CDK Global, Inc.

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00:40 Thank you, and good afternoon. I'd like to welcome you to our second quarter fiscal 2022 earnings call.

Joining me on today's call are CEO, Brian Krzanich; Chief Operating Officer, Joe Tautges; CFO, Eric Guerin; and Mahesh Shah, our Chief Product and Technology Officer. Following their prepared remarks, we'll be taking questions.

01:04 Our earnings press release was issued after the close of the market today and is posted on our Investor Relations website at investors.cdkglobal.com, where this call is being simultaneously webcast. In addition, our website includes an updated Excel schedule of supplemental financial information and a copy of our results presentation that we will be referencing during our prepared remarks.

01:32 Throughout today's call, we will be discussing our continuing operations only, which do not include the international business results, which are presented as discontinued operations. Unless otherwise noted, all references to financial amounts during our call are on a non-GAAP adjusted basis.

01:52 Reconciliations of adjusted amounts to the most directly comparable GAAP amounts are included in this afternoon's press release. Please also note that our all growth percentages refer to the year-over-year change for that period, unless otherwise specified.

02:11 I would like to remind everyone that remarks made during this call may contain forward-looking statements. These statements involve risks and uncertainties as further detailed in our filings with the SEC, which could cause actual results to differ materially from those mentioned in the forward-looking statements.

02:31 With that, it's my pleasure to turn the call over to BK.

02:36 Thanks, Reuben, and thanks to everyone for joining the call today. I hope you have all had a good start to the New Year.

As we begin the new calendar year and the half way point for our fiscal year, I like to thank our employees, our customers, and partners for their contributions to making Q2 another great quarter for CDK. 02:58 In the second quarter, CDK continued to execute to our expectations.

With revenue of 437 million, EBITDA of 168 million, and EPS of $0.74 per share, which is a remarkable result. Our focus investments in strengthening our core products including significant improvements to our customer service and technology solutions had distinguished us from the competition and resulted in the twelfth consecutive quarter of year-over-year site growth.

03:32 Before I get into some additional commentary on the industry, I wanted to mention that I’m excited that you have the opportunity to have from Mahesh Shah, our Chief Product and Technology Officer during today’s call. And many of you have asked for additional insight on our product roadmap, engineering acquisition integration, and the R&D investment required to execute on roadmap.

03:54 I’m excited about our progress in these areas, felt this would be a great time to have Mahesh provide some comments and take a few questions at the end of the call. I believe there has never been a more exciting time to be in the automotive industry, and several trends are creating new opportunities for CDK to continue to drive innovations that elevate the consumer experience when buying and owning a vehicle.

And the most significant trend is the demand by consumers to start the buying process online. 04:27 However, most people still want to finalize the deal in-store.

In order to meet consumer expectations, OEMs and dealers will need to collaborate and provide a seamless experience, a one that transitions easily from digital to physical. A great example of this is our collaboration with Hyundai Motor America.

The CDK Roadster solution is being used to connect Hyundaiusa.com. visitors with its dealer network digital retail and capabilities, leveraging our robust retail API’s from Roadster.

05:04 Hyundai’s new program further streamlines the car buying experience by helping consumers who start their shopping journey at Hyundaiusa.com to instantly discover local dealership pricing, while seamlessly transitioning them to our local dealership for the completion of the purchase, whether online or in-store. 05:25 Another exciting trend that we are driving innovation around is the connected vehicle.

According to Statista, 80% of cars sold in the U.S. are now connected and by 2025 this will grow to roughly 100%.

Yet in a recent study by CDK, only 58% of shoppers are even aware of connected car technology. This is an area where OEM and dealer collaboration will be essential.

05:54 Customers are very excited about our work in leveraging artificial intelligence to drive insights at the intersection of connected car data and dealer systems. In OEMs and dealers are increasingly using data to provide customers with experiences that predict when a service is needed and even proactively schedule the appointment creating a seamless car owning experience.

06:22 Lastly, I would be remiss if I didn’t mention the implications of the growing adoption of electric vehicles. First let’s get grounded on the data.

While EV is an exciting future, by 2030 research done by a global consulting firm estimates that only 32% of the new car sales will be EV, and EVs will make up less than 10% of the car park. 06:46 Change is happening, but it's an evolution and our dealer customers will play a central role.

As the EV market scales, traditional OEMs will be the dominant distributor of EVs. Again, based on our research, by 2030 83% of all EVs will be distributed through the dealer networks of incumbent OEMs.

07:09 These OEMs see the dealer as a strategic competitive differentiator against the direct-to-consumer EV players. And we'll be using their dealer networks to both assist with sales and provide a superior service experience.

07:24 In closing, this is an exciting time to be in the automotive industry. The auto market is large and growing, and we believe dealerships will remain the dominant channel for all car sales.

07:36 CDK is uniquely positioned at the heart of the automotive ecosystem to connect our industry. And through our technology, we unite dealerships, software developers, and OEMs.

It's through these connections that we share expertise and facilitate collaboration for the benefit of everyone. 07:56 So now, I'm excited to turn the call over to Mahesh.

08:02 Thanks BK, and good afternoon, everybody. I'm happy to join the call today and provide some highlights relating to the investments we've made in our product roadmap over the last couple of years.

08:12 I'll start by sharing an overview of the architecture, our innovation efforts, and providing an update on the progress we have made with acquisition integration over the last 12 months. 08:23 Hopefully, at the end of this, you'll have a better sense of how these efforts tie together, as well as an appreciation for how they are already impacting customer response and contributing to our financials.

I look forward to providing regular updates on these efforts in future earning calls and in meetings with you over the course of the year. 08:42 First off, regarding our architectural footprint, we've provided supplemental material this quarter, including a slide showing the architecture of our solutions.

What we've built over the last two years is a connected cloud platform architecture that is deployed in the cloud and utilizes common building blocks, which are developed by CDK to speed innovation, integration, and deployment of new functionality. 09:07 This concept is not new in software development, and a similar model has also been used in the automotive industry with the concept of a common chassis with reusable components that are paired with unique styles engines and capability layered on top.

In our space, components like document management and e-signature can be utilized by any application using our APIs without having to be built into each application separately. This unlocks a tremendous amount of efficiency we didn't have just two years ago.

09:38 Data, which was once fragmented, is now connected allowing us to deliver insights and to enable a trusted stream of data that is critical to the emerging connected car adoption. Applications, which were once siloed with limited workflow, capability, are now integrated through shared services making the sales processing much simpler for dealers.

10:00 This is enabled by hundreds of modern APIs that facilitate integration, and by a cloud environment that uses standard containers and product images, which improve deployment in management of our products while running at scale across thousands of customer sites. 10:15 The structure I just described is like what other software peers sometimes call the platform with a service, and it’s central to our efforts to simplify the development and deployment of cloud-based applications.

10:29 Now turning to our innovation efforts, using our cloud platform, we are updating our products and moving faster and developing into playing new software, while driving innovation. Platforms are critical as they allow us to leverage reusable components and deliver continuity of information across our products, ultimately simplifying the experiences our customers have with our software.

10:51 We are using this public cloud based platform to update our DMS software in areas that benefit our customers workflow the most, and we are driving a very regular quarterly cadence of workflow and interface improvements. 11:06 For example, we've now deployed several simplifications in our accounting workflows that enable customers to simply capture invoices by taking a picture with a mobile phone and loading them into the system for digital payment.

Our Lightspeed product used by customers in Powersports, Marine and RVs has just undergone a significant upgrade and will be migrated to a public cloud over time. 11:28 The refreshed platform now includes capabilities like embedded tax needs signature and has led to revenue expansion opportunities in that customer set.

On the truck and agriculture side, we are now introducing additional solutions such as Elead CRM, Heavy Equipment, Integrated Rental, and Cybersecurity are helping drive growth. 11:51 Turning to acquisitions.

The architectural work we've completed has allowed us to rapidly integrate our recent acquisitions and benefit our customers who are excited to deploy these new solutions in their dealerships. 12:03 First off, I'm pleased to say, we've integrated Roadster with our product portfolio and are now enabling a simplified sales process for dealers.

Last quarter, we mentioned that the engineering teams of Roadster and Elead merged under one leader to help create and efficient development team. These teams have moved rapidly and we're happy with the progress and the resulting positive response from our customers.

12:26 When using our CDK modern retail product suite, we are now able to support a simple online experience where dealer customers can complete a full purchase online or through a seamless and synchronized combination of online and in-store. 12:40 Through a combination of Roadster and our cloud platform, we are now digitizing the entire workflow.

Salty has been fully integrated into our portfolio, taking just 30 days to complete. Workflow automation to initiate the insurance process for vehicle have been seamlessly integrated into the sales process and the product has already been deployed with a number of dealers.

This is a remarkable, given we just closed the deal in Q1. 13:07 Customer adoption has been brisk, and we have seen a significant level of interest from our dealers to deploy in the coming months.

Neuron has continued to grow and recently added a large U.S. OEM as the customer.

Our customers are using our data science capabilities and products, the performance suite, and new real time data APIs that allow OEMs and dealers to gain visibility to critical supply chain data such as inventory and vehicle information to support sales and new and used vehicles. 13:37 Neuron is also being leveraged as a built-in component of our core products, including within CDK service, where we have deployed the predictive service capability beginning with the top five OEM.

The pipeline is healthy for FY 2022, which will add to a healthy customer base of OEMs, dealers, and automotive ISPs. 13:57 Fortellis is critical to executing our strategy to become the enabler of product innovation and Fortellis capabilities are foundational to our modernization efforts, providing an efficient way for us to enable the benefits of our open architecture approach.

In addition to internally focused benefits, we continue to add new APIs and applications into our Fortellis marketplace, both from CDK and third parties and connect them into our customer workflows, enabling a faster pace of innovation for our customers. 14:26 We believe this will allow us to be much more agile in meeting our customers’ needs today and tomorrow, and will differentiate us as many OEMs and dealers look to pair back the number of software providers they use in order to lower the complexity and cost of their operation.

14:42 The traction we've seen has been remarkable and gives us confidence this platform is resonating with our customers and partners as a prime resource for software development in innovation for the automotive industry. 14:56 I'm proud of what we have built over the last few years.

And as I look into the next few quarters, we will continue to invest in innovation efforts, which allow us to execute our roadmap, while keeping R&D expense as a percent of revenue at current levels, which I think are healthy and sustainable. 15:12 I'm excited about the ongoing innovation, this will introduce for our customers in the coming year, and I look forward to meeting with you again soon.

15:20 Now, I'll turn the call over to Joe.

15:23 Thanks Mahesh, and welcome everyone to the call. I want to start by adding some context around the strategy and technology updates that BK and Mahesh covered earlier with respect to our go to market activities.

We are proud of the performance we had this quarter with revenue growth of 7.5%. 15:43 Our growth is being driven through leveraging the deep customer relationships built by our sales organization, the delivery of superior customer experience by all of our customer facing teams, and our market leading solutions and technology.

16:00 The way we think about growth is number one, maintaining foundational building blocks where we grow our installed base of customers. We have been doing this quarter-after-quarter, both in our foundational DMS, as well as in our broader applications and you are seeing that come through in the financials.

16:21 Number two, serve the market with innovative solutions that address key market trends, which you've seen in our investments around the success and adoption of digital retailing and modernizing the service experience. Mahesh talked about the depth of the technology investment we have made in these areas and that's already making meaningful contribution to our revenue per site growth.

16:44 As we continue to scale these innovative solutions into the market, we have seen unprecedented adoption and attribute this to our relationships with our customers and the trust we have built with them. 16:57 And lastly, over the last couple of years, we have planted several seeds for investment both organically and inorganically that are additive and gives us confidence we can grow well into the future.

Mahesh touched upon several of these new investments, including Salty, Neuron, and Fortellis. 17:18 I'm excited to share with you that yesterday we officially announced CarSource.

CarSource is an online wholesale marketplace that connects dealers to used vehicle inventories nationwide, through a seamless integration with CDK’s industry leading dealership management system, CDK Drive. 17:38 The new solution is an added benefit that dealer is using CDK Drive that creates opportunities for time and money savings.

It enables automated inventory listings to the marketplace from a large trusted network of actively governed and screen sellers nationwide. 17:58 It also allows dealers, including those using other dealer management systems to search or bid on vehicles at no cost.

And offers the most competitive wholesale transaction fees with discounts for CDK customers. This is another great example of how we are leveraging our unique position within the automotive ecosystem to create a seamless integrated experience across all aspects of selling, buying, and owning a vehicle from sourcing to retail sale and beyond.

18:34 We're also very excited about how all these innovations are generating even more strategic conversations with OEMs. Over the last six months, we have had several significant planning meetings with OEMs to engage with them on their most strategic projects.

18:52 Let me give you an example. A few months ago, we're asked by a Top 3 OEM to partner with them on an opportunity to totally modernize the entire service experience.

This included building a mobile application that would leverage connected car data, connect the customer with their local dealership, managed service alerts, warranty items, and related highlights. Then, it facilitates the service appointment.

19:20 The goal is to have a true digital first experience that gives a consumer the ability to engage with the vehicle and the dealer to share all relevant service information when the appointment is scheduled. That way, when a consumer arrives at the dealer, it is seamless, integrated, and a wonderful guest experience and an opportunity for everybody to win.

This is what's resonating with our customers and what is driving CDK to the strategic center between dealers and OEMs. 19:53 We have always played an important role in facilitating collaborations between dealers and OEMs and we expect that to expand and accelerate.

20:04 Now, I'll share a few highlights from the quarter. Our teams performed well on both sales and installations this quarter.

We were able to surpass our expectations on both metrics, despite a typically seasonally slower quarter that has fewer selling days and despite the abnormally low auto inventory environment. 20:24 As a result of the low auto sales due to the ongoing supply chain issues, our transaction related revenue was down slightly, compared to last year with credit check providing some resiliency in Q2 to offset lower vehicle registration revenue.

We expect these headwinds to persist into the third quarter. 20:43 Revenue per site for auto remains strong, and we hit a new RPS record in our adjacency business.

Auto revenue per cycle 4% with contributions from the Roadster acquisition representing approximately 2% and the remainder from higher layered application penetration. We have continued traction with our strategic applications with adoption of CDK Service, Doc Cloud, and Cloud Connect.

21:11 Additionally, the universal product sales team that we discussed last quarter continues to ramp and has gained traction with Elead, and now includes a Roadster focused sales team. We are excited about their ability to establish relationships with new customers by leveraging exciting new products like Roadster and Salty.

21:32 Auto sales were up 2%, the fastest growth we've seen since 2015, while adjacency sites grew over 4% and hit another all-time high. Within auto, the strength of our product portfolio has led us to over 80 competitive wins in Q2.

Additionally, we have had another quarter of significant year-over-year [cycle] [ph] of CDK service and Elead CRM. 22:00 We are seeing an increase of Roadster installations both at sites with our DMS and those where a competitors’ DMS was installed, and we’ll see a significant pipeline of interest from dealers looking to add this product to their workflows in response to the modern retail trends Brian articulated earlier.

22:22 The adjacency business had another strong quarter with revenue per site growing 6%. The improvements Mahesh mentioned earlier had generated interest from customers who are looking to modernize their DMS to help improve their operations.

Our solutions in this space are very competitive and we expect to see continued site growth in both recreational, and heavy equipment parts of our business. 22:48 We can add unique value to both dealers and OEMs with our end-to-end platform, which gives our customers and partners the greatest flexibility to adapt to their markets.

I'm pleased with our competitive position at this point of the year. Our teams have the right products, and incentives to deliver market leading value to our customers and continue to drive our growth in coming quarters.

23:13 I'll now turn it over to Eric Guerin for the financial results and outlook.

23:19 Thanks, Joe, and good afternoon, everyone. I'll start by walking you through our second quarter results and related metrics.

Then conclude with commentary on our outlook for the remainder of fiscal 2022. 23:32 Second quarter revenue was $436.7 million, up 7.5% versus last year.

Revenue growth, excluding the impact of the acquisitions was approximately 5%. Subscription revenue was $349 million, up 6% from the same period in fiscal 2021.

This includes growth in core DMS and applications, and from the impact of acquisitions, partially offset by the impact of ASC 842 lease accounting, which shifts a portion of revenues for certain products out of our subscription revenue to other revenue, and modest headwinds from the partner program. 24:18 Transaction revenue was $38 million, slightly down versus the same period in fiscal 2021 due to lower vehicle registration revenue, given lower auto sales stemming from ongoing supply chain disruptions.

Other revenue was $49 million, up 26% reflecting higher hardware sales. 24:40 Now turning to earnings.

Second quarter EBITDA grew 8% to $168 million. Higher EBITDA was driven by income on higher revenue, and favorable software capitalization, partially offset by higher employee related costs and increased travel and entertainment expenses.

25:00 Our effective tax rate was 25.4 in the quarter, earnings per share for the quarter rose 25.4% to $0.74, primarily due to lower interest expense and higher revenue. Free cash flow was $125 million, up from $112 million last year.

25:23 We paid dividends of $18 million in the quarter, and we also repurchased $107 million of our common stock, bringing us to $208 million of repurchases since we restarted the program late last year. We continue to expect to repurchase between 200 million and 250 million of stock by the end of fiscal 2022.

25:45 Our balance sheet remains strong with net debt to adjusted EBITDA of 2.6x in the range of our target of 2.5x to 3x. 25:56 Now, turning to guidance.

I am narrowing the range for fiscal 2022 revenue and adjusted EBITDA and raising the midpoint and range for adjusted EPS. We expect full-year revenue between $1.785 billion to $1.815 billion, EBITDA between $660 million and $680 million, and EPS between $2.85 and $2.95, with an effective tax rate range between 25% and 26%.

26:34 In summary, we are on track to meet our financial targets for the year, while continuing to invest in innovation and customer success. I'm proud of our employees execution in Q2 and look forward to driving profitable growth as we move through the remainder of fiscal 2022 and beyond.

26:53 Thank you, and we will now open the line for questions. Operator?

27:22 Great. Thank you for the question.

I wanted to ask just on a couple of the key KPIs and metrics for you guys, as far as DMS sites, just the strength across autos and adjacencies was great to see again. Could you just double click there and kind of touch on how we should think about the sustainability of those site additions and then I have one on average revenue per site as well?

27:54 Hey, Josh, This is BK. You bet.

I mean, we're really proud of it. If you could just take a look at it, I think this is something like 12 quarters in a row now that we've had growth in our DMS sites.

And I think, you know, I always tell people, you really want to look at growth DMS sites and the revenue per site, those two metrics tell you, are we growing and are people spending more with us? 28:23 And so, we think this is absolutely sustainable that we can keep growing in that 1.5% to 2% [rate] [ph] and that’s – if you look at the forecast that Eric just talked about for the year in guidance that projects 1.5% to 2% rate for the year.

Joe anything?

28:43 Yes. No, I just think you see everything coming together, Josh.

When we look at it, just the – and you heard Mahesh talk about the technology between our sales team and service team everything's coming together, and we feel very good about where the teams perform and what we have ahead.

28:59 Got it. And then on the revenue per se, we saw the growth on a year-over-year, but was wondering why did that move lower on a sequential basis?

What was causing that? And how should that average revenue per site trend going forward?

29:21 Yeah, Josh, thanks for the question. This is Eric.

One of the big drivers there is, we did have some large enterprises actually renew with us in the prior quarter. So, we were a little bit higher in Q1.

I would see that grow as we move forward in Q3 and Q4 on a sequential basis.

29:48 Okay. So the renewal in the prior quarter, could you just explain that, how that impacted last quarter and then this quarter?

30:00 Yes. So, in the prior quarter, when we renewed it, it's part of the 606 calculation.

It was a quite large enterprise. So, as that renewed, it shifted some of the calculation in the quarter.

I would look at the year-over-year as you saw in Joe's comments increasing year-over-year and what I would anticipate is that will normalize as we move forward and we would see sequential growth moving forward in Q3 and Q4.

30:28 Okay. That's helpful.

30:30 Maybe just to add. I mean, we've talked about before, we've seen this in – that mid-single-digit range and like Eric said, I think as you look at what we have ahead in the second half and the momentum we have, we feel that it will return as we go forward Q3, Q4 and be at a level of increase that you used to see.

30:51 Great. Thank you.

31:00 Hey, good afternoon everyone. A couple of questions here.

Are we getting to the point now BK that with this great set of products that you have that complements the DMS product overall, are you getting more DMS interest from the fact that you have this great product line that is helping the dealers sell cars digitally, helping on CRM, etcetera, etcetera. Could you maybe comment on that?

31:30 Sure, I can start and part of the reason I wanted to have Mahesh on the call and I think you'll see him more and more now is – we're really proud of the products, we're proud of where we're at right now, and I think to continue to hear from the guys who are really doing the work. But absolutely, if you look at the strength we've seen already with Roadster, right.

So, we said we would integrate it within the first 100 days. Mahesh and team absolutely did that.

31:58 The Roadster team has done a great job integrating them. Salty is another great example, fully-integrated and all of these products are now really powering the dealerships have options, they have choices.

They really like the portfolio and what they even like more is we talked to them about our roadmap for the future, where we're headed with digital retail, where we're headed with several other efforts. 32:26 You saw things like, we announced yesterday – yesterday or day before, our CarSource.

That's another great example where we're delivering products to them now. Actually they don't have to pay us for from a software standpoint.

We actually generate revenue or save them money. And Salty and CarSource are too great examples of that.

32:51 So, all of those things are driving people through our business. And that's why we think we can keep this 1.5% to 2% DMS growth.

33:00 Okay. And then it gets me into my second question with CarSource.

That is a transactional revenue product for CDK, you're not charging a subscription for the software or anything right?

33:15 Yes. Gary, good to talk with you.

We're really excited. As Brian said about the launch of our wholesale option marketplace, and integrates fully into the DMS and really as soon as the dealer brings that used vehicle into the dealership, automatically saves them time to post it to the marketplace, and then you're right, there’ll be a transaction fee per car traded, but it's an opportunity where we're going to come at a price point that allows the dealer to save meaningful amounts of money and fully integrate [to the post-end] of transaction within the platform.

33:50 So, do have a – I'm sorry, go ahead Brian.

33:53 No, I was just going to say Gary, look, one thing which a lot of people don’t realize is the number of cars per month dealers exchange between each other, and so, it's a large number of cars, many more than I think people typically think. So, we’ll have to even get a small percentage of that business and they save just a ton of money doing that.

34:19 Do you have the capability with CarSource to do an independent inspection that, kind of gives a degree of confidence from the dealer that's buying or is this – or are you not doing any kind of – or is the inspection being done by the dealer, how is that done? Because that's a real friction point with these online auction dealer to dealer platforms?

34:46 Agree, agree. And we've been very careful around how we’ve structured this.

It's a full service opportunity or a full service offering. And so, we partner with the nationwide inspection company, it could be able to make sure that inspections are performed and you expect a lot of time Gary piloting this in the Midwest over the last several months and just the feedback from dealers has been positive.

35:15 We've traded vehicles and we're ready to scale it. So, for sure, like you said, really important part of their operation and something we think where they can trade cars more quickly, so they don't have the vehicle on there, lot longer as auto population and save the money on executing the deal.

35:34 Okay. Thank you very much.

35:42 Alright, thank you. I may have missed this.

I don't know if you touched on this, but congratulations on the continued site count growth, can you give us a little bit more color on that? Where have you seen most of those gains and it has a smaller [side doing] [ph]?

And then also, was it driven by let’s say one big contract or is it pretty diversified? Thanks.

36:06 Hey Ian. Good to talk with you.

So, a couple of things going on. First, as Brian talked about our offer is really resonating and we're winning.

We’re winning across the board, whether it's smaller dealers, bigger dealers. The other dynamics you're seeing come in is dealers are driving a significant amount of consolidation and it's really these larger more complex dealers, which is well suited within our technology.

36:31 And what I would say is, we're starting to get a tailwind and expect that to continue as well from the consolidation because we over indexed to those larger dealers. And so, yes, I think while we don't break out the segments or the different portions of the portfolio, we're doing better, I think across the board, and really our office resonating maybe Mahesh some comments around your view on the technology and the workflow integration that you've done that’s really enabling dealers?

37:05 Yeah. What you're seeing across all these questions is, we're really trying to simplify some of these workflows across these dealers.

And as these dealers get larger and larger, it gets even more complex. So, accounting as an example, the more dealers under the same dealer group, the more complex the accounting.

And that really plays to our product strengths as you look at all of these things. And what we're really just driving is, simplifying these workflows as we bring it all together with the DMS.

37:36 Okay, great. And then on the subscription revenue side, was there any impact on like lease accounting ASC 842 or [46%]]?

37:53 Yeah. Thanks for the question.

In my prepared remarks, I highlight that there’s ongoing movement with ASC 842, some kind of geography movement, some moving from subscription to other revenue. We don't break it out specifically in detail, but there’ll be ongoing movement just based on that accounting treatment.

38:16 Okay. So, they don't know a direction per se like – or the actual impact?

38:23 Yeah, I don't give a specific number. What I would say is, there’ll continue to be movement.

It's not a significant number, but we will have that ongoing movement as that lease accounting on hardware moves some of that subscription revenue to other revenue, because you recognize it upfront for 842.

38:46 Okay. Perfect.

Thank you so much.

38:47 No problem.

39:00 Okay. I just, I really want to thank everybody for joining the call.

Those were great questions. I really appreciate it.

I just want to end with, I'm really proud of what the team has accomplished. I want to thank all of our partners and customers for continuing to work with us and continuing to trust us to help them run their businesses.

39:24 Looking forward to the rest of fiscal 2022 and really looking forward to bringing you next quarter's results. So, thank you very much for joining the call today, and we'll see you [in a quarter] [ph].