GROV - NYSE

Good afternoon and thank you for standing by. Welcome to Grove Collaborative Holdings, Inc.'s Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Hosting today's call are Grove's Co-Founder and CEO, Stuart Landesberg; and CFO, Sergio Cervantes. Before they begin their prepared remarks, I will review the forward-looking statement, safe harbor. Some of the statements made today about future prospects, financial results, business strategies, industry trends and Grove's ability to successfully respond to business risks, may be considered forward-looking. Such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All these statements are based on Grove's view of the world and their business as they see it today. As described in their SEC filings, the underlying facts and assumptions for these statements can change as the world and their business changes. For more information, please refer to the risk factors discussed in their most recent filings with the SEC which are available on Grove's Investor Relations website at investors.grove.co. During today's call, they will also discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures are provided in the earnings release, which is also available on their Investor Relations website. I will now turn the call over to Stuart Landesberg to begin.

Thank you, operator. Hello, everyone, and thank you for joining the call today. I want to start this call with a reminder about why Grove's mission and brand purpose is more important and relevant than ever. Around the world, July was the hottest month on record. Wildfires blazed from Canada to Hawaii. The U.S. Secretary General recently declared that the period of global warming has ended and the era of global boiling has arrived. Our reports from Swiss researchers said that in July, we passed the annual amount of plastic waste that our systems can handle, the implication being that the rest of the year's plastic ends up as pollution in our environment. But change is possible and consumers increasingly demand it. For Grove and for the Grove Co brand, this is an obligation. And this is an opportunity and this is our company's reason for being. Turning now to the second quarter. This quarter was another very strong step in the journey to improve Grove's fundamentals for sustainable, profitable growth. We achieved record net revenue per order of $64.80, beating our previous record in Q4 2022 by $1.40 or 2.2%, while maintaining a strong gross margin of 51.9% comparable to our record in Q1 2023 despite the impact of a $1.1 million inventory reserve charge. Excluding the impact of the reserve charge, our Q2 2023 gross margin would have been 53.6%, which would have been a new record for Grove. These two drivers plus the strategic reduction in advertising spend led to an adjusted EBITDA margin improvement of 570 basis points quarter-over-quarter and 2,270 basis points year-over-year, despite the expected decline in sales due to lower marketing spend throughout the last several quarters. Not only did we meaningfully improve our adjusted EBITDA, but we generated $1.2 million of operating free cash flow during Q2, even inclusive of $3.1 million of cash interest payments on our outstanding debt. This is our first operating cash flow positive quarter ever as a company, and the result is a true testament that supports the long-term ambition of being financially self-sufficient. The strong adjusted EBITDA results were driven by continued execution of our 4-point value creation plan, which encompasses number one, improve marketing efficiency; number two, omnichannel expansion; number three, net revenue management; and four, operating expense discipline. I will dig into each of these initiatives in a bit more detail. Starting with marketing efficiency. We continue to see strong performance in the quarter due to the optimization of our spend, allocation to cross channels and strong performance in unpaid checkouts. Media tax in the second quarter were down approximately 60% year-over-year and approximately 32% quarter-over-quarter, achieving our lowest since the peak of the pandemic, highlighting our ability to target the most efficient channels and our strong organic awareness. This result gives us increased confidence in our ability to become a profitable business and to stabilize and over the long term, grow our revenue. Furthermore, despite less spend on a year-over-year basis, our internal brand research highlights that our unaided brand awareness is the highest it's ever been and increased materially versus our last measurement period, which was October of last year. Again, this is even at lower levels we spent. We made additional progress in the quarter on our omnichannel distribution expansion strategy despite a challenging retail environment overall for natural brands. We announced progress with Kroger and Hannaford as new partners taking our retail footprint to over 5,700 brick-and-mortar locations. We are also encouraged by the performance of Grove Co, our flagship brand on Amazon. We increased our SKU assortment to include laundry sheets, foaming hand soap, floor cleaner, glass cleaner, and tub and tile product lines during the quarter, expanding on the successful launches of multipurpose cleaner concentrates and hand and dish soap bundles during Q1. Across all retailers, we have also optimized our promotional strategies to drive margin expansion while continuing to expand distribution. Meeting our customers where they shop is critical to our objective of making sustainable, effective household essentials as accessible as possible. We remain focused on delivering our long-term capital efficient growth strategy by putting our products on more shelves and in the hands of more consumers. We are just over two years into our retail journey and are encouraged by early trends. We are just getting started in this channel where the majority of consumers still shop and are excited to take share in this way in the U.S. home and personal care market, which amounts to approximately $180 billion. Third, net revenue management initiatives focused on strategic pricing and on the optimization of DTC net revenue per order implemented in the back half of 2022, coupled with fewer new customer orders delivered a record net revenue per order for Grove of $64.80 this was an improvement of 11% year-over-year and 5% quarter-over-quarter. As we highlighted last quarter, as we improve our gross margins, increasing the DTC revenue we earn per order is especially beneficial. We will touch on this more later on, but we are optimistic that we can continue to move the needle on this metric as we expand our health and wellness offering to the consumer. Lastly, even as we get closer to profitability, we remain ever focused on driving margin improvement by maintaining strict expense discipline and are seeing results across the P&L. From pricing actions and procurement initiatives to improve gross margin, carrier mix optimization that drives down outbound shipping costs, to improve advertising channel allocation and new strong performing creative, coupled with strong organic traffic, yielding CAC improvements to relentless work on SG&A efficiencies. Our entire team is focused on finding opportunities to drive profitability while delivering for our consumer and executing with a streamlined expense structure. This value creation plan drove continued improvement in our second quarter financial results. Adjusted EBITDA loss in the second quarter of 2023 was $2.6 million, an improvement from a loss of $6.9 million in the first quarter of 2023 and a loss of $21.1 million in the second quarter of last year. An improvement of 88% year-over-year. This improvement was achieved despite a revenue decline in the second quarter, which was down 8% sequentially and 17% year-over-year, primarily driven by the 74% strategic reduction in advertising spend in the current quarter when compared to Q2 2022. This reduction in advertising spend continues to reflect our strategy of building a machine that can focus on the most profitable marketing spend to drive profitable growth in 2024 off a durable and high-margin existing customer revenue base. While the reduction in advertising spend resulted in year-over-year comparative pressure on revenue, which we expect to continue throughout 2023, our efforts to improve advertising efficiency have driven strong results, and we remain confident that it is the right step to position ourselves for success in the future. During the quarter, we continued to make progress towards our goal of moving beyond plastic. In the second quarter, we continued to focus on improving plastic intensity or pounds of plastic per $100 in revenue. Site-wide and through retail partners, plastic intensity was 1.01 pounds of plastic per $100 in revenue, a slight improvement from 1.02 in the first quarter of 2023. And a meaningful improvement from 1.07 in the second quarter of last year. Specifically, 67% of revenue from Grove Co products came from either zero plastic, reusable or refillable and zero plastic-waste products, meeting the company's Beyond Plastic standard. Down slightly from 70% in the first quarter of 2023 and second quarter of last year. We are working on bringing more innovations to market that can drive this number higher. We continue to challenge others to disclose plastic intensity as we lead the industry in the move away from plastic. Building off the success of our value creation plan. I'm excited to announce today our growth and market expansion initiative. This initiative builds on our strong position in sustainability with a focus on customer centricity and customer service, continuing momentum in the health and wellness category, enhancing our focus on replenishment categories and improving the VIP program by making the benefits and experience more intuitive and easier to use. On that note, today, I'm also excited to announce the VIP hub which makes it seamless for VIP customers to access exclusive benefits like samples, VIP discounts and early access to limited edition collections. This feature was built based on feedback from literally thousands of VIP customers on what would improve their experience and represents a great step in helping our customers get the best value from Grove, discover new products and prevent additional plastic waste. We are optimistic that these benefits will continue to drive loyalty among our best customers while also providing the right incentives to add more VIPs to our community. We have a number of new features in the pipeline, but the early response has been terrific. We look forward to improving our customer experience for these customers and are grateful for their feedback as we seek to continue innovating. Grove Wellness, which launched in March, is making progress. As a reminder from our last quarter, our research suggests that 89% of customers would trust Grove over other sources to solve their health and wellness needs. Continuing the trend from last quarter, we saw a record amount of revenue and percent of orders containing wellness products. This is important because not only do wellness offerings expand customer order sizes, contributing to record net revenue per order in the current quarter, but many of these offerings are highly regimented. From multi-vitamins to sleeping relaxation, digestive health, allergy season needs, immune support and men's and women's health. We are setting ourselves up to become the platform that consumers can turn to for all of their lifestyle needs. While health and wellness sales currently make up a small percentage of our overall revenue. We are encouraged by our customers' response to date and are excited to bring them more offerings in the coming quarters. We have grown our SKU count in this category by over 60% year-to-date and expect to roughly double our SKU count in this category over the coming quarters by the end of the year. Moreover, as we enhance our focus on high replenishment categories, R&D remains a top priority for us. Our DTC platform powers the Grove innovation engine, providing us with superior access to customer data and preferences and allowing for quick iteration and test and learn. We use these insights to drive innovation and SKU development at a quicker pace than our competitors and many in the industry. This ensures that when we bring products to market and especially to retailers, we have already proven their success, allowing for sustainable growth in retail and in our own brands over time. Our innovation pipeline is strong as well. And we are excited to announce new product launches over the coming quarters, which will provide more ways for customers to enjoy all of Grove's offerings. For example, we recently announced our fall seasonal collection, Traditions Aglow. Featuring limited-edition fall scents Harvest Apple and Spiced Pumpkin. They are exclusively available on our site and app, and you can find great bundles in the VIP hub. We also continue to explore M&A, which could provide a step change opportunity. Our grove.com platform, DTC fulfillment capability, in-house marketing expertise, sustainability leadership and potential to merge retail sales efforts are a few examples of how our current infrastructure could create material synergies. The bar for action, as always, is extremely high, and we continue to be deliberate with how we invest time and resources. Now I want to turn to a couple of incredibly exciting business updates. First, I'm excited to announce the appointment of Jeff Yurcisin as the new Chief Executive Officer for Grove Collaborative effective August 16. Jeff will also join our Board of Directors. Jeff is the former CEO of

Thank you, Stuart. Similar to previous calls, we will provide quarter-over-quarter comparisons in addition to the year-over-year changes. As we believe the sequential comparisons better reflect the strength in the business and the steps we have taken to position ourselves for long-term sustainable and profitable growth. Net revenue in the second quarter was $66.1 million, down 8% from the first quarter of 2023 and 17% year-over-year. Both comparisons continue to be impacted by the strategic decision to reduce advertising spend as the company focuses on achieving profitable growth in 2024. The sequential decline is also impacted by the seasonal increase in advertising spend in the first quarter of 2023, while our sustainability messaging resonates more strongly with consumers. Similarly, total orders were down 11% quarter-over-quarter and 26% year-over-year to 1 million. And active customers were down 9% quarter-over-quarter and 28% year-over-year to 1.1 million on a trailing 12-month basis. DTC net revenue per order was up 5% quarter-over-quarter and 11% year-over-year to $64.8, a record high level surpassing our previous record of $63.4 achieved in Q4 2022. The year-over-year increase was due to net revenue management initiatives, including the launch of the supply chain fee, a higher percentage of existing customer orders compared to new customer orders as well as the introduction of strategic price increases on Grove brands and third-party products. The sequential increase was further benefited by a higher percentage of orders coming from existing customers, and a recovery from a seasonally softer first quarter. Gross margin was down 20 basis points from the first quarter of 2023. But up 280 basis points year-over-year to 51.9%, very close to gross record high in the first quarter of this year. The Q2 2023 gross margin was impacted by a $1.1 million inventory reserve charge. Absent the impact of these reserves, gross margin would have been 53.6%, which would have been a new record for the company, surpassing the prior record by 150 basis points. The quarter-over-quarter change was further impacted by a decrease in Grove brands' percentage of net revenue offset by a decrease in discount rate and lower product costs. Grove brands as a percentage of net revenue declined 380 basis points quarter-over-quarter and 290 basis points year-over-year to 45%. The year-over-year and sequential decreases are due to a higher mix of third-party products within existing customer orders as we continue to expand our offering. And a decrease in new customer orders, which include more Grove brand products. The sequential decline of road products in existing orders was largely due to coming off a seasonally high performance in Q1, whereas the year-over-year decline is due to an expansion to categories with an increased third-party presence, including VMS, home decor and storage. We believe that having a diverse SKU assortment on our DTC side makes for a better customer experience. Advertising expenses decreased 46% quarter-over-quarter following our typical seasonal pattern and fell 74% year-over-year to $4.7 million, reflecting our strategic pullback in advertising spend and focus on improving marketing investment efficiency. We continue to be pleased with the improvement in advertising efficiency resulting from this strategy. Product development decreased 4% quarter-over-quarter and 32% year-over-year to $4.1 million. Mainly due to a decrease in personnel expenses. Despite the lower investment, we continue to make progress in our innovation strategy. SG&A expense decreased 8% quarter-over-quarter and 39% year-over-year to $35.2 million. Excluding stock-based compensation and severance, SG&A expense in the quarter would have been $30.2 million or 10% less than the first quarter of 2023 and 24% less than the same period last year. The quarter-over-quarter decline was mainly due to lower fulfillment costs and other operating expenses, which is reflective of our strategy of creating operational efficiencies and eliminating less productive spend to focus on profitability. As a percent of net revenue, SG&A expense would have been 45.7% compared to 47.1% in the first quarter of 2023. And 50.2% in the second quarter of 2020. Our adjusted EBITDA loss improved to $2.6 million as compared to $6.9 million loss in the first quarter of 2023. And was a material improvement compared to the $21.1 million loss in the second quarter of 2022 despite lower sales. Our adjusted EBITDA margin improved by 570 basis points quarter-over-quarter and by 2,270 basis points year-over-year to minus 3.9%. The quarter-over-quarter improvement was due to lower advertising investment expenses, partially offset by a lower gross profit due to less revenue. Net loss in the quarter was $10.9 million compared to a net loss of $13.1 million in the first quarter of 2023. And a loss of $35.3 million in the second quarter of 2022. Turning now to the balance sheet. We ended the quarter with $89.7 million in cash, cash equivalents and restricted cash, down $0.7 million from the previous quarter, primarily from the adjusted EBITDA losses and interest payments, largely offset by working capital efficiencies particularly on inventory. We finished the quarter with an inventory balance of $34.5 million, down $6.4 million from the end of Q1 2023. Bringing down our inventory balance continues to be an area of focus in our pursuit to improve our working capital, and we are pleased with our results to date. Which resulted in our first quarter of positive operating cash flow of $1.2 million. As announced last quarter, in Q1, we closed on an asset-based loan facility with $35 million total capacity for which borrowing capacity is calculated from our inventory and accounts receivable balances. The loan is for a term of three years and will support our strategic initiatives and working capital needs. We did not make any draws during the second quarter after having taken the minimum draw of $7.5 million in Q1. Based on current inventory and AR balances, we have $9.3 million of capacity available under the ABL. Furthermore, assuming a share price of $2.26, our average trading price in 2023, we have up to $13.6 million of capacity on our standby equity purchase agreement. Taking into account market conditions and business priorities, we will evaluate using this capacity strategically to supplement our liquidity. Lastly, as noted previously, a $10 million investment from Volition further solidifies our balance sheet. We feel good about our current liquidity position and our ability to continue executing on our aggressive push to profitability. Now turning to our outlook. Factoring in our performance to date and our expectations for the remainder of the year, we are offering the following guidance. For the 12-month period ending December 31, 2023, we continue to expect net revenue of $260 million to $270 million, and we now expect an adjusted EBITDA margin of minus 5% to minus 7% and up from minus 5.5% to minus 7.5% previously. I would now like to turn the call back over to Stu for some closing remarks.

Thank you, Sergio. I'm truly proud of our accomplishments in our first year as a public company. Our team deserves credit for the rapid progress towards profitable growth and a secure balance sheet. And I have never been more confident in the customer-centric sustainable innovation that lies ahead. The opportunity to meet our customers and collaborating to create and scale a sustainable brand continues to be an important and worthy north star. I could not be more excited to welcome Jeff and Larry, and I could not be more grateful for the work of each of the extraordinary individuals on our Grove team who have driven our results to date and whose efforts ensure our best is still ahead of us. Thank you all for listening to our prepared remarks. We are now happy to answer any questions. Operator, please open the line.

Thank you. [Operator Instructions] Our first question will come from Susan Anderson with Canaccord Genuity.

Hi, good evening. Nice job on the quarter. It's great to see that improvement in profitability. Stu, maybe if you could just kind of walk us through your thought process on why you feel right now is the right time to kind of hand the wand over to someone else to kind of take the company through its next leg of growth and just kind of go over kind of like why now is the right time?

Thanks, Susan, and appreciate the call out for the progress. The team worked really hard and feel really good about the financials this quarter. In terms of why it was the right time. I think there were really two things at play. The first is if you look at our journey from IPO to now, we really moved quite an incredible distance to get the business operating as close to profitability as we did in the second quarter and as we've been able to say we will going forward. And that gives us the opportunity to look ahead and say, gosh, there really is this moment of, I don't want to quite say reset, but opportunity looking into the future and say who -- how can we best prepare ourselves to go through that. And so when we have the opportunity to work with an exceptional leader like Jeff, who has truly a track record of second to none in terms of building customer-centric direct-to-consumer businesses. Is -- that's something that's a massive opportunity for our mission, for our customers, for our shareholders that I think was too good to pass up on. And so always, that is my first thought. And the second is that there's a lot of really great work to be done, both inside the company that Jeff will be leading and outside the company sort of to make sure that we -- our awareness continues to grow, that we continue to have the time to focus and look at M&A in a current environment where there's a lot of really exciting opportunities out there. And so really, the sort of combination of having a strong foundation with the opportunity to bring a truly, truly exceptional leader in Jeff and the opportunity to get some more leverage out in the market from the Executive Chairman role. I think made this an opportunity that was as within the timing really just so right and so exciting. And as a shareholder and fan of the company, I'm really excited for all that comes ahead.

Great. Yes, that sounds like a perfect fit, it seems like. And then maybe if you could just talk about on your advertising spend. The quarter, I think, dropped at about 7% of sales, I think, from 12% last quarter. I guess, is this kind of the new benchmark we should think about for advertising spend as you look forward through the back half of this year and into next year?

No. So we've seen historically that advertising is a bit seasonal with as Sergio mentioned, Q1, new year new you, people really like the sustainability message. We also find that back-to-school and sort of holiday Thanksgiving not holiday Christmas are both very, very strong periods for us. And so with a more efficient advertising mix, we're thinking a lot about how do we line our spend up through the year. So I think in Q4, we'll probably be a bit above the 7%. I don't think we want to give specific guidance on that. But I think for the full year, we'll probably come in a bit above 7%. Sergio, anything you want to add there?

No, Stu, well said and covered. So that's accurate.

Okay. Great. And then I think you mentioned that you guys did raise prices in the quarter. Did you guys say how much that contributed to the growth? I guess I was just looking for kind of like pricing versus volume?

That's on a year-over-year basis, we raised prices. There was almost no price action in the current quarter.

Got it. Okay. And then, I guess, last one for me, just on the wellness shop, sounds like it's going really well. I guess, has it grown at all, to a material piece of the business? And then also, I was curious, are you seeing primarily existing customers kind of adding on to their order? Wellness products or are you also seeing it drive new customers to the site?

So I'll start with the second part of that question. which is really we offer this primarily to our existing customers because that's a really robust base of demand that we can both go to grow the business, but also really learn with to make sure we get the offering to a place where it's first class. So you're right that it's strategic. It's a big driver of net revenue per order. But we're really focused today on offering it to our existing customers. Both to get quick traction and to drive quick learning. And the first part of the question was about the materiality of the sales there. I just want to confirm.

Yes. It sounds really like it's kind of doing well out of the gate. I'm just curious, I guess, is it -- has it gotten to a percent of the business that's not necessarily significant, obviously, but where it's material, I guess, where you could see it kind of moving the new dollars to look forward.

Sergio, do you want to take this one? Okay, I will. So I think from a materiality perspective, it's still mid-single-digits. So it's not driving the overall top line but customers who buy a wellness product tend to have net revenue per order around $80 or even a bit higher, which is obviously materially higher than our overall net revenue per order today. So as we look ahead to net revenue per order growth, we view wellness as one of the places where we can sustainably build on our current basket sizes, deliver more value for our customers. And of course, that incremental dollar of net revenue per order of average order value is quite margin accretive. So we really like that. So it's already having a real effect in terms of driving net revenue per order higher. But in terms of driving overall revenue, I think we're a little early to say. It's a big driver, but hopefully soon.

Yes, sorry, just -- sorry, Susan. Just adding on top of that, I was on mute, and I was starting to answer the question, and then I heard Stu. So basically, the way that we see this is the mix that we have been referring as to the value creation. So this part of the mix is early days still to talk about the long term. But rest assured that changing the mix into these categories is something that will be accretive to the company in the long run. And we are seeing good success at the moment. So we wouldn't call out specifics, but Indeed, we are excited with the opportunity ahead.

Great, thanks so much and good luck, Stu and everything in the future and hopefully you get a little bit of downtime and good luck the rest of the year.

Thanks so much, Susan.

Thank you. [Operator Instructions] Our next question comes from Dana Telsey with Telsey Group.

Hi, good afternoon, everyone, and nice to see the progress. Welcome, Jeff and Stu, Glad you're still very, very much involved. As you think about the expense reduction this quarter, which obviously, advertising expense was significant, but it looks like there was a decline in fulfillment costs also. Does that continue going forward? Or how do you see the buckets of expense transform as we go back to putting in some ad expense nearing the fourth quarter? And then I have a follow-up. Thank you.

Go for it, Sergio.

Thank you, Dana and thank you for the question. So basically, if I understood the spirit of the question is getting a sense on how this is going to translate going forward. I would say that yes, what you saw -- thank you for confirming, what you saw on Q2 in terms of fulfillment costs and reductions. Yes, it's going to continue the trend, has been one that we feel really proud about the efforts that the team have achieved in terms of reducing -- controlling the expense in spite of inflation. And this has to do with jumping into regional carriers across the board that is helping us basically control the cost. So I don't know if that answers your question, but that's part of the principal, why you are seeing it, and we will continue to see this trend.

And will it be at this magnitude of the $2 million or so go forward?

Not at this magnitude because the first chunk is the important one, but we'll -- continue to be savings coming from that for sure.

Got it. And when you think of the path to profitability and getting near breakeven in the third quarter, as you think about next year and just the path of advertising and that path to profitability, how do you think of the advertising spend going forward?

So I think, sure. Yes, I'll start it. It's a great question, Dana. So we've been, first and foremost, focused on advertising efficiency and return on ad spend and LTV to CAC, of course. So if you think about year-over-year where we've come on that. We've seen huge improvements there. And we continue to be focused on making sure not only are we driving a really good return, but we're focused on optimizing down to make sure our advertising spend is more effective. We've said a lot of times that we're targeting, this is not guidance, but just focused on finding the way to profitable growth in 2024. And so would love to see advertising spend at least flat to potentially a little bit up year-over-year in 2024. But we're still building the plan that drives profitable growth in 2024. I think throughout the balance of the year, you can expect that it will continue to be a seasonally -- we will continue to spend seasonally more in Q1 and in sort of end of Q3, beginning of Q4, as I mentioned, for those seasonally strong periods. But I think you're right to say, hey, we're going to be more focused on making sure that we have enough advertising to drive growth as we get to profitability.

Got it. And then can you talk about how the quarter went? Was one month stronger than another? What did you see in terms of the Amazons and some of the new channel. New partnerships like Kroger and Hannaford, was there a difference in sell-through and also your brand and third-party brands in terms of what you're seeing.

So the quarter was fairly balanced and strong throughout. I think we continue to find that if you look at our net revenue per order and our gross margin, those are sequential trends. And so if it's getting better quarter-over-quarter, it's probably also generally getting better month-over-month, not every month better than the last. But in general, sort of those things tend to grow month -- tend to be growing on a sequential basis. And so through the quarter, I think we saw pretty consistent demand. We felt very good about our performance on Prime Day, but we're very early there. So that's still -- it's growing at a great clip, but still very small. And through the quarter, I think, look, we've clearly been driving this business to operate as close to profitability as possible. And so with the gross margin and overall margin improvements that are rolling out sequentially, we do see those improvements rolling in monthly on a sequential basis. I hope that answers the question.

Thank you.

Thank you. There are no additional questions at this time. I'd like to now turn the conference back over to our presenters for any closing remarks.

Thank you. Thanks, everyone, for joining. Again, a huge thank you to the Grove team for exceptional progress this quarter and a huge welcome to Jeff. Excited to see all of the great things this next chapter holds for Grove. Thanks so much, everyone. Do well.