll give you a MediaMath update. Obviously -- so what's happening on the -- I'll expand even, Lee, beyond your question to see if that would be helpful.

So obviously, the ad spend market, the ad tech market took a major step down in the March-April timeframe. MediaMath has experienced a recovery in the ad spend. Actually, we're pleased to see that their daily spend has returned to pre-COVID-19 levels, and they're seeing particular strength in certain geographies outside the U.S. Also the Connected TV product that they launched, which is doing very well. It's ahead of plan.

So that's on the positive side. They've also took some steps in the middle of the pandemic around cost alignment and really setting their company up to achieve better operating leverage as the company comes out of -- and the entire sector comes out of the pandemic. What we've been working with the company on is ensuring that it has the right capital structure to leverage the opportunity it has as the #2 -- second largest demand-side platform out there.

So we're working on the -- so to put it in finance world, the left side of the balance sheet, the company is doing quite well. As I said, recovering ad spend, products are working, seeing strength as the overall ad tech market is improving. Right side of the balance sheet, we're working on making sure that they have the right capital structure in place to be able to take advantage of that.

Obviously, when you look at all options on capital structure, sometimes news outlets pick that up and report other things. But the main focus is ensuring that their capital structure is stable and sufficient to support the growth of the company as it emerges from Q2 and into what appears to be or starting to be a strong Q3.

(Operator Instructions) And we have a question from a participant.

Bruce Kallins, Yakira Partners. Can you hear me? Hello? Can you hear me?

That's a little better.

(inaudible), it is a little tough in communicating with the -- with most [patterns]. So I guess a couple of questions. First one, going into cash balance. If sales have a $13.6 million and we're estimating other 3 companies' expenses and the [follow on] it leaves us a little tight as far as having enough cash. So with the letter of intent that you mentioned, it's had -- any expectation of when that's going to be there to actually fund us? Or are they looking at any other resources or we do if it falls through because it fell through in the past?

Okay. I think I got the gist of the question. Bruce, I hope you can hear us. So as we indicated, we have 2 companies that are under LOI. And while there's obviously deal risk, we have $13-plus million at the end of the quarter. And our expectation is that the exits that are planned plus other cost-containment measures that we're taking at the Safeguard front will fund the company for the next 12 months. We don't know specific -- obviously, estimating when deals close are difficult. But we are optimistic or cautiously optimistic of both of these processes. But we, of course, need to take contingency plans. And we explore other alternatives to make sure that we are not in a position where we can't support our companies as appropriate. So that -- if that's helpful.

It's helpful. I see that we put more money into Syapse. And one thing we know is that we increased our investment by [$3.4 million] but ownership percentage went down [29.6%] from the prior quarter. I'm assuming that we're not -- we're having the company in not investing or participating as much as possible. And (inaudible) that happen, how can you explain that?

Yes. I can address that for you, Bruce. And for those of you who may have had a hard time hearing the question, the question was around Syapse and the fact that we have made an additional investment this quarter in Syapse and about how that investment for deployment relates to the change in our ownership percentage. And I would say, the round was essentially an insider-led round. So the proportions of ownership interest, and particularly ours, right, did not change substantially. I know from time to time, there are also option grants at the lower -- at the employee level, which may change slightly the ownership percentages.

But yes, I would -- I wouldn't -- I guess I would characterize the ownership percentage change as not substantial in that case. And it was just -- and again, an important sort of step forward for the company, right?

Okay. And I guess my last question would be when we look at the revenue, just to give revenue figures on our partner companies. And I believe it's somewhere around $350 million. And I guess we -- on an average somewhere around 25% of our companies or something like that. If you look at the multiple on where these companies trade usually, the young companies, [valour] companies, and 4, 5x, 6x and even up to 10x revenue on [some situations]. How do you explain our valuation based on multiple revenues based on (inaudible) markets? And if there is anything -- any comments on why it would be -- probably any clarity around this?

Yes. Let me -- and Eric, you may want to touch on this question as well, but let me just start. For those of you who may have had a hard time hearing, and Bruce, the connection is not great on your call, but the -- your question is around transaction multiples for companies within our portfolio. And I think you referenced that revenue multiples can be 6, 7, 8, 9, 10x revenue, if I characterize it correctly.

That's right.

Okay. So and I would say that we have a much wider variety of revenue multiples that are possible. So -- and in some -- each one of our companies has their own specific niches that they operate with them. And some of them are just not as high as what you've just described. I think the digital media space, in particular, has had -- the multiples in that area have come down, and that's something that we've seen. But there are a lot of company-specific factors that would go into how we would think about the value of anyone of those individual companies.

Yes. Let me try to provide a perspective on this on a couple of different levels. I think what you might be getting at is if the underlying companies are in attractive sectors growing and the public comps have high multiples, why are -- how does that -- what's the read-through to Safeguard stock? Or what's the read-through to our value? And maybe I can give you just a kind of a perspective from an investment standpoint.

So listen, one of the reasons why I think I find Safeguard attractive and just to try to address it from that standpoint is that, as we talked about, through Safeguard, you have exposure to a basket of late-stage venture companies in 2 sectors primarily. You have tech-enabled health care and you have ad tech. So you're playing on the tech-enabled health care side between Syapse, Prognos, Aktana, Moxe, Zipnosis and meQuilibrium. That's $86 million of invested capital. So that's over $4 per share.

The tech-enabled health care as a space, as we've spoken about in prior conversations, there's a secular tailwind as the health care industry is being transformed, using technology, reducing costs. These companies are well positioned in a post-COVID-19 world, and they're experiencing strong revenue growth and healthy, strategic and financial M&A activity.

Obviously, you can take a look at the announcement this past week of the Teladoc-Livongo deal. Everyone wants to cite that. That was in the high teens, maybe with 17 to 18x 2021 revenue-type multiple and a stock-for-stock deal. Deal made a lot of strategic sense between those 2 companies. But if you just macro up at another level, tech-enabled health care, the peer set that we look at trades at 8x 2020 revenues. So that sector is a -- call it, they have outliers, Teladoc might be an outlier of the transaction, but call it an 8x revenue multiple.

So for us, we look at Safeguard stock, and we're saying there's $4 a share of cost of tech-enabled health care that the public markets. The peers in the public markets are trading at 8x. That's kind of on one side. On the other side is, obviously, we have ad tech, MarTech bucket, which if you take Flashtalking, MediaMath, Clutch, just those 3, it's $2.5 per share of cost. Now the ad tech space has a cyclical element or there's cyclical recovery on top of a secular tailwind. Secular tailwind is obviously moving to digital spend, digital programmatic, linear TV adoption, et cetera. And the ad tech market is going through a recovery process. There's no COVID-19 tailwind per se in ad tech. There's a secular transition to digital programmatic, linear TV, et cetera.

That bucket, if you will, of our investments, they don't trade in the public market, that Mark said, as at high multiples. Yes, there is Trade Desk, which is -- trades at 31x revenues or 24x forward revenues. But there's also the -- by and large, that sector, the median is roughly, call it, 2x for Clutch comps and 4x for Flashtalking's comps. So you're in a much different revenue multiple.

It's still an interesting sector. It's still something we're quite excited about. So when you look at the 2 together, there's $6.5 cost in 2 sectors of which are both interesting, both have different dynamics. And through owning -- through at least why I'm taking over half of my comp in Safeguard stock so I'm -- and why I bought stock, Safeguard has already had exposure to that. Now is every one of our partner companies, every one of our portfolio companies as good as Teladoc or Trade Desk or something that's trading at 15 or 20x? We're not going that far in saying that. But we do think it provides access and exposure to an interesting portfolio of companies, growth companies that we're working. And we're providing as much insight as we can to you. And we believe that if we can execute and we can help drive value at the partner company level, and these companies can achieve exits in the reasonable timeframe and at reasonable multiples. We're not saying that these companies have to be a Livongo or a Trade Desk for this to be interesting for us. The stock and everything else will take care of itself and value will be created for the Safeguard shareholders.

So I know, Bruce, it was a little long-winded, but I think I just wanted to frame at least how we're thinking about the opportunity at Safeguard and how, when you double-click on Safeguard stock, you get 2 buckets. And each bucket, one is tech-enabled health care, the other is pretty much ad tech. And within that, those companies each have their dynamics. So I'll stop there and see if that's helpful at all.

(Operator Instructions) And we do not have any telephone questions at this time.

Okay. Thank you, operator. I'd like to express my appreciation for all those who joined us today and those who will eventually listen on the recording. In summary, while the second quarter was challenging for us and our companies and resulted in delayed -- delaying expected transactions within our portfolio, I can assure you that we remain committed to encouraging our ownership interest towards monetization and return of value. We realize that it's frustrating to see no exit activity this quarter, but we assure you that we are pressing to accelerate these events.

Thanks for joining us today, and thank you for your continued interest and confidence as well as your support.

And this concludes today's conference call. You may now disconnect.