Desktop Metal, Inc. (NYSE:DM) Q1 2024 Earnings Call Transcript

Desktop Metal, Inc. (NYSE:DM) Q1 2024 Earnings Call Transcript May 9, 2024

Desktop Metal, Inc. misses on earnings expectations. Reported EPS is $-0.15926 EPS, expectations were $-0.06. DM isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings, and welcome to Desktop Metal First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Michael Jordan, Vice President, Finance and Treasury. Please go ahead.

Michael Jordan: Good morning, and thank you for joining today’s call. With me today are Ric Fulop, Founder and CEO of Desktop Metal; and Jason Cole, CFO of Desktop Metal. Please note, our financial results, press release and presentation slides referred to on this call are available under the Events & Presentations section of our Investor Relations website. This call is also being webcast live with the link at the same site. The webcast and accompanying slides will be available for replay for 12 months following this call. The content of today’s call is the property of Desktop Metal. It cannot be reproduced or transcribed without our prior consent. Before we begin, I’ll refer you to our safe harbor disclaimer on Slide 3 of the presentation.

As a reminder, today’s call will include forward-looking statements. These forward-looking statements reflect Desktop Metal’s views and expectations only as of today, May 9, and actual results may vary materially based on a number of risks and uncertainties. For more information about the risks that may impact Desktop Metals business and financial results, please refer to the Risk Factors section of Form 10-Q in addition to the company’s other filings with the SEC. We assume no obligation to update or revise the forward-looking statements. Additionally, during this presentation and following Q&A session, we may refer to our results on a non-GAAP basis. Non-GAAP measures are intended to supplement, but not substitute for performance measures calculated in accordance with GAAP.

Our financial results press release contains the financial and other quantitative information to be discussed today as well as a reconciliation of the GAAP to non-GAAP measures. I’ll now turn the call over to Ric.

Ric Fulop: Thank you, Michael. Welcome to our first quarter 2024 conference call, everyone. I’ll start by providing a high-level overview of our results and cost structure, followed by an update on the demand environment today and the progress we’ve made commercially in 2024. I’ll then turn the call over to Jason to cover our results in more detail. I’m super excited about the progress as we have worked very hard over the last few quarters to reduce our cost structure so that it can fit our revenue run rate and near-term opportunities. This now marks eight consecutive quarters of OpEx reduction and nine quarters of year-over-year adjusted gross margin expansion with our adjusted margins nearly doubling year-to-year. First quarter 2024 revenue was $40.6 million compared to the prior year period of $41.3 million.

While we saw a very slight decline in year-over-year revenue, this is a major improvement over the last year where our entire industry saw much larger declines. In fact, if you exclude business lines that we exited last year, such as Aerosint, in our North Huntingdon AIC, our revenue was closer to flat. Our industry is not fully out of the woods yet, and one data point doesn’t make a trend, but we’re heartened that all the hard work and sacrifices our team has made is paying off. As our funnel grows, we’re confident that the overall demand environment is getting more constructive, and we should begin to see incremental growth in the coming quarters, driven by digital casting, entry-level metal binder jet systems, growing technical ceramics, binder jet applications in a new figure sheet metal platform.

We also see great traction in the use of our products as evidenced by our recurring revenue, reaching a record 43% of revenues. As you know, recurring revenues have a higher margin and are generally a demonstration of the utilization of our products in the field. As we discussed on our prior call, we believe we’re just beginning to see the benefits of our expanded global installed base using added manufacturing equipment for real production. Utilization of Desktop Metal products at our customer sites is increasing as evidenced by the growth in our recurring revenue streams. Turning to our cost structure. We began our efforts in the second quarter of 2022 well before our competitors. And since then, we’ve implemented approximately $135 million of our $150 million in cumulative annualized cost saving measures.

We’ve been able to reduce our non-GAAP OpEx by 45% in that time, accelerating our path to profitability with only modest revenue losses. Importantly, as we have executed these measures, we have built a more lean and efficient operation, which we believe will greatly benefit us in the long run. From an adjusted EBITDA perspective, Q1 2024 was a record Q1 in our history, as our best adjusted EBITDA quarter, recognizing a $13.6 million loss for this quarter, $10.8 million improvement over the prior year’s period. From Q1 2022, the last full quarter since commencing our cost reduction efforts, adjusted EBITDA losses have decreased 53%. These losses have shrunk dramatically from $41.6 million to $13.6 million. One of the most impressive improvements to our business has been the growth in adjusted gross margins.

We have a record Q1 margin of 30.5%. This is a massive improvement of 1,200 basis points from Q1 2023 as we have integrated our operations and deemphasized lower-margin portions of our business to focus on IP-centric segments that are growing faster, where our products have the leading market share and have the high ground. Hindsight is always 2020. But as I look back on the past 18 months, I think we have gained important context. The Additive Manufacturing industry has averaged double-digit growth since inception, and there are no signs of abating that in the next decade as it permeates the $12 trillion manufacturing sector, but there are cyclical patterns that we can reduce. Our large capital expenditure purchases in the industrial sector, of Additive Manufacturing, where we’re the leader, it is highly sensitive to rates and the sudden cost of capital increases.

This surprised me and my peers last year as it lengthened some of our sales cycles. The result was slightly lower productivity per sales rep, but enough to drive 2023 into a slight contraction. If you take the average of our reps in the large-format industrial managed side, they each grew approximately $7 million a year in sales. This contrasts with less than $2 million for many of our peers. This means two things. First, we do not have enough go-to-market coverage in many of the regions we serve. Second, in the regions with mature adoption, we now have many customers adopting multiple systems for mass production, making existing reps more productive. So our strategy going forward, as we continue to execute our cost reductions is to also begin to reinvest in go-to-market.

We have a new internal plan where we’re adding sales capacity and go-to-market capacity around the world. We’re in the process of adding an additional 30 reps around the world over the next few quarters. And as these become more productive, we believe they will yield double-digit incremental growth through our binder jet business. No matter how you slice it, we are still in the early innings of Additive Manufacturing adoption, and we see a long-term bright future where we have a multi-billion-dollar opportunity with a rapidly growing installed base. For example, just in the printed digital casting space where technology leads, there are very big multi-billion-dollar opportunities. Today, the technology is proven and is used in products like the F-35, submarines, jet engines, rockets, advanced cars like Teslas and BMWs, but it’s still only being used at the tip of the spear and only in less than 5% of foundries globally.

I firmly believe that every single foundry should have at least one printer. And once you do the back of the envelope math with over 25,000 foundries globally, there’s a $25 billion CapEx cycle that will probably go over the next 10 to 15 years. This creates an opportunity for more than $1 billion in revenue a year for this market just in this segment. This is a fantastic opportunity since we’re the 80% market share leader in this space with best-in-class products and fully automated solutions. So in hindsight, I think revenue was slightly down last year for us and our peers in the Industrial Additive Manufacturing market because we only focused on cost reductions and as rates went up, we should have also expanded our go-to-market aggressively as the lengthened sales cycle affected sales productivity.

The good news is that projects are not being canceled, they’re simply taking a little bit longer to close, but they’re still in the funnel. Our goal is to increase the number of projects under consideration by expanding the go-to-market globally. We’re under 5% penetration for this market, and we believe we have a huge growth opportunity ahead. We continue our relentless marathon to adjust our cost structure and reach profitability, and we’re making excellent progress on this effort. We’re not totally out of the woods yet and don’t have full visibility to what will happen for the next year, but we’re focusing on execution and controlling what we can control, and we’re looking forward to letting our results speak for themselves this year. We’re looking forward to crossing the adjusted EBITDA profitability threshold this year and getting back to growth as we focus on the parts of our business where we have best-in-class solutions that solve important problems.

Before turning to the demand environment, I wanted to provide a quick update on our previously announced strategic alternatives process that we’re running for some of our photopolymer technologies. It’s been approximately eight weeks since we kicked off this process, and we’re having many active discussions and are pleased with the level of interest. We will continue to provide additional options as appropriate. Our goal is to help accelerate our path to get cash flow positive. I’d like to reiterate, we continue to believe in the strength of these technologies and their long-term potential. While difficult, this decision helps us trim cash-consuming businesses and focus on more profitable product lines, and we believe this will further accelerate our path to adjusted EBITDA profitability and eventually cash flow positive.

We continue to have the industry’s leading portfolio for mass production with nearly 100% of our products focused on end-use parts. And any small amount of growth at this cost structure is going to yield excellent results to the bottom line, especially given the high margin, high rate of consumable consumption tied to our production users. Moving on to the demand environment. As I explained in the previous few minutes, we’re not demand constrained. In the past two years, we have been go-to-market constraint. We believe there remains a substantial near and long-term growth opportunity available to us in Additive Manufacturing 2.0, and our goal will be to resume to double-digit growth as we add go-to-market resources. We’re already the global market share leader in binder jet by sales and installed base with the broader set of products and capabilities for mass production in the industry.

We also hold the leading market share position in Class II health care applications across a wide array of dental materials and end users, which is highly profitable as a business for DM. We believe we’re the only company in the world with commercial solutions for binder jetting of reactive materials like aluminum, titanium and advanced refractories like carbides and tungsten. We’ve continued to reorganize strength in our digital casting business, where we just attended a very successful Metalcasting Congress in Milwaukee and our Figur G15 metal launch which began late in Q4 is fully underway with a healthy pipeline. Our entry-level metal binder jet systems are also seeing renewed growth with some investments and changes in our go-to market.

Production of large silicon carbide parts and other technical ceramics on our large format binder jet systems like the 160 Pro and S-Max also continues to be a bright spot. In conversations with customers, high cost of capital continues to make larger investments challenging. That said, the proven high-value benefit of some of our more mature products is still extremely compelling for customers and has excellent return on investment linked to the adoption that we’re seeing in the market. This industry is a marathon, not a sprint, and we’re confident in the long-term compounding opportunity in front of us. Overall, I’m extremely pleased with our performance this quarter and with the opportunities and large projects ahead, we’re better positioned than ever to capitalize on growth.

Moving to the commercial side of things. In the first quarter, we had several new exciting updates. We announced that our Flexcera family of FDA-cleared residents for permanent and removable dental restorations continues to expand its reach in the growing digital dentistry market. Leveraging our foundational intellectual property in printing, we have formed consumable materials distribution partnerships with major players. In addition to Carbon and SprintRay and other premium dental printing hardware provider, Asiga, has now validated Flexcera for using its systems. This is a testament to the performance of our products in a major group. Rarely do printer manufacturers sell other people’s ink. In this case, Asiga can now offer materials to their thousands of dental labs and practices that use 3D printers across the world.

We also expect to continue distribution expansion with other 3D printing companies as they seek to adopt our breakthrough Flexcera materials for their best-in-class mechanical properties and take advantage of our strong blocking and foundational intellectual property position in area-wide photopolymer printing. This is great validation in the very high value in our large intellectual property portfolio of close to 1,000 patents. The dental 3D printing market is projected to hit $8.1 billion by 2029 with a compounded annual growth rate of 19% from ’23 to 2029 and is primarily driven by increasing demand for permanent restorations or cosmetic procedures like veneers and functional applications like dentures and implants, which are enabled by our products.

We’re very proud of the strong market position of Flexcera and our other products in this segment and only expected to strengthen in the stretch ahead. Another promising growth area of recurring revenue is our ScanUp Digital Dentistry Adoption products, which we are doing in partnership with Align Technologies. We continue to see good demand for this product. We expect this new business model to be a meaningful part of our company by the end of 2024, and it’s an attractive way for DSOs and dentists to digitize their practices and adopt printed permanent restorative parts. Restorative dentistry is posed to go 100% printed and digital over the coming decade, and this represents a $30 billion a year global opportunity, especially since insurance reimbursement for printed parts has begun to be approved in the U.S. in the past year.

Last quarter, I talked briefly about humanoid robotics. We believe our low-cost printed casting technology is a great solution for mass-producing low-cost limbs, and we’re looking forward for these new products to eventually get to market. We think it’s a huge, huge market opportunity. We’re working on many ways to make printed die cast malls for this market with a process similar to the technology we offer today to make molds for automotive body in white giga-casting. As I mentioned on the last call, we have several product launches scheduled for the rest of the year, which are the result of many years of work. In recent quarters, we began shipping our figure systems. We launched new versions of Flexcera. And this week, we’re launching a commercial aluminum and titanium biogenic solution.

I look forward to many exciting product introductions that we have scheduled for the rest of the year. Finally, me and our team are extremely grateful to the U.S. government for their support in our sector. DM is working in many areas to support the Department of Defense and the Department of Energy across many critical segments like shipbuilding and submarine building with advanced casting technology, aerospace parts in metal and technical ceramics for multiple airplane platforms and space platforms, nuclear fuel materials printing for SMRs and for space propulsion, printing of refractory materials for advanced defense applications and manufacturing of large aluminum and magnesium parts for light-weighting of many of our vehicle platforms.

At a time when defending democracies around the world and our way of life has become more important than ever, we look forward to supporting the defense industrial base to help our country and our allies. In closing, I’m very grateful for all of the hard work our team has put in. And looking ahead at the balance of 2024, I’m very excited by our progress and our focus on reaching profitability through the realization of our cost-saving initiatives, which we began well ahead of competitors. It’s amazing to me that there are no truly profitable printing companies at the moment, and none of them are at large scale yet. But with eight consecutive quarters of OpEx reduction and nine quarters of adjusted gross margin expansion, we’re closer than ever to get there later this year.

In the long term, Additive Manufacturing is the future, and Desktop Metal is poised to emerge from this cycle as the clear leader in mass production with a very profitable business in the long run. Unlike our competitors, who make their money on prototyping and tooling, which are now commoditized markets with lots of competition, we’re a leader with high market share in markets with under 5% penetration in very massive TAMs ahead. Our optimized cost structure will prove invaluable as growth materializes, and we realized leverage on sales as we implement our vision in our go-to-market expansion programs. We’re extremely optimistic on our go-forward path in future over Additive Manufacturing. I want to really thank our employees again, our customers, our partners and all of our shareholders for their continued support over the years and the sacrifices they’ve made.

We look forward to updating you on our progress next quarter. With that, I’ll turn it over to our CFO, Jason Cole. Jason?

Jason Cole: Thanks, Ric, and thanks, everyone, for joining us today. Beginning in the financial summary section, you will see our performance for the first quarter of 2024. Please note, we will be referring to several financial metrics on a non-GAAP basis. Reconciliation to GAAP data is included in the filed appendix. Before walking through our financials, I think it’s important to recap the strategic actions we’ve taken over the last couple of years, which will further contextualize the results and serve as the foundation for our confidence in our outlook. While the Additive Manufacturing industry has remained challenged, we took decisive action to right-size our cost base and accelerate our path to profitability. In June of 2022, we announced a $100 million cost reduction program.

As the demand environment continued to deteriorate as a result of higher interest rates, we announced an additional $50 million of annualized reductions in January of this year for a total of $150 million in cumulative annualized reductions. These reductions directly drove efficiencies across cost of sales and OpEx, which has steadily improved our operating leverage across 2023 and into 2024. With respect to the $50 million cost-out program announced in January, we’ve realized the majority of these savings in the first quarter with the balance completed through year-end. These measures included a further 20% reduction in our workforce, three additional site consolidations, continued efforts to streamline centralized costs and the sun-setting of several slow-moving product offerings.

In March, we took things a step further and announced our intention to de-emphasize select business lines principally within our portfolio where a lack of growth and scale have been a headwind to profitability. These actions are above and beyond the previously announced $150 million. As Ric mentioned earlier, we have strong belief in these products, but given the time to scale the business lines would more directly benefit from new ownership. We have been engaged in running a process to find alternatives for these businesses, and we’ll continue to update you when we have more to report. Overall, I am pleased with the progress we are seeing since 2023, and the following slides will demonstrate the progress we have continued to make. Consolidated revenue for the first quarter of 2024 was $40.6 million compared to $41.3 million in the first quarter of 2023.

Product revenue decreased primarily due to a reduction in units shipped during 2024 driven by the macroeconomic conditions impacting the Additive Manufacturing industry. This was partially offset by strength in our recurring revenues, of which grew 2% year-over-year. Non-GAAP gross margins were 30.5% for the first quarter of 2024 compared to 18% in the prior year period. Gross margins improved 1,250 basis points versus the prior year period, driven by improved absorption of fixed costs. Sequentially, gross margin decreased from 34% in the fourth quarter of 2023 on lower revenue in Q1 of 2024. On the next slide, non-GAAP operating expenses were $28.6 million for the first quarter of 2024. Through cost optimization, we reduced non-GAAP operating expenses sequentially by $2.9 million and year-over-year by $6.3 million, improving by 9.4% and 18.1%, respectively.

Adjusted EBITDA for the first quarter of 2024 was negative $13.6 million, improving year-over-year by $10.8 million compared to the first quarter of 2023. We continue to make progress towards our goal of adjusted EBITDA positive in the second half of 2024. Turning to the balance sheet. This quarter’s cash consumption from operations was down 69% when compared to $56.3 million consumed in the first quarter of 2022. As a reminder, 1Q ’22 is our comparison point as it was the last full quarter of results before commencing our cost reductions with continued improvement throughout. We finished the quarter with $83.1 million in inventory. We are well positioned to execute on expected first half demand and remain committed to optimizing inventory management, monetizing the inventory we have and improving cash flow and working capital in 2024.

We expect inventory to be a source of cash for the year. Further, we have accounts receivable of approximately $35.4 million, which we expect to turn through the next two quarters. Moving to our financial outlook section, we are reiterating our financial guidance for 2024. We anticipate generating revenue in the range of $175 million to $215 million for 2024. We expect the momentum in the improvement of adjusted EBITDA to continue throughout 2024. And as such, we expect full year ’24 adjusted EBITDA to be negative $30 million to negative $10 million. We do expect that in the second half of 2024, we will begin recognizing positive adjusted EBITDA as we realize the nearly full benefit of our $150 million cost savings programs. Additionally, the guidance reflected today does not include any businesses, which may roll-off as part of our strategic review process.

With that, we will take some questions. Operator?

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Q&A Session

Operator: [Operator Instructions] First question comes from Troy Jensen at Cantor. Please go ahead.

Troy Jensen: Hi, gentlemen. Congrats on the decent results here in a tough market.

Jason Cole: Thanks Troy.

Troy Jensen: Jason, just quick for you on – I guess, gross margins were pretty impressive, I was wondering [27%] to 30.5% here adjusted. I mean going forward with revenue growth, I’m assuming you’re going to expect gross margin expansion. And I’m just kind of curious if you could give us any flavor of guidance for what the next quarter or the full year could look like on gross margin line?

Jason Cole: We generally stayed away from giving direct guidance on non-GAAP gross margin. However, I think we’ve been pretty consistent that we thought we could get this thing in sort of our typical quarterly levels right around $50 million plus to be in the mid-30s. So I think that’s definitely a trend that we can continue. 1Q over 1Q, I agree, it’s impressive. A lot of hard work goes into that. And then the prior quarter, which is before some of the more recent cuts, we did 34% on a $52 million number. So I think the last two quarters are reflective of a lot of the savings we’ve expected to see. And hopefully, we can continue to drive it a little further as well.

Troy Jensen: And then on non-GAAP on OpEx, so $28.6 million in Q1. I know you probably got the tail-end of some cost reduction efforts, but now you’ve got these investments and go-to-market strategies. So do we think non-GAAP OpEx on a dollar amount has bottomed here? Is there a growth now because of the investments or just give some color on OpEx.

Jason Cole: Yes. I don’t think it’s bottomed. I think we have a little bit more down even with some of the strategic investments we’re making. The strategic investments are very targeted. We think they’re going to drive strong returns, and we’re trying to make sure they can do that rapidly. 1Q, we announced some changes in 1Q, so you don’t get a full quarter effect of that. So we do expect it to come down. Some of these cuts are being managed very carefully. So I’ll stop short of kind of saying exactly how much further down, but I would not call this a floor.

Troy Jensen: And then last one here for Ric. Ric, I’d love to just hear you talk a little bit about just the powder bed metal business and Studio Shop, the P-1, P-50, the other products too, but how is powder bed metal.

Ric Fulop: So actually, we’re quite happy with the results for Q1 in that part of the business was up roughly 9%. And when we had the move from channel to a more direct sales force, for a period of time, we let the sales force sell all the products. And obviously, the more expensive systems in the printed casting side, which are over $1 million, the sales team will sell what generates the — what is usually the lowest hanging fruit and generates the fastest, largest sort of return for them. And I think that maybe we should have split the sales teams at that time. So you had dedicated resources for the direct metal side and then dedicated resources for the printed casting side. And I think we’ve done that now since Q4, and I think you’re seeing the results that I think are quite good.

And in that segment, we have a very competitive position. We have over 30 materials. We’re the only people that do reactives. We’re the only people that do high-performance refractories that do carbides and our customers are in mass production. You can order Sandvik and Kennametal components that are mass produced in these classes of products. So I think we are in a very, very strong position. It is a group of solutions where we offer lowest cost per CC, even lower than the other folks that are in the market. We have a much larger installed base by a huge margin. And so the products are mature. They’re getting better. Material sets are getting better. We have a number of exciting things coming up in the future that you’ll see as the year progresses.

So it is still an important part of our business, and we’re very proud of those offerings. And we have a better portfolio, you can go from 0.5 liter up to 160 liters, whereas other folks in the market may have just one machine and it only does one thing, and so it’s very niche, you may only print stainless steel. I mean we have a pretty broad portfolio. Even on the studio side, I still think we’re the only people who do titanium in that class of product, whereas our other competitors don’t do those class of materials. And anyway, so we are committed to continue to grow the business and scaling it and very happy with the results that we had growth again in that segment, which last year was tough.

Troy Jensen: Great. Understood. All right, guys. Well, good luck going forward.

Ric Fulop: Thank you, Troy.

Operator: Thank you. The next question comes from Jacob Stephan at Lake Street. Please go ahead.

Jacob Stephan: Hi, guys. Thanks for taking my questions. Ric, I think you talked about a little bit in your demand environment section about adding some go-to-market resources. But at the same time, you’re making cost reductions. So maybe if you could just kind of help us bridge the gap between some of the resources you’re adding. Are these baked into your kind of assumptions already and just kind of any commentary around that.

Ric Fulop: Absolutely. Look, if you think about it as a full system and the cost of capital goes up, the effect of that is that the sales cycle tends to lengthen in a capital-intensive product like ours. And that means that it takes longer for this — if you have a certain number of salespeople, it takes you longer to close the number of deals that you have in your pipeline. And that’s what I think caught our industry flat-footed last year a little bit. We should have been adding capacity there while we were reducing our costs, but we were 100% laser-focused on cost reduction first. Now I think we are ready to start expanding and you averaged roughly $7 million per rep in our business. And we want to add capacity. We don’t have enough capacity in several regions in the U.S. We don’t have enough capacity in different parts of the world where there’s growth in this area.

They’re manufacturing hubs around the world for these class of products that are made with our machines. So I think it’s a great opportunity. And I think now is the time to start thinking about how do we get this company back to double-digit growth. And obviously, it takes time once you make an investment for those resources to become productive. But we are making the transition now from sort of stemming, basically stopping the losses and then now getting back into a growth mindset. And we’ve got a much improved cost structure. And I’m surprised for many of our peers, they still have OpEx north of — OpEx is larger than revenue. And I think it’s very hard for them to kind of break that cycle. We focused to bring down our OpEx now to a number that’s manageable and for the size platform we have and we are very happy — we still have leading market share in our segments.

In binder jet, we’re still kind of near 80% market share. And I think from here, growth and investment in go-to-market is going to drive the returns and the leverage. And we saw some of that in Q1 with roughly 15% on the printed casting side year-over-year and 9% on the metal and power bed products. And so I think it’s time to start stepping on the gas again. We won’t be like a straight line. So I think maybe a little lumpy. But I think if you give a couple of quarters, that small amount of investment, I think, is going to yield meaningful upside as we get leverage on this new cost structure.

Jacob Stephan: Okay. Understood. And then maybe, Jason, if you could just kind of help us understand, does 2024 look a lot like kind of 2023 with regards to seasonality with kind of Q2 up and Q3 down. Maybe if you could just kind of help us think about how we should break out the revenue conundrum here.

Jason Cole: Yes, thanks Jacob. I think the seasonal patterns have been pretty steady, even despite kind of year-on-year comps bring down across 2023. So I still expect sequentially to be 2Q will be stronger over 1Q, 3Q to be a little bit more muted with our largest quarter being 4Q. That seems like a seasonal pattern that we can depend on. I think the degrees and the highs in 2Q and 4Q are something we’re still proceeding with great caution. And I think that’s reflected in our guidance. So we’ll continue to — we’re re-upping our guidance today. We’ll keep you apprised of that as it unfolds. But I think we saw some signs of stabilization in 1Q, but we’ve still got a long way to go, and we’re going to continue to manage this with a lot of care and attention as we navigate through this.

Jacob Stephan: Okay, very helpful. Good luck, guys.

Jason Cole: Thank you, Jacob.

Operator: Thank you. We have no further questions. I will turn the call back over to Ric Fulop for closing comments.

Ric Fulop: Wonderful. Well, thank you very much to all of our investors and employees and for joining us today and for all of your interest in the company. And as always, if you have any follow-up questions, we’re happy to talk to you and don’t hesitate to call us. If you’re in the Boston area, please come visit and see our technologies in-person, and thanks again for joining our call.

Operator: Ladies and gentlemen, this concludes our conference for today. We thank you for participating, and we ask that you please disconnect your lines.