Q1 2021 Liquidity Services Inc Earnings Call

Welcome to the liquidity services, Inc. First quarter fiscal year 2021 financial results Conference call. My name is James and I'll be your operator for today's call.

Please note that this conference call is being recorded.

All participants are in a listen only mode. Later, we will conduct a question and answer session.

On the call today are bill angry liquidity services, Chairman and Chief Executive Officer, and Jorge Celaya, Executive Vice President and Chief Financial Officer. They.

They will be available for questions after their prepared remarks.

The following discussion and responses to your questions reflect liquidity services management's views as of today February 4th 2021 and will include forward looking statements actual results may differ materially.

Additional information about factors that could potentially impact our financial results is included in today's press release, and and filings with the SEC, including the most recent annual report on form 10-K.

As you listen to today's call. Please have the press release and front of you, which includes liquidity services financial results as well as metrics and commentary on the quarter.

During this call liquidity services management will discuss certain non-GAAP financial measures.

And its press release and filings with the SEC each of which is posted on its website you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures.

Liquidity services management also use certain supplemental operating data as a measure of certain components of operating performance.

And I also believe is useful for management and investors.

The supplemental operating data includes gross merchandise volume and should not be considered a substitute for or superior to GAAP results.

At this time I'll turn the presentation over to liquidity services CEO Bill Anchorage.

Good morning, and welcome to our Q1 earnings call I'll review, our Q1 performance and provide an update on key strategic initiatives next Jorge Celaya will provide more details on the quarter.

We are pleased with our continued strong momentum.

As reflected in our Q1 financial results and we're very proud of our team's efforts to safely deliver outstanding results for our customers.

And our fulfillment centers and remotely during the quarter.

Our E commerce marketplace solutions are resonating with both large enterprises and small businesses.

Which is contributing to strong organic growth.

And market share expansion.

Our team has carefully listened to the needs of our customers.

And we continue to deliver the right tools services and strong buyer liquidity to ensure sellers and buyers and every major sector of the economy successfully monetize assets.

And this is translating into results.

Consolidated <unk> was up 28% year over year. The number of auction participants was up 14% year over year or completed transactions rose, 12% year over year, and we grew our adjusted EBITDA by $10.9 billion over the prior year period.

Our solutions continue to drive strong recovery for sellers and have enabled us to scale our services quickly as more customers seek efficient self service solutions with optional value added services, we provide.

To manage surplus and returned goods and the global supply chain.

We are finding the demand for our services and marketplace is growing along every dimension.

By size of customer.

By geographic region.

And by product category.

This past quarter, we helped sellers monetize assets and a diverse range of categories, including.

Vehicles construction equipment.

Biopharma assets and industrial machinery.

Real estate and consumer goods, such as apparel consumer electronics jewelry and housewares.

Our newest marketplace all surplus dot com features all of these categories and more for our over $3 8 million registered buyers did you bid and by using our mobile first platform and personalized recommendation engine.

In fact, the more our buyers shop are all surplus marketplace.

The better our matching engine becomes.

Which helps us improve the buyer user experience and increase recovery rates for our sellers.

Indeed through our domain expertise.

Innovative technology platform and integrated services, we are driving the continued digital transformation of the reverse supply chain across the retail.

Industrial.

And public sector markets.

Which together comprise a 100 billion dollar market opportunity for liquidity services.

Overall, our strategy and.

And platform investments have yielded strong results to date and.

And we are well aligned to the needs of where the customers going and the future.

And a changing landscape with higher E commerce demand.

G M D and our deal.

And our Gov deals segment.

Through a record 36% over the prior year's comparable quarter as more government agencies.

Utilized our digital platform to transact higher volumes across a larger breadth of.

Key categories.

And our growing buyer base and automated asset promotion tools drove higher realized values through our marketplace.

G M D and our retail supply chain group segment grew 30% over the prior year's comparable quarter as more large and SMB retail sellers utilized our platform, resulting in higher transaction volumes on our marketplace.

<unk> and our capital assets group segment increased 5% year over year, driven by strong results and our heavy equipment Biopharma and energy verticals.

Finally, our machining segment grew revenue by 14% during the quarter as as equipment owners are benefiting from the machinery O dotcom classified marketplace.

As well as our machinery host inventory management system.

That together connect with buyers at lower costs, when compared to traditional marketing channels.

Looking forward.

We're well positioned to help our customers continue to adapt to the changing landscape of the global economy, including the continued growth of E. Commerce the need of organizations of all sizes to leverage technology to drive supply chain efficiencies and monetize assets.

And the increasing focus.

By business and government customers on sustainability.

These needs are not unique to the current climate of a pandemic.

Over time liquidity services has proven to be a constant cyclical business, which helps sellers create value both in periods of economic expansion.

And contraction.

We currently have strong activity and our sales pipeline and are optimistic about our growth prospects.

Against this backdrop, we remain focused on our goal of eclipsing $1 billion of annualized G. M. B by continuing to execute a rise strategic plan.

And closing.

We thank our team members across liquidity services for their dedication to our mission.

And we are excited to continue our role as a global market leader to create value for our customers and shareholders.

I'll now turn it over to Jorge for more details on the quarter.

Thank you Bill and good morning.

We completed the first quarter of fiscal year 2021, with G M b of $194 million.

A 28% increase from $148 6 million and the prior years.

Terrible period.

Revenue for the first quarter was $55 8 billion, a 13% increase compared to the same quarter last year.

While net income for the first quarter was for $5 million, resulting in diluted earnings per share of 13 cents.

Our results compared to the same quarter last year have shown significant improvement.

Non-GAAP adjusted EBITDA was $8 8 million, a $10 $9 million improvement.

The first quarter fiscal year 2021, comparative year over year consolidated financial results reflect.

Reflect increased volumes across all of our segments.

And with the largest increases and our Gov deals and retailer <unk> segments.

As businesses and governments.

<unk> continued to benefit from our safe and effective E Commerce solutions.

Our mix shift to more consignment, which includes self directed solution.

As reflected in improved gross profit margins to 60% this quarter from 51% last year.

We have also experienced improved margins from the mix of products sold.

In both retail and Gov deals.

And asset recovery rates achieved.

Our bottom line results reflect these benefits.

Gross profit margin, the overall increase and topline volumes across our segments.

And leverage and our operating expenses.

A key goal of our multi year business transformation and investments and our technology has been to enable us to provide more diverse service offerings and leverage our platform for scale and more profitable results.

We are pleased and our ability to have sustained solid performance this past quarter.

And specifically comparing these first quarter results for the same quarter last year.

Our <unk> segment was up 36% on G M D and 35% on revenue or.

Our retail <unk> segment was up 30% on GMB and up 10% on revenue and our CAG segment, <unk> was up 5% and flat on revenue.

Machine revenue was up 14%.

We have a debt free balance sheet completed $4 1 million and stock repurchases during the quarter and.

And the ended the quarter with $77 8 million and cash up $1 $8 million from last quarter.

Looking ahead, we continue to see a solid pipeline strong customer relationships and indicators of positive performance going forward.

The general economic uncertainties globally, and any possible shifts and related business dynamics and government spending.

In spite of long term macro drivers.

Timing of business activity across our segments and historic seasonality trends are difficult to predict and.

Especially for any given quarter, given the uncertainties still being faced.

We will therefore, not provide quarterly guidance and reassess future guidance on a quarterly basis.

Financial results for Q2 of fiscal year 'twenty, one are expected to improve year over year.

We remain optimistic about our prospects given our strong position and our key markets and marketplaces, our enhanced platform services and the trends pointing towards a long lasting shifts to online transacting by businesses and governments alike.

We continue to be highly focused on creating efficiencies and benefits to enable our growth, who and asset light low touch marketplace solution.

And as E Commerce penetration continues to grow substantially our online platform and cloud based solutions should become an integral part of the evolving economy.

Thank you and we will now take your questions James.

Thank you you can now begin the Q&A session. If you have a question. Please press star one on your phone.

And if you wish to be removed from the question queue, you May press, the pound sign or the hash key.

And if you're using a speakerphone you may need to pick up the handset gross before pressing the numbers.

Once again, if you have a question press star one on your phone and.

We have from Colin Sebastian of Baird with our first question.

Paul This is dealt and current on for Colin.

Alright, so congrats on the quarter guys. A couple questions here I know youre, not giving guidance on <unk>.

Second quarter, but as we think about and kind of returning to normal seasonality and some of the segments here.

Kind of wondering if you can give us a sense for what to expect in CAG moving forward, obviously, there's been quite a bit of improvement as we've lapped that finally lap the wind down and the scrap contract, but thinking about that moving forward and there is a great deal of volatility given the size of the contracts there, but can you give us a sense for what normal.

Seasonal patterns will look like there now that we've lapped all those wind down impacts and then.

Maybe looking at this quarter, specifically the biggest drivers of gross margin improvement sequentially, there and whether you think that's going to be sustainable.

I'll take the question adult and and welcome to the call.

CAG is a business that ultimately embraces all of these macro trends, we discussed and if there is a large global buyer community that inherently benefits from transparency to these.

Equipment and events and sales that we that we conduct.

On on our platform.

For the seller community for the CAG business.

I appreciate the importance of sustainability.

Managing efficiencies and our supply chain.

And of having better record, keeping and audit and oversight of of how the full asset life cycle is managed all of those play to our strengths and so we believe this is a double digit organic growth business.

And that it is getting more efficient over time because of the work that we've put in over the last few years to improve the marketing technology stack the tech stack and have given.

Sellers and buyers.

More.

Tools to manage these transactions directly and the platform.

And we believe that.

Both with the self service options.

In addition to our value added services, which.

Individual sellers can elect to use they can elect to have us.

Do more on the ground.

And <unk>.

Manifesting and valuation work and in some cases.

Even help the assets being moved.

And we're able to do all of that or to use third parties to do that but.

More often the cases that sellers like to have control.

And we give them tools to do that and so broadly we've got an organization that's geared to helping sellers and Europe, the Americas and Asia all access.

Important liquidity for key verticals the verticals that have been very active for us.

Biopharma and health care, I mean, theres, just billions of dollars being invested in R&D.

And all of the testing and measurement equipment and that market is regularly upgraded.

And that also overlaps with the University lab market that we handle quite a bit of work with and product flow.

The global energy marketplace is quite active for us.

And that's.

For many years and we provide cross border liquidity for that.

The global automotive sector is a big driver for US if transportation is something that is undergoing a lot of technology change. So we're really well positioned to drive double digit organic growth and more efficient business model and a model that allows more self service opportunities.

And I mentioned last quarter, how we went live and South Africa with our all surplus platform.

As an example, where we can extend the reach of our platform and.

And some cases with.

Local partners using our tech platform and the local partner can provide some value added services for the sellers, but ultimately the transaction clears on our marketplace. So.

And we're excited by the growth prospects the reason that businesses.

What unquote volatile is because when you're working with fortune 500 companies. The individual asset sales amounts and values are very large and and you may have multi.

Multibillion dollar asset sales.

Regularly drop in our marketplace and those may move a month or two and an environment, where due to due to the pandemic and regulatory rules you may have restrictions on travel or quarantine barriers that affect timing of sales or.

And inspections of assets and.

And therefore these large transactions can move from one period to the next so and the short term that makes that the visibility on a particular quarter more difficult to predict but and the long term, we really like the opportunity of being that global market place for high value assets, where we have a law.

Lot of past performance, a lot of integrity, a lot of credibility with sellers and buyers.

And then I think the second question was related to margins.

And I'll give a few comments and Jorge can also Uh huh.

And his perspective, but you know.

Our business.

Record GAAP revenue GAAP revenue was and output metric, it's not a driver for US we don't give guidance on GAAP revenue.

Our goal as imbued in our rise strategy is to drive <unk>.

Maximum recovery volume.

And high service levels and leverage our expense base to satisfy the needs of customers, we use a variety of pricing models.

Consignment pricing model and some cases will do revenue shares that could include taking title to goods. When we take title to goods, we record the full GMP and the value.

The goods as GAAP revenue, but that's not an ultimate ultimate driver for the business, what what helps us grow our business is driving.

Strong.

Value realized and the marketplace, which is reflected in and G. M D and as we've seen over the last year.

More of our clients have used the consignment pricing model.

And I think we're at a record high consignment level as a percentage of the whole and so when we're seeing growth and our consignment model.

We only book the fees associated with that service level on GAAP revenue and GAAP GAAP revenue so.

And that evolution has resulted in.

Revenue being a smaller percentage of G. M D, but it's a much more profitable stream for us because we don't touch the assets typically the assets are sold and place and so we like to look at our margin profile as our earnings as a percentage of either gross profit.

For net revenue are.

Gross profit as a proxy for net revenue or GAAP revenue and that's been very strong for us and we continue to see.

That is the future of our margin profile with a mix shift to lighter touch consignment business, where gross profit and.

EBITDA is a measurement of our profit will be very important and there are other parts of our business remember that don't have G. M. B. So machining and segment. For example is a subscription model and all of that is service related Theres No G. M. D. There are tremendous <unk>.

<unk> between.

The equipment sellers on machines, and our transactional marketplaces, which we're beginning to realize but there is no G and be associated with that business. So we've seen a mix shift.

And I think we had some commentary and the release and and our Q about.

Gross profit margins, expanding and we do think that sustainable.

Anything to add Jorge.

Sure.

Just had a little more.

Detail to what Bill just said.

When you look back.

You would have seen that.

Our ratio of revenue to G M D.

In the.

Close to mid thirties, when we had the deal day contracts, where it was all a purchase model.

As we grow and we've been saying that we've been targeting to grow the mix of confinement and specifically self directed consignment business.

And that has been growing.

Faster than the purchase model.

That will.

Inevitably drive that gross profit margin.

But what you have is instead of having revenue.

G M B.

And the mid thirties wear now.

B.

Give or take 29% ratio of revenue to G. M D.

As you see.

We beat your.

G M B estimates for the quarter, but I think as you look forward.

And where we are now in terms of that revenue to <unk> ratio.

It's probably a better.

The better ratio to look at going forward simply because.

Of our.

Improvement and growing our consignment and specifically our self directed business.

Plus not having dot dot dot.

The contract if you go even further back in history. So you'll see this last quarter you can see that this quarter.

So again and give or take that's probably a better <unk>.

And from a gross profit perspective.

As a percent of revenue.

I mentioned that we are at 60%, so yes being in the high 50% to 60%.

Gross profit as a percent of revenue.

Is.

It was a good place for us to be.

And we keep.

We have provided.

Guidance, we have focused on G M D and that's so much easier to predict.

Given how clients from time to time.

Shift between the two different models, so not only are we and <unk>.

Some cases like Bills example of tag where things can shift by by months and.

Therefore, the growth rates and can vary.

And the long run.

Equalizes, so as Bill said, but we also have and.

And a business like that the.

Decisions with clients on whether they go.

From a purchase model for a consignment model and that two makes it a little more difficult to predict but bottom line is if we sustain the growth that we're looking for and we focus on.

And these levels of gross profit than the rest kind of takes care of itself, because we have a pretty well controlled up operating expense.

The.

Situation.

So we feel pretty good about the bottom line.

I appreciate all the detail on that and that's really helpful. And then maybe one more quick quantify Ken and then I'll hop back in the queue. If we look at the RSC G segment here and just thinking about the shift to E Commerce and.

Elevated return volumes associated with that I'm. Just wondering if you can give any color on if you've been seeing a lift related to that following the holiday season.

What we should expect thereafter that a little bit of a sequential moderation in gmg and the quarter, assuming that there'll be a bigger lift post holiday, but just wondering if those return rates are any different than what you'd be seeing from normal ecommerce volume through the year. Thanks.

I will address that dot and we began our business many years ago, realizing that the world was going to a digital first E commerce world and certainly depend and make accelerated all facets of <unk>.

Procurement of.

Day to day, and necessities and discretionary items online I think thats rippled through the <unk> markets as well I think people have.

Become more habitual and <unk>.

Searching for products and services.

Online and being more comfortable purchasing even very high ticket items online and we're a beneficiary of that and that.

That relates to.

Not only being viewed by.

The large.

Omni channel and ecommerce retailers as it would be.

<unk>.

Most safe.

Durable scalable reliable.

Solution to handle high.

High volumes of return goods.

And that's reflected in.

The number of new clients that we've activated the <unk>.

Growth within existing accounts.

The fact that many of the newer versions of of ecommerce players never had and warehouse facility or never had a retail store network. So they need.

Attention and support on the reverse supply chain right out of the gates and we're there to provide that and we've equipped these sellers with more options. They can.

They can load and sell directly on our platform.

They can ask us to do some of the services, we have a warehouse distribution center network that's been.

And essential supply chain function throughout the past 12 months and that's available to many of our clients.

Who don't have the resources to focus on returns.

Management.

And that's only going to strengthen overtime.

And you know.

And I've always said the barriers to entry are low anyone to men and a truck and bus.

By a pallet or a truckload of goods, but significant barriers to scaling and.

For now.

At a level of scale, where we are a durable solution for our clients who depend on us to provide the velocity of the ash.

Asset sales and recover that capital for them to focus on their core business, our clients would rather optimize their full margin products and.

And for its supply chain activities, and then get caught up and <unk>.

Open box returns and.

If you can't be available for these clients.

Seamlessly week over week month over month, then the repercussions of that are there operational bottlenecks and their facilities.

And that affect their forward business and the cost of that is far greater than.

The benefits of managing that on their own so we like the opportunity to continue to be the leading solution and the retail.

Supply chain for the management and sale of of both returned goods, but also seasonal goods.

And our client.

Roster and activity and our pipeline reflect that so we think there is as the mix shift gross you know call it mid to high teens for penetration to 25% 30% penetration.

And that's really a strong tailwind for us but also this this online procurement online first habit.

Ripples into other categories day.

Used vehicle category trucks.

Construction equipment.

Real estate all of those high ticket items are opportunities for liquidity services, and we're seeing more appetite to use our safe and effective solution for these higher value categories and we're excited about it we're well positioned to capitalize on it.

Thanks I appreciate it.

Our next question from Gary Presto, Pinot of Barrington Research.

Hi, Good morning, I have a couple of quick questions and just some simple answers would be helpful.

First of all.

Can you give us some idea directionally.

How low since you've got the new platform going and all of that on a year over year basis. How you at the improved returns on GMB for your clients.

We've got.

And I'd say.

Youre looking at double digit 20% type of improvement and.

Also the.

Nation engine component of the platform is important.

And that.

$3 8 million registered buyers, they're typically going in for a specific type of asset, but recommendation engine allows them to be exposed to.

Adjacencies to their initial query and those Adjacencies open up additional lift.

In terms of penetrating the buyer base and driving higher recovery, so low 20% would be around number Gary that I would use.

Great well, that's encouraging and then.

With this recommendation engine that you're talking about is that part of the oil surplus market or is that just generally a part of every market that.

You Walker.

We pioneered it with.

Our all surplus marketplace and we are using it.

Is this sort of proving ground to then expand to other marketplaces.

Okay.

And then.

Can you give us some idea.

Just.

Or can you slap some metrics around that that will just.

Highlight just how much the improvement in your business or your GMB has come from having you all surplus market.

We wouldn't have.

And alone metrics that we would be let's say.

Regularly publishing on that I mean ultimately.

For our merchandising engine.

Meaning.

And that we capture information about a lot of different products and then we match that product with the.

Qualified logical buyer base and the more that that can be done using sort of machine driven tools. The more efficient our business becomes it comes less manual less less expensive and more effective and so.

Over the years, we've been able to segment.

The right buyers for over 500 different categories, and so we're able to utilize.

A variety of tools to contact and reach and.

And continue to engage those segment buyers for categories such as retail.

Consumer goods Biopharma equipment transportation equipment construction equipment and so.

More of that is happening and an automated always on type of way vs.

And we started the business you might've had someone and a customer service area.

Call somebody and say, Gary I know that you bid on.

Afford $1 50, we have more for $1 50 is coming or even today you'd have people doing live events, where where theres a lot of.

Costs associated with getting people to that location shipping the items to that location.

And we've moved away from that over the last may.

Many years and the.

And the important point for US is that we feel that we're still improving the.

The recovery rate and we're finding more upside and lift from investing and these technology tools and learning more about our customers our customers either their clickstream and they're buying viewing bidding patterns and allow us to present.

More for them to buy more reasons to be on our marketplace and that will up.

Provide upward movement and recovery over time, and there'll be more satisfied with that experience that theyre getting relevant offers.

The other thing is.

We're also providing.

Classified marketplace for used equipment as well.

This machine market.

Marketplace.

Is not a transactional marketplace, it's a marketplace where.

Equipment owners cant publish all of their available inventory and they're trying to find and users for that inventory and in many cases there'll be successful for that.

But in many cases day will need.

A.

More accelerated.

Rail through the auction channel and we're providing that full breadth.

For both both the.

Direct sales to end users as well as the auction channel for things that are slow moving or not getting the desired velocity through that channel and so we get a lot of data from the machining and classified marketplace about.

What trends are.

And in place for supply and demand and different categories, and I think that gives us a great perspective, and how to market effectively.

Okay and then.

Just a couple of more here I heard you mentioned $1 billion target for <unk>.

And your narrative is that something youre looking for to do in fiscal 'twenty, one or is that something that.

You're targeting a year out from now.

Well this is our what I would call a our target model that is sort of an evergreen and focus for us as an organization eclipsing $1 billion annualized GMB is just that.

A point of reference for us internally to say.

And we've created enough value enough.

Supplier buyer relationships too.

B one of those few.

E Commerce marketplaces to have achieved that mark and we don't have a set timeframe on that.

Obviously, we did a $190 million and <unk> and the current quarter. So theres a GAAP to goal there.

Gary and so we see that as our as our.

Sort of guiding ambition in the near term.

Not going to be and the next few quarters, but.

Certainly the next few years that we're going to get to that point and just one of those things that we continually reference as a satisfying intermediate goal and we feel very good about.

The position of the company.

To ultimately achieve that goal.

Okay, and then lastly.

I know, you've said that year over year quarter will be better than.

And it was and I mean last year, you generate a loss and EBITDA I believe.

On a sequential basis.

No.

What are you what are you thinking for the quarter and then I guess the second question I would have and I'm just talking about Directionally will Q2 be stronger than Q1 and then the.

Whole issue of not giving guidance, which you did give for Q4, you've kind of pulled back on that is there something that has changed and the visibility of the business or the.

Your outlook that had you pulled guidance on a quarterly basis.

Well, let me just save my philosophy.

And as a business owner.

Has been to continue to execute the strategy.

And we haven't had any fundamental change.

Change and the business or the business prospects of what we are seeing though is that there's a very uneven manner.

Management of.

Government.

<unk> lines.

And travel restrictions.

And vaccine related Rollouts.

That do play a role and the ability to transact business and certain of our Submarkets and.

And in certain segments CAG as an example, because you have a lot of folks that are cross border and nature and.

You know that.

And is harder to predict and so we think it was prudent.

To not assume that everything is.

Back to sort of pre Covid world and.

Have our normal routine around guidance, we feel that there's still.

Some.

Execution and.

The way the government is handling the relative the vaccine to allow us to use our typical approach to guidance. So it's really more about that than anything that we're seeing changing and our business.

And bill if I, if I can add Gary.

The last earnings call was a year and.

And we did it in December.

And we had the benefit of course of having October and November visibility.

And now we're back to a regular quarter and.

We're here.

Starting to see our January results.

So you know obviously if I'm sitting.

Over two months into a quarter, it's a lot easier to give you some guidance then.

And then if I'm sitting only one month into a quarter.

Simply because of issues of tightening.

Okay, No that's fair alright, thank you.

And we have.

Excuse me, we have don't and current again of Baird.

Thanks, guys just one more if I can looking at your cash flow is here. It seems like you've been able to generate some nice strength of cash flow profitability here for straight quarters for the first time and a while so I was wondering if you can update us on your thinking about capital allocation strategies.

From here on.

Obviously investing and the rise strategy.

It's going to be a core part of that but just wondering where the core investments are related to that that still remain and as youre thinking about growing and expanding the business, obviously and machining I always been a big contributor to gross profit expansion recently, so just wondering kind of how youre thinking about the opportunity for <unk>.

Potentially expanding into other segments, there to help bridge the gap to that $1 billion <unk> target.

Yeah. Thank you Don and then we do.

Think about businesses as ones that have.

Good cash flow characteristics.

Ones that have high returns.

Oh and effort and investment and therefore.

The product roadmap is a key part of allocation of capital we are rolling out new products that day.

Deal with.

Providing the customer more control.

Bye.

And how they market and sell through our through our marketplace platform. So we have.

A product called scan and sell that's been used by a number of our clients we've expanded that total comparable tool that.

And is in the warehouse of many of our clients, who called load and sell.

And those are things that require some investment we've rolled out something called machinery host, which is a E. Commerce storefront I shouldn't say E commerce, really and inventory management and marketing storefront for equipment dealers and owners and Thats been well received.

And basically taking a lot of these SMB customers, who really don't have a <unk>.

Mobile first.

Responsive web site that is.

Well positioned to present their inventory to the search engines and other areas and get them online quickly.

And very effectively.

We're investing and.

All surplus liquidity one.

Platform as well, where we're adding some new payment features.

We're streamlining.

And the way that customers.

How they get paid how they monitor transactions.

To make it more seamless we still believe it or not we still have a lot of governments who.

Insist on paper checks and where we're trying to bring them into the 20, <unk> century, and say look there.

Are there ways to digitize that process and so we have some investments there I think in general.

A lot of investment is around marketing and sales as it relates to removing the friction from the process to get more of our sellers doing things in and automated fashion.

And we're excited about that.

We have done some buybacks.

And we've also been looking at.

Areas of opportunity and.

And the M&A World.

I would say more and the tuck in variety and.

And that's always something that we monitor.

I think a lot of people have looked at us and it said boy can I be part of that because you are able to.

Uh huh.

Scale your business and the.

And the partners might have some domain expertise and a category or region and and you don't have.

Let's say the the.

For E Commerce chops.

Get over the hump, and so where we are potentially able to.

Accelerate the business plan, if we do.

Some buying versus just pure building.

But nothing too exotic and nothing transformative theyre, just continuing to block and tackle.

<unk> organic investments and some tuck ins and the.

The menu of options for use of capital.

And Dalton and one.

One thing just to keep in mind as as we look at our operating expenses and any investments, we may make and operating expense, whether it be technology or marketing.

Yes, and in the previous year, we focused on certain things and now and this next year will be shifting and focus and another thing but.

But generally speaking at least for our own and internal goals.

We don't think that there is some.

Significant incremental expense that we need in order to achieve our incremental top line growth.

If we look further down the road maybe.

Those will be and play.

For for positioning ourselves for the longer run, but just from a from.

And the base.

Business model perspective, we're in really good shape, yes, there's going to be some inflationary.

Things that happened to your expenses.

And the normal course of business.

Generally speaking, we feel pretty good about our operating expenses as we go forward.

This next year to achieve our own internal.

Goals from a growth perspective.

For the color.

Okay.

And there are no more questions.

James if there are no more questions you can conclude.

Very good thank you.

And thank you ladies and gentlemen. This concludes today's call. Thank you for participating you may now disconnect.

Okay.