Good morning, and thanks for dialing in today for our call to discuss our fiscal second quarter 2021 earnings results. Before we begin, I'd like to remind everyone that the statements made during this call, including in the question-and-answer session at the end of the call, may include forward-looking statements, including statements regarding financial projections and future performance.

All the statements that relate to our beliefs, plans, expectations or intentions regarding the future are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on our current expectations. Actual results may differ materially due to risks and uncertainties, such as competitive factors, difficulties and delays inherent with development, manufacturing, marketing and sale of software products and related services and general economic conditions.

For a discussion of these and other risks and uncertainties affecting our business, please see the risk factors contained in our annual report on Form 10-K and our most recently quarterly report on Form 10-Q and in our other SEC filings and in the cautionary statement contained in our press release and on our website. The company undertakes no responsibility to update the information in this conference call under any circumstance.

In addition, the development and timing of any product release as well as features or functionality remain at our sole discretion. Our press release related to today's announcement was issued over the wire services earlier this morning and has also been furnished to the SEC as an 8-K filing.

The press release is also available on our Investor Relations website. On this conference call, we will refer to non-GAAP financial measures.

A reconciliation between the non-GAAP and GAAP measures can be found on our website. This conference call is being recorded, and a replay is available for the webcast.

An archive of today's webcast will be available on our website following the call. With me on the call this morning are Sanjay Mirchandani, President and Chief Executive Officer of Commvault; and Brian Carolan, Chief Financial Officer of Commvault.

Sanjay and Brian will each share opening remarks and commentary before we open the call for Q&A. Now I'll turn the call over to Sanjay.

Sanjay?

Thank you, Mike. Good morning and thank you for joining us today.

I'm pleased to share that we delivered another quarter of balanced top line growth and improved profitability. Key elements of our vision are coming together.

In Q2, we saw continued adoption of our portfolio driving total revenue growth. Metallic, our SaaS platform crossed into multi-million dollar ARR.

The net dollar retention rate for our subscription business exceeded 100% for the second quarter in a row. With our focus on go-to-market execution, just as we had in Q1, we landed multiple seven figure deals in the Americas.

Additionally, Europe had a solid quarter with year-on-year and quarter-on-quarter growth. Adding to this, our focus on operating efficiency drove healthy margin and profit growth.

Our strategy as evidenced by these results is working. When I talk to customers, two things continue to be on top of mind, navigating their journey to the cloud and securing their data in face of threats like ransomware.

Our goal is to provide solutions that make it easier for customers to address these challenges. Regarding cloud, our newly introduced solutions and partnerships are helping customers move to the cloud faster.

Each quarter, we're seeing double-digit sequential growth in the amount of customer data moving to the public cloud. Our Metallic SaaS offerings are also off to a strong start.

Metallic now protects tens of thousands of Office 365 mailboxes and endpoints and more than five petabytes of data for paying customers with 80% of those customers being net new to Commvault in Q2. And we're excited by the many accolades and awards it has received, most recently, a coveted Best of VMworld award.

Between Metallic’s rich innovation roadmap, strategic partnership with Microsoft and the upcoming expansion into new markets and geographies, we look forward to sharing more updates in the quarters to come. Regarding security, security conscious customers dealing with the scourge of ransomware are trusting Commvault to ensure they can recover their data and get that businesses back up and running.

Ransomware incidents appear to be at an all-time high. The FBI estimates a 400% increase in ransomware attacks that were pre-pandemic levels.

And we're seeing this too across our customer base. In September alone, our customer success team before more than 1,000 business critical restores worldwide for our customers following ransomware and malware attacks, we are proud to be the trusted partner our customers turn to when ransomware strikes.

The rise in ransomware is one of the reasons we launched a security dashboard in Q2 to help customers identify and resolve security risks. Additionally, with ransomware, top of mind, we introduced Commvault Disaster Recovery, a standalone product that simplifies the customer experience.

We believe these strengths in cloud and security represent a tailwind for us because we have the innovative solutions to help customers address both these critical needs. While innovation is our lifeblood, I also understand how real innovation can sometimes add to complexity and undermine value.

I saw this when I was a CIO. This is why we know that innovation with simplicity is the key combination.

In July, we launched a new flagship product, the next-generation Commvault HyperScale X. It can capsulate the power of all things Commvault, world-class data protection, Hedvig distributed storage and seamless connection to the cloud via Metallic, delivered as an integrated scale-out appliance, all managed under a single, simple and elegant pane of glass.

This is the vision we laid out a year ago and delivered on it in Q2. In addition with HyperScale X, we introduced DevOps oriented multi-cloud container data management, and expanded data protection capabilities with Kubernetes workloads.

While our competitors are struggling to pull together, they contain a strategy and making pre-announcements, our customers already confident be using Commvault storage and data protection for containers in production. Further bringing together the priorities around cloud and ransomware, Metallic Cloud Storage Service is the next exciting new offering in a rapidly expanding SaaS business.

This new service makes access to secure cloud storage as simple as a click of a button within the Commvault Command Center, our single pane of glass. It is built with layered air-gap cloud security, and we believe it is the ultimate cloud-based solution for ransomware recovery.

We believe this cloud core strategy is driving our return to growth. Our industry-leading technology paired with newly packaged products and modern licensing options is making it easier for customers to accelerate the cloud journeys, embrace new workloads, reduce mass data fragmentation and manage security threats.

Commvault has once again become the leading force in our industry, whether it is the most urgent topics of the day, such as cloud security, critical emerging areas, such as containers or formidable partnerships like that of Commvault and Microsoft that add value for customers. Our approach is not only best-in-class, it's becoming the industry playbook.

Bottom line, we have the right vision, customers and prospects are seeing the value of our portfolio and we are executing. With that, let me turn it over to Brian to provide some financial highlights and our Q3 2021 outlook.

Over to you, Brian.

Thanks, Sanjay, and good morning, everyone. We're pleased to report for second quarter in a row, we were able to deliver top and bottom line growth.

Specifically, we successfully executed on subscription renewals, added more new subscription and SaaS customers, posted healthy ARR growth and had another quarter of solid margin expansion. I'll briefly review the results.

Total revenue was approximately $171 million, up 2% year-over-year. Software and Products revenue increased 5% year-over-year to $72.3 million.

Software revenue growth was driven by large deal revenue and continued success in our subscription business. Large deals represented 66% of software revenue in the quarter, compared to 64% a year ago.

Revenue from software transactions over $100,000 increased 8% year-over-year to approximately $48 million. The volume of these transactions increased 11% year-over-year.

Average deal size was approximately $319,000. Revenue from these large deals grew across all three regions.

We closed multiple seven figure deals in the quarter with the Americas leading the way. We're encouraged by the growth in the large deals pipeline as we enter the second half of our fiscal year.

We also saw a rebound in deals under $100,000, revenue from these transactions grew both sequentially and year-over-year with solid improvements in the Americas and EMEA regions. Fiscal second quarter services revenue was approximately $99 million or flat year-over-year, as we strategically transition certain perpetual maintenance customers to subscription licensing arrangements.

These conversions benefit us over the longer-term because of the associated opportunity to drive higher lifetime value with an active customer. Let me now discuss our continued transition to a more recurring revenue based model.

As a reminder, FY2021 marks the first significant year of our subscription renewal cycle, which represents a positive inflection point for our business. We expect the renewal cycle will continue to be a revenue tailwind for the next several years.

As our business moves more toward recurring revenue over time, we will be increasingly focused on the following three operating metrics to align our reporting with the way customers consume our products and services. They are, subscription as a percentage of software and products revenue, recurring revenue as a percentage of total revenue and annual recurring revenue or ARR.

Now I'll take a moment to discuss each of these three metrics. In Q2 FY2021 subscription revenue represented 53% of total software revenue.

We added approximately 200 subscription customers and our subscription net dollar retention rate exceeded 100% for the second consecutive quarter, which indicates we're executing on expansion opportunities across our base. Our total recurring revenue increased 6% year-over-year to $129 million and represented 75% of total revenue in the quarter.

Last quarter we introduced annual recurring revenue or ARR, we define ARR as the annualized value of Commvault’s recurring revenue streams at a point in time. As of September 30, our ARR increased 9% year-over-year to approximately $483 million.

Now I'll discuss expenses and profitability. Q2 FY2021 total expenses, including both cost of sales and operating expenses were flat year-over-year at $140 million.

Growth in software and products revenue combined with our discipline around expenses resulted in EBIT of approximately $29 million a 17% year-over-year increase. EBIT margin expanded 210 basis points year-over-year to 16.9%.

Let me now shift gears and discuss cash flow and the balance sheet. For the quarter, we generated approximately $25 million of free cash flow, we ended the quarter with $394 million in cash and cash equivalents and continue to have no debt on the balance sheet.

I would like to address the non-cash impairment charge that was included in our press release issued earlier this morning. This accounting charge is primarily due to the revenue performance of the standalone Hedvig product, which did not meet our initial amount options.

As a reminder, this storage technology is absolutely strategic to our portfolio was the primary motivation behind our acquisition and was integrated into our HyperScale X offering in less than a year. The integration of this technology gives us capabilities that remove reliance on third-party vendors will drive meaningful gross margin expansion on our HyperScale platform and improve the overall customer experience.

Now we'll discuss our financial outlook for Q3 FY2021. For the third quarter of FY2021, we expect total revenue of approximately $174 million to $176 million.

We expect software and products revenue of $77 million to $79 million. I'll take a moment to provide some additional color on Q3 revenues.

With the launch of HyperScale X in Q2, we will start to see the elimination of pass-through hardware revenue from appliance sales. The absence of this pass-through hardware revenue represents a fiscal third quarter top-line headwind of several million dollars.

On the expense side, we expect to start seeing gross margin benefit from reduced third-party royalties associated with HyperScale X, the reduction of the aforementioned hardware pass-through revenue and cost efficiency measures that we have implemented in our customer support function. We remain disciplined in aligning our underlying operating expense base to current revenue levels, we expect Q3 2021 total expenses to be down modestly year-over-year resulting in EBIT margins of approximately 17%.

Our projected share count for Q3 is approximately 47.5 million shares. Now I will update you on share repurchases.

Our board recently increased the share repurchase authorization amount to $200 million and extended the program for another year to March 31, 2022. The enhanced authorization reflects the confidence that we have in the momentum of the business and the return potential we see from current price levels.

We plan to be active with the repurchases this quarter. It is also our expectation that share repurchases will be the primary use of cash for the foreseeable future.

Finally, we look forward to providing long-term financial targets and additional details around our capital allocation policy in the near future. Stay tuned for additional details.

Now I'll turn the call back over to Sanjay for some closing remarks. Sanjay.

Thanks, Brian. Organizations need to embrace data differently in the world of multi-cloud.

They need to be the best data protection, the best storage management and the best SaaS experience, and all of that has to be simple, seamless, integrated and extensible. We've been on this path for more than a year and have solutions to these challenges today.

And as you've seen lately, our competitors are scrambling to keep up. We are confident in the opportunity ahead.

We have the right playbook, right vision, the right portfolio, and the focus on execution that we believe will drive sustainable and profitable growth in fiscal year 2021 and beyond. A renewed commitment to share repurchases and our intention to provide long-term financial targets in the new future underscores our confidence.

With that, let's open it up for questions,

Hi, good morning guys. Excuse me, wanted to ask a few questions about go-to-market.

So the – some of the channel folks that we talked to mentioned that you guys will be implementing some pricing changes starting November 1. Can you elaborate on those first?

And then I have a follow-up.

Sure. Good morning, Jason, it's Brian here.

Thanks for dialing in. Yes, so we actually as part of our launch in July we came out with some simplified pricing and packaging to align to more customer usage.

So it's going to be more cloud and consumption-based and we think this is going to actually smooth the go-to-market efforts and also the sell-through the channel. It's early days, but we've got some good feedback on it.

And we've just made it more granular for customers to really align to the workload as well as to getting on board with us.

And it really just supports our continued move to more recurring subscription-based consumption-based offerings.

Okay. And Sanjay for you, just what are some of the areas on the go-to-market side that you still feel like you guys could be doing a better job of?

We've done a lot of the work in that space as you've been tracking with this, Jason. I think we're going to just continue to make sure that our offerings, our subscription related offerings, our SaaS related technologies, our newer products like our DR product are understood and easy to adopt.

So it’s just really fine tuning if anything, I think we've got a pretty good handle on where we want to be, most of the stuff we want to do, we've already put in place. I'd say we had – and I’d say if I had to pick a theater, just I'd say we continue to work on our Asia Pacific and Japan business.

So those are sort of broadly broad strokes, by and large, I think things are – as you can see from the results, things are beginning to happen.

And just on a large deal side, are you happy with where the mix of the business is right now? I mean it still seems like you're pretty dependent on these large deals, but maybe there is more of them.

So maybe it was just a quick comment on your comfort level with sort of a mix of large deals today.

Jason, it’s Brian here. So I think it's about balanced growth.

I mean, we’re pretty pleased with our ability to perform in that large deal segment right now, especially in the current environment, the Americas and EMEA and even APJ all scored seven figure deals in the quarter with Americas having multiple. So I think that's goodness for us.

But we also start to see some stabilization, as I said in the deals under $100,000 with solid contributions from the Americas EMEA. So I think that was good.

Thank you.

Hi, this is Jake on for Aaron. Congrats on the great quarter.

I was wondering if you could talk a little bit more about your subscription ramps, specifically the upsell opportunities you're seeing there.

Sure. Yes, thanks for dialing in.

So we're – as I said on the call, we're pretty pleased with the start in terms of our subscription renewal business, it's our second full quarter in for a meaningful subscription cycle and what's reassuring and gratifying is that the upsell and cross sell motions are starting to show up with the net dollar retention rate on all of our subscription business being firmly over a 100%, that also goes for ARR. And what's also reassuring is that the second half opportunity for our subscription renewals is going to be greater than the first half.

So that gives us further confidence in the second half.

And the other thing I'd just say more from a product point of view, everything we brought to market, just about everything we brought to market in the recent past, whether it's our Metallic offerings, DR, our workload based pricing and our ability to sort of deliver all of that from a single pane of glass vastly simplifies customer's ability to pick and choose what they want to use with us, and that's in a subscription basis. So ease of consumption becomes a key in that model.

And we're also for example selling off the marketplace with Azure, because all of these things make adoption super easy and all directed towards subscription.

Great. And just as a follow-up, I was wondering if you could give us a little bit more color on what you're seeing in the enterprise market right now?

I can give you something, Jason. Enterprise as you can – without going back into the numbers, it's – we're seeing incumbency continues to be important at this time, knowing the technology, knowing the skills, having the skills, knowing our roadmap, these sorts of things help customers make better decisions in the enterprise.

And especially in times like this, ransomware is top of mind to customers rightfully so. And our technology, even though we’ll produce data protection lends itself really well to ransomware type attacks, our new Metallic Cloud service ties into our core product, giving customers more capabilities.

So we think the enterprise really leaned towards that, starting to lean towards that and our new DR product which we brought a couple of months ago sort of launched a couple of months ago is also seeing good traction from a POC, even sales. So all in all I'd say that enterprise customers are doing fine.

I think we're the structural shifts that we saw that had to happen a few months ago are in place and hopefully holds us in good stead as our technology is super relevant to the segment. So it's – we think we're in a good place there.

Great. Thanks so much.

Hey guys, this is Joe on for Brent. Appreciate the question.

It's good to see the commitment to the growth on the top line and discipline on the bottom line, but your cash flow for the first half of the year is down year-over-year. So when should we see cash flow start to track more evenly with EBITDA?

Hey Joe, it's Brian here. Just to touch on that, we typically are backend loaded in terms of our cash flow.

So with improving profitability in the second half will become increased cash flows. So just keep in mind that will still happen and it tends to be coming off also a weaker Q4 that was the COVID impact from Q4 FY2020 that impacted our Q1 cash flows.

But again, we'll see accelerated momentum in the back half of the year.

Okay. But there is nothing else that stood out as a mormon.

No.

No.

Okay. And then you touched on it a little bit already, but just in regards to guidance, how should we think about the renewal opportunity in 3Q, maybe you can just size it relative to 1Q or 2Q?

And then, I think we talked about a little bit last quarter, but any commentary on the rough opportunity size in fiscal 2022 relative to 2021?

Yes. So we haven't – well stay tuned for that, as part of our longer-term targets, we will issue longer-term color around the subscription renewal opportunity beyond FY2021.

So just big picture, we had approximately $50 million of software opportunity related to subscription renewals in FY2021, about 60% of that sits in the second half of the year. And that's something we've said on prior calls.

Okay. Thank you guys.

Welcome.

Yes. Thanks for taking the questions.

Just on the net retention rate, Brian, could we categorize it as over 110%, is that a fair starting point? And I know you might fill up those later on that, obviously a very important metric to track.

Can we start there?

We're not ready to kind of disclose that level of specificity, but I would say it's firmly above 100%.

Okay. And then the subscription business 53% right of software.

Is there a way to accelerate that and accelerate the decline in pass-through hardware or – and maybe set through sales compensation or channel alignment uncertain marketing programs. But I guess – is that just a function of the renewals and customers coming up for more capacity than transitioning the demand?

I guess, what's the path to 100%, how long could that take?

So let me unpack that, because there is a couple of different concepts in there. One is just let me get the hardware component out of the way, I did mentioned that, for this fiscal quarter when you do a year-on-year compare, there are several million dollars of a headwind to top line growth, because we are going to start ending the past-through hardware, we're going to begin that this quarter, it'll continue on and basically be out of our P&L, almost by the end of this fiscal year, I'd say, but it's significantly reduced.

So with respect to subscription however, all of our efforts now are leaning more towards subscription and consumption-based offerings. And we're going to emphasize that in terms of our go-to-market motions, we're going to lead with subscription offerings.

I don't know if we ever get to 100% of software because, there are certain industries and geos that just don't consume that way, but we are going to continue that migration as part of our longer term targets that we will issue, we will talk to that guidance, but we've come a long way in just a couple of years, I mean, just back in 2017, this was less than 10% of software, now it's firmly over 50%. We continue to see that increase, and it will increase and it's aligning to the more modern way that customers want to consume.

And keep in mind, when we start also selling more Metallic which is off to a great start, by the way, we've got a solid seven figures of Metallic ARR that's built into our numbers that will also drive more repeatable revenue, not necessarily on the software line, but total revenues where it can continue to become more repeatable.

And I guess, the renewal cycles obviously accelerate the subscription percentage, right Brian?

Absolutely. Yes.

So FY2022 will be greater than FY2021, and this will be a revenue tailwind for us for the foreseeable future.

Just to clarify a couple of things, I'll jump off here. The pass-through hardware business, you've never have added margin to the pass-through business, right, the pass-through revenue?

Very little margin on that component, so we're excited by this HyperScale X launch, because it reduces our reliance upon pass-through appliance sales and it's going to drive lower, lower overall cost because there's less royalties, there's no royalties on that.

Okay. Last thing, I think you typically give enterprise deals as a percentage of license revenue, or maybe some function of that.

Did you disclose that this quarter?

Yes, I did. That was – it was 66% of our software revenue.

The deal count was up 11% and the average deal size was $319,000.

Thanks guys.

Thanks, Alex.

Good morning and congratulations on the results. I would ask maybe, Sanjay, if you could just reflect on, it's been slightly over a year since you first introduced Metallic, just what's been the biggest surprise to you around the introduction of this product and what still needs to be done from your perspective?

Jack, so firstly, we've built the product in record time, brought it out, put it on our – to be announced in October, put it on preview and then the – and then sort of the pandemic climate hit us. We turned around and made the product available to anyone, any business in the United States that wanted to avail of our endpoint capabilities, and we gave that to them till September.

In parallel, we've had some of those, I wouldn’t say customer, but some of the folks had used it become customers, and then we've seen patterns of customers by one service and expand into more than one service and we're very pleased. I mean, we're very pleased, that said this last quarter was probably the full quarter where we were in the marketplace with Microsoft where the partnership was signed, and we are starting to see traction.

We launched more services. We're getting into new markets very, very, very soon.

Substantial new markets and increase in the portfolio. This is a big part of our future.

This is a big part of how customers wish to consume technology from everything we're seeing, and I am – and the team and I are super glad we made the decision last year to build it and bring it to market.

Great. And thanks for the perspective around that.

And just as a follow-up. I was wondering if you could touch a little bit more on the value proposition of HyperScale X, sort of thinking from the go-to-market strategy, are you going to need to perhaps have more of a developer-led go-to-market strategy around this?

Or is this going to touch into different buying centers?

Sure. But just the way I look at HyperScale X, it's our flagship product that brings everything that we're building – brings our vision at one place.

So, as much as customers could consume SaaS separately or parts of our technology in and off themselves, HyperScale X is a converged capability that brings our data protection, our storage capabilities, and extending into the clouds from Metallic, all in one place. You can plug on top of that DR, you can plug on top of that our file optimization capabilities, and we make it available in pretty much every way that a customer may want to consume it.

For example, if they want to use it in DevOps oriented workflows, we have the richest set of rest APIs that allows them to do it. So we are getting queries from customers who say, hey, can we – we are building – we're building this thing in a DevOps model, can we use data protection or your storage capabilities in that model, and the answer is a resounding yes.

And if they want to continue using it in the way – in a more traditional ways or through SaaS, we've got that too. So, that's why HyperScale X is such an important platform for us, because that is the cornerstone, that is where we bring everything together and deliver in a way that customers can use it either through their own workflows or ours.

Got it. That's really helpful.

Thanks for taking my questions.

Pleasure.

Operator, is there another question?

Hey, guys. Thanks for the question.

Brian, you had mentioned a strategic maintenance change. Can you walk us through what that was and how that might have impacted revenues this quarter and maybe if possible how it could flow through for the rest of the next year or so?

Sure. So good morning, James.

So you saw how our software growth is 5%, services growth is somewhat muted. This has been strategic for us over time is that we're proactively working with our customers to convert their historical legacy perpetual maintenance contracts into a more modern subscription offering and this helps us greatly on a number of different fronts.

One is, it adds more certainty to our revenue streams over time, it's a more modern way to consumer products that aligns with the way customers want to consume it with cloud workloads and more offerings that we have that are going to be more consumption based. And also we're able to drive the cross-sell and up-sell opportunities with that and grow with them so that net dollar retention rate that I spoke about for our subscription business that exceeds firmly over 100%, that's testament to our ability to grow the overall lifetime value with the customer.

So we're pleased with that. The services revenue will be muted because of it, but I think over time this will continue to add to our ARR growth, and it also will be an incentive for customers to continue to expand their product portfolio with Commvault.

Got it. And then as part of these transitions, we're about three-quarters of the way to, you mentioned you won't get to 100%, but we're roughly 75% coming from software today, but at what point do you think we actually start removing kind of the revenue headwind related to the transition and we don't have kind of the pricing impact in this kind of movement?

So let me just clarify, James, its actually, it's 53% of our software is subscription based recurring and 75% of our total revenue is recurring in nature. Again, we'll issue more longer term targets as part of an Investor Analyst Day.

So stay tuned for that, but it'll continue to track north of where it is today. And as we have more opportunities in FY2022 and FY2023, it will become a headwind for us.

We're squarely focused on this. I think it's a really good thing for our business model and also aligns to the way customers want to consume our products.

Got it. Thanks for the questions, guys.

Yes, I wanted to dive a little bit deeper on the revenue opportunity from the kickoff on the HyperScale X. Obviously, we've got a capacity need expansion going on with your largest customers, but you also talked about kind of a cross-sell and up-sell opportunity, as you look at the rollout of this, of the launch of the new flagship offering, where do you see the biggest opportunity?

Is it really more on the capacity expansion of your customers as they consume and need more data information management capability or is it cross-sell or up-sell?

Specifically the HyperScale X, Eric?

Yes.

For me, HyperScale X is a one-stop shop for the various use cases customers want. So capacity is one, but it's really ease of use.

It's the ease for them to be able to deploy this, data protection, built-in workflows with DR if they want it, cloud-burst for ransomware, we've got everything in one place. And this, it gives you sort of, it has new functionality, new workloads, obviously more capacity containers.

So it's a one-stop shop and it's the easiest way for customers to get started or expand. So I'd say the answer is both.

Okay. All right.

And then margin question for you, you had talked about the operating expenses inching up and I'm kind of jumping back to the Q1 earnings call. You had expected them, the operating expenses to rise throughout the year.

We were actually, at least based on my math, it looks like the non-GAAP operating expenses were roughly flat in Q2 versus Q1? Do we still expect those operating expenses to rise now in the out quarters?

So at least for Q3, we're guiding that it's going to be slightly down year-over-year. This is a matter of just we're trying to fight any expenses and trying to come back in terms of the temporary ones that we're able to reduce such as lower T&E and event costs and things like that from the new world order.

And we're maintaining a discipline around all non-essential costs and prioritizing our investments right now. So we're kind of pleased where we are right now, more to come on the longer term margin profile and expense profile of the company.

But we're maintaining our discipline internally right now.

Okay. It's good to see.

Congratulations on the quarter, that's it for me.

Thanks Eric.

Thank you.