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Realty Income (NYSE: O)
Q3 2024 Earnings Call
Nov 05, 2024, 2:00 p.m. ET

Realty Income Reports Steady Growth in Q3 2024

Strong Performance Amid Market Evolution

Leadership Insights on Future Opportunities

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Realty Income third-quarter 2024 earnings conference call. [Operator instructions] Please note that this event is being recorded. I will now hand the call over to Kelsey Mueller, vice president of investor relations. Please go ahead.

Kelsey Mueller — Vice President, Investor Relations

Thank you for joining us today to discuss Realty Income’s third-quarter operating results. Presenting our results will be Sumit Roy, president and chief executive officer, along with Jonathan Pong, chief financial officer and treasurer. Please remember that some of our comments may include forward-looking statements. Actual results could differ significantly from the projections mentioned. We will provide further details in our Form 10-Q. I will now pass the call to our CEO, Sumit Roy.

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Sumit Roy — President and Chief Executive Officer

Thank you, Kelsey. Greetings, everyone. Realty Income’s third-quarter results reflect our ongoing progress, careful strategy, and the advantages of our global investment platform. Our main offer to investors is clear: we are a real estate partner for leading global firms.

We have built a strong and diverse real estate portfolio featuring top-tier clients to ensure stable cash flow. We have reported positive operational returns each year for the past 30 years, managing to thrive in different economic conditions. Notably, with an improving economic outlook supported by recent U.S. interest rate cuts, we have started to see better conditions for transactions. Consequently, we are excited to raise our 2024 investment volume guidance to about $3.5 billion, driven by solid activity this year and a strong pipeline for the fourth quarter.

At the same time, we are raising the lower end of our AFFO per share guidance for the year to between $4.17 and $4.21. Despite some recent market fluctuations, we remain confident in our future strategy and growth prospects. Our investment approach reveals many opportunities across sectors like retail and industrial, and newer areas such as data centers and gaming. We are also making headway in setting up a private capital fund, which I will discuss further in this call.

Now, delving into our third-quarter specifics, we reported AFFO per share of $1.05, a 2.9% increase from the previous year. We invested $740 million into promising opportunities, achieving a blended initial cash yield of 7.4% or a 7.8% straight-line yield assuming a 2% CPI growth. Of that, $378 million was invested in the U.S. with a 7.4% initial cash yield, and $362 million was allocated in Europe at a 7.3% initial cash yield. Both U.S. and European markets have shown substantial growth this year, highlighting the benefits of our multi-faceted growth approach.

All together, we executed 70 separate transactions, with four of these surpassing $50 million, which accounted for nearly 60% of our total investment volume. This momentum allows us to adjust our investment volume guidance up to $3.5 billion for the year. In the third quarter, our organic acquisition activity, excluding credits and previous development spending, reached $594 million, more than double the second quarter’s figures. We anticipate more growth through the remainder of the year with an expected fourth-quarter investment outlook of roughly $1.3 billion, fully funded as we keenly pursue high-quality investments that align with our risk-adjusted return standards.

In the third quarter, our capital deployment yielded an investment spread of 243 basis points, exceeding our historical average of 150 basis points. This performance benefited from $165 million of adjusted free cash flow post-dividend payments, ready to fund investments. These spreads are determined based on our short-term nominal cost of capital. It’s important to note that our investment decisions hinge on our long-term weighted average cost of capital, ensuring careful management of equity costs.

The increase in our external capital funding was about 65 basis points in the third quarter, a notable addition to our strategy as we navigate a lowering trend in our weighted average initial cash yield.

Looking at our portfolio operations, we maintain a diversified array of over 15,400 properties with clients known for their resilience through various economic climates, generating stable returns.

Moreover, our extensive data resources and advanced analytical tools empower our asset management and research teams to foresee future trends. By the end of the quarter, our occupancy rate was 98.7%, representing a slight decline of 10 basis points from the prior quarter. Our rent recapture rate for the 170 leases renewed stood at 105%, which brought in approximately $38 million in new annual cash rent, thanks to our team’s diligent efforts.

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Realty Income Reports Strong Q3 Results, Plans Expansion into Private Capital Markets

In the third quarter, Realty Income sold 92 properties for a total of $249 million, with $87 million coming from vacant properties. This brings the year-to-date total for asset sales to $451 million. The company now anticipates proceeds of $550 million to $600 million by the year’s end. Sumit Roy will now provide a deeper look into our quarterly financial performance.

Jonathan W. Pong — Executive Vice President, Chief Financial Officer, and Treasurer

Thank you, Sumit. We are pleased to report another strong quarter and are increasing our guidance for adjusted funds from operations (AFFO) for the year, indicating ongoing growth. Our disciplined approach to managing our balance sheet remains crucial. We have strong credit ratings of A3 and A- and wide access to capital, both of which help us enhance earnings through various channels.

Our net debt to annualized pro forma adjusted EBITDA ratio stands at a healthy 5.4 times, comfortably within our target, and includes $969 million of unsettled forward equity. Meanwhile, our fixed charge coverage ratio of 4.6 times is consistent with our target range of 4.5 to 4.7 times, a metric we have maintained over the last seven quarters. To mitigate future funding risks, we conducted two bond offerings in the third quarter: a $500 million 30-year U.S. dollar bond with a yield to maturity of 5.49%, and a dual-tranche sterling bond offering that raised GBP 700 million with a weighted average tenor of 11.1 years and an annual yield of 5.4%. These offerings illustrate our commitment to diversifying our capital sources.

Our latest 30-year bond is the first of this kind since 2017, and the sterling bond marks our fifth public offering outside the U.S. in about three years, increasing our foreign-denominated unsecured debt to over $8 billion.

We appreciate the ongoing support of the fixed-income community as we enhance our global credit presence. By the end of the quarter, we maintained $5.2 billion in liquidity, including unsettled forward equity, along with access to nearly the entire capacity of our $4.25 billion revolving credit facility. Currently, only 3.4% of our outstanding debt has a variable rate, emphasizing our financing flexibility as we approach year-end. Our company’s success relies heavily on our ability to access capital, which our portfolio’s size, diversity, and trading liquidity in public markets have supported by offering competitively priced capital for significant investment opportunities.

Looking ahead, we are proactively adjusting our financing strategy to accommodate future growth. In recent years, we have explored various sources of equity capital beyond public markets and are in the process of establishing a private capital infrastructure. This initiative will enable us to tap into a much larger pool of resources to broaden our capital allocation opportunities globally.

Sumit Roy — President and Chief Executive Officer

Thank you, Jonathan. As we mentioned previously, diversifying our access to equity capital is a crucial step in our growth strategy. The potential equity from private sources significantly outweighs that available through traditional public markets. For perspective, the U.S. private real estate market is approximately $18.8 trillion, which is ten times the $1.9 trillion in assets owned by public REITs, meaning that private capital now accounts for more than 90% of the U.S. commercial real estate market, according to the National Association of Real Estate Investment Trusts.

Building a private capital investment platform will grant us access to significant institutional capital that typically cannot invest in real estate securities. This alternative equity source usually has less pricing volatility, allowing us to better monetize our well-established operating platform and enhance shareholder value. Additionally, a new fund management strategy will likely yield recurring high-growth revenues through base management income from managing third-party capital, which typically earns premium multiples in the investment community.

The majority of our fees will be recurring, coming from open-end perpetual funds rather than being performance-based or transaction-oriented. Our unique business model will allow us to pursue this initiative without substantial new investments while benefiting from our experienced team. With a history dating back to 1969 in underwriting and managing our real estate holdings, we have amassed a considerable amount of property-level data, which enhances our predictive analytics for informed decision-making.

As we grow, these data-driven insights will become even more accurate. Coupled with our team’s expertise, we believe we can present an attractive investment platform for co-investors. Ultimately, we aim to create an evergreen open-end fund to manage private capital for institutional investors, including pension funds, sovereign wealth funds, endowments, foundations, and large insurance companies.

It’s important to clarify that this structure differs from typical private equity closed-end funds that have fixed durations or narrower investment scopes. Our fund will target institutional investors and will not be marketed as a non-traded REIT to high-net-worth or retail investors. Realty Income will also act as a significant co-investor in this fund while earning management and potential incentive fees, aligning the interests of public and private investors and enhancing overall returns.

In summary, our private capital platform will complement and enhance our existing operations. By wisely allocating investment opportunities between Realty Income and the new fund, we aim to maximize returns for both our public shareholders and private partners.

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Strategic Expansion: Company Aims to Bolster Earnings with New Private Equity Fund

Company X is rolling out a new private equity initiative targeting financial growth for shareholders and private investors. This move intends to boost earnings and dividends, widen the market for investments, and lessen dependence on public equity when market conditions favor strategic choices. Further information will follow as the fund progresses toward launch.

As we summarize our year-to-date performance, it’s clear we’ve surpassed expectations due to robust investment momentum and a stable portfolio featuring leading global clients. Optimism surrounds the multiple growth avenues we’ve identified for capital deployment. Combining these growth strategies with alternative funding sources is expected to speed up the evolution of our platform. I will now open the floor for questions.

Operator:

Questions & Answers:

Operator:

Thank you. [Operator instructions] Today’s first question comes from John Kilichowski with Wells Fargo. Please proceed.

John Kilichowski — Analyst

Thanks. I’d like to discuss the third-quarter acquisition numbers and what is projected for the fourth quarter. We noticed significant cap rate compression. Could you elaborate on the current state of the acquisition market? Additionally, is there potential for a large 7-Eleven deal to impact this trajectory? Would this align with your long-term weighted average cost of capital?

Sumit Roy — President and Chief Executive Officer

Great questions, John. Let me address them. In the third quarter, we completed $740 million in acquisitions at a 4% cap rate. This reflects a 50 basis point decrease compared to the prior quarter’s 7.9 cap. This shift is also linked to our improved cost of capital, which fell by about 65 basis points compared to the beginning of the year. So, while the cash yield has compressed, our lower cost of capital made the third-quarter transactions more beneficial overall. It’s crucial to analyze both metrics together to understand our true investment advantage.

Now, regarding our fourth-quarter outlook, we project around $1.3 billion in acquisitions. This pipeline was developed throughout the third quarter, and despite recent volatility, we’re set to finance these plans independently of the public equity markets. We prioritize maintaining a sufficient safety margin in transactions, ensuring long-term costs exceed our set hurdle rates.

While I won’t delve into specifics about upcoming transactions, I can assure you we are consistently engaged in one-off acquisitions. When discussing the 7-Eleven deal, 35 transactions have occurred so far in 2024, often trading in the 5% to 9% cap rate range. Importantly, our recent acquisitions, including the $740 million investment, were made at rents significantly below market rates—6% below and 26% under replacement costs—allowing us to foster long-term value for our investors.

Operator:

Thank you. We will now hear from Greg McGinniss at Scotiabank. Please go ahead.

Greg McGinniss — Analyst

Good afternoon. Sumit, your comments suggest that the primary hurdle to acquisition volume this year has been capital raising, rather than a scarcity of investment opportunities at expanded spreads. Do you anticipate that the cost of equity will decrease within the fund business? Additionally, how will you manage investment priorities between the fund and core business to prevent any conflicts of interest?

Sumit Roy — President and Chief Executive Officer

Excellent question, Greg. The key difference between private and public markets is the focus on first-year returns compared to long-term internal rates of return (IRR). We exercise caution with transactions that do not align with our historical spreads, which have typically been 150 basis points. Given that our valuation hinges on initial returns, we sometimes miss out on opportunities with potentially higher total returns that have a lower initial cash cap rate. By tapping into private capital with a longer-term viewpoint, we aim to diversify our investment strategies and pursue higher growth opportunities at potentially lower initial yields. This approach is seen as complementary to our existing business model. Would you like to discuss further?

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Strategic Insights into Industry Investing: A Look at Current Challenges and Opportunities

Company Leadership on Investment Constraints

In a recent discussion, the Chief Executive Officer highlighted challenges in pursuing certain asset types, specifically mentioning the five-and-a-half ZIP code. The current cost of capital, coupled with modest growth expectations, complicates investments in long-term leases. Despite a suitable return profile anticipated for the future, immediate transactions in this area are off the table. Another sector under consideration is data centers, which may also not align with the cost dynamics at present.

Aligning Interests through Strategic Funds

During the Q&A, analyst Brad Heffern inquired about overlap between the company’s fund and its public entity. The CEO confirmed that they would maintain a significant equity stake in the fund, ensuring aligned interests across both investment vehicles. While both entities will seek opportunities beneficial in the long term, short-term transactional strategies may differ. Capital raising efforts will also play a pivotal role in funding these ventures.

Clarifying Complications in Investment Vehicles

The CEO further explained that the perpetual nature of the new vehicle differentiates it from limited capital funds. As major co-investors, they aim to maintain clarity in financial consolidation. While their existing platform is not always reflected accurately by public markets, this strategy serves to leverage their scale for better monetization without significant additional costs.

Understanding Recent Financial Impacts

Analyst Smedes Rose raised concerns regarding a recent $63 million charge related to a convenience store client. The CFO provided context, noting that this charge was primarily noncash and stemmed from accounting practices regarding land and building valuations in lease agreements. Despite the charge, the company has a history of recovering over 80% of rent from affected portfolios.

Addressing Credit Issues and Market Sentiment

In the ongoing dialogue about credit concerns, the CEO shared details on efforts to regain control of the underperforming convenience store assets, located mainly in Texas. The company remains optimistic about swiftly replacing lost rent once they regain management. Further discussions also covered responses to significant developments in the restaurant sector, particularly with Red Lobster and Rite Aid, both of which have emerged from bankruptcy. Their recapture rates reflect a strong rebound potential, with the firm securing favorable lease renewals from major retail partners, including Walgreens, CVS, Family Dollar, and Dollar Tree.

The emphasis is clear: external headlines can misrepresent the realities experienced in their portfolio. With a deliberate and data-driven approach, the company aims to keep a selective strategy that aligns with sustainable growth.

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Realty Income’s Growth Prospects: Insights on Fund Size and European Opportunities

Context on Fund Launch

During a recent conference call, Sumit Roy, President and Chief Executive Officer of Realty Income Corporation, discussed the forthcoming fund and its potential impact on the company’s growth. With considerable uncertainty about the fund’s size, analysts sought clarity on its initial scope and future expansion. Roy emphasized that it’s still too early to make definitive projections about the fund’s size, noting, “We believe in what we are doing,” but refraining from committing to specific figures.

European Market Potential

Analyst Jay Kornreich from SMBC Nikko Securities inquired about the company’s opportunities in Europe. Roy confirmed the company’s current success in the European market, revealing that 56% of Realty Income’s activity this year has occurred there. He affirmed that the momentum is expected to continue and highlighted that the company is exploring potential expansions into new European territories as opportunities arise.

U.S. Trends and Fourth-Quarter Expectations

Addressing inquiries about anticipated performance, Roy referenced a projected $1.3 billion in transactions for the fourth quarter. He clarified that while European growth has been strong, the company expects a return to historical trends regarding U.S. versus international activities as the year closes out.

Long-term Benefits of the New Fund

Analyst Haendel St. Juste raised the potential long-term advantages of the new fund, particularly concerning sustainable growth without the need for frequent equity raises. Roy reiterated the aim of enhancing their investment opportunities, which will support their growth ambitions over time. He emphasized the importance of having alternate equity capital sources to avoid future capacity issues, stating, “It’s a mathematical fact” as it relates to their public market growth projections.

Funding Strategies and Market Conditions

Regarding the possibility of financing through existing assets, Roy clarified that the fund will initially mirror Realty Income’s existing portfolio. This structure would help attract capital and support upcoming transactions while providing flexibility to participate in various high-potential opportunities. He expressed confidence that the expected profits would remain healthy despite variations in cap rates, citing strong historical performance as a basis for assurance.

Operational Scalability and Efficiency

Analyst Spencer Allaway inquired about the operational implications of launching the private fund. Roy responded positively, highlighting the company’s existing staff and investment capabilities as vital assets for managing new opportunities effectively. He reiterated that Realty Income has a robust workforce of 465 employees across various global offices, which positions the company well to absorb the new fund’s operational demands without significant restructuring.

This discussion underscores Realty Income’s strategic focus on growth and market expansion, both in the U.S. and internationally. As the company prepares to launch its fund, stakeholders will be keenly observing its potential in sustaining the company’s strong performance into the future.

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Examining Recent Developments in the Investment Landscape

Key Insights on Scale Benefits and Competitive Dynamics

In recent discussions, the focus has been on incremental personnel in investment management, highlighting scale benefits. The first notable advantage is the expertise of our asset management team, which has excelled in both U.S. and international markets.

The second scale benefit emphasizes our commitment to being neutral about asset ownership. Whether assets are held within a public fund or maintained on our balance sheet, our dedicated team will continue to manage them effectively. This robust management approach aligns with our ongoing strategy.

Additionally, we have a large legal team that takes pride in working in-house. This team will be essential for transaction negotiations and lease discussions, reflecting our commitment to leveraging internal resources efficiently. This strategy points to our third scale benefit, where existing personnel will handle crucial operational tasks without requiring substantial new hires.

Overall, the incremental costs associated with establishing this investment branch will remain minimal. The primary expenses are linked to hiring a fund manager and ensuring a strong investor relations function that caters specifically to private investors.

Competitive Landscape Shifts in U.S. and International Markets

When speaking on the competitive landscape, CEO Sumit Roy noted the changing dynamics in both U.S. and international markets. Private equity arms are increasingly becoming significant competitors in the transaction space. While new public firms have emerged in the net lease market, we typically avoid direct competition with them due to the nature of our transactions, yet the U.S. market feels increasingly crowded.

Conversely, the international market remains one of our strengths, although competition has intensified slightly over the past couple of years. Most competition arises from private capital, which has not yet reached the challenging levels seen in the U.S. This differentiation is crucial as we navigate through varying market conditions.

Market Reactions to Rate Changes: Insights Needed

Analyst Upal Rana raised a question about the market’s response to recent rate adjustments. As interest rates fluctuate, the impact on transaction activity becomes significant. CEO Roy responded, indicating that much of the current market volatility is tied to upcoming decisions from the Federal Reserve regarding interest rates. While the long-term costs of capital are affected, the unpredictable nature of inflation and performance expectations plays a vital role in shaping the future landscape.

The outcome of these decisions will undoubtedly dictate our ability to engage in transactions, emphasizing the importance of clarity in the months ahead.

Timing and Strategy for Private Capital Funds

Also, in relation to the private capital fund initiative, Upal inquired about the timing and rationale behind this decision. Roy clarified that there are no pressing concerns on the credit side, as demonstrated by a decrease in the credit watch list to 4.2%. Despite current market fluctuations, the focus is on carefully building this investment business.

The aim is to cultivate a robust fund that can yield long-term benefits for shareholders. Drawing comparisons to established peers, Roy emphasized that forming this capital structure will take time but is a necessary step to ensure future growth.

2024 Outlook: Bad Debt Updates

Analyst Linda Tsai also sought updates on bad debt trends, specifically regarding projections for 2025. CFO Jonathan W. Pong noted that the first nine months of 2024 saw approximately $6 million in bad debt expense. Further details will guide expectations moving forward, ensuring stakeholders are informed of our financial health as we navigate the upcoming years.

Realty Income Reports on Recent Financial Developments and Future Strategies

Realty Income Corporation’s recent financial analysis highlights challenges and opportunities within its rental portfolio.

Assessing Credit Loss and Portfolio Health

The company noted a credit loss of 40 basis points within its rental revenue, largely attributed to one specific convenience store operator. Excluding this unusual event results in a credit loss of about 18 basis points—much lower than the typical 25 basis points observed in pre-pandemic years. This data suggests that the portfolio remains in good condition, notwithstanding the pandemic’s prior impact, with a current credit loss rate of 4.2%.

Furthermore, officials emphasized minimal concerns among tenants, noting that none of them represent more than one percent exposure. The company has been vigilant about tenants on its watch list and has good visibility on their cash flow coverage.

The firm plans to outline the assumptions for its 2025 guidance in February.

Impact of C-Store Write-Down on Earnings

Linda Tsai, an analyst from Jefferies, inquired about the potential impact of the write-down associated with the convenience store on earnings, specifically regarding the Adjusted Funds from Operations (AFFO) and recovery rates. Jonathan W. Pong, EVP and CFO, responded, noting that the write-down could affect earnings by about $1 million monthly. However, this has already been accounted for in their guidance, and they anticipate significant interest in recovering these assets. Historically, the firm has managed to recapture approximately 84%-85% of rent affected by credit events.

Investor Interest in New Fund Structure

Ronald Kamdem, an analyst at Morgan Stanley, raised questions about the fund’s investment strategy and potential investor profiles. Sumit Roy, President and CEO, acknowledged that while there has been limited research on investor profiles, the real estate fund presents a wider range of potential investors compared to public securities. Many prospective investors may prefer the private fund structure since it allows for direct involvement in real estate investments.

Roy highlighted that while some current investors may overlap with public stockholders, the fund’s strategy would largely target those interested in private direct investments. The company plans to align its interests with the fund through co-investment, enhancing overall alignment and strategy.

Expanding Data Center Initiatives Amid Growing Demand

Kammed followed up with an inquiry about data center initiatives and evolving demand. Roy mentioned that while he would not disclose specific pipeline details, there is indeed a visible interest and opportunity in this area. The company has engaged with several data center operators and is focused on creating a compelling value proposition to meet the growing demand.

Despite the optimism, Roy cautioned that it’s still early to determine the direction of this segment, although it could present significant opportunities for Realty Income.

Clarifying Fund Strategy and Return Profiles

RJ Milligan from Raymond James sought clarification on the fund’s investment mix beyond traditional triple net leases. In response, Roy emphasized that investments would focus on generating flow-through income that aligns closely with the firm’s operational principles while maintaining high overall margins.

He confirmed that the fund would not stray too far from their established investment strategies, aiming to ensure that returns remain consistent with Realty Income’s long-term objectives.

Overall, Realty Income’s recent communications reflect a strong grasp of their portfolio management while setting the stage for future opportunities in both new investment areas and changes in market demand.

Realty Income’s New Fund Structure: Exploring Development Opportunities and Investor Insights

CEO Talks Development Plans and Investor Engagement

Sumit Roy — President and Chief Executive Officer

Our fund structure allows us to enhance co-investment and streamline benefits for our public shareholders thanks to the recurring asset management fee stream. This is integral to how we operate.

Seed Portfolio Provides Initial Investment Base

RJ Milligan — Analyst

Will Realty Income be contributing properties to the fund?

Sumit Roy — President and Chief Executive Officer

Initially, we will establish a seed portfolio to facilitate discussions with potential investors. Following that, we will pursue new investments outside of this seed portfolio.

Development Plans May Expand Under New Fund

Operator

Thank you. Our next question comes from Greg McGinniss of Scotiabank. Please go ahead.

Greg McGinniss — Analyst

Will you consider increasing investment in developments that could be included in this platform?

Sumit Roy — President and Chief Executive Officer

Your question is insightful, Greg. When we pursue developments, we have to comply with certain accounting guidelines, which sometimes limit how we can recognize cash impacts. Through this fund structure, we have the chance to do more. These efforts will aim to meet and surpass our targeted returns.

Investor Profiles and Future Conversation Plans

Greg McGinniss — Analyst

Do you have potential investors in mind yet?

Sumit Roy — President and Chief Executive Officer

Currently, no specific investors are lined up, but we have a clear idea of the investor profile we aim to engage with. We’re working with our advisors to understand these details further.

Expense Leakage Insights and Adjustments

Greg McGinniss — Analyst

Can you explain the slight increase in your expense leakage guidance?

Jonathan W. Pong — Executive Vice President, Chief Financial Officer, and Treasurer

Several factors contribute to this change, Greg. We’ve reported some deferred expenses that were carried forward, leading us to adjust our spending. Additionally, we’re experiencing carry costs related to a few vacant assets, which affects our margins. It’s important to note that last year’s leakage was 1.1%, and with the $9 billion Spirit portfolio added this January, we did see an increase in leakage, which now stands at a midpoint of 1.35%.

Assessing the Development Pipeline

Operator

Our next question comes from Wes Golladay with Baird. Please continue.

Wes Golladay — Analyst

When do you anticipate leasing up non-retail properties? Are you delaying leasing for now?

Sumit Roy — President and Chief Executive Officer

That’s a good question, Wes. Non-retail properties represent only about 15% of our overall development. We are cautious and hold off on significant investments until we clarify lease arrangements. Our partnership with Panattoni gives us confidence that we can lease these properties soon.

Expectations for Lease Rates and Future Developments

Wes Golladay — Analyst

Will you achieve higher lease yields given the speculative nature of these developments?

Sumit Roy — President and Chief Executive Officer

Yes, indeed. We have observed situations where actual lease rates have surpassed our expected figures, boosting our confidence in our team’s ability to assess these transactions accurately.

Conclusion of the Q&A Session

Operator

This concludes our question-and-answer session. I’ll now turn the conference back over to Sumit Roy for closing remarks.

Sumit Roy — President and Chief Executive Officer

Thank you all for your participation. We look forward to future discussions and seeing you at upcoming conferences. Thank you.

Operator

[Operator signoff]

Duration: 0 minutes

Call Participants:

Kelsey Mueller — Vice President, Investor Relations

Sumit Roy — President and Chief Executive Officer

Jonathan W. Pong — Executive Vice President, Chief Financial Officer, and Treasurer

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