Silvaco Group Inc (SVCO) 2024 Q3 法說會逐字稿

Good afternoon and welcome to Silvaco’ s third quarter, 2024 conference call. All participants will be in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please note this event is being recorded. I would now like to turn the conference over to Greg McNiff, Investor Relations for Silvaco. Please go ahead.

Thank you. Joining me on the call today are Babak A. Taheri, Silvaco’ s CEO and Ryan Benton, Silvaco’ s CFO. As a reminder, a press release highlighting the company's results along with supplemental financial results and an earnings presentation are available on the company's IR site at investors.silvaco.com. An archive replay of the conference call will be available on this website for a limited time after the call. Please note that during this call management will be making remarks regarding future events and the future financial performance of the company. These remarks constitute forward-looking statements for purposes of the safe harbor provisions of the private securities Litigation Reform Act.

The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. It is important to also note that the company undertakes no obligation to update such statements except as required by law. The company cautions you to consider risk factors that could cause actual results to differ materially from those in the forward-looking statements contained in today's press release earnings presentation, and on this conference call. The risk factors section in Silvaco’ s most recent form 10-Q filing with the security and exchange commission provides a description of these risks. With that. I would like to turn the call over to Silvaco’ s CEO Babak A. Taheri.

Hello and welcome to Silvaco’ s third quarter earnings call. I am Babak Taheri, CEO of Silvaco. Thank you for joining us today.

In addition to discussing Silvaco’ s results, we will also provide an update on our most recent press releases, business outlook and current market trends. For those joining us for the first time, Silvaco is a provider of TCAD, EDA and semiconductor IP solutions that enable chip design, digital twin modeling and simulation, utilizing AI and machine learning.

We have decades of deep expertise in modeling and simulation software from concept to design and manufacturing.

The Silvaco’ s digital twin platform drives advances for the next generation of power semis such as silicon carbide, gallium nitride for high performance compute and AI displays for watches, computers, cars and televisions, memory devices for servers, clouds, laptops and [IOTD] devices and advanced CMOS technologies utilized in design and fabrication of integrated circuits. We have 800 plus customers worldwide and hold the number two position in the global TCAD revenue. We have 260 plus employees. Our headquarter is located in Silicon Valley.

I am really excited about the progression of the business we have seen, and we are executing on the strategies we outlined since we went public earlier this year. We believe our strategic focus on driving innovation through AI based semiconductor design for advanced CMOS geometries and power semiconductors, which includes digital twin modeling, positions us well for long term growth and our strong business fundamentals and innovative product lines will continue to drive our customer momentum and growth trajectory. If you would like to learn more about our company and our mission, I encourage you to refer to my opening remarks from our second quarter earnings call and to the materials on our investor relations site. I now want to touch on a few recent achievements and provide some commentary on the importance of the recent press releases.

Please turn to slide 4.

First, we continued expansion of our FTCO platform in the third quarter. We received a $5 million order late in the quarter which we were not able to recognize until the first week of the Q4. However, the significance of this order is that we further expanded our FTCO offering with our partners. I will comment more on this in the next slide.

Second. In June, Silvaco announced strategic partnership with Purdue, Stanford, and Arizona State University to help overcome the time shortage and expand research activities. In addition to these efforts, Silvaco has collaborated with Stanford University to publish a comprehensive book on chip fabrication that includes extensive TCAD examples using Silvaco platforms. This joint effort aims to create a valuable resource that bridges the gap between academia and industry, offering insights and knowledge on the latest advancements in TCAD technology.

Third. In September, Silvaco appointed Candace Jackson as SVP general counsel and corporate secretary. We welcome Ms. Jackson to our team. Her semiconductor industrial experience and background in corporate governance, litigation management, M&A and SEC reporting has made a significant impact.

Fourth. In September, Silvaco announced the expansion of its victory TCAD and digital twin modeling platform to planar CMOS fins set and advanced CMOS technologies. Our TCAD platform has gained significant traction in display, photonics, memory and power semiconductor markets where our solutions have been instrumental in driving innovation and enhancing performance.

We have now extended our comprehensive suite of tools to the advanced CMOS market enabling next generation semiconductor technologies to address growing markets such as foundries 5g AI and high-performance computing. Our newly released TCAD platform has been utilized by a strategic customer for the past few years and is now available for broad market adoption.

This new capability for advanced CMOS technology enables customers to accelerate their technology development with significant cost savings and its fundamental step in expansion of our AI based FTCO platform into advanced CMOS markets. In September, Silvaco was added to the Russell 2000, Russell 3,000, and Russell microcap indices.

Silvaco’ s inclusion in these widely tracked rustle indices represents another important milestone for our company. We look forward to the increased visibility in this inclusion which will enable us to broaden our shareholder base by reaching a wider range of passive and active investors including ETFs and other institutional funds.

Finally, Silvaco achieved ISO p9001 certification of TCAD, EDA NIP, products in October.

I now want to touch on a few financial and operational highlights of the third quarter as well as provide some commentary on our outlook. Ryan Benton, our CFO will go into more detail later about our financial results and guidance.

Q3 gross bookings were $9.9 million our Q1 through Q3 total bookings was $45.5 million representing a 7% growth year over year for the first three quarters. We recognized revenue of $11 million for Q3 and $41.8 million for the first three quarters. We had a strong quarter in terms of customer traction. We signed 14 new customers as well as expanded our relationship with several existing customers across key markets including power, memory foundry and display.

We also signed a follow-on contract for a digital twin product with a large memory customer which validates our strategic focus on this unique technology. This demonstrates our solid business process and strategies for securing new clients and deepening existing partnerships. We expect this momentum to continue into Q4 2025 and beyond.

While Q3 revenues were impacted by the shift of some orders including a substantial $5 million order received in the first week of the quarter. We remain confident in our ability to achieve our revised full year financial targets due to strong customer demand. We expect to regain momentum and execute on our long-term strategy by expanding our footprint across the key end markets as well as executing on the right strategic and organic opportunities. We believe our business prospects remain strong as you will see reflected in our Q4 and full year 2024 guidance.

Despite the lower expected revenue for the quarter, the relative impact to gross margin was minimal. For Q3 Non-GAAP gross margin was 80% and GAAP was 75% compared to 85% for GAAP and Non-GAAP alike in the same period last year. The fact that we were able to maintain such a healthy growth margin despite a decline in expected revenue, speaks to the significant value of our solutions provide our customers.

The next few slides offer an overview of our products and markets which we covered in more detail on our previous earnings call. I would like to turn to slide 11 to summarize our growth strategies in that slide. Slide. Number 11.

In summary, we believe our strategic focus on driving innovation through AI enabled semiconductor design for newly announced advanced CMOS geometries and power semiconductors which include digital twin modeling, positions us well for long term growth. Additionally, we have continued to leverage our deep relationships with R&D centers and academia to stay ahead of the technology.

We believe this approach along with our strong business fundamentals will continue to drive our customer momentum now and in the future. With that, I will turn it over to Ryan to review the quarter and discuss our guidance. Ryan.

Thanks, Babak and thank you for joining us. Today I will review our financial results for the third quarter, 2024 and discuss our outlook for the fourth quarter and full year.

As a reminder, we announced preliminary unaudited Q3 revenue and updated our full year guidance on October 15th. Turning to slide 13, there are a couple of growth drivers in our business model which I'd like to highlight today.

First as bio covered in his prepared remarks, we remain very excited about the opportunity for our digital twin modeling platform to create enormous value for our customers.

Second, with our strong financial position and operational expertise, we are actively pursuing strategic acquisitions that we believe will bolster our products enhance our competitiveness and market presence, add strong engineers and scientists and provide much needed scale that can leverage our business model.

Now, let us turn to discuss our third quarter financial performance on the next slide. Starting with bookings, we achieved gross bookings for our software and semiconductor IP products of $9.9 million. A decrease of 21% year over year.

It is important to note that the first day of Q4, we secured a $5 million follow on order from a strategic memory customer, which expands our relationship through the deployment of our FTCO digital plan product. The order taking longer to finalize than originally expected is a function of the company moving so far up the value chain. It is a major win for us, and we believe a significant portion of the order will be recognized as revenue in Q4.

Additionally, there is a delay in certain orders principally from China. However, we believe we will be able to book orders and recognize revenue for many if not all of these customers in the coming quarters.

As a reminder, China remains a relatively modest portion of our overall revenue. 17% of our year-to-date revenue as of Q3 2024. For Q3, we successfully added 14 new customers which brings our year-to-date new customer wins to 33 including 11 in the power market and six automotive two key markets where we continue to see strong demand. Turning to revenue on slide 15. We generate revenue from sales of our software and IP products. As a reminder for a new customer or a new product sale to an existing customer. We generally recognize software license revenue upfront upon delivery of the license products. For the up sell the product to an existing customer, for example, the sale of additional seat licenses or an extension of tenure. The license is typically recognized at the beginning of the renewal period.

Maintenance and services revenue is recognized evenly over the contract term. The revenue recognition of [SIP] is generally straightforward since these products are usually sold without any additional performance obligation.

Unless customization is involved, the revenue is typically recognized upon delivery of the technology license to the customer or in some cases once the cash is received from the customer. For the third quarter, we posted total revenue of $11 million down 27% year over year, primarily due to the delayed orders previously mentioned. Year-to-date through Q3, we recognize $41.8 million in total revenue, which is flat compared to the previous year.

As we will see in the following slides, we are reiterating the FY24 guidance we provided in the October 15th press release. Which equates to what we believe will be record quarterly revenue in Q4 and double-digit growth for the full year.

The pie charts show the year-to-date splits. I will reference the third quarter splits in my remarks. However, please note that these along with 11 quarters of historical data are included in the financial supplement available on our investor relations website.

For the third quarter of 2024 approximately 62% of revenue came from software licensing while 38% was from maintenance and services. Year-to-date, the chart shows that software license revenue was a bit higher at 72% of total sales and maintenance and services was a bit lower at 28%.

Q3, 2024 year-to-date software license revenue of $30.1 million was down 2% year to year, which does not include the large TCAD order that was booked in Q4. Q3 2024 year-to-date maintenance and services revenue of $11.7 million was up 5% year over year as we continue to build our recurring revenue base. On a product basis for the third quarter of 2024 TCAD revenue was $6.5 million. EDA revenue was $2.6 million, and sip revenue was $1.8 million. This brings product revenue on a year to day basis to the following. TCAD revenue of $27.5 million or 66% of sales, EDA revenue of $10.3 million, 25% of sales and SIP revenue of $4 million, 9% of sales. On a year-to-date basis, TCAD is up $3 million or 12% year over year, even with the large FTCO order slipping into Q4. The TCAD is set up nicely to continue its solid growth trends.

EDA on a year-to-date basis is down $0.9 million or 8%. Tip on a year-to-date basis is down $2.1 million or 34% year-to-date. Tip is still playing catch up from the delay we had in renewing a strategic resale agreement in Q2 as well as being impacted by the order delays in the Asia Pacific region.

Although we are not satisfied with the short-term results. We have high expectations for this product line in the future. There are numerous M&A opportunities to bolster this product line to provide complementary products, technologies, and engineering teams as well as that much needed revenue bulk and enhanced profitability. Turning to a split between geographic regions for the third quarter of 2024 Asia Pacific revenues were $6.5 million or 59% of sales.

The Americas was $3.3 million for 30% of sales and [MEA] was $1.2 million or 11% of sales. On Q3, 2024 year-to-date basis, the Americas represented 37% of total sales, which is essentially the US. Asia represented 53% of sales. [MEA] was 10% of total sales similar to historical levels.

Before turning to gross margins, expenses, and profitability. I would like to note that I will be discussing Non-GAAP results going forward. As a reminder, our GAAP Financial results along with a reconciliation between GAAP and Non-GAAP results can be found in our earnings press release. In the appendix of the presentation and within the supplemental financials on our website. GAAP, gross margin for Q3 was 75% impacted by stock-based compensation of approximately $313,000 and $249,000 amortization of purchased intangibles. Excluding those two items, Non-GAAP gross margin was 80% in the third quarter. Down from 85% for GAAP and Non-GAAP alike in the same period last year. This put us at 85%. Non-GAAP gross margin year-to-date our Non-GAAP cost revenues which is primarily the wages and related costs for the staff supporting our customers are largely fixed in nature.

Non-GAAP cost of revenues for Q3 was $2.2 million consistent with the previous quarter and the third quarter last year. This is partly where we believe we can gain leverage as revenues increase; we expect Non-GAAP gross margins to expand towards our long-term target of 90% plus. Turning to operating expenses. Our GAAP operating expenses were $15.5 million which includes 2.2 million in [SEC] expense and approximately $1.9 million legal fees and expenses related to an acquisition related estimated litigation claim.

Please refer to the press release we issued on July 24th and my remarks on our Q2 earnings call for more detail on the litigation claim and its impact on our financial results. Our Non-GAAP operating expenses for the third quarter were $11.3 million compared to $9.9 million. In the same period last year. The increase in costs year over year was due to increases in general and administrative followed by research and development, sales, and marketing.

Consistent with the previous quarter, the increase in G&A expenses is largely due to the costs associated with becoming a public company. The increases in R&D and sales and marketing expenses are a result of expanding our engineering and sales teams, respectively.

For Q3 2024 year-to-date Non-GAAP operating expenses were 79% of sales. R&D with 26% of sales. Our ongoing investments in both advanced research and product development positions us to take advantage of an enormous EDA software market which is expected to reach $22 billion by 2030. According to a study conducted by Grand View Research sales and marketing was 24% of sales. We will continue to invest proportionally in this team as revenues grow.

G&A was 29% of sales due to the semi fixed nature of a lot of our G&A costs. We do not expect GNA cost to scale at the same rate of sales. We believe can leverage the people and infrastructure that we have built out. So, the net is that Non-GAAP operating loss was $2.6 million compared to a Non-GAAP operating income of $2.7 million In Q3, 2023. The decline was largely due to the lower revenue amount recognized in the quarter. Q3, 2024 year-to-date Non-GAAP operating income and Non-GAAP operating margin were $2.4 million, 6%, respectively.

Our net loss for the quarter was $6.6 million which again included the charges for stock-based compensation and the acquisition related estimated litigation claim charge. Our Non-GAAP net loss for the quarter was $1.8 million compared to the Non-GAAP net income of $2.3 million in the same period last year. Our EPS basic and diluted was a loss of ¢0.23 per share for Q3. Non-GAAP EPS basic and diluted came in at a loss per share of ¢0.6 compared to Non-GAAP EPS basic and diluted of ¢0.12 per share in the year ago period.

Comment on our balance sheet.

We ended the September quarter with $100.4 million in cash, cash equivalents and marketable securities. For the third quarter, free cash flow was an outflow of $2.16 million similar to the $1.84 million outflow in the same period last year. Our basic and diluted share count for the third quarter was $29 million shares. As to share count following the IPO lockup, expiration last week, approximately $2.9 million [shares] were released. Given the decline in our share price, we chose to utilize net settlement to minimize dilution.

This resulted in the issuance of approximately 725,000 fewer shares for a net of 2.2 million shares and the company utilizing approximately $5.3 million of its cash to settle the associated taxes.

As a result, as of last week, the company had approximately 28.5 million shares outstanding. We expect the shares outstanding at the end of Q4 to be approximately 28.6 million. On slide 17, I will now review the full year guidance which is unchanged from the guidance we provided in our October 15th press release. For bookings we expect gross bookings for the full year to be in the range of 64 million to 67 million, which would represent a 10% to 15% increase from 2023.

As Babak and I noted earlier the updated forecast reflects macro uncertainty in Asia. Despite this near-term headwind, however, we still believe bookings remain a great leading indicator of performance and relative strength of the business.

We continue to see strong customer demand across our key markets driven by an increasing adoption of our software solutions and positive feedback from new and existing customers. This demand coupled with our strategic initiatives and execution of our land and expand strategy gives us confidence in our ability to achieve our long-term targets, which we will discuss in a moment.

We expect revenue for the full fiscal year to be in the range of $60million to $63 million, which would represent a 10% to 16% increase from 2023. This full year guidance applies a strong sequential rebounding key four for both bookings and revenue. Specifically, we expect Q4 bookings to be in the range of 18.5 million to 21.5 million which will exceed what we believe was a record for quarterly bookings in Q2 2024. Likewise, we expect Q4 revenue to be in the range of $18.1 million to $21.2 million which would exceed what we believe was a record for quarterly revenue in Q1 2024 of $15.9 million.

This forecast includes approximately $2.8 million in revenue expected to be recognized in Q4 from the $5 million order received in the first week of the quarter. For Non-GAAP margins, we are at 85% year-to-date through Q3. Based upon expected strong Q4 revenues for the full year, we are forecasting Non-GAAP gross margins to be in the range of 85% to 87%. For Non-GAAP operating income for the full year, we are now expecting to be in the range of 5% to $8 million which would be an increase from 2023 of between 14% and 18%.

Now let us move to slide 18 to review our long-term financial targets. While we are disappointed with the near-term revisions to our guidance, due to the challenges we faced this quarter, we are confident in our ability to regain momentum and execute on our long-term strategy. We continue to target 15% to 25% top line growth, 90% Non-GAAP gross margin and 25% plus Non-GAAP operating margin over the next several years. We expect to achieve these targets by expanding our presence in key markets and pursuing the right strategic inorganic opportunities with that, Babak and I would be happy to take your questions, operator.

Thank you. (Operator Instructions)

Our first question comes from Chris Sankar with TTC. You may proceed.

Hi, this is Robert Burns on the line on behalf of Crish, you mentioned that you signed 14 new customers in the quarter up from I think 10 wins last quarter, which was split sort of between power and auto and I think one solar customer. So, it looks like this quarter, you added founder and display, which is nice to see. But could you provide any more breakout maybe between where the main skew of these customers operates in? Was it primarily powered automotive or more evenly spread?

Yeah, 14 addition of new customers, new logos this quarter 11 last quarter, just to be to get the record straight. Out of the 14, there were in Q3 of 2024 we had more power. A matter of fact, we had also Milaro and that's US. US based as well as we had some as Ryan mentioned in automotive and display. So, but majority over five of them were from power. If you think of our revenue for Q3 2024 in terms of markets, the top four were power in terms of landing, right? New logos, it was 58% of the lands were power. The arrow was about 10% automotive was 8% and IOT was 7% and some foundry as well. So, those are the top ones.

Great. Thank you that, that is helpful. And then just in terms of the guide for December, it looks like the implied OpEx is sort of flat, maybe up 25% quarter over quarter. How much of that would be seasonal factors in the compensation structure versus just general growth in the hiring? And is there any sort of directional guide you are comfortable giving into the first quarter next year?

Yeah, this is this is Ryan, I will take that question. Similar last year, there absolutely is a portion of the operating expenses that we expect to grow in the fourth quarter. Really attributable to variable comp some of the compensation structures have a yearly accelerator that hit, get hit depending on those levels. As well as there is also some more off things that tend to happen in December. We have not really given guidance for 2025, so I won't comment on that. But again, I think you expect that some of the, the cost that we have added in Q4, we have built out the head count as we said. So, there is, it is obviously a natural, some natural growth that is happened in Q3 and Q4 as we have added staff.

Got it. Okay. Thank you. I appreciate.

Thank you. Our next question comes from Charlsie from Needham Company. You may Proceed.

I do want to check in with you on the China revenue side. Because mostly it is the sum of the shortfall in your China revenue that is causing you to move the four-year outlook down by roughly speaking, $3 million. I recall right around the time you had the preannouncement that you were speaking about, maybe some of the Chinese customers were delaying the contract renewals. In light of the US Presidential election, now the election is over. How is that the conversation changing with your Chinese customers? In addition, I think in the prepared remarks you said, do you expect to recoup some of the lost sale with those Chinese customers? Do you, is there a timeline for that? Are you expecting maybe in Q1 or Q2 or what can you provide some specifics there? Thanks.

Hey Charles. Thank you for your question. This is Babak Taheri. Yes. Last time we did the prerelease announcement, we said that it will take several quarters. And we still stand to say several quarters as a matter of fact, we have seen some that we are working with the customers meeting practically on a weekly and monthly basis that a few of them have the potential of closing this quarter. PO Q1 and Q2, I would say so the message we are trying to give is these are not lost opportunities. It has been a delayed opportunity. As Ryan stated, some of it has to do with the macroeconomics in Asia in general and China specific and then also having impact on decisions based on that as when to place the order and that is what we have seen. So, we haven't seen any cancellation, it is a matter of delay. And in summer we think in the next few quarters we will close all those. So, and the last, I mean, the last color I want to add as Ryan said to date, Our China revenue has been about 17%. So, which is, we have always said 15% to 20%. So, it doesn't mean that it is gone down and bottom line, our expectation for growth as much as we thought some of that growth is delayed rather than canceled. So.

Got it. Obviously, the $5 million deal that signed in earlier part of this quarter, probably kind of pushed up to the Q4 revenue a little bit more than, than you originally planned, but could potentially make the sequential growth in Q1 look a little bit lighter but that any directional color on the Q1, I know you are not guiding for 2025 but that you want to get a little bit sense on where you think Q1 revenue could potentially land. Especially given, that the base for Q4 is a little bit higher but at the same time, it does sound like some of the delayed opportunity in Q3, Q4, some of that won't be fully recouped by the time you get into Q1. Thanks.

Yeah, this is Ryan, maybe I will take first step of that [BioX]. So, look at of course, as we kind of said and prepare remarks previously, we believe, Q1 of 2024 was a record for the company in terms of quarterly revenue, which was $15.9 million. And so, the range, the forecast range for revenue that we provided for the fourth quarter of this year is, obviously $18.1 million to $21.2 million will be anywhere in that range will be a substantial, should be a substantial record revenue quarter for the company. Again, we haven't given guidance yet to Q1, I don't want to talk about Q1, but I think a more reasonable approach would be to begin to look at Q1 in 2024 and think of sequential, think of that as a good comp rather than looking at Q4.

Thank you.

Thank you. Our next question comes from Craig Ellis with B Riley Securities. You may proceed.

Yeah, Thanks for taking the question guys. I wanted to go back to the 2nd $5 million tranche on the FTCO deal that booked here in early four Q and just try and get a better understanding of what some of the project milestones are related to that. And since this is the second element, that is rep right with this customer, is there potential for further such extensions to the deal or will this really take the deal to its natural fullness?

Hey Greg, thank you for asking. That is a great question. We have said historically and continue on our same path that even though we sell new technologies, we have always tried to provide solutions that address issues 3 to 5 years down the road. And by the nature of FTCO, and that we have actually worked on and for the past 4.5 years and now soon to be five. We have always said that these kinds of products are suited for enhancing yields, getting to market faster and lowering costs for manufacturing. And we have said always that one element of these software tools and AI platforms are always going to need an improvement and enhancement based on what product lines our customers run into their fab and which fab it is. So, the addition that we had in Q3 was a natural extension that we knew, and we have been working on with the customer on what we call wafer level elements and physics modeling. Rather than going from a simple process level, we are actually getting to more of the Wafer level enhancements and improvements on our modeling.

And that was a natural course of it. And that is what we started. And also, we proposed an enhanced version of what we thought our new algorithms and better solutions for what we call parasitic extraction and that is, what extended this work. And as we go along the path of exploration and see how we can improve this thing, I foresee and expect that this continues to grow and again we are on the cutting edge of the technology and every time we are in the cutting edge of the technology, I assume you have solved all the problems, but there is always something that requires more attention, more details, more enhancements and those are what we consider to be our extension to our projects. And I expect that to keep on going for the years to come. So, and because of the fact that technology and changes the technology gets improved, requirements for technology are different than what it was four years ago. And enhancements are needed and advanced enhancements are needed. So, we will continue on this path with this customer. And as we announced also on our advanced CMOS, we have been working for a couple years on TCAD with our advanced CMOS customer that we are actually working with them. And in order to get them switched into a TCO and that is our next step in growing that whole business and that market. So.

Got it. That's very helpful, Babak. Thank you. And then I will switch gears. M&A was brought up a couple times is an important part of the growth strategy and how you will get to longer term targets. Not the new strategic thrust for the company. But I was wondering if there is any new information you can share with us just in terms of how things are progressing with funnel management and getting closer to selecting potential targets. Thank you.

So that's a great question. No, as you know, we have the funnel, we have been working through it. We have narrowed it down much closer. We have done, we have started the discussions with potentials and that is the vehicle we have. But we have a very high bar in terms of our requirements for acquisitions and the ones that we are looking at fall in that category. And we are working very hard to see how fast and how quick we can close them. So.

Got it. Thanks guys.

Thank you. I would now like to turn the call back over to Babak Taheri for any closing remarks.

Yes, thank you very much. I wanted to thank all of you for joining us on this call. We always enjoyed having this conversation and be transparent to the public and as well as our investors and an analyst. We welcome any questions and follow on' s. And thanks again, I appreciate your time for joining us.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.