Good day, ladies and gentlemen. And welcome to the Vonage First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Hunter Blankenbaker, Vice President of Investor Relations. You may begin.

Oh, great, thanks, Sonia, and good morning, and welcome to our first quarter 2016 earnings conference call, and our discussion on the definitive agreement to acquire Nexmo. Speaking on our call this morning, will be Alan Masarek, Chief Executive Officer; and Dave Pearson, CFO. Also joining us are Joe Redling, Chief Operating Officer; Clark Peterson, President of Enterprise; and Tony Jamous, CEO of Nexmo. Alan will discuss the Nexmo acquisition and our first quarter results and Dave will provide a more detailed view of our first quarter results and the Nexmo acquisition. Slides that accompany today’s discussion are available on the IR website. At the conclusion of our prepared remarks we would be happy to take your questions. As referenced on Slide 2, I would like to remind everyone that statements made during this call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s expectations, depend on assumptions that may be incorrect or imprecise and are subject to risk and uncertainties that could cause actual results to differ materially. More information about those risks and uncertainties is highlighted on the second page of the slides and contained in our SEC filings. We caution listeners not to rely unduly on these statements and disclaim any intent or obligation to update them. During this call we will refer to non-GAAP financial measures. A reconciliation to GAAP is available on the IR website. With that, I would like to turn the call over to Alan.

Thank you, Hunter. Good morning, everyone. Thank you for joining us. It’s an incredibly exciting time at Vonage, and I’m thrilled to be with you to discuss our first quarter results and our definitive agreement to acquire Nexmo, a global leader in cloud communications within the Communications Platform as a Service or CPaaS segment. First, some quick highlights in the quarter. The Q1 results reflect the ongoing execution of our growth strategy in Vonage Business and our continued progress releasing the inherent profitability of consumer services. We had a strong Q1. We generated consolidated revenues of $227 million, a $7 million year-over-year increase. We delivered adjusted EBITDA of $42 million, our best performance in five years. And we grew Vonage Business revenues to $74 million, a 76% year-over-year increase. I will dive into these quarterly results in more detail later, but first, I will explain why our Nexmo acquisition so incredibly compelling. With Nexmo, we are now even better positioned to be the leader in cloud communications. With Nexmo, we are among the largest cloud communication companies in the world, as measured by revenues. With Nexmo we’ve combined the best of UCaaS, Unified Communications as a Service, with the best of CPaaS, Communications Platform as a Service, to deliver the most complete product offering in a massive addressable market. And with Nexmo, we have a huge global cloud communications footprint across the two most dominant modes of communication today, voice and text messaging. Cloud communications includes UCaaS where Vonage is already the world’s second largest independent provider, and CPaaS where Nexmo is also already the world’s second largest provider. UCaaS and CPaaS are highly complementary. And in fact, the combination of the two, we believe will become the minimum table stakes a provider will need in order to serve a…

Thanks, Alan and good morning, everyone. I’m pleased to provide financial details on the Nexmo acquisition, as well as review our financial results for the first quarter of 2016. Let’s go to page 16 of the presentation. Our financial approach to the Nexmo transaction supports the business strategy that Alan outlined. Purchase price for the acquisition is $230 million, with an additional earn out opportunity of up to $20 million contingent upon Nexmo hitting certain performance targets. We believe that this purchase price, including the earn out, reflects the valuation of less than two times 2017 revenue for a company that is growing over 40% organically. This transaction is immediately growth accretive and the revenue multiple compares favorably to those of public status and UCaaS companies as well as private market M&A and capital raises in the cloud space. In addition, we are estimating annual run rate cost synergy’s of $5 million, primarily in the areas of cost of telephony services and G&A. We have carefully structured this transaction to minimize shareholder dilution while maximizing the long-term incentives of Nexmo management. $230 million purchase price is split between cash and stock with some payments now and some vesting over time. Specifically, $195 million will be paid at close, comprised of a minimum of $159 million in cash and a maximum of $35 million in stock. We have the option to elect at close to settle Nexmo’s institutional shareholders fully in cash, thus reducing the amount of stock paid by $23 million. That means that we have the opportunity for 100% of the stock being paid in this transaction to go to Nexmo management and employees and for cash to represent 93% of the consideration to be paid at close. The remaining $35 million of the $230 million purchase price is…

Great, thanks, Dave. Sonia, let’s go ahead and open up the line for questions, please.

Thank you. [Operator Instructions] And our first question comes from George Sutton from Craig-Hallum. Your line is now open.

Thank you, guys. Congratulations on the acquisition. I love the direction and I love the price.

Thank you.

Relative to how you are going to market today with your Vonage Business offering, how is that going to change as you add the Nexmo capabilities? Will this be viewed as a cross sell or will you be going as a combined organization into the enterprise market?

This is Alan. It will initially be a cross sell opportunity because Nexmo is focused on the developer community, both direct to them and also there’s a self-service model as these APIs are virally pulled by developers. Over time, you will see the product offerings come together because as I said in my remarks, we fundamentally believe that companies require both, but it will take some time for that integration to happen.

And as I think maybe this is a question for Clark, as we think through the channel partner group that you work with, how will they view this acquisition? How will they be able to take the Nexmo piece of this to market?

Go ahead, Alan.

From the channel partner’s point of view, we work with our channel partners through our national network of managers. That continues with our existing UCaaS services, just like I describe before, while it’s a cross sell opportunity initially and over time it will become more integrated. We will over time train our channel managers to work with the master agents to sell this enhanced value proposition.

Okay. Understand. Last question for me. As we think through this quarter, you saw some very large deals. What I’m wondering is that the fruition of some hard work over time or is that more of a indication of a macro environment that’s really conducive to some of these larger opportunities, from your perspective.

I will start and then I will turn over to Clark. It’s both. We saw so much activity in enterprise that we reorganized and created a focused enterprise group under Clark. That activity and I think I mentioned on the earlier calls we were seeing this very large amount of RFP activity as the cloud has finally reached into large enterprises. In response to the activity, we knew we had to reorganize around it, because the selling It involves RFPs. It’s a longer process, much more consultative. Your clearly top selling organizations, frequently, et cetera, et cetera. So we organized around it, and now we are seeing that macro trend continue to gain steam. So we are very excited about enterprise opportunities going forward. Clark, do you want to add to that?

Yes. I agree. I think the timing is right for enterprise. We are seeing the market adoption there, but also even more importantly, I think all the work that Vonage through acquisition and organically at through our product set, it’s really that culmination has created a package that’s resonating with these enterprise customers. These enterprise customers demand QOS. We have an MPLS network and we have SmartLAN throughout the country. They demand integration into their world. They don’t want to change the whole CRM world for you, and we have full integration. As you know, the Google for work sales force.com, Office365, and they demand a smooth cut over and that someone really holds their hand through what can be a very large and complex integration and transition to our services. And the proprietary system we have in Zeus has become critical as we create very smooth, large transitions of very large enterprises.

All right. Well, great to hear. Congrats, guys.

Thanks, George.

Thank you. And our next question comes from Richard Valera from Needham & Company. Your line is now open.

Thank you. I’m wondering if you could talk about the reset for the business segment where that is expected to be this year, relative to your prior, I think 50% growth rate for that segment.

Sure. I mean, there are really two components. As we think about business, it’s both the business we have today and then the remainder of the year after we close the Nexmo acquisition. We expect Nexmo to contribute in the mid to high $40 million on a GAAP basis. As we think about Vonage Business revenues without Nexmo, we expect that to come in the low $320 million range. So it’s a single digit number of million of dollars below our original target, and if you think about that, if you unpack that, there are several different factors in there, Alan alluded to the main ones. As I think about it, you really have three. You know, one was the fewer feet on the street going into the second quarter, which Alan talked about. And that had to do with the number of cleanups and getting more efficient sales teams in place. Number two, we had cleanups from the iCore acquisition which we talked about in the past. We spent a lot of time on operationally that there were a number of accounts receivable and credit situations that we had to clean up there and we built that into the purchase price and more for that asset. And then third, slightly lower USF, which is a pure pass through that shows up in the revenue line where we make a prediction at the start of the year but the rate tends to fluctuate, not by too much, but it’s more than $1 million in that difference.

Got it. That’s helpful. And then just I wonder if you can provide some broader commentary on the CPaaS market and sort of where Nexmo fits? I have think you mentioned they were the number two player but can you give any broader sense of that market and the opportunity and their position within that market?

Well, let me introduce Tony, who is the CEO and Founder. Tony, do you want to take that question?

Yes, sir. Sure. So when you look at how the market is going and there’s some items that were mentioned. Enterprises are adopting more integration, communication and also developers becoming more empowered as the cost of building communication solution is dropping, Nexmo filled that gap in the market and is very complimentary to the existing trend that we see in the Vonage Business as we go up towards the enterprise business.

Got it. Thank you.

Thank you. And our next question comes from Dimitry Natis from William Blair. Your line is now open.

Oh, yes, thank you, gentlemen. So I just wanted to confirm – by the way, first, great acquisition. All signs point to the right direction you are taking here.

Thank you.

So very much in line with kind of the bigger themes in the industry. But the question on the Nexmo, you submit the 40. That assumes second quarter or end of the second quarter closing. Just if I’m doing the math here, and assuming that 40% organic growth, that would put you kind of in the maybe $70 million plus range for the full year up 2016, and then assuming the acquisition price of $250 million, including that $20 million earn out and 2x multiple, that would put the 2017 revenue into the $125 million range. So we going from maybe 70 plus to 125 and I just want you to kind of validate that math and the growth rates from 2016 to 2017.

Sure. So on a 2017 basis, you are doing the math correctly and that includes the earn out amount if paid. We are not in a position to give 2017 guidance but you know sitting here right now that’s what we believes the company’s capable of, 18 months out. I think that this is a very, very dynamic market and that may not taken to account you know additional investment that we can make if it’s warranted. On a 2016 basis, your number is a bit light. We would expect a number in the mid-to-high 80s for 2016, but, again, a very dynamic business and it does have different attributes from our current business. The traffic can switch algorithmically and it’s not based on a subscription the way our traditional business is right now but that is what gives you the incredible upside and I think we feel like we’ve got the capability to step on the gas on both of those numbers. So we are looking-forward to getting in close as quickly as possible.

All right. Thanks, Dave. And then maybe the follow-up on the broad relationship you have and how this could potentially impact that relationship. You know, on the positive or neutral side of things, negative side of things how are you thinking about that? They do have kind of an API development platform as well. I forget what it’s called [indiscernible] or something along those lines. How this relationship with Nexmo now being internal, how does that change the relationship with Broad Soft?

So this is Alan, Dimitry. I think it’s neutral to positive. The key thing is as I mentioned, we have our proprietary stack, Vonage Essentials which sells mid market and down and Vonage Premier which is built around BroadSoft on the call processing staff, is mid mark up to the large enterprises. Obviously as the market moves up we are pushing Vonage Premier all the time to those mid market up to large enterprise companies. And as we have done BroadSoft based acquisitions, while we have completed the sort of strategic picture of the product portfolio, we will still be opportunistic geographically from a buy versus build approach as we look to expand sales teams. So that will still be an option to us as we get more entrenched with BroadSoft. Nexmo is the…

Your [indiscernible] strategy regarding rolling up BroadSoft [indiscernible] remains intact and still think that’s kind of an option down the road as well, despite this acquisition of Nexmo?

I wouldn’t necessarily characterize it as a roll up going forward because what we have been very purposeful about in each of these acquisitions is to fill in elements of our strategy. And Nexmo is the same but within the BroadSoft space, we needed to fill in distribution channels, the master agent channels and direct sales. So Telesphere and Simple Signal were the masters, iCore was direct. We had to have coverage geographically. ICore gave us the ancillary cloud products that we sell in. Telesphere gave us Zeus, and the nationwide MPLS network, et cetera, et cetera. What we now have is a completed product portfolio in UCaaS. We actually believe it’s the richest out there. Vonage Premier based on BroadSoft enterprise grade solution to serve up market and our own proprietary to serve more down market. Now, that said, we are trying to grow our sales force, which finding good salespeople is always a challenge and so as we move into other markets and you heard we refer to it as the NFL cities, the other large cities in the United States, it’s a buy versus build. And so we’ll still be opportunistic looking at those BroadSoft based service providers in those marks. I think of it more tactically now because we’ve strategically built out the product. Your question about CPaaS, the marriage of CPaaS with UCaaS is what we see as the strategic direction. That marriage will happen over the top of Vonage and Vonage Premier. Vonage Essentials has our proprietary stack underneath it. Premier has BroadSoft underneath. The better we do in CPaaS, the better both will do underneath. I think in the near term it’s neutral but over time it’s very positive.

Very good, very good. And lastly, on kind of a few housekeeping items. You said Vonage Essentials and premier, what’s the rough run rate mix between the two? I think the last number was 50/50. Is it still in that range? And then secondly, the percentage of revenue coming out of the customers with 250 seats or above. What was that number in the quarter?

Yes, so the mix between essentials and premier continues to be roughly 50/50. That’s right. And, sorry. Your second question was based on seats, percent of seats? Yes. That number is the same as it was last quarter or due to its above 20%.

Thank you. And our next question comes from Catharine Trebrink from Dougherty. Your line is now open.

Oh, thank you for taking my question. I will switch over to the consumer. In your prepared remarks, Dave, you had mentioned that you foresee seeing a decline in the consumer in the low teens for the next several years. Could you please elaborate on the next several years? Is that 2020, 2018, et cetera? Thank you.

Yes, the math underlying the cash know number of at least $600 million of net free cash flow from the Company kept it on the current pace of the low teens decline. It’s a little bit lumpy in some years and, again, it’s a five-year projection, some years it’s a bit higher and some years it’s a bit lower but it averages to that number. That’s the pace we are on. That’s the pace that we feel like we can control and gets us the right subscriber economics and the right cash flow. That being said, we are not targeting a pace. We are targeting an ROI on subscribers and cash flow operating performance from the business. I would also just note that $600 million, and the terminal value as well. I mean, it doesn’t stop there. It keeps going for a long period of time, and you can ask Joe Redling here about the AOL dial up business which is still in existence. Which is this what it could look like into post 2020. But we’ve got the ability to move that cash flow around. If we decide that for whatever reason, including, you know that the opportunity in business is even greater than the amount of capital we are deploying now, we can decide to pull that forward for a higher return opportunity. But this is the pace we are on now and this is the visibility that we have.

All right. So at what point do you think you will be 50/50 consumer versus BBS?

We believe in 2017, our objective, our target is business revenues to be larger than consumer revenues. They will cross over, in our view, in 2017 and for the year business will be slightly higher sitting here today than consumer.

All right. Thanks. And then another question on the channels. Alan, were these several large deals you came out with from a direct sale or from a channel partner?

Direct sale.

And the other question I have in listening to the commentary and question is, it seems even though you have trimmed back for performance reasons your sales organization, do you think you are moving to more direct channel than over a direct over a channel? It seems like this might be a switch here to be more direct than indirect. Any commentary on strategy on your channel? Thank you.

Sure, Catherine. Our strategy has not changed. We support in a robust way channel as well as direct. So we still have 27, 28 Regional Channel Managers. We just hired a new Regional Channel Managers – Regional Vice President Channel Managers in the mountain region, and another one on the West Coast. We have taken under our Chief Sales Officer and [indiscernible] who owns the channel program. We have gone through and made some cleanup changes as I chatted with you about in the past, but we are big time in the channel. As a matter of fact if you had visited us at the channel show in March with a massive booth, we were there meeting with every master and many, many subs all the time. So it remains very important. That said, the field sales is something that is a controllable element for us as well. Remember, we are a multi channel company. So we today are in 10 markets where we have field sales offices. And I have always spoken about the NFL cities strategy, which says I want to be in the major markets and there’s 32 NFL markets. I always tease, we are not going to be in Green Bay but we are going to be in the large cities. So we are only in 10 and we have got 20 more to go. So we are just building them both out as we go, but we intend to be a multi channel distribution company and I have often talked about from inside sales to field and channel to enterprise.

Thank you. In the interest of time we ask that you limit yourself to two questions. And our next question comes from Tim Horan from Oppenheimer. Your line is now open.

Thanks, guys. Tony, can you elaborate a little bit more on what our customers are using your product for and how do you charge for it and maybe what is the secret sauce in the Company? And then Dave, maybe you could talk about the business EBITDA ramp from 2017 or maybe you are not giving 2017 guidance but maybe where you think ultimately the business EBITDA can go to in the time frame on that as it becomes a much larger piece of the Company? Thanks.

Tony, did you hear that question okay?

Yes, sure. I will start covering the first part which is really about understanding our product and the use cases what customers are doing with their platform. And then we will cover more about the secret sauce in terms of getting to the growth. So let’s start with the products that we are offering of we offer APIs that enable developer to embed communication into their business flows applications and web apps. These are APIs of communications, obviously they are messaging, voice, chat up, and we have the largest phone number in the world, virtual phone numbers that are cloud based and also phone verification as well. So some examples of use cases. So in the messaging space, messaging has been used a lot about two-way communication. So for instance, in marketplaces like taxi hailing apps or companies that provide, like [indiscernible] market basis. They creates two-way communication between a driver and a passenger, for instance and they need to have APIs to integrate them into their business flows. These messages are voice. Another example is with phone verification. Phone numbers have emerged as an identity for people online. And phone numbers have been used to identify people and so essentially we see an important trend and phone number becoming the identity and sending a message for a phone call to identify that the person becomes a critical part of the business flow of an online application. And regarding the second part of the question, our secret sauce. So essentially it’s really about lowering the barrier for entry for software developers to build an application faster much more scalable. And also make it global so we cover the whole world in terms of our communication. We have customers all over the world from Asia Pacific, Europe and the U.S., and we enable them to connect with our customers and the users across the globe while providing the high quality of service which we believe will be improved working with the industrial scale voice platform and infrastructure that voice can provide us.

Thank you, Tony.

Just to answer your question on EBITDA around for business quickly this year, as we talked about in the past will be break even to slightly negative. And again, this is allocated EBITDA we are a functional organization. So it’s not the way we run the business or report the business for that reason. But we are targeting as we think about it, at some point, more than half of our business and running consumer solely for cash flow. Our target is to get to a 20% EBITDA margin in business in 2020, and to have a ramp between this year, zero to slightly negative. That’s fairly a step function although, I’m sure it will tend to be chunky, but that’s our target and I think that type of ramp makes sense.

Thank you.

Thank you. And our next question comes from Mike Latimore from Northland Capital Markets. Your line is now open.

Great, thanks. The acquisition looks great. You highlighted a lot about messaging here. I guess I’m trying to figure out how much of the Nexmo revenues is tied to messaging versus say to non-messaging services? And what would be the gross margin on the business?

Sure. So right now most of the revenue is tied to messaging. If you think about kind of four areas and two products, voice and messaging and U.S. and rest of world, the company is very strong in rest of world and very strong in SMS. SMS makes up about 90% of the revenue right now. Opportunity especially with our voice network and history as Alan talked about is to be complimentary and to be strong in both. Obviously, we are a U.S. company. So that’s an opportunity. As it relates to gross margin, it is a fundamentally lower gross margin business than the one that we have today because there is a termination element to it. So it’s sub 50% right now. But two things, one is the EBITDA margin as we talked, we think it will be a small loss this year, which is very different for many SaaS companies and gross margin tends to drop to the bottom line very efficiently because there’s no service delivery and there’s the viral and developer marketing aspect to it. The other thing is that we believe we can add a lot of value on the gross margin line consistent with the kind of voice and SMS complementary comment and we will be able to update and track that as we go.

Great. And then on the three big deals that you highlighted, I guess just to clarify were they first quarter wins and how long does it take to deploy?

Clark will take that.

Sure. They were first quarter wins and we’ve already started deployment on most all of these. So there will be a long runway there of deployment for deals this big but we started and we are moving aggressively on the deployment of these deals.

Did they get deployed this year or more than a year?

Much of it will be deployed this year. Many of these are large enough that it will be over this year, past this year.

Thanks.

Thank you. And our next question comes from Michael Rollins from Citigroup. Your line is now open.

Hi. Thanks for taking the question. I was wondering if you could talk a bit more about your financial leverage target and aspirations. I think on the last call, you mentioned a limit of two and three quarters open a gross basis. Can you talk about how much cash you like to keep on hand and what your target net leverage is and what that means for future flexibility on potential transactions or share buy backs? Thanks.

Sure, that’s exactly right. Mike, our current bank loan limits us to 2.75 times total gross leverage. So within that, we are going to about two and a half, just sub two and a half to make this deal happen and we have got a lot more capital as I mentioned than that, committed through the accordion. So as we grow cash flow, we can actually grow leverage within the current loan. More broadly, and consistent with having gotten some of these accordion commitments, we believe that based on the performance of the business and the cash flow, and the state of the bank market and what we are hearing from our banks that there’s more capital and more leverage head room out there. We’re pretty confident in that dynamic. I don’t see us being over three times consistent with the comments before, I don’t see its being over three times for any sustained period of time. We go above three times to make an acquisition. I think we would, if it were compelling enough, but I think we get back down below three times relatively quickly. And our models show that we do pay down the debt that we are taking on by Nexmo but also future debt that’s available to us relatively quickly just through the cash flow of the consumer business. In terms of the long-term target, we are not there yet. It is really much more about feeding the strategy at this point and making sure we are facilitating that but, again, I don’t see us having a target above three and it’s probably in the low two range on a steady state basis.

Thank you.

Thank you. And our next question comes from Robert Routh from FBN Securities. Your line is now open.

Yes, thanks for taking my question. A couple of questions, could you first update us on what your remaining share buyback authorization is given what you have done and do you foresee going through that and reauthorizing once you do? Because I think they are pretty close to what have you currently.

Yes, so we have got $100 million four-year program that was authorized at the start of 2015. So it runs through 2018. To date we brought back $26 million. So roughly a quarter of that over the course of five quarters. So we are relatively close to the pace of the authorized buyback. I think that we – as I said in my prepared statements, I think that we continue to think about the buy backs as a very flexible tool that has been deployed in a successful or accretive way and that’s how we look at it going forward. I would say, just putting that together with the sort of Mike’s question, we do have – we are going to have, upwards of $350 million of gross debt post this transaction. So we have also got a leg of the stool, which is managing our balance sheet. So we need to balance those things, but the buy back is still authorized, there’s still plenty of head room there and plenty of time on the authorization so management can still use it as a tool.

Okay, great. And just along those lines have you ever thought about selling [indiscernible] stock out of the money as part of the buy back? Where, if you don’t get the stock you keep the premium and if you do you’re buying it a lot cheaper than it is? Because given the results it seems like your stock should not be going down. It seems like that might be something to consider as a way to participate and also not use your capital or give you a lower price in the market and put your stock somewhere. I don’t know if you considered any creative strategies like that?

We are always assessing different strategies and I think willing to be creative. We have not used a buy back as a trading strategy to date. It’s been more about capital allocation and balancing that with leverage management. We are always getting pitched on various strategies from banks and we are willing to look at them where they make sense and don’t create too much complexion.

Great. Fair enough. And just two more if I may. As far as the given the acquisitions you just made today, what do you think the potential is for you guys to make more acquisitions this year given the size of this and obviously how much it changes the Company? Does it kind of further slow down your ability to continue buying other things are doing more deals as you integrate this, or do you still think we could see a year like 2015 in terms of the number of transactions you may enter into?

I think the practical reality is that we will slow down, simply because of just the digestion issues. Nexmo is the largest size acquisition that we have done both in terms of revenue and absolute dollar size. We expect to have more liquidity through this going back into the bank market, but we don’t know that be and as I mentioned to an earlier question, we filled out strategically all the piece parts and so now I think of it in a very opportunistic way, more tactically, if I’m trying to move into a given market and there’s an opportunity to buy a local sales force or BroadSoft service provider. In a sense I think it as an inexpensive and quick way to get into the market and have customer acquisition costs, then we might do it. But we think about it in a tactical opportunist way.

Okay, yes, that makes sense. That’s what I thought, great. And last question, you know, given this acquisition, I know you said for the balance of this year, you think Nexmo will be EBITDA negative, I misheard that. Can you give us a sense of what that EBITDA could be and what the free cash flow, if I don’t have any but what the cash flow deficit from Nexmo is. And, are you going to inherit any NOLs from this acquisition? Obviously, if they haven’t made money, they must have losses. I wonder if that could increase the tax asset for you or not? Or if there’s any other hidden assets through the acquisition that you would also be buying that would increase your equity value?

Sure. So yes, we will inherit NOLs and so that will add to our NOL balance. The Company does not use much CapEx. So EBITDA really is free cash flow and I think in terms of looking forward we are not yet in a position to guide on that. But, we are talking about very small numbers to the extent that it’s negative this year and then I think we will calibrate how much stepping on the gas we want to do once we own the Company.

Okay. Fair enough. Fair enough. Great. Can you give us any sense of the size of the NOLs that you will be acquiring in terms of how it will increase your future tax yields?

We’re still working through that exact calculation.

Okay. Is it material, though?

You can see in the slide, this was a small company, not too many years ago. So you can get a sense there. So they were generating losses like any start-up, but, yes, we are not yet in a position to quantify that.

Ladies and gentlemen, this does conclude our question-and-answer session for today. I would like to turn the call back over to Hunter Blankenbaker for any further remarks.

Great and thanks, Sonia. We appreciate everyone’s time today and we look forward to speaking and seeing everyone throughout the quarter. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.