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spk10: Good morning, everyone. My name is Chris and I will be your conference operator today. At this time, I'd like to welcome everyone to the SolarWinds third quarter 2021 earnings call. 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 star, then the number one on your telephone keypad. And if you would like to withdraw your question, please press star one again. Thank you. Dave Hafner, Head of Investor Relations. You may begin.
spk06: Thank you, Chris. Good morning, everyone, and welcome to SolarWinds' third quarter 2021 earnings call. With me today are Sataka Ramakrishna, our President and CEO, and Bart Kalzu, our Executive Vice President and CFO. As Chris mentioned, following our prepared remarks, we'll have a brief question and answer session. This call is also being simultaneously webcast on our Investor Relations website at investors.solarwinds.com. On our Investor Relations website, you can also find our earnings press release, and a summary slide deck, which is intended to supplement our prepared remarks during today's call. Please remember that certain statements made during this call are forward-looking statements, including those concerning our financial outlook, the impact of the cyber incident on our business, our market opportunities, the impact of the global economic environment on our business, and the spinoff for the enabled business. These statements are based on currently available information and assumptions, and we undertake no duty to update this information except as required by law. These statements are also subject to a number of risks and uncertainties, including the numerous risks related to the cyber incident and the recently completed spinoff of the Enable business. Additional information concerning these statements and the risks and uncertainties associated with them is highlighted in today's earnings release and in our filings with the SEC. Copies are available from the SEC or on our investor relations website. We completed a spinoff of the Enable business on July 19th 2021, and accordingly have included the results of the Enable business as discontinued operations for the current and historical periods. Therefore, the financial results presented on this call reflect SolarWinds as a standalone business and do not include any contribution from the Enable business. Furthermore, we will discuss various non-GAAP financial measures on today's call. Unless otherwise specified, when we refer to the financial measures, we will be referring to the non-GAAP financial measures. A reconciliation of the differences between GAAP and non-GAAP financial measures discussed on today's call are available in our earnings press release and summary slide deck on the investor relations page of our website. We note also that because there was no impact of purchase accounting on revenue in the third quarter, our non-GAAP total revenue is equivalent to our GAAP total revenue in this period. Going forward, we will begin to present certain financial measures on a GAAP basis only. With that, I'll now turn the call over to the docker. Thank you, Dave.
spk02: Good morning, everyone, and thank you for joining us today. I hope you're doing well and staying safe. I want to start by first thanking our employees, customers, partners, and our shareholders for their ongoing commitment to SolarWinds. As many of you know, we will hold our annual Analyst Day meeting on November 10, 2021. During this virtual event, we look forward to sharing our vision for SolarWinds and how we plan to retain, evolve, and grow to build an even more successful business. Given the proximity of this call to the Analyst Day event, our comments today will be a bit shorter than normal. As we move our discussion of financial and operational highlights for Q3, I'd describe our performance as continued progress. I attribute the progress to the dedication of our salarians For the third quarter, we delivered revenue above the high end of the range of the outlook we provided, with total revenue ending the quarter at $181.3 million. Third quarter adjusted EBITDA was $75.3 million, representing an adjusted EBITDA margin of 42%, exceeding the high end of our outlook. As I outlined in the Q4 2020 earnings call, customer retention is a top priority in 2021, and we continue to make great progress towards this goal in Q3. Our Q3 maintenance renewal rate of 88% was above the low to mid-80% renewal rate we noted we expected in 2021. Customer retention remains a key priority and with our growing portfolio of offerings, we believe we have a great opportunity to continue to grow our LTV and net retention rates with our large customer base. While we continue to offer flexible pricing purchasing options to our customers, we're increasing our focus on subscription bookings, and we expect to continue to increase the mix of subscriptions in the upcoming quarters and years. In Q3, Our subscription revenue grew at a 20% year-over-year rate, with subscription ARR growing 23% year-over-year. Bart will provide more color on how this part of our business will trend in Q4 and beyond, given the skew that the Century One acquisition timing creates. We completed the successful spin-off of the Enable business in July, and that has enabled us to plan and execute our standalone strategy, the details of which we look forward to sharing with you at Analyst Day. Our global system integrator and enterprise motions are resulting in larger subscription rates. Noteworthy here is that customers are investing in our entire solutions offering and taking advantage of our simplified packaging and pricing. These solutions are the underpinnings of our upcoming solo which we look forward to sharing more details about at our analyst-based presentation. We will also highlight our views on our observability solutions' potential to be a growth driver in the coming years through a comprehensive and differentiated approach to observability compared to the alternatives. Our product teams made significant progress in Q3, delivering new elements within our solutions that are designed to drive additional value to our customers based on their evolving needs, including updates to our database and ITSM solutions, as well as Secure by Design initiatives that impact our entire product portfolio. We extended the breadth of our database monitoring portfolio's platform support, which now includes Google Cloud extensions and added enhanced integrations, including with Microsoft Teams, to our ITSM solutions. Increasingly, our application, database, and ITSM offerings will become integral elements of SolarWinds' observability as we support customers of all sizes with their IT, Dev, and SecOps requirements. We believe that this will help differentiate our offerings from those of the other vendors. we are expanding our global partner engagements with events in various geographies. Our global partners, including GSIs, cloud service providers, and MSPs, are critical to expanding our GTM reach and to jointly deliver customer success. Differentiated offerings with rich enablement, incentives, and a spirit of mutual accountability are the underpinnings of our partner strategy. In September, we celebrated the seventh annual IT Professionals Day holiday, which was originally established by SolarWinds in 2015. IT Pro Day recognizes and celebrates all IT professionals and the contributions they make to their business every day. As part of the celebration, we released findings from our IT Pro Day 2021 survey, Bring It On, which revealed ITPRO's confidence and pride in their role. We were also able to recognize four IT professionals nominated by their peers in our second annual ITPRO Day Awards. We believe that IT professionals showed true grit under challenging conditions this past year and deserve recognition and appreciation for their effort, commitment, and resilience We continue to attract excellent talent across all functions of our organization, and we are selectively adding footprint in international regions, including most recently in South Korea and parts of our EMEA region. With that, I'll turn it over to Bhatt to provide more color on our financial performance and outlook.
spk09: Thanks, Hidakar. As most of you know, our spin of the Enable business happened earlier this quarter and was effective on July 19th. Therefore, their results are reflected as discontinued operations in our third quarter financial results. Also, a quick reminder that the guidance for the third quarter that I provided in August did not include any impact from Enable as the spin had been completed at that time. Once again, our public filings will present Enable as discontinued operations in the third quarter as well as in prior periods for better comparability. That execution led to another quarter of better than expected financial results for the third quarter, with total revenue ending at $181.3 million, above the high end of our total revenue outlook of $176 to $180 million. For the third quarter of 2021, there was no impact of purchase accounting on revenue, so our non-GAAP total revenue is equivalent to our GAAP total revenue. Total license and maintenance revenue was $149 million in the third quarter, which is a decrease of 6% from the prior year period. Maintenance revenue was $120 million in the third quarter, which is up slightly from the prior year. Our maintenance revenue has been impacted by a combination of year-over-year declines in license sales for the past eight quarters and a reduction in our renewal rate in 2021. The trend of lower license sales intensified with the COVID-19 pandemic in the first quarter of 2020, and because of the introduction of subscriptions of our license products in Q2 of 2020, as well as the sunburst incident in December of 2020, as we focus more of our efforts on longer-term customer success and retention rather than maximizing near-term sales. Although maintenance renewal rates have remained lower than historical levels since sunburst, we are encouraged by the fact that they have improved throughout the year. Our expectation at the start of the year was that maintenance renewal rates would be in the low to mid-80s. On a trailing 12-month basis, our maintenance renewal rate is 89% quarter renewal rate for the third quarter, which currently stands at approximately 88%, which again is above our expectations at the start of the year. For the third quarter, license revenue was $29.2 million, which represents a decline of approximately 26% as compared to the third quarter of 2020. On-premises The remainder of the decline in license revenue reflects the combination of the impact of the cyber incident and the continuing impact of the COVID-19 pandemic. That said, our new license sales performance with commercial customers has improved sequentially each quarter during the year. And while we have continued to sell to customers in the federal government and have had some key wins post-Sumverse, new sales to customers in the federal space overall has been a challenge this year. primary focus has been on working with customers and maintaining the security and stability of their environments. Moving to our subscription revenue, third quarter subscription revenue was $32.3 million, up 20% year over year. This increase is due to the additional subscription revenue from Century One products, as well as increased sales of our on-premises subscriptions as part of our early efforts to shift more of our business to subscription. Total ARR reached approximately $624 million reflecting year-over-year growth of 9%, and is up slightly from our NVQ2-2021 ARR balance of $621 million, which is the corrected amount included in our 8K filing from earlier this month. The growth in ARR is primarily due to the incremental revenue from Century 1, which we acquired late last year, and our efforts on sales of our products at on-premises subscriptions. Our subscription ARR of $130.2 million increased 23% year-over-year, and 9% sequentially from the second quarter. We finished the third quarter of 2021 with 786 customers that have spent more than $100,000 with us in the last 12 months, which is a 4% improvement over the previous year. We are continuing our efforts to build larger relationships with our enterprise customers, which we will talk more about at our upcoming analyst day next month. We delivered a solid quarter of non-GAAP profitability, third quarter adjusted EBITDA with $75.3 million, representing an adjusted EBITDA margin of 42%, exceeding the high end of the outlook for the third quarter, despite continuing to invest in our business. Excluded from adjusted EBITDA are one-time costs of approximately $2.9 million in cyber-related remediation, containment, investigation, and professional fees, net of insurance proceeds. I do want to clarify that these cyber-related costs not included in adjusted EBITDA are one-time and non-recurring. They are separate and distinct from our Secure by Design initiatives, which are aimed at enhancing our IT security and supply chain process. Costs related to our Secure by Design initiatives are and will remain part of our recurring cost structure as we go forward. We expect one-time cyber-related costs to fluctuate in future quarters, but to be less in future periods. These one-time cyber costs are, however, difficult to predict. They not only include the significant cost of the forensic investigation efforts we substantially completed in May, potential judgments or fines related and as well as related professional fees. We expect our insurance coverage to offset a portion of these expenses and will be presented net of insurance proceeds. Net leverage at September 30 was approximately 3.8 times our pro forma trailing 12 months adjusted off. We retained the full amount of the $1.9 billion in term debt that the company had pre-spent. During the third quarter, we completed a two-for-one which was paid in August. In addition, Enable repaid $325 million of intercompany debt. As a result of this repayment, our cash balance is $709 million at the end of the third quarter, bringing our net debt to approximately $1.2 billion. Our plan is to keep that cash on our balance sheet for the foreseeable future. We believe we have favorable terms on our debt, so we intend to maintain flexibility as it relates to our cash on balance. We are providing guidance for the fourth quarter of 2021 for total revenue, adjusted EBITDA, and earnings per share. And we will tell you what that means for the full year. For the fourth quarter of 2021, we expect total revenue to be in the range of $180 to $184 million, representing year over year decline Non-GAAP fully diluted earnings per share is projected to be 25 to 26 cents per share, assuming an estimated 160.7 million fully diluted shares outstanding, which reflects the reverse stock split completed on July 30th. And finally, our outlook for the fourth quarter assumes a non-GAAP tax rate of 22%, and we expect to pay approximately $8 million in cash taxes during the fourth quarter of 2021. representing a year-over-year decline of negative one to flat with prior year. Adjusted EBITDA for the full year is expected to be approximately $297 to $299 million, which implies an approximately 42% adjusted EBITDA margin for the year. Non-GAAP fully diluted earnings per share is projected to be assuming an estimated $116.5 million fully diluted shares outstanding. As you think about the components of revenue in the fourth quarter, it is important to remember that we acquired Century One last year in late October. We expect our subscription revenue growth in the fourth quarter to be in the high single digits. However, looking ahead to 2022 and beyond, we intend to continue to expand our subscription offerings. while making new subscription sales a much higher priority with our sales team. Based on what we've seen year-to-date, we expect that maintenance renewal rates will be in the high 80s for the fourth quarter and anticipate continued progress throughout 2022. In the near term, we expect that maintenance revenue will continue to be relatively flat to slightly down compared to prior year periods. And as we think about EBITDA margins for the rest of the year and into 2022, into the margins in the short term. We anticipate accelerating margins again in the future, but believe that these investments are now necessary. We will talk more about these initiatives at our Analyst Day on November 10th. With that, I will turn the call back over to Siddhartha for his closing remarks. Thank you, Bob.
spk02: Our team's competence, commitment, and attitude continues to be on display as we deliver a strong Q3 performance, exceeding our outlook in both total revenue and adjusted EBITDA. We are executing our mission to help customers accelerate their business transformation via simple, powerful, and secure solutions for multi-cloud environments. In Q3, we introduced an early adopter program of SolarWinds observability to select customers. These customers, currently under maintenance, have the opportunity to make an early move drive to our offerings, and begin a journey to multi-cloud with SolarWinds as a strategic partner. By eliminating customer complexity and meeting them where they currently are, we believe we are uniquely positioned to protect their investments while increasing our relevance to them over time. We expect this motion to become a mainstream activity in our upcoming quarters and a significant contributor to our subscription and ARR. In Q4, we continue to execute on the initiatives that I outlined during our Q4 2020 earnings call, focusing on customer retention and demonstrating ongoing progress in subscription, license, and maintenance growth across all geographies and sectors. I conclude by again thanking our employees, partners, and customers for their commitment to Sullivan. We hope to see you all on November 10th. both and I will now be happy to address your questions.
spk10: Thank you. As a reminder, if you'd like to ask a question, please press star then 1 on your telephone keypad. Our first question is from Matt Hedberg with RBC Capital Markets. Your line is open.
spk03: Hi, this is Anisha from Matt Hedberg. Thanks for taking my question. Maybe to start with, could you talk about How Q4 is looking from a new bookings perspective, given Q4 is your biggest new bookings quarter?
spk09: So, yeah, obviously the new bookings for the fourth quarter is factored into the range that I provided from a total revenue perspective. It also, as you said, is our biggest quarter. We talked about commercial bookings trending positively through the year.
spk03: Got it. And my second question, given it has been over 10 months since the breach, if you could provide us an update on how the conversations with customers have evolved from Q2 to Q3. Maybe give us an update on the renewal trends. You have noted an uptick in the renewal rate to 88%, which is great. I know on the last call you've noted in the past that customers have taken longer to buy. Have you seen that ease in Q3?
spk02: So let me address that first. First of all, on the renewal rate, as you highlighted, we exceeded the range that we previously provided of low to mid-80s by delivering an 88% renewal rate. trending higher throughout the year. What we anticipate is that that trend will continue as we go into Q4 and into 2022. Now, to your previous question as to how our customer conversation is going, I would classify it as in Q1 and Q2, most of the customer conversations were related to the incident itself in terms of what happened, how did it happen, and so on. And these days, the conversations are more about our learnings from the incident, the improvements that we have made in Secure by Design, and how we can apply those improvements to customer environments, because many of our customers are also producers of software, and they obviously want to deliver secure software as well. So in that regard, we are becoming more strategic to our customers rather than simply be a technology supplier.
spk03: Bye. Thank you.
spk10: The next question is from Sterling Auti with JPMorgan. Your line is open. Yeah, thanks.
spk05: Hi, guys. So maybe just following on that a little bit, I'm just curious, in terms of new logo traction in the quarter in the enterprise, you mentioned what was happening in government, but what specifically did you see in terms of new logos on the enterprise side? And is there any particular product area that particularly is resonating?
spk02: I'll take a crack at this, Sterling, and if you have a follow-on question, please ask as well. We are seeing traction all across the portfolio, so starting with our Orion platform, including through some of our partners, such as the GSIs that I mentioned in my prepared remarks, Sterling. Additionally, database monitoring has been part of our portfolio. monitoring which is also seeing very good traction both with call it our velocity motion as well as our enterprise motion and then more recently we have started packaging and integrating these solutions in a better together fashion and what I noticed is that some of the enterprise So broadly speaking, all across, I don't need one concentrated part of the portfolio.
spk09: Yeah, and certainly from a customer account standpoint, the trend in the third quarter is consistent with what we've seen in every other quarter as it's trended over the last couple of years. And we've had our typical spike in the third quarter.
spk05: All right, that makes sense. And then one follow-up. Go ahead, Bart.
spk09: Well, you know, I gave the number in the script at 786 customers. You know, that's the number that we focused on in the past, and that turned it up as well this quarter.
spk05: That makes sense. That makes sense. One other area is you mentioned observability a couple of times. Is the observability kind of suite or package or bundle really going to be focused for, you know, behind the firewall applications, in the cloud, hybrid, what's going to be kind of the focal area that you're really trying to zero in on?
spk02: Sterling, I'll address that. It will be a combination. Our trajectory is to go towards multi-cloud. That obviously includes hybrid in our context. So it will be across the board, and but meeting them where they are today and extending them into the cloud. While some customers are, let's call it, completely cloud-native, and that's fine by us, many of our customers rely on hybrid environments, and we are able to now provide an effective bridge, so to speak, for them. That's been the topic of our conversations as it relates to the early adopter program that I mentioned. We are seriously in early days on that,
spk01: and listening.
spk10: Sounds good. Thank you. The next question is from Sanjit Singh with Morgan Stanley. Your line is open.
spk00: Thank you for taking the question. I had a question more on kind of the shape of the revenue curve, what some of the factors have influenced that growth, and how should we think about that going forward? And that's specifically related to a couple of factors, but I was hoping you could comment on. One, What has been the impact on revenue growth from the shift to subscription? If you could just walk through the unit economics and the breakeven timelines for a deal that's driven by subscription versus a deal that's coming in through license and maintenance. That's number one. Two, the impact of COVID. And three, the impact of the breach. How are those trend lines shaping across those three metrics to inform our view of growth going forward?
spk09: So yeah, Sanjeev, to answer the first question, the shift in subscription mix for us was an 11% headwind to our total revenue number for the quarter, to licensed revenue in particular there. And then your question about how much of it is related to COVID-19 versus the cyber incident, that's a little harder to quantify. What I would tell you is I think we're getting the pandemic We're obviously seeing less and less as we get further away from last December, but the trend, you know, has been, you know, has been improving.
spk00: Understood. And the last question, and it goes sort of back to growth, but this time just – I'm sorry, Dr. – Yeah, I just wanted to clarify.
spk02: I just want to remind everybody that starting, let's call it, middle of December all the way through to end of Q1,
spk00: Understood, and very well noted. And then the next question I have is around subscription growth and ARR. So the ARR growth has been hovering in the 20% range for subscription, and then for 4Q, you're sort of pointing us to 9% growth. I know there's some inorganic contribution, but I was wondering if you could sort of draw that or provide that bridge for us on why subscription growth and growth would decelerate to the extent that it has given the 20% subscription ARR growth that we've seen over the last couple of quarters?
spk09: Yeah, the subscription ARR growth, you know, it obviously takes what our ending run rate is and annualizes that number tangent. And so obviously the subscription revenue that we picked up from century one, we get a bigger impact of that when you annualize that number. You'll see, that's why I guided for the fourth quarter, that you'll see the fourth quarter because we are coming up on the anniversary of the Century One deal.
spk01: So subscription revenue growth in the fourth quarter will be in the high single digits. Understood. I appreciate it. Thank you, Mark. Our next question is from Rob Oliver with Baird.
spk10: Your line is open.
spk07: Great. Hi, guys. Good morning. Thank you for taking my questions. Bart, in your comments, you talked about some of the challenges in new sales to Fed, and I think that makes absolute sense. But just curious on Fed retention and how you guys felt in the quarter relative to some of those Fed renewals in the fiscal year end. I know, Sudhakar, you had mentioned customer retention was really number one focus for you guys through this period, and you've done a really nice job, I think, kind of managing a a really unprecedented atmosphere, but just curious relative to U.S. Fed in particular, did you see the churn out of U.S. Fed? Were there agencies that walked away? Just how do you characterize that opportunity?
spk02: I'll take a crack at it and Bart will add to it. First of all, as you can imagine, if you were to look at a The Fed customers, the arc is a little longer than the commercial customers that you see in the new license sales as well. That being said, on an overall blended rate of 88% renewal rate, if I were to break it down simply as Fed, it still turned out to be over 80%. That's not a segment that we normally break it out, but if you put that in context, that is a very good result even in a sector that had the longest arc. recovery. So I'm encouraged by that. And as I mentioned, we have a super dedicated Fed team and our customers have also been very supportive of us, including in the Fed sector.
spk07: Got it. Okay. That's very helpful. And then just one general question. I know we're going to get a lot of detail at the analyst event, but there's been talk about observability and DevOps and Historically, you guys have had a really good reputation with those IT professionals. Is there any thought about revamping the developer and IT pro focus? In particular, I'm thinking about the community that you guys historically had. It was pretty strong. It seems, you know, it's whack. It just seems activity levels there have slackened a bit. Just curious if that's a part of the strategy going forward. Thanks, guys.
spk02: Most definitely. So the community has always been, pros have been the foundation of that. I would say that that will continue to be the case and build on it. But when I mentioned DevOps and SecOps, it's a recognition that the lines are sometimes blurred across those and their needs can be a little different and we need to listen to every one of those communities. And so you will notice that our crack community will also start reflecting that strategy as we move forward into 2022 and beyond.
spk01: Great. Thanks again, guys.
spk10: The next question is from Eric Suppager with JMP Securities. Your line is open.
spk11: Yeah, thanks for taking the question. I just want to make sure I heard correctly. The renewal rate in the Fed sector is still north of 80%. Is that correct? That is correct.
spk01: Yeah, that is correct.
spk11: Okay. And then... The license revenue declined about 26%. Do you think that's going to remain in that kind of decline range and maybe the 20% to 30% range as you continue to shift towards subscription? Is that what we can expect going forward?
spk09: No. I mean, Eric, as you start to fill out your models, obviously, we expect in our license revenue, and you won't see this same kind of year-over-year decline as we start the anniversary, the Sunburst incident. So you should start to see some improvement there as it relates to our license sales. And the impact on subscription, you know, at this point, you know, like I said, it's an 11% headwind. really more though in the second half when the observability products are more prevalent online.
spk01: Okay, very good. Thank you.
spk10: The next question is from Kurt Matern with Evercore ISI. Your line is open.
spk08: Yeah, thanks very much for taking the question. I guess to start off, so Dr. Newton, you'll probably talk about this a little bit at the analyst day, but Does the shift to selling more subscription change the go-to-market model for you all in a material way? Is it just more of the incentives have to be shifted around? I'm just curious if sort of the structure of the sales model has had to be tweaked to sort of sell something that's a more sort of ongoing subscription versus more of a traditional perpetual license.
spk02: I classify it more as sales compensation models and sales enablements practices will evolve and change, not so much the sales structure per se. The one area that we will look at it from a programmatic standpoint is how we engage with partners and the partner incentives and the partner motivations to do that.
spk08: That's helpful. Bart, on the maintenance renewal side, when you lose a customer these days, are they moving off the technology? Have they just suspended maintenance? I was just kind of curious if there's any opportunity to sort of have some of the maintenance that you've lost, you know, reattached over a period of time if they're just sort of running SolarWinds, you know, without maintenance attached to it, or is it more of a decision on their part to move technically to another vendor potentially?
spk02: Yeah, so I'll address that. Go ahead. So there have been cases of, let's say, customers who may have responded, let's say, to the fact that we had that incident by trying to go in different directions, and some of them have actually come back to us even after possibly evaluating alternate solutions. On a programmatic basis, our customer retention team, going back to that being our number one priority in Q4, is expressly going back to some of those customers and figuring out ways to call and bring them back online. either to call it reestablishment of maintenance or to call it re-upping them through the entire portfolio. So that is the motion that we've started, and I believe that we will have some traction around that. We haven't fully characterized it.
spk08: Okay. And then just last one for me. Is there any real change in – say, the sales trajectory or maintenance renewal rates, if you look at it on a geographic basis, meaning was the U.S. kind of hit harder than maybe EMEA and AsiaPAC, or is it pretty similar across the board when you think about sort of just, you know, bookings momentum, renewal rates, et cetera?
spk09: Yeah, I mean... side was a little lower, but not meaningful, to be honest with you, Kirk. We were very encouraged by the fact that we managed to get renewal rates up to 88% for the year, obviously well above what we projected at the start of the year, and obviously very pleased with the performance of the Fed team as well to get the renewal rates with our federal customers above 80% as well.
spk08: Sounds good. Thanks for taking the questions.
spk10: Our next question is from Eric Seppager with JMP Securities. Your line is open.
spk11: Yeah, thanks. Just curious, have the supply chain issues been a factor for either you or for any of your customers, either in the build-out of your cloud capabilities or in terms of customers getting projects underway?
spk02: Please ask me a follow-up if I don't answer the question to the point that you're raising. So I'm trying my best to make sure that I address the intent of what you said. If your question is that whether the supply chain
spk11: Okay, that's what I was asking, is the broader supply chain, if that's made any difference to you, but it has not. Okay.
spk02: I mean, you know, we are entirely selling software, and many of our customers either deploy it in cloud infrastructure or virtual infrastructure, so they are not even dependent on physical parts for the most part.
spk01: Very good. Thank you.
spk10: We have no further questions at this time. I'll turn the call back to the presenters.
spk06: Okay, thanks, Chris, and thanks to everybody who tuned in today. That concludes our third quarter earnings call. Have a good day.
spk10: Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.
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