Q2 2019 Earnings Call
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Oh now, let's turn the conference over [laughter], <unk> General Counsel and executive Vice President of corporate development. Please go ahead.
Thank you and good morning, I'm joined today by Rick Calder, Gtts, President and CEO , Mike Sicoli, Gtts, Chief Financial Officer, and Brian Thompson Gtts Executive Chairman of the Board today's discussion is being made available via webcast through the Companys website Www Dot GTT dot net a telephonic replay of this call will be available for one week dial in information for the replay as well as access to a replay of the webcast is also available on our website.
Before we begin I want to remind you that during today's call, we'll be making forward looking statements regarding future events and financial performance made under the safe Harbor provision of the U.S. securities laws, including revenue and margin expectations projections and references to trends in the industry and Gtts business. We caution you that such statements reflect our best judgment as of today August eight based on factors that are currently known to us and that actual future events or results could differ materially due to a number of factors many of which are beyond our control for a more detailed discussion of the risks and uncertainties affecting our future results. We refer you to our SEC filings.
GTT disclaims any obligation to update or revise these forward looking statements to reflect future events or circumstances.
During the call. We will also discuss non-GAAP financial measures, including certain pro forma information, which were not prepared in accordance with GAAP. A reconciliation of our GAAP and non-GAAP results is provided in today's press release and is posted in the Investor Relations section of our website I will now turn the call over to Rick Calder Rick.
Thank you, Chris and good morning, everyone. This was a challenging quarter for us as we have not yet returned to organic rep driven growth overall net installations of monthly recurring revenue remained negative at this stage. We ended the second quarter with approximately 320 quota bearing reps the same level as last quarter with a similar level of sales and sales productivity at approximately $7000 per rep.
As we discussed before to return to positive net installs and organic rep driven growth, we need a larger sales force to drive a larger volume of sales and installs to outpace our churn at the mid 1% level.
We are now targeting 400 quota bearing reps by year end 2019, and 500 by year end 2020.
Our installs in Twoq, you were similar to last quarter, though our installed productivity remains lower than our sales productivity at approximately $6000 per rep in monthly recurring revenue with the opportunity to improve the pace of installations of our backlog, which remains at approximately 10 million in monthly recurring revenue year to date, our churn remains at 1.5% and was slightly lower in first quarter and slightly higher in the second quarter.
Looking at a division level year to date, we have seen positive net installs and our Europe Division and since our last call. We consolidated leadership over Europe Division under Yes, regard, who will drive investments to accelerate growth throughout our five European regions, including the UK, Nordics, Benelux, Germany, Austria, Switzerland, or dock, and South which includes France, Italy and Spain.
We have had weaker performance in negative net installs year to date and our Americas Division.
Since our last call, we announced a leadership change with Ernie Ortega joining GTT in June as President of our consolidated Americas Division. We are very excited to welcome you to our team as he brings brings a tremendous track record of success in our industry running a large sales organizations at Ekso, cogent and cold and we'll bring fresh leadership to the Americas Division.
As we grow our salesforce to 400 by year end 2019, we are converting existing trained resources at GTT into quota bearing account executives directly assigned to clients to focus a higher percentage of our workforce on direct selling activities as of today, we have increased to 370 quota bearing reps.
We are also recruiting aggressively to add sales development wraps recipe ours as our lead generation engine.
Inside sales account representatives to cover our smaller accounts and selectively for our higher end account managers and account directors for larger accounts, while we expect these resources to increase our overall sales.
Average sales productivity per rep will be slightly lower as we move forward since our inside sales account representatives and our account executives will carry a lower quarter than our more experienced reps.
<unk> expense, we expect to fund most if not all of the planned salesforce expansion by reducing costs in other areas of the business, most notably non head count related SGN AG.
For the balance of 2019 and through 2020, our focus is returning to an accelerating organic rep driven growth.
Very simply we must grow our sales force to expand our overall sales and backlog, we must increase the pace of installations to keep sales productivity installed productivity at similarly high levels, and we must maintain our churn levels in the mid 1% range within our Americas Division and Europe Division, earning SBR focused on each of these three areas as follows.
Increasing sales by adding sales development reps to generate leads and expand our farm system of new sales reps, adding adding quota bearing reps at both inside sales account representatives and higher end account managers and account directors to increase coverage of our existing clients and new prospects and expanding our training and development program with focus on our core services of SD Wan Internet transport and unified Communications.
Two increasing installs and install productivity by consolidating the talent pool across our previous for service delivery organizations into two stronger teams by standardizing our initial design and deployment of SD Wan, which represents approximately one quarter of our current install backlog.
And allowing agile post install design changes from clients.
And lastly by automating many of our current manual processes using our internal CMB development resources as they have completed our integration activities.
Three reducing churn again by adding quota bearing reps to increase coverage on our existing accounts and by dedicating more resources across the critical post sale client touch points, including service delivery incident trouble management and billing and collections. Moreover, we are expanding client visibility and control into all of these touch points to our either vision client portal.
I'm pleased to report that the intrude integration is now substantially complete.
We are still experiencing some post integration challenges with our billing and collections function in Europe , and converting billing systems is never easy and while it really is not the most complex integration we have ever done it was certainly the largest.
Revenue and cash flow were negatively impacted during the quarter as we continue to work with many of our European clients to answer all of their questions about the new Bill format.
Fix any data errors and issue related credits.
Mike will talk about this more in a few minutes, but we expect some of this work will continue into the third quarter, and then returned to normal levels by year end.
Our business remains Capex light, though asset rich and with the inner root integration behind us, we expect to drive increasing levels of free cash flow defined as operating cash flow less capex with a target of generating 175 to 200 million of free cash flow in 2020.
In addition, we have engaged an advisor to explore divesting non strategic assets that we have acquired over the past several years as we focus on our cloud networking services. The main use of proceeds from any asset sale will be to pay down debt.
On the <unk> on the M&A front, we announced the acquisition of KPN International, which we expect to close sometime in Fourq you 19.
KPN International operates a global IP network, serving strategic enterprising care clients.
Increasing our tier one scale and network reach and adding key sales operations and service delivery resources to our team.
In addition, this deal positions GTT as the preferred international network supplier for the domestic clients retained by KPN, who have international connectivity needs.
The purchase price is 50 million euro in cash, which we anticipate will represent a multiple of less than five times post synergy EBITDA and we expect to complete integration within two to three quarters post close.
As I said earlier, while we have not yet returned to organic growth. We have completed our integration activity and remain confident in our ability to return to organic growth in the future.
From the beginning of 2017 until now we have closed and integrated 10 acquisitions and nearly quadrupled the size of the firm as we have noted before each of the companies. We acquired had a flat or declining trajectory at close and while we have not yet returned to growth. We have assembled all the right components to return to growth in the future.
We have the same focus strategy of providing cloud networking services to large multinational clients and taking share from the incumbent telcos in the multi hundred billion dollar market for cloud networking services, we have a fantastic team of people located in 60 offices in 30 countries around the world committed to deliver on our purpose of helping companies connect people to any location in the world and to every application in the cloud.
Now I will turn it over to Mike to review the financials in more detail Mike.
Thanks, Rick.
Second quarter revenue increased 33% year over year and decreased 4% sequentially to $434 million.
Exchange rates had a negative impact on our reported results as approximately 51% of our revenue is denominated in non U.S. dollar currencies.
In constant currency revenue increased 37% year over year and decreased 3% sequentially.
On a pro forma basis, including intrusion prior period results and in constant currency revenue decreased 3% both year over year and sequentially.
The year over year decline was driven by two main factors currency, which represented over $50 million of annualized revenue reduction compared to last year as well as negative net installs.
The sequential revenue decline was driven by several factors, including a $2 million reduction from currency headwinds a 2 million dollar reduction in nonrecurring revenue and the remaining 12 million reduction was split fairly evenly between the impact of negative net installs and credits issued to clients to resolve disputed amounts associated with intrude billing integration.
Issuing dispute credits as a result of billing integration is not uncommon, but the magnitude is larger and the timeframe is longer than we normally see.
The typical reasons for these credits are Miss disconnects double billing are important errors, most of which relate to prior periods.
We expect billing credits to remain elevated in the third quarter as well as we resolve any remaining issues delaying payments then returned to a more normal level starting in the fourth quarter.
Second quarter, adjusted EBITDA increased 50% year over year and decreased 8% sequentially to $112 million.
In constant currency adjusted EBITDA grew 55% year over year and decreased 8% sequentially and on a pro forma basis, adjusted EBITDA grew 8% year over year and decreased 8% sequentially.
Adjusted EBITDA margin of 25.8% increased by 290 basis points year over year and decreased by 130 basis points sequentially.
The year over year pro forma adjusted EBITDA increase was due mainly to the realization of cost synergies from the intrude acquisition and the sequential decline was due to the revenue decline.
Both cost of revenue and SGN, a were lower sequentially, but not enough to offset the revenue declines.
We continue to expect to achieve our original target of $100 million of cost synergies from the intrude acquisition and these savings are largely reflected in our results at this point with only approximately 10 million of annualized savings remaining to be realized.
During the quarter, we incurred $6 million of transaction and integration expenses, which are included in our reported EPS Jna, but excluded from adjusted EBITDA.
We also incurred $6 million of severance restructuring and other exit costs.
From a cash standpoint, we paid out 14 million of combined exit and integration cost in the quarter down from $18 million last quarter.
These exit and integration costs are mainly related to intra route but also include access point.
At quarter end, we had approximately 18 million remaining to be paid out related to previously expensed exit costs, most of which should be paid out in 2019, and we expect future exit and integration expenses related to these two deals to be minimal.
Second quarter net loss was $33 million compared to net loss of $136 million last year, and net loss of $27 million last quarter.
The net losses in each period were driven mainly by nonrecurring costs, including exiting integration costs as well as the noncash change in fair value related to our exchange rate and interest rate hedges.
Second quarter capital expenditures were $19 million or 4.4% of revenue compared to $19 million last year, and 32 million last quarter.
As we discussed on the last call last quarter's capex was higher than normal due to the timing of payments and this quarter was closer to normal.
Going forward, we expect our capex to be between five and 6% of revenue, which is slightly lower than we discussed on the last call.
Our revised expectation reflects the capex late late nature of our strategy and we are comfortable lowering the range now that we've seen a full year of intrude activity.
We continue to expect our capex to be driven mainly by success based investments in support of specific revenue opportunities.
Second quarter, ending cash balance was 34 million and net cash provided by operating activities was 15 million.
Adjusted free cash flow, which is net cash provided by operating activities less capex, excluding acquisition related costs was $10 million in the second quarter compared to 2 million last quarter.
Our cash flow was negatively impacted by working capital this quarter as we did not make significant progress yet on reducing our accounts receivable balances in Europe .
We have made organizational and process changes to accelerate the pace of reducing our accounts receivables balance in Europe , and we continue to expect to normalize our dsos in the second half of the year.
We also continue to expect cash flow to increase throughout the year as we normalized working capital fully realize expected cost synergies and finished paying out exited integration costs positioning GTT to deliver free cash flow in the range of $175 million to $200 million in 2020, as Rick mentioned earlier.
Our debt balance was approximately $3.3 billion at the end of the second quarter, including 2.6 billion of senior secured term loans maturing in 2025 of which roughly one third is euro denominated and 575 million of senior unsecured notes maturing in 2024.
During the second quarter, we increased our revolver capacity by 50 million to $250 million to increase liquidity and fund the KPN acquisition.
We did not draw any additional revolver during the quarter.
Our pro forma net leverage ratio in the second quarter increased to approximately 6.5 times on a trailing 12 month basis, including acquisitions and unrealized cost synergies in prior periods.
As we've said before we remain committed to reducing leverage over the next few years to our long term target of four times or less through growth in adjusted EBITDA cash flow generation potential asset sales and delevering acquisitions.
We also announced that we've adopted a section threeeighty two rights agreement or Noel rights plan.
The NOL rights plan is designed to protect our net operating loss carryforwards or Nols available under section three two of the internal revenue code.
As of June Thirtyth, 2019, GTT had $217 million of Nols available for use to offset future federal taxable income and our ability to use those nols would be substantially limited if GTT experience an ownership change as defined under section 382 of the internal revenue code.
To protect Gtts noel's from being limited or permanently lost under section three any to the NOL rights plan seems to deter trading that would result in an ownership change and to protect gtts ability to use. It then it was in the future in order to prevent the reduction in shareholder value that would result from any loss of the other wells.
More details are available in the 8-K.
This concludes our prepared remarks, and we will now open up the call for questions operator.
Thank you we will now begin the question and answer session.
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Today's first question comes from Jon Charbonneau of Cowen and company. Please go ahead.
Great. Thanks for taking the questions how should we now be thinking about the timing of when you can get back to sales rep driven growth, especially given that you expect 400 sales reps by year end and then in terms of your free cash flow target of 175 to 202020, what assumptions have you made within that for sales rep driven growth and additional M&A. Thank you.
Hey, John It's Mike I'll start and I'll, let Rick.
Rick cancer as well.
In terms of the timing.
As you know, we don't provide specific quarterly guidance.
Yes, so we are not providing a specific timeframe.
Today.
Although as Rick said in his prepared remarks, we are optimistic and think that it.
Sooner rather than later.
In terms of the assumptions of free cash flow next year.
Regarding.
Rep driven growth.
There is not a significant assumption of rep driven growth underneath that.
And in terms of M&A.
We've got the KPN deal that we've already announced and talked about.
Which we have assumed will be in the numbers for 2020, but we have not assumed additional M&A in that.
In that number.
Yeah, and then just to reiterate the point John I mean, where are single mindedly focus at this stage in returning our business to Rep, driven close United said as we've noted in that in the prepared remarks were close.
We are simply too small from the Salesforce perspective, and we meet installed productivity to basically be equal to sales productivity. We have the backlog to achieve that we have not achieved that yet and we have to maintain churn at a constant level. So as we grow to 400 Fourfifty by mid next year 500 by the end of next year, we certainly see the opportunity to return.
Relatively quickly to rep, driven growth get to positive and then accelerate that growth moving forward.
Great. Thank you.
And our next question comes from Frank Louthan of Raymond James. Please go ahead.
Thank you.
How close are you on to the 50% level can you give us some color on.
Much cushion you have before you trip the the change of control and then to be clear. Your you hired an advisor not not to sell the whole company. Just some particular assets and can you give us an idea of kind of what those assets might be and a range of what they might be worth.
Sure.
Regarding the the 50% level.
Around the Threeeighty two change of ownership guidelines.
We haven't provided a specific number.
I would say it.
It's not as if we are one or two percentage points away, but it's high enough that.
We felt like it was a prudent thing to do to.
If you take this step at this time I would just say it was it was above.
40%.
And then on that we're early in the process on.
We have engaged an adviser the vast majority of our business is strategic.
Clearly as we bought to many different assets over the past two and a half years or certain select portions that are less strategic.
To be focused on our cloud networking strategy are highly strategic products are clearly wide area networking Lan leading with our most strategic products offered defined wide area networking wide area networking.
Internet services transport and infrastructure Ethernet wavelengths.
And unified communication, so things that fall outside of that of that portfolio are less strategic to us. They generally represent relatively small portions and as it were in early stages I wouldn't comment specifically on how much we would expect to generate but we do expect to take whatever proceeds we would generate and use it to pay down debt.
I can appreciate you don't want to necessarily boxed in but I mean is it are we talking yes.
North of 100 million or something more like five to 10 million kind of it's kind of the sales.
No other meaningful assets and that someone would want to buy.
Yes without being specific.
Just reacting to your range, yes, we're talking about north of a $100 million not 10 million. If it was 10 million, we wouldn't bring it up right.
Its meaning okay.
All right good.
Good enough and then can you can you quantify the billing credits that that's you have left for the remainder year that elevated.
I have a better idea how to put that into it.
Not a model for that.
Yeah Yeah.
Go back to what I talked about in the prepared remarks, there was sort of a 12 million dollar number sequentially that was a combination of.
The negative net installs and the.
And the billing credits.
Billing credits that it was roughly half and half between those two items so call it 6 million.
Approximately in this quarter from from billing credits.
Our expectation is that.
Q3 will probably be a similar level to Q2.
Meaning it shouldn't generate additional decline sequentially.
But it will remain elevated during the third quarter, while we resolve all of the outstanding issues that are preventing payment.
And then as we head out of the third quarter the that that level of credits should go down such that that alone would produce.
Some incremental revenue quarter over quarter, and then it should be.
Sort of normal from there.
Okay, great. Thank you.
Our next question today comes from James Breen of William Blair. Please go ahead.
Thanks for taking the question.
Just a couple that EBITDA margin came down sequentially can you just talk about what's driving that and.
How you feel about that progressing throughout the year and then secondly.
You gave the free cash flow guidance 2020.
Given the 5.5% ratio for Capex, it sort of implies a revenue number somewhere between a billion 600 billion eight which is a pretty broad range.
Some of the asset sales.
Factored into that guidance and then.
How do you think about that going forward. Thanks.
Sure the from a margin perspective.
Obviously disappointing this quarter the.
The.
The revenue credits that we talked about a minute ago are essentially 100% margin.
[noise] reductions to revenue in period.
And so that clearly had a big impact on on margin this quarter, and we'll probably weigh a little bit on margins again.
In the third quarter.
Longer term.
There's really no change in what we have said before and what we expect I think getting into the high Twentys and ultimately.
Up to 30.
I think is still achievable and that's still our goal.
In terms of the.
You know trying to infer the revenue guidance from the Capex guidance that was in the non-GAAP reconciliation, we're clearly not trying to provide revenue guidance.
The range on Capex is really based on you know.
The way, we think about forecasting capex, it's not it's not based on a revenue expectation.
And sorry, if I missed it did you quantify the credits.
Yes.
We said it was roughly 6 million in the quarter.
Of sequential decline there is always some level of credit activity in our piano.
No one is.
It's completely perfect that billing.
But the incremental above the normal or above the first quarter level was about 6 million.
And how do you feel about that going forward.
Sure.
Literally just answer that question.
The the.
We expect a similar level in Q3 versus Q2, so shouldn't produce additional declines from Q2 to Q3.
And we expect it to return to normal you know by the time, we get to Q4.
Okay. Thanks.
And our next question today comes from George Sutton of Craig Hallum. Please go ahead.
Hey, good morning, guys, Jason on for George just a couple from me. So just wondering if you can comment on the hiring and retention trends that you're seeing in or are you seeing the employees that you want a higher out there for the economics that you're looking at and then if there's anything unique that you're seeing in the internal a attrition trends and then kind of along those same lines.
You talked about the productivity levels that you're seeing today, maybe that dips down a little bit as you accelerate hiring over the long term can you get that back to where we are can you get that back higher to levels that we've seen in the past. Thanks.
Yes, Hi, two comments there I think at the high end as we said in prepared remarks were very selective in hiring at this stage. We think we have the right number of higher end account managers and account directors to cover our what we tag internally is our premier and gold accounts, we have some some selective hiring there.
And I think we see enough and generally those are people that are well known to us are known to the teams in terms of recruiting them. We're generally not trying to hire people that we do not know.
Most of our recruiting will be focused at the SDR level sales development Rep, which are usually either graduates are first jobs.
And then into the account representative which is the inside sales. We are absolutely as we grow from three to 400 450 and 500 it will be much more of an internally generated.
A development program and we're investing significantly more in training as we bring up SDR to account representative than into outside sales account executive and beyond.
And we have and that will do twofold things one the pace the peak that piece of our base that is not as well covered today is the silver or smaller accounts and we think that will.
Not only.
Allow us to sell more but actually maintain if not even potentially lower churn.
And we see lots of opportunity to.
Recruits that level of folk throughout the 16 countries that we sell in.
So were very aggressive there we do expect that because those quotas on account representatives and the lowest end of account executive and outside sales are lower than our sales growth. It will come down somewhat though as our more tenured folks actually continue to improve sales, we think that will offset it slightly but as we noted in the prepared remarks, we would we would expect sums up small decline in sales productivity moving forward.
Thank you.
And our next question today comes from Brandon So.
Thanks. Please go ahead.
Hey, guys. Thanks for taking the question I'm curious.
Mike as EBITDA declined sequentially and potentially I guess could going forward given the growth trajectory here.
Where are you at with your debt covenants.
And where does where the equity is trading now impact any impairment asset impairments test that you might have.
And then secondly can you size, maybe the revenue impact for QEPM. So we can square where models. Thanks.
Sure I can go in reverse order in terms of KPN revenue, it's a similar expectation to other small acquisitions at approximately one times revenue the purchase price being approximately one times revenue.
In terms of impairment, we did if we havent already we will be filing the Q shortly.
And in the Q you can see the commentary regarding impairment, we did look at the stock price decline as a triggering event to review.
The fair value of the goodwill and determined there was no impairment.
As of today.
Obviously, there could be impairment in the future and depending on what happens with the stock price, but as of today no impairment.
In terms of the debt covenants, we still have plenty of room.
Today as you know the there's only really one covenant one maintenance covenant that is in the revolver to the extent that the revolver is.
Greater than 30% drawn it is today greater than 30% drawn.
However, our expectation is we'll be paying below 30% and all the way down.
Zero at some point.
As the free cash flow returns.
That being said, we did also which you'll see in the in the 10-Q, we did push out the covenants step downs a bit as well just to sort of take that issue completely off the table.
So we have plenty of room today, and we will have plenty of room under that covenant for quite some time.
Thank you.
And our next question today.
From Timothy Horan Oppenheimer and company. Please go ahead.
Thanks, guys the free cash flow.
Guidance or a range for 2020 does that include any impact from working capital either positively or negatively.
As we've said, we do expect to improve working capital significantly over the next several quarters.
I expect a lot of that to be done this year.
There probably is a little bit more upside in in 2020 as well, but we did not forecast any significant improvement in working capital as part of that.
Number.
Because if you normalize for the 6 million this quarter, you're at close to 120 million of EBITDA and.
What's your interest expense and.
[noise] Capex you are close to 50 million of free cash flow in the quarter.
Theres, a working capital improvements so I mean, it's kind of.
Applying five times around the $500 million range of EBITDA next year, I know, you're not kind of guiding to that but.
You are really not I guess on guiding to any real improvement off the trends that we've seen in the first half of the year for either revenue or EBITDA onto next year with this type of free cash flow guidance.
Sure the one thing to point out is.
The bond interest payment was.
Was made in July because the last day the quarter was in June so the cash interest year to date.
Doesn't have the bond interest in it.
But.
That's a relatively small.
A component of the overall free cash flow I think the.
Yes, your point is that.
We have a conservative expectation and I think thats, a valid point and I think thats prudent for us to do.
Really at any time, but especially now so hopefully we'll outperform.
Well I guess, just just on that point can you tell us I mean, I know you don't guide, but if you normalize for the 6 million.
Sure EBITDA trend up from here or should we expect a few more quarters of EBITDA declining at a high level and just stuff.
All for that run rate for the first half of the year to next year, we expect an increase on EBITDA broadly speaking.
Yes, tricky to answer because we don't provide guidance I think.
Yes, I'll go back to what I said before clearly the 6 million.
From the second quarter that was related to the billing credits.
Is effectively 100% margin and we don't expect that to be there.
Forever It should it will likely be there in Q3.
But beyond that no. So I think that's a fair adjustment to make I also mentioned that there is still some additional synergy realization to hit the piano.
Which should also drive.
Some upside and then ultimately.
We expect to get back to organic growth as well, which should drive additional growth and margin expansion on top.
Oh thanks.
And ladies and gentlemen, this concludes your question and answer session.
During this conference back over to Judy do you see.
Calder for any closing remarks.
All right. Thank you operator, I'd like to turn it over to Brian Thompson, our chairman for some closing remarks.
Thanks, Greg I, just wanted to be brief but to make a comment its historical in nature most of all but that's that over the 14 years since we.
Started the first acquisition.
We have been a public company and we have a fairly assiduously avoided guidance to the investment community.
Going forward because of the obvious difficulty in determining how and when.
So many one time charges, both both income and balance sheet related would fall in the on that the learning experience that we have with each acquisition and how that will turn itself into things like organic growth and technology.
We are a company that is.
Built itself on acquisitions to the size, we are because we felt that we have to be a size like we are now before we can really do the kinds of things technologically that the customers requiring worldwide, which is a very important factor as well.
So that we could have a value proposition that would be very comfortable for a sales force to be out there bringing to the customer demand.
We believe we're at that point I think it's fair to say that because of our lack of providing guidance. The most important thing that has come about in this timeframe is that we feel.
Comfortable about where we are in terms of generating positive cash flow that we have we have said for years that we were focused on because it's that cash flow that allows us to have a lot of flexibility.
As we meet the marketplace, both technologically as well as in things like adding sales force et cetera.
Because we are no longer a a major acquisition mode company and we are committing ourselves to that what I would call. The performance test of the model that we started with 14 years ago.
I feel that the strength of the company is is as it has never been before it is it is terrific.
The people that we've got now going forward not just at the leadership level, but at the secondary level and down I really quite confident comfortable and able to bring forward the value proposition and the basic tenets that make this company successful going forward.
We're quite bullish frankly about our ability to move this company forward from where we are now having taken advantage of all of the issues that have come through our acquisitions and importantly.
The the headwinds that the difficulty in doing an acquisition and the size of inner route and getting that behind US I think has created a very valuable lesson for everybody in the company going forward about what what is critically important both as we do acquisitions, but more importantly, as we operate the company.
Therefore, I think it's it's fair to say number one the projection that we have made finally.
What we think cash flow would look like in the next year is a one time thing that we have not done before and it's very important we feel comfortable that we can make that projection.
We hope to be able to put ourselves into a position, where we can get even better guidance going forward in future years, because we will be.
Very dominant factor in the <unk> and the and the marketplace that we serve which is basically the.
The cloud network services activities, so with that I wanted to say thank you for the call. Thank you for the questions and were looking very much forward to the third quarter and the fourth quarter.
Thanks.
Great. Thank you everyone. This concludes our call for this quarter, we look forward to reporting in the third quarter. Thank you.
Thank you Sir todays conference has now concluded we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.