CRCT - NASDAQ

Good day, and thank you for standing by. Welcome to the Cricut, Inc. fourth quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To ensure your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the call over to your speaker today, Jim Suva. Please go ahead.

Thank you, operator, and good afternoon, everyone. Thank you for joining us on Cricut, Inc.'s fourth quarter 2024 earnings call. Please note that today's call is being webcast and recorded on the Investor Relations section of the company's website. A replay of the webcast will also be available following today's call. For your reference, accompanying slides used on today's call along with a supplemental data sheet have been posted to the Investor Relations section of the company's website investors.cricut.com. Joining me on the call today are Ashish Arora, Chief Executive Officer, and Kimball Shill, Chief Financial Officer. Today's prepared remarks have been recorded, after which Ashish and Kimball will host a live Q&A. Before we begin, we would like to remind everyone that our prepared remarks contain forward-looking statements and management may make additional forward-looking statements, including statements regarding our strategies, business, expenses, and results of operations, in response to your questions. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the risk factors section of Cricut, Inc.'s most recently filed Form 10-K or Form 10-Q that we have filed with the Securities and Exchange Commission. Actual events or results could differ materially. This call also contains time-sensitive information that is accurate only as of the date of this broadcast, March 4, 2025. Cricut, Inc. assumes no obligation to update any forward-looking projections that may be made in today's release or call. I will now turn the call over to Ashish.

Thank you, Jim. We have a strong conviction in our category and the overall market potential. While our opportunity is sizable, even in the shorter term, we are disappointed with our inability to execute and capitalize on it. While we are pleased with our growth in operating income, we are working with tremendous urgency and focus to drive to an inflection point for growth. We can achieve this potential by driving a mass market experience, accelerating our development cycles, and competing better. I would like to look back on 2024 on what went well and what we could do better, and our priorities for 2025. Kimball will go through much of the quarterly details and how we look at 2025. 2024 was our eighth consecutive year of positive net income, as we generated $62.8 million of net income, which increased 17% or $9.2 million compared to 2023 and translates to a $0.05 increase in diluted EPS for the full year. We are pleased with our increase in profitability and a 7% increase in paid subscribers in 2024. However, we are disappointed with the 7% decline in total company sales and with engagement metrics that continue to show softness. In 2025, we are relentlessly focused on increasing our speed of execution and are accelerating investments that will help drive future revenue growth. These accelerated investments are in hardware product development, materials, and engagement. We also recently initiated additional litigation to appropriately protect our intellectual property. Finally, we are continuing increased marketing and promotional spending that we initiated in 2024. Some of the hardware and engagement investments we are making will only benefit future years, and as a result, we expect operating income to decline year on year in 2025, and Kimball will go into these details. We need to reignite our top line to satisfy the expectations of our team and our shareholders. We have conviction in what we need to do to return to growth. We need to attract more new users to buy our connected machines as we focus on addressing affordability and increasing marketing and awareness. We need to reverse weakening engagement trends and reinject enthusiasm among our users by simplifying the making process. We need to defend our share in accessories and materials. This plan is woven into four priorities: new user acquisition, user engagement, subscriptions, and accessories and materials. We continue to focus on new user acquisition and engagement growth on our platform, which ultimately drives our monetization flywheel. I am excited that last week, we launched the next generation of our most popular cutting machines, Cricut Explore 4 and Cricut Maker 4. These new machines are up to 2x faster than previous models. They are available in two fresh and modern colors, sage and seashell, and we have added greater value to each machine by including tools and materials to help makers get started right out of the box, with enough materials to make up to ten projects. The Cricut Explore 4 and Cricut Maker 4 machine MSRPs are $249 and $399, respectively. For only an additional $50, the users can upgrade to the essential bundle that adds more value and enough materials to make up to 100 projects. While these machines were just launched last week, we are pleased with the initial feedback, which is positive from both retailers and end users. After several years of reductions in marketing spend, we started to carefully increase our marketing spend in 2024 to drive full funnel excitement, augmenting marketing spend by $20 million. We are seeing a positive uplift from these efforts. Our market mix analysis shows that our investment in top-of-funnel marketing had a positive impact on machine sales. In 2025, we expect to continue this as we reaccelerate consumer excitement for the brand and category. Given the positive uplift from our deeper promotions, which we started in 2024, we plan to be even more promotional in 2025. We ended Q4 2024 with 5.89 million active users, down 0.7% year on year. We had 3.81 million 90-day engaged users who cut during the quarter, down 3.1% year on year. Over the last three years, we added fewer new users than the COVID cohorts of 2020 and 2021, and the new users that we are attracting more recently tend to cut fewer projects than new users during the pandemic. Both of these dynamics combined pressure our engagement metrics. Our focus remains to maximize the engagement of our user base. As a reminder, onboarders are a particular focus because the more they interact with our platform early, the more likely they are to engage with our platform over time, which we expect to lead to a more engaged user base. During Q4, we continued to make progress on our initiatives to drive engagement with our new members by streamlining their out-of-box experience. In 2024, the vast majority of our platform efforts were focused on the experience users came organically to Design Space. In 2025, this will continue to be a major focus, coupled with proactive efforts to bring users back to Design Space by sending them relevant personalized inspiration and other triggers. In Q4, we launched our first retention marketing campaigns using our new customer engagement platform. In 2025, we will scale this platform and activate lifecycle campaigns that will span across marketing channels, reaching our members outside our application through push notifications, email, SMS, and social media. In 2025, we continued to simplify Design Space, focusing on specific use cases and streamlining the entire customer journey for each of those use cases, both from a design and assembly perspective. Despite the pressure on our engagement metrics in Q4 2024, we are confident in our efforts to simplify our design experience by assisting users based on their project intent. Design Space will meet users where they are and guide them from inspiration through creation. In 2024, our paid subscribers increased 7% to 2.96 million. Paid subscribers continue to be a big positive for us, an increase of 189,000 year on year, an increase of 121,000 sequentially in Q4. We are doing a more effective job at getting higher initial subscription rates from onboarders. We are also seeing positive trends on winbacks, where our promotional offers are driving increased sign-ups from our prior subscribers. In the second half of the year, we focused promotional efforts on reducing cancellations and are seeing an incremental drop in our voluntary cancellation rate based on our promotional offers. We have a rich roadmap to continually increase the value proposition for subscribers, including over one million high-quality makeable images and a suite of premium design tools. Along with the content strategies described above, our goal is to make it incredibly compelling to sign up as a subscriber to leverage our content and software tools. As our engagement efforts bear fruit, we expect to see further boosts to subscriptions. Accessories and material sales declined 20% for the full year. Affordability plays a key role in materials. We have lost significant share in retail to private label brands, and we are now focused on being more cost-competitive in retail and online. There is additional pressure because of lower engagement. We continue in our relentless focus on driving cost out of this business along with having the right product configurations in the appropriate channels so Cricut materials are the obvious choice when users want to make. Recall in the first half of 2024, we launched the Cricut value line of materials with a limited number of SKUs, and given the success we saw, we launched additional SKUs in the second half. We are even more optimistic about this product now that we have some history in the market, but it is still early and only a small portion of our portfolio. We have additional innovation, products, and cost reductions coming in the quarters ahead. Consistent with prior comments, we will continue our promotional cadence in this category to remain price competitive for consumers with a focus on winning share. For some accessories, we recently focused on being more price competitive. This may create some margin pressure near term, but as our accelerated hardware strategy bears fruit, we should see an increase in profitability over time. As I mentioned previously, we recently initiated litigation to protect our intellectual property over accessories and materials. We are intensely focused on the overall customer experience, and we are motivated to work with those retailers that help us create a great experience both on the shelf and for actual use of our ecosystem. It is our fundamental belief that when we give people more reasons and inspiration to make things that are appealing to them, and we make it easier to make things affordably, we will see a lift in materials consumption. We are driven to continue to innovate while exhibiting both long-term focus and current discipline. After serving as a member of our board of directors since 2013, Len Blackwell has made the decision to not stand for reelection at the upcoming annual shareholder meeting. We thank Len for his contribution during the past twelve years and wish him the best in his future endeavors. With that, I will turn the call over to Kimball.

Thank you, Ashish, and welcome, everyone. In the fourth quarter, we delivered revenue of $209.3 million, a 9% decline compared to the prior year. Full-year 2024 revenue was $712.5 million, a 7% decline over 2023. We generated $11.9 million in net income or 5.7% of total sales in Q4 and $62.8 million or 8.8% of total sales for the year. This marks our twenty-fourth consecutive quarter and our eighth consecutive year of positive net income. Breaking revenue down further, Q4 2024 revenue from the platform was $79.4 million, up 2% year on year. We ended the year with 2.96 million paid subscribers, which is up 189,000 or 7% year on year, and up 121,000 or 4% from Q3. For the full year, platform revenue was up slightly over 1% and ARPU increased 2% to $53.12 from $52.07 a year ago. As we were more promotional, the mix shifted more toward annual versus monthly subscriptions and geographic mix shifted more international, all of which are targeted efforts. Q4 revenue from products was $129.9 million, down 15% year on year. Connected machines revenue decreased 13%, driven primarily by fewer units sold combined with more promotional activity. Accessories and materials decreased 18%. For the full year, revenue from products decreased 12%, driven mostly by the 20% decrease in accessories and materials as connected machines revenue decreased only 3%. In terms of geographic breakdown, international revenue for the quarter was $52.9 million, an increase of 3% compared to Q4 2023. As a percentage of total revenue, international was 25% in Q4 2024, compared with 22% of total revenue in Q4 2023. For the full year, 2024 international sales increased 1% and represent 22% of total company revenue compared to 20% in 2023. Foreign exchange benefited international sales by less than 1% for both Q4 and full-year 2024. We saw strength in France, Meza, and Latin America throughout the year, and improvement in the UK in Q4. We are experiencing continued softness in Australia following more of the trend we see in the US. We continue to make strong progress in increasing brand awareness in international markets, which we expect to have a positive impact on member acquisition in 2025. We ended the quarter with 2.96 million paid subscribers, up 7% from Q4 2023 and up sequentially. This continues to be a bright spot for us, and Ashish detailed our efforts that are gaining traction in this area. But I do want to mention, as discussed in earlier calls, there is some natural subscriber attrition, so subscriber growth may be challenging until we increase the pace of machine sales and new user acquisition. Recall, this could result in a seasonal pattern of quarter-on-quarter paid subscriber growth in Q1 and Q4, but flat to declining quarter-on-quarter subscriber growth rates in Q2 and Q3. Moving to gross margin, total gross margin in Q4 was 44.9%, an increase from 42% in Q4 2023. For the full year 2024, total gross margin was 49.5%, also an increase compared to 44.9% for 2023. The improvement reflects a higher amount of subscription revenue as a percentage of total revenue and higher product gross margins. Breaking gross margin down further, gross margin from the platform in Q4 was 87.9% compared to 88.8% a year ago. For the full year of 2024, gross margin from the platform was 88.1%, which decreased from 89.4% in 2023. The decline in platform gross margin for the quarter and full year was primarily related to the higher software development costs and higher hosting fees compared to a year ago. Gross margin from products was 18.7% compared to 18.2% in Q4 a year ago. For the full year, products gross margin was 19.3% in 2024, which increased from 14.7% in 2023. The increase in gross margin for both the quarter and the full year was primarily due to a reduction in inventory impairments and selling previously reserved inventory offset partially by higher promotional activity. Total operating expenses for the quarter were $80.1 million and included $11.3 million in stock-based compensation. Total operating expenses decreased less than 1% from $80.5 million in Q4 2023. For the full year, total operating expenses in 2024 of $276.7 million increased just over 1% from 2023. As Ashish mentioned, we increased our marketing efforts during 2024 by $20 million. Operating income for the quarter was $13.9 million or 6.6% of revenue, compared to $16.5 million or 7.1% of revenue in Q4 last year. For the full year 2024, operating income increased to $76.1 million, up 9% compared to $70 million in 2023. As a percentage of sales, full-year operating income was 10.7% in 2024 compared to 9.1% in 2023. Our tax rate in Q4 2024 was 28.3%, bringing the full-year tax rate to 29.3%, in line with our expectations. For the quarter, net income was $11.9 million or $0.06 per diluted share, compared to $11.3 million or $0.05 per diluted share in Q4 2023. For the full year, we generated $62.8 million of net income and diluted earnings per share of $0.29, up from $53.6 million in net income and $0.24 diluted earnings per share in 2023. Turning now to balance sheet and cash flow, we continue to generate healthy cash flow on an annual basis, which funds inventory needs and investments for long-term growth. In 2024, we generated $265 million in cash from operations compared to $288 million in 2023. We ended 2024 with cash and cash equivalents of $337 million, remaining debt-free. Recall, we generated higher levels of cash as we worked to bring inventory more in line with pre-pandemic norms. Accordingly, inventory decreased by $129 million from a year ago to $115 million at the end of the year. During Q4, we used $8 million of cash to repurchase 1.3 million shares of our stock. As a result, $22.9 million remains in our approved $50 million stock repurchase program. After the close of Q4, we paid approximately $21 million for the declared $0.10 per share semiannual dividend on January 21, 2025. Now on to our outlook for 2025. Recall, we do not give detailed quarterly or annual guidance, but we do want to offer some color on our outlook for 2025. As Ashish mentioned, we are focused on bringing excitement to our category. We are doing this by investing in our core markets through accelerating our investments in R&D, new product launches, increased focus on marketing, and continuing our strategy of deeper promotion on our product to drive affordability. We launched two updated connected machines last week, which we are very excited about, but they have only been available for a few days. We expect total company sales to decline year on year in the first half of 2025 compared to the first half of 2024, due to continued pressure in accessories and materials. However, we expect the rate of the sales decline should be less than the rates we posted in the first half of 2024. We have reason to be optimistic that we will reach an inflection point during the second half of the year. We expect platform sales to increase year on year on paid subscriber growth. Lower new user growth rates will put pressure on our subscriber growth rates. This could result in the seasonal pattern of quarter-on-quarter paid subscriber growth in Q1 and Q4, but flat to declining quarter-on-quarter subscriber growth rates in Q2 and Q3. Given that, we are continuing the efforts we began in 2024 to increase marketing and promotions. We expect to see benefits from this in 2025 and beyond. In addition, we are adding incremental investment in R&D to accelerate new products and platform enhancements that will benefit future sustainable long-term growth. We are also aggressively prosecuting IP protection actions that will impact G&A this year. Therefore, we expect operating income dollars and operating income margin percentage to be lower in 2025 compared to 2024. This will result in lower operating margins in 2025 by approximately two to three percentage points as we increase operating expenses. We expect incremental improvement in operating margins in subsequent years. We expect to be profitable each quarter and generate significant positive cash flow during 2025. We also expect to continue to be active with our authorized $50 million stock repurchase program, which has $22.9 million remaining. Our long-term financial model remains unchanged with operating margin targets of 15% to 19%. Our proven model has demonstrated that when we operate at scale, which we define as revenue above $1 billion and drive top-line growth, these margins are achievable. With that, I will turn the call over to the operator for questions.

Dylan, thanks for the question. And we are not calling for full-year growth. But our optimism really is rooted in our execution and all the things that we are working on, as Ashish mentioned. And so let me take you through the different aspects of our business. First, in the platform, that is the healthiest part of our business. We are confident in our subscription business, and we expect to grow platform revenue year on year. And we did grow in 2024. In machines, you know, we were down 3% for the full year. But we have been spending a lot of money on marketing. We are continuing that spend. The intermediate data that we are tracking tells us that that spend is having an impact, and we believe that that continues to generate enthusiasm for our machines. We just launched two updated machines that are being well received. And then we are pleased with the sellout trends that we are seeing quarter to date. So we believe we are gaining momentum in our machines business. And finally, in accessories and materials, that was down 20% for the year, and we know that that is where we have to really pick up our game, launching a bunch of new products in that space. We have over a hundred new SKUs coming in, many of those in the first half that will help build that part of the business, especially related to our value line materials. Then in Q4, we started being more promotional on some of our hardware accessories, and we are very pleased with the uplift that we saw from that. And we are continuing that. So we think that will help us build revenue in that segment. And so all of these things combined really underpin our confidence that we will inflect to growth at some point in the second half of the year.

Thank you. One moment for the next question. And our next question will be coming from the line of Asiya Merchant of Citi. Your line is open.

Great. Thank you for taking my call. You know, on the positive side, international was up. I know you highlighted a few countries that did well. Maybe you can just tell us about, you know, what is going on there, if this is something that you expect, you know, if you expect total revenues to be down again next year with an inflection in the second half, how we should be thinking about the international trajectory?

Thanks, Asiya. You know, we are excited that we have grown for a third quarter in a row in our international business. And, you know, we look forward to when we are able to deliver even more growth. Part of the dynamic is, you know, we are in over fifty countries, and there are different levels of penetration in those markets. And so markets we have been in the longest are experiencing headwinds similar to what we have experienced in the US. And so, for example, we highlighted a number of quarters last year where the UK was really challenged, and we saw the UK really turn a corner in Q4. You know, France and our metro region in particular performed well for us last year. But other markets like Australia continue to be extremely challenged. And so we see green shoots of growth, but not enough to fully overcome some of the headwinds that we are seeing in some of the other markets. One of the things that we are working on this year internationally is how we do a better job of getting more awareness of Cricut, Inc., and some of our marketing spend that we are continuing at, you know, our continued higher level spend will be focused on building awareness in key international markets.

Okay. And if I may, on a little bit on the connected machine, you know, it seems like the rate of decline here is accelerating for connected machines. You know, and, yeah, I think, Ashish did talk about generating positive ROI from deeper promotions. So just help me bridge that gap. Like, you know, what gives you the confidence? Is it that, you know, selling these machines is the right, you know, will turn around and generate positive ROI? What is driving that confidence in generating positive ROI? Thank you.

Thanks. Again, revenue played out much as we expected for the year. And it really goes to, you know, the confidence in our marketing spend and when we talk about marketing spend, that is not just the deeper promotions, which is an important part of the strategy that we are continuing in 2025. But it is also the awareness marketing and how we pull people through the funnel. And that is where our models show us that we are gaining ground with our consumers. That combined with the new machine launches this year and our efforts to continue addressing affordability is what gives us confidence in that business, where, yes, Q4 was down 14%, but we were down 2% for the full year, and we expect to be able to turn the tide on that business as we continue to build momentum.

Thank you. One moment for the next question. And our next question will be coming from the line of Angus Kelleher-Ferguson of Barclays. Your line is open.

Hi. This is Angus Kelleher on for Adrianne. Got a quick question and then kind of a longer-winded follow-up. A wholesale partner of yours within the specialty retail category recently filed for bankruptcy. Curious if you could quantify the impact from that in Q4 and if that is included in your guidance.

So yes, the bankruptcy you are referring to is reflected in our Q4 numbers, and it is not material to our financials. I mean, we have been actually managing that risk over the last twenty-four months.

Got it. Nice to hear. My second question is, can you help us bridge the margin guidance calling for two to three points of decline? You know, what are the bigger drivers of that? How much of an impact are the IP protection actions? Just anything you could share on the timing of those expense headwinds. I am, I guess, kind of curious if it will have a similar shaping to your sales guidance where you will see a two H recovery. Thank you.

Thanks, Angus. So really there are four things I would highlight in terms of our higher OpEx spend this year. One is we are continuing to spend marketing at a higher level that we initiated last year. So that is an important part of our investment. Secondly, as Ashish mentioned in his comments, the R&D in our physical products to bring more products that are compelling to consumers sooner. We are also investing heavily in the platform to accelerate some of those so that by the end of the year, we expect to have a meaningfully simpler experience for key use cases for our consumers. And so those are the primary areas of spend. We highlighted the IP protection because earlier this year, or last year, rather, we initiated both an IT action and a district court action to enforce our intellectual property. And while we have an ongoing IP protection program, we are spending a little bit more with both of those actions, which is why we highlight it. Some of these investments will begin to bear fruit this year, like the software platform by the end of the year. Some will benefit next year and future years. And so that is why ultimately we are calling for an impact of two to three percentage points on operating margin. Let me just reinforce that. You know, Paul and Kimball have already said a couple of things. But, you know, part of it is also rooted in our conviction. We believe in the very early days. I know we have had a tough couple of years, the last few years. But at the end of the day, we believe we are in the very early stages of our market. We have tremendous market potential, so we work internally as a team and with our board. So the areas of investment are continued marketing, you will see us accelerate and innovate on our product launches, machines, accessories, etc., materials as well. So across the board, you know, we are basically investing this OpEx in accelerating some of the development life cycle and some of the innovation life cycles. And finally, you know, basically, if you think about the main objections as to what it takes to get to a mass market experience, it is affordability and ease of use. So on machines and ecosystems, that is what we are working towards. On the ease of use, we are working on our platform to make it significantly easier to use, which ultimately is also better for engagement. So I think those are the three areas: sustained marketing, you know, drive innovation to make our products easier, better, faster, more affordable, and then finally to make a very addictive engaging platform. So that is why we believe this is the right opportunity for the company to continue to build towards a mass market experience.

Got it. Thank you. Best of luck in the year ahead.

Thank you. One moment for the next question. And our next question will be coming from the line of Eric Sheridan of Goldman Sachs. Your line is open.

Thank you so much for taking the questions. Two if I could. A couple of quarters ago, we talked about alternative pathways to market, things like partnering with commerce platforms and players in the creator economy. How do you think about beyond just what you are planning now from a marketing and intensity standpoint in terms of exploring different alternatives to put your products in the hands of the broader commerce landscape and possibly creating some virality around that away from paid marketing dynamics or promotion dynamics? That would be number one. And number two, you know, the balance sheet has an increasing amount of cash on it. You know, you guys do return capital to shareholders, while we are in this period where the marketing intensity stays high and the turnaround is deeper into 2025. How do you think about your priorities for capital allocation during this time period? Thank you.

Yeah. Thanks, Eric. So I will let Kimball answer the second part of the question. But let me first talk about the first. Probably kind of take a couple of different angles. Right? One is we have data and we see it broadening demographics. Right? So we believe that, you know, our product and our platform have a lot of appeal in its current manifestation. Right? So as we continue to enhance content, as we continue to make the experience simpler as more of a, you know, guided experience, we believe that there is a significant opportunity to expand to different demographics, different use cases, you know, etc. Now we have talked about this in the past. That, you know, a huge part of our marketing comes in the word-of-mouth, and people get to know about the product because a friend has made a project. You know, just as an example, I was in the gym the other day, and one of the ladies who works out there is a CPA, she was telling me, saying, hey. You know, a friend made a project for me, and I asked her, hey, I did not know you are that crafty. And the story went on to telling her about Cricut, Inc. Right? So we believe that as people get more engaged with the platform, there is an opportunity to create that virality that you talked about. Last but not the least, right, as we are building the platform, in addition to broadening the demographics of our current product, we are always thinking about how what are the other ways to monetize this platform? How do we get to other, you know, forms of fulfillment, other forms of what you call the creator economy? So again, you know, our investment in the platform is not only to, you know, market our current products and our current solutions to a wide range of demographics, it is also with a view to create new business models and new ways of helping people make things. So I will just leave it at that for now. Let Kimball answer the second question about capital structure.

Yeah. Eric, so I would call out that we brought inventory levels down by $129 million and ended the year with $114 million in inventory. And a lot of the excess cash that we have been generating over the last several years has been as we have been bringing inventory levels down from pandemic highs. So I would not expect us to be kicking off the same level of cash going forward as we were able to produce this year. That said, our capital allocation framework really is to make sure that we have enough inventory to run our business, that we are investing for the medium and long term, and that we keep some dry powder in case there is a strategic acquisition that makes sense for us. But beyond that, you know, we are about how do we return capital efficiently to shareholders. And, you know, the tools we have used historically are we have an active buyback program. We have a recurring dividend where we just paid our second installment in January on our semiannual dividend, and then we offer we do special dividends from time to time at the board's discretion.

Great. Thank you.

And thank you. This does conclude our Q&A session for today. And I would like to go ahead and turn the call back over to Jim Suva for closing remarks. Please go ahead.

Thank you, Lisa, and thank you everyone for joining us this afternoon. We have a large opportunity over the long term to drive new user growth and increase engagement. The Cricut, Inc. platform continues to not only strengthen but also provide increased value to our users. We will continue to manage the business for sustainable profitable growth and generate healthy cash flows. I am excited about the opportunities ahead for us. We will be meeting with investors at the Morgan Stanley Technology Media, and Telecom Conference, tomorrow, Wednesday, March 5, 2025, in San Francisco, California, and we hope to see you there. If you have additional questions, please email me at [email protected]. This now concludes this earnings call. And you may now disconnect. Thank you.