AgileThought, Inc. (AGIL) on Q3 2022 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to AgileThought's Third Quarter 2022 Financial Results Conference Call. Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the end of the call through November 11, 2022. I would now like to turn the call over to Mariana Franco, the company's Head of Investor Relations.
Mariana Franco: Good day and thank you for joining AgileThought's third quarter 2022 earnings conference call. Our speakers today are Manuel Senderos, Chairman and Chief Executive Officer; and Amit Singh, Chief Financial Officer. Before we begin, allow me to remind you that some of the comments on our call today, including our business and financial outlook and the answers to some of your questions may be considered forward-looking statements. Such statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. The content of this call contains time-sensitive information that is accurate only as of today, November 10, 2022; except as required by law, AgileThought disclaims any obligation to publicly update or revise any information to reflect events or circumstances that are here after this call. Today's remarks will also include references to non-GAAP financial measures, such as adjusted operating income, which is how we track performance internally and the easiest way to compare AgileThought to our peers in the industry. Additional information, including reconciliation between non-GAAP financial information to the GAAP financial information is provided in the associated earnings press release. This conference call will be available to replay via webcast to AgileThought's investor relations website at ir.agilethought.com, where you can also find a copy of our earnings release. I'd now like to turn the call over to Manuel Senderos, our CEO.
Manuel Senderos: Thanks, Mariana. I'm happy to be here again and thanks to everyone for joining us. We appreciate your time today as we discuss our third quarter performance as well as our view for the remainder of the year. On our last earnings call, I highlighted our focus on the people organization, which is a key factor for us to capitalize on the digital markets growing demand and for our continuous work to further expand market reach in the digital space. Included in these areas is our decision to center on pure digital work and as a result, exiting nonstrategic business. As reported in our previous quarterly results, we continue to make big strides across multiple fronts of our business. We announced the openings of 2 new offices in Latin America, bringing us closer to current and potential talent. We created a new market unit, technology, media and telecom, US West, which will provide a focused and agile response to a $5 trillion market. We continue to strengthen our AgileThought team with the necessary experience to develop cutting-edge digital solutions for our clients that will ultimately allow our clients to strongly grow in an increasingly digital economy. Overall, this has been another strong quarter for AgileThought, with revenue totaling $43.4 million, above our guidance, representing a growth of 7.4% year-over-year despite continuing to exit the noncore business, as announced on our previous earnings call. Our gross margin for the quarter was 34.3%, which represents an improvement of 770 basis points year-over-year and up 100 basis points versus the previous quarter. As you know, the macroeconomic environment remains volatile. However, the demand for digital technology services remained strong and expanded, allowing us to continue partnering with our clients in their digital transformation journeys. There are a few reasons for this. First, we team up with our clients to help increase the revenue and streams or significantly helped decrease their costs through our digital transformation services, which allows for a strong value add. Additionally, we have intentionally targeted Fortune 1000 companies of clients where there is an opportunity to wisely expand our market reach and grow our footprint. We are focused on working with clients that have strong goals for digital transformation. During the third quarter of 2022, we added 16 logos to our portfolio. All of them, we believe, with a potential to generate revenues above $10 million each year in the midterm. As we have mentioned previously, with a growing demand, we are concentrating on accelerating our recruiting capacity. We have announced the opening of 2 new offices, one in the city of Merida in Mexico, which will bolster our presence in the Yucatan Peninsula, the fastest-growing region in the country; the second one in the city of Buenos Aires in Argentina, enhancing our presence in South America, which perfectly complements our strong presence in Mexico. These openings will help enable the acceleration of our net headcount growth while promoting the professional development and career paths of talent in both regions. Mexico has a large skilled talent pool with the second-largest population in Latin America. Mexico also has 8 highest annual STEM graduates in the world with 160,000 new graduates per year. Argentina, despite being smaller has a strong reputation for boosting some of the most experienced engineering pools in the region too. As we work towards our goals, our efforts around the people organization are not the exception. For that reason, alongside implementing the talent acquisition strategies, we have continued to work towards upgrading the agile thinker experience. Some highlights worth noting. During this quarter, we have propelled our training platforms and partnerships, bringing knowledge closer to our people and helping them continue with their professional development, while, also improving our career management global internal processes, which were started in the last quarter. As you know, our people organization has been going through a lot of changes. But these have allowed us to become more efficient on our talent allocation and set the foundation to achieve the necessary headcount growth to support our revenue growth plans. At the end of the third quarter, we measured the employees' experience with an ENPS survey, resulting in a very high employee Net Promoter Score. Additionally, our attrition has been trending down since we started focusing on our people organization. We are proud of our accomplishments in this area. And we'll continue to make strides on our employee experience. Attracting well prepared and motivated talent allows us to continue reimagining the future of our clients who are looking to disrupt their markets through new offerings along with the creation of new revenue models. A great example of vital working with a client in this way is very specific, which is a 100-year-old company and the U.S. leading supplier of residential rollout cards. Their products are used in the recycling and waste management supply chain. They are in a very traditional business and have a decisive create new ways to deliver value for their customers. For that reason, they came on a mission to create software and services that enable the usage of its containers in a very smart and efficient way. For our unique engagement model, which we call 3D or discover, design, deliver; which helped define digital path with new solutions that included prototypes designs. We are now delivering on a suite of new IoT applications that will allow very specific to print, assign, track and self-manage these assets through the life cycle of the processes. With this innovative new software solutions, very specific customers will be able to improve their costs and sustainability of the waste management collection, handling and recycling processes, creating increased value along the supply chain that will not only benefit the customers, but will help us all take better care of our plans. Over the next year together, both Agile in very specific will make the 100-plus year old business of waste management, more reliable, more profitable and more sustainable. Market units are our go-to-market approach, which are organized by a defined focus in an industry vertical in a geography. As I mentioned earlier, we announced the creation of our new TMT US West market unit during this quarter. We had clients in this industry already that were spread along different market units. So the focus of the TMT market unit is to bring these clients together under the same umbrella, emphasize demand generation within the vertical and leverage the industry expertise gained from our diverse projects. Combined with our technology expertise brought by our build structure, our industry vertical expertise gained and shared among our agile squads allows us to discover, design and deliver the best solutions for our clients. As we've mentioned before, our gills are technology-focused communities of experts. As an example of their work, one of those gills, user experience engineering has been developing innovative solutions that allow new ways for our customers to create digital products quickly. Working with our long-time partner, Microsoft and their industry-leading product, Visual Studio, we've built a new way for organizations to improve the time from aviation to the delivery of mobile applications into the iOS and Android ecosystems. We are improving the pace from design to downloads, for our clients who want to capitalize on the mobile app as a way to deliver value for their customers. In today's digital economy, all companies, young and old, across all the industries must create digital mobile experiences to be competitive. We see significant opportunities to introduce AgileThought to new and existing customers through this capability. We have already launched this solution in the market and are actively positioning with our current and prospective clients. One of the clients utilizing this solution is a long-time client Signal. Earlier this year, we announced our partnership with ExperienceIT. And I am excited to tell you that it's been very successful for both companies. With our partners at EIT, we are using a global human capital management platform, which is a core platform that accelerates the integration of our clients' acquisitions. As part of our vision to help our clients reimagine the future, we also focus on helping them modernize and integrate the platforms that are gained through M&A activities. Leveraging these digital assets through mergers and acquisitions can be a daunting task and can make or break the financial model underpinning the acquisition business case. Together with EIT, we are accelerating the addition of these new capabilities with our core platform, creating a world-class offering across all of the America. This is a multiyear strategic partnership between AgileThought and EIT and this leading HCM platform provider. We will all continue to grow together as a team. As you can see, our growing AgileThought team, driven by our technology professionals continues to develop cutting-edge digital solutions for our clients that ultimately allow our clients to grow and increase profitability in a digital economy. Now I will turn the call over to Amit Singh, our CFO, who will provide additional insights into our financial results.
Amit Singh: Thank you, Manuel, and good afternoon, everyone. I will start by summarizing the results of our third quarter 2022. I will then discuss our guidance for the full year 2022. Overall, our results for the third quarter of this year showed that we continue to strongly move towards our long-term targets. On our last earnings call, we shared with you the decision to exit noncore business. Knowing this decision would impact our revenues in the short term but help us set the base to achieve market-leading revenue growth and margins in the mid long term. Revenues for Q3 were $43.4 million, above our guidance and represented 7.4% year-over-year growth, but down 6% compared to the previous quarter. As Manuel mentioned, the demand for our end-to-end digital services is strong and expected to remain so in the coming years as enterprises continue to increase their investments in digital transformation. During the third quarter of 2022, the U.S. revenues represented 63.2% of our total revenues. Revenues from our top 10 customers represented 61.7% of our total revenues for this quarter compared to 65.1% in the third quarter of 2021. Health care continues to be our fastest-growing vertical, with 50.3% year-over-year growth and 9.6% sequential growth. It has become our main industry vertical with 27.3% of our total revenues in the third quarter of 2022, followed by financial services with 27.1% of our total revenues in the same period. Our revenues per billable employee as of the last 12 months ended September 2022 was $79,000 compared to $71,000 as of the same period of the prior year, representing 10.5% year-over-year growth. Turning now to profitability. The gross profit for the third quarter of 2022 was $14.9 million, implying a 34.3% gross margin. We continue our progress towards industry-leading margins, with gross margin improving 770 basis points year-over-year and 100 basis points quarter-over-quarter. This confirms that the efforts to improve our gross margin, such as focusing on strategic clients and revenues are showing strong results. We believe our SG&A as a percent of revenue will also decrease in the mid, long term as we drive economies of scale and operational efficiencies and our near-term strong investments in sales, delivery and people organizations, normalize. Adjusted net loss for the quarter totaled $347,000 compared to a loss of $3.2 million for the same quarter of the previous year. Adjusted diluted EPS for the quarter was negative $0.01 based on 46.2 million average diluted shares for the quarter compared to negative $0.08 for the same quarter of the previous year based on 37.6 million average diluted shares for the quarter. Moving on to the balance sheet. Cash and cash equivalents as of September 30, 2022, was $10.4 million, significantly increasing from the $4.1 million as of September 30, 2021. On working capital, we made an aggressive effort to improve our collection efficiency and reduced our accounts receivable level during the third quarter of 2022. As of September 30, 2022, account receivable were $33.3 million, decreasing from $38.9 million at the end of the previous quarter. The results of these efforts have allowed us to proactively reduce our accounts payable level, which as of September 30, 2022, were $10.6 million, decreasing from $13.5 million in prior quarter, along with further reducing some other operating liabilities within our balance sheet. Now we are at a comfortable working capital level. But we will continue working on further optimizing our cash cycle that will continue to support our investments in our growth initiatives. We beat our guidance for the third quarter of 2022. And while the exit from the noncore revenue base will continue in 4Q, we feel comfortable about 2022 full year results. We now expect our full year 2022 revenues to be at least $176 million in constant currency, representing at least 10.9% year-over-year growth versus prior expectation of full year revenues of at least $174.7 million, representing 10% year-over-year growth. As we mentioned earlier, and our third quarter results indicated, we are progressing very nicely with our gross margin growth trends. At the same time, we continued investing strongly across our sales, delivery and people function, which together, we believe, will position us for industry-leading top line growth and margins. Given the strong trends in gross margin, we are raising our full year 2022 gross margin guidance range to 31.5% to 32.5% versus 31% to 32% before. Thanks, everyone, for participating in the call. I'd now like to turn the call back to Manuel for any closing remarks. Manuel, please?
Manuel Senderos: Thank you, Amit. In conclusion, we are currently in a transition year, just at the inflection point. We remain confident about our top line growth and gross margins progress towards our long-term goals. We believe we have built the base to benefit from the strong digital transformation demand and positioned us well on the path of industry-leading performance in the coming years. And with that, I'd like to turn the call over to the operator so that we can begin the question-and-answer session.
Operator: Our first question will come from the line of Josh Siegler with Cantor Fitzgerald.
Unidentified Analyst: This is Keeler on for Josh today. Congratulations on the great results. So gross margin, as you mentioned, came in particularly strong. I was hoping you could go into a little more detail on the trends you saw there and whether you expect those to continue into 2023? And any more color there would be great.
Manuel Senderos: Yes. Thanks for the question. That's a very important question because that's actually our focus right now. We want to have plans with those margins where we're delivering high value than we're going. So we're prioritizing that. So I would say most of our new engagements, if not all, are coming in at various gross margins. We're targeting above 40% on all new engagements. So we'll see that improvement as contracts get renewed and new engagements come through the pipeline. We expect that margin to continue at the level kind of gross margins.
Unidentified Analyst: That's great. And then if I could get in a second one. It seems that you're still experiencing very robust demand for your services. I think last quarter; you said you need to hire around 150 billable employees per month to meet that demand. Are you still on track with that? And has anything changed about that metric?
Manuel Senderos: No, I think that's a correct metric. It's difficult to assess when you're also prioritizing high value. And we are reducing staff in other areas where we were doing low value engagements that we didn't want. So the net headcount is kind of difficult to grasp. But yes, the target for 150 monthly is still there. And we're building strongly on our recruiting team and our people organization to be able to have a buffer there and actually have more capacity than 150. So that when we'll continue to accelerate our revenue growth, we'll have enough supply to engage in those projects.
Operator: Your next question will come from the line of Mayank Tandon with Needham & Company.
Mayank Tandon: Congrats on a strong quarter. I wanted to start with just maybe more macro given that's the question on everyone's mind. You had a good quarter and the guidance for 4Q also is very impressive. But just in terms of the sales cycle decision-making, are you seeing any indications of a softening, which might then potentially impact 2023? And any directional the guidance you can give for next year would be help as well at this juncture. I know it's a little bit early, but any sort of directional thoughts around that would be helpful.
Manuel Senderos: Sure. So we haven't seen any decline on the demand. We've seen actually quite strong demands, new engagements with big projects and things to do. I would say when we see this type of downturn for a lot of clients, it's also a signal to double down on digital investments to be more efficient and bring in either more revenues or bringing SG&A down. So we've seen a lot of that, especially in the financial sector. We have large engagements coming through the pipeline, which are mainly geared to both accelerating revenue and lowering SG&A for them. So demand feels pretty strong. On the next year, we feel pretty confident about accelerating growth. Once we clean up the engagements for clients where we didn't feel we were really adding a lot of value and we didn't have the right gross margin. Once that gets cleaned up, we feel pretty good about accelerating from 2023 onwards with very healthy new clients with healthy gross margins.
Amit Singh: Just to add to Manuel's point, even net-net despite getting out of -- or despite continuing our efforts to get out of noncore accounts on an overall growth basis, next year should be a faster growing year for us compared to 2022 and then to the earlier question about gross margins as well. We're making strong progress already as displayed in our 2Q and now 3Q results and our full year guidance being raised. We still expect, as we move into next year that those gross margins to continue showing year-over-year improvement. As a company, as we have discussed in the past, our target is for our revenue growth, obviously, to be much higher than where we are ending this year. And our gross margins to start trending or getting closer to that 40% gross margin level.
Mayank Tandon: Amit, if I can just sort of extend on that question in terms of the -- exiting up the noncore revenue, could you just size it in terms of the impact for 2022 that is embedded in your expectations? And then when does that basically go away? In other words, when do we have a clean slate on the top line?
Manuel Senderos: Sure. Sure. So what we have said in the past is around call at around 50-ish percent, 10% to 15% of our revenue is what we define as noncore revenue and it falls in various geographies and different verticals. And we are very aggressively working on, call it, not renewing a lot of that work or not continuing performing in a lot of -- or sort of delivering on a lot of that work. But it will likely take 4 quarters for us to completely get rid of it. So starting in 3Q, it will likely go on until the mid of next year, the majority of that happening likely in the first 3 quarters.
Operator: Your next question will come from the line of Brian Kinstlinger with Alliance Global Partners.
Brian Kinstlinger: I wanted to start with recruiting. You made some strategic hires to improve on this department's execution. You've opened 2 new offices, but those are rather new. Has there yet been any improvement in the recruiting trends? Any numbers you can provide to help us with context would be great. And a while back when I first met the management team in this predate to meet demand is exceeding supply of talent for AgileThought. How would you characterize that today?
Manuel Senderos: Yes. Good question, Brian. Thanks for joining. Look, we completely revamped the people organization just recently by appointing Gonzalo; I think it was 3 months back. The first item on the agenda was actually getting closer to our people and working on a lot of things that impact their careers and the way we work with them. So the first benefit of that when you're talking about net additions was really reducing the attrition rate. We've seen a big reduction month-over-month and we're very excited about that. And that was the first thing on his stake. On the recruiting side, I would say we're not where we want to be yet. He's doing a lot of changes. He's changing some people in the team; he's just adding additional individuals. We just opened the office in Buenos Aires. It's going to be the center for recruiting in Latin America. He's hiring key individuals with good experience with recruiting at scale. So I would say that we're still in the works. We expect that to be up and running and humming by the end of Q4. So we are improving already in recruiting, but not where we want to be. We need a couple of months additional. But net headcount are improving significantly because attrition is coming down.
Brian Kinstlinger: And are you able to share what the billable headcount is and maybe what utilization is so we can get a picture of that?
Manuel Senderos: Amit -- you're unmute Amit.
Amit Singh: Sorry. So let me give you the exact number. Our average billable headcount is a little more than 2,200, so I think 2,227 for this quarter. And what was the second question, sorry?
Brian Kinstlinger: Utilization.
Amit Singh: Yes. So on utilization level, right now, we are around high 80s percent on utilization. As we move forward and this whole recruiting and everything normalizes, we will be -- the ideal place for us to operate would be around that low to mid-80s. But currently, we are at the high 80s level.
Brian Kinstlinger: That was very helpful. And then maybe for either one of you discussed the new governance around the contracts that come in that are new around 40%. How is that being handled? And then help us reconcile the gross margin in the fourth quarter implies 31.5% or lower. You're bringing on higher margin contracts. You're getting rid with the low-margin contracts. I think pricing is up, if I'm not mistaken, maybe there's, a couple of less billable days. But maybe help us about puts and takes that drive you close to the low point of the year?
Manuel Senderos: Yes, absolutely. So the first thing we put in place is a deal governance committee where every new engagement of significant size goes through it and needs to get approved. It has to have the right gross margin, the right type of delivery or the right scoping, technology, et cetera and also the right working capital profile, right? So we -- because we want to grow in a healthy way, so we're being very, very careful on taking on clients that are really committed to doing digital transformation in a good way and they're not just looking for a good deal. We're looking for clients that are really committed to high-end work. So that governance works every week. And we make sure that every new deal comes at the right gross margin above 40-plus percent. And it's the right customer. We are very strict on what we defined at the ideal client profile which is a customer that is committed to investing above $10 million per year with us for a long term, for a long time. And it's not just a onetime engagement for a simple fix. So we're being very, very cautious on how we select our customers and we want to have top AAA customers that are really committed.
Amit Singh: And then, Brian, just to add to that. As you know, around 90% of our revenue in a given year comes from existing customers. So it's a process, right? Every time we are renewing work or renewing different type of work with our clients, we are raising the pricing levels to slowly, slowly bring our gross margin closer to 40% across the board. But it takes some time for that whole thing to flow through. So that's why while all the new work we are signing and a lot of the work that we are signing, it's all at a very encouraging gross margin level. And year-over-year, thinking of that, call it 100, 150 basis point improvement in gross margin, that's a good way to think about our business.
Operator: Your next question will come from the line of Kate Cranston with William Blair.
Unidentified Analyst: It's Kate on for Marg Nolan today. Congrats on the quarter. My first question was, I know that you have previously mentioned you would like to be more selective with the client logos that you're taking on. So I was hoping -- could you tell us anything more about the new logos that you saw in this quarter and any trends that you're seeing there?
Manuel Senderos: Yes, happy to do this. So it's all in the, let's call it, Fortune 1000 type clients, really big accounts within the industry. As you know, for now, we are focusing in just a handful of industries. So we're looking for new client sales because we really believe that the intersection between industry knowledge and technology is when we do our best work. So we are focused on that. And -- but we are getting very good results of adding, let's say, at least 4 to 5 new good level engagements per week where we're having good conversations, good high-level conversation with these types of accounts and then some of them converted within the quarter or not. But it's very, very selective. And it's within the industries that we are currently working on.
Unidentified Analyst: It's helpful. And then I had one follow-up question. I know that overall, you quite mentioned that you're not releasing any signs of a slowdown. But if things were to get worse in terms of the macro, is there any vertical that you would expect that weakness to show up? Or are there any verticals overall that you are seeing a slight weakness in?
Manuel Senderos: Honestly; we don't -- we haven't seen any weakness and we don't -- I couldn't highlight one particular industry. I think at our size, it's more about our good execution and our good client engagement than the macro, probably at our size; macro has a less impact than our specific execution. So no, we haven't seen that. If at all, we've seen our pipeline grow over the last quarter quite significantly. And we are working on very interesting engagements going forward.
Operator: Your next question will come from the line of Joseph Vafi with Canaccord.
Joseph Vafi: Maybe we will start with your new TMT vertical and what the plans are there for perhaps investment spend there. And at a high level, perhaps you could outline for us kind of where you see your focus in 2023 in terms of sales and marketing spend in TMT versus some of your existing verticals? And then I have a quick follow-up.
Manuel Senderos: Yes. Thanks for the question, great question. So the way we set up the market units is a really comprehensive approach. It's not just putting one individual. So it has a market unit leader. I don't have technical leaders, industry leaders and then they'll have a group of account leads, hotels, as we call them. So it's a whole group that has stood up for that particular market unit. It's based out of California. It's in the West. And the way we approach is we have -- the major is the industry, which, in this case is TMT and technology or media and technology. But they also address the West Coast for other industries where the closeness of the region also helps. So we call that the minor. So this quarter, we're adding that market unit. We do expect new market units to be added very soon and we'll announce soon. But we're going to target financial services in a more focused way for the U.S. coming forward. We do expect significant increase in our sales capacity for 2023. We will probably show that in the next quarter. But we are investing in increasing our sales team, especially in the U.S. market very significantly. And you'll hear us opening additional market units ready for that.
Joseph Vafi: And then just one quick follow-up. As you continue to wind down the kind of noncore revenue projects, are any of those with other -- with customers where you're doing more high-value work and is it at all kind of a strain or damaging on that customer relationship to wind down part of it while trying to maintain or grow the other piece of the business?
Manuel Senderos: Yes, go ahead, Amit.
Amit Singh: Thanks, Joe, that's a great question. It's actually a mix of both. Yes, there are certain customers where -- which are not strategic for us and where the work is, call it, noncore -- it could be at high margin. But it's just the work might be noncore and we are exiting that. But then there are certain clients. And some of those clients are even in the U.S. I think a one client in the professional services industry, where we're doing work, which is high end. But we're also doing work over there, which could -- in our terms, that's also -- that's noncore. So our focus there is we exit that noncore work and increase our exposure to more digital work in that client. So you see that sort of, call it, rotation for our company happening in several clients as well, where we are giving away or moving outside of that but increasing our exposure more to the higher-end digital work. So you're seeing both of those trends play out for us.
Operator: Our next question will come from the line of Zack Ajzenman with Cowen.
Zack Ajzenman: One question from us just on partnerships. Can you refresh us on your relationships with the hyperscalers and other SaaS ecosystem partners? It sounds like a potentially attractive channel that you can leverage to drive more opportunities.
Manuel Senderos: Yes. I mean, we have good relationships with all the SaaS channels or even the cloud providers. But we try to be agnostic in the way we take our services to the market. And most of the time, our clients are pretty large accounts that have already selected their technology stack and they have their partnerships in place, depending on their industry, there's different players. So we try to be technology agnostic. We try to bring new ideas that especially the way we work, which is the agile format and we can adopt in different technologies. We also like to add more in the industry knowledge in order to really help them address the specific pains within their industries and give them ideas on how to use technology in a better way in that industry. So in that sense, we are pretty open to playing with different partners. But we try to be agnostic because our clients see in more of a neutral way on their side.
Zack Ajzenman: That's helpful. I'm actually just going to squeeze one more in, sorry. On Ukraine, with the war unfortunately dragging on, are you seeing incremental opportunities from clients looking to derisk delivery exposure from the region just given the ongoing uncertainty?
Manuel Senderos: I mean, honestly, not specifically for that reason. No, we haven't seen that. I mean, at the beginning, there was a lot of noise. And I've seen our peers that work in the region also kind of being able to reorganize quite quickly, which was really good for them. But no, we haven't seen an opportunity because of that specifically.
Operator: We have no further questions at this time. I'll hand the conference back over to Manuel for any closing remarks.
Manuel Senderos: Well, we want to appreciate everybody that joined and asked those questions. They're all very helpful. We're very happy to have additional conversations and go deep with anyone that likes to do it. So thanks very much and enjoy your rest of the day.
Operator: Ladies and gentlemen, that does conclude today's meeting. Thank you all for joining. You may now disconnect.
