John Wiley & Sons, Inc. Q2 FY2022 Earnings Call

Good day and thank you for being here. Welcome to Wiley's Second Quarter 2022 earnings conference call. All participants are currently in a listen-only mode. After the presentation, there will be a question-and-answer session. I would now like to hand the call over to Brian Campbell, Wiley's Vice President of Investor Relations. Please proceed.

Hello everyone and thank you for joining us. I see reminders to start. The call is being recorded and may include forward-looking statements. You should not rely on these statements as actual results may differ materially and are subject to factors discussed in our SEC filings. The Company does not undertake any obligation to update or revise forward-looking statements to reflect subsequent events or circumstances. Also, why we provide non-GAAP measures as a supplement to evaluate underlying profitability and performance trends. These numbers do not have standardized meanings prescribed by U.S. GAAP and therefore may not be comparable to similar measures used by other companies, nor should they be used as alternatives to measures under GAAP. Unless otherwise noted, we will refer to non-GAAP metrics on the call and variances on a year-over-year basis and will exclude the impact of currency. After the call, a copy of this presentation and playback of the webcast will be available on our Investor Relations webpage. I will now turn the call over to Wiley's President and CEO, Brian Napack.

Good morning. Welcome to our Q2 earnings call. Wiley team has delivered another quarter of solid performance underscoring loudly leading position in the knowledge business and our strong performance in serving the ever-increasing demand for scientific research and career-connected education. As you know, Wiley drives impact in three areas. We enable scientific discovery, we power career-connected education, and we shape work forces. In a world hungry for innovation and opportunity, it's not surprising that we're finding strong growth in our research and education businesses. Wiley reported good revenue growth of 9% this quarter, 5% of which was organic, driving a 7% increase in adjusted EBITDA, and a 6% increase in adjusted EPS. Revenue was up 9% in research, 3% in APL, and 15% in ED services. As a reminder, all variances exclude currency impact. Jammie will touch on our first-half results, but I will say upfront that we are very pleased with how the year is progressing. And we continue to track well to our full-year guidance for revenue, earnings, and cash flow. Our growth strategies are largely on target and you can see that they are paying off. They remain well aligned with favorable and enduring market trends such as the shift towards open research, the focus on career-connected education, and the drive of corporations to fill the widening talent gap. These trends are creating significant demand for our transformational Open Access research models, for our career-focused learning programs, and for the talent development services that we provide to corporations. In the quarter, we continued to see a strong post-lockdown recovery in professional learning, which more than offset a decline in education publishing, which was driven by softness in U.S. fall enrollment and easing of last year's COVID-related tailwind along with the disposition of our world languages content portfolio. Meanwhile, accelerated growth in talent development more than offset the easing of last year's COVID-related tailwinds in online education, where enrollment growth slowed to 3%. As announced in October, John Kritzmacher will be retiring at the end of December. For eight critical years, John has been an exceptional leader for Wiley, helping to drive our strategic direction, expand our growth profile, and strengthen our financial position. We built an expanding finance organization and it leaves us well-positioned for a bright future. On behalf of the Board of Directors and all colleagues worldwide, I want to thank John for his strong principled leadership. John, we all wish you the very best in all that is to come.

Thank you, Brian.

Also, on the call today with us is Christina Van Tassell, our new Chief Financial Officer. Christina joins us from Dow Jones where she served as CFO and helped to grow leading digital information businesses like The Wall Street Journal, Barron's, and MarketWatch. Before that, she was CFO of WPP Company. She brings to Wiley over 30 years of broad financial leadership, strategic insight, and a proven ability to drive operational excellence. I am looking forward to partnering with her on our next phase of growth. Welcome, Christina.

Thanks, Brian and hello, everyone. It's great to be here. I have long admired Wiley for its remarkable legacy, its financial strength, and meaningful contributions to society. I believe our deep network of partnerships with the world's leading universities and corporations and our unique position as an advocate for researchers and learners will allow us to win in the dynamic global market, which continues to rapidly evolve. I also want to take this opportunity to thank John for his example and for building a terrific finance organization. I look forward to working with the Wiley team to further accelerate growth, drive innovation, and consistently deliver strong results and shareholder value. I also look forward to meeting all of you. Thanks.

Well, it’s just great to have you on the team, Christina. I want to start today by talking briefly about the large corporate opportunities that we are now tapping into across Wiley. As you know, at its core Wiley is a knowledge and a learning company. In a world where new information, new discoveries, and new capabilities are the engines that power innovation and growth, Wiley is very well-positioned, which you can see in our year-over-year growth of 17% for research corporate solutions, 15% for professional learning, and 67% for corporate talent development. Corporations need our research content, our platforms, and our databases to achieve their commercial objectives. Wiley provides the cutting-edge knowledge that companies need to develop new products, and our platforms and services help those companies achieve their marketing goals. For example, we just kicked off an ambitious project with pharmaceutical giant Eli Lilly to build four educational resource hubs in critical disease areas. This helps them educate and activate their healthcare community and increase their brand engagement. Through the Wiley online library, our proprietary research content platform, we can provide direct access to over 15 million scientific, medical, and technical researchers. This results in 179 million extremely valuable impressions per month. Targeting media and advertising will be an increasingly attractive business for us as the Wiley network of partners grows. Wiley's expanding portfolio of partner solutions also includes digital career centers that help employers fill their critical jobs with qualified candidates. For example, we just renewed an important partnership with our partner Pfizer to manage its career center. Of course, any CEO will tell you that building a winning workforce with the right skills and capabilities is now both their biggest pain point and their biggest opportunity. For this reason, Wiley is increasingly on the front lines with our corporate clients in the escalating war for talent. We've always played an important role in helping universities supply career-ready talent to the labor market, and we continue to do so effectively in education publishing and in university services, as the world's leading companies are increasingly turning to Wiley to directly address their most urgent talent needs. You could see this in the success that we're having with our professional learning and talent development solutions. Here, Wiley's playing an essential role in helping companies attract, train, retain, upskill, and rescale their talented teams. We're rapidly signing up new clients to create hard-to-find tech and digital business talent. We secured six more major global corporations this quarter and are seeing unprecedented growth in employee placement. Moreover, the opportunity to expand client relationships with additional skills-based training continues to grow. During the quarter, we expanded our relationship with one of our largest Fortune 100 clients, and we will now be reskilling their existing employees with critical digital skills. This will help them retain valued experienced colleagues and prepare them to contribute anew. The return on investment of these reskilling activities is very high for our partner and, of course, for Wiley. Every day, we are talking to our multinational clients about similar value-added services. And another example of how the Corporate Opportunities are influencing all of these activities, we're now delivering a customized, self-serve platform to our clients that strategically connects their employees with career-enhancing degree and certification programs while also managing the burdensome administration of tuition reimbursement. With that, let's move on to our segment performance. Research again delivered strong revenue and profit growth, with revenue up 9% or 4% on an organic basis, and adjusted EBITDA up 10% for Q2 with an EBITDA margin of 37%. Our performance was driven by double-digit growth in open research publishing, corporate solutions, and research platforms. Research article output rose 8% year-over-year, driven by the recent acquisition. Organically, article output was actually lower by comparison to last year's COVID-driven surge when lockdowns caused an unprecedented 22% increase in output as millions of researchers exited the lab and focused on documenting their research. That said, the organic trend line continues to be very positive with a two-year average output growth of around 9% per year, very strong indeed. Demand to publish remains robust, due first to the ever-increasing global investment in science and second due to the enduring draw of our Wiley journal brands. In the quarter, we announced a multiyear transformational agreement with the Council of Australian University Libraries. This is the largest rebundling publishing agreement to date in that region. The agreement provides subscription access to all of Wiley's journals and grants researchers at 52 participating institutions the ability to publish accepted articles by open access in Wiley's journals. In early November, we announced a multi-year transformational agreement with the Virginia Library Consortium involving over 70 libraries. It was our 15th transformational agreement globally and seventh announced in 2021. We see a very strong pipeline ahead. As a reminder, these strategic agreements are great for our large customers and great for us; they drive significant incremental publishing volume and move us closer to a price times quantity ecosystem, where revenue is a direct function of the quantity of articles published and the price we charge. On the quantity side, the outlook looks very good for publishing output in the years to come, and on the pricing side, Wiley continues to enjoy very solid pricing power due to the draw of our high-quality journal portfolio. The results of this are a very healthy dynamic and continued revenue gains. As you know, Wiley partners with over 900 of the world's leading academic societies and research publishers, helping them all to succeed in an increasingly complex information ecosystem. Specifically, our partners need support crossing the chasm to an open access future, and Wiley helps them navigate that complexity while generating new revenue streams for them by leveraging our industry-leading platforms and services. This area is what we refer to as Partner Solutions. We recently made two exciting new acquisitions to broaden our offering in this key growth area. The first, J&J Editorial, provides world-class, highly efficient production and copy editing systems support, and consulting support to 120 demanding societies and publishers. The second, Knowledge on Latch, helps our clients and partners address a critical pain point—the processing at scale of open access transactions. This is one of the most complex challenges in the open transition. Knowledge on Latch has solved this problem for its rapidly growing client base through innovative per article payment services, more fluid tools, and data analytics. Without these key links in the commercial value chain, many of the world's societies and publishers would simply not be able to participate in the open future. In summary, we have strong momentum in research, and this is reflected in our current operating performance and the success of our strategic initiatives, which will deliver even greater opportunities for growth in the future. Academic and professional learning rose 3% this quarter driven by 15% growth in professional learning, adjusted EBITDA rose 18% for Q2 with an EBITDA margin of 33%. This is up from a 29% margin in the prior year period. As noted, after last year's COVID-related setback, we are seeing continued strong recovery in professional learning as corporations and professionals focus intensely on building the capabilities that they need to succeed in the post-pandemic environment. This is evident in our strong year-over-year growth in professional publishing and in corporate training. Professional publishing continued to benefit from timely publication of titles in areas like investing to E&I, and leadership. Corporate training continues to deliver strong performance through virtual and in-person delivery with revenue growth of 24%. Education publishing revenue was down 5% this quarter, the result of softer U.S. enrollment, the easing of pandemic-related tailwinds for content and courseware, and the sale of our world languages portfolio. U.S. fall undergraduate enrollment, an important driver for us, was down 3% as universities continue to manage through the challenging enrollment environment. Printed course materials were down 15%, offsetting modest growth in digital content. In the second quarter, a small portion of course material represented only 7.5% of Wiley's revenue, down from nearly 9% in the year-ago period. We continue to see positive trends ahead for digital content and courseware in this market. We will see continued declines in print, resulting in a full-year revenue outlook for education publishing that is roughly in line with the prior year. In summary, the strong recovery in professional learning this quarter from robust demand for professional content and skill-based training more than offset a year-over-year decline in education publishing. Our education services segment reported 15% growth for the quarter, with university services up 3% and talent development of 67%. Adjusted EBITDA for the segment was approximately $10 million, down 35% due to higher student acquisition costs in university services and investment in talent development to accelerate the expansion of client relationships. Our adjusted EBITDA margin for the segment was 12%. University services growth was also impacted by softer fall enrollment in the U.S. with graduate enrollment up 2% compared to 6% last year and undergraduate enrollment down 3%. Enrollment in our online programs is up 3% compared to 14% enrollment growth in fiscal 21 when COVID shut down campuses and forced studying to shift online. If you normalize over a two-year period, enrollment in our online programs was up 8% on average. So, a very solid trend line overall for online education for us. We recently added New York-based Adelphi University, a top 200 school, as a new full-service partner. We also signed an important renewal with Georgetown University along with adding 14 new degree programs with existing partners. We're seeing good momentum in markets like Australia and with innovative short course programs in subject areas like cybersecurity, artificial intelligence, bioinformatics, and crypto finance. In talent development, as I talked about earlier, we are rapidly signing new corporate clients amongst our existing clients and expanding into new verticals. In today's economy, all industries are in dire need of tech and digital skills, and this is reflected in the multinational clients we signed this quarter, which come from multiple sectors, including financial services, food services, and facilities management. We also grew talent placements with our existing Fortune 100 customers by nearly 130%. As noted, we're also making very good progress in upselling additional reskilling services to our existing clients. Momentum is clearly accelerating. In summary, we continue to see strong growth in net services as we expand our partnerships with leading universities and corporations to attract, educate, place, retain, upskill, and rescale the talent needed to succeed in the global digital economy. With that, I'll pass the call over to John to take you through our outlook and our financial position.

Thank you, Brian, and good morning, everyone. As Brian noted, the Wiley team continues to execute on our growth strategies and drive operational improvements throughout the business. I'd like to briefly recap our first-half performance, which clearly demonstrates that we are tracking well to our full-year outlook. Revenue was up 9% to $1.02 billion, or 6% organically, with research up 10%, APL up 5%, and Ed Services up 14. Adjusted EBITDA was up 9% to $222 million, driven by first-half profit contributions from research and APL, offsetting investment in Ed services growth initiatives. Our six months adjusted EBITDA margin was 22%, right in line with the prior year. And adjusted EPS rose 10% to $2.14. As a reminder, our adjusted EPS metric now excludes the non-cash amortization of intangible assets recorded in connection with our acquisitions. I would also, again, note that all variances on the slide are shown at constant currency. Foreign exchange movement favorably contributed to our first half results by $19 million in revenue, $2 million in adjusted EBITDA, and $0.03 in adjusted EPS. Given our first half performance and leading indicators, we are reaffirming our fiscal '22 guidance, which includes revenue growth of mid to high single-digits to a range of $2.07 billion to $2.1 billion. Adjusted EBITDA is expected to range between $415 and $435 million with profit gains on higher revenue tempered by investments to accelerate growth. Adjusted EPS is anticipated to range between $4 and $4.25, and free cash flow is expected to range between $200 and $220 million. As a reminder, while cash earnings are again expected to be strong in fiscal '22, we see certain headwinds compared to fiscal '21, including higher Capex, higher net cash taxes due to the Cares Act related tax refunds received in fiscal 2021, and higher annual incentive compensation payments related to fiscal 21 outperformance, which were issued in Q1 of this year. One further note on these projections, I should point out that our year-to-date and projected FX rates are in line with the rates prevailing when we issued our guidance in June. Turning now to our balance sheet and cash flow, our net debt to EBITDA ratio was 2.1 at the end of October compared to 1.9 at the same time last year. At quarter-end, we had $101 million of cash on hand and undrawn revolving credit capacity of more than $435 million. Free cash flow in the first half was in line with the prior year, driven by higher cash earnings offset by higher annual incentive compensations for fiscal year 21 performance. Capex was $51 million, $3 million over the prior year. And we invested $14 million in acquisitions. We will continue to be active on the MD&A front as we seek to add capabilities to our core strategic areas of focus in research and career-connected education. Finally, $56 million was allocated to dividends and share repurchases, up from $38 million in the prior-year period due to our COVID-related pause in share repurchases last year. As a reminder, we raised our dividend payout in June for the 28th consecutive year, and our current yield is roughly 2.5%. So far this year, we've repurchased 313,000 shares at an average cost per share of $55.51 for a total spend of $17.4 million. We have $200 million remaining in the current share repurchase authorization. Before I pass the call back to Brian, I just want to thank all our Wiley stakeholders, including our investors, colleagues, and coverage analysts for your engagement and support over the years. I wish you and your families well. Wiley is a great company with very capable leadership and a bright future ahead.

Thanks very much, John. At the core of everything we do, Wiley is driving positive impacts. Whether it's delivering more cutting-edge knowledge to the world faster and more openly, or unlocking career potential for millions of learners and workers. As I've said before, the more researchers and learners that we help, the greater positive societal impact. And with Wiley's revenue in our recent performance, positive impact is very good for business. Our colleagues are highly motivated by our ability to drive impact both within our walls and out in the world through our products and services. We are widely recognized for our impact and have been deemed a very low-risk company from an ESG perspective. In fact, we are rated in the fourth percentile globally for ESG risks by Sustainalytics and Morningstar Company. We're very proud of this rating, but we also know that there is always more room for improvement. Improving the price-value equation in education is one of our long-standing objectives. And as an education service provider, transparency about education outcomes is critical. To this end, we recently published a transparency report that highlights the affordability, accessibility, and outcomes of our partner degree programs. The data is clear and it shows that graduation and retention rates at our partner institutions are materially higher than comparable non-profit online schools. The data also shows that the cost to earn a degree at our partner programs is lower. For instance, on average, an online MBA costs $25,000 in one of our programs, which is $6,000 less than the market average. Our Nurse Practitioner MS, is $4,000 less than average. Across Wiley, we're always looking for ways to lower the cost of education while improving career outcomes. Today, Wiley is a digital company with 83% of our revenue generated by digital and tech-enabled products and services. That said, we still have many opportunities to reduce our environmental footprint, including the impact of our printed products, which represents 17% of our revenue. We're working hard on this. This year alone, we actively reduced our printed journals by 1.1 million units through our Go Green program, saving 8,000 trees, reducing shipping polybags by another 1.1 million units, and eliminating the significant footprint of shipping. Going forward, we'll plan to treat every print copy Wiley actively starts printing as a symbol of our commitment to reducing our carbon footprint. In everything we do, the colleagues of Wiley are working to drive positive impact. Let me quickly summarize the key takeaways before I open it up for questions. Wiley has delivered strong first-half performance with revenue and earnings growth driven by solid performance across segments. The long-term favorable trends that have been defining our markets continue to roll forward, including the shift to open research, the increasing focus on digital career-connected education, and the ever-growing need of corporations to fill the widening talent gap. Wiley's business today and its growth strategies are tightly aligned with these trends, which you can see in our current performance and full-year outlook. We continue to drive real-world impact and advance our ESG and sustainability initiatives inside Wiley and out in the world through our research and education products and services. Given our solid first-half performance and positive indicators, we're reaffirming our full-year outlook, and we're well on our way to surpassing $2 billion in revenue for the first time in our long and illustrious history. On behalf of all Wiley colleagues worldwide, I want to again thank John for his partnership and his remarkable contribution to Wiley over the years. One more note, since I know that the great resignation is on the top of everyone's mind. There is no doubt that the last two years have caused many to reevaluate their career pathways. But I will say that I feel very good about Wiley's terrific team. Our engagement levels are very high by any standards, and our colleague retention is well above benchmarks. We're clearly able to attract amazing talent to join our journey. One reason for all of this is our attention to ensuring a people-centered culture, which includes a real commitment to personal growth and career development. And at a deeper level, it is also due to the passion that all of us in Wiley have for our mission and that we believe in the impact that each of us can have on the world every day. My personal goal is to make sure Wiley remains the place to be in research and education. Especially at this time of the year, I'm grateful for our wonderful Wiley colleagues and their enduring vacation wishes to each other. If the last two years have proven anything, it is that our commitment to take care of each other and the global community is more important now than ever, and that research and education are at the very foundation of a long, peaceful, and prosperous future. As 2021 comes to a close, I want to wish everybody in the Wiley community and all of you a very joyful holiday season and a happy and healthy 2022. I'll now open the floor to any comments and questions.

Your first question is from Daniel Moore with CJS Securities.

Thank you. Good morning and thanks for taking the questions. I'll start quickly, John, just first off, thank you for your candor and transparency over the last eight years. It's been great working with you, and I certainly look forward to working with Christina. I want to start with the research. The obvious article submissions benefited from the pandemic. And we're seeing that tough comp now. When do you expect to get through those comps and maybe get back to a normalized mid-single-digit growth trajectory in terms of research article output?

It's obviously a very important question, Dan. We feel very good about the long-term trends in the business. We've always felt good about them. They are working their way through all of our businesses, and I think all CEOs are seeing this this year. Last year was a particularly unusual year. This year is equally unusual, if often in the reverse direction. It's difficult to sort through all the tea leaves, but we're seeing trends in all of our data that tell us that we're reverting back to norm. We feel very good about a 9% two-year average, as we highlighted. And that underscores what we've been saying for a long time about the long-term investment in research leading to long-term output. Also, it's important to know that our open access businesses are growing significantly, more than 80% year-on-year. And that's critical for the financial dynamic as we go forward. So, you're going to see this stuff sort itself out over the balance of this year. It's not — in the long run, we're reverting to the norm, if not more than the norm, as increased investment occurs. And as we take an increasing share, which we have been doing for the last four or five years.

Very helpful. Shift gears to academic and professional. Start with that publishing. Do you expect that we're back on sort of a moderate decline trajectory in terms of overall revenue or with this quarter? Is it more of a 1, 2, 3 quarter phenomenon given just enrollment rates and what we saw across the board, most universities this fall?

Yeah. Look again, it's the same comment I can make for any of our businesses, which again, any CEO will make these days. Last year was very unusual. This year was unusual. In academic and professional, particularly in education publishing, which is what I think you're focusing on, what we're seeing is that yes, the long-term trends from printed to digital continue. The business is now 60% digital, so we feel really good about that. We feel really good about the trajectory. We feel really good about the fact that universities continue after all the transition to use gold standard published products like ours in their classrooms and in their online settings. So, we feel very good about all of that. In the long run, I don't see any reversion. I see a continuation of that and a continuation of these things washing out over a set of quarters, not a set of years. Again, I feel very good about the business and it continues to be an extremely good and profitable business for us. We'll see — we'll see as we go forward. But I think the story hasn't changed. So, I think that's underlying your question. Has the story changed? No. The story is the same.

Perfect. And professional learning, obviously a really nice bounce back here. And that business frankly held up better than maybe some of the thoughts to the pandemic. But where are we relative to pre-pandemic levels for those underlying businesses in professional learning? How is the variance or risk to the recovery or do you think we've learned to work hybrid or remote enough that we continue to trudge along and continue to recover from here?

Yeah. Look, we're still below the levels that we were before the pandemic because in-person training certainly hasn't returned at its levels because we're not back in the office and people are behaving differently. So, we are currently trending at about 10% or 15% below where we were pre-COVID. But there are some really good developments in that business. And the developments are—as we've talked about in prior quarters, during this pandemic, we actually turned a business that was primarily about in-person training into one that is now primarily about, or I should say, balanced between online and in-person training. So that will allow us to have digital relationships, not just with our companies and our managers, but with the people that go through the training, allowing us to, A, do a better job because training isn't just episodic, but B, have a long-term relationship; I could train and then maybe two years from now do another training. But we got to have a never-ending relationship on an ongoing basis, and we get it to us because of the longer-term relationship, we have a longer lifetime value. So, we're still below, but we're trending back very nicely. We expect we've fully recovered by the end of this fiscal year, and that full recovery would be with a business that, in our opinion, is way healthier with a lot more growth potential than we had going into the pandemic. Look, in short, Dan, what happened is COVID forced the digital transition where there should have been one, but people before didn't want to do it because it's better, just as we say across many of our businesses. But — so it forced that transition. And now when we catch up to demand as we get back to a more normalized situation, we will have both a healthy in-person and an unhealthy online business. So, we feel again—we feel good about our outlook.

Very helpful. Maybe shift gears as well. On services, can you maybe give a little more delineation in terms of profitability between OPM and talent development? Just trying to understand where we are in the trajectory for each given the upfront investments. I think you mentioned was more on the OPM side.

Sure. Well, we're not breaking out the individual margins of those divisions. But as we have said in the past, these are growth businesses and we're investing in them. We're running around break-even trying to get them to grow and take advantage of that huge opportunity that I obviously spoke a lot about today. As we are across many of our businesses, is that corporate opportunity. And in the services side, we're certainly investing. We're investing in marketing to help our partners grow. We're investing in new partners, and we do expect in the mid- to long-term, as we have said many times, that a 15% margin is completely achievable, and we continue to run that business very profitably, which is a big accomplishment in this segment. So no change there, running both of the businesses as growth businesses, and we're investing significantly in both of them, and ending the segment overall. So yes, I think we're—John, would you add anything to my comments there?

No, Brian, I think you described it well. We're roughly— you mentioned profit margin, so just to be clear, we're talking about adjusted EBITDA margin on these businesses. Again, we're running the talent development business for growth and not trying to drive improvements in profitability there. It's close to neutral on an adjusted EBITDA basis, but we're running for growth there, and you can see that in this quarter's results with 67% revenue growth. And again, on the university services side, that business is geared up for a long-term adjusted EBITDA margin of 15% or higher, and we're going to keep it there over time; that's the plan.

Got it. Just in terms of performance year-to-date, both top and bottom line, it's been ahead of our projections. Just curious if you see the higher end of the guidance being maybe more likely, or as you described it as basically in line with your internal forecast to date?

Dan, I would describe the results year-to-date as roughly in line with our expectations. Year-to-date, clearly, we're trending a bit ahead, or you would think that we're trending towards the higher end of the range, hence your question. But I would say that we do expect to see a bit of the investment that we called out when we issued our guidance to be in the back half of the year versus the front as we ramp up on some of our initiatives. So, I wouldn't start to get precise about where we land in those guidance ranges. I would point out that we've got some investments on the back-end, and we feel very confident about where we're trending at this point in the year.

Excellent. You repurchased $10 million of shares in the quarter, clearly indicating an increase in cash returned to shareholders. Is this a reasonable rate to expect moving forward? You have a very strong balance sheet and cash flow. Is there anything stopping you from being even more aggressive in this area? Thank you for the insights on everything.

Yeah, I would say that you should expect us to roughly stay the course now. We don't have any particular changes that are planned. We continue to drive a balance between investing in the business, both organically and with acquisitions, and returning cash to shareholders in the form of dividends. So, we're going to likely stay the course in the near term, continuing to maintain that balance as we seek longer-term capital allocation, investing for growth.

Very good. Thank you both. And thank you for everything.

Thank you very much, Dan.

There are no further questions. I will now turn the call back over to Mr. Napack for closing remarks.

I want to thank everyone for joining the call today. And again, wish everybody a very, very happy holiday and a healthy New Year. I look forward to sharing our third quarter results with you in March.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.