Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the SPS Commerce third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question during that time, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to hand the conference over to our first speaker for today, Miss Irmina Blaszczyk. Thank you. Please go ahead.
Thank you. Good afternoon, everyone, thank you for joining us on SPS Commerce third quarter 2020 conference call. We will make certain statements and projections today, including with respect to our expected financial results, go-to-market strategy, and efforts designed to increase our traction and penetration with retailers and other customers. These statements and projections are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. We note in particular that uncertainty regarding the impact of COVID-19 pandemic on our performance could cause actual results to differ materially from our projections. Please note that these forward-looking statements reflect our opinions only as of the date of this call, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Please refer to our SEC filings, specifically our Form 10-K, as well as our financial results press release we furnished via Form 8-K to the SEC earlier today for a more detailed description of the risk factors that may affect our results. These documents are available at our website, spscommerce.com, at the SEC's website, sec.gov. In addition, we are providing a historical data sheet for easy reference on our investor relations section of our website, spscommerce.com. During our call today, we will discuss adjusted EBITDA financial measures and non-GAAP earnings per share. In our press release, our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP and adjusted EBITDA measures, including reconciliations of these measures with comparable GAAP measures. With that, I will turn the call over to Archie.
Thanks, Irmina, welcome everyone. We delivered a strong third quarter of 2020 as retail activity continues to shift to e-commerce. This trend in consumer behavior is fast-tracking the pace of EDI adoption among trading partners, resulting in an acceleration in demand for order fulfillment automation. For the third quarter, revenue grew 12% to $79.5 million, recurring revenue grew 13%, adjusted EBITDA grew 29% to $23.2 million. Supply chain disruptions caused by the pandemic earlier this year and risks of future outbreaks are driving a long-lasting impact on retail dynamics. In addition, with the holiday season around the corner, retailers are expanding their supplier networks and asking trading partners to implement or improve e-commerce capabilities. According to IBM's annual retail index, the pandemic has accelerated the trend to e-commerce by nearly five years.
By all indications, consumers will embrace buy online, pick up in store, curbside pickup, or drop ship as preferred shopping methods this season. Changing consumer shopping preferences make fulfilling orders more complex for all trading partners, including retailers, distributors, suppliers, and logistics companies. SPS's expertise in automating order fulfillment for B2B relationships includes drop shipping. Currently, SPS has relationships with over 600 retailers that fulfill drop ship orders through our network. Two-thirds of these retailers also send order types through our network to suppliers. In total, we have more than 12,000 drop ship connections. SPS is committed to supporting our customers and optimizing their EDI systems across various markets. We recently announced a market-leading QuickBooks EDI solution.
SPS is the only EDI company to partner with Right Networks, the leading provider of cloud hosting for QuickBooks Desktop Enterprise, to deliver a turnkey product that makes EDI easier for thousands of QuickBooks customers. Combined with our expertise and partnerships with the most popular integration solutions such as Oracle's NetSuite, SAP, Sage, and Acumatica, SPS has a leadership position in fulfillment system automation across a significant portion of the market, with exposure across all verticals. Pet Retail Brands, parent company to two of the top five pet stores in North America, recently partnered with SPS Commerce to create one consolidated EDI system that will handle all EDI transactions for Pet Valu and Pet Supermarket. The use of EDI will provide increased order visibility, inventory planning, and a more efficient invoice reconciliation process.
Coborn's, a growing retail company, runs more than 120 grocery, convenience, liquor, and other retail locations across the Midwest. As expansion and growth result in operational complexities, Coborn's engaged with SPS Commerce to implement electronic order fulfillment across their network of vendors to increase efficiency and accuracy, expedite payment terms, and increase speed to shelf. Increasing order volumes also prompted Lily's Sweets, a chocolate producer, to implement order automation to keep up with the demand. The company's business more than doubled in two years, and their products can now be found at a growing number of national retailers and grocers. With SPS' fulfillment with QuickBooks, Lily's was able to scale without needing to update or swap out their current systems. They can also modify the solution as their logistics strategy changes. Over the past several quarters, we have seen an acceleration in demand for EDI.
The SPS Commerce full-service EDI solution integrates with any system and software to enhance automation, speed up processes, and improve data analysis. SPS Fulfillment supports 3PLs, shipping solutions like ShipStation, and offers carrier service for companies who book shipments themselves. We connect our customers to tens of thousands of retailers and distributors, allowing them to scale their business quickly and cost effectively. In summary, trading partners across the retail supply chain continue to rely on SPS Commerce to streamline their order fulfillment. As consumer preferences for omnichannel shopping accelerate, we are well-positioned to help our customers increase efficiency and automation in a rapidly changing environment. I'll now turn it over to Kim to discuss our financial results.
Thanks, Archie. We delivered a strong third quarter of 2020. Revenue was $79.5 million, a 12% increase over Q3 of last year and represented our 79th consecutive quarter of revenue growth. Recurring revenue this quarter grew 13% year-over-year, driven by strong momentum in Fulfillment, which grew 15% year-over-year. The total number of recurring revenue customers increased 5% year-over-year to approximately 32,000. For Q3, wallet share was up 8% year-over-year at approximately 9,500. For the quarter, adjusted EBITDA was $23.2 million, a 29% increase compared to Q3 of last year. We ended the quarter with total cash and investments of approximately $263 million. Turning to guidance. For the fourth quarter of 2020, we expect revenue to be in the range of $80 million to $80.5 million. We expect adjusted EBITDA to be in the range of $21 million to $21.5 million.
We expect fully diluted earnings per share to be approximately $0.20-$0.21, with fully diluted weighted average shares outstanding of approximately 36.5 million shares. We expect non-GAAP diluted earnings per share to be approximately $0.33-$0.34, with stock-based compensation expense of approximately $5.1 million, depreciation expense of approximately $3.5 million, and amortization expense of approximately $1.4 million. We continue to monitor the uncertainty around the duration and magnitude of the pandemic and the impact that a second wave of infections may have on economic activity. We are also taking into account the possibility of continued pressure on retailers, prolonged store closures, and bankruptcies, all of which would negatively impact our business. For the remainder of the year, we expect to see continued softness in analytics. We expect Fulfillment to remain strong.
For the full year, we expect revenue to be in the range of $309.3 million to $309.8 million, representing approximately 11% growth over 2019. We expect adjusted EBITDA to be in the range of $85 million to $85.5 million, representing 22%-23% growth over 2019. We expect fully diluted earnings per share to be approximately $1.09-$1.10, with fully diluted weighted average shares outstanding of approximately 36.2 million shares. We expect non-GAAP diluted earnings per share to be approximately $1.48-$1.49, with stock-based compensation expense of approximately $19.3 million, depreciation expense of approximately $13 million, and amortization expense of approximately $5.4 million. For the remainder of the year, on a quarterly basis, investors should model a 30% effective tax rate calculated on GAAP pre-tax net earnings. For 2021, we will provide detailed guidance on our Q4 earnings conference call.
For modeling purposes, we expect to deliver $93 million-$95 million in annual adjusted EBITDA in 2021. Given our history of strong operating leverage and the resilience of our SaaS business model, we remain confident in our ability to achieve our long-term adjusted EBITDA margin target of 35%. Recent trends in retail have accelerated the pace of EDI adoption. We expect this trend to continue as retailers and suppliers adapt and embrace e-commerce, driving demand for our Fulfillment solution. I would like to open the call to questions.
Thank you. As a reminder, to ask a question, you may need to press star one on your telephone. That's star one on your telephone keypad. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. We now have our first question, comes from the line of Matthew Fowle from William Blair. Your line is now open.
Thank you. My question. When we entered the pandemic and you guys had your earnings call in April, it seemed like that you could expect or that you were expecting perhaps somewhat of a negative impact from higher churn and bankruptcies to your growth rate. When you reported your second quarter results, it seemed like maybe you were thinking that it was going to be more neutral from a growth perspective, now the commentary kind of seems like that COVID could ultimately be providing a tailwind to your growth for 2020. Maybe you could just sort of walk us through how you're thinking on the impact from COVID on SPS Commerce has evolved over the past seven months.
Sure, Matt. There's different puts and takes. On the fulfillment side, we've seen an acceleration there. Our fulfillment growth in Q3 was approximately 15% year-over-year, which is an increase from what that growth rate was in Q1 and Q2. A lot of the dynamics we're seeing there are related to sort of that digital adoption that we're seeing retailers need to take maybe in a faster manner than they otherwise would have with their suppliers. Currently, we're seeing a positive as it relates to on the fulfillment side and adoption. Analytics, we're actually seeing a slower growth rate there. For the quarter, we were about a 4% year-over-year growth rate on analytics, that is an area that we have seen softness, and we anticipate continuing to see softness going forward.
As it relates to bankruptcies and churn, we have not yet seen an increase there, we do think that that is too early to really know what is going to happen there. That is something that potentially we would see that in Q4, potentially that's something after the holidays into 2021. Again, just a little too early to know. Going back to the 2008, 2009 time period where there was difficult economy, we were impacted about 1%-2% from churn and bankruptcies. Again, what we've seen demonstrated coming through is very positive as it relates to fulfillment, softness in analytics, and we have not had an impact, at least yet as it relates to churn and bankruptcies.
Very helpful. That's it for me. I'll pass the line. Thanks, Kim.
Thank you. Our next question comes from the line of Koji Ikeda from Oppenheimer. Your line is now open.
Hey, Kim and Archie, thanks for taking my questions. Great quarter. Congratulations. Wanted to ask you a question on community enablement campaigns. It looked like it was a really nice quarter there on the net customer adds of about 560. Is there anything particular to note there? I guess looking out further, how is the pipeline for community enablement programs looking for over the next six to 12 months?
Yeah, I would say in general, the retail team has done a really nice job on both selling new retail programs but also implementing in a tough environment. We feel really good about the performance of that team. They've stayed very focused. They've really done a nice job executing, and we foresee that that's going to continue to be strong, and it's one of the reasons why fulfillment has been so strong.
Thanks, Archie. I got one follow-up for either you, Archie, or Kim. Kind of taking a step back here, it really seems like the results here in the third quarter point to the shift to digital commerce is benefiting the business, and I think this is a follow-up to an earlier question from Matt. Just thinking about, would that imply if the world went back to normal tomorrow, say, with just retail stores opening back up fully, would that mean this would be a negative for SPS Commerce? Is there something bigger going on here, really, with the way that the suppliers and retailers are thinking about their supply chains for the future?
Well, obviously the move to drop ship, that's created some tailwinds. I would say, Koji, in general, just the whole focus on making your supply chains efficient, hands-free, automated has been at the forefront. Just small things like retailers having to, at the early days, of touching packing slips. That was a big deal to get rid of that. People are working now from home. Well, guess what? If you're mailing bills and you're mailing purchase orders, that doesn't work very well. I think there's just an overall trend, which we did see in tougher retail times in 2008 and 2009 towards automating the supply chain, which is a positive for fulfillment.
Thanks, Archie. Thanks for taking my question, guys. Congrats on a really great quarter.
Thank you, Koji.
Thank you. Our next question comes from the line of Scott Berg from Needham. Your line is now open.
Hi, Archie and Kim. Congrats on a good quarter. I guess I have two questions here. Archie, let's start with partner impact. Obviously, you talked about the tailwinds, both you and Kim, about on the drop ship and the endless aisle concept that you like to talk about is clearly taking hold today. Within your partner ecosystem, what's their impact in your business been like over the last two quarters as the pandemic has rolled out?
Actually, Scott, that's been a real positive surprise. I think in the April time period, we were very concerned about ERP implementations, what was going to happen there. That seems to have been moving along fairly well. Now, remember that many times we're later in the implementation, so some of it is an indication of what happened pre-COVID. That team has also executed very well and has not been a headwind to fulfillment whatsoever.
Got it. Helpful. Then from a follow-up perspective, Kim, I noticed in the quarter you're almost touching 70% gross margins again, I think 20 basis points or so away from it. How should we think about growth margins over the next couple of years? 70% is kind of the first time we've seen that level since 2012. Do you think you can get to the mid-70s as you gain the proper leverage over the next couple of years, or is this 80% opportunity? I think helping frame that now that you're getting closer to 70 would be helpful. Thank you.
Sure, Scott. Going back a few years ago, we were in more of that sort of mid-ish type 60s range. We believe longer term, when we get to adjusted EBITDA margins of approximately 35%, we think gross margin can be at least in the low 70s, when we're at, again, that sort of mid-30s or 35% adjusted EBITDA margin. The one caveat that I would bring to you, which I do say anytime this question comes up, with our business, it's always better to look at some of those measures on an annual basis, not as much specific on a quarter. In some quarters, for example, you may see a little bit less on the sort of hiring versus another quarter, as an example. In Q4, we will be adding customer success resources to meet the needs of our existing customers as well as future opportunity.
Again, our expectation is we'll continue to make improvement to gross margin until we get at least to that low 70s. Again, looking at it on sort of an annual lens is probably a better way to look at it versus a specific quarter.
Got it. Quite helpful. Thanks, and congrats again on the great quarter.
Thank you. Our next question comes from the line of Joe Vruwink from Baird. Your line is now open.
Great. Hello, everyone. Kim, if I heard you correctly, just on the initial thinking for 2021 EBITDA, I think $93 million-$95 million would suggest something less than the typical 20% EBITDA growth. I can appreciate the end of next year is a long way out, so it probably makes sense to be a bit disciplined in planning. Are there any specific assumptions behind that type of performance or any discrete, maybe, expenses that need to work back into the fold in 2021 that might specifically be driving that type of number?
Sure, Joe, appreciate the question. A couple things to think about when we're looking for next year. First of all, we're in a position this year where we've actually nicely exceeded relative to what our EBITDA expectations are for the year. The implied guidance we just gave is in excess of 20%, which is the typical average that we give. We're a little bit higher, closer to about that 22%. A part of that is because there are some spends that are not occurring this year because of the pandemic. Think of it as discretionary spend. Obviously, people are not traveling for the most part. Also, our attrition levels have been lower this year, which is great because we've been able to have our employees for longer, which is fabulous, and therefore you can get more output and more efficiency.
When we think forward to what we're seeing currently and what our expectations are for next year, we are going to be adding resources, particularly in the sales area and the customer success area. Again, making sure we're meeting the needs of our existing customers as well as future customers. There will be an increase relative to headcount in those two areas. Our hope is, hard to predict, but hopefully at some point in 2021, things will be a little bit more back to normal. Not certainly to the levels of pre-pandemic, but we would anticipate that at some point, folks are back to being in the office, traveling, et cetera. Again, not back to sort of historical levels, but certainly more than what we are seeing in 2020.
Those are really the two things that we've taken into account that may be a little bit different than some other years as we think ahead to the annual 2021 EBITDA dollars.
Okay, great. That's helpful. Thinking about your revenue growth in the quarter and maybe just decomposing it into the wallet share contribution to growth. The acceleration there, does that perhaps serve as any sort of leading indicator or point of contrast if you compare the current environment to 2008, 2009? My thinking is that the fact that your existing in-network customers are really leaning on SPS more, of course, that doesn't prevent the possibility of churn later on, but it would certainly seem to maybe imply that the model is much more durable. In other words, maybe we don't have to worry about the 100 or 200 basis point kind of churn potential because what you're seeing today is indicative of an environment that ultimately your existing customers could use more of your solutions.
I don't know if there's a way to contrast that with 2008 or 2009, but what kind of does the wallet share today tell you about maybe the next 12 months?
Sure. When you think about our fulfillment customers, they're going to fall in a couple different buckets. There's a group of those fulfillment customers that are using us. Think of it more documents, more activity with retailers, just more volume of how they're using us than historical. Some of those trends show up in the form of the increase in drop ship, the increase in e-commerce, as an example. We're seeing those trends, which are positive to a subset of our customers and are translating into more revenue from those customers. There are, however, some customers that are in verticals or industries that are more challenged in light of the pandemic than other areas. What is unknown at this point is what happens to some of those retailers or some of those suppliers as we go through sort of the holiday season and into 2021.
Again, for those customers that are in sections of retail that are performing extremely well, as well as sections where they're needing to be more nimble in a more electronic way, we're seeing a positive. In some other sections, I just think it's too early to know what could potentially be the outcome in higher bankruptcies or higher churn.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Tom Roderick from Stifel. Your line is now open.
Hey, Kim. Hey, Archie. Thanks for taking my questions. I'll echo the congratulations. You've clearly weathered the storm and come out stronger on the other side. Archie, I think it's been a long time since we've heard you use the phrase acceleration as it relates to the demands of your retail partners. I'd love to hear a little bit more about that dynamic. Koji asked a question kind of hitting on it, but maybe I'll go just a level deeper and ask, what gives you the sense that this is less temporary and more sort of secular in their acceleration of sort of transforming their business? Maybe you could talk a little bit about some of the other things that they're doing with their strategies beyond just EDI. Are you seeing ERP upgrades? Are you seeing e-commerce upgrades?
Are they making long-term project commitments that are really sort of looping you in for a multi-year commitment as opposed to just trying to patch fix it and get things up and running for drop ship or e-commerce or things like that? Talk about the secular trend here a little bit, if you don't mind.
I think overall, when we segment retailers, instead of just segmenting them into grocery and pet stores, et cetera, we're really looking at there's retailers that are accelerating through this. There's retailers that are performing kind of more normal, and then there's retailers that this has been a big negative too, especially on the luxury goods side. They all have a little bit different dynamic, Tom, as to where they are. If they're on the acceleration mode, they're doing things completely out of need, and they need to be able to onboard suppliers quickly. They need to make sure that their suppliers are automatically and quickly automated. They don't have the capacity to receive product into the distribution center with packing slips and no barcode labels. They weren't knowing when it was coming and how it was packed. They need responses real quickly.
In those cases, there's a big retail demand to be able to automate the supply chain. Those are very, very interesting. For instance, we've highlighted in the past, there's increased demand for somebody like Costco to onboard suppliers even faster than they've had in the past, which was 48 hours. Now we're looking at sometimes hours to make sure that they can receive an order and get going. The ones in the middle, I think they are needing to adjust with drop shipping. If they haven't done it, they need to adapt to that because for the supply chains, they need to add suppliers. They need to go back to their suppliers and increase efficiency. There's just an overall, I think, awareness on supply chains being efficient. There's been so much written and so much focused on the supply chain.
There's a little bit different sales cycle for the retailers that are, I would say, more in the hurting camp. If you can get them to think past the pandemic, then they are also looking at drop shipping. There's just a lot of dynamics. I think there's just an increased focus on supply chains and making them more efficient. I think the other dynamic is that suppliers and retailers are more likely to buy from the industry leader, and we're the clear industry leader by a long shot here. It's very obvious to them that with a strong balance sheet and 79 quarters in a row of profitable growth, that we're here for the long term, and they can buy their solution set and not worry if SPS is going to be around and what's happening to them.
We're not a small private company that doesn't give out financials. I think our sales team has also done a very good job of differentiating SPS Commerce from the rest of the pack.
Yeah. That's really good. The momentum, so clearly a ton of momentum on the fulfillment side, which is fantastic to see. When you look at analytics, you've clearly got one foot on the brakes on that, even though that's back to growing a little bit this quarter. What do you think is the sort of secular dynamic that changes the demand level for analytics and sort of reignites that segment of the business? Is that just the time period that we're in? Is that the nature by which analytics is consumed because it's a nice-to-have? What changes the demand structure for analytics?
I think the biggest demand structure will be confidence that their business is going to remain strong. Underneath the covers, we have customers that back in April looked like they were just crushed, right? You think about different industries that were dead. The golf industry is one that they were dead. There was no golf courses open. They couldn't play golf. The golf industry just came off an unprecedented year. We had analytics customers that did actually try to reduce their contract, look at what they really needed, and now they're actually adding. I think it's more of a confidence level of saying, "Are we done with this? Are we going to remain strong?
Are we going to continue to see the demand?" Things change pretty quickly from when you look back and you say what the world looked like in April, May, and what it looks like today. There's some industries that were just completely closed down in April and May, and they're actually just can't keep up with demand now. There's other industries that obviously have stayed down as well, especially in the luxury goods and apparel is hurting because people are home. People aren't dressing up. You're not buying a new suit, you're not buying fancy purses, et cetera. I think it's more confidence that they can do that discretionary spend and that they're going to have time to implement it and get the value.
Yeah. Great commentary. Thank you, Archie. I'll jump back in the queue, that was fantastic. Appreciate it.
Thanks. Thanks, Tom.
Thank you. Our next question comes from the line of Jason Celino from KeyBanc Capital Markets. Your line is now open.
Archie, again, thanks for fitting me in here. Retailers typically put off some of their bigger projects for Q4 to focus on the holiday season. Was any of the strength that we saw in Q3, maybe some pull-in at all, or?
It's a fascinating question because I know our tech team, usually Cyber Week is just a incredibly busy week, and I think because you have things like drop ship, at one time it was our volume, we were seeing triple the normal volume. Now it's still strong. It's more than double on the drop ship side. You're really wondering, well, what does the holiday season look like? Is there an acceleration? I think some of it, though, is just out of need, and what's interesting is although we've seen activity sometimes lower in Q4, underneath the covers, we're signing up enablement campaigns and getting work done to be able to kick those off in Q1. When you see, for instance, strong numbers in Q1 from community enablement campaigns, those are probably deals that were signed September through December 31st. Underneath the covers is activity.
It's just when the rollout and implementation comes. I don't know. I think we're in a more fluid environment of what the holiday season is going to be like. I do know that many retailers are very nervous about getting. Supply chains are again under focus. Can I get product? By the way, if I do drop ship it, what's the capacity of the FedEx and UPS' of the world? Can they get it to my customers in 2 days? If you want product at somebody's house on December 24th, I would recommend that you not place the order on December 22nd. You're probably going to be disappointed in 2020.
Yep. No, that makes a lot of sense. More products than just toilet paper that people will need. I think my second question, a lot of talk around the accelerated pace of EDI adoption. Help me understand some of this incremental spend. Is it just some of these retailers who are doing quite well right now? It sounds like some of them are reinvesting some of these dollars, but are they standardizing on one EDI provider? Are they upgrading older versions? It sounds like some of them are adding drop ship. Maybe can you talk about this dynamic a little bit more?
I think there's really a couple different dynamics. One is they are investing in expanding their footprint. Others are just expanding their supplier networks, the number of trading partners they have, because they're looking for different new drop ship suppliers. They're looking for new suppliers that can drop ship. They are expanding what we consider to be expanding of our total addressable market, which is really monetized by the total number of trading partner relationships. I think you see a lot of that, I think you just see that the suppliers that they are doing business with manually, they are feeling significantly more pain in a work from home or you have a supply chain that's already stressed.
If you have a stressed supply chain, you need to automate it, and you need to automate it today, or you're just not going to be able to move product through the distribution center, because you'd either need to build another distribution center, which you can't do overnight, and is also very expensive. I think there's a lot of focus there. As far as focusing on the way most retailers work, or all the retailers that we know work, is they do build a rule book, and they do more or less mandate that the suppliers use that rule book. As far as a certain EDI provider, we don't know of anybody that does that. What we want the retailer to do is have one provider, and that would be SPS Commerce, be the onboarding agent for all of their suppliers.
They can either use SPS Commerce, or they can use a competitor or a legacy software, and we would test and certify them. I think that's really the only way for a retailer to be effective, because if they try to force their suppliers to use a specific EDI provider, what happens when they have a multi-billion dollar large supplier that has their own EDI solution to force them to use SPS Commerce? We would advise them against that. We always do a non-exclusive approach, and we think that's the right long-term approach for our customers.
Okay, great. No, thank you for the color.
Thank you. Our next question comes from the line of Patrick Walravens from JMP Securities. Your line is now open.
Hi, this is Joe on for Pat. Thank you so much for taking our question. We're just curious around how you guys are thinking about M&A in the current environment and any commentary you can provide there.
M&A, I would say we continue to be very focused on our 3 main criteria, which is, 1 is pure customer acquisition, 2 is geographic expansion, and 3 is really product roadmap acceleration. The environment is, although different, it's very much the same in the fact that we're going to remain disciplined. The valuations are higher, which is making people think about selling. Some are doing well, some are hurting. We're approaching it like we have in the past. We continue to be out in the market. We continue to be active. We continue to make sure that our small competitors know that we have capital and are ready to deploy it. We're very much staying the course.
Great. Thank you.
Thank you. Once again, as a reminder, to ask a question, you will need to press star, then the number 1 on your telephone. That's star 1 on your telephone keypad. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.