Inspired Entertainment, Inc. Q2 FY2023 Earnings Call

Good morning, everyone, and welcome to the Inspired Entertainment Second Quarter 2023 Conference Call. Please note, today's event is being recorded. Please refer to the company's safe harbor statement that appears in the second quarter 2023 earnings press release, which is also available in the Investors section on the company's website at www.inseinc.com. This safe harbor statement also applies to today's conference call as the company's management will be making certain statements that will be considered forward-looking under securities laws and rules of the SEC. These statements are based on management's current expectations or beliefs and are subject to risks, uncertainties and changes in circumstances. In addition, please note that the company will discuss both GAAP and non-GAAP financial measures. A reconciliation is included in the earnings press release. With that completed, I now would like to turn the conference call over to Lorne Weil, the company's Executive Chairman. Mr. Weil, please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining our second quarter earnings call. With me today are Brooks Pierce, our President and CEO; and Stewart Baker, our CFO. Second quarter EBITDA was $26.2 million, which was roughly in line with consensus, slightly up over last year, but at least a couple of million dollars less than we would consider to have been the inherent earnings power in the business in the quarter. As can be seen in the P&L that was in the earnings release, quarter-to-quarter corporate expense increased by $800,000 from $6.2 million in 2022 to $7 million this year, with the vast majority of this increase due to the timing of our audit expenses. As we reported some time ago, we changed auditors during 2023 or for 2023 from Markham to KPMG, with the latter now billing us on a different and unavoidably accelerated cycle. In our leisure business, we incurred a statutory $600,000 increase in labor cost in the second quarter due to the U.K. National Living Wage, but we have since reconfigured and reengineered our processes, enabling us to offset this cost going forward beginning with the third quarter. We also had about $1 million of equipment sale EBITDA move out of the second quarter into the second half of this year. Taken together, these items will benefit the second half to the extent of at least $2 million of EBITDA. And since we were anticipating a strong second half in any case, driven by growth in the digital businesses, continued strength in the gaming business, and a return to growth in leisure, we remain more than comfortable with the current full-year consensus. EBITDA on our digital businesses, pre-corporate expense allocation, grew by 14% year-over-year on a functional currency basis, comprised of 28% growth in Interactive and 11% in virtual sports. As anticipated several quarters ago, our interactive earnings continue to accelerate, driven by platform enhancements, high-performing new games, and additional customer integrations. Recent growth in Virtual Sports has been moderating, but we're anticipating a strong reacceleration in virtual sports as we move into next year. We expect that our gaming operator partners will be entering a number of new markets, catalyzed by our NFL license. We're expecting to see significant activity in the U.S. market. In a moment, Brooks will elaborate on much of this. Our leisure business had a year-to-year decline in EBITDA in the second quarter, due almost entirely to the aforementioned labor cost increase, together with the previously reported loss of a pub customer. But as we move through the year, the combination of strong seasonality, new holiday park customers, and improved cost structure should drive leisure into positive growth by year-end. Lastly, but by no means least, I should mention that trading performance in our core gaming business continues to be very strong, aided by the very successful rollout of our new Vantage Cabinet. And here again, Brooks will elaborate more in a moment. And with that, I'll hand it over to Brooks.

Okay. Thank you, Lorne. As I usually do, I'll try to add some color to the results of each of the segments of the business, both in quarter 2 performance as well as what we're seeing and what we have planned for the second half of the year, which we're very excited about. Our digital businesses, Interactive and Virtual Sports, had double-digit growth in revenue in the quarter compared to the prior year, and through the first half of the year now represent 31% of our revenue, excluding low-margin sales, and 62% of our EBITDA on a combined basis. This continues the trend of shifting more of our business online and we expect these businesses to contribute a larger portion of our EBITDA going forward and generating significant cash flow with high margins and low capital intensity. The Interactive segment growth of 28% in both revenue and EBITDA was helped in large part by the launch of FanDuel in both Michigan and Pennsylvania, as we've outlined in previous calls, and we expect that growth from this customer to continue as we add more and more of our best content with them and go live with them in New Jersey yet this month. The growth of Interactive was really across all geographic areas with Europe/U.K. growth being 17%. North America growth is growing at a strong 52% and Latin America growing even faster but on a small base. We see these trends continuing because of the quality and quantity of the content we're releasing every quarter, but we're also starting to see some real traction in some key markets for us like Italy, with growth of over 230% year-over-year, and the Netherlands a growth of 95% year-over-year, but both growing off a smaller base. In fact, we just had our best ever week in terms of both total handle and revenue in the Interactive segment ever just last week. Looking forward, we have some very exciting titles launching in the second half of this year, including Terminator, Big Piggy Bank, and Space Invaders along with all of our usual holiday games around Halloween and Christmas, and we'll be introducing some exciting product innovations later this year that we think will accelerate this growth even further. It's a very competitive space, as you all know, but we're clearly delivering excellent growth and cash flow conversion in this part of the business. Moving over to Virtual Sports. As we talked about in our last quarterly call, the comps in this area are going to get tougher as we grew this segment of the business dramatically in 2022 through the launch of some innovative games, the shift to more people playing online in some key new geographies. Even with that, our quarter 2 2023 revenue was a record quarter. We've consistently said that we believe that one of our biggest potential markets was in North America and that we were gearing our product and sales strategy to capitalize on this and we're starting to see the fruits of that strategy. A good example would be in Ontario, where our Virtual Sports revenue was up 10% versus the same period last year, and the total North American revenue in Virtual Sports was up 20% year-over-year. That's without even being live with our home run baseball game, our NFL license game, and the highly anticipated hockey game that we'll launch in 2024. In baseball parlance, we're in the very early innings of this. So the product team has been working feverishly to have our NFL game ready for the September launch. But as you would expect, it will take some time to get it rolled out to our customer base around the world. We expect very little contribution in the third quarter, but a greater contribution in Q4 and accelerating into 2024. We're building multiple versions of the NFL product that we'll be launching throughout the next 6 to 12 months, similar to the multiple versions of soccer we offer, which currently is our most popular game. We're working with several of the key sports betting operators and expect to be live with them over the rest of this year and even into early next year. So our plan is that by this period in 2024, we'll have a product roadmap of North American focused content and the distribution with the largest sports betting operators alongside the addition of further states from the lottery vertical to deliver on the internal expectations we have for this segment of the business. No doubt, it's taken a little longer than expected or hoped, but we have a clear vision now on the path to success for this part of the Virtual business. Moving on to the gaming side of the business, the highlight of both the gaming segment and the leisure segment has been the launch of the Vantage cabinet in both areas. In gaming, we've now installed almost 50% of the customers we're converting and are still seeing close to 10% improvement in the cash box. As we had mentioned before, with the trials of Vantage showing a 13% uplift in the cash box, we had realistically expected there would be a modest falloff with the added density. But frankly, almost 10% growth is even better than our expectations with almost 50% installed. We expect to finish the rest of the Betfred and Paddy Power installs by October, and we'll see the benefit of that for most of the fourth quarter. We've also improved our operating efficiencies, as Lorne mentioned, across both the gaming and leisure segments, by combining our field engineers, both geographically and cross-training them on multiple products, and the benefit of those operating efficiencies will now start showing in the second half of the year. Finally, we're seeing good results from the installation of the terminals at WCLC that we sold last year with approximately 600 terminals now installed, which we hope will help us sell this product to other provincial operators and other U.S. jurisdictions of distributed gaming. Moving on to leisure. Although the sample size is much smaller, the growth we're seeing in the cash box for Vantage in pubs is approximately 14%, and we'll be aggressively rolling this product out with our key hub customers for the rest of the year. Our flex cabinet continues to be the best-performing cabinet in the adult gaming center space. As Lorne mentioned, we're in the seasonally highest period for our holiday parks, and the early results are encouraging, and we expect this part of the business to be back in growth mode by year-end. Finally, we're making excellent progress in our new lottery system development and have now gone live with online wagering with LEIDSA in the Dominican Republic and are seeing growth from this part of the business, particularly the online lottery part which has picked up nicely as we've seen a 50% month-over-month revenue increase in July. So in summary, we obviously have a lot of growth drivers to deliver in the second half across all segments of the company, and our focus remains on execution of these to build momentum for the rest of the year and into next year. So with that, I'll hand it over to Stewart.

Thank you, Brooks, and good morning, all. So as normal, I'll give an overview of the financials. One area where comparability has helped in this quarter's analysis versus the prior period exchange rates. So while the pound to dollar rate was a little lower at 1.25 this year versus 1.26 in 2022, this gap is much smaller than it has been in previous quarters. For consistency with prior quarters, I used the functional currency pound variance in explaining movements. It's also worth noting that given where the rate currently is and where it was last year in the third quarter, we expect in Q3, the FX will become a tailwind. In this analysis and the earnings release, we tried to provide clarity so you can see the results including and excluding these sales. As the rollout will likely continue into the fourth quarter, this will be relevant for the rest of the year. Overall, revenue grew 13%, including these low-margin sales and 7% excluding them. As has already been mentioned, Interactive revenue grew at 28% and Virtual Sports grew 8%, with the latter coming up in its too comparatives. In the land-based business, gaming revenue was up 24%, including these low-margin sales and 6% excluding them. It's also pleasing to be reporting that Leisure has returned to top line revenue growth, growing 2% compared to a decline in the first quarter year-on-year of 4%. At an adjusted EBITDA level, we grew 1%, which is clearly a smaller growth rate than we've been seeing recently. So it's worth giving some color here. As Lorne has mentioned, we have a phasing difference with the order to change, which causes a 3% impact on growth rates. Additionally, the prior year, the nature of hardware sales in gaming was higher margin as casino terminals don't carry an ongoing revenue for content. This quarter happens to be one when the sales were low and the comparative period was high. The other big area of impact is wage inflation, particularly in the leisure segment, which is the biggest cost. Costs are rising faster than revenues is not a trend that can continue, nor do we expect it to, based on what we can see from the combination of cost reduction measures and revenue growth drivers that Brooks spoke about. Notwithstanding that overall EBITDA growth for the company was below longer-term trends. It's worth pointing out that both Interactive and Virtual Sports grew double-digit rates at 28% and 11%, respectively. Further down the income statement, depreciation and amortization was up 5% or $0.5 million, but this excludes an after period adjustment from Q1 of $0.6 million. So excluding this was broadly in line. You may have seen in the earnings release that we have revised the prior year numbers for this chart based on software assets being amortized earlier than initially recorded. For the avoidance of doubt, this revision does not impact revenue, adjusted EBITDA, CapEx, or cash flows. There were no exceptional SG&A charges in the period, but the interest line showed an increase of $1.3 million year-on-year. To be clear, this is not reflective of increased borrowings or the cost of borrowings, as our rate is fixed at 7.875% until the middle of 2026, but instead reflects FX differences on cash balances and mark-to-market movements on FX hedges. Turning our attention to the balance sheet, CapEx in the quarter was $10.6 million, down from $11.1 million in the same quarter last year and from $11.6 million in the first quarter of this year. We finished the quarter with $42 million of cash, which gives us a net leverage of 2.5 and looking at the last 12-month EBITDA on a functional currency basis. On capital allocation, you'll have seen we only purchased a nominal amount of stock in the quarter, but still have just under $15 million of this facility available and are constantly evaluating both stock and debt repurchases. Finally, while we are working to try and file the 10-Q today, this may not be possible given the revisions to amortization. If this isn't possible, we'll add details later today with KPI information usually one in the Q in the form of an updated investor presentation and expect the Q to follow shortly after. So with that, I'll now hand back to Lorne for any closing remarks before opening up to Q&A.

Thank you, Stewart. That was an excellent financial summary. I don't have any further prepared remarks. So operator, if you can please open the program to Q&A.

Your first question comes from David Bain from B. Riley.

I guess first, Brooks, you mentioned the lottery in tandem with Virtual Sports. Could you give maybe an example or two of new potential virtual sports concepts that could operate or be offered in a traditional lottery outlet or sales environment? And as you're having those discussions, what's your best take on when we may see agreements, understanding that lotteries don't often move very fast like some other industries?

Yes. Well, that part is definitely true. But I think we've seen already with both Pennsylvania and D.C. that the lottery vertical is definitely a good one for virtual sports. Clearly, the NFL, Lorne can comment on this as well, is something that the lottery industry is tremendously excited about because they've never really been able to get an NFL license like we have. So all I can tell you is that we're in accelerated conversations with a number of state lotteries, largely driven by the NFL license. We expect certainly to be able to announce something through the course of the rest of the year. But you're right, it does take a little bit longer to get decisions made in this space and obviously, to do the integrations and get it implemented.

And are there concepts where it could actually be reported to more of a traditional kind of ticket or numbers format more than someone who views it?

Yes. I mean, the reality is, as you know, the outcome of a virtual sports game is literally just like a keynote game or a lottery draw. We've had a number of conversations with lotteries about could this be a new enhanced kind of exciting way to accelerate their growth in the draw game space. Our product people have been in discussions with state lottery product teams, having a number of conversations about whether it will be a new kind of highly innovative advanced version of a keynote or even as a draw game, we think virtual sports will slot in very nicely to the lottery product offerings.

Awesome. And then I guess, Stewart, maybe if you could review to the best of your ability, I know some of this is out of your hands as operators. But kind of the sales weighting of low-margin customer transitions over the next few quarters, the weighting there? And then I don't know if Brooks or Lorne, you mentioned, I didn't hear it if you discussed the network lift from Vantage cabinets to date.

Yes. So let me start with the first one then, Dave. So in terms of the number of terminals, that's probably the easiest way of thinking about it. In the second quarter, we delivered around 930 low-margin sales, generating around $4.4 million of revenue. In the third quarter, we expect to do just over 4,000, and then in the fourth quarter, we expect to do just over 1,000.

Perfect.

I apologize, please continue if you have more to add.

I missed it then.

Yes. So on the Vantage cabinet, what we talked about is, if you remember, we said in the trial, we were seeing a 13% uplift, which was very nice. We always assumed that when you have so many more terminals, there would be a slight drop in the cash box. But frankly, we've been very pleasantly surprised with now almost half of the terminals installed. The uplift in the cash box is still at roughly 10%, which is very meaningful for our operator customers and obviously bodes well for us going into the fourth quarter when we're fully deployed.

You want to know about the pub too.

Yes. Sorry, Lorne, was just saying. The other part of it, then maybe we probably haven't elaborated on this as much as we should have is the Vantage cabinet that's a slightly different version of the Vantage cabinet is going now into the pubs market as well. The early numbers that we're seeing in the pubs market are even better than the LBO business at 14%. By the end of the year, we're going to have thousands of Vantage terminals in multiple segments of our business and hopefully continuing to produce the results that we're seeing thus far. So that's a very nice tailwind for us, obviously, in the fourth quarter, but moving into next year.

Our next question comes from Barry Jonas from Truist Securities.

As we think about the growing importance of digital to the business, can you talk about how you think about the synergies with the land-based side?

Yes. Well, there are two important synergies. The origin is the content development and the so-called omnichannel strategy that a lot of people think has been and will continue to be key to succeed in the business overall. Our start in the digital business was our land-based customers in the U.K., the William Hill, Paddy Power, and actually even the U.K. operators in the U.K. that are not our customers like Ladbrokes and Coral. When they first launched online gaming in the U.K., the first games that were launched were the same games that had been played on the machines and in the shops. So people would play it in the shop. They had a couple of games that they really liked. They get home. They play them on their phone or on their computer. The whole idea of developing games in retail, seeing what works in retail and then transferring those games to online is sort of the origin and that continues to be a very important driver of the business. One of the reasons we're able to introduce many games to the online market that drives, I'm not sure if folks mentioned that, but I think in the first 6 months, our interactive is up 50% over last year, something close to that. We're able to introduce that many new games because we have an installed base of 50,000 or more machines in retail locations that we can amortize that total software development expense. It's ironic that where this issue that Stewart mentioned earlier about our needing to revise the amortization of this game software just because we're doing so many games and so many people are doing them that this has kind of slipped. But I think continuing in the future, again, the ability to have a huge retail base that lets us really understand what works and what doesn't, and having both a retail and an online business to be able to amortize the cost of the content development, I think, is a huge benefit. Without question, this is why we've been able to build such a successful iGaming business that is so profitable. If we didn't have our retail business, we wouldn't have been able to do that in 1 million years.

Yes. And Barry, just one last point I'd add to that. I think it's interesting that you see it's somewhat different by geography. Where we have big installed bases of retail terminals in the U.K. and in Greece, you would see the same content that's at the top of the board for both online and retail in those markets, but it would be different content in Greece than it would be in the U.K. So having the ability to develop games specific to geographies really does enhance our growth. It's a very competitive space, so that's certainly a big advantage that we have. Hopefully, as we grow our North American VLT business, we will start getting even more and more traction from that in North America as well.

That's extremely helpful. And just as a follow-up, there's been some M&A activity in the space since your last call. I just wanted to get your thoughts on your appetite for M&A here.

Well, our appetite for M&A continues to be strong as it always has been. But as we've talked about this a number of times, Barry, we're not going to pursue M&A just for the sake of doing M&A to acquire some earnings. We have a pretty clear template of what we're interested in. We don't have any intention of doing anything that would be considered a significant diversification. I'm strongly of the opinion that sticking to your knitting is the best strategy. We're looking at lots of deals, but we're not going to overpay. We're not going to do anything that's dilutive, but as things come along that fit that template and the numbers work, then we are anxious to do it. Our balance sheet right now is really strong, as Stewart said, the leverage is right now 2.5. By the end of the year, it might be down to 2. We have plenty of cash and we're generating plenty of cash. So we certainly have the resources to do it, but we're not going to do anything unless it really makes sense.

And Barry, one other thing, it's probably precious today with all the news with Penn and ESPN, et cetera. M&A can benefit us in other ways as the sports betting space is getting more and more competitive and M&A is going on in that space. With the NFL license that we have, which is something that we assume that all the sports betting operators are going to want, the rising tide should lift all boats, and we think that will be very beneficial to us. So we're happy to see how big and competitive the sports betting business is because we think it will, as we've talked about many times, Virtual Sports is complementary to the sports betting business in the rest of the world.

Our next question comes from Jordan Bender from JMP Securities.

I want to start my follow-up. You guys talked about in the Virtual Sports segment, just kind of the comps getting tougher into the back half of the year. Is it kind of fair to assume that, that is mid-single-digit growth in 2H and then you mentioned in '24 that's when it starts to reaccelerate again. Is that kind of the right way to think about it?

Yes. I think it is. As Brooks was saying in his part, a major driver of the growth in Virtual Sports is the opening up of new geographic markets. In the absence of a game-changing product like the NFL football game that Brooks talked about, after a couple of years, the new markets tend to flatten out a little bit. A year ago, we had a significant increase in new territories that kind of slowed down, and then the growth with the time lag of a year to 18 months begins to slow down. Looking ahead, I think your numbers are right in terms of the short-term growth expectations. From our conversations with our customers, they are preparing to enter a number of new geographies over the course of the next year or 18 months, combined with the impact of the NFL game that I think will reaccelerate the business in the States. Effectively, each state is like a different country. So yes, I think a year from now, I am comfortable that we'll be back on a growth cycle as we were a year ago.

Okay. That's great color. And then I guess my second one here is just on the margin within the Virtual Sports segment. It seems like quarter after quarter here, we continue to talk about that adding new highs. Where are you guys seeing the leverage from that keeps pushing up that margin? If we look at '24, is it kind of fair to assume that as revenues keep going up, you're going to continue to gain new operating leverage that you've seen over the last 18 months or so?

Yes. In our interactive business, as it expands, the margins—whether gross margin or EBITDA—are increasing at a pace that outstrips revenue growth. This is a classic example of creating a product once and selling it multiple times. We develop a game, and other than marketing expenses, the operating costs primarily involve the electronic delivery of the game to our customers. Therefore, as our customer base increases, the costs do not proportionately rise. Theoretically, this model allows for margins to improve almost indefinitely with increasing sales, unless growth is dependent on significant additional expenses that we currently do not foresee. At this time, I don't anticipate any changes to the revenue margin dynamics in the near future.

Yes. I think, Jordan, Lorne's comment on geographies and expanding geographies just accentuates that because for us to go into a new geography, for either Virtual Sports or our iGaming business, it is selling the same thing and further expansion. We're starting to see the benefit of more effort and more markets. Obviously, whatever new markets open will further drive our growth.

Our next question comes from Edward Engel from ROTH MKM.

I appreciate the cadence of the Vantage rollout. I just wanted to kind of ask two quick ones on that. Would you expect all of the rollout you've talked about in the past to be finished by the end of this year? And then of those 6,000 that you pointed out, is that all for sale at low margin? Or is any of that kind of investment on your balance sheet?

Yes, it's all low-margin sale. In the LBO or betting shop business, we will be done with Paddy Power and Betfred this year, but we would see the William Hill conversion will go into next year. In terms of the pubs, most of it will be done or a big chunk of it will be done this year, but there will also still be some lingering conversions in the pubs market next year on our balance sheet.

So the 6,000 machines is all in the betting shops and they're all being bought effectively financed by the customers. In the pub business, we continue to make the CapEx, and obviously, we derive the benefit of the increased cash box that is driving.

Our next question comes from Ryan Sigdahl from Craig-Hallum.

This is Will on for Ryan. I first wanted to touch on FanDuel. It seems like the launch and rollout is going well, and you gave an update on New Jersey. I'm curious when you think Pennsylvania might launch. In addition to that, are you supplying virtual sports to FanDuel?

In terms of Pennsylvania, we're already live with FanDuel and Pennsylvania. In terms of New Jersey, I would say it's going to happen this month. It's always subject to final testing and regulators, but we're scheduled to go, I think maybe even next week. Can't really comment specifically on Virtual Sports other than what I said in my remarks and that we're in discussions with many of the operators, the sports betting operators in particular because of the NFL license. So when we can announce something in that regard, we will.

Fair enough. And then maybe as a quick follow-up, MLB shootout launched during the quarter, I believe. How has that performed? Has it helped accelerate any traction at all?

It hasn't launched yet. It will go live this quarter. I think with Bet365 first, and then we'll go into others. When we have our next quarterly call, we'll obviously be able to update what's happened both in the NFL game and the home run shootout. So you can highly anticipate that in the third quarter call.

Our next question comes from Chad Beynon from Macquarie.

I wanted to revisit the margin question. On the non-new CapEx or the non-new machines, coming in at low margins, can you help us think about where gaming and leisure margins are versus maybe how you were thinking about it last year? Whether it's wage, utilities, freight costs, etc., a lot of moving pieces on the inflation side? Just wondering if that same-store margin business is starting to look a little bit better here?

Stewart, do you want to handle that one?

Yes, sure, Chad. In terms of the leisure segment, we start there, it might be a bit easier. As we said, there's the impact on the top line of the declining or the last pieces that we took out from the pub business in kind of Q3, part of last year that's now annualizing. We got the new impact of additional holiday parks, which boosts it, particularly in this Q3 period that we're in now. And then there's the wage inflation piece that we talked about that you can particularly see in Q2. We think that for the cost reduction reasons that we talked about in the prepared remarks and the benefit of the additional holiday parks revenue, leisure margins will be back where they were, and as Lorne said, certainly back into EBITDA growth as well as revenue growth. On the gaming side of the business, obviously, the low-margin sales to Betfred and Paddy Power are distorting the numbers at the moment. If you take away those numbers, there’s a bit of an in-quarter year-on-year decline as we had the high-margin product sales in Q2 of last year. These sales jump around as we spoke about over the years. There’s no declining trend, it just happens to be a lower quarter this time versus a high comparative. All the upside we’re seeing from Vantage will fall to margins being no additional cost on that. We also have the additional cost reduction measures in gaming as well. Putting all those pieces together, at least similar margins, if not improving margins in gaming.

Excellent. And then here in the U.S., there's some really good momentum in North Carolina. I think two bills have been put forward from the separate houses on distributed gaming legalization. If this market legalizes, I guess maybe a two-parter on this: One, if this market legalizes, would you be ready to get into that market, given what you've done in other distributed markets? Secondly, Lorne, how are you thinking overall, if this passes, how other states might look at this as a source for revenues?

Sure. Yes, we obviously monitor that very closely and certainly depending on how it goes in North Carolina, but if it does pass and they expand into distributed gaming, similar to what they've done in Illinois and the provincial markets in Canada. Yes, that's right in our sweet spot, distributed gaming, where it's a large number of locations with few numbers of machines where downloading content makes a huge difference. We've always believed that distributed gaming was going to be a growth driver in this industry, as the building of big casinos seems to have slowed down. If North Carolina were to do it, that might be a tipping point for other states. We've seen gaming legislation throughout the years: generally, when one state does something, surrounding states feel impacted, and they tend to pass it as well. Yes, we're obviously big advocates for distributed gaming because we think it fits perfectly with what we do everywhere else in the world.

Appreciate it.

I will now turn the call back over to Lorne Weil for closing remarks.

Thank you, operator. Once again, thanks to all of you for joining the call. I know everyone is anxious to get off the phone because there's a very exciting conference call beginning at 9:00. I might even listen to it myself. But in the meantime, let me just iterate that we are very upbeat and quite positive about where we're going to be in the second half of the year. A lot of things we've been working on are coming together very nicely. I think we're going to be very happy with the year come the end of December. We look forward to speaking to all of you in 3 months, and thanks again.

Ladies and gentlemen, that concludes today's call. Thank you for all joining. You may now disconnect.