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Executives

Mark Moshayedi - President & CEO

Raymond Cook - Chief Financial Officer

Mitch Gellman - Vice President of Investor Relations

Analysts

Gary Mobley - Benchmark Company

Sherri Scribner - Deutsche Bank Securities

Aaron Rakers - Stifel Nicolaus

Rich Kugele - Needham & Company

Nehal Chokshi - Technology Insights Research

Richard Shannon - Craig-Hallum Capital

sTec, Inc. (STEC) Q1 2013 Earnings Conference Call May 8, 2013 4:30 PM ET

Operator

Good day ladies and gentlemen and welcome to the sTec, quarter one, 2013 earnings call.

At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session with instructions to follow at that time. (Operator Instructions). I would now like to turn the conference over to your host for today, Mr. Mitch Gellman, Vice President of Investor Relations. Sir, you may begin.

Mitch Gellman

Thanks Dan. Welcome everyone and thanks for joining us today for our earnings conference call. We hope that you had the opportunity to read this afternoon’s earnings release. It contains the results for our first quarter of 2013.

Joining me for today’s discussion of our results, business outlook and the Q&A session are Mark Moshayedi, our President and CEO; and Raymond Cook, our Chief Financial Officer.

But before we begin today’s earnings call, let me mention that we’ll be presenting at a few upcoming investor conferences. The Benchmark Company’s Investor Conference on Thursday, May 30 in Milwaukee and for the first time at the Bank of America/Merrill Lynch Technology Conference on June 4 in San Francisco.

As I do each quarter, I need to remind everyone that our prepared remarks and answers to questions will include forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and are based on management’s current expectations.

These forward-looking statements include, but are not limited to statements concerning the rapidly evolving dynamics of the enterprise storage and server markets; growing acceptance, adoption and qualification of SSD’s within the enterprise storage and server markets; the launch marketing qualification and production of STEC’s product and solutions and other developing technologies; continued product research and development; the qualification of STEC’s products and solutions into emerging SSD system vendors, enterprises and non-OEM end-user customers.

Along with OEM customers and changing sales mix, diversifying the company’s customer base, leveraging the company’s global channel program and growing sales and marketing infrastructure; recruiting seasoned personnel, STEC’s key product line initiatives and development; the transition from one product generation to the next; the length of the qualification cycles; the capabilities, performance, cost advantages and benefits of STEC’s products and solutions and developing technologies; the future financial performance and outlook of the company and expected second quarter 2013 revenue and loss per share entail various significant risks and uncertainties that could cause our actual results to differ materially from those expressed in such forward-looking statements.

These risks and uncertainties are detailed in periodic filings with the Securities and Exchange Commission. Special attention is directed to the portions of those documents entitled Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Listeners are cautioned not to place undue reliance on these forward-looking statements, which represent our views only as of today. While we may elect to update future forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if the estimates change, and therefore you should not rely on the forward-looking statements as representing our views as of any date subsequent to today.

Additionally, as we discuss our financial performance, we will be referring to certain non-GAAP financial measures. Please see the reconciliations of our GAAP to non-GAAP measures, included in today’s earnings release.

Thanks again for joining us today, and now I’d like to turn the call over to our President and CEO, Mark Moshayedi.

Mark Moshayedi

Thanks Mitch. Good afternoon and thank you for joining our call today. We are seeing signs of tractions from our new go-to-market strategy, leading to a growing pipeline of activities in our enterprise business.

As a reminder, we’ve implemented a new go-to-market strategy to better align with the evolving dynamics in our industry. We are focusing our efforts on summing access SSD’s as a component to a limited set of OEM customers, in a market that has attracted much larger, more vertically integrated competitors and have become increasingly more challenging.

In response to these changing dynamics, we’ve made significant investments in people, tools, resources necessary to effectively and seamlessly transition from an OEM centric model to a more balanced and diversified sales model. The high priority growth of this process is to become a more recognized brand to the enterprise end user customers. We would like our products to be at the forefront of the IT decision making process rather than a component in their back end pre configured to store assistance.

To that end, we’ve re-branded the company, launched a global channel program, hired enterprise sales and marketing personnel with expertise in systems and applications. sTec has a lot to offer and we would want to make sure that end users are fully educated and aware of the capabilities of our technology and its competitive advantages.

As we continue to execute our plan, our target is to achieve a sales mix of about half of our revenue coming from traditional OEM customers and the other half coming from non-OEM customers, including global channel partners and direct enterprise customers. Longer term, our goal is to have our customer base as widely distributed as possible and to be able to deal directly with the many end users as possible.

IT managers are becoming more sophisticated and the problems of managing their traditional storage architecture is more acute. Enterprisers are not choosing to tailor their data centers to be better optimized for their applications. In these cases a pre configured off the shelf solution rarely meets all the customers needs.

Our goal is to serve our expanding portfolio of customers, with our high quality proven and comprehensive suite of solid-state drive technologies. Our products are proven for a variety of today’s most challenging workloads and enterprise environments. The combination of the systems, applications and SSD expertise that we deliver to the customers give us a unique advantage in the marketplace and allows us to deliver the valued customers to a solution based approach. More importantly, it allows us to solve customers’ most critical problem with our solutions.

I hope that this discussion of our strategy is clear and as we’ve discussed this over the last call. We talked about this in detail and with the formal re-launch of our brand and market strategy on April 2, I thought it was important to reinforce what you may have already heard with more details.

For our company, we remain excited about the prospects of our business and executing on this plan that should help proliferate, further our technology, which has been our primary goal overall.

At this point I’ll ask Raymond to review our financial performance for the quarter. Thank you.

Raymond Cook

Thank you Marc and welcome everyone. Net revenue for our first quarter of 2013 was $22 million, which was within our guidance range of $21 million to $23 million for the quarter.

Net revenue by major product categories was as follows: Flash related products accounted for $20.9 million or approximately 95% of total revenue; DRAM-related products accounted for $518,000 or 2% of total revenue; and service and other revenue accounted for $608,000 or approximately 3% of our total revenue.

The Flash-related revenue was comprised of ZeusIOPS of $13.9 million; MACH products of $2.7 million and embedded SSDs and other flash products of $4.3 million. International sales comprised 39.4% of our total revenue for the first quarter of 2013.

For the first quarter of 2013 our GAAP gross profit margin was 26.8% as compared to 32.2% in the fourth quarter of 2012. Our non-GAAP gross profit margin was 27.7% as compared to 32.8% in the fourth quarter of 2012.

The decline in gross profit margin is primarily attributable to an increase in fixed production overhead and a labor cost as a percentage of total revenue and the decrease in the average selling price, certain SSD products, which was partially offset by a decrease in Flash component costs.

Our Q1, 2013 GAAP sales and marketing expense was $6.6 million; GAAP, general and administrative spending was $12.1 million and GAAP research and development spending was $12.7 million. Total GAAP operating expense for the first quarter of 2013 was $31.3 million and non-GAAP operating expense was $28.5 million.

Our non-GAAP results for the first quarter of 2013 excluded stock option compensation expense of $3.3 million, SEC investigation and litigation costs of $2.6 million; securities litigation-related costs of $243,000; IP litigation costs was $23,000 and employee severance costs of $343,000, net of tax impact of $68,000. The non-GAAP adjustments are detailed in our first quarter 2013 earnings release that was issued earlier today.

Our provision for income taxes was booked in an effective tax rate of approximately 0.4% for the quarter ended March 31, 2013 compared to 0.1% for the quarter ended December 31, 2012.

We established a full non-cash valuation allowance against all of our net U.S. deferred tax assets during the second quarter of 2012. The establishment of a full non-cash valuation allowance does not have any impact on our cash, nor does such an allowance preclude us from using our tax losses, tax credits or other deferred tax assets in future periods.

To the extent that we are able to generate taxable income in the future to utilize our deferred tax benefits, we will be able to reduce our effective tax rate by reducing the full non-cash valuation allowance.

Our GAAP deluded loss per share was $0.54 for the first quarter of 2013. Our non-GAAP diluted loss per share was $0.41 for the first quarter of 2013, which was within our non-GAAP loss per share guidance of $0.40 to $0.42.

From a balance sheet perspective, the following are select accounts of interest for the first quarter of 2013. Cash and cash equivalents decreased $25.3 million from Q4 of 2012 to $132.9 million. The composition of the cash decrease for the quarter was comprised of $15.2 million utilized to pay the company’s portion of the Federal Class Action Settlement, $8.7 million utilized for operations and $1.5 million for capital expenditures.

Accounts receivable decreased $5.6 million from Q4, 2012 to $7.9 million. Net inventory increased $330,000 from Q4 of 2012 to $42.1 million. Capital Expenditures I had noted was $1.5 million for the quarter, which was offset by $3.3 million of depreciation and amortization, and current liabilities decreased $32.2 million for the quarter to $26.2 million, due primarily to the funding of the Class Action Settlement Fund by the company of $15.2 million and by our insurance carriers, $20 million. We had no long-term debt outstanding as of March 31, 2013.

Turning now to our guidance for the second quarter of 2013, we expect our revenues to be in the range of $23 million to $26 million, with non-GAAP diluted loss per share to range from $0.41 to $0.43.

I’d like to thank you for joining us today. This concludes our prepared remarks. I will now open up the call to your questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Gary Mobley from the Benchmark Company. Your line is open, please go ahead.

Gary Mobley - Benchmark Company

Hey guys. I was hoping to start off with a simple question, were there any greater than 10% customers in the quarter.

Mark Moshayedi

We did have one greater than 10% customer in the quarter, which will be out in the Q, which should be released here momentarily.

Gary Mobley - Benchmark Company

The OEM or direct customer.

Mark Moshayedi

That would be an OEM.

Gary Mobley - Benchmark Company

Okay. With revenue breakeven so far, away from current revenue, I think you have to – with triple revenues getting to break even. I just wanted to question the new business model and the go-to-market strategy.

I’m assuming your sales account is up and perhaps numbering the 100s of people, and I’m just wondering, how fragmented these different market opportunities are to deal directly with customers and to what extent can each of these sales people handle these different, presumably small opportunities and could you give me a sense of how the directed to customer sales model might scale over time.

Mark Moshayedi

Thanks for the question here. What you are asking about is the new enterprise and user accounts that we are going after; how it’s going to scale. We’ve got about 50 people now that are focusing on this area. They are the combination of sales people, SEs and marketing people that have to join force, to be able to get to these customers and be able to sell them their products.

What we do find is that there are obviously very large customers that we come across as part of the pack that we go after, and then as the customers get educated, then you will also end up with a breadth of customers as well.

So at this point we are involved with lots of opportunities that are very sizable and unfortunately we don’t dictate when these things go into production and when these customers will roll out their product, but their opportunity size is huge out there for the products that we sell.

And as far as each of the verticals that we go after, each of those verticals have the potential to be multi billion dollar opportunities for us as well, and that’s why we have a focused effort on each of these verticals.

Obviously the sales guys are new to these new sales models that we are going after. I think within the next six months we should see much, much better traction and results out of these and we do anticipate some of the larger orders as well to come in the next few quarters with some of the guys that we were already engaged with.

Gary Mobley - Benchmark Company

I noticed embedded was a strong end market for you. Was that because that market is fairly attractive and hence stock exacts made the conscious effort to pressure the market.

Mark Moshayedi

Right, so we’ve been in the embedded business for a long time and it’s a growing business and it’s a very, what we see internally, as the low cost structure to manage and expand that. Its growing at a rate of about 20% a year right now for us and it’s a profitable business unit. So we basically continue on doing it.

It’s a not a focused product line for us, from the standpoint of that’s what the sales guys are going out and selling. But we have the customer base; we’ve done business with these guys and it is a profitable business unit. So we continue on supporting those products.

Gary Mobley - Benchmark Company

All right. That’s if from me. That’s guys.

Mark Moshayedi

Thank you Gary.

Operator

Thank you. Our next question comes from the line of Sherri Scribner of Deutsche Bank. Your line is open. Please go ahead.

Sherri Scribner - Deutsche Bank Securities

Hi, thank you Mark. I think in the beginning of our prepared remarks you made the comment that you are seeing signs of traction on your new business model. I was hoping you could give us some specific examples of the traction that you are seeing with, the way that you realign the business.

Mark Moshayedi

Yes, I can just give you general that the type of environment you are in there is a banking establishment that we are going after with their IT infrastructure that could be using about $20,000 of our drives.

In that just one application alone, we’ve got a very large telecommunication company that has already committed to the products and they will be using 20,000 to 40,000 drives over the next 12 to 18 months and each one of these opportunities are $10 million, $20 million opportunities. So they are not small sized opportunities.

A few of these could obviously make a huge difference from where we are at from a sales perspective to becoming profitable. So we are going after all of the large sized opportunities and we are seeing traction, we are seeing the products. The customers like the product they are seeing.

Unfortunate we can’t make the sales happen any faster than it has to go through with regards to customer evaluating the product and seeing the value proposition and then making the decision to move forward for the next step of launching it. And even after they move forward and start launching the program it all depends on how quickly they roll out their systems in their application. So its somewhat, do you have to go out and start promoting the product and selling the product and seeing what prospects you come across.

But we are very encouraged with regards to what we are seeing, the size of the opportunities and the small ones, believe it or not, the smalls ones are a couple of $100,000 and the large ones are $20 million to $40 million opportunity. So the size varies depending on the market space that you’re going after.

Sherri Scribner - Deutsche Bank Securities

Okay. And then in terms of the products that these customers are interested in, is it primarily the ZeusIOPS or are customers interested in the market, is it a variety, what are you primarily pushing?

Mark Moshayedi

We are pushing the product that fits the customers’ application. Obviously the product that’s today is a very competitive product and we see quite a bit of traction with customers as our GEN4, ZeusIOPS, SaaS product, but we do have some customers that have evaluated and are continuing to evaluate our PCIe based Solutions and there are some sizable opportunities around that as well.

Sherri Scribner - Deutsche Bank Securities

Okay, thank you.

Mark Moshayedi

Thanks Sherri.

Operator

Thank you. Our next question comes from the line of Aaron Rakers of Stifel. Your line is open. Please go ahead.

Aaron Rakers - Stifel Nicolaus

Yes, thanks for taking the questions. First of all as we look at the program that was launched in early April around the channel, can you just remind us how the company expects to build that channel? How you recognize revenue for channel sales and I guess that’s the question, how do we anticipate that channel to re-amp and how do you specifically recognize revenues at a sell in or a sell through model for your channel partners.

Mark Moshayedi

Yes, basically all of the accounts that we are going after right now, its all sell through. We don’t recognize revenue on things that haven’t been already deployed in the system. We are not stuffing the channel, we are not putting parts in other peoples shelves for which of them selling it.

So it’s a very direct, end user centric type of an approach and even if there is a distributor or a bar involved in our discussion, we have our guys that are involved with the end user accounts that these parts go into and we are directly involved in configuring those systems or consulting with the customers to make sure the customer sees the value proposition of our products.

Aaron Rakers - Stifel Nicolaus

Okay, great. And then when I look at the model and I noted what you guys have give as far as guidance, but looking at the gross margin, how are you guys thinking about the long term gross margin model at this point, given all the various things and also inclusive of hopeful ramp in the PCIe market here as we move forward.

Mark Moshayedi

Yes, I think from the gross margin perspective, as revenue goes up, the gross margin will increase, because we’ll be able to spread our fixed manufacturing cost over a larger base. So we’ll get above from a gross margin perspective once we see the revenue start to increase, but we also anticipate that the PCIe and the systems that we are selling will have, very good margins, better than what we have seen previously as a blended company.

Aaron Rakers - Stifel Nicolaus

But I guess, I mean should we think about this model, optimizing the mid-30% gross margin; can we get back to a 40% gross margin. Any kind of framework will be helpful on that front.

Mark Moshayedi

I think our long term target is still to have a blended GP of about 40% and once this business scales above $70 million, $80 million a quarter, I think we should be able to see the sizable net profit left.

Aaron Rakers - Stifel Nicolaus

Okay. Thank you guys.

Mark Moshayedi

Thank you.

Operator

Thank you. Our next question comes from the line of Rich Kugele of Needham & Company. Your line is open. Please go ahead.

Rich Kugele - Needham & Company

Thank you. Good afternoon gentlemen. Just a few questions. First, can you updated us on where you actually are on the PCIe front with both the OEMs and that the you’re new direct enterprise customer. Then I have a couple of follow-ups?

Mark Moshayedi

Yes, the product is released. We have products up to two terabytes that’s released and we are working on the larger capacities that should hopefully get released in the next quarter or so and we are actively engaged with customers evaluating the products.

Today we do not have that much orders on hand, but there are multitude of customers that are looking at the product and are evaluating it and we are getting some good speed back from customers. So its still remains to be seen how fast that market could expand.

What I’ve already commented, we are also seeing that many of the customers that usually being getting engaged with on the PCIe side, they very quickly switch over to our SaaS product line. So the discussion sometimes, it starts with the PCIe, but then they migrate over from the PCIe to the SaaS due to all of the benefits that drive the form factor. This product gives you from unstop ability, expansion capability to be able to go through four drives for example and to your chassis. So there are definite advantages and because of those reasons we are seeing some of the customers switch over from PCIe over to SaaS for us.

Rich Kugele - Needham & Company

Okay, then just secondly on the direct side, what percentage of your business went that way in the quarter? I know you said you want to be 50/50 over time, but how much of that business went direct this quarter versus last quarter.

Mark Moshayedi

The non-OEM portion for Q1 was 22.7%.

Rich Kugele - Needham & Company

22.7% okay, and just remind me what was last quarter.

Mark Moshayedi

The quarter before that was 39.4%, but this should not be taken as a kind of downtrend because we have some large orders that we are anticipating and they just haven’t happened, so...

Rich Kugele - Needham & Company

Okay, so these are some data center lumpiness.

Mark Moshayedi

That’s right. So that the orders, again this new business model, unfortunately we are going to see some lumpiness in the business where some large orders will come in and make the number much bigger and hopefully there will be steadiness as we get multiple of these customers over time. So they will smooth each other out.

Rich Kugele - Needham & Company

Okay and then, this is a question for Raymond. As you are selling more direct to the non-OEM model, obviously it requires a more high touch, then that leads to expense. But are you compensating for that with higher prices for these products or should we assume that it’s going to have to be mix that drives the gross margin back up to your targeted range.

Mark Moshayedi

So again, the mix is what we are shooting for. We’ve got a portfolio of products we sell depending on the customer base on the – I would say the lower gross profit margin said would be some of the OEMs, larger size OEMs and some of the larger deals that we work on with the data center guys. That will probably have a lower gross profit margin closer to 30%, net of all this additional manufacturing hit that we are taking right now, because we are underutilizing the factor.

And then some of the other businesses that we are going after with the enterprise end user, they could be in the 55%, 60% margin base and some of the systems will have a 70% gross profit margin base. So it’s the mixture that we are talking about, when we are talking about a 40% blended GP.

Raymond Cook

But we do anticipate our sales and marking costs, even though they dropped in Q1 over Q4, we are anticipating that those will be ratcheting up as we move forward, as we continue to bring on more high-caliber sales and marketing personnel to fit within these verticals that were attacking on the non-OEM side.

Rich Kugele - Needham & Company

Okay and my last question is just on R&D headcount. Can you just update us on where that’s at today? Any changes in the quarter, as people are trying to evaluate your tangible book number and value of the company. I mean so a lot of it is actually the engineers and people are concerned about the fractions.

Mark Moshayedi

I think we’ve had pretty steady – we felt pretty steady on the number, its about 280, 290 people in think in R&D.

Rich Kugele - Needham & Company

Okay. All right, thank you very much.

Mark Moshayedi

Thanks Rich.

Operator

Thank you. Our next question comes from the line of Nehal Chokshi from Technology Insight Research. Your line is open. Please go ahead.

Nehal Chokshi - Technology Insights Research

Thank you. A couple of questions; first, you expect revenue to be slightly up, but EPS is flat. Can you help us bridge that gap? Is that expectations of lower GM or rationing OpEx there.

Mark Moshayedi

Yes, we are going into the proxy season and we are going to have higher consulting cost during this quarter. So its actually a step up that we are going to be seeing. Yes, because of all the activist attention that we are having, we are gong to see a step-up this quarter in our operating expenses.

Nehal Chokshi - Technology Insights Research

Okay, all right. And then it sounds like you are expecting some large non-OEM orders to come in, they didn’t come in, but you guys still have your guidance level. So that would imply that you had upside from OEMs, (a) is that correct? And if so, what was your driver to that.

Mark Moshayedi

Yes, I wouldn’t describe it as much as up side from the non-OEM. We guide conservatively and we guide with what we believe that we can do in the quarter and deliver to. Obviously this a new field for us and we are getting into the non-OEM business. During the quarter we had engaged and we felt that we would see some upside to that number, higher than what we actually achieved for the quarter and I think that was the color that was given.

Nehal Chokshi - Technology Insights Research

I see. Okay and I had one more question actually. Mark, so you mentioned that you’re targeting a 50/50 split between OEM and non-OEM customers. But in the near term it seems like there might be greater opportunity with non-OEM customers. Well, I think your telling me the six to 12 month range.

So do you see potential for that split to overshoot towards non-OEMs within a year of so or just trying to detect where the ramp for the OEM customers is going to come from as well.

Raymond Cook

All right, so just to be clear, we do see a ramp on both sides. We see a ramp both on the OEM side and the non-OEM side. So it’s not just on non-OEM side. We are putting emphasis on the non-OEM side, because we believe that’s an area that we could go and expand and expand our market share in that area and be able to expand our margin base.

But we also have traction with many OEMs that we’ve been working on over the last six to nine months on qualifications of many products and once these qualifications get done, we do see a ramp in our OEM sales as well. So as the OEM sales goes up, it’s going to become more challenging obviously for the non-OEM side to become 50%. So it has to grow at even a faster rate to be able to become 50% and our goal is to be able to get there by the end of the year.

Nehal Chokshi - Technology Insights Research

Okay, thanks.

Mark Moshayedi

Thanks Nehal.

Operator

Thank you. (Operator Instructions). Our next question comes from the line of Richard Shannon of Craig-Hallum Capital. Your line is open. Please go ahead.

Richard Shannon - Craig-Hallum Capital

Hi guys. Let me follow up on the last question just asked here regarding the OEM business and your expectations for growth. Mark, can you give us a sense of where those qualifications might be coming from, tier ones versus smaller customers. Any return in business and some of your customers have previously been 10% or more. Give us any flavor of how you see that coming in from home?

Raymond Cook

Right. So we have a guess on the large opportunities at one of our traditional top three accounts that they are finishing qualifications and we hope you might, end this year that their new product will go into production. And then we do have a series of new applications, which are more server centric; that’s traditionally in years past we have not gone after or done any qualifications with.

But these are household names and once they qualify the product, they will go also in production. So they are more server centric than they are the story centric from that perspective. But we do anticipate to be able to increase our OEM sales from quarter-to-quarter as well.

Richard Shannon - Craig-Hallum Capital

And kind of wrapping that in to one of these questions about OEM and non-OEM split here as you kind of put out a goal for the end of the year. Can you give us any sense of how should we think about the magnitude of the size of the business you expect get you to that 50/50 splitter by the end of the year.

Raymond Cook

That’s something that obviously we don’t forecast that for an advance, but this is the goal that’s been assessed for all the sales guys and that’s what everybody’s marching towards.

Richard Shannon - Craig-Hallum Capital

Okay, fair enough. Then tuition and operating expenses; just in general how should we see that ramp. I guess assuming everyone will see there’s improvement towards the end of the year once you get that 50/50 split. How should we think about OpEx growing and I guess basically on the R&D side as well.

Raymond Cook

I think from the R&D perspective, we should be holding ultimately flat on our R&D spend. G&A will ramp up this quarter as we have talked about with all of our property activities that we have going on, but generally our G&A is probably looking at a very stable range and sales and marketing is the one that we are continuing to bill it out and we will see that continue to ranch it up as we hire new personnel as we go throughout the year.

Richard Shannon - Craig-Hallum Capital

Okay, and then just last question from me, probably again for you Raymond. What does the breakeven model look like right now and what revenue level?

Raymond Cook

Yes, the breakeven model is still about $65 million to $70 million at a 40% gross margin range.

Richard Shannon - Craig-Hallum Capital

Okay, great. Perfect guys. Thank you very much.

Mark Moshayedi

Thanks Richard.

Operator

Thank you. And with now further questions in queue, I’d like to turn the conference back over to Mr. Gellman for any closing remarks.

Mitch Gellman

Okay, I just like to thank everybody for coming and just once again to remind you, if you have plans to attend either the Benchmark Investor Conference in Milwaukee at the end of May or Bank of America’s technology conference on June 4 in San Francisco. I’m just hoping that you’ll join us there.

Thanks very much everyone.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may all disconnect. Have a great rest of the day.

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