Audiocodes Ltd Q4 FY2023 Earnings Call

Good morning everyone and welcome to the AudioCodes Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time all participants have been placed in a listen-only mode and the floor will be open for questions after the presentation. Please note this conference is being recorded. I will now turn the conference over to your host Mr. Roger Chuchen, Investor Relations. You may begin, Roger.

Thank you, operator. Hosting the call today are Shabtai Adlersberg, President and Chief Executive Officer; and Niran Baruch, Vice President of Finance and Chief Financial Officer. Before we begin, I'd like to remind you that the information provided during this call may contain forward-looking statements relating to AudioCodes' business outlook, future economic performance, product introductions, plans and objectives related thereto, and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters are forward-looking statements as the term is defined under U.S. Federal Securities Law. Forward-looking statements are subject to various risks and uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties and factors include, but are not limited to, the effect of global economic conditions in general and conditions in AudioCodes' industry and target markets, in particular, shifts in supply and demand, market acceptance of new products and the demand for existing products; the impact of competitive products and pricing on AudioCodes and its customers, products and markets; timely product and technology development, upgrades and the ability to manage changes in market conditions as needed, possible need for additional financing, the ability to satisfy confidence in the company's loan agreements, possible disruptions from the pandemic on a business and results of operations. The effects of the current terrorist attacks by Hamas and the wartime hostilities between Israel and Hamas and Israel and Hezbollah as well as the possibility that this could develop into a broader regional conflict involving Israel with other parties may affect our operations and may limit our ability to produce and sell our solutions. Any disruption in our operations by the obligations of our personnel to perform military service as a result of current or future military actions involving Israel and other factors detailed in AudioCodes' filings with the U.S. Securities and Exchange Commission. AudioCodes assumes no obligation to update this information. In addition, during the call, AudioCodes will refer to non-GAAP net income and net income per share. AudioCodes has provided a full reconciliation of the non-GAAP net income and net income per share to its net income and net income per share according to GAAP in the press release that is posted on its website. Before I turn the call over to management, I'd like to remind everyone that this call is being recorded. An archived webcast will be made available on the Investor Relations section of the company's website at the conclusion of the call. With all that said, I'd like to turn the call over to Shabtai. Shabtai, please go ahead.

Thank you, Roger. Good morning and good afternoon, everybody. I would like to welcome all to our fourth call and full year 2023 conference call. With me this morning is Niran Baruch, Chief Financial Officer and Vice President of Finance of AudioCodes. Niran will start off by presenting a financial overview of the call. I will then review the business highlights and summary for the call and discuss trends and developments in our business and industry. We will then turn it into the Q&A session. Niran?

Thank you, Shabtai, and hello, everyone. Before I start my formal remarks, I would like to remind everyone that in conjunction with our earnings release this morning, we will post shortly on our Investor Relations website an earnings supplemental deck. On today's call, we will be referring to both GAAP and non-GAAP financial results. The earnings press release that we issued earlier this morning contains a reconciliation of the supplemental non-GAAP financial information that I will be discussing on this call. We will be comparing our fourth quarter 2023 results to the prior quarter as we believe it provides a better gauge of our financial performance. Revenues for the fourth quarter were $63.6 million, an increase of 3.2% over the $61.6 million reported in the third quarter of the current year. Full year 2023 revenues were $244.4 million, a decrease of 11.2% over the $275.1 million reported in 2022. Services revenues for the fourth quarter were $30.9 million, accounting for 48.6% of total revenues. On an annual basis, services revenues were $120.4 million, an increase of 8.7% over the $110.8 million reported in 2022. The amount of deferred revenues as of December 31, 2023 was $82.8 million compared to $77.8 million as of September 30, 2023. Revenues by geographical regions for the quarter were split as follows: North America 44%, EMEA 37%, Asia Pacific 14%, and Central and Latin America 5%. Our top 15 customers represented an aggregate of 61% of our revenues in the fourth quarter, of which 46% was attributed to our nine largest distributors. GAAP results are as follows. Gross margin for the quarter was 66.7% compared to 66.5% in Q3 2023. Operating income for the fourth quarter was $7.2 million, or 11.4% of revenues, compared to $5.8 million or 9.4% of revenues in Q3 2023. Full year 2023 operating income was $13.4 million compared to operating income of $31.3 million in 2022. Net income for the quarter was $3.7 million, or $0.12 per diluted share, compared to $4.3 million, or $0.14 per diluted share for Q3 2023. The decrease was driven by $1.4 million in exchange rate differences expenses related to the revaluation of assets and liabilities denominated in non-dollar currencies compared to $767,000 in exchange rate differences income in the previous quarter. This shift in exchange rate differences resulted in a $0.07 negative impact on GAAP earnings per diluted share quarter-over-quarter. Full year 2023 net income was $8.8 million, or $0.28 per diluted share, compared to $28.5 million, or $0.88 per diluted share in 2022. Non-GAAP results are as follows. Non-GAAP gross margin for the quarter was 67.6% compared to 67.3% in Q3 2023. Non-GAAP operating income for the fourth quarter was $10.7 million, or 16.9% of revenues, compared to $9.6 million, or 15.5% of revenues in Q3 2023. Full year 2023 non-GAAP operating income was $28.9 million compared to operating income of $47.2 million in 2022. Non-GAAP net income for the fourth quarter was $8.9 million, or $0.28 per diluted share, compared to $8.3 million, or $0.25 per diluted share in Q3 2023. Full year 2023 non-GAAP net income was $25 million, or $0.77 per diluted share, compared to $45 million, or $1.35 per diluted share in 2022. At the end of December 2023, cash equivalents, bank deposits, marketable securities and financial investments totaled $106.7 million. Net cash provided by operating activities was $9.3 million for the fourth quarter of 2023 and $14.9 million for the year 2023. Day sales outstanding as of December 31, 2023 were 98 days. In December 2023, we received court approval in Israel to purchase up to an aggregate amount of $20 million of additional ordinary shares. The court approval also permits us to declare a dividend of any part of this amount. The approval is valid through June 18, 2024. Earlier this morning we also declared a cash dividend of $0.18 per share. The aggregate amount of the dividend is approximately $5.5 million. The dividend will be paid on March 6, 2024, to all of our shareholders of record at the close of trading on February 20, 2024. During the quarter, we acquired 595,000 of our ordinary shares for a total cost of approximately $6.3 million. As of December 31, 2023, we had $19.2 million available under the approval for the repurchase of shares and all declaration of cash dividends. Our guidance for the full year 2024 is as follows. We expect revenues in the range of $252 million to $267 million and non-GAAP diluted net income per share of $1 to $1.15.

I will now turn the call back over to Shabtai. Thank you, Niran. We are pleased to conclude 2023 with solid fourth quarter results and healthy growth in the strategic areas of our business, namely UCaaS and customer experience. At the same time, we have seen important accelerated development and a significant rise in opportunities relating to conversational AI, which grew more than 50% year-over-year and is quickly becoming a new growth engine for success in the areas of Microsoft Teams and UCaaS. Altogether, when we combine the progress in our operations in UCaaS, customer experience and conversational AI segments, it is clear that our focus on the enterprise space, where our business reached a level of 90% of company revenues for the quarter, is starting to bear fruit and drive continued business expansion in the enterprise space going forward. With a continued focus in 2023 on shifting our business model into subscription and recurring sales and the shift to higher margin cloud software solutions and services, we are making significant progress in our transformation to become a software and services company. As in previous years, services revenue evolved to contribute about 50% of our business. We have built throughout this past four years a profitable managed services business, exiting 2023 with 50% growth year-over-year, achieving a level of $48 million in annual recurring revenues for our Live business. We expect continued growth for our Live business in 2024, which currently is planned to grow on the order of another 40%. As a result, we've made significant progress in our strategic initiative to increase our software and service revenue mix to nearly 70% in 2023, up from 60% in 2022. Shifting our focus in 2023 to AI-first voice-related software and applications, and more so for 2024, we're now adding a new strong leg in the form of software-to-service solutions in the conversational AI space, which should further drive expansion for our business and profits in the coming years. To recap on our success in the past 15 years, we've built a very strong voice position in the industry. Our partnership with leading application vendors such as Microsoft in the UCaaS space and Genesis in the customer experience market is a testament to our success. Our success has been focused in the past on voice network infrastructure and we became a top connectivity player in both the gateway space and the enterprise SBC market. We are now shifting our focus toward AI-first business voice applications for the UCaaS and CCaaS markets, which represent a huge opportunity in terms of potential seats to serve. Combining our assets and capabilities in the areas of telephony, voice networking and infrastructure with the new emerging conversational AI solutions, we believe we are creating a rather unique position in the industry, which we believe would be hard to compete with or replicate by competitors. In 2023, we've already seen good signs of rapid growth in this space, which would further pave the future for business expansion. Another key accomplishment in 2022 relates to our growth in the customer experience market. We are now investing in two key areas. The first is taking advantage of our strong offering of voice infrastructure for the customer experience networks and deployed solutions. We saw much success working with leading CX vendors in helping to transform legacy on-prem solutions, which are gradually becoming less efficient, and progressing to new evolving cloud-based modern CCaaS solutions. In this space, we saw much success in our Live CX services and enjoyed growth of about 20% year-over-year for the full year. Secondly, we saw huge success related to the penetration of the customer experience market, winning new potentials with our Voca CIC product, our new leading initiative for AI-first, Azure-native CCaaS solution for the Microsoft Teams environment. We saw initial launch wins with enterprise customers in North America, including one of the largest universities in the enterprise sector and a Fortune 500 global manufacturer. In both cases, the Voca-CIC solution has displaced an incumbent Team's CCaaS vendor, serving both as proof points that Voca-CIC is ready for prime time. We expect this initiative to further increase CCaaS market penetration in 2024 and beyond. All-in-all, we ended the fourth quarter in the CX area with record business levels of over 40% year-over-year and close to 20% for the full year. By exiting 2023, customer experience revenue now represents more than 20% of our business going forward. As such, we have high confidence in the customer experience segment emerging as a second major growth pillar for our business in addition to our Microsoft Teams UC voice success. Now to UC. Within enterprise, our UCaaS business continued to perform well. Business in Microsoft UC grew 5% year-over-year in the fourth quarter. The full year Microsoft UC business increased by 7%. Microsoft Teams business grew 10% year-over-year for the quarter and 13% for the full year. At the end of 2023, our Teams business is now more than 95% of the Microsoft business. Revenue from Skype for Business continued to decline in the fourth quarter with related revenue going down by more than 40%. For the full year, it declined approximately $8 million or 55%. Thus, by exiting 2023, Skype for Business revenue declined to less than $1 million in the fourth quarter, which means that Skype for Business revenue will no longer weigh on the Microsoft business going forward. As a result, we should see the full impact of Teams growth in terms of expansion. On the services side, we continue to experience strong momentum for AudioCodes Live Managed Services. Business mainly in the Microsoft Teams environment, with annual recurring revenue growing 50% year-over-year, ending the quarter at $48 million consistent with our expectations. Regarding our SBC product line, we enjoyed a very strong fourth quarter, ending above $35 million in revenue. For the full year, we achieved revenue close to $130 million. In December 2023, research from Omdia ranked AudioCodes as the market leader for enterprise SBCs for the third quarter of 2023 with a worldwide revenue share of 23.2% in its enterprise SBC and voice-over-IP gateway market. Our Mediant SBC line is winning Microsoft Teams direct business. Again, getting back to where I stopped, our Mediant SBC line is keen on winning Microsoft Teams Direct Route business and full connectivity in other market areas such as Zoom, Genesis Cloud, CX, Microsoft Dynamics 365, and other leading UCaaS and CCaaS solutions. While growing nicely in the enterprise space, we have witnessed rather soft business in the service provider space. During the fourth quarter, business in this space declined by more than 60% year-over-year and over 40% for the full year. With the economic slowdown across the board in 2023, the effect of growing inflation coupled with high interest rates has materially affected sales of related products, which in return impacted the sales of equipment gear provided to service providers worldwide. It is important to understand that though the long-term plans, and definitely with the shift we are making towards more software and services, this decline was anticipated to occur over the next three to five years. Due to the accelerated economic slowdown in early 2023, we observed an acceleration of this trend and major impacts already seen in 2023, which should have occurred anyway in upcoming years. As such, we believe that the pressure and impact on our growth from the decline in the service provider space early in 2023 will be substantially relieved in 2024 and beyond. While visibility in the segment remains limited, revenues did stabilize sequentially in the quarter, which may point to a better 2024. On the operational side, I'm glad to report solid progress in non-GAAP gross margin, which recovered from early first quarter with 62.1% in 2023 to reach 67.6% in the fourth quarter. Coupled with disciplined expense management, non-GAAP operating margin has also improved dramatically from 4.9% earlier in the year to 16.9% in the quarter, which is in the range we defined for our long-term financial model. This continued focus on shifting the core business model into subscription in recurring sales and a shift to higher margin cloud software solutions means we expect operating margin to keep inching forward in the coming years. On the cash flow side, we have witnessed a very successful quarter. Operating cash flow grew to $9.3 million this quarter and $14.9 million for the full year. Regarding headcount, we are fully disciplined in hiring, mainly in our networking business. However, we are adding select positions in the growing areas of customer experience and conversational AI. We ended the fourth quarter with 950 employees compared to 938 employees in the previous quarter. As for the guidance that Niran provided earlier, we are initiating 2024 revenue guidance of $252 million to $267 million for the full year. We anticipate mid-range revenue growth of about 6% compared to 2023. Non-GAAP EPS guidance of $1 to $1.15, that anticipates mid-range earnings growth of about 40%. The top-line outlook builds in continued conservative enterprise spending environment and assumes modest growth in networking and high double-digit percentage growth in conversational AI backed by ongoing healthy pipeline funnel. As for the key wins in the quarter, we've signed a 36-month live contract with one of the world's largest PBX companies, enabling the vendor to use AudioCodes as a preferred solution when provisioning its end customers with Microsoft Teams Voice. We've signed a 36-month contract with one of the largest universities providing Voca-CIC Azure Native Teams certified contact center solution and smart compliance recording as competitive displacement of a Teams CCaaS incumbent. We also signed a 60-month contract with a Fortune 500 global manufacturer, providing the Voca-CIC Azure Native Teams certified contact center solution and smart compliance recording. Again, it's a competitive displacement of a Teams CCaaS incumbent. To wrap up my introduction, we had a solid fourth quarter and strengths across the board in strategic areas of our business, having navigated well in ongoing difficult market conditions. We are gaining market share against our primary competitors, having scored multiple landmark deals in both the UC and CX space, which serves as validation of the successful execution of our land and expand strategy. This sets the stage with core business leading indicators such as the pipeline remaining robust, giving us conviction that we have the right strategy in place and are on the right path to execute our commitment of returning to revenue growth and driving operating margin improvement in 2024. We've increased focus and investments in technologies and services for the UCaaS customer experience and conversational AI markets backed by strong live bookings, mainly in Teams, CX and Voca-CIC. We believe we are on the right path to execute our plan to achieve revenue growth and drive improved profitability in 2024. And with that, I've concluded my introduction. I would like to move the call to the operator.

Thank you very much. We will now proceed with our question-and-answer session. Thank you. Your first question is from Ryan MacWilliams of Barclays. Ryan, you are now live.

Hey, guys. This is David Cawthon on for Ryan MacWilliams. Thanks for taking the question. How does your pipeline visibility now compare to what it was in 3Q? Were there any green shoots that you could point to for improving demand trends leaving the quarter?

Ryan, this is Shabtai. I'm sorry. It was hard to hear. Can you please repeat the question?

It's just a question on your pipeline visibility, how that compares now to the end of 3Q at the last earnings call. And just if you were seeing any green shoots leaving the quarter?

Yes. Well, largely, I would say that there's not much difference, although I must point out that usually the fourth quarter is the strongest quarter in the year. I think that in 2023, that phenomenon has kind of been emphasized because budgets were less utilized earlier in the year due to the slowdown and delays of projects. So I think we enjoyed a strong fourth quarter. I therefore expect that the first quarter, as in many previous years, will probably be down a couple percent, maybe 2% or 3%. But all-in-all, the pipeline looks good. I didn't mention that, but we had a very high score of bookings done in 2023 compared to 2022. So all-in-all, we believe we're fully effective. I would also add one more point, which I've not mentioned in my introduction, that we do intend to add, in the first half of 2024, new software services additions, new cloud multi-tenant solutions for recording services in the form of compliance recording and meeting space. We believe that our live platform would become substantially more competitive. We do not see any close competitors with such capabilities. All-in-all, we believe that pipeline and visibility for 2024 should be good.

Got it. Thank you. And then how did CCaaS demand fare in the quarter? And are you seeing an increase in the attention for buyers on Voice AI? Thanks.

Yes, definitely. Actually, we do see a rise in the number of opportunities in the CCaaS space for our Voca-CIC product. We actually, as I've mentioned, we won two large deals, one that's close to a million, one that's above half a million in North America. We have a range of more opportunities coming up. Also, we plan on an Analyst Day in about a month from today, or six weeks from today, dedicated primarily to Voca-CIC. And obviously, we will present that at Enterprise Connect in March, so a lot of activity in the CX space.

Got it. Thanks, Shabtai. I'll go back in the queue.

Thank you very much. Our next question is coming from Greg Burns of Sidoti & Company. Greg, your line is live.

Morning. The growth rates from Microsoft have slowed a little bit from where they were maybe a year ago. Can you just talk about what's driving that? Is it mixed with Live gaining greater traction or is it macro? Because it seems like in the CX market, you're still posting solid growth there a little stronger than what you're seeing on the UCaaS side of the business? Thank you.

Right. Yes, I think your observation is correct. I think that the moderated growth results partly, as we all know, are due to the slowdown in global economics. So projects have been pushed, etc. However, in our specific business, it relates directly to the success of what we call Microsoft Teams Phone, which connects enterprises to the public network. Currently, we believe that until now, there was limited benefit from adding the phone functionality over other functionalities of Microsoft Teams, such as chat, presence, conferences, etc. We do believe that in 2023, we started to see the impact of conversational AI on the use of Teams Phone. We have seen, obviously, generative AI technology being put to work. Our solutions, including meeting insights, utilize generative AI, which means to provide benefit in the Microsoft phone space, you really need to have a phone, a Teams phone license. Similarly, the introduction from Microsoft of Copilot and Teams Premium means we are seeing many more applications. So once there will be new business voice applications that provide value on top of the Teams phone license, we will start to see increases in our business. And we believe that we've already seen signs of this at the end of 2023. We believe that going forward, with the emergence of adoption of meeting insights, recording of meetings, and Copilot, we will definitely see a rise. So we believe that's kind of a belated trend in 2023, but we should see growth returning in '24 and beyond.

Okay, so what are the penetration rates of voice licensing in the Teams environment now? Is it still less than 15% or 10%?

Yes, well, the last numbers that I remember quoting were that around July of 2023, I believe the number that was quoted was about 17 million or 18 million PSTN breakouts. That's just, as I mentioned, 17 million or 18 million. The runway is obviously substantially larger, right? Microsoft 365 paid licenses are close to $400 million. Teams, as a whole without the phone, is nowadays quoted to be at least $18 million. So there's a huge, huge runway expected. So, again, when there are more applications that provide value on top of the Teams phone license, I think you'll see an increase in the number of seats using Teams phone.

Okay. And, Niran, the cash conversion for this year, do you expect it to be stronger than what has been the last two years?

Yes, you saw the operating cash flow in the fourth quarter, which was close to $10 million and improved from previous few quarters. We believe the operating cash flow for 2024 will be better than in 2023.

Okay, great. Thank you.

Thank you very much. Your next question is coming from Ryan Koontz of Needham & Company. Ryan, your line is live.

Thanks for the question. And nice quarter on the margins, particularly there, really great to see that. I hope we could circle back to Contact Center and your CX there. You talk about a really nice inflection to 40% growth. Can we drill in there? And what's behind that? Is it product improvements? Is it focus on go-to-market? Are some of your key partners seeing an inflection on sales growth? Any of those would be helpful. And this quick follow-up: Can you clarify what those wins were again? The audio was breaking up a little bit on the, I think, two CX wins you mentioned. Thank you.

Thank you, Ryan. In the CX space, we have two main activities: supporting the deployment of voice networks and helping the transition from on-premises to cloud-based contact centers. There is a need to move from outdated networks to modern, global architectures. We are providing SBC gear and managed services, among other components, to facilitate this shift. The significant growth in CX is due to our involvement in several large deployments with leading CX vendors. For instance, a major CX provider has been winning contracts against older, less efficient competitors. Transitioning from legacy on-premise systems to new cloud-based solutions means we are addressing hundreds of locations worldwide. To ensure high quality, security, and efficiency during this transition, our SBCs and managed services are crucial. This explains our success, and I believe the shift to cloud solutions will continue to present new project opportunities for us. Regarding the two wins I mentioned, the first is a large university in the U.S. that selected our Voca-CIC and compliance recording solution, replacing the previous system with bookings close to a million. The second win involves a prominent S&P 500 manufacturer that also chose our Voca-CIC to replace an incumbent certified solution in the Teams space.

All right, great. Thanks. That's somewhat helpful. I mean, I guess, on-prem cloud is not really a new trend to be going up for many years. So any commentary on why you're specifically seeing this inflection of growth for AudioCodes in terms of your efforts in that market, which has been humming along pretty healthily for years?

Yes, it's definitely a healthy market, and we are actually seeing expansion in that segment. We actually just discussed the prospects for the first quarter of 2024, and it seems that it continues. I believe that with more maturity and reliability of Contact Center operation from the cloud there may become an incentive for end users to make the transition. I would also add that usually we're talking about contracts that last several years. When such a contract is coming to an end, that often coincides with the transition from on-prem to cloud. So that is an ongoing process. Also, as the world of CX matures and becomes more successful, we believe that we will see projects like this more often.

Great. That's real helpful. Just a quick follow-up. You haven't talked about Zoom phone in a while. Any quick commentary on Zoom in terms of their progress and your selling opportunity? Are you seeing much traction with Live there?

Well, we do continue to work with Zoom. We've enjoyed fewer opportunities, but at this stage, I would not say that we believe Zoom will become a growth engine for us in the UCaaS space.

Fair. All right. I'll pass it on. Thank you.

Sure.

Thank you very much. Your next question is coming from Samad Samana from Jefferies. Samad, your line is live.

Hey, guys, this is Billy Fitzsimmons on for Samad. Maybe backing up and taking a higher level view here. Can you guys remind us what you're seeing on the macro front? How did things like lead times and close rates evolve over the course of 2023? And did they get better or worse in the fourth quarter? Any customer verticals looking particularly strong or weak at this point? And then I want to double click on what's kind of assumed on macro in terms of the 2024 guide?

Right. Actually, it's a great question for CEOs and CFOs. 2024 is still kind of foggy. We have not seen any dramatic change from the end of 2023. We have seen a good pipeline, as I've mentioned before. Q4 was strong, but it's the last quarter in a year, so that's kind of expected, no change. At this stage, it's hard to make a call as to whether 2024 will be substantially better or just better than 2023. But all you know, I think for us as a company, while we have set aside the whole issue of service providers, which impacted our operations early in 2023, we are glad to focus on the contact center, which is growing, and conversational AI, which is very fast-growing these days, as well as other opportunities. We also see UCaaS, which again, we believe conversational AI will contribute to the growth of our business. So, all-in-all, we expect the enterprise space to be good with no other indications at this stage.

Got it. And then it's probably still early, but on the strong conversational AI bookings demand, can you relay some of the initial feedback you're seeing and hearing from customers, any color on the initial wins? And how should we think about the materialization of that offering on the revenue line going forward?

Right. So we focus on a world where, on one end, there are strong, large technology providers such as Microsoft, Google, and AWS, with lots of technology available in the cloud. On the other end, every successful enterprise company is adopting AI quickly to improve its operational productivity. So in the middle, there are solutions that will channel the AI gear to those end users. This is usually done through applications such as Copilot, Salesforce, other unknown Google applications. However, there are specific implementations which require a combination of numerous technologies. I'll give you an example. We have implemented a crucial solution for an emergency service that needs to pick up calls in real-time, record them, transcribe them, derive insights from them, and apply automation on top of it, and then send alerts. So you see emerging applications that are AI-first enabled, combining numerous areas, including telephony, networking, and cognitive services. This is where we shine by providing a combination of all these technologies we've developed over the years. There's a growing need due to hostility around the world to understand what's being said, where, for what purpose, and to act accordingly. This creates a rising application demand in many areas which have budgets for this. Those are the types of solutions we're currently seeing.

Perfect. Thanks, guys.

Thank you very much. We appear to have reached the end of our question-and-answer session. I will now hand back over to Shabtai for any closing comments.

Thank you, operator. I would like to thank everyone who attended our conference call today on the years of recovery in our business in the second half of 2023. We have high confidence in our ability to successfully expand our business in 2024 and following years. We look forward to your participation in our next conference call. Thank you very much. Have a nice day. Goodbye.

Thank you very much, everyone. This does conclude today's conference. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.