Q1 2024 Progress Software Corp Earnings Call

Participants

Michael Micciche; SVP of IR; Progress Software Corporation

Yogesh Gupta; President & CEO; Progress Software Corporation

Anthony Folger; CFO; Progress Software Corporation

Ray McDonough; Analyst; Guggenheim Securities, LLC

Fatima Boolani; Analyst; Citigroup Inc.

Antonio Venturim; Analyst; Jefferies LLC

Pinjalim Bora; Analyst; JPMorgan Chase & Co.

Presentation

Operator

Good day and welcome to the Progress Software Corporation Q1 2024 earnings call. Participants are in a listen-only mode. After the speaker presentation, there will be a question and answers question. During the session, you will need to press star one one on your telephone. You will then hear an automated message advising your handouts withdraw your question, press star one one Today's conference is being recorded. I would now like to hand the conference over Mr. Mike Micciche, Senior Vice President of Investor Relations. Please go ahead.

Michael Micciche

Okay. Thank you, Sherri. Good to have you back with us.
Good afternoon, everyone, and thanks for joining us for Progress Software's first quarter 2024 fiscal financial results conference call online. With me this morning, this afternoon are Yogesh Gupta, President and CEO, and Anthony Folger, our Chief Financial Officer.
Before we get started, let's go over our Safe Harbor statements. During this call, we will discuss our outlook for future financial and operating performance, corporate strategies, product plans, cost initiatives and other information that might be considered forward.
Looking such forward-looking information represents Progress Software's outlook and guidance only as of today and is subject to risks and uncertainties. For a description of the risk factors that may affect our results, please refer to the risk factors in our filings with the Securities and Exchange Commission. Progress Software assumes no obligation to update the forward-looking statements included in this call today.
Additionally, please note that all the financial figures referenced on this call are non-GAAP measures unless otherwise indicated, and you can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP figures in our financial results press release, which was issued after the market close today. This document contains additional information related to our financial results for the first quarter of 2024, and I recommend that you reference those for specific details. We also have prepared to proceed with a presentation that contains updated supplemental data for our first quarter 2024 results, providing highlights and additional financial metric metrics, both the earnings release and the supplemental presentation are available in the Investor Relations section of our website at investors dot progress.com. Today's conference call will be recorded in its entirety and we will be available for replay on the Investor Relations section of our website.
And with that, I will turn it over to Yogesh.

Yogesh Gupta

So thank you, Mike, and good afternoon. Everyone, and thank you for joining us today. As we announce the results of our first quarter of fiscal 2024, it was a busy quarter for us. So let's jump right into total revenue of $185 million in the first quarter came in above the high end of our guidance and represents 12% year-over-year growth once again, our top line benefited from steady demand across geographies and product ARR came in at $571 million, which was up slightly year over year in constant currency and MLR was 99%, which again reflects the resiliency of our business and the strength of our customer relationships. Our operating margins were 42% ahead of our expectations and were driven by our strong top line performance, coupled with solid cost management and the realization of efficiencies as the result of the completion of the Mach logic integration, EPS of $1.25 came in $0.09 above the high end of our latest guidance. And adjusted free cash flow was $72.2 million. As you saw in our press release, we are raising guidance for both these metrics as our existing business remains strong on the top line and we continue to run been. Our balance sheet remains strong, and we finished the quarter with cash and cash equivalents of over $133 million. Dsos were 50 based versus 62 last quarter, which is reflective of the timing of collections we mentioned on the fourth quarter call in January. In other news, as you might have seen, we also announced a possible offer to acquire Maria IDB, a New York Stock Exchange listed Irish open-source database company, who reported fiscal 2023 revenue of around $53 million. While EBITDA is used by over 600 enterprises around the globe for their mission-critical applications. As we have repeatedly demonstrated when we've acquired other enterprise software companies, we focus on serving the needs of our customers as evidenced by our net retention rates of around 100%. This makes us the right home for Maria DB. Our possible offer of $0.6 a share represents an enterprise value multiple of under 1.5 times revenue. We believe that this valuation would represent a truly compelling offer from IDB shareholders as it is a significant premium to their recent stock price. We are disciplined buyers and will only proceed if the terms generate value from the shareholder.
Turning to our products and markets, we're seeing customers respond positively to our AI-powered products as these products enable them to rapidly realize the business benefits of AI technologies. For example, HeartLogic and some are for enables sophisticated generative AI applications through that or retrievable automated generation, the retrieval augmented generation RAG is becoming the most popular method to contextualize and to dramatically improve the accuracy of generator responses, morphologic and Semma for enable our customers to leverage their own proprietary data and content to augment the Gemini capabilities of LLS. We continue to make advances with AI in our digital experiences products as well. Sitefinity 15 introduced out-of-the-box generative AI capabilities based on Azure open AI that allows content, editors and marketers to generate, improve, optimize and personalize content at the click of a button. And last quarter, we released a high-powered observability product flow on D for anomaly detection to help cybersecurity professionals detect understand, prioritize and quickly respond to security events. It operations managers are facing an ever-growing volume of increasingly sophisticated cyber attacks flow. Non-eds uses AI to analyze the increasingly complex network operations data to pinpoint issues and to provide context around the potential intrusion to help inform an effective response. This product has only been available for three months. And it's already on the shortlist in two categories of 2024 cloud security awards, namely cloud security, Innovator of the Year and Best Network Security solution. We also continue to offer new SaaS AIOps products to complement our existing portfolio. For example, load master three 60 is any SaaS control plane for large load master deployments. The product provides telemetry data that will allow customers to realize the value derived from load master deployments, which in turn will lead to expansion opportunities and greater renewal rate freeze only a quarter, though the subscription product is already seen. Meaningful customer adoption and SaaS, which was released on second half of 2023, has also been embraced by many enterprise customers. Amazon recently announced that the AWS Officeworks platform will be discontinued, and several of those customers have moved to SaaS.
Lastly, we also released a subscription only version of ports of bone, which our partners have embraced enthusiastically. We'll have several customers sign up within a month of launch and expect that the product will drive adoption of what's up gold even further. And as always, our workhorse product OpenEdge performed extremely well as revenues remained robust and customers remain steadfast in their commitment to that plan.
Turning to other recent news, at the very end of the quarter, you likely saw that we announced a convertible notes offering, which was upsized to $450 million and a new $900 million revolving credit facility. These transactions will lower our interest rate and give us more flexibility and greater scale for accretive M&A by fortifying our balance sheet. Even more to provide a bit of detail. We use the proceeds of the convertible notes to pay off all of our previously existing bank debt, which carried a variable interest rate slightly above 7%. With that bank debt refinanced into lower cost convertible notes, we were able to amend our bank facilities and put in place a new $900 million revolving line of credit. This new revolving line of credit is two times the size of our prior revolver and has less restrictive terms, which reflect our solid recurring revenues, durable cash flows and strong record of executing well on acquisitions. Anthony will go through both transactions in more detail. While I want to share that we're very pleased with the outcome and how it positions us to continue executing our strategy going forward.
I want to emphasize that while we now have access to more capital which we can deploy with greater flexibility, our discipline around our total growth strategy will remain unchanged. We will still target infrastructure software companies that have excellent technology, a sticky customer base, solid recurring revenues and opportunities for synergies that will allow us to quickly reach our operating margin targets. Likewise, we intend to remain extremely disciplined with respect to how much we pay for our company to ensure that our return on invested capital exceeds our weighted average cost of capital and be watchful of our net leverage ratio. So while we have access to more capital and the ability to move quicker opportunities, we do not intend to change the model that has been working well for us so far, the opportunities for M&A remain robust, and we remain very active leading deals within our targeted audience. We continue to feel confident not only in the availability of quality companies, but also in our ability to execute more than one transaction in a year.
Before handing off to Anthony, I'd like to take a moment to talk about Moovit as you know, we have been very transparent about motor tolerability in our disclosures, including our recent 10 K. As we have previously shared, the IT that primarily impacted the on-prem version of Moovit, which is deployed in our customers' environments and where we have no insight. Nevertheless, we rapidly patched and proactively communicated to our customers to help them defend against the attacks on their mobile device. And while Moovit represents less than 4% of our total revenues for progress, every mobile customer is important, we have received very positive feedback regarding our response to the situation. And I believe that our customer first approach to everything that we do, he's helped us navigate a difficult situation and minimize the impact to our business. It is also important to note that while the SEC and other governmental entities are conducting fact-finding inquiries into the attack on Moovit, the investigations do not mean that progress or anyone else has violated any laws or that these entities have a negative opinion of promise. Promise has been fully cooperating with the SEC and other governmental entities in their investigation. While we are currently unable to quantify any potential impact from future proceedings or government investigations. We're grateful for the continued support of our customers, partners and employees, and we will continue to be transparent, proactive and cooperative. So to finish up, it was another solid quarter for progress and our outlook remains positive. Accretive. M&a, combined with solid execution remains our top priority, and we look forward to the rest of the year with confidence. As always, I want to thank my fellow progresses for their hard work and our investors for their continued support.
With that, I'll turn it over to Anthony.

Anthony Folger

Thanks, Yogesh, and good afternoon, everyone, and thanks for joining our call. As Yogesh mentioned, we're very pleased with our Q1 results, which again exceeded the high end of our guidance range on revenue and earnings per share. We're also very pleased to have recently completed a refinancing of our credit facilities and believe the amended facilities provide progress with significantly more liquidity and flexibility to continue the execution of our total growth strategy.
More on that in a few minutes.
Turning to our results and starting with top line, we closed the first quarter with ARR of $571 million, which represents modest growth on a year-over-year basis. This growth in ARR was driven by steady demand for several products across our portfolio, especially OpenEdge.
Another factor that continues to contribute to the resiliency of our top line is strong net retention with Q1 net retention rates coming in at 99%.
In addition to our solid ARR results, revenue for the quarter of $185 million was above the high end of our guidance range with the overperformance driven by strong demand for multiple products in our portfolio. On a year-over-year basis, revenue growth of 12% was driven by a full quarter contribution from Mark logic compared to only one month contribution in Q1 of '23. And this growth was partially offset by the timing of renewals on multiyear subscription contracts. As I've noted on previous earnings calls, the timing of subscription contract renewals, especially multi-year subscriptions, can have a significant impact on our revenue in any given quarter and skew results higher or lower using Q1 of '24.
To illustrate this point if we were to exclude both Mark LOGICS contribution and the impact from the timing of renewals on multiyear subscription contracts, our remaining business would have shown low single digit revenue growth generally consistent with our growth in ARR and growth trends in recent quarters. We will, therefore continue to focus on ARR as a barometer of our top line performance. And as a reminder, our calculation of ARR is presented on a pro forma basis to include the results of acquired businesses in all periods and in constant currency, with all periods presented at our current year budgeted exchange rate. I should mention that consistent with past practice, we've updated IRR using our 2024 budgeted rates. And as a result, the IRR that was reported in prior periods has changed slightly changes in material and doesn't alter the trend in ARR growth or the net retention rates that we've been reporting over the past several quarters. And to illustrate this point, we've included some details in the supplemental presentation filed with our press release.
Turning now to expenses. Our total costs and operating expenses for the quarter were $108 million, up 16% compared to the prior year and slightly lower than our expectations. Year-over-year increase was driven by the impact of a full quarter of mark logic when compared to last year and to a lesser extent, expected increase in compensation costs across the rest of our business.
Operating income was $77 million, up $5 million compared to the prior year quarter, our operating margin was 42%, which was well ahead of our expectations and driven by our top line overperformance, combined with strong cost management on the bottom line, earnings per share of $1.25 for the quarter is $0.09 above the high end of our guidance range. This overperformance relative to our expectations was, again driven by solid cost management across the business, coupled with the previously mentioned overperformance on the top line.
Moving on now to a few balance sheet and cash flow metrics.
I'll begin with our recently completed refinancing and remind everyone that our 2030 convertible notes and the amended credit agreement were both completed in March and therefore will not be reflected in our financial statements until Q2. At the outset, our goal was to refinance our previously existing bank debt into a lower-cost fixed rate instrument and to amend our bank facilities so that they better support our business model and future growth.
With that, here are some of the details. First, our convertible notes offering was complete on March first, 2024 and the total offering amount, including the overallotment option was $450 million for the notes carry an interest rate of 3.5%, a six year maturity and with privately negotiated capped call transactions, they have a 75% effective conversion premium of $92.98. The net proceeds from the offering and capped call transactions were used to repay all existing bank debt, which totaled $338 million at the end of the quarter and to repurchase $25 million of progress shares during the offer. With our existing bank debt repaid using proceeds from the convert, we were able to negotiate a new amended credit facility that provides a $900 million revolving line of credit. This new line expands our liquidity and provides significant flexibility as we continue executing our total growth strategy, and there are currently no revolving credit loans outstanding under this new facility.
In closing, I'll reiterate these financing transactions and the $25 million in related share repurchases were completed after the end of Q1, and they'll be reflected in our balance sheet starting in the second quarter.
Moving on, we ended up the quarter with cash, cash equivalents and short-term investments of $133 million and total debt of $698 million for a net debt position of $565 million. This represents net leverage of two times using our trailing 12 month adjusted EBITDA. Our DSO for the quarter was 50 days, an improvement of 12 days when compared to last quarter. And adjusted free cash flow was $72 million for the quarter, an increase of $25 million compared to the prior year quarter. As we discussed on our last call, the increase in free cash flow was aided by the timing of billings in Q4 and was also driven by stronger than expected Q1 collections and operating performance during the first quarter. We also repurchased $23 million of PROGRESS stock at the end of the quarter. We had $171 million remaining under our current share repurchase authorization.
Okay. Now turning to our outlook for Q2 and the full year 2024, when considering our outlook for Q2. It's important to reiterate the point I made earlier about the revenue impact of multiyear contract renewals and how their timing can impact our revenue in any given quarter skewing results higher or lower. Despite this potential for volatility in quarterly revenue, we would expect ARR to be a good reflection of our fundamental top line performance. And as mentioned on our last call, we expect ARR to grow slightly in 2024. With that, for the second quarter of 2024, we expect revenue between $166 million and $170 million and earnings per share of between $0.93 and $0.97 for the full year. We continue to see strength in the demand environment for our solutions, and we're also aware that the macro environment may become more challenging as such. For the full year 2024, we expect revenue between $722 million and $732 million, consistent with our prior guidance, an operating margin of between 39% and 40%, generally consistent with our prior guidance. Adjusted free cash flow between $205 million and $215 million, an increase of $3 million compared to our prior guidance and earnings per share of between $4.65 and $4.75, an increase of $0.07 compared to our prior guidance. Our annual EPS estimate contemplates a tax rate of approximately 20%, approximately 44.6 million shares outstanding and the impact of 30 million in additional share repurchases, bringing our total share repurchase expectation to [78 million] for 2024.
In closing we're excited to deliver strong financial results across the board in the first quarter, a continuation of the trend we saw for all of 2023. We're thrilled with the refinancing of our bank facilities and believe we're very well positioned to deliver strong results for the remainder of 2024 and beyond.
With that, I'd like to open the call for Q&A Q.

Question and Answer Session

Operator

As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be to withdraw your question, please press star one one due to time restraints, we ask that you please limit yourself to one question and one follow-up question. Please stand by while we compile the Q&A.
Yes, our first question will come from the line of Ray McDonough with Guggenheim Securities. Your line is open.

Ray McDonough

Great. Thanks. Yogesh, may be for you. Maria DB is obviously based on open source technology and throughout history. There's very few examples of companies that were successful in scaling businesses supporting open source technologies wise, Maria d be different and progress is control and how confident are you that you can ramp margins. When I just look at the filings that they have there, it seems like they're burning a good amount of cash right now. So just want to understand kind of what you're seeing in that business in terms of your ability to drive success and drive free cash flow generation?

Yogesh Gupta

Perhaps the sure Ray than Thank you know. So do things, right. First of all, we do have shaft, which is also an open source product. And we have demonstrated that we can do well with a business like Chef, both from the perspective of customer retention, ARR growth on margin expansion and so on. So we have an example of an open-source company that we have done this before with. And with respect to Maria DV. A couple of points there. Last year's financials actually do not reflect some of the restructuring that they announced at the very end of last year. So they have done a significant restructuring. I think they publicly announced that they were eliminating at least 28% of their employee headcount. They have also talked about the fact that they have exited two very, very small, but highly unprofitable businesses. And they also have, to be honest, public company costs that way, if you can imagine a 50 something million revenue company dealing with a keynote for public company expenses structure, which there is further opportunity for us. We believe that we have tremendous opportunity here to create truly significant meaningful value for our shareholders.

Ray McDonough

That makes sense. And then maybe just a follow-up for Anthony. In your comments around guidance. You mentioned you're aware the macro might become more challenging as we move forward. I am just wondering, one, is there anything behind those comments in terms of what you're seeing out of your customer base and any sort of product category and to maybe just kind of help us understand what level of prudence you're putting in the guidance here and what could go wrong and what could go right to do or what could be better in the macro and what that would mean in terms of achieving your high end of your guidance?

Anthony Folger

Yes, sure. I think on we continue to see inflation still running through from a cost perspective, right. And so I think that was the probably the point that we were making is that that's still a bit of a challenge for us and for a lot of companies out there. I think we're pretty good at managing costs and being forward looking in terms of and a higher cost profile is going to develop. And I think it's just a nod to the fact that we're going to have to continue with that because we still see some of the same inflationary pressures in the market and in our business and we'll continue to stay disciplined in managing that managing our margins.

Yogesh Gupta

And to sort of just add a bit, I think from a demand side, we are not seeing Kevin to be honest on anything differently, we continue to see steady solid demand across the portfolio.

Ray McDonough

Great.
Thanks for taking the questions.

Operator

Thank you. One moment, Farhan question and that will come from the line of Fatima Boolani with Citi. Your line is open.

Fatima Boolani

Hi, good afternoon. Thank you for taking my questions. Yogesh had one for you to start in the follow-up for Anthony. Over the course āof last year.
Going to one of the themes that come I mean, you had discussed with this opportunity for Mark logic to enjoy some cross-sell synergies with your a very sticky, very large OpenEdge install base. I'm curious with now a full year under your belt and having been very conservatism or having been very conservative conservative rather on your ability and expectations to kind of cross-sell or cross-pollinate into those bases. I'm curious if you're going to take any deliberate or material steps to actually derive that behavior this year.
And then just a follow-up, for Anthony. Thanks.

Yogesh Gupta

So you know, I Fatima our own our efforts around cross-sell are modest because, as you know, our efforts around go-to-market are in general, modest right. That means one of the things that in the trade-off that we make is the trade-off between what happens on the spend on go-to-market efforts and what we deliver in terms of our margins. So I think fundamentally, we continue to do what I would call targeted efforts around cross-sell, but we have always modeled every single one of our acquisitions with to be honest, right? And we've said this publicly no cross sell. It's modeled in our modeling. We think of these businesses as having to stand alone to deliver value for our shareholders and if we can actually do some cross-sell, then that's upside. So from our perspective, Fatima, I don't see to be honest, any real meaningful cross-sell that sort of move the top line needle in a meaningful way. We will continue to do some cross-sell. We are doing cross-selling, not just actually cross-selling month logic into OpenEdge. It's even cross-selling other products into the March logic customer base. So whether it is our chefs product for managing those environments and the deployment and dev ops for those environments, whether it is something like a Sitefinity and other digital experience products that end up front-ending a lot logic application. So we see opportunities there as well as we see opportunities with Cinemark logic going into open its customer base but really again, as you know, I keep saying this and I'll I guess I repeat myself over and over that we really don't see a meaningful impact from that on our business.

Fatima Boolani

I appreciate that, Yogesh And Anthony, to you on the net retention rate at 99% now, just to nitpick, that is a shade below your internal threshold at 100%. So any nuances you can offer to us on why that stepped down.
Now you've been pretty consistently at the 100, 100-ish level, 100-ish percent So just wanted to get maybe some additional context around that slight compression this quarter. Thank you.

Anthony Folger

Yes, sure. Fatima. I would say that compression because we measure our net retention rates on a trailing 12 month basis, you sort of have to look back over that trailing 12 month period and figure out the ins and outs. And we mentioned in Q4 that we had a couple of contracts turn out. And one of them was due to M&A, frankly, where we ended up losing a customer and that impacted us in Q4 brought the net retention rate down a little bit and that contract is still in the denominator of our calculation. It will be there for a couple more quarters. So we're not surprised to see things at 100% or 99% for a little bit and certainly doesn't change our long-term outlook from a net retention and a target perspective of being 100 or better.

Fatima Boolani

Thank you so much.

Operator

Thank you. One moment for our next question will come from the line of Brent Thill with Jefferies.
Your line is open.

Antonio Venturim

Hi, guys, thanks for taking the questions. And Antonio Venturim for Brent Thill. It looks like you guys had an overall strong quarter of top and bottom line. Can you just give us your puts and takes on the delta between ARR growth sort of being flat to slightly up versus revenue growth growing in the double digits. If you can just give us puts and takes on that out that would be great?

Yogesh Gupta

Yes, sure. Sure, Antonio, I can I can take that. So for the quarter, Mark logic, if you sort of take a look at the year over year, we only got a month contribution from Mark logic last year, and we get a full quarter this year. So that drove in out of the vast majority of our growth from. But there was an offset to that, right. We did have some multiyear subscription contracts that executed last year. They renewed last year. We didn't have the same opportunity this year in the quarter. So when you're looking at revenue on a year-over-year basis, I think the right way to reconcile it is you've got some growth from Mark logic day. It gets offset a little bit by the timing of contract renewals, some of those subscription deals. And so you can still sort of reconcile down to low single digit growth on the revenue. But ARR just ends up being a, I think, a more accurate on more accurate reflection this quarter of what's going on in the in the business fundamentally.
And you know, what's interesting is that when you look at ARR year-over-year last year, the full cleanup pro forma ARR. of my largest was included in last year's results. So when you think about it that way, right. When we compare ARR, we include acquisitions, privately are are as though it was part of our business. So the growth in ARR is really sort of the real growth of the business, the real trajectory of the business where, as you know, until you have a full 12 month cycle, the actual reported revenue looks significantly higher because my logic is adding to this quarter for the full year on quarter, whereas last year, as Anthony said, was just about a month.

Antonio Venturim

Awesome. Thanks for taking my question.
Congrats on the quarter.

Yogesh Gupta

Thanks.

Operator

Thank you. As a reminder, if you would like to ask a question, please press star one. One moment for our next question will come from the line of Pinjalim Bora with JPMorgan. your line open.

Pinjalim Bora

Great. Thanks for taking the questions. I want to ask you on HeartLogic. I heard throughout the world drag along with Mark logic. It's harder to document database, but can you remind us what has mark logic? You have a locked up so far from a rig standpoint and have they created a vector DB. store? Is there a search layer in there maybe help us understand that absolute targets. Are you seeing customers look at that more, you know, seriously as for the RAG use cases?

Yogesh Gupta

Great question Pinjalim. So what we have done. So if you think about Mark logic, of course, this is really unstructured data and but similar for on top of that, right is the semantic analysis of that information. And so the question becomes, you know, when you get information out of an NLM, how do you contextualize it?
So yes, we have actually created capabilities and we have them. I don't want say customers in production, but we have customers who are looking to figure out how to use it to actually leverage their content and their data using both HeartLogic and some of four on top of their inflammation and then augmenting and in which they will that they do through elements of any generative content until you get through the L&M, we'll do it. Then basically the argument though the generation with information from my logic flash number four and therefore provide more contextual answers. I wish I had where we get to the point where we have production customers, we can talk about it.

Pinjalim Bora

Interesting. Yes, thank you.
Thank you for that, Yogesh. One for Anthony. I hear you on the comment that you made about kind of the customer churn. You had a couple of customers churn last quarter, and that's kind of impacting in our. But when I see the sequential decline in ARR seems like it's a little bit more and then maybe a year ago or even maybe last quarter. Just wanted to make sure that there is no incremental gross dollar churn that you're seeing at this point? Thank you.

Anthony Folger

Yes, sure, Pinjalim. Yes, I would say the trends for us have been generally consistent. We do see sort of a seasonal move in ARR. because we're a software company where contracts can lapse on. We've generally seen a step down from Q4 to Q1. It's not a not uncommon for us in terms of ARR. And so we saw that again this quarter, I think it may be slightly higher than what it was last year. But from our perspective, in terms of what comes back into the tail in Q2 and just trends in the business. I don't see it as anything meaningful in terms of incremental churn in the quarter.

Pinjalim Bora

Got it. Thank you.

Operator

Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call. I'm over to Mr. Yogesh Gupta for any closing remarks.

Yogesh Gupta

Well, thank you, everyone, for joining our call, and we look forward to speaking with you again in a quarter. Thank you.
Bye-bye.

Operator

Thank you all for participating. This concludes today's program. You may now disconnect.