Hello, and welcome to the PacBio Fourth Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Todd Friedman, Director of Investor Relations. Todd, please go ahead.

Good afternoon, and welcome to PacBio’s fourth quarter 2022 earnings conference call. Earlier today, we issued a press release outlining the financial results we will be discussing on today’s call, a copy of which is on the Investor section of our website, www.pacb.com, or as furnished on Form 8-K available on the Securities and Exchange Commission website at www.sec.gov. With me today are Christian Henry, President and Chief Executive Officer; and Susan Kim, Chief Financial Officer. Before we begin, I would like to remind you that on today’s call, we will be making forward-looking statements, including statements regarding predictions, progress, estimates, plans, intentions, guidance, and others, including expectations regarding our Revio Onso system in their commercialization timeframe, the future availability, uses, accuracy, coverage, advantages, quality or performance of, or benefits or expected benefits of using PacBio products or technology, including our Revio Onso systems. You should not place undue reliance on forward-looking statements because they are subject to assumptions, risks, and uncertainties that could cause our actual results to differ materially from those projected or discussed, including those inherent in developing and commercializing new products. We refer you to the documents that we file with the SEC, including our most recent forms 10-Q and 10-K and our recent press release to better understand the risks and uncertainties that could cause actual results to differ. We disclaim any obligation to update or revise these forward-looking statements except as required by law. During the call, we will also present certain financial information on a non-GAAP basis. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement and understanding of the company's operating results as reported under US GAAP. Management believes that non-GAAP financial measures, combined with US GAAP financial measures, provide useful information to compare our performance relative to forecasts and strategic plans and benchmark our performance externally against competitors. Reconciliations between historical US GAAP and non-GAAP results are presented in tables within our earnings release. For future periods we are unable to reconcile the non-GAAP gross margin and non-GAAP operating expenses without unreasonable effort due to the items indicated in our earnings release. In addition, please note that today's call is being recorded and will be available for audio replay on the Investor section of our website shortly after the call. Investors electing to use the audio replay are cautioned that forward-looking statements made on today’s call may differ or change materially after the completion of the live call. Finally, we will be hosting a question-and-answer session after our prepared remarks. We ask that analysts please limit themselves to one question, so that we could accommodate everybody in the queue. And with that, I’ll now turn the call over to Christian.

Thank you, Todd. Good afternoon and welcome to our fourth quarter results and business highlights call. Thanks for joining us today. We have a lot of exciting news to share and I'll kick things off with an update on our performance in the fourth quarter and 2022, I'll then delve into some exciting developments we've seen in the past few months and wrap up with an update on our market segmentation. Susan will then provide a more in-depth look at our financial results and our guidance. But first, a quick recap on revenue. Our most transformative long-read sequencer today, we are just a few weeks away from broad commercial availability of Revio, which is scheduled for next month. Currently, we have dozens of instruments on the manufacturing floor in our Menlo Park facility. And at this point, we don't see any serious supply chain constraints. As a result, I expect that we'll ship at least 25 Revio systems to customers prior to the end of the quarter. We will continue our manufacturing scale up through the second quarter and I believe we will be at our planned production rate for 2023 by the end of Q2. This is good news as the Ravio platform enables our customers to take on projects in the thousands to tens of thousands of samples. With this scale, we believe Revio will be a game changer for scientists and clinical researchers. What would have taken years or even decades with long-read sequencing in the past can now be completed in a fraction of the time and cost with the Revio platform. For years, the scientific community has relied on short-read genomes and exomes, yielding valuable insights into the human genome. However, despite millions of short-read genomes being sequenced, much of the genome remains unactionable today,…

Thank you, Christian. As discussed, we reported $27.4 million in Product, Service and Other revenue in the fourth quarter of 2022, which represented a decrease of 24% from $36 million in the fourth quarter of 2021. Entrant revenue in the fourth quarter was 6.1 million, a decrease of 62% from $16.2 million in the fourth quarter of 2021. The decline in revenue was primarily driven by the announcement of the launch of Revio in the fourth quarter, which impacted orders and shipments for Sequel IIe. We delivered 18 Sequel IIe systems during Q4 growing the install base to 512 Sequel II and IIe systems as of December 31, 2022. Turning to consumables, revenue of $16.7 million in the fourth quarter grew 11% from $15.0 million in the fourth quarter of last year. And was a record for PacBio. Sequel II and IIe consumables represented approximately 94% of our total consumable revenue in the fourth quarter, with the rest from older systems and other consumables. Annualized pull through per system on the Sequel II and IIe installed base in the fourth quarter was approximately 127,000. We expect Sequel II and IIe pull through to decline throughout 2023, as we begin shipping Revio and customers transition to the new system. Finally, service and other revenue was $4.6 million in the fourth quarter, compared to $4.8 million in the fourth quarter of 2021. From a regional perspective, America's revenue of $12.0 million declined 36% compared to the fourth quarter of 2021, primarily driven by lower Sequel II, IIe replacements, with the recent announcement of the Revio launch. Asia Pacific revenue of $10.2 million grew 23% over the prior year. The region continued to recover, with growth from both consumables and Sequel IIe to system sales compared to the prior year period. With the…

Thank you, Susan. During last month's JPMorgan Healthcare conference, I outlined our strategic goals for this year, focusing on delivering results to our stakeholders. Our first priority is to drive widespread adoption of our Revio sequencer by converting existing Sequel II and IIe customers and attracting new PacBio customers. We're off to a strong start with 76 systems in our backlog as of year end, and approximately 30% of our sales pipeline consisting of new customers as of year end. Second, we aim to demonstrate the unparalleled accuracy of Onso in customer’s hands and show its ability to transform research in several genomic applications. As discussed, our internal data shows that Onso’s accuracy can detect variants at far greater depth than SPS and beta partners are sharing that they're having an excellent user experience. Third, we're committed to continuing to develop our long-read sequencing technology, including ultra high-throughput and benchtop systems, and a next-generation SBB sequencer. This year marks the first step in our journey for offering multiple systems across the sequencing spectrum with Revio and Onso leading the way. Next, we will leverage the current infrastructure to drive towards positive cash flow. As Susan shared with our OpEx guidance, we're going to prioritize and focus on spending on the areas that matter the most. Finally, we plan to expand our partnerships across the ecosystem and workflow to increase customer adoption of SBB and HiFi. With the launch of the PacBio compatible program, we have a framework in place to onboard the best partners in the sequencing workflow. Our long term goal is to exceed 500 million in revenue in 2026. And we believe that 2023 is the start of a multi year growth story towards achieving this. I look forward to keeping you all updated on our progress throughout the year. And with that, operator, would you please start the Q&A portion of our call.

Yes, of course. We will now begin the question-and-answer session. [Operator Instructions] First question this evening comes from Kyle Mikson with Canaccord. Please go ahead.

Hey, Christian and Susan, thanks for taking the questions.

Hi.

Better. Yes. Hey, so I guess I'm the guidance. This is kind of the range a lot we're expecting. Two questions about this, I guess within my one here. On instruments, does this kind of assume your streamlining the 25 Revio’s in the first quarter? I'm just curious if you could kind of talk about what the cadence of the orders and the shipments and the rev rec going forward. And maybe like within that, like, beyond the shipment bolus in March and the recommencement of the shipments and maybe like May or June, there's going to be probably like an assumption for inventory, instrument terms and the second half. So I'm just curious about that, that's for instruments. On consumables, maybe just pull through dynamics for Sequel IIe 127k, I think in 4Q, I mean, how quickly could that decline? Could that be like 80k to 90k by the end of the year? I think you mentioned Susan, Revio pulled through could be – you're assuming some consumables there. What are you thinking about it there curious about that? Thanks, guys.

All right. A lot of pack there, Kyle, and thanks. I am back in the saddle. So I'm sorry, I missed everyone at AGPT last week. But let's talk about the guidance a little bit and how we thought about it. We do expect that, on a quarter-by-quarter basis, revenues will improve throughout the year. We don't give quarterly guidance on – on revenue. So I'm not other than to say that, I do think that what you're going to see us grow over the course of the year, and probably going to stop there. With respect to Revio shipments, 25 is really just the start and we're prepared to produce and shipped more than that for a quarter. We're starting at 25, because we want to make sure we have an incredible customer experience with these early shipments, as we scale up. So I wouldn't assume that it's a linear, a linear kind of outlay quarter-after-quarter-after-quarter. But I would say that, 25 is a good starting point for us to really get – get the system out in the field and start to see how it impacts both consumables, with Sequel IIe, but also, the utilization of Revio itself. With respect to the pull-through dynamics, as I've said a couple of times. We aren't going to know, really what the pull-through dynamics look like for several quarters. And so, the truth is, we're not going to try – try to speculate or guess, what we do know is that, some of our largest customers are early adopters of Revio. And so that will have – our assumption is that, they will use Revio, and they will start to slow down the usage of Sequel IIe, it may not go totally to zero with those customers. But it will certainly decline as they move to the, scale and cost effectiveness of Revio. And so, that could have an impact on, and it's likely that, it will have an impact on Sequel IIe pull through probably over the next couple of quarters. But where that ultimately settles out, I think you've quoted 80k to 90k. We don't know, and we're not going to make a – we're not going to try to guess at that today, we're going to see how this unfolds over the course of the – over the course of the year. I do think that Revio utilization will – will likely grow over the course of the year and particularly as we start to shift to the larger customers first. And then what we will see is – we will start to see some sort of normalization of that. I suspect, based on past experiences, it's probably going to take us three or four quarters to really see where that settles out. So hopefully, Kyle that, that answers your questions, and gives you a sense of how we're thinking about the guidance with respect to the instruments and consumables.

Yeah. That was great, Christian. I'll hop back in the queue.

The next question is from Julia Qin with JPMorgan. Please go ahead.

Hi, good afternoon. So, in terms of the manufacturing capacity for Revio, you said a 25 shipping in 1Q and fully ramped up by 2Q. So where do you think the supply will stand at round rate in the second half of the year? And then in terms of the Revio pull-through ramp, I believe you previously mentioned that you expect a barbell distribution in terms of the customer in a volume. So is it fair to expect that the lower throughput customers will onboard later this year, or do you think that's more of a 2024 and beyond dynamic?

Julia, thank you for the questions and it's good to get to talk to you. You know, first of all thinking about the run rate on manufacturing, the good news is that we have enough production capacity today to satisfy a very wide range of outcomes with respect to demand. And we are going to scale our production and get to our steady state by the end of Q2. But that doesn't mean we couldn't scale further in Q3 or Q4 and beyond. But what we're trying to do is, is not put us in a situation where we produce a lot of instruments at one time, and then reduce the steady state. We'd much rather be a little bit more consistent over time because that's how we'll get the best efficiency out of the plant. And that's how we'll get the best, the lowest COGS and improve gross margin. Part of Revio is not only the enablement of this new technology for our customers, but it's also for us to drive our gross margin improvement both through the instrument itself over time, but also and especially because it can be a much higher pull-through instrument, which will drive you know product mix. And when we think about that, barbell distribution as you're talking about with respect to consumables, you're right, typically in these markets, you end up with maybe a bimodal distribution of very high throughput customers with very high utilization, and then lower throughput customers. Our expectation is with Revio that, sure the earliest shipments will probably be to the higher throughput and highest throughputs, and that'll probably be mostly through Q1 and even a lot of Q2, but we're going to -- it's really important that we provide this technology to all of our customers, and so we're going to try really hard to be to, you know, to get some of our lower throughput customers, which we think will be the high throughput customers of tomorrow, the system as soon as we can. And, of course, we're going to serve our very large customers and large projects, because they really enable the next sets of large projects to come through to build the business. And so, I would expect to see a pretty broad distribution of customers over the course of this 2023 and it'll continue on in 2024.

Got you. That's very helpful. And just one follow-up on the Sequel pull-through if I may, I think you mentioned that there might be some near-term volatilities in the Sequel utilization, because there is an initial wave of inventory destocking, but then if customers early orders aren't fulfilled, they might have a rebound utilization. I'm just curious, has your expected or reasonable expectation of Revio supply constrained in that initial year, being communicated to these customers in an attempt to, kind of, and maybe smooth out their inventory management of legacy Sequel II and how does that, kind of, tied to the best case and worst case scenario of Sequel pull through that's embedded in your guidance?

Yes. So we have been very clear with our customers and we are -- one of the things we are trying to do is, we are laser focused on our customers, that's one of our core values and helping them understand, timing of when they're going to receive Revio when they utilize -- utilization of Sequel IIe consumable and II and IIe consumables. We really tried to working at the grassroots level, each customer, so that they can optimize their experience. Some customers that have ordered, say recently, that it's likely that they're not going to get their Revio for a while, so they're going to continue to run their projects on Sequel IIe. So we're going to want to make sure we help them manage that transition. And it could have -- like, I said in my prepared remarks, there could be some variability or volatility around the consumable revenue as we go through this transition. The good news is that by the -- really, by the end of the year, this volatility is likely behind us, and we're scaling our utilization on Revio. And you're starting to see the consumable pull-through from Revio. We're starting to understand what those numbers look like and have more sense. But the next few quarters, it is going to be transition and we're just managing that the best we can. The good news is -- the other piece of good news is that we have -- we’ve done a really good job on producing 25m smart cells and we're in an excellent inventory position already. And if you were -- if most of you recall, we actually completed the 25m smart sell over a year ago at this point. So we've got a lot of experience with it. Yields are already coming up in the manufacturing plant. And so, our ability to supply the market at really any level of demand that we're kind of seeing is already in place effectively, which is super exciting.

The next question comes from Tejas Savant with Morgan Stanley. Please, go ahead.

Hey, guys, good evening and Christian, it's good to hear your voice. We missed you at AGBT, especially after the sun went down, as a lot of people told you, I'm sure. On the Revio for us to kick things off, you've got 76 orders in backlog. You're shipping 25 here in essentially a month here, you've got the April pause as well, but you -- Mark talked about at AGBT, is not particularly impactful from a numbers standpoint. But could we actually see you ship all of the current orders and backlog by the end of the second quarter, or do you see that as more of a third quarter or a mid third quarter situation? And then my second question here is on Onso. So, first, easy one for Susan, what exactly are you baking into the guide for Onso? Perhaps, any color on the number of shipments here in the back half? And I think you showed really good data at AGBT. I think it was, something like 600 million to, sort of, 730 million reads, higher than your 400 to 500 target range. So what exactly remains to be done there over the next few months? Other than just incorporating some of the learnings from your beta users?

Yeah. Okay. A lot to unpack there, Tejas. Thank you for the questions. First of all, I want to – you're right. We had 76 orders in backlog at the end of December. But the truth is, we have more orders in backlog than we did at the end of December today. So, and the reason why I start by that is that the reality is that we, you know, we expect to continue getting more and more orders over the course of the year. And so it's you know, shipping the 76 by a certain amount of time, I would expect us to carry backlog for quite a while actually. Because I do think the order, the demand for the product is quite substantial. And so what we're doing is we're working to ship the 25, at least 25 units is what I said specifically, this quarter to get started. And then you're right. In April, we're still going to be manufacturing systems all through April. So it's not like, you know, when we say pause, all we're doing is making sure the field is that we're very satisfied with how customers are ramping up on Revio. It has nothing to do with anything other than that, and so will it has exactly zero impact on our ability to deliver revenue in Q2, I just want to make that crystal clear, because it does seem like some, some analysts have really kind of drilled into that and I don't – what we're focused on is having an incredible launch. And that's part of how you plan these things out to do it exceptionally well. And so we're not – I'm not really going to say when the 76 gets all – all shipped, but what I am going to…

Sure. So I think with that backdrop, we are super excited by the positive customer feedback on Onso, customer interest in terms of the revenue Onso bundle. But in terms of the year, this is – this is a Revio year in terms of our guidance, I guess to provide some perspective in terms of Onso, what is baked into our guidance is basically a modest number of Onso shipments in the year, but it's not a material contribution to the overall revenue number as this year again is mostly driven by Revio.

Yeah, particularly most of the growth.

Most of the growth, exactly.

The next question comes from Dan Brennan with Cowen. Please go ahead.

Great. Thanks for taking the questions. I guess, maybe I'll stick with one, but I guess a multiproduct, if that's easier. In terms of consumable that was really helpful to hear some color in the total guide but how to think about consumables at the high end of the guide? And while I appreciate the Sequel IIe roll off, it's a hard thing to predict like. Can you give us any more color within that guidance range? Like, what are the barriers on Sequel IIe consumable? And then, b, Christian, certainly can appreciate that the orders didn't stop at year end. You discussed 76 orders from 43 countries and 30% goes from new customers. That was as of the end of the fourth quarter. Can you just give us some color maybe about how the order book has evolved since early January? And I'll leave it there. Thanks.

Yeah. I mean, I think, we're going to try to, I mean, realistically, we're going to try to stay out of, looking at backlogs and order books in the snap, but to color, what's happened since a year end. We've had two very, very, very successful conferences, the plant and animal genome conference AGBT. And if anything, the funnels are strengthening the perspective lots of customers or many customers have actually run samples inside of our labs now in our – in our applications labs. So, customers are getting more confidence around, it really is what we say it is. And I think that's really – that's really exciting. And so the, the funnel is it continues to strengthen. It is a global. It is a global funnel, and there are a lot of new customers. And I think that's one thing that's really important to me is, not only do we want to get all of our existing customers to scale up with Revio, but it is really important for us to show new customers and see these new customers get engaged with the technology. So far, I think the – I think we've seen a lot of that internally, with our customers and perhaps maybe most interestingly is the scale people are starting to talk about is different than ever before in the history of PacBio. And so people are starting – people are contemplating, 10,000 sample projects, 20,000 sample project, larger scale, large-scale transcriptomic projects, large-scale whole genome projects. And I think that's going to be – that's extremely encouraging to, kind of prove out the thesis that we needed to get to higher throughput, and we needed to get to economics that enable that through -- enabled scale. We already -- and we continue to do with the best accuracy and has that all of us preprint showed, quite frankly, the HiFi sequencing right now is the most accurate and most complete sequencer you can get. And so that's all been really well, I know that doesn't help you build your model per se, but anecdotally, it makes us feel a lot better. I didn't understand, Dan, your question really on guidance barriers on Sequel II, maybe could you ask that question again?

I think Susan talked about consumables at the high end of the guide would be flat to up, but that I presume you’re referring to total consumable, so Revio plus Sequel, and I just wanted to clarify that, and if it was, I was just trying to think through on Sequel itself within the guidance any color on how we're thinking about Sequel IIe consumables at the high end and the low end of the guide?

Yeah. So yeah, Susan was talking about the total consumable number, which makes -- the total numbers is actually the hard number to predict, because you don't know how fast Sequel II is going to decline. You do know that Revio is going to accelerate and it'll continue to accelerate throughout the year. But we don't really know yet how that will transpire exactly. And so that's why, when we think about our guidance, we have contemplated that volatility in the range of different outcomes. I think that's probably the easiest way to put it.

The next question comes from David Westenberg with Piper Sandler. Please go ahead.

Hi. Thank you for taking the question. I echo everybody's sentiment when I said, we really missed you at AGBT. So let's start with, I think you've got the number 30% new to PacBio, would you be willing to discuss whether they might be existing long read customers using maybe O&T, they're looking for maybe accuracy at a lower cost, or if this would be short read customers that really are looking for long reads, because for all that it offers and then projects that they're looking at? Is there any way to describe that 30% of customers?

Yeah, I can't -- I don't have the breakout in front of me. So I can't give you specifics. But the reality is that there has been a lot of conversations and I'm getting the second half because I wasn't at AGBT, unfortunately, but at AGBT there were lots of conversations where customers were expressing their need to move to Revio from their existing long-read sequencing paradigm, because they see the accuracy, because they see the completeness. And the other thing is they believe in the robustness of the platform that we bring to bear given their market experience with Sequel IIe, and so we've seen that, but the predominant portion will still be shortly customers moving to long-reads. And what everyone has to realize is that virtually every lab that's doing sequencing has a short-read sequencer today, or is, you know, that's the predominant and phenotype in the world. And what's happening is that they will bring a Revio machine into their lab and they'll start to move projects away from short-reads to long-reads for exactly what you said, the benefits of completeness, structural variation, being able to see phasing straight out of the gate without any tricks, epigenetics, you know, there's just, it's just become so apparent that there's so much advantage to looking at long-reads over short-reads, in most applications, and that you're starting to see a lot of people start to make that switch and move forward. And I think that's – I think you're going to see, you know, Revio machines sitting right alongside existing short-read sequencers, and the Revio machines are going to be capturing more and more at the dollars in many different applications, where we clearly have significant competitive advantage. And now we have the scale and the economics to enable our customers.

The next question comes from Sung Ji Nam with Scotiabank. Please go ahead.

Hi. Thanks for taking my question. I can totally appreciate that. This is the year for Revio. But given the – the really positive feedback on Onso and also the really attractive bundles that you were offering, I was just kind of curious what your thoughts are in terms of the attachment rate, if you will, in the outer years and also in order what would you think might be kind of the biggest barrier in terms of customers really adapting Onso at this point? Are they looking for more data in comparing Onso to other short-reads platforms, if you could talk about those?

Yes, I think you're right. This is – the – there is a lot of excitement about Onso because, you know really for the first time in a very long time. There's significant differentiation in the short-read space with Onso. And customers see that – they see the bundle pricing and offering that we have as something unique and no one else can provide that and so exactly why our strategy of becoming the only company with highly accurate long and short-read technologies gives us the ability to talk to every customer in the space and really ask them what questions are they trying to answer and provide them solutions that answer their questions. And that's going to be really powerful, not only as we get out of the gate here, but over the next several years in particular. And what I think customers are going to be excited about is getting Onso into the lab to see what it can do. And then watching our ability to increase the power of the technology through increases in density, driving more, you know, driving more reads per run, which would create more value than ever before. And it's really that that differentiation. I think the barriers today are probably the biggest barriers we have to get the product to market to be maybe a little tongue in cheek, but that's really what it is. I think that there is a lot of excitement around the product. We need to finalize the development, make it a highly robust and have an amazing launch and that's really what we're going to do here over the neck. As we get Revio out the door and prepare for Onso, and then you're going to see us continue to focus over the second half of the year and into next year on how you integrate with bundles, how you increase the performance of both Revio and Onso quite frankly, and then increase our value to the customers. And that's – that's really the plan of attack here. I'm very enthusiastic about it. I mean, we are from a guidance perspective. We are taking a modest view, because we want to make sure we get this right. We know that, there's a lot of choice in the market. We believe we have a highly differentiated offering. But we also want to be practical and responsible about how we give our financial guidance.

The next question is from John Sourbeer with UBS. Please go ahead.

Hi. Thanks for taking the question here. Maybe just question for Susan, and on the greater than 25 shipments in the first quarter. Do you think you can recognize those in revenue or can you remind us how the revenue recognition is on the shipment? And then follow-up, it sounds like the Broad for the Revio has been shipped up the door, have they actually received it and up and running? And if so, any early feedback on the installation there and software? Thanks.

Yeah. So John 25 that – those will be recognized as revenue, because the predominance of our shipments are the prime elements of the instruments we deliver to customers is recognized upon delivery. So that is – that is meant for revenue recognition in the quarter.

And then on the Revio going to the Broad, it was – we sent it via truck, so the trucks arriving next minute – now I think it's arriving actually in the next couple of days.

Yeah.

And so the truck will arrive and they'll install it next week. And then they'll – they'll – they're very, very capable. So I wouldn't be surprised, if before the end of the month. We're starting to see runs come off of – off of the machine assuming the installation goes well.

The final question this evening comes from Ross Osborn with Cantor Fitzgerald. Please go ahead.

Hi. Thanks for squeezing me in. I know, it's been a long call. So I'll be quick, so just curious to hear your view on China. You said the borders opening, but cases increasing relatively strong instrument demand. But any insight into overall activity would be appreciated.

Yeah. I'll – yeah. So right now overall activities have been pretty good. We had very strong demand for Revio in China. And I think that's going to, that will help us with our Chinese revenue in the quarter. You're right, when I give guidance, one of the things I do worry about is – is, how does China play itself out this year, because we all none of us really know how that will completely play itself out. What buoys my confidence is the fact that, we have a new product cycle and a lot of enthusiasm, and a lot of orders are ready for Revio. So that will help. But you're right, potential closures, COVID, those kinds of things. There's still headwinds that we face in the market, and when we were thinking about our guidance, we are trying to think through – through that, there still are headwinds sitting out there. That we're concerned with and watching, but so far, our view on China right now is that, we expect it to be operations as normal. We will be shifting some Revio's to China this quarter. And so, that will – that will help and get those customers started. But right now, there's nothing extraordinary to report, but we are watching as is I'm sure all of our competitors and peers, how that will unfold over the next several quarters?

This concludes our question-and-answer session. I would like to turn the conference back over to Todd Friedman for any closing remarks.

All right. Thank you all for joining us today. We look forward to connecting with many of you later this quarter at our several industry events and updating you on our progress this year. As a reminder, a replay will be available on our website. And this now concludes our call. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.