威瑞信 (VRSN) 2012 Q1 法說會逐字稿

Good day and welcome to the first quarter 2012 earnings release. As a reminder today's conference is being recorded. At this time I would like to turn the conference over to Mr. David Atchley. Please go ahead sir.

Thank you operator and good afternoon everyone. Thank you for joining us on VeriSign's first quarter 2012 earnings conference call. I'm David Atchley, Corporate Treasurer and Director of Investor Relations. I'm here today with Jim Bidzos, Executive Chairman, President and CEO, John Calys, Vice President, Interim CFO and Controller, and Pat Kane, Senior Vice President and General Manager of Naming Services. Please note that this call and accompanying slide presentation are being webcast from the investor relations section of our corporate website, www.Verisigninc.com. Please refer to that website for important information including the first quarter 2012 earnings press release. A replay of this call will be available on the website within a few hours. Today's slide presentation will also be available for download after the call.

Financial results in today's press release are unaudited and the matters we will be discussing today include forward-looking statements, and as such are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC. Specifically, the most recent report on Forms 10-K and 10-Q and any applicable amendments which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. I would like to remind you that in light of Regulation FD, VeriSign retains its long-standing policy to not comment on financial performance or guidance during the quarter unless it is done through a public disclosure. The financial results in today's press release and the matters we will be discussing today include non-GAAP measures used by VeriSign. GAAP to non-GAAP reconciliation information is appended to our press release and slide presentation as applicable, each of which can be found on the investor relations section of our website. In a moment, Jim and John will provide some prepared remarks, and afterward, we will open up the call for your questions. Unauthorized recording of this conference call is not permitted. With that I would like to turn the call over to Jim. Jim?

Thanks David, and good afternoon everyone. The first quarter was another solid quarter for VeriSign and we are pleased with the results. In naming we again saw a record number of new registrations at 8.9 million while adding 2.86 million net names, finishing the quarter with 116.7 million names in the domain name base. In our NIA business we again saw strong bookings growth. We were also able to achieve ongoing margin expansion through disciplined operations. Our balance sheet remains strong with $1.35 billion in cash. During the first quarter we continued our share repurchase program by repurchasing 1.8 million shares for $68.4 million. We have approximately $763 million remaining in our share repurchase authorization program, which has no expiration.

We continually evaluate the overall cash and investing needs of the business and consider the best uses for our cash including potential share repurchases. While basic shares outstanding stayed essentially flat quarter-over-quarter, our diluted share count, which is used for our diluted EPS calculation, increased in the first quarter. The main driver of this increase was dilution from our convertible bonds. As in the first and second quarters of 2011 we see dilution from our convertible bonds when our average stock price for the quarter is over the current conversion price of $34.37. These shares represent diluted shares and not shares that have been issued. John will provide more details on the share count and this impact during his comments.

On March 27 ICANN posted for public comment on their website the renewal terms for the .com Registry Agreement negotiated between VeriSign and ICANN. The terms are substantially the same as the terms contained in the existing .com Registry Agreement except for new provisions regarding indemnification and audit rights, aligning it with the other five largest gTLD registry agreements including the .net agreement. Regarding ICANN's new gTLD program VeriSign applied directly for 14 new gTLDs, 12 of these 14 are transliterations of .com and .net. Also applicants for approximately 220 new gTLDs selected VeriSign to provide backend registry services. It is still early in the process to determine what impact these applications will have on our revenue. Depending on ICANN's pace for processing and approving these applications, revenue from new gTLDs is not expected before 2013 and is not expected to be material in 2013. We expect more details will be available when ICANN posts information regarding the new gTLDs for which applications were received. We expect that announcement in May.

Also as announced today VeriSign named George E. Kilguss, III as CFO effective May 14. George brings over 25 years of solid financial experience to VeriSign. Most recently he has been serving as CFO at Internap and has been CFO of three public companies. We look forward to introducing you to George on the next earnings call. Also, John will continue with the Company as Vice President and Controller. I would like to thank John for his service as interim CFO since last September.

I'll comment now on first-quarter operating highlights. In our naming business the base of registered names in .com and .net totalled approximately 116.7 million at the end of March. This represents an 8.1% increase year-over-year in the base and a 2.5% increase quarter-over-quarter. In the first quarter we added 2.86 million net names to the domain name base and we processed 8.9 million new registrations or a 7.7% increase in new registrations over the same period a year ago. The first quarter was our strongest quarter on record for new registrations. Internet adoption, e-commerce and online advertising continue to be drivers of our registry business growth. Some of the first quarter strength was driven by two favorable factors. First we saw improvement in the economics for domain name monetization.

Secondly we saw some of our registered customers have more success with their marketing programs during the quarter. The fourth quarter of 2011 renewal rate was 73.5%. While renewal rates are not fully measurable until 45 days after the end of the quarter, we believe that the renewal rate for the first quarter of 2012 will be approximately 74.3%. We expect the second quarter net names added to the base to be between 1.8 million and 2.2 million names reflecting continued growth and the underlying drivers of the internet and seasonality. Our NIA business continues to perform well and exceeded its bookings target in the first quarter of 2012. With the NIA team in place we are continuing to execute. More importantly we continue to focus on scaling the NIA business to achieve quality revenue and stable growth. Thanks for your attention and I'll now turn the call over to John.

Thanks Jim and good afternoon everyone. As Jim explained we are pleased to be announcing another solid quarter. During the first quarter we generated revenue of $206 million, delivered non-GAAP net income of $68 million and non-GAAP operating margin was 51.9%. These results at drove approximately $101 million in first-quarter free cash flow. Of our total cash and investment balance about $245 million was domestic as of March 31, 2012. Let me recap our performance for the first quarter on our key operating metrics. Which are revenue, deferred revenue, non-GAAP operating margin, non-GAAP EPS, operating cash flow, and free cash flow. Then I will discuss our 2012 full year guidance.

Revenue of $206 million for the first quarter was up 13% year-over-year. Deferred revenue ended the quarter at $783 million, a $55 million increase from year end. Non-GAAP operating margin for the first quarter was 51.9% compared to 50.9% in the fourth quarter of 2011. First quarter non-GAAP operating expenses were $99 million, down 1% sequentially and up 1% year-over-year. Jim mentioned earlier that we applied directly for 14 new gTLDs. 13 of these applications occurred during the first quarter which added $2.4 million of operating expense. The first quarter operating margin expansion was driven by revenue growth and through realizing efficiencies in our business. We will continue to look for further efficiencies in our business and other ways to improve our operating margin.

Non-GAAP net income for the first quarter was $68 million resulting in non-GAAP earnings per share of $0.42 compared to $0.32 in the first quarter of 2011. With respect to taxes, we think a non-GAAP tax rate of approximately 30% remains a reasonable estimate. In 2012 we expect to pay cash taxes of about $35 million to $50 million. We had a weighted average diluted share count of 163 million shares in the first quarter compared to 160 million shares in the fourth quarter of last year. Dilution related to the convertible debentures was approximately 2.5 million shares based on the average share price during the quarter. We have included a slide in the appendix of our earnings presentation detailing the dilution calculation related to the convertible debentures. Operating cash flow was $110 million for the first quarter compared to $90 million for the same quarter last year. Free cash flow was $101 million for the first quarter of 2012 given $4 million in excess tax benefits and $13 million in capital expenditures for the quarter.

We saw solid performance in the first quarter. We have grown non-GAAP operating income and net income. We have a strong balance sheet and expect strong cash flow generation to continue as a result of our financial model. With respect to 2012 guidance, we now think revenue for 2012 will be in the range of $870 million to $890 million, representing growth of 13% to 15%. We gave a range of $865 million to $890 million on the last call.

Non-GAAP gross margin is still expected to be at least 80%. Q4 2012 exit non-GAAP operating margin is still expected to be 52% to 54%. Non-GAAP interest expense and non-GAAP non-operating income net is still expected to be a net expense of approximately $38 million for 2012. Capital expenditures are still expected to be 7% to 10% of revenue. Our guidance is based on expectations of continued growth and increased operating efficiencies in our business in addition to financial projections for interest income and expense. I will now turn the call back to Jim.

Thank you John. Before opening the call to your questions I'd like to provide an update on our areas of focus for 2012. During the remainder of the year we are focused on the following five areas. One, continue providing unparalleled registry services and network performance. Two, continue to work with ICANN and the Department of Commerce towards a smooth renewal of our .com agreement. Three, continue to invest in and grow the NIA business. Four, as a post-restructuring next phase, focus on value creation through new services in our core business, in fact during Q1 we have taken concrete steps to accelerate identification, testing and development of innovative new core services. Five, and of course, continue to act as responsible stewards for the Internet infrastructure which we operate. We will now take your questions. Operator we're ready for the first question.

Thank you.

(Operator Instructions)

Walter Pritchard with Citigroup.

Hi. Thanks. John, I'm wondering maybe on the guidance, the 1.8 million to 2.2 million, if I look backwards to your guidance a year ago, it's actually less than a year ago and yet first quarter is running modestly ahead of what your adds were a year ago. I'm just wondering, do you see something in the base or in the trends at the end of the quarter there that suggest that Q1 was more of an anomaly and Q1 trends back to a lower birth rate?

That's a good question, Walter. I don't know that we see anything exiting the quarter that makes first quarter look like an anomaly to us. I know our guidance last year for the same quarter was higher. I think our actual performance for second quarter last year was 1.95 net adds, so I think really what we have is the seasonality that we've talked about in the past. First quarter is always a little bit stronger based on activities that the registrars do with marketing, as well as just some seasonal patterns in the Business. Pat, I don't know if you have anything to add.

No, I think that's spot on.

And just second question, Jim, on the -- it sounds like more of an emphasis on exploring some new services and so forth. Can you talk about what role M&A may play at all in that process of looking a little bit more aggressive about diversifying the Business or expanding into adjacent areas?

Sure. I don't expect M&A to play any substantial role at all in that growth. This is consistent with what we've been messaging for the last two quarters that we are very much focused inward on innovative opportunities in our Core business. This Company has a lot of talent, a lot of great ideas, and what we're doing is making sure that there is a way to rapidly exploit them. So, the M&A is not part of that plan. As I've always said, if we have a product road map that we like, and we see M&A as some way to get there quicker we'd consider that, but there is nothing on our radar.

Great. Thanks a lot.

Steve Ashley, at Robert W. Baird & Co.

In terms of the domain name activity I was going to ask about promotional activity, and I realize that that's in two buckets. One is promotional activity that you, yourselves, VeriSign, have where contra revenue is involved and there is the amount of activity in the field. Just wondering if you could comment on either of those. How it related to maybe normal or last year.

As far as the programs that we run that are contra revenue programs, I think we've talked about that in the past, that on a full-year basis they are not a significant amount of but we do some each quarter and usually they are a little more weighted towards the first part of the year, especially first quarter. So, there was a little bit of impact on the top line for first quarter of this year in that. Pat, I don't know if you have some comments about registrar activity?

Based on the contra programs, they are intended to be performance-based programs. And so the performance-based programs that we put in there, we're actually augmenting the activity of the registrar. And so, we've actually found programs and incentives that are actually driving additional units that we've been more productive than in the past and the performance has been better than in the past.

Terrific. And then could you just comment, maybe at a high level of how international versus domestic domain name growth might have looked in the period?

So, we still have strength coming out of international. Largely we are seeing growth from India, we're seeing growth from China, as well as Southeast Asia and Australia from international standpoint but it still looks to be about a 40%, 60% split from international to domestic.

Great. Thank you.

Phil Winslow, at Credit Suisse.

Thanks guys, great quarter. Just had a question on spending from here, especially on these non-domain named businesses. How do you feel with the OpEx level that you're at right now in terms of growing the revenue from here. Are you comfortable with that, or do you think this actually needs more investment over time. Thanks.

We certainly think there is an opportunity to always manage and get more efficient from an OpEx standpoint, Phil. I don't think we foresee some type of significant increase based on what we've guided to exit the year on, we're not expecting an increase in OpEx levels relative to revenue. In fact we are still anticipating some improvement through the end of this year.

Phil, this is Jim. If you are referring at all specifically to some of the innovation efforts that are going on in the Company. I think it's fair to say that given the operational efficiencies that we continue to find and exploit as the Company sort of gets adjusted to its new size. Remember we've gone from over 5000 to just over 1000 employees in four years. That, and just some small reallocation of expenses throughout the Company, we are pretty comfortable. Give us what we need to fuel the innovation engine here and do the kind of R&D that we need to do. So, I think it's something that from the outside it will be essentially difficult to notice.

Perfect. Thanks guys.

(Operator Instructions)

Sterling Auty, JPMorgan.

Yes thanks. Hi guys. I was wondering is it too early for you to tell on the gTLD program if any of the ones that you applied for were also applied for by others. In other words, could there be an auction or a need for increased investments to land some of those that you have applied for?

This is Jim.

It is too early to tell. At some point I ICANN will reveal what the applications were and they have a process for dealing with duplicate applications. As of right now we can't tell you what that is. The process is being adjusted as we speak and for an up-to-the-minute update I will ask Pat to comment on that.

In terms of finding out when, what additional topical domains have been applied for beyond the ones that we have done, there is a process now to where the application system itself has to reopen, and ICANN. has been closed for a few days. And after that happens they will have a final submission, and then there will probably be a couple weeks after that before ICANN announces, so it's a moving target right now as to when that will occur. But we will certainly analyze it as soon as it opens up and identify where there are exact conflicts, where there will be conflicts that may create some end-user confusion, and we'll take a look at those, as well.

I think the original so-called reveal date for what strings were applied for was April 30. We expect that there will be some short period of time beyond that before the actual new date is announced, which as Pat said, we expect to hear in a few days or so. Sometime in early May we expect to know what strings were applied for and at that point any conflicts with the obvious, and as mentioned ICANN has a process including an auction process to deal with competing bids, and then that will play out at that time.

Okay. And there was an earlier question asking about contra revenue. I'm going to ask it this way. Given the number of net adds that you had in the quarter, given the base of needs that you had through the quarter, I think there are some of us that felt that the revenue would've been a little bit higher. So, wondering is it Contra Revenue business outside of the Naming business or something else that may have dampened top line by $1 million or $2 million or $3 million?

Actually, I think from our standpoint the top line was right about where we expected it internally. As far as the contra programs there were no significant changes for the full year plan in 2012 versus 2011. There might have been a little bit more waiting in the first quarter this year than last. But I don't think we expected something significantly different than what we are reporting.

Okay. And then last question, Jim, if you mentioned it I missed it and I apologize, but in your prepared remarks you talked about as one of the goals adding additional services to capitalize on the infrastructure in the position that you've got. Is there something specific that you can share with us now that you are looking to innovate beyond the stuff that's already in naming and the other parts of the existing Business?

Well is a different than what we've talked about before. I mentioned, there is a lot of talent and also a lot of ideas, and in fact quite a bit of intellectual property here in the Company. And I don't think we've worked as hard as we could have in the past to exploit it. So, the concrete steps that I referred to involve putting structures and people in place to make sure that we rapidly maximize our ability to exploit those ideas that we think can result in productive new innovative core services. So, they are very much core services. I've mentioned in the past that we think that security is a very good place for us to focus. I don't think there is anybody anywhere on this planet that doesn't appreciate the need for cyber security so that's the general area where we are looking to enhance our offerings. That's probably as much as I can say right now.

Okay. Thank you.

Sure.

Rob Owens, Pacific Crest Securities.

Great. Thank you. Good afternoon everyone. Could you talk a little bit about some of the success you are seeing in NIA and maybe a little bit of color around the bookings there. It seemed like the deferred categories grew better than I was expecting this quarter.

As far as the deferred category, certainly it was very strong growth and that really relates to the 2.86 million net adds in 8.9 new registrations, that's driving deferred much more than anything from an NIA standpoint.

So, on that specifically there, are you seeing an extension in duration then in terms of some of those renewals or new names or are you still about five quarters on average?

The average term length is about five quarters right now when we see with renewals.

It was a pretty big change I think in long-term deferred if I'm not mistaken. Historical numbers.

Yes. First-quarter I think seasonally is always a strong increase in Deferred for us. So, but certainly much more than sequential quarter was, last quarter.

Okay. [ Multiple Speakers ]. Go ahead I'm sorry.

As John said that attributable to areas outside of NIA, but with respect to NIA we set some bookings goals for them for the quarter that are -- that were in excess of the goals we've set last year. And they are exceeding those goals, so we are pleased with the process. We are not breaking out those numbers separately.

If it were to achieve 10% of bookings would you break it out separately?

If NIA were to achieve, if their revenue were to achieve 10% of total revenue we would break it out separately under SEC reporting requirements. Yes.

And then second, how many names are up for renewal in Q2?

24.4 million

Thanks very much.

Jaimin Soni, Bank of America Merrill Lynch.

Thanks guys. I just had a couple of quick questions. First I wanted to ask about operating margins in your guidance. You have about 100 basis points ramp through the year. As we exit the year and I guess as you continue to get more efficient, is that where we can see more steady state margins going forward or do you think you have room to invest more in some of the opportunities that you've outlined earlier?

Certainly we see margin improvement through the end of the year, as we've guided in the 52% to 54% range. And as I commented earlier, and we spoken many times before in our post restructuring era here, we continue to work hard daily at finding opportunities to grow our margin, to get more efficient, to do things smarter and better.

Obviously, we will see in the revenue, on the revenue line we will see the impact of the price increases that we did in January, and as you know that kind of bleeds into the revenue line over about a five-quarter period. So, that gives you some natural margin growth as well that comes about from that. Beyond that we, obviously, haven't provided guidance beyond the end of 2012. But we take very seriously that it's our job to run the Business very efficiently and find ways to do things better and smarter all the time.

Got it. And another follow-up on the net domain adds. If I look at what you guys had guided last quarter for the year to about 6% to 8% unit growth rate for net new names, looking at what you have, the midpoint guided to about $2 million for the next quarter. Seeing the first half total net new name growth at about 1% to 2% implies that the second half should really accelerate. Is that what we should think about for the second half of the year in terms of net new name growth?

No, the 2.5% is quarter-over-quarter. Right? And so, year-over-year right now, we're at 8.1% so you should see some consistency in quarter-over-quarter growth.

Yes, our revenue guidance of the $870 million to $890 million that I mentioned early -- earlier is predicated on 6% to 8% unit -- net unit growth for the year over the prior year. And at this point we would say we are trending towards the upper half of that range.

Got it. Thank you.

Gregg Moskowitz, Cowen and Company.

Thank you. Jim there was a very nice increase in the expected renewal rate for Q1 versus what you've reported over the prior few quarters. Aside from perhaps getting some benefit from a renewal base that's becoming more mature, were there any other factors that might have contributed to the higher renewals that you expect to see this quarter?

Well in Q1 we did have a higher early renewal -- early renewals were up in Q1 which helps explain the increase in deferred revenue. Other than that I'm not aware of any changes.

The behavior is as expected. So, it's consistent, so what we will see some variability in tenths of percentage points based upon specific registrars and what they are doing with their customers and different programs that they may or may not run. So, even though it's up by couple of a tenths percent in terms of where we thought we would end up, it's well within expectations.

Okay. And that's great. And thanks for the color earlier on the new gTLDs. You've gotten attached to a large number of backend applicants, frankly more than I would've expected. Although a lot of these I would imagine will be relegated to somewhat of a niche type status. Assuming their applications are accepted. What it wanted to ask is, and I know this is not a material 2013 impact, but just kind of wondering on a longer-term basis given what we know today and how you see this potentially unfolding, whether you see a greater opportunity directionally from VeriSign on the front end or the backend around new gTLDs. Thanks.

This is Jim. Certainly 2013 is too early, and we don't think there will be any material revenue in 2013. I think is just too early to speculate about what that revenue will look like beyond. We are certainly pleased that over 200 applicants have chosen us to be their backend registry service provider.

But how -- we like the program, we think that it's going to, as ICANN said, encourage creativity and we hope it will grow the market globally for domain names. But how much that will grow, exactly what our participation will be, how these 220 applicants that have chosen us to provide services for them will fare in that new market, I think it's just too early to speculate about that. We have said that we do see that as a growth area. I think this is going to expand the market and we're pleased to be participating in it, both through directly applying to operate gTLDs and as you said providing services for 220, but beyond that I think it's just too early for us to speculate.

Great. Thank you.

(Operator Instructions)

Ed Maguire, CLSA.

Hi good afternoon. I saw you had posted last month the RFC for the .com renewal contract. Are there any issues that you can anticipate that might come up that might result in any changes to the proposal and any update on expected timing of finalizing that contract?

Well there is -- this is Jim. There is a published timeline for that. ICANN has a fixed duration comment period. I think it would be inappropriate for us to comment on the comments while the comment period is still open. But there is a fixed process. At some point ICANN and VeriSign will complete that process. ICANN will receive the comments and respond to them and then the agreement will be turned over to the Commerce Department for its consent to the renewal.

The agreement expires on November 30, so that's the timeline to complete this process by then. And our plan is to follow the timeline and work through it. I think again .com had a similar process, of course, except that it didn't require Commerce Department approval. But essentially it went through an open comment process, there were responses to those comments and then ICANN's Board voted to approve the contract. Our expectation is that there will be a similar process here.

Great. And just a follow-up on cash. Currently how much you have offshore and whether you have any ability to move some of that on sure.

We have about $1.1 billion offshore right now, $245 million domestically. No specific plans right now to move any of the offshore cash back at this point in time.

Okay. Thanks a lot.

Craig Nankervis, First Analyst.

Thank you very much. My questions have really basically been asked. Maybe just a little more of the 220 new gTLDs that you have been selected to provide backend services. Have you had discussions with most of these entities or was that number basically entirely a surprise to you, and how do you think about that quantity?

I will let Pat weigh it in more detail but some of those applicants actually ran competitive bid processes to select the backend services provider. And we were successful as a competitor in that process for many of them.

Okay.

We've certainly entered into agreements with all of them at this point. I don't know that I can comment on how that fell with expectations. Given that the -- ICANN has said nothing about the number of applicants, it's probably inappropriate to speculate about how many there were or how we did. Pat, I'll invite Pat to comment.

As you said Jim is hard to tell where it falls into a total number of top-level domains that have been applied for. But we are pleased with the number, and we are pleased with the quality of the partners that have chosen VeriSign to provide backend services for their offerings as they see it as a valuable asset in terms of how they move their businesses forward as well.

So assuming -- I guess what has to happen they have to all -- each of those have to get their gTLD approved and then assuming that's the case it's very likely you would operate for the backend for everyone on that -- all of that group. There wouldn't be a reason you would be selective within the group is there?

No, those 220 have already said that if they are awarded a gTLD by ICANN that VeriSign will act as the operator of backend registry services for them. That's the agreement we've already entered into.

We've agreed to do that. So, there is no reason that the number would change from our perspective, and as Pat mentioned, they have specified us in their application as the provider so we assume that -- that's our expectation, that if their applications are approved we will be their backend registry services provider.

I see. Does that -- as this unfolds does this have any implications for your infrastructure and build out thereof or really not. How do you look at that?

Well I think we have a world-class infrastructure that can certainly handle the types of business that we take and put onto it. I think that it's well within our capabilities.

So, capabilities. So it doesn't -- it's not going to -- I don't know, necessitate a different pattern to your CapEx spending or something like that because of this -- of this new dynamic.

This is Jim. I don't think we anticipate anything substantial on that sense. I think we really need to look at the nature and the use and the deployment of some of these TLDs. But for example many of them are brands who are probably going to have a very small number of domain names associated with their TLDs that will operate for them.

So, I don't think of this as a major overhaul of our infrastructure in order to support it. I think they -- for them, even if it's a small number of domain names, if it's an important brand, I think security and stability and availability are really the important things which is why they chose us. We're certainly going to continue to provide that. We'll make the normal investments that we make in our infrastructure to provide that security and stability, but I believe that's what appealed to most of them.

Sure. I wasn't try to imply that you'd have to have a major overhaul to what you have, I was just curious if it changes the pattern of how you operate with incorporating these --

We operate multiple domains now. We have for a long time. We're structured to operate multiple demands. While this could change over time I wouldn't expect that given the circumstances you would expect to see a substantial increase in the overall number of domain names. Again, if these are brands, the number of new domain names within the gTLDs will be relatively small. But it will be important that they resolve reliably and I think that is why we were chosen.

Sure. Okay. Thank you for the help.

Sure.

That does conclude today's question-and-answer session. At this time I like to turn the conference over to Mr. Atchley. Please go ahead sir.

Thank you operator. With regards to events in the second quarter, please note that Jim, John and George will be presenting at the JPMorgan TNT conference at 2.10 PM Eastern time on Tuesday, May 15 in Boston. The webcast registration details for this conference will be available on the investor relations section or of the VeriSign website. Please call the investor relations department with any follow-up questions from this call. Thank you for your participation and continued support. This concludes our call. Thank you and good evening.

Once again, that does conclude today's conference. We thank you all for joining us.