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.
spk04: Good afternoon, and welcome to the Mark Forged First Quarter 2022 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 your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Austin Foley, Director of Investor Relations. Please go ahead.
spk00: Good afternoon. I'm Austin Boleg, Director of Investor Relations of Mark Forged Holding Corporation. Welcome to our first quarter fiscal year 2022 results conference call. We will be discussing the results announced in our earnings press release issued after market closed today. With me on the call is our President and CEO, Shai Terrell, and our CFO, Mark Schwartz. Before we get started, I'd like to remind everyone that management will be making statements during this call that include estimates and other forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in the call that are not statements of historical facts should be deemed to be forward-looking statements. These statements represent management's views as of today, May 12, 2022, and are subject to material risks and uncertainties that could cause actual results to defer materially. Mark Forge disclaims any intention or obligation except as required by law to update or revise forward-looking statements. Also during the course of today's call, we refer to certain non-GAAP financial measures. There's a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued after market closed today. which can also be found on our website at investors.markforged.com. I'll now turn the call over to Shai Turem, President and CEO of Markforged.
spk07: Thank you, Austin, and thank you all for joining us today to learn more about our Q1 2022 performance. I'm very happy to share that we continue to execute successfully on our plan at both the top line and bottom line. We achieved our growth targets and finished the first quarter of the year at $21.9 million in revenues and non-gap loss of $0.08 per share. We continue to feel confident about our momentum and outlook for 2022. The underlying demand trends across all of our business segments are strong. Our customers continue to solve more and more mission-critical applications with our technology. With the increased pressure on supply chains, more manufacturers are realizing the value of additive to help alleviate these concerns and are turning to Markforged for a sustainable solution. This idea is no longer just a buzzword, but a directive coming out of the White House. As you saw last week, the Biden administration announced the Additive Manufacturing Forward Initiative to encourage companies to adopt 3D printing technologies. to bolster and strengthen their supply chains. Of course, we've already been doing this since our inception. From our beginning, Markforged has been focused on manufacturing applications, enabling deglobalization and bringing production to the point of need. We applaud the US government's efforts to accelerate adoption and look forward to helping businesses across all industries transform their supply chains and bring manufacturing back to America. I'm very proud to share that thanks to amazing efforts by our team, production and delivery of the FX20 is on track. We shipped several FX20 systems to our channel partners and customers in the first quarter, and we expect the pace of shipments to accelerate in the second half of the year in line with our plans as we have mentioned previously. The FX20 increases our addressable market into larger part size high-temp resistant material, and robust production, and we expect it to have a significant impact on our future, particularly in aerospace and automotive applications, among others. As more people see the FX20 in action, we're excited and humbled by the increased interest and positive feedback. Next week, our team will be attending Rapid TCT and displaying the FX20 in North America for the first time. I'm spending a lot of time in the field helping connect people to the power of the digital forge. There is this magic aha moment I love when someone holds a strong and accurate part printed on the digital forge platform in their hand for the first time. I can literally see the mental gears turning as they begin to imagine the manufacturing problems they can solve with such high quality parts. I can't wait for our team to bring this energy and the Fx20 to the threshold floor in Detroit next week. In addition to the Fx20 for robust production, we continue to drive our strategy of expanding our addressable market for early-stage design with the addition of precise PLA to our portfolio of materials. This cost-effective, specialized version of polylactic acid, or PLA, now enables the Digital Forge to address the full product development lifecycle from validation to end-use applications, all on the same platform. Markforge customer Zero Tolerance and Injection Molding and Machine Shop used other 3D printers and PLA materials as part of their design phase and were not satisfied with the quality of their results. Now, with Markforge Precise PLA, they can print reliable and high-quality designs and move directly into production using Markforge Onyx, with continuous cover for strength, all on the same platform. With the full lifecycle development, the customer told us, this is the most reliable additive platform we ever used. It just works. Software has always been a key differentiator for Markforged and core to the DigitalForge solution. So it's natural that our first acquisition is a high-value software technology that will add production-grade capabilities for our customers. I'm very excited to welcome the Teton Simulation Software Company to our team as the deal goes subsequent to the quarter end. Teton's Smart Slice technology automates validation and optimizes power performance for additive manufacturing applications. We'll integrate it into our agri-software as a subscription add-on providing a streamlined workflow, including virtual validation. By replacing time-consuming and wasteful physical testing, we give customers a better understanding of the strengths of their parts. This technology aids customers in configuring slicing parameters for end-user requirements. With a deeper understanding of the composition of their parts, we anticipate engineers will utilize our advanced composites like our continuous fiber reinforcement technology in more critical manufacturing applications. This means deeper utilization of the digital forge in critical manufacturing applications in sticky relationships with our customers. As everyone is well aware, challenges across the global landscape continues as the war against Ukraine has escalated. I want to clearly state that SmartPort has never done business directly in Russia and does not intend to do so. Our customers and team in EMEA continue to navigate the uncertainties this ongoing conflict has created without a clear resolution in sight. Between the worsening conflict in Ukraine and more regional COVID shutdowns, we're experiencing, along with every other company in the world, continuing disruption to the global supply chain. To date, we have overcome these challenges and remain confident that our team will continue to work creatively to secure supply to meet demand from our customers. I would like to share with you why, especially now, I personally believe that Markforged is a very different player in the additive market. First, it's our mission and focus to help our customers solve for high-value products and use mission-critical applications, enabling point-of-need production. Second, our digital forge platform, driven by a proprietary advanced composite technology, is a reliable, affordable, and easy-to-use platform that our customers love. Third, our software infrastructure and our blacksmith AI engine ensures our platform learns and improves over time. Fourth, thanks to our robust balance sheet, and very strong talent base were able to accelerate our organic product innovation and continuously increase our addressable market with products like the FX20 and more to come. This results in growing install base with strong unit economics and leading gross margins. Coupled with our rigorous financial discipline, this model will create operational leverage over time. As such, And in spite of many global challenges, we remain confident that our strategy and execution capabilities will continue to support our growth in 2022 and beyond. We'll continue to take pride in just doing what we say we are going to do. I now turn the call over to Mark, who will review our financial performance in more detail.
spk06: Thanks, Shai. I will now review our financial results for the first quarter and update our full-year outlook for 2022. Please note that my comments reflect our non-GAAP results and outlook. For your reference, our earnings press release issued earlier this afternoon and posted to our investor relations website includes our GAAP to non-GAAP reconciliation to assist with my commentary. Revenue increased 8.6 percent to 21.9 million for the first quarter of 2022, compared with revenue of 20.1 million for the first quarter of 2021. Gross profit in Q1 was 11.7 million compared to 12.2 million for the first quarter of 2021. As a result, we generated a gross profit margin of 54% compared to 61% in the first quarter of 2021. our Q1 gross margin was impacted by increases in freight and logistics costs, as well as by the successful launch of the FX20, which added component material and labor costs associated with ramping this new product to commercial production. Certainly, more broadly, rising labor and component material costs continue to exert pressure on cost of goods sold. But against this backdrop, Our DigitalForge platform creates a powerful differentiator, supporting our gross margin advantage. The DigitalForge unlocks for our customers the ability to produce accurate, high-strength, mission-critical parts for manufacturing, as opposed to the more crowded market for single-use, commoditized prototyping hardware. Moving on, we incurred $27.1 million in operating expenses during the quarter, compared to 20 million for the first quarter of 2021. The year-over-year increase was a planned increase, driven largely by accelerated innovation efforts, investment in our go-to-market activities, and public company infrastructure costs as we continue to execute on our long-term growth strategy. A significant component of that growth strategy is the capacity to develop multiple products in parallel, to achieve our long-term goal of bringing a major new product to market roughly every year. In line with our plan for operating expenses, we continued to grow our research and development teams for the first quarter of 2022, nearly doubling R&D spend to 9.1 million compared with 4.9 million for the first quarter of 2021. For the first quarter of 2022, our net loss was $15.5 million, or a loss of $0.08 per share. Now onto our guidance. We reaffirm our 2022 revenue guidance, again anticipating revenue for the year to be within the range of $114 million to $123 million. This represents year-over-year growth of 30 percent compared to 2021 at the midpoint of that range. With the accelerated commercial ramp of the FX-20 expected in the second half of this year, we continue to expect 60 to 65 percent of our revenues in 2022 will be recognized during the second half of the year. Further, we reaffirm our gross margin guidance for the year, expecting 2022 gross margin to fall within the range of 55 percent to 57 percent. While Q2 will continue to present gross margin challenges similar to what we experienced in the first quarter, our outlook for the full year remains unchanged. We also reaffirm our previous guidance for operating profit and EPS, anticipating an operating loss in the range of 52 million to 57 million for the year and EPS results for the full year to be a loss in the range of 28 cents to 31 cents per share. Finally, we'd like to reiterate our continuing expectation that our cost controls and our strong balance sheet will carry us through to sustained profitability without the need to raise further capital, even including planned corporate development activities. Since we first publicly provided a revenue and expense forecast approximately 15 months ago, We have consistently achieved our revenue goals while spending within our expense targets, and we plan to continue to adhere to this financial discipline. That concludes our prepared remarks today. Operator, please open up the call for questions.
spk04: We will now begin the question and answer session. To ask a question, you will press star then 1 in your telephone keypad. If you're using a speakerphone, please pick up your hand and tap before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to send our roster. Our first question will come from Brian Drab with William Blair. You may now go ahead.
spk09: Hey, good evening. Thanks for taking my questions. First, just, Mark, can you... stick on OPEX just for one second. You mentioned how much it's up year over year and the plans going forward, and you gave the earnings guidance, but to the extent that you can, can you give us a sense for how each of those lines, marketing, sales, R&D, G&A, are going to trend? And in R&D, have you added the people that you need for the year now, or is that still continuing to ramp up? Just any detail and updates you can give would be great.
spk06: Yeah, thanks, Brian, and thanks for your question. So as we think about not the near term, but maybe the midterm and the longer term, we believe that we've created operating leverage with our model, and that will enable, as a percentage of revenues, our G&A to continue to decline. And that's what puts us on the path toward profitability. Specific to R&D, sales and marketing, maybe G&A, in the near term, there are Some continuing additions to the teams that we're making principally in research and development as we continue to ramp the teams for innovation. But certainly the levels of growth we've experienced over the past four quarters are curtailing, and you won't see that continued level of increase. Again, that speaks toward the operating leverage and our ability to start as a percentage of revenue to see each of these lines come down. So there'll be modest increases throughout the year, but nothing like what you've seen over the past four quarters.
spk09: Okay, got it. And then I'll just ask one more for now. On the FX-20, and please correct me if I have this wrong, but I think the last we heard from you was that you had over a couple dozen orders, firm orders, and over 100 opportunities. I'm just wondering how that order book has developed since we heard from you last. Thanks.
spk06: Sure. I'll give you an answer, and I'm sure Shai can add some color. The order book for the FX20 continues to grow. With more FX20s in the field, more customers are using them. Other customers are now able to see the potential of that system. And from our perspective, we're delighted and humbled by what we're seeing from the reaction in the field. So that order book continues, and we stand firm on what we've said. I know we haven't said a lot about it, Brian, in terms of numbers, but what we've said about our conviction in rolling out that product this year, it's happening, and it's happening as we've scheduled.
spk09: Okay, great. And I'm sure there'll be a lot of activity next week on that order book. But thanks for taking my question.
spk06: Yeah, well, we will be sharing it for the first time at Rapid. And we'll see you there next week, I believe. So looking forward to it.
spk09: Yep. I'll see you there. Thank you.
spk04: Our next question will come from Greg Palm with Craig Halem. You may now go ahead.
spk03: Yeah, thanks. Good afternoon, everybody. Thanks for taking the questions here.
spk06: Sure, Greg.
spk03: Starting with unit sales, I think excluding FX20 unit sales were down on a year-over-year basis. I'm curious, would they have been up excluding that large transaction that occurred back in Q4 2020 that carried into Q1 2021? Just curious to get your thoughts on unit volume specifically here in Q1.
spk06: Yeah, for sure. So if we back out automation alley from q1 then we're up a little north of 16% year-over-year so there was a significant impact I think the q1 impact for automation alley was around 1.4 million and in to confirm you it won't just be driven by price units would have been up as well that is correct okay good
spk03: gross gross margin you know so kind of understand um a lot of the challenges that are are out there what are you seeing anything now that's you know significantly worse than what you saw a couple months ago and you know looking ahead obviously what you did in q1 it sounds like q2 commentary will be you know sort of continued challenges it puts in a little bit of a more of a whole to get to that guidance for the year. And so it almost implies like you think things are going to improve quite a bit in the second half. So just maybe help us understand your thoughts.
spk06: Sure. If you recall, Because I know you hang on every word we say, Greg. If you recall from our first quarter release and call in March, we suggested we see this lasting at least a full year. And while perhaps others were commenting that some of these supply chain challenges might start to subside in the second half of the year. We weren't really seeing that. That hasn't changed. We think we're going to continue to be challenged pretty significantly throughout this year. But that's already been factored into our guidance and into our thinking for the year. So, you know, for the first part of your question, nothing has really changed. We're not seeing any improvement. I think it's as challenging as it was earlier in the year. But I think because we planned for that somewhat, that it doesn't impact our guidance for the year. We're on plan with where we thought we would be. So you are correct that you do the math and necessarily the second half of the year, gross margin would need to be modestly higher than where we are today. That is correct. But if you consider our plans for the year, the growth of our business, the introduction of our new materials, the precise PLA, the introduction of the FX 20 and it ramping into more commercial production, the second half of the year, that meets all of our expectations. So we're, if we thought any different, we would, we would tell you that. I think you know that.
spk03: Yep. Okay, good. Last one. Just, you mentioned or shy, you mentioned forward in your prepared remarks. Do you have any additional thoughts, you know, on that, you know, how meaningful that could be, you know, not just to Mark Forge, but, the overall industry just to help grow or it's an adoption for additive in general.
spk07: I think it's a little bit too early to say, and we don't have the crystal ball, but it definitely helps to clarify or to prove that the demand is out there and people need help. And this is what Mark Poggi is doing. We've been helping our customers with supply chain, with mission-critical parts since the day of inception. I can share with you a little bit, if you remember in 2014, we had another initiative come in, And at the time, there was significant increase in demand for a couple of years. It's a little bit different now because unlike then when the technologies or the strongest polymers were ABS plastics and others, Markforged now have continuous fiber reinforcement. We have Onyx with chopped carbon fiber and we have very accessible and affordable metal solution which makes it much easier to replace parts on the manufacturing floor, and you can certify that they will not break. So I think it is different this time, and we're going to wait and see.
spk03: Okay, perfect. I'll leave it there. Thanks, and best of luck going forward.
spk06: Thanks, Craig.
spk04: Our next question will come from Troy Jensen with Lake Street Capital. You may now go ahead.
spk02: Hey gentlemen, congrats on the nice results. Thank you. Hey, maybe to start out with Shai, I guess I'd be curious just the various product lines. You talk about, you know, Metal X versus industrial versus desktop, you know, all the platforms seeing growth or as you know, some growing faster than others.
spk07: I would say it's more or less the same. The composites continue to be the lion's share, although metals continue to be strong. And it's very obvious. We are replacing traditional manufacturing. Most of traditional manufacturing, as you know, is metals. It's aluminum and steel. But when customers come to us with a problem and we can introduce the advanced composite solution... which is sometimes cheaper but stronger, lighter, there's no corrosion, there's a lot of advantages, then they end up with composite solution. So we see more or less the same, I would say, product mix between the three that we had before.
spk02: Okay, perfect. And how about on the PLA launch? I mean, I understand customers can kind of swap out materials, but historically a lot of users don't like to. So I guess I'm curious your opinions on will this – promote more system demand also if people opt to kind of keep more material per machine?
spk07: Yes, definitely, and especially on the lower end. So, you know, for one hand, we increased our addressable market with FX20. Robust production, faster, bigger, high-tech materials, et cetera. But on the lower end, we're also expanding our ability to answer kind of the design phase of manufacturing. Until now, we had many customers that love our solution, as you know, because you go and ask them. But they told us, look, For the design phase, we use cheaper versions because later on we throw it away, but we would love to do it on the same platform. So we said, okay, and we gave them these materials, which are a little bit cheaper, but now they can have the entire lifecycle of production from design to the final part done on the same platform, and they love it.
spk02: Yep, makes sense. How about just lastly for me then, just on the software side, Blacksmith and Fleet Manager are I'm guessing it's kind of too big to break out with respect to revenues, but just can you talk about adoption of those two software applications?
spk07: Yes. As you said, it's still relatively very, very small compared to the total revenue, but they are enablers. So when we talk about enterprise accounts that have multiple systems in multiple continents, and, you know, like Vestas, for example, that you saw probably the video, they require it. You must have this part of your real manufacturing production process. You need to ensure that the same part will be produced no matter where it is. If it's here or if it's another continent, you must have the same part. You need to control access to the system. You need to ensure that the same part is being printed. So we see the adoption continues, especially with the bigger accounts. And I think now with the TITAN simulation, we can take it even to the next level and really certify and help them get the right conviction right out of the gate that the part that they are looking for will have the right requirements.
spk02: Perfect. All right, guys, congrats again, and keep up the good work.
spk06: Thank you, Troy. Yeah, thanks, Troy.
spk04: Our next question will come from Jim Suva with Citi Group. You may now go ahead.
spk08: Thank you. Not talking about shipping costs, but raw material costs, like aluminums, metals, polys, carbons. Are you changing the way you do it? I'm just not talking about pricing, but now contracts saying indexed to a price amount or something, or do you just adjust it as the customer comes back to buy more? I'm just kind of wondering if there's any structural changes going on since raw materials have unprecedentedly been quite volatile.
spk06: Yeah, it's a good question, Jim. We're doing everything that others are doing. So we've talked a bit before about buying ahead, buying in bulk. We are signing longer-term contracts with certain vendors to secure source of supply and to secure pricing. We're doing that now actually with the FX20 components as we're moving into commercial production. So moving from the 5s and 10s and 20s into greater volumes. So yeah, we are doing some of that. I thought your question was moving in a different direction. I'll answer that if you don't mind. I thought you were asking maybe are we thinking about redesigning some of these parts out of our systems? And the answer to that is no, at least not currently.
spk08: Thank you. And then my follow-up. Earlier you talked about regional trends. I'm just kind of wondering about as the quarter progressed in Europe, Did you see a bit of a pause in some of the Eastern European countries for industrial, just given the unfortunate uncertainty of the conflict war area over there? And if so, kind of what are they telling you, hopefully for things like to get settled out before they come back, or are they just still investing in CapEx in your product despite the unfortunate Russia-Ukraine conflict? And I'm not talking Russia-Ukraine specifically. I'm talking about the bordering countries and such.
spk07: I would say in general that we started to see some delays in Q1, right as this terrible event started to take place. We don't see a positive change yet there. But as you know, our business is global. So I think we'll still be able to grow on plan with this. But there's definitely the impact there. And we hope it's going to get better there very soon and get a resolution.
spk06: Yeah, what I would add to that, Jim, is, you know, Shai's highlighted, there's a lot of uncertainty. And we've seen some customers, particularly in EMEA, push out orders. But the underlying demand trends for additive solutions, I think, more broadly remain strong. And we have confidence in hitting our full-year revenue targets. That remains intact.
spk08: Thank you for the details and clarifications. It was greatly appreciated.
spk06: Thanks, Jim.
spk08: Thank you.
spk04: Our next question will come from Noel Dilt with Tiful. You may now go ahead.
spk01: Hi, and thanks. Sticking with that geographic theme of questioning for a moment, could you comment on the strength that you saw in APAC in the quarter and then just kind of as you look out to the year and your volume expectations, I guess sort of any changes in how you're thinking about the regional trends and where some of that growth will come from? Thanks.
spk07: Sure. So I think in APAC first, we have very strong leadership and amazing team and they are doing just phenomenal work. In addition, as you know, APAC was under a lot of pressure with COVID for a long time. And especially for us, the biggest two countries there is Japan and Australia. that were under a lot of shutdowns. But as this started to a little bit open up, we definitely see the impact. We see more customers face-to-face, more trade shows, et cetera, which definitely helped to accelerate the transaction to the final stage. Going forward, we believe we're gonna continue to see the growth on all geographies. The supply chain challenges today are everywhere, everywhere. And when we come and try to help our customers to overcome them, they really need it. So we started to see customers that have digital libraries with kind of the Mark Ford solution with thousands of parts now that they print on demand. Thousands of parts that they print on demand versus parts that used to stay on the shelf, but now you cannot get them. So I think this is definitely a driver that has us grow everywhere in the world currently. I don't see it changing anytime soon.
spk01: Okay, great. Thank you. And then could you just revisit sort of how you're thinking about cash usage for the year and anything notable we should keep in mind as we're modeling, as you sort of pick up growth in the back half of the year, anything we should think about from a working capital perspective? Thanks.
spk06: Yeah, sure, Noelle. I think there's probably two things to comment on there. One is Q1, given the the first half of the year tends to be the lowest in terms of revenue, quarter one and quarter two. And bonuses and other things being paid out in Q1 tends to be the most cash outlay of the year. So we're not on a run rate of burning the cash we burned in Q1. In fact, we have great control over our expenses and we're on plan for the year. The second I would highlight is with the acquisition of Teton, you or others might think, well, gosh, that's going to add a cash burn to the company. And it will, but it's a very, very modest cash burn, a small team. They also were fiscally responsible. And even factoring that in, we're not changing our guidance for the year.
spk01: Thanks very much. Appreciate it.
spk06: Sure, Noel.
spk04: Again, if you have a question, please press star then one. Our next question will come from Rod Hall with Goldman Sachs. You may now go ahead.
spk05: Yeah, hi. Thanks for the question. I wanted to come back to the Teton acquisition and maybe see if you could talk a little bit how that strategically fits into the business and how you see that augmenting the opportunities you've got in the business, so just qualitatively on that. And then I wanted to come back to the working capital question. Just looking at your inventory days, they did bounce up quite a bit for good reasons, I'm sure, given the supply chain situation. Just curious what you think is going to happen inventory days from here. Do you expect that to kind of trend down from here? Do you think it goes up again in Q2? And then likewise, these days payable went down quite a bit. And just any color on that, or is that just kind of normal ebbs and flows of the business quarter to quarter? Thanks a lot.
spk07: Thank you Rod. So I would take the Teton question and I assume Mark will help on the working Capitan. So Teton has a very easy to use and very accessible software that helps evaluate how to build the part and that will give you the strength in the points you need. As you know, Mark Forge, we have the continuous fiber reinforcement, which is critical if you want to build parts which are stronger than aluminum. Now, today, in order to get the certification you want, sometimes you need to print the part, test it, print it, test it. With this software, our customers can avoid all of this testing and do a simulation, an evaluation of how strong would be the part, depending on where they put the continuous fiber inside the part. We believe that it will help to strengthen the position that we have in the market with the continuous fiber reinforcement. It will give our customers the ability to adopt even deeper the technology into more manufacturing application and in a cheaper and easier way. Instead of doing multiple prints and test them, you do it once and you know what's going to be the outcome. So we believe that it will have a very positive impact on our total adoption. And the way that we're going to try to monetize it, as we said, we're going to add another subscription, kind of software subscription into our offering that will give our customers the ability to use it and really ensure that they have the right part in their hands in the first time.
spk06: Yeah, Rod, was your working capital question related specifically to Teton, or maybe you can rephrase that?
spk05: Oh, no, Mark. I was just looking at the balance sheet metrics, and days of inventory were 114 up from 82, and they haven't really been that high for a while. Everybody's inventory is going up, so it's not surprising. It's just a question of, does the days of inventory maintain that sort of level? Do they trade down from there? Is it just trying to figure out if we're at a peak on inventory or do you think the inventory goes up a little bit more? And then likewise on days payable, um, that's down, I look at like just over 30 days down sequentially. And I'm just wondering, does that, you know, anything that went on there that caused your days payable to come down or is that just normal seasonality?
spk06: Yeah. So on the inventory, um, we have been building inventory, um, And so you shouldn't expect that the current level we have will continue as a percentage of revenue. We'll burn that off as we move forward. And you'll see that sort of drift back down into maybe more historical normalized levels for us. In terms of the I think what you're seeing is closer to a new normal for us. One of the areas that we have shored up as we've become a public company is on that side and being a little bit more responsive to our vendors. And so I think you're likely to see the levels where we are now as a percentage to stay fairly flat.
spk05: Great. Okay. I appreciate it. Thank you.
spk06: Yeah, you're very welcome.
spk04: This concludes our question and answer session. I would like to turn the conference back over to Shea Turan for any closing remarks.
spk07: Thank you very much, everyone, for joining us, and looking forward to see you maybe next week in Rapid.
Disclaimer