Skillsoft Corp.

Good afternoon.

And welcome to Skillsoft's second quarter fiscal 2023 earnings call. After the market closed, we issued our Q2 earnings press release and posted supplemental materials to the Skillsoft Investor Relations website. Today's call will contain forward-looking statements about the company's business outlook and expectations, including statements concerning financial and business trends. Our expected future business and financial performance, financial condition, and outlook. These forward-looking statements and all statements that are not historical facts reflect management's beliefs and predictions as of today and are therefore are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risks described in the safe harbor discussion found in the company's SEC filings. During the call, we will also discuss certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. GAAP requires accounting periods before and after the merger and de-SPAC on June 11, 2021, to be separated into predecessor and successor periods to reflect the change in ownership and lack in comparability between periods due to different ownership and investment bases. In addition, global knowledge activity is only reflected in the GAAP financial statements after June 11th. References on this call to combined GAAP results reflect a combination of the predecessor period before June 11th that excludes global knowledge with the successor period after June 11th. For all non-GAAP measures in the supplemental materials and in today's commentary, the company is providing normalized results as if Skillsoft and global knowledge had been combined for all periods presented, which we believe is useful to investors to show the trends of the go-forward company. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures as well as how we define these metrics and other metrics is included in our earnings press release, which has been furnished to the SEC and is also available on our website at www.skillsoft.com. After our prepared remarks, Jeff Tarr, CEO, and Gary Ferrer, CFO, will be available to take questions. With that, it's my pleasure to turn the call over to Jeff.

Thanks, Eric. Good afternoon, and thank you all for joining us. Today, I'll discuss our progress extending Skillsoft's leadership position in corporate learning. I'll cover a few operational highlights, provide some context to our financial results, and speak to our share or purchase authorization before turning the call over to Gary. Q2 marked our first anniversary as a newly formed management team and public company. Through a combination of organic investment, a number of strategic acquisitions and a successful divestiture, we have repositioned Skillsoft to benefit from positive secular trends in the enterprise learning market. Skillsoft now benefits from strong positions in the three most important categories of corporate learning, including leadership and business skills, tech and dev and compliance. across a wide range of learning modalities, including micro videos, hands-on learning, coaching, assessments, and instructor-led training delivered through our leading enterprise grade learning experience platform. We also benefit from a large enterprise customer base serving more than 15,000 corporate customers, more than 70% of the Fortune 1000, and a community of more than 80 million learners adjusted for the sale of SumTotal. With the benefit of these capabilities, we believe we are best positioned to deliver on the complex learning needs of the world's most sophisticated organizations. Over the long term, we believe this should enable us to accelerate revenue growth, expand margin, and generate strong cash flow. In our first year, acquisitions and divestitures were an important priority to better position our portfolio for the long term. Codecademy was a major building block to scale our offering within tech and dev, which is where organizational skills gaps are most acute. Additionally, through the acquisition of Pluma, we added coaching and mentoring capabilities, which are highly sought after by our enterprise customers. And shortly after the quarter, we announced the closing of the sale of SumTotal. This marked another major milestone in our strategy to become a more focused enterprise learning provider. Our investments have been focused on three key areas, content, platform, and go-to-market. Let me touch on a few important accomplishments in each. Over the past year, we invested heavily in new content and consolidated the Skillsoft and Global Knowledge on-demand collections, greatly increasing the breadth of our offering. We also expanded our local language coverage and released innovative new courses in DE&I, customer service, psychological safety, code of conduct, cloud and DevOps, among many others. In Q2, We released our new career journey experiences, which blend self-study and e-learning with instructor-led courses and other capabilities to address skills gaps and critical domains such as cybersecurity and advance the learner from novice to certified expert. We believe this approach provides superior outcomes for the employer and the learner alike and is easy for our customers to deploy at scale. With regard to platform leadership, over the past year, we reached our goal of migrating more than 90% of ARR onto Precipio and dual deployment. We achieved FedRAMP certification, which has enabled us to sell Precipio within the federal government and combined with the completed Workday integration will help us retire our legacy Skillport platform. We launched our skills benchmark offering. and we signed important content partnership agreements with Coursera and Udemy, adding to more than 30 other partners whose content can be accessed through Percipio, along with our customers' custom content to deliver even more comprehensive learning journeys. We believe making Percipio the one-stop learning experience platform is an important differentiator. Our investments in content and platform are paying off by driving higher engagement, which we believe will contribute to higher retention and new sales. At the end of Q2, monthly average users are up 21%, completed courses up 26%, and badges issued are up 16%. We have also made solid progress with our go-to-market transformation, which is now largely complete and sets itself well for Q4. With higher key talent, made investments in new tools and technology, and realigned our sales force to a more strategic coverage model that better enables cross-sell, upsell, and acquiring new business. In Q2, we added more than 150 new logos, including a large Australian multinational, one of India's largest private sector banks, and a large European grocery retailer. In North America, through investment in dedicated state and local government resources, we added several large customers, including city governments, municipal health care providers, and port authorities. We also signed a large auto manufacturer, a global publisher, a Fortune 100 financial services company, and one of the nation's largest and most visible nonprofits. Turning to Codecademy, we've made excellent initial progress with the integration. We acquired the business to strengthen our tech and dev offering with hands-on learning and programming and data science, an area where our enterprise customers are experiencing severe skills gaps. We also acquired a strong brand and community of learners. Every month, millions of people around the globe come to Codecademy to advance their skills. This community is passionate about Codecademy. By leveraging the Codecademy brand, community advocacy within the enterprise, and our large sales force, we believe we will be able to capture a substantial cross-sell opportunity. In our first quarter of ownership, we have integrated the product into Percipio, trained our sales force, and built a healthy pipeline of enterprise opportunity. We've also closed our first sales, including two Fortune 50 retailers. We are in the process of attaching Codecademy to a growing number of Q4 renewals and expect to report material progress at year end. The B2C side of the business continue to grow at a double digit rate, and we believe we are taking share in an environment where competitors are seeing declines. Before I turn the call over to Gary, I'd like to provide some context to our financials and update to our global knowledge business. I'm proud that we delivered five straight quarters of subscription content bookings growth after seven years of decline, despite an increasingly difficult economy. Q2 LTM content bookings was up 9% compared to flat in the year-ago period on a constant currency basis. Excluding Code Academy, it was up 8% from down 2% in the year-ago period. Dollar retention rate on an LTM basis was 98%. up three percentage points year over year. We expect these metrics to finish the year strong based on the strength of our Q4 pipeline and the fact that approximately 50% of our Q4 content subscription forecast is already booked or committed. With that said, I'm acutely aware that our financial results have fallen short of our initial expectations. The world is very different than it was a year ago, and those external changes have had a material impact on global knowledge, which is a transactional business and more sensitive to economic factors. Approximately 75% of the first half bookings decline in global knowledge was due to changes in training programs at two large technology partners. Other contributors are staffing challenges and inside sales, which should improve as recent hires become fully productive. Difficult comparisons due in part to last year's COVID bounce back and the economy. We believe our actions to date have now stabilized the business. Turning to expenses, as we integrate all our businesses into a more cohesive offering, we have been reducing costs and realizing operating synergies across the portfolio. These actions will help our overall cost structure become more efficient, and we believe we will drive greater adjusted EBITDA growth as revenue grows. Moving on to capital allocation. Today, we announced that our board of directors has authorized up to a $30 million share repurchase. We believe the current dislocation in our share price, combined with the strength of our balance sheet and confidence in our outlook and long-term prospects, have elevated repurchasing Skillsoft stock as the best use of capital available to us at this time. In closing, I remain as optimistic as ever in our ability to create a recognized leader in our space. with a high growth, high margin recurring revenue business capable of creating and sustaining a much higher public company valuation. The world is materially different than the one that existed when we announced the formation of the new Skillsoft in October 2020. However, I'm confident in our long-term opportunity and I'm looking forward to seeing our progress more appropriately reflected in our financial results and share price in the coming quarters and years. And with that, I'll turn the call over to Gary.

Thanks, Jeff. Welcome, everyone. I will now begin with a summary of our Q2 results before turning to our thoughts on the remainder of the year. As I describe our results, the prior year results will be presented as if Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on January 31st, 2022. In addition, for comparability, the results that I describe will be on a pro forma basis to include Codecademy as of the close of the acquisition in early April. Additionally, due to the sum total divestiture last month, we will report results for continuing operations excluding sum total for all periods presented. We've added constant currency metrics into our reporting due to the current strength of the dollar and the significant impact it had on our financials in Q2, and that we believe it will continue to have for the remainder of the year. Before I get into the financials, I thought it'd be helpful to just frame Skillsoft excluding sum total. Skillsoft now has nearly 60% of its revenue from the content business, which is primarily subscription-based with a large portion that are multi-year deals. This part of the business is a SaaS-like software business with strong operating leverage and low capital intensity. The seasonality of the business remains largely the same with nearly half of our content bookings coming in Q4. Therefore, looking at the business on a quarterly basis can be difficult. This is why we try to focus on last 12 months' trends as a more useful measure. The remaining 40% of the business is our global knowledge or instructor-led training segment, which is in transactional and lower margin. Over time, we expect the content segment to grow more quickly, which should drive margin growth. Now moving on to the financials. Bookings for the total company for the second quarter were $124 million, down 10% and down 7% on a constant currency basis, which is entirely due to declines in our lower margin transactional business, which we believe has stabilized on a quarterly run rate basis. These declines offset the continued subscription content bookings growth, which is on pace to end the year strong. Content bookings in Q2 were 77 million, up 3% and 5% in constant currency. On an LTM basis, content bookings growth, excluding Codecademy, was 8% constant currency. We have made significant progress in content bookings growth since the time we went public in the year-ago quarter, when LTM content bookings declined 2% constant currency. When including Codecademy on a constant currency basis, we're up 9% over the last 12 months. The content segment now includes Codecademy bookings, which grew 13% constant currency. As Jeff mentioned, we closed our first enterprise deals in Q2 and are encouraged by the early success in building out our pipeline for this product. We would expect to report material progress in bookings in Q4, which is our heaviest renewal period, and when we sign the bulk of cross-sell activity. Bookings for global knowledge in Q2 were 46 million, down 27% and down 21% in constant currency. As Jeff stated, on a constant currency basis, approximately 75% of the first half decline was due to changes in the training programs of two large technology partners. On a positive note, we do not have any other large partner concentration in this business. We also believe we have stabilized the sales effort at GK and expect the productivity of recent sales hires to improve through the back half of the year. Turning to revenue, GAAP revenue was 141 million in the quarter, down 6% and down 3% on a constant currency basis. Adjusted gross revenue in the quarter was down 148 million, down 5% and down 2% on a constant currency basis. The declines in revenue are also entirely due to declines in the global knowledge business as content revenue continues to grow. As a reminder, our outlook is based on adjusted gross revenue. Adjusted revenue for the Skillsoft content segment in Q2 was 99 million, up 3%, and up 5% in constant currency. Adjusted revenue growth for Codecademy, which is included in the content segment, was 20% on a reported and constant currency basis. Q2 adjusted revenue for Global Knowledge was $50 million, down 19% and down 13% in constant currency. The decline was due to lower prior quarter and in-quarter bookings, as these bookings typically convert to revenue within two quarters. Moving on to profitability, Q2 adjusted EBITDA was 33 million, down 2 million, a decrease of 5% compared to last year and up 1% constant currency. Proforma for Codecademy losses in the prior year, Q2 adjusted EBITDA was up 8% and up 15% constant currency. Adjusted EBITDA margin for the quarter was 22%, up approximately 270 basis points from the prior year. As I mentioned on previous calls, when comparing adjusted EBITDA year over year, you need to also consider the increase in public company costs as we move through the first full year as a public company. Our gap net loss from continuing operations was $127 million for the quarter. Our adjusted net income was $15 million for the quarter. We ended the quarter with $43 million in cash versus $76 million at the end of Q1. As previously mentioned, we closed the sum total transaction in mid-August. Net cash proceeds after all fees and other adjustments were approximately $175 million. Our credit agreement required us to use approximately $30 million of these proceeds to pay down debt, which was accomplished shortly after the sale. The remainder of these proceeds may be reinvested in the business, or we are required to use these funds to pay down debt within 12 months of the sale. At quarter end, net leverage was four times after adjusting for this sale. We are revising our outlook due to the following three items. First, the divestiture of sum total has the following impact. Bookings lowered by $127 million, adjusted revenue lowered by $123 million, and adjusted EBITDA lowered by $37 million. The bookings and adjusted revenue impact are a bit higher than the amounts given when the deal was announced, as reseller fees have since been included. Second, the continued strength of the dollar will also have a negative impact to our full-year bookings and our revenue outlook of approximately $15 million and adjusted EBITDA of approximately $4 million. And finally, while we believe global knowledge has reached a point of stabilization and we anticipate continuing sales productivity improvements within global knowledge, we are taking a more cautious view in the second half through the chance of increased economic softness. We believe our actions to date have stabilized the business and we expect second half performance to be approximately in line with Q2 run rate. This will have an impact of approximately $70 million to bookings and adjusted revenue, primarily due to global knowledge. For the total company, after adjusting for the sale of some total and the impact of FX, you arrive at the top end of our outlook range for adjusted EBITDA of $125 million. The $20 million range relates primarily to the anticipated continued softness in the global knowledge business, partially offset by identified cost initiatives. In summary, our revised FY23 outlook ranges on a continuing operations basis are bookings of 580 to 615 million, adjusted revenue of 545 to 580 million, and adjusted EBITDA of 105 to 125 million. And finally, As Jeff mentioned, the board authorized up to a $30 million share repurchase program. We believe this is the best use of capital at this time given the low share price and when taking into account our strong liquidity and cash flow, along with the confidence in our current strategy and expectations for the business. With that, I'll turn it back over to Jeff.

Thanks, Gary. I'm pleased that we have returned Skillsoft's subscription business to high single-digit growth. stabilized the transaction business going into the second half, preserved industry-leading margins, created a world-class tech and dev capability with the acquisition of Codecademy, and strengthened our balance sheet with the sale of SumTotal. With our Salesforce transformation now largely behind us, we are well positioned for Q4 when we historically generate nearly 50% of our subscription bookings, and our confidence in our future is evidenced by our board's share repurchase authorization. I'll now open the call for questions.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Raimo Lencho with Barclays. Please proceed with your question.

Hi, this is Sheldon on for Raimo. Thanks for taking our questions. Can you help us balance the tailwinds for corporate learning with a tight labor market? We had 150 logo ads in the quarter, but of course we have a challenging macro here. You assumed a fundamental headwind embedded in the guidance. Can you help us understand what's underpinning this? Is it customers simply taking a pause, needing more approval layers to get deals done, and also help us understand the level of conservatism in the guidance? Thank you.

Sure. Thanks, Sheldon. The tailwinds that we're seeing are quite significant and haven't changed. All you have to do is pick up the newspaper and you read about skills gaps, the great resignation, a tight labor market. All of this is making training and learning an imperative inside the enterprise. And we operate in a very unique place in that. We operate at that place where both the learner and the enterprise come together with common needs that are focused on growth. Growing the company, growing their careers, and that's where we win. With regard to headwinds, those headwinds are primarily impacting the global knowledge business, which is transactional in nature. So unlike the Skillsoft business, which is subscription and deeply embedded in the enterprise, the global knowledge training, while important and critical, also can be delayed from one quarter to the next in a way that the other training offerings that we deliver cannot be.

Got it. And a quick follow-up, if I may. So adjusted EBITDA from continuing operations was pretty strong in the quarter. Can you help us think about the cash flow generation piece and how we should think about the relationship between adjusted EBITDA and cash flow going forward? Thanks.

Sure. This is Gary. It's a little noisy in the first part of the year just because of the acquisitions, et cetera. But what I would say is we're in this sort of cash burns, like cash burn period right now. And as we enter the fall and early winter is when we start generating a lot of cash again. And then we generate cash again. all the way through about April or May. And so it's hard to say in the first half because we have an A going on, but the second half, it'll be in the, between now and April, I'm gonna say 30, 40 million as an estimate. It's just that's a big cash flow. Be very heavily dependent on bookings and Q4, et cetera.

Makes sense, thank you. Thanks, Shaleen.

Thanks, Shaleen.

Our next question comes from the line of Ken Wong with Oppenheimer. Please proceed with your question.

Great. Fantastic. Just wanted to kind of dig in on the macro assumption part of the last question. But, you know, as we think about the guide, I guess, are you embedding a worsening macro? Are you embedding kind of softer demand of specific products, you know, kind of global knowledge in particular? How should we think about what's been baked into the outlook?

Well, I'll start and then hand it to Gary. I think generally baked into our business is a belief that we're lined up to deliver a strong fourth quarter in our subscription business. Fourth quarter is when we book nearly 50 percent of our subscription business. And that's also where we see the opportunity to upsell and to attach Codecademy and and and our coaching business as well to the renewals. So Q4 is critical for us and we see that shaping up nicely. And then on the global knowledge side of the business, we've baked in a view that we've stabilized that, that the worst is behind us and that we now have our handle on the business. We've staffed up the inside sales organization. Those sales people are becoming increasingly productive. And the changes that we've seen in the Subsidy programs at our two largest partners really also are largely behind us. So we feel better about the second half.

Sure, I can add a little bit to that, Ken. I mean, when you think about it, two businesses that are very different in the fact that in the last 12 months, the content side of the business on a constant currency basis has grown 9%. It's grown all these most recent quarters. And the issue we had with GK was Q2 was a little bit lower than we had anticipated. And then we're stabilizing from there. And that's where you see it on the guidance is that the biggest hit we're taking in the guidance is from that. Things may turn more quickly than we anticipated, but with the macroeconomic environment, we just think it's prudent to assume it's fairly flat for the rest of the year.

And just one final thought, we feel really good about how Codecademy is shaping up. Now, keep in mind, whenever we sell something to our enterprise customer base, there's typically a six to 12 month sales cycle, but we're seeing really exciting early traction with that business. We've closed a few large deals much earlier than we expected, and we feel good about how Q4 is shaping up for that part of our business as well.

God, I appreciate the code. And then maybe if I could on the content DRR, you know, flipped a little bit from Q1, but does mirror what we saw, you know, kind of the orders prior. I guess, what's the right way to think about that metric directionally?

The right way to think about the DRR metric is, first of all, like our bookings growth in general, it needs to be looked at as an annual business, right? Our first few quarters of the year, three quarters are small. We're heavily weighted towards the fifth quarter. So small wins or losses or changes in mix can impact the growth metrics in the first three quarters of the year, similarly impact the DRR metrics. But the way you should look at it is DRR is up three percentage points on a trailing 12-month basis. And we have opportunity in front of us to improve it as we look at the quarters and years ahead.

Got it. And then last thing for me, I was just thinking about kind of the spend dynamic going forward. Looks like you guys were able to moderate some of this top line downdraft this quarter. Should conditions soften even more? Do you think there's still some leverage you guys can pull there?

yeah ken it's gary um so we obviously we put a lot of work into this we we saw um you know a few months ago that gk was not going in the direction we wanted so we started pulling you know triggers and levers at that point um and we're going to continue with that um and as we go into the second half of the year we're looking at everything uh we even you know brought in an outside firm to assist and uh i i don't know if we'd go to another level i think it's all pretty much baked into our guidance

Okay, perfect. Thanks a lot, guys. Thank you.

Our next question comes from the line of Raj Sharma with B Reilly. Please proceed with your question.

Hello. Thank you for taking my question. Could we please dig into the guidance and the decline? There's a substantial reduction in bookings guidance. I know you've said bookings for the digital platform are looking good. Could you break that down between Precipio and global knowledge? How much of the 70 million decline in revenues is because of global knowledge?

Raj, the vast majority, I don't have an very small numbers.

Okay. Thank you. And then was the EBITDA impact for some total worse than you had originally listed out when the deal was done? Has that gotten worse?

No. We adjusted it by the same amount we mentioned on the

Right, it was $37 million before allocations, corporate allocations. So now, you know, it was $25 after allocations. I was just wondering and wanted some clarity on that. And Code Academy, right, sorry, go ahead.

Yeah, no, just on that point, I mean, we just closed the deal. So it's going to take us some time to work through that. And we have a transition services agreement through the end of the year. So we'll get some cash inbound to assist in the work we're doing to help them for the next six months. And that might trail on a little longer. So that's all in the works.

Right. And then there's a sizable impairment charge. Is that all global knowledge related?

That's 100% global knowledge. Right.

And how do you expect that business? Are you still kind of seeing it recover at some point or has the business materially disintegrated since you purchased it?

So what we see now is a business that we believe has stabilized for the current economic conditions that we're seeing. Longer term, our aspiration is to move much of that capability into our subscription offerings and use that to fuel growth in our subscription business. That's not a near-term solution. Near-term, this is about execution on the transactional side of the business. But longer term, we see it as a contributor to subscription growth.

Got it. So, right. and then the code academy business uh mentioned was doing really well you know is it still um what is the expected growth in the code academy business this year that's built into this guidance we haven't broken your bases we haven't i'll let gary share what he can on that one but what i will tell you is it's a double digit growth business on the consumer side and on the

B2B side, we're building pipeline, and we expect that to be a meaningful contributor in the fourth quarter. Gary, any additional specificity?

Yeah, it was 13% in the quarter on bookings, 20% in the quarter on revenue, and we would expect that or slightly better for the rest of the year.

Got it. And then you'd also mentioned earlier when you'd done the acquisition that there was a 25 million EBITDA loss on Code Academy that you were expecting to turn around to a breakeven in 12 months or so. Correct me if I'm wrong on that. Is that still the understanding? You're able to cut the expenses to take it to breakeven?

So it was 20 million when we acquired it was the burn last year. And then this year we were trying to have that and then we were trying to get to break even at the end of the next year. So 20, 10, and zero. Got it.

Got it. All right, great. Thanks. Thank you for answering my questions. I'll take it off. Thanks. Thanks, Rush.

Our next question comes from the line of Lucky Schreiner with DA Davidson. Please proceed with your question.

Hi, guys. Thanks for taking the question. Just one for me. In terms of Codecademy, can you maybe break out how much of the strength in the quarter was from your cross-sell into the prosumer versus just regular Codecademy growth? And do you still feel extremely confident on the ability to penetrate at least 1% of those 20 million prosumers?

Thanks. So the growth that you see this year is almost entirely on the consumer side of of Codecademy. The growth on the B2B side was quite strong, but off a small base. And so we're still early in that journey, and we still feel very good about our ability to, over multiple years, penetrate vastly more than 1% of our base. And an early indication is that that opportunity is very much intact.

And as Jeff mentioned in his

other rules happen and that's when your cross-selling is happening versus q2 thank you as a reminder if you would like to ask a question please press star 1 on your telephone keypad our next question comes from the line of arvind ramnani with piper sandler please proceed with your question

Hi, thanks for taking my question. I just wanted to see just with some of the softness that you're seeing, have you all considered kind of flexing on pricing versus volumes? Or has that come up with conversations where clients are thinking what we can keep volumes healthy? but they're looking for you all to flex on pricing and have you all had that discussion internally to give up some pricing in exchange for volumes?

So, thank you, Arvid. Pricing is always a lever in a business like this. Sometimes that means increasing pricing. Sometimes it means reducing pricing. You didn't ask about the subscription business, but I will tell you that we do see pricing opportunity on the subscription business. We have increased our prices, but that takes a while to flow through into the financial statements because, first of all, most of our renewals are in the fourth quarter, and then that revenue is recognized ratably, and then only a portion of our subscription business comes up for renewal in a given year. On the global knowledge side of the business, pricing has been pretty stable. We haven't seen the price uplift opportunity, but we're always testing alternatives and various promotions on a market by market, product by product status.

Perfect. That's helpful. And then, you know, in terms of for us who are looking at the business externally, you know, are there some sort of macro signs we should sort of look for when, you know, sort of things may come back or is it just We've got to watch it, look at it quarter by quarter.

I would say on the global knowledge business, quarter by quarter, and I would expect that over the medium to long term, as I said, we're going to move more of that capability into our subscription offerings. Near term, it's about, at this point, about executing our way through the market that we're in. And as I indicated on the subscription side where we're seeing healthy growth, we're seeing good tailwinds and we haven't seen significant economic impact other than what's reflected in the foreign exchange rate.

Perfect. Thanks for taking my questions.

Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I will now turn the call back over to Jeff Tarr for closing remarks.

Thanks very much. Thank you very much for participating in our call. We certainly look forward to continuing the conversation with you and updating you next quarter.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation and have a wonderful day.