Telenav's (TNAV) CEO HP Jin on Q4 2016 Results - Earnings Call Transcript

| About: Telenav, Inc. (TNAV)

Telenav, Inc. (NASDAQ:TNAV)

Q4 2016 Earnings Conference Call

August 02, 2016, 17:00 ET


Cynthia Hiponia - IR

HP Jin - Co-Founder, President & CEO

Mike Strambi - CFO

Hassan Wahla - President, Automotive


Steve Dyer - Craig-Hallum

Josh Nichols - B. Riley

Greg Burns - Sidoti & Company


Welcome to the Telenav Fourth Quarter and Fiscal Year 2016 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Cynthia Hiponia. Please go ahead, ma'am.

Cynthia Hiponia

Thank you. This is Cynthia Hiponia, Telenav Investor Relations and I'm pleased to welcome you to Telenav's conference call to discuss its fourth quarter and full fiscal year 2016 earnings results. Joining me today is HP Jin, President and CEO, Mike Strambi, CFO, Hassan Wahla, President of Automotive, Loren Hillberg, President and GM of Thinknear. After the market closed today, Telenav issued a press release through Globe Newswire. The release is also available on the Telenav website.

During the course of today's presentation, our executives will make forward-looking statements, including statements regarding, among others, the Company's expected financial performance for the first quarter of fiscal 2017, anticipated sources and mixes of revenue, expected profitability, product and business strategies and strategic relationships. We wish to caution you that such statements are just predictions based on management's current expectations or beliefs and that actual results and events may differ materially.

We refer you to documents we filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K and other periodic filings. These documents identify important risk factors that could cause our actual statements to differ materially from those contained in our forward-looking statements. We assume no duty to confirm, update or revise the financial forecast for the year or any other forward-looking information on this call as a result of new developments or otherwise.

Today, we will be discussing our results on a GAAP as well as non-GAAP basis. These non-GAAP results include billings and adjusted EBITDA, also sometimes called pro forma results, exclude stock-based compensation expense and assume that our preferred stock was converted for common stock on the date of issuance for calculations of earnings per share. We use these additional non-GAAP measures as we believe they give useful operating information in addition to the GAAP results.

There are a number of limitations related to the use of billings versus revenue calculated in accordance with GAAP. We compensate for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with revenue calculated in accordance with GAAP, as well as considering whether we're likely to satisfy the criteria required to recognize revenue to convert deferred revenue into revenue. We provide visibility to investors to understand how we define billings by providing a reconciliation of billings to revenue calculated in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial statements is available in our press release and on our Investor Relations webpage.

Let me now turn the call over to HP Jin, Telenav's President and CEO.

HP Jin

Thank you, Cynthia. Thank you for joining Telenav's Fourth Quarter and Fiscal Year 2016 Earnings Call. On the call today I will briefly discuss our results for the fourth quarter and fiscal year, summarize the progress we made during the year and lastly provide a general overview of our strategic direction of our connected car and location based advertising business. We ended fiscal 2016 with very strong quarterly results, significantly more positive than the guidance we provided last quarter. The stronger results are driven primarily by four things. SYNC3's unit volume increase in North America and the slower than expected transition in the European shift from SYNC2 to SYNC 3 which typically would have a dampening effect on revenue. Our CFO, Michael Strambi, will provide additional details regarding the revenue upside.

Our total billings for the fourth quarter were $50.4 million, an increase of 13% year over year. For the fiscal year 2016, we achieved almost $200 million in billings, an increase of 21% year over year which is a significant milestone for Telenav. As we mentioned many times before, we view billings as a key indicator of the health of our business as we continue to expand our offerings to include connected services which are provided over a longer period of time and consequently, their revenue is recognized accordingly. Total revenue for the fourth quarter grew 11% year over year to $47.8 million while we reduced operating expense for the quarter by $1.5 million over the same period last time, last year.

Total revenue for the fiscal year grew 14% year over year to $183.3 million, while we reduced operating expense for the year by $2.7 million. This is a result of our continued focus on cost optimization and productivity improvements as we take a balanced approach to growth. As we have previously announced, we have reduced our operating costs, cost structure as it relates to the Thinknear business and we achieved a 32% improvement in our sequential adjusted EBITDA results. This is a significant improvement but we were unable to achieve our target of 50% improvement in our sequential adjusted EBITDA results, due to slightly lower than anticipated revenue which was due in part to deals closed later in the quarter. As a result, we continue to build our backlog and we exited the quarter with a record high backlog.

While the revenue for this quarter is approximately $5 million, we had our third consecutive quarter of bookings in excess of $7 million. We have already booked $6 million of our expected revenue for our September quarter. With this momentum, we're still targeting to achieve breakeven on a cash flow basis for the end of calendar 2016. Our sales to the auto segment continued to be strong at 25% of ad revenue. Now let me share with you some business updates from our fourth quarter, starting with our three major leading auto OEM partners. With Ford, during the quarter we continued to expand the global rollout of SYNC3 to now include China and Europe. As a reminder, we launched SYNC3 in North America this time last year.

With the introduction of One Box Search in SYNC3, Telenav has significantly improved the user experience of the imbedded navigation system. We have been very pleased with the SYNC3 volume increase in the North America market. We continue our strong relationship with Ford and continue to develop more and more enhanced features to serve Ford customers better. With GM, we remain on track to launch in the first half of calendar year 2017 as we reported last quarter. We continue to work with them regarding their future product roadmap which includes additional advanced features that leverage the connected car.

With Toyota we continue to see adoption of our Scout GPS Link solution for model year 2016 vehicles in the U.S. which contributed significantly to our billings growth. We're actively working with Toyota on additional opportunities and are hopeful of broadening our product lines in the future. We're pleased with the ongoing growth and deepening relationships with our key customers, Ford, GM and Toyota and will continue to work towards winning more business in the future.

Next let me provide some business highlights of fiscal 2016 to give you more clarity of our strategic direction in fiscal 2017 and the progress we're making along the way. Let me first put things in broader perspective. As we transition from mobile GPS carrier business to auto OEM business, we have hit a few significant milestones during the past two years. In fiscal 2015, we successfully reversed a decline of revenue for the prior two years. And in fiscal 2016, we successfully reversed the decline of gross profit for the first time in four years.

Our next big milestone is to achieve cash flow positive from operations. As we continue to drive billings increase, we're making every reasonable effort to control our operating expenses and keep it stable as we move through fiscal year 2017. There of course will be some variance quarter to quarter and there can be no such certainty that we can achieve this objective. Mike will provide that quarterly guidance as we move forward.

Now onto the business highlights. In January this year at CES, we shared our vision of our connected car technology by demonstrating our intelligent 8F and the predictive technology leveraging our big data platform and access to car sense information. We integrated our technology into a live demo to show how we help drivers before, during and after their drive to stay on time and stay safe with a similar experience across multiple screens and multiple functions. We received encouraging feedback from our existing OEM partners and from many other prospective OEMs.

They believed that our solutions delighted the driver while offering OEMs clear differentiation as compared to generic Apple CarPlay and Android auto plays experience. We all believe that the detailed data gathered about the driver such as their driving patterns, preference, as well as information about the driving environment, based on those preferences such as preferred alts and frequent destination is available intelligence to improve the user experience. The positive feedback from our engagement with our auto OEMs during CES and our follow-up meetings make us believe that the auto OEMs will continue to provide both imbedded connected and brought-in solutions for navigation.

As connected car technologists advised, OEMs will have a motivation to broaden their navigation services with a particular focus on safety and autonomous driving. Telenav has full car solutions with deep integration in the vehicle that allow on demand safety features that brought-in solutions cannot provide. Our partnerships with OEMs are driven by the mutual desire to bring the best and safest solution to the consumer which provides a differentiated value to the OEMs as compared to standardized brought-in alternatives. As OEMs look forward, they rely on these types of technologies and partners that align with both end users and their business interests to ultimately deliver the connected care of the future.

Telenav is best positioned to help OEMs to achieve their goals with its Silicon Valley innovation DNA, strong global presence and local experts in Asia, Europe and North America. In addition to safety, another area of significant innovation in the connected car industry will be new business models. Telenav has been a pioneer in this area as well with our initiative in location based advertising. We signed an advertising agreement with GM to serve targeted advertising within GM connected applications. We have already launched our first campaign with a strong brand customer who has subsequently signed on for renewal of that campaign. A third area of focus for Telenav is its OSM Squared initiative which is enhanced OSM for navigation.

Telenav is a leader in contributing to the OSM community, focusing on improving the OSM map quality as well as increasing the capabilities to support in car navigation and mapping, 8F maps and high definition maps for autonomous driving. Scout GPS Link with Toyota was the first commercially deployed brought-in navigation solution powered by Telenav's mapping technology, OSM Squared. The combination of this technology and OSM community of almost 3 million mapping contributors worldwide, allows map data and content to be updated frequently. During the Telenav Update Conference in June, we announced our open source tools to accelerate the overall capabilities of OSM Maps. One of these tools, Open Street View, released at OSM State of the Map Conference two weeks ago, is an open source and free platform across the web and Android and iOS apps.

The apps enable drivers to capture road imagery while driving, from street signs to road curvature which adds to the map attributes, increasing navigation and other capabilities such as car planning. Since we have released the private beta approximately a year ago, Open Street View has captured 4.5 million photos and covered 130,000 kilometers. We're hopeful that with the public launch of Open Street View, we will be able to capture significantly more data in the future. The interest in OSM is growing and is attracting larger global technology partners which further movement in an impactful way. We continue to collaborate with the leading technology companies regarding sharing content and tools to accelerate the improvement of OSM maps. The last, but not the least initiative we have been focusing on is our big data and intelligence platform.

With connected cars there will be massive amounts of data available. Through innovative data mining, processing and modeling and deep learning, we expect to derive significant understandings and insights about the car status, road conditions and driver behavior. This intelligence and insight will significant strengthen our position in the connected car industry by allowing us to provide more personalized and predictive and safe services to drivers and also by providing a device they like about cars and entertainment system to OEMs. And providing unlimited possibilities for new business models which will bring new revenue streams to OEMs and other third party partners in the same ecosystem.

Our intelligent and scalable big data platform has already been used to support our safety features we have showcased at the CES. We expect our innovation in big data and intelligence will create further differentiation from competitors as we work with our established global leading OEM partners with a significant market share. The scale of the network is critical and our established OEM partnership with large scale are strong foundation for us to leverage, to create significant benefit to consumers and OEMs and help them to defend against other auto competitors.

In summary, Telenav is well positioned in the disruptive connected car space. We bring a unique combination of location based services, big data, [indiscernible] and monetization to create highly differentiated offerings for OEMs and drivers and this sets us up well in the connected car space. We're very happy with the progress we have made in the connected car technology platform and the market position we have achieved and are very excited about the future it brings to Telenav and all of its stakeholders including customers, employees, shareholders and the community we live in.

Let me now turn the call over to Mike Strambi, our CFO. Mike?

Mike Strambi

Thanks, HP. This portion of the presentation, as well as HP's remarks, contain forward-looking statements. We encourage you to review our risk factors in our most recent Form 10-Q on file with the SEC which sets forth risks and uncertainties that may affect these forward-looking statements. Let me now discuss results for the fourth quarter and fiscal year in more detail. Total revenue for the quarter was $47.8 million, an increase of 3% sequentially and 11% year over year. The upside in revenue for the quarter was driven primarily by two factors.

As we noted in April, we expected Ford to transition all of its European plants from SYNC2 to SYNC3 during the quarter resulting in a reduction of revenue for the June quarter associated with this transition. Although the transition in Europe began in the June 30 quarter, the transition is still underway and will extend into the September quarter. The delay in transition has two effects. First, our revenue form the June quarter from Ford Europe was not as affected by the transition and accounting rules as we expected. And second, as we will discuss later, we anticipate that the full impact of the revenue recognition change for SYNC3 in Europe will occur in the September quarter.

As Ford transitions to the new SYNC3 platform in each region, the timing of title transfer changes. This change has the effect of delaying revenue recognition to the date that vehicles are manufactured which is now reflected in my guidance for the September quarter. This transition has now occurred in North America and China and the effect has been reflected in our financial results through the June quarter. However, the effects will not be fully realized in Europe until the September quarter. In addition, during the quarter we saw higher unit volumes in North America from Ford. Automotive revenue for the quarter was $37.1 million, an increase of 7% sequentially and 23% year over year.

During the fourth quarter we earned $35.1 million from royalties on automotive compared to $34.6 million in the prior quarter and $29.8 million in the same period during the prior year. The increase year over year was driven primarily by continued success with Ford in North America and Europe. We also realized $2 million in customized engineering fees on automotive solutions that were delivered in the quarter. Location-based advertising revenue for the quarter was $5 million, a decrease from $5.2 million both sequentially and from a year ago. The lower actual revenue relative to our revenue guidance for our location based advertising business for the June quarter is attributed to the increasing duration of campaigns and the associated revenue recognition over the longer timeframe.

Total billings for the fourth quarter were $50.4 million compared to $53.1 million in the prior sequential quarter and $44.6 million in the fourth quarter of fiscal 2015. The sequential decline reflects the impact of the aforementioned customized engineering fees that were billed in the March quarter but recognized as revenue in the June quarter. Total revenue for fiscal 2016 was $183.3 million, an increase of 14% year over year. Automotive revenue was $135.4 million, an increase of 31% year over year. Location based advertising revenue was $21.7 million, an increase of 21% year over year. For fiscal year 2016, Telenav generated billings of $199.9 million, resulting in an increase in deferred revenue of approximately $16.5 million.

The increase in deferred revenue was driven primarily by higher billings associated with the launches of our Entune Audio Plus navigation solution in Toyota vehicles and our navigation and map care solution in Ford Australia and New Zealand in fiscal 2016 as well as our continued powering of the GM Remote Link application which was launched in January of 2015. Ford remains our largest customer at 74% of total revenue for the fourth quarter of fiscal 2016 compared to 67% for the prior year period. For fiscal year 2016, Ford accounted for 71% of total revenue, compared to 61% in fiscal year 2015. Total gross margin for the June quarter was 44%, compared to 44% in the prior quarter and 48% in the same quarter last year.

The expected decrease year over year was due to the continuing shift in revenue mix towards automotive and the effect of higher product volumes in international regions which generally have higher third-party costs. As we will discuss later, we anticipate that as mobile navigation revenue continues to decline, we will see additional declines in gross margin. For fiscal year 2016, total gross margin was 45%, down from 51% in fiscal 2015. During the quarter, total operating expenses were $28.9 million compared to $29.4 million in the prior quarter and $30.4 million in the fourth quarter of fiscal 2015. During fiscal year 2016, total operating expenses were $117.1 million, compared to $119.8 million for the prior fiscal year.

We're pleased with our ability to keep costs relatively flat year over year. As HP mentioned, we continue to be focused on cost optimization despite market forces that can drive increased costs. We experienced a GAAP net loss for the June 30 quarter of $8 million compared to a $9.8 million loss for the prior quarter and a $7.6 million loss for the prior year period. For fiscal year 2016 we experienced a GAAP net loss of $35.3 million, compared to a GAAP net loss of $23.1 million for fiscal year 2015. The increase in GAAP net loss year over year was driven primarily by the recognition of a fiscal year 2015 tax benefit of $13.1 million which did not recur in fiscal year 2016 as we were limited to a two-year NOL carryback period.

We received a tax refund of $4.8 million related to this benefit in the recent June quarter. We generated an adjusted EBITDA loss of $4.6 million for the quarter compared to a $6.4 million loss in the prior sequential quarter and a $5.5 million loss in the fourth quarter of fiscal 2015. For fiscal 2016 we generated an adjusted EBITDA loss of $21.5 million compared to $20.5 million for fiscal 2015. Free cash flow for the fourth quarter totaled a positive $1.9 million, reflecting the receipt of the aforementioned $4.8 million in income tax refunds compared to a negative $2 million in the prior quarter period and a negative $8.7 million in the year ago period. Free cash flow for fiscal year 2016 totaled a negative $7.1 million, compared to a negative $8.9 million in the prior year.

Turning to the balance sheet, we continue to be debt free and as of June 30, 2016 had approximately $110 million in cash and short term investments. Deferred revenue as of June 30, 2016 was $23.4 million compared to $20.7 million as of March 31, 2016 and $6.8 million as of June 30, 2015. The increase was primarily attributable to the growth in billings related to our automotive business, including our connected solutions and value added services which are provided over an extended period of time. We ended the quarter with 583 full-time employees, compared to 562 at the March quarter end and 579 from the year ago period.

Let me now discuss selected highlights of our business outlook for the first quarter of fiscal 2017. The full guidance is discussed in our earnings press release. Our expectations for the September quarter are as follows. Total revenue is expected to be $40 million to $43 million which reflects the anticipated further impact of Ford's transition from SYNC2 to SYNC3 in Europe and to a much lesser degree the effect of the typical seasonality of auto plant operations. The revenue impact of Europe's SYNC2 to SYNC3 transition is not expected to be significant beyond the September quarter. However, we have no control over the timing and speed of Ford's transition and are basing our expectations on information available today. Billings are expected to be $45 million to $48 million in the September quarter and represent an increase of deferred revenue of approximately $5 million.

Gross margin is expected to be 45% in the September quarter. I want to stop here for a minute and discuss gross margin on a longer term perspective. We believe automotive and advertising will continue to be our growth areas. And as we have previously indicated, these businesses carry lower gross margins. In addition, automotive gross margins are particularly affected by map costs and can vary based on regions.

As we see our business today, with automotive and advertising continuing to comprise a larger portion of our revenue base, we expect gross margins will continue to decline and generally settle around 40% over the longer term depending on the mix of automotive and advertising revenue. GAAP operating expenses are expected to be between $29.5 million and $30.5 million in the September quarter. GAAP net loss is expected to be between $10 million and $11 million, reflecting an estimated noncash benefit for income taxes of approximately $1 million. Our adjusted EBITDA loss is expected to be between $7 million and $8 million.

As we close, I would like to reemphasize that September quarter revenue will be negatively impacted by the effect of the Ford SYNC3 transition in Europe which should be completed in the September quarter.

We're now available to take your questions. Operator, if you could please open the line for questions.

Question-and-Answer Session


[Operator Instructions]. We will take our first question from Steve Dyer with Craig-Hallum.

Steve Dyer

I'm just wondering if you could provide a little bit of an update on GM. How material do you expect that revenue to be in fiscal 2017?

Mike Strambi

So we have characterized fiscal year 2017 for Telenav to be based on model year 2017 vehicles of GM. And those volumes will manifest themselves in the second half of fiscal 2017. We still don't have deep insights on those volumes and we continue to characterize that volume as being insignificant.

Steve Dyer

Okay and do you know sort of which name plates you'll be on or which models so far or is that still all up in the air?

Mike Strambi

I don't know that it's up in the air, but we don't have keen insights into what those specific product roadmap models are going to entail yet.

Steve Dyer

Okay. Outside of GM, are you guys engaged with any other top 20 automakers beyond the pilot phase?

HP Jin

We can comment that we're engaged with many OEMs in terms of our selling solutions to them, but we don't have any more color to put on it.

Steve Dyer

Okay, have you seen any change in intake rates with SYNC3 versus SYNC2?

Mike Strambi

So as we indicated on the call, we saw higher volumes in North America in the June quarter. With the new manner of title transfer where we recognize revenue as vehicles are manufactured with our navigation solution, the early indication is that we're seeing higher nav rates for the June quarter. It's still a little too early to conclude that that will occur throughout SYNC3 in North America or in other regions. We're cautiously optimistic, but it would be too preliminary to conclude that that's the path forward in fiscal 2017.


And our next question comes from Josh Nichols with B. Riley.

Josh Nichols

Yes, I was looking, could you quantify the impact that the SYNC3 transition is going to have on Q1 revenue so we could get a bit better idea for what a steady state might be?

Mike Strambi

I don't think we're prepared to -- I understand the question, Josh, on the auto royalty side. I think what you're asking is do we expect, separating the SYNC2 effect, do we think royalty units are going to increase in the September quarter. And we don't expect there is going to be a significant change in cadence from the June quarter. There's a lot of moving parts with regard to estimating these royalty volumes.

So for example, in North America on SYNC3, it's possible that the early models of SYNC3 might have higher take rates. We're not sure if that's the case and whether those take rates will normalize in the September quarter. Also under this new manner of revenue recognition, we're also dealing with the effect of plant closures for holiday periods.

So during the 4th of July there were quite a few plants that shut down for a week. And if there's 13 weeks during a quarter, a one-week shutdown can have a significant effect. So the September quarter, under this new manner of using title transfer to measure volumes, isn't necessarily a good indicator of run rate going forward as well because there's one week where the plants are shut down.

Josh Nichols

Okay, so deferred revenues look like some healthy growth expected in Q1 now that you're in some additional models with Toyota for 2016 vehicles. Are you also going to be in 2017 model year vehicles as well or what's the plan?

Mike Strambi

Yes, that's the plan for 2017. But just to clarify, the guidance that I provided for those incremental billings, the increase in deferred revenue for the three connected service and value added solutions we have. So we're talking about the Ford New Zealand, Australia, the Toyota Entune Audio Plus and the GM Remote Link, my guidance of $5 million is really consistent with the last two quarters. The phenomenon that we were dealing with in the June quarter was the effect of the billings on the customized engineering fees. But generally, the two quarters of results and my forward guidance have been in that $4.5 million to $5 million range.

Josh Nichols

And then are you still expecting to hit cash flow or EBITDA breakeven in the mobile app business in December and focus in on managing that with the dual mandate of both profitability and growth?

Mike Strambi

We're cautiously optimistic with regard to that target that we established for ourselves. There's still quite a bit of work to do with regard to achieving the bookings level that we would need to deliver that targeted breakeven on adjusted EBITDA. We're encouraged by the fact that in the -- for the September quarter, with the guidance that I provided, approximately $6 million of ad revenue has already been booked that is expected to run in the September quarter. That's the strongest level of bookings expected to run in the current quarter that we've ever been at and we think that bodes well for the September quarter which has traditionally been the seasonably strongest quarter for us on the ad side.


[Operator Instructions]. Next we will hear from Greg Burns with Sidoti & Company.

Greg Burns

I just had a question about Ford's connected strategy. I know you're doing the imbedded and connected for GM. What is Ford doing in terms of a connected solution?

HP Jin

So we cannot comment specifically say for Ford, but I can tell you the industry trend. I think all OEMs will be, all OEMs that we're interacting with, are planning to launch imbedded connected services. It's just a matter of time. But every one we talk to, that is the trend.

Greg Burns

Okay. And as we think about next generation automated driving solutions and things of that nature and integrating the nav more closely with some of the other systems in the car, do you -- as the market evolves, will navigation and mapping be bundled by the OEM into the car and cease to be, move away from being kind of an add on that the customer buys but that it's something that's already bundled into like a technology package of a car? Is that where the market is headed?

HP Jin

Possible, but I think it's a little early to tell. Right now there are a lot of safety features being introduced. Like blind spot detection warnings. In the future I think with navigation you can do lane changing, automatic lane changing and all those features. It's going to be I think from a product offering point of view, it will be hard to separate them. So I think safety and navigation will be more and more in our view closely bundled to a degree. But the safety sometimes, for some OEMs, they sell them as a separate package, right? But navigation and safety we believe will be more and more closely related and bundled.

Greg Burns

Okay and lastly, Toyota is using the Scout GPS Link in their vehicles. What are the conversations like with other OEMs in terms of using that technology for an over the top type solution?

HP Jin

You're referring to -- so Toyota is using non-auto, non-CarPlay solutions, you know that, right? You're asking whether that same solution will be used by others?

Greg Burns

Yes, are other OEMs approaching you? Is there interest from other OEMs to leverage that Scout GPS Link technology for an over the top solution?

HP Jin

So they are. So there are some OEMs looking into providing alternate solutions, right, beyond just the CarPlay and auto. So Hassan, can you comment more on that one?

Hassan Wahla

Sure, HP. So I think even though OEMs that have already launched or are in the process of launching CarPlay in autos, they are looking for a third option as well. I think in the case of Toyota, they went with where they for now have chosen not to launch CarPlay in any auto at all. But others are looking at the third option which is non-Google or non-Apple. And there we have seen progress and interest from several OEMs in adopting the Ford AppLink solution as a third option. So given our partnership with Ford, we have a lot of deep experience there. So as other OEMs explore using that as a means to bring in applications into the vehicle, they are also in discussions with us about using a solution similar to Scout GPS Link.


And seeing that there are no further questions, I will turn the call back over to the speakers for closing remarks.

Cynthia Hiponia

Great. Thank you, everyone, for your time today. And we look forward to updating you again on our next earnings call.


That concludes today's conference call. We thank you for joining.

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