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spk00: Ladies and gentlemen, thank you for standing by. My name is Parvesh and I'll be your conference operator today. At this time, I would like to welcome everyone to the Soho House & Co's third quarter 2023 results conference call and webcast. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the one once again. Thank you. I will now hand the call over to Thomas Allen, Soho House & Co.' 's Chief Financial Officer. You may begin your conference.
spk02: Thank you for joining us today to discuss Soho House & Co.' 's third quarter financial results. My name is Thomas Allen and I'm the Chief Financial Officer. I'm here with Andrew Carney, our CEO. Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Some of the factors that may cause such differences are described in our SEC filings. Any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our third quarter earnings release, which can be found at sorosco.com in the news and events section. Additionally, we have posted our third quarter presentation, which can also be found in the news and events section on our site. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from, our GAAP results. Reconciliation from the most comparable GAAP measures are available in today's earnings press release. Now let me hand it over to Andrew.
spk01: Thanks, Thomas, and good morning, everyone. I'm going to start by talking you through the quarter's highlights, then provide an update on the progress we've made against our strategic priorities. I'll then hand over to Thomas to talk through the financial performance, give an update on our balance sheet and our guidance before we move on to Q&A. Now let's discuss the quarter. We're really pleased to be announcing another strong set of results with further growth in membership revenues and profitability. We're delighted to welcome over 8,000 members in the quarter growing to 185,000 Soho House members overall, a year-on-year increase of 21% and a 5% rise quarter-on-quarter. Total Soho House and co-membership was also up, growing 21% year-on-year and 3% quarter-on-quarter. Our waitlist continued to grow, reaching 98,000 up from 95,000 in the second quarter and a 15% increase year-on-year, which again demonstrates the strong appeal of Soho House globally. Total revenues grew by 13% year-on-year to 301 million, supported by growth in our recurring membership revenues, which were up 31% year-on-year and 5% quarter-on-quarter. While overall revenue in the quarter was very healthy, it is also worth calling out that the back weather we had through the summer did have an impact on our house's performance. particularly given the number of outdoor spaces that we typically get strong traffic across the warmer months. Our like-for-like in-house revenue compared to 2019 was up mid-teens, but excluding weather, we estimate it would have been around 20% and consistent with the second quarter. We managed expenses well and grew adjusted EBITDA margins by 640 basis points year-on-year, despite high inflation. which led to Q3 adjusted EBITDA of 42 million with 14% margins, a 22 million or 108% increase year on year. These results have led us again to increase the midpoint of our adjusted EBITDA guidance for the year. We have also delivered positive cash flow from operations in the quarter after we achieved that milestone in Q2. Now let me give you an update on the progress we're making against our two strategic priorities. growing and enhancing the value of membership and delivering operational excellence to drive profitability and free cash flow as i've said before ensuring the very best member experience is at the heart of what we do and that remains our key focus in the quarter we've continued to roll out our new menus and in october we introduced seasonal menu changes at every house simultaneously for the first time we refurbished electric house in london during the summer including a new grill menu Sales and member feedback have been very encouraging since we launched. Little Beach House Malibu had an exceptional summer, benefiting from the introduction of our Scorpius concept. And despite the weather, Soho Farmhouse had a great summer, benefiting from the high occupancy of the additional cabins we opened in 2022 and the refreshed dining options for our members. Paris, Barcelona and Rome, also significant growth in performance, partially benefiting from more UK and American members visiting Europe this summer, as well as the natural ramping up of the very attractive offerings. In September, we opened the doors of Serra House, Mexico City, our first location in Latin America. Formerly a private residence that has since been restored and reimagined, the house includes several bars, including one entirely dedicated to tequila that showcases local and regional brands, an underground vinyl music room, and our largest outdoor pool in North America, which is overlooked by a glass house restaurant. The house has gotten off to a great start. Membership demand has been very high, and we are well ahead of our typical maturation curve and forecast for membership revenue and profits. We have Serra House San Paolo and Serra House Portland opening around the end of this year. San Paolo will become our second property in Latin America and first location in South America. It's a natural choice given the city's creative fields of architecture, music, and contemporary art. Located on one of the city's principal streets, home to some of the most influential cultural institutions such as the São Paulo Museum of Art. The house is situated within the Cidade Matarazzo project, one of São Paulo's most significant heritage site redevelopments. The house will honour and share Brazilian culture and include 36 bedrooms, a gym, spa, rooftop pool and bar with multiple restaurants and club spaces. Sewer House Portland is our first house in the Pacific Northwest and will open within the historic Troy Laundry Building in the city's central east side neighborhood. The house will feature a two-story gym, rooftop pool and restaurant, a music room, and dedicated working spaces for our members. We've been part of Portland's creative community for now over six years, hosting pop-up events and programming with our Cities Without Houses members. We feel confident on both these houses' membership potential. With these openings, our total new houses since 2018 reaches 26, giving us 44 houses globally. This will enable us to continue to drive strong membership, revenues and adjusted EBITDA growth. With earnings today, we are raising our membership target to over 192,000 members by year end and setting a target for over 210,000 members at the end of 2024. Turning to our second strategic priority, operational excellence. As you know, our strategy here is centered on three things. First, leveraging data to remember insights, operate, and scale efficiently. Second, expanding in-house margins. Third, having operational discipline as we grow. It's been another strong period of progress here, allowing us to achieve our second consecutive quarter of positive cash flow from operations. whilst delivering adjusted EBITDA of 42 million, more than double versus 2022 Q3. At a time of continued pay inflation, we've continued to control wages well, with wages as a percentage of revenues improving by approximately 300 basis points versus last year. In-house F&B margins continue to be strong, up 230 basis points versus Q3 2019, and a like-for-like basis. We've continued to deliver on driving higher occupancy in ADR, leading to REVPAR increasing 6% year-over-year at a like-for-like properties and 31% versus third quarter of 2019. Combined with higher membership revenues, these results drove house-level contribution margins up 750 basis points year-over-year. Other revenues performed very well, with our beach club concept Scorpius having a great season in Mykonos, with revenues growing well over 2022, despite what we hear was a tough year for most of the properties in the market. We are excited to be opening two live scorepieces in the next 12 to 18 months, in Bodrum and Tulum. These properties will be similar to the original Mykonos property, with a large club, a dining area, as well as ritual spaces, but we will also be adding bedrooms for the first time, We'll also be adding our fourth NED in Washington, D.C. in the same time period. Lastly, I'm delighted to announce the promotion of Tom Collings, our new Chief Operating Officer. Tom has spent the last 10 years at Soho House and most recently as Managing Director of UK, Europe and Asia. As we've discussed the past few quarters, these regions have really stood out in terms of delivering the change initiatives that we've been focused on and driving our improved results. Tom has been instrumental in this, and I'm thrilled to be giving him a broader role. Now let me pass on to Thomas to give you more detail on the numbers and our updated guidance.
spk02: Thanks, Andrew. Total revenues for the third quarter grew 13% year-on-year to $301 million, or 8% on a content currency basis. Membership, in-house, and other revenues rose 31%, 6%, and 7% year-on-year, respectively. or 27%, 2%, and 1% on a constant currency basis. House-level contribution increased 62% year-on-year, with house-level margins up approximately 750 base points to 26.5%. Other contribution was up 42%, with a margin climbing approximately 650 base points to 27.5%. Giving more details on revenue. We saw continued strong revenue growth year-over-year, increasing revenues by $35 million. This is despite what we estimate to be around $5 million negative impact from weather. Highlighting some more weather stats, between New York, LA, and London, our three largest markets, rain for more than double deer every year in the third quarter, up 130%. For a business that has a lot of outdoor space, that has a real impact. Membership growth and pricing drove a $22 million increase in membership revenues. Good training in our houses, especially in the UK and Europe, led to a $7 million increase in in-house revenues with stronger growth offset by weather. And other revenues were up $6 million. We saw strong growth at Scorpius in design and development and Soho home sales, offset by lower public restaurant sales, partially driven by closures. Our third quarter adjusted EBITDA was $42 million, up $22 million year-on-year, as we benefited from the profitability initiatives we have outlined and continued membership and revenue growth. We did benefit from $2 million of non-cash rent moving from 3Q to 4Q, but even excluding our adjusted EBITDA for the quarter beat consensus of $38 million. Now discussing our balance sheet. We ended the quarter with $163 million of cash and cash equivalents and $607 million of net debt. Supporting our cash position, we generated $42 million in adjusted EBITDA during the third quarter and had $1 million of non-cash rent. Offsetting, we had approximately $8 million of cash interest expense, $2 million of cash taxes, and $22 million of net capex. On the financing side, we repurchased $12 million of stock in the quarter at $6 a share. Moving to guidance for fiscal 2023, we are raising our guidance for total Soho House members to now exceed $192,000 at year end, benefiting from the very strong demand we saw in the third quarter, including Mexico City outperformance. On total membership revenues, we have narrowed the range from $360 to $367 million to $361 to $366 million. On total revenues, we have narrowed the range and lowered the midpoints slightly, now expecting $1.13 to $1.16 billion. As we have discussed, third quarter revenues were hurt by the wet summer weather. The temporary closing of our house in Tel Aviv also impacts our prior expectations. And on adjusted EBITDA, strong cost control and continued progress on our profitability initiatives mean we're raising the midpoint of our gains. moving from a range of $126 to $134 million to $130 to $135 million. We have factored in Tel Aviv impacting our adjusted EBITDA guidance by about $2 million. For 2024, we believe it's too early to give operating guidance. However, we have clear visibility into our membership growth, which we expect Soho House to surpass 210,000 members by year-end. The majority of this growth will come from the houses that have opened since 2018 that are still in their ramp phase. We have been prudent about our expectations for new houses, which while we still expect to be between five to seven next year, remains uncertain given the development backdrop.
spk01: Thanks, Thomas. It's been another strong quarter for the business with good growth in membership and revenues underpinned by our record waitlist. Our operational excellence initiatives continue to drive profitability and adjusted EBITDA was ahead of expectations for the fourth quarter in a row, helping us raise the midpoint of our EBITDA guidance range again. We continue to make great progress in our cash flow as we ramp up cash flow from operations and remain disciplined on CapEx, which will continue in 2024. We remain focused on delivering for our members and further driving membership value. We are more confident than ever on growth opportunities ahead for Sowerhouse and Co. I'd like to take this opportunity to thank all our teams around the world for their hard work and dedication in the quarter. And with that, we'll now open to questions. Operator, we can take the first question, please. As a reminder, you can either ask your questions over the phone or submit them over the webcast.
spk00: Thank you. At this time, I would like to remind our teleconference participants in order to ask a teleconference question, please press the star followed by the number one on your telephone keypad. Our first question comes from the line of Sharon Zakfia from William Blair. Please go ahead with your question.
spk07: Hi, good morning. I guess a question on profitability, because it has been much better than expected, at least relative to my expectations on the house level and also on the other contribution. It looks like you'll end this year ahead of kind of your goal, which I think was 11% adjusted EBITDA margin. I think you'll be about 50 bits ahead of that. I mean, how do we think about the pacing of you know, what you can leverage on an ongoing basis. You know, you've had a lot of expansion year over year. You've obviously been coming out of the pandemic. What's like a normal run rate of annualized margin expansion that you guys kind of target internally?
spk02: Hey, Sharon. Good morning. So, look, we're really pleased with the margin performance we've seen this year. You know, obviously, we set out at the end of last year two strategic priorities, one growing enhanced membership and then two operational excellence to drive greater profitability. And, you know, we're delivering on both of those. As we think about, you know, the margin growth in the future, you know, we have a medium to long-term target of 15 plus percent EBITDA margins. You know, we're not coming to when we will achieve that target, but we definitely expect to continue to improve margin next year and on a go-forward basis.
spk07: Thanks for that. I guess on the house level, you know, if you're doing, On a consolidated basis, you've been kind of in the mid-20s all year, and now you're bumping up on the high 20s. I mean, you're more mature houses. How high can those house-level margins actually get?
spk01: Hey, Sharon. Higher, for sure. Like Thomas said on his prepared comment, we have a lot of houses that have opened since 2018, nearly 26. that's what you're you know as they ramp up and they hit their maturity cares where we continue to increase our membership we can control our costs we deliver a great member experience we improve our margins that's where you we're going to really you know see a ramp up in our house contribution. So that's what you're seeing. You're also seeing our teams execute really well, I would say. I think we've improved significantly over the last year on how we run our houses and balancing, delivering a great member experience whilst improving those margins.
spk07: Thanks. And then last question for me. You explained well what was going on with in-house revenues, but just curious if you're seeing any kind of pullback at all in the US consumer. Thanks.
spk01: No, look, we had a really good quarter. We are a membership club, our membership beat, and we've raised our membership guidance today, and we've also provided 24 guidance on membership. So that shows the strength of our business, and that's across all regions, and that's who we are. We're Serah House, we're a membership club. Look, we had some lumps and bumps in the quarter. You wouldn't believe the weather patterns that we were seeing. Thomas has got all sorts of stats that we can talk about on weather. We also had entertainment strikes that hit our West Coast houses. The good news is our footfall and our revenues have bounced back in October, back to what we were seeing in Q2. So we feel good about that. And I just think, again, I think one of the messages we want to land on today is what I'm really pleased with is we did have lumps and bumps in the quarter that we can't manage. We can't manage the weather. But what you heard on the call is we improved our member experience. We doubled our profits. So that, for me, shows that we're operating really well when things get thrown at us in curveballs like weather and strikes.
spk07: Okay. Thank you.
spk00: Thank you. Our next question comes from the line of Sean Kelly from Bank of America. Please go ahead with your question.
spk06: Hi. Good morning, everybody. Thank you for taking my questions. Andrew, I wanted to pick up on that last point, and I appreciate there's a lot going on here, but could you just give us, unpack the sort of behavior that you saw a little bit on the consumer side, be it covers or visits or how you look at it? And then, Thomas, I'm sure you've adjusted for your best shot at weather, so any sense on if we kind of look through all the noise, just how you think like for like,
spk01: uh member spending you know proceeded as we move through the quarter and and maybe most importantly how does october feel sure great question so we you know if you think about our houses we have a lot of houses a lot of roofs and pools so that's our peak season predominantly in july and august across all our major i would say the three big cities la london and new york so when we're weather impacted or when we're having to close if i think of new york dumbo and our SoHouse New York because of the Canadian fire, so about 50% of the time through that period, our members just spend less. What we've seen, which is what we're excited about, is we rolled out new menus. We rolled out for the first time across 42 houses at the end of September. We've improved member experience in the houses. We've spent a lot of time on that. And our lights to lights now are back up in October, back to where we saw them in Q2. So member spend and footfalls come back, which shows that the team is doing a great job on delivering on member experiences in the houses.
spk02: Yeah, Sean, look, I'll just echo what Andrew said, is that when we look at October, both the visitation and the spend per visitor trends have gone back to what we were seeing in the second quarter. um you know the third quarter the third quarter you know just just some stats to throw out there was the first tropical storm in 84 years in california you know that hit us on a weekend not exactly what you you want to see um we there was a we had the rainiest july since 2009 in the uk and so things like that obviously you know negatively impacted our performance on the top line but we were able to control cost really well and delivered by the way.
spk06: Great, great. Thank you for the color. And then second question would just be, you know, as we think about your comment, Thomas, on the, you know, financing environment as you start to look forward to openings in 2024, you know, can you just comment a little bit more on maybe what you're seeing from, you know, possible partners and then what that could impact, you know, or what we should expect in terms of timeline for some of those openings if they do end up skewing,
spk01: little bit more towards the second half just maybe help us think about member cadence or member growth cadence just so we you know uh kind of account for that if you will great question so um we're membership club and we hit all our membership numbers so the most important metric for us even ahead of opening new houses is us achieving our membership goals so we feel super confident on membership you know development's tough high interest rates, high inflation. The good news is we have great partners in development. You know, we've got, I think we've got a bit of a USP at Sohouse that we're very, very attractive to our partners. And we have a lot of partners wanting to open new houses with us. We have great terms, which are highly attractive. And we've got a really strong pipeline for the next three to five years that we're super excited about. So we're not changing our guide of five to seven just yet. We've opened Mexico City. We've got San Paolo and Portland coming at the end of the year. They are three large, amazing houses that's going to really add to our membership. And, you know, what we do when we open houses, especially in new regions like Mexico City and San Paolo, we have fantastic new members. So at the moment, like I said on the last call, we're very confident on achieving our membership goals and we'll continue to open new houses, which delight our members. But for sure, there's some lumps and bumps, but I think we can, you know, ride them out and make sure that we deliver great houses over the next three to five years.
spk06: Great. And last question, if I could sneak one more in, would be just retention. We haven't talked about this in a while, and I don't know if there was a stat in the deck. If so, I may have missed it. Could you just give us kind of the latest on member retention, either percentage or direction? That would be helpful. Thank you.
spk01: Great. You've managed to get three questions in here. Normally you're a two-question guy. I like it. Retention remains really strong. It's one of our key metrics for driving our recurring membership revenues. As we previously highlighted, our retention dropped a bit from 21 levels, but we've still got our highest retention we've had for the last seven years. We continue to focus on it. It's actually slightly improving, which is a nice trend to see again. And, you know, it just shows the strength of what we're delivering for our members in our clubs. So at the moment, we feel really good about our member retention.
spk02: Sean, let me just add, so in 2021, we had 95% retention. It was the highest level that we've been at in the prior seven years. In 2022, it dropped a bit to 93.4%. 21, we benefited from, you know, members were just coming back post-COVID, so they were less likely to leave. The other thing that, you know, if you just look at it on a total number has changed is we have a lot more new members than we've ever had before. And if you look at our kind of retention curve, the longer you're a member, the more likely you are to stay. So, on an absolute basis, that would bring the number down. But, you know, if you look at it by cohort, it continues to be very, very strong. And we typically, you know, we disclose that metric at the end of the year on 10-K. Super. Thank you, everyone.
spk00: Thank you. Our next question comes from the line of Stephen Zacconi from Citi. Please go ahead with your question.
spk05: Great. Thanks very much for taking my question. I had a brief follow-up on the questions around the quarterly performance of in-house. Did you quantify, I may have missed it, the Tel Aviv revenue impact? I heard it on EBITDA, but just on revenue. And then the question I had just following up on this commentary about developments being a bit tougher, if you were to see the growth profile drop to more like four openings per year, what's the implications for the EBITDA margin of the business?
spk01: that slow the potential for your time margins to grow do you feel like you still have enough within your power to improve you know how you run houses just talk through that please yeah so i'll let me start with the second part of the question um if we lowered our house openings it wouldn't have an impact on our membership growth and that's the most important thing in our growth is membership. So it wouldn't impact our membership growth. It wouldn't impact our membership revenue because we've got so many new houses that we've opened over the last three years. Our EBITDA would actually go up because as you know, and we've talked a lot about this with you all is when we open a house for the most part, the first year, we make a negative impact as the membership ramps. So what you would see is EBITDA enhancement. but no real effect on membership revenues. So we would actually improve our margins if that was the case that we dropped to less houses each year.
spk02: And then, Steve, on the Tel Aviv question, so as we said, we expect about a $2 million EBITDA impact versus our prior expectations. You know, all that will obviously be in the fourth quarter. On the revenue side, it'll be a little bit higher, but not meaningfully higher. You know, we're continuing to pay the staff from the house, but we've, you know, we've obviously, we've allowed our existing CalVie members to all freeze their membership. We're not charging them. And so that obviously has an impact.
spk05: yes understood um can we shift to pricing and just thinking about membership pricing as you look to 2024 you know this year you implemented the different architecture with existing members versus new members different pricing growth how do you think about that for next year um we're still working through on pricing
spk01: So I don't really want to disclose what we're thinking about on membership pricing. I'm going to give you a short answer on that. Our goal is to always deliver value for members at every opportunity. So we're still working through that at the moment. Okay. Fair enough. Thanks very much.
spk05: Best of luck in the fourth quarter.
spk00: Thank you. Our next question comes from JP Wallum from Roth MKM. Please go ahead with your question.
spk04: Good morning, and thanks for taking the questions. Maybe kind of following up on one of Sharon's questions about when we think about kind of the in-house contribution margin, I know, you know, you pointed out for a couple of quarters now some meaningful improvement on the F&B side. And I'm just kind of curious, A, where are we in terms of improving the food and bed margin? And then B, as we think about really kind of the legacy houses, the ones that aren't having this huge member ramp, you know, what's kind of the next step for improving house contribution margin there? Thank you.
spk01: Great question. So we have been in a very high inflationary period. over the past two years, in particular in the UK. I think the UK was running a double digit for most of last year. So I think the teams have done a terrific job on improving margins in that environment. And we did a lot of work on our supply chain, a lot of work on efficiencies and just sharpening up those elements. That's why we can grow our margins. We feel confident that we can continue to grow our margins across all our regions through being brilliant procurers fantastic operators and as inflation drops, which if you read the reports last week in the UK is now dropping, we will benefit from that. So we are very confident in our margin performance and improvement going into 2024.
spk02: And then just a second question is how are we going to keep on improving margins at our more mature houses? You know, it's all about operational excellence still, right? You know, as we've talked about over the past few calls, we're offering, you know, new things for our members. We're doing seasonal menu rotations, which we haven't done in the past. We're serving our members more to understand what they really want. And so by giving our members a better offering, that drives higher spend per visit and, you know, and all the other initiatives drive higher profitability.
spk04: Okay, yeah, that's very helpful. And then I'll just squeeze two others. The frozen members number, anything you can point out there? And then just the stock buyback, any kind of capital allocation thoughts? That would be highly appreciated. Thanks, guys.
spk01: Yeah, just on frozen, frozen members is just normalizing. It continues to normalize. We're still below pre-COVID levels. It's just It's just part of our business. We're super flexible with members. Most of our frozen members are moving city, changing lifestyle, having children. It's just so I wouldn't worry about frozen members. It's just part of our business. And it's still below what we used to see pre-COVID.
spk02: Then in terms of capital allocation, You know, as you see, as we've talked about the past few quarters, we've now had positive cash flow from operations. And, you know, we expect that to continue in the fourth quarter. You know, our priority is to invest back into the business, given the long-term growth opportunities we see with SoHouse. Next year, we're also investing in opening two new Scorpuses, which we talked about on the call. We feel even more confident in that following how good Scorpius Myconosis results were this summer. We also like to have a healthy cash position to bolster financial flexibility. And so, you know, investing in the business and also reducing leverage are our main priorities. Buybacks are not our top priority, but when we see opportunities, we have the balance sheet to be flexible. And so, you know, our buybacks in the quarter We're at a discount to where the stock was trading, and so we saw it as a good opportunity.
spk04: Understood. Thanks for the time, and best of luck moving forward.
spk00: Thank you. Our next question comes from the line of Stephen Gambling from Morgan Stanley. Please go ahead with your question.
spk03: Gambling runs with gambling. Quick question on one of the comments you made about earlier. a greater percentage of new members versus history. Is there any specifics you could provide around what that mix looks like now versus where it's been? And then also just any color on what spending looks like for new customers in-house versus folks who are maybe several years into their membership?
spk02: Hey, Steve. So I don't have the stat of percentage of new members versus legacy, but we can, you know, you can back into it based off of our earnings presentation. We give net paying members by cohort house, and so that can help you. I know we just give net numbers, but, you know, that can kind of give you a guide. In terms of spend per member and based off of their life cycle, it's pretty consistent. Age can have a factor. So the older our member is, typically the more they spend. But based off of the life cycle, it's pretty consistent on a per visit side.
spk03: And then maybe a higher level question. Do you target a certain level of in-house spend per person as you're thinking about it? And do you view that as either a sign of the health of the consumer or the health of the membership? Or are your efforts to be more profitable potentially going to impact spend in-house as we look out next year and over the next couple of years?
spk01: yeah so i would say it's probably one of our biggest initiatives is increasing member spend average check value i think you'll hear a lot more about that from us over the next 12 to 18 months we've got a whole heap of initiatives around delighting our members more we know our members better than ever before we're much more sophisticated in how we treat our members which then will either drive our members to our houses or when they're in a house to actually spend a little bit more with us. So it's a combination of us being, you know, inspired by our data, understanding what our members want more from us, giving it to our members in the right way, and that's going to drive member spend. So we do have member spend goals, for sure. And we'll probably talk a lot more about that on our March earnings, because you'll see it's going to be quite a big strategic initiative for us.
spk04: Look forward to it. Thank you.
spk00: Thank you. There are no further questions at this time. Thomas Allen, I'll turn the call back over to you.
spk02: Thank you, Babesh. So I'd just like to thank everyone for joining the call, and we look forward to catching up with you again soon. Thank you.
spk00: Thank you. This does conclude today's conference call. We thank you for participating, and you may now disconnect.
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