Research Solutions, Inc. (RSSS) Q2 2023 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the Research Solutions' Second Quarter 2023 Earnings Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to John Beisler, Investor Relations. Please, John, go ahead.

Thank you, operator. Good afternoon, everyone and welcome to the Research Solutions' second quarter fiscal 2023 earnings call. On the call today are Roy Olivier, President and Chief Executive Officer; and Bill Nurthen, Chief Financial Officer. After the market closed this afternoon, the company issued a press release announcing its results for the second quarter of fiscal 2023. The release is available on the company's website at researchsolutions.com. Before Roy and Bill begin their prepared remarks, I would like to remind you that some of the statements made today will be forward-looking and made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied due to a variety of factors. We refer you to Research Solutions' recent filings with the SEC for a more detailed discussion of the risks that could impact the company's future operating results and financial condition. Also on today’s call, management will reference certain non-GAAP financial measures which we believe provide useful information for investors. A reconciliation of those measures to GAAP measures are included in the earnings press release issued this afternoon. Finally, I would like to remind everyone this call is recorded and made available for replay via a link on the company’s website. With that, I would like to turn -- now turn the call over to Roy.

Thank you, John and thanks to everyone joining us today. As I review and think about our Q2 results, I'm generally happy with the 30-plus percent year-over-year growth in our Platform revenue and the continued growth in our Transaction revenue and the cash flow and EBITDA performance versus the same period last year. We are experiencing some headwinds in terms of net ARR growth, in what we call, new bookings which is defined as a new platform and a new transaction customer. While our net renewal rates continue to be over 110%, we have seen some increase in churn in smaller customers related to the general economic conditions and uncertainty. The overall net ARR growth is behind where I'd like it to be but it is a big improvement over Q1 in terms of our new bookings. Transaction revenue growth was strong for the second consecutive quarter and does not include any revenue from the FIZ acquisition which will start to show up in Q3’s results. We’re very proud of the $1 million in EBITDA improvement and the $1.3 million in cash flow improvement in the first half of ‘23 versus the same period in 2022. I will provide some more detailed comments about the state of the business after Bill walks you through the results in more detail. Bill?

Thank you, Roy and good afternoon, everyone. Total revenue for the second quarter of fiscal 2023 was $8.7 million, a 10.7% increase compared to the second quarter of fiscal 2022. As noted in our press release, this represents our second consecutive quarter of double-digit revenue growth. Platform revenue increased 31% to $2.1 million, primarily driven by a net increase of Platform deployments over the last 12 months, including 34 net new deployments in the second quarter and upselling of current Platform customers. Annual recurring revenue or ARR, at the end of the quarter stood at $8.8 million, up 5% sequentially and 28% year-over-year, reflecting our continued sales and upselling efforts and low churn of existing Platform customers. We also had 3 sales in the quarter related to our newly launched Curedatis product. Please see today's press release for our definition and use of annual recurring revenue and other non-GAAP items. As I turn to Transaction revenue, I comment that the numbers to follow do not include any impact from the FIZ transaction that was completed in our fiscal Q1. This customer acquisition will begin impacting transaction revenue in our fiscal Q3 and I will talk more about that later. Transaction revenue for the second quarter was $6.6 million compared to $6.3 million from the prior year quarter. This represents 5.4% growth year-over-year and is the second consecutive quarter of growth for the Transactions business. In the past, we had noted wanting to see 2 consecutive quarters of growth prior to saying that we could be well positioned for growth in this segment going forward. We are now seeing signs that, that trend can continue as we are seeing growth in both and academic paid Transaction counts. Transaction customer count for the quarter was 1,223 versus 1,179 in the second quarter of fiscal 2022. The increase was driven by an increase in corporate customers. Gross margin for the first quarter was 39%, a 300 basis point improvement over the second quarter of fiscal 2022. The increase is due to the revenue mix shift towards our higher-margin Platforms business which now constitutes 24% of the revenue and 55% of the business' gross profit. With some limited exceptions which I will note later in the call, we see no reason why the trend in improvement in corporate gross margin percentage cannot continue as the mix of Platform revenue continues to grow. The Platform business recorded gross margin of 88%, a 240 basis point increase from the prior year quarter due to proportionately lower labor and software costs. I expect that for the foreseeable future, we can continue to maintain Platform gross margin at 85% or above. Gross margin in our Transaction business was 23.4%, similar to the prior year quarter. Our expectation is that Transaction gross margin will continue to stay within a range of 23% to 24%. Total operating expenses in the quarter were $3.7 million compared to $3.3 million in the prior year quarter, due primarily to higher noncash stock-based compensation costs and higher discretionary sales and marketing spend. I want to take a moment here to explain the stock compensation expense as it is notably higher for this quarter. As many on the call are aware, starting with this fiscal year, we ended the prior Restricted Stock Program for executives and installed a new Long-Term Equity Bonus program. The fundamental change when we did this was to eliminate a program where executives received restricted stock as part of their quarterly bonus and replace it with a program designed to better align executive compensation with stockholder interests. This involved the granting of 1.8 million restricted shares across the executive team which vest in 20% increments when the stock attains and maintains price levels of $3, $3.75, $4.50, $5.25 and $6 per share within the next 5 years. If the stock prices are not attained, the shares do not vest. Conversely, if the stock fully vests at $6, this would imply an over $100 million market cap increase with the payout to executives being under 10% of that amount. Restricted stock grants such that these require a third-party valuation to determine how they are expensed. The high volatility of our stock drove the value of the grant upwards and it has been determined that the value of the grant is roughly $2.5 million to be spread over approximately 2.6 years. Thus, this is the amount that we will expense during that time. The net of all this is that from a stock compensation expense standpoint, we are presently dealing with the runoff expense from the old plan while effectively accelerating or pulling forward some of the expense associated with the new plan, as the expense for the new plan is weighted more earlier than the 2.6-year period and will eventually expense to 0 and not continue indefinitely. In addition, in Q2, we also had our annual Board Stock Option Grant which served to increase the compensation expense as well. For Q3 and Q4, I expect stock compensation expense to be approximately $500,000 for each quarter, $300,000 coming from the new plan and $200,000 coming from the runoff of the old plan. In fiscal year 2024, we should start to see the expense come down from these levels. I apologize for the long-winded explanation there but we thought it important to discuss it given the expense level in Q2 and also to reiterate the point that we believe the new plan over the long term will prove more beneficial for our shareholders. Turning back to profitability. Net loss for the quarter was $256,000 or $0.01 per share compared to a net loss of $482,000 or $0.02 per share in the prior year quarter. Removing the effects of the new restricted stock plan, our net income would have been roughly or close to breakeven from a GAAP perspective. Adjusted EBITDA was positive $201,000 compared to a loss of $165,000 in the year ago quarter. We have now generated over $600,000 of adjusted EBITDA in the first 6 months of the fiscal year compared to a loss of over $300,000 in the first 6 months of our prior fiscal year. Turning to our balance sheet and cash. The increase in adjusted EBITDA has been backed up by an increase in cash flow which I think speaks well to the quality of our earnings as they grow. Cash and cash equivalents as of December 31, 2022, were $11.3 million versus $10.6 million on June 30, 2022. We have now generated over $1 million of cash flow from operations in the first 6 months of our fiscal year. There were no outstanding borrowings under our $2.5 million revolving line of credit and we have no long-term debt or liabilities. As we look ahead, I wanted to make everyone aware of a few items. First, on January 1, we moved all of our employees in Mexico to a direct hire relationship. We expect this will result in approximately $400,000 of additional annualized cost and may cause a slight dip in gross margin in Q3, before it starts rising again. Second, commencing January 1, realizing revenue from Transactions related to our FIZ customer contract acquisition. It is too early to provide a projection of the impact of these new customers but we do think it gives us an opportunity to continue to push transaction growth upward, perhaps hitting double-digit growth rates in that segment. There are some unique expense items that will be hitting us in Q3. As a result, I expect our operating expense level to be at its highest level for the year in Q3 before coming back down again in Q4. Adjusted EBITDA for Q3 will likely be flat to down from Q2 but then showing upside in Q4, resulting in a very strong finish to our fiscal year. I'll now turn the call back to Roy. Roy?

Thanks, Bill. In the next few minutes, I'll give you an overall update on how the business is working and how that will translate into long-term value creation. First, I'd like to discuss marketing and sales. As you know, we brought in a new Head of Marketing in 2022, who has built out a new team that is starting to execute around driving marketing qualified leads or MQLs. We have, for the first time, launched several programs around webinars, newsletters, product release notes and social media. These programs are driving more MQLs and are generating both new, new sales and upsells. While there's lots left to do, I'm very excited about the progress in this team in terms of driving activity in QLs and sales. Regarding sales, we showed an improvement in the new, new sales team for Q2 versus Q1 but we are still behind our internal plan. Upsells and existing sales continue to show strong results as reflected in our net renewal rate continuing to be over 110%. We've seen an uptick in churn primarily from businesses shutting down or being acquired. You may recall that our target for net ARR growth is over $500,000 a quarter and we are not at that level and I don't expect to be at that level in the second half of the year. That said, we are doing a lot of great things in the sales teams in terms of training, better materials, better products, more MQLs and upgrades to our business development teams that drive leads. I think in the long term, that will help drive more results as the economy continues to improve. We feel that we are well prepared to regain momentum and accelerate sales as the market recovers. From an operational perspective, we made many improvements to customer onboarding, technical support and transaction operations that are driving improvements across the organization. This is reflected in our NPS score remaining over 60 and the fact that we can deliver the increase in Transactions reflected in the year-over-year growth in that segment with no new headcount. Turning to product releases or reference manager products -- I'm sorry, turning to product releases, our Reference Manager products, specifically References and References Pro have had strong early adoption. We've upgraded over 125 accounts which has helped us maintain the high net renewal rates I referenced above. Curedatis' launch is going well and we are tracking with our rather conservative plan for '23 and have over 200 pipelines -- I'm sorry, have over 200 opportunities in the pipeline. We've also continued to see positive traction with our add-in products, specifically our outlook and word add-ins as well as our browser extensions. All of this has resulted in a nice uptick in active users. Our active users at the beginning of fiscal '23 ran in the $22,000 a month rate. Most recently, we are seeing almost 40,000 active users in the platform which helps explain some of the Transaction year-over-year growth. The Transaction business in Q2 improved primarily from significant year-over-year growth with the academic and government users. The FIZ implementations and customer onboarding is complete but not reflected in the Q2 numbers. Preliminary numbers indicate that we transferred almost 70% of the FIZ customer base which has resulted in early signs of strong revenue growth in January. In looking at the January numbers, we are seeing similar academic and government year-over-year growth as Q2 plus strong corporate growth based on FIZ and the aforementioned increase in active users. We continue to be very active in M&A opportunities and have walked away from 2 opportunities that were in the IOI or LOI stage. We continue to be very focused on improving our overall product value through integrating an AI, NLP or artificial intelligence, natural language processing solution into several points in the research and workflow. Getting the right deal done remains our highest priority. As I mentioned in my earlier remarks, I remain cautious about the outlook for the next couple of quarters in terms of net ARR growth. However, this does not change my view regarding long-term opportunity for our business. I'm more excited than ever about the activities that we are doing in sales, product, marketing and M&A and remain confident in the value of our products -- and the value that our products bring and will continue to bring to our customers. I think we are really well positioned to deliver shareholder value as the general economy and markets improved and we are poised to see growth on both our top and bottom lines. With that, I'd like to turn it back over to the operator for Q&A. Operator?

[Operator Instructions] The first question comes from Richard Baldry from ROTH Capital.

I know you guys are newer at the helm of the company. I’m curious if you know from the Board level, the chatting, what has the pattern been historically for macro pressure in churn? I would assume that in the short term, people can make decisions to kind of step back briefly but this seems central to what most of your customers do. So how quickly do they tend to come back afterwards, what sort of pattern should we think about there?

Yes, this is Roy. I think that's a great question. And we did some research on public companies, specifically the publishers and what they went through in the last kind of economic downturn. And all of them remained pretty strong. They maintained maybe a few points below their previous growth rates and then they bounce back very quickly, because a lot of the organizations don't stop doing research and don't stop having a need in a down economy. And I think that is reflected in the churn that we are seeing are typically our smaller customers. They're very, very, very small. So when we look at logo count, it’s a little higher than we would like. And then the dollars are not even anywhere close to our average revenue per sale. So we are seeing a little bit of an uptick. We are concerned about it but it is not happening with larger, more established accounts. It’s primarily very small accounts. Anything you want to add, Bill?

Yes. Just to add on to that, I think the larger accounts that have been with us for a long time, they do actually achieve and realize the savings associated with being on the Platform. So it's something where they're actually saving money by being on the Platform. And so I think we're less concerned about issues there and losing customers there. I think more of the pressure is just getting new customers to adopt the Platform in the environment.

Then can you talk a little bit about the successes you’re starting to see early in the vigilance side. How is that working in the sales motion? Are you going to put dedicated people on that as you start to see the successes and have more referenceability? Can your existing group kind of handle both products at once?

Yes. We think that the model we have now which is the existing group handles the products with the support of a product specialist is the right model. I think as we grow, we may get to a point where we want a dedicated sales team. But right now, certainly, our hunting and upsell teams of over a dozen people are good in terms of setting up appointments and getting interest. And then we have a product specialist that goes in, does the demo and watch the customer using the product. So I think that's certainly working at this point and I don't expect that to change between now and the end of the fiscal year.

And then with the FIZ Karlsruhe type of acquisitions, partnerships, how do we think about what should happen with sort of active customer counts starting this year -- this calendar year and sort of the impact that could have on ARR going forward?

Well, I think in the short term, it will have a very little impact on ARR because these are primarily transaction-only customers. So the -- 2 things are happening. Number one, we're onboarding them and they're starting to buy articles from us which I think will be reflected in a nice bump in year-over-year growth rates in the Transaction business. And the Transaction business, the incremental cost to deliver those is very, very low. We don't need to bring on any incremental headcount to do that. So I think that will nicely flow to the bottom line. On the ARR side, all of those customers, we look at as an opportunity to upsell into the full Platform. And when we think about what does that look like in the calendar year, probably very little impact. But over the next 1 to 2 years, I think we'll convert a percentage. I don't know what that percentage is but as a reminder, the company Research Solutions in general converted 60-plus percent of their existing transaction-only customers over 2.5 to 3 years. So we could, if we execute, convert a material percentage of them.

The last thing would be the first half cash flow from ops has been pretty strong. Was there anything sort of unusual in that? Is there any seasonality we should be thinking about? And how do you think that plays out sort of in the second half?

Bill, do you want to take that one?

Yes. No, I think there's not much unusual in it. I think, again, there's a couple of things that we've done. One is that we had made prepayments to some of our publishers and they previously were occurring about 3x a year. So that was causing some lumpiness in the cash flow. We've redone those arrangements to make them 4 times a year in equal increments. And so that's helped to see things along. And I think while there's some variation in prior quarters, I think that's going to bring less variation as we move forward this fiscal year. We are getting a little more interest on our cash but that's not really contributing the vast majority of the gain. And I will say, usually, seasonally, the toughest quarter is Q1, because that is when we are paying out both year and sales bonuses for overachievement. And we sort of got through that in Q1, was not really applicable in Q2 and won't be applicable Q3 and Q4. So I think we could see still some seasonality over time. I think it will align, as I said, very closely with EBITDA but I don't see a reason why we can't continue to produce good cash flow for the rest of this fiscal year.

Congrats on the quarter.

The next question comes from Allen Klee from Maxim Group.

I was curious how you think about what percent of incremental ARR drops to EBITDA?

Bill?

Yes, that's a good question. Again, I think really, the vast majority of it at 85% gross margin, right? We don't need a lot of additional G&A type costs or support cost to support that additional dollar of ARR. So it is our quickest path to increased profitability is increasing the ARR dollars. We have shown that over time. And as we see that gross margin go up that we can support additional revenue there without a much more proportional increased cost. Is there any additional dollars that sort of dropped kind of below the gross margin line, it's just a question of are we reinvesting those or not. And if you really sort of look at the expenses, we are making some intentional uplifts in expense, not too material but some uplift but they're in the right areas. They're in sales and marketing. They're in product. It's not in G&A and things like that. And so -- so again, it's going to be sort of commensurate with those gross margin levels.

Got it. And I heard -- I was a little confused on something. I heard that as you add new customers transactions, there’s very little cost to that. So a lot of it drops to the bottom line. But I thought that the Transaction gross margins were kind of you’re saying 24% to 25%. So could you explain what you meant by what you said?

Yes. Just to clarify, I should have said the gross margin from the trend -- the incremental Transaction revenue we're bringing in will mostly drop to the bottom line because we're not bringing in any incremental headcount to handle the growth. It's being handled by the current staff and the team. Bill, I'm sorry, I interrupted with you.

Yes. I would just say, keep in mind, a lot of that gross margin is influenced by the margin on the actual article itself which is a very tight margin. And so really, that gross margin could swing a little bit favorably to us because the labor component is -- that is needed to also process those is not growing. But again, you have to remember the vast majority of the costs associated in that business segment is the royalty back to the publisher. But all that said, from just a total EBITDA perspective, the more transactions grow, there's still many coming into that kind of margin range but more actual EBITDA dollars will flow to the bottom line.

Okay. So the way to think of that is of the 70% of FIZ base business that you transferred over would follow those dynamics?

Yes. So it's going to be similar gross margins. However, again, the more the Transactions grow, it's -- you're going to drop more dollars to the bottom line.

[Operator Instructions] The next question comes from Peter Rabover from Artko Capital.

I had a bunch of questions. One is the more housekeeping on the cash flow. It looks like you -- majority of that came from the lowering of the prepaid royalties. Is that more of the lumpiness? Or are you expecting that number to go down in general going forward? So that’s one.

Yes, sure. So when you look at that, there's basically -- and the history there. You look -- there's 2 things that are causing the variation when you look year-over-year. And again, I think this is going to smooth out over time. But prior, we were making prepayments 3 times a year. So certain quarters, we didn't have a prepayment in and that those times were getting compared to other quarters where we had a prepayment. That has now changed. We're starting with this fiscal year, we're making our payments each year -- each quarter equally in each quarter. So that should help smooth some of the variability there. The other thing that is happening is those prepays are getting actually exhausted quicker than they had been in the past due to the Transaction growth. So as the Transaction grows, we exhaust those prepays. Those prepays go down. And really what you saw is that we had put a lot of prepays on the books coming into the year. And by the end of December here, had exhausted a lot of that prepay and that basically led to some of the cash flow gains from that perspective. But again, I think there's a lot of variability when you look last 6 months, in the next 6 months, I think you'll see less changes in those accounts as we move forward.

Okay. And then I noticed that $300,000 asset purchase. What is that -- is that what the Transactions business that you were mentioning earlier?

Yes. That is the deposit we made on the FIZ transaction that we've been talking about, the customer contract acquisition.

Okay. Roy, I got a question for you. So for some of us that have been here for a few years. A lot of the marketing stuff that you mentioned, webinars, social media, et cetera, if I remember, that was tried in 2017, 2018. Peter was experimenting with lots of those marketing things which was not a lot of success. So I’m curious what changed now that makes you guys so confident that these things will result in MQLs, I believe, et cetera?

Yes. I think the biggest thing that changed is the team now is very metric dashboard oriented. So we literally have a live changes every day dashboard and our CRM system that shows here are the sources of these leads and we're able to attribute an investment back to an actual sale. So I was sitting through a marketing review in the last week and they were able to report, yes, on a year-to-date basis, x percent of our upsell revenue was contributed directly back to these programs, y percent of our new, new revenue was attributed directly back to these programs. And that's enabled us to make, I think, better decisions about, okay, let's double down investment in this program that's generating results, let's dial back investment in this program that's not generating a good return on that investment. So for me, I'm not -- I don't -- I obviously was not the CEO in 2017, so I did not see if we had those type of dashboards but we do now. I have made it clear to the marketing team, we're not going to invest discretionary investments and growth opportunities unless we can measure it back and they've done a nice job of building out workflow into CRM. And we also integrated the 2 CRMs we had into a single CRM that also includes the whole marketing engine product, so that we now can track this stuff and see if it works. So going forward, the objective is to invest in what's working and not invest in what doesn't work.

Okay, great. And then, I was wondering if you could update us on -- the academic platforms product. I know you rolled it out a few quarters ago. And b, the -- we haven't heard about this in a few years but you did have Evidence Partners, I believe, partnership almost 3 years ago. So I'm just curious how that's worked out and whether that's making any progress.

Yes, good question. On the Article Galaxy Scholar and as a reminder, we have both a free version of a paid version and the beginning of this year, we decided to really put a lot of emphasis on the free version to drive installs to generate transactional revenue in the short term and provide an upgrade ARR opportunity in the long term. That's working pretty well. We're in the high-30s in terms of installs this year. Some of those are paid. Some of those are free. And we’re seeing very significant year-over-year growth in the academic segment as a result of that strategy. I’m not crazy about the amount of ARR generating in the academic scholar space because it’s just a much tougher market and different from our corporate market but it’s generating some really nice incremental transactional revenue and we are able to at least get installs that we can upgrade to the premium version of AGS later. So anyway, I think generally, that strategy is working. The partnership opportunity that you mentioned, I think in general, we could do a better job in partnerships. We do have occasional wins based on the specific one you mentioned and others that we have around the world. We probably have 12 or 13 partnerships but none of them are driving huge amounts of revenue. The bulk of the heavy lifting around here in terms of upsells and new, new is our direct sales force.

The next question comes from George Melas from MKH Management.

On the new products or Curedatis and on Reference Management, can you give us a little bit of an update on that? And specifically, I mean, how do you -- I mean the Reference Management seems to take a lot of update. So clearly, they seem to be a good product set there. Maybe can you comment on that and also on the product market at book here?

Yes. In terms of References, as I mentioned, we have 125 or 126 upsells so far this year. It's been, I think, a pretty exciting product. A lot of people like it. It's completely integrated into the workflow instead of you having to do your search in 1 place and then get your document in 1 place and then store it in a different place. So people really like it and we continue to have a high number of demonstrations of the product. So I think that product is a really nice home run in some ways, maybe a triple but it's definitely driving new sales and upsells. In terms of Curedatis, Curedatis is on plan but we had a very, very conservative plan. I think the customers that have acquired it like it. The prospects we've showed it to really like it. I think we still need to figure out the sales model there. It's a little bit different and it's a different decision maker in many cases. So we're still tweaking kind of how we sell it, who we sell it to and what the messaging is. But generally, the users, the people that are actually doing the pharmacovigilance work inside of the corporations love what it does. So I think that product will gain momentum through the second half of the year.

Great. The Curedatis is clearly the new product. The Reference Manager, are you replacing your existing products and other people’s products? How does that work?

Yes, great question. We've got a couple of drivers of that business. We did have, I guess I would describe it, as a light Reference Manager application that we call Biblilogo. You may remember hearing that in previous calls or on our public filings or website. So References and References Pro ultimately will replace Biblilogo. So the number I mentioned are customers that are either upgrading from nothing or upgrading from Biblilogo into References, References Pro or are there new customers that we've sold and onboarded as a result of References. I think -- did you have another question or was that it?

But what I'm wondering, my understanding is there are some companies in that state that had a big share of that space and that they were trying to expand sort of add functionality. And clearly, you have the Transaction and the Platform side and adding these apps and these features. Know exactly what my question there is, Roy but I’m trying to understand how you’re making progress replacing other people’s product.

Yes, great question. I think there was a company in Europe that's been a competitor that was a Reference Manager application. They had a freemium premium model, so they would give away a free version that they would upgrade to a corporate enterprise version later and they were trying to move into the document delivery or doc delivery space that we're already in. We, on the other hand, of course, we're moving from doc delivery into References. We've had virtually no churn to that company. We have not lost competitive new deals of that company. I think that while they probably still have the edge on us in terms of features, I think we deliver 90% of their feature set and we do a much better job on the doc delivery side. So I think going forward, we’ll continue to narrow any feature gaps and we’ll compete well with them. That said, we’re not taking share from them. And we are competing on a number of deals to displace a current provider we have won a handful of smaller ones. We have not won any of the very large enterprise ones. I’ve sat through a couple of presentations that were 500-plus seat opportunities and those are typically long sales cycle, very long drawn out process. So we’ve not won any of those yet but we’re definitely engaged and fighting to displace some current providers and larger accounts.

This concludes today's question-and-answer session. I would like to turn the conference back over to Roy Olivier for any closing remarks.

Great. Thank you. A quick reminder. We will be participating in the ROTH Capital Partners Conference in March. For more information on that event, please feel free to contact your ROTH sales rep. And I appreciate everyone for joining us today and have a great afternoon.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.