Q2 2024 MediaAlpha Inc Earnings Call
Brown: [music].
Yeah.
Thank you for standing by my name is Pam and I will be your operator today at this time I would like to welcome everyone to the media Alpha Inc. Second quarter 'twenty 'twenty four earnings call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn that.
Conference over to Alex the way you you may begin.
Thanks Pam.
Good afternoon, and thank you for joining us with me, our co founder and CEO, Steve <unk>.
And CFO Scott Thompson.
On today's call, we will make forward looking statements relating to our business and outlook for future financial results, including our financial guidance for the third quarter of 2024.
These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially.
Please refer to our SEC filings, including our annual report on Form 10-K, and quarterly reports on Form 10-Q for a fuller explanation of those risks and uncertainties.
That's applicable.
Statements.
All the forward looking statements we make on this call reflect our assumptions and beliefs as of today and we disclaim any obligation to update such statements except as required by law.
Today's discussion May include non-GAAP financial measures, which are not a substitute for GAAP results.
Conciliation of these non-GAAP financial measures to the corresponding GAAP measures can be found in our press release and shareholder letter issued today, which are available on the Investor Relations section of our website.
I'll now turn the call over to Steve.
Steve: Okay. Thanks, Alex Hi, everyone. Thank you for joining us.
Steve: Our performance in the second quarter was the strongest in our history across many of our key metrics with transaction value and adjusted EBITDA, reaching record levels and exceeding the high end of our guidance ranges.
For those newer to the media off the story I'll start today with a brief overview of the company.
We're an advertising technology company that operates what we believe are the largest online customer acquisition marketplaces, serving the P&C and health insurance industries.
Steve: We do not sell insurance policy, and we don't earn commissions on a sale or renewal of policies.
Our product is a transparent and scalable programmatic advertising platform that enables insurance carriers and brokers to reach high intent insurance shoppers in real time.
Steve: We primarily facilitate teeth connection through our network of hundreds of third party publishers, where we earn a percentage of the value of each advertising transaction.
We also operate our own website that represent a small amount less than 15% of our overall transaction value.
Now turning to our Q2 results, our P&C insurance vertical achieved record transaction value growing over 300% year over year.
We saw strong growth in marketing investment by an increasing number of our P&C carrier partners as auto insurance underwriting profitability continued to improve.
Steve: We expect carrier spending in our marketplaces to further increase in the third quarter with PNC transaction value growing well beyond normal seasonality.
Steve: Moving forward, we expect P&C market conditions to remain favorable well into 2025, given that many carriers have yet to resume normal levels of marketing investment.
Steve: And our health insurance vertical we delivered solid second quarter growth consistent with our expectation.
Steve: Given the strong performance of our P&C business, our health vertical is expected to generate approximately 20% of transaction value for full year 2024.
Steve: As we've discussed previously we continue to cooperate fully with the FTC Civil inquiry, which has been ongoing since February 2023.
Steve: We've conducted an extensive review of our marketing practices and while we can't predict the ultimate outcome of this matter. We continue to believe our practices comply with legal and regulatory requirements.
Steve: Our goal is to resolve this matter as soon as possible and we will provide an update when we have one to share.
Steve: Given recent market dynamics I want to briefly acknowledge the short seller report that was published about our company last quarter.
Steve: Our view is that the report bottom mentally misrepresent, our business model and business practices.
Speaker Change: Contrary to the report neither microphones Eugene No Ray sold shares in the recent secondary offerings.
Speaker Change: We continue to collectively own nearly 20% of the company and we're more excited today about our growth opportunities for our shareholders partners and team members as we were when we founded the company in 2011.
Speaker Change: With that I'll turn the call over to Pat for a more detailed review of our second quarter performance and third Florida guidance.
Pat: Great. Thanks, Steve.
Pat: As Steve mentioned, our second quarter results exceeded the high end of our guidance ranges across all metrics and we generated record transaction value and adjusted EBITDA of $321 8 million and $18 $7 million respectively.
Pat: P&C transaction value was up 88% sequentially above our expectations at 60% to 70% driven by significant month over month step ups in marketing investment by our carrier partners as the quarter progressed.
Pat: Transaction value in our health vertical was up 9% year over year in line with our expectations.
Pat: Overhead was slightly above our expectations as we increased our investment in the business to accommodate the growth we are experiencing.
Pat: The net effect of all that adjusted EBITDA increased $15 $1 million.
Pat: Representing over 400% growth year over year.
Pat: We generated $14 million of cash last quarter, nearly doubling our cash balance to $29 million at quarter end, while paying down over $5 million of debt.
Pat: There were a couple of notable items in our Q2, adjusted EBITDA reconciliation, including $700000 of legal expenses related to the ongoing FTC inquiry and $600000 of legal and accounting expenses related to our secondary equity offerings.
Pat: In addition, one of our health partners assurance IQ ceased operations during the quarter, resulting in a one time contract termination fee payable to us of $1 7 million.
Pat: Looking forward to Q3, we expect 40% to 45% sequential growth in P&C transaction value well in excess of normal seasonality as the pace of recovery belts, and we continue to gain market share.
Pat: In health, we expect similar transaction value growth year over year to what we saw in Q2.
Pat: Moving to our consolidated financial guidance, we expect Q3 transaction value to be between 415 and $435 million a year over year increase of 290% at the midpoint.
Pat: We expect revenue to be between 240 at $255 million a year over year increase of over 230% at the midpoint.
Pat: And we expect adjusted EBITDA to be between 22 and $24 million a year over year increase of over 540% at the midpoint.
Pat: Driven by higher contribution of moderate expense growth.
Pat: We expect the overheads to be flat to slightly up versus Q2 before increasing another $1 million in Q4, as we selectively add head count to drive growth.
Pat: Lastly, Q3 legal costs associated with the ongoing FTC inquiry are expected to be at a similar level to Q2.
Speaker Change: Given the strong growth we are seeing we are investing in the business, while continuing to generate operating leverage as we discussed last quarter, our lean team and capital efficient model have enabled us to deliver significant year over year margin expansion and we expect this to continue in the third quarter.
Speaker Change: Our near term capital allocation priority remains to reduce net debt, though we will continue to evaluate alternative capital deployment opportunities as business and market conditions evolved with that operator, we are ready for the first question.
Speaker Change: Thank you if you have dialed in and we would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: So trying to raise your hand and trying to see if he would like to withdraw your question simply press Star. One again, if you are called upon to ask your question and then listening via loud speaker on your device. Please pick up the handset and ensure that your phone is not on mute.
Speaker Change: And your first question comes from the line of Michael Graham of Canaccord Genuity. Please.
Speaker Change: Please go ahead.
Michael Patrick Graham: Okay, Thanks, very much and congrats on the numbers and the.
Michael Patrick Graham: The guidance raise is really.
Speaker Change: It was really impressive so it seems like things are going well and I just wanted to start with a question about the recovery.
Speaker Change: You mentioned in your letter that multiple P&C carriers works.
Speaker Change: Increasing spend meaningfully so yeah, just looking to see if you could put a little bit of depth around that.
Speaker Change: Talk about.
Speaker Change: With such dramatic acceleration growth expected in Q3 talk about.
Speaker Change: You know, how conservative or aggressive or how much visibility you have into that sort of forecast would be great. Thank you.
Speaker Change: Hey, guys. Thanks.
Speaker Change: I'll address that.
Speaker Change: Let's see.
Speaker Change: I think what one of the things that we did predict correctly, what's how unpredictable this recovery might be adding Pat really.
Speaker Change: Nailed that one.
Speaker Change: I think what's happening is as <unk>.
Speaker Change: Growth in our marketplace and our TNC marketplace, most notably is happening more quickly than what we expected.
Speaker Change: Because quite frankly, the early the carriers, who were early to take rate and shift back into growth mode.
Speaker Change: I think has been approaching the situation and.
Speaker Change: And I guess, the mixed recovery or the or the I guess, the mixed market dislocation that theyre facing more aggressively than we had anticipated.
Speaker Change: What we thought was that when they started to come back into the marketplace because of the unpredictability of the last several years and how historical the underwriting conditions, we're in historically unpredictable market and the market condition or that they would be.
Speaker Change: I think cautious in stepping back into the market and that really hasn't been the case I think what's happening is that when is that.
Speaker Change: Carriers, some largest sat on the sidelines.
Speaker Change: Didn't advertise much for several years most carriers lost a lot of policies in force during this time and thank you.
Speaker Change: Say regain profitability and they started to get half of them in there right.
Speaker Change: I think they're really stepping on the gas.
Speaker Change: To take advantage of the current market conditions, where you have a limited number of carry on growing but limited number of carriers who have recovered.
Speaker Change: It had gotten their rates right.
Speaker Change: Are at their target profitability.
Speaker Change: And the consumer sentiment now.
Speaker Change: Insurance shopping behavior being at historically high levels, I think theyre, taking advantage of that market opportunity is to really start to take market share and so we've been pleasantly surprised by how aggressively that these carriers have been stepping on the gas and we certainly benefited from that and you see that reflected in our.
Speaker Change: Our results. So I think going forward I would expect to see a continuation of these positive market trends, but there's still several carriers who are notable centers prior to the hard market still arent spending.
Speaker Change: In a notable way right now and so as these carriers regain profitability again, we expect them to.
Speaker Change: Following the core set by the earlier carriers and really start to step up their marketing investments, particularly in our marketplace.
Speaker Change: And then in addition to that we have to remember also that there are some geographies, most notably, California, New York, New Jersey, some of the big geographies that had been slow to actually allow for rate increases we're really carriers are marketing.
Speaker Change: And full right now and so we expect the positive market conditions.
Speaker Change: And the positive momentum to really continue well into 2025.
Speaker Change: Alright, I'll go back in the queue. Thanks, so much Steve.
Michael Patrick Graham: Thanks, Michael.
Speaker Change: Your next question comes from the line of Cory Carpenter of Jpmorgan.
Cory Alan Carpenter: Please go ahead, great Hello, Thank you.
Speaker Change: So just.
Cory Alan Carpenter: Just kind of building on that question is the right way to think about this is that the early movers for back to normal lifestyle section.
Cory Alan Carpenter: Traction in key states and if so how do we how should we think about the growth opportunity from here just given your transaction volume level today, which is which is record level like how do you. How are you comfortable with gross drilling.
Speaker Change: Drilling from from current levels I have a follow up on I'll stop there.
Speaker Change: Okay, well listen I'll start to address the question Pat might chime in.
Speaker Change: As I start to answer that I mean, I think we're giving you the visibility that we have right now for Q3.
Speaker Change: Based on the unpredictability.
Speaker Change: And our underestimation in the last couple of quarters.
Speaker Change: I think as these carriers come back and it will be hard to predict what's going to happen.
Speaker Change: Think that the growth rates overall for the P&C industry on a year over year basis.
Speaker Change: We will continue at high levels.
Speaker Change: On a quarter by quarter basis.
Speaker Change: Going forward into 2025, we can certainly foresee that.
Speaker Change: That there'll be lower.
Speaker Change: Again as fats pricing normalizes.
Speaker Change: Some of the volume around the heightened consumer shopping behavior starts to normalize as well, but in terms of just giving an indication of really what we think the market is going to do for the remainder of the year I mean, we're giving you our best estimate for Q3.
Ed: Certainly we do expect a positive tailwind again, well into 2020 fives as the market recovers and again Ed.
Speaker Change: <unk> trend of insurance carriers.
Speaker Change: Bracing the online direct to consumer model continues and we expect that secular tailwind to continue in 2025 and beyond and so Pat did you want to add anything to that.
Speaker Change: Yes.
Pat: Steve you touched on the price versus volume piece, which I think I can maybe.
Pat: Elaborate on a little bit which is as you look at the last peak of the business for us with Zen in late 2020 early 'twenty one.
Pat: And what we've seen over the last few years is that the volume trend has been generally flat to up over that time period of volumes there.
Speaker Change: It's a bit higher than they were at that time.
Speaker Change: And in our pricing is now kind of.
Speaker Change: In the ballpark slight.
Speaker Change: Slightly higher than it was at the last the last peak as well and so.
Speaker Change: There are both of those things kind of added up I think Steve kind of touched on it which is like Hey, we think the trend lines are in the right direction, but it's hard to predict.
Steve: The exact slope it does but I think we're pretty bullish.
Speaker Change: Given where we're at in terms of the recovery and we think there are market types to come.
Speaker Change: Okay. Thank you and just first follow up I wanted to ask about the household.
Speaker Change: We received more questions.
Speaker Change: Kind of an open ended question here, but why don't you give your thoughts just generally your outlook for the health business.
Speaker Change: They're on their companies and chose to excellent you guys chose to stay on.
Speaker Change: Why is that and then also wanted to be a chance to respond and maybe some of our key business plan consolidations.
Speaker Change: Came up in the short board as well.
Speaker Change: Yeah, and Corey I'll, maybe address that first part of it of why we're staying in the business and I can hand, it over to Steve for the second part of that question. So.
Steve: As we.
Steve: Think about the health business. There are couple of things at play there in a first off.
Steve: It's been a growing business for us consistently upwards.
Steve: So.
Steve: <unk> grown that business from being a pretty small business a number of years ago to a meaningful one.
Steve: And we're optimistic about the future of the business and really as we think about it there are two different pieces I bet. There is Medicare advantage, which is the product that has really strong fundamentals.
Steve: Compelling product for many consumers and that it offers.
Steve: Benefits at no out of pocket.
Steve: It's a business that's attractive for carriers.
Steve: <unk>.
Steve: Today, a number that's in the area and its a solidly profitable business for them and it's a business that enjoys bipartisan support.
Steve: With the government as well for the benefits it provides and the under 65 side, that's been a nice business for us as well and where we've grown that across different political administrations and thats. One that we think provides value to consumers and to the asset.
Steve: Marketplace.
Speaker Change: And what also point you towards I think some of the folks that have exited the health vertical their models were much more Asia happy models, where they weren't focused on binding policies themselves.
Speaker Change: <unk> said in the prepared remarks, we have no agents without directly contract with any agents that we'd receive commissions for the sale of any insurance policies.
Speaker Change: And so the business model.
Speaker Change: And argue are pretty flat and so Steve do you want to tackle the second part.
Steve: Yes, absolutely.
Steve: Appreciate the question about the short report.
Speaker Change: The city is there I mean.
Speaker Change: What I can tell you that we looked into it internally.
Speaker Change: The whole in terms of you went through it with our board, including our independent directors.
Speaker Change: We continue to stand by our business practices and we continue to believe that we're in compliance with all applicable rules and regulations and so.
Speaker Change: Really beyond that I think it's a bit of a fool's errand to really like point by point go through the business practices that they outlined there in some of the allegations they outlined there.
Speaker Change: I think most people probably on this call understand how these firms work and how you know what these fashion grab reports are really all about right.
Speaker Change: Taking things out of context.
Speaker Change: Making serious connections between one thing and another in order to actually paying a fully and completely misleading picture of a given company and certainly they've done that here.
Speaker Change: With the goal of really driving down our stock price to make a quick buck at the expense of our long term shareholders.
Speaker Change: We think thats the horrible thing to do and the last thing we want to do in a call like this when we've had a record quarter and im looking forward to another record quarters to give any more airtime.
Speaker Change: So a short seller like this and so so I appreciate the question.
Speaker Change: But I think thats, where we want to leave it with the short seller report.
Speaker Change: That's helpful. Thank you. Thank you Bob.
Corey: Thanks Corey.
Speaker Change: Your next question comes from the line of Mike Zaremski of BMO capital markets. Please go ahead.
Michael David Zaremski: Hey, thanks.
Speaker Change: Yes.
Speaker Change: Maybe going back to <unk>.
Speaker Change: Lots of good color you gave on.
Speaker Change: Transaction value, specifically I'll, just stick with that.
Speaker Change: If we look at your <unk> guidance.
Speaker Change: And just make a reasonable estimate of what it implies for P&C specific transaction value.
Speaker Change: And then also if I.
Speaker Change: Taking your comments of <unk>.
Speaker Change: Volume has been flat to up over the years and pricing is slightly higher than the last peak.
Speaker Change: It doesn't pilot you said yet.
Speaker Change: The math implies youre, taking a lot of market share because we we kind of know what the average price of auto insurance has been over the last few years.
Speaker Change: So if I'm right I think you said you took a lot of market share what what maybe you can elaborate unpack. What's why are you taking market share or is it just simply just maybe you guys are the only ones that do certain things are.
Speaker Change: What's going on underneath.
Speaker Change: That covers the.
Speaker Change: Causing you guys to win so much more okay, yes.
Speaker Change: Yes.
Speaker Change: Mike I'm happy to take that and then Steve can jump back if there is anything to add let's say I think your categorization, yes, yes, that's correct and that's I.
Steve: I think the volume trends have been good the pricing trends in particular over the last couple of quarters have been steeply up which has driven.
Speaker Change: The acceleration in transaction value that we've seen.
Steve: Would say that.
Speaker Change: We got this question a lot in the hard market.
Speaker Change: Performance fees of <unk> peers.
Speaker Change: One of the biggest drivers.
Speaker Change: Performance is business mix and our business.
Speaker Change: <unk> is overwhelmingly focused on the selling of clicks.
Speaker Change: Two carriers.
Speaker Change: So in a number of these carrier so in a time when carriers are not rate adequate or not profitable that is spend that they can very easily reduce or eliminate because the last thing. They want to do is to be acquiring lower funnel customers.
Speaker Change: That would be on that will be on profitable from day one.
Speaker Change: So we think we're in a spot now as carriers are getting rate adequate and getting solidly profitable. They are eager to grow and they are returning to our marketplace probably faster than we expected.
Speaker Change: And that has been driving that.
Speaker Change: Out performance versus peers over the last couple of quarters and that's a trend that we think will continue in the next year.
Speaker Change: Yes, Pat let me just.
Speaker Change: I think the other thing that Youre seeing at play it's really the power of a marketplace model and so and so we're the only pure play marketplace model right.
Speaker Change: Among our comparable company and so what that means is that we have brought together hundreds of insurance publishers.
Speaker Change: Into our ecosystem and these are insurance price comparison sites like with Libra and ensure a five insurance carriers, who are looking to generate advertising revenue off of the non consumer non converting shoppers.
Speaker Change: These are personal finance apps like credit Karma, who are trying to save insurance dollars to help deliver insurance savings to their user base their lead generation side and so it's really the ecosystem of hundreds of insurance specific website that can really flex up with carriers and they are enormous growth appetite.
Speaker Change: In times like this.
Speaker Change: And so what youre seeing is a validation of that transparent programmatic marketplace model.
Speaker Change: Yes.
Speaker Change: And what we expect to see is that model really continuing to pay dividends going forward as more and more carriers continue to spend.
Speaker Change: And we continue to expect to outgrow our competitors certainly well into 2025.
Speaker Change: Because of the marketplace model and because the recovery is really going to be focused on the national.
Speaker Change: Direct to consumer carrier budgets, where we focus.
Speaker Change: And I think just one clarification, what you said in the beginning I think I don't know if you.
Speaker Change: You said that the volume had been either flat to up slightly since the last peak.
Speaker Change: I think that Thats.
Speaker Change: I think volume is actually up pretty significantly since our last peak.
Speaker Change: Okay.
Speaker Change: Further clarify on that last piece.
Speaker Change: I think in any given quarter on a year over year basis. It was flat to up for that but cumulatively, yes every year compound okay yep.
Speaker Change: Okay got it I think the national carrier piece might be part of the equation too at that helps us think through this.
Speaker Change: Got it.
Speaker Change: And I guess, just lastly, and maybe theres nothing to say here because you're already kind of said in the last question, but I feel like it's.
Speaker Change: I have to ask so.
Speaker Change: Have there been any business meaningful business practice changes.
Speaker Change: In recent months.
Speaker Change: Yeah.
Speaker Change: So business practice changes.
Speaker Change: Yes.
Speaker Change: Are you asking in response to the short seller reports.
Speaker Change: Yes.
Speaker Change: Well I guess well.
Speaker Change: Clearly the.
Speaker Change: The industry has been somewhat reacting to the ongoing issues there.
Speaker Change: Got.
Speaker Change: Government agencies.
Speaker Change: This has been there's been issues going on for well over a year now and the Medicare marketplace. For example, so just kind of I don't know.
Speaker Change: If there's just.
Speaker Change: If theres anything.
Speaker Change: Think that.
Speaker Change: Maybe the marshal market changed a bit that's worth kind of reflecting on our specifically any business practice changes over the last maybe more than just a couple of months due to.
Speaker Change: What's taken place in the market.
Speaker Change: Yes, I mean, I think I can start.
Speaker Change: We will have some.
Speaker Change: Some things that here I mean, I think I think specifically, you're referring to the health insurance market.
Speaker Change: And some of the.
Speaker Change: Some of the CMS.
Speaker Change: One to one concert.
Speaker Change: Requirements that are going to be in effect for this upcoming enrollment period.
Speaker Change: As well as some of the one to one concert requirements from the FCC under the new formulation of <unk>, which which affect both health insurance industry and the auto industry.
Speaker Change: I think the impact of these things are going to be mostly within the health insurance vertical because these things are going to affect our mostly leads that are sold and our TMT vertical is so predominantly click focused.
Speaker Change: That we don't foresee a lot of changes to the P&C ecosystem, if any at all.
Speaker Change: I think with regard to what's going to happen within the health insurance. The system I mean, I think what youre going to see is the one to one that really bringing about more transparency and higher quality leads.
Speaker Change: And certainly that we're going to welcome I think some of the Devil is going to be in the details of exactly what's meant by an automated dial.
Speaker Change: I think companies are going to try to come into compliance with this in slightly different ways and so I think it'll be interesting to see how things shake out I think certainly we're testing a lot of different implementations to maximize conversion rates, while still abiding by the new one to one consent requirement, but overall for regulations like this which really I think will limit.
Speaker Change: The number of times elite can be sold making more transparent exactly who's going to call. You. Once you submit yourself as a lead to a health insurance company.
Speaker Change: The spirit of those things we welcome we've always welcome those.
Speaker Change: I don't know Pat if you have anything to add.
Pat: No I think that was a good summary.
Speaker Change: And Mike is that is that does that answer your question yes.
Speaker Change: Yes.
Michael David Zaremski: Very helpful. Thank you.
Michael David Zaremski: I appreciate it Mike.
Speaker Change: The next question comes from the line of Tony.
Speaker Change: Joint of Kb capital. Please go ahead.
Tony: Hey, good afternoon, guys. Thanks for taking my questions.
Speaker Change: On the seasonality front, you typically see a pickup in the gross profit margin in the fourth quarter.
Speaker Change #104: The rise of the health care mix in that quarter.
Speaker Change: Should that be more muted this year than previous years, just given the rise in the mix of P&C and it's larger share of private platform mix and is there any way to sort of quantify this.
Speaker Change: Yes.
Speaker Change: Tommy I would say the short answer to your question is yes, it will be more muted.
Speaker Change: And really the way, we would think about in a kind of modeling edits for us typically Q4.
Speaker Change: It has about 40% of our transaction value for the year and the health vertical.
Speaker Change: A round number about plus or minus.
Speaker Change: And you can see over the last few years kind of how Q4 profit might compare to Q.
Speaker Change: Q3 versus Q1 and acknowledging there are some changes in P&C in there, but you can start to get a feel for.
Speaker Change: How much extra profit health vertical does generate in Q4, because it is.
Speaker Change: Yes. It is.
Speaker Change: Pretty meaningful profit quarter for the for the health vertical.
Speaker Change #100: Okay got it.
Speaker Change: Yes.
Speaker Change: You guys, often cite your sort of need for minimal capital expenditures.
Speaker Change: Can you just talk about like where you guys are investing in the business and sort of what gives you confident that you maybe you shouldnt be spending more on capex to.
Speaker Change #102: Capex to make sure that the business maintains its competitive advantages.
Tommy: Yes in Tommy I would say on the Capex side.
Speaker Change: From an accounting standpoint, we historically have not capitalized any software development expense and thats because it hasnt met the thresholds for capitalization.
Speaker Change: And the Capex we have in.
Speaker Change: <unk> generally been for.
Speaker Change: Sure.
Speaker Change: Lease hold improvements.
Speaker Change: Little it stopped.
Speaker Change: So things like that and so there's just.
Speaker Change #103: Virtually nothing that said that capex bucket for us. It was a 100 grant last year and it will be kind of similar ballpark us in a couple of hundred thousand probably.
Speaker Change: For this year.
Speaker Change: On the investment side, you can see that we are investing in the business given the overhead numbers.
Speaker Change: We talked about the Q2 numbers and the trend line for the balance of the year and I would say that.
Speaker Change: We think about those investments I would say.
Speaker Change #101: <unk> speaking they fall into two categories.
Speaker Change: One would be.
Speaker Change: Kind of fundamental.
Speaker Change: Kind of fundamental product expansion and excellence and you can think of that as being us adding to our capabilities from a tech product and data analytics standpoint get those sir fundamental differentiators for the business over time.
Speaker Change: And the second area in terms of real investment is going to be some of those.
Speaker Change: With that I would say our <unk>.
Speaker Change: <unk> variable worse directly.
Speaker Change: Supporting revenue and you can think of those as being sales and account management heads that become.
Speaker Change: Kind of more necessary and quite frankly more financially attractive in a time when the <unk>.
Speaker Change: Market is growing and the business is performing well.
Speaker Change: Okay. Thanks for the explanation thanks Pat.
Speaker Change: Yes.
Speaker Change: Since there are no more questions that concludes today's call. Thank you all for joining you may now disconnect.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].