BlackBerry Limited (BB) Earnings Call Transcript & Summary

Good afternoon, and welcome to the BlackBerry First Quarter Fiscal Year 2024 Results Conference Call. My name is Andrea, and I will be your conference moderator for today's call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn today's call over to Tim Foote, Vice President of BlackBerry Investor Relations. Please go ahead.

Thank you, Andrea. Good afternoon, and welcome to BlackBerry's First Quarter 2024 Earnings Conference Call. With me on the call today are Executive Chair and Chief Executive Officer, John Chen; and Chief Financial Officer, Steve Rai. After I read our cautionary note regarding forward-looking statements, John will provide a business update and Steve will review the financial results. We will then open the call for a brief Q&A session. This call is available to the general public via call-in numbers and via webcast in the Investor Information section at blackberry.com. A replay will also be available on the blackberry.com website. Some of the statements we'll be making today constitute forward-looking statements and are made pursuant to the safe harbor provisions of applicable U.S. and Canadian securities laws. We'll indicate forward-looking statements by using words such as expect, will, should, model, intend, believe and similar expressions. Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors that the company believes are relevant. Many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements. These factors include the risk factors that are discussed in the company's annual filings and MD&A. You should not place undue reliance on the company's forward-looking statements. Any forward-looking statements are made only as of today, and the company has no intention and undertakes no obligation to update or revise any of them, except as required by law. As is customary during the call, John and Steve will reference non-GAAP numbers in our summary of our quarterly and full year results. For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release published earlier today, which is available on the EDGAR, SEDAR and blackberry.com websites. And with that, I'll turn the call over to John.

Thanks, Tim. Good afternoon, everybody, and thanks for joining the call today. Let me start with the IoT business unit. Revenue for the quarter was $45 million and gross margin remained strong at 80%. Revenue came in lower than expected for 2 main reasons. The first related to a number of leading industry players that are revising their development plans as they step up their software-defined vehicle efforts. This has caused some programs to be delayed. While seeing our customer facing a higher priority on the SDD transition is a good thing for both QNX and IVY, the delayed rollout of QNX development seat license has, therefore, pushed out revenue this quarter. This was purely a timing issue. As we have outlined in the pass, from quarter-to-quarter, design phase revenues will fluctuate depending on the timing of large design awards and when the work begins. However, we haven't seen any weakening of the strong secular trends driving the business. We remain confident in our ability to win new designs. The second factor is the macro environment, which has impacted some regional production volumes and with it, royalty revenues. As has been the case in recent quarters, the impact appears to be mixed across OEMs and geographies. While production in China in the early part of this year was much softer than expected, elsewhere in North America, Europe, Japan and Korea, output continues to look relatively steady, helped, of course, by an easing of supply side constraints. We will closely monitor the situation and assess for any potential impact for the year. And at this time, we continue to expect to achieve the full year revenue consensus for IoT. Further, we are reiterating the 18% to 22% 3-year revenue CAGR that we provided at our Analyst Day last month. These targets are based on a number of factors, including our strong QNX backlog, which we reported as being $640 million at last fiscal year-end; our pipeline of upcoming potential design wins; and our assessment of ongoing secular trends. A data point that illustrate those trends and our leadership position in the market is our annual vehicle count. PAC Insight, a leading technology analysis and market research firm, has published that QNX is now embedded in over 235 million vehicles, a year-on-year net increase of $20 million or 9%. When compared to annual global vehicle production, this supports a growing market share for QNX. QNX remains the foundational software of choice for leading automakers and Tier 1 suppliers around the growth as we continue to add new design wins. In the quarter, QNX has 7 design wins in auto and 7 in general embedded market verticals. In auto, we continue to secure design wins in the digital cockpit domain. This fast-growing domain has largely led the way in consolidating various software stacks onto a single high-power chip in the car. This quarter, we recorded wins with 2 of the top 5 global automakers. The first win includes our real-time operating systems as well as our Hypervisor and acoustic middleware. The second win will deploy 2 instances of QNX supporting the digital cockpit and main body domain, both running on high-performance compute engines. We also secured win of a leading U.S.-based EV automaker, with multiple instances of QNX being deployed. QNX, in that case, will support a zonal and central compute architecture including the digital cockpit and the vehicle telematics. These wins demonstrate how we expanded both the number of domains deploying QNX and the number of layers of QNX deploy in each of the domain. Outside of auto, we recorded wins supporting a range of different applications. In industrial, we secured an ADAS platform for heavy industry machinery that requires both our Hypervisor and OS for Safety. We also secured wins for industrial testing and control, including a next-generation controller for use in marine and aerospace applications, and a win with a leading global household appliance manufacturer for production line testing equipment. In medical, wins in medical eye laser equipment with a leading surgical technology manufacturer. These designs and operational technologies, like medical and industrial, demonstrate our ability to win in this very large and growing market. These verticals are showing similar trends to auto, including significantly higher compute at the edge and the need for complex, safety-critical software stacks, which is where QNX is the market leader. On the product front, last month, we announced the early access release of our next-generation kernel. This is a significant step change for QNX. The new release helps deliver significantly higher performance in particularly scaling almost linearly as the number of cores on the underlying chip increase up to 64 cores. While safety and reliability are essential parts of the QNX value proposition, it is also our leading performance in complex compute stack that helps differentiate us from our competitors. This release will position QNX to support the future of rapidly increasing compute power at the edge for many years to come. Moving on to IVY. As planned, we have now released a general availability version of IVY. This is a much more stand-alone version of the product than before, requiring far less support from the IVY technical team. We see this as a significant step forward for scaling our go-to-market efforts, allowing us to support a much wider range of proof-of-concept trials than before. We are making good progress with building the IVY ecosystem, an important part of the overall value proposition. This past quarter, we announced an investment in the Michigan-based CerebrumX. Ford, Stellantis and Toyota are all currently working with CerebrumX, and they offer AI-driven solutions that analyze vehicle data on driver behavior and vehicle health. They harness this data to deliver application such as fleet management and personalized insurance plan. IVY end-to-end edge-to-cloud platform will provide CerebrumX with higher quality, easier-to-use data in a standardized development environment. We also announced a go-to-market partnership with a leading automotive cybersecurity firm, Upstream Security. Upstream Security partners with BMW, Volvo and Renault as they are already protecting over 20 million vehicles against cyber attacks with their VDR, stands for vehicle detection and response, platform. This new partnership with BlackBerry will allow them to leverage IVY's edge capabilities to preprocess data in near-real time, maintaining cybersecurity while significantly reducing cloud overhead. The strategic decision by BlackBerry and AWS to develop a primarily edge-based architecture is proven to be the right call, especially as some cloud-only players such as [ Regil ] and Autonomo has struggled to achieve profitability. Turning now to the cybersecurity units. Revenue for the quarter was $93 million, representing 6% sequential growth. Like many others in this market, we've also seen delays from elongated sales cycles, with additional layer of approval compared to previous quarter slowing our ability to convert our growing pipelines into revenue. That said, a leading indicator for revenue for this business is billings. And this quarter, we booked total contract value, or TCV, billings of $122 million, significantly higher than revenue for the second consecutive quarter. TCV billing grew for the fourth consecutive quarters with 14% sequentially and 3-7, 37% year-on-year growth. This growth was anchored on multiyear deals in our core government vertical where we continue to have a lot of success. In the quarter, we closed one of the deals that slipped from Q4, with the other 2 still progressing well and likely to close later in the year. We also see 2 new large potential deals in government that have entered the pipeline. Given this pipeline and billings momentum, we expect to achieve full year revenue consensus and expect TCV billings for the year to be in the range of $430 million to $480 million. Finally, we are reiterating the 3-year revenue growth CAGR of 9% to 12% that we gave at our Analyst Day. Gross margin for the quarter improved to 60%, which is 700 basis points higher than the prior year, largely due to product mix. In addition, the decline in ARR slowed and came in at $289 million. This trend is encouraging as we remain on track for ARR to return to sequential growth in the second half of this fiscal year. The dollar-based net retention rate, or DBNRR, also stabilized at 81%. As a reminder, DBNRR doesn't include new logos. As mentioned in the quarter, we secured new, renewed and expanded business with a number of leading government institutions. These include Shared Services Canada; Transport Canada; the Canadian House of Commons; the U.S. Special Ops Command; the U.S. Navy; the U.S. Army Corps of Engineers; the White House Communications Agency; and the U.S. Transportation Security Administration, or known as TSA. Outside North America, we secured business with the French Ministry of Defense, the German state police, the Netherlands Ministry of General Affairs the New Zealand Ministry of Foreign Affairs and the British Transport Police, just to name a few. We also closed business in health care and financial services, including John Muir Health, Kaiser Permanente and Hartford HealthCare and a number of leading international banks. On the channel front, a critical element of scaling our SMB go-to-market presence, this quarter, we saw promising sign of progress from our renewed channel programs. In North America, deal registration and new logos brought by the channel increased significantly, both sequentially and year-over-year. Turning briefly to product. Leading independent test lab, The Tolly Group, recently performed an assessment of a number of end point protection platforms, EPPs, including CylanceENDPOINT, Microsoft Defender and others, and tested performance for detection rates, CPU utilization and total scanning time. CylanceENDPOINT came out on top with a market-leading 98.9% detection rate, both online and off-line, while also using the lowest amount of CPU capacity. In comparison, competitors allowed between 9 to 52x more malware through than Cylance. Moving now to licensing. The past quarter, we were pleased to have closed a deal with Key Patent Innovations for the sale of the noncore portion of the patent portfolio. The deal includes an initial $170 million cash payment, which we have received, and a deal value that could total as much as $900 million over time. KPI has already started to ramp up their monetization activities, including adding to their experienced team by hiring executives and patent lawyers as well as starting to engage with potential licensees. That said, it will take some time to be fully ramped up, and we do not expect any meaningful additional revenue from the sale to be recognized this fiscal year. Under the terms of the deal, we retain ongoing revenue for any licensing arrangement in place prior to the sale. And in this quarter, this was $17 million. We expect revenue to be approximately $5 million per quarter for the remaining of the fiscal year. Let me now hand the call over to Steve who will provide more color on our financials. Steve?

Thank you, John. As usual, my comments on our financial performance for the first quarter will be in non-GAAP terms, unless otherwise noted. Total company revenue for the quarter was $373 million, IoT revenue was $45 million, Cybersecurity revenue was $93 million and licensing revenue was $235 million. Software product revenue as a percentage of total revenue remained in the range of 85% to 90%, with Professional Services forming the balance. The percentage of software product revenue that was recurring remained at approximately 90%. The $235 million of licensing and other revenue represents $17 million of revenue from pre-existing arrangements that John mentioned earlier and $218 million relating to the patent sale. More details will be available in our 10-Q. Related to this, there was $147 million of intellectual property assets previously classified as held for sale on our balance sheet, which were sold as part of the transaction. Accordingly, with the sale completed in Q1, these were reclassified to cost of sales. Total company gross margin was 48% and 22 percentage points higher when excluding the patent sale. Operating expenses for the first quarter were $145 million. These non-GAAP operating expenses exclude a $22 million fair value expense on the convertible debentures, $10 million in amortization of acquired intangibles, $8 million in stock compensation expense and $5 million in restructuring expenses. Both the non-GAAP operating profit and non-GAAP net profit for the first quarter were $35 million. The $0.06 non-GAAP basic earnings per share for the quarter beat expectations. Adjusted EBITDA, excluding the non-GAAP adjustments previously mentioned, was $41 million. Total cash, cash equivalents and investments increased by $91 million to $578 million as at May 31, 2023. Net cash generated from operations was $99 million. The cash generated from the patent sale strengthens our balance sheet and helps finance our plans for profitable growth. Given the macroeconomic backdrop, we remain selective on potential investments and remain committed to significantly reducing the level of EPS loss and operating cash flow usage this fiscal year. That concludes my comments, and I'll turn it back to John.

Thank you, Steve. Before we open the line up for Q&A, I'd like to touch on the announcement we made in May regarding the strategic review of our portfolio. . Our strategy is clear. We have a robust operating plan for both our business units to address the large and growing market opportunities. In addition, we see potential upside to the thesis from the convergence of cybersecurity with the IoT. Indeed, McKinsey recently issued a report on this trend of convergence and named BlackBerry as being well positioned to capitalize on what they estimate to be a $750 billion TAM. We believe that executing against this strategy, hitting our 3-year targets and achieving profitable growth will generate significant shareholder value. Notwithstanding, the Board and management are constantly focused on optimizing shareholder values and have, therefore, asked the question as to whether there are alternative approaches for delivering greater shareholder returns, for example, by means of the 2 business operating as stand-alone companies. As per our press release on May 1, we have engaged leading investment bankers, Morgan Stanley and Perella Weinberg, as well as establishing an internal program management office, to support this review. And I could tell investors that there is a lot of activity ongoing. Although the review is in the early stage, a lot of progress has already been made and the team is focusing on performing a thorough process as quickly as we practically can. It wouldn't be appropriate to provide further commentary until the Board has approved a specific outcome or has culminated its review. That ends my prepared remarks. Andrea, could you please open the line for Q&A?

[Operator Instructions] And our first question will come from Luke Junk of Baird.

First question, I want to ask about IoT. So you cited some temporary delays to the start of new programs as a few of your customers review their software-defined vehicle plans. I guess what I'm trying to understand is how close you are to these customers as they made that change and your level of confidence that this is solely a timing issue versus something that could be more disruptive. And related to that, should we be thinking about the low end of full year guidance? Or where would you expect to be within the guidance range given this result?

Okay. Good question. So from the design delay, we base our forecast on the project being awarded to us, mostly. So it is embedded into our $640 million backlog that we announced. So we already won the design. That's why we're expecting the development seat. So we have very high confidence and very close contact with these customers. And these are the huge big customer names around the world. So I feel comfortable with that. There are, of course, design wins that may get affected in Q2, 3 and 4, but we wanted to make sure that we see that first before we made the adjustment. I personally believe that there might be some minor shifting of time frame but nothing that we expected to not winning it. I don't actually expect that it will be delayed for too long. So that's that question.

The outlook, John, would it be towards the bottom end of the range?

Well, Tim has looked at the consensus number. And when we look at our range and our forecast, we feel comfortable with the consensus number. And I don't know what is high or low end.

Towards the lower end, John.

Okay. But I think you estimated based on the consensus number. That should be reasonable for now.

Okay. And then for my follow-up, I want to stay within IoT, John, could you just comment on the level of engagement that you've seen since IVY's GA release earlier this month. I'm curious both with respect to OEMs and Tier 1 partners, if you could comment. And is there anything that has surprised you in the first month post release?

On the IVY?

Yes.

I would rather not tell you the number of POC that is requested or ongoing, but it's reasonably significant. I'll just leave it at that. So a very high level of interest. IVY is quite unique right now in the market. The competition that we run into is the customer themselves. They believe they are building a data and analytics platform that may not be as much edge-to-cloud, maybe it's mostly cloud, implementation. But once they see the simplicity of our solution and the number of applications that we have lined up, and we'll continue to line up, this is almost like building an app store for the car. A lot of them wanted to test IVY under the POC and then make a determination whether they should continue doing their own or they come with us. Some of them have already decided that they are coming with us. So that's the extent that I could comment on.

The next question comes from Mike Walkley of Canaccord Genuity.

Switching gears maybe to the cybersecurity business. With a fourth consecutive quarter of billings growth, can you share a little more color just what's driving the improving billings? Or maybe more specifically, what solutions in the portfolio are some of these multiyear government contracts choosing?

I think it's a number. First of all, we had 2 challenges in the past. One challenge is the SME for the UEM challenge where they were leaving us, and there was a lot of churn in that. And that churn over the quarters, over the time, has now stabilized. So that's number one. Number two, on UES, the Cylance product line, as you know, we were having trouble integrating it, and we did integrate it. And then we caught up on the EDR's technology. We're not winning bake-off. So we're comfortable with that. And the customer is not seeing that. So our renewal rates are now trending up nicely. And winning new logo by replacing kind of the legacy folks in the SMB market, and that's why I also commented on the channel, the channel does bring us a lot more businesses than it usually do. So those are the second part of the reason. And then we have a growth, although now based on a smaller number, for both AtHoc for the Critical Event Management software as well as the Secure Communications software. And they are typically tied to government. And government problem is that it takes a long time. But they are all in very high renewal rate, very high. In fact, we seldom ever lose one. It would be rare for us to lose the renewal. And we're winning new ones, but that takes time, as I said. So I feel that all the 4 components that make up our cyber offering are all building some level of momentum. And you're raising or addressing some of the issues, the pain point, that we had.

Great. That's very, very helpful. And maybe just a follow-up question, just going back to IoT and your big pipeline there. I know tough on the development seat timing, but as these new design wins turn to production, what are you thinking about in terms of revenue uptick in terms of what you're getting today from current royalties?

So the first set of revenue that we're going to get on the design win that we had is the developer seat. As they get into a very strong development cycle, typically, every OEM will buy more seats. And so that's number one. And then they sometimes will require professional services help, which we also offer, to make sure they get to use the QNX in the most efficient way. So that is the second one. Typically, an SOP, which is the start of production, on a design win, 3 to 4 years from the day we win it, but I think that is going to accelerate partly because of competition from China and some of the other Asian countries, like Vietnam, I think will compress the cycle. And so I don't know whether I answered your question, that's kind of where we expect the revenue to come in. So the $640 million, this is only royalty. It doesn't include professional services. It doesn't include developer seat. So we will eventually, hopefully, get, if not all, the majority of the $640 million. And we, of course, will continue to grow the $640 million.

The next question comes from Paul Treiber of RBC Capital Markets.

I'm going to apologize upfront for asking an accounting question. But can you explain, the high-level reason for the revenue recognition on the patent sale, you received $170 million cash and you're recognizing $218 million, what's the reason for the difference there?

I could ask Steve to tell you because I think we should recognize a lot more, but my accounting gurus all said that this is the right, proper constrained revenue. I think they use the word constrained. I have never used that term before. But I'll let Steve answer the question of how this come about.

Sure. So as we disclosed the details of the terms of the deal, beyond the initial payment of the $170 million, which we did receive, there's a fixed amount that's due no later than a few years' out and then there's some also royalty component as well. So it's those other elements in short under the accounting framework where the fixed piece, obviously, there's some discounting there that you apply the kind of net present value back, and then only a very small component, just the very near term, on the royalty component. So the rest, obviously, will be recorded in future periods as the amounts become known over the next several years. .

And the earn-out per se or the future royalty, like is it a risk-adjusted measure? Like, how did the accounting arrive at that number?

Basically, there is a lot of factors that go into it, and there is some risk weighting in it. But by no means does the accounting framework allow you to kind of look at the full stream and value of the full stream over the remaining period. So don't think of it as a fair value because the accounting does not represent the full fair value of that.

Okay. That's helpful to understand. In terms of cash flow, though, if you take out the patent sale this quarter, cash flow from operations was negative. What were the headwinds to cash flow this quarter?

Usually, our typical profile is to have a net cash usage in the early part of the year. So in that regard, if you remove the amount related to the IP sale it's a similar profile to what we typically have over the course of the year and then generate in later periods.

Paul, it's driven mainly by bonuses for last's year so-called VIP payment and compensation.

Okay. Good to know. Just last question, I'm not sure you can answer it, but I'll throw it out there. This arbitration in regards to the patent sale, any comments there, any sort of outlook on that?

Well, it's something that I shouldn't comment on. I think the lawyer wouldn't like me to comment on it, but there's no merit to it, and we will fight it vigorously. And I don't think you need to worry about it. .

The next question comes from Daniel Chan of TD Cowen.

On the new software-defined vehicle plans, you mentioned that there was timing differences, but just wondering if there's any changes to the scope of those programs that could either generate potential upside to what you originally had agreed to?

Yes. Have you or any one of the people on your firm gone to the MotorTrend event in CES in Vegas this beginning of the year? The reason I asked that question is because nearly every OEM -- we should try to get tickets for you guys in the future. Every OEM is having an SDV plan, software-defined vehicle. So yes, the scope are expanding. We just don't want to get overly carried away with our estimates. But the scope is definitely expanding. It is truly a timing thing. In a particular one case, we're relying on some really good developer seats that didn't come in. And that was purely a timing issue because they want to step up the program. And there is some very visible public thing, public announcement, that the OEM, major OEMs, are reorganizing some of their efforts and step up some of the car release days because of software. There are at least a handful of them. Because they're all my customers, I prefer not to mention here.

Okay. That's helpful. And then on the cybersecurity side, the billings that you won, any color on how much of those were renewals versus new business?

That's interesting. I don't have it. We could have Tim follow up with you. I don't have the breakdown of the 122.

Okay. Just looking for some color on how much of that is just backfilling contracts that have expired versus how much renewed.

I would tell you the biggest one, that was the most significant one, was an extension of multiple number of years and also expanded the footprint on a number of licenses. So in that case, it's both.

Next question comes from Trip Chowdhry of Global Equities Research.

Congratulations, very good backlog and billing numbers. I have a question. In terms of IVY, you have a very strong machine learning models for Cylance. And I was wondering, is there a way of using maybe some transfer learning or some other secret sauce that this intellectual horsepower you have in the Cylance machine learning AI products we could transpose it into IVY? And if so, that would be great. So any thoughts you may have on that end?

Yes. Like every company, we obviously are looking at this plan. So first off, our threat hunting group as always uses the AI, and we recently just offered the threat hunting services to customers. So in a way, it's all AI-driven model. There's like 4 generations of that. And we got literally billions of malware profile experience that we built the model based on the machine learning. So you'll probably see that being a push. Now as with other AI capability going into products, we haven't finalized that. We're in the business of going through it, in the process of going through it. Except I wanted to kind of make sure that we don't reveal too much of our internal model when we go into the OpenAI world, so we're literally in that kind of internal analysis of it. And we're also waiting for the government. I think the government will have something to say about how the AI is allowed to use and not allowed to use in the product because we're very sensitive to governments. We're a big provider of system or software to governments around the world. So we got to be very careful that we don't run afoul with their rules. So I have people working on both, in developing the product as well as understanding the policy.

Very good. A follow-up on same IVY and battery management system, which is very critical component of the modern electric vehicle. And again, you have technologies like Cylance, and I was wondering if you may have thought about using the machine learning models that you already have, maybe it needs to be trained on a different set of data, to automate maybe battery management system for some performance enhancements, which could literally differentiate yourself. And maybe you will be the only player who can offer software-defined vehicles complete intelligence in the battery management solutions. Any thoughts on that? And that's all for me.

Yes, Trip, our lab people will know a lot more about that. And we, of course, will try to take advantage of the two from a business side. But it's not something that we are deep into yet, but that's a good suggestion.

The next question comes from Todd Coupland of CIBC.

I was wondering if you could talk about the expected quarterly cadence of IoT and cyber. What does it look like for Q2 and then the back half of the year?

I don't normally provide quarterly outlook, Todd. That's a good one. Given the environment out there, I think we should be a little bit more cautious short term. But the year, as I said, we feel good about our pipeline and all the deals that we're working on, particularly the government deals from the cyber side. We're waiting for the OEMs on the vehicle side to kind of release their development schedules, so to speak. So those are the two major things that we have to look forward to and examine very carefully and watch very carefully. So I would say I expect Q2 to be probably a little better than Q1. And then second half, as I said, particularly on the cyber side, I expect the ARR to return to positive sequentially.

Okay. I appreciate that. And then what are your thoughts on your contract extension, which is coming up this year? I know you've talked about it in the past, if you have anything incremental to say there, I would be interested.

It's a little complicated with the Imperium (sic) [ Zimperium ] project. I'm waiting for kind of where the Imperium comes up with. Then I will kind of make my own decision of what I wanted to do. But it's all in good hands. So don't worry about it. And I told the Board, let's wait for where the Imperium project is at and then we'll make that decision.

All right. And you had indicated there was a lot of activity around that project. Would you expect it still to take at least the summer before you get your initial findings? Or can it happen sooner than that?

When you look at separating the business, you look at separating the income statement. That's the easy one. Then you have to separate the balance sheet, and then you have to look at the tax side of the equation and then you have to look at what the market offer and not offer. And there's just a ton of thing that you cannot just skip it. And so I still expect this to be the end of summer type thing.

I would now like to turn the call back over to John Chen, Executive Chair and CEO of BlackBerry, for any closing remarks.

I don't have any closing remarks. Thank you, everybody, for participating. We're always cognizant of the fact that you are in the East Coast and then it's late for you folks, and I appreciate it. So I'll talk to you guys more, hopefully sooner than next quarter, if not, at least next quarter. Thank you all very much. Have a good evening.

That concludes today's conference. Thank you for attending today's presentation, and you may now disconnect.