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Globus Medical Inc (NYSE:GMED)

Q2 2013 Results Earnings Call

August 1, 2013 5:30 PM ET

Executives

David Paul - Chairman and CEO

Dave Demski - President and COO

Richard Baron - Senior Vice President, Finance and CFO

Ed Joyce - Investor Relations, Director

Analysts

Bob Hopkins - Bank of America

Matt Miksic - Piper Jaffray

Bill Plovanic - Canaccord Genuity

David Roman - Goldman Sachs

Richard Newitter - Leerink Swann

Steven Lichtman - Oppenheimer

Operator

Welcome to Globus Medical’s Second Quarter Earnings Call. At this time, all lines will be on mute and a Q&A session will be held after the prepared remarks. Joining today’s call from Globus Medical will be David Paul, Chairman and CEO; Dave Demski, President and COO; and Richard Baron, Senior Vice President of Finance and CFO; and Ed Joyce, Investor Relations, Director.

I will now turn the call over to Ed.

Ed Joyce

Thank you and thanks for being with us today. I will now read our required legal disclaimers.

During this call, items may be discussed that are not based entirely on historical facts. These items should be considered forward-looking statements and are subject to many risks, uncertainties, and other factors that are difficult to predict and may affect our business and operations. As a result, our actual results may differ materially and adversely from those expressed or implied by our forward-looking statements.

As discussed -- a discussion of some of these risks, uncertainties, and other factors are set forth in our Form’s 10-Q and 10-K on filed with the SEC. These documents are available at www.sec.com.

We take no obligation and do not intend to update any forward-looking statements as a result of new information, future events or circumstances arising after the date on which it was made.

The financial information discussed in connection with this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in our second quarter 2013 Form 10-Q.

Our revenue, earnings, operating margins and similar items are sometimes expressed on a non-GAAP basis and have been adjusted to include certain items including among other things interest expense, depreciation, amortization, taxes, provision for litigation loss or income, and stock-based compensation.

The comparable GAAP financial information and a reconciliation of non-GAAP amounts to GAAP amount can be find -- found in the tables included in today’s earnings release, which is available on the Globus Medical Investor Relations website at www.globusmedical.com.

I will now turn the call over to Dave Demski, President and COO.

Dave Demski

Thanks, Ed, and welcome to everyone on the call. I will provide a commentary on our overall performance for the quarter, Rick will give some additional color on our financials, and then David Paul will provide some insight into our product development efforts.

We had record breaking sales in the second quarter and the first half of 2013. We continue to execute on our three-prong strategy of technology innovation, expanding our sales force footprint both domestically and OUS, and maintaining financial discipline and operating efficiency.

Second quarter sales were record $107 million, 11.5% higher than Q2 2012. Not only this growth rate outstanding in comparison to our peers it is compared to a very strong Q2 in 2012 in which we grew 18.6%.

Adjusted EBITDA of 34% compares to 36.1% in Q2 2012. A reduction of 2.1 percentage points, in line with expectation as 1.6 percentage points of this delta is attributable to the medical device excise tax.

As previously announced, the jury trial with DePuy Synthes concerning our plate spacer technology concluded on June 14th with the decision in favor of DePuy Synthes. We had reserved a total of $19.5 million in the second quarter to cover potential damages and cost associate with lawsuit.

While we are not happy with the result and intend to appeal, we do have clarity on the magnitude of the liability and result does not impact future revenues as improved versions of all three products were launched in late 2012.

We continue to launch a steady stream of new technology. In Q2 we launched six new products including LATIS, a unique laterally expanding interbody device that David will discuss in his remarks. Our pipeline of future products is significant with some exciting second half launches anticipated.

Sales force recruiting continued to have robust pace in the second quarter. While we don’t really specific headcount numbers our net U.S. additions in the first half of 2013 surpassed the full year net additions in the U.S. for every year since 2007. Not only has the quantity of recruits been excellent, the quality of experienced sales professional has been exceptional.

As we have discussed in the past, the impact of recruiting on sales tends to be modest in the first 12 months after hire. With a more pronounced ramp in the second year due to non-compete restrictions.

The large uptick in the first half hiring could result in slight drag on EBITDA percentage over the last half of this year, but it should not be a material. We are excited about the potential impact of our first half efforts in this area and expect to see positive sale momentum over the next 18 to 24 months.

Revenue from international operations grew 20.3% in Q2 over the comparable period last year. Between 2010 and 2011, we grew our OUS footprint from five to 24 countries. Much of our efforts during the first half of 2013 were focused on improving the efficiency of our OUS operations and getting that segment of the business EBITDA positive.

With that behind us, we are now focusing our efforts on deeper penetration within each country in order to accelerate sequential growth. We continue to see significant upside in our OUS business.

Consistent with last quarter pricing pressure remains in the low to mid-single digits. Pushback from payers seem to have stabilizes, the impact of the OIGs Special Fraud Alert on PODs seems to have slowed the growth but has been somewhat disappointing and that we have yet to see meaningful reduction in POD participation. We see the return of overall stability to the spine market as favorable, particularly in light of our continued market share gain and industry leading growth and profitability.

In summery, we are pleased with the quarter, we achieved record leading sales growth, launched six new products, maintain exceptional adjusted EBITDA margin and continued recruiting top industry talent to our team. This performance leaves us well situated to deliver outstanding results in 2013 and beyond.

With that, I will turn it over to Rick to discuss our financial performance in more detail.

Richard Baron

Thank you, Dave. Today I will review our performance for the second quarter of 2013 as compared to the second quarter of 2012, for key elements of the income statement, balance sheet and statement of cash flow.

Our worldwide sales for the second quarter of 2013 were a record setting $107 million. This was an 11.5% increase over the second quarter 2012. Our growth continues to be driven by sales of our disruptive technology products, which increased this quarter to $44 million or by 26.7% from the prior year's quarter. Innovative Fusion sales increased to $63 million or by 2.9% from the prior year's quarter. Sales in the United States for the second quarter of 2013 grew to $98.1 million or by 10.8% while international sales grew to $8.9 million or by 20.3% from the prior year's quarter.

Overall growth in sales was attributed to expansion of both domestic and international territories and greater penetration in existing territories and countries. Gross profit for the second quarter of 2013 was $82.2 million or 76.9% of sales for the current year's quarter as compared to $77.6 million or 80.9% in last year's second quarter.

The percentage in the current quarter was unfavorably affected by 1.6% or $1.7 million due to the medical device excise tax and by a $1.3 million provision for litigation relating to the DePuy Synthes lawsuit. The charge was due to a write-off of certain inventory which will now be sold due to the verdict.

Research and development expenses this quarter were $7 million or 6.6% of sales as compared to $6.9 million or 7.2% of sales for the same period of 2012. The change in the percentage of spend does not signal a change in overall spending on R&D but is due to the timing of certain expenditures in the course of the year.

Selling, general and administrative expenses were $45.8 million or $42.8% as compared to $41.2 million or 43% of sales for the prior year second quarter. The percentage of sales is a slight improvement as compared to the prior year sales.

The increase in SG&A dollar expenses was primarily due to the increase in sales of the company and related compensation which included the hiring of additional sales representatives. Operating income decreased to $11.2 million or 10.5% for the second quarter of 2013.

Excluding the impact of litigation expenses of $19.5 million and the medical device excise tax, the operating margins would have been $32.4 million or 30.3% as compared to $29.4 million or 30.7% of sales for the prior year's quarter. Adjusted EBITDA for the second quarter of 2013 was 34% or $36.3 million as compared to 36.1% or $34.7 million in this prior year's quarter. Without the medical device excise tax expense, the adjusted EBITDA would have been 35.6% or $38 million.

Algea had a limited affect on the quarter as compared to the prior year's quarter. Q2 2012 was the first quarter that included Algea sales. Its effect during this -- in a period-to-period comparison on adjusted EBITDA at this time is immaterial.

Income tax rate for the quarter -- current quarter was 32.3%. The decrease in our tax provision and effective rate was primarily due to the $19.5 million DePuy Synthes litigation loss, the timing of the American Tax Payer Relief Act and other charges -- changes to the components of the annual effect of rate calculation. The effective rate for the three months ended June 30, 2012 was impacted by the inability to recognize the effect of the restated tax credit in the period of the qualifying activity.

Net income and GAAP EPS was $7.4 million and was 6.9% of revenue. Earnings per fully diluted shares was $0.08 per share in the second quarter of 2013 as compared to $19 million or $0.21 per fully diluted share for 2012. Excluding the provision for the litigation loss, primarily associated with the DePuy Synthes case, non-GAAP earnings were $0.21 per diluted share as compared to $0.20 in the last year's second quarter.

A table reconciling this number and other non-GAAP numbers can be found attached to our press release in Form 10-Q when filed. Fully diluted share count for the second quarter was $94 million and $91.3 million as of June 30, 2013 and 2012 respectively. Total cash and marketable securities balances combined were $231.7 million as of June 30, 2013 compared to $224.1 million as of March 31, 2013 with a net cash increase of $7.6 million during the second quarter.

Cash provided by operating activities for the six month ended June 30, 2013 was $27.3 million compared to $34.9 million for 2012. All of our marketable securities are classified as available for sale as of June 30, 2013.

The total investment in CapEx was $13 million and $11.8 million for the six months ended June 30, 2013 and 2012 respectively, we continue to remain debt free. In terms of our revenue and earnings outlook for the year, our expectations have not changed. We remain comfortable with our previous guidance of 2013 annual revenue of approximately $432 million and non-GAPP fully diluted EPS of $0.81.

I will now turn the call over to David Paul.

David Paul

Thank you, Rick. We are pleased to report on our second quarter performance, again with industry leading metrics. Once again our ability to consistently launch innovative products attract top sales force talent and maintain financial discipline has enabled us to deliver superior growth and profitability.

In addition to a strong financial result has already alluded to you by Dave, our sales recruiting efforts were particularly strong through the first half of the year with Globus remaining the destination for the best sales talent in the spine industry. We launched six new products during the quarter, bringing our total launches through the first half of 2013 to eight.

Our development pipeline across all segments continues to remain robust and on track to launch more exciting new products in the second half of the year. I will now speak specifically about one of those products launched, the LATIS spacer a minimally invasive lumbar interbody fusion spacer.

This is the first laterally expanding unitary implant on the market to offer the benefits of a traditional anterior implant through a posterior approach. The launch of LATIS provides spine surgeons with a new tool in their armamentarium, the ability to obtain the footprint and bone grafting space only found with anteriorly placed interbody cages through a direct posterior or transforaminal approach.

LATIS allows surgeons to achieve their surgical goals while obviating the anterior approach and its inherent challenges, potentially leading to shorter operative times and less blood loss by using the same approach for posterior fixation combined with our revolved MIS medical screw system, the entire procedure is designed to maximize preservation of the stabilizing muscles of the lower back.

This is another example of the Globus product development engine creating a market leading technological improvement. LATIS with its narrow 10 millimeter width is designed for a small insertion window to minimize nerve retraction and expands to create a large graft area for an optimized fusion mass.

We continue to build on our growing franchise of expandable interbody fusion technologies that have now been used in over 20,000 levels in the U.S. alone. Given the broad range of interbody preferences and patients needs presenting to the surgeon, our strong portfolio of MIS supplemental fixation and MIS friendly instruments create the perfect complement to our suite of expanding technologies. More than 75% of spine surgery is still performed through a posterior approach and having yet another leading technology enables us to further gain market share in the largest procedural segment of spine surgery.

Within the lateral space, we continue to take market share with robust growth as we have introduced new products that have enabled us to leapfrog our competition. Our product development team continues to perform at a high level and will continue to produce cutting edge technology into the foreseeable future. We are excited about our products in the second half of 2013 and beyond, as we continue to execute on our disciplined strategy of profitable growth.

We are now happy to take questions from you.

Question-and-Answer Session

Operator

(Operator Instructions) And your first question comes from the line of Bob Hopkins from Bank of America. Your line is open.

Bob Hopkins - Bank of America

Good afternoon. Can you hear me okay?

Richard Baron

We can hear you, Bob.

Bob Hopkins - Bank of America

Great. Good afternoon. So just to start out, I'm sure you anticipated this questions to some degree, given what NuVasive reported yesterday, but I was just wondering, if you could let us know whether during the quarter you also received a subpoena relative from the OIG or if you did not?

Dave Demski

Bob, this is Dave Demski. We have had no communication with the OIG.

Bob Hopkins - Bank of America

Okay. Perfect. And then now on to the fundamentals, two things I want to ask you about. One is, you guys could give us some sort of estimate on LATIS in terms of the size of the market opportunity? And then on the new hires, it sounds like you really had obviously some robust activity there?

Can you give us a sense as to, do most of those guys have non-competes and need to move to different geographies, or are these folks that can come in and start to have an impact from day one? Thank you.

Richard Baron

Yeah. The first part of your question about LATIS that, that’s one of the biggest segment in posterior lumbar fusion. So it’s a huge potential opportunity. We don’t quantify or put out estimates on individual products in terms of our expected performance.

And then in your -- on the recruiting question, for the most part when we refer to the competitive hires, people with experience, they do have non-competes, not always true but generally the case, that’s why the first 12 months performance is difficult to predict, as well as we expected to ramp up after 12 months.

Bob Hopkins - Bank of America

Okay. And then, so just follow up on LATIS, maybe, I know you, you went into some detail here, but if you could just give you a little more color on exactly what this does for the surgeon in terms of what he used to have to do posteriorly, I’m sorry, interiorly, and he can now do posteriorly? Maybe just a little bit more of description of the benefits that this bring, that would be great?

David Paul

Sure. Bob, this is David. So, for a surgeon to perform a 360 degree fusion that is with anterior column fusion in the anterior column and posterior column fixation, surgeons would have to do an anterior approach to put in a lift cage and then flip the patient and put medical screws or other supplemental fixation.

LATIS now enabled the surgeons to get the same type of anterior column support without an anterior approach. So they can approach the spine from a posterior side approach and get the same anterior column support like in a lift and do the supplemental fixation also with a posterior approach. So we see this as a huge benefit for those surgeons who are going anterior now to get that type of a bone grafting volume and footprint into the disc space.

Bob Hopkins - Bank of America

In addition for launch now.

David Paul

Yeah.

Bob Hopkins - Bank of America

Great. Thank you very much for taking the questions.

David Paul

Thank you, Bob.

Operator

Your next question comes from the line of Matt Miksic from Piper Jaffray. Your line is open.

Matt Miksic - Piper Jaffray

Hey. Thanks. Just a follow up on Bob’s question there on LATIS. I’ve seen the product and it definitely looks quite innovative. I wanted to just clarify one thing about it, which is you of course can, you can put in cages, put in spaces in the posterior to the (inaudible), I think everybody familiar with that, the difference here being that, those are typically fairly narrow and this is quite a bit wider and your comment on, similar the kind support that you get from wider cage upfront, is that right?

David Paul

That’s correct, Matt, so this cage goes in from a posterior approach or transforaminal approach with a narrow window and then expands inside in the disc space, so you can get a wide footprint comparable to an a lift.

Matt Miksic - Piper Jaffray

All right. I do have one question for Rick around EBITDA, but I though, David, it would be very helpful given that we thought the number of times about rapid innovation and how you go from whiteboard commercialization in a faster time, a lot of companies would normally try to do? Can you just expand a little -- unattended, expand a little bit on what the front to back process for this product look like, is this sort of the cage example, would that be too much that, can I call like that?

David Paul

Probably a little too much for a call like this, if I would estimate the timeline on this, I would say about 15 months.

Matt Miksic - Piper Jaffray

Okay. And IP on this product?

Richard Baron

Any IP.

David Paul

Yes. We have filed patents for this product.

Matt Miksic - Piper Jaffray

Excellent. Thank you. And one question for Rick on EBITDA, you talked a little bit about breaking even OUS and sort of that that being a goal, you there now, is that still I guess, breaking even, and then there is sort of getting up closer to what maybe developed market, or U.S. market businesses like. Can you talk about how long you think that will take, or is that a process that sort of eases sort of the downward business mix on EBITDA as we see it today as stable as it look?

Richard Baron

We are clearly on the path of to achieve that 34% or so adjusted EBITDA. We’ve turn quarter on breakeven this year as we said we would, we obviously don’t give out specific segment information. Mathematically or algebraically it is still a bit of a drag on that 34%, 35% goal as clearly as Algea. But we see, we concurrently get to that 34%, 35% range.

Matt Miksic - Piper Jaffray

So that would imply your U.S. business is kind of tracking north of that currently, correct?

Richard Baron

Yeah. Yeah. The -- to break it down, the U.S. business we’ve always said operates at a rate higher than that and you should look at the 34% to 35% aspirational goal to be a blended average of not only the U.S. but OUS, Algea and other projects that we might have that will come up over time.

Matt Miksic - Piper Jaffray

Great. Thanks so much for the color.

Richard Baron

Thank you.

Operator

Your next question comes from the line of Bill Plovanic from Canaccord Genuity. Your line is open.

Bill Plovanic - Canaccord Genuity

Great. Thanks. Just a couple of questions, one on pricing, you mentioned that the industry is still down low to mid single-digit. What is your specific pricing mix look like in the quarter?

Dave Demski

Hey, Bill. This is Dave. I was commenting on our performance, I’ve said, we are down low to mid single-digit.

Bill Plovanic - Canaccord Genuity

Okay. And then, on Algea, I know this is something that you’ve been building on, is that starting to gain traction or you still think that could ramp up in the back half of the year, or how are you thinking about that now?

Richard Baron

We are seeing growth in that division, it’s still of a small base but significant growth.

Bill Plovanic - Canaccord Genuity

And then just lastly, you discussed OUS and the efforts there in terms of getting deeper into those markets, is that something that will be rather quick turnaround or is that 2014 event for you? That’s all I have. Thanks.

Richard Baron

We expect to see somewhere in the second half but more pronounced in 2014.

Bill Plovanic - Canaccord Genuity

Thank you.

Operator

Your next question comes from the line of David Roman from Goldman Sachs. Your line is open.

David Roman - Goldman Sachs

Thank you and good afternoon. I was hoping, Rick, to get just a little bit more help here or maybe even from Dave with the guidance and how to think about the balance of the year. We are entering what was for you guys an industry last year a seasonally weak third quarter. So if we were to assume a similar trend as to what played out in 2012 that does imply a very significant ramp in the fourth quarter to get to deploy your numbers. I guess is that characterization correct and B, is there anything that you want to add to that as well?

Richard Baron

I just want to back up of our, I guess, to address our somewhat story to approach to guidance. We’ve been pretty consistent since the beginning of the number that we’ve put out there. We felt at the beginning of the year with that wonderful attempt that I made that we would be at $4.32. We felt comfortable in reiterating it both last quarter and this quarter.

And consistent with that we’ve always emphasized, as I know you know when everybody else knows it that you need to look at us over a 12-month period. It’s hard for us to predict quarter-to-quarter exact numbers and seasonably last year, I think the entire industry took up small different procedures and our growth was only around 12%.

It took a dip sequentially period-to-period, but that, we’re not going to comment into the future on a quarter-to-quarter approach. We’re really emphasizing the 12-month look and we’ve reiterated the $4.32 and the $0.81.

David Roman - Goldman Sachs

And I guess, the reason I push on the third quarter is, this is the third quarter you’ve been public your sort of one beat, one miss, one kind of in line, so I just want to kind of make sure that we’re capturing all the moving parts around the seasonal development in the business to try to get us on the same page more consistently.

Richard Baron

And I understand that, but we’re going to stick to the annual type discussion we feel, so that’s the best way to look at it. If you look at us over these past two quarters and consistent with the way that we attempted to guide, we’re actually probably a little bit ahead of that guidance, which is good. The original consensus when we talked last quarter was about $0.5 million in the other direction or almost a $1 million different. We reiterated then we’ll reiterate now, and we try and give you what we think we’re going to do. I can’t help you much more than that David.

David Roman - Goldman Sachs

Okay. And then maybe for David or Dave, on the LATIS launch you guys just, you call it on the press release, it’s obviously a big focus, it does sound like an interesting product? Is there any more perspective you can provide on or is there a past product launch that you want to compare to, I mean can you size up just in relative magnitude, the importance of this product launch, so we can think about the opportunity? And then I guess, the further question that would be how long does it take for you to start to see an impact from this launch?

David Paul

David thanks for your question. I wouldn’t characterize this as a homerun product. This would be another single or a double, along with typical characteristics of these product launches. We’re super excited about the technology that LATIS presents and so we’re looking forward to seeing how the market uptake is going to be. We’re excited about it. We’ve invested in sets and we’ve launched the product, and now we’re waiting to see how it will be accepted in the marketplace.

David Roman - Goldman Sachs

Okay. Thank you very much.

David Paul

Thank you, David.

Operator

Your next question comes from the line of Richard Newitter from Leerink Swann. Your line is open.

Richard Newitter - Leerink Swann

Thanks for taking the question. Rick, can you just provide us an estimate for the tax rate in the back half that we should be modeling?

Richard Baron

Yeah. I think the range that’s out there is in the 35% to 36.5% range. The effective rate this quarter is a little bit affected because of the impact of the large litigation situation. And the way that works from a technical perspective is, it kind of goes to the ratio of permanent differences and things like that which if I begin to explain everybody on the call, we’ll either hang up or fall asleep.

But that accounted for almost the entire delta between that expected rate that each one of you have and the ones that we’ve talked about. I don't think that. I think the rest of the year it will look more normalized than this one because we would not expect any impact from litigation going forward and the effect of other things has been taken to the numbers that we provided in the past. Does that help?

Richard Newitter - Leerink Swann

Okay. Yeah. That does. I wanted to ask one more just kind of similar to David’s question, maybe on the EBITDA margin side. Last year despite a dip in sales, the EBITDA margin held pretty consistent between the third quarter and the seasonally stronger fourth quarter. Should we expect a fairly even kind of cadence there?

Richard Baron

Well, what we have said for the year that we felt that, beginning of the year which happened. We were little bit higher at the beginning of the year than anticipated. We said that we would be well below the 34%, 35% range and actually when we had original conversations about it, we felt that we would not really achieve this 44% range until later in the year, and really we wouldn’t achieve it until Q4.

So the probability has been as we would hope. We’re in that 34%, 35% range. And we would expect to be able to move on from here but sticking within the range that you had historically and perhaps growing a little bit, but not much beyond that mid-34% range, that’s we still have investments and other things that we’ll be making.

Richard Newitter - Leerink Swann

Great. And if I could sneak one more in, just the comment with respect to PODs in your opening remark, Dave, was that, I think you said you’re seeing continue gravitation of your customers towards these entities? Can you maybe just give us a sense of any anecdotes that you’re hearing of the easing or what timeline you think or how does [Audio Gap]?

Dave Demski

I guess, my comment was that we were seeing quite a bit of activity of surgeons migrating to PODs prior to the fraud alert. We see still some folks going in that direction but that’s slowed down significantly. What we have hoped to see was people leaving PODs and we have seen much less indications of that at this point, people are kind of stay in POD, if you will. Does that help you?

Richard Newitter - Leerink Swann

Yeah. And I think that does. Thank you.

Dave Demski

Okay.

Operator

Your next question comes from the line of Steven Lichtman from Oppenheimer. Your line is open.

Steven Lichtman - Oppenheimer

Curious to see, I was just wondering if you could give us an update on how the training and launch is going there relative to your expectations?

Dave Demski

We continue to train folks. So we’ve got a fairly robust training program and the launch of the uptick is about where we thought it would be. We knew this is going to be challenging, given reimbursement and the training requirements and that is moving above where we thought.

Steven Lichtman - Oppenheimer

Dave, can you talk a little bit more about that in terms of the reimbursement because certainly things on the private side, things have gotten better from a product perspective. So what is still the challenges in terms of getting the ramp up quicker?

Dave Demski

There is still a number of carriers that don’t reimburse it and then we are not on the approved list of some carriers. We have to go through the steps that get our product on there as well and that involves getting -- we've got some peer-reviewed articles that will be published, that will help in that connection as well.

So you can -- the procedures are getting paid for. And I don’t know that we have any outright denials where patient wanted the prosthesis and was not able to get it. It’s just a challenge and it takes us longer for the patient and the surgeon. And I think some surgeons don’t want to go through that fight every time. They’d rather stick with the technology that’s just easier to get done.

Steven Lichtman - Oppenheimer

Okay. Got it. And then just secondly, you’ve given the ongoing decline in [NPUs]. Any updated thoughts on Biologics for you guys. Is that an area we should be looking for, for you guys to get more aggressive in over the next 12 to 18 months or so?

David Paul

Yeah. Steve, that’s definitely an area that’s -- it has been our focus over the last several months and we don’t speak about future launches but we are actively involved in multiple projects in this space. And as we begin to launch these products, we’ll be making the announcements.

Steven Lichtman - Oppenheimer

Okay. Great. Thanks guys.

David Paul

Thank you.

Operator

Your next question comes from the line of Matthew O’Brien from William Blair. Your line is open. Matthew O’Brien, your line is open. As there are no further questions at this time, I turn the call back over to the presenters.

Dave Demski

So thank you very much for being on our third call. This actually is the night before our first year anniversary of being public. So thank you all for participating and asking such good questions. Have a good night.

Operator

This concludes today’s conference call. You may now disconnect.

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