Workiva Inc. (WK) Q4 2020 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. My name is Siderius, and I will be your host operator on this call. After the prepared comments, we’ll conduct a question-and-answer session. Instructions will be provided at that time. [Operator Instructions] Please note that this call is being recorded on February 17, 2021 at 5 PM Eastern Time. I would now like to turn the meeting over to your host for today's call, Adam Terese, Director of Corporate Development and Investor Relations at Workiva. Please go ahead.

Good afternoon and thank you for joining us Workiva's Fourth Quarter 2020 Conference Call. Today's call has been prerecorded and will include comments from our Chief Executive Officer, Marty Vanderploeg; followed by our Chief Financial Officer, Stuart Miller. We will then opening the call up for a live Q&A session. Jill Klindt, our Chief Accounting Officer is also on the call. A replay of this webcast will be available until February 24. Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section. Before we begin, I would like to remind everyone that during today's call, we'll be making forward-looking statements regarding future events and financial performance, including guidance for the first quarter and full fiscal year 2021. These forward-looking statements are subject to known and unknown risks and uncertainties. Workiva cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only. We undertake no obligation to update any statement to reflect the events that occur after this call. Please refer to the company's Annual Report on Form 10-K and subsequent filings for factors that could cause our actual results differ materially from any forward-looking statements. Also during the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures and certain additional information are also included in today's press release. With that, we'll begin by turning the call over to our CEO, Marty Vanderploeg.

Hello and thank you for joining today's call. We are pleased with our fourth quarter and full year 2020 results, which beat guidance for revenue and operating income. In Q4, we continued to benefit from macro business trends, which included significant increases in cloud platform deployments, digital transformations and remote workplaces. Workiva has also benefited from the growing demand for RegTech and XBRL. Our financial results reflect the broadening adoption of our platform and fit-for-purpose solutions. We exceeded 20% growth in subscription and support revenue and generated record bookings. In 2020, 77% of new solution and new local bookings were generated by solutions outside SEC or SEDAR. As we recently announced, all of our customers are now on our next generation platform, which is more open, scalable, intelligent, and intuitive. This company-wide initiative was a significant undertaking. And I would like to thank our employees for their dedication and hard work and achieving this important milestone. I'd also like to thank our customers for their commitment to Workiva and recognizing the value of our new platform. Now that our platform upgrade is complete. We are prioritizing three areas where we see opportunities for growth, fit-for-purpose solutions, global expansion, and our partner ecosystem. First, our fit-for-purpose solutions. Our idea to incubation framework gives us some mix of discipline, speed and agility. We will continue to launch new solutions that solve specific business problems and enable our customers to realize value quickly. Second, global expansion. We will continue to capitalize on demand from companies outside North America that need to manage complex datasets, reduce errors and risk, improve efficiency, and respond to regulatory requirements. In 2020, EMEA and APAC generated less than 8% of our consolidated revenue. We expect these markets to contribute an increasing percentage of total revenue over time. And third, our partner ecosystem. Many of our more than 200 partners are not creating new solutions and services on top of the Workiva platform. We look forward to further spanning our partner ecosystem as we work together to deploy our platform throughout global enterprises. In 2020, our values-based culture sustained us as we remain strong and connected to each other and to our customers even as our global teams work remotely for most of the year. We also strengthened our commitment to advancing diversity, equity and inclusion efforts through a variety of employee and company-wide initiatives. We continue to win awards in 2020, including being named a top 100 best workplace by Fortune magazine for the second year in a row, as well as being named a great place to work in technology for families and for millennials. Earlier today, we announced that Stuart Miller, our CFO will be retiring at the end of this month. I want to thank Stuart for his dedication over the past seven years, guiding us from a private company through an IPO and for the global SaaS Company we are today. Stuart has been a valued colleague and we will all miss him. Thank the Stuart’s leadership. We are able to make a seamless transition by appointing Jill Klindt, our Chief Accounting Officer to the CFO role. Jill has been with Workiva since our early days building our finance and accounting teams and taking on more responsibility over the past several years. I look forward to continuing to scale Workiva with Jill on our executive management team. In closing, I am extremely pleased that we finished 2020 with strong revenue growth and record operating income and cash flow. While upgrading all of our customers to our new platform and continuing to provide innovative solutions. With that, I will turn the call over to Stuart Miller.

I want to start by thanking all of my colleagues at Workiva, particularly Marty, the rest of the executive team and my team in accounting, finance and corporate development. I believe Workiva is in great hands with Jill Klindt as CFO, having worked closely with her for many years. Working with the extraordinarily talented people at this great company for the last seven years has been the highlight of my career. Turning to our results. We saw broad-based demand for our solutions in Q4. As a result, we’re raising guidance for 2021 revenue, which I will discuss later. As always, I will talk about our results and guidance on a non-GAAP basis. Refer to our press release for a reconciliation of our non-GAAP and GAAP results in guidance. I’ll address our performance against Q4 guidance first. We beat Q4 2020 revenue guidance at the midpoint by $3.4 million, higher subscription revenue accounted for all of the beat. We closed more deals early in the quarter, and we sold and delivered some capital markets deals within the quarter. We beat guidance on Q4 operating income by more than $4.5 million. The revenue beat, I just mentioned accounted for the majority of the swing. The remainder of the beat relative to guidance included lower travel and entertainment costs, reduced expenses from shifting marketing and internal events to a virtual format, higher PTO usage and decreased occupancy costs. Turning to Q4 2020 results versus Q4 the year before. We generated total revenue in the fourth quarter of $93.8 million, an increase of 16.9% from Q4 2019. Breaking out revenue by reporting line item. Subscription and support revenue was $81 million, up 22.4% from Q4 2019. New logos and new solutions helped drive strong revenue growth in Q4 2020. 56% of the increase in S&S revenue in Q4 came from new customers added in the last 12 months. Professional services revenue was $12.9 million in Q4 2020 down 8.9% from the same quarter last year. The decline in XBRL services revenue outpaced growth in setup and consulting. In Q4 2019, we had posted a one-time increase of $2.5 million in XBRL services revenue, due to a regulatory change. Turning to our supplemental metrics. We finished Q4 with 3,723 customers, a net increase of 213 customers from Q4 2019 and a net increase of 140 customers from Q3 2020. Our revenue retention rates remained strong. Our subscription and support revenue retention rate was 95% for the fourth quarter of 2020 compared to 94.7% for the same period last year. With ad-ons our subscription and support revenue retention rate was 109.5% for the fourth quarter of 2020 compared to 113% in Q4 2019. The number of larger subscription contracts continues to increase. In the fourth quarter of 2020 we counted 847 contracts valued at over $100,000 per year, up 30% from Q4 the prior year. The number of contracts valued at over $150,000 totaled 419 customers in the fourth quarter, up 47% from Q4 2019 results. Moving down the P&L. Gross profit total $71 million in Q4, up 22.2% from the same quarter a year ago. Consolidated gross margin was 75.6% in the latest quarter versus 72.3% in Q4 2019, a net expansion of 330 basis points. Breaking out gross profit, subscription and support gross profit total $68.1 million equating to a gross margin of 84.2% on S&S revenue, and expansion of 160 basis points compared to Q4 2019, driven by lower server costs related to the transition to our new platform and lower travel costs. Professional services gross profit in the fourth quarter was $2.8 million equating to a 22% gross margin. Research and development expense in Q4 total $22.1 million, up 4% from Q4 2019 due to higher compensation, partially offset by lower T&E expenses and occupancy costs. R&D expense as a percentage of revenue improved to 23.5% in Q4 2020 from 26.4% in Q4 2019. Sales and marketing expense for the quarter increased 12.8% from Q4 2019 to $35.1 million, driven by higher compensation, partially offset by lower T&E expense. General and Administrative expenses totaled $8.6 million in Q4, down $1.7 million compared to Q4 2019 due to reduce T&E expense, lower compensation and decrease professional services fees. G&A expense as a percentage of revenue improved 370 basis points to 9.1%. We posted an operating profit of $5.2 million in Q4 2020 compared to an operating loss of $4.6 million in Q4 2019, Turning to our balance sheet and cash-flow statement. At December 31, 2020. Cash, cash equivalents and marketable securities totaled $530 million; an increase of $6.2 million compared to the balance at September 30, 2020 net cash provided from operating activities in Q4 2020 totaled $13.4 million, compared with cash provided a $2.1 million in the same quarter a year ago. Remaining performance obligations on subscription contracts continue to vary from deferred revenue as we implement multi-year contracts with annual billing terms for some customers. Turning to our guidance. We are factoring in the expected impact of COVID-19 pandemic on our business and results of operations based on information available to us today. For the first quarter of 2021, we expect total revenue to range from $100 million to $101 million. We expect subscription revenue to grow a faster rate than services revenue in Q1. We expect non-GAAP operating income to range from $4 million to $5 million. For full year 2021 we are raising guidance for revenue. We now expect total revenue to range from $409 million to $411 million. We expect non-GAAP operating loss to range from $12 million to $10 million. In the last three quarters of 2021 we are modeling higher travel costs and investment in growth opportunities. In 2021, we expect to post positive free cash flow for the fifth consecutive year. We will now take your questions. Operator, we are ready to begin the Q&A session.

[Operator Instructions] And your first question comes from the line of Rob Oliver with Baird.

Great. Good evening, everyone. Thank you very much for taking my question. Stuart, congratulations on your retirement and certainly we'll miss working with you. I have two quick questions. One first for you, Marty. Just you talked about the three focus areas of growth for the business this year, fit-for-purpose solutions, global expansion and our partner ecosystem. I was wondering and you guys had laid those out. I thought really nicely at the Analyst Day. I was wondering if you could just provide a little bit of color on where we are with some of those key initiatives right now. And then I had just one follow-up for Stuart.

Sure. I'll start sort of with the fit-for-purpose solutions and just say that we've had good results in the first solutions we've run through there primarily FERC and GSR, Global Statutory Reporting. The system that Julie put in place in terms of vetting, developing and preparing these before we go to market has been really rigorous and very good. And we have several in the pipeline for next year that, that we're excited about. We're not ready to talk about what they are until we're sure we're going to go, but we feel good about that. Global expansion has been going well that the revenue growth is higher in both EMEA and APAC, and it's on a small denominator obviously as we referenced, but that's looking very good. And we almost have to do that because, a lot of our customers are deploying us more broadly and a lot of them are global companies. So they want representation and support in all those areas. So not only is it expanding our market, but it's better serving our biggest customers. Partners we're doing really well, that's really coming together. Partners are realizing that they can generate good income from themselves deploying our products and we've been going together jointly into the marketplace and doing really well. We're seeing that grow rapidly. It's a big part of what we want to do because we really want to get more involvement from our partners for delivering our product. We want to focus on being a software company, not a services company. And, so gone well, we're really not ready to talk about metrics yet because that metric is so ill defined, but most of what we do is go to customers together and then we contract directly with our customers. So you had another question?

Yes. No, I appreciate that. That was really great Marty. Thank you very much. And then Stuart, do what, just one for you just on the guidance, I know you said it still factors in COVID-19, I think you also said from a cost perspective that it sounds like you guys are expecting some returns normalcy at least from cost outlays in the back half of the year. So just wondering how those two things match-up, and if the – what were some of the factors that you thought about when thinking about the other revenue guidance for 2019 – for 2021 in light of COVID-19? Thank you guys very much.

Yes. So on the expense side first; we're fairly optimistic about the ability to get shots in arms and the efficacy of the vaccine. And we also thought it was just prudent from a forecasting standpoint to assume that those costs were going to rise in due to increase travel in the back half of the year, actually starts to ramp in our model starting in the second quarter. And then on the revenue side, our optimism really is as it's always been; it's been rooted in the pipeline and the maturity of that pipeline. And we run a fairly granular business, so, and we've got many years of experience with it. So we're pretty confident in what we're seeing with the pipeline. And it's – the demand has been very broad based.

Thank you again.

Your next question comes from the line of Matt Stotler with William Blair.

Hey guys, thanks for taking my questions. Marty, it's good to connect with you. Jill, good to speak with you again, and Stuart, we actually just want to coverage about six weeks ago. You and I have been talking for the better part of four years. So it's been a pleasure and congrats on your retirement and best of luck going forward.

Thank you, Matt.

A couple of maybe product specific questions here. So first on ESEF, just love to get an update on the traction you're seeing with that offering. How many customers you have using it today. And when you think about what that adoption could look like, and what kind of penetration do you think is likely or reasonable when you look at that target, 5,000 plus potential customer base over time?

Well, let me, in terms of ESEF, its tracking about where we thought it would be. It's behaving much like the early days for the SEC market. And we expect that we will get – we will have success as time goes on, it's not a one-shot deal. And we are definitely closing business, even in light of the delay that some of the countries have lately announced and customers are taking it seriously. And we're seeing a good broad base all the way from very small companies to large companies looking at our solutions. So we're very optimistic.

Got it. That's helpful. And then just one on Wdata. So when we talk to your customers and partners, it seems to be a lot of interest in Wdata. But in a lot of cases still typically pretty early stage, customers evaluating the practical use case, value proposition, though there are some high attach areas like global stat reporting you guys talked about in the past. Can you just give us some more color on the overall interest or tax rate that you're seeing with this capability and what you're doing to drive broader customer adoption here? Thank you.

Yes. I think that question is really sort of locked in the fact that we're trying to move to more of a platform company. Obviously our journey there takes us through selling solutions, but obviously some of our customers have seen and understand the value of the platform. Wdata is been more incorporated in the platform in late – and this is viewed as one of the key parts of it being able to connect and then prepare your data is vital to our platform. So as we move toward a platform sale, we're seeing it in a lot of the newer solutions that we're rolling out. And so Wdata is still a very important thing that we do, and we're seeing good attachment rates. Julie, you want to add anything?

No, Marty, I think you covered it there. It's now just a component of our end-to-end platform and part of our growth strategy rather than a single solution offering that we'll sell separately.

Great. Thanks, Marty. Thanks, Julie. Thanks, everybody.

Your next question comes from the line of Terry Tillman with Truist Securities.

Yes. Good afternoon. Congrats on the quarter. Stuart, we're going to miss you, congrats. You're going to miss our engaging questions, I'm sure and these earnings calls. Jill, welcome aboard and good luck with our questions. But, I guess maybe my first question, and I don't know if this is from Marty or who it's for, but I'll just throw out there. The strength in the fourth quarter in terms of new logo activity, and I know like it can kind of move around each quarter, depending on just kind of the seasoning of pipeline. But as we're looking at 2021, you know, we've got a couple of things going on. Your customer successfully replatformed these, built for purpose or built for use as solutions. Maybe there could be a quicker path of the next use case adoption in your installed base, but I'm curious this logo strength, should we expect kind of a similar kind of dynamic in 2021 where it's stronger new logo activity. Or could it shift back to maybe where you're getting a lot more from your installed base because of the success with replatforming and then I had a follow-up.

Sure. I'll just give a high level question and see Stuart wants to add anything, but what we've always said and what’s continues to hold true is roughly about half of our new sales each quarter come from new customers, new logos, and about half comes from new solutions and existing customers. That ebbs and flows a little bit, but for the most part, it stays right in that range. And so we expect that to continue for the most part. Stuart, you want to add anything?

No, I think that – I mean I think that covers it, Marty. Over the long run, it has been 50/50. We have no reason to believe it's going to be otherwise in the future.

Okay, got it. And I know we're talking about global expansion, but if I come back kind of to the States and look at the federal opportunity, it was great to see the deal. I think it was the DOJ signature deal. We saw the value as a large deal. And the aftermath of that, maybe Marty or team, what could you all say about the federal government and just public sector in general and what you're seeing? Thank you.

Well, just to back up a little bit, our plan in general for growth is to be broad-based in terms of geographies and solutions. And clearly the state and local governments and the federal government between COVID and the election definitely took a hit. And so we see great opportunity there. And it's just starting to revive now based on the election being over and sort of the everybody seeing the light at the end of the tunnel on COVID. So we're seeing that recover nicely, but again it's just part of our portfolio. And because we have a portfolio approach, we can always deal with one or two of our vectors being a little soft. So we're optimistic about the future for the federal, but you can imagine what it went through in terms of the COVID experience.

Your next question comes from the line of Stan Zlotsky with Morgan Stanley.

Perfect. Thank you so much guys. And Stuart, we're definitely going to miss you. Quick – a couple of quick questions from our end. Maybe just at a very high level, when you guys think about pricing for your products as you go into 2021 and beyond is 2022. How do you feel about the balance of essentially the value that you are delivering to your customers from your products versus how much you're able to monetize those products across your customer base? And I have a quick follow-up for Stuart before we let him go.

I'll just give a high level point of view on that in terms of price. I think that anytime you start a new solution in a market to get some market share and experience, it tends to start a little lower. And in the SEC, for instance, in that product base, that we've sort of gotten those prices that match value. We also have a value team that looks at this and we try to match that with value. So I think in some of the solutions we're quite mature, and we think that the value matches the price tag. And we're confident that because of the customer said and the churn numbers. In some of the newer markets, we'll see as we develop those markets, we'll right-size it and probably move it up, but almost always you start the new market, you start low. Stuart, you want to add anything?

No, I think you covered it.

All right. And then one for Stuart, when you think about net revenue retention, I know you guys don't guide to it, but when you think about it for 2021, how do you – what do you see happening to that net revenue retention rate as we go through the year?

Yes. So as you know, the components of that include price increases and in add-on sales, and I expect – we expect to see good contribution from add-on sales. We're really not planning to take a price at all this year, very little. So we were having a good success selling volume. We'd rather sell more solutions to customers than take price. So that's what I can say in terms of components of it. The pipeline would indicate that we're – we've got a good prospects when it comes to the add-on sales.

Got it. So just as people are kind of going through trying to calibrate their models is the current level of net revenue retention? Is that what you're expecting to seek moving forward?

Well, as you indicated in your preamble, we – we've never – we haven't guided to it. And so we don't want to break any news today on that front.

Fair enough. All right. Thanks, Stuart.

Thanks, Stan.

Your next question comes from the line of Tom Roderick with Stifel.

Everybody, happy New Year. Thanks for taking my questions and Stuart, I'll start with you. It's been a real pleasure working with you. So congratulations on your retirement. We're going to miss you over here on our end. Much more than I know you're going to miss us, but it's been great, so thank you. Maybe I'll throw the first one back at you, Stuart and Marty, Jill, you please chime in. I know I think it was Matt earlier than asked the question just on Europe in general and ESEF. I was wondering if you could share some more statistics with us. I think Marty; you might've said it was high-single digits international as a percentage of revenue. Do you have that the exact number that Europe was either for the full year or where we're sort of finishing the year, where we finished the year 2020 as a percentage of either revenues or new logos? And I guess what I'm just trying to get behind it is, how quickly is that ARR or net new bookings kind of catching up to where the quota carrying reps are and then what does that look like for next year for Europe? Thanks.

So Tom, the – thank you for your comments that greatly enjoyed working with you as well. So we filed the 10-K today, and there is a footnote in the – to the financials that lays out Americas versus rest of the world in terms of splitting out revenue. And so that's finally as we cut it. A majority of that non-Americas revenue comes from EMEA, although APAC is starting to contribute, but certainly in terms of 2020 a substantial percentage of that $22.3 million that's subscription revenue in $4.5 million professional services revenue is coming from EMEA. So it's footnote 12 to the Page 90 of the 10-K.

Okay, great. And then just maybe following-up on that Stuart real quickly in terms of the question on the – on head count and how quickly you're ramping that relative to where the opportunities are in Europe or international, if you want to cut it that way.

Yes. Marty, do you want to talk about that?

Sure. I mean the in terms of overall head count that's we put a lot of growth into EMEA in 2020 in terms of head count and we'll continue this year as well. We think that's a big opportunity. And in APAC, it's very early days still. And we will continue to add people there as well, probably at a higher percentage even than EMEA, but it's off even a smaller denominator, but all the indications are good in terms of demand in both markets.

Great. And a quick follow-up one for you Marty, this is a bit more thematic, but with everybody talking about ESG and how to monitor that and track it and measure it, it would certainly seem like your platform is sort of tailor made for helping your customers take advantage of the reporting and connected reporting qualifications and needs around ESG. Can you talk about what your customers are asking for you from that matter and how you think about that as an opportunity to monetize the platform?

Well, the new solutions we’re working on, I really don’t want to comment on, we definitely see there’s a market there and you’ll hear from us in the future.

Okay. We’ll look forward to that. Thank you all. Appreciate it and very nice.

Thanks, Tom.

Your next question comes from the line of Alex Sklar with Raymond James.

Thank you. Stuart and Jill, I’ll echo my congratulations to you both as well. On the booking strength, I want to dig in a little bit more on the logo growth, just two really strong quarters in a row, I think four quarter was the most, any quarter in the past six or seven years. I can appreciate the commentary of selling the platform more broadly. But is there’ve been kind of any commonality you can speak to in terms of these ads and any two to three solutions that are driving the most success or any geography in particular. Thanks.

Stuart, you want to take that?

Yes. So I mean, it was really – Alex, thank you for your comments by the way. But it was very broad based. And we saw strength with global stat, with energy, with capital markets, with ESEF, with SEC, with integrated risk. It was very strong quarter overall. I mean, I think we would direct you back to some of the macro trends that we’re seeing the shift to the cloud, the digital transformation in the office of the CFO, the realization that hybrid work environment is here to stay and it customers need collaborative work platforms, so all that was heading in our direction.

Okay. Thank you. And then, I guess, Stuart to follow-up, in the prepared remarks, you mentioned new logos drove, I think, 56% of the revenue growth. I think that implies that those new customers are coming in at roughly 2x the company average, is that right? And then in terms of why the must bigger land is that at all geography based. Is that just having the broader platform to sell now? Anything else you can tell us from that?

Yes. So the 56% is relative to incremental subscription revenue. And that number, it’s been – it averages – it goes 50-50 over time, when we were implementing solution-based licensing, it got up to about 54% on existing customers, and now it’s 56% from new logos. And so that’s just the percentage of revenue that’s attributable to new logos in the past year. So it wouldn’t – really hasn’t changed that much.

Okay. Thank you.

Thank you.

Your next question comes from the line of Andrew DeGasperi with Berenberg.

Thanks for taking in my question. First congrats Stuart and Jill as well. I had a question in terms of just the high level change in administration; obviously, people are expecting a much more rigorous pace of regulations coming from there in the U.S. And I was just wondering if talking with your partners and clients, is there any sort of chatter or activity that reflect like either potential for more solutions that they need to adopt or anything like that?

Yes. I mean, we certainly are optimistic that the Biden administration is going to look at regulation and the pendulum is going to go back the other way some. And so we are optimistic about that. I would say that the thing I’m more optimistic about is the adoption of XBRL starting to hit a tipping point, ESEF and then FERC. And I think XBRL is already being talked about for a number of different things. Some of the solutions that we’re going to look at in the future it’s being adopted across global statutory reporting in some jurisdictions. So when XBRL hits a tipping point, it’ll be a meaningful thing for us. And so I think the Biden administration, in terms of the U.S. is definitely going to help us, but I think the fact that XBRL is becoming almost the go to machine readable language now is what gives me the most optimism.

Thanks. And then just add a question in terms of your go to market outside the U.S. I know you’re planning to do this organically in the media. But I was just wondering if you considered doing something more in depths with some of the larger ERP vendors when it comes to APAC, something like, for example, BlackLine has done on with SAP or something to that effect.

I don’t anticipate us doing that. I mean, the double-edged sword, right, you got better access to markets, but you pay a heavy price for that in terms of go-forward S&S revenue. And you probably heard the rumored number for BlackLine, but we want to address our market through our partners and our own direct channels and not damage our TAM in any way. So I don’t expect to see that unless it’s a joint – go to market jointly, but really that’s a tough thing to do, so probably not.

Understood. Thank you.

Your final question comes from the line of Mike Grondahl with Northland.

Hey, thanks Workiva team and Stu best of luck in your retirement. Well deserved. Two quick questions, one Stuart, is there anything to call out, you talked a little bit about the 4Q upside coming from the capital markets area. Any more you can add there or anything in the pipeline would be great. And then just maybe for Marty, any thoughts on acquisitions going forward or if you’ve been spending any time there.

Yes, so thanks, Mike, enjoyed working with you as well. So capital markets is part of the story in Q4, but certainly global stat in energy and ESEF, they were all big contributors that capital markets piece was just relative to guidance. Because we generally have low expectations for that business, or if we – from a safety standpoint, it’s better for us to assume very little from that business. And some of it gets delivered within the quarter, and that’s why it can be an upside surprise. We’re just trying to avoid a downside surprise. So we don’t assume much there. And then on the M&A front, Marty, do you want to talk.

Sure. My answer will be the same as your Stuart. We continue to look, we think that there’s opportunities in our future, but we’re very careful. Last thing, we’re going to do is run off and do something that would cause us harm. We just see so much organic growth potential. You want to comment, Stuart?

No, it’s – I mean, I think you’ve covered it. I mean, we’ve been looking more at small add-ons that can accelerate our existing strategy. We’re not actively looking at anything that would be transformational.

Got it. Thanks guys.

Thanks, Mike.

And there are no further questions at this time.

Thanks everybody.

Thank you all.

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.