RADCOM - Q2 2023

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. Results Conference Call for the Q2 2023. All participants are present in a listen-only mode. Following management's formal presentation, instructions for the question and answer session will be given. For operator assistance during the conference, please press star 0. As a reminder, this conference is being recorded and will be available for a replay on the company's website at www.radcom.com later today. On the call are Eyal Harari, RADCOM CEO, and Hadar Rahav, RADCOM CFO. Please note that management present for your that will be used during the call. If you still need to download it, you may do so through the investor section of RADCOM's website at w.relations. Before we begin, I would like to review the safe harbor provision.

In the conference call involves several risks and uncertainties, not limited to the company's statement about its full year 2023 revenue guidance, the potential to scale up to a mid-size software company, levels of gross margin, operating expenses, and headcount, growth in 2021, expectations regarding the enterprise market for telecom operators, including trends in the market and the effect of connections, investment in and benefits from research and development, as well as sales and marketing.

Its expectation to gain further interest from operators and play an important role in facilitating the transition to 5G, the potential to leverage continual technology and products to the benefit of RADCOM, its expectations of one opportunity leadership position, AI and cloud strategies, increase in market share and momentum, further demand for its products and growth, the company's expectations with respect to its relationships with AT&T, Rakuten DISH, and potential grants from the Israel Innovation Authority. The company does not undertake to update forward-looking statements. The full safe harbor provisions, including risks that could cause actual results to differ from these forward-looking statements, are outlined in the presentation and the company's SEC filings. In this conference call, management will refer to certain non-GAAP financial measures, which are provided to enhance the user's overall understanding of the company's financial performance.

By excluding certain non-cash stock-based compensation expenses, acquisition-related expenses, and amortization of intangible assets related to acquisitions, non-GAAP results provide information helpful in assessing RADCOM's core operating performance and evaluating and comparing the results of operations consistently from period to period. The presentation of this additional information is not meant to be considered a substitute for the corresponding financial measures prepared in accordance with generally accepted accounting principles. Investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures included in the quarter's earnings release, available on our website. Now, I would like to turn the call over to Eyal. Please go ahead.

Eyal Harari (CEO)

Thanks, operator. Good morning, everyone. Thank you for joining us for our Q2 2023 Earnings Call. This quarter, we achieved several all-time financial records and continued investing in our solutions to drive future growth. Revenues for the Q2 were $12.4 million, the 16th consecutive quarter of year-over-year growth. We significantly improved our bottom line, achieving net income for the Q2 and first six months of 2023 that hit a five-year high. The improvements in our profitability KPIs continued our strong momentum and are driven by strong execution and revenue increase. At the same time, with a robust business model, our software-centric company delivers high gross margins and recurring revenues, driving the business and providing good visibility into the future. A note on the business strategy, we announced last month the nomination of Mr. André Fuchs to the board of directors.

His nomination will be voted for at the AGM tomorrow. Andre has served in various senior executive positions at AT&T, the most recent of which was the Executive Vice President and CTO of Network Services. We are excited that Andre has accepted our invitation to be nominated, and I believe he will contribute significantly to the company's strategy and future growth. Turning to the 5G market. With uncertainty around the macroeconomy, some operators may take longer than others to roll out 5G, expand, and transition to standalone 5G. Still, the market direction is clear, and we believe our position as the leading assurance provider for 5G will continue to drive positive returns. Not only does 5G complexity require assurance to help manage the networks with extensive automation, but operators also work in a highly competitive environment. They are under pressure to control costs and streamline the process system....

Solution enable this through cutting-edge AI and analytics. Operators use our assurance technology to manage the network through action that means excellent customer experiences, while saving OpEx and driving automation. This is our added value and why we are well positioned to win additional business. An example of how our assurance solution helps operator roll out 5G is DISH, building one of the world's most advanced cloud-native 5G networks and the world's first Standalone network on a public cloud. It recently announced that it had accomplished a significant industry milestone by providing network coverage to over 70% of the U.S. population. Last week, DISH announced it is bringing an exclusive offer to Amazon Prime members to sign up for its mobile services. New customers can quickly sign up without setting foot in a retail store, which improves customer touch points and offers a completely digital experience.

The Dish-Amazon partnership has lots of potential. Using cutting-edge technology, Dish and Amazon can offer innovation and on-demand services not limited by legacy infrastructure. Our assurance solution seamlessly integrates into AWS Cloud, enabling Dish to understand what is happening in their network 24/7. These insights are critical in helping drive a more intelligent 5G network and are key to delivering advanced 5G services to multiple verticals as the network build continues. We feel proud to be Dish's assurance partner as they create their network and meet these significant milestones along their journey, providing best-in-class assurance that ensures subscriber enjoy great customer experiences. Turning to our cloud strategy. With our solution maturity and cloud-native architecture, combined with our team's extensive cloud expertise, we continued integrated with RADCOM ACE into the cloud ecosystem for 5G.

We are excited to announce that we have launched our solution on Google Cloud last month, so we are now integrated with all three leading public cloud providers, Amazon Web Services, Microsoft Azure, and Google Cloud, extending our market availability to more potential customers. This new integration with Google Cloud has already received positive feedback from potential customers, and we have several ongoing opportunities for RADCOM ACE on Google Cloud. We offer multiple assurance use cases to automatically prevent service degradation, drive network automation, and save operational costs powered by AI. Integrating with these top public cloud providers means telco operator can choose whatever provider they want to use our assurance technology to manage their 5G rollouts. Turning to our AI strategy. Generative AI applications such as ChatGPT, GitHub Copilot, and others, have captured the imagination of people around the world.

The latest generative AI applications and large language models can perform many tasks, from analyze the massive amount of data to providing personalized experiences. At its core, it is about creating smart machines that can think and act like humans and combines analytics, machine learning, natural language processing. In the telecom industry, generative AI can ingest documented processes to offer engineers interactive guides to speed up and simplify installation tasks and help operator identify areas where they are losing revenue or incurring revenue leakage. It can recommend troubleshooting actions and procedures to networking engineers when there is a network failure. We use AI to automate the network and automatically boost service quality, making the operator's network more intelligent and efficient through our solutions analytics.

It enables the operator to transition to automated workflows, with AI doing the heavy lifting and analyzing massive amount of data, providing insights that drives 5G network operations. As I will elaborate further, we continue to invest and develop our AI use cases. Turning to Continual. In May, we completed the acquisition of Continual. We believe that adding Continual's core assets will enrich our solution and create new opportunities for RADCOM in top-tier customer. The initial customer feedback has been positive, and these engagements have already borne fruit, with additional opportunities added to the pipeline. I am pleased with the progress and solution integrations made so far and believe this can generate more opportunities for RADCOM in the future. We announced the RADCOM Virtual Drive Test, or RADCOM VDT, launch as part of the solution integrations.

Telecom operator spend significant OpEx on physical drive test to ensure service quality. Typically, physical drive tests require a fleet of vehicles equipped with highly specialized electronic devices that drive around to test various network parameters. RADCOM VDT aims to replace physical drive tests with the powerful AI capabilities. It offers telecom operators a significantly more green, sustainable approach to drive tests. It also save operators significant cost while providing better insights, helping boost the mobility experience for subscribers. Continual mobility experience analytics power the new solution. Turning to our product innovation. We continue investing in product development because we believe it is a crucial enabler for future business. We serve as the operator's smart copilot to help them navigate 5G network complexities, which means continually evolving our assurance solution to maintain our 5G assurance leadership.

I'm excited to announce that the company and our products recently received industry recognition, as we were named finalist for the 2023 Leading Lights Award. This telecom-focused program recognizes the industry's top companies' achievements in the next-generation communications technology, strategies, and innovation during the year. We were named a finalist for Outstanding Use Case in AI and machine learning, awarded to a company that innovatively use AI to improve network performance, customer service, or business operation. We were also named as a finalist for Innovative Public Company of the Year, awarded to the company that stand out from its competitors and innovates constantly.

Our North Star is making networks more intelligent and autonomous through our AI-powered analytics. We remain confident that our product offering align with market needs, are best-in-class, and will increase our market share by winning opportunities as the 5G transformation progresses. As the 5G market evolves, we will continue investing in sales and marketing to take the advantage of the increased assurance demand. To summarize, our strong momentum continues with solid financial results that sets two all-time company's record for quarterly revenue and non-GAAP net income, as we improve our profitability KPIs. This demonstrates that we are on the right path, and we have unique market position, supporting telecom operators as they roll out 5G. Our ongoing sales engagement shows that the demand for our solutions is robust, while also our multiple-year contracts provide a strong backlog, driving consistent results and giving us good visibility into 2023 and beyond.

At the same time, we are increasing our assurance capabilities and AI use cases to bring more value to customers, while continuing our solution integrations into cloud ecosystem to expand the availability of our technology to additional operators. We remain confident in our ability to cross the $50 million annual revenue threshold, scale up to a mid-size software company for the first time in the company's history, and deliver a fourth consecutive growth year. Therefore, we are reiterating the 2023 revenue guidance of $50 million-$53 million. With that, I would like to turn the call over to Hadar Rahav, our CFO, who will discuss the financial results in detail.

Hadar Rahav (CFO)

Thank you, Eyal. To help you understand the results, I will refer mainly to non-GAAP numbers, excluding share-based compensation. Now, please turn to slide eight for our financial highlights. We achieved record revenues in the Q2, reaching $12.4 million, representing a 16 consecutive quarter of year-over-year revenue growth and an increase from $12 million in the Q1 of 2023. Q2 revenue grew by double digit, with year-over-year growth of 11.2%. This resulted in non-GAAP net income for the quarter of $2.1 million, a six-year high. At the same time, we continued to manage our expenses while investing in the business strategically and efficiently. Our gross margin on a non-GAAP basis in the Q2 of 2023 was 73%.

Please note that our gross margin may fluctuate between the quarters, depending on the revenue mix. We expect that the Q3 will remain at a similar level. Our growth on the expenses for the Q2 of 2023 on a non-GAAP basis were $4.4 million, a decrease of $290,000 compared to the Q2 of 2022. We received a grant of $180,000 from the Israel Innovation Authority during the quarter, compared to $197,000 in the Q1 of last year. As a result, on a non-GAAP basis, our net R&D expenses for the Q2 of 2023 were $4.2 million, compared to $4.5 million in the Q2 of 2022.

We expect the Israel Innovation Authority grant in the Q3 to be on a similar level. Sales and marketing expenses for the Q2 of 2023 were $3 million on a non-GAAP basis, an increase of $480,000 compared to the Q2 of 2022. G&A expenses for the Q2 of 2022 were $929,000 on a non-GAAP basis, an increase of $88,000 compared to the Q2 of 2022. As Eyal mentioned, this quarter, we completed the acquisition of Continual Ltd. Onboarding Continual teams increased our operating expenses by 6%. However, thanks to the positive impact of foreign change rates, the increase in total operating expenses from the previous quarter was lower than expected.

At the closing date, the company allocated transaction price and recognized in its balance sheet goodwill and intangible assets in the amount of $3.2 million. Operating income on a non-GAAP basis for the Q2 of 2023 were $842,000 compared to an operating income of $176,000 for the Q2 of 2022. The increased revenue and favorable foreign exchange rates drove this growth. Our financial income for the Q2 of 2023 were $1.3 million, mainly due to interest rate income on short-term bank deposits.

Net income for the Q2 of 2022 on a non-GAAP basis was $2.1 million, or a net of $0.07 per share, compared to a net income of $15,000, or a net income of less than $0.01 per diluted share for the Q2 of 2022. On a GAAP basis, as you can see on slide seven, our net income for the Q2 of 2023 was $781,000, or a net income of $0.05 per diluted share. This compares to a net loss of $1.3 million, or a net loss of $0.09 per diluted share for the Q2 of 2022. At the end of the Q2 of 2023, our head count was 298.

We expect our head count to remain similar in the Q3. Turning to the balance sheet, it shown on slide 11. Our cash, cash equivalents, and short-term bank deposits as of 30 June 2023, were $78.3 million. That ends our prepared remarks. I will now turn the call back to the operator for your questions.

Operator (participant)

Sure. Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly use the handset before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we poll for your questions. The first question is from our Arjun Bhatia. Please go ahead.

Arjun Bhatia (Co-Group Head of Technology, Media, and Communications)

Yep, perfect. Thank you, guys. Eyal, you called out in your prepared remarks that the macro might be starting to have some impact on the 5G rollout at some telcos. Can you just elaborate that on a little bit? What are you seeing? How might that impact your business from a downstream perspective? How severe or minimal are these pushouts?

Eyal Harari (CEO)

Good morning. Yes, as mentioned in the prepared remarks, we all see the macroeconomic pressure on the, in general, and we, we see some operators reporting reducing some of their CapEx spend as part of their alignment to the new conditions. In general, we are still confident on the market evolving into 5G, and we still see a demand for our products. As we executed well this quarter, we're expecting our growth journey to continue. We do still see that 5G is strategic to top operators, and they are still progressing with their 5G programs and continue to spend into evolving to 5G Standalone, and by that, creating the demand for our products. We are seeing two, I would say, two separate influences.

One is that our solutions, with automation and AI, are helping operators to save and be more efficient with their staff. Under this environment, this is highly required, and this is one of the things that enable and excite our customers and potential customers, which drive more demand to our requirements. Parallel, we see some operators spending less on the 5G, which obviously, we are targeting those operators, and it might slow things down. I think those two things are kind of balancing, and we continue to see the demand is solid. We still have a solid pipeline, and we will continue to monitor the market and advancement into 5G. Most important is that strategically, it's all going toward the right direction.

Arjun Bhatia (Co-Group Head of Technology, Media, and Communications)

Okay, that, that makes sense. That's helpful. Thank you. When you think about some of the newer capabilities that you've launched, you, you announced VDT with Continual. What does adoption of that look like? How do you think that plays out over time? Is that something that you incorporate into your core platform, something you can monetize separately? How are you thinking about the strategy there?

Eyal Harari (CEO)

We, we are continuing to add more and more innovation around analytics and automation, and the newly announced offering with the Virtual Drive Test, so VDT, is definitely part of it. It also aligns with what mentioned before, of operator desire to find better ways to manage the operation and do things in a more advanced way, in a more efficient way. VDT is definitely answering this need. We already started, and we are in a good shape with the integration between the Continual product lines in RADCOM, and this is all going to be part of our portfolio. While we are still offering the VDT as a standalone application on top of existing data sources the operator can provide, and obviously to get more value while you take the full package integrated with the RADCOM ACE.

We start in this stage, we just concluded the, the acquisition, in May. In the last, few months, we are marketing this new offering. We are meeting our existing customers, new customer, and, overall, the message is very positive. We already have new opportunities in our pipeline. As we know, sales cycle in telecom is, taking time, and we expect to see some of the results, in 2024.

Arjun Bhatia (Co-Group Head of Technology, Media, and Communications)

Okay. That's helpful. Just last one for me, on the Google Cloud partnership. It sounds like you have some customers that are live with ACE on GCP already. How does your customer base differ between the three big clouds? You have all three now. Is there one that you have more exposure to? I'm trying to figure out, I guess, how of an opportunity this is now that you have GCP in addition to Azure and AWS on your platform.

Eyal Harari (CEO)

First, our vision, our strategies, we are the aiming to be the leading solution in the cloud environment, and hence we, we want to be available for any cloud choice that the operator is preferring. We know different operators will choose strategic partnerships with different cloud providers, some work with AWS, some with Azure, some with Google. We want to be, to have our portfolio available for all of them. We build the product and architecture, so it will be cloud-native, and by that, easily available on all different platforms. We see some cases that some operators are using a mix.

They want to have multiple cloud providers in order to have sometimes flexibility to bring into different applications, sometimes in order to have to minimize the strategic risk, betting all their workloads into one cloud platform. Our approach is to be available on all the leading platforms to expand our market, addressable market and availability. Google is very powerful in Europe. They are also very powerful in the analytics space. We are happy to see Google now added to our portfolio, and this new partnership is also extending the activity that was done around Continual product line in the last couple of years. The fact that we are now available also on the Google Marketplace is opening us more doors. We are not betting, as I said, on one direction.

We are looking to continue maintaining the integrations with the, with the key cloud providers. Every one of them that is successful is good for us, as all the migration into cloud is enabler and accelerator of adapting our technology. As when operator move from legacy architecture into cloud, this is what drives the opportunity for us. We will be happy to cooperate with all cloud providers, and more success for them is usually more success for us.

Arjun Bhatia (Co-Group Head of Technology, Media, and Communications)

All right. Very helpful, Eyal. Thank you.

Eyal Harari (CEO)

Thank you, Arjun.

Operator (participant)

If there are any additional questions, please press star one. If you wish to cancel your request, please press star two. Please stand by while we poll for more questions. The next question is from Alex Henderson of Needham & Company. Please go ahead.

Alex Henderson (Managing Director of Security, Data Networking, and Optical Research)

Thank you so much. So great quarter, and thanks for the nice prints, pretty consistently. I'm looking at the number here and thinking, you've got an acquisition that's adding 6% to the OpEx line, and I'm wondering if there was some of that in the Q2 or when that is a some more of a sequential increase into the Q3, you know, what you expect OpEx should look like in both the third and Q4s. Is this going to be, you know, 5% or 6% above the $8 million that you just did, or what?

Eyal Harari (CEO)

Thank you, Alex, and good morning. We already incorporated the operation expense of the acquisition in most. The results are better than expected due to both on advantage of the Forex and the weakening of the shekel, which gain us some benefit, as well as a higher, I think, higher than usual, gross margin. We are expecting operation expense for this quarter to be in similar levels with some increase as mentioned before, that we are continuing to invest into sales and marketing. We already, let's say, the step function that we mentioned last quarter is already in most in the numbers.

Alex Henderson (Managing Director of Security, Data Networking, and Optical Research)

Am I thinking then that given the, the run rate revenues in the back half of the year is going to be, you know, at the midpoint? That it should be higher in Q3 and Q4, or is there some offsets because you're running well ahead of street expectations for the year so far.

Eyal Harari (CEO)

We, we reiterate our guidance in terms of revenue, and, we are still looking to doing the $50 million-$53 million range, which means that we are likely to, to have a higher second half of the year in, in terms of the revenue. If no change in the Forex, and, we execute on our plans, then, then we continue to perform strongly for the rest of the year and see also a similar trend on the bottom line.

Alex Henderson (Managing Director of Security, Data Networking, and Optical Research)

All right. I mean, mechanically, that would suggest that you're going to crack $1 million in profits at the operating level in, in both HQ and the ups from the first half EPS level. Is, is that a right assessment?

Eyal Harari (CEO)

This, this, this makes sense. Again, under the current environment and force conditions, it definitely give us this potential.

Alex Henderson (Managing Director of Security, Data Networking, and Optical Research)

It's, it's helpful. In terms of the end markets, and I, I certainly get the macro impact commentary, but we're actually hearing that there's a deeper root problem with the 5G Open Core, cloud-native core, that there's operational challenges that have come up that have undermined the ability of the service providers to continue to ramp their business. There was obviously very weak results at both Ericsson and Nokia in the 5G, particularly in the U.S., where U.S. operators are more cloudified than international operators. We've heard that they're cutting back on spending in 5G because of that, and specifically, you know, cutting back even on the WAN investments because of that.

Can you comment on what you're seeing in terms of the efficacy and the performance of the existing 5G core technologies, and whether there is any change in the willingness of the key customers to continue to push down that path, given what we're hearing from the field, there is some operational challenges?

Eyal Harari (CEO)

Overall, and I think this is the most important, operators are strategically investing into 5G Standalone. This direction continues. We don't see any operator hesitating with that, actually, we are seeing more and more operators joining into this strategic investment with more and more commitment. This being said, it's true that this is a very complicated technology, it requires the cloud environment. It's introduced some complexity that the telecom industry still didn't solve. It's also important to add that the complexity means that there is more need and more value for our solutions. Therefore, while things are taking time and are likely to take time, as an industry, we are still trying to figure out how to build smartly the 5G networks. We see that it's moving forward.

We see companies like Dish and Rakuten continue to be very bullish with 5G and with others, this is something that is in industry will be solved. Later, operators that joined, again, it will be easier and easier for them. I think that most of the weakness reported by companies like Nokia and Ericsson is driving from less spending to the radio, which is, they covered a lot of the sales sites in North America, where the most of the population are based, and maybe the higher value customers are based. Due to the economy, they are slowing down with their implementations. In the fall, they are continuing to, to invest, and this is eventually what will drive new services and new revenues.

What remains now is the complexity, and I'm positive that this is something we will overcome as an industry, and we, and we continue to do so and identify those uses that create, return on investment.

Alex Henderson (Managing Director of Security, Data Networking, and Optical Research)

What, one, one more model question. The interest income line, rates have been going up a year. A similar sequential increase in the interest income line as we saw in each of the last couple of quarters, where it's gone up pretty nicely, $200,000+, sequentially. Should we flatten it out at the current level?

Hadar Rahav (CFO)

Hi, Alex. Well, we experienced a decline of decline of the interest rate, so we expect the financial income to be lower in the next quarter.

Alex Henderson (Managing Director of Security, Data Networking, and Optical Research)

Expect the interest income to come down a little bit in the Q3?

Hadar Rahav (CFO)

Yes, correct.

Alex Henderson (Managing Director of Security, Data Networking, and Optical Research)

More along the lines of the Q1 level, is that right?

Hadar Rahav (CFO)

Yes.

Alex Henderson (Managing Director of Security, Data Networking, and Optical Research)

Okay, thank you. I'll see the floor.

Operator (participant)

The next question is from Charles Elliott of Inflection Point. Please go ahead.

Charles Elliott (Partner and Portfolio Manager)

Hi, I'd like to ask a specific question about VDT, Virtual Drive Test. At the moment, I understand that companies including Google, Apple, HERE, TomTom, have vehicles driving around, gathering data for 3D mapmaking, and this is a major investment. Would you be selling to those companies, selling in competition with those companies, and would your channel be the mapmakers or the telecoms companies, and the telecoms companies they then go into competition with the, the mapmakers?

Eyal Harari (CEO)

The virtual drives application is still offered to our traditional customers, the mobile operators, the 5G carriers, that are looking to optimize and ensure the customer experience on their network. That traditionally we're using vehicles in order to go around the different geographies of the country in order to see what is the quality of service. This is very tedious, very costly, not so green, and we are adopting an approach that is taking the analytics and based use available data points in order to emulate and create what we call the virtual drive test, drive test. Which not only save on costs and more green, but also providing much more information in terms of 24/7 analysis and a much better coverage. Go-to-market approach is very similar to our approach with the RADCOM ACE product.

We see synergies between the two products, so definitely going into our install base and other prospects as, as an add-on and as an advantage is our key approach, as well as continuing to promote it as a standalone solution, as it complements the RADCOM ACE but it can continue to run as a standalone on leveraging available data that the operators already can provide.

Charles Elliott (Partner and Portfolio Manager)

I'm, I'm sorry, it's an extension of your quality assurance, it is not a mapmaking?

Eyal Harari (CEO)

Yes. It's extension of our quality assurance that could be as a standalone or as an add-on.

Charles Elliott (Partner and Portfolio Manager)

Thank you. Second question is on R&D. At the gross and net levels, this is still a very high R&D spend, but it's down year-over-year. Why is that?

Eyal Harari (CEO)

The, the R&D expense is, as mentioned, we are looking to maintain on a similar level. We do see that percentage-wise, we see increase as we, as we increase the revenue and keep the R&D level in a similar number, the percentage-wise, we invest less in R&D. This quarter, we had a one-time increase in the level due to the acquisition of Continual, Continual and the onboarding of the R&D into our teams. This is why we have the incremental expense that should be our new working level. We are looking to maintain the R&D level in similar numbers, again, taking into consideration the fixed effects.

While we continue to grow the top line, this should be allowing us to see improvement, as we proved in the last couple of years, significant improvement on the bottom line.

Charles Elliott (Partner and Portfolio Manager)

Thank you. I, I see the leverage around the R&D, but three months ended June 2022, your GAAP R&D number was $5.15 million, and it fell to $4.77 million in the latest quarter. Is that just currency making for having a funny impact, or has there been in any way, a cut in your R&D spend?

Eyal Harari (CEO)

It's primarily FX change, that the shekel weakened, and therefore our numbers in dollars are a bit lower. With some optimizations we did along the beginning of the year, as I mentioned in previous calls.

Charles Elliott (Partner and Portfolio Manager)

Mm-hmm. Great. Thank you. That, that's great.

Operator (participant)

This concludes the RADCOM Ltd Q2 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.