Cryoport Inc . (NASDAQ: NASDAQ:CYRX), a global leader in life sciences supply chain solutions, has maintained its full-year revenue guidance for 2024, citing solid growth in its Life Sciences Services and the successful launch of new products and services.
Despite subdued demand in the Life Sciences Product business, the company reported a 9% increase in Life Sciences Services revenue and a 12% year-over-year growth in BioStorage and BioServices.
Cryoport's CEO, Jerrell Shelton, expressed confidence in the company's strategy to return to positive adjusted EBITDA by 2025, supported by cost reduction strategies and a strong balance sheet with over $270 million in cash and short-term investments.
Key Takeaways
- Cryoport reports a 9% growth in Life Sciences Services revenue and 12% in BioStorage and BioServices.
- The company maintains its revenue guidance of $225 million to $235 million for the full year.
- New IntegriCell cryopreservation solution launched, with additional services in cell therapy.
- Cryoport's CRYOPDP business secures nine new contracts worth over $6 million annually.
- The company continues to generate positive cash flow and adjusted EBITDA despite lower revenue rates.
Company Outlook
- Cryoport anticipates continued market challenges but remains optimistic about long-term growth, especially in cell and gene therapy sectors.
- The company expects to achieve positive EBITDA in 2025, with cost-saving initiatives projected to yield over $20 million annually.
- Full-year guidance reaffirmed, with a modest revenue increase expected in Q4.
Bearish Highlights
- Life Sciences Product business faces challenges with overall demand expected to remain depressed for the year.
- Q3 product revenue fell short of expectations, leading to a conservative outlook for Q4.
Bullish Highlights
- The company supports 691 global clinical trials, indicating growth in its service capabilities.
- IntegriCell launch progresses well, with initial contracts secured and a grand opening in Belgium planned.
- Cryoport supports 17 commercial therapies and expects two additional approvals by year-end.
Misses
- Despite positive developments, the company acknowledges subdued demand in Life Sciences Products.
Q&A Highlights
- Manufacturing of HV-3 shippers is underway, with market readiness expected by the end of 2023.
- Commercial growth expected to be between 25% to 30%, with the budgeting process ongoing.
- The company aims to return to positive adjusted EBITDA by 2025 through cost reduction and capital realignment strategies.
Cryoport's third-quarter results reflect its resilience and strategic focus amid industry challenges. The company's commitment to expanding its service offerings and securing new contracts demonstrates its proactive approach to capturing growth opportunities in the life sciences sector.
With the upcoming launch of HV-3 shippers and anticipated commercial therapy approvals, Cryoport is positioning itself for a robust performance in the future. Stakeholders await the next quarterly update for further clarity on revenue expectations and the company's progress towards its financial goals.
InvestingPro Insights
Cryoport Inc.'s recent financial performance and strategic outlook can be further contextualized with insights from InvestingPro. The company's market capitalization stands at $382.1 million, reflecting its position in the life sciences supply chain solutions sector. Despite maintaining its full-year revenue guidance, Cryoport faces some financial challenges that align with the company's own assessment of market conditions.
InvestingPro data shows that Cryoport's revenue for the last twelve months as of Q3 2024 was $226.11 million, with a slight revenue growth of 0.9% in the most recent quarter. This modest growth is consistent with the company's report of a 9% increase in Life Sciences Services revenue and aligns with their maintained revenue guidance for the year.
Two key InvestingPro Tips provide additional context to Cryoport's financial situation:
1. Cryoport operates with a moderate level of debt, which could provide financial flexibility as the company navigates current market challenges and implements its growth strategies.
2. The company's liquid assets exceed short-term obligations, suggesting a solid short-term financial position. This aligns with CEO Jerrell Shelton's confidence in the company's strong balance sheet, which he mentioned includes over $270 million in cash and short-term investments.
These insights support Cryoport's stated goal of returning to positive adjusted EBITDA by 2025 and its ability to weather current market challenges while investing in growth initiatives like the IntegriCell cryopreservation solution.
It's worth noting that InvestingPro offers 6 additional tips for Cryoport, providing a more comprehensive analysis for investors looking to delve deeper into the company's financial health and market position.
Full transcript - Cryoport Inc (CYRX) Q3 2024:
Operator: Good afternoon and welcome to the Cryoport Second Quarter 2024 Earnings Call. All participants will start in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to your host, Todd Fromer from KCSA Strategic Communications. Please go ahead.
Todd Fromer: Thank you, operator. Just a quick correction, this is Cryoport's third quarter conference call from 2024. Before we begin today, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address our operating performance, events or developments that we expect or anticipate occurring in the future are forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions and not on the information currently available to our management team. Our management team believes that these forward looking statements are reasonable as and when made. However, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We do not undertake any obligation to publicly update or revise any forward looking statements whether as a result of new information or future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results, events, and developments to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in item 1a, risk factors and elsewhere in our annual report on Form 10-K filed with the Securities and Exchange Commission and those described from time to time in other reports which we filed with the Securities and Exchange Commission. It is now my pleasure to turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport. Jerrell, the floor is yours.
Jerrell Shelton: Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining our third quarter earnings call today. Joining us is our Chief Financial Officer, Robert Stefanovich; our Chief Scientific Officer, Dr. Mark Sawicki and our Vice President of Corporate Development and Investor Relations, Thomas Heinzen. As a reminder, we've uploaded our third quarter 2024 in-review document to our website. It can be found on the main page of the Cryoport, Inc. website. This document provides a review of our financial and operational performance and a general business outlook. If you haven't had a chance to read it, I would encourage you to visit our website and download it. I will now provide you with a brief update on our business, and then we'll take your questions. Our Life Sciences Services business showed 9% growth for the third quarter with BioStorage and BioServices revenue increasing over 12% compared to last year. This increase in our service revenue was coupled with a substantial improvement in gross margin to 46% for our Life Science Services business. Reflecting on our performance through the third quarter, we are maintaining our full year revenue guidance of $225 million to $235 million, anticipating continued growth in Life Science Services while acknowledging the ongoing softness in the Life Sciences Product business. To address our current market dynamics, we have been actively executing on our cost reduction and cost realignment strategies that we shared with you earlier this year. We've made substantial progress, and we are on course to complete these adjustments by the end of the year. Our actions are showing positive results as shown by improvements in our gross margin, adjusted EBITDA and positive cash flow through the quarter. As planned, these strategies are moving us closer to the objectives of sustainable profitability, and we believe that these measures will lead us to a return of positive adjusted EBITDA during 2025. In addition to our focus on profitability, we continue to advance the growth plans we have underway as we balance those plans with our committed -- our commitment to achieve profitability with current market conditions. In October, we launched our IntegriCell cryopreservation solution with a new state-of-the-art facility on our Houston campus. This new cryopreservation service will provide standardized cryopreservation of leukapheresis material, seamlessly integrating this service with Cryoport's end-to-end global temperature-controlled supply chain platform to support the development and commercialization of cell-based therapies. Our IntegriCell offering addresses yet another critical aspect in optimizing the supply chain for the development and commercialization of cell-based therapies through high-quality, more consistent cryopreserved starting material. In addition, there have been other exciting recent developments across our business, which includes CRYOGENE's successful opening of its biorepository operations in San Antonio, Texas and the onboarding of its first major client, a major cord blood repository. Beyond providing BioStorage services for this client, CRYOGENE will utilize Cryoport Systems' advanced BioLogistics capabilities to provide national and international patients with vital cord bloods, ensuring the integrity of these crucial materials as we benefit from further growth in the national cord blood market. Also, as a part of our company's overall mission to help patients in need, CRYOGENE Houston responded to a Methodist Hospital emergency request in the wake of Hurricane Helene, impacting -- Hurricane Helene's impact on the Southeastern region. Mobilizing quickly, our team provided recovery freezers for the hurricane caused by -- the hurricane that caused severe damage to a manufacturing facility that produces essential reagent supplies for patients. These freezer units were essential to ensuring consistent patient care during the emergency situation. I'm very proud of our team, which was on the ground assisting health care workers during the devastation. It was a demonstration of selfless service to the community and the team's care for patients without complaint or hesitation. In my opinion, they are real heroes and great examples of the spirit of Cryoport. At CRYOPDP, we've maintained a strong focus on acquiring new customers across all geographies with the addition of nine high-value contracts that CRYOPDP was awarded during the third quarter with a total value of over $6 million per year. We also continued to make strides at our MVE Biological Solutions business, which is core to our Life Science Products. Our team has been implementing measures designed to align MVE's operations and workforce with our current market demand to help maximize positive cash flow contribution. Consequently, as the cryogenic systems market improves, we will be in a better position to benefit from operating leverage. We think our initiatives, developments and efforts will put us in a better place to take advantage of the growth of the life science and especially the substantial growth forecast for the cell and gene therapy industry as approval for cell and gene therapies accelerate, ensuring the reliability, safety and integrity of the supply chain is essential for these life-saving products. Cryoport is a leader in this. As of September 30, we supported a total of 691 global clinical trials, a net increase of 21 clinical trials over last year with 79 of these clinical trials in Phase III. Looking ahead, we expect the macro and sector-specific challenges that have impacted many life science tools companies to continue for the near future. Consequently, as we move into 2025, we will further sharpen our focus on profitable growth and maintaining a strong balance sheet. We continue to be optimistic about our long-term business growth trajectory. We believe we are strategically positioned to leverage the anticipated long-term growth in the life sciences and the high-growth cell and gene therapy markets through our comprehensive and integrated supply chain solutions designed specifically to reduce risk and improve efficacies. This concludes my brief update. So now I will ask the operator to open the lines for your questions.
Operator: [Operator Instructions] Your first question comes from Paul Knight of KeyBanc. Your line is already open.
Paul Knight: Hi Jerry. On the clinical trial service business, it was up a little bit in the quarter year-over-year. Are you, I guess these label expansions we've seen in the market, they kind of take time. Is that the way we should read that? Because it doesn't seem like there's a share gain or loss story. But can you talk to when you would expect those label expansions to hit?
Jerrell Shelton: Yes, Paul. It takes about six to 12 months for that to have effect on our operations and Mark may have some additional comments.
Mark Sawicki: Yes. So move to earlier lines of treatment are already starting to benefit us. For example, the J&J, Legend, Gilead (NASDAQ:GILD) and Bristol-Myers Squibb (NYSE:BMY) projects are contributing. In addition, the expanded label of Sarepta (NASDAQ:SRPT) is also helping from a ramp [Technical Difficulty]. And with the newer products that have come to market that we're supporting, the CRISPR, Vertex (NASDAQ:VRTX) product, Iovance, Adaptimmune and Atara, these guys will start to contribute notable revenue into 2025. So all of those are positive for us. Looking at the clinical market because you had mentioned clinical, but I think you're referring to commercial. But on the clinical side, we are encouraged to see every phase of clinical trials that we support continue to grow. And we demonstrated year-over-year growth despite the market. And all of the currently approved therapies that we support were approved based on Phase II data. So it's encouraging to see the number of Phase II trials that we support hitting a record high of 319 trials.
Paul Knight: And the funding, are you seeing that in this trial activity, Mark?
Mark Sawicki: Yes. Biopharma market funding did take a step down sequentially in the third quarter with financing totaling about $16 billion in the third quarter versus the first and second quarter. First quarter was about $43 billion. Second quarter was about $23 billion. However, year-to-date aggregate are notably above 2023 and 2022 levels. So that's obviously a significant benefit. And you've got to look at a broader context than strictly one quarter. And the good thing is we're seeing, obviously, as we've mentioned in previous calls, that the trial activity seems to have stabilized, and we're starting to see consistent increases in clinical trial count on a quarter-by-quarter basis.
Paul Knight: Okay, thank you.
Operator: Your next question comes from David Larsen of BTIG. Please go ahead.
David Larsen: Hi can you please talk a bit about MVE and the products business, your dewars, sort of piece of dewars shipments, the large freezers, the smaller freezers, any color there would be very helpful. Thank you.
Jerrell Shelton: Yes, sure. We have an uneven market recovery in MVE. And as you know, we manufacture two primary cryogenic system product lines at MVE, dewars and cryogenic freezers. And while dewar sales were what we expected, we experienced weaker cryogenic freezer demand in North America and EMEA. But on the positive side, we did see a pickup in order flow from APAC, excluding China. And as we look at order patterns, we think freezer demand may be a bit better in quarter 4, but we continue to expect demand to be depressed for the year.
Robert Stefanovich: Maybe just to add to it, David, from a cost structure perspective, we mentioned that we've already initiated a number of actions in the first half of the year related to the product side as well. And then we look at the gross margin for products with over 42% gross margin, I think we're still able to achieve a robust gross margin even at this lower revenue rate and then still achieved solid good cash flow from the products business as well as positive adjusted EBITDA.
David Larsen: That's very helpful. It sounds like it's still profitable, cash flow positive, still a good business. Can you also talk a bit about your BioStorage business? Last quarter, I think you mentioned like a significant number of clients that have signed up for that, that are using the BioStorage solution. Just any color around that would be helpful. And then also the IntegriCell launch, how is that progressing, please?
Jerrell Shelton: David, that continues to be the case, and Mark can amplify on both those situations.
Mark Sawicki: Yes. So BioServices revenue, as we mentioned, was just under $4 million, up 12%, which is a solid improvement and continues to increase. We have onboarded quite a few projects in the BioServices area over the last 6 months. They do run in a bell curve consistency where early activity in support of clinical trials is a little bit slower and then it ramps over time. And most of those projects will take a few quarters to really start to contribute substantial revenue, but they are all on board and running, and we do see consistent increases in the BioServices revenue, which is outpacing our overall services business right now, which is great. IntegriCell just opened its doors. As we had mentioned, we had a grand opening last month in October in the Houston site, and we'll be having a grand opening in the Belgium site early next month. And we have already signed our first contracts there, and that will start to contribute revenue, although nominally this year, and we'll start to see some contribution next year.
David Larsen: Okay, thanks very much. It seems like Life Sciences, BioStorage, IntegriCell, they're all doing well. It's just this sort of very stubborn MVE division that's facing a bit of a cyclical downturn is what it looks like to me. But okay, thanks very much, I'll hop back in the queue.
Jerrell Shelton: Thank you, David.
Operator: Your next question comes from Kyle Crews from UBS. Your line is already open.
Kyle Crews: Thank you, Jerrell for taking the questions. Could you please, turning to 2025, you touched on it a little bit, expecting the market to remain a bit muted. Could you touch upon how you see the cadence of end market demand evolving throughout the year? And with regards to cost actions that have been taken this year, how should we think about those flowing into 2025? And if there was any reduction in incentive comp within 2025 that played into the margin improvement, could you size that? And would that be a headwind heading into next year? Thank you.
Mark Sawicki: Yes. I'll comment on the business first, focused on the services business, and Jerry might add some commentary around the products business. But the services business continues to progress nicely. And the biggest thing to think about as you're thinking about the service business is the opportunity associated with the clinical portfolio. We're supporting 691 programs, 79 Phase IIIs, 317 Phase 2s. We had three more BLA or MAAs filed in Q3, another two approvals in Q3, and we anticipate 4 more filings in Q4 with potentially another 2 approvals in Q4, and we already have two PDUFA dates in 2025. All of that will in addition to the recently launched therapies, will obviously continue to bolster the services side of the business for the foreseeable future. Now, Jerry, do you want to comment on product?
Jerrell Shelton: Yes. I think that I made some comments a little bit earlier about MVE and about the fact that it does have two product lines, which sometimes gets overlooked, dewars and freezers. And of course, it's been -- the demand has been down globally, but it's been down more in China than it has any other place. And I just was in China for a couple of weeks, and I can tell you that we do have a strategy for competing in China, and we will be implementing that. So look, MVE is a very good business. It's a profitable business still even at these depressed rates. It's running margins in the 40% range, and it has a positive cash flow, a positive EBITDA. It's a good business. And we're in a position now where when things do improve, the operating leverage will be available and it will produce more cash flow than it's ever produced. So...
Robert Stefanovich: Yes. And maybe just to talk a little bit about the question you have related to the cost reduction efforts that we've had, some of the resource alignments and then really a bit of a change of the overall financial profile for the company. As we mentioned in the earnings call for Q2, these initiatives that we implemented are well underway. We expect to have those completed by the end of the year. The initiatives in total expected to generate over $20 million in annualized cost savings. You can see just based on our Q3 performance and Q2 and Q3 performance, a sequential improvement of our adjusted EBITDA performance with Q3 being a negative $2.4 million. And we have mentioned for '25 that we expect to achieve positive EBITDA during the year 2025. If you look at the cash flow performance, cash flow from operating activities moved from a negative $8 million in Q2 to a positive $0.5 million in Q3, so all these things are moving in the right direction. We continue to maintain a very strong balance sheet with over $270 million in cash and short-term investments. And then from a gross margin perspective, I mentioned earlier, for the product side, in spite of the more depressed revenue, we're maintaining a 42% plus gross margin. And where we expect to see more operating leverage is on the Life Science Services side. So that's where we've seen some of these measures already taking place, moving gross margins for services to 46%. So that's, again, moving in the right direction. I think if you go into 2025, we'll obviously provide more guidance when we discuss our Q4 and full year earnings.
Kyle Crews: Thank you for that. And maybe one last one. Any anticipation of any changes as a result of the recent election? And then I'll jump back in the queue. Thank you.
Jerrell Shelton: No. No, there's no indication of changes. I mean, look, a lot of the analysts have put out what they call cheat sheets on what they expect, and I think they're pretty common. We know, and so there's no need for me to repeat these on those on this call, but we don't think anything of significance is going to change for us.
Operator: Your next question comes from Puneet Souda of Leerink Partners. Please go ahead.
Puneet Souda: Yes, hi guys. Thanks for the questions here, so a couple. On commercial, correct me if I'm wrong, was that down sequentially and year-over-year? Can you just elaborate more on that?
Mark Sawicki: Sure, happy to. So it was down a hair sequentially, basically flat. As you remember, we continuously talk about the commercial revenue as a stair step pattern. And so what we see is it jumps up, it goes flat, it jumps up, it goes flat, so some of our commercial customers had really good quarters. Others were more uneven. If you look at the nine-month period, and we like to look at that rolling forecast year-over-year, nine-month was up 14%, which was a good performance. We do expect to see another strong step up in Q4 as established there, these continue to ramp and then more recently launched their piece start to contribute and we're seeing several of our commercial accounts starting also leverage other Cryoport services other than their historical biologists business which will start to contribute in an increase of revenue on a per patient basis.
Jerrell Shelton: Yes. Puneet, we don't see this pattern as unusual for start-up industries and we're still in the start-up phases of this industry.
Puneet Souda: Okay. That's helpful. My question is really, look, when we look at the last couple of quarters, your weakness has continued across the industry. Unfortunately, Cryoport has missed as a result. Just given the backdrop today, can you just help us understand why you're continuing to reiterate the guide at this point? And what can you provide us about 2025 at this point?
Robert Stefanovich: I think for 2025, it's again too early to say. We're obviously in the process of completing our budget and our longer-term forecast. So we will provide more guidance for 2025. We do expect growth, obviously, but we'll provide more guidance. I think if you look at the performance for the full year, we provide guidance of $225 million to $235 million. So even if you look at the very conservative estimate for Q4, we'll still land within that guidance that we provided. And as Mark indicated, there are some additional revenue contributions that we expect during the Q4. So we are comfortable with the guidance that we've provided and reiterating that guidance for the full year.
Puneet Souda: Okay. And then could you elaborate what are your assumptions for MVE into the fourth quarter? And wondering if you can provide that for any thoughts on next year?
Robert Stefanovich: Specifically providing guidance for product and services. But I would say, in general terms for MVE, currently, we expect very, really modest revenue changes from where we are right now. It's too early to talk about any specific trends in the demand curve. So from our perspective, we're looking at very moderate changes from our current revenue level. And again, for 2025, we'll provide a little bit more insight.
Puneet Souda: Okay, helpful. All right, good thank you. And then my last one, if I could, could you provide an update on the HV-3 shippers? Has that started? Have you started using that? And can you provide us what the replacement cycle for the current mushrooms to the HV-3 shipper looks like?
Mark Sawicki: Yes, Puneet, so we're in the middle of manufacturing right now. So it is out at our vendor. We have the first manufactured units in-house. They're going through their final qualification and quality checks. It will be available for market at the end of this year. We're already engaged with many of our commercial clients around that transition. That timing, it depends on the client. Some are talking two quarters, some are talking four to five quarters. It just depends on their quality processes inside their own organization. But the receptivity has been fantastic. They love the product. All the clinical sites that we've sat down and talked to love the product as well, so we think adoption is going to be extremely robust.
Puneet Souda: Okay, helpful. I get it, thank you.
Jerrell Shelton: Thank you.
Operator: [Operator Instructions] Your next question comes from Matt Stanton of Jefferies. Your line is already open.
Unidentified Analyst: Yes hi, this is Jack on for Matt. I appreciate the question. I guess following up on commercial, understanding you're not guiding to 2025, but you've talked about 25%, 30% as a decent go-forward rate. Is that a fair assumption on the commercial side as we think about next year as we think about next year?
Mark Sawicki: As we had mentioned, we're in the middle of the budgeting right now in the budget process. What we do is we do a top-down and a bottom-up based on client forecasts and their demand forecast as well as the commercial launch schedules associated with new products and/or product label expansions. We'll have good clarity on that to be able to provide more oversight on that in the next quarterly call.
Robert Stefanovich: It should be a positive outlook, though, when you factor in, we're supporting 17 commercial therapies today. You could have two more approved before the end of the year, two more with PDUFA dates in January and a lot of filings throughout 2024 and another possible 18 for 2025. So the trend is moving in the right direction. The commercial revenue should continue to grow for a long time.
Mark Sawicki: Yes. And we had mentioned Q4 looks very good. So we should see a nice step-up in Q4.
Unidentified Analyst: Right, right. Yes. I appreciate the color. And then I guess moving to the fourth quarter implied guide, it looks like it would be $61 million. The reaffirmed full year, it's a high single-digit sequential step-up. Could you just talk about your level of comfort in that step-up, maybe speak to some things that may improve versus third quarter and the level of visibility you have as we sit more than a month into the quarter?
Robert Stefanovich: Yes. I think, again, the guide itself for the year is $225 million to $235 million. So we believe we'll be in that range. If you look at Q3, the product revenue came in a little bit short of expectations. So we are taking a more conservative view on Q4 expectations for the product side. But the services side is robust, and we do expect greater elasticity in terms of growth in -- on the product side. I don't know if anyone else wants to add to it.
Jerrell Shelton: No, I think that's the answer. I mean, look, we understand the concern that this year has been a challenging time for us. The cell and gene therapy and life sciences tool space took a hit, and we've changed to adapt to the near-term challenges. And so the reality is that the growth of cell and gene therapy hit a soft spot and its ramp and expansion. And it's sort of like the biologics business that kind of sputtered for a while. And today, it's over a $300 billion annually industry. So...
Robert Stefanovich: I think, look, based on the visibility that we have with the client base, with the commercial revenue -- commercial clients that we support and really that significant number of clinical trials that we support we're quite confident that the cell and gene space will pick back up in its pace of growth. And so we're quite actually bullish about the longer-term growth aspects of the commercial cell and gene therapy.
Mark Sawicki: Just to add -- I guess I'll just add one last comment on that. As we've mentioned, the commercial revenue side, we did have another 2 commercial approvals in the quarter, and we had a couple of commercial approvals earlier in the year. All of those are starting to contribute revenue and will continue to ramp. In addition, you had the product line expansion for Sarepta. You had the product line expansion on the BMS product lines, all of which will increase the patient count, and we are seeing obviously benefits from that. And you can see that some of that is evidenced by some of their earnings releases over the last week or so.
Mark Sawicki: I appreciate it thanks you.
Operator: There are no further questions at this time. I would hand over the call to Jerry Shelton for closing remarks. Please go ahead.
Jerrell Shelton: Well, thank you for your questions and our discussions. In closing, our third quarter results were in line with our expectations, reflecting economic and industry-related issues we've seen throughout this year. We're adjusting our actions and our business is stable, driven by strong longer-term fundamentals. While demand in our Life Sciences Products business remains subdued, we continue to see further growth in the Life Sciences Services business. We will continue to implement our cost reduction and capital realignment strategies, which have to-date led to improvements in our gross margin, adjusted EBITDA and cash flow. By focusing on profitable growth, we intend to reach our goal of returning to positive adjusted EBITDA during 2025. We thank you for joining us this afternoon. We appreciate your continued support and interest in our company. We're looking forward to updating you on our progress again next quarter. We hope you have a good evening. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.
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