Tucows Inc (TCX) 2015 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to Tucows' second-quarter 2015 conference call.

Earlier this afternoon Tucows issued a news release reporting its financial results for the second quarter. That news release and financial statements are available on the Company's website at Tucows.com under the investors heading.

Please note that today's call is being broadcast live over the Internet and will be archived for replay both by telephone and by the Internet beginning approximately one hour following the completion of this call. Details on how to access the replays are available in today's news release.

Before we begin, let me remind you that matters the Company will be discussing include forward-looking statements, and as such, are subject to risks and uncertainties that could cause the actual results to differ materially. These risk factors are described in the Company's documents filed with the SEC. Specifically, the most recent reports on Form 10-K and Form 10-Q. The Company urges you to read its security filings for a full description of the risk factors applicable for its business.

I would now like to turn the call over to Tucows' President and Chief Executive Officer, Mr. Elliot Noss. Please go ahead, Mr. Noss.

Thank you, operator, and thanks, everyone, for joining us today. With me is our Chief Financial Officer, Michael Cooperman.

As per our usual format, I will begin today's call with an overview of the financial and operational highlights for the quarter. Mike will then review our financial results for the quarter in detail and I will return with some closing thoughts before opening the call to questions.

Continuing growth in Ting Mobile, complemented by ongoing solid performance from our domains business contributed to another quarter of record consolidated revenue at just shy of $43 million, which was up 21% from the second quarter of last year. We continue to benefit from the operating leverage in our business, which drove further expansion of our gross margin, exclusive of the portfolio group, to 29% from 26% in Q2 of last year.

Growth in revenue and operating leverage continues to be reflected in our profitability with adjusted EBITDA for Q2 increasing 64% year-over-year to $5.4 million, bringing our total for the year to date to $12.3 million. Net income per share was $0.21, up from $0.12 in Q2 last year.

As I mentioned a moment ago, Ting Mobile saw continued growth in Q2 and a bit of a rebound, averaging over 10,000 accounts and 15,000 devices, to bring our total at the end of the quarter to more than 113,000 accounts and 178,000 devices. You'll recall that last quarter our customer support team was struggling to keep up with call volume and we shut down all marketing and promotional activities until we could get back to the level of service that has defined and propelled the Ting brand.

That was the state we were in for two-thirds of the second quarter. While we are still not at levels that we are satisfied with, we have caught up sufficiently to the increased demand brought on by changes in [spread] policies that by the end of May we've started marketing the service again and by the beginning of June we are in full throttle.

The centerpiece of that effort was a referral promotion letting our customers know there has never been a better time to bring friends to Ting and increasing the reward for doing so. In the end, June with our second-largest month of gross adds ever following this past December. It brought us back over the 10,000 net add benchmark that we had slipped below briefly with the events of Q1 and hope to stay above in quarters ahead.

Coming into the second half of this year, we have a great opportunity with Ting Mobile to get additional returns on incremental operational improvements. We have clear and consistent requirements and processes now for Sprint devices to come to the service.

While it is more complicated than it was, at least it is settled. We have a choice of two nationwide networks and we can now accept a far greater percentage of owned devices. We have a much better handle on the drivers of customer support interactions with the redesigned business processes and we have a staffing plan to keep us out in front of it.

Perhaps most importantly, we now have a greater abundance of prospects to convert. In our first three years just about any improvement we made to our offering or our conversion produced relatively small returns while very few people knew who we were. With the Consumer Reports rating in December, the interest in our fiber initiative over the past couple of months, and a growing customer base spreading the word to their friends every day, we appear to have muscled our way into millions of daily discussions about cell phone service providers.

We see it in our website traffic and our support interactions, both of which reached all-time highs in Q2. What that means to us is that we can now get significant returns on improvements to our user experience before, during, and after activation. We have a long backlog of screws to be tightened on our website, in our programs to generate and nurture leads, and in our sales and support processes, and we see those as ways to turn more of this demand into customers.

Meanwhile, the key metrics on the Ting Mobile business remain consistent. Churn is between 2% and 2.5% of our base each month. That is, of course, included in the net 10,000 we are adding each quarter. Our customers spend about $35 a month. Gross margins are around 50% and cost per acquisition continue at under $100.

As you can see, these numbers and the growing base are all showing up quite clearly in our strong results. Ting Internet launched in Q2 in Charlottesville, Virginia. We lit up our first beta gigabit customers in May, allowed customers to start signing themselves up in early June, and have been operating at or near capacity ever since. Meanwhile, we are rapidly building out the fiber network to cover the entire city and have already reached over 3,000 serviceable addresses.

In our other launch market, Westminster, Maryland, where the city is building the network and we are playing the dual roles of network operator and service provider, we co-hosted a fiber lighting ceremony in late June and expect to start signing up customers in mid-August. We continue to receive praise for our unique public-private partnerships there. The National Association of Telecommunications Officers and Advisors, or NATOA, recently recognized Westminster and Ting as the innovative partnership of the year as part of their 2015 community broadband awards.

At this stage, our focus is on optimizing our processes: from network buildout in Charlottesville to scheduling and performing a high volume of customer installs, to tracking and managing customers' actual Internet usage. We are, of course, also identifying opportunities to improve the user experience and minimize the need for support. All of that is going well. Our costs so far seem to be in line with our assumptions and we are increasingly confident that we can scale this service.

Moving to the domain services side of the business, performance was in line with expectations solidly in Q2, especially outside of a declining expiry stream business with particularly promising results in email. Registrations on open SRS were up 2%, driven by an outstanding renewal rate of 79%, once again our highest renewal rate ever. Perhaps even more impressive, that included a 70% rate of new gTLDs with a large percentage in their first year of renewal.

We added 52 more new gTLDs in Q2 and by the end of the quarter 2,100 resellers have registered at least one new gTLD, up from 1,900 at the end of Q1. In addition to the promise of incremental revenue from these resellers, this adoption across more services ultimately fosters stickier relationships and secures the revenue on our core gTLDs.

Open SRS continued to find growth in all corners of the world in Q2. New registrations from outside North America and Western Europe were up 16% year-over-year and represented a new high of 25% of all new registrations in the quarter.

We are also particularly pleased with some growth coming back to our email business, primarily the result of Google no longer supplying Gmail to ISPs. Long-time investors will remember that years ago we lost some big pieces of business to Google as they got into this market. They have now effectively exited.

However, our retail demands business continues its strong growth, with increases in both revenue and gross margin of over 18% year-over-year and growth in the customer base of 14%. We launched an exciting new initiative in Q2 called [Hover Connect] that will enhance the customer experience and has the potential to ultimately drive more customer acquisitions through partnerships.

Hover Connect allows our users to easily connect their Hover domains to their favorite Web services without DNS modifications. The user simply chooses which site-building service he is using or she is using from a menu of popular choices on Hover and Hover automatically points the domain to the appropriate website. It highlights one of Hover's greatest competitive advantages: that we do not attempt to lock users into our own site building or hosting service. It also simplifies the trickiest aspect of the domain name experience, the link to the web host.

In addition to improving the Hover experience, we are hopeful this feature will be appealing to the site-building services as they consistently identify connecting with domain registration as perhaps their greatest pain point.

I would now like to turn the call over to Mike to review our financial results for the quarter in greater detail. Mike?

Thanks, Elliot. As Elliot stated at the outset, the second quarter of 2015 with another record in terms of revenue at $42.9 million, an increase of 21% from $35.6 million in the corresponding quarter of last year. Cost of revenues before network costs were $28.3 million, up 14% from $24.7 million in Q2 of last year. Gross margin before network costs was $14.6 million, up 35% from $10.9 million. As a percentage of net revenue, gross margin before network costs increased to 34% from 30%.

Looking at the two major components of gross margin for our business, gross margin for domain services grew slightly to $7.7 million from $7.6 million for Q2 last year. As a percentage of revenue, gross margin for domain services was essentially unchanged from Q2 of last year at 28%.

Gross margin for network access for Q2 increased by $3.7 million, or 115%, to $6.9 million from $3.2 million, primarily the result of the contribution of the much larger Ting Mobile customer base relative to a year ago. Gross margin as a percentage of revenue for network access expanded to 45% from 39% in Q2 of last year as the contribution from services continues to grow relative to that from devices which are sold more or less at cost.

Breaking down gross margin for domain services into its component pieces, gross margin for the wholesale channel decreased by $134,000, or 2%, to $5.4 million from $5.5 million from Q2 of last year. This small decline in margin is primarily due to the timing of certain marketing initiatives undertaken by both Tucows and our vendors in 2014, which have either been modified or scaled back this year. As a percentage of revenue, gross margin for the wholesale channel was unchanged from Q2 last year at 23%.

Gross margin for retail services increased by $257,000, or 18%, to $1.7 million from $1.4 million for Q2 of last year, as Hover continues to successfully add customers and gross sales to existing customers. As a percentage of revenue, gross margin for retail services was unchanged relative to Q2 of last year at 56%. Gross margin from portfolio services decreased by $35,000, or 5%, to $641,000 from $676,000 in Q2 last year.

Turning to costs, network expenses for Q2 increased by $468,000, or 35%, to $1.8 million from $1.3 million for the same period last year. This increase is primarily the result of the additional costs we incurred as a result of our now providing high-speed Internet access, Internet hosting, and network consulting to customers as a result of our BRI acquisition.

Total operating expenses for the quarter were just under $900 million, an increase of $1.5 million, or 20%, from $7.5 million in Q2 of last year. The following factors accounted for the bulk of this increase.

First, operating for Q2 of this year included a $900,000 provision for overachievement bonus purposes. We took this step and it now appears that we will exceed our adjusted EBITDA target for 2015 and this will likely be payable based on our 2015 bonus plan.

Second, workforce-related expenses were also $400,000 higher than Q2 of last year, primarily due to servicing our much larger Ting Mobile subscriber base. Third, our marketing spend increased by $200,000, largely as our efforts to acquire Ting Mobile subscribers. Fourth, credit card processing fees, facility costs, and supplies increased by $200,000 when compared to Q2 last year, primarily to support the growth of Ting Mobile.

And, finally, as a global company, we are impacted by foreign exchange resulting from the valuation and settlement of our forward contracts, as well as the impact of the revaluation of our non-US-dollar-designated assets and liabilities.

As we describe in more detail in our 10-Q, the net impact of foreign exchange for the second quarter, when compared to the second quarter of last year, resulted in our recognizing an additional net loss of $100,000. These increases were partially offset as our impairment of indefinite-life intangible assets charged in the second quarter this year was $289,000 lower than in the second quarter of last year.

In the second quarter of last year, during our normal renewal process, it was determined that certain domain names we acquired in the June 2006 acquisition of Mailbank should not be renewed and were allowed to expire. In addition, amortization costs were $167,000 lower in Q2 of last year as a result of the acquisition of IYD being fully amortized last year.

As a percentage of revenue, total operating expenses were unchanged from Q2 of last year at 21%. Net income for the second quarter of 2015 increased to $2.3 million, or $0.21 per share, from $1.3 million, or $0.12 per share, for the same period of last year.

Turning to the balance sheet, cash and cash equivalents at the end of the second quarter of this year increased by $1.6 million to $15.3 million, when compared to the second -- to the end of the first quarter of this year. During the quarter, we generated $2.2 million in cash from operating activities, as well as $300,000 from the exercise of stock options. These sources of funds were partially offset by our using $490,000 to repurchase shares under our ongoing share buyback program and our investment of $1.1 million in property and equipment.

Included in these additions to property and equipment is an amount of $800,000 that we invested during the quarter, primarily in expanding our fiber footprint under the Ting Internet buildout in Charlottesville. Deferred revenue at the end of the second quarter was $74.3 million, up 1% from $73.6 million at the end of the second quarter last year and up $1.3 million from $[73.3] million at the end of the first quarter of this year.

With that, I would now like to turn the call back to Elliot.

Thanks, Mike. I want to take this opportunity to set the stage for how investors should start to think about Ting Internet over the longer term.

Fixed Internet access is not a get-rich-quick business. It is a get-rich-slow-and-for-a-long-time business. As I discussed earlier, we are currently in two markets, Charlottesville and Westminster. What we have been doing in these two markets is primarily testing out our core hypotheses.

Are build costs in line with our assumptions? Are take-up rates in line with our assumptions? Are we able to handle home installs in a way that is satisfactory to us? Are we able to provide the core back-office systems in a way that is satisfactory?

Think of 2015 as us getting a sense of whether we should be in this business for the long term. At this point we are both comfortable and excited that the answer is yes. We are now working through the pipeline of new cities and towns for 2016. We would guess that we will be in five or six new markets next year.

The question I get asked frequently is how we determine which markets to go into. We have a number of criteria, a lot of which many of you have seen publicly as published by Google in their Google fiber initiative. A lot of these criteria are around things that you would expect, like population density and demographics. Others are more specific to us, like finding the right market sizes, both on the low and high end, and finding the right mix of homes, businesses, and multi-dwelling units, or MDUs.

We view 2016 as the year in which we learn how to best select markets. Accordingly, some of our choices may be in the nature of experiments and that experimentation will take place, again, around some of our core assumptions. At this point we are quite comfortable that Ting Internet has real, material, long-term upside potential and, importantly, well-bounded downside risk.

We are also getting more comfortable with some of our core operating assumptions. Ting Internet, unlike Ting Mobile, is a very local business, and as a result, these assumptions will have significant variability market to market. That said, at this point we are benchmarking the cost of building and connecting a home at roughly $2,500 and the gross margin from connecting a home to be roughly $1,000 per year.

Those benchmarks assume a 20% take-up rate in the first year and a 50% take-up rate over five years, consistent with what a number of fiber-to-home initiatives are currently seeing. And these also assume the existence of a Ting TV service, which we do continue to hope to be in market with by the end of this year or the first couple quarters of next year.

In addition, when looking at the pipeline for 2016, it is our guess that the majority of deals we do will be deploying our own capital, while the rest will be public-private partnerships or public open access networks. Finally, while we do expect to start to deploy serious capital in 2016, we don't think we will begin to come close to a level of capital deployment where we need to materially look at our sources of capital or our strategy around returning capital to shareholders.

We are now through half of the year. We have clearly had e a strong first half and now feel it appropriate to increase guidance for 2015 from $20 million in EBITDA to $25 million in EBITDA. This is a strong performance and one that bodes well for the future.

In many ways, the current performance reminds me of 2012-2013, when we were investing in Ting Mobile. We were able to continue to grow the business, while investing in and launching a completely new revenue stream, in a way that made the investment seem invisible and painless to investors. Right now, for the next bit, we were investing in Ting Internet, and much like last time, the investors who recognize this are likely to be well rewarded.

With that I would like to open the call to questions. Operator?

(Operator Instructions) Hubert Mak, Cormark Securities.

On the Ting Mobile business, you called out that you started out (inaudible) from Sprint and it looks like you had some return to normalcy in the quarter. Can you just, based on what you are seeing now, can you extrapolate what kind of run rate you think net adds are going to be for Q3 and Q4? Because you had 10,000 this quarter and two-thirds of it was -- you didn't have sales and marketing, so can you give us a little bit better guidance on this?

I think that right now Q3 probably looks similar to, in the range of Q2. Q4 is always a funny one because it's got the Christmas season in it. I think that you are going to see us -- we are dealing with still changes in the way we have had to do business that have caused the customer service performance to not be what it was.

So, yes, there was a chunk of Q2 where we weren't marketing and, yes, we've started to turn it back on, but if you gave me a choice between no marketing and customer service where we want it to be or full marketing and customer service performing at a mediocre level, I will take the former over the latter. Ting is very, very driven by the customer experience and so we're pretty heads-down around that. And I think until we see that come clean, we are not trying to push too hard.

Okay, so I want to be clear. So the sales and marketing is back I guess to where you were before?

Yes, roughly.

Okay. And then the service level, you obviously have the capacity right now, so you are also at 100% right now?

What I am saying is that hold times are too long. The customer service experience is not what we want it to be and we think that impacts conversion and referrals. So we think that's still a drag.

And that's primarily because the changes that we have had to make -- so both in the changes in the Sprint supply chain and new policies and the introduction of GSM have changed our customer service ratios. We've had to internalize a lot more of the supply chain and it has just changed --. When I say customer service ratios, the amount of customer service we have to put into conversion, which is one thing we look at, relative to the number of customers; is another thing we look at. So those ratios have fundamentally changed and we have to catch up to them.

Okay. And then can you sort of comment on the GSM impact, whether --? Are you seeing any traction on that side and do you still see a potential pent-up coming?

I don't know about pent-up. We certainly are signing up a lot of people on the GSM side. We're making a conscious decision not to provide breakouts between the two services, but I am comfortable saying that GS -- a lot of people taking it out.

Okay. And this question might be for Mike, but are you able to provide as to what the contribution was from the revenue side for Blue Ridge?

We haven't started breaking out any of those numbers as yet. What I can tell you is, just to reiterate what Elliot has said, we do not believe that the Internet side will have a material impact one way or another on our results for 2015.

Not a lot of the top line, Hubert. When I say that, it has done what it should do in the quarter, but it is not a big business.

Okay. And then perhaps related to that, as I look for the cost, operating expense this year, obviously just a little bump up here. My guess is you got the full contribution of Blue Ridge, so can you maybe just talk about the cost structure, like whether this is a good base level? And then how do we see this panning out for the rest of the year given that, as you just talked about, that your service level on Ting is not where you want it as well as your investment going into fixed Internet?

Sure. We're going to be investing a little, certainly through the next couple quarters and going forward, but I want to be clear around level of investment. One of the things we used to talk about, one of those metrics we used to consistently put out is that we would spend less than $0.50 of every incremental gross margin dollar on operating expenses.

That's still -- we don't talk about that on the calls anymore. We haven't talked about that probably in a few years, but you are still seeing leverage in the business. So we're going to take some of the margin expansion, both at a gross and net level that you are seeing, and we're going to sort of healthily add capacity to a business that growing.

So I think you will continue to see slight increases in those OpEx levels through the second half of the year and it will consistently be south of that $0.50 threshold, or 50% threshold, that we used to talk about. In other words, you are going to continue -- you should continue to see increasing both net and gross margin.

Okay. And then a quick one here on the tax rate. It was a little bit -- looks like it has increased a bit here this quarter, so can you give us an idea where you think the tax rate is going to be for the rest of the year or next year?

Sure. The reason for the increase in the tax rate is simple, Ting is -- obviously operates in the US and we now have US state taxes to pay. That's the reason why the tax rate is going up and the tax rate -- I would anticipate the tax rate will stay in the 36% range, certainly for the balance of this year.

Okay. Then lastly, as you guided an increase in your guidance here, what is the assumption around the fixed Internet? Am I correct in assuming that that's breakeven? I think that is what you've talked to before.

No, no, I think you're seeing a little bit of an investment there. That whole reference there, we are investing in that business. It is a place where we are building out a whole new set of competencies, so we are investing in that business.

Okay. So the assumption is that it will be initial losses as you --?

Yes. Again, that is why I was drawing the reference to mobile, where we invested in that business. We didn't really break that out until we were probably six or eight quarters in and then we started to give you a little visibility as that stuff settles down. You will probably see a similar sort of story and bit of disclosure here, but we are investing in that business. So that $25 million number subsumes that investment [so it's] payment.

Okay, great. Thanks.

Pete Lanctot, Goudy Park Capital.

Congrats on a great quarter. Really great work. Can you guys give a little color on what net adds from T-Mobile were in the quarter and maybe how you expect that relationship to ramp in the coming years?

Again, we don't want to break out the splits between the two. I think we are satisfied or comfortable. GSM is now just a solid part of the business. We -- if you go through our purchase path, you will see that we really let the choice of the phone that you have in your hands drive, in a lot of respects, which network you end up on. Over time, we may start to have geography figure into some of that as us, with our customers' help, get smarter around particular markets.

You guys are in Chicago, which does have a particular profile; for instance, one network versus the other. So I think that you will see that continue to evolve.

We are not seeing -- when you are talking about the relationship -- and I don't know if this is what you are referring to, but it's certainly what brings to mind for me -- we are not yet seeing from our partners, for instance, from either of our partners, a willingness to let us do some of the things that Google is doing, for instance. But we will keep pushing. I don't know if that is the way you were thinking or if there was another direction there.

Right, right, that is sort of what were getting at. And then just quickly, I know you mentioned that these were broadly the same in the quarter, but I'm curious in terms of trend. Are you seeing any changes in the cost to acquire a customer or in churn?

The short answer is no. Stuff is staying in line. We are always trying new things on the customer acquisition side, so we've got a few things we are playing with. Hopefully, they will be ripe enough that I will be sharing some of them with you next quarter. Well, hopefully, they will not only be ripe enough, but will have actually worked a little bit and I will be sharing them with you next quarter. But we are not seeing any material changes there.

I would qualify that just one little bit, where in Q2 where we run a promotion like we did with our boost to the referral program, which was for a very time-boxed, limited period, you do see a little bit of an uptick there. But that's very much by choice and in a bound time period.

Got it. Thanks again and congrats on a terrific quarter.

(Operator Instructions) [Patrick Retzer, Retzer Capital].

Great job on another quarter. So just to make sure I understood what you have already said, it appears as though even though the Internet business, the fiber business, will take some capital, you still intend to continue to be able to buy back stock on some sort of schedule?

That's right. So two things there. One, we continue to see value and there's no change in our view that returning capital is strategic. Also, no change that every quarter we make a decision as to what tactics we might use, so that's open market versus Dutch and that's what amounts and what prices. It's business as usual in that regard for us.

The second thing that I always want to reiterate around that, and, by the way, around most other fundamental either operating variables or principles, is we're going to give clear heads up if we do change that.

Okay. So by the end of 2016 I believe you inasmuch said that you will be perhaps in as many as seven to eight markets for fiber total (multiple speakers)?

Yes, that's right.

Okay. So is it appropriate to look at fiber markets as Google sort of primed the market by getting a bunch of cities all excited, educated, revved up on getting fiber laid and then several of them didn't make Google's Final Cut so there's a ready market, a ready and anxious market perhaps, of cities that are anxious to get fiber in their town?

Yes, we have spoken to a couple cities who have had exactly that experience, where they mobilized at a city level around the Google Fiber initiative and where they then, subsequently, didn't get chosen.

I think that one of the things that fundamentally separates us from Google is that we are willing to work with cities in a number of different ways across a number of different models. Cities like that. They like to be able to be able to consider a public-private partnership.

But I can tell you the cities that have gotten excited for Google and that we have subsequently spoken to, they have been well primed and the discussions tend to be a little bit smoother. One other thing that I would note there is we do -- we are very comfortable looking -- as you can see by our first couple markets and I think you will see going forward, we are very comfortable looking at smaller markets than Google is. We think there are potentially some very interesting opportunities in smaller towns and cities.

And when I talked earlier about testing some core assumptions and experimentation, I think one of the things you will see us experiment with is a bit of how small can we do feasibly. Because if you can do that -- if we can take on small bites profitably, that's just a fantastic opportunity, both from a competitive standpoint and from a number of opportunities standpoint.

So based on that it sounds like we shouldn't be thinking of Charlottesville and Westminster as just sort of test markets, let's see if this works. These are situations you got into with legitimate profit-making goals.

Oh, yes, very comfortably. I think that the right way to look at these businesses; the way that we think about them internally is they are nice, profitable small businesses each in and of themselves. So if we can pull $1 million, $2 million, $3 million, $4 million in EBITDA a year out of a market, we think that's fantastic; fantastic relative to the investments, relative to the effort.

And the financial models look really pretty. Now obviously those numbers -- when I am down at that very low end I'm thinking of some of those small population markets. But I think you will see Charlottesville and Westminster maybe in the slightly lower, but maybe even in the sweet spot of our population size, and each of those markets will be profitable on their own.

Okay. And at the same time, perhaps some of these Google candidates that were left at the altar, so to speak, those would be much larger opportunities?

Some. But Google didn't have strict limitations on who applied, so I mentioned we had spoken to a couple Google fiber cities. One of them was in our sweet spot around population. The other was a bit bigger.

Okay. But at any rate, it looks like the pipeline has -- it sounds like you guys, to a degree, are kind of drinking out of a firehose here.

Yes, I think our limiting factor is not cities that want to work with us and have us come in and build fiber or built fiber themselves and partner with us. Our limiting factor is we want to continue to crawl, walk, run. As we do with everything we do, we expect to be excellent at it and this business is a complicated business.

So that feels like the right size of ramp and, in addition, the right amount of capital to deploy as we are starting to put some bones onto what 2016 might look like. We don't want to go from our current level of capital deployment and just all of a sudden start spending like crazy. We want to do this in a measured way and one of the things we are very attentive to is that downside risk.

I think that, even with moderate take-up rates, what would be relative to existing of implementations, low take-up rates, you can still grind your money out in these markets. So that's something that is very important to us because, as you know, we pride ourselves around capital allocation and a return on equity.

Okay. Well, I would just like to compliment you and your team on your vision. I mean Ting Mobile; I think the timing was absolutely stellar. And especially what is happening this week around some of the traditional cable and media companies, it looks like your timing of the fiber is equally stupendous. So congratulations and thank you.

Thank very much for that, Pat. That's sweet, thanks.

There are no further questions in queue at this time. Mr. Noss, I will turn the call back over to you for any closing remarks.

Thank you, everyone, for joining us and we look forward to speaking with you next quarter. Thanks, operator.

Ladies and gentlemen, this does conclude today's conference call. Thank you for joining us. You may now disconnect.