PTC Inc. (PTC) Earnings Call Transcript & Summary

Good morning, everybody. I'm Tyler Radke. I co-head the U.S. software sector here at Citi. Welcome to day 1 of our Tech Conference. For the second presentation, and I think this is a software room. We have PTC here. We got Mike DiTullio here.

Mike, I think for investors who may be unfamiliar with your role, could you just give a brief overview, how long you've been at the company? What are the areas of responsibility that you look over at PTC?

Sure. Well, first of all, thanks for having us, and nice to meet everyone here. I see a few familiar faces, but I haven't met everyone. So Mike DiTullio, my current responsibilities are President and COO of PTC. I'm coming up on year 25 at PTC, so long history. My bones were cut in the sales organization. So I ran sales of every size, including the entire global sales and marketing operations. For a bunch of years actually held that role when we cut over to a subscription model. So that was a pretty big transformation for the company of 7 or 8 years ago. And what else would I say? A couple of major executive spots. I ran Europe for PTC, did next [ pad ] assignment over there. Jim actually had me look after what we call our Velocity business unit, which were the 2 new pure native SaaS businesses we bought that we kept separate, ran that for a few years, and then I've been in this [ wall ] for just over a year.

Yes. A lot of different exposure and a lot of history with the company. Maybe we could start on Jim. So he's stepping down as CEO. I think also been there 25 years. Give us your thoughts on the CEO transition, how do you see the -- with Neil coming in from ServiceMax? How is his vision going to be different? Or what are kind of your thoughts on the transition?

Yes. Well, I mean it's a big deal. And kudos to Jim. I mean, he deserves to start a next chapter of his life. He sees -- I think he started at PTC one year ahead of me, so our careers have been intertwined and an amazing run. I guess I would say I can't imagine this process going any better just to net it out. CEO succession can be -- I think it can be disruptive. But in this case, the amount of thought that Jim put into, his timing, the selection process, even the transition process have been A+, certainly, internally, that's the way we feel and hopefully externally, you feel the same way. And then that brings me to Neil, which is -- I don't know, some of you who have had a chance to meet him. But if you haven't, when you do, I think you'll quickly arrive at the same conclusion we did, which is we got the guy to run this company for the next chapters of PTC. Very qualified, 2-time CEO, extremely smart, high EQ, finance background and a very quick study. And maybe lastly, not to be lost is the type of company he's run, [ the bolted software companies ], but ServiceMax in particular, has a very similar business model. They sell to the same type of customers we do. And so I just think there's a lot of goodness there. So we feel good about it.

Yes. Yes. And maybe just kind of frame where PTC is on this journey. I mean, you've been at the company a number of years. You oversaw a very successful subscription transition. There's been kind of this new initiative, new -- towards the SaaS transition, you've made a number of acquisitions in the market. Kind of how does the growth outlook look for PTC? What are the key drivers over the next 3 to 5 years that were maybe different over the last few?

Yes. And you're right. They have been three major chapters we sometimes sell that was the $0 to $1 billion in 10-year time in the '90s. Then we call next decade, we call lost in the woods a little bit. Like we weren't that [ interested ] from growth. And quite frankly, we weren't that interested from a profitability standpoint. But mostly under Jim's tenure, there's been a very, very interesting turnaround in this company, and I've been at his hip. So there's a lot of pride there. If you talk about going forward, I know the question gets asked, it's very interesting, how sustainable is it? I mean we've been busy over the last 7 or 8 years. I don't think anyone would say worth rested on our laurels. There's multiple things that have gone on, one you mentioned, the cutover to a subscription model for PTC. I lived in the old world. Some of you may have covered software companies. The old perpetual world is no way to live. It's no way to be predictable. I mean, it's crazy. Whether or not you close a deal at 11:59 or 12:01, is crazy. And as an investor, it's also a crazy way to try to figure out are they doing well or not. This sort of smooths that out and you actually see true growth, and it's a much better business model, much better business model. If you were choosing from scratch, you'd choose subscription all day long. So the fact that that's behind us, we're going to wake up, and it will be October 1, and we'll start at $2 billion, just under $2 billion, not $ or maybe the maintenance revenue we had. And in a business like ours, which is, I guess, not to couch my words, it's a very sticky business. When you put CAD and PLM, and you don't swap them out every 6 months. And so our recurring business model with sticky products is -- it's a very attractive business model. So there's that, and that's here to stay. I'd also point to, if you watch us closely, and you think about our heritage and our DNA, we've been very thoughtful acquisition strategy. We've been pretty active on M&A, but not M&A just to plug in growth, somewhere thoughtful M&A about what is it that we do uniquely and what belongs as close relatives to us and maybe even more so to sell to the same customer base. I mean that's -- it's actually a big point in our ability to cross-sell is pretty good. So when Jim and the strategy team thoughtfully buy companies that are close relatives to our DNA, in particular, with our existing customer base, that's a pretty good growth model there. We did some -- Matt and I were talking this morning. We did some analysis if you think about the portfolio, and I can go through the acquisitions over time, if that's helpful. But we're about 15% penetrated in our existing customer base, so that's a model you can sort of bet on. We have a history of cross-selling our base. If you had to sell a brand-new product to a brand-new market, that's risk all over it, but we've bought close relative products that can be sold to our existing customer base, and we're only about 15% to 20% penetrated.

Yes.

You could add on from there. These are sort of layers of things that have been happening that I think create sustainable growth. PLM. PLM is approaching a 30-year business. But if you actually look at it, it really is just hitting its stride right now as an enterprise system rather than an engineering system. And it happens to be at the heart of digital transformation, which for industrial companies is really important right now and has legs for as far as you can see out. And then lastly, we've talked about this, but our move to SaaS, right? So that's another layer. It's in the early stages right now. It's sort of not so meaningful yet in our top line numbers. But as some of you will remember, we told the story that the market will go. I mean, we're not bringing fire to caveman here. Like our little corner of the world is one of the last places to move to the cloud. And there's reasons for that, people were worried about whatever IP protection and security. Those are reasons to go to the cloud, by the way. But every other part of the business has moved to the cloud. Ours will too. And we have sort of said this will be a 10-year run, an S-curve. It will be slow getting started for the first few years, then we'll hit probably the fat part of the curve and then the long tail where those who are going to go will go. So I don't know, all those things are actively going on right now and have been thoughtful. So I think that's probably the best answer -- sustainable.

That's a great frame. I'd love to dive in a little bit deeper on each of those areas. And one question we often get is just on the PLM side, which you talked about. It's a market that's been around for a long time, but I mean your PLM growth today is probably the highest it's been in, I don't know, a very long time, at least since I've been following the company. So can we just unpack that a little bit, I guess, what is different about the environment today where enterprises are standardizing, like what's kind of the catalyst to move this from an engineering system to a kind of a broader enterprise platform?

If I was going to be simple, let's say, digital transformation. I mean -- because what might have been a nice idea for very proactive customers is now like front and center. The macro issues that are driving digital transformation aren't going away, workforce issues, solving sustainability and it just so happens that those macro initiatives, PLM actually plays a pretty big role in it because if you make a product, the way you do it and the decision support, you get the insights you get, determine a lot about top line growth and top line profit. And for us, we -- our history has been the selling to companies who have complex products, planes, trains, automobiles, things that live for 40 years. And so it just turns out the PLM is pretty important to that. PLM isn't a thing. It has roots in like core product management and just think of it as layers of an onion. As the enterprise starts to say, wow, that's pretty important, then there's more users. So sort of layers of the onion as more people need access to that information in a way that's digestible for them.

Yes. And you hit on the ability to cross-sell new products. You've made a number of acquisitions over the years, everything from kind of the IoT category with ThingWorx. You recently acquired Intland, which is the Codebeamer technology. What -- I guess, what are the cross-sell opportunities that you're most excited about today? And what are the biggest opportunities?

Well, we have two that are fairly new in the last 1.5 years. One is Intland or Codebeamer. I'm sure some of you are aware of that. But I mean if I was going to try to net it out, software is eating the world. Automotive companies say you may have heard this stat, but you think of those as typical industrial -- mechanical, industrial companies, they have 4x as many software engineers as they do mechanical engineers. And that phenomenon is just taken shape here in the last 5-plus years. So ALM, which is application life cycle management, was for managing software. And for a lot of years, that was, of course, companies like PTC, that's all we do. We only make software. But think of an automotive company with 4x as many software engineers, it's starting to dominate their product development cycles. So software, agile processes into product development. So I mean all of those things, Codebeamer -- we acquired Intland mainly because some big customers and prospects came to us. We have been in the ALM space. And quite frankly, our own product had gotten a little bit dated as are the other ones in the market and a couple of our customers said, "You ought to go take a look at this because we're going to move to it, might be interesting if they were owned by somebody like you." And so I mean, that's a pretty big testimony on these big manufacturers, especially auto manufacturers for something like ALM, which is safety critical traceability. Say they're switching to a small company that's largely a mom-and-pop shop, that tells you a lot about that technology. So I'm excited about that and the early progress has been very encouraging. In our base, and this is also interesting is that if ALM becomes the most important thing in some of these safety critical industries like med device or auto, in product development, it could start to be a tip of the spear for places that haven't traditionally been PTC companies if that makes sense. Maybe they don't use us for CAD, maybe they don't use us for PLM, but they want us for ALM. And maybe over time, we'll stay right there or maybe they'll say, "It'd be interesting to have ALM and PLM combined", things like that. Intland, Codebeamer for sure, but more recently is ServiceMax. And we've been in the service part of the business, I talked about PTC customer base tend to be complex products that have long life cycles. So more than a decade ago, actually close to 20 years ago, we thought there was an opportunity for us to take some of this rich product information and repurpose it for things like technical publications and how do you do user manuals and things like that, and that business has been alive and well. We've also been in the business of spare parts management with Servigistics. So we've been in the service business for a long time, with ServiceMax is a little bit unique. It's a service execution system of record. In the product life cycle hemisphere, where products go live for 5, 10, 40 years, you're a -- airplane or an elevator. And so I think it really gives us a landing spot in the service part of the business, which is very fragmented today. So I think it's looking for something like us, but you've seen Jim show the infinity loop of product development, manufacturing over to service, let's call it the full life cycle. And I think ServiceMax gives us an interesting opportunity. All those companies we bought were accretive to our growth as we bought them, but maybe even more interesting as part of our portfolio.

Right, right. And I guess going back to a comment you made just around Intland and opportunity to take share from competitors. It does feel like over the last year, just the tone of commentary we've heard from some of the executives suggest that some of the competitive share gains are starting to pick up. Where is that coming from? Is it coming from kind of more niche year, smaller players, maybe folks haven't heard from? Or is it more coming from the [ Dessaus ] and the large publics out there? Where are you seeing kind of these share gains manifest?

Yes. So it's probably worth talking about because I would say most of the discussion that Jim or Kristian have talked about that we see is with Onshape. Those who may not know Onshape is a SaaS native CAD tool, the only one in the marketplace, and it happened to be invented by the inventor of SolidWorks and it's pretty unique. And so where we see a pretty significant share gains starting to happen and companies looking to switch are in -- predominantly from the SolidWorks ad base. And it's early, it's early there, but we see signs of tipping points, and that's in an area of the market where we had very little share. So it's all upside. SolidWorks took a lot of share in the low end of the market where maybe Creo was whatever low too heavy or complex. So there's a whole portion of the market where collaboration is key. And there's also a whole new community of designers who can't think about using data or grand ads tool sets. Onshape thinks the way they think. It's cloud native. You're not thinking about where the store files is just shared. So Onshape is getting interesting, and we'll see how it plays out. But predominantly, we are taking share from SolidWorks with Onshape.

Okay.

The other place where maybe share is moving quite a bit is in the ALM space because there was a previous generation of tools out there that we're okay when software wasn't that pervasive in products, but when it's front and center where most of your innovation is coming from and where most of your engineering is happening, you're going to use a world-class tool. And these are in regulated industries. You can't have an airplane fall from the sky because you made a change and didn't follow the traceability of the impact or same thing with a car or a med device. So first of all, they must use these tools, and they're not going to use a tool that was invented 40 years ago and there's a lot of those on the market. I predominantly see us taking share a little bit from DOORS, IBM's DOORS solution, which is a little bit dated, and I think the market is looking for a change. Then in our core business, I think you know this, but I said it earlier, especially with big manufacturers, you don't see these cataclysmic market share changes in CAD and PLM. Traditionally, it's been too hard. So I would characterize that as opportunistic. If there's an inflection point happening, I like our chances to get in the mix. Maybe they do want to move to SaaS. And all of a sudden, a lot of the friction that was there for 30 years about switching goes away, like just set it up with us and turn on the utility. So that's interesting. But I would say, at a large level, CAD and PLM share in the bigger industrial companies doesn't move that much. We're opportunistically looking for inflection points.

Yes. Okay. That's helpful context. And talking about the SaaS opportunity next. I certainly understand it's kind of a gradual kind of S-curve adoption. So we're still in that early part of it. But how are you, I guess, what has been the early feedback been like for some of your Creo+ and Windchill+ customers? And how are you just thinking about your ability to upsell them as they move to the SaaS model?

Yes. I think really good. And when we -- one of the reasons we talked about the S-curve, we knew the market desire is there. It was ready. The market was ready. There was some stats about a tipping point of more than 50% being on the cloud. It's just customers are stuck, right? That's what takes time. So our own PLM system and somebody has been using Windchill for 30 years, and they have customized it. Some of those customizations, they wish they didn't have, but they just do. And so they're stuck. It's hard to upgrade. So they're not on the most current rev. And it's not an ideal situation for us because we can't put our best foot forward or the client, they get stuck. So those take a little bit of time. It's almost like a mini assessment to go, look at their environment, work with them on what customizations they can do without. But the value prop of going to the cloud is pretty clear because for every dollar they spend with us right now, that's $3 or $4 that go to, let's call a low to no value-add administration. And again, we're not paving new ground here. I think the value prop of the move to cloud is pretty well known. So the reaction is good. We -- Windchill, we're just over a little over a year since we launched, and that progressed as well. I think those were our learnings. A little -- we expect it to be slow and it was mostly helping them figure out how to go from -- to a new environment. Creo launched at LiveWorx here this past May, and that reaction has been very interesting. There's less friction with a move to Creo. The value prop is the same, reduce the administrative burden and just use the tool, don't worry about maintaining it and upgrading it. So that's actually been interesting as well to see the early progress there where they're like take away this administration for me.

Right. All right. And I guess on Creo, I mean, obviously, some of your big customers, there's a lot of computational intensity that's happening, we're maybe moving to a SaaS model is I think there's some hesitation because of that, where do you kind of see those heavier -- the evolution of those heavier Creo users and when are they going to move?

Well, it's funny. On the computation thing, I said there were reasons why people didn't go to the cloud and might have been a laggard for the last 8 to 10 years, that's actually almost a reason to go to the cloud. Now we have infinite computing power. It might have been too hard in the early days, but now actually your own private data center becomes more limiting. You know what I mean. But still, your point stands that we have customers on a whole spectrum, which is why we think this can play out over a decade. Some were like, where were you all my life. I want to move now. By the way, if you're making a new decision right now, I can't imagine you wouldn't go cloud. You'd never choose to go on-prem and go hire a big staff, especially in the SMB space, and we see that. We see new clients making a new change. We don't even propose on-prem. They could buy it, but we don't propose it. And with our existing customer base, it's just a matter of -- usually, it's looking for the inflection point. Oftentimes, they have an upgrade schedule every 2 to 3 years. One of our pitches is, let's make this the last upgrade. The last time you ever have to worry about staying current on our platform, but maybe that's still a year out. So they're doing the homework on it. So I do think it's going to follow this curve just for natural reasons about some customers are ready to go yesterday. So I am saying, yes, but I need to do this work and others like not yet, but let's keep talking.

Yes. Yes.

Typical curve.

Yes. And so you talked about the $3 to $4 of low-value spend that customers are spending today on premise relative to the dollar on PTC is, is that -- do you think you can capture the full $3 to $4? Or is it more $2 to $3 in terms of the upsell?

Yes. I mean you've heard us target 2x, maybe 1.7x for CAD, but -- and we're quite confident because that leaves the customer putting too in their pocket and getting a much more current evergreen environment to work with. And we also have our own data points. I mean we didn't just SaaS as the next version, but we've been in the cloud business for over a decade, and we know what customers paid us to -- we used to call it your mess for less. Just hand it over to us and we'll go run it, and they did pay us 2x for that. So our own proof points tell us that, too.

Yes. Yes. So I think you talked about earlier October 1 at reset, right? This is the fiscal Q4 for you. What are your conversations like on the ground? Obviously, we get a lot of questions about the macro environment, PMIs or have been under pressure for a while, but your results have been pretty resilient. How have your conversations evolved? What's the tone out there? And how are you feeling on your ability to deliver?

Yes. Well, there's no way around the fact that the macro is whatever you want to call it, sluggish or uncertain, but we've been in that for a year. So I guess I would say this, I don't see any dramatic turn one way or the other in macro. We've performed pretty well up to this point. I don't see any changes. I don't see more pressure. I don't see less pressure. I think people want to wait and see. Everyone watching the Fed trying to figure out what they should do. So that's there. And yes, all the things that come with that, you probably don't get the natural low-hanging fruit growth of, I just hired 20 more engineers. I need more licenses. And maybe it gets a second and third look scrutiny. Those are things that just happen. They've been selling for a long time. There's good and bad economies and the show goes on. By the way, for our sales force, we tell them that's not an excuse, like what we have is critical to that company. So they're spending money with somebody, make it be you. And I think, in general, both of those things are true, little uncertain sluggish economy, but we've been in it for a while, and we're doing quite well. I think the things we do are pretty relevant to customers finding a way to do things more effectively. That's what digital transformation is all about. So software sort of way out. But anyway, all those things are true.

Yes. And just going back to the ServiceMax acquisition and obviously, Neil is -- I'm sure it's going to be even bigger priority with Neil leading the charge. But can you just talk about the magnitude of that cross-sell opportunity, obviously, ServiceMax was a decent-sized business when you acquired it? And I think the growth rates were above PTC, but they were maybe around 20%. But just talk about that opportunity, where do you think it's most differentiated in the market.

Yes. Well, ServiceMax was a leader in service -- field service execution. But where they really were dominant is an asset-intensive service type operations. So again, think about places that are not easy. It's not -- I think Jim's use this analogy. It's not like the cable company coming out and stopping out your router at your house. That's a different service call. It's more about scheduling and routing and being efficient. This is like you got to go out into the North Atlantic Sea to go help -- equipment on an oil rig and every hour that it's down, it's costing you millions, like it's that type of service operation. It'd be nice to not show up with not knowing what the problem is or having the right part to repair something. Like the stakes are really high in that type of business. And why I mention that is back to like PTC's customer base, those are the types of customers who chose a tool like Creo and a tool like Windchill. They tend to be complex products with long life cycles. So the marriage is really good, not just for -- because we wanted to get into the service business and because the type of service that needs to be done could benefit greatly from what we call digital threat information, that product DNA that we have. And then conversely, the input back into product development from the field service system, very interesting synergies there. So I mean it's a good swath of our customer base, do service, and that service is a very important part of their growth and profit, so we think those good synergies.

I mean it seems like in a lot of ways, almost completes the original vision of IoT that you had back in the day.

And maybe even -- yes, I'll come back to that. But if you've been around a long time, Jim has been pretty good in this industry of having some vision and his vision of PLM back a decade ago was in fact about this full life cycle. We had this name out there called PLM, but it really was product development. And talk about the life cycle that we're really talking about the product life cycle, it might be in development for 2 years, it might take you a month or 2 to manufacture and then it goes and lives for 40 years. That's a big part of the life cycle. So I think it actually fulfills our vision of capital PLM. But you're right, back to IoT. A big part of why somebody would do connected anything is to monitor it, to maintain it and service it. So it actually gives us a pretty logical landing spot in the service operation, why you might use IoT, why you might connect your products, why you might monitor them to do better service, but maybe the best service call you do is the one you don't do. You monitor and fix before you roll a truck, right? So yes, it's pretty interesting.

All right. And I guess on the IoT bread, I mean, how -- just give us an update on that business? Obviously, having ServiceMax, I think, gives you some synergies in terms of ThingWorx and some of the other products in that line. But at the same time, maybe IoT is not the first priority in this macro environment if budgets are tight. So how are you kind of seeing the puts and takes in that business?

Well, this is my personal opinion here, but what I've seen having gone through a few cycles is IoT has followed in classic technology adoption curve cycle. You have early days where -- willing participant there. Sure, we have this horizontal toolkit you can do anything with. Eventually, that runs out of gas. Real adults at companies say, "what are you doing and what are you improving and how do I make money off it." And that's sort of the stage we're getting into now. And the other thing that's sort of history is repeating itself is nobody really likes toolkits for that long. Nobody wants to be in the business of building things themselves. They might want a tanker, but what they really want is purpose-built solutions to go solve a problem. So I think that's the stage we've entered into with IoT and our ThingWorx platform. We just briefed Gartner on our IoT strategy. And we talked about providing insights across the value chain, engineering, manufacturing and service with purpose-built solutions that over time, become a suite of IoT solutions, again, across that value chain. So we're really -- our strategy is evolving, mainly to focus on that digital thread value chain that we talked about, but I think it's because the market is evolving there. That's what the market wants. So lots of interest.

Yes. Okay. Shifting to go-to-market a bit. So I think it's what, over a year now, President, COO role. A little over a year ago, there were some price increases announced. I guess how have you kind of seen that play out across your customer base? Are we still kind of in the early stages of those rolling through the customer base and now in your approach, do you think there's further opportunity maybe with some newer products or high-value products to charge more for the value being delivered?

Yes. Of course, we think about that a lot. We had a unique situation last handful of years with inflation running as they did. And yes, it does layer in over time because we tend to catch up the contracts, multiyear deals. So I mean I think we've seen a piece of it. Kristian has talked about the impact, it's been fairly nominal. But a little tailwind, and that will continue. And yes, I think it's a dance. You want to find the right place. You want to get fair value for your products. If there's been inflationary periods, then we have the right to go get that. By the way, we're trying to make sure that our sales force, we've had a program we call -- we've paid more attention to discounting and price -- getting a good price premium, especially price increases when it makes sense. So I think it will normalize back to a very natural stage that we've had over the years and it becomes a little bit of a tailwind.

Yes. So we have about 5 minutes left, and I haven't asked you about generative AI. Save the best for last, right? But it's interesting, the broader design category. I mean I remember years ago, we were talking about generative design, right, before -- well before people were talking about generative AI. But how do you -- at PTC, how are you thinking about this? And specifically, are you thinking about generative AI is kind of a new product SKU that you could potentially charge more? Or is this kind of more driving more usage and opening up the addressability of the market, targeting more users within an organization?

What's the topic? Generative AI. I don't know if you've heard of it. Kristian wanted me to tell you what change in the name of the company, the PTC AI. Okay. So like the rest of the world, there's a beehive of activity going on. First of all, internally, thinking about how we can use it, just like every other company on the planet, just on the efficiency side of our own operations, there's some obvious areas where there's some interesting things, legal, tech support, you name it, and that's happening. As you get into our product development, also some interesting things happen. There will be a little more careful. So we set up a governance committee. One, to be sharing the ideas amongst the product development community, but also making sure that we have proper governance. We're not just going crazy with it. But everything you would expect internally about how we can improve our own operations. Externally, it gets pretty interesting. So I think most people know, but I mean today, we have 3 products/technologies in the market that are already that we, of course, have our generative design in the CAD tool that you mentioned. We have computer vision, technology, which is very interesting these days, then we also have ThingWorx Analytics, which is from an earlier acquisition of ColdLights, which focused on sort of machine learning -- big data machine learning for predictive analytics. All those things are there today. You asked an interesting question and we think about this all the time is how are we going to monetize this? And I think like anything you decide to come up with that will fall into 3 categories. It's either a feature enhancement, it just makes a product better. It may come in as a module. You can see that as a module of Windchill. Windchill product insights that would be sellable, might actually be a stand-alone product. It really just depends on the space it's in, but beyond those 3 products, I would say it's every part of our product development, some of you met [ Kevin Renan ] maybe spoke with him some months ago. But I mean his team is thinking about what we can do and where we should go next. The broad umbrella that you should expect from us under this category would be focusing on the value chain from engineering, manufacturing and service and what insights we can provide automatically from information we either create or manage. There is a world of opportunity there to create insights for folks to make better decisions. So I think that's probably the category, but lots going on there.

Will be exciting to watch. So in the last few minutes, I think it would be great just if you could leave us for what your biggest priorities are for next fiscal year, which I think kicks off in a few weeks from now, what are the big initiatives? And kind of what's your outlook as we head into FY '24?

Yes. Well, executing our strategy. I talked about all the work that's gone on over the last decade. We don't need some new big strategy. Of course, I'm COO. I think about what's on the truck and going to make it execute, whether that's on the product development side or the go-to-market side. So I'm maniacally focused with that team about being effective and efficient. And when you think about our strategy, we have a right to do both. But translate those to growth and improve profit at the same time, which we've been doing and we can continue to do because I think the model we have is a suite of solutions where we're marginally penetrated in our existing customer base. And then in years to come, we'll move that base to SaaS and get a higher premium for what we do. And so it's effective and efficient, trying to set up the machine, both on the product side and the go-to-market side to go execute that strategy.

Great. Well, I appreciate you coming, and thanks, everyone, for having this session.

Thanks for having me.

Thank you.

Thanks, everyone.