Q1 2024 Commvault Systems Inc Earnings Call

Good day, and thank you for standing by. Welcome to the CompVault fiscal year 2024 earnings conference call. This is a calamity event

All participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.

To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Melnick, Head of Investor Relations. Please go ahead.

An earnings presentation with key financial and operating metrics is posted on the investor relations website for your reference. Statements made on today's call will include forward-looking statements about Commvault, future expectations, plans, and prospects. All such forward-looking statements are subject to risk, uncertainties, and assumptions. Please refer to the cautionary language in today's earnings release and Commvault's most recent periodic reports filed with the SEC for discussion of the risk and uncertainties that could cause the company's actual results to be materially different from those contemplated in these forward-looking statements. Commvault does not assume any obligation to update these statements. During the call, Commvault's

Commvault financial results represented on a non-GAAP basis, a reconciliation between GAAP and non-GAAP can be found on our website. Thank you for joining us. Now I'll turn the call over to Sanjay for his remarks. Sanjay? Thank you, Mike. Good morning. I'm pleased to report our Q1 results met our expectations and position as well for fiscal year 2024.

Let me share some highlights. Total ARR, the metric we use to measure the growth of our recurring revenue streams.

increased 15% year-over-year to 686 million.

Our subscription ARR grew 32% year over year to 500 million.

Metallic are hypo-groult SaaS platform, grow ARR 72% year over year and now exceeds 2,000 customers.

All of these showcase the strengths of our subscription-based recurring revenue model that we've been driving to over the past several years. And we did it while delivering 22% EBIT margins and continuing to return cash to shareholders through shared repurchases.

Our strategic objective is clear, to be the leading cloud-first data protection company in the industry.

This requires constant innovation, execution excellence, and the ability to rapidly evolve with the ever-changing data protection market.

Our customers have reached an intellectual point.

Driven by four major forces that are shifting the data protection demands and expectations of the modern enterprise. One, they're experiencing unique and complex challenges on their hybrid cloud journey.

Two, customers shouldn't have to choose between a software and SaaS. At this point, it should be a natural and seamless decision with a modern, unified platform.

Three, the world of data protection and data security are converging and require customers to consider a new approach. And lastly, the advancements in artificial intelligence have opened the door to improved customer experiences and increased value.

data protection and data security are converging and require customers to consider a new approach. And lastly, the advancements in artificial intelligence have opened the door to improved customer experiences and increased value. Let's discuss each of these.

The first and perhaps most important is the industry-wide move towards the hypercloud. According to a recent report, 80% of IT leaders say that they have adopted the hypercloud nearly half of which are embracing multiple public clouds.

As a result, data is distributed across multiple environments. It's fragmented and in flight. Managing this new reality can become untenable in costs, complexity, and security delivered at scale.

To manage all of this, today's hybrid enterprises are doing nothing at all. For a patchwork of anything from basic cloud-native backup to point solutions, some SaaS, some software, each intended to solve a piece of the puzzle.

Rather than holistically simplifying and managing everything, this only increases more complexity and cost. This is where Commvault comes in.

which leads me to the second major force.

Today, customers are forced to make unnatural choices that are inefficient and unsustainable. Instead, they need the best of both software and SaaS in a single solution. Our cloud-based data protection platform does just that – has software or SaaS on the same control plane. Not only do we help customers reduce complexity, our unified platform has the best total cost of ownership and greater value than any solution that we compete against, cloud-native or software.

This is revolutionary for the industry and positions us as the company to beat within the category. And both existing and new customers are embracing this technology. I'll discuss three examples. First, we won an M365 deal with net care, a publicly traded South African health care company.

The company cited the simplicity and cost efficiency of our single platform versus the existing cloud-native solution.

as the key decision-making criteria.

Second, thesis. A SAS-based student learning system chose Commvault to drive six-figure cost savings versus its cloud-native tools.

Third, a Fortune 1000 food manufacturer and an existing Commvault software customer expanded with our SaaS solution to protect thousands of Office 365 users.

Which each of these customers, we were the natural choice given a proven mission critical capabilities, our ability to operate between technologies and workloads, our cost advantages and our capability to accommodate future cloud use cases on our platform. These examples are consistent with the trends we've seen every quarter since the launch of our SaaS platform. 40% of our SaaS customers use another combo of product.

and 30% use multiple SaaS offers. Software and SaaS are complementary and are creative to our business.

Which brings us to the third course.

Data from cryptocurrency trading firm Chain Analysis indicates cyber ransom payments more than doubled in the first half of 2023. And a report by Cybersecurity Ventures notes that cyber crime will account for 10.5 trillion in costs by 2025. Of course, ransomware is only part of the modern era pervasive autonomous threats in conjunction with other malicious data exfiltration and data destruction activities. This is increasingly driving the need for a layered security approach that includes predictive threat analytics to defend both backup and production workloads.

and ironclad cyber resilience in the case of a breach. No amount of preemptive defense can take the place of unfailing rapid recovery and no amount of security is 100% successful. The two must operate hand in hand.

Building on the early success of our track-wise cyber deception offering. In June , we offered new security capabilities across our portfolio. These were designed to help customers proactively and reactively secure, defend, and recover their production workloads while strengthening their backup infrastructure. These advanced security features are managed and delivered through the simplicity

We also expanded a security ecosystem to include product integrations with Microsoft, Palo Alto, SampleOne, and CyberArk.

while others in the industry provide limited point solutions.

Commvault offers a platform that protects and enables customers to recover both production and backup environments.

Finally, the fourth force impacting data protection is the topic that's driving an unprecedented frenzied adoption of AI across every enterprise. The rise of generative AI is ushering in a new era, one that is increasingly automated and autonomous and moving faster than one can imagine.

We've been using AI and machine learning for years in our technology and our operations. Further leveraging AI-driven automation across our platform, we can help customers rapidly recover and also constantly optimize, manage, and control every aspect of their data protection capabilities.

The bottom line is we can no longer look at each separately.

The future of our industry depends on our proven ability to offer a seamless, automated, and cost-effective approach to these hard problems.

In the fall, we'll be announcing some exciting capabilities and offerings that will further empower customers and redefine the industry.

With that, I'll turn it over to Gary to discuss the numbers. Gary.

Thanks Sanjay, and good morning everyone.

Coming off a strong finish to fiscal year 23, we are off to a solid start to fiscal year 24.

As a reminder, we have recast our P&L presentation effective this quarter, which is led by a term license software and SaaS offerings, which are now approaching 50% of total revenue.

The revenue from these arrangements is referred to as subscription.

and combining them in a single line item allows the investment community to have an enhanced understanding of our results.

Our fiscal Q1 results were driven by 11% year-to-year growth from our subscription business, which increased to $97 million as a result of the accelerating contribution of SAS revenue. Q1 for petrol license revenues were $13 million.

Our go-to-market motion is led by subscription.

So perpetual license sales are generally sold in certain verticals and geographies.

Q1 customer support revenue was $77 million.

which includes support for both our term-based and perpetual software licenses.

The year-over-year decline was in line with our expectations.

as a result of the cumulative impact of the strategic conversion of certain perpetual customers to our subscription offerings. We will continue from revenue results to ARR now.

Total ARR in Q1 was $686 million, an increase of 15% year-over-year, outpacing our annual growth expectations.

In Q1, subscription ARR, which includes both term-based arrangements and SAS contracts, grew 32% year-over-year to $500 million, crossing a major milestone and nearly doubling over the past eight quarters.

As Sanjay noted earlier, SAS ARR continued its strong growth up 72% year-over-year to $113 million.

SAS net dollar retention for Q1 was 118%, with our SAS offerings being a primary driver of customer expansion.

Now, I'll discuss expenses and profitability.

Fiscal Q1 gross margins were 82.9% and reflect a 70 basis point year-over-year impact of our accelerating SaaS revenue.

which carries a higher cost of sale than software.

Fiscal Q1 operating expenses were $119 million, down 3% year over year.

We ended the quarter with a global headcount of approximately 2,800 employees.

including additional inside sales reps we onboarded during the quarter to drive our Velocity SaaS motion.

We are managing our people, facilities, and third-party expenses.

We will continue to evaluate our resource base against the market demand environment. non-GAAP EBIT for Q1 was $44 million and non-GAAP EBIT margins were 22%. The strong earnings result was driven by continued operating expense discipline relative to our top line revenue. Moving to some key balance sheet and cash flow metrics. We ended the quarter with no debt and $275 million in cash, of which $81 million was in the United States. We will continue to evaluate our resource base against the market demand environment

Our Q1 free cash flow was $38 million, up 76% year over year.

Key drivers of free cash flow are deferred revenue from SAS and the strength of our subscription software renewals, which typically include upfront payments on multi-year contracts.

In Q1, we repurchased $51 million of stock under our repurchase program.

representing 135% of Q1 free cash flow. Now, I'll discuss our outlook for fiscal Q2.

We continue to believe that ARR and free cash flow should be viewed as primary KPIs of our underlying business momentum.

For fiscal year 2, we expect

Subscription revenue, which includes both the software portion of term-based licenses and SaaS to be $95 to $99 million.

representing 24% year-over-year growth at the midpoint.

We expect total revenue to be $193 to $197 million with year-over-year growth of 4% at the midpoint. At these revenue levels, we expect consolidated gross margins to be approximately 82.5%

an EBIT margin of approximately 20%.

As I mentioned on our last earnings call,

We are executing some foundational go-to-market changes, which include amplifying our discrete focus on our land and expand opportunities, while also scaling our motion to secure our growing subscription renewal base.

We continue to hire additional inside sales reps focused solely on the SAS Velocity Market as we refine our segmentation model.

Some of these investments will continue into fiscal Q2, and we expect that these go-to-market refinements should drive enhanced field sales productivity as we exit the fiscal year. Our projected diluted share count for fiscal Q2 is 45 million shares.

As of June 30th, we have $205 million remaining on our existing share repurchase authorization.

Finally, as noted on page two of this morning's earnings press release, we are also reconfirming our existing guidance for all provided metrics for the full year fiscal 24. We remain confident in our full year outlook, given the ongoing momentum in our SaaS business and the seasonally stronger trends we historically see in the second half of the fiscal year, including a larger term software rental opportunity and potential for improved large deal traction.

I will now turn the call back to Sanjay for his closing remarks. Sanjay. Thank you, Gary. Our customers are facing hard problems as they modernize the data protection approach across a hybrid cloud environment.

Our question comes from Aaron Rakers of Wells Fargo. Please go ahead. Yeah, thanks for taking the question. A couple if I can real quickly. I'm just curious, guys, congrats on the execution in the quarter. Given the current macro backdrop and the spending environment that some are concerned about with regard to enterprise, I'm just curious of how you characterize the linearity through the quarter, deal activity, any kind of deal shrinking in terms of size or any push outs, just overall context of what you're saying.

we do see some pressure on the ASPs of our larger deals. And most of that is driven really by term length. Okay, so the quantity of the deals and the volume of the enterprise deals is still strong. It's still actually consistent with even year over year levels. But what we do see a little bit of a down take in the ASPs on compression of term. As customers are continuing their journey to the cloud, they continue to focus on optimization of the workloads that they have and being able to make sure that they're ready for their next turn. And with some of that, they take a little bit of a step back.

and some of the deal size lengths start to compress a little bit. Our average length of our term deals in fiscal Q1 was about two years.

And just to give some context, that was, you know, any, what was that last quarter? What was that a year ago?

Yeah, we're down, our average term on our subscription deals is down about 10% year over year. And it's missed single digits decline sequentially.

Yeah, yeah, that's helpful. I appreciate all that color. As a quick follow up, I'm just curious, one of the things that we've thought about on the Commvault story as we moved into Fiscal 24 was just this base of renewal opportunity, setting itself up and really comping relative to what the subscription revenue looked like three years ago or so.

step up into the back half of the year when we look at the metrics you're giving around renewals and net dollar retention, et cetera. Just help us frame that. whole bye awaiting the Bil Sal

Sure, Aaron, I can touch on that also as well. The renewals in our business typically follow the linearity that we typically see across the broad portfolio of our go-to-market motion, which means that we'll see a higher renewal value in the second half. So that goes for both renewal opportunities and the second half.

and convergent opportunities. We'd expect probably about 60% in the second half versus relatively maybe 40% roughly in the first half. And some of those, the term length discussion I had on your previous question applies to the Reynolds, as some of Reynolds also see some of those things change in dynamics.

on term length as well. Yep. And then the final quick question, and I'll see the floor is, you know, you beat operating margin this quarter, you know, 22%. I think you guided around 20. I know you're guiding around 20% this next quarter. So appreciating that you gave the full year, you know, reiterated the full year guidance of up.

relative to what you thought of coming into this year? Why wouldn't we see some upside of that 50 to 100 continue to flow through as we think about the back half of the fiscal year as well?

Um, you know.

Aaron, at this point we're keeping our guidance for the full year for all the reporting metrics consistent. There's obviously opportunity for operating margin leverage and expansion, especially as the top line accelerates, which we'd expect some of that to happen, as I mentioned, more in the back half.

So where I'm sitting here today is that fundamentally, all the core tenants of our business are consistent and we're confident in where we're at for the first half. And I think maybe revisiting where we're at exiting Q2 for the back half is what we'll look to build.

Yep, that's very helpful. Thank you, Gary. Sure. Thank you. One moment for our next question.

Our next question comes from Howard Ma at Guggenheim Partners. Please go ahead. Hello everyone.

Great, thank you.

I have a question for Sanjay and also a question for Gary. I guess I'll start with Gary. It's actually two questions. The first is a shorter one, but I guess I'll start with, can you can you address the reason for the metallic net retention rate dip? You know, it's down about seven percentage points versus last quarter.

Hey Howard, good morning. Thanks for the question.

We don't look into one quarter as a trend for the long term for metallic when you look at the net dollar retention at 118%. We still believe it is a strong result and it's still driving a lot of expansion. Typically in the net dollar retention calculation, you are going to find that the downside rates are stillry diamonds and they second rate on dangling. People thinking this is what they think is something that

the base gets bigger and bigger and bigger, which also contributes to it. So that's good. So we have a growing base. So therefore, you'll start to see the calculation kind of moderate in kind of in that 118% or so. But from an actual expansion opportunity, we're really pleased with where we're at to be able to grow off that.

We're now approaching 4,000 metallic customers. So the ability and the opportunity for us to derive that number through that 4,000 customer base is an amazing opportunity that we look forward to kind of driving in the second half. So we're now approaching 4,000 customers.

Okay, that's fair. My second question is related to what Erin was asking. Can you talk about the key underlying assumptions that give you confidence in achieving total and subscription ARR guidance this year? And as we model out the balance of the year, can you talk about any notable you over your comps? Well, I think Erin mentioned it.

The back end way did that where the 2nd, half weighted renewal cycle in response to Aaron's question. Can you talk about a, is there anything else we should we should look out for, you know, for instance. No, I know fiscal 3 key was probably an easier over your top this year, but if anything else with respect to subscription or metallic.

Yes, a couple of things, Howard, I can touch on. So first, before I get to the second half, even by looking to the current quarter, we're in fiscal Q2, right? Typically, that's our seasonally softest quarter, especially in Europe . But as we start to look at the second half of the year,

we're still confident in the opportunity and the guidance that we gave for the second half. If you look at that subscription revenue line, each quarter we get a nice tailwind of recognized revenue from SAS. So the predictability of our subscription revenue starts to firm up every single quarter because a larger portion of that.

become SaaS revenue, which is the same realization of the ARR. When I take that, Howard, and I tie it to the seasonally stronger, especially in the large deal expectations on the term license software that we typically see in the second half, all of that still contemplate all of the kind of macro trends we currently see today.

We haven't seen anything essentially worse since I gave guidance roughly 90 days ago. So we're still confident in kind of what we see. The only really, I'll say notable change that we're seeing some modest change in is the term length, which I already addressed. But despite that, we're still confident in those full year numbers.

Okay, thanks, Gary, that's helpful. And for Sanjay, can you talk about where Commvault is with respect to the go-to-market evolution and if investments such as, you know, you've filled out a dedicated inside the Salesforce for Metallic, you have expanded partnerships with Salesforce and AWS and not the...

A little of both. So these are investments. They're fueling up multiple engines of growth for Metallic. Traditionally, our sales force has carried the bag for Metallic alongside our partners. We're seeing great progress with the large hyperscalers on

on go-to-market across the world actually. And we are also building out

our own Velocity inside sales engine as one of the other engines. So they're all coming together nicely in different stages. And we think, you know, over the course of the year, you'll see us share more about how these are working and coming together. So, you know, it's the strategy we set.

I think late last year fiscal year, and we're rolling it all out as we speak. So we're quite pleased with where we are.

late last year, fiscal year, and we're rolling it all out as we speak. So we're quite pleased with where we are. Thank you.

One moment for our next question.

Our next question comes from Jim Fish from Piper and Sandler. Please go ahead.

Hey guys, thanks for the questions. Gary, for you, what's going through the transition, I know we've talked about this in great lines, but where are you with perpetual maintenance, contribution, and really the crux of my question is, when you expect perpetual maintenance.

to be the minority in the sense of ARR and revenue trends start to converge as opposed to the large divergence we have this year? Is there any way to think about what you are seeing with perpetual maintenance renewal rates versus this point last year?

Yeah, thanks Jim. Good morning. I can handle that.

Good morning, I can handle that.

A couple of different pieces I'll talk to you first, and I'll get to your specific question on revenue. But first, if you take a look at ARR, that we're now up to well over 70%. We're approaching 75% of our ARR from the non perpetual base, so from subscription and fast. And you can see we're making excellent progress there.

When I translate that to the P&L and specifically how that gets reflected into that customer support revenue line, a larger portion of that continues to be driven by subscription. If I take a step back and maybe quantify that for you, about a year ago I would…

minimum about 10 points change in that balance. So I think where you're going is as we kind of roll that forward a little bit over the next one to two years. We'll start to see that subscription to be the primary driver and more than the majority of which driving that. Some of what you're seeing Jim, if you look at the kind of the year-rear growth of that customer support line.

the annual decreases that we're starting to see on a quarterly basis.

That's very helpful. And Sanjay, for you, how have the new marketing campaigns gone in terms of building net new pipeline? Is there any concern around the Office 365 competitive environment?

that you have some of your competitors out there being aggressive on price or even Microsoft coming in and just one day kind of bundling it into, say, like an E5 or E7 or whatever they want to come up with at that point.

Well, Jim, hopefully you've seen our new marketing campaigns and we're a lot more bold, a lot more direct. It's been having some great impact on the funnel and the pipeline. We're getting a, and it's bringing a lot of hits to our,

freemium sort of skews on the talc. It's working the way we want it to, and there's a lot more visibility around what we do.

So overall in our new approach with marketing, we're very pleased and the impact it's starting to have. There's a lot of excitement there. On Office 365 specifically, I think you're referring to...

Microsoft's recent announcement on some archival capabilities of which we're, you know, we're part, it's more of a platform kind of announcement. It legitimizes the need for Office 365 backup, which for the longest time, you know, customers were made to believe they didn't need it. And what they really need is a lifecycle of data management.

on one of the most used apps in most enterprises. So we believe we have the best approach to that, the best solution there. Competitive pressure has always been there, and it's not a price thing. It's also important for customers to understand where their office data is written to.

So you could get a service that looks like ours, but the data is written to some cloud you don't know, or to some data center you don't know. Ours is end-to-end. All the Office 365 is end-to-end on Azure.

and everything that comes with that. So it's a value proposition. We think we've got a great value proposition. It dovetails wonderfully with our software capabilities, which is important for customers. It's not an island unto itself. And we have competitive skills.

Thank you very much.

One moment for our next question.

comes from Eric Martinezzi from Lake Street Capital Market. Please go ahead.

Sanjay, just curious on the outlook geographically, as we look at Q1, the America is roughly flat, international up about 1%. Are we looking for any change in that based on the full year guide? Would we still see roughly similar growth rates for the two different geographic segments?

Eric, if Gary, I can jump in and answer the question on geographic. Yeah, so the performance overall for fiscal Q1 was roughly the same. In America, as you stated, it was roughly flat year over year. International was up 1% year over year. In international, relatively though, we're seeing stronger results.

throughout Europe , relative to Asia Pacific. Because I think about French geographically into the second half, I would expect a little more growth out of the Americas as a lot of the renewal opportunity we have, right? We have a much higher renewal opportunity in our subscription software business.

which gives us some of that transparency into the opportunity in the second half. But much of that is concentrated in the America's Hub preachers.

You talked about continued investment in sales into Q2. Can you give us some specifics there as far as the number of reps that we currently have and how many more we plan to add in Q2?

So Eric, if I think about some of the work that we're doing within GoToMarket, it's really driven around that discrete focus that we're trying to provide in our business and trying to build and enhance new routes to markets. So much of what we're doing is reallocation.

of resources through the business to provide that discrete focus tied to three key areas. One is driving net new land and expand business. The second is continuing to secure our renewal motion. And the third is building out that velocity motion.

solely dedicated on SaaS. So if we think about where any incremental, I'll say net new investments are primarily coming from, it's primarily coming from the third. As we build out that inside sales motion to drive that velocity piece of the market dedicated to SaaS.

So all of that is reflected within the guidance. Much of that happened during fiscal Q1, and there's just some final pieces that we'll move towards into fiscal Q2.

is reflected within the guidance. Much of that happened during fiscal Q1, and there's just some final pieces that we'll move towards into fiscal Q2. I understand. Thank you.

One moment for our next question.

Next question comes from Jason Adder at WB. Please go ahead.

Yeah, thank you. Hey Sanjay, can you give us just a quick competitive landscape and market share update both for the enterprise side of the data protection market and also the mid-market?

Over the course of the past couple of quarters, we've done a few things that are separating us in the short term very well. So I'll give you an example. We launched a support for data domain, boost on data domain, which gives us incredible performance in that install base, and that's a large install base. And we're seeing a lot of good traction, for example, in that, okay? That's just one example.

We're also seeing some of our competitors struggle in a tough macro environment. Okay, we've always been focused on on responsible growth and we'll continue to, we continue to innovate, we continue to streamline our go-to-market, we've amped up our marketing. And we're definitely taking share in SaaS.

It's white space. We're growing there.

And, you know, and I think.

As the platform goes, with the new security enhancements that we put out, nobody does what we do.

Okay, and now coming in the fall, we've got a whole bunch of new capabilities that we're bringing to market based on customer input. So we feel very well positioned technically. And I'd say over the last couple of quarters, we're definitely taking share from some of the more legacy players.

I mean, it's never a cure, if never just nobody else there, it's always competitive, you see the usual suspects. And in the mid market, we're also starting to get some good penetration with metallic. And so we're seeing some of the smaller players, niche players there.

It's never just nobody else there. It's always competitive. You see the usual suspects. And in the mid-market, we're also starting to get some good penetration with metallic. And so we're seeing some of the smaller players, niche players there. It's the usual suspects.

Okay, and then Gary, for you, just, did you provide any guidance on customer support, the customer support line for FY24? Yep, absolutely. The trends that you see from a customer support line will continue.

into Q2 and into the back half of the year. I would expect that the custom support line will be down on a year over year basis for full year FY24, somewhere in that mid to high single digit range from a year over year, which is kind of where we're currently trending.

is we're quickly approaching where the majority of that line will become subscription revenue related from a customer support and not perpetual and currently we're about 60% is perpetual I think we'll get to close to 50 50 by the end of the year or early next

fiscal year, which then helps over the longer term actually to moderate that line, and some of those declines will start to fade away.

Okay, so just do it there when you do a term license.

That's a subscription you separate out the support part from the software and that goes into customer support. Is that the right way to. Confirmed yes. Okay. Yes.

Hey Jason, Sanjay again. I just wanted to add one more thing. One of the things we're getting some lift from is

vendor consolidation. You know, as customers sort of look at spend and commitments and what they've got in the install base, they're looking to consolidate. And we're a great consolidator in that space. Also, as data security spend and data protection spend come together within this environment, the TCO equation.

we win. And so those are some of the trends we're seeing that are assisting giving us lift as we take share. I mean, just one data point.

With Metallic, we've exceeded 4,000 customers.

That's a customer acquisition machine.

And so we are taking share. And if you think that 60% of those customers are new to Commvault.

and 40% of those customers very quickly have another Commvault product that is not SaaS, you see the stickiness of what we've got there. Gotcha. So 60% of the 4,000 are net new.

Roughly in that field of, yeah.

Roughly in that deal. Yeah. Thank you guys. Good luck.

Thank you. Thank you. Thank you. I am showing no further questions at this time. I would now like to turn the conference back to Sanjay Mirchandini, President and CEO , for closing remarks.

Thanks, Amber. This is Mike Belnick, Investor Relations. Thanks for joining today. As a reminder, all our earnings materials are available on the Investor Relations website and feel free to reach out to us for any follow-up. Thanks for joining and we'll speak to you again in the fall.

This concludes today's conference call. Thank you for participating. You may now disconnect.