CCC Intelligent Solutions Holdings Inc. Q1 FY2022 Earnings Call

Greetings, and welcome to the CCC Intelligent Solutions First Quarter 2022 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brian Denyeau from ICR. Please go ahead.

Good afternoon, and thank you for joining us today for CCC's First Quarter 2022 Financial Results, which we announced in a press release issued after the close of the market today. Joining me on the call today are Githesh Ramamurthy, CCC's Chairman and CEO; and Brian Herb, CCC's CFO. The forward-looking statements made today about the company's results and plans are subject to risks and uncertainties that could cause actual results and implementation of the company's plans to vary materially. These risks are discussed in the earnings release, which is available on our Investor Relations website and under the heading Risk Factors in our 2021 annual report on Form 10-K filed with the SEC. Further, these comments and the Q&A that follows are copyrighted today by CCC Intelligent Solutions Holding Inc. Any recording or retransmission, reproduction or other use of the same for profit or otherwise without prior consent of CCC is prohibited and is in violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in such transcripts. Please note that the discussion on today's call includes certain non-GAAP financial measures as defined by the SEC. The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends regarding the company's financial condition and results of operations. A reconciliation of GAAP to non-GAAP measures is available in our earnings release that is available on our Investor Relations website. Thank you. And now I'll turn it over to Githesh.

Thanks, Brian, and thanks to all of you for joining us today. I'm pleased to report that CCC delivered strong top- and bottom-line results in the first quarter. We had solid performance across all parts of our business as customers continued to invest in our solutions to digitize their operations. I'd like to start by summarizing our financial results for the first quarter. Revenue was $186.8 million, up 18% year-over-year and ahead of our guidance range. Adjusted EBITDA was $73.7 million, which grew 33% year-over-year. This represents a 39% margin, up more than 400 basis points from the first quarter of 2021. Our ability to deliver consistent and profitable growth across our business is driven in large part by our ability to solve the most pressing operational problems facing our customers' businesses. For them, digital transformation is not a nice-to-have, but critical to their long-term success, given several challenging macro factors, including rising inflation across the ecosystem, labor shortages made worse by increasing levels of retirement, difficulties hiring technical staff who understand vehicle complexity in the tight labor market, and, of course, supply chain challenges. We increasingly hear from customers that these challenges are mission-critical issues that must be addressed to operate profitably. Adapting their businesses to address these challenges are an important background to what we believe are three key factors driving the digital transformation of the auto insurance economy that will underpin CCC's growth for years to come. First is the need for our customers to deliver a better experience to the consumer. Many of the current processes in the auto insurance economy are inefficient and leave significant room for improvement. These process gaps can drive less-than-optimal engagement with policyholders and create unnecessary friction among insurers, repair facilities and other industry participants. CCC's suite of cloud-based solutions automates insurer rules for many of the critical elements of the claims process, so insurers can focus on the more important paths and meet the heightened expectations of today's consumer. Second is the benefits of a connected ecosystem. A key to eliminating the friction I just mentioned is to have a truly interconnected and multi-sited network that digitizes key aspects of the claims process. We have built by far the largest connected network in the industry and one that continues to expand. I will provide some more examples of this a little later. Third is the power of AI to improve and accelerate decision-making. CCC has built a data set of more than $1 trillion worth of claims data over decades. We are incorporating AI across our product portfolio to help our customers deliver faster and better decisions across a range of solutions and process steps. CCC is in a unique position to help our customers benefit from these trends as they progress through their digital journeys. Our operational and financial performance in the first quarter reflects our success. The core of our ability to deliver these digital solutions to our customers lies in our vision for Straight-Through Processing, or STP. STP is a comprehensive approach to the P&C insurance economy that will be made up of many digital and AI solutions that are seamlessly integrated to provide customers digital solutions throughout the claims process. This modular approach is a great fit with what customers need to digitize their end-to-end claims experience and demonstrates the value of the CCC Cloud's deeply integrated position. Customers tell us they want flexibility and fast time to value throughout the claims handling process. The CCC Cloud readily unlocks this capability without the need for costly and time-consuming re-platforming. To illustrate how comprehensive the CCC Cloud and our STP vision is, I'd like to spend a few minutes walking through at a high level what a claim journey looks like and how we can add value through each step of the claims workflow. One of the first steps in the auto claims process is to determine whether a vehicle is repairable or not after an accident. We have made significant investments to create a compelling front-end experience with our mobile and predictive analytics capabilities that enable insurers to quickly make this determination. Today, our platform is used to determine the repairability of tens of billions of dollars of auto claims annually. For the approximately 80% of claims that are repairable, we have a comprehensive portfolio of solutions that help automate and digitize the repair experience. In recent years, the car parc has become increasingly sophisticated with an ever-growing amount of technology embedded in a car, like automated cruise control, lane departure warning systems and multiple cameras. This greatly raises the complexity of the repair process. Both insurers and repair facilities need solutions that can provide a consistent repair process regardless of the automaker. One way CCC is helping to do this is through CCC Diagnostics, which simplifies the process of importing the diagnostic report and provider invoice directly into CCC ONE as part of the repair workflow. We have seen rapid adoption of our diagnostic solutions as customers look to CCC to help solve this challenge. Diagnostic scans, which tell you what is damaged or needs to be reset or recalibrated in a car, are seeing explosive growth. Scans are up more than 900% since 2017 and are now present on nearly half of all collision repair appraisals. Streamlining this process for repair facilities, including validating the scan with the insurer as part of the claim, is critically important. On that point, we recently expanded the CCC Diagnostics network with the addition of our partnership with Astec, a global leader in diagnostics, calibration and programming solutions. They went live on the CCC Diagnostics network about a month ago. With the addition of Astec to the CCC network, we now have more than 10% of our repair facility customers utilizing our diagnostic solution. We believe diagnostic spend in the industry exceeds $1 billion today and will be a multiple of that in the coming years. We expect that diagnostics can be at least a $50 million to $100 million revenue opportunity for CCC, making it one of the more compelling growth opportunities. For the remaining 20% of claims that are determined not to be repairable, we have developed a comprehensive suite for total loss resolution, which is seeing good momentum in the market. Historically, our total loss products have been focused on helping insurers determine the value of the vehicle, but there are also many additional downstream manual processes that need to be completed to finalize a total loss claim, including the processing of title, lien, taxes and fees, among others. Each of these represent sizable opportunities for CCC to assist in digitizing. Our Total Loss Care solution is one way insurers can streamline these downstream aspects of the total loss process, including lender payoff requests, letters of guaranty and lien and title resolution. In the 18 months since launch, we now have 21 carriers who are either onboarded or in the pilot process for Total Loss Care. Another example is our Fee Calculator, which gives insurers the ability to configure upfront the applicable title, registration and license fees in a given jurisdiction and automate their inclusion in the valuation workflow. This saves significant time and reduces manual effort in the total loss claims process. By digitizing the broader total loss process through Total Loss Care, Fee Calculator and other solutions, we believe that more than $1 billion of insured Loss Adjustment Expense, or LAE, which is the cost insurers incur to investigate and settle claims, can be impacted annually. Taken together, we believe this represents a sizable incremental revenue opportunity for CCC. The roughly 80-20 split of repair and total loss claims I just covered are what we refer to as Automobile Physical Damage, or APD. In addition to APD, unfortunately, auto accidents often result in medical claims, with roughly one in every five incidents having injuries. This is referred to as casualty, and it is a complicated part of the process that represents a significant portion of the total outlays from an insurer in a given year. Casualty is a huge part of the overall auto claims market. To put it in perspective, medical claims payouts are roughly comparable in size to the annual payments made for Automobile Physical Damage claims. Casualty represents a significant opportunity for CCC, where we have substantially less market penetration than in Auto Physical Damage. We have made significant investments to strengthen our casualty offering in recent years to dramatically increase the degree of digitization. We are starting to see good momentum. One example of the investments we've made in our casualty platform is to automate the process of reviewing medical bills based on a customer's business rules to help the insurer determine if the bill should be paid directly or sent for exception handling and extra support. These investments are starting to pay off. This quarter, we added two new national carriers to our casualty platform. We are excited for the long-term opportunity to add value in casualty, which we believe is ready for digitization. Casualty represents another logical extension of the services we provide to our insurance customers and has good growth potential for CCC. Finally, there are a number of horizontal solutions that work across the entire insurance ecosystem that provide significant value. Payments is a great example, and we have some important early success with our new payments integration during the quarter. We signed the first carrier customer for our payments integration, and the implementation process is currently underway. We're making good progress on the enablement of multiple use cases, including from carrier to various payees, whether it's the repair facility, lender, medical facility or a consumer. We're pleased with the progress we're making on building out the capabilities of our integrations with payment processors and how the pipeline is developing. To remind everyone, payments is not material to our revenue in 2022 but is an exciting future growth opportunity. Subrogation, the process which protects consumers and insurers from paying for losses when the insured is deemed not at fault or only partially at fault, is also a sizable opportunity across the claim spectrum. We're making excellent progress with the integration of Safekeep, which is on track from a go-to-market and product integration perspective. Our initial focus is to leverage CCC's existing data to launch a new version of Safekeep solutions quickly and with minimal effort needed on the part of carriers. We have been very encouraged by early customer feedback on this acquisition, which has been consistently positive and has led to a number of new opportunities in the short time we have owned Safekeep. As a reminder, Safekeep's technology helps to automate subrogation, a multibillion-dollar area of focus for insurers that has historically leveraged little to no technology to automate the process. We are excited about the opportunity in subrogation and see multiple ways to expand the offering over time. We are looking forward to highlighting all these new innovations when we host our annual industry conference later this month. We're thrilled to once again be hosting this event in person, meeting with customers and partners, discussing key trends shaping the industry, and having deep discussions about how CCC can continue to help solve challenges in their businesses. These customer learnings inform our innovation flywheel and enable CCC to continually develop new solutions that increase the value we can deliver. In summary, we see many great opportunities to deliver innovation across our client base regardless of their size or the breadth of solutions they use from us today. Before I turn the call over to Brian, I want to close by reiterating how pleased we are with the start CCC has gotten off to in 2022. We are raising our outlook for 2022 and are on track to deliver another year of double-digit revenue growth and strong EBITDA margins. We are seeing strong adoption across our product portfolio with both existing and newly introduced solutions. We also continue to expand and strengthen our ecosystem. I believe the investments we are making in talent, innovation and service delivery will help us solve critical problems for our customers as well as deliver consistent growth for years to come. I want to take this opportunity to thank the CCC team members for their incredible dedication and to our customers for the tremendous trust they place in us every single day. I will now turn the call over to Brian, who will walk you through our results.

Thanks, Githesh. As Githesh outlined, we feel like we are in a strong position to deliver on the industry's vision for Straight-Through Processing and to deliver exceptional value to our client base. In turn, this will drive durable long-term growth and opportunities to scale with both the more mature products, like casualty, and the more recent launches, like diagnostics, Total Loss Care, payments and the other solutions that Githesh talked about today. Our existing products provide a long runway for growth. In that, if we sold these solutions to our eligible customers, we'd be roughly three times the size we are today. And we also believe these newer solutions that have recently launched add more than another $1 billion in future market opportunity. As the industry continues to digitize, there will be many more organic and inorganic opportunities ahead for us. Now, let me turn to our first quarter 2022 results and provide guidance for the second quarter and the full year of 2022. Total revenue for the first quarter was $186.8 million, up 18% from the prior year period. Our growth is being driven primarily by cross-sell and upsell into our installed client base, including the large expansion deals that we've talked about over the last couple of quarters, which contributed approximately five points of growth, also the broad-based adoption of our new digital solutions such as mobile, AI and Engage, as well as growth from new logos, which was primarily driven from repair facilities and parts suppliers. Turning to our key metrics, software Gross Dollar Retention, or GDR, captures the amount of revenue retained from our client base compared to the prior year period. In Q1 2022 it was 99%, up one point from historical levels. We believe our software GDR reflects the value we provide our customers and the stickiness of the network effect. Software GDR is a core tenet of our predictable and resilient revenue model. Software Net Dollar Retention, or NDR, captures the amount of cross-sell and upsell from our existing customers compared to the prior year period as well as volume movements within our auto property damage client base. In Q1 2022, software NDR was 114%. As expected, software NDR remained above our historical range. The consistently strong NDR performance in recent quarters reflects the success we've had with our cross-sell opportunities across our customer base, including the large expansion deals signed in the second half of 2021. NDR is a core driver in our business, and we have excellent opportunities to execute against this for the foreseeable future. Now to review the income statement in more detail. As a reminder, unless otherwise noted, all metrics are non-GAAP, and we've provided a reconciliation of GAAP to non-GAAP in our press release. Adjusted gross profit in the quarter was $145.1 million, with adjusted gross profit margin of 78% compared to an adjusted gross profit margin of 76% in the first quarter last year. Adjusted gross profit margin benefited from the continued scale in our business and the efficient multi-tenant cloud platform. This is slightly below the 79% adjusted gross profit margin reported last quarter, which benefited a point from the $4 million of nonrecurring revenue we spoke about. As we turn to our operating expenses, adjusted operating expenses were $78.2 million, which grew 12% year-over-year. Growth in these expenses was largely driven by headcount additions, public company costs and the increases in discretionary spend as these expenses continue to normalize. On the headcount addition point, we are pleased with the progress made to advance our operational capabilities by adding key positions across product management, product development, partnerships and M&A. We feel like we are in a strong position to continue delivering ongoing innovation into the market and execute on our strategic agenda. Adjusted EBITDA for the quarter was $73.7 million with a 39% adjusted EBITDA margin. Adjusted EBITDA grew 33% year-over-year, and margins improved more than 400 basis points compared to prior year. Margin progression is being driven from scaling revenue flowing through to EBITDA at high rates as we have an efficient and scalable business model. Now turning to the balance sheet and cash flow. We ended the quarter with $195 million in cash and cash equivalents and $798 million of debt. At the end of the quarter, our net leverage was approximately 2.2 times adjusted EBITDA. Free cash flow in the quarter was $32.6 million compared to $33.5 million in the prior year period. Looking at cash flow on an unlevered basis, year-to-date we converted approximately 51% of adjusted EBITDA into unlevered free cash flow. This quarter included the impact of our annual incentive plan payments and finishing the build-out of our new headquarters. Adjusting for these items and on a normalized basis, cash conversion would have been above our historical position in the low to mid-60s. Subsequent to the end of the quarter, we successfully completed a secondary stock offering of 20 million shares by our selling shareholders. CCC did not receive any proceeds from this offering. Now, I'd like to finish with guidance beginning in the second quarter. We expect total revenue of $189.5 million to $191.5 million. This represents 14% year-over-year growth at the midpoint. We expect adjusted EBITDA between $69 million to $71 million, which represents a 36% adjusted EBITDA margin at the midpoint. For the full year 2022, we expect revenue of $763 million to $771 million, which is 11% year-over-year growth at the midpoint. We expect adjusted EBITDA between $288 million to $294 million, which represents a 38% adjusted EBITDA margin at the midpoint. There are a few things to keep in mind as you think about our guidance for 2022. Our revenue guidance reflects our confidence in the underlying momentum in the business. We will continue to see growth shift more to cross-sell and upsell versus new logos, reflecting our growing solution portfolio. And we feel really good about the strategic position and long-term opportunities with Straight-Through Processing, payments and our Safekeep acquisition. However, these will not be meaningful contributors to growth in 2022. Also keep in mind, in the second half of this year, we will be lapping the large expansion deals signed in the second half of 2021 as well as the $4 million of nonrecurring revenue recorded in the fourth quarter of last year. In terms of profitability, the second quarter includes the impact of cost phasing and our annual industry conference. And we expect to see the impact of continued hiring in key positions across product management and product development to support our growth and innovation roadmap. We do expect profitability to grow sequentially each quarter in the back half of the year. To wrap up, CCC got off to a strong start in 2022 and is well-positioned to deliver on our financial and operational targets for the year. The need for digitization across the P&C insurance economy continues to accelerate, and CCC is well-positioned to drive durable revenue growth in the near- and long-term. We are confident that, as we continue to execute on our strategic priorities, we will generate significant value for both our customers and our shareholders. With that, operator, we're now ready to take questions. Thank you.

Our first question is from Dylan Becker from William Blair.

Maybe I guess first for you, Githesh. As you think about some of the inflation dynamics that are impacting some of your repair facility customers, insurance carriers having to navigate and manage that profitability headwind, you've talked a lot about those key platform adjacencies. How much has that need for better input cost visibility — the repair dynamics — driven the accelerated demand you're seeing around the platform expansion, and then some of those earlier-stage tools like diagnostics and total loss that you talked about as well?

A couple of things. The need for precision to really manage repairs and to manage claims is incredible; there's an incredible need to understand how the supply chain is developing. We've had many requests from customers across our customer base to really understand the analytics and the data, and we published a crash course. For each customer, we provide unique insights into what is going on. So I would say that inflation has clearly been running heavy, along with a shortage of labor. All of these things have really made these mission-critical solutions that you can deploy and get very quick ROI particularly important. So I would not say that it has accelerated anything in particular, but the long-term secular demand for the products and solutions we have continues to be emphasized pretty heavily by what we're seeing.

Yes, I think that's fair. Obviously, adding that visibility is the key value driver at the end of the day. If you think about the evolution as well of your overall ecosystem, you've got a lot of the key constituents today. There's also a lot of white space going after the lender dynamic and maybe more on the medical claims side that you've talked about as well. There's multiple counterparties involved here, right? How do you think about the progression of that broader platform expansion and the opportunity to drive value and competitive strength by adding more components to that ecosystem over time?

You have to think about it in a couple of dimensions. Our overall macro view is our vision of STP, or Straight-Through Processing. So from the moment a claim happens, the process runs all the way through, deciding whether it's a total or repair and running all the way through to the end. When you look at specific components, each of these has multiple ecosystems. For repair, you've got repair facilities, parts providers and insurers. For casualty, you've got medical providers, insurers and other parties. For total losses, you've got banks and lien holders. Our vision of STP involves stitching together a seamless experience across all of these different ecosystems. That's where the power of the network, and years of having delivered solutions to our customers, really comes in.

The next question is from Chris Moore from CJS Securities.

It was a very interesting discussion on casualty. I had no idea that insurers had spent that much there. Are there any unique challenges within the penetration that you're seeking there that could be helped through M&A?

We actually did the M&A a few years ago and acquired a company, and we have been investing significantly in the platform over the last several years and have a number of customers. Penetration, as I pointed out, is significantly less than it is in auto physical damage. But we have several top-20 carriers and a number of carriers with significantly less penetration. As I pointed out, we've added a couple of customers during the quarter as well. Stitching all of this together into a seamless experience with Straight-Through Processing, artificial intelligence and these capabilities becomes super important. So yes, we did the M&A a few years back and have been investing since.

From where you are now, is it kind of a couple of years before it's a meaningful contributor to revenue?

Today, it's about roughly 10% of our revenue.

That underrepresented part was helpful. And just maybe a little bit more on CCC. You talked about the first carrier. Are there any other specific milestones you could point to for the balance of 2022 into 2023 that we should be thinking about?

We have built the business to be quite resilient to any particular event. If you look at our customer base, we've got insurers, parts providers and repair facilities, so we have a broad mix. Various products have different milestones. If you are asking specifically about payments, we are working through four use cases. Last year, our first goal was to get the payments infrastructure in place; we did that. Second, we said we'd work with early customers to refine use cases, and we've been doing that. Third, we said we'd get a first customer on board, which we just did. We are continuing to work with a number of customers. Payments is an important component, but I wouldn't call out any particular big macro timing point. As we pointed out on the call, we do not expect payments to contribute in any meaningful way in 2022.

The next question is from Kirk Materne from Evercore ISI.

This is Peter Burkly on for Kirk. You guys are doing a lot of innovation. You talked a little bit about diagnostics today. Last quarter you discussed Safekeep a bit and the excitement about subrogation capabilities and how that can open up more of the P&C insurance economy outside of auto. Is some of that outside-of-auto thinking something you guys are considering in terms of future products or your roadmap, even if not near term?

Exactly. Subrogation is one of those solutions that extends well beyond auto. Subrogation exists in property and workers' compensation, and it's across a range of solutions. Payments solutions also extend outside of auto as there are needs to make payments well outside of auto. These are examples of horizontal solutions that take us beyond auto.

Brian, maybe one quick one for you. Last quarter you called out hiring maybe being a little bit behind schedule, and that is helping drive some of that margin expansion. It sounds like hiring is proceeding nicely this quarter. Any more color on how it's going this quarter and how you think about hiring for the rest of the year?

Yes, Peter. We have been making progress across our plans. We brought in heads around product development and product management, and we also highlighted that we've invested in some of our partnership capabilities. We will continue to make additions as we go through the year. We are very focused on balancing investments against our strategic priorities while delivering against our long-term margin goals. We feel good about the hires we've made in our operational capabilities as we go forward.

The next question is from Gabriela Borges from Goldman Sachs.

This is Jake Titleman on for Gabriela. STP is obviously a key part of the long-term vision. You announced Estimate STP recently. Can you comment on some early success there? And maybe talk about what are the other key technical challenges and innovations that need to be solved to get you closer to a full STP solution down the road?

Estimate STP is a component of our overall STP vision and one of the hardest pieces to pull off. We announced Estimate STP around October of last year, and in the six to seven months since then we've got eight significant customers up and running on Estimate STP. This involves very sophisticated AI, workflows and tuning of AI parameters. It's giving us credibility for STP overall — we've had customer conversations around this topic in the last couple of days. Estimate STP is going well, with fairly quick adoption and significant ROI. It's also showing the power of STP as it extends across different components of the claim. Many of the people we're hiring are focused on this vision.

My follow-up: you've talked about growth shifting more toward cross-sell and upsell versus new logos. What are the implications for your unit economics and margins? Is it fair to assume that the cost of customer acquisition on cross-sell is lower than on new logos?

Yes. Historically, about two-thirds of growth was driven by cross-sell/upsell and about one-third from new logos. We've highlighted that this will shift to more like 80% cross-sell/upsell and 20% new logos, and we started to see that play out. The second half of last year was closer to a 70/30 mix, and it's moving toward the 80/20 mix. We see margin expansion opportunity from selling into our existing base and the efficiency that drives. That is part of our confidence in long-term margins moving from where we are now toward the mid-40s over time. Today, we don't spend a lot on customer acquisition. We have a very efficient sales organization with coverage across our customer groups. So while cross-sell is an efficiency tailwind, it's not like we're spending significant dollars on customer acquisition today.

The next question is from Gary Prestopino from Barrington Research.

A couple of questions. First, on the payment business that you signed, you said you signed one customer, right, Githesh? That one is working in implementation with you now?

Yes, this is a signed customer. We have a number of customers we're working with in early stages, and the customer we've converted is in the implementation phase.

And this would be an insurance carrier?

Yes.

As you implement this and it's out in the market, do you see a cascading effect where it goes from 'maybe I might have it' to 'it's necessary for me to have it'?

As with many of our other solutions, when you deliver a great experience and clear ROI to a customer, that has a huge impact on adoption speed. I'm not going to predict precise timing, but we are extremely focused on delivering a great experience, which drives adoption.

What was software NDR for last year? Do you have that handy?

We ended last year at 115%. If you look across the year and average the four quarters, it was around 113%.

I was asking about Q1 of last year specifically.

Q1 of last year was 106%.

In terms of Engage and electronic parts ordering, you noted about 30% of rooftops have Engage and a 40% increase in electronic parts ordering in Q4 last year. Can you give an idea of how much uptake there was in Engage from repair shops as well as electronic parts ordering more recently?

We made progress on both fronts. We continued to sign parts suppliers, and we're seeing growth from new rooftops and parts suppliers as well as increased electronic ordering as a percent of parts on repair orders. We're seeing good progress on Engage and the number of rooftops using it. One of the key drivers when we look at our NDR strength is Engage and other digital solutions — Mobile, AI, Engage — and some early adoption of Total Loss Care are all core drivers of our NDR performance.

One other thing: many customers have integrated Engage into their websites and use it for booking appointments and estimates. That word is spreading broadly and we expect Engage to continue to grow over the next couple of years.

We have reached the end of our question-and-answer session, and I would like to turn the call back to Githesh Ramamurthy for concluding remarks.

Well, thanks, everybody, for joining us. As we've said before, we believe the industry is in the early stages of digitization. We have terrific credibility with our customers, having delivered a lot of solutions. We're investing in innovation that's being really well received. I want to wrap up by saying thanks to all the CCC team members who make this possible day in and day out. Thanks very much to our customers who place their trust in us every day. I also want to thank our investors for continuing to be a key part of what we do. We look forward to addressing you next quarter.

That then concludes today's conference. Thank you for joining us. You may now disconnect your lines.