SEMR - NYSE

Hello, everyone, and welcome to the Semrush Holdings First Quarter 2024 Results Conference Call. My name is Drew, and I'll be the operator for today's call. After today's presentation, we will begin the Q&A session. [Operator Instructions] With that, I'll hand over to Brinlea Johnson, Investor Relations. Please go ahead.

Good morning, and welcome to Semrush Holdings First Quarter 2024 Conference Call. We'll be discussing the results announced in our press release issued after market close on Monday, May 6. With me on the call is our CEO, Oleg Shchegolev; our President, Eugene Levin; and our CFO, Brian Mulroy. Today's call will contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning our expected future business and financial performance and financial condition, expected growth, adoption and demand for our existing NNA products and features, our expected growth of our customer base and specific customer segments, the expansion of our content shake tool industry market trends, our competitive position, market opportunities, sales and marketing activities, future spending and incremental investments, our guidance for the second quarter of 2024 and the full year 2024 and statements about future pricing and operating results, including margin improvement, revenue growth and profitability. Forward-looking statements are statements other than statements of fact and can be identified by words such as expect, can, anticipate, intend, plan, believe, think or will. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements address matters that are subject to risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. For a discussion of the risks and important factors that could affect our actual results, please refer to our most recent quarterly report on Form 10-Q and our annual report on Form 10-K filed with the Securities and Exchange Commission as well as our other filings with the SEC. During the course of today's call, we refer to certain non-GAAP financial measures. There is a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued yesterday after market close, which can be found at investors.ceras.com. As noted last quarter, our results for the first quarter and our forward-looking guidance uses our new non-GAAP definition. We are no longer providing guidance for non-GAAP net income and instead guiding to both non-GAAP operating margin and free cash flow margin. Definitions for these are presented in our earnings release. We've also updated our definition of non-GAAP income from operations on which non-GAAP operating margin is calculated to exclude amortization of acquired intangible assets, acquisition-related costs, restructuring costs and other onetime expenses outside the ordinary course of business. For example, our exit costs incurred primarily in 2022 in addition to the current exclusion of stock-based compensation. The updated definitions are reflected in our first quarter 2024 financial results. All future financial statements will reflect the new definition for the current and prior periods. We are also providing a reconciliation in the old definition to the new definition for the periods presented. We believe this update allows investors to better understand our financial performance, better align with measures used internally by management and operating our business and permit a better evaluation of the efficacy of the methodology and information used by management to evaluate and measure our performance. Now let me turn the call over to Oleg.

Thank you, and good morning to everyone on the call. In the third quarter, we delivered revenue of $85.8 million, up 21% year-over-year and IRR growth of 21% year-over-year. We reported income from operations of $1.5 million and non-GAAP income from operations of $9.7 million in the first quarter. Importantly, we generated free cash flow of $12 million and a free cash flow margin of 14%. We see our prior guidance, and I am pleased to say we are raising our full year 2024 guidance. Our business is focused on driving strong sustainable growth while also expanding profitability and generating free cash flow. Before handing it over to Eugene Levin, I would like to touch on a few highlights about our strategy to continue to scale the business and capture a significant market opportunity we see ahead. We have strong capability positioning as the platform of choice for businesses to improve the line visibility. With growing trend of businesses of all sizes, investing more time, effort and resources into enhancing the online visibility. We are leveraging our unique data sets to differentiate ourselves in the market. We continue to make progress on each of our growth pillars. In the first quarter, we reported nearly 112,000 customers and now have over 1,125,000 pre-active users. We believe there are millions of marketers and business obvious who will benefit from our platform, and we plan to grow both our paying customers and our pre-active base. We have an extensive loyal installed base that stands over 160 countries across all industries and market segments from solopreneurs to Fortune 500 companies. We continue to deliver higher value to our customers by cross-selling and upselling within our base. And as we increase our focus on moving upmarket, we expect an increase in average ARPU, which, as reported today is nearly 32. Our strong profitability, keep competitive mode and accretive loyal base allows us to continue to invest in the business. We continue to build on our technology and customer foundation with investments designed to further our business objectives. Our reinvestment series include launching new AI-based tools like ContentShake and expanding the enterprise. As we highlighted last quarter, we efficiently soft launched an enterprise issue of product into the market in late October 2023. And we are pleased to announce that it is now generally available. It has already been used by a select number of large-scale business customers, including one of the largest apparel companies and one of the largest market research companies. While we are still in the early stages, the initial signs we are seeing are very encouraging. Importantly, our enterprise offering has the opportunity to create a meaningful inflection in ARPU. As this product carries ARPU but tends to be 10 to 15x our company average. We believe our early adopter customers are experiencing significant returns on the investments after migrating to the platform. Features like automated workflows, corporate-level assess controls, customized dashboards and building a professional service network are helping our customers drive meaningful improvements in efficiency while also delivering significant time and cost savings. In 2024, we remain focused on continuing to grow our core business, upselling and cross-selling our offerings and expanding our platform. In conclusion, I am very pleased with our start to 2024. And I am optimistic about our ability to capitalize on future growth opportunities throughout the year. I will now turn the call over to Eugene Levin to discuss the results of the quarter and our outlook in more detail.

Thank you, Oleg. We delivered another solid quarter, and I'm increasingly optimistic about our ability to deliver durable growth over the long term. I want to start with the migration Semrush is making up market. Last quarter, I discussed the segment of our customer base, sophisticated accounts that we believe represents a significant growth engine for us. Companies that fall into this broad segment are businesses that tend to have multiple marketing team members that are each Semrush user, and they generally have significantly higher ARPU or average revenue per user than our average and meaningfully stronger net revenue retention than our average. The relative strength of this customer set gives us increased confidence that our new enterprise product will be met with strong adoption, further supporting our goal of driving strong durable growth on both our top and bottom line. To service this upmarket customers, most effectively, we have been making several important adjustments to our go-to-market model to optimize LTV-to-CAC ratio over the past several quarters. We are leveraging our product-led low-touch sales strategy and shifted more of our investment focus to the high-value enterprise area. First, we have been realigning some of our sales investments from the SMB sector into this upmarket category to focus on converting our existing enterprise customers to use our new enterprise SEO product. Second, we have been making investments in our quote-to-cash process to properly handle the complexities that often surround enterprise clients. These are things like establishing a deal desk and building out proper discipline around large deal sales funds. We have been making these investments for some time and the significant presence we already have in this segment gives us confidence in our ability to successfully handle the ramp that we foresee from our enterprise product. In addition to enterprise product initiatives, we continue to leverage AI in our platform. We continue to see excellent adoption of some of our AI products and features, including our recently released AI-powered content creation tool called ContentShake. ContentShake is a smart pricing tool that combines AI with real live competitor insights. It guides you from ideation to publish in directly to the blog generates SEO-friendly articles, create personalized content ideas, composes copy with AI and helps you optimize for organic traffic, engagement and rankings. We're monetizing content shape on its own, but it's important to understand that we are also monetizing AI in several different ways. First, we have AI features built into all of our tools and the inclusion of those features helps drive new clients acquisition and also aids in retention as they improve the customer experience. Second, we have structured some of our product tiers to only include the AI features in the higher-priced tiers. This attracts clients to the higher-priced tiers and contributes to overall ARPU growth. And the third way we monetize AI is through separately sold subscriptions like the Content Shake product I just mentioned. We're also using AI to help drive efficiency in our own R&D departments, and we have recently seen success using our AI tools for our own marketing efforts, where we are not only producing more content, but we are also making higher quality content that ranks well and drives improved engagement. In summary, I'm confident in Semrush's positioning in search market and our extensive product portfolio. We are seeing increased adoption of our AI products and continue to innovate and bring new offerings to the market. Our sophisticated accounts are growing and helping to fuel ARPU and strong net retention and I'm very excited about our ability to service our market customers and continue to expand our portfolio of offerings. I will now turn the call over to Brian, who will provide a more detailed discussion of our financial performance and guidance. Go ahead, Brian.

Thank you, Eugene. As Oleg and Eugene mentioned, we had a strong first quarter across the board. Our revenue was $85.8 million, growing 21% year-over-year. Growth was driven by new customer additions and expansion of our average revenue per customer as we continue to execute on our cross-sell and upsell strategy. Annual recurring revenue for the quarter grew 21% year-over-year to $354.2 million. There are several factors that can cause our net new ARR to fluctuate from quarter-to-quarter. And as a result, we believe ARR trends are best observed on an annual rather than quarterly basis. Our calculated ARR per paying user grew 9.8% year-over-year and our dollar-based net revenue retention for the first quarter was 107%. We believe our dollar-based net revenue retention has troughed and over time, should begin to trend back up, particularly as our more sophisticated accounts increase as a percentage of our mix since these customers have higher net retention than our company average. We recognize the importance of having strong retention metrics and accordingly have recently made some changes to our sales team's incentives that we expect could exert some gentle upward pressure on these figures. Moving down the income statement. During the first quarter, we had positive non-GAAP operating income of $9.7 million. We reported another significant improvement to our non-GAAP operating margin of 11.3%, which is up 2,000 basis points year-over-year and surpassed our guidance for the first quarter. This improvement is a result of a number of factors. First, our gross margin improved nearly 80 basis points year-over-year to 82.9%. Gross margin benefited from higher revenue and our continued ability to gain scale and leverage from our efficiently engineered platform. We continue to expect strong gross margins above 80% in the near term and view the way in which our STACK is engineered as a key competitive differentiator. Our healthy gross margins also provides us the flexibility to invest below the gross profit line, which gives us a structural advantage in the market. Second, we continue to execute on our commitment to drive efficiencies while also pursuing growth. It is important to note that we have been able to increase our operating margins while making go-to-market investments for our enterprise products. We expect that we will continue to be able to make incremental investments to strengthen our position here while also driving further operating leverage in the business. And we don't expect to see any headwinds to our more traditional SMB business as we realign these resources. This is because we pursue a product-led growth strategy that leverages a self-service sign-up process and drives meaningful leverage that we're able to reinvest. Turning to the balance sheet. We ended the quarter with cash and cash equivalents and short-term investments of $243.1 million, up $4.6 million from the previous quarter. Our cash flow from operations in the first quarter was $14.8 million. Turning to guidance. I'm confident in the underlying trends in the business and capabilities of our team to continue to deliver strong growth and profitability. Our business is off to a strong start this year, and we are encouraged not only by what we have accomplished so far, but we are optimistic about what we see as the opportunities in front of us. For the second quarter of 2024, we expect revenue in the range of $89.1 million to $90.1 million, which is midpoint of our guidance and expect revenue in the range of $366 million to $369 million, up from our prior range of $364 million to $368 million, which translates to growth of 19% to 20% and represents a $1.5 million increase at the midpoint. We expect full year 2024 non-GAAP operating margins to be between 10.5% and 11.5%, up 50 basis points from our prior guidance range and full year free cash flow margins to be approximately 8%. To help you with your modeling, the difference between our non-GAAP operating margin and our free cash flow margin is the result of interest income offset by capital expenditures and cash taxes. Finally, our guidance assumes a euro exchange rate of $1.08. As a reminder, approximately 30% of our expenses are denominated in euros. In closing, we are confident in our ability to grow and scale our business and remain committed to a disciplined and balanced approach to spending. We are focused on driving improved efficiency and profitability even while we invest in future growth opportunities that we expect will deliver long-term value to our shareholders. With that, we are happy to take your questions. Operator, please open the line for questions.

Thank you. We will now start today's Q&A session. [Operator Instructions] Our first question today comes from Scott Berg from Needham.

Nice quarter here. I have 2. I wanted to start with a macro question a little bit more high level. Your ARR additions the last 3 quarters have been very good, especially on a year-over-year basis. Yet we're seeing demand for software that's predominantly sold to SMB type companies be a little bit inconsistent or soft over the last several quarters. Can you help us understand maybe something in the product or maybe something in your go-to-market strategy that's helping you kind of buck this trend to throw off some really good results the last couple of quarters.

Thank you. Let's start with market question I would say we don't see any kind of significant changes remake for all businesses in all segments, we believe that it's still challenging. At the same time, we delivered -- deliver strong results in current environment. And with IRR, Brian.

Yes. I mean, Scott, the key for us is macro is impacting us just like every other company, but we're faring really well. We have a really strong market position, really good market -- secular market shifts that are happening where suspending in companies is shifting from one area to an area where we actually provide good technology and service. And we have a really strong competitive mode. And then more recently, we've been able to launch a lot of new AI products that we're monetizing in the 3 ways that Eugene mentioned earlier. And of course, we have our upmarket play into enterprise. So we think there's a lot of factors that are allowing us to navigate through this macro environment and still deliver a really strong durable growth.

Got it. Helpful. And then the last question for me is, Brian, you mentioned you expect ARR to trough in this most recent quarter here. It sounds like you made some changes on the sales side to maybe incent cross-sell expansions a little bit more. But how do we think about the impact of your new enterprise sales motion on ARR over time? Is that a sale that's still very much a land-and-expand opportunity maybe by modules or seats? Or are your enterprise customers having the opportunity to maybe land much larger that might not offer some expansion opportunities there?

Sure. Yes. So 2 things. ARR, we're really pleased with the performance, pleased with the performance over many quarters. We've been able to maintain very strong durable retention on a gross and a net basis. And in the most recent quarter, we've seen a trough in 107%. We have talked about that over the past couple of quarters that it is somewhat of a lagging metric that measures performance over a 24-month period. So it's doing exactly what we expected and troughing, and we expect it will pick up over time, especially as we move upmarket and start to take advantage of the enterprise SEO product. The key for us is, for sure, there are land and expand components to our enterprise play. But our early potential there is more of an expand. We've been talking about the fact that we do already have more than 5,000 enterprise accounts. They've been very loyal and have adopted a majority of our platform and are asking for more features to do their best work. We've delivered that with the launch of our new enterprise SEO products. And as you know, that commands an ARPU of about 10 to 15x what our average ARR per paying customer is. So we do expect that to be in the early days and expand of our existing enterprise accounts and therefore, having good upward pressure on the ARR metric.

Our next question comes from Surinder Thind from Jefferies.

As a follow-on to kind of the enterprise customers as you look up markets, can you maybe talk about behavior or potential between the U.S. enterprise-based customers and maybe international opportunity?

Yes. Thank you for the question. So of course, United States is the #1 market for us. It's almost half of the opportunity from our point of view. At the same time, if you actually look at a list of early customers that we acquired since soft launch in the end of October, at least half of them are international companies. We have very strong traction in Germany, in France and other markets. And as you probably know, in general, we always had a philosophy in mind to build products for global use because even our U.S. customers, a lot of them are also multinational companies who sell overseas and across the globe. So from that point of view, product is definitely built for global use. And in terms of go-to-market, again, Semrush also has presence in over 13 different countries. For enterprise, the list is probably going to be a little bit smaller. But still, we're going to ramp our teams based on geographic presence of our customer base proportionally. And another thing, world is actually not as big as it might seem because from a go-to-market point of view, what matters the most is what languages people speak and you probably know there are only several really popular languages. And we only need to scale sales force with native speakers who can help us with go-to-market in those markets. But that's really pretty much all the work that needs to be done in terms of international expansion.

And then as a follow-up on just the sales structure for the enterprise opportunity here. How would you describe the changes that you've made? I mean you've kind of talked about it on the call, but how disruptive are the changes? Or how significant are the changes? Because obviously, SMB sales are very different than enterprise sales. And then how much more change should we expect before we kind of get to what I would call full productivity levels.

Yes. So great question. Just -- so 2 questions there. One is what changes are we making to SMB and how does that impact it and then investments in enterprise. So on the SMB side, we've been very fortunate that we have a very low-cost frictionless selling process. we've been able to enhance that over the last couple of years with AI and automation that has allowed us to really maintain good success and efficiency with a product-led selling motion. And because of that, we've been able to efficiently grow and manage the transactions for our SMB and even mid-market customers. That's given us a structural advantage. It's allowed us to reinvest that efficiency into an enterprise upmarket play, and we have been doing that over the past couple of years. And there's 3 fundamental things that we're focused on. One is there's systems and infrastructure that we need, so demand generation engine, a CRM engine that manages the lead to opportunity process and in an ERP system to manage quote to cash. So we've been investing in that and preparing for these types of transactions. From a human resources perspective, we're investing in a deal desk to help facilitate the transactions and the negotiations with procurements. And of course, scaling up the enterprise sellers that have that skill set and experience to be able to develop relationships and strong partnerships with companies to be able to evolve from just a transaction to a value-based sale that will allow us to be successful. So we're making those investments. We're not expecting that this will be disruptive because the SMB dynamics have been things efficiencies that have been building in the business over time, and we're able to see the impact and then adjust the investments accordingly. And for enterprise, it's new for us. So while we do have more than 5,000 enterprise accounts, this upmarket selling motion and the enterprise SEO product is new, and we're taking into account the risks and the opportunity and setting expectations accordingly.

Our next question today comes from Scott Ader from KeyBanc.

It's Jackson Ader from KeyBanc Capital Markets. I hope you're doing well. So first question is, Brian, I know you guys have talked about the balance of growth and profit. But just given the result.

Yes, this is a really, really good question. It's something that we think about every single day. we're always challenging ourselves and the leaders throughout the organization to make sure they're focusing on investments that will drive long-term growth and value for us and our shareholders. And our goal here, we've talked about this, our goal at Semrush is to achieve an efficient frontier. So we want to be investing in the business so long as that investment drives incremental results. But we don't want to be overspending and getting past that efficient frontier where the incremental return doesn't justify the investment. For Semrush in 2024, we are investing quite a bit. So we're investing on this enterprise upmarket play as evidenced by the most recent general availability of enterprise SEO. We've been doing a lot of product investments in AI. Eugene talked about 1 new product ContentShake AI and a number of others earlier this morning that we've monetized in a few different ways, and we're constantly focused on what that next close adjacency is for our customers that will allow us to expand our platform beyond our core competency. So we're continuing to invest. We do believe in 2024 in the foreseeable future that there is a lot of opportunity. We have a strong foundation with 112,000 paying customers, over 1 million free users, and we have quite a bit of cash on the balance sheet to put to work, and we'll be doing that over time.

Okay. All right. Great. And then just a quick follow-up, kind of a practical question. Those 5,000 enterprise customers that you talked about, what is -- can we get a sense for like for what their current ARPU looks like? Do they have -- do they have the propensity or the willingness, I guess, to spend 10 to 15x more than your typical customer?

Yes. Definitely, they already pay more. And their expansion, their LTV is much higher than average as well. So they're not just buying more expensive subscriptions. They are more active, they are more likely to have multiple people using the product. So they have all the signs that correlate with willingness to pay.

Our next question comes from Adam Hotchkiss from Goldman Sachs.

Great. I guess to start, I just wanted to touch a little bit more on the enterprise product. When we look at the early access page, we see stats like 10x faster SEO productivity and generating a 360-degree view of customer data, which seems like a pretty ambitious message to send a prospective enterprise is. So could you just take a step back and give us a sense for what enterprise customers are asking for that the tiered offerings aren't giving them today? And then when you think about how much of that is just a function of customers wanting to run more volume through your system versus actively looking to you to co-innovate on incremental products? How would you describe the balance of that customer relationship?

Great question. So yes, I mean, of course, to sell, you have to sell. So of course, 10x is definitely achievable, but people need to put work and fine-tune the product to their needs, which we help them with. But -- to give you just a couple of examples of why I think 10x is maybe even conservative. We have, for example, customers who use our internal linking module. And when you do internal linking for a small website, it's not hard, you can do it using white board, you just put 20 pages and figure out how to connect them. Now our enterprise customers, they have millions of pages. So there is no whiteboard in the world that is big enough to put all those pages and figure out how to connect them. So that's what we call the websites. We understand what other websites linked to them, so we can figure out externally profile, internal linked profile, the map of the website and figure out what pages should be connected to other pages and sort of share the authority of the page with other pages using AI and machine learning and -- if you think about the incremental value, it's not just being 10x more productive, it's actually finally being able to do the work that you would not be able to do without this technology. And the difference between tiered offerings like that we sell to SMB is an enterprise that SMBs don't have websites with millions of pages, so they don't need those features, while large enterprises have millions of patients so they need additional products. And that technically a philosophy that we have with enterprise products, things that we build in enterprise platforms, they are purely incremental. They are not things that are just fancy versions of things you can buy with our SMB offering. They are incremental. They use the same technology and data, but they solve totally different scope of problems that only big companies have.

Okay. That's incredibly helpful. And then could you just talk a little bit more about your professional services strategy here as you move upmarket. It seems though what we've seen that you're opting to vet and collaborate with enterprise freelancers, excuse to help enterprises. Is it fair to say that this will exist in the place of building out more meaningful services in-house? And then maybe, Brian, if you could just touch on what the monetization arrangements look like with those freelancers that would be useful.

Yes. Great question, and I probably should have answered this in the first quarter as well because, of course, services is another area where enterprise product is differentiated from SMB product. And as you mentioned, big companies, they need extra services, they need someone to hold their hand. They need someone to provide second opinion and guide them -- and there are 2 options that companies -- software companies have when they tackle this problem, sometimes they decide to build service arm inside the company, which has some benefits. But from our point of view, it's actually margin dilutive. And we're a software company. We want to run very high-margin business. And the other approach is actually what we're doing to partner with industry-leading experts in different areas and connect them with the pool of customers that we have, and we are starting with freelancers. And experts over time, we think we could expand this to our agency clients as well and generate additional leads and demand for them by allowing them to work with our brand customers. And in terms of financial arrangement, what we do is we will productize their services, and we provide sort of billing and handle transactions and then take our small commission for facilitation and then pass the remaining revenue to freelancers. So we recognize as revenue only our commission, so it's a clean high-margin revenue for us.

Our next question today comes from Elizabeth Porter from Morgan Stanley.

Just given the focus on the cross-sell and upsell plus addressing larger enterprise customers. It sounds that can be a material upside to ARPU. So how should we think about the growth algo between new customers and ARPU shifting between these 2 factors. I think historically, it's been a little bit more balanced, maybe skewed a bit more towards customers. So I just wanted to level set on the growth algo in the forward outlook as we go down these new initiatives?

Elizabeth, this is Brian. Yes. So we expect, as we've experienced in the past that both will be significant growth drivers for us. So we're still very pleased to see the amount of net adds that we experience every single quarter. The SMB mid-market, which tends to be the bulk of the incremental net adds for us has been very strong and healthy, and we expect that will continue to be a growth driver for us. At the same time, as we've been talking about, we do see much healthier metrics as we're moving upmarket. We've talked about things like the retention, the average ARR per paying customer and even growth for that particular segment. So I think going forward, you might see a slight shift where the number of accounts and -- or sorry, the growth would actually shift a little bit more towards upsell and higher-valued accounts. But we still expect that we'll see healthy growth in net adds as well.

Great. And then a follow-up actually on the net add side. Then as of 4,000 was just a bit below the 5,000 you've consistently added in prior Q1. So just curious if there were any factors to call out and then also touch on the seasonal trend of customers leaving in Q4 but coming back in Q1. How did that play out relative to prior years?

Sure. So just building -- we were just talking about the -- like any metric, they can fluctuate from quarter-to-quarter. There's always seasonal dynamics within 1 quarter or even year-over-year that could affect that number. But I think what you're seeing is just because we're putting more focus on higher-valued upmarket enterprise accounts that you could see that as we're putting more focus on that, that you could see that net add metric be impacted going forward.

Our final question comes from Mark Murphy from JPMorgan.

This is Arti Vula, on for Mark Murphy. I spoke to some of these investments you guys are expected to make, particularly on the upper end of the market. Can you give us any sense of how you expect hiring to trend this year?

It's tough to hear you. It was a little bit choppy. Can you just ask it again? It was tough to hear you.

Is this better?

It's breaking up a little bit but try again.

My question was just around hiring and how we should expect that to grow, particularly to the marketing to transit this year maybe compared to last year and year before.

I see. Yes, good question. We're not expecting a significant change. So we've been talking about our investments in enterprise are being funded by the efficiencies we're seeing in SMB and mid-market. And of course, the quantity of SMB and mid-market sellers is -- was higher. So now that we've been able to take advantage of leveraging AI and automation and really push a lot of the SMB sales through our e-commerce platform and take advantage of the product-led growth strategy. We're able to reinvest back into the enterprise. So while we're investing significantly and making a strong push into the enterprise, you shouldn't expect to see sales expense from an E-to-R perspective or even sales head count change materially.

There are no further questions in the queue at -- at this time, that concludes today's Q&A session. I'll now hand back over to the management team for closing remarks.

Thank you all for joining us today. I want to say again, we are very pleased with our execution in the first quarter and strong start to 2024. And we look forward to giving you updated on our progress. Thank you.