This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk02: and welcome to the Bandwidth, Inc. First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, if needed, please press star then two. Please note this event is being recorded. And now I would like to turn the conference over to Sarah Wallace, Vice President of Investor Relations.
spk00: Please go ahead. Thank you. Good morning and welcome to Bandwidth's first quarter 2024 earnings call. Today, we'll discuss the results announced in our press release issued earlier this morning. The press release and an earnings presentation with historical financial highlights can be found on the Investor Relations page at investors.bandwidth.com. With me on the call this morning is David Morkin, our CEO, and Daryl Rayford, our CFO. They will begin with prepared remarks, and then we will open up the call for Q&A. During the call, we will make statements related to our business that may be considered forward-looking, including statements concerning our financial guidance for the second quarter and full year of 2024. We caution you not to put undue reliance on these forward-looking statements as they may involve risks and uncertainties that may cause actual results to vary materially from any future results or outcomes expressed or implied by the forward-looking statements. Any forward-looking statements made on this call and in the presentation slides reflect our analysis as of today, and we have no plans or obligation to update them. For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our latest 10-K filing, as updated by other SEC filings, all of which are available on the Investor Relations section of our website at bandwidth.com and on the SEC's website at sec.gov. During the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release issued earlier today, as well as in the earnings presentation, which are located on our website at investors.bandwidth.com. With that, let me turn the call over to David.
spk03: Thank you, Sarah. Welcome to Bandwidth's first quarter 2024 earnings call. We had an impressive start to the year, exceeding first quarter guidance with record quarterly revenue and our highest ever adjusted EBITDA result for a first quarter. Given the overperformance, we are raising our full year outlook on top and bottom lines. The team is grateful for the trust our customers place in us every day and for our bandmates who go the extra mile to support them. And I thank God for the opportunities he's given us. This morning, I've asked Daryl to first walk through our quarterly results and our updated outlook for 2024, along with our recent capital structure achievements. I'll then use the rest of the call to provide a broader perspective highlighting our fast-growing customer category, direct to enterprise, where we are seeing very encouraging progress.
spk01: Daryl. Thank you, David, and good morning, everyone. We're off to a solid start in 2024, feeding guidance for the first quarter, raising our full-year outlook, and dramatically strengthening our capital structure. First quarter revenue of $171 million grew 24% year-over-year, exceeding the midpoint of guidance by $6 million. Within that result, cloud communications revenue grew 12% year over year. Adjusted EBITDA of $16 million was up 215% year over year, exceeding the midpoint of our guidance by $4 million, reflecting the top line beat and good cost control. Just a few days ago, we strengthened our capital structure by expanding our existing undrawn revolving credit facility to $100 million with a new five-year term. This facility led by Bank of America and Wells Fargo improves our flexibility by doubling the previous available revolver amount from that established last August with our banking partners. Yesterday, We entered into agreements with certain convertible note holders to repurchase $140 million of our 2026 convertible notes at a discount to their face value. This leverage reducing yield accretive repurchase exercise reduced the outstanding balance of these notes to just $35 million from an initial issued principal balance of $400 million. I'd like to take a moment and talk about our capital structure strategy. We're proud to deliver growth, profit, and to be judicial with our capital structure. In November 2022, we repurchased $160 million of these notes at a very large discount, recognizing a $40 million gain. We then repurchased an additional amount in March 2023 at a discount and recognizing another gain. And now, in early 2024, we have essentially eliminated the subject of the maturity of these notes through yesterday's repurchase exercise. We estimate our third gain from yesterday's repurchase will be roughly $12 million. Going forward, our on-hand cash and securities balances, our revolver access to undrawn liquidity, and our cash flow generating potential positions us very well to seize the market opportunities that are before us while growing our business profitably. Rounding out our first quarter results, as I noted, cloud communications revenue of $128 million was up 12% from last year. From a product standpoint, messaging continued to be a strong driver, growing 50% year over year, and resulting in messaging now reaching 21% of cloud communications revenues. Within that result, commercial messaging grew 34%. While it is difficult to differentiate cyclical political campaign related usage from the ongoing commercial civic engagement usage derived from the same cohort of customers, we estimate that political campaign messaging revenue from the U.S. primary elections contributed approximately $3 million in the first quarter. Customer demand from political campaigns did appear earlier than we had expected, attributed to presidential primary spend. Turning to our three market categories, first quarter global communications plans revenue growth was 4% year over year, as we expected, reflecting an improvement from last year's usage trends. Our programmable services category grew 49% year over year. reflecting the strong demand for messaging, driven by continued healthy demand from commercial customers in e-commerce, financial services, and healthcare, as well as the previously mentioned $3 million tailwind from cyclical political campaign messaging. In our direct-to-enterprise customer category, we grew revenue 20% year-over-year, reflecting bandwidth's ability to solve the complex communications challenges of global enterprises and the continued execution of our enterprise go-to-market strategy. Our pipeline remains full of new opportunities across verticals and geographies. In terms of operating metrics, our first quarter net retention rate was 107%, an improvement of six percentage points from the fourth quarter of 2023. Our customer name retention rate once again remained in excess of 99%. Evidence of the reliability and breadth of our global communications cloud paired with our unwavering focus on customer success and continuous innovation. Our average annual revenue per customer climbed to a record $190,000, reflecting our continued focus on attracting and serving large enterprises. Our non-GAAP gross margin was 57% for the first quarter, up 300 basis points from the prior year's quarter. This is a really great gross margin result for the company. And it's worth reminding that gross margin can fluctuate a small amount quarter to quarter. We continue to expect our full year 2024 gross margin to grow roughly 100 basis points in line with our previously provided expectations. The first quarter free cash flow result reflects a $4 million use of cash due to seasonal timing of working capital. We remain on track to achieve greater than $50 million free cash flow in 2024, which draws us closer to our 15% free cash flow margin medium term target. We're raising our full year guidance to pass through the first quarter beat on top and bottom lines. For the full year 2024, We expect revenue to now be $715 million at the midpoint of our range, reflecting a $15 million raise to our previous guidance, and adjusted EBITDA to be $74 million at the midpoint, also reflecting the beaten raise. Importantly, while the timing of campaign revenue has somewhat accelerated, our full-year outlook for 2024 continues to project a $40 million contribution from political campaign messaging and associated surcharges. That means, at this point, our full-year guidance raise is driven by our commercial customers as opposed to our political campaign customers. In terms of sequencing political campaign revenue across the remaining three-quarters of the year, while it's difficult to discern and predict, based on conversations with our customers, we expect the second quarter to reflect a relative lull in political campaign messages with activity ramping in the third quarter and peaking in the fourth quarter with the election concluding in November. In closing, our excitement about 2024 remains high. We're pleased that we're able to raise our full year guidance on the top and bottom lines while improving our balance sheet and capital structure flexibility. Two years ago, we told you of our plans to grow our business profitably, and we are delivering. These results and our recent capital structure achievements give us comfort in achieving both our near-term and medium-term targets. Now I'd like to turn the call back to David.
spk03: Thank you, Darrell. A little over a month ago at Enterprise Connect, we met with a number of customers, partners, prospects, and investors. These conversations show the strength of our direct to enterprise strategy. The enterprise category with year-over-year revenue growth of 20% in the first quarter following a year of 21% growth in 2023 is driven by innovations we have brought to market and the opportunity that our award-winning Maestro platform provides. Global 2000 organizations know that moving their communications to the cloud is the fastest way to leverage relevant new AI technologies and deliver the rich new customer and employee experiences that are key to staying competitive. At the same time, these enterprises are dealing with enormous complexity from past implementations and legacy tech debt that have built up over time. Maestro solves this complexity and provides a smooth enterprise route to the cloud. It is software automation, and it's central to our portfolio of offerings that are aligned with what Global 2000 customers tell us they need and value most, interoperability, freedom of choice, and solutions to their global communications challenges. Formally, announced at last year's Enterprise Connect, where it won Best of Show, Maestro was quickly welcomed with significant client and industry excitement. As the name suggests, Maestro is an orchestration software platform complementing the offerings of our cloud communications customers to facilitate seamless integration capability for enterprises to deploy and manage best-in-class real-time voice apps across unified communications, cloud contact centers, and AI platforms. Our global 2,000 customers are finding Maestro can dramatically reduce the complexity of moving to the cloud while optimizing costs and increasing control of contact center and employee communications in the cloud. These capabilities enable enterprises to achieve faster time to value and a better customer and employee experience across a wide range of industry verticals. For example, in financial services, Maestro serves as the foundational element for vendor-agnostic cloud communications for both cloud-first fintechs and mature giants both looking to modernize. They can unlock the power of Teams, Genesys, 5.9, and more, along with best-in-class fraud and AI tools, while simultaneously lowering costs and simplifying vendor management. And they view bandwidth as a partner with established expertise to help them navigate a competitive and highly regulated global landscape. As another Maestro example, in the hospitality and retail verticals, A customer may have a complex global system of independent franchises and want to add new customer experience applications and AI. Now, they can build once with Maestro, integrating all their locations to deliver a unified customer experience everywhere in the world. Some enterprises are choosing to use system integrators and managed service providers to map and build their new cloud-based communications. Our growing channel strategy creates partnerships with the largest players doing these enterprise transformations. For example, we recently worked with NWN Carousel, a leading managed service provider, to transform the customer experience platform for the largest US domestic airline. Bandwidth replaced a legacy telecom carrier to power the airline's new cloud-based high-capacity customer call center as well as integrate their customer and employee communications platforms. The airline is also rolling out bandwidth text messaging API to enable its service representatives to easily send texts to customers as part of its multi-channel communication strategy. We completed the project with NWN in a short timeframe and are pleased to report flawless performance during peak holiday season. In examples like all of these, Maestro can be a real differentiator and valuable addition to our enterprise customers' communications deployments. Its software automation interoperability and AI enablement capabilities uniquely distinguish bandwidth as a leader in cloud communications. As the largest enterprises come to us to help them navigate complexity, we're also investing in our legendary customer support offering. This includes new predictive AI-enhanced analytics to identify and solve potential incidents before they escalate. We believe this is a significant differentiator, and it was honored last month with a gold Stevie Award for customer service innovation. Congratulations to everyone on our operations team for this achievement. At a time when many of our competitors have made it harder to get help, much less to talk to a real person, we are distinguished by our customer support, and it remains a true competitive advantage for bandwidth. So again, very encouraging progress in our fast-growing category of direct-to-enterprise. At the same time, our other two market categories are also performing very well, as you heard just now from Daryl. In our programmable services business, we saw earlier than expected demand in political messaging related to the U.S. election season. Meanwhile, we are consistently expanding our customer base in commercial messaging with notable contract wins such as a premier digital vehicle presentation provider in the automotive industry. This customer transitioned to bandwidth's toll-free messaging solution. Our specialized support and deep expertise were instrumental in helping them navigate the intricate and evolving messaging landscape, significantly enhancing the deliverability of their communications. In our global communication plans category, we benefit from expanding wallet share with existing customers as well as new customer additions. For example, in Q1, a leader in healthcare engagement and payment solutions selected bandwidth as the sole provider for their inbound voice traffic, valuing our exceptional customer support, network reliability, and automated number provisioning and porting processes. Before we wrap up, I want to remark on the leadership change we announced today. Anthony Bartolo, our Chief Operating Officer, is leaving to pursue other opportunities, He will stay until later this year to ensure a smooth transition. Anthony joined us a little over two years ago to scale our global growth, and his accomplishments are clearly evident in our strong operating results. He radically improved our strategic planning process, overhauled our product segmentation, brought in excellent new leadership, and executed with outstanding day-to-day rigor and discipline. We were fortunate to have Anthony with us at a time important in bandwidth evolution, and we're a much better company as a result. He is a world-class global leader, and I'm confident that someday soon you'll see him leading a company that's fortunate to have him on point. I will always count him as a friend. I know all bandmates worldwide join me in thanking Anthony for his excellent leadership and in wishing him all the best in the future. fair winds, and following seas to the entire Bartolo family. In closing, as we reflect on a quarter marked by strategic achievements and solid growth, I want to reiterate our unwavering commitment to innovation and customer excellence. The advancements we've made with our Maestro platform, our expanding partnerships, our award-winning customer service, and our disciplined operating team are all pivotal elements in our mission to lead the worldwide cloud communications revolution. Our team has demonstrated the ability to deliver on our core operating principles of profitable growth, operating leverage, and cash flow generation from the foundation of a durable franchise as a leader in our space. I'm incredibly proud of what we've accomplished together this quarter, and I'm even more excited about the opportunities that lie ahead. I'll now turn the call over to the operator to begin the question and answer portion of our call. Thank you.
spk02: Thank you very much, and we will now begin the question and answer session. To ask a question, you may press star, then one on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. And again, it's star one. If at any time your question has been addressed and you would like to withdraw your question, please press star two. And at this time, we'll start with a question from Ryan McWilliams from Barclays. Ryan, please go ahead.
spk06: Thanks for taking the question. I wanted to say that while I'm sad to see Anthony Bartolo moving on, I know he did a lot to improve the business. And to use a bandwidth expression, I'm glad he's moving on on a high note. So for David, it looks like OneQ saw improving net retention and stronger average annual customer spend. Are your customers feeling better from a macro standpoint? And how are upsells like Maestro helping support these metrics?
spk03: Thanks, Ryan, and I just want to reiterate what you said at the outset. Indeed, Anthony is a master conductor and has left us and is leaving us on a very high note, and we are sorry to see him go and so, so grateful for the 10 quarters during which he executed flawlessly. So thanks for mentioning that. In terms of the macro, we talk to customers in all of our segments consistently about their plans and outlooks. And we do factor that into the guide and the results from the first quarter notwithstanding. There are always concerns in these days that we live in about macro and policy and international events. But all that said, we increased our guide on the top and bottom. according to the overarching sentiment that we pick up across all segments with our customer base. So we're excited about executing throughout the rest of this year.
spk06: Perfect. And then for Daryl, glad to see continued debt pay down. How are you thinking about the four-year guide here after a stronger raise in the top line compared to the bottom line? Is this mostly you just pass through the commentary around the strength that you're seeing in your commercial messaging business? Just a little more detail there. Thanks.
spk01: Yeah, hey, good morning, Ryan. We raised our revenue guidance by $15 million at the two midpoints. Roughly two-thirds of that is related to surcharges, and a third is related to commercial cloud communications revenue. And so that, you know, roughly one-third is falling through at margin represents the increase in the approximate increase in the EBITDA raise to the full-year revenue.
spk02: And our next question comes from Madam Marshall from Morgan Stanley. Madam, please go ahead.
spk04: Hey, morning, everyone. You've got Jamie on for Mita. I guess just two quick questions from my end. I guess, one, is there any sort of way we can kind of track the progress that you guys are getting with Maestro, either a number of customers on the platform or that sort of thing? And as a follow-up, it looks like capital investment has picked up a little bit over the past couple of quarters. Should we look at recent trends as the new run rate?
spk03: Yeah, thanks for your question. Enterprise customers and Maestro adoption continues really, really well. And while we haven't called out specific numbers on our customers, the growth percentage-wise in these early days since going general availability back in August has been substantial, so we've talked in the past. about that growth, and it is actually continuing to grow at that same rate or faster. So we haven't decided if we're going to call out Maestro adoption as a particular KPI, but enterprise customer additions and Maestro adoption continues to really be favorable.
spk01: Hey, and good morning. Jamie, it's nice to speak with you, and please give our regards to Mita. On the capital expenditures for the first quarter, Traditionally, we have incurred more in the first quarter or the first part of the year versus the last year. I think it's a natural business phenomenon. Everyone has zeal and zest when it comes to the first part of the year and getting on with their investment plans. With that said, we hold our guidance at around 3% of revenue for CapEx, and that's what you all should be considering. I don't take anything with the slightly higher amount in the first quarter.
spk04: Great. Thanks so much for the detail, and congrats on the strong results.
spk01: Thank you.
spk02: Our next question comes from Ryan Koontz from Needham and Company. Ryan, please proceed.
spk09: Thanks for the question. What I asked you about the messaging business sounds like that was broad-based in terms of your strength there, really strong growth on the cloud comms piece there. I assume that's mostly U.S.-based, first question. And second here, as it relates to international and your presence you gained from BoxBone, can you expand on your thoughts about how that market develops for you going forward? Thank you.
spk03: Thank you. Thanks for the good question. Total messaging is up 50% year over year. Commercials showed strong growth of 34% year over year, and enterprise momentum also really solid. So your question about domestic versus international, we recently announced international, which is part of our solution selling to large enterprise globally. And that's a really positive and strong addition that rounds out our offer portfolio. However, these results do reflect the preponderance of the messaging growth domestically. So international is strong growth upside for us going forward. The second part of your question about international business generally continues to be a very real differentiator for us on both voice and now reporting. messaging footprint. Globally, our voice footprint is unsurpassed, and enterprises really value that single partner solution. And now with messaging coming on alongside it globally, we expect the international business to continue to outperform our expectations, and we're pleased with how it's doing.
spk09: Got it. So let me interpret that. Sounds like your global presence has given you a lot of strength to win domestic deals, to have that international reach, and you're planning to pivot more to direct international sales now a little A little harder?
spk03: Well said.
spk09: Thank you.
spk02: Our next question comes from Patrick Walravens from Citizens JMP. Patrick, please go ahead.
spk05: Oh, great. Thank you. So, Dave, this question is going to seem a little unusual, but I think the context will be super helpful. So can you just step back and help people who don't know this story that well understand what's been going on in this business over the last couple of years and how you're positioned now? And, you know, just for context, I mean, this stock peaked at almost $190 in March 2021. Last year went all the way down to nine and change. And, you know, now at 42% year-to-date plus pre-market is up another 9%. So just help us understand the big picture in terms of what has been going on, why there's so much volatility, and where we're headed from here. Not commenting on the stock where we're headed from here, but where the business is headed from here.
spk03: Thank you, Pat. Thanks for the opportunity to speak to the longer term and the background. So we enjoyed COVID tailwinds, as did many in our space, when remote work seemed to become the foreseeable future. And those tailwinds certainly dissipated after the COVID era ended. Our whole space and peers were similarly impacted as valuations plummeted. But executing is really what matters. And I can't answer the question about the last two years without appropriately tipping my hat to my bandmate, Anthony Bartolo, who is going to be the CEO someday soon of a powerful company somewhere. We can't wait to see where that might be. And there's certainly nothing to announce. But I want to say this. Anthony came on board and with Daryl Rayford, our CFO, articulated excellently our mid and longer term plans at our first ever investor day. And we've executed ever since. And this space is in the very early days of a transformation of taking 100 years of business telephony that has been premise based. and migrating it to the cloud, and doing so with platforms like Maestro, which allow them to abandon incumbent carriers and instead go completely software-driven with how they move calls and messages around the world. We are in the vanguard of companies that have helped these enterprises globally do that, and so I think we're going to look back and see the COVID era spikes in valuation as but an anomaly in a much longer time period of growth that fundamentally changes the way enterprise businesses do communications and voice and text. And again, the platform approach that we've taken, the leadership that Anthony and myself and Daryl have had in place over the last two years has contributed to the outperformance that you see today. And if I'm an investor and I'm looking at that pattern that you mentioned over time where we shot up and then cratered and now we're crawling our way back out of that basement to a bright horizon, it would be with confidence that the macro technology shifts that we are a part of are going to persist and the team And the technology that we've built are durable for that future. So this is our 27th quarter of achieving the guidance that we put out to the world. And we hope and pray that we continue to do that against the backdrop of a very real technology shift in communications. I hope that answers the question, Pat.
spk05: Yeah, that was great. Thanks, Dave.
spk02: And our next question comes from Arjun Bhatia from William Blair. Arjun, please go ahead.
spk10: Perfect. Thank you, guys, and great job on the quarter here. Maybe first to start with, I noticed that the net retention rate had a nice uptick from Q4 to Q1. It sounds like some of the usage growth is coming back. Messaging is strong. Enterprise is strong. Can you maybe just give us a sense of how net retention might progress through the year and embedded in that, I assume there's also some maestro, but would love to hear how that might benefit that net retention figure as we progress through the year here.
spk01: Good morning, Arjun. This is Daryl. It's nice to hear from you. Let me just plainly say that we expect net retention to continue to grow. Over the last 18 months, we've spoke each quarter about churning small inconsequential customers from our customer base and replacing them each quarter with larger enterprise customers. On net retention, when we remove existing customers, there is no more net retention, and so that will lower the rate. But when in that same quarter we replace them with other customers, it's a year in the formula before net retention is reflected. It's now been a year and going. We're very happy with our enterprise customer outcome. Our average annual revenue for customer grew to the record $190,000, and we're expecting through the year net retention will be growing, back to what a normal rate would have been, should have been, had we not architected the churn over the last 18 months.
spk10: Okay, perfect. That's very helpful. And then the other one I just wanted to touch on is gross margins. Again, I think you've called out that there will be about 100 basis point improvement there year over year, but when I look at the Q1 performance especially, it seems Like there's been some outperformance there. Again, can you just give us a sense for the puts and takes on gross margin? And I guess when I'm looking at this year and Q1 performance, maybe I'm extrapolating too much, but why can't it be higher than 100 basis point improvement as we're looking at 2024?
spk01: It is a real, you know, the first quarter was, as I said, a really great performance. It touches the record that we set about five quarters ago in terms of a quarterly gross margin performance. We are still expecting it, as you said, to be 100 basis points higher for the full year over last year. Product mix certainly helps. We're also driving for cost efficiencies, which we continue to do. And as our international grows, it will improve margin as well. But for now, for the full year, taking all things Together, and our investments that we're considering as well in terms of our network costs and the like, we're calling for 100 basis point improvement. Is it conservative? Possibly, but that's what we're calling for right now.
spk10: All right. Understood. Fair enough. Thank you, guys. Congrats again, and congrats to Anthony as well. Hopefully, we'll reconnect soon.
spk01: Thank you, Arjun. Thank you, Arjun.
spk02: And now we have a question from Quentin Gabrielli from Piper Sandler. Quentin, please go ahead.
spk07: Hey, thanks, guys. Yeah, I'm on for Jim Fish here at Piper Sandler. Just one question for us. You know, as we think about your core use cases, really specifically in messaging, you're seeing strong messaging growth. Is there any material change in those kind of core use cases you're seeing or providing for customers? Or should we think about it as, you know, similar use cases as customers historical kind of provided by bandwidth. It's just you're gaining more share in these kind of deployments. Thank you.
spk03: It's broad, Quentin. We have adoption across fintech, healthcare, large enterprise, retail. The messaging need for engagement is very, very broad. We expect that to continue. The share that we'll take, both domestic and international, is from incumbent providers as well as some of our competitors, but The emerging use cases that displace conventional email or even snail mail are significant, and so there's lots of upside once you're into a large enterprise account. So you should consider the success that we've had in messaging in enterprise, which has been broad, to continue.
spk07: Understood. Thank you.
spk02: And we have a question from Will Bauer from Baird. Please go ahead.
spk08: Hi, this is Yami Simula from Willpower. Thanks for taking the question. So could you walk us through the drivers of your enterprise business in Q1 and how those, you know, some of those drivers of some of that upside might have changed here versus last quarter?
spk03: I think the drivers are similar. Our Maestro product adoption is accelerating. It hasn't yet been a year since general availability. We have more awareness of our solution and our AI approach to enabling enterprises to easily get to the cloud, and that transition is not easy if you're working with an incumbent. You've got lots of use cases around AI that require orchestration of your voice and messaging services And so I think the enterprise adoption that we've seen in past quarters continues to pick up speed. And I think it's a function of the product strategy and our path to market. We've got great sales leadership. And again, I'd be remiss if I didn't call out Anthony Bartolo, our COO, and his leadership during this past period, driving the results that you see today.
spk08: Okay, awesome, thanks. And then just looking at messaging, I was hoping you could discuss the messaging outlook for the balance of the year, maybe just a framework for some of the growth expectations there, or I guess what some key drivers could be there, too, any driver's website you call out.
spk01: Messaging grew 50% in the first quarter, 34% in commercial messaging. I think our outlook for the second quarter would have a similar growth for commercial messaging. And then in messaging in total, with the additional $40 million, less $3 million, $37 million that would be called for in our projections in the second quarter, you can expect messaging to definitely pick up in the second half of the year. That would be driven by continued robust commercial and the increased wedge of political campaign.
spk08: Awesome. Thanks so much. I'll pass it back.
spk02: And this concludes our question and answer session as well as the conference. Thank you very much for attending today's presentation. You may now disconnect and have a great day.
Disclaimer