Voxeljet AG (VJET) 2017 Q2 法說會逐字稿

Greetings, and welcome to voxeljet AG Second Quarter Financial Results Conference Call. (Operator Instructions) I would now like to turn the conference over to your host, Johan Pesch. Thank you. You may begin.

Thank you, operator, and good morning, everyone. With me today are Dr. Ingo Ederer, voxeljet's Chief Executive Officer; and Rudi Franz, voxeljet's Chief Financial Officer. Yesterday, after the market closed, voxeljet issued a press release announcing its second quarter financial results for the period ended June 30, 2017. The release as well as the accompanying presentation for the conference call is available in the Investor Relations section of the company's website at voxeljet.com.

During our call, we may make certain forward-looking statements about company's performance. Such forward-looking statements are not guarantees for future performance and, therefore, one should not place undue reliance upon them. Forward-looking statements are also subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed. For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release as well as the risk factors contained in the company's filings with the Securities and Exchange Commission.

With that, I would now like to turn the call over to Ingo, Chief Executive Officer of voxeljet.

Thank you, Johan, and good morning, everyone. I want to thank everybody for joining us today. I would like to remind those who might be new to our company about voxeljet's core business model shown on Slide 4. In our Systems segment, we manufacture and sell industrial-grade, high-speed, large-format 3D printing systems, geared towards mass production of complex models and modes.

In our Services segment, we operate such systems and several facilities around the world to offer affordable, on-demand access to our technology. This proprietary technology is reshaping the way things are made and is truly disruptive to the traditional methods of manufacturing.

Slide 5 highlights our operational footprint. We are a truly globally acting company. Overall, I am pleased with our performance. Our gross profit and gross profit margin increased sequentially from the first quarter of 2016 to the first quarter of 2017 and the second quarter of 2017. To put this into perspective, absolute gross profit increased 68%, from EUR 1.25 million in the fourth quarter of 2016 to EUR 2.1 million in the second quarter of 2017. Regarding our Services segment, revenues for the first half of 2017 increased 19% compared to the same period in 2016. Regarding our Systems segment, it's important to note that revenue recognition for VX1000 printing system slipped into the next quarter and we'll go into more details in the next minute.

We are working in a highly dynamic environment with huge opportunities in front of us. A few weeks here or there can appear to have dramatic changes. But that is simply because of the arbitrary nature of when a quarter ends and when revenue can be recognized.

From a big picture point of view, we are executing well on our key goals of increasing awareness and adoption of our solutions more effectively, targeting companies with 1,000 or more employees with larger company and lifetime values. For example, we expect to deliver full production solutions to such clients in the future. I will go into more details in the coming section. Our sales front looks pretty impressive and our colleagues all around the world are working hard to turn these prospects into orders. Our approach will remain focused around the work that we can win at margins that represent the value that we deliver.

Let's start with the formal part of the presentation. I am going to begin by providing some highlights from the second quarter and then spend some time discussing our portfolio of advanced technology. Rudi will then provide a more in-depth view of our financials and our outlook for the third quarter of 2017. Following his comments, we will be happy to take your questions.

Let's turn to Slide 6 of the presentation and begin with the highlights of the second quarter 2017. Revenue for the quarter was EUR 5.2 million, which represents an 18% decrease compared to last year's second quarter. Revenues from our Systems segment, which includes revenues from selling 3D printers, consumables and spare parts as well as maintenance, decreased 33%, EUR 2.5 million in the second quarter of 2017 from EUR 3.8 million in last year's second quarter.

We delivered 3 new printers compared to 3 new and 3 refurbished printers in last year's second quarter. As figures from this do not necessarily paint the true picture, I would like to add a bit of color here and share some additional insights with you. We are proud to say that in early May this year, we have successfully inaugurated our first PMMA-based system in India. The customer is a leading investment company in the northern part of India and is producing very complex investment castings in a wide range of materials specifications. This applies to the products globally. This particular deal was designed as a rental agreement, with revenue being recognized on a monthly basis. As such, the impact on quarterly Systems revenues is limited. The foundry industry in India is traditional in its approach and operations, but things are changing rapidly with the paradigm shift towards new technology. With the worldwide proliferation of 3D printing technologies, the foundries in India continue to increase their interest in voxeljet's unique product portfolio. We certainly expect this trend to continue and to sell an increasing number of printing systems in India. Another point I would like to make as you heard me talking in previous calls, we continue to research new and advanced materials and components with a higher knowledge content, new functionalities and improved performance. One specific example for these advanced materials is ceramic applications. Printed ceramic components can provide considerable benefits, like freedom of design, over conventionally made ceramics and can be used, for example, as [floater] or catalyst carrier in the chemicals industry. Many intermediate and end products in the chemicals industry can only be produced with the help of catalysts. We are in the final stages of successfully qualifying of our VX1000 printing system to run with specific ceramic materials. This is a joint development project with a market-leading company based in Europe. The engineering team of this customer was here in Friedberg a couple of weeks ago, and it's fair to say that they were quite impressed. We did expect to book revenue for 1 VX1000 linked to this project in the second quarter of this year, however, as it can happen in complex development projects, it experienced some unexpected delays, which meant that revenue recognition slipped into the next quarter. We are quite optimistic that this successful development of this printing system can increase our sales in the future and this customer has the potential need for marketable systems to support its manufacturing operations.

In China, one of our largest systems was delivered to a huge and leading research institute. We expect them to be a great market to cater for our ongoing expansion in China. As of now, we have a systems backlog of roughly EUR 5.1 million. This compares to a backlog of EUR 4.3 million at the end of last quarter, which represents an increase of roughly 19%. I would like to highlight that we managed to achieve much better gross margins of 36% in our Systems segment compared to 29% in last year's second quarter, which means we are heading in the right way.

Revenues from our Services segment, which focuses on the printing of on-demand calls for our customers, increased 5% to EUR 2.6 million in the second quarter 2017 from EUR 2.5 million from the same quarter last year.

Slide 7 summarizes the results. I want to highlight 2 points. First, looking at the breakdown by geography, our revenues in the U.S. increased by 352 basis points in the second quarter of 2017 compared to last year's period. This was offset by a decline in Asia. Please keep in mind, this was to a large extent driven by printer sales in the respective regions and therefore quite volatile. Going forward, our global footprint will further increase stability by balancing revenue streams, provide new opportunities for growth and ultimately help us attain sustainable success. Second, looking at operating expenses, other operating expenses are largely related to changes in the valuation of intercompany loans granted to our subsidiaries in the U.K. and the U.S. Regarding research and development, we saw an increase of 225 basis points to 27% of sales. Let me add a couple of things inside here. To stay ahead of the curve, we followed this strategic decision, which remains unchanged since our IPO in 2013.

To add new technology and capability to further strengthen our solutions portfolio, highlighted on Slide 8. These investments in core growth areas include the addition of more advanced and higher knowledge materials by high-speed sintering, ceramics, inorganics and phenolics-based applications. In addition to that, as we go more and more into production, the conversation with our customers is no longer focused around the pricing of our products but rather about the total cost of ownership. Consequently, we continue to invest a significant part of our development expenses into further improving the reliability and performance of our systems. The conducted trust feasibility studies and the increase in possible printhead performance is absolutely amazing. But to be clear, it takes time from something working in a lapse to working at moderate production levels, to working at higher production levels to optimize cost.

Although we are working on the setup of the modular printing farms, which feature first layers of automation, we then plan to bring this one step further by fully automating subsequent processes in uptaking and finishing. I cannot go too much into details, but we are working with global-acting market-building companies, let me tell you that.

All of these activities are centered around our core strengths, summarized on Slide 9, and are strongly aligned with the growing trend for high performance products across all of our end-use markets, summarized on Slide 10. Our printing systems are modular, versatile and highly scalable and, therefore, uniquely positioned to support critical demanding applications and address the challenges that are most important to our company.

This brings me to Slide 11 and our growth strategy, which remains unchanged. Innovation fuels growth. We have significantly invested in innovation over the past 3 years and we expect to start beginning to see the outsized return that can be generated through incremental investments. We are in the best position to drive growth against the biggest opportunities, summarized in Slide 12 and Slide 13. I've given you some examples of these opportunities in my opening statement.

Turning to Slide 14 and sales execution. We continue to improve the performance of our sales teams around the growth and investing in sales leadership, additional sales representatives and training. In addition to that, we focus on educating our channel partners to ensure true global coverage.

One topic we focus on in sales execution is to create a culture of accountability and to raise expectations. We will not accept mediocrity.

We keep improving with efficiencies and the effectiveness of our sales to improve the use of software tools. Thanks to our cloud-based customer-relations management tool, we are in a position to monitor our pipeline on the daily basis and to make adjustments when necessary. The pipeline itself comprises data points like the customer, expected revenue, probability of receiving an order, weighted revenue, type of system and expected installation, among others. So this really helps us to further improve our visibility into and the understanding of what the probabilities of closing a deal and converting it into actual shipment are. This will also better align our production and sales functions.

Turning to Slide 15. We are making good progress in especially the aerospace industries and are in advanced discussions about marketable system sales.

On Slide 16, from our customers in the German automotive industry, we hear that they plan the strengthening of Germany's status as a manufacturing location for E-Mobility. Going forward, all of their plants will be able to build vehicles with combustion engines, plugged-in hybrids and all-electric models on a single production line. This kind of flexibility is ideally suited for our corporate (inaudible), 3D printing technology and we expect to benefit from the clients' value-added opportunities over the next year. Let me spend a moment over the past several months. We've performed very well in some areas and other areas require improvement. We are putting very clear actions in place, both organizationally and operationally, to address these areas of improvement to achieve accelerated performance in 2018 and beyond. As we execute on these and other opportunities, I expect to deliver increased value to our customers and shareholders with the culture of accountability that consistently meets or exceeds expectations.

With that, I would like now to turn the call over to Rudi.

Thank you, Ingo, and good morning to everyone. I would like to begin by providing financial details and adding some additional context to our results before discussing our outlook for the rest of 2017.

Turning to Slide 17. Our total revenues decreased 18% to EUR 5.2 million in the second quarter compared to EUR 6.3 million in last year's second quarter. Gross profit and gross margin in the quarter were EUR 2.1 million and 41% compared with to EUR 2.3 million and 37% in last year's second quarter.

The next slide shows our Systems segment reporting for the quarter. On Slide 18, revenues from our Systems segment which includes revenues from selling 3D printers, consumables and spare parts as well as maintenance, decreased 33% to EUR 2.5 million for the second quarter of 2017 from EUR 3.8 million in last year's second quarter. We sold 3 new printers compared to 3 new and 3 refurbished printers in last year's same period. Systems revenue represented 49% of total revenues compared to 61% in last year's second quarter. Gross profit and gross margin for our Systems segment in the quarter was over EUR 9 million (sic) [EUR 0.9 million] and 36% compared to EUR 1.1 million and 29% in last year's same period.

As utilization picks up, we expect gross margin from the Systems segment to be in the range of 40% to 45%, consistent with the outlook we have given in the past.

Cost absorption in our factories will continue to improve and it should lead to further improvement in margin outcomes and product sales as the year progresses. Our goal is simple: deliver solutions to solve our customers' problems. While we have made significant progress in our cost structure again, our work here is not complete. We will commit to driving effectiveness and efficiency in every function that we perform via a continuous improvement mindset. I have no doubt that this effort will produce on appropriate cost structure for the current and future environment as well as improved support to our customers. We continue to invest in improved systems, implement best practices in inventory and supply chain management, and continue to improve our communication and coordination between engineering and manufacturing teams.

On Slide 19, revenues increased 5% to EUR 2.6 million compared to EUR 2.5 million in last year's second quarter. This was mainly due to a higher revenue contribution from our subsidiaries in China and the U.S. and partially offset by lower contributions from the U.K. Gross profit for our Services segment was almost constant at EUR 1.2 million, gross profit margin contribution from voxeljet America as well as voxeljet China improved. From our German operation, we recorded an almost unchanged gross profit margin contribution while the contribution from voxeljet U.K. decreased. As stated previously, utilization is key to realization of better gross margin.

Looking out to the rest of the income statement on Slide 20. SG&A expenses were EUR 2.6 million in the second quarter of 2017 is compared to EUR 2.4 million in last year's second quarter. Research and development expenses were EUR 1.3 million compared to EUR 1.0 million in last year's second quarter. As Ingo highlighted, we continue to invest in core R&D and generally to maintain our position as a technology leader in 3D printing.

Operating loss was EUR 2.7 million in the second quarter of 2017. We booked foreign currency losses amounting to EUR 0.1 million compared to EUR 0.6 million in the comparative period last year. The increase of losses from foreign currency transactions is primarily driven by the valuation of the intercompany loans granted by the parent company to our U.K and U.S. subsidiaries. The loans are denominated in GBP and U.S. dollars, respectively. The financial impact reflects the strengthening of the euro against GBP as well as the U.S. dollar in the second quarter of 2017.

Net loss for the quarter was roughly EUR 2.7 million or EUR 0.72 per ordinary shares compared to a net loss of EUR 1.7 million or EUR 0.46 per ordinary share in the prior year's quarter. On an ADS basis, net loss was EUR 0.14 per ADS compared to net loss of EUR 0.09 per ADH in the second quarter of 2016.

We have provided a slide presentation for the 6-month period ended June 30, 2017 on Slide 21 to 24. As you might have seen yesterday, we have filed a Form S-3 shelf registration statement with the Securities and Exchange Commission. Once declared accepted by the SEC, we may offer to the public in one or more offerings ordinary shares, debt securities as well as a right to subscribe for ordinary shares up to a total aggregate offering amount of $75 million. The securities will be offered at prices and on terms to be determined at the time of any such offerings. We anticipate that the shelf registration will provide more efficiency and access to the capital markets and allow us to act opportunistically in support of our growth objectives.

Slide 25 shows selected balance sheet items. At June 30, 2017, the company had cash, cash equivalents and short-term investments in bond funds of roughly EUR 15.7 million. We continue to inventory rationalization efforts and ended the quarter with inventory of EUR 9.5 million. We continue to see opportunities to improve working capital performance. We remain comfortable with our cash balance and overall liquidity position. We believe that our balance sheet, with an equity ratio of roughly 80%, positions us well for the long term. Total debt at June 30, 2017, was EUR 7.2 million. Weighted average shares outstanding for the quarter were EUR 3.72 million, which equates to 18.6 million ADSs.

Moving now onto Slide 26 and our revenue guidance for the quarter. For the third quarter of 2017 we expect revenues in the range of EUR 7 million to EUR 8 million. Full year 2017 revenue remains unchanged and is expected to be between EUR 26 million and EUR 28 million, with gross margin above 40%. SG&A spending is expected to be in the range of EUR 9.25 million to EUR 10.25 million, and R&D spending to be approximately EUR 4.75 million to EUR 5.75 million. Depreciation and amortization expenses are expected to be between EUR 3 million and EUR 4 million. EBITDA is expected to be neutral-to-positive in 2017. CapEx spending for 2017 should be in the range of EUR 8 million to EUR 9 million, which primarily consists of ongoing investments in our global subsidiaries.

This concludes my remarks and with that, we will now open the call for your questions. Operator?

(Operator Instructions) Our first question is from Rob Stone with Cowen and Company.

My first question is on sort of your visibility for the second half. The guidance implies pretty good sequential growth in Q3 and again in Q4. And so any color you can provide on the metrics you're watching that give you confidence in that outlook would be great?

Rob, this is Ingo. So thanks for your question. The visibility for the moment is quite good, as you see from our backlog for the systems. We have a decent amount of systems already as ordered in and we expect further orders to come. So that's why we are still feel confident -- or we are confident to reach our numbers, according to the outlook we gave. And then you see on the Services side, Services is -- overall is picking up all around the world. So we have good business, especially here in Europe but also in the U.S. and in China. I think with the move of our U.K. facility, which is, I think, finalized in September, we expect decent growth also there. So we are quite optimistic to reach the goals.

So with respect to the Systems, you mentioned the sales funnel and expectations on converting orders. Are you prepositioning, perhaps, some work in process in that suspension of order in order to shorten the lead times for some systems?

Well, with some of the deals I'm talking about, we are in the procurement state, which means they are quite finalized, these deals, and we expect signatures on the contracts very soon. Some others are in the later stage of benchmarking of parts. So we are -- as I said, we are quite optimistic on that end. With the software tools we have in place now, all around the world, we are quite good prepared to have this all on a transparent basis.

Great. Go ahead, Rudi.

Rob, I think if you look into our 6-K, our inventory gives us -- and our work in progress gives us the flexibility to ship in Q3 and in Q4 on quite short notice, right? So we are prepared for shipments in Q3 and Q4.

Great. So on Services, Ingo, I was going to ask, historically, the European activity would normally see some seasonal slowing in the September quarter. But you have significant growth coming from other locations. So do you -- what can you say about the seasonal trend you're expecting for Services in Q3?

Well, this is absolutely right, what you're saying. Usually after the summer break, we see, traditionally, a slight slowdown here in Europe. This is not the case in China, and not the case in U.S. So it is very likely that we balance this slowdown in our Services business out. For the moment, what I can say is, also in August, which is usually a traditional vacation month here in Europe. We have extremely good business, much better than previous years. So the expectation is relatively high.

Our next question is from Troy Jensen with Piper Jaffray.

So just maybe a couple of questions for Ingo here, and I want to start with high-speed sintering. I guess, have you thought more about how you plan on distributing this product? Will this be through your existing sales force? Do you need to make some investments in more sales, headcount? Or will you be using the channel partners to (inaudible) ?

This is a very good question, Troy. So technically, this product is different in its approach and especially in its use, to the existing platforms and the existing materials that we have. Currently, we believe, a rate or a big customer sector vertical for this product could be the automotive sector, where we are extremely well positioned. And I think also our dealer network is extremely experienced with these guys. So there we are quite confident to reach the right addresses. I think with the other verticals, it may be the case that we need to add the one or the other dealer to the network. And it could be the case that we are talking also with other companies in that area about collaboration -- sales collaboration.

Okay, that's fair. And on the materials side of that, Ingo, is this going to be like your current [sand casting] business, where you will only capture the material sales on the agents? Or will you be selling the nylon-12 powder and capturing a bigger revenue stream on the materials side?

So since we are targeting with the HSS production, it is clear for us that the materials side is very crucial for our customers, especially if you look at the total cost of ownership of such a machine. So the current view at voxeljet is that we need to keep -- because of the warranty issues and warranty questions -- we need to keep the binder business as long as the machine is under warranty. We also deliver powders to our customers with the machine. But we are also open to take powders from the customers and qualify them for the process. So it's a twofold business model, of course, with a bunch of materials which are highly adopted to the system with the parameters tested here in voxeljet and handed over to the customer, but we're -- as said, we are open to take materials from the customer itself.

Understood. So, then the last question for me, and I (inaudible). If you think about the addressable market for your current business, the sand casting, I mean, if you think about the addressable market opportunity for high-speed sintering, which one's bigger?

This was a good question -- this is a good question. I think the main difference is the readiness of adoption, in both segments. So we have a pretty developed market in the casting area. So 3D printing there is, I think, a well-known method to make unique castings. Everybody is aware of and some of the customers, as mentioned and addressed, are already thinking about production (inaudible) that method with replacing other production technique with it. It is probably the case that we need to talk the next 2 or 3 years to clients before we reach, in HSS, a similar level of adoption. So that's why you need to expect us at voxeljet probably having more business with our casting lines in the next 2 years than this HSS, but in the end, the HSS market is probably bigger than the casting market.

Yes, I would agree. All right. And how about just then one for Rudi here. Just on the gross margins up nicely here in the total revenues, is this -- on a year-over-year basis? Is that just primarily the -- last year we had some refurbished machines in the mix here, is there something else going on in margins?

Gross margin on the Systems segment, Troy, is that your question?

In aggregate it was up nice, Rudi, so I'm just trying to -- and the Systems, but I'm assuming it's just -- go ahead, I'm sorry.

I would say, we recently optimized our cost structure and definitely benefit from seeing spend. It's not our current thinking to optimize spend. And I think that will, as said in my text type, I see that improving on a quarterly basis, and we expect gross margins to be above 40%.

Our next question is from Ken Wong with Citigroup.

On -- in terms of the deal that slipped in terms of the -- the Systems sale that slipped, can you help us quantify kind of what that amount might be? And then, whether or not that transaction has officially closed in Q3?

Okay, Ken. This is Ingo. I will answer shortly. So this is a VX1000 system. So what we did here, this is very special. So we took a standard VX1000 system from the production line but tailored it to the needs of the customers working with the specific ceramics material set. So that's why the total amount of that system is slightly higher or, let's say, truly higher than standard VX1000 because it is all diffused with the tailoring. It means a lot of work is around the tailoring and is also not recognized as revenue for this system.

Got it. And then -- and there I guess, just whether or not -- so that system sale has officially closed now. And you guys have recognized the revenue as of Q3, I assume?

Well, this machine is -- was shipped last week, is on the truck, on the way to the customer. And we're quite confident to book revenue for this quarter.

Got it. And then, on -- maybe diving in a little bit on high-speed sintering again. You guys talked about having some applications in place now,. You are working with some customers on it. Can you give us a color in terms of the vertical segments that you guys are working with at the moment? And then, any sense for how many -- again, kind of how many customers might be working with you guys on high-speed sintering at this time?

So on the high-speed sintering side, we are taking advantage of our good connection with the automotive industry. We have a lot of automotive customers, clients directly working with us on that topic. Especially in automotive industry, you have a need for customized plastic parts, especially for interior applications. Those guys are all highly interested in additive manufacturing, especially for these needs. And I think we are quite good prepared to working with them. We see, also good applications in this sports and leisure equipment business. And also, again, as we see other technology in aerospace. For the moment, I think the main task for us is to limit ourselves to the most prospective customers, so we could probably take much more customers into the beta program for the moment. But out of limited resources, we need to see that we took the right customers out of the line of potentials. And I think we are working well on that. Out of them are also some chemical companies. They are interested in supplying specifically and adopt the materials to the later HSS companies.

Got it. And then when we think about the full year guide, do you -- have you guys embedded much revenue coming in from the high-speed sintering systems? Or should we think of that contribution coming more in '18?

So we are selling these machines under beta contracts. So we will see probably some revenue contribution from them in this year, but not that much. We expect more to come in 2018 and, of course, the following years.

Our next question is from Saliq Khan with Imperial Capital.

There's a couple of questions on my end. First one being is, I understand that you've been increasing the spend on R&D as well as the SG&A. The whole idea was to be able to improve your growth either sequentially or on a year-over-year basis? However, if you take a look at the lower than expected growth from the investors over the last several quarters, how does your view on operating expenses change as you look out onto the several upcoming quarters?

On -- I have had that question. SG&A remains on that level. It's -- the only driver in SG&A, primarily our agent commission and shipping expenses if we sell more printers. But overall it remains on that level and growth varies on a low basis, that's the current plan at least for the next 4 quarters. But operating profit definitely should benefit from a growing revenue because, as said, SG&A remains the same.

Got it. And I know it's been a while since you guys talked about this but, can you give us a update on the partnership that you've announced long time ago with S&P -- SAP, excuse me, and UPS? And what does that opportunity have looked like for you over the last several quarters? And how do I think about that in the coming quarters?

Johan, do you want to take this question?

Yes, this is Johannes speaking. So the answer is, this is going well so we are in contact with them and we are developing a platform with them and with others customers as well. So, for example, HP is part of it. U.S. is part of it. And it's really interesting. Absolutely, we're making good profits.

Guys, if I'd say -- think about the industry and how it's really developed over last several years, maybe even over a decade now, still, the industry is still very fragmented. So what are your thoughts on becoming a consolidator as opposed to the way that we're seeing now, where you're competing with other privately held companies, some publicly traded companies as well across the globe?

Ingo, you want to answer?

Well, so you need to see that the 3D printing market is highly fragmented, not just because of the businesses itself but also because of the different applications. It is pretty unlikely that you see an overall consolidation on all these areas under 1 or 2 umbrellas. I think there is enough room and enough space for highly specific, adoptive companies like us for specific areas. I don't think that the overall trend will leave us in a position where you see only 2 or 3 market leaders in the future. It is more likely that we have, in some specific areas, like the metal printing, for instance, consolidation as it takes place for the moment. But as you know, as we differ with our printing technology and verticals to the others, I think it is much more important for us to develop our key strengths forward and to develop our applications independently.

Guys, just one last question which is, could you highlight with the capacity utilization rate looks like across the facilities?

Well, there is still room to grow in. And I think the utilization rates are different in our different locations. We have in Europe a quite mature service center, which works on a very high level of utilization. So this gives extremely good margins as in numbers. We have U.S. expanding much better. And with the better utilization in the recent quarters, I think China and U.K., they still have room to grow in. But in general, we are quite pleased with the performance in the Services business.

Ladies and gentlemen, we have reached the end of our question-and-answer session. I would like to turn the call back over to management for closing remarks.

So, thank you. For the second half the year, we are seeing increased market interest in our portfolio across all our product lines. We will continue to invest strategically to support our momentum and to drive higher revenue growth in the second half of the year. This gives me confidence in our growth prospects for the future. The passion and commitment of our colleagues I've met on my travels, coupled with the strong foundation we have in place, will enable us to continue to seize opportunities available to profitably grow our business and drive value for our shareholders. Thank you very much.

Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.

Thank you.

Thank you.

Thanks, bye-bye.