RMNI - NASDAQ

Good afternoon, and thank you for standing by. Welcome to the Rimini Street Second Quarter 2023 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dean Pohl, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. I'd like to welcome everyone to Rimini Street's Second Quarter 2023 Earnings Conference Call. On the call with me today is Seth Ravin, our CEO and President, and Michael Perica, our CFO. Today, we issued our earnings press release for the second quarter ended June 30, 2023, a copy of which can be found on our website under Investor Relations. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in the press release. An explanation of these measures and why we believe they are meaningful is also included in the press release under the heading About Non-GAAP Financial Measures and Certain Key Metrics. As a reminder, today's discussion will include forward-looking statements that reflect our current outlook. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We encourage you to review our most recent SEC filings, including our Form 10-Q filed today for a discussion of risks that may affect our results or stock price. Now before taking questions, we'll begin with prepared remarks. With that, I'd like to turn the call over to Seth.

Thank you, Dean, and thank you, everyone, for joining us today. Before we review the quarter results, I wanted to remind everyone again that Rimini Street has been growing and evolving from a single service company into a global provider of end-to-end enterprise software support products and services. Unlike most IT service providers who really specialize in software implementation, Rimini Street instead focuses on the very specialized area of IT strategic and operational needs to run, manage, support, protect, connect, monitor, customize, configure and optimize mission-critical enterprise application, database and technology software. We have global operations with over 1,900 employees spread across 21 countries, delivering senior engineering support capabilities to clients with an average response time of less than 2 minutes, 24/7 by 365 and earn an average client satisfaction score on our support delivery exceeding 4.9 out of 5 where 5 is excellent. Today, we're the leading third-party support provider for Oracle and SAP software and to date, have served over 5,200 Fortune 500, Fortune Global 100, mid-market, public sector and other organizations across a broad range of industries. We are also Salesforce and AWS partners in SaaS and cloud markets, respectively. We enable clients to achieve better business outcomes, such as lower operating costs, increased profits, increased investment in innovation, improved competitive advantage, and accelerated growth. We believe we have delivered over $7 billion of savings and reinvestment opportunity to our clients. Operating results. For the second quarter of 2023, we continued focusing on improving sales execution across the expanded portfolio of solutions and being able to deliver the full portfolio of solutions globally. As our current and prospective clients learn more about the unique offerings and value of our expanded solution portfolio, they are responding positively and buying across the full portfolio. Our next-generation global revenue strategy, program and team are showing good and improving traction that we believe are increasing sales leads, opportunities, and pipeline, and we believe will ultimately drive a higher revenue growth rate and increased profitability. Operating results included achieving the largest second quarter total sales invoicing in North American history and improving new client invoicing in pipeline sequentially and year-over-year with continued sales growth across the full product portfolio. To enhance and accelerate lead, opportunity, and pipeline development and help close more large and strategic transactions, our senior executives, including myself, continued our extensive in-person Rimini Street client and prospect meetings and attendance at third-party events and executive sales meetings in the United States and globally with hundreds of current and prospective clients. To deliver our full solutions portfolio globally, we continue to grow our workforce and capabilities backed by innovation and technology that provides additional leverage for increased profitability and growth. Demand environment and competitive advantage. We see strong demand for a proven, reliable partner for mission-critical transaction system services that can allow organizations to consolidate their preferred IT service providers for streamlined vendor management, increased aggregated purchasing power, and better outcomes. Organizations today need to figure out how to deliver both revenue growth and increased profitability. And now as an end-to-end provider of mission-critical IT support, products and services, Rimini Street has the broader portfolio of solutions needed to be recognized as a key IT service partner that can help clients achieve their goals from developing IT strategy and building roadmaps to plan execution. We believe that we are well positioned to meet the current and evolving needs of organizations that faced heightened global competition in just about every industry and to help them navigate the complex macro environment over the coming years. Oracle litigation update. Rimini Street and Oracle have been in litigation for more than 13 years. While the U.S. courts have confirmed long ago that third-party software support is legal, we presently have 2 active proceedings with Oracle. The injunction compliance dispute and Rimini II proceedings, both of which relate to the manner in which Rimini Street provides support services for certain Oracle product lines. Rimini Street is not prohibited from providing supportive services for any Oracle products. With respect to the injunction compliance dispute, Rimini Street filed an appeal in 2022 to the 9th Circuit of the United States Court of Appeals relating to certain rulings of the U.S. District Court. Oral arguments on the appeal were held in San Francisco on February 6, 2023, and the matter remains pending before the Court of Appeals. We believe we could have a court ruling on the appeal at any time this year. With respect to Rimini II, the company filed a lawsuit, Rimini Street, Inc. versus Oracle International Corp., in October 2014 in U.S. District Court. Just days before the trial was set to begin in the Rimini II litigation, Oracle withdrew all its claims against Rimini Street and myself as CEO for monetary relief of any kind under any legal theory in the litigation. Following trial in late 2022, on July 24, 2023, the District Court issued its finding of fact and conclusions of law and Rimini II, accompanied by a permanent injunction against the company called the Rimini II injunction. The company prevailed on a number of legal points, including a significant portion of Oracle's infringement claims and the U.S. District Court held that the pertinent software licenses do not prohibit Oracle's customers from hiring a third party like Rimini Street to perform updates or fixes to the same extent the Oracle customer could themselves under the pertinent license. However, the company, respectfully disagrees with several other conclusions, findings, comments and rulings of the U.S. District Court. And on July 25, 2023, the company filed a notice of appeal of the Rimini II findings and conclusions of law and Rimini II injunction, and on July 28, 2023, filed an emergency motion to stay enforcement of the Rimini II injunction pending results of the appeal. On July 30, 2023, the District Court issued an order setting an expedited briefing schedule for Rimini's emergency stay motion with Oracle's response due by August 7, 2023, and the company's reply due by August 11, 2023. The Rimini II injunction is primarily directed at Oracle's PeopleSoft software product. The Rimini II injunction currently limits but does not fully prohibit the support services the company can provide its clients using Oracle Peoplesoft software product. The percentage of revenue derived from support services the company provides solely for Oracle's People software product was approximately 8% of the company's total revenue during the fiscal second quarter of 2023. For additional information and disclosures regarding the company's litigation with Oracle, please see our disclosures in the company's quarterly report on Form 10-Q filed on August 2, 2023, with the U.S. Securities and Exchange Commission. Please also note that at this time, we are unable to provide material additional information beyond the disclosures and statements in our press releases, SEC filings and court filings, nor are we able to provide additional comments related to litigation or impacts because we are engaged in current continued analysis and court briefing and motion activity. Summary. We remain confident that we are continuing to take the right actions and making the right investments to reaccelerate growth, increase profitability, enhance shareholder value, and bring our litigation with Oracle to a successful conclusion as soon as possible. Now over to you, Michael.

Thank you, Seth, and thank you for joining us, everyone. Financial results. We were pleased with our second quarter performance in revenue, gross margin, net income, adjusted EBITDA, and revenue retention rate on subscription revenue. Additionally, we maintained a strong balance sheet with cash in U.S. government-backed securities of $140.7 million and debt of $76 million, which equates to a net cash position at quarter end of $64.7 million. Revenue for the second quarter was a record $106.4 million, a year-over-year increase of 5.2%. Our revenue in the quarter was again negatively impacted by currency movements having a 0.8% unfavorable impact to revenue growth in the quarter. On a year-to-date basis, negative currency impacts were 1.2%. Clients within the United States represented 50.7% of total revenue, while international clients contributed 49.3% of total revenue. Annualized recurring revenue was $410.1 million for the second quarter, a year-over-year increase of 3.4%. Revenue retention rate for service subscriptions, which makes up 96.3% of our revenue, was 94% for the trailing 12 months, with more than 74% of subscription revenue noncancelable for at least 12 months. Billings for the second quarter were $104.4 million compared to $101.6 million for the prior year second quarter, an increase of 2.8%. Gross margin was 63% of revenue for the second quarter compared to 63.1% for the prior year second quarter. On a non-GAAP basis, which excludes stock-based compensation expense, gross margin was 63.5% of revenue for the second quarter compared to 63.7% for the prior year second quarter. Operating expenses. While inflationary pressures are still persistent for skilled labor across all theaters, we are very pleased with both our ability to continue to attract and retain key talent. Moreover, our strong margin performance underscores the advantage of our global footprint with centers of excellence in geographies where both the talent and value remain extremely attractive. Sales and marketing expenses as a percentage of revenue was 35% of revenue for the second quarter compared to 35.8% for the prior year second quarter. On a non-GAAP basis, which excludes stock-based compensation expense, sales and marketing expenses as a percentage of revenue was 34.3% for the second quarter compared to 34.9% for the prior year second quarter. As Seth noted earlier in the call, given our improving leading indicators for accelerating sales in pipeline, we remain focused on making the appropriate investments needed to market our expanded portfolio of solutions and capitalize on these growth opportunities. General and administrative expenses as a percentage of revenue, excluding outside litigation costs, was 17.7% of revenue for the second quarter compared to 18.6% of revenue for the prior year second quarter. On a non-GAAP basis, which excludes stock-based compensation expense, G&A was 15.2% of revenue for the second quarter compared to 16.9% for the prior year second quarter. We are seeing a good year-over-year improvement in spend due to the previously mentioned restructuring and now that the required initial investments to develop and launch our expanded portfolio of solutions is largely behind us. However, G&A expenses as a percentage of revenue continue to be elevated compared to our peers due in large part to the ongoing costs for in-house legal and compliance teams and other costs made necessary by our ongoing litigation with Oracle. Net outside litigation expense was $0.6 million for the second quarter compared to $3.1 million for the prior year second quarter. The reduction in year-over-year spend is due to decreased activity as we await court rulings that Seth discussed earlier. Our non-GAAP operating margin, which excludes outside litigation spend and stock-based compensation, improved to 14% of revenue for the second quarter and 11.8% for the prior year second quarter. For the second quarter, net income attributable to shareholders was $4.3 million or $0.05 per diluted share compared to a net income of $110,000 or $0.00 per diluted share for the prior year second quarter. On a non-GAAP basis, net income for the second quarter was $8.8 million or $0.10 per diluted share compared to a net income of $6.4 million or $0.07 per diluted share for the prior year second quarter. Adjusted EBITDA was $15.8 million for the second quarter or 14.8% of revenue compared to $11 million or 10.9% of revenue for the prior year second quarter. Balance sheet. We ended the second quarter with a cash and equivalents balance of $123.5 million plus short-term investments of $17.1 million, consisting of short-term U.S. treasuries and agency securities, bringing cash and short-term investments to $140.7 million compared to $160.2 million at June 30, 2022. On a cash flow basis, second quarter operating cash flow was $13.1 million compared to $14.9 million for the prior year second quarter. Deferred revenue as of June 30, 2023, was approximately $285 million compared to $300 million from the prior year second quarter. Backlog, which includes the sum of billed deferred revenue and noncancelable future revenue, increased to $565 million as of June 30, 2023, compared to $551 million for the prior year second quarter. Capital market activities. During the second quarter, we repurchased $1 million of our outstanding common shares at an average price of $4.09 per share. The company is providing third quarter 2023 revenue guidance to be in the range of $105.5 million to $107.5 million and suspending full year 2023 revenue and adjusted EBITDA guidance until there is more clarity around impacts from current litigation activity before the U.S. Federal Courts in the company's litigation with Oracle. For additional information and disclosures regarding the company's litigation with Oracle, please see our disclosures in the company's quarterly report on Form 10-Q filed on August 2, 2023 with the Securities and Exchange Commission. This concludes our prepared remarks. Operator, we'll now take questions.

[Operator Instructions] The first question comes from Brian Kinstlinger with Alliance Global Partners.

This is Sherwin on for Brian. Thanks for taking my questions. To start, have you evaluated any expenses necessary to comply with a more manual process for PeopleSoft if the ruling is upheld? And can you share that if so?

Sure. Good to talk to you. It's Seth. The answer is we're still compiling the data. We have of course been working since the day that we got the court's order and the court's injunction order. We've had teams working on calculating what we have to do, the steps that we would have to do, that we can do. As you've seen, we filed an emergency motion to stay the injunction because there are some significant problems with what the court is asking us to do. And so again, at this point in time, we have to get more clarity from the court about what it is that we need to do to comply, and we'll see what -- hopefully we'll get some answers from the court, hopefully as early as the 12 to 14th, sometime after we finish our briefing schedule on the 11th. At this point in time, we really can't share any of that data. What I can say is when you go back, if you look historically in the records, when we dealt with this discussion point back in 2015 and '16 through Rimini I, we used to estimate at that time that we thought that conversion to a manual process would likely cost 1% to 2% of gross margin in that product line. As you've seen, based on our disclosures, the product line accounted for roughly 8% of our revenue. You could do some calculations against our gross margins and see what those numbers might look like.

Will the ruling do you think have an impact on your planned investment strategy? Will you spend more or less depending on the results of the appeal?

Well, I think as you can tell, the reason we suspended guidance in the fourth quarter was because we just have too much uncertainty around the court rulings while we go through this process. As you know, we're extremely respectful of the process. There's a reason we have Federal Courts, we have Appeals Courts, we have the Supreme Court. We are going through the process of respecting the court's opinions, disagreeing with them, respectfully. Now we're in the process through the appeal side of this. Unfortunately, we wish this would take a faster turn, but that's just the way the court system works. It could be days, it could be weeks, and so we felt, again, suspending guidance was the right thing, because we can't tell whether we'll have an impact on revenue, an impact on sales, what the impact might be on costs until we get more clarity from the court. Now, we were comfortable in giving third quarter guidance because we're already almost halfway through the quarter. And as you know, with a ratable model on revenue and the way the expense model and the contracts work, we felt comfortable that we could provide a very reasonable workable range in terms of our numbers. But the fourth quarter was not predictable. At this point in time, I think we just all have to let this process play out over the next couple of weeks. Now, we have of course, continued all the operations around the business, working of course to comply with the injunction on one hand, but all the other parts of our business that aren't affected by the injunction we continue to move forward, we continue to close business. We even closed another 7-figure deal this morning. We're continuing to move the business forward in a methodical way.

In regards to closing new business, do you see -- I know September is a busy quarter for new business. Are your prospective clients that you're talking to asking a lot of questions about the court ruling? Are you seeing yourself have to explain?

I think we've had a few calls. We've had a few inquiries, what does this mean? Does this impact any of my business or the product lines that I'm working with? That's natural, but it has not been many. I would say probably you could count them on one hand today. Because, again, a lot of people are just waiting. We've been communicative. We put out a press release. We put out the public stay motion. I think people are being able to follow the basics, and they know that we're working this through the courts, and I think there's an amount of patience that we're asking people to take while we work through this process. But I think, again, the majority of the business outside of where the injunction affects, is continuing to move forward normally. And in fact, we will be expanding the salesforce. We're increasing our hiring based on what we've seen. As you know, we backed our salesforce down a little bit and regrouped over the last couple of quarters. In fact, down to about 65 reps. We feel good now that we fine-tuned what we wanted to get out of those reps in terms of the marketing message, the sales execution. You saw that in North America with really the most significant performance we've seen there in years. Not just in total, but across the spectrum of deal sizes, including doubling the number of 7-figure deals compared to a year ago. A lot of good metrics, and so we're comfortable now. We're going to move forward and we're looking to expand that salesforce potentially up to 90 sellers by the end of the year. It's a big lift to get that number of sellers hired, but that's where we are with the way we see the business in '24. So yes, we're going to continue to grow the business, we're going to continue our plans to grow the business, and we will deal with this serious court matter along a separate track.

The next question comes from Jeff Van Rhee with Craig-Hallum Capital Group.

Michael, maybe if I could start with you, you commented on the pipeline and the leading indicators trending very positively. Maybe just expand a little bit on that, what you are and have been seeing in the pipeline. And then one other numbers question on the backlog. It looks like it was up roughly 12%. The duration, unless I'm reading it wrong, looks like it might have lengthened. Are you seeing longer-term contracts in there?

Jeff, I'll answer the backlog question first. Inherent in that figure in your analysis does suggest longer-term contracts had some nice contribution, some nice wins in the second quarter. And I'd actually like to go over to Seth, I think he can give you a better answer from a pipeline perspective outside of my remarks.

Sure. Yes, Jeff, I think, again, as I just said a second ago with Sherman, the pipeline, interestingly enough, and what I really like about what we're seeing, is not just growth in numbers of the deals, it's the mix of the deals. The second quarter had probably the healthiest mix of deal sizes that we have seen in a lot of quarters. It's what we wanted to see. A lot of healthy deals in that $200,000 to $500,000 range, which is really a sweet spot for us. You would love to be able to make all your business deal numbers on that 2 to 5 and then count your 7-figure deals as icing on the cake. And I think what we saw in the quarter was really nice to watch the idea that we had a big mix of those midsized deals, sweet spot deals. We did big deals up to I think our biggest deal was $7 million in the quarter, which was great on an annual basis. Again, another big win, megadeal. We also did several deals in the 7-figure. We doubled the number from the Q2 of last year. And I think the overall range in our ASP was higher in the quarter. So again, a lot of healthy components. And I think we saw this across North America. We saw this across Asia. The big problems we had in the quarter were performance in EMEA and performance in AN

Great to see. And then one other follow-up on the legal side. Obviously, the judge threw the book at the PeopleSoft processes and tools and came very hard on PeopleSoft. And as you're commenting, you're going to have to figure out what that means and how to service those customers. To be clear, did you see anything else in the ruling that suggested meaningful impacts to automation tools? I know the tools are primarily for PeopleSoft, but meaningful process change required to service any other platforms? That's one. And then two, she threw in some vague comment about Oracle database seems to be related to the migration window. But any more clarity if that comment relates exclusively to the migration window and/or it affects any ongoing support going forward?

We'll answer to the database question. I think as you saw in our filing on the emergency stay, again, we noted that from what we've been able to ascertain in our analysis of the court orders, that she found that the Oracle licenses from years ago, and I think we're talking back to 2016, that there were some on our systems that she didn't believe that we had the right to have them on our systems. And we noted in our filing that the license, the OLSA as it's called, the Oracle license and service agreement, actually does not have a physical location limitation on it. And that was even part of the testimony of Oracle's Head of license, Ellison, when he took the stand and his depositions as well. From that point of view, we just think that with all due respect to the court, it was -- it seems like it's a legal error. But there was nothing about servicing the Oracle database platform, so that's why there's no injunction component she mentioned relative to Oracle database. But we do think that that's just an error. On the PeopleSoft side, as I noted, you can see in the filings and terms of the disclosures, we mentioned that we're limited but not prohibited from providing support. Remember, when we provide support, most of the support is our taking questions, giving verbal responses to issues. Some things involve coding. The general point of what was contained in this no use of automated tools decision, which again, we respectfully, very much respectfully disagree with the court on, it's really around the development of tax, legal and regulatory updates for the PeopleSoft product. And it was a process used only in the PeopleSoft product. From that point of view, the rest of the service that we provide to clients, the support in general, we're still able to provide. It's this whole issue over tax, legal and regs. There's environment issues, there's file issues. And so hopefully, we will see clarity from the court as we go through this process in the next 2 weeks. And I think as you've seen for 13 years, litigation has these rhythms. Findings come out, people analyze them, appeals are put together, there's further communication, there's further clarifications. That's the stage we're in now. Those first couple of weeks after we get them, I mean this was a 200-page document, digesting all that, trying to understand what the court is saying, what is the court telling us we need to do. Figuring all that out does take a few days. And now we're going to seek additional clarification and we're seeking relief from the court on things that we just don't think are appropriate or even that we think might be illegal for us to do. We'll hopefully work that out soon.

The next question comes from Derrick Wood with TD Cowen.

Thanks, guys. It's Andrew on for Derrick. These big deals, Seth, are impressive. Anything you can say on the types of customers, verticals, geos, who you displaced? And were these expected to close in Q2? Or were they earlier or later than expected?

Well, good question. They were actually right on time. We felt they were progressing through the pipeline nicely. They moved on target. Again, we -- again, as I mentioned, we did close even another 7 figure this morning, so we're continuing to close many deals even since the court ruling. We're continuing to move that business forward globally. And I think, again, the mix was even global. Those deals were around the world. We're seeing good global contribution. We're still struggling, as I mentioned, from Q2 with EMEA and getting AN

Yes, that's great. And on the sales reps, did you say 90 by -- I missed when you expect it to get to 90.

Well, I would love to have 90 by the time we end the year, but you know what it's like to hire sales reps, and going from 65 to 90 will be honestly a massive challenge. I mean that's a lot of sellers to hire in a period of time we've never done before, and we're putting special programs in place. We're even changing the nature of who we're hiring. We have changed from what was traditionally a 20-plus year profile in hiring to a 10-year. We wanted to get people who were a little more junior in their career that we can shape in the way that we want them to sell. We think that that's a good move and we know a lot of other tech companies have done similar where they've tried to bring people in a little bit earlier in their career so that they can help shape them and grow them to sell the way that they want them to sell. And the other thing we're doing is we're changing the profile from hiring licensed reps to hiring service sales reps. People who have been out selling services instead of license, and specifically, AMS services. We're going to go to a whole different pool than we've hired in the past because we believe that AMS is so much more of a complicated sale than even the support that we do, that what we want to do is we want to bring in sellers that have a different base. They come in with proven AMS skills, and we will train them how to sell support. We think it's actually going to be better and easier to train them in the opposite direction than train people how to sell AMS because of the complexity. We think the combination of that and you add 25 of those sellers into the mix of the sales team will greatly bolster our ability to sell our new managed service and our full Rimini I outsourcing, which we have over 110 customers already on. We see this as a massive increase in opportunity to grow revenue and we think that the changing of the salesforce structure, the tenure of the people, and who we're hiring from and their background, we think will have a very positive effect in 2024.

Yes, that makes sense. On the Europe issues that you kind of talked about, international had been one of the stronger regions for you I guess the past couple of years. Maybe just expand a little bit more on kind of what you're working through in Europe.

Yes, it really is, it's execution through and through. It's why I said you always have to separate out. If you have a demand problem, the product is not appropriate for the market or does the market not appreciate them, then the answer is, I think the demand is fine. The demand in both markets. I think we had a problem with some of the management who were not adapting fast enough to being able to sell the full portfolio. And from my perspective, we're not aggressive enough in the marketplace. And these issues do happen, and we do have pockets of success within EMEA. For example, France is very successful. Israel is very successful. We've had some good work even building up in other countries in the region. But we didn't do well in the German Dutch region. We're doing a full reboot of the selling motion in that region. We're not doing as well, we've done some business in the Nordics, but not as well as we'd like. And we pretty much avoid the Southern European, we do it opportunistically, but we haven't put people into Southern Europe because we find that the deals tend to be smaller. The ASPs are smaller and the return on that investment just hasn't been as strong. There is some restructuring going on around both the EMEA structure and of course, as we said, in AN

The next question comes from Brian Kinstlinger with Alliance Global Partners.

Just one more quick follow-up. I just wanted some clarity on the appeal. Is it both the PeopleSoft and the press release and marketing statements going forward? Or is it just related to PeopleSoft?

Well, first of all, let me just clarify because I know this can get really confusing. What we have filed so far, so the court gave us a court order on their findings. The court gave us separately an injunction, telling us what we have to do. And what we've done so far is we filed a notice with the court of our intent to file an appeal and that appeal is both of the findings of the court as well as an appeal on the injunction. So that was number one that we filed. But it's only a notice of our intent to appeal. We haven't actually filed an appeal yet. The second thing we filed was an emergency stay motion on the injunction, which says you need to do X, Y and

While you're awaiting ruling on that motion or on those motions, will that press release still need to go up on your website?

Well, again, we'll cross these bridges when they come. The court had asked us to put that up 30 days after issuing the injunction, and we'll cross that bridge in 30 days. Hopefully, we'll have an answer before then of what the court decides to do. But again, at this point in time, that's the court's order and we will work with the court to see what we can come up with between now and then.

I show no further questions at this time. I would now like to turn the call back over to Seth Ravin, CEO, for closing remarks.

Thank you. I want to thank everyone again for joining us for our second quarter '23 earnings call. I want to thank all our Rimini Street colleagues for their efforts in the second quarter. And believe me, getting the filing done when you have all these subsequent events was not easy. I thank our auditors at KPMG who worked around the clock to make sure we get all these subsequent events in and were able to file on schedule. And of course, as we get additional updates and as it's appropriate, we will update the market relating to litigation matters. And lastly, of course, we all live in a great place and there are a lot of people in harm's way who have to deal with issues far more drastic life and death than we deal with every day. And I always like to take this opportunity to just remind us of what goes on in the rest of the world and how lucky we are. Thank you, everybody. Appreciate the time today. Look forward to follow-up calls with folks. Take care.