Good evening. My name is Simon, and I will be your conference operator today. At this time, I would like to welcome everyone to the 8x8, Inc. Fiscal Second Quarter 2021 Earnings Conference Call. I will now turn the call over to Victoria Hyde-Dunn, Head of Investor Relations.

Thank you. Good afternoon, and welcome to 8x8's Second Quarter Fiscal 2021 Earnings Conference Call. Joining me today are Vik Verma, Chief Executive Officer; and Samuel Wilson, Chief Financial Officer. During today's call, Vik will begin with business highlights of our second quarter performance. Following this, Sam will provide details on our financial results and guidance. After these prepared remarks, we look forward to taking your questions. Before we get started, just a reminder: Our discussion today includes forward-looking statements about 8x8's future financial performance; as well as its business, products and growth strategies, including the impacts of COVID-19 pandemic. We caution you not to put undue reliance on these forward-looking statements, as they involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements as described in our risk factors in our reports filed with the SEC. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans or obligation to update them. In addition, some financial measures that will be discussed on this call, together with year-over-year comparisons in some cases, were not prepared in accordance with U.S. generally accepted accounting principles or GAAP. A reconciliation of these non-GAAP measures to the closest comparable GAAP measures is provided with our earnings press release and PowerPoint presentation deck, which are available on our investor relations website. With that, let me turn the call over to Vik. Vikram Verma;CEO: Thank you, Victoria. Good afternoon, everyone, and thank you for joining us today. I hope all of you and your loved ones are healthy and safe. We delivered a strong quarter across the board in Q2. As the only pure-play integrated UCaaS, CCaaS and CPaaS provider in the market today, customers are embracing and validating our integrated platform strategy.…

Thanks, Vik. And good afternoon. We appreciate you joining us as we report the second quarter financial results. I want to echo Vik's comments that I hope you and your families are well and staying safe. For today's call, I will walk through our Q2 financial results and then provide guidance for the third quarter and full year. Lastly, we'll open the call to answer your questions. Starting with our second quarter results. We are pleased to have delivered performance that exceeded guidance, improved operating leverage and reflects increased confidence in delivering profitability. Overall results were driven by better-than-expected performance in UCaaS, CCaaS and our bundled offerings. Total revenue for the quarter was $129.1 million, an increase of 18% year-over-year and above our $125.5 to $126.5 million guidance. Total revenue was driven by better-than-expected results across the board. Looking at our geographic mix. International revenue was 26% of total revenue, up 37% year-over-year. And the U.S. was 74% of total revenue, an increase of 12% year-over-year. Our investments in expanding our global footprint continue to pay benefits. Looking specifically at service revenue. We generated $120.9 million, an increase of 19% year-over-year and above our $117.3 to $118.3 million guidance. Total ARR was $467 million at quarter's end, up 20% year-over-year; and from solid growth across UCaaS, CCaaS and CPaaS offerings. This growth was driven by our continued movement upmarket to larger enterprises, including winning several 8-figure TCV deals. Channel was also an essential driver behind increasing our reach into mid-market and enterprise customers. As Vik discussed, our strategic investments in channel and product innovation over the last few years are delivering strong results, and our recent CPaaS expansion into the U.S. and U.K. as well as voice for Microsoft Teams is promising. During the quarter, we lapped some large channel-led…

[Operator Instructions] Your first question comes from the line of Ryan MacWilliams with Stephens Inc.

Nice quarter, and I like some of the changes to the cash collection. For Vik: I thought the 48 new bookings over $100,000 in ARR was telling of the recent pull forward in the upmarket's adoption of cloud solutions. Can you talk about any further changes you've seen there for this mid-market enterprise purchasing since COVID? And are you seeing any changes here to deal cycles? Like are you seeing a sense of urgency from these larger customers? Vikram Verma;CEO: Yes. And actually what has been quite interesting is, as you can see, our combination deals where people are buying 2 out of our 3 solutions is significantly ramped up. It's 70% of our bookings greater than $12,000 in monthly recurring revenue. What we've also seen is this whole concept of land and expand, where people may buy, for example, our contact center solution and then immediately follow up with our UCaaS solution. And increasingly, they're starting to also buy our CPaaS solution to customize the end user experience. One of the interesting trends we also saw was some very large contact center deals. If you remember from my prepared remarks, we talked about a 1,300 contact center win; and an 800 contact center win; and several, I think, 400 contact center wins. And so you're just seeing this trend more and more towards large global enterprises selecting a communications platform, starting with either a unified communication or a contact center solution and then adding the rest as time goes on.

Perfect. And then on Microsoft Teams, it seemed like 8x8 was ahead of the game here. At least on my end, it seemed like you're one of the first to promote your Teams direct routing integration this year. I know it's still early, but how has 8x8 voice for Teams helped you engage with some larger enterprise customers that maybe 8x8 hasn't engaged before? And have you seen any initial interest for these Teams customers to maybe add-on contact center? Vikram Verma;CEO: Yes. Actually, more than initial interest, we've actually closed deals like that. What we are finding is Microsoft Teams pulled in a lot of 8x8 voice because we added the PSTN connectivity. And we did it essentially seamlessly so that from a user's perspective it was a completely seamless experience. And then we saw a tendency for people to add on also our contact center. So we view this as a very fast-growing initiative for us, and we think we're very well positioned for it.

Your next question comes from the line of Rich Valera with Needham.

It's Chad Tevebaugh on for Rich. Good progress on the X Series migration. I'm just wondering what you guys have seen with respect to churn as you've shifted this base.

Okay. So this is a question that comes up several times, so I'll just hit it head on. So it's not that we go to the customer and request that they migrate. We usually migrate them over the weekend. We let them know way in advance. And we see a lower churn rate on migrated customers and on X Series customers than on our legacy customers. And so we witnessed that again in the second quarter. We had lower churn rates overall compared to the first quarter, not surprising, I think, given that ramifications of the COVID and everything are starting to settle down, but in terms of migrations, we definitely continue to see the trend that migrated customers have a lower churn rate.

Your next question comes from the line of Michael Turrin with Wells Fargo Securities.

Maybe to start off with from the highest level. You've talked in the past around the importance of owning the stack. The messaging has since somewhat evolved towards single vendor open platform. Can you just help us understand what that means for customers and for partners and how you're positioning competitively given this move towards the more open-platform approach? Vikram Verma;CEO: No, I don't think the message has evolved. It's all about owning the stack. And the only part that -- and as part of owning the stack, we provide APIs so basically people can change their end user experience and customize for their various business needs. We think it's increasingly more important, and I think you're seeing that happen everywhere. If you look at the messaging, increasingly you're seeing people buy both contact center and unified communication together. And CPaaS becomes a way to integrate and change the end user experience. And so -- and then on top of that, because it's all part of one common stack, you have one common data layer, one common way of basically accessing all the various information and a common user experience across the entire company. I view that as hugely differentiated. And particularly as we go into a compliance and security environment as well, having one integrated platform under one vendor's control, we think, is increasingly more and more important. The CPaaS function gives us the ability to then ensure you can add, for example, a video link or a SMS reach or something like that at the end user experience level and do it as still part of that one common platform.

Maybe one as a follow-up, for Sam, on guidance. I mean you mentioned a few things in the script, but given the 19% services revenue growth you just delivered and the 12% to 13% you're guiding for in Q3, is there anything, any change to call out just in your approach to setting targets here versus the prior [ team ]? And maybe, is there anything you can add just to help quantify what you mentioned there around the lapping of Wavecell and some of the deal activity you saw last year?

Yes. So we lapped Wavecell in Q2, so the 20% ARR growth, 19% service revenue growth is relatively clean from a lapping and all those kinds of things point of view. What I was trying to call out was last year's comp was a big -- tough. There was a big surge between Q2 and Q3. And so we're seeing a little bit of that drop in Q3's growth rate, so -- but we did put the guidance out for the full year. And if you do some quick math, you'll realize that there's a reacceleration going into Q4. And then overall, we did take the service revenue growth expectation up from the year. Previously, we had said 17% to 18%. Now we're saying 18% to 19%. So for the year overall, you're looking at something around 18% to 19%; and no, no change to sort of how we give guidance. We give guidance on what we think we can do.

Your next question comes from the line of Matt VanVliet with BTIG.

I guess, looking at the channel momentum still kind of outpacing the overall growth of the company, and the mix of bookings remains quite high. The addition of new channel partners is pretty high, but I guess, as we think about that and then the guidance for the next quarter -- next couple of quarters, you lap -- you're talking about lapping some bigger deals, but you've brought a lot more partners into the network. So I guess, 2-part question on that. What's potentially slowing down on the overall growth in the channel business? And how is that weighing on the total growth rate and especially for the third quarter? And then second, on some of these big announcements around the VAR models, maybe a little bit more than kind of just reseller or, I guess, channel partners out there that are just kind of selling [ a bush business ]. How has that been a focus? And how is the market changing around that dynamic?

Okay. I'm Sam. I'll take the first part of this one, on some of the channel metrics stuff, and I'm going to turn it over to Vik for the VAR second half part of the question. So what I was trying to highlight in my script was simply that the, way the IR metrics sheet works on bookings, it's really based on total contract value. And so if we book a very large deal or a 5-year deal or whatever, it can create that concepts of a tough comp. And so as we've been closing these larger and larger enterprise deals, I mean, you really see it in RPO, which is growing 50% year-over-year. You can really see that we can start to have an effect where a comp or a big deal or a couple of big deals in a given quarter can whipsaw that growth rate number, and I just wanted to make investors aware of that, right? I still think the purest, cleanest way to look at our company is looking at ARR growth, which was 20% last quarter. It encompasses our CPaaS business and encompasses all those pieces. The other thing I would highlight just on the channel piece is, if you look, we're monetizing our investments. If you go back a little over 2 years ago, we had literally 127 active channel partners. We've effectively grown that almost 10x with, I think, we're putting in the IR metrics sheet 1,169 active channel partners. And we have a lot more room to go there. I think we have good traction and good momentum in the channel. We really like our channel partners. We really like where we stand, but we definitely have more room to run with that initiative. Vik? Vikram Verma;CEO: Yes. No, I'll echo…

And maybe as a follow-up. We've seen a lot of success around the overall industry, for obvious reasons, as demand has been pulled forward for a lot of companies. How do you feel like you're performing in competitive deals? Are you still needing to get more [indiscernible]? Are you finding your way into most of the deals that you feel like you should be a part of right now? Vikram Verma;CEO: No, actually I'm feeling much better about demand generation, overall brand recognition and overall performance. I think for us, right now, what I'm seeing more and more of is the -- we've been on a 3-year journey, when we have made major investments in our platform, major investments in our demand generation engine, our website infrastructure, our channel partners. And we are now starting to see all of that pay off, and we're also starting to see it in terms of the leverage that we're able to get. So we like where we are. It's all about execution.

Your next question comes from the line of Meta Marshall with Morgan Stanley.

Sam, I wanted to ask you a question maybe first just as you've been in the role a couple of months. Clearly, you guys have talked about making the services organization more efficient or moving to kind of one generation of product that you have to maintain, but just are there other areas where you think there's opportunities for efficiencies within the business? And then maybe a second question, for Vik. Just where are you seeing success in kind of bringing some of CPaaS' higher-margin products into kind of the sales opportunity versus just kind of SMS?

All right, so I'll take the first one, Meta. I guess this is my defect as the CFO, but I believe in continuous improvement. So yes, there are other areas we can improve on. There's areas that we've already improved on and we can improve more on. You did highlight a couple of them. Professional services, we're doing better, as I mentioned, in the margin, in the script. Flex hardware rentals saw nearly 50% growth quarter-on-quarter. Those are areas where it's kind of low-hanging fruit, and we'll continue on that. Monetizing the channel, monetizing our marketing investments are a key piece, continuing to focus on cost structure, all those kinds of things. We're really just focused on continuous improvement on each dollar that we spend. I hate to make it so simple, but it's really that simple. Vikram Verma;CEO: Yes, no. And I'll give Sam kudos. Sam as well as the entire finance team, they've done a great job across the board. I think you saw it also in terms of how the team has executed in terms of overall margins improving, particularly professional services as well as other margins. You also saw bottom line improvement. You've seen CAC improve steadily. So all of those trends are underway, and we're putting in all the efforts in place to make sure that there is continuous improvement across the board. The other part, I think, which you were talking about which I think is exactly the strategy we've been on, which is this whole concept of an integrated platform: I think we talked about the fact that UCaaS, CCaaS represented approximately 70% of our bookings greater than $12,000 ARR. And that's -- and actually is growing twice at the market rate and now represents 1/3 of the overall company ARR. So that's one part. The second is increasingly those customers then are asking us for CPaaS APIs so that they can change the end user experience. I gave you one example of a recruiting company which added CPaaS to go out and do a series of blasts to all of their various candidates who then click on it and can -- and then become part of a campaign which can then be talked to through our contact center. We are seeing a significant interest in our video offering, which is why we will be making JaaS, Jitsi as a service, available very shortly, where literally in minutes you can add a video meeting link to somebody's embedded application. That will then become available over on a general availability by end of this calendar year. So CPaaS, we view as a great addition to our overall platform. And we are also seeing significant opportunities for margin improvement, particularly as we move into voice and video services for CPaaS.

Your next question comes from the line of Peter Levine with Evercore.

Congrats on a good quarter. So as we think about revenue reacceleration. The go-to-market investments you made internally and towards expanding your partner ecosystem clearly are gaining traction here, so looking at your pipelines, what's your confidence in your sales org being able to deliver on the last mile? Vikram Verma;CEO: I mean we've brought onboard a CRO, who have a lot of confidence, in Steve Seger. The team overall is executing well. We've had -- our last quarter from a bookings perspective was very strong, and we continue to feel like there is a good opportunity to continue to improve from there. So it is all about execution for us. I like where we are at. I like the fact that the investments are finally starting to pay off, and I think now it's all about execution.

And I think I -- all I'd add is the proof from the numbers, right? We just had a great quarter. We upsided service revenue, total revenue, margins, everything, right? So yes, I, we have extreme confidence that we can convert the pipeline into future revenue. Vikram Verma;CEO: I will add one other thing, which is -- which I think is a team I want to also recognize, which is our e-commerce team. We introduced e-commerce, I think, a little over a year ago. They're adding thousands of logos a quarter, which means at the low end of the market people can literally click on and have a fully functioning UCaaS system right off the bat as well as Meet Pro. And so that becomes a great on-ramp then to our overall X Series platform. So it also allows us to free up our sales team to focus on larger and larger deals, which has been part and parcel of our strategy over the years.

Great. And also a last question: I was hoping to get a little of color on your pipelines [ in that environment ] throughout the quarter and if you're seeing any changes in sales activity or change in conversation with customers here in the fourth quarter. We have an election around the corner. COVID cases are spiking here and across the globe, so curious if all this uncertainty in the last couple months of the year is having any impact or if you're seeing any changes. Obviously, clearly by your results and guidance you've given us, I would think not, but just any incremental color would be great. Vikram Verma;CEO: Last quarter -- actually one of the good things about last quarter was it was a very normal quarter with normal puts and takes, and it was business as usual. I'd like to see that continue.

Your next question comes from the line of Mike Latimore with Northland Capital Management.

Interesting to see more and more 8-figure deals show up here. It's good to see, yes. In terms of, I guess, Vik, you just said it was sort of business as usual. I guess, does that go to bookings kind of linearity as well? Did bookings sort of track as you expected by month?

Actually it's -- I'll take this one. It was actually a little better than expected. So it was less back-end loaded than we normally have. And I think, as you see, the DSOs on the balance sheet are basically flat, right? So everything was kind of as expected. As Vik said, it was fine, and linearity was actually a little better than expected. Vikram Verma;CEO: And then Mike, going back to your comment about the first part, which is, as you know, we've been in this journey to move higher and higher up the stack in terms of mid-market enterprise deals, but we also wanted to make sure we were able to service our small business customers in a very efficient manner. Our e-commerce has been adding thousands of logos at the lower end and then which frees up the sales team to go up to mid-market and enterprise deals. And so you're seeing both ends of the deal being serviced, and the fact of the matter is you have one platform which allows you to go from small deals all the way to enterprise-level deals. And you can mix and match. You've got voice, video chat, contact center, plus the APIs now through our CPaaS acquisitions. So that, we've seen the land-and-expand portion of it also be a very significant growth driver going forward.

Great. And then on small business, anything, any change in churn in the small business category?

We've been migrating them. So as I mentioned earlier, we're seeing lower churn rates on migrated customers. So I'll say the only thing is that churn was down in the second quarter. And as you can see, the cash, right, cash is doing fantastic. It was better than we expected for the quarter, so our collections are really no problem.

Your next question comes from the line of James Breen with William Blair.

Just wondering as you think about this quarter relative to last. Any changes you're seeing in the channel as those companies sort of adapt to what's happening, pandemic, et cetera? Given sort of the potential resurgence we're seeing here on the COVID side, just wondering how those -- how the adoption is happening in the channel. Vikram Verma;CEO: No, I think we have enjoyed our interactions with the channel. As a matter of fact, I think our brand recognition within the channel has been going up quite significantly. We are also starting to see that channel has also adopted our e-commerce engine. So for their low-end deals, channel partners are now starting to put that on their websites. So for small customers, they can actually go in and service them there. We are also doing these large, we call them, blitz days where channel partners and 8x8 folks go out and reach out to prospects all over the world; and that's been extremely well received. We are also starting to see much larger deals come from the channel. We have seen a lot of 8-figure-TCV deals coming from the channel, which means the channel is starting to feel more and more comfortable that we are the partner of choice.

And with respect to just geographic dispersion, can you just talk about where sales are coming from globally and how [ it's impacting ] business?

Yes. So if you look at -- I mentioned this in the -- if you look at our international business, it was up 37% year-on-year. So our previous investments that we've made in growing the channel, especially in the U.K., are really paying off. I mean Vik mentioned Virgin, but in general we are seeing stronger growth internationally than we are domestic U.S. But I don't want to downplay. We're seeing growth in both markets. Part of it is just the U.S. market is so much larger. It's harder to get a bigger growth rate number off of it.

Your next question comes from the line of Siti Panigrahi with Mizuho.

Good to see progress in the business. I have a couple of question. First, on Microsoft Teams, good to see this early success. We talked about tens of thousands of seats. So how do you characterize this success? Is it more in the U.S. or outside the U.S., certain geography? And also, yes, any particular segment between the small, midsize and large? Vikram Verma;CEO: No. Actually it's global and it's broad-based. It's you've got small customers. You've got mid-market customers. I think we even talked about a 13,000 deal, Microsoft Teams win, so yes, it's broad-based and it's global.

Okay. And then we keep hearing a pretty good, positive feedback on your technology and platform as you talked about. And you're making progress on the go-to-market side. Now that Steve joined as CRO, I'm wondering what sort of changes we should expect in the go-to-market initiative. Vikram Verma;CEO: So I'm thrilled to have Steve Seger onboard. He's a former defensive end, and he has that kind of mentality. I think our team is a strong team. They are generally in place, and Steve brings that -- we have brought everybody essentially under one roof, and Steve brings that intensity to kind of take it to that next level. We also see VAR being a very strong growth driver going forward. And e-commerce, as I indicated, allows us to go after the low end of the market in a very cost-efficient manner. So as I said, I like where we are at. It's all about execution.

Your next question comes from the line of Andrew King with Colliers Securities. Andrew King;Colliers Securities;Research Associate: Just one quick one. I've noticed that migration has really accelerated past where we were originally expecting. I just wanted to get an idea if there are any factors outside of COVID that accelerated this migration past your expectations. Vikram Verma;CEO: I mean, look, the biggest factor is an awesome engineering and biz apps team. They found a way to completely automate the process. I think Sam alluded to it in the past, where in essence what you do is -- they have found a way where you can take a customer that was on a legacy platform, literally map it over to a new platform, do all of the prep work beforehand. And over a weekend, literally a switch gets flipped and the customer is now on the new platform. And they're -- other than the user interface, from their perspective, all the feature functionalities are very similar. It was a phenomenal teamwork. And they migrated tens of thousands of customers over the last couple of quarters, so that's a great accomplishment. We also believe some of the IP that they developed has opportunities for migrating other customers that may not be on 8x8's platform in the future. And the whole goal here is to make sure you automate that process.

Your next question comes from the line of Will Power with Baird.

This is Charlie Erlikh on for Will. I'll just ask one. I was hoping you can talk about your gross margins expectations medium to long term given a lot of moving pieces, contact center growing strongly, CPaaS trends strong and UCaaS trends and video coming online too. So how should we think about that, putting that all together, [ for ] gross margin [indiscernible]?

Yes. It's a super fair question and I'd love to give you an incredibly articulate answer. There's really 2 moving pieces here. As our CPaaS business grows from a product mix perspective, that drives down gross margin. At the same time, as flex and our professional services scale up, that's a positive influence to gross margin. So roughly, we model it flat to slightly down. We think CPaaS has a little bit larger influence. And by slightly down, I mean tens of basis points, not full percentage basis points. That's generally how we think about it over the next, let's say, 4 quarters or so, and then after that, you'll -- I'll have to reassess and give you an updated answer.

Your next question comes from the line of Jonathan Kees with Summit Insights Group.

Congrats on a good quarter. I wanted to dig a little deeper in terms of the video. In the past, you talked about like the number of users for the 8x8 Video Meetings Pro. I just want to try to get an update on that; and also just trying to get an understanding in terms of have you been using this as a lead-in for the UCaaS, CCaaS sales. Is this -- or this has -- more have been a upsell afterwards. Just kind of get a better understanding in terms of the interplay between that and the more established offerings that you have. Vikram Verma;CEO: Thanks, Jonathan, yes. No, video, as you know, we are still at several million users. The main point on video over the last quarter, as we talked about, has been how do you monetize that. And there's been 3 very good approaches. Number one, increasingly it has become the on-ramp to both our 8x8 Express as well as overall UCaaS, CCaas platform. So that's worked extremely well for us. The second, and this has been essentially customer led, they increasingly like our video, Jitsi as a service, as a way to embed into their own applications to add video capability. And so we've already got several pilot customers on that as well. We've also got a very robust open source community that is continuing to innovate on that. So for us, video has become increasingly a way where we -- as part of a bundle, it's a differentiated offering. It's an on-ramp onto our X Series platform. And Jitsi as a service allows us to monetize by putting in applets essentially into somebody else's larger app, where they are able to literally do it in minutes. And developers have -- we've got, as indicated, several data customers on it already.

And so you're going to keep meetings pro more as an on-ramp for now without -- and more monetize Jitsi as a service. Vikram Verma;CEO: That is correct.

Your next question comes from the line of Ryan Koontz with Rosenblatt Securities.

It seems like a sizable piece of the UCaaS TAM out there is in the carrier business lines, and I wonder how you view the carrier opportunities to sell them white labeled product. Or do you prefer really to just place them typically with your own brand and your own channels?

Okay, so I would answer that question with sort of the two-pronged approach that we have. Number one is a lot of the carriers traditionally have sold through VARs and -- or have a large VAR component to it. So that's obviously our VAR program that Vik discussed earlier. The second one is with e-commerce and even with some X Series stuff and our APIs we have the capabilities of white labeling, selling to, et cetera. Those discussions have occurred, are occurring, will occur, et cetera. I don't want you to read anything into that, but we have the ability with, for example, Manager Express. We can white label it if that's what a carrier chooses, to use that as a self-service, zero-touch on-ramp to UCaaS; and then progressively move up from there. I will tell you, for sure, carriers are super interested in the idea of self-service, zero-touch, "no human being involvement" type of stuff. And that's a lot of the activity we're seeing when we mentioned that we're starting to have the ability to move e-commerce into our channel. Vikram Verma;CEO: And I mean -- and you can look at the example of Virgin Media Business. In essence, they are standardizing on our platform. They're go into their installed base. They can sell UCaaS. They can sell CCaaS. They can sell CPaaS. They can sell it for small business customers through our e-commerce offering. So we are increasingly seeing carriers as a route to market by them essentially co-labeling our products and/or white labeling our products. Because we believe our platform is hugely differentiated, comprehensive and fully integrated. And from their perspective, it becomes a one-vendor way to go to market with multiple offerings.

Your next question comes from the line of George Sutton with Craig-Hallum.

One interesting thing that I don't think has been addressed is the decision to pay more of your bonuses in cash versus stock, which I think is an interesting move. Can you talk about the logic behind that?

Yes. I'll take that one. So look, when I became CFO back in May, June, I heard a lot of concerns about cash. I think, with the latest numbers, we've really taken that off the table. We're talking about over $155 million in cash, not including restricted cash, exiting in Q4. We're on the path to cash flow profitability, so it's time to start to turn our attention to things like stock-based compensation and those types of things to make sure that we're very shareholder friendly in what we're trying to achieve, right? So it was really a function of the fact that we have cash. I don't know if you know this, but you're not earning much when your cash sits in your checking account these days. So it's better for us now to issue less stock at the values that our stock is trading at and just pay out our bonuses in cash.

I'm well aware of the current interest rates, but I think it's an interesting move.

Yes. I -- we just do not have any concerns about cash balances right now. And I think this is just another way that we can start to become more shareholder friendly.

Ladies and gentlemen, this concludes the Q&A portion of today's call as well as the conference call. Thank you all for participating. You may disconnect at this time. Thank you.