Rover Group, Inc. (NASDAQ:ROVR) Q2 2023 Earnings Call Transcript August 1, 2023

Rover Group, Inc. misses on earnings expectations. Reported EPS is $-0.02 EPS, expectations were $-0.01.

Operator: Good day and thank you for standing by. Welcome to the Rover Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Walter Ruddy, VP of Investor Relations and Capital Markets. Please go ahead.

Walter Ruddy: Good afternoon. Thank you for joining us to discuss Rover’s second quarter 2023 earnings results. In this call, we will be discussing the results announced in our press release issued today, which is available on our Investor Relations website at investors.rover.com. As a reminder, this call is being webcast live from our Investor Relations website and is being recorded and will be available for replay from there shortly after the call. With me today is Aaron Easterly, Chief Executive Officer and Co-Founder; Brent Turner, President and Chief Operating Officer; and Charlie Wickers, Chief Financial Officer, Rover. Before we begin, I’d like to remind everyone that management may make certain forward-looking statements within the safe harbor provisions of the Securities Litigation Reform Act of 1995.

These including future GAAP and non-GAAP financial and operating results and targets, business metric performance in 2023 financial guidance, marketing, product investment and other strategies, anticipated future growth, prospects, margins, profitability and liquidity, expected investments and initiatives and their impact, macroeconomic, public health and travel factors and trends, partnership and expansion opportunities, U.S. and non-U.S. market growth expectations and opportunities and other future events, industry and market conditions. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results or performance to differ materially from those expressed or implied during the call, including the risks and uncertainties included under risk factors and elsewhere in our most recent Form 10-K and subsequently filed Form 10-Q.

All forward-looking statements speak only as of today and are based on current expectations, estimates, forecasts and projections and the beliefs and assumptions of management. We undertake no duty to update this information unless required by law. You should not place undue reliance on forward-looking statements as they are not guarantees of future performance. We will also discuss certain non-GAAP financial measures. The most directly comparable GAAP financial measures and historical reconciliations to the most directly comparable GAAP measure can be found in the non-GAAP reconciliation supplement posted under News and Events, Presentations at investors.rover.com. For the reasons discussed in the non-GAAP reconciliation supplement, we have not provided the most directly comparable forward-looking GAAP measures or a reconciliation of any forward-looking non-GAAP measures.

Non-GAAP financial measures should not be considered as a substitute for or superior to GAAP financial measures. Unless otherwise noted, we will compare all Q2, 2023 metrics to Q2, 2022 in this call. With that, let’s get started. I’ll now turn the call over to Aaron Easterly, Co-Founder and CEO. Aaron?

Aaron Easterly: Thanks Walter, and thank you everyone for joining us today. I will start by outlining our second quarter 2023 earnings results and give a few highlights before turning the call to Brent to discuss our bookings performance and investments in marketing and products. Charlie will then close out the prepared remarks by providing additional detail on the financials and our guidance before we take questions. We had a fantastic second quarter. Gross booking value grew to $266 million. Revenue increased to $59 million, and adjusted EBITDA expanded to $10.5 million, or an 18% margin. As a result of our strong performance and reduced expected near-term macro risk, we are again increasing our revenue and adjusted EBITDA guidance for the year.

Beyond these headline results, we are building on many of the priorities we have had for the last two years. First, we continue to demonstrate strong operating leverage in our business with notable adjusted EBITDA margin expansion. Even while leaning into marketing investments ahead of the summer travel season and investing in product enhancements, adjusted EBITDA margin increased substantially from 10% of the prior year to 18% this quarter, driven both by scale and investments we’ve made to improve our cost structure. We have articulated a long-term target of greater than 30% adjusted EBITDA margin, and we believe our Q2 results are further evidence of our ability to achieve this goal. Second, we achieved solid new customer bookings of 279,000 in the face of sluggish category demand.

This was another record quarter, up 7% over last year’s record levels, and now pacing our measure of new business demand by approximately 17 points. We believe that this is the result of additional share gains. Third, we had another quarter of strong growth in our non-U.S. markets. European GBV grew 59%, and Canadian GBV grew 34%. GBV for cat-only bookings grew 151% in Europe and 60% in Canada, reflecting our continuing strengths with cat parents. Further improvement in our drivers of unit economics in Europe allowed us to expand our marketing investments in these fast-growing geographies. By doubling down on existing channels while also launching new channels, we were able to speed up the scaling of these local marketplaces. France and the U.K. responded particularly positively, igniting both demand and supply.

Fourth, we saw continued strength in our most recent cohorts. Expected LTV from customers acquired during the first half of 2023 are tracking the all-time high, driven by increases in ABV, growth in repeat bookings per customer, predominantly in dog walking and daycare, and reduced cancellation rates. As noted last quarter, we’re also seeing a positive trend with pre-pandemic cohorts, where these customers have now recovered to the incremental trends we would have expected had there been no pandemic. Finally, product improvements have strengthened top and bottom line results. Enhancements to how sitters view bookings on their Rover calendar and our newly launched sitter insights dashboard are examples of changes we’ve made that we believe are increasing customer acquisition levels, long-term platform stickiness, as well as customer satisfaction.

Additional adjustments to how our payments are processed and customers are supported are creating cost efficiencies that are driving increased bottom line margins. I’m proud of what we’ve accomplished this quarter, and I’m excited about the remainder of the year. Our team is focused on improving our offering to uphold our mission of making it possible for everyone to experience the unconditional love of a pet. With approximately 87 million pet-owning households in the U.S. and a similar amount in Europe, there’s tremendous growth potential in our business. Our Q2 performance and our improved outlook is a testament to the engagement we are driving and our progress towards our long-term operating targets. With that, I’ll turn over the call to Brent to discuss our bookings and operational performance.

Brent Turner: Thanks Aaron, and good afternoon to everyone on the call. I will start by giving a bit more commentary on our success in driving booking volumes. Then I will discuss marketing expenses and the execution of our marketing strategy. Finally, I’ll wrap up by highlighting some of our product investments during the quarter. In Q2, we continued to generate record levels of new and repeat business on the platform. Total bookings increased 20% versus Q2, 2022. Repeat bookings were 1.5 million, a 23% increase year-over-year. New bookings totaled 279,000, up 7% over our record second quarter in 2022, even as our measure of approximate changes in demand, especially from new customers, was down roughly 10% for the second quarter.

This new bookings performance is especially encouraging as it represents our highest level in a quarter to date and suggests that we are gaining additional market share. Turning to marketing. In Q2, non-GAAP marketing expense was 22% of revenue, in the middle of our target range of 18% to 25%. As we have mentioned on previous calls, our category development strategy is to steadily build non-search marketing spending as we are able to prove its effectiveness in driving new customers at acceptable unit economics. Here we are making progress, and in Q2, we built upon our testing success in prior quarters to establish a bit of a ramp going into summer. We continue to see positive results, including on Nextdoor, YouTube, and in streaming and linear television.

We are especially pleased with our results outside the United States with YouTube and some targeted display media spending. As we look into the back half of the year, we are focused on scaling YouTube and Nextdoor while also testing new channels such as TikTok. In Europe, as we build our marketing momentum, we are focused on improving our creative development process to more effectively match the nuances of each individual market. And in all geographies, we are revisiting our framework for messaging to potential customers from initial awareness through to first booking. I would now like to turn to product investments. As we have discussed in other calls, our product strategy has two general goals. The first is to drive new bookings by increasing conversion rates for new customers.

The second is to drive repeat bookings by improving platform stickiness for existing customers on both sides of the marketplace. Q2 is another quarter of executing against that strategy, and we are excited about our momentum. First, we released a very well-received update to the pet care provider calendar experience. Here, we enabled care providers to more easily view and manage their availability of pet parents. Second, we made a set of enhancements to the way care provider information is displayed in our search experience to help facilitate better matches between care providers and pet parents. Third, we released a broad improvement to our sitter insights dashboard to help pet care providers understand how to better perform on key metrics of pet parent happiness.

We continue to test additional platform enhancements, and we hope to announce further releases in future quarters. Overall, our team is focused on improving our offering and building awareness of Rover to drive both new and repeat bookings. I’m proud of our efforts during the quarter, and I look forward to further progress. Now I’ll turn the call over to Charlie to provide detail on our financial performance.

Charlie Wickers: Thanks Brent. I’ll begin by providing an update on our financial results for the second quarter, followed by guidance. Rover produced excellent financial results during the quarter, including strong revenue growth and continued expansion of adjusted EBITDA margin year-over-year, clearly demonstrating the margin leverage possible as we scale toward our long-term targets. For the quarter, revenue was $59 million, up 35%, while GBV was $266 million, up 25%. The increase in revenue was primarily driven by three factors. First, approximately half of the revenue increase was driven by the 20% growth in bookings Brent provided detail on. Second, approximately 15% of the revenue increase was driven by higher ABVs of $153, which were up 4% year-over-year, and as expected, moderating.

The main driver of ABV growth was an increase in average price per unit of service. And third, approximately 15% of the revenue increase was due to the higher recognized take rate of 23.3%, up from 21.9% a year ago, which benefited from the start of a shift of all U.S. owners to the 11% fee structure and the 140 basis point cancellation rate improvement. The balance of the revenue increase was from the combination of timing related to the 4th of July holiday and continued growth in ancillary revenue. Improvements in take rate and cancellation rate have driven both growth and revenue, as well as expansion of our margins. In Q2, our non-GAAP contribution margin increased to approximately 82%, from 80% in Q2 of 2022. Approximately half of the lift was due to the take rate and cancellation rate improvements.

The balance was driven by the operating leverage from our variable tech infrastructure costs. In late Q2, our product team further expanded our margins by implementing enduring efficiencies to our merchant fees through improvements of our payment processor configuration. Going forward, we expect approximately a 70 basis point increase in our non-GAAP contribution margin relative to recent performance. These changes are expected to increase our LTVs, improve our unit economics, and enable further investment in marketing while increasing our confidence in long-term margin targets. Moving to expenses. We efficiently invested in marketing to drive growth into the summer peak season, while managing costs across the business. In addition to strong revenue performance, the bottom line beat for the quarter was driven by three items.

First, continued leverage and operations and support. In Q2, non-GAAP operations and support was 12% of revenue, an improvement from 14% of revenue in Q2, 2022. Second, efficient marketing investment is driving scale in our business. In Q2, we were able to invest an additional $2.4 million on marketing, while reducing our non-GAAP marketing expense as a percentage of revenue to 22% from 24% in Q2, 2022. Third, our commitment to managing fixed cost and non-GAAP product development and non-GAAP G&A. Non-GAAP product development was 11% and non-GAAP G&A was 17% of revenue, both decreasing from 12% and 20% of revenue respectively in Q2 of 2022. This quarter’s performance has provided additional data points to support our view that recent product improvements have positioned us for positive near and long-term returns.

We believe that there are additional opportunities for us to consider which may result in incremental investment. Absent additional investments that may drive further upside to our medium term trajectory, we continue to believe that our cost structure is generally right-sized. Strong revenue, improved non-GAAP contribution margin, and continued focus on marketing efficiency and our expenses were the primary drivers of our adjusted EBITDA of $10.5 million, or a margin of 18%, up from an adjusted EBITDA of $4.2 million, or a margin of 10% in Q2 last year. We remain committed to showing the margin leverage potential of Rover and our ability to scale bottom line results and believe that our year-over-year incremental margin has continued to demonstrate this commitment.

Moving to an update on our buyback program. Through July 31st, we have repurchased a total of 5.6 million shares for an aggregate purchase price of $26 million, crossing the halfway point of our program. And as of July 31st, our shares outstanding is approximately 181.8 million, a decrease of approximately 2.5 million from year-end 2022. In summary, our business produced phenomenal top and bottom line results in the quarter, while also investing in our product and delivering capital to shareholders. These results are a testament to the focus and dedication of the Rover team, and I’m proud to work alongside them. Now turning to guidance. As Aaron discussed, we are thrilled by our performance as we head into the peak summer travel months and thus are raising our full year 2023 guidance.

The increase in our guidance takes into account our overperformance in Q2, as well as our improved outlook for the second half of the year. Accordingly, we are retaining a potential mild to moderate recession in our forecast, but moving the peak timing of the impact to the mid-first half of 2024 from the previously modeled mid-second half of 2023. We also continue to include possible health impacts for the balance of the year. Similar to last quarter, I want to emphasize that a recession that is more mild or occurs later, or macro health impacts that are less than remodeled, may result in incremental upside to our new increased guidance for 2023. For the full year 2023, we now expect revenue of $222 million to $227 million, which at the midpoint would be a 29% increase in revenue over 2022, and adjusted EBITDA of $37 million to $41 million, or a 17% adjusted EBITDA margin at the midpoint.

For the third quarter, we expect $61 million to $63 million in revenue, which at the midpoint would be a 23% increase in revenue over Q3, 2022, and $12 million to $14 million in adjusted EBITDA, or a 22% adjusted EBITDA margin at the midpoint. We are excited about our performance this quarter and look forward to continuing to execute against our priorities this year to drive top line growth, while progressing toward our long-term margin goals. We look forward to connecting with you again to discuss our progress next quarter. And with that, we will now turn to questions. Operator, can you open it up for Q&A?

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from Maria Ripps with Canaccord. Your line is open.

Maria Ripps: Great. Good afternoon, and congrats on the excellent quarter. So, I think this is your second time this year raising your full year outlook. Is there a way you can maybe talk about sort of to what extent this is driven by stronger macro and sort of travel environment versus execution and your platform perhaps creating broader category awareness and gaining share?

Aaron Easterly: Hi, Maria. It’s good to hear your voice. There’s a lot of factors going into it. I’d say starting with the neutral. The travel environment is healthy. It’s roughly flattish to 2019 and up year-over-year. So, we consider that healthy. The slightly better macro environment in terms of the recession we had modeled in is definitely a benefit to us, and we think that helps both on new and repeat. We’ve also seen some material gains from our product investments, and I think the product investments is kind of the hero in terms of our performance so far this year. We do believe that the results we’re seeing is a result of material share gains across pretty much all of our markets, and we’re seeing nice word-of-mouth dynamics that we’ve seen for multiple years in the U.S., but we may be seeing some acceleration of that in Europe.

Maria Ripps: Great. And maybe a bigger picture question. Could you maybe rank order your various growth initiatives in terms of expected impact, top line growth over the next couple of years? So, among international expansion, refining your marketing mix, sort of launching new products and services, which one of these are you most excited about and allocating more investment towards?

Brent Turner: Hi, Maria. It’s Brent. We are most excited about our product investments. We have said on multiple calls that we think that there’s still quite a bit of low-hanging fruit out there in terms of improving usability on both sides of the marketplaces in terms of, and also driving stickiness, particularly for care providers. And so, we think that the product investments are probably the thing we’re most excited about from an investment standpoint. Obviously, our marketing momentum is helping us, and we’re excited about the fact that our plan to keep the channels that we feel good about going and not be sort of interrupted by macroeconomic swings or swings in the COVID waves is better this year, but we are excited. I would put International 3 only because of its level of materiality, but it is growing quickly and becoming a bigger part of the pie every year.

Maria Ripps: Great. Thank you very much for the call.

Operator: One moment for our next question. Our next question comes from Cory Carpenter with JP Morgan. Your line is open.

Danny Pfeiffer: Hey, guys. This is Danny Pfeiffer on for Cory Carpenter. I just have two quick ones. Last quarter, you talked about the drop-off in category demand via the Google search terms, and I think you mentioned it again in the opening remarks. Can you talk about how that trended through the quarter and maybe what you’re seeing so far in 3Q? And then secondly, we heard from a lot of travel and airline companies that there’s been a greater shift from domestic travel to international. Maybe are you seeing any of that internally in terms of longer duration of overnight bookings? Thanks.

Brent Turner: Thanks for the question. So, yeah, we use a basket of terms in Google trends that are important for our industry in approximating industry demand, particularly for new customers. And it is important to say that we’re talking about new customers when we talk about this measure. And we trend those every quarter. Last quarter, I think we said was down something between 10% and 20%. We saw something additional this quarter, particularly in the United States. We might be seeing a little bit of a rebound in Canada right now, but that softness has continued through the current moment. We are encouraged by that, honestly, in terms of how we’ve been able to continue to scale through it, and we think that that is our testament to the fact that the business continues to scale, plus our marketing and product investments paying off.

Aaron Easterly: This is Aaron. With regards to the question around international travel, we’re definitely seeing nice growth in our international markets. We don’t have perfect visibility to where people are going as a destination on their trips because the services that they book typically are in their hometown, the town that they’re leaving from. Although, we would think that in the case where there’s more international travel, you’d probably have a slightly higher duration of a stay, so slightly higher units per booking. And we did see slightly higher units per booking, but pretty modest, in the order of 1% to 2% from a year-over-year comp. So, maybe a little bit would be the answer to your question.

Danny Pfeiffer: Thanks.

Operator: One moment for our next question. Our next question comes from Ralph Schackart of William Blair. Your line is open.

Ralph Schackart: Good afternoon. Thanks for taking the question. During the call today, you talked about material gains from products and enhancements, as well as material share gains. Just curious if you could sort of give some perspective or quantification or an idea around what those material share gains may be? And then any comparisons you might be able to perhaps make when you’ve had other sort of combinations of product enhancements and what sort of share gains you may have seen at that time as well. Then I have a follow-up.

Brent Turner: Hi, Ralph. It’s good to hear your voice. When we talk about share gains, I think what we mean is we’re continuing to grow new customers, even when we, at least by our measures, think that the category for new customers has gone down. And so, while we have some sort of internal estimates about which product enhancement is driving what, they are sufficiently bundled right now that I’m not sure we’ll say much publicly about that. We do think that additional improvements are not only possible, but probable in the future.

Ralph Schackart: Okay. Great. Just — maybe just focusing on the guidance a little bit. It sounds like you still have some macro factors embedded in the 2023 guidance, but perhaps to a lesser degree or order magnitude than previously, and maybe some of that sort of recession sort of concerns that you may have had before is pushing 2024. Do I sort of have a good handle on that? Just kind of curious, maybe a little bit more color, what’s in the guidance now versus before on the macro set. Thank you.

Charlie Wickers: Hey, Ralph. It’s Charlie. With regards to us accounting for what we think is a most likely scenario, some form of macroeconomic disturbance, we’ve taken the same approach, but we’ve just shifted the peak timing. And so, when you think about the seasonality of this business, we tend to have our highest revenue, highest number of booking periods during the second half of the year. And so, with the shift of the peak out of the mid second half of 2023 into the mid first half of 2024, there’s a — dynamic there where the peak impact just has a lesser as a result of the overall demand going through the platform because of seasonality. And what that means for 2023, as well as with the shift of that peak out of our highest revenue, highest booking period of time and shifted out of the calendar year, that has just increased our confidence, and thus is a primary driver for increasing our guide for the balance of the year.

Ralph Schackart: Okay. It’s helpful. Thank you.

Operator: [Operator Instructions] And one moment for our next question. Our next question comes from Andrew Boone with JMP Securities. Your line is open.

Andrew Boone: Good afternoon, and thanks for taking my questions. I wanted to ask about the LTVA to CAC chart that you guys published in the presentation. As it relates to marketing efficiency, it looks like it’s trended down a little bit over the last six quarters and understood the commentary on macro. Is there anything you guys can share to help us understand marketing efficiency as it stands today and how it’s trending going forward? Thanks.

Aaron Easterly: Sure. It’s worth noting, when you look at that chart, the COVID period. During COVID, we basically shut off a big portion of our paid marketing and went to a largely organic strategy to conserve cash and runway. And so, you got these deceptively outsized LTV to CAC ratios. And so, if you look at the post-COVID period where we’ve normalized our marketing, we’d say that those are generally pretty consistent quarter-over-quarter adjusting for typical seasonal dynamics. So, we expect to be in a similar range going forward. The most recent data points on that chart have fewer data points, so they don’t go up as high, but that’s just because the cohorts have not played out as long. We would expect the incremental data points to kind of continue to increase as more time goes by.

Andrew Boone: That makes sense. And then, I wanted to double click in terms of the new customer demand you’ve talked about, and I think the word has been sluggish. Can you help us understand, is that a tough comp? Is that less pet adoption? Is there something else that you guys are seeing to help explain just kind of the macro pullback in terms of new pet demand? In other words, can it rebound? Thanks so much.

Brent Turner: Thanks for the question. This is Brent. I think I was saying on a previous call, say a little bit or previous question or a previous question, I’ll say a little bit more now. I mean, where we’re getting that from is, as somebody who’s operating the marketplace, I see the indications of up funnel demand that are on our platform, but we’re more reassured if we can find data points that are off the platform that also help us make sure that everything’s going okay in terms of how we’re executing. And we have settled on that basket of terms in Google trends and being able to trend those year-over-year, things like dog boarding, pet sitting, pet sitter, dog walker, doggy daycare. We put together a basket of those terms and then we trend them year-over-year just to approximate up funnel demand and changes in up funnel demand from year-to-year.

My personal editorial here is that, or I think our group editorial here, is we are in a place where, at least for the past few years, the changes in those terms have been so driven by changes in travel that it’s become easy to sort of simplify our thinking and think it’s all about travel when it’s really not. Traditionally speaking, travel is, obviously, a big driver of demand on the platform, but also pet adoptions, which may or may not be soft right now, and then new houses, housing purchases and relocations, which also seem to be soft right now are big drivers of our business. Now, all this, I guess, this backdrop. I mean, in the room, I would say we expected to normalize again to long-term trends. We are not sure about the timing or the strength.

Andrew Boone: Makes sense. Thank you so much.

Operator: One moment for our next question. Our next question comes from Tom White with D.A. Davidson. Your line is open.

Wyatt Swanson: Hey, this is Wyatt Swanson on for Tom. Thanks for taking our question. So, as COVID-19 has started to play less of a role in your cancellation rates, could you talk a little bit about what’s driving your cancellation rates now and how you anticipate it changing over the remaining half of this year?

Aaron Easterly: Sure. So, we have not seen a full normalization of our cancellation rates post-COVID. COVID continues to be in the population at some level, although generally less severe. And so, we think it still contributes to some of our cancellations. So, that’s issue one. Issue two is we’ve also had a service mix change since the pre-COVID level that hasn’t fully reverted. So, we have a higher share of our business going to overnight services, which historically have had a little bit higher cancellation rate. So, as that mix has shifted, but not fully shift back, that also results in a little bit higher cancellation rate. On a service line by service line basis, we continue to think that the most likely outcome is that these things do revert back to their norms at some point.

But until the mix reverts and/or we get back to kind of a more normalized health spot, they may continue to be somewhat elevated. We’re generally optimistic. We think there’s always a chance for another wave. But in general, each wave has been a little bit more muted, and those swings have been less volatile over the last year and a half. So, trending the right direction, but we wouldn’t be surprised if there continues to be some ups and downs.

Wyatt Swanson: Got it. That’s very helpful. And then related to that, could you kind of talk about how the stricter cancellation policies that were implemented have been impacting the business? I think you mentioned it on the last earnings call.

Charlie Wickers: Yeah. I’ll take that one. So, yeah, last call I brought up that we had implemented a new feature to allow providers about 18 months ago at this point to adjust to a stricter cancellation policy. That has continued to burn in, an additional three months since our last update, not much to update you on. It was last quarter that we had the real first visibility into it. And so, we’re continuing to monitor to see how it plays out.

Wyatt Swanson: All right. Thank you very much.

Operator: [Operator Instructions] One moment for our next question. Our next question is from Eric Sheridan with Goldman Sachs. Your line is open.

Eric Sheridan: Thanks so much for taking the questions. First, I want to come back to the raised guidance and some of the frameworks we should be thinking through, especially in terms of incremental margin as you go through this year. Maybe frame it in terms of how you’re thinking about some of the key investments you want to make between now and the end of the year versus the elements of variability that might appear in the business if the revenue environment continues to build on its momentum, and how you think about balancing dropping that to the bottom line versus matching your investment criteria. Thanks.

Aaron Easterly: Hi, Eric. We’ve always wanted to balance growth and profitability. And we want to build a business that has great, enduring, long-term enterprise value. We believe that we’re still scratching the surface, both within the core business as well as the broader pet services landscape. Everything — looking at the business overall in terms of dollar amounts, we’re likely to have most of our investment go into trying to improve our core business, some additional investment into continuing to push a little bit harder on marketing and scale our international business. And then, we expect to reserve some amount of investment to move into newer areas. Now, all of our investments have some level of risk. When we roll out features and we test them, sometimes they go really well.

Sometimes we say, what, we think we can do better. So, we expect there to be some quarter-to-quarter variation in the returns on those. But we’ve been very happy with the aggregate numbers, but roughly in that order of prioritization.

Operator: I’m not showing any further questions this time. I turn the call back over to Aaron for any closing remarks.

End of Q&A:

Aaron Easterly: I want to thank everyone for joining us today to discuss our Q2 results. We are excited about the trajectory of the business and our progress towards our long-term targets. We look forward to connecting with you all again next quarter.

Operator: Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day.