Q2 2023 Cognyte Software Ltd Earnings Call
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The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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Good day and thank you for standing by welcome to the cognate second quarter fiscal year 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.
I'll ask a question during the session you will need to press star one one on your telephone.
Please be advised that today's conference is being recorded.
Now I'd like to hand, the conference over to your Speaker today, Dean Ridlon head of Investor Relations. Please go ahead.
Thank you operator, Hello, everyone and Dean Ridlon Cognates head of Investor Relations. Thank you for joining us today.
Here with a lot strong cognex, CEO and David about a cognate CFO .
Before getting started I would like to mention that accompanying our call today is a presentation.
You'd like to view these slides in real time during the call. Please visit the investors section of our website at Cognex Dot com click on the investors' tab click on the webcast link and select today's conference call.
I would also like to draw your attention to the fact that certain matters discussed on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, and other provisions of the federal Securities laws.
These forward looking statements are based on management's current expectations and are not guarantees of future performance.
Actual results could differ materially from those expressed in or implied by these forward looking statements.
The forward looking statements are made as of the date of this call and except as required by law cognate assumes no obligation to update or revise them.
<unk> cautions not to place undue reliance on these forward looking statements.
For a more detailed discussion of how these and other risks and uncertainties could cause cognex actual results to differ materially from those indicated in these forward looking statements. Please see our annual report on form 20-F for the fiscal year ended January 31, 2022, and other filings we make with the SEC.
The financial measures discussed today include non-GAAP measures.
We believe investors focus on non-GAAP financial measures and comparing results between periods and among our peer companies that publish similar non-GAAP measures.
Please see todays presentation slides our earnings release in the investors section of our website at Cognex Dot com for a reconciliation of non-GAAP financial measures to GAAP measures.
non-GAAP financial information should not be considered in isolation from as a substitute for or superior to GAAP financial information, but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes.
The non-GAAP financial measures. The company uses have limitations and may differ from those used by other companies.
Now I'd like to turn the call over to allot.
Thank you, Dan and welcome everyone to our second quarter Conference call.
Our Q2 revenue came in at $81 million.
This is supporting revenue performance represents a significant decline year over year and sequentially, reflecting further adverse changes in customer behavior that I will discuss shortly.
With regards to bookings bookings activity came in higher than reported revenue and drove an increase in our backlog.
As a reminder, <unk> is the amount of contracted revenue that has not yet been recognized and we are sharing this metric investors because we use it as a proxy to measure on our backlog.
As of the end of Q2, our IPO was $534 million, an increase of approximately $20 million from the end of Q1.
We have a significant backlog. However, we are not able to convert more backlog into revenue during Q2.
I'll also explain the reasons shortly.
Our Q2 gross margin improved sequentially.
As a result of our better software mix, but given the relatively low level of revenue we had an operating loss in Q2.
David will provide further details and analysis of our Q2 financial results.
Next I would like to focus my comments on what Youre seeing in the market and the corresponding actions, we're taking to return to growth and profitability.
We start with your view.
Despite the challenging macroeconomic environment in Q2, we continued to win multi seven figure deals in our booking activity exceeded reported revenue and resulted in a backlog increase.
Let me talk about a few of the large deals we won in Q2.
The first deal is for approximately $50 million from existing law enforcement customer to expand our solutions used to combat drug trafficking another accumulate activities.
The longstanding relationship we have with this customer and differentiated solution drove this expansion over there.
The second thing is from an existing loan foster customer for approximately $5 million to combat screaming all activities.
This customer is expanding its organized while replacing a solution of a competitor.
Customer selected our solutions because of the previous positive experience is recognized and our superior technology.
The third is from a national Security agency, which has been a lot of customers of approximately $5 million.
To help combat the variety of national security threats, including illegal immigration drug trafficking and organized crime.
We won this deal because of our successful track record with this customer.
We believe that these larger orders highlight the confidence our customers have in our technology.
And our ability to deploy large complex solutions.
Our competitive position remains strong and we believe that we have not lost any significant deals to competitors during the quarter.
In terms of forward bookings activity, while we want many deals including large deals in Q2, we also experienced longer sales cycles across all geographies and we had many more deals that we expected to close in Q2 was delayed by customers.
Let me expand further on the changes in customer behavior that we're seeing in the market.
In addition.
To pipeline conversion delays, we have seen backlog conversion delays.
Customers in many countries are facing reduced funding and budget constraints, which impact the ability to make payments tied to deployment.
This change in customer behavior impacts our ability to accurately plan the deployment schedule for our backlog.
We believe this behavior is due to a deteriorating macroeconomic conditions and related budget cuts in some countries and does not reflect a change in their interest in your analytics technology to address evolving security threats.
While we believe security remains a high priority the global economic slowdown has caused some of our customers to change behavior.
Given the changes in the marketplace I discussed earlier, we are second guessing the response across three main initiatives.
First initiative is to maximize bookings by focusing the company on the areas with the highest near term potential.
This includes geographical priorities to focus on countries that are less affected by budget cuts.
For example, we increased our focus on the U S government market and I am happy to report that our solution was recently selected by the Baltimore Police Force.
We are also focusing on security used case says that currently represent higher customer urgency.
Second initiative is to reduce our cost structure.
We are reducing operating expenses, we target to achieve below $70 million in Q3, and we lost $65 million in Q4.
Third initiative is to regain visibility as soon as possible with a focus on predictable backlog deployments.
Government contracts typically provide customers significant flexibility.
Recognizing that flexibility, we are collaborating with customers to achieve a more predictable backlog deployment schedule.
We expect this will have before visibility and increased our deployment efficiency.
Our goal is to return to growth and profitability as soon as possible and given the macro environment. I believe these three initiatives will help us achieve this goal.
I also would like to mention that the actions we have taken previously to several operational supply chain issues were successful and we are now seeing minimal supply chain impacts on our operations.
At this point, our visibility remains limited and we are unable to resume guidance power.
However to provide color on our near term revenue expectations. We believe first quarter revenue will be similar to or lower than the second quarter and the fourth quarter revenue will increase above the tier three level.
We intend to resume guidance as soon as practical.
In summary.
The global economic slowdown is affecting our near term performance and we are taking actions to focus the company owned territories and used cases with the highest potential to reduce our cost structure and to improve the planet predictability of our significant backlog. So that we can regain visibility.
The board and management team are laser focused on returning to growth and profitability.
We believe security threats are pervasive and customers need innovative solutions to address evolving threats.
We are market leader investigative analytics with a long history of growth and a strong track record of customers around the world.
Now, let me turn the call over to David to provide more details about our Q2 results.
David.
Thank you <unk> and Hello, everyone. Our discussion today will include non-GAAP financial measures.
Correlation between our GAAP and non-GAAP financial measure is available as Dean mentioned in our earnings release and in the investors section of our website.
Revenue for Q2 came in at $81 1 million.
With three component software revenue of $27 million.
Tougher services of $45 4 million.
And professional services another of.
$8 6 million.
This revenue mix has changed as follows.
Software revenue declined by $29 million year over year and increased sequentially by $2 1 million.
We see a change in our customer behavior, which distract planning of the backlog conversion into revenue.
As Alex said government contracts typically provide customer flexibility.
We are working with customer to achieve a more predictable backlog deployment schedule.
This will help improve our visibility increased our deployment efficiency.
Software services revenue declined by $8 5 million.
Year over year and came in at similar level to Q1.
Professional services and other revenue declined by $5 $5 million year over year.
Booking activity during Q2 came in higher than our reported revenue and drove an increase in our backlog.
As of the end of Q2, our IPO was $534 million.
An increase of approximately $20 million from the end of Q1.
We believe that our significant backlog will drive our future revenues.
Turning to gross margin in Q2 gross margin improved to 65, 1% on a non-GAAP basis.
Up approximately 400 basis points sequentially.
Really as a result of the increase in software revenue and mix.
Our Q2 non-GAAP operating expenses were 74.
$4 million.
At $4 $4 million lower than Q1 level.
Reflecting our cost control activities, which we plan to continue in the second half of the year.
Despite the sequential improvement in gross margin and Opex the lower revenue level resulted in non-GAAP operating loss of $17 4 million for the quarter.
Below the operating line.
Incurred approximately $1 million in interest and other expenses.
And noncontrolling interest expense of approximately $1 million.
And our non-GAAP tax expense, which I would like to discuss further.
For purposes of non-GAAP tax expense, we have consistently used mythology that start with our estimate of total cash tax payment for the year compared to our forecast of pre tax income to create an annual effective tax rate.
Each quarter of the year to date tax expense is adjusted based upon changes in the full year estimate of tax payment and pre tax income.
A key to this adjustment resulted in a positive contribution to income of $16 7 million.
Our actual cash tax payments in Q2 were $4 8 million.
Turning to the balance sheet, we ended the quarter with about $55 million of cash cash equivalent and short term investments.
Cash used in operation was $18 8 million inclusive.
Inclusive of one time payment of $6 $2 million related to the settlement of patent claim that I talked about last quarter.
During Q2, we reduced borrowings under our credit facility and as of July 31, we had $20 million of outstanding debt.
Also during Q2, we renegotiated some of the credit facility covenants to provide us more future flexibility.
Given the macro could violent.
We recognize that we face ongoing uncertainties relative to the timing of return to profitability.
As a result credit facility actions as well other actions will be mitek will be evaluated frequently.
As we look ahead, we are.
Taking steps in response to the current macro environment.
We expect revenue in Q3 to be similar or lower than Q2, and fourth quarter revenue to increase above the Q3 level.
Carbonite has a long history of delivering profitable growth and managing through periods of volatility.
We look forward to resuming guidance as soon as practical.
We have a long term opportunity in front of us in helping our customers to address the evolving security threats.
With that I would like to hand, the call over to the operator to open the line for questions.
Operator.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone please stambaugh.
Please standby, while we compile the Q&A roster.
Our first question comes from Mike <unk> with Needham <unk> Company. Your line is open.
Hey, Thanks, Mike Chico's here from Needham.
I wanted to make sure that I heard you guys correctly can you comment again, what was the revenue expectation for Q3 and Q4.
Hi, Mark Yes, sure so.
We expect Q3 to be similar or lower than Q2.
In Q4 to be better than Q3.
For Q better than Q3, okay and so.
One of the things that I'm struggling with on my side and hopefully you guys can help with this but I know that we're calling out the more difficult macro environment today.
But at the same time you guys are also talking about the.
The increase to <unk>, if I go back last quarter. You guys also had noted a slight increase to our PEO sequentially right.
So can you help us better understand I guess, what gives you that.
Confidence to start at least directionally guiding to the revenue in.
In Q3 and Q4.
Yes, so maybe I'll give you some color Mike.
What we see in the market and then I'll address the Q3.
So we do see economic slowdown and this result of course in their budget cuts and customer's personal readiness.
It has an impact on the deployment schedule.
Already committed orders and.
Actually we are unable to convert some of the backdrop to deployments and recognize revenues.
So today, if you look at the situation, we do seek to different customers behaviors. The swap. The first one is related to the slower pipeline conversion.
And the second one is.
The backlog conversion issues and both of them are related to the <unk>.
<unk> got some macroeconomic slowdown.
And still we're able to increase our backlog in Q2 as you mentioned then in Q3.
And in Q3 actually.
So in Q2 it was increased by.
Approximately $20 million.
IPO when.
When we look at Q3.
We'll have the <unk>.
Backlog and that's the reason we believe that it can be similar to Q2. However.
However, we do see the issues that are related to the backlog conversion and customers' readiness. Some of them are noteworthy with a platform to help whether they need some of them are noteworthy was the resources and some of them deferring some payments. So so that's the reason we believe it can also be lower than Q2.
In terms of Q4.
We had some orders deployments that were shifted from Q2 to Q3 and the backlog entry point in Q4 seems to be stronger than previous quarters and that's the reason, we believe Q4 will be.
Better than Q3.
Does this answer your question Mike.
Yes, yes that is helpful and then.
I know that we've spoken to the pipeline conversion.
Before that also came up on the last quarter as well.
Can you just remind us what <unk>.
I've made is doing to help customers or.
I guess help convert that that pipeline.
And drive that increased visibility I know that you guys have a new chief revenue officer and.
And youre working on higher priority areas.
But.
What is it specifically that you guys are doing to help it.
Increased visibility and convert that pipeline.
Yes sure. So we are proactive in this respect late last year, we discussed the need.
Too soon.
Strengthen the management team and we hired a new CLO. It was beginning this year.
And.
I believe we have now the key leadership to execute the plan and of course, Nextgen, just as necessary and respond to changes in the market.
And we are also focusing on where the high potential is and this is related to first.
Countries that have budgets.
And second is the more pressing security use cases that our customers are facing so it's actually agreed of budget plus acuity.
Pressing needs.
And that's what where we are focusing our sales force. The sales force is focused now more efficiently in areas, where we believe the pipeline can be converted faster.
Countries that have the budgets to to support <unk> orders.
If I could just build on that a little bit more and I don't mean.
To poke here, but if I'm just thinking about it like the.
Let's talk about those two initiatives that we had just spoken to right. The idea that you're going to focus on countries with budget and.
Focus on customers with more pressing use cases.
Like in my head Shouldnt that be something that the sales force is already executing against and <unk>.
And so the question becomes like.
How.
Is that something that you guys weren't doing previously.
I'm just confused by.
How that's going to help you guys strike better execution through those two things I would think is what the sales organization is doing on a on a continual basis.
If you could just help me square those two pieces yeah. Yeah go ahead.
Sure. So let me give you an example of one of our customers and I believe it will give you some color so.
With the company for more than 20 years, now and they know our key customers personally.
I was visiting one of them at the beginning of the year and we discussed the plan for this year.
And actually the customer indicated that the business is as usual, it's a country with no budget issues, usually and also.
Sticking to the schedule of deployment.
I visited them again two months ago.
Actually the situation was totally different they updated us on.
Just cuts the updated us that they have to defer some of the payments and this will affect also deployment of existing orders.
So actually you can see that only in a few months' time the situation has changed so.
The macroeconomic slowdown is affecting some countries more than others. Some are security.
Security threats are more important today than others. So it's a dynamic situation that we have to adjust to and make sure that we focus our resources and efforts in the right places and our objective.
Objective is very clear, we want to return to growth on profitability and for that reason, we are focusing on both converting pipeline in more efficient way.
Given the current situation focusing on areas, where we see the opportunities are more mature and customers being able to fund and the other area is to discuss with our customers.
And firm up the deployment schedule and their readiness.
Readiness of hardware resources.
Payments in order for us to be able to convert the backlog in a more efficient way. So those are the two initiatives that were focusing on and it's a dynamic situation we have to monitor it and after accordingly, but we are proactive on this.
Understood. Thank you I'll turn it over to my colleagues.
Thank you Mike.
Okay.
Thank you one moment.
Our next question comes from Peter Levine with Evercore ISI. Your line is open.
Great. Thanks for taking my questions, maybe just a follow up.
Last one is did you guys experience any higher level of sales churn.
Within the sales force and then second to that is can you just maybe that sector sales funnel for us.
If it was the sales force was not successful in converting leads are adding leads at a similar level as planned.
Do you feel like you have enough reps in place or is it just folks just not hitting quotas.
So we do look at our sales force and the focus now as I mentioned before is to focus on areas, where the higher potentially.
Another example, I gave an example to Mike before once we've seen the market. Another example is our initiative to expand our business in the US This is an example of where we see more opportunities.
And with respect, yes, we hired a sales force most salesforce in the U S and we are contracted with the channel.
So we are taking actions according to where the potential is.
So yes, we do take actions relevant to the current situation.
Have you experienced higher sales churn this year versus historically.
Yes, we did.
Okay, and then yes.
Just a final question here is can you give specifics on kind of your cost reduction plans, where those costs are coming from sales and marketing R&D and just kind of how youre thinking about balancing I think the near term impact from those cuts towards the longer term initiatives to kind of reaccelerate the top line.
Yes, so well cost reduction reduced opex already in Q2 and we.
Target will take the Opex below 70 in Q3 and below.
<unk> 65 in Q4.
Cost reduction is more in R&D than SG&A.
And we have designed the cost reduction in a way that first it's not going to impact <unk>.
Customer commitment and.
And second that.
It will.
And not impact our ability to return to growth and profitability.
And that's how we look at the cost reduction and if I'll give you an example from R&D.
We are actually reducing investments in technology Foundation improvements that can wait for later stage. So that's how we look at any cost reduction initiatives.
Thank you for taking my questions.
Thank you.
Thank you one moment. Our next question comes from Brian Rutenberg with Imperial capital. Your line is open.
Yes. Thank you very much a couple of follow up questions to the previous in terms of cash burn.
The next couple of quarters, what are you looking at I believe yes.
Yes, you burned a couple of million dollars this period.
Well its previous can you give us any kind of indication where cash burn will be.
And third quarter and fourth quarter and what your plans are to maybe increased credit facilities are.
What your cash flow balance sheet look like.
Yes, so I would take it David.
We used cash in operations in Q2 and during Q2, we had the one time settlement payment of $6 2 million.
Which we don't expect that it will continue later on when you look at the cash shed there is two major aspect of cash from an operational perspective.
Obviously, they either decide of the expense and as we.
Cash like we are reducing our cost structure and.
We are aiming to be under $70 million in Q3 and under $65 million.
Q4 as for collection.
We have like two major pillars that drive our collection with our accounts receivables.
Which are sitting on our balance sheet and we actively collecting disarray receivable that on top of that we have our backlog, which is off the balance sheet and it's we have a significant backlog is as you know and we are taking actions to convert this backlog faster, which would be another source for cash for us. So if you think like in Nash.
About the cash.
Aiming to return back to positive.
Cash flow and we do indeed by two things like aligning our cost structure and accelerating our backlog conversion and then.
We have a track record of generating cash.
Okay, and just as a <unk>.
Up to that.
You are talking about $70 million of operating expenses in the.
Third quarter and $65 million.
Operating expenses in the fourth quarter is that correct.
non-GAAP operating expense in Q3 and Q4.
Okay.
Thank you that's very helpful. A couple of other follow up questions can you talk about head count you talked about 5% Cai.
And I know everybody has been asking about that <unk> cut some R&D in a variety but can.
Can you talk about what percent you are talking about.
And this next series of cuts.
Yes, so actually when we look at the cost reduction and we are managing carefully all of your store operating expenses reduction it's not just <unk>.
Resources.
And in this environment, it's clear to us that the company needs to be.
Lynn and to focus on.
Higher potential opportunities, we have and we are aligning the organization and resources Accordingly.
Okay do you have.
Specific percentage like you gave last quarter.
We share with you like the Opex I think that the key is in the end is like what would be the opex that we will end the year. So we are driving the opex down quarter over quarter in Q3 again okay.
No no no that's helpful.
The last question I have is understanding government pulling back.
Primarily international government not the U S.
So you are getting growth out of the U S. Can you talk a little bit about what percentage of your <unk>.
Total revenue right now is U S.
Thank you.
Yes, so we have less than 10% of our revenue is coming from the U S and obviously, we see it.
Hi, a opportunity in the U S and Thats the reason, we decided to expand.
Our operations there.
I am very happy that we were able to win the Baltimore.
Police force.
Recently.
Okay, and then where is the biggest so thats, where the biggest growth opportunity is for you guys where is it EMEA, where I get that youre seeing the biggest cut.
Happening or pullback.
Actually when we look at the market, we don't see really regional trends. These days related to macroeconomic slowdown what we see is that it is contemplated country.
Some countries are more affected than others in some countries. There is no almost no impact in others. There is a major impact in <unk>. So we don't look at it the regional way because we don't see regional trend. We go one by one.
Okay. So theres no region that you can point to that says hey, here's more cutbacks happening in this range and in Europe , Western Europe or anything else.
Okay.
Situation is that correct to summarize.
Correct, it's a country by country and as I mentioned before we use the greed of where those.
What countries are suffering with budget cuts and the water. The pressing security use cases that they have in this combination focus us on the.
Where to put our resources in the highest potential opportunities that we want to too low cluster.
Okay, and then last question.
In the U S. I know that the federal government has been hesitant to buy from Israeli based firms in the past at least at least by heavily.
Hi.
Is that changed at all or are you getting any traction at the federal level. It seems like youre getting traction at state and local level, but can you address that on what the federal government is looking for.
Yes.
When we look at the U S.
Doing business in the U S for quite a while it's not a risk.
<unk> we.
We are just now expanding and we want to go for federal and state and local.
That's our plan for now we are focusing more state and local and we'll see.
Along the way whether there is a desire to.
Two of our has an appetite to invest more if we see of course our customers.
And coming and coming to us and I do believe that given the differentiated technology that we have and we have a differentiated technology and given that we have.
Successful in many areas around the world. We are operating in more than 100 countries. As some customers are very advanced customers I do believe that we were able to expand.
Also in the U S and different government agencies.
Great. Thank you very much.
Thank you.
Thank you and we have a follow up from Mike Seacoast with Needham <unk> Company. Your line is open.
Hey, guys just a couple more questions if I could.
First I know that we spoke about the revenue for Q.
Q2, and then this outlook for the rest of the year.
Can you help us understand what what happened with the decline that we saw in professional services revenue this quarter, just because I think thats.
Understanding what happened in Q2 and potentially your outlook for professional services and <unk> is obviously going to impact our assumptions around how gross margin tracks just because so much of the.
The gross margin improvement from Q1 Q2 came from the mix shift with professional services falling off in Q2. So can you help us think about that.
Yes, I would say to add to answer all your question, but there are a few question on the same line. So let's start first from the composition of our.
Revenue.
As you know like.
We are working on data, where it's software model, which means that we.
Driving more software revenue and they want.
We want to reduce the level of professional services and other.
And other revenue, which means that.
From a mixed perspective, we want to have less.
Revenue of professional services and much more revenue of software revenue any incremental software revenue will deliver.
And if we were going to deliver and we even like when you're converting our backlog will drive much higher gross margin and you can see actually between Q1 and Q2 that the main reason for the improvement in the sequential growth in the gross margin. It was because of this incremental.
Software revenue so.
When you look at the professional services.
In Q2, we had a relatively very low.
And our revenue and professional services and <unk>.
This is because part of it is because of like the deployment of the of the of the backlog and we are working now in part in our point that we are not as efficient as we want to be there to be with them with a proficient surfaces, giving that delay.
In deployment of the backlog so the more we will be able to frame up the backlog and we will be able to plan better we will be able to achieve.
Much more efficiency across the organization and also it will allow us to improve our gross margin.
To the right levels.
Yes.
I hope I addressed your question.
Yes, so the.
Professional services revenue around like eight or $9 million year.
I know that you guys have been talking about this transition to the software model like should we expect professional services to hang out around $8 million to $9 million now or.
Will that move higher as revenues come back.
So there is a proportion between the overall mix of the revenue the revenue of the Prefinancing services should be taking consideration with the overall revenue. So you need to look at the mix what would be the percentage of the total.
Professional services out of the total revenue.
And in the end of last year, we were like very close to 88% of the total revenue software around 12% of the revenue and professional services. So.
We don't see any reason to not to believe that the improvement in the overall mix that we will see less professional services over time will not continue actually when I'm looking at my <unk> performance and we're seeing that our booking performance in the backlog by the end of the.
Each one is supporting our software model.
Understood. Thank you for that and.
I know coming back to the Opex and the color you provided there if I go back to Q1 and the transcript you guys had said that you expect it to get to around $70 million in Q3.
I'm looking at how you guys executed in Q2, you are just about there you were at $74 million right. So.
Just help me think what what went right when thinking about the opex cuts in Q2.
It just seems like you guys are realizing these cost savings at a faster clip than what.
What we had previously expected.
Yes, when we spoke to.
<unk> in our.
Our Q1 earnings call, we would like.
Getting to be about $70 million in Q3, and we also mentioned that we already executed part of the plan of the savings so we.
We look at our Opex, and we analyze and we executed a cost saving plan and yes, yes.
Like Cadbury in Q2, and we're pleased with that because we want to be like to cut cost and be as lean as possible and be efficient while.
Allowing the company to continue to grow.
And then to be successful.
We are aiming to be under 70 during Q3 and the other 65 in Q4 at a cost of <unk>.
It's something that we plan and we have like.
The actions are already like.
As part of them are taken and we're doing the right things like to get there.
Thank you for that and then just a final question if I could.
I know that.
Yeah.
A letter from Neuberger Berman a couple of months ago can.
Can you just provide us an update or what what cognates response was to.
Do that.
Whether that had been sent over by Neuberger, just curious if we can get an update on that front as well.
Yes.
Got the letter of course.
The board.
Got it and the body of discussing what will be the right.
Respond and it's.
Between the border Neuberger now.
Got it thank you very much.
Thank you Mike.
Thank you and there are no other questions in the queue I would like to turn the call back to Dean <unk> for any closing remarks.
Alright, Thank you Catherine and thank you everyone for joining us on today's call should you have any additional questions. Please feel free to reach out to me and we look forward to speaking with you again next quarter. Thank you all.
This concludes today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly.
Raise your hand during Q&A, you can dial star one one.
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