Powerfleet, Inc. Q1 FY2023 Earnings Call

Good morning, and welcome to PowerFleet's First Quarter 2023 Conference Call. Joining us for today's presentation is the company's CEO, Steve Towe; and CFO, David Wilson. Following their remarks, we will open the call for questions. Before we begin the call, I would like to provide PowerFleet's Safe Harbor statement that includes cautions regarding forward-looking statements made during this call. During the call, there will be forward-looking statements made regarding future events, including PowerFleet's future financial performance. All statements other than present and historical facts, which include any statements regarding the company's plans for future operations, anticipated future financial position, anticipated results of operation, business strategy, competitive position, company's expectations regarding opportunities for growth, demand for the company's product offering and other industry trends are considered forward-looking statements. Such statements include, but are not limited to, the company's financial expectations for 2023 and beyond. All such forward-looking statements imply the presence of risks, uncertainties and contingencies, many of which are beyond the company's control. The company's actual results, performance or achievements may differ materially from those projected or assumed in any forward-looking statements. Factors that could cause actual results to differ materially could include, amongst others, SEC filings, overall economic and business conditions, demand for the company's products and services, competitive factors, emergence of new technologies and the company's cash position. The company does not intend to undertake any duty to update any forward-looking statements to reflect future events or circumstances. Finally, I would like to remind everyone that this call will be made available for replay in the Investor Relations section of the company's website at www.powerfleet.com. Now I would like to turn the call over to PowerFleet's CEO, Mr. Steve Towe. Sir, you may proceed.

Good morning, and thank you for joining today. It's a pleasure to share our first quarter performance review. Our positive start to the new year reflects our unwavering focus on driving growth, profitability and SaaS recurring revenue expansion, all while facing challenging macroeconomic pressures and significant FX headwinds. On a constant currency basis, our total revenue increased by 4% year-over-year, and our high-margin recurring service revenue was up 17% compared with Q1 last year. We're also delighted to report a 15% gross profit expansion in Q1 with margins in the quarter exceeding 50%, up from 43% in the prior year. Our U.S. business is seen as a major contributor to our future growth story, a thesis that continues to be validated with a 20% increase in recurring revenue versus the prior period last year. We also improved our bottom line metrics notably versus the prior year, which David will highlight shortly. Our key change efforts aim to optimize PowerFleet's business and concentrate our capital on areas that deliver superior returns to shareholders. This includes our revenue mix, geographies, competitive advantage and allocating capital and resources to drive faster growth and increased profitability. As part of this transformation strategy, we're actively working to divest low-margin, low-growth and sub-scale business units. We've made good progress on finding potential new homes for our Argentinian, Brazil and South African business units, continuing hardware-only purchases through our Cellocator sales channel and terminating loss-making contracts. This exercise naturally moderates our overall total revenue growth in the short term but allows us to focus on value-enhancing recurring revenue expansion, which in turn drives attractive gross margin expansion, improved cash flow and EBITDA. The most concrete indicator of the progress of our transformation efforts is the excellent gross margin performance of our go-forward core businesses in Q1. For these business units, we expanded our total gross margin to 53%, and our high-quality service margin increased to 71%. This impressive and exciting margin profile for our core business going forward provides us with an excellent platform to drive accretive shareholder value. In addition to the major transformation activities we executed in Q1, we successfully closed the Movingdots acquisition, launched a major new value-added module on our Unity platform, and secured several major customer sales wins. Before I dive deeper into our operational progress and outlook, I'll turn the call over to David to walk you through our numbers in more detail. David?

Thanks, Steve, and good morning, everyone. To begin with, I would like to provide an overview of our company's financial priorities after my first 90 days in the role. Priority number 1 is to accelerate our strategic transformation while staying within the limits of our current balance sheet. As Steve noted, we recently completed the Movingdots acquisition, which brought an additional $8.7 million in liquidity. This move also onboarded a talented team of engineers and data scientists to help accelerate the rollout of Unity, brings complementary technology that meets the high-performance standards set by one of the world's largest insurance providers and expands our presence to accelerate growth in the EMEA region. As we transition existing activities to the Movingdots team in the second quarter, we expect to spend $1.5 million, resulting in a short-term hit to EBITDA. In parallel with the transition, we are also executing a series of cost-cutting actions, including our $3 million OpEx challenge to bring the EBITDA impact of absorbing the Movingdots business down to breakeven as we exit Q3. Priority number 2 is to improve the underlying operating leverage of our business by implementing a common and scalable software platform across all key geographies. We currently have an assortment of ERP systems, resulting in a massive amount of manual working costs. During my first 90 days, we made the decision to pivot from the initial ERP rollout plan that would have taken us deep into 2024 to complete to an accelerated, more cost-effective plan B, which we expect to complete by year-end. In addition to saving time and money with ERP rollout, the project will address the root cause issues that currently result in G&A spend being well above our peers and our longer-term operating targets. We expect to see substantial savings from this project in the P&L from Q1 2024 onwards. Now on to our financial performance, where I'm pleased to report that our Q1 results demonstrate solid performance despite economic challenges and FX headwinds. Total revenue for the quarter ended March 31, '23 was $32.8 million compared to $33.2 million last year, with the planned decline in low-value product revenue, offset by growth in higher-value service revenue. On a constant currency basis, total revenue would have been $34.6 million, an annual increase of 4%. Our services revenue totaled $20.4 million, up $1.7 million year-over-year and accounting for 62% of total revenue. On a constant currency basis, our service revenue grew an impressive 17%, reflecting the successful execution of our SaaS growth strategy. This strategy is focused on expanding our customer base and driving more value for our existing customers through the delivery of high-quality cloud-based services. Product revenue declined by $2 million to $12.4 million or 38% of total revenue, with deal discipline and terminating unprofitable contracts being the key drivers. While we continue to invest in new product development, we've implemented a more disciplined approach to deal making. This approach has enabled us to focus on higher value, higher margin opportunities while reducing our exposure to lower-margin business. Gross profit margin expanded to 51% in Q1 '23 from 43% in the prior year, driven by an improved mix of high-margin service revenue versus product revenue, deal discipline and lower purchase price variances. Our operating expenses increased by $400,000 to $18.5 million compared to $18.1 million in the same year-ago period. Performance in the quarter was adversely impacted by $700,000 in M&A and other nonrecurring and out-of-period costs. Our ongoing focus on cost management is enabling us to shift investment into areas of higher return, including sales and marketing, with compelling results expected to be evident with accelerated revenue growth in the second half of 2023. Net profit attributable to common stockholders inclusive of a $7.2 million gain on bargain purchase for Movingdots totaled $3.5 million or $0.10 per basic share and $0.08 per diluted share, up from a net loss attributable to common shareholders of $4.1 million or $0.12 per basic and diluted share a year ago. Adjusted EBITDA improved significantly to $1.4 million, benefiting from a $2.2 million expansion in gross margin. This reflects our continued focus on profitability and our ability to deliver high-margin services to our customers. At quarter end, we had $25.1 million in cash and cash equivalents and a working capital position of $41.8 million, benefiting from $8.7 million in net proceeds from the acquisition of Movingdots. We believe with our strengthened balance sheet, combined with our focus on delivering high-quality services, we are well positioned to drive growth and value for our shareholders. That concludes my remarks. Steve?

Thanks, David. Despite the macroeconomic and FX challenges we're currently experiencing, our team's strong operational execution has enabled us to remain ahead of schedule on our plans to transform PowerFleet into a world-class SaaS solutions provider that delivers high growth and profitability. Our 2023 operating plan focuses on four key strategic objectives we are laser focused on delivering. Objective number one is optimizing our OpEx base and operating structure. In March, we launched Phase 2 of our optimization plan, which is expected to reduce our operating expenses by an additional $3 million annually, providing room to onboard Movingdots sales and engineering capability. We've also started further mid-term seismic shift projects. In terms of hardware rationalization and an integrated and centralized global supply chain and shared service centers that we believe will translate into an incremental $10 million of annualized EBITDA, which we'll begin to realize during early 2024. Objective number two is driving organic growth in our key regions where we can deliver high-quality recurring revenue growth. The proof points we've established significant sales momentum in the U.S. and Mexico, where SaaS recurring revenues were up 20% and 33%, respectively, in Q1 versus the same period last year. Our industrial vertical remains very strong with our U.S. team delivering a 25% increase in total revenue for the channel year-on-year, driven by our collision avoidance and advanced pedestrian safety solution. In Q1, we secured several notable Unity sales deals and strategy-validating proof points with customers in the U.S. and Mexico. To expand a little further, in the U.S., Unity has begun to have accelerated sales success in multiple vertical markets with the light of in-demand on-cart company selecting the Unity platform and our brand state to integration services to offer full fleet visibility and improve utilization for their assets sustained. Walmart, a long-term partner of PowerFleet, has confidently expanded their relationship with us with a multimillion dollar commitment for further Unity subscriptions with new sales orders in Q1 for over 7,000 new assets. Nestle has also expanded their partnership with PowerFleet, selecting the Unity advanced collision avoidance safety solution for 52 warehouse sites. Additionally, we continue to partner with NACPC to give them a competitive advantage in the chassis rental and leasing markets with a commitment in Q1 for an additional 10,000 Unity subscriptions. These successes highlight and validate the value and effectiveness of the PowerFleet Unity platform in saving lives, time and money for our customers. We continue to gain momentum in Mexico, where FEMSA, who has already selected the PowerFleet Unity platform for their entire vehicle fleet to over 6,500 vehicles, has now expanded their relationship with us, adding 1,200 new safety camera solutions as part of the new Unity safety and security module. PowerFleet's strategic partnership with AXA commercial insurance goes from strength to strength, adding a further 1,500 Unity subscriptions in Q1. Notably, we secured a pilot for our Movingdots smartphone-as-a-service insurance solution for AXA's 60,000 strong vehicle corporate fleet of passenger cars. The business aim is to implement safety and efficiency metrics to reduce risk levels and improve AXA's value proposition for the market. The Mexican division of one of the world's largest FMCG companies, who has more than 9,000 employees in the region, has chosen PowerFleet's Unity safety and security model for employee transportation with Airbus fleet; we plan to significantly further expand our relationship in the second half of 2023. Our half-2 2023 sales pipeline is very encouraging, improving by 47% in the first quarter, highlighted by several large strategic opportunities for our Unity platform with notable global enterprises. For example, one of the world's largest sports shoe and accessory manufacturers is actively piloting Unity, evaluating the solution's ability to meet their visibility and analytics needs across their total organization. One of our large global vehicle rental fleet customers is planning to replicate the success we've had in the U.S. by deploying in the APAC region, leveraging the Unity connected car solutions across their estate. On top of this, another top-tier on-demand international car rental company is also currently piloting our Unity solution. We expect this prospect to decide on a preferred vendor by the end of Q2 and roll out the solution during the fourth quarter. Our third strategic objective this year is delivering highly advanced enterprise software modules to the market. In March, we introduced our safety and security data-powered application to our new Unity platform. The new application brings together multiple data sources to enhance driver management, prevent loss and features best-in-class advanced collision reconstruction capabilities. The safety and security application is the first of a number of new and improved module applications to be delivered throughout 2023. Our next release, the sustainability module that centers on next-generation electric vehicle telematics capability and advanced ESG and CO2 reporting, is on schedule to be launched at the end of June. Objective number four is expanding our channels and routes to market to drive new growth opportunities. A great example of this is our highly strategic acquisition of Movingdots, providing us with a meaningful beachhead for the European expansion, alongside adding a distinct competitive advantage in the insurance vertical with the already established blue-chip go-to-market partners. In partnership with our Movingdots team, we've now put off the expansion of our European sales and service teams to launch an aggressive go-to-market plan for the full breadth of our Unity solutions. We're also evaluating a number of channel partnership offers we've received from large mobile assets enterprises in the Middle East. We're looking to create joint growth propositions for the local markets. In the second half of the year, we also expect to announce new strategic relationships with major transportation and mobile asset providers in the U.S., who are looking to maximize their total fleet in third-party contractor visibility and performance by integrating data from OEMs from their current telematics deployment with multiple vendors and from PowerFleet's own data gateways through the Unity platform. The customer plan is to utilize our advanced data enrichment capabilities to provide enhanced customer service propositions and improve efficiency for their end clients. Combining their information channels and integrating their data sources also gives the customer the ability to optimize the performance of their full suite of business operating systems and to simplify their business processes. We call this unified operations. Our unified operation strategy is at the very heart of the future of PowerFleet and our plan to drive consolidation in the industry. In the immediate future, we will focus on the integration of Movingdots and how we can truly maximize the game-changing market potential with that business. In summary, our transformation plan remains on track, and we are fully confident in our ability to deliver on our strategic foundational pillars, which will ultimately generate sustainable top-line growth, combined with increased profitability and cash flow. That concludes our prepared remarks. Now I'll turn it back over to the operator for Q&A.

Our first question is from Mike Walkley with Canaccord. You may proceed.

This is Daniel on for Mike. So I guess my apologies if I missed this during the prepared remarks, but could you just provide some additional details on the different moving parts of your cost savings initiatives?

Sure. So in terms of last year, there was a $5 million target that's largely been realized. That was a combination of both savings at the gross margin line. So in terms of driving efficiencies from a cost of goods sold standpoint, particularly on the product side of things. In addition to that, there were savings on the G&A side of things. In terms of those dollars, they have been reinvested back into the business. So we are now investing more in terms of sales and marketing. Obviously, the goal there is to see accelerated growth, and we're on track to see a strong acceleration in the second half of this year. The other major area of focus is to invest in Unity in terms of building out a next-generation SaaS platform.

And then with 2023?

Yes, the 2023 target is a $3 million OpEx target we set for ourselves in Q1, and we're on track to realize that. This, in large part, is creating room to absorb the Movingdots acquisition. So there's a huge talent pool that we're bringing on board. That was a major driver of that M&A decision. Again, we're working our way through those savings. There will be some overlap given we need to, in effect, transition R&D activities over from existing teams to Movingdots' teams. So there'll be some overlap in terms of cost in Q2, but the expectation is as we exit Q3, those savings will be realized, and that will enable us to absorb the Movingdots acquisition with, in effect, a breakeven EBITDA profile.

And then finally, as we talked about the seismic shifts, there are a number of longer-term projects that are underway that take a longer time to realize the savings back, but that's a $10 million of EBITDA expansion that we expect to start to roll through the P&L sometime during 2024. And that's everything from the ERP savings through to the globalization of our supply chain, the rationalization of the hardware, as we talked about previously, going from 26 devices down to 9, plus other operational efficiencies around shared service centers for the global business.

Right. Thanks for all the detail. And I guess just for a follow-up, could you just provide some additional color on how the integration of Movingdots into the Unity platform is trending?

It's very early days. We're only, I think, four or five weeks into the integration. So I think it's too early to kind of talk about that in any level of detail. Ultimately, what Movingdots brings is some very highly sophisticated algorithms, data science and AI capabilities that have been borne out in the insurance industry, obviously validated by Swiss Re, who is one of the world's largest reinsurers. They also as well have sustainability propositions around CO2 and emissions. So we've launched our overall new safety module, and we are launching our new sustainability module. Over time, we will bring that full unit functionality, sorry, capabilities into one platform and one set of modules.

Great. Thank you very much. I’ll hop back in the queue.

Our next question is from Max Michaelis with Lake Street Capital Markets. You may proceed.

Hey guys, congrats on the quarter. First question here is, I just would like to get an understanding of how order patterns have tracked so far in April and May.

So I think we've seen a very strong start to the quarter in terms of orders. So we built good momentum. There was a slow start in January and February as I think as people were contemplating investments, but we're seeing very good traction through March, which has continued into April and May. In that sense, while you've seen the pipeline that we're talking about that's increasing dramatically plus some of the sales results that we've talked about on the call today.

I was going to ask about your commentary on the outlook for Q2 and the rest of the year. Can you touch on a few key points of confidence throughout 2023? I know your pipeline has grown strong, but is there anything else you can highlight?

Well, I think if you stand back and look at what we talked about a year ago coming into this company. So we said that we would focus on high-quality SaaS recurring revenues. Our performance there so far is pretty impressive in terms of the growth levels of that element of the business. Secondly, we talked about Unity being a game-changing and industry-defining new platform. And I think the proof points in terms of the customer wins and the pipeline opportunity and the size of the pipeline growth for PowerFleet is super validating in terms of that being a winning strategy for the business moving forward. I think from a gross margin expansion perspective for our go-forward businesses to have already reached 70% in services and recurring revenue gross margin, that's starting to get towards the ambitions that the company had to be at a couple of years out from now. So that gives us strong confidence that, that will continue to expand. We're only just getting started. The more repeatable solutions we can get on the Unity platform, the more cross-sell and upsell opportunities that we get, then obviously, we create more margin by doing that. If you see and understand from the customers we're talking about the expansion that we're getting within our customer base with that cross-sell and upsell opportunity, then that should bring a high degree of confidence for all of us for the future.

Great insights, everyone. Just one more question from me before I circle back to the others. We've noticed a nice increase in gross margin this quarter. Can we expect to see further expansion in Q2, Q3, and Q4 on a sequential basis?

Yes, I can address that. We expect our gross margin for products to be 30% and higher. This year, we were at 27%, which is consistent with last quarter and shows a significant year-over-year increase. A major factor contributing to this improvement is the deal discipline we discussed earlier. Looking ahead, several aspects will benefit us. First, we're still working through some costly inventory acquired last year due to various supply chain challenges. Additionally, the customer mix affects our margins and tends to fluctuate from quarter to quarter. In Q1, the customer mix was not as favorable as usual, but we anticipate that Q2, Q3, and Q4 will return to a more normalized state. Our general expectation is to maintain a gross margin above 30%, with some quarterly variations, while aiming for a long-term trend of 30% and above.

Yes. And then on the services side, in terms of getting into that mid-70s range, I think that's in sight for us earlier than expected. We can't put a date on that yet, but the more new modules we get out, the more of that cross-sell and upsell opportunity that we are able to realize, then we'll start to expand margins from that perspective. There's also a lot of consolidation work going on in the background in terms of our platforms, our communication costs on the cost side of the services line. We feel very confident, and I think it's a good stake in the ground. As I've said for those core markets moving forward, to be now 71% is pretty impressive at this stage.

Thanks very much guys. And good luck.

Thank you. Our next question is coming from Scott Searle with Roth MKM. You may proceed.

Good morning. Thanks for taking the questions. And congratulations on the gross margin expansion in the core SaaS business. Steve and Dave, I apologize I got on a little bit late. But in terms of the sales acceleration into the second half of this year, I was wondering if you could provide a little bit of color of exactly what that means. And then specifically with the Unity pipeline, I think you talked about it being up 47%. I'm wondering if you could calibrate us in terms of what that looks like in absolute numbers. And as now we start to introduce the new modules with safety, followed by sustainability, what that's doing to the ARPU impact or the dollar content per transaction?

So sales acceleration, again, as Steve noted earlier, our pipeline increased sort of 47%. In terms of the dollar value, it's tens of millions in terms of just what that means in terms of the size of the pipe that's coming through. So that will help you just give you a sense there, Scott, in terms of sort of quantum that we're talking about there.

Yes. It's $125 million of contract value added to the pipeline during the first three months of the year. Can you repeat your second question? You went a bit quickly for us.

Oh, I apologize. Steve, just in terms of the new modules, what they're doing in terms of the ARPU per connected device or the overall deal size?

Yes. So we're very much focusing as you heard from the customers that we were talking are mid-to-large-sized enterprises. So these are good sizes, anything ranging from 250 subscribers up to multiple thousands. In terms of ARPU, we're seeing a nice uptick around about 15% to 20%. I would say at the moment in terms of improvement on ARPUs versus our historical kind of new sales of the old versions of the modules pre-Unity. I think people are seeing the value. We're doing a much better job in terms of value-based selling, our return on investment contribution, building long-term roadmaps with our customers. We're also when we are putting hardware in, is we're focusing on our SmartBox concept, where we're getting a higher value device fitted that ultimately then all the modules can be turned on remotely with software upgrades rather than the customer having to keep adding in more hardware. So the vectors are good. Obviously, still early days, but in terms of proving out the proof points, I think the strength of the pipeline, the reaction to Unity, the major brands that have already signed up for it, the major brands who are expanding to different parts of their fleet or even different geographies. The companies who are now putting in exclusive pilots to really test out the solution, we couldn't be more pleased. And let's not forget, we didn't really bring Unity until Q4 to the market. So there's a long way for us to go. We've put a new sales team on the pitch that are building pipeline. So there's a lot of oxygen for us moving forward. But we couldn't be more delighted by that shift. I think confidence is really growing in PowerFleet as a partner and a provider, particularly in how we treat customers and how we look to create that long-term relationship in comparison to the service levels that they get from multiple providers in the market today.

Steve, maybe just to quickly follow up, what are you seeing from a sales cycle perspective given the new product portfolio, but also the current economic landscape?

Yes. So it's a bit more elongated. I think decisions are still being made, investments are being made, but the gates to get there are taking longer, and it's really a matter of providing that confidence, as I've said. That said, the solutions that we're providing really are mission-critical, we can provide huge efficiency optimization, and ultimately as well compliance to an organization. So we feel good about it, but there's no doubt over the kind of Q4, Q1 period that decision-making is taking longer and it's a lot harder to kind of get through. But that's where I think the talent that we've brought in can really have those top-to-top business conversations and get tied less into kind of the cost of the asset and more into the value that we bring to the business.

Great. And maybe quickly on the divestiture front, in terms of Cellocator and the other non-core businesses, it looks like you've got a breakdown from a P&L standpoint. It sounds like there's some active dialogue. Did you provide a timeline or dollar amount that you expect to generate from those, as it looks like it's about $16 million in annualized sales?

We haven't done either. Obviously, I think we last spoke in March, and we said that we were exploring opportunities. We've had offers for those parts of the business, which we're evaluating currently. This isn't something that we are going to rush. We're going to make sure that this is right for the business, right for our teams and our customers. So that process will continue. And again, we haven't provided anything in terms of valuation to the market of those entities today.

Okay. And lastly, if I could, just on the OpEx front, Dave. I think in the past pro forma, you had taken out deal amortization. I think that is not removed in the current pro forma numbers. I just want to clarify that. Was there any Movingdots OpEx in the first quarter? And then I just want to clarify, you still got $3 million of OpEx saving programs expected over the course of this year, partially offset by the bump up in Movingdots. But then as we get into '24, it sounds like there's another $10 million of various optimization plans related to ERP systems and otherwise that we should see start to kick in. Is that correct?

That's correct, Scott. So in terms of Movingdots, the deal closed on March 31, so we got the balance sheet pickup, but there was no expense in the year. So that's true. In terms of managing expenses, in terms of bringing that out of the business, yes, we are on track for the $3 million. As I said, the expectation is by the time we're through the integration of Movingdots, it will in effect be absorbed on an EBITDA-neutral basis. We expect that to have happened by the end of September, so as we exit Q3. Looking to next year, as Steve mentioned in his prepared remarks, there's a $10 million opportunity. A significant portion of that, I would say half of that, can really be driven by G&A efficiencies as we get a common platform in place. The other portion will largely come out of improvements in terms of supply, in terms of the rationalization we're doing regarding the number of product SKUs that we have there. So good progress there as well. And I guess, Scott, just to take a step back, there's been a huge amount of activity going on, even before I arrived, in terms of taking costs out and reinvesting it back into the business. You can see evidence in terms of just the underlying cash generation of the business. If you look at the last couple of quarters, for example, we've been generating unlevered free cash flow, which I think is unusual for the history of Movingdots. Good progress there, I think about 1.2% or so of unlevered free cash flow over the last six months. Q2 will be a little bit bumpy just given we have to settle the transaction fees for Movingdots, we'll have the double expense of Movingdots for those types of things. So Q2 will be a little bit tougher. We'll also be paying out some of the incentive comp from 2022 in the second quarter. But in terms of just the progress that's been made and much of that predates me, that's definitely evident in terms of the unlevered free cash flow we've generated over the last six months.

And just to add to make sure we're all aligned on Movingdots. So Movingdots is an acquisition where Swiss Re had not really brought to market the sales element of the solutions that are out there to be provided. They basically built a world-class product, an amazing tech team. We're even more delighted with the team there, as they've become part of the business. We were planning to invest in R&D for Unity and these guys fit perfectly into that scenario. We feel that with both our sales channels and the Swiss Re channel, we have the ability to significantly drive revenues in the insurance space. So it's a cost burden right now, but it will very quickly translate into value on the top line and ultimately on the bottom line of the business as we expand out and particularly as we expand our European operation. So we've got a much better capability now to go and sell a full range of solutions in the European market.

Thanks so much.

Thank you. We have reached the end of our question-and-answer session. So I will now turn the call back over to Mr. Towe for his closing remarks.

Yes. So thank you, everybody, for attending the call. We appreciate your support. Our style is very much to come in a very transparent way and walk through the transformation activities that we're undertaking as a business. That transformation has been and remains substantial. I think if you look at all the key vectors of our strategy in terms of wanting to become a high-growth, profitable SaaS business, we're making very solid progress against all those vectors. We appreciate that some of the changes and the volume of changes we're making, it's sometimes hard to follow the ins and outs. But ultimately, the execution plan we believe is ahead of schedule, and we're very confident for the future. So thank you for today. Enjoy your day, and we'll speak to you soon.

Thank you for joining us today for our presentation. You may now disconnect.