Chegg, Inc. (NYSE:CHGG) Q1 2014 Earnings Conference Call May 1, 2014 5:00 PM ET
Alex Hughes - Investor Relations
Daniel Rosensweig - President and Chief Executive Officer
Andrew Brown - Chief Financial Officer
Douglas Anmuth - JPMorgan
Stan Velikov - Jefferies
Nat Schindler - Bank of America Merrill Lynch
Aaron Kessler - Raymond James
Mike Olson - Piper Jaffray
Welcome to the Chegg conference call discussing first quarter financial results. (Operator Instructions) I would now like to turn the conference over to Alex Hughes, Head of Investor Relations for Chegg. Please go ahead, Mr. Hughes.
Good afternoon. And thanks for joining Chegg's first quarter fiscal year 2014 conference call. On today's call are Dan Rosensweig, Chairman and CEO; and Andy Brown, Chief Financial Officer. In terms of structure, Dan will open with a discussion of Chegg's business and Andy will follow with a review of our operating results and our outlook for the second quarter and fiscal year 2014.
A copy of our earnings release is available at our Investor Relations website, investor.chegg.com. A replay of this call will also be available on our website. We routinely post information on our website and intend to make important announcement on our media center website at www.chegg.com/mediacenter and we encourage you to make use of these resources.
Before we begin, I would like to point out that during the course of this call we will make forward-looking statements regarding future events and future financial performance of the company. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important risk factors that cause actual results to differ materially from those in the forward-looking statements.
In particular, we refer you to the risk factors described in Chegg's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 6, 2014, and our other filings with the SEC. Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.
During this call we will also present both GAAP and non-GAAP financial measures. Our GAAP results and GAAP to non-GAAP reconciliations can be found in our earnings press release.
Lastly, please note that this conference call is the property of Chegg and any recording, reproduction or rebroadcast of this conference call without expressed written permission of Chegg is strictly prohibited.
Now, with that, I'll hand the call over to Dan.
Good afternoon. And welcome to Chegg's Q1 earnings call. We are pleased to report a very strong first quarter with excellent growth in many of our key metrics, including revenue, particularly due to the revenue, new members, customers and engagement.
Our growth in these areas illustrates the strength in our organic business and the improving leverage of the Chegg platform to both students and investors. First quarter highlights for our business on a year-to-year basis, show overall revenue growth of 22% and as I mentioned our digital revenue grew substantially by a robust 66% year-over-year.
Active members grew 25% year-over-year on top of a huge base, as we benefited from the expansion of services that extended our reach to more students. Paying customers also saw strong growth at 22%. As more of those services focus around daily use, we are seeing increased mobile usage with 49% year-over-year growth.
Engagement has also increased, as the number of members using two or more services grew by 75%, now comprising more than one-third of our total members. This shows the strength of our brand and the platform to successfully rollout new products and services that are popular with students.
We are very pleased with how things are shaping so far for 2014. Q1 was a pretty rush season for Chegg, and we once again competed very effectively. Seeing accelerated year-over-year unit growth, we believe we continue to pick up share and as we have said, we see our textbook rental business as a low cost customer acquisition tool as well as a way to build our brand and customer base.
More importantly we continue to see strong growth in our total digital subscribers, which grew 64% year-over-year and reaching a record 554,000 active subscribers in the quarter. This highlights the tremendous year-over-year growth in Chegg Study and the continued success of our transition to e-textbooks.
Andy will cover the financials in more detail in a moment, as I'd like to review some of the major successes in the quarter that will have a positive impact on Chegg's long-term growth strategy and financial model.
Chegg keeps expanding our platform and strengthening our underlying student graph, which enables Chegg to know more about the student than anyone else. As a result, we are building a very powerful platform for both students and the people, places, products and services that they need.
We believe the data from our student graph and our proprietary matching algorithm positions us to be a powerful discovery and distribution platform for student-centric products and services. Chegg's extensive reach and popular brand have already become a significant force in education and we continue to grow.
We believe the positive network effects we get, as we expand our reach and offerings for high school, college and recent grads, sets us up for many years of continued high margin growth. The higher ed lifecycle starts in high school, when students first research and prepare for college; extends into college, when students pursue their degrees; and continues throughout their careers as the demanding global economy requires new skills to be developed all the time.
Because of this, a key focus of Chegg is to expand the number of opportunities, where we can serve students across this lifecycle. We continue to build, buy and partner to add exciting new services for our existing students, which also helps to attract and engage new ones.
The more services in students we have, means the more effective way we can monetize them in the future. We are better able to match them to new learning materials, more colleges, grad schools, internships and many more things over time, as well as helping our marketing partners build their brands across our large and targeted audience.
The team has made excellent progress in our key segments, signing a number of important partnerships and deals in each area. Chegg Admission Services formally known as Zinch signed an important and exclusive agreement with the National Research Center for College and University Admissions or NRCCUA that significantly increases our current reach of U.S. high school students.
Our organic growth was an excellent 44% year-over-year. And when now combined with the NRCCUA database, Chegg Admission Services will contain 75% of all high school seniors intending to go to college, making us the largest source for college bound high school students anywhere. Chegg can now fill more classes at more schools including even the largest institutions in the country. We are disrupting the college admission process, helping students make better choices and letting schools match with better students at substantially lower cost per enrollment.
In the area of digital learning, we entered into a number of new agreements that increase our ability to bring the most comprehensive catalog of digital content to high school and college students. Our catalog now carries over 200,000 eTextbook titles because publishers and content creators increasingly are relying on Chegg for national distribution, now that older channels prove less relevant for reaching students.
Chegg Study also entered into an important pilot program with the largest university in the country, Arizona State University. In this program, ASU has piloted three classes where students use Chegg Study in order to better master their subject. Their goal is to improve graduation rates by increasing the student's ability to learn. Early signs of the test are positive as 62% of students in this program are actively using our service.
We are also getting ready to do our first major organic product launch for 2014, called Chegg Career Services, where we are focused on improving career outcomes. In the next couple of weeks, Chegg members will be able to come to Chegg to research careers, identify critical skill gaps, get match to learning and skills content, internships, and increasingly entry level job opportunity.
This will be a powerful new tool giving students far greater visibility into their career path, enabling them to proactively manage their progress and improve their outcomes. It also means, we will stay with the students during and after college, expanding our opportunities for more lifetime value.
Finally, turning to our brand ad business. We recently increased our presence significantly with the acquisition of Campus Special, which is now named Chegg Deals. This positions us to be a leading player in the real-time local and national office to college students, a demographic that's been over a $100 billion a year and represents one of the most coveted categories by advertisers.
For those of you who may not be familiar, Chegg Deals already reaches 7 million students across 500 campuses nationally at 10,000 local merchants and over 100,000 regular users of its mobile app. Combining this with our growing presence on 4,000 colleges, we believe we can rapidly expand Chegg Deals more broadly throughout the U.S., as well as market Chegg's much wider portfolio of products and services to more students at a very low cost.
It should also help drive daily engagement across the Chegg platform, particularly in mobile, because the service offers national and local deals classified as well as food ordering and delivery. We believe this can be a huge business for Chegg in the next few years, as it takes perfect advantage of our reach, brand and data.
One of the really exciting parts of the deal is unlike other deals-type that you may have heard about, this one has no permanent sales structure, since we sell on an annual cycle through 750 internships, who we train and who work on a commission basis. This is one of the reason, it is a high-margin business that is scalable, while we were able to build the careers of over 750 students.
The power of the Chegg platform is that as we add students in these services, we are better able to populate the underlying student graph further, increasing our effectiveness as an important distribution platform from learning content and brand partners.
Because of this, we now believe that in 2016, we can achieve what we call the 50, 50, 50 goal. That is for Chegg to reach more than 50% of all U.S. high school students, to reach more than 50% of all U.S. college students, and now leading to 50% of our business coming from our high-growth high-margin digital businesses.
We believe we are able to do this through a combination of building our own products as well as acquiring others that can benefit from our enormous distribution and scale. We plan to be aggressive in each of the areas outlined.
In summary, it was a great start to 2014, demonstrating the strength of Chegg's brand and increasing positive impact of our digital businesses on the top and bottomline. We're excited about the progress we are making, as we pursue our 50, 50, 50 objective for 2016.
With that, I will hand it over to Andy. Andy?
Thanks, Dan, and good afternoon, everyone. As a reminder, my comments today are on a non-GAAP basis as I review our fiscal first quarter results and then provide our outlook for Q2 and fiscal 2014.
We saw strong growth across our business when compared to the same quarter last year. Total revenue grew $74.4 million, up 22%, largely driven by growth from our digital businesses. In fact, digital revenue grew 66% to $17.8 million expanding the 24% of total revenue, up from 18% in the same quarter last year.
We continue to see strong digital revenue growth with digital subscribers increasing by over 60% year-over-year. Print revenue grew to $56.6 million, up 13% year-over-year and we saw accelerated unit growth of over 25% this rush season. As the numbers reflect, our textbook business is off to a strong start for the first half.
As a reminder, revenue recognition between Q1 and Q2 varies based upon school-start age, which adjusts each semester. We're on track with our expectations for the first half and we'll update the second half as we get closer to the fall rush.
Total gross margin for the quarter came in higher than expected at 12%, driven by greater digital revenue and improved cost for print textbooks. Now, that digital revenue is almost a quarter of our overall revenue and growing fast, we believe disclosing digital gross margins will provide better insight into Chegg's future profitability.
Looking back to 2013, our combined digital gross margins were 64%, which was comprised of revenue from eTextbooks where gross margins are lower. And the revenue from our portfolio of other higher margin digital businesses where gross margins are already above 75%.
In 2014, we expect overall digital gross margin to expand to over 65% as we scale our digital businesses. For Q1, digital gross margins were 55%, up from 52% in Q1 of last year. Q1 digital gross margins are seasonally lower due to greater mix of eTextbook revenue.
Turning to expenses. We continue to find improvements in operating efficiency, with Q1 operating expense at $28.8 million, before any gain or loss on liquidations. Of 39% of net revenues improving 1 percentage point year-over-year. In the quarter, we had a gain of $1.7 million from the liquidation of textbooks as we continue to improve the percentage of liquidations we sell of our off our site.
Adjusted EBITDA without textbook depreciation came in better than expected in the first quarter with a loss of $16.6 million, driven by accelerated margins and improved liquidations.
Looking at the balance sheet, we ended the quarter with cash, cash equivalents and long-term investments of $130 million and no debt.
With that let me turn to the guidance for the second quarter and for fiscal 2014. For the second quarter, we expect total revenue between $61 million and $65 million. We anticipate digital revenue to be between 30% and 31% of our quarterly revenue, up from 18% last year.
We don't expect any material contribution from Chegg Deals in Q2, as most of the deferred revenue from the acquisition of Campus Special gets locked in acquisition accounting and their new sales cycle doesn't start until the summer. As with textbooks, we'll provide a more detailed second half outlook on our next conference call.
We expect overall gross margin up approximately 36% and we expect adjusted EBITDA without textbook depreciation to be between $2 million loss and a $2 million profit. Our range would have been all positive on an organic basis, but we had a full quarter of Campus Special expenses with little revenue contribution.
For fiscal 2014, we continue to expect total revenue to be between $310 million and $320 million and continue to expect our adjusted EBITDA loss without textbook depreciation to be between $10 million and $15 million and to be approximately free cash flow breakeven for the full year. We expect that digital revenue as a percentage of overall revenue will continue to grow and to be between 28% and 30% for the year.
And finally, we expect overall gross margin to be between 27% and 29%. And we expect digital gross margin to be over 65% for the year. We are also confident that gross margins will continue to expand as we reach our goal of 50% digital revenue in 2016, as part of our 50-50-50 plan as articulated by Dan.
In summary, we plan to drive continued growth for all of our businesses, particularly our digital businesses, and are managing our overall business to free cash flow breakeven. We are excited about our future and believe our student-first focus is the best way to build, lasting student and shareholder value.
With that, I'll turn the over to the operator for your questions.
(Operator Instructions) Our first question comes from Douglas Anmuth from JPMorgan.
Douglas Anmuth - JPMorgan
Just want to ask two things guys, first on the digital side, specifically looking at Chegg's Study, can you talk more about the growth rate that you're seeing there in terms of subscriptions. I'm not sure if you mentioned or I may have missed that. But then also what you're seeing in terms of the tax rates through the rush season in 1Q?
And then if you look on the print textbook business, I know obviously into 2Q its not a heavy period, but as you're starting to look and plan for the back-to-school season in the fall, what are the things you're thinking about there in terms of doing differently or around sourcing or in terms of textbook acquisition, anything there as you approach that cycle, that would be helpful?
On the Chegg Study growth rates, Dan has mentioned the digital subscriber growth rates, and which, we, by the way believes, is a better indicator of overall digital subscriptions, but Chegg Study itself, it grew about the same as our overall digital subscribers, right around 66%. So we're continuing to see some really, really nice growth on the Chegg Study side of the business.
On the last question, and we'll get to the middle question. On the back-to-school for the rest of the year, so we think of the year as two halves, it's actually interesting that we continue to accelerate our customer growth and our unit growth each semester, despite additional competition from larger players. So we have no trouble at all being very competitive in that business.
The way we think about the textbook business, as we plan for the second half of the year, is we've been very clear that we plan to run the company around cash flow breakeven. So we control all of our leverage. We control which books we want in the catalog, we get to control the pricing in that catalog.
We continue, as Andy mentioned, to improve our overall cost structure. And as we've said on the last call, what generally happens is when prices drop in the industry, source cost drop. So we're continuing to see, on the books that we chose to buy early that we know we're going to have high demand on, we continue to improve our sourcing cost around those and our marketing cost continue to come down, so that business gets more efficient. And we expect to be able to do the guidance that we put out. There is nothing that would suggest that we couldn't do that. And we could imagine scenarios where things continue to improve.
Douglas Anmuth - JPMorgan
And any comments just on the attach rates that you're seeing into Chegg Study from that 25% growth in textbook units?
Thanks for reminding the question. We see the attach rate continuing to get pretty close to doubling each semester right now. So two things are benefiting us, of course, or actually two things, we continue to expand the amount of content that is in Chegg Study, which means the percentage of coverage, which is what I think you're referring to there continues to expand as a result of that, plus our ability to leverage the student graph better and improve our marketing.
And the fact, that as Andy mentioned, on your first question about digital subscribers, our eTextbooks, we always see double, the attach rate of an eTextbook subscriber that we do to a print subscriber, and if that business is growing at about 64% to 65% as well, all of those numbers continue to get better. So the business is really positive as is the engagement, one student get involved with the product, they continue to use it on a weekly basis, the number of pages that they view continues to increase. So all signals are very strong there.
Our next question comes from Brian Fitzgerald from Jefferies.
Stan Velikov - Jefferies
This is Stan Velikov for Brian. Can you please comment on how much of a digital in the quarter was coming not from Chegg Study and the digital books?
What was coming from e-books versus Chegg Study?
Stan Velikov - Jefferies
I missed the question, sorry.
Stan Velikov - Jefferies
So other than Chegg Study and the digital books, basically what's the rest, what proportion was of the total digital?
So we look at our digital business as a portfolio of businesses. And if you take a look at that, its eTextbook, Chegg Study, we also have our enrollment marketing business, which is very strong during the quarter. We had some nice growth in schools and nice growth in leads. In addition, we had a very nice quarter for our brand partnerships.
We had a couple of super nice deals that occurred. You probably saw this. That will be, for example, when we re-up dynamic, so those are part of the overall digital portfolio. We don't, at this point in time, break them out separately, we will potentially at some point in time, when they become a greater critical math, but at this point we don't.
But also just as a reminder, for the first time on this call, we chose to breakout the gross margins for the digital business, which include the collective. So each of those business continues to grow at a very similar rate right now. And with the exception of the eTextbooks, which have the lowest gross margins, the other ones, as Andy pointed out are already approaching 75% gross margins. And collectively, we think we'll do over 65% gross margins in these businesses.
And as a reminder, for those who are new to the story or rather those who are, but those who new to the story, we were zero in these businesses three years ago. So the growth rates, the high gross margins are very exciting to us, and we think they reflect just how big the revenue and the profit opportunity is in the next few years.
Our next question comes from Nat Schindler from Bank of America Merrill Lynch.
Nat Schindler - Bank of America Merrill Lynch
Just want to ask a little bit more about Campus Special. Two things on it, one, anything you can give us on the relative scale of that business, I realize that you paid, I think $17 million for it, so I'm not expecting huge, but it'd be great to know especially because it sounds like its hitting you for about $2 million in costs in the second quarter, but no revenue.
And that's the other tricky question I have on this. I'm trying to, but maybe I'm a little confused on my acquisition accounting here, but I wouldn't have thought a deals business would have any substantial deferred revenue that you wouldn't be able to immediate recognize. I thought it would be more transactional or am I confused on Campus Special business?
So when you look at Campus Special business, there's couple of things. First thing is, you're right. It's a little bit over $2 million of expenses in Q2 and little revenue. With respect to the revenue, a significant portion, quite frankly, a significant portion of the revenue does in fact get deferred. They go through a selling cycle. And one of the cool things about Campus Special is they don't have this, what I'll call, permanent sales force. They take interns, about 750 this year, that are on commission basis, they sell during the summer.
So a big part of their selling season just occurs during the summer, from about mid-May through about the end of July. Much of that revenue gets deferred until it gets delivered. As a result of that, when we go through acquisition -- and we don't know exactly what it will look like, but the reality is we believe that under acquisition accounting, we will lose any deferred revenue that we have for Campus Special. If we don't, then that will be a positive surprise, as we go into Q2 and Q3.
And we think that is because currently the business is a subscription business, so they sell on an annual basis. And over time, as it begins to scale, probably a nice size business, but as it gets bigger, as we move from 500 campuses to 1,000 and 2,000 and so on, one of the really big upsides around this business is we can get the annual subscriptions, so we can be pretty secure on the revenue and that will happen, that's why Andy said that we will update at the end of the next quarter, what we expect the impact to be in the second half of the year.
So we really don't have an impact in the second half of the year in our current guidance, because we want to go through the sales cycle, so that should be very good news. And then as it gets more mobile, and currently there is a 100,000 regular mobile users, but as we push it through our system, where we have many, many, many more mobile users, we believe we can build tools that allows the deals to be updated daily, which will increase the annual subscription for people who want to do either a local or national deals daily.
So we think there is enormous upside in this business. And this is the young entrepreneur who has been doing it on a shoestring budget. And we look for companies that have built great momentum, but are undercapitalized. And who don't have the reach that we have, similar to the way we did it with Cramster, which is became Chegg Study. So we think this is another one of those just really big opportunities for us going forward.
Nat Schindler - Bank of America Merrill Lynch
But if I look at your 2014 full year guidance, are you including anything in there for Campus Special?
Nat Schindler - Bank of America Merrill Lynch
It's got cost, but not revenue.
Correct. We have to recognize the cost in this quarter and the revenue is deferred because it's not daily deals, it's discounting coupons deals. And because that revenue is sold on an annual basis, the way they sold it, we don't get the benefit of what they sold already. That's why we have this, short-term take the cost in the quarter, and so it did not included at all in the second half of the year guidance for us. So our digital business in the percentages or revenue that we articulated at the moment assumes seems nothing from it.
Our next question comes from Aaron Kessler from Raymond James.
Aaron Kessler - Raymond James
Couple of questions. First, Dan, if you can maybe just discuss, kind of how the product pipeline looks for the rest of 2014. And also on acquisition front, as a follow-up to Nat's question, this is kind of a little different in terms of -- it's a more of a non-study type of acquisition and kind of your core business, so how should we think about additional acquisitions kind of not as core to your business. And then also what do you think from a valuation standpoint of some of the private companies right now?
A comprehensive questionnaire. So let me first say that we do think things like Campus Special, now Chegg Deals is actually core to our business, because our business is building a giant brand and a platform that serve the needs of high school, college and then beyond. And one of the most important things that college students look for is the ability to save money all the time.
And as we get into our brand business and our formally Zinch's business, which is now Chegg Admission Services, something like Campus Special, which increases our reach, increases our daily engagement, increases the data that we have of all the students and test into on average these kids spend about $500 a month on product and services that go exactly through this.
So we think its actually core to extending the brand, getting the reach, getting the data, and actually getting credit cards, because they're able to buy things through this, particularly food ordering and food delivery. So it is core to us.
Now, how we think about acquisitions going forward, if you think about the future of the digital businesses, if we break them out, there are two camps, there is the advertising digital revenue camp and then there is the learning services camp. So this one puts on to the ad side, which will help expand our brand business.
And by the way, just to think about it, if you think about when we reach 50% of average student, how big can that add business. I mean we think it's huge and we think the gross profits will probably be our highest gross profits. So we are very excited about that.
On the digital learning side, you can imagine that we'll continue to rollout new products and services. Chegg courier services is a very big important launch that we have coming out in a few weeks, that's why we wanted to mention it on this call. It will be a comprehensive site, building on that we already know your college, we already know your class, we already know your major, and now with our internships, we start to get inside into your career.
Now, if that gets built into Chegg courier center, now we're going to know what your skills are that you've learned in school and what your gaps are. And then we're going to be matching you to learning curriculum online or offline, but mostly online to start.
Some of the major names, which we'll rollout in next couple of weeks, as we make the more important launch, where student can actually say, okay, so I want these kinds of job, I have these kinds of skills, I am missing this skill, how do I click here, and take this class right online through Chegg. So you're going to see us more aggressively in the second half of the year, both in potential acquisitions and products to be more around the learning services business. And so you could think about it that way.
In terms of valuations, we have been very deliberate with waving things out. Its no secrete that our valuation is not anywhere where we imagine it could be. And so we have been, when we're engaging conversations, we generally think about using cash if we're going to buy something. We generally help the people understand how big the opportunity, we think it is. We think that this company is going to be a company that has $1 billion in revenue in the not too distant future because the category is so big.
And so the companies that we work with are ones that have leading technology, that are underfinanced or underleveraged, that can really benefit from our brand and our reach and our scale. And so we try to get them before their valuations get out of control or we are patient until they get to a point where we think they are a fair value for us, where we can create upside for our investors.
Our next question comes from Mike Olson from Piper Jaffray.
Mike Olson - Piper Jaffray
I got on little late, so sorry, if you already talk about this, but as you continue to work on kind of reaching students earlier in their path to college, I was just curious how you're marketing Zinch to high school students, to kind of grow usership on that front. I know you have a really strong brand, obviously with college students, but what tactics are you using to kind of reach into high school? And I can't remember what the status of potentially rebranding Zinch to Chegg is, but maybe you can let me know on that as well.
Absolutely, correct. We want to extend the amount of time, both number of years and the number of days over the course of those years that we can have services that are relevant to the student. In the high school category, in particular, the Zinch rebranding to Chegg will be somewhere around the summer time. We will rollout the fully integrated product before the rush, and the rush really happens second week of August through sort of end of September.
So our expectation is that we'll be fully live before the. And we're really excited about it. We'll not be, just the Zinch you see, we'll be much more comprehensive, much more detailed, much more valuable for students, in terms of going through the entire process and starting it early a year, so we believe it's going to be a really big upgrade to the product and service.
The way we currently market today is we do an unbelievably great job at our search engine optimization and that is because the more original content we have, the more uniquely it relates to admissions, the more the students who go to the search engines, find their way over to us. In addition to that we have one of the two largest scholarship databases, which is our primary organic source. And our leads grew about -- our students entering into the system grew 44% year-over-year. So we've seen some really positive just organic success there.
But we also announced on the call that we did a very important deal with NRCCUA, which now gives us exclusive access to not only our own database, but a database that now combined, we believe allows us to go from 40% of our graduating high school seniors, who intend to go to college to about 75%. So that makes us bigger and more important than College Board or anybody else in the admission process.
So we continue to improve our organic growth, plus this deal, which is a multiyear exclusive deal. We think really empowered the out years of what was formally known as Zinch, now Chegg Admission Services, because it means that we can sell to more colleges at the same time and fill a greater percentage of their class. So it's a really big transformative deal in the next couple of years. So we're excited about that, so both, success organically and this exclusive deal that we announced today.
At this time, I will turn the call back over to Dan Rosensweig for closing comments.
Thank you everybody for joining the call today. As you can see, we believe we are off to a great start to the year. We're seeing excellent membership, subscriber and digital growth, and the team has been very busy executing against our long-term plan. It's a story we're very excited to tell.
I know we're scheduled to be at a number of conferences this month. This is new for us. We've only done a few. So we're going to go out and tell our story to more people. And we look forward to seeing many of you on the road. Thank you again for your interest in Chegg. And we'll talk to you on the next call.
Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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