Q1 2023 CSG Systems International Inc. Earnings Call

Speaker 1: Today's discussion will contain a number of forward-looking statements. These include, but are not limited to, statements regarding our projected financial results, our ability to meet our clients' needs through our products, services, and performance, and our ability to successfully integrate and manage acquired businesses in order to achieve their expected strategic operating and financial goals. While these risks reflect our best current judgment, they are subject to risks and uncertainties that could cause our actual results to differ materially.

Speaker 1: Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release any revision to these forward-looking statements in light of new or future events.

Speaker 1: our use of non-GAAP financial measures. We refer you to today's earnings release and non-GAAP reconciliation tables on our website, which will also be furnished to the SEC on Form 8K. With me today on the phone, I'm Brian Shepard, Chief Executive Officer and High-Tran Chief Financial Officer.

Speaker 1: With that, I'd like to now turn the call over to Brian . Thanks, John . Hi, everyone. We appreciate you joining today's call as we begin on slide four. I'm proud to report the Team CSG delivered a fantastic Q1 across all key financial metrics. We posted 13% year-over-year revenue growth, all organic.

Speaker 1: and success stories. I'm pleased to report that 100% of the charter subscriber migrations off of the competitors billing system are now fully complete. We also expanded our relationship with one of the top CSPs in Saudi Arabia and we surpassed 100,000 active merchants.

Speaker 1: on our payment platform for the first time. I'll provide more color on these and other wins shortly. At the end of the day, our success in growing revenue faster is fueled by our exciting ongoing market demand for CSG's industry-leading SaaS products and our impressive sales results.

Speaker 1: Another important topic I want to touch on is our dedication to caring deeply about doing good. As CSG we believe that good people and high integrity companies can and should finish first. A month ago we issued our inaugural impact report which showcases our initiatives around ESG, diversity, inclusion and global community impact. Over the past year we've made huge strides in our ESG and D&I practices having released our first Sustainability Accounting Standards Board report last year.

Speaker 1: and our first task force on climate-related financial disclosures report earlier this year. Our increased disclosure is moving the needle from an ESG rating agency perspective. In April , we received our second consecutive prime rating from ISS.

Speaker 1: which means that CSG is in the top 20% of its software peers when it comes to quality ESG disclosures. Additionally, we received the AA rating from MSCI a step up from the triple B rating received two years ago. We look forward to sharing our continued progress.

Speaker 1: in the quarters and years ahead on this important journey.

Speaker 1: Turning to slide five, I want to reiterate the four strategic objectives that will help CSG create more shareholder value and allow followers of our story to track our progress.

Speaker 1: CSG aspires to deliver long-term organic revenue growth in the 2% to 6% range, striving to consistently be at or above the midpoint of this range, combined with highly disciplined accretive and strategic, inorganic growth. As a reminder, the midpoint of our 2023 four-year revenue guidance represents...

Speaker 1: fiscal year 2023 revenue in the 5.5 percent range all organic. We aimed at operating scale and expand our operating leverage by growing revenues to $1.5 billion in revenue by year in 2025 with bottom line growing as faster, faster than top line revenue growth. We strive to be the number one SaaS provider of choice.

Speaker 1: for global communication service providers by providing the most value-adding technology platforms and by being easier to do business with than our competitors. And finally, we planted diversify revenue even more as we win big and faster growth industry verticals like retail, government, financial services.

Speaker 1: Moving to slide six, you can see that we delivered against all four objectives with an excellent Q1 start to 2023. On the strategic revenue growth side, we reported $299 million of revenue during Q1 2023, resulting in 13% year-over-year revenue growth. On the right-hand side of slide six, we believe the CSG's high-recurring revenue SaaS business model and our strong healthy balance sheet make us an attractive harbor in the midst of macroeconomic uncertainty. By 2025, we aspire to game scale in the markets where we compete.

Speaker 1: and generate $1.5 billion in annual revenue, which implies that CSG will have added over $500 million in profitable recurring revenue from 2020 to 2025. Over the medium to long term, we aspire to expand CSG's operating leverage and use our strong balance sheet to deliver non-GAAP EPS growth that meets or exceeds revenue growth.

Speaker 1: On this last point, I will continue to reinforce the key principle for the CSG Board of Directors and our management team. Investors can be assured the team CSG is laser focused on creating shareholder value and growing profitable revenue, not building empires nor adding empty revenue calories.

Speaker 1: We will maintain a discipline and high return on invested capital mindset, and we explore a wide range of strategic moves to create more value.

Speaker 1: Turning to slide seven, we had good success in Q1 at our goal to be the number one technology provider choice for communication service providers globally and our continued success with both North American and global DSPs proved that we are executing well against this strategic priority.

Speaker 1: It is great to see that CSG grew revenue 10% year-over-year combined at our two largest North American table broadband customers in Q1. This result was partially driven by the migration of subscribers at Charter from a competitor's billing system over the last 12 months.

Speaker 1: but we also saw good growth coming from other drivers. And we continue to win more business in the global telecom market. At the beginning of the year, we expanded our engagement with one of the top telecom operators in Saudi Arabia. Specifically, Team CSG was trusted to consolidate fragmented legacy.

Speaker 1: BSS platforms into a modern unified platform. Our solution will reduce this customer's BSS complexity, improve time to market with new product offerings, and enhance the efficiency of their business operations. During the quarter, we also expanded our relationship.

Speaker 1: with a leading telecom operator in Latin America and the Caribbean. Specifically, we're now helping this business with its digital customer engagement needs.

Speaker 1: Our solution will help this customer reduce cost and standardize their digital experience across the dozens of countries in which they operate. Turning to slide 8, since 2017, CSG has diversified our revenue coming from exciting new industry verticals from 7% of total 2017 CSG revenue to 26% in 2022.

Speaker 1: And while this metric can fluctuate from quarter to quarter, 28% of our Q1 2023 revenue came from these exciting new industry verticals.

Speaker 1: Being a partner of choice for big brands and higher growth industry verticals will we help them digitize and modernize their customer experience and integrated payments continues to be a game changer for CSG and our customers.

Speaker 1: Last fall, we launched CSG exponent Ignite, which brings over 100 prepackaged customer experience journey templates, connectors, and reports that will turbocharge unforgettable outcomes for communication service providers, financial services, retail, health care, and life sciences. This leading SaaS platform leads to quantifiably better business results.

Speaker 1: with improved customer conversion, engagement and loyalty across the brand's digital channels.

Speaker 1: What does this mean for brands in a wide range of industry verticals lower entry price points rapid launch in 90 days or less Turning customer data into powerful insights and faster return on investment During Q1 we landed a nice contract expansion with safe harbor marinas, which is the largest marina management company in the United States

Speaker 1: Specifically, Team CSG is supporting safe harbor marina with their digital operations, including new go-to-market offerings. This is another example of how our digital customer experience suite of products is finding use cases across multiple industry verticals.

Speaker 1: Also in Q1, we expanded our relationship with a leading US company that builds human understanding through personalized healthcare solutions to transform their customer interactions.

Speaker 1: The CSG solution will simplify their architecture, consolidate their voice and SMS interactions, and enable better patient engagement across multiple channels.

Speaker 1: In the payments market, our continued growth is a testament to our industry-leading SaaS integrated payments platform. During Q1, our payments business delivered excellent top-line growth with strong double digit year-over-year revenue growth. We now provide award-winning payment solutions.

Speaker 1: to approximately 102,000 active merchants and ISV partners who need ACH, credit card, payment gateway, and payment processing capabilities serving a wide range of recurring revenue and new and distributed verticals. As a leader in ACH processing,

Speaker 1: We continue to add scale by signing ISV partners in fast-growing industry verticals like property management.

Speaker 1: In both full year 2022 and Q1 2023, we posted excellent results in our payments business, and looking ahead, we anticipate even better growth.

Speaker 1: We believe our strong double digit organic revenue growth will continue and possibly even accelerate into 2023 and beyond.

Speaker 1: As importantly, we're working hard to significantly improve our already good profitability in our payments business and we like the results we achieved in Q1 in this regard.

Speaker 1: To wrap up on slide 9, I hope you see why Team CSG is so excited.

Speaker 1: ESG is growing faster, diversifying revenue more, expanding profitability, and elevating every aspect of our business. Our Q1 results were by far the best we've delivered in several decades and gives us a strong start to 2023.

Speaker 1: We continue to attract, retain and develop the best and most diverse talent in the industry, all while trying to make the world more sustainable and inclusive via our ESG and DE and I initiatives. We continue to transform the industries we serve in telecom, cable, media, financial services.

Speaker 1: healthcare, retail, government, and more. And we continue to turn our healthy, expanding sales pipeline into a steady stream of exciting sales wins all around the world that continue to fuel faster revenue growth. And yet, as good as all this is, we know the team's CSG isn't even close to reaching our fullest potential.

Speaker 1: With that, I'll turn it over to High to provide more detail on Q1 and revisit our 2023 guidance targets.

Speaker 2: Thanks, Brian . Let's walk through our Q1 2023 financial results, and then I'll wrap up with some conclusions. On July 11, we generated $299 million of revenue.

Speaker 2: which represents 13.0% year-of-year growth, all of which was organic. This strong organic revenue increase was primarily triptotive, the closure of certain deals.

Speaker 2: increased payment volume, conversions of customer accounts onto CSG solutions, and other ancillary services.

Speaker 2: As you mentioned on our Q4 earnings call, some of the revenue uplift we recognized in Q1 was related to the timing of certain deals flipping from Q4 2022 into Q1 2023.

Speaker 2: When excluding these items, our Q1 revenue growth rate would still have been higher than the top end of our long-term organic revenue growth range of 2 to 6%.

Speaker 2: Our Q1 2023 non-GAAP operating income was $54 million, or a non-GAAP adjusted operating margin of 19.3%.

Speaker 2: as compared to $40 million, or 16.3 percent in the prior year. The increase in non-GAAP operating income and non-GAAP adjusted operating income margin percentage can be mainly attributed to the higher revenue and the associated operating leverage.

Speaker 2: Moving on, our non-GAAP adjusted EBITDA was $67 million dollars for Q1 of 2023, or 24.3% of revenue excluding transaction fees.

Speaker 2: as compared to $56 million, or 22.9%, in Q1 of 2022. Lastly, our Q1 2023 non-GAAP EPS was $1.04, as compared to $0.86 in the prior Q1, which represents 20.9% year-over-year growth.

Speaker 2: The increase in non-GAAP EPS is mainly due to the higher operating income in the quarter offset by higher interest expense.

Speaker 2: non-GAAP EPS is mainly due to the higher operating income in the quarter offset by higher interest expense and foreign currency movements.

Speaker 2: Turning to slide 12, I'll go through the balance sheet, our cash flow generation, and shareholder returns. I'll go through the balance sheet, our cash flow generation, and shareholder returns.

Speaker 2: Our Q1 2023 cash flow from operation was $15 million as compared to cash outflow from operations of $6 million in Q1 of the prior year. Further, we had non-gap free cash flow of $7 million in Q1 of 2023.

Speaker 2: as compared to $16 million of free cash outflows in Q1 of 2022.

Speaker 2: The primary driver of this increased cashflow performance was favorable working capital changes driven by accrued employee compensation and deferred revenue.

Speaker 2: Plus, as a reminder, historically our 2-1-3 CASL performs tends to be the low point of the year.

Speaker 2: Moving on, we ended the first quarter with $168 million of cash and short-term investments.

Speaker 2: That, along with our outstanding debt at March 31, 2023, results in $276 million of net debt.

Speaker 2: And our net debt leverage ratio sits at 1.0 times.

Speaker 2: As a reminder, we currently have a capital structure that is 100% floating rate, but continues to explore potential ways to balance and optimize our exposure to interest rate volatility.

Speaker 2: Moving to the bottom right of the slide, we declared $9 million in dividends during Q1 of 2023.

Speaker 2: During Q1 of 2023, we did not repurchase any stock but have repurchased $72 million over the last 12 months. We fully anticipate repurchasing at least enough shares in 2023 and each future year to offset, at a minimum, dilution from employee stock compensation. Turning the page.

Speaker 2: I'll revisit our 2023 financial guidance targets.

Speaker 2: Put simply, we are reiterating all 2023 targets. Given our strong Q1, we are now forecasting first half revenue and non-GAAP adjusted operating margins to be slightly stronger than our second half. Further, as we signaled on our February earnings call, we anticipate our Q1 revenue to be the strongest of the year due to timing of a few profitable license fields which moved out of Q4 2022 and closed in Q1 2023.

Speaker 2: In addition to revenue, we now anticipate our Q1 results to be the strongest quarterly results of the year for certain metrics, including non-GAAP adjusted operating margin, non-GAAP adjusted operating margin percentage, non-GAAP adjusted EBITDA, both in actual dollars and as a percentage of revenue less transaction fee.

Speaker 2: and non-GAPEPS. And, as we signaled on our February earnings call, we continue to anticipate Q2 being a low point of the year on profitability metrics.

Speaker 2: as our annual merit increases begin to have an impact as well as the normal timing of our revenue bill throughout the year.

Speaker 2: Going forward, given the challenging inflationary environment, CSG will continue to relentlessly prioritize every investment we make.

Speaker 2: Going forward, given the challenging inflationary environment, CSG will continue to relentlessly prioritize every investment we make and be disciplined in the allocation of resources.

Speaker 2: Innovation and adherence to risk-reward frameworks with continuous learning are two cornerstones of how we run our business.

Speaker 2: We remain devoted to a disciplined approach to managing our capital. In conclusion, our business is well positioned with a strong sales pipeline, a high-quality customer base, and visibility above 90% of our expected 2022 revenue.

Speaker 2: We remain committed to accelerating and diversifying our revenue growth, which may include closing and integrating disciplined value-adding acquisitions. We believe this approach, combined with our consistent capital distribution, will serve our shareholders well.

Speaker 2: With that, I'll turn it over to the operator to facilitate the question and answer session.

Speaker 3: Thank you, Mr. Tran. Ladies and gentlemen, at this time, if you do have any questions, simply press star 1. And just a reminder, if you do find that your question has already been addressed, you can remove yourself from the queue by pressing star 1 again.

Speaker 1: We'll take our first question this afternoon from Matt Stotler of William Blair. Hey, gentlemen. Thank you for taking the questions. Maybe just to start off with, we'd love to get some more color on your pipeline for new products and how it's developing in this environment, specifically Exponent and Forte. Any color you can give on overall demand here, both top...

Speaker 1: all strong double digit growth. And with what we see in the pipeline of just a steady stream of new deals, a growing pipeline and good conversion, we have good expectations that that will continue into the remainder quarters of this year. A big focus for us in digital CX is a couple things one.

Speaker 1: just continuing to be a deal machine where we expand existing customers and we continue to get new logos in North America. A big new area for us is given the success we've had in North America with CSG exponent Ignite, we're actually taking a global with more of a focus on Europe . There we'll both have direct sales and working with channel partners.

Speaker 1: to try to get more amplification of our sales force to keep it going. So, you know, on the digital CX side, we like what we're seeing a lot, and we just have to continue to perform well, which we fully expect to do. On payments, it's a combination of several things. One, we're seeing a lot of changes in the market.

Speaker 1: ongoing good sales wins in these high-recurring verticals that we just perform well and working with ISV channel partners to get more pull-through and just seeing increased transaction volume and again we expect strong double digit organic growth to continue based on the sales pipeline that we're seeing.

Speaker 1: Kind of in the core business, you can see it in our big two cable companies. We continue to grow nicely from a variety of factors. And then in global telecom in the CSP space, we just have to continue to win, deliver, and convert, and bring value. And then that will actually help contribute to great referenceability for more wins.

Speaker 1: Got it. It's very helpful. Maybe as a follow-up to that, just on the partner ecosystem here, obviously you mentioned the ISC channel for payments and more broadly when you're looking outside the US. Could you just double-click on partner contribution at this point, where you're at in terms of how partners influence deals?

Speaker 3: and where you're at in terms of enablement as you think about additional opportunities for partner engagement going forward.

Speaker 1: Sure, I'll break it across different, maybe customer segments, market segments. I would say in the cable and global CSP space, we work with partners sometimes, but what we're seeing more is that they want more of the product vendor and supplier of platforms to kind of bring that domain expertise.

Speaker 1: They want to simplify their business process. They want to reduce the amount of customization and complexity. So we will work with partners, but I would say it's much more of a direct sales approach. In the Digital CX, I think there's a big opportunity to work on these industry vertical specific solutions where there's other brands that have...

Speaker 1: you know, more domain expertise, more brand credibility from the other offerings and products they offer to those verticals. And we think that there's a big opportunity. I would still say it's still a majority coming from direct sales in the digital CX, but I think you could see that begin to morph. In payments, it's actually more kind of a good combination.

Speaker 1: We have always sold with our cloud platforms through ISV partners. They can take our full stack or we have a modular approach where they can pick and choose which modules integrate with what they're doing. So it's always been a very channel friendly model. And we've been trying to layer on more direct sales. There you see more of a good combination in the mix between the two. Net, net, we can do a lot more with channel though.

Speaker 3: Very helpful. Thank you for saying the questions.

Speaker 3: very helpful. Thank you for saying the questions. Thanks Matt.

Speaker 1: Thank you. We go next now to Matthew Erigan of Benchmark. Oh, thank you. It kind of echoes back to what I think Brian McKinsey background, but the report you put out on the state of the customer experience, you know, really talked about, you know, getting more monsterable ROI and with digital transformation.

Speaker 1: Can you talk about how it's getting?

Speaker 1: easier to demonstrate to customers, to the economics, rather than people having to take a leap of faith on products like Exponent. And you also talked about metaverse monetization, which doesn't sound nearly as chic as it did 18 months ago. But it sounds like you have something.

Speaker 1: fairly real there on the virtual store front. And I know that you can probably talk about this on for a while, but I must just get your salient points. Thanks.

Speaker 1: Thanks, thanks, Matt. Really appreciate it. Appreciate you joining. This is one COVID actually helped us in this regard in terms of the world has gone digital and every almost every business in every vertical in every region of the world just realizes they've got to make it easier to sell on board provide next best action to expand loyalty.

Speaker 1: The number one or number two was we've got a major initiative around digital CX, more agile, easy to do business, reduced costs to drive bottom line. What could you do to help us in that? So I think one, there's just a market trend that says the world has gone digital, they need solutions. That would maybe be the first point. The second point would be...

Speaker 1: everybody's trying to figure out how to reduce silos and harness the data they have to get more share of wallet to improve their NPS and by having a solution that's SAS and modular like we have with exponent

Speaker 1: we can go in and say, here's the value we can bring. We can have you up and running in less than one to two months. And it's a fairly low price point to get in. And it'll pay for itself in very short order. So that proven ROI, that out of the box kind of quick implementation, I think makes it easier and reduces the barrier to deploy. Because they can experiment and deploy in one line of business.

Speaker 1: and then reduce the silos and then expand all lines of business quickly after they proven it without a giant check. And I think that reference ability, that success, is then leading to more the increased sales pipeline and more wins. So for us, it's really a land grab at this stage and we've just got to continue to accelerate.

Speaker 1: of our sales, our deployment, our brand recognition, which go back to the question from Matt, the first question, which means we should do more with channel and leverage the amplification that other partners could bring us.

Speaker 3: Great. Thanks, Brian . Congratulations on the quarter. Thanks, Matt. Thank you. We'll go next now to Brett Knoblauch at Cantor Fitzgerald.

Speaker 3: Hey guys, thanks for taking my questions and graphs on the quarter. It seemed like you guys are extremely positive on pretty much every aspect of the business right now is really execution on all cylinders. But you kind of left a lot of your kind of four-year outlook guided the same.

Speaker 3: and what's happening in maybe CX and payments, and some of the agoncillary services are different kind of industries that you've been expanding into. Yeah, I mean, I think that this is how I get to be with you today. I think that right now it's still early in the year. Obviously, we're feeling really good about our performance in the first.

Speaker 2: robust revenue growth on a year-to-year basis. So that gives us great confidence in our ability to reiterate our guidance. But with that said, there's gonna be some tailwinds and some headwinds as we get into the balance here. I think we'll have greater visibility in terms of how we're gonna perform for the full year.

Speaker 2: when we meet again next quarter for sure. And then on the expense side, as we mentioned, you know, those inflationary pressures are still with us, right, and these are the things that we're managing through, but once again, given that recurring nature of our business, and once those inflationary elements.

Speaker 2: Hi, thank you very much for taking questions. It was very strong, results obviously, historically, you know, very strong. Just piggybacking on the last question just a little bit just in terms of keeping the guidance the same. You talked high about, you know, the stuff that you anticipated coming from 4Q slipping into 1Q.

Speaker 1: Were there any pull forward maybe in things that you had expected to be in 2Q or beyond that you were able to close earlier? In other words, is that part of what's contributing to keeping the guidance the same or is it a matter of, hey, this is actually kind of what we were expecting and that's pretty much it.

Speaker 2: Yeah, I think it's just a matter of this is kind of what we were expecting. In fact, you know, we performed. We knew we were going to have a strong first quarter. It's a little bit stronger than we thought. And hence, we did alter our guidance lightly, saying that the first half of this year will be slightly stronger than the second half this year, given our current forecast. But there was no acceleration of opportunities from Q2 and to Q1 here.

Speaker 1: Yeah, maybe the only thing I would add to both those, hey, Shlom, I hope you're doing well, thanks for joining, is we love the start we got in Q1, and now the key, but there still are macroeconomic pressures. We love the demand signals we're seeing in the market across all the different markets.

Speaker 1: looking at how they can conserve, how they can do other things. And so I think it's really, we want to see another strong quarter in Q2, Q3. And that's what we want to continue to perform against and find that balance.

Speaker 3: Mr. Rosenbaum, did you have anything further, sir?

Speaker 4: Here in the response, we'll take our next question now from Tim Horan of Oppenheimer.

Speaker 3: Hi, guys. Great quarter. Can you give us some color on how Q2 is going so far, if you don't mind? We always give you the phone numbers.

Speaker 2: Yeah, I mean, I think that, you know, it's once again early yet in the quarter, but we, you know, we continue to see positive momentum across all of our different, you know,

Speaker 2: solution set regarding some great adoption and so far so good.

Speaker 2: set regarding some great adoption and so so far so good as expected.

Speaker 3: Two more if you don't mind. Some investors are a little concerned that your customers are under a little pressure and they're trying to cut expenses and they might cut what they spend on you.

Speaker 3: you don't mind. Um, some investors are a little concerned that, you know, your customers are under a little pressure, and they're trying to cut expenses, and they might cut what they spend on you. But, you know, obviously, it's kind of

Speaker 4: you know, improving any color on the ROI there.

Speaker 1: on because they're above 10 percent. On an overall percentage of their spend, we are a very small percentage of what they do. And so what we do spend a lot of time talking about is not just what they spend with us, which is kind of like what's above the water level on the iceberg, but there's huge spend that they have internal with other vendors below. And what we really spend a lot of time saying is...

Speaker 1: we can actually help you save money, we can help you be more agile, we can help you improve your customer experience and your loyalty and the market share you get from your end customer by doing more with us. And as long as we continue to bring those kinds of proactive ideas, it does exactly what you were talking about in your question, which says we can bring value, therefore it has a great payback, therefore it's a good spend, it has a good ROI, and it could accelerate our sales.

Speaker 1: that pressure. So we got to prove every day that we can bring them more value by doing more business with us than competitors or internal spend. So it's still a it's still an effort to do. I would say on the second part of your question around ROI I think in the core cable and telecom space I think the ROI are still similar to what they've been. I don't think there's been a fundamental shift.

Speaker 1: What I do think has changed, more competition, more commoditization of voice and data, more need to recoup the big investment in 5G. Therefore, if you could bring value-adding ideas to help them put more money in their pocket by doing those things like agility, leveraging platforms, reducing complexity and customization, then that's a net benefit to us. We gotta prove it every day. I'd say the sales cycles are similar. Where I think sales cycles have gotten shorter is on the digital CX because of what we're...

Speaker 3: kind of consolidate that down onto a wireless platform or more the legacy aligned platform and you know would you guys be able to participate in over-the-top video offerings that are you know bundled together by you know cable companies or other DNOs or others? Yeah I think this is one that's obviously been a trend for for quite a few years.

That's why we invested in a pure cloud platform in Ascendant. We're one of the leaders in anything related to Overtop and Video. And we're proud with all the deployments and customer wins we have on that. The fact that we serve all the triple, the majority of the triple play customers in North America, and a huge market share on that we think gives us a leg up. And we've had three decades of experience.

with these customers is proving we can bring value or mission critical we don't let them down and therefore they can do more with this and it's nice because we don't have 100% of their business in some cases on wireless and others and we see that as an opportunity where if you perform well you bring a more value your mission critical and don't disappoint.

there's a net benefit that can come over time, but that tends to be a long game, not just a short game. Thank you. Thanks so much, Tim. Thank you, and just a reminder, ladies and gentlemen, any further questions, please press star one at this time.

Thank you for letting me back in. It's a quick one for high. Just, there's a lot of cash on the balance sheet. Why was there a need for borrowings of 30 million in the quarter or is it the location of the cash in terms of stuff you're doing internationally? You could just give us a little explanation there. Yeah, I think at the combination of location of the cash, as well as just timing of the cash.