AvePoint, Inc. (AVPT) Q1 2022 Earnings Report, Transcript and Summary

Good afternoon, everyone and welcome to AvePoint's First Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, today's conference is being recorded. For opening remarks and introductions, I will now turn the call over to Marc Griffin, Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to AvePoint's First Quarter 2022 Earnings Call. Today, we'll be discussing the results announced in our press release issued after the market closed. With me on the call this afternoon is Dr. TJ Jiang, Chief Executive Officer; and Jim Caci, Chief Financial Officer. TJ will begin with a brief review of the business results for the first quarter ended March 31, 2022. Jim will then review the financial results for the first quarter, followed by the company's outlook for the second quarter and full year 2022, then we will open up the call for questions. Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause the actual results to differ materially from management's expectations. We encourage you to review the safe harbor statements contained in our press release for a more complete description. All materials in the webcast is the sole property and copyright of AvePoint with all rights reserved. Please note this presentation describes certain non-GAAP measures, including non-GAAP operating income and non-GAAP operating margin which are not measures prepared in accordance with U.S. GAAP. The non-GAAP measures are presented in this presentation as we believe they provide investors with the means of evaluating and understanding how the company's management evaluates the company's operating performance. These non-GAAP measures should not be considered in isolation from as a substitute for or superior to financial measures prepared in accordance with U.S. GAAP. Listeners who do not have a copy of the quarter ended March 31, 2022, press release may obtain a copy by visiting the Investor Relations section of the company's website. With that, let me turn the call over to TJ.

Thank you, Marc and thank you to everyone joining us on the call today. I'm very pleased to report that 2022 is off to a great start. We delivered a solid first quarter, highlighted by robust SaaS revenue growth and continued progress on our innovation road map. Total revenue for the first quarter was $50.3 million, ahead of our guidance. On strong SaaS revenue of $26.6 million which was up 45% from the same period 2021. We grew total ARR 30% year-over-year to $167.4 million. Our commitment to create innovative solutions to meet the evolving business needs of our customers over the past 20 years continues to set AvePoint apart. The first quarter was no different with many exciting enhancements to the AvePoint confidence platform which enables organizations to secure collaboration data, sustain connections between people and ensure business continuity. With 66% of enterprise IT spending shifting to cloud technologies in 2025 and more than half of businesses identifying optimization of their use of cloud as a top priority, our resilience suite ensures business continuity and compliance with data retention and other regulatory guidelines. This is why we were able to successfully onboard a global leader in application testing and quality engineering services to protect the data in its entire Microsoft 365 environment as well as extend that protection to a Salesforce CRM data and an HR application, leveraging the Salesforce platform. The global scale of our confidence platform with 14 deployments across data centers around the world ensures the firm can also satisfy its local data sovereignty requirements. Our Fidelity suite preserves data integrity as organizations transform from one system to the next, capturing data for compliance or integrating SaaS applications to streamline the way users work. Our control suite enables IT to deliver central services at scale with automation and repeatable businesses template. This, in turn, empowers business users and delegated businesses or department owners to control their budgets, licenses, users and workspaces. In Germany, we're automating the security, provisioning, governance and life cycle of Microsoft 365 collaboration spaces for our customers 10,000 users, so it can focus on its mission, to develop solutions addressing basic human needs of food, energy and building. As many companies continue to navigate global supply chain disruptions, our platform's deep integration with Microsoft 365 enables one of the world's largest managed transportation and logistics providers to save time, reduce costs and increase productivity in order to follow through on its commitment to achieve supply chain excellence for its customers. With that point, this firm is centralizing the management and governance of its Microsoft 365 Workspaces, leading the charge to shift its mindset from using file shares decrease its exposure to risk and ensure its data is protected and easily restored. During the quarter, we released a number of upgrades to our confidence platform to partner with organizations on their digital transformation journeys, including robust data protection capabilities with the introduction of ransomware detection within our resilient suite, the extension of our FedRAMP authorization across our platform and introducing two new products, Apple Entrust and Confide. Ransomware tax hit companies every 11 seconds with the cost to recover in the millions of dollars. When mci group a global engagement and marketing agency with 60 offices in 31 countries experienced ransomware attack with the user's OneDrive, it quickly realized the need for additional data protection to retain documents for 5 years and financial documents for 10 years as well as the ability to execute granular restores of data. With that point, mci group was able to add to its ransomware resiliency and achieve unlimited retention of data in Microsoft 365 with multiple daily backups and satisfy its 24/7 internal support SLAs for data recovery. The digital transformation underway reflects the importance of upholding the highest security standards for companies implementing cloud solutions, including public sector and federal organizations. Since our initial FedRAMP authorization last year, we invested in the authorization of solutions that go beyond our Microsoft 365 offerings, including Salesforce and Google Workspace to help organizations like the U.S. Department of State, U.S. Treasury, IRS and others in highly regulated industries to collaborate with confidence. As a result of our FedRAMP authorization, Apple is now working with a small business administration to reduce risk of data loss for critical business content containing Salesforce through automatic backup and ability to restore content out of place to another Salesforce environment. Digital transformation is also transforming the way that people interact and transact. As companies like WPP continue innovating offerings for how people shop in e-commerce, its 100,000 employees around the world are using Microsoft 365 to power this innovation through greater collaboration and productivity. With that point, WPP manages its growing SaaS operations through streamlined management and can now gain full visibility into its entire Microsoft 365 ecosystem with consolidated and secure dashboards which give a better understanding of the applications, features and site users are accessing most so they can make appropriate adjustments to increase adoption. We also expanded into innovative purpose-built applications tailored to the modern workplace through the launch of Confide, a virtual data room powering highly secured digital collaboration. A recent Deloitte survey of merger acquisition professionals found 87% organizations are managing deals in a purely virtual environment despite half the respondents citing cybersecurity as their greatest concern. Confide security stores data within customers' own Office 365 tenant and tailors access for only business leaders who should be privy to sensitive information. A key differentiator from other forms of private channels that exist within Microsoft Teams, Slack or Google Workspace. The feedback since launching Confide with customers as well as our partner community is positive in terms of how it builds on the power of our confidence platform, positioning us as a holistic partner through our organization's M&A journeys as well as its flexibility to evolve over time to address other typical business user use cases where Confide can apply. Since launching our global partner program last July, we have continued to accelerate our mid-market growth rates as well as reach small- and medium-sized businesses with the same enterprise-grade technology available to Fortune 500 businesses. Our channel ecosystem expansion is continuing in line with our geographic and market segment expansion. Our MSP business primarily focused on the SMB market continues to grow in triple digits and this portion of our channel business is expected to reach 10% of our total ARR by end of the year. During the quarter, we added new SIs and VARs as well as distributors like D&H, a leading technology distributor of IT solutions in North America. D&H modern solutions team enables partner to take advantage of the fast-growing market in SMB cloud managed services by equipping them with key technologies across in-demand solutions segments. Strategic distribution partners like D&H play a pivotal role in expanding our partner channel to continue enabling us to scale and deliver cloud services through their cloud marketplaces. Finally, we extend our commitment to meet the needs of an evolving ecosystem with the introduction of our AvePoint's certification program launched with technical and sales tracks to empower partners to best use AvePoint technology and design custom cloud solutions. It will also signal a differentiated level of expertise in our industry-leading technology to help them source more business and exceed competitors. Our direct sales team continue to drive our enterprise business, quickly responding to evolving market trends and help customers solve their complex business problems. As companies like multinational IT consulting firm, Sycor, continued to adopt Microsoft 365 for greater communication, collaboration and productivity. AvePoint ensures the firm can meet its data protection and GDPR requirements, while enabling smooth management of Microsoft Teams and automating business processes to save time and reduce costs so they can focus on serving their customers. We also saw success with our existing customer base as they continue their cloud transformation and look to gain more value from their own cloud investments. The number of our customers with over 100,000 ARR increased to 358 in Q1, up 33% year-over-year. Before Jim goes over the numbers, I want to touch on the share repurchase activity. Since our last earnings to now, we have repurchased approximately $4.8 million in shares. In summary, we reported a solid first quarter and continue to execute on our initiatives which will drive a strong 2022. With that, I'll turn it over to Jim to discuss our financial results in more detail.

Thank you, TJ and good afternoon, everyone. As I review our first quarter results today, please note that I'll be referring to non-GAAP metrics, unless otherwise noted. A reconciliation of GAAP to non-GAAP financials is included in today's earnings release which is also available on our website. Total revenues for the first quarter ended March 31, 2022, were $50.3 million, up 30% year-over-year. Within total revenue, SaaS revenue came in at $26.6 million, up 45% year-over-year and constituting 53% of total revenue compared to 47% of total revenue last year. Term license revenue came in at $10.2 million, up 17% year-over-year and constituting 20% of total revenue compared to 22% of total revenue last year. The uptick in term license is due to shifting business continuity requirements as a result of the dynamics in the global market. Some of those drivers include data sovereignty, disaster recovery and regional redundancy. As of the quarter end, we had total ARR of $167.4 million, representing growth of 30% from a year ago. Our core ARR ended the quarter at $156.4 million, up 26% year-over-year. We had record growth in our SMB ARR with a $1.6 million increase in the quarter. SMB ARR now totals $11 million, representing 100% year-over-year growth rate and 7% of our total ARR, up from 4% a year ago. As customers continue their cloud transformation and expand their SaaS operations, our average core ARR per account continues to grow as well. At quarter end, the average core ARR per account was approximately 38,500 which represents an increase of 11% year-over-year. This growth was driven by 358 customers with ARR of over $100,000, up 33% from the prior year. Our core ARR dollar-based net retention rate for the quarter was 108%, a slight decrease year-over-year. This was primarily due to the realigning of our sales force which caused upsell and cross-sell numbers to be lower than expected. As a reminder, we are in the process of realigning our sales force to implement the hunter and farmer sales motions. Moving forward, we expect to see improvements in our NRR. Now, let's review the income statement in more detail. Gross profit in the quarter was $36.2 million, representing a gross margin of 72.1% compared to 72.5% in the year ago period. The slight margin decline is the result of year-over-year increase in service revenue, our lowest margin business. Going forward, we are continuing to drive our sales efforts toward our fastest-growing revenue stream, our SaaS solutions. At the same time, we expect service revenue as a percentage of overall revenue to decline by transitioning more services revenue to our channel partners, resulting in overall margin improvement. Sales and marketing expenses were $24.6 million or 49% of revenue compared to 47% of revenue a year ago. This represents an increase of $6.4 million year-over-year or 35%. This was driven by an increase in head count and personnel-related expenses as we expanded our sales and customer success organizations as well as additional marketing spend as we invested in both our media and event strategies. We have grown our sales and marketing head count by 13% year-over-year, with hires evenly distributed across our sales functions as well as marketing and customer success, functions. The increase in head count has resulted in a $3.2 million increase in total compensation, primarily driven by salary and benefits. Programmatic spend in marketing is up $2.2 million year-over-year primarily driven by brand awareness efforts and marketing events. R&D expense was $5.6 million or 11% of revenue compared to 10% or $4 million in the year ago period, a year-over-year increase of $1.6 million or 41%. Our head count was up 48% for the quarter compared to last year as we continue to invest in the development of innovative technologies that help our customers stay competitive amidst evolving workplace trends and digital transformation. G&A expense was $11 million or 22% of revenue compared to 21% or $8.3 million in the year ago period. This represents an increase of $2.7 million year-over-year or 33%. The increase in G&A expense largely reflects an increase in people and infrastructure-related expenses associated with our public company readiness and ramp-up efforts, including head count increases of approximately 26%. Included in our G&A expenses were approximately $500,000 of professional fees related to our M&A activities. This is the first time we've incurred these type of expenses. And without such expenses, our G&A expense would represent approximately 21% of revenue. Non-GAAP operating loss was $5.6 million compared to a loss of $2.6 million in the year ago period. Turning to the balance sheet and cash flow. We ended the quarter with $260 million in cash and short-term investments. Cash used in operations was $6.4 million in the quarter, while free cash flow which includes CapEx, was negative $7.4 million. We also utilized $0.7 million for the repurchase of shares in the quarter as well as approximately $1.5 million in completing our first acquisition. Our use of cash in the quarter was in line with our expectations. We have continued to purchase shares subsequent to the quarter end. And to date, we have repurchased a total of 945,000 shares at an aggregate price of approximately $4.8 million. I would now like to turn to our outlook for the second quarter and the full year 2022. For the second quarter, we expect total revenues of $54 million to $56 million and non-GAAP operating loss of $1.5 million to $2.5 million. For the full year, we expect total revenues of $238 million to $244 million. We expect our non-GAAP profitability to be in the range of a loss of $3.5 million to income of $1 million and we expect year-end ARR to be in the range of $212 million to $216 million. In summary, we continue to execute well, delivering strong top and bottom line results and believe that AvePoint remains well positioned to maintain this momentum and operating discipline throughout 2022. With that, we'll open up the call for questions. Operator?

[Operator Instructions]

Operator, before we begin questions, our Investor Relations team pointed out that I misspoke regarding our cash flow, so I wanted to clarify that before we take questions. Our cash used in operations for the quarter was $6.1 million and our free cash flow for the quarter which includes CapEx, was negative $7.1 million. We can now go to the questions.

Our first question is from the line of Derrick Wood with Cowen & Company.

Great. It's Andrew on for Derrick. I'll start maybe with Jim on the shape of net new ARR over the course of the year to get to your full year guidance implies an acceleration in the back half. Is that just the hunter-farmer model kind of kicking in? Or anything else to think about on the net new ARR through the year?

Yes, great question and good to talk to you again. So the short answer is yes. We definitely we'll see the benefit of that model kicking in. So that's one. And then two, our business is still seasonal in nature. So the second half of the year is always much stronger for us than the first half. So I think it's the combination of those two components.

Okay. And TJ, maybe just walk us through like how far of the way through you are through this hunter farmer model transition you are and kind of what type of work left there is to do or anything to think about as we work through that?

Yes. So it's a pretty big change to have the focus of just farmers with a farming patch with also dedicated ARR upsell quotas, so there are a lot of account assignment that happened. This occurred end of Q4 and beginning of Q1. So we're through it now. So all the account executives have their patch of talent and businesses to focus and go after. So yes, we're looking forward to a good year.

And our next question is from the line of Brian Essex with Goldman Sachs.

Can you hear me okay? It sounds like you cut out a little bit.

Yes, you're good.

Great. Yes, I guess I was wondering if we could talk a little bit about cash flow, what the outlook is throughout the rest of the year. Is that going to be relatively seasonal as well and kind of how to think about modeling that out over the next 12 months or so?

Yes. No, good question. So short answer is yes. Similar to how we think about our revenue, cash flow follows a similar trend where our first two quarters of the year, we're definitely consuming cash. And then generally, the second two quarters of the year, we will be producing cash. And again, we're forecasting to be free cash flow positive for the full year. So the way I would look at that is, again, we're expecting negative for Q2 and then positive Q3 important.

Got it. That's helpful. And then maybe if I could hit net dollar retention rate, I understand the comments on cross-sell, upsell. What did churn look like in there? Is that a part of it? And do you think that -- I mean should we anticipate a meaningful recovery in net dollar retention rate now that you kind of like vetted out the hunter-farmer model.

Yes. So maybe two thoughts, right? One is on the gross retention or the gross churn, we haven't been publishing those numbers yet but we are seeing steady improvement on the gross retention. So I think there's a positive trend there. So that's good. And then, on your second point, in terms of NRR, I mean we firmly believe that the shift in this model that, again, started in Q4 of switching to the hunter-farmer the whole, the real driver for that was seeing that as a very positive impact on NRR. So again, we expect to see improvements on that the rest of the year.

Got it. Maybe I can sneak one last one in, maybe for TJ, are you starting to see any kind of focus on the backup aspect of the business, particularly with elevated ransomware in the market? And is there may be an enterprise focus, perhaps particularly on the SMB side with regard to kind of looking to your platform for a greater reliance on backup?

Yes, that's absolutely right, Brian. We are really benefiting from the platform play of business data, security and governance, so ransomware attack, ransomware detection and also for the SMB customers, especially MSPs, we're offering ransomware warranty. So it's exactly what the market is asking for and need and security bend. It's definitely a natural expansion and extension of our existing customers who have back up today.

[Operator Instructions] And our next question is from the line of Kirk Materne with Evercore ISI.

TJ, I wonder if you could just talk a little bit more about the small business momentum you've been seeing? And I guess, the stability or trends behind that, how comfortable you are with trends, just given what's going on from a macro perspective, I think people are a little bit nervous about smaller businesses potentially starting to run into more budget constraints, things like that? So you just talk about maybe your progress and then just what gives you comfort that, that should be able to continue through the year?

Thank you, Kirk. Yes, small business is the fastest-growing segment for us in the three digits. We are forecasting that should be 10% of our ARR for the year. It's really growing fast. And we have a definition for 1,000 employees or less companies being small business. So that's pretty generous definition. So in that regard, there is a very, very big market. In fact, we look at Microsoft's total M365 ecosystem that segment, that's about 50% of their market. So for us, we are growth. It's a great field for us. We're now treating managed service providers, MSP as a vertical to tackle. So we're adding a lot more resources to that to continue that growth trend.

That's helpful. And then obviously, Microsoft started pushing through a price increase on Office 365 in March. I was wondering does that have any bearing on your business at all in terms of as people sort of reevaluate the bundle that they're getting for Microsoft and what might be in it, what might not be in it? I guess, does it have really any bearing on your business or trends from a bookings perspective?

Overall, there's inflationary pressure across the market, you see various platform providers increasing prices across storage, across compute. So for that, it's really our value-add for our customers to maximize their investment on Microsoft Cloud and now extend to Google as Salesforce. So we actually see a benefit from that as well. So it's only helpful for us to continue to provide that value add, so to help our customers and partners to maximize their investment.

And our next question is from the line of Jason Ader with William Blair.

Just first question on the macro environment. TJ, did you specifically address whether you're seeing any impact globally? I didn't catch that, you might have said in your prepared remarks but any update on kind of early signs of cracks or kind of leading indicators that might suggest things are slowing down? And then also from you, Jim, any impact from currency in the quarter or in the guidance.

I'll take the first one and Jim will talk about the FX. From our perspective, the global climate and conflicts in Europe, it doesn't impact us directly because we don't have any businesses in Eastern Europe or Ukraine or Russia. But what we are seeing, though is Western European customers, we have very large German customers, for example, looking to expand their hybrid deployment scenarios for business continuity purposes. Historically, we see multi-cloud as a strategy for that. But now we see -- because data sovereignty because of regional resiliency concerns, there are a lot more of that ask. So this you see some term license up creep as well. So for us, we're very well situated all type of deployment scenarios, whether it's on-prem, private data centers or hybrid or multi-cloud. So we just see that there is the trend for that focus around business continuity and contingency planning. So it's -- actually for us, it's something that we lean into, especially because we're physically in 17 different countries. We can excel into that offering some of the "hyper localization offerings." So on FX, Jim?

Yes. So Jason, thanks for the question. So thinking about FX, we had factored in really FX into our planning process. And then what we saw in really of the almost unanticipated FX was only about 0.5 point in terms of impact on revenue. So not really material compared to what we had kind of baked into the plan.

Great. And then for you, TJ which specific SKUs are you seeing the most momentum from now?

We continue to see our backup as a service, the resiliency skew. As we stated last quarter, the quarter-to-quarter mix is about 50% of the mix now uplift from about 1/3 of the mix. So that's definitely a big uplift. The second one is in Q1 specifically, we continue to see a tremendous amount of migration. So that's something that we see that people are continuing to go digital transformation into different environments. We don't think migration will ever end, honestly, from moving on-prem to cloud or even divestiture merger acquisitions. That will be a continued use cases there.

All right. Last one for me, just for you, Jim. Any update on cross-sell metrics? I know in the past, you talked about a number of customers with more than one product, more than two products, more than three products. Any updated metrics there would be helpful.

Yes. We have gone into detail on that publishing it. It is something I think I mentioned in Q4 that we're looking to gather enough information there and report on that repeatedly. But as of right now, we're not providing any guidance along those lines. Thanks, Jason.

And our next question is from the line of Nehal Chokshi with Northland Capital Markets.

Yes. Can you just double click here on the, why the reorganization of the sales organization has resulted in a step back in the March Q showing 12-month dollar-based net revenue retention rate?

Yes, I think when we were talking about it earlier, I think just it's the normal kind of function of having some disrupt in the organization as you look at realigning people and having them focus on things they weren't previously focused on. I think that naturally creates a little change and it took a little while for that change to really be absorbed and for people to embrace it and ultimately move forward with it. So again, I think we anticipated some of that change. And again, hopefully, we're past most of it in Q1. And again, we think this is the right strategy to move forward and have people focused and embrace those individual roles. But in the meantime, going through that transition, like any other transition has some challenges with it and this was no different for us but we believe we're through it now.

Understood. And just to be clear, that transition began sometime during the December quarter when exactly within the December quarter, did that transition begin?

It was end of Q4. So we mentioned earlier, the gross retention improved. So what we're seeing is actually the gross retention renewal improved and what was this adjustment where people are literally reassigning new accounts to their names or taking away new accounts, their names, create some distraction in upsell side of it. That's where you see the NRR change. So we started that process end of in Q4. That also goes along with everyone's comp plan. Think about every salesperson will have a different number in their comp plan depending on the patch, how many accounts they now cover. Some reps could be going from 70 accounts down to 30 accounts and each patch will have their own natural ARR amount and then thereby we derive a upsell quota for that rep. So, every rep actually has different size quarters, depends on the accounts and patch they own. So there's a lot of accounts being reassigned and that introduces adjustment periods.

I see, okay. And did I hear you correctly saying that you have completed your first acquisition?

That is correct. We completed first tuck-in acquisition. The details are asking in our 10-K. It's in the education vertical sector. It's a domain expert in the training management space because we have integrated industry's only -- integrated learning management, training management and now training management solution that's fully integrated with Microsoft 365 and Teams to offer to higher education as well as commercial.

I see. I'm sorry. I didn't capture that from the 10-K. Could you just briefly review the financial details of the acquisition then?

Sure. So essentially, it's a, like TJ said, it was an acquisition we completed at the end of February. It was in actually Singapore, where we made the acquisition. The transaction had a value of SGD10 million equivalent of about a little less than US$8 million, had a couple of components to it. But again, end of February had very little impact on our revenue for the quarter.

Got it. Okay, very good. And then why not deploy your repurchase faster than what you did?

So it's a great question. What we decided to do when we first implemented that plan was we set a target. We set a systematic process where we were purchasing a fixed amount with our advisers where we set up a recurring purchase every week. And we kind of said it and said we're not going to touch it for the first six to seven weeks of the program to see what happens. So we kind of, this is the first time we're doing a repurchase program. And so we wanted to kind of see how it goes. And again, we -- with the help of advisers we set a specific number and we set a systematic approach and we've just executed upon that. That is something we are revisiting to see if we want to continue at the same level or as you suggested either increase or decrease but that's something we're currently looking at now.

And we do have a follow-up question from the line of Brian Essex with Goldman Sachs.

Just a real quick housekeeping question. just noticed the purchase of investments on the cash flow statement about $180 million. Maybe just touch on that and give us a little clarity in terms of what's going on there.

Sure. This just has to do with -- we're purchasing T-bills essentially. So this quarter, we actually went out and bought T-bills that were extended beyond three months. And so just the accounting rules is you got to classify them as short-term investments as opposed to cash. And so it's just a technical accounting thing but essentially, we're still viewing it as cash and cash equivalents, so...

And we have no further questions in the queue. I will now turn the call back over to TJ Jiang for closing remarks.

Well, thank you, everyone, for your questions and your time today. We continue to be very enthusiastic about the global growth potential for both the market and at AvePoint. With a powerful brand, we continue to increase our access to help organization worldwide collaborate with confidence at scale. We recently announced the appointment of our newest member of our Board of Directors, Janet Schijns. Her experience leading channel programs and disruptive go-to-market strategies will provide a unique perspective as we continue to scale our global channel, one of our key growth vectors. It's clear that we're operating in a highly dynamic market right now, one where it is important to continue to grow while being prudent with expenditures. Throughout our company's 20-year history, we have proven our ability to do just that and I'm confident that we'll continue to do so. We'll continue to achieve positive cash flow on an annual basis which will enable us to evolve our product offerings, continue our expansion and stay on the bleeding edge of innovation, go-to-market strategy positions us well for the new logo acquisitions, a growing partner ecosystem and the ongoing expansion of existing customers to whom we deliver exceptional service today and in the process, create value for our shareholders, partners and customers. Lastly, I want to thank our shareholders for your recent vote of confidence at our Annual Shareholder Meeting to renew my appointment, to the Board of Directors and to approve our senior executive compensation. With nearly 70% of all shares voted and that over 99% in affirmative, we know it is a privilege to have shareholders trust and faith in our ability to navigate the current market conditions, focus on consistent execution and ultimately deliver long-term shareholder value. With that, thank you.

That does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you and have a great day.