Madison Square Garden Sports Corp

NYSE:MSGS

Earnings Call Transcript 2018-Q4

[Operator]

Good morning. My name is Christie, and I'll be your conference operator today. At this time, I would like to welcome everyone to The Madison Square Garden Company Fiscal 2018 Fourth Quarter Earnings Conference Call. [Operator Instructions]

I will now turn the call over to Ari Danes, Senior Vice President of Investor Relations for The Madison Square Garden Company. Please go ahead, sir.

[Ari Danes, executive]

Thanks, Christie. Good morning, and welcome to The Madison Square Garden Company's Fiscal 2018 Fourth Quarter and Year-End Earnings Conference Call.

Our President, Andy Lustgarten, will begin this morning's call with a discussion of the potential spin-off transaction and the company's operations. This will be followed by a review of financial results with Donna Coleman, our EVP and Chief Financial Officer.

After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investors section of our corporate website.

Please take note of the following: Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results, developments and events may differ materially from those in the forward-looking statements as a result of various factors. These include financial community perceptions of the company and its business, operations, financial condition and the industry in which it operates as well as the factors described in the company's filings with the Securities and Exchange Commission, including the sections entitled Risk Factors and management's discussion and analysis of financial condition and results of operations contained therein. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call.

Lastly, on Pages 4 and 5 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income, a non-GAAP financial measure.

And with that, I will now turn the call over to Andy.

[Andrew Lustgarten, executive]

Thank you, Ari, and good morning, everyone.

For fiscal 2018, we again delivered strong revenue and adjusted operating income results. At the same time, we remain focused on ensuring that our company is well-positioned to drive ongoing growth and value creation for our shareholders.

With this objective in mind, in June, we announced that our Board of Directors approved the plans to explore a potential spin-off that would separate our Sports business from our Entertainment business. The pure-play sports company would reflect the strong and steady financial performance of our Sports businesses driven by the New York Knicks and Rangers franchises, while the live entertainment company would capitalize on opportunities for growth, most notably through venue expansion. We believe the potential transaction would provide both companies with enhanced strategic and financial flexibility to pursue their own distinct business plan and capital allocation policy.

We also expect the spin-off would enhance shareholder value by enabling investors to more clearly evaluate each company's assets and future potential. Assuming we proceed with the transaction, we presently expect that MSG shareholders will receive a tax-free pro-rata distribution equivalent in aggregate to approximately 2/3 economic interest in the pure-play sports company. The remaining common stock would be equal to approximately 1/3 economic interest in the sports company. This would be retained by the entertainment company, which we would expect we would use the shares to raise capital to fund its growth initiatives and/or exchange for common stock.

We have not set a timetable for completion of this potential transaction, which would be subject to various conditions. We look forward to updating you on progress in the months ahead.

Turning to our operations. As I mentioned earlier, we delivered strong underlying financial results at both our Entertainment and Sports segments for fiscal 2018 driven by ongoing demand for our portfolio of live experiences, along with our continued focus on maximizing the growth and profitability of our core businesses.

Looking at our Entertainment segment, excluding TAO Group and Obscura for comparative purposes, we generated a low double-digit percentage increase in revenues and an even greater percentage increase in AOI this fiscal year. This was driven in part by our booking business, which delivered yet another year of increased venue utilization with a record-setting number of events. In fact, for fiscal 2018, we had double-digit percentage increases in both multi-market and multi-night engagements, highlighted by our residency with Billy Joel, who last month celebrated his 100th sold-out show here at MSG.

It is also worth noting that the growth in our booking business was broad-based with 6 of our 7 venues generating robust increases in both event-related revenues and contribution. Our expertise in booking will continue to play a key role in our success, especially as we grow our portfolio of venues.

This year, we also unveiled the plan for MSG Sphere, which marked the beginning of a new chapter for our Entertainment business. Through cutting-edge technologies, these venues will create entirely new platforms that will redefine the immersive experience, driving venue utilization at MSG Sphere and the venue -- driving to become the venue of choice for a wide variety of content, from standard bookings to new forms of attractions, concerts, product launches and special events. In addition to changing the way we think about the live entertainment experience, we believe MSG Sphere will attract companies which are now looking for innovative ways to showcase their brands.

As you know, our plan is to build venues in both Las Vegas and London. We continue to refine our design to ensure that we are delivering the most immersive experiences for our guests and maximize the efficiencies that come with constructing 2 venues that will have similar key features. Next month, we will begin site prep in Las Vegas. Our goal is to open Las Vegas venue as early as possible in fiscal 2021 and for London venue to open the following year. We look forward to updating you on both projects and remain confident that MSG Sphere represents a meaningful growth opportunity for our company.

Turning to the TAO Group. It has been 1.5 year since we purchased a majority interest in the hospitality leader, which has expanded its footprint with 5 new venues in Los Angeles, several entertainment, dining and nightlife experience in Moxy Times Square and LAVO Singapore located in Marina Bay Sands Hotel.

TAO Group continues to build its portfolio and, in June, announced plans for an entertainment, dining and nightlife venue as part of Moxy Chelsea in New York City as well as TAO Chicago restaurant and nightclub, both expected to open this fall. This will be followed by -- in 2019 by Marquee Singapore, TAO Group's second venue in the Marina Bay Sands Hotel.

We are also pleased with the success we've had in bringing together the assets and brands of TAO Group and MSG to drive additional growth in areas such as sponsorships and hospitality. Continuing to explore these opportunities will remain a priority, particularly as we move forward with our venue expansion plans.

This past Memorial Day weekend, Boston Calling Events held its annual namesake festival, which took place for the second year at the Harvard Athletic Complex. While this year's financial results did not meet our expectations, we believe we made important enhancements to the festival to upgrade the guest experience and are already working towards making next year's event both a critical and a financial success.

Turning to productions. Fiscal 2018 marked another year of record revenue for the Christmas Spectacular Starring the Radio City Rockettes, which once again was seen by over 1 million people. For the production's 85th season, technology enhancements, along with content by Obscura Digital, the creative studio we purchased earlier this year, digitally transformed the show. This upcoming holiday season, we plan to deliver an even more immersive experience for our guests and look forward to sharing more soon.

Turning to MSG Sports. Our full year results at Sports segment include another year of broad-based growth across sponsorship, signage, local media rights, ticket-related revenue and suite license fees, a reflection of the ongoing strength and popularity of our professional sports brands. This includes the Knicks and Rangers, which recently welcomed new head coaches David Fizdale and David Quinn. Both coaches are continuing to focus on developing young talent with the goal of building championship-caliber franchises. Meanwhile, the New York Liberty are currently wrapping up their 22nd season at the Westchester County Center. We remain committed to finding the right owner who could further advance the team.

This fiscal year also marked our first foray into esports through a purchase of a controlling stake in Counter Logic Gaming as well as our participation in the NBA 2K eSports league. As we look ahead, we continue to see opportunities for growth in areas such as media rights and sponsorship where we bring significant expertise.

In fact, on a company-wide basis, our marketing partnership group had a strong fiscal 2018 with double-digit sponsorship and signage growth. We successfully renewed agreements with 3 signature partners, Delta Air Lines, Charter Communications and Kia, while adding Squarespace as a new signature partner and the first-ever Knicks jersey sponsor. On the entertainment side, we also entered into a marketing partnership with Hulu, which, including naming rights to The Theater at Madison Square Garden, and recently added Montefiore Health System as the title partner of Madison Square Garden's concert series.

And just last month, we announced a multifaceted partnership with PepsiCo, making the beverage and food company one of our official signature partners starting September 1. PepsiCo will become the exclusive nonalcoholic beverage and salty snack partner across the various MSG properties, including our venues in New York, LA and Chicago, as well as select TAO Group entertainment dining and nightlife venues. PepsiCo will also become an official partner of the Knicks, Rangers and Counter Logic Gaming as well as the Christmas Spectacular Starring the Radio City Rockettes. We are pleased to welcome PepsiCo to the MSG family and look forward to creating a partnership that will drive both of our businesses.

In summary, fiscal 2018 represented a strong year with respect to our core operations, highlighted by our booking business, Christmas Spectacular, suites and marketing partnerships. This past year also represented the start of a new chapter for our company as we unveiled our plans for MSG Sphere and announced our intent to explore potential separation of our Sports and Entertainment businesses. We look forward to building on our many successes in the year ahead and remain well-positioned to continue creating value for our shareholders.

With that, I will now turn the call over to Donna, who will take you through our financial results.

[Donna Coleman, executive]

Thank you, Andy. Good morning, everyone. I'd like to start by touching on our full year results.

For fiscal 2018, we generated total revenues of $1.6 billion and adjusted operating income of $193.8 million, which represent increases of 18% and 98%, respectively, both as compared with the prior year. Excluding the impact of acquisitions and nonrecurring license, we grew underlying revenue by a mid-single-digit percentage, further increasing AOI by a strong double-digit percentage in fiscal 2018.

Turning to our fourth quarter results. For the fiscal 2018 fourth quarter, our company generated total revenues of $318 million, an increase of 4% year-over-year, and an adjusted operating loss of $2.5 million, which represents an improvement of $41 million as compared to the prior year quarter.

At MSG Entertainment, revenues of $185.6 million increased 47%. This was primarily due to a significant increase in event-related revenues at the company's venues and a full quarter of TAO Group results. As a reminder, the prior year quarter included 2 months of TAO results due to the timing of the acquisition. The increase in event-related revenues was primarily due to higher revenues at The Garden, Forum and Radio City Music Hall. The increases at all 3 venues reflect healthy growth in the number of concerts held as compared to the prior year quarter.

Excluding the impact of a $33.6 million noncash write-off in the prior year fourth quarter, MSG Entertainment AOI of $7.7 million improved $13.3 million. This was primarily due to strong -- to strong growth in event-related contribution at our venues and the impact of a full quarter of TAO Group results, partially offset by a decrease in contribution from Boston Calling Events.

At MSG Sports, revenues decreased 26% to $132.5 million. This was primarily due to the absence of playoff-related revenues and lower league distributions, mainly the result of $15 million in nonrecurring revenue in the prior year quarter. In addition, regular season ticket-related revenue and food, beverage and merchandise sales decreased, all of which were impacted by a combined 3 fewer Knicks and Rangers home games versus the prior year quarter. The overall decrease in revenue was partially offset by higher sponsorship and signage revenues, local media rights fees from MSG Networks and suite rental fee revenue.

MSG Sports AOI decreased 30% to $10.1 million. This was due to the decrease in revenues offset by lower SG&A expense and direct operating expenses. The decrease in SG&A expense primarily reflects the absence of severance-related costs associated with a team executive recorded in the prior year quarter. The decrease in direct operating expenses primarily reflects lower playoff-related expenses and other net expense decreases.

Lastly, Corporate and Other adjusted operating loss of $20.3 million increased by $1.4 million, which was primarily due to higher selling, general and administrative expenses.

I'd like to point out that beginning with our first quarter of fiscal 2019, we will be adopting the new revenue recognition accounting standard. While our analysis is ongoing, one expected change will be the timing of when we recognize revenue throughout the year for a number of our revenue streams, including local media rights, season ticket revenue and suite license fees. For example, the vast majority of local media rights fees from MSG Networks will now be recognized over the course of the regular season as opposed to being recognized straight-line over the fiscal year. This will impact the quarterly year-over-year comparability of results, starting with the fiscal 2019 first quarter. We'll have more to share on our next call.

Turning to our balance sheet. As of June 30, total unrestricted cash and cash equivalents was approximately $1.2 billion. In addition, there had been no borrowings made under either our $150 million New York Rangers revolving credit facility or our $215 million New York Knicks credit facility. As a reminder, there also remains outstanding an approximately $109 million 5-year term loan at the TAO Group level.

With that, I will now turn the call back over to Ari.

[Ari Danes, executive]

Thank you, Donna.

Christie, can we open up the call for questions?

[Operator]

[Operator Instructions] And your first question is from Brandon Ross of BTIG.

[Brandon Ross, analyst]

I have a couple on the spin. I know it's early, but how are you guys thinking about how much of the retained interest in sports will be sold to raise capital versus swap? If you could kind of help us with what goes into that decision-making process and then I have a follow-up.

[Donna Coleman, executive]

Brandon, yes, it's Donna. So you're right. We're still in the exploration stages of this transaction and our goal is to position the 2 companies for long-term success and value creation and give ourselves financial flexibility.

So as you know, we currently propose that the entertainment company will start with $1 billion of cash on hand and will retain a minority stake in the sports company. This will enhance our ability to pursue our growth plans and also give us the ability to opportunistically exchange shares for our own stock.

To your point, where we ultimately end up in terms of raising capital versus exchanging shares really hasn't been determined. And it will depend on a variety of factors that go into the decision process, including how the stocks trade, the capital needs of the entertainment company and whether we decide to tap the debt market at some point, so there's still a lot to be determined in that regard.

[Brandon Ross, analyst]

And what's the potential for the tax leakage when you do sell those retained shares? How do you plan to shield those taxes?

[Donna Coleman, executive]

Right. So our cost basis is low, but we expect to be able to minimize that in a number of ways. For example, the recently enacted tax reform law allows us to accelerate depreciation on significant components of the MSG Sphere in Las Vegas, which will add to our NOL once we open the venue. We're also exploring some other opportunities that are available to us. And of course, to the extent we exchange some of the retained interest in the sports company for shares of the entertainment company, that would be tax-free.

[Brandon Ross, analyst]

So what -- how do you think about the timing then of the retained interest sale? So do you want to wait a few years to minimize the tax leakage there by shielding the taxes with the greater NOL? Or do you want to set sort of a high watermark concurrent with the spin so that sports trades probably at a higher level?

[Andrew Lustgarten, executive]

Brandon, it's Andy. I think it's a little early for us to comment specifically on timing, but I can say we are always focused on maximizing shareholder value. So take those 2 messages together, but it's very hard to say much more at this time.

[Operator]

Your next question is from Bryan Goldberg of Bank of America Merrill Lynch.

[Bryan Goldberg, analyst]

I was wondering if you could share some perspective on how you're thinking about the opportunity around legalized sports betting, how substantial it could be, what parts of your portfolio could benefit? And operationally, would there be any meaningful complexities to navigate to go after the opportunities there? And then I've got a follow-up.

[Andrew Lustgarten, executive]

Happy to take the follow-up in a minute, but I'll -- starting on sports gaming. If you take a step back and look at what's going on in Europe and see the sponsorship and advertising dollars that go into the Premier League and other European sports, that excites us tremendously. That said, work that, and which I do feel bullish about, put that aside, we love and we're very excited about the impact of sports gaming on fan engagement and what the impact of that engagement does to in-venue and also to both league and team media rights, which also will impact advertising as fans become even further engaged. So just the mix of both what we see on the ad market plus what we think it's going to do in fan engagement is very exciting to us.

It's still early. There's -- New Jersey, as you know, is legal, so -- which we're able to capture the benefit through our ad rep deal with the MSG Network and our carriage into the New Jersey market of our teams. And navigating through the legal environment in New York and the other market is complex and -- but we're hopeful that New York will follow suit with New Jersey and we will be in a position to optimize and maximize our benefit from it.

[Bryan Goldberg, analyst]

And then on -- my follow-up is on the Spheres. I was wondering, you said you're refining your plans. Could you remind us what technological elements of the venues will be proprietary to MSG and what your latest thoughts are in terms of owning or developing exclusive IP?

[Andrew Lustgarten, executive]

I'm happy to take you through that. So let me start. At the forefront, it's hard for us to really give you all our secret sauce of what we're doing here, right? We're -- part of the -- part of what we're creating in -- has a lot of, as I said, secret sauce and we're focused on delivering something above and beyond.

That said, what I can tell you is we built a group called MSG Ventures here internally who's focused on identifying developing technologies that affect live entertainment. Some of those we've showcased already at some of our events. In addition to that team, we've made a number of acquisitions, investments and partnerships. Obscura Digital was one, for example. They've already played a significant role in the Christmas Spectacular and they're playing a significant role in our creation of MSG Sphere. We've made investments in virtual reality companies, in new forms of acoustics. And last month, we made a minority investment in display -- digital display -- sorry, digital technology company -- display company and that company will provide specific technologies for the Sphere. In addition to these investments, we are working with multiple experts in audio video connectivity and other technologies, but one thing I can tell you is our strategy in each of these investments and each of these partnerships is to either obtain expertise or obtain strategic and/or ownership rights which relates to the IP or underlying technologies that we're going to be using.

[Bryan Goldberg, analyst]

That's very helpful. And I'm sorry, one quick housekeeping item. In the quarter, your equity income from the JVs swung kind of meaningfully negative in the quarter year-on-year. I'm just wondering, we don't have a lot of visibility on what's going on there. Any notable ins and outs at the Tribeca or the Azoff JV you could share with us?

[Donna Coleman, executive]

Sure. Yes. There were a number of nonrecurring items that impacted the fourth quarter results this year. If I exclude those amounts, our share of earnings for the nonconsolidated affiliates in the fourth quarter actually increased versus the prior year. And I'd also add, on a full year basis, if I exclude the nonrecurring items in both years, we saw meaningful bottom line improvement relative to the prior year driven by progress in the Azoff MSG Entertainment joint venture.

[Operator]

Your next question is from John Janedis with Jefferies.

[John Janedis, analyst]

Maybe one or so on the Sphere then one separate one. On the Sphere, has the timing around New Year's opening changed? And can you provide any detail on the ground lease with the Sands, specifically as it relates to the payment of 25% of after-tax cash flow to the Sands if certain objectives are reached?

[Andrew Lustgarten, executive]

Sure. Happy to take you through both. I'll tell you, we are full speed ahead on Las Vegas -- on our plans for Las Vegas and for London. We've achieved a number of achievements. Next month, we'll be beginning site prep and we continue to refine our design to make sure that we maximize the advantages from the 2 buildings that has very similar features. We have secured all the necessary entitlements in Las Vegas, a major milestone, and are actively working on the construction permitting process. And our goal is to open as soon as we can and as early as possible and -- but we expect it to be in fiscal 2021.

I think your other question was around hurdle rate?

[John Janedis, analyst]

Correct.

[Andrew Lustgarten, executive]

And the ground lease. So as you know, we -- well, let me just start. Sands has been a great partner. We are thrilled with them. They've facilitated all those permitting that we've already discussed. They're a large part of how we were able to move so fast there and we're thrilled to be next door.

The deal with Sands is a 50-year lease. We don't pay any rent to Sands. And we -- at above certain objectives, they will receive a 25% of excess after-tax cash flow. We're not going to be disclosing exactly what those objectives are, but I can tell you it's into the double-digit return area. In addition to the lease, they provided us $75 million to help fund construction and to connect a pedestrian bridge back to The Venetian and the other Sands properties. And we're very excited.

[John Janedis, analyst]

Okay. And maybe quickly, you spoke to the Pepsi agreement. I'm not sure how much you can give, but how is this agreement incremental to the portfolio? And I guess, more broadly, can you give us any more update on the sponsorship renewal cycle?

[Andrew Lustgarten, executive]

Sure. Probably better to start with the sponsor -- just the marketing partnership in general. We've had a great past 2 years. We've renewed partners, Anheuser-Busch, Lexus, Delta Air Lines, Kia and Charter Communications. We've added Squarespace and, as you mentioned, PepsiCo as a new partner.

We never talk about specifics of any of our agreements, but I can tell you that our team has done a great job of renewing and expanding our partnerships. The Pepsi -- for example, the PepsiCo partnership not only includes the beverage brands, but also includes snack brands and they're going to be virtually -- they're going to be front and center across all of MSG's properties, so virtually all of MSG's properties and they'll be starting September 1. Their deal is going to include a naming rights for an 8th floor concourse and fan deck, which is new. And our success this year has led to double-digit increases in their sponsorship revenue. We are confident that we are positioned well for the future.

[Operator]

Your next question is from David Karnovsky of JP Morgan.

[David Karnovsky, analyst]

Just one on Boston Calling. Can you provide some additional detail there? I think you said it didn't meet your expectations. Was this mainly an attendance issue? And then how are you thinking about the festival for next year and potential expansion in the festival space in general?

[Andrew Lustgarten, executive]

Happy to. So we did see lower attendance this year. We believe that was partially related to the customer experience in 2017, our first year on site at the Harvard Athletic Complex, which we believe is an excellent site, but with any first year festival, there are always hiccups. And in this past year, we really focused on correcting those hiccups and those hiccups were all around customer experience. Ingress, egress, connectivity, food and beverage offering, we focused on that tremendously this past year and we believe, in all the feedback we've received so far, that it's been corrected. And so we're really bullish on the future. Boston Calling is Boston and New England's premier music festival and we think it's a great brand and we look forward to building on it.

[Operator]

Your next question is from Amy Yong with Macquarie.

[Amy Yong, analyst]

I guess, just following up on the return profile for Sphere. Andy, can you talk about what we should expect and should we expect the same return profile in London? And I guess, how does it compare to MSG Garden? I think a lot of us sat through the transformation. Obviously, that was very successful.

And then secondly, I think you mentioned in your prepared remarks the sale process of New York Liberty. What are some of the factors that you're weighing when you're looking for a buyer? And what's been the appetite to take in that team?

[Andrew Lustgarten, executive]

So how we think about returns. We're -- with both the London Sphere and the Las Vegas Sphere, as you know, we're building a state-of-the-art venue. The key to the state-of-the-art venue is the immersive experiences and, most importantly, driving the venue utilization. This utilization will drive attendance, ticket sales and sponsorship opportunities. There will be a wide variety of events from standard bookings to new forms of content, to new forms of attractions, to product launches and to special events. We think these 2 cities are ideal for all forms of those types of content. And in addition, we're focusing very heavily on creating a set of tools that makes the content very easy to be created for both internally for -- and as well for third parties, which will let us drive a library of content that we could use across both venues. As I mentioned, we think sponsorship will be a very significant component to these venues and we think there's been a numerous number of companies that are going to look for innovative ways to showcase their products and we'll be the place for it.

And, look, we don't look exactly -- we don't disclose our exact IRR expectations, but I can say we're very excited and look to create a lot -- long-term shareholder value.

I think your other question was regarding Liberty?

[Amy Yong, analyst]

Yes.

[Andrew Lustgarten, executive]

So where we are -- it's still in the process of finding a right owner. We're very focused on finding somebody who wants to take the brand and the team into the future and are still actively pursuing those buyers. And I have nothing further to talk about at this time, but we are fully committed to our strategy on this.

[Operator]

Your final question is from Ben Swinburne of Morgan Stanley.

[Benjamin Swinburne, analyst]

Andy, I think you mentioned in your prepared remarks low double-digit sort of organic growth in the concert booking business for the Entertainment business. How do you think about the sustainability of that type of growth? You mentioned utilization was up a lot. Is there room to take that higher? And do you have the kind of concert supply and visibility into sort of keeping these kinds of top line growth rates going? And then I have a follow-up on TAO.

[Andrew Lustgarten, executive]

So we've spent the last few years very focused on multi-venue, multi-night bookings and we've seen that strategy pay off. We -- the live business, not only with us, but across the industry had been very strong and there's a lot of tailwinds here pushing the acts to want to be on the road given that's where the economics lie for the acts. And being in the premium markets that we are, we stand to benefit from those tailwinds. And given the markets we are, what we are in and our strategy to push multi-night and multi-venue, we also stand to benefit. So while there's any -- on a yearly basis, we feel very strong. There could always be quarterly or monthly movements based on timing of when our events are in the building and when the sports games are. When -- last year, we had 13 nights of Phish in the summer. So it's hard to replicate that every single summer, but as you think across a year, we feel very strong about the future of our bookings business.

[Benjamin Swinburne, analyst]

That's helpful. And then just on TAO, now that you've got this basically the portfolio inside of MSG for a year and you look out, how has the business performed versus your expectations? What sort of growth did you see organically in that portfolio? And along the same lines of the booking business, what's sort of the outlook to keep that going from a growth rate perspective?

[Andrew Lustgarten, executive]

So we've been happy -- we've been very happy with our TAO deal, TAO partnership. They've -- there's been a whole host of benefits we actually hadn't thought about when we did the transaction. It really pushed us on rethinking about our experiences here in our venues. We're thrilled with what they've done with Suite Sixteen. We expect to continue to grow that and replicate other types of ways to work together to push our base business and also to push our business as we grow in Vegas and in London. Their -- on their own, their growth profile -- the new venues they've been opening are -- we're very pleased with. We think Singapore and other venues in Chicago and some of the other venues that are on the come will be successes. And so I think, overall, we are pleased.

[Operator]

With that, I'll turn the call back over to Ari Danes for any additional or closing remarks.

[Ari Danes, executive]

Thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a good day.

[Operator]

This does conclude today's conference call. You may now disconnect.