Honest (HNST) 2026年第三季度业绩电话会：创纪录利润率与上调业绩指引

核心要点

• 2026年第三季度列报营收同比下降8.6%至8460万美元，反映了战略性退出部分业务组合以及纸尿裤业务收入下滑的影响。在湿巾和个人护理业务的带动下，内生性营收同比增长9.2%至7930万美元。
• 在供应链效率提升、履约成本下降以及有利的产品组合推动下，基础调整后毛利率达到创公司纪录的48.9%，同比上升1160个基点。
• 调整后EBITDA为630万美元，占列报销售额的7.4%。基础调整后EBITDA利润率为7.9%，同比上升300个基点。
• 湿巾消费量增长15%，个人护理消费量增长11%，而纸尿裤消费量下降27%。湿巾和个人护理产品目前占内生性营收的75%以上。
• 截至季度末，Honest拥有1.03亿美元现金及现金等价物，无负债，年初至今自由现金流为3050万美元。在完成此前2500万美元的回购计划后，董事会批准了一项规模最高达3000万美元的新股票回购计划。
• 管理层上调了2026年全年的内生性营收增长率、调整后毛利率和调整后EBITDA预期。

关键财务数据

8940万美元的税收收益源于此前对递延所得税资产计提的估值备抵几乎全部转回。为支持湿巾和个人护理业务，营销支出增加290万美元（即20%），但部分被销售、一般及行政费用的下降所抵消。

业务与经营表现

湿巾类总消费量增长15%，是同品类增速的五倍以上。婴儿湿巾增长4%，而同品类整体增速仅为1%。可冲水湿巾大增近170%，Honest的市场份额同比翻倍，消毒湿巾则增长41%。

个人护理消费量增长11%，而同品类整体增速为4%。Honest表示，公司在婴儿个人护理整体市场中仍保持第二大品牌地位，市占率超10%。其《玩具总动员》（Toy Story）系列在不到一年的时间内已占据儿童个人护理品类2%以上的市场份额。

纸尿裤仍是产品组合面临的主要压力，其消费量下降27%。管理层表示，由于公司重点发展增速更高、利润率更高的湿巾和个人护理产品，该项下滑早在经营计划的预期之内。

年初至今，湿巾和个人护理产品的分销覆盖增加了近20%。家庭渗透率达到近8%，自2022年以来Honest已新增近300万户家庭。无孩家庭目前在Honest用户家庭中占比过半，湿巾则是他们接触该品牌最普遍的切入点。

管理层业绩指引

管理层预计将在第四季度增加销售、一般及行政费用（SG&A）以及营销投入，以支持品牌建设、提升家庭渗透率并构建可规模化扩张的运营能力。公司表示，2026年取得的结构性利润率改善趋势依然稳固，但计划在明年初提供关于2027年毛利率更详细的预期。

风险与关注要点

当季消费增速放缓至1%，主要原因是亚马逊会员日（Prime Day）从去年的第三季度移至2026年第二季度。年初至今，消费量增长6%，相比之下内生性营收增长近7%。

列报营收持续受到业务组合退出、服装库存清仓以及纸尿裤销售疲软的影响。此外，相较于48.9%的基础调整后水平，服装清仓也拉低了列报毛利率。

尽管管理层坚称供应链、履约及产品组合的改善属于结构性举措，但计划中更高的营销及SG&A投入可能会对第四季度的短期经营杠杆产生影响。

分析师问答要点

管理层表示，O5服装授权合作预计对2026年业绩的影响微乎其微。更详细的预期计划于2027年初公布。

在被问及无孩客户群体时，管理层表示，这类客户的购物篮构成有所不同，因为其中不包含纸尿裤。然而，可冲水湿巾、润肤露、洗发水和沐浴露等产品可能会被用于家中的多个房间，且湿巾有助于带动复购和订阅。

在资本配置方面，管理层重申，再投资以扩大业务规模仍是首要任务。向股东回报资本位居次席，并以1.03亿美元现金、超过3000万美元的年初至今自由现金流以及零负债作为坚实后盾。

财报电话会议完整实录

完整财报电话会议逐字稿

管理层陈述

Operator

At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand has been raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host, Chris Mandeville, Vice President of Investor Relations.

Unknown Speaker

Good afternoon and thank you for joining our third quarter 2026 conference call. Joining me today are Carla Vernon, our Chief Executive Officer, and Curtis Bruce, our Chief Financial and Operating Officer. Before we begin, I will remind you that our remarks today include forward-looking statements and that actual results could differ materially from those projected. Please review the risk factors described in our most recent Form 10-K and our subsequent filings with the SEC. We assume no obligation to update any forward-looking statements. We will also discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release and in the appendix to the presentation posted on our Investor Relations website.

Finally, please note that all consumption data included in our discussion today, unless otherwise noted, will reflect Circana MULO Plus measured channel data for the 13 weeks ended September 27, 2026, as compared to the prior year. With that, I'll turn the call over to Carla.

Carla Vernon

Thank you, Chris, and hello to everyone joining us. Three quarters into this year, Honest has done what we said we would do. We have grown the top line and expanded margins to record levels. This strength is an outcome of methodical improvements and focused execution. We believe these results are durable and enable us to continue building this generation's most iconic personal care brand. With our year-to-date performance, we are raising our full-year outlook on both the top and bottom line. further signal of their confidence in Honest's continued growth and financial health the Honest board of directors has authorized a new $30 million share repurchase program in a few moments Curtis will share additional details about this program Now, let's take a closer look at our third quarter performance. Organic revenue grew by over 9%, led by wipes and personal care. underlying adjusted gross margin reached 49%, a new record for the company and an improvement of nearly 1,200 basis points compared to the prior year period. underlying adjusted EBITDA was $6.3 million, resulting in an underlying EBITDA margin of 7.9%, which is an increase of 300 basis points year over year.

During this period of strong financial performance, our consumption growth for the quarter moderated to 1% growth over the prior year. The shift of Amazon Prime Day from Q3 last year to Q2 this year accounted for the vast majority of the change in our quarterly trend. Looking at our year to date, our organic revenue and consumption remain well aligned, with organic revenue up 7% and consumption up 6%. Additionally, our trends remain consistent from prior quarters, with significant strength in our personal care and wipes portfolio, which now make up more than 75% of our organic revenue, and Q3 consumption of these categories grew by 13%. Now I'll share the detailed performance across our categories, beginning with wipes. Your honest community loves our cleanly formulated and sustainably designed wipes for their excellent performance. and with wipes in categories including baby wipes, flushable wipes, hand sanitizing wipes, and makeup remover wipes, we have an option for almost every room in the home or every bag that is taken on the go. Our total wipes portfolio grew 15%, which is over five times faster than the comparative category average.

And now, turning to our three largest subcategories of wipes and their consumption strength in the quarter. Our Honest all-purpose baby wipes, the category's leading natural baby wipes brand, grew 4% versus category growth of 1%. In Q1, we introduced our newest addition to this collection, the 1152-count MegaPak, which is the largest configuration we've ever had in our wipes portfolio. We are seeing strong performance as more households discover this offering. And the MegaPak was instrumental in helping our portfolio take the number one position in total baby wipes during Amazon Prime Big Deal Days last month. And now, let's look at our flushable wipes. Our flushable wipes, which are made with 99% water and begin to break down as fast as toilet paper does, grew nearly 170% in the quarter. and we remain the fastest growing branded player in the segment, doubling our market share year over year.

And finally, our sanitizing wipes grew 41%, which was more than two times faster than the category. This quarter, we also expanded distribution of our hand sanitizing wipes as we launched our naturally scented grapefruit variety into the drug channel with the addition of CVS. The strong growth in consumption and market share is a sign of the trust that we have earned by holding to the honest standard in every product in our portfolio. It is our commitment to offering a portfolio formulated without using 3,500 ingredients of concern. This consistency makes the Honest brand an easy choice for households with sensitive skin and a high standard for clean. In addition to the growth of our WIPES portfolio, we also saw strength in our collection of personal care, where honest consumption grew 11%. was almost three times faster than the comparative category growth of 4%. With a collection designed to bring joy to daily routines, Honest is the number two ranked brand in total baby personal care with over 10% market share.

And this year, we expanded our personal care collection into the big kid aisle with our fun collection of Pixar's Toy Story shampoo, body wash, lotion, and bubble bath. In market for less than a year, it has already taken more than a 2% share of the kid personal care category and can be found in retailers including Amazon, Walmart, HEB, and select Ahold Delhaize grocery banners. With the holidays just around the corner, our Disney offerings featuring Toy Story, Winnie the Pooh and Friends, and Mickey Mouse make the perfect seasonal gifts and stocking stuffers. While wipes and personal care both grew well ahead of their categories, our diapers continued to be pressured. Paper consumption declined 27% in the quarter. Our losses were not unexpected and were reflected in our plan. We know that there's an important segment of families that want a diaper thoughtfully designed to meet a high standard of sensitivity and care.

And our focus is to provide the best option for these families at a price that works. Zooming out, we provide a broad range of Honest branded offerings across the baby and toddler aisles, including diapers, baby personal care and our licensed baby apparel product. This allows us to have a wide variety of ways to introduce young families to honest and our high standard for clean done joyfully. By leaning into our higher growth, higher margin personal care and wipes platforms, we are unlocking new scale and financial strength for Honest. our current fiscal year this strong performance can be seen across measures year-to-date we have delivered nearly 7% organic revenue growth an underlying adjusted gross margin of over 45% record profit margins and a robust $a hundred three million in net cash All of this gives us great confidence in our trajectory. Yet our most promising growth opportunity lies in narrowing the gap between our current household penetration and the full opportunity of our addressable market. Since 2022, we have welcomed nearly 3 million new households to Honest. And in Q3, our household penetration of nearly 8% continued a multi-year trend of household growth.

The opportunity is clear when we look across our categories and see that our leading competitors have anywhere from seven to 12 times more household penetration than honest. In flushable wipes, our fastest growing collection, household penetration is still under 1%. of household penetration contributes meaningfully to our scale. For example, whether looking at baby personal care or flushable wipes, each additional point of penetration is estimated to be worth as much as 25 to $30 million in annualized retail sales. With one brand that brings a trusted and consistent meaning across all of our categories, Honest has a unique ability to be well accepted in every household demographic. Our initial strategy began with making products that earned the trust of the 11% of households with babies. With nearly half of all parents expressing concern that their children have sensitive skin, Honest fits right in. But we also know that according to the National Institutes of Health and Industry Research, sensitive skin affects over 70% of adults.

With this inspiration, we expanded our mission to include the remaining 89% of households with big kids or no kids at all. in the third quarter, our growth in household penetration was a result of our successfully reaching these older households. Today, households without children make up more than half of all honest households. The broad trust of the honest brand across households is one of our advantages. We also benefit from the variety of categories we serve. Across our categories, we see that one honest product can serve as the introduction to an honest product in another category. households that arrive through wipes find their way to personal care and vice versa. And as we continue to grow and build trust with these households, we are turning everyday routines into repeat purchases, and repeat purchases turn into lasting subscriptions. Our progress in securing new households is grounded in our strategic pillar of brand maximization. the pillar that guides our efforts to scale the honest brand in availability, revenue, awareness, and trial.

We drive these gains through two key brand maximization levers, physical and mental availability. Let me begin with physical availability, which is our focus in expanding our core items and innovations across more aisles, sets, and digital platforms. The physical availability of our wipes and personal care are a great example, with distribution up nearly 20% year-to-date. As we continue to scale the Honest brand, we are investing in consumer messaging to drive long-term growth. Whether our community shops online or in-store, we want Honest to be the brand that they think of first and add to their shopping list by name. This is precisely the goal of the lever we call mental availability. This year, we are expanding our marketing efforts to build awareness, encourage trial, and deepen brand affinity across a broader range of households.

In the third quarter, this included the launch of the Mother of All Standards, a full funnel campaign that highlights what differentiates Honest, our high standards for clean ingredients, effective performance, and joyful design. The Mother of All Standards campaign debuted with national and streaming TV advertising. The strength of this campaign message is its ability to connect our products across categories and bring the Honest Brand to life in new ways. In September, we expanded the campaign with a major activation around the U.S. Open Tennis Championships. This was an opportunity to bring Honest into a moment of cultural significance through an authentic connection, the high standards that shape the lives of extraordinary athletes. Our out-of-home advertising appeared across New York City on buses, in subway stations, on billboards, and in prominent locations around the tournament. At the center of the experience was a conversation hosted by Honest between Maria Sharapova, a five-time Grand Slam champion and former world number one tennis player, And Allyson Felix, the most decorated woman in Olympic track and field history.

With more than 50 lifestyle content creators in attendance, these two remarkable champions had a deeply personal conversation that volleyed back and forth about the standards that have shaped their lives as athletes, women, and moms. In addition to the strong social media impressions generated by our creator community, the event marked one of the few times Maria Sharapova has stepped on a public court since her retirement. We are honored that she shared that honest branded moment with her 4.8 million followers in a video that generated almost 19 million views, becoming one of the highest performing posts of her career. by any measure, a very good return. Along with a great boost in brand awareness for the campaign, we also saw Q3 search interest in Honest rise roughly 40% over the prior quarter. With our The Mother of All Standards marketing campaign, we're making the investments necessary to expand our reach and earn our place in new households, Powerful brand building investments like these drive our business forward. Additionally, our strategic pillar of operating discipline is what lets the business turn that investment into an increasingly sound and effective business structure. We are putting that same rigor into the systems and capabilities of the enterprise.

This quarter, we added some core technology and information management systems that support data-driven decisions and greater financial efficiency. Today, we are a more growth-driven and structurally profitable enterprise. More people are choosing Honest, and it's undeniable that the brand has graduated from early stage to center court. With a clear balance of investments and executional discipline, we will continue to execute on our three strategic pillars of brand maximization, margin enhancement, and operating discipline. With this progress in hand, we believe Honest is well positioned to be the most iconic personal care brand of this generation. And now I will turn the call over to Curtis to provide more detail on our third quarter financial performance and raised outlook.

Curtiss Bruce

Thank you, Carla, and good afternoon, everyone. The third quarter is our strategy showing up in the numbers. We delivered record margin. growth concentrated in the platforms we chose and cash generated without leverage. That is the earnings power of the honest model we have built to last. Let me take you through the quarter and then our updated outlook. Starting with the top line, third quarter reported revenue was $84.6 million, a decrease of 8.6% compared to the prior year period. This decline reflects the strategic exits underpowering Honest growth and lower diaper revenue.

On an organic basis, revenue increased 9.2% to $79.3 million driven by wipes and personal care. Turning to gross margin, our Q3 reported gross margin came in at 45%. On an adjusted basis, gross margin was 45.8%, an improvement of 850 basis points. Excluding the dilution from our apparel inventory liquidation, our underlying adjusted gross margin was 48.9%. That is a record for the company and an improvement of 1,160 basis points. This expansion was driven by supply chain efficiencies, lower fulfillment costs, and favorable mix. Adjusted operating expenses increased $2.3 million to $36.5 million.

The increase in operating expenses was driven entirely by a $2.9 million or 20% increase in marketing to support our higher growth, higher margin wipes, and personal care platforms. This was partially offset by lower selling general and administrative costs. Net income for the quarter was $91.3 million compared to $0.8 million in the prior year period. Results include an $89.4 million income tax benefit related to the release of substantially all of our valuation allowance against deferred tax assets previously carried on our books. This outcome is a testament to the hard work across our entire organization to execute on our strategy. It reflects the objective strength of our current financial model and management's clear expectation for sustained positive earnings in the years ahead. Adjusted and underlying adjusted net income were both $3.1 million compared to $0.8 million in the prior year period.

Adjusted EBITDA was $6.3 million, or 7.4% as a percentage of sales, and 360 basis points above the prior year. On an underlying basis, which removes apparel liquidation revenue, our EBITDA margin was 7.9%. 300 basis points above the prior year. Our asset-light operating model continues to provide financial flexibility. We ended the quarter with $103 million in cash and cash equivalents and zero debt. Year to date, free cash flow was $30.5 million. Turning to capital allocation, this quarter we completed our inaugural $25 million share repurchase program, which was authorized this past February. With that execution behind us, and with the balance sheet strength I just described, our board of directors has authorized a new share repurchase program of up to $30 million, effective immediately.

This decision is a direct reflection of our confidence in the structural improvements we have made to our operating model and in the cash this business now generates. We believe our current valuation does not fully reflect those improvements. The program underscores our commitment to a disciplined capital allocation strategy. one that balances reinvestment in our growth initiatives with a clear focus on returning value to shareholders. Given our year-to-date execution, we are raising our full-year guidance. Our updated full-year 2026 outlook is as follows. reported revenue in the range of $322 to $325 million, up from $319 to $325 million. Organic revenue growth of 6% to 7%, up from 5% to 7%. Adjusted gross margin of 45.5% to 46.5% up from the mid-40s. and adjusted EBITDA of $25 to $26 million, up from $23 to $25 million.

Let me provide some additional color on Q4. As part of our ongoing strategy, we're stepping up our investments in SG&A and marketing. This is deliberate as it funds the capabilities that let us scale efficiently and the brand work that drives household penetration, is the measure that compounds for our business over time. At the same time, the structural margin improvement we have delivered so far this year remains intact. Taken together, the third quarter is a continuation of what we delivered all year. growth concentrated in our priority platforms, a business structurally more profitable than a year ago, cash generated without leverage. Ultimately, this consistency powerfully validates our strategy. It It gives us the confidence to raise our outlook today and the conviction that we will continue executing at a high level moving forward.

With that, I will turn it back to Carla for final remarks.

Carla Vernon

Thank you, Curtis. Before we move to Q&A, I want to express my deep gratitude to our incredible team of honest butterflies. results are a demonstration of what a modern personal care company can deliver when the brand, the portfolio, and the P&L are pointed in the same direction and operated with excellence. taken together, our performance to date, and the strength of this team gives us the confidence to deliver the raised outlook we shared today. Anchored by the honest standard, we are on course to be this generation's most iconic personal care brand. With that, I will now turn it over to the operator to open the line for questions. Thank you.

Operator

As a reminder, to ask a question, you will need to press star one one on your telephone. And we ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. Please stand by while we compile the Q&A roster. And our first question, one moment please. And our first question comes from the line of Aaron Gray with AGP, Alliance Global Partners.

分析师问答

Aaron Grey

Hi, good evening. Thank you for the questions and nice to see the accelerated organic growth. First question for me just in terms of the 4Q guide on the top line. So the implied 4Q 76-79 just want to get some clarification on whether or not that does include Imperial if that's all organic I know last quarter you called out 10 million total in apparel left. I think you're about 8.5 for the last two quarters. So if you assume 1.5 in the fourth, that gets you about implied 4 to 9 percent organic growth for 4Q. Just wanted to know if I was reading through that correctly. And then if so, just any driver's potential. to the deceleration in growth in 4Q implied.

Thank you.

Unknown Speaker

Aaron, good to talk to you again. The guide of six to seven on a full year for organic revenue is inclusive of everything that we know today about apparel and what we have been doing both in Q3 and in Q2 is excluding that from organic revenue. And so I hope that clarifies it for you. And then the second part of your question, can you repeat that for me again, please?.

Aaron Grey

Yes, I guess so for the total revenue number, does that have any apparel in there?.

Unknown Speaker

In the reported number, we have about 1.4 million of revenue in the quarter related to apparel.

Aaron Grey

Okay, that answers that question then. Thank you. Great, thank you. Second question for me, just sticking on apparel but switching over to the license agreement, can you give any incremental color? Now, I know it was a new announcement last quarter, but what we should expect in terms of the ramp, the O5 partnership, what they have planned, and how to think about potential contribution to the P&L? Thanks.

Unknown Speaker

Yes, excellent. So, yes, it's O5. They have been a great partner for us so far, as we have been talking in the last quarter throughout the rather immaterial impact on our performance. And we will come back in earlier and give you some more guidance on the exact Yes, excellent. So, yes, it's 05. They have been a great partner for us thus far. As we have been talking in the last quarter, throughout 2026, it would be a rather immaterial impact on our performance. And we will come back in 2027, early next year, and give you some more guidance about what we expect. but we're pleased with the partnership so far. Thank you.

Operator

And our next question comes from the line of Anna Laskin with B. Riley Securities.

Anna Glaessgen

Hi, good afternoon. Thanks for taking our questions. Nice outperformance in the quarter. I wanted to ask on a little bit of the timing of expenses between 3Q and 4Q, obviously some nice upside versus the street. Wondering if there was something that shifted into 3Q or potentially just to understand the difference in expectations. and maybe some costing that may have shifted between the quarters thing.

Unknown Speaker

Yes, so first, we're very pleased with the quarter, both top line gross margin and EBITDA delivery really came in in line with our expectations. I'll just reiterate that, you know, when we last spoke, we did talk about a step up in the sales. second half against SG&A and marketing. You saw that or marketing in the quarter up 20% year on year, and we will continue to expect to do the same thing, similar things in terms of investing in SG&A and marketing in Q4, again against our personal care and WIPES higher margin platforms.

Anna Glaessgen

Great. And then following up on that, we've now seen gross margin in at least 45% in 3Q or close to 46% projected around 45% in 4Q based on the guide. Should we be expecting 40s gross margin to be carried through going forward.

Unknown Speaker

Yes, I think what I would offer you here, Anna, is that we are really proud of the structural improvements that we've made in 2026. The improvement in our supply chain, the improvement in mix is exactly what we expected and what we committed to actually this time last year when we announced powering honest growth. So we are really proud of that. The structural improvements are here to stay and we'll provide more color. on what the expectations are from a gross margin standpoint in early 2027. Thank you.

Operator

As a reminder, to ask a question, please press star 11 on your telephone. And our next question comes from the line of Owen Rickert with Northland Capital Markets.

Owen Rickert

Hey Carla, hey Curtis, thanks for taking my questions here and congrats on another awesome quarter. First one for me, just on the non-parent households, I believe you mentioned it makes up more than half of all honest households now, which is pretty incredible, but do these no kids households have this similar repeat purchase and subscription economics as your original baby and parent households, or do they show a different LTV basket size retention that's meaningfully different?.

Carla Vernon

Hi, Owen. Great to hear your voice. What I would say as I think about the role that these households play in our portfolio is it probably should almost go without saying that they're buying different kinds of items, right? By default, the no-kid households are not buying these big single units of diapers in their transactions. So you are right, I think your intuition is right, their baskets are different. The other thing to take into consideration is that they are purchasing items that typically are purchased, one, for more than one room in the house. Often, if you think about something like lotion or shampoo, body wash, and you think about your own house, it's a very different kind of purchase or flushable wipes. Often people will, for example, purchase a flushable wipe. They have one that's on display.

They have another spare in the cabinet. They've got multiple bathrooms in their house that they're putting them in. So it is a very different kind of purchase dynamic. And then the other thing that is structurally important to know is, and I know we've said this, so for people who are forgive me for repeating myself, but the baby households make up 11% of U.S. households. Big kids, that we defined by kid households with kids ages 7 to 17, is a bigger population, that's 14% of the United States. And then we see that the households that we been calling the no kid household that could be a household that like my own where there were kids but they're grown up now or that could be a household that hasn't had kids or doesn't have kids that's 70% of households so it's a much bigger addressable market the buy rate that we see in the no kid households often starts in the wipes category. That is the most common entry point for a no-kid household for us in our portfolio.

And we love that because that's a loyalty and a subscription type of item. And often it's an item that you just don't buy in singles.

Owen Rickert

Got it, got it. Super helpful. And then secondly, for me, you know, great to see the new repurchase authorization after completing the prior one. But how are you thinking about the balance between repurchases versus reinvesting in brand building and innovation at this point? stage of the turnaround.

Unknown Speaker

Yes, Owen, I mean, it's great, right, that we have 103 million of cash. We are generating our free cash flow is north of $30 million in this year, and we continue to have no debt, right? So we are in a pretty advantageous position. We continue to think about first reinvesting in the business to scale, right? That is still our number one priority. And then we have the flexibility. to continue to return value to shareholders as the secondary coming into our allocation strategy. And so that remains unchanged. And the reauthorization that was just agreed to with our board, I think is a indication of the confidence that we have and being able to continue to drive the performance that we've had over the course course of 2026 into the future. Awesome. Super helpful. Really appreciate it.

Operator

Thank you. Now I'm showing no further questions. So with that, I'll hand the call back over to CEO, Carlo Vernon for any closing remarks.

Carla Vernon

Such a pleasure to be with you all for our Q3 earnings. We look forward to talking to you next quarter and thank you so much.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.

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