ServiceSource International, Inc.
Q3 2018 Earnings Call Transcript

Published: 9 Nov 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to the ServiceSource Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will host a question-and-answer session and our instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded for replay purposes. It is now my pleasure to turn the conference over to Chad Lyne, SVP, Investor Relations. Sir, you may begin.

[Chad Lyne:]

Thank you, Brian, and good day, everyone. Thank you for joining us, and welcome to ServiceSource’s third quarter earnings call to discuss our results for the quarter ended September 30, 2018. As a reminder, a copy of our earnings release has been posted on the Investor Relations section of our website at www.servicesource.com. Leading the call with me today is Chris Carrington, our Chief Executive Officer. As a reminder, we announced on October 18 that Bob Pinkerton has resigned from the company to accept an opportunity outside of ServiceSource. Rich Walker, a Board Member for the past year and highly regarded financial operator in the technology and information services industry, will take over the full-time role of CFO on November 12, and we look forward to introducing Rich to you in the coming weeks. For today’s agenda, Chris will provide a high-level overview of our third quarter results, share context on what we are seeing in the marketplace to affirm our long-term strategy and review progress against our 2018 priorities. I will cover our third quarter financial performance in greater detail and provide our outlook for Q4 and the full-year. Chris will then wrap us up with some closing comments before we open for Q&A. Before we begin, I’d like to remind you that during the call, we will make projections or forward-looking statements that involve risks related to future events. All statements made during the call reflect our views as of today and are based upon the information currently available to us. All projections and forward-looking statements should be considered in conjunction with the cautionary statements in the earnings press release and risk factors included in our SEC filings. These documents contain and identify important factors that could cause actual results to materially differ from those contained in our projections and forward-looking statements. In addition, during the call, we’ll also be discussing certain non-GAAP financial measures and projections, which we believe provide additional information to enhance the understanding of how management assesses the operating performance of the business. You can find the reconciliation of the GAAP and non-GAAP measures in today’s earnings release posted on the IR portion of our website. And with that, I’ll turn the call over to Chris Carrington, ServiceSource’s CEO.

[Christopher Carrington:]

Thank you, Chad. Good afternoon, everyone, and thank you for joining us for the ServiceSource third quarter 2018 earnings call. Year-to-date, in 2018, we’ve been making steady and consistent progress towards enhancing the fundamentals of our business to support future growth and shareholder value creation. Our marketing business development efforts are driving greater market awareness of the ServiceSource brand and solution set and yielding a healthy pipeline. Our outside sales teams continue to close more opportunities with a nice mix of expansions and new logo wins. Our delivery teams around the world are raising the bar on performance and driving better outcomes on behalf of our clients. And over the last several months, we’ve recruited and attracted multiple new executives to further advance the company and reinforce accountability across our organization. Given the progress we are seeing across the company, our third quarter financial results and updated outlook for the year are disappointing. While the $57.2 million of Q3 revenue reflects a year-over-year contraction of 1.7%, the aggregate results were dragged down by late quarter moves at three large and long-tenured clients. Had these accounts performed as expected, we would have seen low-single-digit revenue growth in the quarter. Because we have a cost structure that is somewhat fixed over shorter intervals, the lower revenue from these clients cascaded through the P&L, impacting non-GAAP gross margin and adjusted EBITDA by more than 300 basis points. In the three weeks since we shared our preliminary Q3 results with you, we’ve taken a hard look at the factors contributing to the performance on these three accounts to see if the data pointed to any broader pattern. Our analysis on these programs shows that the variance was a combination of two primary factors. One, we saw software and user demand from delayed procurement cycles and lower conversion rates for some large on-premise enterprise license agreements; and two, we saw client side data challenges due to system migrations, data integrations and customary segmentation efforts. These data challenges directly impacted our ability to manage the opportunity set, close bookings and generate revenue at the level we had originally anticipated. These factors have been recurring themes at other clients for years, as companies are in various stages of adapting and transforming their business models for cloud subscription economy. Historically, we’ve had visibility into the impact of these factors and have forecasted and adapted accordingly. However, we did not anticipate the shift in these three accounts in time to adjust. We remain focused on driving operational and financial performance, and we will continue to work to achieve consistent execution and sustainable shareholder value creation. Despite our challenges in the latter part of the third quarter, our business remains strong, and we are well-positioned to continue our strategic transformation in support of these objectives. I’d like to now provide a brief update on our continued progress in delivering our five key strategic priorities. Our first priority is to grow the number of new logos and total sales transaction value by 20%. In Q3, we closed 17 transactions made up of 13 expansions and four new logo wins. Year-to-date, we’ve added 12 new logos, compared to eight in a year-ago period and the value of close to date paces us well for our commitment. Our second priority is to accelerate the adoption of our inside sales and customer success solutions to become a more meaningful component of our overall revenue exiting this year. This has been a critical initiative for us, as we work to extend our value proposition across the entire B2B customer journey. Customers and prospects like now view us through a much more holistic wins and are rapidly gaining an appreciation for our ability to help them navigate their own go-to-market transformations. I continue to be encouraged by the progress we are making with these solutions and the differentiation they’re providing for us in the marketplace. Specifically, in the third quarter, two of our four new logo wins were inside sales-specific, while nearly half of our transaction value included an inside sales, where customer success motion is part of the overall offering. Our third priority is to grow our global footprint in lower-cost markets. We continue to attract amazing talent in our offshore locations, and our teams on the ground are executing at high levels and delivering impressive results for our clients. At our two sites in Manila and Sofia specifically, we’ve increased our employee base by 90% in the past year. At the end of the third quarter, we were pleased to cross an important threshold, with more than 50% of our employees worldwide now located in lower-cost markets. While the revenue economics are lower for the work we perform in these sites, the margin profiles are accretive and will further improve in coming quarters, as our teams take on larger opportunity sets and transaction sizes, which will enhance profitability down the road. Our fourth priority is the client-centric operating model and philosophy that creates an environment for deeper and more valuable long-term relationships. The feedback we are receiving from our clients points us being on the right path. In September, we completed a semiannual client satisfaction survey and received feedback from more than 150 individuals across our client base. Our NPS, or Net Promoter Score, hit an all-time high in the history of ServiceSource and is above benchmarks we track for B2B technology and service companies. We are proud of our NPS results and they are a demonstrable validation of the time, energy and effort by our leaders and employees throughout the organization to get closer to our clients. NPS has been shown to be a good leading indicator of both client loyalty and propensity to buy more, and we see the correlation in our business as well. On the loyalty side, clients representing more than 60% of our revenue are on multi-year contracts, indicating that our clients use ServiceSource as a strategic partner to enable their wide-ranging digital transformation and customer experience imperatives. On the propensity to buy more side, our top 10 clients in Q3 have collectively grown on a trailing 12-month basis by more than 5%. Importantly, these NPS surveys also provide constructive feedback on areas of opportunity to enhance our relationships and performance and are a key part of a continuous improvement feedback loop that we are focused on. Our final priority is profitable growth. Though we know we have more work to do, we are confident our focus on our four other strategic initiatives lays the foundation that will enable us to achieve this important objective. Over the course of the past several years, we have been able to profitably grow our larger and more tenured installed base accounts, while also landing and expanding new logos. At these clients, we’ve been able to create a flywheel of sorts, where greater scale enables improved operating efficiency, the efficiency gains then drive margin expansion, which allows us to further invest in these programs with innovation and other value-added capabilities, and in this value add then encourage stronger relationships with our clients, enhancing loyalty and unlocking more growth. Then the cycle repeats. Over a multi-year horizon, this flywheel is evident in a wide cross-section of our client base. The offsetting exception to this rule, however, has been the undertow of churn on the business. In today’s dynamic market environment, companies are seeing heightened M&A activity, higher rates of executive turnover and more rapidly shifting corporate priorities and budget allocations. In some instances, these catalysts have opened doors and created opportunity for us, whereas in other cases, we have unfortunately lost revenue. I want to emphasize that our entire organization is focused on successfully addressing churn and mitigating its effects. Throughout the company, we are pushing various strategic and tactical initiatives to improve retention by executing with consistency, exceeding our KPIs, making our value abundantly clear everyday and building multilevel executive relationships throughout an organization. Everyone has an absolutely clear mandate and focus, consistently deliver client delight, retain our relationships in profitable revenue streams, and generate operational and financial results that enhance value for our shareholders. With this objective in mind, today, we also announced several key leadership appointments that we believe will enhance accountability as we drive operational performance across our organization. I’m very pleased to share that we have appointed Debbie Dunnam to the role of Chief Operating Officer. Debbie has spent the past two months at ServiceSource doing extensive diligence to assess our organizational structure and teams, our service delivery capabilities and our operational rigor and discipline. In addition to being an inside sales and customer success visionary, Debbie is a seasoned operator who knows how to build, scale and standardize best-in-class functions that execute on a globally consistent level. Leveraging her decades of executive experience at Cisco and Microsoft, she’s already hit the ground running and has been making meaningful contributions to enhance our business. We look forward to benefiting from her deep expertise in this expanded role. I’m also pleased to share that our Board of Directors has unanimously approved the appointment of Gary Moore to the newly created role of Executive Chairman. Gary has been a Member of our Board since November 2016, where his leadership, operational experience and governance oversight have been invaluable to our company. In his new capacity as Executive Chairman, Gary will be actively involved day-to-day in our business and will be working closely with me and the entire leadership team to accelerate our transformation, with a particular focus on our strategy, clients and external relationships. Speaking on behalf of our Board and management team, we are honored to appoint someone of Gary’s caliber and experience to this role to help promote growth and enhance value. With that, let me turn the call back over to Chad to go into our financials in more detail. Chad?

[Chad Lyne:]

Thank you, Chris. I’ll now give more details around our Q3 2018 financial results and provide our outlook for the fourth quarter and full-year. Year-to-date, revenue of $176.9 million is up 2.2% compared to the prior year period, while third quarter revenue of $57.2 million was down 1.7% year-over-year. During the quarter, our top line results came in below our expectations and were primarily influenced by shortfalls at three clients in particular, which cumulatively had a nearly $3 million adverse impact for the reasons Chris highlighted earlier. Even with these challenges, however, we saw broad-based growth in our portfolio, with our top 10 clients in the quarter growing 5% year-over-year and our top 20 clients in the quarter growing 8% year-over-year. Moving on to margins. In Q3, non-GAAP gross margin was 32.9%, a decrease of 400 basis points year-over-year. Approximately 300 basis points of this variance is directly attributable to the flow-through of lower revenue associated with the three clients I mentioned, with the remainder of the delta primarily coming from the efficiency gains in the installed base that were offset by lower margins on ramping accounts. Non-GAAP operating expenses were $17.7 million in the third quarter, roughly flat year-over-year on both the dollars and percent of revenue basis. Through the first-half of the year, our quarterly OpEx averaged $20.3 million, as we made strategic investments in sales and marketing, our PRISM platform and global capacity expansions. These targeted investments have continued in the second-half of the year, particularly as we added executive talent, including Denzil Samuels and Debbie Dunnam. The change you see from our first-half OpEx trends to Q3’s lower spend is primarily a function of some targeted realignment of G&A personnel and a lower accrual for the corporate incentive bonus program based on the current views for full-year attainment. Walking through the rest of the P&L, the gross margin results and OpEx spend drove adjusted EBITDA of $3.1 million for the third quarter, or 5.4% of revenue. Our non-GAAP net income in Q3 was $700,000, or $0.01 on a per share basis. Now, turning to a brief review of the balance sheet and cash flow metrics. DSOs were 77 days, down five days year-over-year. Cash flow generated by operations was $2.9 million. CapEx was $5.2 million, which included $2.9 million in capitalized software development, resulting in negative free cash flow of $2.4 million. We ended the quarter with $63.5 million of cash and cash equivalents, inclusive of $32 million of short-term borrowing on our line of credit. Shifting gears, let me now share our outlook for Q4 and full-year 2018. First, on Q4. We’ve refined our models and forecasting assumptions to take into account the new information that became available to us at the end of Q3 on the three clients we referenced, and we anticipate we’ll see similar behavior, financial impact in Q4 from these clients. In addition, revenue will be lower compared to our earlier expectations, as we experienced the roll off of two logos in the quarter, where the loss will mute the favorable impact of new logo and expansion revenue we are bringing on. The net effect of these puts and takes is revenue that we expect in the range between $60 million and $63 million or sequential growth of approximately 5% to 10%, below the seasonal upswing we historically experienced. While we are undertaking efforts to mitigate the cascading of lower revenue throughout the P&L, our ability to flex the cost structure is somewhat limited intra-quarter. For Q4, we now expect adjusted EBITDA between $4 million and $6 million and non-GAAP net income between $1.5 million and $3.5 million, or between $0.02 and $0.04 on a per share basis. We assume a basic share count of 91 million shares and a normalized tax rate of 26.5%. Based on our year-to-date performance in Q4 assumptions, we now expect full-year revenue between $237 million and $240 million, non-GAAP gross margins of 34% to 35%, operating expenses of $76 million to $78 million, and non-GAAP net income between $2.5 million and $4 million, or $0.03 to $0.04 on a per share basis. We anticipate CapEx between $16 million and $17 million, and negative free cash flow of $7 million to $9 million. With that, I’ll turn the call back over to Chris.

[Christopher Carrington:]

Thank you, Chad. In conversations with our investors and light of our expectations for the second-half of 2018, we recognize that essential question is our view into 2019. With Rich Walker officially starting as CFO next Monday and quickly jumping in to lead our strategic planning and budgeting process, our plans are to provide 2019 guidance on our February call. As a Member of the Board for the past year, Rich has a solid understanding of our business and will be quickly diving deeper into the financials and performance, so that we can provide the best, most accurate picture of 2019. As we move through the fourth quarter, we should gain far better visibility into our upcoming fiscal year, and we’ll assess the market, pipeline, demand and other factors to provide a more informed view of 2019 on the Q4 2018 call. With that said, allow me to briefly share a bit of context as we rebalance the scales with a greater focus on profitability. We’ve built a marquee client base, where we deliver mission-critical outcomes that have a material impact to our clients’ top and bottom lines. As fiduciaries of our shareholders’ capital, we are carefully considering our engagements and contracts to address any that may be dilutive or less than optimal for our financial performance. We will continue to be a long-term partner for those where we can achieve shared alignment and receive a fair and appropriate reward for the value delivered. Where we can’t reach a win-win agreement, we will work together for a smooth transition and wind down of revenue streams that no longer make practical sense for us. In discussions and negotiations in Q3 and Q4 to date, we have seen both of these outcomes. In one example, we were unable to come to mutually agreeable terms with the premise-based software client, and we’ll be amicably parting ways with the logo at the end of the year. In a very different example, we had a lower-margin client that have been shrinking for several years and that represented a churn risk. Through a competitive RFP process, we were able to rescope the engagement and refine the contractual provisions in structural terms. We will now be renewing and extending a three-year agreement with this client that will contribute to revenue growth year-over-year and also significantly improve our margin. While we would naturally prefer to have more of the latter example, the size, time and an ultimate outcome of these rebalancing efforts will be important in shaping next year and the expectations we ultimately bring to you in February. As these examples highlight, we are not focused on growth at any cost. We are focused on growth that enhances our profitability and helps to drive shareholder value. In my 30-plus years of experience, turnarounds and business transformations rarely have a clean, linear progression quarter-to-quarter, and ServiceSource is no exception. We have successfully delivered significant change and covered much ground during this multi-year journey, though we recognize we have more work to do and we have the right team and the right focus to execute on our strategy. And now that the key building blocks and leaders are in place, the business is positioned to move forward. In all of our conversations with client executives, we are hearing that our value proposition and the technology ecosystem is more important now than ever. Our solutions are squarely aligned to address the total addressable market that is large and efficient and underpenetrated. And with the new team of accomplished senior leaders, including Gary Moore as Executive Chairman, Debbie Dunnam as Chief Operating Officer, Denzil Samuels as Chief Marketing and Growth Officer, and shortly, Rich Walker as Chief Financial Officer, we are focused and energized to deliver on the opportunities in front of us to drive sustainable, long-term value for all stakeholders. I’m excited for what’s ahead and look forward to sharing with you our continuing progress in the coming quarters. Brian, with that, please open the queue for questions.

[Operator:]

Thank you, sir. [Operator Instructions] And our first question will come from the line of Pat Walravens – I’m sorry, Zach Cummins with B. Riley FBR. Your line is now open.

[Zach Cummins:]

Hi, good afternoon. In terms of the hit to the revenue numbers in Q3, this has been the first quarter in a while where you’ve missed your revenue guidance that you’ve put out there. So I guess, my question is really around how much visibility that you have into the revenue line on a quarterly basis? And what was really something that drove the surprise here in Q3?

[Christopher Carrington:]

Yes. Zach, it’s Chris. And yes, as it relates to your question, the company has been in business for 20 years. And over those two decades, we have developed a very science-based approach of how we roll up our revenue, think about it every quarter, from across 50 different logos, 150-plus engagements around the world, and we rolled out all the way up from each individual sales rep around the world to sales manager and then to an account manager and then to a site leader and then to a global theater leader or president and then into our company number. And to your point, as you mentioned, we have been very good over the past four years of accurately either hitting slightly above our range or within our range. And this is the first time within the guidance that we had provided, where we’ve really missed the low-end of the range of revenue. So we feel very good about our science. What contributed this quarter specifically as we came into the last week of the quarter was the three large, long-tenured accounts. In one case, where we were having difficulty getting end user deals closed and it created a softer market than we had seen before. And that specific case for that client we’ve served since 2010, we actually look at the previous quarter, we look at the year-over-year quarter, we look at all the trends, and this is the first time we had an experience in those – in that timeframe, where we had a drop in that case for that client. And we saw that in one other client. And then one – the third one was one of the clients we’ve been ramping, we’ve had some data challenges. That is one of the difficulties for our business and we worked through those, but it also contributed to some slower revenue in the end of the quarter.

[Zach Cummins:]

Understood. And then related to some of the customer churn in Q4, can you talk about some of the reasons around this churn? Was it really related to possible discontinuation of that product line by that customer, or is this just the company ultimately deciding they want to take this renewal service in-house and do it on their own?

[Christopher Carrington:]

Yes. I mean, I wish there was a pattern where I could say it was just one thing. As I mentioned in my opening remarks, we are now driving increasingly more and more to drive the profitability of certain engagements we have around the world. As I mentioned all the way back in Q1, we could see wage inflation kicking in. We’ve been able to address that throughout the year. But as we prepare for 2019, in certain cases, we’re looking for and asking for higher pricing in our agreements for either – to cover wage inflation or increase complexity. And as I mentioned, some customers decide they don’t want to afford that, and so we wind down the relationship together. In certain other cases, it may – it’s back to what we’ve pointed to before. There may be a change to leadership. And so a change of vision of where they insource or outsource something, which has always been, since outsourcing has been around, one of the things that partners look to mitigate as much as they can. So – but those are the two primary reasons.

[Zach Cummins:]

Understood. And then given the lower revenue outlook going forward now, I mean, before you were really focused on investing into the business and truly trying to capture the opportunity on the inside sales and customer success out of the business. But it sounds like your strategy has shifted a little more so towards trying to look at the profitability line of the business. So can you just talk me through kind of your approach as you move through these coming quarters and how you’re trying to balance profitability versus pursuing some of the growth opportunities in the business?

[Christopher Carrington:]

Yes. Look, I think that companies do change strategies to align to the moving markets that they’re in and we’re no different. And the fact that as we’ve progressed, we’ve signed a lot of deals over the last few years. We like those deals. But one of the things that certainly has come up on our conversations with the investor community is, where do we balance the J-curve effect? And so I would say that, we are definitely looking at our new deal cycles and adjusting for that to minimize that or mitigate the J-curve effect, so it cannot have a drag on our profitability in 2019. But we continue to invest in the business appropriately to improve our platform and our processes and retain our best people.

[Chad Lyne:]

And, Zach, this is Chad. One last thing I would add on that piece as well. You asked the question in terms of our newer solutions around inside sales and customer success. So we are still continuing to prudently invest in accelerating those. We do see the opportunity and the reception in the marketplace and in high levels of demand to continue to see investments, driving growth of those solutions on a go-forward basis as well, despite the lower revenue trajectory that we’re sitting at right now.

[Zach Cummins:]

All right. That’s helpful. Thanks for taking my questions.

[Christopher Carrington:]

Thank you, Zach.

[Operator:]

Thank you. And our next questions will come from the line of Pat Walravens with JMP Securities. Your line is now open.

[Pat Walravens:]

Oh, great. Thank you. So, Chris, looking back, you guys definitely have a good track record of hitting your guidance for the quarter. But as I look back, you’ve guided down seven times over the last six years, by the way, not just you, right? A number of other CEOs, too. So seven times over the last eight years and then used churn as one of the reasons for the guide down and four times in the last seven quarters with churn. So, I mean, my question is just, isn’t it – isn’t this just sort of a structural problem with this business? And what can you do now that you or one of the other CEOs hasn’t already tried?

[Christopher Carrington:]

Yes. Pat, I think that’s a fair question and I think it’s a challenge on the number of times we’ve called down. Look, we’ve evaluated the business and changed the business dramatically over the last four years, and we’ve changed its structure and we’ll continue to evolve the structure, but I don’t – I do not believe it is a structural problem. It is certainly a problem from a revenue perspective that undertow of the revenue pull, as we’ve continued to make changes in our business. When we have revenue shortfalls, we experience the margin pressure and then decreased profitability. But we continue to believe in the business and the model going forward, and we’ll continue to adapt to the changing market dynamics.

[Pat Walravens:]

Okay. But is there anything that you’re doing now that you think is really new? I mean, so, for example, one of the last times that you had this issue, I remember you told us that you had identified your top 10 accounts that you were going in and you’re trying to create multi-year relationships with all of them. So is there anything that you think you can try that you haven’t tried before?

[Christopher Carrington:]

Well, I think we’ve continued to evolve. And obviously, one of the big recent changes is the change to the executive team. And I think, between adding Debbie and her years of experience from an operator standpoint, I think that will only enhance our bandwidth of how we transform. Having Rich come from the Board onto our executive team as CFO, allows us to not miss a step there and continue forward that perspective. We – I would say, we’re adjusting our markets and go-to-message – go-to-market messaging to make sure that the market understands the value proposition that we bring to the table. And we’ve gotten, I’d say, more increased involvement of the global leadership team with our top 20 accounts from an executive sponsorship standpoint. So we continue to work closely with the market. I think, we’ve received good feedback in our client survey this year with NPS scores that were the highest we’ve seen. And while that may seem incongruent to the volatility in our revenue, it tells me we are doing a lot of things correctly.

[Pat Walravens:]

Okay. And maybe just add sort of big picture. Under what circumstances would this business be sold?

[Christopher Carrington:]

Well, I think any business, whether you are a $240 million company, or a $2 billion company or something larger, there always comes a point in time where the outcome for the shareholders, the clients and the employees is best addressed by a sale of the company. And as I’ve always shared, we look at opportunities when they come up, and we make the best decision on behalf of the shareholders. So we’ll continue to evaluate all options as they’re presented to us.

[Pat Walravens:]

Okay, great. Thank you.

[Christopher Carrington:]

Thank you, Pat.

[Operator:]

Thank you. And our next question will come from the line of Tim Klasell with Northland Securities. Your line is now open.

[Tim Klasell:]

Yes, just a quick question. Most of mine have already been asked. Obviously, you’re bringing on some more [indiscernible], particularly the COO position. Are there specific areas that you’ve identified that you want to see improvement or changes and with this – with the new appointment? And can you give us some details around that? Thank you.

[Christopher Carrington:]

So, Tim, I just want to clarify. So you’re specifically speaking in regards to Debbie Dunnam, how we’re going to apply her skills and expertise?

[Tim Klasell:]

Yes.

[Christopher Carrington:]

Yes, sure. So, Debbie is someone I knew as a client starting about four years ago and we’ve remained in touch. So she transitioned her career from a long-term career at Cisco to Microsoft. And at Cisco, she ran all their services business and $10-plus billion, $20 billion business, that’s what we’re in. And at Microsoft, she built a 2,000-person inside sales team for Microsoft and that’s what we’re moving into. So it seemed appropriate to bring her skill set on Board to help us advance the company into the future.

[Tim Klasell:]

Okay. All right. Thank you.

[Christopher Carrington:]

Thank you, Tim.

[Operator:]

Thank you. And I’m showing no further questions in the queue at this time. So now it is my pleasure to hand the conference back over to Mr. Chris Carrington, Chief Executive Officer, for any closing comments or remarks.

[Christopher Carrington:]

Brian, thank you. Thanks, everyone, to joining the call today and listening in. We look forward to talking to people in the coming days and weeks. So appreciate your attendance, and once again, a big thanks to our 3,700 employees around the world. We are working hard everyday to make a better world for our clients and for our own selves and our company and our shareholders. So have a good day, everyone.

[Operator:]

Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude the program, and you may all disconnect. Everybody, have a wonderful day.