SmartRent, Inc. (SMRT) Earnings Call Transcript & Summary

Okay. Hi. Good morning, everyone. My name is Lucy Wang. I'm part of the JPMorgan team, and I have the pleasure here with the SmartRent team who is the founder and CEO, Lucas Haldeman. SmartRent is an enterprise tech company that provides smart home operating systems for the residential property managers and owners. As you know, they went public last year. So Lucas, thanks for joining us. Maybe before we dive into business, could you give us a little bit about your background, having held senior positions prior to this at various property management companies and what led you to form SmartRent and the solutions that you provide.

Yes. Well, thanks for having me, and thanks, everyone, for joining. So yes, I won't bore you too long with my background, but I come from the operations side of multi-family and single-family rental real estate. And I actually think that helped -- I like to say we're sort of frustrated operators who were looking for a tech solution that didn't exist, and that's what motivated us and -- to go start this business as we knew the solution was needed by the industry, but all the sort of competitive set -- now competitive set to SmartRent, weren't building it in the right way. And so for 3 years, I tried to convince someone else to go start SmartRent or build the right product and when I realized no one was going to do it, I decided to go do it myself.

Awesome. And could you talk a little bit about kind of what is the overall industry landscape today? And how have you created a powerful moat, essentially what differentiates us?

Yes. I think when you look at this business, what SmartRent has created is it's -- there's not a lot of IP. There's not a lot of patents, but there's a lot of business process, a lot of know-how and a lot of time that then creates a competitive moat. And so just to be able to go -- we did 51,000 new units in Q1 that we installed. To go do that, the effort, the human power needed to do that is incredible. And that's a moat in and of itself. The deep integrations we have with other software, it's not impossible to replicate, but it takes a lot of time. And then really what -- even today, the competitive set that we see doesn't come from the industry. And like I said, my background is in the industry. And so they still don't totally understand what they're trying to build. And that is its own competitive moat to actually be coming from the operations side and say, I know exactly what is needed because I was the customer, I was looking for that company.

Yes. And I think we hear a lot about digital transformation in every industry. And is there -- I mean, I guess in real estate it's also the same, how have you seen that trend sort of -- as a tailwind for your business and as you guys continue to tackle the opportunity?

Yes. I think we'll -- I keep thinking we'll look back on COVID. It's still going on, right, year 3. But at the beginning of COVID, what we saw was the beginning of a digital transformation like I've never seen in real estate. And real estate always lags. It's never a forward-leading industry in technology. It's always a lagging industry and it needs a catalyst, and COVID became that catalyst to say we can't keep doing business the same way, we have to change. So we're still enjoying those tailwinds. It comes with some supply chain pressures and other issues. But long term, we're seeing this incredible transformation towards technology. Not just in smart homes and -- but certainly in smart homes, but across the whole stack, where we really had -- it's amazing to me if you think about in this day and age, there's still a majority of apartments that don't accept rent online. Like where else would you not be able to pay with your phone or with your debit card, like it's incredible to think about that. Like you wouldn't go to American Airlines and be like -- they're like, oh, we don't take cards, like can you write us a check? That's the rental industry. And so that's the industry that we're transforming. And I think we're seeing this sort of new dawn. Part of it has to do with the age of the operator in terms of -- we're seeing a cycling out of some of the older operators and younger people are coming into this industry and just saying, this is broken. This is a broken industry, and we solve it with tech. So it's an exciting time to be in proptech.

Absolutely. And SmartRent's very fortunate to have very strong relationships with the majority of the leading owners and professional managers in the space. How are you thinking about sort of continuing to grow through expansions of your network, especially on the, I would say, middle or smaller market operators?

Yes. I think today, we have 290 customers. And so if you even look 2 years ago, that was less than 50%. So we've already started to move into that space in what we call the long tail of real estate. We started with the largest owner operators for 2 reasons: one is they're great to have on your side, right, that they'll make a big commitment. And so when you have a UDR and an Aimco and an Essex and an MAA saying we're going to get behind you and we're going to -- we really believe in this. That's great. But it's also great marketing. So as we go into that long tail, that's the marketing tool that our sales team uses to say, hey, the largest operators have chosen this, they did the underwriting, they did the vetting, they did the pilots. And it becomes that sales cycle -- speeds up that sales cycle. And so you're seeing that happen. We have over 30 reps now out in the market selling. We added 44 new customers in Q1 alone. So you're actually seeing that come to fruition. And that's the exciting part because if you look at the top 20 owners, it's great we have 15 of the top 20 owners. That's a great statistic, but that's about 1.5 million units out of 28 million. And so really, the game that's a foot is that long tail, and we're well positioned to go harness that.

And usually, when you land with these operators, is it kind of like system-wide rollout? Or how does it work? Is it -- and maybe talk a little bit about the land and expand opportunity?

Yes. It is a great land-and-expand business that we have. And we have 5 core products. Any one of those can be a landing point. So we can say, let's just come to the common area or let us do your apartments. So let us do one or -- your WiFi. And then once we're in there, and say, well, now let's broaden out. And so I love that piece of the business as well. You're seeing that start to come to fruition. We just closed an acquisition of a company called SightPlan in March. That's another 5 products, 39 of our current customers already use that product out of the 290. And so you're seeing these great synergies, which is the other sort of macro issue we're seeing in multifamily is there's just vendor fatigue. And I had it as a [ CTO ] to say, I can only manage so many relationships. And so we're benefiting from that of saying, hey, we're confident, we do a great job. We show up on time. We get it done. We fulfill what we do -- what we say we're going to do, which is -- which turns out is rare in this industry. And so then that gives you the ability to continue to expand the product and grow that ARPU. So if you see an ARPU of $5, $7, $8, you can see that growing to $10, $15, $20 over time with additional products and additional enhancements.

Yes. And we obviously have different parts of our revenue. And as we think about servicing some of these operators, right? I think are sort of the training and some of the workflow processes that you mentioned are very important. And how strategic is the kind of services piece? And how you think about that play into the whole sort of driving the opportunity forward?

Yes. I think having a large field services team, it's a big investment that we made, and we started out making that investment from day 1, but we knew that it was going to be vital to getting implementation done. And that -- from being operators, we knew you can't just send a box of smart home stuff to a property and expect anything to happen. And so we knew that we needed to have that high touch, white glove training and that there's budget for it. The owners are willing to pay for it, but they need that to actually get the ROI that without that, you don't actually harvest that ROI. You can make the investment, but you don't reap the benefit because then it doesn't get implemented correctly. People don't use it, you don't get the uptake. And so for us, having that field services team is a core piece of our business. We have over 200 people out in the field on our payroll, managing these implementations. That's a real key differentiator. None of our competitors have done that. And I think that's part of why we've been able to scale so quickly is because the implementation goes so well.

And part of what I thought is differentiating for SmartRent is our software solutions, right? Our software can work with other third-party sort of devices that they have. Maybe give us a little bit about just how you think about the software solutions and the future that plays into the company.

Yes. I think one of our founding principles was to have a very open architecture. And we believe that the next wave of technology is about being open, things working together. One of the examples I like is Sonos. If you have Sonos, you can use that to control your speakers, but also integrates with Spotify, integrates with Pandora, integrates with Apple Music. That's sort of the model going forward, which is you need to have flexibility, you need to have options. And so for us, a key component of that is integrating with software that's already being used. So it could be a single sign-on so that when an employee is terminated they no longer have access to the smart apartments. It could be the property management software that's already being used. And that's where when we acquired SightPlan, we're already integrated with this company. So that's a great thing about being this open architecture to say we know a lot about this company because we've already been integrated with them, but that's what really makes it work seamlessly, is doing the hard work upfront to do the integration. It's much easier to create a stand-alone product, to create an island, tech Island. It just have to be in there to say, just use my system, log into my system. It's harder to say, no, we're actually going to go figure out the wiring behind the scenes and hook it all up to make it work together. And that's what we've done.

Would you say that, that's a sort of key competitive differentiation for us? And how do you see the competitive landscape?

I think it is a key competitive differentiation. We have a competitor that's owned by a property management software company and we have deeper integrations with that software company than the company they own. So it's one of those that say -- and again, this is one of the moats that I was talking about, and it's not impossible to replicate. People can go do the integrations, but it takes time and you have to know what you're integrating with. And so we still see today a competitive set that hasn't gone and done that hard work. And that's where when you go and sit down with an operator, that's their #1 question is does it work with what I'm already using because we've all -- on the operations side, we've all been burned by incredible tech that doesn't fit into our tech stack. And then an incredible tech that doesn't fit in is worthless. And so it could be the greatest product ever, but it doesn't work with the software I'm already using, then I don't get any of the benefit. And so I hate kind of saying this publicly because it is people can go replicate this. It's not magical. It's not proprietary. But they haven't, and we're enjoying that time. And it's a year's long process to go do that. If you decided today with some of our competitors, hey, we're going to go do this. It takes years. It takes years to go get this done.

And maybe just to dig a little bit deeper on that, just given -- it seems like we have a really sort of a first-mover advantage, if you will, right, from a relationship with the property management companies as well as just the investments we've made to kind of automate some of the workflow and the software investments that we made. Can you talk a little bit more about just R&D and kind of the focus around there? And what do you see just main area of focus, if you will, for 2022 and 2023?

Yes. I think the R&D side, we're continuing to expand the product set, continue to enhance the product set and bringing new products to market. Real estate has a first-mover advantage that is so severe, the cost of being second almost means you don't even get in the game. And I don't think people outside of real estate quite fathom that or realize that, that we've actually seen competitors, well-capitalized big companies leave the industry because they realized it's too expensive. The acquisition cost is too expensive. The cost of being second is so punitive. And so we are -- you're exactly right. We're reaping the benefit of being that first mover of getting the first to be to scale because we weren't the first company to come with this product. We are the first company to come with a holistic product that integrated. And that's what created this first-mover advantage. So the first mover isn't, hey, we're first to have the idea, but we were the first to gain scale. And in real estate, that's the key. The first to gain scale, and you see it through not only multifamily but in commercial real estate, and even in residential real estate, the first mover advantages is unlike any other industry. And so we are reaping the rewards of that. That allows us to then invest in R&D and continue to invest. And we have this embedded customer base that's -- they're pushing us for more products. So it's great to say the demand is there. We just have to build the products.

Yes. So shifting gear a little bit. Just from an expansion perspective, can you talk a little bit about opportunities in Canada, the U.K., Western Europe? Obviously, I think we have enough TAM and opportunities domestically. But I think investors always like to learn a little bit about just the plan internationally.

Yes. So we are already in -- as you mentioned, we're already in Canada and in the U.K., we set up operations there several years ago. And it is a slow-moving industry, even with the tailwinds of COVID, it's still a slow-moving industry. And so for us, it's about getting into markets early. And they won't sort of bear fruit this year or probably even next, but that long term, it's a really interesting growth strategy. And the product we created is not a solution just domestically. It's a solution globally. and we look to go harvest that. So yes, I think Canada, U.K., you look at Australia and New Zealand, they're sort of other English-speaking countries are pretty easy to get into. And then we've had great conversations in parts of Asia and parts of the Middle East as well. So I think those conversations are happening. Those initiatives are ongoing, and they're exciting. But to your point, we are primarily focused on harvesting the 5.1 million units that our current customers own here in the U.S.

And will your relationships with the domestic real estate operators have any kind of leverage for you as you expand overseas?

Yes, absolutely. We have several owners that we work with here in the U.S. who have global portfolios. And so that's another easy way to expand is to say, hey, you used us in Portland. Why not use is in Dublin and so that -- I love that piece of the business as well. So for us, it's about -- kind of like we did in the U.S., we find the largest, most sophisticated operators, get the commitment from them to roll out and then we can stand up a business underneath that and go sell the long tail. So you'll see the same thing domestic -- that we did domestically, you'll see internationally.

Yes. And I think we're growing pretty fast, right? Last quarter, we were -- most recent quarter growth was 95% revenue growth, obviously, very impressive. Maybe investors will always ask, why can't you grow faster? Because 95% is really fast, but I'm sure you can -- there's -- maybe say it another way is what are some of the challenges that sometimes when people don't adopt our product, like what is the sort of bottleneck?

Yes. I mean we're in a pretty fortunate position where if we can get an owner to complete a pilot, we've never had an owner complete a pilot who hasn't gone on to roll out their portfolio. And so for us, it's really about getting over that initial hurdle. So it's not so much is that -- we know the product works. I mean, we know you're going to love it. We can -- we have hundreds of testimonials of people saying, residents love it, owners love it, property managers love it, leasing agents. So that hurdle, what we really are up against is just inertia. And when you look at the multifamily industry, we've had years of expanding revenue, increasing our rents and low occupancy -- or I'm sorry, low vacancy, high occupancy. And so what we're fighting is just status quo. And so for us, it's all about just try it a property, try it at 2 properties, get over that first hurdle. And then once that domino falls, the rest tumble right behind it. And that's a great position to be in to say our sales team is out selling pilots. A lot of people or multifamily bristle at the word pilot because every multifamily owner wants to do a pilot. If I own 100 properties, it's actually pretty natural I'd say, well, why would I do it at 100 properties, I could do it at 1 and see if I like it, right? And this one isn't so different from the others. And so we actually embrace that. We are a counter to that and say, we want you to pilot. I want you to verify what I'm saying is true. I want you to adopt it and internally have that in your -- now in your internal DNA of your company, you say, we really believe in this product, we're going to roll it out. And so that's what we're out pushing.

Makes sense. And when you sell to these potential customers, strategically, is there a difference between sort of kind of selling the whole solution and give them the hardware and they obviously do the 5- to 7-year contract on the software? Or is it -- some of them may have existing devices or hardware that they're already using. So how do you think about that just from a go-to-market point? Is it one way or the other that you want them to go?

You'd be amazed at how few operators have existing hardware. And part of our founding philosophy is we're hardware agnostic. So we work lots of hardware. So if you did -- if you called us and said, hey, we put in this lock 3 years ago. We'd said, great. We can use that, leave it there. I'm shocked. That was a big piece of the founding of the company was we're going to work with all these different -- I'm shocked at how few times we have that conversation where most people say, I don't have anything smart. I've got a thermostat from 30 years ago when this was built. We don't have any devices. So yes, it is there to say, yes, if you have existing hardware, our answer is always, let's try to leave it there. You spent the money. We don't want you to have to spend it again. But what's been sort of surprising for me personally is to how few times we have that conversation.

Yes. So it's almost like a brand-new opportunity to really digitally transform?

Yes, sometimes I feel like we're in like a time machine like we're back 20 years ago. It's like -- because all this tech isn't new. I mean think about when you first heard about a Nest thermostat. Like that wasn't last year, right? Like you've heard about that, by like -- but in real estate, no one's been talking about it. So none of this is cutting-edge brand-new technology. It's just making it what -- the key was making it useful in an enterprise solution. And that's what we did is to say, as an owner-operator, buying a Nest was just an expense. You've got no benefit and so why would you buy it? No one buys something if it's just -- it had to get no benefit, but I can spend more money. No one wants to do that. So we actually made that smart tech useful through the enterprise control.

Right. And is cost ever a factor for the adoption. And also, I think the company's last quarter earnings, we were able to talk about the price increase and just the leverage that we have and I think that speaks to the value add that the solutions provide. Maybe you could just talk a little bit about that?

Yes. I think upfront cost is always a concern for any business, right? No one makes these decisions lightly, and it is a big capital expense. The thing I love about multifamily is we do have budget for it. There's -- every multifamily company has budget to make capital improvement. So it's not saying, do you have a budget, do you not have budgets, it's can I show you the ROI? Can I unlock that budget? But it is good because not every business has budget, for example, [indiscernible] our business just it could be great, but I can't do it. So for us, it's about getting in. On the software side, I think we have a lot of tailwinds around the pricing power, which is once we're in and established and we've seen this through other software vendors in the industry is you're able to take nice price increases going forward. The cost of switching is high enough that you not do not if -- and you can bear some price increases. And we're also looking at -- we listen to as many earnings calls as the public REITs do, we listen to every call and look at their portfolios to see what's going on with the rents. And we know that's going to affect our budget too. And right now, we're in a great tailwind for rent growth. We still -- on a macro level, we still have a housing shortage nationwide. We're still -- we're so low on housing. And so that just says supply/demand, we're going to continue to see rent growth.

Still a lot of opportunities to go after. You talked a little bit about the SightPlan acquisition. I think since closing our transaction with Fifth Wall, we had 2 acquisitions, SightPlan and iQuue as well as a number of sort of product launches. What is the company's M&A strategy as you go forward?

Well, I think for us, we have a pretty high hurdle rate for M&A. There's a lot of opportunity out there and a lot of deals we've passed on. And iQuue and SightPlan were 2 that really checked every box because we're looking for deals that are accretive day 1. We're not looking to take on a lot more burn. And so that in and of itself is sort of a pretty big hurdle for a lot of companies. And then with the sort of macro pullback from growth, for us, it becomes a pretty interesting time. There's a lot of deals coming our way that are interesting. I would say mostly we're focused on integrating SightPlan and integrating iQuue. A lot of the iQuue integration is already done. And so we have a team that's done a lot of M&A in the past at other companies, and we understand that the easy part is to do the acquisition. The hard part is to do the integration, but to really get the synergies and really get the value out, you have to do the hard part. And so that's really our focus. We're not -- we're always looking. We're always open to opportunities, but mostly we're focused on integrating what we have.

Makes sense. Maybe I think a lot of companies who are attending this conference are thinking about now we're transitioning towards the other side of COVID, right?

Hopefully.

Hopefully. What are some of the I would say, maybe as lessons learned or any kind of focus as you go forward now that we're on the other side of that?

Well, yes, I think the great thing for us is it was a digital transformation. What we've seen in some other industries is COVID was sort of a spike. If you look at food delivery, you look at other aspects like there's sort of an unnatural spike. The digital transformation in real estate is sticky. It's not a spike. It's not a point in time. And I think it comes down to it, it's because it's a slow-moving industry. So it's a big decision to move that way. You don't move back. And so what we're actually seeing is we made a lot of progress through COVID with getting owners to think differently about how they're operating their portfolio. And now the worry is well, now we're back to -- I can have as many leasing agents as I need on site, but owners -- we've already gotten used to a new reality. We're not going back to that. And so for us, the sort of spike to digital transformation that we saw throughout a lot of industries, I think, is going to be more durable and more sticky in real estate.

That's great to hear. And I think the company has addressed sort of the supply chain challenges that we've had, right, over the last couple of quarters? And how -- what is the latest there? And how have you guys sort of prepared a company to -- from a go-forward basis?

Yes. I think we are still in a macroeconomic environment of incredibly tight supply. We've been fortunate that we've been able to perform in spite of that and continue to, like I said earlier, 51,000 new units in Q1. And so there's still part of being hardware agnostic and open to hardware. And being from the beginning, one of the benefits of that now is we have options. And so for us is to say, well, if this SKU isn't available, that SKU is and we can kind of look across the platform to do that. But it's still -- we manufacture some of our own hardware. It's still -- every day is interesting. We've addressed that by -- and this isn't -- it's not like we had this idea. Every company is doing this, but we essentially went from 6,000 square foot feet of warehouse in the U.S. to 65,000. And that's how we're all going to change our ways, whether you're a mattress company or a smart home company to say, well, domestically, I'm going to have a lot more in hand. And then I'll be able to weather supply shocks more easily going forward. So we were able to weather it, but it was sort of -- there was a lot of gray hair to get through it. We won't ever have that again. And I think a lot of manufacturers are doing the same thing. I don't think that's unique.

Yes. Makes sense. Maybe talk a little bit about -- we recognize that the opportunity in front of you is pretty massive with your existing customers. In the near term, do you have any plans to expand into other real estate sectors? And just longer term, how you think about the opportunity set?

Yes. I think -- yes, is the answer. We're looking at it. I think we publicly announced we're moving into student housing. And so it sort of depends on how you define different sectors like, so student housing, military housing, there's senior housing. I also think like some of the products that we've brought to market are a natural fit for commercial real estate, and a lot of our owners own both multifamily and office product. And so you'll see that as sort of a natural expansion point for us, it's looking at how we can kind of organically grow that and continue to move into other verticals. So our whole balance though is, again, there's 28 million existing apartments the U.S. Like that TAM in and of itself is plenty big. But at the same time, it's like, well, if you've got a customer who owns 10,000 units and 2 million square feet of office, why would we not service them with our same products. And so it's that balancing act that we're always trying to be mindful of is don't sacrifice the near-term organic opportunity, but also keep your eye on the long-term expansion.

Very good. Maybe last question for me, and then I'll open it up for the audience for anyone who has questions. With the additions of some of the new customer offerings, how do you think about longer-term margin profile for the business? Obviously, we have a very strong software part of the business. That's a different gross margin. And as we continue to move forward, and I think the company guided we're going to be intra-quarter EBITDA positive for 2023. So pretty impressive sort of move towards profitability.

Yes. Yes. Our focus -- one of the nice things about being hyper growth on the software side is you do have that nice high-margin software recurring revenue business. The hardware and the professional services side, not as attractive from a gross margin perspective, but that will help us get to profitability. And so that balancing act between the hardware and the professional services and then the high growth margin of the software is where we look to continue to expand. But I think you'll see with -- even in our Q1 filing and our Q2, we'll have more detail on SightPlan. You'll see nice margin expansion on the SaaS side of the business. And that is for us, that's the exciting part is bringing software solutions that create new experiences in multifamily. That's what excites us. And that high margin recurring revenue is also exciting, and so we look to continue to build on those. And if you look at the hardware and the professional services, it's another kind of gate. It's another kind of mode. It's something -- I like those businesses, but we're more excited by the SaaS piece of it.

Makes sense. Any questions in the audience? No?

Just wondering about, [indiscernible] your company the competitive environment who we see as potential players coming up? Or is this moat just going to continue to expand as you entrench with your customers and grab that last 5 of the top customers?

Yes. Yes, that's our focus. No, I think there's competitors out there, but they tend to be more regional or more point solutions. And that was the problem I experienced as an operator was I don't want to have 5 vendors to have 1 smart apartment like that doesn't make sense. And we're still seeing that where it's like our competitors, if you sort of do the Venn diagrams like they have some overlap, but there's not a complete overlap. And I know they've -- some of them are public and have said publicly, we're going to go build what SmartRent has built, but they haven't built it yet. And so I kind of feel like the way we think about it internally is we know people are coming for us. We have this first mover advantage. We're out ahead, we're picking up our -- an outsized share of the business, 15 out of the top 20 as you alluded to. And yes, the next 5 are on the radar. We will have a viable competitor. This is a massive TAM. So there will be competitors. But every day, we wake up and say, if we can put another name on the board, we get farther ahead. And we have essentially 0 churn in this business. So once they're on our platform, they're there forever, basically. And every day, we sign up more, we feel like we're getting farther ahead.

You mentioned some geographies, but in developed markets, have you explored anything regarding LatAm?

Yes. Absolutely, we have. And that's really through our partnerships with U.S.-based owners as well. But we're looking at parts of Central and South America, also looking at some stuff in Mexico City that we've been invited to. So yes, absolutely. I mean for us, we're sort of opportunistic in where we go, where -- what we want to find is great operating partners that we can partner with and go into a market. But yes, and we already have bilingual support and bilingual app. And so there's some natural synergies there as well. But it's a big part of our focus.

Just one in the back. If you could just wait for the mic, that would be great. So we can hear you.

I was sort of surprised to hear that you already have international operations. I would expect there to be a lot of regulatory differences or kind of idiosyncrasies to different countries or regions. Can you talk a little bit about that? And to the extent that there are certain regions that are easier to move into than others, and then sort of on the topic of moving down the pyramid into smaller type companies or owners, are those profiles the same in terms of -- you mentioned the high degree of services and implementations. Are they still as attractive in terms of profitability as a customer base? Or will they be incrementally less attractive than kind of your existing customers?

Yes. It's a great -- I'll start with the second piece first, and then go to the international. So on the second piece, as we go down into the long tail, they're actually more profitable. And we have actually disclosed some of that to show that in some of our filings is that you have less pricing pressure. If you own 7,000 units, you don't have as much pricing power as if you own 100,000. And so while we started with the largest owners for a variety of reasons that we talked about, as we go into that long tail, it actually -- you see increased profitability. And really, if you think about the average apartment community is 250 units, that's how -- we're out implementing. And it doesn't matter if you own 100 of those or you own 5 of those, the economics are the same for that community. And so for us to get a higher price for that just goes right to the bottom line. And then on the international side, yes, so there are absolutely regulatory issues. There's compliance issues like to go to Canada, you have to be IC certified. So there's hurdles that you have to go through to do that. We did Canada, we did the U.K. because we had the opportunity, we had owners who said, if you come -- go through these hurdles, we'll give you units. And so that's how -- we do have -- internally, I can tell you there's markets that you won't see us go to because it's just -- it's too complex, like it's too much and too many regulations. And then there's other markets that are pretty near term and pretty easy to do. Latin America, Central America, South America are on the radar. Those tend to be easier and less complex than even some of the Western Europe where you might -- so it's not necessarily -- you might naturally think here's the progression. It's not always as natural as it seems because of what you alluded to, there's regulatory and compliance that comes in.

Any other questions? Not. Thank you, Lucas.

Thanks, Lucy.

Really appreciate it.

Thank you all for coming. It was a lot of fun. Thank you.