Allot Ltd. (ALLT) Q1 2013 Earnings Report, Transcript and Summary

Good day, and welcome to the Q1 2013 financial results of Allot Communications. Today's conference is being recorded. At this time, I would like to hand the conference over to your host today, Ms. Maya Lustig, Director of Corporate Communications. Please go ahead.

Thank you very much, and thank you all for joining us today on our first quarter 2013 conference call. My name is Maya Lustig, and joining me today are Allot's President and CEO, Rami Hadar; as well as our Chief Financial Officer, Nachum Falek. The press release announcing our first quarter results is available on the Investor Relations section of our website at www.allot.com. All results and expectations we review on the call are on a non-GAAP basis unless otherwise described as GAAP. Non-GAAP net income and non-GAAP net income per share exclude the impact of share-based compensation, revenue adjustments due to acquisitions, expenses related to M&A activity, deferred tax assets and amortization of certain intangibles. Please note that all earnings per share amount are on a fully diluted basis. A reconciliation of each non-GAAP measure to its nearest GAAP equivalent is available in the press release containing our first quarter results. Before we begin, let me remind you that certain statements made on the call today may be considered forward-looking statements, which reflects management's best judgment based on currently available information. I refer specifically to the discussion of our expectations and beliefs regarding our pipeline and funnel of potential future business. Our actual results may differ materially from those projected in these forward-looking statements. I direct your attention to the risk factors contained in the annual report on Form 20-F filed by Allot with the U.S. Securities and Exchange Commission and those referenced in today's press release, both of which detail factors which could cause our actual results to be materially different from those projected in the forward-looking statements. With that, I would now like to turn the call over to Rami.

Thank you, Maya, and thank you all for joining us today. Our non-GAAP revenues for the first quarter of 2013 were $24.2 million. This is the first sequential decline in top line revenue after 15 quarters of consecutive growth. The primary cause for the sequential decrease in revenues was the softness felt in EMEA during the second half of 2012. This was translated to book-to-bill below 1 over the last 2 quarters of last year. The revenue decline also results from normal first quarter seasonality, which mainly affects our smaller deal. However, as service providers continue to show demand for Allot's DPI and Value-Added Services, our book-to-bill ratio has returned to more than 1 in the first quarter of 2013. The main contributors to the booking strength in Q1 were 2 large purchase orders from Tier 1 mobile service providers in EMEA market. The booking momentum in Q1 continued in the current quarter as we opened the second quarter with a $9 million follow-on order from our U.S. Tier 1 service provider for Value-Added Service offering. We are pleased with the progress we are making with this service provider and hope to leverage our developing business relationship with this client to extract additional business in the future. Going forward, we hope that our strong pipeline and funnel will support this positive booking trend. I would like now to give you more color on the recent quarter achievements. During the quarter, we had 2 over 10% revenue customers, both of which are expansion orders from Tier 1 mobile operators. We believe that we have a healthy funnel of expansion opportunities with these customers, mainly due to mobile data growth and adoption of new added Value-Added Services delivered by our Service Gateway. In total, we received large orders from 16 service providers,…

Thanks, Rami, and welcome, everyone. Let me take a few minutes to review the results we published earlier today. I will be discussing non-GAAP numbers, which exclude the impact of share-based compensation, revenue adjustment due to acquisition, expenses related to M&A activity, deferred tax assets and amortization of certain intangibles. Full reconciliation of the pro forma results discussed on this call to GAAP results is currently available for review on our website and in the press release issued today. Now let me walk you through the results for the quarter. Revenues for the first quarter on a non-GAAP basis were $24.2 million, flat with revenues from the first quarter of 2012 and down 15% versus the fourth quarter of 2012. As a percentage of our revenues, sales in Americas accounted for 19%; EMEA, 63%; and Asia Pacific, 18%. As you can see, in terms of total amount, EMEA revenues grew by 14% year-over-year, and as Rami mentioned, we started the second quarter with large funnel order from the Americas. During the quarter, we had 2 10% customers, both of which are Tier 1 mobile operator. Out of total revenues during the quarter, product accounted for 71% and services for 29%. Gross margins for the first quarter were 74.5%. Our operating expenses were $17.5 million versus $17.4 million in the fourth quarter and in line with our expectation. Our total headcount is now 446 people. For the quarter, we reported earnings per share of $0.02, as OpEx stayed flat versus the fourth quarter and decline in revenues affected the bottom line, keeping gross margin at the 75% level. On the balance sheet side, cash balances declined to $135 million, mainly due to working capital needs of the acquired companies, but also due to the fact that the quarter was more back-end loaded than previous quarters. Please note that the accrual for the Chief Scientist is still unpaid, and the $16 million we accrued during the fourth quarter of last year is still pending payment. Our DSO was 95 days as a result of the decline in revenues and less linearity within the quarter. Deferred revenues went down by $3 million, mainly due to recognition of prepaid support and maintenance, along with some recognition of revenues from large product deals. That concludes my remarks and we will now open the call for questions.

[Operator Instructions] We will take our first question today from Peter Misek from Jefferies. Billy Kim - Jefferies & Company, Inc., Research Division: This is Billy Kim filling in for Peter Misek. Just in terms of the funnel that you mentioned compared to last year, what do you see it looking like this year? And do you see -- I guess, do you have any better visibility this year than last?

Peter, I'm sorry, I did not hear the first part of your question. Can you repeat, please? Billy Kim - Jefferies & Company, Inc., Research Division: This Billy filling in for Peter. But just in terms of your funnel that you mentioned, the large funnel, I guess, do you have any more visibility this year compared to last year? And is there any sense of the timing and size that you could share with us?

Yes. It was a qualifier that funnel is a subjective assessment of sales perspective. I've said it in the past, 1 or 2 quarters, that the size of the large deal is substantially larger than last year. We are now seeing in this last quarter the results of that. So the answer is yes, the funnel is larger. In terms of quality and timing, telecom space still, in certain area, certainly in West Europe, is under stress and therefore, timing is the subject, in one hand, the budget constraints and on the positive side of needs. So it really depends on the customer and the budget issues. Billy Kim - Jefferies & Company, Inc., Research Division: Got it. And then one follow-up, just in terms of the Value-Added Services, the opportunity there. I guess, is there any difference that you see in terms of the competition there? And how is Allot placed?

Not much difference in the competition. As you can see, we are putting a lot of efforts into enabling, delivering, integrating Value-Added Services, and we believe this is the right strategy to help our customers monetize their networks.

We'll now take a question from Mark Sue from RBC Capital Markets.

It's good to see the return of the book-to-bill greater than 1. Should we see this -- combined with your pipeline of activity at the start of the renewal of a lot of projects, can we sustain the book-to-bill trends recognizing the deals are quite lumpy? Some qualitative comments there would be helpful. And then as we look beyond the near term, maybe your thoughts of what you may be able to return your top line growth rate to. You mentioned that the industry is growing at 50%. Just kind of getting a sense of what the large orders, what you may be able to grow your top line.

So, yes, Mark, basically, as we said, very large deals, which are a big percentage of revenues do introduce a certain amount of volatility. Actually, one of these large deals we are hoping to close in Q4, and therefore, the book-to-bill are below 1 in Q4. Now they actually came in very nicely. We're also encouraged by a strong start in Q2. And beyond that, the sales people are aware of that, everybody's working to try and close these deals as early as possible. But these kinds of deals are hard to predict. They are not -- they don't follow normal enterprise or channels rules where these tend to close at the end of the quarter. So it's really a game of working these long-term deals, investing enough in future deals. Some of them take 1 year or 2 to mature, and you have to walk them and follow them through and then they enjoy matureness. For us, to continue to come back to top line growth, obviously, we made the first step, which is a book-to-bill over 1, and that's what we need to do in the future quarters.

Okay. If I can ask just on the follow-on orders, recognizing it's difficult to predict, are they -- are the deal sizes for the follow-on, are they smaller or larger than you originally anticipated? Any indications that the carrier customers are trying to beat this in a more methodical fashion? Just any color there. And then lastly, just market share shift, if you feel you're still maintaining, gaining or whether your position is changing at all at of a lot of these carrier accounts?

So in terms of size of deals, actually, seen in the last quarter, 2 fairly large deals closed at the same quarter is certainly nice. We haven't seen that for a while. So maybe we are beginning of a trend of seeing more large deals. Usually, we track our business in 3 categories, deals which are below $0.25 million and there's obviously many of them. We define large deals as deals above $0.25 million to $1 million and that's a number of 16 large deals. And then the 2 or 3 very large deals are strategic deals. So if you look over the past 2 or 3 years, definitely, our deal size is growing in Allot. In the past, we used to define large deals as anything above $100k, and we kept raising the bar. And if we continue the trend we opened in 2013 where we're seeing a numerous multimillion dollar deals in a single quarter, then we are certainly on the right path. In terms of market share, definitely in the past 3 years, we have gained market share. In this last quarter, I believe, we are more or less maintaining our market share for the past quarter. But in 2012, as I mentioned, we are recognized, I believe, a year late, as the market share leader.

We'll now move to our next question from Alex Henderson from Needham. Alexander B. Henderson - Needham & Company, LLC, Research Division: So I know you guys don't like to give guidance, and I'm not going to ask you to try to do that. But relative to where the Street is and the way people have been thinking about it, starting off the year down 15% is a little steeper decline than normal. Would you think that, that is an indicative that people are too aggressive on their numbers, and say it's 10%, 12% below what Street were forecasting and, therefore, should bring their numbers down for the year? Or would you think that that's something that is indicative of a soft start but not indicative of a full year trend and, therefore, people ought to be more inclined to leave their estimates where they were? How should we be thinking about the sequential pattern here, because you are seeing an acceleration and it leads people with a tough decision on what to do with the numbers here? Just any sort of color around your thinking there would be helpful. I know you don't give guidance and I'm not trying to get you to go over that cliff.

Well, we share with the Street as much raw data as possible for everyone to form a valid opinion. The current quarter results are obviously the outcome of 2 consecutive quarters of book-to-bill below 1. We have some deals in the funnel that were a race to the finish in terms of achieving recognition and taking this quarter as well, so we could've finished at potentially higher numbers. So while 15% sounds not insignificant, for us, sometimes, it's the whole difference between one project of getting installed and accepted or not in the last, say, 1 or 2 weeks of the quarter. The one thing I can say is what I've shared already is the only way to predict the trajectory of our revenues is to follow the book-to-bill patterns and the booking announcements. And I can say that we opened the year very positive, both with the Q1 booking and a good start into the Q2 quarter, though it's very early, but certainly a good start there as well. Alexander B. Henderson - Needham & Company, LLC, Research Division: That's very helpful. So can you talk a little bit about win rates during the quarter? And what you're -- what portion of your business was against pure-play competitors versus integrated-routed competitors, and how that might look different from prior periods?

There was quite a lot of competition in the quarter, but these were more in the large or the medium-sized dealing category. The 3 large deals we discussed are the 2 EMEA deals and the U.S. mobile deal were all a continuation. So although sometimes customers weigh their option before giving you an expansion or typically it goes to the incumbent, both would not end with our competition. But we had a fair [indiscernible] fair amount of wins in the medium size category, and we are getting a nice share of the deals out there. Usually, for user deal, it's related to pricing issues that we would not go below a certain level to maintain our 75% gross margin. We believe that that's detrimental to our sales and to the DPI space in general. So for user deal, usually it's on price where we decide to walk away. If it's down to our products and technology, our ability to support customers, our presence, we usually score -- we make it to the shortest and usually, we score very high in these items. Alexander B. Henderson - Needham & Company, LLC, Research Division: Integrated routers versus pure-plays, what kind of mix of competition are you're seeing?

Yes, we haven't seen any, let's say, leap of improvement in terms of what we call the C-Layer DPI embedded in existing routers or GGSN. So things are stable, and I believe that the trend continue where us and our competitors continue to gradually convert fixed and mobile customers for either not doing DPI all or just being satisfied with limited DPI from their router vendors and switch over to stand-alone solution. As I said in the past, it's still true. In most of the cases -- obviously, in all of the cases where there is an RFP that goes out for DPI, it's usually a stand-alone player that wins the day. So I believe that we are gradually continue to convert carriers from integrated to stand-alone, realizing the enhancements of and improvements of best-of-breed solutions. Alexander B. Henderson - Needham & Company, LLC, Research Division: And one last question and I'll cede the floor. So Bytemobile apparently had a somewhat weak quarter. Did you take any business from them that might account for that? And is -- has the Service Gateway approach started to hit a critical mass that's changing people's perceptions? And is that evident in any of the mix of business here?

Yes, we haven't seen much of Byte yet. We are making our first inroads. The point where we have overlap with Byte is obviously with our new video optimization solution. We are making our first steps into this market, so therefore, haven't yet encountered them in a competitive environment. Sooner or later, it will happen. Although Byte is a mixed player of mobile Internet gateway products versus our Service Gateway, the slew of offering between us and them is very limited at this time, I believe, that eventually, we will start to more overlap and then we'll be more competitive. But right at this time, we are not a source of Byte's issues.

We'll move now to our next question from Matt Robertson (sic) [Matt Robison] from Wunderlich Securities.

First question for me is, if you could kind of comment on the material -- how material, the caching and optimization was in the fourth quarter? Then I'd like to get your -- some color on how meaningful, from a mix standpoint, analytics and traffic steering were for revenue, and how you expect them to affect your bookings?

Yes. So Matt, I will need to disappoint you, we have made a conscious decision to limit the amount of details and specifics on which Value-Added Services are doing well and which are not in the marketplace. Given our leadership at this point, we've noticed that a lot of companies are following our footsteps with this strategy. Some companies actually are not even just in the DPI space, but in other spaces looking to follow the same strategies, but we will not provide more detail. We have shared in the recent press release of this very large $6.5 million -- $6 million project for Parental Control. We did that to kind of launch a new offering from Allot for the first time, which is Parental Control. Moving forward, we're not going to provide detailed breakdown. To give you some qualitative of measurements, obviously, Parental Control is a newcomer and brought us a very large deal. It's certainly the excellent VAS of the quarter. Steering obviously did very well. Actually in these deals, Steering was sold alongside Parental Control, as we are the main function to steer traffic in users to the relevant servers. Caching did fairly okay, followed by optimization, which still needs a little bit more cooking time before we enter the market in a more serious manner.

So analytics hasn't been a factor for you?

Sorry?

You didn't touch on analytics. Was that not a factor for you yet?

Yes, it's starting to grow. Again, I cannot get into details into which same deals, but analytics is starting to become a double-digit element in our revenue and booking patterns.

And the caching and optimization was down significantly from what is provided in the fourth quarter?

No, I didn't say that. I said that caching was -- did an okay quarter, and optimization somewhat lower. But as we guided last quarter, optimization is the new market, the technology is a very disruptive and challenging. It's an earlier market, so the ramp-up has been slower. It's already generating revenues, but slower than caching. Caching is the more mature market, the value proposition is more obvious and, therefore, caching carried its weight and met our expectations this quarter. Optimization is a little bit lower, but we certainly expect it to recover later in the year.

So the decline in the, maybe we might call it core business, that's reported through acquisitions was at least as severe as the overall revenue decline?

Say again, Matt, sorry?

The decline in the core business before the 2 acquisitions was at least as severe as the overall revenue decline?

Let me put it this way. At this time, some of, for example, caching deals are ready deals that come in mixed with our Service Gateway, so it's hard to differentiate. But I can say that compared to, let's say, at least Q4 of last year, core business in percentage was equal or better, if you like. I'll leave you with this note, Matt. As you know, trying to analyze our business on a quarterly basis is subject to a lot of fluctuations. I would wait and see deeper into the year before I try to analyze trends.

We'll take our next question now from Kiera Kilkowski from Bank of America.

I just had a couple of quick ones for you. First, on the Tier 1 mobile U.S. customer order that you said you got in 2Q. Did this include Value-Added Services, or is it just for the sort of the entry monitoring services? And then second, I'm sorry if I missed it, but on the liability for the Chief Scientist, I was under the impression it was going to be paid back this quarter, and it looks like it's still on the balance sheet.

I will let Nachum answer the second part of the question. The first part, the one thing we will say is that U.S. Tier 1 mobile operator, the order is mainly around certain Value-Added Services, which, obviously, we will not go into detail. But it is around -- it's not a classical DPI at the moment, but more around the Value-Added Service. Nachum, for the first...

Kiera, we did the accrual last year, the fourth quarter of 2012. The payment is still due. We will probably pay either on the second or the third quarter. I don't know exactly when. It's a question of getting to the exact amount and exact timing with the Chief Scientist, so it'd probably be either toward the end of the second quarter or third quarter. That's the estimate right now.

We'll now move to a question from Catharine Trebnick from Northland Securities.

Rami, this is for you. Do you think some of the EMEA weakness could be attributed also to LTE carriers getting ready to deploy that? And my other question on this is, there is significant Wi-Fi deployments across Europe. Do you think that might have also slowdowns on some of the booking last year? And then the Software Defined Networking overhang, you did discuss a little bit of Tata and moving to the cloud. So could you pretty much take those 3 little items that I went through and discuss how that is impacting you or not impacting you going forward?

So let's start with the easier. Wi-Fi access, although being discussed, the last only very few carries are actually doing a major rollout of their own, and in any case, haven't -- to the best of my knowledge, haven't affected any of our business. Actually, in one of our top mobile customers in Europe, they are running not only their 3G and LTE traffic through our Service Gateway, but also the Wi-Fi traffic. So no issues there. Regarding LTE, we have noticed that once a service provider is engaged in rolling out LTE, it does become a #1 mission in the service provider operational agenda. Having said so, the amount of time LTE actually caused the customer to come back and wanting to open up a new mobile switching centers and buy more Service Gateways is about equal to the amount of times we've heard "well we are busy now with rolling out LTE come back in 2 quarters." So I would say it's a wash in one hand, it could delay, and the other hand, it's more bandwidth, more equipment and new network and usually, it eventually translates into expansions on our product. Regarding SDN, it's still early days, very natural cause for us as we are making our first step into SDN, already offering our customers to launch Value-Added Services over SDN solutions and that's a natural evolution step for us, and we plan to ride this wave as it evolves over time. Right now, it's more like an enabler and a differentiator. But end of the day, what sells is really Value-Added Services and use case. And whether you do it in line and over our Service Gateway, which is running an industry start at ATCA or an NFV, at the end of the day, what sells is the Value-Added Services. NFV is just an enabler.

Okay. And then on a competitive front, have you -- who would you say that you see most in the bake-offs? And then have you seen F5 is out with their policy and force module, and I'm wondering if you're seeing them in -- them or any of the other ones in some of your something bake-offs? And who do you run into the most? And then, is it different in different geographies?

Well, we haven't seen F5 in a lot of deals yet, so I believe it's early days for their traffic shaping/DPI blades. I would, right now, at least put them in some kind of a similar category to the router and GGSN same vendors. So not much of a fight yet. Regarding others, as I've said it many times in the past, I wake up and worry about the routing GGSN guys with their embedded offering rather than the pure-play folks. I believe that the market is large enough, and we can all 3 grow fast enough if we do well against the incumbent. So that's by default where we encounter the Ericsson, Ciscos of the world with their thin-layer DPI. Certainly, in the mobile space, that's the number one competition by far.

We have a question now from Joseph Wolf from Barclays.

A question about the Value-Added Services. I think you've given the percentage of Value-Added Services of revenues in the past. I wonder if you can give that again for the quarter. And then, as the services grow and specifically with the Parental Control, how much of what you're selling is Value-Added is homegrown versus bundled external packages? And what does the external side tell you about exclusivity for Allot or -- and/or your desire to buy some of these Value-Added Service players?

So we haven't given a breakdown of Value-Added Services in this quarter. I can tell you that it's fairly high, probably a record, given the recent announcements and the high content of Value-Added Services in our recent large deal. As I mentioned to Matt, very dangerous to analyze them, these breakdowns just on one quarter, so let's take it a little bit more into the year before we see some continuous trends in percentage. Last year, if you want, Value-Added Services were roughly 15% to 20% of total revenues. I believe that if we continue the trend as in Q1, probably this number will increase substantially into 2013, certainly with our new acquisitions kicking in. Remind me the second part of your question?

I'm just wondering, in that number, there are some of it which I think is a lot owned and so much is bundled external providers. I'm wondering about exclusivity and then potentially how you think about acquiring the ones that are not homegrown?

Yes. So we've said it many times in the past, we get our Value-Added Services from 3 sources, homegrown in Allot, the outcome of acquisitions like video optimization and video caching and occasionally, termination of need and market trends we would partner. Right now, the majority are either home grown or acquisition. But here and there, we certainly do not shy away from partnerships, obviously with the appropriate measures to protect our position as we introduce this VAS into the market.

Okay. And I guess just another attempt in terms of trajectory and the potential growth in the market, given how you've looked at the opportunity here. If the decline in the first quarter was a combination of 2 quarters of book-to-bill less than 1, do we need 2 quarters or 3 quarters of book-to-bill greater than 1 to see a real snap back in the level of revenue? Or is that too pessimistic?

A book-to-bill over 1 or below 1, can also vary in terms of how much below 1 and over 1 without giving specific guidance. But I would say that if Q2 is a strong booking quarter as well, then we should see a pickup in revenues as well.

We'll now move to our next question from Sanjit Singh from Wedbush.

Regarding booking versus revenue, you've announced some pretty large orders this quarter, and I was wondering how spread out of these deals, how much revenue has been recognized from these 3 wins? I think including the U.S. service provider win this quarter. Is this all future revenue opportunity? Or how is this spread out over the next couple of quarters?

Yes. So I think that we mentioned that the first 2 orders we got it in the first quarter and we cannot get into specific how much and if at all we recognize in the first quarter. But it's clearly that the $9 million follow-on orders that we got in April, this is business for second, third quarter rather than we didn't recognize anything during the first quarter.

I appreciate. That's helpful. And regarding the follow-on order in the U.S. with the Tier 1 win there, what were the factors that drove that follow-on? Is it more of a geographic expansion? Is it an additional Value-Added Services? I know you can't get into detail, but what's driving -- what drove the follow-on order activity, and how much of an opportunity is left going forward?

So it's a combination of the need continues to grow. The customer is satisfied with our delivery of the first phase of order that we got last year. And finally, it is a geographical expansion, so we are now in larger part of the network.

Any sense to penetration of the opportunity? Are we halfway done, or is there any way to quantify that?

Can't get into that, but there's plenty of room to grow, both in geography and in functionality.

We'll now move to our next question from Dov Rozenberg from Clal Finance.

Looking into the revenue, we talked a little bit about market share, et cetera. I was wondering, do you expect Allot to grow as fast as the DPI market?

Again, without qualifying this as guidance, looking at our execution in the past couple of years, I expect a lot of grow, at least, as the size of the market, if not more. Now let's be careful here. I've quoted Infonetics and their expectations on market growth, this not our guidance. But as the market does grow. As we executed in the past couple of years, I expect to grow at least and if not more like in previous years where we have gained market share.

Okay. Would you say that growth going forward is more from existing customers or new deals that are out there?

It was always a combination. In the past, we talked about probably a typical quarter, anything between 60% to 80% comes from follow-on orders from existing customers, and only 40% to 20% comes from new accounts, setting aside certain quarters where a big account comes in for the first time. So any good quarter is the combination of follow-ons, which are more predictable and more manageable than new deals and -- but you can't do a good quarter without getting some new deals as well.

Okay. And also looking on to -- you talked a little bit about Value-Added Services, and looking as a whole here, not into any specific feature, it seems it sort of feels from the deals and also the one in America now and also the $6.5 million in EMEA, et cetera, that Value-Added Services as a percentage of revenues is really growing to be a substantial part. Do you do any internal differentiation even if not telling us between, let's say, core DPI and Value-Added Services? And do you see that becoming a more substantial growth driver?

Yes. The way we plan to redefine the DPI space, is we see DPI not as a space, but actually as a great technology and enabler. What we sell to our customer is a Service Gateway and natural point, the DPI-enabled Service Gateway where it's a natural point to launch Value-Added Services, either from us in the means I've said it before, or even sometimes in partnership or in integration basis with their favorite VAS provider within their existing network. What we provided, DPI brings a lot of efficiency into launching Value-Added Services because coupled with Steering, we are able to redirect only the relevant application, only the customers who opted in to load balancing, health monitoring and really make sure that the process of launching and maintaining these Value-Added Services is easy and painless and less expensive as possible. And this is why, I think, we are seeing pickup of customers coming up for Value-Added Services, even if it's on a partnership basis.

Last question, just sort of bookkeeping. Of the OCS grant, the $16 million, has any of it been paid, or it's all still pending? And when do you expect to actually pay it off and erase it from the balance sheet?

Yes. So the entire payment is still pending, and right now, it looks like we're going to pay toward the end of the second quarter or the third one.

[Operator Instructions] We have no further questions at this time.

Okay. Everybody, we would like to thank everyone who participated in the call, and we will see you on our next conference call. Thank you. Bye.

Thank you. That would conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.