Earnings Call Transcript - SEMR Q1 2024

Operator, Operator

Hello, everyone, and welcome to the Semrush Holdings First Quarter 2024 Results Conference Call. My name is Drew, and I'll be the operator for today's call. After today's presentation, we will begin the Q&A session. With that, I'll hand over to Brinlea Johnson, Investor Relations. Please go ahead.

Brinlea Johnson, Investor Relations

Good morning, and welcome to Semrush Holdings First Quarter 2024 Conference Call. We'll be discussing the results announced in our press release issued after market close on Monday, May 6. With me on the call is our CEO, Oleg Shchegolev; our President, Eugene Levin; and our CFO, Brian Mulroy. Today's call will contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning our expected future business and financial performance and financial condition, expected growth, adoption and demand for our existing NNA products and features, our expected growth of our customer base and specific customer segments, the expansion of our content shake tool industry market trends, our competitive position, market opportunities, sales and marketing activities, future spending and incremental investments, our guidance for the second quarter of 2024 and the full year 2024, and statements about future pricing and operating results, including margin improvement, revenue growth, and profitability. Forward-looking statements are statements other than statements of fact and can be identified by words such as expect, can, anticipate, intend, plan, believe, think, or will. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements address matters that are subject to risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. For a discussion of the risks and important factors that could affect our actual results, please refer to our most recent quarterly report on Form 10-Q and our annual report on Form 10-K filed with the Securities and Exchange Commission as well as our other filings with the SEC. During the course of today's call, we refer to certain non-GAAP financial measures. There is a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued yesterday after market close, which can be found at investors.ceras.com. As noted last quarter, our results for the first quarter and our forward-looking guidance use our new non-GAAP definition. We are no longer providing guidance for non-GAAP net income and instead guiding to both non-GAAP operating margin and free cash flow margin. Definitions for these are presented in our earnings release. We've also updated our definition of non-GAAP income from operations on which non-GAAP operating margin is calculated to exclude amortization of acquired intangible assets, acquisition-related costs, restructuring costs, and other one-time expenses outside the ordinary course of business, such as our exit costs incurred primarily in 2022 in addition to the current exclusion of stock-based compensation. The updated definitions are reflected in our first quarter 2024 financial results. All future financial statements will reflect the new definition for the current and prior periods. We are also providing a reconciliation in the old definition to the new definition for the periods presented. We believe this update allows investors to better understand our financial performance, better align with measures used internally by management in operating our business, and permit a better evaluation of the efficacy of the methodology and information used by management to evaluate and measure our performance. Now let me turn the call over to Oleg.

Oleg Shchegolev, CEO

Thank you, and good morning to everyone on the call. In the third quarter, we delivered revenue of $85.8 million, up 21% year-over-year and IRR growth of 21% year-over-year. We reported income from operations of $1.5 million and non-GAAP income from operations of $9.7 million in the first quarter. Importantly, we generated free cash flow of $12 million and a free cash flow margin of 14%. We see our prior guidance, and I am pleased to say we are raising our full year 2024 guidance. Our business is focused on driving strong sustainable growth while also expanding profitability and generating free cash flow. Before handing it over to Eugene Levin, I would like to touch on a few highlights about our strategy to continue to scale the business and capture a significant market opportunity we see ahead. We have strong capability positioning as the platform of choice for businesses to improve their online visibility. With the growing trend of businesses of all sizes investing more time, effort, and resources into enhancing online visibility, we are leveraging our unique data sets to differentiate ourselves in the market. We continue to make progress on each of our growth pillars. In the first quarter, we reported nearly 112,000 customers and now have over 1,125,000 pre-active users. We believe there are millions of marketers and business owners who will benefit from our platform, and we plan to grow both our paying customers and our pre-active base. We have an extensive loyal installed base that spans over 160 countries across all industries and market segments from solopreneurs to Fortune 500 companies. We continue to deliver higher value to our customers by cross-selling and upselling within our base. And as we increase our focus on moving upmarket, we expect an increase in average ARPU, which, as reported today, is nearly 32. Our strong profitability, competitive moat, and accretive loyal base allow us to continue to invest in the business. We continue to build on our technology and customer foundation with investments designed to further our business objectives. Our reinvestment series include launching new AI-based tools like ContentShake and expanding in the enterprise sector. As we highlighted last quarter, we efficiently soft launched an enterprise version of our product into the market in late October 2023. And we are pleased to announce that it is now generally available. It has already been used by a select number of large-scale business customers, including one of the largest apparel companies and one of the largest market research companies. While we are still in the early stages, the initial signs we are seeing are very encouraging. Importantly, our enterprise offering has the opportunity to create a meaningful inflection in ARPU, as this product carries ARPU that tends to be 10 to 15 times our company average. We believe our early adopter customers are experiencing significant returns on the investments after migrating to the platform. Features like automated workflows, corporate-level access controls, customized dashboards, and building a professional service network are helping our customers drive meaningful improvements in efficiency while also delivering significant time and cost savings. In 2024, we remain focused on continuing to grow our core business, upselling and cross-selling our offerings, and expanding our platform. In conclusion, I am very pleased with our start to 2024, and I am optimistic about our ability to capitalize on future growth opportunities throughout the year. I will now turn the call over to Eugene Levin to discuss the results of the quarter and our outlook in more detail.

Eugene Levin, President

Thank you, Oleg. We delivered another solid quarter, and I'm increasingly optimistic about our ability to deliver durable growth over the long term. I want to start with the migration Semrush is making upmarket. Last quarter, I discussed the segment of our customer base, sophisticated accounts that we believe represents a significant growth engine for us. Companies that fall into this broad segment are businesses that tend to have multiple marketing team members that are each Semrush users, and they generally have significantly higher ARPU or average revenue per user than our average and meaningfully stronger net revenue retention than our average. The relative strength of this customer set gives us increased confidence that our new enterprise product will be met with strong adoption, further supporting our goal of driving strong durable growth on both our top and bottom lines. To service this upmarket customers most effectively, we have been making several important adjustments to our go-to-market model to optimize LTV-to-CAC ratio over the past several quarters. We are leveraging our product-led low-touch sales strategy and have shifted more of our investment focus to the high-value enterprise area. First, we have been realigning some of our sales investments from the SMB sector into this upmarket category to focus on converting our existing enterprise customers to use our new enterprise SEO product. Second, we have been making investments in our quote-to-cash process to properly handle the complexities that often surround enterprise clients. These are things like establishing a deal desk and building out proper discipline around large-deal sales funds. We have been making these investments for some time and the significant presence we already have in this segment gives us confidence in our ability to successfully handle the ramp that we foresee from our enterprise product. In addition to enterprise product initiatives, we continue to leverage AI in our platform. We continue to see excellent adoption of some of our AI products and features, including our recently released AI-powered content creation tool called ContentShake. ContentShake is a smart pricing tool that combines AI with real live competitor insights. It guides you from ideation to publish directly to the blog, generates SEO-friendly articles, creates personalized content ideas, composes copy with AI, and helps you optimize for organic traffic, engagement, and rankings. We're monetizing ContentShake on its own, but it's important to understand that we are also monetizing AI in several different ways. First, we have AI features built into all of our tools, and the inclusion of those features helps drive new client acquisition and also aids in retention as they improve the customer experience. Second, we have structured some of our product tiers to only include the AI features in the higher-priced tiers. This attracts clients to the higher-priced tiers and contributes to overall ARPU growth. And the third way we monetize AI is through separately sold subscriptions like the ContentShake product I just mentioned. We're also using AI to help drive efficiency in our own R&D departments, and we have recently seen success using our AI tools for our own marketing efforts, where we are not only producing more content, but we are also making higher-quality content that ranks well and drives improved engagement. In summary, I'm confident in Semrush's positioning in the search market and our extensive product portfolio. We are seeing increased adoption of our AI products and continue to innovate and bring new offerings to the market. Our sophisticated accounts are growing and helping to fuel ARPU and strong net retention, and I'm very excited about our ability to service our market customers and continue to expand our portfolio of offerings. I will now turn the call over to Brian, who will provide a more detailed discussion of our financial performance and guidance.

Brian Mulroy, CFO

Thank you, Eugene. As Oleg and Eugene mentioned, we had a strong first quarter across the board. Our revenue was $85.8 million, growing 21% year-over-year. Growth was driven by new customer additions and expansion of our average revenue per customer as we continue to execute on our cross-sell and upsell strategy. Annual recurring revenue for the quarter grew 21% year-over-year to $354.2 million. There are several factors that can cause our net new ARR to fluctuate from quarter to quarter. And as a result, we believe ARR trends are best observed on an annual rather than quarterly basis. Our calculated ARR per paying user grew 9.8% year-over-year and our dollar-based net revenue retention for the first quarter was 107%. We believe our dollar-based net revenue retention has troughed and, over time, should begin to trend back up, particularly as our more sophisticated accounts increase as a percentage of our mix since these customers have higher net retention than our company average. We recognize the importance of having strong retention metrics and accordingly have recently made some changes to our sales team's incentives that we expect could exert some gentle upward pressure on these figures. Moving down the income statement. During the first quarter, we had positive non-GAAP operating income of $9.7 million. We reported another significant improvement to our non-GAAP operating margin of 11.3%, which is up 2,000 basis points year-over-year and surpassed our guidance for the first quarter. This improvement is a result of a number of factors. First, our gross margin improved nearly 80 basis points year-over-year to 82.9%. Gross margin benefited from higher revenue and our continued ability to gain scale and leverage from our efficiently engineered platform. We continue to expect strong gross margins above 80% in the near term and view the way in which our STACK is engineered as a key competitive differentiator. Our healthy gross margins also provide us the flexibility to invest below the gross profit line, which gives us a structural advantage in the market. Second, we continue to execute on our commitment to drive efficiencies while pursuing growth. It is important to note that we have been able to increase our operating margins while making go-to-market investments for our enterprise products. We expect that we will continue to be able to make incremental investments to strengthen our position here while also driving further operating leverage in the business. We don't expect to see any headwinds to our more traditional SMB business as we realign these resources. This is because we pursue a product-led growth strategy that leverages a self-service sign-up process and drives meaningful leverage that we're able to reinvest. Turning to the balance sheet. We ended the quarter with cash, cash equivalents, and short-term investments of $243.1 million, up $4.6 million from the previous quarter. Our cash flow from operations in the first quarter was $14.8 million. Turning to guidance. I'm confident in the underlying trends in the business and capabilities of our team to continue to deliver strong growth and profitability. Our business is off to a strong start this year, and we are encouraged not only by what we have accomplished so far but we are optimistic about what we see as the opportunities in front of us. For the second quarter of 2024, we expect revenue in the range of $89.1 million to $90.1 million, which is midpoint of our guidance, and expect revenue in the range of $366 million to $369 million, up from our prior range of $364 million to $368 million, which translates to growth of 19% to 20% and represents a $1.5 million increase at the midpoint. We expect full-year 2024 non-GAAP operating margins to be between 10.5% and 11.5%, up 50 basis points from our prior guidance range and full-year free cash flow margins to be approximately 8%. To help you with your modeling, the difference between our non-GAAP operating margin and our free cash flow margin is the result of interest income offset by capital expenditures and cash taxes. Finally, our guidance assumes a euro exchange rate of $1.08. As a reminder, approximately 30% of our expenses are denominated in euros. In closing, we are confident in our ability to grow and scale our business and remain committed to a disciplined and balanced approach to spending. We are focused on driving improved efficiency and profitability even while we invest in future growth opportunities that we expect will deliver long-term value to our shareholders. With that, we are happy to take your questions. Operator, please open the line for questions.

Operator, Operator

Thank you. We will now begin today's question and answer session. Our first question today comes from Scott Berg from Needham.

Scott Berg, Analyst

Nice quarter here. I have two. I wanted to start with a macro question, a little bit more high level. Your ARR additions the last three quarters have been very good, especially on a year-over-year basis. Yet we're seeing demand for software that's predominantly sold to SMB type companies be a little bit inconsistent or soft over the last several quarters. Can you help us understand maybe something in the product or maybe something in your go-to-market strategy that's helping you kind of buck this trend to throw off some really good results the last couple of quarters?

Eugene Levin, President

Thank you. Let's start with your market question. I would say we don't see any kind of significant changes in the macro environment for all businesses in all segments; we believe that it's still challenging. At the same time, we delivered strong results in the current environment. And with IRR, Brian.

Brian Mulroy, CFO

Yes. I mean, Scott, the key for us is macro is impacting us just like every other company, but we're faring really well. We have a really strong market position, really good secular market shifts that are happening where spending in companies is shifting from one area to an area where we actually provide good technology and service. And we have a really strong competitive moat. And then, more recently, we've been able to launch a lot of new AI products that we're monetizing in the three ways that Eugene mentioned earlier. And of course, we have our upmarket play into enterprise. So we think there's a lot of factors that are allowing us to navigate through this macro environment and still deliver really strong durable growth.

Scott Berg, Analyst

Got it. Helpful. And then the last question for me is, Brian, you mentioned you expect ARR to trough in this most recent quarter here. It sounds like you made some changes on the sales side to maybe incent cross-sell expansions a little bit more. But how do we think about the impact of your new enterprise sales motion on ARR over time? Is that a sale that's still very much a land-and-expand opportunity, maybe by modules or seats? Or are your enterprise customers having the opportunity to land much larger that might not offer some expansion opportunities there?

Brian Mulroy, CFO

Sure. Yes. So two things. ARR, we're really pleased with the performance, pleased with the performance over many quarters. We've been able to maintain very strong, durable retention on a gross and a net basis. And in the most recent quarter, we've seen a trough in 107%. We have talked about that over the past couple of quarters that it is somewhat of a lagging metric that measures performance over a 24-month period. So it's doing exactly what we expected and troughing, and we expect it will pick up over time especially as we move upmarket and start to take advantage of the enterprise SEO product. The key for us is, for sure, there are land-and-expand components to our enterprise play. But our early potential there is more of an expand. We've been talking about the fact that we do already have more than 5,000 enterprise accounts. They've been very loyal and have adopted a majority of our platform and are asking for more features to do their best work. We've delivered that with the launch of our new enterprise SEO products. And as you know, that commands an ARPU of about 10 to 15 times what our average ARR per paying customer is. So we do expect that to be in the early days and expand of our existing enterprise accounts and therefore, having good upward pressure on the ARR metric.

Operator, Operator

Our next question comes from Surinder Thind from Jefferies.

Surinder Thind, Analyst

As a follow-on to kind of the enterprise customers as you look up markets, can you maybe talk about behavior or potential between the U.S. enterprise-based customers and maybe international opportunity?

Eugene Levin, President

Yes. Thank you for the question. So of course, United States is the number one market for us. It's almost half of the opportunity from our point of view. At the same time, if you actually look at a list of early customers that we acquired since the soft launch in the end of October, at least half of them are international companies. We have very strong traction in Germany, in France and other markets. And as you probably know, in general, we always had a philosophy in mind to build products for global use because even our U.S. customers, a lot of them are also multinational companies who sell overseas and across the globe. So from that point of view, product is definitely built for global use. And in terms of go-to-market, again, Semrush also has a presence in over 13 different countries. For enterprise, the list is probably going to be a little bit smaller. But still, we ramp our teams based on the geographic presence of our customer base proportionally. And another thing, the world is actually not as big as it might seem because from a go-to-market point of view, what matters the most is what languages people speak. You probably know there are only several really popular languages. And we only need to scale the sales force with native speakers who can help us with go-to-market in those markets. But that's really pretty much all the work that needs to be done in terms of international expansion.

Surinder Thind, Analyst

And then as a follow-up on just the sales structure for the enterprise opportunity here. How would you describe the changes that you've made? I mean you've kind of talked about it on the call, but how disruptive are the changes? Or how significant are the changes? Because obviously, SMB sales are very different than enterprise sales. And then how much more change should we expect before we kind of get to what I would call full productivity levels?

Eugene Levin, President

Yes, that's a great question. There are two aspects to address. First, regarding the changes we're making for SMB and their impact, and secondly, our investments in enterprise. On the SMB front, we've been fortunate to have a low-cost, frictionless selling process. Over the last couple of years, we've enhanced this with AI and automation, which has helped us maintain success and efficiency with a product-led selling approach. As a result, we've been able to grow and manage transactions effectively for our SMB and mid-market customers, providing us with a structural advantage. This efficiency has allowed us to reinvest into our enterprise upmarket strategy, which we've been focusing on over the past couple of years. There are three main areas we're concentrating on: first, we need systems and infrastructure, such as a demand generation engine, a CRM system for managing the lead-to-opportunity process, and an ERP system for managing quote-to-cash processes. We're investing in these preparations for our transactions. Second, from a human resources standpoint, we're setting up a deal desk to streamline transactions and negotiations with procurement, and we're also scaling up our enterprise sellers who possess the necessary skills and experience to build relationships and partnerships with companies. This evolution from merely transactional sales to value-based sales is crucial for our success. We believe these investments won't disrupt our operations since the efficiencies we built in the SMB segment have been developing over time, enabling us to monitor the impact and adjust our investments accordingly. For enterprise, this is a new area for us. Although we already manage over 5,000 enterprise accounts, the upmarket selling strategy and our enterprise SEO product are recent additions, and we're carefully considering the associated risks and opportunities while setting our expectations.

Operator, Operator

Our next question comes from Scott Ader from KeyBanc.

Jackson Ader, Analyst

It's Jackson Ader from KeyBanc Capital Markets. I hope you're doing well. So first question is, Brian, I know you guys have talked about the balance of growth and profit. But just given the results.

Brian Mulroy, CFO

Yes, this is a really, really good question. It's something that we think about every single day. We're always challenging ourselves and the leaders throughout the organization to make sure they're focusing on investments that will drive long-term growth and value for us and our shareholders. Our goal here, we've talked about this, our goal at Semrush is to achieve an efficient frontier. So we want to be investing in the business so long as that investment drives incremental results. But we don't want to be overspending and getting past that efficient frontier where the incremental return doesn't justify the investment. For Semrush in 2024, we are investing quite a bit. So we're investing in this enterprise upmarket play as evidenced by the most recent general availability of enterprise SEO. We've been doing a lot of product investments in AI. Eugene talked about one new product, ContentShake AI, and a number of others earlier this morning that we've monetized in a few different ways, and we're constantly focused on what the next close adjacency is for our customers that will allow us to expand our platform beyond our core competency. So we're continuing to invest. We do believe in 2024 and in the foreseeable future that there is a lot of opportunity. We have a strong foundation with 112,000 paying customers, over 1 million free users, and we have quite a bit of cash on the balance sheet to put to work, and we'll be doing that over time.

Jackson Ader, Analyst

Okay, great. I have a quick follow-up question. Regarding the 5,000 enterprise customers you mentioned, can you provide insight into what their current ARPU looks like? Are they likely to spend 10 to 15 times more than your average customer?

Oleg Shchegolev, CEO

Yes. Definitely, they already pay more. And their expansion, their LTV is much higher than average as well. So they're not just buying more expensive subscriptions. They are more active, they are more likely to have multiple people using the product. So they have all the signs that correlate with the willingness to pay.

Operator, Operator

Our next question comes from Adam Hotchkiss from Goldman Sachs.

Adam Hotchkiss, Analyst

Great. I guess to start, I just wanted to touch a little bit more on the enterprise product. When we look at the early access page, we see stats like 10x faster SEO productivity and generating a 360-degree view of customer data, which seems like a pretty ambitious message to send to prospective enterprises. So could you just take a step back and give us a sense of what enterprise customers are asking for that the tiered offerings aren't giving them today? And then when you think about how much of that is just a function of customers wanting to run more volume through your system versus actively looking to you to co-innovate on incremental products? How would you describe the balance of that customer relationship?

Eugene Levin, President

Great question. So yes, I mean, of course, to sell, you have to sell. So of course, 10x is definitely achievable, but people need to put work and fine-tune the product to their needs, which we help them with. But to give you just a couple of examples of why I think 10x is maybe even conservative. We have, for example, customers who use our internal linking module. And when you do internal linking for a small website, it's not hard; you can do it using a whiteboard, you just put 20 pages and figure out how to connect them. Now, our enterprise customers, they have millions of pages. So there is no whiteboard in the world that is big enough to put all those pages and figure out how to connect them. So that's what we call the websites. We understand what other websites link to them, so we can figure out an external profile, internal linked profile, the map of the website and figure out what pages should be connected to other pages and sort of share the authority of the page with other pages using AI and machine learning. If you think about the incremental value, it's not just being 10x more productive; it's actually finally being able to do the work that you would not be able to do without this technology. And the difference between tiered offerings like that we sell to SMB is that SMBs don't have websites with millions of pages, so they don't need those features, while large enterprises have millions of patients, so they need additional products. And that technically a philosophy that we have with enterprise products, things that we build in enterprise platforms are purely incremental. They are not things that are just fancy versions of things you can buy with our SMB offering. They are incremental. They use the same technology and data, but they solve totally different scopes of problems that only big companies have.

Adam Hotchkiss, Analyst

Okay. That's incredibly helpful. And then could you just talk a little bit more about your professional services strategy here as you move upmarket? It seems that from what we've seen that you're opting to vet and collaborate with enterprise freelancers to help enterprises. Is it fair to say that this will exist in the place of building out more meaningful services in-house? And then maybe, Brian, if you could just touch on what the monetization arrangements look like with those freelancers, that would be useful.

Eugene Levin, President

Yes, that's a great question, and I should have addressed this earlier. Services is an area where our enterprise product stands out compared to the SMB product. Larger companies require additional services; they need guidance and reassurance. There are typically two approaches for software companies when addressing this need. One is to create an internal service arm, which has its advantages, but from our perspective, it can erode margins. As a software company, our focus is on maintaining high margins. The alternative, which we are pursuing, is to partner with industry experts and connect them with our customer base, starting with freelancers. Over time, we aim to extend this to our agency clients, generating more leads and demand by enabling them to collaborate with our brand customers. Financially, we productize their services, take care of billing and transactions, and retain a small commission for facilitation while passing the rest of the revenue to the freelancers. We only recognize our commission as revenue, ensuring clean, high-margin income for us.

Operator, Operator

Our next question comes from Elizabeth Porter from Morgan Stanley.

Elizabeth Porter, Analyst

Just given the focus on the cross-sell and upsell plus addressing larger enterprise customers. It sounds like there can be a material upside to ARPU. So how should we think about the growth algorithm between new customers and ARPU shifting between these two factors? I think historically, it's been a little bit more balanced, maybe skewed a bit more towards customers. So I just wanted to level set on the growth algorithm in the forward outlook as we go down these new initiatives.

Brian Mulroy, CFO

Yes, we anticipate that both factors will continue to be significant growth drivers for us, just as they have been in the past. We are pleased with the net additions we see each quarter. The small and medium business mid-market segment, which contributes a large portion of our incremental net additions, has shown strong performance, and we expect this trend to persist. Additionally, we are observing healthier metrics as we move upmarket, including retention rates, average annual revenue per paying customer, and growth within that segment. Looking ahead, there may be a slight shift in growth dynamics, with a greater focus on upsells and higher-value accounts, but we still expect to see robust growth in net additions. Sure. The metrics can vary from quarter to quarter due to seasonal factors, both within a single quarter and year-over-year. However, as we concentrate more on acquiring higher-valued upmarket enterprise accounts, the net add metric may be influenced in the future.

Operator, Operator

Our final question comes from Mark Murphy from JPMorgan.

Arti Vula, Analyst

This is Arti Vula, on for Mark Murphy. I spoke to some of these investments you guys are expected to make, particularly on the upper end of the market. Can you give us any sense of how you expect hiring to trend this year?

Eugene Levin, President

It's tough to hear you. It was a little bit choppy. Can you just ask it again? It was tough to hear you.

Arti Vula, Analyst

Is this better?

Eugene Levin, President

I see. Yes, good question. We're not expecting a significant change. So we've been talking about our investments in enterprise being funded by the efficiencies we're seeing in SMB and mid-market. Of course, the quantity of SMB and mid-market sellers is higher. So now that we've been able to take advantage of leveraging AI and automation and push a lot of the SMB sales through our e-commerce platform and take advantage of the product-led growth strategy. We're able to reinvest back into the enterprise. So while we're investing significantly and making a strong push into the enterprise, you shouldn't expect to see sales expense from an E-to-R perspective or even sales headcount change materially.

Operator, Operator

There are no further questions in the queue at this time. That concludes today's Q&A session. I'll now hand back over to the management team for closing remarks.

Oleg Shchegolev, CEO

Thank you all for joining us today. I want to say again, we are very pleased with our execution in the first quarter and strong start to 2024. And we look forward to giving you updates on our progress. Thank you.

Operator, Operator

That concludes today's call. You may now disconnect your lines.