Wix.com Ltd. (WIX) Earnings Call Transcript & Summary

Thanks for joining. Most people probably know by now, but Ygal Arounian, City Internet team. Really excited to have Lior Shemesh, Wix CFO; and Nir Zohar, COO, with us to end up the day, hopefully, and save the best for last.

Hopefully, everyone can stay awake. It's such a long day.

We keep the room really cold. So people won't fall asleep. Thanks for being here with us, guys.

So we're coming off a successful Investor Day. You guys raised your long-term margin targets. Again, give some more color on how you'll achieve the Rule of 40. We'll go into the margin side a little bit later. Just start by just talking through some of the top line drivers. The one thing we didn't get in Investor Day was kind of a specific top line guidance, but -- so Nir, maybe starting with you, Lior, if you have anything to add on. Why not give that specific guidance, something kind of holding you back and just talk through how you're seeing about those growth drivers.

Sure. I think actually, maybe it's worth for Lior to kind of explain how he thinks about guidance, and then I can be zoom out of it and give us the ...

Look, obviously, it's hard then even sometimes impossible to provide guidance for 3 years. And we don't have to provide guidance for 3 years. And usually, when I provide guidance, I mean looking at the numbers that you see about the fundamentals about the KPIs that we see right now. And just based on that, providing the guidance, I can tell you now for the 3 years, in a way we were conservative, yes, I mean, we built the model based on the current run rate of the growth that we see in the second quarter plus the current run rate of expenses, meaning without any expansion even in growth or any other reduction, of course, we are going to get to the minimum of 25% of free cash flow that we mentioned and obviously to the Rule of 40. But it doesn't mean that this is how we think about the potential of our business. And he can elaborate about it more.

So -- and I think that's the core of it. As Lior said, no company gives us for your guidance, right? Some companies don't give an annual guidance. And I think there are so many factors that can move the growth throughout those years. The external -- put aside the external factors, and even the internal factors, we released Studio now. It's -- we think it's a massive opportunity and already seeing great initial results for it. But it's going to take time to fully understand how and how big is the impact it is on growth. And then optimize on that impacting both in order to get more out of it. And that optimization throughout 3 years is going to be massive, because the 3 years lifetime for a product is a very long time. So I think naturally, we wanted to create the baseline, which you explained in order to understand how we look at the growth and focus the model on the things that we control, which is the expense side of things. But even there, it represents a size of a company that gives us enough resources to go after all these things that we believe can push us forward strategy to grow in years to come. So I think the current phase of it gives us our own commitment to ourselves. As a management, it's our commitment to the Board. And obviously, the commitment that we feel that we should share with our shareholders in terms of how -- what kind of business we want to be running in the next few years.

Got it. Okay. One of the frameworks you did give was looking at self creators and then looking at partners. And on the self creator side, you kind of show this path to acceleration where self creator has been a little bit depressed since the earlier part of COVID. Talked about partners potentially becoming equal to or larger than self creator. I mean if you put those 2 things together, but in most people's models that will lead to accelerating growth. So maybe just can you help us think through both of those individual pieces.

So I think the actual part of acceleration you're already seeing or that is incorporated into the model is not very high as we have explained. And it's based on the things we've already seen. But if I look forward on those 2 segments, those 2 segments have still a lot of potential that we believe we can go after. On the self creator side, we are -- and we shared our thoughts about it in the Analyst Day, but also prior to that in Avishai's Blog post are one of the things that is sitting in the heart of our AI product suite, future releases is the AI side generator. And we know from our experience when our expertise in the field that when we release something like that, it can potentially have a big impact on the conversion path of self creators coming in having a much easier path to convert and build the website, as well as adopting more functions and more services after. So that's definitely something that we believe can help accelerate growth and it will be an engine. The second thing on the partner segment, naturally, the TAM there is still massive. It should be a bigger TAM than the self creators, which is still a bigger business for us. So that in itself is a multiplier. Studio, which we just released will have an impact, okay? We're starting to see that impact. We're seeing initial very positive and actual initial results, both on the qualitative side, the feedback we're getting from the partners and the agencies we're working now, our own -- the ones that have been on our platform for many years now, and are actually very critical for us because they've been using the products for a long time and how they're responding. But also in terms of the numbers we're seeing in the adoption numbers, the results are even better than we expected, especially for one month out. So that's another great driver. And lastly, I think we still have a great way to go in terms of international and global expansion. We are very well geared towards it in terms of one of the best companies in terms of integration of languages and localization across the globe. And that's another great way to grow the business.

Okay. Great. Yes, all positive things. I want to -- we'll come back and hit on all those. Maybe just kind of one more thing on coming out of the Investor Day, and we are in the Rule of 40, where a lot of investors are kind of focused on. Do you see 40 as a cap, meaning if it's 10% revenue growth, 30% margins, if it's 15%, 25% or can kind of both go up at the same time where you're above Rule of 40, Rule of 50, for example, kind of like...

We prefer Rule of 50.

So would most.

I believe that this is the rule -- from our point of view, we provided commitment, first of all, to the minimum of 25% of free cash flow. And it was very important because many factors have been asking us about the question, okay, are you going to get to the Rule of 40. So we got to the Rule of 40 with a minimum of 25% of free cash flow. Now let's assume that the growth is going to be 20%, as Nir mentioned, and we truly believe that we can accelerate the growth. So obviously, the Rule of 40 to be kind of like the Rule of 45, right? So yes, I mean, there is a lot of potential both from -- in terms of the profitability, but also in terms of the growth that we feel very comfortable about.

Okay. Great. One of the areas you've seen a lot of margin expansion from has been on the marketing side, and we've seen a lot of efficiencies there. It's been -- each one of your peers talks about it a little bit differently, but we've seen kind of efficiency and marketing spend across the board. What do you see is happening on the marketing side? What's happening for you? I know you've mentioned multiple times that you put a lot of thought into this, which is something that happened overnight, but it feels like a sustainable opportunity.

Well, you want to take it -- I think and you can complement if you like. But first of all, our -- we started deploying -- started at testing happened through, I would say, the summer of last year, but the actual deployment of this new methodology, this new approach started literally a year ago in September of last year. So I think that after a year, we feel very comfortable saying, yes, it's sustainable, especially since we were seeing the day-to-day process and now how it's working, how it's moving us forward. So I absolutely think that it's sustainable. There's going to be some massive change in the world that I cannot foresee now. We'll have to react to it. But at this stage, I think it's very sustainable. And it's gardened I think, a great leverage for us in terms of the business. I don't know if other companies you're talking about have seen the same extent of it, but it doesn't matter, right? In this case, it's about how we use our marketing dollars in the most smart and effective way.

Okay. You're also kind of ramp marketing spend against the partners, that changes some of the dynamics a little bit?

Not really because it is -- it might be a little bit confusing at thinking that since now we're really studio in such a big product release and you're now starting to build this new marketing approach for partners, but that's not the case. We've been working and advertising towards partners for many years, especially in the last 3 years, which is also why we have so many partners to begin with now to test a studio as we do right now, which means that this marketing machine that is aimed towards the partners is already in action. The budget towards what we want to do with Studio for 2023 is already in place. So in the numbers that -- in the guidance that you are supplying. So from that standpoint, you're not going to see something that is groundbreaking different anytime soon. There's no reason.

Okay. All right. That's helpful. One more on the margins. Just on the Investor Day, you guys broke out margins for self creators or the kind of steps for self creators versus partners. Partners are still well behind. Can it ramp up to where self creators is and have kind of similar leverage, similar margins?

Well, I hope so. Let me tell you, first of all, it's a different -- it's a different marketing approach. Not necessarily buying keywords for search. It's rather more engaging with partners. And obviously, the budgets will be dependent on the success of partners of Studio.

But you were asking about the margins -- No, no, but the margins or the marketing?

The margin or the marketing?

Yes. Well, the margins for partners versus self creators.

Okay. I heard marketing. Potentially the margins for our partners can be much better than self creators. Remember that it's still early stage, meaning that we are not going to see it by 2025, but certainly later because think about the compounding effect of partners. Once we have a partner, is keep on generating more and more and creating more and more website. I don't need to invest marketing money in order to do that, right? The same goes for the cost of goods sold because you have like more compounding effect of existing partners. Let's keep on building website, plus you have the new one. So I do believe that long term, the profitability -- and by the way, this is also what we mentioned at the Analyst Day, I believe that long term, the free cash flow or adjusted EBITDA of partners going to be better than the self creators.

Okay. Excellent. Helps kind of paint that picture a little bit more on the margin expansion. Let's move away from margins. But let's stick to the partner topic a little bit. So partners grew 36% year-over-year in 2Q. That was before Studio even launched. You've invested a lot in terms of product here over the last couple of years. So maybe just kind of to level set and talk about what Studio is a little bit. You're seeing a ton of strength even before Studio launch. So what are the factors that are driving the strength here in 2Q before Studio launches? And what are the next steps from here?

Well, I think, first of all, you have to remember that -- for many years, we've created a suite of very elaborate and sophisticated solutions for agencies and partners. That has already been in use and in their hands for a while. And I think that, that is why they've always loved Wix and Editor X as good solutions in order to build and create projects and build websites for their clients. And I think that's a big part of why you see that strength. Also investment -- marketing investment over the last few years towards partners is also part of that strength. We -- it's not as if -- again -- we're not just starting. We're building on good fundamentals on both on the marketing, the user base and the products in order to release something which is new, and we think is going to take us much, much faster and much, much further. When you think about Studio from that standpoint, it's -- it takes a lot of those functionality, a lot of those capabilities that we already had in the platform and puts them together. But it layers more solutions on top of them, sorry, based on what we've been hearing from our partners. So for example, if you take Velo and the ability to code into the system, it is under the Studio hood, but added the ID interface on top of it, which solved a lot of the issues that some of the most sophisticated partners and agencies always have. On the other side of it, one of the key feedbacks we heard about Editor X was that it is very complex. It is very sophisticated. It is great for high-end designers. But the agencies need sometimes they need something more simplified. They want something a simpler solution that is going to give them the same values that Editor X had against Wix Editor, but in a much easier way. So we went and we used a lot of the know-how, lot of the things we learned in Editor X in order to create that simplicity. So still, the strength of Editor X is embodied into the Studio editor. But now in some cases, we added -- we layered the magic. So you have an AI solution that helps you create the responsiveness behavior in Wix studio that in Editor X, you had to do it manually by yourself, which was much -- you have to be much more professional about it. If you still want to control that, go ahead and control that. But if you don't and you want the magic, we'll also give you the magic. And around it, I think that one of the key things we learned from our partners is that they are not only building websites. They are running a business. They are running the business of managing projects and have projects workflows to cater to the needs of their customers. So we built a whole new dashboard, whole new back office through which the agency can run those different projects and work with their clients. And I think all of that together created something which is like it's like an operating system for an agency, something that they've never had before. So corporate can attach that to all the other great values that Wix gives them, which is one closed safe garden to run them with the website, security-wise, software-wise, it's all backed up and CDN all across the world and give them a massive value into their hands, which is why we're getting those great reactions from them.

Okay. Let's elaborate on reception so far. So pretty early. It's still -- it's still in beta, right? When does it come out of beta to availability -- is the adoption coming more from current -- are you already seeing new agencies kind of be interested in the product?

So -- first of all, the way I think about it, we're not in beta, okay? We are in a limited GA, okay, which is because the -- it's important because the beta will imply that you're putting something out there that is not fully ready, that's not fully baked. Now like any other products, anytime, anywhere, yes, there are going to be more versions, there are going to be more added capabilities over time. But what we released in early August was something that we felt proud and felt comfortable putting in the hands of our partners, our existing partners who are actually the most important clients we have, right? You couldn't mess it up by giving something which is clunky which is buggy. And the goal -- so the goal was to give them something like that. And then we basically went out and said a few are our most trusted clients. Before we open it up to the world, we want to show you what we've done because it's the feedback we got from you make sure that we didn't forget anything. And also help you and teach you how to transition your business from Wix and from Editor X to this. So we'll make your life easier. So the team has been really literally running around the world in the past months. Throwing out these education sessions in cities and capitals around the world where we know they have high concentrations of our partners. They've been in Bangalore, they have been in Sydney, Australia. They've been in Tokyo, Japan. They are now in New York. They're in London, I think, next week or the week after and then in Paris. And first of all, we want to make sure that we manage to switch them over, and we get the value from them being on the new platform. And that will also will hone down the key messages we use when we go to the -- open the GA to the rest of the world. And that is expected to happen throughout -- sometimes throughout the floor. So it's getting closer.

Okay. Great. Lior, and maybe can you help investors understand how it flows through the model. Is it in your numbers for this year? Is it not really much of an impact in 2023 Studio? And then when Nir's talking about getting people to switch over, what is the upside? Is it higher ARPU? Agencies making more sites? How does it make things better financially?

Everything that Nir just mentioned is obviously an upside to the model or to the guidance for this year because when we provide the guidance, it was too early to see the results of Studio. So obviously, Studio is going to perform better. It will be -- we see that in the numbers. But eventually, I believe that the contribution or #1 contribution of Studio is the fact that we are going to get much more premium, much more sites, change the mix of our customers, consuming much more business solution as we saw in the past, building more complex websites, using payments, using Google ads, using all the tools that we have as a business and a solid business. So I believe that, that will be obviously the direct effect, which will have an impact on the overall growth of partners.

Okay. Share shift, obviously, I spent some time with the Investor Day talking about share shift and where you guys are taking share from. Can you elaborate on that, I always feel like this is an area where investors maybe misunderstand or underestimate that opportunity of you're taking share from legacy platforms. It's not just thinking about like overall website growth. But replatforming onto Wix and how you see that opportunity. And do all these things help you accelerate that, whether it's AI or Studio?

Absolutely. So I think, as I just said, it's -- and again, I think Avishai has a really good presentation there also in terms of if you look at the graph there, but there are 2 growth paths here that coincide. One, the Internet. In general, the Internet is growing. Yes, we've had some slower years post COVID. I think it's starting to normalize again. At some point, we're going to probably get to I would assume at some point to similar growth rates to pre-COVID. COVID itself was obviously normally that hopefully will not return because it means something bad for all of us. And that on its own is a growth that is inherent to all of these sectors, right. Internet commerce and Internet activity goes back to where it was before. Everything gets further elevated. At the same time, and this is a long -- it's a long process, and it's an evolution that we've seen for a long time now. It is kind of all these legacy systems, these old CMS systems on which people used to build website is -- are starting to get eroded and to lose share. And they're being replaced by SaaS CMS such as us, Shopify, Squarespace, I think there's a whole lot of really great companies that have taken that approach. And I think that they are managing to -- we are managing to take share for the very simple manner that it's a much better experience for the customer. Now granted, if you're a self creator, it's much -- it's much easier because for a self creator today to go and try to get something on those legacy -- on one of those legacy systems, it's extremely hard to begin with. If anyone was ever afraid that by introducing company like ours, we will take away the business of the agencies or the designers, obviously, that's not the case because the reason people go to them is not only because it's hard to do that on the legacy stints, it's also because people -- many people don't have the time or don't have the money -- sorry, don't have the time or the capabilities and taking share know-how to try to do something like that on their own. And it'd be fair to have somebody to help them in their business. And I think that there, the legacy systems are very deep. They have always allowed tons of flexibility and capabilities to the agencies, which is why they like them so much. And they always had a lot of downside in terms of security and issues with the fact you have to do the web hosting on your own, you have to take care of the redundancy and updating software, et cetera, et cetera, over time. And is the balance between -- as long as the flexibility was so high, the downside was something you were willing to deliver. But now in something us come from the outside and you say, you know what, we eliminate this completely. You're not going to have all these problems, and we're going to -- at the beginning, it was slowly, but now I think we're accelerating, give you pretty much all of that flexibility you get here then it becomes a no-brainer to switch over. And I think that's where -- that's a big thing of what we're bringing with Studio is the ability to go after that. Say to you we'll give you ease of use and simplicity in one case, but also you want to add your own react components from the Internet, bring it on, you want to edit your CSS, bring it on. You have -- you decide what level of complexity you want to deal with and what's your level of know-how and we'll give you the solution there. And I think that is what will help us go much further after that market share which is still most of the Internet.

Right. Got it. Okay. That's helpful. Another topic comes up a lot is just macro. Listening to you guys and your peers you've maybe been a little bit more conservative. Your view on the macro has been certainly more cautious. I don't know -- can you talk about why I'm sure the macro is similar for everybody, and it's not worse for you guys, but you guys have found it more [indiscernible] on that.

I thin -- I don't think it's any different from any other company. It really depends on the nature of the company, on the behavior of the customers, but it's very much similar. If you ask about the macro, we saw some modest improvement. It's not big. There is much more room for improvement in terms of the macro. I mean, take for example, the GPV, okay, which is kind of really attached onto the macro environment. We saw improvement in GPV, but still, it's not huge. I believe that for example, when interest rate going to go down, we see a major increase in GPV and also from the obvious reason people are going to spend more money. So yes, we saw some improvement, very similar to many other companies. But again, it was not huge.

But I want to say something about this because at the end of the day, you're right, we are talking about it in one way and another management team talking about it a little bit differently, more optimistic, less optimistic. And none of us are, I don't know, world bank executives that really are the ones to speak to it. But I think if you put the words aside for a moment and just look at the numbers. If you look at this sector, almost everyone is having very similar growth rates on revenue, very similar growth rates on GPV, which means that probably essentially, we're all seeing the same thing. We're just phrasing it in a different manner.

Okay. That makes a lot of sense. Just maybe coming back to international because you mentioned as a big opportunity, you're positioned well. You guys break out international growth, and it's been -- let's just say, weaker than what we've seen in the U.S. So how do we bridge that gap? What are the factors? Or is it just...

I think it's -- international is like in the U.S., international is one thing, but in most places, the countries are there, right? And I think each year having a different effect things that affect them. Even if you look at Europe, it's not really one big chunk of an economy, but there is a difference between some territories there. I think it's a little bit of a lagging effect. Like if you ask us what is our -- are we optimistic about recovery in the rest of the world, Europe, Asia, et cetera? The answer is yes, okay. We do believe so. We've seen some of it starting to happen. And the way we perceive it in the longer term international remains a very big potential because the U.S. is a very mature market. Some parts of Europe are very mature markets, but a lot of other areas in the world are not very mature, but they are improving all the time. They have more and more middle class and middle class means more and more small businesses. Internet penetration gets much better. Commerce penetration gets much better. Solutions for payments, which is a huge thing outside of the U.S. is getting better all the time. So I think that from that standpoint, if you're a company that is well aware of that and is on the ground, seeing the changes happening and incorporating the -- whatever is being sold into your offering so you can increase your reach, I think that's a great opportunity.

Okay. You mentioned AI and the site generator. Been a big focus within your space. You guys are well aware in the past couple of months. There's a couple of ways to just think about it, but maybe on the AI and what you guys are providing and what you're seeing? Are you seeing anything tangible in terms of conversion or share gain? And then on the site builder product, like when does that come out? Or what can you share more about that? Because that seems probably the biggest of your Gen AI products?

Well, of course, I cannot see it before you release it and start putting people to -- people wanting to use it and see what's the effect. If I had to guess or hope or give you my theory around it, than my theory, also based on what I've seen with ADI when we released it 7 years ago that it should have an impact. Because at the end of the day, what AI does -- the tech stack is fantastic and you can create so many different things. And for us, it's such a big opportunity. But for the end user, at the end of the day, it was -- the AI and the chat experiences, the Gen AI experience there does is either simplify something or it just helps them either find things in an easier manner or tell them what they need to find in a very clear manner. And hopefully, that's all at the same place. I think that in a process that is in theory starts very easy, but then there's such complexity in it, which is creating a full-blown website that is descriptive of your business. It's descriptive of it graphically and incorporates your images. It's descriptive of your opening hours of your location. It is transactional in many ways. It allows you to communicate with your customers. It's a heavy lifting that we're trying to simplify. And I think another layer on top of it that is saying, here's what you need to know. Here's the next question. Here's something that you may want to consider changing. And this is before adding on other AI capabilities that will help you run the business, okay? Tell you, you should -- you're out of stock or this is your best seller. Maybe you want to put -- make sure that you have higher stock of it, so it doesn't run out of stock. This is -- there's a holiday coming up, and it's a good time to maybe do a sale. Even before that, just the creation process is something where this kind of behavior of the AI can be very significant for the end user in terms of getting them to where they want to get. So from my standpoint, I do believe it can have a very interesting -- a very positive impact. I believe that we'll be able to introduce this already this year. So that's at least our goal. And it can definitely be a potential upside for us in '24 and beyond.

Okay. Is the idea for AI site generator to build you give a few props and it builds the whole thing top to bottom?

I think that, again, theoretically, yes. Practically, I think what we've seen in many years of helping people build websites that after they get the first version, they start thinking about what else they want. So I think there's going to be more prompt. The idea is to give you a very easy way to get you to be very happy. If you want to prompt it 100 times, be my guest. If you think you can get to it after 5, if you're happy, I'm happy.

Okay. And you kind of hit on this, but one of the areas of concern from investors was -- and it's twofold. It's one that some start-up kind of builds this AI prompt generator build a website and you've seen examples of it and see samples build really basic website really quickly. So that's kind of -- you're addressing that. And then -- the other concern is that we've heard from investors is that it will come from the other side. So a big kind of AI company that's investing a lot in AI will back on this product, so like Microsoft, for example, do you see either of those as a risk?

I think risk always exists, okay? And I think that if you're trying to run a company and you resist risk, then you're hitting your head against the wall. But I think that there are ways to mitigate this risk. One of them is to go to market quickly with a great product. And I think that going to market quickly with a great product. We have the benefits of, one, understanding what a great product really should be about. Because if you're going to generate -- if you're going to start -- you decide tomorrow, you want to compete with me and you want to quickly create something that's going to create very simple websites very fast. Go for it. One, I know for a fact that the clients, the users, they want much more. So you won't get very far with getting something that is very simple because the website they want is not simple. They want something that has complexity to it and has software behind it, okay? They want to schedule meetings for their business. And they want -- there's a cancellation, there will be an easy way to cancel and they want to be able to pay in advance or pay after or share the payer for it because it's a class. And monitor how many people in their class are coming on a regular basis and who is not coming and missing payments. This is not something you do like that is software. You have to build it, okay? And this is one example. There are many. So I think that we are very -- we are pretty much the best geared company to introduce this. And we also have a brand to get traffic to it. Even if you had an amazing solution. Now what -- how will we get the customers? Who will know about you? Why? And I think that from the standpoint of a company like Microsoft one of the big other players, there's still a massive know-how that needs to be done and they need to do this effort. They can. I don't see why would they? Because it's not their core business, it's a very big divergence. But the only best solution I have to it is to be out with a great products in the market as soon as I can.

Got it. It's good time to see if there's any questions from the audience? Okay. I'll keep going, but if anyone thinks they want to, raise your hand. We are -- been talking a lot about agencies, understandably. So a little bit less about your B2B partnerships. Maybe give us a little bit of an update of how things are going there and how you're viewing that channel.

So first of all, B2B partnerships are part of partners. Yes, we see most of the opportunity actually coming from agencies. If you ask me about the main growth driver, what is kind of really, really exciting. So obviously, you know which agency because of the market is huge over there and think about maybe out of 10 people going to an agency or to someone or to build the website for them. It doesn't mean that we don't like or we don't -- excited about the B2B partnerships. I mean we signed the [indiscernible] going very well, [indiscernible] going well. And we have obviously more partnership that we've signed and we will keep on seeing that. By the way, we started to see thousands of pure subscription, converting from the order Vistaprint platform to our platform. So it's happening, and we are getting back millions of dollars of revenue. And I believe that we are going to see more and more partnerships. Remember that the brand of Wix is super strong, and we see more and more companies are providing online services that would like to use the Wix brand for their customers because they know that it's going to help them. So for sure, there are going to be more deals. But again, if I need to compare it -- compared to the agency in terms of the opportunity. So obviously, what the agencies provide us is a much larger opportunity. And this is why we are talking about it because we want to share it with our investors as we believe that it's really important.

Okay. So 2 more, I'll just -- you talked about kind of growth getting back to pre-COVID, normalized levels. Today, most of your growth is coming from ARPS. Can you talk to kind of where you are in that path and how you can continue that strength? Studio sounds like a big part of that attach rates. But what's that -- what's the path on ARPS growth from here?

So well, I believe that it's a combination. I believe that we will see a growth in terms of number of sites built on weeks primarily from Studio. I met 2 days ago with one of our partners. They already built about almost 1,000 website which in a very short period of time. Some of the customers is generating about $1 million of GPV on a yearly basis and is keep on building websites. I mean think about it. But it's not just about adding more website and obviously getting more net premiums, but also changing the mix of our customers. Those people are consuming more and more business solutions. They use payments, they use Google ads, automation and so on. So I believe that this is something that we will definitely will continue to see.

Okay. And then let's -- we'll just end off on just capital allocation, targeted 50% of free cash flow. How do you think about buybacks of -- 50% of free cash flow on buybacks. So how do you think about it versus investing in other forms?

Yes. So we mentioned that we are going to use 50% of our free cash flow generation in order to buy back. In the end of the day, it's about adding more value to our shareholders, okay? And the way to do it is actually to first is controlling the share count, and this is something that we are doing. It's not just through buyback through the fact that we are getting much more efficient in terms of headcount and so on. The other way is to increase profitability. One of the examples we said that we're going to move to a GAAP profitability in 2025. But it has also a direct impact on our ability to generate more free cash flow. So the result of it is getting for, for example, where we are today to about $2 of free cash flow per share to $7.5 of free cash flow per share just by 2025. I believe that it's a great way, including the buyback to show that we can increase value to our shareholders. And this is exactly what we intend to do.

And also, you have to remember for us, we have extremely high confidence that by the end of 2025, we'll generate another $1 billion of cash flow. So it just makes sense that you will deploy at least roughly half of it towards that.

Great. Great. Thanks, guys. That's the end of our day. Thanks, everyone, for joining.

Thank you.

Thank you.