Light & Wonder, Inc. (NASDAQ:LNW) Q4 2023 Earnings Call Transcript
Light & Wonder, Inc. (NASDAQ:LNW) Q4 2023 Earnings Call Transcript February 27, 2024
Light & Wonder, Inc. misses on earnings expectations. Reported EPS is $0.73 EPS, expectations were $0.76. Light & Wonder, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Hello all and welcome to the Light & Wonder 2023 Fourth Quarter Earnings Conference Call. [Operator Instructions]. I'll now turn the call over to Nick Zangari, Senior Vice President of Investor Relations. Please go ahead.
Nick Zangari: Thank you, operator, and good afternoon, everyone. Welcome to the fourth-quarter and full-year 2023 earnings conference call. With me today are Matt Wilson, our President and CEO, and Oliver Chow, our CFO. During today's call, we will discuss our fourth-quarter and full-year 2023 results and operating performance, followed by a question-and-answer session. Today's call will contain certain forward-looking statements that may involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call. For information regarding these risks and uncertainties, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC.
We will also discuss certain non-GAAP financial measures. A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our earnings release as well as in the Investors section of our website. In 2022, we completed the sale of the lottery business to Brookfield Business Partners in the second quarter and the sale of the sports betting business to Endeavor in the third quarter. Accordingly, we have reflected these businesses as discontinued operations in our consolidated statements of operations for comparable prior periods. We are reporting our results continuing operations in three business segments, gaming, SciPlay, and iGaming. Amounts in disclosures referring to combined include both our continuing and discontinued operations.
As a reminder, this conference call is being recorded. A replay of this webcast and accompanying materials will be archived in the Investors section of our website. With that, I will now turn the call over to Matt.
Matthew Wilson: Thank you, Nick, and thanks, everyone, for joining today's call. Our fourth-quarter performance capped off a banner year for Light & Wonder as we continue to build upon our strong business and financial foundation. Notably, we have consistently delivered on our key performance objectives since we announced the company's transformation strategy. Our numbers reflect strong execution and continued momentum with consolidated revenue up 13% over the fourth quarter of last year, marking 11 consecutive quarters of year-over-year growth. We once again delivered double-digit growth across the board as evidenced by our results throughout the year and have now achieved five consecutive quarters of double-digit revenue growth in all three businesses.
As a result, we ended the year with a 16% increase in consolidated revenue, reaching a record $2.9 billion for 2023. Looking back, I would like to share with you what defined Light & Wonder and drove our success this past year. We have an exceptional team and experienced leadership with a winning mentality. I firmly believe that we have the best-in-class talent executing on a proven playbook, and I commend our entire team for an outstanding quarter and outstanding year. Throughout 2023, we made strategic investments in the aspects of our business that we expect to drive long-term sustainable value, something we were not able to do before the transformation. Our improved financial position and disciplined capital allocation strategy support our ability to continue to invest in the future of Light & Wonder, with a commitment to accelerating R&D investments and enhancing our product offerings.
We have a differentiated product strategy and demonstrated sound execution on our growth pillars with refreshed hardware and content for both core and adjacent markets. We achieved impressive share gains in key markets with the popular franchise, Dragon Train, continuing to drive that growth in Australia and creating notable operator engagements around our pending release in North America. We also made considerable progress in adjacencies, and we expect to be active in video lottery terminal markets, notably Oregon and Quebec, where we recently announced deals, as well as the coin-operated amusement machine market and historical horseracing markets in 2024. Capitalizing on franchise extension has been another key differentiator in driving our success.
We have shifted our focus from allocating the majority of our resources to new niche markets coming online to now building on our evergreen franchises and game extensions, which can be leveraged across our entire ecosystem. In our digital businesses, software had another record quarter with continued market share momentum and higher revenue in the social casino space, which we will discuss in further detail. Our organic business segment continue to be a growth driver for Light & Wonder with a strong quarter, reflecting continued momentum in both the US and international market. These results demonstrate the benefit of our robust R&D strategy, driving improved performance with impressive returns on our investments. We continue to see iGaming as a compelling opportunity as this market continues to develop over the coming years.
For Light & Wonder, it truly is all about the game. Throughout the past year, we executed on our product strategy to build exciting, industry-leading games that have continued to drive an impressive performance metrics. In addition, we are pleased with our continued progress on our cross-platform strategy, with development efficiencies being realized and content expansion across all channels, driving digital revenue uplift. We are very pleased with our considerable progress across our business units as we continue to capitalize on the opportunity in resilient gaming industry. I will now turn to our business unit operational highlights. Gaming continues to be a strong driver for Light & Wonder. Our investments are bearing fruit as we delivered on strong top-line growth, up 13% for the quarter and 16% for the full year.
We saw continued momentum in gaming operations, ending the year with an increase of 590 units or 2% growth in our North American installed base year over year. These results were largely driven by premium units, which continued to increase for 14 consecutive quarters. The performance of our games is on full display with both North America and international revenue per day exceeding 2022 levels in the quarter and for the year. This is a testament to our strategy, focusing on fleet optimization and ensuring the games we develop are casino floor mainstays, maximizing the full value of each and every unit we deploy on the casino floors. We will continue to build on our evergreen franchise extension such as Ultimate Fire Link, Huff N' Puff, Dancing Drums, and recently Dragon Train, which was the biggest Australian launch in the company's history.
Our licensed titles such as top-performing Monsters and highly anticipated Squid Game, featured on our highly successful cosmic and new large-screen jumbo HORIZON cabinets, are expected to extend our momentum heading into 2024, providing immersive and seamless player experiences. In game sales, our strategy was validated by an outstanding performance with over 37,000 units shipped globally for the year, a company record, and an increase of 40% compared to the prior year. Our progress in both North America and Australia is evident as we continue to maintain over 20% market share in both markets with exceptional growth in the replacement segment year over year. We expect continued growth with our KASCADA series cabinets, notably the KASCADA dual screen, which was named top-performing new premium cabinet at and the driver of our announced sales into Oregon and more recently, Loto-Québec.
Moving on to systems. Highlights for 2023 included key contract wins driven by our product portfolio with enhanced capabilities such as loyalty features, giving operators access to greater insight on player preferences. Our recent systems deal announced with Harry Reid International Airport, a Mohegan-inspired entertainment resort in Korea, fully demonstrates why we are the preferred choice for operators, providing an intuitive, curated customer journey at every touch point, regardless of locations, vertical, or platform. Our engaged product continues to gain traction as we focus on software services in addition to our in-demand hardware. We're excited about the offerings that we highlighted at the Global Gaming Expo, such as Cashless, which is currently gaining traction, including in Australia as we participate in trials in New South Wales for responsible gaming initiative.
We expect Light & Wonder to maintain its leadership position in this space through innovation and partnership with our operator customers to bring the most comprehensive portfolios to the market. On the tables, we continue to be an industry leader known for best-in-class products and an extensive library of IP. The recovery in the global markets helped drive higher sales with table product revenue up 13%. Overall, we expect to expand on our recurring revenue streams and target long-term growth through product innovation and hardware investments where we have a proven track record of success. To sum it up, I'm very pleased with our performance in gaming. Light & Wonder is still in the early innings of growth in this sector. Importantly, we are well positioned in every product category with our premium offerings and a focused strategy to capitalize on new opportunities across this important segment.
Now turning to SciPlay. We continue to be pleased with our performance in the social casino space. SciPlay is now fully integrated part of our portfolio executing beyond expectations in a breakout year. First, I'd like to share that the integration has gone well, and we are executing on our cross-platform strategy through a more harmonized development process across all businesses. Last year, I highlighted our key growth objectives for SciPlay, outpacing the social casino market, selling average revenue per daily active user, and investing in both our SciPlay engine and product road map. I'm very pleased that we have delivered on these objectives, reflecting both strong leadership and consistent execution. We outpaced the market again now for eight consecutive quarters and have consistently gained share over the course of the year.
SciPlay grew revenue 12% in the quarter and 16% for the year, both record levels. Our four largest game Jackpot Party, Quick Hit Slots, Gold Fish Casino, and 88 Fortunes posted quarterly record revenues, a testament to the success of our SciPlay engine as we continue to enhance our portfolio of games through our live ops strategy. Our recent Dancing Drums app launch was also a success as we continue to expand our land-based titles on our social platform. Average monthly revenue per paying user was approximately $114 and average revenue per daily active user increased 15% year over year to $1, both record levels in the quarter. We will continue to invest in our capabilities and product roadmap to drive engagement and loyalty while continuing to grow monetization sustainably and responsibly, particularly in our core franchises.
Entering the new year, we are focused on developing our direct to consumer platform, which we expect will enhance player relationships and engagements, accelerate the potential to expand margins over the long-term and grow lifetime player values. Clearly, SciPlay continues to be a valuable growth driver for Light & Wonder and a big part of our overall strategy. Going forward, we look to extend our industry leading social casino growth as we further differentiate our offerings from those of our peers. Now looking at iGaming. Our portfolio expansion enables us to be one of the largest content providers in the industry and we continue to see tremendous demand from operators and from players. Quarterly revenue increased 13% year over year to a record $70 million with full year revenue also a record, reflecting the continued growth momentum in the US and international market.
The growth is a testament to our best-in-class content aggregation platform and unmatched third-party content. The quarter was highlighted by record launches with Pirots 2 and Ultimate Fire Link Cash Falls - China Street, further demonstrating our content development roadmap and our cross platform approach. Of the top 20 games on the OGS across the US, our third-party content accounts for over two-thirds of the total, driven by land-based titles, table games, and the lightning box. In addition, ELK, Lightning Box, and Playzido all continue to scale with record GGR in the quarter. We are collaborating closely with operators in our live casino offering, which went live in the quarter in Michigan with Rush Street, Golden Nugget, and DraftKing.
The initial feedback has been very positive with teams working together on both sides as we continue to enhance our product with additional functionality. Importantly, other operators have taken note of our collaborative partnerships. Now I'm pleased to announce we signed an agreement with Penn Entertainment for Michigan, which will include network and bespoke tables. While we are still in early stages, we are already in discussions with customers on expansion opportunity into other regions. Over the long term, we expect this to be a growth driver for our iGaming business. The US is a fast-growing market and we will continue to drive our key initiatives which are to execute on the launch of two epic land-based titles, plus one digital native title total monthly, expand jackpot, steps in table game offering with our IP and scale, and accelerate ELK Studios launches and game services such as marketing jackpots and multiplayer features, all while focusing on game placement and promotion.
As we look to 2024, we expect to extend our momentum through our regionalized roadmap and original content that have already brought us great success to date, as well as further expansion into new markets. We are encouraged by the legislative progress in Brazil, confirming our optimism for the future of iGaming legislation as a growth driver for Light & Wonder. Our portfolio expansion and legalization will drive future growth, and our impressive scale, robust product offering, and well established footprint globally positions us well to execute when opportunities arise. We are very proud of our accomplishments in 2023 as we executed on a number of key strategic initiatives. Our successful secondary listing on the Australian Securities Exchange, or ASX, further expanded our global presence in May.
Subsequently, we were added to the ASX 200 Index last October. Its inclusion enables Light & Wonder's exposure to a broader base of investors, further solidifying our position in the Australian capital market. Notably, feedback today from the Australian investor community continues to exceed our expectations. As we previously mentioned, we closed the SciPlay acquisition in October as well, with integration completed successfully and collaboration on our cross platform opportunity accelerating. Finally, we continue to strategically increase our investment in the business and return capital to shareholders, all while improving our cash conversion and further reducing leverage. I'm also pleased to report that Light & Wonder's strong performance did not go unnoticed as we garnered several distinguished industry awards this past year.
As a testament to the success of our cross-platform strategy, we were named as the Multi-Channel Supplier of the Year at the International Gaming Awards. We were also named Full-Service platform Provider of the Year at the EGR North American Awards, fully demonstrating the power of our well-ramped portfolio. Our business unit leadership and teams all received accolades at the SBC Awards in North America, notably SciPlay was named Social Casino Operator of the Year on the back of a banner year. Our momentum internationally was also recognized as we were named Casino Supplier of the Year at the Global Gaming Awards in Asia and most recently in London as well. Additionally, we were acknowledged for our CSR and ESG efforts by being named a Diverse and Inclusive Team at the Women in Gaming Diversity Awards.
As part of our recent transformation, we have also strengthened our commitment to be a positive influence on the industry, driving key social initiatives that are core to our values. Our primary focus on responsible gaming as an industry leader drives us to create products and services that can be enjoyed responsibly across the globe as evidenced with our cashless collaborations with peers and regulatory organizations in Australia. Responsibility starts with us and we will continue to educate our employees on awareness of responsible gaming policies and practices. Our corporate and social responsibility programs as well as our environmental, social, and governance efforts will continue to be a top priority for Light & Wonder. To sum it up, we expect continued execution of our strategy in 2024.
The results we delivered in 2023, along with our ability to attract best-in-class talent, establish market positions, and strong cross platform capabilities put us on a clear path to achieve our long-range targets. Our teams have done a tremendous job and Light & Wonder is shining brighter than ever. We are ready to deliver on the promise of sustainable growth as we continue to be the leading cross-platform global games company. As you know, in December of last year, Oliver Chow was officially named the company's Executive Vice President and CFO. I am delighted to officially welcome Oliver to our senior leadership team. He has already played a pivotal role in driving the success of the transformation, and I'm confident that we'll benefit from his expertise and financial guidance as we continue to execute on our strategy.
And with that, I'll turn it over to Oliver.
Oliver Chow: Thanks, Matt. These are exciting times for the industry and the company, and I'm honored to be part of it as CFO of Light & Wonder. It is my mission to build on our solid financial foundation, leveraging our highly cash-generative business with a continued focus on operational excellence. I appreciate the confidence that our global investor base has placed in us, and I take my role as a steward of investor capital very seriously. That said, I look forward to working with all of you moving forward. Turning to our operating performance. We were able to capitalize on many of the opportunities presented to us in 2023 and delivered strong top and bottom-line growth, both in the quarter and for the full year. For the fourth quarter, consolidated revenue increased 13% year over year to $770 million.
Full-year consolidated revenue was up 16% to $2.9 billion, a new record for Light & Wonder. Our results for again driven by double-digit growth across all of our businesses. Operating income was $155 million in the quarter, an increase of 57% over the prior year period, primarily on strong top-line growth, lower D&A, and restructuring and other costs. Full-year operating income was $518 million, a 90% increase compared to the prior year. Consolidated AEBITDA grew 14% to $302 million in the fourth quarter compared to the prior year period, primarily driven by double-digit top-line growth and maintained strong margins across all of our businesses. We grew 2023 consolidated AEBITDA 22% to over $1.1 billion, a tremendous outcome reflecting the hard work of our talented team and a continued upward trajectory of our financial performance.
Consolidated AEBITDA margin was 39% for the quarter and the year. We saw a 300 basis point increase over 2022 margin levels for the year, with all three business units over 200 basis points higher, executing with a continued focus on operational efficiencies. Adjusted NPATA was $109 million for the quarter and $388 million for the year. As a reminder, this metric is not comparable to the prior year period due to the materially different debt and tax profile of the company prior to the completion of the divestitures. Consolidated operating cash flow was $167 million in the quarter. Comparability is not meaningful as the prior year period included $176 million of cash tax payments related to the divestitures. Full-year consolidated operating cash flow was $590 million, up compared to prior year, primarily due to cash taxes paid related to the divestitures, which were $32 million in the current year and $641 million in the prior year, as well as lower interest payments.
Turning to the business units. In gaming, we continued to execute against our KPIs, delivering exceptional financial performance, supported by our strong product portfolio and proven market strategy. Revenue in the quarter grew 13% year over year to $496 million and AEBITDA increased to $245 million, a 14% increase compared to the prior year period. This impressive revenue growth was led by robust North American and international game sales in the quarter, which increased 31% year over year, with profitability primarily driven by revenue growth in the period. Full-year revenue grew by 16% to $1.85 billion and AEBITDA by 20% and $918 million with solid growth across all business units. Our AEBITDA margin was 49% in the quarter and 50% for the year as we trend in line against historical levels, which we expect to sustain given continued execution on our margin enhancement initiatives over the long run.
Gaming operations revenue in the quarter increased 7% year over year, primarily driven by growth in our North American installed base and revenue per day. Our premium North American installed base grew 7% year over year. Revenue per day in the quarter grew 6% in North America, and 16% in international compared to the prior year, driven by the performance of our premium games and as we continue to optimize our fleet. Global game sales were robust in the quarter, with revenues up 19% sequentially and 31% year over year. In addition to the continued momentum in the North American replacement market, we also had a large replacement sale of over 37 hundred units into the UK, which affected average selling price in the quarter. We expect this ASP dynamics to continue as we enter into the adjacent markets more meaningfully in 2024.
Onto systems where we continue to expand our recurring revenue stream and higher service and maintenance revenue in the quarter. To note, there was a sizable hardware sale for new property in Asia in the prior year, which affected comparability. Lastly, tables revenue was flat compared to the prior year, primarily due to the timing of product sales, which resulted in a stronger third quarter this year. Looking ahead over the next several years, we expect to expand on the higher margin and recurring revenue segments of the gaming business over time. I'll expect 2024 to be another year of robust sales underpinned by innovation and investment in our product portfolio. Turning to SciPlay. We once again delivered record fourth-quarter and full-year performance, outpacing the social casino market and gaining market share on solid execution against our ROI metrics.
Revenue in the quarter was up 12% year over year to $204 million on higher monetization, leveraging game content, dynamic live ops, and effective marketing strategies, with Quick Hit, Gold Fish Casino, and 88 Fortunes all delivering significant double-digit gains on record revenue. AEBITDA increased 17% to $69 million year over year, with AEBITDA margins up 200 basis points to 34%. Full-year revenue was $777 million, up 16% and AEBITDA was $243 million, up 30%. Both were the highest in SciPlay history. SciPlay's investment in talent and core capabilities has driven significant uplift across key monetization metrics. We saw record average revenue per daily active user increased 15% to $1 and record average monthly revenue per paying user increased 15% to over $113 compared to the prior year quarter.
Our daily active users and monthly paying users both remain steady and payer conversion rate continues to reach quarterly new heights at 10.7%. Prudent and diligent marketing and UA spend is reflective of SciPlay and more broadly, Light & Wonder's DNA. Every decision is carefully considered prior to execution. The margin expansion we saw over the past several quarters is a great example of the health of the SciPlay business. Based on our marketing return analysis, we have identified a number of UA investment opportunities throughout 2024, notably in the first half, such as the new Joel McHale campaign we launched in the current quarter along with expansion and innovation costs as we look to grow in nascent markets and develop new games. Our margins will fluctuate in the near term with these investments, all of which is expected to fuel long-term sustainable growth.
We applaud the success SciPlay achieved this year and the incredible level of execution we're seeing across the portfolio. This gives us confidence in further development of greenfield opportunities, value-enhancing initiatives such as our direct-to-consumer platform, and the performance of our core social casino business. At iGaming, where our core performance reflected growth momentum in the US and international markets, as well as continued strength in our land-based original content launches and scaling third-party aggregation on our platform. Revenue in the quarter increased 13% year over year to $70 million and AEBITDA grew 21% to $23 million. Full-year revenue increased by 15% to $275 million and AEBITDA was up 19% at $95 million. As a reminder, we benefited from termination fees in 2023 from certain operators as they pivoted on their digital strategy, which we do not expect to reoccur in 2024.
AEBITDA margin improved 200 basis points to 33% in the quarter versus the prior year period, driven by revenue growth. This resulted in an overall AEBITDA margin of 35% for the year as we continued to benefit from scale while also investing in our portfolio. We saw solid growth year over year in both our North America and international markets with record player numbers on our platform in the quarter. Wagers processed through our iGaming platform increased to $21.6 billion, also a record high. In fact, we saw record quarters in the US and Canada with GGR in each region up 23% year over year and were double-digit sequential quarterly growth. The US market was driven by increased volume of land-based content, along with continued scaling of the OGS partner network.
Ontario continues to ramp with increasing volume of first-party content. GGR volumes in Europe also reached record highs, marking our third sequential quarter of growth with 11% year-over-year improvement driven by performance across First Party, ELK, and Lightning Box content. We are well positioned to continue expanding our iGaming business with best-in-class aggregation platform, and a robust product portfolio. Going into 2024, we expect growth to be largely in line with overall market expansion, excluding termination fees we benefit from in 2023. Contributions from live casino is expected to be a modest drag on AEBITDA and margins during the year as we continue to ramp up and invest in this business. I am confident in our ability to expand margins as we scale our offerings over time.
Over the past year, we've diligently managed our cost base and drove margin expansion. Operational excellence remains a top priority as we further integrate our businesses and identify efficiencies. Importantly, with the results and healthy business that we saw this year, we will continue to reinvest back into all three platforms through R&D and CapEx to propel our growth pillars. We will maintain a strategic approach that ensures optimized output with a rigorous assessment of ROI. More importantly, we will continue to invest in our people and technology, the backbone of Light & Wonder that drove our success throughout this transformation and into the execution phase. As our business scales, we also expect associated corporate costs to increase proportionately, providing support for the business units through shared services and other functions.
We are building out a lean management team to embed this methodology throughout the organization to drive efficiency and scale. We're challenging our teams to act like owners and arming them with tools and training to make a difference across the organization. As a reminder, in Q3, we called out elevated legal costs of approximately $10 million, which we expect will have an impact across the first and second quarters of 2024. That said, we will continue to stay laser focused on improving processes, staying committed to margin expansion, and driving sustainable long-term profitability through value enhancing initiatives, ensuring we have a prudent sourcing process to drive efficiency as we scale our gaming business and continuous improvement in developing our IT infrastructures.
As I step into the CFO role, I'm fortunate to have inherited a business with a healthy balance sheet and a strong financial profile. After the SciPlay deal that we closed in October for approximately $500 million before fees and other expenses, we ended the year with a net debt leverage ratio of 3.1 times, a 0.2 turn improvement over the prior year and within our targeted range of 2.5 times to 3.5 times. Recently, in January, we were able to further improve our transform debt profile by repricing our Term Loan B, reducing our interest rate by 35 basis points, and driving approximately $8 million in annualized interest cost savings. With the refinance of our senior unsecured notes that we completed in 2023, in total we expect approximately $40 million in annualized interest expense savings.
Our profile is further enhanced by gaining access to the cash on SciPlay's balance sheet and the cash flow generated from the business going forward, providing flexibility and optionality for sustainable growth and value creations, we continue to optimize our cash balances. We reported consolidated free cash flow of $70 million in the quarter. The current year period was affected by $16 million, primarily in cost supporting the strategic review and the related activities associated with the SciPlay merger, while prior year was affected by $176 million in cash taxes paid related to the divestitures. Full-year consolidated free cash flow was $291 million, affected by $32 million in cash tax payments related to the divestitures and $25 million, primarily in costs supporting the strategic review and related activities.
Our 2023 free cash flow conversion rate, excluding the aforementioned items, was 31%, a 1,200 basis point increase from the prior year as we stayed committed translating each dollar to the bottom line. Looking ahead, we expect restructuring costs to wind down as transaction-related costs roll off. Over the long term, cash interest savings will be at least partially offset by expected increases in CapEx, largely driven by gaming as we continue to invest in growing our premium install base. We'll have some puts and takes by quarter based on the seasonality of tax payments, working capital, and other items. But our annual cash flow conversion rate is expected to increase over time on the flow through our highly cash-generative businesses and as we continue to focus on capital decisions and returns.
Free cash flow generation remains a key priority and a driver to enhancing shareholder value. In 2023, we continued what we set out to do, advancing our balanced and opportunistic capital allocation framework; debt reduction, which we've executed, evidenced through our transformed balance sheet; returning substantial capital to shareholders through share repurchases; and lastly, disciplined investment in key growth opportunities. We returned $25 million of capital to shareholders through share repurchases during the quarter for a total of $170 million returned during 2023. Since the initiation of the program, we have returned $575 million of capital to shareholders, which is approximately 77% of total program authorization. We'll continue to monitor the market for opportunities going forward.
As I mentioned before, we will continue to invest in our people and core capabilities to support sustainable long-term growth and bolster our leadership positions with a commitment to driving high ROI, which exceeds our return thresholds. Our capital allocation priorities will always be in the context of a healthy balance sheet. That said, we remain flexible in evaluating all available options that will only deploy excess capital in the most value accretive ways to our shareholders. We have a great team here at Light & Wonder, and I'm extremely excited to be partnering with Matt and the executive team to take us to the next level. We'll continue to execute to our strategy that is core to our culture in a resilient and dynamic industry. What our teams have accomplished to date reflects strong momentum, and best of all, high confidence in our growth journey continuing.
With that, we'll turn it over to the operator for your questions.
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