Alarm.com Holdings Inc. Q1 2023 Earnings Call

Speaker 2: Four.

Speaker 3: Good day, and thank you for standing by. Welcome to the Alarm.Conference Quarter 2023 Earnings Conference Call.

Speaker 2: Goodbye.

Speaker 3: At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star-one-one on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star-one-one again.

Speaker 3: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today.

Speaker 3: Matt Tharpman, please go ahead.

Speaker 4: Good afternoon, everyone, and welcome to Alarm.com's first quarter 2023 earnings conference call. Please know that this call is being recorded.

Speaker 4: Joining us today from Alarm.com, our Steve Tundle, our CEO , Steve Valenzuela, our CFO , and Jeff Badell, President of our Ventures Business and Corporate Strategy. During today's call, we will be making forward-looking statements, which are predictions, projections, estimates, or other statements without future events.

Speaker 4: These statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.

Speaker 4: We refer you to the risk factors discussed in our quarterly report on Form 10Q and our Form 8K, which will be filed shortly after this call with the SEC, along with the associated press release.

Speaker 4: This call is subject to these risk factors and we encourage you to review them. Alarm.com assumes no obligation to update any forward-looking statements or information, which speaks as of their respective dates. In addition, several non- GAAP financial measures will be used on this call. A reconciliation of the gap in non- GAAP measures can be found in today's

Speaker 4: first quarter was $135.4 million, resulting in a non-GAP growth rate of 14.9% over the last year, excluding the VIN.

Speaker 4: Our adjusted even in the first quarter was $30.6 million.

Speaker 4: I'm going to touch on a couple of things in the core alarm.com business and then I'm excited to have Jeff Badell, the president of our Ventures Business and Corporate Strategy, joining the call today.

Speaker 4: I'll be looking to include Jeff or Dan Kursner, the president of our platforms business, in future quarterly updates so that we can provide a deeper review of some areas of the business.

Speaker 4: I'll start things off with a few takeaways from our recent presence at ISC West, the largest trade show for the physical security industry.

Speaker 4: Alarm.com's presence this year reflected our increasingly diversified business profile with alarm.com, open eye and shooter detection systems each have in a dedicated presence.

Speaker 4: Overall attendance at the show returned to pre-pandemic levels.

Speaker 5: The commercial market was a significant theme during ISC West.

Speaker 5: Most of the Alarm.com service provider partners that I met were expanding their use of our commercial services.

Speaker 5: Recently released products have also helped our partners become better at targeting our platform at specific verticals where they are developing expertise.

Speaker 5: One of the things we highlighted was our expanded range of third party camera support.

Speaker 5: Our video solution will be able to support 80 to 90% of third-party cameras that have been installed in mid-sized and large commercial settings since 2018.

Speaker 5: With a more flexible video solution, our service providers can support businesses that want the benefits of our integrated video solution without the cost of replacing existing installed video cameras.

Speaker 5: As we've expanded and enhanced our access control solution, it continues to gain momentum. During the first quarter, access control door installations increased 45% over the first quarter of last year.

Speaker 5: At ISC, we introduced the new Access Control product called Cell Connector.

Speaker 5: Self-connector is a door controller that leverages our work with 4G, LTE, cellular networks to connect directly to the Alarm.com platform where system data is aggregated.

Speaker 5: Bypassing the customer's local network reduces installation complexity and enables an affordable and effective access control system.

Speaker 5: For example, larger, more sophisticated commercial customers and corporate accounts typically have rigorous approval processes for third-party devices to connect to their local area network.

Speaker 5: Cell connector, significantly streamlines the sales and installation process and makes it easier for these customers to acquire an alarm.com system.

Speaker 5: In the residential market, our service providers continue to report steady demand.

Speaker 5: Despite the macro environment, we've also continued to expand our partnerships with builders.

Speaker 5: New RMR creation from our HomeBuilder program increased 14% during the first quarter as compared to last year.

Speaker 5: We also continue to expand our services to fully address the long-term opportunity we see in the residential market.

Speaker 5: A recent report by Strategy Analytics estimated that about 40% of households with an active, professionally monitored security system are still limited to traditional system capabilities that do not include any smart home capabilities like those that alarm.com service providers offer.

Speaker 5: Our goal is to maintain and build on our service providers strong competitive position so they can steadily expand their account base as the market continues shifting to smart home systems. Shifting to our operations during the first quarter, we continue to focus on driving increased efficiency and focus.

Speaker 5: which will allow us to perform against our corporate EBITDA objectives for the year.

Speaker 5: We did this without undermining the R&D investments that drive future opportunities and feel like we have struck the right balance overall.

Speaker 5: We will continue to invest in innovation to continue to build the company for the future while also maintaining discipline through profitability.

Speaker 5: Overall, I'm pleased with our first quarter results. Our performance reflects our continuing momentum and the significant and diverse opportunities that we are addressing. I want to thank our service provider partners and our team for their hard work and our investors for their continued trust in our business.

Speaker 5: Now hand things over to Jeff, provide a little more detail on two of the areas he oversees. Jeff?

Speaker 4: Thanks Steve. It's great to speak with everyone today and I look forward to getting to know many of you.

Speaker 4: I'll start with an update on OpenEye and their cloud-managed video surveillance solution for the commercial market.

Speaker 4: Video Surveillance is a critical system for commercial businesses.

Speaker 5: Today many businesses have deployed video systems but using legacy analog devices.

Speaker 4: A major technology shift is underway, moving from these older on-premises analog systems to digital devices at the edge coupled with cloud-based solutions that form the foundation for delivering robust AI-powered video analytics.

Speaker 4: We continue to invest in the expansion of OpenEye's platform and business to capture share as this technology shift unfolds.

Speaker 4: Our recent acquisition of Ventura expands our AI program and will accelerate the development of video analytics capabilities across our platforms, beginning with delivering innovative models to the OpenI platform.

Speaker 4: This quarter, OpenEye launched a few new solutions enabled through its open ecosystem architecture.

Speaker 4: The OpenI platform allows data from third party devices to be married to OpenI video data to generate alerts and enable forensic search capabilities.

This allows users to find video content based on external data inputs.

the point of sale systems. Sales connect triggers real-time alerts for point of sale's exceptions, such as voids, refunds, and overrides, and retrieves the corresponding video of the transaction. Sales connect is sold as an additional SaaS module and significantly strengthens open-ized position in the retail grocery and quick serve restaurant verticals.

Next, open eye launching integration with third party environmental sensors, which detect smoke from cigarettes and vapes, monitor temperature, humidity, and air quality, and detect sound anomalies.

This integration enables OpenI to associate video with more environmental events, generating as an example, vap alerts, and providing valuable capabilities that have been heavily requested by secondary schools.

Shifting to Energy Hub, I want to touch on a recent milestone. Recall that Energy Hub provides a SAS platform for electric utilities that is known as a distributed energy resource management system or DERMS.

The energy of solution allows utilities to manage grid load by controlling demand side management, leveraging smart thermostats, EVs, connected EV chargers, and other grid-edge devices. You

Energy Hubs proprietary artificial intelligence and machine learning models allow utilities to fine-tune loads, shape on the grid, and to balance energy demand with supply. Energy Hubs recently announced that it is the first-term platform to exceed 1 million devices under management. Collectively, these devices provide 1.35 gigawatts of flexibility.

to North America's electrical grid, which is greater than the generation capacity of a medium-sized nuclear power plant.

Extreme weather events like heat waves, the rising adoption of EVs, and the intermittent nature of many renewable energy sources are making grid stability increasingly challenging and complex.

Utilities around the country are actively developing load flexibility strategies and investing in terms of technology.

Energy Hubs platform is directly addressing these macro trends.

To sum up, we've made continued progress with Open I and Energy Hubs businesses. They are important to the expansion of our addressable markets and our two key components of our overall growth strategy.

Steve Valenzuela will now cover our financials. Steve?

We've done Zuella, we'll now cover our financials. Steve? Thanks, Jeff.

I'll begin with review of our first quarter 2023 financial results and then provide our updated guidance before opening the call for questions.

First quarter staff from licensed revenue of 135.4 million grew 9.9% from the same quarter last year.

excluding Vibment License Revenue, first quarter 2023 non-GAP staff and license revenue grew 14.9% year-over-year on a comparable basis.

Staff and license revenue includes Connect Software License Revenue of approximately 6.2 million for the first quarter, down as expected from 7.1 million in the year ago quarter.

Our SAS and license revenue visibility remains high with a revenue renewal rate of 93% in the first quarter in the middle of our long-term range.

Ardor another revenue in the first quarter with 74.3 million.

Down from 82.2 million in Q1 2022 mainly due to fewer cellular module sales from the end of the 3G upgrade cycle and fewer camera sales as service providers work down their immatory levels.

Total revenue of $209.7 million for the first quarter grew 2.1 percent year over year.

Staff and License Gross Margin for the first quarter was 85.5% Down slightly from 86.3% in the year ago quarter.

Hardware growth margin was 23.9% for the first quarter, consistent with historical trends, and up from 11% in Q1 2022, mainly due to improving supply chain dynamics, and favorable product mix with more commercial offerings.

Total growth margin was 63.7% for the first quarter, up from 56.1% for Q1 2022, mainly due to the improvement in hardware margins and a big shift to SaaS revenue.

Turning down upper to expenses.

R&D expenses in the first quarter were 61.9 million compared to 51.5 million for the first quarter of 2022.

mainly due to an increase in headcount and related compensation expenses.

and reflecting the cost of acquired teams.

We ended the first quarter with 1442 employees in R&D, up from 892 employees in Q1, 2022.

Total headcount increased 1,858 employees for the first quarter compared to 1,565 employees in the year-ago quarter.

Sales and marketing expenses in the first quarter were 26.6 million or 12.7% of total revenue compared to 23.2 million or 11.3% of revenue in the same quarter last year. Mainly due to a priesthood count.

the $24 million in the year ago quarter mainly due to acquisition costs, increased personnel costs, and accounting fees.

G&A expense in the first quarter includes non-ordinary course litigation expense of $800,000 and acquisition related cost of $800,000.

The first quarter Gap Net Income was 14.4 million compared to Gap Net Income of 9.1 million for Q1 2022. Non-Gap adjusted EBIT down the first quarter was 30.6 million compared to 29.9 million in Q1 2022.

Non-GAP-adjusted net income was 22 million or 41 cents per diluted share in the first quarter compared to 21.3 million or 39 cents per share for the first quarter of 2022.

Down from 622.2 million at December 31, 2022, mainly due to payments for estimated federal tax, acquisition costs, and employee annual bonus payments.

Turning to our financial outlook for the second quarter of 2023, we expect staff from a licensed revenue of 137.2 to 137.4 million.

For the full year of 2023, we now expect SAS and license revenue to be between $555.9 to $556.5 million, up from our prior guidance of $551.5 to $552.5 million.

We are projecting total revenue for 2023 of 855.9 to 881.5 million increased from our prior guidance of 851.5 to 877.5 million, which includes estimated hardware and other revenue of 300 to 325 million.

We estimate that adjusted EBITDA for 2023 will be between 120 to 125 million compared to our prior guidance of 115 to 125 million.

We expected just to deput the off for the second quarter of 2023 to represent approximately 23 to 24% of our annual guide.

Non-Gabb net income for 2023 is projected to be 84.6 to 87.5 million or $1.55 to $1.60 per diluted share up from our fire guidance of 79.7 to 86.5 million.

or $1.44 to $1.57 per diluted share.

EPS is based on an estimate of 54.7 million weighted average diluted car?. ?abande K museum digital

We currently project our non-GAP tax rate for 2023 to remain a 21% under current tax rules.

We expect full year 2023 stock based compensation expense of 54 to 56 million.

In summary, we are focused on executing on our strategic business plan and investing in our log-term strategy.

while continuing to deliver profitable growth.

And with that, operator, please open the call for Q&A. Thank you. As a reminder to ask a question, press star 111 on your telephone and wait for your name to be announced. To withdraw your question, press star 111 again.

that operator, please open the call for Q&A. Thank you. As a reminder to ask a question, press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. Please stand and buy what we compiled the Q&A roster.

Our first question comes from Michael Funk with Bank of America. Your line is open.

Hi, yeah, this is Matt Bullock on for Mike's fun. Thanks for taking the questions. It was great to hear all that detail about some of your AI products. It was hoping you could give us a little bit more color on how we should think about the artificial intelligence roadmap and then any additional detail on future monetization in terms of whether or not you're going to leverage it as primarily a product enhancement or.

as a vector for new logo additions? Hey, Michael. This is Steve speaking. Well, I think it's one of the reasons we actually did the evidence of our commitment to that arena, the venture acquisition during the quarter that was recently announced.

where we picked up business expansion on our...

AI video analytics team of about 35% in terms of headcount. So in terms of the overall roadmap, I think any company that's not sort of looking universally at everything they're doing, both from an operating standpoint but also from the perspective of user interfaces that they provided the customer would be sort of...

not looking at things the correct way. So we're looking at essentially everything we do, both internally in terms of processes, but also in terms of the way we present UIs to the customer. And of course, we've got a pretty long history, though, on the video analytics side of using AI to improve the insight that we deliver to the customer. And we would expect to continue.

And then just one quick follow-up. Have you noticed any material changes or subtle changes in the competitive environment following some of the M&A activity of competitors?

I haven't really noticed any changes in the competitive environment. I am imagining probably what you're referring to is one of the recent...

more significant acquisitions where a utility or an energy company acquired a service provider that competes with many of our dealers. I haven't heard yet that there's been any sort of change though in the overall competitive dynamic and business as usual so far.

Excellent. Thanks very much. I'll pass it on. Yep. Thank you. One moment. Our next question comes from

Sikheet, Kalea, from Barclays, your line is open. Okay, great. Hey, good afternoon, guys. Thanks for taking my questions here.

Steve Trundle, maybe for you, just always appreciate kind of just updated thinking that you have on ADT and them as a customer and how things are changing there. And so maybe the question for you is, can we just talk a little bit about any revised thinking on how you're thinking about command and control.

and ADT subscribers kind of starting to roll in. Everything that you can give us just on how depth sort of rolling into the model, if at all.

Sure, that's okay. Good question. And first, just at a macro level, we continue to collaborate with ADT on multiple fronts.

We have, you know, I think a great relationship there. I'm very pleased with the record sort of attrition levels that they're getting as a You know higher and higher percentage of their base are on a smart platform like command and control So things are generally going I think relatively well. We watch of course Exactly what they're

you know, as much as we can, what they're presenting to the public markets about their internal plans.

related to their work with Google. And I think we commented publicly at the end of Q4 that we anticipated an increased use by ADT of their new platform. At the end of Q2 that was based on

what Jim and the team had presented, and maybe we're being a little conservative in the model, but they've had a couple of reports since then, and I'd say we're probably now looking really more for that to be something that maybe happens towards the end of the year in Q4. And I want to remind people, of course, that there will be lots of areas that the partnership with ADT is pretty broad, so there's a lot of areas that we're looking at that we're looking at.

models accordingly. Got it. That's super helpful. Steve Valenzuela, maybe for you, great to hear just the, you know, the operational rigor, right, of the company. You know, I think there was a reference made just to some cost savings. I just wonder if you could just talk about some of the cost savings that you folks started this quarter. You know, how much you sort of expect to save annually and whether we should think about those being reinvested or some of those things that you need started out from the magic team. What did I say about this? Some

or maybe falling to the bottom line. Yes, Zach, good point. I mean, we did a little cost rationalization, really. And if you think about it, most companies actually look at, you know, look at their cost structure, look at their headcount every year and kind of make adjustments. So it was fairly minor on our side. And it was happening in the early part of 2018.

We continue to invest, so we're continuing to hire employees, so the savings from that small reduction really is going to translate into continual hiring. So we reflect that into our guidance, so we're going to continue to hire, especially in the R&D area, and so that's really factored into the guidance we've provided for the quarter for the year. Very helpful guys, thanks so much.

to hire employees, so the savings from that small reduction really is going to translate into continual hiring. So we've reflected that into our guidance, and so we're going to continue to hire, especially in the R&D area, and so that's really factored into the guidance we provided for the quarter for the year. Very helpful, guys. Thanks so much. Thank you.

Our next question comes from Matthew Fall with William Blair. Your line is open.

Hey, great. Thanks for taking my questions. First, I wanted to ask on the commentary around access control and that 45% year over year growth rate of door installations in the first quarter. I'm guessing that's higher than what you've been seeing and that's why you called it out, but maybe if you just give us some context around that number.

And then, you know, if so, you've been clearly improving that product for some time. If you're seeing an inflection there, what's helping to drive that? Thanks. Yeah, good question. I called it out because we were pleasantly, I guess, surprised by the uptick on access control installation velocity.

The the business is not is not yet the largest business at along that company stretch, but we're Continuing to grow there. I think we I think we saw what happened in the first quarter. You know, we got We had some supply chain issues in that category the last two years again

100,000 doors right now on the access control platform that'll obviously continue to grow But just to give you a feel for the size of that business at the moment Looking forward. I also talked about cell connect so what we're doing there is enabling the access control solution to

be more easily installed by service providers, and we would hope that that further puts some wind in the sails there. Great, and then on the commercial opportunity more broadly, you mentioned at ISC West that partners...

we're expanding the use and you know, partly you've released new services that help target specific verticals, some of the ones you call that with OpenI, is that an important piece of the strategy going forward to gain more traction and commercial? Is that maybe something you feel you've been missing as some of those vertical specific functionality to help drive adoption in that market?

I think so. And Jeff spoke about it a little bit when we talked about OpenI, but I feel like the closer you get to a...

ready to install a sort of vertical solution that has a set of key integrations with it. The more sort of differentiated your service provider can be in the sales process. We've seen that in the M.D.U. business, for example, point central. We have an integration with the N.D. called U.T.R. and that helps create some pull-through.

there where we can do self guided tours day one. On the OpenEye side they made some strides during the quarter to add certain retail and analytic integrations that really not just retail, quick serve restaurant integrations that really make the solution.

It's a great problem to be a friend of software business. You want to have really solutions that are vertically inclined and be, I think, it'll just make the offering more relevant. So it isn't focused.

Great. Thank you.

Great, thank you.

and if Jeff wants to weigh in on this. We're considering the macro and the growth opportunities. So first, how are you allocating resources across the four key through a various commercial video software, international and the adventure? And as part of that question, you had plans to expand the support for security, control panel, international this year.

So how is that coming along? And would you say you'd integrate the ones that really open up the opportunity at this point? Yeah, so good question. You said Steve, there's one Steve that tends to speak probably too much, but I'll take it. In terms of the allocation of resources across the different growth areas, I mean, I think

We're basically looking at the long-term SaaS growth potential in each domain, modeling that out, looking at what we need to do to either compete or to remain more sticky with our service providers and allocating resources accordingly. In terms of some of the efficiency shaping we did earlier this year, I would say there was generally a move to pay for some. We're looking at the long-term SaaS growth potential in each domain, modeling that out, looking at what we need to do to either compete or to remain more sticky with our service providers.

The investment we're making in some of the areas that aren't growing as fast and reallocate some of that investment to commercial to video to international and then to our other segment business, especially energy hub. So we're favoring these growth areas. We're willing to live with

negative cash contribution for a meaningful period of time, so long as we're getting, or we can see daylight on, you know, 25% plus growth rates in these domains, and that's what we're seeing so far. So as they come to scale, we would expect them to continue to contribute.

to the overall company's growth and therefore they warrant sort of excessive, if you will, excessive resource allocations.

With regard to the international piece specifically and comments I made last quarter about a desire to

support a wider array of equipment there. We did complete in the first quarter an acquisition of a company called EBS based in Europe that has been in the business for some time of building universal communicators that work with a lot of the legacy.

control panels that are already installed by our international dealers. That's always been a soft spot for alarm.com. We come in...

They love the solution, but they may have a base of 100,000, 200,000, whatever number of customers that are working on older equipment. So what we're doing there is really taking that universal communicator technology and integrating that into the platform so that we can get back to some of those legacy customers where the cost.

So I think that's, we're not, in terms of timeframe for that, you know, we just finished that in Q1, finished sort of the deal and now there's a lot of wood to chop and we're probably into the third quarter before we're actually able to go to market and say we're supporting all the controls that we would like to....

First, are you seeing that through your partners? And secondly, could you just comment on the makeup of the business today versus previous macro spending pullbacks, like say in 2008, and the resiliency you see now in the business? Sure. The first part of the question is are we seeing an impact?

customers not paying. So obviously our customer is the service provider not the the end tumor and most of our service providers are pretty robust and I don't think we've seen any kind of uptick in bad debt. Have we, at least not at a meaningful level? No, not at a meaningful level. Yeah, in terms of are we hearing anything anecdotally, ADT is really the only company that reports publicly on a root.

Kind of the makeup that this is today like Versus you know versus like an oh wait a big pull back happen the housing prices. Yeah good question I don't think we've seen kind of things be a quite as dire as maybe they seemed in 2008 I'll just remind folks that generally in a bad market

Either you generally get fewer moves and that results in less attrition. You just get fewer, you may get a slight headwind in terms of new accounts created at the same time. I'd say we're seeing about the same. I mean we were pleasantly surprised. The housing market is very hard to figure out right now.

compressed than 08 or 09. All right, thanks so much for taking our questions. Much appreciated. Thank you. Thank you. Our next question looks like it comes from Darren with Ross. Your line is open. Hey, guys. Thanks for taking my questions. First one, I don't know if you mentioned what were the growth rates on the commercial business and international in the quarter. And I guess, Steve, your comments about ISV West, like are you more positive, neutral, sort of coming out of that conference as it relates to commercial business.

gave those metrics that we don't typically give it every quarter, but they're still running at about, both at around 25% growth year over year, doing quite well.

Yeah, and the second question coming out of IAC West, how do we feel about commercial?

I think we've been feeling, there's definitely a sentiment now where a wider and wider array of service providers have at least a portion of their business allocated to commercial and small business. So there seems to be a bit more of a green field there. A lot of those entities...

You know, I'd say we brought sort of the mobile and smart experience to the residential world Three four or five years before it really hit in the commercial world that a lot of the stuff we've been doing For a while putting you know control of your home or now in the case of commercial control of the enterprise in your hand with the mobile app

is a little bit newer in the commercial space. So there are more folks looking to be in the market, be upgrading commercial customers, be upgrading SMB customers. And then I'm enthusiastic because I thought our teams executed pretty well at the show, or had good things to show, had good booth traffic. So.

I'm not, you know, I'd say I was overall just pleased with the sentiment, the momentum on the commercial side and the feedback that we were getting from service providers there.

Thanks. Sure. Okay. Our next question.

This comes from Jack Coderra from Maxmum Group. Your line is open. Hi, thank you for taking my question. This is Jack Coderra calling in for Jack Mandarard. I've got a lot of great color on the commercial side of the business. Really bring the thoughtful people involved and hands on the teams when you hear Jack Mandarard and my power is resources, resources?

Last quarter you guys mentioned how ARPUs are a lot higher. You know, I was wondering if you could give any color longer term for expectations of revenue mix between residential and commercial, then I have one follow-up. The commercial this quarter was about 8.5 percent of total SAS. It was about 7 percent a year ago. So commercial certainly is growing faster than residential.

We haven't really given a longer term projection, but if you continue to see the trend, certainly commercial is growing at a faster rate. We'll be a larger and larger percentage of our SaaS revenue going forward. We haven't really broken out what that would be, though.

Okay, understood. That's helpful, Colin. And then, you know, given the macroeconomic effects, you know, I think the explanation you guys have given is, you know, makes sense. Although a little jarring, but I was wondering if, you know, you could share any other anecdotal evidence, you know, is there any effect on

residential attachments or any regions you're seeing different products or different changes in the market dynamics being affected by macro at all. Thank you so much.

Yeah, I mean, regionally there are definitely areas of strength. Those being Texas and Florida. I mean, you visit...

As examples, there are probably more, but those are two where when I go visit a service provider,

You know, they're basically we're as busy as we can be in these markets, so they're continuing to sort of See robust, you know good bus macro conditions. We've also seen strength in the last quarter in Canada We're not exactly sure Yet why but Canada has performed well

Some of the markets you might expect where you have either declining population or what not. You know, maybe not quite as strong, but we haven't seen any really dramatic.

macro level impacts thus far. I'd say probably the biggest thing is the slightly smaller footprint in terms of the number of devices that the consumer is choosing to purchase at the time of new account installation where maybe they're watching sort of their, we haven't seen a decline in activations, but we've seen them put slightly less hardware.

star 11 again. One moment for our next question.

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I'm showing no other questions in the queue. This thus concludes today's conference call. Thank you for participating. You may now disconnect. Thank you.

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