PROS Holdings, Inc. (NYSE:PRO) Q1 2023 Earnings Call Transcript

PROS Holdings, Inc. (NYSE:PRO) Q1 2023 Earnings Call Transcript May 2, 2023

Operator: Greetings. Welcome to the PROS Holdings First Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to Belinda Overdeput, Director of Investor Relations.

Belinda Overdeput: Thank you, operator. Good afternoon, everyone, and thank you for joining us. Our earnings press release, SEC filings, and a replay of today’s call can be found on the Investor Relations section of our website at pros.com. Our prepared remarks will also be available on our website immediately following the call and will be replaced by the official transcript, which includes participant questions, once available. With me on today’s call is Andres Reiner, President and Chief Executive Officer; and Stefan Schulz, Chief Financial Officer. Please note that some of the commentary today will include forward-looking statements including, without limitation, those about our strategy, future business prospects and market opportunities, and our financial projections and guidance.

Actual results could differ materially from such statements and our forecast. For more information, please refer to the risk factors described in our SEC filings. PROS assumes no obligation to update any forward-looking statements to reflect future events or circumstances. As a reminder, during the call we will discuss non-GAAP metrics. Reconciliations between each non-GAAP measure and the most directly comparable GAAP measure, to the extent to which available without unreasonable effort, are available in our earnings press release. Before I hand the call over, I’d like to remind our investors and analysts about our upcoming Analyst Day which will take place at 1:30 PM Mountain Time on Tuesday, May 23rd during the 2023 PROS Outperform conference at the Hyatt Regency in Denver, Colorado.

The event will be webcasted live for those unable to attend in person. Investors and analysts who wish to attend the full conference, in addition to the Analyst Day, will receive a discount on the conference registration. For more details on Outperform 2023 or to register, visit pros.com/outperform. I’d also like to notify investors of our recently published 2022 ESG report available on pros.com. Our ESG report highlights PROS views and approach to key environmental, social, and governance issues that matter most to our stakeholders. With that, I’ll turn the call over to you, Andres.

Andres Reiner: Thank you, Belinda. Good afternoon, everyone, and thank you for joining us on today’s call. I’m proud to share that we delivered a strong start to 2023. We grew subscription revenue by 15% and total revenue by 10%, while delivering a 75% improvement in adjusted EBITDA year-over-year. We’re laser focused on fueling our own profitable growth and our performance in the first quarter is a testament to this focus. As a result, we’re raising our full year 2023 guidance across all metrics, which will cover in his remarks. Underpinning the success of our team is our platform strategy, we continuously extend our market leadership position by consistently driving new innovations to market through our platform. For modularized capabilities to deliver real quantifiable value to our customers, creating the flywheel effect that is our landing expands sales strategy.

At the heart of the PROS platform is our AI. Our AI algorithms have been trained across industries to drive immense value for businesses. We have productized AI algorithms that predict demand, optimize supply chains, drive customer cross-selling, upsell recommendations, detect customer attrition, and predict customer willingness to pay among many others. Our algorithms, not only drive credible value, but are explainable, extensible, and highly scalable. Our explainable AI approach is what drives high customer adoption of our market leading algorithms. Our AI is extensible, enabling our customers and partners to infuse their own algorithms into our platform, bringing new innovations to life. Our AI platform is extremely scalable and supports mission-critical availability to deliver results in real-time to businesses around the globe.

To put our scalability and availability in perspective, we’re now processing 5.9 million transactions per minute with platform uptime of 99.97%. Annualize, that puts us at over 3 trillion transactions process in a year. That’s more than two and a half times the 2022 equity trading volume of the New York Stock Exchange. There has been an acceleration of market interest in AI technology to drive business outcomes, and I believe the growing acceptance of AI will be a long-term tailwind for PROS. In Q1, we launch a new generation of PROS dynamic pricing for ancillaries powered by AI. For airlines, ancillary revenues an increasingly important growth driver, with ancillary revenue as a percent of global airline revenue increasing 40% in the last five years.

PROS dynamic pricing for ancillaries uses reinforcement learning techniques to explore and percent ancillary service prices to passengers, aiming to drive more overall ancillary sales at more optimal prices over time. Dynamic pricing for ancillaries extends PROS leadership position in our offer optimization for airlines, along with our digital offer marketing, dynamic offers in digital retail capabilities. In Q1, we made our innovations even more accessible to customers across industries by enabling businesses to embed PROS Smart CPQ solution in a Microsoft Power App. Businesses can now integrate our market leading capabilities with other applications in selling workflows using a low-code no-code development approach, further extending the digital footprint of PROS platform.

Now I’d like to talk about some of the incredible new customer lands we had in Q1. Europcar, one of the world’s largest rental car companies selected PROS to optimize B2B and B2C selling. Europcar will benefit from our expertise in the rental car industry, using our AI models for demand forecasting, fleet optimization and fleet distribution, empowering them to optimize revenue management and capacity controls. With our pricing and CPQ capabilities, Europcar will also streamline the buying experience for corporate agreements to drive a higher conversion of sales. With addition of Europcar, PROS now powers commerce for three of the top five rental car market leaders globally. We also continue to welcome new customers across areas of manufacturing and distribution.

Meyle, a manufacturing distributor of automotive parts selected PROS to optimize pricing and fueled their profitable growth in the wake of inflationary pressure and supply chain disruption. Another example is Nature’s Touch, leading manufacturer of frozen fruit, who selected PROS to streamline and deliver market relevant prices to customers around the globe. We also welcome QuidelOrtho, a leading manufacturer of diagnostic healthcare products. QuidelOrtho is beginning their journey with PROS powering high volume quotes to integrated delivery networks and group purchasing organizations. Now I’ll share a few examples of expansions from Q1. Air Europa expanded their solution to incorporate our latest innovations in group sales optimization, including dynamic pricing, ticketing and payment capabilities to enable a fully digital end-to-end experience for their customers.

With this expansion, Air Europa is now driving value from every airline centric capability of the PROS platform. We continue to see success in the energy space where PROS provide solutions to five of the top 10 largest oil and gas companies in the world. In Q1, we expanded our relationship with Phillips 66, with their decision to migrate to our cloud solution to take advantage of our latest AI innovations for fuel price optimization. A core component of our land and expand strategy is value realization. PROS commission Forrester consultant, part of leading global market research company, Forrester Research to independently interview several PROS customers to access the value generated from the PROS platform. The Forrester Total Economic Impact study showed an investment in PROS paid for itself within nine months and generated a 400% return on investment in the first three years for the interviewed customers.

Most enterprise software solutions have a hard time to demonstrate direct and quantifiable value, but this study conducted by Forrester showed once again the direct correlation between PROS solutions and a quantifiable improvement to revenue and margin. We’re going to share more about our new innovations and how industry leading companies are leveraging these new innovations to drive profitable growth at our upcoming Outperform conference scheduled for later this month. Outperform is one of the preeminent AI conferences in the world, and we’re looking forward to bringing together experts from across industries to discuss how AI can drive business forward. Before I close, I’d like to thank our incredible global team for their passion and dedication to PROS or customers in our communities.

I’d also like to thank our customer partners and shareholders for their ongoing supportive PROS. With that, I’d like to turn the call over to Stefan to cover financial performance and outlook.

Stefan Schulz: Thank you, Andres, and good afternoon, everyone. Our team delivered a strong first quarter, putting us in a position to improve our growth and profitability outlook for the year. I’d also like to highlight a couple of positive signs from the first quarter that should help us going forward. First, and to echo Andres, we continue to see success in our land and expand sales motion. A great example is Vector Security, a new customer in Q4 who just one quarter later expanded their CPQ capabilities to support their dealer network in addition to their direct sales channel. Second, the continued recovery of travel is a good leading indicator for our business. Despite economic uncertainty, airline projections of passenger demand remain strong.

IATA is projecting that global industry passenger volumes will recover to 2019 levels sometime in 2024. While the benefit to PROS is not immediate, we are pleased to continue seeing positive signs in the travel industry. In Q1, we did recover approximately $1 million from a carrier that previously declared bankruptcy. This puts us in a strong position to recover a total of $2 million to $3 million for the year from carriers who either declared bankruptcy or from carriers who were offered concessions during the pandemic. Now, for our first quarter results. Subscription revenue in the first quarter was approximately $56 million, up 15% year-over-year, and total revenue was $73.2 million, up 10% year-over-year, both exceeding the guidance ranges.

Our first quarter recurring revenue was 84% of total revenue. Non-GAAP subscription gross margins were 78% for the quarter, improving from 76% a year ago. And our non-GAAP recurring gross margins, which combines both subscription and maintenance margins, was 77% for the quarter, up approximately 100 basis points over last year. As we discussed last quarter, we have largely completed our migration to the cloud, and as of Q1, maintenance revenue now counts for less than 8% of our total revenue. By the end of 2023, we expect maintenance to account for approximately 6% of our total revenue. There are certain fixed costs to support the remaining maintenance customers causing the decline in maintenance margins, but given the declining size of this revenue component, there is minimal impact on overall recurring gross margins.

For this reason, we will focus on reporting subscription gross margins going forward. As expected, we experienced a decline in services margin in Q1 due to the seasonal increase in travel and payroll taxes. We continue to project a services margin that is slightly positive for the year. Our trailing 12-month gross revenue retention rate in the first quarter continues to be above 93%. Our adjusted EBITDA loss in the first quarter was $2.3 million, beating guidance and a 75% improvement year-over-year, reflecting our continued focus on driving efficiency improvements. Free cash flow burn in the first quarter was $4.5 million, which was slightly better than our expectations and a 61% improvement over last year. As a reminder, it is typical for our business to see a cash burn in the first half of the year and cash generation in the second half of the year.

We expect a free cash flow burn in Q2, mainly due to the timing of some larger expenses such as our Outperform conference. We exited the first quarter with $192.4 million of cash and investments. Our non-GAAP loss per share was $0.06 per share. We were pleased with our first quarter bookings, but our calculated billings declined 4% year-over-year and increased 6% for the trailing 12 months. The year-over-year decline in quarterly calculated billings was due to some timing anomalies related to renewals and customer migrations where the new SaaS anniversary dates differ from the historical maintenance renewal dates. These timing anomalies will be offset in the coming quarters with much of it anticipated to occur in the second quarter when we expect calculated billings growth to improve significantly.

Now, turning to guidance. We expect second quarter subscription revenue to be in the range of $56 million to $56.5 million, representing 12% year-over-year growth at the midpoint. We expect second quarter total revenue to be in the range of $72.2 million to $73.2 million. We expect second quarter adjusted EBITDA loss to be between $2.2 million to $3.2 million. And to reiterate, the second quarter is our highest marketing expense quarter for events such as Outperform. Using an estimated non-GAAP tax rate of 22%, we anticipate second quarter non-GAAP loss per share of between $0.05 and $0.08 per share based on an estimated 46.1 million shares outstanding. Because of our strong start in the first quarter, we are raising our full year revenue and profitability guidance.

We now expect subscription revenue to be in the range of $231.7 million to $233.7 million, and total revenue to be in the range of $295 million to $297 million. We expect full year adjusted EBITDA profit of between $3.5 million and $6.5 million, and free cash flow in the range of $2.5 million and $6.5 million. We are also raising our subscription ARR guidance range for the full year. We are now anticipating a range of between $251 million and $254 million. In closing, I would like to thank our global team and our customers for their continued support of PROS. We also thank you for your support of PROS, and we look forward to speaking with you at our upcoming events, including our Analyst Day on May 23rd, which will take place within our Outperformed conference.

I will now turn the call back over to the operator for questions. Operator?

Q&A Session

Operator: Thank you. At this time, we will now be conducting a question-and-answer session. Our first question comes from Patrick Schulz of Baird.

Patrick Schulz: my question, and appreciate the updated guidance you provided. Just from a revenue standpoint, subscription revenue growth is implied to accelerate in the back half of the year from 12%, the growth guidance of Q2. Can you just provide some additional color on the level of confidence you have in this acceleration and maybe what visibility you have in the second half of the year?

Stefan Schulz: Yeah. So, Patrick, this is Stefan. I’ll take that. So, as we said in Q1, and it’s still true to today, we had it really factored in the bookings opportunities that we see in the second half. We’re still focused primarily on what we see today for the next, call it, quarter or two. So, we’re early not factoring in a lot for Q4. That said, because of some of the revenue recognition patterns we’ve had, especially in our travel part of our business, we have good visibility to what deals had that have already been booked that are going to be queued up for revenue recognition starting in the second half of the year. So, we have pretty good visibility to what we’re seeing from a subscription acceleration, to your point in the second half of the year based on deals that have already been booked.

Patrick Schulz: Okay. That’s helpful. And then, maybe one quick follow-up on travel. In general, and you guys point out too that it appears that travel and flight data has shown some improvement over the recent months, especially across Asia-Pacific. Can you just maybe comment on how the travel recovery has been relative to your expectations at the start of the year? And with the conversations you were having with your airline customers, how would you describe their ongoing capacity to invest in digital solutions, even as we potentially enter to a more challenging macro?

Andres Reiner: Yeah. Patrick, this is Andres. We’re very pleased with the overall performance of the travel business. And I would tell you airlines are investing very aggressive on digitizing their customer experience. I talked about Air Europa by my prepare remarks moving to GSO, so moving all of the group sales to a full digitized experience. I think those areas are resonating very, very well in the market. So, dynamic offers or digital retail platform, next-generation RM, the areas around ancillary revenues, which we talked about one of the newest innovations so on our next-generation AI solution, those are the areas that are resonating very well in the airline industry. And they see the value that that drives for the business. Overall, we’re seeing strong market demand.

Patrick Schulz: Great. Thanks for taking my questions, guys.

Andres Reiner: Thank you.

Operator: The next question comes from Chad Bennett of Craig-Hallum Capital Group.

Chad Bennett: Great. Thanks for taking my questions. Nice job on the quarter and it’s good to see the incremental raise on the guide. I — so I hopped in kind of mid prepared remarks, so I just want to — hopefully I’m not redundant, but just in terms of the B2B business and deal activity there, I know last year deal activity was very robust, I think double deal over year. Andres or Stefan, just can — did you address that in the prepared remarks or can give us an update on how deal activity is going there?

Andres Reiner: Yeah. Chad, great question. Overall, we are very pleased with the overall performance of B2B. Had a very strong start for the year. And overall, as we talked about last year was our first year, then we moved to our platform launch, which happened in late in 2021. And we saw a pretty significant deal volume growth. We’re seeing now more normalized growth rates of that solution. But we’re very pleased with overall performance and overall growth. I would tell you that, that it’s been great to see how we can start in many organizations from small lands to very sophisticated lands with the platform and receptivity has been very positive. So, overall, B2B continues to drive our growth and very strong performance in the first quarter.

Chad Bennett: And did you have any mention or have you seen any additional deal scrutiny, especially on the larger end of the deal sizes?

Andres Reiner: Great question, Chad. I will tell you, look, the market continues to be a challenging market. I will say we — I talked about it last year a lot, to focus on making sure that we’re landing small, we’re proving our ROI and our value in that we’re getting time to value fast and we’re — that message is resonating and we’re seeing that get our projects through to success. So, overall, I will tell you that, we haven’t seen any major shifts from field delays, overall. But I will tell your sales team very focused on finding a path to lands small, get to value quickly and be able to prove the ROI. And that’s why we also had in prepare remarks around the Forrester Research value study, another data point independent on the value that we drive. And I think that — that’s just another testament to the direct correlation that our solutions strive to helping companies strive both revenue and margin improvement.

Chad Bennett: Got it. Thank you. And then maybe one quick one for Stefan, if I could. Stefan, just on the billings, the timing of the customer migrations and renewals in the quarter, which looks like they’ll reverse here in Q2. But just is there any way to quantify the impact that you saw in the first quarter of the timing issues?

Stefan Schulz: Yeah. Chad, I — we spent a lot of time looking at this, because when you look at our quarterly calculated billings, they literally — there’s no trend to really identify. But what we can tell you is we look forward and we look at what’s up for renewal and what we plan to bill, including some of those anomalies that we talked about from Q1, you can expect to see a growth rate in the quarter, next quarter north of 20%. So, I mean, that kind of gives you an idea how much it’s going to move just between quarters.

Chad Bennett: Yep. That does give us an idea. All right. Thanks. Nice job again.

Andres Reiner: Thank you.

Operator: The next question comes from Parker Lane of Stifel.

Matthew Kikkert: Hi. This is Matthew Kikkert on for Parker. Thanks for taking my questions. To start, have you seen any inflection this year in the number of conversations around your AI, excuse me, AI capabilities with your Gen 4 AI and how often is that one of the primary factors that companies are having in their decisions decision to go with PROS?

Andres Reiner: Yeah. Great question. Definitely, I will say that there’s a lot more conversations about AI and — or Gen 4 AI, we demoed the simplicity of the new neural network algorithm and how we can show the value opportunity even during a sales cycle by loading data very quickly, showing what the value potential is. And I think that’s definitely driving lands. It’s also helping us drive expansions faster. So, overall, definitely I will say that the attention on AI has increased quite a bit and we’re seeing that as a positive benefit to our business.

Matthew Kikkert: Okay. That’s great to hear. And then secondly, how successful has the build out of your quota carrying expansion team been so far? And have you seen any type of early returns there?

Andres Reiner: Yeah. So, we’re very pleased with the quota carrying team, and the team we have to deliver to our updated guidance. So, overall, we feel very good about the team. We’re also seeing some of the new members that come in, drive performance and close deals in the first quarter. So, it’s still early, a small sample size, but I would tell you that, not just the building out the team, but the enablement, really, really proud of the sales leadership and the sales team and everything they’re doing to scale the organization.

Matthew Kikkert: Terrific. Thank you very much.

Andres Reiner: Thanks.

Operator: The next question comes from Brian Schwartz of Oppenheimer.

Brian Schwartz: Yeah. Hi, thanks for taking my questions this afternoon. Andres, wanted to dig in deeper again on the AI conversation. When you’re talking with customers and you’re demoing it and they’re starting to deploy it, are the customers starting to see improved productivity in conversions? And then the question I wanted to ask you, if they are seeing that, can you talk about the potential additional monetization path that there could be for PROS to be able to capture some of that increasing benefits that your customers are likely to start seeing with the embedded AI and the products?

Andres Reiner: Yeah. Great question, Brian. The beauty of our Gen 4 technologies, we can monitor the uplift that our guidance is generated. So, we can give them in a trial, let’s say, they start to run in a region, certain reps are using the technology. We can quantify same time over time, same type of business, the uplift that we’re generating both revenue and margin. And there we can create a real value estimation that AI is generating. Then our opportunity to expand our manyfolds is one, deploying across more divisions, deploying more advanced capabilities within our platform. So, if you look at both our Price Optimization Platform or CPQ platform, we have everything from essentials to vantage to ultimate edition. So, the level of sophistication that you can drive, let’s say you may start with your spot deals, then you may move to agreements, you may move to channel and digital channels.

There’s many different expansion points that we can drive within a B2B company. And that to me was — for us, game changing and moving to our platform in late 2021 is giving us that ability to start small, quantify the value quickly, and then be able to drive more sophistication and capabilities for a customer over time. And Stefan talked in his prepared remarks on Vector, as an example of landing in a follow up quarter expanding, so we’re seeing that play out.

Brian Schwartz: Thank you. And one question Stefan for you. Just looking at the updated guidance for the full year, it’s just a question around the assumptions, because it did look like you beat in Q1 more than you’re raising the full year revenue and profitability guidance. And so, I’m just wondering, if there’s extra conservatism in there, or if there are some moving pieces. Thanks.

Stefan Schulz: Yeah. Yeah. Brian, it’s more the latter. We — I noted in my prepared comments that we had a recovery from a bankruptcy that occurred in the first quarter and that represented about $1 million. And so that was a part of the beat, not the whole part, but a part of it. And that’s really more one time. So, we are not going to see that benefit throughout the rest of the year. And so, that’s why you see a little bit of a — what may appear to be conservatism, but in reality we’re just taking that out of the comparisons between Q1 and then the rest of the quarters in the year.

Brian Schwartz: Thank you for taking my questions.

Andres Reiner: Thank you.

Stefan Schulz: Thank you.

Operator: The next question comes from Scott Berg of Needham.

Scott Berg: Hi, Andrea and Stefan. Thanks for taking my questions.

Andres Reiner: Thanks Scott.

Scott Berg: Congrats on the good quarter. I just got a couple — thanks. Following up on Brian’s question there, Stefan, the extra $2 million to $3 million for a year that’s coming from some of the recovered contracts. Can you mind us where we are in that process? I believe there was $18.5 million that went into kind of either forbearance or bankruptcies. But what does that recovery path look like, and how much more do you think you’ll ultimately recover from that number? Thank you.

Stefan Schulz: Yeah. So, Scott, we’re probably about halfway this year. We’ll be about a little over halfway in collecting what we feel like is recoverable. Now, not all of that $18 million is recoverable. We estimate somewhere between $10 million and $12 million is going to be ultimately recoverable. And some of it, like we saw in the first quarter, isn’t all recurring. Most of it is recurring by the way. And so — but I would say we’re about halfway to getting to that $10 million to $12 million and the balance of it’ll come in 2024 and in 2025.

Scott Berg: Got it. Helpful. And then, Andres, both you and Stefan talked about the land and expand strategy and some of the successes you had in the quarter. How should we think about kind of what — I guess what that cadence looks like versus pre-pandemic levels? I know you’re having a lot of success there, selling some smaller deals, but getting customers to expand their relationships really quickly. Maybe the first quarter, maybe multiple quarters in a row. Do you feel like you’re on the same cadence as you were pre-pandemic or do you still a little ways to go there? Thank you.

Andres Reiner: I would tell you from a B2B, absolutely we’re there or even beyond because we didn’t have the same platform that we had — that we have now. I would say travel, we’re getting to that point, but we still are not fully back to the pre-pandemic level. Definitely, travel is continuing to improve. And I would tell you that in travel also our platform strategy allows us to land smaller in terms of capabilities, which has been part of our strategies to bring more new capabilities that we can activate quickly and get to value. And that’s working well as well.

Scott Berg: Great. That’s all I have. Thanks for taking my questions.

Andres Reiner: Thank you.

Stefan Schulz: Thank you.

Operator: The next question comes from Devin — my apologies. The next question comes from Devin Au of KeyBanc Capital Market.

Devin Au: Great. Thanks for taking our question. First one I have is around I guess generative AI, a lot of buzz and nice to see that PROS is also hearing an uptick from customers looking into AI. But maybe internally within PROS, I mean, how are you guys kind of leveraging that technology to drive automation and efficiency?

Andres Reiner: Yeah. Great question. So, we’ve always been at the forefront of AI and have been working actively with Microsoft on open AI. Various areas, both internal operations in areas around our overall operations of the business, but also in terms of product capability. And those will showcase some of those that are upcoming Outperform, but very focused. Think of it on the customer experience angle and the employee experience angle of our application. Generative AI really compliments a lot of our predictive AI capabilities and the combination can be very powerful. We’ve been very active with Microsoft, and their open AI team in collaborating directly with our science team on those areas.

Devin Au: Got it. No, that’s great to hear. And then, just one quick housekeeping question. I think, currency moves slightly more favorable in the past quarter. Maybe just any update on how currency is being contemplated now in the updated revenue guidance?

Stefan Schulz: Yeah. There’s an old adage of it’s good to be — rather be lucky than good. And I think that certainly applies to us and how currencies have impacted this. You may recall last year, we didn’t really have that much of a currency impact. We had — it was very minor, maybe 1% at the peak in a given quarter. And now that they’ve turned, it’s worked out to where our billings from an international perspective have gotten to pick back up on the better rate environment. And so, we’ve — I think we’re going to be in a situation, assuming currencies stay where they are, where there’s going to be a very limited impact on currency for us both last year and this year.

Devin Au: Got it. Thanks Andres. Thanks Stefan.

Andres Reiner: Thank you.

Stefan Schulz: Thank you.

Operator: Ladies and gentlemen, we have reached the end of the question-and-session. I would now like to turn the call back over to Belinda Overdeput for closing remarks.

End of Q&A:

Belinda Overdeput: Thank you for listening to today’s call. We look forward to speaking with you at conferences and events this quarter. In addition to hosting our Analyst Day, we will be attending the Needham Technology & Media Conference on May 16th in New York City, the Craig-Hallum 20th Annual Institutional Investor Conference on May 31st in Minneapolis, the Jefferies Software Conference on June 1st in Newport Coast, the Stifel Cross Sector Insight Conference on June 6th in Boston, and the Baird Consumer Tech & Services Conference on June 7th in New York City. If you have any questions following today’s call, please contact us at ir@pros.com. Thank you, and goodbye.

Operator: Thank you. Ladies and gentlemen, that does conclude today’s conference. Thank you for attending. You may now disconnect your lines.