OTC Markets Group Inc

OTC:OTCM

Earnings Call Transcript 2024-Q1

[Operator]

Good day, and thank you for standing by. Welcome to the OTC Markets Group First Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dan Zinn, General Counsel. Please go ahead.

[Daniel Zinn, executive]

Thank you, operator. Good morning, and welcome to the OTC Markets Group First Quarter 2024 Earnings Conference Call. With me today are Cromwell Coulson, our President and Chief Executive Officer; and Antonio Georgieva, our Chief Financial Officer. Today's call will be accompanied by a slide presentation. Our earnings press release and the presentation are each available on our website. Certain statements during this call and in our presentation may relate to future events or expectations and as such, may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements. Information concerning risks and uncertainties that may impact our actual results is contained in the Risk Factors section of our 2023 annual report, which is also available on our website. For more information, please refer to the safe harbor statement on Slide 3 of the earnings presentation. With that, I'd like to turn the call over to Cromwell Coulson.

[Robert Coulson, executive]

Thank you, Dan. Good morning, everyone. Thank you for joining us today. I will discuss our first quarter 2024 results at a high level and we'll review our operational and strategic priorities for the year. Gross and net revenues slipped in the first quarter, dropping 1% and 2% lower, respectively, versus the first quarter of 2023. Increases in market data revenues were not enough to offset a 5% decrease in Corporate Services and a 1% decline in OTC Link revenue. In the Corporate Services business, our OTCQX annual renewal percentage dropped slightly from prior years, leading to a lower number of companies on OTCQX at the start of the year, an increase in new OTCQX sales during the quarter presents a positive short-term trend. Similar to other public venture and small cap markets, OTCQB has seen a number of financially stressed smaller companies unable to maintain compliance and therefore, drop from the market. The trend towards international trading activity has continued with trading in ADRs and ordinary shares of non-U.S. companies comprising over 80% of dollar volume across our OTCQX, OTCQB and PINK markets. Trading these global companies in U.S. market hours is a unique value proposition with dollar volumes growing for both European and Asian listed issuers. Our OTCQX and OTCQB markets provide an opportunity for these companies to improve visibility and better engage with U.S. investors. We offer a unique way to connect their local primary listings to U.S. valuations and secondary liquidity. At the beginning of the year, we reorganized our corporate sales and support resources into 3 regional teams covering the Americas, EMEA and Asia. This will align outreach efforts with targeted global growth opportunities so we can better increase issuer understanding and engagement. Our market data results now reflect year-over-year performance, which includes our Blue Sky data core and Endor online acquisitions. Adding these operations enhances our ability to serve our broker-dealer subscribers, particularly with automation of their compliance and risk processes. The better we are at putting useful information on to investor screens and into broker-dealer machines, the more benefits we can offer corporate clients and the stronger our data-driven market model becomes. OTC Link saw a year-over-year decrease in trade volume, but an uptick over the fourth quarter of 2023. The number of unique broker-dealer subscribers across our 3 ATSs rose slightly, with strong growth in subscribers using the ECN to directly access our markets. Our operating expenses during the quarter remained relatively flat to the first quarter of last year. Our approach to expense management is intentional. We pursue opportunities for growth, and we are at a stage where focus on longer-term planning will both reduce costs and bring benefits from scale. Antonio will cover more of the details of our financial results in a few moments. Before I move on from discussing our expenses, I want to address one additional point. As has long been the case, our largest expense is our investment in people. I spoke last quarter about our long-term market integrity initiatives, enhancing market quality and compliance is a priority throughout our organization. The integrity effort is led by our outstanding issuer services team operating primarily out of our Washington, D.C. office. That team led by Liz Hess includes market surveillance, issuer compliance and qualifications teams that maintain the standards of our OTCQX and OTCQB markets and oversee our risk flags. These teams work with public companies to provide adequate current information, track ongoing disclosure and regularly interact with the SEC, FINRA and other state and federal regulators. Operating in highly regulated markets also requires a dedicated broker-dealer compliance team within OTC Link, responsible for building and maintaining a robust compliance program. In particular, that team's work on our AML and suspicious activity report process has been important. Market integrity and compliance are cornerstones of the critical role we play and the teams ensuring we uphold our regulatory responsibilities are critical to our continued success. I thank all of our compliance professionals for their dedication to make us a stronger, more resilient organization. As 2024 continues, it is important to consider how our work in prior years has set the stage for our future initiatives, providing seamless access to more electronic brokers has expanded our markets. Modern market makers are critical to continuous market liquidity. They provide consistent execution quality for retail orders, liquidity in less active securities and connect global prices in ADRs and ordinary shares. Our platforms also support the success of broker-dealers that desire order-driven matching engines. The best markets let participants choose the trading model that works best for their unique situation and provide a seamless connection across the widest possible range of participants. We recently announced our plan to introduce closing cross functionality for subscribers to our matching engine ATSs. Closing Cross is popular in other markets, and we are excited to offer this new feature to enhance choices for liquidity seekers. The liquidity of market makers already providing competitive closing prices directly to their correspondents and our new electronic closing cross process will make the overall OTC market stronger. Dynamic market structure requires multiple trading models and participants that are free to choose what best suits their needs and desires. Launching this initiative is a result of collaboration between our business and technology teams. We continue to pursue 5 strategic priorities this year. First, one team, one platform, driving results to build the value of one [indiscernible]. Under this initiative, we continue to integrate our teams and consolidate our technology platforms to drive operational efficiencies and client value in pursuit of revenue growth.Second, increase the number of securities on our markets. Our near-term opportunity is greater global trading, increasing the breadth and depth of ADR and foreign ordinary shares traded in U.S. dollars by U.S. broker-dealers to grow the size of our markets by adding securities, new asset classes and trading functionality for our broker-dealer subscribers. Third, transform the client connection and improve the quality of information. We constantly work to enhance the customer experience through modernized interfaces and enriched data for external and internal users. It's an important lever for us that the more engaged issuers are and the better quality of information they provide, the better our markets will function. Fourth, mitigate operational risk and strengthen regulatory compliance. In keeping with our focus on market integrity and compliance, we invest in our core trading infrastructure, operational processes and risk management systems as well as our regulatory processes in each case to enhance their reliability and our compliance with securities laws and regulations. Fifth, grow revenue across business lines and align resources with long-term value creation. As much as we may wish, success will not be a straight line. We continue to focus on being good stewards of our markets and thoughtful commercial operators to align our operating costs with recurring revenue generation, where managers intelligently allocate company resources and act as fiduciaries to generate sustainable value for our shareholders. I look forward to reviewing these initiatives in our strategic direction throughout the course of the year. In closing, I am pleased to announce that on May 7, our Board of Directors declared a quarterly dividend of $0.18 per share payable in June. This dividend reflects our ongoing commitment to providing superior shareholder returns. With that, I will turn the call over to Antonio.

[Antonia Georgieva, executive]

Thank you, Cramo, and thank you all for joining our call today. I would like to start by thanking our entire OTC Markets team for continuing to execute on our strategic priorities and for their commitment to our subscribers. As I discuss our results for the quarter ended March 31, 2024, any reference made to proper comparatives will refer to the first quarter of 2023. Turning to Page 7 for a review of our first quarter revenue. We generated $27.7 million in gross revenues, down 1% as compared to the prior year period. Revenues less transaction-based expenses were also down 1%. OTC Link gross revenues declined 1%. While the notional dollar value traded on our ATSs increased by 21% versus the prior year period, the share volume executed and the number of trades declined, resulting in an 8% decline in transaction-based revenues from OTC Link ECN and OTC Link MQB. As an offset, transaction-based expenses decreased 16%. Additionally, OTC Link ATS saw a 6% decline in subscription revenue from our OTC dealer application due to subscriber cancellations. Partially offsetting these decreases was an increase in certain connectivity revenue due to the introduction of additional fees at the beginning of 2024 and an 8% increase in revenues from OTC Link ATS messages due to fee increases offsetting lower message volume. OTC Link finished the first quarter with 112 subscribers to OTC Link ECN and 82 subscribers on OTC Link ATS and had 135 unique subscribers across our ATSs. At the end of the prior year period, OTC Link has 112 and 88 subscribers on OTC KCM and OTC Link ATS, respectively, and 134 unique subscribers. Trading volumes remain highly unpredictable and could continue to decline in the future. Revenues from our market data licensing business increased 2% quarter-over-quarter. Pro user accounts were up 4% with the corresponding revenues increasing 8%. Revenues from internal system licenses delayed decade licenses and other data services increased 11% due to growth in subscribers and price increases for certain licenses. Additionally, revenues from our bulky data products increased 33% as the result of additional fees that we introduced and pricing adjustments. Partially offsetting these increases was an 18% decline in revenues from non-pro users in line with an 18% reduction in period-end nonprofessional user counts and a 33% decrease in revenue from Edge online due to the exclusion of certain nonrecurring revenue that was recognized in the prior year period. Historically, and in the normal course of business, we have seen significant changes in the number of nonprofessional users as market volumes and retail participation on our markets fluctuate, and we may experience a further decline in the future. Corporate Services revenues decreased 5% in the first quarter. OTCQX revenues remained relatively unchanged, while OTCQB and D&S revenues decreased 8% and 6%, respectively. We saw a lower number of companies across OTCQX, OTCQB and DNS in the first quarter compared to the prior year quarter. The impact of annual incremental pricing adjustments effective January 1, 2024, served to offset the decline in OTCQX companies. In the first quarter, we added 21 OTCQX companies compared to 15 in the prior year quarter and finished the period with 577 OTC companies, down 3%. For the annual OTC subscription period beginning January 1, 2024, we achieved a 93% retention rate compared to 95% in the prior year. On OTCQB, we added 36 new companies in the first quarter compared to 49% in the prior year period and had 1,115 OTCQB companies at the end of the quarter, down 8%. We had 1,428 in companies subscribing to DNS and other products at the end of the first quarter, down 5%. Month-to-month variability in our corporate services subscribers is driven by new sales, offset by nonrenewals, corporate events and compliance downgrades. Turning now to expenses on Page 8. On a quarter-over-quarter basis, operating expenses remained largely unchanged at $18.6 million. A 5% increase in compensation and benefits expenses was substantially offset by a 10% decline in professional and consulting fees and a 46% decrease in general, administrative and other costs. The increase in compensation and benefits reflects higher stock-based incentive compensation and related payroll taxes as a result of the cumulative impact of prior year grants, partially offset by lower commissions and cash-based incentive compensation. Additionally, we incurred certain separation expenses. Compensation and benefits comprised 67% of our total operating expenses during the first quarter compared to 64% in the prior year period. Compensation and benefits expenses in the prior year period included certain nonrecurring accruals related to the EDGAR Online acquisition. Professional and consulting fees decreased during -- due to the elimination of certain nonrecurring expenses related to EDGAR Online that were incurred during the prior year period. Additionally, we saw lower regulatory costs related to our OTCQN and OTCQB and lower legal fees. General, administrative and other costs decreased 46% primarily due to lower bad debt. In the prior year period, we had an elevated bad debt provision related to accounts receivable acquired as part of EDGAR online, which did not recur in the current quarter. Turning to Page 9. In the first quarter, income from operations and net income declined 3% and 5%, respectively. Operating profit margin contracted slightly to 25% compared to 25.4% in the prior year quarter. Operating profit margin in the prior year period was impacted by approximately $900,000 in onetime integration expenses related to EDGAR online. In addition to certain GAAP and other measures, management utilizes adjusted EBITDA, a non-GAAP measure, which excludes noncash for base compensation expenses. Our adjusted EBITDA was $9.2 million in the first quarter of 2024, and our adjusted diluted earnings per share were $0.76, relatively unchanged compared to the prior year period. Cash used in operating activities amounted to $0.7 million compared to cash used in operating activities of $0.4 million in the prior year quarter. Free cash flows for the quarter were negative $1.2 million compared to negative $1.4 million in the prior year quarter. Turning to Page 10. During the first quarter of 2024, we returned a total of $5.1 million to investors in the form of dividends and through our stock buyback program compared to $5.5 million in the prior year quarter. We remain focused on growing our business, operating as prudent cures to shareholder capital and delivering long-term value to our stockholders. With that, I would like to thank everyone for your time and pass it back to the operator for questions.

[Operator]

[Operator Instructions]. Our first question is going to come from the line of Brendan McCarthy with Sidoti.

[Brendan Michael McCarthy, analyst]

Good morning, everybody. Just wanted to start off with OTC Link looking at the ECN and NQB revenues down there over the quarter. Can you just kind of talk about the changing mix of securities traded on the platforms that drove that decline?

[Antonia Georgieva, executive]

Certainly, Brendan. As we have discussed previously, our pricing schedule is fairly detailed and depends on the type of security, whether it's low price, middle-priced or higher-priced security and also has various volume brackets that determine prices and rebates. So in any given quarter or month, obviously, depending on the activity that comes to our platforms, broker deal-driven or end client driven. The types of securities traded would shift constantly. And in certain instances, it would shift towards securities where we generate lower fees or towards securities on which we generate somewhat therapy or we can be moving up and down those volume bids that we have on our pricing schedule. So as a net result, we may end up generating higher or lower revenue per unit of volume compared to other periods. Generally, that is unpredictable for us and it's an outcome of the trading activity as it comes to our market.

[Robert Coulson, executive]

And Brendan, you have to understand it's like we have 3 ATSs there's the original network based OTC Link, which is supporting the modern market picker model. And that is really built for firms whose first goal is to internalize and keep the trade on their system. And then we have the 2 matching engine ECMs. And the magic is that we seamlessly connect them into the market and make -- and because together, they're all more powerful for market quality and you're giving investors choices of how they want to trade. But when -- what you see with the market maker model, and you see with other liquidity providers is when markets are not incredibly volatile, they will position more securities on their own systems and not need to trade out of the risk. And that's a good thing for the -- for our subscribers because they're able to do more business on their platforms, and it's a good part for our business of they are using us for the pricing world, but transactions in markets where there's not a lot of volatility will not be as big across competitors, a competitor or intermediary to intermediary because they're willing to carry more risk on their books, if that makes sense?

[Brendan Michael McCarthy, analyst]

Yes, that's helpful. That makes sense. And then turning to the Blue Sky data product, I saw there was a really nice revenue increase there, and I believe it was driven by pricing adjustments. Just curious as to how those pricing adjustments were received by the client base.

[Robert Coulson, executive]

Well, I believe it was pretty seamless because we've added coverage of securities. Our viewpoint is our ideal product is one where we can increasingly stuff more value in to -- for the existing subscribers to make it more useful. And we've also become much more transparent in actually how it's calculated. The previous owner kept the sauce secret. And our viewpoint is be transparent and be open. So my expectation is, especially with Blue Sky becoming more important to the corporate debt market and where we can drive it deeper into the electronic stack and to a wider part of regulated entities, be that broker-dealers, investment advisers, there's places for us to add value. And Blue Sky is just one part of the mix. Whether you're an investment adviser or broker dealer, it's -- is this security lawful -- and is it lawful for the investor that you're talking about. And there's a whole wedding take of various rules and regulations at the state level, at the finer level, at the SEC level. And our goal is to take all of that complexity and give a clean answer with the ability to dive deep.

[Brendan Michael McCarthy, analyst]

Got it. That's helpful. And then turning to the suspicious activity reports Cromas that you discussed this earlier in the call as it relates to OTC Link, but just curious if there's any update on the communication with the SEC just regarding the previous situation mentioned on the past earnings call.

[Robert Coulson, executive]

Yes. Thanks, Brendan. I mean, the disclosure that's in the quarterly report, which really mirrors what was in our annual report as well is it remains the update. It's a long process, but everything we covered both on disclosure and Cromas commentary at the annual earnings call really remains the way we view it. And I think Cramo's comments today regarding our market integrity initiatives generally and the work that's been done on our compliance program and in particular, the staff that's grown and increased focus on these things. It's to be good for us as a business. But in terms of the specific updates as described in the report.

[Antonia Georgieva, executive]

And Brendan, from a financial point of view, there has been no additional accrual beyond what we disclosed in the fourth quarter.

[Brendan Michael McCarthy, analyst]

Understood. One more question for me...

[Robert Coulson, executive]

And just... I look at -- From an investor perspective, you look at is the accrual changing is that, I think, is because we also look at -- when we look at compliance for issuers that for companies where they're -- they've had previous regulatory troubles and new management teams and new Boards of Directors have come in. That's usually and new auditors have come in. That's not for us, but it's like where is the accrual staying. And I think that's probably a number that if I was an investor, I would look at.

[Brendan Michael McCarthy, analyst]

Right. Right in that number stayed consistent right around that $1.2 million mark.

[Antonia Georgieva, executive]

Correct.

[Brendan Michael McCarthy, analyst]

Okay. And one more question just on the Corporate Services business. Cam, I think you mentioned there were some positive trends seen on OTCQX subscribers, while QB obviously remains a little bit more challenged. But I am just curious as to your thoughts on what would be a couple of catalysts that would kind of reverse the trend of lower corporate service subscribers. Obviously, I imagine the interest rate environment is one of them, but just kind of curious as to what you think could reverse the trend there.

[Robert Coulson, executive]

So if I knew the answer, the trend would be reversed. There are things that we are looking at the excuse column would be the mining and minerals space has had a tough financing world after a boom. The other excuse column would be that we -- that smaller companies are struggling on exchanges, and we're seeing delistings across those as they run to the end of their story ramp. And I think that's a really important thing for a capitalism. You listen to the Canadian exchanges talk about venture markets. And they'll say, 95% of the companies don't make it. But it's a really important piece for the 5% that do, and it's a part of capitalism, but we get frustrated when someone has tried, a team has tried in the markets. The story is running down, but that's the capital as system. I would say I'm much more interested in the things that we can control to drive positive change and reorganizing our corporate sales team to be a more team-based approach working on educating issuers, how they can use our platform. There's a lot of conversation around the world about differences of valuations. And how global companies can get in front of investors and show the value of their securities versus their U.S. competitors and comparable business models. That's a real opportunity for us, improving the ability to trade ADRs and foreign ordinary shares. We think both have room for improvement. And we think the world is better giving investors choices. So there's a lot of levers internally for us to grind away.

[Operator]

[Operator Instructions]. Our next question is going to come from the line of Steve Silver with Argus Research Corporation.

[Steven Silver, analyst]

My first question is, I noticed in the quarter there was a pretty substantial increase in the dollar volume traded on -- particularly on OTCQX and QB. And I was just curious as to whether there are any dynamics in play there? It seems a little counterintuitive given the decline in the number of companies on QX and QB as well as the continued limited retail participation in the market. So I was just curious to know if there were any dynamics at play for those pretty substantial increases in trading activity.

[Robert Coulson, executive]

Thank you for the question. I don't try to spend much time over thinking where volumes are coming from and what they're going back and forth because it's not in the lever we can control on the short term is -- and often what gets captured across the 2 business lines of the 2 kind of core trading support side business is the network-based ATS and the matching engine ECMs. So there are many people much more smarter than me who make macro bets every day, whose opinions, I might listen to more, even though I'd take those with a grain of salt because usually they're talking their books.

[Antonia Georgieva, executive]

Steve, as I mentioned, the mix of securities traded between low price, medium priced and high price shifts all the time. In this particular quarter, there was a shift towards higher-priced securities, which drove the overall dollar value of dollar volume traded. But at the same time, the number of shares, which is the driver of our revenue declined. There is a small piece of our revenue that's driven off of notional, but it's really small. It's for the low-priced securities, and that volume actually declined during the quarter. So again, it's mostly -- it is counterintuitive, as you mentioned, but it is a function of the mix of securities between [indiscernible] between pen and a dollar and all dollars.

[Steven Silver, analyst]

Okay. That makes sense. And so the quarterly disclosure cited a subscriber number for EDGAR Online around 500. And I know this is still in the early stages of a multiyear integration. Just curious in terms of just very broadly, whether that subscriber number is in the range of our earlier expectations in terms of making the acquisition. Just in terms of placing where that subscriber number is in the early stages compared to maybe any initial thoughts you might have had in terms of building a subscriber base over time.

[Robert Coulson, executive]

So this is Cromo. The subscriber numbers the overall subscriber numbers is a mix of 2 types of subscribers, the per users of the EDGAPro product and and the enterprise subscribers. Moving EDGAR Online technology out of their data center to the cloud, addressing operational inefficiencies and pain points has been a long process. The team of engineers we acquired have been incredibly dedicated. They've learned a whole new technology stack that supports their code in the cloud. The functionality changes where we can really start driving value to the clients hasn't gotten out to the client yet. And those are the places where can we make EGGAPro not only be a great tool for searching SEC filings comparing financials but also include the various disclosure standards and financials of other companies on our market in a seamless, integrated manner. And that's if you talk to any value investor, their whole history has always been finding interesting securities and the ability to search in a comparable manner, EDGARPro can become a great tool and more interesting because it has the widest range of U.S. traded equities that you can search for an investor. The enterprise licenses are also how do we start adding value. And I think EDGAR Online business, you really have to look at it's so integrated into our Blue Sky product to our compliance file products. That business is really one business. And how do we now look at places where we can use the collection of data from SEC filings from other places, optimize the different groups and find new areas to serve those enterprise clients. That's early days. And those discussions are going on and how we do it. As we said, it's really a 3-year process until we know what type of business is going to be there. And my belief is we have a very strong place in providing SEC filing and other data into broker-dealer and regulatory compliance and structuring that data, of which EDGARPro-- EDGAR technology and services and clients is a very important part. We're on the back foot for investors searching for data, financials, but that we can catch up because we have a really unique data set. And so that's where we are, we're trying to make all of these things work in a thoughtful pace because SEC filings is not the most dynamic spot of the world.

[Steven Silver, analyst]

Great. And one last one, if I may. I was just curious as to your thoughts about the size of overall headcount over time. The quarterly disclosure mentions the need for future investments related to the regulatory compliance obligations. But at the same time, overall headcount declined by a couple of employees year-over-year. So I'm just trying to get a sense as to, as you staff up, I guess, to handle these obligations, how you're going to find that balance between managing the overall size of the organization in terms of keeping the cost structure of the business lean?

[Robert Coulson, executive]

Yes, Steve, on the nuts and bolts sort of numbers, the reduction that you see in the period end is largely a function of timing when we had some employees separated and had some new hires early in the second quarter that will be reflected as we go. On the more macro level of your question, which I think is really the substantive point, we are always looking to scale. And so it's -- for us, it's a matter of prioritization, whether that scale is through technology or physical headcount, consultants and other experts that we can bring in. We've been able to, over time, sort of punch above our weight given the size of our staff and the size of our company and having that much greater impact. That ethos will not go away, right? We've gotten bigger over the past 18 months or so with the additions of BlueSky and EDGAR online. Beyond that, it's been very natural adds to staff. I think that will continue to be our program going forward with focus on those areas that you noted that we've noted in our disclosure and on the call. I know Cromwell has some thoughts as well.

[Unknown Executive]

Yes, one of our original investors was a very successful investor in sell Royo. And Rusty was incredibly careful with his money and thoughtful. And Hua led an investor group with another slightly more famous person to buy the Texas Rangers. And when they sold the Texas Rangers, he spoke about the investments they made to have the team turn into a winning team. And it was his original view was when we spend $1 of our investors' money. We want to get back more than $1 of return and payroll for a sports team, both of the people hitting the balls and catching the balls and throwing the balls, but all of the other support people around, he invested in that. And my view is I think it'd be fantastic to have twice as many employees, but also raise our revenue per employee. And that's hard operationally, a performance management as we grow the 130, 140, 120 size is where your performance management, your senior management techniques, your next level of managers become so much more important in helping serve their success. And those are the things we're working on. We don't look at, oh, we need to stop at this number of employees where we are. What we want to do is support our existing operational needs and have people to have an agent of positive change, a growth mindset who are every year becoming a little bit better at delivering results or operating the existing business with a little bit less effort and resources so we can do some more. And that's the scale piece. And I think it's a really important challenge for us at the management level is how do we consistently build scale -- so with our human capital, we're doing the same things that our technology partners are doing to give us faster processors, more performance from software...

[Operator]

And we have a follow-up question from the line of Brendan McCarthy with Sidoti.

[Brendan Michael McCarthy, analyst]

Sorry, my question was already answered.

[Operator]

I'm showing no further questions at this time, and I would like to hand the conference back over to Cromwell Coulson for closing remarks.

[Robert Coulson, executive]

Thank you, operator. I want to thank each of you for joining us today. I would encourage you to read our full 2024 first quarter report and the earnings press release for more information. Links to both are available on the Investor Relations page of our website. On behalf of the entire team at OTC Markets Group, we look forward to updating you on our key initiatives that will continue to shape the integrity and competitiveness of public markets and build value for our shareholders.

[Operator]

Okay. This concludes today's conference call. Thank you for participating. You may now disconnect.