Earnings Call: Q1 2018

May 2, 2018

Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Warkiva First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question Thank you. Mr. Adam Rogers, Director of Investor Relations, you may begin your conference. Welcome to the Workiva 1st quarter 2018 earnings conference call. This afternoon, we'll begin with comments from Chairman and Chief Executive Officer, mattersai. Followed by Executive Vice President And Chief Financial Officer, Stuart Miller. And then we'll turn the call over to questions. Also on the line today are Marty Vander Lyle, President and Chief Operating Officer and Joe Clint, Senior Vice President And Chief Accounting Officer. A replay of this call will be available until May 9th. Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section. As a reminder, today's conference call is also being broadcast live via webcast. Before we begin, I'd like to remind everyone that during today's call, we will be making forward looking statements regarding future events and financial performance, including guidance for our second quarter full fiscal year 2018. These forward looking statements are subject to known and unknown risks and uncertainties. Warkiva cautions that these statements are not guarantees of future performance. All forward looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this call. Please refer to the company's annual report on Form 10 K and quarterly report on Form 10 Q for factors that could cause our actual results to differ materially from any forward looking statements. Also during the course of today's call, we will refer to certain non GAAP financial measures. Reconciliations of non GAAP to GAAP measures and certain additional information are also included in today's earnings press release. And with that, we'll begin by turning the call over to our Chairman and CEO, Matt reside. Thank you, Adam, and thanks to everyone for joining us today to discuss our first quarter 2018 results. Wartsila is off to a strong start this year. Total revenue for the first quarter was $59,900,000 with subscription and support revenue up 17.5% and professional services revenue up 8.7 percent over Q1 of 2017. We outperformed our guidance for quarterly revenue, operating loss and loss per share. As a result, we are raising our full year 2018 guidance, which Stuart will discuss in more detail later in the call. We continue organizations for use cases and SEC reporting, capital markets, finance and accounting, Southeast Oxley And Internal Controls, audit, risk, compliance, and management and performance reporting. State and local governments and universities are also increasing their use of Wdesk. We continue to improve our Wdesk platform and build our ecosystem to meet growing customer demand for a broader base enterprise wide solution where we see great potential for widespread adoption and long term growth. We also continue to sign more partners. And functional expertise to help customers connect critical transactional systems directly to Wdesk. In March, we announced our partnership with Anaplan to help companies streamline performance and management reporting. Now I'd like to share a few examples of customer use cases that illustrate the breadth and depth of Wdesk usage. 3rd point reinsurance is using our spreadsheets to connect and update data directly from its ERP to Wdesk. A private software company is using Wdesk to create and distribute its monthly board report monthly performance report to its banks and annual report. And a large British construction company is using Wdesk for UK statutory reporting. We see growing demand and success in the capital market space, as customers and their advisors leverage Wdesk and our services for IPOs and other equity offerings debt offerings and M and A transactions to improve efficiency and accuracy in their transactions. We also continue to see strong demand for Wdesk for socks and internal controls. In the first quarter, Tax customers wins include CarMax, Boston Beer, Reading Bank of Commerce And EMC Insurance Group. We continue to see ground demand for Wdesk among private companies for a variety of use cases. New non public customers include companies in software, information technology, consumer electronics, and oil and gas. We also remain encouraged by the growth opportunities for Wdesk in performance and management reporting, including FP and A. Customers currently using WZS for these types of use cases include companies in internet security, healthcare products, and energy. We see increasing demand for Wdesk from state and local governments and higher education institutions. New customers in this market include public employee retirement systems, state government agencies, and local transportation authorities. For example, Florida Atlantic University And Temple University are using Wdesk to improve efficiencies and data consistency in their financial reporting and budgeting processes. And the city of Rochester, New York is using Wdesk to streamline its comprehensive annual financial report process. We remain the leader in the SEC compliance market where we continue to add customers at large and small public companies because Wdesk is widely regarded. As the best practice for ACG reporting, XPRL and in line XPRL. We're looking forward to our 7th annual user conference, which will be September 19 to 21st in Nashville, where we will offer sessions on wide variety of advanced ways to use Wdesk. In summary, our first quarter was strong. Adoption of Wdesk continues to gain traction with new and existing customers and our sales pipeline continues to build. We're excited about the multiple growth opportunities in front of us and we remain focused on executing on our initiatives. With that, let me turn it over to Stuart Miller. Thanks, Matt. I'll start with how our adoption of ASC 606 affected our Q1 income statement. Adopting the new standard reduced our Q1 professional services revenue by $1,700,000 and cut our loss by $155,000 in Q1. The accounting standard had no impact on cash flow, of course. Adopting ASC 606 required several changes to our balance sheet, which are detailed in the 10 Q we filed today. Now, let's review our first quarter results and thereafter, I'll comment on our second quarter full year 2018 financial outlook. We generated total revenue in the first quarter of $59,900,000, an increase of 15.4 percent from Q1 2017. Breaking out revenue by reporting line item. Subscription and support revenue was $46,500,000, up 17.5 percent from Q1 2017. 55 percent of the SMS revenue increase in Q1 came from new customers added Professional services revenue was $13,400,000 in Q1 2018, an increase of 8.7% from the same quarter in 2017. Professional services revenue rose beyond our expectations in Q1, despite the loss of revenue from adopting ASC 606. Some professional services revenue was recognized in Q1 that we had expected to be recognized Turning to our supplemental metrics. We finished Q1 with 3 119 customers a net increase of 2.94 customers from Q1 2017 and a net increase of 56 customers from Q4 2017. Our subscription and support revenue retention rate was 95.7%, for the month of March 2018, compared with 96% in December 2017 95.1% in March 2017. Customers being acquired or otherwise ceasing to file SEC reports accounted for a majority of our revenue attrition, consistent with our experience to date. With add ons, 18 compared with 107.6% in December 2017 and 100 and 6.6% in March 2017. We calculated revenue retention rates using rates using the new accounting standard when we have comparable data. For annual contract values in excess of $100,000. We had 335 customers in the first quarter, up 34% from 250 customers in Q1. 2017. For ACVs in excess of $150,000, we had 151 customers in the 1st quarter 50% from 101 customers in Q1 last year. Moving down the income statement talk about our results before stock based compensation. Release for a reconciliation of our non GAAP and GAAP results. Gross profit was $43,700,000 in Q1, up 15.3%. From the same quarter a year ago. Gross margin was 73% in the latest quarter compared to a gross margin of 73.1% in Q1 twenty seventeen. Now, breaking out gross profit, subscription and support gross profit was $37,800,000, equating to a gross margin of 81.4 percent on S and S revenue compared to $32,000,000 or a gross margin of 81% in Q1. 2017. Professional services gross profit in the first quarter was $5,900,000 equating to a 43.7% gross margin compared to $5,900,000 or 47.6 percent gross margin in the same period a year ago. In Q1 twenty eighteen, under the legacy accounting standard, our professional services gross margin would have been 630 basis points higher than what we reported under ASC 606. Research and development expense in Q1 was $19,100,000, an increase of 27% from Q1 last year, due to higher compensation, consulting expenses, and increased expenses as a percentage of revenue rose this quarter to 31.9% compared to 29% in Q1 last year, in line with the planned spending we discussed on our last call. Sales and marketing expense for the quarter increased 10.2% from Q1 last year to $19,900,000. Sales and marketing expense as a percentage of revenue this quarter improved 160 basis points from Q1 last year to 33.2%. General and administrative expenses were $8,300,000 in Q1, up 24.6%, compared with $6,700,000 in Q1 2017. G and A expense as a percentage of revenue in the latest quarter rose 100 basis points to 13.9% due to higher compensation and growth in administrative and shared services headcount. Operating loss was $3,600,000 in Q1 2018 compared to the operating loss of $1,800,000 in Q1 2017. Orkiva's operating margin contracted 240 basis points in Q1 2018 versus Q1 last year, primarily due to growth in headcount and compensation consistent with the in the comparable quarter a year ago. We posted net loss per share of $0.09 in Q1 2018 compared to a net loss per share of $0.04 in the same quarter last year. Turning to 2018, net cash provided by operating activities was $1,800,000 compared with cash provided at $2,600,000 the same quarter a year ago. At March 31, 2018, cash, cash equivalents and marketable securities totaled $81,100,000, an increase of expected method of implementing ASC 606 required a one time adjustment to a few accounts on our balance sheet at January 1, 2018. Our 10 Q that we filed today has the details, but I will highlight a few items of that adjustment. Consistent with the new standard, we began capitalizing all sales commissions over the expected life of the contract resulting in an increase in deferred commissions of $5,300,000 that we will amortize over 3 years Accounts receivable increased $16,900,000 under the new accounting standard because we no longer gross down invoices that are both expected dollars, appearing in a new account called customer deposits, representing prepayments on services contracts. This item appeared in deferred revenue under the previous accounting standard. Under ASC 606 deferred revenue primarily reflects invoiced amounts on subscription and support contracts. We recorded an increase of $6,900,000 to deferred revenue at the January translation. The net effect of the adjustments to assets and liabilities was a one time improvement accumulated deficit of $8,400,000, which reflects both revenue that we will not recognize on the income statement and commissions that will be expensed the starting balance sheet under ASC 606 at January 1 to the end of the first quarter. At March 31, total deferred revenue decreased $2,300,000 from January 1. Long term deferred revenue declined $2,000,000 because contracts with terms of greater than 1 year continued to amortize. Meanwhile, we proceed to standardize on 1 year contracts. Short term subscription and support deferred revenue declined $366,000 as we continue to migrate customers From quarterly and annual contracts, a group of contracts totaling approximately $1,000,000 were excluded from deferred revenue pending finalization of contract renewal terms. We're making good progress on converting customers to annual contracts, we expect to convert 2019. Turning to our guidance for 2018, our guidance on a non GAAP loss from operations and non GAAP loss per basic share, excluding the impact of stock based compensation, please refer to our press release for a reconciliation of non GAAP and GAAP guidance. For the second quarter of 2018, we expect total revenue to range from $55,700,000 to $56,200,000, We expect the year over year growth rate of subscription revenue to continue to outpace the growth rate of services revenue in the 2nd quarter. We expect GAAP operating loss to range from $16,900,000 to $17,400,000 non GAAP operating loss is expected to be in the range of $10,000,000 to 10,500,000 dollars. We expect GAAP net loss per share in net loss per share is expected to be in the range of $0.24 to $0.25. Our loss per share guidance assumes $43,300,000 basic and diluted shares outstanding. We are raising guidance for the full year 2018 as follows. We are raising the midpoint of our previous full year total revenue guidance by $1,300,000. We now expect our full year total revenue to range from 135.5 percent to $237,000,000. We expect the growth rate of subscription revenue to continue to pace the growth rate of services revenue for the full year 2018. We're also raising the midpoint of our previous full year GAAP operating loss guidance, this time by $1,100,000 and non GAAP operating loss guidance raising by $2,300,000. We now expect GAAP operating loss to range from $56,300,000 to $57,800,000 non GAAP operating loss expected to be in the range of $30,000,000 to $31,500,000. We continue to expect Fortiva to be cash flow positive in 2018. We expect GAAP net loss per share to range from $1.32 to $1.35. We expect non GAAP net loss per share to be in basic and diluted shares outstanding. In summary, Waikiva posted another strong quarter. Demand remains robust for our platform, and we remain focused on executing our growth plan to capitalize on our multibillion dollar market opportunity. We will now Your first question comes from the line of Terry Tillman Junior from SunTrust Robinson. Your line is open. Yeah, hey, thanks, everyone. Let me make sure I get all the names right. Matt, Marty, Stewart, Joe and Adam. Hi, all. Jill and Adam. Jill, sorry. And if there's a Joe too, sorry about that. I really worked on that. Gosh. Pretty good. I'll shut up and ask questions now. Yeah, the first question, and I don't know if I'm just reading too much into this. But when I look at your press release, you you've changed kind of the nomenclature here. It used to be enterprise productivity. And and you've said it other ways in the past in terms of, like, tagline describing the business. In this press release, I see a leader in data collaboration reporting and compliance solutions. Data collaboration is is broad. It seems like that term. And I know your platform is extensible and could, you know, really serve a lot of use cases, but you know, as you all talk about branding and thinking about your markets you're serving. Am I reading too much into this, or are you all kind of evolving some of your go to market strategies in different ways tap into these broader opportunities? Well, I'm not sure if you're reading into it too much, but I think it's in general, as you know, the data is quite important and our customers are continuously making sure that they can deal with both the data that they offer, the data that they bring, the legacy data and so forth. So we're seeing quite a bit of emphasis on, from our customers to make sure that they feel comfortable to be able to bring data into WDS because it's, it's, it's, turning out to be a very important thing for them to feel that there's a edge reported and a trusted data within Wdesk. So I think you're probably reading too much into it, but it allows us to be able to have as much expansion as possible because within the context of our penetration to enterprise, not only that we are focusing on with our initiatives, where Wdesk has a usage, but we're also opening and leaving expansive enough that to be able to also get some, input allow the customers to use Wdesk for a variety of different uses. So to be able to have that expansive view, allows us to be able to have more freer way to deal with W. S. Within an enterprise. Okay. And in terms of SCC reporting, you know, you commented on continuing to win customers, but maybe the health of that business and related to that, I mean, I feel like I'm hearing more about capital markets. So maybe you could talk about SEC reporting and the health of it as well as how material capital markets is becoming? Well, both of them actually, I mean, when you talk about SEC reporting, that is, that's a very good market for us and we continually grow that market. Our XPL and I XPL capabilities are allowing us to do a lot of different things. And So we are very confident that it's a growth business filled with us. Having said that, I'm glad that you brought that cap markets business, that business is surprisingly, is quite, quite healthy for us. And it's continually booming and it's continually getting a lot more traction, especially as the more the law firms or other entities who are involved in those process see and appreciate the capabilities and efficiencies that bring into the, bullish on the Capital Markets business. And I think, yeah, we're going to continually start seeing some domination in that market in the future. And and just maybe one one last one here, Stuart, in terms of deferred revenue, I I think you had called out. I mean, there's obviously a variety of, kind of moving parts here and dynamics some of the PS out of it now. The long turns, obviously, draining down and going probably to to a minimal number. But you mentioned $1,000,000 or so kept out of the balance and maybe that's because of some of the contracts and when they renew getting them on different terms. Should we think the rest of the year deferred revenue, not that it's ever been a great proxy for demand, but could that be volatile the rest of the year with some of these moving parts Thank you. Nice job. Yes, it could be. I mean, I think though you make a good point like the change in deferred revenue as a component of billings is, because of the different maturities we have in our contracts, makes billings not predictive of bookings or predictive of future revenue. But I think we should see some growth in deferred revenue. Apples to apples for the rest of the year. Your next question comes from the line of Tom Roderick from Stifel. Your line is open. Yes, hi guys. Matt Van Vliet on for Tom. Thanks for taking my questions. Hi. I guess building on Ontario's last question there, around the deferred revenue and certainly a lot of noise there, But as you look into the bookings performance from the first quarter and maybe more importantly what your pipeline build looks like for the rest of the year, You know, what what gives you the confidence that, you know, you'll continue to accelerate through the year and raising guidance And maybe what are the biggest drivers, whether it's by product or by vertical that's really driving the pipeline at this point? So I think there's several engines. Certainly, SEC continues to be a strong contributor. As Matt mentioned, the capital markets side has got good traction. You know, we've got a good demand, out of, out of Europe and Canada. We've got good demand at a socks. The pipeline looks really good on the enterprise side. Again, which we think we'll start to see more visible to people from the outside later this year. So I'd say it's, you know, across the board, we're pretty comfortable with it. And then looking at some of the large deal metrics, or the larger contracts that you have out there, how does the mix, of those larger deals skew, whether it's, those customers have more use cases that they're that they're paying for, or is it, you know, the the size of the company is more indicative of of where those numbers are going to be. And, when you look at that relative to your existing customer base, how penetrated do you feel like you are maybe looking at it on a 2 to 3 year basis of, you know, we can double that. We can triple that in terms of getting those customers into maybe that 150 k bucket relative to what you have in the existing customer base now? So, I'll take part of that and matter, Marty can chime in. But we're, as you know, we don't forecast any of our supplemental metrics We have seen strong growth in the $100,000 in the $150,000 range. But the 150,000 range is 151 customers out of our 3000. And you know, and it's up 50%, which is terrific. But it is we have a long way long runway to continue to penetrate that group, which is the good news. The, a lot of those are multiple use case customers, but there definitely are some companies that are just big, that start big. So it's a bit of both. And then lastly, as you continue to make pretty strong progress on getting to a positive free cash flow and, really started turning the corner there. What's the next big driver, leveraging the model to make the next step of getting to positive EBITDA? Is it just scaling up the revenue side of the business? Or do you feel like you can sort of plateau on some of the middle of the P and L spending, and accelerate the leverage on the model? Yes. So, as you know, we have been, cash flow positive, 6 of the last seven quarters and we've given guidance that will be cash flow positive for the full year. So we're feeling good about that. In terms of getting to EBITDA positive. Certainly that's a long term goal. We haven't put any time horizon on it. But that's consistent with the target P and L model that we've given. It's really going to be driven by growth at the top line coming out of the investments that we've made, in the last couple of years. So I think we gave some indication in the February call that we were at a sort of full run rate on our guidance for 2018 on the expense side, and then hoping to get the lift at the latter half of the year on the revenue side. And that's certainly the main focus and goal of all people who work at Workiva. Great. Thank you. Your next question comes from the line of Brian Peterson from Raymond James. Your line is open. Thanks and great job. So first off, maybe just a high level question. On in line EXPRL, I know you put out some data last month. I think it was 84% of facts filed recently, were through Wdesk. So I want to understand, what is the latest from a regulatory perspective related to inline XPRL? And how do you think that changes your competitive positioning? This is Marty. I think that the it's pretty well established just based on the international community that EXPAREL will all be in line at some point. The SEC is is making noise, although they haven't announced when it will become mandatory. Being the leader in that and having a lot of experience with it, obviously, helps us. So I think it will help our competitive position. It'll certainly help us much sooner in the foreign markets. Okay, got it. Thanks Marty. And maybe just some clarity on the capital markets momentum you're seeing. I just want to understand how does that monetization work is obviously we're familiar with the IPO process, but there seems to be a lot of constituents involved. So do you have a larger license or user base initially in that process that transitions into maybe a smaller recurring stream. Just want to make sure I understand how that monetization works. Thanks guys. Yes, I think you had it right. It's it starts with a bigger team and, in almost all cases, we roll right into doing their compliance work. And in many cases, we roll into their socks work. So it really not only do we get the, the initial, number of seats, but it really gives us a situation where we do get to land and expand over time. Understood. Thanks guys. Thanks. Your next question comes from the line of Michael Namara from Credit Suisse. Your line is open. Thanks. This is Alex Hu on for Michael. Congrats on the results thanks for taking our questions. So Matt or Stewart, I believe the customer account with ACV greater than 100,000 actually accelerated this quarter. Was there anything you know, worth noting or calling the marketplace that drove this acceleration. And then was the uptick driven by new customers you signed this quarter or simply just continuing progress on your land and expand sales strategy. And within these larger customers, do you generally see higher retention rates given how mission Oracle WDS is to that? Yes, it's a good question. I think that it's, I would say partner leverage would be sort of a big contributor to some of the larger deals. And just success penetrating existing customers across additional use cases. So, you know, we're there are a number of contributors, to that, to that factor. Just to comment on the, on the retention, clearly our retention is extremely high across all of our different markets. But certainly the in the larger installations, it even gets stickier. So your assessment is correct. Okay, great. And then just one follow-up, Stuart, Q1 beat Henley on the bottom line, but Q2, I think OpEx came in a little above what we were expecting. Can you just sort of help us understand where the investments are being made and whether there are any one time items that we should be aware of for Q2? Sure. Yeah, and as you know, we have this is the first time we've hit the guidance on Q2, but, the big part of that is the fact that we pulled forward about a $1,000,000 worth of services revenue into Q1 that we thought we were going to be recognizing in Q2, the work just got done in Q1. And that piece is nonrecurring. And so, that reflects a big piece of it. The other piece of it is on the expense side We didn't hire as quickly in Q1 as we had originally thought we would and that pace started to quicken at the end of of March. And so, that's where you'll see the higher expenses in Q2. All right. Very helpful. Thanks for taking our questions. Your next question comes from the line of Rob Oliver from Baird. Your line is open. Hi guys, thanks for taking my question. Stuart, I just wanted to drill down a little bit on your comment about strong enterprise pipeline and maybe being a little bit more visible back half of the year. Certainly compliance and collaboration are key themes we're hearing from all of our covered companies and many of the checks that we do. So just wanted to get a little bit more color on that. And then as a follow-up, I know you guys, I saw the Rochester press release earlier in the quarter and you know, clearly one of the the key selling points for them was, you know, the ability to integrate with their older systems and clearly SLED has a lot of antiquated systems. So just wondering what this does for you guys in terms of the Is that a new sales force and how you're attacking that? Thank you guys. Thanks, Rod. Well, on the this is Marty. On the SLED side, You know, that's a very large market and there's thousands and 1000 of government entities out there. They're a slow to adopt, but a herd mentality. And certainly, we're very pleased with our progress there. Starting to penetrate states and cities and we're very pleased with that and it definitely is a large market for us. Yes. And on the enterprise side, Martin, you might want to comment this too, but we've made a very deliberate investment, on sales and marketing, around penetrating the enterprise and have, you know, rolled that out at the beginning of the year and are seeing good progress in the pipeline that we expect to turn into bookings. But those are big deals. And, it's broadening the touch points that we have at customer beyond just the business user and to the IT or shadow IT side. And, it takes time, but we like what we're seeing. Your next question comes from the line of Mike Grondahl from Northland Security. Yes, thanks guys. Hey, what product category maybe was the most surprising to you guys in the quarter kind of as it affected the pipeline? I'd say capital markets. We're really very pleased with, the traction that we're getting there recognition by the the family of law firms, the group of law firms that dominate that business, really beginning to understand the efficiencies that Wdesk brings to an otherwise very painful process. An average capital markets transaction, roughly how many seats are required? Is there such a number? Yes. So, I guess we're really not pricing it based entirely on seats. It's it's more about the process and the value that we bring to that process. Got it. That's probably good for you guys. Any what's the update on the partnership strategy? Well, that means that's, partnership strategy is going extremely well. We are, making a lot of headways with broadening our ecosystem. We're very pleased with that, Martin, do you want to add anything? No, we're just very happy with our progress. Any specific ones to call out or ones that are maybe driving the pipeline more than others? No. Got it. And then lastly, just anything new on the competitive environment that you guys have seen? I mean, I think that, is one of your, colleagues or competitors mentioned earlier, and they were hearing a lot more about collaboration and the value the collaboration brings enterprises. So I think that, there's a lot of focus from a lot of software companies on that, but nothing affecting our numbers, but we certainly watch that carefully. Your next question comes from the line of Stan Zlotsky from Morgan Stanley. Hey, gentlemen. Good afternoon. And thank you so much for taking, our questions. So operating margins in Q1 were very, very strong. These are significantly better than our expectations and definitely consensus expectations. It looks like consensus was mis modeled a little bit for Q2 up margins and that's why, optically that looks that looks odd. But as we think about the rest of the year, right, why do margins step down, step down so much? How much is conservatism? I think Q3, you get an impact you get impacted by your, by the user conference. But is there anything else, is there like an expected some kind of a ramp in op margin The reason I'm asking is because the trajectory over the year looks somewhat similar to what we saw last year where you Q1 started off very, very nice op margins. And then as you've hired people, your margins declined a little bit as we went through the year. So anything for us to keep in mind? Yes. So two things on that. One is just as you were indicating that, and I mentioned earlier that, we didn't hire people as rapidly as early in Q1 as we thought we were going to. And so, we'll be more of the full run rate in the 2nd quarter than we were in the quarter, on expenses on headcount. The, the second thing is remember that Q1 is our seasonal high point in terms of revenue and particularly on it that affects the services side. So the contribution from, contribution margin from services side is at its peak in Q1. So some of that falls in and helps the on that line. I'm just sorry to the operating income line. Got it. Okay. Alright. That's helpful. And just one more on net retention rate. I I realized it's a very volatile number. But is there anything on on the 105% that we need to keep in mind, is there, is there, it was a little bit lower than what we saw in recent quarters? Yes, it does bounce around a little bit. We didn't, we certainly watched that very carefully. We didn't see anything there that gave us any cause for concern In closing, I want to thank you for joining us today. And operator, you may now end the call. This concludes the Workiva First Quarter 2018 Earnings Conference Call. You may now disconnect.