Certara, Inc. (CERT) Q4 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Certara Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker today to Mr. David Deuchler, Investor Relations. You may begin.

Good afternoon, everyone. Thank you all for participating in today's conference call. On the call from Certara, we have William Feehery, Chief Executive Officer; and Andrew Schemick, Chief Financial Officer. Earlier today Certara released financial results for the quarter ended December 31st, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. For a list and description of the risks and uncertainties associated with Certara's business, please refer to the Risk Factors section of our Form 10-K filed with the Securities and Exchange Commission on March 1st, 2022, which will be filed shortly after this call. We urge you to consider these factors and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Also in their remarks or responses to questions, management may mention some non-GAAP financial measures. Reconciliations of adjusted EBITDA, adjusted net income, adjusted EPS and certain other non-GAAP financial measures to the most directly comparable GAAP measures are available in the recent earnings release, which is available on the company's website. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 1st, 2022. Certara disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will turn the call over to William.

Thank you, David. Good afternoon, everyone. Thank you for joining Certara's fourth quarter and full-year earnings call. Andrew and I will start with prepared remarks and then we will take questions. 2021 was a milestone year for Certara. It was our first full-year as a public company and we made progress on a number of key priorities and initiatives. We are very excited about the opportunities ahead and as we continue delivering on our mission to accelerate the drug development process with our proprietary biosimulation software, technologies and services. At Certara our strategy is to transform the drug R&D process with our end-to-end platform powered by innovative technology and our global team of leading experts. We not only speed up the process, but also help to advance safety and efficacy of drugs for millions of patients worldwide. For the full-year, we reported total revenue of $286 million, growing 17% year-over-year including Pinnacle 21 and 15% excluding Pinnacle 21's contribution in the fourth quarter. 2021 revenue growth was in the double-digits in every region of the world. Fourth quarter total company revenue was $75.3 million, growing 17% versus the same period a year ago. Pinnacle 21 contributed $6.1 million in the quarter. Excluding Pinnacle 21, revenue was $69.2 million, growing 7% compared with the same period a year ago. Excluding Pinnacle 21 fourth quarter software revenue was in line with expectations, growing 13% compared with the fourth quarter of 2020, but technology driven services came in below our expectations, growing 6% compared with the fourth quarter of 2020. Our technology driven services performance in the fourth quarter was driven by two issues, both of which impacted the timing of work being executed. First, as we commented in our third quarter earnings call in November, we have been experiencing variability in the timing of our regulatory services projects due to COVID related delays. We did not have cancellations and our bookings and regulatory services projects continue to be strong. As you recall, in Q3 2021, we experienced significant growth, 28% year-over-year in technology driven services due to the recognition of delayed regulatory services projects. In Q4, the COVID related slowdown in closing out clinical trials impacted timing of projects and revenue recognition in regulatory, which resulted in a shortfall in Q4 in services. In the back half of the year, technology driven services revenue grew 16% year-over-year and we expect it to continue growing in the mid-teens in 2022. We expect these delays will moderate in 2022 and we will recapture most of this regulatory services revenue over the course of the year. We continue to work hard to manage consistent conversion of our bookings billings to smooth out our revenue recognition throughout the year. Second, the surge in COVID-19 cases resulting from the Omicron variant reduce the capacity of our employees and clients in the back half of the fourth quarter. We believe that these are transitory factors that we are well equipped to manage in 2022. As we look forward to the coming year, we remain optimistic about activity returning to more normal levels as the year progresses with conferences coming back and more people back in the office. Turning to software, we were pleased with our performance during the fourth quarter, which grew 46% including Pinnacle 21 and 13% excluding Pinnacle 21. The growth was driven by a 96% software renewal rate and strong demand for our proprietary biosimulation software our Phoenix and Simcyp platforms and Pinnacle 21 also delivered according to our expectations. As we mentioned at our December Investor Day, we see a number of compelling opportunities ahead for Certara in software and we've increased our investment to support those R&D activities in 2022. Specifically, we're focused on expanding the use cases of our Simcyp Simulator, which continues to grow in adoption to reduce or waive drug-drug interaction and bio-equivalent studies as well as support better dosing for special patient populations. Looking to 2022, we expect strong momentum in software to continue and we believe the transitory headwinds experienced in regulatory services projects during the fourth quarter will subside over the course of the year. Bookings trends in both software and technology driven services remain strong. Fourth quarter bookings grew 30% year-over-year and trailing 12 month bookings grew 18% over the prior period, including the contribution from Pinnacle 21. As such, we remain well positioned to achieve our long-term financial and strategic plans. Moving to performance for the year. In 2021, we drove strong growth in new customers and we now serve more than 2,000 customers, including more than 350 additional software end customers who engage with us through our distributors in Asia Pacific. Our land and expand strategy has also delivered solid growth among existing customers. We ended the year with 299 customers with annual contract value of more than $100,000, representing growth of 15% year-over-year. The integration of Pinnacle 21 into our software group was an important focus in the fourth quarter. We are now beginning to execute on the promise of the compelling opportunities identified when we acquired Pinnacle 21. In December, we released the latest version of the Pinnacle 21 enterprise software, which offers immense value to experts in biostatistics and biometrics in ensuring that submissions to regulatory agencies comply with data standards requirements. The feature-rich release proactively supports the new Define-XML 2.1 data standards. This is the first of many growth milestones we expect to emerge from the Pinnacle 21 platform. Updating Certara software remains a top priority for our team and we continue to innovate during the fourth quarter with the release of Simcyp Simulator Version 21 and D360 Scientific Informatics Software Version 21.5. The latest update to the Simcyp Simulator aligns with recent regulatory guidances and it includes other updates to support customers development priorities including additions to the compound library to facilitate drug-drug interaction analysis and updates to our renal and hepatic impaired population models. The latest version of D360 software increases efficiency in analyzing and guiding the design of small molecule drugs and biologics. We remain very encouraged by the growing pipeline and opportunity for our software to advance discovery research. During the quarter we announced that the FDA has renewed and expanded licenses of Certara's biosimulation software with more than 400 user licenses of Simcyp and Phoenix platforms across 12 divisions and offices. The FDA also recently licensed our Immunogenicity Simulator for the first time to research and evaluate immunogenicity and regulatory submissions for biologics. Immunogenicity or the tenancy of protein-based therapeutics to trigger an immune response is a major problem in drug development. Our Immunogenicity Simulator predicts the immunogenicity incidence of therapeutics could guide dosing and study design for better clinical outcomes for patients. It continues to be a privilege for us to provide software that global regulatory agencies can rely on to inform their reviews of regulatory submissions. 2021 was also the eighth consecutive year that Certara's customers received 90% of the novel drug approvals by the FDA excluding diagnostic products. The Simcyp Simulator is used in 13 of these approvals to inform a drug label. We are excited by the recent launch of the FDA's Project Optimus initiative, which aims to reform the dose optimization and dose selection paradigm in oncology drug development. This is important for drug developers and patients because the current approach of maximum tolerated dose may lead to selection of a dose that provides more toxicity without additional efficacy. Certara is well positioned to address these upcoming changes in dose finding and the evolving regulatory landscape with our extensive experience in oncology as well as dose optimization trial design, regulatory strategy and submissions. As outlined in our strategy, we continue to invest in the business and add to our expert team worldwide. For the end of the year, we experienced an increase in attrition due to a variety of factors. Our attrition was fairly low in 2020. So now we're getting back to more normal levels of attrition that we had experienced pre-COVID. We continue to prioritize adding top talent and in 2021 we hired leading scientists and subject matter experts to support our ongoing growth. We ended the year with approximately 1100 employees, including more than 350 employees with doctorate degrees. Certara culture and commitment to innovation and customer partnerships continue to attract top talent in a competitive hiring environment. We remain focused on making Certara the employer of choice in the industry. In summary, I'm pleased with the performance of the company in 2021, delivering double-digit growth in software and services, advancing the adoption of biosimulation and acquiring and integrating Pinnacle 21. While revenue from our regulatory services business in the fourth quarter did not meet our expectations, our bookings growth and our momentum remain strong. I am confident in our Certara team to execute our plan. I will now turn this over to our CFO, Andrew Schemick to discuss the fourth quarter and full-year financial results in more detail.

Thank you, William. Hello, everyone. Total revenue for the three months ended December 31st, 2021 was $75.3 million, representing year-over-year growth of 17%. Excluding Pinnacle '21 fourth quarter revenue growth was 7%. Full-year 2021 reported revenue was $286.1 million, which represents 17% year-over-year growth. Excluding Pinnacle 21 full-year revenue grew 15% in line with our long-term plan, despite the unexpected performance of our technology driven services business in the fourth quarter. We are very well positioned for 2022 with trailing 12 months bookings coming in at $341.7 million, up approximately 19% year-over-year on a reported basis and up approximately 16% excluding Pinnacle 21. I continue to look at trailing 12 months bookings as a predictor of forward 12 months revenues. Book-to-bill has been stable ending the year at 1.19 times and the annual bookings in 2021 as a percentage of forward revenue supports the visibility into our guidance for the year. Software revenue was $25.5 million in the fourth quarter, which increased 46% over the prior year period. Excluding $5.7 million in Pinnacle 21 software revenue contribution, year-over-year growth was 13%. The growth in the quarter excluding Pinnacle 21 was driven by our biosimulation software Simcyp and Phoenix. For the full-year, software revenue was $86.8 million, representing 18% growth as compared to 2020. Excluding Pinnacle 21 year-over-year growth for the full-year software revenue was 10% driven by Simcyp, Phoenix and Integral. Software bookings were $32.3 million in the fourth quarter, which increased 54% from the prior year period. Pinnacle 21 contributed $8.2 million to software bookings in the fourth quarter. So 4Q year-over-year software bookings growth excluding Pinnacle 21 was 15%. Trailing 12 month software bookings were $94.5 million, up 29% over the 2020 software bookings. Software aggregate renewal rate was 96% in the fourth quarter and 92% for the full-year in 2021. Services revenue was $49.8 million in the fourth quarter, which increased 6% over the prior year period. As William mentioned relative weakness in technology driven services was due to the delays in closing clinical trials, impacting regulatory services projects and lower employee utilization rates and technology driven services towards the end of the quarter. For the full-year, services revenue was $199.3 million, representing growth of 17% year-over-year and looking at the second half of the year, services revenue was $104.4 million, up 16% over the same period last year. Technology driven services bookings in the fourth quarter were $80.2 million, which increased 27% from the prior year period. Services bookings for the full-year were $247.2 million, which increased 15% as compared to 2020. Moving further down the P&L for fourth quarter results. Total cost of revenue for the fourth quarter of 2021 was $29.3 million, a decrease from $34.9 million in the fourth quarter of 2020, primarily due to a $7.2 million decrease in stock-based compensation expense. Total operating expenses for the fourth quarter of 2021 were $42.6 million, a decrease from $83.3 million in the fourth quarter of 2020. The components of operating expenses are as follows. Sales and marketing expenses were $6.7 million compared to $10.4 million for the fourth quarter of 2020 lower due to a $6.7 million decrease in stock-based compensation partially offset by employee-related costs resulting from increased investments in the commercial operations and sales force expansion. R&D expenses were $6.5 million compared to $10.5 million for the fourth quarter of 2020. The decrease in R&D expenses was primarily due to a $5.7 million decrease in stock-based compensation, partially offset by increases in employee-related costs resulting from headcount growth. G&A expenses were $18.7 million compared to $52.4 million for the fourth quarter of 2020. The decrease was primarily due to a $34 million decrease in stock-based compensation expense. Intangible asset amortization was $10.2 million compared to $9.4 million in the fourth quarter of 2020 higher due to acquired intangible assets. Depreciation expense was $0.5 million down slightly compared to last year. Continuing down the P&L, interest expense during the fourth quarter was $3.3 million compared to $5.5 million for the fourth quarter of 2021, a decrease due primarily to lower average outstanding principal balance on our credit facilities. Income tax expense was $9.5 million as compared to an income tax benefit of $5.5 million in the prior year due primarily to the relative mix of domestic and international earnings as well as the impact of rate changes in foreign jurisdictions and the impact of non-deductible items. Net loss for the fourth quarter of 2021 was $9.7 million compared to a net loss of $54.4 million in the fourth quarter of 2020. Diluted loss per share for the fourth quarter was $0.06 as compared to $0.40 in the fourth quarter of 2020. Adjusted EBITDA for the fourth quarter of 2021 was $28.2 million compared to $22.2 million for the fourth quarter of 2020, representing 27% growth. For the full-year, adjusted EBITDA was $103.7 million, representing 18% growth over 2020. Adjusted net income for the fourth quarter of 2021 was 1.4 million compared to $10.3 million for the fourth quarter of 2020, a decrease due to the increase in provision for income taxes and acquisition amortization. Adjusted diluted earnings per share for the fourth quarter of 2021 was $0.01 compared to $0.07 for the fourth quarter of 2020. Now moving to the balance sheet. We ended the quarter with $185.8 million of cash and cash equivalents. As of December 31st, 2021, we had $295 million of net outstanding borrowings on our term loan and full availability under our revolving credit facility. We are making an adjustment to our guidance based on what William discussed earlier around transitory COVID related impacts to our regulatory services business. We are lowering the top end of the range for revenue from $370 million to $360 million and lowering the top end of the range for EBITDA from $135 million to $131 million. We are maintaining the low end of the ranges for revenue and EBITDA reflecting our continued confidence in the strong growth in bookings and our dedication to delivering on our strategic and financial plans. Revenue in the range of $350 million to $360 million, which represents growth of 22% to 26% year-over-year and 15% to 18% year-over-year growth excluding Pinnacle 21. Adjusted EBITDA in the range of $127 million to $131 million. Adjusted EPS in the range of $0.48 per share to $0.53 per share. Fully diluted share in the range of $156 million to $159 million. GAAP tax rate in the range of 40% to 45% and cash tax rate in the range of 20% to 25%. Thank you. Now we will open up the line for questions. Operator, can you open the line.

[Operator Instructions] I show our first question comes from the line of Luke Sergott from Barclays. Please go ahead.

I guess given the duration of the business and the visibility you guys have, you had a step down in 3Q in the bookings. And then kind of I guess that flowed through into 4Q. I'm just wondering you talked about getting this business back throughout the year. Why wouldn't it come back earlier, are you still seeing some weakness due to Omicron. I'm just trying to get a better understanding of the dynamics?

Yes, Luke, thanks for the question. We saw weakness quite suddenly at the end of the fourth quarter. It continued into January. Although it seems like we are through that now. So our view is that two things happen to us in the fourth quarter. One was due to Omicron our own internal capacity and then the other one is this we saw some lengthening of time between when particularly regulatory customers have booked our - have done bookings with us and actually have gotten the data ready for us to do work. So all things considered as we look forward to the year, it's what we know for the first two months now. We think our guidance of 350 to 360 makes more sense.

Yes and just kind of just a follow-up on that I mean because it's really early in the year and it just to not think that you're going to get it back. We'll give you the like what's the - is it getting pushed out to '23 now to do the regulatory stuff or is this business that was lost?

No, we didn't lose any bookings, but we have seen the lengthening of time from particularly from a number of customers from their database lock, which is really what kicks off this type of work for us. It's possible, this will reverse during the year. But we're kind of have to call it the way we see it with the two months of data that we've got so far. I don't know, Andy, if you want to comment on any of this.

That's consistent with my view.

Thank you. I show our next question comes from the line of John Kreger from William Blair. Please go ahead.

Just following up on that. Andy, can you remind us what's the percent of your revenue that is regulatory services related as opposed to the other buckets. Maybe now that you've got another full year, if you could just sort of give us some of those main categories as you have in the past that would be helpful?

Sure. Thank you for the question. The mix this year in terms of revenues was 30% software, 40% biosim services, 30% regulatory and access services. So it's fairly consistent with last year. Slight mix shift towards biosim services.

Got it. Thank you. And then should we be thinking about the slowing that you had in Q4 as sort of a push into Q1. In other words would you assume your Q1 might be even a little bit elevated or should we assume that kind of given the Omicron surge carried through a chunk of January, Q1 would be sort of slower and then momentum would build as you move through the year?

In putting together our guidance we incorporated the second point of view, given the data that we've seen so far. In January and mid-February we're starting to see some pickup, but certainly not a push into Q1.

Got it. Thanks. And then one more, Bill, this might be for you. There's been a lot of anxiety about kind of smaller biotech oriented clients being under pressure, not having the same sort of funding momentum. Can you remind us how big of a chunk of revenues come from biotech and are you seeing any change in behavior from them to-date?

Yes, we've been aware of a lot of comments about that, but we haven't seen it in our business. So our biotech business was grew quite nicely through 2021 and even in the fourth quarter in terms of our bookings. And I think our view is that there was a couple of quarters of slowdown in biotech funding that came after a couple of years of quite healthy biotech funding. So there's just a lot of - there's a lot of well-funded companies out there that are great customers for us. And I think there may be some aspect of when funding gets a little bit tighter then maybe people get even more interested in becoming more efficient by using biosimulation.

Great, thanks. And then can you give us a number about roughly what percent of revenue come from small biotechs without sales?

Yes, we don't disclose that number, but it's a small percentage of the overall company revenues, 50% of the revenues come from the top 20. So it's not a major fraction, a healthy biotech that's having some success, given the type of work that we do becomes a more significant customer, but early stage is a small fraction.

Thank you. I show our next question comes from the line of Dave Windley from Jefferies. Please go ahead.

Hi. Could you talk about your success. You talked about build the enterprise release on Pinnacle 21 and I think part of your strategy was to see what conversion you could encourage from the free accounts the freemium accounts to enterprise customers. Could you just give us an update on where that stands and what your outlook is for that?

Yes, thanks, David. Pinnacle 21 performed in the fourth quarter almost right down the fairway with what we had expected when we did the acquisition. We obviously it's going to take a quarter getting to know each other and integrating and as we go forward this year there is opportunities for cross selling with each other's customers. We still have a strong freemium customer base, particularly as some of the small biotech customers start going start becoming successful and filing for the FDA, they, some of them have converted over. But I think there is a combination of, in terms of strategy, there in terms of what you're talking about is how do we convert some of the freemium and then we have a pipeline of some new products that will be coming out over the next couple of months and we'll come back and sort of stay tuned, but throughout 2021 we have some new things coming out in Pinnacle 21 as well.

Okay, thank you for that. A little bit of a corollary as opposed another version of John's question on mix of clients. Could you I think it's logical to us that, that your biotech clients or your mid to smaller clients lean more towards services, services are going to naturally be lower margin than a pure software purchase. But if you look at apples-to-apples is a pharma service, a larger client services client versus a small services client, similar margin or would there be differences apples-to-apples on those basis?

So, Andy, how do we want to disclose this?

Yes, I would - I would say that for a small biotech, it's profitable in terms of the value that we're bringing to the biotech for a large pharma company we can run the projects more efficiently. So I don't see a mix shift in terms of margins from shifting from what we look at it the top 50 versus the or the Tier 1 versus Tier 2 and Tier 3.

Okay. And then last question, sorry, go ahead.

No. Go ahead, David. Thank you.

I was just going to say related to Project Optimus and maximum tolerable dose changes in philosophy at the FDA. Do you have any thoughts on I mean I listen to your webinar the other day that your colleagues put on. How quickly can this have an impact or an influence over customers changes in the way that they pursue their early stage oncology work and dose escalation and that then result in potentially some bookings for your products in trying to triangulate on those - on those optimal doses?

Yes, the FDA has already started to encourage this and as you said we had a quite large webinar talking about it the other day. We have already started projects related to Optimus. So I guess the answer is that the half of maybe half of drug R&D spending goes into oncology overall and probably a similar fraction of our effort in Certara is associated with that because we tend to mirror the pharma industry. So as those customers are moving over that presents, sorry, those customers are implementing Optimus that presents an increasing opportunity for us, but it starts now.

Okay. And would you view that as new revenue that's incremental revenue not say cannibalizing something else that you do for those clients?

Yes, we see this as a new revenue opportunity for us. Look, a lot of biosimulation focus is on optimizing the dose between safety and efficacy and oncology customers have been at one end of the spectrum for a long time, right. So they you know if you're going to give the maximum tolerable dose then sort of the dosing calculation is easier. Now it's a little bit more complex and we have a lot of our services in our software are quite valuable I think for this. So it should - it should be a good - it's a good opportunity for the company.

Thank you. Our next question comes from the line of Michael Ryskin from Bank of America. Please go ahead.

It's Derrick Brown in for Mike. Hey, just a little bit of clarity on how should we think about the step-up in revenues from Q4 to Q1 or are you expecting flattish. I mean, historically, I mean given the two quarters it's usually like a low single-digit step up is what you're saying is that, is that something, is that similar or be looking more flattish or down Q-o-Q?

We have - we're looking at I would say more like low single-digit step up.

Great. Thank you. And as we look at OpEx, you talked about retaining people and doing like that. Is there any incremental headcount spend OpEx spend, SG&A spend that we need to sort of incorporate relative to what you said on the Analyst Day?

We continue to invest in our commercial organization, our sales and marketing efforts and we also continue to invest in our corporate infrastructure in terms of OpEx. However no difference for the assumptions that we provided at the Investor Day.

Got it. And just some other clean up. Interest expense for the year?

Interest expense for 2022?

Yes, sir.

$15.3 million.

Great, thank you. And just one other one. I mean just reiterating no cancellations. It's all push out and you're just being very conservative based upon what you see at this point in the year?

So we had really no significant. We had no cancellations. We had actually quite healthy bookings in the - in Q4. We did see some of the same slowdown that we saw in December and early January. As we moved into February that seems like things have picked up well.

Great. Thank you.

But these are healthy and we didn't lose any significant business.

[Operator Instructions] I show our next question comes from the line of Vikram Kesavabhotla from Baird. Please go ahead.

Yes, thanks for taking the questions. I just wanted to follow-up on some of your comments around the workforce. I think you mentioned that there was increased attrition towards the end of the year. Could you just give us some more color on some of the drivers behind that dynamic and what you're seeing so far this year. And then I guess going forward I'm wondering if you can just put a finer point on your expectations around headcount growth in fiscal '22 and maybe what parts of the business or what geographies you're most focused on from a hiring perspective?

Yes, thanks, Vikram. So we saw quite low turnover through in 2020 and through the first half of 2021. Like a lot of companies we saw some increased turnover in the second half of 2021. If you average it over 2021 though it was probably at or maybe even lower than our historical average. So I think it might have been a maybe a delayed reaction to people hanging on - in the beginning of the year. Our turnover rate is always something we pay a lot of attention to, because we want Certara to be a place where software developers and drug developers come and innovative and do some really amazing work. And so we do pay a lot of attention to this. We've seen it, you know, we've seen, it will probably improve as we've gone into the first half of this year or the first part of this year rather. For the second part of your question maybe I'll ask Andy to comment around the budget for this year.

So we've seen the delays that we have referenced earlier also had some impact on Q4 bookings. So we're seeing healthy bookings going into the year this year and in line with that we're looking at expanding our billable headcount by around 18% in 2022.

Okay, great. Thank you. And then I apologize if I missed this, but could you clarify what the fiscal '22 revenue guidance assumes for growth rates across biosimulation market access and regulatory. I think you gave some color on those different components at the Investor Day. I just want to make sure we understand the new range appropriately. Thanks.

Sure. In terms of growth rates, it would be high teens, mid to high teens for the biosimulation and low to mid-teens for the regulatory. The difference being historically they would grow at similar growth rates, but the delays are having the greatest impact on the regulatory side.

Thank you. I'm showing no further questions in the queue. At this time I'd like to turn the call back over to Mr. William Feehery, CEO for closing remarks. Please go ahead.

Thanks very much. So thanks everybody for joining us tonight. I think that the message I'd like to leave everybody with is, we had some temporary lengthening of some regulatory projects coupled with an unfortunate timing around Omicron, but fundamentally we believe the company is very healthy and to support that I look at the strength of our bookings, which were quite good both for full year of 2021 and as we finished the year. We've seen, as I said earlier, we saw a continuation of the Omicron delays in the first part of January, but that seems to have ameliorated and things have been picking up as we went into February. Our guidance changes based on what we see right now in terms of, you know, we haven't lost any work, some things have stretched out and they've slipped. But fundamentally we think as we go through 2022 we should see an acceleration. The overall market is healthy. The company is healthy and we feel quite excited about our future. So I'll wrap up now and say thank you to everybody for joining us tonight.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Good day.