Ditech Network Inc. (NASDAQ:DITC)
F2Q10 Earnings Call
November 19, 2009; 4:30 pm ET
Bill Tamblyn - Chief Financial Officer
Todd Simpson - President & Chief Executive Officer
Sam Healey - Lamassu Holdings
Ladies and gentlemen, thank you for standing by. Welcome to Ditech Networks second quarter fiscal year 2010 conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session; instructions will be given at that time. (Operator Instructions)
I’d now like to turn the conference over to our host, Mr. Bill Tamblyn, CEO; please go ahead, sir.
Hi, this is Bill Tamblyn, I’m the Chief Financial Officer of Ditech Networks. Thank you for joining us on this conference call which will cover Ditech Networks announcement of our results for its fiscal 2010 second quarter ended on October 31, 2009. Today’s conference call will cover our financial results for the quarter and we will also provide outlook for the third quarter of fiscal 2010.
Todd Simpson, Ditech’s President and CEO will provide the business and strategic analysis and I will provide a more detailed analysis on the financials. Following, we will open up the call for Q-and-A.
Before we begin, let me state that this conference call is being held on November 19, 2009. Any sound recording or republishing of the contents of this conference call is expressly forbidden without the written approval of Ditech Networks.
Also we must point out that as with similar presentations, the following discussion contains forward-looking statements and in particular, the financial projections for our third fiscal quarter of 2010 that involves risks and uncertainties. Our actual results may differ materially from those discussed here. We will attempt to identify such forward-looking statements with qualifying words such as we intend, plan, believe, estimate or predict, or we may, could or will or other comparable language.
Factors that could cause results to differ include factors discussed today in this conference call and in our press release today as well as those detailed in the section entitled future growth and operating results subject to risk of Ditech’s Form 10-Q for the first quarter ended July 31, 2009 which was filed on September 2, 2009 with the Securities and Exchange Commission.
We assume no obligation to update these projections or other forward-looking statements. Additionally, let me comment on our approach to governance and SEC compliance. Let me mention that we have no off balance sheet entities or associations. We believe we have to the best of our knowledge disclosed all obligations and related party transactions as required.
Our auditors do not perform consulting services for us, such as systems reviews, IT reviews or any other Forms of consulting services. We comply with all effective SEC and NASDAQ requirements, related to audit committee compliance and independence and we continue to adhere to Sarbanes-Oxley compliance requirements.
Today’s announcement was released over the wire this afternoon in a press release and you may also read it on Ditech’s website by going to the investors section of the site at www.ditechnetworks.com.
Non-GAAP financial measures will be discussed on the call and a reconciliation of GAAP and non-GAAP financial measures is disclosed in our press release of today as well as in our press release of August 20, 2009 with respect to our Q1 numbers, both of which are located on the Ditech website at www.ditechnetworkds.com.
With that, I’d like to turn the call over to Todd to comment on the announcement and our strategy going forward. Todd.
Thanks Bill. Good afternoon everyone. I am going to hand the call back to Bill in a few minutes to go through the very detail numbers, but as you will already have seen from the press release our revenue is down slightly this quarter, but similar to the last few quarters. Our OpEx with inline with our expectation and factory note the payment of Simulscribe we made in the quarter or use of cash was better than expected, primarily due to good collections in the period.
As we integrate in a line of Simulscribe products we have also lowered our OpEx run rate to little over $5 million per quarter after one time expenses. So, as we’ve been projecting over the last year the marketplace for voice application is becoming a vibrant and fast paced sector. The stakes are high, voice is the largest revenue generating service for many carrier networks and traditional carriers are in danger of becoming irrelevant in the next generation of voice.
Rich high quality voice applications have two main elements. First is the ability to setup calls flexibly from different environments, for example single number services and seamless transitions from web to mobile. Second is the processing of the voice itself. How it’s sound? How it’s mixed? How it’s interpreted? This second element is clearly our focus.
Our expertise and our strategic path are both aligned around real time media process. Our voice quality algorithms, our partnership with Simulscribe and our strategic investments in mStage and toktok, are all centered around providing carriers better faster and more flexible tools for processing voice. Within that focus area, we’re actively working to diversify to reach broader markets and have a wider portfolio products and to generate recurring revenue as well as platform revenue.
Our partnership with Simulscribe announced in mid September is a quantum step forward on this past. It provides us with a recurring revenue stream and broadens our product portfolio and market opportunity. As part of our dealer Simulscribe, we can leverage the phone tag brand name and we will use phone tag as the primary label for these products going forward.
At the heart of the phone tag product is a freeform speech to text system, enable by both machine transcription and human transcription. Freeform speech to text allows for almost anything to be said, while talking to an application unlike most menu driven systems. The primary application today is voicemail-to-text a market that we believe shows the potential for significant growth within carriers. However, the same technology can be applied to other applications such as those showcased by toktok. I will return to this is a moment.
Perhaps the most visible indicators of market disruption is Google Voice. They continue to expand their services and offerings and our real threat to incoming voice providers. Some carriers have started to partner with the new players, Verizon with Google and AT&T, Skype for example and some large carriers like British Telecom, through their Ribbit division are already actively engaged in reinvent themselves in an effort to participate in this new market.
We expect many large carriers will invest in voice application over the next few years, in order to mitigate the raising threats. During this transition, the business models behind voice will also have to evolve. So for companies like Ditech, this evolution provides an opportunity. We believe we’re positioning ourselves well within the space.
Voice mail detects is a prime example of an application being driven at least partially by competitive forces in the marketplace. It is a prominent feature of both Google Voice and Ribbit and is being widely considered adopted and rolled out by carriers. There’s a variety of voice mail detect solutions on the market from fully human to fully automated.
The decision on how much human touch is required can be made based on market focus, a specific application, or a customer requirement such as security. The more automation that is used, the lower the cost of the solution, and in general the wider the adoption will be. With phone tag, we have the full spectrum of products.
Our product called Scribe-All, which converts voice using high touch manual transcription, and product called phone tag auto, which uses only voice recognition software, and a product called phone tag hybrid, which uses the combination of both. Obviously, humans do not scale quite as quickly or as easily as machines, so our main focus is on automation, which is where we can leverage our media processing background to add additional value.
There are a number of automated products in the marketplace, and we looked at many of them before choosing to work with Simulscribe, as we believe that phone tag is the best automated solution. We have also analyzed the impact of our voice quality algorithms on phone tag accuracy rates and believe we can further improve the service across the phone tag portfolio.
Ultimately, we feel that phone tag is a great solution and that together we can compete aggressively within this space. We expect that phone tag is the first of many voice applications that carriers will adopt more widely. Voice dialers, social network integration and better business integration will become more widely adopted as players seek out opportunities for incremental revenue or to support their existing voice revenue.
We have been bundling our view of these services under the toktok umbrella. In fact, there’s sort of a continuum of services between phone tag and toktok from which we are carefully including, which components to fully prophetize. We will continue to refine this offering, as we fully integrate phone tag and listen carefully to our customers and beta users.
Our toktok service is currently being use to showcase mStage and showcase our overall capabilities including phone tag, which has been integrated for voice mail use. Other features such as our voice dialer, voice per messages and social networking sides and calendar reminders are fully functional, and voice commands are available anytime before, during or after calls. We have influential users for many of our perspective customers on the system and as just stated, are using their feedback to guide where further R&D investment is placed.
While carrier interest in toktok continues, phone tag is an already established marketplace and is now our entry application into both the carrier and enterprise markets. Given this approach, we have scaled back our intentions of directly attracting large amounts of end user traffic to toktok and instead are focused on packaging and delivering the right components to our customers.
Since we did the deal with Simulscribe we receive the lot of interest in the solution and we’re busy turning not interest into real traction. We have signed up and are actively transcribing for a number of innovative carriers and are inactive discussions with several Tier 1 players. We expect to scale the revenue from this application over the next few quarters and diversify the languages, which we offer.
Our full strategy rests on top of our platforms, from our VQA business through to the mStage initiative. Our platforms address the issue of providing voice service with very high quality. Today this is differentiator, but we believe quality will be table stakes for the next generation of voice.
Let me spend sometime on the platforms in the VQA business, mStage is development continues to pay and as indicated in the last conference call we expect to be running early version to the system for customers this calendar year with real uptake starting in the next fiscal year. mStage does the heavy lifting behind the toktok services.
Currently our VQA platforms are our primary source of revenue and we continue to invest in voice quality algorithms to maintain our position as the clear leader in network based voice quality. This business, while challenging has the potential to grow in its own right as well as to bridge us through to increased recurring revenue.
The strength of our VQA platforms is also strategically important as it maintains and builds the relationships we require to sell our new platforms and applications. In the last few months, we have seen the impact of tighter capital and operating budgets worldwide. Operators are being very careful with every dollar they spend. That makes it even more difficult than usual for us to judge the timing and scope of deals.
Within that contact, we expect the current quarter to be similar to the last few as it relates to the VQA business. Our TDM products continue to be the focus of our international sales efforts. Our value proposition of allowing operators to scale more cost effectively using VQA versus adding more radio towers is a compelling way to save CapEx. However just stated we have seen tighter controls on CapEx budgets.
As with the last few quarters, we do not see opportunities going away. However, we do see timeframes flipping and decisions being deferred, making timing difficult to judge. Also in the last quarter, we finished a large study on the impact that VQA has on the amount of time people will spend on the phone. We found that, as we expected, people will talk more frequently in noisy environments when VQA is on.
Thus VQA also the potential to drive incremental revenue in markets where voice is charged on a per minute basis, which is typical of the fast growing international markets, we are in the process of integrating these results into our sales and marketing efforts to bolster our value proposition and business case.
Our PVP platform continues to sell mainly in the domestic market. We added another Tier 1 provider to the list of PVP customers this quarter and are actively pushing for deeper penetration within our existing customer based. The PVP provides the dual value proposition of voice quality and codec transcoding.
We are now finding that initial interest in one component, typically turns into interest in both, quality sensitive vertical markets and voice over IP interconnects remain our target markets with the PVP. So through all of this we continue to manage our expenditures with the goal of being as prudent as possible.
We have stated over the last few quarters that we’re aiming to keep our use of cash $202 mill a quarter and we are mindful of the risk reward balance of the spaces in which we are investing. AIMD continuous development and evolution of our platforms and the integration of Simulscribe into our growth strategy we have also manage to lower our expense line. Part of process included a reduction in headcount, Bill get some specific in a moment.
In summary we feel we have taken an important strategic step this quarter through our deal Simulscribe. We believe that will help us accelerate our vision of offering services beyond, but including voice quality and give us a foothold in the new voice application space. We still have a lot of work to do to scale this business, but it is within accruing and growing application space.
We’ve also made consistent progress with our mStage and toktok issues and will be actively refining our market approach by using phone tag as the leading application. Voice Quality remains the foundation behind all we were doing, and we continued to support and drive this business.
I’ll now turn the phone back over to Bill Tamblyn, to give more details around the numbers for the last quarter. Bill.
Thank you, Todd. I’d like to now share with you the financial results for our second quarter of fiscal 2010, as well as our outlook for the third quarter of fiscal 2010. Please allow me mention, that our discussion today, our operating results will be provided on a non-GAAP basis. Our press release posted on our website includes the summary information from GAAP and related reconciliation for Q2. The primary change is the elimination of approximately $600,000 related to stock compensation.
The key points of the second quarter results as noted in our press release are as follows. Revenues $5.1 million, non-GAAP gross margin 44%, non-GAAP loss from operations $3.9 million, non-GAAP loss of $3.9 million, the non-GAAP diluted loss per share from continuing operations was $0.17 per share.
The second quarter details are as follows. Total revenue was $5.1 million, a 16% decline from the prior quarter of $6.1 million and a 25% increase from the prior of $4.1 million. Q2 revenues were less than our projections several transactions that we thought would close by quarter end did not due to global tightening of capital outlay in operating budgets a dynamic that Todd discussed earlier.
International revenues worth 33% of total revenue, we had two greater 10% customers in Q2 and have approximated 41% of the revenues compared to four greater than 10% customers in Q2, that approximated 83% of revenues. Non-GAAP gross profit for the quarter was $2.3 million, or approximately 44% of revenues below our prior projections of the 54% approximation.
Our lower than projected revenues as well as treatment of several installation contracts contributes at lower gross profit. We continued to prudently manage our inventory levels to ensure that adequate reserves are maintained. The non-GAAP operating expenses were approximately $6.2 million for the quarter in line with our projections. However, our projections did not include $350,000 of transaction cost incurred in the negotiation of exclusive relationship with Simulscribe.
So our results were better than otherwise expected. This is down from $7 million in same quarter in the previous year. The details of the operating expenses for each area are as follows. Non-GAAP sales and marketing expense was $2.3 million, this was an increase of $200,000 in the prior quarter, due primarily to expenses on Simulscribe.
Non-GAAP R&D expense was $2.8 million, supporting our legacy business and new mStage toktok initiatives. This was relatively unchanged from the prior quarter. Non-GAAP G&A was $1.2 million, down $100,000 from the prior quarter and in line with our expectations based on lower RFPs in the period as expected. Other income expense netted to income of approximately $100,000, due to general low returns on short term investments. We continue to invest in highly rated conservative investment vehicles.
Non-GAAP pre-tax operating loss was approximately $3.9 million versus the non-GAAP loss of $3.3 million last quarter. Non-GAAP income tax is tied to AMT and foreign taxes. Our non-GAAP net loss was $3.9 million, which is $0.15 per share compared to $3.3 million or $0.13 per share in the prior quarter. To reiterate, all the operating results that I have just given you, other than the revenue and net interest expense on a GAAP basis.
Please refer to our press release for the first and second quarters of fiscal 2009, and fiscal 2010 for comparative GAAP results as well as the reconciliations of the non-GAAP results to our GAAP results.
Moving onto the balance sheet and cash flows, both of which are on a GAAP basis, cash equivalent short term and long term investments at quarter end totaled $38 million and approximate $4.2 million reduction from the prior quarter, $3.5 million of the reduction was to fund our exclusive agreement with Simulscribe. The remaining reduction of $700,000 was better than our expectations of $1.5 million to $2 million.
As of October 31, this year our second to last auction rate security was redeemed at par. We now have only one remaining auction rate, which is valued at $100,000 on a $10 million par and we are pursuing arbitration on that investment. Cash used in operation was approximately $340 million for the quarter. This too was significantly better than expected and is based on ability to collect our accounts receivables more effectively and consume $1.4 million in inventories.
At quarter end, accounts receivables were approximately $1.9 million. This was a $1.6 million decrease from the prior quarter. DSOs in Q2 were better than our long term expectations that approximately 33 days and we’re better than the prior quarters 52 days. As we stated in previous quarters, we expect our long term target to be between 45 and 55 days. Let me remind you that our DSO numbers are subject to change as the timing of sales and shipments in any given quarter as always subject to fluctuations.
Net inventory was $8.7 million at quarter end, down $1.4 million from the prior $10.1 million. This decrease in inventory is solely based on using existing inventories for customers and bringing in nominal new inventory during the period. At quarter end, we believe the remaining inventory is still usable based on our forecasts.
Capital spending was approximately $250,000 in the quarter and depreciation and amortization approximately $660,000. We ended the quarter with 105 employees, essentially flat from the prior quarter. However, we did a reduce in our workforce in early November by approximately 10% and it addresses expenditures based on the stages we are at in development with the legacy and other products and the other operating areas of the company. This reduction was severance pay will not be significant OpEx in Q3, but it will be for Q4 at $700,000 from our total operating expenses.
I will now review our GAAP productions was the third quarter of fiscal 2010. In this regard, please not the cautionary statements regarding these forward looking statements that we gave the begging of the call. Our Q3 outlook is drive from existing backlog, deferred revenues and our bookings forecast. Therefore we project revenue is to be similar to the last few quarters based non tight year end budgets and a timing of starting calendar 2010 budgets. We believe the gross margins to be in a range of 45% to 50%. This may vary based on product and customer mix.
Regarding operating expense, we are continuing to manage our legacy platform businesses as sustainable breakeven businesses and are therefore moving resources and related dollars to the new initiative, our phone tag, mStage, toktok. Additionally, the quarter will include severance charges for the reduction in force and we expect those operating efficiencies will benefit us in Q4.
Operating expense in the third quarter will be tied to customer and channel mix, and the investments in mStage toktok as well as Simulscribe. Overall, we would expect GAAP operating expenses including estimated $500 million of stock based compensation to be approximately $6.1 million to $6.3 million. This would be an approximate 10% reduction from Q1 and Q2 levels.
Our tax rate once again, should be in the range 1% to 3%, due to the loss situation we’re in. Additionally, a couple of other data points for you. In early November, we issued an 8-K and press release on a litigation settlement. This is related to a derivative action that began in 2006. The settlement is for $1.50 million. This settlement will recover 100% by our insurance provider.
Ditech had less than $15,000 of cost in Q2 related to this litigation and should have no cash or P&L impact going forward based on our meeting or detectable limits in Q2. Weighted averages shares should still continue to be calculated on a basic basis due to our losses and should approximate 26.3 million shares. Our cash burn remains a major focus for us.
For the first six months of the year we have used only $1.5 million in cash outside the $3.5 million payment on Simulscribe. This was better than our projections, we hope to continue to control our cash burn rate and keep it at a minimum. Over the next two quarters however we still project cash burn to be $1 to $2 million per quarter. However accounts receivable timing could be significant at the end of Q3.
Based on the type of transactions we expecting Q3, they will have staggered payment terms that will increase receivables. Therefore with increasing accounts receivables also in severance costs, we would expect our cash at quarter end to be $2 to $3 million from Q2 levels. However our expectation would for Q4 to be more normalized and we would see a reduced use of cash.
Therefore over the next two quarters we will burn $2 to $4 million in total. Looking at Q2 as a whole we were disappointed with reduced revenues and gross margin levels. However the Simulscribe relationship has created many leads and contributed a couple $100 in Q2 revenues despite the fact that the sales activity didn’t begin until mid September, halfway through the quarter.
As Todd intimated this is a strategic partnership that we are very excited about and have high aspirations for that said we remain very focused on legacy business revenue growth, conserving cash and aggressively minimizing operating cost while investing appropriately in the business.
With these comments, I would like to turn it back to Todd.
Thanks Bill. Shannon, we can now open up for question.
(Operator Instructions) Your first question comes from Sam Healey - Lamassu Holdings.
Sam Healey - Lamassu Holdings
I want a keep up the same line of questioning that we usually take regarding the continued investment in mStage and toktok at the $1 million to $2milion level per quarter. Bill last call you told about that by the end of the fiscal year, which is now only a quarter and halfway, if we didn’t see a significant traction and understanding that would be significant revenue opportunity from an ROI basis.
We think the continued to investment in this initiative or clearly from the revenue you just did and from your guidance for next quarter, if there is traction is not significant nor is it revenue generated. So, its just concerning here that you plan that same level of investment going forward.
What I am missing in terms of your thought process on a continued investment in something that each call you push back the potential for any revenue or is there any quantify away because Todd two calls ago you told about that you would have significant tractions by the end of this calendar year in your mStage toktok investment, but we can see some sort of traction, because its clearly not in the revenue nor is it in the revenue guidance?
We I believe we have been consistent over the last few quarters and we’re not changing that story right. So, we believe that there is significant upside potential in the market we’re investing in and we’re also cognizant that you have to do that within a certain reasonable timeframe and you do have to show traction and ultimately revenue growth and so Sam you are correct that in the last call we said we have to do that by the end of the fiscal year, otherwise we would have rethink things and I think that is the same story.
Sam Healey - Lamassu Holdings
So, I misunderstood Bill’s comment of continuing to invest in new initiatives as $1 million to $2 million for the next several quarters, but by that you really meant just until the end of the fiscal year and at that point, you would, to quote him make an assessment and continue to do something else with rather than proceed down this path?
Yes, now that said, I mean, we’re pretty confident that on the path we’re on that we’re going to meet what we have said and create a significant opportunity here, but yes, that is consistent I think what Bill said for the next quarters, which take us to the end of the fiscal year.
Sam Healey - Lamassu Holdings
In order to better understand your revenues, you don’t break out business by business, but you have said that there would revenue from the mStage toktok investment in this calendar year and the ramp would be slow and it would be significant in your next fiscal year.
Can I understand that there has been or will be some revenue in this calendar year from that product and if so, does end division on your other businesses are in fact that there we go then you might have otherwise expect it, because I believe you weren’t expecting a $5 million revenue rate with contributed revenue from the new initiatives. Is that fair or can you clear that up for me?
First of all on the existing business, the VQA business, the issue we have is an issue we’ve had for quite a while, which is a very lumpy business. So, timing closing large transactions to show sort of learner growth is definitely an issue, which is why we’re working hard to get into a recurring revenue stream and so more consistently more projectable revenue growth.
So I don’t think we’re same that the VQA business is softer than we expected or what not. We’re just dealing with the issue that it’s a lumpy business at these revenues levels that can create quite a swing from quarter-to-quarter.
Sam Healey - Lamassu Holdings
It’s something I don’t understand it’s lumpy and had the last several quarters and your guidance continues to only as be that revenue will be similar. So I don’t see the lumpiness, what I see is the fundamentally weak business and aggressive investment in something where you’ve continued to push back when we’ll get revenue it, but again you’re running the business not me. So correct me if I’m wrong.
The other thing what the VQA business is that the transactions are large so, I think and we’ve consistently say this and it is consistently true that there are enough large potential transactions there that I think it will be shortsighted to discount those and they simple, we have to close them. In terms of what we’ve said around mStage and toktok, I think you’re largely correct.
So I think, we carefully use the thought that we wanted to see transaction in this calendar year and I believe we are seeing that in terms of the interest we are seeing in the products and now we have to convert that into real revenue as you’ve said in the next period. Finally, of course, we’ve done the strategic move with phone tag Simulscribe to actually kick start that recurring revenue. So we have done that and I believe it actually makes our risk awarded going forward quite a bit better than it was, in that we can use phone tag as sort of the leading edge application into the recurring revenue business.
Sam Healey - Lamassu Holdings
That’s I commend that initiative in terms of opening up another way to get some revenue to this product. I think, what I want to drill down with or keep handling on is the fact that we continued invest and traction is not quantifiable so it’s hard to sit here as an investor and watch the value of assets go down and I think every investor will admit that they regularly go down at a fairly strong rate simply based on the notion of traction.
So I guess what I’m drilling forward, it seems like your committing to is that should we not have material revenue visibility on this in the next quarter and half at this point that we will stop this level of investment in a product that seems to not have revenue on the other side of it and that basically what you’re saying?
Yes, I think I believe I heard you properly, right. So if we didn’t see strong potential for upside from our investments and it would not be good business decision to continue forward. So we feel that we do have that potential and at the same time we’re trying to be very prudent with our investments and…
Sam Healey - Lamassu Holdings
I think what shareholders are asking, is not that you guys see potential, because you’ve seen potential for a long time and we put enough money into this idea of potential, but in fact something that is quantifiable in the means of revenue approaching, I believe the number you have was $4 million from product to justify the investment or in Bill’s words, a meaningful and significant ROI return by the end of this year.
I don’t want to be here when you next come to us. Now half a quarter away from the end of fiscal year and be talking about potential. We’re going to need to hear from you all pretty soon and I’m trying to get you to commit to stick to what you said or as not potential, but revenue that can be quantified from this product or a decrease in the level of investment in it, which is once where you’ve pointed us last call, but now we seem to be stepping away from and sticking more to potential rather than real justifiable ROI on your investment?
We’re not stepping away from what we said last call, in fact I think hopefully we’re saying the same thing. Of course if potential, until its revenue, so there’s a transition point where it turns into revenue would we be continuing to invest if we didn’t think it was significant and that would have a good ROI. That would not be a good business decision.
So we’re trying to balance that with the fact that bringing new products into the telecom market does not happen overnight. So given the market were in, there’s a certain runway that you have to invest through in order to get these products through to their revenue generating stage. We’re cognizant into that balance.
Sam Healey - Lamassu Holdings
What I guess, I’m asking you to sort of verify right now on the call is you have indicated by at this stage in the calendar year, you should be well along that runway. I understand there’s a transition phase to revenue. What I’d like to hear is that you all well along in that runway and that meaningful revenue is something that is realistically in the near future, because it continues to get pushback and the investments continue to be made, that’s what I’m asking for?
Not so much as where you are in calendar year investment, but you have said at this point, trials would be out there, customers would have the product, we would be on the runway. So if can’t give me something quantifiable that says the continued investment in this is prudent, I’d least like to get you on the record of saying that, yes. You are significantly down that runway and continued investment makes good sense?
We are down the runway for sure. We have influential users from our perspective customers on the system. We have many dialogues around the platform that we expect to turn into real business in the timeframes that we’ve outlined.
(Operator Instructions) Gentlemen, there are no future questions, please continue.
Thanks everyone. Of course feel free to call in, talk to Bill or myself or drop by and see us here at Ditech. We appreciate you calling in for the call and look forward to the next update in February, if you here in the U.S. enjoy your Thanksgiving. Thanks.
Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T executive teleconference. You may now disconnect.
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