Resources Connection, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Resources Connection, Inc. conference call. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. At this time, I would like to remind everyone that management will be commenting on results for the second quarter ended November 23rd, 2024. They will also refer to certain non-GAAP financial measures. An explanation and reconciliation of these measures to the most comparable GAAP financial measures are included in the press release issued today. Today's press release can be viewed in the investor relations section of RGP's website and filed today with the SEC. Also, during this call, management may make forward-looking statements regarding plans, initiatives, and strategies and the anticipated financial performance of the company. Such statements or predictions and actual events or results may differ materially. Please see the risk factors section in RGP's report on Form 10-K for the year ended May 25, 2024 for discussion of risk, uncertainties, and other factors that may cause the company's business results of operations and financial conditions to differ materially from what is expressed or implied by forward-looking statements made during this call. I'll now turn the call over to RGP's CEO, Kate DeShane.

Thank you, Operator. Welcome to our second quarter call, and Happy New Year, everyone. Thank you for joining us today. I'm pleased to report that we delivered sequential improvement in revenue, gross margin, run rate SG&A, and adjusted EBITDA in Q2. Specifically, we grew top line revenue by over 6%. We delivered gross margin of 38.5% and improvement of 200 basis points and adjusted EBITDA of 9.7 million or a margin of 6.6% up from 2.3 million in Q1. While overall results were still off year over year as expected, all measures exceeded our outlook. Turning to performance highlights. First, Europe improved top line sequentially by 18%, while Asia also grew steadily at 4%, delivering overall segment improvement of 10%. The on-demand segment revenue was up slightly from Q1 and is continuing to stabilize. Our consulting segment, Veracity, grew 10% in Q2, with improved bill rates and utilization metrics. The outsource services business, County, was essentially flat sequentially and grew 4% year over year, adding 25 new logos during the quarter. These positive results reinforce the soundness of our long-term strategy and demonstrate steady progress in our business against a macro backdrop that remains choppy. Since the close of Q2, we also accomplished a major milestone with the implementation of our new technology platform in North America. We successfully went live on Workday Financials and Workday Professional Services Automation module and optimized Workday HCM and our Salesforce platform. 75% of our business is now run on a modern, state-of-the-art technology platform, enabling increased use of artificial intelligence and automation in the delivery of our services as well as back office operations. We expect these new tools will drive greater efficiency in our processes and accelerate speed to market across the enterprise. The significant technology modernization is also highly beneficial as we increase the use of global teams to deliver services, especially in the finance and accounting, risk and compliance, and digital transformation practices. I want to applaud our entire project team, especially our management employees and RGP consultants for the excellent implementation plan and hard work to deliver this major initiative. We will continue to execute our plan to roll out the technology to our international regions. As we embark on the second half of our fiscal year, we're going to drive continued progress against our strategy to deliver diversified service offerings to our exceptional clients. Our rich portfolio of diversified offerings, encompassing professional staffing support, consulting, and outsource services creates a strategic powerhouse that we believe will drive value for investors over the long term. Let's review a few of the advantages. First, our model is designed to meet clients where they are and serve them in a truly tailored fashion. In today's interconnected and fast-paced economy, businesses face multifaceted challenges that require customized solutions. Offering professional staffing, consulting, and outsourcing allows us to address clients' challenges both flexibly and holistically depending on whether they need to fill immediate talent gaps, review and refine strategy, or design, lead, and execute a project all the way through. This constructive collaboration ensures that clients can choose how and when to engage and also receive end-to-end solutions under one roof, saving time and reducing complexity. Second, diversified offerings better positions RGP to be a preferred partner in both good times and bad in the years ahead. Market dynamics are constantly shifting, and businesses must remain agile to succeed. Diversified service offerings enable our clients to pivot based on immediate needs and market conditions. For example, during periods of rapid growth, on-demand services can ramp up workforce capacity without the risks associated with permanent hires. During downturns, consulting helps optimize operations with process redesign and cost containment initiatives, and outsourcing ensures critical functions are maintained efficiently. We believe this adaptability will strengthen RGP's market position throughout economic cycles moving forward, as it is intended to build inherent resilience and shield the business from cyclical impact. Next, diversification also deepens client relationships by enabling RGP to function as a trusted advisor rather than a one-off vendor. By serving a client holistically, we gain a comprehensive understanding of their business, challenges, and goals. This knowledge fosters stronger partnerships, increased trust, and long-term collaborations. Our clients are more likely to rely on us since we evolve with their needs, and offer a seamless client experience rather than fragmented solutions. We can create economies of scale that translate into cost savings for clients. Badrash will share specific examples of this cross-sell dynamic in contracts we have recently won as well as our pipeline. Finally, a diversified services portfolio also attracts a wide array of talent. from consultants who excel at strategy to specialists who thrive in execution. This diverse talent pool fosters innovation as professionals with different skill sets collaborate to solve problems creatively. Additionally, the integration of services promotes cross-functional expertise, offering clients insights and solutions informed by a broader perspective. Veracity, for example, is growing in partnership with our on-demand business, building scalable consulting teams that bring together strategists and execution specialists. Reference Point, our financial services strategy group, and On Demand also collaborated to close multiple contracts during the quarter that each would not have successfully pursued alone. RGP's flexible talent model continues to be a key differentiator and growth driver for the business. even as we're deepening our consulting capabilities and serving clients in new ways. The time is now to bring our diversified offerings to market as the global professional services industry is poised for growth and transformation in the next five years. According to research published by Statista, the industry is expected to grow to 95 billion worldwide by 2029, or a CAGR of 6%. In addition, the finance, accounting, risk, and compliance sectors within professional services are poised for significant changes in 2025 and beyond. As a result, the global finance and accounting professional services market is expected to grow at a compound annual growth rate of over 9% from 2020 to 2027, as reported by Grandview Research. RGP's core buyer has traditionally been the CFO and or his or her direct reports, and now we have more to offer that buyer than ever before. As such, we are successfully engaging our longstanding CFO relationships to introduce us to additional buyers in our client environments. This is particularly true for consulting services focused on transformations spanning finance, human resources, supply chain, customer, and employee experience. With almost every client spending on technology, data and digital transformation initiatives, we now have a rich services portfolio that is aligned with market demand. Veracity, for example, uniquely brings together domain, technical and UX expertise to lead and deliver such projects with differentiated value and flexibility. In closing, we beat expectations this quarter as we continue to transform RGP as a global partner to our clients for services critical to the future of their businesses. The changes we have undertaken to strengthen the business and our position in the marketplace are not easy, but necessary to enhance long-term value for our stakeholders. We are heads down in the execution of our strategy and are making steady progress. We are excited and optimistic on the long-term outlook as reinforced by the Board's recent authorization to increase our stock buyback program. I'll now turn the call to Pradesh to provide more color around our Q2 performance and the signs of inflecting trends we're closely tracking as we look ahead.

Thank you, Kate, and Happy New Year. I'm pleased to share our quarterly update and walk you through the progress we've made in executing our strategy along with our continued focus on growth. RGP is a challenger brand, uniquely empowering our clients to select how they prefer to engage with us throughout their transformation and operational journeys while eliminating the internal barriers that can hinder progress. This quarter, we made significant strides in cross-selling, optimizing our pricing approach, and improving operational efficiency. As a result, we achieved sequential growth for the first time in nine quarters at 6.3%, along with a 4% improvement in average weekly run rate and an increase in hourly bill rates compared to our previous quarter. Our pipeline remains stable with a steady flow of opportunities with existing clients and new logos, particularly in finance transformation, focusing on ERP consolidation, migration, and upgrades, along with supply chain modernization and change management. Additionally, HR transformation with an emphasis on employee experience and digital transformation powered by automation and AI-driven operational processes are also gaining momentum. all core to our capabilities and cross-sell strategy. While we remain cautiously optimistic about the state of the macro environment, especially as it drives our on-demand segment, the stability of our overall business gives us confidence in our established baseline moving forward. Additionally, we're seeing positive results from our pricing initiative. On new contracts, we've achieved notable rate increases, highlighting the growing demand for our service offerings and the recognition of the value we provide to our clients. Now I'll provide an update on our quarterly performance by segment. Our consulting segment achieved 6.8% sequential organic growth, underscoring the soundness of our strategy to segment the business. This growth was driven by our expansion into new buying centers within existing clients and higher-level conversations around client transformation initiatives. As we continue bringing our consulting capabilities together, with reference points, Their expertise in data, digital, and AI is adding significant depth to the value we deliver to a broader range of clients beyond financial services. Including ReferencePoint, our consulting segment revenue grew 10.2% from the first fiscal quarter. Bench utilization rates have also increased, while we continue to balance rising pay rates with improved bill rates. This quarter, we secured several consulting contracts valued at over $1 million and are actively pursuing multiple opportunities, each with a potential value exceeding $10 million. Each of those wins and opportunities is representative of the momentum and the differentiation we've been working hard to build and communicate to the marketplace. Our on-demand segment achieved growth of 1.9% in top-line revenue alongside an improvement in gross margin compared to the first quarter. Despite macroeconomic challenges, the business is benefiting from our cross-selling efforts, which are driving incremental opportunities and strengthening client relationships. Our flexible on-demand talent model is also a key driver of our consulting business. accelerating project staffing and enabling us to scale more quickly while mitigating the financial risk of a traditional bench model. Our Europe and Asia Pacific segment achieves sequential quarterly growth, as Kate mentioned earlier. This is a positive step given the broader regional challenges. In Asia Pacific, our business remains stable while we continue to leverage existing relationships to navigate inherent geographic complexities. Our offshore services segment remains on track with the majority of the wins coming from early stage clients in the technology sector. The combination of new business and expanding existing relationship lends confidence in our ability to sustain this momentum. While we relentlessly execute our growth strategy, we continue to refine our operating model to enhance the efficiency with which we deliver our services. One of the key steps we've taken this quarter is the consolidation of our talent acquisition and go-to-market talent organizations, enabling us to serve our segments more centrally, streamline talent acquisition, and align resources to better meet the needs of our clients across segments. Last, as Kate mentioned, we're officially live with our North America technology and digital transformation efforts. We'll soon begin our efforts to migrate our international operations onto our new platform. In summary, we're excited by the progress we're making on all fronts, including strategy execution, financial performance, pipeline growth, and operational efficiency. This is only our second quarter under a new operating model, and we're already seeing tangible results reflected in the financial performance we reported today. While the macroeconomic environment presents uncertainty, our focus on cross-selling and driving efficiency across the business puts us in a strong position to continue growing and optimizing our operations in the quarters ahead. I'll now hand the call over to Jen.

Thank you, Bidresh, and Happy New Year to everyone. In the second quarter of fiscal 25, we achieved significant revenue and adjusted EBITDA growth over the first fiscal quarter and narrowed the year-over-year performance gap. In addition, we outperformed our second quarter outlook ranges on all fronts. Total revenue was $145.6 million, a sequential growth of 5% over Q1 of fiscal 25 on a same-day constant currency basis. Compared to the prior year quarter, revenue was down 13% on the same adjusted basis, which is an improvement over last quarter's 19% decline. We're pleased to see either stabilization or growth in all segments of the business, and we're especially encouraged by the notable sequential improvements in our consulting and Europe and Asia pack segments. While the macro environment remains more or less the same with clients still hesitant to commit, we have seen more top of the funnel client activities this quarter. Our cross-sell efforts are yielding early successes and contributed to a steady improvement in our weekly revenue run race throughout the second quarter. Gross margin for the quarter was 38.5%, a 200 basis point improvement from the first fiscal quarter, driven by resilient pay bill ratio and better bench utilization, along with more favorable seasonality. Compared to the prior year quarter, our gross margin was off just 40 basis points. Year-over-year pay bill ratio and bench utilization were less favorable. However, the timing of the Thanksgiving holiday not being in the second quarter this year provided a boost to the gross margin. Despite the competitive pricing environment across the globe, we improved enterprise-wide average bill rate to $123 constant currency from $122 a year ago. Our U.S. average bill rate increased to $166, which is a 4% increase from the prior year quarter and a 2% increase from Q1. As we strive to push for higher bill rates in all geographic regions, revenue mix across the globe will continue to be reflected in our total company average bill rate, especially as we increasingly leverage nearshore and offshore delivery teams. Now on to SG&A. Our enterprise run rate SG&A expense for the quarter was $46.5 million, a 2% improvement from the prior year quarter, primarily driven by lower management compensation expense as a result of actions taken in the previous year to reduce fixed costs, as well as our continued cost discipline. In summary, with our improving enterprise top line, growth margin, and run rate SG&A expense, we delivered adjusted EBITDA of $9.7 million in the second quarter, or a 6.6% adjusted EBITDA margin, a significant improvement from the first quarter margin of 1.7%. Next, I'll provide color on segment performance. All year-over-year percentage comparisons for revenue are adjusted for business days and currency impact. Revenue for our consulting segment was $60.6 million, up slightly from $59.1 million in the prior year quarter. However, it's flat year-over-year after adjusting for business days and currency impact. Second quarter consulting revenue includes $6.1 million from acquisitions made over the past year. Segment adjusted EBITDA was $9.7 million, or a 16% margin, compared to $10.9 million, or a 19% margin, in the prior year quarter. Revenue for our on-demand segment was $53.5 million, compared to $70.9 million in the prior year quarter, a decline of 27% on an adjusted basis. Segment adjusted EBITDA was $5.6 million, or a margin of 11%, compared to $8.7 million or a 12% margin in the prior year quarter. Turning to our Europe and Asia PAC segment, revenue was $19.7 million compared to $21.8 million in the prior year quarter, a decline of 12%. Segment adjusted EBITDA was $1.5 million or an 8% margin compared to $1.7 million and also an 8% margin in the prior year quarter. Finally, our outsourced services segment revenue was $9.4 million, up from $9.1 million in the prior year quarter, or a growth of 1%. Segment adjusted EBITDA was $1.5 million, or a 16% margin, compared to $1.8 million, or a 20% margin in the prior year quarter. As always, segment adjusted EBITDA excludes certain shared corporate costs. I also want to note we recorded a non-cash goodwill impairment charge of $79.5 million in the second quarter in response to the drop in our market capitalization and a delayed recovery in business performance in both our on-demand and Europe and APAC segments. $57.8 million was recorded for our on-demand segment and $21.7 million was recorded for our Europe and Asia-Pac segment. Turning to liquidity, Our balance sheet remains pristine with $78 million of cash and cash equivalents and zero outstanding debt, and we generated $23 million of free cash flow for the trailing 12-month period. We distributed $4.7 million worth of dividends in the second quarter, implying a yield over 6% at our current stock price, and repurchased $5 million worth of shares at an average price of $8.36 per share. In connection with our technology implementation, we capitalized $20 million worth of implementation costs, which we expect to amortize starting in the third quarter. With the majority of the implementation effort completed, we expect cash flows from operations to improve starting now in the second half of fiscal 25. With total available financial liquidity of $252 million, we will continue to invest in high growth areas in the business, return cash to shareholders through dividends, and engage in share buybacks under our share repurchase program with $82 million remaining at the end of the quarter following our board's additional authorization of $50 million during the quarter. I'll now close with our third quarter outlook. Early third quarter weekly revenue run rate has shown continued uptick through mid-December. While we're encouraged to see improving trends, third quarter revenue will be impacted by the typical global holidays as well as the following idiosyncrasies in terms of timing of the holiday. First, given how the fiscal year calendar falls, the third quarter will include Thanksgiving holiday. Total US business days in the third quarter will be only 59 compared to 64 in the second quarter and 61 in the prior year third quarter. The midweek timing of both Christmas Day and New Year's Day is expected to impact billable hours due to consultant and client holiday schedules. Past experience suggests that the midweek timing of both holidays could result in an additional two business day impact to revenue. As such, we remain cautious in our revenue expectation in the third quarter and guide to $127 million to $132 million. We estimate gross margin to be in the range of 34% to 35%, reflecting the same holiday impact I just summarized. On the SG&A front, we expect our third quarter run rate SG&A to be in a range of $46 to $48 million. This outlook range includes the savings from the reduction in force we executed in early December, offset by the employer payroll tax reset in the new calendar year, as well as amortization and other costs associated with the recently launched technology platform. Non-run rate and non-cash expenses for the third quarter will primarily consist of restructuring costs associated with the reduction in force, stock compensation expense, and the remaining technology transformation costs, totaling approximately $6 million. In closing, We are proud of the progress we've made so far to enhance execution under the new operating structure, and we're encouraged by the early momentum we're seeing in the business, as reflected in our second quarter results. With improving economic certainty over time, we believe we are well positioned for a sustained return to growth. This concludes our prepared remarks, and we will now open the call for Q&A.

As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Joe Gomes of Noble Capital. Your question, please, Joe.

Thank you. Good evening. So, first, I wanted to start out, gross margin, as you mentioned, was significantly higher than both the guide and year-over-year, or sequentially. I just wondered if you could drill down a little bit more on the gross margin improvement.

Hi, Joe. This is Jen. Happy New Year. Yeah, so gross margin improvement over Q1. You know, we had a little bit of improvement from the pay bill ratio standpoint. We also improved our overall utilization of bench consultant. And the holiday impact as well, if you're looking at Q2 compared to Q1, that's what's driving the gross margin improvement quarter over quarter. And then from a year-over-year standpoint, as I stated in my remarks, you know, there's a little bit of degradation in the pay-bill ratio. Mostly, we're seeing some pay pressure, mostly across our international region in EU and impact, really due to, some of it is due to the talent shortage, so we are seeing some pressure there. Utilization is a little bit less favorable than the prior year, and that, you know, and we have, favorable holiday impact if you compare year over year because of the Thanksgiving holiday. And so that sort of offset a little bit of the utilization and the pay deal dynamics that I just talked about. Does that help?

Yes, yes, thank you. And then I could follow up on reference point. Just, you know, how is that? Is that meeting your expectations, exceeding? Maybe just give us a little more color on how Reference Point is performed in the quarter and how it's set up going forward.

Yeah, Joe, hi, and Happy New Year. It's Kate. Reference Point is performing to our expectations. We've been pleased to see we're integrating it as quickly as we can so that we can continue to expand what Reference Point solution set is into our client base. Now, we've started with financial services because that's been their core, but we're also seeing some opportunities outside of financial services where clients can benefit from the kind of skills and solutions that Reference Point brings.

Okay, great. And then just one more for me, if I can sneak it in. You know, last quarter you talked about being a little more focused on stock buybacks. You did buy back another $5 million in the quarter, but that was flat with what you did in the previous quarter. Is there something that, for a reason why you didn't, you know, be a little more aggressive on the stock buybacks, or is that just kind of a timing issue?

Yeah, Joe, I can answer that. Yeah, it's a little bit of timing. It's not really an issue. As you know, we just completed our digital technology transformation. We're more bullish about stock repurchasing and doing more of that. We just wanted to kind of get through the technology transformation first. Now that that's behind us, I do expect that we'll pick up the activities there a little bit more.

Good. Great. Thank you for answering my questions. I'll get back in queue.

Thanks, Jeff. Thank you. Our next question comes from the line of Alexander Sinatra of RW Baird. Your question, please, Alexander. Hi.

I just wanted to say congratulations on the good results this quarter. First, I was just wondering a little bit on Demand domestically and in Europe. You did mention improvement in Europe and Asia, so I was just looking for a little bit more color on that.

Hi, this is . Happy New Year, everyone. What we're seeing is, you know, since we have segmented the business offerings and kind of how we go to market, we're starting to see demand a lot more in finance, accounting, digital transformation, supply chain, and that's where we're focused. You know, there's a lot more activity in this area across the globe. The movement of the activity is still kind of, you know, choppy, but the good news is that our pipeline is filling up in the early stage discussions across clients a lot more than we had last quarter.

Okay, thank you. And then I just had a quick follow-up on how we should think about, I guess, the impact of the amortization of those spec transformations transformation costs, if there was any kind of codes to give on that.

The annual amortization expense is going to be around $3 million. So we're going to start to amortize this halfway through Q3. And so Q4 will be the first quarter with the full impact of the amortization.

All right, great. Thank you.

Thank you. Our next question comes from the line of Andrew Starneman of JPMorgan. Your line is open to Andrew.

Hi, I have two questions. The first one is, I assume that the months of November and December kind of head against the calendar year end for your clients, the typical time for clients to finish up projects. So I was just wondering, as you look at your months of November, December, you know, how does the pace of current project ends look versus a typical year? And my second question is for Jen. When you look at the midpoint of the revenue range that you gave for third fiscal quarter, what would be the year-over-year change adjusted for any M&A that you mentioned as well as on a same-day basis?

Hi, Mark. This is Badrash. From a trend perspective of November, December, and project ending, I think, you know, we're living through times where every year is pretty unique. And, you know, last year, there was a lot more pressure on clients and not making decisions and spend. You know, so in that sense, we're seeing more of that activity. On the second piece is, you know, a lot of our projects, you know, we don't have the cyclicality that traditional firms used to have historically, where things ended in November or December. So, you know, we manage this, you know, all day long, every day across projects and manage, you know, refilling that. So we're not seeing those end-of-year cliffs that you're sort of thinking to compared to last year either. It's just a matter of, you know, continuing the work and, you know, managing the work as it's ending and filling it with new or extending. And I'll let Jen take the second question.

Yeah. Andrew, at the midpoint of the guidance range for revenue, it's a 15% year-over-year decline on an organic same-day constant currency basis.

Thank you. Appreciate it. Yeah.

Thank you. Once again, to ask a question, please press star 1-1 on your telephone. Again, that's star 1-1 on your telephone to ask a question. Our next question comes from the line of Mark Riddick of Sedoti. Please go ahead, Mark.

Hey, good afternoon and Happy New Year, everyone.

Hi, Mark. Happy New Year.

So I wanted to talk a little bit. You mentioned in your prepared remarks a couple of times about cross-selling benefits and some of the early successes that you're seeing there. I was wondering if there's anything additional that you could share there as to maybe some of the areas that were most receptive. I think you mentioned, of course, financial services, but were there any particular areas project types or service types that were more receptive initially.

Yeah, this is Madresh. Hi. What we're finding is, you know, in finance transformation, especially for a lot of ERP projects where clients have to get off on-prem to cloud, we're seeing a lot of activity there. We're seeing a significant amount of activity also in digital as it relates to employee experience or digitization of operational processes. And then we're seeing opportunities in supply chain modernization, especially coupled with brand and UX. That's kind of where we're seeing a lot more activity as we're focusing into our existing clients and the spend that they're looking at, which are aligned to kind of the strategy that we've laid out for, you know, where we're focused in the organization and in the market more.

Excellent. And then, Jen, hey, good afternoon. I think you made mention as far as the timing of going live on some of the platforms was after the end of the second quarter, if I remember hearing that properly. Maybe you could talk a little bit. It seems that was obviously a fairly short amount of time between then and now, so maybe you could share maybe a little bit of initial... thoughts as to how smoothly that went, any hiccups, anything that we should be thinking about there?

Yeah, so we just went live December 21st. I would say, you know, the go live went very smoothly and, you know, an implementation of this size, you know, you expect small things here and there. It's not perfect, but, you know, we were able to work through everything You know, the first couple of weeks post-go-life, all the major kind of critical milestones, we were able to complete that successfully. And, you know, we have a very robust hypercare structure in place to triage and resolve issues. All in all, you know, I would say that this is a very, very successful go-life implementation.

That's very encouraging. And then? Kate, I sort of wanted to ask your thoughts on this. You might be one of the last companies that folks are asking this up, but due to the timing of when you last reported, are you getting any sense or any feedback as to any client activity or behavior or changes or shifts around our political landscape post-election? And then maybe as a reminder for folks, maybe you could talk a little bit about what – what differences may have been experienced during the first Trump administration that might sort of figure into the thought process of what we might see going forward.

Yeah. Hey, Mark, and again, Happy New Year. So I would characterize the sentiment post-election as generally more positive in our dialogue with clients. It's not that they're pulling the trigger on projects rapidly. but we're certainly engaged in more meetings and starting to talk about planning for activities in this new calendar year. So I would, overall I'd say it's more optimistic, but it's not a hockey stick yet. So I will tell you that. I think the areas that I'm hearing about from talking to clients, talking to my network, There's a strong belief that there will be more transactional work coming, which always provides opportunity for us, whether that's substantive finance and accounting or risk and regulatory work, but also the associated project management and change management work that happens with transactions and integration support. And I think more dialogue is happening about some pending activities that are starting to open up in our client base. With respect to the last administration versus now, I mean, you know, regulatory change is a driver of opportunity. Tax change is a driver of opportunity. And again, I'd go back to a more active M&A environment.

Very helpful. Thank you very much.

Thanks, Mark.

Thank you. I would now like to turn the conference back to Kate Duchesne for closing remarks. Madam?

Yeah, thank you, Operator, and thank you, everyone, for following us. We look forward to talking to you after our third quarter of our fiscal year 25. Thanks again, and best wishes for a wonderful year. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.