Teads Holding Co (TEAD) 2025 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Teads second-quarter 2025 earnings conference call. As a reminder, this conference is being recorded.

I would like to turn the call over to Teads Investor Relations. Please go ahead.

Good morning, and thank you for joining us on today's conference call to discuss Teads second quarter 2025 results. Joining me on the call today, we have David Kostman and Jason Kiviat, the CEO and CFO of Teads.

During this conference call, management will make forward-looking statements based on current expectations and assumptions including statements regarding our business outlook and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. These risk factors are discussed in detail in our Form 10-K filed for the year-ended December 31, 2024, as updated in our subsequent reports filed with the Securities and Exchange Commission.

Forward-looking statements speak only as of the call's original date, and we do not undertake any duty to update any such statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's second-quarter earnings release for definitional information and reconciliations of non-GAAP measures to the comparable GAAP financial measures. Our earnings release can be found on our IR website, investors.teads.com, under News and Events.

With that, let me turn the call over to David.

Thank you, Maria. Good morning, everyone. Thank you for joining us as we report on our first full quarter as a combined company. Before diving into the details, I want to make a few points. We have continued to see excellent customer response from advertisers, agencies and media owners globally to the new Teads value proposition, a true end-to-end platform delivering outcomes across branding and performance.

In Q2, we grew EBITDA sequentially in a meaningful way, generating strong cash flow. At the same time, we are experiencing a slower pace in the return to growth than we had anticipated post-merger, mostly attributed to organizational issues we identified during the quarter.

We are executing on the integration decisively, making critical organizational changes that we believe positions us for success in the second half of the year and beyond. I will elaborate on each of these points.

Turning to the quarter. On the financial front, we delivered results within our guidance, so positive sequential progress and a deceleration in the year-over-year decline rates. As it relates to the post-merger integration, we successfully launched the new TIs brand and value proposition globally.

Organizationally, our initial focus was on allowing the merged teams to settle in, creating alignment and clarity on roles and responsibilities. However, several learnings from the first few months resulted in us identifying necessary structural changes to improve the effectiveness of the sales organization.

We've taken those lessons, which are not uncommon when you merge companies of similar size, responded quickly and accelerated some key changes.

In early July, we consolidated our European business under a new Managing Director, Alex Savage, who ran the legacy Teads Central European and LatAm businesses to drive better operations and effectiveness in our key markets.

We restructured the US sales leadership, ensuring a focused mandate for the US team, our largest market, removing decision-making bottlenecks, enabling the team to focus on the customers and instilling a stronger operational rigor and focus on business KPIs. We created a global CRO forum led by me that includes all our regional leads, our strategic account group, global agencies and our brand direct response.

Jeremy Arditi our Co-President, continues to steer global strategy agencies, partnerships and corporate development, while Bertrand Quesada, our Co-President, drives regional leadership across Europe and JPAC.

We also refined our go-to-market sales approach, including changes in packaging and pricing and in our cross-sell strategy, simplifying the narrative and pitch of our sales teams. We expect that the combination of these changes will lead to improved execution in the second half of the year and into 2026.

We are equally focused on maintaining financial discipline. On cost synergies, we remain on track to deliver $40 million in cost savings for 2025, with a full year run rate savings of $60 million expected in 2026. We remain confident in our ability to deliver positive free cash flow for the full year and recently took the step of repurchasing a portion of our outstanding debt, reinforcing our commitment to efficient capital allocation.

Let me turn to the business, starting with the demand side. The US market continues to be the main headwind on our business with a year-over-year decline of more than 20%. We are now seeing early signs of positive impact from some of the changes I highlighted.

We continue to see strong growth in our CTV business with 80% year-over-year growth in Q2 on a pro forma basis. We believe that the completion of the integration of our combined home screen offerings across OEMs into Teads Ad Manager, allowing for a much more efficient workflow for our customers will further support growth in this business.

We are also continuing to grow our CTV inventory, especially across the home screens of premium OEMs like Samsung, LG, and Hisense, which we believe is a reflection of our trusted brand relationships and creative capabilities. We are also growing with other premium supply partners, including HBO Max, Paramount, and others.

In addition, we are continuing to further diversify our supply as part of our omnichannel strategy. On the retail media front, we announced our first partnership to activate performance campaigns on retail sites to Pentaleap. We aim to grow our presence in retail media and leveraging brand advertiser relationships into performance use cases, specifically product sales.

On the strategic account front, we signed new joint business partnerships with several top global brands, including Kia and Zalando, underscoring confidence in our integrated offering. We're seeing initial success in cross-selling performance products to legacy Teads clients. Example includes Lowe's, Citran, AB InBev, Nestle, and others.

And in our Outbrain direct response business, which is focused on affiliates and other pure performance advertiser categories, we launched our Amplify AI-based MCP server that allows AI agents to connect natively to the Amplify platform. This innovation streamlines integration and workflows for performance marketers, allowing us to deliver greater efficiency and measurable results. An early adopter has called the product a revolution of campaign management and a mandatory tool for anyone serious about native performance advertising.

Also, as has been the case for several years, legacy Outbrain supply outside of our traditional feed continued to grow to over 34% in Q2, enabling performance advertisers to reach consumers with a range of placements across the entirety of the open Internet, including display placements, banners and others. We continue to expand this type of supply, specifically for our direct response performance buyers.

On the supply side, we saw some decline in our traffic volumes driven by two main factors. First, we made a deliberate and aggressive reduction in publishers and properties that don't meet our elevated quality standards post-merger, removing over 200 publishers in the last few months.

This cleanup led to a roughly 5% year-over-year reduction of legacy Outbrain revenues. And while it creates near-term pressure on revenues, we believe it strengthens our marketplace long term by ensuring our supply drives positive outcomes for advertisers on quality placements.

Second, we saw a modest decline in traffic from premium publishers, largely due to reductions in search-driven visits. As this is an area generating many questions, let me clarify. Notably, even with some pressure on page views, we saw our seventh consecutive quarter of RPM growth on the Outbrain legacy platform, which largely offset the decline in page views and is a testament to our improving monetization per page and per session.

It is important to note that search traffic accounts for around 7% of legacy Outbrain page views and even a much smaller portion across our full network when you take into account legacy Teads and CTV impressions.

Another point is that the impact of AI overviews or AI summarization is more pronounced by a factor of 2x on evergreen content than on current events content such as news, sports, entertainment and finance, where our inventory is the strongest.

Also, AI prompts such as ChatGPT are a growing traffic source and drive a higher rate of page views than before based on users clicking on the disclosure of sources for topics they are most interested in. We are in active discussions with companies in the ecosystem about opportunities to monetize such AI-based results.

Moving to the product and technology side. We are accelerating investment in our next-generation advertising platform, Teads Ad Manager. We expect that the next generation of our platform will be built leveraging Agentic AI modules, delivering increased efficiencies for agencies and effectiveness for advertisers with a focus on providing control, transparency, and modularity. We expect to launch this new platform in H1 2026. More on that in our upcoming quarters.

In Q2, we launched new offerings that align with our core differentiation. We introduced connected adds in beta, a distinctive format that allows a single brand to occupy both mid-article and end-of-article placement, demonstrating the potential of brand formats. Early interest signals real potential for scale, and we are already testing it with several advertisers.

We've seen overall growth in our vertical experiences across publishers. Our vertical video solutions, which includes immersive feeds, the legacy Moments product, is gaining traction with both advertisers and publishers and is live on over 70 premium publishers with early adoption by brands, including Luxottica, James Smucker Company and others.

On the CTV front, we also launched new nonstandard formats for in-play advertising. These include L-shape, POS ads and others. We're also in the initial stages of driving performance campaigns on CTV with the initial focus being on delivering incremental traffic to advertiser properties by retargeting web users on the CTV screens, leveraging the Ted's omnichannel household graph.

In closing, we remain confident in the strategic rationale behind this merger to build the go-to platform for advertisers seeking scaled, high-quality performance on the open Internet for all their campaign objectives. We are continuing to invest in growth areas. We are not fully satisfied with our financial performance in Q2 and how we are guiding for Q3.

But when we look at the medium term, we believe that we will continue to provide incremental value to our advertisers, leveraging AI, our unique product capabilities and access to the most premium media of the world through an end-to-end platform.

We have made some organizational decisions that we expect to lead to market share gains, growth and stronger yields and profitability. While Q3 may still reflect some of the transitional effect of the merger, including our reorg and realignment, we expect to see clear momentum building into Q4. I'm tracking the leading indicators closely and look forward to updating you on our progress on our next call.

Now I'll turn it over to Jason for a more detailed financial update. Thanks, David. As David mentioned, we achieved our Q2 guidance for Ex-TAC gross profit and adjusted EBITDA in our first full quarter since completing the acquisition of Tease in February.

Revenue in Q2 was approximately $343 million, reflecting an increase of 60% year over year on an as-reported basis, driven primarily by the impact of the acquisition. On a pro forma basis, we saw a similar year-over-year decline percentage in Q2 as we reported in Q1.

While we saw momentum early in the quarter, the summer months have proved more challenging. In June, we experienced several headwinds that decelerated our revenue trends. One, a lower rate of conversion from our sales pipeline, particularly in key countries, US, UK, and France that we attribute largely to operational issues, as David discussed.

Two, some softness in a couple of our key verticals, particularly consumer goods, automotive and luxury goods, primarily driven by tariff-related uncertainty and softer demand in certain geographies. And three, the short-term residual impact from our cleanup of underperforming supply partners, which drove the majority of the decline in page views we experienced and was a headwind on revenue.

Despite this, we still experienced positive year-over-year growth in ex-TAC from the legacy Outbrain business as we continue to drive higher RPMs through improved algorithms, optimization and improving performance for advertisers, which helped lead to higher average CPCs. Ex-TAC gross profit in the quarter was $144 million, an increase of 158% year over year on an as-reported basis, driven primarily by the impact of the acquisition.

Note that ex-TAC gross profit growth is outpacing revenue growth, which is driven primarily by a net favorable change in our revenue mix resulting from the acquisition, additionally aided by the continuation of improved revenue mix and RPM growth from the legacy Outbrain business.

Other cost of sales and operating expenses increased year over year, predominantly driven by the impact of the acquisition as well as several related onetime expenses. In the quarter, we recognized $5 million of acquisition and integration-related costs as well as $2 million of restructuring charges.

Also note that we recorded a benefit from deal-related cost synergies in Q2 of approximately $13 million, which we expect to extend throughout H2 as we continue to capture savings across both compensation and non-compensation areas.

We continue to expect total cost synergy savings to amount to approximately $40 million for the year and maintain our expectation of $60 million for 2026. Overall, we're focused on our integration and plan to remain disciplined on costs and cash flow generation while taking steps to drive top line growth. Adjusted EBITDA for Q2 was $27 million, which on an as-reported basis, represents an increase of nearly 2.5x as compared with Q1.

Moving to liquidity. Free cash flow, which, as a reminder, we define as cash from operating activities less CapEx and capitalized software costs was $19 million in the quarter. This includes cash outflows related to transaction costs, which, when excluded, result in adjusted free cash flow of $22 million.

During the quarter, we used $8 million of cash to repurchase $9.3 million principal amount of long-term debt at a discount of approximately 17% as the debt is trading at a considerable discount to par value. As we continue to expect to generate positive cash flow this year and beyond, we view the opportunity to use excess cash on hand as an accretive capital allocation opportunity. We will continue to consider repurchases in the future.

As a result, we ended the quarter with $166 million of cash, cash equivalents, and investments in marketable securities on the balance sheet. We continue to have EUR15 million or about $17.5 million in overdraft borrowings classified in our balance sheet as short-term debt. and we have $628 million in principal amount of long-term debt at a 10% coupon due in 2030.

The long-term debt is carried on our balance sheet net of discount and deferred financing fees and has a balance of $603 million as of June 30, resulting in a net debt balance of $454 million as compared with $471 million from March 31. In these first 150 days, I'm very proud of what we've accomplished in terms of integration decisions we've made and how quickly we've adapted as a combined management team to our learnings.

All of our integration decisions take into consideration our long-term goals and vision. This process is challenging as we melt two complementary but distinct businesses and strive to quickly execute a high-performing, efficient go-to-market strategy.

In the short term, we have felt a slower-than-anticipated return to growth, which we believe is predominantly a matter of timing. The delays in our return to growth have a sizable impact to our adjusted EBITDA in the short term as most of our expenses are fixed costs.

With that context, we provided the following guidance. For Q3, we expect ex-TAC gross profit of $133 million to $143 million, and we expect adjusted EBITDA of $21 million to $29 million. Considering the fact that Q4 is our most significant quarter of the year, historically contributing nearly 50% of annual adjusted EBITDA for the pro forma business and the unusually wide range of outcomes we currently see for Q4 due to the uncertainty of how quickly the steps we've taken will impact revenue trends, we have made the decision not to reaffirm adjusted EBITDA guidance for the full year 2025.

However, we still expect to generate positive free cash flow this year and are very confident the steps we are taking will drive improvement to the results starting in Q4 and into 2026.

Now I'll turn it back to the operator for Q&A.

(Operator Instructions) Laura Martin, Needham.

Hi. Thank you. I'll just ask two. Just following up on that last comment, Jason, around debt. So you're buying in debt at a 17% discount, which sounds a good deal, but you only spent $8 million, but your free cash flow was $19 million. Is there -- and you have so much cash on the books. Is there some -- like why the restriction?

Why not spend like all your free cash flow on buying in debt since you have so much cash on the books? Just curious as to how you size how much debt you buy in, in a single quarter. It seems like a good idea.

And then second, for David, for you, I wanted to -- I wanted to drill down a little bit on this negative 20% US in the US, which is creating a headwind. How much of that is structural? Or we're going to have to go through four quarters of that? And how much do you think is just a one- or two-quarter dislocation that will not recur in future quarters? Thank you.

Hey, Laura, it's Jason. Thanks for the question. So on the debt, we used, as you said, $8 million, we do have a lot more cash than that. We used what we were comfortable with immediately in terms of excess cash. So our first interest payments on the debt is actually in a week or two.

So we're still in the process of integrating. We're moving cash around in the most efficient and effective way. But we totally are open to more in the future. As we do expect to generate cash flow this year and, of course, beyond, it's something that if we see it as an accretive use of capital, we'll continue to. For us, the $8 million is really the start of what we thought was excess cash available on the balance sheet at the time.

Laura, it's David. I'll take the second one. So as we said, I mean, we are not happy with exactly where we ended. But the good news is that these are all things within our control. They are organizational, structural rigorous sales processes.

We've made a lot of changes on that very quickly when we realized it. I can tell you that I'm tracking very closely leading indicators around pipeline, conversions, meetings, RFPs, and all of them are trending up in the US. So I'm pretty positive around how we're going to end up towards the end of the year. And I think, again, this is in our control, and I think we're changing -- we made the right changes to affect that.

Matt Condon, Citizens.

Thank you so much for taking my questions. My first one is just on -- it's good to see you guys reaffirm the $40 million in synergies in '25, the $65 million to $70 million in -- but can you just talk about if things don't materialize in the top line that you guys expect, what's your willingness to cut more out of expenses just to meet that free cash flow target for the end of the year?

Maybe I'll take that. So at the moment, we are really focused on growth, totally focused on back to growth, and we believe that the changes we've made will get us there. We always look at opportunities if we need to. Right now, we believe we have the right cost structure to get back to growth in the second half of the year. We are tracking it very closely.

So if we see something that changes, we will adjust and we've done it in the past. So we know how to do it. But right now, I think we decided deliberately to focus on back to growth.

Got it. And maybe just a follow-up on just the return to growth and the revamped go-to-market strategy. You specifically called out pricing and packaging. Can you maybe just elaborate just on specifically what you are doing and what's giving you confidence that everything can get back on track?

Sure. I mean, as an example, legacy Teads moved from being a single product company to a multiproduct company. I think there's a lot of opportunities to package better the omnichannel offering. So if you price, for example, something where you give a home screen placement, but you can package with it also in-stream and other online video. I just approaching this in a more structural way, more strategically around the portfolio, I think, is a big change, and we already see that working.

On top of that, we're now adding quite significant amount of cross-selling of performance to legacy customers and branding solutions to legacy Albrand customers, packaging those together, finding the ideal pricing for the combined offering is something that takes some time. I think right now, we are -- again, it's not perfect yet, but it's already really impacting the volume and the conversion rates and the win rates in our team.

Thank you so much.

Ygal Arounian, Citi.

Hey, guys. Good morning. So just on the transition challenges, I want to maybe tie some of these points together a little bit better. David, you talked about the advertiser response being really strong and being energized by it on the new combined product and we're down 20% in the US and seeing some of the challenges around the sales organization. It sounds like the majority of the challenges or maybe even all are around that. So can you just maybe bridge those two points first?

And then in what you're seeing in 4Q and pulling the guidance and the wide range of outcomes, you're talking about having -- or feeling like -- feel confident you fix these issues. So what gets you maybe to where you want to be in 4Q versus not in this wide range of outcomes that you see potentially in 4Q?

Hey, Ygal. Thanks. I think we met in kind. I mean, you could see there, I think the brand is well received. We had more than 300 meetings with top brands, top agencies really presenting and promoting the concept of branding and performance and the opportunities that we bring to the market by combining the two, for example, connected adds, just a great launch of a product that has a mid-article, end of article, one brand taking it and then being able to combine. So that is super positive.

I mean we have not had any issues around what's the meaning of the combination. Everyone wants to give it a chance, wants to potentially push more budgets there. Generally, people are looking to diversify from walled gardens and us being one of the largest players on the open Internet that can reach incremental audiences with great ROI across branding and performance is resonating very well.

Now in three markets, we're having really organizational operational issues that I highlighted, which is the US, UK, and France. Other markets, for example, in Europe have all been growing. So it means it really relates to management, operations, rigor and other things that we are addressing. I'm very confident because I see already -- I mean these things take time.

I'm confident because I see leading indicators that I referred to, like how much more coverage we have on RFPs, the win rates, the number of meetings, the conversion of the pipeline, the speed of the conversion of the pipeline.

So looking at all of these, I can tell you, we've seen already in July month-over-month growth in cross-selling of both performance capabilities, performance campaigns to legacy Teads clients and branding campaigns to legacy brand clients. I see more meetings. And I'm pretty encouraged by what I see.

And I think it's not great news how we performed and what we're guiding, but it is good news that it is -- I feel it's -- most of it is totally in our control and getting back market share is something that with better execution, we're highly confident we'll get there.

Okay. And I guess one of the -- you talked about the impact to traffic from Gen AI and AI overviews. -- this topic is probably top of mind more than any other single topic from investors. And you outlined you're seeing some impacts, but it's not the majority of your, I guess, revenue base isn't impacted directly from this. Can you just talk about the trends that you expect to see?

I think part of the concern is that as AI overviews continues to become a bigger part of search, this has a greater impact. Was the decision to move away from certain publishers related to the trends that you're seeing here at all? And then the commentary around trying to monetize the new Gen AI overview, I thought that was pretty interesting. I just want to hear a little bit more about your approach there.

Sure. So maybe I'll start with one thing that is specifically to us, which is this reduction in publishers. We have to elevate the quality of the supply. I think when we try to bring Teads legacy advertisers to supply, we just have to play in a different ball game than before. We made a conscious decision to reduce about 200 publishers that are a lot of page views, lower quality and about 5% of the revenue. So that's something that specifically is something we did.

Going back to the bigger topic, a, I mean, we are big believers in the open Internet generally. And people are spending more time on the open Internet. That includes obviously also CTV, which is on a run rate for us for about $100 million this year, growing 80% this quarter. We have unique offerings there. So I think diversifying on the -- in the open Internet from traditional publishers to CTV and to retail media things we're doing.

Specifically on traditional publishers, I think there's -- it's a mixed bag. So search, AI summaries have really had minimal impact on us until now. I'm taking it very, very seriously. And obviously, we're tracking it. But there's a few elements that play here.

One is the type of content, evergreen content is much more affected than current content, which is news, entertainment, sports, finance, and others. Publishers are really doing a lot to increase the engagement of users on their site, including incorporating ChatGPT type capabilities into the site and keeping the users more engaged, and that creates more interesting supply that we're helping them monetize and can help them monetize.

Generally, I think we have the premium publishers are doing a lot to improve experiences on the site, less density, better quality, which plays again in our favor here. So there's a lot going on. It's clearly -- I think -- I mean, we can't deny it is a risk on page views.

On the other hand, we've also shown continuously improvement in monetizing pages. So our RPM, which is what we get per page is increasing for the seventh consecutive quarter, and we see a really good pipeline in the algo to continue to do that. I'm giving here, Ygal, it's a mixed bag. We're tracking it. I think it is something that is impacting the industry, but the industry has always found a way to really do well.

And I'm confident that between what we can do with the publisher world, diversification, better monetization, I think it's going to be something that we go through and come out of it in a good place.

Great. Thank you so much, guys.

Ed Alter, Jefferies

Hey, everyone. Thanks for the question. Maybe just digging into these headwinds a little bit more. Where -- is this mostly been on the go-to-market strategy? Or is the product fit? Just to give a little more color on that would be greatly appreciated.

It's David. I think I said it's very much, I would say, operational, which again gives us the confidence that we can fix it. I think the product is great. The new go-to-market, which clarifies the branding packages, performance packages, the omnichannel is something that is starting to resonate, and we're leveraging this new go-to-market to get more business.

So we're very confident on the product, the strategy, the brand format combined offering, our premium advertiser base, we increased our joint business partnerships. We're working a bit more in the US on the programmatic side on certain type of deals. So I think it is things that are in our control. And I feel that we already turned the corner based on some of the numbers I see in July.

Great. And on the CTV opportunity, is -- would you say today, that's mostly on the home screen and then where that can go? Could you get in-screen placements? Or is home screen the main part of that strategy?

It's a combination of the two. I think the home screen is where we have really clearly unique differentiation. Many of these home screen placements today, we have exclusive access to. It's really a strong demonstration of unique creative capabilities and the quality of advertisers. LG, Samsung, Hisense they need to make sure that on the home screen, you have only the most premium advertisers of the world, and they're very selective even when we look at the legacy Teads advertiser base, they're still selective.

So that's a great differentiation, but a big part of the business is in stream. I think the other advantage that we have is now that all these CTV offerings have been integrated into Teads ad Manager, which is our platform. It makes it much easier for agencies to run campaigns on an omnichannel basis and dynamically allocate those campaigns. So that is, again, I think, a big tailwind for the growth in potential in CTV.

Great. Thanks.

Zach Cummins, B. Riley Securities.

Hi. This is Ethan Widell calling in for Zach Cummins. Thank you for taking my question. I think to start, just going forward, can you maybe speak a little bit to your capital allocation priorities maybe between debt paydown and other options and maybe what your strategy would be there?

Sure. I can take that, Ethan. Thanks for the question. We've said really since we closed the deal, our priority has been to obviously build back to growth here, focus on integration, synergy capture, and generate cash and using that cash to deleverage. Our target leverage ratio we've shared in the past is 1 to 1.25 times.

And honestly, I think the use of what I would consider our excess cash to start buying back some of the bond at a significant discount aligns with what we said in the past, and that continues to be our priority.

Got it. Thank you. And then looking at tariff uncertainty in the macro environment right now for -- throughout the rest of the year, I was wondering if you could just speak a little bit to your visibility looking at demand for the rest of the year.

Yeah, I think we feel very good about it. Obviously, what we're focused on are those leading KPIs, as David mentioned, I think in the prepared remarks and also in one of the questions, the number of meetings, the RFPs, the pipeline, the weighted pipeline, and we're monitoring it even closer than we were previously.

And I think we feel better about our visibility than we did, obviously, in the first maybe 100 days compared here to the second 100 days post-closing. So we feel good. We're monitoring it closely.

And as Dave said, we're assessing over the KPIs that drive the business and the rigor that goes into it. And I think that is reflected in a lot of the operational and organizational changes that we've made. So I feel good. And we also, I would just say, have a pretty diverse business where we did see softness in certain verticals or geos, there's an overlap there and none of our verticals are more than mid-single-digit percentage.

So where we have seen softness, we felt it in luxury goods or automotive, but it's been isolating, as David said, if you take out those three markets, take the other 50% or so of the legacy Teads business, it's grown year over year, right? And so we feel good about that regaining momentum that we really saw up until June when it flattened down a little bit.

I would just add, I mean, the geo diversity is very relevant here. We're about 30% in the Americas, 60% in EMEA, 10% being in JPAC. As Jason said, we don't have any major customer vertical concentration. We've seen some softness in certain geographies in beauty and Lux and others, but the portfolio is diversified enough. We don't see today any major macro negative impact other than, again, there's been some instability around the tariff announcement that I think we're over that at this point, and we don't see any big macro.

Understood. I appreciate all the color. Thanks.

Thank you. And at this time, we have no further questions. I would now like to turn the floor back over to David Kostman for any closing remarks.

Thank you very much. Thanks for joining us today, and I look forward to updating you on the development we see in our business. Thank you.

Thank you. This does conclude today's conference. We appreciate your attendance. You may disconnect your lines at this time, and have a wonderful day.