Stratasys Ltd (SSYS) 2019 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Stratasys First Quarter 2019 Financial Results Call. (Operator Instructions) As a reminder, today's conference is being recorded. I would now like to turn the call over to the Vice President of Investor Relations. Sir, you may begin.

Actually, it's Yonah Lloyd. Good morning, everyone, and thank you for joining us to discuss our 2019 first quarter financial results. On the call with us today are Elan Jaglom, Interim CEO; David Reis, Vice Chairman and member of our Board's Oversight Committee; and Lilach Payorski, CFO. David is joining us remotely by phone.

I remind you that access to today's call, including the prepared slide presentation, is available online at the web address provided in our press release. In addition, a replay of today's call, including access to the slide presentation, will also be available and can be accessed through the Investor Relations section of our website.

Please note that some of the information you will hear during our discussion today will consist of forward-looking statements including, without limitation, those regarding our expectations as to our future revenue, gross margin, operating expenses, taxes and other future financial performance and our expectations for our business outlook. All statements that speak to future performance, events, expectations or results are forward-looking statements. Actual results or trends could differ materially from our forecast. For risks that could cause actual results to be materially different from those set forth in forward-looking statements, please refer to the risk factors discussed in Stratasys' annual report on Form 20-F for the 2018 year as well as our report on Form 6-K and the related press release concerning our earnings for the first quarter of 2019, the latter 2 of which we are filing with or furnishing to the SEC today. Stratasys assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

As in previous quarters, today's call will include GAAP and non-GAAP financial measures. The non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance. Certain non-GAAP to GAAP reconciliations are provided in the table contained in our slide presentation and in today's press release.

And now I would like to turn the call over to our Interim CEO, Elan Jaglom. Elan?

Thank you, Yonah, and good morning, everyone, and thank you for joining today's call. We are pleased with our first quarter top line results and particularly encouraged by the continuation of the strong performance we have been seeing in North America over the last several quarters, demonstrating steady and continuing adoption of our systems and materials in our largest market. Overall, revenue was unfavorably impacted relative to the corresponding previous year period by unfavorable changes in foreign exchange rates. We are also pleased with our non-GAAP profitability in the first quarter as we continue to show our commitment to control expenses and deliver shareholders value.

We're excited about our recent new product introductions, such as F120 and V650 printers, which we believe will expand our addressable markets, and we look forward to sharing more about our portfolio road map later this year.

I will return later in the call to provide an update on our search for a new Chief Executive Officer, and David will provide more detail regarding the quarter and recent product announcements. But first, I will turn the call over to our CFO, Lilach Payorski, who will review the details of our financial results. Lilach?

Thank you, Elan, and good morning, everyone. Total revenue in the first quarter was $155.3 million compared to $153.8 million for the same period last year. After adjusting for the sales of our divested entities during 2018 on a like-for-like basis, total revenue was up 3% for the first quarter and 5% after also adjusting for foreign currency exchange rate changes.

GAAP operating loss for the first quarter was $3.3 million compared to a loss of $6.5 million for the same period last year. Non-GAAP operating income for the first quarter was $6.8 million compared to non-GAAP operating income of $4.9 million for the same period last year. GAAP net loss for the quarter was $2.3 million or $0.04 per diluted share compared to the net loss of $13 million or $0.24 per diluted share for the same period last year. Non-GAAP net income for the quarter was $5.7 million or $0.10 per diluted share compared to non-GAAP net income of $2.7 million or $0.05 per diluted share reported for the same period last year.

Product revenue in the first quarter was $105.1 million, an increase of 1% compared to the same period last year. Excluding the divested entities, product revenue increased by 4%. Within product revenue, system revenue for the quarter was up 1% and increased by 4% after adjusting for the divested entities compared to the same period last year. Consumable revenue for the quarter increased by 1% compared to the same period last year and increased by 3% after excluding the divested entities.

Service revenue in the first quarter was $50.2 million, an increase of 1% compared to the same period last year. The exclusion of the divested entities had no meaningful impact on the overall service revenue growth rate. Within service revenue, customer support revenue increased by 1% compared to the same period last year and 2% excluding divested entities.

GAAP gross margin was 49.2% for the quarter, unchanged for the same period last year. Non-GAAP gross margin was 52% for the first quarter compared to 52.8% for the same period last year driven by the mix of revenue sources.

GAAP operating expenses decreased by 3% to $79.7 million for the same -- for the first quarter as compared to the same period last year primarily due to the exclusion of our divested entities. Non-GAAP operating expenses decreased by 3% to $73.9 million for the first quarter as compared to the same period last year driven by a continued focus on administrative cost control, R&D project timing and the impact of divestments.

The company generated $4.6 million of cash from operation during the first quarter as compared to $27.1 million of cash generated in the first quarter last year. The reduced cash generation compared to last year is primarily due to timing of tax payment and proactive step to increase inventory levels in order to improve fulfillment time and support product demand. We ended the first quarter with $367.8 million in cash and cash equivalents compared to $393.2 million at the end of the fourth quarter of 2018. The decrease in our cash balance relatively to prior quarter is primarily due to a mortgage repayment.

To recap, we are pleased with our first quarter results and are encouraged by the continuation of strong performance we have been seeing in North America over the last several quarters in both systems and materials. Our results reflected continuation of strong non-GAAP earnings, demonstrating the success of our ongoing efforts to maintain operational discipline and expense management. We continue to enjoy a healthy balance sheet and are well positioned to take advantage of opportunities moving forward.

I would now like to turn the call back over to Elan.

Thank you, Lilach. Our search for a new CEO is moving ahead and we continue our dialogue with candidates to drive our strategy and vision forward. While we had hoped to finalize the process by now, we're happy to have a strong and experienced Oversight Committee reporting to me that has done an excellent job advising our team during the interim period. We believe that the diligence and careful consideration we are taking during the search process will well reward us once we make a decision, and we look forward to completing the process and announcing our new CEO.

I would like now to ask David to provide more detailed information regarding the results of the quarter. David?

Thank you, Elan. Our first quarter results reflect the continuation of the trends we observed in the first quarter of last year with strong hardware and consumer growth in the U.S., our largest markets.

In the U.S, we had very good quarter for our high-end Fortus FDM production systems driven in part through continued adoption of aerospace OEMs. As we have mentioned before, our high-end platforms generate more utilization per unit, which we believe will lead to accelerated future annuity streams for material and services. U.S. also saw a strong quarter for our F123 platforms, with continued interest in our new elastomer TPU material-enabled addition. Overall, we continue to see increased adoption of our target verticals of aerospace, automotive, health care and dental.

We are pleased with the early traction we are seeing from our new product launches last year, including the F380 Carbon Fiber Edition, the previously mentioned elastomeric TPU-enabled version of our F123 printer. We also began shipping the new MakerBot Method at the end of the first quarter after showing strong preorder demand.

Recently, at the Additive Manufacturing Users Group conference, we made several announcements. We introduced the new F120 3D printer, an industrial-grade system targeting customers to -- new customers to additive manufacturing. The F120 offers the benefits of our F123 platform at an affordable price and provide reliable, accurate and quality 3D printing specifically designed for designers, engineers and educators. The market response has been very positive, and we look forward to shipping the F120 later this year.

We also showcased our new V650 Flex stereolithography 3D printer, our first commercially available entry into this market space, which combines the power of a large-scale system with an open, configurable environment that is fine-tuned across a broad range of available resins. The V650 gives customers great accuracy, choice and lower costs for 3D printed prototyping and part development. Select DSM resins tailored for specific application will be commercially available directly from Stratasys. The interest has been strong, and we expect to place units at customer sites throughout the year and beyond.

Finally, we announced our collaboration with Pantone, the authority on professional color standards and digital solution across the design industry. The Stratasys J750 and J735 printers are now the first and only 3D printing systems with technology officially recognized as Pastone-validated, allowing for synchronized color communication between designers, modelers and manufacturers. We expect to continue to see demand for high-end PolyJet solutions for industries that require high level of realism, including the consumer package goods and the medical segments.

These represent just the beginning of a series of product launches and announcements that we plan to make over the next 18 months and beyond that we believe collectively will meaningfully extend our portfolio and contribute to accelerated growth beginning in 2020.

In addition to the upcoming new innovations from our FDM and PolyJet portfolios, we expect to increase our manufacturing-focused materials offering, add additional technologies that expand our addressable markets and pursue collaborations that enhance our ability to enter into high-requirement industries and applications.

I would like to briefly mention the significant milestones that we achieved in our key vertical segment of aerospace. Recently, the National Institute of Aviation Research, or NIAR, published a National Center for Advanced Material Performance material specification, process specification and extensive test and analysis report, which documents the performance or the design allowables, achievable with the Fortus 900mc and ULTEM 9085 in our aircraft interior solution configuration. While aerospace companies often develop their own processes and standards, the specification document makes it easier for others in the industry and their supply chain to leverage our technologies with the fraction of the testing, qualification and investment needed previously and without the risk of unknown outcomes.

The only way to meet the standard is to run ULTEM from Stratasys on a qualified Fortus production system. We're extremely excited about reaching this milestone and look forward to continue adoption of our technology for advanced manufacturing application in aerospace.

I would now like to turn the call over to our VP of Investor Relations, Yonah Lloyd, who will provide greater detail on our 2019 financial guidance. Yonah?

Thank you, David. We are providing full year guidance for 2019 as follows: revenue guidance of $670 million to $700 million; GAAP net loss of $22 million to $12 million or $0.40 to $0.22 per diluted share; non-GAAP net income of $30 million to $38 million or $0.55 to $0.70 per diluted share; non-GAAP operating margin of 5.5% to 6.5%; capital expenditure is projected at $45 million to $60 million. Our guidance reflects growth combined with a continued showing of operational efficiency as our profitability will increase relative to the top line.

Non-GAAP earnings guidance excludes $32 million of projected amortization of intangible assets, $20 million to $22 million of share-based compensation expense, reorganization-related and other expenses of $1 million to $2 million, and includes tax adjustments of $3 million to $4 million on the above non-GAAP items.

The estimated non-GAAP tax rate for 2019 is impacted by the ongoing noncash valuation allowance on deferred tax assets that we expect to record throughout the year on U.S. losses.

Given the expected ongoing negative impact of not recording a tax benefit on U.S. tax losses on our net income as well as significant quarter-to-quarter variability in our non-GAAP tax rate, the company believes non-GAAP operating income is the best measure of our performance.

Appropriate reconciliations between GAAP and non-GAAP financial measures are provided in the table at the end of our press release and slide presentation with the itemized detail concerning the non-GAAP financial measures.

And operator, now would you please open the call for questions?

(Operator Instructions) Our first question comes from the line of Shannon Cross with Cross Research.

I guess what -- I'm curious about demand and what you're hearing from customers in that do you think that some of the improvement in product demand is because customers have sort of gotten to full utilization of product maybe they brought a couple of years ago and that we just sort of had a pause in the prior year? Or is there more of a shift to using your machines for small manufacturing jobs? Just trying to understand, especially in North America, what's driving some of the improvement and how sustainable you think it is. And then I've got a follow-up.

Lilach, I'll take this question. It's David Reis. I think that in the previous few years, we introduced a few new and interesting technologies. Especially in the manufacturing segment, the adoption takes time. Now as we progress, we said many times in the past, we expect adoption to accelerate, and possibly increased demand can be attributed to this fact. Again, I cannot disclose the precise number, but we did see very significant year-over-year growth in U.S., in aerospace, for example. Likewise, when you look on our PolyJet line of business, the introduction a few years ago of the extremely high-quality, high-realism technology, I think pushed customers to experiment and learn how to use these technologies. And as they're experiencing gaining more knowledge and confidence, I think demand increased and utilization increased in parallel to it.

Okay. And then just if you can give any more clarity on the CEO search. Just kind of curious as to what specifically is taking a long time to figure out and -- or just anything you can give us on that, I'd be curious.

Okay. This is Elan Jaglom. So the industry does not have a wide pool of established leaders to pull from, so we are looking outside the additive industry, which adds to the complexity of our search for potential candidate. We are carefully considering candidates. And meanwhile, we are continuing to execute our plan and look forward to bringing the right candidate at the right time.

And the next question comes from the line of Greg Palm with Craig-Hallum Capital.

This is actually Danny Eggerichs on for Greg Palm today. Just a couple for me. It sounds like FX was a decent-sized impact in the quarter. Is there any way that you could break out that a little further either by segment or geography?

Yes, definitely. It impact this quarter -- because of the strength of the U.S. dollar, we impacted about $3 million, and mainly in EMEA. On a like-to-like basis, excluding the divested entity and the foreign exchange impact, our total revenue grew 5%. And hardware actually grew 7%. If you take out the FX, consumable, 5%; and services grew 2%; and the customer support grew 4.5%. So definitely, the foreign exchange impact our results significantly this quarter year-over-year.

Great. That's some great. And then just one more. It seems within the additive market that digital dentistry seems to really be kind of a rapid adoption. Do you have any positioning within the digital dentistry market?

Yes. We are very active in 3 areas in which PolyJet technology is suitable. We're very active in what is called -- we're creating templates for the creation of aligners. And we have a few other applications which are relating to not the creation of crowns but the fitting of crowns over stone models. And with those -- basically, between those 2 segments, we are very, very active.

And our next question comes from the line of Brian Dabber (sic) [Brian Drab] with William Blair.

This is Brian Drab from William Blair. I was wondering if you could just give us some help modeling the margins, first on gross margins. It's been rather steady at around 52%. How do you foresee that progressing through the year?

Yes. It was relative steady around 52%, and this is probably what we expect going forward as well. Obviously, in the gross margin, there is a lot of vectors. Specifically, this quarter, we're also impacted by the foreign exchange because our cost of product is relatively stable. And if the revenue was impacted by the foreign exchange, it does have some impact. But still, we believe that it's around the same level of the 52-ish that we saw in the last year.

Okay. And then on the operating expense, that stepped down materially from the fourth quarter and the first quarter, I guess, mainly with seasonality. But can you talk about what we should expect in terms of the dollar level of OpEx, collectively R&D and SG&A for the second, third, fourth quarter? What kind of run rate -- can you give us any reference point that we should use as a run rate for OpEx?

Yes. So in terms of the operating expenses, there is obviously seasonality between the quarter, like you mentioned that tied to the revenue performance, whether between Q4 and Q1, whether with the seasonality of the revenue. So obviously, we have a cost in the same market that's attached to that. So this will be changed as we look at the quarter going forward, where we have usually the first quarter is our highest revenue, then the second highest is the second quarter. And then we'll have the expense aligned to that. On top of this, we do see some changes related to R&D investment based on the project -- investment cycle time. Specifically this quarter, we saw -- we have a relatively low R&D level, but we do expect to have R&D costs going up in the following quarter based on the project timing.

Okay. So if I look at the quarter year-over-year for your spending on OpEx, is it fair to say that it's flat for the balance of the year or maybe up slightly for the balance of the year? Is there any way you could help with that modeling?

So first of all, when you compare Q1 this quarter to last year, obviously, there is the impact of the divested entities. So once you exclude that, yes, it's relatively similar. And going forward, we expect to see a slightly increase in our R&D expenses based on the project timing, and we maintain relatively similar operational expenses.

And our following question comes from Troy Jensen with Piper.

Congrats on the nice results and all the new product announcements. So David, I guess I want to start with you and V650. I know it's an open platform, right, and you're partnering with DSM on the materials. So can you just talk about like the cost of materials on the proprietary machine and how much less expensive your materials with DSM will be? I'm just trying to figure out kind of profitability margins that you're going to make out of these materials going forward.

Yes. So first of all, it is an open system. And nevertheless, we're saying very clearly that it was -- and is and was a well configured to certain materials, which we're going to supply from DMS (sic) [DSM] Again, I can't give you exact indication comparing the cost material, but it is going to be lower compared to what is used today in the market, okay? This is what I can say for sure.

Yes, perfect. And just to follow up on materials. I think 1% growth this year is a little bit if you normalize the FX stuff. If I remember, I think last quarter, it was maybe a little bit below what we'd thought too. So just your thoughts on what's going on in the material line.

So again, I think that Lilach said earlier, you do need to take into consideration the foreign exchange, which was very significant this quarter. So if you take this into consideration, consumable did grow 5% this quarter, okay? So it's -- and I think you need to consider it. So it's 5%, it's 5% in real numbers, okay.

So you think -- so kind of mid-, high single digit is kind of what you think the materials' growth?

Again, sorry, can you repeat exactly what range you indicated?

I just said -- I have always said kind of high single-digit growth for materials is something that should be able to exist for a while until we move into more production applications.

I think it's a reasonable assumption. Again, the demand for consumables, it is always -- there's a trend of customers moving to more sophisticated, more high-performance materials. On the other hand, we have machines which are in the market for many, many years and some of them are still being used. I think that on average, what you're indicating is reasonable. And when -- like we said, we're going to move to more production systems and then we'll have a higher relative count and our IB numbers might be higher.

That's fair. Okay, one more question and I'll cede the floor. Can you just give us an update, maybe timing update on your partnership with Xaar 3D and when you guys will be launching the high-speed sintering products?

Again, I don't give you an indication of when the product is going to be launched. We are progressing as planned. R&D is doing good progress. The product looks promising. And when it's going to be ready and available, we'll definitely going to announce it.

And our following question comes from David Ryzhik with Susquehanna.

Lilach, would be able to maybe update us on the seasonality for the year? Do you still expect second half to be 51% or 53.5% of annual revenue? And I have a follow-up.

Yes. We do expect to see -- to be within the same range as we communicated last quarter, 51% to 53.5% revenue in the second half. And we do expect a growth in every quarter after excluding the divested entities.

Okay. And then you mentioned increased inventory levels to support product demand. Now what signals are you getting from customers? Is this mainly for North America high-end FDM or is this for other product areas? I realize you have the Method started shipping in Q1. You have some other new products. Just would love some color on what exactly type of inventory you're building for anticipated demand.

Yes. So definitely, it's touching a couple of areas. One is building up an inventory to support those additional new products that are coming into the market. And also, when we are more and more selling our product to manufacturing, the SLA -- the required SLA will have material available. It's increasing, so we see more and more demand in the region, mainly also in the consumable aspect to have demand 24 -- like immediately 24/7 demand for availability for product. And we are putting in place an action item to make sure that we have a ready available inventory to address it.

And our next question comes from the line of Jim Ricchiuti with Needham & Company.

This is Mike Cikos on for Jim Ricchiuti. Just following up on a couple of OpEx questions that were asked earlier in the call. Wanted to fine-tune the R&D comments. When we were saying that the R&D is expected to be up year-on-year, are you looking at that on an absolute dollar basis or as a percentage of revenue?

We expect to have the R&D going up in absolute dollars as compared to the rate that you see -- that we have this quarter, okay? And also year-over-year, it's probably relatively to what we saw last year.

That's helpful. And then just another quick question. Regarding the new products that you guys are bringing to market, is there anything that we should be mindful of when we're looking at sales and marketing expense for the rest of the year, whether it's additional trade shows or product launch expenses? How would you characterize the flow of those additional costs?

I'll take that. We're doing a lot of marketing and sales efforts regardless of those products. Yes, for sure, every launch of new product has some associated cost attached it, but it's not something which is significant in the overall picture of our marketing sales expense during 2019.

Okay. And one more, if I may. If you guys could just characterize the demand environment you're seeing by geography, that would be beneficial.

Yes. I think we -- Lilac, do you want me to take it? I'll take it, okay. Like we mentioned earlier, we see a strong demand and substantially growth in our North American operation. Europe is operating along our plan. We do see some slower advance in Asia, mainly around the adoption of the production systems if you compare it with the industrial countries in the Europe and the U.S. So if you compare the territories, again, Asia is a little bit slower and mainly because of the slower adoption of production system. But we also, I think, started in Asia later, so I'm sure that in the coming years we'll be able to catch up.

And our last question comes from the line of Ananda Baruah with Loop Capital.

Congrats on solid results and some stability here. A couple if I could. I guess the first is really more of a follow-up or clarification, Lilach, on the conversation you're having with David. When you're going through some of the inventory, is that -- was that an inventory specific-related response or is that related to demand that you're seeing in North America as well? And then I have a follow-up after that.

Yes. It's both definitely. Obviously, we are increasing our inventory level based on our future expectations for demand. So it's definitely addressing the demands that we see in North America and, of course, also at the globe. And for sure, we want to be -- we see the increased demand from our customers to have those consumable available immediately. And we believe that this is the key, the utilization of our -- using our machines, it's the key, and we need to make sure that we have everything available for them immediately.

Excellent. Excellent. And are there any other areas in North America where you're seeing the performance strengthen? I mean is it -- I think what I've heard you guys talk to you on the call so far is aerospace and manufacturing. Is there a distinction between those 2? It sounds like kind of Method sales are off to a pretty good start. And I think dental, you've spoken to also. Is there anything in addition to that like traditional prototyping or any of the other? And 123, you've talked about too, but any of the other product areas, are those meaningfully contributing to the strength that you've seen -- that you're seeing in North America?

Yes.

Well, is there anything -- what are all the meaningful impacts in North America aside from aerospace systems?

The main -- industries, you mean?

In anything, as you would see it, as you would characterize it as being meaningful, so contributing to the strength in North America?

So what contributed to the strong growth in North America this quarter is mainly the high-end FDM production systems and the shared office systems. So both grew nicely this quarter.

Awesome. That's really helpful. That's awesome. And then just to wrap up. In the slides, you talked about having a healthy balance sheet, well positioned to take advantage of opportunities moving forward. That sounds like kind of an M&A narrative. Is that accurate? And then if you could just kind of talk -- if is accurate, talk to sort of how you're thinking about M&A at this point going forward? And that's it for me.

Okay. So like you said, we have a strong balance sheet and enough cash. We are constantly looking for opportunities. Nevertheless, if and when we're going to move, it's going to be after targets which really support our strategy. In this point of time, nothing look substantial on the table. If and when, obviously, we're going to announce it.

That's very helpful. I will sneak one more in. Any -- on the last call, you guys didn't want to get into, yes, because it was early talking, providing much, much detail on new products that you're going to be introducing through the year, though you are saying you have sort of good hope for those products. Would you be willing to provide any more detail on this call around the products that you're going to introduce through the year?

Yes. I think we said it very clearly on the script earlier, we expect in the next -- in the coming years, some will come earlier, some are going to come later, new products both based in our FDM technology, PolyJet technology and other technologies that we already announced, which are going to enhance our capabilities. I think Troy asked about the Xaar collaboration. We have our metal systems that was announced. So all those products are being developed into different stages. I mentioned on the previous call we have a very substantial R&D effort, very focused, very well financed. Nevertheless, R&D is not a guarantee. But like we said earlier, in the coming 18 to 24 months, you should expect from us, if everything will go well, to hear about several product announcements, which I think would be really very impactful on our future.

And our last question comes from Paul Coster with JPMorgan.

This is Paul Chung on for Coster. So just looking at your systems margins, they're holding up pretty well, so I assume you're kind of staying disciplined on pricing. But your overall revenue growth rate remains pressured, kind of growing at below industry CAGR. So just my question is, what's been your strategy to defend your market share or gain it back? And do you need to sacrifice kind of more on prices to get the top line moving?

Paul, it's David. First of all, you can see that our gross margin is stable, okay, so we don't see any dramatic changes in our overall ASPs, which means that customer appreciate the value of what we are selling and usually are willing to pay for what it's worth, okay? And going forward -- going back to my previous answer, we believe we have probably the strongest channel in the industry, the best channel. And as we're going to introduce new products, some of them are going to come out in nice margins, which will allow us to both keep hopefully at this level of profitability or gross margin and allow us to sustain our end market share.

Okay. Great. I think I may have missed it, but on your services margin decline this quarter, is that kind of temporary or this is some kind of structural step-down?

Lilach?

Yes. Customer support obviously is made of various aspects. Warranty service contract and timing and material and can fluctuate in the product mix here can have an impact as well. So as well we've been impacted by the foreign exchange. We see a relatively stable cost from a dollar perspective, and we believe that the customer support will return to a more typical growth rate moving forward. So we don't -- we do not view this decline -- a slightly decline in gross margin of customer support to be the trend going forward.

Okay. And then last question, on free cash flow. It was a bit light this quarter, obviously, given your inventory levels that you mentioned. But for the year, how should we think about overall cash from operations, if it can be somewhere in the mid-60s as you kind of harvest that inventory? And then on CapEx for this year, you mentioned some HQ spending is driving some of that increase, but what's more your kind of normalized level of CapEx?

This quarter, we do see the impact of increasing inventory, and we don't anticipate to see also in the next quarter or so. So we -- and it will impact overall the cash flow for the year. Bear in mind that this quarter, we also had the impact by the tax payment that we do not anticipate it to see going forward significantly as we saw in Q1. So overall, those are kind of the major factors that impact this quarter, and I would probably would see something in the range of the -- like you mentioned, like about $50 million for the year.

Thank you. I would now like to turn the call back to Elan Jaglom for closing remarks.

Okay. Thank you for joining today's call. We look forward to meeting those of you that will attend the RAPID + TCT conference later this month in Detroit and speaking with you all next quarter. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.