Revolve Group, Inc. (RVLV) Earnings Call Transcript & Summary

Hi, everybody. For those of you who don't already know me, I'm Alex Straton, and I'm the Vice President on Kimberly Greenberger, specialty softline, department store and branded apparel and footwear team here at Morgan Stanley. We are very pleased to host REVOLVE with us today. REVOLVE is a $5 billion-plus market cap next-generation fashion e-commerce retailer that targets millennial and Gen Z consumers and REVOLVE completed its IPO in 2019, so just a couple of years ago. The company generated nearly $800 million in sales over the last 12 months, and has delivered strong top line growth in 2021 with net sales up 48% year-to-date versus 2019. REVOLVE sells both third-party brands and its own brands on its websites. And unlike many of its e-commerce peers, Its business model translates to actual profit and cash flow with an operating margin of 11% and free cash flow of $67 million in 2021 year-to-date. REVOLVE is supported by a proprietary technology platform, which enables a data-driven read-and-react merchandising strategy and customized user experience as well as a deeply engaged community of millions of consumers and network of more than 7,000 influencers. Today, we are joined by Co-CEO, Mike Karanikolas. He founded the company in 2003 and has served as co-CEO since then. Thank you for joining us today, Mike, and welcome.

Thank you for having me.

Great. So we'll start today's session in a question-and-answer style fireside chat, where we explore some of the investor questions we've heard most often in recent months. We'll also utilize the session to answer some of your questions. [Operator Instructions]. So lastly, before we begin, I do need to remind everybody that for important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. So with that, let's kick off the session.

Mike, a key takeaway for us on the last earnings report, is that REVOLVE's core growth algorithm is on track with its IPO targets. So top line is growing over 20% again. How do you ensure that the company can stay on this trajectory and keep delivering on these growth targets? And maybe digging in a little bit more, could you walk us through the actions you guys took in the last year that reignited this growth profile back to where you were at, at IPO?

Yes, definitely. So we've been doing this 18 years. And you're going to have your ups and downs in between as with any business. But generally speaking, nearly every single year, we've grown at 20% plus. So we're very confident in the growth algorithm, and we've been confident throughout it all. Obviously, last year was a very unique year, both for the company and kind of in human history. And certainly, on a quarterly basis, you're going to see some ups and downs. But if you look at our track record, very consistent 20% plus growth, and we're very confident in that going forward.

Perfect. So I think moving a little bit away from just the top line growth. One of the other key differentiators is REVOLVE's approach to marketing and social media, and this is particularly around customer acquisition and driving spend around events. Last month, I know you guys launched the brand ambassador program, which is an extension of this strategy. Could you talk to us about what led you to launch this program, how you hope it plays into REVOLVE's overall customer acquisition strategy? And then also, can you give us a brief overview of some of the events I know you guys have kicked off recently and what you have planned for the next upcoming months.

Yes, definitely. So we're really excited about the brand ambassador program. And it just goes to show that even in a space that's starting to mature and has been evolving for many years, like the influencer marketing. There's still a lot of room for innovation and moving things forward in a bigger way. And so for us, this program enables us to do a couple of really key things. And so the first is work more directly with a lot of our influencers and directly get pretty much all the data from the engagements as far as understanding who's driving sales win across a much larger set than we've been able to do before. We've always been very focused on a lot of the key big influencers. This is going to make it much easier for us to work with a lot of those mini and micro influencers in a much bigger way. And one thing we're really excited about and looked that the program was great when we launched it, but the response has blown us away. The first 24 hours, I'm told by the team, we had close to 10,000 sign-ups for the program. I think that's pretty incredible for a 24-hour period. And so obviously, we have our work cut out for us now, not just with those sign-ups but all the ones that continue to flow in, but it's a good problem to have, and we're excited who can really help us build the program in an even bigger way.

That's great to hear. And I know many people I knew were excited when they saw it come out. So that's great. Can we also just touch on the events that you've done in the last couple of months. How has that changed versus kind of the path you were on during COVID and then what you guys have planned thus far for the next upcoming months?

Yes, definitely. So we're a lot quieter with the events during COVID, as you know. And there are some benefits on the marketing line items, in some of those quarters into the resulting cash flow. But it was awesome that we wanted to get back to as soon as we felt like the world was ready for it and the timing was right. And so for us, we were ready to go for a number of quarters, right, but it's always one of those things where -- you kind of didn't know to the last minute if you could move forward with the plans. And so for us, what was really exciting is the back half of this year is when we finally felt like the timing was right to go in a big way. And so we thought a number of incredible events in the third quarter. First and foremost, our involvement with New York Fashion Week. We've never been involved with the New York Fashion Week in a big way. We think we really stood out from the pack, and I know there were some comments out there by bloggers and others in the news about how we took over New York Fashion Week. So when we do something, we try to do it right, we try to do it the REVOLVE way. We're really pleased with the results. And then the other huge news, of course, is the Kendall Jenner relationship where we signed on Kendall to be our Creative Director for FWRD. That's going to be absolutely huge for FWRD. And what's incredible about it is how organic it came about, right, where it was just a conversation between the teams. It wasn't us reaching out to them and it was them reaching out to us and saying Kendall really wants to go in this direction. She's done the modeling thing and she wants to get more involved on the creative side and she loves FWRD, think its a perfect brand, FWRD associated within. And on our side, we felt the same way where she's -- her style fits perfectly with FWRD and what FWRD represents, not to mention she's probably the biggest fashion icon in the world. And then on the creative side, she's been really involved and contributing in a big way to FWRD already, between -- out of the gates wanting to change the logo, had a lot of input in the brands that we're buying and pics that she is creating for us. And so we've been really pleased with the relationship thus far, and we think it's going to be huge.

Great. And I'm glad you touched on that because I was going to ask about it later, but we might as well dig in a little bit more now. And -- because as we understand it, it's quite hard to break into the luxury space with those brands. Does she kind of her star power help you with that? And what kind of -- are you envisioning for her longer term in terms of what she'll do for that brand?

Yes, yes, definitely. Yes, no question, someone like Kendall helps in every single way, certainly, with those luxury relationships. I think -- yes, I'm trying to think of some quotes from some of our brand ambassadors. But essentially, they were blown away. Like they couldn't believe it, they were ecstatic. And as soon as they heard wanting to partner with us in an even bigger way. So probably it's going to be good there. I mean, certainly, even without that relationship, FWRD has really come into its own in terms of those luxury relationships, but this just helps take it to the next level. And in terms of what you can do for the brand, what can't you do for the brand? She is the biggest fashion icon in the world and she loves FWRD and we love her, and it's a match made in heaven, we think.

That's great to hear. So taking a step back, I know that one question that you've been getting a lot on your recent conference calls that we hear a lot on our end from investors is about the potential impact of IDFA. Can you just walk us through the basics of what's happening? I get that question a lot. What's changing? And then how this could theoretically impact your business if you've seen an impact thus far, what you're doing to manage it? Just a quick overview, so we can put this question to rest.

In simple terms, IDFA reduces the ability of advertisers to target as precisely as before IDFA, right? And so generally in advertising, the more targeted, the better, right? So that's obviously something that presented somewhat of a headwind to pretty much any advertiser on social media, right? So something that we called out a few quarters ago as a potential risk. We've been really pleased with how things evolved. And I think it really speaks to the power of our brand where as much as we utilize targeted advertising, we're not solely reliant on it in the same way as maybe others are because the brand that we built is so powerful, and we're able to do other types of advertising. So what we found is some of the most targeted advertising channels, we saw a reduced scale and scope after IDFA. But then it was offset by inventory opening up in other types of advertising to where, at least for our company, as we assessed it internally, the net impact ended up being neutral because of the gains we saw in other types of advertising.

Great. Okay. That's a good overview. I think one other differentiator we do want to hit on, which is super relevant in the sort of supply chain disruption environment, is your use of data analytics and particularly within your inventory management. So like I said, we're going into a pretty unusual holiday season where a lot of the companies we cover in the soft line space are facing inventory shortages and quite worried about it. So how is REVOLVE kind of navigating that first and foremost? And also how you guys use your data backbone kind of as an advantage as you navigate through this?

Yes. First and foremost, it's through that data and technology and through smart quick decision-making, which is more important than ever in a world where supply chains are backed up, right? So our ability to automate so many aspects of the use-making process in leverage data that others don't to make those decisions in a very quick, accurate, efficient way and get ahead of things, it's a huge differentiator in environment like this, right? Because every day that you're late costs you even more when supply chains are backed up versus when they're running smoothly. And so that's been huge for us. And the other thing that really helps us in a situation like this is just how diversified we are, right? Because we're not a single brand company. We're not relying on a small set or set of brands. We have 1,000-plus vendors that we work with. And so if something does get backed up in one place, we're not as reliant on it as companies that might rely on a smaller set of vendors.

That makes a lot of sense. And maybe just to give people a more tangible example. What are the kind of metrics you guys are monitoring as you think through your inventory? And have you seen any categories that are maybe more at risk or more easy to have in stock right now? And have your brand partners said anything? Like are they having issues on their end? Just a few layers deeper there.

Yes, definitely. So certainly, at a style level, there's a number of proprietary metrics that we look at. But if you look at the inventory as a whole at a high level, we're looking at the same metrics as others are in terms of how our total position looks like, what our terms look like, what does our inventory flow look like compared to expected demand, et cetera. So we made sure we are well positioned going into the quarter because we knew there's the risk of supply chain disruption. And so we wanted to guard against that. And then in terms of what we're getting for our vendors, certainly, some vendors are having trouble, and that goes back to the diversification, right? Because even if you make those decisions as quick as possible, as much in advance as possible, there's still going to be some risk there. But as a whole, it's been very manageable. In terms of specific categories, certainly, shoes is something that's been tougher supply chain-wise across the industry, and that's affected us a little bit. But as a whole, we feel great about how we're positioned.

Right. And the shoes part is more related to the Vietnam exposure there?

Yes.

Okay, great. So now kind of moving a little bit deeper into FWRD. I know we briefly touched on it, but the concept is clearly resonating with consumers right now. The strategy appears to be working when you look at those growth rates that they've delivered recently, particularly in the last couple of quarters. So can you just walk through what's driving the growth of this brand at the moment? And what's kind of changed, would you say, in the last couple of quarters?

Yes. So I think there's a couple of things moving with FWRD. One, a couple of them really happened pre-COVID, but the impact was kind of muted or rightfully ignored because COVID hit and so everyone's thoughts shifted to that. But FWRD actually had great momentum entering COVID with a really strong Q4 2019 and then the first 2 months of 2020, we're incredibly strong for FWRD. And that momentum was a result of the work that we put into growing and positioning FWRD. And really, FWRD coming of age and reaching a scale where it started to matter, because we always had the pieces in place that we felt like could make FWRD a great destination, right? That data-driven background, that marketing expertise, understanding of how to build a brand and position a brand. But it started after a lot of the big players, right? So it was smaller and it didn't quite have the scale. So it was really coming into its own with really robust growth rates just pre-COVID. And then obviously, COVID hit. And so we had to weather that storm. And then -- now that -- and we're not post-COVID, right? But from a consumer mindset, the impact of COVID is very muted compared to where it was in 2020, right? And so once that mindset shifted FWRD, which is off to the races again. And as it continues to grow scale, we think it's going to get even more and more powerful. And then you layer on the Kendall Jenner partnership and then just taking it to another level. So just really, really excited about the momentum there.

So thinking about it longer term, what's the next steps for this business? How should we think about how big it could be for REVOLVE? And I know we cover some other companies in the space and they're saying, this industry, at least online luxury can grow in like the 20% to 25% range. And I don't know that the market is necessarily accounting for that for FWRD. So how does that strike you? What do you think about the longer-term opportunity there?

Yes. I think the longer-term opportunity is huge, and I completely agree with those assessments that we think it can grow of those rates for many years to come. In terms of the size, our view is if you do the right things, you build the brand in the right way, you build the experience and the destination in the right way that you just compounded -- you compound, and then you look back a few years in the future, and like, wow, right in terms of the size compared to where you were before. So certainly, it's -- there's -- the luxury market, right, it's $100 billion plus, right? And so do we think FWRD can grab some small portion of that, that's still quite sizable from a company standpoint, absolutely.

That's a great overview. I think one other thing I just want to dig into on this one is just -- I know you guys recently launched a loyalty program that I think, spams across brands. Can you just talk about that? What was the vision behind it? How it's going? What's the plan going forward?

Yes, definitely. So there's a couple of key comments to loyalty program. One is that even without being across brands, it works -- we spend a lot of time testing and refining it and doing really stringent testing behind it to make sure that have the desired impact. And so that launched on REVOLVE also pre-COVID, like right before COVID. And it's been great for all on its own. But what we're really excited about, right, is to be able to launch that program across FWRD as well. And then not only do we get the boost to FWRD, but more importantly, it brings the REVOLVE and FWRD brands together in a big way, which is really important to our strategy for FWRD, because REVOLVE has such a huge customer base relative to FWRD. And we believe we can bring over a ton of those customers to FWRD, because we believe the REVOLVE shopper the majority of them do shop certain items and categories on FWRD in a big way. Even if they're not shopping for yet, right, right, right? They're shopping those same items in the categories right now. It's just a question of moving them over. And what's been really exciting is since we launched the loyalty program, we've seen progressively with each month, increased shopping overlap between REVOLVE and FWRD. And really a change in the trajectory in that overlap. And so it's been a really powerful driver, and then we're going to continue to layer on more and more cross marketing messages, build that relationship together even closer, and we think it's going to be very beneficial.

That's great. It sounds like a really good opportunity. So again, another key differentiator here with you guys is your higher-margin owned brand offering. So I think it was around 27% of sales in 2020 compared to that 36% high watermark or so in 2019. Can you just talk about across both brands, how you think about the private label opportunity both in the near term and long term?

Yes, definitely. So for REVOLVE, we think the private label opportunity is huge. On FWRD, we think there's opportunity there, but it's never going to be -- or at least it's certainly not in our plans to make it anywhere near as because we think the opportunity is on REVOLVE. But we think it has plenty of room to grow. We want to make sure we grow it in the right sustainable way in 2019, which was the peak before, we got a little ahead of ourselves as far as trying to grow too fast. At end of the day, we want to do what's right for the customer, first and foremost, building the best destination for her is the big picture, where she wants to come to us because we absolutely have the best stuff for her, the best experience, the branded resonates with her. And private label can be a huge part of that. So we dialed it back from where we were in 2019 because we had pushed too much of the same product versus actually building in the right sustainable way where we have diversified capabilities across diversified price points and brands, et cetera. So it's actually much more profitable in its current state than it was in 2019. And now we're building it. And what's really exciting is that -- I think we discussed earlier this year that we expected the kind of lines to cross as far as returning to growth sometime this year in Q4, and that continues to be our expectation. And so even though we've taken it down for a couple of years, the ones are now starting to cross into where it's growing. And we think that can be a nice margin driver in the quarters and years to come.

Great. So thinking about the assortment more broadly, how do you balance the owned brand mix versus third party? Are there any kind of differences when you're thinking through the category mix each brings and then also the price point that they're coming in at?

Yes. Yes, it's definitely different by category and price point in terms of the relative strengths of different players in those areas. But most importantly, the capabilities, right? And that's where we got ahead of ourselves in 2019, where I think certain categories and price points, we're taking close to 70% share with own brand, which is too much for our consumer. And so the right way to do it, right, is to take 30%, 40% share of across categories versus trying to take too much share in both category.

Great. That's a good overview. So I feel like we've covered a lot on the basics of the business. So now maybe let's move to recent performance, the latest quarter. So one of your key KPIs is average order value. Last quarter, you guys noted that it was above pre-COVID levels after obviously trending downwards throughout 2020 during a pandemic. What were the drivers of this change in the last quarter or so?

Yes. The major drivers of the change are really just the shift in consumer mindset and behavior. And I think you saw the change alongside our sales trajectories where the consumer returned in a big way to dresses and other going out apparel that our brand has historically been known for, versus the types of items that we're resonating in the pandemic. And what's really exciting for us is -- some of the -- most of those pandemic categories, we're continuing to see growth in, so they gained share during the pandemic and gained mind share among consumers, but we haven't lost that share, right? So like Beauty being a key example always all other growth on the beauty side with pandemic. But beauty is obviously a lower price point than the rest of them and what on. So it's a combination of the return to those going out categories that tend to have higher price points associated with them, as well as just the strength of the consumer and our consumer being excited to shop the best premium merchandise out there, and she's willing to pay a premium price point for that. And so certainly, we've had really strong full price sales as well, which helps us at least.

Great. So can you also just remind everybody just kind of the AOV differences between REVOLVE and FWRD, how those businesses contrast? And then also, where do you see AOV heading over time from here? Because you've had a little bit of a bumpy ride through COVID. So where is it going to go? And kind of what are the puts and takes to thinking about it?

Yes. So with regards to AOV, you hit on -- another key difference that I neglected to mention is obviously the growth of the FWRD segments. While both segments are growing fast, FWRD has been like a rocket shipment. And so with FWRD, you have an AOV, let's call it 2 to 3x higher than the REVOLVE. So obviously, that has also provided nice upward momentum on the AOV.

Great. That's super helpful on the FWRD piece, it makes sense. Can you also just talk about the revenue mix by category? You're talking about kind of the shift from COVID until now more going out versus at home during the pandemic. How do you see kind of the category mix evolving in both the short term and the medium term? I guess, kind of your learnings and what a pandemic opened up for you guys?

Yes, definitely. So in the short term, the category mix evolution has been really sharp back to a lot of those traditional categories we excelled in, dresses, tops kind of going out, focused. But again, what's nice is we've retained some nice share in some of those pandemic categories. And so over the long term, we expect those categories to be additional growth drivers for us, right, where we've built a great brands for consumers when they're trying to look at their best in going out, right. But capturing more wallet in other areas, whether it's beauty, whether it's more basic items, quality basics, right? Premium quality basics is something that we haven't traditionally made a focus, and we think our consumer buys a lot of those as well and that we can grab a lot of our wallet share there. Certainly activewear, another kind of pandemic growth category that's a growth category for us. We think we can grab a lot more share there. And so for us, expanding our share of wallet with the consumer over time, building the relationship with them even deeper is a big part of the strategy.

Great. That makes a ton of sense just given what COVID taught you guys. So moving to another KPI for you guys, REVOLVE added, I think, 124,000 active customers in the most recent quarter. So that's apparently the first time the company added more than 100,000 new active customers in a single quarter. So a massive milestone. Could you just talk about the drivers of that growth? What do you think happened in the quarter for that just great result to happen?

Yes. I mean, it's really the shift in the consumer landscape. We certainly felt really positive about the trends we were seeing entering the quarter. And you're just seeing kind of week by week, month by month, things continue to improve and get better. And so certainly, we did a lot of marketing in the quarter that we feel very strongly about. But I think more so we can in the marketing, it's just that sort of pent-up strength of the brand, right? It was just waiting to be unleashed while consumers were huddling inside their houses. And then now that consumers are out again, it's just a great time for our brand. And it's really a return to the historical momentum and trajectory that we saw pre-COVID where every year, every quarter just continuing to grow and expand our awareness.

That's great. So aside from that, of these new customers you're acquiring, what's the typical profile? Like are they different from your prior customers? Or do they have new characteristics? Has the pandemic kind of changed who you're targeting or who's coming to the site?

Yes. No, the pandemic hasn't changed who we're targeting or who's coming to the site. As I mentioned, we've certainly broadened our strategy somewhat. I mean that broadening was happening even pre-pandemic. And so that accelerated a little bit, and that's something we're going to continue to do in the coming quarters and coming years, right, in terms of reaching out to some of those other areas. But the core focus and the core type of customers that are coming in is the same as it's always been. Certainly, I'd say one thing that's a little bit different in the recent period, it's just -- we've been enjoying some of our strongest full-priced sales ever. We've always excelled in that metric, but it's been even better than ever, the past 4 quarters and then the most recent one, certainly no exception, and so a stronger mix of full-price customers, which is great because we find that those customers are even stickier than the off-price customers, obviously higher margin. And so we're really pleased with that.

Yes, makes a ton of sense. So maybe if we just keep moving down the P&L on to gross margin. So REVOLVE posted over 55% rate in the latest quarter, and that was just only slightly below the rate you guys put up last year, which was, of course, in an incredibly tight inventory environment as well. Can you just discuss the dynamics driving that result as well as how you guys think about -- because you're at your long-term target, right, you're at the 55%, not maybe on an annual basis, but quite close. So how should we think about that long-term target and then just also drilling down on this most recent quarter?

Yes. Our long-term target continues to be 55%, right? And as you pointed out, right, we're essentially there, right? But -- it's about doing it consistently. And also, certainly, we hope to exceed that, but we're going to do what's right for the consumer. So our hope is that we can continue to post really nice full price sales ratios and continue to grow the own brand division, in which case, certainly, you can see some nice upside on that target. But at this time, we're just continuing to execute on our core strategy and we're not ready to issue any updates to that long-term target.

Great. Okay. I'm getting a couple of questions from the audience too, which I want to squeeze in before I keep going on. And one of them is kind of how did you guys approach Black Friday? Any initial reads on the demand in Cyber Monday that you can get the people?

Yes. So we approached Black Friday and Cyber Monday the same way that we always do, which is very different from other retailers, right? And so for us, it isn't a big focus because we're so full price focused. And our customer, she is all about the latest and greatest and newest and she's less in the sales. So for us, it's not that we do nothing on Black Friday and Cyber Monday, but it's just not something we're focused on or that's a big event for us in the same way as it is for other retailers. So it's -- it's not really a big part of the strategy in the same ways with others.

Got it. Makes sense. Also, some questions around revenue mix. We're getting more specifically, kind of how you think REVOLVE versus FWRD could shake out long term in terms of size or penetration within the business? And then also, I'll let you answer that one first, and then I'll move to the 2 part of the question.

Yes. I mean certainly in terms of size on FWRD, our hope is to grow it into a multibillion-dollar brand. And obviously, REVOLVE is something that we want to grow into a multibillion-dollar brand as well. And so the ultimate ratio between those 2 businesses, we don't want to comment on. I mean REVOLVE, we would expect even long term to be bigger than FWRD just because REVOLVE is so unique in what it offers, and we really feel like can make a really large share of the market in the space as far as what's out there. But certainly, long term, they both have really strong potential.

Great. And then the second part of the question is on your international piece of the business, definitely seeing some momentum there. I believe you guys have made some changes to really improve service levels. Can you just talk about the strategy there, how you think about that in terms of mix long term?

Yes. So international, we think is a huge long-term opportunity. We've seen really nice success there. And so with the brand that we've built, we found that it resonates internationally. And for better or worse, we've built it internationally already in many ways because social media does not have the same borders that a lot of traditional marketing and advertising has. And so we have a really strong presence in most Western regions in the world. And so for us, we've been focused on improving the experience in those regions that we can really properly leverage our brand in the right way. And so we've done a lot of great work there. We still have a lot of work to do in terms of continuing to tap that opportunity. And given a recent case a few quarters ago that we mentioned that I'll mention again, because it's so powerful. We -- for Canada, our friendly neighbors to the north, we weren't offering them a good experience until recently where we finally launched all-inclusive pricing, free shipping to returns. Customer doesn't have to worry about duties and taxes or any of that. It's all invisible to them behind the scenes, seamless local shop insurance. We're finally able to launch that and get to that. And since then, the sales have been consistently in triple-digit growth rates. So that's really the formula in the playbook that we look to do across the world. And then Asia is a little bit of a different beast. We do have brand strength in Asia, but marketing in certain regions of Asia was a little bit different than the Western regions. And so that's little more nascent for us. We have seen some green shoots this year in terms of things we can potentially leverage. Long term is a big opportunity, but we still have a few things we have to get right to leverage it in a big way.

Great. That's a super good overview kind of how you're thinking about international. I think we only have -- well, let me -- we got one more question, I'll squeeze that and then I'll wrap it because we have a couple of minutes, is opinions on the latest variant of COVID. Any internal conversations how you guys are thinking about it impacting people's ability to go out and thus shop at your brand? Any early thinkings? Or is it still a little bit too early to tell.

Yes. I mean it's certainly very early and we're waiting for additional information as everyone is. But for us, we certainly wouldn't expect huge impact in the way that we saw when COVID first hit. And that's based on our experience in the U.S. and all the international regions across the world, where we've seen with each progressive wave of COVID, consumer impact is more and more muted, right? And it's not to say it doesn't affect people's lives in some way, but we found that we see successive wave it hasn't really affected their shopping behavior, and they're still going to do things that they love most, which includes going out and looking great and feeling great. And when we saw that with Delta, right, where Delta looked like it was going to be pretty scary. And we certainly cautioned on the potential impact of Delta. And we saw a very muted impact to consumer behavior. So that said, there's still a lot of uncertainty and anything can happen. But in terms of our long-term view of the business, it certainly doesn't affect that, and that's what we're most focused on.

Good. So we're a little over 1:30 now. So we're coming up on time. Mike, thank you so much for joining us and everyone on the line and via webcast. Thanks also for joining us. And have a good rest of the day and enjoy the conference.

Great. Thank you. Thanks for having me.