Call Start: 17:00
Call End: 17:36
RPX Corporation (RPXC)
Q4 2016 Earnings Conference Call
February 14, 2017 05:00 PM ET
JoAnn Horne - Head, IR
Marty Roberts - Interim CEO and General Counsel
Bob Heath - CFO
Nick Nikitas - Robert W. Baird & Company, Inc.
Darrin Peller - Barclays Capital, Inc.
Karl Ackerman - Cowen and Company, LLC
Good day and welcome to the RPX Corp. Q4 and Full-Year 2016 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ms. JoAnn Horne, Head of Investor Relations. Please go ahead, ma’am.
Thank you, Tom, and thank you for joining us today to review RPX Corporation’s fourth quarter and full-year 2016 earnings. Leading the call today to discuss the results are Marty Roberts, RPX's Interim CEO and General Counsel; and Bob Heath, our Chief Financial Officer.
The agenda for today’s call includes commentary from Marty, regarding recent developments and the 2017 outlook, followed by detailed review of the fourth quarter and full-year financial results by Bob, as well as the Q1 and 2017 guidance. Immediately following, we’ll open the call up to take questions. Trevor Campion, CEO of Inventus, will also be available to answer your questions.
This afternoon, RPX issued a press release announcing its fourth quarter and full-year 2016 financial results, which is available on the Company’s Web site at www.rpxcorp.com. This call is being broadcast over the internet and the audio of the call will be available on the Investor Relations page of the Company’s Web site. Also, please note that there are slides corresponding to the information discussed today available on the IR site.
I’d like to remind everyone that today’s discussion will include forward looking statements that are not historical facts but are based on the Company’s current expectations and beliefs. These forward looking statements include but are not limited to expectations regarding the growth of the Company’s business and the business outlook for the year. The Company’s actual results may differ materially from these forward looking statements. Please refer to the Company’s SEC filings for detailed information concerning the factors that could cause actual results to materially differ. In addition, non GAAP financial measures will be discussed during the call. Reconciliations are included in the table attached to the earnings release and on the Web site.
And with that, I’ll turn the call over to Marty Roberts.
Thanks, JoAnn. Clearly the past two week have been eventful at RPX with the resignation of our CEO John Amster. So I want to with a quick review of what led to John's departure and offer some context before we discuss the business and operating results.
Whenever a company goes through an unexpected change in CEO, the first question is always why? And in our case the answer is simple, John and the Board had different visions of how to increase shareholder value at RPX. John wanted to start a process to sell the Company in a going private transaction right away. The Board doesn’t think it's time to proactively explore sale at present and believes will maximize shareholder value by continuing to build the Company's businesses, expand the range of services we offer our clients, and continue our program with capital return.
As a result of these opposing point of view, it was mutually decided that John will resign. I was named interim CEO last week and for those of you don't know me, I’ve been General Counsel at RPX since 2010 and have been a member of senior management since joining the Company. I worked with John and the rest of the management team on every transaction and initiative we executed since then.
In addition, I also oversee our data and technology services and human resources groups. So I suppose you could say I've been a de facto Chief Operating Officer for some time now. Our plan is to continue the strategies in place for both our patent risk and legal discovery businesses, which include a robust cross-selling effort to capture more of the estimated $500 million annually that our current RPX clients spend on e-discovery services.
On a personal note, I want to say how much I and indeed all the employees here appreciate everything that John has done for the Company. He and his co-founders took a singular idea for reducing risk in patent licensing and built the business with nearly 350 clients who have saved more than $3 million and avoided legal and settlement costs.
As Bob will discuss in detail, our financial performance reflects the Company's continued progress toward achieving this vision. As we indicated last week, fourth quarter results were in line with our guidance. We added 20 net new clients in Q4 and ended 2016 with 348 clients. Our renewal rate remained at around 90% in the fourth quarter. Discontinued strong renewal rate is important to note, especially in the patent environment that has been evolving in recent years.
It's no secret that patent litigation activity has fallen recently, a reflection of many factors, especially the impact of the Supreme Court's Alice decision and the increasing utility of IPRs to challenge patent validity. Both of these have driven many low-quality patents out of the licensing model and reduce the amount of new litigation that companies face.
I might add that we believe RPX has also helped to reduce the amount of litigation by removing problematic patents from the ecosystem. The patent litigation has definitely not disappeared. Last year alone there were more than 1,200 active campaigns by MPEs with approximately 4,000 unique companies defending themselves often in multiple separate litigations. There are still hundreds of thousands of patents issuing every year and the patents that remained in the licensing ecosystem are higher quality assets that are costly to litigate and settle.
In other words, there are still a lot of patent risk out there and without RPX in the market there would be even more. MPEs continue to be a multibillion dollar annual problem for thousands of companies and RPX offers a cost-effective way to reduce that risk. Our value proposition is compelling and our renewal rate reflects it. Our market activity in 2016 underscores this value. Despite lower patent spend, RPX acquired rights to 78 patent portfolios and we were able to transact this large volume of acquisitions for a net patent spend of $117.5 million.
In the process, we achieved 220 litigation dismissals for our clients. That’s nearly one dismissal for every business day of the year. And outside of litigation resolutions, our open-market purchases help clients avoid approximately 320 litigation that will never occur, because we cleared the assets.
RPX remains a very active player in the pre-litigation market, closing 35 deals in 2016, our most in any single year since inception. RPX acquired 6.3% of the portfolio that reviewed in 2016, up from our four year average of 4.7%. We see this as a reflection of the market shifting away from nuisance level portfolios to higher-quality patents.
As the market shift, its useful to remember that this dynamic is being felt across the spectrum of that risk companies. And that spectrum has grown steadily, wider. The amount of patent litigation overall has receded with the number of companies feeling the threat has been rising over time. 10 years ago this is a serious problem for hundreds of companies. Today thousands of them are experiencing patent licensing litigation and experiencing it more consistently.
There are also a number of developments in the patent ecosystem that may enhance our growth. For example, the current litigation gamesmanship, among Article III Courts, the patent trial and appeal Board and concurrent litigation in pro-enforcement international jurisdictions, such as Germany and China is adding complexity to the patent risk that our clients continue to face.
There are also trends in oil and gas, clean energy, autonomous vehicles, and medical devices and diagnostics that may expand the universe of patents that MPEs and companies consider worth litigating. Furthermore, we don't know how the new administration in Washington will affect the patent market, but it's reasonable to assume that any legislative change will wait until after the Supreme Court decides the TC Heartland case, which could affect where a corporate defendant may be sued for patent infringement.
However, these trends play out and however the market evolves, we know that a broad cross-section of companies still need help mitigating their patent risk. For example, during the fourth quarter of 2016 and just the sectors where RPX is currently active, more than 500 unique companies were named in MPE suites, more than 400 of which are not yet in the RPX network. 50 companies were sued more than once by MPEs during the quarter and more than 180 non-client companies were sued by MPEs for the first time.
To execute on this opportunity, we're strengthening efforts to expand our businesses and we recently welcomed two industry veterans, Andy Block and Neal Rubin to a management team that already includes many outstanding IP professionals. Andy spent the last 15 years at Time Warner as a Group Vice President and Chief Counsel for Intellectual Property, and Neil spent 15 years at Cisco where he most recently was Vice President for Litigation. Andy and Neil are highly respected leaders in the IT space. They'll be involved in our business development activity, syndication development, and client relations efforts.
There are many reasons why these two industry veterans have decided to join the Company, but I know both Andy and Neil especially value RPX's comprehensive approach. Over the past eight years we’ve proven and expanded our ability to manage patent risk in a variety of ways, from acquiring patents to negotiated syndicated settlement agreement, the challenging weak patents in IPR petitions.
RPX also offers the only comprehensive patent insurance products available today. This is expanding our addressable market and we’ve seen consistent growth in premiums written, but the uptake is not going as quickly as any of us hoped. In 2016, we ended the year with nearly 200 policyholders and we continue to expand our presence by cultivating a robust broker channel.
And as we discussed on prior calls, we've also developed policy offerings that are tailored to medium and large clients. Finally, we were pleased with the sales and cash generating performance of our discovery business in Q4 and 2016. The Inventus team saw strong progress in key vertical markets, such as financial services, energy, and healthcare and we added new clients in the automotive construction and telecom sectors.
The sales pipeline is increasingly full and we’re establishing new channels to expand our market presence. One recent example of this channel expansion is our agreement with the leading insurance carrier to join their discovery vendor panel to assist on both matters for the Company and for its policyholders. Our cross-selling efforts with Inventus are also picking up steam and during Q4 two RPX clients chosen Inventus for some of their e-discovery work, because of efforts by RPX's client development team.
In closing, I’d like to say how proud I am of the approximately 300 people who work here at RPX and Inventus for maintaining their focus on unsurpassed client service and delivering the 2016 results, despite some of the headwinds and distractions we faced. We enter 2017 with some of the same industry headwinds in our core business, but I believe our performance in 2016 and our continued focus on execution throughout the Company will make us a stronger more nimble organization.
We are committed to executing on the core strengths, that have driven our success to date and we’re always looking for transactional and syndicated deal opportunity to accelerate our growth and expand our market presence in all parts of our business. Our syndicated transactions continue to serve as a model for our industry-wide licensing and improve business relationships among technology companies.
While moving steadily closer to our long-term vision of creating a broad-based patent clearing house. That will do it for me. I look forward to answering your questions and I expect to have the chance to meet many of you over the coming months.
Now here's Bob with the financial details.
A - Bob Heath
Thanks, Marty. As JoAnn noted, we posted a slide on our investor relations site which corresponds to today's fourth quarter 2016 financial discussion. I encourage you to review this deck and today's press release for the full details of our financial results. As usual, our discussion will focus on non-GAAP metrics which JoAnn explained a few moments ago.
For the fourth quarter of 2016, total revenue was $81.8 million, an increase of 12% from Q4 2015, reflecting the inclusion of the discovery services business, partially offset by lower subscription and fee related revenue. Subscription revenue for the quarter was $62.7 million, which is down $5 million in the prior year but up slightly from the third quarter. The decrease compared to the prior year was primarily the result of M&A activity that affected some of our client base earlier in 2016.
Discovery services revenue was $18.3 million, an increase of 40% from Q4 2015 and up sequentially but leaving a slightly below guidance for the full-year. Christmas holiday schedules affected review related revenue in December, and the decline of both the euro and pound sterling versus the U.S dollar during the second half had an unfavorable translation impact on some of our international revenue.
Fee related revenue for the quarter was $0.8 million. Within the patent risk management business, we finished the quarter with 348 clients and net additions for the quarter of 20 primarily new insurance policyholders. Renewals hovered around 90%. Non-GAAP cost of revenue was $49.2 million in Q4, up from $39.4 million in Q4 2015, again reflecting primarily the addition of the discovery services business.
Patent amortization included in cost of revenue was $39.1 million. Non-GAAP SG&A was $17.9 million as we mentioned in prior calls we have been working to streamline our cost structure in light of the revenue decline we experienced in the patent business.
Non-GAAP net income for the fourth quarter was $6.2 million or $0.12 per diluted share. This compares to $11.7 million or $0.21 per diluted share in the fourth quarter of 2015, which benefited from $5.1 million in fee related revenue. Note that our non-GAAP tax rate of 51% in Q4 is primarily a result of the impact associated with reserves for unrecognized tax benefits recorded in the quarter. We estimate that our cash taxes for the quarter will be closer to the historical rate of 37%.
For the quarter, adjusted consolidated EBITDA was $54.6 million. The net patent spend for the quarter was $45.5 million, consolidated non-GAAP EBITDA minus net patent spend was $9.1 million in the quarter. For the year, net patent spend was a $117.5 million. Average amortization on patents acquired in Q4 was approximately 26 months and 27 months for full year of 2016.
Turning to the balance sheet, we ended Q4 with $191 million in cash equivalents and short-term investments. Our deferred revenue balance rose to a $130 million compared to a $103 million in Q3, reflecting the seasonality of client renewals. During Q4, we repurchased 902,000 shares of RPX stock for $9.3 million at an average price of $10.36 per share.
Since we began repurchasing shares in Q1 of 2015, we repurchased a cumulative 7.9 million shares of our stock for $86.3 million, at an average price of $10.90 per share. For full-year 2016, we reported revenue of 30 -- $333 million, non-GAAP operating profit of $63.6 million, and record cash flow measured as EBITDA minus net patent spend of $108 million.
Despite the headwinds we faced in the patent risk business, we continue to demonstrate the value of the RPX network. We successfully integrated the Inventus acquisition, we streamlined our cost structure and we delivered the highest level of cash flow in our history.
Before diving into 2017 guidance, let me give an update on some trends we talked about in the past year. We indicated last quarter that we had worked through most of the known renewal risks related to clients who were involved in large merger or acquisition transactions. That remains true today.
In addition, trends in the U.S economy seems stronger than they did a year-ago. With that said, trends in the patent will remain mostly unchanged from 2016. There was a decline in MPE litigation in 2016 and in the first 45 days of 2017, we have yet to see signs of a rebound, although January is typically a slow month for patent litigation.
We believe that the decline in litigation has resulted mostly from the withdrawal from the market of lower quality portfolios, which in the past might have been asserted against potentially dozens of plaintiffs for nuisance level settlements. These low-quality assertion campaigns have generally fallen below RPX's radar. So we remain as busy as ever despite the lower overall level of litigation.
Separately I'd like to add to Marty's comments on the possible effects of the new administration in Washington. Well it's unclear whether there will be any meaningful patent reform we are encouraged by the possibility of a substantial change to corporate tax rates. RPX has historically paid federal taxes at or near the statutory rate of 35% and a reduction of this rate could have a meaningful impact on our after-tax cash flow.
So let me turn to guidance. For fiscal year 2017 we are providing the following outlook and revenue. Subscription revenue of $240 million to $250 million; discovery services revenue of $70 million to $79 million.
Our annual guidance for e-discovery revenue will necessarily be wider than the guidance ranges as we’ve historically provided for the patent risk business. Revenue and the discovery services business comes from over 1,000 different clients in matters and is largely recurring from month-to-month. That said, large projects can ramp up and we’ve down very quickly, which can make the quarterly pattern of growth volatile even in the context of steady long-term growth.
In 2016 that volatility was our friend as some large projects came online. There will, however, be some quarters in the feature when volatility may mean the wind down or termination of a large project as cases inevitably get result. Let me note, that as compared to pro forma 2015 revenue of $52.4 million. The bottom and top of our guidance range represents compound annual growth of 16% to 23% over the two-year period.
I would also note that this revenue growth has occurred despite the fact that the pound sterling has declined approximately 18% from its average level in 2015. I would further note that on a constant currency basis, our 2017 guidance represents a 5% to 18% growth rate versus 2016 results.
Moving on to fee related revenue, we estimate $5 million to $15 million just as we did last year, yielding total revenue of $315 million to $344 million for the full-year. Regarding to non-GAAP cost of revenue of a $193 million to $198 million, reflecting patent amortization in the range of $153 million to $156 million. We have provided a supplemental table in our earnings release with regard to patent amortization.
We're guiding to non-GAAP SG&A expense of $73 million to $78 million and non-GAAP net income of $31 million to $42 million. Non-GAAP adjusted EBITDA in the patent risk management business for fiscal 2017 is expected to be $183 million to $199 million and discovery services adjusted EBITDA is expected to be $19 million to $23 million.
So guidance for consolidated adjusted EBITDA in 2017 is $202 million to $222 million. We expect net patent spend for the full-year to be in the range of $110 million to $115 million. Therefore adjusted EBITDA minus net patent spend for 2017 is expected to be $87 million to $112 million, and we continue to believe that adjusted EBITDA minus net patent spend is the best measure of pre-tax cash flow for the consolidated business.
We estimate 50 million diluted shares outstanding on a weighted average basis for the year. In this estimate we make no assumptions about share repurchase activity through the remainder of this quarter or the full-year.
Now for quarterly guidance, for Q1, we expect combined subscription and discovery services revenue of $79 million to $81 million. Fee related revenue guidance for the first quarter is $1.0 million to total revenue for Q1 is $80 million to $82 million under our guidance.
First quarter non-GAAP net income is expected to be between $5 million and $7 million, with $49 million diluted shares outstanding on a weighted basis. And for Q1, we expect adjusted EBITDA of approximately $51 million to $52 million.
Before we open it up for questions, I like to echo Marty's comments and express my gratitude to John Amster for the opportunity to be part of this unique Company, he helped conceive and has led tirelessly for the past seven years.
And with that, we'd like to open it up for your questions.
Operator, we will take questions now please.
Thank you. [Operator Instructions] And we will take our first question from Jeff Meuler with Robert W. Baird.
Hey, thanks guys. This is Nick Nikitas on for Jeff. Just looking at the full-year subscription revenue guidance and a kind of Parse with Q1, with Inventus combined, but have you seen any recent trends with M&A or any deterioration in the growth rate that would be leading to the revenue decline or is there any potential conservatism in that number, just given, kind of the trend that you had historically over the past year or so.
Yes. Thanks, Nick. This is Bob. Actually the good news is at this time last year we had some large lumpy M&A related renewals that were at risk, and as we said in the past, some of those broke against us. At the moment, we’re not seeing debt. With regard to the Q1 guidance, you should anticipate that it's sort of steady issue goes for both the discovery services as well as the patent risk business. And with regard to your comment about conservatism for full-year of 2017. We try to learn from what -- are forecasting the past year we forecast the same way the last year. But we overestimated the probability of some renewals. So we factor that into how we estimate in this year.
Okay. That’s helpful. Thanks, and then I know its early, but if you just look out past '17, you guys mentioned the renewals have remained strong. Just any early indications with clients or potential pipeline activity that could lead you to be a little bit more positive going out with potential stabilization or just seeing a stabilization in the trend just going forward outside of '17?
Yes, tough question. Obviously, we’re not prepared to give specific guidance for 2018. Clearly there are some crosscurrents in the industry. We’ve talked about the overall decline in litigation. That said I think we're seeing a little bit of a passing of the baton, if you will, from some of the entities that were active in MPE litigation, maybe two or three years ago to a different set of entities that may create more demand for bigger deals and bigger settlement. So for example, companies like Unwired planet and [indiscernible] seem to have exited the patent litigation business. Walker innovation seems to have withdrawn, Acacia has been relatively quiet. On the other hand, we see some sophisticated private equity backers moving into patent monetization, including center bridge sometime last year financed a portfolio of patents out of Blackberry that we expect we'll see being monetized. Similarly vector capital has been active, buying IT value and recently acquiring a portfolio called Longitude Licensing from Conversant. So, If I look out further I think maybe it’s a changing of the guard a little bit, in terms of who is sponsoring patent monetization and the next rough might involve deeper pockets, more sophisticated financiers and maybe a more patient delivered approvach to licensing.
This is Marty. On a higher level than that, there is a lot of investment being made in things like clean energy, and autonomous vehicles and our experience is that when a lot of money flows into something people and patents follow and litigation sometimes follows that. So while its way to soon to predict how that might affect our business. There are lot of things moving in the macro economy that could help good growth in 2018 and beyond.
Okay. And then, Marty, you mentioned expanding potentially the range of services, is that more so speaking to the cross-sell initiative with Inventus across existing subscription client base or do you think there is potential to maybe open up new service lines, so there is the organic or potential additional M&A.
I was primarily talking about cross-selling efforts between our RPX and Inventus clients, but of course we do have a -- we do hope to increase the number of offerings related to our data services over the next year and half. So that would be an organic add.
Okay. Thanks for taking the questions.
We will take our next question from Darrin Peller with Barclays.
Hey, guys. How are you? Regarding the overlap of expenses between the discovery and the core patent business. Looking at the guidance for year, SG&A seems relatively flat maybe slightly down at the midpoint. So I was wondering where we were in the cost take out opportunities and kind of what timeline we might expect before, potentially more savings are realized there.
Okay, great question. So we did takeout about 5 million in run rate costs from the beginning of 2016. That doesn't mean you should see a $5 million decline in the RPX cost structure in 2017 versus 2016 because we achieved about half of those reductions in the second half of last year. That being offset a bit by growth at Inventus. Inventus had a very strong year, especially in the European theater and so there is some increase in the
Inventus SG&A that offset some of the savings at RPX. Specifically Inventus is opening an office in Germany in response to the customer success they’ve had there. And unfortunately there we will probably end up paying a little bit more for real estate, in London because they’ve been enjoying a substantially below market rent in London, but we’ve estimated that sometime this year. We’re going to get kicked out and we’re going to have to move to something that’s a market rate.
Okay, great. And I know it's kind of early with the new administration, but on the patent litigation environment in the U.S, I know the prior administration that kind of post some headwinds in terms of secular trends etcetera. But do you have any visibility into potential changes there, anything you've kind of heard down the pipeline from Washington that gives you incremental confidence in the overall environment here?
Not a lot. I would point you that there are some good summaries of the new administration, positions on patents as well as the positions at some of the senior individuals in the administration have taken variety of law firms that publish those. But patent reform or patents generally were not a high priority topic during the campaign, so it’s a little bit of tealeaf [ph] reading involved here. But I think your first comment is right. The Obama administration was unusually focused on patent reform and so it's likely that this administration may be less so. I think that a lot will depend on whether Micheli remains at the U.S patent and trademark office or whether the Trump administration replaces her or she decides to step down. So it is a little bit early to tell, but I would again harken back to your opening comment that the Obama administration was keenly focused on patent reform and it would seem at least for the moment that the current administration has several things that are higher priorities.
Okay, great. That’s it for me. Thanks for taking my questions, guys.
[Operator Instructions] We will go next to Timothy Arcuri with Cowen and Company.
Hello, gentlemen. This is Karl Ackerman on for Tim. My first question is frankly regarding Mr. Amster's resignation. Specifically is the Board fundamentally against going private? And if so, why and I guess really the issue is -- if the issue is solely around just timing, then why you get rid of your CEO now? And I’ve a follow-up please.
The Board is not fundamentally against any transactions. The Board believes that we have a lot of exciting things to work on during 2017. And that it's possible for us to generate long-term returns for our shareholders as a public Company, and they believe now it's not the time for us to launch a private or going private. The process to go private, so it's not more complicated than that.
Got it. Again, if I look at your guidance for the year, you specified to some extent on the ranges that you provided are a little bit wider than previous years with subscription revenue down little bit more than rest of your business. Is the software outlook you’ve provided primarily related to, maybe a greater level of attritioning your core business or is it related to -- there is more concern around what Washington will do this year. And I guess if it's really related to the level of attrition business. Do you think you may need actually increase your patent spend at 2017 to target new client growth.
So Karl, the -- it does reflect, I suppose you could say it reflects on a net basis, little bit more attrition, but it's probably more accurate to say, it reflects a different set and slightly lower probability waiting on renewals throughout the year, then we had at this time last year. You will recall that last year, we went out with the guidance range and a number of large things that we had handicapped at that occurring with some probability between zero and a 100%, It didn’t happen. So when that happens we try to learn from that and adjust our probabilities down. So what you’re seeing is the result of our handicapping, both the existing business, renewals, as well as the probability of bringing in identified and unidentified prospects, I will not say, its related to anything we think that is coming out of Washington. And I apologize, I think there was a third part to your question that I forgotten.
Yes, just patent spend.
Oh, patent spend?
I will say that while we think the patent spend guidance is consitent with the revenue guidance we’ve given and our patent spend as a percentage of revenue in the past, as always if we see opportunities to bring in new clients at attractive margins by spending more or we will absolutely make that investment.
Got it. And one more if I may, it's been about a full-year since you’ve integrated Inventus into the operations and I think grew -- Inventus nearly grew about 30% year-over-year. On a pro forma basis, very strong. As you look into 2017, how do you think about the seasonality of that business, specifically in the first quarter. And how much, if at all, are you assuming in your full-year guide for many cross-selling opportunities from insurance in your core RPX subscription revenue on the sale side. Thanks.
I’m going to -- I think they were two questions there. With regard to seasonality there is -- depending on the mix of project, there is probably some seasonality in the summer and in December related to vacation schedules, but again that’s really going to be a function of the mix of project. Hosting and processing does not have seasonality, because when data stored, its stored without regard today of the week or whether it’s a national holiday. But If you have reviewers working on a review project, obviously the level of activity can rise and fall with vacation schedules, mostly. And can I ask you to repeat the second part of the question.
Yes. It was just you had talked about this quarter receiving some cross-selling opportunities from, I guess, from Inventus and maybe your core insurance business, how should we think about that continuing in 2017, at least from a cross-selling opportunity perspective?
You should have seem some of it is baked into our guidance. We -- I will say we were little slow out of the gate last year in cross-selling. And we had a lot of crosscurrents in the business and some other things to deal with, but it is a top of mind focus for the sales forces on both the Inventus and the RPX side to generate that cross-selling revenue.
Great. Thank you, gentlemen.
[Operator Instructions] Mr. Roberts, there are no further questions in the queue. I’d like to turn the call over to free any closing remarks?
Okay. Thank you very much everyone for joining us and we look forward to talking to you next quarter.
And ladies and gentlemen, this does conclude today’s conference. We appreciate your participation.
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