Insperity Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2023

There are 8 speakers on the call.

Operator

Good morning. My name is Jenny, and I will be your conference operator today. I would like to welcome everyone to the Insperity Second Quarter 20 23 Earnings Conference Call. June will follow the formal presentation. DPAD.

Operator

Please note this conference is being recorded. At this time, I would like to introduce today's speakers. Joining us are Paul Sarvadi, Chairman of the Board and Chief Executive Officer and Douglas Sharp, Executive Vice President of Finance, Chief Financial Officer and Treasurer. 2019. At this time, I'd like to turn the call over to Douglas Sharp.

Operator

Mr. Sharp, please go ahead.

Speaker 1

2. Thank you. We appreciate you joining us. Let me begin by outlining our plan for this morning's call. 2019.

Speaker 1

First, I'm going to discuss the details behind our Q2 2023 financial results. Paul will then comment on the quarter and our plan over the remainder of the year. 2nd quarter. I will return to provide our financial guidance for the Q3 and an update to the full year guidance, and then we will end the call with a question and answer session. 2nd quarter.

Speaker 1

Now before we begin, I would like to remind you that Mr. Sarvadi or I may make forward looking statements during today's call, which are subject to risks, uncertainties and assumptions. 2nd quarter. In addition, some of our discussion may include non GAAP financial measures. For a more detailed discussion of the risks and uncertainties that could cause 18.2% of the prior year.

Speaker 1

Actual results that differ materially from any forward looking statements and reconciliations of non GAAP financial measures, 2nd quarter. Please see the company's public filings, including the Form 8 ks filed today, which are available on our website. 2. Now let's discuss our Q2 'twenty three financial results in which we effectively executed on our plan in sales, service pricing and other areas of the business, however, experienced a shortfall from our forecasted earnings due to substantially higher healthcare costs. We reported adjusted EPS of $0.64 and adjusted EBITDA of $51,000,000 for the quarter.

Speaker 1

2. As for our growth metric, the average number of paid worksite employees increased by 7.2% over Q2 of 2022, 18, which was just below the midpoint of our guidance as net hiring by our clients came in slightly lower than expected.

Speaker 2

2nd quarter.

Speaker 1

Moving to gross profit, we continue to achieve pricing above targeted levels and we combined with our workers' compensation program, payroll tax 2nd quarter and traditional employment offering, we experienced a favorable outcome. However, Q2 health 2nd quarter. The share cost came in approximately $42,000,000 higher than expected. This was primarily due to both the number 2nd quarter and the severity of large claims up to our $1,000,000 per person insurance claim limit. 18.

Speaker 1

Large claim activity accounted for approximately 75% of the higher costs with claims over 2017,000 being the primary driver of this increase. The remaining 25% related to higher than expected pharmacy costs. 2. And as for the higher pharmacy costs, we experienced an increase in utilization of specialty drugs, 18, including a significant step up in the use of diabetes and weight loss drugs and behavioral health drugs. 2.

Speaker 1

Now while large claim activity persisting over more than one consecutive quarter has been rare over the course of our history, Q2. Our updated range of earnings guidance incorporates a continued high level of large claim activity over the remainder of the year

Speaker 2

2nd quarter on the low

Speaker 1

earnings side and a return to more normal activity on the high earnings side. 2nd quarter. In both cases, we anticipate that pharmacy costs will remain elevated. When considering these factors, 20. Along with our results over the first half of the year, we are now forecasting a benefit cost trend of 7% to 8.5% for 2023, up from our prior estimates in a range around 5%.

Speaker 2

2nd quarter.

Speaker 1

On top of the pricing improvements that we have achieved, we intend to further adjust our pricing to mitigate the impact of this potential increased cost trend. 2nd quarter. And Paul will provide additional comments on our benefit pricing and cost trends in a few minutes. 20. Now moving to operating expenses, costs increased 9% over Q2 of 2022 and included continued investment in our sales, service and technology and the impact of the inflationary environment on our costs.

Speaker 1

Our growth investment included a 15% 18. Increase in the number of higher business performance advisors, putting us in a good position as we approach our fall selling season. 20. Net interest income increased by $3,000,000 over Q2 of 2022 on higher interest rates and invested balances. 2nd quarter's effective tax rate was 25%, which we are also now forecasting

Speaker 2

18% as our full year rate.

Speaker 1

Now our financial position and liquidity remains strong and we continue investment in our growth while 2nd quarter, we repurchased 98,000 shares of stock at a cost of $11,000,000 $2,000,000 in cash dividends. We ended Q2 with $219,000,000 of adjusted cash $370,000,000 of debt. And as announced this morning, we have increased our share repurchase authorization by 2,000,000 shares 2nd quarter and intend to be more aggressive than our typical repurchase activity depending on market conditions. 18. Now at this time, I'd like to turn the call over to Paul.

Speaker 3

Thank you, Doug, and thank you all for joining our call. Today, I'd like to provide 18 months ago.

Speaker 2

I will now turn the call

Speaker 3

over to the operator for the Q2. I will now turn the call over to 12 months of 2019. 2nd, I'll discuss how Insperity is positioned to capitalize on our vast market opportunity 2nd quarter with a focus on the future of the workplace and the corresponding changes needs changing needs in our target market. 2nd quarter. I'll finish with comments on the outlook for the company into next year and beyond despite the unexpected large healthcare claims in the recent quarter.

Speaker 3

2nd quarter. Our most important key drivers for long term success and growth and profitability more within our control are new sales, pricing, client service and retention. 2nd quarter. All these areas were strong in Q2 and contribute toward a positive outlook for the future. Our workforce optimization book sales were solid, 2nd quarter driven by an outstanding effort in our mid market business performance consultant team.

Speaker 3

This team experienced one of their strongest 2nd quarters in history in book sales in both deal count and worksite employees sold. In addition to substantial book $1,000,000,000. Excellent progress was made by our BPAs driving sales activity, which was a priority coming into the quarter. 2019. Our 15% higher number of BPAs increased discovery calls nearly 30% over Q2 of last year, 2nd quarter, making our prospective client pipeline significantly stronger as we go into the second half of the year.

Speaker 3

2019. One of the other highlights of the quarter was workforce acceleration or WX continuing to gain traction across the sales organization 18% and coming in well above budget in booked sales. One of the reasons this is exciting is the opportunity to test 18.1 of our assumptions regarding WX. At this level of WX adoption and incentives and a large number of new BPAs over the last 12 months. We can begin to assess the potential for WX to lower BPA turnover.

Speaker 3

20. Historically, the 18 months ramp up period for training BPAs and workforce optimization sales has resulted in a level of frustration from the complexity of $1,000,000 sale and relatively few closes over the learning period. This caused higher turnover rates and less tenured Tier 1 and Tier 2 BPAs. 2nd quarter. WX is a less complex sale and provides opportunity for earlier success 2nd quarter 2020.

Speaker 3

The early read for this first half of the year appears to be validating as the WX quarter. Sales adoption has considerably lowered turnover in both tiers. Now sales efficiency is down somewhat year to date, 2, which is to be expected with the high number of new BPAs in the mix and a different economic climate in the first half of the year. 2019. Our refined sales compensation incentive programs are encouraging exactly the behavior we want to drive efficiency going forward.

Speaker 3

Q2. Not only does strong WX sales by Tier 1 and Tier 2 BPAs create a client base to upgrade to WLO over time, 20, but they also provide an opportunity for sales efficiency to improve sooner if this lower BPA turnover continues. 2019. Now our strong pricing allocations were also a highlight this quarter. This is particularly critical considering the higher than expected claim cost in Q2.

Speaker 3

18. In a few minutes, I'll address how this pricing trend and our plans going forward will contribute to offset cost trends. 2. Q2 was also another strong quarter and execution reflected in our client service and retention results. Retention was 99% each month of the quarter at historically high levels.

Speaker 3

Our success in our recruiting and training efforts of corporate staff over the last 3 quarters has resulted in appropriate client service ratios to support our changing client needs. 2nd quarter. So through the first half of the year, we've experienced solid execution of our plans across the company, and we believe the business is on sound footing for growth going forward. 2. As we look ahead, we are seeing fundamental changes to the future of the workplace and therefore the needs for small and medium sized businesses to compete 18 months ago as an employer of choice.

Speaker 3

This was clear to us more than a year ago and we established a new division in the company and a new role 2nd quarter 2018. Our strategic planning and development organization led by Executive Vice President, Kathy Johnson 18 months ago. Is focused on strategic, corporate and organizational development to continue our industry leadership position 2nd quarter. In the breadth and depth of services provided and the level of care for our clients. This team is focused on purposeful 18th year.

Speaker 3

We are pleased to

Speaker 2

announce that our transformation to the changing

Speaker 3

HR environment, including everything from data analytics and artificial intelligence to employee generational and psychological demands 2nd quarter

Speaker 2

2020. Thank you, Jim. I would like to welcome everyone to the

Speaker 3

Insperity 2nd quarter 20 2nd quarter. We are planning upgrades to 20. We are planning upgrades to many of these areas over the last half of the year to support our clients' changing needs. 2. I believe with our focus and innovation in these areas, we are well positioned to meet small and medium sized employer needs 2nd quarter 2020.

Speaker 3

We are pleased to remain competitive in the tight labor market and succeed in the marketplace. These demands require cultural changes in companies to attract 2nd quarter. Our history of working with clients on these issues combined with our efforts to provide the appropriate benefits 20 and dynamic employee experience platform for these businesses positions Insperity as the provider of choice into the future. 18. So we believe that our long term outlook remains very strong driven by effective ongoing execution and enhanced strategic planning and development.

Speaker 3

18. Our level of confidence is not impeded at all by the recent large claims and the effect on the quarter or the projected year. 20. The best place to start to put this claim quarter in proper perspective is to look at our 5 year compounded 18% annual growth rates in both pricing and cost of our benefits plan with this year's estimate included. 2.

Speaker 3

Our estimated benefits cost compound annual growth rate is 4.2% to 4.6%, 20, including the wide range of potential claims we've estimated for the full year. Our compound annual growth rate for benefits 2nd quarter 2018. Allocations over the same period is 4.1%. Now these rates demonstrate effective healthcare cost management compared to the marketplace 2nd quarter and achieving our goal of aligning our pricing with cost increases over time. Our long term historical cost trends are solid and our 2nd quarter pricing strategy has performed well.

Speaker 3

Now this year, we're running ahead of target allocation increases 20.5% and we've already initiated a plan to add a moderate incremental amount of pricing for 2024 of approximately 1% to 1.5%, 2nd quarter, which we believe is in line with marketplace trends and should put us in a solid position to align our pricing and cost going forward. 2nd quarter. When we look ahead to next year and beyond, we believe we'll be able to continue to appropriately align our pricing strategy 2nd quarter 2020. We are in year 2 of our current 5 year plan and this quarter's results do not 2nd quarter 2020. We've had quarters in which we experienced unexpected large claims.

Speaker 3

2nd quarter. In each such instance, we've successfully managed this situation and continued our long term growth and profitability. 20. For the company to stay on plan, the most important focus is on our growth drivers over the balance of the year. 2nd quarter.

Speaker 3

Our focus includes continuing the investment in BPA hiring and training and additional marketing to drive sales over the balance of the year. 2017. We also have the organization ready, willing and able to continue solid execution on our pricing and client service and retention strategies. 2nd quarter. We remain confident in our ability to achieve these goals, which we believe will drive future performance and position us well to continue

Speaker 1

2. Thanks, Paul. Now let me provide our guidance for Q3 and an update for the full year 2023. 2019 earnings guidance includes assumptions around a possible range of outcomes in our benefit costs over the remainder of the year. 2nd quarter.

Speaker 1

Outside of this area, we continue to expect favorable trends in our pricing and other areas of gross profit 2nd quarter and are forecasting slightly lower paid worksite employees and operating expenses. As for the details, 20.5% to 7% worksite employee growth for the full year 2023, 2019, slightly lower than our previous guidance and a tighter range since we are now more than halfway through the year. Q2. The lower growth outlook is primarily a result of Q2's average paid worksite employees coming in a little light due to lower hiring in our client base 2nd quarter and an assumption that this lower hiring continues over the remainder of the year. As for Q3, we are forecasting 2nd quarter.

Speaker 1

The year over year worksite employee growth of 4% to 4.5%. Now this is lower than our full year growth forecast due to our assumption of 20.5% significantly less hiring in Q3 of 2023 compared to Q3 of 2022. 20. However, this guidance reflects continuing sequential worksite employee growth over the remaining 2 quarters of 20 23 and improving year over year growth in Q4. We have 2nd quarter earnings guidance based upon our results through the first half twenty twenty three and our updated outlook for worksite employee growth and the range of 20 2.5% expectations around our benefit costs as previously discussed.

Speaker 1

So after putting together the pieces, we are now forecasting full year 23 adjusted EBITDA in a range of $300,000,000 to $350,000,000 2nd quarter and adjusted EPS in the range of $4.35 to $5.32 Q2. As for Q3 earnings, we are forecasting adjusted EBITDA in a range of $57,000,000 to $81,000,000 2nd quarter and adjusted EPS from $0.69 to $1.14 Now at this time, I'd like to open up the call for questions.

Operator

5.

Speaker 4

Thank you and good morning. I wanted to ask on the benefits cost side first. I was hoping 2. You could provide a little bit more color on the benefit cost trend, particularly on the $750,000 plus side. Is there anything 2nd quarter.

Speaker 4

To pinpoint in terms of the underwriting approach or the risk management approach that would help to explain that or is it just Some noise. And then I guess maybe the bigger picture question is, do quarters like this Change your appetite for risk on the healthcare side or any kind of long term ramifications to this kind of quarter? Thank you.

Speaker 1

Yes. I think when you look at a little bit more of the detail behind the cost, obviously, we investigated some of the detailed claims data that was provided from our healthcare carrier very diligently. 2. I think one thing that came out of that was that there was not a higher concentration of large claims from new clients, 2. Which would indicate that through our fall selling season and our year end renewal, this is not the situation where there has been adverse quarter.

Speaker 1

That's obviously one of the first things that you want to rule out. When you look at the types of claims, 2. Sure, you've got some heart attacks, you've got some accidents. And so it's really varied and diversified over as far as the nature of the type of claims. 2nd quarter.

Speaker 1

And so I think it was from what we can see thus far, yes, we did have a claim 20. A period of large claim activity. It has happened in our history, but I think we still feel particularly when you look at Paul's comments with respect to over the long term in the 5 year compounded rates that we're still managing The healthcare cost trends even with the forecasted higher costs over the remainder of the year 2nd quarter. Within a range that a tolerable range and really within a range where our 2nd quarter pricing with being above target recently and maybe some adjustment to that, we feel like the matching of pricing costs

Speaker 3

2nd quarter. So let me address the second half of that question about the kind of appetite for risk. 2. Because I think there's 2 different ways you have to look at it. First of all, we are comfortable with 2nd quarter.

Speaker 3

The way we have structured our program to align price and cost over the long term 2nd quarter. And we know that it provides advantage to grow the business and it provides a more profitable long term structure. But at the same time, we sure don't like when we have a large claim quarter like this. And as you know, when we did this in 2019, 2nd quarter. We did purchase a coverage limit on individuals at the $1,000,000 level.

Speaker 3

2nd quarter. We also will continue to look and evaluate that as this year goes by. We've quoted lower limits before. 2nd quarter. Sure.

Speaker 3

We'll take a look at that, like we do every year. And I would just say also that we, on an ongoing basis, look at 2nd quarter. Other possibilities to take out some of the volatility, that relates to this type of quarter 18% and how that affects us in the public markets. So, we continue to pursue those things.

Speaker 2

2nd quarter. So I would say

Speaker 3

our appetite to we still want to run the business this way, but certainly as we can find other ways to

Speaker 4

2. That's helpful. Thanks to you both. I guess for my follow-up question, I wanted to ask on capital allocation and maybe the capacity you have 18. Can you just flush out the type of capacity you have this year to put back into buying the stock?

Speaker 4

Thank you.

Speaker 2

Well, I

Speaker 1

think you can see from the increased authorization of 2,000,000 shares, it would give you some indication as to where the Board is currently 2nd quarter. Feeling with respect to repurchase authorization, which would indicate 2nd quarter. A higher level than what we have done typically. But even if you look at it over the course of our history, we've always been a big purchaser of shares. 2.

Speaker 1

I think if you go back to the 2019 events where we had some quarters of high elevated large claim activity, we were quite aggressive because 2. We felt that over the long term, the business model remained very much intact. I think we obviously feel very confident in that today. 2. So with the increased authorization, it does allow us to be more aggressive, should opportunities present themselves 2.

Speaker 1

Coming off of this quarter's activity, again, strong confidence that our long term plans 2nd quarter. Are still in place and still reasonable targets for us.

Speaker 2

2nd quarter. Thank you.

Operator

Thank you very much. Your next question is coming from Tobey Sommer from Truist. Toby, your line is live.

Speaker 5

Thanks. I was wondering if you could share with us your expectations and what you're hearing from your 2 healthcare provider about whether the higher healthcare expense level May continue into 2024. I think it's been a theme and concern

Speaker 3

that people had Sort of in

Speaker 5

the post pandemic era. Thanks.

Speaker 2

Yes, I

Speaker 3

think we do continue these conversations on an ongoing basis. 2nd quarter. And Toby, as you heard from our discussion here, we did go ahead and build in just a higher pharmacy trend because there's Things in there that seem more likely to continue than be a short term bubble. 2nd quarter. So we do continue to monitor those things.

Speaker 3

I think that's different from this, the large claim component. However, 19. Since we had a difficult period in 2019 that covered multiple quarters, we've just used 2nd quarter. Wider range of the expectation for this year, but in the conversation with our advisors 2nd quarter and outside the company. We think we're properly managing and aligning our cost and price with the underlying trends.

Speaker 3

2.

Speaker 5

Thanks, Paul. And for my follow-up, I'll make it 2 pronged if I could. So 2. The mid year price hike you talked about 1.5%, is that applicable to all clients or is that sort of a And then maybe you could talk about and dig into your experience with BPA retention and Maybe talk about something a little more exciting on the sales front away from the benefits. Thanks.

Speaker 3

Sure. So When we look at remember, we are looking at pricing every day in our operation based on the trends 20%. Adding another 1% to 1.5%, that began immediately when we decided that. And 20. That adds to the typical trend increases we've been building into clients.

Speaker 3

Clients typically get an increase from us. It varies based on their experience with us. But generally speaking, customers will get an increase in the high single digits, Some will get double digits, but most of the time it's on average, I would say in high single digits. And then 2nd quarter. They will make their own decisions on how to lower that cost by plan selection or how they might share costs with employees or other issues that they'll look at.

Speaker 3

So what we're saying now is we'll continue to drive that higher than the average it's been, 2nd quarter 2020. But it appears to us to be very much in line with what is going on in the marketplace at large. So we're not in a position where we've got to 2nd quarter and what we're able to pass on. And as you can see, we've just come off of a year and a half of really strong pricing success 2nd quarter with our client base. So we're very comfortable with that going forward.

Speaker 3

So now on to the exciting part on the growth side, yes, I'm very excited about Really, everything we're doing in our organization around the core business 2nd quarter and the incentives that we've changed to direct behavior at the appropriate things at the appropriate time. Also the WX element that we also incented in such a way that we're seeing the lower turnover year to date 18%. And that has a dramatic potential effect. And then of course, the other factor that I always want to focus on is how 2nd quarter. We were in mid market and we are building that team and building that pipeline for more consistent and predictable 20.5% growth on the mid market front.

Speaker 3

So all three of those pieces together really point to a positive growth outlook for the company. 18. Even though we've been in a period of time when growth in the business is below the double digit number, we still 2nd quarter. We have had the highest growth rate in the industry, but I think as these things really take effect, 2nd quarter. There's this long term potential for improved sales efficiency from less turnover.

Speaker 3

And in addition to that, 2nd quarter. It's also lower cost, dramatically lower cost when you have lower turnover. So that kind of has a double dip positive effect. 2nd quarter. And we're excited about where we are on that front.

Speaker 3

Still a lot of work to do, but we're really poised for an excellent

Speaker 2

second half. 2nd quarter.

Operator

Thank you very much. Your next question is coming from Mark Marcon of Baird. Mark, your line is live.

Speaker 6

Thank you. I've got a couple of questions. The first one, just basically relates again to a little bit more detail with regards to Higher Healthcare Claims. And what I'm wondering specifically is, can you talk a little bit more about what's going on in the pharmaceutical side, 18, which seems like it will be an ongoing trend. And then on the larger claims, Did you find that it's just that you had more severe incidents?

Speaker 6

Or is there also some inflation 18% for some higher incidence. In other words, is 2. Treating the same type of cancer, significantly more expensive today than it used to be or 2nd quarter. Are heart attacks more expensive than they used to be? Obviously, labor costs are going up within hospital systems.

Speaker 6

So I'm wondering if that's

Speaker 3

Exactly that. And that's generally more in the typical year to year trend numbers. And we work, of course, with our 2nd quarter. And of course with our carriers to monitor those things. But what we're really talking about this quarter, 2nd quarter.

Speaker 3

I don't think that factor is an underlying factor all the time and not different this quarter. But on the pharmacy side, 2. I think most people have heard and you see in the marketplace a lot of discussion about

Speaker 2

2nd quarter. Some of the diabetes

Speaker 3

drugs and the drugs that maybe weren't originally designed for that but are being used that way, 2nd quarter. More of a fad type thing and I think that may wane also because there are some long term effects that are not positive for people, But it takes time for that to run through. And so, there's also, I think, an increase in behavioral health 2 needs and that is also a factor that if you think about being 2 years into 2nd quarter. A period of high inflation and kind of the squeeze of the wallet for a lot of people. That has a mental and nervous effect.

Speaker 3

It has a 2nd quarter. That is most important to build in as we see it. So we've done that. And 2. Like I said, we've done stuff on the pricing side to make sure that's all aligned going forward.

Speaker 6

2nd quarter. Great. And then with regards to implementing a modest price increase, Which can be mitigated to a certain effect by the behaviors of the clients. What 2. What sort of impact would that have on sales?

Speaker 6

And then offsetting that, to what extent, Paul, can you accelerate WX 2. And take out some of the healthcare risk from the initial pricing discussion.

Speaker 3

Yes, that's good. We definitely on the WX front, one of the advantages, of course, of growing that business is it's not 2. There is no medical risk in that business. So we do see that as a nice enhancement And we are intending to drive that considerably as time goes forward. It makes sense to do that.

Speaker 3

And we are what's happening right now is the sales team is really getting on board. We incented They're adding a client base of their own that can upgrade to WLO as time goes on, and they're feeling more successful early in their tenure, 2. And that's what's lowering the turnover. So we just see a lot of advantages for WX 2. We are definitely moving that ball forward and expect that it can be much, much larger.

Speaker 3

There's other things that we're doing there access to wages and things of that nature, other tools that can be provided to employees for wellness. We're doing that 2nd quarter. Both in WX and WO on the financial wellness and other types of services that employees 2. Some dramatic success in WX.

Speaker 1

Tobey, I think your other question with respect 2. The pricing adjustments that we're going to be making on the healthcare side. As we mentioned earlier, the good news is we've been above our targets 2nd quarter. On the medical pricing allocations over

Speaker 3

the course of this year and

Speaker 1

when we look at 2nd quarter forecast and assuming a wide range and that some of this large claim activity continues, We're looking at making incremental pricing changes in the range of 1% to 1.5%. And looking out 2. There in the marketplace, it's very much in line with the marketplace trends. So we don't think that our pricing is going to be 2nd quarter 2020. And we'll be very consistent and shouldn't put it at a disadvantage.

Speaker 1

2nd

Operator

quarter. Thank you very much. Your next question is coming from Jeff Martin of ROTH Capital Partners. Jeff, your line is live.

Speaker 7

Thank you. Good morning. Doug, I wanted to get a sense when you think the potential price increases for the benefit cost allocation may be fully 2. Is that early next year or is that going to be sooner than that?

Speaker 3

20. Yes, a significant chunk of it happens through the year end transition. And then they'll continue on 2. That's the increase component. And we've been having strong pricing increases that are flowing in every month.

Speaker 7

2nd. Got it. Okay. And then on the new initiative in terms of helping Small Businesses position for the current environment and attracting and retaining employees. Is that an added component in terms of an additional service charge or is that lumped in with the workforce optimization product?

Speaker 3

I'm sorry, can you repeat that for me?

Speaker 7

I was just curious if that new service offering For small businesses where you hired Kathy Johnson, where you brought you elevated her to lead that effort. Is that going to be an offering that you specifically charge 24 as part of workforce optimization or is that built into the product itself?

Speaker 3

That's good that you bring that up because what this Strategic Planning and Development Group is all about is carefully evaluating any new things that are offered 2nd quarter to determine the appropriate structure for that addition. And so there will be things that will be charged for because they're outside of, it's no for us, we don't want to just keep adding to the 2nd bundle, so to speak. And there's certain services or products that people want to own to have outside of that bundle. So We'll be looking at a variety of things on every product service, every improvement that we're going to make to that group. 2nd quarter.

Speaker 3

We'll be looking at those as financial investments and looking for the return on those investments.

Speaker 7

2. Thank you.

Operator

Thank you very much. We have reached the end of our question and answer session. Q2. I will now turn the call over to Mr. Salvati for any closing remarks.

Speaker 3

Once again, we do want to thank everyone for participating today, and 2. We look forward to a strong second half, continue to focus on our growth into the future and continuing our

Operator

20 18. Thank you for your participation. Goodbye.

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