Q2 2020 Earnings Call
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Good afternoon, everyone on behalf of simulations plus I welcome you to our second quarter fiscal year 2020, French results conference call and Webinars hosting the call today is englishness plus the CEO shot O'connor and the company's CFO John can Nigel.
Our quarterly earnings release, it shouldnt be available momentarily and expect to have this before we get into the main details of the earnings call today [laughter] an opportunity to ask questions will fall. Today's presentation. You may send your written question using the question pain under control panel or you may use the hand, raising icon on your control panel.
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Before beginning I'd like to remind everyone that with the exception of historical information. The matters discussed in this presentation or forward looking statements that involve a number of risks and uncertainties. The actual results of the company could differ significantly from those statements factors that can cause or contribute to such differences include but are not limited to continued demand for the companies.
Alex competitive factors, the company's ability appliance future growth the company's ability to produce in market new products in a timely fashion the company's ability to continue to attract retain skilled personnel and the company's ability to sustain or improve the current levels of productivity.
Further information on the company's risk factors is contained in the company's quarterly and annual reports and bound to Securities Exchange Commission was asset like to turn the call the CEO Sean O'connor John.
Thank you Karen this is certainly an eventful in historical quarter for simulations plus and for all us.
I'd like to start the call expressing my whole that you and your families are all healthy and save in these uncertain times, while we all maybe feeling a bit homebound at this point anchorage, everyone to adhere to the guidelines in precautions that keep you in your families best protected during these times.
Thankfully the impact of the comment endemic on US here in simulations plus has been relatively minimal to date I will elaborate on the co that impact in our response later in the call. The first I'd like to comment with regard to our recently announced acquisition and operating results for the quarter.
Subsequent to the ended the quarter we acquired.
There is France, the developer of the highly regarded modeling suite.
Analytics is the PK PD modeling platform.
Of course, the farmer competitions workflow with data exploration to model sitting through to Clinicals rental simulation.
This acquisition does several things for us.
First it immediately expands our presence in Europe, with all new employees and strong experienced executive management.
Second in Rebalances, our mix of software and consulting revenues following two acquisitions of businesses that are more weighted consulting.
Lets us revenues are 99% annual software licenses with consistently high renewal rates, which we believe will benefit from our sales and marketing channels.
Third Luxoft has historically turned away consulting opportunities and we believe that we will be able to respond to this market opportunity with our consulting resources, creating new sources of revenue.
And finally, the acquisition is immediately accretive with revenue growth performance in our target of 15% to 20% revenue growth and operating and EBITDA margins that exceed our existing performance.
I welcome Jerome Khalifa with US co founder and Chairman and Jonathan Jovan lets us Chief Executive Officer to our executive management team and I also welcome to all links octane simulations plus family.
With regard to our operating results simulations plus delivered another strong quarter of execution.
As you May recall, our stated goal is to deliver organic revenue growth of 15% to 20%.
And once again, we exceeded this goal with 22% group.
This was a third consecutive quarter with revenue growth in excess of 20%.
Our software revenues grew 12% inline with prior areas. These strong results were achieved despite lower than anticipated new license business from our Asian distributors were killed in impact was first being developed in February.
Specifically, we saw about two to $300000 as new business in Asia slip out of the second quarter.
More with regard to current enrollment.
Our service revenue growth was strong across each of our divisions coming in overall at 35% growth.
The Lancaster team is busy with many collaborations we have announced over the past several lines cognizant is operating at capacity with full backlog.
And delays and grew this quarter at 45%.
Down from there, 89% growth than first quarter, but still excellence and more in line with our capacity.
Our gross margins improved to 74% overall benefiting from a seasonally higher software court.
Our mix was 52% software with margins of 85%.
And 40% consultant with margins was 63%.
Net income in EBITDA as a percentage of revenue were generally within historical levels.
Acted by onetime transaction expenses related to the latest Luxoft acquisition.
I will speak to these in detail later in the call.
Let me now speak in more detail to the impact of coded on our business.
Operationally about 40% of our workforce already worked remotely and nearly everyone was equipped to do so.
As a result, the transition to 100% working from home has gone quite smoothly.
Indeed, our entire workforce is now working remotely and productivity is essentially unchanged.
Our industry is seeing the cancellation of most conferences, we are conducting trainings and workshops virtually and we have transitioned sales activities from face to face meetings to virtually.
We've been completed an acquisition this quarter remotely.
I believe and early results reinforce the simulations plus is well positioned to weather the storm compared to other companies.
We have a strong balance sheet with ample cash we've generated years with consistent profitability and we exercise prudent expense management.
Even after the use of cash to complete the Luxoft acquisition, our cash position of approximately $8 million is adequate and exceeds our cash position subsequent to our two previous acquisitions.
We recently secured a line of credit non cash flow concerns, but rather as a minimal cost insurance policy.
These results facilities are excellent cost to put them in place amendment minimal and there is no fee related unused granted during the term of the line of credit.
The line of credit serves as an insurance should the need to rise in the future.
Additionally, a significant portion of our revenues comes from the renewal of software of annual licenses with very high renewal rates.
Lets operates on a similar model with renewal rates that are very similar to ours. So the acquisition further boasts bolsters our recurring revenue.
We have seen no impact to date on renewal rates.
Finally, our service business operates off and large backlog of security business, which at the end of the quarter totaled just under $10 million.
We have undertaken a detailed review combined with ongoing interactions with our clients.
We have identified less than 10% of the backlog at risk of delay or cancellation at this time, but we continue to monitor the status.
Where we have seen impact is in the securing new business as historical rates.
I previously mentioned that we saw two to 300000 new software licenses.
Excuse me in Asia slip out of the second quarter.
Asia continues to be impacted where in some regions infrastructure for work at home is not as robust as our experience here in the states.
That said this important this impact on new license sales or sell matches in Asia, but in all geographies.
Thus far we've seen no measurable decrease in demand.
However, buying decisions are being delayed as companies wait for clarity into the economic impact of to pin down there.
Changes to their development plans and investments and visibility into when the stay at home situations will begin to abate.
We continue to close new software license business, but as slower than historical pace as a result, our new software pipeline is grow.
With regard to our service business, we also see a slowdown in closure of new business.
As you know our work with clients is sometimes in support of new clinical trials.
Our cost analysis, and clinical trial performance, which in today's environment as an install.
Direct development industry has focused its attention uncoated related programs is managing the disruptive impact on currently active clinical trials and evaluating existing plans for future clinical trials and programs in general.
Further lab facilities in a role to testing and disrupted impacting the generation of data available for analysis.
All without certainty as to when the work environment will return to normal.
New business discussions continue when a slow and cautious pace, we continue to close new service business, but at a pace behind historical levels similar to our software business, our new business pipeline is grow.
On a positive note we have recently initiated two new service offerings.
Which adds to our new service opportunities.
First a global regulatory strategies our brain.
Allergies class led by a significant New addition to the team from the FDA.
And secondly, the strategies plus coated akt program to speed consulting assistance to any organization involved in the grown Iris research.
As part of this initiative each division and simulations plus has identified totally unrelated product applications and services to provide specialized expertise, which will contribute to developing safe and effective treatments.
These two news new service offerings and the addition of those economics, our software revenue stream and the potential for modeling space consulting service agreements.
All represent incremental revenue opportunities introduced in the last quarter.
All positives for the future Nonetheless, the near term is dependent upon the uncertainties of because it will impact in terms of the timing and nature of our clients go forward plans.
In summary, our business is faring better than most in today's call that environment.
We are strong financially able to continue our supported clients with minimal impact and enjoy high recurring software revenue renewal revenues and a good backlog of service business to current environment for which there is no easy means to estimate when will we returned to normal is impacting new business cycles.
That is mostly deferred and not lost.
Before I turn the call over to John Let me speak briefly about the performance of our division.
And our Lancaster Division revenue was up 18% for the quarter.
Breaking this down our revenue from James 71% for renewals, 16% from new sales and 13 from 13% from consulting services.
In our software business renewals were 80% by account and 94% based upon fees and we generated 11% year over year growth and new licensing units.
We added 12, new commercial companies, including new licenses in the US Europe, Japan in Brazil.
And we also expanded our presence with nonprofits research groups academic institutions and regulatory agencies.
We are engaged in projects with 19 companies intend hundred collaborations.
Operationally, we continue to advance our industry leading software.
As previously referred to we welcome onboard Sanders, where as sharp as Vice President regulatory Affairs.
Sandra comes to us after a 10 year career.
The FDA, where she was most recently master reviewer in scientific advisor for the division of biodiesel pharmaceutics.
We ended the quarter with 44 full time employees that are Lancaster Division.
Three from 41 in the prior quarter NSX from 38 last year.
And our Buffalo Division revenue was up 20% for the quarter, we signed 21 contracts and initiate 14 new projects during the quarter.
Overall, we had 64 active projects across 34 companies. We have 18 proposals outstanding with 18 companies as of March Church.
We also continue to expand and improve our team we recruited a director qualitative clinical pharmacology to focus on traditional pharmacology consulting support and we hired a senior clinical pharmacology. This to increase capacity to support early stage clinical development advice and services.
Yeah.
We ended the quarter with 52 full time employees at our Buffalo Division one from 51 in the prior quarter end up 10 from 42 last year.
And our dualism, where our TV division revenue increased 45% for the cord.
Breaking this down 48% of total division revenue was from delay some software and projects.
Our present racism, 10% from IPO system excuse me software.
12% from natural decent software in projects, 6% from realism grant and 12% from our heart failure Roger.
Still isn't as 20 active consulting projects and seven active consorting contractors. This time.
We ended the quarter with 18 fulltime employees that are our Tbds division one from 17 in the prior quarter and up one from 17 last year.
I'll take a breadth and let me now turn the call over to John to review more detailed financial results John.
Thanks, a lot Sean.
Looking at the quarter here first our consolidated net revenues for the.
Second quarter fiscal year, 20 were up 22% or 1.9 million to 10.3 million compared to 8.5 in the prior year.
Total gross profit increased 23% to 7.7 million, representing a 74.2% gross margin in the second quarter of this fiscal year compared to a 73.9% margin in the same quarter last year.
Yes, DNA expenses were 4.1 million or 40% of revenue in the second quarter. This year and an increase of approximately $1.3 million, 46% compared to 2.8 million or 33% our revenue in the second quarter 19.
Great last generics Googles, primarily the result of increases in salaries wages labor and stock compensation costs as a company has grown headcount to support our revenue growth.
We've also seen increases in selling expenses commissions in advertising some contract labor also.
In addition, this quarter, we incurred about $300000 of M&A related due diligence costs associated with bulwark soft acquisition.
Helpings transaction related cost us gionee would've been approximately 37% of revenue.
Thanks, Jamie expense in the third quarter will be also being impacted by transaction cost associated with the Luxoft acquisition.
Research and development costs for the most recent fiscal quarter were approximately 1.4 million.
Total.
748000 was Expensed and 620 was capitalized.
Income from operations for the second quarter. The year was 2.8 million of approximately 96003, 0.5% compared to 2.7 million in the year ago quarter.
Our provision for income taxes.
Second quarter fiscal year, 20 was about $686000 and effective rate of 24.2% compared to an effective rate of 22.1 in the prior year.
We expect our tax rate to be in the 23% to 25% range for this fiscal year.
Net income increased by approximately 2.4% or $51000 to 2.2 million than most recent quarter compared to 2.1 million a year ago.
Per share basis, net income was 12 cents per diluted share in the second quarter of both this fiscal year in last fiscal year.
The transaction expenses lowered EPS by just over one cents per share.
EBITDA was 3.5 million this quarter up slightly compared to 3.4 million a year ago quarter.
Now going on to the year to date numbers.
Consolidated net revenues year to date were up 23.4% or 3.7 billion to 19.8 million compared to 16 million a year ago.
Our gross margin for the first six months to 73.1 per cent compared to 72.5.
Selling expenses, including the 300000 of transaction related costs were $7.6 million or 38.6% of revenue compared to 34.5% for the same period last year.
Expenses research and development costs were approximately $1.3 million for the first six months of the year.
We unchanged from prior periods.
For the prior year excuse me.
So from operations for the period was 5.5 million compared to 4.8 million and that inquiry letting some increased by approximately 600000 or about 16% to 4.2 million compared to 3.6 million.
EBITDA was 6.8 million year to date of 10.5% compared to 6.2 the prior year.
Turning to the next slide.
This slide shows our revenue on a quarterly basis from fiscal year 2016 to the second quarter of 20 Twond.
Illustrating both historical quarterly growth patterns and the seasonality of the business.
Seasonality can best be seen using the 2019 crumble bars.
Our third quarter is typically our strongest quarter with the decrease in revenue in the fourth quarter that coincides with the slowdown in our clients purchasing in the summer months.
First and second quarters. This year fall on the same upward trend.
The next slide.
Represent some by quarter, which illustrates instances the track record of increases both year over year and sequentially through the first and third quarters, where the fourth quarter as we talked a little bit lighter for the year.
As you can see the patterns for quarterly revenues on quarterly income from operations.
Largely held true for quite a number of years.
The slide 15, we can see that similar pattern of net income looks third quarter typically being the strongest we isolated the impact of $1.5 million deferred tax benefit in the second quarter fiscal year 18, so as it turns a skew the presentation with.
Our highlighting that difference.
On the next line.
Diluted earnings per share follows the same current tracks with net income as expected.
As I mentioned earlier fiscal year, 22nd quarter diluted earnings per share were 12 cents, excluding the 300 bells and the transaction costs related to lower cost.
Indicated before earnings will develop anymore.
Turning to EBITDA.
Again, we expect them the seasonal patterns to hold true the overall trends moving upward.
Seasonality with typical seasonality between the quarters.
Just to note here regarding the trends in these lines as John has covered what we currently see related to covert 19. After what is effectively only one month to the Pandemics effect.
No one is able to fully predict the the full impact with based on our annual renewal models for software revenues, we'd expect the seasonal nature. These trends to continue.
We will we continually monitoring for changes.
This slide shows our revenue by region.
We are a global business with the majority of our revenues in the Western Hemisphere.
Approximately 68% of revenues were in the Americas.
Asia and Europe, each represents 16% total revenue for our current year.
Moving on to our cash position lines.
This slide shows the strength of our cash position with a quarterly view of our cash balance and how we have use funds for dividends and acquisitions over the period.
Observing the run balance line, what you'll see that the low point to cash or the time when the company has invested in new acquisitions.
Financials patterns of cash accumulation goals major acquisition date.
Beginning with the first quarter.
Fiscal year 17 on the far less the blue bar at the bottom illustrate our consistent dividend payout approximately 900000 for fiscal year through the through fiscal 17 at the beginning of 2018 board increased the dividend payment the success of share, thereby read.
Turning approximately $1 billion on billion won and cash to our shareholders quarterly through the present quarter.
Today on our press release, we announced the borders again as we continued the six cents quarterly dividends in the next dividend payment will be may 1st.
Continuing with the chart the green bars represent cash used for acquisitions.
Cash flows from operations have allowed us to invest for future future growth through acquisitions with the extra cash.
While keeping in maintaining a healthy balance sheet.
And.
Okay.
Our reinvestment through acquisitions has exceeded 15 million over the last four to five fiscal years, we'll also returning more than $15 million to our shareholders through the consistent dividend payments without taking on any borrowed.
Subsequent to the quarter as Sean mentioned earlier, we established a line of credit in the amount of $3.5 million under terms agreement at our discretion, we either pay interest for prime rate or fixed rate based on LIBOR plus 1.75% on funds drawn.
It's a two year term or the agreements and there is no charges on funds for under use line fees.
The agreement requires the company to satisfy certain financial covenants relative to profitability EBITDA.
Annually requires the company to maintain a zero balance.
30 day period.
While we don't we need to utilize funds under management under the agreement at this time the letter of credit provides us cash management capabilities into the future.
Moving onto the next line.
Okay.
At the end of the elderly year again quarter early in the third quarter cash was $12.2 million, which was up 7% compared to our fiscal fiscal year.
Balance sheet is clearly stronger today than a year ago as a direct result of our increased earnings power cash flow generation prudent allocation of capital.
So I'll turn call back Dino.
Thank you John.
Merle navigating a new world impacted by this unprecedented pandemic.
As far we fared better than most and are well positioned to continue our long track record of success, even in these challenging times I.
Im excited to add works out to our already strong and diverse organization.
And grow our European presence and improving our revenue mix demand for our solutions remains strong, although we will likely season measure delay in new business as our customers deal with the ramifications and uncertainties as being damages caused.
And with that I'd like to turn it over and take any questions you might have.
Thank you once again do you like to ask the question using the telephone. Please you the handwritten icon and the control panel and be shared to enter the unique audio pen and this time I will as of late in poll for questions.
Go through some of the early written questions that are have been Schmidt.
Actually we are going to take any questions first from Matt Hewitt with Craig Hallum.
Late one second Matt.
Aligned.
Your next slide Matt.
Good afternoon. Thank you for taking the questions and thank you for providing some detailed on the quarter virus, maybe just to dig in on that a little bit more.
And I realize this is an ever evolving situation, but as you are talking to your clients and you're seeing news that some of them or maybe pushing out some of their trial starts.
Or continuations of trials what is the feedback that you're getting from them is are they waiting for 30 days and then they're going to get back to you are they seeing what we're just going to parse. The trial start date from may be sensitive may 1st we're going to push it to June 1st just any incremental color on what you're hearing from the clients would be helpful.
Yes, Matt.
Good question and obviously, everyone in Mosul returns is looking very that date certain.
[music].
The the trend downward the certainly or visibility to return to normal girls, we will take place and unfortunately, no known as a crystal ball PMSO discussions with clients.
You know there influx they're evaluating.
Fair Reallocating resources.
The focus on coded related.
The development opportunities that are being pursued theres pursue there's there's there's a lot of movement in that direction existing plans.
For other therapeutic areas in development.
Our being held two birds.
Cautious right now.
They are not planning to we're going to defer. This from April 1st started to June 1st or is we're going to defer it from our plan to April 1st or.
Without a date identified to going forward.
[music].
I think we're all operating in environments in which we will be able to plan better if we knew.
In the occur.
And were going to add uncertainty just keeps us all in a wait and see node.
I think thats the characteristics to determine what we hear from clients, it's a little bit wait and see how things evolve here over the coming days weeks and hopefully not too many months.
Understood. Thank you and then regarding the Luxoft acquisition, congratulations looks like a great fit.
And you even in touched on some of the potentially cross selling opportunities.
How quickly, especially given the current environment, how quickly do you anticipate being able to integrate.
That business and see some of the benefits from the cross selling.
Well, we're getting so easily sense to take it takes some time, but we've been planning in anticipation of the announcement that we made last week.
Ill answer the number of the.
Efforts plans.
Engagement to points between.
The new organization and ours is starting to take hold.
In the.
Coming months I think is the plans in terms of sales and marketing as well as product development will.
I will begin to take shape.
I think that they are.
And there is a population of consulting opportunities that are out there all subject to those encoded.
Issues that we've addressed already here, but I.
I think in every quarter is for businesses.
It was waiting for someone to catch it and now with our consulting resources.
We should be able to total they're relatively quickly so.
I think we'll move very quickly in this regard its a.
A product space that isn't to is adjacent to us familiar to us.
Cleanser.
The same answers or ability to consolidate sales and marketing efforts should trigger Verizon playing very quickly.
Okay, and then maybe one last one from me I'll hop back in the Q.
Regarding the new regulatory strategies team.
Maybe a little more color there as far as how should we thinking about the size of those contracts on the duration.
How what is their pipeline looking like I realize it's early days, but is there a pipeline is building and when do you anticipate signing the first contract. Thank you.
No.
As exciting as Jan has been onboard to maybe in months now.
And we.
Slide show you the marketplace and a recast immediate positive responses is well known.
Well, we noted in the Afirma community and.
Hello.
The annually.
Marketplace answer in terms of great to hear that she's to Andrew organizational excitement around them.
Yes, it's a very quickly generated a number of leads that we are managing through.
Right now.
The types of projects.
And I guess I'm, just going into two scenarios one.
Duties that are.
Regulatory advisory projects in and out themselves, meaning that's appointed the.
Jason Service and then secondly in the breadth of consulting.
Offerings or projects that we do.
Including in those projects.
Some last minute time and use of the Sanders.
Advice.
In affecting other projects our midstream projects if you will.
To give that regulatory IC color into the expertise that sooner brings to the table.
So if you will fit into the Standalone new projects.
As well as contributor in there too.
The slower existing consulting projects that we that we perform.
Great. Thank you very much sure.
Thank you. This time, we will walk through some the written questions. The first questions come from Howard Halpern.
You stayed the acquisition public soft.
Will add approximately 3.5 million to the revenues.
Given the continued lockdown in Europe is that still attainable and how does the margin profile and over time, what is the plan to integrate it into the general consulting services.
Okay, well begin to the first point in terms of.
Revenue expectations, well, what we disclosed as a close the calendar year.
20.
19 were 3.4 million in revenue.
That means as they enter.
LNG or 20 with 3.4 million.
Software revenues in software licenses that given there.
Hi, renewal rates are very tricky traditionally enjoy to that.
The vast majority.
90, plus percent 3.4 million should we should we knew.
And recur into the calendar year 20, with our fiscal year.
August stay here as we get two years in terms of management mismatches in terms of those this time frames.
Sam but to the point is that their base business, which is.
Recurring revenue is at that to 3.5 level and so expectations or.
Pretty pretty high that we should be able to continue that into our fiscal year 21, it's not highly dependent upon the new software license. We certainly expect that's not to be zero.
During this timeframe.
So on the margin side there.
Gross margin operating income EBITDA percentages.
On a standalone basis over the prior two years, all exceeded were at or exceeded our.
The percentages in those records of revenue in terms of their model performance. So.
Asia to add too.
And Mike.
In a small way improve our.
Brazil, which results in terms of the.
EBITDA percentage of revenue operating income.
And the last it was with regard to consulting how quick level.
Come on board.
This sale cycles that are involved there renewable jet leads.
Continue at least pretty pretty quickly.
Now we're in that environment.
Nine so hard to say in terms of the speed of that sales cycle closure.
Okay.
Thanks, John.
Next follow up question from Howard is have you increase the use of Webinars virtual conferences to offset the some 20 plus conferences and presentations you attended and given year.
And you expect any impact on future customers and obtain them.
Yes, we certainly got virtual was as many have.
The business World virtual in in the sense of the.
Our webinars our training.
Workshops.
Each of the divisions is.
His mood plan to them centers that format.
And so we utilize that.
Significantly.
Insulated face to face sales meetings.
With the virtual meetings, so we're keeping the pace of activity.
And going.
Doubt there is some slowness that equity exam as in into the presence as we've talked about that and again, we're leveraging.
The virtual world.
As we can.
And with this one additional question Howard is has the pipeline consulting services across all subsidiaries change due to the current environment.
Yes.
As I've said it through the pipeline has actually grown as we've had to.
A slower pace on the on the closure into the sales cycle. The mountains businesses. We are working in our our pipeline has has grown.
Certainly some some has the opportunities have fallen off to the additions to the pipeline for two reasons.
The fall out there.
And that is true across all three businesses do Islam.
Engine into the consulting work, we'll do that link.
Thank you Sean and we are you back to Allied question, a follow up question from Matt Hewitt Craig Hallum.
Matt Your line is lives.
Maybe I guess, just one last one here.
As you look at the sales force I think you were up to two.
In.
The did luxoft bring also bring any sales resources or is that an area, where you still maybe you could look to add any heads there. Thank you.
Yes.
[music].
Brad.
Sales organization.
Jonathan the CEO as the primary.
Sales front to the organization supported the.
Round number 10.
Other with us to employees split pretty equally between software development.
Personnel and applications personnel applications personnel being.
Those that support to clients.
Facing.
Demonstrations customer service and support.
Trainings and workshops et cetera.
So.
We've got to an excellent salesperson and Jonathan Thats come onboard.
And.
Our needs going forward not immediate in terms of additions because of the acquisition the joining of whatsoever.
And in fact, it gives us the immediate benefit of having a seniors and sales oriented executive lengthening in that geography.
And just as we will be.
Coming up to speed in terms of being able to front.
The laser products here in the us.
Speed in terms of being able to front our products in Europe as well in this process.
That's great. Thank you.
Okay.
Thank you we have a few more follow Britain in questions.
Personal coming through Carl Hoffman, and how does the links all software complement.
Or potentially overlap any SLP existing software.
Got it mostly in adjacent product, it's a product in PK PD modeling world.
Covers.
A modeling.
Some modeling platform that allows scientists to run from data explorations and billing PK models to.
Primarily in our me is the type of modeling.
Technique that it has engines for and runs simulations.
Offer that even clinical trial simulations.
To the adjacent product to our.
The PK plus the farm in gas requests.
Some functionality allergy that.
Crosses over.
But it's relatively minimal.
Thanks, John One final question for Howard Halpern.
Has there been any material change to your operating expense profile. During this current pandemic environments.
Excluding the transaction cost as mentioned.
What are the external expectations for percentage of sales for the remainder of the year on an operating basis as you may cost.
Well United in Marriott has called me up and asked me, where where I've been over the last to eight units for six weeks.
So I guess there probably is some.
Extends that we're waiting.
Yeah in the sort of work style.
Realizations I don't think it's dramatic.
Certainly there is.
Travel side, there is no we did not incur a tremendous expense related to taking our.
Workforce off sites much of that was already in place. Most all employees were set up such that even if they worked in office today.
Has the capability in the.
Working from home.
On a temporary basis. So there is no creating great expenditure in terms of cost animals and the transition.
In that regard.
DNA excluding.
The impact to the closing of the transaction and expenses continue to flow in third quarter related to it.
I think.
Should continue to.
Move as we have been.
For the last number quarters.
Having stepped up and the lower revenue seasonality quarters above the 35% you'll see that too.
Average out with our second and third quarters, which are the higher revenue quarters.
And.
We've been working at keeping as close as we cans in the 35 presenters for the for the year as a whole.
I don't see anything that's changed.
In every other than the uncertainties as the topline engines that are topline growth.
With coded index.
Thank you Sean It appears there is no further additional questions with that concludes the conference call. Thank you everyone. On this does conclude today's conference call and Webinars in this part of today's presentation. The replay will be available on the website simulation dash plus that Tom. Thank you have going we can.
Thank you everyone we say.
No.