Stamps.com, Inc. (NASDAQ:STMP)
Q2 2012 Earnings Call
July 25, 2012 05:00 pm ET
Jeff Carberry - IR
Ken McBride - Chairman & CEO
Kyle Huebner - Co-President & CFO
Kevin Liu - B. Riley & Company
George Sutton - Craig Hallum
Jared Schramm - Roth Capital Partners
Good day ladies and gentlemen and welcome to the Stamps.com second quarter 2012 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded.
I would now like to introduce our host for today Mr. Jeff Carberry, Senior Director of Finance. Sir, please go ahead.
Thanks very much and good afternoon everyone. On the call today is Ken McBride, CEO, and Kyle Huebner, CFO. The agenda for today’s call is as follows: We’ll review the results of our second quarter 2012, and then we will discuss financial results and talk about our business outlook, but first the Safe Harbor statement.
The Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. This release contains forward-looking statements such as our expectations and financial guidance that involve risks and uncertainties.
Important factors including the company’s ability to complete and ship its products, maintain desirable economics for its products and obtain or maintain regulatory approval, which could cause actual results to differ materially from those in the forward-looking statements are detailed in the filings with the Securities and Exchange Commission made from time-to-time by Stamps.com including its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, quarterly reports on Form 10-Q and current reports on Form 8-K.
Stamps.com undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Now, I’ll hand the call over to Ken.
Thank you Jeff and thank you for joining us today. Today, we announce another great quarter where we had strong financial performance and where we again had outstanding performance in multiple areas of the business.
We achieved a sequential quarterly increase in our paid customers which were up 5,000 to a new all-time record high level of 418,000. Our year-over-year growth rate for paid customers was 14%, which is the highest growth rate in four years for the seasonally slower second quarter.
We achieved the highest growth rate for enterprise paid customers in five years. We continued our strong momentum in our high volume shipping area with 80% growth in total postage printed. We achieved a record growth rate for total postage printed by our customer base which is up 53% to a new record level of $233 million. And we achieved record core PC Postage revenue with 18% year-over-year growth and continuing the strong double-digit growth rates we’ve experienced over the past seven quarters.
The strength we saw across the board in our business lines drove strong earnings in the second quarter with record non-GAAP operating income of $6.8 million, record non-GAAP net income of $6.9 million and non-GAAP earnings per share of $0.40.
During the second quarter of 2011, we first applied breakage accounting to our PhotoStamps boxes sold through retail channels and this added $2.2 million to PhotoStamps revenue, $1.7 million to non-GAAP operating and net income and $0.12 to non-GAAP net income for fully diluted share.
We believe the growth rate excluding the initial recognition of PhotoStamps breakages in the second quarter of 2011 provides a more meaningful comparison of the year-over-year performance.
Excluding the initial recognition of PhotoStamps retail box breakage in 2011, total revenue in the second quarter of 2012 was up 15% year-over-year, non-GAAP net income was up 45% year-over-year; non-GAAP net income for fully diluted share was up 21% year-over-year.
While we face very tough comparisons during the second quarter this year, we were pleased that the business continued strong growth trends particularly in light of the fact that the small business economic environment continues to struggle relative to pre-recession levels. On the call today, we’ll talk in more detail about our PC Postage metrics and business, our financial results and our business outlook.
First, let me begin with a more detailed discussion of the PC Postage business. The customer metrics we’re going to discuss on the call today are only for the core PC Postage business which excludes all enhanced promotion channel activity. For more detailed definition of how we calculate each of our metrics, you may refer to our quarterly investor metric spreadsheet at investor.stamps.com.
Core PC Postage revenue including small business enterprise and high volume shipping customer segments was $26.2 million in the second quarter. That was up 18% versus the second quarter of 2011. Over the past seven quarters, we have generated strong double-digit year-over-year growth rates in our core PC Postage revenue. This Q2 released the highest quarterly revenue level we have experienced in our core PC Postage business since we started tracking the core areas approximately six years ago.
The increase in the core PC Postage revenue was attributable to continued strength in our small business area and in our enterprise and high volume shipping customer segments which are now contributing to our core business revenue growth in a meaningful way.
During the second quarter, we acquired 71,000 gross small business customers; that was up 12% versus the second quarter of 2011 and our cost per new small business customer acquired or CPA was $125 in the second quarter; that was up 1% versus the $124 we saw in the second quarter of 2011.
We were able to continue to grow our customer acquisition spend which was up 13% versus the second quarter last year, while still maintaining a consistent CPA which shows that our marketing spend continues to scale efficiently.
The second quarter of 2011 showed a strong acceleration in the growth of customers acquired so we had a tough year-over-year comparison for this quarter. Note that the second and third quarters are typically our seasonally solid quarters and we did experience a seasonal slowdown versus the first quarter of this year.
We also note that customer acquisition in the first quarter of 2012 benefited from the January postal rate increase which did not repeat in the second quarter making the seasonal effect even more pronounced this year.
Our average monthly churn during the second quarter was 3.7% which was up 0.2% from the 3.5% churn in the second quarter of 2011. The second quarter has historically had the highest churn rate of the four quarters of the year, so the sequential increase in churn was expected due to seasonality.
We believe the year-over-year increase in churn is partly reflective of our strong customer acquisition trends over the past year, while the second quarter of this year had a larger percentage of paid customers and clearly part of the churn group which has a higher churn rate as compared to the second quarter of last year.
We also believe the economic environment may also play a role in the increased churn as the National Federation of Independent Business surveyed small business optimism for June 2011 registered its largest one month decline in the past two years; now return the index below the recession level and relinquished the gains the index has achieved during the prior eight months. We continue to focus on managing our churn metric and hope that we can bring it back down into 3.0% to 3.5% range that we have been targeting.
Paid customers in the second quarter was 418,000 and that was up 14% versus the second quarter of 2011 and up 5,000 sequentially versus the first quarter of 2012. The 14% year-over-year growth in the second quarter was the largest year-over-year paid customer growth rate for the seasonally slower second quarter since before the recession began in the second quarter of 2008.
ARPU was $20.90 in the second quarter and now is up 3.5% versus the $20.20 we saw in the second quarter of 2011. The year-over-year increase in ARPU was attributable to higher customer fees from high volume shipping in enterprise customer segments, higher insurance purchases for paid customer, driven by our focus on shipping and the new insurance features that we have added; while we were pleased with the continued increase in our ARPU, we did experienced a slow down in our year-over-year growth when compared to prior quarters.
Second quarter of 2011 showed a strong acceleration in ARPU growth, so we had a tougher year-over-year comparison for this quarter. In addition, the slowdown in year-over-year growth rate of ARPU was a result of the breakout performance we saw in our small business area over the past year.
Paid customers in the small business area grew at the fastest rate during the second quarter in four years. The gains made in ARPU by continued strong performance in enterprise and high volume shipping were outweighed by the strong growth in small business which has a lower ARPU and which is still a much bigger part of our overall business in the newer enterprise and shipping areas.
Total postage used by customers was $233 million in the second quarter of 2012 and that was up 53% versus the second quarter of 2011. This matches the highest growth rate we have ever seen for total postage printed and is now the fifth consecutive quarter where year-over-year growth in our quarterly postage usage has exceeded 50%.
Total postage printed in our high volume shipping segment was up 80%, continuing the high levels of growth in our segment. We carefully monitored total postage usage as an indicator of the value customers drive from our service, and its growth has been correlated with strength in our other business metrics.
We continue to believe that the economic environment with respect to smart business remains challenging relative to pre-recession levels and continues to affect our small business customer acquisition as noted in the transaction above. However, we believe that sustained improvements in the small business economic environment from current levels could provide a further lift to our small business efforts over the long-term.
Now let's discuss some detailed initiatives that we are working on in PC Postage. This discussion is about the core PC Postage business excluding the enhanced promotion channel. In a small business area, we are continuing to scale and optimize our customer acquisition spend. We continue to experience a strong ROI on our marketing spend and estimate the life time value exceeds our current CPA by at least two times.
During the second quarter, we are able to increase our small business customer acquisition spend investment by 13% versus last year while keeping the CPA into the increase in CPA to only 1%.
We would note that there was enhanced seasonality apparent in our new customer acquisition during Q2 of this year, which was not apparent last year but which is typically there in our business historically.
This year in the second quarter acquisitions was down 15% when compared to the prior fourth quarter of last year. Last year in Q2, acquisition was down only 6% versus the prior Q4. Two years ago, it was down 20% versus the prior Q4 and three years ago it was down 19% versus the prior Q4.
Note that we have compared the second quarter to the prior Q4 in our each quarter they excluded any distortion for post related increases. So the 2012 trends appear more normal against historical backdrop of the past few years of the poor economic environment and 2011 appeared to have really been the quarter about the trends somewhat.
We believe that 2011 did better than historical seasonal trends because of a better economic environment we saw in the first half of last year, but also as a result of our initial investments in new marketing channels which began in the second quarter last year.
We expect that our total 2012 small business customer acquisition spend will increase by 10% to 20% year-over-year. We continue to utilize a variety of marketing channels including direct mail traditional media, online marketing and other areas. Across each of our marketing channels, we plan to continue to focus on scaling the totals spend while keeping cost per acquisition at a reasonable level.
Also in the small business area, we’re continuing to optimize our business model and our overall customer experience in several ways. Keep working on the website, the registration process, the post-registration customer interaction, and we’ll continue to launch new features and our client that make mailing and shipping easier for our customers, particularly for the e-commerce users.
Recently, we released version 96 of our client software. That version added several great new features such as a Batch Shipping Toolbar with a Redesign User Interface in the Batch Shipping Section, the ability to combine multiple orders for a buyer into single order to save on shipping costs, support for 2 default printers in the order, to print separate, in order to print separate shipping labels or packing slips on separate printers and support for automatic insertion of product data into an external source directly in the customs form which makes it easier to batch print, especially for international.
In the enterprise area, we’re continuing to scale up our sales and marketing efforts. Customers continue to choose our service as a great alternative to postage meter based on the dramatically lower total cost of ownership. Customers also like the visibility available from our centralized reporting tool, where they can monitor postage spend across their entire network of users, a feature that is not available with postage meters.
During the second quarter, we continue to make strong progress in the enterprise area, with growth in the second quarter revenue of 42% year-over-year. Our growth in paid customers for enterprise was the highest it has been for five years.
We landed in new enterprise opportunity during Q2, which is the largest single customer we have ever had. Our pipeline of opportunities continues to grow nicely as well, and we continue to see lower churn rates and higher ARPU in enterprise compared to our SOHO business.
Overall, we’re excited about the continued progress in enterprise and we feel that we’re seeing the returns on investments we’ve been making in this area.
We’re expecting to see continued strong growth out of this business line going forward. In the high volume shipping area, we’re continuing to scale up our efforts in this area this year. We continue to attract high volume shippers, such as warehouses, fulfillment houses, e-commerce shippers, large retailers and other types of high volume shippers to our service through our efforts in this area.
Our business in this area is doing very well as evidenced by the 80% year-over-year growth rate in high volume shipping postage printed we saw during the second quarter. For 2012, we will continue to focus on scaling this business area. We will continue to introduce improvements in the software and features to further improve scalability of the product to the largest high volume customers.
We will continue to add new shopping card integrations for easier data import and export from the tools that the customers like to use and we will continue to scale our sales efforts using our national sales force.
Overall, we’re very excited about the progress we’re making in the high volume shipping area and we feel we’ll continue to contribute to the business to become a strong contributor to the overall business.
With that now let me turn it over to Kyle who will discuss in more detail detailed financial results and our business outlook.
Thanks Ken. We will now review our second quarter financial results. We will discuss our second quarter financials on a non-GAAP basis, which excludes the following, $1 million of stock-based compensation expense. Also as Ken discussed, our year-over-year comparisons for the second quarter discussed in the section will exclude the initial recognition of further Stamp’s retail breakage in the second quarter of 2011. A reconciliation of all non-GAAP to GAAP numbers is contained in the earnings release posted on our website.
Total revenue was $28.2 million in Q2, up 15% compared to Q2 ‘11. The second quarter continued the trend of growth in total revenue driven by strong results in our core PC Postage business.
Core PC Postage revenue was 26.2 million in Q2, up 18% compared with the second quarter of 2011. The year-over-year increase in core PC Postage revenue was driven by both increased paid customers and increased ARPU as discussed by Ken in the metric section.
This was our seventh consecutive quarter of double digit year-over-year core PC Postage revenue growth. Non-core PC Postage revenue from the enhanced promotion channel was $732,000 in Q2 down 9% compared with Q2 '11.
PhotoStamps revenue was $1.3 million in Q2 down 7% compared with Q2 '11 and PC Postage gross margin was 79.2% in Q2 compared with 78.0% in Q2 '11. Cost of sales included promotional expenses related to customer acquisition of $832,000 in Q2 this year compared with $868,000 in Q2 of 2011.
PC Postage gross margin excluding promotional expenses was 82.3% in Q2 compared with 81.8% in Q2 '11. The improvement in gross margins excluding promotional expenses was primarily due to leverage in our cost of service.
PhotoStamps gross margin was 24.8% in Q2 compared with 19.8% in Q2 '11. Total sales and marketing spend was $9.6 million in Q2 which was up 15% compared with Q2 '11. Total PC Postage sales and marketing spend which includes small business, enterprise, high volume shipping and enhanced promotion marketing spend but excludes promotional expenses increased by 16%, and PhotoStamps sales and marketing spend decreased by 23%.
R&D spend was $2.4 million in Q2 which was up 10% compared with Q2 2011. The increase was primarily related to increased headcount related expenses to support our expanded product offerings. G&A spend was $2.9 million in Q2 which was down 6% compared to Q2 2011.
The decrease was primarily related to decreased legal spend as we settled our Endicia litigation during the first quarter of 2012. Non-GAAP operating income was $6.8 million in Q2, which was up 44% compared with Q2 2011 and non-GAAP operating margin was 24.1% compared with 19.3% in Q2 2011.
The income growth in margin expansion were primarily attributable to strong revenue growth in our core PC Postage revenue and leverage in our operating expense line items which increased at rates less than our revenue increases.
Non-GAAP net income was $6.9 million or $0.40 per share based on $17.2 million fully diluted shares compared with $4.8 million or $0.33 per share based on $14.5 million fully diluted shares in Q2 of 2011 which represented 45% and 21% year-over-year growth respectively.
The increase in fully diluted shares was attributable to higher shares outstanding from option exercises in 2011 and higher common stock equivalents resulting from a higher average stock price during Q2 2012.
EBITDA was $7.0 million in Q2 which was up 43% compared with Q2 2011. This metric is calculated as non-GAAP operating income plus $246,000 of D&A from operations from operations contained in operating expenses.
Free cash flow generated by the business was a positive $6.5 million for the second quarter. This metric is calculated as non-GAAP operating income plus the $246,000 of D&A contained in operating expenses, less $549,000 of capital expenditures related to the business.
Note that this calculation excludes tenant rental income in capital investments related to our new corporate headquarters. We end the Q2 with $66 million in cash investments or approximately $4.0 per ending balance sheet share, which was down approximately $1.2 million from the $67 million in cash and investments at the end of first quarter 2012.
Free cash flow from the business was offset by the capital investment in our new corporate headquarters which was $6.1 million for the second quarter. We expect to move our new corporate headquarters early in the third quarter.
NOL and DTA update. As of June 30, 2012, we had approximately $225 million of federals NOLs and $120 million in state NOLs, resulting in a gross deferred tax asset or DTA of approximately $81 million.
We have approximately $53 million valuation allowance against the gross DTA resulting in a net DTA of $28 million on the balance sheet. Our federal NOLs do not begin to expire until 2021. So at our current annual profit level, we would not expect to pay regular cash federal taxes for approximately the next 10 years.
We estimate that as of June 30, 2012, our section 382 ownership shift was at an approximately 17% level compared with the 50% level that would trigger a potential impairment of the NOL asset.
As part of our ongoing program to preserve future use of our NOL assets, Stamps requests any shareholder contemplating becoming a 5% shareholder equivalent to approximately 825,000 shares and more, contact the company before doing so.
Now turning to guidance. We expect 2012 total revenue to be in a range between $107.5 million to $117.5 million. We expect 2012 GAAP EPS to be in a range between $1.80 to $2.00 per fully diluted share. GAAP numbers assume approximately $4 million of stock-based compensation expense and the first quarter, $11.9 million non-cash tax benefit.
Excluding the stock-based compensation expense and non-cash tax benefit, we expect 2012 non-GAAP EPS to be in a range between a $1.35 to $1.55 per fully diluted share. We expect 15% to 20% growth in 2012 core PC Postage revenue. We expect enhanced promotion revenue will continue to be down in 2012 compared to 2011. We expect PhotoStamps revenue will also continue to be down in 2012 versus 2011 as we continue to focus on our core PC Postage business.
We expect 2012 small business PC Postage customer acquisition spend to be up 10% to 20% compared with 2011. We expect G&A excluding stock-based compensation expense to be down 5% to 10% in 2012 compared to 2011. Fully diluted shares for 2012 are expected to be in a range of $17.2 million to $17.5 million compared with $15.2 million fully diluted shares in 2011.
As a result, we expect that the year-over-year growth for 2012 non-GAAP net income will be approximately 15 to 20 percentage points higher than the year-over-year growth for 2012 non-GAAP diluted earnings per share. For purposes of comparing annual guidance growth rates excluding the initial recognition of PhotoStamps breakage as discussed previously, fiscal 2011 results without the second quarter breakage were a total revenue of $99.4 million and non-GAAP diluted earnings per share of $1.29.
We expect approximately $5.5 million of additional cash investment in our new corporate headquarters to be spent for the second half of 2012. The third quarter is usually our seasonally slowest quarter and fourth quarter is our seasonally strongest quarter, so we would expect our 2012 third and fourth quarter metrics and revenue to reflect this pattern.
Overall we were very pleased with our results from the first half of this year. While we face tougher year-over-year comparisons in the second half of 2012, we still expect to deliver solid growth and results for the remainder of the year. With that we will open up for questions.
Thank you. (Operator Instructions) Our first question comes from the line of Kevin Liu from B. Riley & Company.
Kevin Liu - B. Riley & Company
First question, just looking at the receivables line, was a little surprised to see a spike up in the quarter; it’s not a usual seasonal trend for you. So just trying to get some color around that?
Yeah it relates mostly to some of our larger customers in the enterprise and shipping segment, where just the timing of some of the invoices related to postage that's used is just the timing thing. So you know in certain cases, we get paid shortly after the quarter ends and so if you look at the AR balance, it was kind of -- in Q2 it was consistent with where we were at year-end. Q1 was down just based again on some of the timing of the payments from some of those larger customers and partners.
Kevin Liu - B. Riley & Company
And I think you guys talked about you know your biggest enterprise win in history, I'm wondering if you could give us some additional details as to you know what that sales cycle looks like and whether they were contributing to the results in the quarter already and in terms of kind of billing terms, does it match up with how you would typically build one of your SOHO customers?
It came in late in the quarters, so no it didn’t really impact the quarter, but it largely reflects the same type of billing terms as most of our other enterprise customers.
Kevin Liu - B. Riley & Company
And then just with respect to your sales and marketing spending plans, I think prior to last year, you guys had typically slowed down the spending in the second and third quarters. It seems like in the past years you have been more willing to spend pretty steadily throughout the year. Should we expect more of the same this year?
I mean I think our goal is to continue to increase the customer acquisition spend on a year-over-year basis throughout the year. So you know our expectation is still that we will spend, our spending will be up 10% to 20% for the year. So you know that implies that we will continue to grow the customer acquisition spend for the second half of the year.
Kevin Liu - B. Riley & Company
And then just lastly, as you kind of look at the CPA metric that came in this quarter versus last year, at the same time you know just curious as to whether you guys shifted around the types of marketing programs that you went after and or whether you are pretty much doing more the same and maybe some of the returns there; just one as robust as the prior year?
Yeah, its you know I think we are probably more of the same, you know we always are shifting from channel to channel as we see different performance metrics, but on the whole I wouldn't characterize it as being dramatically different. I mean the CPA was essentially flat year-over-year and given the 13% increase I think we are pretty pleased with that outcome and I think we do feel like there has been some evidence through all the different metrics we track of some decay in the small business environment this year itself a little bit more as most it can in Q2 this year than it did in Q2 last year, but net-net we are pretty happy with the outcome of flat CPA with a 13% increase in spend.
Thank you. And our next question comes from the line of George Sutton from Craig Hallum.
George Sutton - Craig Hallum
You spoke more about a weak economic backdrop as an impact item specifically around insurance this quarter more so than I’ve heard at least in the recent past, am I hearing that correctly?
Yeah, I mean we, I think we believe that as the economy gets weaker we tend to see impacts on both new customer as well as on churn.
I think George we've been you know the reality is we've been operating in a weak small business economic environment in essence really since 2008 and I think if you look at last year there were some company specifics factors that enabled us to kind of excel despite that. I think if you look at the June NFIB report that Ken referenced that was really a pretty pessimistic report and it was a pretty big decline. So I think in general, we probably in Q2 did see a little bit more of a tougher economic environment as compared to at least the previous quarters where the index had gotten up above the recessionary level.
George Sutton - Craig Hallum
I wonder if you could give us an update on your thoughts relative to the postal service in general, obviously a lot of discussion of late and I am wondering if that's having any impact at all in your minds on the marketing efforts?
On our marketing efforts? Yeah you know there hasn't been a lot that's changed since last quarter which is why we didn't really kind of say a whole lot in the prepared remarks because we would have just repeated what we said last quarter.
Right before last quarter we had seen by part as in Postal Reform Bill pass in the Senate but nothing’s really happened in the House side. So, that means nothing’s really happened and there's not really a lot of expectation that there's going to be something that happens before the August recess. So postal service is kind of doing what they can to reduce hours and reduce costs and then of course I think we always felt that, it would be politically difficult for them to do massive closings.
We’ve always said that that’s the case and it seems like a case again this time. So we’re not really surprised by the developments, you know, it’s kind of status quo for the most part and certainly to the extent that some hours get cut. It’s less convenient because --- post office highlights are value proposition more so that you know, I think we have felt for probably sometime. I think some backdrop of help form the value proposition by just generally less convenient postal service access. So you know, generally speaking, we’re hoping for some reforms that improves the financial condition.
We’re really need them to survive in the long-term and we are doing you know, in the meanwhile, we’re doing our best to help them grow with our 53% growth in postage, and our 83% growth in high volume. It’s really kind of one of the highlights in the postal world right now for growth.
George Sutton - Craig Hallum
You gave a statistic relative to enterprise growth being the highest it’s been in years and given the large numbers surprised you. I just want to make sure I understood what that number specifically was referring to?
Paid customers, specifically in the enterprise area, which we don’t give them that metric out but we just from time to time, we like to give people a peek under the hood. You know, in this quarter we saw our highest paid customer growth in five years, certainly helped by the largest single customer we’ve ever had landed during Q2 which did impact some of the Q2 revenue, but all of that just came in later in the quarter. So but even without that large opportunity coming in, we still had a really, really great quarter in enterprise.
Thank you. (Operator Instructions) Our next question comes from the line of Jared Schramm from Roth Capital Partners.
Jared Schramm - Roth Capital Partners
Given the high rate of enterprise client growth we saw in the quarter, from a customer acquisition perspective what particularly are you finding to be the most effective means in attracting these enterprise clients for the platform?
So for enterprise, it’s really a direct sales model, so we do, do marketing efforts in many of the same ways that we do with the small business. But generally speaking, it is about driving the opportunities through a hi-touch sales force and finding those opportunities with people that are actively searching for them on a daily basis. So it’s different model in the small business and that it’s really a direct sales model which is, the marketing is kind of less important and less direct part of that equation.
Jared Schramm - Roth Capital Partners
Okay. And you mentioned you signed your largest single enterprise client in the quarter; do you plan on using that as sort of a flagship customer to go and recruit some more clients for the same scale?
We would like to yeah and we haven’t sort of gotten full clearance to disclose who they are and get a white paper up on our website and we have done that with other large enterprises, but it just -- it came in, like I said it came in late in the quarter, so it wasn’t something that we thought we could disclose, but we are helping that down the road. Certainly we can use it as an opportunity to talk about the, give it as a case study.
Thank you, sir and one moment for any further questions. I will now turn the conference back to Ken McBride for any concluding remarks.
Thank you for joining us. If you have follow-up questions, as always you can reach us at 310-482-5830 or you can contact us through our investor website at investor.stamps.com. Thank you.
Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone, have a good day.
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