Good morning, and welcome to the Pitney Bowes Third Quarter 2017 Results Conference Call. [Operator Instructions] Today's call is also being recorded. If you have any objections, please disconnect your lines at this time. I would now like to introduce participants on today's conference call. Mr. Marc Lautenbach, President and Chief Executive Officer; Mr. Michael Monahan, Executive Vice President, Chief Operating Officer; Mr. Stan Sutula, Executive Vice President, Chief Financial Officer; Ms. Lila Snyder, Executive Vice President and President, Global Ecommerce and Presort Services and Mr. Adam David, Vice President, Investor Relations. Mr. David will now begin the call with a Safe Harbor overview.

Good morning. Included in this presentation are forward-looking statements about our expected future business and financial performance. Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from our projections. More information about these risks and uncertainties can be found in our earnings press release, our 2016 Form 10-K annual report and other reports filed with the SEC that are located on our website at www.pb.com and by clicking on Investor Relations. Please keep in mind that we do not undertake any obligation to update any forward-looking statements as a result of new information or developments. Also, for non-GAAP measures used in the press release or discussed in this presentation, you can find reconciliations to the appropriate GAAP measures in the tables attached to our press release and also on our Investor Relations website. Additionally, we have provided slides that summarize many of the points we will discuss during the call. These slides can also be found on our Investor Relations website. Now our President and Chief Executive Officer, Marc Lautenbach will start with a few opening remarks. Marc?

Thank you, Adam, and good morning. Joining us this morning, we also have Lila Snyder, Executive Vice President and President of our Global Ecommerce and Presort Services businesses. I thought it would be beneficial if you heard directly from Lila about our recent acquisition of Newgistics, a strategic fit and how we will proceed going forward. Before I turn it over to Lila, I want to depart from my normal practice and begin by talking about the quarter. As has been the case in the past, there are many current going into the quarter and Stan will take you through the details. At a summary level, revenue is turning out as expected, but our bottom line is less than what we expected. Clearly, part of the mess is due to poor execution. We own that and have made the appropriate changes. At the same time, we continue to invest in growth opportunities, some of which we planned on and some that have risen throughout the course of the year. The enduring point is that we have found our next chapter and is centered on shipping and addresses. The evidence is found in our revenue performance. We're experiencing growth in markets that are shipping, parcel and address centric. This transcends our entire business, SMB, Enterprise and Digital Commerce. Let me reiterate a point I have made before, we will continue to use our intellectual property from a technology and domain perspective across these businesses, so we can utilize scale and create economic advantage in the area of shipping, parcels and addresses. In short, our next chapter is predicated on taking the complexity out of shipping, the same as we have done for mailing over the last 100 years. Let me be clear. We continue to see mailing as an important part…

Thanks, Marc. On October 2, we completed the acquisition of Newgistics, which is a natural strategic fit in the Company's next chapter. I will share what Newgistics does, how we see the strategic fit for Pitney Bowes and our expectations going forward. Newgistics provides parcel delivery services, returns, fulfillment and digital commerce solutions for retailers and e-commerce brands. This acquisition provides expansion into the U.S. domestic market for our Global Ecommerce business while complementing our cross-border business. It also aligns with our Presort Services network. It essentially fits right in the middle and builds on the strength of both our Ecommerce and Presort businesses. Online shopping is now part of millions of consumers everyday life. The products and services provided by Newgistics will also enable us to provide a more robust and consumer focused end-to-end shopping experience, both cross-border and domestic. Newgistics has a demonstrated track record of success in the e-commerce industry. Their expertise in the delivery, returns and fulfillment of parcels is supported by the breadth of their retail client base and strong customer retention history. Aligned with the most important trends in e-commerce, Newgistics enables its clients to improve the post purchase experience for consumers and to scale rapidly as their e-commerce businesses grow. For example, Newgistics recently helped the midsized Ecommerce brand called Good American, redistributed its inventory from a single fulfillment center to multiple Newgistics centers, resulting in a 15% reduction in transportation costs, faster delivery times to consumers and accelerated return. This is just one example of how Newgistics drives value for its clients allowing the retailer to invest in their growth. We plan to leverage Newgistics' existing network and volume to drive scale across the Pitney Bowes parcel platform. And as Marc mentioned, you will start hearing us talk a lot more about…

Thank you, Lila, and good morning. There are several factors impacting our results that I want to first go through to provide a good grounding on where we are and what this means going forward. Overall, revenue in the quarter performed in line with our full year guidance and was flat to prior year. This is a significant improvement from the trend over the last two years. And as our business model continues to shift towards the long-term market growth rates, we expect revenue to further improve from where we are today. We did underperform on earnings. We have lowered our earnings and resulting free cash flow guidance for the remainder of the year. Let me compartmentalize what has happened into two major categories, execution missteps and items that are part of the company's transition to growth. First, the execution missteps, in our North American Mailing business, the majority of the shortfall was driven by poor sales execution in our field channel with our legacy products, which impacted revenue as well as the segment's bottom line. In our Global Ecommerce business, we experienced some start-up system stability issues with our domestic shipping APIs. This not only put us behind in ramping up volumes, which are high margin, but also required additional investment to remedy the situation. And as a result, we have seen a significant improvement in our stability and are now close to industry norms. And importantly, we have built significant demand, which we will realize in 2018. Also within Global Ecommerce, we resolved a vendor contractual issue related to cross-border operations and incurred marketing expense with a specific client, both of which negatively impacted our bottom line. We did not anticipate these events entering the quarter. The second category impacting the quarter are items that are part of…

Thank you, Stan. During the third quarter, we validated that the next chapter of revenue growth will come from shipping, parcels and address verification, all of which transcends our entire business. And while it's disappointed in our financial results in the quarter, I'm encouraged about our path forward as we continue to transform our company. With the Board of Directors and the management team continuing to focus on enhancing shareholder value, the board believes now is the time to explore a broad range of strategic alternatives and have the potential to further unlock shareholder value. We have made substantial progress against our strategic objectives and with the acquisition of Newgistics, our portfolio has moved towards growth. We are committed to improving our margins and improving efficiencies throughout the business by taking out $200 million in spend. While we have accomplished a lot, there's clearly more to do. Operator, we will now open the line for questions.

[Operator Instructions] And our first question will come from Shannon Cross with Cross Research. Please go ahead.

Thank you very much for taking my question. Can you talk a bit about sort of the longer-term cash generation characteristics of the model as it stands? Given the need to invest and the growth areas and then what you're seeing in terms of some at least near-term pressure on the Mailing business. I'm just trying to think about – the company typically was a pretty significant cash flow generator over the years, and is this where we're going to switch to more of, I guess, an investment vehicle? I don't know. And then if you can just talk a bit about your thoughts on dividend and uses of cash over time.

So Shannon, let me start and then Stan will add. The way I think about that is exactly the way that we laid it out in 2014. So if you think about those businesses, we laid out our long-term revenue growth rates, they still hold. The margins still hold. So as we think about the cash flow, it's simply a derivative of the revenue at the mix that we suggested and the margins that flows. So that's how we think about. There is nothing that's changed in our thinking. In terms of the dividend, the dividend continues to be our priority. It's part of our investment thesis. Again, nothing has changed in terms of our thinking there. And I would point out, while the earnings were less than what we expected, we're still generating a reasonable amount of cash. We had $109 million of cash. So I think it's a fair question, given all the things that are moving around for sure, but the short answer is our thinking really hasn't moved.

Yes, and I'd add to that, Shannon, that in terms of longer-term cash generation. I think if you take a look by our business segments, within SMB mailing, we've seen that equipment sales did not have a good quarter this quarter, but if you look at the trailing 12 months, they were up slightly. And I think that's a first indication of some long-term recovery in streams, and streams are what drive a lot of that cash and profit. If you look at our Software business, had a good quarter this quarter, and you saw the EBIT margin pop up. When it performs well, it also throws off a lot of cash from profit. And then in Global Ecommerce, we steadfastly maintain, that that's going to be an investment strategy ahead. And we had 28% revenue growth. But we do expect to start yielding profit out of this model. And adding Newgistics to the mix, I think enhances our value proposition out to our clients. So I look at where we're going to invest, we're going to continue to invest in our product set and particular, in Global Ecommerce, though we expect to see an improving profit portfolio along with Newgistics and the shipping APIs as they ramp up.

The $200 million of expense takeout obviously has a meaningful impact on cash. Thank you for your question.

Okay. And then can you just give a little bit more detail on some of your thoughts on strategic alternatives? Is this precipitated obviously, I'm guessing, from the numbers that came out today and then sort of the trajectory you've seen last couple of quarters, but also, I mean, were you approached by anyone? Just if you can give us a little bit more there and how significant, I guess, change are you willing to undertake?

Sure. So obviously, I'll be a little circumspect about what we say. But let me kind of answer that, in terms of the first question, it was not because of a quarter or even a year. If you think about this issue, the first thing that I would say is in the Board has been remarkably disciplined since I've been here in terms of looking at a breadth of strategic alternatives. So it begs the question of what's different. So as I've said, it wasn't the quarter, it wasn't the year, but what's different is the company is different. And if you can dimensionalize this in many different ways, you can start in the income statement with the top line. Five years ago, this was a company that was a melting iceberg, it was mail centric. Today, this is a comprehended the weighted average growth of the portfolio is plus 3 from minus 2. If you look at the product portfolio five years ago, we didn't really have any new products that were contributing to growth. Now we have a meaningful contribution to growth. We've taken out $300 million of expense underneath that. We've got fundamentally different business processes, different technology. So the short answer on why now is it's a different company, and that's what provoked the broader consideration of strategic alternatives. In terms of what's on the table; everything is on the table, but through the lens of increasing shareholder value. So that's kind of what provoked our thinking that's how we're thinking about it going forward.

Okay. Thank you very much.

And our next question will come from Ananda Baruah with Loop Capital. Please go ahead.

Hi, guys. Good morning. Thanks for taking my questions. I apologize for the background noise. So Marc, just sticking with the strategic alternatives, everything on the table, looking through the lens of creating shareholder value. Could you maybe just sort of tease out a little more context around shareholder value and potential long-term synergies in that regard between the traditional Mailing business as you see it and the aspects of the business, the newer parts of the portfolio that you talked to on the call as being the growth drivers going forward? And just as we sort of try to frame for ourselves what – how you guys might be thinking about it. I'd love to get some context there. And then, I have a follow-up as well. Thanks.

Sure, it's a really good question. So in one sense, if you think about the traditional mail business, we continue to believe that the secular drivers in mail will continue, that market will continue to decline. That's become a different dynamic with the new products. So if you ask what ties the traditional business, the SMB business, with Pitney Bowes going forward, the new product, CSD2, is the connective tissue and particularly around shipping. So if you think about the new product, it is a software-as-a-service, digitally connected multi-application, mail shipping, plus lots others. So our thinking is kind of bifurcated in terms of how we think about that business. So if I would have told you five years ago that SMB was a software-as-a-service, digitally connected multi-application, you would have – that would have been a head-scratcher, but that's precisely what it is today, shipping ends up being the connective tissue. So let me give you a couple of examples where we're sharing technology across because it continues to be an important thesis. Things like career libraries, which are important throughout the entirety of our businesses. API technology, which was so important and Hackathon, which was so important, as Laila mentioned in her e-commerce services businesses. So what we see is while the secular issues in mailing, we don't believe it’ll change. The technology that we use “our newer businesses” we're driving into that SMB business, which is why I’ve said that with the CSD2, the reinvention of the mail. I think the Hackathon is a wonderful illustration of the points. If you think about the Hackathon that we completed a couple of weeks, I guess, a month ago at this point, think about having 2,000 developers from around the world, developing 65 applications for our 1 million SMB clients, that's a tremendously powerful dynamic. And as I’ve said in my remarks, it is a game changer. So what you see is kind of – you don't see a change in the secular dynamics, but you do see very pro evidence of how we invented the business. And I think the question that Shannon asked is this is a different company.

Got it. That's helpful context. I could drill down into that, but I’ll save that for later because I want to get a couple more in. With regards to the execution related dynamics that impacted the margin this quarter, I guess, how many quarters or what time frame do you think until those normalize; those aspects of the margin impact?

So I think SMB sales execution improves in the fourth quarter period, full stop. I think if you look at the dynamics in Global Ecommerce, two of those three were clearly one-off issues in terms of the marketing issue as well as the settlement with client. The API issues, we've stabilized that technology. It is now performing as we want. That being said, you are not going to get a lot of shippers coming on that platform in the fourth quarter in one of the busiest season. So what we're encouraged about and I don't want to get lost in this conversation is, we're seeing tremendous demand for the APIs. And even while the quarter fell short of what we expected, it still grew 50%. So it's an important growth dynamic. But while the technology has stabilized, it's going to be January when we realize the demand but customers haven’t blinked in terms of their willingness to consider our technology.

Great, so going into next year, it sounds like sort of the execution-related subject pretty much deep through and that in fact will kind of be put…

I would say the execution has already improved. By the way, across the board, in all of those dynamics, it’s just we're not going to be able to realize the demand until we get through the holiday season.

Got it. Thanks. And then last one from me the $200 million of new cost savings initiatives. Now that's growth since 24 months. But should we develop any expectation that some of that could be passed to the bottom line every time? Or is that really more about optimizing in scale?

The answer is some will go to the bottom line and some will come through scale. This is $200 million of incremental spend actions above our 2017 run rate, and those actions are going to take the form of both program and people related spend actions. So we’ll make investments in things like Global Ecommerce. This is a gross reduction. Some of that will flow to the bottom line, some of that will go back into the business and we'll update you more as we look at next year's guidance.

Just off of that one, do you expect to recognize and fairly ratably over the 24 month? Or is there a cadence that we should be aware of?

We will go through that as we do our guidance for next year. Obviously, we will take a big chunk of this in 2018. But we have not made that determination exactly yet.

Got it. Thanks so much.

And our next question comes from Kartik Mehta with Northcoast Research. Please go ahead.

Good morning Marc and Stan. Maybe a bigger picture question, Marc. In any given quarter, as you look at the business, how much visibility do you have into revenue and earnings? And the backdrop of this question is, you’ve had issued to lower guidance several times. And each time you thought things were changing, execution was improving. So I'm just wondering from your perspective, how much visibility you have both for revenue and earnings?

On revenues we have good visibility this year on revenue. So I mean, we're kind of right in the bandwidth of what we called in the beginning of the year, if not, slightly above and that's why last quarter moved to the upper end of the guidance. Obviously, margins, we've not had so much visibility. Some of that around the mix of the business changing, some of it is around – we see opportunities to look after it. And some of it, candidly, like we saw in the quarter, some poor execution. So I think it's a different picture than it was a couple of years ago, where we didn't really have the revenue visibility. I only got, I would say, reasonably good revenue visibility, and it's just we got to get a little tight around the margins.

And then Marc, on the strategic alternatives, I realized in your stated comments you said you do not have a set timetable. But I imagine internally, you must have some type of timing as you don't want uncertainty, especially with all the employees and people trying to do their jobs and execute on it. As you look at the process, how do you think the process will go through in terms of you looking at alternatives and thinking about when to execute on them?

Listen, I'm not going to talk about the process or the alternatives beyond what I already have. As I said, I think it's a different company. It's what provoked the question from the board, the exercising of broader strategic alternatives. The process will go as it goes, but I'm not going to comment more deeply about it.

And then just one last question Stan, as you look at the Global Ecommerce, you talked about some one-time hit. What were the margins in that business, if you took away the one-time hits and just looked at the business this quarter without those.

I think if you took a look and kind of excluded the two one-time events, you'd see a profitability in range with what we've reported in 2Q. And again, when we look at what's happening in Global Ecommerce, the 28% revenue growth was across all of our properties, if you will. So we've gotten good lift on the revenue side. Those two items, would put us back into a profit range of roughly what we reported in 2Q. But I think one of the impacts here why we're not seeing that lift more is the shipping API ramp. So while we address the stability issues and we're approaching industry norms. Those are highly profitable and that ramp has now shifted to the right and as we go into fourth quarter, we do not believe that we will see a material shift in fourth quarter simply because people are in the middle of the holiday season. But the stability of the platform has definitely improved. We've added 14 new offerings. The volumes were up over 50% from 2Q. So we are confident in the platform. We're confident in the offerings. We believe we'll see that ramp somewhat through 4Q, but more into 2018.

I think it goes back to the first question you asked, the visibility around the margins. When you're in a new business like we are with APIs, I mean, new last year so, and likewise trying to scale software, it's pretty hard to predict exactly how they come online. And I would plead guilty of being off a quarter or two. But I think the common theme is that directionally, we're getting it right. But we are generally a quarter to off of what we had anticipated. That's shame on us. That being said, to Stan's point, given the number of moving pieces and I encourage you to kind of look back on the amount of change that's been reduced in the Company over the last five years between the portfolio, the business platform, the new products, there's been a lot of moving pieces to manage. But I don't, I'd hate for the underlying trends to get lost in the quarter-to-quarter visibility.

I would just add. The way I think about this is we're 12 months into a start-up on the shipping APIs. It's really what it is. It's coming from zero to something. And I think Marc is right. We're guilty of being off by a couple of quarters. The one thing that I think gives us the more confidence is there has been no wavering in the market in terms of our clients and partners and their excitement about what we are bringing to market. So while they may not be willing to shift volumes to us during the holiday because of some of the stability issues, we do have a track record of running SaaS platforms in the ecommerce business at or above industry norms. And we're getting this platform to that level as we go through fourth quarter. So the demand is there in the market, and we feel confident about the traction we're getting with clients.

I mean you look at the GSP platform that we've run successfully now for five years. By the way, when I started, we had stability issues not unlike stability issues that we've been kind of there. Now if you look at the stability of that platform, it's as good as anything in the industry.

And maybe just one last question for you, Stan. The confidence level you have for the fourth quarter in terms of revenue and margin, just considering what has happened in the last couple of quarters.

Look we are confident because we put it out there as we look at fourth quarter and I think if we go by business. So let's start with SMB. We have a new product that's out there. It's been very well-received in the marketplace. We'll work through these sales execution items, and that should help as we head into fourth quarter. Global Ecommerce, this is the biggest quarter for that business. We're coming off of very strong revenue growth here in third quarter and look for that to be a contribution. And while we haven't talked a lot about Software here today. Software had the best quarter they've had in a long time. Now we're cautious when quarters have trend make but we had good performance in the indirect channel for Software and we saw revenue and EBIT margins that we have not seen in quite a while. Then we look at our Presort business, also grew and contributed as DMT, that's a little bit more of a volatile and as lumpy with the overall business. But if you look at where we are and what we did with the overall corporate spend, we're confident in fourth quarter on the number we put out.

And I think I would answer the third question.

I think you can get lost in the story in the quarter-to-quarter stuff. We’ve certainly looked at that and I would tell you, we die on the field, do the best the can every 90 days. I'm not telling I don't care every quarters, I do. That being said, I think the longer-term trend, are as important as we are contemplating the creation of value.

Thanks very much.

And the next question will come from Allen Klee with Sidoti. Please go ahead.

Yes good morning. So you API business could you help us understand a little of how you go-to-market to sell that and type of customers that you're targeting?

Sure. We work with shipping partners. So there a lot of technology companies out there that help small and medium sized retailers primarily, warehouses as well ship from an e-commerce perspective, and that software is something that we connect our APIs into. And we then work with those partners in an indirect way to help influence small and medium retailers to move on to their platforms. So we are targeting shipping, UI, interface partners who have access to small and medium businesses, who have access to warehouse clients, who are doing high-volume shipping in a warehouse environment. And then we work with them to help them grow their business. That's a model we feel very good about and it's working well for us. And so that's the client group. It makes it a little bit more of a process from a sales perspective because we sign up the partners and then we help them sign up retailers. So it takes a little bit longer from a sales process perspective and that's some of what we're feeling right now but those relationships are strong. And I think that it is part of our value propositions that we're offering something that is not just an API technology, but an end-to-end solution that leverages all of Pitney Bowes, from financing solutions, to parcel protection, to the data science we can embed in that, to talk about guaranteed or date certain delivery. Those are all aspects of our solution that go well beyond just the traditional shipping API provider.

I’ll just double click on one point. We are very partner-centric and we are dead focus on making our partner successful in this marketplace.

Great, thank you. And then in the North American SMB segment, you closed a lot of revenue as recurring revenue. Sometimes if a quarter is light, it then has a lingering effect. So how do we think about that in terms of how much of the timing issue is short-term versus maybe longer term?

The way that I think about those the trailing 12 months. I mean so if you go back to second – I mean, you actually go back to the first quarter of 2016, we pulled ahead a lot of demand because of the business platform lending in the second quarter. We sold virtually nothing in the second quarter literally. Third quarter, we ended up selling a lot. And so what you see in the last seven or eight quarters is there's a lot of noise kind of left and right in terms of the – where demand is actually set. So the way that we think of this in terms of the impact of equipment sales on streams is we work at the last 12 months, Stan made the comment, if you look at the last 12 months were essentially flat to up a little bit. So that's how we think about that.

So maybe just go ahead. It was – just maybe if you could explain again kind of what caused the disruption or the miss at this quarter and why you think it's temporary?

Well – I mean, so first of all, if you go back to third quarter of last year, there were some large deals that we had in the third quarter of last year. That always obscures the year-to-years. We had some large deals in the third quarter this year, but not as many as last year. And our deal closure on large deals was not as good. So because it's somewhat isolated and you can see it, that's why we have confidence, it gets back on the horse. We entered the fourth quarter with a slightly higher backlog, they are higher backlog then what we would have typically seen. That tells you the demand there, it's just slightly off. The other thing and Stan mentioned in the comments that you can kind of glossed over, but it's fairly important. So if you think about the last four or five years in the low and mid range, we haven't had I mean, last four or five years, probably last 10 years, we haven't had new technology to sell. So the normal sales motion there was to go to a client and say, Mr. client, I know you had this technology for 48 months, please sign up for another five or six months. That's tremendously profitable. You recognize a reasonable amount of revenue in the short-term, but obviously it doesn't do anything around your long-term asset base. So with the new product in the third quarter, it's a different selling motion. So wasn't – we're going to extend your lease. Here's a totally new value proposition, new piece of equipment, which you recognize less revenue in the short-term, slightly less margins, but it rebuilds your asset base. So that contributed as well.

Okay. And then lastly, on Newgistics, can you help us in any way to think about kind of what the opportunity is in terms of revenue growth rate and margin profile?

Yes, let me talk a little bit about that. We – this does a couple of things from a market perspective. So we've always talked about our Global Ecommerce business as being in a $7 billion market. With the addition of Newgistics, we moved that to a $20 billion market with the addition of a lot more U.S. opportunity around fulfillment, returns and delivery. It keeps us in a similar growth range from a market perspective. So we think of the growth rate of the market we're now in across e-commerce, including Newgistics, the 14% to 18% growth market. So that's sort of the range we expect to be in going forward. Obviously, in Q3, we were well above that, but that's the range we're targeting. As we bring these businesses together, we see a lot of the synergy and that will contribute both on the bottom line in terms of cost savings and margin synergies, but we also see a tremendous amount of revenue synergy and revenue upside. So one example of that is just if you think about the simplest of revenue synergies, which is the cross-sell opportunity I mentioned it in my remarks, Newgistics has about 500 retail clients. We have the opportunity now to sell into those clients, cross-border solutions as well. On the other side, we've got 250 retailers on our cross-border platform, we now have the opportunity to talk to them about a broader set of services around digital solutions, returns, delivery and fulfillment. At the same time and probably more overlooked, we have many, many Presort clients who've been using Pitney Bowes for mailing sortation over the years and they’ve been asking us to get into the parcel sortation market. We can use the Newgistics network to serve that market as well, and so that presents a nice cross-sell opportunity for us going forward, too.

Okay. And one other thing, in e-commerce, in your comments, I heard that while you're in investment mode now and it's losing money that you have an expectation of improvement of that in the future. Can you help us – help quantify that? Does that mean at a certain point, getting the profitability that you could mention?

I'll reiterate what Marc and Stan had both said. While we still see growth opportunity, we're going to continue to invest behind it. And with the addition of Newgistics, we see a cluster of opportunity to continue to invest. So we're going to continue to look at that in a very stringent way around the ROI and net investment, but we're going to continue to make investments there. I would point to two things. One is if you look at the year-to-date EBITDA of this business, it is EBITDA positive, while Q3 was not our best quarter from a profitability standpoint. We are performing EBITDA positive year-to-date. As we said before, as you put volume into these businesses whether it’d be our current cross-border business or Newgistics, that really does lend to higher margins. We've seen that historically in the fourth quarter. We expect that as we continue to scale this business, we'll see more of that over time.

Here is the way I think about, and rest assured that Lila and Stan and I have this conversation almost on a daily basis. So the first way I think about it is we guided long-term margins in this business. There's nothing that has changed about our view of the long-term margin opportunity in this business, nothing, point one. Point two, as long as we see an opportunity to get what I would say as nonlinear growth, and I would consider 28% nonlinear versus the market rate, we'll continue to invest in front of that. As the growth rate begins to moderate towards the mean, towards the market then the profitability will reach more of a steady state. So that's kind of how we think about it from our perspective. But understanding fundamentally this is a scale business and we are in a land grab right now where we believe we have competitive advantage, I'm going to grab as much land as we possibly can. So that when the growth does moderate to the mean, that we've got as much scale as we possibly can.

Thank you.

And the next question comes from Glenn Mattson with Ladenburg Thalmann. Please go ahead.

Hi, most of my questions have already been asked. But I'll say curious as regards to the strategic alternative review. Is it also going to be a review of the capital allocation and most specifically, do you expect to review the dividend policy in that process?

Listen, we said everything is on the table. But I'll go back to what I said. It's the dividend – there's two important thesis that we have going forward. One is the dividend continues to be an important part of our investment thesis. And secondly, we are committed to have investment grade ratios. So while strategic alternatives could touch a lot of replaces, I think those are – those appear to me to be very steady.

Okay, thanks. That’s it from me.

And at this time, we have no further questions in queue.

So listen, first of all, thank you for your time. Obviously, a lot to digest and Adam and the rest of us will be around. We are, for obvious reason, going to be fairly circumspect about talking much more about strategic alternatives. We'll let you know when we have more to say about that. But I think we've pretty much exhausted everything that we're going to say at this point. So while we were disappointed about the quarter in terms of the financial performance, I do think I keep on going back to the fundamental point, that this is a different business. It's a business, but now is oriented towards growth, that's driven by parcels and shipping and addresses, and we remain very confident about the future for this business. Thank you very much.

Thank you. That does conclude the conference for today. Thanks for your participation, and for using AT&T teleconference. You may now disconnect.