Q3 2024 Coursera Inc Earnings Call

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Speaker Change: Gladiys and gentlemen, thank you for standing by and welcome to Chris Harris, third quarter, 2024 earnings call. At this time, participants are in a listen only mode and please be advised that this call is being recorded.

Speaker Change: After this speaker's prepare remarks, there will be a question and answer session.

Speaker Change: If you would like to ask a question during this time, please press star, follow the number one on your telephone keypad. And if you would like to withdraw that question, again press star one. I'd like to turn the call over to Cam Carey, head of Investor Relations. Mr. Carey, you may begin.

Cam Carey: Hi everyone and thank you for joining us for Coursaris Q3 2024 Ernest Conference Call.

Cam Carey: Today, I'm joined by Jeff Maggioncalda, Corsair's chief executive officer, and Ken Hahn, our chief financial officer.

Cam Carey: Following Jeffrey Maggioncalda, we will open the call for questions.

Cam Carey: We're in the press release, including financial tables, with this shoot after the market close, and it's available on our Investor Relations website located at investor.coorsarra.com, where this call is being simultaneously webcasts and reversions of our prepared remarks and supplementalize it's imposition.

Cam Carey: During this call, we will present both GAP and Nongap Financial Measures. A reconciliation of Nongap measures, to the most directly comparable GAP measure, can be found in today's earnings press release and supplemental presentation on the Investual Relations website.

Cam Carey: Please note all growth percentages refer to your over your change unless otherwise specified. Additionally, while statements may during this call relating to future results in events are forward-looking statements based on current expectations and beliefs.

Speaker Change: Actual Results and Events could differ materially from those expressed or implied in the forward-looking statements due to a number of risk in uncertainties, including those discussed in our own express release, supplementary presentation, and SEC violence. And with that, I'd like to turn it over to Jeff.

Jeff Maggioncalda: Good afternoon, everyone. It's great to be with you all. We've installed third quarter. Our operating finance results emphasize the focus and execution we're driving across the organization, including content, product and marketing in order to deliver our most important long-term growth initiatives.

Jeff Maggioncalda: Last month, we showcased our progress at our annual Coursera Connect Conference, which brings together our globally connected ecosystem of learners, educators, and institutions to collaborate on the future of learning and work.

Jeff Maggioncalda: We showcase a more personalized, relevant and engaging learning experience with rapidly expanding Coursera Coach features.

Jeff Maggioncalda: We demo new capabilities, like course-filter and academic integrity tools, for the world's best educators and corporate authors to move quickly to create and scale high quality content that is increasingly modular and interactive.

Jeff Maggioncalda: and we help forge stronger connections between university and industry to ensure education is able to keep pace with emerging technologies and a fast-changing global labor market.

Jeff Maggioncalda: Before discussing the slate of announcements we made across our unified platform, I'd like to provide a brief update on how industry micro credentials are increasingly addressing the needs of digital transformation and skills development and reshaping global higher education in the process.

Jeff Maggioncalda: In September, we published a new Coursera Survey of more than a thousand higher education leaders, including Dean's, Provost and Chancellor's, representing more than 850 institutions across nearly 90 countries.

Jeff Maggioncalda: The surveys, findings, or consistent interest in micro credentials is growing.

Jeff Maggioncalda: Among higher educational leaders, our survey found that 94% believe micro credentials can strengthen students' long-term career outcomes.

Jeff Maggioncalda: Half of the leader surveyed said that their institutions currently offer micro credentials and those that don't over two thirds plan to adopt them in the next five years.

Jeff Maggioncalda: They were also clear about the factors driving their support.

Jeff Maggioncalda: 75% said the students are more likely to enroll in programs that offer micro credentials for academic credit and over 90% believe that micro credentials can strengthen long-term career outcomes for students and enable their institutions provide the job related skills demanded by employers.

Jeff Maggioncalda: Despite the conviction in these findings, the pace of progress has been inconsistent with obstacles to widespread adoption. Leaders cited challenges around awareness, integration with existing curriculum and uncertainty about quality, all of which have been headwinds for our industry.

Jeff Maggioncalda: But one of our key differentiators is our credit recognition initiative.

Jeff Maggioncalda: Previously, I've mentioned our ongoing effort to secure credit recommendations for industry micro credentials from the American Council on Education, as well as the European Credit Transfer and Accumulation System or ECTS, which now recognize up to 15 of our most popular and reliable professional certificates.

Jeff Maggioncalda: Today I'm pleased to share that we recently expanded our efforts to India, our second largest country of registered learners.

Jeff Maggioncalda: Coursera has achieved India's national skills, qualification framework, or NSQF alignment for 10 professional certificates from Google and IBM.

Jeff Maggioncalda: When paired with our growing suite of academic integrity tools, these advancements significantly enhance the credibility and recognition of online learning, helping to facilitate their acceptance by universities and employers for academic credit and professional qualifications.

Jeff Maggioncalda: It's one of the reasons we believe in the it will be a critical market for Cresera for campus. And we're seeing these trends occur at varying tastes across countries and universities as data term and how to evolve their higher educational offerings.

Jeff Maggioncalda: One of the best examples continues to be our partnership with the University of Texas System.

Jeff Maggioncalda: The Texas Credentials for the Future Program, a partnership between University of Texas and Coursera, is one of the countries most extensive industry-recognized micro-cranus programs and it continues to deepen and scale.

Jeff Maggioncalda: Students across UT's nine academic institutions have access to our professional certificates, equipping them with job-ready skills in a variety of fields.

Jeff Maggioncalda: Today more than 10,000 students have enrolled in one or more professional certificates, earning more than 25,000 certificates of completion.

Jeff Maggioncalda: This fall, we announce the program will expand to include nearly 15,000 students enrolled at UT's five health institutions.

Jeff Maggioncalda: Texas is home to one of the country's largest workforce of the healthcare professionals.

Jeff Maggioncalda: The healthcare industry, like many others, is becoming increasingly digital. And this trend is evolving the career paths and skill requirements of the healthcare workforce, even for advanced professionals.

Jeff Maggioncalda: As role requirements change, micro credentials in data, technology and business are vital to supplementing health care qualifications.

Jeff Maggioncalda: Software and IT skills are increasingly relevant activities like managing patient portals, telehealth platforms, and mobile apps, along with the early stages of integrating AI into various administrative, diagnostic, and treatment processes.

Speaker Change: We are inspired by the innovation that UT system is demonstrating in enriching their broad-based curriculum and preparing graduates for the future workforce. And I am proud of the important role that our platform is playing in the process.

Speaker Change: And now I'd like to discuss updates across our three platform advantages. First, educate our partners in our content catalog.

Speaker Change: Corsair's first advantage is our 350 educator partners and the high quality courses and credentials that they create.

Speaker Change: We recently welcomed ten new partners to the Crosstery ecosystem, including leading universities like Save Business School from the University of Oxford, Dubai College of Tourism, IMD Business School, and Real Madrid Graduate School, University Dad, Europeia.

Speaker Change: We are also rapidly broadening our partnerships with industry experts and fields like business, data science, technology and health, including Adobe, Airbus Beyond, Amazon, Johns Hopkins Medicine, Liberty Mutual, and Xbox.

Speaker Change: Together with our trusted educators, we are establishing Coursera as the global destination for individuals and institutions seeking high-quality education and in-demand skills and credentials for the rapidly changing economy.

Speaker Change: For today's update, I'll focus on two key categories, entry-level professional certificates, and gender-of-AI content and credentials.

Speaker Change: Our entry-level professional search advocates can create pathways to well-paying digital jobs, as well to earn credit toward the college degree.

Speaker Change: As our recent studies suggest, industry micro credentials are placed to play an increasingly prominent role in the transformation of higher education, which is why we've been rapidly expanding this catalog with new partners, job roles, languages, and credit recommendations.

Speaker Change: At the start of this year we had 45 entry-level professional certificates live on platform and we've added more than 25 in 2022 or so far.

Speaker Change: This includes nine recent launches from new and existing partners, including Adobe ADP, Amazon, Epic Games, IBM, and Microsoft. Many of which are expanding the selection of careers on Coursera with new roles in game design, graphic design, sales, and more.

Speaker Change: Now, turning to my second catalog update, let's discuss our growing selection of gendered AI courses and credentials.

Speaker Change: We now have over 500 gender-avic courses and projects with more than 3 million cumulative enrollments to date and we're seeing the pace of these enrollments accelerate in 2024 with 6 every minute.

Speaker Change: Although it broad selection of content is essential, we believe that achieving the innovation unlock and productivity gains that employers are looking for requires gendered AI training that is specific to a job role or function.

Speaker Change: IBM and Microsoft recently introduced a brand-new Genre AI specializations in functions such as cybersecurity, data science, HR, marketing, and more. With instruction that was designed to help learners integrate the latest AI tools like co-pilot into their data they work.

Speaker Change: However, our efforts extend beyond new content.

Speaker Change: We have continued to work with our partners to enhance our existing portfolio of certificates with gendered AI content.

Speaker Change: Google has created several of the most popular courses in credentials on Coursera. Their AI Essentials course wants earlier this year has accumulated nearly 700,000 enrollments in a matter of months.

Speaker Change: Recently, they enhanced each of their six-inch global professional certificates with refresh curriculum, including activities, readings and videos that feature practical, field-specific AI training directly from Google's own industry experts.

Speaker Change: Our industry partners are at the forefront of emerging technologies. As they create the next generation of technology tools and services that will fundamentally reshape work in labor market more broadly, we are proud of how our partnership is making education and scaling equally accessible on a global scale.

Speaker Change: This brings me to our second major advantage, the global reach of our platform.

Speaker Change: This quarter, we added more than 7 million new registered learners, growing our global base to 162 million by the end of September.

Speaker Change: and the United States. Additionally, we grew the number of paid enterprise customers by 19 percent, so over 1560 institutions with recent additions spanning all verticals.

Speaker Change: and to create more value for a rapidly expanding ecosystem, we continue to invest in our platforms third advantage, which is product innovation.

Speaker Change: Our innovation efforts are focused in areas where we can uniquely leverage a jet of AI across our platform, including content, data, technology and marketing, to redefine the experience of our learners, educators, and institutional customers on Coursera.

Speaker Change: And the advances we are making with Corsair Coach given early indication of how AI will transform both learning and teaching.

Speaker Change: Since coach launched as a learning assistant, it has supported over 1 million learners, leading to higher quiz pass rates, faster grading with more personalized feedback, and more lessons completed for hour. And we're rapidly building on the initial coach use case with three new enhancements.

Speaker Change: First, Coach for Career Guidance will help learners explore career paths and identify transferable skills, recommending tailored learning paths based on their experience and goals.

Speaker Change: We expect it to launch later this year and be an important compliment to our career-based discovery experience currently rolling out in the consumer segment.

Speaker Change: Second, course builder, our Genre II power-at-offering tool will begin piloting the integration of coach-foran's structural design support in the coming months.

Speaker Change: Coach will act as a thought partner for the course-building offering experience, giving educators an author's a personal instructional designer, helping design and refine course content, to just course modifications, and uphold Coursera's pedagogical best practices.

Speaker Change: To his launching in March, Core Stutter has been used to create more than 700 new custom courses, which have logged over 135,000 learner enrollments.

Speaker Change: With the coming coach capabilities, we're excited to see how our customers and partners we use course builder to further accelerate course customization and personalization at scale.

Speaker Change: The lock in the handsman is coach for interactive instruction.

Speaker Change: In the early stages of online learning, learning was passive, simply sitting back and watching a video.

Speaker Change: Korsera and the launch of MOOC's in 2012 advanced us from passive learning to active learning. Or learners would watch videos and then write reflections and take assessments.

Speaker Change: With AI, online learning is now entering its third stage, advancing us from active learning to interactive learning. And a new coach capability is now live in the hands of instructors to do this.

Speaker Change: We've just launched a new capability that makes coach an extension of the instructor.

Speaker Change: The feature allows an educator to give coach custom instructions and knowledge, which coach then uses to deliver personalized interactive instructions to student on a scale that was unimaginable before Jennifer AI.

Speaker Change: We started with TechSpace Coach Dialogues. In the coming months, we'll also add other interaction types including modalities like audio.

Speaker Change: EducatorPartars like DeepLarning.ai, Google, the University of Michigan, Vanderbilt University and others have already started integrating these new teaching methods into their courses and credentials. And I'm pleased to share that Google Gemini is the large language model that is powering interactive coach dialogues on Cresera.

Speaker Change: To wrap up my opening remarks, I want to provide an update on our efforts to reignite the next chapter of growth, innovation and agility as we better position Coursera for long term sustainable growth.

Speaker Change: One of the most significant technologies just of our lifetime is underway. Navigate in the near-term environment, requires an organization that is focused and nimble.

Speaker Change: As we discussed earlier this spring, I have flattened my leadership team structure to spur faster decision making and foster increased collaboration across our platform, including product content and marketing.

Speaker Change: And as you can see in the nearly 700 basis points of adjustment ebut the margin we intend to deliver this year, we have been disciplined about pacing our expense structure to ensure we build a viable, long-term business.

Speaker Change: Going forward, we're committed to undertaking a broader expense reduction initiative.

Speaker Change: This includes a reduction in our global workforce of about 10%, which will allow us to better prioritize existing resources on core capabilities and create the capacity for future investments that are aligned to our three most important growth initiatives.

Speaker Change: First, expanding access to affordable, flexible, and job-relevant credentials. They can help millions of learners discover, unlock, or advance their career through our consumer segment.

Speaker Change: Second, supporting our Crosseira for business customers as they navigate a new era of skilling imperatives, helping them harness the potential of emerging technologies, and ensure their talent is prepared to keep pace with our evolving economy.

Speaker Change: and third, growing our Coursera for Campus Vertical which continues to demonstrate a more scalable approach to supporting academic institutions, looking to transform higher education and modernize the college degree, particularly in international markets.

Speaker Change: We have a clear strategy with distinct atoms, and we're operating from a position of financial strength, including a healthy balance sheet, and a consistent track record of delivering growth with increased profitability every year as a public company.

Speaker Change: In 2024, we made important strides and strengthening our competitive advantages, accelerating the pace of our content engine and product innovation, and driving productivity improvements, the position us for long-term profit will grow.

Speaker Change: We've spent to build on this momentum. Focusing our resources on the opportunities where we can further differentiate and enhance the value of course there is platform for the millions of learners, educators, and institutions that we serve.

Speaker Change: I like to now turn it over to Ken. Ken, please go ahead.

Ken Hahn: Thank you Jeff and good afternoon everyone.

Ken Hahn: In Q3, we generated total revenue of $176.1 million, which was up 6% from a year ago, as we navigate the lower top line growth in the near term.

Ken Hahn: A results continued to demonstrate or commitment to driving sustainable growth, targeting growth opportunities while also expanding financial and operating leverage, no matter the environment.

Ken Hahn: This is highlighted by our strong bottom line performance here today, which is leading us to raise our adjusted EBITDA margin target by 170 basis points for the full year to 5.4%.

Ken Hahn: Additionally, the Expensorduction Initiative Jeff Outline is intended to focus on our core capabilities, while extending our track record of delivering consistently increasing leverage over the past several years as a public company and prior.

Ken Hahn: We expect this initiative to generate at least $30 million in annualized structural cost savings, creating capacity for targeted investments as well as incremental profitability that will be reflected in our full year 2025 financial outlook provided next quarter.

Ken Hahn: As we navigate more constrained growth in the near-term, we will ensure that the business remains fundamentally strong, while we pursue efforts to return to a growth company revenue trajectory.

Ken Hahn: Please note that for the remainder of this call, as are review of business performance and outlook, but we'll discuss our non-gap financial measures unless otherwise noted.

Ken Hahn: For the third quarter, Gross Profit was $98.1 million, a 56% Gross margin, up from 51% in the prior year.

Ken Hahn: The law for an expense was $89.6 million or 51% of revenue and improvement of 6% of points from the prior quarter and continued operating discipline across all functions.

Ken Hahn: Net income was $16.6 million or $9.4% revenue and adjusted EBITDA was $13.3 million or $7.6% of revenue.

Ken Hahn: Now let's discuss cash performance. We generated strong pre-cash flow of approximately $17 million, which is inclusive of $6 million in purchases of content assets.

Ken Hahn: At the start of this year, we began treating these investments like other categories of capital expenditures, effectively lowering our free cash flow computation.

Ken Hahn: In Q4, we expect our content production investments and the Associated Treatment of CapEx on FreeCastwell to be more pronounced as we target utilization of full $20 million budgeted for this year.

Ken Hahn: I've been well pleased with our substantial generation of pre-cache flow, inclusive of those content investments.

Ken Hahn: You're today, we deliver more than $50 million in pre-cache for further bolstering our strong balance sheet.

Ken Hahn: We end as a quarter at approximately $719 million of understirpted cash and cash equivalent with no debt.

Ken Hahn: Now I'd like to discuss performance or segment starting with consumer. Consumer revenue is 102.3 million dollars, up 3% from the prior year on growth and crocera plus, including recent certificate launches from industry partners.

Ken Hahn: Revenue growth was in line with our expectations coming into the quarter, but we are seeing some softer signal in global consumer trends, specifically months month retention that are tempering our fourth quarter revenue expectations and factored in stat look of the short lay.

Ken Hahn: Regiment-Gress Profit was $55.3 million or 54% of consumer revenue up from 52% in the prior year period.

Ken Hahn: The final act of the arranged strong is 2-3 is our seasonal cake for new learner additions. In consistent with the geographic trends we discussed in recent quarters, we once again saw a higher proportion of traffic coming from regions outside North America, which on average correlates with a lower lifetime value.

Ken Hahn: Moving to our enterprise segment.

Ken Hahn: Enterprise revenue was $60.4 million, up 10% from a year ago on growth in our business, campus, and government verticals.

Ken Hahn: Segment gross margin was $42.3 million, or 70% of enterprise revenue compared to 68% the year ago.

Ken Hahn: The total number of paid enterprise customers increased to 1,564 up 19% per year ago, and are never tension rate for paid enterprise customers with 89%. A reflection of the transitory budget dynamics we've discussed in prior quarters.

Ken Hahn: Despite that disappointment, we continue to see signs of stabilization in the corporate learning market in the third quarter and will be closely monitoring the budgetary environment as we approach year end.

Ken Hahn: In finally our degree segment, the degrees revenue was $13.4 million at 15% per year ago. I'm growth in new students and scaling of recent program launchers.

Ken Hahn: The total number of degree students grew 29% per year ago to 26,455. Primarily due to some sizable new cohorts in more recently launched Indian programs.

Ken Hahn: As a reminder, there's no content cost and tribute to the degree segment, the degrees segment gross margin was 100% as revenue.

Ken Hahn: We expect the degrees and broader market serving universities to continue to evolve, including opportunities like Crosera for campus, and we intend to be highly targeted in the partnership's programs in capabilities that can be best served by our platform.

Ken Hahn: Now, on Torfinance Lautlook, which reflects both our latest view of more muted consumer top-line trends, and the strong operating discipline demonstrated throughout the year.

Ken Hahn: For Q4, we are expecting revenue to be in the range of 174 to 178 million dollars. For just that Eva Dough, we're expecting a range of 4.5 to 6.5 million dollars.

Ken Hahn: So the full year of 2024, we anticipate revenues to be in the range of 690 to 694 million dollars.

Ken Hahn: And as I highlighted earlier for Jeff's diva-duh, we're increasing our range to 36.5 to 38.5 million dollars in raising our annual adjusted EBITDA March-NAT look by 170 basis points to 5.4%.

Ken Hahn: We have a strong record of successfully managing our cost structure, including pacing our investments with the trajectory of our top line.

Ken Hahn: As we navigate near-term trends, the better position ourselves for future growth opportunities. I remain pleased that our disciplines, the store growth.

Ken Hahn: and Financial Management Create Strength, the ability, and strategic optionality as we have to keep it on our long-term strategy to lead our large, early and dynamic markets.

Ken Hahn: Ultimately, delivering growth and leadership in these substantial markets is how intend to create value for shareholders and our learners. And we are offering a financial discipline and strength in order to enable and bolster or return to hired growth.

Speaker Change: I'm asked from the call back to job for closing remarks.

Jeff Maggioncalda: Thanks Ken. We're proud of Chris Error's role and especially the partners who join us in ensuring learners everywhere have access to the highest quality education.

Jeff Maggioncalda: For many, believe in our collective responsibility is why they choose to join in our shared mission. And I'm excited that our educator community now includes Adobe.

Jeff Maggioncalda: Last week, they launched their first entry-level professional certificates, which were unveiled alongside an expansion of the Adobe Digital Academy. A program aimed at equipping next generation learners and teachers with AI literacy, content creation, and digital marketing.

Jeff Maggioncalda: Like many of our partners, Adobe recognizes that emerging technologies will fundamentally reshape the relevant training skills and credentials in their industry, as well as the labor market more broadly.

Jeff Maggioncalda: and we are thrilled that they have chosen the collaborate with Coursera in order to empower the next generation of Creative Talent.

Jeff Maggioncalda: Now, let's open up the call for questions. Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question in answer session. If you would like us, could question please press star 1 on your telephone keypad. And if you'd like to withdraw your question, again, press star 1. And please limit yourself to one question and one follow-up.

Speaker Change: Here first question comes from the line of Stephen Sheldon with William Blair. Please go ahead.

Stephen Sheldon: Hey, thanks. First, is it a frame how much monetization in your consumer segment you're getting from AI related courses? Is that becoming a notably bigger part of the mix? And then please give some more detail on where things have weakened and consumer more recently.

Stephen Sheldon: Thanks for watching.

Speaker Change: So on AI monetization, we don't break it out. One of the things that is true in the earlier stages is that many of the original pieces of the content of the first piece of the content.

Speaker Change: Coming out with January the I, or in a course format, it takes a little bit longer to do the long form, professional certificates and specializations.

Speaker Change: The courses are not subscription based. The long reforms are.

Speaker Change: So I'd say in the early stages it was relatively little. As more of the recent content has been launched in longer formats and we've upgraded a number of these, it's increasing but we don't break it out and I will say it's not a major part of the overall revenue base to consumer at the point.

Speaker Change: We are seeing the greatest search demands and enrollments in Gen. Adcontent.

Speaker Change: You don't have to have any other particular kind.

Speaker Change: and we're seeing like six enrollments.

Speaker Change: from Minnesota and in January I content we continue to obviously put a lot of kinds on the platform. So we think we're still at the pretty early stages.

Speaker Change: of individuals and institutions embrace and remain for AI content and credentials. And the content engine is cranking and we and our partners are producing more content faster and less extensively because of the children's reasons.

Speaker Change: In terms of the funnel on consumer, obviously what we need to do is attract a lot of learners, convert them and then retain them.

Speaker Change: and when you look at the top top of the funnel, 7 million new registered learners, not bad, you know, a pretty strong quarter in terms of absolute numbers.

Speaker Change: We are seeing some softer signals in the global consumer trend, especially when it comes to retention. So, conversion rates look pretty steady. Retention rates have been under some pressure.

Speaker Change: and it's very possible that there are macro-factor factors that are thickness, hard to say for sure exactly what that is.

Speaker Change: But what we've really been pushing on and clearly in the script, I said a lot about it, but launching a lot more content credentials and delivering a much better learning experience and offering experiences as well.

Speaker Change: We think, and if you look historically, what has really driven the consumer segment is basically job market disruptors. What opportunities and threats have come from changes in technology and changes in labor?

Speaker Change: and we think we're at the beginning of a major wave of dislocation where people are going to have to get in skills and prove that they have those skills by showing credentials.

Speaker Change: The state that they could be productive in the given company. So we think we've got the assets in terms of content and products. We think we're the early stages of this. Historically, these types of disruptions like COVID have really driven consumer segments. And we're optimistic that we're the early end of a similar kind of disruption.

Speaker Change: and maybe just talk about the rationale for cutting more of the cost base now and at a very high level, where you might be focusing those efforts.

Speaker Change: Yeah, so I'll start with sort of maybe thinking about it, can I know if there's any members that you want to get into or whatever, but when we really think about it, I mean, to a large degree, our strategy.

Speaker Change: has been to leverage as many of the key assets that we're investing in as possible. So, one technology platform, one data capability.

Speaker Change: One platform of content and credentials and then sell the consumers, sell the institutions, sell different formats including perpetual circuit to get some degrees.

Speaker Change: In the last many years, that very broader approach has given us two top line growth. We've been able to amortize nicely these assets that we could sell across many segments.

Speaker Change: where that has changed a little bit. I think in the current environment is some of the use cases have very high product market fit where there's a very clear buyer, very clear content credentials, if delivering a lot of value, it retains well.

Speaker Change: The use cases are changing a bit and there are certain use cases where for the time and money we spend winning that deal.

Speaker Change: or creating that piece of content.

Speaker Change: is just isn't having the kind of financial impact.

Speaker Change: We did a pretty simple analysis to say across region of segments where we sing the biggest growth and where we sing the best leverage.

Speaker Change: from the Sales and Marketing Against Revenue, RG against revenue.

Speaker Change: of GNA General Gallicated.

Speaker Change: We said, let's just put more resources against those places where we're seeing more growth of more leverage, and that's pull back on those places where we're seeing less growth, and less leverage, and it really just comes down to, in my opinion, value delivery. Where are we delivering real difference? You have value, that's where we're going to have the highest growth, and then ours.

Speaker Change: [inaudible] Hey, students about the timing as well, and so does.

Speaker Change: and Nicky, of course, exactly in the way we approached ship was to preserve.

Speaker Change: Gross areas. The timing is setting us up as part of our planning for next year. This is about EBITDA for next year. We've been very disciplined as we've just got in the script as to always improving since we've been a public company or leverage and our EBITDA margin.

Speaker Change: To what rate we have allowed to vary, but this is setting up for 2025, from both an even doctor's perspective, and drive as much growth as we can within that context.

Speaker Change: I guess I'd say in Jeff described broadly how we're doing it, emphasize one concept around focusing on growth is on the website. We'll plan to end next year with more head counts and we have ending this year.

Speaker Change: And so, you know, we're seeing right now a lot of opportunity on the product side on AI. And I think it's early because you see the results. I think that's one example specifically to illustrate how we thought about it.

Speaker Change: Make that, thank you.

Speaker Change: Here next question comes from the line of Ryan McDonald with Needham. Please go ahead.

Ryan McDonald: Thanks for taking my questions. Maybe take a little bit deeper on some of those comments on consumer.

Speaker Change: As we think about, you know, talk about maybe to extend, you've got visibility into it on what's a useful life from a monetization perspective.

Speaker Change: and there is for some of the content and consumer.

Speaker Change: and then, you know, how was that changed? And as you think about that softer retention internationally, are there specific subject areas or topics where you've seen retention fall off quicker than may be other areas or than you expected?

Speaker Change: Yeah, I'll start here and then can go for the chime in. So on useful life.

Speaker Change: It really depends on the title and a lot of what we're doing now. We talked about a bit in the script. We're upgrading an awful lot of pieces of our more popular titles with our partners to include AI. So, our ability to refresh content is getting better and better and to help our partners do that. And that being said, if you look at sort of the...

Speaker Change: Difference in ARR per month by title. Generally speaking, it declines over time.

Speaker Change: Some types of contents seem to decline a little bit faster than others. We said in the past and so I'll just remind folks on the call here. These entry-level professional certificates have been...

Speaker Change: Really the engine of our consumer segment grow. It's for people generally who are thinking about starting or switching a career. They come from top-branded companies and they teach skills that are required to, kind of the portfolio skills required to do an interlevel job.

Speaker Change: It is really ideal when there's a lot of job openings that people want to go get and they need to get the skills and the credentials to go do them.

Speaker Change: We have seen historically that the lifetime value of learners in these entry-level professional certificates has generally been higher than many other titles.

Speaker Change: So that retention rate has been higher, it's kind of what I'm saying. We have seen especially in North America, some of the softness.

Speaker Change: On month of month retention, capeting among these entry-level professional certificates.

Speaker Change: tells you exactly why, but macro factors are likely at play just as, you know, in years ago, a lot of the macro factors were great tailwinds. We're thinking that they might be headwinds right now, but you know, probably not at all times and not at all regions.

Speaker Change: But that's those of the titles that typically have the highest lifetime value and we're seeing some of the fall and retention rates in those titles. And anything you'd like to know?

Speaker Change: Right, and then maybe following up on the enterprise segment. So obviously a nice quarter in terms of accelerating growth in terms of logo additions.

Speaker Change: and our kind of continues to come down here.

Speaker Change: He's just within the pieces of enterprise talk about maybe where you're seeing the most softness on the spend that continues to kind of drive and are around and you know, I guess what level of visibility do we have going into fourth quarter here on sort of the renewal business and sort of close rates there. Thanks.

Speaker Change: Yeah, I'll talk a little bit about NRR and closes as well. Sort of what water people interested in.

Speaker Change: and our arms are clearly still under pressure. We mentioned last quarter before. In the script we talked about pre-end-apporting budgets. A lot of these transit-apporting budgets are sort of a pandemic dollar that a lot of governments had to spend to upskill and otherwise.

Speaker Change: and I'm trying to help people remain productive during that period when they're locked at home. Some of those budgets are less durable and that's where we have continued to see some of the weakness.

Speaker Change: is in the government sector. But on the question of visibility, you know, we are seeing in the Cresair for Business among, you know, so the North American and the Eurasian's, an awful lot of interest in gender bay.

Speaker Change: and certainly more in terms of pipeline development and bookings in North America and Europe than we are seeing in other parts of the world.

Speaker Change: We are optimistic that we're seeing the beginnings of companies not just talking about AI, but getting strategies in place, realizing that you get a strategy, then you buy some of the technology and then you train people on how to use it. Like with cloud computing like with many of the other technologies, there is a bit of a sequencing here.

Speaker Change: As we think about demand and retention, Gen. A in North America for Corsair for business has definitely been one of the highlights.

Speaker Change: and if this persists, you know, we're feeling like we might be seeing some stabilization, really supported by the interest in gender-day eye training.

Speaker Change: and you added that. She for sheep probably. Talk about the battle. Yeah, yeah, of course, our camper's is also finishing. I mean, the number of universities.

Speaker Change: who are recognizing that this technology is not just changing the demand from employers of what graduates that you need to have in terms of skills. But students saying do I want to get a college degree and what kind of programs do I want to take? And what do I need to learn in order to get a job?

Speaker Change: That is changing very rapidly, much faster than schools can keep up.

Speaker Change: and an addition to the needs in terms of skilling students, so they can get jobs.

Speaker Change: There's a whole teaching and learning experience that happened at school.

Speaker Change: that is fundamentally...

Speaker Change: and being transformed by this technology. And that's what we talk about. The students and coaching course builder for the instructor. So we are definitely seeing a lot of interest in general of hiring course air for campus.

Speaker Change: and in particular we put this in the script quite a bit as well. When you integrate this cutting edge technology and other job relevant concepts, especially gender-to-eye, into college curricula where the student gets credit for the college degree.

Speaker Change: We see very strong NRR and good expansion. So that's a use case that, again, the early part of what we think of bigger ways of higher education, you know, two trillion dollar market, saying...

Speaker Change: The only way to keep up is to integrate something like Coursera, that we can improve our curriculum and help attract students and help get them job. So we are seeing some bright spots in our in that segment of Coursera for campus.

Speaker Change: Thanks Jeff appreciate all the color there.

Speaker Change: Here next question comes from the line of Rishi Gillaria with RBC, please go ahead.

Rishi Gillaria: Wonderful, thanks so much for taking my questions. Maybe I just want to continue thinking about kind of the growth rates right now and things that are causing softness. You know, you've helped us kind of understand a little bit of the piece on consumer. You've talked about enterprise before and unpacked that.

Rishi Gillaria: But if we just think you take a step back, you do have all these secular till when that you're back, the changing nature of education, Jenny, I'm the need for people to upscale and reskill, maybe even some pockets of softness and economy that we've been seeing over the past.

Rishi Gillaria: 2 years or so. I guess given all of these, you know, what aren't we seeing higher growth rates or, you know, won't be the right way to kind of think about what needs to happen outside of a macro recovery.

Rishi Gillaria: To see those growth rates and select upwards to at least, you know, back to double digits, maybe help us kind of understand all of those pieces there and then I've got to click to follow up.

Speaker Change: Alright, I'm going to give a really high level view of this, but that's what you ask for. At a really high level, we really do believe that, generally, I, actually, as it relates to people learning things.

Speaker Change: is going to create a much higher demand for people learning skills and credentials which help prove that they have them in order to be productive in the workforce.

Speaker Change: When we think about when, so I agree, I really believe that we are going to be AI winners. It remains to be proven clear that the growth rates do not suggest the balance was happening.

Speaker Change: But I look at individual readiness and institutional readiness. And a lot of it starts with institutions. But when I think about institutional readiness, you got to look at business of governments and campuses.

Speaker Change: Campuses, they're not very agile organizations. They are the ones facing the greatest disruption. I think of greatest disruption, the higher education than anything we've seen in our lifelines, is going to be hitting higher education institutions around the world.

Speaker Change: They are not the most agile organizations, but like with any organization, they need to attract customers or call those students to deliver value, which is a curriculum that helps them get jobs. Because they're not fast.

Speaker Change: Good.

Speaker Change: It's hard for them to keep up with the way it changed. I don't think they can do it without someone like us. But because they're not fast, we are not seeing growth rates happen as quickly as we would like.

Speaker Change: I believe still is a very large market. It will be a little out to crack that and we are very well positioned to do that. So I think the institutional importance exceedingly is very high. The readiness, not quite there, but you can see people.

Speaker Change: Very focused on how, let's say, people, people in the university thing.

Speaker Change: We're about to see something very fundamental happen to our universities because of this technology. So the recognition is there, the response and readiness is coming.

Speaker Change: on Business Side I can't have already outlined that.

Speaker Change: Frankly, I was not right when I thought two years ago, almost two years ago, that this would happen really quickly. Businesses would rapidly adopt genetic technology, see productivity benefits, and then force the learning and credentialing on to their learners.

Speaker Change: We are definitely seeing an increase in not just talking but doing, starting as I said, what North America. Here's how I see this playing out.

Speaker Change: When?

Speaker Change: Company starts seeing the productivity gains that are expected. We can see puts the number at 4.4 trillion dollars.

Speaker Change: and productivity gains will not happen equally across job functions. And the job functions like customer support are going to happen faster. Other job functions will happen more slowly, but what McKinsey laid out is customer support, software engineering, product and R&D, sales and marketing. Those are the big functions where the big dollars are and where transformation is most likely to take place.

Speaker Change: [inaudible]

Speaker Change: is that when company starts seeing major productivity gains, I usually use technologies and training people at these technologies in these functions, they will either require the employees to learn these types of skills.

Speaker Change: and or hire them in higher-other employees who have these skills. That gets me to individual readiness.

Speaker Change: If companies put the requirement on individuals to learn these skills and how to use them. And frankly, I've been a little surprised at how slowly individuals have been really using this type of technology.

Speaker Change: But if the productivity gains in there, the companies will demand it, either from the current employees or from new employees that they hire. Sometimes those new employees will not be in the same country as the current employees.

Speaker Change: Knowing and proving that you can, you can predictably use Genevieve High Skills is going to make you more valuable as a job candidate.

Speaker Change: So when we look at individual readiness for a gen of AI and you do the surveys in different countries, surprisingly, there's a lot more optimism and positivity in India among employees than there is in the United States.

Speaker Change: A lot of people in the United States are pretty worried about their jobs. They haven't seen any impact yet, but they're just a little reluctant on this. I think the impetus is going to come from their businesses who say, if the new way to do business, if the new way to do your job, you're going to have to learn these tools and work at the shed and do that. We need employees who are productive using these tools.

Speaker Change: I still see every indication that that is the way that things are going to sequence and I think we're a bit on the front edge of this.

Speaker Change: Sorry, I'm just going to keep going for one more moment here, Rishi.

Speaker Change: If I look at the rate of value of us creating content and credentials with our partners, and I look at the rate of value that we're creating with the product for learning and teaching,

Speaker Change: We've really been doing a lot in the last year. It just has not yet shown up. The value we're creating has not yet shown up in revenue, right? I believe it positions us well for the tailwinds that are going to occur, especially when institutional ratings kind of matches what the opportunity set is right now.

Speaker Change: Anything you'd add to that? You know, you just added, Dan, the only thing I was going to add, we might want to highlight a little bit more, is on the product side. It raises a fundamental question, of course, of how we're getting back to double-digit growth.

Speaker Change: and I do think Carlos can be.

Speaker Change: product-driven coach and course builder. Maybe we should talk a little bit more about what that's going to look like. We're going to be creating better, more value for our customers, and we will capture some of that over time. Yeah. And it's early, and we're seeing results. Yeah, it's not, it's not just theoretical anymore, at least in terms of learner experience. I mean, we, we, we launch coach

Speaker Change: in May of last year. So we've been in market with Gen AI for over a year on many products.

Speaker Change: We've now had over a million people using Coach. We see how they're using it. They really like it. They are learning faster. That's one of the things, putting pressure on a retention rate, is people are finishing courses and specializations faster.

Speaker Change: But they really like it. The translations have been helping. And on the course builder side, we're seeing a lot of institutions saying, I can take these world-class courses and tailor them just to my company's needs.

Speaker Change: So it's no longer for us theoretical that there's a lot of value there and customers see the value and benefit from it.

Speaker Change: It's still early and we have not seen that show up in revenue yet. But our rate of progress is high and as we think about where we're going to focus our resources and where we're focused on the cost reductions, we are going to continue to push hard on value delivery from the content engine and value delivery from product innovation.

Speaker Change: Got it. Okay. Thanks. That's super helpful. Maybe just a very quick follow-up because that was a very thorough answer. But just how should we be thinking about capital deployment? You've got nearly three quarters of a billion of cash, net cash on the balance sheet. Stock is trading at

Speaker Change: multiples that are, you know, sub one times revenue approaching half times revenue. If you are in fact so bullish on the business and all these different growth drivers and the path ahead, I guess why not pull the trigger and opportunistically buy back shares at these kind of super low levels?

Ken Hahn: So, Rishi, this is Ken, of course. So, fair question and certainly one we've considered.

Ken Hahn: On an overall basis, given where we are in the market, given our cash mountains, the thing you didn't add is we're throwing off a lot of free cash flow. So it's, you know, there's even more reason to ask that question. We don't need it to survive. I think, you know, given this period, this period right now where growth is slow a little bit, the financial stability we think is pretty important as it relates to our customers.

Ken Hahn: Additionally, the strategic optionality

Ken Hahn: We're not done with that yet. We see opportunity. It's been hard across the sector, so, you know, we don't look around and say other people aren't growing, then we shouldn't grow as much. That's not okay. And you led into that perfectly with your first question. So we shouldn't be growing faster. We should be getting back to double digit growth.

Ken Hahn: We do think there's the opportunity strategically while things are moving around in the space.

Ken Hahn: for us to take advantage of it. We haven't done so yet.

Ken Hahn: You might remember we disclosed last quarter we non-gapped some significant deal expenses because we didn't close a deal.

Ken Hahn: We're going to continue to remain active.

Ken Hahn: If we thought for some reason we weren't going to be active and there wasn't strategic opportunity, absolutely we'd think about moving forward and purchasing stock at prices like this. And if we did, it wouldn't be the first time. I mean, we did complete some share repurchases and notwithstanding that- Well, if you look just this year, right, we've maintained this cash balance. We bought back $40 million worth of shares.

Ken Hahn: with this talk this year, so spot on.

Ken Hahn: So, if the concept isn't foreign to us, and it's a good question, and we'll continue to monitor, but also hopefully look for us to be more active strategically.

Speaker Change: Thank you.

Speaker Change: Really helpful. Thanks, guys.

Speaker Change: Bye-bye.

Speaker Change: Your next question comes from the line of Joshua Baer with Morgan Stanley. Please go ahead.

Joshua Baer: Great, thanks for the question. A lot of the prepared remarks were more around the consumer as far as weakness.

Joshua Baer: On the Q&A, definitely we got into enterprise, but I want to make sure I understand the differences as far as the change from

Joshua Baer: the prior guidance, so maybe like focusing on Q4, the what was implied before.

Speaker Change: Some of the government contracts that you had previously talked about churning, just wondering around that drop in net retention rate, what was incremental versus last quarter?

Speaker Change: Yeah, it's a good question Josh. The reason we focus on the prepared remarks on the consumer business is because that is where the vast majority of the weakness occurred.

Speaker Change: A lot of that revenue is from historic contracts a year plus, a year plus previous. The only thing that does affect it on the margin is renewals. Renewals were slightly weaker than last quarter, but not materially so. The myth is primarily consumer.

Speaker Change: And on the NRRs, it is mostly persistence of things that we had talked about last time in terms of what's dragged on the NRR.

Speaker Change: Okay, so that drop quarter over quarter, you're saying it wasn't driven by losing large customers?

Speaker Change: That's right.

Speaker Change: Okay, got it. Thank you. There were some non-renewals from some of the one-time, as Jeff referred, from some of the one-time only less.

Speaker Change: Your next question comes from the line of Taylor McGinnis with UBS. Please go ahead.

Taylor McGinnis: Yeah, hi, thanks so much for taking my question. So first one just on the consumer side So I think part of the implied acceleration in the previous guide was driven by the rollout of some of the recent content launches

Taylor McGinnis: that you guys talked about in the prepared remarks. So just one, like, I guess, are you seeing, like, since those have gone live, are you seeing the traction with those that you anticipated? Is there any part of the softness, maybe just not seeing, you know, like the conversion with those? And if so, curious, you know, why that might be, and if there's been any delays or anything else we should keep in mind. Thanks.

Jeff Maggioncalda: Yeah, Taylor. Hey, this is Jeff. So we clearly have been cranking on the content engine. We launched 10 entry-level professional certs. Those are a lot of the big money makers in the consumer segment. And this is like Adobe, Amazon, Epic, IBM, Microsoft, nice big brands.

Jeff Maggioncalda: 20 new and upgraded Gen-AI certificates. So we're definitely getting into the next phase of our generative AI, what we call the Gen-AI Academy Strategy, where there are three pillars.

Jeff Maggioncalda: We launched an AI Academy last November and it was first GenOBI for everyone and these are kind of general purpose

Jeff Maggioncalda: titles.

Jeff Maggioncalda: that are about, you know, what is AI, how does it work, and how should you think about it responsibly. And then there's generative AI for executives. And then the third big pillar has been generative AI for teams. And this is basically the job-specific generative AI titles.

Jeff Maggioncalda: So, we have recently started, our partners have started creating more of these job-specific Genevai titles.

Jeff Maggioncalda: We have had a few of them launch, a couple handfuls.

Jeff Maggioncalda: And we are anticipating that when it comes to productivity unlock, those are going to be the kinds of titles that will teach people the skills in their jobs to unlock productivity, do higher quality work. So we're excited about those. We're still at the early stages.

Jeff Maggioncalda: Now, you asked...

Jeff Maggioncalda: Have they performed according to our expectations? It's still relatively early. We have pulled in, I shouldn't say pulled in, we've accelerated the rate of production

Jeff Maggioncalda: We have not seen on the on the traffic side the number of people coming into the new titles or coming to the site for the new titles to be as high as it was on some of the big new professional certificate launches, say, from Google in last year or the year before.

Jeff Maggioncalda: Conversion rates.

Jeff Maggioncalda: have been pretty steady. So we're feeling pretty good about conversion.

Jeff Maggioncalda: But as we have talked about, and it was kind of related to, I think it was...

Jeff Maggioncalda: and Josh's question, or maybe it was Rishi's.

Jeff Maggioncalda: at slightly lower rates than we have before. And that includes existing professional certificates, which historically had higher retention rates, including some of the new certificates. So I don't think it's anything about the current, you know, new titles that came out. It makes us think.

Jeff Maggioncalda: This is more of a macro kind of factor. But another thing that we are expecting is that that third pillar of Genova AI Academy, these titles that have to do with role-specific productivity unlocks associated with learning Genova AI skills.

Jeff Maggioncalda: that that's going to be increasing in demand as more companies say to their employees, I need you to learn these skills because I'm counting on these kinds of productivity gains. So the answer is content engine good.

Jeff Maggioncalda: Conversion's been good, but it hasn't not been drawing as many people, the retention has not been as high, so overall when you add that together, we're not getting as much revenue from these new titles as we thought in the Q1, Q2 period when we were looking at these things as a pipeline of content that would be rolling out.

Speaker Change: You talked about some areas that, given the $30 million in cost savings, there's going to be areas that you're going to pull back on, those with less growth and less leverage. So when we think about the puts and takes of that, combined with focusing on other areas, any potential headwinds to revenue that could occur from that shift in any of the segments that we should consider, or anything as we're thinking about the different segments overall with this initiative?

Speaker Change: Yeah, at a high level, I'll sort of give you the guiding principles. We obviously don't have, well, we're not going to show all the details, and then, Ken, maybe you can provide a little bit more granularity. But we basically looked at this, did this analysis of basically growth and leverage. So where are we growing the fastest per dollar that we're spending on it? We started mostly with sales and marketing.

Speaker Change: leverage. And then we looked a little bit R&D because we do have some dedicated R&D towards certain types of markets and segments, certain regions and segments. And so we we feel pretty good that these cost reductions are not going to have a huge impact on our growth rate. We are

Speaker Change: We're still continuing to invest in the content engine, the source, and in the product innovations, like we said with Coaching Course Builder. So we really tried to find ways where we can pull back on spend in a way that has the least impact on growth.

Speaker Change: To some degree, I think when I look at the amount of value that we're shipping in terms of content and product, we're ahead of where a lot of our customers are right now, I think. I think a lot of the titles, they're not yet ready for them. I think a lot of the product features are new to them.

Speaker Change: and they will find that these are really valuable. So we are not really planning to slow down our shipment of value. We are trying to pull back in certain market segments, most in our sales and marketing, where we're just not seeing the market traction. We don't wanna put the sales and marketing dollars against those things.

Speaker Change: I'd say broadly just acknowledge any time there's change like this it creates risk on the revenue line items and you just described well how we thought about how we approach it. I guess the one thing I'd say is where we started

Speaker Change: looking at the growth areas and what we were going to support.

Speaker Change: So, again, with the emphasis, you know, where are we going to grow in 2025 and beyond? And from there, we paired around that in areas that weren't required to get us there. One final thing I'll just mention.

Speaker Change: Any time some new technology comes out or there's some major change that happens in the world, you know, organizations respond at different rates.

Speaker Change: We use the word pacing a lot around here. We talk about pacing our investments with our growth rate. There's another kind of pacing, which is pacing our investments with the readiness of the market to adopt new innovations.

Speaker Change: I think we're at the leading edge of this, but we don't want to go faster than the market is ready, either.

Speaker Change: I think that the level of value that we're shipping is far in excess of the amount of incremental revenue we're getting for it.

Speaker Change: and so we just don't want to put too much out there before the market's ready to absorb it and so we're also really thinking about where on the product side are we seeing the most immediate adoption, immediate value, and the ability to monetize those features that we're delivering. So we're pacing also to market adoption not just internally to growth, race, and leverage.

Speaker Change: Your next question comes from the line of Jeffrey Silber with BMO Capital Markets. Please go ahead.

Jeffrey Silber: I know it's late, I'll just ask one. You had a pretty sizable adjusted EBITDA beat in the third quarter, and I guess the implied guidance for the fourth quarter, it looks like you might be coming in a little bit below that. Were there any timings of expenses potentially that benefited the third quarter that, you know, you might shift into the fourth quarter?

Speaker Change: No, Jeff, there was nothing specifically. What we do is we always try to, you're newer with us so I'll repeat what we repeat ad nauseum, what we do is we pick a target EBITDA margin for the year and then we try to grow as much as we can within that.

Speaker Change: And so we're trying to invest for growth wherever we can. In Q4, we'll see some higher expenses because we couldn't spend enough. We do not try to be on an EBITDA. We try to come in where we commit.

Speaker Change: And so we haven't been able to spend enough the last couple quarters, which is why we had to, which is a funny way to say it, had to increase our guidance pre-MidDoc.

Speaker Change: We've had a little bit more opportunity to try out some spending areas that should contribute to longer-term growth, which we can take in in Q4. So we'll do that. There will be some incremental spend, but no, no delays that go quarter to quarter. And I'll just chime in when we talk about pacing. We think about sustainable growth.

Speaker Change: and recurring expenses.

Speaker Change: So, we started pulling back on a lot of our recurring expenses, i.e. hiring back in Q2.

Speaker Change: you, right? And so, we said, look, we want to make sure that we don't lock in a, you know, a rate of spend that's going to be further than, in excess of what we're going to be growing on the top line.

Speaker Change: So, when Ken talks about finding ways to, you know, manage the EBITDA margin for the year and thinking about Q4.

Speaker Change: We're looking for ways to deploy expense

Speaker Change: that are non-recurring, because we want to make sure we don't outpace our revenue growth in the rest of this year and next year, but can help.

Speaker Change: really further growth for next year. And so we're not going to spend money unwisely. We are very careful about putting in recurring expenses by hiring people.

Speaker Change: We would like to find ways that we can sort of use expenses in Q4 to buy growth or to further our growth.

Speaker Change: in the next year. But when you look at this on balance, you know, as we thoughtfully consider how to spend the money, it just turned out to be a bigger adjusted EBITDA margin because we don't want to lock in recurring expenses and we feel like we're adequately deploying our expenses for next year's growth and Q4 growth as we go into it.

Speaker Change: I appreciate the call, everybody.

Speaker Change: Sure, Jim.

Speaker Change: That wraps today's Q&A session. Replay of this webcast will be available on our Investor Relations website. Thank you for joining us. Take care.

Speaker Change: Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation and you may now disconnect.