Alarum Technologies Ltd.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Alarm Technologies' fourth quarter and full year of 2023 Corporate Update Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. If you have a question, please press the star followed by the 1 on your touchtone phone. If you would like to withdraw your question, please press the star followed by 2. If you're using a speaker equipment, please lift the handset before making your selection. This conference is being recorded today, March 14, 2024. Before we get started, I will read a disclaimer about forward-looking statements. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements include statements about plans, objectives, goals, strategies, future events of performance and underlying assumptions, and other statements that are different than historical fact. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that may result in expectations not being realized and may cause actual outcomes to differ materially from expectations reflected in these forward-looking statements. Potential risks and uncertainties include those discussed under the heading Risk Factors and Alarms Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 14, 2024, and any subsequent filings with the SEC. All such forward-looking statements, whether written or oral, made on behalf of the company are expressly qualified by these cautionary statements, and such forward-looking statements are subject to risks and uncertainties, and we caution you to not play any undue reliance on these. At this time, I would like to turn the call over to Shahar Daniel, the company's CEO. The floor is yours.

Thank you very much and welcome everyone to Alarm Technologies' 2023 Fourth Quarter Earnings Results Conference Call. As is customary, it's me, Shahar Daniel, our Chief Financial Officer. In this call, I would like to provide a brief review of our business operations, summarize our accomplishments, and then I will turn the call over to Shai, who will briefly discuss the financial results of the first quarter and full year of 2023. Before, we will open the call to questions. We are extremely pleased with our first quarter results, showing growth and successful execution in every aspect of our business. Before going into more detail about the first quarter of 2023, I would like to look back at how we started this year. In the first quarter of 2023, we had two business lines, NetNut, our internet access for enterprises, and CyberKick, our internet access solution for consumers. We finished the first quarter with revenues of $5.7 million from both business segments. net loss of $700,000, and positive adjusted EBITDA of $60,000. The first quarter was also the first time we announced positive cash flow for operating activities. When we started 2023, we began our path to profitability strategy. By the end of the second quarter, following consideration of the current market environment, we made a decision to downside our investment in the consumer business. a measure that we believed to bear a positive impact to the company. During the third quarter, we focused all our efforts in supporting NetNut and our data collection solution business. We passed all investments in customer acquisition in the consumer business and sold our cybersecurity business. As a result, the third quarter marked a historic moment in the company's journey, as we became profitable with $1.1 million in net profits. From being on the path to profitability, we became profitable and proven our strategy to be the right one for the company. We announced today that we finished fourth quarter with revenues of $7.1 million and a record net profit that continues to grow, reaching to a record of $1.7 million. The revenues for the fourth quarter represent not only a record quarter, but a quota that surpassed the revenues generated from both business lines at the beginning of 2023 and demonstrated the strength of NetNut and our business. In the last two years, NetNut has experienced considerable expansion, concluding 2021 with revenues of $6.3 million and soaring all the way to $21.3 million by 2023. We are delighted with these outcomes, which reflect our intense effort and commitment to the prosperity of our business. Moreover, we began the year 2024 witnessing high growth and setting new monthly revenue records in January and February. We are proud of our current strong financial stability, the fact that we are profitable and we don't have to rely on raising funds to support and sustain our operations going forward. 2023 was a turning point for Allowal that now focused only in NetNut and the expansion of our product offerings. Today, NetNut is one of the strongest brands in the world of the IPPN, known for its fast, advanced, and secure network. NetNut platform is based on our proprietary reflection technology. Our hybrid network infrastructure comprises of more than 1,000 servers and over 7,000 700 proxy servers deployed around the globe connected to 52 million IPs of various types, including ISPSPs and data center IPs in leading data centers, all together providing full global coverage. During 2023, we entered new market segments, including AI-powered sales intelligence, fintech, and AI recruiting markets in winning new leading customers across the board. Building on our network success, we began to expand our product offering in 2023, hiring new talents for our research and development with the goal of delivering innovative and disruptive products to the data collection market. The first product we introduced during 2023 is the Google SERP Scraper API, our first data collector providing enterprises innovative suite analysis tools on-demand data access. The SERP Scraper API delivers real-time structured data from global search engines tailored to enterprise needs. Our second product release is the innovative Website Unblocker. It's designed to allow automated data collection tools access to public-facing web data without being tagged by anti-bot and bot management solutions. Our latest announcement was the revolutionary AI Data Collector product line. This product line will be one of our growth engines for the upcoming years. It's an important milestone in NetNut's roadmap towards securing its share of the data collection market and will disrupt current web data collection methods and allow users to scrape the Internet data tailored to their specific requirements. With an intuitive no-code interface, the new AI data collector will enable users to effortlessly generate data collection within minutes The product's advanced AI will automatically adapt to website changes, ensuring continuous data collection without any downtime. Furthermore, NetNuts for Parity unblocking technology will provide seamless access to web data, which will allow uninterrupted data exception at any scale. Users will simply be required to input the target URL, select desired data subjects, set the range of timing, and choose their preferred download format. We are excited about our new data collection product offering and have started to market the two first products to our existing and new customers while beginning great positive feedbacks. Starting today, we plan to update on a quarterly basis our customer retention rate, NRR. NetNut NRR were 153% as of December 31, 2023, and 144% as of September 30, 2023. We sum up the recurring revenues from existing customers for a period of four consecutive quarters and add any expansion revenue, upsells, cross-sells from those same customers during the period. Then we subtract any contraction revenue, downgrade, churn from those same customers during the same period. We then calculate the revenue from these customers during the preceding four quarters and divide this total by the recurring revenues for the first period. A positive NRR indicates that existing customers are spending more over time through either expansion or add-ons, offsetting any losses due to churn or downgrades. Conversely, a negative NRR indicates suggests that the company is losing more revenues for existing customers than it is gaining through upselling or cross-selling. Before going further, I would like to turn the call over to Shai to discuss the financials for the quarter in more detail. Shai, the stage is yours.

Thank you, Shachar. I will begin with a summary of our fourth quarter and year-end 2023 financial results which are compared to our fourth quarter and year-end 2022 results, unless otherwise stated. Revenue for the full year of 2023 totaled $26.5 million, of which $7.1 million were earned in the fourth quarter. This represents a 39% increase compared to the revenues from continuing operations of $18.5 million for the full year of 2022 of which $5.1 million were earned in the fourth quarter. This sharp growth in revenues is attributed to the increase in NetNuts business. Gross profit for the full year of 2023 increased to $18.8 million, of which the fourth quarter contributed $5.3 million. This, compared to gross profit for the full year of 2022, of $10.1 million, of which the fourth quarter contributed $2.8 million, representing increases of 85% and 89%, respectively. These significant increases in the gross profit were primarily driven by the increase in revenues, while increasing the gross margin to more than 75%. Operating expenses totaled $24.3 million for the full year 2023. Excluding goodwill and intangible assets impairments related to the consumer Internet access activity scale down announced by the company on July 6, 2023, operating expenses amounted to $15.8 million only. This compared to operating expenses of $22.9 million in 2022. IFRS net loss from continuing operations for the full year of 2023 totaled $5.6 million, or $0.14 basic loss per ordinary share. The loss is attributed to the consumer internet access goodwill and intangible assets impairment. This, compared to IFRS net loss from continuing operations of $12.5 million, or $0.39 basic loss per ordinary share in 2022. IFRS net profit from continuing operations in the fourth quarter of 2023 reached $1.7 million, or $0.03 basic profit per ordinary share, compared to a net loss of $3 million or 0.09 basic loss per ordinary share in the fourth quarter of 2022. Adjusted EBITDA for the full year of 2023 was $5.2 million compared to adjusted EBITDA loss of $8.5 million in 2022. Adjusted EBITDA for the fourth quarter of 2023 was $2.2 million, compared to adjusted EBITDA loss of $2 million in the fourth quarter of 2022. As of December 31, 2023, shareholders' equity totaled $13.2 million, or approximately $2.20 per outstanding American depository share. compared to shareholders' equity of $13.3 million as of December 31, 2022. The minor change is due mainly to the goodwill and intangible assets impairment recorded in the second quarter of 2023, on one hand, offset by the September 2023 private placement and the non-IFRS earnings on the other hand. As of December 31, 2023, the company's cash and cash equivalents balance totaled $10.9 million, compared to $3.3 million only as of December 31st, 2022. And lastly, I wanted to touch base on our share count as it stands today. On an outstanding basis, we have around 62.8 million ordinary shares, representing approximately 6.3 million ADSs. On a fully diluted basis, we currently have around 78 million shells or 7.8 million ADSs outstanding. With that, I'll turn the call back over to Shachar.

Thank you, Shachar. Our accomplishments in 2023 have positioned us to utilize our extensive, fast, and dependable network to meet the evolving demands of the AI market. The cornerstone of all current AI solutions lies in their ability to access and extract data. AI technologies require a vast amount of real-time data in order to deliver good outcomes. Data collection, especially on skills we developed through years of experience in the industry, is something we excel at. Furthermore, we can identify future challenges for AI solutions as they become increasingly integrated into our daily lives and equipped with the necessary tools to address and provide the right solutions. With that, I would like to open the call for any questions.

Thank you. Ladies and gentlemen, at this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is coming from the line of Brian Kinslinger with Elias Global Partners. Please proceed with your question.

Great. Thanks for taking my questions. My first is a financial one. Your operating margin over the last two quarters has been an impressive 22 and 24 percent, and your revenue continues to grow. Sales and marketing expenses have been declining. My question is on the operating expenses. At what point do you expect the company will need to make meaningful investments to sustain these growth rates? Is that anytime soon? Hi, Brian.

So, first of all, you know, if you measure our operating expenses as a percentage of the revenues, So basically our plan is to stay in the same rate. As I can tell you now in the first quarter, as we see the growth and basically we stabilize our team and our operating expenses. So I don't think that there is a time in the near future that you will see that I may identify as a point that we need to increase shapely or to invest significant investment in our operation in order to support the revenues.

So to be clear, you think the 24 to 25% operating margin is sustainable and you probably won't grow it that much. You'll reinvest the rest into growth. Is that accurate?

Yeah.

Great. And then the net retention rate, um that you provided 144 percent or 153 provided two different ones revenue growth is 150 percent can you share with us the customer accounts what they are per net net and how that compares to a year ago it sounds like much of the revenue growth is coming from the existing customer base by looking at those two um metrics and so i'm trying to understand new customer accounts and maybe help us understand the evolution of a new customer? Is the first year a very small contribution, then expands in the second year, maybe go over why?

Okay, so let's start from the NRR method. So basically the method that we choose, by the way, it's a method that a lot of SaaS companies are choosing, that we make an average of four measurements, meaning we are measuring four quarters versus four quarters, and then we are going back one quarter and measuring again four quarters versus four quarters, and additional two times, and then this is the measurement. When we come to the next quarter, we will do the same. You know, we will measure. We will have one more measurement for this quarter and going back for four measurements, and then it's called NIR point in time, meaning it's an average of four measurements, So basically, you cannot take in direct connection the growth of the revenues of 2022 versus 2023 with this measurement because it's an average of four measurements, okay? So for your question, so I don't have the accurate numbers in front of me, But I can tell you in high level that the number of customers grows in around 20% quarter over quarter, year over year. It depends because if you remember, we have a huge variety of customers. We have customers that are paying us $5,000 a year, and we have customers that are paying us $100,000 a year or more. But if you will hit our new deck that we just uploaded to the website, we have a special slide that describes, we divide the revenues according to the number of customers, and you can see the split between the size of the customers and the number of the customers. If you want, we can go over it now, or you can take a look later, and if you have any questions, So we'll be happy to answer.

Shachar, can I add something just to make things clear? Brian, the 144% is not 144% to raise compared to the previous period. It's a 44%. Okay, so if you compare it to 150% rise in the revenues during 2053, you can see here quite clearly that a large bunch of it came from new customers. Okay, it's not that it is only, okay?

Yeah, for sure. Thank you, Sean.

And then you've got two new products that I think you're excited about. namely the SERP scraper and the website unblocker. I know it's early, but can you talk about how you expect these to drive growth? Is this a 2024 event or is this more of a 2025 catalyst as they become a little bit more mature?

You said it's too early, so you are right. Basically, it's too early for me to project because we are just starting now our A-B testing with our current customers. As I mentioned, first of all, we went out with this product because we identified the demand and the need in the market. We know that the market needs it, and we think that we know exactly what it needs and why our product is innovative and basically disrupts and other products in this market. We think that besides of the fact that customers will directly acquire this, will purchase this product, and will have direct revenues from this product, we think that this product will strengthen our product portfolio and there are some customers, maybe a lot of customers, that are looking for one vendor, and they skipped us till today because we couldn't offer them the next, you know, in the data channel, the data stack, we couldn't offer the next product, so they preferred to choose another vendor that can offer them two products from one vendor. So now, besides of the direct value that we receive from these two products, We might see and we hope, we expect to see more customers that will buy our IPPN products because we have this add-on of this data collection products. I think that we will start to see significant revenues. The AI Scraper, which is our main product line, we launched the product line, but we didn't launch the product yet. We are about to release this product around the third quarter. I hope we will start to see revenues in the fourth quarter and hopefully significant revenues in 2025. The webinar blocker we are about, we released the beta version. It's going very well. And I hope we will start to see traction in the end of this quarter, meaning second quarter, going to the third quarter, and then to see more significant revenues in the last quarter of this year. So basically, this is the data that I have now. I don't want to project more than this because I might mislead you.

Great. And then the last question, just so I understand, the website unblocker, that's where you're trying to help customers scrape data from a website, but it's blocked. So this part will help unblock it so you can get from certain sites. Is that right?

Exactly. Exactly. Accurate. Just wanted to make sure I understood. Okay. Thank you so much. Thank you, Brian.

Thank you. Our next question is coming from Chris Tuttle with Blue Capita Capital. One moment, please, while I connect you through. Thank you, Sarah. Your line is now live.

Hi. Thanks for taking my question. I just had a couple. One of them is, obviously, you're busy. NetNut is working very well for you. What do you look at as your governors for growth? for the rest of 2024? What are the limiting factors that you're working on addressing?

The limiting factors? Yeah, what governs your overall revenue growth this year?

So I think that it's something that is basically by nature, you know, we have a team, we have an infrastructure. If you heard my speech where I talk about the size of our network, by the way, it's one of our major intellectual properties, the fact that we have thousands of servers all over the world that might serve a huge amount of data and customers. We build the team, meaning we plan the team and the network according to the projected growth that we see this year. Of course, if something will happen and we see, I don't know, a demand that we didn't imagine, So it might be that our network or the team, you know, starting from support, going to R&D and others might not be able to support this amount of traffic. But I think that I hope that after years of experience of the team here in NetNet, we know how to plan and how to project the expected growth and the amount of traffic and customers. So I don't think it might be a bottleneck, but this is something that might be in general.

Okay.

One housekeeping question. Can you just remind us, what's the difference between the number of shares and the current share count and the fully diluted number?

Yeah, of course. I want to take it.

Yes. Basically, it includes two kinds of securities that are not outstanding. One of them is the stock option plan for employees and consultants. We have allocated options and RSUs to our employees. And this amount to, I believe around 700 or 800,000. Oh, sure. Everything's one of me. It's more than 800,000, I believe. Sure. 700,013 for the employees. And the other part are series of warrants to investors that came from previous rounds back in 2020 until 2023. Most of them, by the way, are far out of the money. When Shachar can elaborate.

Yes, so we have 650,000 from this kind of warrants. The weighted average excess price is $40, and the rest is around 900,000 belong to the employees, you know, the employee's option plan. And by the way, I'm inviting you also, as I told Brian before, we have a slide. in the presentation, the new one that we just uploaded to the website, and you can see a pie that describes the difference between the outstanding and the fully diluted and describes all what we said now.

Okay, I'll take a look at that. My last question is just, as you look out for 24 and into 25, are there any kinds of acquisitions or technology gaps that you feel that you need to fill in order to accomplish those plans, or do you feel like right now you guys have everything you need in-house with your current resources to achieve your plans over the next 12 to 18 months?

Okay, so first I would answer in a very simple way. The answer is yes. Currently we have everything we need in order to support our growth engines and our revenues and all the products and the technologies that I just described in my pitch. But it doesn't say You know, over the time, we might find something interesting, something that can accelerate growth, something that can take us faster to the end. We are just investigating, by the way, as I mentioned, we see a huge gap in the AI market. between the experts of the AI that have their algorithms to analyze data, but they need the data. And we think there is a huge gap there. We see it. We established a special committee with industry experts, and we see a very interesting opportunity there. So maybe over the time, we will find something interesting that we might consider, but at this point of time, it's not the plan.

Okay, thanks very much for taking my question. Thank you very much.

Thank you. Our next question is coming from Nick Peters, a private investor. Please proceed with your question.

Hi, guys. Thanks for taking my call. Obviously, great job the last half year. Are you guys seeing any pricing pressure? I know when you look, say, on Proxyways, they show bright data – Smart Proxy are cutting prices, but those look to be at the lower end, smaller customers. So are you seeing it at the higher size customers at all?

So just to make sure that I understand your question, so you are asking if we see a pricing pressure because you think that the big, our competitors like Oxyleft and Vidata and the Quist, meaning gave lower prices? That's the question?

Yeah, at least from what I see on their websites. But again, is that the lower prices?

No, no. So basically, the answer is no. The answer is no because, by the way, it's not that I don't think. I'm not aware of the fact that they decrease prices or they cut prices, maybe for one or two products, but not something significant. And we don't, we are not identifying at this point of time something that is happening in this field, something that, you know, something that they can say that has an impact. As always, you know, customers are negotiating and want to get the best price, but not something different from one year ago or other period.

Okay. Excellent. And then the second part of my question is, do you, foresee any changes to pricing, you know, as you add these new products on, you know, possibly to price, you know, your network a little bit cheaper and then upsell on the higher value added products over time?

It might be one strategy, but

Okay, so it's so commercial, and I prefer to keep it as a commercial issue inside, okay, because it's part of our pricing strategy, but it might be an option, yeah, but not something that we are planning to do now, but it might be an option.

All right, sounds good. That's all the questions I have. Thanks, guys. Thank you very much.

Thank you. Our next question is coming from Jeff Hart with Hart Partners. Please proceed with your question.

Yeah, congratulations, Shakar. Excellent quarter. You're really executing. I just have one quick question. I see you did not renew your F1. Is there any reason for this?

You are meaning our F3, the shelf perspective? Yes. So it's expired. We did not renew it because currently we are not planning to raise money. although most of the companies, you know, have this F3. So basically now we did not renew it from focus issues and others, but maybe we'll do it in the future. But basically we didn't do it now because we don't see any point to renew it now.

All right. Very good. Excellent. That was my only question. Continue the great job.

Thank you very much.

Thank you. As a reminder, if you would like to ask a question at this time, please press star 1 on your telephone keypad. Our next question is coming from the line of Robert Smith with the Center Performance Investing. Please proceed with your question.

Thank you. Thanks for taking my questions, and congratulations on a superb quarter. You must have a business plan, at least an annual plan. It's not a three-year plan. So how much of that could you reveal to us, I mean, as far as what you're looking for for this year? So, of course, I have in details.

For one year, for two years, for two years. We did not reveal it at this stage for some reasons. I guess in the coming future we will start to expose more and more. As we are growing, for example, we are starting now to talk about our retention and some other KPIs and measurements. You can find them in our new presentation. So at this point of time, I will not talk about numbers, but I think that in high level, yes, we are planning to keep our growth. As I mentioned in my pitch, we see the first two months of 2024 are going very well. and supporting our growth plans. Of course, we want to keep on the balance between growth and profitability, meaning the operational profit, EBITDA, and other KPIs. We are pushing and investing a lot in our new and innovative products because it's the time now that according to our strategy, We are jumping to the next layer in the data stack, meaning from the IPPN to the data collection and labeling market by our scrapers and our collectors and our AI scrapers. And as I mentioned, we are recognizing the gaps in the AI world. Of course, we have customers in this space, so we know what are the gaps. And we think that we can play a significant role in this world, also in the coming future. So this should be our growth engines for the next years. Besides of our current product, it is an amazing growth engine, as you see in our results. And this is more or less what I can say now. I hope we answered your question even a little bit.

So... on a serial basis, you're suggesting that February was better than January? Yeah. The question is yes. Yeah, okay. So, then stepping ahead a little to your IP situation, what are the protections that you have? What do you mean protection? On our intellectual property? Well, I'm Yeah.

So we have two patents protecting us at a high level. And besides, I can tell you that the barriers, the entry barriers for our market, and I see it in the real life when new players are trying to come in is the fact that besides of our technology and software, one of our major intellectual property is the network. This network, it took us, you can see also in the results of NetNet, we lost money in the beginning. Not that we lost, we invested a lot to bring talents, experts in DevOps, which are very hard to hire, and we build a global network with thousands of servers that can serve petas of data, which is a huge amount of data with concurrent customers to provide a full global coverage with high success rate, high performance, zero downtime. It's something that it takes years and a lot of know-how to achieve and to build. And the customers, by the way, are very sensitive to this KPIs that I just described, to the performance, to the global coverage, to the downtime, to the support. So I think the best protection is the fact that it's a know-how that takes years to build.

So obviously the business is a brain game. So how about the question of hiring new personnel and research and an R&D as well? Yeah, so what's the question? Well, what kind of focus do you have on hiring new talent and how much money to be spent in R&D?

So as I answered Brian, the analyst, in one of his first questions, so we hired a few talents last year to the R&D. We strengthened our human resources with great talents, by the way, not only in R&D, in other also verticals and pillars like the sales and marketing, like the operation, like others. And basically, you know, we are trying to keep on the current EBITDA rate, meaning the ratio between the operation profit and the revenues. So I don't see any major impact on our P&L for this year, at least.

In the past, you've used the term accelerating. The growth rate is accelerating. So how far into the future do you see that kind of acceleration possibility?

Hope forever. Most of our efforts and KPIs invested a lot in the growth. It's a combination of new customers and the level of satisfaction of current customers, which come to express in the retention rate that you are measuring. And besides of it, we're investing a lot in the innovation and, you know, looking to the future, what will be the next big thing for our, the next big opportunity for our technology and product. And as I mentioned a few times, we identified the artificial intelligence product, the AI world, as one of the big consumers for data. and and we think that those together hopefully it will go and we will do the we're doing we'll have a great product we think it can maintain and support our growth over the in the future is the new product development and execution what's differentiating you from competition Yeah, so the AI collector should be a great competitive advantage and differentiator. The web and blocker that we develop basically according to our measurements and our tests should be in few parameters to be the best in the market, to disrupt the market. and some others you know future capabilities but these are two main products for this year and hopefully for the ai world i think we will bring a lot of innovation and differentiation from the current market and just finally what would you say are your two chief concerns going forward

You know, our world is changing so fast.

So, of course, we are trying to predict and project the future and what will be the challenges of our customers, how we can solve them. So if I take it to the concern side, yes, so my concern is always if something will come and we didn't project it, okay, new technology, new challenges. something will change. Something that we are, at least me, investing a lot, talking with analysts, talking with my colleagues, reading a lot of articles and learn a lot. We have here in the company researchers and product experts that are trying to mitigate this risk. But I think this is the major thing that basically concerns me and I think will concern me forever because it's part of our world that is technology world that is changing so fast.

And just looking at your background and the company's domicile, do you feel in the global market that you have any particular limitation in that respect? No. Great. Well, look, I think you're doing a grand job and, uh, I wish you all the best. Good luck going forward. You're showing terrific growth. Thank you very much. Appreciate it. Thank you.

Thank you. It appears we have no additional questions at this time, so I'd like to pass the floor back over to Shahar Daniel for concluding remarks.

Thank you very much. So to summarize, looking forward to 2024, we have clear goals for continuing to grow our business, We plan on increasing market share in the IPPN vertical with penetration to new regions, engagement with high-profile customers, and increased networks infrastructure globally. In addition, we aim to penetrate to the data collection and labeling market with our AI scraper and web unblocker distribution for selling it to our current customers and target new customers. We plan on entering the data insights world and then they are in analysis capabilities to our data product and deliver end-to-end solution for our customers. All our business will keep serving our main goals of presenting solid revenue growth and profitability. Thanks everybody for joining us today.

Appreciate it.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.