Open Text Corporation
Q2 2016 Earnings Call Transcript

Published: 10 Feb 2016

[Operator:]

Thank you for standing by. This is the conference operator. Welcome to the Open Text Corporation Second Quarter 2016 Financial Results Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Greg Secord, Vice President, Investor Relations. Please go ahead.

[Greg Secord:]

Thank you Brandon, and good afternoon, everyone. I'd like to welcome you to today's call. With me is Open Text's CEO and CTO, Mark J. Barrenechea; as well as our Chief Financial Officer, John Doolittle. Welcoming to the call as well our new President, Steve Murphy. As with our previous calls, we'll read prepared remarks followed by a question-and-answer session. The call will last approximately one hour with a replay available shortly thereafter. I'd like to take a moment and direct investors to the Investor Relations section of our website where we posted two PowerPoints that will be referred to during this call. The first is our quarterly supplemental update on the financial results; and the second PowerPoint is our annual strategic overview presentation from July, outlining our leadership positioning in the EIM marketplace with supporting stats outlining both our historical performance and cloud transition initiatives. I encourage all of our investors to download both presentations. As with previous quarters, we've updated a summary table highlighting Open Text's historical trends and financial metrics. Both PowerPoints and our trended financial spreadsheets are downloadable from the front page of the IR section of our website. Open Text will be hosting an Investor Day in New York on Thursday May 12. Details and official agenda will be posted on the IR section of our website in the coming weeks. If you're interested in attending or want to find out more information, please contact our Investor Relations team directly. And with that, I'll proceed to the reading of our Safe Harbor statement. Please note that during the course of this conference call, we may make statements relating to future performance of Open Text that contain forward-looking information. While these forward-looking statements represent our current judgment, actual results could differ materially from a conclusion, forecast or projection in the forward-looking statements made today. Certain material factors and assumptions were applied in drawing any such conclusion while making a forecast or projection, as reflected in the forward information. Additional information about the material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion while making a forecast or projection as reflected in the forward-looking information, as well as risk factors that may project the future performance results of Open Text are contained in Open Text's Forms 10-K and 10-Q, as well as in our press release that was distributed earlier this afternoon, each of which may be found on our website. We undertake no obligation to update these forward-looking statements unless required to do so by law. In addition to the conference call will include a discussion of certain non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to their most directly comparable GAAP measures have been included in today's press release, which may be found on our website. And with that, I'll hand the call over to John.

[John Marshall Doolittle:]

Okay Greg. Thank you very much. Good afternoon, everyone. Welcome to the call. Let me go through the numbers, and my references will all be in millions of U.S. dollars unless I indicate otherwise. I'll start with total revenue. For the quarter it was $465 million, down 1%, compared to $468 million for the same period last year, and up 6% on a constant currency basis. Year-to-date total revenue was $900 million, down 2%, compared to $922 million for the same period last year, and up 5% on a constant currency basis. Recurring revenue for the quarter was $383 million, down 2% year-over-year, compared to $392 million for the same period last year, and up 4% on a constant currency basis. Year-to-date recurring revenue was $767 million, down 3%, compared to $788 million for the same period last year, and up 4% on a constant currency basis. Now to foreign exchange; in Q2 compared to the same period last year, our revenues were negatively impacted by $32 million. Adjusted operating income negatively impacted by $11 million and adjusted EPS by $0.07. The negative effect of the $32 million by revenue type is broken down as follows

[Mark J. Barrenechea:]

Thank you, John, and welcome, everyone. As I usually do, let me convey our key messages in the introduction and then do a deeper dive into those topics that require more information or insights after my introduction. The team delivered a strong Q2, both financially, and strategically and I'm pleased with our progress. John has provided the financial detail and I'll get into a few additional items here in a moment. I recently announced a series of executive promotions at the very top of the organization and I welcome the addition of Steve Murphy as President of Open Text. He'll be on the call a little later. Release 16 is on schedule. We are making select key investments immediately and in the coming quarters, help capture the Release 16 opportunity. The data opportunity is large, transformative, and expanding. The most recent notable expansion, being the rise of machine-to-machine transactions, and EIM will play a key role in those machine-to-machine transaction as a platform to manage a single source of truth, some call this the Internet-of-Things. Customers are looking to Open Text for leadership in digital. This includes EIM, Cloud, hybrid, Analytics, the Internet-of-Things, managing their own digital transformative agendas and many other items. We have earned a right at the table with the Fortune 10,000 and we are shaping our own future. We have made significant progress in Forrester Waves and Gartner Magic Quadrants. We are in six Waves and lead in three. We are in seven Magic Quadrants and lead in three. The industry is beginning to recognize our leadership in the EIM. There is economic uncertainty which ultimately is an opportunity for Open Text. The company tend to behave in one of three ways in uncertain markets I tend to find. They either freeze, they retreat, or they invest. We are investing and we see that opportunity really as two fold. First customers need to go faster on their digital transformations and with Release 16, we have the opportunity to be their strategic partner for the next decade. Our investments will center on those customers and market share gains including enablement, readiness, upgrades, and competitive replacements. Second as an acquirer with M&A as a core part of our business model, assets should become more actionable and we should accelerate and we can accelerate the growth of our platform breadth and depth. As I commented on our last earnings call, our Q2 pipeline looks strong and we executed to that. As we look into Q3, we expect typical seasonality. What is Q3 seasonality? It's pretty simple for us. The majority of our customers, it is their first fiscal quarter and thus they allocate more time on planning and alignment for spending. It is the beginning of their budget cycles. As John noted, we're on target to both our internal fiscal 2016 operating plan and our external target model and we are not updating our external model today. Our business model, the OpenText Intelligent Growth System is our guide. M&A will continue to drive the majority of our revenue growth in net income and cash flow expansion, coupled with a relentless focus on organic growth. Over the last 12 months, cash flow from operations was near $0.5 billion. These are the key messages and let me dive a little deeper into a few of them. On Q2, the team delivered a strong quarter. The quarter shows the potential from our customers on the multiyear digital transformation market opportunity. We have built a powerful operations engine, net income, and cash flow business and this quarter shows its potential. As for our financial performance in the quarter in constant currency year-over-year, total revenues were up 6%, recurring revenues were up 4%, maintenance revenues were up 9%, cloud revenues were up 1%, license revenues were up 19%, PS revenues were down 6% a balance with solid margin of 24%. With this revenue performance and our operations engine, solid execution and our May 2015 restructuring now behind us, we deliver strong margin, income and cash performance. Please recall, this previously announced restructuring was to align the organization to our hybrid on-premise cloud view of the world and digital strategy. The teams have executed well on the restructuring and I'm pleased with where we've landed. Adjusted operating margin was 37%, adjusted operating income was $172 million, up 12% year-over-year and an ending cash balance of $726 million, highest quality adjusted operating income in our history. On to the cloud

[Stephen Murphy:]

Thank you for the warm welcome, Mark. I'm extremely excited to have joined Open Text. It's been just over 30 days and I'm really impressed with the quality of the team. We have a world-class organization with the best EIM suite of products in the marketplace. Let me give you my first impression of the company. First, something that's very important to me is that the culture of the company is one of customer first, whatever it takes to help the customer whether that's during an escalation or during an upgrade or during a transition. Second, my philosophy is that customers don't buy from companies, but rather they buy from people. I have observed first hand that all around the world customers like us and trust us. This is a huge competitive advantage. Third, as an organization we are margin focused and this is a good fit for me. I am operations oriented and I see lots of opportunity to balance cost discipline with real growth initiatives. And then fourth, we're big enough to leverage our scale, but small enough to be agile which gives us a major advantage over some of our larger more cumbersome competitors. Customer is my number priority and I'd love to be out in front in them getting to know them. Over the next 60 days or so I plan to get face-to-face with as many customers as possible and will be traveling all over North America, Asia, Europe, UK and Australia to do so. When I'm back home, I'll be working out of our U.S. headquarters in San Mateo, California. I'd also like to describe the breadth of the role of President which I have assumed. I have functional responsibility across the entire spectrum of customer facing operations for Open Text including marketing, professional services, pre-sales consulting, license sales, cloud sales and technical services. The holistic nature of the role allows me to have laser focus on healthy and sustained organic growth for Open Text. Before I pass it back to Mark, I want to say again just how enthusiastic I am about the opportunities at Open Text. The executive team is a great group of individuals with a get things done mentality. They don't let egos get in the way. We're in a unique position to help customer realize concrete return on investment with digitalization. And I look forward to being a major part of this. I hope to meet many of you who are on the call at our New York Investor Day at May. Back to you Mark.

[Mark J. Barrenechea:]

Thanks, Steve, I really appreciate it. I would like to now turn the call over to the operator for your questions.

[Operator:]

Thank you. The first question is from Phillip Huang of Barclays. Please go ahead.

[Phillip Huang:]

Hi, thanks, good afternoon. Congrats on a solid set of results. It should certainly help to address any sort of lingering concerns on a cloud transition strategy. But I was wondering if you could give us some additional color or perhaps an update on how much of the revenue growth on the cloud side is now coming from what you would consider as new revenue sources rather than existing customers switching from older platforms?

[Mark J. Barrenechea:]

Phil, thanks for the question. Yeah I mean on cloud specifically on constant currency we were up 1% year-over-year. We brought on board I think 24 to 25 new customers in the quarter, over 900 managed service customers now, and there are variety of growth opportunities for us in the cloud. I think we have a geographic opportunity in EMEA for both our value-added network, our on-demand messaging, and managed services. I also think we have more vertical opportunity in the cloud. Our transportation and logistics module coming out, some of our new healthcare capabilities for on-demand messaging. So a majority of our revenues are from existing customers. We've added new customers in the quarter and we do have a handful of meaningful growth factors for us out there as well, geographic, vertical and functional. I also want to note that our cloud strategy is one of not substitution, right. We've been very focused on driving for new spend in new revenues. Whether that be taking a license and hosting it, taking a license and providing managed services. So to that end being able to provide managed services back to our traditional ECM and BPM customers is also a growth factor for us. So look and – within the quarter we had a good license quarter as well. So the revenue can move between the lines. So the opportunity is strategic. The transformation is very successful and I think we've got some very well defined growth factors to go after.

[Phillip Huang:]

Right, that's very helpful. Just along the same line given what's happening at some of your competitors, you know Dell, HP, can you give us an update on any changes observed, perhaps by your sales team. Have you done any analysis perhaps on potential benefits as a result of disruptions at some of your competitors? Thanks.

[Mark J. Barrenechea:]

Yeah. You mentioned, thanks, Phillip. I put the competitive landscape into probably three buckets. And with kind of market conditions – as like to say between – well let's just call it market conditions and Release 16. I'd kind of look at the competitive landscape in kind of three categories. I think we're going to have some very established incumbents such as IBM and Adobe that will be our main competitors, if you will. By pillar, we'll have a competitor may be Pega in BPM and Release 16 is going to be that much differentiated. I think you have a handful of competitors as well from properties like ReadSoft, Kofax, Documentum, Interwoven that have not invested in EIM, have not invested in digitalization that we're going to look at for competitive replacement programs. Then you probably have a third category of those companies that are going to look a lot more like a feature with Release 2016 such as the jives and the boxes of the world. So with Release 16, our competitive differentiation is going to get that much stronger. Our analysis shows sort of three big buckets of the IBM and the Adobe's of the world and has a secular competitor. Secondly those who have not invested in EIM, digital which we're going to look at for competitive replacement programs and then a handful of others that are going to look a bit more like a feature versus the company when Release 16 comes to market.

[Phillip Huang:]

Thanks very much.

[Operator:]

The next question comes from Richard Tse of Cormark Securities. Please go ahead.

[Richard Tse:]

Yes, thanks. Mark can you talk about the go-to-market strategy for Release 16 when it comes to existing and new customers or any sort of major programs that you're planning here, and maybe give us a bit of color on that?

[Mark J. Barrenechea:]

Sure, thanks, Richard thanks for the question. We weren't planning to go into detail today. I'll touch on a couple of things. We're – in the beginning of Q4, we'll do our launch event and we'll talk about those specific programs. Certainly, there are things we can help existing customers with and that is an upgrade. We spent a fair amount of time learning from Red Oxygen of how to be able to provide upgrade capabilities. We have potentials of upgrading customers into our cloud as part of an installed base program. So kind of bucket number one investments. Bucket number one will be going into the installed base and looking at every opportunity and we think there is an opportunity to every customer to upgrade, making it easier, faster, and less – and potentially in our cloud. For new customers, it will be centered around competitive replacement programs and probably industries, a handset of verticals, but more detail to come. We'll talk about the specific programs when we do our actual launch in beginning of Q4.

[Richard Tse:]

Okay. And then as far as the M&A environment goes, I was wondering if you can maybe talk to the opportunities today, the pipeline, how robust it would be and perhaps a little bit of color on valuation of the market?

[Mark J. Barrenechea:]

Sure, thanks. Well look we've talked over the last couple of calls that here in fiscal 2016 we expect to do multiple and meaningful transactions in the year and nothing has changed our view on that and without getting into vertical, geographies, pillars and that sort of thing. Our pipeline is rich, and in volatile markets assets theoretically become more actionable on valuation. Our methodology hasn't changed, our sense of valuation hasn't changed and nothing has changed my view that we can't execute two multiple and meaningful transactions on the year. And as market become more volatile, it's an opportunity for Open Text.

[Richard Tse:]

Okay, and then the last one from me. I was just wondering if you can maybe comment on your progress in regards to cross-selling products among your base. You've obviously expanded through acquisitions both through products and your customer list. Is that something that you're focused on now and perhaps give us color on that progress? Are you really waiting for Release 16 to do that? That's it. Thanks.

[Mark J. Barrenechea:]

Yes, fair enough, thanks Richard. My best way to describe this is show me one buyer and I'll show you one sales force right. And we intentionally designed the field coming into 2016 to be focused – really kind of three sales forces if you will or go into three buyers, so that means we'll call it three buyers. One is the information platform, the other is analytics and the other is the business network. And they have their quotas and they have their goals and they got lots of opportunity to go hunting. I think one of the things that Steve and I are working on and designing is as we get into 2017 is more cross-sell opportunity, but the key word here is probably going to be verticals, right, verticals. So right now, we're targeting kind of three buying centers, the business networks helps the business network analytics, sales analytics and the information platform sells the information platform. Analytics is an opportunity everywhere for us and that's pretty clear. But those are our mandates coming into 2016 as well look into fiscal 2017 and Murphy studies the organization and we think account segmentation, we'll think more of cross-selling. I know analytics is top of the list and probably more of a vertical focus as well.

[Richard Tse:]

Great. Thanks guys.

[Operator:]

The next question comes from Kris Thompson of National Bank. Please go ahead.

[Kris Thompson:]

Great. Thanks and this question is for Steve. Welcome first of all. I think it's probably fair to say that Open Text has had fits and starts with the formal Oracle partnership over a number of years. Is there now renewed hope for a formal agreement similar to the one with SAP now that you're now on board at Open Text?

[Stephen Murphy:]

Hey, thanks for the question. What I can say is that we've had great success with SAP and it's certainly reasonable to think that that success could be modeled elsewhere. There are some strengths I bring as far as relationships with folks at Oracle right now, but Oracle has also got a way that they go to market that has a different view of third-party products and how they are willing to sell those. So it's something that we'll take a look at, but I'm certainly not willing at this early stage to make any commitments around – certainly in the next six to 18 months – how much progress we can make there. But it's something worthy of taking a look at for sure.

[Kris Thompson:]

Okay. So it's fair to say it's not a priority for you then in the near term?

[Mark J. Barrenechea:]

Thanks for your question, Kris.

[Kris Thompson:]

Mark, one for you then. In your opening commentary you talked about customer setting their budgets in this March quarter. Are you seeing any spending caution so far when you're talking to your customers looking into this quarter?

[Mark J. Barrenechea:]

Yeah. Kris, I haven't seen in the pipeline at this point budgets being deferred or budgets shrinking. I haven't seen that behavior yet. It feels like typical Q3 seasonality but they're not going to shrinking budgets, disappearing projects, we haven't seen that yet. We're only one-third of the quarter as well, but it feels more like typical Q3 seasonality.

[Kris Thompson:]

Okay, good stuff. I'll hop back in the queue. Thanks a lot, guys.

[Mark J. Barrenechea:]

All right. Thanks, Kris.

[Operator:]

The next question comes from Paul Treiber of RBC Capital Markets. Please go ahead.

[Paul Treiber:]

Thanks very much. I just wanted to touch on cloud revenue. It's been flattish for the last number of quarters despite the strong cloud and MCV year bookings. Could you speak to some of the moving parts in cloud revenue? And then when should we think about cloud bookings translating into stronger headline cloud revenue on a constant currency basis?

[Mark J. Barrenechea:]

Paul, thanks for the question. Maybe we'll just talk about the parts a little bit, right? I just like to just remind us that the asset classes for us in the cloud are more like GDP growth, right? So EasyLink as an on-demand messaging platform, GXS as a B2B VAN as well. These are not 20%, 40% growers, right? We intentionally went for kind of the infrastructure, the value, being able to optimize to income. So I just wanted – just remember that we've on-boarded lower growth assets. We see potential to grow them. Second is, this is really in three layers. We have our value added network; we have our on-demand messaging; and we have managed services. And we have opportunity in EMEA for ODM and VAN. We have opportunity in the enterprise for managed services. A couple of other data points – we run in the mid 90%s, John, on renewal rates in the cloud, right? So on the on-prem license side, we're in the low 90%s, and in the cloud, we're in the mid 90%s. So we have to make up for that, right, to be able to grow. Managed services, we're experiencing, I'd say, two to three quarters, two to four quarters from a booking to full revenue if you will. So it takes a while, right, to able to on-board – to bring the infrastructure in, on-board a customer, to be able to get all the transactions flowing over the network, and sort of from time from booking to revenue is multi-quarter. Obviously, you want to work on that and be able to bring that in as well, so Paul that's another variable in the equation as well. And on the MCV number, that will translate to revenues in the coming quarters.

[John Marshall Doolittle:]

Yes.

[Mark J. Barrenechea:]

With that said, in any given quarter revenue can move between lines in our hybrid strategy. And in Q2, we had a strong license quarter, right? It doesn't change our view of recurring revenues, our managed services, but it can move between lines.

[John Marshall Doolittle:]

The other variable I was going to point out, maybe you did already Mark, but just a duration of these contracts.

[Mark J. Barrenechea:]

Sure.

[John Marshall Doolittle:]

We're talking on average three-year contract, Paul, so you've got to factor that in as a variable as well.

[Paul Treiber:]

Okay, thanks. I just wanted to ask one more question to Steve, just could you elaborate on what you feel personally is the opportunity that you see for Open Text in EIM over the next several years? And just in regards to your own goals and priorities at Open Text, in what ways do you feel that you can improve Open Text's performance going forward?

[Stephen Murphy:]

Hey, let me give you a few things to think about, but I'm not sure I can do complete justice to the question. I do think that having been on the job for a month, a couple of things I'm just ecstatic about. One is, this is a healthy, stable company that has done a great job of focusing on margin, right, so you see that in the numbers. When I think about some of the acquisitions we've made and the assets we have, embedded analytics for instance, there are a lot of places where that – someone had asked it earlier about up-selling and cross-selling. There certainly is a lot of potential to take our global scale across the thousands of people we have that face the market and sell embedded analytics into the customers we already do business with. With Release 16, I'm not going to go into detail on some of the features or functions around things like entity modeling, but there are some really fantastic pieces of technology in there, I expect us to do the same with that. So those are couple of places where I can already see. We've got a differentiated technology that no one else has, we've got a sales force that's very capable and we'll take those pieces of technology and weave them into the solution we sell.

[Paul Treiber:]

Thank you, I'll pass the line.

[John Marshall Doolittle:]

And Paul, I'll just emphasize one thing. As we continue this conversation, right, on cloud in the quarters to come, the organization is very focused on managed services, and both in the enterprise, analytics and business network. We think ultimately that is one of our great opportunities. We sort of nicknamed the 3M strategy of maintenance, margin, and managed services. And for managed services, the more customers we can bring into our infrastructure the stronger our cloud becomes. So you'll hear me continue emphasize managed services and the one metric that we're publishing behind it which is new MCV, but ultimately we'll turn to revenue over a series of course.

[Operator:]

The next question comes from Paul Steep of Scotia Capital. Please go ahead.

[Paul Steep:]

Great, thanks. I guess the first one is a clarification. Mark, you've talked a bunch of times in the calls, as has John, about strategic investments for the back half of the year. Maybe you could talk about the significant, or the size of these investments, you've highlighted to customers. Is this a ramp in additional head count or is this more related to R&D and marketing spend, marketing spend around the tour and then I have a quick follow-up?

[Mark J. Barrenechea:]

It's a combination of all of those things Paul. So as we look at Release 16, its sales folks, its sale support staff, its engineering folks, its marketing. So we need to invest across the board in order to launch this release, so it's not one item and I'm not going to get into the specifics of how many here, how many there, but we kind of baked it into the analysis that we've given you in terms of the operating model for the back end of the year.

[Paul Steep:]

Okay, that's clear. Mark I guess we're just slightly over one year anniversary in Actuate, so happy anniversary. Can you reflect a little bit on the performance-to-date? It was a company with great assets and maybe some executional challenges on a prior strategy. What's your take at year end? And we've talked about some of the opportunity but maybe where are we standing here today on February 09, 2016?

[Mark J. Barrenechea:]

Paul, a great question. I'll just start with what a gem. So we are just delighted to have Actuate as part of the Open Text family. And one year end, we're right on our internal plan. And the opportunity, there is a standalone opportunity and then there is an integrated opportunity. The standalone opportunity is embedded analytics. Actuate is just the best asset, the best analytic platform out there for embedded analytics. We provide the daily reporting for Bank of America branch management. We do the daily reporting for Deutsche Bank's mortgage business. We recently won the next-generation embedded analytics platform at NetApp. And this is just an incredible opportunity having Actuate as part of Open Text. The next horizon is to bring Release 16 to market where analytics is embedded everywhere and that's going to be exciting to watch. It's part of the content suite, process suite, experience suite, it's just now on top of the business network as part of Cloud 16, the business activity index. We're on target for that in our April release that we showed at Enterprise World. So that's the next big opportunity is to bring Suite 16 and Cloud 16 to market. So just a gem of our product that people are delight, we're on our financial plan, the standalone opportunity in embedded gets more credibility with Open Text. And then with Cloud 16 and Suite 16, we're going to just see it integrated everywhere as the next step.

[Paul Steep:]

You know what you made me think one last one then I'll slide in. You've talked a bunch of this call more than any time in the past I can recall but M-to-M and IoT as an opportunity area. What have customers been brining that up to you or is that a vector that you're identifying as an area of growth? Thanks very much.

[Mark J. Barrenechea:]

Yeah, you bet. It's actually I think the first time I'm bringing it up. We won two platforms last quarter that are actually machine-to-machine transaction generators, if you will and all the information is being stored in our EIM platform. And so it's got to become a stronger focus for us with Release 16 that it's not just humans, right, putting in the unstructured data, it's going to be machines putting in unstructured data. So I think we've begun to figure it out a little better. We've had a few customer wins and we got some more product obviously, go build and deliver. But it's we're highlighting as a growth factor.

[Paul Steep:]

Thank you.

[Operator:]

The next question comes from Steven Li of Raymond James. Please go ahead.

[Steven Li:]

Hey, guys. Just a quick one from me. Your DSOs very strong in Q1, but in Q2 at 54 days, probably the worst it's been in a couple of years. Anything going on there, John? And would you expect that to revert as soon as Q3? Thank you.

[John Marshall Doolittle:]

Yeah. I wouldn't call it a trend Steven. I'm focused on DSO. I've talked to my new partner Steve about that as well. Our DSOs within the kind of call it all the Open Text are very good. We have some opportunity to reduce DSOs within GXS and we're really focused on that and so that's going to be, that's on the top of my list of things to look at and as well we're focused on our days payable. And the easiest way to drive cash or raise cash is to drive it from your balance sheet and we're going to do that, so look for improvements.

[Operator:]

This concludes time allocated for questions on today's call. I will now hand the call over back to Mr. Barrenechea, for closing remarks.

[Mark J. Barrenechea:]

Thanks, Brandon, I appreciate it. And thanks, everyone, for joining us today. We have an important second half coming up in front of us and it's about our execution. I'm looking forward to being on the road with the team for information tours and personally giving with the team big keynotes and connecting with a lot of customers in the coming weeks. Hope you better join us at the Morgan Stanley Tech Conference, to join John later in this week in Toronto and please save the date for Annual Investor Day in New York City on May 12. There will be an important update as the executive team presents the strategy on the business. Thanks for your time today and I look forward to speaking and seeing many of you soon. That concludes today's call.

[Operator:]

This concludes today's conference call. You may now disconnect your lines. Thanks for participating and have a pleasant day.