Altair Engineering Inc

NASDAQ:ALTR

Earnings Call Transcript 2018-Q4

[Operator]

Good day, ladies and gentlemen, and welcome to the Altair Fourth Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Howard Morof, Chief Financial Officer. Sir, you may begin.

[Howard Morof, executive]

Thank you. Good afternoon, welcome, and thank you for attending Altair's Earnings Conference Call for the Fourth Quarter 2018.

I am Howard Morof, Chief Financial Officer of Altair; and with me on the call is Jim Scapa, our Founder, Chairman and CEO.

After market close today, we issued a press release with details regarding our fourth quarter and full year performance, which can be accessed on the Investor Relations section of our website at investor.altair.com. This call is being recorded, and a replay will be available on our IR website following the conclusion of the call.

During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from our expectations. These risks are summarized in the press release that we issued today.

For a further discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our quarterly and annual reports filed with the SEC as well as other documents that we have filed or may file from time to time.

During the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release.

Finally, at times in our prepared comments or responses to your questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future.

With that, let me turn the call over to Jim for his prepared remarks.

[James Scapa, executive]

Thank you, Howard, and thank you all for joining our call. Today, we will talk about our quarterly and full year results and our outlook for 2019. We will discuss the integration and market traction we see for our 2 most recent acquisitions, Datawatch and SIMSOLID. We will talk about changes for our global marketing and compelling customer wins.

As 2019 will be our first year reporting under the new 606 accounting standards, we will be careful to identify when we are talking about 605 versus 606 numbers. My remarks regarding fourth quarter and 2018 financials will use the 605 standard.

Our fourth quarter revenue and profitability exceeded expectations and demonstrated excellent year-on-year growth. We had total revenue for the quarter of $103.9 million, an increase of 16% from a year ago, with 2018 revenue of $385.1 million growing over 2017 by 16%.

Our revenue growth was strong and powered by software product growth of 19%. We produced adjusted EBITDA in the fourth quarter of $14.1 million, with full year adjusted EBITDA of $38.5 million, both nicely above the upper end of our guidance range.

We completed the acquisition of Datawatch on December 13, 2018, and have moved quickly to integrate it into Altair. We made several important adjustments to the business, while making sure to support customers, employees and their ongoing efforts.

We are moving quickly to streamline Datawatch brand offerings and merge their products with our other solutions and business models.

Our complete data intelligence offering includes market-leading data preparation, data science, streaming and visualization solutions that fuel engineering, scientific and business decisions.

We are integrating all of our data intelligence capabilities into a modern, cloud-based solution, including important enterprise-level capabilities such as security, data discovery, collaboration and operationalization of user-developed machine learning workflows to deliver a more unified experience for users.

The Datawatch sales organization is strong and highly process-centric. We have maintained and supported this team, focused on their traditional markets and are strengthening them by looking to leverage Altair's more global footprint.

We established a small overlay team with expertise in data intelligence, focused on supporting Altair's strategic account executives, cross-selling Datawatch products into our manufacturing customers worldwide.

The synergies are bidirectional. For example, we are learning from and embracing several Datawatch sales processes across the broader Altair sales organization. We are confident our combined global teams and infrastructure will continue to develop and deploy great products, grow sales and delight customers as we move forward in an era where simulation and data intelligence are converging to drive many operational decisions.

We anticipate bookings from Datawatch products for 2019 to be consistent with 2018 bookings, while significantly increasing the percentage of recurring revenues.

We put in place several million dollars of synergies to be realized in 2019 from this business, including significant administrative and executive headcount reductions.

We also anticipate substantial external spend cost reductions, including public company expenses. We expect the financial contribution of the acquisition to be aligned with our overall adjusted EBITDA percentage targets.

In October of 2018, we announced our exciting technology acquisition of SIMSOLID. Since then, we moved to quickly release the product commercially and promote its game-changing power with seminars, free trials and special offers.

The results have been extraordinary. Customers worldwide, and in all vertical markets, are impressed by the technology and taking initiatives to deploy SIMSOLID in their enterprises.

We believe SIMSOLID is a unique technology, which allows users, mainly designers and design engineers, to accurately simulate simple to extremely complex assembly designs directly on their CAD geometry without the simplification or meshing required by other technologies.

SIMSOLID is robust and extremely fast, and in our estimation, will finally allow the market to realize its ambition to have meaningful simulation at the design stage.

SIMSOLID is available under HyperWorks units as a stand-alone solution, sold by resellers and as a pure cloud SaaS offering. We are integrating SIMSOLID into our Inspire platform, where it will complement Altair's other simulation technologies for simulation-driven design.

We believe SIMSOLID will deliver a meaningful new revenue over the next 3 years and has the potential to disrupt the current market for simulation at the design stage.

We believe it's important that our marketing and demand generation efforts are aligned with our growing product portfolio and expanded value proposition.

To lead that effort, we were excited to welcome Amy Messano to Altair at the beginning of 2019, as our new Chief Marketing Officer. Her extensive experience and expertise in technology marketing is an important addition to our executive team, especially at a time of rapid growth in our product portfolio. She has already moved to reorganize global marketing, including Datawatch, to elevate Altair's brand and align with sales objectives.

The fourth quarter was strong. We continued to win across the board in new and existing accounts. Our core products of design, modeling, visualization solvers continued to perform well, and we saw growth in new areas, including electromagnetics, mono base design, data intelligence and high-performance cloud computing.

I would like to highlight some of our successes today, as they indicate fundamental strength in our business. In aerospace, our second largest industry sector, a major supplier committed to a nearly $2 million agreement, driven by the replacement of Nastran and Patran with OptiStruct and HyperMesh.

A major global automotive supplier headquartered in Europe signed a multimillion euro renewal for 2019 that represents a nearly 20% increase as they continue to use HyperWorks for broader range of product development challenges.

Also in Europe, 2 different automotive OEMs signed 3-year deals, each worth 7 figures annually, representing a 38% and a 27% annual increase over their previous multiyear agreements. This was driven by large expansions in the usage of Altair solvers and optimization products, with many hundreds of users in the organizations.

The fourth quarter was excellent for our High-Performance Computing sales teams across a diverse set of industry verticals, including energy, automotive, defense, electronics and data storage. There were several expansions, including a large one in the defense sector. Product sales in the electronics industry are growing, including a 74% increase at a chipmaker on several hundred thousand dollars in revenue. While another customer nearly tripled their usage commitment. Finally, an important energy customer in the Americas made a new commitment of over $650,000.

We are beginning to see immediate customer success with SIMSOLID. In the 4 months since the acquisition, there have been over 5,200 downloads, including almost -- at almost 500 unique existing customer companies.

We have trained more than 1,400 individuals, can see usage growing globally at several accounts across most verticals. Our data intelligence team joined Altair during the final 2 weeks of the year and quickly contributed some important wins.

Topping the quarter was a 7-figure expansion deal with a major banking customer. This is a historically strong market for Datawatch, and we expect this to continue. A long-time health care customer decided to upgrade to our cloud offering and agreed to transition to an annual subscription.

We had a very strong fourth quarter and 2018, delivered on our stated objectives and made meaningful acquisitions, including SIMSOLID and Datawatch. We are well positioned because of our large recurring revenue base, and we are diversified through geographic and vertical markets. We remain optimistic about our outlook and look forward to the future.

Now I will turn the call over to Howard for details on our financial performance during the fourth quarter and full year as well as guidance for 2019. Howard?

[Howard Morof, executive]

Thanks, Jim. We are very pleased with the performance of our business in the fourth quarter, completing a great 2018.

As Jim mentioned, we are required to report under ASC 606 for 2018. In order to provide comparability, we are providing 2018 quarterly results under both 606 and 605.

Our guidance for 2019 is under the new standard. However, my review of our results for Q4 and the year will be primarily based on the 605 standard. Note that we did include a reconciliation of results in the press release that bridges 2018 under 606 to 605.

The Datawatch acquisition did not have a significant impact on the results, given the very limited number of days post acquisition in this quarter.

Our fourth quarter and full year results demonstrated strong operating leverage expansion and cash flow generation, driven by solid software revenue growth. For the quarter, software product revenue was $80.8 million, an increase of 19% from a year ago, while total revenue reached $103.9 million, representing growth of 16% from the fourth quarter of 2017. Both results are above our guidance for the period.

We also had strong profitability in the quarter, as adjusted EBITDA grew by 67% to $14.1 million for the quarter, which is well above our guidance and compares favorably to $8.4 million a year ago.

For the year, software product revenue was $293 million, an increase of 20% from 2018, while total revenue reached $385.1 million, representing growth of 16% from 2017. Both results are above our guidance for the full year.

Software product revenue is reflective of the strong momentum for our software products and grew to 76.1% of total revenue, an increase of 2.7 percentage points from 73.4% a year ago.

Adjusted EBITDA grew by 71% to $38.5 million for 2018, which also exceeded our guidance and compares very favorably to $22.5 million a year ago. Adjusted EBITDA margin for the year was 10% compared to 6.8% a year ago, an increase of over 3 percentage points in the year. We are pleased that the growing leverage in our business continues to be evident.

Changes in certain currencies can have an impact on both our revenues and expenses, especially when those changes occur over relatively shorter time periods or when currency changes are more pronounced over time.

As such, we think it is meaningful to measure aspects of our performance on a constant currency basis. For 2018 as a whole and in Q4, the impact of foreign currency rates did not have a meaningful impact on our revenue or adjusted EBITDA.

For 2018, calculated billings were $399.7 million, an increase of 11% from last year, indicative of the growth in our business. In the fourth quarter, calculated billings were $111.6 million, an increase of 12.5% from a year ago. The annual and quarterly metric has been adjusted for the impact of acquired deferred revenue.

We tend to view calculated billings over longer time periods, due to the impact of variations and timing of renewals, expansions and new customer arrangements can have quarter-to-quarter.

I would like to turn to the balance of the P&L results, some of which are on a non-GAAP basis. A reconciliation of GAAP to non-GAAP measures has been provided in the earnings release we issued earlier today.

Non-GAAP gross margin in the fourth quarter was 70.9%, an increase of 48 basis points from a year ago. For the quarter, non-GAAP operating expenses, which excludes stock-based compensation, amortization of intangibles, acquisition costs and other operating income were $63.6 million compared to $58.9 million a year ago.

As mentioned above, adjusted EBITDA for the quarter was $14.1 million compared to adjusted EBITDA of $8.4 million a year ago. Adjusted EBITDA margin in the fourth quarter was 13.5% compared to 9.4% a year ago.

Adjusted EBITDA was positively impacted by our revenue mix, driven by software product momentum, improved software-related services gross margins and achievements in operating leverage over our cost structure.

Our recurring software license rate, that is the percentage of software revenue that is recurring, continues to be strong at 89% in 2018, consistent with our past performance and is not impacted by the shift from 605 to 606.

Non-GAAP gross margin for the year was 69.9%, an increase of 2 percentage points from a year ago due to a higher mix of software product revenue, coupled with improved margins from software-related services activities.

For 2018, non-GAAP operating expenses, which excludes stock-based compensation, amortization of intangibles, acquisition costs and other operating income, were $244.2 million compared to $214.2 million a year ago.

Adjusted EBITDA for the year was $38.5 million exceeding our guidance compared to $22.5 million in 2017. Adjusted EBITDA margin for the year was 10% compared to 6.8% in 2017, reflecting terrific progress towards increasing our operating margins.

We continue to be focused on driving our operating margins higher, while simultaneously investing prudently into those areas and opportunities that we believe will be beneficial to our long-term growth prospects.

Let me now run through the specific impact the adoption of ASC 606 had on our performance. Generally, we will now recognize approximately 80% of software product revenue from a new or renewal contract upfront upon delivery of the software and commencement of the license period. The remaining 20% or so will be recognized ratably over the life of the contract. This compares to 605, where we were unable to separate out revenue for multiple element arrangements.

Usually, 100% of software product revenue was recognized ratably over the life of the contract for subscription-based licenses. This change increased our revenue by approximately $11.3 million in 2018. The implementation of 606 did not have a meaningful impact on our operating expenses.

It is important to note that this change does not have any impact on our cash flows or the value we delivered to our customers.

Going forward, calculated billings, an important cash flow metric for our business, is likely to be more closely correlated to revenue recognition under 606.

The adoption of 606 reduced the aggregate amount of deferred revenue on our balance sheet as of January 1 by $82.9 million under the modified retrospective approach permitted by the new standard. This change is strictly accounting-driven, with the implementation of the guidance under 606 versus 605.

For the fourth quarter under 606, total revenue was $103 million and software product revenue was $79.9 million. Adjusted EBITDA was $12.9 million, equaling an adjusted EBITDA margin of 12.6%.

On a full year basis under 606, total revenue was $396.4 million. Software product revenue was $304.4 million for the year or 76.8% of total revenue. Adjusted EBITDA was $50.2 million in 2018, and our adjusted EBITDA margin was 12.7%.

On a GAAP basis, fourth quarter net loss was $10.8 million or a loss of $0.14 per diluted share based on 76.8 million diluted weighted average common shares outstanding. And net income for the year was $13.7 million or $0.18 per diluted share, based upon 74.9 million diluted weighted average common shares outstanding.

Turning to our balance sheet. We ended the fourth quarter with $35.3 million in cash and cash equivalents, noting that we funded our acquisitions with cash and minor borrowings on our line of credit. We have approximately $119 million undrawn and available on our U.S. line of credit as of year-end.

Moving to our cash flows. Cash flow from operations in the fourth quarter was an outflow of $4.2 million compared to an outflow of $1.4 million in the fourth quarter of 2017. For the year, cash flow from operations grew to $36.2 million compared to $16.1 million for 2017, driven by our revenue growth and excellent collections in Q4.

Free cash flow, which consists of cash flow from operations plus cash and capital expenditures, was an outflow of $5.5 million for the fourth quarter, consistent with our business cycle and then also similar to the outflow of $4.5 million in the fourth quarter of 2017.

Free cash flow was $29.6 million for the year, a significant improvement from $8.6 million in 2017 and nicely in excess of the top end of our guidance at $24 million. The increase in our free cash flow for 2018 clearly reflects the impact of our positive momentum.

I would like to mention a couple of specific points regarding our cash flows in 606 before highlighting our guidance for 2019 under 606.

Our revenues are seasonal based upon renewal dates from our customers, with the first and fourth quarters having typically greater renewals and expansion revenue than the second and third quarters. These patterns will cause our quarterly results under 606 to be much more heavily skewed to when renewals, expansion and new licenses occur, causing our results to be more variable on a quarter-to-quarter basis compared to 605.

Also, as mentioned before, our seasonal patterns allow us to realize a substantial portion of free cash flow in our first and early part of the second quarters of each year. As such, I would caution against extrapolating free cash flow results on a quarter-to-quarter basis.

Our guidance for 2019 is impacted by fluctuations in currencies, such as the euro and pound. Given the movements in these and other currencies compared to 2018, our guidance anticipates a negative impact on annual revenues of approximately $7 million to $10 million and a $2 million to $3 million headwind to adjusted EBITDA for 2019.

As to our expectations related to our effective tax rate for 2019, we are assuming an ETR of 40%, due primarily to the impact of foreign taxes and domestic tax credits for which we are unable to recognize a present benefit, given the valuation allowance covering our U.S. tax attributes.

For the full year 2019, under the 606 standard, our expectations are as follows: software product revenue to be between $373 million and $377 million, representing growth of 22% to 24% from 2018; total revenue to be between $470 million and $474 million, representing growth of 19% to 20% from 2018; adjusted EBITDA of between $61 million and $65 million; free cash flow to be between $34 million and $36 million.

For Q1 2019, under the 606 standard, our expectations are as follows: software product revenue to be between $99 million and $101 million, representing growth of 24% to 26% from 2018; total revenue to be between $123 million and $125 million, representing growth of 19% to 21% from 2018; adjusted EBITDA of between $23 million and $25 million.

Our revenue outlook for 2019 includes contribution from Datawatch, based on our initial expectations of flat to slightly down compared to 2018 as mentioned before. As a reminder, this reflects the continuing transition to licensing of Datawatch products on a subscription basis. We have successfully realized an excess of $5 million of synergies virtually immediately upon closing.

To summarize, we continue to be very pleased with the performance of the business for the fourth quarter and full year of 2018. We are executing well on our strategic priorities and generating an attractive combination of growth, profitability and cash flow.

We are optimistic about our ability to drive revenue growth in 2019, based on our market momentum and ongoing investments that are leading to continued progress toward our long-term target.

With that, operator, can we now open up the call to questions?

[Operator]

[Operator Instructions] Our first question comes from Sterling Auty with JPMorgan.

[Sterling Auty, analyst]

I think looking at 2019, the 2 moving parts, I want to make sure I fully understand is, you mentioned Datawatch flat to slightly down, I think that's very consistent. But what does that actually mean in terms of the actual dollar contribution within the guidance that you provided? As well as is there -- as we think about the 606, everything should be annualized, so there's no additional tailwind or headwinds from 606 to the top line, correct?

[James Scapa, executive]

So I missed your second half of your question there, Sterling. Would you mind repeating it? I apologize.

[Sterling Auty, analyst]

Yes. Let's start with the first part, being Datawatch. You mentioned flat to slightly down. So what's that mean in dollars to the guidance?

[James Scapa, executive]

Right. So to be -- I know you're going to hate this answer, but to be honest with you, the way that we manage our software business, we integrate all of the products under our units model. And so we expect by basically beginning of the second quarter to have the Datawatch products running under the units model. And so you're going to have a mix through the year of sort of the historical stand-alone stuff, because there's some of that as well as a lot of HyperWorks units revenue. And so we really aren't breaking it out. I know you hate that because you want to break it out. But what we do with, as we look at the overall picture, and we look at the overall picture of expenses as well, and we try and manage our business. So I'll let Howard add to that if he wants to.

[Howard Morof, executive]

The add is simply we -- as we converted prior acquisitions as well, although not, obviously, quite the same size as the Datawatch, it's been essentially the same fundamental process for us converting into HyperWorks units, and then we clearly lose the individualized revenue streams that are acquired.

[Sterling Auty, analyst]

Understood. And then, just the other part was, again, now that we're 4 quarters into 606, there's no additional headwind or tailwind impact to the top line from that. Everything should be normalized, correct?

[Howard Morof, executive]

Yes, that's absolutely correct.

[Operator]

Our next question comes from Rich Valera with Needham & Company.

[Richard Valera, analyst]

Just a follow-up on the Datawatch contribution. For 4Q, I think you said it wasn't meaningful, Howard. But I think Jim actually referred to a 7-figure deal that you got during the quarter. So I'm just wondering, did they contribute maybe a couple of million dollars in 4Q in that couple of weeks? Or if there's any color you could give on Datawatch's contribution to 4Q?

[Howard Morof, executive]

Rich, it's -- there really was a pretty negligible impact overall on the revenue in Q4. I mean, we owned them for essentially 18 days, of which it includes Christmas and New Year. So I would -- I'm not going to say it's $0, but really quite negligible.

[Richard Valera, analyst]

Got it. And then just on the expense side. The non-GAAP net income, I think, came in lower than we expected despite a decent top line [dip]. Was there something acquisition-related that you didn't back out of that non-GAAP net income?

[Howard Morof, executive]

No. Not acquisition-related, actually tax-related. Specifically -- as I think, you're aware, we're in a full valuation allowance at our U.S. tax attributes because of our NSO deductions and such. So the foreign taxes that we pay and foreign taxes withheld at source and our U.S. tax credit, we don't get to, if you will, recognize the value of that. And that was really accelerated in Q4. So that's really the impact there. It's all about tax.

[Richard Valera, analyst]

Got it. And then, Jim, just wanted to ask a question about SIMSOLID. Obviously, some pretty exciting initial results there. And you talked about I think kind of a 3-year time frame, thinking that could be really significant. Is there any kind of range you'd be willing to put on the kind of revenue potential you see for this down the road? If it's not specifically 3 years, just how material do you think that could be relative to your current product revenue run rate?

[James Scapa, executive]

I guess, I'd rather not put a very specific figure on there. Yes. I'd rather not do that. I apologize, Rich.

[Richard Valera, analyst]

Another thought on that, just you've -- it sounds like it has a stand-alone product, it's getting a lot of uptake, but I think you alluded to the potential for that to be used more in design environment and integrating it into the inspired product, so it's -- have you looked at also just sort of integrating that into other perhaps third-party 3D CAD tools as kind of an embedded simulation engine? Is that -- just wondering what you're thinking on that front.

[James Scapa, executive]

So we're open to that, actually. But we haven't specifically explored that yet. We're not close to it. But it's just for us.

[Richard Valera, analyst]

Got it. And then just one final question on kind of the general environment -- sort of general demand environment relative to the last couple of quarters. And where you guys are in kind of the process of increasing your go-to-market capacity, which really started I think a couple of years ago. But if you can just give us a sense any change -- it sounds like that the environment continues to be very good. So my sense is no changes, if I had to read your tone. But if you can give us a sense on that and sort of where you are in kind of that sales force ramp up you've been undertaking.

[James Scapa, executive]

So we are still pretty focused on growing the capacity for sure. One of the key things we are focused a lot on though is process. And so we are looking to, if you will, structure the sales process a little more. And actually, the Datawatch acquisition's held hope for us. They were very organized and very process-centric group. And we see a lot of learning from them, particularly the way they do inside sales. And we've made some moves, including a recent executive that we brought in who has, let's say, more process orientation to his sales experience. So that, combined with some other things we've been doing over the last couple of years, also on the tools that we use, we see continuing to grow the capacity, but also grow the structure, if you will, around and the infrastructure around sales.

[Operator]

[Operator Instructions] Our next question comes from Matt Hedberg with RBC Capital Markets.

[Matthew Swanson, analyst]

It's actually Matt Swanson on for Matt. Jim, I know it's really early days here, but can you just comment on kind of the early reaction you're getting from your installed base on Datawatch? And how that's kind of impacted your ideas around cross-selling?

[James Scapa, executive]

It is very, very early days. We created this -- the sort of swat team, just a few people, and they've been out to several of the regions already. We've had a lot of interest actually more than I might have even expected. And there's a lot of interest from my own organization as well, and we want to manage that carefully. So the reaction in general is pretty positive. I think we have to take our time a bit, get our arms around some of the go-to-market there. We're just learning and exploring, but by middle of the year I think we're going to be able to go much faster.

[Matthew Swanson, analyst]

That's great. And then it was also great to hear about all the large auto deals that you won in Europe. Just kind of looking at the general PMI data recently, it seems like there might be a little general manufacturing softness in the EMEA region. Have you noticed anything customer conversations? It sounds like generally things are looking good, but then did you see any macro-specific concerns in the region?

[James Scapa, executive]

We're not seeing that, and we have a particularly strong organization, I would say, in the EMEA region. Sometimes, a downturn actually helps us. I've talked about that before. But right now frankly, we're still seeing a lot of strength. So I don't know what will happen next year, but this year, things look very solid.

[Operator]

Our next question comes from Josh Tilton with Berenberg.

[Joshua Tilton, analyst]

In regards to the go-to-market strategy for Datawatch within the Altair customer base, is there a plan to expand the omnis overlap team? And then how fast can the sales force ramp behind the strategy?

[James Scapa, executive]

So there's 2 pockets, if you will, in the existing customer base. One is traditional Datawatch customers, which is financial organizations and data scientists. And then the second is some of the engineering opportunities and the synergies that we've talked about. So it's a mix. We are beginning to train. Or we're going to build some materials to bring our own account executives up to speed, and they are joining some of the meetings little by little. And that's how they are learning. Frankly speaking, the products, I think, are quite good. Under the units model, I think it's going to be a very compelling story, and I think we're going to be able to communicate pretty effectively what the strengths and weaknesses of these products are very soon.

[Operator]

And I'm currently showing no further questions at this time. I'd like to turn the call back over to Jim Scapa for closing remarks.

[James Scapa, executive]

Oh. Okay. I'm sorry, I thought there was one more. So thank you all very much for joining the call. Appreciate the interest in our company and in our business.

I do want to point out that we are going to have an Analyst Day on March 12 at our headquarters in Troy, Michigan. And so we invite those interested to attend. Thank you very much.

[Operator]

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day.