Q3 2023 Appian Corp Earnings Call
Okay.
Good day and thank you for standing by welcome to the Appian third quarter 2023 earnings Conference call. At this time 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.
One one on your telephone you will then hear an automated message advising your hand is raised to work.
Draw. Your question. Please press star one again.
Please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your first speaker today random thought Vice President Finance and Investor Relations. Please go ahead.
Thank you operator, good afternoon, and thank you for joining us to review <unk> third quarter 2023 financial results with me today are Matt Hawkins, Chairman and Chief Executive Officer, and Mark Matteo <unk> Chief Financial Officer. After prepared remarks, we will open the call for questions today, you'll want to follow along with our earnings.
The presentation you can download it from the main page of our Investor site at Investor start Appian Dot com.
During this call we may make statements related to our business that are forward looking under federal Securities laws and are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995. These include comments related to our financial results trends and guidance for the fourth quarter and full year 2020.
Three the benefits of our platform industry and market trends, our go to market and growth strategy, our market opportunity and ability to expand our leadership position, our ability to maintain and upsell existing customers and our ability to acquire new customers.
Words anticipate continue estimate expect intend will and similar expressions are intended to identify forward looking statements or similar indications of future expectations. These statements reflect our views only as of today. They do not represent our views as of any subsequent date they are subject.
For a variety of risks and uncertainties that could cause actual results to differ materially from expectations for a discussion of the material risks and other important factors that could affect our actual results.
Refer to our 2022 10-K, our 10-Q filings for 2023, our 8-K filings and other periodic filings with the SEC. These documents are also available on our investors section of our website.
Recently non-GAAP financial measures will be discussed on this conference call.
To the tables in our earnings release and the investors section of our website for a reconciliation of these measures to the most directly comparable GAAP financial measures with that I would like to turn the call to our CEO, Matt Hawkins Matt.
Thanks, Sri and thank you everyone for joining us today.
In the third quarter of 2023, Ibm's cloud subscription revenue grew 27% year over year to $77 2 million.
Subscriptions revenue grew by 20% to 103 8 million total revenue grew 16% year over year to $137 1 million.
Our cloud subscription revenue retention rate was 117% as of September 30th.
Adjusted EBITDA was a loss of $5 3 million.
A couple of financial highlights.
<unk> non-GAAP gross margin was 75% this quarter the highest it's been since our IPO.
Our adjusted EBITDA was well above guidance.
Read too much into this dramatic sequential improvement largely due to the timing of our expenses to takeaway should be that we delivered in last year's commitment to reduced adjusted EBITDA loss below 10%.
We will continue on our path to positive EBIT to EBITDA and I want to emphasize that this transition will not come at the expense of growth.
Last earnings call I spoke about <unk> approach to AI.
As you May recall, we're pursuing something we call private AI.
I don't believe that most customers will allow their data to be sent over the internet to our public AI services.
Nor do I think they wished to train.
And AI algorithm, they do not own.
Under private AI.
Data stays entirely private.
We also achieved better compliance.
To ability and security levels.
Our private AI offering depends upon our data fabric functionality, which is itself highly differentiated in the market.
We have a data centric approach to AI.
And we think the data side of things has been somewhat under recognized underappreciated.
The hype around generative models.
In private AI, we feel we have a defensible and advantaged offering.
Over 100 customers used at NII in Q3, there is an example, and.
In Australia, and wealth fund manager processes inbound portfolio requests for tens of thousands of customers and brokers on our platform.
The group receives requests through E mail before Appian employees handled these e-mails routed them to relevant parties open cases to process the requests.
In Q3 this firm trained a private AI model for Matthew with its own data the model.
Ingest females classifies the routes and to the appropriate person for follow up.
It makes the intake the resolution process and eliminates the need for manual Triaging now the customer can resolve cases faster.
Yes.
The AI market is still developing.
Too early to say, which ideas and vendors will prevail.
We're advocating this private.
Ada centric approach to AI, because we believe in it.
And also because we are getting strong support from buyers.
I won't be a winner take all game.
Scores of different approaches, we will succeed by finding and satisfying specific markets.
And it might yet be better.
The agile.
To be bank.
There's plenty of room for Appia I am optimistic about our future.
Turning to our earnings presentation.
Youll see our series of special metrics.
<unk> provides additional transparency on how macroeconomic factors are impacting our business.
These numbers again indicate that there continue to be some effects.
I hope these extra reports have been useful in 2023 for next year, we will consolidate them and probably add some more.
My favorite fact from the report packet.
Is that <unk> count of seven figure.
Our customers have.
<unk> crossed 100 for the first time.
This uptick coincide with some large deals in the U S public sector.
Here's some combined examples my first cases, a federal agency that manages procurement processes for the department of defense.
The agency selected Appian two years ago to unify disparate contract writing systems.
This quarter, it's <unk>.
Signed a seven figure software deal to license thousands more users.
Now Appian will manage end to end contract writing processes for tens of billions of dollars in contracts annually.
Another group.
Group <unk>.
<unk> a seven figure software deal in Q3 and became a new appian customer.
The group will manage law enforcement investigations, and a secure impact level five environment on Appian government cloud.
Before the agency manually conducted investigations using paperwork in offline channels.
Now over 1000 field agents and back office employees will create cases review evidence and.
<unk> dispatch law enforcement support within a single Appian.
Sure.
As you know if you've heard this call in the past I like the solutions business.
I like it because the sales cycles are shorter.
Competition narrower pricing power higher the addressable market in total larger.
We're making progress on solutions this year, Here's an example.
A leading global investment manager increased its annual recurring spend on Appian software by 40% in Q3, the firm purchased our customer lifecycle management solutions two quarters ago, when it became a new appian customer.
Our solutions automated manual processes, so the company can onboard and manage clients faster.
In Q3, it decided to add its legal department to the process and purchased additional platform licenses to build new workflows. For example that will automate legal agreement processes. So lawyers can readily collaborate on tasks and the company has real time visibility on the contract status.
Let me offer you a few marketing updates two to be precise.
Randy Guard joined <unk>, as our new Chief Marketing Officer.
Randy brings decades of experience, leading marketing product strategy and technology teams.
Second we were named a leader in the Gartner Magic quadrant for enterprise low code application platforms two weeks ago.
Before I hand, the call over to Mark for a deeper look at our financials I want to mention.
Looking past the numbers for a moment.
Company is oiling with activity service.
Appian has made substantial investments in our platform over the past few years and introduced new features and solutions.
We are realizing a data centric AI offering.
We are evolving our go to market activities and driving a new set of sales plays that will open new opportunities.
Out of sight of the news in the numbers.
We're working hard to prepare appian for a strong future.
With that I'll hand, the call over to Mark.
Yes.
Thanks, Matt I'll review the financial highlights for the quarter and then we'll provide guidance for Q4 and the full year 2023.
Total revenue cloud subscription revenue adjusted EBITDA and non-GAAP EPS were above guidance.
As a continued healthy contribution from existing customers and strong growth from key industry verticals, especially in the U S public sector and financial services.
Let's go into the details.
Subscription revenue was $77 2 million, an increase of 27% year over year and above guidance on a constant currency basis cloud subscription revenue grew 24% year over year.
Subscriptions revenue was $103 8 million, an increase of 20% year over year.
On a constant currency basis subscription revenue grew 17% year over year.
Consistent with the prior quarter subscription revenue growth was impacted in part by some customers converting to the cloud subscription model.
Professional services revenue was $33 3 million, an increase of 6% year over year.
On a constant currency basis professional services revenue grew 3% year over year.
Our professional services will continue to be a strategic offering.
Just on enabling partners and driving customer success. However, we expect professional services revenue to continue to decline as a percentage of total revenue.
Total revenue was $137 1 million.
We saw a 16% year over year and above our guidance on a constant currency basis total revenue grew 13% year over year.
Descriptions revenue was 76% of total revenue up from 73% in the prior quarter and year ago period.
Our cloud subscription revenue retention rate was 117% after.
September 30 of 2023 up from 115% in the prior quarter and year ago curve.
As a reminder, we continue to target a cloud subscription revenue retention rate of 110% to 120% on a quarterly basis.
Our international operations contributed 35% of total revenue compared to 31%.
On a year over year basis International growth was broad based and saw healthy contributions from both APAC and EMEA regions.
Our cloud software net new ACD bookings were approximately 80% of the total net new software purchase during the nine months ended September 32012, compared to 85% in the first half of 2012 as 80% in 2022.
Now I'll turn to our profitability metrics non-GAAP gross margin was 75% compared to 73% in the prior quarter and year ago period.
Subscription non-GAAP gross margin was 89% consistent with the prior quarter and 90% over the year ago period Professor.
Professional services non-GAAP gross margin was 30% compared to 28% in the prior quarter and 27% during that period.
We expect professional services non-GAAP gross margin to decline to a low to mid 20% range in 2023 and beyond we continue to invest in non billable resources to help our customers maximize the value of their appian investment.
Total non-GAAP operating expenses were $110 5 million relatively flat from a year ago period.
We continue to make good progress on optimizing our cost structure in the current uncertain macro environment. We are prioritizing projects that generate a higher ROI. In addition, we continue to scale, our Chennai R&D Center.
It should help drive operating leverage long term.
Adjusted EBITDA loss was $5 3 million versus our guidance of a loss between $60 million 12 million compared to an adjusted EBITDA loss of $22 9 million in the year ago period.
The upside in EBITDA was driven by prudent opex discipline, a pushout of some expenses into Q4.
We remain confident about continued improvement in adjusted EBITDA margins going forward.
In the third quarter, we had approximately $4 $3 million of cornerstone as losses compared to $1 $2 million of foreign exchange gains in the prior quarter to $6 1 million of foreign exchange losses in the same period a year ago.
We don't forecast movements in FX rates. So therefore, they are considered in our guidance.
non-GAAP net loss was $14 7 million or <unk> 20 per basic and diluted shares.
Compared to a non-GAAP net loss of $30 9 million or <unk>.
<unk> 43 per basic and diluted share for the third quarter of 2022. This is based on $73 2 million basic and diluted shares outstanding for the third quarter of 2023, and $72 5 million basic and diluted shares outstanding for the third quarter of 2022.
Turning to our balance sheet as of September 32023, SaaS in cash equivalents and investments were $169 5 million compared with 196 million.
The 31st 2022.
For the third quarter cash used by operations was $65 million versus $43 7 million for the same period last year.
The increase in cash usage was primarily due to a onetime payment of $57 3 million for the industrial transportation insurance policy, which I'll speak about more for more detail later.
Total deferred revenue was $197 8 million as of September 32023, an increase of 20% from the year ago period.
As we have stated on past calls the majority of our customers are invoiced on an annual upfront basis, but we also have some customers that are billed quarterly or monthly due to the variability of our billing terms changes in our deferred revenue are generally not indicative of the momentum in our business.
We continue to believe cloud subscription revenue is a better indicator of our business momentum than billings or remaining performance obligations. The latter metrics fluctuate based on the timing of invoicing seasonality of on Prem license revenue and the duration of customer contracts with.
The true scale of the business is represented by subscriptions revenue, which includes support in our software subscription revenue, regardless of whether the customer deploys to the Appian cloud private cloud or on Prem.
Before I turn to guidance I wanted to touch on Appian is accounting for the adjustments reservation insurance policy and the current macro environment.
During the third quarter Appian obtained adjusted preservation of insurance policies.
This agreement resulted in a onetime payment of $57 3 million.
The payment was made from available cash on hand.
From an income statement perspective, this payment will be amortized over approximately three years and will be excluded from adjusted EBITDA.
For additional details of that policy. Please refer to our 8-K filing from early September.
We continue to be prudent with our guidance assumptions and the current macro and geopolitical environment as noted on prior earnings calls we continue to see.
Slippage.
Budgets and elongation of sales cycles.
In some instances deals are being impacted by customer specific issues, such as executive changes internal restructuring and write offs.
Finally, we are being cautious with respect to our expectations for the federal vertical given the possibility of the government shutdown.
Now I'll turn to these items.
The fourth quarter of 2023 cloud subscription revenue is expected to be between 78, 6% to $79 $6 million representing year over year growth of 19% to 21%.
Total revenue is expected to be between 130 $143 million, representing a year over year growth of 10% 14%.
Adjusted EBITDA loss for the fourth quarter of 2020 is expected to be between 16 and $12 million.
non-GAAP net loss per share is expected to be between 29 and 24.
This assumes $73 3 million basic and diluted weighted average common shares outstanding.
For the full year 2023 cloud subscription revenue is expected to be between 300 and $301 million representing year over year growth of 27%.
Yes.
For the full year 2023 total revenue is expected to be between 538 and $543 million representing year over year growth of 15 with 15%.
Adjusted EBITDA loss is expected to be between 62% and $58 million.
Now non-GAAP net loss per share is expected to be between $1 13, and $1 76. This assumes $73 1 million basic.
Weighted average common shares outstanding.
Our Q4 guidance assumes the following.
First professional services revenue will decline at a high single digit rate compared to the year.
Second on term license revenue will increase by a low double digit rate compared to the year.
Period.
Third other nonoperating expenses will be approximately $2 5 billion in Q4.
For us capital expenditures will be approximately $2 million.
Finally, our guidance assumes FX rates as of October 25, 2023.
In summary, we're excited about the growth opportunities ahead of us.
<unk> focused on investing in areas that will drive growth and generate superior returns long term.
That will turn it over to questions.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Yeah.
Our first question comes from the line of Jacob <unk> of William Blair. Your line is now open.
Hey, thanks for taking the questions.
When you are when you're talking to customers, where does the budget for your AD spend coming from is it coming from existing budgets and maybe crowding out other areas of spend are you seeing customers create net new budget dollars and expand it spend for further investments.
Yes.
I think that there is a budget for AI talk.
Separately, a smaller budget for AI purchasing.
I think that right now there is most of the AIA economy has done in words alright.
And I think we're transitioning right now.
And pivoting toward where that legitimacy NII is going to come from installations from accomplishments through practical value and I think it's going to be it at first I don't see a separate budget for this no I think it needs to be justified.
Think that the way people envision it right I'm, sorry, AI right now is not actually practical on a large scale and so the.
The pipe dream, its going to have to come down to size and prove itself in order to grow a larger budget I.
I talked to a lot of Cio's I do not hear that they are inventing a new AI specific budget.
Instead this is going to compete for funds and it's going to have to show value to achieve those targets.
Okay helpful. And then Mark if you can just add any commentary on the.
One area of demand throughout the quarter and into October you had a nice beat in the quarter, but the Q4 guide came in a bit lower than we expected. So have you seen any change in the macro over the past few months that would cause that or is that just the conservative assumptions you called out around the federal segment.
A potential government shutdown.
Yes, I mean, we have reason to continue our caution into Q4, I think there hasnt been any sort of improvement where were breathing a sigh of relief and saying macro is getting better it's still a factor for us.
And et cetera.
The federal thing its still looming as we all know.
Okay helpful. Thanks for taking my questions.
Thank you one moment, Sir our next question.
Okay.
Our next question comes from the line of Steve <unk> of Citi. Your line is now open.
Okay, great. Thanks for thanks for taking the questions out here.
I guess I guess, maybe maybe to start with.
Get a better sense for the comment you made about there is a lot going on the bubble under the surface without the yen.
I guess high level, how should we be thinking about like what that what that means and what that means for the business.
Going into next year, and how youre thinking about the product set and development moving forward here.
Yes, but I don't want you to do is model that right.
That was a statement of ambition of activity.
I want you to know how much energy, we're putting into the future, but I don't mean that to end up on a spreadsheet.
Okay Gotcha.
And then I guess, maybe for Mark just on.
The timing of the expenses that you called out here just anything that we should be thinking about it about what that means moving forward into <unk>.
And the 24, and I guess any kind of more specificity around the EBITDA performance and the shift that's going on into <unk> here.
Yes, so I mean, we're pleased with our performance in our bypass that we set forward has been something.
Something we've executed pretty well on it and as you can see I have improved the EBITDA by $5 million for the full year.
We just note that the third quarter performance, obviously was a little bit.
What are you expecting in terms of an improvement and a lot of that was because of just the timing of some employee related expenses that will occur in Q4 versus Q3.
But all in all it's kind of what we have promised and said before continued improvement on adjusted EBITDA.
Okay perfect. Thanks for taking my questions.
Our next question.
Our next question comes from the line of Sanjay <unk> of Morgan Stanley. Your line is now open.
Thank you for taking the questions and then I was wondering if you could.
Walk us through the rationale for the insurance policy, maybe go through like some of the terms.
And when would you expect potential.
Payout from the policy, so any sort of detail there would be super helpful.
I appreciate the question.
I'm going to have to direct you to our 8-K, which is our full statement on this matter.
Got it okay. So.
Well then.
Looking at maybe just.
The your core verticals, whether its banking and life insurance health and life Sciences government.
How do you see the demand trends and the spending trends and the priority of like sort of automation as you go into Q4, and how does that sort of setup for 2020 for any sort of color around the industry verticals.
I think that when we settle into realization of the real value of the theme of the year, which of course is AI.
We and our buyers are going to understand that AI is incomplete solutions that it's a part of a team not a solo.
It's going to require a lot of cross extra coordination.
Will require a lot of low code workflow.
Routing and partnership with other forms of automation.
And as such I see it.
Complementary.
And enhancing the demand for automation, even though right now I'm not sure the market understands that.
That's where I see it going.
And so what we see here I think it's a multi year lift come.
Coming from AI, which brings with it technologies that are naturally complementary to AI and when I think of technologies that are naturally complementary to AI.
Number one is.
Data.
Data like <unk> data fabric that.
That.
Creates a virtual database across the enterprise and allows you to address data from anywhere as if it were local that's essential to AI to training to provisioning to answering questions well and then the other technology that will be naturally complementary it should rise with the economy would be process.
In process automation in this case because process includes the technologies to do the work. In addition to the technology of the rest of the world. So.
That's my belief about where automation is going.
I don't have that differentiated by sector, I think thats true across sectors.
What I anticipate.
Thank you so much I appreciate the color.
Thank you.
One moment for our next question.
Our next question comes from the line of Kevin Kumar of Goldman Sachs. Your line is now open.
Thanks for taking my questions.
Curious on the performance of the.
Government sector in terms of bookings, how does that maybe compared to prior quarters and also can you talk a bit about the new case management.
<unk> for the public sector and what type of use cases, you expect would that nutrition.
Yes, alright public sector is one of our best one of our best growing one of our best already in size and the government acquisition management solution has.
<unk> added a spark.
That sector.
And it's going to add a second a spark next year as well, we're getting good growth out of that.
Successful uptake and have good prospects with regards to case management.
Case management.
You look at our use cases, what's happening is bought for.
At least half of it.
<unk> case management.
You could look at a lot of the things. We do is a case to case passes through workflow and it reaches the resolution we do a lot of cases.
And so what we've done here is enhance the way, we handle cases and configure it specifically for some federal use cases.
I believe what we've got is powerful.
And the pipeline reflects that.
The customers May believe it too.
I'm excited about where that will take us next year and I want to add.
But there is no reason.
<unk> case management needs to remain.
A public sector offering.
Appian is as you know located near to the federal government.
I am from my office at this very moment looking at the beltway.
Beltway that goes around Washington D C.
Sure.
We start some patterns and offerings in the government.
Just because it's here.
And so we may find that this solution has its greatest impact eventually.
Outside of the public sector.
<unk>.
Just wanted to clarify that it is not suitable only for that industry.
I appreciate the color there.
And then maybe one on kind of the net new business in the quarter in terms of the mix.
New customers versus expansion, how does that compare to prior quarters, and then I saw the uptake.
Uptake in net expansion rate this quarter kind of within your historical arrangement curious if you'd call out any specific drivers of strength there. Thank you.
Yes, you're right. The 170 instead of 115% I don't think it is important.
As for <unk>.
The mix this quarter, yes, it was a little bit more for the existing customers I would say and you can see that not only in the 117 NR, but also in the.
And the stat that has us passing 100.
<unk> million dollars per year customers.
In both cases, that's where the energy was this quarter.
Great. Thanks for taking my questions.
Please standby for our next question.
Our next question comes from the line of Derrick Wood of TD Cowen. Your line is now open.
Alright, Thanks, guys, it's Andrew on for Derek.
Speaking of that $1 million.
Customer cohort chart, it looks like a solid uptick there what exactly is driving the up sell of strength there what what are the new products, thereby to get them up to that level.
Yeah, well up.
I think happy customers are driving it I think we're just creating value. It's a very fundamental answer, but I think thats really what it comes down to it there's been no shocks to the equilibrium, but we're just we just have happy customers and they buy more.
I think that.
We are going to focus more on this next year, because we believe we can go deeper.
With the customers that we've got.
I mentioned sales plays right in my talk part of that uplift and expansion.
I believe we can do more.
These customers, but that doesn't mean it will neglect the customers, we don't have or going after those too.
Yeah, that's great.
And then Matt I'm not sure I heard as much about partners and their preparedness.
I, usually do how would you characterize partner performance in the quarter and kind of on the New program you talked about earlier this year the incentives there any early impacts to talk about on the partner side, that's helping you.
Yes, it's funny that I didn't mention them because of course this is a major.
By the time for us with regards to partners.
I guess I, probably left it out because we have yet to reach conclusions with the new efforts, but were making them.
Our our key theme here is focus.
Intensive advocacy in both directions, and that's what we want to give thats, what we want to get.
And so we're shaping new closer relationships with our partners at this moment to achieve that.
Alright, thanks, guys.
Thank you.
One moment for our next question.
Our next question comes from the line of Joe Mirrors of choice Securities. Your line is now open.
Great. Thanks for taking the questions guys.
Just regarding opex.
Like each quarter last couple of quarters, you've been driving about a $5 million upside to the guidance.
Is that the cadence that we should expect going through the end of this year into next year in terms of just how you guys can drive profitability or are there any plans in place.
Around cost savings that could make that increase a little bit more exponentially.
Sure.
We're certainly not looking to increase it exponentially or do anything.
In terms of accelerating our path here.
We're on a steady path, we're happy that we're over performing.
It's not a sort of on.
On purpose that we're beating those numbers necessarily it's just the way further shaken out so far.
But we continue to be pleased with that and so I think it's.
It's one of those that we're happy to.
Got it.
And I'm just curious.
Randy <unk>, Chief marketing officer, although you're going to be any shifts in the marketing strategy and then could you remind us what the split is in that sales and marketing bucket between sales and marketing spend thanks guys.
Alright.
First of all.
Randy is a real pro.
Very pleased to have him on board, it's been a pleasure working with them already.
He comes in with a lot of great ideas.
That said, we've got a high degree of continuity between E and founder Mike <unk>, who has been running the marketing department on an interim basis.
And so I do.
Don't expect any discontinuity I, just expect a evolution toward effective new priorities and ideas that Randy brings to the table.
And as for cost issue.
Okay.
We don't disclose that breakout.
Safe to say our sales was larger than our marketing this is Richard.
Yes.
Thank you.
One moment for our next question.
Our next question comes from the line of Raimo <unk> of Barclays. Your line is now open.
Hey.
Thanks for squeezing me in.
Matt a quick question on when you talk about Keith management, how do you think this will play out because obviously it here at the <unk>.
Large vendor in your space as well that kind of makes a lot of noise around that how do you think customers will kind of looking at more into the individual capabilities or do you think they're going to be like segments like they will do like it.
Keith management et cetera, whether you do all the other cases like how do you kind of positioning yourself against them. Thank you.
Yes, that's right. It's a great question case management as a as a broad tool as I was saying of that earlier answer it really applies to quite a lot of our business and it applies to quite a lot of other people's business as well alright. There are many products not just one but many many competitors many products that are implicated in a case management situation.
Lending in some cases on what specific case, we're talking about and so yes. It invites a lot of competition.
And yet I'm quite optimistic about it because I believe that it is.
<unk> powerful products, we have a really strong platform that can be turned capably toward new use cases, and our solutions enterprise.
Is an exercise in realizing the advantage that we believe we will find in new use cases, if we just put our mind to it and and customize the platform a little bit so.
I recognize that competitors will have their strengths and competency scale name recognition.
I think that in many cases, if not all cases that.
We will have something to say on the feature side that gets the customer's attention.
Okay, Perfect and then one follow up for Mark and Marty.
Got a few kind of asking about the guidance a little bit though.
Think about it.
Can you start with the government shutdown that kind of the guidance that comes through and Keith can be completely different.
Other factors that we should consider there. Thank you congrats from me as well.
Yes, I wouldn't expect a.
The significant difference either way.
Definitely.
After in our guidance, but I wouldn't look for a material difference.
Okay perfect. Thank you.
As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Please standby for our next question.
Our next question comes from the line of Fred <unk>.
Mccurry capital your line is now open.
Greg can you hear us.
We are not hearing spread.
Okay. If for some reason we are not able to hear Fred.
At this time, we want to thank you so much for your participation in today's conference.
This concludes the program you may now disconnect.
Thank you.
Okay.
[music].
Okay.
Okay.
[music].
Yes.
Okay.
Yes.
[music].