Greetings. Welcome to Chegg’s Fourth Quarter 2016 Earnings Conference Call. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Tracey Ford, Vice President of Investor Relations for Chegg. Thank you, Tracey. Please go ahead.

Good afternoon. Thank you for joining Chegg’s fourth quarter and full year 2016 conference call. On today’s call are Dan Rosensweig, Chairman and CEO and Andy Brown, Chief Financial Officer. A copy of our earnings press release, along with our investor presentation, is available at our Investor Relations website at investor.chegg.com. A replay of this call will also be available on our website. We routinely post information on our website and intend to make important announcements on our media center website at chegg.com/mediacenter. We encourage you to make use of these resources. Before we begin, we would like to point out that during the course of this call, we will make forward-looking statements regarding future events, including the future financial and operating performance of the company. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important factors that could cause actual results to differ materially from those in the forward-looking statements. In particular, we refer you to the cautionary language included in today’s earnings release and the risk factors described in Chegg’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2016 as well as other filings with the SEC. Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. Our GAAP results and GAAP to non-GAAP reconciliations can be found in our earnings press release. We also recommend you review the information included in the slide deck and Investor datasheet posted in our IR website, investor.chegg.com. Now, I will turn the call over to Dan.

Thank you, Tracey and welcome, everyone to our Q4 earnings call. A year ago, we set out the following priorities for our company: to complete our multiyear transition to become an all-digital company; to invest in our existing products and add new high-growth services that accelerate Chegg’s growth and profitability, while continuing to build and extend our brand and reach with one of the largest and most valuable audiences in the world, students. Every investment we make is designed to enhance the student experience and improve their outcomes and students have rewarded us by making Chegg a top destination on their journey for academics into career. Key to achieving that status was great execution, and 2016 was our best year yet. We set a Chegg Services revenue record of $129 million, reached a record number of Chegg Services subscribers exceeding 1.5 million for the year and hit a record $20.8 million in adjusted EBITDA, up almost 300% from the previous year. As you can see, we exceeded our own financial expectations, because we continue to meet and exceed the needs and expectations of our students and we see the opportunity is only getting bigger. We enter 2017 with tremendous momentum in our business, which is why we remain confident in the financial forecast for the year that we laid out in November. We did a lot of work in 2016 to put us in a position to expand the opportunity and accelerate growth in 2017. Last year, we said that we would complete our transformation to an all-digital business and we are happy to say that this transition is now finally complete. We managed to retain all of the branding and the customer acquisition benefits of the textbook business, shed the burdens of buying and owning the inventory and logistics,…

Thanks Dan and good afternoon everyone. Today, I will discuss our financial performance for the fourth quarter and full year 2016 as well as our outlook for 2017. 2016 was a great year for Chegg. We had four strong quarters of strong execution and we completed the multi-year journey of transitioning to an all-digital company. The investments we are making in our platform of services, brand and student graph are paying off as our revenue and adjusted EBITDA came in above our expectations. For the full year of 2016, non-GAAP revenue came in at $199.4 million, up 20% over 2015, driven by Chegg Services revenue growth of 37%. We hit a record of 1.5 million subscribers throughout the year, an increase of over 500,000. This drove gross margin to 53%, up from 37% in 2015, resulting in adjusted EBITDA that nearly quadrupled to $20.8 million. We also ended the year on a high, with Q4 non-GAAP revenue of $56.4 million, which was driven primarily by 54% year-over-year growth of Chegg Services revenue to $44.3 million. Q4 gross margins were higher than expected at 67%, as a result of strong top line growth and increased synergies from Chegg Services. Notably, much of the incremental revenue goes straight to the gross margin line as services like Chegg Study and our writing tools have a relatively fixed cost structure. In other words, as our services grow and achieve scale, our margins continue to increase. In Q4, our operating expenses grew 12% year-over-year while non-GAAP revenue grew 38%, resulting in significant leverage, which led to an adjusted EBITDA of $13.9 million, the high end of our expectations. Looking at the balance sheet, we ended the quarter with cash of $77 million, better than we expected as Ingram accelerated their payment due in early 2017…

Thank you. Ladies and gentlemen, at this time we will be conducting a Question-and-Answer Session. [Operator Instructions] And our first question comes from the line of Corey Greendale with First Analysis. Please proceed with your question sir.

Thank you. This is Ken Wang on for Corey. Congratulations on a great quarter guys.

Thank you very much.

Thanks.

So just wondering, a quick question on Chegg Study, so you are talking about 15% penetration, I guess what I am trying to figure out, can you talk a little bit about the underlying user demographics, so right now, as far as the penetrated demographic is concerned, is that still primarily 4-year non-profit college students or have you seen any increase in high schoolers or students from other types of higher ed institutions?

Yes. So the volume is correlated by the size of the school and the bigger schools are generally the 4-year state schools. We don’t really build content for the “for profit schools”. Those schools have declined dramatically in student enrollment as they should, given the – what they were doing for students, taking government money and not graduating students. So that’s not a big market, never was for us and we never concentrated on it. So our big volume, if you think about it this way, there is about 4,500 schools in the U.S., 1,000 of them represent about 52% of student population. So most of our focus is on the big states with the big schools and our penetration within those schools continues to grow every year. Sometimes as much as doubling every year, but we still have a long way to go. So the way that we think about it is, with the ISBN content that we have in there, an ISBN is just a proxy for textbook content in there, we have about 23,000 ISBNs. Every 1,000 or so new ISBNs, we add another 1 million students that we can possibly reach. So when we say we are about 15% penetrated, just with the content that we have, we continue to grow really, really fast and we have a huge amount of upside to go before we even tap out into the existing content. As it relates to high school, we think that’s a huge future market for us. We do get high school kids who take AP classes and that’s good. But we are going to be focusing new content on the high school market as we go forward because we think it’s a huge opportunity.

Thanks. That’s very helpful. And then just one follow-up for me, just wanted to get your thoughts maybe on the eTextbook pricing landscape, following Pearson’s decision and announcement that they were going to drop eTextbook pricing by up to 50%, so just wondering from what you are seeing, are eTextbook and print textbook prices now generally on par, are they pretty competitive with each other and have you seen any changes from a demand perspective?

Yes, it’s very interesting. I have been doing this now for 7 years, so I predicted 7 years ago that print textbooks would be gone in 5 years. So I am not sure you should follow my lead on this since they still represent about 90% of the market. We have been working with the publishers for years, particularly the current generation of leadership at the publishers because this turned over quite a bit. And they are very interested in making a faster transition to digital, which we think would be very much in our best interest. The more digital they go, the better it is for our business because we sell the eTextbook, we have the student every day, we know what page they are on, we know what they are studying, we know when they are studying, we can bring Chegg Study, we can bring Chegg Tutors, we can bring Chegg writing and we know the attach rate is better for us with eTextbooks. So the more they lowered the price, the better. We have been working with the publishing companies on price testing for them because they don’t have any other mechanism to be able to go direct to the student. We are the larger student – direct-to-student network that there is. So we have been working with Pearson and others in understanding at what price point if they put the eTextbook will you serve print. So remember, there is new print, used, rental and eTextbooks. eTextbooks, historically, have been about 85% of the price of the new textbook, making them entirely uninteresting to a student who can get a rental for two-thirds less. So if they come down to 50%, it’s still higher than rentals, but we do see movement in shares, so we have been…

That’s very helpful. Thank you and congratulations again.

Thanks

Thanks Ken.

Your next question comes from the line of Brian Fitzgerald with Jefferies. Please proceed.

Hi guys, this is Alex Giaimo on for Brian. Thanks for taking my question. So Chegg Tutors continues to grow at a very fast rate and our question is moving forward how do you plan on matching the supply and demand for tutors in the marketplace, I assume that if the service continues to gain popularity, you will need to recruit more tutors onto the platform, so how do you go about striking that equilibrium with the service growing so fast? Thanks.

Yes. Great question, it is what the team is working on. It’s a combination of tutor recruitment, building that community relationship, which we built a team to build those communities using data to be able to understand what subjects, from what schools, what time of day, what time of night, what the volume is simultaneously. It’s a lot of deep science work that we do. And we have 25 data scientists in our company now that help us understand how to do that matching. The interesting thing for us is recruiting tutors for us is not a difficult as it would be for others, because tutors are going to go where they think they can earn money. And given the fact that we have overwhelming demand given any other source because the size of the Chegg network and as you heard us on the call say that the majority of our tutor customers are coming directly from Chegg Study, we can drive demand. And so that is about finding the right number of tutors, the right time of day, by subject and being able to estimate in advance what our needs are. So over the course of the last year, we worked very hard with our data scientists to be able to notify tutors a week in advance, let’s say, next Thursday from 7.00 PM to 10.00 PM, we expect the large volume around this subject matter from these schools on this time of day. So we have tremendous technological sophistication and matching capability that we have built and that we are building. And of course the pool for us to recruit is relatively straightforward. We have 40 million visitors a year, 10 million visitors a month. So we know your school, we know your major and we have the ability to communicate to you and recruit you to become a tutor and so that has been something that we have been pleasantly surprised about. The flip side of that is we are also very careful. We reject over 50% of the people that asks to be tutors because we want to make sure that the quality is very high. So at the moment, we are just architecting the rate of growth to be able to make sure that we can respond to any request on any subject within five minutes. And as long as we do that, we continue to open up more of the demand curve, so, so far so good.

Great. Thanks Dan.

Yes, it’s exciting.

And our next question comes from the line of Jeff Silber with BMO Capital Markets. Please go ahead.

Thank you so much. You have a slide in your presentation on each of this a few times about your target operating model and I am just curious, can you just remind us how long you think it will take to get there and what the ramp up might look like? Thanks.

Yes. So thanks Jeff. Yes, so when we look at our target operating model and as we anticipate that, we have 30%, just as a reminder to everybody, 30% revenue growth, Chegg Services revenue growth greater than 60% gross margins 25% EBITDA margins. Our target is for 2018. And as you can see, over the last couple of years and if you take a look at our guidance, we have made some significant progress towards that. So that’s where we are on the target operating model.

So if you got that target for next year, does that prohibit you from potentially going into some of the new areas that you talked about at your Investor Day or is that something you think you might do this year as well and still be able to hit that target?

Yes. This is Dan and I will turn it over to Andy. So we anticipated when we set that target to be able to continue to make significant investments in the future growth of the business. I think what people are beginning to realize now and hopefully, the fourth quarter earnings and the guidance that we put out for 2017 start to reflect is just how profitable these digital businesses are. That even they are getting bigger and bigger and bigger, their growth is not slowing. In case of the tutors, they are accelerating. And the bigger they get, the more profitable they get because they have significant fixed costs that don’t really have much variable costs except on the case of tutors. So we plan to be able to make investments in Test Prep, and careers and Chegg Mate. They are all part of our ‘17 and our ‘18 operating plan and we still feel very confident that those are numbers that we can make. Let me turn it over to Andy for more details.

No, that’s – no, Dan nailed it. The fact of the matter is we have planned for those investments. Having said all of that, when you look at our top line growth, most of that – that is really the businesses that we have today, the three core businesses, right; Chegg Study, Chegg Tutors and writing tools. We are not expecting a lot of top line contribution from the newer businesses, but we are planning on the investment.

Okay. That’s very helpful. Thanks so much.

Yes. Thanks for the question. Because I think it’s – now that we have gone through the transition and this is the last year that on a GAAP basis, it will look like revenue is flat even though revenue is really growing fast that you start to see the acceleration in ‘18 and ‘19 and ‘20 because textbooks become – they stayed flat and they are breakeven, but they become a much smaller part of the business and the other businesses are just getting really big, really quickly and we are incredibly excited. That’s why I said on the call I was waiting forward to this call for 3 years.

Thank you. And our next question comes from the line of Alex Paris with Barrington Research. Please proceed.

Great quarter, gentlemen. This is Chris Howe, sitting in for Alex Paris. Would you be able to provide some additional color on perhaps what your overview is for career services in the year 2017 and what gets you excited about its near-term and long-term potential?

Yes. I will take a stab at that. I just want to make clear and I appreciate the question. Now what we said when we launched it, what we reiterated at Analyst Day and what we will say again today is that we have no financial revenue expectations for career services in 2017 at all. Obviously, we have the expenses. And as one of the questions asked earlier, are you making the best, the answer is yes. We are very, very, very excited about it. I mean, we have previewed an example of what it could look like at Analyst Day. And I think people began to understand that if we reach more students than anybody, we know more about them than anybody, we know your high school and we know your college, and we know your major and we know the history of the people that came before that. And because of internships.com, we have relationships with 75,000 corporations and hundreds of thousands of listings to both the internships and job. Our ability to match is better than anybody’s over time. So what we are working on now, what you can expect to see from us is product innovation rather than revenue and of course, this year because the goal is to be able to make the product really work well, make the marketplace extraordinarily dynamic, have a history of proving that the masses are improving each day. We have got a number of employers that contact us regularly, because recruiting from college is a very difficult thing. Companies spend a fortune to be able to do it. There has never been an efficient way to do it. So, we just believe that over ‘18, ‘19 and ‘20 that, that’s just become a very big opportunity for us. But like anything else, we take our time, we invest, we make it great, we build the critical mass and then we start to make it a business. So, the plan is exactly as we laid out. And you will start to see how this site, how the product gets better and better and better over the course of the year. We’ve got a full team on it now where we didn’t at the beginning of 2016.

Thank you for the color. And one follow-up. You addressed previously remedial writing with the acquisition of Imagine Easy and you had briefly mentioned an interest in the math arena. Is this something that is part of the growth strategy in 2017 or how do you see the overall environment for investments in this specific subject matter?

Yes. Writing is a very big area for us. So the acquisition of Imagine Easy, as I mentioned, has gone better than we anticipated and we were anticipating a very good situation. It’s an extraordinary team. They have two great founders. They have really amazing product people and I gave some of the color on the volume of 400 million citations within this year – 2016 alone. So, the usage from middle school on to graduate school is really just cute. And because of the acquisition of Chegg, the inventory is getting bigger. But to your point, the significant investment that we are making is on new writing tools to include in our subscription service to make them even more valuable, which really do acknowledge that we have a writing problem in America. As you pointed out, 25% of all students have to take a remedial writing class. That’s extraordinarily unfortunate. The same thing is true for math. So we see writing as being a big investment in 2017, all assumed in our guidance and forecast and we see it growing and growing quite nicely, both on the subscription side and on the ad side. But I am really excited about some of the products and services that our teams are working on now, which will not only do citations and bibliographies, but utilize technology to help people understand where their strengths and weaknesses are in writing and then help them actually improve their writing, either through technology or by connecting directly into a tutor. So like anything else, I can imagine as one day being the biggest teacher of writing in this country, because the country needs it and math is no different. We have capital. We have no debt. We are growing quite nicely. We are profitable. So we have the opportunity as other companies seek bigger partners to work with, to continue to be opportunistic if we see a math opportunity like we did with Imagine Easy. We, of course, will look at it. It just got to be something that leverages our reach and our brand that we can grow faster at a lower cost and is there a price we are willing to pay, but you can imagine us continuing to looking at the math category quite aggressively.

Thank you for taking my questions.

Yes, great question.

And our next question comes from the line of Aaron Kessler with Raymond James. Please go ahead.

Great. Congrats on the quarter. A couple of questions. First for Andy, I assume the free cash flow guide hasn’t changed and any details on the accelerated liquidation of textbooks, how that impacts EBITDA in the Q1 and Q3 periods? And then I have a couple of follow-ups.

Yes. So, on the free cash flow guide not a lot of change there, we still think it will be in the $15 million, $20 million range or so for 2017. As far as the liquidation of textbooks, like we said, we had originally thought that we would have kind of had a relatively even split between Q1 and Q3 as far as the liquidation. Now understand, there is hundreds of thousands of books we have to liquidate, but we saw an opportunity to accelerate liquidations into Q1 and that – and we took advantage of it. And we anticipate that by the end of the quarter, we will actually be – our net book value of our inventory will be zero, so it all came into Q1.

Yes. And can you just quantify how much that impacts EBITDA in Q1?

Yes. It’s...

I think we did in the guidance.

We did in the guidance. If you look at the guidance, we were – the guidance came up maybe $1 million or so and I think that’s probably appropriate deals of how it impacted.

Got it. Great. And just a couple of follow-ups for Dan, any thoughts from the Princeton Review sales, can you probably take a look at that and then an update on maybe the Chegg Mate and Career Explorer as well? Thanks.

Yes. So Princeton Review, yes, we took a look at it. We took a look at it 3 years ago, we took a look at it 2 years ago, a year ago and we just couldn’t find a circumstance where it would make sense for it to be part of our company. It was a company that was declining in revenue that really didn’t have profits that was in an offline market and we had to do that transition once it’s a public company and I think once was enough. So, we see value in the name, because it matters a lot to a certain subset of parents and high schools, but it just really – we couldn’t make the numbers work to create the kind of value that we think we can create on our own over time, so we passed. And on the other areas, Chegg Mate – again Chegg Mate and Career Finder, these are things that are all investments that we are going to be exhibiting the product in 2017. We just don’t have any financial expectations except the investment, which is included in all of our guidance and our forecast. So you are going to start to see, if you pay attention closely, Chegg Mate be tested to a very small alpha group some time in the first half of this year and I don’t imagine it will be widely distributed until ‘18, because it’s the kind of thing where you got to go book by book, subject by subject. And just like we did, Chegg Study, which started out at 600 textbooks in it when we started 6 years ago and now it has 23,000 that once you start to get the critical mass and content, these things explode. And so I just want to take our time and do it right.

Got it. Great. Thank you.

Yes.

Thank you. Our next question comes from the line of Eric Martinuzzi with Lake Street Capital Markets. Please proceed with your question.

Thanks. The Imagine Easy acquisition was May 2, 2016. I think at the time it was a $42 million transaction with some contingent payments. Given the better-than-anticipated results from Imagine Easy, should we be factoring in some contingent payments as we look at the balance sheet?

No, no. In fact, there was – there were some contingent performance payments that were contingent upon – that meet some of the objectives in 2016 and those are already being taken care of. We do have approximately $26 million in payments that are left in 2017, a large payment, which was planned and it’s how we did the transaction in April and then some later in the year, but there is nothing else as performance contingent.

Okay. So the $42 million is the correct number?

$42 million is the correct number, correct.

Okay. And then I had a question given your guidance for 2017, obviously the services guidance there is for growth of 37%. The counterpoint to that is the decline in the Required Materials that implies about a 17% decline for the year. I am just wondering kind of looking at that quarter-by-quarter is that 17%, is it – does that decline rate – is it safe to assume that’s the decline rate for each of the quarter? Is it higher in some quarters, lower in other quarters, I’m just looking for some clarification?

Yes. So the way to think about Required Materials is this way is that – and we talked a little bit about this at Analyst Day. It’s about a $50 billion to $60 billion annual business, somewhere between 5 million and 6 million units and breakeven. What has changed in the Required Materials front over the last couple of years as we made our transition to an all-digital company is that it really doesn’t get spread out of a quarter much anymore. The revenue is recognized immediately. And so the revenue would be – most of the revenue is either recognized in Q1 or Q3, because that’s when students go back to school. And so first thing is you expect that. As far as the rate of decline, I wouldn’t view it as any – I would view it pretty equally between Q1 and Q3. But once again, just the fundamental seasonality dynamics have changed as a result of going – the partnership with Ingram.

Understand. Thanks for taking my questions.

You bet.

And our next question comes from the line of Doug Anmuth with JPMorgan. Please proceed.

Hi. This is Lina Rudashevski on for Doug Anmuth. Two quick questions. First, can you just remind us what Imagine Easy’s revenue contribution is in 4Q and whether that is a good run-rate going forward or if that has seasonality similar to the rest of your business? And also, is there any change to your CapEx guidance that you gave during the Investor Day? Thank you.

Yes. So Lina, we don’t actually breakout the businesses individually. But as you can imagine, when you look at the seasonality of Imagine Easy, it’s kind of like the school year, right? So, I mean, there is the school year pretty much goes, what I will call it, the middle of August through the end of May. And then you’ve got kind of the dry months, and it’s – because there are some kids in school and some of it, but it’s not near the quantity that you have during the winter and the fall semester. So, that’s how you should think about seasonality. From a CapEx standpoint, we do anticipate some in the neighborhood, I’ll call it, $20 million to $25 million of CapEx this year. And I just want to remind everybody on the call it’s not your typical kind of bricks-and-mortars systems and hardware CapEx. So, we make large investments to drive, particularly Chegg Study where we do content investments and we’ve done that for a couple of years now, where part of that’s both internally developed content and part of that is purchase content. And we will continue to do – to basically fuel the engine and that’s the vast majority of our – what we call CapEx of the company.

And then there is a good ROI on each piece of that, because every time we invest in content, lots of good things happens. Student satisfaction goes up, which means renewal rates go up and we are at an all-time high now for renewals at Chegg Study on top of the largest number of subscribers we ever had. So, that’s extraordinarily helpful. The Q&A network that gets answered, where we have over 8 million questions at the end of 2016 already asked and answered, makes an incredibly difficult moat for anybody else to compete with as it relates to being the go-to place for students to ask and answer questions. And every one of those things gets indexed into SEO, so it helps us not only keep and retain, but it helps us acquire customers. So it’s really just a virtuous cycle of CapEx that gets spend that actually has a positive ROI over time. So we look at it as the more we can invest there to expand the reach that we have, the quality of the content, the SEO capability, the faster the business continues to grow and the more profitable it gets.

Okay.

Yes.

Our next question comes from the line of Alex Fuhrman with Craig-Hallum. Please proceed with your question, sir.

Great. Thank you for taking my question. I would love to ask a little bit about how your Test Prep offering has been going so far. I’d be curious if – to see kind of who the customers are initially, have these been primarily customers of some of the other Chegg Study and Chegg service products that you have out there or has it been perhaps a different customer, maybe older or younger? And anything you can comment on retention there would be very helpful, just trying to get a little bit of color on how that is unfolding?

Sure. Good question. So as you know, the big three drivers today continue to be Chegg Study, Tutors and Writing. And all of them are very early and growing very fast and two of them have become extraordinarily profitable already, which gives us the opportunity to make long-term investments and things like Test Prep. We don’t – because of our size and I think people need to, from our perspective, appreciate that we see a $1 trillion market and we are the largest player in the direct-to-student space and it’s only getting bigger. So our ability to notify people that we have a product or service and then drive traffic to it is pretty powerful. So, we get hundreds of thousands of people to know over the course of time that we are in the Test Prep business, and that’s very good for us. And as we have said, the difficulty when you are launching education space is there seasonality to when people use your product, then take the test, then report back, then you get to tweak the product, which is why we take these multi-semester cycles when we do these things. So, on the Test Prep side, it really has expanded the number of items that we can offer it to high school students. We only currently offer SAT and ACT, although that will change over time to GRE and med school and law school and those things, but – so I don’t know if they are additive to the Chegg network as much as Imagine Easy has been really helpful for us to be able to target high school students, because we know based on the paper you are writing and the books you are citing whether you are in high school and what year you are likely in high school and that’s allowed us to drive a lot of traffic to Test Prep. So that’s the way we use to attach in the network. So we have learned a ton. We hope we have lots of people coming to it and lots of people using it. And what we are doing is we are improving it everyday, because we want it to be adaptive. But we have to go through how students use it, report back their tests, so it’s just the – it’s the ramp that we expected, but we are pleased at how aggressive we can market these things to students and how willing they are to drive it.

Great. That’s really helpful. Thank you.

Yes.

Thank you.

[Operator Instructions] And we do have one question coming from the line of – okay and then now no further questions at this time. I will turn the call back over to management for any closing remarks.

So, we had a moment of alternative facts there. So, well, first of all, thanks everybody for dialing into the Q4 earnings call. It’s February. So looking back in Q4 and so far in our rearview mirror, but we are really proud of our team, of the execution of our team, of the focus that our entire company has on the mission of improving students’ lives and improving their outcomes. It’s been a lot of hard work for a number of years to get to the point where we can finally say we are at all-digital business, where we can finally say and mean that we are high-growth and high-margin and produce cash flow. It was only 3.25 years ago that we were losing adjusted EBITDA. And last year, we made nearly $21 million in adjusted EBITDA. So we could not be more excited about the opportunity that we have, about the team that we have that has been with us through this ride, about what 2017 looks like for us and beyond. We see the market is getting bigger. We see our execution is getting much stronger. We see that our penetration in the markets is getting – growing really fast even though we have a long way to go. So we are excited about this year. We appreciate everybody dialing in and we will talk to you all again in May. Thanks.

Thank you. Ladies and gentlemen, this does conclude our teleconference for today and we thank you for your time and participation. You may disconnect your lines at this time. Have a wonderful rest of the day.