Ladies and gentlemen, and welcome to the Cars Second Quarter 2024 Conference Call. [Operator Instructions]. This call is being recorded on Thursday, August 8, 2024. I would now like to turn the conference over to Katherine Chen, Vice President of IR. Please go ahead.

Good morning, everyone, and thank you for joining us. It's my pleasure to welcome you to the Cars.com Inc. Second Quarter 2024 Conference Call. With me this morning are Alex Vetter, CEO; and Sonia Jain, CFO. Alex will start by discussing the business highlights from our second quarter. Then Sonia will discuss our financial results in greater detail, along with our outlook. We'll finish the call with Q&A. Before I turn the call over to Alex, I'd like to draw your attention to our forward-looking statements and the description and definition of non-GAAP financial measures, which can be found in our presentation. We'll be discussing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, adjusted net income and free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation. Any forward-looking statements are subject to risks and uncertainties. For more information, please refer to the Risk Factors included in our SEC filings, including those in our most recently filed 10-K, which is available on the IR section of our website. We assume no obligation to update any forward-looking statements. Now I'll turn the call over to Alex.

Thanks, Catherine, and thanks, everyone, for joining us on today's call. We extended our track record of delivering both revenue growth and strong profitability with our second quarter performance. Q2 revenue was up 6% year-over-year, boosting us to record year-to-date revenue in the first half of 2024. OEM and national performance was particularly robust, up 28% year-over-year. Dealer revenue also contributed to growth as we expanded dealer count while maintaining ARPD. On profitability, adjusted EBITDA was solidly within our expectations, up 10% year-over-year from strong operating leverage. And free cash flow grew to $56 million for the first six months of 2024, which was the highest level in 3 years. Q2 was our 15th straight quarter of delivering year-over-year revenue growth, showcasing our ability to execute through challenging external conditions like the industry-wide CDK disruption that occurred in June and continues into the third quarter. Recall, we have a high concentration of franchise dealerships who rely on CDK. With dealership operations interrupted, many of our sales conversations and product launches were paused. I'm proud of our team who creatively stepped up to support dealers whose systems were down both in sending leads to dealers directly and updating inventory manually. While we made strong efforts to support our retail partners, we also lost considerable sales momentum. Our priority in Q3 is to reramp those engagements, particularly for products like Accu-Trade, which require a longer sales cycle and hands-on dealership engagement. This was a frustrating event for the industry and for us, but we believe it's ultimately a temporary impact as we continue to grow the business in 2024 and beyond. More importantly, we delivered on our key growth drivers in the second quarter that advanced our platform strategy and laid a strong foundation for continued growth in the remainder of the…

Thank you, Alex. We delivered year-over-year revenue growth and margin expansion in the second quarter through disciplined execution of our platform strategy. Despite being slightly below our expectations, revenue of $179 million was up 6% year-over-year, reaching a new second quarter record. This includes the roughly 1% unexpected impact from discrete items related to legacy solutions contracts. Excluding that impact, revenue would have been roughly in line with the low end of our guidance range. Dealer revenue grew 4% year-over-year to $160 million, driven by contribution from our D2C acquisition and increased adoption of our trade and appraisal and website products. OEM and national revenue was $16 million, up 28% compared to the prior year. This acceleration in growth reflects continuing OEM investments into marketing and advertising to influence and drive consumer awareness of their products amidst rising vehicle inventory levels. For the second quarter, total operating expenses were $169 million, compared to $156 million a year ago. Product and technology expenditure increased $3 million year-over-year as we added talent in support of our product road map, up leveled key technical roles and invested in back-end systems. General and administrative expense was up $5 million year-over-year, mostly due to the inclusion of D2C operating costs, including $2.7 million in D2C earn-out expense this quarter. As a reminder, unlike the earn-outs associated with our other acquisitions, D2C earn-outs redeems compensation expense under GAAP, and therefore, run through operating expenses. Second quarter adjusted operating expenses were $156 million, roughly 6% higher than the same period a year ago. Net income for the second quarter was $11 million or $0.17 per diluted share. And adjusted net income for the second quarter was $26 million or $0.38 per diluted share compared to $23 million or $0.33 per diluted share a year ago. Adjusted EBITDA…

Thank you. [Operator Instructions]. Your first question comes from the line of Naved Khan from B. Riley Securities.

Great. Thank you. A couple of things from me. One, maybe Sonia, for you. I think you mentioned 1% unexpected impact from -- from legacy solutions contract? Can you just maybe explain that more a little bit in terms of how that kind of flows through and how it affected you? And the other question I have is on Accu-Trade. So, you did talk about improved satisfaction with the product feature rollout. If I just look at the count, count went down sequentially and you kind of expect slower growth now because of, I guess, some lost sales. Maybe just go through the dynamics of like what might have led to the higher churn? And what has changed going forward?

Thanks for your questions. I think your first one was on the discrete items that impacted us in Q2. That was really related to some legacy contracts associated with our website business. We can't get into the individual customer specifics, but we do believe they were onetime in nature, and it was just a timing thing. They impacted top line.

Yes. And on the Accu-Trade front, certainly, I'm disappointed in our Q2 results there because we made a lot of positive changes with the product. In fact, our most avid users swear by the product. They love the product, getting dealer adoption to change their operational process has proved to be more difficult. And when there's turnover of dealerships, we lose that advocacy inside the stores. There is a shift that we're making on the product, which we signaled on the call, which is to follow our proven DI formula of seeking these OEM endorsements to land and expand accounts through that model, which should bring in more dealers with manufacturer backing into the platform. It means we're going to get in at a lower price point, so you may not see the same revenue lift that we were anticipating this year selling the connected full Accu-Trade product. But we do think we can get solid dealer growth on website solutions and then upsell -- move to upsell them in the store, full-blown store solution over time. That's going to prolong the ramp here and move it more into 2025, but we still see solid product growth in the solution this year. It's just slower than I think we all would have liked.

Understood. And Sonia, just going back to the legacy solutions contract. So, you quantified it for second quarter. Is it fair to assume there is a impact from the remainder of the year as well you just thought of the guidance today? Or is that something separate from that? Can you just maybe parse it out for me?

The discrete items are really range bound into the second quarter. They obviously influence our full year results, but the impact is really confined to the second quarter.

Your next question comes from the line of Gary Prestopino from Barrington Research. Your line is now open.

I know this question was asked, Alex. But with Accu-Trade, could you maybe just again go over what -- besides the impact of the CDK disruption, which definitely impacted your product uptake, what was going on there? Is it a function of that the dealers did not have the manpower to implement the product? Or they didn't have any incentive to implement the product? I guess -- trying to get a feel for what happened in the quarter and what you've changed.

Yes. Well, the first answer, Gary, is I want to connect those 2 because while the CDK impact was unfortunate for our customer partners, it also had an indirect impact on our sales pipeline as well. Most of our Accu-Trade success year-to-date has been with dealer groups. And so, a huge percentage of our sales pipeline was expecting those dealer groups to further deploy the solution to all of their stores. And that concentration of CDK dealers, they just put those sales motions on hold, right? We had major dealer group deals that we thought would close in the quarter, and they got kicked out not only indefinitely, but we hope to reboot those in Q3 assuming dealership operations return to normalcy, which they are. And so, we feel good about that. But where we sit today, we just don't have verbal commitment that they're ready to proceed with expanding Accu-Trade deployment throughout the rest of their platforms. And so, I do want to connect those two things. I do think as we've signaled in prior calls, we've been really focused on dealer success and onboarding, and we had some big wins in the quarter. Like if you look at the dealers that we sold in the prior 3 periods, their utilization of the product is up 30% over the original cohort we sold in the first quarter. And so, we're getting better at onboarding. We're getting better at targeting and we're getting better at dealer utilization. Those are all going to be tailwinds for the product, but it's clear to us that we're going to go slower, get it right and build allegiance to the platform in the dealer community so that they endorse the solution and get it expanded across their footprint of stores. It's really just a -- a slowdown in the -- where we were at the beginning of this year, we had our assumption that this would scale much faster. And that's clearly not happening as we would have liked. But the fundamentals of the value prop are rock solid and the dealer excitement about the solution when they're using it remains extremely strong.

So, you ended up with about 1,000 dealer customers on Accu-Trade in Q1. Is it safe to assume that that number did increase a little bit in Q2? I mean, was there any deconversions?

It didn't grow in Q2. And that's the disappointment that we thought we would see better growth in that. Again, a lot of the deals that we had in our sales pipeline for Q2 were CDK dealers. And so those went from like 90% likely to zero in our sales forecasting, waiting virtually overnight. And then that really put a damper on Q3 momentum, which obviously impacts full year.

Okay. So, you've changed the strategy and you're going after -- you're trying to get OEM endorsements. With those OEM endorsements, which it's nice to see you've got the Stellantis and Jaguar Land Rover. With those endorsements are the deal -- are the OEMs giving the dealers co-op support in terms of some kind of monetary figures given to them to adopt Accu-Trade?

So, a couple of things, Gary. First of all, I wouldn't say we're totally changing the strategy because our Accu-Trade sales are still solid, and we're still getting dealers to adopt the full solution. I would classify this as saying we're showing agility with the strategy to pursue growth in new ways. And so, the website solutions is something that we signaled last year that all OEMs are realizing that they need trade-in solutions to facilitate new car sales. If you can't get a consumer out of their existing vehicle, it's hard to sell them a new car. And so, all OEMs started talking to us about using Accu-Trade technology not only on their Tier 1 website to talk to consumers directly, but deploying it across their dealer websites. And so yes, we got a couple of huge wins that we shifted to in the quarter to land some OEM endorsements that do include co-op for the platform. And in some cases, they're paying for the dealer to have this widget on their website. The JLR deal, we're the exclusive trade-in provider for all JLR websites. And so, we're going to begin that rollout in Q3, where we'll be replacing any legacy trade-in technology on dealer websites and inserting Accu-Trade. We know that through that experience, the dealers are going to be impressed with what they see in the product. And we think that will open up upsell conversations to deploy the full Accu-Trade technology in their physical stores and off our marketplace as well.

Okay. And just one more question on that with the certification. You mentioned Jaguar Land Rover, you're going to be rolling that out. The dealers aren't required to take Accu-Trade. Again, it's up to the individual dealers to decide. But the OEM can be very cohesive in that regard. Is that right, the correct assumption?

I'll let JLR have to speak to how hard they're going to enforce it, but they've announced this as the exclusive technology that they want to see the deployed across all JLR websites, whether we built them or not. And so, we are providing this technology that will be private labeled on the dealer website. JLR is beginning their rollout to their dealer network, and they're looking to create a consistent digital retail experience, which we are going to power not only for the corporate website but again, exclusively across all JLR websites. So, we do think it will produce meaningful upsell opportunities. It certainly will mean lower revenue initially, but like we showed with dealer website adoption when we landed these OEM endorsements, it led to faster overall sales growth for not just websites, but for media and for marketplace to those dealers because of the OEM backing.

Okay. And then so just one more question, I'll go up. Is it fairly safe to assume that if we didn't have this issue with CDK, there would have been no step down in the revenue guidance for the back half of the year?

It's a good question, Gary. I mean, as Alex indicated, Accu-Trade was a little softer than we expected it to be in Q2. We're really pleased with the OEM endorsement in that land and expand strategy that we're going to run with our website application to connected. And we're also pleased with the promotions we put into market to drive dealer engagement. They just take time. So that was certainly an additional component factored into the guide in addition to the disruption from CDK.

Next question comes from the line of Rajat Gupta from JPMorgan. Your line is now open.

Good morning. Thanks for taking my question. Just had a question on the second half guidance. I appreciate all the color on the third quarter, the impact from CDK and the Accu-Trade impact. But if I look at the fourth quarter guidance -- implied fourth quarter guidance, the midpoint implies around 3% revenue growth. I mean that would be slower than the third quarter, if I excluded the CDK impact. So, I'm curious like what's driving that deceleration? Why isn't there like offsets from the other areas of the core business? Or is it like really Accu-Trade drive? And just relatedly, I was just curious if -- how much was the Accu-Trade contribution supposed to be in the initial 2024 guidance that you provided earlier in the year? If you could just tie those two, it would be helpful. And I have a quick follow-up.

Thanks for the questions, Rajat. I am not 100% sure I'm getting to quite the same map as you are for slowing growth in Q4. We do expect to see some strong trajectory as we move through the balance of the second half. From some of our comments earlier, as you've probably gathered, we had strong aspirations for the Accu-Trade ramp up over the course of this year. Last year, we were largely devoted to pricing and packaging efforts on our marketplace. And so, there's been some challenges. CDK certainly interrupted some of the efforts we had put in place in Q2 to try to drive dealer engagement. And that is a reason for the revision in part to our guidance range.

Understood. Okay. That's fair. We can check off-line on the fourth quarter math. And just the buyback comment on the second half, again, like my math would imply something like 30 -- between $30 million to $40 million of potential share repurchases in the second half. Is that in the ballpark in terms of the assumptions we should be making?

That is in the ballpark. We agree on that math.

Great. And then just last question, just on the competitive landscape. What's the latest that you're seeing from some of your public or private peers in terms of pricing or sales competitiveness? And what would you call out to be the main advantages in the current landscape for cars commerce?

Yes. I mean, look, it's -- I'm following some of the public reporting that's coming out this week and trying to track the various puts and takes from various players. I think the high-level benefits that we offer that our competitors do not. You know that the majority of our traffic is coming to us organically or directly. And so, when customers invest with us, they're getting true incremental lift to their sales performance. Most of our peers rely on searches and marketing arbitrage, which directly competes with the dealers' other marketing budgets. That's number one. I think on the technology solutions side, I don't think we have a real peer because our website solutions are best-in-class, both domestically in the U.S. and now in Canada, where we achieved number 1 status. And our Accu-Trade technology, while growing slower than we would like, it's still contributing nicely to both our growth and our platform efficacy, which has strong flow-through to the bottom line. And so, as we get dealers to adopt our technology, it's adding meaningful layers of ARPD that create a meaningful profit picture for the business that's going to generate a lot of free cash flow. So, I think we're really well positioned. We've got strong growth in both revenue and EBITDA this year in the second half. While it's a little bit lower than we would like, I think the fundamentals are strong here, and we continue to execute.

Your next question from the line of Marvin Fong from BTIG. Your line is now open.

But I guess just to put a finer point. So, with Accu-Trade, do you have the visibility on how many actual transactions are occurring there? And should we view that as appraisals being a good proxy for that? And then part B of that question is, you obviously won those two great endorsements in the quarter with the Stellantis and Jaguar. What's the pipeline for more wins there? You had four direct a couple of quarters ago. Is there an active -- is there activity around other major nameplates? And then I have a follow-up.

So great question, Marvin. So first and foremost, we do see the vehicle acquisitions on dealerships because we can see which cars are appraised. And then we see them appear in their dealer inventory listed on our marketplace. And so, we are starting to match that technology. And what we saw year-to-date is that dealerships are acquiring about 17 cars on average in June, which was down slightly from May, which was '18. But you think about that, that -- if you were to apply auction fees against 17 or 18 cars -- dealers are spending $2,000 to $3,000 to acquire a car via auction for 1 vehicle, where with Accu-Trade, our software solutions, they can acquire 17 or 18 for that same dollar amount. And so, we know that the delta between sourcing inventory from your customer base versus the physical auction is a macro trend that you can absolute bet on. This is the winning approach, and dealerships that are doing this successfully are reporting record profits. And so, we know that we're on the right macro attack point in terms of the legacy model of wholesale versus the new way to retail. I think the second part of your question was really about, I think, the OEM endorsements. And you'll see even in our social posts announcing the Stellantis deal, there's more dealer comments on these posts than anything we've ever talked about. There's general excitement coming from the dealer community that finally, there are car companies are backing dealer digital offerings. Historically, OEMs have forced dealerships to update their physical showrooms and build modern coffee bars and fiscal structures. I think you're going to see continued capital allocation shift by OEMs to help dealers do digital more. And we've built that infrastructure to both support Tier 1 and Tier 3 far more effectively than any of our peers.

Got you. And obviously, we talked a lot about the guidance. I actually would just like to kind of take a look at the second quarter numbers in terms of both dealers count and ARPD. So, did the CDK impact those numbers at all? I mean you mentioned the lost sales momentum closing the quarter, as well as just the fact it looks like Accu-Trade had a bit more churn. So, the fact that -- or what looks like ARPD was a bit lower than at least I was modeling. How much of that was kind of due to CDK? How much was due to other items? And then how much was due to just the Accu-Trade shortfall? If you could maybe just help us understand how the second quarter evolved. Because it did, I believe, come in below the low end of your guidance on the revenue line. Just some help there would be great.

Yes, I'll start and then maybe Sonia, you could add some more detail. But first of all, we were really pleased to grow dealer count in the quarter, right? We would have certainly liked it to be higher, but the fundamental trend line started to shift and we started seeing higher new sales. We announced on the call that we've got strong traffic trends. Our lead and value delivery is also accelerating. And so very pleased that our dealer count grew in the quarter. And I think that can bode well. Unfortunately -- and by the way, the fact that we did that without seeing any depreciation in ARPD shows that that is solid dealer growth, right, that we're getting both customer growth and we're holding, if not slightly growing our average revenue per dealer. It's a very healthy metric. It did impact it negatively and that we anticipated more sales coming in, honestly, through Accu-Trade in Q2. And in Q3, we just thought we'd have more momentum by now. And I think we've talked about that enough here that I don't go into those details, but it would have actually grown ARPD better had we would have seen that sales lift. Looking ahead, obviously, D2C has a lower price point than domestically, what we sell our services. So even though we may get continued dealer growth, that inorganically depresses ARPD a bit. And our solution strategy to sell dealer website solutions comes in at a lower starting point as well. And so ARPD may not grow as fast, but it's still very strong, growing steadily. And if we can get dealer growth and ARPD growth, that creates a really powerful financial picture. I don't know, Sonia, what else you'd add in terms of detail.

Yes. Maybe to just fill in a couple -- a little bit more color. I think related to ARPD, Marvin, one of the impacts in Q2 is, in fact, the discrete item that I was mentioning earlier. Those do run through ARPD since they were in our dealer revenue number, and we're trying to be fairly consistent with our use of these kinds of metrics. So that's probably the single biggest reason the ARPD came in a little bit lower than you modeled it.

So just to be clear, in your guidance, when you provided it a couple of months ago, the discrete items was not contemplated?

Those are not contemplated. No, those were not expected.

Nor were they expected in the full year?

Nor were they expected in the full year. The other thing I'll mention, too, which may be helpful, while the CDK disruption certainly had an impact on our business for Q2, in particular, it was less of a financial impact. You see it more in the operating metrics of the business given the disruption to the sales cycle. So, it interferes with like your Q2 exit rate going into Q3. But the financial impact is going to be weighted to the following quarter. So that's why we've been talking about it in the context of Q3 full year guidance, if that's helpful.

Yes, that makes total sense. I thought maybe more on the dealer counts in that like a June 30 cutoff with that had more CDK. Okay. I'll take the rest of my questions offline.

Next question from the line of Tom White from D.A. Davidson. Your line is now open.

A couple, if I could. I guess just first on the national OEM line. Sonia, maybe you could just parse out a little bit for us kind of how the different like cohorts of advertisers in there performed? I guess, I'm sort of grouping it maybe like legacy kind of auto OEMs, nonauto national advertisers and then maybe some new auto OEMs like the EV guys. Just curious like how sort of spend is trending for those groups? And can you confirm, did you say that the line will be down quarter-over-quarter in the third quarter? And then I got a follow-up for Alex.

I'll just start on the mix. Most of our growth with OEMs, Tom, have come through the smaller upstart and/or mid-tier OEMs. We still have the largest OEMs have largely sat on the sidelines. The reason we're not baking those into our second half guide is that hunting those giants is hard to predict, right? If 1 of those giants were to step back in, it would change the game for us profoundly, but we just don't feel confident baking that into our full year guide. So, a lot of our OEM success year-to-date and as we look ahead, is coming from more of the disruptive EV players trying to take market share and more of your foreign and import automakers who are also trying to grow market share in the U.S. We don't have much growth from the large domestic OEMs that have the biggest budgets yet.

And then really specifically to your question on sequential growth in OEM from Q2 to Q3. We do expect it to be down slightly, but I wouldn't consider it to be like a hugely material downtick. It's still growing year-over-year. It's going to be somewhat consistent with what you saw us delivering kind of the Q1 time frame.

Okay. That's helpful. And then -- not to beat a dead horse on Accu-Trade. But I guess I just want to make sure I understand, Alex, when you refer to this sort of this website, I think you called it website solutions. So basically, what's happening is that for whatever reason, some dealers, maybe it's turnover at the dealership or just it's tough for dealers to kind of like really change the way they maybe handle trade-ins actually at the store. So that instead of like you guys selling in the sort of a handheld unit that plugs into the diagnostics and all that stuff, sort of now you're sort of aiming more to actually just put some of the technology on the dealership websites to value trade-ins, and that's kind of the way to land the customer and then hopefully, over time, you think you can kind of get more of the on-premise, for lack of a better word, kind of technology going?

Yes. I think let me try to explain it this way to try to connect the dots. Our most successful Accu-Trade dealerships use Accu-Trade throughout their physical stores. They're appraising every vehicle that comes in for service. They're offering this as something they can do for customers in a matter of minutes. And they're acquiring, in some cases, hundreds of cars per month purely from their service lane. And they love the product, and there's even an opportunity for us to take pricing up that they use it so passionately. I think the downside of that is it takes a lot of time to get dealerships to embrace that physical change of us both deploying people and resources into the dealership to conduct that on-premise training. And so, it's a slower sales ramp. It takes more time. It has a higher cost in our go-to-market. What we're finding in terms of what OEMs and dealers are willing to do is embrace online first as a way to get them started using our technology and then move towards upselling them towards the full physical store rollout. I wouldn't recommend this strategy if all we had was to go convince dealers to sell Accu-Trade on their website. But when you have the OEM setting up regional meetings with their dealer bodies and announcing their financial commitments to helping dealers do this more effectively, we think it can really boost our sales effort because they're now bringing the dealers to us. And then we're focused more on just installing the technology and training them on how to use it on their own website. Those that find the success in doing that, we think will naturally gravitate to saying, how do we get more volume? Can we start sourcing from the Cars.com marketplace? Can we start to promote -- we'll buy any car media with you? And can we source cars in our service lane, will you train us how to do that? We think this will be a better sales prospecting strategy. And again, slower revenue on the front end, but we think it will create a lot bigger customer base using the technology and our tools.

Great. Thanks for the description.

Thanks for the question.

Next question from the line of Joe Spak from UBS. Your line is now open.

Thanks, good morning. Just to the CDK outage again, I mean, as you just sort of describe it, this is really somewhat of a temporary impact from delayed adoption. I just want to confirm, like there's -- you're not really sort of seeing any -- or maybe there was some cancellation in light of maybe some lower near-term profits or any reconsideration going on? And then -- my understanding is CDK is mostly DMS and infrastructure back-office financing, but they do have other products. I think they've got some digital retail trade valuation offering. So, I'm wondering if you see any overlap there and there's actually maybe an opportunity here from some potential sort of dissatisfaction with that vendor?

So, the first part of your question, we do believe this has been more of a onetime impact. In a subscription model like ours, when you lose 30 or 60 selling days of new customer acquisition, it can have a prolonged impact on the cumulative effect of your subscription revenue number, which is I think what you see in our full year second half guide. So, the impact is onetime, but again, the subscription nature has a more prolonged impact, if you will. I think you're right that this has been a real challenge, not just on CDK's DMS, but their digital retail solutions, CRM, their inventory management. And so, we do think there's opportunities for us to pick up market share, where our cloud-based technology, we know we can provide a degree of enterprise-level support and dealerships are looking to find more modern tools and technology that run their stores. So, I do think it has more upside potential on a go-forward basis, but the onetime impact certainly muted some of our success in Q2 and Q3 as well.

Okay. And just as a second question on the comment about 50% of second half free cash flow to buybacks. I mean like rough math, that seems like a little bit over maybe 2% of the current market cap. And especially after the reaction this morning, clearly, you want to sort of send a strong signal and confidence of the business. But can you just tell us a little bit more about sort of how you think about the use of cash for that versus maybe repaying more debt, which I think also would be fairly accretive or maybe even M&A? And maybe just to follow up on the last question, there's even an opportunity to acquire some assets that may help you more compete with an opening for CDK.

Yes. No, thanks for the question. I mean one of the great strengths of our business is that we do generate a lot of free cash flow. Even after deploying 50% of free cash flow in the second half towards share repurchases, we still believe that we have ample flexibility to continue with other portions of our strategy when it comes to capital allocation. So namely, debt paydown. Yes, we agree with you in today's interest rate environment, debt paydown is generally speaking an accretive thing. And even that aside, we have the flexibility for M&A. So, I don't view it as a limiting thing. We have been -- we have been balanced. We think it's prudent for us to lean in a little bit more here on the share repurchase this quarter.

Next question from the line of Doug Arthur from Huber Research. Your line is now open.

Yes, I'll take the questions offline. Yes.

Okay, Doug.

Yes, there will be no question. Please go ahead, Mr. Vetter.

Thank you. I want to thank everyone for tuning in today, and I hope that people realize that as we've demonstrated time and time again, including this quarter, we're growing consistently our revenue and our profitability, which is a real winning combination for long-term value creation. We've got a lot of powerful opportunities, and our team is head down executing on our platform strategy, growing the revenue and focusing on innovation. So, we want to thank you for your time today, and we look forward to talking to more of you again shortly.

Ladies and gentlemen, this concludes today's conference call. Thank you for participation. You may now disconnect.