Earnings Call Transcript - PCOR Q2 2024

Operator, Operator

Good afternoon, everyone. I would like to thank you for attending the Procore Technologies' Full-Year 2024 Q2 Earnings Call. My name is Brianna and I will be your moderator for today. I would now like to pass the conference over to your host, Matthew Puljiz, with Procore Technologies. Thank you. You may proceed.

Matthew Puljiz, SVP of Finance

Thanks, good afternoon, everyone. Welcome to Procore's 2024 second-quarter earnings call. I'm Matthew Puljiz, SVP of Finance. With me today are Tooey Courtemanche, Founder, President, and CEO; and Howard Fu, CFO. Further disclosure of our results can be found in our press release issued today, which is available on the Investor Relations section of our website and our periodic reports filed with the SEC. Today's call is being recorded, and a replay will be available following the conclusion of the call. Comments made on this call may include forward-looking statements regarding, among other things, our financial results, products, customer demand, operations, and macroeconomic geopolitical conditions. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements are subject to risks, uncertainties and assumptions that are based on management's current expectations and views as of today, August 1, 2024. Procore undertakes no obligation to update any forward-looking statements to reflect new information or unanticipated events, except as required by law. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information. Therefore, these statements should not be relied upon as representing our views as of any subsequent date. We'll also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP out to GAAP measures is provided in our press release and our periodic reports filed with the SEC. And now here's Tooey.

Tooey Courtemanche, Founder, President, and CEO

Thanks, Matt, and thank you, everyone, for joining us today. So I'd like to start by thanking our team for their continued hard work and our customers for their continued partnership. Despite the tough demand environment, we continue to see bright spots, including revenue growth of 24% year over year and an operating margin of 17.6%. We hosted our Annual Innovation Summit, a virtual product showcase where over 4,000 construction professionals registered to learn about our latest platform and feature enhancements. Our newest products, Pay, had good traction in the quarter, and we expect to see continued demand for this offer in the coming years. In June, we were included in US News list of best companies to work for, a testament to the strength of our culture and our employees' belief in our mission as we continue to grow and scale. In the quarter, we added new customers, including Perla Construction, one of the largest locally owned general contractors in the Pacific Northwest. Perla had been using a competitive solution and a number of point solutions. When they learned that a key part of their tech stack would be phased out and that the replacement options would not meet their needs, they began an extensive competitive evaluation. Procore was selected after joining Perla onsite, thanks to our connected platform, brand, and best-in-breed solutions to support their continued growth. We also closed a number of additional transactions with new and existing E&R 400 contractors, including a major expansion with one of the largest GCs in the world and a partnership with a major nonresidential contractor driven by strong support from the field teams. While our success with large GCs continued to shine this quarter, we also highlighted the diverse range of customers who find value in Procore. We welcome finance from many sectors, including a leading industrial gas company with over 750 production facilities operating in 50 countries; one of the fastest-growing data center owners and operators in the world; a leader in artificial turf installation; as well as the Ministry of Health from a country in Asia, among others. Now let's shift gears. Our goal has always been to treat shareholders as partners and to ensure that they understand the journey that we're on as Procore continues to evolve. In that spirit, I'd like to spend some time today discussing changes that we're making to the business. This year, we are guiding to surpass $1 billion in full-year revenue. While this is an important milestone for Procore, it also represents a key inflection point as we move toward becoming a multibillion revenue company. I’ve spent a lot of time reflecting on what got us here and what we need to do to prepare ourselves for this next chapter of growth. It has become clear to me that in order to achieve our long-term goals, we need to refine our approach and mature our operating model. This is a natural and healthy part of growth. In my 22 years leading Procore, we've gone through many iterations of how we operate. Today, I wanted to talk about the next evolution of our go-to-market motion. But first, let me provide an example of a similar evolution we made in technology. An important part of setting ourselves up for long-term success was getting the right leadership team in place to bring our vision to life and to drive execution. Over the last three years, I have strategically reshaped the executive team, and the impact that I've witnessed these leaders have on the company has been incredibly exciting for the future. One great example of this is the evolution we've seen in our technology organization. In the last few years, we have brought this organization forward for this next chapter of growth by evolving the technology operating model, topology of solutions, and corresponding team structures. We've built out these resources, growing teams, and scalable high-challenge geographies, improving our velocity in delivering high-quality, high-customer-value solutions while simultaneously improving gross margins and R&D efficiency. Our product and technology team has been able to move product from concept to close beta in a matter of months. It reminds me of the early days of Procore when we could roll things out rapidly, except now what we're rolling out is enterprise-grade. We are seeing better platform performance. It is incredibly rewarding to partner with Steve Davis, our President of Product and Technology, and the rest of our technology leaders are maturing the engine of how we build our products and the products themselves. The improvement we have seen with our technology team is now what we intend to bring to our go-to-market motion. I've been working closely with my leadership team to develop and evolve our go-to-market operating model to set us up for durable long-term growth. Over the last couple of months, it has become clear that we have the opportunity to accelerate its rollout. Most of my remarks today will focus on this evolution in our operating model and our rationale for accelerating its timing. Since joining Procore in February, our Chief Revenue Officer, Larry Stack, has focused on evaluating our entire go-to-market and customer lifecycle and has helped us validate and fine-tune our plan. While our current operating structure was the right one to get us where we are today, we need to evolve the current model to take us to the next level of scale. With Larry ramped and onboard, we have pulled this plan forward and are beginning to implement it. We're being intentional with the timing of this decision. We have a lot of conviction in this evolution. When you believe you have found the right plan, you take action. The sooner we get started, the better we expect it will be for the long-term prospects for the business. Quite frankly, I don’t want to wait until next year. We also believe there’s added benefit to starting this process now during an economic downcycle to ensure that we are best positioned to capture the market when it inevitably improves. Now I’d like to walk through some of the specific changes we’re making to our go-to-market operating model. First, we’re moving from a matrixed organization structure to a general manager model. Today, we have a global head of sales and a global head of customer success model, which is not uncommon for companies our size. But this model has constraints that have become more evident as we scale globally, requiring coordination and alignment across departments and geographies to move quickly on customer needs. General managers will have combined teams reporting to them, which should streamline engagement across the customer lifecycle. The general managers' roles will cover North America, Europe, Australia, New Zealand, and the Middle East, which represents our current geographic coverage. In the future, when we elect to move into new countries within these regions, the general managers of these respective regions will be better positioned to determine specific strategies and tactics for their countries. Second, we will begin building out more robust public sector and channel motions. A few weeks ago, you may have seen that we announced our intention to obtain FedRAMP authorization, which we expect will open up an incredible amount of opportunity with the federal government. Given Larry’s experience working directly within the public sector, he’s uniquely equipped to help us capture this opportunity. We will share more on this as this initiative continues to develop. Finally, it is natural for changes in operating models to be accompanied by changes in roles, responsibilities, reporting lines, and eventually compensation plans, all of which will follow as part of our go-to-market evolution. We expect some disruption with this evolution of our go-to-market motion; Howard will outline this shortly. I am confident these changes will take us to the next level of scale and that this is in the best interest of both our customers and our shareholders. As I shared, I see many parallels to how we fine-tuned our technology organization over the past couple of years and how I expect our go-to-market organization to benefit. It’s exciting for me to be part of this critical period that enables the durability of our long-term growth. We expect a variety of benefits from this go-to-market model, including ensuring our customers get the greatest value from Procore by helping them run more efficient, productive, and profitable businesses. Here are some ways we intend to evaluate our performance in this evolving model. First, we expect to see even stronger and deeper customer relationships. This model is designed to create greater focus and enable our teams to be more strategic with each customer. These advisory relationships are expected to lead to improvements in retention and net expansion rates. We also have an opportunity to improve adoption rates of our newer solutions within preconstruction, resource management, and pay. This includes a greater number of product specialists who are experts in these solutions, working on site with customers to help ensure their success. Second, this creates nimble teams that can quickly address on-the-ground dynamics as they arise. General managers will have the autonomy to respond to the local nature of construction and tailor their own motions specific to the needs of the markets they serve. This aligns with our belief that the best decisions for customers are made in the field, not back at headquarters. Third, we believe this will ultimately improve our go-to-market efficiency. As customer relationships become deeper and more strategic, we expect product adoption and usage to increase, leading to stronger retention and expansion rates, improving the lifetime value of customers, which in time will be reflected on the P&L. I want to close by reiterating how much conviction I have in our path ahead. This evolution is a natural part of scaling, and this model is better suited to serve our increasingly diverse product suite, global customer base, and upmarket focus. We’re proactively making these changes from a position of strength to maintain Procore's leadership position and ensure that we're ready to capitalize on the next upturn construction will experience. This is an incredibly exciting chapter for Procore, where I have the privilege of guiding our business toward becoming a multibillion revenue enterprise. We are the undisputed leader in transforming one of the world's largest and least digitized industries. We're confident the path we've laid out will set us up for even greater success, especially when the economic cycle improves. And with that, let me hand it over to Howard.

Howard Fu, CFO

Thanks, Tooey, and thank you to everyone for joining us today. I'll recap our Q2 financial results, share some color on the business, and conclude with our outlook. Total revenue in Q2 was $284 million, up 24% year over year, and international revenue grew 31% year over year. Our Q2 international results were slightly impacted by currency headwinds. On a year-over-year basis, FX contributed approximately 1 point of headwind to international revenue growth. Therefore, on a constant currency basis, international revenue grew 32% year over year. Q2 non-GAAP operating income was $50 million, representing an operating margin of 17.6%. Our key backlog metrics, specifically current RPO and current deferred revenue, grew 16.4% and 18.7% year over year, respectively. Now let me take a step back and share some additional color on the business. Q2 benefited from approximately $4 million in revenue that we did not anticipate within our previously issued guidance from Q1 earnings. The primary driver of this benefit pertains to the recent success and magnitude of implementation deliverables, which accelerated this revenue stream based upon service delivery. While we intend to continue expanding our professional services motion, we do not anticipate an implementation revenue benefit of this magnitude in the second half of this year. This $4 million in revenue acceleration also contributed to our strong operating margin performance in the quarter. Without this benefit, Q2 revenue would have been 22.8% growth and operating margin would have been 16.5%. Moving on to an update on Pay. Q2 represented only the second full quarter of general availability, and we continue to see strong adoption here. Given the ramp period associated with onboarding Pay, we do not expect this to be a material contributor to our financial results this year, but we are pleased with the progress we have seen thus far and believe this represents a significant opportunity to drive greater cross-sell as we further extend our platform functionality throughout the construction life cycle. Regarding the demand environment, Q2 represented a second consecutive quarter of stability within our churn activity. The underlying health of our customer sentiment is not worsening; rather, it continues to stabilize, similar to what we saw in Q1. However, while churn is stabilizing, our retention metrics are still below what we saw in the past as we are not seeing the level of expansion that we anticipated. This dynamic is contributing to how we think about our outlook for the rest of the year. With that, I’d like to provide additional commentary on the impacts of our go-to-market transition. While we believe this change is the right shift for the business in the long term, we know that it will take time and will create near-term disruption to bookings. Therefore, we will be adjusting expectations for this year and next to reflect this disruption. Specifically, we will maintain our full-year 2024 revenue guidance. We no longer expect CRPO growth to accelerate in Q4, and we expect this disruption to carry into next year as a significant headwind to fiscal '25 revenue growth. While these expectations represent a shift from my commentary last quarter, we believe it is prudent to apply incremental conservatism given the changes we are making. We intend to keep investors informed as we gain better clarity on the impacts of this transition. On the margin side, as we evolve our go-to-market operating model, we will accelerate investments in sales capacity beginning this fall. These investments reflect our confidence in our long-term opportunity and our conviction in the go-to-market model we are building. As Tooey mentioned, we also believe these investments will best position us to capture the market opportunity when the macro improves. Recall that our previously issued full-year margin guidance incorporated the flexibility for incremental investments like those we are making for this go-to-market transition. Note that these investments should result in Q3 and Q4 operating margins that are lower than Q2. Even with these investments, our updated margin guidance will continue to reflect strong margin improvement for the year. If I take a step back, I recognize that the financial framework we provided at Investor Day last year may need to be updated in the future to contemplate the significant and accelerated changes we are now making to the go-to-market model. Therefore, we intend to revisit the structure of the framework once we transition to this new model. To be clear, in all paths going forward, we remain committed to balancing revenue growth with margins and dilution across multiple years, which is the spirit of why we provided the framework. Over the long term, we believe this new go-to-market model approach will result in numerous benefits, which will ultimately be reflected in our financial performance. First, I believe this model will enable more durable long-term growth, particularly in helping our retention and expansion metrics. Second, the efficiency we anticipate once we have successfully transitioned to this new model should provide incremental confidence in achieving best-in-class terminal margins. Now moving on to our outlook. As a reminder, our guidance philosophy remains unchanged from 90 days ago. For the third quarter of 2024, we expect revenue between $286 million and $288 million, representing year-over-year growth of 15% to 16%. Q3 non-GAAP operating margin is expected to be between 9% and 10%. For the full-year fiscal 2024, we maintain the high end of our revenue guide between $1.141 billion and $1.144 billion, representing total year-over-year growth of 20%. We are raising our non-GAAP operating margin for the year to be between 10% and 11%, which implies year-over-year margin expansion between 800 basis points and 900 basis points. To wrap up, we are optimistic about this next evolution of the business as we move towards our goal of generating multibillion in revenue. It's never easy to make big changes, and we will communicate our progress as we move forward. Long-term growth remains our priority, and we have strong conviction that we are investing appropriately to best position the company to capture the massive and underpenetrated opportunity ahead of us. I'd like to close again by thanking our customers, partners, employees, shareholders, and the industry, as well as the communities we serve for giving us this opportunity.

Operator, Operator

We have the first question from Dylan Becker with William Blair.

Dylan Becker, Analyst

Hey, gentlemen, appreciate the question. Obviously, a couple of moving parts here. Maybe Tooey starting with you on the go-to-market reorganization. I guess you kind of touched on it, but why now? What was the impetus for change? What sparked that? Any way to think about kind of the timeline of this transition? And how we should assess kind of the progress as this evolves over time?

Tooey Courtemanche, Founder, President, and CEO

Yeah, Dylan. So yes, you’ve been along with us on this journey for several years now when we’ve been talking about the maturation and transformation of my leadership team. So think of it this way, as we had been going through this journey, we went through the whole Steve Davis journey early on. We were maturing our whole P&T organization. We knew we were going to be evolving our leadership in our go-to-market organization as well as the operating model. So think of this as just the next logical step in that journey. We had been planning on this for quite some time. We didn’t plan on it coming down quite this quickly. We were thinking more in the 2025 or the 2026 timeframe. But then when Larry joined the team and he reviewed the plan that we had in place, he was enthusiastic. He’s seen this play before and he was behind it. Taking into account the fact that the macroeconomic demand environment was how it is right now, we thought let’s get this going and let’s start the transformation now. So when the macroeconomic environment improves, we’ll be in a good place to capitalize on it. When I see a plan that makes a lot of sense and is the right thing to do for Procore, it’s time to move.

Dylan Becker, Analyst

Okay, great. I know you kind of quickly touched on the FedRAMP opportunity as well. I know you guys are in the government space too. It sounds like the broader macro remains stable, which is encouraging, but really digging into kind of what you think the FedRAMP opportunity unlocks. And I think with Larry as well, too, having some of that expertise to really double down in that segment.

Tooey Courtemanche, Founder, President, and CEO

Yes. It’s really exciting. Again, this is one of those decisions that’s not new. We’ve been talking about being FedRAMP compliant for years. A lot of infrastructure work has gone on to get that journey started. The announcement is around our intention to satisfy the needs of our customers that do work for the federal government. You're right; today, a lot of our customers use Procore on these federal projects. It’s really important that we get to that certification and authorization level in order to capture additional project volume from our existing customers and from new ones. It’s also part of the evolution of our business strategy, something we’re incredibly excited about.

Dylan Becker, Analyst

Thanks. I appreciate it.

Saket Kalia, Analyst

Great. Hey, Tooey. Hey, Howard. Thanks for taking my questions here. Tooey, maybe just to start with you. Lots of change to get through. But maybe if we could just focus on sort of the idea of building out a channel. Procore clearly has a very strong direct sales business. Tooey, as you think about the business, in a couple of years in the future, how do you sort of envision the mix of the business coming from the channel versus direct?

Tooey Courtemanche, Founder, President, and CEO

Yes. It’s a huge opportunity for Procore to capitalize on the channel opportunity, both in the US and globally. One of the things that Larry Stack brings to the table is a tremendous amount of experience. We have high hopes that this will be a significant contributor to our growth over time. This is an area where I’m spending a lot of time, and I do think the industry is ready for it. We’re really enjoying building this team out right now.

Saket Kalia, Analyst

Got it. Got it. That makes sense. Howard, maybe for my follow-up for you. I think you made in your prepared remarks a very helpful comment, which was just a point around balancing growth and margin expansion. Understanding that it's early to provide a framework for looking forward, but even anecdotally, particularly on the margin expansion point, how do you think about sort of margins through these changes? Clearly, there's some top-line impact, but how do you think about expanding margins as that go-to-market motion changes?

Tooey Courtemanche, Founder, President, and CEO

Yes, makes sense. Thanks for the questions, Saket. From a margin perspective, I want to make sure everyone understands that we did a tremendous amount over the last couple of years. When you think about our guidance at the high end, we’ve given back about 21 percentage points of operating margin improvement over those years. I think about how we deploy capital, specifically for this go-to-market change, considering the returns over multiple years. We’re making investments that are right for the long-term optimization of the company. This means accelerating these investments into the back half of this year. Even if we keep the margins next year the same as we’re guiding at the top end of our guidance, we would still be well ahead of our margin framework.

Saket Kalia, Analyst

Very helpful. Thanks, guys.

Howard Fu, CFO

Thanks.

Jason Celino, Analyst

Great. Thanks for taking my questions. Tooey, construction is totally a relationship-based business. So it makes sense to be getting closer to the regions you outlined and moving to this general manager approach. Is that part of the reasoning? Do you have the right leaders in those areas already in place? Or should we be expecting some key announcements?

Tooey Courtemanche, Founder, President, and CEO

I love that you asked this question because one of Procore’s hidden secrets has been our customer centricity. This really makes us different from our competitors. We’ve focused more on being upmarket, becoming a trusted partner to these large construction firms. The closer we can get to them, the more we can service their needs and provide more services. It’s one of the driving factors of this transformation.

Jason Celino, Analyst

Great. Just following up on the potential channel expansion, what might that look like? Do your big construction customers work with global SIs? Or would it expand into other types of resellers? How would that look?

Tooey Courtemanche, Founder, President, and CEO

We have defined plans there, but I think it’s a bit early to go into great depth. There will definitely be more to come because it’s an area of excitement for all of us.

DJ Hynes, Analyst

Hey, guys, this is Ryan on for DJ. I just want to double click on Procore Pay for a minute. We’ve spoken in the past about how some customers are hesitant to make that switch over the product mid-project. As the industry faces headwinds and presumably the number of projects falls, are you seeing customers sort of retool between projects? Or are they just waiting for the market to turn for them?

Tooey Courtemanche, Founder, President, and CEO

Hey, Ryan. Our customers never sit on their hands. There's no hand sitting here. Yes, it doesn’t make sense to bring a project online in the middle of a project on to pay because that changes how you pay your vendors and that’s probably not scalable. But our customers run dozens, if not hundreds of projects that are staggered over time. Just because they’re not bringing an existing project, it doesn’t mean that they don’t have a project starting tomorrow that they can bring on to the platform. Our customers start and stop jobs every day, so we’re diversified across their book of business.

Ryan, Analyst

Okay. Makes sense. And for Howard, just maybe a little clarification. I thought I might have read somewhere that you guys are either in the process of or you’ve already wound down the materials financing effort. Is this right? Can you talk a little about what that new model looks like and what traction you're seeing?

Howard Fu, CFO

Yes. The materials financing product was our attempt to address the working capital problem in the industry. That problem still exists, and we continue to explore different options to address it. We did wind down the materials finance business last year and we are looking at opportunities to address those issues in the industry.

Alexei Gogolev, Analyst

Hi, everyone. Tooey, if I may ask about the incremental signs that you may be seeing with regards to the stability of renewals.

Howard Fu, CFO

Alexei, this is Howard. I can provide an answer. The stability we’re seeing is in our churn performance, consistent with what we saw in Q1. Recall last quarter, we talked about the cohort of customers that made purchases with Procore last Q1 and the stability we saw in this past Q1. We’re seeing similar dynamics in Q2. However, we are still facing challenges in terms of the expansion of those customers, which has pushed down our performance.

Alexei Gogolev, Analyst

Understood. Thank you, Howard. And in terms of the average win rates, you mentioned last quarter that those win rates were stable. Any update? Have you seen improvements in win rate?

Howard Fu, CFO

The win rates still remain stable, as we mentioned last quarter. We are not seeing any significant variations in those win rates at all.

Nick Altmann, Analyst

Awesome. Thanks, guys. Howard, I appreciate the update on the CRPO framework for the end of the year. It sounds like there's some strength with Procore Pay and some of these products that don’t necessarily flow into CRPO. How should we think about the delta between CRPO growth and revenue growth moving forward as some of these newer products, Procore Pay, etc., won’t move the needle on RPO?

Howard Fu, CFO

From a revenue standpoint, I’ll specifically talk about Procore Pay. The other ones are even smaller. It's still going to be immaterial to our revenue results this year and next year. We are still excited about it, but the ramp period and adoption could take up to 24 months. So for this year and next year, those will still be very small contributions. I wouldn’t look at that as a significant delta with the comments I made about CRPO.

Tooey Courtemanche, Founder, President, and CEO

Yes, Nick. This allows me to promote our mission at Procore, which is to connect everyone in construction on a global platform. The more people engaged on our platform, not just collaborators who are free users and our customers’ accounts, but people benefiting from the Procore construction network, they get more engaged and drive network effects. The more folks engaged, the more opportunity we have to provide services that they value. This is one solution to drive platform adoption and engagement.

Robert Trout, Analyst

My first question is a follow-up on the discussion. I think you’re right about the need for better adoption.

Howard Fu, CFO

Robert, we can't hear you.

Tooey Courtemanche, Founder, President, and CEO

Bob, we lost you. Can you speak up?

Robert Trout, Analyst

Sorry about that. I think you're exactly right.

Tooey Courtemanche, Founder, President, and CEO

Yes, we got you.

Robert Trout, Analyst

Following up on the last point, I thought one of the best things you did in the last couple of months was to take a more active leadership position by demonstrating the immediate impact of adoption to the largest potential cohort of your TAM, which is the subs. I realize the GC will always be the flywheel. But how are you pitching that to the most vulnerable part of the pie?

Tooey Courtemanche, Founder, President, and CEO

Your hypothesis is true, during challenging economic times, those that work in construction look for ways to optimize their business. They look for ways to maximize their cash flow, avoid risk, and find opportunities to increase margins. We promote this to both the lower end and upper end of the market. Procore enables our customers to run more construction volume per person when they use Procore, which helps them drive better businesses. It's important in challenging times and in good times.

Brent Thill, Analyst

Tooey, can you put this go-to-market change in context? What percentage of the go-to-market team are you changing? When do you expect it to reach peak change?

Tooey Courtemanche, Founder, President, and CEO

This touches the vast majority of the go-to-market engine because this is a GM model. Reporting lines will change for many as they will report to a GM instead of directly into a global head of sales or customer success. This will drive customer centricity and allow the GMs to run their businesses. Roles and responsibilities will change to emphasize becoming trusted advisers and partners to the customers. We will add new roles, such as product specialists who will help customers get more value from Procore.

Howard Fu, CFO

This will impact many areas and it will cause disruption. It’s early to provide specific timelines for returns. The changes will likely come at the beginning of the fiscal year. The disruption will affect the back half of the year; we’re building in conservatism regarding revenue for fiscal ’25.

Andrew Sherman, Analyst

Thanks. Tooey, the move to the GM model makes sense and has been done by other companies. How does Larry’s experience help this effort? How can learnings from the tech organization inform the go-to-market changes?

Tooey Courtemanche, Founder, President, and CEO

Larry has seen this before. He’s bringing in the right folks underneath him and he's bringing the organization along. Clear and concise communications are critical in these transformations. Procore is not doing this as a one-off. Many companies that have reached Procore's scale have gone through this transformation. I’m very confident we have the right team and plan in place, so now it’s about execution.

Howard Fu, CFO

Larry has experience managing through major transformations, which is valuable for what we’re trying to do.

Tooey Courtemanche, Founder, President, and CEO

Thank you all for joining us today. We appreciate your time and interest. We're excited about the direction Procore is headed, and I look forward to sharing our progress with you in future earnings calls.

Operator, Operator

Thank you. This concludes the Q&A session and today's conference call. Please enjoy the rest of the day, and you may now disconnect from the call.