Good day, ladies and gentlemen, and welcome to the Blackbaud, Inc. Q3 2017 Earnings Call. Please note, today's call is being recorded. And at this time, I'd like to turn the conference over to Mark Furlong. Please go ahead, sir.

Good morning, everyone. Thanks for joining us on Blackbaud's Third Quarter 2017 Earnings Call. Today we will review our financial and operational results and provide commentary on our performance in the context of our 4-point growth strategy. Joining me on the call today are Mike Gianoni, Blackbaud's President and CEO; and Tony Boor, Blackbaud's Executive Vice President and CFO. Mike and Tony will make prepared comments and then we'll open up the line for your questions. Please note that our comments today contain forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our most recent Form 10-K and other SEC filings for more information on those risks. We believe that a combination of both GAAP and non-GAAP measures are more representative of how we internally measure our business. Unless otherwise specified, we will refer only to our non-GAAP financial measures on this call. Please note that our non-GAAP financial measures should not be considered in isolation from or as a substitution for GAAP measures. A reconciliation of both GAAP and non-GAAP results is available in the press release we issued last night, and a more detailed supplemental schedule is available in our presentation on our Investor Relations website. Before I turn the call over to Mike, I'll briefly cover our upcoming investor marketing activity, which is available on our Investor Relations website. During the fourth quarter, our team will be attending the Crédit Suisse conference in Scottsdale, Raymond James conference in New York, NASDAQ Conference in London, and meeting with investors in London, Paris, New York, Boston, Cincinnati, Columbus and Chicago. Please reach out to Investor Relations if you're interested in connecting at one of these events. With that, I'll hand the call over to Mike.

Thanks, Mark. Good morning, everyone, and thanks for joining our call today. As many of you know, we held our annual user conference called bbcon last week. We held approximately 250 expert-led sessions convening over 2,000 attendees, which included hundreds of first-time attendees. Representing our growing communities of new customers like Feed the Children, Georgia Tech, JetBlue, and the Minnesota Vikings Foundation, just to name a few. They've joined a community of roughly 35,000 customers that collectively represent 4 out of 5 of the top 50 most influential nonprofits, over 90% of higher education institutions with billion-dollar campaigns, 26 of the top 32 hospital systems in the U.S. and a third of the Fortune 100 companies. Our industry-leading solutions and expertise are enabling our customers to yield impressive results. And we were thrilled to celebrate a few of the many success stories on our main stage. For example, University of Georgia posted their fourth record-breaking fundraising year in a row, bringing them closer to their capital campaign goal of $1.2 billion by 2020. Special Olympics of Missouri increased their fundraising by 179% by reaching Blackbaud analytics. American Diabetes Association streamlined a 2-week review process down to 30 minutes utilizing our foundation solutions. And CSA Insurance achieved 98% employee engagement in their CSR program supporting organizations like the American Heart Association and Habitat for Humanity, which are also Blackbaud customers. We're the only cloud software company in the world uniquely positioned to serve and connect the entire philanthropic ecosystem, which includes nonprofits, foundations, corporations and individuals. In fact, Fortune recently recognized Blackbaud on their annual Change the World List, and featured us as 1 of the 6 rising star companies that supports global good. IDC also profiled Blackbaud as the 24th largest cloud software company in the world with a niche…

Thanks, Mike. Good morning, everyone. Pleased to report that we posted another solid quarter, positioning us well to achieve our long-term aspirational goals and updated financial guidance. I'll direct you to yesterday's press release and investor materials posted to our website for the full detail of our Q3 financial performance. Today, I'll focus on key highlights so we can get to your questions. Our third quarter revenue was $196 million, an increase of 5.6% on an organic basis over 2016, with subscription revenue now making up roughly 2/3 of that balance and growing 19%. AcademicWorks is performing well and tracking to our internal expectations. Our mix of recurring revenue continues to grow, representing 81% of our total revenue, which is 380 basis points higher than Q3 of 2016 and delivered 10.7% growth on an organic basis. Recurring organic revenue growth is a key measure for us as it represents the core of the business and is expected to continue growing as a percentage of total revenue as we further shift towards subscription-based recurring revenue. Subscriptions accounted for 65% of total revenue in Q3, which is a 760-basis-point improvement over Q3 of '16, representing total revenue growth of 19% on an organic basis. Subscriptions continue to exhibit strong performance as we move to integrated and open solutions in the cloud and shift our mid-market customers to NXT. Services, licenses and other revenue declined 11.2% versus Q3 of '16 and represented 19% of total revenue. The decline in services is more pronounced than we originally expected when we set our annual guidance for 2017. We originally expected services revenue to be relatively flat versus 2016. Instead, we are successfully driving an accelerated decline in professional services with our shift in focus towards selling cloud-based solutions, increasing the rate of innovation and improved…

Thank you. [Operator Instructions] And we'll go to our first caller. Please go ahead, your line is open.

Hey guys, good morning. It's Tom Roderick from Stifel. So, first question for me, Michael, I want to just get a better understanding of JustGiving, both financially and also functionally what it brings to the table. But let's start with the functional part. Is this a peer P2P -- peer-to-peer kind of giving model in the U.K. but more curious to what you can to with that with your core installed base as you bring that technology to the States? And then maybe you can kind of it on how that overlaps or doesn't overlap with what you have with everydayhero and TeamRaiser? And then financially, Tony, maybe you can just help us understand how we should think about that impacting the way you've guided relative to the full year?

Sure, Thomas. This is Mike. So, for JustGiving functionally, it adds a new category that we didn't have before, which is the direct person-to-person giving. And having that mobile presence is important because as people get accustomed to using a solution like JustGiving for person-to-person, they can actually then use the same mobile solution for person-to-institution, so to charities, for example. So, it's a footprint -- a mobile footprint in the cloud that we didn't have before. So, it's sort of a bridge between those two. It's a U.K.-based business, as you said, but they've actually had individuals use the system from well over 100 countries. So, it is in fact a global platform already. Although the business is in U.K. -- excuse me, U.K.-based business. So, it does fill a gap that we did not have, and it's a different solution, if you will, then what we had. What we're going to do, classic of what we always do, is we're going to integrate that platform with our existing middle- and back-office solutions. There are multiple platforms like that in the world today, a couple of them, and all of them are not integrated. So, we'll be not only providing more resources globally for that solution, but we'll also integrate to our middle- and back-office solutions, which are also global, which makes a more frictionless environment for institutions when they receive money. So today if a charity received money from JustGiving or another platform, it's a little clunky from a workflow standpoint and it creates back-office manual processes and work. We're going to eliminate that and make it a lot more frictionless. And then from a B2B standpoint, we're going to offer this to our all of our customers globally as a new integrated mobile solution. So that's the functionality.

So, numbers, Tom, if everybody will recall, we will exclude the acquisitions that happened this year for any organic count for the year, pro forma in the full year for next year when we do that calcs and provide guidance next year. As far as JustGiving specifically Q4 impact, Q4 is their seasonal low quarter. Revenue-wise, we'd expect something between $6 million and $8 million in the quarter for contribution. We still expect it to be dilutive in Q4 to our operating margins, but for full year '18, we'd expect it to be accretive.

And we'll move on to our next question. Caller please go ahead.

Rishi Jaluria at JMP Securities. It's nice to see an acceleration in organic subscription revenue growth. Two questions. I'll start with you, Mike. With moving all the products to Azure and I know you've talked in the past of getting everything on the Blackbaud SKY architecture. Can you give us a sense for what work needs to be done technologically to get the solutions on a common architecture? And then maybe what's the timeline for doing so, including the subvertical solutions would look like? And then I have a follow-up for Tony.

Yes, sure. We've actually made a lot of progress in moving. And again, it's a -- the SKY architecture is a microservices architecture, so it's many components. But I'll just use one represented sample, example, which is the user experience. Most of our cloud solutions are in the SKY user experience today, which means most of our cloud customers and solutions are there. Many are using the SKY Reporting, SKY APIs. So, it's a journey, but we've made a massive amount of progress architecturally in the last several years moving our entire company there. We are still, we have a foot in colo data centers and a foot in Azure. You can imagine, there's not a lot of heavy lifting architecturally to get to Azure. And so, we're kind of balancing our move from colos to the Azure environment. But we're fairly far along, again, architecturally with SKY architecture across the whole product portfolio and the move to Azure.

Got it, that's helpful. And Tony, we saw some nice margin expansion on both the gross and operating margin side this quarter. Was that primarily driven by mix shift in revenue? Or were their other drivers to that margin expansion?

Rishi, there's a lot of moving parts in there. I'd say, our continued progress on our operating efficiencies and all the related initiatives is, obviously, contributing. In the quarter, payments are always a key component there in the mix. In Q4, we'd anticipate payments to be a bit higher mix, which will be put a bit of pressure on overall margins. Feel really good about where we are to date, most of it's the efficiencies we've gained. I think one of the other things, the little bit of detriment on the revenue growth side is that service is shrinking as a percentage of total, but we're doing really well on margins within services. So that dual impact of services being a smaller percentage because it is dilutive to our margins. But also, services margins improving is also helping prop up our overall margin structure.

Yes, one thing I mentioned in my prepared remarks is we've been evolving to a new organizational structure, incrementally over the last several years, and that's largely done. And that structure also provides opportunity for continued scale.

And we'll move on to our next question.

Rob Oliver at Baird. Just to go back to JustGiving since it's something that's coming up a lot more than we would have expected in terms of questions or concerns. Mike, in response to Tom's question, you talked a little bit about kind of the thesis behind the JustGiving acquisition. We had a chance to talk to some customers at bbcon, can you just give us a little bit of a sense for what some of your big customers are talking about? Social was a big theme there and kind of how they're thinking about, kind of, the future of fundraising? How that could fit in there? And then a follow-up question for Tony, just, is that revenue mostly payments? And is that why there is a margin impact there? Or is some of that classic license as well? And can we think of that as part of the payments business going forward?

Sure, Rob. So, customers are excited about the category of which JustGiving fills. The future of giving always, has been evolving for a while. I think we've in past calls have talked about the fact that less than 10% is actually online today, yet it's growing and shifting to online pretty significantly. Our product portfolio supports that. This is a gap filler in something we didn't have, which also supports online giving. Many of our customers have been experimenting with different platforms in the space. This acquisition fills the gap for us but, also, once integrated from a workflow standpoint with our other solutions provides a platform for our customers who've been experimenting in the space to fully participate in the space with a platform that they can move forward in their systems, if you will. So, I think there's a lot of excitement for us and from the customer base to be able to have Blackbaud deliver this. If you think about some experimenting that's been going on, they have to go to other vendors that are stand-alone vendors and experiment and the system of records in the back -- middle- and back-office is us. So, when they're out there experimenting, they're also creating an inefficient environment for themselves. So, here's the platform now that creates an efficient higher velocity, lower friction -- operationally, lower friction environment that they'll be -- they'll have access to.

And then, Rob, on the monetization approach, there is some components of the various offers that have a recurring subscription component. The largest majority of the business though would be transactional. So, it'd look like -- much more like a payments usage-type revenue stream, so it won't have any big deferreds associated with the largest portion of it. The dilution on operating margins that we would anticipate is really driven wholly by seasonality. So Q4, which is a bit unusual from where our payments seasonality goes to be a bit contrary. We normally have our highest payment seasonality in Q4, theirs is actually the lowest. So that'll provide, I think, a bit more consistency in our overall combined company as we roll it in next year. But it's all driven by seasonality. So, we would expect it to be accretive to operating margins on a full year basis.

And we'll move to our next caller.

Justin Furby with William Blair. I guess maybe first question for Mike or Tony. Just that the framework, the 6% to 10% organic revenue framework, I mean is that -- is there any change to how you're thinking about the long term?

Yes, we're not talking about '18 guidance now or long-term aspirational goals. We're just covering Q3. But you can see with the mix shift that's been planned over the last couple of years and sort of what's happening in the business, it's quite clear that the success we're having in shifting the business with subscriptions being 65% of total, organically growing at 20%. And you think about the acquisitions we've made in AcademicWorks and JustGiving, are going to fall to the subscription line and you'll have a full year effect, obviously, in '18 from those, which accelerates the percentage of total from a subscription standpoint. While services continue to drop because of the cloud solutions and the model, which we've talked about a couple of times in the last few calls and the maintenance shift to subscription. Just looking at those few items, really show the model shift that we laid out that would happen several years ago. So, we feel really good about the, sort of, top of the P&L revenue shift that's underway.

And then, Mike, I think, the JustGiving business saw a 15% growth stand-alone. What do you -- do you think you guys can accelerate that meaningfully as you kind of go in and leverage your install base? Or what do think can happen with that over the next few years?

I'll just generically answer that for every acquisition we make. We value acquisitions on a stand-alone basis. And obviously, we have a synergy case that's internal to Blackbaud that looks a lot better than a stand-alone case. And so, the valuation is stand-alone, the synergies are ours to get and those include a lot of things related to revenue and margin opportunities. That theory applies to every acquisition we make.

We will now to move to our next question. Caller please go ahead.

This is Ken Wong from Citi. So maybe circling back on JustGiving some more. In terms of how you guys plan to go to -- go-to-market in the U.S., can you maybe elaborate a little bit on what needs to be done their terms of kind of getting your sales force up and running? And also in terms of building a brand? I mean, here you're -- this is more of a consumer-centric brand. I'm wondering if that's going to require a different level of investment versus your kind of -- your traditional base.

Yes, that's a good question. It's a consumer brand, but it's also a B2B sell in a B2B set of capabilities, which is right in our wheelhouse. And so, we've built our plans around the fact that we're going to take this to market in a B2B way, which is what we do every day. And once we do that, a lot of our customers have well-known brands. And so, there's an opportunity here to sort of leverage that or have them leverage that in the market that they face as individual charities, for example, in that space. And so, there's some large brands there that we think will get some leverage. We did not expect and our synergy case does not expect that this is all of a sudden going to become a North America or larger global brand on the consumer side. That's sometimes not easy to achieve, we're going to work on that. We're not necessarily going to significantly invest in that because out of the gate, again, it's more of a B2B play for us, which is in our wheelhouse from a go-to-market standpoint.

Got it. And then in terms of sales and marketing, you guys had kind of touched on potentially seeing some retention impact. Anything you guys can highlight in terms of the improvements you've seen there? And how that might continue to get better going into the next year and beyond?

Yes, sure. From a sales and marketing standpoint, we've talked about this quite a bit. We've added to some headcount last year, a little bit this year. We've got sales initiatives, sales excellence program, that we started a good 18 months ago now. That's a program that never ends, but it's now a structured, well-metric program that's just driving better transparency and better results. We have a substantial amount of our sales resources in market, wasn't the case going back 3, 4 years ago. So, we're pleased with the operational progress of that initiative. I'm not sure what you meant by your comment around retention. Our retention rates have remained about 93%. So, there's been no downward impact to retention, it's actually been quite healthy. And we've mentioned in the past that when our clients adopt more solutions like analytics and payments, retention actually goes up to the high 90s.

We will now move to our next caller.

It's Kirk Materne with Evercore ISI. I guess first question for Mike, just on the new or expanded Microsoft partnership. Is there anything you guys are doing with them from a go-to-market perspective? I'm just wondering if you're going to be co-selling with them? If there's any SPIFs for their salespeople to help push Blackbaud into their customer base? I'm just wondering, I understand the technology relationship. I was just wondering if anything's really changed from a go-to-market perspective?

Yes. This is a relationship that's been really strong for us, especially, the last 3 or 4 years as we've sort of doubled down on the SKY architecture and moved to the cloud. There's been a lot of collaboration across the board with Blackbaud and Microsoft. Microsoft has decided to focus on this market. And in fact, they created a new business unit focused on this market. And they decided that to be successful, they want to partner with Blackbaud, right out of the gate. So that's sort of the macro level message with that press release. Getting underneath it a little bit, there's more discussion and work around better integration across the product roadmaps and the platforms. Blackbaud is going to become a cloud solution provider, which is a different level of sort of partnership in their partner program. We are collaborating more on future solutions and on innovation. And from a go-to-market standpoint, we're working on some different things related to how we go to market and what's most efficient for both companies and for our customers. And so, everything's on the table related to how we can both win together in this marketplace. And so, it's a significant announcement for Microsoft because they created a business unit and they're now focused on the space in a way they haven't been before. And it's significant for Blackbaud because out of the gate, they said, we need to do this together and that's how we win, together. So, I see lots of opportunities here with their product platform from solutions like Office 365 and Dynamics through data possible opportunities with LinkedIn. I mean I think there's a lot here that will come out of this over time, including distribution channel, to your question, and some really cool innovations that now we're looking at.

Okay. And then just one for Tony. Tony, obviously, services this year has come in below your expectations as you guys move more and more towards sort of cloud, cloud offerings. I guess, just, I know you don't want get into '18, but as we think this holistically about this going forward, does that, we had more of a normalized run rate? Does it just keep going down as the business keeps pivoting towards, I guess, I'm just trying to get a sense on how we should think about that as we start thinking ahead to '18, '19, just in terms of whether it continues to be this big a drag or it starts to potentially level out a little bit as a percentage of your total revenue?

Kirk, the certainty is that services and other will continue to become a smaller and smaller percentage of the total. There is a couple of dynamics this year. We came into the year, if you recall, when we set guidance, we expected services and software to be relatively flat with prior year. And that was inclusive of a couple of issues: one is moving to subscription model. So, we were going to have -- we felt less back to base sales for licenses and new modules for the legacy Raiser's Edge Financial Edge products. We also this year were moving to a subscription model for the first time for BBCRM. And so, we were going to lose that license revenue recognition there. Software has become almost meaningless in total dollars for us now. So that one will not be -- continued decline, right? So, once it's bottomed down, it's largely nonexistent. We may have a few million dollars left in software now for BBCRM, but that's the extent of it. So that won't continue to be an accelerated decline driver. The overall services, I think, our move positive shift to the cloud. The SKY architecture, the SKY Reporting layer improved quality, improved innovation, just all the things we're doing are reducing the need for customized services and also reducing the amount of implementation services that are required. So, I'd expect that we'll continue to see drop-in services. We also, as you know, this year changed how we compensate folks and we were paying a bit less in some cases for services. So, there are a lot of drivers that have been pushing that down by design and per our strategy. So, can't give guidance now, but I would expect services to become a smaller percentage of total, certainly, over the next couple of years.

We'll move on to our next question. Please go ahead.

Hi, good morning guys, its Brian Peterson from Raymond James. So just one for me. So, I just wanted to get an update on your previous ambitions to add to your 100-revenue sales team. And when you think about a strategic partnership with somebody like Microsoft, and potentially more partnerships down the road, does that change the cadence of those investments at all as maybe you take a wait-and-see approach to what that could ultimately be? Or are you guys still kind of sticking to that playbook there, is thinking about those investments over the next few years?

Yes, I mean, we've added to the sales headcount last year, which we break out annually in the K we've added this year. But I would also say that we're really focused on productivity as well, sales productivity. We've really built up our customer success organization in the last 18 months. Where really, we didn't have a customer success organization if you go back 3 years ago. And so, customer success is about focusing on customers and renewals, but it also has the added benefit of removing the sales teams from managing customers in an account management way. So that also goes toward productivity. So, sales productivity is about not just adding headcount, it's about being in market near the customer. It's about building information systems inside of the company to support things like onboarding new folks and helping our existing folks get access to information and better processes. And then doing things like customer success that offloads the account management function from sales. So, sales efficiency for us is a multipronged project, and improving our ability to grow quota attainment and quota, if you will, is not just headcount related, it's efficiency related. It's both. So, I would just really want to be clear on that because I think there's opportunities to basically get a lot more productivity out of the existing headcount without just having to continue to add more headcount.

And we'll move to on our next caller. Please go ahead. Your line is open.

Hi. This is Mark Schappel with The Benchmark. Just one question for me. Mike, I was wondering if you could provide some additional details on your Blackbaud Labs initiative.

Yes, sure. So really, it's about organic innovation. We have now gotten to a point with the Blackbaud SKY architecture where it's effectively consuming our entire product portfolio. And we have a well flushed out architecture and set of tools and capabilities where we're building more and more new solutions organically. A while back we built an outcomes product in Blackbaud SKY running in Azure, which is to measure outcomes, that's been in the market now for a while. At our bbcon customer event last week, we did a demo on the main stage about a mobile auction bidding and event platform that we built in SKY that we're going to roll out across the whole customer base. And so Blackbaud Lab is really about organic innovation. We've got a pipeline of prioritized things that we'd like to do there. And so, we're now in the -- in an architecture where it's not only a lot easier to do things, but it's actually lot more efficient as well. You think about building something in SKY like that mobile auction solution that we demoed at bbcon, the user experience, SKY UX, is already defined in the architecture, so there's a toolkit. So, you're not having to spend 25%, 30% of the engineering time building a UX from scratch, sort of, already done for you. SKY Reporting is a reporting engine, so you can put the data there in the reporting engine. APIs are there. So now we can really build solutions and go to market faster with functional solutions like mobile auctions. And not have to build the whole environment out, reporting and UX and APIs because they're already there. So, our ability to pick up velocity on organic builds is now there because of this architecture. That's what Blackbaud Labs is all about.

And we'll to move to our next caller. Please go ahead.

Hi, good morning. It's Kevin Liu with B. Riley. First on AcademicWorks. Could you talk a little bit about to what extent you're already seeing cross-selling with some of your existing solutions? And with the introduction of and integration with RE NXT? Are you expecting that to help accelerate growth for AcademicWorks even further?

Yes, both is a yes. Actually, we right out of the gate started to cross-sell AcademicWorks. You can imagine, we have a lot more sales executives in our education business units than AcademicWorks had just given the size of their business. And so right away, we went to market with AcademicWorks from a cross-sell standpoint, and cross-sell is both ways. They have a lot of clients that were not Blackbaud customers, so that started immediately. Also, we've started and completed some of the integration work. All of it's not done, but some of the integration work between AcademicWorks and the Blackbaud products is complete. So, it makes the combined solutions a stronger solution in the marketplace. So, we now -- when we make acquisitions, before closing, we have a long-term executable operating plan that starts very quickly with things like integrating back-office, but also product integration and go-to-market. And that planning is done before of an acquisition's close. And so, the first week post close, we start executing on the operating plan.

And just a quick follow-up on the payments business. Could you talk about what benefit, if any, you guys saw from the hurricanes during the quarter?

Yes. We saw, there's always ins and outs in our business. So, we did see some volume pickup. And we do, fortunately or unfortunately due to natural disasters, right? But also in natural, when these disasters happen, sometimes some of our customers are impacted. And so, if there was an event in Houston during that, or what have you, there could be some downside to revenue, not just upside. So, it kind of balances out. But for the ones that happened in Q3, they weren't material anyway to the company. So yes, we saw some upside, but some slight downside. But it wasn't material nonetheless in Q3.

And we'll move to our next caller.

It's Tom Roderick from Stifel, again. I'll take another shot at my follow-up question here. So, a lot of questions on the services side, want to turn the attention just a little bit here to the maintenance side. Maintenance continues to go down as we would expect with the model transition. But maybe you can help us understand what happens when $1 of maintenance goes away, presumably, if your churn rates are staying the same, that customer's turning into a subscription customer. How quickly do you then see it in the top line in terms of that maintenance dollar turning to subscription? And then maybe you could talk a little bit about sort of pricing and lift in terms of what is happening with that dollar of maintenance? Are you, in fact, getting that sort of $1.50, $2 of subscription that you talked about seeing over time?

Yes, Tom, that hasn't changed significantly from where we were Investor Day a little over a year ago. We're still seeing an uplift if you look at what they were paying in actual maintenance to what that customer would pay in subscription on an annual basis is still across the breadth of FE and RE is still 1.5x to 2x uplift. Now that does not include anything that might drag along like payments revenue and other usage and some of those things. So, there could be incremental upside there for the longer term. The timing of that is nearly simultaneous. So, the way those migrations are structured, we're typically turning off the maintenance at or about the same time that we're turning on the subscription. And so, we typically would not have a lag between one and the other. And so, it may not be immediate when they sign the contract. But as far as rev rec goes, largely, we'll move right from maintenance right into subscription with that kind of 1.5x to 2x the subscription amount of what you would have seen in the maintenance stream. Now that said, obviously, we're not getting the license upfront as we would on a new sale, and typically not as material of services requirement as well on those migrations.

And with that, that does conclude today's question-and-answer session. I'd like to turn the conference back over to Mike for any additional or closing comments.

Sure. Thank you, operator. I'll just close by saying that we're really pleased with our quarter. We're pleased with the progress against our 4-point strategic plan. I think some of the results speak for themselves with the subscription growth and the shift that is obvious in the results. There's a lot happening at Blackbaud with the Microsoft announcement, a lot around innovation. We plan to further all these initiatives in the fourth quarter and achieve our financial guidance of long-term aspirational goals. And Tony and I look forward to updating you on our progress on our next call. Thanks, everyone.

And with that, ladies and gentlemen, that does conclude today's call. We'd like to thank you, again, for your participation. You may now disconnect.