Earnings call transcript: Stem Inc. Q1 2025 reports revenue beat, stock surges

Stem Inc. (STEM) reported its first-quarter 2025 earnings, surpassing revenue expectations with $32.5 million compared to the forecasted $31.27 million. The company also posted an earnings per share (EPS) of -$0.15, exceeding the anticipated -$0.19. This performance, coupled with positive operational developments, led to a 6.19% increase in the stock price during aftermarket trading. According to InvestingPro data, the company currently shows signs of undervaluation, though it operates with significant debt and faces cash burn challenges. InvestingPro subscribers have access to 14 additional key insights about STEM’s financial health and valuation metrics.

Key Takeaways

• Stem Inc. achieved a 27% year-over-year increase in total revenue.
• The company reported its first positive operating cash flow of $9 million.
• Stem Inc. announced a 27% reduction in workforce, aiming for $30 million in annual cost savings.
• The stock surged 6.19% in aftermarket trading following the earnings announcement.

Company Performance

Stem Inc. demonstrated strong performance in Q1 2025, with significant year-over-year revenue growth driven by its software and services segments. The company has positioned itself as a leader in commercial and industrial solar asset monitoring software, expanding its presence in utility-scale and international markets. Despite economic and regulatory uncertainties in the clean energy sector, Stem Inc. has continued to secure strong bookings, particularly in utility-scale solar.

Financial Highlights

• Revenue: $32.5 million, up 27% year-over-year
• EPS: -$0.15, compared to -$0.19 forecast
• GAAP gross margin: 32%
• Non-GAAP gross margin: 46%
• Operating cash flow: $9 million positive

Earnings vs. Forecast

Stem Inc.’s actual EPS of -$0.15 beat the forecast of -$0.19, marking a positive surprise of approximately 21%. The revenue of $32.5 million also exceeded expectations by about 3.9%. This performance indicates an improvement in operational efficiency and market positioning compared to previous quarters.

Market Reaction

Following the earnings release, Stem Inc.’s stock experienced a 6.19% increase in aftermarket trading, reaching $0.441. This movement reflects investor optimism about the company’s financial performance and strategic initiatives. The stock’s recent performance contrasts with its 52-week range, highlighting a positive shift in market sentiment.

Outlook & Guidance

Stem Inc. reaffirmed its full-year 2025 financial guidance, focusing on improving profitability and expanding its software and services revenue. The company aims to enhance its PowerTrack EMS for storage and hybrid assets, targeting growth in these areas. Despite potential tariff impacts, Stem Inc. remains confident in its core business resilience.

Executive Commentary

CEO Arun Narayanan stated, "We are now better positioned for sustainable growth," emphasizing the company’s strategic focus on software and services. CFO Doran Hole highlighted, "We generated positive quarterly cash flow from operations for the first time in our history," underscoring the company’s financial progress.

Risks and Challenges

• Economic and regulatory uncertainties in the clean energy sector could impact future performance.
• Potential tariffs on hardware may affect project deployments.
• Workforce reduction could pose operational challenges in the short term.
• Market saturation in the solar asset monitoring segment may limit growth opportunities.
• Dependence on international market expansion could expose the company to geopolitical risks.

Q&A

During the earnings call, analysts inquired about the impact of tariffs on hardware and project deployments. Stem Inc. addressed its cost reduction strategies and margin improvements, providing clarity on its operational adjustments and future growth plans.

Full transcript - Stem Inc (STEM) Q1 2025:

Conference Operator: Greetings, and welcome to the Stem Inc. First Quarter twenty twenty five Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded.

It is now my pleasure to introduce Ted Durbin, Head of Investor Relations. Please go ahead.

Ted Durbin, Head of Investor Relations, Stem Inc.: Thank you, operator. This is Ted Durbin, Head of Investor Relations at Stem. Welcome to our first quarter twenty twenty five earnings call. Before we begin, note that some of the statements we will be making today are forward looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements.

We therefore refer you to our latest 10 Q, 10 ks and other SEC filings, including the supplemental materials, which can be found on our website. Our comments today also include non GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our earnings release, which is on our website. Arun Narayanan, CEO and Doran Hole, CFO and EVP, will start the call today with prepared remarks, and then we will take your questions. And now I will turn the call over to Arun.

Arun Narayanan, CEO, Stem Inc.: Thanks, Ted. Hello, everyone, and thank you all for joining us today. We made significant progress advancing our strategic priorities in the first quarter with early success evident in our results. But before diving into these results and our outlook, I want to highlight important changes we have recently implemented in how we structure our business internally. Since becoming CEO, a key priority has been implementing organizational adjustments to realize our strategic shift.

We have transformed our operating model by establishing four distinct business units that clearly define how we organize and run our business. Our four business units are software, professional services, managed services, and OEM hardware. Each unit will have full P and L responsibility and accountability for their financial performance, including EBITDA and cash flow metrics. This new structure represents an intentional shift in how we manage our business and we believe it will deliver multiple strategic benefits. It empowers our leaders to make efficient market responsive decisions about resource allocation investment priorities.

The new structure also enables more precise tracking of return on investment across our portfolio, allowing us to optimize capital deployment towards our highest growth opportunities. Additional details about these business units are available in our supplemental materials on the IR website. I’d like to once again emphasize that while these business units guide our internal operations, they may differ from external reporting segments. We look forward to sharing more about these changes and their impact in the coming quarters. Directly related to these changes in how we organize and run our business, on April 9, we announced a targeted 27% reduction in force that we expect to result in $30,000,000 of annual cash cost savings, including an expected $24,000,000 cash benefit in 2025.

These reductions were thoughtful and consistent with our software focused strategy and will preserve our ability to grow software revenue. To that end, we maintain the full strength of our PowerTrack team, which is central to our near term growth strategy. Our changes also preserve our ability to honor commitments to customers across all business areas. This restructuring was a critical step for us to execute on our three key priorities, which I laid out on our fourth quarter earnings call in early March. First, to grow our software revenue with a renewed focus on PowerTrack.

Second, to reduce our cost structure and drive profitability and third, to revamp our software development. I’m pleased to say that we have made definitive progress on all three priorities. Let’s begin with an update on our refined strategy that is focused on growing software revenue. As I mentioned earlier this year, one of the key factors that drew me to STEM was PowerTrack’s distinctive position and strong reputation in the market. PowerTrack is a market leader in the commercial and industrial or C and I segment of solar asset monitoring software.

During the first quarter, solar annual recurring revenue or ARR was up 10% sequentially and up 24% year over year. These results clearly demonstrate the tangible success we are having in growing our business to provide more scalable recurring and profitable revenue streams. We are continuing to invest in PowerTrack to be able to serve smaller utility scale customers, which to us generally means in the range of 20 to 100 megawatts. Utility scale deployments are much larger than C and I, and our market share in this segment is modest presenting significant growth opportunities. We are seeing momentum in utility scale with nearly triple the bookings in the first quarter compared to the same period last year.

We are also investing to grow our software deployment presence in international markets. Managed services including our storage software Athena also performed well in the first quarter. We drove storage ARR higher by 4% sequentially and 31% over the same period last year. Our software continues to deliver substantial value and ROI to our customers who continue to face challenges in maximizing the value of their energy storage assets. Our strategic focus for storage is centered on software and services, particularly for brownfield opportunities that enable faster revenue conversion.

Additionally, we are experiencing growing momentum in our professional services offering. Our team of industry experts has established themselves as trusted advisors and thought leaders in the clean energy sector. We are excited about this offering because these professional service engagements can in turn drive downstream business development opportunity for our software solutions. Now a discussion of our second focus area, cost savings and profitability. During the first quarter of twenty twenty five, we reached several significant profitability milestones.

We delivered strong gross margins driven by robust growth across our high margin software, services and edge device offerings. Additionally, we generated positive quarterly cash flow from operations for the first time in our history. We believe this validates both our refined business model and strategic execution. Importantly, our first quarter results do not reflect the financial benefit we expect to realize from the organizational changes and cost savings we recently implemented. We expect to see improving profitability as we move through the year.

Lastly, let’s discuss our third priority, our software development revamp. We are focused on protecting and expanding PowerTrack’s success in the C and I market through continuous product refinement, investment in differentiating product capabilities and responding to customer feedback. We continue to develop our PowerTrack EMS software with the goal of entering new markets such as when projects deploy standalone storage or co located solar and storage installations. We are excited to soon bring to market software that brings the asset monitoring capabilities we have mastered in solar to both storage and hybrid assets. As part of our portfolio review, we have made the difficult decision to pause on further development of two products, PowerBeta Pro and Asset Performance Management or APM.

Looking forward, our refined software roadmap emphasizes AI integration across our development process and product suite positioning us to accelerate the delivery of innovative solutions to our customers. As mentioned in the previous call, we are aiming to bring a step change to develop our productivity by using generative AI methods in our life cycle, and we will have updates in future earnings calls. I would also like to address the current macro environment. While the clean energy sector faces uncertainty due to evolving economic and regulatory policies, we are maintaining our upward momentum. Today, our bookings pace and pipeline development remain robust across our core offerings.

Our software and service offerings are largely exempt from the current types of tariffs being considered. Some of our offerings such as PowerTrack compatible edge computing devices will face a limited tariff exposure. These generally pass through to our customers. On the OEM storage resales business, which forms a smaller portion of revenue, we will work with our suppliers and customers to negotiate tariff absorption or diversify to domestic suppliers. With all this in mind, we are pleased to reiterate our full year 2025 financial guidance across all metrics.

Lastly, I want to welcome both Vasudevan Guruswamy and Krishna Shivram who have joined our board recently. They both bring significant energy industry, financial and technology expertise to the Board, and I am glad to have them with us. With that, let me turn the call over to Donald.

Doran Hole, CFO and EVP, Stem Inc.: Thanks, Arun. I’ll start with a quick review of our first quarter twenty twenty five Overall, our quarterly results were in line with the expected cadence of our 2025 guidance that we announced on our last quarterly call. Total revenue was up 27% year over year, driven by strong growth across the business. Importantly, software revenue was up 17% versus Q1 twenty twenty four reflecting continued strong performance from PowerTrack and increased storage software activations.

We generated a record GAAP gross margin of 32% and our non GAAP gross margin of 46% was close to an all time high. The significant margin expansion versus prior years evidences the value of our refined strategy focused on higher margin software and services revenue while reducing our reliance on battery hardware resale. Adjusted EBITDA for the quarter improved versus Q1 twenty twenty four, not only driven by margin expansion, but also by continued operating cost discipline. We generated $9,000,000 of operating cash flow, which as Arun mentioned is the first quarter of positive operating cash flow. We think this milestone proves that the company is on the right strategic path.

Additionally, we generated just over $2,000,000 in net cash during the quarter, growing our cash balance to $59,000,000 at quarter end. We plan to remain disciplined with our dedication to cash conservation, margin improvement and working capital usage. Turning to our operating metrics. As we announced during our fourth quarter earnings call, we’ve introduced enhanced operating metrics that should provide stakeholders with better visibility into the key drivers of our financial results. During the first quarter of twenty twenty five, contracted backlog and car both increased sequentially largely due to solar bookings.

Total bookings were lower sequentially due to slight seasonality in this metric. We generally see heavier bookings in the second half of the year. We saw solid growth in solar ARR and AUM and in storage ARR versus the fourth quarter of last year. Storage AUM sequentially declined slightly because we removed the AUM associated with Power Bidder Pro, which we are deemphasizing as Arun discussed previously. Now on to guidance.

Today, we are pleased to reaffirm across all metrics the 2025 guidance we announced last quarter. As Arun said, our revenue performance and expectations for 2025 remain solid despite recent economic policy changes and uncertainty. At this point, we see no discernible slowdown in deployments by our customers. Our backlog is solid, and we have good visibility on ARR and revenue growth, thanks in part to our enhanced focus on driving the newly announced business units. From a margin perspective, we expect to pass through any tariff related impacts to customers while preserving our target margins.

Regarding our adjusted EBITDA and operating cash flow outlook, we are on track to meet our targets. Our recent cost optimization efforts, including the targeted workforce reduction, are expected to yield immediate and lasting financial benefits. These efforts are expected to generate $30,000,000 in annual cash cost savings with $24,000,000 of that benefit realized this year. While our headcount reduction was 27%, we expect to achieve dollar savings in the high 30% range, substantially exceeding our initial target of 20% that we talked about last quarter. And lastly, on liquidity, we believe our solid cash position provides us with sufficient runway to execute our business plans.

As Arun discussed in April, we implemented a new business unit structure. As part of these changes, we plan to enhance our financial transparency through segment reporting. We think that this increased visibility will provide our investors with deeper insights into the value propositions and performance drivers across our different business lines. The organizational changes mark a significant milestone in STEM’s evolution in support of the strategy shift announced last fall, positioning us to drive stronger financial discipline, accelerate smart decision making, and ultimately deliver enhanced shareholder value through more focused execution. While we expect to provide insight to investors on the financial performance of these business units, the formal segmentation in our financial reports may differ slightly.

Finally, we issued our definitive proxy statement last week and set our shareholder vote for June 4. As we mentioned last quarter, we have asked shareholders to approve a reverse stock split of our common stock. This reverse split is intended to allow us to regain compliance with New York Stock Exchange listing standards. Now I will pass the call back over to Arun for closing remarks.

Arun Narayanan, CEO, Stem Inc.: Thanks, Doran. In closing, I want to directly address our team, our customers and our investors. First to our team, we have recently undergone significant organizational changes including a difficult but necessary 27% reduction in our workforce. To those individuals who have departed STEM, we are grateful for your contributions. To our current team members, I recognize this period of change creates uncertainty and challenges.

Your resilience, professionalism, and unwavering focus on customer success during these changes has been remarkable and is part of what attracted me to STEM in the first place. Second, to our customers, we remain committed to providing you with superior software and services that maximize the value of your storage and solar assets. We are doubling down on our commitment to enhance the features and functionality of our software products to deliver the insights and performance you need. Our financial position is getting stronger and we are all well positioned to grow with you throughout the market cycles. Lastly to our investors, we are appreciative of your support and trust in the company and that you are standing with us.

We are now better positioned for sustainable growth. We believe that our refined product focus on our core software and services along with our streamlined organization strengthen our path to profitability. With our industry leading solutions and dedicated team, I remain confident in STEM’s future. With that, operator, let’s open the line for questions please.

Conference Operator: Thank you. We’ll now be conducting a question and answer session. Our first question is from Justin Clare with ROTH Capital Partners.

Justin Clare, Analyst, ROTH Capital Partners: Hey, guys. Thanks for taking my questions. Wanted to start off here just on the bookings environment and how that’s evolving. So given the tariffs, just wondering, how is your ability to secure new storage bookings for U. S.

Projects, potentially being affected? And then I’m just thinking through for customers that might not have batteries in The U. S. Right now, are your customers looking to contract, whether it’s for, you know, batteries that would be sourced domestically, from Southeast Asia or or even potentially from from China? Just wondering if it’s are people in kind of a wait and see mode, or are you still seeing, contracting, in the current environment?

Doran Hole, CFO and EVP, Stem Inc.: Thanks, Justin. It’s Torin. I’ll I’ll I’ll try to take a stab at this one first, but I I’ll open by saying you you, I guess, it’s just a kind of a reminder as far as looking at the overall guidance for the year. The OEM hardware sales like the battery transactions you’re talking about are, you know, not a significant component of the business going forward. So while we’re continuing to have really active dialogues with the customers that we’ve got in our backlog and those who are close to PO, we’re we’re looking at, all of the, well, volatility and what the tariffs may end up looking like, etcetera.

And we’ve been in direct contact with probably the three major, you know, OEM providers that we’ve been integrating with and spending quite a bit of time on on what the tariffs will look like. However, when I look at our overall plan for the year, the cadence of those types of POs at at this point in time is really impacting our outcomes, at at least not not at this stage. I don’t think I can get into the nuances of particular countries or particular directions at at this point. But, of course, as you know, we we deal with both, you know, domestic and and and Chinese players there. Right.

Right.

Justin Clare, Analyst, ROTH Capital Partners: Okay. I guess what I’m trying to get at is is, you know, you may not be selling the hardware yourself, but if there’s a limited supply of hardware, it might be a tougher environment for you to contract, the software for storage projects. And so I guess I’m wondering if if that’s being affected. And then I guess it’s possible it could be affected on the solar side as well, but maybe to a lesser extent. Maybe could you talk to about that, in regards to solar and and storage?

Doran Hole, CFO and EVP, Stem Inc.: I’ll I’ll tackle both of those. So the the plan for 02/2025 is largely driven by activations of things that we’ve already got in the kind of, call it, contracted backlog or in car where, you know, our managed service offerings are, you know, just really dependent upon activations. These are projects that batteries are already

Justin Clare, Analyst, ROTH Capital Partners: on track

Doran Hole, CFO and EVP, Stem Inc.: and we’re, you know, they’re they’re going through the process of finalizing construction, commissioning, etcetera. And that’s really kind of what we’re looking at for 02/2025 on the storage side for managed services. When you move into solar, we we, as you intimate, have not noticed a real slowdown there in terms of our bookings. Bookings have continued to be strong. We are constantly out there talking to customers, as you know, and we’re we’re not really seeing a significant impact there.

And as you know, the systems first of all, software and services doesn’t really hit tariffs. But really what we’re talking about here is the pace of deployment. And the pace of deployment, we haven’t seen slowdown at at this point in time at this juncture. You know, our customers are still, developing new projects. They’re still mapping out construction of new projects.

And our edge device and software solution is something that comes, you know, kind of at construction time. It’s a very small line item in the overall construction cost, and we feel very comfortable that if we do end up with some tariff impact, we’ll be able to pass along those costs to our customers without much resistance.

Arun Narayanan, CEO, Stem Inc.: Justin, this is I’ll answer the question. Can I just add one piece to it? I mean, I would like you all to just maybe think about our software as something that adds value to our customers’ operations. And there’s always an opportunity for us to continue to sell additional value added components into that customer account as well. So activations and deployments in new deployments is one dimension, but continued engagement with the same customer is perhaps another dimension to think about as well.

Justin Clare, Analyst, ROTH Capital Partners: Got it. Okay. One more, just on the comments that you made in the prepared remarks. It sounds like you expect improving profitability quarter by quarter this year. Just wondering if you could share a little bit about more what the drivers are.

So are you anticipating primarily the improvement to come from the OpEx reductions that that you’ve announced? Or do you see revenue growth or potential gross margin expansion as as we move through the year?

Arun Narayanan, CEO, Stem Inc.: Okay. Just just to take a stab at it before I hand over to Don as well. If there there are dimensions to it as well, one is, the nature of revenue and the fact that the cyclicality pushes the revenue towards the second half of the year is one piece that affects operational profitability quarter by quarter. But then the other piece obviously is the way we are looking at managing our operating expenses as well as opportunities that we continue to look at in that space beyond the reduction in force and trying to bring efficiency to everything that we do.

Doran Hole, CFO and EVP, Stem Inc.: And, Justin, it’s Doran. I would only add that that ability to really hone in on, margins and operating expenses on a business unit by business unit basis is now much more clear for us going forward with the four business units.

Justin Clare, Analyst, ROTH Capital Partners: Got it. Okay. Alright. Thanks, guys.

Doran Hole, CFO and EVP, Stem Inc.: Thanks, Jess.

Conference Operator: Our next question is from Thomas Boys with TD Cowen.

Thomas Boys, Analyst, TD Cowen: Appreciate you taking the questions. Maybe the first one, just on the brownfield opportunity that you highlighted in the prepared remarks. You know, it’s kind of a way to sidestep, you know, interconnection congestion and things that have been, you know, playing me. The energy, you know, sector at large, You know, are there specific geographies that you’re you’re targeting for, first? Or or maybe I’m trying to get get a better understanding of maybe the size of that opportunity.

Doran Hole, CFO and EVP, Stem Inc.: So this is Doran. I’ll tell you, geographically speaking, I think that we’ve got some core geographies where we operated our managed service, platform. And as you’ve seen our, you know, assets under management continue to grow, what we’re seeing is a lot of opportunities for, the market shifting and changing providers in those particular cases. There’s not a single geography where that is jumping out as being being attractive. I think it’s a little bit more broad based, but it is very much connected to the geographies where we are already operating.

Managed services as a business line requires you to, one, like a company to step up and stand up a a platform, a rock, the services, individuals who need to be actually working the software tools in order to actually bring value to the customers. And the more volume we have running through in terms of megawatt hours, gigawatt hours, the more profitable that business line is gonna become. And those brownfield opportunities, therefore, really do present a good opportunity for us. And we are, you know, we don’t have anything in particular to announce today, but we are, you know, pursuing a number of situations in that in that area.

Thomas Boys, Analyst, TD Cowen: Great. And I appreciate that.

Arun Narayanan, CEO, Stem Inc.: Just just one one other dimension on it is managed services and and brownfields is one thing. If you look at PowerTrack and the ability to deploy into PowerTrack, there are remarks that you have made, maybe to think about it in three groups. One group is the C and I group or the c and I segment, is growing and our dominant dominating market share in that space. What we can do in the utility scale space as we bring PowerTrack EMS online as well as the ability to grow internationally into other markets as well sort of helps us look at an overall picture.

Thomas Boys, Analyst, TD Cowen: Understood. Appreciate that. Maybe as my follow-up or as my second question is just, could you speak to the nature of the the PowerBidder Pro contract, you know, the kind of removal from NASA’s under management? Was this from customers where since you, you know, discontinued, you know, active development for the the product that they elected not to continue? And then, you know, was I just wanted to better understand maybe the rationale for the deemphasizing that product.

Is it just it’s difficult to differentiate market participation software? It’s competitive and maybe not worth the time and attention? Just really interested for your thoughts there.

Arun Narayanan, CEO, Stem Inc.: Thomas, this is Arun. You’ve mentioned many of the contributing factors in your question itself. As we look at our software strategy, we want to make investments based on the overall growth potential and our ability to execute and actually deliver that growth on on a period by period basis. So looking at all of those factors, we think it’s best for us to focus on PowerTrack and associated offerings, and that’s what we’re doing.

Doran Hole, CFO and EVP, Stem Inc.: And this is Doran. I’ll just add from a financial metric perspective. As you’re looking at the numbers, you’ll probably notice a slight decrease in the, assets under management on the storage side. The PowerBidder Pro contracts are fairly low ASP, and therefore, we actually we continue to increase our ARR, despite the fact that we actually pulled those, pulled those systems out. So that also speaks to some of what Arun was talking about there.

Thomas Boys, Analyst, TD Cowen: Got it. No. Appreciate it. Thanks. I’ll hop back in queue.

Conference Operator: Our next question is from Dylan Massano with Wolfe Research.

Doran Hole, CFO and EVP, Stem Inc.: Yes. Hi. Good afternoon.

Dylan Massano, Analyst, Wolfe Research: I just want to start with the cost reductions that were announced during the quarter. Can you just clarify to what extent were those reductions already contemplated when you you originally, issued 2025 guidance?

Doran Hole, CFO and EVP, Stem Inc.: Sure. This is Doran. I’ll just start with the the quick comparison is that what we talked about in the last call was a 20% reduction in run rate end of twenty four OpEx that we were mapping out. What we actually did was quite a bit higher than that as a result of the ultimate decisions that we made to realign the business units and realign our staffing accordingly. So, you know, while we talked about 27% by headcount, the dollar reduction there was close to, you know, high thirties percentage.

And when you kind of compare that to the 20% before, clearly, we’ve we’ve kinda gone above and beyond. That’s purely financial look.

Dylan Massano, Analyst, Wolfe Research: Gotcha. Okay. Thanks. And then for my follow-up, just looking at gross margins for the quarter, obviously, outperformance relative to guidance. Can you just give a little more color around, specifically what kind of drove that this quarter?

Was it revenue mix between hardware and software? Or how should we think about gross margin kind of trending through the rest of the year?

Doran Hole, CFO and EVP, Stem Inc.: So I think we’ve talked about guidance. This is Doran. We talked about guidance in terms of what our gross margin will look like. Obviously, q one, we came in above the non GAAP gross margin range that we’ve got for the year. I think we’re, of course, baking, you know, some conservatism in there to ensure that we respond to the nature of today’s macro environment.

But at the same time, the the the straight answer is product mix. So less OEM hardware in the mix, higher software and edge device with higher margins, and that that’s the change in strategy. That’s the change in business model, and and that’s the way we we expect to see things moving forward.

Arun Narayanan, CEO, Stem Inc.: I would go back to what we are focused on. We’re focused on selling those higher margin offering, and that’s what you’re seeing as as a result in the in the earnings report.

Thomas Boys, Analyst, TD Cowen: Great. Thank you very much.

Conference Operator: Thank you. There are no further questions at this time. This does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.

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