Good afternoon. Welcome to Model N's first quarter and fiscal 2022 earnings call.

This is Carolyn Bass, Investor Relations for Model N. With me on the call today are Jason Blessing, Model N's Chief Executive Officer and John Ederer, Chief Financial Officer.

Our earnings press release was issued at the close of market and is posted on our website. The primary purpose of today's call is to provide you with information regarding our fourth quarter and fiscal year 2021 performance, and offer a financial outlook for our first quarter and fiscal year ending September 30, 2022.

The commentary made on this call may include forward-looking statements. These forward-looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date.

We disclaim any obligation to update any forward-looking statements or outlook. Actual results may differ materially.

Please refer to the risk factors in our most recent Form 10-Q filed with the SEC. In addition, during today's call, we will discuss non-GAAP financial measures.

These financial measures should be considered in addition to, not as a substitute for or in isolation from, GAAP results. Reconciliations of non-GAAP metrics to the nearest GAAP metrics are included in the earnings press release issued today, which is available on our website.

I encourage you to visit our IR website at investor.modeln.com to access our first quarter press release, periodic SEC reports and the webcast replay of this call. Finally, unless otherwise stated, all financial comparisons in this call will be to our fiscal year 2021 results.

And with that, let me turn the call over to Jason.

Thanks Carolyn. Good afternoon everyone and thank you for joining our call today.

Our first quarter results outperformed across the board exceeding all key guidance metrics including total revenue, subscription revenue, professional service revenue and adjusted EBITDA. Excellent sales execution, professional services utilization and strong renewals drove the top line performance.

This combined with disciplined expense management resulted in very strong bottom line performances. I am very proud of our team and the excellent quarter we posted to start the year.

As we look ahead, we remain focused on driving profitable growth and as discussed on the last call, we are targeting to exit our fiscal year 2022 at a 20% ARR growth rate, as our cloud business accelerates. Two important Q1 metrics stand out to me that I'd like to highlight.

First, our SaaS ARR grew by 23% year-over-year, and Q1 was the best gross bookings quarter in the Company's history. As we've noted over the past few quarters, we have a strong pipeline and this is encouraging to see this convert to booked business.

All of our growth levers contributed to our strong quarter as well as continued growth in pipelines. To recap, our strategic growth levers are SaaS transitions that occur as we move our on premise customers to the cloud, cross-selling up-sell to our existing customers, new logo acquisition and finally international expansion.

In short, we had a great start and we feel good about the year ahead. A few months, we've closed four SaaS transitions.

As discussed on the last call, we expect this to be a pivotal year as we start projects to move a substantial part of our remaining on premise customers to the cloud. The final phase of SaaS transitions is important because it has a positive impact on our ARR growth this year, and acts as a catalyst for cross sell and up-sell.

And over the long-term, getting all of our customers to the cloud allows us to simplify our business model and operations, which enables us to get more leverage out of our investments. Q1 demonstrates continued momentum in our SaaS business.

Given the success we are seeing with SaaS transitions, we also continue to see our maintenance declined at an accelerating rate compared to recent levels. We view this as a positive as it is evidence that our strategy to recast Model N as a cloud company is working.

One final point to illustrate the progress we're making as a cloud company, and how strategic our products are, is our net dollar retention rate. For the 12-month period ending on December 31, 2021, our net dollar retention rate was 119% in excess of our target of 110%.

Alongside our strong gross retention rate, we've used these metrics as proof points that we are building a durable and valuable SaaS business. Next, I'd like to share some quarterly business highlights.

Q1's over performance was driven by a healthy contribution from all growth levers. We signed new logos for SaaS transitions, numerous customer base expansions, and we also enjoyed strong renewals.

And similar to last quarter, we closed a healthy mix of deals from both our Life Sciences and High Tech verticals. Turning to SaaS transitions, during the quarter we signed multiple large customers including Stryker, AstraZeneca, Abbott Diagnostics and ConMed.

AstraZeneca is a terrific case study of why our customers are moving to our cloud. A key factor to AstraZeneca starting their SaaS transition is the value of our automated testing capabilities.

We have specifically designed pharma companies, more easily test and system updates in a regulated environment. This in turn allows them to stay current, take advantage of innovation, and stay compliant in an ever-changing regulatory environment.

Turning to Stryker. This is a strategic digital transformation initiative designed to build a strong foundation for future operations and growth.

Stryker will be consolidating two legacy Model N instances into one cloud implementation that will serve as the global blueprint that they will eventually roll out to their other divisions. Stryker is also experiencing growth through acquisition and a single scalable version of Model N, will support this growth to day and into the future.

Also, during the quarter, we signed a new logo in Life Sciences, a top 50 pharma and biotech company headquartered in Japan. This customer purchased Global Price Management to consolidate their pricing practices across their global markets.

I expect our team will able to quickly demonstrate value for this customer and look for ways that we can expand our relationship in the future. Turning to High Tech.

We continued to see improved traction in this part of our business. We selectively added talent to the High Tech team last year, based on trends in our pipeline and a belief that this sector would pick up in 2022, and we are in fact seeing the fruits of this investment.

During the quarter, our sales team signed Solidigm Technology, a global provider of flash drive technology that was recently spun out of Intel. This demand was highly competitive as the Company conducted a rigorous market review of vendors as well as an analysis to determine, if they should buy a solution.

In the end, based on the breadth of our platform, our experience working with market leading tech companies and our ability to hit their aggressive implementation timelines, they selected Model N. It's exciting to see a global company being designed from the ground up, select Model N's global pricing and deal management, channel management, rebate management products as foundational investments for the new entity.

We also continue to see our land and expand sales strategy pay dividends. During the quarter, we had numerous expansion deals with key customers including AMD, Diodes, Marvell and Western Digital among others.

AMD is a great customer and relies on Model N's Channel Data Management and Revenue Cloud applications for mission critical systems. Our solutions have supported AMD's organic and inorganic growth in recent years.

As a result, we have earned their trust to move the newly acquired Xilinx business onto Model N. As they fold Xilinx into their portfolio, we believe, we are well-positioned to continue to support their growth and expand our relationship in the future.

Turning to professional services. Our team had another great start to the year.

In Q1, we had several successful go-lives, including projects at Jazz Pharmaceuticals, Pfizer, Novartis and Teva Europe. As you may recall, we welcome Jazz Pharmaceuticals as a new customer in Q4 and they went live in Q1 with our global price management solution.

For some backgrounds, Jazz merged with GW Pharma earlier this year to form a 3,000-plus person company focused on delivering life changing therapies for serious diseases. Our team worked with their users in Europe and an IT team in the U.S.

to successfully and rapidly deliver this project. This engagement leveraged our express methodology of rapid time to value implementation approach that we've refined over the last couple of years.

The express methodology is a templatized approach to implementing Model N that allows customers to go-live quickly and benefit from the best practices that we've collected from dozens of successfully completed projects. The duration from project inception to go-live took just 13 weeks and as a testament to our unique implementation approaches and our delivery excellence.

Our services team continues to deliver on-time, on-budget and at best-in-class margin. I expect the strength to continue services business in 2022, as the team has built a substantial backlog.

Q1 marks the one-year anniversary of our acquisition of the business services offering from Deloitte. This business expands our total addressable market, and enables us to sell a differentiated portfolio of software and services to pre-commercial clients up to the largest Life Sciences companies in the world.

We continue to see our Business Services M&A thesis validated with a solid Q1 performance, which included an expansion at an existing customer, one of the world's largest pharmaceutical companies based in Germany. The Business Services team has enjoyed a long-term partnership with this customer, and we have continued to expand this relationship since the acquisition in support of their growth plans.

We also expanded our relationship with Akorn an existing Model N software customer, and now includes Business Services Medicaid processing. This shows the potential to cross-sell Business Services into existing Model N customers.

For Medicaid processing, Akorn needed a partner that could provide an integrated technology and services solution that would help them efficiently leverage industry best practices. As I reflect on the one year anniversary of the Business Services acquisition, I continue to be bullish on the addition of the solution to our portfolio.

We integrated this business a full two quarters ahead of plan, improved the overall profitability, and most importantly hit our internal sales plan in year one. The addition of Business Services gives us ultimate flexibility to tailor offerings to meet our customers' needs today and into the future.

This truly sets Model N apart in the marketplace. Turning to innovation, our longstanding relationships with our customers and deep domain expertise allows Model N to proactively innovate and deliver more value to our customers.

On our last call, I introduced a new product, State Price Transparency Management. Just a sneak we announced the general availability of this offering.

This product co-developed with Pfizer, one of our longtime customers. This product will help our customers more efficiently address new state drug pricing laws enacted over the last few years across 22 states and counties.

These new laws require drug manufacturers to report information about any new drug launches or price change as well as the justification for the change. State Price Transparency Management is unique because it's built natively on our cloud platform and it's the first new products that we built to can be consumed as software as a service or as a Business Service.

Its flexibility provides our customers with choice, how they manage the rapidly evolving set of state regulatory requirements and continuous to support Model N's role as a trusted advisor. Let me conclude by reiterating that I am extremely pleased with our execution in Q1, and I feel that we are on track to meet our objectives this year.

We've built a solid foundation and are laser focused on our strategic growth levers, and I believe that we will continue to drive profitable growth in 2022 and beyond. I would also like to thank the great team that we have at Model N for their efforts in Q1 and over the last several years.

I'm proud of how our team continues to execute and this gives me optimism for the year ahead. I'd now like to turn the call over to John to discuss our Q1 financial results and provide an update on our guidance.

John?

Thank you, Jason, and good afternoon to everyone on the call today. As Jason noted, we had a solid start to the year as our first quarter results exceeded all of our guidance metrics.

Revenue upside was driven by both subscription and professional services, while our strength in adjusted EBITDA and non-GAAP EPS was driven by the strong revenue performance as well as continued good management of operating expenses. Perhaps most importantly, our bookings performance in Q1 has solidified our outlook for the year, and you'll see that when we discuss the guidance in a few minutes.

Turning first to our financial results for the first quarter. Total revenue grew 21% to $51.5 million, which exceeded the top end of our guidance.

Subscription revenue was also up 21% to $38.1 million, again exceeding the top end of the guidance range. We also saw upside in professional services revenue, which grew by 19% year-over-year to $13.5 million.

And while we are no longer breaking out Business Services separately, the revenue performance was consistent with prior quarters, and it did contribute to our year-over-year growth numbers in Q1. Looking at profitability for the first quarter.

Total non-GAAP gross profit was $31.1 million or a gross margin of 60%, while non-GAAP gross margin for subscription revenue was 68%. On a year-over-year basis, both total gross margin and subscription gross margin were impacted by the addition of Business Services.

On an organic basis, the non-GAAP subscription gross margin for core Model N remains in the mid-70% range. Also as a reminder, Q1 FY '21 gross margins were boosted by a one-time benefit related to the J&J transaction last year.

Non-GAAP gross margin for professional services was very strong again in Q1, hitting 40% versus 34% a year ago as this team continues to execute extremely well. Operating expenses for Q1 were lower than expected due to the timing of some hiring and other investments.

And as a result, adjusted EBITDA for the quarter was $7.2 million and well ahead of the high end of our guidance of $5 million. Adjusted EBITDA margin was 14% for Q1, which was the third quarter in a row that it had been back in the mid-teens range, following the successful integration of the Business Services acquisition.

Finally, non-GAAP net income was $5.4 million or $0.15 per share versus the high end of our guidance of $0.09 per share. On the balance sheet, we ended the quarter with $155.5 million in cash and equivalents, which was down from the end of September, but in line with our typical Q1 seasonality due to the timing of our annual bonus payouts.

In terms of RPO, or remaining performance obligations, the total balance was $256.5 million at the end of Q1, representing an increase of 37% year-over-year. While the current RPO balance was $123.8 million, an increase of 25% year-over-year.

The high growth in RPO reflects the strong bookings performance in Q1 and provides better visibility on future contracted revenue. Finally, before we take a look at the guidance, I know that some of you focus on calculated billings, which is typically defined as revenue plus the sequential change in deferred revenue.

For Q1, calculated billings grew by 6% year-over-year, which is in contrast to the strength we are seeing in RPO. The variance has to do with the timing of certain invoices, which went out in early January.

Thus, the strong Q1 bookings were fully reflected in RPO, but not as much in deferred revenue as of December 31. In terms of our outlook for the business, as we noted on our last call, there are a few financial trends that we expect to continue here in 2022.

First, SaaS transitions for our larger customers are accelerating, which is good news overall for the business. Second, the increase in SaaS transitions is putting pressure on maintenance revenue, and we expect quarterly declines in maintenance to accelerate starting in Q2 as cloud migrations continue to increase.

For fiscal year 2021, our maintenance revenue was about $23 million and was declining in the mid- to high single-digit range. Going forward, we expect that decline to be more in the low to mid-double-digit range starting in Q2.

As we've previously communicated, we won't break out maintenance on a quarterly basis, but we will provide annual updates so that investors can monitor our progress here. The third thing I'd like to point out is that offsetting the declines in maintenance revenue is the continued growth of our SaaS revenue.

The SaaS portion is now the majority of our reported subscription revenue and will be the key driver of our business going forward. To give you a better indication of our success in transitioning from on-premise to SaaS, we have begun disclosing SaaS ARR.

This represents the annualized value of our daily SaaS subscription revenue for the most recent quarter. We finished Q1 with $85.5 million in SaaS ARR, which was up 23% on a year-over-year basis.

We do have more challenging comparable quarters coming up in Q2 and Q3 this year for SaaS ARR growth, but we expect to exit fiscal 2022 at the 20% mark. Additionally, our net dollar retention on SaaS ARR was 119% in Q1, which was a strong quarter compared to what we have typically seen, in excess of 110%.

Now let me turn to our guidance. For the second fiscal quarter, we expect total revenue to be in the range of $51 million to $51.5 million, subscription revenue to be in the range of $37 million to $37.5 million, adjusted EBITDA to be in the range of $4 million to $4.5 million and non-GAAP EPS to be in the range of $0.06 to $0.08 per share based on a fully diluted share count of approximately 37.3 million shares.

On our earnings call last quarter, I noted that we are facing some headwinds to our subscription revenue in Q2. In particular, I called out the accelerating decline in maintenance revenue as well as a unique situation involving two customers that have merged and will temporarily consolidate their contracts with us before making a SaaS transition later this year.

This will ultimately be a net positive for Model N, but it will put pressure on our near-term subscription growth rate. Also, please keep in mind that starting in Q2, our year-over-year comparisons will not include the benefit that we derive from the Business Services acquisition over the last four quarters.

For the full year of fiscal 2022, we are increasing our total revenue range to $212 million to $214.5 million, with subscription revenue expected to be in the range of $153 million to $155.5 million. We are also raising our outlook for adjusted EBITDA to a range of $24 million to $26 million, generating non-GAAP EPS in the range of $0.46 to $0.52 per share based on a fully diluted share count of approximately 37.3 million shares.

Our revised guidance for the year reflects low double-digit growth in revenue, combined with low double-digit EBITDA margins and is a continuation of our profitable growth objective. This is a theme that you've heard from us for several years now, and we are committed to continued progress.

Even though we are making significant investments with our customers to support their journey to the cloud, we are doing so in a responsible way that benefits not only our customers but also our shareholders. The investments that we are making today will ultimately result in higher SaaS growth, which has become and will continue to be the key driver of our business going forward.

Now, I'll turn the call over to the operator for any questions. Operator?

This is Maya Kilcullen on for Jackson. Can you give us an update on your hiring motion across the board, but then also specifically within the sales organization?

It's Jason. I'll answer that.

So we have continued to selectively invest in both sales product and marketing over the last couple of years. In particular, we did some additional investment in High Tech on the sales side over the past year, really in anticipation of that business coming back.

The other thing I would also say, we've invested in our customer success function as we've been reinventing Model N as a cloud company. That was a function that did not exist when I joined.

So you can think about the investment levels as thoughtful across the go-to-market functions as well as a bit in product. And then probably your follow-up question to that is what are we seeing in terms of turnover in the labor market right now.

And what I would say is we've seen a slight uptick in turnover, but nothing dramatic as we've gone through the last couple of quarters. And our turnover does remain, as it has always been, much lower than high-tech industry averages.

And we've done a lot of things for our employees during the pandemic. We have a great culture.

It's a great place to work, and I think it's reflected in our ability to not only attract talent, but retain it.

Yes, that's great. And then just as a follow-up, last quarter, you mentioned you were starting to see some seasonality within the SaaS deals towards the second half of the fiscal year.

Is that still what you're expecting for this year?

We didn't -- I think that was misinterpreted a little bit in terms of seasonality in the back half of the year. I think what we really want to convey around SaaS transitions is we've got really good visibility into how SaaS transitions are sequencing this year and next, particularly given the on-premise end of life that we announced a year ago.

So the point is we really do have good visibility into the time frame when some of our bigger customers are going to move, and that's reflected in our outlook and also reflected in our guidance.

Great. Just on the RPO.

In the past, I think you've kind of related that as almost a backlog figure in thinking about the visibility you have the next 12 months. If I just take the current RPO and do that same kind of coverage calculation, it looks like it stepped up pretty nicely relative to the revenues you're guiding to.

What's the right kind of interpretation of that? I know you had strong gross bookings, and there were some renewals in that.

So maybe the coverage ratio doesn't make as much sense. But kind of how do you view kind of visibility?

And is there maybe upside in your guidance for this year as certain things come through in addition to the strong RPO you've built?

Thanks, Joe. I appreciate the question.

This is John here. So I guess, first off, I do tend to think about it the same way as you.

And so, the RPO figure is largely a backlog number. And so, we do tend to think about it the same way, particularly looking at the current version of the current portion of the RPO.

And so yes, I would say that in terms of the Q1 bookings and then the RPO performance that we saw in Q1, we are feeling better about our visibility for the year.

Okay. But nothing to maybe read by the coverage being a bit higher than, well, it's been trending over recent quarters?

Well, I think if we go back and look at the coverage over probably the last few years, it has been trending up as we've been moving more and more of the business to SaaS. And so again, I view that as a good thing, and that gives us increased visibility in terms of our forecast and the guidance for the year.

Okay. That's helpful.

And then second question for me. Just -- it seems like a lot of change in how pharma orgs are approaching their commercial operation and really in a lot of ways leaning into their cloud vendors to drive better performance, better productivity with existing teams.

It seems like Model N slots into that a little bit. And I guess that would...

[Technical Difficulty]

Joe, are you there?

Operator, are you there?

Yes. Can you hear me?

Sorry about that. My headset went out.

Just on commercial operations and the changes that seem to be taking place in sales orgs in the life sciences industry. I'm curious whether Model N is seeing maybe new interest or new expression of interest in certain products.

I think the new state-level pricing products, certainly fits into this conversation. But do you view certain practices or maybe certain thematic things in the industry actually providing a bit of a tailwind where it creates new demand opportunities for you?

Yes. Thanks for the question, Joe.

So yes, the simple answer is yes. It was kind of interesting.

I think pharma companies pre-pandemic were -- had a fairly traditional approach to doing work and where work happens. And I think as we've gotten into the pandemic, there's been an acknowledgment that there's going to be a completely new way to work and a more distributed way to work, which has certainly been one of the things that has been a driving factor, one of many, frankly, and why our customers have been moving to the cloud.

But then the other positive tailwind that you highlight that definitely is benefiting us is the increasingly complex regulatory environment. I get asked the question a lot of, is this ever going to get simpler.

And my viewpoint on it is no. And when the federal government decided to not implement new price transparency laws, the states took over.

And so now we've got 22 states who have implemented new legislation and counting, and that presented an opportunity for us to work with Pfizer to build a new product to simplify that complexity. And we ultimately benefit from that, and our customers benefit from it.

Because we help them solve that complexity and put them in a better position to run their business and be compliant.

Congrats on a good quarter. Jason, maybe just piggybacking off what you're just saying there in terms of the complexity in the regulatory environment and how that has shifted from a federal conversation to the state conversation.

How should we start to think about how the pipeline builds for the new State Pricing Transparency product? And is there a deadline that these states are generally -- or a time line to a deadline where your customers have to be in compliance?

And how is that affecting, I guess, purchasing to say with the base.

Yes, it's a great question, Ryan. So first of all, yes, there is a grace period for customers to become compliant.

And in many cases, customers have rushed and done things manually. Now that they've got a product offering from us, they should be able to do it quickly and have a more scalable process.

And it's interesting that you asked a question about the rollout of new regulatory regimes state-to-state. Last quarter when we gave an update on this, it was 20 states, and now it's 22.

And so yes, there's a general belief that this is going to become pervasive across all the states regardless of the politics of that state. So there is a grace period, but it is something that customers, our customers are taking very seriously and really looking for commercial software solutions to address.

I will tell you any customer who does business in one of the states that has enacted this legislation needs a solution. So we've seen very strong interest so far.

We have a customer event coming up. This is one of our top five most subscribed sessions or tracks to learn more about this product.

And the final thing I would say that I also like about this product is it can be implemented by existing customers and works in harmony with existing Model N products. And it can also be sold and implemented as a stand-alone product.

So our new logo team has this in their in their portfolio as well. So I think this is going to be a pretty interesting product for us.

And again, it's been great to partner with Pfizer to build it and bring it to market.

Yes. It seems like a really great opportunity there, Jason.

Maybe as my follow-up question for John here. John, you're getting really great utilization from the pro services team, and that's resulting in some pretty strong professional services gross margin expansion.

Just curious if there's anything anomalous about the 1Q margin levels? And how sustainable is that level of margin as we look out through the remainder of the year?

Yes. Thanks, Ryan.

And thanks for noticing on the professional services time -- team. That group has actually been doing a phenomenal job, and we've actually seen three quarters now where they've been in that 40% gross margin range.

I know that I said that, that wasn't likely sustainable, and I'm going to say it again, but they are doing a very, very nice job right now. And in particular, in our first fiscal quarter, we saw better-than-expected utilization over the holiday period.

And so that actually drove a little bit of the revenue upside as well as the performance on the margins. They do have the wind at their back right now.

We're seeing a lot of business coming in from SaaS transitions. And so we've got a very healthy project backlog for that team to go execute on.

But ultimately, that 40% mark is not a long-term, sustainable number. Now I do think that we can continue to be in the very solid range like we had been historically, in the mid-30s.

And that's still a very, very good professional services margin. but I would not expect to see 40% forever.

I guess kind of piggybacking on Joe's question earlier, as you're looking across the demand for SaaS transitions at the existing, especially pharma customers, now that you've done a bunch of these implementations and have others signed in the pipeline, is there anything sort of across the customers that they choose a specific module or a couple of modules to migrate first? And just kind of how that maybe helps you look at what the rest of the customer base has left to do and sort of the timing that you might expect them to be interested in the migration?

Yes. Thanks, Matt.

It's a great question. The most common pattern that we see is customers will take their existing footprint.

That tends to be payer and provider and government pricing in the U.S. That's kind of -- those are the three kind of most widely implemented products.

We'll see customers take those products and move it to the cloud as a first step. Then there are a series of other products and add-ons, à la carte things that customers tend to look at.

One is Validata, which is a relatively new product for us that scrubs script-level pricing data from providers and from payers and ensures that at a script level, the commercials are compliant with the contract. So that's not a product that everyone's implemented.

That tends to be fairly popular. We also see the opportunity to get back in front of our customers and talk about some of our global products, like Global Price Management, Global Tender Management.

Those are popular with customers that are upgrading. And then State Price Transparency Management, we already, I think, talked about that one.

And then the final thing I would mention -- and this is, again, kind of part of Model N reinventing itself as a SaaS company. We are now offering tiered subscription levels, recurring revenue subscription support levels to our customers.

And we're seeing platinum level support and the premium associated with that as something that's very popular, particularly with our largest customers.

Very helpful. And then just on both the state transparency, and the Global Price Management, was there a lot of leverage from sort of the underlying, I guess, code or just at least functionality on the Global Price Management that moved into state transparency?

And then within that, how complex or different are the 22 states regulations and what you need there versus is the product just sort of a rules-based mechanism where you kind of input the -- each state's level, but the underlying functionality is pretty consistent across all of those states?

Yes, that's a great question, Matt. So we did leverage some of the infrastructure for Global Price Management, which is where our customers do store all of their commercial agreements, both in the U.S.

as well as globally. And so we were able to leverage that repository to feed State Price Transparency Management.

You don't have to have our Global Price Management product to implement the new product, but it does come integrated, and customers have definitely liked that. In terms of what the product actually does, there is an engine that aggregates up all of the new drug launches, the pricing associated and any price changes.

It packages all of those changes into a way for management to be able to consume it and then determine how and when they're going to file with the different regulatory authorities. And your question is also kind of interesting because, yes, the rules do vary in complexity from state to state.

You'll frequently hear people talk about California and Nevada being some of the more complex and have really blazed a wide trail on the complexity. Others less so, but to your point, there is -- your question, there is variability across each state, and we can accommodate that in the different reporting formats that are required.

Operator, can you prompt for more questions, please? Doug, are you there, please?

Operator, are you there please? Operator, this is Model N and we'd like you to put the next analyst in the queue.

Is there a technology issue? Hello?

[Technical Difficulty] Okay. We'll wait another minute to see where Doug the operator is.

Perhaps, he's been disconnected. Okay, for those of you that are still on the line, the operator’s bridges have just crashed and he is trying to reload.

So, we may wait another minute here or two, and hopefully, we're unable to manage the question line and it's on his bridge. So, we'll have to let him get rebooted here.

Hi, everyone. This is Jason Blessing.

We apologize. Our conference service is having technical difficulties and is not able to continue the call and let the remaining individuals in to ask questions.

So we do apologize for that. But I do appreciate everyone joining the call today.

And certainly, we'll take ample time on the call backs to get all of your questions answered today and as the quarter continues. So again, thank you for everyone -- to everyone for joining.

We apologize for the technical difficulties, but we'll talk soon, and have a good night. Thank you.