Seer, Inc.

Good day, and thank you for standing by. Welcome to the SEER third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You'll then hear an automated message advising that your hand is raised. To withdraw your question, Please press star 11 again. Please be advised that today's conference is being recorded. I will now hand over the conference to our first speaker today, Carrie Mendeville, Investor Relations. Please go ahead.

Thank you. Earlier today, CIRA released financial results for the quarter end of September 30th, 2023. If you've not received this news release or if you'd like to be added to the company's distribution list, please send an email to investor at seer.bio. Joining me today from SEER is Omid Farraqzad, Chief Executive Officer, President and Chair, and David Horn, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section titled Forward-Looking Statements in the press release SEER issued today. For a more complete list and description, please see the Risk Factors section of the company's quarterly report on Form 10-Q, where the quarter ended September 30, 2023, and in its other filings with the Securities and Exchange Commission. Except as required by law, SEER disclaims any intention or obligation to update or revise any financial projections or forward-looking statements whether because of new information, future events, or otherwise. This conference call contains time-sensitive information, and it's accurate only as of the live broadcast, November 7th, 2023. With that, I would like to turn the call over to Omid.

Thanks, Kari, and thank you, everyone, for joining us this afternoon. I will begin our call today with a review of our third quarter results, as well as the progress we're making across our core focus areas to drive growth. Then I will turn the call over to David to provide more details on our financial results. I'd like to start by thanking our incredible team for their hard work and dedication to our mission at SEER. We're pushing the boundaries and forcing an entirely new market in proteomics amidst a very challenging macroeconomic backdrop. Even in the best circumstances, developing a new market is never easy. Our team is working tirelessly to serve our customers and help them realize what is possible using the Perdograph product suite. We ended the third quarter with $4.2 million in revenue, increasing 5% year-over-year, and approximately $381 million of cash, cash equivalents, and investments on our balance sheet. Given our performance year-to-date, as well as these ongoing challenges in the current microenvironment, we now anticipate coming in at the lower half of our revenue guidance range of 16 million to 18 million. On our last earning calls, we outlined some of the challenges that are impacting near-term adoption of our technology, as well as the actions we're taking to mitigate them. First, making it easier to access mass spec-based proteomic data. For proteomics or mass spec expert customers, we introduced a strategic instrument placement program, or SIP, to enable immediate access to the proteograph and help generate the data needed to secure funding and sample to conduct larger subsequent studies. For biologists and genomicists customers, we introduced the SEER Technology Access Center, or STAC, to enable access to a simple to conduct the first study and apply the biological insight provided by the photograph. This will accelerate publication and help researchers to secure funding for future studies and investment in bringing in workflow in-house. In addition, building market awareness and continuing to lay the groundwork for market adoption with more substantial market development efforts designed to shorten the sales cycle and enable more data to become publicly accessible. We're increasing market education with expanded outreach events, and we're supporting potential customers with proof of principle studies and examples of use cases with our application lab. We're making progress across these efforts, and I'll share more details on each throughout the call today. We have shown, along with very early customer data, that deep unbiased proteomics at scale is possible and we're forging a path forward with the broader research community. More papers are being submitted and published from our partners and customers with exciting data as well as great interest in STAC and our recently launched Protograph XD Asset Kit. I have strong conviction in the unique benefits of our technology and the differentiated insights that we offer to the OMICS customers. I remain convinced that once third-party data becomes increasingly accessible to our broader research community, our market development efforts will pay off and we will see an inflection point in adoption, the size of studies, and ultimately revenue. We're making strong progress here despite market headwinds. That said, this has been a year of learning and adopting as we change the status quo of proteomics research. We're constantly refining our approach as we figure out how to advance adoption of deep unbiased proteomics at scale. While I'm confident this will happen, it will take time, particularly in this challenging macro environment. In the near term, we continue to focus on our key critical areas to develop our business. First, enabling breakthrough discoveries with the Proteograv product suite. Second, demonstrating the power of our technology. And third, catalyzing innovation. new applications, and markets. Starting with our first objective of increasing the availability of public data and publications to validate the value of the photograph, we're aware of 180 public presentations and 48 posters of presentations by customers. This has also been an exciting year for publications, with six manuscripts submitted to preprint servers to date, and line of sites to another half a dozen that have been or will be submitted to peer review this quarter, the vast majority to high-impact journals. These publications cover a range of applications, including analyzing PQTLs, understanding the body's response to spaceflight, finding new biomarkers, signatures of Bakken disease, and validating the quantitative and precise data enabled by the proteograph. In October, two new papers were added to BioRxiv. First, researchers from Auburn University published a second manuscript using the proteograph, following an earlier one in June. They're using skeletal muscle samples to understand molecular signatures affected by aging and resistance training. finding a set of proteins in cellular senescence pathways that were upregulated over 100-fold following resistance training. Second, researchers from Brigham and Women's Hospital, in partnership with WeDiagnostics, have developed and validated three distinct measures of biological age in a manuscript now available on BioRxiv. These researchers have developed a robust Predictive biological aging phenotype, which combined with DNA methylation and multiomics, generated two biomarkers. Both biomarkers demonstrated strong association with chronic disease and mortality, outperforming current biomarkers across their discovery and validation cohorts. Additionally, these biomarkers provide opportunity to identify clinically relevant interconnections central to the aging process. This quarter, Prognomic presented exciting data from their case-controlled lung cancer cohort, demonstrating unprecedented early detection performance using a multi-omics approach, which includes the proteograph for non-small cell lung cancer. Using two different subsets presented at the 2023 World Conference on Lung Cancer and CHEST annual meeting, they highlighted validation data showing significantly higher sensitivity and specificity to detect lung cancer, particularly for early-stage lung cancer than previously shown in presentations or published data. The results of these datasets show the proteograph helped to identify 4,440 proteins and over 30,000 unique peptides on average per subject. Previously published plasma proteomics studies that included over 500 subjects have typically detected fewer than 600 proteins on average per subject. These presentations reflect the first customer data set demonstrating the value of the content that can be derived from at-scale studies using the proteograph. This is an exceptional result that could have a significant impact on discovery efforts for early detection of various diseases. We believe this encouraging and pivotal data will serve as the foundation for the development of multi-omics assay for blood-based liquid biopsies for the early detection of lung cancer. The data from this large cohort has been analyzed and is being prepared for manuscript submission. In a recent webinar hosted by GenomeWeb, Dr. Nate Bassisti from the National Institute of Aging, NIA, discussed data on a 900-sample longitudinal mouse biomarker study that they completed within just four months using the Protograph product suite. Dr. Bassisti and his team achieved deep quantitative proteomic profiling of low-volume mouse serum encompassing over 4,300 total protein IDs and revealing major alteration in lipoprotein and triglycerol-associated pathways with age and varying by mouse strain. This demonstrated both the scalability and flexibility of the proteograph to enable a species agnostic unbiased study and scale. We expect a manuscript will be coming out in the coming months. Last week, we announced that Panel Bio, a world-class metabolomics service provider with mass spec expertise has joined our Centers of Excellence program. By combining deep proteomic insights at the peptide level with the proprietary metabolomics workflow, PanOnBio will enable first-in-their-kind studies with robust pathway analysis to significantly advance research in biomarker discovery and drug development. As we focus on expanding access and resolving pain points to accelerate adoption, there is mounting interest in deep unbiased and scalable proteomics and an appetite for the publications demonstrating these results. As potential customers consume this groundbreaking data and capabilities, I'm confident that we will see these adoption momentum accelerate. Turning our attention to our second objective, demonstrating the power of the Proteograph product suite, we continue to expand the capabilities of our technology and increase access to the Proteograph via a number of initiatives. Back in June, we launched our second product, the Proteograph XC Assay Kit, which enables nearly any lab to take large-scale proteomics with higher throughput and depth of plasma proteome coverage. This product enables the analysis of 10,000 samples per year with one proteograph XT and two mass spectrometers. We're seeing good traction with XT, and it's performing exceptionally well in the hands of customers. We're on track to have the majority of our installed base upgraded to the XT configuration of the instrument by the end of this year. The power of the Proteograph XT assay was exemplified through the fantastic data that Thermo Fisher presented at ASMS in June, showing the power of the Orbitrep Astral mass spectrometer in combination with the Proteograph XT. Our partnership with Thermo Fisher to launch the SEER Technology Access Center stack has been generating a lot of interest and has had a significant impact on access to mass spec readout, giving us confidence that this was the right strategy to help open up the market. We're expecting to run thousands of samples by the end of this year with a backlog of projects. We believe that as customers gain access to, validate, and apply the biological insights provided by the prototype, this will accelerate the availability of customer data using the prototype and will increase the pace of peer-reviewed papers. In addition, over time, we believe these researchers will add MassPAC technologies to their own lab. As I mentioned, we launched a SIP earlier this year to remove the barrier of capital investment for customers. We continue to make good progress with this program and its ability to increase accessibility to our technology for those customers that would like to bring the prototype in-house. Outside of our initiatives such as SPAC and SIP, we're also working to expand our global presence through new distributed partnerships. We're partnering with Daniel Biotech in Israel and Jintika in Eastern Europe. With these partnerships, we will be well positioned to address interest from new geographies and customers around the globe. We're also making significant developments in validating our technology through two new ISO certifications received ahead of schedule. First, we received ISO 27001 certification, which helps increase our information security and cybersecurity standards. This will make us more effective with stack in our labs and collaborations and form the bridge for GDPR compliance for European customers. Second, we received ISO 13485 certification, which establishes the processes, people, and systems for quality management. This lays the groundwork for the creation of the highest quality, reliable solutions and enable the utilization of our products in FDA submissions. These certifications underscore our dedication to ensuring quality and security and pave the way for technology to make a meaningful impact in clinical settings. It is a testament to the dedication and hard work of our entire team that we achieved these significant certifications in such a timely manner. In addition to these certifications, we're making our software easier to use to make it simple for new customers to add unbiased fluidomics data to their studies. And lastly, an update on our third objective, catalyzing new applications and markets. As I mentioned earlier, the ProteoGraph is an inherently extensible technology. We have seen this time and time again across new cases in our application lab and in diverse stack projects. Our technology is being used to support the development of early detection tests, biomarker discovery, veterinary applications, and aging research. To date, we have shown use cases for skeletal muscle, host cell proteins, various model organisms, secretome and conditioned media, and low sample volume. We're working on samples to study exomes, brain, dry blood spots, tears, horse, and joint fluid. It is very exciting to see how people are imagining what they can do with deep unbiased proteomics being more accessible. I am pleased with the progress we have made this quarter to address our near-term challenges to commercial adoption. However, we still have a lot of work to do. We are actively pursuing market development activities and raising awareness about the capabilities of the Protograph product suite. More data publications and proof are emerging, revealing high-impact biological insights. Each of these studies further demonstrates what's possible and paves the way for future customers to add deep unbiased proteomics to their studies. I'm confident in this substantial long-term opportunity ahead of us. With that, I will now turn the call over to David.

Thanks, Omid. Total revenue for the third quarter of 2023 was $4.2 million, representing an increase of 5% compared to $4 million in the third quarter of 2022. The increase in third quarter revenue was primarily driven by increased instrument sales, services, and grants and other revenue, offset by lower consumable kit sales. Product-related revenue for the third quarter of 2023 was $3.3 million, including related party revenue of $1.4 million, and consisted of sales of SB100 instruments and consumable kits. Service revenue was $536,000 in the third quarter of 2023. As Omid mentioned, we are seeing good customer interest and traction with our stack program, where we will run mass spec for our customers and, in some cases, provide a full workflow solution for customers who would like to access our technology. Grant and other revenue was $348,000 in the third quarter of 2023, largely related to our SBIR grant from the NIH. We did receive an extension of our SBIR grant from the NIH in the third quarter, which allowed us to continue our work under this grant. Total gross profit was $2.2 million for the third quarter of 2023, representing a gross margin of 52%, compared to $1.9 million in the third quarter of 2022, representing a gross margin of 49%. We continue to expect variability in our overall gross margin on a quarter-by-quarter basis as a proportion of instrument consumable and service revenue will fluctuate between any given quarter. Total operating expenses for the third quarter of 2023 were $28 million, including $8.3 million of stock-based compensation, an increase of 4% compared to $27 million, including $9.1 million of stock-based compensation in the third quarter of 2022. Research and development expenses for the third quarter of 2023 were $13.2 million, an increase of 14% compared to $11.6 million in the third quarter of 2022. The increase in R&D expenses was primarily due to an increase in product development efforts related to the Protograph product suite, including employee compensation costs and other related expenses associated with overhead allocation, general business expenses, and depreciation of equipment. Felony general and administrative expenses for the third quarter of 2023 were $14.8 million, a decrease of 4%, compared to $15.4 million in the third quarter of 2022. The decrease in SG&A expenses was primarily driven by a decrease in professional services, including recruiting expenses. Net loss for the third quarter of 2023 was $21.1 million, compared to $24 million in the third quarter of 2022. We ended the quarter with approximately $381 million in cash, cash equivalents, and investments. Turning to our outlook for the year, as Amid mentioned, given our performance year-to-date, as well as the ongoing spending constraints at our customers, in light of the current macroeconomic environment, we now anticipate coming in at the lower half of our revenue guidance range of $16 to $18 million. In terms of our cash burn, we are committed to maintaining a strong financial position and are taking a very disciplined approach with our spend. We continue to estimate that our 2023 free cash flow burn will be less than our free cash flow burn in 2022. At this point, I would like to turn the call back to Amid for closing comments.

Thanks, David. While we continue to navigate temporary headwinds and manage through the current environment, we have made tangible progress in increasing accessibility to our technology this quarter. We're seeing a growing interest with our stack and are seeing more customer publications moving through the peer review process. I'm so proud of our incredible team for their hard work and dedication throughout the year. I strongly believe that we will see an increase in adoption of our technology as more researchers see third-party validation of the capabilities of the Perotica product suite. With that, we will now open it up to questions.

Thank you very much. As he said, we will now conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.

Our first question today comes from Dan Brennan with TD Collin.

Your line is open.

Great, thank you. Thanks for the questions, guys, and congrats on the quarter. Maybe just the first one would just be kind of on the sales funnel. Obviously, you're not alone feeling some pressure on the demand trends given the difficult kind of environment. That said, you kind of rattled off all the initiatives and you got the new product and you have some publications coming out. So I'm just wondering on the publication front in particular, if you could just speak to kind of maybe any color on what the funnel looks like qualitatively and have you begun to see any increase in demand as some of these publications have made their way to market?

Yeah, thanks so much.

We're seeing good traction with the XD and the product is performing exceptionally well in the hands of customers. We're on track to have the majority of the install base upgraded to the XD configuration of the instruments by the end of the year. As you would expect, The revenue ramp for new product launch takes time. We factored these elements into a revised guidance. That said, we are seeing good traction, and the customer have given us very favorable reviews in what they're seeing so far.

Got it. Yeah, go ahead, Dave.

Yeah, just to jump in on the publications front, again, as we mentioned, We now have six on bioRxiv, which is great. Obviously, that's preprint, but they'll all be submitted. Then we also know of another, as we said in our remarks, another kind of handful to half a dozen that we're excited about. So hopefully, again, we don't have control over the timing of the peer review process, but hopefully in the first half of next year, we'll start to see some nice publications and could see some as early as the beginning of the year.

Got it. And then maybe just as a follow-up, maybe two-parter on that stack business, could you just speak to kind of what that opportunity looks like? Is that getting reported through the service line? So any color on kind of how meaningful or not that could be? And then just be, I know we're not guiding for 24, but consensus has you guys growing 60% in 2024. It looks to be pretty steep given the environment. Any early way we should be thinking about a reasonable level of kind of growth in 24 at this point. Thank you.

Yeah, let me maybe comment on what the stack means for our business, the purpose of it, and what we're seeing. And then maybe I'll have David comment on the economics of it in terms of balance of the year and also heading into 2024. So the stack really exemplifies the power of the Protograph XT assay together with the Thermo Fisher Orbitrub Astral. The data is just simply fantastic. We launched this stack at the SMS conference in June. We've seen a lot of demand, a lot of interest in being able to access the Protograph in a service model, really lowering the barrier for a customer to go from a sample to data. We actually have a backlog in the stack in order to process these samples on the XD and the Astral. So, that's really encouraging for us. In terms of how you should model that for the balance of the year and 2024, let me have David comment on that.

Yeah, Dan, just to answer your questions. Yeah, we do report stack revenue through the service line. service revenue is primarily stack revenue. I think the only difference to think about with respect to stack, as Amit said, we do have a nice pipeline of projects we're working on, but we do need to run those projects and deliver the data report to the customer before we can recognize revenue on that. So there will be just, you know, between when you get the PO and you get the samples in, you actually have to run and deliver the data So there is a bit of a time lag there, and that just becomes an issue around how much capacity do you have in any given quarter. So we're optimistic about what we're able to do, but there is just an additional time component rather than with an instrument or consumable where as soon as you ship, you can recognize revenue. So again, I think that's just something to keep in mind, that we do have to kind of work through that each quarter. But we are... We are optimistic about where that will come out, both for the balance of the year and the contribution it will make next year. I think the second part of your question was outlook for next year. Again, I would say it's still every week, every month, we are continuing to face challenges and headwinds. I think we continue to like our pipeline and where it stands and the number of opportunities we have. I think the question is just the timing of those and how quickly those can or can't move through the funnel based on the funding at the various customers and capital budgets and that type of thing. So I think we're cautious. Certainly around next year, again, I think it'll probably be a year that's more back half loaded, but obviously we'll have a lot more information and data on our year-end call. But, you know, again, I think it's similar to other companies out there in our sector. It's just a tricky environment right now in terms of what people are doing. And then you layer on the fact that we're a new technology. And I think that, again, just causes us to continue to be optimistic, but, you know, appropriately, you know, conservative as well as we look into next year. I got it. Thanks, Dave.

Thank you very much. One moment.

Our next question comes from Tejas Savant from Morgan Stanley. Your line is open.

Hey, guys. Good evening, and thanks for the time here. Omid, just a couple of quick follow-ups on the stack and SIP sort of initiatives. Do you view this as essentially sort of sufficient in terms of mitigating some of the macro headwinds here? Or is there anything else you're contemplating internally at the moment just in terms of tweaking your go-to-market on a go-forward basis?

Yeah. Tejas, the stack and SIP to me were meant to... to be a market opening strategy. In other words, as you remember, we launched, we were adamant about a couple of principles. We said, we don't wanna be in the service business. We wanna have a distributed model. And at the same time, we were introducing a first of its kind product, the like of which did not exist in the marketplace. And at the same time, there was, a total paucity of data that showed the customer what is possible to do with the proteograph. Now, you know, we managed to have a commercial success of 6.6 million in the first year. That was a limited release year. And then, you know, 15 and a half the year after. But ultimately, the pace of publication from customer was slower than I had hoped. And what the stack aimed to do was to let a customer get access to data much, much faster than bringing an instrument in-house, ramping up of studies of scale, getting to data and publishing it. I think that thesis or that hypothesis proved to be correct because there is so much demand for the capacity that we built in the stack. By the way, we might have to actually expand that capacity, because I don't want the customer experience to be such that they have to wait a long time in order to go from expressing an interest to get a sample process, to us giving them data. So I think in that context, the customer access data. So this is a different problem. And by the way, in terms of the customer profile, the STAC and the SIP also differ in the type of customer profile that they address. STAC was mostly geared toward targeting a genomic customer. that is not really a mass spec user, just wants the data. And I think eventually with understanding the inside of what comes from that type of biological data, they may eventually become a mass spec user, or they may bring the proteograph in-house and then send the peptide to the stack to get processed. But really, the stack is geared toward the genomic customer. This is mostly geared, you know, toward the proteomic customer or the traditional mass spec, which business model largely is, you know, a CapEx business model. They invest a lot in terms of a mass spec. But then they really don't have a lot of capital left over for consumable, which is really required with our business model. So what the SIP does is it lets that customer bring the capex in-house in terms of the loaner. Now our expectation is that a significant number of these customers will end up buying it, but then to use whatever money it is instead of buying that instrument to actually buy samples, run the studies, and get these guys to find secure funding and others for them to eventually scale up on their assay. So I think that the solution or the problem that these two solutions offered is a very different one than the macro picture, Tejas, in my mind. Largely, it was opening up the market. I think the macro is just making it difficult for us. The sell cycle is longer. We're seeing a significant slowdown in China that I don't have visibility to the resolution over the coming couple of quarters. I think it's tough, but I do think that we're making the right step, Tejas, and I don't see a need to make any additional kind of strategic pivots or strategic changes to do this. I think the next real big turn, if you would, in the flywheel is going to come when customer publications comes, because what SEER did was it makes it possible to access content proteomic content at scale speed that wasn't previously possible. And then the next important, if you would, milestone is the why should I care about that content, which is what is the value of that biological insight in terms of making me make decisions clinically or scientifically in terms of, I don't know, biomarker discovery and others. And those are the kind of You know, real milestones that are going to drive adoption, and it's just publications from customers. And the beauty of it is that the visibility that we have in what the customers have done with the work really is validating in what we had expected to adjust, even better than my expectation, by far, by the way.

Got it. That's super helpful, Rabinth. And just a couple of quick follow-ups here. So on the SIPP side of things, have you sort of started loaning those first instruments yet or is that still ahead of you? Give us a flavor. I know you mentioned sort of good progress, but any flavor around the number of customers that are interested in accessing the proteograph through SIPP. And then quick follow-up to your comments and just the cadence of publications and how important that is. Out of all the preprints in BioRxiv at the moment, are there one or two that are particularly pivotal in your mind in terms of unlocking adoption for the XT?

Yeah, I'll take the first one, Tejas, just on the SIP. We have placed instruments under that program. And, you know, I'd say it's a handful, maybe a little bit more than a handful. And so, you know, And again, that came with a consumable purchase. And again, we place these in accounts, as Amit said, where we fully expect them to purchase. Again, they may or may not, but they're not obligated to. But certainly, we hope to get them excited about the data that they'll run. And so we have had some good uptake with that program, both in the second quarter and the third quarter. And we expect to continue that in the fourth quarter as well.

Let me maybe just take the one on the publication side of it, which is the bioarchive papers, I would say about half of them, actually probably more than half of them, are currently under review at various different journals. Now, here's the interesting part of it, which is the early ones that were submitted have all gone through one round of revision, which basically means that they're very close to kind of being accepted and to come out. And here's the most important part of it, which is those papers are in what I consider to be the very, very kind of top journal, either the top one or two journals that you can imagine or the sister journals from those. And that just really reflects kind of like the level of science that became possible when you did unbiased proteomics. at scale, deep unbiased proteomic at scale. And I say that because it's very easy to do a single-shot proteomic, meaning a neat injection in a mass spec, get 500, 600 proteins, and to do that at scale. But to do deep proteomic at scale, there is no other solution other than SEAL, other than SEAL's proteograph, that scale. And so the papers that are coming to us or in great journals. And by the way, you know, you and I were on a panel together when I had predicted that by the end of next year, we're probably going to see the first population scale defund bias proteomics study get underway. I still believe that's going to be the case. And that just really falls in the realm of what was not possible now is possible. So I think what I'm excited about seeing is really just the value of the biological inside of this content. I think that would fundamentally have the potential to fundamentally shape, you know, so many changes in medicine and science.

Got it. Super helpful. Thanks, guys. Appreciate the time.

Thanks, Tejas.

Thank you for your call. Our next question comes from Rachel Van Stahl from JP Morgan. Your call, your line is open.

Hello, this is on for Rachel Van Stahl from JP Morgan. Thank you for taking the question. So you touched a little bit on macro during your prepared remarks, but perhaps you can compare and contrast what you've seen in 3Q versus 2Q on the macro front. And then what are you seeing so far in 4Q? Is there any improvement or deterioration or stabilization? Thank you.

So let me take that one. In terms of what we're seeing just on the macro front, look, I think it continues to be pretty similar throughout. I think the uncertainty is something certainly you know, in the second and third quarter around inflation and the general macro trend of are we going into recession or are we not, really just caused our customers to kind of elongate their purchase decisions and think, you know, about their budgets. I think as we get into the end of the year here, that trend continues, certainly on the commercial side where we are seeing customers just be more thoughtful. As we've said, Certainly for proven technologies, companies that need another mass spec will go buy another mass spec. But for new technologies such as SEER, there's just more questions that are answered and need to be answered. And we've also seen approvals need more approvers, if you will. And so we continue to see that. I think that's just the general uncertainty. I think the only thing that may have changed a little bit in the third quarter and fourth quarter was just the uncertainty around the government funding. And so I think, again, we don't have much, if any, exposure around that, but we do have some. And again, I think that's just the availability of the funding. Is the government going to shut down or not shut down? It does create an impact on some of that funding. So again, I think it's been pretty steady, if you will, in terms of the uncertainty. And hopefully as we move in, you know, through the fourth quarter and into the new year, some of that gets resolved, both in the macroeconomic, but also the government funding circles as well.

Okay, thank you. And then on your updated guidance, you're now expecting it to come in towards the lower half of the prior into 2018. So can you maybe unpack for us what are the updated assumptions for 4Q, and are you assuming any type of 4Q budget flush in light of the uncertain macro?

Yeah, in terms of the, you know, I think the guide to the lower half, I think, again, it's just something around the, really the uncertainty, if you will, of just, you know, for us, given the the size of the numbers we're talking about here. Again, as we've said, one or two deals can be the difference there. And so, again, I think we're just trying to, as we see and look out for the balance of the quarter here, just some of that uncertainty creeping in, as I just talked about. And so if a deal goes one way or the other, that's the difference there. And so we're just trying to be mindful and thoughtful around that. in terms of that overall uncertainty. And so I think that that's really what's driving it, is something just to kind of be mindful. I think that's really, really what we're seeing.

Thank you.

Thank you. This concludes our question and answer session. I would now like to turn it back to Omid for further thoughts.

Thanks so much, everyone. Really, really appreciate participating on this call. Thank you.

This does conclude the program. You may now disconnect. Have a good day.