Skillsoft Corp

NYSE:SKIL

Earnings Call Analysis

Skillsoft Reports Mixed Q3 Performance

Skillsoft's financial journey through Q3 reflects a tale of two segments. The Content & Platform bookings rose to $420 million, a 4% year-over-year (YoY) increase, with robust retention rates highlighting strong customer value. This segment's revenue grew by 3% YoY to $101 million, marking sustained growth. However, the Instructor-Led Training (ILT) segment did not mirror this success, showing a 9% decline in revenue YoY. Despite a challenging market, Skillsoft improved its adjusted EBITDA to $30 million, 21% of revenue, marking continuous margin expansion from 16% in Q1 to 21% in Q3. Full-year expectations have been moderated to meet the lower end of prior revenue guidance, while maintaining confidence in achieving the high end of adjusted EBITDA targets, aiming to cut gross leverage below 4x EBITDA in three years.

Harnessing Generative AI to Forge a Market Lead

Skillsoft is steering the ship into a promising fiscal year 2025, equipped with generative AI that is transforming their work processes. Content development and marketing teams have embraced AI to shorten development times and scale their campaign reach swiftly. The dedicated efforts to become a powerhouse in the market, an innovator, and an essential partner in workforce transformation are seen as a strategic move to leverage new technologies to stay ahead of the curve.

Consistent Growth and Strong Customer Retention

The Content & Platform segment is showing resilience with bookings reaching $420 million, marking a 4% rise over the last comparable period. The segment enjoys solid retention rates, notably a Long-Term Monthly (LTM) dollar retention rate that climbed to 101%, which is an increase of 300 basis points. Despite a rough period for many companies, Skillsoft's retention is trending upwards, signaling customer satisfaction and successful cross-selling abilities. However, the Instructor-Led Training (ILT) faces a more tumultuous path, where bookings and revenues are somewhat steady sequentially, but have dipped year-over-year. The ILT segment is being reevaluated under the lens of the current cautious economic climate.

Financial Discipline Leading to Increased Profitability

Skillsoft's focus on lean operations and financial discipline has paid off with an increase in profitability. The third-quarter adjusted EBITDA stood at $30 million or 21% of revenue, improving from the previous year's 20%. This is part of a consistent effort to boost EBITDA margins, and such efforts have also led to a decreased net loss compared to the previous year. The company maintains a strong cash position, although it reports a negative free cash flow that has nevertheless improved from the prior year. Furthermore, they've adapted to the slow economic climate, predicting bookings and revenue to be at the lower end of their initial guidance, but EBITDA at the higher end, keeping an eye on long-term debt management.

Future Goals: Expanding Market Share and Value Creation

Jeffrey Tarr, the company CEO, highlights Skillsoft's unique position with an extensive suite of enterprise learning solutions. With a strategic focus on solving the customers' pressing skills gaps, the company leverages its strengths to spur growth. This strategy reflects in the increased dollar retention rates and is believed to translate into improved profitability and shareholder value over time.

Earnings Call Transcript 2024-Q3

[Operator]

Greetings, and welcome to the Skillsoft Corp. Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.It is now my pleasure to introduce your host, Chad Lyne, Head of Investor Relations. Thank you, Chad. You may begin.

[Chad Lyne, executive]

Thank you, operator. Good afternoon, and thank you for joining us today for Skillsoft's earnings call to discuss our results for the third quarter ended October 31, 2023. Participating on today's call are Jeff Tarr, Skillsoft CEO; and Richard Walker, Skillsoft CFO.Today, after market close, Skillsoft issued a press release announcing its financial results, which is available on our Investor Relations website. Before I hand the call over to Jeff, I want to remind you that today's call will contain forward-looking statements about the company's business outlook and expectations, including statements concerning financial and business trends, our expected future business and financial performance, financial condition and market outlook. These forward-looking statements and all statements that are not historical facts reflect management's current beliefs and expectations as of today and therefore are subject to risks and uncertainties that could cause actual results to differ materially.For a discussion of the material risks and other important factors that could affect our actual results, we refer you to our most recent Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements or information, which speak as of the respective dates.During the call, we will also discuss certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures included in today's commentary to the most directly comparable GAAP financial measures as well as how we define these metrics and other metrics is included in our earnings press release, which has been furnished to the SEC and is also available on our website at www.skillsoft.com. After our prepared remarks, Jeff and Rich will be available to take questions.With that, it's my pleasure to turn the call over to Jeff.

[Jeffrey Tarr, executive]

Thanks, Chad. Good afternoon, everyone, and thank you for joining us. Our team delivered another quarter of revenue and bookings growth in our high-margin SaaS-based Content & Platform segment. Our LTM dollar retention rate was 101%, up 3 percentage points, highlighting our progress in growing share of wallet within existing customers.Adjusted EBITDA margins were 21%, up 100 basis points. Our Instructor-Led Training segment remained stable sequentially but was down year-over-year, in part due to a noncore product line that we are exiting. Rich will cover our results in more detail.Today, I'll focus my remarks on how we are positioning Skillsoft to seize the substantial growth opportunity in front of us. In my recent discussions with business leaders across a range of industries, skills gaps and workforce transformation challenges are a consistent theme, and generative AI is almost always a topic of conversation.According to the World Economic Forum's Future of Jobs report, nearly 1/4 of all jobs will be disrupted in the next 5 years due to new technologies, including generative AI. According to Goldman Sachs, 2/3 of occupations are exposed to at least partial automation by AI. In the face of this wide-ranging disruption to the labor market, more than 8 out of 10 companies view investments in learning as the most promising strategy to deliver on their business' goals. For these organizations, effective upskilling and reskilling initiatives are C-suite priorities. This is where Skillsoft is winning.Over the last 2 years, we've transformed Skillsoft from a vendor of video e-learning content into a provider of transformative multimodal learning experiences that deliver measurable results. We built Skillsoft Percipio into a best-of-breed AI-enabled learning experience platform that integrates with nearly every major LMS and e-learning content provider.We added skills assessments, benchmarks and curated learning journeys to our platform. We enhanced our leadership and business skills solution with ICF-accredited coaching at scale. We grew our compliance practice with important platform enhancements and thought leadership, while revitalizing historically dry training with dramatic emotion-infused scenarios grounded in sound instructional design and interactivity has proven to change behavior.We acquired Codecademy to add interactive learning and hands-on labs to serve many of the fastest-growing occupations and skills in AI, data science, cloud, cybersecurity and web development. And most recently, we launched CAISY, a powerful generative AI-based simulator that is helping learners develop their skills to engage in crucial business conversations across a rapidly growing range of scenarios.These strategic moves have positioned us as the leading provider of transformative learning experiences to the world's largest and most sophisticated organizations, organizations with acute and complex reskilling, upskilling and workforce transformation needs. These customers are focused on realizing demonstrable business outcomes. Unit economics for Skillsoft from this group are attractive. Deal sizes are typically 6 or 7 figures. Contracts are usually multiyear and dollar retention rates are often north of 110%.Taken together, these metrics are indicative of our success cross-selling and upselling solutions with our largest customers and the potential for growth across our customer base overall. For example, a leading international supplier of integrated technologies and systems for the defense industry operating in 130 countries chose Skillsoft to centralize and enhance its global training program. Skillsoft won the account on the breadth of our multimodal solution, integration capabilities with their LMS, compliance with their IT security requirements and broad language coverage.In another example, we were chosen by one of Europe's leading IT transformation providers with more than $3 billion in revenue to deliver a unified learning experience to a highly technical workforce of more than 5,000 employees. Our offering, spanning leadership and business skills, technical training and compliance, all delivered on our industry-leading learning experience platform, allowed this customer to consolidate down from 5 vendors and deliver a better learning experience at lower total cost.For a global leader in memory and storage technology, we broadened the scope of our pre-existing relationship beyond leadership and business skills with a new 3-year deal that added our compliance solution in a competitive takeaway. In the financial services industry, we secured a 3-year agreement spanning leadership and business skills, compliance and coaching to support a leading digital consumer and corporate bank.For a global energy and chemicals company, we doubled the size of our relationship with a multiyear extension and upgrade to our full solution suite, allowing the customer to rationalize multiple vendors and achieve a higher ROI by centralizing their learning experience on the Skillsoft Percipio platform.Within the U.S. federal government, our ability to offer the only digital coaching solution that is FedRAMP authorized through our Percipio platform led to the award of a high 6-figure contract to provide leadership coaching and custom assessments to the Department of the Interior. And finally, we had a sizable land-and-expand success story, growing a content and platform customer win from earlier this year by adding a 7-figure commitment to deliver instructor-led training that support this technology company's culture of innovation through skills growth and talent development.The unifying thread behind these success stories is our focus on winning with customers for whom reskilling and upskilling is a strategic imperative and where the breadth and scale of our capabilities delivers differentiated value and measurable outcomes. We believe our recent investments in talent and product will position us to capture more of this growing market opportunity.We recently attracted new senior leaders to accelerate our growth, including a new seasoned CRO, new heads of customer success and customer acquisition, and new leaders for our coaching and tech and dev businesses. We are seeing good early returns from this infusion of new talent, and I look forward to the positive impact they will have on our business in the future.We've also continued to invest in our platform and content, particularly in areas related to generative AI, which we believe is creating a long-term structural tailwind for our business. Generative AI is rapidly changing what we teach, how we teach and how we work, and we're moving quickly to seize this compelling opportunity.During the quarter, we announced the general availability of Skillsoft's CAISY, our AI-powered skills trainer that delivers personalized and contextualized leadership coaching at scale. The customer reaction and market feedback to CAISY has been exciting, validating our position as a forward-thinking and innovative industry pioneer.CAISY's initial launch included 10 scenarios focused on developing effective interpersonal and leadership communication skills, including employee performance management, customer negotiations and customer service challenges, all of which can be modified for a wide range of personality styles. We're partnering with customers to rapidly develop additional scenarios with 50 scheduled for launch this quarter as well as powerful new capabilities creating innovative and immersive learning experiences.Another example of our use of generative AI to transform how we teach is Role Advisor. Role Advisor is an AI-powered skill building concierge for the learner. It identifies top skills required for a specific role, assesses those skills to identify gaps and serves targeted learning recommendations to close gaps and build proficiency. Much as AI is transforming how we teach, it is also changing what we teach.Our new generative AI aspired learning journeys offer multimodal learning paths that promote subject literacy with courses ranging from generative AI foundations and guardrails to AI and ML for decision-makers, ensuring that learners are equipped with the fundamentals needed to use generative AI effectively.We also launched additional skill benchmarks, which assess learner proficiency and knowledge in generative AI. These benchmarks score and level learners from novice to advanced with personalized learning recommendations that progress the learner from foundational literacy to subject matter mastery. On an enterprise-wide basis, organizations are able to ensure that AI skills gaps are quantifiably bridged and that their employees are prepared for the future of work.Beyond our market-facing generative AI investments, we are also leveraging this important technology to change how we work. For example, our content production teams are using generative AI to help offer content and assessment questions, reducing development time and shortening content release cycles. Our marketing teams are using it to rapidly build and localize marketing campaigns, webpages and collateral. And our shared services teams are using it to automate workflows that were previously time and labor intensive.I'm proud of our team's progress to strengthen our position as a market leader, innovator and workforce transformation partner for the enterprise, while seizing the exciting opportunity created by generative AI. I'm encouraged by the progress I'm seeing across the company. The entire organization is currently laser-focused on closing our important fourth quarter on a strong note that set us up for a promising fiscal 2025.With that, I'll now turn the call over to our CFO, Rich Walker, to review our financial results. Rich?

[Richard Walker, executive]

Thanks, Jeff. Welcome, everyone, and thanks for joining today. Covering our financial results, let's turn first to our Content & Platform segment, which accounts for nearly 3/4 of our business.As we've discussed in the past, given its quarterly seasonality, it's best to view bookings and retention rates in this primarily subscription-based segment on an LTM basis. Content & Platform bookings were $420 million on an LTM basis, up 4% compared to the prior LTM period, with growth across all areas of the Content & Platform portfolio. Retention rates in our Content & Platform segment remained strong, demonstrating the value we deliver to our customers and our team's ability to upsell and cross-sell our broad range of solutions.Our LTM dollar retention rate was 101%, up 300 basis points from the comparable prior period and marking our third consecutive quarter at this level. In an environment where many SaaS companies are facing higher levels of churn and erosion, our dollar retention rates are trending positively.Content & Platform third quarter revenue was $101 million, up 3% year-over-year and marking another quarter of growth for this segment. Similar to my bookings commentary, all areas of the portfolio contributed to the revenue growth.Let's turn now to our more transactional ILT segment, where bookings were stable and roughly flat sequentially at $46 million, but down 4% year-over-year. ILT revenue was a similar story, flat sequentially at $38 million, but down 9% year-over-year, which was consistent with the second quarter comparison.The demand environment for in-person and virtual instructor-led training continues to be choppy as we've seen corporations shifting some of their IT training priorities and budget resources. We've also seen the current macro impact ILT's European operations more acute, while performance in our North America, Middle East and Asia operations trended reasonably well in the quarter. Our teams are focused on multiple initiatives to accelerate growth, but we are now prudently taking a more measured view of the ILT business for the remainder of the year.On a combined basis, total revenue for the company was $139 million, down marginally year-over-year as the Content & Platform segment growth was offset by ILT.Shifting to profitability. We remain committed to building a lean operating model and instilling a disciplined culture of fiscal stewardship. We continue to sharpen our focus to drive greater efficiency, freeing up capacity to invest in areas that will drive customer value, while also accreting more to the bottom line. The third quarter was another example of us investing in our most important growth initiatives, particularly around generative AI while leading our industry peers by a wide margin in terms of adjusted EBITDA profitability.Walking through our expenses, all of my references will be on a non-GAAP basis with the GAAP to non-GAAP reconciliations included in our earnings press release. Cost of revenue of $36 million or 26% of revenue was flat year-over-year, with facility-related savings partially offset by higher personnel and hosting costs to support the revenue growth in our Content & Platform segment.Content and software development expenses of $14 million or 10% of revenue were favorably down 6% year-over-year with more efficient internal resource utilization, partially offset by timing of third-party spending.Selling and marketing expenses of $42 million or 31% of revenue were flat year-over-year. General and administrative expenses of $17 million or 12% of revenue were favorably down 6% year-over-year as we continued to focus on streamlining the organization.Total operating expenses were $109 million or 79% of revenue. On a year-over-year basis, operating expenses were favorably down $2 million or 2%. On a sequential basis compared to Q2, total operating expenses were favorably down $7 million or 6%.At the bottom line, we generated higher profitability on both the dollars and margin basis. Third quarter adjusted EBITDA was $30 million or 21% of revenue compared to $28 million or 20% of revenue in the prior year. Over the course of this year, we have expanded adjusted EBITDA margins approximately 500 basis points from 16% of revenue in Q1 to 18% in Q2 to 21% in Q3. Our GAAP net loss was $28 million or $3.45 on a per share basis. Our adjusted net loss was $23 million or $2.82 per share.Moving to cash flow and balance sheet highlights. On a year-to-date basis, cash flow from operations was negative $9 million, while we invested $12 million in capital expenditures and capitalized internally developed software. As a result, year-to-date free cash flow was negative $20 million, favorably compared to negative $37 million in the prior year-to-date period. For the third quarter itself, free cash flow was negative $13 million and in line with our expectations for quarterly seasonality.We closed the quarter with a healthy balance sheet and a strong cash and liquidity position, with cash and cash equivalents of $130 million and restricted cash of $7 million. We had $40 million drawn against our $75 million accounts receivable facility that matures in December of 2024. We had $585 million outstanding on our term loan facility, net of original issue discount and deferred financing costs. As a reminder, this facility matures in July of 2028, with quarterly amortization payments of $1.6 million until maturity.Total net debt, which is net of cash, cash equivalents and restricted cash, was approximately $489 million, resulting in net leverage of approximately 4.9x our LTM adjusted EBITDA.To wrap up, we delivered a good quarter in the context of a more challenging market environment with another consecutive quarter of growth in our Content & Platform segment, flat sequential performance in our ILT segment and meaningful improvements in adjusted EBITDA and free cash flow.As we look to the balance of the year, a more cautious economic backdrop has prompted us to temper our near-term outlook, particularly with respect to ILT. We now expect to deliver full year bookings and revenue approximately at the bottom of our previous guidance, but are confident in our ability to deliver at the high end of adjusted EBITDA. We expect our continued focus on profitable growth will allow us to reduce gross leverage to below 4x adjusted EBITDA within the next 3 years.Looking forward, we're more optimistic than ever about the opportunity in front of us. We've moved quickly to address a large and growing market need for workforce reskilling in the age of generative AI, and we remain confident in our ability to unlock value for all of our stakeholders as we execute our long-term strategy.With that, let me hand the call back to Jeff.

[Jeffrey Tarr, executive]

Thanks, Rich. I'm excited by the opportunity in front of us. Skillsoft has assembled the industry's most complete suite of learning solutions for the enterprise. We are leveraging those capabilities to grow our share of wallet within the world's largest and most sophisticated organizations. And we're addressing our customers' most critical skills gaps with measurable outcomes.These strengths are reflected in our improving dollar retention rates, especially at the high end of our market where DRR is 110% and a healthy pipeline of new opportunity. Our team is firmly committed to translating this progress and to improve profitable growth and meaningful shareholder value creation.With that, operator, please open the call to questions.

[Operator]

[Operator Instructions] Thank you. Our first question comes from the line of Ken Wong with Oppenheimer.

[Hoi-Fung Wong, analyst]

Fantastic. Jeff, maybe I wanted to maybe first touch on the softness you saw in Europe. Maybe give us some details in terms of what you guys saw in the KPIs, what you're seeing from customers in terms of what's causing that particular down pressure? And then just Richard, as far as the guide down, is that specific to just Europe? Or have you embedded potential weak [ margin ] in other regions as well?

[Jeffrey Tarr, executive]

Yes. We are -- we feel good about the Platform & Content business. We've seen acceleration in the LTM growth of Platform & Content and good metrics there. So on the ILT side, early in the quarter, we were seeing good metrics and some real momentum in that business. It's stalled in the second half of the quarter or at least softened such that we were able to deliver a good sequential performance. But year-over-year, we were down than we had hoped to be up.In general, I'd say, overall, the market for that product is softer and because it's a transactional business, has a little less visibility than the rest of our company. Rich?

[Richard Walker, executive]

Yes. I would echo we had expected to see the growth in the second half accelerated. And we've heard from our largest tech partners that ILT spending is down overall year-over-year, and we experienced that same trend.

[Jeffrey Tarr, executive]

But the Platform & Content business is healthy.

[Operator]

Our next question comes from the line of Raimo Lenschow with Barclays.

[Sheldon McMeans, analyst]

This is Sheldon on for Raimo. I wanted to ask a little more on what you're seeing on the Content & Platform side. Like you said on the call, retentions are remaining healthy around that 101%. So I wanted to ask what you're seeing on sales cycles for new business. And anything to call out there, maybe by region? And are you doing anything on value selling or trying to package together maybe smaller deals to help increase the velocity on the net new side? And then I have a quick follow-up.

[Jeffrey Tarr, executive]

Well, I can tell you where we're seeing strength and where we're seeing relative softness. First, overall, the Platform & Content business is performing well. And we're seeing momentum in that business. You can see that in the LTM metrics. You can see that in the dollar retention rates, all of which are trending in the right direction. In terms of where we see the greatest strength, it's at the high end of our market. It's with our larger customers. It's where the needs for reskilling and upskilling are particularly complex and where our ability to deliver an integrated global solution is competitively very strong. That's where we're seeing the growth.At the lower end of the market, we're seeing price competition as we've seen over the last few years, and we're taking steps to address that with a competitive entry-level offering which we recently launched and we're investing in our inside sales capabilities so that we can address that low end more efficiently. But net-net, we believe that we are performing well in the high-growth segment of the market, and that's the upper end of that market and feel good about how we're positioned.

[Sheldon McMeans, analyst]

Got it. Great. And I wanted to ask how is CAISY trending? And when you're talking to customers in the early stages, is that reviving customer interest to reengage more meaningfully with Skillsoft?

[Jeffrey Tarr, executive]

Absolutely. Yes. I'm glad you asked. Absolutely. What we're seeing from customers and analysts is a very strong reception. There's a few that -- we have a market-leading offering here in CAISY. People learn by doing and CAISY is enabling our learners to do just that. And it's very exciting. We're partnering with customers to create new scenarios. So they're highly engaged.In terms of how that drives revenue, it's embedded in a higher-tier subscription offering and along with a number of other capabilities, and we are actively upselling from our entry-level offering into the subscription that has CAISY and other elements of interactivity.

[Operator]

Our next question comes from the line of Raj Sharma with B. Riley.

[Rajiv Sharma, analyst]

I wanted to understand, either for Jeff or Rich, just is it easy or tough to measure the contribution of generative AI on revenues today or in the near to medium term in the future?

[Jeffrey Tarr, executive]

Thanks, Raj. It's not -- to measure just the impact of generative AI isn't really possible because the biggest impact is on the curriculum side. So we've been actively developing learning journeys and courses that are designed to give people the skills to use generative AI across the enterprise, across all functions, across all content areas, and there's been a really strong uptake. In fact, just to give you a metric, we've -- this year alone, we've delivered 17 million AI-related courses year-to-date. And that's a strong metric. It's important we're investing, but that's across the entirety of our portfolio. And so it's difficult to measure how the actual impact on growth.Where we may be able to get some -- quantify some impact is our success upselling higher-value subscriptions. But even then, as I mentioned, CAISY is part of the higher-value subscription, but it's not the only element of interactivity in the higher-value subscription. Rich, anything to add?

[Richard Walker, executive]

Yes, just a quick one. Jeff talks, Raj, about what we teach, how we teach. That last piece, I think, was directed to me, how we operate the business. And while it's very early days, I think over time, key areas of marketing and content development, it's going to be part of the reason we'll continue to see margins expand and absolute EBITDA grow.

[Rajiv Sharma, analyst]

Got it. That's very helpful. Just in terms of the bookings and whether it's weakness or strength and how it varies across the market, across the customers, larger customers doing better? Or could you add more color to that?And also, you mentioned -- Jeff, you mentioned the high DRR sectors. Could you talk about what -- who those customers are?

[Jeffrey Tarr, executive]

Yes. When we look at our largest customers, the dollar retention rates are north of 110%. So obviously, if you then consider that our dollar retention rate is a little over 100% for the company overall that at the low end of the market, the dollar retention rates are lower, and that's where we have an opportunity to meaningfully improve our customer retention at the high end. We believe we have substantial headroom to grow share of wallet because we're really just scratching the surface of the cross-sell and upsell opportunity.

[Richard Walker, executive]

Yes. Raj, I'd add one thing in the Content & Platform, another reason why it's so important to look at the business on an LTM basis. So the Content & Platform bookings were up 4% this quarter. If you go back to the first quarter on an LTM basis, they were 1% last quarter, 2% on an LTM. So we're seeing acceleration in the Content & Platform business and also converting into revenue, seeing nice revenue growth in Content & Platform.

[Rajiv Sharma, analyst]

Got it. I wanted to just touch upon the Codecademy. Is it -- so I just want to understand, is it a stand-alone product? Or is it integrated into Percipio? And how is that performing in terms of its organic growth? Or is there a way to measure it now or?

[Jeffrey Tarr, executive]

Yes. The consumer product is stand-alone. The B2B product, which is where most of the growth is, is integrated. In fact, we've rebranded the entirety of our Tech & Dev offering as Codecademy for enterprise. So it's not possible to break it out, but we can tell you that it contributed to growth in the quarter. Rich?

[Richard Walker, executive]

Yes, I'd just add that while we -- the segment we report on doesn't give granularity down to the individual products. On an LTM basis [ and ] Content & Platform, all 3 of the segments grew and contributed to that growth. Certainly, Codecademy enterprise, our Tech & Dev offering was part of that.

[Jeffrey Tarr, executive]

And I'd say the B2B is growing stronger than the B2C, which -- the B2B market has been softer for everyone. B2B is strong.

[Rajiv Sharma, analyst]

Got it. And then just on the guidance, is that correct? You said that it's the earlier guidance range, but the revenues would be the lower end of guidance and EBITDA would be at the upper end of guidance. Is that -- did I read that correctly?

[Richard Walker, executive]

That's correct. We didn't date the range for both bookings and revenue. We said approximately at the low end of the bottom of the range and on the adjusted EBITDA pointing you to the high end.

[Operator]

Thank you. There are no further questions at this time. I would like to turn the floor back over to Jeff for closing comments.

[Jeffrey Tarr, executive]

Well, I just want to take this moment to thank everyone. I want to thank our team members who have been working really hard to set us up for a really solid Q4 and for what they delivered in Q3. And I want to thank our analysts for the hard work that you're doing and our investors. We -- and of course, our customers. We look forward to connecting with you over the coming days, and we look forward to giving you an update when we wrap up the year. Thanks very much.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.