Q1 2021 NortonLifeLock Inc Earnings Call

[music].

Ladies and gentlemen, thank you for steady night and welcome to the fiscal Q1, Q 21 earnings call.

At this time, all participants are in listen only mode.

After the speakers presentation, there will be a question and answer session.

To ask a question. During this time you want me to press Star one on your telephone.

Please be advised that today's conference is being recorded and if you require any further assistance. Please press star zero.

I'd now like they have a contract over two years speaker today. So one can head of Investor Relations. Please go ahead sorry.

I'm pleased to welcome to walk me through our cost discussed our first quarter fiscal 21.

Equally securing some trouble fly for Investor Relations.

Speakers on todays call Orbison, Black Werent, Lifelocks, Chief Executive Officer, now reversed Chief Financial Officer.

Carl will be available replace what customer website like remind everyone that all references midpoint of metrics, our non-GAAP unless otherwise stated please refer to supplemental materials.

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Definitions bargain metrics.

No non-GAAP financial measures reference during this call reconciled the comparable GAAP financial measures approach.

Of course, our website, we believe our presenters on non-GAAP financial measures would tick in terms of course.

To provide supplemental information regarding our operating performance for reasons, that's kind of slow our management team uses these non-GAAP financial measures and what's your operating results as well as one funny are forecasting future periods.

Regarding on definition measures also facilitate comparisons our performance of course curious about investors understand.

Sure.

Non-GAAP financial measure supplemental should know because substitute financial information presented in accordance with yeah.

Please call contain forward looking statements based on conditions.

Statements are based on current beliefs assumptions expectations before.

And as such involve risks and uncertainties that may cause actual results may differ materially from their current expectation.

To do our statements regarding your proxy on when cool I can kind of a car business.

At a price Korea.

He participated benefits from such stealing cost reductions associated with this transaction related subject to a variety of risks.

These reports the cautionary statement our press release for more information, you'll also find detailed discussion over to doctors are filings with yet.

Circular our annual report on form 10-K for fiscal year end of April for 2020 recently filed quarterly reports on form 10-Q.

Let me now returned to call over to Vincent.

Thanks to one and good afternoon, everyone. Thanks for joining us today.

Since we closed the sales of the enterprise business, we committed to return to customer growth drive sustainable revenue growth complete an overhaul of the cost structure and deliver a healthy profit.

In just our second quarter at noon and Lifelock I first quarter fiscal year 2021, we delivered better than expected results were strong reporting beatings cooling off 9% revenue growth of 4% and EPS growth of 48% you have a young.

As we created known in livestock, we believed into potential of the business. So we focused on building personal cyber safety for consumers.

We initially set our sights on sustainably and meaningfully growing customer count and delivering revenue growth in the mid single digits.

In Q1, we delivered both sequential and year over year 400000, net new customers a first since 2014.

Revenue growth was 4% meeting the long term objective of mid single digits in just never said in some quarters.

[noise] [noise] end of June we didn't mean, 80% to 95% I'm just trying to cost and we expect to be done. This month, one quarter ahead of plan.

In Q1, including trying to cost we reached 47% operating margin for the company, that's 15 points year over year and expect to reach 50% by September I.

Another one of our commitments.

If you exclude this tiny toast the consumer business has been running above 51% Bedinan operating margin target of 50%.

Our Q1, EPS was 31 cents, which included a four cents impact from stranded cost any up 10 cents year over year.

By the end of this fiscal year, we expect to run the business I thought target of adult 50 annualized TPS.

Which can be achieved by virtue of mid single digit revenue growth operating margin above 50% or utilizing our remaining 600 million share buyback program or some combination of any all of them.

Finally, we projected to run the company.

900 million on you lost free cash flow after the transition period.

Why do we have been and are running at that level in Q1, excluding cash spend on stranded cost we are trucking for dose levels to be reflected in our cash flow statement once our financials, how clean of trying to cost in the second half of this fiscal year.

As we demonstrated the operational discipline, which we want to can you talk operate we made a priority to build out our post transition leadership team.

This quarter, we welcomed new and accomplished leaders with deep experience in consumer technology now that he who you will hear from in a minute brings operational skills, we said growth mindset.

Overall, we added seasoned leaders from very successful consumed with technology companies. These leaders are joining us for mission to bring cyber safety to every consumer around the world. We believe the company's uniquely positioned to seize sees that tremendous growth opportunity.

Our emission lever to restart the growth was to increase our marketing spend which as you know as Amin week to reach new consumers and educate them on the benefits of our solutions.

As we maintain a consistent messaging leveling the market.

So increased efficacy.

Our overall customer acquisition cost continued to benefit not just from lower AD rates, we needed to coffee, but also from us owning shady ufs two shifts marketing spend two new digital channels, including search social media and digital video.

In terms of Leach despite the global trends of the northern Brian We had not invested in international marketing in recent years.

We reversed that in Q3, if you spend with 20 and New York beginning to see the results from those investments.

These strategic shifts in our marketing efforts have broadened outreach and well, making steady progress in reaching younger and international customer cohorts.

As of the end of Q1, we come to 20.6 million customers, who buy out products or services directly to our E Commerce platform.

This represents an increase in net customer by 379000 sequentially and 416000 year over year.

Our Q1 growth was broad based with growth across the board the portfolio and the geographies.

We grew both in the U.S. and internationally across all regions.

The increase in international customer count outpaced attacking the U.S. Another first in a long time here.

240 by trends like work from home virtual meetings and online shopping and transacting, we saw both our security and identity product categories grew sequentially and year over year. Another first in a very long time.

Our average revenue per user ARPU remained strong at $9.03 per month, even as we reported strong net additions.

Our retention remains very strong as well at around 85%, suggesting that the customers recognize the value in Steve with us with us for a long time.

Hi.

Listen to a dynamic business, which accounts for about 90% of our revenue. We also have upon organization developing new ways of distributing our offerings to individuals.

In Q1, we grew our indirect revenue 11% year over year.

In retail outperformance and Amazon and other etailers offset the weakness from traditional stores being shut down the operating with limited hollers.

Our indirect sales also benefited from the strong performance of employee benefit programs.

Okay and growing partner channel.

We are seeing strong growth from new and probably acquisitions and greater participation within existing employers.

The more why do we stealing early stages I'm also pleased to report progress in our long term partnerships with organization like that is an ERP.

Also it takes time to develop and ramp up new relationships, we've been leaving the long term potential to extend our reach and continue to grow.

Growing through new marketing channels, and various forms of partnerships and consistently messaging our value proposition to them is extremely important.

Our new Chief commercial officer, Robert's Clarkson has significant experience building a global partners and platforms over his tenure I'd pay upon his passion is around consistently delivering the customer experience to our they customer journey and lifetime that is the reason, we we grouped our direct indirect and renewal.

Yes of innovation under his leadership.

Our vision is to keep people around the world cyber safe.

We believe it is our responsibility to provide everyone with innovative products and solutions to protect and control they digital lights.

Division was the impetus for creating the northern Threesixty integrated platform and we believe customers are starting to see it.

The vast majority of new customers are now coming directly to northern 360.

And there is of the end of Q1 over 40% of Finestone base, what Tom Nolan Threesixty.

Up from approximately 25% at the end of Q4.

We spent attrition is important as it enables us to offer comprehensive cyber safety and the one common experience to seamlessly upgrade our platform with new features like home title protection.

To increase engagement and we've got the retention of customers.

Some of our platform features Mike when you to be offered the Standalone products wait makes sense for customers and heads accelerated the course of our company.

Last quarter, we talked about sort of easy VPN as an example of a standalone product. This quarter I went to share a new example that demonstrates how we constantly are looking at new ways to protect people and they are highly dynamic digits flights.

Some customer one health limiting the public availability of their own personal data surf the web and you will likely see that a lot a few personal information than you may not want out there is readily available such as the team H addresses for numbers.

Privacy monitor which is available as a feature was known increased 60 with lifelock.

Cans for personally identifiable information API accessible on the most popular people search web sites.

But taking control of these data tejas at best and often too complex.

Recognizing discounts this consumer needs, we developed and beta tested a product called privacy monitor assistant it's a white glove service, where our agents assisted by software fine. Indeed, all you PII on these data broker websites.

Wouldn't you pay for a reasonable fee to secure your personal information.

It's still early but we have seen positive response, so far and we've seen this capability as tremendous value for customers. This is a good example of how we can continue to fulfill our vision by protecting our customers and enhancing the control they have over day digital lights.

It's also a good example of how our service capability combined we software can differentiate us from competitors, we have a large customer base. That's constantly uses our service and provide us with insights we can turn into new features our products.

Growing through innovative products and solution is key to fulfill our mission that is why we have put product management and R&D under our new Chief product Officer, Goggin Sing jargon has a passion for technology and in particular, how artificial intelligence and machine learning can help build cutting edge.

Product.

He was particularly interested in our internal research team and their capabilities.

This June our research team, we this but side, which can be downloaded for free as a browser extensional iOS up in the targeted efforts to enable people to identify this information on the Twitter feed.

But such technology is based on machine learning and leading edge algo. It's it looks at over 20 different distinguishing features such as each of the account and tweet frequency to detect tweeter butts and should then directly on feed in real time.

We're now looking to advanced technology and extend this capability to other use cases and threats.

Before I pass it to Natalie let me take admitted to step back and talk about our vision to deliver cyber safety to every person across the globe.

Even before the world was starting to term on our mission was relevant at the digital would digital words, sorry is taking over how we work none shop and basically leave our lives.

Now is complete 19, our mission is more important than ever clearly this mic has accelerated people's reliance on technology.

And we are seeing the impact of that increased activity online to the number and variety of attacks on consumers.

Attackers have elevated they techniques on stealing information disrupting sites and cascading malware through phishing attacks camouflage, that's tracing ops, social engineering powertrain copied vaccines.

And boys and website immolating stimulus benefit or resulting in an increased need for security identity protection and restoration and privacy solutions.

These are just a few of examples of the many threats facing US now that's more of our everyday activities are done digital.

So once there is a lot of uncertainty at the macro level. One thing is certain there is a real need for cyber safety for individuals families and homes.

Two innovative products and expanding distribution channels. Our mission is to meet that need and provide cyber safety to everyone.

And with that let me pass it to not only to give you more details on our Q1 financials.

Thanks, Vincent before I dive into our results. Let me first say how excited I am to join Martin Lifelock I'm inspired by our mission to bring cyber safety to consumers worldwide.

Energized to help drive that mission in my new role.

Over the course of my career I've chosen to join companies, where the mission in the brand are focused on helping people in their everyday lives.

From GE to blackened decker to ebay and now Norton Lifelock.

Albeit leaders in different industries. These brands were all built on establishing trust wick and delivering intrinsic value to their customers.

Garrett Norton Lifelock, we must continue to deliver on our commitment to keeping consumer safe and in control their digital lives.

This commitment combined with our incredible business model and opportunity to drive accelerating growth is what drew me to Norton Lifelock.

I look forward to working with our team to achieve our strategic up aspirations.

Now, let me share or Q1 performance.

Focusing on non-GAAP results Q1 revenue was better than expected at $614 million up 4% year over year.

Q1 reported billings was up 9% year over year, but the two point positive impact from FX in our ending contract liability balance.

Billings growth was supported by customer growth and customer count, increasing approximately 400000, but quarter over quarter and year over year.

This was our third consecutive quarter of net customer ads, our first quarter of year over year growth in customer count in over five years.

Diluted EPS was 31 cents up 48% year over year and exceeded our guidance range driven by strong execution on topline growth and removal of stranded cost.

For the quarter total company operating margin from continuing operations was 47% burdened by approximately $30 million of stranded costs.

Therefore, excluding stranded costs the businesses operating at over 51% operating margin with head count below 2500.

With approximately 95% of total stranded costs are moved through Q1, we're lowering our estimate for cumulative cash stranded cost to $650 million.

Down from our $750 million projection last quarter.

Q2 will be the last quarter with notable transition related costs in our non-GAAP financials.

When the company first started this process eight months ago, We said cash sales proceeds will fund cash stranded costs.

With strong execution on both cost and asset sales, we're now projecting to deliver over $1 billion more cash than initially forecasted.

As for the remaining sale of underutilized assets, we remain confident in our ability to reach our goal of $1.5 billion total cash proceeds.

We're pleased to announce the recent sale of our Culver City real estate, which closed on July 27 for $120 million.

As for our remaining under utilized assets, we remain focused yet patient on monetizing and realizing fair market value.

We had another strong quarter of operating cash flow.

We generated $170 million of Cashel cash flow from operations and spent only $1 million in capex.

Cash flow was burdened by some one time items this quarter, most significantly about $100 million of stranded <unk> cash costs.

Which were partially offset by the timing of certain tax payments.

Adjusting for these nonrecurring items the businesses generating approximately $900 million of free cash flow on an annualized basis.

We believe we are well capitalized with our Q1 ending cash balance at $1.1 billion and another billion dollars in our Undrawn revolver.

With our strong balance sheet and cash flow, we continued to return cash to shareholders. This quarter.

Free cash settled the principal and conversion rates of our $625 million convertible note, which lowered our debt to $3.6 billion to $5 billion and reduced diluted share count by over 30 million shares based on our Q1 average stock price.

As a reminder, we still have approximately $600 million left of our $1.6 billion share buyback authorization and we'll continue to use it opportunistically.

Now turning to our Q2 outlook.

We expect Q2 non-GAAP revenue in the range of $615 million to $625 million, representing 3% to 5% growth after normalizing for the I'd analytics divestiture.

We expect Q2, non-GAAP EPS to be in the range of 31 to 35 cents per share with the business operating at approximately 50% profit margin when excluding stranded cost.

Finally, I would like to thank Matt Brown for his leadership to the interim period and thank the entire team for their execution over the past eight months.

I look forward to building on the strong financial Foundation, we have and delivering consistent results for our shareholders.

Now, let me turn the call back to Vincent for closing comments. Thanks mentality in the last eight months, we have turned noden lifelock into a growing leader with distinct competitive advantages. We have eliminated stranded costs, we have build the consumer centric leadership team.

We have reinvested into our go to market model and reinvigorated our product development team I'm proud to say, we have delivered on all of our initial commitments.

But as we've increased our execution capabilities on visions have also grown.

We have our sights set on a mission consumers have this said by constantly evolving cyber threats.

Our current platform is just scratching the surface of west can be done and we now singularly focused on innovating on our consumer cyber safety vision.

We have a large engaged customer base terrific technology capabilities, and innovation pipeline and significant financial resources.

Combined these things with recurring revenue high margins and significant cash flow and you can see why I'm super optimistic about our future and long term growth potential.

And we definitely not happy to take your questions operator.

Okay.

At this time, if you would like to ask audio question Press Star and the number one on your telephone keypad.

The star followed by the number one on your telephone keypad.

Your first question comes from the line of Keith Weiss.

Hey, Keith excellent.

Gone.

Good good.

Excellent so very nice quarter and at the headline number infer from my perspective of course is almost 40000.

New subscribers added to the platform. That's the biggest sequential increases in quite some time and it's a maybe to start out with can you help us understand.

Just to an extent is this just like the programmatic stuff they get put in place on the marketing side of equation, particularly expanding to international or is this kind of like a delayed reaction from work from home because you guys would see it a little bit later, then kind of other people. It because you don't do the sort of the bundling with OEM. So it's more about.

Getting sort of more Pcs out there and you guys do your marketing against that so you're going to help us understand kind of where that screen came from and how much of it you guys think is going to be durable on a go forward basis in terms of just adding customers to the platform.

And as I do that we have to go back to where we coming from rights. When we broke out and decide focused solely on the consumer business. How to this has been that cyber safety will become more and more important for every one as we move more and more of activities online and cyber safety doesn't just means six.

Pretty security for you divide security for your data. It also means privacy protecting your identity and including services to restore the when you can be prevented so it's our overall umbrella that we know we have what we are building in the long term that a lot of applications and feels that we still need to feeling that portfolio and.

Build up the the category. So so we believe the TCC few one either long structure. One. So that's number one number two is the division at the time under cement take had not invested in marketing as we discussed in the past and we reaccelerated marketing as are we to communicate.

Our message to consumers, we raised our marketing on blow by $100 million on an annual basis. We also said that the efficacy of that marketing investment. If you one has to schwab overtime as we consistently deliver in spend in market and then we started to tweak that marketing investment moving to new.

Channels of marketing moving to new regions and starting to market in in Europe. For example, where we had not marketed in the past. So so those are our contribute to see few one for the return to growth and we said hey, the most important these products in April 19, we launched a first version of known to 60, an integrated play.

That form addressing four pillars security privacy identity protection and restoration and you entirely 5 million homes. If you want and we still are in the process of warning that out I believe it's very attractive for consumer to adopt that overall umbrella for membership fee, having access to all of those.

Every asked and having a peace of mind and then the last one is then compete 19 happened and definitely changed to weak people operate on mine easy to peak change or is it a step function I don't know well we believe in the long term view of building up our portfolio increasing awareness to drive a.

To drive growth.

Got it and then on the.

[noise] underutilized asset sales can you just remind me what the at that like the remaining I guess, a 600 million is high in terms of the on the expected proceeds like what are those assets love to diesel.

Yeah. Keith this is not really I'll take that one we have a few assets held for sale on our balance sheet, including the three campuses that we have here in mountain view as well as one in Dublin, or we have active discussions with interested parties.

And albeit it's very hard to predict timing of these sales.

Especially given current conditions a please know where we're focused on striking the right balance between value price and timing of those sales.

Got it and then on the on the operating side integration, how should we think about the pace of hiring for you guys.

True fly 21, not like where are you guys look into sort of make investments where should we expect to see hiring and any kind of indications on on the pace would be great.

Yeah, no absolutely. So so before the phase I won't say, we put a business model out there and we say hey, we're going to grow up mid single digit and operated the business out that 50% operating margin and I don't have to remind you that eight months ago I think the majority of people with doubters, we delivered on that business model.

At least a quarter ahead of plan thing we've proven we can operate at these levels.

We reduced headcount from the assignment that company 12000 people to today, where our business model should be around 2500 and for this first I mean, the long time, we shifted from restructuring to hiring talent, where it makes sense and I can tell you. It's definitely a energizing for the then tire company to talk about.

Not hiring the right time in the right skill set.

We are hiring engineers in Dublin, we were trying to create a.

For the type lop over there we hiring in threat analytics. So we definitely are building up the functions.

We have a few new leaders I mentioned Gorgon and his passion around machine learning.

Roberts came in and has a passion around the customer lifecycle of both of their not coming up which proposal for investment to accelerate the calls and I can tell you I'm Super happy to have not that he here. So I found my matching term off of CFO skill set then she and I will partner drawing to prioritize.

This investment to accelerate our performance.

I'm standing very nice quarter guys. Thank you. Thank you Jackie.

And your next question comes from lineup that came a lani from Bbs. Please go ahead.

Good afternoon.

Vincent Harry you earned.

Great well good afternoon. Thank you for taking the questions and welcome that level before talking with you.

Maybe just to start if I can drill in on to the strength on the indirect side.

Specifically called out strength from the employee benefits vertical I am wondering what were some of the steps you kept to actually revitalized that channel and what investment or mechanisms are programs you have in place to start as habits continue to sustainably help.

July that subscriber growth and then I have a couple of follow ups yeah, no absolutely. So so first of all the the employee benefit program has been a grower channel for us or growing channel for us for a few quarters. This quarter. It was a very.

Very strong performance that offset the physical retail the weakness of course.

The overall proposal that thing is the number one that's activity known and three six years and overall that offers a with you identity protection also the security element is a big one today, if you dig employee benefit right at a very macro level U.S. companies spend 37 billion on on employee benefit this 5.6 million.

Lawyers and so they are programs or address a few thousands.

So we want you bring on new and unique solutions to more employers and at a very basic level. After abuse. The upgrading the platform, it's really about sales and sales coverage.

Do you see us continue to either in that area.

Fair enough.

And then just on the subscriber count growth still sequentially and year over year I wanted to get a better understanding of the demographic in terms of the H potentially socio economic backdrop.

And how that factors into your retention rate assumptions as we move forward provided data a lot of these more subs are very new to the Norton Sam So just want to get a better understanding of this profile of the new subscriber that's coming into the Norton Eco system relative to the subscribers you had in the past outside of.

The comments you made a its strength for the international front and that's it for now. Thank you. Thank you no absolutely. So so we said it now for a few quarters. Our number one objective was to return the company to growth and the number one priority number two weeks was to attract more customers. So they can experience that the cyber safety.

Program moving into new demographics in term of of age if you want pyramid as well as new geographies was an important objective as you know we know marketing in Europe, we partner with studies in Canada, and then some of demography in reaching out we moving from traditional format.

Marketing into a new iPhone social media digital videos I was looking abuse the quarter in quarter. All you cannot always a map. It blew out was looking at the long trend two years trend. If you look at 2018, our Gen X plus baby boomers with over 70% of far.

Total customers. So did that group is around 55% and the rest into new newer cold. So we'll continuing that trend will continue with that effort. We launched a gaming additional flown into 60 and as we develop programs. We are going to have in mind. This ah this needs to reach out to all cohorts.

Very helpful. Thank you for the detail.

And your next question comes from the line of S. A cat cover Ya from Barclays.

Please go ahead.

Hey, so awesome.

Hey, Vincent and and welcome welcome not only as well thanks for taking my questions here.

Vincent maybe first for you I think you've touched on this on a couple couple of either questions, but can we just drill into subscriber acquisition outside the U.S. just a little bit more what markets are doing well and then are you know do typically lead internationally with Norton overs lifelock over the bundle just for a little bit more need on the bone.

In terms of but in terms of what's working internationally, yes, we still refining our approach, but I would say over the last couple of quarters specific last quarter, a mature countries in Asia, Japan, Australia, New Zealand in Europe, Germany, France, UK, where high performer for us we definitely pushing one message when.

Do you come to marketing awareness and it's on the northern 360 odd the ability and unique competitive advantage to offer a cyber safety blanket full consumers is our main value prop. This is a way to build that vision to ensure that everyone can can get a that digital life safe.

D. D. There are some cases, where we lead with specific standalone products and Thats market specific or we can go into more details, but overall, we charged with northern to 60.

Got it and maybe as my follow up for you Vincent I guess the question is how are you thinking about market share in both the anti virus and sort of identity protection parts of business separately or together. However, you want to however, you want to talk about it and more importantly, do you feel like the changes that we're making up the company here or sort of sub.

Payable in terms of in terms of market share.

Yeah, So I am not obsessed by by market share, especially because the D market. The way they are defined our by pillars you have the security so traditional security pillar than you have the identity pillar you have still performing wants waste privacies privacy, the new frontier secure video and still owns standard one set of markets Frank.

We really working as we said about acquiring new customers and delighting do is that we have and you've seen that we've done somewhat of a good job was our retention of 85%, but wouldn't continue to improve there and that's our major focus if we continue to focus on innovation building up at the portfolio.

And trying to build that cyber safety vision I think thats the race, we want to run.

Makes sense, thanks, very much guys.

And just as a reminder, if you would like to ask a question press star one on your telephone keypad.

And your next question comes from the line up Walter Pritchard from Citi.

Please go ahead.

Hi Haven.

And good to talk to you for the full time here Natalie on a on the international can you help US understand you know your marketing effectiveness, how you're on what you're seeing in terms of of measurement and marketing effectiveness marketing effectiveness internationally versus domestically in other words I assume it's still lags how much does that lag relative to what the sort of effect.

Effective as you're seeing in the U.S.

I think if you're if you're interested in being their role we have a job for you totally right you've seen it we first invest into you as we mature I CAG. We have good return we now moving from traditional forms a digital form out playing out ahead two quarters ago, we started to doing to national International we started directly more digital and social media leading the.

Charge was northern Threesixty as I mentioned, we still building up to new identity feature and privacy features and dark what monitoring being extending into new countries in Asia next quarter into Europe. So so we definitely are are behind the U.S., but it's a faster growing and we very focused on building up.

International presence I think that the huge opportunity for us moving forward.

And how are you thinking about from a higher level you've achieved the goal I mean as you noticed as you noticed.

Earlier in terms of giving to the you know the mid single digits growth at 50% margin. How are you thinking about the next step is it to push harder on the growth is it to preserve that margin is that's the optimal sort of marginal cost just curious how you're thinking about just philosophically. The next the next step.

So you have a new leadership team for them achieving mid single digit was the entry point no I go get what's next week. When we go what do we do this vision is fantastic and full of opportunity and so we're discussing we agreed that accelerating the growth and making our solution more complete and available to more consumer.

<unk> is our number one mission now we running the consumer business slightly above the current operating margin target I'm not going to change. It. So we still intend to run the business has 50% on some quarter will front operational efficiencies. We don't have an immediate a reaction to spend it but we have plenty of.

Of new ideas to fund to try to accelerate the growth if were able and I think we will be in the long term to accelerate that growth I would say growing EPS faster than revenues our segment metric, we won't be bounded by ratio a percentage. It it's really about accelerating the topline going in growing EPS soccer then.

Robert.

Great very clear thank you.

And your next question comes online.

Yes, So Lee from Oppenheimer. Please go ahead. Thank you taking for taking my question. Congrats on a strong results will come Natalie and hope that lives safe I guess my questions to follow up from the last question, this and tougher but going into international theater a presence.

So the last couple of quarters, we you invested and tell us, what's wonder which market where did he is that EMEA Asia Pac Latin America.

Would you say, it's the most critical of four and lock to invest at this juncture.

Well, I think where global leaders I have to invest in developing the portfolio and developing the marketing and sales channel I have to invest in direct digital media and building up on the opportunity and employee programs and we're not that he's helping I can tell you. She has a gross.

Mindset, but very analytical so we'll use they're not to prioritize those investments, but Canada is a huge opportunity penetrating the if anything species internationally, where digital identity and I would see additional Ben.

Our growing very fast all huge opportunity for us.

Okay, and then maybe one more follow what it did not only or are they said in terms of I don't understand or restructured process again, it's really I had a pad and ahead of target. If you work expanding your investment dollars in the future like in terms of other M&A or R&D investments, you want to Africa and lock portfolio.

Well, what about that called areas.

[laughter] sort of give you name targets look we've owned the credibility of looking at also gross inorganically organically. So our process really started with the portfolio in the market to buildup cyber safety what are the gaps in the other applications. We can build on and then we have.

Real time assessment on organic capabilities or time to market needs versus whats already exist, where they support type of product or fully developed business and a then at the end of the old matches. It becomes a financial decisions I think we on the credibility we have the operational chopped form the holders.

Management team leadership Im income, including the board is focused on on on growth from from orders or all sides.

Okay. Thanks for taking my partner and congrats on a quarter toxin.

Sure.

And just as a reminder that would be star one.

For your question.

On your telephone Keypad press Star one.

And I have no further questions at this time in Q.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.