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Altus Group Ltd
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Good day everyone and welcome to the Altus Group Second Quarter 2023 Results Conference Call and Webcast. Today’s call is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. I will now turn the call over to Camilla. Please go ahead.
Thank you operator. Good afternoon, everyone and welcome to Altus Group's second quarter conference call and webcast for the period ended June 30, 2023. The news release announcing our results was issued after market closed this afternoon and it's posted on our website and SEDAR profile, along with our MD&A and interim financial statements. A presentation to accompany our prepared remarks has also been posted to our website under the investor relations section. Joining us today, are CEO Jim Hannon; and our new CFO, Pawan Chhabra. We’ll start with some prepared remarks, and then we'll move right into the Q&A session. If we miss any questions, please contact me directly by email.
Some of our remarks on this call may contain forward-looking information. Forward-looking information is based on assumptions and therefore are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Those assumptions, risks, and uncertainties are detailed in our forward-looking statements disclaimer in today's materials. Please be reminded that Altus Group uses certain non-GAAP financial measures, non-GAAP ratios, total segments measures, capital management measures, and supplementary and other financial measures as defined in National Instruments 52-112. We believe that these measures may assist investors in assessing an investment in our shares as they provide additional insight into our performance.
Readers and listeners are cautioned that they are not defined performance measures and do not have any standardized meaning under IFRS and may differ from similar computations as reported by other similar entities and accordingly may not be comparable to financial measures as reported by those entities. These measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with IFRS. An explanation of these measures is detailed in today's IR materials, including the news release, presentation, MD&A and in our other filings with the Canadian Securities Regulators. I would also like to point out that unless otherwise specified, all the growth rates we'll refer to on this call will be on constant currency basis over the same period in 2022. Okay, over to you, Pawan.
Thank you Camilla and good afternoon to everyone on the call. I'm pleased with the steady progress we are making in executing our strategy. The team continues to deliver on our plans. Our results demonstrate solid sales execution and healthy demand for our offers. Our intelligence offers help our clients manage performance and risk which is especially relevant in today's dynamic CRA markets. From a year-over-year comparable, bar was set high for us this quarter. Q2 2022 was the highest quarterly revenue and adjusted EBITDA performance in the company's history. As you know Q2 2023 reflects the reset of the UK property tax annuity billing revenue stream that peaked at 33.2 million last year. We are really pleased with the robust performance this quarter. Property tax successfully managed through the UK annuity reset with the strong performance across the portfolio. Analytics didn't skip a beat delivering consistently strong double-digit revenue growth and significant margin expansion.
Beginning with our consolidated second quarter results, as Camilla pointed out, unless specified the growth rates I will be referencing are on a constant currency basis. Our consolidated revenue came in just shy of the historic quarterly record revenue achieved last year, excluding the impact of the UK annuity reset, TOP line growth was 14.3%. Adjusted EBITDA was down 15.3% inclusive of the 33.2 million annuity reset, most of which drops to the bottom line. Profit was 11.9 million slightly down from the prior year. This reflects the savings from the completion of the 2022 Global restructuring program offset by the higher income tax expenses this quarter. Adjusted EPS came in at $0.53. Free cash flow was 19.1 million, a strong sequential improvement over Q1. This metric continues to reflect temporarily higher working capital balances following our transition to our new ERP system at the beginning of the year. Operationally, we're seeing improvements in both billing and collections. We remain on track to meet our original working capital targets by the end of the year.
Turning to our business segment performance, starting with Analytics. We continue to consistently put up double-digit top and bottom line growth with significant margin expansion. This puts us on a nine consecutive quarters of double-digit top line growth and five consecutive quarters of margin expansion. Revenue was up 15.5% and notably, recurring revenue was up 19%. All in Analytics revenue was organic. We are benefiting from our ongoing transition to cloud subscriptions, new sales, valuation management solutions asset expansion, supported by steady new customer additions. Adjusted EBITDA continues to grow with the higher revenues and improved operating leverage. Overall, we are really pleased with the sustained momentum and recurring revenue growth.
At 89 million in the quarter recurring revenues were up 19% and represented 89% of total revenues. We continue to focus on go to market efforts and investments to make consistent recurring revenue growth. This provides us with a resilient revenue base. 700 basis point margin expansion in the quarter captures improvements in sales productivity, cross border salary leverage, more streamlined processes, better resource management, and overall prudent expense management. We remain confident in our plans to continue expanding margins in the second half of 2023.
Now turning to property tax, as mentioned there's an annuity element in this segment that is prevalent in the second quarter. Last year we benefited from the UK annuity revenue that dropped off this year with a jurisdictional reset of the tax rating list. Revenue was down 18.4 million or 22.4% net of the 33.2 million drop. Backing out the impact of UK annuity revenue, growth would have been 20.4%. Our Canadian and U.S. operations had a great quarter with double-digit growth. We had also strong performance in the UK against the new 2023 rating list as we begin to build our new annuity revenue stream. The solid results achieved this quarter are a testament to the team's perseverance in managing effectively to the UK annuity reset.
And finally Appraisals and Development Advisory revenue was steady in the quarter driven primarily by the Development Advisory team. Development Advisory provides us with a predictable revenue stream associated with complex long-term projects. We have rebalanced some of the resources from our appraisals group to support our higher margin Value Management Solutions engagements as we continue to pursue operating efficiencies.
Lastly turning to our balance sheet, we finished the quarter with a cash position of 43.1 million and with 335.8 million in bank debt. The funded debt to EBITDA leverage ratio as defined in our credit agreement was 2.19 times, well below our limit of 4.5 times. Applying cash to the net debt to adjusted EBITDA leverage ratio was 2.10 times, representing a very healthy balance sheet. Regarding our capital allocation priorities, we continue to reinvest in the business to scale, opportunistically pay down debt, and maintain financial flexibility for M&A and stock repurchases. With that, I'll turn it over to Jim.
Hey, thanks, Pawan. Let me start with again congratulations to my colleagues for delivering outstanding results in Q2. Feel like I say it every quarter and really guys, thank you for those listening. The momentum across our business is strong and the team's doing a fantastic job executing strategy and moving the business forward. Our ongoing transition to ARGUS Cloud is tracking the plan. We ended the quarter with 70% of ARGUS Enterprise users contracted on the cloud, a steady improvement from 52% a year ago.
Turning to new bookings, this metric captures incremental new business growth. Recurring new bookings at 18.4 million were up 30.5% sequentially and up 3.4% year-over-year at constant currency. Sequentially, our software bookings remain strong, data bookings grew, and we saw a nice increase in valuation management solutions. We're seeing growth driven by both debt and equity funds. In Q2, we signed our largest debt valuation engagement to date. We're closely watching how the external environment will impact bookings in the second half of the year and we're cautiously optimistic about recent Q2 fundraising reports. There's a few points to note, our pipeline continues to grow, our largest clients are active in the market, and we are selectively layering in sales and service delivery capacity to ensure we remain well positioned to best serve our clients as our business and more importantly, as our clients businesses continue to grow.
To wrap up, quarter-after-quarter, we've demonstrated the resiliency of our business model. We continue to successfully navigate this dynamic business environment to strategically position ourselves for long-term growth. We know that volatility in the market drives demand for our advanced analytics. Our development group is continually adding to and improving the features and functionality of the office performance platform. Our Office Labs team brings new insights to CRE data each day, leveraging the power of the artificial intelligence technology we acquired [indiscernible] and applying those technologies against the significant amount of data available across our office offers including ARGUS Enterprise, Valuation Management Solutions, and property tax.
Our sales and marketing teams are driving the business development process with new offers such as Market Insights Premium, which has added significantly to our pipeline. We've expanded our services with our largest clients. Our new infrastructure is already paying dividends with significantly improved visibility into customer profitability, resource utilization, and business unit metrics. This visibility allows us to identify areas of continuing operating efficiencies.
We continue to invest in our global service center resources, another source of operating leverage while acquiring fantastic talent. We can see the progress in our working capital processes as measured in the increased throughput of billings and collections. And with the UK reset behind us, we look forward to several years of rebuilding the annuity revenue with an even greater number of clients. Combined, these efforts will drive higher cash flow conversions to fuel both organic and inorganic growth, debt repayment, and opportunistic share buybacks. Said differently, significant revenue and margin growth opportunities exist to continue driving success. Okay with that, let's open up the line for questions.
Thank you. [Operator Instructions]. We'll take our first question from Yuri Lynk with Canaccord Genuity.
Good evening, everyone and congrats on a nice quarter. Well, yeah, wanted to get more color on tax. I mean, surprising how strong it was and even in Q1, I think you could see it building. So was the outperformance all in the U.S. and Canada or was the UK able to, sounds like they were able to do better than we thought so. Was that new lines of business or how were they able to kind of offset a lot of that annuity headwind?
Great question Yuri. So the U.S. and the Canadian teams had just been -- they've been crushing it. They've been planning for the dynamics in the various jurisdictions even within U.S. and Canada. And, they kept their eye on the ball and they closed the deals they needed to close. In the UK if you remember a couple of quarters ago, I guess, Q4 of last year, we said we would continue to add resources selling in the UK. We continue to add significant amount of clients there. It's a really well run sales machine in the UK and our UK sales leader is repeating those processes across the U.S. So it's just all about being really focused and keeping the teams on what they need to do and they are.
Is there…
Just to add to that, we had really good success off the 2023 less in the UK as well, too. So it's a good backlog that we are beginning to build.
Okay. Is there anything outside of annuity billings that would make you to -- still make it the biggest quarter of the year, I'm just trying to get -- it's quite a bit higher than what we were expecting, just outside of what you just explained, was there anything one time in nature that might have got pulled into the quarter?
There's always large deals that will settle at various times in different jurisdictions. So we do expect Q2 will be a high point for the year but we expect that really strong finish in Q3 and Q4.
Yeah, and Yuri as you're familiar, there is a slight element of seasonality to the U.S. with Q2 and Q3 typically coming in stronger than Q1 and Q4.
Okay. That's it for me. Congrats again on the quarter. I'll turn it over.
Thanks Yuri.
We'll take our next question from Daniel Chan with TD Cowen.
Hi, guys, thanks for taking my questions. And congrats on a strong quarter. The new bookings performance in Q1 was a point of concern for a lot of investors. But that seems to have completely reverted which is great to see. Can you just provide some colors on what you are seeing from this quarter versus Q1?
Yeah, I think you heard our comments in Q1, where we said keep an eye on the recurring revenue growth. Our growth comes from more than just the bookings number. So one, let me just grant everyone again, any bookings number is incremental new growth for our business. And our recurring bookings are strong and you can see that flowing through our recurring revenues. And that's why we kept landing everyone, last quarter. So we knew our revenue growth was going to be strong. In addition to the bookings number, as our clients add assets to a portfolio we already serve, that doesn't count into our bookings number, so that's incremental. So there's multiple ways for us to grow outside of just the bookings number. That said, we still see -- we've seen an increase in capital inflows to CRE in Q2 versus Q1. And we're seeing our clients commit they want, they want to make sure that they're reserving resources with us as they deploy those assets. And yeah, so we're seeing that. We had amazingly strong bookings, we saw it starting to build the second half of 2021. 2022 was a massive increase over 2021. 2023 is a massive increase over 2021 as far as bookings. And you're seeing that flow through the recurring revenue line.
So that's good to hear.
Just add to that, Daniel, maybe, there was a harsh reaction to the March headline news that hit Q1 that precipitated in a lot of the outcome for Q1 bookings that Jim mentioned in the prepared remarks, like fundraising is still up versus Q1. A lot of the activities being led by larger companies, and a lot of those larger companies are our clients. And so we're benefiting from the fundraising activities and the deployment of capital in the larger companies.
Okay, so it's not just software bookings are strong, but DMS sounds like is benefiting as well?
That's right.
That's great to hear. Okay, maybe along the same lines, like your cloud migration is moving along. 70% is now contracted. As we look beyond the cloud migration and you guys were talking about the new analytics products a lot at your conference, how's the sales pipeline developing for those new products and is there appetite for these transformational products in this volatile environment?
Absolutely, in my comments, I mentioned that the offer says premium, which we still technically have not. We soft launched it at the Connect Event. We haven't done our major launch of it yet. But our pipeline, even if we don't break our pipeline numbers down into the components but our pipeline for next -- for the end of this year toward, but for really next year is growing significantly because of the premium offer. The marketing says premium offer. We've got several proof of concepts in place, as this is kind of a new motion for a lot of our clients to one adopting this data science and adopting it from artists. I'm sorry, offers but through the size of the ARGUS Enterprise users as well.
So great, thanks.
Thank you.
We'll take our next question from Stephen MacLeod with BMO Capital Markets.
Great, thank you. Good evening, everyone. Just wanted to follow up on a couple of things. The first one is just coming back to the new bookings number. If I think back to Q1, it was really like customer’s sort of -- sound of those, the year-over-year decline in Q1 was driven by customer’s sort of hitting the pause button around the marked banking crisis. So even though CRE volumes continued to be weak on the transaction side in Q2, I'm just trying to understand how you were able to put up both year-over-year and sequential growth. So I was just wondering if you could just parse it out a little bit more for me?
Yes, Stephen. There are new funds spinning up in both debt and equity. And those clients because we are the gold standard for this, those clients are coming to us. And they are raising these funds to deploy capital, and we're at the point where they're looking at the market and we're getting closer to the regional bank balance sheet adjustments are starting to get priced into deals. So now it's who gets in at the price point. And there's several of our clients that are already out with public statement saying that they're seeing -- they're ready to deploy their capital quickly right now.
Yes, Stephen. You have -- there is like almost 350 billion of dry capital sitting on the sidelines, and we're starting to see the larger companies trying to deploy assets. Again, I think, as I mentioned earlier, I think March was just a knee jerk reaction to the headlines that hit. And we're seeing the activity being led by the larger companies.
And seeing we just punch it back again like, what's the recurring revenue growth.
Yeah, okay. Well, that's helpful. That's great color. Thank you. Good to see the sequential and year-over-year growth. Just wanted to confirm, I think I know the answer but in terms of the tax business, you wouldn't expect to see anything in Q3 from this annuity reset, is that right?
No, we're selling off in the 2023 lists. And then the we'll see Q2 next year is where we'll see the major step up off of the new list [Multiple Speakers] revenue from the original list.
Okay. Yeah. And I was going to ask, just you have a great chart in your presentation, you show the annuity impact over the last couple years, would you -- do you expect it to sort of build in a similar way, when we get into 2024 and then over the next few years?
We would adjust it up for we have significantly more clients now than we did last time they started to rebuild.
And also keep in mind as you just think about it, this next annuity cycle is much shorter, which actually plays to our advantage in regards to keeping existing clients and growing new ones.
Okay, that's great. Well, that's helpful color. Thanks so much.
Thanks Steve.
We'll take our next question from Christian Sgro with Eight Capital.
Thanks for taking my questions and congrats on the second quarter. The first question I'll ask is on the Analytic side of the business. And just in the context of the macro and how things have changed since March, what trends are you seeing across your high touch versus your scale of clients, which are more engaged and more active right now, with your group and your products?
We're seeing more activity with the High Touch, which is Christian, as you know that that's where our focus is, that's where we're doubling down our go to market efforts. Extra support on customer success. And it's what the premium offers, data and analytics. That's where we expect them to land. So those are the clients who have the most valuation management solution contracts with us. And we saw immediately in Q1, when the market was trying to figure out what's going on, you know you're the trusted partner when you're the first call. And so we know we're in a great position with our largest clients and we expect that to continue driving growth right now. They also have the most uninvested capital right now. So their capital availability to them is much greater than to the smaller players in the market.
Okay, and could you confirm, are you still seeing assets increase across your largest customers and the references to the dry powder on the sidelines, do you think this is a trend you could expect to see through the year that this would be independent of the bookings -- your bookings for years, but it sounded anomalous in Q1 and even still, it's surprising, but do you see this asset base continuing to increase?
Again, we have strong bookings for the last couple of years. So the number of assets we serviced in Q2 of this year, is significantly larger than Q2 of last year. And there's a seasonality to the number of assets that drive revenue in any given quarter. So if you recall, in Q1 when we were looking at the recurring revenue, you have to normalize for the spike in the number of Q4 valuations that drive revenue. So the number of assets are increasing with them and it's the largest clients that are driving it.
That’s helpful color, thank you for taking my questions.
We'll take our next question from Gavin Fairweather with Cormark.
Oh, hey, good afternoon. Late last year, early this year, you added some sales resources for Analytics, can you just discuss how those resources are ramping in the current macro and it sounds like you're looking to layer in a few more resources, so maybe you can just discuss where those resources will be pointed out, is this North America high touch or are you starting to broaden out the focus there?
Good question, Gavin. We did add sales capacity and we will continue its sales and service capacity. Because we know this capital will get deployed and these clients are committing to deploy it with us. So we need to be prepared to service them with you can see we're doing that while still driving 700 bps in margin expansion. So we're being very selective about how we do that, and rebalancing across the P&L to make sure we're most effectively deploying capital.
Okay, that's helpful. Maybe just on the market insights offering, you've discussed in the past that as kind of a Trojan horse or a way into some of the verticals where you're less penetrated like REITs. It sounds like the pipeline is building nicely, maybe you can just kind of comment on whether that would include some of these verticals where you're a little bit less penetrated?
Right, sorry, I grabbed a sip of water in that last answer. So those are two related questions. So the sales resources, we are targeting our resources from data companies. So that's where -- that's the type of resource we're adding. And they are targeting absolutely high touch, and specifically around market insights premium. It's slightly different motion. A lot of our existing legacy sales folks are doing awesome, and getting there but we're complementing them with folks from the data and analytics world. And they're targeting high touch here. The other area where we are specifically targeting resources is, as you can see as debt funds, but then we also have higher motion directed at banks.
That's helpful. And then just lastly on the working capital, should we expect roughly the 65 million kind of outflow in the first half to reverse and in the back half, is that kind of roughly the excess working capital that should flow back in?
Yeah, that's right. And as we mentioned in the prepared remarks, where we did the big transition in Q1, we're operationally we're already seeing the improvements in Q2, and we're fully expecting to be on track for the full year.
So Gavin, if you look at our free cash flow conversion EBITDA from last year, as a percentage, we will finish this year significantly better than that, which will be reflected in not only a catch up, but an improvement in Q3 and Q4. And we can see all the metrics in the throughput of the teams, where they're operating at higher volumes than they ever did last year, with the new systems.
That's it for me. Thank you.
Thanks Gavin.
We'll take our next question from Scott Fletcher with CIBC.
Hi, I have a question on the property tax. Obviously, a strong quarter there and outperformance on the revenue but also on the cost side I think. And I'm just curious, could you give us some context on how the margins in the tax this quarter compared to previous quarters that had been at the sort of the trough of the annuity cycle?
Both, so most of the 33 million trough is through to the bottom line. So there's no way operationally you're going to offset that. We did continue to add resources, especially in the UK at the end of the year, which gave us a first half increase in expenses. But if you remember, we were specifically targeting to finish the 2016 list very strong off of that, because we could sell through that through March 31st and we did. And then we're carrying it and as I said, the UK is a is a fantastic selling machine. And we're going in -- we will be going into the new list, we're in the new list with a significantly larger number of clients than in prior years. So that's where the investment is going. We also have significant investment going into systems automation, and bringing if you are fair with the word Analytics into the tax business.
Okay, thanks. And then we've covered a lot of good ground but I'm curious, just on the new bookings again, was there any sort of -- was there any change in the cadence as the quarter went on and did you sort of see sequential improvement through April, May, and June and then maybe even into Q3, if you have any color on that?
You know, we saw our normal, probably a little more skewed to the month three, than usual. But that's why it's always heavily weighted to month three, as that's what we saw in March. So it was in month three and we were watching our clients go through price discovery. So it was -- are they going to close their funds, is more capital going to flow in to CRE, how many funds are going to close, what type of funds and can we service those funds. And those things lined up very nicely for us in the quarter.
Yeah, Scott, we started a quarter with a really good pipeline. And we've finished the quarter with the good conversion on that pipeline. So it was anticipated throughout the quarter and it was really good to see them close appropriately.
Okay, thank you.
We'll take our next question from Paul Treiber with RBC Capital Markets.
Thanks so much and good afternoon. It's really great to see the rebound in the booking. Just honing in again on the bookings that were delayed in Q1. Can you give us a sense of what proportion closed in Q2 and if there's any sort of outstanding proportion that's remaining to close?
The best way I can answer that for you, Paul is that you always have bookings or bookings are lumpy by definition, right. So it's why everyone looks at recurring revenue. And we always have multiple paths to hit our number. So which deal is going to close in quarter versus out of quarter, so we have large deals that we were targeting at the end of Q1 that actually closed end of Q2. And we had large deals in Q2 that are now the team's calling in Q3. So in any tech business, as you know, you're going to get those large deals just moving across the quarter in line. But the pipeline looks good right now.
And really just to add to that and we're trying to accelerate Q4 deals into Q3 as well. There's always going to be a push and a pull. We're looking at pipeline, pipeline coverage and conversion of that pipeline is kind of our leading metric of comfort for the quarter.
But that's been released every quarter for 30 years.
So nothing new.
How do we think about the seasonality of bookings, is it typically skewed to Q4 like most software companies?
So you get into the legacy. So even though you're in -- we're into software as a service mode or ARGUS Cloud, a lot of those contracts were clients who were trained for 20 some years to use up their capital at the end of the year. So even though the term license world is gone, you look at -- clients will renew their contracts or move to cloud when their old contract expires. So there are still significant on the application side of things, significant amount of clients that will be at the end of Q4. So, it varies. As we said, bookings can be lumpy. The real -- the true test here is maintaining the recurring revenue growth and just seeing that play through. And then, you know, we're always keeping an eye on deferred revenue as well. So we're replacing that backlog as we recognize the revenue onto the P&L.
Okay, then one last question. Just on the AE renewal rate or retention rate, it dipped down Q2 versus Q1. Is anything that to call out there or is it just sort of the quarterly noise or variability?
No, it's getting to be such a small number for us that one client can move it. There's nothing there that is causing any alarm on our side here.
Alright, thanks for taking the questions.
Alright, thanks Paul.
We'll take our next question from Richard Tse with National Bank Financial.
Yes, thank you. So I don't know if this refers better to revenue or bookings. But if you look at the growth, can you maybe give us a sense of how much is sort of coming from new versus existing customers, and in the case of the existing customers, can you also give us a sense of what they may be adding. I appreciate, when they sort of start another fund, they'll sort of add more licenses, but just really trying to understand the mix in terms of the contribution and growth?
When we get -- so when you break it down to AU BMS, so the AE clients when they're new clients they tend to be very small bookings. On the BMS, it's new and existing like when you break that down, we've had new funds spin up that sign -- that sign contracts with us in Q2, but it's the largest clients again who are -- who have been the most successful in raising capital, and who we expect to be most confident in deploying capital. So as they add new portfolios, that we treat as a new booking or you can think of that portfolio as a new client, but it's largely our existing clients expanding.
Okay, and then on Slide 23 of your deck you talk about digitizing property tax workflows, it seems like a far, I don't know how far out it is, but as an opportunity to potentially improve the efficiency. So sort of two-part question; number one, what is the sort of the timeline for that? And then number two, what do you figure the potential margin lift would be from something like just driving efficiencies?
So there's a couple of things there. We continue to leverage our investment when we bought Rethink with the product itamlink. And we continue investing in technology, particularly in the UK business, which gives us more and more of a moat around that business. So in future years, the appeals time will actually shorten. And although we have a majority share the business in the UK, there's still a massive growth opportunity there for us. And the smaller legal firms and accountancy firms that are doing tax appeals aren't going to be able to process all the information that they need, as quickly as they will need to file the appeals. So we're continuing to invest there. The other piece of the business, so there's customer acquisition and workflow, which is what the UK investment is around. There's leveraging the itamlink workflow, particularly in the U.S. And then there's the self-serve market in tax, which is the major driver of why we bought itamlink for the clients who do not want to engage in a full white glove turnkey service. They can self-serve leveraging itamlink.
Okay, and then just I guess the last questions are related on those acquisitions you referenced. No doubt, it has sort of given you pieces to sort of buildup, sort of a more broad platform. What do you think about acquisitions today, are there any pieces that you may be missing, that you need to pursue, but the valuation is sort of in your sweet spot, maybe you can give us a bit of color on that?
We think the acquisition, the opportunity for acquisitions is increasing right now. You heard us say several times last year, we thought valuations were lofty and there was a lot of private money chasing transactions, even though they couldn't go in there strategically, chasing pricing to a point where we didn't see it being accretive in a reasonable timeframe. So there was a ton of money that went into prop tech in the last few years. And so there's M&A opportunity here, as some of those earlier stage companies are getting cash crunched here. So we think, valuations are to come back down to a very attractive point for us. We're keeping a close eye on the market.
Okay, thank you.
[Operator Instructions]. Alright, and there are no further questions at this time. I would like to turn the call back over to Jim Hannon for any additional or closing remarks.
Right. Well, as always, thank you everybody. Thank you for the thoughtful questions. And as always, you can get in touch with us through our IR website or directly to Camilla or Martin. So have a great night. Thank you.
And that does conclude today's presentation. Thank you for your participation and you may now disconnect.